Skip to content

Podcast

Big Tech’s AI Vibe Shift

Prof G Markets

Source ↗ ← All highlights
  • Jackson Hole, Spa Days, And Skiing Excuses
    • Scott describes staying at Jackson Hole and preferring spa and social interactions over actual skiing.
    • He uses ski trips to trap his boys on a mountain so they talk to him for hours. Transcript: Scott Galloway I’ve done a bunch of meeting there because one of the great things about having the footprint that I enjoy is if you post where you are, people like you haven’t heard from, like, oh, remember Me? We played basketball together in the 11th grade. Do you want to have coffee? I’m like, no, but it’s good to hear from you. People, it’s so funny. I was out last night and a bunch of people came over and the people are with, do people come up to you? I’m like, yeah, they come up to me a lot. And they say, why do you think that is? It’s because everyone assumes I’m so fucking pathetic that they’re doing me a favor coming up and saying hi. Everyone assumes that I’m so lonely and so desperate and depressed and have so few friends that people don’t come up to me and say, I mean, they come up and they’re very nice, but they’re More like, do you want to join us? Are you okay? So it’s. Ed Elson I highly, highly doubt that. Scott Galloway It’s a different type of approach. But anyways, I’m here in Jackson Hole. It is, it is beautiful. Are you skiing? No, I’m all about entry. The only time I ski now is with my boys because I’m all about injury prevention. But I’m going to go snowshoeing. I’m officially an old man. In between World War II documentaries, I’m going to go snowshoeing. Ed Elson You’re not skiing because you’re afraid of getting injured? Really? That’s a little bit of a lame excuse. I just got to be real with you. Scott Galloway I don’t like the outdoors. I especially hate skiing. Okay, fair. I can’t stand it. The reason I ski is I want to be able to trap my boys on a mountain for four or five hours where they have to talk to me. Yes. And so I ski, I maintain, I’m also not very good at it. Are you a good skier, Ed? I’m a decent skier. Yeah. Ed Elson I’m not amazing, but I’m okay. I’m not. Scott Galloway And their mother is such an extraordinarily beautiful skier. I remember the first time I saw her ski, I was like, wow, that’s amazing. Ed Elson It is very cool when people are good at skiing. Scott Galloway And she grew up very kind of lower middle class, middle class in Poland. And so her parents just always put her on skis two or three weeks a year. And I said, we got to do that for our boys. But unfortunately, when you do that, you have to actually ski with them. So, but no, if I don’t, I would much, I’m sitting in here, I’m going to go work out. I might, you know, do one of these weird, like hot stone recce massage treatments with some dude with beads who’s going to talk to me about my chakra. And I like that shit now. I’m turning into like the white women of wine. I’m just into the spa. And I’ll just hang out. And we’ll go for a really nice dinner. (Time 0:02:08)
  • AI Is Valuable When It Boosts ROI
    • Meta shows AI delivers real revenue uplift through better ad targeting and user engagement.
    • Investors rewarded Meta’s proof of ROI while punishing companies selling AI stories without clear returns. Transcript: Ed Elson And I think that we should probably start with Meta. Fourth quarter sales rose 24% from a year earlier. Also issued stronger than expected sales guidance for the current quarter. The stock rose as much as 10%. So that has been the biggest performer. I think a few things stand out to me about the meta earnings. I mean, one is, as we’ll see, the earnings were pretty similar to what Microsoft reported, but it was a tale of two stocks here because meta rose around 10%. Microsoft fell around 10%. Microsoft wiped out nearly half a trillion dollars in value. So I think the big question here is what was different about Meta? And I think the thing you have to sort of look at here is this unbelievable revenue growth of 24%, $60 billion in revenue over the year. So that is just a staggering increase from what we’ve seen before. And I think what Zuckerberg is basically proving is that AI is turbocharging the business. And now investors are realizing, OK, this guy probably knows what he’s doing. We could also talk about the CapEx, which exploded, or at least the guidance exploded, $115 to $135 billion in CapEx guidance for 2026, up 60% from last year. He’s doubling down on AI. Last year, people were scared about that. Now, investors decide, actually, we trust this guy. Scott, any initial reactions to Meta? And then we’ll get into the other earnings as well. Scott Galloway Well, it appears that it’s better to be in the business of leveraging AI than in the business of AI. And there’s few companies that can boast that they have adopted to greater effectiveness AI than meta right now. Their users clicked on Facebook ads 3.5% more off in this quarter and boosted conversions on Instagram by 1%. And the number you talked about, they increased, what was it? They increased their revenues 23%. Ed Elson 24%. Scott Galloway On that number, on that top line number, what I would have loved to have seen is I don’t think they did it with many more employees. So, you know, they are kind of, I mean, quite frankly, anyone who’s on Instagram or on Reels or on Threads understands the power of AI because I keep getting served with more and more relevant I mean almost kind of those eerie moments where I’m talking about doing a trip to you know DC with my kids and I start getting served ads by the park high at DC and say oh are they you know it Just it’s incredible how they’ve been leveraging AI Microsoft it was that, and you said this, that the new expectation is that you beat expectations and they only met expectations. So it wasn’t, you know, and they took the stock down 10%, which I’m not entirely sure I understand. Maybe it was because they’re just got out over their skis, but the meta one really struck me. Any thoughts on Microsoft, Ed? Ed Elson Yeah, Microsoft is pretty staggering. You know, $440 billion in market value just