OpenAI’s New Content Deals + Latin America’s Most Valuable Financial Institution

Scott shares his thoughts on OpenAI’s content deal with Vox and if it means ChatGPT will now be training on this podcast’s content. Then Scott and Ed break down why Nubank’s shares have rallied so much this year, and what barriers stand in the way of it becoming a super-app. Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X 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.

• 0:00Speaker 00

  When you need to build up your team to handle the growing chaos at work, use Indeed sponsored jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs.

• 0:30Scott Galloway?

  This week's number, $8,000. That's how much a ticket from New York to London costs for a dog and its owner on Bark Air, a boutique dogs-first airline. What is the worst dog breed? There are no bad dog breeds. Okay, Chihuahua. Chihuahua. That's not a great breed.

• 0:58Scott Galloway?

  Welcome to Prof G Markets. Add a little dog humor. A little dog humor from the dog.

• 1:05Ed Elson?

  Really, really going PG now.

• 1:06Scott Galloway?

  I keep meeting these people with their kids, saying they're listening.

• 1:10Ed Elson?

  Very different vibe.

• 1:12Scott Galloway?

  Yeah, yeah. Anyways, today we're discussing OpenAI's content deal with Vox and Latin America's new top bank. Here with the news is Prof G Media Analyst and not a dog. Ed, did you grow up with dogs?

• 1:25Ed Elson?

  I did. I had one dog. I had a Border Terrier growing up.

• 1:28Scott Galloway?

  A Border Terrier. What was your Border Terrier's name?

• 1:30Ed Elson?

  His name was Leo.

• 1:31Scott Galloway?

  Leo. So first off, just a little word to the wise. Never own one dog. Dogs need to have another dog. They need a buddy.

• 1:38Ed Elson?

  Yeah, he was a, he was kind of a socially weird dog. I actually wasn't that close to him.

• 1:43Scott Galloway?

  Really? That's a, that's such a moving story of a dog and his, of a boy and his dysfunctional dog. Any more, any more heartwarming stories? Let me get this. You're not that close with your siblings and don't like your parents despite them working really hard to establish a good relationship with you. Jesus Christ. Get to the headlines, you sociopath.

• 2:03Ed Elson?

  Before that, I just want to remind listeners again, go subscribe to the new Prof G Markets feed. We're soon going to be moving this markets podcast entirely off of the Prof G Pod feed. So if you're listening on the Prof G Pod, stop what you're doing, go subscribe to the new feed, Prof G Markets. We're number one in business right now. We're top 30 in all categories. You can't miss it. Go subscribe, Prof G Markets. And with that, let's start with our weekly review of market vitals.

• 2:34Ed Elson?

  The S and P 500 fell, the dollar climbed, Bitcoin jumped, and the yield on 10-year Treasuries rose. Shifting to the headlines. Saudi Aramco has announced a more than $10 billion stock sale. Currently, just 1.5% of the company is publicly traded, and Saudi Arabia and its investment fund own the rest. This follow-on sale is one of the largest of all time. ConocoPhillips is acquiring Marathon Oil in an all-stock deal valued at $22.5 billion, including debt. That news came just a day after the shareholders of another oil company, Hess, voted to sell to Chevron for $53 billion. And finally, Salesforce reported weaker-than-expected first-quarter revenue growth of 11% from last year. That's the first time the company

• 3:18Ed Elson?

  has fallen short of revenue projections in 18 years. It also lowered its expectations for subscription sales growth for the full year, and shares plunged 20%. Scott, thoughts?

• 3:30Scott Galloway?

  The Saudi Aramco thing, it sounds basic, but it sort of indicates the broader strategy of what is the fastest-growing big economy other than India, I think. And that is, you know, here's, here's the good news. They have infinite capital. The bad news is it's running out. I think there's somewhere between 40 and 70 years of oil underneath that ocean, or that ocean of oil does run out. They're smart people. They need to transition to another economy, another type of economy. So what are they doing? They're selling a stake in their oil-based company and using it to try and fund the transition to tourism, education, technology, and other things. So I just think this makes a lot of sense for them. Any thoughts on Saudi Aramco?

• 4:10Ed Elson?

