Prof G Markets: Why Are Millionaires Moving Abroad? + The Biggest Deals in Podcasting
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The only difference? Silicon Valley Bank is now backed by the strength and stability of First Citizens Bank. Yes, SVB. Learn more at svb.com slash vox. Today's number, $10 million. That's how much the U.S. Open's signature Grey Goose drink, the Honey Deuce, brought in last year. True story, Ed. I've been having all these podcasters, Huberman, Attia, on the pod talking about how alcohol is terrible for you. So I've decided to take action, and I am no longer listening to podcasts.

Welcome to Prop G Markets. Today, we're discussing golden passports and podcasting mega deals. Hello, daddy. Someone's about to get sexier. That's right. Bring me the mega. Bring me the deal. But first, but first, here with the news.

is Prof G analyst Ed Elson. Ed, what's a good word? I'm doing very well. How are you, Scott? I'm doing great. Is everyone really happy to have me back? Elated. Yeah, sounds it. So I take August off and I'm

Catherine and I are actually getting some work done this weekend, and she's like, all the kids are gone. So what did you do this summer? Where did you go? I didn't go anywhere this summer. I was just in New York. Oh, we talked about this. Your grandfather passed away. Well, that's a buzzkill. Fuck that. All right, Claire? Claire, what did you do? I went to Copenhagen. It's Copenhagen. You clearly don't smoke enough pot. It's Pokenhagen. Yeah.

Well, I have a Chicago accent, so. It's beautiful in the summer, isn't it? Yeah, it is. It's gorgeous. And I went to Maine as well. That doesn't sound that interesting. Allison, what about Allison, our associate producer? Allison, where did you go in August? I went to San Francisco and then drove to Yosemite and did some hiking. Oh, how millennial. Would you do like some crazy, crazy newfangled drive? Okay. What's in Yosemite?

Who were you with? It was just me and my boyfriend. Oh, God. Healthy relationship, Yosemite. Fuck that. Let's get back to the fucked up world of technology. Ed, bring the dysfunction. Let's get back to the markets. Let's start with our weekly review of market vitals. The S&P 500 declined, with Nvidia's 10% single-day drop dealing a blow to the larger market. The dollar slumped, Bitcoin sank, and the yield on 10-year treasuries fell.

Shifting to the headlines. The UK's Competition and Markets Authority decided not to launch an in-depth investigation into Microsoft's hiring of inflection employees. The CMA said that while the hiring does count as a merger, it didn't find evidence the merger would substantially lessen competition. President Biden is preparing to block Japanese-based Nippon Steel's attempt to acquire US Steel.

U.S. Steel's CEO said that if the nearly $15 billion deal doesn't go through, the company will likely have to move its headquarters out of Pittsburgh and lay off thousands of employees. And

Finally, Andreessen Horowitz has closed its Miami office just two years after opening its doors. While the company signed a five-year lease for the office, the firm shut it down because employees weren't utilizing the space enough. Scott, your thoughts starting with this decision on Microsoft and inflection. I'm of two minds here because it's clearly, well, one, it feels like Microsoft/OpenAI are just running away with it. Both the decision by Apple,

Nvidia, and I think it's Microsoft to fund the most recent round for OpenAI. And I read that it has about a 70% market share. It feels as literally they're just running away with it. So it strikes me that Microsoft should be under a pretty well-lit microscope right now in terms of acquisitions. At the same time, I think it also buttresses the notion that OpenAI and Microsoft are running away with it because

And Inflection, I think their argument was, we're fucked. We don't have the scale here. So I don't know what to do in a situation like this. We have a company that probably couldn't compete, but this is just an acquihire. And I had Reid Hoffman on the podcast. I guess he's one of the founders of Inflection, and he claimed that it was still a company. But this feels, again, and you've sort of been out in front of this, a bit uncomfortable that one company seems to be just—they came in and basically took their heart

their in their lungs and their liver they took the top employees and then claimed that it was a legitimate deal it just felt so weird from the beginning what are your thoughts yeah i agree i mean we should just go over the context again for people who may not remember inflection is this ai company that has been working on a chatbot similar to chat gbt and the idea is that it's going to be more kind of human more personal and a year ago they raised 1.3 billion dollars

And that round was led by Microsoft. So this was, you know, this was a big deal. The CEO was this guy, Mustafa Suleiman, who started Google DeepMind, which is one of the leading AI companies back in the day. This was supposed to be a big company. And then a few months ago, something strange happened where Mustafa announced he was leaving the company and

and so was the co-founder, and so were half of the employees. And where did they say that they were going to go instead? Microsoft. And now Mustafa Suleiman, who was the co-founder and CEO of this AI startup, is now the CEO of Microsoft AI. So as you say, the whole thing is very weird. We've talked about it on this podcast before. I found it very suspicious, and so did the regulators in the UK. So they launched this investigation, and they have decided that

this was fine. So first of all, they said, quote, our investigation has found that the transfer of employees coupled with other tactical arrangements mean that two enterprises are no longer distinct. As such, the transaction does qualify as a merger under UK law, and the CMA has the jurisdiction to review it. So that's the first thing they're saying is this was a merger. They may pretend it's an investment or a partnership, but it was basically an acquisition. Second thing they said, however, quote,

