Prof G Markets: ChatGPT’s First Victim + The Department of Government Efficiency (DOGE)
54:57 Share

Support of the show comes in the new season of crucial moments, the pocket sums to coax capital. What is a crucial moment? It's a turning point where we face a tough decision and our response can shape the rest of our lives. These decisions happen in business to, and so qua ital, a crucial moments gives you a behind the scenes look, asking founders of some of the world's most important tech companies, including youtube, dora h. Redit and more, to reflect on those critical junctures that define who they are today, tuning the season two of crucible moments today, you can also catch up on season one at crucible moments dot com, or ever you listen to podcasts.

Think scaling A I is hard. Think again with watts and x, you can deploy A I across any environment above the clouds, helping pilots navigate flights and on lots of clouds, helping employees automate tasks. On prem of designers can access the prieta data and on the edge, so remote bank tellers can assist customers.

What's the next works anywhere? So you can scale AI everywhere? Learn more IBM dot com slash IBM.

Let's create, think, scaling. A I is hard. Think again. With watts and x, you can deploy A I across any environment above the clouds, helping pilots navigate flights and on lots of clouds, helping employees automate tasks.

On prem so designers can access proprietary data, and on the edge so remote bank tellers can assist customers. What's the next works anywhere? So you can scale AI everywhere? Learn more IBM dot com slash. What's the next IBM? Let's create today's number.

eighty thousand. Not how many pounds of butter costco were called last month after forgetting add milk to the ingredient .

less to fuck.

So what happens? You drink all this tequila. Seriously, today's number eighty thousand. That's how many pounds of about a cosco were called last month after forgetting to add milk to the ingredient la.

Today's number eighty thousand, not so many pounds of Better, costco recalled last month after forgetting to add milk to the ingredient ingest. True story. At one day, my mom called me mastercard in the bathtub. I thought you'd be mad, but instead he just stopped buying margin. 他的 信仰 不变。

I'm not even sure what that means. How are you at? How are you?

I'm there. Well, we finally got that. Took a while. Seems that you had a pretty big night last night.

Now, god, I drop. So do you have a party of friends that you can discard tax at any moment like what you do not describe? Dream, i'd like to think, yeah, yeah.

So like, so fuck you. Just take my advice. So my friend Scott, about used to be that guy from in new york anyways, died of a real phone, came me. We're not to talk about this as I have a story so now I don't have a party of like text table drinking bodies and i'd like to build text and and so last night um hang IT out, I got nothing to do IT I am in new york.

I'm a see less celebrity and I got nothing to do and I know there's something great going on and I else know i'm just not a part of IT and so I text my new friend just in the row of beetle juice fame and am I do, what do you do you want to like i'm headed to this hand genocide reveal event is like, I know, I know weaker flux in the world and is like calm. So I come on my way. So I went and saw the new hand genesis, which is lovely, which is lovely and then we're like, okay, my going free genesis here, why we hear so like, let's got a zero bond and then we text our body, George, on come, I come out and not drink with us.

Now i'm trying to be Better about inviting people out to drink with me, even if there in recoveries. To think that said, they can reference of these people, not going to be that way in georgia was fun. Georgia was like a little fucked up. Even so, he rolled in. And then, and this is totally named, dropping about care and nine o'clock I know A C three sixty and so like A I taxed Anderson Cooper and like broken mian rap sy playing now at zero born come join us and is in the kind i'm in the car on my way the four of us SATA zero bond and trying to killer status except for georgian and we had the best time.

That's amazing. Oh.

it's awesome. And I would the lesson i'm trying to take away from IT is it's easy to think other people are super busy and they are, but you never know if you're not busy to like start texting people, what are you doing? And I was IT was great to hang out with them, but I loved about IT was for both like where all guys is trying to find friends.

And daddy went deep in the paint last night. I'm switching to the qua according to Justin. It's a cleaner burn and I was about to hang over.

So um I still feel love at slow today. So you're going to have to you're going to have to do what I do on basically every podcast that you're going have to Carry the show. You're going have to Carry the show.

right? Let's start without weekly review of market vitals.

The S M, P one hundred came down from the post election high. The dog continued to climb. Bitcoins supported ninety thousand dollars for the first time.

fucking a.

and the yield on tania treasuries increase.

Who doesn't know a coin raise their hand? Who doesn't know a coin?

Raise your hand. Shifting to the headlines, spotify monthly active users grew eleven percent to six hundred and forty million in the third quarter. The company he is on right for its first year of profitability with a Better than expected forecasts for the fourth quarter and shares rose eight percent.

Gambling company flutter reported third quarter earnings that beats less expectations, with revenue up twenty seven percent from a year earlier. The company also raised its full year guidance due to strong results outside of the us, and shares climbed almost seven percent. Following that earnings report, disney stock rose nine percent of its streaming unit and studio business reported strong growth.

