SpaceX Raised $111B — It Already Needs More

Ed Elson is joined by John Foley to unpack why SpaceX is looking to borrow $40 billion, what’s driving its stock, and whether he thinks the current price is justified. Then, Ronan Farrow returns to break down the rise of the annoyance economy and the legislation aimed at combating it. Finally, Ed shares his take on OpenAI’s reported breakthrough in solving some of the world’s most difficult math problems. John Foley is the head of the Lex Column at the Financial Times. Ronan Farrow is a Pulitzer-winning journalist at the New Yorker. Vote for Simply Put at the Signal Awards here Subscribe to the Prof G Markets Youtube Channel Follow Prof G Markets on Instagram Follow Ed on Instagram, X and Substack Follow Scott on Instagram 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.

• 0:01Ed Elson?

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• 0:23Ed Elson?

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• 1:21Speaker 03

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra because it's not just a superior light beer. It's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser-Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 1:55Speaker 04

  Money markets mad. If money is evil, then that building is hell.

• 2:06Ed Elson?

  Welcome to Prof G Markets. I'm Ed Elson. It is October 8th. Let's check in on yesterday's market vitals. The major indices fell from record highs as bonds sold off again. The yield on 10-year Treasuries hit a new 24-year high. It later cooled off following a 10-year note auction that drew solid demand. Meanwhile, minutes from the latest Fed meeting showed another rate hike is likely this year, though it may not come until December. And finally, Brent crude remained elevated around $101 per barrel. Okay. What else is happening? Four months ago, SpaceX raised $86 billion for its IPO. Now it's looking to borrow even more.

• 2:49Ed Elson?

  On Tuesday, the Financial Times reported that SpaceX is seeking $40 billion to buy Nvidia chips. $30 billion will come from investment-grade bonds and the other $10 billion will come from bank loans. Reportedly, the investors pitched on this deal got a two-page memo which showed pictures of outer space with an arrow pointing to data centers, quote, "somewhere in the universe." This is not the first time SpaceX has borrowed big. Less than two weeks after its IPO, SpaceX sold $25 billion worth of bonds to investors, which now trade at 85 cents on the dollar. Still, the stock has been on a tear this month. SpaceX shares are up about 12% over the past week.

• 3:32Ed Elson?

  Yesterday, the stock closed down 2%. Okay, here to break it down, we're speaking with John Foley, head of the Lex column at the Financial Times. John, thank you for joining us on Prof G Markets. So SpaceX wants to borrow $40 billion. Kind of crazy considering they raised $86 billion just four months ago. Then right after that, they issued another $25 billion worth of debt. And now they're saying, that's not enough. Now we need more. Now we need $40 billion. Let's just start with your initial reactions.

• 4:09Speaker 05

  Well, SpaceX already has quite a bit of cash on its balance sheet because it did this IPO. It raised debt shortly afterwards. It has something like $90 billion. But what Elon Musk wants to do is build, he says, 10 gigawatts worth of data centers by the end of next year. Because we measure these things in gigawatts and a gigawatt costs, very rough numbers, about $50 billion to build. So that would be $500 billion. So unsurprisingly, he needs more money with which to do that. So it's not totally surprising that he's now coming to the market and saying, can I have some more money? He absolutely needs that and much more if he's going to meet his goals of data centers on Earth, in space, or anywhere else in the universe.

• 4:46Ed Elson?

  So $500 billion, I heard that correctly, right? That's, that's how much he would need to raise in order to achieve those goals?

• 4:54Speaker 05

  Yeah, that's like taking a very rough $50 billion for a gigawatt worth of data center and his plan to build 10 gigawatts by the end of next year.

• 5:02Ed Elson?

  So I guess the question, and this seems to be reflected right now in the bond markets right now, especially the credit default swaps markets, which is like, where is the money going to come from? And this is something that we had been talking about when they first went public, which is that in order to keep up with their extraordinary costs, they're going to have to raise huge amounts of money. We're already starting to see signs of it. They raised the IPO money, then they go and issue the debt. Now they want to issue more debt. And I guess the question is like, how are they going to keep doing this? I mean, if they're not generating the profits, do they just raise half a trillion dollars worth of debt?

