No, We Do Not Have An Iran Deal

Scott Galloway and Ed Elson break down the memorandum of understanding between the United States and Iran and explain why the agreement was unlikely to succeed from the start. Then, they unpack the financials behind OpenAI and Anthropic, exploring what it would take for either company to become profitable, and when that might actually happen. Finally, they revisit Snap Specs to examine why the product flopped, and why Snap’s dual-class share structure makes meaningful change at the company nearly impossible. 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

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 1:29Scott Galloway?

  Today's number 16. That's the total number of goals Lionel Messi has scored in all his World Cup appearances. Now tied for the competition's record. So I'm going to say, who gives a shit? The Tartan Army's coming for all you bitches, including you, Lionel Messi. Nahagus, that's a real meal. Watch out, Morocco. Here we come after a resounding defeat of that world-class Haitian team.

• 2:02Scott Galloway?

  We're top of the table right now. We're literally leading

• 2:05Ed Elson?

  That's right.

• 2:05Scott Galloway?

  Our flight, our, our group.

• 2:08Ed Elson?

  That's right. I'm just now learning you're a massive Scotland fan. I have a question for you. Can you name one player?

• 2:14Scott Galloway?

  Oh, I don't know, McComany?

• 2:16Ed Elson?

  There we go. Well done.

• 2:18Scott Galloway?

  Well, I don't know.

• 2:19Ed Elson?

  That's the, he's the only one who really matters. That's a great, that's, I'm so glad to hear that.

• 2:23Scott Galloway?

  No, the other guy, the, the midfielder is incredibly, incredibly, incredibly good. What's his name? McGinnis? Oh, fuck.

• 2:33Ed Elson?

  Um, McGinn, John McGinn.

• 2:34Scott Galloway?

  John McGinn, that's right. Yeah, he's supposed to be.

• 2:36Ed Elson?

  Yeah, he's a great player.

• 2:36Scott Galloway?

  He's supposed to be absolutely outstanding.

• 2:40Ed Elson?

  Unfortunately, my favorite Scottish player, Billy Gilmore, who was a previously Chelsea legend, is injured at the moment, but it's great to see you're doing well. You know who else is doing well?

• 2:50Scott Galloway?

  Oh, you saw Team England, right?

• 2:52Ed Elson?

  That's right. 4-2.

• 2:53Scott Galloway?

  Yeah, no, that was, that was resounding. That was, and against a good team too, right?

• 2:57Ed Elson?

  That's right, exactly. Croatia's a very good team, very strong. Luka Modric's still in good, good form, in good shape.

• 3:04Scott Galloway?

  I heard his great grandson is gonna be in the next World Cup.

• 3:08Scott Galloway?

  No, no, no, no, no.

• 3:09Ed Elson?

  Don't do Luka like that. By the way, it's Lionel Messi, not Lionel Messi.

• 3:13Scott Galloway?

  Lionel, he always been Lionel to me. What's your favorite player on, uh, on, uh, Team England?

• 3:20Ed Elson?

  Rhys James. You know, I'm a lifelong Chelsea fan, so I gotta support all the Chelsea boys. It's very sad to see Cole Palmer is not included. He's been posting some Instagram photos of him in like Marbella or Ibiza or something. So he's living his best life and we wish him well.

• 3:36Scott Galloway?

  God, that guy's gonna need, that, that guy's gonna need a Belondo or whatever they call it to get laid. He is not an attractive man. He is not an attractive man. He, that, that bitch, that bitch better splash the cash in Ibiza. He's looking to have a little World Cupping of his own, so to speak. You left out Andrew Robertson, the captain of Team Scotland. I'm so embarrassed. I got, what's his name? John McGinn's wrong, name wrong.

• 4:01Ed Elson?

  Yeah, Scotland has a decent squad.

• 4:03Scott Galloway?

  A decent squad. They're very, they have, they have one of the best left, left backs of his generation in Andrew Robertson.

• 4:11Ed Elson?

  Are you reading off of AI right now?

• 4:13Scott Galloway?

  No, I'm not. I've been, I've been totally, I got this in my notes actually, cause I'm so excited about him, but I'm not reading off of AI.

• 4:21Scott Galloway?

  But I think I'm curious, I don't know if I'm hoping this is McTominay's cup, we'll see. And I'm putting a car before the horse, but tomorrow night I'm joining the Tartan Army here in London and we're marching to a pub and I bought my kids.

• 4:36Ed Elson?

  That's great.

• 4:36Scott Galloway?

  I bought my kids all these awesome jerseys and we all have kilts, but they're refusing to wear their kilts. So I'm going to shut off their phone and tell them I'm not turning it on until they put on their kilts.

• 4:48Ed Elson?

  Good.

• 4:48Scott Galloway?

  That's the only leverage I have, but if they, if they make it, I'm definitely, have you heard what's going on in Boston? That they're out of beer?

• 4:55Ed Elson?

  Out of beer.

• 4:56Scott Galloway?

  Out of beer.

• 4:57Ed Elson?

  Unbelievable.

• 4:59Scott Galloway?

  How awesome is that?

• 5:00Ed Elson?

  It's amazing. It really is.

• 5:02Scott Galloway?

  I'm seriously excited. So I am all in on Scotland until they're out and then I'm, and then I'm going for team England.

• 5:09Ed Elson?

  Going for team England over team USA because I gotta say USA looked pretty good too. I was impressed.

• 5:14Scott Galloway?

  USA, USA was outstanding. They say this is the best team they've ever assembled.

• 5:21Ed Elson?

  For sure.

• 5:22Scott Galloway?

  Incredible athleticism. I don't know. There's just something, I hate to say it, but I feel like the rest of the world needs it more than the US. It's just so strange though. It's so much about team vibe. I used to go, I, so we're a house divided. I think I told you this. I like Arsenal. My youngest likes Chelsea. My oldest likes Tottenham and we'd go to a lot of Tottenham games and Harry Kane and Son were the strikers or the forwards. Two of the greatest of the game and the team never gelled. It just never gelled. It's so much. And they say that's the difference between the American club and the European ones is that I guess the Americans don't have a lot of opportunities to play together. And they just never quite gel at an elite level.

• 6:03Ed Elson?

  Yeah. And that's always been the problem for England too, that we've always been so.

• 6:07Scott Galloway?

  They're outstanding.

• 6:09Ed Elson?

  No, I mean.

• 6:10Scott Galloway?

  It's such a British thing to say. If they don't win, they have problems.

• 6:13Ed Elson?

  Well, we, we came close in the last one, so credit to England for that. But I mean, it's, it's last time we won was 1966 and we've had, we've always had many of the best players in the world.

• 6:25Scott Galloway?

  Some of the best talent in the world.

• 6:26Ed Elson?

  The story of team England has not been a very, a very good one. At least over the last few decades. But apparently what really got everyone going was Thomas Tugendhat, the manager's speech at halftime. Thomas Tugendhat basically said to them, he said, if we lose, we lose. And that's fine, but we're going to do it our way. And that's what we're going to be happy about. We'll lose our way. So that is my message to you as we begin this podcast. If we have a shitty podcast.

• 6:53Scott Galloway?

  We're doing it our way.

• 6:53Ed Elson?

  What we're talking about, it'll be our way.

• 6:56Scott Galloway?

  Dick jokes aplenty. That's what you're saying.

• 6:58Ed Elson?

  Dick jokes aplenty.

• 6:58Scott Galloway?

  That's what you're asking for. Let's bust right into it, my man.

• 7:00Ed Elson?

  Let's do it.