Inflection is not a strong competitor to the consumer chatbots Microsoft has developed directly, i.e. Copilot, and in partnership with OpenAI, i.e. ChatGPT. And on this basis, we cleared the transaction. So the argument they're making is that Inflection is or was a weak company. And therefore, by taking them out of the competitive landscape, competition wasn't harmed. My view on this, and I'd like to get your perspective,

is that that's ridiculous because Inflection barely even had a chance to try. I mean, it was, the company was two years old. This thing was destined to succeed.

And it feels that what actually happened is that Microsoft just got in there super early and they nipped it in the bud. And it feels like the precedent we're setting here is that big tech is actually allowed to suppress competition, crush competition. It can do that as much as it wants, so long as the competition is small, so long as they do it early enough such that that competition can't grow into something bigger.

It's an interesting take. My take, or at least my gut was, it was actually the opposite, and that is Reid, who is the founder. I think Reid would—if Reid believed in Flexion had a shot of becoming a real player in the AI space, that he would have, for a lot of reasons, loved to have another feather in his cap, more diversification. He's already making a bunch of money on the Microsoft board or involved there. I don't think—

My sense is, and this is more disturbing in my view, is that he has real insight into Microsoft, their assets, and the power and progress of OpenAI and Microsoft's co-pilot. And then he really understands very well the progress to date of inflection and basically went to the team at inflection and goes, I know the competition, the number one player really well in their assets and their lead, and I know what we have. And guys, we're fucked.

And because I'm on the board of Microsoft, I'm going to get us a golden parachute. I'm going to find great jobs for you guys. We're going to pivot to something else. You're going to get a little bit of money. But I have seen the enemy and the enemy has 10 Panzer tanks and we're here with a squirt gun.

So my sense is he basically, what this says to me is that Reid Hoffman, one of the most talented people in technology, one of the most insightful people who has near perfect symmetry of information on a startup in this space that has all the assets that any startup could ask for. And then the leading player has said a startup with everything it needs has no fucking chance.

against the leader right now, that they're just running away with it. And the best we can do is to have peace with dignity or to have somewhat of an honorable death. We need to euthanize this thing now, or it's going to get embarrassing and awful for all of us. So I can see why they didn't block this deal. This company, I believe, didn't have any shot. So what are you going to do? Just let it die a slow death? But what I think it should say to the DOJ is,

okay, you have a monopoly player emerging that is going to be the most powerful player very early in what is the emerging technology market.

globally. Is that a good idea? So this to me was more disturbing, but for other reasons. I don't think these guys had a shot. I think that's what Reid decided or discerned. I think that's a fair reading, but it's interesting that both of those readings lead to the same place, which is there is not enough competition. So whether or not you agree with this specific ruling, overall, the theme remains the same, which is these other companies can't really compete with

with the big dogs. In one way or another, Microsoft is finding a way to totally squeeze out the rest of the competition in this space. Speaking of blocking deals, any thoughts on this US Steel story and Biden's decision blocking that deal where Nippon Steel wanted to buy US Steel? This is a mix of xenophobia, ego, and pandering to unions.

This is stupid. If they were making air filtration systems or airbags, they'd let the deal go through. But because steel, for some reason, is seen as Pittsburgh and a part of America, we need steel to build buildings. They want to get in the way of it. I'm sure unions are trying to convince them that this is a bad idea. This deal should absolutely go through. The Japanese have better technology. This is an industry that is consolidating mostly around China, who produces 54% of global steel output. The U.S. and Japan produce 4% and 5%, respectively.

They need each small players, they need to bulk up. This gets shareholders not a great outcome, but a decent outcome. It gets them additional capital.

This is the basis of trade, comparative advantage. I mean, you're talking about an ally. We have aircraft carriers stationed off the coast of Japan to provide defense for them. They are about as, you know, other than the UK and maybe Canada, I can't think of a stronger ally. Well, maybe Mexico. We have a lot of strong allies. It's great to be American, Ed. It's great to be American.

But they're a fantastic ally. And if the shareholders here and the people who run the company think we need to be a 9% player to compete against the 54% player, this makes all the sense in the world. And if this were any other category that wasn't machoed up or tightly associated with brand US, it would sail through. This is politically driven, ego driven, and pure xenophobia. It just...

I don't like it, Ed. I don't like it. Yeah, I 100% agree with you. It feels like a lot of it is to do with the fact that this company is called U.S. Steel as well. And it's, you know, it's this old, iconic American industrial company. By the way, it was founded by Andrew Carnegie, J.P. Morgan, Charles Schwab, and a bunch of other sort of iconic old American industrialists.