erased pretty much overnight. After they, I mean, you say met expectations, which is more accurate. They beat by like marginally. I mean, revenue was up 17%. I think saying they met expectations is the right characterization. I think two issues for Microsoft. One is that Azure, the cloud growth, this is all that investors really care about because this is representative of how growthy is your AI business. It grew 39%. I still think that’s a pretty big number. It also beat expectations, or as you say, met expectations, but it’s slightly lower than the previous quarter. So I think investors are kind of upset about that. I think maybe in comparison to Meta, they see the growth of that business and they don’t like that. But I think the big problem I would estimate, and we’ll see over the coming weeks, is their RPO number, their remaining performance obligations, their future commercial bookings, Basically. This is how much revenue they have in the pipeline, the contracts they’ve secured, which they’re going to see in the income statement in the next few quarters. It grew dramatically to $625 billion. So that’s great news. However, 45% of that backlog is attributable to OpenAI. I think investors have decided what we have been saying for a long time, which is you can’t really trust this company. If you’re making $1.5 trillion in spending commitments all over the place, and you’re only generating $13 billion in revenue, and you’re going out there and you’re kind of struggling To raise, not struggling to raise, but they’re talking about raising $100 billion, but that doesn’t cut it. There’s so much money they have to spend on these contracts in the next few years. And basically, Microsoft is coming out there and saying, hey, we have a bunch of growth opportunity coming down the pike, but half of it is going to come from OpenAI. And it appears that investors are saying, eh, we call bullshit. We don’t think that that revenue is actually going to come in. I would guess that that is the main concern. I think there’s the additional concern that compounds the mistrust in OpenAI, which is where is that revenue actually coming from? Well, it’s not coming from their profits. This is not a profitable business. It’s coming from Microsoft. Microsoft is the main investor in OpenAI. So this is just a circular transaction happening again. Microsoft invests, and then it comes back to Microsoft in the form of these remaining performance obligations, which makes it doubly concerning. So I think this is the investor response. People are coming around and saying, you know, this open AI thing, this has gone a little too far at this point. And so if you come out and say, yeah, we’ve got all this money coming in, but most of it’s open AI, we’re not going to take it all too seriously. Scott Galloway I see a theme emerging where it’s (Time 0:06:24)
  • AI ‘Vibe’ Moves Hundreds Of Billions
    • Market sentiment now rewards the vibe around AI associations as much as technical progress.
    • Associations with OpenAI flipped from a positive to a negative investor signal over recent quarters. Transcript: Ed Elson Yeah, Microsoft is pretty staggering. You know, $440 billion in market value just erased pretty much overnight. After they, I mean, you say met expectations, which is more accurate. They beat by like marginally. I mean, revenue was up 17%. I think saying they met expectations is the right characterization. I think two issues for Microsoft. One is that Azure, the cloud growth, this is all that investors really care about because this is representative of how growthy is your AI business. It grew 39%. I still think that’s a pretty big number. It also beat expectations, or as you say, met expectations, but it’s slightly lower than the previous quarter. So I think investors are kind of upset about that. I think maybe in comparison to Meta, they see the growth of that business and they don’t like that. But I think the big problem I would estimate, and we’ll see over the coming weeks, is their RPO number, their remaining performance obligations, their future commercial bookings, Basically. This is how much revenue they have in the pipeline, the contracts they’ve secured, which they’re going to see in the income statement in the next few quarters. It grew dramatically to $625 billion. So that’s great news. However, 45% of that backlog is attributable to OpenAI. I think investors have decided what we have been saying for a long time, which is you can’t really trust this company. If you’re making $1.5 trillion in spending commitments all over the place, and you’re only generating $13 billion in revenue, and you’re going out there and you’re kind of struggling To raise, not struggling to raise, but they’re talking about raising $100 billion, but that doesn’t cut it. There’s so much money they have to spend on these contracts in the next few years. And basically, Microsoft is coming out there and saying, hey, we have a bunch of growth opportunity coming down the pike, but half of it is going to come from OpenAI. And it appears that investors are saying, eh, we call bullshit. We don’t think that that revenue is actually going to come in. I would guess that that is the main concern. I think there’s the additional concern that compounds the mistrust in OpenAI, which is where is that revenue actually coming from? Well, it’s not coming from their profits. This is not a profitable business. It’s coming from Microsoft. Microsoft is the main investor in OpenAI. So this is just a circular transaction happening again. Microsoft invests, and then it comes back to Microsoft in the form of these remaining performance obligations, which makes it doubly concerning. So I think this is the investor response. People are coming around and saying, you know, this open AI thing, this has gone a little too far at this point. And so if you come out and say, yeah, we’ve got all this money coming in, but most of it’s open AI, we’re not going to take it all too seriously. (Time 0:09:26)
  • Free-Riding Beats Frontline AI Spending
    • Drafting off AI (using others’ infrastructure) can outcompete being the capital-intensive AI frontier.
