The Prof G Pod with Scott Galloway - Prof G Markets: OpenAI’s Dev Day, Disney vs. Warner Bros. Discovery, and Uber’s Branding Turnaround

Episode Date: November 13, 2023

Scott shares his thoughts on Uber’s second consecutive quarter of profitability. He then breaks down why Disney had a better quarter than Warner Bros. Discovery, despite facing the same headwinds. Finally, we hear the latest from OpenAI’s developer event and Sam Altman’s keynote address. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. This week's number, 30,000. That's how many pounds of chicken nuggets Tyson recalled after small metal pieces were found in the product. Little piece of trivia, chickens die after having sex. At least all the ones I've had sex with have died. Welcome to Prop G Markets. We're off to a good start, Ed. Did you know, I'm going to try and segue out of this. Did you know there are more birds in captivity than in the wild? That's a true story. This is true because of chickens.

We have so many chickens being raised inhumanely. Yeah, that was a true story. This is true because of chickens. We have so many chickens being raised inhumanely. Yeah, that was a nice segue. Pretty good, right? That was really good. Pretty good. Yeah. New image in my head. I like it.

All right. Let's talk about the markets. This is where people are questioning their decision to tune in today, as they do every day. Go ahead. Talk about the markets. Okay. Let's start with our weekly review of market vitals. The S&P 500 rose, the dollar was stable, Bitcoin hit an 18-month high,

and the yield on 10-year treasuries fell. Shifting to the headlines. Amazon is offering one medical to Prime members for $99 a year, a $100 discount. The e-commerce giant acquired the primary care company in February in a bid to expand its healthcare business. Eli Lilly received FDA approval for a weight loss drug called Zep Bound that costs about 20% less than Novo Nordisk's Wgovy. Investment manager KOTU marked down its stake in NFT marketplace OpenSea. The move suggests OpenSea's valuation has dropped from $13.3 billion in 2022 to just $1.4 billion today. Fast fashion company Shein is targeting a $90 billion valuation as it explores a US IPO.

That's well above private market valuations of $50 to $60 billion marked earlier this year. And finally, chipmaker Arm delivered a disappointing sales forecast in its first earnings report since its IPO. Shares fell 9%. Scott, do you have any reactions? I love One Medical. I think they do a great job.

When I got COVID, I got on with One Medical right, and I said, I have these symptoms. I've just tested. I'm positive. And they said, okay. And I said, I want Paxlovid. And they asked me a bunch of questions. They said, fine. Not only did they get me a prescription, send it into the pharmacy, but they told me which pharmacies had it in stock and sent me instructions on how to walk there. I would describe it as almost like concierge medicine. You know, you hear about these families in Stanford that pay $100,000 a year to have the Nobel Prize-winning pulmonologist come over and make sure the little Becky's cough is

okay. It's sort of the old Navy version of concierge medicine. And I think they do a fantastic job. I'm thrilled that Amazon's in the space. I think healthcare needs kind of an Amazon-like efficiency and cost-cutting approach. So I think that's a great thing. It'll be interesting to see how many people pick up the $100 offering.

Eli Lilly, I love to see this because we've said here that GLP-1 drugs may be bigger than GPT-4, although after seeing OpenAI's developer conference, maybe AI will in fact be bigger. The problem right now with GLP-1 drugs, they're not getting to the right people. And that is, and I love this stat, the region that has the greatest penetration of prescriptions of GLP-1-based drugs is also, ironically, the thinnest region in the world. And that is the Upper East Side. So in sum, right now,

these drugs are essentially getting to rich people who want to lose 15 or 20 pounds. I'm convinced everyone I know is on GLP-1. I see everyone and they're like, you know, they look like their 17-year-old son. And I'm like, are you on GLP-1? They're like, no, I went gluten-free. Yeah, sure you did, boss. Anyways, so what we need is the following. We need prices to come way down, and the way you get prices to come down is through competition. I also think that there's going to be a next generation of drugs, or at least I envision one as my, you know, playing a scientist on TV, that will be marketed under kind of off-label applications. So, for example, they're finding that when people are on these drugs, they drink 60% less alcohol. They don't bite their nails. I think these drugs are going to start being, or some derivative of these drugs,

