Why Big Tech Is Losing to Boring Stocks

18:08Scott Galloway:Now, what do I mean by that? There's a basic bull case or kind of this trope that with these types of staple companies that people will always need toothpaste and shampoo and that it's recession-proof. I think that is total bullshit. You know what I think is more recession-proof? enterprise software that runs mission-critical operations in a company. And what I would offer up just from a consumer level is that when a recession hits, consumers stop buying lattes, companies stop buying new office chairs, but companies don't stop using Salesforce to manage their customer pipeline. So this notion that this group of companies is somehow shielded from a recession, A, they're not, and B, I would argue they may be less shielded from enterprise software.

18:58Scott Galloway:Demotrons might hit their margins, but when you talk about CRM, ERP, cloud infrastructure, cybersecurity, these aren't discretionary spends. They're the nervous system of these companies, and the switching costs are enormous. The churn rates are low. Salesforce's churn is sub-10%. You know what has higher churn? Cable TV subscriptions.

19:23Ed Elson:People were saying that Netflix is a recession-proof trade. I mean, that was the idea at the beginning of last year. Everyone uses Netflix. Who cancels it? It's like a lot more people are cancelling their Netflix and they're cancelling their Salesforce, right?

19:37Scott Galloway:Discretionary consumer. The operative term is discretionary. And they say, okay, they're staples. Well, okay, you might buy detergent, but you might go to a private label and you might decide to have bigger loads or fewer loads or whatever the term is. But if you have Salesforce in your company or ServiceNow or Workflow or S &P or whatever it is, that shit is hard to rip out. And you may not, procurement may get off its heels and onto its toes and ask for some price concessions. But I don't see any reason why these SaaS companies aren't as recession-proof as what we have come to believe are recession-proof consumer staple stocks.

20:16Ed Elson:I think that's 100 % right. It is so fascinating how many different narratives are fighting against each other in this market right now. Like, there's the idea that AI is going to be the killer that's going to destroy these business models. There's the idea that there is just general uncertainty, which is going to lead to a recession. So you need to move to a flight to safety. So maybe that means you move into some of the more boring sectors that we talked about. Then there's the question of like, who will be the AI winners and who will be the losers? A year ago, if you were a tech company, if you were a software company, that generally meant that AI was going to be a good thing for your business and your multiples went up.

20:58Ed Elson:Now that there's a different question where it's like, oh, actually, no, we think that AI is going to be a killer for your business. Then there's the question of, is AI like a bubble? Like, is the whole thing overvalued? What's happening there? Then there's the question of like, if you're moving into safety, why are you going into toothpaste? Why aren't you going into fixed income? Why aren't you going into bonds? Maybe that means you're going into gold. I thought gold was the biggest safety play. So all of these stories are floating around right now. And it seems like over the past two or three years, the story seems to be pretty anchored in consensus.

21:36Ed Elson:People seem to agree on what the major market narratives were, where the trends were moving over time. But it seems like there's so much disagreement right now over who's winning and who's losing. I look at Amazon as another example. Warren Buffett just dumped practically his entire Amazon stake. Meanwhile, Bill Ackman is going out and buying up Amazon more than ever before. That's a huge disconnect on the narrative on who's going to actually win this. So all's to say, very interesting time to be in the markets, to be an investor. The level of disagreement that I'm seeing, both by looking at the prices and also just looking at the conversation online, on CNBC, among Wall Street analysts, I mean, no one seems to agree on anything right now.

22:28Scott Galloway:The net-net here, and I think we feel fairly confident around this, which is dangerous. The closer you get to certainty, the more likely you are to be wrong. But in sum, the market is paying a 50 % plus premium multiple for low-growth, low-margin commoditized physical goods over high-growth, high-margin, sticky digital products. So I would argue it's not a flight to safety. It's simply put, it's mispricing.

22:58Ed Elson:And I don't think that it would be an overconfident statement to simply say that the risk-adjusted return on software stocks on the IGV basket right now is very, very high relative to anything else. You know, that's not saying that it's going to massively outperform, but based on the numbers, yeah, the risk-adjusted return is pretty awesome right now. Those stocks have been beaten down to death. It's unlikely that they will fall that much further. But the possibility of them going up is very high, just on a multiple basis.

23:36Scott Galloway:You know what else has been beaten to death? This. This story. What's the next story, Ed? It's like our listeners are like, all right, enough already. We get it. We get it. Ed loves Salesforce. We get it.

23:50Ed Elson:They want to get rich. We're going to get rich here.

23:53Scott Galloway:There you go.

23:56Ed Elson:We'll be right back after the break. And if you're enjoying the show so far, send it to a friend and please follow us if you haven't already.

24:02Scott Galloway:Thank you. Today, our most innovative companies are staying private rather than going public. The result is that everyday Americans are excluded from investing and getting left further behind, while a select few reap all the benefits. Until now. Introducing VCX, the public ticker for private tech. VCX by Fundrise gives everyone the opportunity to invest in the next generation of innovation, including the companies leading the AI revolution, space exploration, defense tech, and more. Visit GetVCX.com for more info. That's GetVCX.com. Carefully consider the investment material before investing, including objectives, risk charges, and expenses.

