Zohran Mamdani Wins — Why NYC’s Mayor Race Was a Referendum on Inequality

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1:42Welcome to Prof G Markets. I'm Ed L. It is November 5th. Let's check in on yesterday's Market Vitals. The major indices declined as AI valuation concerns dragged down tech stocks. Palantir sank 8 % after Michael Burry disclosed a$900 million bet against the company. Meanwhile, Bitcoin slid 6%, dropping below$100 ,000 for the first time since June. The dollar hit its highest level since May. And finally, Tesla fell 5 % on news that one of its largest investors voted no to Elon Musk's$1 trillion pay package. Results of the vote will come tomorrow at the company's annual shareholder meeting. OK, what else is happening?

2:33Shopify posted a strong quarter of growth yesterday, but rising costs weighed on investor sentiment. Revenue rose 32 % year over year, beating estimates. However, net income fell 68 % as operating expenses increased significantly. Shares closed down 7 % on the results. Just a reminder, what is Shopify? This is your one-stop shop platform for e-commerce. It helps you set up your website and your payments and your shipping, etc. So if you are a small to medium-sized retail business, chances are you're using Shopify. But they are also now expanding to larger companies too. companies like Mattel and Luxottica and Estee Lauder, lots of large retailers.

3:15So Shopify is a juggernaut at this point, a juggernaut in e-commerce, more than$200 billion in market cap. And I'm very pleased to say that we are breaking down these Q3 earnings with the president of Shopify, Harley Finkelstein. Harley, great to have you on Prof G Markets. Great to be here, Ed. Big fan of the show and big fan of yours. So thanks for having me. Wow. Thank you very much. That is very kind coming from you. We want to talk through the earnings here. Some pretty incredible numbers. Revenue up 32%. Gross merchandise volume also up 32%. $92 billion. Let's just start with your headline takeaways on this most recent quarter for Shopify.

3:57Yeah. I've been doing these earnings calls for over 10 years now since the IPO. I think This is earnings call number 42, maybe 43 at this point. GMB, obviously, you know,$92 billion is super important because it's a proxy for how well merchants are doing on Shopify. That's up 32%. What I don't think was well understood was that that is our ninth consecutive quarter of GMB above 20%. So that I was really excited about. On the revenue side,$2.8 billion, up 32 % as well. That's our 10th consecutive quarter of 25 % for greater top-line growth. And then free cash flow was 18 % of revenue or about$507 million.

4:36So that's 12 consecutive quarters of positive free cash flow and nine consecutive quarters of double-digit free cash flow margin. Why does this matter? One of the things that we've been trying to articulate, and I hope I've done a good job of this, is this idea of durable, consistent growth. And Shopify will do what we say we're going to do. I talked about, you know, on our last call that we're going to be doing something in Agenta Commerce. Obviously, I was able to announce a couple, two weeks ago, that we're doing this incredible work with OpenAI, but also with perplexity. So ultimately, while the numbers themselves, I think, are incredibly impressive and we're balancing kind of top line and bottom line, what matters to me is Shopify is a well-trusted, publicly traded company.

5:17And I think the way you do that is just to do what you say you're going to do. From my understanding, Shopify is investing pretty significantly into AI. R &D spend up this quarter. you recently announced this integration with open ai like what does ai have to do with shopify how does it help the business um where does it fit in yeah i was just there's two buckets the first is well maybe three buckets the first is the first bucket is is how we use shopify reflexively inside the company um and obviously you know there's now i think a leaked email out there somewhere that toby wrote to the entire company talking about that shopify has to be a reflex has to be ai reflexive meeting.

5:56Every person that works here thinks about how they can use it to make their job better. And in fact, you know, before you ask to hire someone, a new person, you have to first substantiate why AI cannot help you do it. That is embedded in the culture of the company. And so, you know, a good example is our support organization, our frontline support organization, where now they're able to have much more of these high quality conversations, like helping merchants grow their business, and less of the low quality conversations like, you know, password reset or domain or CNAME configurations. So that is important.

6:25The second bucket is probably how merchants, we give these tools to merchants. And that's really where Sidekick plays a role. This idea that I mentioned on the call, but so far since we launched it, 750 ,000 of our merchants are using Sidekick to effectively as a core part of running their business, whether it's running reports or analytics or figuring out which products are selling better, where to launch campaigns, things like product photography or product descriptions or merchandising, this idea of giving merchants these like superpowers through Sidekick, which knows everything about your business and knows everything about Shopify.

