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I used to be this cute professor that everyone said nice things about, and then when I got big because of you, people started actually looking at my shit and saying, This makes no sense.
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Hi everyone, this is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher.
And I'm Scott Galloway.
¶ New York's Piedra Terre Tax
Um where are you right now? Where are you?
I'm back in New York. I get back uh last night. Oh you were? Yeah. I love I love coming back here. I don't know if this is my happy place, but it's definitely my let's go to Shamar go and get fucked up place.
Okay, but let me ask a question. The Piedra Tear tax, what is did you hear about this with Hokel and Mamdani?
Does that mean if you're banging a French dude you gotta wear condoms? What does that what does that mean?
It's for people who don't actually live in New York. They're they're taxing your real estate. That would be you. Yeah, two or two.
Well I'm glad you've announced that publicly such that they know how to know how to penetrate my L L Cs and like It attempts to hide my tax data.
They're already onto Ken Griffin.
Yeah, me and Ken Griffin.
Yeah.
Me and Ken Griffin.
saying that's that's who they're noting has a Pierre Terre.
Yeah.
Yeah that too. Me people who don't live in New York, who have a second home and doesn't act don't actually live here, have to pay a tax. That's what's happening.
You know, I'm glad to participate and support our Navy in great parks. It's an honor for me. Isn't that what rich people say? Is that they they love paying their taxes at twelve percent tax rate? Yeah, I don't know. Let's see how much it is. High value probably is over five million.
Yeah.
Okay. That's a bummer. A ten million dollar apartment could face fifty to two hundred K per year extra tax. What?
You know, it'll raise about 500 million for the city of New York to help bring good services to the good people of New York, just saying.
I say let the homeless rain and let the subway go to shit. I can't afford the
Oh my god. Oh my god. Well, th you have to rethink things. Anyway, I just so glad to tell you about your tax news. I'm just paying you back for my picture up.
I was in such a good mood this morning and you show up and remind me. I thought you knew highlight you.
Ran.
And basically put a bullseye on my forehead for the New York State Comptroller.
There is not a bullseye. Oh my god, they know it. They know it.
I rent a studio in Gowanas, just so everyone knows that I don't own a place here.
It's not a bullseye, Scott. They know it. They know. They know. You talk about where you live, but oh my God, forget. I'm not you're not blaming me for this pietatera. I see.
I saved your fucking series, you cost me a quarter of a million dollars.
¶ Iran Tensions and US Strategy
Okay. Let's get to the news. There's so much going there's also so much going on besides Piet I'm your new name is Pieta Terra.
Pepe La Pierre.
You're pe you are peppy. You know what? You kind of are. Anyway, let's do a rundown of the latest with Iran. President Trump says the war is very close to over again. As we tape this, Iranian officials and Pakistan's military chief are set to meet in Tehran to discuss messages exchanged by Iran and the US. Meanwhile, Iran's military has threatened shipping in the Red Sea if the US continues its blockade of Iranian ports. What do you think?
Let me just piss off everybody. I think that the US threatening to block Um, to fully block the state of hormones is the right move right now. Because Because if uh freedom of navigation for the last hundred and fifty years has been a key component of the global economy. It's a generally accepted principle that
the Strait of Malacca, the Straits of Singapore, if Indonesia, Malaysia and Singapore decide one day to exert their geopolitical power and get tens of billions of dollars, that they could block the Strait. Egypt could block uh the Suez Canal. And so if there isn't a multilateral force that keeps this thing open, it just sets a terrible precedent. Now how we got here, I think a lot of people have very valid arguments around, well, we broke and now we're asking the world to fix it.
But I think it's actually a good strategy to say, okay, if you want the straits blocked, we're gonna make them blocked for everyone, including all entry into Iranian ports. Which I think is the right move. Um, what is really unusual about all of this, and I know we're gonna get to this, is that the markets are up. Um which is just uh it it fully seems like the markets have totally dislocated
Yeah, let me...
I'm sorry.
Yeah, the the the S and P is up two point six percent in the last five days. Just they are going up'cause they feel that there'll be some Some c opening of the Hormuz, correct? I mean or as Scott Besson call it, the Strait of Vermouth. But go ahead.
¶ Markets Disconnect Amidst Tensions
I've I've said this for a while. I think the Nasdaq and the DAO are the two most damaging metrics in the world because they give people a false sense of how of the prosperity and well being of the world. And the reality is America is energy independent. And so there's actually some stocks that are up twenty to forty percent in the oil sector.
So it's not a defense risk to there is the markets seem to be saying that the war will at some point be resolved sooner rather than later and that the oil flow through hormouths will begin again. You also have This unusual situation where in the last three big major conflicts the US was involved in, or three exogenous shocks, the Gulf War
the Iraq War and COVID, what ended up happening was the markets were way down. And initially in March, at the outset of the war, the markets declined ten percent. But in each instance there's been a rip back and the following year the stocks are up. So people have been buying the dip, and basically what's happened now is people buy the dip sooner and the markets recover based on the historical pattern of the market surging after.
Sure, but but it's still a mess there, a mess created by Trump that was unnecessary, right?
That's a political statement and I I uh you can agree or not agree. I'm just talking about what the markets the markets have totally disassociated here.
They have. And I think what you know, Stephanie Rule actually had some a really good take on this uh this week where she was talking about why they're like this. And they just feel they're just trading that's what she said, the ups and downs. They don't care about anything else. They just have watched the
But also look at who look look who this is hurting. Uh gas is uh gas prices are, you know, Brand crude. Right. Is uh You know, the European benchmark's up thirty-uh two percent, the price of gasoline in America is up thirty-six percent, Brent oil futures are up thirty-one percent. But let's be honest, who does this hurt? It hurts
the lower half of Amer oil prices doesn't don't really impact you or me, Cara. And and the reality is ten percent of Amer the top decile of American citizens now are now responsible for fifty percent of consumer spending. They own ninety percent of the stocks. Do they care that gas is at six bucks? I mean it's an interesting media headline.