    • Companies with clear revenue benefits from AI win valuations over those with speculative AI promises. Transcript: Scott Galloway I see a theme emerging where it’s better to draft off of the AI wars in terms of capital expenditure than to be on the front lines. And that is it feels like people are increasingly skeptical that open AI is going to be able to justify an $850 billion valuation, much less the trillion or trillion and a half dollar Valuation that’s been floated for a public offering. And that there’s only about three or 5% of its users actually upgrade to a paid subscription. And it looks like they’re being bested by Anthropik in the enterprise market. So that’s beginning to infect Microsoft, who again, is looking to similar to the way that Tesla is claiming Optimus robots are going to be the growth vehicle, being reliant or claiming That you can justify a $4 trillion valuation because of all the additional profits and revenues, to your point, you’re going to get from your investment or your relationship with open AI that looks like there’s no way it can meet its expectations. It’s a dangerous place to be. At the same time, when you’re a company like Meta or even, I would argue, a company like Waymo, where you’re leveraging AI, you’re drafting off of or free-riding off of other people’s Cheap capital and massive investments. I mean, even Apple, I think Apple will probably be a beneficiary of AI because what they’ll do is similar to avoiding the search wars, they’ll stay out of it and they’ll start figuring Out ways to provide licensing agreements or access to the billing consumers. But it feels like the new kind of Libmus test is, all right, it’s great to be in AI, but your valuations have gotten out in front of your skis and you’re spending so much money that the sweet Spot is to leverage AI and leverage the falling price and inference and show that you know how to leverage AI, see above, you know, Meta’s targeting capabilities. Can we talk about Tesla for a second, Ed? Ed Elson Yeah, we should talk about Tesla. I mean, just before we move on to Tesla, I would just add one caveat, which is that Meta is spending like crazy on AI. I mean, that CapEx was unbelievable. But I think that to your point, what investors want to see is like, show us that you have leveraged AI. Show us that there’s real money coming in. Meta was able to do that, which gives them the option to go out and spend like crazy. That could reverse, you know, on a dime. And we’ve seen this continue to happen over the past year. I think what we’re increasingly seeing in the AI wars is this is a war of vibes, a narrative. This is all about, like, does the market generally agree that you know what you’re doing with AI? And are you associating with the right people? Last year, associations with open AI was a vibe to the upside. Now it’s reversed. It’s a vibe to the downside. I think it’s highly possible that vibe could keep whipsawing back and forth. But there is no question the vibe is massively important to valuations right now. It’s literally moving hundreds of billions of dollars at a time. Scott Galloway Well, just to use an acronym here, ROI, right? It’s all about ROI to some extent. And there’s a raft of new unicorns, and it’s an exciting part of the economy, and we got to give AI its credit. It’s created an ecosystem of companies that put a thick layer of innovation on top of inference and then sell into niche products and services into specific sectors. And they’re basically free riding off of the massive I, right? And they get a big return because they can free ride and have small I themselves, which makes the R-I bigger. And then there’s companies that are huge on the I, but it’s not entirely clear what the R is. I would put open AI in that bucket. It’s like, it’s very hard to figure out how all of the spending and these trillion dollar commitments, where the R is going to be big enough. But the sweet spot is companies that have huge R and huge I, because they’re seen as pulling away from everybody else, but also are showing the massive kind of return. And right now that’s meta. Huge CapEx can make that CapEx so they can pull ahead of. Pinterest didn’t lay off people because of AI efficiency. (Time 0:12:26)
  • Narrative Keeps Tesla’s Multiple Elevated
    • Tesla’s market valuation rests on future projects and narrative rather than current automotive fundamentals.
