Pod Insights Big Technology Podcast Andrew Ross Sorkin on Meme Stocks, Bitcoin, SPACs, and Elon Musk About this episode Andrew Ross Sorkin is the co-anchor of Squawk Box on CNBC, founder and editor of Dealbook at the New York Times, and the author of Too Big To Fail. He joins Big Technology Podcast to discuss the wild state of the market, the rise of meme stocks, the promise and drawbacks of bitcoin, SPACs, Big Tech antitrust, Elon Musk, and when the party will come to an end. Tune in for a wide-ranging interview about the world's most pressing financial and tech issues.
Buy Andrew's book: https://amzn.to/3zFPTXp
The Michael Lewis article Andrew references: https://www.nytimes.com/2001/02/25/magazine/jonathan-lebed-s-extracurricular-activities.html?referringSource=articleShare
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Transcript 12,772 words · 4 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:14 Alex Kantrowitz? Hello and welcome to the Big Technology Podcast, a show for cool headed nuanced conversation of the tech world and beyond. We are ready to talk meme stocks, SPACs, Bitcoin and all that jazz. Because our guest today is Andrew Ross Sorkin. He's the co-anchor of Squawk Box on CNBC, the founder and editor of Dealbook at the New York Times, and the author of Too Big to Fail, which might have some good lessons for our time today. He's the perfect person to help us make sense of this moment. Andrew, welcome to the show.
1:42 Speaker 01 Thank you for having me. I am a longtime fan and listener, first time on the show, so thank you.
1:50 Alex Kantrowitz? It's great to have you on and the feelings are mutual for sure. So I'd love to start open ended, just talking about the economy in general. So it seems to me right now that the market is crazy and you watch this stuff every day. And it seems totally absurd. So what's your sense of the market's rationality or lack thereof right now? What's happening here?
2:11 Speaker 01 Okay, so well, we have to break apart what we're describing as the market for a second.
2:16 Alex Kantrowitz? You know, I was going to start telling you like I'm here to deliver a message on behalf of the meme stalkers. But like
2:23 Speaker 01 Okay, so We'll wait for the second second. But you just said it. There's one part of the market that is this meme stock driven explosion and and that is something I think unto itself. Then there is the market if you the sort of market excluding all of that. And then there is this thing we'll call the real economy over here. They're all potentially interrelated, or you'd like to think. The stock market unto itself, again, meme stock excluded for a second, I think is, I don't know if it's fairly valued, maybe it's a little bit over its skis. There's
3:07 Speaker 01 lots of excitement still about where we are. But you're even starting to see what they call the great rotations, people moving in and out of technology into travel because they think everyone's going to travel again and all sorts of like that. That seems at least rational what's happening. And we can debate about whether there's going to be more infrastructure spending or what the Federal Reserve is going to do. But what's really caught everybody's excitement are the meme stocks. You know, the AMC apes and the GameStop hysteria. And don't forget Bed Bath & Beyond, or or some of the others that are completely and utterly divorced from reality, Alex. Yeah.
3:52 Speaker 01 You know, it's a bunch of people who have an idea. I don't think that the idea is about fundamental investing. It's about demonstrating that they can push up the price of a stock. It's I hate to use the word manipulation because and people will get very angry if you put it in this sort of context. But I think there's a group of people who would like to press the price of a stock up. And you're seeing it in this sort of very unique social media enabled. You know, mobilized moment. And I think that's, that's what's happening. And some of those people are doing it because they actually believe in the stock.
4:35 Speaker 01 Most of them are doing it to sort of prove something. Other people are doing it, hopefully just to make a lot of money because they think they can sort of ride a wave. So there's a lot of elements to this.
4:47 Alex Kantrowitz? Right. And so let's get right into the meme stock thing. So the argument that people make to say this is totally normal is that all stocks are traded on momentum and stories. And so what if a GameStop or what if an AMC is traded on a story? And people just get mad when it's, you know, the common person doing it versus, uh, you know, traditional investors that are doing it. What do you think about that argument?
5:15 Speaker 01 I, I, I don't, I don't buy it. I, I just don't buy it. And it's not because I, you know, first of all, I, I would love the quote unquote little guy, I even hate that phrase, to do, you know, to be wildly successful and to beat the man. I would love that. I'm not even sure that's what's even happening here. But there is, I think, a distinction between what's happening in this, in the, in the sort of meme stock era and the sort of frankly blatant manipulation that happens to the extent we're going to call it manipulation that happens in the market via institutional investors.
5:54 Speaker 01 And the biggest distinction I'd make is that one group, the professional investor, typically kind of knows what they're doing. They understand it and they understand the risks of it. If you spend enough time on Reddit, and for better or worse, I do, there are a lot of people that don't really understand what's going on at all. And, uh, there's a lot of misinformation. There's a lot of disinformation. There's a lot of people who, who don't even believe information that's factual in front of them.
6:35 Speaker 01 I mean, this is sort of almost financial, the financial is, this financial moment's almost become politicized in, in certain ways. And some of the things that we've seen in politics over the last four or five years, it's sort of come to the market. And so. I worry about that and I worry about
6:58 Speaker 01 the people who have frankly, a lot to lose. And that's why we've always as an we as an industry, the media, but hopefully the the laws and regulations that are in place have always been about trying to protect the smaller investor. Now, what's so unique about this moment is that a lot of those smaller investors are saying, no, no, no, those laws, you sork in the media, they don't protect, they don't protect us at all. In fact, you're not protecting us, you're protecting the man, you're protecting the establishment, you're protecting the big guy. Uh, with all of those laws and you're preventing us from having the opportunity to make money.
7:42 Speaker 01 And to some degree, they're probably right. They've actually hit on something. Some of those rules and laws and maybe even the way we approach it do prevent some of them from buying some of those lottery tickets and and winning. But I, I think, or at least I want to think unless my head is not screwed on straight and I've got this totally wrong. I think it's also about protecting them on the downside. And it's almost impossible to believe that the downside won't come.
8:10 Alex Kantrowitz? Yeah, your mentions must be a pretty pleasant place when you speak about this stuff.
8:14 Speaker 01 Oh goodness, uh, yes, I'm, I'm a suit and much worse than that.
8:19 Alex Kantrowitz? Oh yeah, I've, I've been on the receiving end too. It's not pleasant. So. But it is good to actually go up there and start speaking about this stuff because it is easy to sort of get caught right in the story and it's tough to step out and say, hey, what is this going to mean? The other counterpoint that, you know, folks who would be the pro meme stock group would have would be that, uh, GameStop has actually stayed pretty high. I've been surprised at how high it stayed. Who knows if AMC is going to stop, gonna, gonna drop given the current levels. So maybe the joke really is on the short sellers.
8:58 Speaker 01 Well, look, maybe it is, maybe it's, maybe it really is. And, and you're right. Look, there are people who believe, uh, that Ryan Cohen, who's now been installed as the chairman and the new team, uh, most of whom come from Amazon are going to reinvent the company. And, and maybe this is like a venture capital bet that these folks are going to somehow. Totally reinvent this thing in ways that we don't even know. It would, whatever they would do to get to the price that we're at now would obviously have to, it would almost have to be a completely different business. It would have to be, you know, transformed into something that, that looks almost nothing like what it is today. And maybe that's possible.
9:37 Speaker 01 Now, historically, public market investors have not made those types of bets before. That's the place where historically venture capital has made those kinds of bets. Or maybe private equity has made a sort of a turnaround bet. And maybe the argument in this case is, look, those kind of bets happen in these private, private areas where typically the public can't participate. We want to participate. So I get it. I get it. And there's an element of it which I admire greatly. But there's also a piece of it that, that, that I think is at minimum nerve wracking. And I do, one other thing, I think there's a distinction between what you're seeing, GameStop.