• 7:01Scott Galloway?

  Let's do it our way.

• 7:05Scott Galloway?

  Now is the time to fly. I hope you have plenty of the well at all.

• 7:12Ed Elson?

  The United States and Iran have signed a memorandum of understanding that pauses the conflict and reopens the Strait of Hormuz to commercial shipping for the next 60 days. In exchange, the US will lift its naval blockade of Iranian ports. But the agreement leaves some of the toughest issues unresolved. Key negotiations, including the future of Iran's nuclear program, have been deferred to a second round of talks scheduled over the next two months. Let me just go through quickly what this memorandum of understanding actually says. And then we can get into what it means. It's a 14-point plan. I've collected some of the most important takeaways here.

• 7:51Ed Elson?

  I'm just going to go through right now. So first off, both sides declare an immediate end to military operations on all fronts, including Lebanon. US lifts its naval blockade on the strait immediately. Okay. Iran will reopen the strait free of charge within 30 days. That's good. But importantly, that no charge clause ends after the 60 days. Meaning we can go back to normal for 60 days. And then Iran has the right to basically jack up costs and charge a fee for any ship that goes through it. So that's not great. Okay, Iran reaffirms it won't develop nuclear weapons.

• 8:31Ed Elson?

  Both parties agreed to discuss the issue of enrichment, but Iran will, quote, maintain the current status quo of its nuclear program. So what I take away from that is. Nothing has changed there. The US will undertake with regional partners a $300 billion reconstruction fund to rebuild Iran. The US will also undertake, that's the word they use, undertake, to unfreeze all of the currently frozen Iranian assets, and the US will terminate all sanctions on Iran. So that's basically the deal. If I could summarize what it gets us, it basically gets us nothing, because the nuclear program will basically continue

• 9:13Ed Elson?

  as is, and lots more to negotiate there. And the strait which was open before the war will be reopened. And then in exchange, we paid in 14 American lives, $100 billion in taxpayer funds to fund this war, also a full percentage point of inflation, which will amount to billions of dollars in household expenses. And then potentially, we're going to pay another $300 billion for this reconstruction fund, although there is an agreement on that. I mean, this, to me, if it's even a deal, and that's questionable, might be the worst deal ever. And I don't think I'm being hyperbolic when I say that. What are your reactions?

• 9:52Scott Galloway?

  So I don't know if you heard, but this morning, Mexico presented the US with a memo of understanding where we're going to give them Phoenix back. My, I told my kids that they kept misbehaving, I was going to bomb them. And they presented me with a memo of understanding where I've agreed to buy them a new iPhone. This is, okay, so to be serious for a moment, the perfect reflection here was the signing at Versailles, where they, nobody in the Trump administration clearly took a history course and realized that Versailles is known for elaborate signings that don't mean a fucking thing. It just, it just shocks me. No one said, oh, that's a bad look to sign this at Versailles.

• 10:35Scott Galloway?

  So let's go through this in more detail. In terms of documentation and seriousness, I've said for a while, a memo of understanding is meaningless. It outlines that you're interested in getting to a deal. I've never even heard memo of understanding in the context of geopolitics. The JCPOA was 159-page agreement. The MOU is less than two pages. This is not a serious document. The core issue that everyone around the world and Trump agree on is that nuclear constraints were the core problem. The JCPOA required Iran to reduce its enriched uranium stockpile by 98%, which they complied

• 11:13Scott Galloway?

  with, and dismantle two-thirds of its centrifuges and cap enrichment at 3.7% and accept unannounced IAEA monitoring. The memo contains no nuclear constraints at all, just a pledge. Oh, okay, the IRGC is pledging never to build a weapon, which, by the way, Iran made the same pledge in 1970, when it signed a nonproliferation treaty. Verification and inspections, which is kind of the meat and potatoes of this, the JCPOA had IAEA inspectors, continuous monitoring, 24-hour-a-day access provisions. The MOU, the memo, defers all of this to a 60-day negotiating window with no guarantees.

• 11:57Scott Galloway?

  This is paying more for a worse product. The memo comes with a $25 billion price tag and another 300 billion in "reconstruction framework," exceeding the JCPOA's cost while delivering fewer nuclear concessions. They're at 60% enriched uranium, which is way above what it was when they tore up the JCPOA at 3.7. So Iran enters these talks in a much stronger position than it was when Trump decided to tear up the agreement. We're giving away military leverage. The memo commits the US to not increasing its regional forces, with Washington withdrawing extra forces within 30 days of the final agreement.

• 12:39Scott Galloway?

  And the reason we spend $1.5 trillion on a military is so we can have one of our 11 aircraft carriers anywhere to tell people when they get out of line to sit the fuck down, and we're taking that away? In addition, something that hasn't gotten any coverage, and is really important in my view, is the JCPOA.

• 12:58Scott Galloway?

  Was a multilateral agreement. Its signatories included the US, Iran, the EU, UK, France, Germany, and get this, China and Russia, meaning that if Iran went back on its word and started enriching uranium, China and Russia had an incentive to economically punish Iran. And at this point, their incentives are probably to see a stronger Iran if it keeps sticking its finger in the eye of the Western world and the, in, in US geopolitical power abroad. So there's, there's no enforcement mechanisms, no monitoring mechanisms. We have reduced our credibility globally. We have given up leverage of our military. We have alienated European allies. We have sent the world into economic disarray.

• 13:43Scott Galloway?

  We have shown the Gulf states and every other nation around the world that when you put a US military base on your territory, it's not protection, it's a bullseye. And basically, the political outfall from this, or the political amongst an incredible neutering and weakening of the United States for the next several decades, is Trump knows what a shitty deal this is and is already throwing his vice president under the bus, the political equivalent of sending a mob with a noose after JD Vance saying, oh, well, the parts I negotiated are strong, but this is JD's thing. And by the way, even Secretary Hacksat and Secretary Rubio know this is a giant steaming pile of shit and are nowhere to be found. And they've said, JD, you go on The View, you go talk about this deal.

• 14:26Scott Galloway?

  This is, in a word, disastrous. Your thoughts on it?

• 14:32Ed Elson?

  I think in addition to that, I agree with everything you said. I think there are so many reasons to believe that whatever quote unquote deal we have isn't actually a deal. And that doesn't seem to be what the markets are believing right now, at least when you look at oil prices, which have come down, and the stock market, which has gone up, because there's a lot more optimism about this. But I just want to go over like all, all of the reasons why you shouldn't think that this is actually a deal. So number one, since the MOU was signed, Iran has already fired multiple drones at commercial ships. And those drones were intercepted by the US military.

• 15:12Ed Elson?

  So already it doesn't seem real because Iran is still firing missiles. And of course, the US doesn't want to talk about that because if they talk about that and recognize that we don't seem to have an actual ceasefire agreement or a peace deal here, then suddenly Trump looks bad. So that's a big problem. There's also this $300 billion reconstruction fund thing that everyone's bickering about and arguing over, which again is a signal to me that we don't actually have a deal. It is in the MOU. It is one of the points, one of the 14 points in that agreement that the US is going to,

• 15:51Ed Elson?

  quote, undertake to construct this $300 billion reconstruction fund. The question is, what does undertake actually mean? Does that mean that they're in charge of getting other, quote unquote, regional partners to pay for this thing? Does it mean that the US is going to pay for this thing? I don't know. But what I do know is that Iran is expecting $300 billion. And if they don't get it, then the deal is off. Well, Trump has gone out and said, quote, that the story that the US is paying Iran 300 billion is fake news put out by the Democrats. He also reiterated in an interview that we're not investing and that we don't have a fund. So clearly there is disagreement over what are we going to do about that?

