2021 Predictions: The Great Dispersion

Scott reflects on the 2020 predictions he got right and wrong and then dives into his predictions for the new year. You'll hear his thoughts on the dispersal of work, hospitality, and healthcare, as well as potential acquisitions, stocks he's watching, and more. 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

  Episode 43, the atomic number of technetium, the number of Richard Petty's race car when he won seven Winston Cup championships. True story, Microsoft Internet Explorer sponsored a race team, but the car kept crashing.

• 0:15Speaker 01

  Go, go, go!

• 0:26Speaker 00

  Welcome to the 43rd episode of The Prob G Show and the first episode of 2021.

• 0:37Speaker 00

  Go fuck yourself 2020. Anyways, Happy New Year from the dog. Today, we're sharing our predictions from the live stream that took place on the 17th of December. We'll review the predictions we made for 2020 and hold ourselves accountable on the ones we got right and the ones we got wrong. In addition, we'll talk about our predictions for 2021. A few disclosures, a few disclosures. I get this wrong all the time. As Eisenhower said, plans are useless, but planning is invaluable. And I think the same is true of predictions. Predictions are somewhat worthless, but predicting is worth while. Hopefully, this catalyzes some discussion within your own organization that helps you develop economic security for you and your family. Another disclosure, I own stock in the following companies. So many of these stocks, I'm talking my own

• 1:21Speaker 00

  book, but I don't know what you want to call that. I generally believe in the themes and trends behind these stocks, and I'm trying to vote with my feet and my wallet. Some of them are public, Amazon, Apple, Twitter, Airbnb, I own, and then some, also eliminated public stock I own, and then some private companies, 98.6, better.com, and my higher education startup, Section 4. So if it sounds like I'm talking my own book, as I referenced before, I am, and we're trying to put our money where our math is. Anyways, enough of the disclosure. Let's get on with it. First, we're going to revisit our 2020 predictions after this quick break. Stay with us.

• 2:00Scott Galloway?

  Support for the show comes from Superhuman. The pace of modern work can be relentless. You're getting a constant influx of messages from a ton of different apps. You haven't closed all your browser tabs in a year. Everything seems urgent and staying on top of it all feels like an impossible task. Superhuman Go is an AI chat that's always there when you need it, already aware of what you're doing and doesn't ask you to start from zero. Superhuman Go, from the makers of Grammarly, help you be the best version of yourself at work. It handles the repetitive stuff so you can focus on the work that only you can do. Whether you need to summarize an endless email thread or prep for a meeting that's happening in five minutes, Superhuman Go works inside the tools and sites you already use, your browser, inbox, docs, and your project tools. And its AI chat is available on the side of your browser and it's always ready.

• 2:45Scott Galloway?

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• 3:03Scott Galloway?

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• 3:48Scott Galloway?

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• 4:28Speaker 00

  So let's revisit 2020. Prediction: The Democratic nominee would be Bloomberg or Buttigieg. Got that wrong. Enough said. I don't know about you. I'm gonna miss the misogyny, the bigotry, and the general "head up your ass"ery stupidity of the last four years. I'm gonna miss that. But anyways, welcome Biden and Harris. Uber exits food delivery. We got that wrong. We got that wrong. As a matter of fact, they doubled down on food delivery. Acquired Postmates. And this, to be fair, I'm not a big fan of Uber. I think it's part of the menace economy. We figured out a way to take advantage of a permanent underclass and use software to circumvent minimum wage laws. But distinct of that, you have to give the management team kudos

• 5:11Speaker 00

  for pivoting and taking advantage of the COVID-19 pandemic and moving into food delivery, which has surged as ride-hailing has declined. And you can see that this probably saved Uber's market capitalization. You gotta think that Uber would be struggling right now had they not made this acquisition. In 24 months, FedEx is acquired or down 30% as a prediction I made. Amazon is now spending more money on fulfillment than FedEx or Walmart and has a clean sheet design and is just executing better. And I thought this was gonna primarily be the beginning of the end for FedEx. And I thought this was going really well. And then COVID came along. And distinct of all the death, disease, and disability, it's messed with my predictions, which is really the tragedy here.

