The Prof G Pod with Scott Galloway - Future of Cities, Work, and Office Space — with Dror Poleg

Episode Date: April 15, 2021

Dror Poleg, the author of Rethinking Real Estate, joins Scott to discuss how NFTs could change the way we compensate employees and why you should think of offices and cities as consumer products. Dror also shares how crypto assets will come into the real estate space and why he’s particularly bullish on Ethereum. Follow Dror on Twitter, @drorpoleg, and check out his newsletter here. (12:36) Scott opens with his thoughts on ghost kitchens, autonomous food delivery cars, and the future of low-wage jobs. He also breaks down Alibaba’s $2.8 billion fine for antitrust violations.  Algebra of Happiness: Build some anticipation in your life (57:09). Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Episode 59. The atomic number of Praesiodiumium mercury takes 59 earth days to make one full rotation i was in a hot yet gentle relationship with elon musk and told him i wanted to live on mercury not mars and now i'm his space x it is a fixer-upper of a planet yeah i know i know it's getting rough around here. Stay with the dog. Go, go, go. Welcome to the 59th episode of The Prof G Show. Supposedly, people on the nines are more likely to get divorced, get married, or commit suicide. So our show, be nice to our show because it's 59 and the show is going to freak out today. In today's episode, we speak with Jor Poleg, the co-founder of Real

Innovation Academy and the author of Rethinking Real Estate and co-chair of the Urban Land Institute Tech and Innovation Council in New York. That's a lot to fit on a card drawer. We discuss which are the future of cities, office space, and work, and how they relate to crypto NFTs in the post-industrial world. Okay. Okay. Let's break it down. Alibaba's $2.8 billion fine in food delivery robots in downtown Miami. Both things right up my alley. Let's start with Alibaba. On October 24th, 2020, Alibaba founder Jack Ma criticized the Chinese government. And then a week later, the government halted Alibaba's Ant Group IPO. Can you imagine what it would be like if I lived in China?

Seriously. Seriously. Say goodbye. Say adios to the perro. Jack Ma was not seen again in public for three months. Okay. Yeah, China is a land of opportunity. It's a land if you speak out, they disappear your ass.

And Alibaba's stock has underperformed the NASDAQ ever since. That is until Monday when Chinese regulators find the company 2.8 billion over antitrust violations. The idea of disappearing Mark Zuckerberg and Sheryl Sandberg actually sounds pretty appealing to me. Sounds pretty appealing. By the way, I'm not in no way endorsing violence. Just to throw that out there for all the woke people who are going to hit, the wokesters that are going to hit my Twitter feed after hearing that. As a result, Alibaba's stock price closed up 9% on Monday, adding nearly $50 billion to its market value. That's right. That's right. What's going on here? As a species, we appreciate certainty, or more specifically, we don't appreciate uncertainty. When the FTC fined Facebook $5 billion in July 2019 for privacy violations, the fine represented

about a month, just a month of Facebook's revenue, and Facebook's equity closed up nearly 2% on the day of the fine, adding about $10 billion to its market cap in 24 hours. That's how fucked up we are in this world that fetishizes innovators and tech companies in that. Imagine if you got a speeding ticket or you were put in jail or you were found guilty of something and the judge said, you've been found guilty. And immediately you jumped up and said, right on my brother, that means I'm wealthier. Well, that's what's happening here in terms of our justice system around big tech, not only in San Francisco, but also in Shanghai. And that is you get fined two and a half or $5 billion, and your stock increases by a multiple of that. A year later, after the fine, Facebook stock was up 22%. What are we going to have here? The best buy on a risk

adjusted basis in the world right now is Alibaba. It trades at a very low multiple of earnings. Most internet companies trade at a multiple of revenues. As a matter of fact, Charlie Munger made his first equity purchase in more than seven years on Friday. What was it? You guessed it. Alibaba. This thing is prediction. This thing is up 30 to 50%. Actually, I'll take the 50 number up. It's up at least 30% by the end of the year. Ghost Kitchens. We're switching gears to Miami and Ghost Kitchens. That's an awesome name, Ghost Kitchens. Seriously, Ghost Kitchens. That just sounds baller, which have been popularized by Uber co-founder and former CEO Travis Kalanick. Our kitchens for delivery-only restaurants and operate inside warehouses.

According to Euromonitor, the global Ghost Kitchen market could be worth $1 trillion by 2030. Wow. Wow. Ghost Kitchens. There you go.. Wow. Wow. Ghost kitchens. There you go. GK. GK in the house. The Wall Street Journal reported that in October 2020,

entities tied to Travis Kalanick spent more than $130 million acquiring at least 40 properties across the country for his cloud kitchen startup. Not only are cloud kitchens popping up all over the nation, but they're also operating their own virtual restaurants with names including Excuse My French Toast and Bitch Don't Grill My Cheese. I'm sorry.