  The background context on that story is that... The Sovereign Wealth Fund has been struggling with liquidity recently. So four years ago, they had around $130 billion in cash and in cash equivalents. And now it's down to around 20 billion. So they've spent almost 90% of the pot. And now they need to go find cash somewhere else. And there are two ways to do that. One, they can borrow, which is what they have been doing. And two, they can liquidate their position in Aramco, which is, as you're saying, that's what's happening here. Here's the part I don't understand. This is all meant to fund their new investment plan. Vision 2030, the stuff that you're talking about, transitioning the economy,

• 4:50Ed Elson?

  which is projected to cost in total, not tens of billions, not hundreds of billions, but trillions of dollars. Like, it's the most capital intensive project basically in history. And just as an example, they're building this city in the desert, which we've talked about before. This city called Neom. Neom is going to have its own artificial ski resort and its own moon. Literally a moon, artificial moon made out of drones. And that project alone is going to cost half a trillion. So I'm starting to think that all of these forward looking national investment plans are at least a little bit unserious.

• 5:31Ed Elson?

  Because it just doesn't make much sense to me to be talking about building this solar powered city. It's going to cost half a trillion dollars and have a moon made out of drones. While at the same time, you're struggling with liquidity issues and then announcing this follow on offering of, wait for it, $10 billion.

• 5:47Scott Galloway?

  So just a couple of things. My father used to say that rich people live hand to mouth, just on a higher level. And wealthy people are smart and they always have their money invested. They sometimes keep some money in cash, but you want to be in the markets. You want to be fully invested. You want to be diversified. And if you get a big chunk of money and you want to put it into an ETF, you should dollar cost in in case you're investing at highs. But. Wealthy people, wealthy nations have their money at work for them, which creates situations where oftentimes they're in cash crunches or they have less liquidity than they'd like. This happens to me all the time. I have tuition payments due and I'm like, wait, I don't have any cash. So I gotta find shit to sell. And I never thought, having this level of economic security,

• 6:32Scott Galloway?

  I would still have, you know, not liquidity problems, but I have to think about this stuff and I have to look at it and say, okay, is all my stuff short term? Anyways, it does, I don't care how rich you are. There's always liquidity. You're always going to run into liquidity issues. And these guys, as rich as they are, are finding that, okay, maybe we're out a little bit over our skis or our eyes were bigger than our stomach. But I bet, you know, there's going to be a lot of debt involved. They're going to buy, you know, more glass from South Korean glass manufacturers, but some of the manufacturers will finance some of the purchases. They will start getting revenues from these companies. They will issue bonds when they build NEOM and they build this one area that they are fairly confident is going to spin off

• 7:16Scott Galloway?

  a couple billion dollars a year in taxes or resort fees or whatever. They'll be able to securitize those cash flows by borrowing money. So that's the equity component here. That's a big headline number and it's a staggering number. But that doesn't mean they need to come up with that equity capital all at once. And so much of this is out of their control because if oil goes to $300 a barrel, they're fine. They're fine. They're probably going to announce that they're spending more. But if oil goes to 15 bucks a barrel, they're going to have to scale back projects. They're going to have to cancel some projects. But to give you a scale of this stuff, you know, I think the infrastructure act was seven or 800 billion from the largest economy in the world. That's supposed to give the entire infrastructure in the United States a facelift. They have seven projects that are of that scale or greater.

• 8:01Scott Galloway?

  All of this comes down to one thing. What is the price of oil in three, five, 10 years?

• 8:05Ed Elson?

  I want to pivot to the oil. News, Canoco Phillips buying Marathon Oil.

• 8:11Scott Galloway?

  Canoco, it's Conoco.

• 8:13Ed Elson?

  Conoco.

• 8:13Scott Galloway?

  Jesus, you and your bread. It's, put that shit in the boot. Yeah. Canoco.

• 8:19Ed Elson?

  Mispronunciation aside, there's been a huge amount of consolidation in the oil and gas industry in the past year. We've covered some of these deals in the, in previous episodes, but I just want to remind you of what's happened here. Back in October, ExxonMobil agreed to buy Pioneer Natural Resources for $60 billion. That same month, Chevron agreed to buy Hess for $53 billion. Two months later, Occidental bought Crown Rock for $12 billion. And two months after that, Diamondback bought Endeavor for $26 billion. And now Conoco Phillips is buying Marathon for 22 and a half billion. What is going on here?

• 9:00Scott Galloway?

