Morning Brew Daily - Elon Musk Unbans Alex Jones & SmileDirectClub Files for Bankruptcy

Episode Date: December 11, 2023

Episode 210: Neal and Kyle recap the weekend with major leadership changes in Argentina and the University of Pennsylvania, both in economical turmoil. Then, Elon Musk brings back Alex Jones on X while SmileDirectClub closes up shop and files for bankruptcy. Next, LA scores BIG with Ohtani’s massive deal with the Dodgers and Lakers winning the In-Season chip. Meanwhile, SantaCon season is here but maybe those charitable dollars aren’t that…charitable. Lastly, a preview of the biggest news happening this week.  Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.c.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning brew daily show. I'm Neil Freiman. And I'm Kyle Hagee. On today's pod, Penn's president resigns under pressure from major donors. And Shohei Otani is likely making more money than you. Today is December 11th.

Neil, let's ride. Kyle, thank you for filling in for Toby again today. The last time you graced us with your Manu Genoblee sixth man of the year talents, You stated that the holiday season doesn't start until you've watched Home Alone. Well, can I ask what you did this weekend? Yes, so I know people have been waiting with bated breath for this announcement. This weekend, I did watch Home Alone 2 Lost in New York. So for those who are waiting to celebrate, the holiday season is officially upon us.

I've got my mini Christmas tree. We're good to go. Are you excited for the holidays, Dan? I am so excited. December goes by so fast. You wait for all year, and then next thing you know, you're just in the depths of January. So I'm just trying to savor every second. And before we jump into the news, a quick shout out from our sponsor.

Yeah, Neil, I've actually been working on this character, I think. I'm ready to introduce it to the world. And this character is Kyle from Yahoo Finance. Okay, paint the picture for me. Yeah, so Kyle from Yahoo Finance, he's got a loaded 401K. He can recite all the companies in the S&P 500 backwards. And Warren Buffett actually calls him when thinking about making an investment decision. Sounds like Kyle from Yahoo Finance is a pretty informed guy.

He is. And that's, of course, because he basically lives on the... the internet's number one finance platform. Do you want to be like Kyle from Yahoo Finance? I know I do. So head to finance.jave.com today or download the Yahoo Finance mobile app. They say everything happens for a reason, but I suspect everything happens for a Reese's. Like this commercial break. Did you need 15 seconds away from music or 15 seconds to eat a Reese's? Perhaps it's true. Everything happens for a Reese's. Let's start our show with a turmoil over free speech on America's campuses.

On Saturday, University of Pennsylvania President Liz McGill resigned from her position after being heavily criticized for her congressional testimony about anti-Semitism. You might have seen the clip that went viral last week. McGill, Harvard President Claudine Gay and MIT President Sally Cornbluth, were asked whether calling for the genocide of Jews would constitute bullying and harassment at their schools. They didn't unequivocally say yes, offering instead a bunch of contextualizing and legal that outraged many people. Leading the charge against McGill and the other presidents, even before this testimony,

was major donors and Wall Street bigwigs. There has been a revolt among some wealthy alumni who have accused Ivy League colleges of letting anti-Semitism spread unchecked on campus, particularly after the October 7th attack on Israel. Mark Rowan, the head of Apollo Global Management, led a crusade to get donors to pull their money from Penn. This tension reached a fever pitch after last Tuesday's hearing. Pfizer's CEO Albert Borla, a grandchild of Holocaust victims, called the testimony one of the most despicable moments in the history of U.S. academia, and a major pen donor threatened to pull a $100 million donation if leaders weren't removed.

They got what they wanted with McGill's resignation, but there's also been significant pushback among faculty who said, we don't want outside interference from billionaires leveraging their fortunes to dictate our school's policies. So here we are in maybe the most tense time on college campuses since Vietnam. Yeah, I mean, the board chair Bach said, quote, basically the presidents were overprepared and over-lawyered. Given the hostile form in high stakes, she provided a legalistic answer to a moral question, and that was wrong. It made for a dreadful 30-second soundbite in what was more than five hours of testimony. I think everyone saw that soundbite, and you touched on the pressure from donors, which I think in total was more than hundreds of millions of dollars. They were threatening to pull from the university.

So the university kind of had no choice in this matter to find a way forward. And you mentioned kind of this like really tense situation on campuses. And there was a quote from one of the professors that said, quote, it's terrifying. As scholars and academics were used to being in disagreement all the time, the whole academic world is set up in such a way that the proper response to speech that you don't like is more speech. And so it does seem to be like this trifecta of crises facing university presidents and universities, around Israel and Palestine, around free speech, and around just building a campus where everyone feels like they belong. And so this is a really tough situation for universities to be in.

