Two Months In: Why Markets Stopped Caring About Iran

Scott Galloway and Ed Elson discuss how the war in Iran has impacted prices and markets as the conflict passes the two month mark. They also break down what makes a great CEO in light of Tim Cook’s decision to step down from the helm of Apple. Finally, they explore why SpaceX is acquiring Cursor. Get your tickets to the Prof G Markets tour Subscribe to the Prof G Markets Youtube Channel Subscribe to the Prof G Markets newsletter Order "Notes on Being a Man," out now Note: We may earn revenue from some of the links we provide. Follow the podcast across socials @profgmarkets Follow Scott on Instagram Follow Ed on Instagram, X and Substack Send us your questions or comments by emailing [email protected] Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 1:29Scott Galloway?

  Today's number: $150. That's how much New Jersey Transit is considering charging for a round-trip train ticket to the World Cup this year. Ed, what do a 12-volt battery and an asshole have in common?

• 1:42Ed Elson?

  What?

• 1:43Scott Galloway?

  Well, you know you're not supposed to put your tongue on it, but you do anyways.

• 1:58Ed Elson?

  Are we gonna get to the World Cup this summer? What are we gonna do about this? I'm very upset because this is like the big moment. I should obviously be going to the World Cup. Huge football fan, never gone to the World Cup in my life, and it finally arrives in America, but I can't get a ticket. It's just insane.

• 2:14Scott Galloway?

  Well, I don't know if you heard, but an alcoholic, a priest, and a pedophile are going to the World Cup, and that's just the first person.

• 2:19Ed Elson?

  What is the joke? Who are you making fun of?

• 2:22Scott Galloway?

  I'm saying they're the same person: alcoholic, pedophile, priest. Anyways, um, maybe I didn't deliver that well. It's time to bring in our producer. Okay, wait, hold on.

• 2:31Ed Elson?

  No, no, no, no, no.

• 2:32Scott Galloway?

  I've got a better one. I was interviewing for a job. And the interviewer said, what is this for your gap in your resume? And I said, well, I went to Yale. And she said, wow, that's impressive. You you're hired. And I said, oh, God, that's such good news. I really need this this job. Think about it.

• 2:53Ed Elson?

  I got it. I got it. Again, the silence is not an indication of confusion.

• 2:57Scott Galloway?

  And it was, how are you, Ed?

• 2:58Ed Elson?

  I'm doing well. I again, present you the question, what are we, what are we going to do about this World Cup thing? Are you going to be able to figure it out? Like, I don't know what to do about it. I'm just going to regret it the rest of my life.

• 3:10Scott Galloway?

  Is it really that hard to get tickets right now?

• 3:11Ed Elson?

  Uh, it is, unless you're willing, I think, to spend like

• 3:15Scott Galloway?

  A lot?

• 3:16Ed Elson?

  Not just a lot, but like a fortune.

• 3:18Scott Galloway?

  Better start wearing more quints, bitch.

• 3:24Scott Galloway?

  I so I've been, yeah, I've been the last two times. Look, I get, I don't know, I get a brand takes me, so I don't. But I would bet if you want to figure it out, I would bet tickets start to free up towards. America's never been that into football, so I don't, I would bet a lot of tickets will free up, but I don't. Do you want to go to the big games or do you want to follow Team England?

• 3:48Ed Elson?

  I mean, England would be incredible, but I mean, that's, I think that's a that's high hopes to go see England. I'd go to anything. I'd go to anything in New York. What I'm just curious, what is your plan here? Are you waiting for a brand to tell you, hey, we have some tickets, come along?

• 4:06Scott Galloway?

  Yeah, that's exactly my plan. You just literally outlined my plan. I don't, I don't think about me. It's not till, when is it? Oh, it's coming up.

• 4:13Ed Elson?

  That's what I'm saying. I got to get my act together.

• 4:15Scott Galloway?

  I get the sense, Ed, you're going to figure this out. We're going to figure this out for you. I get the sense that someone's going to

• 4:20Ed Elson?

  Well, that's kind of why I bring it up. I was, I was hoping that maybe you'd give me sort of the inside baseball.

• 4:24Scott Galloway?

  This is you fishing for for invites to the World Cup?

• 4:27Ed Elson?

  Yeah, exactly. Maybe you get offered tickets and then you kind of forward me the email, like maybe you have a conflict or something.

• 4:34Scott Galloway?

  Yeah, I think the answer is Paramount Plus.

• 4:39Scott Galloway?

  We'll see. We'll figure it out.

• 4:40Ed Elson?

  Paramount Plus. That's very exciting. And in in other good news, they are, I'm now going to get dragged for saying good news. It's not good news. Warner Brothers has officially decided that they are going to get sold to Paramount, which is something we could discuss, but that's not on the docket today. We have other stuff to discuss. Before we get to that, though, I want to promote our tour. Again, we are hitting San Francisco, LA, Miami, Chicago, New York. We're going to be on the road May 27th to June 2nd. If you haven't gotten your tickets, do it now. Go to profgmarketstour.com. Scott and I are going to be live in conversation. We're going to be doing Q and A. We're going to have some very, very special guests.

• 5:22Scott Galloway?

  It was just interesting. We were worried. We knew we would do well in New York. We're almost sold out in New York, but we're almost sold out in the city we thought we were going to do least well in. You know what city that is?

• 5:30Ed Elson?

  I do. San Francisco.

• 5:31Scott Galloway?

  San Francisco. That's right. I think they're coming to throw shit at us.

• 5:37Scott Galloway?

  But yeah, we're doing well in San Francisco. But it's going to be great. It's going to be a chance for us to spend a lot of time together, which will be nice. But anyways, I don't know how to promote it other than saying they're a great time. And Ed likes to drink, unlike Kara Swisher, he likes to drink. So we'll try and do an after party at all of them, which will be, which will be fun.

• 5:59Ed Elson?

  I'm going on the road with Scott. I'm excited about that part.

• 6:01Scott Galloway?

  We're going to take a big bus. We're driving across this great nation.

• 6:05Ed Elson?

  We're going to get groupies?

• 6:06Scott Galloway?

  Let's hope so. Yeah, I don't know. All right. In other news, let's talk about Iran.

• 6:14Scott Galloway?

  Let's move to something more light.

• 6:15Ed Elson?

  Yeah. Okay, let's do it.

• 6:19Scott Galloway?

  Now it's in time to cry. I hope you have plenty of the well at all.

• 6:26Ed Elson?

  The war with Iran reaches its two-month mark tomorrow. That's well beyond the four-week timeline the Trump administration had initially suggested. So with the conflict stretching into its third month, we thought it was a good moment to step back and assess how it's impacting prices and also the broader market. But the bigger question still looms, how and when does this actually end? Scott, let's just look at what's happened with the markets here. We're now at month two. We started this war on February 28th.

• 7:01Ed Elson?

  So we've we're essentially two months into this thing. Oil prices are rising still. Brent crude is above $103 a barrel. So I think a lot of people expected that maybe oil prices would kind of calm down, that the markets would sort of temper. That hasn't really happened. It's still very volatile and it's still pretty significantly elevated compared to where we were before the start of the war. But what has been interesting is how well the the stock market has performed. So since the ceasefire was announced, the Dow has risen 6%. The S and P has risen 8%. The NASDAQ has risen 12%. And actually, it's not just US markets that are rallying.

• 7:46Ed Elson?

  It's markets everywhere around the world. So again, since the ceasefire, since Trump announced that ceasefire, and we can debate whether it actually was a ceasefire. But since that announcement, Europe's stock market up 3%. Germany's up 4%. China's up 5%. India's up 5%. Japan up 10%. So it does seem that investors are either breathing a sigh of relief or deciding that things don't matter perhaps as much as they originally thought when it comes to the war and its impact on the larger economy. Or they're just looking at the earnings that we're seeing. And the earnings have been pretty phenomenal, that which we've seen

• 8:29Ed Elson?

  since the start of this war. The point being, markets, stock markets are doing pretty well right now. And they continue to do quite well.

