Prof G Markets - Can A Podcast Change Southwest Airlines? + The College Consulting Business

Episode Date: October 21, 2024

Scott and Ed open the show by discussing Kalshi’s new election contracts, the rest of the bank earnings, the repercussions of ASML’s 2025 sales guidance, and Amazon and Google’s nuclear energy deals. Then Scott breaks down why he thinks Elliott's new podcast is a smart tool for its activist play at Southwest Airlines. He also explains how podcasts have become the premier way to monetize attention. Finally, Ed and Scott discuss the college consulting industry and explain why they think the business will only continue to grow.  Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

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internship at Jane Street Capital. True story, Ed. I was a virgin at 19 and my father offered to buy me an escort and I thought, what is a shitty car from Ford going to do with the number, but I just like the joke. I don't get it. Ask your parents. Ford Escort was a shitty car in the 80s. Okay, got it, got it, got it. Yeah, it was either that one or last night I had a prostitute, and on the way out the door I said to him,

it was a business doing pleasure with you. You like that one where you get the simple stuff. I'm a simple man. Ed, what's going on? Not much, Scott. That number is really incredible to me. And, you know, I feel like we see these kinds of numbers a lot and I'm always sort of suspicious of them. But I will say I have a friend who works at Jane Street, which is the quant trading firm that Sam Backman Freed worked at. And I can vouch this individual who has worked at the company out of college for maybe two years is going to make a million dollars this year. Wow. Just unbelievable the amount of money this company is printing. So as someone who worked in investment banking and all my friends were jealous of me out of school,

I told you why I went into investment banking, right? My roommate, Gary Leshko, desperately wanted to be an investment banker. And I was competitive with Gary and I thought, well, if he wants it, I'm going to get it. I had no idea what investment banking was, but I thought, I've got to get it. I think that's every investment banker, by the way. Pretty much. I had no idea what it meant. I literally had no idea what it meant. And I interviewed, and as you can imagine, I'm a monster interviewer and also lied about my grades. Not proud of that, but that's why I probably can Investment Banking. It's a fucking awful job. So the reason why these folks make so much money is because they generate a lot of economic value. But two, it's just most jobs are one of two things. They're

either boring and low stress, you know, a night watchman or, you know, they're just pretty rote but boring. Or they're very interesting, but they have a decent amount of pressure to keep you up on your toes. Investment banking was this incredible combination of a radically boring material with a ton of pressure placed on it. It was just, and not only that, as bad as the work was, the people were worse. Everybody hated being there, but couldn't leave because they were going to have to take a 60% cut in salary to go do anything else. But this is my long-winded way of saying, stop your bitching. You work for a podcasting company. You get free lunch. That's not true. We don't get no free lunch at Prof G Media, but maybe we should start that. We're talking about even at some point giving you a salary and maybe health insurance. And I think your friend at Jane Street is jealous of Ed Elson.

That's true. I've seen the fans that come up to him like, Ed, let's take a selfie. Oh, you're British. Oh, you look like Scott's younger son. Oh my God. Jesus Christ. Oh God. Oh God. Yeah. We have free coffee at Prof G Media too. I don't know if Jane Street offers that. It's pretty good. Pretty good. Really free coffee at the coworkworking place you're at?

That's right. I've never been to the co-working space because that's the kind of boss I am. But I'm convinced you guys, whatever co-working space in Brooklyn we're at, it has the hottest guys because this firm is run by young single women. And I'm pretty sure there's a bunch of guys roaming around with like dogs and shit like that who are like very available and very single. Yeah. I think you pretty much nailed it. Yeah. And we love it.

And free coffee and free bananas. So, you know, screw Jane Street. There you go. Should we get to it? Go ahead. Before we get started, just a quick reminder that Prof G Markets has its own dedicated feed now. So type in Prof G Markets wherever you get your podcasts, hit follow, and you'll be getting

two episodes, not one, two episodes of Markets every week. And now let's start with our weekly review of Market Vitals. The S&P 500 hit a new record high, the dollar climbed, Bitcoin rose, and the yield on 10-year treasuries jumped. Shifting to the headlines. Americans can now bet on the presidential election after a federal appeals court cleared the way for prediction market CalShe to list election contracts. The Commodity Futures Trading Commission has filed an appeal, but the court won't make a decision until after the election. Third quarter earnings season continued with Bank of America, Citigroup, Morgan Stanley, and Goldman Sachs all beating analysts' expectations. That was in large part due to gains in their investment banking divisions. The banks have benefited from increased dealmaking as a result

of the Fed's interest rate cut. Chipmaker ASML's stock fell 16% after the company cut its 2025 sales guidance. That report caused a sell-off in the global chip market, resulting in a $420 billion loss in value. And finally, Amazon and Google have announced plans to invest in nuclear energy to fuel their data centers. They're focused on developing small modular reactors, which experts say may be cheaper than the large reactors like Three Mile Island. Scott, your thoughts, starting with this new ruling from the courts that allows Americans to bet on the presidential election. We discussed this briefly in the past,