25:07Scott Galloway:This and other information can be found in the Funds Perspectives at GetVCX.com. This is a paid sponsorship.

25:18Scott Galloway:Support for the show comes from Public, the investing platform for those who take it seriously on Public. You can build a multi-asset portfolio of stocks, bonds, and options, and now generated assets, which allow you to turn any idea into an investable index with AI. It all starts with your prompt, from renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20 % a year over year. You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one-of-a-kind index, and lets you backtest it against the S &P 500. Then you can invest in a few clicks.

25:50Scott Galloway:Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com slash ProvG and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash ProvG. Paid for by Public Investing, Burford Services by Open to the Public Investing, Inc., Member FINRA and SIPC, Advisory Services by Public Advisors, LLC, SEC, Registered Advisor. Generated assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available at public.com slash disclosures.

26:29Scott Galloway:Support for the show comes from ShipStation. When your business is juggling a patchwork of disconnected apps and tools, getting orders out the door quickly gets a lot more difficult, and that can slow your momentum when you're trying to scale. ShipStation says they're built to help. Their intelligence-driven platform brings order management, rate shopping, inventory and returns, warehouse systems, and powerful analytics into one easy-to-use place. ShipStation says their time-saving automation can help you win back up to 15 hours a week on order fulfillment. The platform automatically chooses the right carrier, finds the best rate, prints labels in bulk, and even sends tracking updates to your customers.

27:05Scott Galloway:They also say ShipStation compares rates across major global carriers, including USPS, UPS, and FedEx. You can try ShipStation free for 60 days with full access to all features, no credit card needed. Go to ShipStation.com and use code MARKETS for 60 days for free. 60 days gives you plenty of time to see exactly how much time and money you're saving on every shipment. That's ShipStation.com, code markets. ShipStation.com, code markets.

27:38Ed Elson:We're back with ProfG Markets. Wealth taxes are suddenly back in the spotlight, and the proposals are piling up. Back in September, a French economist proposed a 2 % tax on French residents with over 100 million euros in assets. In the Netherlands, lawmakers just approved a plan to tax unrealized gains on assets such as stocks, bonds, and crypto. And in California, a proposed 2026 ballot measure would impose a 5 % annual tax on individuals worth more than$1 billion. That proposal in particular has sparked a lot of debates. Here are some of the headlines we're seeing from the San Francisco Standard.

28:16Ed Elson:Quote, the billionaire tax backlash is spreading far beyond billionaires. From CNBC, California's Ro Khanna faces Silicon Valley backlash after embracing wealth tax. And from Politico, billionaire tax sparks intraparty war in California. All of this backlash underscores the bigger question, does a wealth tax actually make sense? Scott, we talk a lot about inequality on the show, income inequality and wealth inequality. This is a proposed solution to the problem. What do you think of the wealth tax?

28:49Scott Galloway:So first off, let me just put a land acknowledgement or an asterisk on this, and that is I don't think the top 1 % are paying their fair share, especially the super owners. The super earners at the 1 % that are, you know, mom's a baller partner in a law firm, makes a million, million half bucks, dad's a successful chiropractor, makes$400 ,000, combined income,$2 million, they're paying a ridiculous amount of taxes because it's current income. The person who makes their living buying and selling assets has a lot of assets and then occasionally sells them, pays a much lower tax rate. And what people don't recognize is what they do is they borrow against those assets, thereby deferring the tax liability such that their bigger pre-tax asset grows exponentially bigger faster because they kind of never pay taxes on it or they defer the taxes.

29:38Scott Galloway:So I do think we should have alternative minimum tax. I think we should tax assets if you borrow against them. But a wealth tax in some does not work because income is easier to tax. It's a flow of money from company A to person B. And basically, the government can fairly easily intercept that transfer and figure out what percentage they're taking. And it's also pretty easy to estimate what someone's flow is. The problem is with a wealth tax is you get into an enormous war that'll create a pretty sizable industry trying to figure out the value of these things. So if your net worth is$10 billion because you own 15 % of a company worth$67 billion, the reality is you don't have$10 billion sitting in a checking account.

30:27Scott Galloway:So you would have to sell stuff. So it would create unnatural acts. In addition, how do you assess someone's art collection, the value of their homes? So it's sort of like you're trying to tax someone's house based on what Zillow says it's worth and then demanding that they pay cash for it. And what if they don't have the cash on hand? Do they have to sell the house? But if everyone's forced to sell their houses or assets to pay wealth taxes, what happens to asset values? They probably go down. I wouldn't think they collapse, but they go down. and valuation is an absolute nightmare. How do you value a Picasso?

31:05Scott Galloway:Is it worth$3 million or$30 million? How would we value, say they wanted to take, say it was a 10 % wealth tax, how would they value what my stake in Prop2Media is worth? And then where do I come up with that money? So I spend three or six months fighting with auditors and consultants and trying to get letters saying that Prop2Media is worth$2 million, not$20 or$100, right? Right. So it's it's it's just fraught with risk. In addition, they don't work. Sixteen countries that have had wealth taxes, all but three have repealed them. The uber wealthy are the most mobile people in the world. Also, just philosophically, I think there's something to the notion that it it violates private property laws.