are going to start being prescribed to people who are spending too much time on social media platforms or too much time watching porn or too much time or have some sort of gambling addiction. So I'm just super excited. I want everyone in this business. I want these prices to come down. CO2's marking down of OpenSea, I got this wrong. I predicted that OpenSea would double in value in 2021, I think I said, because I thought that digital assets would increase in value. And it was inspired by watching my kids buy digital assets. You know, they buy skins and weapons on Fortnite and things like that. But it appears that NFTs are just, I don't want to say they've gone away. Maybe they'll have a rebound, but it doesn't appear. It appears like this market felt

like what a lot of people thought it is, and that is total bullshit. What do you think about this, Ed? Yeah, I thought the craziest number was that, I mean, obviously the valuation's down 90%, but trading volume on the platform since 2022 is down 99%, which leads me to believe that $1.5 billion is still way overvalued. I mean, that can't be a unicorn. And I've seen one estimate that says that OpenSea's done around a little under 50 million dollars in revenue this year that still feels high to me but let's assume that's true that means that code 2 is valuing the company at 28 times sales 28 times sales for a company whose entire industry appears to be in structural decline who's just laid off half the staff and whose literal one

source of revenue is down 99 i mean mean, it just still feels incredibly generous. I think this thing's worth, at most, a couple hundred million dollars. Also keep in mind, just because CO2 marked it to this doesn't mean that's where it is. Yeah, yeah. Because, let me put it this way, if CO2 is going to err, they're going to err on the side of a mark that says their existing holdings are worth more than they actually are. They're not going to undervalue something. Their incentives are to overvalue it because the investment managers at Co2 get compensated

based on the mark or the value of their portfolio. And by the way, their 2021 growth fund is down 20% so far. I would bet it's down 40 or 50. It's been marked down 20. Yeah, exactly. Sheehan, I actually think this firm is a phenomena. percent so far i would bet it's down 40 or 50 it's been marked down 20 yeah exactly xian i actually think this firm is a phenomena and that is that i think there's some pretty big trends here one supply chain agility such that you can do short runs or immediately sense online what people are browsing and buying and start producing it in real time and having almost an inventory-free supply chain is really an innovation.

And I think this company has sort of mastered it. Shein is the number one most visited apparel website globally and accounts for, get this, 50% of U.S. fast fashion sales. Shein adds between 2,000 and 10,000 new styles every day. Zara typically adds 2,000 items over a 30-day period. So it feels like, what is that, somewhere between 30 and 150x the number of new styles. In 2022, they registered $23 billion in revenue and net profit of $700 million. And their goal is by 2025 to have $60 billion in revenue and $7.5 billion in profit. That's aggressive, but I think they could potentially get there. The fastest zero to a billion apparel retailer in history was Old Navy. This is Old Navy on

steroids. Old Navy was 80% of gap, 50% of the price. These guys are saying we're 80 or 90% of Zara for 40% of the price. And it's just got unbelievable pickup. They've got some questions around sustainability. But if they were smart, if they were smart, they would have their bankers price the IPO really aggressively. Because whoever comes out of 2023 with the best performing IPO, which quite frankly is a pretty low bar given that everything is a broken IPO, is going to get a massive amount of media attention. So let's look through the numbers here. Their latest round was at $60 billion. Say they priced it at $40 billion and it popped to $80 and that 100% increase in performance year to date. They would get so much press that it would be the best branding event any apparel manufacturer or consumer brand could have because every other IPO has been a disappointment, I think. But wait, aren't they leaving money on the table? Say they raise $4 or $6 billion. They give up 10% of the company at $60 billion. They give up $6 billion on $40

billion. They give up 14% of the company at a valuation of $40 billion. So you could argue that they're giving up $4 billion in shareholder value or they're taking an additional dilution of 10%. Not even that. Actually, a lot less than that. That is worth the branding they'd get. I think the most interesting thing about Shein is it's a Chinese company. But a couple of years ago when the CCP started cracking down on Didi and Alibaba and all these other Chinese tech companies, Shein saw that happening, immediately said, fuck that,

