The Prof G Pod with Scott Galloway - CNN+, Investing Platforms, and the Return to Fundamentals — with Leif Abraham

Episode Date: March 31, 2022

Leif Abraham, the co-CEO of Public.com, joins Scott to discuss the state of play regarding the fintech investment space and Public’s overall business strategy.  Scott opens with his thoughts on how the state of the IPO market is a forward-looking indicator of what’s about to happen to the streaming industry. He also shares his thoughts on CNN’s new subscription product, CNN+. Algebra of Happiness: knowing when to deescalate.   Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Episode 150. Cinderella first premiered in 1950 whenever my daughter is acting up i play cinderella backwards and say this could be how your life turns out go go go go welcome to the 150th episode of the Prop G Pod. Jesus Christ, are you tired? I'm exhausted just reading that.

I've done anything 150 times. Seriously. On today's episode, we speak with Leif Abraham, the co-CEO of Public.com. We discuss with Leif the state of play regarding the fintech investment space and Public's business model. We hear about the meme stock phenomena as well as how the company differentiates itself and navigates its competition. Oh my God, what a lot of bullshit words meant to make us feel more NBA-like.

And also a disclosure, I'm an investor in public and still own shares. Okay, what's happening? Between the Oscars airing last Sunday and the big news, my show dropping on CNN Plus on Tuesday morning, and the IPO market freezing over, we're going to break down how we see the streaming landscape play out in the coming months. Oh my God, what a thrill. It's all coming together for us. So first and most importantly, our show on CNN Plus, No Mercy, No Malice, launched on Tuesday, March 29th. What a thrill.

You're welcome. It's not that I'm a narcissist. It's not that I like to see my big mug on screen so I can be shocked at how fucking ugly I've become. No, we're doing this for you because we care. So all kidding aside, most kidding aside, I should say, we are very excited. Go sign up at plus.cnn.com. It's $3 a month if you sign up now for your lifetime. I love how before a store even opens, they discount it.

I'm not sure that's a good forward-looking indicator. Anyways, plus.cnn.com. We'll touch more on CNN Plus as it relates to the broader streaming landscape in a minute. Anyways, the big news, the Oscars represented a seminal moment for the streaming giants. And that is Apple TV Plus became the first streaming service to win Best Picture. You thought it was going a different way, didn't you? And films produced by streaming services, including Netflix, HBO Max, Disney Plus, and Hulu dominated the nomination list. And it makes sense. Think about the amount of time we spend watching streaming

versus going to the movies. $140 billion this year into original scripted programming with the streamers. That's just out of control. That's greater than the defense budget of Germany. So similar to most things we talk about on this podcast, the pandemic was a key accelerant here, making Oscar wins and nominations possible for these streaming services as the Academy allowed nominated films to skip a theatrical release for the second year in a row. That's right. They didn't need to stop just so that they could qualify for an award. And I think that makes sense. Well, the shift away from going to movie theaters and other communal activities offers plenty of negative externalities.

It's important to note that this is generally a great sign of the times. Why? Because we all have much greater innovation in our home in terms of how that experience has changed. And we're less inclined to go to the movies. And I think that you think about less carbon, you think about, I mean, all these directors in their fifties and sixties wax on about the collective and how we need to go back to movie theaters. I don't buy that any of them go to the fucking movie theater. I think they're all home in their fancy theaters drinking their high-end tequila or whatever it is they drink with people rubbing their feet and talking about, oh, wouldn't it be great to get back to the movie theater as they stream everything on their eight-foot-wide TV that is only a quarter of an inch thick. Global

box office revenue reached just $21 billion in 2021. And though that is up significantly compared to 2020, that's down by nearly 50% compared to 2019's pre-pandemic levels. So what's going on here? We can expect these same streamers to capture more attention from traditional studios as their content budgets balloon by the billions, not even the tens of billions, the hundreds of billions, just as streaming has been motivating people to ditch cable TV for years now. I actually think the defining art form of our age is television. You know, I don't know if you look back at certain great periods of, you know, impressionist art or sculptor or poetry, whatever it is. We're going to look back on this era. I don't think Damien Hirst is going to be remembered.

I think Shonda Rhimes is going to be remembered. I think Breaking Bad is going to be remembered, not some piece of modern art. A lot of people who offer something creatively are finding or touching streaming because there's so much capital trying to find people and ideas to grab into it. Every journalist that has written about big tech is getting their book optioned, whether it's Mike Isaac and Super Pumped, which announced a season two, or WeCraft. I mean, just every one of us, and this is good for us, I guess, is being contacted by different agents saying, have you ever thought about turning this into some sort of original scripted drama? It's not movie producers saying, I see you in big lights premiering in an hour and a half film.

