Prof G Markets: Trump & Elon Break Up Over the Tax Bill

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27:39We're back with Prof G Markets. The big, beautiful bill is facing resistance on Capitol Hill as several GOP senators have raised concerns about the legislation. Trump met with the Senate Finance Committee Republicans last week to shore up support. As Elon Musk weighed in on X, he called the bill, quote, a disgusting abomination. The two have since feuded publicly, with Musk claiming Trump wouldn't have won the election without him. And then Trump also said, quote, Elon and I had a great relationship. I don't know if we will anymore. Adding to the pressure, the Congressional Budget Office has projected that the Big Beautiful Bill will add$2.42 trillion to the deficit over the next decade.

28:21So, Scott, let's just review what's happened here. I think what we're seeing is that in the past week, this Big Beautiful Bill, which you and I have criticized at length, it's becoming increasingly unpopular. I think it was initially seen as mostly a tax cut and a Medicaid cut, and it sort of passed in the house kind of quickly. It was a slim margin, but I don't think the world or America got that much time to really review it. But now people are starting to look at it. They're recognizing this larger economic issue, which you and I pointed out, which is that this is just going to massively inflate the deficit.

28:58We've had several different deficit calculations from several different organizations. The CFRB projected it would add$3 trillion in deficits over the next decade. The Congressional Budget Office, just last week, they had their calculation. They say$2.5 trillion. Lots of different numbers floating around. But what is clear to everyone is that this bill will massively increase deficit spending very, very significantly. And just about now, people are starting to speak up about it. We had Ron Johnson, who said he won't vote for it. Rick Scott, Mike Lee, Rand Paul. And now we're getting arguably the biggest no from Elon Musk, who has spent the past week on X tweeting about how bad this bill is, how destructive it will be in terms of our debt load and future interest payments, which, to be clear, I wholeheartedly agree with him on.

29:48And now it's turning into this feud with Trump. And finally, finally, the relationship looks to be coming to an end. Your reaction, Scott? This is the thing. I don't think he gives a shit about the bill. I don't think he's read it. I don't think he cares about it. I think he saw a couple of things. One, they're cutting off some of the subsidies that make his company profitable. What I really think happened here was I think Scott Bessett punched him in the face. That's what Steve Bannon said. Steve Bannon said that Scott Bessett and Elon Musk got into a physical altercation. But I don't know how he would know that because he's not on the inside.

30:26Well, Steve Bannon is always right. But what I'm What I'm saying is you're agreeing with him. Elon Musk, according to the New York Times and Wall Street Journal, is a rabid drug addict. Have you known many people with rabid alcohol or drug problems? No. That's great. Maybe your co-host. To be honest, I was trying to think of a smart joke there. I couldn't squeeze it. I control my substances. They add to my life. It's the only thing keeping me sane, Ed. that's from the Falcon and the Condor I think Sean Penn gray line another movie you never saw look drug addicts I've had it's weird professionally I've been introduced to drug addicts they're very inconsistent it is very you do not know who you're waking up next to you literally it's Jekyll and Hyde you just have no idea I think the guy is so fucking high that he's gone angry.

31:25He's decided Trump good, Trump God. Now Trump bad, Trump evil. And he's tweeting like crazy. He's mad tweeting. He's rage tweeting. And he has so much money and he has such a powerful platform from the political chattering class that they don't know what to do with this guy. They don't know. He's basically, I think, kind of, I don't know. Kara was talking about this. Kara thinks that they've got to bear hug him and figure out a way to settle with him. my attitude is I actually think they can just sort of stick up the middle finger and say, all right, just go away. I don't see why they have to come to some sort of consolation prize with them.

32:01I guess it would affect 26 maybe. We should also just talk about what the market thinks of the breakup. And that is the market thinks that Trump is bigger than Musk. And Musk getting into these wars or shooting these flares across the bow of the SS Trump, Tesla's down 11 % today. I think his shareholders are saying, we don't know if it's the ketamine, we don't know if he cares about the deficit, but this is not good for us. The thing that is so disappointing is that the holdouts, one, I appreciate the fact that they are quote unquote fiscal hawks and they're saying this grows the deficit too much.

