Money Rehab with Nicole Lapin - Elon Musk Told Advertisers To "F—k Themselves," Here's Our Hot Take
Episode Date: December 4, 2023Last week, three industries: AI, electric tech and social media began to shift— possibly forever— and Elon Musk is at the center of all of it. Today, Nicole answers the question: what does it mean... for us, as investors, when one person has so much influence over the global economy? Plus, she gives her hot take on Elon’s message to the advertising world to, "go f—k yourself."
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bfa.com slash newprosmedzy. Just last week, three industries,
AI, electric tech, and social media began to shift, possibly forever, and Elon Musk is at the
center of all of it. So the big, big picture here is what does this mean for us as investors when
one person has so much influence over the global economy? But within that bigger picture,
the industry-specific stories also have important money trails that we should definitely follow
today and in the upcoming weeks. So I'm going to start with the two relatively easier stories,
AI and electric vehicles. I can't believe that I just said that AI is one of the easier stories, AI and electric vehicles. I can't believe that I just said that AI is one of the
easier stories today. But then I'll top it off with social media. And for the cherry on top,
I'm going to give you the hot take on Elon's message to the advertising world to
go fuck themselves. First up, AI. Last week, journalist Andrew Ross Sorkin interviewed Musk
at the Dealbook conference. It's an event put on by the New York Times.
In this conversation, they covered a lot of ground,
from Musk's childhood to the upcoming presidential election, and yes, of course, AI.
Sorkin wanted to get the tea, of course, about OpenAI,
the company that created ChatGPT, from Musk.
Now, the drama all began when the CEO, Sam Altman, was ousted for all of four days.
And then the tables turned.
Altman was brought back as CEO, and the board was fired.
I went into this in depth on the show as it was happening, and I linked that episode description
in the show notes in case you missed it.
I was really interested to hear Musk's take on this, because Musk actually helped found
OpenAI.
And like him or hate him, he
is one of the most important minds in tech right now.
In the interview, Musk said that he had mixed feelings about Sam, and quote, the ring of
power can corrupt.
To make matters more ominous, Musk's gut feeling is that the reason behind Sam's
removal from the company was serious, and potentially because of the discovery of something dangerous about AI. We always knew that AI could be a power for good
or for evil, and for me, Musk's comments just brought home the fact that Biden's executive
order managing the risks of AI is coming not a moment too soon. As a quick refresher there,
at the very end of October, Biden introduced an executive order that requires developers of powerful AI systems to share their safety
test results with the US government, protecting Americans from AI-enabled fraud by establishing
standards for authenticating official content, and more. It is abundantly clear that we are
well into the AI new era. Now, it particularly interested me
that Musk said we were three years away from AGI, but that is a story for another episode.
In the meantime, I am personally looking into some AI ETFs and cybersecurity investments so
I can take advantage of the growth in this industry and support the companies that are
keeping us safe. The next industry in the limelight is EV, electric vehicles. They have been really
exciting for environmentalists and investors alike. And while Musk's Tesla was at the
forefront for a very long time, other brands have jumped on the EV bandwagon. At first,
brands focused on producing EVs for the mass market. But as these companies have started
to scale their EV offerings, they've started to dabble in truck models. In 2019, Musk kicked off the conversation by
announcing the development of Tesla's truck called Cybertruck. While Musk was the first to announce,
Tesla quickly fell behind some of its competitors. The Cybertruck won't hit the market till 2025,
and Ford, General Motors, and Rivian have all started selling their own electric trucks.
To be honest, since the Cybertruck was first announced, it's been kind of a mess.
When the Cybertruck was first debuted on stage in 2019, the chief designer bragged about the
truck's badass bulletproof windows, and then to prove it, he threw a metal ball at the window
and it shattered. So basically, it couldn't have gone worse, and the crowd watching the debut literally
groaned.
That set a chaotic tone for the product, and the Cybertruck has been giving Tesla headaches
ever since.
In that fateful 2019 announcement, Musk said that the truck would be priced at $40,000
and that the highest-end version would be able to travel 500 miles on a single charge.
But when Musk gave an update last week, he said that the starting price for the truck would be
about $61,000 and the highest-performing version will be able to go 340 miles on a single charge.
But to be fair, the Cybertruck will also come with an extra battery pack that extends its range
to 470, which honestly is pretty close to
500.
But even though there have been some setbacks, the Cybertruck has had some wins too.
The engineering work, for example, is pretty amazing.
The hard steel body is bulletproof, the truck can tow over 11,000 pounds and accelerate
from 0 to 60 miles per hour in 2.6 seconds.