• 16:36Ed Elson?

  That's a huge deal. Also, it's only a 60-day agreement. So by definition, it isn't really a deal because it's going to expire. So it's really more of a pause. But then finally, and this is the most important in my view, based on what Trump has said, I don't think even he takes this seriously. And this goes back to what you said about how he's blaming it on JD. And we will get to that in a moment. I have an interesting clip to play for you. But I just want to read you some of the quotes that he said about this deal that signaled to me that he himself doesn't think that it's a real deal. So he said, quote, "It's a memorandum of understanding." And if I don't-

• 17:17Ed Elson?

  Like it, we'll go back to shooting at them, dropping bombs on their head, end quote. He also said, quote, "We have an understanding of certain things without writing it. And if they don't honor that, we'll probably go back to bombing them," end quote. So he's already talking about how this isn't that real. This isn't that strong and we can just always go back and shoot them again. Then he was asked how long the military will stay in the Gulf. He said, quote, "Probably a while. That's not good." And then when he was asked if he saw this deadline of 60 days as a hard deadline, he said, quote, "No, I don't. Just as long as they're behaving, I really don't care that much." So everyone seems to be like collecting around this idea that this one's real. This one means something.

• 18:03Ed Elson?

  I think it probably means something more than the previous fake frameworks of deals. But I don't think that we can take this that seriously if the president himself isn't seeming to take it that seriously. I have a clip of this J D Vance situation, which I think is interesting. But I just want to get your views on whether you think that this deal is actually a deal or if it's like bullshit like the rest of them.

• 18:29Scott Galloway?

  Well, let's play the clip and I'll comment.

• 18:30Ed Elson?

  Okay. So this is the clip of when Trump was asked about how J D Vance is handling it. Let's see what you think of this.

• 18:38Speaker 07

  There's some element to this where you send the vice president. If it works out, great, you'll look like a genius for sending him. And if it doesn't work out, it's the vice president's fault.

• 18:50Speaker 08

  I like that idea, Sean. This way, if it works out, I'm going to take the credit. If it doesn't work out, I'm blaming J D. You better be careful, J D.

• 18:57Ed Elson?

  So he's basically just said it.

• 18:59Scott Galloway?

  Got to appreciate his authenticity.

• 19:00Ed Elson?

  Yeah.

• 19:01Scott Galloway?

  Yeah, look, the, this isn't, just to be clear, this isn't an agreement. It's a memo of understanding. It's a business document and memos of understanding less than half the time advance to an agreement. I think this agreement or this understanding. Never gets to an agreement. First off, they talk about the cessation of all hostilities in Lebanon, yet Hezbollah nor Israel are signatories to this thing. There's no incentive for Iran to actually come to any sort of agreement. All they, they have accomplished what they needed. They have basically given the president his symbolic out, so he can try and declare victory and leave. He's left, he's gone. And the notion that they're going

• 19:43Scott Galloway?

  to go back if they misbehave in 30, 60, or 90 days with military action is just not realistic, given the absolute lack of support in the upcoming midterms. What you're going to see here is Iran will operate within two goalposts, and that is, they are still going to try and exert enough pressure to show the world they have their boot on the carotid artery of the global economy, and they control the Strait of Hormuz, and will leverage that for political and financial advantage. That, to me, is clear. At the same time, they won't be so aggressive that we have no choice but to go in again, which is, that gives them a huge berth. But this is, Iran emerges from this much stronger than we went in. We have given them a nuclear weapon in the form of their ability to now

• 20:28Scott Galloway?

  control and influence the Strait of Hormuz. And the only, the political takeaway domestically is the following: J.D. Vance will not be president. There is going to be no way he can escape this. The president is hanging this anchor around him. It's as if he sent a mob and a noose for him politically. And I've said all along that neither Vance nor Rubio are going to be the nominees from the Republican Party, because what history tells us about Donald Trump is that he is the equivalent of political Chernobyl, and that anyone close to him dies of leukemia. He doesn't give a shit about J.D. Vance. He gives a shit about having a fall guy when he knows this is a disastrous agreement.

• 21:09Scott Galloway?

  And I think J.D. Vance shows a total lack of political savvy. Anyone here from Secretary Hagseth? He's like, oh, no, no, no, J.D., you take it. You take it. I don't, I don't want anywhere near this. This is, I mean, there's just, it's as comical that they're even calling this some sort of agreement. It, and no one already, already no one appears to be living up to it. Also, just the 300 billion reconstruction fund, the way I read that, and I'm curious to get your take, is that essentially Kushner and Whitkoff have said, they see everything as a transactional business opportunity. They've said, you know what? Iran's a huge economy, 80 million people. We want to build the next

• 21:51Scott Galloway?

  St. Regis there. We'll go in, we'll raise money. This is a huge opportunity to go in and invest alongside of Hal Burton, or Exxon, or Chevron. This is an opportunity to make money. Their only frame of thinking is like hotels and resorts. Yeah, how do we make money? That's the only way they see it. So I would imagine at some point, they said, you know, we're going to raise money out of the Gulf, and investors, and Jared and Whitkoff are going to raise a fund to invest in Iran. And guys, wink, wink, let's get along, let's make money, let's make money together, guys. You're reasonable people. Have you seen what he said about the IRGC, that some of them are rational people? I mean, this is, he sees everything, it's like he's the buyer and the seller, and he thinks if he wills the car dealership into selling

• 22:35Scott Galloway?

  him a Ferrari for the price of a Camry, that somehow they'll decide to do that. We, i.e. the president, have been so played here by the IRGC, and unfortunately, European allies, China and Russia are kind of all saying, you know what? I don't mind if this guy gets his eyebrows singed really badly, and if he loses a couple fingers, and maybe even a couple hands, because he's been such an asshole. I mean, it's just weird to think that the IRGC now has potentially more support. And then the wild card here is Israel. Israel, Netanyahu is on record for decades saying, if given the opportunity, he is going to eliminate.

• 23:18Scott Galloway?

  What he perceives as Israel's enemies and their proxies. They're the wild card here because I'm not sure Trump has as much authority or power over Netanyahu as he would like to believe. And notice they were not Netanyahu was not shown the quote unquote memo because I thought he was worried he was going to front run it and say, no, this isn't going to happen. We're not going to cooperate.

• 23:40Ed Elson?

  Yeah, exactly. So many wild cards in here, including Israel, including also if this deal is branded as a disaster, which I believe it already is, then you could probably see Trump just going back on it because all he really wants at this point is to just save his skin and probably to save himself for the midterms. Because that's really, I think it's likely that that's this is what this is all about. His approval ratings are tanking, inflation's going up. Everyone knows that this is a disaster, so he needs to save face in some way, shape or form. And if everyone believes that this wasn't a success, then he hasn't really accomplished his objective. So maybe he'll just blow it up again, as he's done multiple times in the past.

• 24:23Ed Elson?

  In terms of the economic takeaways, why should investors care about this? Again, this all goes back to inflation and as a result, interest rates and the probability of rate hikes. I mean, if your belief is that we have a deal and therefore inflation is going to come down, I would just encourage you to just reconsider that belief. I just don't think that you can really say with any level of confidence or certainty or optimism that we have a deal here and that we're going to see oil prices coming down significantly materially and that ultimately that is going to mean that inflation is going to come down and therefore that we won't have to raise rates. I mean, the Federal Reserve meeting was literally unanimous for the first time ever.

