AI’s $400 Billion Test Is About To Begin

Scott Galloway and Ed Elson break down Google’s $85 billion equity offering and explain why they see it as a smart strategic move. They share their predictions for SpaceX, Anthropic and OpenAI’s IPOs, and break down what could happen if the offerings flood the market with $400 billion. Then, they examine why fast-food franchises are struggling and debate whether the franchise model itself is part of the problem. Finally, Scott and Ed reflect on the biggest lessons and surprises from the first-ever 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 59. That's the percentage of Americans who say they will not watch any World Cup matches. What's worse than the US men's national soccer team?

• 1:39Ed Elson?

  What's that?

• 1:40Scott Galloway?

  Absolutely nothing, Ed. Nothing.

• 1:53Scott Galloway?

  Are you excited about the US team?

• 1:55Ed Elson?

  No, I'm not excited about the US team. I'm excited about the England team.

• 1:57Scott Galloway?

  Team England. Your man Cole Palmer.

• 2:01Ed Elson?

  Well, he's been left out. You heard that?

• 2:03Scott Galloway?

  What?

• 2:03Ed Elson?

  Cole Palmer, I mean, it was just devastating news. Cole Palmer has been left out of the England squad. So a lot of, not really much reason for the Chelsea fans to be watching. But I'm still going to be cheering for England anyway. We've still got some amazing players on the team. Harry Kane's going to be carrying us, Jude Bellingham. You know, Team England all the way. But yeah, it's very, very sad about Cole.

• 2:24Scott Galloway?

  Cole Palmer did not make the England squad?

• 2:26Ed Elson?

  Cause we've just had, we've had a bad season and Cole, I mean, as much as I love him, he hasn't performed. And I think this guy is, is basing his decisions over form versus fame. He also didn't include Phil Foden, who's kind of our other star.

• 2:41Scott Galloway?

  Foden, I understand. When I, I've been to three World Cups, I've been to the US, Russia. Last time we did it, whenever it was like 94. And then, and then I was in Russia and then Qatar. And when Cole Palmer, was it Ezzy, came on the field in the second half? I had lunch with, I forget the name, the guy was the Team England coach of the last one. Lovely guy. And of course I couldn't like stop heckling from the cheap seats.

• 3:07Ed Elson?

  Guy at Southgate, right?

• 3:08Scott Galloway?

  Yeah, Southgate. Based on the fact that I've played FIFA once or twice, which makes me a coach. I'm like, every time Ezzy and Palmer came in, the whole mood, the whole vibe, the whole momentum of the game changed. I mean, why didn't you start them? And of course he sat there and he was very polite thinking, who the fuck is this guy asking me about?

• 3:28Scott Galloway?

  I didn't even imagine how much second guessing that guy, that guy gets. But yeah, I can see, well anyways, I'm, I think it's a big mistake not to have. Who are the, well, let me put it this way, who are the two or three young stars from Team England that everyone's excited about?

• 3:43Ed Elson?

  Ezzy's in the squad this tournament and he's been playing incredibly well for Arsenal. So people are very excited about Ezzy. Manchester, Saka, of course, everyone's excited about Saka. There's, there's a new defender on Manchester City, Nico O'Reilly, who will be interesting to see. But I mean, the other big star who got left out as well is Trent Alexander Arnold, who's the Real Madrid star.

• 4:07Scott Galloway?

  We need to speak to the coach.

• 4:08Ed Elson?

  I am. Let's get him on the phone. Thomas Tuchel, Scott Galloway has some advice for you. You need to stick with your superstars versus, I don't know, whatever this intellectual. I don't know what you would call this. Going for form, form over fame. I mean, that's, yeah.

• 4:25Scott Galloway?

  This show is off to an awful start. It's off to an awful start.

• 4:29Ed Elson?

  Well, this was what happens when you go on tour and you have this hangover. I slept 12 hours yesterday and I still feel terrible. This is the problem. I'm not, I'm not sharp right now.

• 4:39Scott Galloway?

  Well, imagine doing it when you're like 90 years old and you're with a bunch of children roaming around the nation, trying to figure out what you're going to say tonight that's any different than the night before. I felt like Mick Jagger out with a boy band.

• 4:52Ed Elson?

  Yeah.

• 4:52Scott Galloway?

  Like with, out with N Sync when they were still in high school. What was the highlight for you of the tour?

• 4:58Ed Elson?

  Well, we'll get to that. We're going to do a full review of the tour at the end of the show. So I think I'm just going to launch us into the business stories of the show. What do you think about that?

• 5:07Scott Galloway?

  Let's do that. What the hell?

• 5:09Ed Elson?

  What the hell?

• 5:10Scott Galloway?

  What the hell?

• 5:21Ed Elson?

  Google is making a massive bet on AI and asking investors to help fund it. The company is planning an $85 billion equity offering, which would be the largest stock sale in history. Roughly $10 billion of that investment is expected to come from Berkshire Hathaway, which will reportedly receive a six and a half percent discount on their shares. Google's stock fell 4% after the announcement. The fundraising effort highlights the significant cost of competing in the AI race and Google had already been ramping up spending aggressively in April. It raised its projected capex to as much as $190 billion for the year. And the timing is notable because Anthropic just confidentially filed for an IPO

• 6:04Ed Elson?

  last week and SpaceX is set to go public this week as well. So some analysts believe that Google is trying to secure the investor capital now, possibly before it has to compete with those other offerings. Scott, we've got an absolute whirlwind of huge equity offerings here. We've got SpaceX, we've got Anthropic soon to come, we've got OpenAI supposed to come later. And now we've got Google with this 80 to 85 billion dollar equity offering, the largest public equity offering of all time. Initial reactions?

• 6:39Scott Galloway?

  I just loved reading this. I think it was such corporate genius. And a tech executive that doesn't get her due is the CFO of Alphabet, Ruth Perot. So first off, this is going to be the largest equity offering in history to date, unless, I don't know, one of the big three, the other three going out raises more money. And it's kind of the story that, or the news story so far has been if Alphabet needs to tap the markets for additional capital with the kind of cash generative juggernaut it is, it's kind of like Warren Buffett taking out a mortgage. It just gives you a sense for how thirsty this capex is, or how much is required to keep up. Now, I would argue that's not this.

• 7:22Scott Galloway?

  I think they could fund this off their balance sheet. My sense is that CFO's job is to find the cheapest capital possible and use that capital as a weapon to pull ahead of everybody else. That's their job. How do we raise more money less expensively than everybody else? And I think what Ruth Perat, or, and what I believe is everyone else, or Microsoft, Nvidia, CoreWeave, Apple are going to, may do the same thing. Is they're like, okay, look at the valuations that are being paid, or supposedly might be paid for, you know, call them the big three, Anthropic, OpenAI, and SpaceX. That is insane. And so what they're saying to the market is, okay, you want some of that upside of incredible

• 8:03Scott Galloway?

  infrastructure investment on this brave new world of AI, which has a TAM the size of, you know, not Everest, but of constellations? Okay, you can get some of that upside with us, and there's a whole lot of less downside. If AI doesn't work for Alphabet, or it doesn't live up to the expectations, it's still an amazing business. And so what they're doing is they're cutting the line and saying, okay, if you're, if there's this cheap, i.e. stupid, capital out there that is so dying to get into this business, that they'll pay this type of valuation, fine, here you go. We're cutting the line and we're going to take $85 billion off of the table, because the cruelty of capitalism is that every resource is finite.

