The Prof G Pod with Scott Galloway - Prof G Markets: Airbnb’s Record Revenue, Buying Football Teams, and Testing Bing’s AI Search

Episode Date: February 20, 2023

This week on Prof G Markets, Scott breaks down Airbnb’s first full year of profitability and shares how his options trades from the previous week turned out. He also explains why billionaires are investing in Premier League football clubs like Manchester United and Tottenham Hotspur. Then, we take a look at the new Bing AI search experience and hit the street to see if anyone else is actually using it. Learn more about your ad choices. Visit podcastchoices.com/adchoices

I just don't get it. Just wish someone could do the research on it. Can we figure this out? Hey y'all, I'm John Blenhill, and I'm hosting a new podcast at Vox called Explain It To Me. Here's how it works. You call our hotline with questions you can't quite answer on your own. We'll investigate and call you back to tell you what we found.

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I like my burger the way I like my anal. And involving... No, Scott. Come on, everyone's smiling. Give it up for the dog. Oh my God. You really want to put that out there. I like it. This is not CNBC. This is not Jim Cramer. Next up, Joe Kiernan. No. Welcome to Prof G Markets. Today, we're discussing Airbnb's earnings, takeovers in the Premier League, and Bing AI's search experience. Here with the news, Prof G Media Analyst, Ed Elson.

Ed, what is going on? Scott, I asked ChatGPT for its thoughts on my job security at this company. And let me just read you what it said. Scott, I strongly believe that Ed Elson should not be replaced by AI as the co-host of the Prof G pod. Ed brings a wealth of industry experience and a unique perspective that cannot be replicated by a machine. His dynamic with you adds a level of engagement and entertainment that is critical to your

success. Moreover, Ed's ability to connect with the audience on a personal level is truly irreplaceable. He has a real personality, thank you, a sense of humor, yep, and the capacity to establish a genuine connection with listeners. In short, Ed is an indispensable part of the podcast and should continue to be a co-host. Wow. Your thoughts on that? Well, I'm just curious.

What was the query? Did you say, give us the full query or command to ChatGPT that inspired that? Because it's impressive, right? Not true, but it's impressive. Yeah. I asked ChatGPT to tell you why I shouldn't be replaced by AI, but that's all I told it. I sort of filled in all of those really crucial blanks there, which I'm not sure I disagree. Well, so the obvious follow-up is to ask it, which I should do right now, why you should be replaced by AI and see what it says. And then have, I don't know, can chat GPT decide which is the more compelling argument?

The mind starts to spin here, Ed. Anyways, tell us about the news. Tell us about the headlines. Let's start with our weekly review of market vitals. The S&P 500 was mixed amid signs of persisting inflation. The dollar rose, Bitcoin climbed back above $24,000, and the yield on 10-year treasuries also gained. Shifting to the headlines. The consumer price index rose 0.5% from December to January. However, on a yearly basis, inflation was down slightly from 6.5% to 6.4%. And on the supply side of the economy, the producer price

index also rose up 0.7% in January from the previous month. That's the largest gain since June. Meanwhile, consumers are still spending money. U.S. retail sales jumped the most in almost two years, up 3% from December to January. And finally, the SEC is coming for crypto. On Wednesday, the agency voted in favor of a rule that will require investment advisors to secure their crypto assets with qualified custodians. Previously, this was a rule that only applied to traditional assets like funds or securities.

Scott, what are your thoughts on this? I mean, it just struck me that Bitcoin is back above $24,000 because I see Bitcoin has almost become sort of the ultimate risk-on, risk- off metric. And that was when Bitcoin goes up, it means risk on. And I think it bottomed at 16 or 18 grand, at least most recently. And it's up, you know, call it what, 25 to 33 percent in the last few months. So I think this means a few things. I think you're going to see a return or revenge of the growth stocks, the stuff that survived and isn't going kind of to zero has popped. But also, I wonder if it means we're going to see more activity, more up rounds in the private markets, or usually there's a lag. We're probably three or six months behind in the private markets. There's probably still some pain there. But I see this as by no means an indication of Bitcoin's value or lack thereof, but it does seem to be a pretty decent kind of, you know, the bulls are marching again. The inflation headline number, again, the number is, oh, it's a disappointment. It's not coming down as fast as we'd hoped. Another month where

