Prof G Markets - Why Are Millionaires Moving Abroad? + The Biggest Deals in Podcasting
Episode Date: September 9, 2024Scott and Ed open the show by discussing the UK’s investigation into Microsoft’s Inflection acquihire, as well as Nippon Steel’s potential acquisition of US Steel and Andreesen Horowitz’s deci...sion to close its Miami office. Then Scott shares his thoughts on why millionaires are flocking to the Middle East and why he’s not concerned about the rising popularity of golden passports. He also explains how he thinks countries should handle taxation in order to attract citizens. Finally, Scott and Ed discuss why the podcast industry is booming right now, and what it could mean for Prof G Media. 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
Transcript
Discussion (0)
Do you feel like your leads never lead anywhere?
And you're making content that no one sees,
and it takes forever to build a campaign?
Well, that's why we built HubSpot.
It's an AI-powered customer platform that builds campaigns for you,
tells you which leads are worth knowing,
and makes writing blogs, creating videos, and posting on social a breeze.
So now, it's easier than ever to be a marketer.
Get started at HubSpot.com slash marketers.
Support for this show is brought to you by Nissan Kicks.
It's never too late to try new things
and it's never too late to reinvent yourself.
The all new reimagined Nissan Kicks
is the city-sized crossover vehicle
that's been completely revamped for urban adventure.
From the design and styling to the performance, all the way to features like the Bose Personal Plus sound system,
you can get closer to everything you love about city life in the all-new Reimagined Nissan Kicks.
Learn more at www.nissanusa.com slash 2025 dash kicks.
Available feature.
Bose is a registered trademark of the Bose Corporation.
Today's number, $10 million.
That's how much the U.S. Open's signature Grey Goose drink, the Honey Deuce, brought in last year.
True story, Ed.
I've been having all these podcasters, Huberman, Atia, on the pod talking about how alcohol is terrible for you.
So I've decided
to take action and I am no longer listening to podcasts. Welcome to Prop G Markets. Today,
we're discussing golden passports and podcasting mega deals.
Hello, daddy. Someone's about to get sexier. That's right. Bring me the mega. Bring me the deal.
But first, but first, here with the news is Profiteer Analyst, Ed Elson. Ed, what's a good
word? I'm doing very well. How are you, Scott? I'm doing great. Is everyone really happy to have me back?
Elated.
Yeah, sounds it. So I take August off, and Catherine and I are actually getting some work done this weekend, and she's like, all the kids are gone. So what did you do this summer? Where did you go?
I didn't go anywhere this summer. I was just in New York.
Oh, we talked about this. Your grandfather passed away.
Well, that's a buzzkill. Fuck that.
Claire, what did you do?
I went to Copenhagen.
It's Copenhagen. You clearly don't smoke enough pot. It's Pokenhagen.
Well, I have a Chicago accent.
It's beautiful in the summer, isn't it?
Yeah, it is. It's gorgeous. And I went to Maine as well.
That doesn't sound that interesting.
Allison, what about Allison, our associate producer? Allison, where did you go in August? I went to San Francisco and then
drove to Yosemite and did some hiking. Oh, how millennial. Would you do like some crazy,
crazy new fangled drug? Okay. What's in Yosemite? Who are you with? It was just me and my boyfriend.
Oh God. Healthy relationship, Yosemite. Fuck that. Let's get back to the fucked up world
of technology. Ed, bring the dysfunction. Let's get back to the fucked up world of technology.
Ed, bring the dysfunction. Let's get back to the markets.
Let's start with our weekly review of market vitals.
The S&P 500 declined, with Nvidia's 10% single-day drop dealing a blow to the larger market.
The dollar slumped, Bitcoin sank, and the yield on 10-year treasuries fell. Shifting to the headlines.
The UK's Competition and Markets Authority decided not to launch an in-depth investigation into Microsoft's hiring of inflection employees. The CMA said that while the hiring does count as
a merger, it didn't find evidence the merger would substantially lessen competition.
President Biden is preparing to block Japanese-based Nippon Steel's attempt to acquire U.S. Steel. U.S. Steel's CEO said that if the nearly $15 billion deal doesn't go through,
the company will likely have to move its headquarters out of Pittsburgh and lay off
thousands of employees. And finally, Andreessen Horowitz has closed its Miami office just two years after
opening its doors. While the company signed a five-year lease for the office, the firm shut
it down because employees weren't utilizing the space enough. Scott, your thoughts, starting with
this decision on Microsoft and inflection. I'm of two minds here because it's clearly,
well, one, it feels like Microsoft slash OpenAI are just running away with it.
Both the decision by Apple, Nvidia, and I think it's Microsoft to fund the most recent round for OpenAI.
And I read that it has about a 70% market share.
It feels as literally they're just running away with it.
So it strikes me that Microsoft should be under a pretty well-lit microscope
right now in terms of acquisitions. At the same time, I think it also buttresses the notion
that OpenAI and Microsoft are running away with it because Inflection, I think their argument was,
we're fucked. We don't have the scale here. So I don't know what to do in a situation like this.
We have a company that probably couldn't compete, but this is just an acqui-hire. And I had Reid Hoffman on the podcast. I guess he's one of the They took the top employees and then claimed that it was a legitimate deal more kind of human, more personal. And a year ago, they raised $1.3 billion, and that round was led by Microsoft.
So this was, you know, this was a big deal. The CEO was this guy, Mustafa Suleiman, who
started Google DeepMind, which is one of the leading AI companies back in the day, this was supposed to be a big company. And then a few months ago, something strange happened where
Mustafa announced he was leaving the company, and so was the co-founder, and so were half of
the employees. And where did they say that they were going to go instead? Microsoft. And now
Mustafa Suleiman, who was the co-founder and CEO of this AI startup, is now the CEO of Microsoft AI.