but now it is confirmed you can trade on this election. I don't see how you could not let people do this. I mean, if you're going to allow them to bet on a college football game, I'm not sure why they shouldn't be allowed to bet on a presidential race. What was interesting is that CalSheet shows Trump at 57%, and $20 million has been placed on this bet as of Thursday morning. We shouldn't necessarily take this at face value. The betting market got the 2022 election wrong, and other polls outside of the betting market show a more even matchup here. I'm about this because uh there is evidence

showing that states that legalize gambling immediately see an uptick in bankruptcies and also i mean if you think about the stock market it's become a giant i don't say casino but it's there's three trillion dollars a year in transactions or trades And the stock market is supposed to be a source of financing for companies. And about 300 billion of that is IPOs and secondary. So 90% of trades in the markets are one person betting against another saying, I know more than you. I think it's going to go down or I think it's going to go up. That is a form of gambling. So I don't like this. I don't like the gamification of everything, but I don't see one, how you stop it of gambling. So I don't like this. I don't like the gamification of everything, but I don't see one, how you stop it, and two, I don't see why you shouldn't be able to bet on the

presidential race. One last thing, the thing I find fascinating, and I think it's the best indicator or the most interesting indicator of the likely outcome of the election is just Donald Trump media stock. And that is after the debate with Biden, when it thought like, okay, we have an old man who is in serious cognitive decline, and he's going to get his ass kicked by Trump, Trump media was about 45 or 50 bucks a share. After the debate with Vice President Harris, where he now looked like the old feeble man, and she kind of destroyed him, the stock went down to 12. I find in some ways it's a pure litmus test. And right now with the stock at 30 bucks, I think the market at least is saying they're giving the edge to Trump. What are your thoughts on Kalshi? So a lot there. And side note, I will be interviewing the CEO and founder of Kalshi

on First Time Founders. So I'll be asking all these questions. It'll be interesting to get his take on your point that the markets are pricing in a Trump victory. So you're exactly right on Kalshi. His odds of winning are 57%. And on these other betting markets that, you know, not based in the US and poly market, for example, his odds of winning are 62%. And that's way higher than his odds in the traditional polls where he's polling at around 47%. And a lot of people are saying, to your point, that the betting markets are more accurate, because unlike polls, there's actual money on the line, you're more likely to have a more informed take because, you know, you're at risk of losing something. I would like to propose an alternative view.

So women make up 50% of the population. But I think one thing to remember is that the vast majority of people who are placing bets on these platforms are men. And these markets are very interesting because it's sort of a mix of investing, sort of trading, but also gambling. And the reality is that in the gambling world, 64% of gamblers are men. And so I sort of look at what's happening here. And regardless of there being money on the line, the reality, in my view, is that biases do have an effect on markets. And the biases at play here in this election are actually very simple. Kamala's got a 13-point lead among women, and she's lagging by eight points among men. And so, to me, this is more of a reflection, not of the true electoral picture, but of just how much gender

is likely influencing this race. And I think when it's all said and done, we will look back at the election and we will all kind of nod our heads and reluctantly recognize that most of this came down to one thing, which is, are you a man or are you a woman? Well, what if you're non-binary, you racist bitch? Jesus Christ. No wonder you ended up at a low-paying podcast job. Anyways, go ahead. But I just I think it's a pretty reasonable assumption that if the majority of the people placing wages are men, I think they're going to have a built in bias to think Trump's going to win. The market reflects everything, including our biases. What I don't get, though, is that, for example, one of the bets on Kalshi, MIT's president leaving this year, 5% chance or put another way, 20 to 1. So if I'm the president of MIT, maybe I scrape together a half a million bucks, bet on me against, take the over on that, 20 to 1, that I'll leave. And then I announce I'm retiring and I collect my 10 million bucks and I peace out

to Tulum. I'd like to live in Tulum. I would teach yoga. People would love me. I would just be that old guy roaming up and down the beach, selling ceramic monkeys and offering yoga classes. That's how I see it. But it feels like it's just ripe for some form of insider trading, no? Well, I think that's the other point here is also what is stopping Elon Musk from taking $20 million and betting on Trump and tilting the odds. I mean, markets are subject to manipulation

and we see it all the time, which is why I'm just a little bit hesitant and critical of the viewpoint that these prediction markets offer a clearer view of what's actually going to happen. And I think we're forgetting that actually markets are a little bit flawed. They might draw out the wisdom of crowds, but how wise is the crowd? This is the reason I don't think you

want to do this. And that is my friend Todd Benson used to come to my class in business school and he would say the following. He'd say, all right, does anyone believe they can eat a slice of bread within 30 seconds? And inevitably, a bunch of people put their hands up. And it ends up that when you try and chew a piece of bread fast, it turns into its more natural form of dough, and there's just no way to eat it within 30 seconds. And he said like- Really? I think I could do it. Well, there you go. There you go. But his point was you should never enter into a bed with people who probably have more information than you. And it strikes me that whenever you put a bed in here, that there's a decent amount of money in here that has more information than you. And it's like that saying, if you don't know who the dumbest person in the room is, that means it's you. This feels like anytime you go in here without some sort of insider information,