inflation has declined year on year. So now we are at seven months of declines. And the thing, I was on the BBC yesterday because I'm actually quite fancy. The UK, their inflation, I think it's 10.1%. So get this, their inflation is 350 basis points more than us. Food, get this Ed, food costs are up 16.7%. So almost 17% year on year food is up. The fastest way to get to a revolution isn't to abuse your people. It isn't to be corrupt. The fastest way to inspire a revolution is inflation. Because while people may disagree or agree with your policies, most policy changes don't impact you on a day-to-day basis in the short term. But what does impact you is when you can no longer afford

beef. What does impact you is when you can no longer pay your kids tuition. Generally speaking, whenever we have inflation, wages do not keep pace with inflation. So in sum, inflation is an erosion in the quality of life of people immediately, immediately. They can't make their car payment. They're eating potatoes instead of chicken or chicken instead of beef, whatever it is. So inflation in the US, as much as we'd like to think it's bad and the headlines are bad, inflation is less bad here than almost any Western nation in the world. And then any final thoughts on the SEC regulating crypto? This has been

pretty big, scary news for crypto firms in the past few days. My response would be, okay, a day late and a dollar short. Where were they 12 months ago before most of the damage was done? So I guess better late than never. But the asset class has lost, what, 60% or 70% of its value from the peak. And I feel like a lot, maybe even the majority of the fraud that has taken place has already taken place. Yeah, I have this theory about this, because it is so, so unbelievably late. And I'm wondering what you think of this, which is, I feel like they knew that they should have regulated this thing years ago. But if they were to do that while crypto is at the peak, then it would have been bad press because people were making money off this thing. And it would have felt like these regulators have come in and stolen all of the people's money, because it would have killed the industry basically overnight. My feeling is that maybe Gensler was waiting. He knew this thing was going to implode. He knew that a market couldn't function

without regulation. And maybe they were just waiting for everything to implode on its own, let everything come crashing down. And then once it's politically, you know, reasonable and encouraged to go in and regulate, then they go and do it, which is what they're doing now. Suddenly, everyone's like, oh, yeah, crypto is kind of dangerous because we just saw what happened to FTX. And now they're going in and regulating. Do you think that that's possible? Or are these guys just late to the party, didn't know what was going on? I think you're right. I think they waited, you could call it politically or tactfully, until public opinion, until they had the wind in their sails to do this. Right. Yeah. But I also think that's really disappointing because if you think about the whole reason behind having they felt this way and they saw what was going on,

which I believe they did see what was going on, the whole notion of government is you're supposed to weigh in and say, no, we're not going to approve this drug because as much as people may want it, we think it does not serve the long-term interests of the commonwealth. So I think you're right. I think they were waiting for political opinion to give them the cloud cover to do this. But the whole point of a representative government is that they're supposed to be able to have the backbone and the power to make very unpopular decisions. Okay, we'll be right back after the break with a look at Airbnb's record earnings. 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.

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Get all the automation, integration and reporting tools that get your marketing running seamlessly, all backed by Constant Contact's expert live customer support. Ready, set, grow. Go to constantcontact.ca and start your free trial today. Go to constantcontact.ca for your free trial. Constantcontact.ca. We're back with ProfitG Markets. Airbnb had a huge earnings report, which included record revenue as well as its first full year of profitability. The company generated $1.9 billion in revenue for the quarter. That's up 24% from a year before and much higher than analyst estimates. And earnings came in at $319 million for the quarter.

That's six times higher than the year before and double what analysts expected. Airbnb shares rose almost 10% in after hours trading. So, Scott, what stood out for you in these earnings? I mean, everything. This company is firing on all 12,000 cylinders. And because it's in the business of managing these properties and really doesn't have huge capex, once it hits profitability, if they can maintain anything resembling this type of growth rate, this company should become a cash volcano.