  If you let the economy just run unfettered, what happens is one company through innovation and great execution develops stronger earnings growth and investors pile into that company because it's a safer bet. They have access to cheaper capital and then they use that cheaper capital to go make acquisitions and forward leaning investments that no one else can match and they kind of run away with the show. And people like to think, well, naturally there'll be disruptors. Some of that is true, but what you end up with, with kind of unfettered capitalism with no regulatory intervention, specifically DOJ or antitrust action is you end up with the following. And that is four companies control at least 80% share in the following sectors. Drugstores, home improvements, cars, airplanes, oil, computer hardware, computer software,

• 9:46Scott Galloway?

  food retail, internet retail, medical distributors, air freight couriers, telecom, cable, satellite TV. Essentially, essentially the world is controlled by a small number of concentrated companies that have incredible advantage. And I think the fastest way to oxygenate the economy is if we were to go on a breakup Lollapalooza. And that is going to all of these industries and create fertilizer in the shit would be instead of having Google or Alphabet, you'd have search, you'd have YouTube and you'd have Google Cloud. That's three companies right there. It's just you concentrate. What happens when these companies get concentrated is you have cartel pricing power. They all kind of look at each other and raise prices equivalently.

• 10:27Scott Galloway?

  There aren't that many suitors bidding to rent labor and on, you know, wash, rinse and repeat. And the myth is that competition is self sustaining and eventually these companies get disrupted. And in some instances, that's true, but not until these companies have created a tectonic shift in capital from labor to corporations and shareholders, which again entrenches and enriches the incumbent. So, you know, triple the budget of the DOJ and the FTC and go through and oxygenate all parts of the economy and create more innovation and more taxes, more employment, more leverage on the part of labor by going in and breaking these companies up.

• 11:04Ed Elson?

  Yeah, I think, I think that's right. But to be clear, the Exxon Pioneer acquisition has been completed. I mean, it was subject to review, as you'd expect, $60 billion deal. But at the beginning of last month, Exxon announced that they closed the deal. So now we've got several other deals under review, but I don't fully see how if that's the precedent that's been set, that you could break up, I don't know, a $12 billion deal for Crown Rock. Thoughts on the Salesforce earnings? Pretty dismal for the stock, down 17%. Worst stock drop for Salesforce since, I believe, the financial crisis.

• 11:43Scott Galloway?

  Wow, it's up 21%. It's five year, it's up 41% over the last one year. It's flat. The people who look like geniuses are Elliott, who came in, and I think late 2022 or early 2023 and said, you need to get your costs in line and took the stock from 200 to about 300. And then I think they exited their position. That was like the perfect activist investment. Stock is up 50% since then, and now it has checked back because of slower growth. Did you get any color on the earnings call? Is it a function of competition? Is it a function of their customers are scaling back? What do you think's going on here?

• 12:18Ed Elson?

  I personally think that this sell off was a little unfair. I mean, yes, they missed, but these were. Very marginal misses. I mean, literally, they were a fraction of a percentage off on both metrics. What I think is going on, I think the trouble that they're having is that Wall Street is getting used to these Nvidia-like beats, as we discussed last week, where you sort of blow your expectations out of the water. And I think investors are looking at Salesforce and they're like, well, you know, you're a tech company. Why can't you be like Microsoft or Amazon or Google or Nvidia, all of which have built in these huge expectations for AI and which Salesforce hasn't really accomplished. And I think it's

• 13:00Ed Elson?

  that story, it's the AI story that investors are really looking for with Salesforce right now and which Salesforce and Marc Benioff haven't really delivered on. I think what they're overlooking, though, is just the fact that the fundamental business for Salesforce is still incredibly strong. I mean, more than $9 billion in revenue, 11% revenue growth, which apparently is a problem, but that's, you know, that's double-digit growth, one and a half billion dollars in profit. It's still a juggernaut. Is it going to take over the world with world-class gen AI? Probably not, but I don't think it has to. I don't even think it necessarily should. So, I don't know, it just feels like an over punishment.

• 13:40Scott Galloway?

  I love that. Why can't you be Nvidia? True story, Ed. I used to have a girlfriend and she would scream out during sex, why can't you be more like David Hasselhoff? And I'd be like, I don't mind you imagining other men, but David Hasselhoff?

• 13:52Ed Elson?

  We'll be right back after the break with a look at the latest news from OpenAI.

• 14:06Speaker 00

  When you need to build up your team to handle the growing chaos at work, use Indeed sponsored jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs.

• 14:40Ed Elson?