and got the hell out of China. And now it's headquartered in Singapore. They're trying to move their entire supply chain out of China. And now they get to be a company that goes and lists on a public US exchange. So I really like it because it's sort of a lesson for governments,

which is authoritarianism works until it doesn't. And if you want to attract big, successful businesses, promote prosperity, you have to establish boundaries between the private sector and the public sector. So, I don't know. I just, I love that they got out of China. I think it says terrible things about the CCP and wonderful things about the West. So, a couple things. One, I agree with you. To be clear, though, the CCP wanted to kneecap Xi'an or not let them move to Singapore or not go public on the NASDAQ. They could do it. They could get in the way of it. So my sense is that the CCP

has said, OK, we want to cut the finger off the arm or the hand of our capitalists, but we're not going to cut off the arm. We need our economy slowing. We need our thoroughbreds to run. Also, I'm hopeful, the biggest tax cut in history right now would be if the U.S. and China would kiss and make up, because the biggest and the second largest economies in the world with the first and the second largest militaries in the world, it's just better when we're all getting along and trading with each other and making each other money. So I'm hopeful that there are more U.S. companies that go into China and do really well,

and I'm hopeful that there are more Chinese companies that have successful IPOs. We'll be right back after the break with a look at Uber's earnings. We're back with Profit Markets. Uber reported record ridership and a second straight quarterly profit. Passengers took 2.4 billion trips in the quarter, up 25% from a year earlier, and net income came in at $221 million. That number was slightly below expectations, but still a huge improvement from last year's billion-dollar loss. Uber CEO Dara Khosrowshahi expressed optimism that profits would continue, stating that the company is, quote, well-positioned for the journey ahead in good or bad macro environments. Shares rose 3% after the report. Scott, investors have long questioned

Uber's ability to turn a profit. This is two straight quarters of profits. Do you think the company has officially figured it out? I think they have, and you have to give Dara Khosrowshahi a lot of credit. I've never been a fan of Uber because I think they have. And you have to give Dara Khosrowshahi a lot of credit. I've never been a fan of Uber because I thought they were using software to skirt minimum wage laws. I didn't like that they were sort of this move fast and break things and not get business licenses. And simply put, I wasn't a fan of Travis Kalanick. And I think that Dara's come in and sort of been adult supervision and taken a great concept and made it into a sustainable company. Demand rose across Uber's two main revenue segments, mobility and delivery, with bookings

increasing 31 and 18% respectively. In addition, they're getting into the advertising business. And when you think about it, they have data that says, oh, you are going, driving to the airport? Well, we're going to run an ad for Delta Airlines or whatever it is. They know that you pulled up to the American Airlines first class check-in. They know a lot about you. They know you're headed into Soho and you don't live there. Well, here's a coupon at a new restaurant. I mean, this targeting, this data set is kind of an advertiser's dream. And as a result, their advertising base grew 70% to 445,000 businesses. This pushed revenues up 11% year on year. The delivery business registered efficiency gains with

times for delivery decreasing by three minutes in the US and cost decreasing by 5%. So revenues up, costs down. And this all adds up to one thing, profitability. And this is their second consecutive quarter of profitability. This is an example of a company that used capital as a weapon. They raised a shit ton of capital. They underpriced the product. There was no reason that people should be driving in an Escalade to the airport for $38. They've raised prices because they now kind of have monopoly power. They have a weak number two in Lyft.

I like Lyft. I like the management team. But people think of Uber. And the app is going to have the scale for advertising. They're getting delivery. They're diversifying their revenue base. They're a global company. They offer mobility solutions that are customized to individual markets. They partner with taxi services in LA, New York City, SF, and in Japan, where taxi culture is still pervasive. In less developed markets, such as India and Argentina, they offer moto and auto trips on motorcycles and rickshaws. Q3 trips on motorcycle and rickshaws grew 160% year-on-year, respectively. And in India, rickshaw trips represented over 40% of all trips in Q3. I remember going to Cannes Alliance, and they had something called Ubercopter. It was a branding event, but you could click on a little helicopter,