• 8:45Scott Galloway?

  And the amount of new capital willing to go into AI infrastructure bets is finite, and they're about to take $85 billion off the table. So I wouldn't be surprised if we see Amazon all of a sudden announce a new equity offering. I think this is genius, cutting the line and taking $85 billion of cheap capital off the table and saying, hey, folks, look over here. We're

• 9:11Scott Galloway?

  We're hot, we're in the hot space and there's less downside with us. I think it's, I think it's brilliant because AI has become the railroad boom of the 21st century. And that is, everyone agrees it's transformative, but it's more difficult. The harder question is whether or not the people laying the tracks will earn a return on that capital. And every time we've had this kind of capex in the past, whether it's the highways, the global telco build out in the late 90s or railroads twice, there ends over the electric grid. There's usually a bit of a crash following it as people realize the ROI is just not, just not there. But I, I, I love this story. We talked about it yesterday on the editorial call. I just think it's hilarious. These guys are stepping in front of the little kids.

• 9:53Scott Galloway?

  And basically the two for here is Gemini wants to kick Anthropic and OpenAI in the nuts. And they're doing this by, by stepping on the carotid artery of their capital raising plans.

• 10:06Ed Elson?

  Yeah, I think that's exactly right. And the thing that you mentioned yesterday is, you know, maybe the pitch to investor is maybe there's less upside for the Google IPO versus the SpaceX IPO, but at least you're protected on the downside. My argument is, I think you could argue that there's actually a lot more upside in the Google offering because you've got SpaceX going out at more than a hundred times earnings or more than a hundred times sales, excuse me. I mean, if we were to price Google, which is already an incredibly successful business, at the same multiple as SpaceX, Google would be worth $45 trillion. And so this is, I mean, this is a company that is, is actually priced quite reasonably when you compare it to the other offerings out there. So I would argue that when you look at it on a risk adjusted basis, actually there's a lot of upside here.

• 10:50Ed Elson?

  And so they're almost just rebranding themselves as the hot new AI company by making this equity offering. And I think, I think it's really fair game. Now you mentioned this idea that they're going to extract the capital out of the ecosystem, which I think is very true, and I think it does pose a problem to Anthropic and to OpenAI and potentially to SpaceX, although SpaceX is set to go out pretty soon. And it does seem that there is a little bit of a concern here that whoever goes out first is going to suck up all of the Energy and all the capital out of the room and Google is is creating a problem there. So that's one point that those those new AI companies need to be aware of. But I just want to go through the size of these offerings here and add it all up.

• 11:34Ed Elson?

  So you've got SpaceX, which is going to raise seventy five billion dollars in its IPO. Largest IPO of all time. I mean, the the largest amount that was ever raised was Saudi Aramco in twenty nineteen with around twenty nine billion dollars. SpaceX is going to raise seventy five billion. So that's one. Then you've got Anthropic. Anthropic just raised a private round. It's series H. They raised sixty five billion dollars in their private round. Just for context, that is more than double the size of the largest IPO of all time. And this is a private round. Now, this this company is going to go public. It's going to IPO later this year. So presumably, they're going to raise more money at the IPO. Let's call it, say, a hundred billion dollars or somewhere in that ballpark.

• 12:18Ed Elson?

  It seems reasonable that that's what they're going to do. Now, let's look at OpenAI, also going to go public. Their last private round, they raised a hundred and twenty two billion dollars, more than triple the largest IPO of all time. So let's just assume that they're also going to raise. I mean, we're going to be conservative here, somewhere in the ballpark of a hundred billion dollars. And then you've got Google, which is raising eighty to eighty five billion dollars, the largest public equity offering of all time. So add it all up. These companies alone are about to ask investors for three hundred and sixty billion dollars ish of fresh capital. And that's in addition to the thirty billion dollars that have already been raised so far from IPOs this year.

• 12:59Ed Elson?

  So this is four hundred billion dollars of new equity issuance that is about to be flooded into the market. I just want to go back to to Econ one oh one. What is Econ one oh one all about? It's all about supply and demand. This is the the fundamental thing that we all learn when we take economics. And and the the rule of supply and demand is what happens to prices when there is an oversupply of a product? When the supply outstrips demand? The answer is prices go down. And I think what we might be about to see in the Stock market is the same thing. And that is for years, what we have seen in the public markets is a scarcity of new equity supply. There's been very few amounts of IPOs that have been happening, very, very little new equity issuance.

• 13:44Ed Elson?

  The IPO market's practically been dead since 2021. But what we're about to see is $400 billion worth of new supply flooding the market all in one go. And so the question is, is the demand going to keep up with the supply? Or is the supply going to outstrip the demand? It's a very simple question. And I think to me, when I look at those numbers, when I look at the fact that the largest IPO year ever was 2021, where $140 billion was raised, we're about to see triple that. We're about to see 10 times more the amount of money that was raised in the IPO markets last year. It was around $44 billion. We're about to see $400 billion, probably more than that.

• 14:27Ed Elson?

  My view, supply is about to flood this market. It is going to outstrip demand. The only answer after that is that prices go down. I do think that the, once these companies go public, that's going to signal the top. And we're going to see a very significant pullback, specifically in the AI trade, because there simply isn't enough capital to go around to keep prices propped up.

• 14:51Scott Galloway?

  The other thing that hasn't gotten the reporting that I think it deserves is that Berkshire Hathaway is getting a 6.5% discount. So when arguably the richest company in the world needs to sell stock at a discount, they're telling you that even the capital's become scarce, even for them at these levels, right? I mean, that's, that struck me that they needed, I don't know if they wanted the credibility or an anchor for the deal or the diligence or, or brand halo, the Berkshire Hathaway. Brings, but why on earth did they need to offer Berkshire Hathaway a six and a half percent discount to what retail investors are going to pay? Do you have any thoughts there?

• 15:30Ed Elson?

  I think that's part of the problem here. Why are they, why is there a concern? And I think there is a very reasonable concern. We're now getting to a point where people are asking, is there actually enough dry powder left to go around? I mean, the fundamental question you have to ask yourself, if, if we're about to see all of these IPOs, and it's going to total somewhere close to $400 billion, the question is, do investors have $400 billion laying around in cash right now? Does that actually exist? Or, and so that's the first question. It sounds like Google at least maybe is a little bit concerned, or maybe there's like a shred of doubt that that actually it does exist right now. So they'll, they'll give some shares to Berkshire Hathaway because they said, we'll lock it

• 16:13Ed Elson?

  in and we'll do it at the six and a half percent discount. So does that exist? Or are investors going to have to sell something in order to buy these IPOs? I think that is the question. If the cash exists, then great, no problem. The markets continue to rip as they have done for a long time. I mean, later down the line, we're going to see that investors are a little bit more strapped for cash and there might be problems later on. But if that's, if the money's there, then okay, good. My, I doubt that all of that money is there or that investors are willing to shell out like that. I would think that people are going to have to sell something in order to buy these. And then the question becomes, what are they going to sell? Are they going to sell their homes to buy the

• 16:56Ed Elson?