I'm sorry. I like that. Bitch Don't Grill My Cheese. I'd order from them. I would order from them. In recent news, Kartken, an autonomous robot started, created by former Google engineers,

partnered with Reef Technology to introduce self-driving food delivery robots in Miami. According to TechCrunch, Reef Technology's self-driving robots are now delivering dinner orders from the company's delivery-only kitchens to people within a three-quarter mile radius in downtown Miami, as if we needed another reason to move to Miami. Over in Houston, Texas, where you do need a reason to move, another robotic startup run by former Google engineers partnered with Domino's Pizza and self-driving robots are now delivering pizzas to select customers. This all points to a broader trend towards automation. A study done by researchers at MIT and Boston University found that adding one robot to a geographic area

reduces employment in that area by six workers. Think about that. Think about that. One robot, six future jobs. Let's get me some robots. I'm so sick of the people around my house. I just want a series of robots to love me. That would be an expensive robot. That would be an expensive robot. Another study conducted by the Brookings Institute. That's probably my water pick. My water pick is just a gentle lover when

it comes to my gums and my plaque. I just love the Waterpik. It's one of the best purchases I've ever made. Disclosure, none. I just love Waterpik. By the way, I have just the worst fucking dental hygiene. Everybody brags about their dental hygiene. My mouth is such a shit show. It's the British in me. But the Waterpik is bringing me back from the edges of poor dental hygiene. Thank you, Waterpik. Let's circle Mercury or the sun. Where am I going? Where am I going? And you're wondering,

did he do an edible before this podcast or is he just getting really fucking old? Well, the answer is yes. Another study conducted by the Brookings Institute revealed that 70% of the tasks and jobs related to office administration, production, transportation, and food preparation could be automated by 2030. It looks like the Jetsons are finally coming back.

And guess what cohorts this puts at the greatest risk? Young people and people of color because they're over-representation in these job categories. So how do we handle this transition? Why do we need or why should we care? The last big digitization, the internet attacked middle-class jobs. Specifically, automation went after factories and manufacturing, and we lost a lot of kind of good-paying blue-collar jobs. And now we're going to lose a lot of low-wage jobs and think, well, that's not that bad. Well, it is bad.

It is bad because young people get their start in the clusters of low-wage jobs, and 60% of them manage their way out of that cluster. The problem is that for the 40% that don't make it out, if you don't make it out within 10 years, there's only a 2% chance you'll ever make it out. I saw on TikTok this guy talking about how elephants, when they're young, are tied to a post. And for the rest of their life, even when they become so powerful,

so powerful that they could rip the post out of the ground, they still never try because they've come to believe that they can never reach escape velocity. And I think probably some of this is psychological that if you believe you're a low wage worker and you believe that there's not a lot of opportunity for you or you don't build confidence or any sort of economic base, at some point you just never, you become incapable of ripping the post out of the ground. Anyways, what do we need to do? We need to do a couple of things. The first is we need to acknowledge some people probably won't make the jump to light speed and we need to do? We need to do a couple of things. The first is we need to acknowledge some people probably won't make the jump to light speed and we need to protect them and have some dignity of work. And it's ridiculous the minimum wage is still stuck at $7.25. And while Senators Sanders

and Warren continue to Jones for the camera, it feels to me that we need a union similar to the union that got voted down in the Amazon plan of Bessemer. And that union should be called the House of Representatives of the United States Senate. And the fact that they don't represent workers who are willing to get up every morning and haul their ass to a job and do that job well, and that we won't even pay them a living wage is just obscene. And so, yeah, do we need unions? A hundred percent. That union should be called our representation in our elected officials. We also need, we also need to reinvest in in youth, specifically with an on-ramp or more on-ramps to the greatest wealth creators in the history of mankind, a platform called the U.S. Company. We need to acknowledge that two-thirds of Americans probably won't get a college degree.

So how do we create more on-ramps for those two-thirds? We take more of a European-style approach and realize, okay, not everyone's going to Harvard. And if you don't go to college, that doesn't mean you're a failure. It means you still have something to offer. And I think we need a massive investment in vocational programs. We also need corporations to de-fetishize or to become less obsessed with recruiting out of elite universities only. That's not to say they shouldn't hire good people from great universities, but it also means they should hold themselves to a higher standard and fall back in

love with the unremarkables and say that a certain percentage of our workers, not just in the low paid admin jobs, but people who demonstrate capabilities, we're going to create an on-ramp for them with different forms of certification, such that they have entree or an on-ramp into, again, the platform that has been this incredible upward lubricant, and that is the U.S. corporation. Secondly, you can't stop technologies march. What you can do, though, is say that there's no reason to subsidize technologies march such that hiring somebody becomes much less attractive than making the investment in building a robot. And that is people pay social security taxes, payroll taxes, which makes them more expensive. And you get to

write off the expense or amortize the expense of a robot, whereas you have to fully expense an individual's compensation. So, okay, that's fine, but why don't we have a level playing field? Why are we providing tax incentives to automate factories or create automation when in fact a human who is tech enabled, if you will, could do as well or better than the robot? Andrew Yang brought this up. He talked about that we want to demonize immigrants or specifically the right wants to demonize immigrants. The reality is that we should be demonizing robots. And when I say demonize them, I mean, just recognize that if we're going to have no one in a factory,

we are going to need to reinvest in training those laid off workers. And probably a logical way to do that and address the externality of automation that's subsidized by the people who were paying those taxes is to reinvest in vocational programming. Stay with us. We'll be right back for our conversation with Jor Polig. 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. 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. Welcome back. Here's our conversation with Jor Poleg, the co-founder of Real Innovation Academy, author of Rethinking Real Estate, and co-chair of the Urban Land Institute's Tech and Innovation Council in New York. Jor, where does this podcast find you? I'm in Dix Hills, Long Island, a refugee from Brooklyn. So let's buzz right into it. Talk to me about NFTs and the future of work. Give us your sense of NFTs, or first off, just provide a brief definition and overview and how

you think it's going to impact work. So what's interesting about NFTs is that they allow you to fractionalize ownership and to distribute income at a very granular level. We started to see more frivolous uses of it to begin with, you know, people selling little bits of art that they created and then sharing some of the revenue from that art with people that contributed to their art or with some of their fans, which is all nice and all well. But what's more interesting to me about it is how that same model, whether it is with NFT or just with NFT as a metaphor for other things that we can do with technology, affects other industries. So when you look at something like, let's say, a software development project, usually when it comes to open source,

you might have a few hundred people, even thousands in some cases, contributing to a project. Their contribution is definitely not equal, even if they all work in the same company and get the same salary. But at the moment, we pay them more or less the same salary because it's just too complicated to measure all the time what everyone does and also to start compensating them at a very granular level. It's just too expensive. What NFTs do and technology more broadly is that they help us lower the transaction costs of paying everyone at a very granular level.