10:21 Speaker 01 Like I, I, I don't want to say I see it, but I, I understand it. Even on the sort of fundamental level or on a fundamental basis, not because today's fundamentals mean anything, but I could see the bet you'd make in that regard. AMC, for example, though, I think is a completely different. How so?
10:44 Speaker 01 Cause they're not sticking it to the shorts. It's just all speculation. Well, it's, it may very well be sticking to the shorts, but I think that the, look, you look at the secular trends in, in, in the, in the theater business, in the film business before we had the pandemic. And then you have to, and are we going to believe that somehow the secular trends are going to be even, are, are going the opposite direction after the pandemic? I don't think anyone's making that argument. Nobody's making the argument that Adam Aaron, who's the CEO of AMC, is planning to somehow magically transform the company. He's not saying he's going to transform the company, right? This isn't, I mean. He's playing right into it. Yeah, well, whether Ryan Cohen will, will, will transform the company or not, he sort of represents this sort of sun god that's going to come in and do something different.
11:29 Speaker 01 Adam Aaron's not claiming he's going to do anything different. In fact, the only thing that Adam Aaron's doing is, is to some degree, and I, I also admire this, though I think that raises all sorts of questions. Yeah, he's winking at the, at the. He's winking at them. Retail investors and saying, keep on going. Keep on going. And by the way, at the same time. And I don't want to say he's taking advantage of them, but if they're taking advantage, he's taking advantage by selling shares to them at prices that I think he knows full well are vastly overvalued.
12:00 Alex Kantrowitz? Right.
12:00 Speaker 01 And so he's, he's taking that money, using it hopefully to pay down debt and maybe put the, the company in at least a, a better position to not fail. But is he putting it in a better position to have, you know, great shoot the moon success? I'm not, I'm not sure that's, that's his plan.
12:18 Alex Kantrowitz? Yeah. So where does this go? Does every CEO all of a sudden need to have like a meme strategy where, you know, they make, do an AMA on Wall Street Bets and try to, you know, corral all these retail investors?
12:32 Speaker 01 You know, I think there's a whole, whole world of CEOs who say, oh my God, could this happen to us? How's this going to work? Da, da, da, da. In some respects, there's an argument to be made, this can't really happen to every company out there and especially massive, large companies. I mean, it'd be very hard for a retail base of investors to move the stock of an Apple or a Walmart or an Amazon in this kind of way. What made these things attractive was both the short interest. I don't want to say the small amount of volume, but the sort of, the, the, these were smaller companies. I mean, by the way, now they're big, big multi tens of billions of dollar value companies.
13:16 Speaker 01 So it's possible at some level this can happen. And I don't want to say that, that nobody's susceptible, but I think there's sort of a range of kind of company with a kind of valuation and a, a kind of perspective around these issues, around what the short interest is like for something like this to happen and be attractive to this group.
13:37 Alex Kantrowitz? Yeah, but big stories can also, sorry, big stocks can also be a story company. I mean, I, I started to think about this and I don't think it happens unless you start to have some of the stock market unhinged from the fundamentals to begin with.
13:51 Speaker 01 Right.
13:52 Alex Kantrowitz? And that's when I start to think about Tesla, which is a real story stock.
13:55 Speaker 01 Yes.
13:55 Alex Kantrowitz? So, but I don't, I guess Elon can do it on a scale because he's Elon, but it will be more difficult for other companies to do that.
14:02 Speaker 01 But no, and, and look, but that's the argument. I mean, I think a lot of people would say, look, look at Tesla. That was a story stock and people believed and look at where it is now. And so why can't that be AMC? Why can't you will? Why can't you will the valuation, not just the valuation, but the success of a company into being
14:23 Speaker 01 simply by getting behind it and getting behind its stock and effectively giving them the opportunity to raise so much money that they can, they can do these things. That is possible. By the way, there's an intersection here probably with crypto, which is to say,
14:36 Alex Kantrowitz? Yeah, we'll move to that soon.
14:38 Speaker 01 But had people not decide, some people thought like, would Bitcoin succeed? That was a bit of a belief system. It is a belief system. And
14:48 Speaker 01 11 years later, people still believe. So yes, if people will decide they're going to believe in AMC for the next 100 years, and they decide they want to keep giving Adam Aaron money, maybe this can end spectacularly.
15:01 Alex Kantrowitz? Yeah. So let's think about what's going to happen next because you've said that either this type of manipulation, or whatever you want to call it, is going to be regulated, or they're going to prove that the whole system is broken and cause some lasting changes.
15:15 Speaker 01 Right.
15:15 Alex Kantrowitz? So what could that look like?
15:17 Speaker 01 Right. There's, there's two, two possibilities, probably relatively binary. One is that Garrett Gensler at the SEC decides that he's going to
15:29 Speaker 01 crack down, for lack of a better word or phrase, on this kind of trading. Either he's going to regulate what can be said on, on, on social media platforms about stocks, whether he's going to try to prosecute some of the people that have been involved in these things online. I don't know if that's a good case or bad case. I don't think, by the way, it'd be a particularly popular case to be made. But, you know, could you find email, you know, could you subpoena some of these individuals' emails, have them talking about how they don't believe the stock is worth anything, and that they're trying to manipulate the price to push it higher, and they actually like say that in email?
16:15 Speaker 01 And could you bring a case against them and make an example of them? Yes, you could. And then how would that change the dynamic? Would it force Reddit and other social media sites to, to put in different, different procedures and things, maybe in the same way that you're seeing Facebook and others try to deal with misinformation or disinformation in the world of politics? I mean, that's what could get interesting on one side of things. The other side of things is if they really succeed, they could effectively break the markets as we know them. I mean, one of the things that's so interesting is if you own the Russell 2000, which is an index, passive index, it's actually doing quite
16:54 Speaker 01 well, almost spectacularly so. Why? Because AMC and GameStop are part of it. And so you could start to do things to the market that divorce it from reality. And I don't know what that, where that ultimately goes. But again, by the way, at some point, everything's not going to go to the sky. Something will go wrong. And when things go wrong, lots of things typically go wrong. So that's when I think the divorcing of everything will come into play.
17:26 Alex Kantrowitz? Yeah, I think it would be also tough for the SEC to start cracking down on this in particular, even if there are people that are manipulating on the back end, because they will face this backlash. And they've been so ineffective elsewhere, like the Elon Musk thing, for instance, like when Elon can tweet, SEC stands for, you know, a three-letter acronym, and the E is Elon's. And they can't do anything to him.
17:50 Speaker 01 But so that's a great question, though. Well, I think there's two issues. One is Gary Gensler is a different person than Jay Clayton, who's the former chair of the SEC. Gary's just got into this role. And I think he's going to want to put his stamp on this agency and make a mark. I do. And so I just, I don't think that we, I think it's almost impossible to believe that he would have done something already in any kind of real way. I'd also remind your listeners, and it's such a fabulous story, if you can go back and Google it and find it. Michael Lewis wrote a piece, probably 20 years ago,
18:32 Speaker 01 this is after the dot com bubble burst, about an 18 year old kid that the SEC had actually prosecuted. Or I should say sued, because it's not a criminal case, for effectively manipulation, using chat boards and the like to push stocks. And they won. And so you should go back and find the article. It is, I mean, Michael Lewis.
18:55 Alex Kantrowitz? Yeah, we'll link it.
18:56 Speaker 01 Like, everything he does is, you know, is perfect. But it's a great article, but it really gets at this issue. And so could he, could he go after some individuals? I wouldn't be surprised if he weren't, and I wouldn't be surprised if he even went after Elon Musk. I wouldn't be surprised if he tried to go after some of the people, some of the higher profile people involved in SPACs. Just to make a point.
19:22 Alex Kantrowitz? Yeah, oh, it'll be interesting. I mean, the, the order of operations on that is going to be important.