Disney plus markets second consecutive coursey profit, gaining four point four million core subscribers. And the company also issued guidance to projects a jumping profits over the next three years. And finally, activist investor elliot management has built a five billion dollar stake in industrial conglomerate oneyman and its largest investment in a single stock.

They want honeywell to break up its airspace and automation businesses into two separate companies. Scott, let's start with spotify. Very strong earnings, your reactions.

So it's stock as one hundred and fifty percent year to day. And they ve raised the tone of money massively spent to essentially consolidate the streaming music. Now would argue people say, what about apple? What about amazon? I think if you're in the music, I just think you have have a spotify subscription and occasionally people try to act alternative apple. You know, I know for me it's .

just a switching over issue. I know it's a Better platform, but it's just a pain to switch over.

I think there is such a good job, but they they onna page out of the netflix book and theyve overspent. But for the first time, IT appears to be working and theyve appeared to be kind of hiding the same sort of escape osi the netflix had about seven, eight years ago, five years ago, where they really dead to fall player and subscription music and paid subscribers jump twelve percent to two hundred fifty million.

Profit margin reached thirty one percent. That's up twenty six percent. That knocked on spotify with IT was basically a music coa passing through all the revenues of the artist.

And now IT appears they have so much power that the probe cutting Better deals in terms of revenue share like and spotify. I get this in ce twenty fifteen. Last nine years, I seen its revenue grow eight fold and IT struggled achieve full year profiled as a captain in investing.

But is change this year, it's gone into profitability, which is like putting in investors lips on a crack pipe. I mean, you can take IT away and to get there again, I think the C, E, O took a page from network playbook emphasising tighter costas plan. The company is also cracked down on password sharing and race Prices twice and past year.

I think basically they are on fire if this is like new flix IT still could triple er quintupled from here if they have kind of mark power, I think they have because networks supposedly at other competitors. But did they really, did they really add? So i've always love spotify. IT was my stock tech of like twenty twenty one or something. And I went nowhere for three years.

I was flat for the longest time. I was early.

I wasn't wrong. I was early. And so my x wife had to say, and it's not bad, you're just early all the time.

Plant P I be here all we try the veal. Uh, okay, so get on spotify and use their A I D J. IT is fucked and amazing. IT is so good.

IT has figured out at every song information either be tompson ty or tomato ty, or yellow, or occasionally carbon haris, to make me feel like i'm not one hundred years old and IT just works. I came my whole thing, that is choices. Bad thing. I only want things, whether is no choice. And I I love spotify AI, because a lot of times when i'm home and i'm on prescription great pharmaceuticals to dance, I don't know the perfect dance music and spotify figures out, you know I think at what time what my mood is really powerful.

I'm glad you mention the A I D J because I think the thing that i've been thinking about with spotify right now and what they're really good at is unlike a lot of other tech companies that just come out with these kind of meaningless product updates that no one really cares about. I feel like every product update from spotify, the users just love. So they have video podcasts now, which they sort of double down on recently to compete with youtube.

And there are now more than three hundred thousand video pod costs across spotify. That's another great product update. They have podcast comments now, this opening up a comments section.

And I think the best thing they did from a product perspective was spotify wrapped, which was sort of the year and review of all the stuff you ve been listening to. And you know, when they did that, IT exploded. They went viral.

Apple music ended up having to copy that. I mean, they have just a worse version of IT. Clearly, the engineers that the product managers, the very scrappy, they're constantly figuring out new ways to package and deliver this content.

And I think you know the markets now recognizing this, as you said, talks up nearly hundred fifty percent in the past year. It's starting to look perhaps a little expensive, but in this case, I think it's warranted. This is just a great cause.

And I agree, I think this is a great company. And clearly, they're doing something right from a management perspective. And let's move on to flutter now.

So this is a gambling company. Their own brands like bet fair and sky betting and paddy power. If you're from the U.

K, you'll recognize those names. But in the U. S, they also own fan duo.

And the story of this earnings report is all about america. So U. S.

Revenue jumped fifty one percent to one point three billion dollars. A big sauce ce. Of revenue was the nfl.

The C. E. O said that betting activity, I found this quite digging.

Betting activity on some of the nfl games that are happening right now is actually higher than betting activity on last year. Super bull. So sports gambling is absolutely soaring. And if you want to ride that wave, this is the stock flush, your entertainment.

I'm comes with all of this, but the reality is the vast way to scare your company with high margin revenue is to have some sort of tap into some sort of addictive weakness of the species. And this is doing that. Having gambling on your phone and having a piece of frictionless is really, I think, really troubling ing.

But at the same time, it's a great IT. This is not getting around IT. It's a great business. Fandel has almost fit. They have they control most half the market that forty six percent market share. Americans spent a record hundred and twenty billion on sports rates and twenty twenty three, that's about twenty percent from twenty twenty two this year. Sports sledding is expected to pass one hundred .

and fifty billion. Hundred and fifty like, emphasize that hundred fifty billion dollars in sports bets. That's a crazy number. Now.

yeah, it's huge people. No, it's fun and mean, really is passing out crack fifty dollars three for your first bad, right? Free, free money for your first bad.

