ATM Scam Summer School

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1:43Felix Salmon: Your first three videos are free at heyjen.com slash pod. That's H-E-Y-G-E-N dot com slash P-O-D.

2:06Hello! Welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon with Elizabeth Spires of the New York Times.

2:18Felix Salmon: Hello. And with Emily Peck of Axios. Hello. And we are going to talk about ATM glitches and what happens when you can withdraw unlimited amounts of money from an ATM. We are going to talk about alternative assets and whether normal folks should be able to invest in them. We are going to talk about thought leadership and whether you should give up your sleep and your social life in your 20s to become rich. We have a Sleep Plus segment on beef and the price thereof. It's all coming up on Sleep Money.

3:02So I'd like to start with a story that I've been low-key obsessed with for a few weeks, and slowly we're getting enough details that we can begin to talk about it, which is an infinite money ATM glitch. Or that's basically what it looks like. Emily, you want to bring us up to speed on what happened up in the Bronx?

3:22Felix Salmon: So this is a New York City story. There is a program in the city called Summer Youth Employment, where city kids get jobs with the help of New York City. And they can sign up to get paid through direct deposit. It's usually minimum wage. Or they can, if they don't have bank accounts, they can get a debit card, ATM card, and get their money that way. And so about 30 ,000 of these kids got these cards in July and they went to get their money from the ATM and they found that there was no limit on how much money they could take out from said ATM. Other crooks cottoned on to what was happening and started offering these kids a lot of money or cool stuff in exchange for said ATM cards, debit cards.

4:12Felix Salmon: and a lot of money was then lost because a lot of money was then taken out from ATMs by crooks and or kids. And or kids. So yeah, so basically what happened and it all happened over one weekend is that, well, there's always one patient zero, right? Someone who like discovers this, someone who like, you know, eats the mushroom and goes, that's delicious and I haven't died. So there's one kid who puts their card in the ATM. And as far as I can make out, the only ATMs that were used were like bodega ATMs. People weren't using their local city banks or chases or whatever. But a kid goes into bodega, takes out$100, and then goes back to the bodega to take out more money and discovers that their balance hasn't gone down.

5:01And you can take out like the$200 maximum as many times as you like, and your balance doesn't go down, which is kind of amazing. and if you're 16 who isn't gonna you know take advantage of that and or once the story spreads who isn't like if someone comes up to you and says i'll buy your card for a thousand bucks you'll be like great that's more money than i'm going to make all summer on this youth employment program i'll give you my card here's a thousand bucks and then a bunch of adults take your card take it to a machine and empty the machine of cash and the first thing is obviously there was some kind of a computer glitch.

5:39And this really was a glitch. This wasn't like the infinite money glitch that hit Chase a while back, which wasn't a glitch. It was just people kiting checks. This really was a glitch that when you took money out of the ATM, the computer didn't decrement the balance. But the other thing that fascinates me about this is basically who lost money and the way in which this is a good old-fashioned theft of banknotes. You know, people hit ATMs because they're these steel boxes with a bunch of banknotes in them. And for at least 20 years, 15, 20 years now, there's been this thing called jackpotting, where normally it's some kind of a computer hacker tries to come up with some way of hacking into the ATM and getting it to spit out all of its money because cash money is the most incredibly awesome form of cash there is.

6:34It's untraceable, yada, yada. Most of these ATMs don't have cameras. And so people didn't even need to hack anything. They just found this glitch on this one card. It seems to have been one particular sort code for one particular bank was broken that weekend. And then come Monday morning, all of the transactions finally register on the accounts. The kids log into their accounts. and they're showing massive negative balances. And now everyone is worried that these kids are going to face all manner of debt and judgments and stuff because they owe$15 ,000,$20 ,000,$30 ,000 on their account. And the first thing I want to say here is this is meant to be a debit card.

7:19The way that prepaid debit cards work is they cannot go below zero. If you try and buy something for more than the amount of money in your account, your card is just declined. There is no overdraft facility. There is no such thing as a negative balance. These kids are under 18. They're adults. It's really hard to even make the case that they're legally capable of signing a contract saying that they will repay money if they borrow it. But even if they are legally capable of signing that contract, they didn't. So the idea that these kids actually owe all of this money, I think is a little bit legally dubious.

7:55There are also two other factors here. According to the program, most of the kids who did this were the younger kids. They're, you know, 16. They're minors. But also the program is actually designed in part to teach financial literacy. Well, it did that. Arguably. Congratulations, you succeeded on that. Really good real world lesson for them.

8:16Felix Salmon: I thought that was kind of the saddest part of the whole thing. This is a program meant to keep kids out of trouble in the summer and give them jobs and introduce them to, for lack of a better term, the real world and the finance industry. And what an awful introduction. Here's how things work in the real world, kids. It's a mess. There's scammers everywhere. Trust no one. You might get in big trouble for things that are out of your control in a lot of ways. It's rough out there. It did start a little bit like the check kiting scheme, though, because one kid somewhere realized that his balance wasn't going down or her balance wasn't going down.

8:54And eventually it ended up on social media, which then created a giant market for this. Exactly. Without social media, this would have been five kids. With social media, it was 500 kids. And it reminds me a little bit of the Silicon Valley bank run in that case. Everything just got incredibly accelerated. There was these massive networks of ATMs, especially in the Bronx, that all got hit. And the idea, the coordination mechanism of being able to hit all of these ATMs in one weekend, is something that would have been really hard before TikTok. When everyone's seeing these TikToks of kids fanning out their$100 bills, it's obvious that it's going to happen quickly.