Plus, the thing looks like a Cybertruck.
It is straight out of the year 3000. And when the latest version of the Cybertruck was unveiled in
Austin last week, the chief designer threw a baseball at the window, and this time,
it simply bounced off. No shattering. Although the engineer did play it safe and used a baseball
instead of a metal ball this time, but still,
it's really impressive. My car could not take a baseball to the window, period, the end.
And even though Musk said it would take a while for Cybertruck to be a real revenue generator,
it has received more than a million refundable reservations for the truck.
Experts have mixed feelings about what the impact of the Cybertruck will have on the overall
industry, but I think there is a reason to be optimistic here. Up until this point, the electric trucks
at competitors have had mixed success. Both GM and Ford have scaled back plans on some of their
EV products and investments. However, Tesla's marketing has been able to do what other brands
cannot here, sell EVs to people that do not care about EVs at all.
Some people buy Teslas because they're better for the environment. Some people buy Teslas
because they look cool. And that had never happened with Toyota's Prius.
So just like Tesla did with the electric car, the Cybertruck could reinvigorate
interest in electric trucks. Now for the main event, social media and Musk
telling Disney's CEO Bob Iger to go fuck himself. Okay, this particular chapter of Elon's story
starts, as most do, with a tweet. You've probably seen the headlines referring to Elon's recent
anti-Semitic tweet, but it wasn't actually his tweet. Here's what happened.
A random ex-user posted, quote, Jewish communities have been pushing the exact
kind of dialectical hatred against whites that they claim to want people to stop using against
them. I am deeply disinterested in giving the tiniest shit now about Western Jewish populations
coming to the disturbing realization that those hordes of
minorities that support flooding their country don't exactly like them too much." And Musk
commented on that post, tweet, whatever you call it, with quote, you have said the actual truth.
So here's the major issue with this post. The current moment is a traumatic one in Jewish history and a time
we need support. This post puts all the blame on Jewish people for the attack, and also,
anyone saying that they don't give the tiniest shit about Jews right now is no friend of mine.
The final layer to this tweet, though, is a little bit more complicated.
As we know, one of the most anti-Semitic groups in the
world are white supremacist groups. And so by accusing Jewish people of being anti-white,
that just gives fuel to the white supremacists to mount more hatred against Jews. Musk's endorsement
of this post was denounced by the Jewish Civil Rights Group, the Anti-Defamation League, ADL,
and the White House, both of which characterized
the Post as anti-Semitic. So listen, you know how important this topic is for me, but I do not think
Elon is anti-Semitic. You know I would call him out if I thought he was. But Elon does not have
a filter. If Elon hated Jewish people, he would just say so. Instead, he said that of all of his 30,000 tweets,
that one might be the worst and dumbest post, his words, he's ever done.
And then Musk went to Israel in the middle of this war, and he has been wearing a Free
the Hostages necklace given to him by one of the families of the hostages. But regardless,
this tweet got a lot of attention, and in the wake of the tweet, some brands like Disney and Apple withdrew advertising spend from X's platform.
Enter the comment that broke the internet. This fiery conversation also happened during
Musk's interview with Andrew Ross Sorkin at the Dealbook event. I told you they covered a lot of
ground. It was an hour and 30 minutes and I watched every minute of it.
Sorkin asked Musk how he felt about the fact that advertisers were leaving the platform and Musk responded, quote, don't advertise.
If someone is going to try to blackmail me with advertising, blackmail me with money,
go fuck yourself.
Go fuck yourself.
Is that clear?
Hey, Bob, if you're in the audience,
that's how I feel. Don't advertise. End quote. That is a direct quote. And again, the Bob Musk
is referring to here would be Bob Iger, the CEO of Disney, one of the most powerful people in
business. Now, I'll state the obvious. Blackmail is a pretty extreme description of what's happening
between X and its advertisers. And it
wouldn't be fair for me to say that this tweet is the only reason advertisers are pulling ad spend
from X. Long before Musk endorsed the controversial post, studies have shown that hate speech on X
has doubled since Musk took over the company. And while Musk has been committed to his mission of
free speech on the platform,
this has been difficult for advertisers because there is no control over where their ads will
appear. So some brands will end up having their ads appear right next to posts that are spewing
Nazi garbage. Brands have every right to be pissed about that. If I paid for Money Rehab
to be advertised on X and it got put next to some anti-Semitic clickbait, I would be furious. First and foremost
because I personally find this type of speech deplorable, but also because it would make
my brand look terrible. If you saw an ad for a brand right next to hate speech, you're
not going to go out running to that brand's website to buy their product, right? So advertisers pulling their spend is not a new issue here, and it's not just about
one post. Monthly ad revenue on X has declined 55% year over year each month since Musk took over,
and the company's valuation has gone from $44 billion to $19 billion. And when Musk was there taunting brands not to advertise, the first people I
thought of were the X employees. Even though Musk earned back his status as the richest man
in the world, if X continues to lose money, he's not going to pay his employees out of pocket. I
mean, history just shows that. Musk has laid off more than 80% of X's workforce since he bought
the company. Musk also said in his interview, quote,
If the company fails because of an advertiser boycott, it will fail because of an advertiser boycott.