You know, that like 5 cents for every line of code that you contributed that ended up being used. Or even when you combine it with machine learning that actually listens to conversations and analyzes meetings, you can see, okay, oh, this person had a really good idea that other people keep repeating or that we ended up using on our campaign or that ended up going into our product. So you start to have a very structured kind of data layer that tells you what every person's contribution was.

And NFTs give you the financial layer to enable you to compensate people more directly based on what they actually did. So there's commissions, which can be easily measured where you sell a house, 5% goes to the brokers. You're saying that there might be some sort of additional AI or additional more granular metrics because of NFTs. Does that, I'm just trying to think how that plays out though, because don't you run the risk that for all the efficiency you bring, you create additional inefficiency as people try and game these things because it's just measuring whatever it's programmed to measure.

It's definitely, I mean, once the incentives change, the game will change as well. So you're definitely right on that front. However, I think there's a lot of incentive and pent-up demand for it to change. So if we look at an example of a project, let's say the Android operating system, maybe the biggest open source project in the world that everyone has in their pocket, or a lot of people do, about a thousand people contributed to the initial project. Mm-hmm. The most productive person there, the one that contributed the most commits, or a lot of people do, about a thousand people contributed to the initial project.

The most productive person there, the one that contributed the most commits, the most kind of code changes, contributed about 5,000 of these. The 10th most productive person there contributed about 2,000. Now about 70% of all the other people contributed barely 20 kind of little contributions to the code. Now, of course, the number of lines of code that you contribute don't mean that you're more productive because especially in the world of coding, sometimes doing less is actually more important than doing more. But there are ways in that world, for example, to analyze, okay, what code ended up being used? What code ended up even being upvoted by other colleagues, by the thousands of other participants that are on that project.

And then if you have an automatic way to compensate people based on that contribution, you're in a very interesting world. And we're starting to see that in the real world. So you also talk, let's raise it up one level and talk about Bitcoin and other scarce assets in a zero interest rate policy world. Say more. So basically we're in a world of abundant capital with negative interest rates, with dry powder for private equity and venture capital at all time highs. We're also in a world

with a lot of rapid change. And in such a world, anything that generates stable income is extremely valuable. And beyond that, even anything that is scarce, whether it is artificially scarce or it's really scarce, but as long as you can enforce that scarcity, it's becoming more valuable because investors are basically fully allocated to all the old things that they used to invest in. And they're constantly looking for yield in other places, because based on their projections, they're already behind. Even though we had a wonderful bull market for the last year, and even for the last 11 years, if you look at institutional investors, so the pension funds, the insurance companies, to a lesser extent, endowments as well, the stuff that they promised their savers, you know, 20 or 30 years ago, the boomers that are retiring now now they told him okay we're gonna make eight percent or ten percent of your money most of these haven't done anything close to that over the last decade so now they're constantly in search for yield which means

that they're moving up the risk curve and looking for things that might generate the types of returns that they need now in order to catch up and i'm saying might because they might not as well obviously but there's other things that will definitely not generate these things. So if you stay in cash or if you invest in treasury bonds as they do, they're guaranteed not to give you the type of return that you want. So people are being pushed into those other assets. And Bitcoin is a great example of that. But I think that even real estate itself, despite its current troubles, the fact that it is inherently scarce and the fact that it can generate a stable income will make it more valuable on relative terms. of great masters in terms of paintings. Isn't it just an imbalance

and obviously asset prices explode or is there something else going on here? So that's definitely a big part of that. I mean, just the pure monetary policy, but the fact that there's an abundance of cash doesn't determine who will get more of it. So not all assets have appreciated to the same degree over the last two years or 20 years or 100 years, for that matter.

What's interesting in real estate is that in parallel to this kind of crazy monetary experiment, we're also seeing the cash flows of real estate assets actually becoming more risky and less stable because of technology as well. So, you know, we're seeing more flexibility across the board. We're seeing things like WeWork and like Airbnb and like all sorts of co-living operators. And even in the world of logistics and industrial real estate, there's more flexibility. So the customers of real estate are becoming more demanding. They want more services, more design, more flexibility. And at the same time, they're becoming more fickle. They're less

willing to commit. They're less willing to sign that five-year or 10-year lease like they used to, which means that the nature of the cash flow from these assets is becoming less stable. But at the same time, because there's so much money in the world, there's still going to be a lot of money going into real estate, which means that a lot of the existing owners and operators of real estate are actually not going to do well. But those who find a way to de-risk those assets, to attract the customers on a regular basis, to make them come back to the office every day, to make them renew their lease, they're going to make more money than ever before because the income that they generate

is going to be capitalized at multiples that are much higher than probably ever before. So talk about the real estate industry. The general consensus is commercial real estate owners, losers, residential winners, hotels, and hospitality. That's nuance. If it's a business hotel, you're a loser. If you're a destination hotel, you're a winner. Do you see it any differently? I do. So let's take it one by one. We'll start with office. I think in office, it's less about winners or losers. It's more about we are going to see much more polarized outcomes. What do I mean by polarized outcomes?