9:35And I think a lot of people are going to be like, we need to jump on this before Monday morning, because somewhere deep in their hearts, they knew this wasn't going to last longer than the weekend.

9:43Felix Salmon: Some of the reporting seemed to suggest that the ATM operators have insurance that would wind up covering this because they're the ones who have lost out, right? It's like there are people who own the ATMs that are placed in bodegas in New York City. They'll own like a thousand of them or a hundred of them or whatever. They rent the space from the bodega. Exactly. This is a really interesting question is who actually loses the money? New York City came out with statements saying no taxpayer funds have been lost. It's like, well, not yet until you start paying out. The kids may or may not be found liable.

10:18It does seem that in the first instance, the ATM operators are the owners of the cash and they used to have the cash and that was an asset on their balance sheet. And now they don't have the cash and that's not an asset on their balance sheet. And they've literally lost that money. So it's these sort of people that people don't think about very much, which is ATM operators who are really out. And they're the people who are quoted in the piece in the New York Magazine piece. It's like freaking out and making all of these phone calls and trying to shut this thing down because they were losing money.

10:48But yes, one imagines that many, if not all of them, have some kind of insurance against this. So there'll be a deductible and then there will be an insurance company that pays out some amount of money. And then the insurance company will presumably start going after New York City because they know that trying to go after a bunch of 16 year olds is a nonstarter. Or maybe Visa Dash Pay, which is the company that administers the cards. They messed up. They definitely seem to have messed up. That's where the hack might have happened. Was it a hack? So that was, yeah, there was one piece of reporting.

11:24There was like one person was quoted saying it was probably a hack. And I'm not sure I buy it. I think it was more of a cock up than a conspiracy.

11:33Felix Salmon: Can we talk about the ATM business? I never gave it any thought, just like you said, Felix. So if you own ATM machines that are put in these like little delis all over the place, you buy the money. It's not the bank's money in the ATM. It's your money in the ATM. Correct. Your business's money. It's a wonderful business. And by the way, can I just say for the record, this is going to be my nerdiest detour of the day for sure. It is perfectly fine to say ATM machine. I'm just going to say that. Thank you. I have no problem with ATM machine. What is it? Automated teller machine machine. Yeah. That's what ATM machine is.

12:12Felix Salmon: Okay. And you're okay with that. I'm okay. I'm okay with an automated teller machine machine. Automated teller machine squared. I hate it when people do like dollar sign$300. I'm like, no, that's dollar squared. There's no such thing as a dollar squared. It's just saying ATM. You can do it. ATM machine, also fine. It's part of the vernacular. No problem. Anyway, back to the question. Yeah, I build a metal box that you can take money out of using your debit card. I own the metal box. I go along to my bank or take, you know, use my money and turn it into$20 bills and put it in the metal box. That is my money.

12:50That belongs to me, Felix, right? Then you put your card in, take a hundred dollars out. And I have an agreement with the banking networks that basically I will get$100 from the bank into my bank account in return for the$100 that was taken out in cash. So you, Emily, come to my metal box with your card. You take out$100 in cash. You get the $100 in cash. $100 leaves your bank account and enters my bank account. Actually, given the way American ATMs work,$104 leaves your bank account. And I get$104 and I'm out$100. So that's my profit. And out of that$4, I need to do a bunch of stuff like, you know, insure the cash, pay rent, you know, pay taxes and all the rest of it.

13:44Felix Salmon: Is the business in decline now? Because like, I don't know about you, like, I was all over the ATMs of New York City in the 2000s. I'm hitting in the ATMs all the time. I knew which ones offered$5 bills, which ones had the lowest fees, et cetera, et cetera. Now in 2025, I go to an ATM maybe twice a year, maybe to get cash. 100%. As society transitions away from cash for a bunch of reasons, many of which are quite good. And by the way, let's be clear about this. Cash transactions by convention, like clear at par, You know, people think of cash as being cost free. But if you're a merchant who's dealing in a lot of cash, it is not cost free.

14:26If you are a restaurant, say, and you're cash only, and you make thousands of dollars a night in revenues, all in cash, and then you put that all in a box and you take it to the bank, you know, and you put it in a night deposit box at the bank, the bank will charge you for accepting that cash. You know, there are fees associated with that. There are fees associated with everything. Cash is dirty, it breeds criminals, it's a pain in the ass, it gets stolen much more easily than most other forms of money. So there are lots of good reasons why the decline of cash is a good thing. But you're absolutely right, the decline of cash means a decline in demand for ATMs.

15:03And it kind of stands to reason that as demand for ATMs goes down, they're going to start raising the prices because that's the only way they can keep making any money. It's also super interesting to me that this program that was designed to teach financial literacy and encouraged kids to open up a bank account so they could get paid, which is a great way to learn financial literacy, ultimately said, well, yeah, okay, you don't have to open up a bank account. If you don't, we'll give you one of these debit cards instead. A lot of online bank accounts are effectively indistinguishable from prepaid debit cards.