• 5:42Speaker 05

  So that is the very important question is how are they going to pay for all this? How are they going to, how are they going to service this debt? Of course, they do want to make profit. SpaceX is already making a profit from its connectivity business from Starlink. And the idea is supposed to be that because data centers are in such hard demand that you can get paid, you can get your investment back very quickly. So the CFO of SpaceX said quite recently that they can get payback on a data center investment in less than a year. So if that remains true, then as you're building data centers, you're also renting them out at high enough rates that you can make your money back. Of course, the question is, can you actually build them in time? What happens to the price of data centers in the kind of rental market in the meantime?

• 6:26Speaker 05

  But Musk's bet is that he can do this faster than anyone else. So while everyone is scrambling to find space in data centers, he'll be able to bring his online and he'll have no problem. This is what investors are being asked to believe in renting those data centers out at very high rates to people like Anthropic, to Google, to anyone else who needs them.

• 6:44Ed Elson?

  The idea is building data centers quickly, but also the idea is putting data centers in space. And to me, those two things seem to be completely at odds with each other. You can tell, I mean, you can see my prize. I think that this is a little bit ridiculous, but I'm just going to read you a quote from the Financial Times report. I don't think I'm being unfair when I say that this seems unserious. Here is exactly what was reported, quote, "Investors whom SpaceX has previously approached about financing its multi-billion dollar chip purchase said they only received a short two-page deal memo with pictures of outer space and an arrow pointing out that the company was going to build data centers, quote, 'somewhere in the universe.'" "How are we supposed to take that to the IC?"

• 7:27Ed Elson?

  one of the people said, referring to the in-house investment committee that approves transactions. This is just an extraordinary anecdote that that is actually the pitch on a $40 billion transaction. I mean, what was your reaction to that story?

• 7:45Speaker 05

  So to be clear, although I'm discussing all this stuff with a straight face, like if you think that SpaceX is really worth $2.3 trillion, which is where it is today, it's because you think Elon Musk is some kind of anomalous genius. And if you don't think that, you should not be in the shares because there isn't like, it would be breaking all of the rules of finance as we know them. So to, to hand out investors a two-pager with some pictures of space on is kind of wild. We're not, it's not like that is going to be the final documentation for this debt issue. I think what we're looking at here is some early communications with would-be investors that seemed very back of the cocktail napkin. That reflects the fact that Musk kind of shoots first and asks questions later or answers them later. And people give him money because he is Elon Musk.

• 8:30Speaker 05

  When they actually get to do this issue, which is, they're talking about it closing next year, there will be something a bit more concrete than that, but it will still be based on this idea that his moonshot, literally moonshot, putting, putting stuff into space, putting data centers into space is viable, which a lot of people think, a lot of scientists think it is not.

• 8:47Ed Elson?

  But it does seem to speak to this, this issue that seems to be kind of pervasive on Wall Street specifically when it comes to SpaceX, where everyone seems to be shooting completely from the hip. I mean, it's not just this two-page deal memo where they're like, we'll just, we'll just do it. We'll put data centers in space. Don't worry about it. We'll figure it out later. But we see this in a lot of the price targets from the investment banks as well. Morgan Stanley putting a price target at $300 a share. I mean, Raymond James coming out and saying that the company is actually worth $10 trillion. And my, my, my little conspiracy theory about this, which I'd like to get your reaction to, is that if they know that this company is going out to issue hundreds of billions

• 9:29Ed Elson?

  of dollars of more transactions, whether that be more equity issuance or more debt issuance, they also know that that is, those are fees that they can profit off of. And they want to be the banks to go out and help with those transactions and issue that debt, issue that equity. So it seems to me that maybe there's a little bit of a, a conflict of interest here where there's so much money in the pipeline here that they don't care about the numbers. And yeah, they'll just accept a two-pager with pictures of rocket ships and pictures of space.