Because the margins on those fees they're charging, I mean, what are they, 90 plus points of margin? So this is a company, this is what you look for and pray for in a technology investment. And that is you cover your extraordinary cost to build a marketplace with enough buyers and sellers. You cover your extraordinary cost of developing that IP and getting to critical mass. But once you hit that tipping point, it's champagne and cocaine. I mean, most of that revenue above their costs will fall to the bottom line. And if they grow another 40% next year, you got to think that

they're going to become immensely profitable and the market sees that. What we predicted, and I think we got this right, was what we refer to as revenge travel. More than 900 million tourists traveled internationally in 2022. That's 63% of 2019 levels. But the UN World Tourism Organization predicts international tourism will return to approximately 80 to 95% of pre-pandemic levels in 2023. I actually think it's going to be more on a dollar volume basis because I think there's a certain mentality among people that's like, you know what? Let's upgrade to business class. Let's not go to Yellowstone. Let's go, you know what? Let's upgrade to business class. Let's not go to Yellowstone. Let's go to Japan.

People, I think, have a renewed sense of the finite nature of life and want to do really exotic, extraordinary things and really have, I mean, they're kind of going to go large here. Chinese tourists may also return in 2023 after three years of closed borders. You got to think that's going to be big

when you have the nation that's created, I think, more new wealth, if you will. I mean, a few things happen when people get wealthy for the first time. One, they start eating beef. Two, they buy cars. Three, they send their kids to college. And also they start traveling abroad. And so you could see this red wave of tourists emerge again and start seeing Chinese tourists back at Disneyland and everywhere else. And that's just their sheer numbers and their economic power

could kind of just juice the entire system. Brian Chesky stated that no matter what happens in the world, people want to travel. The office is now Zoom, the mall is now Amazon, and the theater is now Netflix. And that's an interesting statement because essentially, if you think about the most enduring feature of COVID, it's probably remote work. I mean, I'm traveling right now. When I first started this podcast, I first started working with Vox, I didn't have the capability.

If I was in Florida, if I came down to Florida, I went to the local PBS affiliate and we rented a studio there and I recorded in the studio. Now Drew sets me up with this portable mic and I can work from anywhere. I mean, tomorrow I'm going to Isla Mirada with my kids, which sounds like hell, by the way. It sounds like hell. Some tacky resort and the keys it's supposed to give for the family. I'm going to hate it. Anyways, but then daddy's jumping on a plane to Tulum to party with all the rich, hot people who pretend that they're

soulful and into yoga. Hello, ladies. Oh my God, I can't wait. Anyways, don't know how I got there. But my point is I'll be doing podcasts from Isla Morada and Tulum. And you weren't able to do that. And so what does that mean? When travel is no longer isolated or sequestered to the time to your vacation time, but travel is just something you can do all 52 weeks of the year, not just 48 or 44, you got to think that the travel ecosystem is just going to boom. And we predicted this. And I think Airbnb is up 50, 60% from its low. I think it touched a low in the high 80s and now it's in the 140s. By the way, it's gone up since the earnings call. Airbnb is my favorite company in the world. It's got great margins.

It's leveraging other people's capital. I think that any company that has a shot at getting to a trillion dollars in value, they all have one thing in common. They leverage other people or other agencies' capital, right? Apple built its incredible business off the back of GPS and chip research by the government, Google off of DARPA. SpaceX is building their business off of the backs of EV subsidies at Tesla, and then at SpaceX, the huge investments we made at NASA.

The best thing to do is to build a layer of innovation on top of someone else's investment. And Airbnb is exactly that. They don't build a hotel. They don't finance this stuff. They don't even really train a distinct set of employees and give them uniforms with name tags and have to pay their health insurance. They are leveraging one of the largest investments in the history of mankind, and that is the U S populace's investment in residential real estate. And then these things set fallow for 30, 50, 70% of the year for some people. And it gives them a way of monetizing that excess capacity. So anyways, Airbnb has been my largest position since they went public. Yeah. So there's one question that I, that I wanted to ask you, Scott, uh, last week, you said that you wrote call options on Airbnb, specifically covered calls. How have those done after earnings? My guess is not great.