  SpaceX IPO? I don't think so. Are they going to sell their defensive positions like their industrials and healthcare and utilities? I don't think so, because I don't think you want to switch from those defensive positions and then go into these highly risky AI, AI positions. I think if you're selling something to buy SpaceX or to buy Anthropic or to buy OpenAI. Realistically, you're trimming your tech positions. Like, you're probably trimming down on Tesla, for example, to get into SpaceX or Nvidia or Broadcom. Or maybe you had some investments in these ridiculously high-performing chip companies like SanDisk and all the rest of the chip companies.

• 17:37Ed Elson?

  And you're going to take some of your profits from those positions and then put them into these other IPOs. Either way, the point is there is now a significant justification to pull back from these standard equity positions in AI, which is going to put pressure on prices moving forward. So this is really the real test of AI. Can you keep these prices up when you suck out this degree, this amount of capital out of the markets? And is that going to be sustainable for the long term? And I would just finish here by pointing out some research from BCA Research, where they looked at some of the largest IPOs going back to the 30s.

• 18:20Ed Elson?

  They looked at like the Xerox IPO in 1936 and the Ford IPO and the McDonald's IPO. And what they found is that the S and P tends to underperform right after these major blockbuster IPOs. Because what always happens is that there's so much excitement when the IPO happens. The IPO sucks all the capital out of the ecosystem. And then it leads to a period of time where there simply isn't enough capital to prop up that demand. And so it's hard to believe that that isn't going to happen at this point. I don't think it necessarily means that we enter like a structural bear market. But I do think that it means that this is, I mean, we're in kind of crazy town right now. These companies know it, which is why they're going out to the markets now, raising at the largest valuations that are humanly possible.

• 19:05Ed Elson?

  And then we're going to enter sort of the sobriety phase where we realize, okay, I mean, what more can we buy? What more can we prop up? And so I think that's the thing to keep track of right now.

• 19:16Scott Galloway?

  I mean, remember when Andreessen said software is eating the world? Now it's transitioned to AI is eating balance sheets.

• 19:22Ed Elson?

  Yeah.

• 19:23Scott Galloway?

  It's just, it's just coming in and soaking up. And I just got off a webinar for Section, the AI Adoption Company. And disclosure, I'm an investor.

• 19:38Scott Galloway?

  I mean, the, the, the thing that fascinates me, they were asking me, what are I advising companies around? And, and I'm so happy not to be advising companies anymore. Anyways, the

• 19:48Ed Elson?

  Instead, you're advising Gareth Southgate, a lot more fun.

• 19:52Scott Galloway?

  Seriously, the amount of golf I had to fucking play, Ed, with people I didn't enjoy that much.

• 19:57Ed Elson?

  I just cannot picture you playing golf.

• 19:59Scott Galloway?

  Oh, I played. I got to like a eight handicap. Um, I was playing golf every weekend, like twice a week. If you are, if you ran a strategy firm in the nineties in San Francisco, you either played golf or you didn't have new clients. It was, it was absolutely how you got to know your clients was golf. I promised myself when I moved to New York, I was going to pour all of that time into fitness and I have played golf maybe three times in the last 20 years and I do not miss it. Anyways, one of the things everyone's talking about token maxing and the wrong incentives, you should be focused on productivity versus how many tokens used. But something that struck me is I finally got one of those prompts. I've been, I love Claude. I play with it.

• 20:37Scott Galloway?

  I play with it a lot. I think one of my biggest unlocks in terms of a hack was connecting my Gmail and I, it's such incredible. It's such incredible optimization for your search because if I'm trying to figure out, all right, what is the, you know, Vox gets acquired by James Murdoch. I'm like, okay, what does that mean for us? So I say, please go into my email and look at the agreement I have with Vox. Is there a change of control provision? You know, I, and you can't ask the web that, but there's so much information that's germane to you and your communications with everyone. And it goes through and it says, here's a thread from 2023 that explains, and the agreement that you both parties signed in the exact paragraph. It's just such, anyways, I'm fascinated with Claude. I love it.

• 21:20Scott Galloway?

  I purposely don't ask it for personal advice because I just, I don't ever want to have anything that gets in the way of my relationships or. Or inspiration or motivation or incentive to ask people and friends for advice versus asking something that's just going to take me to a regression to the mean. But anyways, I got one of those prompts finally that said, you're out of tokens and we need you to upgrade to Claude Pro Max for $200 a month. And at first I'm like, 200 bucks a month? I'm like, wow. And then I thought that's a lot. And then I read that Claude Pro Max costs, if I sign up, it costs Anthropic $5,000 a month and compute and inference to service

• 22:03Scott Galloway?

  you. And so quite frankly, what I'm saying to people now is like, all right, create incentives around or try and attach productivity regardless of the technology you use and have workshops and lunch and learns that are optional. This is how you connect different things. This is what it's good for. This, I have found that AI is really disappointing as it relates to imagery. You know, everybody thought it would come up with great videos or Instagram posts or imagery. I find it truly disappointing there. I find it's terrible at original writing, but it's amazing for distillation, editing and finding interesting data that are analogies that you might insert into your writing. But the writing itself has to start with a

• 22:43Scott Galloway?

  human. At least that's what I found. But what I tell people is if you, if you had a business tool that right now costs 20, costs you 20 cents, but the provider was spending five bucks on it, you might want to, you might want to adopt and experiment at, at the outer edge because you are getting, it's never been cheaper. They're, at some point they're going to have to, while I think there'll be a war and the costs will come down, it's pretty inexpensive right now. Well, actually it may get cheaper with these Chinese open way models. But let me summarize this word salad.

• 23:21Scott Galloway?

  There has never been a moment in history where despite the unparalleled revenue growth, which Mark Mahaney reminded us of, the RBC analyst in San Francisco.

• 23:29Ed Elson?

  Ever cool.

• 23:29Scott Galloway?

  There's never been revenue growth like this. There has never been a time when you've had this type of percentage of GDP invested in infrastructure that hasn't resulted in a subsequent crash. The railroads proved to be transformative. The internet proved to be transformative, as did the highways. But part of getting there was a froth and a market that crushed early investors. Well, not early investors, but investors buying what was, I don't know what you call it, the first peak, if you will.

• 23:58Ed Elson?

  Yeah, the IPO.

• 23:59Scott Galloway?

  Yeah. Amazon and Cisco lost 90-plus percent of their value from 99 to 2001. Obviously, Amazon came back and then some. Cisco did not. But this is, these capital wars are just extraordinary. We've never seen anything like it. And I gotta think that in the next 12 to 24 months, one or two of these three companies is off 60 or 80%. I just don't see how they maintain this momentum.