you're likely on the wrong side of the trade. 100%. Let's move on to these bank earnings. Any thoughts? It's sort of a continuation of the bank earnings we saw last week. We're seeing deal-making coming back. Goldman's investment banking revenue rose 20%. Citigroup's rose 30%. Morgan Stanley's rose 50%. It appears that M&A has returned. Any thoughts or reflections on the end of the bank earnings? Well, it's nice to have a franchise with different businesses. The wealth management business is a less volatile,

kind of slow-growing, nice business, and the markets love it because it's more predictable, consistent revenue. At the same time, they have these franchises in trading and in investment banking, and that gives them a lot of diversification because for the last several years, investment banking has just been the worst. It's been the dog of these companies. There's not a lot of deal flow. There's a lot of antitrust scrutiny. Companies are afraid to make big acquisitions. So kind of the big monster deals with huge fees have been

pretty much non-existent. And now it appears that some of those deals are back. The thing that is inspiring those deals is that interest rates coming down gives private equity players and acquires more confidence to go out and borrow money at lower rates to finance acquisitions, which has kind of kicked up acquisition activity. But this is why it's nice to have a diversified franchise. Any thoughts? I think you nailed it. And I think it's going to be nice to be an investment banker again. I think we're going to start seeing some big numbers on those bonuses. It's just a good time to be a banker. Your thoughts on the ASML report? This chip maker in the Netherlands,

stock dropped 16% and caused a wider route in the chip market. Quite remarkable. When I saw this, I thought back to the Nvidia earnings that we saw a month ago, where Nvidia had a decent-ish quarter. I say decent-ish, it had a decent-ish quarter. I say decent-ish, it had a great quarter.

Revenue doubled, it beat on the top line, it beat on the bottom line, but they pointed out that growth was slightly softening and the stock dropped around 6% or 7%. The market was very upset about it. I'm seeing a similar thing here. And it reminds me also of what happens with tsunamis. So one of the first signals that a tsunami is coming is that the water will start to recede away from the shore and it forms what is called a trough. And that happens long before the actual tsunami comes and hits. And to me, this is the trough. Because aside from the guidance, which

was not great, the earnings were actually not that bad. Revenue grew to more than $8 billion, which was a beat. The net income grew to more than $2 billion, which was a beat. But because of this very simple and not that dramatic cut on guidance. Wall Street internalized that, and they thought, hold on, maybe this AI thing isn't going to work out the way we hoped. And what should have been a slightly disappointing quarter was instead a disaster. The company lost a fifth of its value. It caused every other chip stock to slip as well. AMD fell 5%. Broadcom fell around 5%. ARM fell around 7%.

NVIDIA fell around 5%. It recovered, but initially it fell. And in total, almost half a trillion dollars in market value was just erased from the chip market. And it was all because this chip maker, as you say, which was in the same neighborhood as these other chip makers from the Netherlands, cut its guidance. And so the question that I think I'm asking again, which we asked when we saw NVIDIA's earnings, is what is going to happen when one of the big chip companies has a bad quarter? What is going to happen when NVIDIA comes out and says, hey, growth is looking flat, possibly down. Because based on this reaction to what is essentially a cough at ASML

and what was essentially a hiccup at NVIDIA, I think what we should expect, should that bad quarter occur, is basically a market meltdown in the tech sector. So that's why I call this a trough, not because of the earnings themselves, but because of the market's reaction to these earnings. The market had a panic attack.

And that to me is the indication that our expectations for AI are too high, but more importantly, very, very unstable. We see one little piece of news and then we start selling like crazy. That to me is a very unstable market. Yeah one little piece of news and then we start selling like crazy. That to me is a very unstable market. Yeah. I would just start saying that we could have hail the size of tomato soup cans. I think that's a better metaphor. Look, I don't, I think you're right. I think the expectations here are they expect these companies to kind of, I mean,

you pointed this out a few months ago, that if you just meet expectations, you're not meeting expectations. You're supposed to, the expectation is that you're going to beat expectations. Yeah. And it's just remarkable to me how willing the market is to be optimistic about AI, but also how willing they are to be pessimistic about AI. But we'll see, and we'll keep monitoring it. Let's just wrap up here with this Amazon and Google headline.

They are both investing in nuclear, as we discussed a few weeks ago. Microsoft is investing in nuclear as well. They're basically rebuilding Three Mile Island. You predicted the nuclear would make a massive comeback a few years ago.

I think this is sort of the evidence or the final proof or final confirmation that we need. Nuclear is back. It's not coming back. It is officially back. Any reactions to this headline? So, you know, every year we do this predictions deck and we do it in November. Shit, it's coming up. We'll start hallucinating or taking more edibles. But every year we pick a technology of the year. 2022, we said it was AI. 2023, we said it was GLP-1 drugs. My technology for 2024 is going to be nuclear. And these companies have correctly identified, they've gone up and down the supply chain. And I think this is a useful exercise for any startup or any company that's kind of not even a startup, a company that's got some scale. What is the friction point in our business? them is energy production. And that is, they're going to need so much incremental power that their energy needs are going to explode. And they also think, okay, well, I'm going to need more energy.