15:39Felix Salmon: I have an online bank account. It's much more than that. Okay, what does it do that you can't do with a reloadable prepaid debit card? I write checks. Really? Yeah, physical checks? Physical checks. I have like a savings and a checking and buckets in your savings account. Most of those things you can do with a reloadable debit card if you have like an online access to it, but not the physical checks. I'll grant you that. They pay interest on the savings. And also having a savings account. Most of these things don't come with savings accounts. Yeah. Yes. so i win but in any case i just do need to tell this story because it's a wonderful story and i spent about a week fact checking this story once a couple years ago and so i need to just get a return on my time investment here so i'm going to tell the story here there was a financial literacy class in i think it was down in like maryland or delaware or somewhere like somewhere around that one of those like dc-ish states and the teacher of the class basically said so in order to learn about money and managing money all of us are going to open up an account at this friendly local bank and the bank manager of the friendly local bank came into the class and they all filled out a form and opened up a bank account and they put in five dollars into their bank account and they had a and they had a bank statement and then they could put more money in and it would go up and they could take money out and it would go down and now you're learning what it's like to have a bank account financial literacy yay then they disappear off on their summer holidays the small local bank gets taken over by like fleet or city or some big national bank the big national bank converts all of the small local banks bank accounts to their bank account and for the big national bank accounts if your balance is below a certain amount they will charge you a monthly fee by the time the kids come back from summer holidays, the monthly fee has wiped out all of their money and they all have no money.

17:37Felix Salmon: Financial literacy. Financial literacy. That is how you learn financial literacy. Rule number one.

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19:16Felix Salmon: Support comes from WISE, the smart way to manage the currencies you need around the globe. Fed up with losing out to hidden fees when you send money abroad with your everyday bank? Choose the smart way. Wise. You can count on the exchange rate you'd usually find on Google. No unwelcome surprises. Plus, ditch that where's my money feeling. Most transfers arrive in under 20 seconds. Join millions, saving billions on hidden fees. Be smart. Get wise. Download the Wise app today. T's and C's apply. As a small business owner, you're the CEO, the marketing team, and the customer service rep all at once.

19:53I was recently talking to a shop owner who told me their worst nightmare isn't a slow day, it's the vanishing act. It's that moment you're inches away from a deadline and the Wi-Fi just disappears. We've all felt that pit in our stomach when the connection flares up right when it matters most. Your business is only as strong as your connection. AT &T Business is the reliable provider built for that exact brand of hustle, so you can stay focused on the work that builds your legacy. powered by AT &T Business. Built to work. Get AT &T Business at business.att.com. This is such a great topic to talk to Emily Peck about because Emily Peck is not just one of the finest journalists of her generation.

20:39She also, as longtime Slate Money listeners will know, was briefly an employee of a company called Fundrise. And Yieldstreet and Fundrise and And I was briefly on a platform called Lending Club. And anyway, there's a bunch of these companies online that basically say, we will allow the little guy to invest in the kind of investments that are normally available only to the very rich. And Emily, is it a good idea to be sold on this? Because what happened to Yieldstreet?

21:11Felix Salmon: Yieldstreet, well, Yieldstreet, which is different from Fundrise, basically, their whole pitch which was democratizing assets, just like you said, invest like the 1%. They let people invest in different real estate projects, buildings, ships even. And a lot of those investments went to zero. And CNBC did a big piece on it and talked to a bunch of people who invested, one fellow invested$400 ,000 in two real estate projects and his investments went to zero. He lost all his money. And Yieldstreet, you know, has been in trouble before. Apparently there was an investment in ships and Yieldstreet lost track of the ships at some point and was sued over it.

21:55Felix Salmon: So it's sort of been a long time coming. If you own a ship, it's kind of a good idea to know where the ship is. Gotta know where the ship is. And, you know, I guess you can take what I say with a grain of salt because I did work at Fundrise. Yieldstreet's business model, in the broadest sense, Felix, you're right. It's one of these companies that say like you can invest like the millionaires. You can have access to investing in these private market assets that will lead you more money that the rich people invest in. But the way Yieldstreet operates is different than Fundrise. Yieldstreet let people invest in one real estate project.

22:28Felix Salmon: You put all your money into it. That is riskier than what Fundrise is offering, which is like a fund in which there are like 40 real estate projects that you're investing across the whole fund. So even if one of those buildings falls apart and goes to zero, you still have the, you know, 29 other. So the likelihood of your, I think of your investment going to zero is less. And so, so the first lesson here is diversification is good. Diversification is good. And Fundrise operates like they manage their investments. They pick the projects, like their fortunes rise and fall with the fortune of those investments.

23:01Felix Salmon: Whereas my understanding is with Yieldstreet, they're like operating as like a middleman where like you give them money and then they give the money to some other person and they take a cut of the money but they don't have a stake in the long term. They're like a sales channel for people who want to sell equity stakes in ships or buildings or something. Yeah exactly so it is different but the broader question of should regular people invest in illiquid assets like in Fundrise's case you can get your money back quarterly but not daily it's not like when I go to Vanguard, I see how much I have in my IRA or whatever.

23:34Felix Salmon: It's all stocks and I can be like, sell it today. And I know how much I'm going to get because stocks are trading all day long. And you know, there's price discovery, you know what's happening. But with these illiquid markets, and this is where I need maybe help understanding even more, but like there is a model that sort of estimates the value of your investment. You don't really know what it is, I think, until you liquidate or whatever, take the money out. Like it's harder to have real price discovery. If it's an illiquid asset and it hasn't been sold, then ultimately, if you're going up to Fundrise, they're going to do a sort of conservative estimate of what the shares are worth.

