Prof G Markets
01:04:10 · Ed Elson, Josh Brown
[01:04:10] S3: For those who hear that and are like, okay. So the biggest companies continue to get bigger. The rich get richer. The winners win more than the losers. [01:04:20] S4: No, no. Anthropic is gonna create when all is said and done, thousands of multimillionaire households. I have spoken to people who work there. These are regular people. Not everybody working at Anthropic is on their third go round in Silicon Valley with like stock options coming out of their ears and $10,000,000 houses. They're regular people. They followed their dream. They wanted to work on something that had meaning some way or another. They met a recruiter from this company. They took the job. They believed in what the company was doing. They're still there. They've accumulated stock options. We talk to people who have never had investments, who are now gonna have $50,000,000 overnight. This can still happen in America. It'll never happen in Europe. They're almost right laws against it. It's crazy, but it's true. I don't want, Ed, I don't want what I said about size advantage and national champions and that dominance to be construed as it only benefits the rich and the rich keep getting richer. [01:05:33] S3: Yeah. Because the reality is these companies are in are in everyone's four zero one k. I mean, we're talking about the S and P, but there is a dynamic of bet on the biggest companies, bet on scale.
01:05:33 · Ed Elson, Josh Brown
[01:05:33] S3: Yeah. Because the reality is these companies are in are in everyone's four zero one k. I mean, we're talking about the S and P, but there is a dynamic of bet on the biggest companies, bet on scale. [01:05:45] S4: In the public markets, that actually is an investment thesis. It's been working for, like, a decade and a half since the financial crisis. There are a lot of reasons behind that that we don't have time to get into. Monetary policy, we don't police necessarily. We don't even pay attention to monopolistic behavior anymore, except briefly when there's a Democrat in the White House. Like there's a lot of things that go into that stew, but you can still invent something that changes the world overnight. You could still come out of nowhere. The best investments are not necessarily being birthed in Cupertino at Apple. Like a lot of cool things are being invented elsewhere and you can change your life, change your coworkers and your employees' life. You can do that in America still. In the public stock market, basically, the S and P 500 is being driven by the earnings power of like 50 or 60 companies. The other companies, it's not that they're not also profitable. They're not big enough to move the chains mathematically in the index. So what I'm trying to say is don't think about is this is such and such good or bad for business. Ask the smarter question. Is this good or bad for the MAG seven? Is good or bad for the S and P one hundred? Because that's what will affect your investments.
01:07:11 · Scott Galloway
[01:07:11] S0: The only asterisk I just wanna add here, around... You're right. This could only happen in America. Anthropic, which was founded six years ago, had been founded in Europe. It'd be one of the five most valuable companies in the world. But there is a pretty serious concentration of wealth here. It's 5,300 employees. You know, Eli Lilly has 60,000. P and G has a 100,000. Apple has a 150,000. And this is a trend. And granted, I do think that AI over time will create more jobs than it destroys. But we are in a bit of a weird spot right now where the best earnings calls in the world are where Meta says we grew 23% with 20% fewer employees. There is there is a fear here that the wealthy... The wealth concentration... I mean, rents are supposedly up 24% quarter on quarter in San Francisco. The SpaceX IPO created 12 new billionaires in Texas. Meanwhile, there's a lot of people who are just freaked out about gas prices or can't afford... You know, 40% of American households have dental or medical debt. I'm an AI optimist. But when you see a company like this worth this much money and spreading it across, at least I I get the four zero one k. I get the valuations stock market. But the reality is, as you pointed out to me last night, Josh, 10% of America owns all of the stocks. There is something that we have to keep a real eye on here, and it's potentially very dangerous, that it seems like a disproportionate amount of the spoils are going to a fewer and fewer number of very talented and also very, very lucky employees.