• 8:40Ed Elson?

  There's some nuance that we can dive into, but let's just start with your reactions to that fact. S and P up 8% since the ceasefire.

• 8:47Scott Galloway?

  The markets seem to believe that the war is going to come to an end. Also, I think it's a bit of a recognition. Or belief that we have fully transitioned to a tech and services economy and the straight up from moose doesn't stop that. And at the center for tech and services is the United States and distinctive, the fraying of our alliances. I mean, I, I, I think long term, there's just impossible to believe this is not going to have some sort of a pretty serious economic impact. But when the majority of the S and P is fueled by companies and services and tech, whether it's JP Morgan or Microsoft, those companies don't seem to be, I mean, in many ways, those companies kind of benefit from this. I mean, there was talk of data centers being bombed, but not really.

• 9:32Scott Galloway?

  The tariffs don't affect them. Energy prices, I guess arguably might affect them, but they have the capital to try and, I mean, the really good ones kind of secured the energy supply before this nonsense, right? So it has been, and if you look at the, the markets that have performed the best, the two markets that performed the best are one Taiwan of 15%. And I wonder how much of that is like, okay, AI is, is the place to be. They are the number one producer of chips, right? And so their market's up 15% as the chips market goes, so does the Taiwanese market. And the interesting one is Israel's market is up 9%.

• 10:12Scott Galloway?

  And I think what people have, I think if you try and read into it, the market has basically decided that, that Israel is the new superpower, is the superpower, the definitive superpower in the Middle East and its tech sector. I mean, I, I think the market is betting that their technological excellence has demonstrated during the war. If you look at many of the, a lot of people would argue, who argue for military spending, that the spillover effect is actually accretive, that whether it was, you know, radar, which gave rise to GPS, you know, jet technology, which ended up transforming jet transportation, that there's a lot of spillover. DARPA was basically a backbone communications network for post-apocalyptic America that

• 10:57Scott Galloway?

  gave rise to the internet. And I think a lot of investors are looking at Israel and saying that technology has demonstrated during this, what feels like a permanent conflict, the last, better part of the last three years, is it going to spill into their tech sector, which is now, I think, the third largest tech sector in the world. And it's really registered incredible growth. They have more unicorns per capita than any nation in the world. So I think the world or the markets have come to the conclusion, one, rich people drive the markets and they don't care about energy prices. And two, the world has become, we're no longer a fossil fuels economy. It makes a difference, but this is a technology and a services economy now. And these companies are doing really well.

• 11:38Scott Galloway?

  And also, to be fair, the earnings have been really strong across these companies. So consumer sentiment, it's, there's some dissonance. While consumer sentiment claims, studies say consumer sentiment is its lowest level. It doesn't seem to be translating to a decline in consumer spending.

• 11:56Ed Elson?

  I mean, I guess the first thing to address, why are my markets rising? And it could be that one, investors think that the war is about to end. In which case I fundamentally disagree with them. I don't think this war is coming to an end. I don't think we had any indication that this war is even close to coming to an end. I think it's actually going to keep going for a long time. Or two, they've decided that this doesn't matter that much in terms of the markets, because the markets care about earnings. And so far, as you say, earnings have been extremely strong. Every sector's earnings estimates have risen since the war began, especially the tech sector,

• 12:40Ed Elson?

  which is the most important one, which the market is pretty much dependent on at this point. Their earnings estimates have seen the largest increase in recorded history.

• 12:50Ed Elson?

  So I think that that is the, the correct reading, or at least if you're going to justify why the markets should go up, why right now is a buying opportunity. I think the correct reasoning is you would say not that the war is going to end, but regardless of what happens with the war, earnings in corporate America are fundamentally very, very strong right now. And they are increasingly driven by one sector that isn't going to be hamstrung by the fact that there is traffic and blockades in the Strait of Hormuz. It isn't going to be fundamentally affected by rising gas prices. That's not going to be really a problem. And

• 13:34Ed Elson?

  To your point, when we look at the backward looking data, so that meaning the data that we already know, the evidence that we have, yeah, consumer spending is actually not not going down. We've seen that consumer consumer spending is is pretty stable. We saw that in most of the earnings from the banks. We also saw it from Capital One. In their earnings last week, they said that, quote, "So far, we've not seen any adverse effects on our portfolio, even in our credit or in our spend metrics. Consumer spending is pretty much fine." At the same time, as you say, you've got consumer sentiment, which has literally reached a

• 14:14Ed Elson?

  record low. So how people feel about the economy right now is not good at all. And then the question then becomes, how much of a metric is that really? The question then becomes, what happens next, though? Because we haven't really seen what elevated and durable gas prices will do to this economy yet. And while, yes, we have electrified our economy more so than we have in the past, and while, yes, the top 10% of consumers make up half of all consumer spending, and they are not very sensitive to gas prices, the

• 14:54Ed Elson?

  reality is, we haven't seen what a long and durable period of elevated gas prices, which are up 35% in America since the war began, and they're up even higher in basically every other market around the world. And so the question then becomes, is it going to have a real impact next quarter, or the following quarter, or the following quarter after that? And that is a question of how long are we going to remain in Iran? It's a very complicated and unclear question right now. And it is, it does all go back to this point that we've said a lot, a lot of the time, which is that the economy is so fundamentally dependent on both a handful of tech companies at the top, and also a

• 15:36Ed Elson?

  handful of earners and thus spenders at the top as well, which means that it's very hard to even understand how the economy is even doing. And so the stock market is just, as we've said, a pretty shitty indicator of general economic health, but that's what we're here to talk about. And so far, investors believe, and they're probably right, that oil prices are not going to have that much of an impact on earnings, especially when we're in this AI boom and AI spending and revenue continues to rise.

• 16:12Scott Galloway?

  I mean, it's a couple of things in terms of markets. Your proximity to AI coupled with the trade surplus of oil. So are you an oil exporter importer and your proximity to AI? So in the security of it, so Israel markets up tremendous proximity to AI. Taiwan tremendous proximity to AI, but they're both oil. My understanding is oil importers. And what that says to me is the proximity to AI bests your need for energy. And then you look at the US, it is both got, it not only has proximity to AI, it's ground zero for it and we're an oil exporter. And despite the fact, okay, so think about the cost of production for oil have not gone up in the United States.

• 16:55Scott Galloway?

  They can still extract a barrel of oil for about the same price as they could five weeks ago. The difference is they're now getting, you know, 40% more per barrel. That is money that goes into the pockets of shareholders of US companies. So it's not leave, to a certain extent, the increase in energy costs here aren't leaving our shores. They're just being redistributed, maybe inefficiently. But you have a lot of companies, you have oil companies, big companies in the S and P 500 in the United States who are benefiting from this. So while it'll cost consumers money, and at some point you think that's squeeze out other purchases, but you're not seeing a decline in the purchases of site licenses for Anthropic

• 17:38Scott Galloway?

  because people are spending more on gas this week. And that's what drives the market. Now, in terms of moving forward, also, it just appears. I mean, there's just no getting around it. The market has just become this incredibly resilient organism.

• 17:52Ed Elson?

  Yeah, it's just a debt buying machine.

• 17:54Scott Galloway?