Yeah, I think people are concerned about the non-application of standards across, if you create standards for free speech for one marginalized group or something like that, then you have to necessarily apply it to another one. And I think what the critics are saying is that Jews, as a marginalized group, you're not treating the same way in terms of your free speech policies as you would another. And you've had these major Wall Street guys like Bill Ackman, who's a Harvard alum, kind of used the same bare-knuckle tactics that they use when making deals and hostile takeovers, posting these letters on Twitter and X and calling for these people to resign. It's really tough to say whether the donor exodus, like how significant it is.

because you look at Harvard's endowment, it's $51 billion. That's a ton of money. One is a smattering of people pulling their donations actually going to affect the bottom line. Like, how much pressure can they actually exert? But it does seem, you know, when you look at Harvard's revenue, 12% does come from fundraising. So I think if you have people pulling 100 million here, 100 million there, it's going to get you to change your policies potentially. And then you have the pushback on the other side where it's like, man, billionaires control literally, every other part of the world, now they are coming into our campuses, which are supposed to be

bastions of academic freedom and all of that. So this is, you know, this is only going to be building. MIT has stood by their president. Harvard Gay has said she's not stepping down either. Yeah, it will be quite interesting because McGill is still serving as the interim president until they can find the next person. I think that will really be illuminative of who that next person is that Penn selects. The line of questioning that person is going to have to kind of to fulfill the job, and then what policies they're going to implement once they become actual president. We talked a little bit about Bill Ackman in Twitter, so let's go back to our favorite platform,

which is X. And if you weren't getting enough conspiracy theories on X, I guess you're in luck now because Alex Jones, the conspiracy theorist and host of InfoWars, actually had his account restored on X over this weekend after a very, let me say, scientific in air quotes, poll conducted by Elon Musk, where he basically asked people, should I let Alex Jones back on the platform? 70% of respondents approximately said, yes, let him back on. And then Elon said, quote, this will be bad for X financially, but principles matter more than money. And he said that basically following the poll, the people have spoken and so shall it be. So Alex Jones was

reinstated. This was a reversal of a 2018 decision by the social media platform's former management team to ban Jones, basically after he violated their terms of service around harassment. Neil, what's your thoughts on, on X and Alex Jones? Well, it's not just a reversal of previous management. It's a reversal of what Elon Musk said just last year. Correct. Because he's been being badgered by Twitter ex-users saying, let Alex Jones back on the platform.

You're supposed to be a free speech absolutist. And Musk was, you know, he's reinstated Kanye Weston, Donald Trump, and said, you know, where I draw the line is Alex Jones because Alex Jones is infamination. for calling this Sandy Hook shooting a hoax, and Elon Musk lost his first porn child, and he said, I have no mercy for anyone who would use the deaths of children for gain politics or fame.

And then it seems like he just kept getting badgered and badgered, and then now he put it to, yes, this very scientific poll. But yesterday, as soon as Alex Jones was reinstated, they held a Spaces event with Elon Musk, Vivek Ramoswami is the presidential candidate, Alex Jones, Andrew Tate, the influencer has been charged with

you know, sex trafficking. And the first thing that Elon Musk asked Alex Jones was about Sandy Hook. And what did Alex Jones say? He said, he gets all defensive. He says, like, I've apologized a million times. I was just trying to play devil's advocate. Like, I don't, I believe, I've just said, sorry. I believe that it happened now. So, you know, he just, he kind of is just like, look, I've said, I've apologized. Like, stop asking me about it, blah, blah, blah. But that's the least of his problems because he owes, there's a defamation lawsuit, and he owes victims over $1 billion. Right. Yeah, exactly. For additional context, he owes $1.5 billion in damages to these families. And actually, last month, the families offered Jones a deal to settle this debt for only about

6% of what he owed. He's filed for personal bankruptcy, and he's trying to evade payment. So hopefully the families get some money and some closure on this. And obviously, it's just an incredibly sad thing for these families to have to endure. her going through this. Meanwhile, Linda Yakorino is probably like, are you kidding me? She's the CEO of X, and her whole main task is to get advertisers to come back and create a relatively safe platform for your brand to run an ad. And then when you add Alex Jones into the mix, it obviously adds another curveball to

that and makes her job a lot more difficult. But Elon Musk doesn't care because he's told advertisers to go after yourself. Yeah, right. Okay, a new era has begun in Argentina as self-described anarcho-capitalist, Javier Miele, was sworn in as president yesterday. But in his inauguration speech, Milay didn't offer the usual, rah, rah, let's go get them, boys' message. No, it was pretty dark and intense with Milay telling Argentines to prepare for even more pain

as he tries to get the flailing economy on the right track through shock therapy. I mean, when was the last time you heard an incoming president say, there is no money in his inauguration speech? Fact is, Milay is right. Inflation is ripping at 143 percent, four in 10 Argentines. Argentines are impoverished, and Argentina owns a mammoth $45 billion to the international monetary fund. That frustration and pain helped Miele, an economist and former TV pundit, come from out of nowhere to win the election in November with a radical agenda that included replacing the peso with the dollar and abolishing the central bank. Still, in the week since his election, it seems like he is backing off some of his most out-there plans.