• 24:26Ed Elson?

  Just to that point, I mean, this is the question everyone's, or every investor's asking themselves, should I buy the IPO? And I just want to point you to an analysis that was done by Truist, where they looked at 30 of these like big blockbuster IPOs. They looked at everything from Facebook to Uber to Roblox to DoorDash. They looked at the 12-month returns of those companies after the IPO. And what they found was that the average drawdown that was experienced by these companies within a year of going public, the average maximum drawdown was 55%, negative 55%. So in other words, you could expect, based on history with a relative degree of certainty, that at some point within

• 25:09Ed Elson?

  a year of going public, the stock is going to get cut in half. Now, that doesn't mean that the stock's not going to come roaring back later and go way up over the long term. But it does mean that when these companies go public, that is the peak hype, that is peak demand. That's when everyone wants to buy the stock. And usually what happens is once the demand- Fades and the hype kind of deflates. You see that the stock starts to draw to to fall and and and over the over the 12 month average. Usually they get cut in half. So I think the question for the investor is, do you want to buy right at the IPO? When the stock is most in demand, when it's at its sexiest, when everyone's talking about it, when everyone's talking about it in the news and

• 25:53Ed Elson?

  social media and on podcasts, or do you want to wait for the hype to likely come down? And then find your entry point when greed is low and fear is high. I think that's what what you need to think about here. SpaceX is going to go public. Anthropic is going to go public. OpenAI is going to go public. Maybe they'll have a pop. Maybe they'll just have this explosive entry into the public markets. But realistically, given history, they're also going to enter a downturn and they're probably going to dip below the amount or the valuation that they went public at. That's when you want to think about buying. That's when you want to find your entry point. Because doing it now, when hype is like at an all time high and that, I mean, these valuations are just ridiculous.

• 26:38Ed Elson?

  We'll see what actually happens with Anthropic and OpenAI. But if SpaceX is sort of a signal of what's to come, that's not the time that you should be buying. You should be waiting for these stocks to come back down and realistically, they all will. So that would be my advice. Don't buy at the IPO. Give it some time. Wait for the hype to fade. Then you can find your entry point.

• 27:00Scott Galloway?

  What you're doing is what we say a little bit not to do, but I'll engage in it. And that is you're trying to time the market.

• 27:05Ed Elson?

  Yes.

• 27:05Scott Galloway?

  And I I understand that, you know, at these valuations, you may want to stay away from the, I agree with that. The, what typically investment bank does. One of the reasons to go public is it's a branding event and you only get to go public once. And you want to manufacture scarcity and hype such that you get a pop. And I've even said, advise companies that are going public, price well below the demand. Because if you're up 40, 60, 80, circle went public at, you know, 200% pop.

• 27:39Scott Galloway?

  The additional five or 7% dilution, which isn't the case here because they're raising so much money, but the additional five or 7% dilution from, or 2% or 3% from leaving money on the table, because technically you're raising money, you could raise a lot more money at a lower dilution, but the branding you get when you're seen as, wow, this IPO, even if you can raise money at a cheaper cost, to be able to have CNBC analysts fawning over the fact that your, your first trade was 30% up, that's almost worth the dilution because it creates a certain momentum and halo, wow, this must be a great company. No, the bankers manufactured the pop. Sometimes they misestimate and the pop is more, but the last thing you want is a broken IPO, because that'll be the story. If SpaceX were

• 28:24Scott Galloway?

  to price at 1.8 and go out on the first trade at 1.5, that would be an extraordinary victory for everyone, including SpaceX. Obviously not the first trade, the people who bought into the IPO got allocation, but every story would be SpaceX, broken IPO. Not SpaceX raises money at 80 times revenues, but SpaceX, a broken IPO. So the banks are smart at estimating demand. They'll look at the number of times oversubscribed it is, and they'll say, price lower, price lower, whatever it is, and such that we can manufacture a pop. So if you're fortunate enough, and 99.9% of people aren't, to get into or allocation in the IPO, then

• 29:04Scott Galloway?

  fine, have at it, take the bet on the trade in the first trade. Beyond that, I would say look out below. And if we're gonna, if we're gonna have fun here, I think the company that most likely has the biggest pop is Anthropic, because loosely speaking, the story, the overall halo, is that there's a lot of noise out there that SpaceX is overvalued. That's just sort of becoming the, the little bit of the narrative, right? And in this case, it's true. The narrative is actually true. Yeah. And then if you look at OpenAI and Anthropic, we've never seen a more vicious

• 29:41Scott Galloway?

  Trading Places or Freaky Friday of the market leader and the number two happened in 90 days. And OpenAI is on the wrong side of that and Anthropic is on the right side of that. So I think Anthropic probably, they have, quite frankly, Anthropic has more momentum and riz right now than either of those two companies. The story of SpaceX is it's overvalued. The story of OpenAI is it's no longer number one, it's number two. And the story of Anthropic is that it's just kind of firing on all 12 million cylinders, if you will.

• 30:11Ed Elson?

  We'll be right back after the break. And if you're enjoying the show so far, send it to a friend and please follow us on YouTube, Spotify, or wherever you get your podcasts.

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• 32:03Ed Elson?

  We're back with Prof G Markets. It's been a rough year for fast food franchise operators. So far, we have seen bankruptcy filings from operators for Subway, Applebee's, Popeyes and Carl's Jr. And some are blaming the franchise model itself. One McDonald's franchisee said that operators, quote, "cannot absorb all these costs, do all this discounting and still pay to remodel our landlord's building." This issue is especially relevant for McDonald's. Its franchised and affiliated locations account for more than 95% of restaurants and roughly 62% of total sales. Because of that exposure, the company has rolled out a new initiative called McDonald's

• 32:43Ed Elson?

  Next, which is designed to make its restaurants, quote, "easier to run and more enjoyable to visit." What stands out is how explicitly the strategy focuses on operators, not just customers. The message is clear. Improving the experience for franchisees is key to improving the business overall. So, Scott, fast food franchises are struggling right now. Plenty of bankruptcies. Burger King operators filing Chapter 11. Popeyes operators, Carl's Jr. There was a Domino's franchisee, which also just went bankrupt this year. And apparently, there are concerns about the franchise model. Apparently, it doesn't really work anymore.

• 33:27Ed Elson?

  That is at least what these franchise operators are saying or complaining about to the larger corporations. And when you look at all of these fast food closures, do you think it's that? Or do you think it might be something else?

• 33:41Scott Galloway?

  So, the franchise model is like the licensing model. It's the ultimate business model. They come up with a good concept that people love. And then, rather than scale the company and use your own capital, you find local entrepreneurs that want to open. I was on the board of Panera, and the largest Panera, there was a franchise that had 40 stores in Southern Florida. And you have a talented on-the-ground. You're talented on the ground management. The key to retail is that the owner is there. So for example, the most successful franchise model, I would argue, arguably. So Panera, Starbucks and Chipotle always had NPS scores of like 62 or 63. And NPS is basically considered kind of the holy grail of consumer metrics. And that is the number of people that would recommend it, strongly recommend it versus people that wouldn't recommend it.

