Ask Us Anything: How will GLP-1s change the economy? + Why are young people turning against AI?

0:00I'm Adam Schwab. I'm Adir Shifman. And this is The Contrarians with Adam and Adir.

0:08And we are back, episode 214, Ask Us Anything, where you, our super smart audience, ask us incredible questions, and we try to give the best answer we can. Over to the chief question, ask himself, Michael. Hey guys, first question this week comes in from Courtney Askew, and she asks, What's your macro hypothesis for how the business world changes over the next decade as GLP-1 slash peptides become more widespread, particularly as oral formulations are approved and become more accessible? Which industries do you think are most affected, e.g. gyms, hospitality, retail, and what are the biggest second order effects you foresee in Australia?

0:50Over to you guys. How good, Courtney. Love this question. Oh, dear, you're the doctor. We'll go over to you. Peptides. We'll leave them to second. Let's talk about GLP-1s first. Well, of course, GLP-1s are peptides. The P in GLP is peptide. I know. But when people talk about peptides, we'll get to it. They're usually talking about other things, right? The illegal Chinese ones you're talking about. Yeah. And, like, I think people want to feel better. What does a peptide mean? Like, basically, it means a short-chain amino acid. What does that mean? It means you've got proteins. That's a building block.

1:24You put them together like Lego, they turn into what's called amino acids and a short one is a peptide. That's it. That's a very fancy language, right? So let's talk about GLP-1s and start with this idea of oral preparation. So obviously people are excited about the notion of oral preparation because you don't have to take injections. But I think oral preparations might not have longevity. I mean, they'll get better and then they'll be popular. But this first generation has problems. One is they're not as effective. Two is you have to take them every day. And those two factors... I wouldn't say they're not as effective.

2:02You still lose a lot of weight. You don't lose as much weight. That's right. A synonym for that would be not as effective. But it could be effective. But in many ways, it could be as much as many people need. You don't need to lose 35 % of your body weight. Like I think it is a rectal utile. The new... Yeah, I haven't kept up with what they're called. The thing about what you just said is correct. But the problem with what you said is when someone decides they want to go into GLP ones and lose weight, mostly they just want to go bananas and lose as much weight as they possibly can. And they're going to have a bias for whatever makes them lose weight faster.

2:39But the other problem with oral is that because you're taking them every day, you start getting compliance issues, i.e. people just forget to take them all. And so that's the other issue. Like I think the, you know, as hard as it might be to believe, I don't take GLP-1s. And so… Well, not until I had the protein ones that just bump that muscle tone up. This is all… I can't wait for them to come out, by the way. I'm being so… Like I don't take GLP-1s, but I'm making fun of myself. So please do not. You've got to make fun of me so I don't sound arrogant with these comments. I was making fun of it as if like, obviously, I don't look like I take GLP-1s.

3:13And so… But basically, I think you have to take the injection once a week. and that means like it's and the injection the needle is very narrow board it's tiny barely feel it from what i've heard and so i don't think there's really an issue with the injection some people are scared of needles that's a real thing i'm waiting till the tablets come out i'm waiting till tablets yeah well i think but you're a maniac so you will have no compliance issues whatsoever but normal human beings who are a bit forgetful and doing other things they start getting compliance issues. But presumably if you miss one, you're okay.

3:46You just can't miss multiples. I'm sure it's not like you miss one in a month and suddenly it's completely ineffective. No, but I think when you lose the weight more slowly, that also has some compliance challenges as well. Like when you're taking an injection and every week you're one and a half kilos lighter than the week before and like you basically don't feel hungry sometimes because you just feel too nauseous to be hungry. Like that's a compliance issue as well, by the way. So let's get to the point of this. What do I think the changes are going to be? So that's the medical part of it, but we would have similar validity in each of our views on what the changes might be.

4:22There was a huge wave of panic when it came to Maccas and stuff like that. Remember they dropped it, the share price fell because no one's going to eat Maccas anymore. It's still down. I'm just looking at the share price now. McDonald's share price, last six months alone is down 11%, which is a decent number for McDonald's, to be honest, and it's down – it's pretty much flat for the year. But, yeah, six months down 11%. So it's still at high levels at$200 million, but, yeah, it's definitely off its peak. And so what do I think about that? I think they've got other problems as well, right? They're doing – like Coke is about to – they're about to abandon Coke because they're trying to do Starbucks kind of drinks to drive revenue.

