Morning Brew Daily - Musk v. Altman Gets Fiery & Coca-Cola’s Cash Cow is…Milk?
Episode Date: February 12, 2025Episode 517: Neal and Toby cover the feud between Elon Musk and Sam Altman after Musk makes a bid to take control of OpenAI, starting a war of words between the two billionaires. Then, Coca-Cola impre...sses Wall Street with their earnings, but leaves them thirsting for more of the soda company’s success with milk. Also, Kanye West’s controversial ad and website is pulled down by Shopify. Next, a book publisher ends the practice of blurbs which has opened up a fierce debate in the literary world. Finally, a rundown of the latest headlines from the day. 00:00 - Monty wins the Westminster Dog Show 3:15 - Musk-Altman gets personal 8:20 - Coke’s milk is rich 12:00 - Shopify pulls down Yeezy site 18:00 - Book blurb battle 22:30 - Sprint Finish Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Check out https://wise.com/business for more! 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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Good morning brew daily show.
I'm Neil Fryman.
And I'm Toby Howell.
Today, Sam Altman called Elon Musk
Not a Happy Person.
Let's go inside the billionaire battle
over the future of AI.
Then the publishing world is locked in a heated debate
over those little blurbs you see
on the back of books.
It's Wednesday, February 12th.
Let's ride.
The Super Bowl wasn't the only contest
that everyone you know is talking about this week.
The Westminster Dog Show was held last night
and Best in Show
went to a giant show
Schnauzer named Monty.
It's the most prestigious prize in the U.S. Dog Show world where dogs are judged
according to how closely they match the ideal for their breed.
Monty's owner and handler could barely hold back tears on the podium.
Puppy did the damn thing and I'm so proud of him, she said.
Having been named the top dog, Monty will now be retiring from competition.
Toby, what did you accomplish when you were five years old?
Absolutely nothing compared to Monty.
This was Monty's third time in a row representing the working group,
classification of dogs.
So screw the Chiefs dynasty.
I'm all in on the Monty dynasty.
Hopefully it kicks off a new era for the working group, though.
This was its first win since 2004.
You also got a feel for Bourbon the Whippet,
who was a runner-up for the third time at the competition
and get this, the nine and a half-year-old,
came out of retirement just days before the competition.
So what a performance out of Bourbon?
Other finalists did include the crowd favorite.
Neil the Bichon Friese representing the non-sporting group.
Neil never heard of a dog called Neil.
That is also the first time I've heard of a dog named Neil,
and I feel bad for that dog, to be honest.
But get this, Neil, heel, does kind of roll off the tongue.
But congrats to Monty.
Its owner says it's retiring from the competition on top.
What a performance.
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Well, Mom, the billionaires are fighting again.
Sam Altman and Elon Musk escalated their beef yesterday
with the two trading barbs on X
and in interviews over Elon's last-ditch attempt
to hijack a deal to make open,
AI, a for-profit company. Earlier this week, Elon shocked the Tech Bro world by making an unsolicited
bid to purchase the nonprofit arm that controls OpenAI for $97.4 billion. Elon co-founded the
multi-billion dollar startup with Sam Altman as a nonprofit back in 2015, but has spent much of
the past few years railing against Altman's plan to convert the company into a for-profit
entity. Through submitting a bid, Elon has thrown a wrench into those carefully laid plans.
Open AI's board doesn't have a fiduciary responsibility to maximize returns since it's technically a charity.
But by submitting a bid, Elon is setting a public floor price for anything Altman ends up offering, likely forcing him to paying a higher price to take control.
Alman spent much of yesterday morning discrediting Elon's Hail Mary as an attempt to slow down a competitor, reminding everyone that Elon has his own AI company, XAI.
But Altman also took the time to offer up some personal.
jazz adding that Elon's whole life is from a position of insecurity and that he, quote,
feels for the guy. Neil, it is real housewise of AI out there with billions of dollars and the
future of artificial general intelligence at stake. Yeah, Open AI right now is trying to pull off
a routine of Simone Biles level difficulty. What they're trying to do right now is one of the
most complex maneuvers in American commercial history. It's got this $500 billion data
Center project called Stargate with Oracle and SoftBank. At the same time, it's raising $40 billion
at a $300 billion valuation. That would be the largest venture capital round by orders of
magnitude in American history. For those to happen, it needs to be able to convert from this
non-profit, for-profit structure that it's in right now to streamline that into one cohesive
for-profit company that allows it to raise money. Right now, it is handcuffed.
to raise money because of this weird structure that it's in.