And that will be what bankrupt the company, and that is what everyone on Earth will know.
Let the chips fall where they may, end quote.
But that is not entirely fair.
As the CEO, you have a responsibility for your employees. Yes,
sometimes in order to keep a company afloat, layoffs happen. It is an awful, awful situation,
but one that is sometimes unavoidable. But X losing advertising dollars is somewhat avoidable.
I mean, the layoffs only became necessary once Musk took over, so he can't blame everything
on the advertisers.
Musk has to take some responsibility here and look out for the profitability of the
company, because people's livelihoods depend on it.
But in some ways, I also understand where Musk is coming from on the whole go fuck yourself
thing.
I know, it's a hot take, but running a business built on advertising is very hard.
Trust me, I know this firsthand because my network that makes this very show runs on
advertising dollars. I mean, just think about the celebrities who advertised for FTX. They
probably should have told SBF to go fuck himself, right? This goes beyond advertising. In any
industry, there's a chance that you'll be offered money
to do something that you don't want to do or doesn't feel right. I have a friend from college
who worked at a nice family-friendly restaurant to put herself through school, and I remember her
telling me so distraught about a time that she was waiting on a group of guys who told her
to dance for them. Right at the table, right in the middle of this very nice restaurant.
She was so mortified, but she actually did a little shimmy because she was scared that
they wouldn't tip her otherwise. And she was struggling to pay for college after all.
But then, of course, when she did get the tip, she felt like it was dirty money.
And sure, Musk is overreacting a little bit here. Blackmail is a very strong allegation.
Perhaps a better word here is bullied. If I were in his shoes, I'll be honest. I'd be thinking to myself,
how can I tell myself that I'm running a free speech platform if I censor what I say so that
advertisers give me money? If I let an advertiser's opinion of my thoughts dictate my business,
what kind of business am I running? Musk, of course, is the main character of all of these stories.
And I want us to think about what this means that one person has so much influence over such important industries.
It goes beyond the power that he can exert by having so much market share in the global economy.
His tweets can literally move markets.
We've seen it.
Twitter stock went up and down
based on Musk's 140 characters. The fact that stock valuation can be so affected by one person's
opinion introduces volatility in the market that makes it really hard for us as investors.
If we're talking about a tweet from a financial reporting firm like Morningstar, that makes sense.
But even Kim Kardashian, who is not a
financial expert, mentioned a crypto coin on her Instagram story and the price shot up.
To tell you the truth, I don't know how optimistic we can be about influencers being
restricted from talking about companies. I did talk about this recently with content creator
and financial BFF Vivian Tu. You're going to hear that episode on Thursday.
But to make a long story less long, sure, celebrities will be sued by companies from
time to time, like when Elon was sued by Twitter for talking negatively about the
platform and the price sink. But I don't think we're prepared to draw lines just yet between
free speech, influencer marketing, defamation, and pump and dump schemes right now.
So with that in mind, today's tip you can take straight to the bank is to make sure
you have a diversified portfolio. But really diversified. It is awesome if you have an ETF
that's a particular collection of stocks in different companies. But if that ETF is so
highly invested in tech, yeah, you will be exposed to the volatility if Musk or a Kardashian starts
hating on tech. So make sure you're not just investing in different companies, but in different
industries as well. And don't sleep on bonds, you guys. 5.35% for a three-month T-bill?
Can't you see it? Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin.
Money Rehab's executive producer is Morgan L Network. I'm your host, Nicole Lappin. Money Rehab's
executive producer is Morgan Levoy. Our researcher is Emily Holmes. Do you need some money rehab? And
let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to
potentially have your questions answered on the show or even have a one-on-one intervention with
me. And follow us on Instagram at Money News and TikTok at
Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you.
Thank you for listening and for investing in yourself,
which is the most important investment you can make.