and this 14-year-old in a uniform took on a lawnmower with a turbo on it and flew you across the Cote d'Azur to Cannes, which was pretty cool. Their stock has doubled in the last year. It's trading at about three times sales, significantly lower than its four-year average of 4.4 times sales. I just, like, Dara Khasashahi, he should be nominated for CEO of the year. And Uber is doing an amazing job. What are your thoughts? Yeah, I completely agree. I mean, you think back to where Uber was four years ago when it actually went public. The IPO was basically a disaster. It immediately tanked and then it quickly became one of the most shorted stocks on the market. It was just a bad business. It was

losing $9 billion annually. But then in terms of PR, to your point, I feel like Uber at one point was arguably the most disliked company in Silicon Valley. I mean, they had massive scandals with the founder, Travis Kalanick. They were getting sued for basically lying about pricing and safety requirements. And they were settling all these class action lawsuits. And they were also dealing They were getting sued for basically lying about pricing and safety requirements, and they were settling all these class action lawsuits. And they were also dealing with all these labor union protests for, you know, classifying their drivers as contractors instead of employees. And I think most people believe, it sounds like you agree with this at least, that Uber

mistreated its workers. And now you look at the company, and it feels like Uber has suddenly turned into the good guy. I'm not sure exactly what they did to do that. Their drivers are still contractors, but he's done something to basically completely transform Uber's brand and reputation without any of us even noticing. They've done a great job. They're, you know, it's now a verb, right? I'm all Uber there. And I use a service in London called Wheelie, which I love,

which is sort of the high-end version of Uber. But Uber Lux in London is just amazing. It's 7 Series and S-Glasses and I sound like an entitled douche. Anyway, love Uber. Love Uber. Love Uber.

Luber. I'm a Luber. Warner Brothers Discovery and Disney reported third quarter earnings last week and it was a tale of two companies. Warner Brothers Discovery missed by almost every metric. It missed on earnings with a $417 million net loss. TV ad revenue fell 12% from a year earlier, and it lost 700,000 subscribers.

The stock sank 19% after that report. Meanwhile, at Disney, things looked brighter. The company added 7 million Disney Plus subscribers, and despite a drop in ad revenue, net income came in at $264 million. That's up 60% from the previous quarter. Shares rose 4%. Scott, we've been tracking entertainment pretty closely recently. What are your reactions to this pair of results? I thought this was really interesting. So Max, the company's streaming business, turned a profit while the overall company narrowed its net loss to $417 million from a $2.3 billion loss a year ago. So, that's

actually decent news. Total revenue increased 2% to $10 billion in what is a challenging environment. TV ad revenue dropped 12%. That's a significant decline. And linear content distribution dropped 22% as a result of lower third-party licensing revenue. And as of September 30, 2023, the average duration of the company's outstanding debt was 15 years, with an average cost of debt of 4.7%, which means they have really friendly debt on really friendly terms, and that's important. Let's talk about Disney, and then we'll talk about the contrast between the two. Disney also saw a 10% decline in revenue from linear TV networks, so it has the same problem, but achieved an 11% increase in streaming revenue. Operating losses on streaming improved by nearly $1 billion.

In other words, I think they only lost $400 million instead of $1.4 billion. They added 7 million subscribers. Now they have about $150 million total. And then the parks continues just to be a juggernaut, up 13% year on year, higher attendance and ticket prices domestically and abroad. And also, they're cutting costs. By the end of Disney's fiscal year 2024, it expects to have reduced operating costs and entertainment spending by $7.5 billion, nearly $2 billion ahead of its original target. So, they have some of the same problems, but they have a better story. You had Disney up three or 4% and you had Warner Brothers Discovery had its, I think, worst single day in history in terms of its stock.

And some of that was because Warner Brothers Discovery doesn't have the parks and their streaming isn't showing the same type of robust growth that Disney is, but they both kind of face the same headwinds. The difference is, quite frankly, is the CEOs and their ability to tell a story. The story that Zaslav told was essentially, here's the bad news and here's the worst news. Our linear TV is off and we're not sure we can maintain our deleveraging. And effectively, what you have is the reason why people were sort of in the stock or the story they liked was the enterprise value is the market capitalization of the company, the number of shares times the price of those shares plus the debt. So when you have a company that has, call it, a $65 billion enterprise value, people say the company's worth $65 billion and they have $40 billion in debt, so we'll make the equity then is worth $25 billion. If they can reduce the debt $5 billion a year and still have these assets maintain kind of the same robust revenue or same value,