And I think you're exactly right. It's one of these political stories where it just isn't a good look for one of the oldest industrial companies in America to be sold to the Japanese. That's the kind of story that a voter will observe. And at first glance, they're going to say, oh, our country's going to shit. But you look at the business case for this.

Their U.S. steel is shutting down steel mills. They are laying off thousands of workers. According to the CEO, if this deal doesn't go through, they're going to have to shut down even more plants. So if you keep this company under the current

it doesn't actually work out that well for the unions or for our economy. There's not really any rational business case that you could make that this deal should be blocked. But again, this is a fun political story to jump onto, and I think you're exactly right. Finally, this Miami office issue.

Update. Why does this make me happy? Yeah, exactly. Why does this make me happy? I love it. California is unbearable. We can't stand it here. We're sick of government mismanagement. We're going to Miami and they go to Miami and they're all coming back. My favorite is who's the...

I don't know. What's the best way to describe him? Self-hating douchebag. I forget his name. I'm going to guess you're talking about Keith. Oh, that's right. This is a very prominent VC. His name's Keith Raboy, who is one of the leaders of this We're Moving to Miami movement in the tech community. Oh, here's a good quote from him. He complained in 2020 after moving them that complaining that San Francisco was, quote, just so massively improperly run and managed, it's impossible to stay. It's impossible to stay there, Ed.

And four years later, Rablois has moved back to SF part-time and is renovating his house there, he supposedly said. Now, this is what's happened.

He moved down there to recognize a capital gain at a lower tax rate and establish residency. And he's figured out that his consensual hallucination that a state that doesn't have a world-class engineering department can ever be a player in tech. He has figured that out probably painfully and quickly. And now he's pretending to be back in San Francisco renovating his house. How's it going, Keith? Are you picking out curtains right now? How's it going? Maybe a little soapstone in the kitchen? Yeah, I bet he's renovating his house and that's why he's spending more time back in the Bay Area. Yeah.

There is a bit of a boomerang. A lot of people went to these low-tax states. I think it's important that these states compete. And just as New York has—if you live in the city of New York, as you do, I'm sure you see it every day, you can pay up to 13% in additional state and city taxes. And the thing about Manhattan is it's worth it.

And I think Chicago or Illinois is really going to suffer because I'm not sure that's worth the additional taxation. But I think Manhattan is definitely worth it, or I would offer that it is if you can afford it. That all of these VCs who moved out, a lot of them are moving back because they realize, to California's credit, there's something about the alchemy of innovation, capital. I would say one in three kids from my class, and this is NYU, just get on a plane and head to the Bay Area.

Because I think that is where that is where shit is happening. You know, that's where innovation, you know, and it's still happening. It's not like all and California has its problems. A lot of people say it's ungovernable. A lot of people are angry and I can see why at the homeless problem and crime in San Francisco.

But despite all these issues, the positives continue to outweigh the negatives. And you're starting to see prominent people or very successful VCs and Keith Rebois move back to San Francisco. Yeah, just a great stat here. Startups in San Francisco in the second quarter of this year raised $19 billion. Startups in Miami in the same quarter raised half a billion dollars. So there is a giant gap.

giant golf. And I'm trying to think about why, because this makes me super happy as well. I'm trying to think about why that is, because it's not that I have a problem with people moving somewhere else. I don't have an issue with tech bros moving to Miami. That's fine. I think the issue is just

how loud they were about this whole thing. Just the idea that they turned this whole thing into this political story about how liberals are ruining the economy, they're ruining our lives, they're ruining our culture. Everyone is moving to Miami. That's where everything's happening. That's where the money is. And it just wasn't true at all. So it's not surprising to me that Andreessen is

packing up the Miami office because it feels like it just reflects a reality that we all kind of sensed and kind of knew, but we weren't really allowed to say for some very strange reason. We were kind of bullied out of saying, actually, I think California's probably doing fine. On a more meta level, so I'm a resident of Florida. I've participated in some major

roundtables around, okay, what does Florida need to do to maintain economic growth other than being a tax haven or a retirement home? And my view is if you want to tap into the, you know, the economy that's probably or the part of the economy that we don't know about a year or two years, but in 10 years, as we've, as Josh Brown said, there's an optimist default, optimal or default setting of optimism is technology is going to continue to

eat the planet and account for a greater share of GDP. What is ground zero for that? Is it good governance? Is it warmer weather? What is it? The ground zero for any tech company that ever hopes to be worth more than $10 billion that I can see is that every one of them is started within a bike ride of a world-class engineering university.