He hasn't mentioned dollarization in a while, and he's appointed establishment figures, including the guy known as the message. of finance to key posts. So the question now is, which Milay will we get? The anarcho or the capitalist. I think the first thing I have to say is the key to like any Argentinian politics is just drop messy in as many times as possible. Always a good move. Yeah, I mean, I think Millet is being quite honest, or at least he's saying he's being honest, saying, quote, the challenge before us is Titanic. And I'd rather tell you an uncomfortable truth than a comfortable lie that we are facing some really rough, a really rough situation. And there's going to be pain over the next six months, but I'm going to try to do what is right for the country.

But yes, the question is, is the campaigner we saw going to be the same person that governs, or is he going to backpedal on some of these lofty promises to abolish many public agencies and try to get Argentine back on track? So we will see what happens, but he also said he's not going to be pressured by protests, and that he views his 11-point victory kind of as a mandate to do exactly what he said he would do, on the campaign trail. Doing it might be a little harder than just saying he's going to do it, though.

He's definition of a wild card. Yes. I don't know what he's going to do. He also is absolutely like a quote machine. He is one of the most interesting politicians I've seen. One of his nicknames is the Madman or El Loco. And he also has four dogs named after free market economists, including Friedman and Rothbard.

He's the first economist in history to be elected in Argentina. So a very interesting next six months we're going to see play out in that country. Those dogs are all clones of one dog. Yeah, so it's true. To make things even cooler, he's into cloning. All right, Neil, let's move on to our next story. And I have some very bad news for middle schoolers who are looking to avoid their awkward braces phase. And that is that Smile Direct Club, a telehealth company that sold teeth-straighting devices through the mail announced Friday that it's going to be shutting down.

This company no longer exists. The company was founded in 2014. It sold these teeth aligners for over 1,800. which basically it marketed as a cheaper, faster alternative to braces. And its initial public offering, its IPO valued the company at $8.9 billion in 2019, and now it is a penny stock. But this company actually did service a lot of customers, over 2 million customers over a decade. But as business goes, the company was not profitable.

And it filed for Chapter 11 bankruptcy in September. I've heard that 9 out of 10 dentists agree that this bankruptcy, was necessary by Smile Direct. Neil, do you agree with the dentist assessment? What was crazy to me was reading about, so Smile Direct Club, obviously not profitable, but also had a lot of legal issues and complaints from customers. There's this non-disclosure agreement that has to do with refunds. That was pretty interesting to read about.

So you can get, within 30 days, you could get a refund on your, I don't want to call them, whatever. Teeth liners. And if you wanted to get a refund after 30 days, they, you can talk to them. They might give it to you, but then you have to enter this non-disclosure agreement where you can't tell anybody else about the refunds. So they keep it under, keep it under wraps.

I don't know if that's like in other businesses or across other industries, but that has been the source of a lot of headaches for Smile Direct Club and a lot of customer complaints. It even went as far as where you had to delete negative social media posts about the company. Like they would be like, yeah, we'll give you your money back. But this tweet saying we're not perfect, like you're going to have to delete that first. And because of this report. by the New York Times, which uncovered this in 2020.

They actually had to release 17,000 customers from these agreements. Did they just rage post on social media about it? Apparently. And they had to pay 500K to the Washington, D.C., to the district that the suit was in. So it's tough for Smile Direct Club. Honestly, might be a big L for everyone because now we are going to be forced to go back to the dentist, which no one wants to do. Hey, we have dentists. We are not anti-dentites.

We're not anti-dentites. It's just, it's tough, the teeth cleaning portion. True. We'll get to the second half of the show after this break. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179, like the next grill 3-burner gas grill. Or get $50 off a select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together.

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does not fit all. Get a quote or find an agent today at thehart.com slash small business. Let's head to our winners of the weekend segment where we pick two people who got whatever the opposite of the Sunday Scaries is. Kyle, you won the pre-show ice sculpting competition, so you get to go first. It was a beautiful ice sculpture. I'm actually going to pick a city for the winner of the weekend, and that city is Los Angeles. And to me, this is just such a heartwarming story.