    • Elon Musk repeatedly pivots investor attention to next big initiatives like Optimus to sustain high multiples. Transcript: Scott Galloway Tesla? Oh my gosh. I love that he’s trying to distract. Talk about weapons of mass distraction on the earnings call. I don’t know if you saw this. Musk updated investors on Tesla’s new mission, which is, open quote, to build a world of amazing abundance. And we’re going to build a world of amazing abundance. I would translate that into an abundance of ketamine before the earnings call. He also focused on Tesla’s humanoid robot product, Optimus. Sales of the robot are expected to begin in 2027. Musk mentioned Optimus 28 times on the earnings call. I’m shocked he didn’t threaten to bomb Iran at this point to distract from the fact that the Cybertruck is a total fucking disaster and revenues were actually down. Automotive revenues declined 10% year on year, and their pre-tax profit margins in 2025 were about 6% less than half as much as Toyota’s. And just to give you a sense for what is, I would say, with the exception of Palantir, the most overvalued company in the world, Tesla trades now at 400 times earnings. Toyota, which in my view is the best managed automotive company in the world, trades at 10 times earnings. Your thoughts, Ed? Ed Elson I would love to know if there have been companies in history, and I would go with large cap companies in history, that have traded at near 400 times earnings, and yet their revenue has Been in decline for not just multiple quarters, but getting on to multiple years now. I mean, that is just unbelievable. The fact that revenue, the stock actually jumped in after hours. Then it came down. People seem to kind of, I guess, come to their senses a little bit. But revenue was down 3% year over year. And yet this is the company of the future. It’s a declining business. Scott Galloway It’s a declining business trading at 400 times earnings. Ed Elson And we can just go through more of the statistics. I mean, there’s no question. This was a horrific year for Tesla. Scott Galloway Operating margins down, everything. Yes. Ed Elson Free cash flow down 30% year over year. Net income down 61% year over year. Also, a lot of the reason why they’re staying afloat is because of these regulatory credits where they registered half a billion dollars because of these regulatory credits. Without them, profit would have fallen another 65%. And of course, the big, beautiful bill is going to get rid of those regulatory credits going forward. But the genius, and I mean, you call his bluff and so do I, and I think so do many investors, but the market seems to believe it. The genius is Elon has been able to just launder in a new future growth project every few years to keep the multiple afloat. He’s not keeping this business or this valuation up through fundamentals. He’s decided he doesn’t even care about that. The car sales are done, whatever. But he’s laundering in his next project, which is The Optimist, which, as you say, he mentioned 28 times on the earnings call. He said he’s going to stop producing the Model S and the Model X because he’s going to increase the production capacity for these humanoid robots. So that’s one piece. Rumors out, or at least Bloomberg has been reporting this, that he’s considering merging Tesla with SpaceX and also merging Tesla with XAI and also investing, having Tesla invest $2 billion into XAI. So then the stock goes up again on that news. So this guy is just like a magician of, I guess, brand laundering would be perhaps or maybe multiple laundering, valuation laundering. I’m not sure what exactly what it is, but it’s working because somehow this business is in decline and yet the markets are saying, yeah, it’s okay. We’ve got the robots coming later. We’ve got the AI coming later. It’ll be fine. (Time 0:16:46)
  • Apple Grows By Licensing, Not Leading AI
    • Apple delivered surprising 16% revenue growth driven by iPhone replacements and record services.