32:38What is so disappointing is none of them are talking about, okay, maybe we need to cut, maybe we need to raise revenues. Maybe we need to not raise the exemption on the estate tax. Maybe we need to lower it. Maybe we do, in fact, need to have some sort of alternative minimum tax on the wealthy and on corporations. Because on my debate yesterday with Pierce Morgan, featuring me and Kevin O 'Leary, Mr. Wonderful, he basically said we have to have the capital is mobile and we have to have at least be in the middle of tax rates. And I actually agree with Kevin on this, but I didn't get a chance to respond.

33:16But here's the thing. Our tax rates are illusory. It's our ability to enforce them and not have a tax code that basically makes it such that the majority of wealthy people and the majority of corporations never pay what they're supposed to pay in terms of tax rates. The tax rate is unimportant. It's the tax code and our inability to enforce it. But none of them, for all their outrage about the tax on you and your generation moving forward, which is what a deficit is, and that it will ultimately begin to crowd out investments in the deficit and any forward-leaning investments in education or technology, none of them are outraged enough to actually broach the subject of, well, maybe we need to raise revenues.

33:55So this is, I was just on with the Young Congressional Democratic Caucus, and they said, I had a list of policy ideas, and they said, what would you do right away? A lot of my policies are more longer term, national service, changing the tax code. They said, what would you do right away? I'm like, I think the young Democrats should propose. They have a bunch of incredibly bright staffers. I would task them within seven days of coming up with an alternative tax bill that says, all right, hard decisions around means testing, Social Security, cutting Medicaid, maintaining defense spending, maybe reducing it 2 % a year, but building ships that the Navy doesn't even want.

34:30Come up with X in cost savings, X in reduction in spending. and but, and this is what will be different than the big beautiful, we have 1.5X in revenue increases, which I think they could find, that wouldn't be that hard to find. Alternative minimum tax, lowering the state tax deduction. And then what would happen is CNBC, MSNBC, CNN and Fox would all put the two bills next to each other. And it would position the Democrats as the adults in the room. Now make say you're willing to cut spending, but also you want to raise revenues and you're going to be the first administration since the Clinton administration to figure out a way to put us on a path over the next four, eight, 12 years towards a massive reduction in our annual deficits.

35:15And it'll deposition them as the fiscally irresponsible ones. And I call it the adult in the room strategy. But all of the oxygen is Mike Johnson and Republicans grabbing the mic and saying, I'm a fiscal hawk. And before I bend over and take it up the ass from Trump, which they will all do. That escalated quickly. They will all do. Get some air time. It's interesting that you think that Elon, that all he cares about is really just what's happening with the EV tax credits, which are going to be stripped out in this bill. And that's what Trump has said. He said that Elon was fine with the bill and then suddenly I got rid of the EV tax credit, and now he's upset about it.

36:01That's also what Mike Johnson is saying. So the Republicans are saying, this guy is kind of lying about his concern about the deficit. All he really cares about is this EV tax credit thing. I actually disagree with that. I don't, I mean, I just don't believe that that's the real problem. I actually believe that Elon went in there. I mean, think about what his job was, his job was to reduce spending. That was the whole point of him entering this government. That was the whole point of Doge. And this bill, which is going to increase deficits by somewhere between$2 to$4 trillion over the next decade, no one really knows, this bill has rendered Doge and Elon's entire existence in this government as useless and irrelevant.

36:51And I think Elon is probably, I mean, probably rightly offended by that. And now he's having this lash out. And because he's a very weird guy and because he's addicted to drugs and because he has an addiction to social media, he's doing it in a crazy way where he's just lashing out like a maniac on social media. But that doesn't make me think it's not genuine. I think that he is concerned or upset about this bill for the same reasons that you and I are upset about this bill, which is we're going to massively balloon our interest payments over the next 10 years. We're going to actually double our net interest payments.

37:34We're at$900 billion per year that we're spending just servicing the debt. That's going to double to$1.8 trillion by 2034. And already, net interest payments are our second largest federal expenditure. We spend more on the interest than we do on Medicare and on national defense. So I think he looks at it and he's pissed off about it. And that's why I'm sort of like, why don't we just take that win? It's kind of nice. I mean, the guy has caused so much anguish for so many reasons, as you've explained, but he owns one of the largest social media platforms in the world. And he's decided that this deficit thing is a real problem.