And it's just no accident that the Valley is smack in between, and San Francisco is smack in between Berkeley and Stanford, two of the finest technical universities on the planet. And quite frankly, Florida just doesn't have it. And if you were to really be focused on sustaining the economic growth that Florida has registered over the last two decades, I think the best thing they could do, and if you wanted to be a hero—

in Florida, I actually spoke to one of these individuals who has the resources to do this. It would be to do what Paul Allen did at the University of Washington. He funded with, I think, $300 million, a world-class engineering university at UW. I mean, this is how ecosystems get started in technology. Also, I would argue Miami, I think probably it's easy to play Monday morning quarterback, but I think going kind of all in on crypto and

gave it a little bit of a sketchy feel. You're telling me the path to prosperity isn't MiamiCoin? Yeah, remember that? They had a coin. I love that. A state-sponsored cryptocurrency won't produce... Enduring innovation? Yeah. Florida's going to be fine, but it's not...

It's still an amazing state that offers a ton of, you know, it has a ton of upside. But these individuals, I just wish they were more honest. I wish I'd say, I have an unrealized gain, so I'm going to move to Florida. I like it there. The people are hot. It's a great place to live. I'm going to move there just long enough to establish residencies so I can be taxed at a lower rate. And then I'm going to slink back to the Bay Area where people make real cabbage. Right.

and where there's an ecosystem where every other foot, there's a really interesting startup trying to raise capital. And none of them want to say this. They all want to blame the primary reason that they're successful and have registered their blessings, and that is the U.S. government and specifically the ecosystem in California that continues to churn out these incredible companies. Anyways, enough of that. I still love Miami, though. Still love Miami.

Oh, you should see Daddy at the Faina. He goes into that place called The Living Room with that porcelain cheetah and he buys drinks for everybody. Hola! Hola, yes. We'll be right back after the break with a look at Golden Visas. Support for this podcast comes from Huntress. Keeping your data safe is important. However, if you're a small business owner, then protecting the information of yourself, your company and your workers is vital.

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We're back with Profit Markets. JP Morgan is deploying a private banking team to Dubai to capture the wealth of an influx of millionaires moving to the Middle East.

The United Arab Emirates has become the country of choice for the ultra-wealthy, with more millionaires expected to relocate there this year than anywhere else in the world. Other wealth managers such as UBS, Deutsche Bank, and HSBC have also identified the Gulf as a growth region. Scott, what is going on here? Why are we seeing this influx of millionaires moving to Dubai and other areas in the Middle East? I mean, essentially, it's economic opportunity. And

I went to Riyadh to a conference. I've been to Dubai several times. And what's inspiring about these places is you meet a lot of

entrepreneurs from Europe and Asia. And basically, there's just more economic opportunity now in the Gulf. And then you couple that with very low taxes, if not zero taxes. It's actually more attractive, I think, for European citizens because if they move there, U.S. taxes will follow you wherever you go the rest of your life. You'll always pay U.S. federal taxes unless you turn in your passport, which I don't recommend you do. But I think if you're a German or a

And if you're a small business entrepreneur building websites or you have an interior decorating firm or whatever it is, the economy there is just booming. So you not only have more upside, you have much lower taxes. And they're very straightforward. It's like you play by our rules. That's the downside. You don't want to get caught.

with edibles. Drinking. Speaking for a friend. Oh, no, you can drink in Dubai. Riyadh, it's... You can drink at the Chipriani. You probably can't drink anywhere else. I don't know. Oh, my friend. You can drink anywhere in Dubai and catch the eye of a lovely woman from Russia who is very interested in you. Again, speaking for a friend.

No, Dubai is actually quite liberal and well-run. It just represents opportunity and more economic security for young people. So it doesn't surprise me. What's surprising is that people used to move to a different city or whatever. The fact that there's sort of these international relocations now. I do have a couple of friends who've relocated. To the Middle East? Dubai. Dubai.

So, my friends who've already made it are relocating to Portugal to become taxpats and just hang out in Cascais and live nice lives with their kids. My friends who are kind of in their 30s and on the upswing and have a small business are moving to Dubai to try and make more money. Sort of similar. I mean, I kind of did the same thing. I moved to Florida thinking, okay, it'll be a better quality of life. I'm massively going to cut my burn by 40% and I'm going to reinvest my 13% a year in my top line from tax savings and investments.

But what you see is young people are becoming bolder. More people have passports. More people are less intimidated by moving and they feel like they can stay in better touch with their family with FaceTime. They're just not as intimidated. And Emirates has now kind of opened up the region. I mean, flying 14 hours on Emirates is like flying two or three hours on American Airlines, right? It's just about the same level of trauma to your system. It's such a pleasant way to fly.

that I think it's really interesting. I think there's just some core investments, just as we were talking about how powerful an investment in a university can be. I think one of the best investments the UAE made was in Emirates Airlines. It just sets this tone that, wow, this is an amazing country and I don't mind going there because getting there is just so easy and so nice. And the airport is so... By the way, one of the best meals I've ever had is at the Doha Airport in

You don't usually think about, I got a facial and an amazing meal at the airport in Doha. That's not typically. By the way, go to an airport if you really want to be radiant and help with the pores and look younger. Go to an airport for a great cosmetic treatment. Anyways.