    • Tim Cook likely prefers licensing AI to building it, leveraging Apple’s consumer custody rather than competing vertically. Transcript: Ed Elson We’re back with Prof G Markets. We talk about Apple. Not that much interesting here. Stock is up a little bit, around 1%. Better than expected earnings. Revenue was up 16%, which is pretty impressive. Beat on EPS. I think one analysis that we found kind of interesting that says something about Apple. I’m not particularly bullish on Apple, as you probably know. But this was an analysis from Sherwood. They got this data from the Consumer Intelligence Research Report, which found that people aren’t buying iPhones for the new features of the iPhone. In fact, that is only 14%. Everyone is buying an iPhone either because their iPhone is old or because their iPhone is lost or it’s broken. And they lay out these numbers. It translates to around 70% of new iPhone purchases are for one of those two reasons. And for me, I mean, I think Apple has gotten so entrenched in our society as a product that the iPhone has at least. And it is impressive that they are growing sales. But in the long term, I don’t think it’s very exciting what they’re doing. And I think the market’s response kind of reflects that. It’s like, yep, you did well, you’re doing things right, congrats, and we’re going to reward you with, you 1% bump in the stock. I’m not going to give you a super extraordinary multiple right now, but things are going well. I mean, it seems that Apple is more and more becoming a legacy tech company, and it seems to be reflected in the numbers and also in the way they’re handling the business. But any reactions from you? Scott Galloway I think you’re being a little unfair. I was actually shocked that they grew the revenue 16%. I mean, that’s on a company of this revenue base, 16% is real. And it’s actually, it’s fastest quarterly growth in more than four years. So it looks like growth is kind of revved up again. And its earnings per share increased 19%. I mean, that’s an incredible quarter for a company this size. And that’s despite a pretty lackluster AI story. The growth came from, as you mentioned, better than expected iPhone sales and record services revenues, which have greater margins in hardware. So I would say the top line number surprised me more than any other company. 16% on this company is, I mean, basically they grew this company, you know, kind of like the size of Procter& Gamble in one quarter. I mean, just 16%. I mean, let me put it this way. Tim Cook would love to repeat this quarter over and over. And it just shocked me because I always get the new iPhone more signaling than anything else. It’s just automatic for me to have the newest iPhone. But I don’t really sense any difference. As a matter of fact, I think the operating system is a little bit confusing. I think it’s sort of a step backwards. They say the camera’s better, but at some point, you know, the last camera seemed pretty incredible. But they grew their revenues 16% top line. I just, I was, quite frankly, I was really shocked to the upside by their revenue growth. Ed Elson Yeah, I think that the 16%, I think that’s a totally fair point. The 16% revenue growth is very impressive. And it’s because people are buying the iPhone. And, you know, I think that that is a testament to their marketing capabilities. I don’t think it’s a testament to the product itself. I think that is my point. The thing that you’re saying there about the iPhone itself. I mean, I got the new iPhone. The reason I got it was because my old iPhone was, the battery was kind of dying and I figured, okay, like, I guess i should get the new iphone and it’s time for an upgrade um but i’m not impressed By the new iphone i’m not impressed by the product that’s what i’m hearing from most people i don’t think anyone’s really impressed by the operating system and the growth potential Of ai is not really there he was asked about how they’re going to monetize ai tim cook was on the call and he didn’t really have an answer to that so i i think i think that’s true i think it is Impressive the sales growth of the iphone but i just don’t view it as that sustainable going forward because i just don’t i don’t see them introducing new products that people are really Excited about um but you know perhaps’m being, perhaps I am being too harsh on Apple. Perhaps I’m upset with Tim for going on the Melania show. Scott Galloway I think Apple is going to basically, essentially create an enormous new licensing agreement with one of these LLMs that’s raising ridiculous amounts of capital to have, to be the AI LLM of choice to their billion wealthiest consumers in the world. I think they’re doing the same thing. I think they’re going to stay out of the AI wars and leverage their custody of the billion most important consumers in the world and enter into some sort of similar agreement as they have With search. You know, they never got into the search wars. They said, we can’t compete. It’s better to rent our consumer base than go vertical in this. I think they’re doing the same thing in AI. (Time 0:26:36)
  • Warsh Signals A Hawkish Fed
    • Kevin Warsh is seen as a hawk and the ‘least bad’ Fed nominee relative to other options.
    • Markets reacted modestly, reflecting relief that the Fed chair pick won’t immediately pursue extreme rate cuts. Transcript: Ed Elson Trump has nominated Kevin Walsh to be the next Federal Reserve chair. If confirmed by the Senate, Walsh would replace Jerome Powell in May. The major indices fell slightly on the news. Meanwhile, the dollar climbed and long-term bond yields rose. In a truth social post, Trump said, quote, I have known Kevin for a long period of time and have no doubt that he will go down as one of the great Fed chairman. Maybe the best. On top of everything else, he is central costing and he will never let you down. We finally got our fed chair people thought it was going to be kevin uh hasett people thought it might be chris waller then people thought it might be rick reader it is going to be kevin Walsh um my initial reactions to this the options were not that great at least if you were to look at Kevin Walsh versus Kevin Hassett versus Chris Waller. I don’t know as much about Rick Weedek because he came onto the scene very late. What I do know is that, in my opinion at least, Kevin Walsh is the least bad of the options. He’s definitely been a sycophant of late, but he could not have been more sycophantic than Hassett has been, and also than Waller has been. And what is also quite interesting is, you know, he is traditionally known as a monetary hawk. His view is, at least in his past, has been, you need to fight inflation, which means higher interest rates, which is interestingly the exact opposite of what Trump wants right now. He is, of course, changing his position a little bit lately to make Trump like him. I mean, they’re all doing this. They’re all playing the sycophant role. But it will be interesting. And I could see this playing out quite similarly to the Jerome Powell situation where Trump said very similar things about Jerome Powell. And then eventually Jerome Powell held his own. And he did what he thought was right for inflation. And now they’re in this war against each other, and the administration is trying to investigate him. So, I think he was the least bad of the options. So, I think this went about as well as it could have gone, given the circumstances. Scott Galloway That feels right. I think the markets are doing a collective exhale right now. And the key term you used is hawkish. I think the fear was that he was going to put some sycophant alkali in and the person was immediately going to cut interest rates to 1% and ignite an upward spiral, a death spiral of inflation. And that was kind of the doomsday scenario. And this guy is known as a hawk. Yeah, he likes Trump’s policies, but we knew that was going to happen. Canadian Prime Minister Mark Carney, who’s seen as a responsible guy, he was the first non-UK citizen to, I think, chair the Bank of England, called him a fantastic choice. He’s also said, Warsh has also been critical of the Fed for enabling too much deficit spending, which I’m a big fan of that viewpoint. So, you know, he has ties to the billionaire class. He’s a Trump fan, but he’s, I think, you know, I think this is a good pick. We’ll see. (Time 0:31:51)
  • SpaceX Has A Durable Moat
    • SpaceX has a wide moat in launch capability that justifies stronger long-term conviction than many AI unicorns.