38:17And if he's going to be the one to popularize it, at least among his cohort, how about it? I just think you're giving him too much credit. I don't, I mean, first off, I think his real objective here, as far as I can tell, was to remove all the inspectors, generals, and remove all of the cases against him for safety violations, discrimination violations, and remove all the inspector generals that were forcing him to like have crash test dummies in those autonomous vehicles before they were approved. All of those people are gone. I'm not defending that. But I think that was his objective. I think that you're giving him too much credit as someone who was really concerned about the deficit, because if he was concerned about the deficit, he wouldn't be proposing a 40 percent cut to the IRS.

39:01Well, he thinks you can you can have tax cuts and just cut a ton of other stuff. He thinks that all of the infrastructure in government is useless and fraudulent and it's all abuse. And so we can just get rid of all of it. Let's get rid of all the inspector generals. And then in addition, we can also cut taxes. I mean, he's got like a five-year-old's view of what government is and what government does. But that's sort of the Republican view, just a brief history of deficits, George Washington to George Bush,$7 trillion in deficits. And then where this all really kicked off was that George W. Bush convinced the American public, I know we can go to war and lower taxes at the same time.

39:41We had never done that before. We had trained or logically inferred to the – or intimated or expressed to the American public that if we go to war, your taxes are going up. And that was a decent regulator on if and when you went to war. So what happens when you convince the American public that we can maintain social spending and cut taxes and we can go to war and cut taxes? You explode the deficit. And since George W. Bush, everyone on the left and the right has signed up to this. And nobody wants to be the adult in the room because they think by the time I'm out of office, it just doesn't, you know, that's when they'll have to pay for it.

40:20But the notion that he came in with a serious attempt, if anyone was serious about deficits, they would triple the size of the IRS. I agree. I don't think it was a very serious or informed perspective on the deficit, but I think it was very clear to me that that was one of his stated goals. And now he's pointing out that they're doing the opposite. And that's true. Whether or not his opinion on the matter was serious or informed or legitimate, I don't think it really was. I think he acted like a child throughout this. But the fact that he's speaking up about it now, to me, I'm like, let's just take the win.

41:06And let's see if we can popularize this idea that we can't keep spending this much fucking money in America. But you're assigning principle and logic and critical thinking to his actions. I'm not. I'm just saying that whatever, let's embrace it. My point is, if he was really concerned with that from the beginning, he would have approached this much differently. He wasn't going to solve your generation's economic problems through big deficits by cutting off USAID. If you want to have an adult conversation, if you're really philosophically committed to reducing deficits and not screwing your generation, do we have to cut spending or raise taxes?

41:45The answer is yes. And you're not serious if you're not talking about an increase in revenues and also going after entitlements, including Social Security or going after defense or raising taxes on the wealthy. Or healthcare, as we've talked about. That's the big one. Yeah. Healthcare, this was never a philosophically or an intellectually honest movement. I totally agree with that. I think the question now is that a lot of people are wondering, what are the chances that this bill actually goes through? And that is an important question because of all of the economic reasons that we've just discussed.

42:19So will it go through as it stands? Probably not, actually. It needs a simple majority in the Senate, which is 51 votes. There are 47 Democrats in the Senate who are likely all going to vote no, and 53 Republicans. So the Republicans can only afford to lose three votes, in which case it would be a tie, and the vice president can and would break that tie. But so far, we've seen four Republican senators who have come out and said they don't support this. And then there are six more Republicans who haven't outright opposed it, but who have raised concerns and are pushing to reform the bill. So what will most likely happen at this point, now that everyone's coming out of the woodwork and saying this doesn't make sense, the Senate will likely reform the bill.

43:04Who knows what reforms they'll make? But the bill will likely go back to the House, and the process will start all over again. So right now, the situation actually looks less terrible than it did a week ago. And now the question is, what kinds of reforms will the Senate actually make? Will Will they actually address the deficit problem? Will we see a substantial decrease in spending? Will we see a substantial decrease in tax cuts, which, as you point out, would increase our tax revenue? These are the questions. So we'll see. We'll be right back after the break with a new trend that's shaking up the VC world.

43:41If you're enjoying the show so far, hit follow and leave us a review on ProfG Markets.

44:13We'll see you next time.