• 5:55Speaker 00

  And as you can tell, FedEx has surged. Good for them. Their shipping volumes are up. They're gonna play a critical role in the distribution of the vaccine. Way to go, guys. Amazon will be the fastest-growing healthcare company in the world by 2025. I'm gonna say that we have gotten this right or we are getting it right. Amazon has piloted several healthcare initiatives on its own employees and has all the assets to create a corpus of your digital healthcare system, specifically a wearable that tracks a lot of data, including your body mass index, your movement. What foods you order, your purchase history, your demographics, your wealth, whether you're in a monogamous relationship, your zip code, all the actuarial inputs you would need to build

• 6:39Speaker 00

  an entire vision or image of your digital health. And they'll be able to not only offer you products and services and a diet, but get off their heels and onto their toes from a healthcare standpoint, and perhaps offer you insurance diagnostics or even primary care over smartphones or smart speakers. I believe that the relationship Amazon has with 82% of American households, and by the way, that's the most trusted relationship in the United States between a corporation and a company, that healthcare is a natural fit. And it is clear they are lining up their tanks, their planes and their artillery out the border to go after what is the most disruptable business in the world. Specifically, the 17% of US GDP are the 3 to $4 trillion business that is healthcare. The party stops in 2020. We predicted this in December

• 7:24Speaker 00

  after basically an 11-year bull run. And we see a 20% correction in the Dow. Boom, that happened. It's also had a vicious rip back, but we did have that decline. I'm going to give us a win there. Private company valuations will continue to decline. We're seeing declines. There are some big winners, but on the whole, there have been more down rounds, approximately double the number of down rounds in 2020 than there had been in previous years. Vision Fund II does not happen. Remember WeWork? Doesn't that just seem kind of fun? The whole SoftBank-WeWork fiasco? Well, we were right here. This thing has not worked from the start. Take somebody who conflates the luckiest investment in the world, 10 million or 50 million into Alibaba for $100 million return, and they start believing they're a genius. And regression to the mean,

• 8:09Speaker 00

  and karma has a way of catching up to you. And Vision Fund II is not going to happen. In 2020, Airbnb becomes more valuable than Uber. And you might say, well, that's obvious. Well, it wasn't obvious at the time when we made the prediction. When we made the prediction, Airbnb's value was $30 billion and went to $18. And at the same time, Uber's valuation was approximately double. So we said, OK, these things are going to revert. Where are we now? They're primarily equal. And that is because of the pandemic, because of a great move around acquiring a ride-hailing associate. Excuse me, a delivery company, Uber's stock has surged, but it hasn't surged as much as Airbnb, and Airbnb is on the precipice of eclipsing Uber's market capitalization. As a matter of fact, it may have happened today.

• 8:51Speaker 00

  Why is Airbnb such an incredible gangster company? It is a platform, it has incredible moats around network effects, and as we're seeing, it is accelerating 115% up on the first day of the IPO. Twitter tracks an activist investor or is acquired. I wrote a letter to the board of Twitter management, or to the board of directors. Interesting, I did not hear back. They did not write the dog back. And to be blunt, I felt that Twitter having a part-time CEO is on the verge of comical. I've been on several public company boards and dozens of private boards, and I've never met a CEO who can manage two firms at the same time. So maybe Dorsey has some superpower I'm not aware of.

• 9:34Speaker 00

  And if Twitter moves just 1, 3, 10% of its revenue to a subscription model, I believe that the stock would surge. And as a result, Elliott, one of the largest hedge funds in the world, read my letter and basically showed up and signed it with a $1 billion pen, got three seats on the board, which means that the board knew that they were outgunned, and they gave up board seats incredibly, incredibly fast. The stock has continued to go up, and I believe, I believe that the stock will hit $70 per share if the board continues to pull its head out of its ass and fires their part-time CEO, moves him up to chairman so he can have peace with dignity, and shows any pulse around subscription. I think that's going to happen this year. By the way, management teams and boards don't put out letters confirming, or validating,

• 10:19Speaker 00

  or reinforcing the CEO's job unless they're about to fire him, and he's looking for peace with honor or a graceful exit. What do we also have here with our part-time CEO? We have part-time revenue growth. Look at the usage patterns there up. To be clear, this is a fantastic product, yet, yet the revenue growth does not match, does not match their user growth. Whereas at the other social media firms, Snap and Facebook, revenue growth is outpacing user growth. What is wrong with this movie? When Dorsey speaks, the stock drops. This guy opens his mouth, and people say, wow, great product, great opportunity, shitty part-time CEO. And every time he speaks, he reinforces our instincts here.

