The Prof G Pod with Scott Galloway - Prof G Markets: ByteDance’s Blowout Profit, Kalshi & Events Betting, and Dude Perfect’s Big Deal

Episode Date: April 15, 2024

Scott shares his thoughts on the latest financial figures from ByteDance and discusses if he would buy shares on the secondary market. He then takes a look at a platform for trading on event outcomes that just attracted a big market maker. Finally, Scott and Ed discuss one of the largest deals in YouTube history, and what it says about the creator economy. Pre-order "The Algebra of Wealth" out April 23rd Vote for No Mercy / No Malice in the Webby Awards Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Ready, set, grow. Go to ConstantContact.ca and start your free trial today. Go to ConstantContact.ca for your free trial. ConstantContact.ca This week's number, 22 million. That's how many high school and college paper students turned in last year that used generative AI. True story. I used to complain to my mother that the students were making fun of me for being a virgin.

Her advice? Stop giving them bad grades. Welcome to Prop G Markets, Ed. Today, we're discussing growth at ByteDance, trading on event outcomes, and a big investment in the creator economy. By the way, Ed was nominated, got an honorable mention for best co-host. That's right. Which at the age of 15 is pretty recent birthday. At the age of 15 is pretty exciting.

So congratulations, Ed. Thank you. I think it was for both of us. I got more awards than prostate-itis. I don't need this shit. I love the affirmation, but I was more excited, as you can tell. Well, I'm just trying to signal that I'm humble. So yeah. Have you dropped that line in bars yet? I've been nominated for an honorable mention for best co-host in the Webby Award. That I was a 2024 Webby honoree.

No, I need to try that sometime. It's probably going to be really successful. That's an express train to virginity. How was your vacation? It was good. Thanks for asking egypt was it's just one of those trips where i enjoy it more after and that is i know just at some point in our lives we're going to be really we're just going to love looking at those pictures and remembering how you know we were floating down the nile and all that good stuff so that was a good family trip and then i did a trip to israel on my. That was much heavier, as you can imagine, but more meaningful.

Tel Aviv is an amazing city. I would describe Tel Aviv as kind of Berlin, but good weather on the beach. It's a very cool city. So I really enjoyed Tel Aviv, the food, the people. And then I went to the Gaza envelope and toured Kibbutz Farazah, which is one of the 22 kibbutzes that was attacked on October the 7th. Obviously, that was very deep and heavy, but I'm glad I went. But yeah, glad to be home. And I head to Vancouver on Tuesday, where I meet Greg Shove, the CEO of Section, and Prof. G analyst Mia Silverio at TED. And I'm doing a talk called The War on the Young,

which I'm excited about. And then I go to New York for the launch of the book, a lot of book promotion, a lot of book parties. I don't know if those things work, but it'll be fun. Although we're number one, someone said we're number one in new releases in wealth management. I don't know what that means. Please buy our book. If you buy our book and post it on social, this is not a joke. We'll donate 50 bucks to Charity Water, which I love, bringing potable water to Sub-Saharan Africa. But please buy our book because, Ed, I got to figure out a way to get Ed up to $9.25 an hour. All right, get to the headlines, Ed.

Let's start with our weekly review of Market Vitals. The S&P 500 declined, the dollar rose, Bitcoin dropped, and the yield on 10-year treasuries jumped. Shifting to the headlines. The Consumer Price Index showed inflation rose 3.5% in March from a year earlier. That's slightly stronger than expected and higher than last month. The lingering pressure of inflation has derailed hopes of a rate cut in June, and investors are now expecting the first cut in the late summer or early fall. Gold hit a record high, up more than 16% year over year. Central banks are driving the surge

as they strengthen their reserves, and China just purchased gold for the 17th month in a row to reduce its dependence on the US dollar. Apple doubled its iPhone production in India last year, assembling $14 billion worth of the product in the country. One in seven iPhones are now made in India, though China does remain the largest manufacturer. Nelson Peltz lost his bid for a board seat in his proxy battle at Disney after receiving only 31% of the vote. Shareholders voted to re-elect the full board, also rejecting Pelts' other nominee, Jay Rasulo, who received only 12% of the vote. And finally, the Justice Department is investigating whether AI companies could

