The Compound and Friends - Is Gen Z Completely Cooked? With Ed Elson

Episode Date: October 2, 2026

On episode 262 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and Michael Batnick are joined by Ed Elson of Prof G Markets to discuss: the massive AI spending boom and whether we’re in an AI bubble, the race between OpenAI and Anthropic, sky-high private market valuations, AI safety and regulation, whether AI is helping or hurting education, Waymo and the future of autonomous driving, the growing divide between young Americans and previous generations, housing affordability, sports betting and financial nihilism, America’s $40 trillion debt problem, and what it will take to give Gen Z a better shot at building wealth. This episode is sponsored by ROCY and ROCQ from J.P. Morgan Asset Management and Janus Henderson Investors. Learn more about ROCY and ROCQ at https://www.jpmorgan.com/income Visit https://www.janushenderson.com/ for more information. Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ JP Morgan Disclosure: Investing involves risk, including possible loss of principal.   Investors should review a mutual fund or ETF’s investment objectives, risks, charges, and expenses before investing. This and other information is in the prospectus—read it carefully. To obtain an ETF prospectus, call 1-844-4JPM-ETF  JPMorgan Distribution Services, Inc.; member FINRA. Learn more about your ad choices. Visit megaphone.fm/adchoices

It is difficult talking into a microphone. And I've noticed this increasingly about myself that my brain breaks all of the time. And I think when you're talking to somebody in like normal life and you sort of stumble, like they just fill in whatever word you're looking for. But when you're on the microphone, you're like, that's why you've got to do it like a bazillion times. So Scott is incredible. Like his brain does not break on Mike. Josh's brain, your brain doesn't.

No, Josh's brain never breaks. Or lose the sentence or lose the word that I'm looking for all the time. I don't think you always do. I mean, it feels, I feel like I do it a lot. You never do. Scott never does. I told you, I listened to your conversation with the guy from Hamilton Lane that you did it this week. I thought it was like one of the best things I've ever heard you do.

And maybe it's because you know the topic so well. It was like a flawless, no um, no uh. Like as soon as he finished a sentence, you had the next question ready. Well, thank you. You reacted to his statements immediately. I don't think you. I rarely feel like I finish something. I'm like, yeah, that's.

I was pretty good. But I did do a good job. But also, I know the content, and he was, he was very good. So he made it easier. He was very, he was very good, too. When you do a bad show, how long do you think about it for? I used to think about it for weeks. Now, I think about it for hours. Weeks? Yeah. Yeah. I'm hours. But the thing I've learned is that the more you do, the less each one matters. And there's also less time to work. Because you have another pod the next the next step. You've got another thing to figure out. And nobody cares. Are you in a lot of, are you in a lot of, Are you in a lot of like two-way conversations with your audience? Like, do you get a lot of feedback and do you respond to any of it?

Do you use that to try to improve the show? Yeah, I do. But I think you've got to take everything with a grain of salt because people online are generally insane. I don't mean comments. I mean like literally somebody comes into you and says, says something constructive but critical. Not in a, not in an open forum. If they're right. Okay.

Sometimes they're wrong. And I'm like, you're wrong. I feel strongly about this. I very much not try to. I do avoid the comment section. Yes. Because Bill Simmons said it's that it crystallized with me. Because obviously, like everybody else,

it's weird to see strangers talking shit about you in a personal way. It's just a bizarre feeling. Yeah. I understand, and I'm thrilled that people even care to listen to us. So I'm not mad that people talk shit. That's part of the game. I accept that. I totally get it.

But I don't want to subject myself to it, number one. Like, it's not healthy. But number two, and more importantly for the audience's point of view, I don't, I want to say what I want to say. Exactly. Without a random anonymous person comment in the back of my brain, it's not fair to the audience because the audience isn't reading the comment section for the most part. So why would you like steer the conversation where it's going to like make, like try to avoid landowners?

Just to please that. That don't exist. That's going to say the things that way. Then you're not going to say your opinion anymore. And I think the most lame thing that a podcaster can do is talk to the negative comment section. That's not what the audience is there for. Yeah. They don't give a shit that somebody.

fight with the comments. So a tomato, yeah. Like, they don't care. They're just... You got to move on. I think... Some people say, don't read them at all. Zero.

I think that it's worth just checking them out and getting a sense of just where people land. But at a certain point, you don't have to anymore. Yeah, I think, I think, I think read them and don't take them too seriously. Every now. Here's a happy medium. Skip the comments entirely. Mm-hmm. but pay attention to the analytics.

Of course. Because that's people putting their money where their mouth is, and by money I mean their actual time and attention. Yeah. So if you do a show, which we had Ed Zittron on. Yeah. He's fucking crazy, but he's a great guest, and we really enjoyed the conversation.

And by the way, he does his homework. Oh, yeah. And so this is the thing with that he's crazy, but he's doing his homework. That's right. He was 75 important numbers ready. Boom. Yeah, it was very prepared.

Correct. He's a great guest for any show that wants to have an opinionated, spirited discussion about AI, which is the most important topic of our time. That's what you want. You don't have to agree with him. But, you know, his view is valid, I think, because he's doing his homework. He's looking at the numbers. And he's coming up with a view.

You don't have to agree with it. So we did a great show. And then I looked at the analytics. First of all, the show did huge numbers. So, yes, we had people on. the comments like, oh, that guy's the worst or Charlottoman, he doesn't work in finance. He's not, he's saying like, don't even invest

on my opinions, I'm just spouting off. Like, every criticism you could think of. But you know what? Forget about the views. People stayed for the whole thing. Yes, the thing that I look. Like, if I have a guest where people drop off two-thirds of the way through in big numbers,

I'm paying attention to that. That's signal. Yeah. It's not one guy spouting off in the comments. I don't want my, I never want my fans and my audience to be like, this is not a good use of my time. Exactly. Then I'm failing.

And you don't have to agree with them. And that's the point of having guests on is to have a different point of view. You guys have your point of view, have the guest on. Then bring it on another guest who has a different point of view. This is the whole point of all of this. To be clear, I am, if anybody heard me say, if anybody heard me say, it's obviously not what I'm saying. I just say, I think, no.

He knows the cameras are rolling. Now he's got a hedge his thing. Exactly. That's bullshit. No, no, I think you're doing your audience a disservice if you focus on the negative comments, bring it into the show. That's my point. I agree. And you can feel the anxiety on the host.

Like, well, this is what I said. You're trying to justify that just, it's okay. You have an opinion. Well, that's right. Out of respect for the audience, Michael is not going to slavishly focus on what the, like, the 1% of the audience thinks just because they're the loudest thing. Then you wouldn't be here. You wouldn't be telling your own opinions that come from your own experience, from your own experience, from your own view, your own data,

you wouldn't be here telling your opinions if all you cared about is what other people think. So did you go to school for finance? Like, what is your... I went to Princeton, and I studied classics, and I was, you know, deep into... Just like us. I was going to say, are we looking at a mirror?

It's crazy. Wait, what dorm? What dining club do you belong to? It's a Princeton classics. So, all right, I would have said Princeton or, because you told me the story, but I don't remember. And then, but you had a great story of how you met Scott. Let's, let's hear it. Because I know it, but Michael doesn't know.

Well, I was a huge fan of Scott for a long time. I was listening to his podcasts. And then I found out that an old roommate of mine, I was listening to one of his episodes. And I found out that an old roommate of mine, his mom was a guest on the show. I'm like, oh, my God, this is my hero. so I try to get connected. I have a kind of awkward phone call with Scott, but I try to make my pitch.

I end up being his intern. He hires me out of college. I work with him doing everything, helping him with his books and his research and his decks. And then one day he says, okay, I want to start a podcast. I need someone to read the news. And I said, okay.

I was on one of those first episodes with you guys. Right. And I would literally read the news. Yep. I would just, boom. I had a script. I'd write up what happened the previous day and Scott would react.

Exactly. And eventually I start realizing, okay, I have a viewpoint. I want to start expressing it. So I do. The podcast grows. And now we have a relationship where it is a co-hosting dynamic. I host now four out of five episodes a week. And Scott joins me on one of them. We review the previous week in markets and finance and tech and anything that is relevant to us. And yeah, and here we are. The show is... So brag a little bit. The show is on fire. You guys, it's a great dynamic when the two of you are on because you're not the same generation. You don't agree on everything. He actually is a very good listener on the show with you.

And I think, like, him and Kara is obviously chocolate and peanut butter. It's a great combo and they have great banter. I think with you, you probably say more than she says. I think you, like, he really gives you room to express an opinion. He's a great listener. Better than I am at that. As you'll come to find out shortly.