It's so great to see an underrated city, finally get some limelight. So congratulations to Los Angeles. Why do I say LA is the winner? Well, first, they signed the big free agent, Shohei Otani to a 10-year, $700 million contract. So Showtime got the bag here. The Dodgers did. The Dodgers did. Yeah, because he went from another Los Angeles.

Yes, he went to the Angels to the Dodgers. And just to put this amount of money in context, this is more than $275 million more than what is Angels teammate Mike Trout made in 2019. It's $10 million more than Damien Lillard of the Bucks makes, which who was the highest paid North American athlete. And it actually eclipses Messi. We're bringing him back up the $50 to $60 million that Messi is making for MLS, Inter-M Miami team. In addition, eight MLB teams are actually paying their entire rosters less than

Shohei is going to make in 2024, which is just remarkable. And I love this quote, Otani doesn't drink, doesn't smoke, doesn't care about money, which is part of his unique charm. For someone who doesn't care about money, he is certainly making a lot of it. And then just a second note on LA, because clearly this wasn't big enough for LA. The Lakers have won the inaugural NBA in-season tournament. Basically, every team in the league battled it out for the first ever NBA Cup, the first ever time they ran this.

The Lakers went 7-0 in route to this victory, and LeBron James won the NBA Cup MVP trophy. So a big weekend for L.A. Great to see it happen to such an underrated season. Yeah. So the question here is $700 million for Otani. Is it, will you ever see that return? Will you ever see a return on that investment? $700 million.

He's one baseball player. Can you possibly, can the Dodgers MLB possibly make $700 million on that? So people who don't know baseball, Otani is this, you know, generational talent because he can pitch and he can hit. So we can play two positions, and that's kind of unheard of since Babe Ruth, but even though Otani is way better than Bay Ruth, they're probably terrible at this point. And then the other side of that, which probably is more, you know, probably juice that $700 million figure, is his market ability and his ability to have fans on both sides of the Pacific and have Japanese people come and watch MLB games, watch Dodgers games, and then come and visit the United States and spend money. and also you can get Japanese brands advertising at Dodgers Stadium.

So there's a big off-the-field component here. I don't know whether the math actually works out to $700 million. I don't think the Dodgers actually did it. They were just like, this creates, ironically, a halo around us that will just like create, you know, drive value in our brand for a decade to come. Right. There's a lot of upside. And then the downside is the Dodgers are actually like pretty good. They've sold out.

They've led the league in a 10, excuse me, 10 of the last 11th season. So it's not like they need to sell more tickets. They could raise prices that might piss off like long time fans. And they've also made the playoffs 11 consecutive years. So if this, if you went to like a smaller, less successful club, this might actually boost their brand. The Dodgers have a really solid brand. So this will be super interesting to see if it actually does have benefit to the Dodgers more than $700 million. Well, how many people in Japan who, you know, Otani is a hero there are going to buy a Dodgers hat right now?

Yeah, there's a lot. All right. Let's go to my winner. It's the legendary anime filmmaker Hayao Miyazaki, who did something this weekend he's never done in his long, illustrious career. He topped the box office. Miyazaki's latest movie, The Boy and the Heron, debuted at number one in North American theaters, becoming the first original anime title ever to lead the domestic box office and his first time wearing the yellow jacket, which is shocking since this is the same director who brought us movies like Spirited Away,

Princess Mononouke and other magical treats. The intrigue is whether the boy with the heron will be Miyazaki's last. He's 82, after all, and both the boy with the heron and the film before one, before this one, was supposed to be a swan song. But of course, he's reportedly already working on another film because he's him. Yeah, I mean, he is the goat of animation. I think it's safe to say you mentioned Castle in the Sky, my neighbor Todoro, spirited away, spirited away, which at one point was Japan's highest grossing film in Japanese history.

There's also a great Netflix documentary about Studio Ghibli who produces these films called The Kingdom of Dreams and Madness that everyone should check out. Miyazaki's the goat. That's all that's all I can say. Yeah, let's hope he just keeps making movies in perpetuity. I got to see this one. Yes. All right, let's move on to our last story of the day. And before Santa has to deliver every single present in the world on Christmas Eve, he needs to blow off some steam, right?

He's a person just like us. And that's exactly what Santa Con is all about, seeing thousands of air. NYU graduates, another 20-somethings, dress up as Santa for a big bar crawl. But if you thought that Santa Con was just a drinking festival, you're actually wrong. SantaCon is a registered 501C3 nonprofit called Participatory Safety Inc. And it actually has the Santa Con trademark. And that got that status in 2014. And its mission statement, which I never knew, is to, quote, bring art to underserved communities.