31:53Scott Galloway:and that is once you get through the current tax regime, whatever it is, fair, unfair, and you have that asset, that cash post-tax or that house and you've already paid taxes on it, whatever, and it's gone up in value, you've bought the house, it's yours. And no one has the right to come in and force you to sell it or to take a portion of your assets you already have. So A, I don't think it works. Billionaires will immediately hire the best tax attorneys and accounts to argue their assets are worth 40 % of what the government says it is. The IRS does not have the resources to fight this. And you would literally need 10 times the budget of your auditors and your IRS to administer a wealth tax.

32:38Scott Galloway:And most of the money would go to paying lawyers to argue about your yacht valuations. They just don't work. So I think quite frankly, just as AI in our previous story was having sort of the shadow effect on consumer stocks, I think Epstein is having a shadow effect here. I think that the general public is just so fed up with the entitlement and what is arguably the depravity of the uber wealthy here. They're like, okay, we've just sort of had it. So, you know, I can understand the sentiment, the social pressure, the basic philosophy. We need to increase taxes on corporations and the uber wealthy.

33:22Scott Galloway:This is not how you do it.

33:23Ed Elson:I agree with some of what you said, and I disagree with other parts of what you said. I will start with where I disagree. So, I mean, you talk about how... taxing illiquid assets is too complicated. Like, how do you value it? If it's not current income, like, what do you do about that? I mean, my response to that is like, that's exactly what property taxes are. Like, property taxes, you have a home, we're going to come up with a valuation, we're going to figure out an appraisal, and then you're going to pay a certain amount of cash as a percentage of the value of that home. So I don't see any reason why the exact same thing shouldn't apply to everything.

34:15Ed Elson:I mean, we do tax illiquid assets, specifically real estate, through the form of property taxes. So, you know, like how do you value property media? You have an auditor come in and look at the cash flow statement and figure out a valuation and then determine a tax rate based on that valuation. in the same way that we do that with houses. So I think that, I mean, I agree it's a lot of work and it is like more complicated than just tax and current income, but I don't think it's crazy and I don't think it's out of the question. And I think given, as you say, the pushback against the Epstein class and the billionaire class, though I, to your point, I like Epstein class, I think that's better.

35:02Ed Elson:An argument against it, I think needs to be stronger than it's too difficult. Because, you know, I think the people at this point say, screw you, we can figure something out. We'll figure out a way to tax it. And I don't think it actually is too difficult. So that's one piece of it. On the other side, I do think there is a valid point that it doesn't really work. And that is you bring up all of those countries that have tried it and then repealed it because it didn't work. And it seems like the common thread among those repeals is that actually people tend to leave. Billionaires tend to leave, at least.

35:45Ed Elson:And I don't like that answer. I mean, I don't like the idea that we're having to cater to this very small subset of people because they're so wealthy and we need their money so badly that we've got to tailor all of our laws just to have them stay. to me i find that ridiculous and annoying and to be fair it isn't always the case that billionaires leave i mean we saw what happened after mamdani was elected everyone said i'm gonna leave it's gonna happen and then the luxury market the housing market started to rip and inventory went down because there was so much demand like they were kind of faking it but there are cases where actually that does happen it happened in norway it appears to be beginning to happen in california mark zuckerberg just bought a house in miami he apparently is gonna move to miami in april so i think that that is a legitimate reason why it actually might not work and then another reason i would add on to why it probably won't work is that i mean these billionaires are just not gonna let it happen like even if it goes through in california i guess there'll be some movement out of California.

36:57Ed Elson:But in addition, it will be hundreds of millions of dollars funding lawsuits to make this not happen. And if there's anything we've seen over the past few years after Citizens United, it's that rich people kind of control politics. So if you come up with a plan that rich people, that very, very rich people really, really, really hate, and they hate this, My view is they're just not going to let it happen.

37:23Scott Galloway:So this is total populist bullshit that defines the term, the difference between being right and being effective. The super rich are not paying their fair share. They've registered unparalleled prosperity and haven't paid their fair share. And we need to do something about our deficit. And just for the good of the commonwealth, when the Gini coefficient is where it was during the French Revolution, all right, we've got to do something. 100 % right. And then let's go to the part of the program where we try to be effective and not do a non-DOM tax where we're going to collect less money in the UK than we did before the non-DOM thinking we were going after billionaires, right?

38:05Scott Galloway:So how do we actually, if the net-net is to help address income inequality, raise the funds we need to have a social safety net in the military, that's the goal. The goal is to get more money, not less, and then feel good about ourselves. So you brought up the notion of basically property taxes are kind of a wealth tax. I think, theoretically, I understand. I own one of 14 units in my building. There are transactions every year, and they can say, all right, your unit is worth approximately X. Ed, what is the value of Prop G Media? Serious question. What's the value? What's the value? No, better, what's the value range?

38:45Scott Galloway:um i'll shall i answer it seriously yeah yeah what's what do you think the range of value is for prop g media right yeah i would argue one of the reasons people like this show is we give them behind the music we try to be more transparent than any fucking show joe karen isn't going to tell you how overpaid he is you own a large equity stake in prop g media because you believe it's going to be worth something and owning equity in a company is how you build wealth It grows tax-deferred. And the reason I give you ownership in Prof. G. Media is I want you acting like an owner, and I don't want you to go be Joe Kiernan's successor.