No, I think that's cool. Like I watch, so I watch you guys on YouTube or whatever, or on Spotify, and I'm looking at the screen. And there are long stretches where he's just sitting quietly listening. And nobody would expect that because it's Scott Galloway. Of course, he's doing the talking. So I think that's a really cool dynamic that you guys have. And then you have a lot of the episodes on your shoulders.

And it's, I think it just, it worked. My wife listens. She started out as a pivot fan and then discovered ProfiMarkets because I was on the show. And you're in her rotation. She loves you guys. Well, I totally agree. And I think it's credit to Scott for deciding to take a bet on someone who is young, on someone who a lot of people would say, why does he get to have an opinion?

Why is he talking? I understand it. And if you don't want to listen what I want to talk about, then don't listen to the show, and that's okay. But I think what he has been really good at is identifying that actually young people, if you give him a shot, they can be pretty good. And I think that that show is sort of the evidence of that.

And so I'm super grateful that he was willing to take a bet with me. And he didn't have to do it. But he did. Shout out to Professor Scott Galloway, for sure. You know, Barry and I know Scott for a really long time. He's been at some of our events. We think he's one of the most interesting people we know. He has a fascinating character.

100%. And very polarizing. Yeah, well, so that's another interesting thing that I'd love to just hear from you on. So he's not afraid to go there. Like, he talks about sex and tons of politics, especially lately, and itematic. that'll get louder as we go into the midterms. He has people on both sides of every debate. He's not afraid to listen to what people have to say.

How much blowback do you get, depending on who his guest is? And is that something that you can just run off your back? Or what's that like? Yeah, I sometimes get blowback if people are upset with Scott. And they say, oh, screw you, Ed, for working with Scott for whatever reason. silently while he let so-and-so say blank. Exactly. So I personally don't worry about that because I know that it has nothing to do with me,

but it's a very small minority of listeners. I think most listeners listen to the show, and they know that we're different people. We have different views. We have different priorities, different values. And you hear that on the show every episode because we're arguing with each other. I'm bringing a different perspective.

I'm bringing the young person's perspective. He's bringing his perspective. So we push back and forth. And so I think generally speaking, it's not a problem for me, because I think people recognize that I am a different entity, different mind, different view. And I think most people can understand that. Yeah, I think your audience is very, you probably have a very highly educated audience. Just given the nature of the content and Scott's persona, I think you're talking to people

that are accustomed to being confronted with other points of view. Yeah, I think so. Like, that's what we aim for. Yeah. I try to make sure that the show isn't too esoteric or like annoyingly intellectual. It's important to me that we're very clear about everything. Everything's symbol to understand. Anyone can understand what we're talking about and understand the point of view.

But I think one thing that is probably true about the show is that people who listen to it are ambitious and they give a shit about what's happening in the world, what happens in markets, what matters, why money matters. I mean, all of these things, I think, is probably true of most of our audience, which I love because that's how I feel about the world, too. Very cool. Well, get ready for some esoterica on today's edition of the comic. How are we doing, guys? All right, we got John Grayson and Daniel Parrott in the house in the control room right now. They will be piloting the show.

Thank you guys, as always. Hey, John, what episode is it? This episode is sponsored by Rerner. Rocky and Rock Q from JPMorgan Asset Management to new option-based ETFs for investors looking to complement an income approach led by Hamilton-R-R-O-C-R-C-Y and an experienced team ROCY and ROCQ seek to provide monthly distributions.

These distributions may come from stock dividends and selling options, and they may also include return of capital. Both also seek equity upside potential with less volatility. ROCY offers exposure to the U.S. large-cap stocks, while ROCQ offers exposure to the NASDAQ-investing involves risk, including possible loss of principle. Investors should review a mutual fund or ETF's investment objectives, risks, charges, and expenses before investing. This and other information is in the prospectus. Read it carefully to obtain an ETF prospectus. Call 1844 for JPMETF.

and Distribution Services, Inc., member FINRA. To learn more, visit jp.morgon.com slash income or search R.O.C.Y and R.O.C.Q. Today's show is also brought you by Janice Henderson. At Janice Henderson investors, we believe working together is the way to work better. Like combining your portfolio plans in our in-depth strategy, your valued assets and our valuable insights, your mission and our vision. Always working in perfect harmony to find the right investment opportunities. Janice Henderson investors investing in a brighter future together.

Visit Janice Henderson.com. Ladies and gentlemen, you are now rocking with the greatest investing podcast of all time. I listen to all of them. You can take my word for it. Not the only good show, of course. The control board. Just the gold standard. All right.

Guys, my name is downtown Josh Brown. First time listeners, welcome to the show. With me, as always my co-host, Mr. Michael Batnik is with me today as well. Michael, say hi. Hello, hello. All right. And we have podcasting royalty today. My buddy, Ed Ellson, Ed is a business writer, analyst, and co-host of the Prof G.

Markets podcast with Professor Scott Galloway. In 2025, he received the Webby Award for Best Business Podcast. Did we ever win that twice? Amazing. And before that, the Honorary Award for Best Co-host. I like that. In 2025, he was included in the Forbes 30 under 30 list. So are you stealing money yet?

He's like I'm going to jail next year. When do you get indicted? His work has been featured in multiple New York Times bestsellers, including the algebra of wealth, adrift, and siege, Ed Elson. I can't believe we haven't done this yet. So happy to have it. So happy to be here. We're so excited.

Big fan of the show. All right. Greatest intro music in all of podcasts. I definitely agree with that. I definitely agree with that. All right. Question one. AI.

It's good? Is that the question? Yeah. Is that how we're starting? Speaking of, all right. Speaking of giving you room. Yeah. We're going to tackle this from a market's perspective, but we're also going to get into

this from a societal perspective. And I know you're very passionate on that end of the debate. I am too. I just don't, I don't spend a ton of time on it just because. because the focus of the show, but I do want to do that with you. We have this setup where tech is the everything cycle. Are we starting there? Yeah, so just to frame the conversation, A16Z put out their state of the markets.

And one of the first charts is, as Josh mentioned, this is how we got here. Daniel, chart on place, they have a chart showing that tech is now 55% of all U.S. capital spending. Yeah. And they zoom out from the 1960s today. And this really does a great job visualizing the story of why all of the most famous and most powerful CEOs in our country were at the White House yesterday talking about technology and the next wave and AI and super intelligence. And this is it. Yeah.

That's exactly right. And it really, I mean, I know there is an end in sight, but it's not in sight today. It really, I mean, it looks like it's hockey sticking even from these levels from, I mean, could tech? become 80% of U.S. capital spending as inconceivable as it sounds. Again, in 1960, it was 15 and today it's 55. It just, it seems like we're in an, like these are the times that people look back 20 years later and say, holy cow, that was, that was it. That was the revolution. 100%. All right. So let's start here from a markets perspective. It's a pretty exciting time for you to be covering the markets. Every day. Every day is an incredible new story.

I mean, the White House meeting of all of the AI leaders, I thought was incredible entertainment. I thought the clips were amazing. Trump jabbing at Dario Amadee trying to get him to say something, him feeling awkward, say something positive, him calling Sondapachai a monster, but then saying that as if it's a good thing, and then Sondapichai saying, I don't know if that's the right label. I mean, incredible entertainment. He pointed at Sondra Meshai. This guy's a monster who no one knows.

He couldn't say, he couldn't remember his name at first. Eventually he goes, Sundar. Sundar. It sounded like he was searching for it. Exactly. So he was like, look at this monster. Sanda Pichai, of course, doesn't know what to do with that because he never confronted an individual like Trump. So incredible entertainment. And that's it.

That's all that was, that meeting. I think that there was nothing that actually came out of it that actually mattered. We thought that maybe they were going to come up with some level. of regulation that was actually important coming out of this AI hysteria, which I know you and I have talked about and we could talk about again. But in terms of what actually got done in this meeting, nothing really got done other than they said. Wait, what do you mean? Super intelligence. We got a new name. What's you talking about? It's not artificial because artificial is fake. Super intelligence. Exactly. Super. Did you watch any of this?