be violating antitrust laws. The DOJ is specifically looking into competitors sharing board members, a practice that the Biden administration is increasingly cracking down on. Scott, your thoughts? So in order, consumer price index, I got this wrong. I thought inflation was going to crash in 2024, and it's stickier than people think, which is sort of interesting, although the markets don't seem to mind it so far. The thing about gold, I've never understood gold. I guess in a high interest rate environment, although this isn't arguably a high interest rate, it's just what you would call historically a normal interest rate environment, gold surge is somewhat befuddling to me. I guess

it's a hedge against inflation. It does have some use cases. I wonder if it plays into an increasing conspiracy economy, and that is because of an attention economy where you get to monetize attention and novelty slash conspiracy slash dis and misinformation is just, there's just more economic value in it. That gold plays into that, that if you're worried about the zombie apocalypse or the dollar losing all value, according to every Bitcoin bull that you think, oh, a safe hedge would be gold. It's sort of like, it feels very survivalist to me, but the news says that it's central banks investing in gold, I guess, because they want to get out of fiat. Any thoughts on the CPI or gold?

Yeah, I mean, I'm with you on gold. I feel like people have been predicting the end of the dollar for years, at least four decades. And that's always been part of the narrative with gold of why we need to buy gold. But that's just never come even close to happening. I mean, you look at the dollar today, the US dollar accounts for more than 60% of all global currency reserves. And then the next best option is the euro, which is at 20%. So it's not even close. And now, you know, a lot of people will say, well, you know, the dollar is declining, it's on a downward trajectory, which if you look at the past 10 or so years, that's true. But if you zoom out to a reasonable timeframe, like if you look back to the 90s, it's actually increasing in usage. So in 1990, the dollar made up less than

50% of global reserves. So I think this obsession with gold and with crypto, by the way, is largely being driven by this narrative that's very fun to indulge in. It's exciting to think about what the world would look like if it collapsed and how the US is going to fall and how we're all going to be living in bunkers and bartering with gold coins. But there's just no plausible data that actually supports that narrative. Yeah, it's weird, though. So, you know, my favorite thing in the world is my favorite physical object. I was going to say a dog, but...

Well, that's not a physical thing. That's an animated thing. Yes, those are my favorite things. They just beat out my sons. But my favorite inanimate things are one, my favorite object is I have a Ramoa piece of luggage that I absolutely love. But more than anything, I just fucking love money. And what do I mean by that? I love hard cash and I love rolling around with Benjamins and I love paying with cash. I love the way it feels. I love the way it looks.

I think a lot of it is deep-rooted scarring. When I was in college, I remember going into the bank, not the ATM, because the ATM only issued $20 bills and I needed $10 and I had like $38 in my checking account. So now it's just such a luxury to roll around like a mobster with just a big wad of cash. And I just absolutely love fiat currencies. The tweet that's got the most retweets of any tweet I ever, or any, whatever you call it, Twitter, Twitter X, was when I said, I'm doubling down on the ultimate, this is the idiot we want to take down. Apple arguably has the best supply chain in the world, number one consumer products company in the world. And Tim Cook comes out of supply chain. Their ability to pull together $500 worth of sensors and chipsets and sell it for $1,100 to $1,300 is unprecedented. The iPhone creates more profits than any company

in history. It's the margins of Ferrari with the production volumes of Toyota. And it's a supply chain story, you would argue, even verticalization down into their stores. And what's happened over the last few years since COVID is up until COVID, the entire supply chain strategy was optimized for efficiency, which is Latin for cost. But what you've had since COVID was we realized there was absolutely no slack in the supply chain. It had been so optimized that if the cheapest place to produce tops for a specialty retailer was in Shenzhen, 90% of our tops were coming there. And then if a virus jumps the lab and they shut down this region overnight or within two weeks, your 550 specialty retailers

don't have tops. And there's no way to replicate that or replace that production quickly. And so you've got to think that Apple is scared shitless about their dependence on their supply chain in China and the geopolitical risks that presents. So this is an example of them scrambling to diversify as quickly as possible. I would bet they would literally veto anything that is an incremental dollar going into China on the back end, not on the front end. You want to spend more marketing on the Chinese consumers such that they maintain that desire and demand for our products? Fine. But anything around the back end, the rest of corporate America has woken up and said that the homogeneity of our supply chain is a risk.