39:24Scott Galloway:So what do you think Prof. G. Media? Give me a range. What is Prof. G. Media? I can give you within 5 % to 8 % certainty, with 5 % to 8 % variance, what I think my condo is worth. What do you think the range of value is for Prof. G. Media?

39:38Ed Elson:I'm going to go with$75 to$100 million. But if David Ellison were the buyer, I'd double it.

39:49Scott Galloway:Okay. The range is zero. The bottom range is zero. What is this company worth if I show up in the Epstein files tomorrow and I'm arrested? Serious question. What's this company worth?

40:05Ed Elson:it's worth, we'll go$5 million.

40:10Scott Galloway:Do you think someone would pay$5 million for this company without me?

40:15Ed Elson:I'll figure it out. I'll make it happen, Scott.

40:18Scott Galloway:All right, so let's say$5 million. I buy your high end. If we continue growing, it's the, you know, podcasts are doing well. We have crazy EBITDA margins. We're going 20 to 30 % a year. We have done some diversification away from the angry professor. or people want to get into the space, it's hot. I get it. I believe the range of this company is somewhere between zero and 100 million right now. So say they pick the mid-range, 50 million, right? Let's say someone owns 10 % of the company, all right? That means they have a$5 million liability. They're saying your asset's worth 5 million. They want 3 % of it.

40:58Scott Galloway:Could you come up with$150 ,000 right now? No. now to be fair they're saying for people who make over 50 million but let's let's walk through practically senator warren's proposal who by the way keeps getting richer and richer as a congress person as a senator who continues to oversee a senate where taxes go down while she constantly complains about income inequality we'll do your fucking job and you know you're the referee on the field complaining about the officiating. Anyways, her proposal is a 2 % annual tax on wealth over$50 million, 2 % annually, 3 % on wealth over a billion. So let's take it through.

41:41Scott Galloway:So she estimates it would raise$3 trillion over 10 years. That's assuming people don't start piecing out to Madrid or Dubai or turn in the passports and go to Singapore as one of the founders of Meta did, right? So she's, let's say, let's give it to her,$300 billion a year. The 2026 federal budget is$7 trillion. So this radical, administratively complex, constitutionally questionable tax raise is 4 % of the budget. And that's before accounting for evasion, avoidance, capital flight, depressed asset values from forced selling, the cost of enforcement. The annual revenue would likely be 30 to 50 % lower.

42:20Scott Galloway:You're likely getting$150 to$250 billion a year, less than we currently spend on interest on the debt, and compare that. I'm not one of these don't tax the rich, but here's an idea. Get rid of the carry interest loophole on investment firms and get rid of the lower capital gains tax. Everyone pays 37%, not 21. By the way, do those two things. You raise the amount every year that she claims this highly speculative, dangerous, weird wealth tax would. There's no reason I should be paying 21 % when I sell my stocks and you're paying 37 % when you make money. There's no reason that the private equity billionaire should be paying long-term capital gains on their carried interest, which is essentially a commission.

43:11Scott Galloway:Whereas if you sell a copier as a salesperson, you pay current income. But when I get a commission on buying and selling assets, I pay long-term capital gains even though I haven't put any capital at risk. There are much more pragmatic, enforceable, acceptable means of raising taxes on wealthy people. Totally agree with that.

43:31Ed Elson:I think the thing that I – the tax solution I think is best is the borrowing tax. As you pointed out, like why don't billionaires pay taxes? It's because they just never sell their assets. And then it's like, well, how do they come up with the money? It's because they borrow against their assets. And if you do that triggers a taxable event. Exactly. So if you make that a taxable event, then you're solving the problem right there. But I think just to play devil's advocate on this wealth tax thing, I think the way a lot of people probably see it is, you know, you're presenting an alternative. You're like, this doesn't work.

44:07Ed Elson:But how about we do this?

44:09Scott Galloway:No, but the billionaires are just like, this is a bad idea.

44:12Ed Elson:This is a bad idea. It doesn't work. It's too complicated. How are you even going to figure it out? I own this company. And when they do that more and more times, at a certain point, it starts to sound like, okay, you guys are just making up a bunch of fucking excuses because you don't want to pay taxes. If you do this, we're all going to leave. So you can't do it. It's like, okay, well, propose another solution. Because the inequality in this country, everyone agrees at this point, has gotten out of control.

44:37Scott Galloway:Let me give you another one that I think is a better way to taxation. Zuckerberg is threatening to leave. Right? I think he will leave.

44:46Ed Elson:Yeah, he bought the house.

44:49Scott Galloway:I don't know. I think he's got between$80 and$120 billion. Let's call it$100 billion in metastock. He probably realized it's been an amazing run. It's pretty high. Maybe it's time to start liquidating, and he's going to come up with a bull. I've had it. I'm out of here. I don't like the homeless encampments. I can't stand it. He'll come up with a bunch of Keith Reboi bullshit reasons for why he just wants to pay lower taxes. Here's the bottom line. Mark Zuckerberg has enormously benefited from the University of California, the great Cal State system, our highways, the fact that we have massive investments in social programs that make it a really nice place to live.