  We're back with Prof G Markets. OpenAI signed two more content licensing agreements with The Atlantic and with Vox Media. As we've discussed previously, OpenAI has been striking deals across media, most recently signing a contract with News Corp worth an estimated $250 million. Terms of the deals with The Atlantic and with Vox have not been disclosed, but we do know a few details about their arrangements. For example, Vox will allow its content to be displayed on ChatGPT, but the platform must include attribution links to the source material. Meanwhile, Vox will use OpenAI's technology to enhance its ad platform and its commerce product called the Gift Scout, which offers shopping suggestions based on a user's prompts.

• 15:22Ed Elson?

  Okay, Scott, Vox Media is our distribution partner. Genuine question, are we about to get fed into the ChatGPT LLM?

• 15:32Scott Galloway?

  I typed into ChatGPT, how do I study? And it said, I'll help you on the hard parts. So it's making penis jokes. Coincidence, Ed? Coincidence? I don't think so. I think they're crawling the dog.

• 15:42Ed Elson?

  That was good.

• 15:43Scott Galloway?

  They're crawling us. Look, I, we said, I think one of our predictions was that a lot of, I won't call them second tier, but smaller media companies would find a new incremental high margin revenue source, bidding or renting out their content or entering into exclusive or licensed deals with LLMs who are all trying to, I don't know how much of this is they need the content or they're just trying to placate these people and pretend that they're good for the entire ecosystem. It's like when Google would occasionally run ads to say, oh, we're a good partner. So, you know, no, we're not just sucking the oxygen out of the room of every media company and advertising company in the world. We advertise because you're our partners. You're our partners. And, you know, they run their fingers through their hair before they shot them in the fucking face.

• 16:24Scott Galloway?

  Look, I don't, these deals, I think if you really pull it under the hood, these deals are smaller on a top line level, but it's all gross margin revenue, right? And what'll be interesting is this'll go one of two ways. And that is as it becomes normalized, that you have to pay for the license for this content. And I'm sure that the media companies themselves will come up with their own L L Ms to detect whether or not they're crawling our podcasts. And by the way, the agreement says they are not crawling podcasts, but the, the content they own.

• 16:55Ed Elson?

  I didn't see that.

• 16:55Scott Galloway?

  Oh, no, oh, no. I would be like call them back off and say, this shit is gold.

• 17:00Ed Elson?

  Yeah.

• 17:00Scott Galloway?

  This shit is gold. You don't, you don't get to put gold in you. You don't get to have a new gold tooth without paying the dog and, and the, the Kenoko Brit on my podcast. But they're not doing that supposedly. They're just doing the content they own, which I think is like New York Magazine and all the, all the blogs they have and, you know, they produce a decent amount of content. The question is whether this sets off a bidding war for good content and creates the incremental revenue stream that all of media has been waiting for from big tech. Or if it's just going to be used to train other L L Ms that'll begin producing their own New York Magazine like content for the L L Ms to, to crawl themselves. And, and my, where I went into sort of a rabbit hole mentally was the notion that I think at some point with these voice front ends on A I that I'll be able to say, when I wake up in the morning,

• 17:45Scott Galloway?

  give me today's business news in the voice of George Carlin, but with the fact driven nature of Reuters. And I'm not going to need to go to, you know, H B O Max. I don't know where I would go for George Carlin content, but I wouldn't, I don't need to go to the Reuters side or I don't need to go to the CNN side. You know, my, my content, the analogy I would use, I was at Santa Bros yesterday and they, well, that place makes money out of everything. It's such a rip off, but, but most restaurants try to break even on the food and where they make the money on, on the alcohol. And I wonder, I mean, the ideal model with content companies are hoping for is that they break even on their actual content, but they make money off of things like, I don't know, events or, or renting their, renting and leasing their data out to L L Ms that that becomes their

• 18:30Scott Galloway?

  high margin. Because when daddy orders that third makers and ginger with his tacho a pepe and prosciutto burrata. You know, the margin on those makers and gingers that they're charging me, I think 22 bucks for, I think the drink costs 55 or 70 cents. That's how these places make money is based off of my addiction and wanting me to like me more. But I don't know. I think I could see this going one or two way. I don't know if this is a big head fake or jazz hands. It's going to just result in training these L and M's such in a year or two years, they don't need them. Or if we're at the very early days of what ultimately will be a bidding war and an increase in this very small, but high margin revenue.