19:27 Speaker 01 Right.
19:28 Alex Kantrowitz? Because if you're, if you go only after like the folks involved in this retail trade, and I know there's lots of implications there. And you leave Elon and you leave the SPAC guys alone, you could have a problem on your hands, so.
19:40 Speaker 01 Bingo.
19:40 Alex Kantrowitz? Let's talk a little bit about another speculative asset, although I'm going to get in trouble for saying that, Bitcoin. So when I hear you talk about Bitcoin, you seem somewhat amused, pretty skeptical. Obviously, the price over the last couple of months has gone wild, you know, up to around 60,000, down to 30,000, back up again, down again. Where do you think the freight train's heading on that front?
20:05 Speaker 01 On the price, I have no idea. I mean, I think there's now a considerable group of people who believe in the idea of Bitcoin. I've been fascinated by Bitcoin probably since about 2000. I think I'm trying to think, I met Brian Armstrong, who I remember trying to convince me of Bitcoin's benefits. Had I listened to him, I'd probably be in a different profession right now back then.
20:31 Alex Kantrowitz? Did you buy?
20:32 Speaker 01 I did not. I did not. I did not buy Bitcoin.
20:35 Alex Kantrowitz? You like to, you like to ask guests, you know, whether they own.
20:38 Speaker 01 Yes.
20:38 Alex Kantrowitz? Do you own Bitcoin?
20:39 Speaker 01 It's a great question. I do not own Bitcoin. And I will also say, as a journalist, I was always skeptical of whether I should or could. I don't own stocks, as you probably know, because that's a policy that, that we've long had. And because of the information that oftentimes I'm privy to, sometimes in the reporting process. So, you know, I own mutual funds and things like that, but nothing beyond that.
21:08 Speaker 01 And I always didn't know, is Bitcoin counted as a currency? How would we think about?
21:12 Alex Kantrowitz? It's so strange in terms of what it actually is.
21:14 Speaker 01 It's funny because my kids now, but now that it's become sort of a mainstream thing, it might even be a bit of a currency. Maybe I'd feel more comfortable owning it. I don't know. My kids. I have two 10 year old boys and a four year old, but the 10 year olds are trying to design NFTs. And so, and to also buy NFTs, not, I mean, for like $4. But they need a-
21:41 Alex Kantrowitz? Not $69 million?
21:42 Speaker 01 Right, not the people, but they need Ethereum, which would mean that we, so we need to get a wallet for them. So they would have Ethereum. So this is all of a sudden very interesting. Can you really own Ethereum? You know, are you, it's, it's, um, it's getting complicated quickly.
21:59 Alex Kantrowitz? Yeah. I like how you asked Francis Suarez, the mayor of Miami, a former guest of the show, whether he owns. And he said, yes. And, and I thought there were two really interesting things about his answer. First of all, he's like the Bitcoin mayor. And he bought in mid to high 30s. So he's probably underwater right now on Bitcoin. And second, he flat out said the reason why he bought was because he bought it as a hedge against inflation, which was so fascinating to me that. An elected representative, I mean, a mayor of a major US city was basically like, our currency is going to inflate. I need something else. What did you think when you heard that?
22:35 Speaker 01 Um, I thought that was the right thing to say. If you're the mayor of Miami, you're trying to become the mayor of, you know, the crypto capital, if it becomes crypto capital. I think that he said the words you were supposed to say. I imagine he bought it because he wanted to play with it. I think he imagined he bought it so he could say that he had bought some. And believed in it in the same way that he's trying to, to do this for the city. I have been somewhat skeptical of, of the argument around inflation. I think inflation is real, by the way, but I, around sort of whether Bitcoin becomes the standard. It may, it may not. It's, it's, to me, the whole thing is so hard to-
23:18 Speaker 01 Figure out, and maybe I'm, maybe that makes me too skeptical of it. I think it could, it could have some success. I just don't know if it's really going to turn into a currency. I don't know what happens when there is regulation, you know. Uh, for the first time, um, we just learned that 401, there's a couple of companies that are going to start working on 401k plans to allow you to put crypto into them. I think all of a sudden that's going to force the issue for regulators to figure out what they're going to do.
23:46 Alex Kantrowitz? People betting their retirement on this stuff.
23:48 Speaker 01 So, and, and once you get there, okay, so now are you going to say there has to be a, a know your customer, what's called a KYC policy around Bitcoin? Uh, anti-money laundering, uh, implementations in the same way that banks have. If you actually do that, then what does that do to Bitcoin? Can't have a private wallet. You can't, all of the benefits of Bitcoin sort of disappear very quickly.
24:13 Speaker 01 So I think there's that. I also wonder about the environmental piece of it. And I know there's lots of people who are now arguing that somehow it's going to be an improvement for the environment.
24:22 Alex Kantrowitz? The water is pretty muddy on that front.
24:24 Speaker 01 I, I look, I think long-term, yeah, long-term, we will figure out how to mine Bitcoin and also just create electricity, of course. Hopefully more cleanly. That will happen. But if you were going to create a new currency in this day and age today, you would think you would try to deal with the, the, how much electricity is used is how much, you know, whether it has KYC, you know, know your customer information, except, but that's the virtue of it, by the way. Some people say that's the virtue. It takes a lot of electricity. That makes it, creates value, gives it, it imbues it with value. And of course, the fact that it's anonymous also imbues it with value. So.
25:03 Alex Kantrowitz? Yeah. And, you know, talking about the inflation stuff, I don't agree with, you know, Francis Suarez, that it is a, a good check on inflation. But I also, my perspective on why it's increased so much, I'm curious what you think about this, is that, um, money has become, uh, somewhat meaningless to lots of folks recently, even of course.
25:24 Speaker 01 I think there's a lot of money floating around. I think stimulus money that's floating around.
25:27 Alex Kantrowitz? Yeah.
25:28 Speaker 01 I think the Federal Reserve being as low as it is, look. You know, you have Michael Saylor at MicroStrategy. He's now effectively raising money from public investors in taking out loans. This is like a, his company's turned into a leveraged, basically a leveraged Bitcoin fund is effectively what it is. And people are willing to loan him money to go buy Bitcoin. That's what's happened. It's extraordinary. So, so yeah.
25:58 Alex Kantrowitz? It feels like a house of cards.
25:59 Speaker 01 There's a lot of money floating around and the question is when the music stops and the music will stop, is Bitcoin somehow completely not correlated to all, to everything else? I have a hard time believing that, but there's clearly a lot of people who, you know, spent, spent time in the month of June in Miami who believe it.
26:20 Alex Kantrowitz? That's right. Yeah, I think the Bitcoin Miami emails have finally tailed off in my inbox. I don't know about yours.
26:25 Speaker 01 I'm still getting some and I.
26:27 Alex Kantrowitz? There are a lot. Yeah. When does the music stop? I mean, is it when the Fed raises the rate in some way? Or how does this sort of party come to an end? And not just Bitcoin, but the economy overall?
26:42 Speaker 01 So the, the only lesson I feel like I learned writing Too Big to Fail and, and, you know, reporting around that crisis and now really trying to understand financial crisis as a phenomenon is every financial crisis is really only a function of one thing. It's too much debt. It's too much credit leverage in the system. You can have as many bad actors as you want on the stage, doing as many bad things on the stage as you could imagine. So if you think that the SPAC people are being irresponsible and you think that the SEC is not minding the store and you, you name your, you can name whatever you think is bad, it doesn't really matter unless there's too much leverage in the system.
27:28 Speaker 01 And so the question is where that leverage is today? It's not at the banks. And so the question is, is it somehow levered into crypto? Is this quote unquote shadow banking system? Is that where the leverage is? Clearly, one of the big places the leverage has moved. Is, you know, even the phrase too big to fail, back in 2008, we talked about in the context of banks. Today, we talk about, you know, cities, municipalities, states, countries that are too big to fail. I mean, think about the amount of debt that we took on even during the pandemic in the United States, let alone every other country in the world. So that's what I really worry about long term.