Oh, I hate myself. You know, it's like do as I say, not as I do. I covered it, or I brought options against it at a much higher price than it was trading at, but it has busted absolutely through that. So I haven't lost money. What I've lost is potential upside. Can you explain the rationale behind why you wrote those covered calls and what that means? So I have a very big position in Airbnb. And one way I hedge it is that on a regular basis, I write calls. In other words, if the stock's trading at 100, I'll write calls at 110 or 120. And I get a little bit of premium. I think about it as like owning an apartment complex and I'm collecting rent. And it's a means of generating cash flow off a stock you own. And it's also sort of a means of hedging, because if the stock goes down, you collect

all the premium. And it's all fine and good until the stock skyrockets, as it has done the last week. And basically, the underlying stock goes up in value, but you have to pay above the strike price to the person you wrote or sold the call to. So basically you end up at anything above 120 if you wrote calls at 120, you're a wash on. Your underlying stock has gone up, but you've given up the upside. And that really hurts. In some ways that hurts more than losing money. So yeah, I wish, I'm hating myself, but I've given up the upside. And that really hurts. In some ways, that hurts more than losing money. So yeah, I wish, you know, I'm hating myself, but I've done this strategy for a while. I try to be pretty disciplined about it. And it's over the long term, it's paid off. But yeah,

this was the wrong week to give up heroin. I mean, the wrong week to give up or not give up writing covered calls on Airbnb. And while we're on the topic, last week we were talking about your bed, bath, and beyond put options. Let's hear how you did. So yeah, my thesis was bankruptcy or the decline would take longer to play out than people think. And I wrote puts. I sold puts to someone at 250, a strike of 250,

and I got 25 cents in premium. The puts expired and the stock was trading at about 235, which means I had to buy back shares at 250. They got to go out and buy in the open market at 235. So I lost 15 cents, but I'd gotten 25 cents in premium for riding the put. So I made 10 cents per share. So I actually made money there. It's unusual that it's right in the strike zone there. Usually they keep it all or you have to write a check. But in this instance, I made a small amount of money. How much did you make? I wrote 4,000 contracts or 400,000 shares. So 400,000 times whatever a dime net gain. So I made $40,000.

Two huge transactions are pending in the world of English football. The first is for Manchester United. The club is in talks for a takeover agreement with a group of Qatari investors, including Qatar's Sovereign Wealth Fund. That's the Qatar Investment Authority. Manchester United, which is a publicly traded company, saw its stock rise more than 5% on that news. Meanwhile, Tottenham Hotspur is also facing a potential sale. Iranian-American billionaire Jam Najafi is making a $3.75 billion bid that would value the club's equity at $3 billion and add $750 million in debt to its books.

Najafi will provide 70% of that financing, and the rest will be taken care of by Gulf state investors again, mainly from Abu Dhabi. So Scott, it feels like every billionaire wants to buy a Premier League club these days, especially investors from the US and the Gulf. Last year, Todd Bowley bought Chelsea, Bill Foley bought Bournemouth, and there are even rumors that Liverpool is in talks to be sold at the moment. So what is with this new billionaire obsession with football? So my neighbor down in Florida purchased the Houston Rockets, I think, for $200 million in the early 90s and sold them two or three years ago for $2 billion.

These are just, they're the definition of trophy assets. They don't really produce income. You hope to break even. All the money that you get from TV, from ticket sales, you pour back onto the floor of the ice, and that is you spend it on the players. Except for, I think, the Maple Leafs, who have figured out that everyone in Canada will watch the Leafs regardless of how good they are. So the owner there doesn't spend because it doesn't matter. They continue to show up and watch the games. But anyways, these assets keep going up in value. There's also a huge non-economic return.

And that is, for lack of a better term, sports washing. Roman Abramovich, whose reputation globally obviously took a big hit during the Russian invasion of Ukraine and for being what people thought was a close ally of Putin. But if you talk to Chelsea fans, they feel pretty good about him. They thought he was a great owner. And the Gulf's association, support, investment in football has a halo effect. And I would argue a really positive halo effect. And while Qatar hosting the World Cup raised some important issues and brought some attention to the region that was probably unwelcome in some instances for them, this isn't anything new. The Gulf has figured this out. Abu Dhabi purchased Man City in 2008

for $360 million. By the way, that's probably worth a couple billion now. Doha purchased Paris Saint-Germain PSG for $170 million. And since then, the UAE and Qatar have invested a combined $2.5 billion to improve their teams. Egypt's billionaire businessman, Nassif Sawiris, I think I'm saying that correctly, bought Aston Villa. Saudi Arabia's Prince Abdullah bought Sheffield United. Most recently, the Saudi government wealth fund purchased Newcastle for $405 million. And then it even goes down to the sponsorship. Qatar Airways pays between $5 and $10 million a year to sponsor PSG jerseys. I would argue that's the best deal in branding.