45:31Scott Galloway:But for all the shitposting, the wealthiest people in the world, which is Latin for the people with the most options, all decide to stay in California. And it's because there's enormous investments in the infrastructure paid for by California citizens. So if Mark Zuckerberg aggregates$100 billion in wealth while in California, he can peace out to Florida. But when he sells his stock, he is subject to state taxes on the amount of money accreted while he was living in and leveraging and enjoying the California infrastructure. So when Bezos moved from Washington State to Florida, and this is my favorite, to spend more time with his father, what a guy.

46:15Scott Galloway:What a guy. When he starts selling down his stock, which he did immediately after getting to—I guess his dad talked him into selling his stock. Because the moment he moved to spend more time with his dad, he started selling stock. Okay. When you leave, they go, Zuck, here's a mark. $100 billion in wealth. until you have paid 14 % on that$100 billion. Maybe you adjust it if the stock goes down in value, but if it goes to$200 billion, fine. Pay the 0 % in Florida on that$100 billion, but on that first$100 billion you're selling that you accreted in California as a function of the amazing culture and infrastructure of California, an amazing human capital that is drawn to California such that they can go have, eat sushi at Nobu in Malibu and go sailing in the bay and go see, you know, the Rams player.

47:10Scott Galloway:I'm trying to come up with cultural references for just how fucking awesome or go to the Greek theater or go to stay at the pool at the Beverly Hills Hotel. All the amazing things that are singular about California, you are paying for what you accrued here. There are a lot of common sense taxes that are indefensible. It's indefensible to argue against them. Indefensible. If you made all this fucking money in California and they want to peace out and not pay back California? No, no. You are paying California taxes on the money you made and the wealth you accrued in California. Get rid of the carried interest loophole.

47:48Scott Galloway:Do away with the tax, the reduced taxes on capital gains, and your state taxes follow you on the capital and wealth you have accreted while enjoying the privilege and investments of that state. Boom.

48:03Ed Elson:And make borrowing a taxable event. There you go.

48:06Scott Galloway:Yeah, that's right.

48:07Ed Elson:Trigger's a taxable event. Exactly. Just a final point, and then we'll move on. It is just so frustrating when you've got this rampant inequality where 19 households control 2 % of all the household wealth in America. We all know the stats. The top 1 % come on the third of the nation's wealth, never been higher, inequality going out of control. None of these rich people who appear to care about or say that they care about the state and the health of the nation, no one says a word. And then the wealth tax is proposed, and suddenly they're all triggered, and they're all up in arms about how this doesn't make sense.

48:46Ed Elson:And suddenly they have this great analytical minds about, you know, what is best for America, what makes sense in terms of the tax code, et cetera, et cetera. And it's like, it is so obvious how self-interested you are with your motives here. And I think what they need to get through their heads is that this train isn't stopping. I mean, billionaires have never been as unpopular in America as they are today. I mean, the statistics are just striking. Seven and 10 think Americans think billionaires need to be taxed more. More than half think billionaires are threatening democracy. People do not like billionaires.

49:23Ed Elson:And you can say that that's unreasonable or they're being jealous or whatever it is. But that is the reality of the situation. And it's a function of how out of control inequality is gotten. So this argument of that doesn't make sense. We're going to leave. It just it doesn't really work. Like, I think you'd have to take a poll of the of the people of California who would probably say, OK, leave. We don't care. From our view, you're not really paying taxes anyway. We don't really like you. Get out of here. Fine with us. And, you know, maybe that will be a mistake later down the line, but that's the reality on the ground right now.

49:58Scott Galloway:It is reality and it is a mistake. That was the sentiment here in the UK was people like, fuck you, leave. And they did. And now they're going to collect less money.

50:07Ed Elson:And maybe it will be a mistake. And to be fair, like, I'm not a huge fan of this wealth tax compared to others. But I think the billionaires should be if they want to take this seriously. Propose alternatives. Don't just sit there and say, no, it doesn't make sense, and then peace out. I mean, give a real solution.

50:24Scott Galloway:The billionaires themselves will never do that. The billionaires will never come up with that. I mean, I saw a clip of basically what is the right-wing version of this podcast, and it has a couple billionaires. And they said, you can't get the taxes we need unless you go after the middle class. That's where all the revenue is. I'm like, okay, let me get this. You guys are suggesting the pragmatic solution is to raise taxes on middle-class households. They're going to lose. I mean, they're so out of touch. The Epstein overlay, look at it. The president, the wealthiest man in the world, and the guy who's considered the kind of prototypical icon of billionaire wealth and technology, Bill Gates, they're all in the Epstein files, dozens if not hundreds of times.

51:11Scott Galloway:That is not helping their case. Let me get this. Income inequality is out of control. And now I believe, unfairly, every billionaire. I think there's a decent size of the population right now, a decent segment of the population right now, that feels as if the majority of billionaires are pedophiles. Yeah. I mean, so, oh, tax them? Yeah, I'm down with that. Whatever it is. I don't care how pragmatic it is. I don't care. Just, yeah, hit them hard. Hit them hard. We've had it with these guys.

52:09Ed Elson:Upwork can help make it easy to bring in the right freelancer when you need them, so you can stay focused on what you do best. Thousands of growing businesses already trust Upwork to hire flexible, high-quality freelance talent for everything from one-off projects to ongoing support. You can browse profiles, review past work, and get help scoping the role so you can hire with confidence and get started quickly. Upwork also cuts down operational hassle by handling things like contracts and payments in one place so you can spend more time running your business. Visit upwork.com right now and post your job for free.