I don't want to be known as a climate terrorist. I pretend to give a damn. I have all these woke people that do walkouts during lunch. So I can't just massively up liquid natural gas, although LNG isn't as bad as traditional fossil fuels. And all roads kind of lead to one place in my mind, and that is nuclear, which is probably the worst managed brand of the last 30 years. And just some facts about nuclear. We talked about its reliability. The waste can actually be recycled. Nuclear waste can be reprocessed and recycled. If all nuclear waste from the past 50 years in the U.S. was recycled, it could power the U.S., forget this ad, 93 years.

I love this. And there's some incredibly, not only the deepest pockets investing here, but the deepest minds. Bill Gates is all in on nuclear. Sam Altman is going big on nuclear startups. So word is out on nuclear. Siemens, GE, Vernova, and Mitsubishi, who make the steam turbines and generators required for nuclear

power generation, their stocks are up 92%, 109%, and 176% year-to-date, respectively. So it's too bad we didn't make this prediction. It's too bad I didn't actually invest against this prediction two or three years ago. But the biggest, I think, transfer or reallocation or reshaping of energy production in the U.S. is going to be inspired by the need for massive incremental energy due to the AI boom. So AI is going to have a lot of externalities, but one of the first ones, or knock-on effects, but one of the first ones is that when the history of this decade is written, they will say that AI basically reignited a boom in nuclear or a renaissance in nuclear. We'll be right back with a look at a new podcasting strategy from Elliott Management.

And if you're enjoying the show so far, make sure you're following Prof G Markets to get two episodes from me and Scott every week. Support for Prof G Markets comes from Fundrise. It's no secret that the AI industry is growing Thank you. the vast majority of AI startups are going to be backed and owned by venture capitalists, not public investors. The Fundrise Innovation Fund is trying to change the landscape for regular investors. The Innovation Fund pairs a $100 million plus venture portfolio of some of the biggest names in AI with one of the lowest investment minimums in the venture industry. AI is already changing the world, but this time you can get in early with the Fundrise Innovation Fund. You can get in early at fundrise.com slash markets. That's F-U-N-D-R-I-S-E dot com slash markets.

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One for tracking expenses, another for staying on top of your taxes, and another for payroll management. Just switching back and forth between them must eat up practically half your day. If you're looking for a way to take some of the busy work off your plate and handle all of those tasks in one place, you might want to check out Found. Found is business banking designed for small business owners just like you. Found lets you manage your financial tasks effortlessly, all in one easy to use app. The platform can help you manage your money, track your spending, invoice your clients, and even handle your taxes so you can focus on running your business. Plus, Found says you'll save hundreds or even thousands of dollars on bank fees and app subscriptions because their platform has

no hidden fees. You can try Found for free at found.com slash prop g. Listeners can sign up for Found for free today at found.com slash prop g. Found is a financial technology company, not a bank. Banking services are provided by Pyrmont Bank, member FDIC. Found's core features are free. They also offer an optional paid product, Found Plus. with ProctiMarkets. Elliott Investment Management launched a podcast to advance its attack on Southwest Airlines. As we discussed back in June, Elliott took an 11% activist stake in the airline and called for the CEO and chairman to step down. Last week, the firm requested a special meeting for shareholders to vote on its slate of eight board candidates in December, and then it dropped its first podcast episode. The Stronger Southwest podcast will feature a conversation with one candidate per episode in the weeks leading up to the vote, aiming to introduce them directly to shareholders. So,

Scott, this is the first time we're seeing a podcast used as a weapon in a boardroom battle. What do you make of Elliott's strategy here getting into podcasting? I think it's really smart. It's a chance for them. I mean, traditionally what they do is they have comms people who try and reach out to CNBC and Stephanie Ruhl and Barron's and Wall Street Journal

and try and frame the issue and say, these are our candidates, they're so strong. And this is a chance for them to take their story directly to the end consumer. Now, I don't know if this is going to make great listening, but if you're an investor, if you work at Southwest, if you're an IR firm, I mean, there is an audience here that wants to listen to this. I remember I was an activist investor in the aughts. And I always thought if I did another activist play, I would do a presentation. I'd have Catherine Dillon and her team bring the data to life.

I'd make some jokes. I'd film something, and I'd put it on YouTube. Instead of press releases and doing interviews and going to ISS, I would just go straight direct-to-consumer. And if you think about it, the dispersion of content straight to the end consumer has been arguably has reshaped media, right? It used to be that cable companies spent billions of dollars on fiber optic cable and had regulatory capture and you had to go through them. And all these guys, creatives, shareholders, people who own these cable companies took a huge, huge vig. And now with net neutrality, everybody has access to homes through the internet for

basically free. And all you need now is a phone to create your own content, and there's platforms to go direct to consumer. And these guys are saying, all right, we're going to go direct to the end consumer, that is potential investors or potential media with podcasts. Also, and I've said this before, every election seems to have kind of a medium that it elevates. Kennedy and TV, FDR and radio, Trump and Twitter, Obama and Google. I think this is the election of podcasts. And what struck me is that Vice President Harris went on Fox last night. And by the way, I think that's why Donald Trump media stock is down. I think she actually did fairly well. But I mean, there's just some crazy stats. If Vice President Harris were to go on Joe Rogan, which I believe she's going to do, she would reach roughly five times more people than she did on Fox