  Yeah, it seems to be surviving wars, pandemics. And a friend of mine, Jason Mudrick, who started Mudrick Capital as a distressed credit investor, said something that is so simple, but it struck me as really insightful. It's like, as long as there's demographic growth, as long as there's population growth and innovation through technology, markets will, over the medium and long term, go up into the right. And it struck me, he's right. The market has decided that these dips are opportunities, that they're not structural, they're cyclical, and then immediately capital weighs in to benefit from the up cycle again. Now, having said that, in 2022, I didn't see any cause for the markets to throw up, and they did. I don't know if it was people taking, we should ask Josh Mann what happened, money off the table.

• 18:38Scott Galloway?

  But I still think it's more likely that a announcement from a large corporation, who has been a big purchaser of site licenses of AI, comes out and says, we're not getting, we're scaling back on our AI efforts because we're not getting the ROI we had initially anticipated. I think that is going to be more likely to be responsible for a drawdown in stocks in 2026 than Iran or the oil or energy crisis. We're just, we've been saying this forever. We transitioned from an agriculture society to a manufacturing, to a services. And a lot of people said it's always been about energy. I get it. You know, Indonesia's a bit screwed here, India, big oil importer.

• 19:17Scott Galloway?

  But it does feel like oil and I can't imagine the investment in renewables isn't going to have such a huge uptick that fossil fuels are going to play an even less significant role moving forward.

• 19:33Ed Elson?

  You mentioned, like, if there were a drawback in AI spending, then that would be the thing that kills the markets, not this. Hundred percent agree, that's definitely true. The thing that is striking to me, and I made this point in our previous Monday episode, and I also said it on The Daily Show last week. It also, to me, shows that investors just don't really care about Iran anymore.

• 19:57Ed Elson?

  Or at least their interest and their concern for the matter is waning. Mm hmm. And when you're in that mindset, as we've discussed, you start to go big zoom out, zoom out, zoom out, and you go big picture. And you say, you know what? Fundamentals are strong, earnings are strong, in the medium, the long term, markets go up, population growth, you know, all the things which are true. And you revert to those things. But at the same time, I believe that there is a fundamental, as you said, dissociating from what is happening on the ground in Iran. And I think where they might mess up is mistaking

• 20:36Ed Elson?

  their lack of caring for convincing themselves that the situation is fine and sorting itself out in Iran. That, to me, is just wrong. And I just look at what happened in terms of developments in the past week, where we had, I mean, I told you how the markets have responded since the ceasefire began. They've gone up. But the fact is, we didn't have a ceasefire, really. We still had Iran shooting at ships in the Strait of Hormuz. We still had a US Navy destroyer shooting at an Iranian container ship. We still had

• 21:16Ed Elson?

  multiple violations of the ceasefire, as expressed by both parties, by the US and Iran. And then we had an extension of the ceasefire, which didn't mean anything, because the ceasefire wasn't a ceasefire to begin with. They were still firing at each other. But Trump says, oh, we extended it. It's good. Things that we're moving in the right direction. Meanwhile, Iran says that the ceasefire extension means nothing. And they're right, because the original ceasefire meant nothing. So you're extending essentially nothing. We're still in the same situation that we were a week ago, two weeks ago, three weeks ago. We're getting into seven, eight weeks. We're still in a very, very precarious situation on the ground there, to the point where it's like, okay, I take the argument that maybe it doesn't matter.

• 22:02Ed Elson?

  That I think is fair, but I think where we're going to run into trouble is if we start confusing ourselves by saying it doesn't matter by saying, oh, it's it's getting better and oil prices are going to go back up again. No. So I think that is going to be the thing that investors have to keep in mind at this point and that we all have to keep in mind because the more this goes on, like, to be frank, the more desensitized we become to the situation. And you see these headlines and then you see things blowing up and you go, oh, yeah, it's just another day. Just that's what happens. There's a war in the Middle East. Yeah, okay. And we become the whole situation becomes normalized. And what I would just, again, just emphasize, there's a difference between believing

• 22:42Ed Elson?

  that it doesn't affect the global market system because we are such a tech-heavy and top 10% to 1% heavy economy versus believing that the thing is going to resolve itself.

• 22:57Scott Galloway?

  To your point, it is a little scary that the markets have totally dissociated from war. And I wonder, okay, does that mean future presidents decide that have more of just a hair trigger? And that is, I mean, the problem is, I think we go to war too easily. And to be blunt, and this will piss off the people on us, I think we leave too easily. And that is, we have a glass jaw. And that is, okay, things don't go well, 14 people die, tragedy for them and their families. Russia's losing 1,000 people a day. And effectively, the way you win a war, if you're a foe of the US, is the following. You just survive. I don't care if it's the Taliban. I don't care if it's Al Qaeda. I don't care if it's the IRGC. They don't need to win. All

• 23:40Scott Galloway?

  they need to do is survive. Is just hold on. Now, as it relates to energy prices, to a certain extent, the war in Iran, the impact it's having on the US, that economic impact has been registered by Europe for the last 30 or 40 years. What I mean by that? Everyone's saying, oh, the elevated gas prices will have a huge impact on the US economy. Maybe those same, the gas prices we're paying now, European nations have been paying for decades. So

• 24:07Ed Elson?

  The gas prices everywhere else apart from America is just unbelievable how they've increased.

• 24:13Scott Galloway?

  So these economies in Europe and this, I went on this podcast called Trigonometry and this, this really intelligent guy, Konstantin Kissin, who I find really interesting, has basically said that Europe has just fucked itself with all this taxation around energy, that access to low cost energy is, is kind of the, the grist or the, is the, the mother's milk for a strong economy. And the, which is sort of interesting is basically the last 30 years, European energy prices have been where our greatest fear is around our own energy prices, which leads to the fact that, well, okay, what does that say about taxation of energy? What does it say about renewables? His whole point was this was just stupid,

• 24:56Scott Galloway?

  this massive move to renewable at the, at the trade off of economic growth.

• 25:00Ed Elson?

  I don't fully agree with that framing. Saying that taxation is the reason that, that energy prices are high in Europe is just the wrong focus. To me, it's like, you need to invest more in your own energy and become energy independent. That is definitely a good thing, especially if you're reliant on these nations like Russia, who you're now at war with. So I just disagree with this framing.

• 25:22Scott Galloway?

  We should talk about the nations that are having, that have had the worst performance. Indonesia, you know, they're an oil importer, dollar denominated debt, which has become harder to service. And also the global risk aversion leads to capital outflows from riskier emerging markets like Indonesia itself. The one that surprises me is India, which I thought would have had a lot of proximity to AI. Their market is down about 5%. Again, they're a major oil importer and they're worried that they're exposed to price spikes, which could lead to inflation. But it definitely, I feel like we're in uncharted territory. I just wonder, I just think, my guess is, and I don't have a rationale for this, the

• 26:02Scott Galloway?

  war ends and the markets collapse. I just, something, this is just such a strange market right now. I don't know, I don't know how to play it. And again, it goes back to our major theme on this show. You don't try and play it. You know, if you're worried about the world, then diversify. But my view is you're always in the market and you don't try to time it. And the key is just diversification and low cost index funds. Because if you, it would have been very easy to make an emotional decision in March. Well, of course, the market is down 10%. This war is not going well. It's going to be a forever war. We've lost all this credibility. They're sending, they've fired more missiles into the UAE than they have into Israel. I'm selling. And then the markets trip back.

• 26:45Ed Elson?

  Yeah, I think just on top of that, like, if you're gonna play the market, if you're gonna play games, if you're gonna trade, don't do it on war. Don't, don't, don't think that you understand geopolitics and military strategy more than other people. I'm sort of down with making these more specific, sector-specific bets. Maybe you have some insight in the tech sector, or you have some insight in some supply chain thing, in some very specific industry, and you want to kind of get involved in that and make some trades and pick some stocks. I'm actually for that. I think that it means that you get a better understanding of how markets work and how, how flows and volumes work. But the idea of like, oh, I know what's gonna happen here. That is certainly not something that you should be trading on.