This is zero. Okay. You got to find some clips of this. I was watching it. I was watching Yesterday, Melissa Lee and Michael Santoli were, I think their show is the one right after the closing bell, like right after 4 o'clock. I think it's, I guess it's the close, I don't know. It doesn't matter. They were like stunned because it's $25 trillion of market cap in an impromptu press scrum in front of the White House. Nobody has ever seen anything like this. This would be the equivalent 100 years ago. If you saw like, I don't even know,

Warren Harding standing in front of the White House with John D. Rockefeller, Cornelius Vanderbilt, Morgan. J.P. Morgan. Like, this is, it's totally unprecedented. And he's demanding and pointing fingers. Oh, okay, now you speak. And they go in there and they bumble their way through

trying to talk about how AI is actually a good thing. Dari Amade is saying this. Meanwhile, the Anthropic S-1 is literally saying that it might extinct human beings. Right. So, I mean, the extent of the hypocrisy here, the way that these guys are folding themselves into bits is astounding, but they have to do it in front of the big man. And that's why I think this whole thing was it was total performance off. Donald Trump said, I want you to get in there. I want you to say that AI is going to be nice and AI is going to be safe. You think they needed the coaching? You don't think they know? You watch those clips? Those guys that do not know what they're talking about. No, no, no.

But you think they needed him to say, all right, I want you to be positive? No. That they know. Like, this is my role here. I think, Daria, yeah, I think they eventually showed up and they realized, okay, the memo here is President Trump wants me to come in and disavow all of the things that I've said in the past about how AI might extinct us. And I'll just forget about the fact that my current employee of the company said

that there is a 10% chance that my own technology is going to wipe out all of humanity. I'm just going to try to put that aside because I know that the president doesn't like that. I know that, generally speaking, the business world isn't a huge fan of that. I'll show up and say what I'm supposed to say. And you listen to the way that they delivered those messages.

Those were not honest expressions of their views of AI. That was a hostage statement. That was President Trump putting them on the spot, doing it well, I will give him that, of saying, okay, now tell us how actually AI is fine. And who knows what they believe at this point? And this is the problem with the whole conversation. No one actually really knows what they're talking about.

None of it is based in evidence. None of it is based in data. That 10% calculation. We're going to go there in a sec. Let's put a pin in that. I want to show a few pictures. Daniel, you have some shots here. All right.

Beautiful. All right, I thought this was interesting. The seating chart, so the guys standing in the back row were obviously seated on the side of the table where their backs would be to us. But look at who's sitting where. Yes.

It's almost. It's ranked by net by net worth. It's almost like Last Supper-ish. And all right, so Trump in the middle, Elon on one side, Jensen on the other. Let's just start there. Yeah.

Jensen is the best, I think, the best politician in that room. Would you agree with that? I think Jensen Huang has been really good on the messaging. I think that there's a lot of people who would say that he's made a lot of a lot of screw-ups as well.

The first one that comes to mind for me is in the Ezra Klein interview. I thought that actually a lot of what he laid out about AI regulation was directionally correct. His only mistake was saying, I don't know my home address. That was weird. That was weird. That was weird. And they said, I don't know.

You sure? You don't know? Yeah, I'm sure of it. You went from, we started a company at Denny's to, I don't know my home address. If you're trying to communicate that you're in touch with reality, it's not a very good way to do. I think there's a lot of hysteria around what AI is going to do. to humanity. Yeah.

And I was saying this to Ben yesterday. I think the term AI slop is so overused. I think people have lost their fucking minds. This idea that AI music, AI language, AI movies, it's all going to replace humanity. Nope. Not even, like, stop, just stop. I reject all of that. And I understand why certain groups of people, journalists, for example, feel threatened.

They should. I totally understand that part of it. What Jensen said with Ezra that I was nodding my... my head out, and I think, I don't know if this is controversial or not, do young people need to know how to do long-form division? Do they need to know the square root of 225? I don't know. But then when he said, I don't even know my own address, I think he probably regrets that. But I was like, what? That's bizarre. I think that it is a very bold statement. And I think a lot of statements are being made that are very hot takes, very bold statements, and they're being

expressed with a lot of confidence and certainty about where the world is headed. To say as confidently as he did that you don't need to know how to do basic math in this world of AI, to me, I mean, it's a viewpoint, but it doesn't mean that he's correct. And I think that he should be expressing these views with a little bit more caution. Because, I mean, I'm with you. I think that young people need to have a basic understanding of how the world work. They need to understand basic math. Or arithmetic, we got to learn, for sure.

We got to know arithmetic. tick. And this is all important. And we're already seeing that young people's brains are melting, not even because of the AI, but because of the years of screen addictions that have led us to this point. And we're seeing it in the testing scores in science, in math, in reading. It's all going down. And then we see these new reports that AI actually makes it worse, that if you're using AI daily, your test scores on science tests is actually lower than if you are you if you are not using AI at all. I have a very different point of view. I have college age kids in no way, shape, or form.

And this might be very specific to where I live or the level at which I'm trying to have my kids compete. In no way, shape, or form would I say their age cohorts, one is 17, one is 20, have melting brains. It is so much harder to get into the schools that my generation was able to walk into with 70s and 80s GPA. And the level of work they're doing in high school looks more like college. if they want to go to business school and they're not taking advanced placement classes where I live, don't even bother applying. The average SAT scores for the 50 schools

that we've all heard of, like whatever that list is, they're probably up 30% from the averages of just 30 years ago when me and my friends were applying. Schools that, like, no offense to anyone listening to this, you could waltz into Ohio State or University of Maryland in 1995 like with the bare minimum amount of work done,

they were filling quotas of out-of-state kids. Now, these schools are almost the schools in Florida, you cannot, UF might have a lower acceptance rate than Princeton right now. You might not believe me, but I think it's, I think that's actually accurate. So I don't think that these kids screen addictions

and these screen addictions are very real. I don't think that's universal to all kids. Correct. I think we're still creating stars and performers and I've met with tons of college age kids over the last couple of years, both friends of the family

and randomly just speaking at universe. These kids are so much further ahead than we were. The last thing is... I'm going to respond. I'm going to let you. The last thing is I think it's fine if they're quote-unquote

cutting corners with AI because that's the world they're going to graduate into. That's what the adults are going to be. be doing who are handing them tasks. There's no brownie points for taking a number two pencil to a piece of graph paper. You don't win any awards for doing that in most vocations. When I went to school, we didn't even have computers. There was no internet, no phones. What we had were word processors. You would literally type and there was an eight-digit LED screen to read your work.

Why would we hold that as the standard? Like, are we Amish? Like, why? Why? Why? Why? You know, Why would we force kids to, they're not teaching them cursive anymore in elementary school. Good fucking riddins. Somebody sent me a letter written in cursive today. I threw it out. I can't read it. Like, I don't, why would we still be teaching that? It's ridiculous.

It has no value. So I don't know that I fully buy into this idea that the screen addiction and the AI is melting brains. I think it's just changing what we as a society say is important of the top performing kids that are, that are, that are coming through the world. So what I would say to you is I agree with your point that the standard. All right. Cundice, Mike, that's good enough. We can move on. That the standards are high and especially when you look at some of these top schools that you're talking about and I have no doubts that your kids are excelling in their education. You could have some doubts. They're doing okay though.

What I can tell you is in the same way that we have a wealth inequality problem in America that is pervasive in getting worse, we also have an educational inequality problem. Of course. 100%. And I can tell you that the gap in attainment between the top 10% of students, the bottom 10% of students in America is higher than any other developed nation in the world, aside from Luxembourg. I don't know what's going on in Luxembourg, but that's what I can tell you. And I can also tell you that the gap is getting worse.

I can also tell you that just in terms of the median average score, we have the test scores. The test scores are going down. It's just a fact. And I would, I think it's certainly possible that, But there's a wealth inequality story there. I agree with you. And the top students are doing well and they're getting better.

The bottom students are completely falling behind. And we're seeing it literally in the test scores. And so I think that's going to be the real problem here, is that how do we make sure that we have an equal platform for everyone? And in terms of AI, I mean, I think there's a question about work ethic. But wait a minute. What if another version of this is that AI does not, not only not exacerbate what you just described, which, by the way, was pre-existing way before

we had LLMs, and you're dead right on it. What if that is part of the solution? It might be, but I'd like to see a bit more of a thoughtful conversation around it. I would rather not see Jensen Huang going on and just randomly saying, you don't need to do long division. Fair. And there are, to be fair, there are thoughtful conversations being had, but it needs to be about, okay, how do we think about work ethic, how do we think about attainment, what does intelligence actually looked like. If the answer is, oh, use AI because it's better to bullshit and

cut corners, I don't think that's going to make for a very productive society. No, use AI to tutor you because your parents can't afford $150 an hour for a biology tutor, but here's the good news. That I like. That I like. No longer necessary. That's the story that these guys, I think, have done a very poor job at telling, but it's actually one of them, one of the most immediate consequences of intelligence at everyone's fingertips for $10 a month. It literally could be revolutionary for the kid who does care and whose parents care, but lack the resources so that they can't put their kid into a private school or bring in tutors. Let me ask a question of learning versus just being given the answer by AI.