• 34:26Scott Galloway?

  So it's sort of passion, consumer passion. Chipotle, Panera and Starbucks always around the same thing. And then 10 points above that was Chick-fil-A. I mean, just striking and Chick-fil-A's secret sauce. Yeah, the chicken's fine. It's a great product, but the other ones have a great product too. It was that they had this really unique model where they have 25,000 people apply to be one of the 80 or 120 franchisees. And they call from former military veterans to, and they have this really sophisticated means of trying to find somebody who they think is just passionate about the brand and will be on site every minute of every day.

• 35:09Scott Galloway?

  There's all this data showing that a restaurant does not work if the owner isn't there a lot. Whether it's shrinkage, making sure the bathrooms are clean, saying hi to consumers. And so Chick-fil-A, where I'm headed with this, this isn't about a business model. This isn't even about them competing with each other.

• 35:28Scott Galloway?

  Newspapers made the same mistake.

• 35:31Scott Galloway?

  You know, the New York Times thought it was competing against the LA Times or the Boston Globe or the Chicago Tribune. No, they were competing against a structural shift in consumer behavior. And I want to acknowledge I'm a hammer and everything I see is a nail, but I think this is all about. I think this has nothing to do with the franchise model. I think this is about GLP-1. And that is one in eight, 30 million Americans are on GLP-1s. The population of Texas is on GLP-1s now. And you don't go into a Wendy's. And eat, you know, a double whop or whatever the fuck they serve is and then leave and think, wow, that was a good idea. Wow. That made all kinds of sense supersizing my McDonald's

• 36:12Scott Galloway?

  meal at Newark Airport. By the way, that's, that's an amazing meal. Newark Airport McDonald's, shout out. It's like supposedly one in three times a pack of cigarettes is sold. The person buying it is swearing to themselves it's going to be their last pack ever. You typically don't walk out of fast food thinking, great idea. Great idea. You need cheap calories because it's gotten so expensive. We subsidize beef, we subsidize water, and people are so time starved and working so fucking hard that if you're a single mother, I used to eat fast food all the time when I was growing up with my mom because quite frankly, it was the most affordable means of getting cheap calories. And it was convenient, it was fast and it was easy. Unfortunately, it is really bad for you because they're, they're engineered to addict

• 36:54Scott Galloway?

  you with salty, sugary and fatty food that we couldn't find on the savanna several thousand years ago. And it's just really bad for you. And what do you know? GLP-1s come, there's something like 20% of America eats at McDonald's once or twice a day. And I gotta think GLP-1s are starting to kick in here. I just don't, the, the, the economics of a franchise model are somewhat at play here. And that is, the labor model worked, or the franchise model worked when labor was cheap, interest rates were low, and consumers weren't counting calories. All, all of that is broken. But more than anything, people are having an easier time

• 37:39Scott Galloway?

  driving by a Jack in the Box and driving by it. And just saying, I'm gonna go home and eat kale, or I'm gonna go home and have a bowl of, you know, whatever it is, a bowl of cereal, or I'm just not, I'm just not that hungry. And I think this is, I think GLP, I mean, I've said this before, I think GLP-1s are bigger than AI. So I think that, that, that this is, sure, I'm sure it's something about the franchise model, interest rates, all that, you know, labor, inflation, I'm sure all their concerns are real. But if everybody was, was eating more,

• 38:11Scott Galloway?

  That would roll over the anomalies in the franchise model. This is the oxygen is being sucked out of the room. And there's just, it's like when a company is shrinking, everybody starts blaming each other and they questioning the business model. It's like, no, people just aren't buying newspapers any longer. They're reading, they're getting news from different sources. So I'm open to pushback here, but I think this is more a story of GLP one as opposed to the franchise model doesn't work.

• 38:35Ed Elson?

  I think that makes a lot of sense. And I think, I think the comparison to the newspapers is a great one because it's easier to, if your business is declining and if your competitors is going bankrupt and then you're struggling as well. It's, it's an easier pill to swallow to say that there's something that you need to do organizationally or management wise to sort of restructure your business. Or maybe we need to sort of start changing the way that we present our menu. Maybe we need to, you know, upscale our locations. Those are easier problems, but it's a different thing to say that our entire industry is structurally undergoing a shift, which is going to eat away at our bottom line. And that is exactly what happened with the newspapers.

• 39:19Ed Elson?

  And it does seem like a similar thing is happening here. Like a lot of people are saying, oh, it's inflation. Oh, it's, it's the fact that prices are going up, people are downscaling. Historically speaking, fast food is recession proof. I mean, you look at most major recessions, you look at 2008, fast food traffic was stable because it is one of the cheapest options. I mean, that's kind of what you do. You go get a really cheap option over at McDonald's if you're struggling economically. But so I don't see that as a very viable argument, but it is true. Foot traffic to fast food restaurants is going down. Last quarter it fell more than 1%. The quarter before that it fell around 2%. And you have to think that's crucial statistic there that I'm sure a lot of these franchisees aren't really thinking about

• 40:01Ed Elson?

  because it probably seems to out there, which is, as you said, one in eight US adults are now using GLP one drugs. That is 30 million people and that number is only going up over time. And so if you look at the, I mean, that's the GLP one penetration. Let's look at the fast food penetration, four and five. Americans are eating fast food at least once a month and around two in five Americans are eating it weekly or more. So if you just count that up among the adult population, that's around one hundred and ten million people. Hundred and ten million adults who are eating fast food weekly. If you've got thirty million on GLP ones, you just do the napkin math. You're essentially reducing the total addressable market by about twenty seven, thirty percent.

• 40:45Ed Elson?

  And that's assuming that the people who are taking GLP one drugs aren't going to McDonald's. They aren't going to Wendy's, they're not going to Popeyes, Burger King, Carl's Jr., you name it. And I think that is a completely fair assumption to make. If you're on GLP ones, I doubt that you're feeling very good or even excusing the fact of or the idea of going to McDonald's once a week or even more than that. I just don't think that that is really happening. So I think that this is definitely true. I think that this is something that these companies need to start taking really seriously. And I think when these companies report their earnings, it seems that so far they've kind of brushed these concerns aside and said, no, we're not really worried about that.

• 41:27Ed Elson?

  At a certain point, I think they need to take it a lot more seriously and recognize that this is something that Wall Street and investors are genuinely concerned about because it has way larger implications than you're not running your business right. This is a structural, secular issue that they need to start taking seriously. So I'm with you, I'm in agreement.

• 41:47Scott Galloway?

  You know, who's probably adopted the franchise model at a greater scale than fast food restaurants is hotels. Very few hotels are owned by the flag. Four Seasons owns one of its property, its flagship property, its headquarters in Toronto. Every other Four Seasons is owned by a rich guy who thinks I'd like to, I'd like to own the local Four Seasons. And then they come in, it's a much better model, they plant the flag, they let them tap into the reservation systems. They have a very onerous owner agreement around you have to have someone twenty four hours a day at the check in desk. You have to clean the rooms twice, you know, whatever it is, and they take eight to twelve percent of top line proceeds. And the owner of the Four Seasons in New York, I think, had to give it back to the bank because they had to maintain these onerous standards when no one was checking in. But it's an amazing model.