I think it's interesting, and I really—have you been to Dubai? No, I haven't. Yeah, it's sort of like Vegas without the charm. I don't love Dubai, but it's impressive what they have built there. Also, it's kind of part of a trend around passports have become the newest luxury item where people are starting to buy passports, so they kind of have a go-bag—

I had to jump through all sorts of hoops to get a tech visa here, a tech talent visa, which isn't easy at my age, given I don't know how to turn on my phone. So I got a five-year visa. But these places you can basically buy citizenship. Let me ask you this. If you felt...

So you make a certain amount of money. If you felt you could make the same money, have the same or lower cost of living as you do in New York, but save 30% of taxes, would you consider moving to Dubai? I would certainly consider it, yeah. But I think I'd need to be making a lot of money such that I can be kind of at the very, very tip-top.

of the hierarchy in Dubai. I think it wouldn't be very... When you say America is a terrible place to be poor and a wonderful place to be rich, I'll bet that's even more true in Dubai. So I would have to think about that. But on this golden visa point, you mentioned this is similar to you establishing residency in...

Florida, it's different because anyone can do that. And the difference that we're seeing here and the trend that we're seeing around the world, you mentioned Portugal. Portugal is one of the biggest countries for these golden visas, and now it's becoming the UAE. And basically what a golden visa is, is it says if you pay...

you get to come and live here. So in the UAE, the rule is if you buy a property worth at least 2 million dirham, which is around half a million US dollars, you get a visa.

And this is the case in many countries. Actually, over 80 countries today offer golden visas. Some of them offer golden passports, which means that you can literally just pay to become a citizen. And at the moment, demand for golden visas is up 15% in 2024. So this is a new phenomenon. I mean...

I'm sure this has existed in various forms throughout history. Governments trying to adjust their policy to attract wealthy foreigners. We've talked a lot about how the UK has done that for a really long time. But golden visas specifically and golden passports are on the rise. And I look at this trend, and to me it's conspicuous

concerning. Just the idea that we are moving to like a pay-to-play citizenship model where it doesn't actually really matter what your nationality is. It doesn't really matter if you know anything about the culture. You're not taking like a nationality test. You're literally just paying money and they say, okay, come in here and now if you live in the UAE, as you mentioned, you pay very little in taxes. No, you pay zero in taxes in the UAE. There's no income tax, no inheritance tax, no estate tax. And now

everyone's moving there and they're just paying for it. So are you concerned about this in the same way that I am, that we are just letting people pay to live wherever they want? I'm not. Just as I think it's good that Texas competes with California and that California will have to get its shit together and offer its taxpayers better value at some point. So in 2024, the UAE will attract the most millionaires, followed by the U.S., Singapore, and Canada. On the flip side, China, the U.K., and India will lose the most.

I think that competition is really important. I think that nations competing against each other to attract people is really important. I think that China will probably have to keep a check on, somewhat of a check on human rights or the way they treat people because I read some crazy stat that two-thirds of millionaires in China have either left or are planning to leave. Right. In China and Russia, all the rich people are leaving. Yeah, supposedly the thing that's really going to fuck the Russian economy is just the brain drain.

And so, you know, ensuring that your citizens are happy, otherwise they're just going to peace out. I think that's a good thing. I think that competition, I think it'll inspire the UK to try and figure out. And it's not only low taxes. It's and we were talking about this before. I don't think New York has any plans to lower its tax rate and it doesn't need to because it offers an amalgamation or an alchemy of culture, grid and opportunity that's worth it.

And I think companies and countries that don't make it worth it, that have a mix of high taxes and low opportunity and low, you know, low human rights or low, you know, modest or mediocre freedoms, people are just going to leave and go somewhere else. It is a bit disturbing that

You know, millionaires get to do whatever they want and buy citizenship. But, you know, it's the financialization of everything. Welcome to the real world that everything is about money increasingly. And it'll create a more competitive environment. But I think on the whole, countries competing against each other for its quote unquote most productive citizens or its wealthiest citizens. I think that is primarily a good thing. But it's it's competition to serve such a small amount of people.

I'll just give an example of where this is happening, which is the UK. You mentioned the UK is at the bottom of that list. It's seeing the greatest outflows of millionaires. And the reason...

behind that is that as we've discussed before the uk used to be sort of a tax haven for wealthy foreigners because of this thing that we've talked about called the non-dom status it's a tax classification for wealthy foreigners who are living in the uk and it basically exempts them from a certain amount of taxes and we can go into the details on what exactly those exemptions are

But the point is, wealthy foreigners live in the UK and they love it there because they get to enjoy all the nice things. And also they get to pay less in taxes than regular UK citizens as a percentage of their income.