5:03I mean – I'm not sure they're going to abandon Coke, but they're going to be not exclusive with Coke anymore. Yeah. And so I think you have to think broadly. I don't know a single answer. We have to think broadly about what these drugs are going to do as people get – so they get thinner, but also their appetite is reduced, right? But on the flip side, they've got muscle mass problems as they take these drugs. Like they can reduce your muscle mass. So I think there's different – The current wave, that is being tested. The current generation, yeah. With current testing. And they've also got some wonder drug benefits.

5:31They seem to reduce a whole lot of renal – Apparently it's good for cancer as well. Cancer risk is reduced. Yeah, at the moment we're finding all the things it's good for and then like we'll find all the things that's available. But basically I think if you're in snack foods, fast foods, maybe food in general, like I don't know why people are picking on fast foods, like basically your appetite is reduced. That's what these things do. I think you do opt towards more healthy food as well. You might. But like – Fresh fruit and vegetables, for example, you want to buy that rather than fried food. So that's a big tick obviously.

6:01That's true. But also it might affect fine dining restaurants and other upmarket restaurants. you might still go but you might eat less, for example. Oh, I think it also reduces alcohol intake because it reduces all those urges. So that's where restaurants will be hit because restaurants make virtually all that money from alcohol. So I'm a terrible restaurant customer. Nobody likes me in that restaurant because – Yeah, and I'm not sure that's only because of the alcohol issue. I'm going to be honest about that. That's the main reason, though. Well, before they bring over the drinks menu, they're like, I'm not sure we want this guy in the restaurant.

6:33So I think, you know who else sells a lot of alcohol? It's alcohol companies. So it might not be right for them either, right? So I think there's all of those obvious things. And the question of how much they're affected is how many people go on these drugs. And I think it's hard to know. You know, there was this huge wave. But just to be clear, I don't know how to say this in a politically correct way, but, like, there are still lots of obese people walking around as far as I can see in Australia. I think U.S. obesity... Bloomberg report. I think U.S. obesity is down like 40 in the low 30s or 35.

7:05So, yes, it's not a massive change, but obesity has been climbing in the U.S. for like five decades. So this is a pretty remarkable turnaround. Over our entire lifetime, people are getting fatter, certainly in Western countries like the U.S. and Australia. We've seen a turnaround there. And we've talked about this obviously on the show before, and Scott Galloway at the same. I think GLP-1 is almost the most critical invention of the last 30 years. And I'm putting AI in that category as well. So GLP-1 is doing more for people, and Scott Galloway says this, than AI is currently doing for people.

7:36Yeah, I agree. And so then what is the second order? Because they're the first order things. Like I eat less. Okay, they're easy to work out. Second order is some weird stuff. Like what about sleep apnea companies like ResMed? I mean obesity is heavily linked to sleep apnea. What about people that are involved in the treatment and management of diabetes, which obviously Novo Nordisk is a diabetes company. And so we should – and heart disease, like all of these should be reducing. And so I think ironically in some ways one of the victims of the rise of GLP-1s could be pharmaceutical companies because far fewer people are going to need all of the drugs to treat heart disease and other diseases.

8:17Well, they'll probably die, start dying, other stuff. So I'm not sure people are going to be living forever. They will, but maybe you won't see as many people on like drugs for kind of cardiac failure, angina, other things. I was going to say statins, but a lot of that's genetic. So possibly people are still going to love statins, but you'll have a lot of that kind of stuff. And then it's like what do you think the upsides are? Like what can thinner people do more of? Exercise? Can I give you a few examples? Swimwear companies, big winners. Airlines, big winners because you're carrying less weight.