28:10 Alex Kantrowitz? What do you think is going to be the implications of taking on all that debt? I mean, we did, what, $6 trillion in stimulus in a year?
28:17 Speaker 01 Well, unlike, I mean, so the benefit of a government taking on that kind of debt, unlike a company or a bank, is you can keep printing money. But as you keep printing money, you devalue your currency and you have inflation. So that's, that's, I think, what ultimately happens. The question is, if every other country is doing the same thing at the same time, you could argue maybe it doesn't matter. And I think that's sort of the MMT theory of life. I wish I knew the answer.
28:49 Alex Kantrowitz? Yeah. To bring it full circle, it does seem, you know, you think about the way that all this is going. And it does seem like it's the, the actual, you know, quote unquote, little person that ends up getting hurt. It seems like it's a great time to be in the money and in the right places, but an awful time.
29:08 Speaker 01 Oh, goodness, if you can own assets, if you own property, if you own stocks, if you own, if you could just own anything right now, at least it appears that that is, that is the winning ticket at the moment. And if you're renting, it is, it is, is probably, I mean, there may be some.
29:27 Alex Kantrowitz? Renting and a wage worker. Yeah.
29:29 Speaker 01 And a wage worker, it's a hard, it's a hard place to be. It's a very, very hard place to be. And we've seen that. And we've seen the movie. It's, it keeps, keeps, you know, the divergence keeps getting worse.
29:41 Alex Kantrowitz? Yeah. And I worry what's going to happen to the country because you will have like a very distinct, we already had a distinct set of winners and losers. And now we're going to have a much more distinct set of them.
29:52 Speaker 01 And I think it'll then play into the politics and it's going to get very, you know, completely.
29:57 Alex Kantrowitz? Yeah. Okay. Let's talk about something more uplifting, specs.
30:00 Speaker 01 Yep.
30:01 Alex Kantrowitz? I really had just one question written down about specs.
30:04 Speaker 01 Okay.
30:04 Alex Kantrowitz? Legit or scam? What's your take on it?
30:09 Alex Kantrowitz? So these are blink check companies that investors will raise lots of money for and then invest in a company that they want to take over, just for listeners. But sorry, go ahead.
30:17 Speaker 01 It's okay. The answer is actually, it's not binary. I actually think SPACs will be around for a very, very long time. I think they'll be a feature of the market. And by the way, they were a feature of the market for years. They were just sort of a dark sort of corner, and people did think they were somewhat shady. I think that this sort of SPAC phenomenon we're seeing is probably going to be, long term, actually a good thing for SPACs in so far as they're going to create more regulations and other policies and better practices around these things so that they're not effectively backdoor ways for companies to go public that shouldn't be public. I mean, that's the issue. Right now, it's a backdoor, it's oftentimes
30:59 Speaker 01 a backdoor way for a company that has no business being public to be public without going through the sort of rigorous process of an IPO. That's, I think, the issue, pushed by quote unquote sponsors who really have no interest in actually hanging around the hoop at all and actually investing in the company, but, you know, making a quick buck. That's the problem. I think longer term, you're going to find more SPACs with more reputable sponsors, or, and that's not to say that the current sponsors aren't reputable. There are some that are and some that aren't, that will have more attractive pricing and more attractive transparency around what they're doing. And then it will become just another
31:44 Speaker 01 sort of way for companies to go public. But, but I don't think we will look at it as askance as we are now. And I think we're looking askance today rightly.
31:56 Alex Kantrowitz? Yep. This is kind of an inside baseball question. But did you read Doohic stories on SPACs and Chamak?
32:01 Speaker 01 On Chamak?
32:02 Alex Kantrowitz? Curious what you thought about it.
32:05 Speaker 01 You know, I thought, I worked with Charles for many, many years. He's a great writer. I thought he did a great job with the piece. I think Chamath's an interesting, complicated, brilliant guy.
32:21 Speaker 01 Who I think has skated, you know, but skates close to the edge, no question. And I, I think 20 years from now, he will get credit as the SPAC king. I think he will get credit. But the question is whether that will be good credit or bad credit.
32:37 Alex Kantrowitz? And that's the label you want.
32:39 Speaker 01 No, no, and I'm not sure what the, I'm not sure what the answer will be. You know, I only say that because I think if you're, as we were talking about before, if you're a Gary Gensler and you're trying to make your mark and you look at the SPAC market and you think that it is not being done above board, you know, a lot of these SPACs are presented in, you know, in the best light always. And I'm sure that if you subpoenaed the emails, you would find lots of people of these sponsors, maybe the Chamaths of the world and people like Chamath who are emailing each other and clearly they have projections that are not great and projections that are great. And if you go out and make only great projections, but you don't acknowledge the other projections.
33:25 Speaker 01 You know, is that a good case to bring? Maybe it is. I don't know. But I think that that's the kind of thing that you could see.
33:30 Alex Kantrowitz? All these things that we've talked about, meme stocks, Bitcoin, SPACs. I like the way that they work in theory. They are a way for the everyday person to get in on, for instance, the value of the IPO or, you know, a rising currency or a momentum stock before the institutional investors get in there. So I like what you're saying.
33:51 Speaker 01 I look, I love the idea of democratizing finance. What I find so strange, what I find so strange is the people who are, who say they're trying to democratize finance seem to do such a lousy job of actually trying to protect the people that they say they're democratizing it for. So I would feel totally differently about SPACs if the SPAC sponsors were out there saying, look, we want to give you an early opportunity to get in now, but here are really all of the issues and problems and conflicts and everything else that are involved in it in a very easy to digest way. Why don't they do that? For obvious reasons, they don't do that. I think.
34:34 Alex Kantrowitz? Half of its grift.
34:35 Speaker 01 Yeah, right. But I think that's it. But that's the issue. I think that there's a lot of these things. Same thing with the meme stocks. You know, I would love if the people who were really out there promoting this stuff on Reddit, didn't just explain what they were doing, but said, here are the risks. I don't know what's going to happen here. Like, this is a theory and you don't, you don't see that. You know, I think Robin Hood, by the way, has done a tremendous job of creating a product that that people want to use. But most of them, unfortunately, even though they did the terms of service, don't understand that there's this payment for order flow issue that effectively some of the money that they're, that they could be making effectively is getting paid out to, to, to other financial
35:20 Speaker 01 firms. And that's how Robin Hood is getting paid. So that's, that's sort of my, if, if I have a, it's, I mean, I guess journalists are supposed to be professional skeptics, but that's, that's where my skepticism lies.
35:33 Alex Kantrowitz? Yeah. And I think it's all fair skepticism. All this stuff's nice in theory. We probably need some rulemaking in order to make sure that people can really share in the wealth and, you know, don't end up getting hammered by the downside.
35:46 Speaker 01 And I, and I look, I hope everybody does really well. I mean, that would be great outcome.
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38:00 Alex Kantrowitz? And we're back here for the second half of the Big Technology Podcast. Our guest is Andrew Ross Sorkin. Okay, we're going to talk about big tech antitrust. This is one of our favorite issues to discuss/debate. So why don't we jump right into it? First, I want to hear your personal story. I saw you hint at it on Twitter, and I want to hear the full deal. So your father was an antitrust litigator.
38:24 Speaker 01 That's what he did for a living.
38:27 Alex Kantrowitz? So you grew up talking about antitrust cases around the dinner table. Tell us more about that.
38:32 Speaker 01 All day long. So my father was an antitrust lawyer in New York City. And that's what we talked about. We talked about whether mergers should go through or not, how to define a market. We talked about dumping cases when foreign companies were arguably dumping products in the United States at lower prices. That's an antitrust issue. And I loved it, frankly. And we had debates about Microsoft for years. Should the browser be connected? Should it not be connected?