Emirates, not to be outdone, the best airline in the world in my vision, maybe other than Qatar, sponsors Real Madrid for an estimated $75 million a year, and Arsenal for $56 million, and then also an unknown sum for AC Milan. So word is out. I mean, the most powerful people in the Gulf have basically said, our brand strategy can be described in one word, football. And so these, for lack of a better term, what they're called, these oil teams, it's a great investment for the region. It makes them feel softer, more benign, more relatable. They're known as very good owners, mostly because they spend and they're very focused on winning, but they're seen as good organizations to work for. So if you have

an asset that's going to go up in value, maybe a break even, maybe you don't, you'll probably lose some money. I mean, Todd Boley is spending crazy money, including the young player of the World Cup, this Argentinian kid, but he's spending a ton. And it's also this amazing kid out of Ukraine. Anyway, enough about Chelsea. But if you have an asset that continues to go up in value, I mean, occasionally there's a cycle where it goes down for a few years, but generally speaking, this is beachfront real estate. If you're willing to hold it for a decade, you're going to sell it for more than you bought it. You get huge PR, ROI, huge goodwill across the whole region. And the bottom line is, it's probably a shit ton of fun. It's a great answer in a bar. What do you do? Oh, I own Chelsea. I mean, that's just a good rap. That's just a good rap ad. Don't you think that there's a,

I mean, you often talk about boring is sexy and this is the sexiest thing of all time. And to me, it feels like these guys are coming in and they're buying these companies largely because of those PR incentives and the incentives of it being extremely fun and cool and being able to say that you own Chelsea. But would you ever personally invest in a sports team?

I feel like it doesn't really foot with your boring is sexy thesis. So I called the banker handling the Chelsea transaction and said, I would like to be a small investor with the investor group. I want to go to the games. I want to take my sons. I think it'd be fun to say I'm an owner. I'm a narcissist and going through a midlife crisis that'll last about

another 30 or 40 years. And I gave this pitch. I'm like, I'll help with technology. I understand NFTs. I'll blah, blah, blah. And the banker, super smart guy goes, Scott, why on earth would you do that? You'd be dead equity. These guys control the team. They're not really financial buyers. They know not really financial buyers. They know they'll make money eventually, but that's probably not why they're doing this for the love of the sport. And so I said, okay, that doesn't make sense. But the analogy I would use is that a fat home on the beach, like beachfront real estate. And imagine you were really social and had business associates come over for meetings. First off, you want to go where other people can't. You're taking advantage of the fact there's just a limited number of

people that can plunk down billions of dollars for an asset that's not going to produce any money. Just as there's just a limited amount of beachfront real estate and a limited number of people who can afford it, it's good for your brand. People are impressed. It's really rewarding emotionally. There's huge psychic return to living on the beach or owning a football team. And two, over time, there are a few assets like beachfront real estate or sports teams that more reliably go up over the medium and long term. But you also have kind of a winner take most environment here. You know, you just go down one or two leagues and the value drops dramatically. But my plan has always been if I have a next big or another, or I would say a much bigger

exit at some point, I am absolutely going to buy 20 or 30% of Rangers. Their market cap, I think, is 130 million pounds. So I've put together an investment group of other sort of famous Scots and go in and do some sort of convertible preferred vehicle and then go to Rangers games. And they will love me. They will love me. Okay, we'll be right back after a quick break with a look at Bing's AI capabilities. Hello, I'm Esther Perel, psychotherapist and host of the podcast, Where Should We Begin, which delves into the multiple layers of relationships, mostly romantic. But in this special series, I focus on our relationships with our colleagues,

business partners, and managers. Listen in as I talk to co-workers facing their own challenges with one another and get the real work done. Tune into Housework, a special series from Where Should We Begin, sponsored by Clayview. So what is enterprise software anyway? What is productivity software? How will AI affect both? And how are these tools changing the way we use our computers to make stuff, communicate, and plan for the future? In this three-part special series, Decoder is surveying the IT landscape presented by AWS. Check it out wherever you get your podcasts. We're back with ProfgMarkets. Microsoft recently announced a new AI-powered version of its search engine, Bing.