So it needs to be able to execute this deal.
And Elon Musk, as Sam Altman is probably correctly saying,
is trying to throw a wrench in it and slow it down.
Even if he's not able to stop it,
Elon OpenAI has a lot on their agenda,
a lot of mouths to feed this very complex maneuver,
and Elon Musk is certainly making that more difficult.
Yeah, and what needs to happen is the board needs to, you know,
pick a side, essentially.
opening I did completely overhaul its board members.
Remember the blowup that happened between Altman and the old board of directors last year.
So in theory right now, the board is, you know, on Altman's side.
It oversees a nonprofit arm, which in turn controls the for-profit business.
Also, who was on that bard, none other than the former chairman of Twitter,
Brett Taylor.
He was the chairman of Twitter when Musk made his other unsolicited bid to buy that business
and then tried to back out before, you know, he was eventually forced to buy the business.
So he has a very fraught history with Elon Musk to say the least.
It is just like this Brett Taylor cannot escape Elon Musk trying to buy every single business he's on the board of.
So the same time, though, the board could hypothetically say, wait a second, this is a legitimate offer.
Let's see what you have to cook up, Altman.
They can't just dismiss it completely out of hand.
So hypothetically, the board should side with Altman, but you never know.
instances when, you know, you have billions of dollars on the line.
And there's also a chance this is a complete smoke screen because Open AI board director
Larry Summers, who's the former Treasury Secretary, said he had not received any formal
outreach from Elon Musk in that consortium of investors who put forward this nearly $100 billion
bid. Sam Altman also told employees that he hasn't received anything official from the Musk team.
So we'll see whether this is blust or actually a real bid in the first place.
And then the final point to make here, I mentioned that the board doesn't have a fiduciary responsibility like most for-profit boards do, but they do have an obligation to fulfill opening eyes kind of legal purpose.
And that legal purpose is safely advancing artificial intelligence to benefit humanity.
So the question of price is secondary to the question of whether this sales fulfills the mission that the nonprofit arm set out to achieve.
So it gets a little nebulous there, but that is one other aspect of this that you have to pay attention to.
And this is very all soap opera-e, obviously.
But there is so much at stake billions of dollars, but also the future of AI.
OpenAI is one of the leading AI companies in the world.
Every corporate exec and technology leader says this is the next industrial revolution.
So who controls what happens going forward with this technology is of crucial importance to everyone around the world.
And right now, these two guys are duking it out to be that person.
Is milk the future of Coke?
And by that, I don't mean milk-flavored Coke, which would try.
But Coca-Cola, the drinks conglomerate, which is leaning into the white stuff to become a, quote, total beverage company amid declining soda sales.
In its earnings call yesterday, Coca-Cola touted the milk brand Fair Life for continuing to perform well throughout the year.
That is an understatement.
It's Coke's fastest-growing brand in the United States and the centerpiece of its plan to diversify away from soda into beverages that people.
people, you know, drink. On the surface, milk might seem like a bad choice. U.S. per capita
milk consumption has plunged nearly 30% since 2010, as Americans have turned to plant-based
alternatives. But Fair Life is not ordinary milk. It's milk, but fancy. It filters milk to create
higher levels of protein while cutting sugar by half and getting rid of lactose altogether
for happier stomachs. Fans worship its creaminess, propelling sales to grow 1,000% from 90 million
in 2015 to seven years later when it became a billion dollar brand for the first time.
Toby, food and drink companies are under a lot of pressure from changing consumer trends,
high inflation, and the OZempec craze.
So here's the big question.
Is it milk or milk?
It is milk, Neil.
Also, I have tried Fair Life, and it is very deliciously creamy.
A lot of fans do just like it because it's got a Junicequa to it.
It's got that creaminess.