01:08:44 · Josh Brown
[01:08:44] S4: Can I asterisk your asterisk? Anthropic doesn't owe anybody employment or stock options. It's a Agreed. Yeah. When they commit to something like 8 or $900,000,000,000 in compute, that all has to get built. You're talking about millions and millions of jobs. One of the really interesting things that I didn't read a lot about, or you don't hear the politicians say, all this back, quote unquote, backlash against the data centers, you know, who's not saying a peep? The construction unions, because they love it, because it's guaranteed employment as far as the eye can see for as many members that they have, and probably they could double the size of their membership just to satiate the demand for construction of all these things. There's a ripple effect anytime a company like Anthropic comes along and spends money the way that they're spending, and maybe it doesn't show up in the form of stock options for a million people, but it's employment for a million people. It's a lot of projects, a lot of work to be done. And I think it would be nice if everybody had a million dollar portfolio, but the next best thing is everybody working. The dignity that comes along with that, the pride, the opportunities, being out in the sun on a construction site is better than sitting at home and saying, Yeah, we show them no data center in our backyard. So I think there's more to it than just how many people get stock options. Although I do agree with the premise that we have to create more investors in this country desperately, desperately.
01:10:24 · Scott Galloway, Josh Brown, Ed Elson
[01:10:24] S0: Being outside in the sun on a construction site, the three of us. [01:10:28] S4: Not that I know anything about that. [01:10:30] S0: I was gonna say, you look like a construction worker. I I... I'll give you that. But to your [01:10:34] S3: point Yeah. [01:10:34] S4: We make [01:10:35] S0: The economy. [01:10:35] S4: We build bagels where I'm from. The Economist. The [01:10:40] S0: Economist has said so far, it looks like AI thus far has created a million jobs and has destroyed a 100,000. So I am with you. I do think it's gonna create more jobs than its deals. I won't get into taxation. Ed, do you... Oh, I have a question for you, Josh. I would love for you to talk a little bit. You've been like me, a long time Netflix bull. What are your thoughts on what's going on at Netflix? [01:11:01] S4: This is the stock that I am the most wrong about this year. So I bought it at 100, down from $1.40. I thought it was a steal. Then I bought more in the eighties, then I bought more in the sixties. Then it got into the seventies and I sold half right before they reported, and I'm glad I did. Now it's 63. It's just a slow bleed. I think the big problem for Netflix, they're being compared to something that they can't do anything about. So Wall Street [01:11:32] S0: What's that?
01:11:33 · Josh Brown
[01:11:33] S4: Wall Street has become obsessed with this metric, time spent. So it's measuring the amount of hours that people spend watching Netflix versus everything else. And they're being compared to YouTube, which is now lapped Netflix. It's 2X the amount of time spent. Now, don't know that that's meaningful. Do people just put YouTube on a screen and walk away into the other room? Probably. It just auto plays. It just, like if somebody's watching Prof G Markets and that ends, then maybe my show comes on and then maybe someone else, and it just plays. Is that meaningful really to anyone? Well, unfortunately for Netflix, it's the thing that's being scrutinized more than anything else. Netflix is hugely profitable. They're earning like $3,000,000,000 a quarter. They're expanding internationally. They just shook up the programming people. They brought someone in who's pretty well respected. The quality of the movies is not great. The typical show that they've put out is not great. That could be fixed. It's not rocket science. Just, you know, the way that they're spending money has to this $20,000,000,000 annual film and TV budget, just do it better. Like they've done it before. The thing is it almost doesn't matter because Wall Street is fixating on, are they losing to YouTube? And they are. And I don't even know that they can do anything about that other than to lean in on the fact that it's premium content and because it's premium and the viewer actually chooses it rather than has it auto played, that there's some signal there about future subscription holding up and future cash flows as a result. I think they can do that. What's not gonna work is trying to be YouTube light and just throwing podcasts on the platform and video games. And I think they should do what Paramount's about to do, which is double on the quality of the programming and make the case to the street that these viewers or these users are really sticky. I think they put out East of Eden and I think it's the best thing they've made in five years.