And the biggest source of revenue is this big Santa Con festival where people can join. for $15, there's an official route. But they say some of this money is supposed to go to nonprofits. They're supposed to donate to the community. But that might not be happening according to this Gothamist analysis. Neil, break down this analysis for us because there's so much interesting things in here from Santa Con. So the thing that stood out here is that more than the third of this nonprofit's total giving

between 2014 and 2022 went to groups or individuals who, appear connected to, I just want our listeners to like take, just like pop something in your mind. The answer is burning, man. Who saw it coming? Who saw it coming? And apparently, if you go back to Santa Khan's originations in the 80s and 90s, it was part of a group that did performance art and art installations and disrupted traffic and did all these kind of anarchist things.

And that's where Santa Khan came from is that Burning Man vibe. And then it's just amazing to see how where it's now, where it's kind of like, it's associated with finance bros and the East Village of New York. But I think you, but when you peer through the financials, that's why it's super interesting because you can see that's where it started was in the ethos of Burning Man. So they're still trying to maintain that link. Yeah. And so if you had Burning Man on your bingo card, I hope you also had cryptocurrency because of course. The nonprofit also lost $17,000 in cryptocurrency bets. that it made. And basically, a quote here from an accountant was, to the extent that they're doing

something charitable, it's not what people think. The money is going to their targeted cherries. To targeted cherries is just a minuscule percentage of their budget. So this idea that they're a non-profit and giving back, it might not be particularly accurate. It's not illegal or anything, but maybe a little shady. That said, you know what, Santa Khan gets a bad rap. I say live and let live. I'm just not going to go anywhere near there. I've never heard someone who's going to Santa Con being like, yeah, I'm doing this for the nonprofit giving. Yeah, well, they don't know about it. Exactly.

All right, let's run through our preview of the week ahead. Tomorrow, the annual COP28 climate summit wraps up and the question of what to do with those pesky fossil fuels is front and center. Do we need them as we transition to green energy? Should they be phased out wholesale right away? Those are the issues facing the COP28 leaders as they try to hammer out a deal. OPEC, the cartel of major oil-producing countries, cause an uproar when it wrote a letter urging its member state. to reject any mention of a fossil fuel phase out in the final text of the agreement. So we'll see what happens there.

Yep. Funding for Ukraine also hangs in the balance this week. A Christmas break deadline in the Senate at the end of the week is ratcheting up the pressure for lawmakers to reach a deal on a $110 billion emergency aid package for Ukraine. Republicans want major changes to U.S. immigration policy in exchange for approving the proposal. But others say, stop playing political games because money is literally running out for Ukraine. and in a sign of the desperate times, President Zelensky will visit the White House tomorrow to make his pitch. Then there's the final Fed meeting of the year, and like most work meetings in mid-December, not a whole lot is going to happen.

Chair Jerome Powell is pretty much guaranteed to leave interest rates unchanged as inflation continues its descent to a 2% target, which means the bigger question is, what's on tap next year? Rate cuts, most likely. Investors will be glued to Powell's press conference for clues on when the Fed thinks it will need to slash rates next year. All right, a bunch of other things to run through. Final four episodes of the final season of The Crown will drop on Thursday. Still haven't seen a single episode. Neither of I.

Thursday is free shipping day where you can shop at participating online stores and not pay a dime to ship your package. And it will be guaranteed to arrive before Christmas. Now that holiday season is officially started because I watch Home Alone, get on that free shipping day. Wonka, who is played by Timothy Shalameh hits Theaters Friday. It's the backstory of our chocolate hero. Saturday is the 250th anniversary of the Boston Tea Party. How are you going to celebrate? I might have to buy some tea from a grocery store and go throw it in the river or something.

I think people might actually do that. I'm sure there's some cool celebrations happening in Boston. And then Taylor Swift turns 34 on Wednesday. I will turn 34 in two years. I think you and Taylor Swift's comparable resumes. All right. That is a wrap on our show. Have a wonderful Monday, everyone.

It's going to be a great week. Toby will be back tomorrow for anyone worried. about him, but Kyle, amazing show as always. Thank you so much for coming in. Feel free to send your thoughts on the show or just say hi to our email address. Morning Brew Daily at Morningbrew.com. Let's roll the credits. Samantha Velas is our editor and producer.

Raymond Liu is our associate producer. Yuchenoa Ogu is our technical director. Billy Minino is on audio. Hair and makeup is still hungover from Santa Con. Devin Emery is our chief content officer and our show is the production of Morning Brew. Have a great week, everyone. I wish you well. All. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the

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