If we look at the world of retail or hotels, there's a lot of winners in that world, even today. But to be a winner means building a consumer brand, taking all sorts of risks, having a point of view, and adopting all sorts of tradeoffs that a point of view, and adopting all sorts of trade-offs that historically office landlords didn't have to make. Meaning you have to adapt your product to a very specific type of customers and go all in on them. Historically, office buildings were boring by design. We had elevator music, and it was boring as a feature,

not as a bug. It has to kind of appeal to everyone, not offend anyone. We're moving now into a world that is much more consumer-y, which means, you know, you need to have a point of view, just like WeWork does. You know, WeWork is a joke to some people. It's a great service to other people. And even if it's a joke to most people, it doesn't matter because the customers will love it if they're willing to pay a premium for it. That's all that matters. So we're going to see more polarized outcomes where people in the middle that just wanted to kind of like, you know, I'll just develop an average building and kind of provide an average service

and not have a strong point of view, they're going to completely get decimated. People on the other extreme, we just focus on value and being the cheapest, you know, they can survive probably, but they're in a margin war. And people at the top will be those that have a brand, that have their own distribution,

that resonate with their customers, that have some sort of relationships that mean something. So that's for office. For retail, obviously retail has been a disaster for many, many years. If anything, what's good about the current crisis is that it's going to kill a lot of companies faster. So instead of waiting another five or ten years for all retail spaces to kind of come down to reasonable prices

and then other people can take them up and do something interesting with them, we're probably going to get to a clearing price sooner than that. And then we'll see the emergence of more and more interesting uses of actual retail space. Now, I remind you that a lot of retail space is in great locations, which is why I think it is inherently valuable. You know, there's something to do with it. When you have something, ground floor in a very walkable neighborhood in the middle of Manhattan, this is valuable.

Even if it's not valuable at the current price, there's something to do with it. When it comes to an office building, when you have like a little floor plate empty on the 40th floor of something, there's just nothing to do with it. You know, if a tenant doesn't want it, nobody else can do anything useful with it. So I think office in a way is in more risk than retail because it's much less prepared for that risk. And it didn't have a 20 years notice like retailers today have. When we look at residential, it gets even more interesting because we're all saying, yeah, of course, everyone needs a place to live. So apartments will be fine.

But there's two issues there. One, because of the changes in the world of work, today people have a choice more and more in terms of where to live. So, you know, if they don't have to be in the most expensive city in the world in order to work, now they have a choice, which doesn't mean that they all want to move out, but it means that they're becoming more discerning in terms of pricing and, you know, that they will stay in your apartment if it makes sense to them, but they have more options. Maybe a more interesting point is that when you read about the distress in the office world and in retail and everywhere else, everyone's answer seems to be, okay, let's turn it into an apartment. Let's turn our offices into apartments. Let's turn our hotels into apartments.

That means that you're going to have more and more supply of apartments just coming out of thin air, which also is going to put pressure on residential prices. So I would say that, you know, just saying, you know, apartments are safe, everything will be fine. That is not true either. So the game is becoming, just like in any other business, about picking the right types of operators that know how to navigate this dynamic environment rather than just assuming that the assets themselves are valuable. It sounds like the world you envision in office kind of hits the sweet spot of WeWork. Are you a bull on We? I am a bull on We.

Before they IPO'd, I wrote that they probably should aim for less than half of what they were asking for. They ended up plunging even below that, as you know. I still think that even in that market in 2019, they could have IPO-ed at like 20 or 25 billion if, you know, they haven't committed all these unforced errors that have nothing to do with their business. So, yeah, I am generally a WeWork pool. I think that the fact that they survived this crisis puts them in a great position because the world is now being reborn in their image. You know, people want more flexibility.

They want more branding. They want to feel that their office is a consumer product that is geared towards whatever they care about. So, yeah, I am. Talk a little bit about your thoughts on cities more broadly as a consumer product. Yeah, so that comes back to the world of work as well. So over the last 20 years, we started to see the emergence of a consensus that cities are just going to become bigger and bigger. There'll be a handful of winner-take-all cities. And my friend, and I think your friend as well, Richard Florida, basically said at the beginning of this century, creative people are

becoming more important to the economy. These people will want to live in the biggest cities together. And so big cities will grow. In addition, economic theory also said that to innovate, you need access to the biggest possible talent pool. So, you know, to be in a big city means that you can match employees to their tasks in a very efficient way way which allows you to innovate better than others and also it enables these kind of spontaneous collisions between people that spark innovation so we saw a bit of a paradox where you know the internet was emerging but at the same time cities and physical presence was becoming more important than ever and i think most people thought and especially economists that this is the paradigm for the 21st century, that this is the, you know, this is the post-industrial world.