But the reality is the stock market is now a proxy for companies that are mostly invested in technology and some oil companies. You could argue some consumer companies will get hurt because consumers will stop will spend less. But wealthy people just aren't affected by this.
Right, which is which is the point you made. I'm gonna inter one of the thing I interviewed uh Jose Andres this week, um, at the um semaphore column and he was talking about fertilizer prices and how people You know, people at m across the world eat hand to mouth and and he was noting that. He said, You and I
you know, it'll be irritating to pay four, five, six dollars at the gas station. Um and it will it will hurt us, but not in the way it hurts people around the world and and also uh fertilizer prices um for for farmers in the Midwest and added to the tariffs with Canada because the two places we get fertilizer from I I'm I believe
¶ Political Controversies: Hegseth, Vance, Impeachment
The United States primarily imports fertilizer from Canada and I think Russia. Anyway, we we have an issue with everybody else. And so the stock market doesn't reflect people's lives. That's exactly experiences, right? So one of the things that that House Democrats are doing now you told them to act and I don't know if you think this is a thing to do, but they just filed six articles of impeachment against Defense Secretary Pete Heggsess. I think they're getting ready as
Rahm Emanuel has started started to make some moves, high crimes and misdemeanors related to Iran. And by the way, Heg, I must note, he read a fake Bible quote from Pulp Fiction during a prayer service at the Pentagon on Wednesday. He's really quite n and at the same time he's there's supposedly uh operations being prepared for Cuba. They're moving to Cuba, um, even as the Trump administration continues to beef with the Pope, which is a whole nother thing.
And so I think in despite the fact that yes, the stock market is reflecting something else, you and I might not be as affected as other people. These this th this is it's beyond political. It's now economic for most people, which I think gets missed in you know, it doesn't get missed in all this, but it's has a real impact.
including this beef with the Pope. Um let's listen to a clip now JD Vance has entered the conversation, newbie Catholic J D Vance, uh at Turning Point USA event this week where of course nobody showed up, which was kind of astonishing. Let's listen.
Mr President, but I think that it's important, in the same way that it's important for the Vice President of the United States to be careful when I talk about matters of public policy, I think it's very, very important for the Pope to be careful when he talks about matters of theology. Well I'm sorry, p the Pope shouldn't talk about matters of theology. Isn't that exactly who you should be discussing?
He has to be careful. He should be careful, even though he's a very well regarded theologian. But JD Vance has some words for him. He's I think he's torpedoing his twenty twenty eight chances by picking a fight.
He's decided still that he needs to s have such to be such an accolade. This is a politically stupid move for him. Because evangelicals are actually swing voters. They were sort of a toss up with Biden and then they they went hard for Trump. If he doesn't get ev evangelicals, he's not gonna be the nominee.
And he's clearly decided that it makes more sense. I mean, quite I I don't get this at all because if he were to come out and say, those comments, while I respect what Trump said, I feel like the Pope's comments were ill timed. I still have an issue and I will not be critical or i if he came out slightly against Trump Trump might be furious at him. Trump's not going to dump his VP at this point. And JD Vance needs evangelicals. I mean, this was just
A really stupid thing. And also uh uh just because I think it's important to be as offensive as possible and convince people that I am not, in fact, running for president, you know how a little boy saved a priest's life.
Oh no, no, no, we're not doing, no, we're not doing, we're not.
Okay. Never mind. I'm sorry I won't do it. I respect you. I got a picture of you behind me. Never mind. Let's move on. He found a lump on his scroto. He found a lump on his scrotal.
No, no.
Cop pulls over two priests and says we're looking for two child molesters and the priests look at each other and then look to the cop and say, We'll do it.
Oh my God. Okay. We're not insulting the Catholic Church right now because Trump is doing so. Um, I think the whole thing is insane. And uh you know, I know it's a joke about Pete Hagseth quoting from Pulp Fiction. He probably did an AI search and thought it was that, right? That's my guess. That's that's probably what happened to one of his dumb minions added it in. Um but
It's it's a fake Bible version. These people are so performatively religious is the my issue. Like they don't even they don't even read the Bible. They just quote from Pulp Fiction because they don't know the difference. And if you're actually someone who's really uh religious, you do know the difference. And with the vice president, he just literally, let me just take one more point.
Uh the Pope is an American citizen. He should be able to say what he wants, by the way. He I I don't he he remains an American I assume he remains.
From Villanova.
Um desp despite being a pope. Um but he doesn't lose those First Amendment rights. But he's talking about peace, he's talking about tyrants, he's talking about everything Jesus talked about.
Is there a
And solidifying it.
What do you get when five hundred Jewish mothers convert to Catholicism, Kara? Critical masked. I think that's pretty good. I think that's pretty good.
Anyway, we're gonna move on this is really disastrous, this fight with the Pope. The Pope is gonna win.
No, don't go up against El Papa. Especially this Papa. He's very good. He's very good.
This is a good Papa. Like, oh man, I even want to go in the church. That's how a good Papa it is. I'm like, I'm going back. Like, I'm going back in.
You're gonna go to one of those crazy Unitarian churches with some lady with blue hair, baptizing support, or rescue dogs, you'll end up in one of those kind of churches.
No no I won't. I don't like those.
What a glide next time in San Francisco. That's awesome.
I love Glyde. I love Glyde. It's a wonderful church. It's a wonderful church. I don't like Unitarian ch churches. My my ex wife took me to one we were married and I was like, do they stand for anything? Like I I for some reason the Catholic in me got go.
Correct for you.
No, they were like it was like it was like everybody everything. They believed everything. And I was and I I listen, I have a lot of respect for all all religions, but I got I I had to leave.
There's your land acknowledgement. I don't. I believe some religions are worse than others. Let me just say that. I just I got interrupted by my poorly poorly timed jokes. But I just want to go back to the notion of trying to do a an impeachment or begin impeachment proceedings of hexath. I think that's stupid. I don't think you uh I think if we've learned or one thing we should have learned as Democrats
is that uh unless you have the votes lined up, you don't do it. It comes across I I just don't think America needs another impeachment.