They all want to do streaming. Cable still captures the greatest viewing share in the U.S. at about 35%, but by a pretty slim and declining margin. Streaming currently accounts for 29% of all viewing. That's more than broadcast TV at 26%. So it goes broadcast TV last, then streaming, and then still cable. And you're going to see cable dropped a second. You're going to see streaming take over the next few years. Here's the thing. Streaming is overinvested and similarly to cable getting expensive. Streaming services including Amazon, Netflix, Disney+, HBO Max, and Hulu have all raised their subscription prices since their launch. A premium subscription with Netflix, for example, has doubled in price

since 2010 to reach $16 per month. Meanwhile, the average monthly cost of cable and satellite television service in the U.S. has increased 21% between April 2012 and April 21, reaching $478 per month. In sum, cable is getting the shit kicked out of it and streaming continues to grow. As a result, there's been, I think, an overinvestment in streaming and it's unsustainable. So just as we're seeing growth stocks get the shit kicked out of them because there was an overinvestment and mania and everything from Opendoor to Robinhood to Rent the Runway that took these stocks to... Actually, that's not true of Rent the Runway. It was always

a shitty business and the stock never really popped. Actually, it did pop. I think it went to 23 and now it's back to six or whatever. But a ton of these companies, including some great companies, Roku, Moderna, are 70, 80% off their 52-week highs because just too much money poured into the asset class of growth stocks. What happens when too much money pours into any asset class, whether it's Florida real estate or meme stocks, the returns go way down. In other words, look out below. We're going to see the same thing in probably 12 to 24 months in streaming. You just can't figure out the R in the OI, that is a return on investment, on $140 billion. There's not enough people with enough credit

cards with enough time on enough couches to justify that type of investment. So things are expensive or getting more expensive and oversaturated. And again, this should be reminiscent of what is happening to the stock market right now, and especially the IPO market, which has definitely jumped the shark. Finally, the Wall Street Journal reported that so far in 2022, get this, just 22 companies have gone public in traditional IPOs, raising a combined $2.3 billion. Last year at this time, 79 companies, and here's the mind-blowing number, $36 billion was raised from initial public offerings by this time last year. So far this year, 2.3. What is that? A decline of around 95% in the amount of capital raised year-to-date versus year-to-date in 2021. That's a total meltdown. The Journal also reported that shares of companies that raised at least $50 million through traditional IPOs in

2021 are on average down by nearly 30% from their IPO prices. The profitable companies at the time of their IPOs are down 11% on average, while the unprofitable ones are down roughly 46%. So the market is moving away, and this always happens. Markets are cyclical. Everyone gets their turn in the woodshed and in the sun. So what are the markets telling us? They want profitable, good, solid companies

and all this growth shit where tomorrow never seems to be today. It's getting hit really hard, whereas definitely 2019, 2020, 2021, we're all about growth, the future. The IPO market is a great example of overinvestment, and it's now being rationalized, if you will. 2021 was a mind-boggling year for venture capital. That was the overinvestment. VC-backed companies in the US raised a record, get this, $330 billion in 2021. That's a third of a trillion dollars going into these companies in 2021. And all of them are hoping for a 3, 5, 10x return. So that money that went in is going in under the auspices of rational decision by smart investors and smart limited partners who are the venture capital partners charged with deploying this capital.

There's an expectation in that $330 billion investment that they're going to create about a trillion dollars in new equity value across those companies they're investing in. Sure, some will lose, some will win, some will just go sideways. But the market is basically saying, we think we can get a trillion dollars in new enterprise value with these venture investments. So what does this have to do with streaming? How are we going to stitch all of this together? How do we get our issue up? Macrame weekly. Sit down. Make us a spot of tea. I'm British, so I want some cream and sugar.

I'm going to put on my slippers, get my little alpaca blanket, throw on murder, she wrote. And think about how we string together all of these stories. Anyway, at some point, every sector needs to return to fundamentals. And it's been a little too much champagne and cocaine for the streaming services over the past few years. And we're seeing the repercussions of that now. Most of the streaming stocks are taking a hit. Because why? The same overinvestment that's plagued the IPO market and growth stocks is now becoming somewhat obvious and streaming. Disney is down 22% in the past six months. Netflix down 36%. Roku is down 60%. These are great companies. That doesn't mean that they can't get ahead of their skis,

which it appears they have. So now let's stitch it all the way back to our show and do what I do best, and that's bringing it back to, let me think, me. So our show, No Mercy No Malice, drops on CNN+. And what does that mean for CNN+, news and politics have long been free to the public. We've never had really had the opportunity to enjoy the kind of CNN quality like news without commercials and without the clock. The two things that totally, in my opinion, just fuck up television are one, the clock. Some days, some days the international or some days the business news should be nine minutes. Some days it should be 90 minutes, but instead you have a clock that says, no, it's got to go exactly 41 minutes. The other thing that screws it up is South Korean car

companies, light beer companies, pharmaceutical companies trying to convince you that you have restless legs or should be really thinking about your opioid-induced constipation. Specifically, the advertising ruins it. And that is the surface of attack for Facebook and Google is everything, and yet they have the precision guidance missiles or weapons because of their incredible ad tech to target everything down to households in New Jersey where there's a new driver. That is not true of television. Because they have gotten in the way of each other,

there's no real data that's fluid because it made sense to keep everyone in the dark so that they could charge higher ad rates and ensure that the studios never had direct access to the consumer. So there was no sharing of data, no signal liquidity, no analytics. So as a result, 98% of the garbage you see in between the programming, i.e. the commercials, is just not relevant to you. And again, I'm not a good model here because I pay too much for media. But you would think that if you could get great news and politics, that it'd be worth $6 or, in this case, $3 a month just to avoid the advertising. Now, having said that, I think CNN Plus faces some real headwinds.