OK, we got the Internet in the 90s. Cities became bigger. So, you know, it's just going to continue from now on. But I think that what they missed, you know, economists only look backwards. They only look at data of things that already happened, is that the Internet was barely here even five years ago you know let alone a year ago uh you know people didn't most people on earth didn't have smartphones 10 years ago we barely had iphones internet bandwidth wouldn't enable the type of conversation that you and i are having now 10 years ago in most homes and definitely on mobile so we're only now starting to see the

beginning of the internet and what we're seeing is undermining a lot of these economic assumptions, because the idea of, you know, matching talent in a big pool, you know, New York is a big talent pool, 10 million people, maybe 30, depending how you calculate. But, you know, the Internet is a much bigger talent pool than that. And assuming that matching people in a big pool is critical to your business, then, you know, taking advantage of remote opportunities is more important. And as far as, you know, occasional or kind of spontaneous collisions, these happen on Twitter and elsewhere all day, you know, you and I, and me and a lot of other business partners that I have, we haven't met on the street or in a club somewhere. We just met by sharing our ideas on the internet and they brought us together. So I think that means that the city as an employment magnet is losing some of its power, not all of its power, but it means that now where you live is becoming more of a choice,

which turns the city itself into a consumer product as well, into something that has to attract you with something other than just, okay, the only place you can get a good job is here. It has to be walkable, to appeal to your values, to appeal to your environmental views, to do it. Depending on whatever it is that the city is trying to achieve, it has to choose what it specializes in and what it brand means and to compete on a much broader field. Coming up after the break. One of the interesting things that is happening now is that we're all becoming movie stars in a way.

So we have the potential to, you know, make a hundred times more money than before because of the internet. But it also means that all of these anxieties of being a star come with it as well. That, you know, we hit a home run today, but we have no idea what we're going to do tomorrow. Stay with us.

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how NFTs might be deployed. I see NFTs as a means of divisibility and a means of securitization of future cash flows or access to something of scarce value. And that hopefully it has some credibility, what I call scarcity cred, that our government and fiat currency is losing scarcity cred because we keep printing so much of it that NFTs basically say, we promise this is the only one or there's a limited amount and it's easier to divide a hundred pieces of an MBA grad using a token than try to divide that person up or their cash flows up. What is the likelihood of, say, Stanford deciding to issue a coin and anyone who has a coin, anyone in their immediate family has access to Stanford, any class, any certification over time? A hospital saying,

we'll take care of you, cradle to grave, your family, you just need to have a coin. Or a city saying, if you want to live in Manhattan, you need to buy one of these coins, almost like a taxi medallion. And it goes up and down in value. And if we wanted to ramp up or down the social good, we could say, we're going to ensure that 30% of the coins are for artists, low-income people, social workers, frontline workers, whatever you want. But how broad does the circle of the NFT or tokenization expand? So I would say the probability of that is 100%. Wow.

So not necessarily with NFTs, because again, there might be other technologies that are more efficient that would enable us to do that. But in terms of using tech to distribute ownership over things and to redefine the incentives of all the participants and all the customers of these things, I think this is definitely something that we're going to see more and more of and sooner rather than later. So I was going to ask you what you thought were good investments, but the better way to get to that is what are you invested in?

Where are you deploying your capital right now? All right. So I'm buying some physical real estate so to have you know at least 20 or 25 percent of my net worth in a physical asset in the residential space in this case second I'm invested in crypto so you know Bitcoin ether and all sorts of other smaller coins you know Uniswap are we've file coin So not just things that are speculated, but things that actually have a specific utility that I think is interesting and can be a building blocks for this new world that's heading towards. Are these holds for you or are you trading on the mania? Because it feels like if you look at economic theory and patterns, it looks like there will be a few big winners here and a lot of coins will just go to zero. Is this a trade for you where you think that

on a risk adjusted basis, you do a basket and invest in the space, or are these the kind of things you're gonna hold on for years? It's generally a hold. I do think that it's hard to know who the winners will be, but what I like about the crypto space is that the asymmetry between the downside and the upside seems amazing to me.

I mean, you know, the fact that you can put $1,000 or $100,000 or $500,000, depending how much you have, but like, let's say 5% to 10% of your net worth or of your portfolio in these things, they might go to zero, which is fine. But if they end up being, you know, a 10th of what they can be, I think you're at a, not even a generational, but like, I don't know what a century or a 500 year opportunity. And we've already seen that with some of the early investors in Bitcoin and even in Ether. And both of these, I'm not saying that they will never go down. They're very likely to go down, but they can still be, you know, 10 times or a hundred times bigger than they are are and to go back to the point you made about government i want to make an important kind

of caveat to that you're talking about scarcity cred i agree with you the government is losing its scarcity cred but it might soon show us that it has violence cred which is something that other people will struggle to uh to with, which means that they might say, oh, you have Bitcoin? Okay, so from now on, I say that, you know, you're not allowed to own it anymore, or that you have to give me 50% of all your upside. And that's just the way it is. And I don't care if you can transfer it without my consent. I'm just telling you that it's illegal to do it. And now you have to decide if you want to become a criminal, or if you want to play ball according to the new rules that I set. So I think it's always very, very important to remember that at the end of the day, it

comes back to everything boils down to violence, including the US dollar itself. The reason that they can print and that everyone keeps running back to it all over the world is that we have the US army backing this currency at the end of the day. Yeah, it's interesting. Roger McNamee, I wrote a post on my blog, No Mercy, No Malice, about NFTs and crypto. I'm trying to wrap my head around it and still haven't. But Roger called me and said, the discussion we need to have is around sovereignty. And that is the two components or the two legs of the stool of sovereignty are the twin pillars are one, the ability to tax and two, the ability to deploy force. And crypto is inherently a challenge to both those things. And he said, and maybe we don't want sovereignty, but if we, one,

basically lose the power to tax and force, you know, and tell people, all right, if you sell a house or you sell, you buy ether at a buck and you sell for a thousand, you owe taxes on it and we'll put you in jail by force if you don't do this, or the ability to, and the ability to tax that we really no longer have a nation. We're sort of just almost like a trading platform, if you will. Do you think that crypto represents a threat to traditional sovereignty as we know it? It definitely does. And I think particularly in our day and age, what's interesting is that we're starting to get into kind of like a collective action problems among nations themselves. So if crypto is a threat to all governments, you would expect all of them to come together and say, listen, we don't like this thing. Let's all crack down on it together.