So as you say, the whole thing is very weird.
We've talked about it on this podcast before.
I found it very suspicious, and so did the regulators in the UK.
So they launched this investigation, and they have decided this was fine. So first of all, they said, quote, our investigation has found that the
transfer of employees coupled with other tactical arrangements mean that two enterprises are no
longer distinct. As such, the transaction does qualify as a merger under UK law, and the CMA
has the jurisdiction to review it. So that's the first thing they're saying is this was a merger.
They may pretend it's an investment or a partnership, but it was basically an acquisition. Second thing they said, however, quote, inflection is not a strong competitor to the consumer chatbots
Microsoft has developed directly, i.e. Copilot, and in partnership with OpenAI, i.e. ChatGPT.
And on this basis, we cleared the transaction. So the argument they're making is that inflection
is or was a weak company. And therefore, by taking them out of
the competitive landscape, competition wasn't harmed. My view on this, and I'd like to get
your perspective, is that that's ridiculous because Inflection barely even had a chance to try.
I mean, the company was two years old. This thing was destined to succeed.
And it feels that what actually happened is that Microsoft just got in there super early
and they nipped it in the bud.
And it feels like the precedent we're setting here
is that big tech is actually allowed
to suppress competition, crush competition.
It can do that as much as it wants,
so long as the competition is small,
so long as they do it early enough,
such that that competition can't grow into something bigger.
It's an interesting take. My take, my gut was it was actually the opposite, and that is
Reid, who is the founder. I think if Reid believed in flexion at a shot of becoming
a real player in the AI space, that he would have, for a lot of reasons, loved to have another
feather in his cap, more diversification. He's already making a bunch of money on the Microsoft
board or involved there. I don't think my sense is, and this is more disturbing in my view,
is that he has real insight into Microsoft, their assets, and the power and progress of OpenAI and Microsoft's
co-pilot. And then he really understands very well the progress to date of inflection and basically
went to the team at Inflection and goes, I know the competition, the number one player really
well in their assets and their lead, and I know what we have. And guys, we're fucked.
And because I'm on the board of Microsoft, I'm going to get us a
golden parachute. I'm going to find great jobs for you guys. We're going to pivot to something else.
You're going to get a little bit of money. But I have seen the enemy, and the enemy has 10
Panzer tanks, and we're here with a squirt gun. So my sense is, he basically, what this says to me
is that Reid Hoffman, one of the most talented people in technology, one of the most insightful people who has near perfect symmetry of information on a startup in this space that has all the assets that any startup could ask for.
And then the leading player has said a startup with everything it needs has no fucking chance against the leader right now, that they're just running away with it.
And the best we can do
is to have peace with dignity or to have somewhat of an honorable death. We need to euthanize this
thing now, or it's going to get embarrassing and awful for all of us. So I can see why they didn't
block this deal. This company, I believe, didn't have any shot. So what are you going to do? Just
let it die a slow death? But what I think it should say to the DOJ is, okay, you have a
monopoly player emerging that is going to be the most powerful player very early in what is the
emerging technology globally. Is that a good idea? So this to me was more disturbing, but for other
reasons. I don't think these guys had a shot. I think
that's what Reid decided or discerned. I think that's a fair reading, but it's interesting that
both of those readings lead to the same place, which is there is not enough competition. So
whether or not you agree with this specific ruling, overall, the theme remains the same,
which is these other companies can't really compete with the big dogs. In one way or another,
Microsoft is finding a way to totally squeeze out the rest of the competition in this space.
Speaking of blocking deals, any thoughts on this U.S. Steel story and Biden's decision
blocking that deal where Nippon Steel wanted to buy U.S. Steel?
This is a mix of xenophobia, ego, and pandering
to unions. This is stupid. If they were making air filtration systems or airbags, they'd let the
deal go through. But because steel, for some reason, is seen as Pittsburgh and a part of America,
we need steel to build buildings. They want to get in the way of it. I'm sure unions are trying
to convince them that this is a bad idea. This deal should absolutely go through. The Japanese have better technology. This is an industry that is consolidating mostly
around China, who produces 54% of global steel output. The U.S. and Japan produce 4% and 5%,
respectively. They need each small players. They need to bulk up. This gets shareholders
not a great outcome, but a decent outcome. It gets them additional capital. This is the basis of trade, comparative advantage. I mean, you're talking about an ally.
We have aircraft carriers stationed off the coast of Japan to provide defense for them.
They are about as, you know, other than the UK and maybe Canada, I can't think of a stronger
ally. Well, maybe Mexico. We have a lot of strong allies. It's great to be American, Ed. It's great to be American. But they're a fantastic ally. And if the shareholders here and the people who run the company think we need to be a 9% player to compete against the 54% player, this makes all the sense in the world. And if this were any other category that wasn't machoed up or tightly associated with
brand US, it would sail through. This is politically driven, ego driven, and pure xenophobia.
I don't like it, Ed. I don't like it. Yeah, I 100% agree with you. It feels like a lot of it
is to do with the fact that this company is called US Steel as well. And it's, you know, it's this old, iconic American industrial company. By the
way, it was founded by Andrew Carnegie, JP Morgan, Charles Schwab, and a bunch of other sort of
iconic old American industrialists. And I think you're exactly right. It's one of these political
stories where it just isn't a good look for one of the oldest
industrial companies in America to be sold to the Japanese.
That's the kind of story that a voter will observe.
And at first glance, they're going to say, oh, our country's going to shit.
But you look at the business case for this.
The US Steel is shutting down steel mills.
They are laying off thousands of workers.
According to the CEO, if this deal doesn't go through, they're going to have to shut down even more plants.