24:10And they'll pay you that conservative estimate out of their own balance sheet. And then they'll try and sell those shares to someone else at a higher price or just hold that investment on their own balance sheet because they think they've bought it below market rates or whatever. But you're not selling it at market. And if you want to hold that investment to maturity, that's going to be a five to 10 year time horizon. And if it's a fund, then it might actually just roll over and you'll never, you know, it's hard to know when these illiquid assets or even whether these illiquid assets are ever going to mature and pay you back.

24:43And for most human beings, you kind of want to know when you're going to get your money back. Well, there are also two other structural problems with this. One is that, you know, if Yieldstreet is allowed to participate in these deals, they're getting the worst deals on the market because you have an entire commercial and residential real estate investment industry of people who are getting these deals largely through high touch transactional stuff. So whatever Yieldstreet is getting is kind of the bottom of the barrel to begin with. So let me stop you there because this is something which I've read a bunch of times about Yieldstreet.

25:14Emily, would you agree with that? Because Mutatis Mutandis, this applies to Fundrise as well. If something is being sold to retail, then one can assume that it's something that the smart money has passed on.

25:26Felix Salmon: I don't know if I would agree with that just based on the Fundrise example. I can't speak to Yieldstreet. Well, Fundrise has hired presumably people who are experienced commercial real estate investors. That's not the case with Yieldstreet, though. And, you know, one of my prior jobs, I managed, among other things, the commercial real estate trade. And it's just a very small industry. It's high touch. And I don't know how a company like Yieldstreet, that's just really is a middleman, would be able to evaluate those deals. It's not the kind of thing where you can just sort of take everybody's valuation model at word.

25:59These are private markets. There's not a lot of transparency. So it's an area where the average investor probably should not be putting money in the first place. But I'm conservative on that front. I think, honestly, people shouldn't be picking individual stocks if they don't know how to evaluate a security. Right. But at least with the individual stock, if it goes sideways, you know, and you can sell it if it goes down. But yeah, no, I agree. In this day and age, there's not a lot of good reason to be buying individual stocks. The other one, I should mention Masterworks in this context, too, because that's another classic one where people are like, invest in alternative assets.

26:34Rich people buy paintings. You can buy a fraction of a painting. And sometimes rich people make money buying paintings. And maybe if the painting goes up, you'll make it. And then your brain explodes. The reason rich people buy paintings is because they want to live with the painting and it's a beautiful painting, not because it's a speculative asset. But yeah, there is this, so there's this liquidity problem that we've talked about. There's the adverse selection problem that Elizabeth has talked about. And then there's just this, I'm interested in the marketing side of it. And Emily, you can probably shed some light on this.

27:09Like, is invest like the 1 %? Is that a message that resonates? And if so, why? Is there this feeling among a large chunk of the population that the 1 % is getting better investment returns? And I think my answer to that question is probably that there is that feeling. The feeling is based in reality, but the reality is not based on the fact that the 1 % have access to certain investments that normal people don't. And it's more based on the fact that rich people never need to sell low. If you're rich and you have a bunch of investments, including illiquid investments, fine, whatever. or Jean-Michel Basquiat or whatever, then if you need some cash and a whole bunch of your investments are doing well and a whole bunch of your investments are doing badly, you will never sell the ones that are doing badly.

28:05If they're all doing badly, you will still not sell any of them. You'll just borrow against them. And so the first rule of making money is buy low, sell high.

28:14Felix Salmon: Oh, I thought it was have a lot of money. Be born rich. No, it's just buy low, sell high, right? Don't sell low. sell high. So you just sit on everything you own until it goes up and then you can sell it. And poor people don't have that luxury. When they need money, they need to sell. And that's why their returns are lower. I have another theory about that, which is that if you look at the big kind of outsized high return stories, they're almost always in early stage venture capital. And average people don't have access to that. And so they see these stories of Facebook millionaires and people who got in on the ground floor of these early stage tech companies, and they realized that they don't have access to those deals.

28:54So in a way, the pitch for Yieldstreet or maybe Fundrise sounds like that's what you're getting offered access to on some level. It's like, well, the elites do have these opportunities that I don't have.

29:05Felix Salmon: I was going to mention that. Yeah, because Fundrise a few years ago, they launched basically like it's like a VC fund. You can go to Fundrise and invest in startups. They have Anthropic, Canva, OpenAI, Stripe. I was just talking to someone there the other day. You can invest in those companies. And I think a lot of people do, like Elizabeth's saying, you read about OpenAI doing so well and sky-high valuation or these other startups doing so well, sky-high valuations. Fewer companies are going public now. So there is an argument to be made like, well, we are giving you an opportunity that wealthier people have, which is to invest in these like startups, these early stage companies.

29:42Felix Salmon: And that might be appealing to people. Although I think I will push back just a tiny bit on Elizabeth's assertion that normal people don't get to invest in early stage startups, because I think that was true until the whole crypto thing came along. And I think that the huge amount of enthusiasm that you see among normies for a certain type of normie for crypto is precisely this idea, which is not 100 % true, but it's not 100 % false either. The crypto does kind of level the playing field and the people can make money there. You can get in early on the project or a coin or whatever. Sure, but that's not investment in early stage company.