I didn't even know that, in fact, that it got rid of it.
of lactose when I first tried it. You just think it's really good milk. But I think it shows that
Coke is on this path towards evolving away from, you know, it's bread and butter, which is soda.
They do, they're reading the consumer wins right now that are saying that we want healthier
things. We don't want these sugary beverages to be our main thing that, you know, props the
company up. So we have been seeing them pour money into coffee, into sports drinks. They've,
they bought body armor a few years ago. They've bought these coffee brands. And now they have this
milk brand that I don't think they had high hopes for when they first bought it. You don't think
about milk as a tent pole product, but when you kind of innovate and you add these extra layers
that consumers really start flocking to, you see how milk can be Coke's fastest growing U.S.
brand. Yeah, I don't think they knew what they were getting into it. This deal has a very interesting
history. Back in 2012, they entered a joint venture with a milk co-a, a dairy co-op, which created
the Fair Life brand in response to declining milk sales. And their new,
initial outlays were about $320 million, but this deal had some performance-based payments
that continued through this year, and the performance was really good for Fair Life.
So they kept having to pay over these performance-based payments.
So now at this point, which started as a $320 million deal, has now morphed into a $7.4
billion deal over five years, and that's now the largest acquisition in Koch's 133-year history.
So it's cost them a lot, but it seems like it is they're getting their return.
Right. It's kind of a good problem to have. What's ironic about this whole thing, too, is the U.S.
milk industry isn't doing very well. The sector's been facing the same sort of headwinds that, you know, the soda industry has been facing where a lot of kids and a lot of people just aren't drinking milk anymore.
Also, you look at plant-based alternatives, oat milk, you know, soy milk. They have surged. So U.S. per capita milk consumption is down nearly 30% since 2010. It does closely
mirror the soft drinks industry's fall as well. Since 2000, the total amount of soft drinks consumed
in the U.S. each year has sunk by 37%. So somehow we're combining a soft drink company with a milk
company, and yet one plus one is equaling three in this instance because of just the approach
that Fairlife has taken. Shopify finally booted the artist formerly known as Kanye West from their
platform after the rapper used a Super Bowl ad to direct traffic to a site that only sold
swastika shirts. Towards the end of Sunday's game,
Ye's ad appeared on screen in markets, including L.A.,
Atlanta, and Philadelphia. In the 32nd spot, he told people to go
to Yeezy.com, but within an hour of the commercial airing,
Yeh's website got rid of its normal inventory and instead
only had one product for sale, a $20 t-shirt with a swastika on the front.
Shopify drew widespread condemnation for keeping
Yeas store open for orders throughout Monday before it took the site
offline yesterday morning, citing a violation of its terms. This isn't Shopify's first scandal either,
despite months-long public outrage. Another Shopify powered store that sells Holocaust denial merch
is still active. Neil, last year, Shopify removed a ban on, quote, hateful content from its
user policies. So those recently loosened acceptable use policies are in the spotlight again
after this incident. Yeah, my first question for this was also, how did this commercial pass mustard
to air. I mean, we didn't see it because we were watching in the New York market, but apparently
he bought 30-second spot on three Fox-owned channels. And the ad, which many people in America
did not see, but many people did see, was him in a seemingly dentist chair filming on an iPhone.
And, you know, this has to go through legal approval. So these station directors looked at this
and said, okay, well, I guess there's nothing apparently wrong or illegal here. And when he did direct
people to this website during the Super Bowl itself.
But during the Super Bowl, this store sold very generic, non-branded merchandise,
nothing like the swastika shirts.
And then hours after is when he flipped it, leaving these studio execs being like,
what did we just do?
But it speaks to the fact that Super Bowl commercials are also not always national and
these very slick productions.
Sometimes they're local car businesses and lawyers.
And often more controversial advertisers will buy, you know,
spots in local markets for hundreds of thousands of dollars. It's still very expensive, but kind of
skirt the national spotlight. It seems like this is kind of what Kanye did. It's also, you know,
created some uncomfortable moderation questions at Shopify, particularly, but it also, it goes beyond
Shopify in recent months right now because, remember, they loosened its acceptable use policies
last year, but also they're not the only ones doing that. Meta announced it was ending its
fact-checking system in favor of this community note system that you see
on a platform like X.