So if you keep this company under the current management, it doesn't actually work out that
well for the unions or for our economy. There's not really any rational business case that you
could make that this deal should be blocked. But again, this is a fun political story to jump onto.
And I think you're exactly right.
Finally, this Miami office update.
Why does this make me happy?
Yeah, exactly.
Why does this make me happy?
I love it.
California is unbearable.
We can't stand it here.
We're sick of government mismanagement.
We're going to Miami
and they go to Miami and they're all coming back. My favorite is, who's the, I don't know,
what's the best way to describe him? Self-hating douchebag. I forgot his name.
I'm going to guess you're talking about Keith.
Oh, that's right.
This is a very prominent VC. His name's Keith Raboy, who is one of the leaders of this. We're
moving to Miami movement in the tech community. Oh, here's a good quote from him. He complained in 2020 after moving them that complaining
that San Francisco was, quote, just so massively improperly run and managed,
it's impossible to stay. It's impossible to stay there, Ed. And four years later,
Rablois has moved back to SF part-time and is renovating his house there, he supposedly said.
Now, this is what's happened. He moved down there
to recognize a capital gain at a lower tax rate and establish residency. And he's figured out that
his consensual hallucination that a state that doesn't have a world-class engineering department
can ever be a player in tech, he has figured that out probably painfully and quickly. And now he's
pretending to be back in San Francisco renovating his house. How's it going, Keith? Are you picking
out curtains right now? How's it going? Maybe a little soapstone in the kitchen? Yeah, I bet he's
renovating his house, and that's why he's spending more time back in the Bay Area. There is a bit of
a boomerang. A lot of people went to these low-tax states. I think it's important that these states
compete. And just as New York has, if you live in the city of New York, as you do, I'm sure you see it every day, you can pay up to 13% in additional state and city taxes. And the thing about Manhattan is it's worth it. And I think Chicago or Illinois is if you can afford it, that all of these VCs who moved out, a lot of them are moving back because they realize, to California's credit, there's something about the alchemy of innovation, capital.
I would say one in three kids from my class, and this is NYU, just get on a plane and head to the Bay Area because they think that is where shit is happening.
That's where innovation, and it's still happening.
It's not like all, and California has its problems.
A lot of people say it's ungovernable.
A lot of people are angry, and I can see why at the homeless problem and crime in San Francisco.
But despite all these issues, the positives continue to outweigh the negatives. And you're starting to see prominent people or very successful VCs and Keith Rebois move back to San Francisco. Yeah. Just a great stat here. Startups in San Francisco in the second quarter of this year
raised $19 billion. Startups in Miami in the same quarter raised half a billion dollars. So there's a giant, giant gulf. And I'm trying to
think about why, because this makes me super happy as well. I'm trying to think about why that is,
because it's not that I have a problem with people moving somewhere else. I don't have an
issue with tech bros moving to Miami. That's fine. I think the issue is just how loud they were
about this whole thing.
Just the idea that they turned this whole thing
into this political story
about how liberals are ruining the economy,
they're ruining our lives, they're ruining our culture.
Everyone is moving to Miami.
That's where everything's happening.
That's where the money is.
And it just wasn't true at all. So it's not surprising
to me that Andreessen is packing up the Miami office because it feels like it just reflects
a reality that we all kind of sensed and kind of knew, but we weren't really allowed to say
for some very strange reason. We were kind of bullied out of saying, actually, I think California is probably doing fine.
On a more meta level, so I'm a resident of Florida. I've participated in some roundtables around, okay, what does Florida need to do to maintain economic growth other than being a tax
haven or a retirement home? And my view is, if you want to tap into the economy that's probably or the part of the economy that
we don't know about a year or two years, but in 10 years, as Josh Brown said, there's an optimist,
default setting of optimism is technology is going to continue to eat the planet and account
for a greater share of GDP. What is ground zero for that? Is it good governance? Is it warmer weather? What is it?
The ground zero for any tech company that ever hopes to be worth more than $10 billion
that I can see is that every one of them is started within a bike ride of a world-class
engineering university. And it's just no accident that the Valley is smack in between, and San Francisco is smack in between Berkeley in Florida, I actually spoke to one of these individuals who has the resources
to do this, it would be to do what Paul Allen did at the University of Washington. He funded with,
I think, $300 million, a world-class engineering university at UW. I mean, this is how ecosystems
get started in technology. Also, I would argue Miami. I think probably it's easy to play
Monday Morning Quarterback, but I think going kind of all in on crypto gave it a little bit
of a sketchy feel. You're telling me the path to prosperity isn't MiamiCoin? Yeah, remember that?
They had a coin. I love that. A state-sponsored cryptocurrency won't produce enduring innovation.
Florida's going to be fine, but it's still an amazing state that has a ton of upside.
But these individuals, I just wish they were more honest.
I wish I'd say, I have an unrealized gain, so I'm going to move to Florida.
I like it there.
The people are hot.
It's a great place to live.
I'm going to move there just long enough to establish residencies so I can be taxed at a lower rate. And then I'm
going to slink back to the Bay Area where people make real cabbage and where there's an ecosystem
where every other foot, there's a really interesting startup trying to raise capital.
And none of them want to say this. They all want to blame the primary reason that they're successful
and have registered their blessings, and that is the U.S. government and specifically the
ecosystem in California that continues to churn out these incredible companies.
Anyways, enough of that. I still love Miami, though. Still love Miami.
Ooh, you should see Daddy at the Faina. He goes into that place called The Living Room with that porcelain cheetah,
and he buys drinks for everybody.
Hola!
Hola, yes.
We'll be right back after the break with a look at Golden Visas. Fox Creative.
This is advertiser content from Zelle.
When you picture an online scammer, what do you see?