39:08 Alex Kantrowitz? Whose side were you on?
39:10 Speaker 01 Oh, I went back, I went back and forth.
39:14 Alex Kantrowitz? Yeah.
39:15 Speaker 01 There was certain evidence that was presented. I was a believer at one point, I do remember thinking it was an ecosystem and actually that the ecosystem mattered. So I remember going back and forth about that with him a lot. And, but those were, we've, anyway, I love a great antitrust debate.
39:34 Alex Kantrowitz? So. Yeah.
39:35 Speaker 01 Let's go for it.
39:36 Alex Kantrowitz? Okay, so Apple.
39:38 Speaker 01 Yes.
39:39 Alex Kantrowitz? You don't think Apple is a monopoly?
39:41 Speaker 01 I don't think Apple is a monopoly in the way it's being argued in the construct of the Epic case, clearly, and probably more broadly, I don't think it's a monopoly either yet. Remember that there's two pieces. One is, the other thing I remember learning as a child is being a monopoly unto itself is actually not illegal.
40:10 Alex Kantrowitz? It's the maintenance of a monopoly.
40:12 Speaker 01 I don't think that people really know that.
40:13 Alex Kantrowitz? Yeah.
40:14 Speaker 01 People say, oh, it's a monopoly, therefore it's illegal. It's, it's, it's, it's what you did to either become a monopoly or to quote unquote, maintain the monopoly, as you just said. And so, you know, in the, in the context of the Epic case, for example.
40:29 Alex Kantrowitz? Right, and just, just for context, Epic is the maker of Fortnite. Fortnite sued Apple, sorry, Epic sued Apple because Apple was charging this 30% tax on top of the money that people were paying to upgrade on Fortnite and didn't like it, got kicked off the App Store. But Fortnite does exist, you know, in many different places, not just the App Store, but on computers and actually most of its businesses are, is outside the App Store.
40:52 Speaker 01 So, so to me, the, the lesson I learned from my father many years ago is when you, when you think about any type of antitrust suit, you first have to think about the market. What is the market? So in the context of Epic suing Apple, I've never thought that they Had a great case. I thought that there were other companies that could probably bring a stronger case because most of Epic's market, if you will, doesn't even exist on the phone. That's not where the majority of the people are even playing Fortnite. They're playing it on consoles. They're playing it on computers. They're playing it in other places. So arguing that Apple is somehow a monopoly that's doing some disservice to them.
41:36 Speaker 01 I think once you sort of define the market and say that they're not a monopoly in the context of Epic, everything else goes out the window. And, you know, there was lots of, look, there are lots of things that came up during that trial because I listened to it every day on YouTube. I was fascinated by it. And there were some very unattractive facts that were brought forward for Apple's purposes, not necessarily in relation to Epic, but about sort of how they keep a walled garden and what they're trying to do, all of that. And I, I, I, I'm not going to, I wouldn't sit here to defend Apple in that regard. I would just say, in the context of the Epic case, I think it's a, it's a very tall,
42:18 Speaker 01 tall hill to climb to win that case. I also think it's very hard, even in a more, more broadly, to claim that the App Store unto itself is monopolistic insofar as it's very hard to say that Walmart is a monopoly. You know, if you have your own store, what you sell in it, you know, you typically don't have to open up your store to others. That's, it's a very unusual sort of thing to ask for. And I've always been surprised in a way by the resistance from, I understand why developers would like
43:03 Alex Kantrowitz? More money.
43:04 Speaker 01 Lower fees, no question, but, you know.
43:08 Speaker 01 This isn't like a false inducement case. So there are cases where a company, a store, might say, "Please make a product for us, and we will give you a certain percentage of the sale, or we'll take a certain percentage of the sale." And they bring you in at 5%, and then 12 months later, they jack the price on you. Right? That would be a problem. Because you've built a product for a specific thing, and then they've changed the terms on you. In fact, at Apple, the terms have actually only gotten better. Right? First of all, they've either been at 30%, or in some cases, they've since come down.
43:50 Speaker 01 So it's not like everybody who was developing for Apple didn't know what the arrangement is. It's a little... And people forget that every product, every developer is developing for Apple. It's a little bit like if you were an automaker and an auto supply maker. You know, you said that we're looking for steering wheels for this car, and you will make the steering wheel for this car. And then the auto supply maker decides to make a steering wheel for this car, and then decides they don't like the deal.
44:25 Alex Kantrowitz? Well, okay, it is a little different than that.
44:27 Speaker 01 That's kind of what's happened here. I'm not so sure.
44:30 Alex Kantrowitz? Because you're talking about like, I mean, the way to get to people using phones. Like, that's become the internet in a large part.
44:38 Speaker 01 So that is actually, to me, the most interesting piece of this. At some point, you can just make a public policy argument, which is a case that the government would have to bring, I think, not an individual company. The government could bring. And it really is a public policy issue, which is to say, at some point, do you decide that it's somehow bad for the economy for a company to be of a certain size and scale? I'll give you a great, by the way, example of this. So after the baby bells, after the bells were broken up, this is in, I believe, the late 70s, early 80s. There was a fascinating case where there were third-party companies that made telephones, like the physical telephones.
45:23 Speaker 01 And they weren't allowed to connect into the baby bells' networks. It was called, it was an interchange business. Because the baby bells said, "You have to use our physical phones on the network." And a lot of those third-party companies sued and they lost individually. But then the government brought a case and they won. And so I think that that's to me, the sort of larger piece of it. And, and again, there is a sort of public policy question and I don't know the answer. But I also don't know if you broke it up. Or, or I'm not sure what the, what the
46:02 Speaker 01 solution would be because I do think that the reason why you buy an iPhone, the reason I buy an iPhone is because I like it the way it is. I do actually. I don't think I'd be happy if it was the Wild West. Otherwise I'd buy an Android.
46:15 Alex Kantrowitz? True. That definitely has something to do with it. It's also, they get you locked in on the ecosystem. So if you started using an iPhone before Androids were good, you're kind of stuck there. Now you're going to break all your group messages if you go Android and you'll appear as a snot green bubble.
46:31 Speaker 01 I also, I also think, by the way, that what people don't appreciate is what do you think the implication would be if they won? Let's say, let's say there was now multiple app stores in the iPhone.
46:41 Alex Kantrowitz? Yeah.
46:42 Speaker 01 What happens? It just means that the hardware will get more expensive.
46:45 Alex Kantrowitz? Okay, that's a good point.
46:46 Speaker 01 That's, that's what it'll get passed on to you. So that's why I think there's some interesting sort of dynamics that are often not thought about.
46:53 Alex Kantrowitz? Yeah.
46:54 Speaker 01 Thoroughly in the public policy.
46:55 Alex Kantrowitz? Do, do you think Apple could raise the iPhone price and still sell the same amount as, as they are? I mean, it's pretty high right now. Could they go to $1,500 and sell the same amount? Or does that make switching become more appealing to people? Given that Android's really improved. Like, there's got to be a ceiling for them in terms of their way that they raise their prices.
47:16 Speaker 01 So I've always thought there'd be a ceiling for them.
47:18 Alex Kantrowitz? And then look at us.
47:19 Speaker 01 Hasn't it, hasn't it surprised you?
47:21 Alex Kantrowitz? Oh, yeah.
47:21 Speaker 01 This goes back to meme stocks a little bit. Like, the world is a little bit divorced from what you might think is completely realistic.
47:28 Alex Kantrowitz? Totally.
47:29 Speaker 01 Look, maybe for, you know, the highest end phone, I think there will come up on a, on a, on a top. I would imagine. But I also think they could probably manage to create
47:41 Speaker 01 not cheaper phones, but sort of more middle-tier phones and, and, and build a, build a premium effectively into that.