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45:06From Pushkin Industries, I'm Jonathan Goldstein, and Heavyweight is back. The new season is bigger than ever. Bigger hopes? I keep waiting for this moment when he says, Mom, I get it. I'm sorry. Bigger dreams. Tom Hanks wants to meet with you. This is a real chance. And bigger heartbreaks. I thought it would be my movie moment. And maybe he would even whisper in my ear, I've always been in love with you. Check out new episodes of Heavyweight on Apple Podcasts.

45:50We're back with Prof G Markets. Singapore's$300 billion sovereign wealth fund, Temasek, has dramatically cut its early-stage investments. The fund slashed its first-round investments in unlisted companies by 88%, dropping from 82 deals in 2021 to just 11 in 2024. Temasek still invests in startups indirectly through VC funds, but now prioritizes later stage revenue generating companies that are closer to IPOs. And this reflects a broader market shift away from early stage investments. Seed stage funding as a whole has dropped 40 % year over year, while late stage rounds are up 4%. So I think the thing to focus on here, Scott, isn't Temasek specifically, but the venture capital industry at large.

46:37because it's highlighting, this Temasek strategy is highlighting an interesting dynamic that is happening in VC right now, where early stage investing is petering out and late stage investing is growing. And just some stats to illustrate this. In the past two years, seed stage deal count has fallen 30%. Seed stage funding has fallen 40%. And Series A funding has fallen 20%. And what's interesting is that as you progress into the later stages of startup funding, When you get to the Series C, D, E rounds, the trend starts to reverse. So Series C funding, for example, is up 66 % in that same period.

47:16Series E funding has more than doubled. So in other words, we're seeing less investment into young, early startups, more investment into older, later stage startups. And that's reflected in the numbers and also anecdotally from what we've seen with Temasek here. And I would also point to what's happening over at Thrive Capital, which is one of the hottest VC firms right now. And they're starting to invest in public companies. They're even starting to buy and operate late-stage companies in the same way that a private equity firm would. So everyone's kind of transitioning away from early stage, not as sexy, not as hot anymore.

47:53And they're more interested in late-stage. My question to you, Scott, why is that happening? Well, one you have, you could argue that it's become an economy where it's worth it to pay a premium or maybe not a premium for whoever established themselves as the market leader. But I think this is mostly the following. So I got pitched yesterday on a concept, a really interesting concept of essentially an AI partner that listens to all of your text messages and obviously opt in and then communicates with you and gives you tips, whether it's personally, you're being passive aggressive here, stop it.

48:30if you need relationship coaching or can interpret business emails and give you kind of suggestions, sort of a mentor following you around. It's a really neat idea. It's essentially two guys and some contractors. I think one of the guys has had an exit and they're raising$4 million at a pre or a post of$40 million. And I just said, I'm not doing SeedStage anymore. I think SeedStage is the worst place because people want me to invest in SeedStage and then they just want my time and it's a ton of work and you're in this thing for a decade and most of the time it doesn't work out. And even when it does, if you don't have capital to defend your position, seed and angel investing is for men in their fifties and sixties that have made a shit ton of money, still looking to stay relevant, enjoy hanging out with young entrepreneurs, but it is a shitty part of the cap table.

49:17It is just a really difficult place to make money. And also I think domestic is basically just saying in early stage investing, the valuations on a risk-adjusted basis, the returns are just too low. And I'll give you two examples. Personally, I invested in Post News. Do you remember them? That was going to be a competitor to Twitter. Super impressive founder. I co-invested with Andreessen. Seed round,$100 million valuation because this guy had invented ways. This guy was probably the most accomplished executive that wasn't working at a company. And he took advantage of that and raised money at a$100 million valuation.

49:58I think I invested$2 or$3 million out of business in 14 months, lost everything. The seed investment I did make money on about two and a half, three years ago, maybe four years, three and a half, three, three and a half years ago, a friend of mine who I met at Gardner, his company was acquired, my other started a company focusing on supply chain-based research, subscription research for supply chain. I know that business really well. That's what I did for digital at L2. I invested$1 million at a pre of$9. I was a seed stage investor, so I got 10 % of the company. And then I invested another $2 million, I think 12 or 24 months later when it had some traction at a pre of$18.