For the longest time, we have these images of somebody sitting,
crouched over their computer with a hoodie on,
just kind of typing away in the middle of the night. And honestly,
that's not what it is anymore. That's Ian Mitchell, a banker turned fraud fighter.
These days, online scams look more like crime syndicates than individual con artists.
And they're making bank. Last year, scammers made off with more than $10 billion.
It's mind-blowing to see the kind of infrastructure that's been built to facilitate scamming at scale.
There are hundreds, if not thousands, of scam centers all around the world.
These are very savvy business people.
These are organized criminal rings.
And so once we understand the magnitude of this problem, we can protect people better.
One challenge that fraud fighters like Ian face is that scam victims sometimes feel too ashamed to discuss what happened to them.
But Ian says one of our best defenses is simple.
We need to talk to each other. We need to have those awkward conversations around what do you do if you have text messages you don't recognize?
What do you do if you start getting asked to send information that's more sensitive?
Even my own father fell victim to a, thank goodness, a smaller dollar scam, but he fell
victim and we have these conversations all the time. So we are all at risk and we all need to
work together to protect each other. Learn more about how to protect yourself at vox.com slash Zelle.
And when using digital payment platforms, remember to only send money to people you know and trust.
Support for this show is brought to you by Nissan Kicks. It's never too late to try new things,
and it's never too late to reinvent yourself. The all-new reimagined Nissan Kicks is the city-sized crossover vehicle that's been completely revamped for urban adventure.
From the design and styling to the performance, all the way to features like the Bose Personal Plus sound system,
you can get closer to everything you love about city life in the all-new reimagined Nissan Kicks.
Learn more at www.nissanusa.com slash 2025 dash kicks.
Available feature, Bose is a registered trademark of the Bose Corporation.
Support for this show comes from Constant Contact. You know what's not easy? Marketing.
And when you're starting your small business, while you're so focused on the day-to-day, the personnel, and the finances, marketing is the last thing on your
mind. But if customers don't know about you, the rest of it doesn't really matter. Luckily,
there's Constant Contact. Constant Contact's award-winning marketing platform can help your
businesses stand out, stay top of mind, and see big results. Sell more, raise more, and build more Thank you. you create and send the perfect email to every customer and create, promote, and manage your
events with ease all in one place. Get all the automation, integration, and reporting tools
that get your marketing running seamlessly, all backed by Constant Contact's expert live
customer support. Ready, set, grow. Go to constantcontact.ca and start your free trial today.
Go to constantcontact.ca for your free trial.
Constantcontact.ca
We're back with Profit Markets.
JP Morgan is deploying a private banking team to Dubai to capture the
wealth of an influx of millionaires moving to the Middle East. The United Arab Emirates has become
the country of choice for the ultra-wealthy, with more millionaires expected to relocate there this
year than anywhere else in the world. Other wealth managers such as UBS, Deutsche Bank, and HSBC
have also identified the Gulf as a growth region. Scott, what is going on here? Why are
we seeing this influx of millionaires moving to Dubai and other areas in the Middle East?
I mean, essentially, it's economic opportunity. And I went to Riyadh to a conference. I've been
to Dubai several times. And what's inspiring about these places is you meet a lot of
entrepreneurs from Europe and
Asia and basically there's just more economic opportunity now in the Gulf and then you couple
that with very low taxes if not zero taxes it's actually more attractive I think for European
citizens because if they move there U.S. taxes will follow you wherever you go the rest of your
life you'll always pay U.S. federal taxes unless you turn in your passport which I don't recommend you do. But I think if you're a German or a Spanish citizen
and you go to Dubai, you literally pay zero taxes. And if you're a small business entrepreneur
building websites or you have an interior decorating firm or whatever it is, the economy
there is just booming. So you not only have more upside, you have much lower taxes. And they're
very straightforward. It's like you play by our
rules. That's the downside. You don't want to get caught with edibles. Drinking. Speaking for a
friend. Oh no, you can drink in Dubai. Riyadh, it's- You can drink at the Chipriani. You probably
can't drink anywhere else. I don't know. Oh, my friend, you can drink anywhere in Dubai and catch
the eye of a lovely woman from Russia who is very interested in you.
Again, speaking for a friend.
No, Dubai is actually quite liberal and well-run.
It just represents opportunity and more economic security for young people, so it doesn't surprise me.
What's surprising is that people used to move to a different city or whatever. The fact that there's sort of these international
relocations now. I do have a couple of friends who've relocated.
To the Middle East?
Dubai. So my friends who've already made it are relocating to Portugal to become taxpats and just
hang out in Qeshqais and live nice lives with their kids. My friends who are kind of in their
30s and on the upswing and have a small business are moving to Dubai to try and make more money. Sort of
similar. I mean, I kind of did the same thing. I moved to Florida thinking, okay, it'll be a better
quality of life. I'm massively going to cut my burn by 40% and I'm going to reinvest my 13% a
year in my top line from tax savings and investments. But what you see is young people are becoming
bolder. More people have passports. More people are less intimidated by moving, and they feel
like they can stay in better touch with their family with FaceTime. They're just not as
intimidated. And Emirates has now kind of opened up the region. I mean, flying 14 hours on Emirates
is like flying two or three hours on American Airlines, right? It's just about the same level of trauma to your system. It's such a pleasant way to fly that I think it's really interesting. I think
there's just some core investments, just as we were talking about how powerful an investment
in a university can be. I think one of the best investments the UAE made was in Emirates Airlines.
It just sets this tone that, wow, this is an amazing country and I don't
mind going there because getting there is just so easy and so nice. And the airport is so...
By the way, one of the best meals I've ever had is at the Doha Airport. You don't usually think
about, I got a facial and an amazing meal at the airport in Doha. That's not typically... By the
way, go to an airport if you really want to airport if you really want to be radiant and help with the pores and look younger.