So the UK government has recently decided to scrap that. So non-DOMs, or wealthy foreigners, will now be taxed the same as everyone else. And when that happened, as I'm sure you heard from a lot of people in London, a lot of wealthy foreigners were like, oh, this is terrible, we're moving. This doesn't work for us anymore. My instinct, when I heard those rumors, was that it was kind of similar to Miami-Dade

It's kind of bullshit. They're saying, oh, this is terrible because they just want to put up a stink and maybe get that tax policy reversed, but ultimately they want to keep going to 5 Holford Street and running into you at Maison Estelle, etc., etc. But then I saw the data, and

which is that the UK is expected to lose 10,000 millionaires this year, which is the highest number ever. And this new economic analysis came out saying that because of the amount of non-doms that are leaving, the Treasury is expected to actually lose tax revenues, expected to lose £1 billion. And this whole thing was supposed to increase revenues, but everyone's actually leaving. And apparently, if we look at the data, they're literally moving to the Middle East. So...

How are governments supposed to thread the needle here? Because it's not that Britain's implementing unfair tax policy. It's very fair, very moderate tax policy. But it's just that somewhere else, the tax policy is...

just preferential to rich people? So is it just sort of kind of a race to the bottom of who can cater to the rich as much as possible? So a lot there. The first is I want to acknowledge that I like your mentality in the sense is that, okay, when the data changes, I change my mind. And I had the same view as you. I have a close friend here in the UK, total baller, does really well.

and has residency in a low tax domain. And then when he heard about the non-dom thing, he started kvetching that I'm leaving, this is gonna be a huge hit to me. And I'm like, "Boss, your kids are in school here. You love it here. You're not going anywhere."

And I was right on this specific instance. But for people who don't have kids, for people who it's, you know, a savings of tens of millions of dollars, the data you just put forward is really stark. And the fact of the matter is, if this tax policy meant to increase the Treasury is actually going to diminish it, then it was the wrong policy, regardless of what you think of the morals of it.

So what needs to happen? I think that in general, you need a few things to happen. The first is, I think there has to be a tax policy that is a multilateral trade agreement, and the U.S. has to lead it because the U.S. is the only one that has kind of the firepower to say, unless you cooperate, we're not going to give you access to the dollar, we're not going to give you access to CFIUS, or not CFIUS, whatever the...

The credit card trade. I mean, the U.S. can kind of impose a sanction on anybody and it kicks the shit out of the U.S. can put almost any country, if not out of business, it can make them much less wealthy if it wants to.

And they flexed that same muscle. You had a lot of U.S. corporations doing reverse mergers and relocating their corporate headquarters such that they could not pay American taxes. So Janet Yellen and the president said, no, we're going to implement a 15% AMT, minimum tax, that regardless of where your quote-unquote headquarters are, you need to pay at least a 15% corporate tax. And then they forced everyone else, including Ireland, that was saying we'll do it for $8 million.

To do that, otherwise, we're going to put you out of business. We're going to start with a tariff order. On UAE. Right. So you're going to have to have, I think, some sort of intercontinental or multilateral agreement around taxation. In addition, as a general rule, the philosophy I would implement around taxation is the following. If you're Jeff Bezos and you've aggregated $160 billion in wealth in Washington as a function of the great

Junior colleges there, the great public schools, the University of Washington, the Seattle-Tacoma Airport, the unique culture of innovation there. And then you decide to peace out for Florida to, quote unquote, spend more time with dad. And you're not going to give back to the infrastructure you leveraged to become one of the wealthiest men in the world.

Boss, that dog just won't hunt. The amount, the accretion of wealth needs to be, the taxes you pay on it need to be based on where you accreted and built that wealth. It's the same bullshit all these VCs who claim that they hate San Francisco is pulling, but on an international scale. Galloway 2024, new tax policy. You heard it here first. No, but I need to be president of the world. Yeah, exactly. General consulate of the solar system. Yeah.

We'll be right back after the break with a look at a few mega deals in podcasting.

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Podcasting deals are back and bigger than ever. Over the summer, Alex Cooper of the Call Her Daddy podcast signed a three-year contract with SiriusXM for $125 million, jumping ship from Spotify. Meanwhile, Travis Kelsey and Dax Shepard struck deals with Wondery for $100 million and $80 million, respectively. And Joe Rogan renewed his contract for $250 million. Scott, 2024...

might be the year of the podcast. What are your reactions to these new podcast deals? My reaction is fourfold. The first is Shama. The second is Lama. The third and fourth are Ding and Dong. We're rich, Ed. We're rich.

Boom! We're each going to have a Ferrari, or more likely, I'm going to have two Ferraris. Yeah. Then I'm going to buy you a Toyota with leather seats. I'm going to be renting a Ferrari from you. There you go. Yeah. I'm super... Look, I think a lot about this, and this is super exciting. And a few things are going on here. One...

Podcasting is one of the few growing ad-supported mediums, and the key there is ad-supported because the trend around all media has been to go behind a wall, whether it's The New York Times or Netflix or HBO or The Financial Times. The best content is basically going subscription and ad-free. Now, what does that mean?