then the market cap, the stock should go up by $5 billion. And that was why people were in the stock. That's why people were comfortable. They saw Zaslav as a competent operator who was de-levering. And they liked that because every time time you de-lever by two to five billion a year, the equity value should go up two to five billion. That was kind of the story here. And so when you said, one, business is shitty, I don't really have a story, and the de-levering is at risk,

it's like, okay, here's a shit sandwich with sprinkles of shit on it. Whereas Iger said, yeah, our linear assets are imploding, but I'm taking all of Hulu. I'm doubling down on streaming. Streaming, by the way, is a flex live events company for any household globally that has children. Because the reality is if you have kids, unless you want child services coming to the linear guys, Paramount, Warner Brothers, Time Warner, loaded it up with cash, and then took all the cash over to Netflix. Disney stock is flat. It's up 1% for the year or year to date. Warner Brothers is down 2%, so they're both flat. Netflix is up 47%. At 47%, you and your friends hanging out watching Netflix all day or whatever it is you do,

is literally you're just taking money from Hollywood and sending it up to, what are they, Los Gatos? Los Gatos. They're in Los Gatos. I find this shit fascinating. This is a case study in leadership. You're going to see an activist at Warner Brothers Discovery because it just feels, quite frankly, it just feels like, all right, the business isn't good and you don't have a story. I also think it's worth considering the fact that, you know, you're comparing this to last year when you had the midterm elections and one of the main cable assets for Warner Brothers is CNN. And, you know, politics is a significant revenue driver for platforms like

that. And as we know, media is cyclical. So as soon as the presidential elections get going, I think that's going to immediately stabilize. And my prediction would be that linear ad revenue is actually going to grow year on year. So yeah, I'm in agreement. Like, this is a bad quarter, but a 20% stock drop in one day, it's worst ever. That feels like an overreaction. Yeah, we're putting together our prediction stack. And one of my, you know, I pick stocks every year

because I'm a glutton for punishment. But I think Disney and Warner Brothers Discover are actually pretty good buys right now. We'll be right back after the break with a look at OpenAI's Developer Day. We're back with ProfitG Markets. OpenAI hosted its first ever developers conference last week, featuring a keynote from Sam Altman and several new product announcements. Let's bring in our editor-in-chief, Jason Stavis,

to take us through what happened. So the main event, Ed, as you said, was Sam Altman's keynote. It was a tight 45 minutes with a lot of new and updated products. But the first thing I noticed about it really was the aesthetics. All these tech company keynotes are somewhat similar in the beats that they hit, but mostly companies try to brand them in some way on their own. OpenAI really leaned into what I would think of as the Apple aesthetic. Big black slides, white text, simple minimalist images, and even the same process where you come on, you say how successful you are, you play a video of your users using the product that's really emotional and heartstring pulling, and then you use a very specific language style that Steve Jobs and Tim Cook really personified, which is these direct, clear, declarative statements. I think you can read that

a couple different ways, but my take is that OpenAI is laying claim to be the company that picks up the baton from Apple as the agenda-setting tech company. I don't think they want to turn into Apple necessarily, but I think what they're telling people is, we are now at the forefront of tech. Across the board, they're improving all of their products. The list of improvements and new features is quite long. Just simply better models, they'll give you better answers. More modalities, they can operate better with vision and with speech. Larger context window, something called JSON mode, which is a huge improvement for using these products as a developer. They've updated the knowledge date cutoff.