• 10:02Speaker 05

  For sure. And like the whole premise of, of sell-side bank analysts' work is that you are being asked to believe that there is a Chinese wall that means that they're not writing from a place of the fees that their investment bank is going to make. Like we, you know, they say that very earnestly. If you don't believe them, then you should take all the analysis that you see from them with a pinch of salt. And as you said, these target prices are really high. When you look at how the target prices were derived, in many cases, you have, you have research notes that are dozens of pages long, but at the end of it, they extrapolate what they think revenue will be next year and slap a multiple on it, which does not, to me, seem very rigorous or, or realistic. It seems to me like a lot of them started with the answer and worked their way backwards. But there you have it, dozens of pages of information and discounted cash flows and

• 10:47Speaker 05

  whatever you like. So, so do your own homework, I guess, is the moral of that story. If you believe Musk is a genius, you're not reading that note anywhere. You're just buying the shares or whatever he tells you to pay.

• 10:57Ed Elson?

  I'm sure anyone is reading these notes, even the Bears or the Bulls. I just want to point to what's happening to the SpaceX credit default swaps, which rose to 194 basis points on Wednesday. They were trading at 110 basis points in June. So essentially what's happened here is the cost of insuring SpaceX's debt against default is suddenly getting very expensive. And the debt itself is also getting sold off as well. So it seems like. The bond markets are starting to tell a kind of a different story, which is they are very worried about the debt. What do you make of what we're seeing in those markets?

• 11:37Speaker 05

  I think they're a bit worried about the debt. So the credit default swaps are, as you said, those spreads are rising and that's because people look for something they can use to hedge against this all going wrong. The bond prices have also fallen more at the long end. So the 50-year bonds are trading at something like 85 cents on the dollar. The five-year bonds are trading much closer to, I think it's like 95 last time I looked. And that's not a sign that people are desperately worried, but it is a sign that they're aware that this company is taking on much more debt. Now, the idea is that its cash flows are also going to grow very quickly. I think its revenues expected to, again, we're back to the analysts here, but expected to quadruple by the end of 2028. If that happens, then like these debt numbers start to look less scary. But certainly, and the other thing I should point out is SpaceX

• 12:20Speaker 05

  at the moment, for whatever reason, has an investment grade rating. Were it to lose that investment grade rating from the credit agencies, then creditors would start to worry because the debt would become much, the yields would go up a long way and it would become much more risky. So we should definitely be looking at the credit worthiness of SpaceX. At the moment, the market's not sending out a distress signal, but it is saying this company's getting riskier by the minute.

• 12:43Ed Elson?

  What do you make of that investment grade rating? You said for whatever reason it has it. Do you think there are reasons it shouldn't?

• 12:50Speaker 05

  Again, much ink has been spilled by credit rating analysts to justify those investment grade ratings. They're based on the idea that he'll do a lot of what he says he's going to do. Also that Starlink is actually a pretty good business. But obviously those ratings are up for grabs, like they get reviewed. If investors don't believe the ratings, then that's a problem for the ratings agencies. So it's not in their interest to stretch credulity too far. A lot of people in these financial markets have a lot of faith in him.

• 13:17Ed Elson?

  It is true that the Starlink business and the connectivity business is a really good business and also profitable and has completely dominated that market. But it does seem as though this company isn't about Starlink and it isn't even about spaceships anymore. It's about data centers. And they spent more than $18 billion on CapEx last quarter and it's all going into these data centers. So, I mean, do you struggle, as I do, to see arguments as valid that are centered around this company being, at least the price being justified by the fact that the Starlink business is strong?

• 13:56Speaker 05

  I mean, it's not even really about data centers. If you looked at their IPO filing, they had a 23-ish trillion dollar total addressable market, of which 22 trillion was enterprise apps. And really, they don't have any enterprise apps at the moment, really, Cursor, I guess, the coding tool.

• 14:10Ed Elson?

  Right.

• 14:11Speaker 05

  Data centers are what's happening now. And data centers are actually where the revenue is. So realistically, if we want them to generate cash, renting out data centers to AI labs is not a bad way of doing it. It's just that that revenue is very early stage. So he needs to show that he can build the stuff, he can rent it out. Starlink is not the core, it's not the future of SpaceX and he's not pretending it is. I mean, the future of SpaceX is colonies on Mars. Like, that's a whole different conversation. It's not unwise of him if he thinks he can build data centers quickly to do that now and try and rent it out to people who are more desperate than he is.