6:58And maybe the third bucket is really on the sogenanetic side that we believe there may be a new surface area that will be an important surface area beyond just the online service and offline service and social services whereby merchants can actually find new customers. And so our objective and our model there is really to make sure that we're not only like we want to be the launch partners there. We want to build the best permutations of what could be. We don't know exactly what Agentex is going to look like, but whatever the permutation might be, Shopify and our merchants are deeply embedded to it.

7:30And, you know, Agentex obviously is getting a lot of attention now. The OpenAI announcement did, but we're also working with Microsoft Co-Pilot, who's already adopted our checkout kit. We're working with Perplexity. And so, again, if we do see a shift in consumer behavior whereby more searches and more discovery happens on using an agent in chat, we've now built a set of tools with Checkout Kit, with Shopify Catalog, so we can deliver these things kind of on a silver platter to these agentic applications and they can ingest it. And now our merchants have a brand new place to engage with the consumers.

8:04Yeah, I have a couple of slightly less Shopify focused questions. One is, you know, I mentioned$92 billion in gross merchandise volume. You know, you are the president of one of the largest e-commerce companies in the world. The way I see it, you kind of have like a front row seat to the consumer, or at least how the consumer is doing. Based on what you see in the data you see at Shopify, how is the consumer doing right now? You know, we've seen inflation rising, obviously the tariffs. Is that having any effect on consumer behavior right now? Well, look, for us at least, consumer confidence is measured at the checkout.

8:43That's what we see. On Shopify, what I can tell you is shoppers, they keep buying, they keep returning. Demand has remained resilient across pretty much every channel and every category. So I can only comment on what we see at Shopify, but if you look at GMV, look at revenue growth, consumers, maybe this is worth mentioning, consumers are certainly being more selective. They are buying from brands they love. We are very fortunate that the brands and merchants love happen to be on Shopify. And we've baked that into our Q4 outlook, and it suggests that. But if you look at the Q3 numbers, it was another quarter of consistent GMV growth by our merchants, 32%.

9:22And that was up, I think, and it was 31 % in Q2. So that's nine consecutive quarters of GMV growth above 20%. I think it highlights the resilience of our merchants. I think it actually shows that there is a segment of consumers that are still buying. They're just buying from brands they love, and they're being more selective about that. Yeah. And then I have a question about investor relations. Sure. I've been saying for a while that traditional investor relations is kind of boring. It's outdated. The days of CNBC and webinars is coming to an end. Now is the time to lean into new media, etc. And I often cite you as an example of someone who is doing it right, someone who's getting on social media, leaning into short form, going on podcasts.

10:11You've been doing it for a while. Indeed, you are now on a relatively young podcast for the first time. I'd just love to get your views on investor relations in 2025. What is your approach? What is your philosophy? And how should other public company leaders think about it moving forward? I can't tell any other public company what to do. I can tell you the way that we look at it, the way that I look at it is this is a storytelling opportunity. It is the quarterly earnings are just it is it is a bookmark every three months. And it allows us to go out and talk to obviously investors, but also talk to our merchants, talk to our partners, talk to the media, talk to the general public about how Shopify is doing.

10:52It's a check in. And I think the traditional way of doing it, which is you do your earnings call, in some cases, you know, you don't even take Q &A, which I think is ridiculous. We spend about half the earnings call talking about the quarter, then opening up for Q &A and then kind of doing the media tour. I mean, look, the reason I'm on your show now, Ed, is because I believe that there are more people than simply just the investors of Shopify who are interested in learning how we are doing. If you are building, if you are Stefan, you're the CEO of Estee Lauder, and you have carriage and the responsibility of a$40 or$50 billion company, and you've just selected Shopify, I think you care a lot about Shopify's performance.

11:30Not just on one quarter, but quarter after quarter. If you're a Shopify partner, if you're a great company like Klaviyo, for example, or another company like Affirm, for example, which is deeply embedded in Shopify, I think you're very interested in how Shopify is performing quarter after quarter. If you're simply just someone who is in tech, and I think you've done a great job, the guys from TVPN have done a great job of this, we effectively are consumerizing to some extent the traditional IR function. I mean, the companies that get it, you notice it. You notice that the way they are speaking is simply different.

12:01Yes. And I think, you know, this is not necessarily across the board, but I think the companies that do it better typically are founder-led companies. The founder-led companies, call it founder energy, whatever you want to call it, founder mode. The founder-led companies tend to be better at that because they just care more. I don't know if I can say this on the show, but there's a give-a-shit factor that I think is above those where you have a professionally managed company where the executive team are a bunch of suits and they're hired to do a job. but like Shopify is a mission-driven company.