And we saw how damaging that can be during COVID. Nelson Peltz, kind of sick of talking about it. This was our prediction, that if it goes to a board meeting, if it goes to an annual meeting, it means the incumbents are going to win. I don't think Nelson's ever going to go on the board because I think the stock's going to go up. And the great thing about being an activist is that if the stock doesn't go up, you get on the board and you can show what a big swinging dick you are and show up and be disruptive or you win, so to speak. You win board seats. But how you really win is you lose because the stock keeps going up and then you sell your position. You make a shit ton of money and your investors want to put more money and you get to hang out in Florida where Nelson hangs out. So my prediction moving forward is that Nelson is

never going to get a board seat because the stock's going to continue to go up and investors don't kick out incumbent board members as long as the stock is going up. And then the Justice Department investigating whether AI companies could be violating any trust laws around shared board members. I think that's really interesting. And that you pointed this out, that AI is more consolidated than we think. And what you've seen around like this open AI kind of jujitsu move, where Microsoft effectively controls it, but never really acquired it, thereby not triggering an antitrust review by the FTC or the DOJ, that all of these kind of investment deals, and you pointed out that Microsoft is in three of the five biggest ones or something, sure that companies aren't coordinating with each other. It's sort of saying, like Steve Jobs, I guess Eric Schmidt, I think Eric Schmidt used to be on Apple's board? That's right. He stepped down in 2009. And once Google decided they were in the handset business or the Android business, Steve Jobs was like, I don't need Eric Schmidt knowing what our plans are. But if they're coordinating, if they both have similar investors, that's bad for competition because effectively it goes from five companies to two or three because they kind of wink at each other and go, okay, we're going to take this part of AI, you take that part of AI. What are your thoughts on that? What's very interesting now is that, you know, this is a law that it's technically called interlocking directorates. It's a law

that's been around for a hundred years. It's barely been enforced until about two years ago when the Biden administration started cracking down on it. And since then we've seen around 25 public companies whose directors have stepped down from the board. Now, they're also targeting boards that have indirect relationships with each other. So just as an example, there's this software company called SolarWinds Corp. Three directors had to step down, not because they served on the board of a direct competitor,

but because they were affiliated with a private equity firm that was invested in a direct competitor. The private equity firm was Toma Bravo. They were invested in Dynatrace. So in other words, the Biden administration set a precedent, which is you can't advise a company and at the same time advise a firm that has a financial interest in that company. This is everywhere in AI. Right off the bat, I can name you three illegal board positions in AI right now. Name them, you high IQ bitch nominated for best co-host. Name them.

I'm calling your bluff. Name them. Microsoft. Microsoft is on the board of OpenAI. It's, you know, they say it's a non-voting board seat, but that's still a board seat. And Microsoft is also an investor in Mistral and Inflection, which are both AI companies that directly compete with OpenAI. That's one right there. Another one is Reid Hoffman. Reid Hoffman's on the board of Microsoft.

He's also a co-founder of Inflection. Brett Taylor, he's a chairman of the board of OpenAI. He's also on the board of Salesforce, which is an investor in Anthropic and Mistral. All I can think is, what's going to happen when the DOJ launches a full-fledged investigation into this thing, because I would bet that no AI company is safe. And, you know, this hasn't gotten that much media attention, but I'm with you. I think this is probably the most important headline in this episode because this affects everyone in big tech. Occasionally you stumble upon insight and this is a big stumble for you. You're absolutely right. I mean, and that is really insightful.

And I didn't, you articulated much better than I could because all the companies you mentioned should be going at it, going at full body contact violence towards each other. Trying to come up with ways to give the New York Times more money such that they can crawl the New York Times and no one else can. But by virtue of the fact they're down with sharing board members, that means they're coordinating. That means that they're cooperating, coordinating and cooperating with each other, which is exactly anti-competitive. And when you talk about a concentration in wealth, and when you talk about an industry that is now worth more than almost any other industry other than maybe software, there's trouble in Mudville. This is total bullshit. I love the framing you put it through, and it absolutely should be an early and often hardcore investigation by the DOJ and the FTC. And the idea that this technology, this powerful,

is coming out of the gate so concentrated with a lack of competition is frightening. We'll be right back after the break with a look at ByteDance. We're back with ProfitG Markets. ByteDance grew its profits 60% year over year in 2023, registering $40 billion in EBITDA. The TikTok owner also increased revenue 50% to $120 billion. Now, we should note these are internal figures,

and they aren't independently audited. But if they're accurate, then ByteDance has surpassed its rival Tencent in both profit and revenue for the first time ever. It's also catching up to Meta, which brought in nearly $135 billion in revenue last year. So, Scott, ByteDance is killing it in the face of its greatest existential threat thus far, which is a potential TikTok ban or sale in the U.S. What do you make of these results? What's really interesting here is that arguably, I would argue, ByteDance is the most undervalued company in the world.S. What do you make of these results? What's really interesting here is that arguably,