47:49 Alex Kantrowitz? Yeah. Also, the whole reason why they're so adamant about this stuff is because They realize people are going to hang on to their phones for longer. It used to be they'd upgrade every year, every other year. Now you can hold on to a phone for four or five years and not suffer too badly for it. So they need that App Store revenue in order to be able to justify their $2 trillion valuation, even in our non-realistic.
48:09 Speaker 01 Right. But by the way, you could also decide from a public policy perspective that it doesn't matter that Apple has a $2 trillion valuation. So that shouldn't be, that shouldn't be part of the calculus. The question is, if there was a lower price, would that, you know, where would the value go? That's the other question, by the way, I think, which is to say, would that value really get spread out? Would it just go to those other companies? Is that a better answer anyway? And I don't know the answer.
48:38 Alex Kantrowitz? Right. Let me ask you this. So, I mean, we've talked a little bit about that 30% tax.
48:43 Speaker 01 Right.
48:43 Alex Kantrowitz? Do you think Apple should be able to prohibit app developers from telling people they can go pay for services for less money on the web, for instance? So if you want to upgrade your Spotify or something, or go buy upgrades and Fortnite can, should Fortnite be able to tell you, you can go to the web and buy this upgrade for less? Or is Apple in its rights to prevent people from doing that? Because that seems to be the thing that they're gonna.
49:11 Speaker 01 This one, now you've got me in a very tough one because I'm a total free speech believer. And you know, I think that people should be able to say whatever they want.
49:20 Alex Kantrowitz? Right. Yeah.
49:21 Speaker 01 But I also recognize that the business model sort of comes undone effectively.
49:27 Alex Kantrowitz? Yeah.
49:28 Speaker 01 If everything sort of goes off piece, if you will. So I don't know. I don't, I don't know.
49:36 Alex Kantrowitz? Yeah. Well, I'll make it easy for you because I just got a look at some of the draft bills that they're circulating in Congress. You know, you talk about, you mentioned earlier, maybe this is a government solution. And there's five of them. And one of them explicitly prohibits companies from telling people who are using their services that they can, wait, basically, let me see if I can phrase it right. It explicitly prohibits companies from preventing app developers from telling their users they can get the services cheaper elsewhere. Which I thought was fascinating. And I've always been, and I think we've talked about this in the past, like I've always been pretty skeptical that the US government is going to do anything to these companies, right?
50:21 Alex Kantrowitz? Because they've proven themselves so ineffective time after time. But looking at these bills today and seeing the momentum that's come out of CCLIN's committee and the House Judiciary, it seems like that might be changing. They're starting to fund the regulators. They're writing these bills that are focused, like another one of the things that they were talking about was that companies will no longer be able to use like third-party data that they get from developers and use that to privilege their own products. And up until now, that was largely like Amazon wasn't going to do that because they needed merchants, not because it was against the law. It was sort of like, you know, assume good faith. And then when they asked Bezos about it, he was like, yeah, maybe we actually do do this a lot. And but now they're starting to put that into legislation and who knows if it will pass.
51:07 Alex Kantrowitz? But it does seem like the government is much more serious about doing something to these companies than it ever has before.
51:13 Speaker 01 Totally. I
51:15 Alex Kantrowitz? What do you, what do you make of that? Yeah.
51:18 Speaker 01 I think they will do something. I just don't know how far it'll go and how big of an impact it will have. Do you remember, and I gotta go back and look at the result. There was a case against American Express because they had a terms, terms of service for merchants that were not allowed to say that you could, you couldn't offer a better price. If you accepted American Express, you could not offer a better price to MasterCard users or Visa users. And you could not advertise that ostensibly the idea was there was a higher transaction fee with, with American Express. I believe, and I gotta go back and look at this, American Express, I thought originally lost the case and then maybe won afterwards on appeal.
52:04 Speaker 01 Unless my memory is not capturing that right, I have the computer in front of me, so maybe we'll look while we're talking. But you know, it's, it's fascinating.
52:15 Alex Kantrowitz? So let me ask you this as you search for that.
52:18 Speaker 01 Sorry.
52:19 Alex Kantrowitz? No, no worries. So can you see one company that starts to be like, I mean, I know we have cases against Facebook and Google from the FTC and DOJ. And then investigations going on with Apple and Amazon and those two regulatory agencies. What's your gut like? What do you think? Do you think that these companies are going to be broken up? Do you think that it's just like these laws are passed or, you know, or is it?
52:44 Speaker 01 Well, I think like, I think it'll be, I think it'll be company by company. I think, I think it'll be very hard. Look, I think it'll be very hard for America, for America's best. I think it'll be very hard for Amazon, for example.
52:56 Speaker 01 I think some of the things that we've read over the years around what's happened with some of the third party merchants. And building product on top, you know, effectively to compete with them and using some of that data. I think there's going to be rules, regulation and enforcement around that. That's going to make that kind of thing very difficult. Do I think that Amazon unto itself is going to get broken up? I'd be very hard pressed to see that really happen.
53:21 Alex Kantrowitz? Yeah, it's tough to do also.
53:23 Speaker 01 Very tough to do. Do I think Facebook will ultimately get broken up? No, I don't. And, and part of that is because the other element of this, and this is the thing that I, I do believe.
53:36 Speaker 01 Even though I know we think there's no competition, I mean, if I had said, Alex, to you, if I just looked at you and said Tik Tok.
53:44 Alex Kantrowitz? Yeah.
53:44 Speaker 01 Like three years ago, you would have looked at your watch.
53:48 Alex Kantrowitz? It's true.
53:49 Speaker 01 Right? Like, that's what would have happened.
53:50 Alex Kantrowitz? Yeah.
53:51 Speaker 01 And so if you go look at the top 20 largest companies in America 30 years ago, and you look at the top 20 large companies in America today. Like they're pretty much all different. They really are. And then of course, the question is 30 years from now, will they be again? And, and, and that is the fundamental question, but I am, I am a believer in innovation.
54:13 Alex Kantrowitz? Yeah.
54:14 Speaker 01 I am.
54:15 Alex Kantrowitz? I think we all know that AMC and GameStop will be the top two companies in the economy.
54:21 Speaker 01 Given how much money is going to be thrown at them and you, and if, so Tesla is going to be number three? Is that what you're saying?
54:27 Alex Kantrowitz? Depending on if Elon's in jail or not.
54:30 Speaker 01 Ooh, wow. That you see, you see the gloves just came off at the end of the podcast.
54:36 Alex Kantrowitz? That's right.
54:37 Speaker 01 Do you really think he's going to jail?
54:39 Alex Kantrowitz? No, probably not. But you never know with that guy. He's unpredictable.
54:43 Speaker 01 For what, though?
54:44 Alex Kantrowitz? I don't know. I mean, I don't think he's gonna go to jail for financial crimes.
54:49 Speaker 01 Interesting.
54:52 Speaker 01 I'm one of those believers, and I can't claim to have made up this phrase. It might have been like Jason Calcanis or someone like who said, you know, betting against Elon is like betting against humanity. And I kind of, I kind of believe that. I don't agree with everything that Elon does at all. And I think he's done, done lots of things that I've just frankly disagreed with. But I think I marvel, I do marvel at what he's, what he's been able to do.
55:19 Alex Kantrowitz? Yeah, I give him credit. I mean, especially the stuff he's done with Tesla and SpaceX. I mean, I've been really fascinated with this whole space race that's going on between him and Bezos. And I think the fact that both of them are in it is gonna make it even more exciting. Because never bet against billionaires' ego. And these two guys have egos, you know, the size of the planet. And they're gonna put everything they have into one up and the other.
55:45 Speaker 01 But are, is all of their wealth gonna be taxed such that they won't be able to do this?