• 25:07Ed Elson?

  It was the first time that we didn't see anyone advocating for a cut. And now the probability of a rate hike in 2026 has gone up to more than 50%. So the likelihood is yes, we will have rate hikes. And I think if we learned anything from the Federal Reserve, it's that we know now that they are very worried about inflation. And I just, I think maybe this can slightly reduce your concerns about inflation, but I don't think it can eliminate them. And I certainly don't think that this changes the path forward for the Fed in any significant way. So those are the economic takeaways, in my view. We'll see, but I think we should expect rate hikes in 2026.

• 25:47Ed 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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• 27:36Ed Elson?

  We're back with Prof G Markets. As the two biggest AI companies prepare to go public, investors are getting a look at the numbers behind the hype. Last week, leaked financial statements revealed that OpenAI lost $39 billion in 2025, raising questions about how long the company can sustain its current level of spending. Anthropic meanwhile appears to be on a different trajectory. According to reporting from the Wall Street Journal, the company expects revenue to surge one hundred and thirty percent year over year to ten point nine billion dollars in the second quarter. And supposedly it is on track to generate its first operating profit, but because both companies remain private, we still have only a partial picture

• 28:18Ed Elson?

  of their finances. So we wanted to fill in some of the blanks in this section. So Scott,

• 28:26Ed Elson?

  there's a lot of nuance to these numbers, especially the numbers that I just mentioned in this intro. And I think it's really essential for two of the most important and significant IPOs in history, OpenAI and Anthropic, which are coming out of the pipeline this year. I think it's essential for us to have an understanding of how profitable or unprofitable these companies actually are. And in a lot of the discourse, what I'm getting a sense of is that people have a lot of opinions about OpenAI or Anthropic. But no one really seems to have an actual understanding of their profitability and how much money they are making and how much money they are losing and spending.

• 29:08Ed Elson?

  So I wanted to just start here with like a demystification of what's really going on. And I'm going to start with OpenAI's financials. So those financials were leaked and we had a conversation with Ed Zitron, who leaked them earlier in the week. And it gave us a picture into OpenAI's financials in twenty twenty five, and it was independently verified by multiple sources, including the Financial Times. So let's just go through them. So thirteen billion dollars in revenue in twenty twenty five, up two hundred forty percent. That is significant. That's a big deal. They lost thirty eight and a half billion dollars. That was the net loss. That's a big number, very scary, very bad.

• 29:51Ed Elson?

  But there is some nuance in there because that was reflective of multiple things like stock-based compensation. And then also supposedly this one-off charge that they had to pay during their reorg from nonprofit to for-profit. There's some debate on this, so. It's a little bit unclear. We'll return to that in a moment, but let's just focus on what we know about their operating profitability because we actually do have clarity on that now. And that is meaningful. So just as a reminder for our listeners on what operating profitability actually is. This is basically the amount of money that you're either making or losing from your day to day operations. So it doesn't include your capital expenditures.

• 30:33Ed Elson?

  In the case of OpenAI, it wouldn't include how much they're spending on building like the Stargate data center. So this is like what the business looks out, looks like day to day. Let's just break down what the line items are in the operating profit. So how much are they spending on general and administrative? That's the first line item. This is mostly how much they're paying their employees. It was 1.6 billion dollars in 2025. Sales and marketing expenses, 5.7 billion dollars, staggering number. I'm sure you have some thoughts. Costs of revenue, this is basically the cost of delivering the product. I see this as inference costs. How much are you paying for compute when your users are asking chat GPT questions? Seven and a half billion dollars, staggering number.

• 31:17Ed Elson?

  Finally, research and development, this is training costs. This is how much you're paying to compute providers when your engineers are basically training, training your models. The number was 19 billion dollars. So their total operating costs and expenses in 2025 was 34 billion dollars. That's on 13 billion in revenue, which means their total operating loss, and this is the most important number, was 21 billion dollars in 2025. That's how much they lost on day to day operations. There's a lot of debate on this, but that I can tell you with a, with a high degree of certainty. I want to get your reactions and then we can maybe keep going and digging into these numbers.

• 32:01Scott Galloway?

  The weird thing is, I don't think it matters anymore. I think that, I think what matters more is, well, one.

• 32:12Scott Galloway?

  SpaceX, the SpaceX IPO has been such a, I don't know what the term is. It's been such a spectacle. It's been so incredible in terms of the valuation and the fact that it, I think it's up 30 or 40% since then. It's come back a little bit, but it's still just remarkable that every person at OpenAI and Anthropic is calling whoever was the lead banker at SpaceX and saying, can you manufacture the same scarcity and cadence of lockups? And they're all trying to take a note out of SpaceX's book, right? And I think operating losses to a certain extent have become moot. It's manufactured scarcity, it's growth, and which SpaceX doesn't have, but more than anything, it's

• 32:56Scott Galloway?

  an ability to articulate an infinite TAM or a total addressable market. Also, I think it's a race to see who gets there first because the valuation of Anthropic and OpenAI, whatever their valuations would have been if they'd gone after SpaceX, are up 20 to 50% because the most exciting thing from an investor relations standpoint, or from the bankers who are going to market this, is that, well, if you thought SpaceX was a great deal and it popped 40%, what if I told you I had a company that was growing 10 times as fast and is only 40x revenues? Welcome to OpenAI or Anthropic. The bigger

• 33:35Scott Galloway?

  problem right now for OpenAI versus Anthropic is that what you're seeing, I've had some dialogue with different CEOs of companies talking about AI and their investments in AI, and what you're seeing is what I call a blame the model narrative right now. And that is, a lot of companies are waking up and saying, Jesus Christ, I'm spending all this money on AI. And they're putting pressure on their CFOs and some of their managers to show a return. And so what a lot of them are doing is swapping out OpenAI for Anthropic. Because they think, oh, it's a model problem. It's not. I mean, I think Anthropic's great, but you have a lot of blame the model, which is disadvantaging OpenAI and Anthropic.

• 34:19Scott Galloway?

  And I think what you're going to see as the numbers come out is not only is Anthropic operating at greater fiscal discipline, it's still a money furnace, but it's, you know, it's an oven as opposed to the volcano that the incinerator OpenAI is. But I don't even think that that's what the market's going to be focused on. I think the market's going to be focused on to Anthropic's advantage, that Anthropic will reflect more momentum upwards. But the fact that these companies are a money furnace, I don't know. I think they're going to be able to position it as if you have a company like SpaceX out there with $2.5 trillion market cap and they need at some point, it's basically, it's got one great business, right? It's got the Starlink business.

• 35:02Scott Galloway?

  That's a, it's a great business, but it's, you know, a relatively smallish business. It's got a sexy business, the rocket business, which is an even smaller business. And then it's got a money furnace. They're smart. They just brought Bod Cursor, which is a real business. But if I were marketing OpenAI or Anthropic, I'd say, you know, at the end of the day, there's a debt, there's a floor on this of, say, 300 or 400 billion, because why wouldn't Musk come in and buy this thing if, if things got rough? And overnight, BV, you know, at some point, he's going to have to backfill these expectations. So it's almost as if cash flows, at least for the next couple of years, don't appear to have much, much importance.

• 35:46Scott Galloway?

  Growth, shockingly, had less impact on the SpaceX IPO. It's total adjustable market, which I think both OpenAI and Anthropic are going to be able to have all sorts of pictures of every person in the world losing their job to, to AI and everything being run by AI. And then. What they'll also, I think, be able to say is, Jesus Christ, these are value stocks at these valuations. We're going out at 40 or 50 times revenues, which is a value stock compared to what else, compared to the thing you just bought shares in. So I think the money furnace that there is OpenAI is less important than we might think.