    • OpenAI’s sustainable advantage looks thinner and more contestable than SpaceX’s infrastructure lead. Transcript: Scott Galloway It may be the largest ever, but it’ll be the largest ever by gross dollar volume raise. And unfortunately, it’ll be crowded into a small number of companies. We keep getting hints of sunshine that the nuclear winter and the IPO market is coming to an end and there’s the beginning of a thaw and it never quite gets its mojo. So I think they’re saying this is, there’s so much pent-up demand and these companies have, you know, have reached such exceptional valuations in the private market that they need To find, you know, the greater fool. And the greater fool, I think, in those instances, will be taking these unbelievable brands and an unbelievable technology and giving retail investors the first shot at owning them. In terms of the companies themselves, you know, SpaceX, I think SpaceX has as big a moat as OpenAI does not. And that is SpaceX, I think it’s like 80 or 90% of launch capability now is controlled by one company, SpaceX. I think the next big, big thing in terms of a company with no revenues being worth $200 billion is going to be space defense. All the moons are lining up around that. And the infrastructure play, the NVIDIA of space, quite frankly, is SpaceX. Just i think i don’t i i have trouble thinking of a company that has built a wider moat than spacex open ai i think could be i think open ai could get pulled i think there’s a non-zero probability That gemini and some of these open weight gain so much traction against open AI and Anthropic is kind of beating them in the enterprise. It’s done a better job of branding instead of branding catastrophe. Anthropic has branded itself as a partner, if you will, and their ads are much clever. They’re more about humans and saying this is a tool, not something that could be the end of the world. I don’t think OpenAI has done a good job managing the brand of late, especially the proximity between Sam Altman and the president. I think people are starting to gag on that. And I think they’re way out in front of their skis in terms of the valuation that they’re anticipating. Anyways, I’m very bullish on SpaceX. I don’t know from a valuation standpoint, you know, how unreasonable the valuation is going to be, but I very rarely see a company that has the kind of competitive advantage or sustainable Advantage it has. And I think OpenAI sustainable advantage is really, really thin. (Time 0:41:03)
  • Starlink Saved The Day
    • Scott recounts using Starlink to get reliable internet when other connections failed.
    • He praises Starlink for enabling connectivity on planes and in remote situations. Transcript: Scott Galloway And also SpaceX or Starlink terminals in Iran have helped kept the world apprised of what’s going on. So both of these technologies, and I think Elon’s done a really good job of trying to ensure, I assume it’s him, trying to ensure that the people of Iran have some sort of communications Hotspots. And also when I paid like $50,000 or $70,000 to have crazy high-speed internet in my home in London, and they had to run a cable across Regent’s Park or whatever, and of course it went out. And this guy was running around, and what did he do? He installed Starlink. And it wasn’t as good as the fiber, but it was the quickest, best, quick solution. It’s an incredible product. I used Starlink on a plane the other day, and I could have done a podcast. It was that good. Anyways, I just don’t think there’s any denying. I think SpaceX is going to be worth more than X, worth more than Tesla, worth more. (Time 0:48:02)
  • Don’t Buy Hot IPOs On Day One
    • Avoid buying hot IPOs on the first public trade because allocations favor insiders and institutions.