8:51It's a significant amount of fat people cost a lot of money to fly. Pickleball? Put pickleball on your list. We'll just call it recreational fitness things. Like anybody who does, obviously, athletics brands have had a torrid time, Nike, on running, all been pretty terrible. But you'd think it's a net positive, certainly in the long term, for any kind of athletic gear, but running especially, because once you lose weight, you can start running again. Can I just make a weird point about this as well? Again, like we're in dangerous non-polically correct territory here. That's where the show resides.

9:21Yeah, that's true. If I try my hardest, I can contribute 5 % worth of this podcast to being the politically incorrect bucket in this podcast. It's mostly mine, obviously. So if you buy a size 8 in Nike and you buy a size 16 in Nike, the price is the same. They're not going to charge you more for the big item, but the cost of goods is not the same. Now, it's not massively different, but actually more thinner people buying athletic and leisure wear reduces the cost of goods of that athletic and leisure. So that's kind of an interesting little point as well. Yeah. You think maybe a victim is someone like cinemas who make a lot of money from selling unhealthy food as well.

10:01So you don't make much money from cinema selling tickets. You make much money selling popcorn and Coke. So that probably doesn't help them. So I think the vice parts of our economy will struggle and call it the good parts like healthy food, athletic gear, anything to do with travel. obviously we're biased there, but they will benefit. So I think GLP-1s are a massive force for good. As you said, there might be stuff that comes out that turns out they're not good. But remember, these may be around. GLP-1s were invented. Effectively, the semi-glutamide was invented in the late 90s, discovered. I forget the lady's name.

10:36It was a lady who worked at Nova Nordisk. Who just finished recently. Yeah, and tested for 20 years. So we would have, I suspect, seen some negative side effects other than what we know about, which is pretty, I think it's fantastic. They haven't been mass used beforehand. What about if I say this? But there's been pretty extensive trials. I hope you're right. But generally it takes 10 years or more for the disasters to come out. But even if there's a couple of disasters and there's millions of people who have extended that life by 10 plus years, and even moreover, extended the quality of that life significantly is the big one.

11:10I tell you why I'm hesitant to say about to advocate for the disaster side of this because I don't want to – I don't know any and there might not be any. I don't want to dissuade people based on, oh, there's these disastrous people. Look, I don't know. But I think it's early to know. What about this as a concept before we talk about the other peptides? Like what about the idea that it costs money to buy these drugs? They're currently not on PBS. But they'll eventually end up on PBS. Like they'll be cheap. And then you won't eat all this kind of food, et cetera. And so because of a reduction in consumption.

11:40And so maybe people will have a bit more disposable income to spend on other things as well. It's possible it's actually an economic driver. It's more of a diversion from unhealthy food to other stuff. You can argue that's a net neutral, although it's a net positive if people are spending less on healthcare, which isn't really value added. Well, that would be the dream. The dream will be. If you wanted to say what is the best case scenario of something you could kind of say is a great going long and buying something, it is that everyone in healthcare is going to make less money and that money, and then governments will have more money to reduce taxes, for example, because healthcare is a hell sucker of tax dollars.

12:21And all of a sudden, like, the whole of society transforms economically because healthcare is not sucking the life out of taxpayers. I think that would be the most dramatically positive outcome. There's so many good things from these drugs. And I actually don't like the fact that there is still a bit of a stigma around people taking them. I think it's reducing every day. Like there used to be a stigma around online dating and now there's none. So I think that stigma gets reduced and reduced. But I think that unfortunately still is, oh, person X lost weight, oh, they're on as MP or whatever it is.

12:47I find that horrendous. I think if somebody loses weight and improves their life, that's an amazing result and we should be celebrating this. Yeah, I'm trying to think about, so if I took it, would I take it? Definitely. Would I tell people that I took it? I think I'd own it. I think you can go one of two ways, right? You can lie, but like you can't. There's a limit to anything you can get. So I think the challenge, the only downside is someone that's just sweated it out with diet and exercise, they might feel a bit shaft if you say, oh, you must be taking a GLP-1? Well, I think you do both. I think you can have a great figure and a great chasse with the use of GLP-1s and exercise.