Google also has recently told the EU
that it's not adding fact checkers
to search results in YouTube videos.
So it is part of the climate that we're in right now
that it does seem like we're in this loosening
of content moderation, which is why
sometimes you're going to see these instances
like what just happened with Shopify
start popping up more and more.
And then also, just to zoom out here,
this kind of ends the ability of Kanye West,
or he's known as yay now,
to be a force for, you know, any sort of selling of anything.
Because remember, he had this big collaboration with Adidas.
That ended in 2022 over anti-Semitic remarks back then.
Remember, he had another big deal with Gap where he was going to partner with them to release a line of clothing.
That fell through as well.
So you have seen, Ye had a sports industry that signed athletes like Jalen Brown, Aaron Donald.
They all left back in 2022 as well.
so you are seeing just kind of this collapse of the Kanye West economy,
whatever last vestiges there were, it is now completely gone.
Up next, what's up with this blurb drama going down on the back of books?
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Now to a page turner of a story that you won't be able to put down.
It truly is a tort of force that redefines how we think about the genre.
I, of course, am talking about the controversy sweeping the publishing world around book blurbs.
You know, those short, cliche-heavy sentences you see plastered on books from other authors,
goading you into buying it.
Well, maybe they're not as permanent a fixture as we thought.
Earlier this month, Simon & Schuster generated a storm when publisher Sean Manning wrote an essay,
a gripping read, if you ask me, railing against the book blurb industrial complex and
stated that the company would no longer require authors to solicit blurbs for their books.
I believe the insistence on blurbs has become incredibly damaging to what should be
our industry's ultimate goal, producing books of the highest possible quality, he wrote.
That Shremmer followed another literary earthquake in December when best-selling author Rebecca
McKay said she'd stop blurbing books for at least the next two years, calling it a drain on her
time and energy.
Toby, blurbs are an incredibly touchy topic among authors.
No one actually likes to ask for them or receive requests to write them, but you seemingly
should do it because this is what the industry has demanded.
Can the blurb economy be reformed?
At stake in all this worrying about blurbs is also this underlying fear about the state of
publishing and, you know, the book industry in general.
Remember in 2022, there was this lawsuit blocking a merger between Simon & Schuster
and Penguin Random House.
in that lawsuit revealed that just how much publishing relies on the top 0.1% of authors that they expect
to sell very, very well. They put most of their resources and most of their marketing behind
the big names of the industry. And what that does is leave very little just scraps over for
kind of the rest of the 99% of the book industry. So a lot of authors have come out and say,
we still need blurbs because we have no marketing spend.
This is our one chance to get some, you know,
advertising for free by hitting up our peers,
hitting up our author friends that we know.
And a lot of authors say,
listen, it's not for people like you and me, Neil.
It's not for people just cruising the bookshelves of your random bookstore.
We don't care that much about blurbs,
but what, you know, who does care,
are people who read professionally book reviewers who,
when they're sorting through a mountain of books,
they will glance at the blurbs and say,
all right, who did recommend this to maybe move a book
from the bottom of the pile to the top of the pile?
So it's not as cut and dry as it's just this cronyism
and it's just you scratch my back, I scratch yours.
It does still have a place in the publishing industry.
It's for the gatekeepers, right?
But it was interesting to me to learn
how this process comes together
because I guess I didn't really think about it that much
when you see a blurb on a book.
You don't really think about how it got there.
But apparently, before a book is published, the authors of books who don't have massive marketing behind them, which is most of them, just literally cold email thousands of other authors asking them to read their book and blurb it.
And oftentimes it is their teachers from their MFA programs.
But anyway, so they send these, they do this like grind, you know, hit the pavement for three weeks trying to get these blurbs.
And then so that does not sound fun, but you have to do it.
At the other end, if you're an author, you are getting all of these requests going into you.
At the same time, you're sending them out.
So this is very painful for everyone involved.
A huge time sucks.
So that's sort of why everyone hates doing it, even though if they feel they must.
At the same time, it's unclear whether these blurbs actually move the needle in terms of sales.