One, first and foremost, see above, space is just overinvested. Two, I can't think of an existing network that has been able to launch a paid adjunct that's working. There's Peacock, which is a giant thud. MSNBC has their streaming network. I actually don't know how that's going. There's Fox and Friends, or as I like to call them, Fox and Fascists. I don't think that's going very well. Because the only way you make this thing work is if you go all in. And that is you spend a lot of time and energy and money creating something that is really compelling. Consumers are used to getting a billion dollars in original programming for every dollar a month they spend, or actually

two billion. See above Netflix. Now, CNN does have a leg up here. Why I do think CNN Plus would work, and obviously I think it's going to work, or else I wouldn't do this. So let's get back to me. Why did I do this one? I'm a narcissist and love seeing myself on screen. I figured out books, figured out newsletters, figured out podcasts. Whether you agree with that or not, I think we figured it out. Figured out speaking gigs. By the way, a lot of people ask what our business model is because we don't have a lot of advertising. We have some on the pod, but we don't do it in the newsletter, the books, whatever. We get the majority of our revenue. And I'm saying we, I mean, Prop G Media from speaking gigs. It's crazy how much the national cotton growers will

pay you to show up and entertain and surprise and delight their audience at their convention in Savannah, Georgia. I also enjoy that. I enjoy traveling. I enjoy meeting new people. I enjoy presenting. Anyway, enough about me. Wait, let's get back to me. So that's how we make the majority of our revenue, but we don't do a ton of advertising. So why would I go all in and make this big investment in television? I haven't figured it out. I want to. And I think you need to be multi-channel, and it's fun. Two, I mean this sincerely, and I've said this before. I love CNN. I think they do a fantastic job. I think they're an important voice. The reason I got involved in the New York Times and the aughts was I love the New York Times.

I think they're a great evangelist for Western values, and I feel the same way about CNN. I love Fareed Zakaria. I love Anderson Cooper, Christiane Amapour. I think they just do a fantastic job. And I always wanted to be involved with the organization and was much more excited and had opportunities on the kind of parent or the core network, but wanted to get away from advertising and wanted to get into streaming where I think the puck has had it. So will people pay for news? And more importantly, in the form of video, what could they do or what should they have done in my view?

I think they probably should have just taken their best programming and slowly but surely put it behind a wall. At the end of Anderson Cooper 360, they should just say, okay, if you want to see this without commercials, it only costs six bucks, go here. Because I think they have a ton of great programming that people would pay six bucks a month for to avoid all the crap. I would pay some money to watch Fareed Zakaria in 41 minutes instead of 60 minutes, see above, restless legs. That's what I would do. And maybe that's ultimately where it will go. Now, what's interesting here, what's interesting here is that quality of the content, it getting traction, how usable the app is, the amount of money they invest. All of these things are shockingly somewhat secondary to things that are out of our control. When I say our, I mean the good folks trying to pull together great content for you and yours.

And that is corporate governance and ownership structure. Specifically, AT&T still owns 71% of what will be the newly launched Discovery Plus. It includes a bunch of Time Warner assets, including CNN Plus. So a lot of things could go down that would entirely change the structure and the future of CNN Plus. What if all of a sudden AT&T stock drops 40% and it's clear that their equity value is so far below their debt value that they just have to reduce debt. What if people start getting twitchy when I say people, the credit markets about interest rates for what and its impact on what is the most indebted company in the world? What is

the most indebted company in the world? AT&T. What happens if AT&T needs to take down or reduce their debt and becomes a for-seller and a private equity group shows up and says, hey, we'll take this massively profitable cash spigot called CNN. And they take it and then they say, well, there's this future stuff that's super expensive called CNN Plus. We're going to just close that down. Or what if they say, okay, we'll take that, but we're going to take the best three, four, eight programs off of CNN Plus and shove it into HBO Max. I mean, there's a lot that could happen here that is totally distinct to what people think is going to be the ultimate arbiter or litmus test for success here. And that is a corporate governance and ownership. I think

it's always a good idea to look at who owns the shares in the stock and look at the characters on the board because sometimes ego and other things get in the way of the content, if you will. So if someone were to say that CNN Plus was doing fine and was exactly in the same form and adjunct to CNN, I would say, I think that's really unlikely. I think what you're going to see in 12 to 24 months is that Discovery, the parent company, is going to offer all of the calories of streaming, that is incredible cost, with none of the great taste. And that is it won't be able to replicate the growth numbers of Disney Plus or Netflix. The market will throw up, hammer Discovery stock.

And the other key issue here that people don't consider is that Discovery will be the only media company of its size in the world that I know of with this stable of assets. I mean, for God's sakes, HBO, TNT, CNN, that will be in play. What do I mean by that? It's not dual-class shareholders. When I bought 17% of the New York Times in 2008 and went on the board, all I could do was yell at them. And they could just ignore me because they had dual-class shareholder structure. If you wanted to take over News Corp, if you wanted to talk to anyone at Viacom, if you want to talk to anyone at Google or Facebook, you got to talk to the people who figured out a way to get the dual-class super voting shares. Not true of Discovery. Why?