• 11:03Speaker 00

  Let's sell the stock. Quibi! will be the worst performing unicorn in 2020. And the tough thing about predictions is when you get them right, they seem obvious in retrospect. But a little 411 on when we made this prediction. We made it a long time ago before they even launched. As a matter of fact, the CFO of the company who's a Stern grad called me and said, hey, boss, can you not dance on our grave before we've been burned? You're not helping. So I quieted the hell down, but not after I said this thing made absolutely no sense. And look at the headlines and the excitement coming out of the gates for Quibi. Oh, my God, quick bites. It's gonna be awesome, right? They secured $100 million of ad commitments ahead of launch. Remember all the excitement about the new Judge Judy, right?

• 11:45Speaker 00

  I wrote this post in February saying this thing made absolutely no sense. And now what skill, what vision did we bring to the party here? Math, simply put, for every billion dollars in content that you get from Apple, they only charge you 83 cents a month. Netflix gives you a billion dollars in content in exchange for 81 cents a month. And guess what? Quibi thought by slicing stuff up into three or five or seven minute segments that they could charge you eight bucks for every billion dollars in content. That just made no sense. They showed up to a squirt. They showed up to a howitzer fight with a squirt gun. This thing just right out of the gates was a terrible value proposition. They were outgunned. What do you know? What do you know? Just after six months.

• 12:27Speaker 00

  By the way, if you're working at Quibi, the best thing that can happen to you is success. The second best thing that can happen is quick failure. So the second best thing happened to the folks at Quibi and the people who work there. Whereas failing over decades or a decade like I did at Red Envelope, that shit hurts. That shit hurts. So failing fast, don't feel sorry for them. They are just fine. Apple goes full rundle and hits 200 bucks a share. That's the prediction here. Okay, so how is their stock price increased three and a half fold on a mild increase in top line revenue and bottom line revenue? Simple, a move to a recurring revenue bundle. They've gone from 9% recurring revenue five years ago to almost 24%. My guess is they like when they get their lips around the crack pipe of shareholder

• 13:11Speaker 00

  growth at the hands of the most accretive action in business history, moving to a Recurring revenue bundle, or as we call it, as we call it, the rundle, when they go full rundle. This is the most accretive action in business history. And you need to be a CEO who not only thinks about top line and bottom line, but your business model. And moving into a monogamous relationship with your consumer. Said, "Apple took 42 years, 42 years to get to a trillion dollars. And then it took five months to get to 2 trillion on the back of a recurring revenue bundle." Apple is going full rundle in 2021. What does that mean? They're gonna take their B-league, Joey Bag of Donuts, Bad News Bears, existing rundle, right?

• 13:55Speaker 00

  Their Apple One, and they're gonna add in this. And they're gonna add in the watch, and they're gonna add in the AirPod Pros, and they're gonna add in the iPad, you know, the shit we love Apple for. And they will say to the billion wealthiest people on the planet, iOS users, "If you come in with us, if you establish a monogamous relationship at 50, 100, 200 bucks a month, you get all of this early. You get it preloaded." The biggest mistake, the biggest mistake we make as marketers, and Apple has realized this, who's probably the best marketer in the world, is that choice is not a good thing. Choice is a bad thing. Choice is a tax. What do we want? We don't want more choice. We want fewer choices. We just wanna be more confident in the choices presented. They just peel off 10% of the people signaling,

• 14:39Speaker 00

  "Have sex with me, I'm a better storyteller. I'm a baller, I make money. You should have kids with me. Your kids are more likely to survive if you have sex with me and we procreate than if you have sex with someone who has an Android device." True story, true story. So if they just get 10% of their iOS base, that's 100 million people, and 100 bucks a month, they have $10 billion a month in recurring revenue. Boom, $200 a share. Boom, $3 trillion market capitalization. It's coming. Our prediction, we said that Disney would win round one of the streaming wars. And you say, "Well, that's obvious." Well, it wasn't obvious back when we said that. This is where Disney was. The Disney Channel had not worked. People had a head start on them. People had more capital. This is where we were when we made this prediction. And then what happened a year later?