12:35Shopify may be, you know, a$200 billion market cap company. We're the entrepreneurship company. We care deeply about entrepreneurship. We care deeply about, you know, retail and commerce and where it's going. And I think the earnings call is an opportunity for that. And also from a recruiting perspective, the people that want to come to Shopify, if you are looking to come work at Shopify or any company, it behooves you to listen to the earnings call to know what is exciting about this company. What are they talking about? So I think you were early also in sort of the analysis that this industry is changing and not everyone is keeping up.

13:08But the ones that do, there is alpha opportunity in that. 100%. Thank you very much. Harley Finkelstein, president of Shopify. Really appreciate your time, Harley. Thanks, Ed. After the break, the economic impact of the longest government shutdown in history. If you're enjoying the show, give Prof.G Markets a follow.

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16:17We're back with ProfG Markets. It's official. We are experiencing the longest government shutdown in U.S. history. Today marks the 36th day of the shutdown, passing the 35-day record that was set in 2018. So far, one in every eight Americans has gone without food assistance, 1.4 million federal workers have missed paychecks, and key economic data has gone dark. The Congressional Budget Office estimates that at least$7 billion in economic output has been permanently lost. And if the shutdown lasts another week, that loss may reach$11 billion. So here to help us unpack this shutdown, what it means, how it is affecting our economy, we are speaking with Prof G Media's very own Jessica Tarlow, host of the Raging Moderates podcast.

17:06Jessie, great to have you on. Yeah, it's fabulous to be here. Thank you for the invitation. Absolutely. I love a crossover. I love going on your show. So thank you for having me on on rm yeah no it was great and scott was thrilled too like his yeah like his kids were playing nice or something out in the backyard exactly yeah maybe a little jealous perhaps always a little jealous it keeps him going though like even on book release week he can find it in himself he's like i'm number one on amazon but you're hanging out with ed without me and that kind of burns me. So it's a good thing. Exactly. We love the FOMO.

17:45Well, we want to get your reaction to this shutdown, this record-breaking shutdown. I guess let's just start with your initial reactions. What do you make of this? Well, I think that it is incredibly sad for the United States. Obviously, people are feeling this deeply. And you called out the loss of SNAP benefits to 42 million Americans, which amounts to one in eight, which is a disheartening number to say the least. And people, you know, you don't feel anything more intensely than when you don't have a meal to look forward to. And the heartbreaking stories that are pouring in of people waiting on food pantry lines was usually people that are on SNAP.

18:26It's a misconception that SNAP covers the entirety of their meal provisions, but it's usually that they have to be on SNAP and then also work with local food pantries to make sure that their families have enough to eat. So you're hearing absolute heartbreak from around the country as the Trump administration so far looks like they're saying that they're going to comply with a court order, according to the press secretary. But Donald Trump is posting himself on Truth Social that they are not going to. So you just have people really left in limbo. So sad day for the United States. It also doesn't feel like this is going to end anytime soon.

19:04The betting markets have it at over 50 percent odds that it goes into the back half of November. There are people who are talking about, you know, 60 days, 90 days. That feels inconceivable to me based on the level of pain that it's causing. But Democrats are also very dug in on this. And I was I don't want to say skeptical, but based on what happened in the funding fight back in March, the first time that we did this during the second Trump administration, the Democrats folded pretty quickly. Like it was about 20 minutes before Chuck Schumer was like, actually, you know what? Let's keep the government open.

19:41Let's see what it looks like, how they're actually going to run the government in Trump 2.0. And now the answer is very clear about how Trump 2.0 is going to run the government. And it's simply not good enough, not for my party and not for the American public. And poll after poll after poll shows that this is a fight that the Democrats should have taken on because people can't have their ACA preuums going up an average of 114 percent. Some people have already seen because the ACA exchange has opened up to 400 percent increases. And you still have millions of people that are going to be thrown off Medicaid because of the big, beautiful bill.

20:20So they're blaming the Republicans and 10 to 15 points depending on the poll. And so Democrats feel pretty secure. For those who haven't been following that closely, could you just like, I mean, you mentioned the ACA premiums going up. Could you just spell out for us, like, what exactly is the disagreement here and why hasn't this been resolved? So this hasn't been resolved because Washington doesn't work, which I feel like is the answer to every question that you could possibly give to a political strategist. strategist, I'm probably putting myself out of business. But if you programmed someone who looks loosely like me in these kinds of glasses, so me or Rachel Maddow and said, what's wrong?