I would argue ByteDance is the most undervalued company in the world right now. So EBITDA of $40 billion. And my understanding is, although there are some restrictions around who can sell stock, the board has to approve a stock sale. But my understanding is in the secondary market, the company is being valued at $250 billion. In other words, the company offered to buy back shares from employees at $250 billion. So that's the mark. With EBITDA of $40 billion, that means that the enterprise value to EBITDA on ByteDance right now is six times now versus Tencent, which is 12 times, which isn't growing nearly as fast. Alphabet, amazing company, 20 times. And Meta is 22 times. So the cloud cover, the illiquidity of the stock in the cloud of the geopolitical tensions between

the U.S. and China make ByteDance, I would argue, the most undervalued company in the world right now. Why? Well, Scott, what if it gets banned in the U.S.? No, it's not going to get banned. It's going to be divested. There's too much. My general go-to around any dispute in business is simple. Money wins. Look where the most money would end up in people's pockets. And whatever that course of action is will be the course of action that that company, not their concern for teens, not whether they spend or don't spend, just say, okay, where is the money? Money wins. And the amount of money these guys are going to make once this

cloud cover is removed and they can hold onto the market by divesting it or coming to some sort of accommodation, which they could with the White House, is going to send the value of these shares skyrocketing. But six times, I mean, you're talking about, I think, Ford and General Motors, you know, does these sleeping industries trade at this multiple? Just on the secondary markets, I mean, it is a little confusing because according to employees, they've been restricted from selling their shares. And there was this whole FT article about this that we were discussing. At the same time, I've also seen articles that investors have been selling on the secondary markets. Granted, they're struggling because there are so few willing buyers right now, but it appears that

some have sold. And in addition, I went on some of these secondary market platforms like EquityZen and Forge Global, and indeed ByteDance is listed as a tradable company there. So it's not totally clear, but it appears that in some situations you can sell on the secondary markets, but there are some restrictions on employees. Given all that, and considering the multiples that you just referenced, six versus 22 for Meta,

say some secondary markets broker approached you with an offer to buy the shares at the previous valuation, which was $268 billion. Would you consider it? In a heartbeat, yeah. I mean, my biggest wins have been running into the fire, buying companies with big addressable markets that for whatever reason, bad cap structure, some sort of cyclical trend, or in this case, a geopolitical overhang, have really impacted the stock. Because A, it's a global company. I think it's worth more than $250 billion even without the U.S. market. And then right now, you get to buy TikTok at six times. I think this is an unbelievable opportunity. I would have to go through the mental anguish of

pretending I give a flying fuck about politics and morality. And then at the end of the day, I mean, I could not get over, and we're on record, what a screaming buy meta was in late 2022. And we said it over and over. Stock pick of the year. It was trading at six times, Oswalt to Motor. It's just like, it's sitting on a cash volcano. And I didn't buy it because people have, you know, I've been shamed on social for, okay, okay, you constantly shitpost this company, you're going to buy it. My advice to people is like, look, to young people especially, I get it. If you want to take a stand, good for you.

But your first obligation is to develop economic security for you and your family in a capitalist society. So vote for people that regulate these companies, but, you know, do what you need to do to get economic security.

In other words, Daddy's going to load up on the tick and the tock. I can't wait to get all of the shit next week. Would you buy it? Would you buy it? Oh, yeah.

Yeah. That's because you're a closet Republican. Total closet Republican. Wall Street is beginning to take interest in an untraditional asset class, event contracts. What is an event contract? Well, essentially, it allows you to bet on the outcome of anything. For example, the chance of a rate cut by June, or whether Congress will force the sale of TikTok, or what the highest temperature in Miami will be today, or how many Oscars June Part 2 will win.

The most popular destination for these kinds of transactions is a platform called Kalshi. Kalshi was the first company to receive regulatory approval on event contracts, and it recently inked a deal with Susquehanna, one of the biggest market makers in the world. Susquehanna is now setting up a trading desk for Kalshi's event contracts, which will strengthen liquidity in this new market. Scott, you're in the business of making predictions, but how do you feel about betting on them? First off, I think they should be allowed to do it. I don't like to infantilize people. People want to bet on stuff. 85% of the people that do this are going to be fine and enjoy it. This is not investing. Investing is an opportunity to buy a company and kind of everybody wins.