I mean, we said it ourselves.
Like, you probably do not look at it.
Because they all kind of start to blend together, like a dazzling display of this and that.
It's just the name attached to it.
Right.
It's even King.
Yeah, Neil Freiman.
All of this said, Neil, if you do write a book eventually, I would definitely blurb your book
because a lot of it is actually just your friends will do it for you.
So if you do have friends in the author community, and people joke that oftentimes when you see blurbs,
all it does is show which MFA program the author intended to because it is most of your teachers.
So all that being said, asking for praises oftentimes a very undignified business.
So it is tough for the authors out there.
but we'll see if we start seeing less blurbs going forward.
I think the ultimate flex is publishing a book.
No blurbs necessary.
Just let it speak for itself.
Catch 22.
Had zero blurbs when it came up.
Okay, let's sprint to the finish with some final headlines.
The DEI rollback continues a pace across corporate America,
with more major companies reversing pledges on diversity, equity, and inclusion
under the directives of the new Trump administration.
The U.S. arm of consulting behemoth Deloitte told its employees working on government contracts,
to remove gender pronouns from their email signatures,
and they scrap broader D.I. program, citing the need to, quote,
align with emerging government client practices and requirements.
Also yesterday, Goldman Sachs abandoned ship on its pledge to refuse to work on IPOs
for companies that had all-white male boards.
It made a rule back in 2020 that it would only take a company public in the U.S.
if it had at least two diverse board members, including one woman.
A spokesperson said, as a result of legal developments related to board members,
diversity requirements, we ended our formal board diversity policy. You are seeing just this
about face at so many companies because I remember back in 2020, David Solomon made this really
big deal at the World Economic Forum. He's the CEO of Goldman Sachs said that, hey, we realize
that the last 60 U.S. and European companies in the preceding two years went public without a woman
or a person of color on the board. So made this very big deal about instituting these diversity
requirements. But now you see the wind blowing the other direction. And they're
kind of quietly sunsetting that big plays that they made back in 2020.
Same thing with Deloitte as well.
Deloitte is trying to tow the line on both sides where they are trying to, you know,
listen to the practices that they're hearing come down from the federal government,
but they're also, like their UK arms said, we're still committed to its diversity policy.
So they're trying to play both sides of it here.
For our next headline, CEOs are starting to sound off on Trump's tariffs.
First up, Ford CEO, Jim Farley, raised the alarm against president.
Trump's proposed 25% duties on Mexico and Canada, warning that their effect on the industry
would be devastating. Speaking at an automotive conference yesterday, Farley said,
let's be real honest, long term, a 25% tariff across the Mexico and Canadian border
will blow a hole in the U.S. industry that we have never seen.
Though Trump paused those tariffs for 30 days early last week, the auto industry is continuing
to scramble as it tries to prepare for levies that could add up to $60 billion in a
cost to the industry. Then Citadel CEO Ken Griffin offered up his displeasure at a financial
services conference in Florida, saying, quote, it's a huge mistake to resort to this form of rhetoric
when you're trying to drive a bargain because it tears into the minds of CEOs, policymakers,
that we can't depend upon America as our trading partner. His comments came after Trump signed
in order that would impose 25% tariffs on steel and aluminum imports. So, Neil, in the case of Griffin,
And those comments are coming from an ardent Trump voter and supporter, so they mean a lot.
Yeah, you've heard this from a bunch of CEOs that these tariff threats and reversals
are creating a lot of uncertainty.
And Griffin cited multinationals, and in particular that you need to plan 5, 10, 15, 20 years
in the future because you're about to sink tens of billions of dollars into a factory or
another kind of investment requires a lot of planning, requires a lot of money.
simply can't make those kind of investments when you're uncertain of the trade policy that the U.S.
is going to engage with with the rest of the world. So uncertainty bad for corporate America,
and that's what Ken Griffin is saying. Gulf of America slash Mexico drama at the White House,
the Trump administration barred an Associated Press reporter from entering the Oval Office for an
executive order signing ceremony because the AP style still uses the name Gulf of Mexico
instead of Gulf of America, despite Trump's renaming of the body of water.