But I thought you said for them to signal what they're gonna do. Isn't that kind of signaling what they're gonna do?
This is in my view, this is what they do. Uh an an impeachment nostalgia tour, the Democrats don't need again. It at this point it wouldn't work. I'm all for impeaching the president at this point and the Secretary of Defense. You don't do it until you know the votes are locked. You announce it and then start the vote the next day. Otherwise it's just performative and pisses off the other side and is a waste of time. This is what you do.
You announce legitimate legal action in coordination with a state AG to go after certain individuals who have committed actual crimes and there's a lot of them in this administration. This is performative, it's political, and we're gonna again look stupid.
¶ Trump Battles Jerome Powell Again
Uh okay. Anyway, um I'm gonna move on because the chaos follows Trump wherever he goes, but he's back to his Jerome Powell fight. He's like an old man who forgot he was fighting with someone and then remembered. He said if he doesn't uh step down next month he's gonna fire him, like even though he has more time on the board and also says
The DOJ probe of Pow Powell and the Fed should continue. Powell's Fed chair term officially ends on May fifteenth. His term as Fed Governor is up in twenty twenty eight. Usually they leave when they when they finish their chair, but he doesn't have to. And he plans to stay on as acting chair until his successor Kevin Walsh is confirmed. Powell says that's what the law calls for.
Walsh's confirmation here is scheduled for next week, but Senator Tom Tillis, who I interviewed, as said, confirmed again he won't confirm him until the DOJ probe is resolved. All this from the prosecutors from the US Attorney Janine Pierrot's office showed up at the Fed this week trying to get a tour of the building's renovations, got turned away. She's trying hard to become Attorney General, FYI.
Um, uh he can't if he fires Trump but Powell, he's in big trouble. He's gonna taco this one, right? Presumably. I he's back to it though.
It's three people in a room with Claude and Chat GPT and every time the temperature in association with Epstein gets above between the link between Trump and Epstein and its presence in the media gets above a certain temperature, they say, throw something out and distract everybody. And this is just another one because I don't even think he legally has the right to remove Powell from the board of governors. So uh uh his term doesn't end till January twenty twenty eight.
So i i i this is just again, I believe he knows and his people have said that I mean there's two things that are going on. Either grandpa just says shit as he's as he's thinking it and maybe that's true, or if you give him more credit than that, it's another attempt to distract.
from from Epstein. I don't want to say feel bad for Kevin Walsh, but all his entire hearing is gonna be about Jerome Powell, not about Kevin Walsh. And what I've said before is that as long as Powell is on the board of governors, He's the de facto chair because anything he says, eleven of the twelve governors are gonna nod their heads.
Which is why Trump wants them gone.
That's exactly right, but he does not have the power to do this. And you are going to have several Republican senators find their testicles and come out in favor. of Chairman Powell remaining on the board of governors. It's uh it but I think Trump I think Trump knows that and just today said, I need something to keep Epstein out of the news. I'll go after Powell again today.
Or or yeah, or
Yeah, my favorite is my favorite is they're gonna start talking about talking about abstinent to distract from Iran.
Yeah, I know. Yeah, that was that was because that's what that that was the Melania faint, I guess. We'll see what happens. They're not gonna fire pile. They're not. They're just not. Okay, Scott, let's go on a quick break and when we come back, Amazon makes a big acquisition.
¶ Mid-Episode Sponsor Break
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¶ Amazon Acquires Global Star
Scott, we're back. Amazon is acquiring a satellite operator Global Star in a deal worth around eleven point five billion as it tries to catch up to SpaceX Starlink. Under the agreement, Amazon gets GlobalStar's existing satellites and infrastructure which will operate alongside Amazon's own uh network now called LEO, as after the Pope, I guess.
Uh Amazon says the deal will enable it to build direct to device satellite system with a rollout expected in twenty twenty eight. FCC Chairman Brandon Carr says his agency is very open minded to the deal. and the FCC is taking all gas no brakes approach to expanding the US space economy.
He kinda has to. He just kinda has to. What do you talk about this because obviously Amazon isn't going away, um with and they're trying to solidify this network for themselves to be the at least the number two player here.
My big stock pick for twenty twenty five was Alphabet. We got that one right. My big tech stock pick for twenty six is Amazon. This is what I think Amazon is going to do. They are going to build a viable competitor to Starlink using Kuiper as a platform and this is another step in that. I'm sorry, Project Leo. They bought basically they bought 24 satellites here. And it's never been profitable, but g Amazon closed up three percent. And this is what I think Amazon's strategy is.
Amazon's gonna launch a phone and then they're gonna offer Amazon Prime Plus, which will offer you a phone and lightning fast connectivity into your home. They're going after ATT Verizon and Comcast and basically gonna offer you connectivity with Amazon Prime. And they need the satellites to do this. So why would they buy a non profitable satellite company? Again, see above twenty-four satellites. They get spectrum, they get radio waves.
The wireless signals, uh, including Wi Fi travel on. The government owns these and issues specific licenses for them, but Spectrum is auctioned off by the FCC and extremely expensive, so they get that. They could do for B to C again, Amazon price, they could sell t Wi Fi to prime subscribers. B to B, they could sell private wireless networks to serve its warehouses, delivery hubs, robots, drones.
Robots and drones need this connectivity to communicate wirelessly, constantly. And it's much easier if it's cost efficient if Amazon has its own network.
Yeah, so it's a strong number two. It's to create a strong number two.
Is essentially what Amazon is. It's the strongest infrastructure company in the world. It's an extension of their investment. in the logistics network. And right now Project LEO has two hundred and forty operational satellites. It plans to ramp up its network by deploying thirty two hundred in Earth's low orbit by 2029. Starlink has over 10,000. This is definitely catch-up, but Amazon has a hundred and fifteen million homes to offer this service to overnight.