primetime. So she could go on Fox primetime every night for a week just to catch up to where the exposure she would get if she goes on Joe Rogan. And this is the two most kind of seminal media moments for the candidates, in my view, were Trump on Alex Schultz. Andrew Schultz. Oh, it's Andrew Schultz? Excuse me. He said on Twitter, I was spreading misinformation about Joe Rogan when I said Joe Rogan was spreading misinformation about vaccines. So I hate him. I hate him. Actually, he did a great job. I thought it was a great interview. And then when Vice President Harris went on Call Her Daddy. So it highlights a couple trends. One, you have guys going direct to consumer. You have these things. We want to cut out the middlemen. We're sick of kissing the ass of some assignment producer or some reporter that went to Columbia Journalism School and doesn't understand our business, we're going to go direct-to-consumer. And also, just the medium is just playing a more and more important role in our society. What are your thoughts, Ed?

I'm surprised that we're not seeing more of this, is what I would say. And I think people are sort of catching on. But as you say, going direct-to-cons consumer, it's really not that big of an innovation. I mean, one thing I like that Daniel Ek of Spotify has been doing is he's been posting his quarterly earnings updates directly on Instagram and just talking about it. And it's a very simple thing to just go where the people are, go where the audience is, and deliver it to them in the way that they consume all the rest of their content. So we are seeing the tide begin to turn here. And it is interesting seeing these very sort of institutional older firms deciding, okay, it's time to sort of meet the people where they actually are. And just one interesting headline that happened that I saw this week, there is a podcaster named Harry Stebbings. He started a venture capital podcast

called 20 Minute VC. He's been doing it for about 10 years. He's 28 years old. He's got a relatively popular podcast. He's from London. He just raised a $400 million venture fund this week. And that makes it one of the largest venture funds in Europe. And he built it off of the back of a relatively sizable media presence, not huge, but you know, big enough. And he's taking over the venture capital industry. He's backed by Josh Kushner. He's backed by MIT, several other tech founders. So it's very interesting to see podcasts have this influence, not just as a form of entertainment and news and insight, but as an actual vehicle for fundraising and for capital allocation.

And I guess the question that I would pose to you is, where else do you see this playing out? Where could we see podcasts and new media having an impact in the financial markets? Well, we see it personally. I get deal flow. I get access to investments because of this podcast. If we picked a nuclear company and start talking about it and say we love this company and it was a private company and said we want to invest, we're not journalists. We're allowed to invest. There's, I would bet, a one in three to one in five chance we'd hear from that company because they want to give us a vested interest in talking about it. And I think that's okay as long as you disclose the investment.

I love OpenAI. There you go. We're huge fans of open AI. Sam, Sam. But look, we used to be in a fossil fuels-based economy. Now we're in an attention-based economy. And it's essentially power consumption, emissions of rage and polarization instead of carbon. Unless you're shitty at what you do, you can monetize attention.

So podcasts, which are each day capturing more and more of Americans' attention, are going to be able to monetize it. One way is through advertising. Another way is through subscription. But there's just no getting around it. A company like Elliott might be able to win proxy fights and then attract more AUM. You mentioned someone who's starting a fund. People with influence perhaps get access to deals they otherwise might not have access to, yours truly. So yeah, look, if you can capture attention, you can monetize it. There's a bunch

of different ways to monetize it. I also think it's interesting to bring up this theme that we were looking at a couple of years ago, which was inspired by this research report from CB Insights. And what this report recognized is that there was this very interesting trend where many traditional SaaS companies, especially finance companies, were acquiring small media companies and then folding those media operations into the larger company. So for example, JP Morgan, a couple years ago, acquired The Infatuation, which is basically a food review website. HubSpot acquired The Hustle, which had a newsletter and a podcast. Robinhood acquired Market Snacks, which was a financial news company. And the thesis that CB Insights, and this guy, Anand Sanwal, who I'm a big fan of,. And the thesis that CB Insights and this guy, Anand Sanwal, who I'm a big fan of, put forward is that the companies are doing this because of this idea of LTV to CAC arbitrage. Now, what is LTV and what is CAC? LTV stands for lifetime value.

So it's basically how long is the customer expected to remain a customer? And CAC, C-A-C, is customer acquisition cost. How much does it cost to actually acquire the customer expected to remain a customer? And CAC, C-A-C, is customer acquisition cost. How much does it cost to actually acquire the customer? Now, the arbitrage they recognized is that in media, LTV is very, very low. People switch from media properties to media properties. But in SaaS, it's very, very high. You sign up for a SaaS product, and then you're sort of locked in.