• 42:30Scott Galloway?

  And by the way, in the hotel business, it's still working because people love the idea of owning the six senses. But all of, almost all of these companies, almost all of the big brands now in hotels, Starwood, Hyatt, a lot of them are basically a franchise model. And it's working. So again, I but but GLP one, as far as I can tell, I it's one of the few industries I haven't been able to reverse engineer disruption from GLP one. This isn't the model here. This is it. Beef and these shitty foods need to be priced to their real costs. We we bury the Central Valley and cattle ranchers in water and we subsidize the shit out of beef that in bad beef that's not good for you. So I don't feel

• 43:15Scott Galloway?

  for and also the fast food industry, you could argue employees, people, but a decent number of employees, but I don't think this is an industry we're going to miss a lot. I don't. I don't. My feeling is this is a healthy part. It's like, I don't think we need more CVSs or bank branches in Manhattan. I'm ready for a lot of those to go out of business. And I don't think we need nearly as much fast food. Now, some people would argue you're being an elitist. There's food deserts. It's cheap calories. And eating healthy is really expensive. But I can't imagine it. And we've talked about this before, a more I just think GLP ones are going to be so massively accretive. And I had the head of Lilly, I had the CEO of Lilly, which is probably the most important company in the Midwest

• 43:58Scott Galloway?

  right now, trillion dollar company, located and headquartered in guess, do you know where it's headquartered, Ed? No, I don't. Where is it? Indianapolis. I'd love that. The latest trillion dollar company is in San Francisco, New York, or wherever, London. It's in Indianapolis. Yeah, it's And GLP one drugs have gone from $1,000 a month to somewhere between 250 and 500. I think they're going to be sub $100. And if you can do a GLP one, it's sub $100 a month, I would argue, probably going to save money. Because, you know, these costs, these indulgences, shitty food, alcohol, whatever it is, it adds up pretty fast in terms of an expense. So I'm, I hate to say it, I'm sort of, I'm sort of excited to see.

• 44:40Scott Galloway?

  Jack in the box, just fewer of them. Now, I would like to see a lot more In-N-Out burgers. I will say that, but I do wanna, you know, if, if there's fewer McDonald's, I'm not sure that's a bad thing for the economy.

• 44:51Ed Elson?

  Yeah, I think I agree with that. By the way, just before we end on this point, you know, you use a few, I think it was a few years ago, we were talking about GLP1s. I mean, we, we've been excited about this for a long time, and we're trying to think about all of the sort of the after effects and sort of who would be the downstream winners and losers. We're talking about maybe fitness companies, and I think, I believe we said lingerie companies. Here's just some interesting news. Victoria's Secret stock rose 40% last week. Why? Because of an incredible earnings report where they posted massive revenues up 15% to $1.56 billion. They raised their full year revenue guidance to more than $7 billion.

• 45:36Ed Elson?

  They saw sales increases across every single income group. And a lot of people are asking, okay, why is it, why is suddenly everyone super excited about buying lingerie and buying underwear? I think you could make the case that a lot of it has to do with GLP1s, that people feel sexier, they feel more fit, they're in shape, and now they wanna go and they, and they wanna buy more, more sexy lingerie. So, I, I mean, we, we can't quite prove causation yet, but I think you can make a case that this is one of the winners. What do you think?

• 46:12Scott Galloway?

  100%. When you lose weight and you feel good about yourself, um, you know, what do you know? You, you wanna go out and buy a new wardrobe. Uh, so I think, you know, look, Urban Outfitters, a company I was on the board of, their stock has doubled in the last five years. You know, you, you feel sexier. I think it's gonna have a, a bit of a baby boomlet maybe, because supposedly lowering obesity rates increases the fertility of somebody. And I, I think that's a fancy way of saying. People are more down to fuck when they feel good about themselves. It's true, right? You feel good about yourself. You look better naked, which, I mean, all of this adds up to a bunch of wonderful things. New wardrobe.

• 46:55Scott Galloway?

  I think gyms are going to boom because you want to keep the weight off. You feel good about yourself.

• 46:59Ed Elson?

  It does seem that this entire, the entire country is taking fitness a lot more seriously. And then we've just been given a literal drug that is speedballing that process and that transformation.

• 47:09Scott Galloway?

  I also think it's kind of, in a weird way, I think the pharma companies who have doubled down on GLP-1 are going to boom. I wonder if we're going to see a decline in antidepressants because there's a link between obesity and depression. So, look, I'm just so excited about this technology. But yeah, I don't, we asked, Mear, one of the moments I loved at Prof G was Mia went downstream and looked at the supply chain of GLP-1 about three years ago and said, there's a publicly traded company that, that manufactures the syringes. And we talked about it and the stock doubled in the next three or six months. But now I think it's, I think it's Novo Nordisk has just come

• 47:50Scott Galloway?

  out with pill form. And what I think you're going to see here is a giant decline in the cost of these drugs, which I think is amazing. But meanwhile, I think the profits and the total revenues are going to, I think we're about to get the mother of all lessons in elasticity, that as prices go down, total, total revenues will go up because it'll start penetrating into the community just that need it.

• 48:13Ed Elson?

  We'll be right back. And for even more markets content, sign up for our newsletter at profgmarkets.com.

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• 49:59Ed Elson?

  We're back with Prof G Markets. We are back in the studio after the first ever Prof G Markets tour. Over the past week and a half, we traveled to five cities. San Francisco, Los Angeles, Miami, Chicago, and New York. We met listeners. We talked about markets and we got a firsthand look at how people around the country are thinking about the economy and investing. Now that the tour is behind us, Scott, it is time to debrief. Let's discuss our learnings from the, from the tour. And let's also get into the numbers here. I'll just give you a little bit of data around how this tour actually went down. We sold 5,239 tickets in our five cities.

• 50:41Ed Elson?

  Our biggest city was New York, where we sold out the town hall. Almost, almost 1,400 people showed up for that show. Our second biggest show was San Francisco, where we sold more than 1,100 tickets. Scott, takeaways, success financially, personally, emotionally?

• 50:59Scott Galloway?

  So just to be honest, I found it very stressful.

• 51:04Scott Galloway?