30:23If you have a real startup that's being invested in by real institutional investors, there is usually a requirement that you have to be an accredited investor. So you have to have a minimum net worth. 100 % accrued. If you're setting up an S-Corp or an LLC or something and raising venture capital, yes, 100%. I'm just saying that there's a whole bunch of companies that are funding themselves not by raising equity from venture capitalists, but rather by selling some kind of a crypto token. And if you're raising equity by selling some kind of a crypto token, then it's more democratic. It's not entirely democratic.

31:01It's more democratic. It's definitely out there. Be sharks and dragons and beware those waters.

31:09Felix Salmon: But yeah, I guess to get back to what you were saying before, the idea of invest like the 1%, it's really a way of saying you can be like a rich person. It's not so much like a chance to get in on the deals, but it's more like a feeling of being in a more exclusive class. It's an attractive story. The rich people make all their money doing this one thing that you can't do, but here's the back door. That's a really appealing narrative. And I think it is also appealing to be able to say, yeah, I own a bunch of warehouses in Alameda and they're cash-flowing a bunch of money. You feel like you're more of an active investor than a passive buyer of funds.

31:54I own a ship. I own this piece of property. I own a ship, but I don't know where it is. but no but like i can actually get in a car and drive to this you know to a mcdonald's in the suburb somewhere and say i own that building or at least you know a significant percentage of it and you feel like this is a real world brick and mortar investment that feels more real when you look at all of those buildings and all of those you know cities and on the side of the road you're like rich people own those buildings if i owned one of those buildings i would be rich and then And someone like Yieldstreet comes along and says, you can own one of these buildings.

32:32So if not all of it, you can own a decent percentage. You put up$100 ,000, you can own like 15 % of this building. And then you're like, oh, cool. I can see why that's cool. One of the crazier Yieldstreet deals, though, they made a deal with a company. And this is a shipping deal that they made, where basically the company would disassemble old ships and make money off of it. And so they would use existing ships that they owned as collateral, but then they lost 13 of them. And so this company was basically some middleman in, I think, Abu Dhabi or somewhere, and they just disappeared. And some of the investors for Yieldstreet sort of said, well, Yieldstreet could have probably tried to find these ships using publicly available data, but it sort of just didn't bother.

33:20Because they didn't have any skin in the game, right? Exactly. And you do get this kind of collective action problem that if most of the investors in these ships or the claims on these ships, I guess because they were collateral, are held by a bunch of small investors, then it's hard to coordinate those investors to do the kind of tracking and suing and all the rest of it that you need to do in order to seize the collateral and get your money back. Having collateral is only useful if you have the ability to seize the collateral or go to court and get a judgment against someone who owns the collateral.

33:54And if you don't have that ability, if you don't have an agent who has that ability, then there's not much point in having collateral at all.

34:02Felix Salmon: Can we pull out and talk a little bit about private market, public market? And I think Mary Childs, who was on the other week, talked about this. There is a merging happening right now. So if your goal as a company is to offer private market assets to more people, that makes them, that pushes them along. That necessarily makes them more public. More public. And that usually you raise the attention, maybe not in today's environment, but you raise the attention of regulators who are going to be more concerned and more attuned once something is more widely available to more regular people. They're going to be more like on your butt to make sure you're not, you know, ripping your customers off.

34:41Felix Salmon: you would assume there'd be more regulation. And we're not just seeing like companies like your yield streets, your fund rises make public more private market assets. We're seeing like the White House now saying we can have private market assets and in 401ks. And there's more ways people can get in the private market. I mean, at some point there is no private market. Is that good or bad? It seems like there's an argument to be made that it is bad because the reason the private market exists is to like get away from all the chains of regulation and like to do more things more nimbly and not have to worry as much about disclosures and blah, blah, blah, have more sophisticated investors, yada, yada.

35:19Felix Salmon: So like it's bad if private stuff becomes more public. On the flip side, maybe it's good because being private and operating secretly, sometimes that stuff blows up and we wind up paying for it anyway. You know, so shruggy, I don't know. Most of the time, private just means too small to be public. Now, not always, right? Sometimes you can have a massive company like Stripe where the equity is private, not because it's too small, but just because the founders don't want it to be public. And that's fine. And that seems increasingly a thing. That's increasingly something that's happening. Right. But it doesn't need to be a hot, young tech company.

35:58It can be Mars Chocolate. You know, there's lots of big private companies out there which are owned by billionaire families and just aren't public. They often have public debt, by the way. You can still see some of their financials. But yeah, like the classic example of a private asset is just a personal loan from the bank. You know, I just want to borrow money from the bank for whatever reason. So I go along to the bank and they look at my income and stuff and they say, OK, here's$5 ,000. And I'm like, OK, now I owe the bank$5 ,000. And that is a naturally private asset. It kind of makes no sense for the bank to then turn around and securitize that loan to a bunch of individuals and say, like, you can buy one hundredth of Felix's loan for 50 bucks.

36:46What is the upside on that? But, you know, that is something that people used to do. This is what Prosper and Lending Club used to do back in the day, which, you know, worked until it didn't. There's always a movement to make private things a little bit more public, a little bit more accessible. And then there's a counter movement to create something which is more private. And right now, there's this thing called private debt, which is really hard to define, which is all the hotness. And people are talking about putting private debt into 401ks and investing in private debt. And there's any number of the old street-like companies saying, like, you too can get into private debt.