50:37So I ended up with 18 % of the company for$3 million. It got sold for$110 million. So I basically got turned three into 20. That was my best seed. And there's been a bunch of others where I've invested like half a million and it's just like, I don't even track them anymore because I think they've all gone sideways or gone away. But effectively, when you hear the guys are starting companies and want to raise a series A at a post or a pre of 40 million, it's like, I just said to these guys, I'm like, good, you know, best of luck to you. Well done. I'm not going to plan traffic like that. That's just too expensive.

51:11The likelihood I get the kind of return I need here versus going into a company that's in a Series C that maybe has a pre of 200, but already has 10 or 20 million in revenues and already is kind of like jamming and has product market fit and already has big investors behind it, is already a potential acquisition candidate. That on a risk adjusted basis is just a better place to invest right now. In some seed stage investing, it's always been a bad place to invest. It's especially bad right now because what entrepreneurs don't recognize is their valuations when they come down, they just don't believe it.

51:48And they can talk themselves into believing, oh, on a PowerPoint presentation, my company is worth$40 million. So I've done a decent amount of this, and it comes down to A, investing in the right team because these things typically pivot and end up doing something different than they originally envisioned. And two, getting in at a reasonable valuation. And also, there seems to be so much dislocation and so many companies getting beat up that it probably does make sense to be opportunistic and look at some public companies. Going into PE, I don't know if Thrive should do that. I think that's a different skill set where you bring in operators and it's a different kind of mindset.

52:29But I can absolutely see why lighter stage companies are offering a better asymmetric bet than seed stage or series A. It's always been literally my least favorite place to invest. It is just so difficult, so expensive relative to what you're investing in. And when it works, you can make 100x. But you have to rewire your brain such that you're ready to invest 15 times and have it go to zero. And at my stage, the last fucking thing I want to do is just have to take calls from some young, bushy-tailed entrepreneur that is thinking about pivoting or not pivoting or what VCs do I know that I can introduce them to.

53:10It's not even the capital. It's the time sink. It's literally like taking care of a baby. babies just take, I mean, they're just constant attention. Anyway, I think a firm like Tomasik, the initial thinking a few years ago when they increased these investments was they wanted access to downstream opportunities to invest capital. So they would put 50, 100, 500 grand to work and say, call us back if things go well and we'll do your B round. It was almost like they were buying a call option. And I think they've decided they don't need to do that. But I think the question is also what has changed?

53:42Because a lot of what you said has kind of always been true of VC. I think one thing you mentioned there that might have changed is that valuations have gotten too expensive. And so people are just like, this is not worth it. But I think there's got to be more to it as well. And I think one of the things that I'm landing on is it's just harder to succeed now. And it's especially harder as evidenced by the lack of IPO activity that we've been seeing, where IPOs are at a historic low. We had 225 of IPOs last year. A little bit of an uptick from the year before, but still down pretty significantly when you look at it historically.

54:19And then you've got all of these incredible private companies that you would think would go public. Stripe, OpenAI, SpaceX. Instead, they're raising these E rounds, these F rounds, sometimes G, H, I rounds, instead of going into the public markets. And I wonder if investors look at that lack of activity. They recognize just how long it takes to get to the public markets and realize that return. And then they look at these young little fledgling startups and they think, yeah, you know what? I'm just going to go in again on Stripe because I'd rather optimize for liquidity. I need to realize a return for my LPs.

55:00So I'm just going to invest in the late round because the IPO, it's probably coming in like the next one or two years. And I'd rather do that versus make this early bet where even if things go right, I'd still only realize a return in realistically 10 to 15 years. And I think that is different. I think that things did not used to be this way in terms of the private markets. And I think what it really emphasizes, and this is something I've been thinking about, is just what a terrible time it is to be a new entrant in America today. In all sectors. I mean, whether it's you're a young person, as you've talked about at length.

55:40If you're a politician, as you've talked about with Crockett and the fact that the average age of a senator is 65 years old. And it's true of founders. If you're an early young founder, you're struggling to raise funding right now. But it's also true of investors. And this is the point that I've been thinking a lot about recently. And this Temasek headline really sparked that for me, where I'm realizing the crucial difference between the internet back in like the early 2000s and AI today is that when the internet was happening, there was so much opportunity for regular retail investors to participate.