Conversely, in SaaS, CAC is very high. You sign up for a SaaS product and then you're sort of locked in. Conversely, in SaaS, CAC is very expensive. It's very expensive to acquire a new customer, but in media, it's very cheap. So the idea is that by buying a media company, you are buying an audience, locking that audience into your product for a very long time. And if you get it on the cheap, then you're also getting it for a very low price. In addition, it's the demographics are really appealing. We just did the demographics for Pivot and PopG. We're about 70 or 80% male. We're young and our average household income is about 150 grand. So if you can reach young, wealthy men. That is kind of the great white rhino for advertisers. They are very hard to find because they don't watch television.

As a matter of fact, I'm going on Chris Cuomo tonight on News Nation. And the only reason I'm going on is because I personally like Chris. I've been asked to go on CNN, MSNBC. I'm just like being on fucking television for six minutes to reach 80,000 viewers. It's like, no, it's just not worth it. It's not worth me hauling up to somewhere in Midtown and having a producer go, okay, make a quick twist a point on issues we've been talking about all day that no one has anything else new to say. Is that what they say? Is that what happens? They sort of coach you through what to say? They don't coach you, but it's pretty obvious what they want. They want you to come up with something new on something they've been banging the shit out of

all day for the last 24 hours. Try and come up with a new frame, say it crisply, hopefully some insight, and then stop talking because we need to break to sell more opioid-induced constipation medication. And I'm like, what the fuck am I doing here? And so I don't go on, I literally, I don't go on TV anymore. And I love to see daddy on TV. I love it. I come home and I turn on the TV and I see myself and my nipples get hard, Ed, my nipples get hard. That's an image. Anyways, i say yes to podcasts pretty pretty easily it's because you can look at but tv jesus christ empty calories do you know the average age of an msnbc viewer uh let me guess average 58 70 58 58 is like mtv 58 is that right 70 70 do you realize do you realize my god that means companies are dead this is ridiculous that means if you accidentally turn on this is true if you accidentally turn on msnbc it means someone 114 is also watching. Seriously. You're 44 years younger than their average viewer.

I mean, it's just insane. It's people. Insane. I was just blown away by that number. And I like MSNBC. I think it has sort of a young, crisp, cool feel to it. I love Joe and Mika. I think Stephanie Ruhl is an outstanding talent. I love Joy Reid. I think they do a great job. The average age is... Anyway, it just blew me away. All a long-winded way of saying the world is headed this way. Only 29% of Gen Z watches live TV, so about one in three, but 50% of those age 12 to 34 have listened to a podcast in the past month. By the way, there was an event last night that I couldn't go to that I was invited to where Leo DiCaprio was there and a bunch of stars. And they asked you to do a video either with another star talking about why you are voting

for Harris, encouraging people, and then they're trying to push it out, right? So it was this formal event to try and get celebrities and C-list celebrities, C above, I was invited, to come talk about Harris. That's generous to yourself. Yeah. Thanks for that. Thanks for that. Go to work for Jane Street. Anyway, since 2017, Trump has appeared or been mentioned in nearly 70,000 podcasts. Harris has appeared or been mentioned in a little over 12,000 podcasts. His appearance on Lex Friedman, The Sean Ryan Show, This Past Weekend with Theo Vaughn, Full Sent Podcast,

Flagrant, and the All In pod have netted almost 30 million views on YouTube. It's unbelievable. Walls will soon appear on SmartLess. Actually, the Walls campaign has reached out to us, or we've reached out to them. Oh, and the Walls team has reached out to us, or we have reached out to them, or that's a question. I forget. I've heard rumors. That's a very important distinction. I've heard rumors that Governor Walls might be coming on the podcast. I just want to hear him say things like, he's the kind of guy that says to you when you're leaving your house, he'll be

like, watch for reindeer and text us when you get home. Or you're out to dine with him and the waitress comes up and he says, what's the damage? He's that kind of guy. If you were broken down on the side of the road, you pray that Governor Walz drives by you. Because he just seems like the kind of guy that would pull over and he could absolutely get your car going again. That is exactly right. And my favorite thing about him, he doesn't own stocks. Yeah, I don't like that about him. I think it's weird.

I love that. I think that's hilarious. Yeah, I think it's hilarious. I think he's that guy. I'd like to go eat beef with that guy. We'll be right back after the break with a look at the college consulting industry. If you're enjoying the show, hit follow and leave us a review on Crofty Markets. The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Mike Gitlin.

Through the words and experiences of investment professionals, you'll discover what differentiates their investment approach, what learnings have shifted their career trajectories, and how do they find their next great idea. Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. Support for this show comes from Grammarly. 88% of the work week is spent communicating, typing, talking, and going back and forth on topics until everyone is on the same page. It's time for a change. It's time for Grammarly. Grammarly's AI ensures your team gets their points across the first time, eliminating misunderstandings and streamlining collaboration.