• 15:23Speaker 00

  Disney has absolutely sprinted out. We're talking like steroid Ben Johnson out of the blocks here. It has been inspiring, both on an Emmy side and on a new subscriber side. We also predicted... That Shopify and Roku would be the new kids on the block. That these companies were coming into their own and would achieve an altitude or an elevation they hadn't done yet. And oh my gosh, look at these two. Look at these two, we're so proud. We're so proud. Canada, oh my gosh. It's good to see Canada. Can't you imagine that Canada right now says, "Are we in an apartment living above a meth lab called America?" Anyway, anyway, different talk show. Up 160 and 195%.

• 16:06Speaker 00

  Shopify now worth more than FedEx, the largest mall operator, Simon, and Nordstrom. And look at these metrics around Roku. Oh my gosh, Roku. I don't really know what Roku does. I just know that they are killing it. We said that TikTok and Microsoft was a total head fake and there was no way this would happen. Why? Because distinct of what the current administration would like to believe, we are a nation of laws. We're also a nation of immigrants. Anyways, 50% of PhDs in the US. Immigrants, hello, hello. 70% of the NASDAQ by dollar volume run by first and second generation immigrant. I know, I know. Our team gets a first round draft choice from every team in the nation, but we don't want that. We want to be xenophobes and really fucking weird

• 16:51Speaker 00

  and say to everybody, "No, we don't want the best people in the world. We're going to be strange bigots." Well, guess what? We're a nation of laws and distinct of the current administration deciding to slice up and fork up the corporate world. Distinct of Microsoft going for this bait. What idiots. Did you really think this was going to happen? This made absolutely no sense whatsoever. Oracle didn't win either. They've just become a minority investor. Why? Because she's in charge here. China co-ops is an autocracy and has control over all of these firms. By the way, TikTok is in fact a security risk and there is no reason that these firms, Chinese firms, should have unfettered access to our markets if we don't have access to theirs. But unilateralist, stupid 140-character decisions were not sustainable.

• 17:42Speaker 00

  So that's a wrap for 2020. Not bad for us. We got 11 of the 14 predictions on the nose or near nose. We have one more quick break before we bust into our 2021 prediction. Stay tuned for our thoughts on potential acquisitions, the great dispersion of a number of industries and more.

• 18:00Scott Galloway?

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• 18:43Scott Galloway?

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• 19:06Speaker 00

  Welcome back. Let's talk about this year. Let's talk 2021.

• 19:12Speaker 00

  First prediction, in the face of antitrust, Facebook's stock increases and Amazon spins. Have you noticed the distinct of this horrible crime against humanity that the FTC actually wants to break up Facebook, as does any other lawmaker that sees their eyes on the governor's mansion who's an AG right now? And what do you know? Facebook's stock didn't move. As a matter of fact, we've known this is coming for about three months and Facebook's stock continues to accelerate. In addition, there are now two points on the line of antitrust. Two points. The first was the DOJ's action against Google. The second was the FTC and the AGs against Facebook. Who's third? Third, it's gonna be that company in Seattle. But Bezos is smarter and probably more ego-driven than any of the rest of us. Why?

• 19:57Speaker 00

  Because he's my age and he's having the mother of all midlife crises. By the way, I can relate to this because I'm in the midst of a midlife crisis. That's the bad news. The good news is I believe I'm gonna grow out of it in about 40 or 50 years. Anyways, anyways, there's no one who's gonna tell Bezos to break up. So he's gonna say, no, I'm breaking up with you. And he's gonna spin AWS and AWS will be the most valuable company by 2025. By using its vast stores of data and money, Facebook has squashed or hindered what the company perceived to be potential threats. The bottom line is they have shown up and said, join or die. But more than that, more than that, what could have WhatsApp been? That's the problem with innovation suppression when antitrust, when the DOJ has been asleep for 20 years.