• 36:25Ed Elson?

  Yeah, I think, I think it's definitely possible that that could be true when these companies go out. And that'll be really interesting to see, to test the markets. Do investors care about the thing that honestly only matters, the only thing that really matters in investing, which is profitability? I mean, maybe I'm like a boomer at heart for thinking that, but that's basically what the whole game is all about. But the question is, can they paper over that giant wound in the business with something else? And I think to your point, SpaceX has been a success story, and they've employed very interesting and very honestly smart tactics to do that. One thing that you mentioned was this tiny flow, the fact that 4% of the shares are publicly traded,

• 37:07Ed Elson?

  which basically means that the stock can be pumped by its super fans, by the retail investors to a big degree. And that is exactly what we're seeing right now. To be clear, as the lockups expire, I still think that this stock is going to get crushed over the long term. I think in six to 12 months, you're going to see huge amounts of selling of the stock because people are going to realize they need to take their winnings and use it to buy something like a house or a cool apartment, whatever it may be. You also mentioned the total addressable market, the fact that SpaceX said that the TAM is $28 trillion, which is more than the GDP of every nation on earth except for America. And by the way, 26 trillion of that was attributable to AI, which means that technically,

• 37:50Ed Elson?

  OpenAI and Anthropic could play the same game. They could say, oh, our TAM is the GDP of America because we're in AI. There's all this excitement and such a huge opportunity here. But, and so they could recreate that. The thing they can't recreate Is the cult of personality this Elon Musk? And I think that is a big reason why SpaceX has been as successful as it has been going out in this IPO. And that is there is a huge cult following around Elon Musk, around his track record of making people rich in the form of Tesla, his 240 million followers on Twitter, the

• 38:31Ed Elson?

  fact that he is this, you know, Jamie Dimon is calling him the Edison of our time. Whether or not you agree with him, that's what people are saying about him. And that's not something that Sam Altman and Dario Hamaday can really do. They don't have that level of cultic following, nor do they have the storytelling ability that Elon Musk has and has demonstrated to have had in his long tenure of being a public company CEO of both Tesla and now SpaceX. So I think that eventually the profitability problem is gonna have to matter. And I just want to dispel some myths that are going on about OpenAI right now.

• 39:16Ed Elson?

  Because when those financials came out, as I said, there was this net loss of $38.5 billion. But in the Financial Times reporting, they talked to someone who was, quote, "familiar with the matter." And that person said that that number doesn't make sense, or that it isn't real, because $30 billion of that net loss was attributable to this one-off charge from when they went to a for-profit. And so supposedly, the more accurate net loss that is going to be recurring for OpenAI was $8 billion. And that is the number that all of the AI boosters are clinging to right now. They're saying, "It's not that bad. It was only $8 billion. The Ed Zitron financials are fake. Like, this is not that big of a deal."

• 39:59Ed Elson?

  But I just want to bring us back to, again, what happened, what we know about the operating profitability. And that is, we know that the operating losses were $21 billion, negative. Those losses are not massageable. You can't bullshit out of those. Those are the actual losses. And so my takeaway here is that someone is lying. Either it's the Financial Times who is lying about what we saw on the income statement, or Ed Zitron who's lying about those financials, which were independently verified by those journalists, or someone who is familiar with the matter is lying about what the profitability actually

• 40:40Ed Elson?

  looks like. Either way, this stuff is getting very shady, very weird. There's a lot of murkiness, and I think eventually investors are going to have to care. Because eventually, the entire business model of AI is going to be called into question, and more and more people are asking themselves, does this business actually make sense? OpenAI is reducing their prices because they need to compete with those Chinese models that we've talked about, which means that their margins, negative margins, are only going to get even wider. So I do think that eventually it becomes a problem, but to your point, maybe in the first few weeks of trading, it doesn't matter to people. But if you're a long-term investor, I don't know, I think eventually you have to care about this.

• 41:24Scott Galloway?

  Well, here's your flaw. You're speaking rationally, Ed. And yeah, I mean, let's forget what companies are supposed to do. Companies are supposed to gather inputs and use culture, IP, plant property and equipment to produce an output that they can sell more for the cost of the inputs. That's called profitability and cash flow. And when you buy a share of stock, you're buying an ownership in that cash flow. And growth companies, which have dominated the market, have done so because they've been able to say, if you give us enough capital, we can use that cheap capital to pull the future forward or make acquisitions. And ultimately, we end up with, especially in a digital economy, these just cash volcanoes

• 42:05Scott Galloway?

  of high-margin revenues and basically, you know, are essentially monopolies in the form of toll booths on, you know, the global citizens or West's daily life. These companies, everyone's looking for the next one. At some point, you know, you find out that, okay, if this company can't produce profits, at some point, it's either an acquisition target, or it has IP value, or it's a trophy asset, or something like that. But I generally believe we have made the jump to hyperspace right now, and it feels like 1999, where as long as it's a hot area, either space or AI, I think you could price these things at a ridiculous number, and I'm predicting a pop on day one. I just think retail investors have thrown in the towel.

• 42:50Scott Galloway?

  And institutional investors have said, yeah, it's not an investment, it's a trade. But why wouldn't we get in on the trade? As long as the getting is good. But that never ends well. Right, unless you get out before it ends. Right. And that is, I don't think people, I would bet a lot of institutional, I mean, maybe there's some institutional players looking to hold these things for 10 years. But at a minimum, I don't care what the price is. If I get allocation and OpenAI or Anthropic, I'm going to take everything I can. And after the end of the first day, I'm going to look at it, the end of the second day, the end of the fifth day, I'm going to look at it. I think it would be very difficult for any of these companies to sustain their current valuations unless it ends up that,

• 43:34Scott Galloway?

  you know, 40% of American jobs go away and it's all replaced by tokens and AI. And data centers in space, it ends up, I'm wrong. And that every person I know that knows fuck all about physics, who's told me this is literally impossible, what they're, they're explaining in their S1 or, or in their, in their prospectus. Until then, this is a trade, but it's a trade that's working out for everybody. So it keeps attracting more capital. But you're talking about long-term rational valuations and cash flow. We are in, we are in a different era right now. And I'm officially saying this is 99.

• 44:11Scott Galloway?

  In 99, you could sell, you could sell $30 worth of dog food or $70, it costs $60 to ship. But if you sold it for 1995, the internet, the total adjustable market of internet commerce was so huge that you would bid up Pets.com. You would bid up these ridiculously stupid companies that made no sense, that were going, losing more money as they grew, that had negative margins. At least these companies in most instances have positive margins. These are great companies that won't collapse the way they did in the dot com era. But they could easily, easily, if, I mean, like Barry Ritholtz said.

• 44:49Scott Galloway?

  If SpaceX declines by 80%, in absence of knowing where it was, you wouldn't look at it at 500 billion and think that it's cheap. You'd think that it was expensive. So I think, look, if you get out my, I've had a bunch of people calling me saying, should I get allocation or should I sell? And the people who call me and say, should I sell? I'm like, yeah, wait till the first couple of trades and then sell as much as you can. And the people who think, they said, I've been offered allocation. I'm like, take it. And I think it's a trade. I think you trade out of this thing sooner rather than later. As an investment, I'm a boomer. I cannot in any way see how these companies in, sustain the growth and profitability. They're going to need to justify these valuations over the medium and the long term.

• 45:33Ed Elson?