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Get everything you need from setup to success at LegalZoom.com. And use promo code VoxBiz. LegalZoom.com and use promo code VoxBiz. LegalZoom provides access to independent attorneys and self-service tools. LegalZoom is not a law firm and does not provide legal advice except we're authorized through its subsidiary law firm, LZ Legal Services, LLC. We're back with Profit Markets. There's a hot new luxury market that very few can afford. Elite college consulting. The Wall Street Journal published a profile last week on a leader in that space, Crimson Education. The consulting company coaches kids on how to score a spot in an Ivy

League school starting as early as middle school. Parents shell out for these four to six year programs with prices ranging from $30,000 to $200,000. The lucrative business has caught the eye of private equity. And after several funding rounds, Crimson Education is worth half a billion dollars. Scott, this company is not alone. It is indicative of a larger trend. In the past 20 years, college consulting revenue has tripled. What do you make of this new hot market? Well, first, let's set some context. There's a bit of a narrative in the zeitgeist or in the kind of public discourse that, oh, it doesn't matter where you go to college. The reality is it makes a huge difference. While less than 1% of Americans attend the 12 Ivy and Ivy Plus colleges,

Stanford, MIT, Duke, and University of Chicago. Graduates of these universities account for 10% of the Fortune 500 CEOs, a quarter of U.S. senators, half of all Rhodes scholars, and three-fourths of Supreme Court justices appointed in the last half century. So if you get into an Ivy League school, as much as it doesn't matter, I would just say ride that whole Ivy thing out and see where it takes you. The kind of premier on-ramp to an upper middle class or wealthy lifestyle is, in fact, an elite college degree. between 30 and 50% over the past decade, meaning they've gone from like 12% to 6%. In my case, UCLA, they've gone from 76% acceptance rate to nine. The kids who get screwed, the kids who get screwed are kids from middle-class households. They're not rich enough to afford the industrial tutoring complex. Dad doesn't have a friend on the board at Brown. But at the same time, their story isn't as nearly as compelling as someone who's managed to overcome the immense obstacles facing lower-income households and do relatively well in school. So the kids who really take it on the chin here are kids from middle-class households.

Now, I have some experience here. I was a client of Crimson, and the founder reached out to me. I was talking about college, and he knew I had kids. Lovely guy. And I said, this to me. I was talking about college and he knew I had kids, lovely guy. And I said, this is great. I'd like to try it. And it was a few years ago. And we set up a tutoring session or a couple of them with my son. And my son was doing really well in school and didn't really kind of didn't like it and didn't felt he needed it. It was, I remember it being quite expensive. And so we ended up not using it. And now I'm entering in, my son is in the 11th grade, I'm meeting him for his college tour next week, and I can already feel the anxiety starting. Not as a college counselor, but I'm open to it because here's the bottom line. You want every advantage for your own kid. And if you have money, what better way to spend your money than helping your kid achieve something or be affiliated with an association

or an organization that improves the likelihood that they will have money, which improves the likelihood they'll have a rewarding life. So I think this makes all kinds of sense that this industry is booming. Very interesting that you tried it. Maybe we can discuss that more in a second. But first, I would like to just propose an economic thesis to you. So the Ivy League receives more than $2 billion in alumni donations every year. And that is a number that continues to grow. And we can have a debate over whether that is

because people have a lot of school spirit or whether it's because they want to increase the chances of their kids getting in. My belief is that it is almost 100% the latter. They are spending $2 billion per year because they want to get their kids in. At the same time, legacy admissions are being phased out in America. Colorado has banned it. Virginia has banned it. Most recently, California has banned it. And it is highly, highly likely that in the next few years, legacy admissions will be gone

in America, and those donations to these schools will not actually be effective at what they're designed to do, which is to get your kids in. And so what that means then is that soon enough, there will be $2 billion in annual college fixing dollars that will soon be looking for a home. And what better home than private consultants? In other words, this gigantic historic industry of paying to get into college in the form of buildings and donations is about to be stripped away from the universities. And the question for me is, who's going to get the money there? education right now is something like a Crimson Education, an elite college consultant that is going to be the beneficiary of legacy admissions disappearing. And there's billions of dollars that go to buildings will end up in the pockets of private companies that offer consulting services. Do you agree?

I agree with some of it, not all of it. So I agree that this industry will become bigger and bigger, and it'll almost become, not that you have an advantage by hiring a consultant, but at some point it'll flip and it'll be you have a disadvantage if you don't hire in a consultant. Because they're smart and they give you, I'm sure, tips and can help the kid figure out the right kind of summer job they want to have on their application process. I mean, they're experts. They know what they're doing and you have a leg up. The thing I don't agree with that you said is that the majority of giving is a transaction hoping to get your kids into school. I do think

there's some of that, maybe even a healthy amount of it. But as someone who has given a lot of money to their alma mater, University of California, Los Angeles and University of California, Berkeley, the chancellors were very explicit with me. And that is not only does this not guarantee my kid is getting in, it likely hurts their chances. Because at a public university,

they have to, and the former chancellor, I think it was Chancellor Crist, at Berkeley said, my daughter applied and didn't get in. With public schools, there's immense scrutiny over the children of donors and children of the faculty members. And the newspapers and the local, you know, and even the school newspaper are all over the stuff. Private schools can kind of do what they want. So there are some schools where I think the development department, if they get a call from the right person, you know, will, in fact, you can, you know, increase the odds, but it's not like you can just show up with a million bucks and get your kids into a certain school. I think you can. Well, I think it depends on the school. I mean, maybe five, maybe the number's not 1 million,