• 27:30Ed Elson?

  Totally fair to have an opinion on it. And you can have, you can have a belief about what's gonna happen in the future. But the idea of like, and now I'm going to bet on that belief. Now I'm going to bet on the outcome of, of our military engagement with Iran. That is just such, such a bad idea. And we have started seeing that some hedge funds, I forget exactly what the hedge fund is called. But there's this hedge fund that just lost like 50% of its portfolio just this week because they were betting again on what was gonna happen to oil prices as a result of what happened in Iran and in the Strait of Hormuz. And it was just such a terrible bet. So it is a reminder, like, you definitely, if you're gonna play games,

• 28:12Ed Elson?

  you certainly don't want to play games on this subject. This is one of those things that you literally just cannot predict, especially when it's all in the hands of this one guy who not even his cabinet can understand or predict his thoughts and his actions.

• 28:26Scott Galloway?

  The people making the majority of the money here are the ones on the inside who know what he's about to announce the next day.

• 28:31Ed Elson?

  Yeah, exactly. Plus, it's rigged. Are you really, are you really gonna play that game? It's a terrible idea.

• 28:41Ed Elson?

  We'll be right back after the break. And if you're enjoying the show so far, please follow our new Prof G Markets YouTube channel. The link is in the description.

• 28:57Speaker 00

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• 29:06Speaker 01

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• 30:31Ed Elson?

  We're back with Prof G Markets. 2026 is shaping up to be the year of successions for some of the world's most iconic companies. Tim Cook announced he's stepping down as Apple CEO after 15 years. He'll be succeeded by John Turnis, Apple's head of hardware engineering. And a couple of weeks ago, Netflix co-founder Reed Hastings. Said he will leave the board in June. We have seen some other departures. Earlier in the year, Disney named Josh Demaro as Bob Iger's successor. And also Warren Buffett stepped down as CEO of Berkshire Hathaway after more than six decades at the helm. So with so many legendary leaders leaving their roles, it raises an interesting question, which is what actually makes a great CEO? And what defines an iconic one?

• 31:17Ed Elson?

  So Scott, a lot of departures here, some that I didn't announce or mention in that intro. Doug McMillan of Walmart also stepping aside. James Quincy of Coca-Cola, Brian Cornell of Target. And then of course, the big news this week is Tim Cook. Let's just start with Tim Cook and kind of take a look back at his legacy, what he achieved. Just some of the stats that really jump out. He quadrupled revenue during his tenure, quadrupled profits, 13x the company's market cap from 350 billion when he took over to 4 trillion. When he left, almost 4 trillion, he outperformed the S and P by 4x. Apple returned 2,000% during his tenure, the S and P returned around 500%.

• 32:03Ed Elson?

  I mean, when you just look at the scoreboard, when you look at the statistics, pretty remarkable. What do you make of his departure and what do you make of his legacy?

• 32:12Scott Galloway?

  Well, he's first ballot Hall of Fame for business. He is the most successful successor in history. And you weren't around, or you weren't of professional age when Jobs died. But what happened, there was this weird shift in our society where we transitioned from the idolatry of athletes and government leaders and actors to innovators. And that is because of the, I think, I think as attendance, religious institutions went down, we still wanted kind of godlike answers. And the closest thing we could get to godlike mysticism was technology. I still don't understand how my phone does what it does. And then you collapse that or collide it with our idolatry of the dollar. And then our new heroes are these innovators.

• 32:56Scott Galloway?

  And all of a sudden, Bill Gates and Steve Jobs became the new, you know, the new gods, especially Steve Jobs, because he did such a great job of branding. And he was taken from us early like Jesus and. You know, so they were the new Jesus Christ, if you will. So literally, Tim Cook didn't have to fill shoes. He had to fill, you know, Jesus's smock or whatever. And right away, they started second guessing Tim Cook. No new products, lacks the creativity, you know, all this shit. And like you said, he's probably added more shareholder value than any CEO in history, with the exception maybe of Jensen Huang. And he has, I mean, there's a few things that are extraordinary that won't be talked about as much because they're boring. He built arguably the most successful commercial supply chain in history.

• 33:41Scott Galloway?

  And that is the supply chain to aggregate and coordinate 2,000 separate components and build an item in China, in a different country, that takes advantage of their advanced manufacturing and their low cost of labor, such that he could produce a supercomputer for $400, instead of trying to produce it in any Western nation, it would have cost $4,000. The result was the most profitable, successful product in history, and that is the iPhone. And generally, the rules of marketing are you can have an aspirational niche product, like a Ferrari. It's highly differentiated and has huge margins. Or you can have a mass product that's great value, where you focus on cost and you have huge production volumes. That's Toyota.

• 34:22Scott Galloway?

  Apple is really the only product, the iPhone is the only product I can think of that has the margins of Ferrari with the production volumes of Toyota. It's created more gross margin dollars for shareholders than any product in history. It's arguably the most successful thing in history. And he did it because of this, and his background was in supply chain. He doesn't get enough credit for products because my favorite product, and I think the most underhyped technology product of the last 10 years, is AirPods. And if AirPods were their own business, they'd be a Fortune 50 company. In addition, he said, rather than trying to come up with new Gizmos, I'm going to take this product, which is the most profitable product in history, and I'm going to move it slowly but surely, but incrementally and purposefully, from being

• 35:06Scott Galloway?

  a phone to a supercomputer that's your center for media, where you can make payments, so you can interact with other people, you can create presentations. I mean, this isn't a phone, it's a supercomputer, and it's revolutionized the way people do business. His ability to create a ring fence and ecosystem such that he could get a little bit of the App Store, which is arguably the second most successful product in history, or service in the world, the App Store, 100 billion in services revenue. And then another tectonic move, and while it was Jobs' idea, Cook executed against it, just at the time when pre-purchase branding, i.e. advertising, was losing its effectiveness, they took billions of dollars out of pre-purchase branding and transitioned it and reinvested it into

• 35:51Scott Galloway?

  distribution, where the distribution around technology, again, you're too young to remember this, if you wanted to go buy a computer, you went to CompUSA or Circuit City, or to like goodies or some shitty place, if your computer broke down, God help you, you took it to this weird place where they gave you a number, and a guy who looked like he had to register with his neighbors, gave you a number and told you to come back in two weeks so you could find out that you need a new computer. And then, and then they built these temples to the brand, 450 of them. You want to go to an Apple store? I'd like to live in one of those places. If Apple put up a coffee bar in any one of its stores, it would be the most, the highest revenue per square foot retail in the world. But wait, they already are the highest per square foot retail in the world, having surpassed

• 36:34Scott Galloway?

  Tiffany in the aughts. So incredible innovation around distribution, consolidation of products into their core product, which has the margins of Ferrari, the volumes of Toyota. Also a great manager, no people going on background, no dramatic firing, no scandals, no lawsuits.

• 36:53Scott Galloway?

  Yeah, you know, he himself, I think, handled himself with a lot of grace, didn't shitpost other CEOs.

• 36:59Ed Elson?

  Except for the plaque. I mean, that was his one, that was his one mistake from a PR perspective, the trophy that he gave to Donald Trump.

• 37:07Scott Galloway?

  People would say his sycophancy around Trump is a bit of a stain on his legacy. No one gets it right all of the time. And what he, I think, decided to do, he decided to take one for the team and the team was shareholders, right? I can't imagine that Tim Cook's skin didn't crawl going to the Melania premiere. I just, but look, let me put it this way. He had an opportunity to be a leader there and like the other 499 S and P 500 CEOs, he decided not to. Fine. But I don't think that's, you know, if your career, if your business career is 35 frames in the blink of an instant, you know, he got 34. It's like, try and find a CEO who's been more right than Tim Cook. It is really difficult.