  Yeah, it's, which is a really big statement, which I agree with. I want to return to Anthropic because Anthropic is possibly the only company in this space, the only hot company that is potentially defying this narrative, specifically because of that Wall Street Journal report that we got last month, which said that they are on track to achieve operating profitability in the June quarter. And if that is true, that is a big deal because here we have the one AI company that is supposedly profitable on an OpEx basis, if it's true. And personally, my view, I don't think that it is true. I think that this is an extreme example of the numbers being massaged

• 46:16Ed Elson?

  because if you dig into the numbers, you learn that they are, they are extrapolating based on a quarter in which they are receiving a huge discount on their compute deal with SpaceX, a discount which will literally end at the end of the June quarter, at which point they will be spending $15 billion a year on their contract with SpaceX. In other words, their compute costs are about to explode. So for them to say, we're about to reach operating profitability is sort of, it's like the profitability equivalent of, of bullshitting your ARR, I think. It's like if we were to sign some massive one-off contract with an advertiser and then we just multiplied it by 12 and we were like, look, we have this incredible ARR. We're going to keep making money like this, but of course we won't.

• 46:59Ed Elson?

  So I, when people say Anthropic is profitable, one, they're not. They said that they're trending to be in a single quarter. And two, we should treat that statement with a lot of skepticism. Having said that. From a spending perspective, Anthropic, we don't know much, but what little we do know, it appears that Anthropic has its shit together in a much bigger way than OpenAI. And we did a little bit of analysis on this. According to a Wall Street Journal report, Anthropic's compute costs last year were $7 billion. However, the Wall Street Journal had also gotten that wrong in that same report about OpenAI. They were off by about 60%.

• 47:42Ed Elson?

  Now that we know what OpenAI's real financials are. So let's assume the same thing was true of Anthropic. That means their compute costs were about $11 billion last year. That is an estimate. Then you add in some of the sales and marketing costs, which would be a lot smaller than OpenAI's. Also, the employee compensation, big, big point here. Anthropic has about half the number of employees as OpenAI does. Our estimate is that Anthropic's costs came out last year to just under $16 billion, which would mean, given their revenues, that they lost $11 billion in 2025. That's a lot, but it's half as much as OpenAI.

• 48:21Ed Elson?

  So I think if Anthropic, they say they've got $47 billion ARR right now. If they actually hit that number, if they actually generate that much revenue, and if they can not let their costs grow by 200%, they have a path to profitability, I think. But that's a lot of ifs, a lot of stuff up in the air. That's where I land on this. I think that it's possible for this business model to work, but I think that you have to be crazy, crazy strict about your spending and about managing your costs, something that I think Anthropic has somewhat

• 48:59Ed Elson?

  of an interest in doing, but OpenAI doesn't at all. So OpenAI, to me, trade. Anthropic, potentially a real investment.

• 49:08Scott Galloway?

  Yeah. And also, I do believe that if these companies wanted, they could be profitable right away. If they priced, there is, there are a lot of users who would pay a lot more money for these, these models. And I think they could cut a lot of costs and investments. And I do think that costs with scale will come down dramatically. The problem is, that business is a great business worth 30 or 50 billion, not worth 500 billion or a trillion. So they have to kind of spend against a future that they're predicting to justify these valuations. But these are businesses, I do believe, that could be profitable sooner rather than later. They just wouldn't be able to sustain, you know, what is it? Anthropic

• 49:49Scott Galloway?

  is growing 5X a year. So again, the market, not even the market, valuations are the tail that wags the dog. What is wagging the dog right now? Getting JP Morgan and Goldman Sachs through soft and hard lockups and a low float to create manufactured scarcity, a vision of a total adjustable market that is just so enormous that it's impossible for anyone to calculate where your potential market size is. And then, you know, a spokesperson who is just commanding a ton of attention. And I think these companies, they should all send a thank you note, you know, wine and roses to Elon Musk because these companies

• 50:31Scott Galloway?

  are going to look cheap by comparison. And it's going to create, I think it's going to create, I used to think, well, we're going to run out of money to invest in these guys because Musk is soaking up all the capital and Alphabet preempting a cutting line. I've now gone, no, everyone is drunk on this and is going to pile into these things. And they're going to, they're going to pull back. I wouldn't be surprised if they pull back the numbers of shares that are offering, that they try and implement some of those tactics, the soft lockups with retail investors or what have you. But you can bet, you know, the CFOs of OpenAI and Anthropic are saying, can we speak to the bankers at JP Morgan and Goldman and how they've managed to float here and what they, how they marketed this and?

• 51:16Ed Elson?

  And they'll say, come on in, because this is hundreds of millions of dollars of fees. And I worked with SpaceX and we said that revenues would grow 100X by 2030. None of us knew what we were talking about, but it didn't matter because we cashed out. So 100% agreed on that.

• 51:31Scott Galloway?

  We'll see. In the meantime, I'm using AI models to try and predict what are the cost of Team Scotland tickets if they're get into the quarterfinals. It's not pretty. It's not pretty.

• 51:43Ed Elson?

  If that happens, we need to do a live podcast in the stadium.

• 51:49Scott Galloway?

  If we do that, we're going.

• 51:50Ed Elson?

  Yes.

• 51:50Scott Galloway?

  If we do that, we're going.

• 51:51Ed Elson?

  Yep. Okay. I'm very excited about that. Now I might be Team Scotland.

• 51:57Ed Elson?

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

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• 53:47Ed Elson?

  We're back with Profi Markets. Snap is making its biggest product bet in years, but it may be a giant thud. Last week, the company unveiled its new augmented reality glasses, the Snap Specs. CEO Evan Spiegel has described the launch as a crucible moment for the company. Investors were less than impressed. Shares fell nearly eight percent following the announcement. One of the main concerns for investors is the price. Snap specs will retail for roughly $2,200, which is nearly three times the cost of Meta's competing smart glasses. So Scott, these new smart specs, snap specs, excuse me, have been released.

• 54:31Ed Elson?

  I'd love to just play this clip of Evan, the CEO, getting interviewed on CNBC unveiling his new snap specs.

• 54:40Speaker 14

  You're wearing your new specs which you just unveiled. They cost $2,195. The stock's down more than 5%. How do you address investor concerns about the potential market for these?

• 54:55Speaker 15

  Well, Julia, thanks so much for joining us here at AWE. It's been such an exciting day for the company and something we've been working towards for more than 12 years now. To really bring computing into the world and make it more human.

• 55:05Ed Elson?

  Are you buying, Scott?

• 55:06Scott Galloway?

  When I saw him put on those glasses, I thought this, I thought for the first time in my, you know, ever, I thought I am much cooler than Evan Spiegel.

• 55:18Scott Galloway?

  Like, I think I could pull at a bar more easily than Evan Spiegel with those things on. If he wore those things, I think it's an even race.

• 55:28Scott Galloway?

  Like, they launched specs in 2016 at $150, or it was $130, and nobody bought them, so they decided the solution was obviously to launch $2,200 glasses that look even more stupid. This is the bottom line. This is the beginning of the end of Snap as a hardware company. And on a larger level, what this reflects is the danger of dual-class shareholder stocks, because Snap's stock is off 90% in the last five years, while the S and P has been up 80%. Evan Spiegel and his fever dreams of being Apple.

• 56:09Scott Galloway?