It's also just such a shame that like the most ascendant companies and assets right now are just totally unproductive in terms of the actual real economy, like I washed, that the best performing assets were actually productive. This is not societally productive. Well.

the only thing I wrap up with this people's vil Scott investing, the stark mark, is gaming. This is no different. Now IT is different.

If you invest in the stock market and you know trade over time, you're going to make money when you gamble. If you enjoy IT fine, just like we enjoy drinking alcohol or buying ten issues, its consumption, this is consumption. It's not investing in. Be clear, keep track of how much psychic enjoyment you're getting because in terms of money, you're going to walk away from the .

table eventually over time with less money in not much really jumped out to me apart from the fact that this is the second quarter in a row where the streaming business has been profitable. So last quarter was the first time that streaming was profitable. And we said, well, maybe you've got this whole streaming thing figured out.

I think this earnings report confirms that they have finally figured out streaming, which is essential for disney because the traditional TV business is essentially and free for just this number here from from the average about Operating profit on that traditional T, V business was down thirty eight percent this quarter. And that's despite all of the election spending, and that's despite owning abc. So they need streaming to work out. And IT looks like that's what's happening.

It's doing really well. I think the movies are import, you know, the movies are meaningful, the revenue from the parks meaningful. But from the market perspective, the results of the trimming division profound and the streaming division had a great, great quarter.

I like IT because I like bobbi gar. And this is going to give him a chance, like he was stupid and have to go back to afghanistan. One of second touch is going to get another metal, and on his uniform is going to be, get to leave this combat zone called traditional media a .

hero again though, dizen dissing IT with of cost well, have .

supported media right now taken yeah, I mean, IT is hand hand combat. And think about disney. They're one of the survivors because they have the singular position around family.

And I believe we deep by p and it's starting a payoff and also it's pank off them because they stood the test of time through what is this this, you know, walking through the desert, if you will, of consolidation in and for the first time in two years, uh, netlik is no wonder increasing their spend. So every other company has doesn't have to follow them down this rabbit le on sustainable. And there's also pricing power.

Netflix is kind of creating elevating the ceiling around pricing and they're raising the Prices, which gives everyone clock covered to race their Prices. I think it's good for disney, good for bob ager, good for the planet. I think it's a great company.

Hope IT stays independent. IT was one of my stock picks last year, disney and morning brother. So we'll see.

But yeah, I think good for them. congratulations. Great quarter.

Move on to eliot's investment activist investment in honeywell, which is this industrial conglomerate, is interesting for two reasons. One, its eliots biggest single company investment ever, five billion dollars. So this is a very high conviction bet.

And to what they are suggesting from an activist perspective is right out of the proof markets playbox. Specifically, this is all about the conglomerate tacks, which you've talked about a lot on this pot gas, which is the conglomerate tend to get these slightly depressed valuations because investors don't really reward diversification. What they really care about is focus and growth.

And that's a lot hard to do when you're when you're Operating multiple businesses. Honeywell is a great example of that because the era space business and the automation business, they're two very different things. And often times when one has performed, the other has lagged and vice versa.

So I think this is a great idea from Elliott. Split them up, have an airspace company and automation company. The only question I would have is all the partner elite management listening to this podcast because if they are, we deserve some credit .

and we deserve cut hundred per yeah the no doubt check on way yeah. I like this stuff, like sometimes when a art gets below a certain amount, this know the whole is less than the sum of its part. And that's the strategy here.

So the stocks up twelve percent year today, but the industrial sector etf is up twenty five percent with under perform the market. And then this kind is one of these themes among all economic community is growing by shrinking. And that as we've talked about this, the mark awards d congal's ation.

G break up an April. G R space stock at is more than twenty five percent and g nova shares to rise more than twenty percent. Hy trades to twenty seven times learnings, while G, E, O, space trades at thirty two times learnings. So I wouldn't be surprised if they decide to do this themselves or come up with some sort of extra dividend that gives away at the pound of flash.

The guy who ended early Better than anyone was mark benning off, and they shut up and said, you're spending too much and rather than the traditional, you know, do you know you you have insult to me good serves and circle waggons and higher lawyers and proxy license and comes people to should post the act of they say, okay, we can learn from your mark ben off usage cloud cover to cut cost A I came in and sales force stock is now at an all time high and essentially to an active of investors. You just show up with the big take and say, we're here. And if the stock is upon its own and for wrong and the stock is on fine, will sell in a lations.

If IT doesn't, then need to do we say we going to nominate directors so you get a little bit of free call option of the stock is cheap enough. So I like these things. I think they go through recycle.