• 37:52Ed Elson?

  I really like your framing there. It's like, he took one for the team. He ruined his legacy. He made himself look like just a sycophantic idiot. Everyone made fun of him and he did it for shareholders. That's why he did it. It was all for the investors, which honestly, when you put it like that, it's like, okay, fair enough. Great CEO. He took one for the team.

• 38:14Scott Galloway?

  So just let me also, Tim Cook will overshadow everybody, but it is important to recognize Doug McMillan. He started out, I think, loading trucks. I actually did some work with him back when I was at L2. Very decent guy, very smart. Stock returned, he, in his 10 years, up fivefold, 15% annualized return, outperformed a lot of large cap peers, Nike, Nestle, Diageo. And he was one of the, really one of the stronger large cap CEOs and probably the most iconic CEO or most important CEO in retail. And, you know, he was ever, he was the first retailer to hit a trillion dollar market cap in 2026 and always been sort of a historically

• 38:55Scott Galloway?

  low multiple, slow growth business, revolutionized retail. And my story about Doug McMillan was, he asked me to come to present to the board of Walmart, I think it was about seven, eight years ago. And the next day, he invited me to His office and he spent an hour, they invite their associates, whatever they're called. There was a line of like, you know, Walmart has a lot of employees, so 400 people who all look to be like 110 showed up when they're smocks or Walmart smocks. And he just spent an hour going down the line and saying hi to everybody. It seemed very easy for him. He generally seems like a, I think arguably he's kind of the most down to earth. Like he's the guy that like will continue to live in Little Rock.

• 39:38Scott Galloway?

  You know, he's not one of these CEOs who shoots in and then heads out to the Hamptons. He struck me as a very down to earth, decent guy. My point is Tim's going to suck all the oxygen out of the room. And another iconic CEO, we talked about Reed Hastings. Doug did an outstanding job and also Walmart had a lot of arrows coming from them, whether it was the cheap capital of Amazon or especially retail or investors looking for higher growth companies. He was just, he was a, he was an adult in the room and he, I mean, he's been through, he's, he's traversed, he's waded in pretty dangerous waters with a lot of gray whites with cheaper, cheaper capital coming for him. Walmart definitely could have been, I think, under less deft leadership.

• 40:23Scott Galloway?

  Walmart could have been Kmart, but bigger. But he didn't, he, you know, it's been a solid performer, outperforming the S and P.

• 40:31Ed Elson?

  Yeah. And it's one of the best performing stocks of the year. I mean, the multiple is just incredible on Walmart at the moment. Just to go back to Tim Cook for a moment, I mean, the, the question we began here with is what, what makes a great CEO? What makes an iconic CEO? And that is the question that I'd like to get to the bottom of. Just to go through some of his wins, you mentioned many of them. AirPods was a win. The Apple Watch was a win. Wearables was $36 billion in revenue last year. Also growing the services business to more than $100 billion in revenue. Scaling the iPhone. He sold more than 3 billion iPhones during his tenure, grew it into a more than $200 billion business.

• 41:11Ed Elson?

  Also, something that we didn't mention in our Apple episode during the week was pioneering the M1 chip. Apple used to have a dependency on Intel for their chips. They created this, what they call this unified memory design where the CPU and the GPU kind of comes together into one chip and it is what led to what is now very popular in the AI community, which is the M4 Mac Mini, which is now this go to machine for all these AI engineers. It is the most popular consumer product that you can buy if you want to run large language models and he did that back in 2020. I don't know if it's because he predicted what was going to happen with the AI, but the reality is it is another winner of the AI boom. And then the biggest thing is that he was this supply chain

• 41:56Ed Elson?

  genius. I mean, the biggest criticism of Apple before he came in was that the supply chain was a disaster. And he came in, he reduced the number of suppliers by 75%. He shut down half of the warehouses. He moved things into China. He massively increased margins, partly by doing that in China where he had all this cheap labor. He reduced the labor costs per iPhone by nearly 25% while tripling the price. So he massively expanded the margins. I mean, those are just some of his biggest wins. His failures, you have to say, was the Apple car, but also maybe credit to him for shutting it down internally. Vision Pro, certainly a failure. I think it's a little bit of a flop that they're kind of quietly pulling that and now he's leaving.

• 42:40Ed Elson?

  And then also potentially AI. Their AI strategy has been considered by many to be not a very good one. I mean, there's also the question of should they be investing in data centers? Their decision is to not do it while everyone else does do it. We'll see if that ends up being a good decision or a bad decision. But certainly in terms of consumer AI, Apple Intelligence has been kind of a flop. Siri was very well primed to be a great winner of the AI revolution and it wasn't. So that you'd have to say that AI was kind of a failure on that front. And then finally. Just his management style is something that I think would be interesting to unpack. Tim Cook has been described as the master of silence.

• 43:24Ed Elson?

  That's what a lot of people call him. And supposedly he had this rule that in meetings, he would always be silent for at least 10 minutes. And he made it a rule that he wasn't allowed to react or give any signals as to how he felt about what the other person was saying. And he said, quote, "If I gave any reaction at all, people would often tell me what they thought I wanted to hear. I found that they were much more likely to say what they really thought, even if it wasn't what I was hoping to hear when I was careful not to show what I thought." And that was kind of his reputation, which is also very, very different from Steve Jobs, we should also note, who was famously, I mean, very aggressive, commanded the room. He was the center of attention. Tim Cook decided to actually play it the opposite.

• 44:08Ed Elson?

  He was this kind of quiet, methodical operator, not really a larger-than-life founder CEO. So that's an interesting dichotomy there. But I figure we should put it in contrast with Reed Hastings because he was kind of the, not quite Steve Jobs level of the founder CEO cowboy, but kind of getting there. He was known for these very bold, risky bets, starting with DVD by mail, then betting the whole company on streaming at a time when internet speed in America was pretty terrible. Then betting and going all in on original content and then going all in on foreign content, et cetera, et cetera. So, I mean, as a CEO, Scott, and as someone who's been like looking at these guys and

• 44:53Ed Elson?

  studying these guys for a long time, what do you take away from like how to manage a company, how to manage an organization? What are your main learnings from Tim Cook in contrast to, say, Reed Hastings? And perhaps which things do you think they got wrong?

• 45:10Scott Galloway?

  If a CEO doesn't have gigantic flops, it means they're not trying hard enough. And it means they're not at the frontier edge of innovation.

• 45:19Scott Galloway?

  So I would argue that, okay, the mixed reality headset, that was just an option to make sure that, okay, if that crazy Zuckerberg is crazy right, we at least will be a letter D. And they shut that down. The whole thing was fucking stupid.

• 45:35Scott Galloway?

  You know, did they miss out on AI? Or they decided they don't want to go into those capital wars and they'll ultimately garner a ton of revenue by being the default AI? The car company, in my view, and this will come back to what I think, I'll come back to that on what I think makes a great CEO. So I've never run a big company. I've run small and medium sized companies, but I've worked with a lot of CEOs. And I think generally speaking, it kind of comes down to three things that great CEOs are attributes that they share. The first is they demonstrate excellence. They are someone who came up through the ranks and they were just outstanding at what they did and they understand the business. So Tim Cook is arguably the best supply chain person in the world. A guy like David Solomon had a reputation for being a great trader.

• 46:19Scott Galloway?

  I think Jamie Dimon was a great investment banker, a wealth management guy. These guys are just, you know, they're just very, they are better at a component of their business than almost anyone. Everyone, everyone looks at these people and says, they are just very good. You have to demonstrate excellence and not just be quote unquote, a manager that can shift the pieces around.