Because Stanky wanted that takeover premium built into the stock. He just wants to get as much money as possible or recover as much money as possible from what is probably the second worst acquisition in the history of AT&T. The number one being DirecTV, which has probably been marked down by, Christ, I don't know, 50% or 60%, whereas Time Warner still could salvage just being a bad acquisition, not a disastrous one because they overpaid for it. So someone could come in and just say, okay, the stock's been hammered. I want to take this thing out and go to Stanky and say, how would you like to reduce your debt by 40 or $50 billion or 8 billion? Think about this. What would Apple or Amazon pay for HBO? I mean, if Apple TV Plus announced tomorrow,

hey, guess what? Everything from Euphoria to Game of Thrones to every other HBO program, The Sopranos is only available and is gonna be available on Apple TV Plus. It's now HBO, Apple TV Plus, and then it just goes out. Overnight, Apple TV Plus is number one.

I don't care. They're superior to Netflix with that type of original programming, I would bet. What would happen to Amazon Prime Video, which is now number two to Netflix, if all of a sudden it got... I mean, this is such a crown jewel. Would it be worth a 1% dilution to Apple? By the way, a 1% dilution to Apple is $30 billion. It's about 18 or 20 billion for Amazon. These are huge numbers that Stanky would have no choice but to say, sure, I'll pay down my debt by that outrageous amount. Yeah, this company is not worth it. These companies don't produce those types of cash flows,

but they're worth it to Apple or Amazon, which kind of brings us to a whole other host of issues around antitrust when certain companies can buy things that no one else can, or they can buy them based on other dynamics around the channel. Anyways, my prediction as it relates to CNN Plus' success, I can make the bull of the bear case. As it relates to what it will look like in a year, the only thing I'm fairly certain of is that it will not look like what it looks like today. What I am certain of is that I've really enjoyed this. It's been fun to produce a television show. TV is insecure. It is finite. I have absolutely no idea if it's going to last three months or three years or 10 years, but I'm enjoying it a great deal. And it's been a really interesting experience in some streaming and the dog.

Stay with us. We'll be right back for a conversation with Leif Abraham, the CEO of Public. The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Mike Gitlin. Through the words and experiences of investment professionals, you'll discover what differentiates their investment approach, what learnings have shifted their career trajectories, and how do they find their next great idea? Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts.

Published by Capital Client Group, Inc. Hey, it's Scott Galloway, and on our podcast, Pivot, we are bringing you a special series about the basics of artificial intelligence. We're answering all your questions. What should you use it for? What tools are right for you? And what privacy issues should you ultimately watch out for?

And to help us out, we are joined by Kylie Robeson, the senior AI reporter for The Verge, to give you a primer on how to integrate AI into your life. So tune into AI Basics, How and When to Use AI, a special series from Pivot sponsored by AWS, wherever you get your podcasts. Podcasts. Welcome back. Here's our conversation with Life Abraham, the co-CEO of Public.com. Life, where does this podcast find you? In New York. In New York. And today's a big day. You're uh crypto in new york is that right that's correct exactly finally it took some time

new york has this crazy thing called a bid license and only i think three companies so far had it and so we're finally able to to offer crypto also to new yorkers so just nice this is probably as good a time as any to just a disclosure. I'm an investor in public. I first found life in public because I was, I don't know if the right term is upset

or concerned about some of the online trading apps that I felt were using gamification to encourage mostly young men to engage in what I saw was gambling, not anything resembling investing or learning. I found public, which does not sell its order flow such that its incentives are aligned or more aligned with the investor or the customer, if you will. Anyways, I ended up investing. So let's start there. The fintech space is obviously very crowded. Can you walk us through what Public does and how you differentiate? and not dollar amounts, but you can actually follow people. And therefore, like this one barrier we always talked about

is that the one barrier to the markets always has been this psychological thing in your head of feeling that the stock market is not for you. And I think that has been pretty heavily been driven by this kind of like more trader culture, right? And so if you think of, you know, stock trading, you will think of Wall Street bets, you will think of stock twits, you will think of, you know, you will think of Daily Day Trader on Twitter and things like that.

And if you truly want to democratize the stock market, for lack of a better wording, we felt you also have to change its culture. And so with that community angle, what we've done from the beginning is to basically bring more people into the markets that you would normally not necessarily expect to be there. And that led basically to things like 40% women on the app, 45% people of color and so on. And therefore, you know, we are kind of more sitting in the camp of really trying to kind of open up that market much more to more people. And that's kind of one big thing that we focus on. And if the business model isn't selling order flow, what is the business model?

I think first off, if you look at the market, and I think what just happened with some of our competitors in the space that have relied so heavily on payment for order flow, is that there's this perception that the only way to make money in the space is to sell your order flow, and which is just simply not true. And I think a big piece of that is also just in terms of how you diversify a business model and the more you focus on you know things like autoflow the more you focus also on a model that where you're kind of putting yourself into a corner to have certain incentives right and so what we basically do is that we focus on building something that is more diversified. And so, you know, there is fees on crypto. There is fees on things like instant transfers. We are launching subscription offerings soon, et cetera, et cetera. And by that, have the ability to also align our centers more with basically our members and stuff. We can talk about that more in a second.

What do you see in the crypto markets? Have you seen a shift into or consolidation around kind of what I think of as the big two, Bitcoin or Ethereum? Again, seeing this data and seeing what people are trading in and out of, how would you compare and contrast people who are trading in crypto versus those that are just in equities? And what observations do you have around the crypto market? I would say that crypto has been definitely one of the components that was generally an unlock for the markets because it's also one of the only asset classes that has been born fractional.