But what we're seeing now is the crypto world playing these governments one against the other. So China is kind of like not allowing people domestically to buy Bitcoin so much, but it's definitely encouraging or enabling the rise of Bitcoin and other cryptocurrencies. The U.S. doesn't want to crack down on it because it's afraid that it's going to make China stronger or other nations stronger so it's kind of like trying to like pretend that it's okay but but to scare people gently away and hope that the whole crypto thing will just collapse and it will not have to worry about it and all other countries are kind of watching and in the meantime again the crypto world is becoming bigger it's becoming more entrenched with the institutions

of these countries so you know when we have the the Goldman Sachs and the pension funds and all these people starting to own crypto, ultimately, these are the guys that go and lobby the government and it will help write the laws. So I think it's becoming very, very difficult for the current sovereigns to stop this type of movement and especially to do it in a coordinated fashion. So just some kind of a lightning round here and just give me your first reaction. If you could buy, if you wanted to speculate

and you were just looking for a trade, a one-year trade, what coin would you buy and why? One year. I'd probably buy Ether. I think it's still not too far from its all-time high, from its last all-time high, which wasn't too long ago. I think Ethereum is the engine behind a lot of the Web3

and a lot of the NFTs and all the other stuff that we've been talking about, which means that more and more people will have to buy Ether just to participate. I think that Ether is on the edge, I hope, of a breakthrough

in terms of its energy use and its transaction costs. It might be a complete flop, but I know that they're working on it. And if it does work, whatever the odds are, even if they're just one in five, I think it will lead to a big jump in price. And just in terms of more technical analysis, Bitcoin is just very, very hot at the moment. So I'm not saying that it will not go up.

But if you're talking a very short term, I think Ether seems more interesting to me because it's a gateway to a whole new ecosystem, which Bitcoin isn't. So the thing I've heard about Ether, to distinguish the two, the thing that's my understanding is the wonderful thing about Bitcoin is it's totally immalleable. It's static. You can't change it, fixed supply, or at least some of that scarcity cred. And it sets it up well as a currency. And then there's Ethereum, which has utility, which its feature is that it is malleable, that you can place smart contracts on top. Is that accurate? It is still scarce. You can't just make more of it because you want to. So you can build stuff, you can build basically smart contracts

and you can program stuff and build applications on top of it, which is part of what makes it valuable. But it's still not something that you can just create out of thin air. One interesting risk with Ether is that it has a founder of sorts. So, you know, so there's vitalik who technically doesn't have more power than an average person that owns a lot of coins but in reality you know if he says something and if he makes his case he can convince the community to

change even the nature of the network itself to do what is called a hard fork you know to convince everyone to agree on some sort of change to the logic of the system. So that in a way is a risk or at least a unique point. But I think that comes back to those kind of having multiple bets. It might be a bad thing, but it might actually be a good thing that you have this someone who can one day negotiate with Xi Jinping or Joe Biden about, you know, finding a new arrangement to allow this thing to survive rather than completely kill it and to implement all sorts of changes and at the same time also betting on ether alternatives that are not able to do that and see which ones might do well but there aren't so many alternatives you know and it's worth probably investing in all of the above rather than trying to pick one and what industry do you think is most ripe for disruption

other than finance, other than banking? What industry do you think crypto will have the biggest impact on? I mean, people have been looking at destabilizing real estate with it from day one. So far they haven't managed to, but I think that's something interesting to keep an eye on. So like tokenizing or allowing fractional ownership of different assets and allowing

greater liquidity inside real estate. But more than anything, I would kind of like question the question. I think what crypto does is help financialize almost any human activity. It kind of enables it to be financialized. So I wouldn't think about it in terms of whether it's finance or something else, but kind of try to think like where we started, how does it impact people who are just creating content? How does it impact people who are just creating code? How does it impact even like a lawyer or an accountant and how they can be compensated and how can they share their risk in this crazy world with their own customers or

people that believe in them? So ultimately I I think if it's if it succeeds or even become becomes a little more relevant, it will affect many, many different industries at the same time. And the officers are you talk a lot about the 10X class that you think. I mean, it every time I get off the phone or get off one of these calls with someone who who I think really understands this as you do, it feels like we're just headed towards a world where there'll be an extreme creative class. I think it's a term you've talked about. It's people who understand this, people who have the capital, and they just, you know, we're just going to mint billionaires like there's no tomorrow.

And then we'll have wealth work, and that is the people who have high EQ supporting them, some administration. And then we'll have 40, 60, 80% of our population that we'll just feed so we don't have to fight them. Is that something? And we'll give them a huge TV with Netflix, a phone that has the processing power of the space shuttle, food delivered on DoorDash.