We discussed that news and its implications on our previous episode, but that was before we'd gotten a chance to try it out. This week, Bing finally took us off the wait list. So let's bring in our editor-in-chief, Jason Stavros, to discuss whether Bing 2.0 is really worth the hype. Jason, how has your Bing experience been so far? Well, Ed, I think my first impression was it's kind of complicated and a little overwhelming. And you get through that pretty quickly, but I'm not sure that's the best first use experience for a new technology. But what you have with Bing 2.0 is you have ChatGPT,

which I think everybody's pretty familiar with, except that it's now been bolted onto a search engine. So it's got more options in how it can communicate with you. And, and this is the really big difference, it can access the internet. With access to the outside internet, Bing can answer a lot more questions than ChatGPT ever could. The thing is, that also means there's a lot more going on. And so, you know, my experience with search has been that there was originally sort of Google, and it gave you the 10 blue links. And that's pretty useful. And for a lot of things, that's exactly what you want. But as the internet gets fuller and fuller of stuff

and we use it for more and more things, we come to Google or any search engine with a lot more different kinds of questions that want a lot of different kinds of answers. And so I think the idea behind AI is that it can sort of route you to the right kind of response as much as to the right response itself. So the chat interface is just one more thing, like in addition to the box of

similar questions and the little column of Wikipedia entries and all the other stuff they've cluttered up the homepage with, now we also have the chat interface. The way Bing is installed, it is that it doesn't immediately come onto your page. Sometimes there's a box that has the results of the AI. Sometimes there's a little tag that says basically, would you like to ask the AI? And you can always either swipe or click this button that brings you into a much more of a ChatGPT chatbot type environment. Another big thing about it is that people are doing the same things with Bing that they did with ChatGPT.

They're trying to break it or get it to do weird stuff. And what's really interesting is that it does do weird stuff, but it's doing different weird stuff than ChatGPT did, right? It almost has a different personality. So Kevin Roos of the New York Times, Ben Thompson have written some interesting pieces in the last week where they've gotten the chatbot piece of Bing to because these technologies, these large language models, even their designers don't really know how they work in the sense that they don't know what kind of result they're going to get, right? It's not that formulaic.

And how the model is processing the information is it's not quite a black box, but it's sort of a difficult to see into box. And I got to believe that getting millions and millions of people, many of whom are very creative, but it's sort of a difficult to see into box. And I got to believe that getting millions and millions of people, many of whom are very creative, trying their best to sort of manipulate the system is giving the developers of the system a tremendous amount of data and also qualitative insights. And that's an advantage that Microsoft has, Google will have, but that startups in this

space will not have, right? OpenAI was able to break through and reach a lot of people. But the sixth, seventh, eighth, ninth large language model that comes online as a chatbot is not going to get anywhere this kind of pickup. This is something that you need scale to do to evolve these models and something that only a few players, Microsoft, Google, Apple, Amazon, have the kind of built-in scale that they can leverage. So to your earlier point, one of the issues is that it's crawling the entire internet and we can't necessarily trust everything that's on the internet. Did you trust the answers it was giving you? Well, a lot of what it does is it kind of regurgitates back to you websites that it found.