It's not a zero-sum game. If the population keeps growing and technology and innovation bring productivity up, the entire global economy should grow, meaning that the value of an asset that you have ownership stake in via a share of stock goes up and there's no loser there. This is you're betting against a counterparty and someone wins and someone loses. This is gambling and the house takes a small cut. This is gambling. This is speculation. People have the right to gamble. I like to gamble. I enjoy it. I see it as consumption. I expect to lose everything I go down to the casino floor with. What I hate about this economy is that our instincts haven't caught up to the frictionless access to gambling of a smartphone. And that is when you have Kevin Hart and Charles Barkley

telling you that this is fun and you're smart and you have insight into the Kansas City Chiefs, I worry that young men who are bored, looking for a dope ahead, who don't have a lot of economic prospects, don't have the guardrails of friendships or a romantic partner, just start gambling a lot. And this is another opportunity to gamble. So, you know, I don't like it. I don't know what you do about it. I think you just have to educate young men and young people on their brains and why we are risk aggressive and that 15% of people who are men who gamble, it becomes a problem for, and it has the highest suicide rate, you know, all that good stuff. But I mean, I guess the good news is it's not like riding options. You can't lose more than you bet. They say it hedges your

risk. That's bullshit. This is pure Robin Hood pretending to be investing and it's just gambling. I think it's innovative and interesting. I think it'll probably do well, but I don't know. What should we bet on here? Not that I'm above betting. What should we bet on? I don't think we should bet on any of this, to be honest. I'm certainly not going to. Are you putting the money up? Sure. I'll put up some hard cash. What is it? Okay. What are the things we could bet on here? Will the child tax credit be passed before Election Day? Cost for yes, 73 cents. Cost for no, 31 cents. I guess that means you get a dollar back if you've spent 73 cents. Oh, so the market, their market believes the child tax credit will be paid. It's sort of interesting from a data perspective because the wisdom of crowds is pretty interesting. Will chat GPT-5 be revealed this year? 82 cents to get a dollar. In other words, yes. The market thinks there's a four and five chance. 19 cents, no. Tesla robotaxi revealed on time. 61 cents for yes. 44 cents for no. That's the one I would take. I would go no on that because I think the jazz hands of Elon Musk are the size of a Tyrannosaurus's

Rex's, although Tyrannosaurus Rex has small hands. They have small, tiny hands. Small, itty-bitty Tyrannosaurus Rex hands. Deadpool 3 Rotten Tomatoes score above 84. I love Ryan Reynolds. Do you know people think I look like Ryan Reynolds, but they say- I did know that, yeah. You've mentioned it maybe 10 times, I want to say. After the fire. That's my favorite part. After he is maimed. I look like

post-fire Ryan Reynolds. We'll make a bet. We should make a bet. We'll bet that Deadpool 3 Rotten Tomatoes is above 84. So we have to spend 60 cents to get a buck back. And I'm going to say that the RoboTaxi, the Tesla RoboTaxi, will not be revealed on time, although we should look into that. Anyways, you know, we need Mia Silverio. She's our chief investment officer. What do you think? Well, I think the point that you make about the wisdom of crowds is an important one. And I think that's the argument that you'd have in favor of having something like this. Because for the longest time, the CFTC said no to these types of event contract markets, because their argument, as you said, is this is gambling, it's gaming, there's no economic benefit here. But yeah, I think that there's this informational benefit that we get from

leveraging the wisdom of crowds, which is, you know, if you have a large liquid market where there's money on the line, it can be a great tool for drawing out knowledge from different groups, and then hopefully arriving at the most rational answer and the most rational price. So I think there's an argument here that this could actually be good for us. It could make us smarter. It could help us make better decisions. We'd be more informed. It could lead to a more efficient market. And I understand I'm kind of doing Kalshi's bidding here, but I'm wondering what your response would be to that.