Most kids are cheating. Let me ask a question. They have to learn because they can't pass the tests if they don't learn it. I understand that there is a large difference. I'm a 41-year-old male versus children. But I think you guys would agree that AI is making us better at what we do. It is making us more knowledgeable. We know more things.

We can do more things better, faster, easier. Why do we think that it's going to be the opposite for children? Why is it going to melt their brains? Because I'm just looking at the numbers that was reported on by the OECD, their PISA test, where they literally just looked at the amount, the frequency with which students are using AI and compared it to the students that aren't. seeing that the test scores are better. Because they're using it as a crutch because you can just get the answer from the AI. And then eventually, when you get tests and you have to use your own

knowledge, you don't have it. You haven't done the memorization. You haven't gone through the pain of actually learning something. I think this is true of any skill. I'm seeing kids tell the AI test me. But I'm seeing no AI tell the AI test me. I have a test coming up. I like that. Here are the seven websites that the teacher has directed us to to study from, test me until I can get a 90th percentile. Like, that's the practical app. I'm not saying everyone's doing that, but it should turn into that. That's what it should look like.

But that's not really the conversation that's being had. And to be clear, I'm not an expert on education. It's just something that I think is important. So I've done a lot of reading and research on it. But I think that that's the direction that we need to be going in is, okay, what does it actually mean to be a productive member of society? What does it mean to learn? What's the point in having a work ethic and working hard?

What do we think about BSing tests and cheating and cutting corners? Do we think it's okay? Or do we think that actually we need to go through the hard and painful process of learning a skill and applying it, bringing your own originality to a problem? Those are the skills we need to think about and we need to think about how to thoughtfully put AI into that system. But if it's just, you know... His kids are under 10. Their high school classes are, I'm guessing, all going to revolve around how to use AI.

Like all of them. Like in other words, they'll be in chemistry, biology, European history, American history, global history. Like, whatever they're studying, that's not going to change. The way that the teachers get the curriculum across and test the kids, 100% will involve LLMs. Well, instead of textbooks, it'll be clawed or whatever. All right. I'm not against that. I'm not against that.

I just think we need to have a thoughtful conversation about how we inject it into our education system. We definitely does. That's our economy right there. This is a dangerous, potentially dangerous statement. But I really believe that a lot of times in the discourse, the numbers either are lying or they're taken out of context or there's not enough zooming out. Or cherry pets. Like, yeah, like, what were the test scores before?

Were we going in the right direction and then all of a sudden AI? came out. It's like, fuck, like, we're, we're, so they got, they got, they got, so. And I also, I think it's, I think, so that could be true. Obviously, people are going to cut corners and get lazy, like, yes, that is not, not happening. But I think it's also very early, and I'm not here to be the math piece of, of artificial intelligence or super intelligence. I don't know, we don't know how the story is going to play out. It's very, very early to make declarations of, it's good, it's bad, it's this or that. But you hear me, I'm not declaring that it's bad. I'm saying that I'm, I'm in agreement with you. I'm saying,

Let's stop declaring that it's good, declaring that it's bad. Let's have a thoughtful conversation grounded in evidence, grounded in scores. Let's have a more. This is where I agree with Jetson Hwang. Well, then we can go into a massive rabbit. So I've, you know, you know, I'm very, I'm, I'm, you and I in some way are opposites of each other. I think. I'd say.

No, no, no. I think, no, we agree on a lot. So I don't want to phrase this wrong. I'm just a lot more cynical than you are. I don't think it's just age. I think I've always been this way. My opinion is a lot of shit has to go wrong in order for us to learn anything.

And this idea that we're going to like be thoughtful and have this national conversation, we can't even like agree on what gender Obama's wife is. We're going to have this thoughtful, bipartisan national debate about how to implement AI. No, but like, like, Think about the things that we're arguing about right now. We can't even say terrorism is bad.

We can't even agree on what day of the week it is. So that's not going to happen. What actually is going to happen is terrible things are going to take place. And then we're going to pick up the pieces and create regulation. Hopefully, somebody's left alive in the aftermath. I already know that's how this is going to go. So I'm not hand-wringing over. Oh, we need thoughtful regulation.

Good fucking luck. we 100% will have a series of crises and then things will because, and by the way, that's only the way it's always ever happened and that's why I know it won't be different this time. I can hear where you're coming from and I'm completely with you

that the national conversation is a shit show on basically every dimension. But here we are having a thoughtful conversation on a big podcast. What else are we supposed to do? Well, I want to show you. Can I show you something around and just say AI's great?

No, no. We're here to have a conversation. I think people listen to this. I think they'll start thinking about it. I think it matters. I think it's worth having that conversation. So I would disagree with the idea that it's all pointless. Why talk about anything?

I don't think it's pointless. I want to show you what was actually announced. And I sort of know what your take is going to be, but I want you to get a chance to say it. Put that last picture up with Elon in the middle. So this is the part we've never seen before. To your point, you're not like the scrum.

They're like, Mr. President, Mr. President, Mr. President, he picks somebody. Probably like somebody that he's somewhat familiar with, let's assume, right? Like, he's not picking somebody from the back that he's never seen before. But even then, I like this. Rather than answer the question in Trump and Ease, which we know would be hilarious, he goes, Jensen, you got this one. Elon, come on up, you take this one. Zuckerberg.

I actually like this as a format going forward. Anytime there's some sort of like industry-related regulation being considered, I like him putting them on the spot. We can argue about how genuine their answers were if it was just happy talk. But like, I sort of think the American public needs to see these people's faces, see how they react to questions, and listen to the words that they're willing to say into a camera. What do you think about that?

I'm okay with it. I don't feel that strongly about it. I don't think it tells us much because as we know, they've been put on the spot. They've been given a rough instruction of what exactly they should be saying. So the words that come out of their mouth,

I don't find it to be that significant. It's all politics. It's all entertainment. It's all performative. It's all performative. Let me ask you this. Getting back to what Jensen said, part of what he said that I strongly disagreed with

was don't ship a product if it's not safe. 100%. We need, and as we're pushed back, rightly so. We need regulation. The market these companies cannot always self-regulate. Obviously, we've seen that a million different times. Dario is saying, regulate me, regulate me. Jensen is saying just ship safe products. And then interestingly, the next day or two days later, Jensen says, today with over 100 industry partners, we are introducing the NVIDIA open agent safety platform, whatever, whatever. And then to the point of it's all fucking performant of

nonsense, literally three days later, open AI scraps release of new AI model over safety concerns. Who knows if that's true? Were they doing that just to show that they're playing ball? Like, it's very hard to make sense of what's happening. He actually took it further. After this White House meeting, Sam Altman said, we will not go public until we can certify that what we're doing is safe. Meaning, he doesn't want to put out an S-1 that has those safety concerns that Dario just put out an anthropic.

Here's what they actually... Which is a third of the risk. It's four things. It's four things. This is Trump on truth social. This is the official statement of what came out of yesterday. One, implement robust internal controls. I would assume they were already trying to do that, I would hope.

To monitor the capabilities and alignment of models during training and deployment. I think like Brad Gersner probably helped write this or some of the all-in guys that are right, because he's not. He doesn't know what he's talking about. We know that. But I don't think he would even represent. he wrote this. I don't think his people, like Trump White House people, are writing this. I mean the industry is writing their own regulation, which usually goes well. Two, empower an internal team to ensure all of the controls monitoring and detection or

operating as intended. Again, something I would hope is already happening. Three, there's two more. Three, partner with an independent external auditor or evaluator to carry out independent assessments of whether the controls, monitoring and detection or operating as intended. The partner with part is, oh, sure. We brought in a partner. They're going to monitor. Okay, fine.

Four, designate, all right, now we're getting somewhere. Designate an independent committee of the board of directors to oversee and receive reports from the teams operating the controls and the internal and external auditors and evaluators. Yeah, like somebody's ass has to be on the line. You forgot the most important part of the contract, though, as the final piece of it. Make America great. Signed president of the United States.

Yeah, well, listen, we're moving at rapid speed and it's AI. Warp-speed, AI regulation. You know, we're spitballing. Well, look, the part I actually agree with Jensen on a lot of this is that there is a fundamental lack of accountability in this entire conversation. And I think that they're doing their sort of Trumpian way of getting to a place of accountability. It's kind of scrappy and it's not very thorough and it's a little bit. What would you would rather? All right.