56:21because these companies were actually going public. With AI, there's almost zero opportunity. I mean, you've got, on the one hand, big tech just keeps on buying up these AI companies and these AI startups, so they never get the chance to actually grow and go public. And two, of the ones that do succeed, none of them are going public. But 20 years ago, it would have been a very different story. I just want to give you a few examples here. Apple, it went public in 1980 at a$1.8 billion valuation. And in today's dollars, that is$7.5 billion. Not that big. And you could have invested as a regular investor and now it's worth$3 trillion.

57:01Amazon IPO'd at$560 million. That's$1.1 billion in today's dollars. That's 300 times smaller than OpenAI. There were all of these opportunities that were happening in tech and in VC, and they were allowed to go into the public markets and list. But for some reason, that's not happening. And in addition to that, you've got investors unwilling to make these early bets. And it's just impossible if you're new to any of this to get in and participate in that value creation. And that's sort of the thing that frustrates me. AI is happening in front of our eyes. I don't know where to invest. I can't participate.

57:41The reason Google and Amazon went public. It's not because they wanted to. It's because they needed capital. And the private markets didn't have those capitals that deep to keep funding them. And their employees wanted to get rich. Now they have both those things in the private market. You mentioned a bunch of companies. I'm an investor in Epic Games. Epic could go public tomorrow at probably a 20, 30, $40 billion market cap. But they're waiting until conditions are amazing because guess what? They can raise a shit ton of money in the private markets right now. And the founders and folks there can do a secondary and dole out enough money such that no one's like, I want to buy a house.

58:13Of course, well, we'll get you your house. In addition, you have an extension in the runway it takes to get to acquisition. So most studies say it takes five to seven years for a successful company to get from inception to acquisition. I have found that to be true. Profit got acquired. Actually, it took me when I started in 1992, I got an investment in 97. So it took me like seven, nine years to get an exit with profit, my first company. L2, it took seven years. We got to our first funding round in four years and or five years and our acquisition in seven years. Red envelope, we got to IPO in five years, but that was during the kind of dot-com explosion.

58:58What's happened recently is it's now closer to 10 to 12 years for a company to get public. So if it's going to take you 10 to 12 years to get to a liquidity event, and what you're seeing or what these investors are seeing is that they're in a bit of a mismatched durations cash crunch. And that is they raise money from investors saying, all right, we should be able to get you distributions of your money back almost fully within seven years. And they have to send out notes basically saying, sorry, we don't have any liquidity events. This takes longer now. And M &A is down, so you don't get those exits either.

59:32That's right. So the IRR is a function of not only its internal rate of return, meaning, okay, what is your return on that money discounted back based on the amount of time it took you to get there? So essentially, companies, VCs are doing the work and saying, okay, if the time, if the runway needed to get to an exit is much longer, then I need a much lower valuation. That is not happening. And also, if you're a 48-year-old general partner at a company, do you want to be making investments you're going to recognize when you're 62? I was going to say that I think most of these guys at this point are probably closer to 55, 60.

1:00:09I mean, the real Silicon Valley legends. I feel like they're more in that range. And they're sort of like, I don't want to wait. Yeah, they're just like, I can make, I have a lot. If they're one of the leaders, I've raised a lot of capital. I can get good returns investing in, you know, maybe going out and buying some private equity stubs or going out finding getting access to a good deal that's where they need capital, but the markets are down. So they need to do a mezzanine round or a late stage round. They probably look at that and say, I'm going to make good money here. Do I really want to figure out how to get, you know, Joey Bag of Donuts, New Startup Inc.

1:00:44on AI, like through its A, B, C, D, F round? And what's so interesting, by the way, is just this is yet another instance where we're seeing how this old versus young dynamic is playing out. It literally crops up in every conversation we have about anything related to markets, where you have the old rich people who mostly control the system and they're doing it their way based on their preferences. but it is having a pretty substantial impact on all the young people, whether it's the young investors who want to participate in these events, or it's the young founders who aren't getting any more funding, or at least a lot less funding, 40 % less, because these old people are like, it's going to take too long.

1:01:31Okay. But before you sprinkle cyanide on your avocado toast and just get ridiculously fucked up playing shuffleboard or whatever it is you do in Gowanus, I think every millennial lives in Gowanus or every Gen Z. I've never been there. I don't even know how to spell it. Is that in Brooklyn? I don't know where it is. I just assume all young people live there. But you do, I do think, the flip side of this is the following. The explosion in AI technology and the ability to outsource things like fulfillment to Shopify, the cloud, you don't have to. I used to have to buy servers. you young people do have a lot of agency while the financial markets might not be as frothy and access to capital might not might not be as promiscuous right now i do think a group of smart young people can get so far on 50 or 100 grand it's possible but it's harder is what i would say you can you can do i agree it's not like we're all doomed but you can't just go out and buy Apple and sit around.