Go to an airport for a great cosmetic treatment.
Anyways, I think it's interesting.
And I really – have you been to Dubai?
No, I haven't.
Yeah, it's sort of like Vegas without the charm.
I don't love Dubai, but it's impressive what they have built
there. Also, it's kind of part of a trend around passports to become the newest luxury item,
where people are starting to buy passports. So they kind of have a go bag. I had to jump through
all sorts of hoops to get a tech visa here, a tech talent visa, which isn't easy at my age, given I don't know
how to turn on my phone. So I got a five-year visa. But these places you can basically buy
citizenship. Let me ask you this. So you make a certain amount of money. If you felt you could
make the same money, have the same or lower cost
of living as you do in New York, but save 30% in taxes, would you consider moving to Dubai?
I would certainly consider it, yeah. But I think I'd need to be making a lot of money such that I
can be kind of at the very, very tip top of the hierarchy in Dubai. I think it wouldn't be very,
when you say it's not, America is a terrible place to be poor and a wonderful place to be rich, I'll bet that's even more true in Dubai. So I would have to think about that. But like on this
golden visa point, you know, you mentioned this is similar to you establishing residency in
Florida. It's different because anyone can do that. And the difference that we're seeing here
and the trend that we're seeing around the world,
you mentioned Portugal.
Portugal is one of the biggest countries for these golden visas,
and now it's becoming the UAE.
And basically what a golden visa is, is it says if you pay, you get to come and live here. So in the UAE, the rule is if you buy a property worth at least
2 million dirham, which is around half a million US dollars, you get a visa. And this is the case
in many countries. Actually, over 80 countries today offer golden visas. Some of them offer
golden passports, which means that you can
literally just pay to become a citizen. And at the moment, demand for golden visas is up 15% in 2024.
So this is a new phenomenon. I mean, I'm sure this has existed in various forms throughout history,
governments trying to
adjust their policy to attract wealthy foreigners. We've talked a lot about how the UK has done that
for a really long time. But golden visas specifically and golden passports are on the
rise. And I look at this trend, and to me it's concerning, just the idea that we are moving to
like a pay-to-play citizenship
model, where it doesn't actually really matter what your nationality is.
It doesn't really matter if you know anything about the culture.
You're not taking like a nationality test.
You're literally just paying money.
And they say, okay, come in here.
And now if you live in the UAE, as you mentioned, you pay very little in taxes.
No, you pay zero in taxes in the UAE.
There's no income tax,
no inheritance tax, no estate tax. And now everyone's moving there and they're just paying for it. So are you concerned about this in the same way that I am, that we are just letting people
pay to live wherever they want? I'm not. Just as I think it's good that Texas competes with
California and that California will have to get its shit together and offer its taxpayers better value at some point. So in 2024, the UAE will attract the most millionaires, followed by the U.S., Singapore, and Canada. On the flip side, China, the U.K., and India will lose the most. I think that nations competing against each other to attract people is really important.
I think that China will probably have to keep a check on, somewhat of a check on human rights
or the way they treat people because I read some crazy stuff that two-thirds of millionaires
in China have either left or are planning to leave.
In China and Russia, all the rich people are leaving.
Yeah.
Supposedly, the thing that's really going to fuck the Russian economy is just the brain
drain. All the rich people are leaving. low taxes. And we were talking about this before. I don't think New York has any plans to lower
its tax rate, and it doesn't need to because it offers an amalgamation or an alchemy of culture,
grid, and opportunity that's worth it. And I think companies and countries that don't make
it worth it, that have a mix of high taxes and low opportunity and low human rights or
modest or mediocre freedoms, people are just
going to leave and go somewhere else. It is a bit disturbing that millionaires get to do whatever
they want and buy citizenship, but it's the financialization of everything. Welcome to the
real world that everything is about money increasingly, and it'll create a more competitive
environment. But I think on the whole,
countries competing against each other for its quote-unquote most productive citizens or its
wealthiest citizens, I think that is primarily a good thing. But it's competition to serve
such a small amount of people. I'll just give an example of where this is happening, which is the UK.
You mentioned the UK is at the bottom of that list.
It's seeing the greatest outflows of millionaires. And the reason behind that is that, as we've discussed before, the UK used to be sort of a tax haven for wealthy foreigners because of this thing that we've talked about called the non-dom status it's
a tax classification for wealthy foreigners who are living in the uk and it basically exempts
them from a certain amount of taxes and we can go into the details on what exactly those exemptions
are but the point is wealthy foreigners live in the uk and they love it there because they get
to enjoy all the nice things and also they get to pay less in taxes than regular UK citizens as a percentage of their
income. So the UK government has recently decided to scrap that. So non-doms or wealthy foreigners
will now be taxed the same as everyone else. And when that happened, as I'm sure you heard from a
lot of people in London, a lot of wealthy
foreigners were like, oh, this is terrible.
We're moving.
This doesn't work for us anymore.
My instinct when I heard those rumors was that it was kind of similar to Miami.
It's kind of bullshit.
They're saying, oh, this is terrible because they just want to put up a stink and maybe
get that tax policy reversed. But ultimately, they want to keep going to 5 Hartford Street and running into
you at Maison Estelle, etc, etc. But then I saw the data, which is that the UK is expected to
lose 10,000 millionaires this year, which is the highest number ever. And this new economic
analysis came out saying that because of the amount of non-doms that are leaving, the Treasury is expected to actually lose tax revenues, expected to lose
£1 billion. And this whole thing was supposed to increase revenues, but everyone's actually leaving.
And apparently, if we look at the data, they're literally moving to the Middle East.
So how are governments supposed to thread the needle here? Because it's not that
Britain's implementing unfair tax policy. It's very fair, very moderate tax policy. But it's
just that somewhere else, the tax policy is just preferential to rich people. So is it just sort of
kind of a race to the bottom of who can cater to the rich as much as possible?