So tell me in your, my dream scenario is a data center kill switch. I don't trust anybody. I don't trust any of these guys. I want the FBI to be able to shut down any data center that's hosting models that are endangering like on site. And I think we do have existing law enforcement. and we need to maybe have a beefed-up AI, cyber security, whatever. I like to shut the whole thing down if these guys can't get their act together. Let's immediately turn off the revenue knob the second we have a threat that these people

should have been responsible enough to have prevented. That's my opinion. What would you have preferred to hear? I think that that's probably pretty severe, I would say. I mean, the thing that I wanted after we had that Jacob Coxon tweet, which literally melted the entire world. Essentially, this guy says, I've quit Anthropic, and everyone at the company thinks that humanity is going to go extinct. He didn't reveal anything we didn't already know. We already knew about the hugging face incident, which happened months before. The only thing

he said was an opinion. Then a current anthropic researcher endorses that and says, but by the way, it's a 10% chance of that happening. Does not cite any numbers, does not cite any calculations. he just attaches a number to an opinion, and then suddenly everyone says, oh my God, it must be true because it's got a number attached to it. Then an Open AI employee says, oh, no, I think it's 70%.

And I think it's not going to be within the next 10 years. I think it's going to be in the next three years. And then suddenly goes, oh, my God. And then the takes start to roll. And then everyone starts to pile on with the opinions. None of it's based in reality. Well, here's your actual words. Okay.

Ed Elson. Can I do it in your voice? Please. I'm excited to hear. spent the past two weeks discussing this topic with everyone from engineers and computer scientists. What you're Griffin door? Policymakers. Wait, I'm going to do it as, I'm going to do it as, I'm going to do it as snatch now. Policymakers and philosophers. I've talked about it on my own podcast and on national television after hours of rumination. Like how terrible it makes me sound.

Yeah. I finally, because you have like a posh British, I'm not good at distinguishing between I just do Guy Ritchie or Michael Kane. The guy rich is good. I finally reached my conclusion. This is the dumbest conversation of the year. And as soon as you said it, I said, he's fucking right. These guys are saying there's a 17% chance we will wipe out humanity in 38 months. Based on what?

What are you talking about? Okay. So can I tell you what the solution is? But they're guessing. They're guessing. Sure. What else can they do? If they're worried.

Okay. Well, here's what you do. if you take their statement seriously. And we should, because we're talking about humanity going extinct. If you take your statement seriously, then you have an obligation. It is on you as the government to investigate the shit out of their claims. And to me, what does that look like? It means handing a subpoena to Open AI.

It means handing a subpoena to Anthropic. It means bringing those people into Congress, in for questioning. It means getting to the bottom of their claims and asking, them, hey, you just released a corporate communication from a current employee. Forget about Jacob Cox, and he's no longer with the company. The CEO is saying this. The CEO didn't double down the 10%. But he didn't say anything about it.

He didn't say it wasn't true. So what are we supposed to believe? So then you need to bring them in and say, okay, what was that based off of? How did you come up with a 10% probability that your technology, your product is going to kill all of us? It's that meme. I made it up. Yes, course.

I made it up. And then when we find that out, it's like, like, okay, this guy just said it. It's an opinion. It's bullshit, which I think is probably the answer. They say, okay, what are we going to do about that? What are we going to do about the fact that your current employees are issuing corporate communications that your technology is going to destroy humanity and it's based on

absolutely nothing? Now we're talking about public deception. Now we're talking about potentially securities fraud. A lot of people think that the reason they're doing this is because they want to have a successful IPO. To be clear, I don't really believe that. That doesn't make sense. I agree.

The argument is that it's. It's marketing like, oh my God, you wouldn't believe how powerful our models are. That would be the dumbest fucking marketing I've ever heard. That's what I agree. That is the most cynical explanation. It's a very cynical explanation. It's stupid. We're so powerful we're going to kill you, give us your money.

Why would anybody give them their money? But this is the problem with the conversation, Michael, is it all started from a place of total opinion, none of it based in evidence. So the responses were ridiculous too. That wasn't the only conspiracy theory. President Trump said the conspiracy theory is that the Chinese set them up. Then he said it was the Democrats that set them up. The Chinese want the Americans.

It was the Chinese Democrats. Exactly. The Chinese Democrats are up to it. The takes were observed. Wait, explain that. The hoax is, like, explain what Trump. Trump is saying, the hoax is this.

This is like the Chinese want us to take our foot off the gas so they have time to catch up so that their military has access to stronger AI than ours does. Yes. Okay. The hoax is that the Chinese have set up this guy, Jacob Coxon, to make us slow. slow down AI and slow down Anthropic and Open AI. On the other side, you have his advisor, David Sacks, saying the total opposite take. No, it's a hoax byanthropic so that they have a successful IPO or because they want regulatory capture to increase the prospects of their business.

They're totally contradictory. They're completely different statements that are going in completely different directions. And that's when I realized this is the dumbest conversation of the year. What about this one? None of this makes sense. the timing of Anthropic coming out with an op-ed on the weekend

dropped this on a Saturday two weeks ago somebody needs to step in here and slow us down Saturday Night Live lampooned it so this is now mainstream This is not just a market store It was funny

So but like the timing of that That happened two days after Meta had this explosive stock move Because of the launch of Muse Like, so another cynical take would be, oh, the frontier models want a pause because they don't want the open weight models, the free models to be able to catch up as quickly or get all. So it's almost like, all right, we'll be frozen, but so will they.

Yeah, makes sense. But you know, so. But so do a lot of takes. No, it's so interesting. I don't know. Everybody has to go to the cynical. What's the motive? Exactly.

Someone's behind. Is it possible? that maybe it's just genuine. I think it is genuine on the part of Dario Amadee, because look at the danger. That's what I think that he puts himself into by saying this. That's why they started the company. They've been saying this for years and years and years.

That's what I think, too. I think that the Jacob, I think these people have a lot of sort of recency bias where they're very involved in this stuff. And so they think that it's going to blow up the world. I think that it's genuine. Then the question is, okay, what do you do about that? Yes.

If you really believe that, then whose responsibility is it to deal with the situation? Scott Galloway. Exactly. We're going to solve the problem. No, Dario Amadeh is responsible. So here's the thing. This is why actually I liked what Open AI did. We can have debates over whether it was genuine.

But I like that the fact that they said, okay, we're going to pull this model because it doesn't meet safety regulations or the guardrails that we believe are appropriate. And so we're going to stop the thing. Good. Great. That's what you should do. And by the way, you know who's been doing this really well? Mark Zuckerberg, who came out with Muse, and remember when we all said, oh, my gosh,

they're renting out the data centers, they don't have their own product. It's going to be a nightmare. And Metastock absolutely tanked, which, by the way, I went and bought because it got so oversawled. But then... That's Alfa. That's what I call it. But then he comes out and he releases Muse,

and he says, we didn't talk about this, and we didn't release it because we didn't want to release it until we knew exactly what the product was, and we had solved all of the safety issues. And then they came out of phone. Very on Zuckerberg-like, I would, like, historically. He's changed as two. He's the one going slow now.

I respect that. That's how you should be doing it. And I respect that Jensen Huang said, okay, there's clearly a safety issue here. And I don't know where I live. I don't know where I live. How do I get home? Who's the trouble?

They say some good things and some bad things. Last question on this. Is it going to get dumber? Yes. What? No, this is it. Who is it? Is it going to get crazier? I would imagine, based on the way that social media works today,

it is not an environment that is cohesive or that rewards moderation. Empirical evidence, thoughtful conversation. It's an algorithm. Takes, takes. The heart of the take, the more successful. Wait till you see the title of this episode on YouTube. Ed Elson hates AI.

All right, wait. There we go. Get the clicks. Do you have your guest lined up for, the Anthropic IPO week, which I think is like imminent. Well, we got some leaked financials that we discussed with Paul Kodroski on our show yesterday. Okay, big bear. Big bear on open air and Anthropic.

Okay. I think that the- Are you as pessimistic on Anthropic? I know the financials, the loss of $42 billion on $4.5 billion in revenue, blah, blah, blah. Well, I'm glossing over it because the investors all know these numbers and they keep investing. So either the smartest money is going off the cliff. So, all right. So the part that I was surprised by, and maybe it's different now from when these financials were dated, is the concentration of like a few customers.

Yes. I was a little bit surprised by that. I don't think I was surprised by the losses because it's, what it is, it's investing. It's not losses like we're selling a dollar for 50 cents and we lose 50 cents. It's more like we're building infrastructure that we will need as our revenue gets to $100 billion. Startups lose money. That's what they do. Startups do lose money. This is a really big startup.

It's a giant one. So the stakes are pretty damn high here. And yeah, startups have a very high failure rate. So I agree, it's a startup. But let's be real about what the risks are here. The risks are enormous. Nobody wants out. This thing could.

Hold on. Have you talked to an investor who's like, I want to get out before the IPO? I haven't heard from anyone. I would be shocked. if we don't see a significant amount of selling when they go public. We saw it with SpaceX. And that's exactly what I predicted.