37:21And it's like, what is private debt? Well, it's definitely not bonds. And it's not really syndicated loans. but it's kind of a syndicated loan, but it's kind of a, it's a particularly a liquid syndicated loan that doesn't involve banks, except for it can involve banks because some of the banks own the private debt companies and your brain starts melting. And you're like, none of this makes any sense. Some of this, you know, new interest in making things like private credit accessible to people really is sort of rooted in the current political environment and the assumption that, you know, normally under normal circumstances, if you start making a lot of these private options accessible to regular people, you would expect a lot more regulation.

37:57But in the current political environment, I think there are a lot of people who are just assuming that that additional layer of regulation is not going to happen. Yeah. And to be clear, as I think Teresa Giarducci, who has been on the show, mentioned in one of the articles in the show notes, like you don't want that kind of private asset in your 401k even, because a 401k is a pool of money that is designed to be spent in the foreseeable future you know like you're going to need to spend this money in your retirement and so you need to have some kind of an idea when that asset is going to mature so that it will be available to you to spend because the 401k with money you can't spend is pointless and when you have no idea when this stuff is going to mature it just yeah don't do it people just say no to alternative assets

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41:06Felix Salmon: Your first three videos are free at heyjen.com slash pod. That's h-e-y-g-e-n.com slash p-o-d.

41:19wrap up by talking about emil bar emil bar is a young millionaire who wrote an article in the wall street journal opinion section bless it saying i am a millionaire and the way i got to become a millionaire so i went to miami university in ohio and i slept three and a half hours a night and I gained 80 pounds and I lived on Red Bull and I struggled with anxiety but this was my peak cognitive years and I knew that if I wanted to get rich then the smart way to do it was to do so in my peak cognitive years and guess what it works I built a company and I sold my company for a million dollars and now I'm a millionaire and I'm going to become a billionaire and I'm going to do it all before I'm 30 and then I never need to worry about money again and losing all those friends and not partying and getting three and a half hours sleep is obviously, I'm not going to trigger code it, it's not easy, but it's a great way of like front-loading all of the stress of life into when you are physically and mentally most capable of dealing with it.

42:27And then you can just enjoy life for the rest of your life. My favorite part of this op-ed was that it was framed as everyone should spend their 20s, you know, grinding incessantly so that you can become a bajillionaire before you're 30. And then maybe the first line of the second paragraph says, I'm 22 and. So this guy's a fifth of the way through his 20s.

42:50Felix Salmon: He had some wild tips. So in addition to not sleeping and only socializing if it furthers your networking goals in college. And another tip was outsource everything, get a cleaning lady, have someone cook for you, get your groceries delivered, whatever. My favorite of his tips was optimized transportation. And you're wondering, what does he mean by optimized transportation? Does he mean just like use Uber, don't drive, something like that, something that kind of makes sense? No. This one he admits is unconventional, but it involves using helicopters to cut travel time between meetings. A three-hour drive versus a 20-minute flight.

43:30Felix Salmon: Freeze up time, he says. That is one of his tips. Use helicopters. To be clear, he does not say, per Elizabeth, everyone should do this. He is saying quite explicitly that building wealth this way requires sacrifices most people aren't willing to make. And he says, this is not for everyone, but just quote for ambitious young people who want to build wealth. And I kind of like, I know a bunch of young people. I am now old enough that my friend's kids are roughly emile we know young people some of us have young people in our house but i'm just saying like none of the young people i know are ambitious young people who want to build wealth and who would be willing to sleep three and a half hours a night in order to do so and who are like this is clearly not like words of advice for young people generally right this is words of advice for people on reddit who are completely insane there's also some self mythology in this piece, you know, the sort of thing you can't fact check, like any, even a 22 year old living on three and a half hours of sleep a night consistently for a year is going to suffer cognitive damage from it.

44:42Nobody can do that. It's true. Like for 99 % of people, that's true. There is 1 % of people who genuinely only need four hours of sleep a night, you know, like Margaret Thatcher was famously one of them. And it is actually interesting. If you look at stories of super successful entrepreneurs, a surprisingly large percentage of them do seem to fall into that category of people who just don't need a lot of sleep. It's all self-reported, though. It's sort of like, wow, Elon Musk insists that he works 25 hours a day, and then you see him tweeting at all hours of the day. Well, exactly. He's not asleep.

45:14If he's tweeting, he's awake, Elizabeth.

45:16Felix Salmon: Also, the title of the piece, I mean, the journal's really going for the troll there. Yeah, they were trolling. work-life balance will keep you mediocre. And the whole frame of like the most important thing is to make a lot of money and not to cultivate a family or like any kind of like real world relationships or connections that will like nourish you emotionally throughout your life. And the primary thing this guy wants to do is become a billionaire. Like that is his number one priority, number one goal. Like, yeah, I don't know if that if that tracks with most people. His brain isn't fully developed yet.

45:55Felix Salmon: He doesn't know anything. But also what he says really contradicts what Gen Z reports they want categorically, which is that they prefer work life balance. Yeah, he's definitely an outlier. But one of the things he has done, like now that he has achieved millionaire status and he's an aspiring billionaire. According to the story. According to this story. But as we have mentioned in the past on this show, a millionaire is eh. Everyone's a millionaire now, right? Everyone's a millionaire now, right? It's not true. The thing that he clearly wants, like reading between the lines here, this op-ed was obviously pitched to the Wall Street Journal by some kind of a flack that he hired with the intention of doing the thing that everyone, well not everyone, but everyone on LinkedIn seems to want to do these days.