• 14:45Ed Elson?

  Let's just take a look at the stock. It's up around 10% in the past month. I mean, I had a three-part prediction for SpaceX. Part one was it would explode on the IPO. Got that right. Part two is it would then get cut in half. Got that right. And part three was that it would start after that point or it would continue to slide as the lockups expired. Got that wrong. It's risen to $167 a share from its low of 108 in August. It has exploded back up to, as you say, $2.3 trillion market cap. What do you make of

• 15:26Ed Elson?

  the rise in this stock, which from what I can understand, doesn't seem to be happening on the back of much news. It seems to be mostly sentiment.

• 15:35Speaker 05

  There's been a tiny bit of news, right? There have been some launches that were quite successful. So the Starship project, like he had his first orbital flight for Starship, which is important because that's going to be key to getting lots of stuff into space and getting his spaceships back again. I'm not totally surprised that the lockups didn't have much of an effect. I know there were a lot of people who were watching this very closely, but that was pretty well telegraphed. I mean, we knew that that was coming. There's no secret about the fact that there's going to be liquidity overhang. So I think that I expected, well, I probably expected it to like you to go up and then to come down below the IPO price. What I would say is that there are a lot of people who want this to stay aloft. Like, as we've discussed, a lot of them in this call, a lot of vested

• 16:18Speaker 05

  interests in Wall Street want to see this stock continue to go up. And Elon Musk is a great generator of fees for Wall Street. So the analysts have lots of incentives to pump him up. He also has a really big fan base. Look at Tesla. Like, we, I have been arguing for so long that Tesla's valuation is not based on any real fundamentals. And yet, if I'd bet against Tesla with some periods that are exceptions, I would have lost money. So Musk just has this ability. The problem is also that others now are going to start to think that they have the same magic charms as he does and they will be wrong.

• 16:53Ed Elson?

  Do you think that the long-term trajectory of this stock will be the same as Tesla? And that is a valuation that just completely exceeds and just lives in a different world from the fundamentals? Like, do you think that the Elon premium is actually going to be enough to keep this company in the ballpark of $2 trillion?

• 17:16Speaker 05

  It all depends on a lot of things that I don't feel that I can predict with much certainty, like what's going to happen with the Optimus humanoid robot? Is it going to change the world? Is SpaceX going to merge with Tesla, which is kind of widely expected to be something that's on the menu at some point? How will Starship perform? There are all these things that like, my expertise is not knowing whether humanoid robots is going to be a $10 trillion market. But if you feel comfortable making that bet, then go for it. And clearly, there are enough people who are comfortable making that bet. The Tesla is where it is. But this is not a regular company where you're projecting earnings out for a couple of years and putting a multiple on them. This is about faith in Elon Musk and lots of people have that.

• 17:58Ed Elson?

  How much faith do you have in the actual, I guess, the price discovery here? Because you mentioned that there are a lot of vested interests, a lot of analysts that are interested in pumping it up. And also, the float remains very small. And so I guess part of the thing here is that it's hard to tell how real any of these numbers actually are and whether they are actually reflective of a market that is even liquid enough to assign a price that is actually commensurate with its value. So I guess, what do you make of the validity of the price, maybe, I would say?

• 18:37Speaker 05

  That is a really good question because that $2.3 trillion market cap is, of course, not real. There isn't $2.3 trillion worth of stock that's available to buy now on the market. And if all the stock were unlocked, would it be worth $2.3 trillion? If you tried to buy SpaceX, would you pay $2.3 trillion? Like, probably not. So that number is not... Also SpaceX, you know, it hasn't been included in some very important indices. So it's not like everyone owns it. So the actual importance of SpaceX, the amount of SpaceX that's in your portfolio without you knowing about it, is quite small. It is important though because it like sets a reference point for other kinds of IPO, for other big companies asking what they're worth. Anthropic would be a big one. OpenAI, SpaceX kind of, like

• 19:20Speaker 05

  Nvidia before, it sets this idea that a company of a certain level of importance should be worth a certain number of trillion dollars. So that's why I find myself thinking about SpaceX as a $2 trillion company, because we like round numbers and it's big. But as you say, the price discovery is not really there because this is a small free float and it's going to be a small free float for a long time.