Right. The relationship with consumers, right? So you have to go out and buy Starlink and people do love it. I have to say, you know, oddly enough, Jose Andres who has had be has a huge beef with m with Musk over uh US AID saying he's killing essentially saying he's killing people. Um, he said we used to critical to our world central kitchen operations. And I think he would like an alternative, but he definitely said it's really a shame. I wish that Elon was around and not this other one.
um, which is, you know, hugely damaging to their efforts across the world feeding people. Um, but between that fertilizer and that, like the cuts at USAID, they're facing, you know, a huge uphill battle against hunger across the world.
¶ SpaceX IPO and Anthropic's Rise
But one of the things that's happening here is you get an all this is what happened with Tesla. This is what happened there's going to be number twos. Now, will it have an impact on the SpaceX IPO? I doubt it. I think it's gonna be like it it's gonna r run, oddly enough, interestingly enough, Google is a big owner of it, um of of the SpaceX IPO. They're gonna make like
many commas of money um from this deal. So that should that would that that'll be an interesting thing because many years ago Yahoo owned a big piece of Google. I don't know if you remember in the beginning. And that's what saved them for a while, like having that. investment in in Google that they made. Um and now in this case Google's gonna make a lot of money from these SpaceX, but I don't think the SpaceX IPO will be damaged in any way, correct? From your perspective.
No, it's it's arguably one of the strongest brands in the world right now, and uh people are excited about it. It it'll go out wildly overpriced. I think it'll get a slight bump. It'll be the biggest IPO of of um twenty six. The best IPO of twenty six will be anthropic, which will get out ahead of open AI because it has more momentum. But it's going to be again
If you look at SpaceX, I think 18 billion in revenue, six billion in profits. So when um it's gonna it's going out at a hundred times revenue, it's growing twenty-four percent a year. When Google went public. It was growing 240% a year and trading at 10 times revenues. So SpaceX, incredible company, the most overvalued IPO in history? Uh the answer is yes. This is just insane the valuation they're talking about.
¶ OpenAI's Shifting Alliances and Rivals
Yes, yeah. And I think it's great that that there's another there's more satellite efforts like this. There has to be at least two or three. I mean, there's not gonna be more than that, by the way,'cause the costs are so huge, but it's good for having them run for their money. Speaking of open AI and anthropic, uh open AI is distancing itself from Microsoft and cozy up to Amazon, which is interesting.
In a memo sent to staff, OpenAI's revenue chief Denise Dresser said that Microsoft partnership has limited the company's ability to meet enterprises where they are. No no shit. On the other hand, Dresser said the company's Amazon deal has generated frankly staggering demand. Dresser also used the memo to go after anthropic, accusing the rival of building its strategy on quote fear, restriction and the idea that a small group of elites should control AI.
Obviously they're throwing they're trying to hurt Anthropic in the race to the N IPO. They're throwing Microsoft under the bus. Um and and uh uh interestingly, Speaking of Anthropic news, the company has recently received multiple offers from VCs to invest at valuations as high as eight hundred billion dollars. And Anthropic has briefed the Trump administration about its new methos model, which is not being released to the public due as we talked about last week due to its
alleged cybersecurity capabilities. Um Bezos owned Washington Post said the efforts by the Pentagon to to thwart anthropic are stupid, which was interesting this week. Um so they're fighting it out in court. I suspect the Trump administration is gonna start dropping that soon enough. Um but what talk a little bit about this OpenAI uh memo, which was obviously
leaked in order to to get it out there. Um and this idea of breaking from Microsoft, sidling up to Amazon and attempting to stain anthropic in some way, which I think is stupid on my in my in my estimation.
¶ Anthropic's Enterprise Growth Dominates AI
Anthropic has more momentum than any company in the world right now. It's gone I mean, it's gone at the end of twenty twenty five, which wasn't that long ago, its ARR was nine billion. It's now thirty billion. It's more than tripled its annual recurring revenue in four months. And by the way, Uh, open AI's is twenty five billion. So the little engine that was, you know, kind of an afterthought to open AI just twelve, eighteen months ago is now a bigger business.
Than OpenAI. And this is the first time that Anthropic has let on revenue and it's growing faster. It's and not only that, it's a better business because that growth is almost exclusively enterprise-driven, which is a better business.
So what is OpenIA doing here by release they released the memo. Let's not pretend that this is what they were doing. What w what's the message here?
become Coke versus Pepsi and yeah, I feel I think it feels desperate. I don't I don't they're trying to they're trying to weaponize the government against them. They're trying to shitpost them. These guys hate each other. It's it's the Hatfields versus uh The McCoys and Anthropic has one thousand customers paying over one million dollars a year. That's up from just five hundred in February. The number of customers spending over a million dollars a year has doubled in the last year.
They don't seem to care about the Pentagon thing at all. You had thought they might, but it looks like they don't. Looks like they don't.
The the numbers here, let me give you some more data. 80% of anthropics revenues come from business clients who are quite frankly are just more reliable and more and less margin sensitive than consumers, uh, versus forty percent at open AI, 70% of every incremental
dollar spent on AI coming from the enterprise is going to anthropic. They raised thirty billion in their Series G at a three hundred and eighty billion dollar valuation, which is ridiculously low compared to the eight hundred and fifty billion dollar valuation Yeah. Which could crush previous investors if they don't if they have to go out lower than that. They they also said
I I mean the both companies are exploring an IPO this year. And Anthropic projects uh positive free cash flow by 2027. OpenAI is said they're gonna break even in 2030, but the bottom line is. Dario Modi is just showing himself to be a much more competent CEO than Sam Albert.
Right. Let me ask you a question. This focus on consumer, here's what I see. Uh OpenAid definitely focused on consumer and being like Kleenex or Google, right? That was what they were going for. The the one that everyone thinks of Chat GPT is Kleenex, right? Or clo or Google or whatever. The the the representative of everything.