13:25I think you've got to do both. I think the notion that GLP-1s do everything isn't right. I think that will obviously fix your diet, but you've got to be at the gym every day and running most days. I think that's the combination of what works. I've seen a lot of people look incredible with them. So I think they're an incredible innovation, and I think this is actually a really great question. thinking of the second-order effects. And this has been two years, three years, four years in the process, hence these share prices have adjusted already to a degree. But I still think there is some inefficiency in the market, and I think businesses like McDonald's possibly still are overvalued.

13:57Just some other stuff to touch on because, you know, it's a broader question. I don't know a lot of the names of these things, by the way, but I know collagen, that's a peptide. I like that one. I put that on my face every day. So hopefully what will happen is everyone will look amazing because collagen has got some pretty good data behind it on some skin benefits it provides. So if you've been wondering, why does a deer glow so much? It's because I've been using collagen for quite a while. That's our friends at Collagen Co. Who are friends at the pod. So I'm sure that's where you get your collagen from.

14:26Okay. I'm going to definitely try it if I don't. And then there's all of these stuff that people use for muscle building, peptides. That's the one that, you know, you see people chunking up on. I don't really want to comment on those because a lot of those are being used kind of off-label for things that, like, they're not usually supposed to be used for. And I think there might be some safety risks around some of them. So I don't want to go into too much detail with those. Basically, there have been – they'll find some safe ones presumably over time that are proven. There have been drugs that you can take to build up your muscles for a very long time.

14:59I don't really want to harp on those things. But I will say this, like they're now being used increasingly for injury recovery. And so one of the things I'm hopeful for is that there'll be a double-barreled theme here where, and people say peptides, but really a way to start thinking about this is medicine, like every bit of tech, medicine's tech as well, and it accelerates on a steep exponential curve. And so there's a whole lot of new medical innovations that are coming through. Some are AI, but also cancer is being transformed by a whole lot of treatments. And peptides are just science learning much more about what different amino acids do when you consume them to different parts of your body.

15:42And I'm hopeful that injury, recovery from injury is going to be one of the big areas of advancement. And that will be great. There'll be thinner, healthier people that get injured less. And when they do get injured, they recover more quickly. All of that has good things going for the health budget. presuming that the health budget doesn't have the life sucked out of it by the cost of these things. That's kind of the trade-off. Yeah, I think it's an MPB positive count. But we'll move on to the question two. Great question. Thank you, Courtney. Over to you, Mike. Question two this week comes in from Terry who asks, Recently we've seen a wave of university graduates in the United States booing speakers who talk about AI as the next big thing.

16:23Why do you think younger people are so angry about the idea of AI? This is a very US-centric phenomenon at the moment. So we've seen the view, I think I saw actually a survey today in Bloomberg, that something like 16 % of Americans are now positive on AI, which is horrendously low. It's a very small sliver of the population. This has sort of gone from 50 % two, three years ago to 15, 16 % now. We actually note that in China, the percentage of people who sort of call it positive on AI is well above 50%. So it is a very Western phenomenon, and US especially, who are probably a bit ahead of us, certainly.

17:00So we have seen this outpouring of rage against AI, possibly due to obviously the job implication, whether that's actually true or not. That's certainly the vibe is that AI is taking people's jobs, especially young people's jobs. That's the sort of most, call it entry-level professional jobs, are really at risk. So there has been a rapid, call it part NIMBY, part fear. People don't want AI as a massive user electricity. You don't want data centers slash electricity facilities in your backyard. So there has been a wave of hate towards AI, especially in the US. What are your thoughts on all this?

17:34Well, I've asked uni students in Australia whether they feel the same way about it. Maybe I've spoken to 10. Let's just keep that in mind. But the feedback was not hate, but it was definitely not love. Like it was, we're all cheating. Well, I will say my son very much is allergic to using AI for university work. He's a very honest person. I don't say that as a, like, I would like him to be less honest about it. But he's very honest about it. But pretty much everyone says to me, every student says, yeah, yeah, we're using AI to do our work. And like when they say, you know, you have to do this question when you do the paper now, which says you have to, one of the answers has to be how much, how have you used AI in doing this work and you have to like kind of come clean and explain how you've used AI.