And I think that's one of the things that has really opened the markets is the sense of fractional investing. And crypto was the first asset class that was truly born fractional. And so I think that fractionalization has been a big unlock. I do think, though, with many crypto coins you're seeing out there, there is a lot of speculative behavior around it, right?

There's a lot of these meme coins where the technological applicability, so to say, that's behind it is just non-existent. And it is really a little bit more speculative. And again, I feel what that comes from is that there is a lot of community drive behind it because obviously in those communities, everyone has an interest in promoting whatever they have invested in, right? And I think that creates this notion of people just feeling part of a community. And I think that is something that in the broader public can be very powerful as well as dangerous.

And so therefore, it's always the question of, you know, where does that momentum kind of gets pushed into? Yeah, because when I think about, I've spent time on all the major apps, and I think that Publix of differentiation, or what I describe as a point of differentiation, is first and foremost the business model. Not selling order flow, putting it on the side of the investor, but I think of public as having a stronger social component. I almost think of it as a social media platform that has investing on top of it. How do you stop the kind of this pump and dump? How do you stop, you know, you see what happened with Milani and the NFTs and you see, I see it on Twitter where it's clearly someone has a thousand or a hundred thousand accounts trying to pump a stock, usually Tesla or usually a specific crypto, how do you create veracity in terms of the content

on your social media platform, if you will? So there's a few aspects here, right? So first off, I think there's a sense of what kind of culture of community are you building? And I know that sounds very fluffy when you say it like that, but I truly believe there's a big impact in terms of and like early on we always said

like you become who you acquire and so very early on we had a focus on building a culture of community where it's very much about people educating each other and if you open the app and you scroll through the feed you will see a lot of that

you will see a lot of people sharing their experiences and when you see a lot of that. You will see a lot of people sharing their experiences. And when you see a drop off the market, people explaining why that drop is happening and so on. And really building that context around what's happening at the markets. And so I think a big piece of that is really culture of community. Another piece, I think, falls into verification. We often talk about how public is like the most verified social network in the history of social networks because every single person wants full KYC, right?

Because they're attached to brokerage accounts. And so their social security number is being verified. There's people's addresses being verified. And so it's not some anonymous community where you just are, you know, a cat profile picture and a username, but people are fully verified. And I think that lifts the baseline quality

of the community dramatically because people are just start off to be on their best behavior. And so it's the combination of the culture of the community and the verification mechanism, so to say, that really creates that quality of community in the end. So what is, I know you have B2B plans, what does a B2B offering look like for public?

Yeah, so what you've seen with that rise in retail activity, right, again, from 5% to 7% or 25% plus, is that a lot of public companies are struggling to what to do with that, and how to even engage with retail investors and so on. If you're a public company, you have an obligation to deliver the same information to all your investors. And it's really hard to get that to regular retail investors, right? And so that's an issue we've seen a lot, right? And so what we've basically built

is different ways for public companies to engage with our retail investors. Like one big thing that you've seen is town halls, right? So it's a Q&A format for public company executives to literally answer questions of retail investors because they don't have a chance to go on an earnings call and so on. And you're also considering a subscription product. How would that work? Yeah, so we acquired this small company called Hypercharts, which is basically, it's this duo of entrepreneurs, so to say. One of them is a famous YouTuber who is doing a big channel on Tesla. And what they've done is they've basically created a system that scrapes SEC filings of public companies and then turns the company KPIs into structured data. And so think about it as like subscriber growth of Netflix or, you know, rider growth of Uber and so on.

Like how many cars has Tesla delivered? And like more of these like more specific company KPIs. And so that is one thing that we're rolling into a subscription product now, including a few other data points and so on to basically, you know, help people to just learn more about these companies that they're investing in, like getting more specific insights

on what the actual company KPIs are, not just the market thing. What we're seeing with our type of investors is that they care about the companies much more than they care about market data because they're also much more long-term investors. And so it's much more about understanding and learning business strategies than pure market data and information.

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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. So there has just been a ton of media talking about some of the bad actors in the space. Jon Stewart did an entire segment on it. HBO did a big thing on it. So word is out that this has got some bad players or bad actors, and similar to social media, there's some externalities that maybe we hadn't thought of.

Does that help public? Because you're obviously trying to differentiate yourself as the folks with the white hats. But does it hurt the whole space? When Jon Stewart does an expose on one of the players in the space that basically says, this is not, there's something wrong here. Do your accounts go up or does the whole space get hurt? I personally think education around how the markets operate. And with that, the structures of things like payment for order flow generally, I think,

is a good thing. It's a good thing, not just for us as a business, but I think it's also a good thing for people to understand the incentives in the markets, right? In the end, incentives dictate outcomes, especially as a business, like whatever you say, whatever your personal intentions might be, the way you make money

will ultimately define what actions you will take as a company. You will end up there, right? And so when we went off payment for auto flow, the one conversation we had internally was also this thing of that, if you would bank on that as a revenue stream, it's just a matter of time until you have that bot call

where you basically say that, cool, when are you going to launch options trading? When are we going to push as many people into options trading? And that was going to say the business that we were set out to build. Also because we think it's a bad business to build,

to be quite honest, because it has high churn and your most profitable users are the ones that churn the most. You will basically end up, you know, having a, you know,

scheme-like kind of structure where you just have to continuously acquire more customers because you burn through the best ones. And that's just not what we wanted to build. And so, again, incentives dictate outcomes. And so the more people understand incentive

structures in the markets, I think the better. So you recently acquired a firm called Otis, a platform that lets people buy fractional shares and things including NFTs. So are you trying to be a place where you invest across all sorts of different asset classes? Are you trying to make a bigger mark in Web3? What is, generally speaking, what's the strategy here? If you think about what a modern portfolio looks like, right? And then we look at it like, okay, it's like in the old world, you had your stocks and your commodities and maybe some currencies, you know, and some bonds and so on.