It would get cut in half. It's had a little bit of a bounce back. So we'll see where things go from here. But I think that it's, I think we need to be at least real and recognize that the profitability and the sustainability of these businesses are precarious.

That's not a hot take. But you have a lot of investors who are just saying, that's not a problem. No, no, no. Don't worry about it. Because it's going to be okay because this is what startups do.

Okay, I get it. But this, we're talking about a two trillion dollar company and a one and a half trillion dollar company, both of which are losing billions of dollars a year. I was going to say, not just precarious for the shareholders in those companies. These are literally the numbers one and two foundational bricks underlying, like a lot of market cap.

Counterpoint. Exactly. Right. Counterpoint. And not to disagree with what you're saying, because yeah, you're right. It's just interesting. The juxtaposition between how private market

trading these companies. That's right. Versus public markets where Nvidia is at 16 times forward earnings. It's traded like a consumer staple valuation. This is, yeah. This is an extremely important point, which is why I believe that we don't have an AI bubble necessarily. There's a lot of doubt. We have an AI lab bubble.

Yes. I think that we have bubbles in pockets of the market. And if you look at Nvidia right now, and if you go back a few months ago and you look at some of the hyperscalers, which were actually trading pretty cheap, I told you I bought Meta at the low of 560. I bought Microsoft before that because they were getting punished after the SaaS But the reality is there is an AI bubble that is infecting only certain parts of the market. And I do believe that the private markets are where it's at right now. Because those guys are the ones who are the most delusional in my view about this is always

going to work out. It's going to be totally fine. Don't worry about the $8 billion in operating losses. To be clear, operating losses. Those are rookie numbers. Michael and I say that the private markets are like kindergarten, where everyone's nice to everyone. Yes.

You have a public market. The public market is a gladiator. Orra looked behind the curtain and they were like, oh, I don't know about that. By the way, a lot of these IPOs are now getting delayed. I mean, SB Energy, which was this, in my view, bullshit data center company. They haven't generated any revenue off of their data centers. They don't even have any data centers in operation. They're calling themselves a data center company.

They want to go out, and I think it was something like $50 billion. They go, they show the materials. they take it to Wall Street, they go on the roadshow, and then they say, actually, we're going to pause this thing. And I think it's because the public markets investors are more discerning. They'll kill you. I think that we're seeing it in the valuations today. And they look at this stuff and they say, this is a little bit ridiculous. So I think there's a lot of doubt.

There's no fear in the market. The VIX is at 16. The average stock is going down a little bit every day, but very little. There's no fear in the market, but there is a lot of doubt because the publicly traded AI exposed names are trading at relatively modest, not even premiums, discounts, but to your point, maybe there is, and I don't know if there's a bubble in Anthropic and Open AI, I would have no idea.

Is it possible? These are foundational companies' technologies. Is it possible that Open AI and or Anthropic could be worth $5 trillion in 10 years? Hard to say. Sure, but that's the pitch. And I don't think it's, I think it's compelling. Why, SpaceX is the same thing.

Yeah. There's no revenue they will be able to do in the next three years that could possibly justify what people are paying in terms of a multiple. Which is why they had to pitch. I don't care about the next three years. Which is why they flung the unicorn feces at us in the proposal. Because, and that's what we saw. They said that, okay, don't worry about our financials. Don't worry about the fact that we're losing billions of dollars on an operating basis.

Don't worry about that. All you need to know is that the total addressable market of AI is $28 trillion. which would make it a larger market, a larger opportunity. So if we just get 10% of China and the GDP of Europe on par with the GDP of America, which is around 32. That's what they told us, and they want us to believe that. I think that works in early stage in the private markets, and I think these companies have gotten complacent because they go to these VCs,

they go to Silicon Valley, and they don't really care about the financials. I can tell you that because I talk with these people. All they care about is the technology itself. And the guy. And the guy. And they say, this is the founder. And they say, this is an amazing founder. He knows how to build a business.

This is an awesome guy. And they go on their podcast. That's the way that they're doing their pricing. But that's not real price discovery. That's not what happens after you go public. After you go public, suddenly you have to start facing the music. But also, if you think about, if you give capitalism the benefit of the doubt, these companies are unbelievable. This is not the final version.

Who the hell knows what these companies will look like at five and ten years? Think about the iPhone, the app store. We couldn't have foreseen. And there's so many exciting things coming. I don't have the company's worth $2 trillion. That's the question. I agree. The question is, what price do you want to pay?

Do you really want to pay $2 trillion for a company that last year racked up $8 billion in operating losses? Do you really want to pay that amount of money for a company whose cost him a concentration has two customers that makes up a quarter of the entire business? But I heard all this stuff. But I heard all this stuff in 2017 about Tesla burning billions of dollars, going out of business, not going to be able to pay their bondholders. And like in the end,

what actually happened was as long as the equity owners maintained their faith and their belief, he was able to sell stock two or three times and end that conversation about we can't pay our debt. Now what are you going to tell me? Now, not only can I pay my debt,

I'm building two more gigafactories around the world. So like, I've seen companies end those debates about their financials. It happens. By keeping the shit. shareholders focused on the bigger picture. Like, I've seen that, I've seen multiple versions of that working. So I'll agree.

You were there too. Elon, the reason that Tesla works and the reason the SpaceX, I mean, didn't really work, got cut in half immediately. It's held the IPO bid. It's one 50. It's okay. Okay. It's come back. But a lot of people went in at the top.

They went in at 200. They sold at 100. And that's what I was worried about. And it's exactly what happened. because that thing was, in my view, ridiculous. But why does it work? Because Elon is a tremendous storyteller. And he's able to tell the story and people buy it.

I think that the valuation of Tesla is ridiculous. I think the valuation of SpaceX is ridiculous. But as you say, it's okay because he can tell the story. Here's my question. Can Sam Altman tell me story? No way. Can Dario Amadee tell that story? He's the one.

He can't do it. He's the one of one. Actually, could you imagine if he's, he was running in vidia, that would be a $20 trillion stock. Can you imagine if Elon had Jensen's fundamentals? Yeah. Like Elon's line of shit with Jensen's actual business, it could be bigger than the rest of the stock market. And that's the Elon premium right there.

And so, no, I'm not going to make a bet on the Elon premium existing for Anthropic and Dario Amadee. I'm not going to make that bet for Sam Altman either. I think that if you get that, that is a unicorn stock. And the same is true of SpaceX even after getting cut in up. What's a part of AI that most excites you? For me, I'm incredibly over the moon about instinct and these personal agents for busy people. I think it's magical.

I think that I'm not over the moon about things like instinct, but I like the direction where they're headed. I like what meta is doing with Muse, where they're basically saying, like, okay, all of this frontier stuff, let's forget about that. let's just focus on stuff that makes your life easier. Let's focus on making it easier to get a dinner reservation. Let's make it easier to book your doctor's appointment.

I like that because it's getting to the reality of what would make your life better instead of feeding us BS. So, you know, I like that. I respect it. I'm not super excited about it. Something I am excited about where I think that AI could make a difference is in biotech and in medical discovery. What I, my understanding is that there are a lot of companies,

a lot of startups that are using the power of those frontier LLMs, and they're using it to figure out how to create complex proteins that can solve diseases that we haven't been able to solve yet. I think that that is an exciting piece of the AI story that I think could turn into something. But again, we're thinking a lot into the future. And the first thing that I'd really love to see is a single AI company show profitability.

That would make me feel really good about this whole thing. But why? Because I would understand then that the unit, economics actually work. And this thing is... Palantir is profitable. You think of Palantir as an AI. Palantir isn't a frontier.

Frontier model company. They don't have an LLM and they don't own a data center, but that's they sell AI. But they've been around... Yeah. So Palantir would be an example of a, maybe we'd call it a legacy traditional AI company. You want to see an LLM go profitable? I would like to see LLM create a profitable business. None of them are...

None of them are aiming for that. If they did that, their investors would say, what the fuck are you doing? That's not the game right now. What's the point of business other than to make profits? Later. Later. Yeah. Okay.

Well, let's see it. Let's see it. Because this story has been playing out for a long time now. I'd like to see it. I'm not saying it's not going to happen. I just want to see it. This generation of founders is closer in H.T.U. The people who went to business school, my generation, were studying Lee Ayacocca,

running Chrysler. These guys, starting these firms, studied Jeff Bezos. If Jeff Bezos were striving for profitability in 1998, you would never have heard of Amazon again. Because what was necessary at that stage in the game was scale. Get to scale. And I also know that there are a lot of companies who had the same mindset and they went out of business and they went back on.