but I feel like there's probably a number that pretty much does it. That's fair. I think that if you're a guy who's given $10 million to a private university and your first kid's getting in and your second kid wants to go and you keep continuing to give money, there's a good chance you're going to get in. And here's the thing. I don't have a problem with it. What I have a problem with is that we're whores. The problem is we're not transparent about being whores in higher education. And I think what we should do is the following. We let international students in and we claim it's for diversity. No, it's because international students check a box in their application saying, I will never apply for any sort of financial aid and they pay full freight. So, you know how

basically there's the retail price in certain industries, and then there's the price. You know when you're in a hotel and you turn the door around and it says, we can charge up to $7 million for this room, but they don't. It's much lower than that. The full sticker price at an Ivy League university, the majority of students are not paying. What I would like to say is just be more transparent and say, pay us a million bucks as long as your kid's not a fucking idiot. We'll let little Bobby or Susie in,

but we're gonna take that money and we're gonna use it to expand seats for lower income kids. I do think there's something to the notion of, look, this is a transaction. Let's be honest, folks. We're not pursuing light in learning. This is a business. At MIT, there are 10 administrators for every one faculty member, and they'd make big lofty statements about building leaders. It's a business. So I wouldn't have a problem with

them saying, okay, this happened. At the Haas School of Business. There was a kid, a student in our school who everybody knew was not that bright or not academically that good. This person's father was a billionaire. We all knew how this person got in. And I was okay with that because this person's dad was going to be very generous to the school and help pay for financial aid for other students. So as long as the money's not going to a new building or more compensation for the Office of Student Engagement or some other bullshit, but it's actually used to expand seats, I wouldn't have a problem with it. In terms of why you give money, what I have found, at least personally, I give money kind of out of, I'd like to think out of

citizenship and a nod to California taxpayers who changed my life, but also to be quite frankly, ego. I didn't give it anonymously. I'm talking about it now because it makes me feel masculine. It makes me feel strong. It makes me feel successful. I like that I was on UCLA's homepage and all my peers who didn't let me into their fraternity or wouldn't go on a date with me see that daddy's a fucking baller now. So it all comes back to the same thing for me. This argument over who gets in is a giant misdirect from the real issue, and that is how many get in. Education is, there are a small number of things America does really, really well. We make the best software in the world, software and technology. We make the best media in the world. If there's a

movie with a guy in tights with a hammer or whatever, we produced it, and it's going to make a billion bucks. We make the best weapons in the world. We also have, hands down, the best college experience of any country in the world. I don't care. There's just nowhere that has Duke basketball or Royce Hall or Fall Leaves in Brazil or Czechoslovakia. The U.S. college experience is the ultimate luxury brand. It's

the ultimate signal. It is the ultimate kind of young adult experience. And my question is, if you have the best product in the world, there's Thor 6, 7, and 8. They'll keep cranking those things out as long as they make money. They'll keep trying to grow that franchise. Yet this industry has decided, no, we're a luxury brand. We're going to create scarcity. Ed, if I had a pill and you took this pill or anyone took this pill and it made them less likely to be obese, more likely to be wealthy, more likely to have kids, more likely to get married, more likely to stay married, less likely to commit suicide. Wouldn't you want to give that pill to as many people as possible? That pill is called higher education. And yet we have decided

as alumni and faculty who both endorse scarce admissions, we have decided to hoard that drug. It's morally corrupt. And they say, well, it would ruin the scarcity, it would ruin the brand. When UCLA had a 76% admissions rate, it wasn't exactly Pico Tech. Maybe the brand wasn't what it is now, but it was a really good brand when I applied. So this bullshit that by letting in more kids into Harvard, it would ruin what Harvard is or ruin what Caltech or Duke is. Bullshit. This is a bunch of people who are infected with the same virus that infects all of America. And that is once I have a house, once I have a college degree, I want to make it harder for everyone else to get it because that'll take the value of my scarce asset up.

It is totally un-American and it is coming back to haunt all of us. Oh, I could never get into the college I went to if I applied now. Well, fuck you. That means your kid isn't getting in, you shithead. You should be upset about that. That means there's something wrong in Mudville. That means you in a next life

are not getting into college and your house is gonna be a fucking stack of stress the senior year for that kid and that kid in school. There's so much unnecessary stress in households across America because my industry has decided that we're no longer public servants. We're fucking Chanel bags. Let's take a look at the week ahead. We'll see earnings from Tesla, Amazon, and SAP. And we'll also see consumer sentiment data for October. Scott, do you have any predictions? I said my predictions. I kind of have too many ones. Donald Trump media stock is going to go below 10 and above 80 in the next three weeks based on what happens to the

election, in the election. This is going to become the most volatile stock over the last three years. It's essentially become the gambling site we were talking about. And then my other prediction, we've already said this, the technology of 2025 is going to be nuclear. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Jessica Lang is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiteer Markets from the Vox Media Podcast Network. Join us on Thursday for our conversation with Patrick Moorhead only on Profiteer Markets. Reunion As the world turns And the dark lies

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