It means that if you're Pepsi or Lexus, you're becoming increasingly desperate to find content that people will endure while they pelt you with the Lexus September to Remember event. By the way, eating the clam chowder at the Lexus September to Remember event wasn't a good idea, Ed. Wasn't a good idea. Yeah.

Anyways, that makes me happy. So, all right, back to our program. So if you have a vehicle, a media vehicle such as the one that the two of us are on right now, that people are willing to endure ads on,

that asset becomes more and more valuable because there are fewer and fewer of them. This is why you've seen an explosion in the value of sports franchises because they can garner TV rights or sell their TV rights, and people are still willing to endure ads in live sports. They're not willing to endure ads in original scripted drama anymore, but they are willing to endure ads so far in audio, specifically podcasts. So you have seen a dramatic uptick

This year, we've seen it in our numbers in advertising. And so what you see is a few of the bigger players, Sirius, Spotify, Wondery, who has Amazon, iHeartRadio, Vox, who we distribute our podcast through, they are paying up because their valuations, if they can show growth in an ad-supported medium, they're going to be paying up.

you know, that creates a lot of shareholder value. And podcasting has also evolved. It used to be celebrities. The era of sign up the Obamas and Prince Harry and Meghan and pay them 10 million bucks for them to do nothing, that's over. But these folks who are proven commodities, who have big audiences that are growing, that ring the register with advertisers, they're getting bigger and bigger deals. Now,

These deals are probably a bit misleading because let's break it down. Armchair Expert, $80 million. That's Dax Shepard's podcast. That's Dax, yeah. But let's assume it's four years. That's $20 million a year. I bet there are revenue guarantees in there. And so it's not, you know, they all want a headline number that's really big. But I would bet that the folks at Armchair Expert gave Wondery a business plan and they said, fine, we believe you.

And you need to hit these numbers. And if you do, and you continue to grow 20 or 30% a year, you're going to get 80 million total over four years. This is, I got to be honest, this is really exciting for us. We're peaking at the right moment. The Prop G Enterprise, you know, markets conversations, this pod is growing, you know, 20, 30% quarter on quarter. The other pod pivot is a juggernaut. And our deal with Vox is up in May. So,

So we're out there positioning ourselves. And my guess is we'll probably end up staying with Vox because we like working with them so much. But oh, my gosh, it's going to cost you, folks. It's going to cost you. Yeah. So this is this is the ultimate question. What is a multi-year contract with Scott Galloway and Ed Elson?

What is that going to be worth in 2024? All the chickens, ale, and Cialis that daddy wants. I don't know. Like, I've done a bunch of deals directly with firms. Money isn't meaningful to me right now. It's not profound. I'm going to call it profound for me, but keep going. And...

In terms of a number, I haven't thought about a number. Yeah, you have. I haven't thought about a number I'm willing to share. I basically like to just, I'd like, I'm building a pool in my new house. I'd like to fill it with cocaine. And I don't know how much that would cost. I don't know how much that would cost. And I also want to be married another four or five times to people from Eastern Europe. I'm curious what that would cost. Yeah.

Yeah, you got to factor all of this in. No, this is going to take some real money. Plus, I need a scrotum left. I'm getting more and more Botox all the time.

Look, it's not cheap being me. It's not cheap. It's not cheap. I got to pay you guys. I got to pay you guys. You got to get a scrotum lift at the Doha airport. Yeah. Best facial I've had. Well, just on this point of subscriptions versus ads. So, you know, you're pointing out that ad spend is increasing on podcasts. And here's some data. Ad spend increased 22% this year, according to one research report on all podcasts. Spotify says...

2024 will be the company's biggest year for podcasting. And on a separate note regarding subscriptions, 62% of consumers who use streaming services report subscription fatigue, and that's up from 46% in 2020. So ads are kind of becoming king again, certainly the podcast world. And you made this point that listeners are willing to endure them.

And that is something that we should zero in on because ads are increasingly dominating this space. In 2021, ads took up an average of 7.5% of total podcast show minutes across all podcasts. And today that number is 11%. So it's grown very significantly. We are hearing more and more ads in our podcasts. Our listeners, I'm sure, will be

feeling this too. We are definitely not bucking that trend. And there might be a concern soon that podcasts similar to TV are just too ad-heavy. It just becomes insufferable. So where do you stand on that issue? Are you concerned at all about

just ad fatigue. So about four years ago, every three months, we would have a conversation, a serious conversation around taking ProfitG and Pivot behind a paywall and putting the No Mercy, No Malice newsletter there and just saying a hundred bucks a year for all of it. And there's something that's very attractive about it. No ads, focus on the content, have a customer base that is really into it. Kind of Sam Harris has sort of forged this model. I think Sam Harris probably has

you know, three or 400,000 subscribers paying a hundred bucks, do the math. He's making a shit ton of money, is very happy. He doesn't have to go to the lowest common denominator or read an ad about, you know, for some crypto platform or whatever. So it was really attractive, but I, we were smart enough to figure out, I thought, you know what? I do think that these advertisers are going to need places and everything is, we're going to go, the market is never,

The market never finds a balance. I'm like, subscription is just, was the right move 10 years ago. It's not any longer because there's still too many advertisers that need to reach people. And that number, 23% growth, I think that means podcasts are growing faster than Alphabet right now. I mean, that is 23%, other than Meta and TikTok, I think that means podcasts are the fastest growing ad-supported medium in the world right now.