52:47Ed Elson:That is upwork.com to connect with top talent ready to help your business grow. That's upwork.com, upwork.com.

53:02Ed Elson:support for the show comes from indeed right now there is a talented person somewhere out there who could help take your business to the next level but finding that person doesn't need to be a grind just use indeed sponsored jobs it boosts your job posting to reach quality candidates so you can connect with the exact people you want faster and it makes a big difference according to Indeed data, sponsored jobs posted directly on Indeed are 90 % more likely to report a higher than non-sponsored jobs because you reach a bigger pool of quality candidates. Join the 1.6 million companies that sponsor their jobs with Indeed so you can spend more time interviewing candidates who check all your boxes.

53:43Ed Elson:Less stress, less time and more results now with Indeed sponsored jobs. And listeners of this show will get a$75 sponsored job credit to help get your job the premium status it deserves at indeed.com slash prof g go to indeed.com slash prof g right now and support our show by saying you heard about indeed on this podcast indeed.com slash prof g terms and conditions apply hiring do it the right way with indeed

54:14Ed Elson:rated t for teen hey everyone it's the best in the world cm punk back to shake up wwe 2k 26 This year, the show never stops. You're running the greatest spectacle on earth with the biggest roster we've ever had. Over 400 superstars and legends from every era. Stack the tables, break the rules, burn it all down. And yeah, my very own showcase. Telling my story the way it should have been told. Because when the show never stops, anything is possible. Available March 13th. Pre-order now.

54:49Ed Elson:We're back with Prof G Markets. AI is quickly becoming one of the defining political issues of the decade. What once looked like a breakthrough technology with broad upside is now drawing scrutiny over its real-world costs, from energy demand and infrastructure strain to concerns about jobs and economic disruption. That concern isn't coming from just one side of the aisle. Politicians across the spectrum, from Ron DeSantis to Bernie Sanders, have started sounding alarms about the industry's impact. So, Scott, I think this is the defining issue for the next 10 years. I think this will make or break careers.

55:28Ed Elson:I think it's already breaking careers. The question of AI. Do we want it? How do we want to handle it? How do we want to regulate it? It seemed like it was sort of a technological nerd bro conversation. It is now very quickly becoming a mainstream conversation. It is spurring all of these grassroots organizations across the country, people who are protesting against data center constructions. It's becoming a really big deal in Washington and basically across America. So a lot to say there. I guess I'll just start with what are your initial reactions to the notion that AI is now the new political football?

56:10Scott Galloway:It's easy to highlight the problems or the causes and not necessarily the solution. But the way I see it is, all you have is a bunch of, quote-unquote, very smart people. There's two things going on here. The chocolate and peanut butter of the general taste of AI from the American public is a function of two things. One, I'm really sick of hearing all these, quote unquote, founders of AI who the moment they invest their$100 or$200 or$300 million in shares and sell them on a secondary market, all of a sudden get very concerned about AI. You know, bitch, that's not helpful now. You built this fucking code.

56:52Ed Elson:What have I done?

56:54Scott Galloway:While you were accreting your wealth, you didn't say anything. And now that you've decided, okay, I got my 3 % of Anthropic, that's worth$10 billion. I'm going to go write fucking poetry. Well, fuck you. And all they talk about is the massive peril. Well, what do you mean exactly? And use all that. You coded this peril. Any thoughts on how we uncode it, bitch? And by the way, are you so worried about the peril that you're going to give your money back or realize that you have created such an existential threat? You're not entitled to the options. Are you just going to catastrophize and scare the shit out of us while you're writing poetry from the Cote d 'Azur with your fucking Belarusian horse?

57:44Scott Galloway:Yeah. Yeah, that's really helpful. You're a great citizen. Thanks so much. And then the second thing is on a pragmatic level, you have millions of households who've seen their electricity rates go up 67 % because there's some fucking empty building that supposedly has computers and chips, this data center down the road that's not employing anybody, that's sucking all the energy off the grid. And all I see is my bill, my electric bill has gone from 80 bucks a month to 140. So there needs to be legislation. I mean, one legislation is pretty simple. We need to start taxing the shit out of data centers.

58:23Scott Galloway:I mean, at least to at least tax them to the incremental cost of the incremental energy and incremental price increases. Middle class households shouldn't be subsidizing AI companies right now. So but I am I am really fed up with the post I've made my money catastrophizing. And I don't I don't buy it. I don't see any reason why AI can't be used as much for defensive as offensive measures. And maybe I might be missing it here. There's people much smarter than me claiming it's really dangerous. Fine. But what do we do? Fine. You built it. Fine. What do we do? Come up with some solutions. I don't want to hear the word peril.

59:06Scott Galloway:I want to hear the word solution. And two, let's figure out a way that all this wealth creation, not only at a minimum, if It's not going to make the economic lives of the middle class easier. At a minimum, they can't raise their prices.