20:57They'd say, Washington doesn't work. The Republicans have been claiming that they are putting forward a clean CR, so a clean continuing resolution to keep the government open. And that would be true if the big, beautiful bill hadn't happened. But it did happen. And that passed in May. And that totally changed the calculus of how Americans are thinking about their lives and certainly how the Democratic Party is thinking about a resolution to keep the government open. And there were so many massive cuts that came in through the big, beautiful bill. Democrats took a step back and they thought we're in the minority, right, of absolutely no institutional control.

21:40How can we possibly leverage what little power we have to affect the most change. And so they zeroed in on health care, which has typically been the issue that Democrats have done better on. We lost a lot of ground over the years in terms of who's better trusted on the economy, immigration, crime and policing, all these very important issues, but always remained ahead on health care due in part to having passed the Affordable Care Act under Obama, but also the Republicans' refusal to even put forward a bill themselves. You know, they're still in the quote concepts of a plan phase. So Democrats basically dug in and they said, if you are not even going to have a conversation with us, that would mean that we would include restoring the Medicaid cuts, which happened in the big, beautiful bill, and making sure that we do something about these ACA premium increases, which are going to go up astronomically in a matter of months, then we can in good conscience fund the government.

22:34I think that Republicans thought that Democrats would balk a la March. And I think that they also thought that the American public wouldn't be so animated about it. But that has not been the case. So while the shutdown has been going on, Democrats have creeped up in their advantage on the generic ballot. It's eight points now in the NBC poll. It was only one point in March. So that could spell a quote unquote blue wave is what you call it. But on top of it, you would see even today there was reporting that in the Senate GOP lunch that members were saying very loudly to Senator Thune, the majority leader, that they want to at least have a GOP bill on funding the Obamacare subsidies so they can at least show the American public that they're trying to do something without being forced to either take on a Democratic written bill or even a bipartisan bill.

23:25So they are hearing it at home. If they do town halls, they're hearing it there. They're also seeing it in public opinion. How do you think this will all shake out in the end? I mean, I looked back at like 2018 and reminded myself that actually Trump capitulated when we had the 35-day shutdown. and, you know, it was a loss for him. And so part of me says, oh, maybe the same thing will happen. But I don't know, maybe 2025 is different. Maybe he's going to continue to dig in and maybe the Democrats will continue to dig in as well. How do you think it all shakes out? How does this end? Well, my hope is, and there have been signals from senators on both sides of the aisle, so Senator Thune and then also Dick Durbin on the Democratic side, that they could be nearing some short-term proposal that would include a deal on the Obamacare subsidies.

24:20If you really got people, you know, off the record, they would say undoing the Medicaid cuts from the big, beautiful bill is really off the table. But we should do something about these Obamacare premiums because they affect Republican voters more than Democratic voters. So 21 million of the 24 million people that are going to be affected are in red states. So I think that a mini deal, like a stopgap solution that involves negotiation over that is the most feasible way out of this. But, you know, the pressure is really going to be stepped up because I don't know if you saw ABC is reporting that the transportation department is saying that they might have to close some of U.S.

24:59airspace because of air traffic control shortages of the 1.4 million workers that are furloughed. That's everything from our national parks to our veterans affairs. Snap benefits not coming through. Also money for Head Start programs. Like these are all things that really touch people's daily lives. and that drumbeat will get louder and louder and become unsustainable. Yeah. So I would say we're approaching it being unsustainable, but not quite there yet. I think a lot of Americans, if you're not on Snap, for example, you're probably not really feeling this, but eventually we'll get there if this goes on.

25:36I mean, you said back of November. Ultimately, who is going to be to blame? I mean, this is sort of the classic question. if you're experiencing air traffic control shortages, so you can't make your flight to get to your business meeting or whatever it is, do you blame the Democrats or do you blame the Republicans? What is the consensus, do you think? I think the consensus is that you blame the people who are in charge. And that's the blessing and the curse of actually winning elections, right? You get to effectuate your agenda, but also when something bad happens, the buck stops with you. And the reality is, is that the Big Beautiful Bill cuts$186 billion out of the SNAP program.

26:17And in 2018, with the 35-day shutdown, Trump made sure that people got their SNAP benefits. So they're not being honest in terms of what they can do with funds that have already been appropriated that actually wouldn't be affected by a government shutdown. And I think the American public is smart enough to know these things. I also think that there are two plot line or subplot lines that are going on that are sending a really bad signal to the American public about how Trump is running this government and what he thinks of the average American. The first is the continued construction of the ballroom, the 90 ,000 square foot ballroom that's replacing the East Wing.