So a lot there.
The first is I want to acknowledge that I like your mentality in the sense that, okay, when the data changes, I change my mind.
And I have the same view as you.
I have a close friend here in the UK, total baller, does really well, and has residency in a low-tax domain.
And then when you heard about the non-dom thing,
he started kvetching that I'm leaving. This is going to be a huge hit to me. And I'm like,
boss, your kids are in school here. You love it here. You're not going anywhere.
And I was right on this specific instance. But for people who don't have kids, for people who it's, you know, a savings of tens of millions of dollars. The data you just put forward is really stark.
And the fact of the matter is if this tax policy meant to increase the treasury is actually
going to diminish it, then it was the wrong policy, regardless of what you think of the
morals of it.
So what needs to happen?
I think that in general, you need a few things to happen.
The first is I think there has to be a tax policy that is a multilateral trade agreement, and the U.S. has to lead it because the U.S. is the only one that has
kind of the firepower to say, unless you cooperate, we're not going to give you access to the dollar,
we're not going to give you access to CFIUS, or not CFIUS, whatever the credit card trade. I mean,
the U.S. can kind of impose a sanction on anybody and it kicks the shit out of it. The U.S. can put almost any country, if not out of business, it can make them much less wealthy if it wants to. And they flex that same muscle. You had a lot of U.S. corporations doing reverse mergers and relocating their corporate headquarters such that they could not pay American taxes. So Janet Yellen and the president said, no, we're going to implement
a 15% AMT, minimum tax, that regardless of where your quote-unquote headquarters are,
you need to pay at least a 15% corporate tax. And then they forced everyone else,
including Ireland, that was saying we'll do it for eight, to do that. Otherwise,
we're going to put you out of business. We're going to start with a tariff order.
And UAE.
Right. So you're going to have to have, I think, some sort of
intercontinental or multilateral agreement around taxation.
In addition, as a general rule,
the philosophy I would implement
around taxation is the following.
If you're Jeff Bezos
and you've aggregated
$160 billion in wealth in Washington
as a function of the great
junior colleges there, the great
public schools, the University of Washington, the Seattle-Tacoma Airport, the unique culture
of innovation there. And then you decide to peace out for Florida to, quote unquote,
spend more time with dad. And you're not going to give back to the infrastructure you leveraged to
become one of the wealthiest men in the world.
Boss, that dog just won't hunt.
The amount, the accretion of wealth needs to be, the taxes you pay on it need to be based on where you accreted and built that wealth.
It's the same bullshit all these VCs who claim that they hate San Francisco are pulling, but on an international scale.
Galloway 2024, new tax policy.
You heard it here first. No, but I need to be president of the world.
Yeah, exactly.
General consulate of the solar system.
We'll be right back after the break
with a look at a few mega deals in podcasting. Thank you. 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.
It goes beyond basic grammar to help tailor writing to specific audiences, whether that
means adding an executive summary, fine-tuning tone, or cutting out jargon in just one click.
Plus it surfaces relevant information as employees type,
so they don't waste time digging through documents.
Four out of five professionals say Grammarly's AI boosts buy-in and moves work forward.
It integrates seamlessly with over 500,000 apps and websites.
It's implemented in just days, and it's IT-approved.
Join the 70,000 teams and 30 million people who trust Grammarly to elevate their communication. Visit grammarly.com
slash enterprise to learn more. Grammarly. Enterprise ready AI.
Support for the show comes from Alex Partners. In business, disruption brings not only challenges,
but opportunities. As artificial intelligence powers pivotal moments of change,
Alex Partners is the consulting firm chief executives can rely on. Alex Partners is
dedicated to making sure your company knows what really matters when it comes to AI.
As part of their 2024 Tech Sector Report, Alex Partners spoke with nearly 350 tech executives
from across North America and Europe to dig deeper into how tech companies are responding
to these changing headwinds.
And in their 2024 Digital Disruption Report, Alex Partners found that 88% of executives
report seeing potential for growth from digital disruption, with 37% seeing significant or
even extremely high positive impact on revenue growth.
You can read both reports and learn how to convert digital disruption into revenue growth
at www.alexpartners.com. That's www.alexpartners.com.
In the face of disruption, businesses trust Alex Partners to get straight to the point and deliver results when it really matters.
Your business is ready for launch.
But what's the most important thing to do before those doors open?
Is it getting more social media followers?
Or is it actually legitimizing and protecting the business you've been busy building?
Make it official with LegalZoom.
LegalZoom has everything you need to launch, run, and protect your business all in one place.
Setting up your business properly and remaining compliant
are the things you want to get right from the get-go.
And LegalZoom saves you from wasting hours making sense of the legal stuff.
And if you need some hands on help,
their network of experienced attorneys from around the country has your back. Launch, run,
and protect your business to make it official today at LegalZoom.com. And use promo code VoxBiz
to get 10% off any LegalZoom business formation product, excluding subscriptions and renewals. Expires December 31st, 2024.
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.
Podcasting deals are back and bigger than ever.
Over the summer, Alex Cooper of the Call Her Daddy podcast signed a three-year contract with SiriusXM for $125 million, jumping ship from Spotify.
Meanwhile, Travis Kelsey and Dax Shepard struck deals with Wondery for $100 million and $80 million, respectively.
And Joe Rogan renewed his contract for $250 million.
Scott, 2024 might be the year of the podcast. What are your reactions
to these new podcast deals? My reaction is fourfold. The first is Shama,
the second is Lama, the third and fourth are Ding and Dong. We're rich, Ed. We're rich.
Boom. We're each going to have a Ferrari, or or more likely I'm going to have two Ferraris.