18:24But you know what people are doing? They're basically prompting AI with prompts like - To answer the question. Yeah, I'm oversimplifying this, but they will say, here's a question, answer it, but make it look like AI didn't answer it. Now, AI is not great at doing that, but like you can get there, right? Like one example would be get the answer, feed it back into AI and say, put some typos and spelling mistakes through this so it doesn't look like AI has done it. That's actually a really common thing that people are doing. The real question on that, the question there is if we're using AI in our real life jobs all the time, shouldn't students be using that to get to their real life jobs?

18:57It's a little bit strange that it's like you can't use a computer at uni or you can't use a typewriter 50 years ago because it's cheating somehow. We want you to be writing with pen and pen. It feels like a very antiquated, typical educational, behind the times mentality. I know, but you couldn't feed a piece of paper into your typewriter from like a math subject and say, do this maths and output it, like without learning anything about how to do the maths. So I think it's a trickier, it's trickier than that analogy. Well, the way to resolve that is just to do tests without access to AI. For example, doing tests, old school writing by hand, and all of a sudden the American company that makes the blue notepads used by colleges 20 years ago is roaring back to profitability because that's actually what's happening.

19:42Even in Australia, like my son tells me that there are handwritten exams in Australia. My wife just was back at uni this year and had a handwritten exam yesterday. So it's absolutely what happens. I would be terrible at that. I'm so slow at writing and like it just hurts my hands. My writing's – I'm fast but my writing's messy as. So I just have to highlight stuff just to make it more legible. Like did they even teach you handwriting when you went to school? Well, I was going to say to you guys, are not all exams handwritten though? It's more like assignments and projects. They were in my era for sure.

20:16Oh, sorry. When I was doing law in US, they were starting to type them, but that was just my last year of law over in Boston. To answer your question, Adir, yes. I'm not as young that we didn't use pencil and pen, but I can't actually remember the last time I actually used a pen to write something. Did you have to get your pen license when you were at primary school or you missed out on that experience? I did. No, I did get my pen license in grade four. Mike isn't like six years old. That's like getting a horse and cart license, a pen license. That's how useful it is today. It's still a thing.

20:47I'm pretty sure pen license is still a thing. Funny because I find it really frustrating to write with a pen because I can type, like you said, Adi, I can type so much faster than I can hand write that I just feel like my brain is ten times further ahead of my hand when I'm writing with a pen. Well, my son recently had this exam where it was open book. You could write notes for yourself, but the notes had to be handwritten, but the exam was typed. It's literally going through a process of typing onto a computer what he had written by hand for his open book exam. It's a bizarre concept. So to get back to the question, all these students, they seem to use AI extensively, but begrudgingly and mockingly of the system that allows them to do this and idiotically tries to catch them.

21:33like with old, they're much, they've outsmarted the system well and truly. Well, I think that the whole uni process is kind of irrelevant to students' view on AI. I think that the negative view on AI is considered, A, it's corporatised, so there's a small number of companies potentially becoming very rich, whether it's the LLMs, whether it's the GPU producers, whether it's the memory producers. So it's a further, we really, we've talked a lot about the great wealth, sort of intergenerational wealth gap. And I think the feeling is, I don't want to put words in younger people's mouths. I think the feeling is AI will, the benefits of AI will go to a very few people.

22:07Yes. I think that's the driver of this. I agree. Especially the externalities are felt by all. Well, maybe we could even go a step further and say it's the corrupt capitalist system allowing billionaires who we think are barely human and have no emotion for us to become even bigger billionaires or trillionaires by stripping our jobs away from us and giving them to computers. That's a pretty bad sales pitch to me to give to young people. And I think that is what the sales pitch sounds like today. And they're doing it with things that we can't even begin to understand these things. We don't even know where to start to try and understand what's going on because the words don't even make sense to us.

22:55When we say, how is this thing thinking? It says, well, vectors, vectors. Well, no, we don't even know what vectors are. We don't know where to... So I think that is like the march of technology has been a march of specialists getting secret information that regular people can't even begin to comprehend. Great question. We'll go to a super quick break. Back with our last question just in a moment.