55:49 Alex Kantrowitz? Oh, what do you think's gonna happen? Because I mean, I guess like that's another big thing that they're talking about. This 40% capital gains tax. Well, last thing, before you answer that, I'll just say, I wouldn't bet against Elon, the company, you know, the companies. But the dude is a maniac. Like, he's so unpredictable. And he's shown a total inability to grasp with like what the consequences of his behavior might be. So, you know, I don't think he's gonna be in jail, but would I be surprised? Not 100%. Okay, sorry.
56:19 Speaker 01 Wealth taxes.
56:20 Alex Kantrowitz? Wealth tax.
56:21 Speaker 01 I don't know if we're gonna get to a wealth tax, but I do think that there is a real question about coming up with a fairer tax system.
56:33 Speaker 01 I'd like to, I mean, that's the one thing that I've cared about for a very long time. I think it's very important in a democracy that people feel that the system is fair. I think it's actually, I think taxes are actually part of that democracy. And the fact that it isn't fair, the fact that everybody knows it isn't fair, and that it's been this unfair, I think unless it does get fixed and solved, not just for the sense of fairness, so there's the fairness issue, and then there's just the practical, like, we need revenue issue. But it does seem that when you look at, and this ProPublica piece really, I think, demonstrated it. Some of the wealthiest people in the world have really managed to effectively never pay taxes. Totally.
57:16 Speaker 01 And look, some of that's because they're giving it away and it's a charitable contribution. And I appreciate that, but it also means effectively that everybody else, including us, effectively subsidizing their philanthropy, right? They get to choose where they're giving their money, you don't. And so, and by the way, I think that actually oddly enough goes against people's fundamental sense of fairness. So I think that there has to be at some point, look, I'm a believer in increasing the step up basis at the end of life. I think a lifetime of not paying taxes is enough, even if you lose the family farm. Not a popular thing to say, I know, but I think you have to pay it.
57:56 Speaker 01 I would deal with, I think, some people like Larry Ellison, who live off of effectively interest, basically they take out loans against their stock and so that they never have to pay. Yeah, that was wild. Yeah. I think there should probably be a limit on the amount of interest deduction you can actually take. And I, very unpopularly, would probably tax
58:19 Speaker 01 great philanthropy, meaning most philanthropists, including Warren Buffett or Bill Gates, effectively are transferring shares, typically founder's shares, into their foundations or to a charity. Which means that those shares, which have created enormous value and wealth, if you will, will never be taxed, ever. When they're sold by the charity. And so my view is maybe, maybe your, the first $5 million you give away on an annual basis should be, you know, tax-free. But after that, there probably should be some rate. Maybe there's a special philanthropy rate even. Maybe it's, maybe that's closer to the current capital gains rate, especially if capital gains goes to something that goes to income tax.
59:03 Speaker 01 But that's sort of a little bit of how I'm thinking about it.
59:05 Alex Kantrowitz? I like that because essentially if you're not taxing that money, it's going to philanthropy. What the government is saying is we think you billionaires are going to do a better job at providing services than we are.
59:15 Speaker 01 Right. So. And by the way, there, there is an argument to be made. I do want people giving to philanthropy.
59:21 Alex Kantrowitz? It should be charity, but it can't be complete substitute for government.
59:24 Speaker 01 Can't be a complete, can't be a complete substitute. And I think that if you took 20% of it, A, it would go towards the government and B, then it would also go towards the philanthropy. I would also say, you look, I mean, we can have lots of debates about Bill Gates, but I was going to say, what Bill Gates has done. No, but what Bill Gates did even during COVID, actually to me proved that you actually occasionally might want a billionaire out there. Working on some of these projects.
59:51 Alex Kantrowitz? I agree with you 100%.
59:52 Speaker 01 Effectively, now uniquely though, they're almost like nation states because they're competing with the government. But in a way, that competition was probably helpful.
1:00:01 Alex Kantrowitz? Yeah, no, I agree. I think that Gates's work on the vaccines in particular, uh, helped push everybody forward. And I'm glad to be vaccinated, so I'll say that much. But it does strike me as unfair, you know, talking about that ProPublica story that all these billionaires are paying less tax than big technology. It just seems crazy.
1:00:21 Speaker 01 Yep.
1:00:22 Alex Kantrowitz? I'm struggling to make it and you know, it should be, there should be some more fairness on that front.
1:00:27 Speaker 01 Well, after this podcast, you won't be struggling to make it. I know that. I mean, I, what, aren't you going to be on your like, you know, series C, series D?
1:00:34 Alex Kantrowitz? No, no investment.
1:00:35 Speaker 01 What's, what's the cap table look like?
1:00:36 Alex Kantrowitz? I can't take any investment. I think taking investment in a new media company is, is absurd most of the time.
1:00:42 Speaker 01 You're just bootstrapping yourself. I like it.
1:00:43 Alex Kantrowitz? Bootstrap away, add support it and, and you know, cross the fingers.
1:00:47 Speaker 01 It'll create even more value for you when you, when you go public through a SPAC.
1:00:51 Alex Kantrowitz? That's right. We'll have to give Chamath a call after this one. See how we can do that. Okay. Well, I think we should wrap there. That's, that's a great place to end. Thank you so much for coming on. It's great having a discussion with you as always.
1:01:02 Speaker 01 Thank you for having me. I appreciate it. This was awesome.
1:01:05 Alex Kantrowitz? Are you still doing?
1:01:06 Speaker 01 Now I'm looking at you this way, but yeah.
1:01:08 Alex Kantrowitz? Yeah. Yeah. Are you still doing uh clubhouse and spaces or have you given up on that?
1:01:12 Speaker 01 Oh, um, I haven't done any clubhouse in quite a while. I turned, I turned the notifications off, which might be part of it.
1:01:20 Alex Kantrowitz? Same here, same here.
1:01:21 Speaker 01 Cause they were very aggressive with the notifications, which I thought was smart for them to do, but then I, they just became less valuable to me over time because I haven't seen as many people like you and others on it. I've done a little bit of the spaces stuff here and there. I haven't been hosting anything really myself. Occasionally I'll listen in. You know, if I happen to be around when uh Kara has been doing one on a Thursday night, that's occasionally interesting, but I haven't. I don't know. What's, what's your take on the whole, whole audio, uh live audio space?
1:01:52 Alex Kantrowitz? Yeah, I, I was always a little skeptical of clubhouse because I thought it would be tough.
1:01:56 Speaker 01 I remember you wrote the very controversial tweet, sort of tweet stream.
1:02:00 Alex Kantrowitz? I got dunked on pretty hard for that, but I always thought it would be tough for them to A, keep the middle class of creators around. So like there were going to be a few people that were going to accrue a million followers.
1:02:09 Speaker 01 Right.
1:02:10 Alex Kantrowitz? But everybody else, you know, who might've been able to attract a larger audience elsewhere, shows up on clubhouse and gets like 40 people and it immediately becomes a terrible experience and they don't want to go back. And then I think the challenge from Twitter is pretty significant and I think that Twitter spaces has potential long-term and is good as a feature. You know, to pop up here and there as something you'd want to jump into, but I think that Andreessen Horowitz definitely overpaid uh in terms of their investment in clubhouse. And Twitter seems to be doing a lot of the right things to make this thing, something that is useful when the time calls for it, but you know, not like a revolutionary social product. I was afraid at first that um it would crush podcasts, but that doesn't seem to be the case.
1:02:55 Speaker 01 And where are you? I don't know if we're still live or not.
1:02:58 Alex Kantrowitz? Yeah, we're, I mean, you can tell me when you want to call it.
1:03:00 Speaker 01 No, you can take whatever you want. On podcasts.
1:03:03 Alex Kantrowitz? Yeah.