If we're easy, everybody would do it. And the NASDAQ got reduced by 70%. If we're easy, everybody would do it. I'm just saying if we're talking about what would make me feel more comfortable about the AI story, it would be, okay, show me. show me that you're profitable. But I don't think that anyone... I hard disagree with that.

No one wants to have the conversation because it's so impossible. Well, I'll show you where the profits are. Wait, wait. What if I told you this is going to be... What if I told you, Google Gemini will accept as a given, they won. Because they have the installed base.

They don't need new customers. They just need to get their AI in use by existing customers. And that's easy. They built it into the email. They built it into docs. Like, whether you know it or not when you search, you're using Gemini

all the. day long. Okay. Put that one aside. Yep. Now you have Claude and you have OpenAI and I don't think we put news in this category because it's an agent more than it's like the LLM seems to not be the thing. So between these two companies, what if I told you only one of them 10 years from now is going to have any meaning? And the other one. Between Anthropic and Open AI, is that your question? It's Claude or Open AI. One of them is going to win the enterprise

and the consumer, and one of them is going to be a footnote like AOL or Netscape or things that seem like they were a really big deal and just faded. If that's the world that we live in, and you know it is, so do I. We don't have five category killers in anything that matters in tech. We have one, sometimes two. If we know that already, why on earth would profitability be the yardstick for this stage in the game? How could it not be the land grab and who can get to $3 billion?

and users the fastest. Like, from my perspective, that is the thing that the investors care more about. I don't think there's anyone on the cap table of either of those companies saying, show me 2028 profits.

That almost would completely work against their investment. Remember, these aren't bonds. These are equities. The only way these work as equities is if they somehow could justify the current valuation. The only way they could do that

is if they get big enough to someday ring the profits out of the user base. So I feel like we have to think in a different way, knowing that these are winner-take-all markets. I understand what they have to do, and I understand the pitch that they're making. But let's have an honest conversation about the risks involved in that strategy.

Let's have an honest conversation about the fact that this is a $2 trillion venture bet. this is a this is as you say this is a startup startups are risky a lot of them fail let's stop pretending like open AI and anthropic are a given that they're just a systemic part of our economy that are going to exist no matter what no they are making extremely bold bets they are burning

billions and billions of dollars and I'm sick of these people going on these podcasts and say no they've got it all figured out don't worry about them these guys have already made it they haven't already made it they're still testing Founders act like they've already made it? Yeah, I think they do. You think Sam Altman is unmeasured in the way he talks about the opportunity?

I don't know if I go along with that. I think that he is a very unique specimen who will say whatever it takes to make the other person in the room happy. So I think that he's flip-flopping all the time. I mean, go back a few years ago and hear about what he was saying about how AI will end society. And then you fast forward to today and suddenly says, oh, no, all of this doomerism is overblown. So to be honest, it's not totally clear to me what to believe when it comes to Sam Altman. But what I can tell you from talking to investors and talking to anyone who has any interest in anthropic or open AI, they seem to just believe that this is just a law of the universe, that these companies are going to be great.

And it's going to be them and not somebody else. Exactly. And it's like, okay, let's not freak out when someone just points to the losses and says, hey, that's a big number. That's a little nuts. why do we have to start jumping on people and say, oh, you must be a total doom a bear for just looking at a number and say,

that probably matters. I'm with you on that. I'm just, what I'm trying to do, I guess is frame this from the perspective of a venture capitalist who has bet his fund or her fund on one or the other of these companies.

I don't think that they're interested in talking about profits. They don't want to talk about it. You know the maniac in Japan doesn't want to talk about Masseyoshi's son doesn't. What I'm most excited about And we want And oh, this is the other thing We will take this for granted

When it happens, we won't even notice it Who's the guy that wrote the book About how things keep getting better But it's never in the news? Was it pinker? Pinker. Okay 14,000 people died in America last year From drunk driving

Another 3,000 people died from distracted driving Which is people on their phones Right? Says like call 20,000 people. These are, these people, the family's lives are shattered forever. It's never fixed.

Because it's not like, oh, it's so-and-so got cancer, so-and-so got, had a heart attack. Those things are already horrible enough. This is like a thing that could and should be prevented. It's not genetic die in a drunk driving accident. There should theoretically, in the age of AI and automation, like there should never be a drunk driving death ever again. or injury or like we literally like we can end that everybody has a car every car has a mode where

the person drives and if they don't feel like driving or they want to scroll their phone or they want to have a few drinks at dinner press the automation button and the car just takes me home like that to me 100% that's a miraculous outcome think about how many lives and families shattered that where that does not ever have to happen again we won't appreciate it nobody will be about it. Well, I could tell you right now, I'm excited about it right now. I've been bullish on Waymo for a long time, which means I've been bullish on Google for a long time. I think Waymo is a miraculous company. And I think the fact that New York City is trying to figure out a way to not include it and not get it regulated here, I think is ridiculous. I think that Waymo and

Robotaxis are great. Now, I can also separate that from my views on the Tesla Robotoxy, which is that this guy has been promising this thing for over a decade, and he keeps on kicking the can down the road. And then suddenly we learn, oh, it's not. actually going to happen this year. Oh, it is going to happen, but we're going to need to have an assistance person who sits in the front seat. Okay, so it's not an autonomous vehicle. You have someone chaperoning.

No, no, no. He's just, he's doing the radio. He's doing, exactly. He's got the Spotify. All right, we want to do one more thing with you before we let you escape. You are very passionate about the younger generation. And I think you're sort of become, would you agree with this? I think you sort of are like the voice of like the younger,

I don't want to say the younger investor because they listen to a lot of voices and some of them are not as sane as you are. But I do think like there's a generational thing where Scott sits back and lets you emote from the point of view of somebody that, you know, we don't, my generation doesn't own houses. We don't have millions of dollars in the market. Like we're not, right? We're not there yet.

So I do think you speak for that cohort or at least from your audience. Do you agree with that? Your words not mine, but I mean, if that's how people feel, then I'm honored to hear that. Okay. But I, you know, I care about the young person's view, which I think has been woefully disregarded and ignored for a very long time. And I think that it's reflected in the way that our economy is set up. I think that it's reflected in all of the numbers. Do you not think that it's always been that way and you just aren't aware of it?

I don't. I think that when I look at the general. generational differences in the way that our paths to building real wealth and actual value creation, when we compare it to previous generations, I think it's a totally different story. If you look at housing as just a perfect example, cost of housing today, the price of a house is more than seven times annual income. My grandparents were my age, it was three times. We can also look at the stock market, which is historically pretty expensive. Now, that's not to say that other generations didn't have it hard. I mean, we'd never got

drafted into a war yet. I was just saying, my dad's generation, you know, young men were sent to Vietnam. We haven't had that, thankfully. That's right. And that was hard. But it's a different type of problem. And the problems that we have is, yes, we have enough money to get by, but we're not having, we don't have enough money.

We don't have the pods to actually build a real life. And you see it in the way that we live our lives. A third of us still live with our parents. I mean, half of us don't want to have children. Half of us don't believe in capitalism. I mean, you look at the way that young people think about the system itself. Half of us say that socialism is better. I don't think that if you polled them that many of them even know what socialism even means.

But I think what I can tell you is that they know that it means that it's something completely separate from the current system. To me, that matters. That matters that young people feel that they don't have any polls to actually make the American generation, though, we said the same thing. they're never going to invest in stocks, never going to own homes. They're not going to start families, or they're starting them too late, or the women are too focused on their careers,

and the men are too focused on video games. And I have a little bit of perspective on this just because I'm Gen X, and I watch them say all these things about the millennials. And then, like, sort of it didn't play out. Like, the millennials, I'm not going to say it all on. This has been a gradual development. I mean, the... I just told us.

sort of feel like... That was the beginning of the short end of the curve, and we're talking about, let's go, you know, 20 years out here. Fair. I mean, we're on a path. You guys were early in that path, and now we're talking about, let's see where this goes 20, 30 years from now.

I think you guys will be fine. And it's not to sweep the concerns under the rug. I think two things are true. It's always... I think people figure it out. It's always been hard for young people. And I think that each generation of young people should be heard, and they shouldn't be dismissed or discard.

or told that they're going to be fine, like I just did. But I do believe that, like, young people will be fine. I don't like a lot of the things that you said. The socialism aspect is super scary. You see it in the voting patterns. Like, there was a lot of shit to be aware of. So I think two things can coexist at the same time. I disagree.