1:02:31That's not possible anymore. There are no Apples. Oh, let me be clear. From an investor standpoint, I'm talking about an entrepreneurship standpoint. From an investor standpoint, we keep bailing out any downward cycles such that entrants are fucked. Every bailout is a transfer of wealth from the young to the old because disruption is a transfer of wealth back through natural economic cycles, back from the incumbents to the entrance. We've decided not to let that happen any longer. So it's very hard to find value right now for your generation. I'm talking about just a raw startup. I met with your college roommate from Princeton and his ability to scale on, granted, he's raised a lot of capital.

1:03:09They're very impressive. But the cost to get from letters A to E has never been lower. And that is when I started Red Envelope or founded Aardvark Pet Supplies, the cost to build a website, and I had a partner who was really good and really cost effective. It would cost us$500 ,000 to build a website that I think would maybe cost$3 ,000 to$5 ,000 right now. Is it harder to access capital? Yeah, but I do think young entrepreneurs with the cloud, with AI, do have more agency and ability to get from letters A to D for less money than before. And to your point, my friend who you met with, he just closed his B.

1:03:52Smooth sailing now. Everyone loves it. At a huge number, right? Huge. I mean, so, but what you said really struck me about how these old guys, I remember talking to these guys yesterday, nice kids. And they said, so we can't give you stock. They literally said, you don't even have to invest. We just want you on the cap table. And I said, no, I don't want to have to take your calls. I don't want to feel like I need to be supportive of you. I want to hang out in Aspen and wait for the ass cancer. And to be fair to you, because that makes you seem like a dick, perhaps, you get a lot of calls. I actually completely understand why you'd say no, because you are constantly getting these calls from people.

1:04:37But what you said is really true. I don't have that much tread left on my tires. I want to do fun things with my boys and, you know, go to Summit, which I'm going to tomorrow. I'm very excited about that. Let's take a look at the week ahead. We'll see the consumer and producer price indices for May. And we'll also see earnings from Oracle, GameStop, and Adobe. Do you have any predictions, Scott? Well, I have two. I think Adobe is going to blow away earnings because they're a new sponsor and I love their products. Don't you love them? Adobe Express is going to turn everything around. Ed and I, they asked us to go do this sponsorship thing.

1:05:15It looked like a food truck. And we were printing out kind of Instagram-ready collateral materials. And I am really good. Anyone that makes me seem artistic, I really enjoyed that. I was actually, I was legitimately blown away by the product. I think that, and it's a great company. I used to talk about Adobe being the first company and they were to move to subscription. It used to be Adobe Direct or whatever it was called, cost$2 ,500. And then the CEO said, no, just charge$25 a month and you'll massively broaden the market. The stock got cut in half and I think it's up like 40 folds since then.

1:05:48They were the first one to kind of invent the SaaS model. Anyways, I love Adobe and their products. My prediction is the following. I love Robert Armstrong's taco trade. And he really got me thinking about the most prosperity-destroying tariff in the world is a steel tariff because it takes the prices up massively. And a few employees that, as you've noted, that literally single thousands of people involved in the steel industry, they make more money. The union does better. The small number of shareholders that invest in U.S. steel companies do really well. You saw Cleveland Cliffs, I think, up 23 or 24 percent.

1:06:23I think once those costs are rippling through the auto, mobile industry and the home building industry, Trump is going to chicken out again, back off. So my prediction is the run up or the surge or the bump in the equity value of the U.S. steel industry is about to come back to its pre-tariff levels. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Dan Chalon is our intern. Drew Burrows is our technical director. And Catherine Dillon is our executive producer.

1:06:58Thank you for listening to Prof G Markets from the Vox Media Podcast Network. And again, if you haven't subscribed to Prof G Markets, you will not be getting this podcast. So go subscribe to Prof G Markets. The Daily Show begins tomorrow.

1:07:15Lifetimes

1:07:20You help me In kind reunion As the world turns And the dark flies

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