And that's kind of how you will construct your portfolio. Maybe if you're a crazy rich person, you would have some art in there and some real estate as well and so on. But that was like really out of reach for most people. What happened was a few years back, this regulatory framework was introduced called Reg A+. Reg A+, basically lets you create actual investable securities, especially with the SEC and everything, for pretty much any asset. And that's when you started to see companies like Otis appear, right? And so it's a very new space, but it suddenly makes it possible to fractionalize pretty much any asset. First to securitize any asset, but then also to fractionalize it. But also a fully regulated wrapper, right? And again, we are a fully SEC-regulated brokerage, right, in that sense.

And so with that also comes how you operate, comes your internal compliance, all these things, insured cash balances, all that kind of stuff. And so when we look at what does a modern portfolio look like, we see that all these asset classes can be part of someone's portfolio. But now they can be part of someone's portfolio even if you only have $1,000 in your portfolio. And that creates a whole new set of investing strategies that people can execute on.

So suddenly, even when you start off investing, you can already think about it of like, how much do I want to have in real estate? How much do I want to put in art? How much do I want to put in collectibles, potentially even, and stocks and crypto and so on? And if you are starting investing, I think you often will start off from the things that you understand. And if you're a young person, you might understand the value of sneakers more than you understand the value of

a certain product traded company, for example. And all of these things, I think, are, you know, like, or just like having

the understanding behind these assets also just helps that you just start or just to keep going because it is like a certain, like, way to just like have some confidence as you as you start investing right so it appears a bunch of companies the covid bump or the pandemic bump has gone away whether it's peloton or zoom the people as they were kind of resume their normal lives a lot of the industries

or companies that benefited from this sort of unnatural wind in their sails of people spending so much time at home and even more time online. Have you seen a dip in investing or activity on the app as hopefully the pandemic or the virus goes endemic? Yeah, no, we have not. We have not. Like we know from obviously other players in the space who are a little bit more tied to market conditions. So normally in trading apps, you always see this kind of spike up and down, right? Whenever, however the markets move,

your monthly active users will move with it to a certain extent. We have not really seen that. And I think that is because we run a little bit of different model, right? So we always say that buying a stock is kind of a commodity, right? If you buy your stock in your Schwab account or, you know, it's another trading app or

public, it's the same stock in the end. But what is different is the experience that is unlocked from that ownership. And so we had a very big focus on like, if you own something, then what is the content that you get served around that ownership? And that is contextual information around why that stock is moving. We have these live shows on the app, literally three, four times a day, kind of like a clubhouse style, audio shows you can follow, etc, etc, etc. And that type of content, I think what creates just this more recurring behavior of people open public, not just to trade, but they open public to see what's going on in the world through the lens of the markets.

And I think that's just an inherently different behavior. So we have never seen our miles actually drop throughout the time, but only basically been going up despite volatility in the markets. And you're one of these companies that has two CEOs. You're the co-CEO. I'm involved with another company that has two CEOs. Can you share any thoughts on best practices for having sort of a productive partnership? So many companies are taken off track

because there's a blow-up among the founders. What are your sort of best practices around maintaining a good marriage, if you will, with your co-CEO? We have this one concept internally of DRIs, of directly responsible individuals. And so basically where everyone is very clear DRIs, and that even falls between Yannick and myself.

And so we divide the company basically between product engineering and growth and everything else. I do growth and everything else, product engineering. We overlap on some product growth stuff, of course. And then larger strategy decisions are being made between us and a few other people on the leadership team, so to say.

But I think that's where it starts. We're having very clear responsibilities so that also if we ever end up not agreeing on something, that we very clearly know if it sits in a certain area then it's basically disagreeing commits and someone can just go and i think that is one of the important ones the one big thing i think that we've seen with this co-ceo structure that has been

phenomenal is that some of these ceo duties we can split and therefore we can be deeper in the work, right? And so we're still very deep in the product. We're still very deep in growth and marketing. And that wouldn't be possible if you wouldn't have the structure. And I think the other thing is also that it's a little bit better, more balanced decision-making

because we're all humans. We're all going to have a bad Tuesday one day. So I think you're protecting yourself a little bit of some emotional decisions because, you know, just the chance of two people having a bad day on the same day is a little bit lower, even though you might experience the same things equally. And so I think you just end up having more balanced decision-making in the end throughout the company, which I think is good.

