Prof G Markets
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.
01:13:42 · Scott Galloway, Josh Brown, Ed Elson
[01:13:42] S0: Fantastic. They can do [01:13:44] S4: it when they put their minds to it. I think they've gotten distracted. Paramount's gonna double down on HBO. You'll see premium quality stuff that you can actually raise the prices for because people can't live without it. You're not gonna do that with podcasts that somebody could just watch on YouTube. So I think they've gotten the memo. They brought this guy in from Disney. He's got an extensive history in the studio system. He's done big sports deals too. You you need to have must have programming that people get pissed off when everyone's talking about it and they didn't see it. That's the that's the roots of what Netflix did with house of cards in 2013, completely reinvented what the platform was. They can do it again. I think the good thing is they've now identified that that is the solution. The solution is, hey, we can do YouTube too. That's not gonna work. [01:14:35] S0: Although I would push back. I do think Netflix should acquire independent podcasts at any price, Josh. [01:14:41] S3: I'm sure you do. [01:14:42] S4: At any at any price. The best ones. [01:14:45] S0: Ed, bring us home. Wrap this wrap this dog's breakfast up, quoting Talia Shire. You lost all credibility right out of the gates there. Win. The amazing Talia Shire. [01:14:57] S4: Did you even I pitted a fool. Hold on. Did you even watch Rocky two ever in your life? [01:15:01] S0: I've seen all the Rocky films. [01:15:03] S4: Not you. I knew you're... I know you did. [01:15:06] S3: I mean, I get destroyed. No. I haven't. No. I haven't.
01:15:06 · Ed Elson, Scott Galloway, Josh Brown
[01:15:06] S3: I mean, I get destroyed. No. I haven't. No. I haven't. [01:15:09] S0: You haven't seen the Rocky films? [01:15:11] S4: No. I I Scott, are we gonna put up with this? [01:15:14] S0: Jesus Christ, man. [01:15:16] S3: Jesus Christ. Was I was I was praying this question would not be asked of me. Cause I fancy myself a movie buff, but it's pretty stop. It's it's a weak spot. [01:15:26] S4: Stop now. Movie buff. [01:15:29] S0: That hurts. [01:15:30] S3: But you still love me. That hurts. Right? [01:15:32] S4: Oh my god. I couldn't love you more. Just, you don't have to watch all 12 of them. You sort of get the gist, but the first four are canon. Yeah. They're canon. [01:15:43] S3: I know. I hate [01:15:44] S4: to it. You have to catch [01:15:45] S3: I'll do it this weekend, and then I'll give you a call and I can give you my thoughts. My final question, we had you on at the beginning of the year. There were a lot of concerns about the market, very similar to the concerns that we're talking about today. [01:16:00] S4: How'd I do? [01:16:01] S3: And we're up 12%, and you did very well. And you said that earnings growth would be extremely strong. You felt that there were... And believe there are a lot of tailwinds going into this market that outweighed the headwinds. So far, look at the numbers. That has been correct. [01:16:19] S0: Here's a freebie. [01:16:22] S4: When the S and P is up double digits through the midpoint of the year, you have like an 89% chance that the high of the year will take place in December. [01:16:34] S3: The- That is a historical- Well,