They've launched this copyright shield product, which will help protect you if you use their products and then you get sued for copyright violations. And I think just those enhancements alone suggest that they really are the leading general purpose AI company. No one else offers the range of stuff that they do. I think the two most interesting announcements from a strategic standpoint, though, were price and platform. So first, price cuts. ChatGPT is a big deal, and we talk about it a lot, but it's only half of OpenAI's business. The other half is selling access to their models

directly to developers and to large customers who want to build their own applications. And that's where OpenAI slashed prices. So this is a longstanding strategy for them. It's their third major price cut in 12 months. And this time around, they launched a new top-of-the-line model, GPT-4 Turbo, strategy for them. It's their third major price cut in 12 months. And this time around, they launched a new top-of-the-line model, GPT-4 Turbo, which costs one-third as much as the previous

top-of-the-line product, GPT-4. And they took their GPT-3.5 Turbo model, which is kind of the workhorse model, which I suspect probably gets the most use, and they cut prices on that to a third of what they were before. So every six months or so, these guys go into the market, and they cut prices on that to a third of what they were before. So every six months or so, these guys go into the market and they substantially reduce the price of their major products. How can they afford to keep lowering prices like this? So there's three factors that go into the price of this GPT product. First, there's just the price of the underlying computing power. And Moore's Law, plus Microsoft just getting better at deploying more chips continues to bring down the price of how much it costs just to make calculations on a computer. Then there's the efficiency of the models themselves, and that's what OpenAI points to most often.

They say, we're making better, more efficient models so we can get you good answers using less compute cycles. And that's a tremendous competitive advantage if they're able to stay ahead of the curve. And then finally, there's just a business decision, which is how much profit do you want to make or how much do you want to invest in buying share? And we can't know exactly where they are on that front, but presumably they are willing at this point to forego some profitability to continue to be the best product at a really good price. All three of those mechanisms are really humming for them. And Altman said on stage that reducing price was their priority over increasing speed

of response. So they see their biggest strategic bet right now is getting this capability, these AI capabilities, into the hands of as many developers as possible and encouraging developers to try things by making it as cheap as possible. And so that's given them huge momentum. The other question then, or the other exciting announcement, is what are they doing with that momentum? And at Dev Day, we saw the latest evolution of OpenAI's platform strategy. So the main feature is what OpenAI is calling GPTs, and it's kind of a dumb name. It's what we would, in generic terms, call an agent. So here's Sam Altman describing what a GPT is. GPTs are tailored versions of chat GPT for a specific purpose. You can build a GPT, a customized version of chat GPT, for almost

anything, with instructions, expanded knowledge, and actions, and then you can publish it for others to use. So a GPT is, like you said, an agent, and they demoed some, frankly, kind of underwhelming ones. An agent that manages your calendar and communications, an agent that plans travel for you. And those are really familiar applications for this kind of technology, and they're already out there. AI in your calendar is everywhere. We at ProfG built an agent, ProfG.ai, that takes specialized knowledge about Scott and responds to questions in Scott's voice. But what Altman said next in that clip is what's really important. They have two new components. One is helping people make these agents much more easily.

So they have this thing called GPT Builder. And on stage, Altman built essentially a Sam Altman bot, which is very similar to what we built for Scott, except it took him about three minutes and he was able to do it live. Now, there will always be a more sophisticated opportunity to do something beyond what these template builders can do. But the ability to spin up an agent for a specific task that you want is pretty powerful. And then the other thing they did, and I think this is what's really the business strategy here,

is that they've elevated these items to a central part of their business strategy, and they've made a platform. So something like an Apple or Google App Store will exist on the ChatGPT product and separately on the web. So I think their idea is, look, there's all kinds of things you can use AI for, and we want to make it easy for you to package those and then allow them to interact with other things in the world. ChatGPT will be sort of an orchestra conductor. There'll be all these ways in which AI can help you, and ChatGPT will be kind of your portal into that. So a lot of people are calling this an extinction event, specifically because there are all these AI companies working on their own custom chatbot businesses, including

the one that we worked with to create ProfG.AI, and OpenAI basically said, anyone can do this in two minutes for $20 a month? Yeah, in two ways, really. First of all, it was the ultimate Sherlocking, right? Sherlock is a phrase that comes out of an early Apple product called Sherlock, which helped you find things on your computer. And when Apple introduced Spotlight, Sherlock disappeared. And so that's become a verb for when somebody incorporates capabilities into the OS or into the platform. And hundreds, if not thousands, of nascent startups were Sherlocked on Monday because OpenAI just built all that stuff in.