And so everyone has their greed glands going and their checkbooks out. At some point, we'll hit a limit in terms of ad fatigue. The thing that'll happen that'll ruin it, if you will, or not ruin it, but change it, is right now, it's pretty easy to skip an ad. At some point, advertisers are going to start tracking ads listened to.

And that will probably change or force podcasts to reduce the number of ads such that people don't immediately get fatigued and start skipping everything. Also, what's different or unique about this medium is the host read over. We read all our ads.

And it's been shown that when I say I have a Hastens bed, is that what it's called? Hastens? Hastens. Hastens. Hastens? Hastens? Hastens? Hastens? Hastens? Whatever. They're nice, expensive beds. Yeah, it's a $12,000 mattress. Anyways, they're an advertiser, and they were kind enough to invite us into their store to try a mattress. And I'm like, I'm not going to go into some strange store and lay down. That's supposed to be a feature? Anyways, it ends up.

Which I never do. I think I spilled some rum in my bed or something. And for the first time, I took the cover sheet off and I see a Hastings logo. And I'm like, oh, my God.

I buy the Swiss bitch of a mattress or whatever. It's a Northern European mattress that has like- Swedish. Gnomes with freakishly small hands sewing this thing. And it is a great mattress. But in the next ad read, I will say I have this mattress and I love it. And the advertiser loves that and so do listeners. The host read over is much more effective than

because people, when they hear the continuity of your voice, if they're on your pod, it means they sort of trust you and they're sort of interested. But this is a medium. The ad market needs a place to find consumers. This medium is growing faster than anything but all but the strongest digital platforms right now. And people are breaking out their checkbooks. It's a great time to be in podcasting. I'm manifesting a $60 million deal next year. That's what I want. You know what's funny? You said this. I

I went on, I'm fascinated by ChatGPT and Claude and AI in general. I went on and I uploaded our numbers. I uploaded our downloads, our numbers, our revenues. This is the guy who said, I haven't thought about it.

I just want to be happy, Ed. Go ahead. I just want to make other people happy. I just want to be healthy. You know, I'm rich in terms of the number of people who love me, Ed. That's how I count my health, Ed. Three different AI assistants to help him think about it even more. All right, shut the fuck up. Anyway, so I uploaded all the data I had on our pods, and I said, please look at all these different deals. These are the potential partners. This is when our deal is up. Please provide me a range of a likely size of a deal.

And both of them came back with nearly the same number, which I thought was really interesting. And after the deal is done, I will disclose what AI projected we were going to get and what we actually got. But it's going to be very interesting. I hope it's big. I really hope it's big. Let's take a look at the week ahead.

We'll see the consumer price and producer price indices for August, and we'll also see earnings from Oracle, Adobe, and Kroger. Do you have any predictions for us, Scott? So it feels as if the worm has turned against big tech. The CEO of Telegram being arrested in France.

Twitter being banned in Brazil, Google being found guilty by a court of monopoly maintenance, the DOJ sending a warning letter or firing a flare across the bow of NVIDIA. Apparently that wasn't true, by the way, the NVIDIA subpoena.

That's what NVIDIA said. NVIDIA is saying they didn't hear from them. And then later today, though, didn't they say that they've been in touch or something? I know they initiated an investigation. The whole thing is very weird. But I mean, they're certainly investigating NVIDIA. So I think what you're saying still remains true. Don't get in the way of my narrative with data and truth, all right? Anyways, I think the worm has turned against big tech. And this bullshit that, oh, the screams of free speech. So news alert, crime is not speech.

If Ed, if you and me owned a hotel and we knew that there was trafficking and there was child abuse taking place and illegal drugs being sold, and the authorities contacted us and said, we know this is going on there and we need your help. And we stuck up the middle finger and said, no, it's free speech. We would be in a world of hurt. Crime is not speech. And people have had it with these folks believing what everyone has been telling them from the

to bought-off senators and congresspeople that somehow they are not subject to the same standards of decency or care for the Commonwealth as every other company and every other individual. So my prediction is the following. In the next six months, you are going to see a high-profile tech executive, when he or she lands in their favorite vacation spot, cuffed.

The world has had it with these guys. And we're going to start to see more local enforcement agencies say, well, if you're in any other industry, we're going to arrest you. So guess what? We're arresting you.

This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our executive producer is Catherine Dillon. Mia Silverio is our research lead and Drew Burrows is our technical director. Thank you for listening to ProfitG Markets from the Vox Media Podcast Network. Join us on Thursday for our conversation with Lynn Alden, only on ProfitG Markets.