So they relied on the consumers. Then they have a really good they start Sam Altman starts to get a very bad consumer reputation. So he g that like and i up and up to and including people attacking his home, right, which is painous. They have relied on consumer relationships, which are very easy to break, right? Suddenly you become the bad guy. And I think that that's one of the things.
Huh bear hugging Amazon and pushing away Microsoft, what is that? If you're in the room, what do you think the strategy is?
The honest truth is, I don't know. My guess is there's some ego involved here and some dynamics behind the scenes that I just don't understand, but Let me be clear. It i it's not easy to build a consumer brand. It can be very powerful. I'm not suggesting I'm biased'cause all my businesses have always been B to B. And the and the one business I did B to C red envelope was just so much fucking harder.
that I found than doing building a B to B business. Now what I think the dynamic here is the following. The reason why anthropic is going to be worth more and get to the IPO starting line faster than open AI as an enterprise dominant business as opposed to a consumer business of open AI. It's not necessarily that one is much better than the other, but here's the difference in terms of competitive dynamics. You can get as a consumer a really outstanding LLM and AI for free.
If you're a company, if you're Clorox looking for a$3 million enterprise wide LLM uh AI offering, there's no free alternative. So uh uh in sum, the substitutes on the consumer level are just much greater than the substitutes at an enterprise level, which says to me, whoever dominates enterprise has a just a much better business. Also These with just with just a duopoly, if one is perceived as better, which right now anthropic is perceived um as better in the enterprise.
¶ OpenAI's Microsoft Spat, Leadership Doubts
Enterprises are much less consumer sensitive because if they're going to implement technical debt, they don't care if it's 30% more expensive.
Is it a mistake to then say my we we didn't get in the enterprise fast enough due to Microsoft, which may in fact be the case, and now we're gonna hug it.
Makes no fucking sense. Right.
Yeah.
You're gonna piss off
Why are they doing it?
gonna piss off one of the most important, measured, thoughtful people in tech, Sachin Adela.
Who back?
It just makes no sense.
Yeah.
Yeah, and it shows it shows that you're not getting along with your y you have these fights behind the scenes. You don't you don't say that publicly, that you don't get into a war with Microsoft.
Well they didn't. It was a memo that got out, but it they leaked the memo. I mean this is my feeling they mean but one of the things they have to do is they have a problem with their image. N because they're the face of AI, they're the face of AI, right? Well Dario looks like a hero from a from a marketing point of view at the very least.
And so that's I think the real problem is Sam Altman represents AI, which everybody is hating on. Like young people, all the polls, all everybody has a problem with it. And when the problem shows you look at someone like Sam Altman and not Dario you know, Dario's not getting the kind of hatred that Altman is getting now, which I think is a problem. But but why hug Amazon too?
Uh because Amazon is executing against infrastructure like no one's business. And if you wanna I mean arguably Amazon from an enterprise level is the most discerning consumer in the world. And a Amazon is the best infrastructure company in the world. I I d so but I think there's some ego here. I think someone got pissed off at someone.
But you don't you don't get into a public tiff with Microsoft. By the way, just in terms of stocks, Microsoft as a multiple of free cash flows cheaper than it's ever been. I think Microsoft's a really good buy right now, but Lo look, the uh anthropic has so much momentum right now and open AI does not do you reali get this. Calci is saying the odds of Sam Altman being replaced as CEO are up to twenty-seven percent.
I mean, for the first time, Sam Altman being replaced by the end of the year is a real possibility because OpenAI, public tiffs with Microsoft, who was supposed to be your partner in this. Throwing up, totally shitting the bet in the enterprise market, all this negative PR and press. I mean and there's just no getting around it. Uh Anthropic is worth more than open AI right now. The and uh so I I think Sam, I think they were smart.
to be focused. They're gonna do away with that ridiculous fucking nonsense from I.O. that that was the stupidest acquisition of twenty-four or whatever it was. That's gonna be a that's gonna be a six billion dollar write-off. They're smart to stay focused. Aaron Powell But this is this is a tale of two cities, and one city is skyrocketing and that's anthropic, and the other is burning up on reentry, and that's um that's OpenAI.
¶ Branding, Competition, and Strategic Indifference
Think about it it is it's i but the posturing is important, right? So Altman is fighting with Musk on on on that case, which is gonna be full of it's going to trial, it looks like, this case. So that's gonna bring unnecessary no matter what, Elon fights, you know, with a lot of swords. So it doesn't he'll he'll he'll land some blows even if he's
a and make them look bad. He will, even if he looks, he doesn't care'cause he's like the villain, so it's fine if he makes other people look like a villain. I mean from a from a public perspective. Um, they're also, um, you know, it's not just Altman, it's like someone like Chris Lahane who I find very aggressive, right? And th this is a very aggressive group of people.
that sounds like they're not getting along intern. You sort of feel rumbles of that. Um th you know, the mistakes of not embracing enterprise and going full scale into popularity, I think, is always If you don't make that transition, as you said, it's really difficult. And quietly, this other group has done this. Now I agree, they should they shouldn't be fighting with Microsoft, but they made their they made the mistake and now they're blaming
their partner for that, right? The ability to meet enterprises where they are because they're actually good. Competing with Microsoft. They are competitors in that in that space. So anyway.
What's to be gained what's to be gained by shit posting Microsoft in public?
Just to say we we're serious about the n we're gonna really compete in the enterprise. This now we're serious. I don't know. I don't know. I just I don't understand this memo whatsoever.
But what enterprise is going to hire OpenAI because they've been critical of Microsoft? I I don't I I absolutely don't get it. This these people have egos. Sachin Adela doesn't need doesn't need SAMP. I mean, Microsoft could write off its investment in open AI. If quite frankly, the market has already done that. The market has taken Microsoft's d stock down.