• 46:39Ed Elson?

  And this might be like an obvious question, but why do you have to do that? Why is it important to be excellent?

• 46:47Scott Galloway?

  Well, I'll give you an example. John Donahue, who was a failed CEO at Nike, was he a great merchandiser? Was he a great brander? Like, what was his greatness? He was essentially a consultant. I don't, I think, I think it helps to be demonstrably great at a key component of the business. You know, Steve Jobs is arguably the best marketer in the world. So I think demonstrating excellence around a specific function of the company, most of the great CEOs I know are just outstanding at a key component of the business. And that's how they got to that point. And it gives them an insight into the insight into the company.

• 47:21Ed Elson?

  Something I would, just to build on that, something I was going to also think is important is that-

• 47:25Scott Galloway?

  And typically, great leaders don't interrupt. But anyways, go ahead.

• 47:30Scott Galloway?

  Jesus Christ, like fucking Kara Swisher. Second thing, I'm sorry, go ahead. Go ahead.

• 47:37Ed Elson?

  I think the other thing that is interesting about demonstrating excellence and is important is that it commands respect.

• 47:42Scott Galloway?

  Yeah.

• 47:43Ed Elson?

  And you need the employee base to like, be like, yeah, this is the right guy for the job. And the reason I'm thinking that is because we just saw my favorite team, Chelsea. We just fired this guy Liam Ross senior, the manager of Chelsea.

• 47:54Scott Galloway?

  How many managers is that Joey Bagadonuts posing as a football club hat in the last three years?

• 47:58Ed Elson?

  Yeah, exactly. It's, it's, it's getting out of control. And one of the big problems was he just didn't have a lot of experience. But then everyone said, yeah, but you know, he, he could be great. He could be great. And the problem is he comes into the club and because he doesn't have enough experience, because he hasn't demonstrated the excellence beforehand, apparently what happens is that the people in the train, in the dressing room just didn't respect him. And that in and of itself is a problem. So they could have given him some time and maybe he would have turned out to be great. But the trouble is because he didn't have the track record, it just meant that when he said things, people just didn't listen to him because they didn't respect him. So that's just a side comment. I apologize for the interruption.

• 48:39Scott Galloway?

  He's no Mikel Arteta.

• 48:40Ed Elson?

  He's no Mikel Arteta.

• 48:42Scott Galloway?

  So, but these guys, I would argue these guys, most CEOs I've known are, you know, specifically like they're just, no one could do, no one could do an earnings call or investor relations like Jeff Bezos. You really were in awe of these people. I've, I've worked with some CEOs where I think, gosh, these guys are just so good. And they're almost always guys. And then two, and this is key, they hold their people accountable and it's not a Hallmark commercial. They, they put in place very definitive metrics for people. They have honest and open conversations because the fastest way to just really diminish morale

• 49:24Scott Galloway?

  is to let mediocre performers survive and keep them in your company. Everybody in a company, they don't need to like each other, but they need to be able to look left and look right and go, okay, I get it. I get why they're here. They're good at what they do. Otherwise, why am I working so fucking hard? If Joey Bag of Donuts over here can be just, you know, okay at their job and take off early on Thursdays and they get, you know, they make, I get 6% at the end of the year and they get 5%. So, holding people accountable, outlining metrics, straightforward, honest conversations with them, shedding people on a regular basis, and I know that sounds harsh, but I think great CEOs hold people accountable. And this goes back to the Apple Titan, which was their car effort.

• 50:07Scott Galloway?

  I think what happened there was it was constantly delayed, constant production overruns, weak designs, bad strategy, and he said, fuck it, I'm closing the whole thing down. He held that team accountable rather than, you know, that must have been embarrassing. And then people talk about it as a failure. I see it as a sign of a good CEO. This isn't working. You said you were going to deliver X by Y. You haven't. I'm shutting this shit down. I doubt the head of Apple's Titan came to him and said, you should shut us down. He kept coming to him or, you know, or her kept coming to Tim and saying, oh, this is why we have missed this deadline. This is why this is not going well. And he said, okay, you're shit out of luck. And then the third thing, and it is more of a Hallmark commercial, is I generally find

• 50:50Scott Galloway?

  these really good CEOs have really good empathy, and that is they understand what their employees want and get to know them on a personal level and what's important to them. And then they try and adapt or they try and recognize, maybe that's more true in small companies, but I always found that if I could understand somebody and what was important to them, whether it was flexibility so they could go to Little League, where they were totally focused on. Some people love to manage people. Like, they just get a thrill out of managing people. So find that person, say, I want you to manage this person. Some people get so much reward out of seeing their name in lights, right? Big egos, I'm one of those people. So I used to, if a newspaper would call, I would say, do you want to give this person a quote?

• 51:33Scott Galloway?

  And letting them give a quote in whatever it was, Women's Wear Daily, was like enormous compensation for them. So trying to understand your management team, what's important to them, and reflecting that I have empathy for you. And the key component, the key message a CEO has to give to his management team... Is the following, if I win, you're gonna win. You're coming on this ride with me and I am really good at what I do. And when I win, it's gonna be a win for you. I want you to be successful. I'm gonna hold you accountable, but I'm gonna give you good feedback and I want you to win. I don't need to like you, but I want you to have economic security. I want this to be the best platform you have ever engaged in.

• 52:17Scott Galloway?

  And I'm gonna take my excellence as platform and an understanding of what you're good or not good at, and I'm gonna get you further faster here than any other platform you could associate with. Not necessarily because I'm a nice guy, but I understand why you're here and I promise you, I'm really fucking good. And me being really fucking good is gonna mean you're gonna do really well too, because I'm gonna bring you along with me. And it sounds trite, but it's true. Team of the best players wins. The metric I always looked at in a corporation, board meetings was churn. I wanna know industry average for churn at every level of the company. And if we're churning faster, there's always a good reason for why, oh, so and so left to go to another company. I'm like, well, okay, why? Why?

• 53:02Scott Galloway?

  I'm an investor in an AI company right now and we've lost two senior managers to AI LLMs. I'm like, how the, why would these people leave? They've got big equity stakes. Like, what's wrong here? And I said to the CEO, this is a poor reflection on you. How could you, why did these people decide they don't have the, they don't have the faith in this company and you for you to get them to the promised land? Like, what's, is it a culture thing? Is it, we're not, they don't have strong expectations about an outcome here? So, one, demonstrates excellence. Two, holds the team accountable. And three, has an ability to really understand what people want and convince them that if I'm successful, you're gonna be successful, because I understand you and I understand

• 53:43Scott Galloway?

  the unique kind of desires you have, what you're looking to get out of this. Anyways, those are, those are my three.

• 53:50Ed Elson?

  Woo. No notes. Killed it. I 100% agree about, with all of that. I love it.

• 53:56Scott Galloway?

  Who tells the best dick jokes, Ed? Who demonstrates excellence at the top of the show? That's right. That's right.

• 54:04Ed Elson?

  Yeah, that's, that's not your area of expertise, but you have plenty of others.

• 54:07Scott Galloway?

  My oldest asked me what condoms are used for and I said, so you can avoid stupid questions like this one.

• 54:18Ed Elson?

  We'll be right back. And if you're enjoying the show, come join us on tour and hang out with us live. You can get your tickets at profgmarketstour.com. The link is in the description.

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• 56:10Ed Elson?

  We're back with Prof G Markets. SpaceX just struck a major deal with coding startup Cursor. The agreement gives SpaceX the option to acquire the company for $60 billion or pay $10 billion for its technology if it chooses not to buy the company. And the timing is notable, ahead of a potential SpaceX IPO later this year. Okay, so Scott, SpaceX is buying Cursor. For those who don't know, Cursor is this AI coding company. It's exactly how it sounds. They use AI to basically do the coding for you or code alongside you. And they're buying this thing for $60 billion.