• 19:39Ed Elson?

  John Foley is head of the Lex column at the Financial Times. John, appreciate your time.

• 19:43Speaker 05

  Thanks.

• 19:45Ed Elson?

  After the break, a look at the annoyance economy. And by the way, my newsletter, simply put, was just nominated for a Signal Award. Please go vote for it at vote.signalaward.com. It really means a lot. Type in simply put in the search bar. You'll find it and we'll also leave a link in the description to make it easier. Thank you.

• 20:11Speaker 03

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra because it's not just a superior light beer. It's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 20:40Scott Galloway?

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• 22:19Ed Elson?

  We're back with Prof G Markets. There's a name for the hidden fees, the subscriptions you can't cancel, and the hours spent on hold with customer service. It's called the annoyance economy. Americans now spend 60% more time on customer service calls than they did 20 years ago. And the groundwork collaborative, a progressive think tank, estimates that the annoyance economy costs American households at least $165 billion per year. Now states are trying to rein it in. Last week, Governor Newsom signed a bill that requires companies to make a good faith effort to connect customers with a human within 15 minutes of the request.

• 23:00Ed Elson?

  The question is whether regulation can actually fix this problem that companies are making money from. Joining us to discuss the annoyance economy and what to do about it, we're speaking with Ronan Farrow, Pulitzer winning journalist at The New Yorker. Ronan, thank you for joining us. So I saw you put out this explainer on the annoyance economy, which I just found fascinating. Let's just start with a basic question. What actually is the annoyance economy?

• 23:26Speaker 07

  Well, sadly, most of us probably know it very well, right? This is the labyrinth of phone trees and menu options and hold times. It's basically a deliberate business practice. It costs money to give service. So making it as difficult as possible to receive service, it is a business win for companies. And that's how it's viewed. That's how many of the programs that ensnare us in endless paperwork, endless menus are designed. You know, one of the examples I gave when I did a video about this was Amazon built a deliberately winding cancellation path for Amazon Prime.

• 24:08Speaker 07

  And they actually gave it the code name Iliad after Homer's poem, right? A 10 year war. And what they found was cancellations fell 14% after they launched that. And, you know, economists have looked at this. There's a Stanford economist, Neil Mahoney, who examined this. And his conclusion was a difficult cancellation process can raise a company's revenue anywhere from 14% to even up to more than 200% depending on the product. So we see this from, you know, ticketing companies are a big offender, hotels, airlines, cable and phone companies, banks, health insurance companies.

• 24:50Speaker 07

  We have probably all been there with these practices and it is not an accident and it is not just a product of limitations of resources on the company's part.

• 25:00Ed Elson?

  Yeah, that's the aspect of this that I find fascinating because, you know, obviously we've all been there. I've been there being held up, trying to make a phone call, trying to get through to customer service, trying to get anything done, interacting with a business. And I always assume when they're incompetent that it's because they are incompetent. But you're saying, no, actually it's deliberate. This is a sign of their competence because they're basically saving money because it means that they don't have to actually deal with the costs of actually fixing the problem. Talk a little bit more about how deliberate it is. And then I guess the question after that is like, is that legal?

• 25:42Ed Elson?

  Are companies allowed to make their products intentionally more difficult so that we cannot cancel subscriptions, so that we cannot get proper service that we would hope that we would would deserve?

• 25:54Speaker 07

  That question gets tested in the courts a lot. And, and I think it's important to note, you know, a lot of these are examples where it's more of an inconvenience in trying to get, you know, a consumer good or something. But it also crops up in cases with real stakes, even life or death ones. One example of this being tested in court in 2024, the Consumer Financial Protection Bureau sued Comerica. That's the bank that ran the debit card that millions of people use to get social security. And the allegation was that its vendors dropped more than 24 million calls before anyone picked up as a matter of policy.