And you're kind of relying on those websites. It has returned some stuff to me that was clearly just clickbait stuff and not very useful stuff. But one thing that's fascinating is that just yesterday, I did some searches that I could show you and say, look, this is where it got something wrong. This is where it did something that confused it. And when I went to do those searches again this morning, but using a screen recorder, so we could use it for the YouTube and everything else, the answers that it gave me back were actually much better. And so some of the things that I'd found that it was doing wrong, it had already fixed. So Microsoft is clearly iterating this thing really, really quickly. Right now, I don't really trust Bing because, for example, I asked it about, give me the numbers that I need to use to adjust

historical dollars to current dollars. I've asked it that question three times now, and I've gotten three different sets of numbers each time. So what kind of queries would you prefer to use the chat bot for versus the normal search bar that we're used to? Like, why would you use Bing AI versus regular Bing? Part of the problem is that you have to ask me that question. And Bing doesn't just figure it out on its own, right? So they're offloading a lot of this very important navigational stuff to the user, because now I have to decide, do I want to use the chat interface or just the traditional search results, which are pretty cluttered and busy? So one of the challenges I think that Bing AI has is it has to do better than the search page, right? Or why are you using this chat function? But I think there are situations where that might

just be a better interface. So for example, like if it's through like Siri or Google Assistant, and you want to speak your question, then the AI needs to be able to take what's in those links and say it back to you. And so I had a bit of an experience this morning that I thought was pretty relevant, which is as I came into my studio to sit down and do this recording, I looked out the window and there was a turkey on my neighbor's roof. So I asked Bing AI, how do I get a turkey off the roof? And it did a pretty good job. The chat function first asked me if I was sure I had a turkey or was it maybe a turkey vulture, to which I thought, I think I know the difference, a turkey and a turkey vulture, bing. And then I thought about it and I was like,

I'm not actually sure that I do. So I asked it to show me a picture of a turkey vulture and it gave me a link. It won't actually put the picture in the chat. I imagine that'll come soon, but it did give me a link. And I confirmed I definitely had an actual turkey on my neighbor's roof. And then it gave me, I guess, you know, I don't know, the advice is particularly groundbreaking. Spray it with a hose, yell at it, keep some food away from it

so it doesn't have a reason to go on your roof. All makes sense. But then somewhat more usefully, it said, and if you still need to get the turkey off your roof, call a wildlife control or pest control. It gave me three actual phone numbers. And I checked, these are real places for the city's wildlife control and two private groups and even, you know, place them on a map, all of which you could get on the regular Bing

page or the Google page. And in fact, it might even be quicker if you were on your screen. But I was thinking if I was just on my phone and I was standing outside and I had some issue I wanted to resolve, like get this turkey off my neighbor's roof, that there's a lot of advantages to being able to do it through this chat system, which would work a lot better if it was speaking. So Scott, what do you think? Do you think there's a demand for Bing? Do you think people want more ways to search? So a couple observations here. Microsoft claims it can add $2 billion in incremental revenue for every 1% market share it gains from Google in the search market. And right now, Microsoft trades at

a 10 times revenue multiple, meaning that every percent or every percentage point of share it can take from Google, it's probably going to translate to $20 billion in market capitalization. I mean, that's just striking. The other thing that really, that I think we're missing here, or the power, if you will, from a consumer standpoint, is that, and Sheena Iyengar said something that's always stuck with me. She's a professor at Columbia Business School. The consumers don't want more choice. They want to be more confident in choices presented. The ultimate merchandising and selection is you are presented with the one best choice. And that's what ChatGPT is trying to do. It's trying to zig, whereas the incentives have sent Google zagging, specifically giving you dozens of answers that you then have to perform your own diligence on

as you slowly but surely no longer trust Google to take you to the right place because oftentimes they take you to the place they can further monetize. And what chat GPT and AI is trying to do is saying, you know what, we're going to attempt to give you the best choice. And consumers love that, especially retail. Huge business is based on less choice. You don't want a thousand toasters. You want someone with better taste than you to pick the right two or three toasters. You don't want to assemble an outfit at JCPenney's or Sears or even at Macy's. You want to go into free people and know that that merchant has much better taste than you, is much cooler than you, and you can have relative certainty that if you select something,

it's going to kind of be in that vein and you're going to look good. So choice is a bad thing. Choice is a tax on consumers. So full disclosure, I use Bing, but I'm only one of 3%. So we wanted to find out if other people in New York are using Bing. And if so, what are they using it for? Let's go to Mia on the street. The question is, what search engine do you use and why? I use Google. Mostly, I would say just because it's like built into the search bar. So I don't really think about it. If like Bing had been built in there, that's probably what I would use as well. Usually Google. Google. Have you ever used Bing? I, no. No, no, like I don't know anybody that's like Bing is like my thing like that's what I like to do. New slogan, Bing is my thing. With that said, I was actually talking to a friend about this

recently and I feel like the quality of Google search results has kind of gone down where I feel like now I have to use quotation marks and dashes to actually find what I'm looking for. Have you ever used Bing? I have on my grandma's laptop. I do use Bing on one of my devices. I just don't want to be tracked. You feel that Bing has better privacy than Google?