    • If you get an IPO allocation, consider it, otherwise wait for the aftermarket to settle. Transcript: Scott Galloway In IPOs. I mean, this is obviously the question. Don’t. Excuse me? It’s an easy one. If you have access to the IPO, absolutely. But buying on the first trade is usually a bad idea. Ed Elson Right. Yeah. So we’ve got Canva, we’ve got Revolut, Stripe, Databricks, Anthropic, OpenAI, SpaceX. Scott Galloway Your view on these is don’t invest. The game is fucking rigged. It’s essentially either you’re powerful and know the CEO or have influence, or you’re an institution that gives so many fees to these investment banks that they give you an allocation. They purposely price it 10 to 40 percent is below what they think the market, the first trade will be. The institutions and the powerful friends of management get in, get easy money, and then the retail investors get to come in and buy the first trade, which is usually, you know, at market. So buying on the first trade of these things has not been a high return strategy in the last couple of years because these things have been so priced so aggressively. (Time 0:49:10)
  • Use AI And Tokenization To Democratize Access
    • Consider tokenization and AI-driven continuous audits to widen retail access to private-company ownership.
    • Use multiple LLMs and benchmarking to reduce hallucination and improve the trustworthiness of AI ratings. Transcript: Scott Galloway The truth that you highlight. One interesting idea is the tokenization of companies from a very early stage. So everyone has access, early fewer transaction fees. The thing I hate about the secondary market, I get opportunities all the time as anyone does through SETR, you know, these secondary markets is it’s very inefficient. They want to charge you 7%. You don’t have confidence to buy because it’s not a liquid market with a price. But I like the idea of some sort of tokenization where you use AI to grade the compliance of the company and the disclosures and the transparency. But from a very early stage, you can buy tokens in these startups and they don’t go public. They just have a publicly traded currency that represents ownership. The problem is that creates all sorts of disclosure requirements. But I wonder sometimes if the SEC and these regulatory bodies want to hold onto their jobs as opposed to acknowledge that the entire market has become very speculative and there’s so Much opportunity for speculation that people have with their money. Who exactly are you protecting from what with these? And I think AI could serve, we’ve talked about this, a pretty thick layer of disclosure where you buy a token and your buddy that started that company, Rogo, that has that layer of innovation On top of AI for financial services companies, you know, should that company have tokens right now that anyone could buy? And it doesn’t, it never goes public. It just keeps increasing or decreasing in value. But there’s got to be some sort of innovation here that gives retail investors access to this stuff. Ed Elson Yeah, I think my view on this is the line between private and public markets has become so blurred at this point that it should really just be eliminated. I mean, the fact that we’re, we have all these investor accreditation laws that are supposed to protect people from buying shares and opening. I mean, while you can buy Cum Rocket and Pepe coin is just completely ridiculous. Scott Galloway Or bet on the Super Bowl on like what if the next play is going to be a run or a pass. I mean, enough already. Exactly. Ed Elson And it’s like, oh, no, we want to we want to make sure that you’re only investing in real companies. So that’s why we’re going to have to go through this accreditation process. And you’re going to have to prove to us that you’ve made $200,000 a year for two years in a row. And then you’re able to invest in these private. It’s just completely ridiculous. So all of these private companies, everyone should be able to invest in them. If we’re going to say that crypto is legal, then investing in private companies should also be legal. My only problem with the tokenization point is I feel like it assumes that it needs a crypto aspect because crypto is highly associated with tokenization. I don’t think it needs that. I think all you need to do is say anyone can invest in private companies. That’s the law. And so let them invest. And then that will mean that the New York Stock Exchange and all these public exchanges can reach out to private companies and have them list. And it basically just means that everyone can list as a public company. I don’t think you necessarily need crypto or AI to enable that to happen. I take your point about, you know, getting the auditing done on some of these companies. But the reality is we’re not auditing prediction markets. We’re not doing any of that shit on crypto. So why are we pretending that we should be doing it with companies too? Yeah, but I was thinking about, you know, we do a plan every quarter. Scott Galloway We get, I get all the financials from them. I try to pretend I have a board at Prof G Media. By the way, I love not having a board, but I try to pretend I have a board and I do kind of an internal quarterly board meeting where- Who’s on the board? Oh, it’s Scott Galloway and his 17 alternative personalities. Ed Elson It’s news to me. Scott Galloway I didn’t know we had a board i didn’t know we had a pretend board i’m gonna have the second and third board members will be those two hotties from that gay hockey series i want to put those Two on my board but what i do is i put together a board deck or something resembling a board deck basically i ask karen and the finance team to put together all these metrics and and i run It through ai where we where’s there opportunity where there isn’t i look at it i’ve gone through a million board decks. But I was even thinking about publishing it because, A, I think it’s illuminating how an entrepreneur thinks about a small media business, a niche media business that’s trying to grow 20% or 30% a year and trying to grow its EBIT to 40% a year. But also, I do think that, I just, I think AI, I think AI could say, all right, I think there’s a business in becoming an SEC, an AI version of SEC where it says, all right, we need the following, I need the following access to the following APIs. I need access to your company’s bank account. It’ll be anonymous. I’m not going to release any information. I need access to your payables. I need access to your client contracts. Need access to, and if you give me access to all of those things, I’m going to put out a rating on your company. And I’m going to write fantastic analyst reports. And it’ll give people the confidence to invest or not invest. And you could create it almost like, well, if you don’t have this good housekeeping seal of approval, stay away. And then you could have a much simpler, much lower cost means of buying and selling shares or tokens in that company, as long as it had this AI audit on a regular basis. (Time 0:51:52)
  • Benchmark LLMs To Mitigate Hallucinations
    • Cross-referencing multiple AI models can reduce errors and mimic the benchmarking role of legacy ratings agencies.