• 19:06Ed Elson?

  I mean, I know that you're, I would say friends, I think with Jim Bankoff, CEO.

• 19:12Scott Galloway?

  I am. Nicest guy in media.

• 19:14Ed Elson?

  Have you ever, have you had any conversations with him about this? Not necessarily about this deal specifically, but you know, licensing deals with AI companies.

• 19:22Scott Galloway?

  So really there isn't a move that, that a big move that involves strategy or technology that Jim doesn't, that Jim makes without checking in with me first and getting the benefit of my wisdom. Everything I've said is a lie. He never, that bitch never calls me. Literally never calls me, never says, hey, what do you think about this deal with OpenAI? I mean, for God's sakes, I've got all these AI people crawling up my ass, inviting me to their headquarters to try and give talks and pay me a lot of money. So I'll say nice things about them. But Jim Bankoff doesn't call me. No, no, no, no, no. He doesn't, he doesn't want to get my view on this stuff. No, I, he has not said a word to me. He's probably worried I'm going to go, well, I want a bigger deal or something. It's like when I, sometimes I'm a little remiss to tell the team at Prop G how well we're doing for,

• 20:06Scott Galloway?

  they're going to be like, well, I want more pet bereavement deal for Fluffy. Fluffy passed away and I need three weeks off. Anyways, where are we?

• 20:16Ed Elson?

  We're still on OpenAI. So, you know, we've seen a lot of these licensing agreements and we've been discussing them a lot recently. I just want to go over all of the announcements that OpenAI has released so far. So, so far we have deals with the Associated Press, Axel Springer, Dot Dash Meredith, Financial Times, Le Monde, Prisa Media, News Corp, and now Vox Media and The Atlantic. So that's nine contracts. None of them have disclosed any of the deal terms, specifically how much the contracts are worth. And we've seen rumors, the Axel Springer deal is supposedly worth tens of millions. That's how it's been reported in the media.

• 20:56Ed Elson?

  The News Corp deal is supposedly north of $250 million, but no one actually knows. It's all just sort of rumors or according to people familiar with the matter kind of reporting. My question to you, why aren't any of these companies disclosing that information? I mean, as you say, if this is going to be the profit maker, especially for a public company, why aren't they saying how much money they're going to make?

• 21:21Scott Galloway?

  I would bet that the numbers are pretty mediocre. So even that $250 million deal, I don't know if it's four years or five years, but that comes down to 50 million a year. Now, granted, 47 of it will hit the bottom line. But when you talk about, when you talk about News Corp, you're talking about some really robust content and it's a great deal. It's a great press release for OpenAI and yet they only came up with 50 million a year. So I bet the Vox deal is millions, not even tens of millions. And so they don't want to announce that. OpenAI wants credit for trying to work plain ice and perhaps be thinking about differentiating its content and being partners with this ecosystem and being a good citizen. My guess is Bankof has struck a deal for millions.

• 22:05Scott Galloway?

  And it's great because it all hit the bottom line, but it's not like it's 100 million bucks. And so they, both parties decide to keep it confidential for fear that it's just going to be a lot of heckling from the cheap seats. Like, oh, you're letting all of them putting a gag ball on you and telling you to grab your ankles and giving you 50 bucks in bus fare.

• 22:24Ed Elson?

  You ask why Jim Bankof doesn't call you for advice?

• 22:27Scott Galloway?

  Can you imagine why he wouldn't want to call me? Get us out of that one, Ed. Cano go out of, cano go us out of that one?

• 22:36Ed Elson?

  So two, two final news items concerning OpenAI. One is that they are creating a safety and security committee, which is, quote, "responsible for making recommendations on critical safety and security decisions for all OpenAI projects." This is coming less than a month after they dissolved the super alignment team, which we discussed. And that team was essentially tasked with the exact same thing, safety and security. The second news item is that Jan Leica, who is a former leader of that super alignment team at OpenAI, who, as we discussed, resigned.

• 23:12Ed Elson?

  He is now joining Anthropic, which is one of the leading competitors to OpenAI. Reactions to either of those headlines.

• 23:20Scott Galloway?