I don't know, twenty or twenty-five percent in the last six months. They the trouble in Mudville has already been perceived by the market with respect to Microsoft's playing in traffic with open AI and that their investment in open AI may not end up being You know the the the kicker in the afterburner everyone thought it was
And a guy like Satchin Adela doesn't scare easily. I I d I don't I absolutely don't understand who approved this public spat on the and it says to me that open AI does not have a board. That that would say, oh yeah, that's a good idea. Let's get in a war with Microsoft. There's ego here. Someone got pissed off at something.
Yeah. So the anthrop going after anthropic as being fear restriction idea this small i is just sort of b so backward looking. Just to to g when you start attacking the number two, there's something going on. Especially I think what they were trying to get reporters interested in this run rate and, you know, inflation of revenues, which
By the way, no one really cares about what these companies at this point. They wanna know who the leader's gonna be. Anyway, um I mean they should care but they don't.
Just a general... crucible r rule, fundamental truth in branding and marketing, is that when you're the market leader, or you want to be perceived as the market leader, which I think open AI would say, we are the leader, and we want to be perceived as the market leader, you never reference the competition.
Right.
You don't. You just never uh Visa was a client of mine back in my brand strategy days at Profit and I said, Why wouldn't you talk about this versus MasterCard? And he goes, We're the market leader, we never reference the competition.
When you reference the competition, you're immediately saying they're a competitor. And when you're the market leader, what you wanna say is we have no Coke never referenced Pepsi. Coke never did a taste test. Like we don't even as far as we're concerned, Pepsi doesn't exist because we're fucking Coca-Cola.
I don't know. I I I used to do when they were talking about competitors. I'm like, who? I'd be do things like like uh I'm sorry, I didn't see it. Like I would
It's
No, I don't. I don't do that. Yeah.
I don't know.
Who's that? What?
Yeah, I think exactly.
The the personal learning here is the following, uh, or what I've finally come to peace with. When people shit post you or criticize you online, the best revenge, hands down
Indifference.
Just indifference.
Remember, you used to get mad at certain people attacking you, you get all
I wasn't used to it. I used to be this cute professor that everyone said nice things about, and then when I got big because of you, people started actually looking at my shit and saying, This makes no sense.
¶ Post-Interview Sponsor Break
Uh and I would get upset. Anyway. I'm fine now.
Thank you.
I discovered edibles.
It's good. Anyway, you've gotten much better about that, I have to say. I'm getting off of Twitter, which you did first, I will acknowledge. I'm sorry for making that mistake last week. Anyway, um another interesting story. We're gonna go on a quick break. When we come back, we'll talk about a potential United American Airlines merger. Seems unlikely, but here we go.
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¶ United-American Airlines Merger and Antitrust
Scott, we're back with more headlines. The CEO of United Airlines reportedly pitched a merger with American Airlines directly to Donald Trump, of course. The two companies combined would account for about forty percent of the U.S. domestic Flying capacity, industry experts and lawmakers are already pushing back, flagging major antitrust concerns. I mean, even I know that.
As one analyst puts it, the Justice Department doesn't object to that, they what would they object to? Trump is staying quiet for now with the press Secretary Kiran Levitt saying he has no opinion on a potential merger. I mean, I don't mind
Uh
this guy trying it, but w why not? It's the last days of the the Nero's empire here, so why not? But this seems like something that would be dead on arrival. I just don't I don't see it. I mean I don't know. What do you think?
Yeah, but you just you summarized it perfectly and that is the last days of Nero and that is you're gonna see in the next two years, you're gonna see so many mergers um proposed because everyone's gonna go, There's no fucking way Uh an FTC or a DOJ that is not in a deep coma would allow this.
So if we're, you know, if we're what are the, you know, two most dominant play if you're just gonna see mergers like crazy because they're gonna go, This is our last chance because this absolutely makes no sense uh from a concentration and monopoly standpoint. This should not be allowed to happen. It would create the largest airline on earth, thirty to forty percent of US domestic capacity and airl I don't know if anyone's noticed, airline tickets. Are scary.
No, I have.
Um I was looking at a one way from Miami to London business class and it was eleven grand.
No, it's crazy.
Um Kirby's argument to the administration a combined airline would be a stronger competitor internationally. are American, framing it as a trade deficit issue. And also American I love airlines. I love aviation. Uh Delta does the best job domestically. Jet Blues Mint is the best product. But American has been America is is i i uh has the best uh has the worst product. They're the weakest of the big three, hundred and eleven million in net income.
last year on fifty four billion in sales, basically break even. And they c uh it carries twenty five billion in long term debt, more than its rivals. On the other hand, United, which is a better run company, did three point four billion on fifty nine billion. Uh American s American airline stock jumped nearly ten percent on the news.
What does that say? That it could happen? This can't happen. This won't.
Well the market thinks it might because again, see above the guy it's just fucking ridiculous that CEOs go kiss the ass of the president to try and get a merger through. He should have nothing to do with this. But The the antitrust problems here are striking. There are two hundred and eighty-nine routes where the two carriers overlap and combining them would leave only one or two airlines serving that route. See above increase in prices.
Some of the some of the routes that overlap are Chicago, Los Angeles, New New York, Newark, Phoenix, Charlotte could require divesting entire hub operations in some cities. and the DOJ previously blocked the Jet Blue Spirit deal, which was a fraction of this size. So this is exactly the kind of deal that shouldn't even be considered If there was a DOJ or an FDC that was independent and looked at consumer prices. And these consumer mergers and the lack of regulation does two things. It transfers
capital from labor and from consumers to shareholders, full stop. And this it it it's been a one way flow of capital and power for the last thirty years. And the DOJ and FTC have almost no reviews anymore. I mean, it's like if you want to save money, get rid of the DOJ and the FTC. What the fuck are they doing now?