59:19Ed Elson:I also think that Wall Street is kind of underestimating the impact on future revenues here, specifically the political backlash against AI. Like, you know, you got big tech spending$660 billion on AI, 3 ,000 data center projects underway across America. Everyone's so excited about what AI is going to do. And they're figuring out, OK, how are we going to set up the chips and how are we going to set up the energy? and how is it all going to work out and who are going to be the winners, who are going to be the losers, etc. But I do think that Wall Street is neglecting a very large question. And I wrote about this last week, which is like, how many people actually want this stuff?

1:00:00Ed Elson:Is it possible that the American people have decided, similar to our previous conversation on a wealth tax, in the same way that Americans decided, we really hate billionaires, what is that going to do to the structure of our economy if most Americans hate them? What happens if most Americans hate AI? What happens if most Americans decide, actually, you know what? We don't like these data centers that employ the third of the number of people that work at an average Walmart and also send our electric bills through the roof, which is something we have already seen. It's been well documented. And also most analysts and most economists agree this is only going to continue with more AI, more energy usage.

1:00:43Ed Elson:Also, it happens with your utility bills as well, because these data centers consume like millions of gallons of water per day. So if all of this happens and all of this builds up, and I get that it's kind of more of a popular politics conversation, and one might argue that's separate from markets, but I would argue actually no, these two things are very, very linked, because we're already seeing all these activist groups shutting down data centers, saying you're not allowed to build this on our property. There's a town in Wisconsin, they want to recall their mayor because he allowed an open AI data center to get built.

1:01:19Ed Elson:So if that happens on a mass scale, what does that do to the future cash flows of a Google or an open AI or an Anthropic or any of these other companies that are building data centers? Does that hurt your top line? I would argue definitely. And I think the question is, how big an issue is this going to become in the political realm? And what I'm seeing, and we've talked about this months ago, we said this is probably going to become an issue. What I've seen over the past basically two weeks is that this is rapidly accelerating into the biggest issue in America right now. Every politician is figuring it out, talking about it.

1:02:00Ed Elson:And now it's on every politician, every elected official to decide, what is my stance on AI? Do I like it? Do I support it? Or do I not? And I think increasingly, as it gets less popular, you're going to see a lot more politicians saying, I don't like AI, I'm going to be against it. I don't know if that's the right position. It might be the wrong position. But I do think that is going to be a position that becomes more popular.

1:02:24Scott Galloway:Again, I think it all stems back from, to a certain extent, Epstein and the war on, And, you know, I won't call it the billionaire class, but the Epstein class, because essentially AI has become inextricably linked, whether it's Musk or Trump's support of it or Sam Altman and, you know, prostrating himself to Trump. AI has become kind of the business of billionaires and tech and everything that's bad about it. And also with the Internet, you got to at least reserve your plane ticket or something. I think those of us who are what I'd call AI literate are getting a lot of value from it. But I would argue that GLP-1 is actually having a more positive impact emotionally on more Americans than AI right now.

1:03:06Scott Galloway:I think people are experimenting with AI, but I don't think people think, wake up, or a lot of people don't go, God, I just love, I just love ChatGPT. It's so much fun. Or I'm getting so much utility. I think people are blown away by it. And there's a lot of people in business going, this is hugely important. But the catastrophizing far outweighs the perceived utility at this point. Whereas with the internet, no one was, you know, catastrophizing about it. The narrative here has gotten away from them. And that is the everyday consumer sees nothing but higher electric prices and some supposedly very brainiac person saying it's the end of the world.

1:03:45Scott Galloway:It's like, well, okay, I'm done with this bullshit. And if this doesn't pan out for Sam Altman's$850 billion raise, you know, I'm okay with that. And a lot of these folks don't see how this is going to affect them economically. There's a small number, you've pointed this out, there's a small number of companies where you have exposure to AI. And so I don't think, you know, I don't think consumers, the bottom line is right now, consumers aren't rooting for it. Exactly.

1:04:13Ed Elson:And that's such a big deal. and the comparison to the internet is the right one. Just some polling data in front of me here. Back in 99, two-thirds of Americans said they liked the technology of the internet. Among users, that number was nearly 80%. Today, less than half of Americans say they like AI, that they have a favorable view of AI. Less than a third of Americans say they trust AI. And I think your Epstein point, some would call it a bridge too far. I think it's exactly right. I think the two things are related. I think there is a lot more public, popular interest in the way companies are built, in the way wealth is built.

1:04:54Ed Elson:There's more interest in business and markets and power and who runs the world and who runs these tech companies. You combine that with the explosion that we've seen over the Epstein files, the fact that we are seeing a lot of these leaders showing up to the island and potentially assaulting children. And to your point, yeah, there's probably people are painting this with a broad brush and saying all billionaires are pedophiles, which obviously isn't true. But let's be real, a lot of them, or a lot more than we had expected, did go to the island and potentially might be, or potentially might be abusing young girls.

1:05:32Ed Elson:So I think these two things are related. And the popular pushback against the Epstein class, against the wealthy individuals who are part of that ecosystem, who are controlling the technology of tomorrow, which is AI, I think that that is a big deal. and i think you know it's a big deal in the political realm but again we're a markets show this is one of those situations where i do think there will be spillover effects into the markets i think this actually will damage a lot of these companies and it's interesting how politics and markets are just they're totally blending together at this point i mean the two you cannot divorce the two in 2026 i mean sort of investment thing that's coming out is go short

1:06:20Scott Galloway:kind of direct AI-related companies, the, you know, NVIDIAs, Microsofts of the world, and go long the companies that have supposedly are under threat of massive disruption from them in the tax sector, the SaaS guys.