  The world is going through in 10 months what took them 10 years to discover Meta. And that is, they don't give a flying fuck about your well being and they're not going to take care of you when you're older. And despite their hushed tones and concerns about the future of AI, they are there to make profit and they're really good at that and shouldn't be trusted to do anything else. And this goes to a bigger issue, and that is, all of this stuff around corporate social responsibility and making the world a better place. I can't go to a conference for a beauty company or a technology company where some very hopeful 20-something stands up and says, you know, we believe here our role is in empowering women or creating a more sustainable future. I'm like, no, it's not.

• 24:03Scott Galloway?

  Your job is to make more fucking money for the shareholders. And that's what you're going to do. And a few people will care that or nod their heads that you're changing the world for it to be a better place. But the way you make a world a better place is you create more value than your inputs. You create economic security for you and your family. You're a good citizen. You vote, you give some money away. And then we regulate the company and tax it at a fair rate such that we, the electorate, can elect people who will vote on things like food stamps and protecting women's bodily autonomy. And just because you paint a fucking AirPod red does not mean you are doing anything for the world. And all of this corporate social responsibility and DEI bullshit has done nothing but distract the populace from the need to regulate these companies.

• 24:48Scott Galloway?

  And all of this kind of notion that we keep hoping that capitalism can serve as an engine of change for social good, we've had 40 years to try and do that. Ben and Jerry's is still a very small company. REI is a cute little company. Good for them. The majority of companies will do whatever they need to do to make more money. Full stop. Ford would still be pouring mercury into the river if we allowed them to do that. The trust and safety team of OpenAI should be in Washington DC and have the ability to tax, prosecute and imprison. Enough with this notion that we have a new generation of corporate leaders that give a flying fuck. Spoiler alert, they don't.

• 25:27Ed Elson?

  It's so interesting because, you know, you're describing.

• 25:31Ed Elson?

  That actually, the main goal for Sam Altman from OpenAI is to create shareholder value. But this is a nonprofit company. And I don't know if you remember that exchange between Sam Altman and Senator Kennedy during the Senate hearing, where he's like, oh, do you make a lot of money? And Sam's like, no, I don't make any money. I don't have any equity in OpenAI, which would go against your point until I just learned this week that apparently the board is discussing granting Sam equity in a new, more traditional corporation in OpenAI to incentivize him.

• 26:08Scott Galloway?

  I remember that exchange where everyone, where Sam said, I'm not making any money with it. Oh, that must mean he's doing good things. I remember thinking, just trust me on this. He's going to make billions. I mean, how could Sam not make billions? If he has the ability even personally to invest in AI companies and has influence over their ability to announce a partnership with OpenAI, now granted, the board should be able to assess out conflicts like that, but it probably won't. I just, this is the easiest prediction ever. Sam Altman, directly or indirectly, is going to make billions of dollars from OpenAI. Sam is doing exactly what he should be doing. Who's not doing what they're supposed to be doing is us. We're supposed to elect people that see through this bullshit, put in place some sort of

• 26:50Scott Galloway?

  compute tax, put in place a tax, a progressive tax structure such that the six wealthiest or the 25 wealthiest people in America don't pay an effective tax rate of 8 fucking percent? Really? Really? Oh, Jesus Christ. Anyways, God, I sound especially get off my lawn today, don't I? Thank you for my TED Talk.

• 27:12Ed Elson?

  We'll be right back after the break with a look at the new most valuable bank in Latin America.

• 27:59Ed Elson?

  We're back with Profitec Markets. Brazilian fintech Nubank has just become Latin America's most valuable financial institution by market cap. Its shares have rallied more than 40% this year to give the company a market cap of roughly $58 billion. That puts it ahead of Itaú, Brazil's largest bank, which has been around since 1945. Behind that rally is a story of tremendous market expansion. When Nubank launched in 2013, roughly 40% of Brazilians were unbanked and an oligopoly controlled roughly 80% of the market. Now, just over a decade later, 54% of Brazilian adults are Nubank customers. The company has also expanded to Mexico and Colombia, and it has also surpassed 100

• 28:43Ed Elson?

  million customers, making it the first digital banking platform outside of Asia to hit that metric. Scott, you interviewed the Nubank CEO David Vélez back in 2022. I think you also invested in the IPO in 2021, if I'm correct. What do you make of this company and its performance since then?

• 29:03Scott Galloway?