They can Gomez and the d can globalize. Anyway, the airspace and automation do they need to be in the same umbrella in its spic notion of ceos love to diversify by having bigger company and diversifier smooth out, the earnings went again. Investors don't need CEO to be that for they can diversify their own. So how like this, we will be right .

back after the break. But the look at one of ChatGPT first victims, if you are, enjoy the show so far, be sure to get property markets and follow wherever you get you on costs.

Support for property markets comes from found small business. Others know that keeping things running smooth, they takes work and a whole lot of apps want for tracking expenses. Another was staying on top of your taxes and another for payroll management, just switching back. And fourth, between them must eat up practically half your day.

If you're looking for a way to take some of the busy work off your plate and handle all of those tasks in one place, you might want to check out found, found his business making design for small business owner, just like you found, lets you manage your financial tasks effortlessly, all in one easy to use. The platform can help you manage your money track or spending in voter clients and even annual your taxes, so you can focus on running your business. Plus, found says you'll save hundreds or even thousands of dollars on bank fees and apps descriptions because the platform has no hidden fees.

You can try found for free and found doc flash property business can sign up for found for free today at F O U N D dot com. Slash found is a financial technology company, not a bank. Banking services are provided by piermont bank member fc bounds.

Core features are free. They also offer an optional paid product found plus. Support for the show comes from the new season of crucible moments, the podcasts.

m. Security capital, did you know that youtube started as a dating site? Probably not because I didn't go well. So how did the company vivid from that failure to become the household name IT is today? On this season of crucible moments, they're going to give you an inside look at that story and more, offering an unvarnished history of some of tax influential told by the founders themselves.

You can hear how losing thirty five million dollars, like the founder of service now to start his own company, or how a red of founder ended up returning to the company just to save the site from itself. Posted by relief bot of skua crucial moments provides behind the scenes look at some of the most to mutual and defining milestones in tech history. He connects with the founders and they reflect on those pivotal inflection points and how sometimes this moments of turmoil become moments of tuning.

The season two of crucial moments now can also catch up on season one at crucial moments outcome or were ever listen to podcasts. Support for property markets comes from fanta. Proving trust is more important than ever, especially when IT comes to your security program.

Banta helps centralize program requirements and automates evidence collection for frameworks including soc. To I saw twenty seven O O one hip hop and more so you can save time and money and build customer trust. And with fanta, you get continuous visibility into the state of your controls, join more than eight thousand global companies, including a li and flow health and cora, who trust found to to manage risk and prove security and real time.

Now that's a new way to G R C. Learn more. A vantage m slash markets. That's vadim flash market.

We're back with property markets. More than a year ago, ChatGPT took a bite out of a leader in the end tax space. Chee, a textbook and homework help provider, was a big winner during kova as learning moved online, then the AI hype cycle began, and chat was one of the first companies to say that ChatGPT was stifling its growth.

Eighteen months later, the companies is telling the same story. Checks earnings last week showed reviews describe as a web traffic all fell by double digits in the latest quarter. The company is also laying off twenty one percent of its workforce, its second round of big job cuts this year.

Scott chuck was still blaming ChatGPT for its problems on its latest earnings call. IT has lost half a million pages, will grab this since the launch of that product. He has a down around ninety nine percent from twenty twenty one are racing fourteen and a half billion dollars in value. And according to the wall street journal, bond traders doubt this company will be able to pay its death. Is IT safe to say that ChatGPT has claimed its first victim?

It's really interesting. So if you look at the industries that was first be disrupted by A I i'm in predicting be health care IT was supposed to be education IT hasn't happened in education. Actually, the top hundred universities are strong or stronger than they've ever ban.

And I i'm so confident about disruption. I started an attack company and quite from just pound out check came in. People, IT was a copa darling.

People, a lot of people trapped indoors taking courses, but it's off ninety nine percent. And some of this is not they are fault or the market market annam ics was trump individual performs. This company was going to get cut in half.

Now I cut by ninety nine. I just think that comes here is terrible. I think to blame ChatGPT is to say, ChatGPT is our enemy.

okay? You're fighting an enemy. This is the albanian army taking on the third right right now. So if you identify the ChatGPT is coming for us in their are animals like OK, that's too bad.

And when we understand and your right is their fault, but you're thought because if if in fact, you're right in there, your enemy and they identify this is a space they want to go after all that consumers are using agents to help them uh with their studies or or essences find the same utility they were finding for you a higher Price. We see no reason why that problem won't get. Just worth the interesting thing here is what you said about the dead.

I'd love to know what the debt is trading at because I believe someone is going to make a real money here. And who is that? I think distressed credit investors is going to come in and by the bonds.

And if they do, in fact, blotter, coveney, ts and the thing goes into bankrupcy, I think whoever owns the bonds will come in, cut a lot of cost um say this is no longer a growth company, this is a distress asset, but they do have revenues have found in eighteen percent, subscribers have found on twenty percent, which means they still love eighty percent of their subscribers. So this is probably still a pretty decent company is just that somebody's going to come in here massively cut costs and recognize where no longer a growth company were um a company decline. But if we can cut cost faster than the decline, we're still gone to have something here and they probably have invested a massive amount of money. Um I don't know what the market cap is, but if it's off ninety nine .

percent that me one hundred and fifty million.