• 26:35Speaker 07

  And, you know, we see numbers where we just know that insured Americans under 65 are delaying and skipping medical care over paperwork problems and obstacles like this in huge numbers. By some counts, up to a quarter of that population reports, you know, I just didn't get the health care because of the obstacles. There's a lot of research on this. You know, people wind up in bad situations because of these obstacles. And, and, you know, the irony is a lot of these policies, Ed, are in place on the argument that if you make it more difficult, only the people who really need the service are

• 27:17Speaker 07

  going to prevail in this Byzantine process and actually go for it. But actually, what the research shows is when you increase the barriers, it, it screens out a lot of the people who need the service most. And actually what it selects for is who has the time and money. You know, you see that with, with Medicaid, for instance, the latest federal budget, starting January 1st, low income adults on Medicaid have to document that they're working and reprove eligibility every six months instead of once a year. Food stamps are now getting the same treatment.

• 27:58Speaker 07

  So, you know, these are cases where it's, it's not screening out people who don't need it. It's screening out in a lot of cases, the sickest people.

• 28:09Ed Elson?

  It's quite a crazy to hear that the government is also engaging in this activity too. That is what you're saying, right? That, that the government is actually making it more complicated so that they presumably don't have to spend as much of the money on Medicaid, on food assistance, on these government programs. Is that the thrust of what you're saying?

• 28:29Speaker 07

  Yeah. And look, there, there are critics who allege that is the intention. That certainly seems to be what has come up in the way the legislation landed and in the process that got us to that legislation. And, and we've seen this happen at a state level before. Arkansas tried this in 2018. They made the paperwork more onerous, more difficult. 18,000 people lost Medicaid and most of them were eligible is the key thing. The Congressional Budget Office has projected, what does this look like with this new federal regime that's in place? Their projection is 5.3 million more people uninsured by 2034. And about 2.8 million of them are going to lose coverage again, not because they fail

• 29:14Speaker 07

  this work test that's been put in place, but because they just couldn't get through the paperwork to prove that eligibility.

• 29:21Ed Elson?

  So Governor Newsom is trying to take this on. He's signed this bill requiring companies to make a good faith effort to connect customers. I don't know what that would actually entail, but what do we know about this regulation? And do you think that it will work?

• 29:39Speaker 07

  Well, we're seeing a number of states move in this way, right? California, as you point out, is one of the furthest along in the last few years. They've put in place rules where an advertised price has to include every mandatory fee. Since last year in California, you have to be able to cancel the same way you signed up. So if you click to join, you have to be able to click to leave. New York City also has been on this. A new rule went into effect October 1st. There's big fines if a company doesn't allow you to cancel with a click. There's a wave of states, basically. And, and, you know, I'd also point out in courts, we're seeing more action. Amazon had to settle with the F T C.

• 30:22Speaker 07

  That was a $2.5 billion settlement. They've already sent back hundreds of millions of dollars to customers. StubHub agreed to pay $10 million in fees this April. A New York court shut down Sirius XM, having like an overly onerous cancellation maze. So we're seeing action here. The tricky thing, Ed, is federally, we're not really seeing that. The F T C did try to pass a national click to cancel rule, but it got thrown out in court on a technicality. So so far, the action here is at the state level.

• 31:00Ed Elson?

  Yeah, I was gonna say, isn't this literally the FTC's job is to prevent things like this? Like, the whole point of the FTC is consumer protection, protecting consumers in their interests against the negotiation with a business. There is a trade happening there. The FTC is supposed to protect the consumer. This is right in their wheelhouse, right?