  It's been an okay performer. It hasn't been a great performer. I think I either sold, eventually sold at break even or even a loss, but stock's up 80% in the last year. And it really tapped into an incredible need, and that is a dramatic number of people in Latin America are unbanked, and they end up paying these onerous fees to get banked. And also, they pay enormous fees in terms of their time, the ability to, you know, have to go down to the utility to pay their electric bill or what have you. Also, and this has been fixed, I think, but in Rio, if you were a male under the age of 40, you had to go into a bank, you had to go into a room with cameras and take your shirt off because they were so worried about crime. And they recognized they can skip the branch network.

• 29:47Scott Galloway?

  It's like when India skipped landline and went straight from kind of no phone to cellphone. Large parts of Latin America and Central America, they're skipping from the unbanked to digital banking. The company is really well-run. It's reported five consecutive quarters of profitability and over 20% revenue growth. And the other thing that I love about this company is it's an asset-light business model. These branches, I think you have to have at least... 30 million or 60 million in deposits just to support the real estate and the human personnel of that operating system of a branch.

• 30:20Ed Elson?

  Yeah, the number I've seen is 50 million, 50 million to generate a return on a bank branch, yeah.

• 30:26Scott Galloway?

  And when you build, make the fixed investment with cheap capital, which they have access to, to build the technology and you don't have to have assets, you don't have to have real estate and things in the window saying, you know, get your mortgage here for 8%. At the end of the day, people absolutely love this. The NPS levels are, get this, two to three times greater than their competitors, which means their cost of customer acquisition is much lower and they don't have the same churn. This is a great company. You'd like to see this in Latin America, there's Mercado Libre, but there hasn't been a ton of digital big winners here and that's what they need. They need to have, you know, they need some companies that make a bunch of people, billions of dollars, which inspires venture capital.

• 31:07Scott Galloway?

  I hope David starts a VC firm in Brazil because that's what you need. You need a Michael Dell to make billions of dollars and then start a VC ecosystem in Austin. So I hope it happens here. I'm really fond of Latin America. If you globally think about what's happened to the economy over the last 40 or 50 years, America's held its own, we control the same amount of GDP, great growth, we're killing it. China, Southeast Asia, they're the big winners. The big losers in the global race for economic dominance have been Europe and Latin America. The saying in Brazil is that no country has a brighter future than Brazil, but it's meant as a bit of an insult and that is Brazil is always a little engine that supposedly can, but never does. And so I hope, you know, I hope this does really well.

• 31:52Scott Galloway?

  Good for, good for New Bank, good for Brazil, good for the planet.

• 31:55Ed Elson?

  It's now turning into a banking meets insurance meets stock market investing meets travel meets telco product, kind of everything in one, which reminds me of this idea of the super app, which we discussed a long time ago, which is basically a term for an app that acts as a portal for everything from banking, communicating, ride hailing. It's basically what WeChat is in China. So it feels like New Bank is getting into super app territory here. Do you think that's the idea? Is that the, the strategy they're going for, do you think?

• 32:30Scott Galloway?

  Every company has the same aspiration. Every company wants to control your interface. We're in an attention economy. If I can figure out a way to control more of your time on a screen, I can monetize it eventually. And so everybody wants to. iOS wants to control everything. They want to be in your car, right? Android wants to be the Alexa, or basically Amazon's Alexa was an attempt to control more of the interface through digital world where you're interacting through their, through their voice devices. Every company wants to leverage their custody of the consumer to grab more and more of their attention such that they can monetize it. And that's the same thing here. And the biggest, obviously, the biggest threats or the biggest barriers to super app status are iOS and Android that do not want anyone. I mean, ultimately, iOS is the premier

• 33:13Scott Galloway?

  super app for rich people and Android is the super app for everybody else. And that is, that's what you go through to access Uber and everything else. And they figure out a way to tax them or tax the end consumer for a more elegant way to access those apps, which is, which is Apple. One's an ad model, one is a subscription model. But those guys have a vested interest in sticking their elbows out and not letting anybody develop their own super app status. Essentially, the fight between Apple and Epic is that Epic essentially wanted to be a super app for gaming. They wanted to put other games on its platform and start charging from similar to the way the App Store works at Apple. And Apple said, no, we're going to disable this technology. We're not going to let you do it. But New Bank, it'll be really interesting. If the stock were to go to 50, it's because

• 33:58Scott Galloway?

  they would be able to show that they can launch adjacent categories and immediately get market share. And then say, okay, even if we break even on the banking, which they don't, they make money. But we now have, as you call it, the super app power to start taking people into different verticals.

• 34:12Ed Elson?