46:45which is become a thought leader right this is emil bar's attempt to ensconce himself in the rarefied world of entrepreneurial thought leaders and we here at slate money towers every day without exception get pitches from pr people pitching an entrepreneur and saying like this is a very successful entrepreneur and we think that you're this entrepreneur would be wonderful for slate money why they think this given that we've never had a fucking entrepreneur show on in the past decade of slate money i have no idea but they keep on pitching it and i'm super interested in this whole phenomenon of why do entrepreneurs want to become thought leaders?

47:35And also, why does there seem to be an unlimited amount of appetite from normal folks to listen to entrepreneurs talking about how they got rich on some kind of implicit assumption that if you do what they do, then you are more likely to get rich? I can answer the first question because sometimes I have people who come to me because I write op-eds for help with their thought leadership, and a lot of them are executives. And for the most part, they usually are doing it like the sort of top level reason is they think it helps their business. But I think the real reason is, you know, when people have professional success, whether either because they're making a lot of money or they're respecting their fields, part of the fun for them is just that it gives them respect from their peers.

48:24And they feel like people now have to listen to them in a way that they didn't before. And so it's a huge status thing. And maybe it does help their business. I think most of the time it doesn't. it helps build their personal brand. But a lot of people care about that.

48:36Felix Salmon: I think it does help their business. I think getting your name out there as the leader of a company and getting the company's name out there is almost always valuable to your business. It's marketing 101. To get your name known as the leader of a company is almost always good, unless you're the guy who went to the Coldplay concert or whatever. But actually, even in that case, the company, I think, benefited. It got name recognition that it wouldn't have had before. No one heard of Astronomer before that. Astronomer. Yeah. And like they wouldn't have had Gwyneth Paltrow doing a commercial for them.

49:08Felix Salmon: Exactly. Now they have Gwyneth Paltrow doing PR for them. It's getting a million views and still no one knows what they do, but they've heard of him. But like if you're in whatever it is they're due and you're choosing amongst companies that do what they do, which we don't still know, you would be like, oh, that company. And you might have a propensity to choose it. And the same thing is like, I've read that CEO's post on LinkedIn or something and then choose that company over competitors you haven't heard of. Because once you've heard of something, it's like you think it's real or legitimate.

49:37You know who the first thought leader was, I think?

49:40Felix Salmon: Andrew Carnegie? Who? Yeah, I don't, I'm going to say, well, at least in the modern era, the first thought leader was Richard Branson. He was super early to this game. And he was surprisingly good at it. And it made him famous in ways that he wasn't famous and made him admired in ways that he wasn't previously admired. And then everyone else was like, I want to be like Richard Branson. And if it wasn't for Richard Branson, like half of this, it probably would have happened eventually. but it wouldn't have happened quite as early and quite as relentlessly. A great example of how the marketing of an entrepreneur and how I did it and I'm so successful works fabulously.

50:21Felix Salmon: Do I even have to say it? Have we all reached the conclusion? Do you know who I'm going to talk about? Jim Vanderhay? No, our president. The president of the United States, right? He had a show, The Apprentice, sold the idea that he was a successful entrepreneur, whatever. Yeah, he wrote a million books saying like, this is how I got rich. Yes. I'm a thought leader. I'm a dealmaker. And now more than half of voters in the country were like, this is what I want. He is a successful dealmaking person. I know this because I've heard about his thought leadership. It's a real thing. You heard it here first, folks.

50:55In 25 years when Emile Barr was president of the United States, you can say it was called by Emily Peck.

51:16Let's have a numbers round. Elizabeth, do you have a number? So 400 ,000. That's the number of followers a woman named Olivia Fernie has on TikTok. And her job is that she's a high-end travel agent to the rich and famous. Livvy! Love her. Oh my God, we need to talk about Livvy and whether she's real or not. So she works for a company that charges$2 ,500 to$8 ,500 a month to provide high-end travel services to clients. And some of these services have included things like overnighting a$75 ,000 Birkin bag to Capri, calling a luxury hotel to figure out where the limes for their margaritas are sourced because her client was convinced that she had some kind of allergic reaction to Lyme's from specific countries.

52:03Felix Salmon: But wait, Elizabeth, the allergic reaction was like, it didn't manifest in any way, right? Yeah. She said she just knew internally that it was doing something bad to her body. Like this is not a diagnosed allergy. There was no reaction in any way. It was just a feeling. Yes. And one guy gave her a hundred thousand dollar budget for his daughter's vacation on the condition that his daughter doesn't talk to him about it. and her posts are so amazing because she's always like sitting in a lounge chair by the pool with the speakerphone on you know and just calmly being like okay yes i'll look into that i'll look into the limes whatever it is and like these things i have to say as a devoted consumer of livy's tiktoks and also the amalfi jets one which is basically the same i always assume a completely fake.

52:53That's skits made for TikTok, right? And they go viral because they're funny. And she gets written up in the New York Times. And she's like, yeah, my clients, they give me permission to record them. But like, you're like, really? Well, having been through the Times fact checking process, I do believe that they probably asked to speak to some clients and her boss and stuff like that.