• 56:51Ed Elson?

  And they also have the option to pay $10 billion to work together if it doesn't work out, which essentially just means it's just a breakup fee, a $10 billion breakup fee, which means that they probably believe that there's a chance, maybe a significant chance, that this won't go through for whatever reason. But this is pretty notable because SpaceX is about to go public. And that's what everyone has been talking about at nearly a $2 trillion valuation. So the idea that they would then buy a company for $60 billion, which is a pretty big deal for a private company, a startup. It's a pretty big deal for any company. And they're doing this just months before they go public.

• 57:33Ed Elson?

  And if this goes through, by the way, they're going to have to refile their S1. They're going to have to report new financials, et cetera. So it's kind of a big deal in the IPO world because everyone's so excited for SpaceX to go public. This is going to be the largest IPO in history on various metrics. And now they're buying a company for $60 billion. That's a big deal. What do you make of it, Scott?

• 57:58Scott Galloway?

  Well, my understanding is, or what it feels like, is there's definitely an aqua hire component to this, but XAI is desperate. My understanding is XAI is just not scaled or shown an ability to develop a product or a front end that registers revenues. And that I think Cursor is an attempt to establish a front end, or both on a front end, that might help them get more actual revenues going. The thing that struck me about the deal and its announcement is that, you know that saying, statisticians lie and liars use statistics? This number just feels like such bullshit to me. First off, nobody's cashing a check for $60 billion here. I'd love to see the deal terms, but it's something along the lines of if we go public,

• 58:37Scott Galloway?

  you're going to get, and you're here for one, two, three, four years, you'll get 0.5, 1, 2, and 3% options on 3% of the company and at a $2 trillion market cap, that's $60 billion. No one's cashing a check for $60 billion here yet. And so it feels to me like, and there's just so many bullshit numbers out there, like, you know, take any number that Sam Altman says about investments in compute, right? What was it? One or $2 trillion and that went away? $850 billion valuation. Well, okay, if you, if you offer me a 17% guaranteed return and a preference, a liquidity preference, all invested in $850 billion valuation, knowing the company's worth

• 59:20Scott Galloway?

  less than Anthropic, which just raised money at 350. So these numbers are more about a press release and kind of a jaw dropped than they are about something that's, that's actually real. I mean SpaceX only had $25 billion in cash on hand. It feels like he's trying to create, I mean, nobody is better at saying, "Look over here", as he stuffs more rabbits into the hat. And to bring together this salad of space, connectivity, AI, a communications platform, you know, it all feels like, okay, at $1.5 trillion, I need a really dramatic story here. It can't be that SpaceX is only $12 billion. It can't be that my AI seems to be going nowhere. It can't be that robots,

• 1:00:02Scott Galloway?

  there's really no commercial application for these things, but all taken together, it just feels like the future, right? So I don't, I would just love to know, how did they get to that $60 billion number? And what is it, what does it mean? And, and I think he's also, and this kind of goes to my prediction, I think he's going to roll Tesla into this thing, because Tesla, all of a sudden, what you have is- There's so much Elon magic built into these multiples. So many people just want to invest behind Elon. They think he's the, you know, he's the Edison of our generation or this age, which I think, you know, is a credible statement. So they think, I just need to invest behind this guy.

• 1:00:46Scott Galloway?

  The problem is, is that the promise always outpaces the performance. So he always has to make a new promise because it's becoming clear that Tesla is a great automobile company that should trade at 20 to the third times earnings, not 155. So he'll probably roll that into the whole thing and say that it's about autonomous and AI. And then only, only his space connectivity and only his AI can power this autonomous car and that he's going to have more data inputs than anybody else. He'll keep just, look over here, look over here, look over here, robots, you know, humanoid robots. So I don't, but this, circling back to the beginning, feels like he needed a front end for XAI, which is a distant player right now in AI.

• 1:01:28Ed Elson?

  Yeah, I think that's exactly right. You point out this idea that the $60 billion number is, what does that mean? And that is a really important point because, I mean, the first question is, is that $60 billion? Or is that $60 billion worth of SpaceX stock? Is that what the cursor team is going to get paid? If it's $60 billion worth of SpaceX stock, then at what valuation are we talking here? Is it the private valuation that we've seen? Is it the internal valuation that they placed on themselves? Is it the IPO price, which is going to be closer to $2 trillion?

• 1:02:08Ed Elson?

  I mean, that, whatever the answer to that question is, would change the $60 billion by orders of magnitude, to the point where saying that they bought them for $60 billion literally does mean like actually nothing. The only thing that you could say maybe means something is they'll pay them $10 billion because maybe there's more of a likelihood that that would be in cash. But even still, it could also be stock, in which case we don't even know what that means. And this, crucially. Is becoming a trend in the private markets. And this has always been a thing with private markets where valuations aren't very clear. It sort of depends on which VC is preempting the deal and, you know, what, how much were you able to raise? And the numbers are softer.

• 1:02:53Ed Elson?

  People don't really talk in terms of strict financials. They talk in terms of monthly revenue and then they extrapolate and call it run rate and ARR and all these things. The numbers in the private markets world are famously very soft. And that's okay when you're dealing with very new, young companies, because usually those companies don't really have much of a business yet. So to act as if they're Walmart is, you know, a little unfair. You should be maybe a little bit more lenient on how they report the numbers. But we are now getting to a place where these companies are worth literally trillions of dollars.

• 1:03:33Ed Elson?

  And they're still private and yet they're still treating it as if they are a series A startup that is just getting their feet off the ground. And the reality is these companies are about to go public and it's not just SpaceX. It's also OpenAI. It's also Anthropic. And if you put them together, I mean, we can just talk about what the expected IPO valuation is going to be for SpaceX. It's 1.75 trillion dollars for Anthropic. It's going to be more than a trillion for OpenAI. It's also going to be more than a trillion. And if you add that up, if you add the combined market cap of those three companies, it would exceed the value of every single IPO from the dot com era put together.

• 1:04:14Ed Elson?

  And at the same time, it would also be equal to half of every IPO from the 50 years before that combined. So we're looking at one of the biggest moments in financial markets in a really, really long time. And it's not just that they're just going to be inserted into the stock market. They're going to go in the S and P. There's no way that they are not included in the S and P 500. So what you're essentially doing there is you're adding more than $3 trillion in equity value into the S and P 500. And crucially, at the same Same time, adding zero dollars in earnings because all of them are burning cash. SpaceX lost five billion last year, reported, we think, based on sources. Again, none of this is actually disclosed.

• 1:04:59Ed Elson?

  Anthropic burned 10 billion, OpenAI burned 25 billion. And so we're now getting to a point where these companies are doing all of the things that gigantic public corporations would do. They're spending tens of billions of dollars on these huge M and A transactions. They're behaving like an Nvidia, like a Walmart. They're doing all the things that those companies would do. And their market valuations would suggest that they are actually commanding that. But the way they're disclosing things is so, so unclear. Like even Curse, when you look at the reporting on the deal, the first thing I'm thinking is like, okay, what's, what's their revenue? No one knows. We don't know what their revenue is.

• 1:05:43Ed Elson?

  We know based on Bloomberg's projections that they're at a $2 billion ARR. That's the run rate. But again, ARR is just you take one month and then you times it by 12. Who knows what the month was before that? Who knows if they're cherry picking their months to increase the ARR? And then it's the same with the biggest companies, the same with OpenAI. We don't really know what the revenue situation actually is. Because again, we're depending on sources say that the number is close to this. OpenAI said that they generated $2 billion in revenue last month. So I guess the ARR we'd say is $24 billion. But again, this stuff isn't that clear.