• 20:40Speaker 00

  We don't know what could have happened with WhatsApp. I believe that WhatsApp might have gone into video or collaboration. You think WhatsApp would have sat by and let Teams or let Slack or let Zoom developed into the companies they are? I believe WhatsApp would be worth more right now and will be worth more when it's an independent company. But however, the sociopath and his lipstick on cancer are lining troops up at the border. Almost a third of lawyers at Facebook have been hired in the last 24 months. He is not gonna go down without a fight. But oh, my brothers, he is going to go down, and my sisters. The whole is less than the sum of its parts here. As a split-up firm, similar to John D. Rockefeller when they took Standard Oil and split it

• 21:23Speaker 00

  into 34 companies, Mark Zuckerberg will get wealthy here. As a matter of fact, every stakeholder benefits in a breakup. Shareholders, the tax base, VC-backed companies, the employees who have more options. Competition is a wonderful thing. The only, the only person that doesn't win is the CEO who wants to sit on the Iron Throne of all seven realms, not just be king of the north. Break this shit up. AWS, the most valuable company in the world that has spun prophylactically by Bezos. The great dispersion, big theme here, big theme here. We've been talking about COVID-19 be more of accelerant than a change age. What is the real trend here, though? It's dispersion, and that is value. The core value a company offers is being dispersed to the end consumer and skipping

• 22:08Speaker 00

  the traditional channels of distribution, be they stores, be they movie theaters, be they traditional sales channels. And I think this is arguably the biggest trend in business and will create the most shareholder value. We've had globalization, we've had digitization, and we have now dispersion. And that's the theme of our predictions. The ability to distribute products and services over a wide area and where and when they are needed most, removing unnecessary friction and costs. First big trend, dispersion of headquarters, right? If you want to hear denial, get someone who owns an office building and a movie theater in the same room. Oh, people can't wait to get back to work. No, they can't. People can wait. There is a cohort that wants to go back to work, specifically young people looking for mentors, friends, and mates.

• 22:52Speaker 00

  A third of people meet their mate at work. By the way, that's not necessarily a bad thing. A different talk show. However, we're going to see a dispersion of headquarters to residential. Specifically, commercial real estate is going to move to residential. We're also going to see a renaissance in coworking. I'm not a big fan of WeWork, but we're going to see coworking pop up again. Why? Because most people are still working from home, and even when they return, they're going to be used to having the flexibility to stay at home, which will absolutely decrease structurally destroyed demand across full-time office leases. But we're going to see a renewed need for coworking space. Just look at San Francisco.

• 23:35Speaker 00

  Coworking space to a certain level takes out the volatility of both the cost on the demand and the supply side of commercial real estate. In just 12 months, this is crazy, San Francisco registered its lowest vacancy rate ever commercially and then its highest. That's what a pandemic will do to you. We're also seeing a lot of people, an increased number of searches, Google searches for coworking, and we see a lot of firms who are permanently adopting a work-from-home option. Young people more than anyone want to be in offices. You're seeing Facebook and Google and Amazon double down on urban real estate. Huge leases signed in New York because they realize the key to their business, the secret sauce, is a double E, 25-year-old out of Dartmouth, and she wants to spend a couple of years in cities.

• 24:19Speaker 00

  And they're building these Xanadu-like campuses for the cohort, specifically young people, that want to come back to the office. Prediction: Airbnb will be bigger than the top five hotel chains combined and hits $200 a share. In sum, this is the strongest brand in the history of hospitality. Look at the number of searches for any city when you're looking for a hotel room. They dwarf every other search for hospitality combined. Nobody says, "Oh, I got an Expedia in San Francisco." "Oh, I decided to get a Booking.com on my business trip." No one says that. This is the strongest, biggest, deepest brand in the history of hospitality or travel. 7 million rooms, more than the biggest players combined.

• 25:01Speaker 00

  And also, also a true tech company that has a greater percentage of their employees are actual technologists or engineers, greater than Amazon, Lyft, or Uber. We have a juggernaut here. We have a juggernaut. I predicted that this thing would be worth $100 billion in the IPO. I was wrong. It was worth 90, but it's worth more. Look at how much it's worth right now or will be worth. I believe it's going to be $120 billion by the end of the year, which puts it at $200 a share. I believe Restoration Hardware and Sonos will reach $1,040 a share, respectively. Why? Because some of that trillions of dollars in commercial real estate is going to disperse into the home, and there just aren't that many good brands in the home. Remember when you looked at a million or $2 million home and they bragged that they