And so you've taken one company, you've started one company that got acquired. This one's doing, you know, knock on wood well. What advice do you think that, well, one, do you think this is a good time to start a business? And also, what advice would you have for younger entrepreneurs or to your younger self? I would argue it's always a good time to start a business and it doesn't really matter when you truly do it. I think markets-wise,

I think the early stage markets, I think are always the least affected by these swings. And so right now, you obviously see that, you know, the market's a little rocky and that's also obviously trickles to private markets as well and stuff.

But I think that trickles very little into early stage and so on. So I wouldn't put too much pressure on things like market condition and so on, on when you start your company. I think it's much more about yourself. And do you have the right idea? And do you feel like the timing is right for the idea you have much more than, you know, much more than, you know, is the timing right in the markets. And then I think the other thing is just get started because I think it's easy

to just always talk about ideas and nothing happens. And life on the important stuff. You're a new dad. Is that right? Do I have that right? I have two, eight year old and two year old. Eight. You have an eight year old? I have an eight year old. I know. I know. I did not know that. What's it like?

So any advice to entrepreneurs who obviously, you know, this isn't, I'm going to speculate that you and your co-CEO and a lot of people at Public spend a lot of time at work and thinking about work. Any advice to husbands and fathers around how to try and balance those things? I think it's super hard

and I struggle on it myself, to be honest. And I just had a chat earlier with someone where there's a little triangle of like, you know, work, friends, family, pick two. And I think it's just incredibly hard. I know that, you know, work, friends, family, pick two. And I think it's just incredibly hard. Like I know that, you know, also having run a company before this and now this one and so on,

that's like, I know there's a lot of kind of like friend relationships that I'm definitely not spending enough time on. Like it's a pure fact, a thousand percent. And I think the other thing is also that that i think especially as a founder you are very emotionally kind of connected to what you're building and making and so i think it's incredibly hard not to take that home and i recognize myself that i'm that i'm that i'm not as present at home as i should be most times and i'm most time like many times you know also like

especially with young kids about that and so I think it's incredibly hard. And so this might, you know, so like, so I wouldn't say I'm the best person to give advice there, to be honest. And if anyone else has advice for me for that, I would totally take it. So how's it for you? Tell me, tell me how it should be better.

It's a little bit easier for me because, well, my kids are 11 and 14. And while I'm running, I'm involved in a startup, I'm not the CEO. And I purposely decided I didn't want to be the CEO of another startup because I'm kind of willing to work 50 hours a week, but I'm not willing to work 80 hours a week again. And startups are a young man's business. In life, you're doing exactly what you should be doing. You're trying to build something, establish economic security for you and your family. But I've always felt there's this cliche Hallmark Channel vision of startups where you can have balance.

I found that's not the case. And that I tell young people they can't have everything. They just can't have it all at once. And there's just when I was in your shoes starting my company or a company with young kids, I didn't see a lot of them. And I missed out on a lot. But, you know, I'm now in a position because some of those hours I logged in to spend more time with them now. So, you know, there isn't balance. There's just trade-offs. Finally, what are your thoughts? Again, I'll just return real quickly back to the market.

Any predictions for the market in 2022? Any observations? And it can be across Web3 or stocks or the market in general. But you're kind of knee-deep in the markets every day. Any predictions? Yeah. I mean, obviously, I'm not allowed to give any financial advice. So, you know, no financial advice, no financial

advice. Hey, right now, I think it's, you know, tough to predict because obviously of all the things that are happening in the world, right? That's a clear one. I could see, especially with interest rates going up now that you're actually going to see a little bit less volatility towards the end of the year. And then I think what you're going to see on a lot of the NFT projects and so on, I think you're actually going to see a little bit less volatility towards the end of the year. And then I think what you're going to see on a lot of the NFT projects and so on, I think you're going to see a bunch of shit go bust.

And that there's going to be a few kind of blue ship things ending up standing that will continue to have traction and do well and have a story to tell, for lack of a better wording. So I'm curious to see things like trading volume and OpenSea have a story to tell for the good part of voting so i'm curious to see

things like trading volume and open c and so on to continue to you know uh to have the volumes they're having right now and so on uh but yeah but i think those are the those are the kind of kind of core things that i would that i would think life abraham is the co-ceo of public.com an investment platform where members can build a portfolio with any fractional assets. Prior to Public, he was a co-founder and CEO of AndCo, which became the largest freelancing software firm in the world, also acquired by Fiverr. He also co-founded Pay with a tweet, a first-of-its-kind social payment system that was acquired by Hans Ventures in 2012. And Life joins us from his home in New York. Thanks for your time. And thanks for what you're building, Life. Cool. Thanks, man.

Algebra of Happiness. I was rattled by the events at the oscars i mean had a really visceral reaction and it's always a good idea i think it's a good idea that when something really pulls at your emotions you have it moves you or makes you angry or makes you feel just something really makes you feel something, I think it's important to slow down and say, why am I feeling this? Oftentimes with certain types of criticism or ribbing, I find I get angry and I think,

well, is that an appropriate response? When the reality is the reason I'm angry or the reason I got upset is that criticism cuts to the bone because there's some truth to that criticism and it's not the person's fault, but I'm especially sensitive about that. It's important to slow your thinking down and understand why you're having an emotional response to something. And I thought, well, why am I having such an emotional response to what I saw is Pure and Simple Assault by Will Smith? What upset me so much about that? And I think it's a few things. One,