I be curious how much debt they have. But I would think distress credit investors are looking those bonds and saying, okay, and I own this company for you know tens or hundreds of millions of dollars and say it's probably worth a couple billion dollars to someone else. So I have a subscriber base who are still paying you. Come is, come is are going to zero.

The the best investments I have ever made have been pulling bankrupt companies out of bankrupcy at a very low Price in things like consumer products or the yellow pages and then consolidating or think if there's other acquisitions of either distress companies in the space cut in costs faster than the revenue declines and you can use just pick them up really cheaply and then you know you can make a lot of money. And the analogous uses that in one thousand and ninety nine, people think blockbusters was going away. So you could buy a blockbusters franchise for two and half times.

It's cash flow. They did go away, but to take another twelve years. So if you buy companies to two and five times cash and they went another twelve years, you made a lot of money.

And I think that's the case here. So I look at this, I think, okay, that's interesting. First kind of public ChatGPT victim, although this probably others not as obvious, but I actually think a distress credit investor is probably looking at the bonds right now.

Yeah, you mentioned there are probably others. I mean, I looked into this. I I really couldn't find many. And i'd be interested to know maybe listeners can identify some companies that have really gotten crushed by AI.

But I do find that interesting because there was all of this catastrophes and speculation around how A I was going to put all these companies out of business that was going to take all these jobs. And here we are, two years into this revolution, and the big victim of A I is chic, which is just like a kind of irrelevant company, bail any employees at all. I mean, they got twenty percent of the workforce, but is that only around three hundred employees who are losing their jobs to A I, I guess.

And so just it's interesting to me a little surprised at how on destructive AI has proven to b. Um so I guess the question that I would post to you, which companies are which sectors do you think we're going to get hit by A I as hard as chee just has? Or is the AI catastrophes just two of a blood? But first, love anything anyone .

a customer service right gets hit pretty hard. But if I were to look at large sectors of companies, you're software as a service. And we decided that as a pangea a we services a software.

So travel agencies, public to travel agencies, I wonder how real state agent, you know, real state agencies are going to fair in a world of an eye. I don't know that that's a super interesting question around who our ChatGPT is next next victims? yeah. I mean, IT feels like the .

entire economy has figured out a way to get A I on. Or at least the very least they made IT seem that way. And I guess the big mistake check was saying where A I is not on our science, as you said, A, I is our enemy. But I mean, I look at the rest of these companies and no one's been taken to the word shed by A I the way we thought, unless i'm just missing something massive here.

what I find is, if you really worried about something that usually doesn't happen because you prepare for IT, it's when you don't see the comment coming. You know, no dinosaur thought I am really freak ought about a media hitting, eating earth that wasn't their biggest worry. No, I don't know how anxious.

Yes, with mental health.

Yeah, yeah. right. Being being the prospect of being eaten while you're sleeping or ware drinking from um that is still my favorite tiktok is the little cheater comes up to the watering home for a little freshman and it's such a peace of little water hole until an eighteen foot crock takes that bitch into the water and I mean, I just never get sick of that and whenever I seen an animal drinking at a water hole on my go okay, here we go anyways um was going to that crocodile is the stuff you don't see coming what do you think? What do you think what sections do you think you're going to do?

My point, I I don't think anyone's going to I don't think anyone is going to be hurt in the same way that checked IT is my view. I just I think what's gna happen is gonna slow and we going to figure out away to make A I work for us. So I mean, I just thought to me, it's telling the fact that we're here and the big loser is this tiny company that no one cared about anyway.

But you maybe I eat, my words will say one did I did find interesting though, that I want to bring up. So apparently the employees of check a couple years ago actually asked for an A I budget because they felt that A I would be helpful to the business that would help with automating their answers. And supposedly the leadership denied that request.

And so I feel like there are some big questions here for leaders and for managers of companies around how to innovate because in this case, the leadership said, no, we don't need to do that and they look stupid now, obviously. But i'm sure there are many other situations where an employee has come to leadership and said, hey, there's this new technology we have to do IT and the manager has said, thanks, but no thanks. We're going to focus on this other stuff and have probably ended up being the right decision.

And the example that comes to mind for me is like the metaverse. I mean, how many employees three years ago were going up to the manager and saying, you don't understand, metaverse is the next big thing we got to do IT. And the guys who said, no other ones who look smart now.

But you know, in this case, if you if you check, you really screw over the entire company by not embracing A I so I guess my question to you would be what is some of the learnings here for leaders is essentially an innovative dilema question. How do you correctly allocate your resources? Well, not you know, risking falling away behind as check has done.

well. I mean, I just hearing you you talk what I think is it's not sectors. It'll be the losers. It'll be the companies in every sector that done a corporate eye into the business Operations.