We'll give them a card for unlimited DoorDash, unlimited food from a ghost kitchen, maybe try and find some social service for them so they feel like they have some purpose. But we're moving towards a lot of the dystopia that people talk about. I mean, maybe that is a happier world. I don't know, but it definitely,

America's identity, as far as I can tell, is work. I mean, it's generosity, it's liberty, but Americans work. And it feels like work is under attack. Yeah, work is definitely under attack. I see us moving into a world of, you know, winner take most or winner take more. And it's not so much the creative class that, you know, a term that Richard Florida coined much the creative class that you know a term that richard florida coined because his creative class was basically the new middle class it was still a very very broad class of people and most of them work in those large companies and have a stable salary and you know so instead of making 120k a year they make 300k a year now but they're still in a very normal and stable world i'm talking about the splitting of

this creative class into another layer at the top of like 10, 15% of people who are now released from those corporate jobs and also released from the constraints of geography. So they no longer compete for jobs just in their own city, but they can compete for jobs all over the world. And someone who values their specific expertise is going to pay them 10 times more than their employer in the same city because that's just how it works with matching another interesting point in this is that i don't think that the winners are so much winners because it's not that you know they're just going to win and that's how the world will be one of the interesting things that is happening now is that we're all becoming movie stars in a way. So we have the potential to, you know, make a hundred times more money than before because of

the internet. But it also means that all of these anxieties of being a star come with it as well, that, you know, we hit a home run today, but we have no idea what we're going to do tomorrow, or if we're going to hit a home run again tomorrow. So there is a certain percentage of people every year who are going to make more money than ever before. But whoever belongs to that little pool of people is going to change constantly. It's going to be a very cruel and anxiety ridden world, even for the most successful people. And I think that's something that I'm very interested in just personally. I don't feel like I'm a winner that I'm winning. Even if things are going well, when I look ahead, I'm 40.

I see myself fighting for survival and having to reinvent myself constantly in order to stay relevant. And even the fact that I understand NFTs now and maybe one of the oldest people to understand it, it doesn't mean that another thing is not going to come in two or three years that will finally go over my head and I'll find myself feeling like I'm nine years old too early in my life. I think there's a lot of insight there. When you think about even the kind of mega stars, the Tom Cruises, the Brad Pits, the Julia Roberts of the world, they are supposedly very insecure creatures because even though they make

10 or 20 million bucks, they can go to zero in 12 months if their last movie is a bomb or for whatever reason, people move on to the next superstar. And it feels as if the one enduring feature of digitization or innovation as it goes through any category is that it crowds or it clusters the spoils towards the top 10, 5, 1%. Even in my limit experience or exposure to this with COVID, because all of my classes are remote now, they said, can you go from 160 students, which was dictated by the fact that Stern's largest classroom was 160 seats, they said, could you do 280? And I said, sure. That's 120 fewer seats for the other marketing professors to fight over, which means if you're able to go 280, then 400, then 1,000, which you will be able to do, your currency is just going to go up.

And there's basically four or five professors at Stern that everybody wants to take, and technology will now let everyone take them and it'll just soak up all the demand. You know, 80 or 90% of the professors you take in business school aren't because you want to, it's because they're available based on constraints that'll be broken down with technology. It just, like you said, I love that term winner, winner takes most. Any other big picture thoughts, any other, you know, you're four years old, you seem to understand the intersection between technology, society, and real estate. Any things out there that kind of scare you and you think we should be spending more time thinking about this?

I'm always looking for the externalities. When we saw social media, we thought it was just going to be kittens and reconnecting with cousins. And it ended up being more damaging than that. Any fears as you look at crypto? So a big one is the one you mentioned, is what I call the scalable careers, the fact that we're not protected by geography anymore, which means that the people who are really, really good can attract many more of our customers and eat our lunch, and we're going to stay completely irrelevant. And it's true for professors, but it's also true for gym instructors and even to doctors and surgeons to a certain extent. And of course, in many other professions, I think one thing, and it's not so much a crypto specific thing, but I think, you know, geopolitics and geography still matter. You know, when I look

at the world, when I look at China and at Iran and at America itself, it all comes back to that physical violence at the end of the day. And, you know, once these kind of big social and economic changes happen, people just get really, really angry and they look for someone to blame. So I'm constantly aware of that. As a 40 year old Jew who had both his grandmas that survived Auschwitz, I'm always thinking, and maybe that's why I'm thinking about all of these things. I'm always thinking, okay, what am I going to be blamed for next? And when is shit going to hit the fan? And what am I going to do about it?

And how am I prepared for that? So I think my biggest concern is just the old world coming back with a vengeance. So again, government violence, violent social movements from both sides of the aisle and beyond. And of course, environmental degradation, all sorts of other crazy things that we're experimenting with that might go completely wrong. I think all of these scare me more than crypto itself. Well, that resonates because now Elon Musk and Jeff Bezos are worth more than the bottom 40% of America. And at some point throughout economic history, when income inequality hits a certain level,

the bottom 40% realize the fastest way to double their wealth is to go take the wealth of those other two people. And it's never that transparent. So they come up with reasons, they demonize them, right? To take their power away, to take, you know, basically to take their money away. And it feels as if at some point

we're going to hit that level. I wonder if a lot of these movements are basically what I call small border skirmishes that could erupt into a revolution. Anyways, let's deescalate this. You're the co-chair of the Urban Land Institute's Tech and Innovation Council in New York. I'm gonna give you three cities

and I just wanna hear your gut response to what you think happens to the cities as products and what happens to the price of real estate. Let's go New York, San Francisco, and Miami. Think of them as stocks. So New York, I would buy and hold for 12 years. Miami, I would buy and hold as well. San Francisco, hopefully I got rid of it already. And if not, I would still sell even right now. It's a one trick pony that is adamant at pushing away the golden goose that helps pay for the things that it should have done, but hasn't done anyway. And just squandered all the money. So New York or Miami, which wins the final, which wins the tournament? Well, it depends on your entry point, but I think, you know,