The news service said it was alarming that the White House would punish AP or independent journalism,
and that, quote, it not only severely impedes the public's access to independent news,
it plainly violates the First Amendment.
The AP's guidance states that it will refer to that Gulf by its original name while acknowledging
the new name Trump has chosen, and that's because the Gulf of Mexico name has been around
for 400 years, and people internationally where the AP disseminates news, do not.
recognize the change. AP Stylebook is not only used by its own journalists either. It is used by
news outlets around the globe, which is why this has some global reverberations, essentially.
And yeah, they are saying that, hey, this is our journalism doesn't just go out to people in the U.S.
It doesn't just affect people in the United States. So we are going to continue offering or referring
to it by the name that the rest of the world recognizes it by. That is not the case, though,
for Mount McKinley, because Trump changed that name from its former name.
Denali. That area, Alaska, is clearly in the United States. So Trump does have full authority
to change that name. So the AP says it will use the new name, Mount McKinley. But I just can't
believe how many words and how much ink has been spilled over this gall-darn body of water off the
coast of Florida here. But I guess you do have to make decisions. You have when you run a
style book, you have to make these decisions. So yes, it might be a, might be making a bigger deal out of it
than it probably is in the grand scheme of things,
but still, these decisions do have widespread effects.
Finally, if you happen to find yourself in Australia
attending a Brian Adams show,
our condolences go out to you.
Instead of hearing a delightful rendition of Summer of 69,
audiences were sent home after a giant sewer Fatberg
made of grease and rags forced Adams to cancel his show in Perth.
A fatberg is the technical term for a giant rock-like mass
that forms when non-biodegradable solids like wet wipes mixed with fat oil and grease deposits
to create a toilet-clogging monstrosity in sewer mains.
Over the weekend authorities made the call that the Fatberg was menacing enough
that it could cause the venue's toilets to overflow, which, along with being a major vibe killer,
is a health risk.
Neil, a 140-ton fatberg discovered in London was autopsied to find all sorts of things
from ketamine to condoms.
A 330-ton one from 2021
nearly took down Birmingham
in the UK. It all told NPR
reporting from 2017
found that Fatbergs were costing
London's water provider more than $1.3
million a month to remove.
These things are devastating.
You'll never be the same.
My life is now divided into two parts
before I knew that Fatberg's existed
and now that I know that they
exist. They are pretty terrifying
and they do make sense on the service.
Like, oh, yeah, that probably would happen over time as all of these non-degradable things
mesh together in our sewer system and create blockages.
My question is, how has a Fatberg anthropomorphize Fatberg not been a villain in a movie yet?
Like, you know, flushed away or something like that.
What are we doing here?
I know.
It is.
So where does the term Fatberg come from?
It's a portmanteau of fat and iceberg.
It makes sense.
I mean, over time, these things can't be broken down, so they just create these
giant blockages and dismantling them are a huge headache. I mean, I talked about that one in London.
It took eight weeks and 36 tanker loads, each 3,000 gallons each to remove the debris from the
site and all told it costs over $100,000 to clear. So it is...
How do you do it? I think you just chip away down there. You must have to open the sewer main
and do it manually. I don't understand any other way to do it. So it is horrifying to think about
that these things are just moving silently underneath our feet. Let's wrap it up there.
Thanks so much for starting your morning with us and have a wonderful Wednesday.
For any questions, comments, or feedback, send an email to Morning Brew Daily at MorningBrew.com.
And if you're enjoying the show, share it with a friend, family member, or coworker.
Toby, who should people with, share it with today?
I want you to share this show with someone you'd hit up for a book blurb.
The person who would gas you up, no matter how awkward it is to ask for praise.
That is who I want you to share the show with.
Let's roll the credits.
Emily Milliron is our executive producer.
Raymond Lute is our producer. Olivia Graham is our associate producer.
Yuchinawa Ogu is our technical director.
Garrett Peck is on audio.
Hair and makeup is the voice of their generation,
spinning a heart-wrenching tale of love and wo.
Neil Freyman, host of Morning Brew Daily.
Devin Emery is our chief content officer
and our show is a production of Morning Brew.
Great show, Danielle. Let's run it back tomorrow.
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