  You know, if someone gives up, it's one thing if this pod sucks, they go back to walking their dog, right? They just turn it off. I think when you have 1,200 people show up for an event and they've spent a hundred bucks or more. By the way, in StubHub, our tickets in New York were going for 500 bucks. You, you have to bring it, you know, you have to. That'd be good. Yeah, you want them to really enjoy themselves. So, and also I felt more responsibility because when I did this with Pivot, Kara is so experienced with live events. And I just kind of show up, tell a dick joke, maybe occasionally stumble on some insight and the whole thing works. And she manages the whole thing. And in this one, you're, you're outstanding, but I felt more

• 51:46Scott Galloway?

  pressure to kind of be the emcee, if you will, and, and keep it on track. And I was just, I was just, quite frankly, I was anxious. So I was super relieved, but we had, what are some observations? I think that live events are booming because people want to get out and touch grass. I think getting your, your, every brand needs a certain number of evangelists. Evangelists are key to a brand, and that is people who just, when they hear the brand name, they, they say to their people, oh, Property Markets, someone hopefully goes, I love that show. And I saw it and it was a ton of fun. That is just so important to a brand. So getting out there and trying to find your evangelist, and also when it works,

• 52:29Scott Galloway?

  and this tour did work, it's really rewarding. And also, it was a nice moment for us. I think when Hillary, when Secretary Clinton came out on stage, it felt like sort of the show was validated. The fact that someone that interesting and important, and although it's not really markets related, would show up live for one of our events, it was just a nice moment of validation. I enjoy flying around with the team. I felt like Mick Jagger flying around with the NSYNC while they were in high school. I'm like, Jesus Christ. Everyone is just so, I'm like, all right, everybody needs to be in bed by 11:00 PM. It's like, literally, I'm with children.

• 53:02Scott Galloway?

  And what you're finding is you can, the ticket, what's interesting about live events, the ticket sales cover your costs, maybe a little bit more, but where you make money is on the sponsorship. That's where the big money is. And that is, our sponsorships range from like a hundred grand to 500 grand. We try and get, for the tour, we try and get three of them. Because the power branding and in-person show is really powerful. And, you know, those events are just, you know, they're just, economically, I'm not sure they make sense. It's a lot of work. I was in seven cities in six days and five stops, and threw a speaking gig in there. And then anyways, but, so I found it exhausting,

• 53:42Scott Galloway?

  very rewarding. The trend is, is towards in-person events. People are recognizing, one of the biggest trends in the consumer economy right now, and that's the reason why Flexjet is doing well and LVMH is not. And LVMH just took a mistake in Flexjet, and why Disney parks are up. But, you know, people buying shit is down. Is that people realize as they get older, and coming through COVID, that we overestimate the pleasure and happiness we're going to get from things, and we underestimate the pleasure and happiness we're going to get from experiences. And unfortunately, with Live Nation, which is a monopoly, it means that Taylor Swift tickets go for $2,800.

• 54:22Ed Elson?

  People are upset about that with our, with our tour too. I mean, what I can say is there's not really much we can do about it. This is the ecosystem. Like, we kind of have to play ball here with them.

• 54:32Scott Galloway?

  Well, and we're charging, well, I think it was a hundred bucks or 200 bucks. I went to Coachella. My God. VIP tickets, such that you don't like, have to be in a teepee and have like a 19-year-old running over you trying to see Justin Bieber. It's 2,500 bucks.

• 54:47Ed Elson?

  Which is, by the way, that's about what it costs for like a nosebleed for the Knicks game right now. I think if you want to go see the Knicks, it's just like 2,500, $3,000.

• 54:55Scott Galloway?

  Well, I don't know if you heard, but I'm going to get really crazy. The tickets, tier one tickets to the finals of a World Cup are $38,000.

• 55:02Ed Elson?

  Someone sponsor us. Someone take us, please.

• 55:06Scott Galloway?

  Yeah, yeah. By the way, I think FIFA is the most corrupt organization with the best product in the world.

• 55:12Ed Elson?

  I'll just give some observations as well on this tour. I mean, I think it's a really interesting point and it's an important point from a business perspective that this doesn't make that much sense for us financially. Like this event is profitable, but we could do other things that are a lot more profitable. Specifically continuing to do this podcast and charging way higher than average CPMs because we have a good brand and because we have a good aspirational audience. I mean, that's really how we make money. It's not from going and doing live tours. That's kind of how like comedians go make their money because they don't make as much money charging for the CPMs on their podcast. They make more money getting people to pay large prices for live events. But I think there are some really important

• 55:58Ed Elson?

  things that are rewarding for us down the line, which is what makes it worth it for us. One, it's fun. That was, I mean, just a whirlwind roller coaster of a time, traveling around the world, around the world, around the nation with the team. You know, when we went and we partied at the Fianna and then the some of the rest of the team, we went out to Club Space and we stayed out partying and it was our research assistant Dan's birthday and we got him a bottle.

• 56:29Scott Galloway?

  Twenty-third birthday.

• 56:30Ed Elson?

  Twenty-third birthday and we celebrated, which is fun and it's also great for team morale, which is actually important when you're running a very high intensity organization where you're making podcasts and videos literally every single day. So that was really important. And then also it's really important for us to understand who the audience is, to connect with the audience and to deliver some sort of a payoff for our super fans. Like I, I was so, and one thing that we did at the end of every show is we like stuck around and we talked with everyone because that was meaningful to us and I want to make sure that if you're listening to the show that you're getting some real reward from this and that you're being, feeling that you are part of a community,

• 57:12Ed Elson?

  which is exactly what we delivered for these shows. So that's really important from the audience perspective. And then finally. In terms of making money for the long term, when you're in the business of advertising, there are two things that you want to do. One is you want to get as many downloads and clicks as possible. We all know that. But two, you want to demonstrate to advertisers that the relationship with the audience, that there is a depth to that relationship and there is a strength in that relationship, that the audience has a level of loyalty to you. And so if you can go out there and show the world, hey, we have a show and 1,300 people in New York took time out of their day. They showed up on a Tuesday night and they paid hundreds of dollars for a ticket to show up and watch this show.

• 57:56Ed Elson?

  That says something very meaningful to the audience or to the advertisers. That tells the advertisers that the audience is listening and the audience cares. So I'm just sort of laying out why this all makes sense from a financial business perspective for Prof G Markets. Despite the fact that these things aren't that profitable compared to other things that we could be doing. Over the long term, it really pays off. And that's sort of the business case for why we're doing it. The final point I will make on why it makes sense to do this is the content that we get for social media. I mean, we've got a lot of clips from the tour. What I've said to the team is we want to make sure that we inspire a massive sense of FOMO among anyone who isn't showing up to these live events.

• 58:40Ed Elson?

  I want you to be seeing how much fun we're having. I want to be posting it all over Instagram, all over X, all over LinkedIn, all over threads. I want everyone who isn't at this show to think, god damn it, I need to show up to the next live tour. So I hope that we did that. I had an incredibly good time. It was genuinely so fun meeting everyone who listens to this show. And I couldn't believe it at times, but it was so rewarding. And I hope for those who showed up, I hope you had a good time too.

• 59:08Scott Galloway?

  Yeah, other than the relevance, validation, narcissism and money, for me, it's all about the fans. Yeah.

• 59:18Ed Elson?

  This is, this is what we're all about. We are transparent.

• 59:21Scott Galloway?

  Seriously, one of the things I found interesting was that I've done a bunch of live events and a bunch of speaking gigs for years. And I would, I would, there's been a transition in Q. The Q and A is always the most fascinating thing. Anytime I speak somewhere, I demand Q and A. I think that's the most interesting part. And we had Q and A for a good 20, sometimes 30 minutes in every event. The shift in questions is dramatic. And that is, a few years ago, people wanted stock tips. It was greed. It was, they wanted to know, what do you think is the big tech stock pick for the next year? Now, they want career insurance. And that is, the things that, it was more about, it was less about greed and more about anxiety.