1:06:33Ed Elson:Okay, let's take a look at the week ahead. We'll see inflation data from the Producer Price Index for January. We'll also get a read on consumer confidence for February and earnings will roll in from Home Depot, Lowe's, Alibaba, Constellation Energy, Paramount Skydance, Warner Brothers Discovery, Salesforce, that'll be interesting. And NVIDIA, that will also be interesting. Scott, any predictions?

1:06:56Scott Galloway:I hate the cold. I'm becoming so old, Ed. You asked me if I was skiing earlier. Like, I don't like the cold. I want to be in Palm Beach drinking an Arnold Palmer and playing shuffleboard and playing gin rummy. I'm getting so old. And one of the things I notice is that I'm obsessed with war. And I follow all these amazing people on TikTok, including this guy, the Geo Hussar. and I follow all these content creators that are fascinated with weapons and troop movements, we are so fucking bombing Iran. I mean...

1:07:28Ed Elson:From what little I know, I would agree, yeah.

1:07:31Scott Galloway:We have two carrier configurations and massive air assets deployed to the region. We have 13 warships in the Middle East with a second aircraft carrier also on the route. And by the way, that doesn't even include the support. You know, it's not like one aircraft carrier. and aircraft carrier comes with dozens of support ships. We got the Gerald R. Ford, the world's largest aircraft carrier, is currently in the Atlantic Ocean en route to the region. And the SS Abraham Lincoln is already operating there. The USS Gerald Ford has an estimated arrival window of less than a week. And if you take all of these, and you include these, I think it's called an Arleigh Burke-class guided missile destroyer carrying Tomahawk land attack cruise missiles.

1:08:16Scott Galloway:You have more than 600 Tomahawk missiles. We're soon going to have the ability to do like 800 sorties a day. Just the cost to organize all this and move it there is staggering. A two-carrier battle group is not a show of force. It's literally a strike force. and so we have the military option fully ready uh talks are ongoing but described as very far apart the window for diplomatic resolution is measured in days not weeks and if talks collapse which i think they i would argue they already have the infrastructure for strikes is already in place now those are rational reasons why we'll bomb again the reason we're going to bomb Epstein.

1:09:05Scott Galloway:Trump is mentioned in the Epstein files more times than Jesus is mentioned in the Bible, or the term meth is mentioned in all seasons of Breaking Bad combined. He loved the flex and the macho light of the Venezuelan raid, which was incredible. And he's like, let's fire up the macho meter again. And by the way, I'm in favor of this. I think the Islamic Republic has been one of the most brutally oppressive, misogynistic regimes in recent history. I think that this would—there's always a non-zero probability and risk whenever you take military action against a country. I think the risks to the upside here are wonderful in terms of peace and stability in the Middle East.

1:09:49Scott Galloway:But anyways, if you follow some of these creators that follow troop deployments, and we basically have the world's largest gas station in the sky now with these refueling tankers that are in the Middle East ready to fuel sorties. This is, here come the Marines.

1:10:06Ed Elson:So the America first president, and I agree with all of your reasons why this is going to happen, is going to drag us into another war because he wants to distract us away from the fact that he

1:10:18Scott Galloway:is likely a pedophile, or at the very least. I mean, keep in mind, the UK in the last 24 hours has demonstrated more institutional credibility than the US has demonstrated in the last five years. They arrested somebody. and they arrested somebody very powerful. They arrested their prince. Yeah, very powerful and very prestigious. Meanwhile, you know, what are we doing? We're, anyway, I'm not going to go there. We're bombing Iran. We're bombing Iran.

1:10:45Ed Elson:This episode was produced by Claire Miller and Alison Weiss. Mia Silverio is our research lead. Our research associates are Isabella Kinsel, Dan Chillon, and Chris Nodonoghue. Benjamin Spencer is our engineer. Drew Burrows is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from Prof G Media. Tune in tomorrow for a fresh take on the markets.

1:11:11Lifetimes

1:11:16You have me In kind reunion

1:11:27As the world turns And the dark lies In my eyes

1:11:43Ed Elson:Rinse knows that greatness takes time, but so does laundry. So Rinse will take your laundry and hand deliver it to your door expertly cleaned. And you can take the time pursuing your passions. Time once spent sorting and waiting, folding and cueing, now spent challenging and innovating and pushing your way to greatness. So pick up the Irish flute or those calligraphy pens or that daunting Beef Wellington recipe card and leave the laundry to us. Rinse. It's time to be great.

1:12:12Scott Galloway:Stitch Fix. Shopping is hard. Let's talk about it.

1:12:15Ed Elson:I don't have time to shop, so I buy all my clothes where I buy my seafood. I just want someone to tell me what shirt goes with what pants. I just want jeans to fit. Stitch Fix makes shopping easy. Just show your size, style, and budget. And your stylist sends personalized looks right to your door. No subscription required, plus free shipping and returns. Man, that was easy. That looked good. Stitch Fix, online personal styling for everyone. Take your style quiz today at stitchfix.com.