I think that we have to take this problem extremely seriously, and we have to be active about it. When we look at the loneliness numbers among young people, one in five Gen Z is today say they do not have a six. single friend. And then we look at all of the patterns and all of the addictions that have come out of this trend. I mean, we could talk about investing. Oh, they're going to invest in stocks. No, what are they doing? They're investing in sports betting and crypto. A fifth of us, a fifth of Gen Z investors, their only investment, the only thing that they own in their portfolio

is crypto. Half of us, young men specifically have an online sports book. And for a quarter of us, we think of it as the same thing as investing. It's part of our long. You don't think people will grow out of that? I think that we've been trained really badly, and I think that we're not on the right path right now. And I think that the way that we live our lives and the extent of the financial nihilism that is pervasive to young people right now is unprecedented. I do worry in the same way that Scott worries about this stuff. I worry about the fact that we're not establishing romantic relationships.

I mean, you look at what it takes to end up building. a family and then going and buying a home, none of us are getting on that trajectory right now. I mean, I look at only fans as an example. None of us is, okay, few of us. There are weddings everywhere, every weekend. It's too expensive for a lot of people to do these things. I agree with you. The share of young people who are getting married and owning homes is plummeting. Yes, it is. We agree. It's been a decline and now it's falling off a cliff. And now it's, to go back to what we said earlier, it was bad. and it's getting worse.

The amount of time that we spend looking at our phones today, it's 118 days out of the calendar year. That's crazy. Is that the number? That's the number. We spend 122 days asleep. So that leaves us with 125 days left over to do everything else, to network, to socialize,

to figure out how to be good at our jobs, to figure out how to meet someone, to go on a day. Everyone asks, why are young people the way they are? My usual response is, we're operating with 40% less time. But I think young people are doing great. And I know, so you're... I totally disagree.

Hold on. Hold on. You're obviously a lot closer to this than I am. Okay? So I'm not trying to like project my... Perhaps ignorant opinion. But I think, hold on. I think there are two worlds.

There is the digital world where we compile these surveys and we say the world is falling apart. And then when you are in the real world, I was in Austin yesterday. And I'm looking around that I was struck. I can't believe. believe how many young, good-looking people, I know it's a specific area of the world, are out there, and I'm just blown away by that.

And every time I talk to young people, again, maybe it's self-selecting, I can't believe the disconnect between what I hear the statistics and what I'm seeing with my own eyes. You're not in rural America. And you said it. It's self-selected. But don't you think both things can be true? That it's not all or nothing? This goes to our conversation about education, which is, I think, that the inequality is

widening. Your self-selecting for a very specific group of people that have decided to go out to this event, figure out how to get their life on track. And yeah, they're doing great. I'm not disputing that. But you're not seeing all the people who are actually in their basements and who are living at home. And based on what we see in the statistics, that share is rising. So I agree. But I... It's going, it's the, it's the K-shape is extremely real. And it pervades every single dimension of society. Don't you think that all of this boils... Well, education, economic opportunity. It's Everything. Don't you think, though, that all of this just boils down to people who come from families

with means are not sitting in their basements, sending only fans messages. Yes. When every August rolls around my Instagram timeline, I don't know why I'm not into this, my Instagram timeline and probably everybody's gets flooded with the sorority dance offs. Like, I'm not into any of it. We're going to study his algorithm later. Be my guest. I don't understand why I'm getting it.

The only thing I could think of is all my friends are into this. And it, like, Gio, I hate it. I have a college-age daughter. I don't want to watch other people's college-age daughters dance around. But I see one after another. These are southern schools. These are rural schools. Like, this is not NYU.

They're not in the running for this. But these are young, healthy people in college, huge smiles on their faces. Obviously, they have hours and hours to spend on choreography and hair and makeup and costumes, and they just don't seem to match with what you're describing. And so I just have to think, like, well, whose kids are those that are doing these marathon presentations of their sorority at Ole Miss? Whose kids are these? Yes.

These are the children of doctors, lawyers, executives, real estate owners, stock market millionaires. That's who that is. I know that's only 10% of the population. I get that. And this is. But the thing is. is that's not the, that's not the thing that we should look at and say that's the problem.

Why not? Because we should encourage everyone to want that rather than mock it or put it down or say it's evidence of a sick society. Who's mocking it? Who's mocking? Everyone that does this K-shaped thing, the implication is we have to drag these people at the top of the K down to Earth. That's not what I believe.

I believe in recognizing the reality of the K-shaped. And that doesn't mean we need to drag everyone to. down who's at the top and get everyone on the same level. It means we need to invest and take seriously the fact that the people on the lower end of the curve are falling. And we're not seeing it. So how do you do it? Okay.

Trump accounts is a great thing. We won't feel the effects of that for 15 years. We won't see it for a while. But I agree with you. But the Trump accounts are, I think personally that this administration has been a disaster. And now they're going to be mandatory, which I like even better. Brad Gersonel was the one who put them through. Yes.

Those are a great thing. We should double down on. on those. Oh, we should make housing more affordable. Four percent mortgages for young people or three percent, whatever it is. Well, I agree. We should make housing more affordable. How do we do that? It means we have to build more housing. The trouble is the president literally just said a couple of months ago, he says, I don't want housing prices to go down. I want them to go up. The reason he wants that to happen is because he wants to reward existing homeowners. Well, the Democrats know better. They want to do rent control, which will basically guarantee that no one builds anything ever again.

I agree that rent control is a bad system as well. Both bad. What we should do is build more housing. I thought we had all agreed on this. I thought that Trump had agreed on this. And then suddenly he comes out and he reverses on his position. And he says, actually, no, I'm going to protect boomers again. I'm going to make sure I'm down to focus on the rates, but I'm not down to focus on the price.

I'm not down to figure out. And the supply side. That's something that we should think about. We should think about completely re-evaluating the tax code here. I mean, I think that the fact that we're creating even more estate. state tax exemptions. You talk about how the kids who are succeeding are the ones... And what a great episode we had. My thanks to Ed Elson. All right, go on. I'll let you cook. What else you got? Well, the reality is with the estate...

We wouldn't need all these estate tax exemptions if millionaires felt that the money that they were paying into the system was actually fucking accomplishing anything from the way that you're describing the state of the world. No matter how much tax I pay, everything is f***ed. So I agree. We need to get serious about fiscal response. That means not... Big Doge guy. I'm down for efficiency. I'm not down for doing it in an extremely ham-handed way and it never actually working and then

getting shut down and then backfiring. That seems a little bit stupid. But, you know, Trump, this is the guy who said he's going to balance the budget. You're fired. Yeah, exactly. I mean, that's literally what happened. They just fat-fingered the whole thing. Trump is now saying that he wants to issue a...

I think it was... I forget how much money it was. He wants to issue a dividend to every... American if the Republicans win the midterms. And then you do the math and it comes out to $1.3 trillion. That's a $1.3 trillion addition to our already $2 trillion annual deficit. We have a $40 trillion national debt. To me, if we care about young people, we care about our future, if we care about the fact that our interest payments are now our second largest expenditure, we spend more on interest than our national defense, then we don't go out and support issuing these dividends

and ridiculous amounts of spending. Yeah, I agree that that's something that is important. I think we can get behind these things. But to me, we need to have a serious conversation about what are we actually trying to work towards? Do we care about the future of young people and their financial prospects? Do we care that we are loading up our system with even more debt? And that young people, when I go pay my tax bill, a very significant percentage of that is going to be paying off the interest from the credit card bill that was racked up by my parents and the parents before them.

That, to me, is a huge problem. And we should get serious about it. I love this. Ladies and gentlemen, the magnificent Ed Elson. Do you have fun on the show today? I had so much fun. I wish we could do it for another hour. Dude, he's a powerhouse, right?

Excellent. Excellent. He's the best. All right. Guys, thank you so much for watching. Thanks for listening. I want to let you know where you can hear more from my buddy, Ed. Number one, you're writing on Substack.

That's right. Okay. How do people find that? I go to Edwardelson.substack.com. Okay. My newsletter is called Simply Put. I was also just nominated for a Signal Award. Look at you.

Fantastic. Now we've got to win, so go vote. Okay. Do I get it to vote? Can anybody vote? Yeah. Okay. Go to...

All right. Where do I go? I forget the domain. No, we'll find it. You'll figure it out. Guys, I subscribe to Ed's stuff. I read it. He's fantastic.

And of course, Prop G. Markets, which you just told me, I didn't even realize this. You guys are putting out an episode every weekday, ish? Correct. Oh, my God. Monday to Friday. Unbelievable. I don't know how you...

So you... So you two stop complaining. Well, we just listened to you guys and the cycling takes. Nicole, Nicole, did you hear that five days a week, Queen? All right. Ed, you're the best. Thank you for coming. Thank you.

Guys, thank you so much watching, listening. We appreciate you. We'll see you soon. We'll see you guys.