• 31:20Speaker 07

  Yeah, and it's worth noticing that, under this administration, there has been the hollowing out of a number of consumer protection organs across the government. So it remains to be seen whether the federal government will catch up on this one. It is the FTC's job, and there's a number of other agencies that are supposed to participate in this kind of consumer protection. You know, just the track record of late has not been great on the federal side. People should challenge this. The thing that provides hope in this space is that it is a rare, truly bipartisan issue. You know, everyone agrees

• 32:01Speaker 07

  that these practices are rapacious and predatory and a problem on both sides of the aisle. So people should talk to their political representatives about that. Also, as you actually engage with these systems, you should fight back. There are all these numbers that are really interesting, some of which I put in this latest video on this subject, showing how so, so few people actually appeal and persist in the process and push back when they get an outcome they don't like. When you're in that phone tree, when you're in that hold time, when you're in that menu system, when you get the paperwork, people don't keep going. And then, when they get dinged, they just leave it be. But the numbers also show that for the small subset

• 32:46Speaker 07

  that engage in the pushback and make themselves annoying, the customer being annoying, they really get results. One of the factoids that stuck with me was a lawsuit against United Health, alleged that 0.2% of patients appealed denied claims, so nothing. But of that 0.2, about 90% of those who did the appealing won. So it pays to be a squeaky wheel and to know the systems are set against us, but you can fight them.

• 33:18Ed Elson?

  I love this. Be as annoying as possible. Be annoying back to them if they're gonna be annoying to us.

• 33:24Speaker 07

  This is why I'm so annoying.

• 33:27Ed Elson?

  Ronan Farrow is Pulitzer-winning journalist at The New Yorker. Ronan, really appreciate it. Thank you.

• 33:32Speaker 07

  Always a pleasure.

• 33:36Ed Elson?

  OpenAI just dropped a bomb on the world of math. On Tuesday night, the AI lab published hundreds of proofs that appeared to solve many of the world's most difficult math problems. These findings spanned problems across numerous fields, including number theory and algebraic geometry. And they even claimed to have reached a breakthrough on the Riemann hypothesis, which is a Millennium Prize problem known as one of the hardest to solve. According to Alex Kontorovich, a distinguished professor of math at Rutgers University, this would have been an instant Fields Medal winner had it been accomplished by a human. Now, I want to be clear, these proofs have yet to be verified. They were essentially dumped onto the internet via GitHub,

• 34:18Ed Elson?

  so they haven't gone through any of the official processes of substantiation. And that is important, because it means that they haven't officially been solved. However, based on the reactions that I'm seeing from the mathematics community online, this does appear to be a very major breakthrough. These are problems that went unsolved for decades. And while some might criticize the way in which OpenAI tackled them, specifically drawing on existing research without proper accreditation or attribution, and also burning billions of dollars in the process, the truth is, they are pushing the boundaries of math. And if our goal is to better understand the universe, well, I don't think there's any denying at this point

• 35:03Ed Elson?

  that the company is helping to achieve that. Because I do want us to uncover the true nature of reality, and I do want to find out what is actually going on out there. And a deeper understanding of math is a fundamental building block in pursuing that goal. Having said that, this still doesn't answer the question of whether OpenAI can become a viable business. Because what we know about intellectual research is that it is very expensive and usually very unprofitable. And if you don't believe me, just go look at the income statement of any research institution. They are largely funded not with profits,

• 35:44Ed Elson?

  but with donations. That is how the scientific discovery process generally works. So if your position is that OpenAI is pushing the boundaries of research, I 100% agree, and I am excited about it. But if you also believe that that is the path to becoming a profitable business, well, then, that is where I run into problems. Because being good at math does not equate to being a good business. They are two fundamentally different pursuits that are being conflated as one and the same. So we can acknowledge the scientific accomplishments of this company, and we can recognize that they are groundbreaking. At the same time, though, we can also recognize that this is a business model that so far doesn't work.

• 36:29Ed Elson?

  The company is still immensely unprofitable, and it appears that their losses are expanding. And despite that, they are still pursuing a $1.5 trillion valuation, which would make the company twice as valuable as Walmart, while generating less than a tenth of the revenues. In sum, scientific research and enterprise business are two very different ballgames. And unless OpenAI wants to burn billions until the end of time, eventually, they're going to have to choose.

• 37:00Ed Elson?

  Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, and engineered by Benjamin Spencer. Our video editor is Brad Williams, our research team is Dan Shalan, Kristin Adonahue, and Mia Silverio, and our social producer is Jake MacPherson. Thank you for listening to Prof G Markets from Prof G Media. If you liked what you heard, give us a follow. I'm Ed Elson. Tune in tomorrow for our conversation with Cal Newport.