  You know, instead it's Zune has cost his shareholders an absolute ton of money. And this is the tragedy. You know, Snap is actually, the core business is actually pretty good. If they, I mean, if essentially Meta came in with this fever dream also of wearables, but they can lose $60 billion and it's a speed bump. Snap cannot. Cook can waste a billion dollars trying to have an option to see if in fact Zuckerberg was crazy genius with his mixed reality headset. Kill it, it doesn't even show up in the earnings. Snap has spent $3.5 billion in augmented reality since 2014.

• 56:53Scott Galloway?

  The stock's down 17% since it unveiled the glasses, erasing $1.5 billion in market value. And essentially-

• 57:02Ed Elson?

  It's a hilariously small number. Just shows you how not valuable this company is.

• 57:08Scott Galloway?

  This is the problem and it's the perfect activist play. But as an activist who was stupid enough to go into dual class shareholder companies with people who are not business people as the people controlling the business, you're just in the backseat as someone drunk has their hands on the wheel and there's nothing you can do. You can, you can scream, slow down, but they've got the radio blasted and they're, they're doing shots of Jack with their hands on the wheel. They just don't give a shit what you think. Because if you look at the core business, Snap has a young engaged user base, nearly half a billion daily users. Four fifths are under the age of 35. That's an advertiser's dream compared to Meta where it's 43%.

• 57:53Scott Galloway?

  And American Snapchatters open the app, and I can testify to this as the father of teenagers, 30 times per day. Investors value Meta's daily users at $400 each. Investors value Snap's daily users at $16 each because the CEO is fucking crazy, is out of his mind and has an obsession, has a meth addiction, a crack addiction to burning capital on prophylactics cosplaying a wearable. So I know some people on this board. Act like fucking fiduciaries. Either spin the specs company or shit can it? And focus on what is Snap's core asset?

• 58:37Scott Galloway?

  And the fact is that it's a great messaging platform with one of the most attractive user bases. This stock is at four bucks or five bucks, 90% value destruction. It's easily a $20 or a $30 stock. If they get this guy's lips off of the crack pipe of believing he's Steve Jobs and can come up with the next iPhone. They're subscale. They don't have the capital. He think, the guy went to design school. This is where he spends all his time and money. And he's the controlling shareholder here. And he's already a billionaire married to a model. Does he give a flying fuck what your stock price is? And that's the problem.

• 59:18Scott Galloway?

  So this is, this is the problem with dual class shareholder companies. Is you can be rational and it doesn't matter. They're in charge.

• 59:30Ed Elson?

  Yeah, I just wanna, the dual class shareholder point is a really important one. I just wanna make sure we're all on the same page about it. What this means, and this used to not be a thing. And in the last two decades ish, basically starting with Google, it became a thing. It means that there are two classes of stock. One of them has a lot fewer votes and the other has a lot more votes. And essentially what happens with these dual class share companies is that the founders give themselves all of this, all of the stock that has more votes, basically giving them more voting power. That's the case for a lot of companies, Google, Meta, plenty of them.

• 1:00:14Ed Elson?

  Snap is that times a million because they have three classes of stock. There's class A, which is the shares that you can buy as a retail investors, the publicly traded shares. They have no voting rights whatsoever. You don't get any vote. Class B, you get one vote. Class C, you get 10 votes. Evan and his co-founder are the only people in the world who own Class C, which means that him and his co-founder together control 99% of the voting power in this company. Evan personally controls 53% of the voting power, which basically means that he controls the company. No matter how many shares other people go out and try to buy, no matter if an activist investor tries to come in

• 1:00:58Ed Elson?

  and steer the ship in the right direction. And also, by the way, you mentioned the board should get their act together. What are they supposed to do? They can't fire him. He's the only guy who can make the real decisions about what the company does. And I think it's such an important point because the dual-class stock has become such a popular thing over the last few years. More than 40% of tech companies that went public last year went public with dual-class stock. In the 90s, that number was less than 10%. This is one of the sexiest things in terms of corporate governance right now is issuing two classes of stock and giving the founder, the founder CEO, all of the power. And usually it's worked out. It worked out for Meta, it worked out for Google. But to your point, this is the perfect example

• 1:01:42Ed Elson?

  of dual-class stock going in the wrong direction. My friend Alex Heath had the best quote. He said, "This is founder mode gone wrong", which I think is 100% true. This guy, clearly investors, shareholders have lost their faith in him. But there's nothing you can do about it because he's in charge.

• 1:02:01Scott Galloway?

  I never missed a chance to tell a story that I think makes me seem more important than I am. You asked what the board members should do. They should do what I did on the board of the New York Times. And that is be such a fucking pain in the ass. Eventually they kick you off of the board. I can tell you, Arthur Sulzberger was so happy and to finally kick me off the board because every time he showed up to a board meeting, he knew that asshole was going to be there asking him questions like, "What the fuck are we thinking owning 17% of the Boston Reds? Why do we own about.com?"

• 1:02:35Scott Galloway?

  Snap board members, you should be making Evan's life fucking miserable every three months. You're supposed, he has made the lives of your shareholders who you are supposed to represent. He has made their lives miserable. He needs to feel that every 90 days. What are the chances? This Sunday night, I've been invited to a party hosted by Evan and I've RSVP'd. Yes. What is the chance that that invitation is withdrawn? Let's create a thing on Calci right now because the board members will be there. And guess what, board members? You are not doing your fucking job unless you make that guy's life miserable during

• 1:03:20Scott Galloway?

  the board meeting every 90 days because the people you represent are miserable.

• 1:03:26Ed Elson?

  Yes.

• 1:03:27Scott Galloway?

  What do you think? Do you think I'm in my room Sunday night ordering room service? True story. True story. What do you think?

• 1:03:34Ed Elson?

  You shippost a lot of people and they seem to continue to keep coming back to you. I think, I think you still get that invite. I'll just put the caveat out there. We're criticizing Evan Spiegel. We're criticizing his strategy because you and I both think that it's a bad one. I, from what I understand about the guy, I like the guy. I actually think he's, seems like a really nice.

• 1:03:52Scott Galloway?

  He's very likable. He's a lovely young man.

• 1:03:54Ed Elson?

  There we go.

• 1:03:55Scott Galloway?

  Yeah, he's, he's a lovely young man, but so are you. So are you, but if you have your head up your ass and lose 90% of shareholders money, you deserve to be fired. I mean, it's not about whether he's loved. Here's the bottom.

• 1:04:08Ed Elson?

  I'm just trying to get your invite back. That's all I'm doing.

• 1:04:12Scott Galloway?

  Humans, we're going to be at the Hotel de Cap on Sunday night. The guy's a billionaire. He's handsome. He's married to a model. Does he care that some hedge fund manager managing the Wisconsin Public Retirement Fund is down 90%?

• 1:04:25Ed Elson?

  Surprisingly important point.

• 1:04:27Scott Galloway?

  Does he give a shit? He's a billionaire in the Cote d'Azur, surrounded by people who will kiss his ass and tell him that the glasses are great. I tried them last night. Oh my God. This, this thing is literally, this, these glasses are a steaming pile of shit. It is so ridiculous that these things, it's like, it, these things made Tim Cook with that mixed reality headset look cool. He looked like he had game with that thing on.

• 1:04:59Ed Elson?

  Yeah.

• 1:05:00Scott Galloway?

  Anyway, I'll see you Sunday, Evan.

• 1:05:04Ed Elson?

  Final point here, Snap has a market cap of $8 billion. It's less valuable than Domino's Pizza. It's roughly as valuable as the Gap. I mean, compared to like SpaceX just bought Cursor for $60 billion. $8 billion, this is chump change, meaning this is a very acquirable company. I think that I would, I would be shocked if companies aren't looking at that market cap and thinking, let's go in and make an offer, acquire the audience, acquire maybe some of the hardware and some of the wearables tech if we're interested in it. And Claire made this, Claire, our producer Claire Miller, we were thinking, who, who might be the acquirer? And she suggested a company that actually I totally agree with. I think this will probably happen. OpenAI.