• 1:06:26Ed Elson?

  And that's important, especially if they're about to go public. And I do think, I guess, just to sort of put a button on this. When they finally disclose their financials, once we finally see the S1 from SpaceX and from OpenAI and from Anthropic. There's going to be no more capacity for the bullshit that we've been kind of receiving in these sources say reporting for the past several years. And I think it's very possible that suddenly investors are going to go, actually, you know what? This thing is pretty ugly. They way overpaid for this company. They're burning too much cash. This is not something that deserves a 1.75 trillion dollar valuation. And I think that could be the downfall.

• 1:07:11Ed Elson?

  But again, we're going to have to wait and see if they even do go public. Maybe they won't. Anyway, I think you're on to something with that $60 billion number being bullshit. And I think it's indicative of something larger and more systemic in the private markets ecosystem right now.

• 1:07:24Scott Galloway?

  So if you look at the way that the deal was structured, it was just weird. So it's all stock deal, no cash. Structured as a share exchange and each XAI share converted to 0.14 shares of SpaceX.

• 1:07:36Ed Elson?

  You're talking about the XAI merger?

• 1:07:38Scott Galloway?

  Yeah, XAI and SpaceX. But essentially XAI was priced at 76 bucks, SpaceX at 527, which valued SpaceX at 859 to 1.3 trillion, which is expensive, but it valued XAI at like 250 billion. And basically that that overvalues, in my opinion, massively XAI, which is also, I believe, now owns Twitter, which was overpaid at 44 billion. But what you have here is a lack of representation for the individual companies. I don't think an independent, a truly independent SpaceX would ever pay that kind of money for XAI.

• 1:08:18Ed Elson?

  But again, that that number is also BS. And that's because remember the headlines came out, they were like 250 billion dollars for XAI. Wow, what a company. And then you look at it, it's like they they actually made that number up. It's based on a like a ratio of SpaceX shares that they converted. And they just decided, oh, SpaceX is worth a trillion dollars.

• 1:08:38Scott Galloway?

  Okay, but SpaceX, 15 to 16 billion in revenue, 8 billion in profit. So, you know, trading at whatever, 100 to 145 times revenues. That's fucking insane, but it's an amazing company. XAI, they did 200 to 500 million dollars last year and they burned 8 billion.

• 1:08:57Scott Galloway?

  And it's being valued at 250 billion. So my prediction is the following, that the biggest IPO in history will be SpaceX. It'll get out. The best performing IPO will be Anthropic. I've never seen, that company has more momentum right now than any company. And this is the big prediction. I don't think OpenAI gets out. I think that the numbers are so stark right now for OpenAI that, and it's going to be so overshadowed by the upward trajectory of Anthropic. I think they're going to come up with a jazz hands reason for why they're delaying the IPO.

• 1:09:27Ed Elson?

  Yeah, I think that's going to be really interesting. And I think the other thing to keep an eye on and the big moment is going to be when these companies release their S1 filings to the public.

• 1:09:38Scott Galloway?

  Oh, I can't wait.

• 1:09:39Ed Elson?

  I cannot wait. We're going to finally see, and who knows, maybe it'll be a lot of, as you often say, smearing vastly and over the lens, maybe it will look like WeWork again. I mean, we know what WeWork did. They created the most BSS1 filing in the history of markets. And a couple people, namely Scott Galloway, were like, hey, this is a bunch of bullshit. This doesn't make any sense. They're basically just lying over and over again, and obfuscating and confusing away from the point, which is this is not a great business. It's possible that SpaceX does that. But even so, I do think people are going to be looking for that. Like, this is such an important, systemically important IPO for the entire market. I mean, it's literally going to be inserted into the portfolios

• 1:10:22Ed Elson?

  of essentially every American. There's no way this doesn't get placed in the S and P. Same with Anthropic, same with OpenAI. And so everyone's going to have to be very, very vigilant. Like, okay, we're finally going to learn what actually is going on with these businesses. How good are they, really? What did they pay for Cursor? What did OpenAI pay for TBPN? Was that cash? Was that stock? What did SpaceX, I mean, what does this XAI SpaceX merger actually look like? What are the financials of Twitter? How does, how is that all playing out? I mean, so many gigantic questions, which they just haven't had to answer because

• 1:11:03Ed Elson?

  they've been private. But I'm excited for them to go public, because we are finally going to get some answers to those questions. Okay, let's take a look at the week ahead. We will see consumer confidence for April. We'll see an inflation reading from the personal consumption expenditures index for March and GDP for the first quarter. And the Federal Reserve will deliver its next interest rate decision. On Calci, the odds that the Fed will hold rates steady are at 99%. And finally, we'll see earnings from Google, from Apple, from Microsoft, Amazon, Meta, Eli Lilly, Mastercard, Visa, Coca-Cola, Exxon, Chevron, BP, Starbucks, Spotify and UPS.

• 1:11:46Ed Elson?

  A ton of earnings and most importantly, the big tech earnings. Scott, do you have a prediction for us?

• 1:11:53Scott Galloway?

  Yeah, almost every one of those companies is going to be to the upside. The expectations have been a little bit beaten down by the war in Iran. And I don't see any of those companies other than to the upside. See above Chevron are going to be affected. So I think there's going to be, we're about to see just a series of earnings beats. And then the prediction I made before SpaceX, biggest IPO in history. Anthropic is the best performing. OpenAI does not get out. And then also if SpaceX gets out at the level I think it's going to, I think a lot of that, I think there's a lot of acolyte buying in Tesla. They go, I don't care if it's not our company. I don't care that it's had quarters of declining sales. I don't care that BYD is kicking its ass all over the world.

• 1:12:38Scott Galloway?

  It's got that Elon magic and he'll figure it out. And I think a lot of that capital, that acolyte capital is going to go into SpaceX and out of Tesla. And I think just as you're going to see an unnatural multiple in SpaceX, some of that is going to come at the cost of a rationalization and a leveling and a recalibration down of Tesla. When it becomes obvious that Musk is much more interested in his new SpaceX thing. And people are going to say, I want some of that Musk secret sauce, but I'm going to sell this at 125, you know, whatever it is or whatever Tesla trades at. And I'm going to go into the new. Cool thing. And then there's an outside shot that he merges Tesla into the whole

• 1:13:21Scott Galloway?

  thing to try and sustain it such that it doesn't just totally implode.

• 1:13:25Ed Elson?

  My prediction is a two-part prediction. Number one, we've got the interest rate decision. My prediction is that we're not going to see any rate cuts for the entirety of the year. That's not that bold of a prediction, but the reason I think that is because of my second part of the prediction, which is I think that the war is going to continue into 2027. We're at two months. My takeaway is nothing's changed. Ceasefire, no ceasefire, blockade, no blockade. Seen this movie before. They said Iraq would be six weeks. It was eight years. They said Afghanistan would be $200 billion. It was $2 trillion. Trump just requested $1.5 trillion defense budget for next year, up from $900 billion. I mean, I think all the signals are clear that this war isn't going to end anytime soon. So I

• 1:14:08Ed Elson?

  think it's going to continue into 2027. I don't think that necessarily means that markets get crushed for all the reasons that we described, but I certainly think that it means that there's, we're not going to see any interest rate cuts despite whatever pressure Trump puts on the new guy, Kevin Walsh. So that is my prediction.

• 1:14:26Ed Elson?

  This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Carti. Our research team is Dan Shlon, Isabella Kinsel, Kristina Donahue, and Mia Silverio. Jake McPherson is our social producer. Drew Burrows is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from Prof G Media. If you liked what you heard, give us a follow and tune in tomorrow for a fresh take on the markets.