Yeah.
Then I'm going to buy you like a Toyota with like leather seats.
I'm going to be renting the Ferrari from you.
There you go.
Yeah.
I'm super, look, I think a lot about this and this is super exciting. And a few things are
going on here. One, podcasting is one of the few growing ad-supported mediums. And the key there is ad-supported because the trend around all media? It means that if you're Pepsi or Lexus,
you're becoming increasingly desperate to find content that people will endure while they pelt
you with the Lexus September to Remember event. By the way, eating the clam chowder at the Lexus
September to Remember event wasn't a good idea, Ed. Wasn't a good idea. Anyways, that makes me happy.
So, all right, back to our program.
So if you have a vehicle, a media vehicle, such as the one that the two of us are on right now, that people are willing to endure ads on, that asset becomes more and more valuable because there are fewer and fewer of them. This is why you've seen an explosion in the value of sports franchises because they can garner TV rights or sell their TV rights,
and people are still willing to endure ads in live sports. They're not willing to endure ads
in original scripted drama anymore, but they are willing to endure ads so far in audio,
specifically podcasts. So you have seen a dramatic uptick this year, we've seen it in our numbers,
in advertising. And so what you see is a few of the bigger players, Sirius, Spotify, Wondery,
who has Amazon, iHeartRadio, Vox, who we distribute our podcasts through, they are paying
up because their valuations, if they can show growth in an
ad-supported medium, that creates a lot of shareholder value. And podcasting has also
evolved. It used to be celebrities. The era of sign up the Obamas and Prince Harry and Meghan
and pay them 10 million bucks for them to do nothing, that's over. But these folks who are
proven commodities, who have big audiences that are growing, that ring the register with advertisers,
they're getting bigger and bigger deals. Now, these deals are probably a bit misleading,
because let's break it down. Armchair Expert, $80 million.
That's Dax Shepard's podcast.
That's Dax, yeah. But let's assume it's four years.
That's $20 million a year.
I bet there are revenue guarantees in there.
And so it's not, you know, they all want a headline number that's really big.
But I would bet that the folks at Armchair Expert gave Wondery a business plan and they said, fine, we believe you and you need to
hit these numbers. And if you do, and you continue to grow 20 or 30% a year, you're going to get 80
million total over four years. This is, I gotta be honest, this is really exciting for us. We're
peaking at the right moment. The Prop G enterprise, you know, markets conversations, this pod is
growing, you know, 20, 30% quarter on quarter. The other pod,
Pivot, is a juggernaut. And our deal with Vox is up in May. So we're out there positioning
ourselves. And my guess is we'll probably end up staying with Vox because we like working with them
so much. But oh my gosh, it's going to cost you, folks. It's going to cost you.
Yeah. So this is the ultimate question. What is a multi-year contract with Scott Galloway and Ed Elson?
What is that going to be worth in 2024?
All the chickens, ale, and Cialis that daddy wants.
I don't know.
Like, I've done a bunch of deals directly with firms.
Money isn't meaningful to me right now.
It's not profound.
I'm going to call it profound for me,
but keep going.
And in terms of a number,
I haven't thought about a number.
Yeah, you have.
I haven't thought about a number
I'm willing to share.
I basically like to just,
I'd like,
I'm building a pool in my new house.
I'd like to fill it with cocaine.
And I don't know how much that would cost.
I don't know how much that would cost.
And I also want to be married another four or five times
to people from Eastern Europe.
I'm curious what that would cost.
Yeah.
Yeah.
You got to factor all of this in.
No, this is going to take some real money.
Plus I need a scrotum lift.
I'm getting more and more Botox all the time.
Look, it's not cheap being me.
Not cheap.
It's not cheap.
I got to pay you guys.
I got to pay you guys.
You got to get a scrotum lift at the Doha airport.
Yeah.
Exactly.
Best facial I've had.
Well, just on this point of subscriptions versus ads.
So, you know, you're pointing out that ad spend is increasing on podcasts and it hits
some data.
Ad spend increased 22% this year, according to one research report on all podcasts
spotify says 2024 will be the company's biggest year for podcasting and on a separate note
regarding subscriptions 62 of consumers who use streaming services report subscription fatigue
and that's up from 46 in 2020 so ads are kind of becoming king again, certainly the podcast world.
And you made this point that listeners are willing to endure them. And that is something
that we should zero in on because ads are increasingly dominating this space. In 2021,
ads took up an average of 7.5% of total podcast show minutes across all
podcasts. And today that number is 11%. So it's grown very significantly. We are hearing more and
more ads in our podcasts. Our listeners, I'm sure, will be feeling this too. We are definitely not
bucking that trend. And there might be a concern soon that
podcasts similar to TV are just too ad heavy. It just becomes insufferable. So
where do you stand on that issue? Are you concerned at all about just ad fatigue?
So about four years ago, every three months, we would have a conversation,
a serious conversation around taking PropG and Pivot behind a paywall and putting the No Mercy, No Malice newsletter there and just saying $100 a year for all of it.
And there's something that's very attractive about it. No ads, focus on the content,
have a customer base that is really into it. Sam Harris has sort of forged this model. I think Sam
Harris probably has three or 400,000 subscribers paying $100, do the math. He's making a shit ton of
money. He's very happy. He doesn't have to go to the lowest common denominator or read an ad for
some crypto platform or whatever. So it was really attractive, but we were smart enough to figure out,
I thought, you know what? I do think that these advertisers are going to need places and everything is, we're going to go, the market never finds a balance. And my subscription was the right
move 10 years ago. It's not any longer because there's still too many advertisers that need to
reach people. And that number, 23% growth, I think that means podcasts are growing faster
than Alphabet right now. I mean, that is 23%, other than Meta and TikTok, I think that means podcasts
are the fastest growing ad-supported medium in the world right now. And so everyone has their
greed glands going and their checkbooks out. At some point, we'll hit a limit in terms of ad
fatigue. The thing that'll happen that'll ruin it, if you will, or not ruin it, but change it,
is right now, it's pretty easy to skip an ad. At some point, advertisers are going to start tracking ads listened to. And that will probably
change or force podcasts to reduce the number of ads such that people don't immediately get
fatigued and start skipping everything. Also, what's different or unique about this medium
is the host read over. We read all our ads. And it's been shown that when I say
I have a Hastens bed, is that what it's called? Hastens? Hastens. Hastens. Hastens? Hastens?