• 1:05:49Ed Elson?

  OpenAI loves spending money on stupid bullshit. They've acquired 18 companies so far. If they're trying to build this wearables device with Johnny Ive, Evan Spiegel's gotten halfway there with his 132 gram pair of glasses that weighs as much as a baseball. Maybe they can get to the finish line with, with, with Snap. So I think that this is going to be an interesting story. Is Snap going to be acquired? Will it be activist investment or interest? I think certainly, but I could totally see OpenAI making an offer.

• 1:06:20Scott Galloway?

  An activist in a dual class shareholder company is not even peeing into the wind. It's jerking off into the wind. It is so, it is such an exercise in futility that I thought I was going to change Arthur Sulzberger's mind and get him to think rationally.

• 1:06:37Ed Elson?

  I'm sorry, I'm still on jerking.

• 1:06:39Scott Galloway?

  I just thought of that. That's pretty good, right? By the way, Team Scotland, Team Scotland. It's jerking off into the wind, you wee.

• 1:06:48Ed Elson?

  Continue your thought.

• 1:06:50Scott Galloway?

  If it's not, if it's not Haggis, it's shite. If, I'm not exaggerating, the board of Snap, okay, this stock's at four or five bucks. If he, if he announced, I'm shutting the specs division down and I'm declassifying the stock.

• 1:07:08Scott Galloway?

  It's at 20 bucks in two days. And I always like to try to bring my profanity and ability to get uninvited from things back to a personal learning. One of the most powerful words in business vocabulary is fiduciary. And fiduciary means the following, that once I have my deal, I'm getting a certain amount of money as a board member. I'm a fiduciary. I represent the interests of other people. One of the biggest honors I've ever had is twice I've been asked to be someone's executor for their estate. That is, you're a fiduciary for them after they are dead, meaning they trust you, they

• 1:07:50Scott Galloway?

  trust you 100% to represent them after they have no voice at all. That is such a, fiduciary is such a powerful word. You are representing other people's interests. And what I would remind the board of Snap is, you're supposed to be fiduciaries for all shareholders. It is such a powerful word and board members consistently forget that F-word. Anyways, that's my speech.

• 1:08:20Ed Elson?

  I love it. I think it's great. Let's take a look at the weekend. We'll see the Fed's preferred measure of inflation from the personal consumption expenditures index for May. We will also see earnings from FedEx, Carnival, Cerebrus, and Micron Technology. Not that exciting, but maybe something interesting will happen. Scott, do you have any predictions?

• 1:08:43Scott Galloway?

  God, that felt like a giant flaccid penis after everything we've been talking about. That felt like my, that felt like my sexual performance.

• 1:08:51Ed Elson?

  Bring us back, bring us back.

• 1:08:52Scott Galloway?

  That felt like my sexual performance after a few too many margaritas. Yeah. I'm so profane today.

• 1:08:59Ed Elson?

  You are.

• 1:09:00Scott Galloway?

  Jesus.

• 1:09:01Ed Elson?

  It's the Scotland in you.

• 1:09:02Scott Galloway?

  Shocking I was kicked off the board of the New York Times, isn't it? Isn't that hard to believe?

• 1:09:06Ed Elson?

  Yeah, I love that that's your advice to board members.

• 1:09:08Scott Galloway?

  Oh, my God. He couldn't wait to kick me off.

• 1:09:11Ed Elson?

  When you think about it, one of the worst pieces of advice possible.

• 1:09:14Scott Galloway?

  Go out with all, sometimes the best thing you can do is anyways, that's the problem. Ultimately, for shareholders, it's the right move. But if you're trying to be on board. You know what's gonna happen? The board, I already know it. The board members are gonna be at the Hotel de Cap, collecting their quarter of a million dollars or 500,000 dollars per year. Do the shareholders even matter? They don't even care. They don't even hear from them, those anyways. Can't wait to see you in the Cote d'Azur. Prediction? Well, look, my, something's gotta, something, anything has to happen here. And I don't know what it is. I'm gonna, I'm gonna go out on a limb here and assume that Evan has some, some responsibility and there are some sane board members

• 1:09:58Scott Galloway?

  that have the wherewithal and the gravitas and the logic and the relationship with Evan to go, Evan, we've been at this since 2016. We've been at this for 10 years, this hardware fantasy. It needs to stop. You have some obligation to your shareholders, to management here. How do they hold on to any employees? Do you realize not a single employee has made any real money there? Look at the employees. They're just waiting around to see when's the next round of 1,000 person layoffs. Who's made money there? The people at Snap, I would imagine the best and brightest at Snap have been, had tons of offers from Meta. What if you had gone to work for Meta in 2016 versus Snap?

• 1:10:40Scott Galloway?

  I'm sure there's people that have been there for a decade. They've made their 300 or 400 grand a year. If they'd taken that job at Meta, they'd be worth 30 or 40 million. Yeah. Go work for an AI company as well. I mean, at least Zuckerberg had the, no one was more all in on the, on the Metaverse and wearables than Zuckerberg. And he, even he had the foresight and the obligation to say, okay, it is time to sunset this thing. So anyways, my prediction is that there is a board member on the board of Snap that can sit Evan down and go, look, Evan. How does $20 a share sound right now? It's not that hard. You'll be a hero. We'll give this company newfound growth. It's a great company.

• 1:11:24Scott Galloway?

  You have one of the most attractive user bases in history. We don't need classes. We don't need them. You've built an amazing platform, an amazing product for advertisers that has incredible loyalty of a half a billion people who use it every day, who are literally advertisers' bullseye. Let's move, come to the light, Evan. Come to the light. My prediction is a hopeful prediction that he's going to listen to one of these board members.

• 1:11:53Ed Elson?

  Okay, I like that. I like that a lot. My prediction, I just want to end on this. I don't know if you saw Mid Journey, which is the AI image generator. They secretly were working on a hardware project, which they just announced, which is an ultrasound scanner that does all of the work of an MRI machine within 60 seconds. And they've, they've basically put all of these little ultrasound cameras around in a wheel and they use water and you step inside of this basically bathtub. And then within 60 seconds, you get a full body MRI. I mean, we'll see how legit it actually is, but from what I've seen, this thing is absolutely incredible.

• 1:12:36Ed Elson?

  Like, I'm so amazed and inspired by it. And just sort of a, kind of a general prediction. I do think that this might inspire a hardware revolution. I think that there's a lot of excitement around building in hardware. And I think that what we're about to see is that hardware is about to become the new software, where the coolest thing to be working on isn't the next AI LLM or software product, but to be working on something physical, something like this ultrasound machine, probably not wearables, probably not the snap specs, but something that you can actually touch and feel. Because this technology is really exciting. So that will be my prediction.

• 1:13:15Scott Galloway?

  I think, yeah, but I think this is your way of telling us that you're pregnant.

• 1:13:21Ed Elson?

  And I want you to know we support you.

• 1:13:24Ed Elson?

  Team Scotland. Team Scotland. Team England. Scotland. I'm not going to let you take away from that. Team England, we'll see. Both of them. And we'll record something if we get to the quarters. Team UK. This is very exciting. That's right. 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 Shalane, Isabella Kinsel, Chris Noddy, Hugh and Mia Severio. 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.

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