And then the second way is what you described, is a lot of companies were trying to build businesses where they basically would put a thin wrapper of capabilities around GPT and say, look, now you can use GPT to do this difficult thing. And what the GPT builder potentially does is just put that tool directly into the hands of consumers. So do you think these updates will ultimately harm the AI startup ecosystem? I don't think so, because you can only get so far with a template-based product,

even one that has AI behind it. there's always going to be a market for more robust development. And so I don't know that it ever made sense for people to try to build businesses around something that's just a thin wrapper on somebody else's product. Like the expiration date on those products was always coming soon.

And in fact, one thing that OpenAI did not slash prices on was fine-tuning models, which is when you invest a lot more time and energy into making a model for your specific purposes. And they announced a business-to-business sort of consultancy where they will work with you to build been all along, which is that real businesses that require a lot of expertise and a lot of capital to build a real product, even if it sits on top of GPT, there's a place for that. What there's not a place for is somebody who spins something up on a weekend and then puts a brand on it and tries to call it a company.

I thought this was remarkable. It felt like the spirit of Steve Jobs handing, you know, initially everyone thought he was handing the baton to Elon Musk. But the thing is, Steve Jobs was rumored to be kind of an asshole. Elon Musk has confirmed that he is, in fact, an enormous asshole. And it feels as if this is the baton handoff to a certain extent we're sort of looking for. I like Sam Altman, and this felt very Jobsian. Quite frankly, I was just blown away by this. It was, okay, we are radically improving the product, step change improvement in the product. Oh, and we're massively cutting the price. I mean,

it was just, well, okay. Something tells me that this thing is going to continue to grow like crazy. And I thought the whole thing was a masterclass in how to portray extraordinary accomplishments in a great light. I think every comms course right now should be watching Sam Altman's presentation of this day. I thought, I mean, nothing short of remarkable. Almost as good as Uber. Almost as good as Uber. Almost as good as Uber. Okay, let's check in on the prediction you made exactly one year ago, Scott, regarding FTX. Just as the subprime market and the 2008 great financial recession created tremendous upheaval in the markets and really dented the economy, but nobody went to jail, I think the opposite is going to happen in the world of crypto. And that is the asset class is now only a few hundred billion dollars, I think, maybe a trillion. I don't think it's going to have much of a dent on the economy.

But I think as we peel back the onion, we're going to find that there was a lot of fraudulent behavior here. And I think we're going to see people in orange jumpsuits. I think we're going to see more people in jail, but less impact on the economy. It's going to be a lot of news, not noise versus what happened the last time with the subprime market. You know how I get that insight? Yeah. Sex with farm animals. That's where I do my best thinking, Ed. Yeah, that's where I do my best thinking. Yeah. So last week, Sam Bankman Freed was convicted on all seven counts of fraud and conspiracy. He faces up to 115 years in prison. Bingo, you're right. I think we're going to see more of this.

That's actually my prediction. I think the government's getting its mojo back and has recognized the algebra of deterrence is really important. And I think you're going to see quite a few criminal indictments still to come in the crypto and the online space. I wouldn't be surprised also if there's some indictments in the SPAC space.

In the SPAC space? Yeah, it surprised also if there's some indictments in the SPAC space. In the SPAC space? Yeah, it strikes me that there's probably quite a few SPACs where there was market manipulation. I mean, we'll see. I don't know this, but it just feels like so much money was lost by so many people such that so few people could make a shit ton of money. I can't imagine who you're talking about. No, I'm not. Let me be clear. I'm not talking about Chamath.

I don't. I'm not. I think what Chamath did, I think he was basically just the most overpriced banker in the world, but I don't think he did anything illegal. I don't know this. But I think you're going to see across all of these asset classes that the SEC, the DOJ are kind of refound their mojo and said our job isn't to protect management teams, it's to protect investors. And I think you're going to see, probably still in the crypto space,

a lot of indictments. I think kind of more to come, if you will. I think we're only starting the kind of the trial phase of this. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our executive producers are Jason Stavers and Catherine Dillon. Neil Severo is our research lead and Drew Burrows is our technical director. Thank you for listening to Prop G Markets from the Vox Media Podcast Network. Join us on Wednesday for our office hours, and we'll be back with a

fresh take on markets every Monday. Ed, have a great rest of the week. Have a good week. Lifetime You have me In kind Reunion As the world turns And the dove flies

In love, love, love, love