It'd be like saying we knew that the winter l revolution was going to a huge impact on the economy, but IT wasn't like pcs took out the auto industry or took out the restaurant business. IT was the companies that didn't adapt in a corporate technology into their everyday business Operations were beaten by the companies in their sector that dead. I think the same is probably true here.

I don't think again, I think they'll be winners and losers in every category. But will there be like five or six industries that just go away? I don't know. I say will be write .

back off the break with a look at the new department of government efficiency if you're enjoying the show so far, kit, follow and leave a through review .

on property markets.

Think scaling AI is hard. Think again with watts and x, you can deploy A I across any environment above the clouds, helping pilots navigate flights and on lots of clouds, helping employees automate tasks on prem, so designers can access proprietary data and on the edge, so remote bank tellers can assist customers. What's the next works anywhere? So you can scale A I everywhere.

Learn more IBM dot com flash, whats the next IBM? Let's create. Think, scaling A I is hard. Think again with Watson x. You can deploy A I across any environment above the clouds, helping pilots navigate flights, and on lots of clouds, helping employees automate tasks. On prem, so designers can access proprietary data, and on the edge, so remote bank tellers can assist customers.

What's the next works anywhere? So you can scale AI everywhere, learn more IBM dot com slash, what's the next IBM? Let's create support for .

the show comes from polestar. Innovation is at the heart of every polestar car and their S, U, V. Polestar three is no different from the intuitive infotainment system to its head turning design.

Post three is for drivers unwilling to compromise. That means merging a spacious, comfortable interior with the tork and handling of a sports s car. Now you can go from zero to sixty in as little as four point eight seconds and get an E, P, A estimated range of after three hundred fifty miles per charge.

Polestar three even allows the driver to optimize the power train between performance and range mode depending on your drivers needs. Experience an unclutter dashboard showing you everything you wants to know and nothing you know. The innovation doesn't stop there because you can just have google turn on your favorite podcast and be emerged in three sound by powers and willing. Polestar has put in the time designing and refining polestar three, and that means the time you spend in IT will be the best time of your day book test drive at polestar dot com.

We're back with brushing markets. Dont trump has named elon mask and vvd gue rama swam as the heads of a new entity called the department of government efficiency. In a statement, trump s said the department will dismantle bureaucracy, slash regulations and expenses, and restructure federal agencies. He also called IT, quote the manhattan project of our time. Scott, your uninitiate reactions to the department of government efficiency, also known as D O G E A K A dodge.

Well, I think the fact that they have two heads of a department on efficiency can says at all, and that is, this makes no fucking on sense. So first of budget cuts armed within a president's constitutional power, only congress controls federal spending and mayor may not act on outside advice. And all of these congress people have districts that are all making money from federal contracts and have a lot of employees that work for the government.

So you know, you may want to slow your role here. The an official government agency cannot be created without an active congress. So it's unclear if doji would exist within the government are outside of IT.

And effectively, this efficiency group air quotes is more bureaucracy, not less. And you look, every single administration has had something similar talking about how to eliminate reaux racy in the inefficiency in government. But let's let's just be real Mandatory spending, including social security, medicare and federal, that interest consumes two thirds of the budgets.

So they're going to try and make fine squaze blood from a turn nipt that is one third of the budget elon must claim ed, at a trump in october, the federal budget could be cut by at least two train dollars that is not true. Uh, to cut two train dollars must could have to eliminate both social security and national defense spending. And also, if you did that kind of cut, you would send the economy into a media recession because, you know, we have what is about a third of our GDP center, or actually thirty eight percent is total government spending.

That's actually less than japan, which spans forty two percent. U. K. At forty three and german and forty eight. So we're spending less on government than other places.

Now granted, they would argue they get more services for the employees. So we may be, in fact, more inefficient. The U.

S. Public sector employees, one in seven workers for fourteen percent of workers. Notes, more than germany, thirteen percent of mexico, twelve percent.

But lesson france is twenty one percent. So I don't. I find this kind of a lot of jazz hands.

And just to be clear, when we're talking about the person running the corner, quote, efficiency department, let's look at his check record, right? So if you look at the autumn industry, you have B, M, W, about one point one million dollars per employee, right? You have ford at nine hundred eighty thousand per employee, general motors, one point o two million per employee, Mercedes, nine hundred and fifty thousand per employee.

And who brings up the rear at seven hundred and four three thousand dollars per employee, the least efficient automobile company. Tesla, so a granted, he was able to maintain a minimum viable product with twitter by languor eighty percent of employees, but he also registered an eighty plus percent decline in revenue. So anything resembling a reasonable conversation would go like this.

We have to put a cap or start reducing or means testing entitlements. Not everyone should be entitled to entitlements. I should not get social security.

Um i'm not sure I should be eligible for medical because I have the money. We are going going to half to raise revenues, which is latterly for taxes. Corporate taxes are at there.