I mean, here's the bottom line, Ed. The way to make a shit ton of money is to tap into a flaw in instincts in an area that is underregulated. Americans spent a record $120 billion on sports betting in 2023. That's up 28% from 2022. This translates into $11 billion in revenue in 2023, or net revenue. That's up 45% year on year. In sum, gaming, other than AI, gaming is growing faster than any business in the world. Gambling, you mean? Yeah, gaming, gambling. Yeah, there you go. And because men are supposed to be more risk aggressive in terms of trying to find hunting and mating opportunities, you end up with this soft tissue in the species. we have the walking dead in DC that doesn't have kids addicted to gaming apps because all their

kids are now 55. I'm telling you that this does not end well. You are going to see, and this will be my prediction, in two to five years, you're going to start to see articles about another reason why male suicide is skyrocketing in the U.S. and is four to one, male to female, is more and more men are killing themselves because they get in too deep, because they got in way over their head, way over their skis because of gambling apps. So what do you do? That's the hard part. I don't think you can infantilize these kids. A certain portion of those revenues does go to gambling education, and gambling education has dramatically risen along with the revenues here.

But I think we got to teach young people in school basic kind of neurochemistry and adulting and basic financial literacy that says, hey, as a young man, you are especially vulnerable. If you want to take a little bit of money and instead of going to the movies or instead of buying a skateboard, you want to do this, fine. But don't think that this is in any way investing and do not, do not gamble money you can't lose. It just discourages the shit out of me that the wealthiest, most resourced, brightest people in the world are trying to figure out how to fuck young people and tap into a flaw in our instincts and an absolute blind spot around regulation. Anyways, that's my TED talk. We'll be right back after the break with a look at one of the biggest deals in YouTuber history. We're back with ProfitGMarkets. A popular YouTube channel called Dude Perfect, known for its viral videos of sports trick shots, has raised more than $100 million from a private investment firm.

Dude Perfect has more than 60 million subscribers on YouTube, putting it in the top 50 most subscribed channels. Now the creators behind it are hoping to use the fresh capital to expand beyond that platform. They want to grow their consumer product offerings, launch a streaming site, and host more live experiences.

They even want to build a theme park. Scott, in terms of financials, the only number we have is their 2022 revenue, which was $25 million. Now, I'm sure it's grown, but for a company that's likely valued at, I don't know, at least $200 to $300 million. They raised on the low end $100 million, on the high end $300 million. $25 million in revenue feels very low. So what do you think this private equity firm, Highmount Capital, sees in Dude Perfect? What they see is the next Mr. Beast. What they see here is an opportunity that the media is headed this way, and they see,

all right, this is the future. This is the next generation Disney that has a flywheel that creates a ton of media. They get some money, but then you can monetize that goodwill and that viewership by getting people to come into the Dude Perfect stores, or maybe I think they're planning a Dude Perfect park or Dude Perfect licensing agreements. It's the Disney flywheel that's trying to be recreated here. And increasingly, I mean, we're talking about this on the call. I was talking to Fareed Zakaria, who was on the podcast. By the way, our last two podcast guests on Prof G have been Fareed Zakaria and Jonathan Haidt, who are the number one and number two bestsellers. And it's clearly because they were on our pod. Let's just be honest. You know, mediocre books,

these guys aren't that credible, but coming on this pod, it's just huge. Anyways, I was talking to Fareed and basically the future of media is if you want to make really big money, you've got to be multi-dimensional or multimedia. And that is, Fareed does an amazing Sunday morning show. He has books. My guess is he will launch a pretty successful podcast. To be mono-medium, it's really hard to make a living because if you're fortunate enough to be really good at podcasting, it's really hard. And the way you make money is that 20 or 30% of your viewers would be willing to give you trial at a low cost in another medium. The same way Disney says, okay, our Star Wars movies, we squeeze that limit as hard as we can, but then we build rides at the parks and then we build

licensing agreements through Hasbro. In other words, you get a huge cost advantage over other stores and over other toy manufacturers because 20%, 30% of your customers from another medium are willing to engage in the new medium at a very low cost. And the same thing is going to happen in media. Your analysis, though, is the right one. And that is at some price, almost every company is a good or a bad investment. And to me, the thing that struck out is that they're raising 100 to 300 million. Typically, typically investors want a quarter to a third of the company, unless it's a private equity firm that's buying the whole thing. Private equity is usually for companies

that are cashflow positive and bigger. This is a growth investment, which means this company is valued at what looks like somewhere between three and $600 million. And the fact that I had 20 million in kind of media sales, I just think I wouldn't get near this if I were an investor. I think it'll be fun to watch, but this to me feels as if they're overpaying. You mentioned this trend in the creator economy where you have these individual creators, whether it's on YouTube or in podcasting or even Instagram and Twitter, where they're going out and they're starting