Hastens? Hostens? Hostens. Whatever. They're nice, expensive beds. Yeah. It's a $12,000 mattress.
Anyways, they're an advertiser and they were kind enough to invite this into their store to try a
mattress. And I'm like, I'm not going to go into some strange store and lay down.
That's supposed to be a feature.
Anyways, it ends up, which I never do.
I think I spilled some rum in my bed or something.
And for the first time, I took the cover sheet off and I see a Hastens logo.
And I'm like, oh, my God.
I buy the Swiss bitch of a mattress or whatever.
It's a Northern European mattress that has like-
Swedish.
Gnomes with freakishly small hands sewing this thing.
And it is a great mattress.
But in the next ad read, I will say,
I have this mattress and I love it.
And the advertiser loves that and so do listeners.
The host read over is much more effective
because people, when they hear the continuity of your voice,
if they're on your pod,
it means they sort of trust you and they're sort of interested. But this is a medium. The ad market
needs a place to find consumers. This medium is growing faster than anything but all but the
strongest digital platforms right now. And people are breaking out their checkbooks. It's a great
time to be in podcasting. I'm manifesting a $60 million deal next year.
That's what I want.
You know what's funny?
You said this.
I went on.
I'm fascinated by ChatGPT and Claude and AI in general.
I went on and I uploaded our numbers.
I uploaded our downloads, our numbers, our revenues.
This is the guy who said, I haven't thought about it.
I just want to be happy, Ed. Go ahead. I just want to make other people happy. I just want to be healthy.
You know, I'm rich in terms of the number of people who love me, Ed. That's how I count my
health, Ed. Three different AI assistants to help them think about it even more.
Shut the fuck up. Anyway, so I uploaded all the data I had on our pods, and I said,
please look at all these different deals.
These are the potential partners.
This is when our deal is up.
Please provide me a range of a likely size of a deal.
And both of them came back with nearly the same number, which I thought was really interesting.
And after the deal is done, I will disclose what AI projected we were going to get and what we actually got.
But it's going to be very interesting.
I hope it's big. I really hope it's big. Let's take a look at the week ahead.
We'll see the consumer price and producer price indices for August,
and we'll also see earnings from Oracle, Adobe, and Kroger.
Do you have any predictions for us, Scott?
So it feels as if the worm has turned against big tech.
The CEO of Telegram being arrested in France, Twitter being banned in Brazil, Google being found guilty by a court of monopoly maintenance, the DOJ sending a warning letter or firing a flare across the bow of NVIDIA.
Apparently that wasn't true, by the way, the NVIDIA subpoena.
That's what NVIDIA said.
NVIDIA is saying they didn't hear from them.
And then later today, though, didn't they say that they've been in touch or something?
I know they initiated an investigation.
The whole thing is very weird.
But, I mean, they're suddenly investigating NVIDIA, so I think what you're saying still remains true.
Look, don't get in the way of my narrative with data and truth, all right?
Anyways, I think the worm has turned against big tech.
And this bullshit that, oh, the screams of free speech.
So news alert, crime is not speech.
If Ed, if you and me owned a hotel and we knew that there was trafficking and there was child abuse taking place and illegal drugs being sold,
and the authorities contacted us and said, we know this is going on there and we need your help.
And we stuck up the middle finger and said, no, it's free speech, we would be in a world of hurt.
Crime is not speech. And people have had it with these folks, believing what everyone has been
telling them from the stock market to a fawning media to bought off senators and congresspeople
that somehow they are not subject to the same standards of decency or care for the commonwealth as every other company and every other individual. So my prediction is the following. In the next six
months, you are going to see a high-profile tech executive, when he or she lands in their
favorite vacation spot, cuffed. The world has had it with these guys, and we're going to start to see
more local enforcement agencies say, well, if you're in any other industry,
we're going to
arrest you. So guess what? We're arresting you. This episode was produced by Claire Miller and
engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our executive producer
is Catherine Dillon. Mia Silverio is our research lead and Drew Burrows is our technical director.
Thank you for listening to Profit Markets from the Vox Media Podcast Network.
Join us on Thursday for our conversation with Lynn Alden, only on Profit Markets. In kind reunion
As the world turns
And the dark lies
In love
In love We'll see you next time. is the city-sized crossover vehicle that's been completely revamped for urban adventure.
From the design and styling to the performance,
all the way to features like the Bose Personal Plus sound system,
you can get closer to everything you love about city life in the all-new, reimagined Nissan Kicks.
Learn more at www.nissanusa.com
slash 2025 dash kicks.
Available feature.
Bose is a registered trademark of the Bose
Corporation. Support for this podcast comes from Anthropic. It's not always easy to harness the
power and potential of AI. For all the talk around its revolutionary potential, a lot of AI systems
feel like they're designed for specific tasks performed by a select
few. Well, Clawed by Anthropic is AI for everyone. The latest model, Clawed 3.5 Sonnet, offers
groundbreaking intelligence at an everyday price. Clawed Sonnet can generate code, help with writing,
and reason through hard problems better than any model before. You can discover how Clawed
can transform your business at anthropic.com slash Claude.