53:16Felix Salmon: She did say sometimes it's a reenactment. No, no, exactly. Like, always it's a reenactment, because you're never going to just catch that. Because, like, does Livy have an Insta husband who just follows her around while she's always looking gorgeous in a bikini by the pool and, like, is recording hundreds of hours of really boring conversations, and then suddenly, like, you'll hit gold and, like, suddenly you'll get, like, huge amounts of content. Like, none of it really seems real. And then she's like, oh, yeah, sometimes we reenact them. And I'm like, well, obviously when you reenact them, you're going to sort of like play it out.

53:51Felix Salmon: Sometimes we reenact them as doing a lot of work in the article. Yes. I'm still not convinced it's real. And I have to admit, and I have written for the New York Times as well. I don't place quite as much faith in the New York Times fact check as Elizabeth does on this one. This is style sag jam. Maybe they just fact check me harder than everybody else. But the byline is Guy Trebe. He's like, I mean. Is he famous for being very fact checked? I don't know. He's just been around for decades and decades and decades. Exactly. He wouldn't put one over on us, would he? No, but would he just take something at face value that maybe?

54:27Anyway, we will see. We will see. My number is 500, which is the difference between GDP per capita in the UK and GDP per capita in Italy in dollars. Basically, it's nothing. Basically, Italy and Britain now have the same GDP per capita. Pre-Brexit, there was like a$4 ,000 difference. Now they've closed the gap. Everyone says something, something. Brexit something. Friend of the pod, Dan Davies, put a thing up on Blue Sky saying, he being British, of course, or more specifically Welsh, our various governance failures and economic stagnation means that we should now think about ourselves as Italy with better weather and food, which is the best troll I've come across in forever.

55:21But it's kind of, I am not convinced that Britain actually has better food than Italy, having spent the past week or so in the British Isles. I do think it kind of does have better weather, though. Like, Italy is just unbearably hot now for basically all of the summer and well into the fall. And, yeah, I think that Britain should just embrace its destiny as being a low-priced tourist destination. Emily, what's your number?

55:51Felix Salmon: My number is 88%. 88 % of the companies that filed IPO-related documents in the first two weeks of August, 88 % of those IPO-going firms had only one or no women on their boards of directors. 88%. And in their C-suites, 93 % had only one or no women in their C-suite. This is from an article in Fortune and I think highlights a trend of how no one gives AF anymore about women being on their boards or in their C-suites. This was a problem for a long time. Yeah, like you and I are deeply familiar with the NASDAQ rule that basically said any company going public on the NASDAQ had to have at least one woman on the board of directors, right?

56:43Is that still in place?

56:45Felix Salmon: The rules are out the window. There's a court ruling that overturned, I believe, the NASDAQ rule and a California law that was similar. And in the current environment where the White House is actively pushing against any kinds of rules like that or guidelines, companies, I don't think, care anymore. I mean, I shouldn't say all companies. Presumably some companies care. Okay, so my next question is, is there a signaling mechanism going on here where by having no women on the board, you kind of signal to investors that you are anti-woke? And anti-woke is kind of something that people want to be these days?

57:25I don't know.

57:26Felix Salmon: That's an interesting question. I do think some of it's signaling in the sense that there have been companies who are certainly downplaying any effort that they make to make their companies diverse, especially at the C-level. I mean, we remember when Twitter went public and everyone was like, hey, there's no women on the board of Twitter. And there was like an outcry about it. And then they put some women on the board. And then for like a long time years, there was like all these efforts and attention paid. Like when companies were going public, startups especially, how many women are on the board?

58:00Felix Salmon: And it was like a thing. And like startups had to care about it. Now I think we've just reverted to the way it was more than a decade ago where most startups are started by men and they mostly have men leading the startup and on the board. And there's no public pressure anymore to have women in leadership or on board. So off they go. Which is dumb. Just on a practical basis, I'm looking at an Ernst & Young report right now that says women-owned businesses that secure funding show better returns on investment tend to be in business longer than those owned or founded by men. I don't know. I don't even believe that stuff.

58:36Felix Salmon: Is that wrong? I mean, I don't know. Who knows? Depending on how you slice it, I think you can get whatever answer you like. But it is, there's definitely something in the water these days. And it's something that doesn't taste too good, to be honest. Anyway, we should wrap this up at this point because we have to disappear off to record a Slate Plus episode about beef prices. I should also reply to various emails about Shohei Otani, who is a baseball player. When we had Nathan Bomey from Axios on to talk about sports betting, we talked about all of the debt Shohei Otani had racked up through sports betting.

59:17We didn't make clear that the bets were made by his translator. They were not made by him. So not only did he not bet on himself, he didn't bet on anything. It was his translator who was doing all the betting, but there were still sports-related debts at the end of it. In any case, thanks for all those emails and all of the rest of them. They come in to slatemoneyatslate.com and we read them all. Thanks to Shana Roth and Jessamyn Molly for producing, and we'll be back next week with more Slate Money.

59:58Felix Salmon: Hi, this is Paige from Giggly Squad, and today's episode is brought to you by McDonald's. Honestly, Caesar sauce and a Diet Coke at McDonald's might be the perfect girl dinner. And McCrispy strips dipped in Caesar sauce? No notes. Right now, at participating McDonald's, the$2.99 Caesar snack wrap is making me rethink my entire go-to order. Caesar sauce is at participating McDonald's for a limited time, so go try it before it's gone. Prices and participation may vary. As a small business owner, you're the CEO, the marketing team, and the customer service rep all at once. I was recently talking to a shop owner who told me their worst nightmare isn't a slow day, it's the vanishing act.

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