1:03:06 Speaker 01 How do you think about sort of the free RSS, if you will, versus what you see happening with the walled gardens, the Spotify kind of situation, or Luminary, or sort of the substackization of podcasts?
1:03:26 Alex Kantrowitz? Yeah, it's really interesting. So actually, talking about taking money, when I first decided to start this, I did hear from a VC who wanted to put money into the podcast in particular, because he believed that there was real opportunity there.
1:03:39 Speaker 01 Right.
1:03:39 Alex Kantrowitz? And the way that he wanted to do it was do it subscriber based, so like kind of a Patreon model.
1:03:45 Speaker 01 Yep.
1:03:46 Alex Kantrowitz? I think that there's like a real place for that, and I wouldn't be surprised if this show ends up doing that. Maybe do one free show, one paid show a week, or something like that. But like, I also think that there's really something to be said, especially early on, for getting your stuff in as many platforms as possible and making it accessible. Like, I remember I was late to turn on Stitcher for this show.
1:04:07 Speaker 01 Okay.
1:04:07 Alex Kantrowitz? And I was like, all right, who uses Stitcher? And I turned Stitcher on, and it became an important part of the audience. So people like had been talking about like, oh, Spotify, Overcast, like every single platform. People even listen on desktop. So as I'm building, you know, it's important for me to grow the biggest audience possible. I wanted to make it available to everyone.
1:04:27 Speaker 01 And which network or which platform gives you the best access to be able to get directly to the consumer? Because I know, obviously, one of the big issues with Apple is that you don't really have a direct relationship, for example.
1:04:40 Alex Kantrowitz? Oh, yeah. So that's the problem. There's no direct relationship with people. Like, there are listeners that will come in through third-party platforms like Spotify, Overcast, Apple, but all those platforms will own the relationship with the listener. Now, like, Apple is starting to make it possible to do like...
1:05:00 Alex Kantrowitz? A paid element of the subscription. So if you're listening with Apple and you want to pay for like bonus episodes, you can do that. But it's just one platform. So there are others out there like Supercast that make that possible. But yeah, look, I mean, I wrote a story about this recently. I think podcasts are massive, massive opportunity that are just starting to hit their stride. And you have only 107 million Americans that listen to them, leaving about 200 million plus that have yet to make it in. And over time, I think there's going to be podcasts that appeal to everyone, and they will largely replace the radio. So I would expect it to go in all different directions.
1:05:35 Speaker 01 What are your favorite podcasts these days?
1:05:37 Alex Kantrowitz? I mean, I listen to the Daily pretty religiously.
1:05:40 Speaker 01 Okay.
1:05:40 Alex Kantrowitz? I listen to Pivot.
1:05:43 Speaker 01 So that owns a half hour of your day every day?
1:05:46 Alex Kantrowitz? Yeah, so I have this routine where like, I'll go for a run, and then pick up a coffee, and on the way home, listen to the Daily. So I would say probably three out of five, three to four out of five shows I'll listen to.
1:05:59 Speaker 01 What do you do on the run? Music?
1:06:01 Alex Kantrowitz? Yeah, I also listen to a podcast. But it's not, it's not a spoken word podcast. And I think I've admitted my EDM love on this show before. So I have no problem saying it again. It's the Above and Beyond mix they put on every week. It's two hours. So it gives me two good runs. And then there's another DJ I listen to, it gives me another hour.
1:06:20 Speaker 01 Got it.
1:06:20 Alex Kantrowitz? So, yeah, so.
1:06:23 Speaker 01 So you listen, okay, you listen to Kara?
1:06:25 Alex Kantrowitz? Kara and Scott on there. And then just a smattering of others. I like the realignment. I don't know if you listened to them before.
1:06:31 Speaker 01 Yep.
1:06:32 Alex Kantrowitz? Sagar and Jetty Marshall-Kosloff, they have like, really interesting conversations about politics and tech. And come to it from like, I don't know, they don't do the traditional talking points, which to me is great. Trying to think what else. Basically, anything else that people suggest. You know, I've also gotten into some of these narrative podcasts. There's one that I listened to that actually Apple produced called The Line. Have you heard of it?
1:06:54 Speaker 01 No.
1:06:55 Alex Kantrowitz? It's about the Marines in Iraq that killed that ISIS member and took a picture with the dead body.
1:07:02 Speaker 01 Wow, it's good.
1:07:03 Alex Kantrowitz? Oh, man, it's amazing. Six parts. The guy gets access to the Marines, you know, both the guy who was on trial, and the members that turned him in. And it just tells a story in a way that I think you could only do on a podcast. So, yeah. Where do you think it's going?
1:07:22 Speaker 01 I don't know. I recently fell for I fell hard for a new podcast and sort of I don't think it's that new, though. I maybe I'm just new to me. I'm like, Smartless, you know?
1:07:32 Alex Kantrowitz? Oh, yeah, that's fun.
1:07:33 Speaker 01 Hilarious. It's sort of like It's sort of like drive time radio, actually, but I just
1:07:39 Alex Kantrowitz? That's right. It's like a morning show.
1:07:41 Speaker 01 It's like they're like a fun gang. They're pretty, pretty fun guests and, you know, it's sort of you sort of listen for the guests, but not even you sort of listen for them.
1:07:51 Alex Kantrowitz? Yeah, the banter's good.
1:07:52 Speaker 01 Pretty amazing. Yeah, so I've enjoyed that recently. Trying to think what else I've been listening to. I'm a daily listener.
1:08:01 Alex Kantrowitz? I try to get into Freakonomics Radio. I listen to that more and more.
1:08:06 Speaker 01 Oh, you know what's great?
1:08:07 Alex Kantrowitz? But
1:08:08 Speaker 01 For the sound design, actually, more than anything, and it actually may give Luminary a chance, this new Chappelle podcast.
1:08:18 Alex Kantrowitz? Oh, yeah, I've heard about it.
1:08:19 Speaker 01 It is
1:08:20 Alex Kantrowitz? Yeah, that's good.
1:08:21 Speaker 01 Pretty extra. It just Like, I know some people love it, some people hate it, but the, just as somebody in the business, how they did it is pretty. I mean, first of all, he's great, but just the the production of it is extraordinary for me. Now, I've also talked to people in the podcast space who are like, oh, it's overproduced. Is this not I?
1:08:43 Alex Kantrowitz? Yeah, I don't have any, yeah, religious beliefs about the way to produce a podcast. If it sounds good, if it's compelling, I'm all for it. So I should give that Chappelle show a try.
1:08:54 Speaker 01 What kind of mic do you use?
1:08:55 Alex Kantrowitz? This is a Scarlett mic. I don't know much about the technology, but I did the Land of the Giants podcast for Recode about Google. And they shipped over Scarlett and I shipped it back and then ordered one on Amazon. So I was watching the new Bo Burnham special and I saw the same mic in it. So it must be okay.
1:09:16 Speaker 01 Okay. Is it good? The Bo Burnham?
1:09:18 Alex Kantrowitz? Oh, the Bo Burnham special? Yeah, you should watch it. It like perfectly encapsulates the madness of Being inside for a year and you see him just sort of have like this pretty witty kind of fun skits in the beginning and then it's just this descent. I'd be curious to hear what you think about it. It's a wild one. Yeah. I'll go watch it. Thank you for having me. Thanks for being on. Great having you, Andrew. See you soon. Thank you, Nick Watney, for doing the editing, Red Circle for hosting and selling the ads. Appreciate it very much. Thanks to you all for listening. If you like the podcast, please rate us. If you're new here for the first time, please subscribe and we will see you all next Wednesday.
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Previous Andrew Callaghan of All Gas No Breaks Goes Independent Next Crossover With The Realignment: Can Tech Survive Washington’s Onslaught? Page updated October 13, 2026 · transcript and summary are machine-generated