    • An AI-driven ratings ecosystem could offer continuous transparency and flag fraud risks faster than traditional audits. Transcript: Ed Elson Doesn’t sound fun, but it also sounds difficult. And you better hope that AI isn’t hallucinating. Current technology will not really guarantee you that at all. I mean, if it’s possible for ratings agencies and Moody’s and S&P to hallucinate as they frequently do, then think about the hallucination rates of the AIs. And then are we taking that at face value? This is the truth. This is what’s going on with this company. Scott Galloway These are the risks. Well, what’s closer to an objective truth, right? Because Moody’s had AAA ratings on all the bonds, the subprime bonds, before they literally folded and almost took down their global economy. What I think is important is the reason you have Moody’s and Fitch is, you know, I forget the third one, is you benchmark them against each other. And what I always do, I never ask one LLM a question of any importance without asking two or three and then cross-referencing them. And I think you could do that here. I think you would run it through a variety of LLMs to say where, because you’re right, it gets it wrong all the time. But I would argue. It gets it wrong all the time. I mean, I’ll ask it a question. Ed Elson I’ll say, this is the answer. And they’ll say, no, it isn’t. And they’re like, oh, you’re right. No, it’s not. It’s this. No, it isn’t. Oh, sorry. You’re right. It’s this. It’s on and on and on and on. Scott Galloway I find the ratings agencies and those guys have finally been so weaponized by who their clients are. And anyways, I find it’s the boring shit that moves the needle. (Time 0:58:23)
  • Resist Through Targeted Economic Non-Participation
    • Use targeted economic non-participation (unsubscribe/cancel) as a lever to pressure companies and influence market-sensitive policy.
    • Organize low-effort collective actions like pausing subscriptions to impact companies with outsized S&P influence. Transcript: Ed Elson Let’s take a look at the week ahead. We’ll see job openings for December. We’ll also see ADP employment data and the employment rate for January. Meanwhile, we will get earnings from Amazon, Google, Palantir, AMD, Disney, Uber, Pfizer, Eli Lilly, and Novo Nordisk. Scott, any predictions? Scott Galloway Well, I’m talking my own book here, but basically, I think these economic strikes are about to become a static part of a new arrow and a citizenry quiver of pushing back on governments. And that is, and we talked a lot about this, my observation is that the current administration and also leadership around the world is now responding more to markets than they are to The citizenry or even the Supreme Court. And that while protests are effective, I’m not suggesting they’re not, they’re very cinematic, But I would argue that the current administration has only responded to changes in The economy and the markets. And the greatest political movement in history in terms of action and size of action was in Q1 of 2020 with COVID. And again, it wasn’t because hundreds of thousands of people started dying. It’s because GDP went down 31%. And the greatest act of, again, the greatest act of radical transformation, you know, kind of radical action in a capitalist economy is non-participation. And I’m seeing a bunch of economic strikes, including the one that we’re organizing, pop up. I think that the marketplace, this vulnerability around such a huge concentration of value across a small number of companies who also happen to be the companies, many of whom who are Enabling the president with their sycophantry or showing up to premieres or giving money for a new White House or whatever it is. Is that a small number of companies have a big impact on the S&P, so a small amount of action, canceling Apple TV +, canceling your Amazon Prime, just for the month of February, going to One streaming platform, having one LLM versus two, and being loud about it will get a lot of attention. And you’re going to see national economic strikes. You’re going to see a bunch of them, and they’re about to become a static part of the resistance. And if you like what I’m saying, don’t like and subscribe. Resist and unsubscribe. And by the way, that’s our website, resistandunsubscribe.com or unsubscribeFebruary. We have a list of the companies at ground zero that would have a disproportionate economic impact on the markets. And then we have something called the blast zone, and that’s companies ranging from Home Depot to Hilton who are kind of aiding or participating in the support of providing infrastructure To ICE. And anyways, prediction, national economic strikes are about to become the new technology of pushing back on what I think are fairly upsetting policies of terror and anxiety in the United States. (Time 1:00:11)