Oh, that's a good question. It's more so that Google knows so much about me already that I kind of want to disrupt that. I feel like the times I tried to use it, it didn't make sense to me. Maybe that's just like I'm projecting, but... No, I kind of feel the same way actually. Yeah, it feels like I'm betraying a partner. Yeah, yeah.

I'm cheating on Google. I'm going to be really boring. I mainly just use Google. It is simple, easy. I'm probably relatively mainstream in what I'm searching for, so it does the job. I have a Google Pixel phone. So now I've moved to a point in my life

where I used to use Google to organise my life and now I feel like Google organises mine. Don't know how I feel about it fully, so I basically don't really think about it too much. If you're using the AI assisted Bing search, what would you ideally want it to be able to do for you? Make reservations, I'd want it to call for appointments, braid my hair, I don't know. Like something like Amazon for example, if I go on to try to find something and there's a thousand products that are all kind of essentially identical,

like it'd be nice if the AI search could help say, oh, you know, because I know you and I know your preferences, I know that maybe you'd like something like this, which like that also raises a lot of like data privacy issues, which is kind of another interesting thought, but. Yeah, honestly, I don't have an answer and honestly that kind of freaks me out.

I think I would want that search to give me recommendations for things that I'm troubleshooting at work. So not necessarily like I know how to find something with Google and Bing, I know exactly what terms to use, but if I'm brainstorming something, like a solution to a problem and I don't know what to search for, that's what I would want to use Bing search for. I'm pretty happy with my search needs. Like right now they're being met, so I'm kind of not. My girlfriend kind of uses ChatGPT sometimes. I think it like came up with an email response for her, which was kind of cool. That's useful. Yeah. Some people get really

anxious about writing emails. All right. That's it. Thank you very much. That was great. Okay. Let's take a look at the week ahead. We'll see the minutes from the latest Federal Open Markets Committee meeting, which investors use to try and interpret the trajectory of interest rate hikes. Minutes typically hold granular economic data as well as insights on the Fed members' decision-making process. We'll also see revised fourth quarter GDP data, new and existing home sales for January, and the personal consumption expenditures index. Again, that's the Fed's preferred measure of inflation. Meanwhile, Walmart, Home Depot, Nvidia, Baidu, Alibaba, Warner Brothers Discovery, and Berkshire Hathaway will all be reporting their earnings.

Scott, do you have any predictions? So my prediction, Ed, is that I see the results of the companies I'm working with. They're actually doing quite well. It looks like they bottomed out in Q3 and Q4, and they're starting to bounce back. And they bounce back after having gotten in fighting shape, which means that if there's a return to growth, that growth comes over or washes over a lower cost structure, which should make that renewed growth more profitable. Now, what does that all bubble up to? When I look at Bitcoin at $24,000, to me, that says risk on is coming back. I think the companies have been agile,

burnt some of the brush away, shed some of the fat. And I think Q2, Q3, we're going to see the beginnings of the return of the IPO market. And we're going to see some, not only some IPOs, of which there's been almost none, but we're going to see some big first day gains in the IPO market. So my prediction is Q3, Q4 of this year, the IPO market returns and we see some really significant first day pops. That's all for this episode. Our producers are Claire Miller and Jason Stavers. Benjamin Spencer is our engineer and Drew Burrows is our technical director. Special thanks to Catherine Dillon and Mia Silverio. If you like what you heard, please follow, download and subscribe.

Thank you for listening to Property Markets from the Vox Media Podcast Network. Join us on Wednesday for office hours to kick off our special series on the future of work. And we'll be back with a fresh take on markets every Monday. You held me In kind Reunion

As the world turns And the dark flies And the dark lies in my mind 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. 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

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