The lowest rates since one nine hundred and thirty eight. The twenty five wealthier americans are paying somewhere between an effective tax rate depends on who you talked to between seven and sixteen percent. But they are paying less than most middle income workers.

But the notion that musk with that chromos wani, are going to come in and find two trillion dollar savings. Good luck with that. And I just also like to I mean, I know if you saw with the new secretary of the interior is David hassle hf and jane linch es character from glee is the news secretary for health and human services. I mean, this is like, this isn't even a cabinet. It's fucking dancing with the stars.

My with this is I can't tell how serious IT is about the problem. And the the feeling that I get is that this is mostly just a way to kind of put up a finger at the establishment and that by putting elon in charge and putting the vae in charge, this is less about addressing the deficit and more about like owning the limbs. And not, to me, is a shame because this is a massive, massive problem.

And everyone agrees, like everyone agrees that the deficit needs to be solved and everyone agrees that IT would be great to have a more efficient government. But to your point, this has been tried several times in the polls. Clinton tried to do IT.

Regan tried to do IT. Bush tried to do IT. Obama tried to do IT. On the other side to IT, which you also brought up, is that we need to raise tax revenue, like if you want to get back in the Green as a government that we need to figure out away to raise more tax as a percentage of all GDP.

And the reality is that our nation has one of the lowest tax revenues as a percentage of GDP among all develop nations. In addition, like the vae, the vae has talked about getting rid all of these to these government agencies, like he wants to go to the dev and the D. O.

J. And I just, I wish he would be have a sober conversation about the numbers here. If you want to get rid of every government agency apart from the department of defense, which is huge, you to get rid of all of them, you would only reduce our spending by at less than tenth. Like these numbers are tiny, that what we spend all of our money on is, as you said, defense and social security and health care. IT adds up to seventy five percent of our entire budget.

So let's talk about the department of education. IT has about a about about two hundred and twenty billion dollars during some other things they do with that money they find titled one of the elementary and secondary education act, which provides supplemental funding to high poverty case three twelve school districts. They have the head.

They fund the heads star program, which provides vital childcare services for many long income and rural communities across the country. The department also administers pilGreen. Who is here speaking to you right now um because of plugins, yours truly are these are investments in long ham households.

They couldn't go to college, which I could not have done without pilgrims. And by the way, those are investments. They are not entitlements. Their investments are a lot of the money that goes to seniors as welfare, a lot of things like pilgrims and department of education or investments.

Because you stop making these investments is a very credible argument that I end up continuing deliver with my mom instead of paying a shit on attacks which I do. These are four leading investments, or you increase government spending on police, fire, rehabilitation, mental illness, diabetes, you know, incarceration. I would argue the problems we can connect IT is quickly as i'd like. I would argue the department of education is probably one of those departments were over the medium and long term, we see a really strong return on investment. You know, project twenty five is talking about eliminating the department of education, which they describe as a one stop shop for the week education cartel.

Yes, is just an unserious proposal. yeah. So like is just not even about politics. It's like can we actually have like a make conversation about the problem?

I don't I don't know where I see with all of this whether it's roy weed being overturned um or this ridiculous notion efficiency he's going to get here's who's going to get heard a kind of praise on the most vulnerable, right? My kids don't need the department of education either will years.

But a middle school family, a family in rural america, kids who couldn't afford to go to college or junior college and need student loans are in poor school districts. They don't get the funding they need because they they don't have rich parents showing up in bidding five thousand dollars for lunch without else. And are whatever these stupid charity actions.

You know, this is again, if you reverse engineer to who really gets hurt with these policies, it's the most vulnerable. And do we need a more efficient government? Other places cut spending hundred percent.

But what I would do if I were a democrat is I am a democrat. As I look, we'll go one for one, you you, or one for two for every dollar you increase or you we find in cuts, you're going to raise two dollars in tax. There's been an explosion and wealth and prosperity.

We keep coming up with reasons to save businesses and stimulus and ppp. Oh my god, what if business what if delt act goes out of business? But then when they're printing money, you want a lower taxes on them.

So look, uh, we need government. I do believe government is too big. When IT gets to this point or even bigger than this point, IT starts to crowd a private investment.

I do think there's something to the notion that we shouldn't be whatever is thirty eight percent of GDP, we should be under thirty percent. I get IT. But the only way realistically, we're going to a serious conversation is to cap increases in spending, cut in areas where we can.

But also you ve got to talk about the revenue shade. I mean, what's next? Are going to nominate my gates, be atterley general away away. Anyways, i'm all right up bed.

I'm gona just take the other side of this. Now though, there is a positive to this that elon iva ae heading up this new department. And to me, it's exemplified by a tweet that was put out by the new official account for the department of government efficiency that was post on X.

I really like this. I said, quote, we are very grateful to the thousands of americans who have expressed interest in helping us. We don't need more part time idea generators.