I really don't want to be that nation. You see that nation in Asia where they're a democracy, and then on a regular basis, they get together in their Congress and they break into a fistfight. I don't want to be that nation where you just can't really expect to go as a tourist and have to be confined to a certain area because it's so violent. I don't want to be that nation where women aren't given driver's licenses. I don't want to be that nation where we can't get together without an expectation of violence. I thought, Jesus Christ, this is us now. This is us. We have an insurrection on our Capitol that some media outlets call a righteous protest where a Capitol officer is bludgeoned

with a fire extinguisher, whether a woman who thought she was doing the right thing because she was fed this diet of bullshit misinformation, get shot and killed by a security guard trying to do his job and protect our elected representatives. When I see our elected representatives, and that's us, they represent us. We vote for them. That's us cowering in the raptor scared. I don't want to be that nation. And when you see the Academy Awards, which I grew up with, engage in that sort of random violence, I think, Jesus Christ, now that's us. That just shouldn't happen in America. I also think that we are normalizing violence, and it's really a bad idea. And all this bullshit that came out the next day around, well, it wasn't that big a deal. Yeah, it is a big deal. It really is a big deal. And then this notion that he was

protecting his woman. First off, that's very tribal. It takes all agency away from women and positions them as victims. And if you want to decrease violence against women, you decrease violence, full stop. I thought this was just terrible for America, obviously terrible for the Academy Awards, terrible for Hollywood. I mean, I think they should just literally shit can all of these awards after this thing. If they can't, if they create the kind of culture where people are comfortable doing that, and then the guy gets a standing ovation and he's partying at the Vanity Fair party afterwards. And this kind of marks America. I think it's interesting.

There's certain things that kind of mark the age. For me, the thing that marks the age recently was that container ship full of luxury cars that caught on fire, was adrift for about a week and then sank to the bottom of the ocean with a billion dollars in Bentleys and Porsches. I think that sort of marks the age.

I think Pete Davidson branding himself, Kim Kardashian's name into his person, I think that marks the age. I think Pete Davidson branding himself, Kim Kardashian's name into his person, I think that marks the age. And I think that Will Smith assaulting Chris Rock, that the world's leading action hero assaulting because he took offense to something. By the way, if I took offense to every joke or ribbing about my hair, I'd be in a fucking Supermax cell right now. There was nothing wrong with that joke. This is a fiercely beautiful woman. And, hey, get used to it when you're in Hollywood. My God, what happens at open mic night at comedy clubs now?

What happens when someone rushes the stage the next time David Chappelle gives a performance? What's the lesson here? We cannot normalize violence. The Academy fucked up so hugely here, he should have been escorted from the theater. I initially had a very emotional response and said he should be arrested. I think when it's two guys that know each other in a private event, they should work it out without the blunt force trauma of getting the law or police involved. I don't think that's the answer to everything. But I think there's a lesson here for young men. I realize I'm going on a while here, but I remember I had a friend in the fraternity at UCLA, a guy named Martine. And Martine was a wonderful guy.

And he was on ROTC scholarship, was in, I believe he was in the Army. And Martine, wonderful, gentle, lovely guy, problem with alcohol. He'd get fucked up and then he'd get belligerent and sometimes violent. And we went to a party. I hung out with a lot of athletes and one of my friends was a football player. And we went to a party with a bunch of football players. And Martine gets, as he does, really fucked up and starts getting really aggressive and belligerent and starts picking fights with no joke linemen from the UCLA Bruins who are like six foot eight, 300 pounds. I am barely exaggerating.

And he is being such an asshole. And I think, okay, you do it, that guy thing. You're supposed to help your buddy out. I come over to him, and I try and calm him down, and there's no calming him down because he's so fucked up, and I think this guy is literally about to get killed. He is giving them every legitimate excuse to assault him and put him in the hospital,

and you know what these guys did? They were gracious. They made light of it. They were funny. They tried to joke. They tried to get him and them out of the situation. They tried to navigate. What did they do?

They tried to de-escalate the situation. And I think that's what it means to be a man. Real masculinity is de-escalating the situation. It's not some bullshit tribal notion of you need to respond to every slight, real or not. It's trying to avoid violence. It's trying to make our society less violent. That's how you reduce this toxicity and this bullshit. There were two people, there were two men involved in this altercation. One showed tremendous

grace and masculinity. The other is Will Smith. Our producers are Caroline Chagrin and Drew Burrows. Claire Miller is our associate producer. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you next week on Monday and Thursday. The bottom line is I went to the CNN Plus party last night, the launch party, where it was, you know, a chance to hang out with media execs and Wolf Blitzer. Although Wolf wasn't there. He was actually a guy I was looking forward to meeting. But I met with some of the other anchors and took my whole team because that's the kind of guy I am. There's no I in team. Actually, there's an I in

this team. And he has shaved head and erectile dysfunction. But anyways, we went to this launch party, the whole team, which was lovely. We had a very nice time. It was lovely. Support for the show comes from Alex Partners. Did you know that almost 90% of executives see potential for growth from digital disruption, with 37% seeing significant or extremely high positive impact on revenue growth? In Alex Partners' 2024 Digital Disruption Report, you can learn the best path to turning that disruption into growth for your business. With a focus on clarity, direction, and effective implementation, Alex Partners provides essential support when decisive

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