their own diversified media businesses. Mr. Beast, you know, he's a YouTuber, but now he's launched a company that sells chocolate bars at Walmart, and it's actually been very successful. It has its own burger brand. It even has a non-profit arm to the company. Another example would be Alex Cooper from the Call Her Daddy podcast. You know, she's now launched her own podcast network. And that's, a lot of that is because she just doesn't want to be solely

reliant on her own show. You know, we do that a little bit, I would say to a lesser degree. But I'm wondering if you have any similar ambitions for this company. You know, we're primarily a podcast company, but you're not going to be podcasting forever. Do you have any plans or objectives to build out ProfG into something bigger than the podcast? Maybe a ProfG network, ProfG brands? Do you see us growing into something similar to what Dude Perfect has done? So this is probably a good time to announce the new line of ProfG catheters.

Is your flow not flowing? I quit. I don't want to wreck out this function drug, but that was too easy. I don't know, two-headed glass dildos. I'm trying to think what would really work. What would really work? A line of rum. I don't know, my own edibles.

That would be good. Actually, that's what I should do. I should have a line of edibles. Yes. That would be fun. So this is what we have in all seriousness, we've started getting better at YouTube. We're probably making, I don't know, what are we making? We're not making a lot there right now.

We're barely making money, yeah. Okay. Everything's stuck. A small acorn turns into a giant redwood, young Ed. The books. We have seven-figure-plus contracts for our books. The pods make mid-millions. The newsletter. We haven't monetized yet, but I think we probably will. We're getting inbound interest in advertisers looking at other opportunities like this. The bottom line is, and this is more comes down to personal thing, I mean, there's two ways to pay yourself cash and be profitable and grow kind of slow to medium,

or take capital and try and flip the model and make the compensation for all the people around equity where we try and grow this business for five or 10 years and then sell it to another media company or something like that. But I don't have any plans for branded products. We have been approached, someone, one of the big talent agencies who is in the business of finding people with a profile and connecting them with products who did Kim Kardashian and Spanx called and said, would you do a credit card around saving? And I looked at it and I thought, I don't like the fees here. This kind of goes against what I think. Anyways, so we would consider it, but it's like anything else. It's a matter of focus and bandwidth. Do you have any ideas for us, Ed? Any product extensions? Maybe we should just create a theme park or something.

Just keep it simple. I like that. I like that. A panic room, a room where you go in and you feel anxious, just super fucking anxious and old i'd like that this is angry land this is depressed land yeah yeah i would like to design a thing give you a dose of ketamine at the end there we go ketamine therapy over here passive aggressive rides over here yeah i like thataggressive rides over here. Yeah, I like that. I like that. Good. We've got a plan.

Let's take a look at the week ahead. First quarter earnings season kicks off with the banks. Goldman Sachs, Charles Schwab, Bank of America, Morgan Stanley, and U.S. Bank are all reporting. We'll also see earnings from Netflix, Johnson & Johnson, and Procter & Gamble. Do you have any predictions for us? Well, my prediction was going to be that banks are going to surprise at the upside Netflix, Johnson & Johnson, and Procter & Gamble. Do you have any predictions for us? Well, my prediction was going to be that banks are going to surprise at the upside because everyone was expecting interest rates to come down. And actually, banks benefit from net margin income, and that is they want to loan out money at 7% and they want to give you 3% or 4%. So,

the margin's expanding in a higher interest rate environment and companies. And there's been consolidation. A lot of regional banks have seen outflows to the big banks. So I think that actually the stickiness of inflation and higher interest rates is going to result in an earnings surprise to the upside. But I like the prediction we made real time here, and that is I think in two to three years, we're going to see the externality of the frictionless gambling environment where these companies are preying on the poor instincts or the weak instincts of individuals and the fact that our regulators are so old

that they don't really think about the challenges the young men face. And I think we're going to see, unfortunately, some very negative externalities from an explosion in what is the second fastest growing business in the world right now, and that is online gambling. This episode was produced by Claire Miller and engineered by Benjamin Spencer.

Our executive producers are Jason Stavis and Catherine Dillon. Our associate producers are Jennifer Sanchez and Alison Weiss. Mia Silverio is our research lead and Drew Burrows is our technical director. Thank you for listening to Prof G Markets from the Vox Media Podcast Network.

Join us on Wednesday for office hours and we'll be back with a fresh take on markets every Monday. In kind Reunion As the world turns And the dark lies In love, love, love, love