  The term that people use to describe this, this kind of bank, which is a digital bank, is neo-bank.

• 34:18Scott Galloway?

  No, they call it a Canoco bank. It's a Canoco bank. Jesus Christ, what are you, a stripper at a Brazilian nightclub? Next up, big hand for Canoco. Get out there. Get out there and shake your money maker, Ed. Get out there. Oh, my God. But I didn't get along with my dog. What the fuck is wrong with you? What is wrong with you? My God. Why did you hate your dog, Ed?

• 34:48Ed Elson?

  He was just weird, man. He was weird. I think he thought he was a human.

• 34:51Scott Galloway?

  Did it try and hurt you? Those are hurting dogs, right?

• 34:53Ed Elson?

  No, actually, he hurt other dogs. He would always bite other dogs. And whenever I'd take him for a walk, it was always smush-faced dogs, like pugs and bulldogs. And he would always... Bite them and I

• 35:03Scott Galloway?

  Was it a purebred?

• 35:05Ed Elson?

  Uh, I think so.

• 35:06Scott Galloway?

  That's the problem. I always get a mutt. I always get a mutt.

• 35:08Ed Elson?

  Why?

• 35:09Scott Galloway?

  Muts, my, it's as if mutts know that they're about to be shipped off to be executed. So they are so thrilled. When you bring them home and start feeding them like lamb, organic lamb food, they're little like, I'll tell you what.

• 35:20Ed Elson?

  Is that what you're feeding your dogs? Organic lamb?

• 35:23Scott Galloway?

  Oh, my dogs eat much better than we do. Literally, I'll come home, I'll come home tonight. I'm getting home at 3am. There's gonna be nothing for me. Like, they're little, it'll be nothing. Like, no one will even like, oh, did dad eat? Who the fuck cares? But if the dog makes a whimper in the middle of the night, we'll get up and we'll microwave it some sort of like organic sheep intestine thing that's good for its coat. Yeah, no, that's a ton of fun. Although I did get a, I, my, my birthday present to myself when I turned forty-five, fifty-five, was I bought a Great Dane. And boy, is she stupid. Oh, my gosh. The village idiot of dogs and so sweet and loving. Oh, God, I love that. I can't wait to see that dog. Can't wait. Kid's sort of excited. Can't wait to see Leia.

• 36:05Ed Elson?

  Yeah, exactly.

• 36:05Scott Galloway?

  She'll get up in the middle of the night, she'll come over. And it's really weird. I don't know if you've noticed this because you probably haven't noticed it because you hate dogs. But she'll come over. Great Danes have this weird thing. They, as a means of affection, they shove their like hind torso into you. That's how they express love. I go, it's good to see you. How about a little of my back and butt? Just to, just to welcome you home.

• 36:27Ed Elson?

  Is that how you express love?

• 36:28Scott Galloway?

  That's, yeah, that's.

• 36:29Ed Elson?

  That's where you learned it from?

• 36:30Scott Galloway?

  You know how I express love. I express love one way, Benjamin. So I give people money. It's the best kind of love.

• 36:37Ed Elson?

  Trips to St. Paul's, which is a good way to, yeah, it's a good love language.

• 36:41Scott Galloway?

  It's the neo-sport for every relationship. I tell people that. I'm like, this is how I express affection. I'm, anyways, I don't want to give specifics, but.

• 36:51Scott Galloway?

  Uh, all right. Am I supposed to make a prediction? Where are we at?

• 36:54Ed Elson?

  Yeah, fuck it. Let's just, let's just wrap up the show. Before we do that, let's take a look at the week ahead. We'll see the unemployment rate for May. We'll also see earnings from Lululemon, Dollar Tree and CrowdStrike. Everything. Do you have any predictions?

• 37:10Scott Galloway?

  My prediction is, and this isn't financial advice, but I bet within thirty days Salesforce has recovered most of its losses. I, I was, just as you were talking, I like what you said. I looked at the numbers. It barely missed. The company is still doing really well. They've cut some costs. I don't, I don't see any evidence here that the company should be worth a lot less. And while the stock was up, it wasn't up so substantially that this was just air coming out. I think this was, to your point, everyone saying, well, why aren't you Nvidia? And like, okay, they're not, but they're still an amazing company. So anyways, my prediction is that this 22% stock decline we're looking at today, that Salesforce recovers most or all of it within the next 30 days.

• 37:52Ed Elson?

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

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