They can't. They absolutely cannot do this. I mean W you know, it's interesting'cause on Monday there you're seeing significant pushback. Uh we'll talk about this more on two things I want to talk about on Monday. The significant pushback to Paramount now. A lot of Hollywood has now like got the pitchforks out essentially. I don't know if they can do anything about it at this point. But y you see them like really organizing. Oh, the the cinem at Cinecom, all these places, there's all this
pushback and again, um, David Ellison wouldn't show up for uh a hearing uh at in in Congress about this, uh just uh for personal reasons. But um But th there's just a lot of pushback there and you sort of see um it beginning to coalesce these ideas of no, I don't think so, which is Interesting. You'll see if this happens. Like I I I feel like people are are quite in the mood to stop these things now. And that's gonna be they're gonna overreach on the other side probably.
Um, but it's feels like this is like I can't even believe this guy did this. Like I just think, well, okay. Like and and Trump has no political capital to to take this on at this point. No way. It's just never happening. I don't I don't see it. I don't I don't see
I need to correct the record. The DOJ and the FTC do serve a purpose, they did they did decide that Live Nation was a monopoly, which was the right which was the right decision.
We'll see. We'll see where it's going. If there's a lot of pushback on all these things, but you're right, they're gonna keep trying to do so, um, as things comport and then we'll get to a normal level again, um, hopefully.
¶ Trump's Kids Accounts, Investment Power
Um one thing that's interesting, about five million kids have signed up for Trump accounts, um, a 1.2 million uh eligible for$1,000 Treasury seed deposits. The accounts were created through Trump's big beautiful bill and are set to officially launch in July 4th. The Bank of New York Mellon will manage the accounts and Robinhood will build a Trump accounts app. Um uh what do you think about Robin Hood known for getting uh people into risky trades involved in this, obviously.
another suck up to Trump in some fashion. But um I have uh several friends who are just doing it. It's like thousand free dollars. Like why not? Like this why not? It it seems like Let's take the money and and use it to save for college or whatever you want to save for for kids. Any thoughts on this?
I love this concept. I remember meeting with a guy named Alex von Furstenberg a couple of years ago and he was pitching me on the idea of baby bonds and he was very passionate about it and he's been very involved in it. I I love the concept of at the very outset, giving, you know, for every infant born, giving them some money and letting compound, you know, the most powerful force in the universe.
I would have gone much deeper than this. For forty billion dollars a year, you could give seven thousand dollars to every baby and then I would totally infantilize them and not let them touch it till they're sixty five. You give you spend forty billion dollars a year and then in twenty or thirty years you announce in another twenty or thirty years we're no longer gonna need social security'cause everyone's gonna have a million bucks at sixty five. Interest rates dive and it pays for itself.
But our Congress doesn't wanna think faster than their fucking two inch dicks. So
Is there danger here of riskiness for people's like I mean, this is free money. That's what I can I I I I you know, someone sheep has just said, Oh, I took a trumpet. I'm like, Are you kidding? Grab it. Like, absolutely take a trumpet. Yeah, it's your own.
Just to just to give you a sense of compound interest, you know, my kid's going to college next year. When he was born in two thousand and um when was my kid born? Two thousand two thousand and seven. I put ten thousand dollars and I think it's called a five twenty.
I did too.
New York Account.
Did too.
And I'm like, I'm worried about college. I don't I was a clinical professor making a hundred and sixty grand a year living in faculty housing. And so I thought, Okay, I'll scrape together ten grand. And I didn't do it again. I was stupid. I didn't do it again. I just looked it up online because I'm like, oh what about that five twenty nine I did? Now granted the markets have ripped. Do you know what that ten thousand dollars is worth?
A hundred thousand dollars.
No, eighty five. But still, in eighteen years it went from ten to eighty five.
Oh, I put more in. I did them for both boys. Mm-hmm. I paid for all of college with Louie and Alex. And s people have controversies around five twenty ones. You could have done better in the market, but I just put it away and forgot about it. And I kept I added the maximum amount to it at the time.
But it's tax it's tax free.
That's tax free. I just was like, I don't even want to f I know I could probably do better in the market, but I don't care. I had the money. It was a certain thing.
I don't think you could have because because the difference just to explain it, if you invested ten thousand dollars and I had eighty five in the market, say out a hundred, I'd have to pay I'd have to pay capital gains on it. Whereas if you apply it towards tuition or school supplies, you get to you don't have to pay taxes on the gains. My point is.
The idea of giving kids, every baby born, a retirement account, I wouldn't let them have access to 18 or 25. The problem is, and the thing that's gonna bankrupt our nation as We continue to send more and more old people who vote, old people more, vote themselves more money. We have to reduce entitlements for old people. And this is the way to do it.
So they're not entitlements, they're investments. I mean, I think the danger, obviously, is if we remove it completely. is people are, you know, subject to whatever the vicissitudes of the market. And that's that's the always been the worry, right? That's why it's called social security.
There has never been okay, but there has never i you could buy any five stocks since the beginning the beginning of the markets. You could buy any five stocks in the S and P and if you hold on to'em for ten years you've never lost money. Because of demographics and innovation, the long term trajectory of the market. Now there's been there's been decades where it's gone flat, but over the over the long over the long term, there's nothing like the up and to the right.
And uh I think this is a great idea.
I put I put that money away for my kids and I never paid a dime for college because we it had been saved. This is the flaw and put away. I and it was all tax free. It paid for their their their dorms, it paid for their food and Alex eats a lot. Um and it was it was it was great. And I was like
That meal plan. Yeah, Michigan is losing money on Alex.
And the only Louis the very end of Louis college thing, uh Alex went to a less expensive college, was just a little bit of money, but it was zero I it was the best money I ever invested, I have to say. Anyway. I was just speaking of which Alex Fisher turned twenty one. Congratulations, Alex. You're on your own.
All right, Alex.
Good for you. Of course he was studying last night. I was like, Alex, go get a drink. that. No, I know, but he's like, That might be a good idea. I was like, I have to study for fluid dynamics.