• 1:00:05Scott Galloway?

  People are talking about AI, housing, and quite frankly, weather. We had a lot of questions from parents, really basically saying, are my kids going to do as well or better than me? And we had over, looked at the data, 800 audience questions. And if you were to summarize them in one sentence, it would be that people aren't worried about the economy, they're worried about their place and their children's place in it. So it's gone from greed to anxiety. You know, and it's moving towards the greatest luxury in America is moving from wealth to certainty. And it just reminds me of happiness studies.

• 1:00:47Scott Galloway?

  And that is, every year, they rank the nations on who are the happiest. And every year, six of the 10 happiest places in the world are in Northern Europe. And I'm going to Stockholm next week. And whenever you go there in the summer, you sort of understand why they're so happy. And then you go back in the winter and can't figure out why they're happy. But it's not the beautiful weather or the beautiful people. What it is, is that happiness is not only a function of what you have, but an absence from the fear of things being taken from you. And that is, it's great to have a lot of money, but what's even more important to happiness is not worrying that if your wife gets lung cancer, you're also going to go bankrupt. And in the US now, we've decided to optimize the happiness for people who have a lot of

• 1:01:31Scott Galloway?

  money at the expense of the anxiety for people who are in kind of in the lower 90, especially, I think, the upper middle class who have more economic anxiety than they've ever had. And you could just feel that in the questions. People asking, what should their kids do? What skill would you give your kids? What is the likelihood my industry gets disrupted here? So in a certain way, it was kind of, I don't want to say disheartening, but... But people are really, people are just worried. And, and all of the catastrophizing coming out of the AI community, which I think is basically fundraising, you can feel it. It's, it's quote unquote, it's working. People are really, really worried.

• 1:02:15Ed Elson?

  What about any optimistic notes to end our show? Or you, what were you, what did you feel good about coming out of that tour?

• 1:02:23Scott Galloway?

  The most rewarding is a chance to spend time with the team. You guys have a, you know, we have a great team. They're nice people. They really enjoyed it. That was nice. I think it was bonding for all of us. Hands down, the most, the nicest thing about the whole tour was that in every city, we had parents who brought their teenage kids. And that's just very rewarding to see parents hanging out with their, their kids at, you know, at our event. I mean, the most, I went to see Taylor Swift because I want to understand the phenomena and I wanted to go to SoFi. Yeah, me at a Taylor Swift concert. Does that make sense? Does that make sense? Me at a SoFi concert. Anyways.

• 1:03:01Ed Elson?

  I just love how you have to qualify. I don't like her. I'm not interested in her music. I just wanted to go see what's happening societally and culturally.

• 1:03:09Scott Galloway?

  It's true. But the thing that, the, the, the thing that was worth it was when I was leaving, there's this gigantic platform, cement platform or deck or terrace at SoFi. And the driver who, who I was with, who takes people to and from the Swift concerts all the time is like, you look to your left when we get out here, you're going to see about 800 dads in cargo pants. And I looked to the left and there's this gigantic terrace full of like guys in their 30s and 40s, all on their phones in cargo pants. And he goes, it's dads waiting for their daughters. They didn't want to spend the money. You know, it's too expensive. So they buy ticket. I thought it was so nice. It's too expensive.

• 1:03:51Scott Galloway?

  I'm like, people don't, I thought to myself, these, you know, all these guys are such good men. They come to the concert, they bring their 13 year old daughter, but they don't want to spend the money on a ticket. So they wait outside for three hours. And listen to, you know, the talking heads in R E M or do whatever it is they do. And then wait for their daughter to come out because they don't want to spend that kind of money on a ticket. Anyway, I found the most rewarding thing, hands down, was when people brought their, their young adult children. I thought that was really affirming.

• 1:04:20Ed Elson?

  The Taylor Swift's of business, that's what we are.

• 1:04:22Scott Galloway?

  Yeah, that's what we are.

• 1:04:23Ed Elson?

  Yep. Well, we really appreciate everyone who came out. It was so much fun. I mean, honestly, just surreal from like the size of the crowds and, and, and seeing those lines and just seeing the fact that, you know, we started this thing like three or four years ago and we didn't really know what we were doing. Or at least I certainly didn't know what we were doing. I mean, even just having Hillary Clinton come out on the stage with us and talking with her about the future of the economy, the future of America, speaking with Governor Pritzker, speaking with Ted Sarandos, the C E O of Netflix about Hollywood, like we've come a long way. And it was, it was, it's nice to have moments where you just observe that and you recognize that and you celebrate that.

• 1:05:07Ed Elson?

  And that's what that was for us. So again, everyone who came out to the show, I'm so grateful. Thank you so much. And I can't wait to do it again next year. We're going to have to do it again next year. We're going to have to figure out where else to go. I know a lot of people in Denver, strangely, were upset that we didn't go to go there. Same with Boston. We probably have to hit D C next time. Uh, I will note the Chicago audience, I wasn't sure if we'd have much of an audience there. That was arguably the best audience. I mean, they went, they went nuts. It was awesome. Um, so long story short, that was a great time and I can't wait. I can't wait for the next one.

• 1:05:45Scott Galloway?

  I'm glad.

• 1:05:47Ed Elson?

  Let's take a look at the week ahead, Scott. We will see earnings from Oracle. We will see inflation data from the Consumer Price Index and Producer Price Index for May. And then finally SpaceX is set to price its I P O Thursday night and go public on Friday. Scott, do you have any predictions?

• 1:06:04Scott Galloway?

  Well, I sort of made it. I think that the three, the big three coming up. Um, I'll be interested to see if there, I don't, this isn't prediction. I wouldn't be surprised if their pricing has to come down a bit. But I think the biggest first day pop or the biggest initial pop on the first trade is going to be Anthropic. I think the momentum. The RIS, so much about an IPO is the narrative versus the numbers. And the narrative is just strongest around Anthropic and weakest among OpenAI. And somewhere in the middle is SpaceX because you have Elon. He's a meme. He's great at, he's great. You know, it is an exciting company. It's got kind of just, it's every eight year old's dream, you know, space and rockets and technology.

• 1:06:47Scott Galloway?

  And I think some of those animal spirits will come in around SpaceX. But if I were to rank them, I think that Anthropic has the biggest first day pop.

• 1:06:55Ed Elson?

  All right. My prediction is that these IPOs will mark the top. As I said, I think the amount of capital that they are demanding in these fundraising events is just going to be too much. And I think that there's too much supply is going to outstrip the demand. I think that that's going to be the top, these companies going public. And then we'll see a period of relative underperformance over the next several months. So that would be my prediction.

• 1:07:22Ed 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 Shulon, Isabella Kinsel, Chris Nodden 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 Profiteam Markets from Profiteam Media. If you liked what you heard, give us a follow and tune in tomorrow for a fresh take on the markets.

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