We need super high IQ small government revolutionaries willing to work eighty plus hours per week on unglamorous cost cutting. If that's dm, this account with your cv, elon and vervain will review the top one percent of applicants. I love this and I love the language they're using here.

And there was an incredibly popular post. I mean, people were liking IT. They were commenting on IT. They were saying, let's fucking go, you know and it's a very boy, a comment section.

But what IT has done clearly by putting elon in the vague in charge is that these great marketing tools for attracting talent because I think previously, one of our biggest issues in amErica has been the it's not cool to work for the government. But clearly what's happening here is, you know whether you like elon in vehicle or not. They're clearly making IT sexier to work for the government on that tweet.

You know, the way that they sort of making IT exciting, that we're going to be cut in costs in an unglamorous way. But we need the small test people in amErica to help us do IT. That to me is the right direction. And if using elon in the vake are the ways to do IT, i'm actually all for IT.

I like that. I think that's really insightful. And you're absolutely right. We need to make government jobs aspirational.

And if we can use two aspiration tional you a very successful man to create that aspiration around government. I I love how you're calling balls and strikes, and I think that's true. I think that is a positive. And anything that attracts brighter human capital into government service, that is the silver lining here.

Yeah, they just need to be honest about what this is all four. And if this just becomes a giant talking point to own the libs, this is not productive. And no one .

owns me and my own woman. I'm fucking mary Tyler. More and many applicants during in my high into the air you're gonna make IT after all, ask your parents, said ask your parents.

Do you take you make let's take .

a look at the week ahead. We'll see earnings from a video target, walmart and lows, and we will also see consumer sentiment data for november to have any predictions .

for a scope minus kind of weird, uh, so a bunch of company, smart companies bought up these cheap, it's closely dying local news stations. If do you .

ever watch local news?

It's hilarious. It's literally hilarious from guy. The weather man is like constant predicting hail the size of golf laws. And it's usually some older guy with good hair who makes you feel comfortable, and some hot Young woman who's hoping, you know, she's gonna katty current job, or I don't know, savana garth's job someday. And the two have have a nice, pleasant banter.

And basically they do the weather, they do local sports in between, and they have a much segments called this is what stupid people did in our neighborhood today. But these companies have much money for twenty months of you, uh, every two years. And then for four months, they have a sunni of money that washes over them in the form of a political advertising.

Because the general consensus today has meant that old people vote and old people watch local news. And so they quent couple their out rates and they just rake in money. The four months leading up to the election, I think those local T, V stations and their owners are about to get disrupted as I think one of the external alist or realizations of the selection is that TV generally does not work.

If you want to influence seven year old White women, which is the viewer of emison bch, go on in your real million people. But if you want to reach fifty five million thirty four year old males, go on, rogan, I think you're going to see you tsunami of capital election spending, capital transition out of local broadcast new stations or local broadcast stations into podcasts. And I think we're about to see this cute little anomaly in the markets be dislocated or slash disrupted and in local T, V, stations are about to get the ship kicked out of them.

In the capital election spending, which is only getting bigger and bigger, is about to flow and already see this happening. All these people are clearly planning run for president, are calling me and seem to be very interested in me right now and expressing their viewpoint and telling me how much they love our work on Young man, which they do. These are good people, but they're also interested in starting to come on our podcast because everyone has noticed that the technology that doesn't work is knocking on doors and that the person with the most money is not unlike in the past necessarily the winner here come raise more money is the person is smartest about media and going after media that attracts old people who already made up their mind doesn't work.

But Young men who are more persuaded, able people go to cable T V. People go to local news um or go to cable cable news to santiago. The religion, their positions and their religion is their political view. People, Young men go to podcast, actually learn there, are more open there. And then if you look at the numbers anyways, my prediction is the following local news stations loss is going to be podcast gains and were going about to see these kind of tired, non innovative companies that have had the sugar high from political spending. I think that's about to come to a fairly abroad.

And yeah, and I would also just add, I think you ve got a first social media into the mix two, because what you just described about local news channels, like here's a compilation of stupid things people did in neighborhood this week that's tiktok, except with presenters. So you can get the same product on tiktok. That's what tiktok is for.

That's where the Young people are. And it's pretty staggering how much more money these campaign spent on T, V ads, VS social media ads. They should be on tiktok and they should be on instagram reals, which to me is gna translate to even greater profits, the bite, dance and matter.

This episode, produced by car Miller and engineer by Benjamin CER, are so he producers out some White mesa. Various are researching jasa as a research associate. Drew bars is our technical director and Katherine Dylan is our executive producer. Thank you for listen to property markets from the vox media podcast network. Join us on thursday for a conversation with giga shaw only on property markets.

I'm so bullish on podcasting and I think next year you could make a fifty eighteen bucks an hour if you keep this. This could get yeah if you keep add just a little motivation, a little motivation if you keep working this hard and my predictions come true, i'm going to be.

get to buy two for orties. I can't wait. I cannot wait.

right? Secretary of transportation. So exotic.