Um look the this is the bottom line or or this is A theory you want to tap into. The most profitable businesses in the world tap into one thing, and that is a flaw in our instinct. We're desperate for affirmation. We're desperate for free gaming. We're desperate for opportunities to procreate. So we buy Ferraris. We go on Instagram and we gamble. The highest margin products in the world tap into a flaw in our instincts. You want to reverse that and tap into the following flaw.
And that is humans are really bad with respect to the time space continuum. What do I mean by that? Because for the majority of our time on this planet, we haven't l lived past thirty five. And now we live to eighty. People have no sense of how fast time is going to go. And they say, Well, the markets are up nine to ten percent a year. That's nothing. I'm not gonna invest in the markets. I can make more money as a baller opening a restaurant or opening my company goes public.
You are going to graduate from college, you're going to blink, you're going to have a couple of kids, you're going to have some joy, you're going to have some grief, and you're going to wake up and you're going to be fucking 60 years old.
Agree.
It happened so fast.
Great.
This is what you want to do. You wanna at a very young age figure out a way where you don't even get the cash in your hands, matching programs at work. five two nines, baby bonds, automatic withdrawals, and just a little bit of money from an early age, and then blink, you're sixty five and you look at that account. And you have a shit ton of money. This is a flaw, this is your revenge on the this is a way you put scaffolding on the instincts that are flawed.
¶ Final Sponsor Break and Podcasts
I agree. Scott, one more quick break. We'll be back for predictions.
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¶ Allbirds' Risky AI Rebranding
Okay, Scott, let's hear up predictions. Is it about all birds now that it's an AI business? No, just move along.
Oh, I had two and one of them was all burned. Okay, go for it. Okay, so I'll I'll go to that one'cause that you're you prompted me. My my prediction was going to be anthropic IPs before open AI, but that's boring and I've already talked about anthropic. So I'll go to the one you suggested. Uh the Alberts pivot to AI will inspire much of copycat.
you're gonna see Cheg, GameStop, Rent the Runway, all decide they're AI companies. All so all this is what's happened. All birds the once hyped sneaker brand. They just sold its IP for$39 million two weeks ago, down from a$4 billion peak valuation, is rebranding.
Uncomfortable sneaker business.
Rebranding is newbird AI and pivoting to leasing AI chips. GPUs, the company is buying$50 million or secured$50 million in financing to buy GPUs and lease them to customers. And shares spiked nearly nine hundred percent at intraday highs on the announcement. Uh so what is this gonna do? Just like remember when Bitcoin treasury companies went crazy and all these different companies decided they were now Bitcoin Treasury companies?
So we've seen this movie before and it doesn't end well. Long Island Ice T Corp rebranded as Long Blockchain in twenty seventeen to ride the crypto wave.
and its shares were eventually delisted and the SEC brought insider trading charges. Shocker. Newbird, if you will, what I call newbird will soon be no bird. So the prediction is the following All Bird and this ridiculous fucking jazz hands pivot to AI that resulted in a massive one day spike, ton of compati ton of copycats, and it doesn't end well.
Uh what where does it end? How does it end?
These companies have short term pops, the insiders who get the shares before they announce it dump the bag and then the people who think this is anything resembling an a company with enterprise value end up losing a shit ton of money.
Uh when you try and it's like remember in the early two thousands when I remember being in a meeting, a board meeting at William Sonoma where we seriously contemplated changing the name of the company to William Sonoma dot com'cause we thought that would add shareholder value. And Howard Lester, who is one of like the clearest blue flame thinkers in retail, is like, that's just fucking stupid. We're not doing that.
Uh anyways, w w when you're just trying to create the illusion you're in a hot area with absolutely no domain expertise, IP, or advantage. Sure. Call it AI, a pop. If you're in Alberts right now, just take it from me, sell. But you're gonna see a dozen of these things announced in the next ninety days.
¶ Episode Conclusions and Prof G Segment
It's so stupid. People did mock it, which is good. All right. Um, I I have no predictions today. I predict that Scott Galloway will be a star of my show this weekend. Everybody watch it because Scott is very funny and actually has a lot of serious and significant things to say about healthcare and longevity. And it's r he's really good.
I don't remember that part.
You do.
I don't remember saying anything substantially.
Yeah, and it you sound great. You sound really good. You actually say a lot of substantive things. Anyway, he looks great and he's and you get to see him sleep. Anyway, we want to hear from you. Send us your questions about business tech or whatever's on your mind. Go to nymag.com slash pivot. Submit a question for the show or call 855-51 Pivot.
Elsewhere in the Karen Scott Universe this week on Prof. Markets, Scott spoke with Katherine Ann Edwards, PhD economist and Bloomberg news columnist on why AI is only one factor behind the challenges young workers are facing. Let's listen to a clip.
It's not as if the only thing standing between young workers and a job is what private employers are doing or say they are doing or will do with AI. We have a weak economy and a weak labor market with terrible social supports. and almost no investment in people that don't have a job. There are solutions that don't have to come from just knowing more about AI, but have to come from holding our policymakers accountable for economic mismanagement.
AI is today's story, but there will be another one. Weakness is weakness in the labor market. We don't have great infrastructure for helping people who don't have a job.
That's a hundred percent right. It's so true.
She's super smart.
Yeah. Anyway, that's the show. Thanks for listening to Pivot. Be sure to like and subscribe to our YouTube channel. We'll have lots to talk about next week. There's so many topics happening. Um and we'll be back next week to do so.
Today's show is produced by Larry, Marcus Taylor Griffin and Todd Wiseman. Ernie Interd engineered this episode, Manella Moreno edited the video, special assistance from Kate Gallagher and Brad Sylvester. Thanks also to Jim Barros, Mr. Varion, Dan Jill and can it. Can AI replace all these people? Nashad Kerwa is Vox Media's executive producer of podcasts. Make sure to follow Pivot on your favorite podcast platform.
Thanks for listening to Pivot from New York magazine and box media. You can subscribe to the magazine at n one mag dot com slash pod. We'll be back next week for another breakdown of all things tech and business. Have a great weekend, Kara.
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