I would vote Tokyo if I could, but if I have to choose between New York... Tokyo, same here. No, like a city that is big enough, but it is able to build a lot of housing quickly as necessary and to accommodate people who want to move there and to remain reasonably affordable, that has amazing infrastructure like you should have in a large city that can sustain as necessary and to accommodate people who want to move there and to remain reasonably affordable that has amazing infrastructure like you should have in a large city that can sustain this infrastructure uh and that is somewhat walkable you know that has narrow streets that is not designed for cars per se i think that's something attractive and new york i think has the potential to become more of that it's already a lot of that. You know, it's a big city.

It's walkable. It has a very diverse economy, which is probably the main reason that I'm optimistic about it. It has somewhat of an oligarchy, which is another reason that I'm optimistic about it because, you know, it's not just run by crazy politicians. It's run by practical people, which scare me as well, but at least they're pragmatic.

You know, money is a pragmatic force. It's not ideological. And if making the city more walkable and more clean and more safe is going to help people make more money, then they'll make sure that it happens. In San Francisco, it's just not clear that any pragmatic arguments work anymore. And it's all just a crazy social experiment that puts all sorts of weird beliefs above anything else. Yeah, I think the experiment is over. I think most people think it's failed. So give us some tier two cities we're going to hear more about. So I'm actually not a big expert on small American cities, I have to say. But I think that

a lot of state capitals that are pleasant, that have lower taxes, and that allow people to build are going to do reasonably well. I think a lot of them have been doing reasonably well for a few years already. The challenge there, and again, going back to Richard Florida, who wrote about this even before the crisis, you know, cities like Nashville are really cool, but then they struggle relatively quickly. Once people start migrating there, they run out of housing units. The infrastructure starts to struggle. Housing costs spin out of control. So to really absorb all of this growth, you need to have good infrastructure and you need to allow people to build, which is why ultimately cities that are already big might still benefit if they respond well to this crisis. If they respond well to this crisis, that's, yeah, that's, that's the key.

New York has a chance. I think New York's destiny is in its own hands, which is more than some cities can say at the moment, you know, so it can still adapt. Some cities, it might be too late, as you said. Greatest city in the world. Jor Poleg is the co-founder of Real Innovation Academy and author of Rethinking Real Estate, Jor explores the impact of technology on where and how people live, work, and socialize. He joins us from his home in Long Island. Jor, stay safe. Thank you, Scott. Algebra of happiness. I've found that when I had kids, I was working around the clock. And one of the most rewarding things I remember about having kids at home or babies,

we had a newborn and a three-year-old at home. I was working pretty much around the clock in Manhattan. And when I would head home, I remember I would come down 10th Street and make a right on 4th Avenue. And right when I made that right, I'd start walking faster. And I was just so excited to see my new family. It was just such a wonderful feel to have people you love and who love you. And there's nothing like the welcome you get from kids when they're at that age where they still like dad or daddy. It was just wonderful. And that last 100 meters, by the way, once I saw them, they were great for 10 minutes and then they just turned into total needy jerks.

I found that anticipation was one of the most rewarding things about being a dad. Whenever I would get on a plane home, I would immediately just get kind of this strange sense of impatience and a little bit of anxiety, but mostly hopefulness and anticipation of getting to see my family. That as soon as I got to the airport after a client engagement or a meeting, that anticipation and that excitement would build. And the closer I would get to home and then finally to that last hundred meters was just wonderful. And I think that's been one of the nicest. If I look back on the film that is my life, Jesus, that'd be one fucked up documentary. You don't wanna see that on your Netflix home screen. Anyways, the frames that were really rewarding or burned brightest for me

weren't necessarily even being with people, weren't necessarily even going on some great vacation. It was the anticipation. So where does this take us? We're hopefully coming out of this pandemic. Build some anticipation in your life. Build some frames that you can look forward to. Call people that you love that you haven't seen in a while, whether it's friends, whether it's grandparents, and put something on the calendar and then call them, call them and create anticipation. Create that last hundred meters, create a sense of wanting and longing. And even if you have, even if something happens where you have to cancel,

the best thing for me about seeing people, about vacations, about doing something wonderful has been the last hundred meters before that thing happens. Build the last hundred meters in your life, start making plans and reach out to people and give them that last hundred meters. Make some trips, put some things on the calendar and reach out to people and give them that last 100 meters. Make some trips, put some things on the calendar, and then express to people, tell them how excited you are to do this, but more specifically, to do this with them. Our producers are Caroline Shagrin and Drew Burrows. If you like what you heard, please follow, download, and subscribe. Thank you for listening to The Prop G Show from the Vox Media Podcast Network, home to Preet Bharara. Bharara, I still can't get that fucking name.

I wonder if he hangs out with Brett Favre. Favre. Anyways, we'll catch you next week on Monday and Thursday. That's right, dos dias for the dog. Support for this podcast comes from Klaviyo. You know that feeling when your favorite brand really gets you. Deliver that feeling to your customers every time. Klaviyo turns your customer data into real-time connections across AI-powered email, SMS, and more, making every moment count.

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