• 25:43Speaker 00

  had a sub-zero freezer, so a $2,500 item was being used to sell a million-dollar home? Well, Sonos and Restoration Hardware are two of the best brands in a sector that is about to absorb a trillion dollars in unexpected stakeholder value and capital. We've seen their stock prices increase, but it's just getting started, in my view. Disclosure, I don't own Sonos or Restoration Hardware, and you're going to see these companies rocket. Again, permanent, permanent demand destruction across a 10-12

• 26:13Speaker 00

  trillion dollar asset class. And where is that money going to go? It's going to go into residential. Who else here has realized, wow, that carpet looks really shitty? Or maybe I need a nicer apartment? Or maybe it's time I put in drapes? Or I would like, I don't know, it smells kind of funny in here. I'm going to make it nicer. That is what everyone is thinking in every house across America. Plywood costs and residential real estate have hit all time highs, and we're just getting started. Why else? We spent 17% of our budget on transportation. We're not commuting as much. What are we going to do with that money? We're going to put it where we're not commuting from, specifically our homes. What does this mean? The great dispersion of HQ to residential is going to be amazing

• 26:55Speaker 00

  for the brands on top of the x-axis here. And it's going to be incredible shedding of value from some of the companies below the x-axis here. Apple acquires Peloton. That's right. There has never been a brand that better foots to another brand than Peloton does to Apple. Why? Why? There's a dispersion of the sweat, of the industrial sweat complex to the home. Simply put, gyms are dying. There will be a mild resurgence. They will still exist, but we're going to lose somewhere between 10% and 30% of that value of gyms. Where's it going to go? Into your garage and into different types of weights. Look at what's happened to work at home equipment.

• 27:39Speaker 00

  It has absolutely surged. Peloton, it's better to be lucky than good. Peloton is both. And you're going to see Apple come in and decide, I know, I know, we want connected fitness in this incredible company that has Apple-like brand, Apple-like margins, and has a market capitalization of $32 billion, which is crazy, maybe overvalued, maybe not. Was Jet.com worth $3 billion? No. Was it worth $10 billion? Probably to Walmart, yes. Is Peloton worth $33 billion? I don't know. Is it worth more than that to Apple? Yes. Apple has a $2 trillion market capitalization. That means if they pay a 30% premium and pay $40 billion, that's a 2% dilution to acquire connected fitness in.

• 28:23Speaker 00

  What does that mean? They get more and more of the all-important attention graph. And that's what they are all trying to do. They're all trying to be the access code, the operating system for our digital lives. And this would be a baller move that increases anywhere from 30 to 60 minutes a day, the amount of time you are staring at iOS. Dispersion of retail. First, it went to warehouses in your doorstep. Now, it's moving to our phones and our tablets. There'll be big acquisitions by Shopify and/or Zoom. These stocks are so rich. This currency is so incredibly inflated. I'm not sure I'd say overvalued because they're incredible performers, but they are going to go shopping. We haven't seen anything like this. Good for them.

• 29:04Speaker 00

  Shopify up 41-fold since in the last five years. That gives them the ability and the need to go buy real EBITDA. We've also seen incredible acceleration in the GMV they manage, but they haven't made any acquisitions. I expect they will make an enormous acquisition in 2021. The stock performance, obviously extraordinary here of Zoom. $113 billion. I am less bullish on Zoom. I do not think it is as sustainable. I believe that Zoom will either acquire or merge with a big, big company in 2021. And the real interesting thing here? Zoom could be the AOL of 2021. Why? They are up against...

• 29:48Speaker 00

  They think they're a great white shark. They think they're the badass of the ocean. But the apex predator, simply put, an orca which is smarter, that is Microsoft with Teams and Salesforce with Slack, might show up and offer video and eat their lunch. I think Zoom is very vulnerable and this $113 billion market capitalization is likely inflated. They will recognize this and try and pull a Steve Case and merge with a traditional big EBITDA company, maybe another telco. And I believe that merger will likely go down in history as one of the worst mergers or acquisitions in history. Zoom either has to buy their way out of this or sell. This is not sustainable. They are playing with giants, and the giant is about to...

• 30:33Speaker 00

  Smack them hard. They need to either hook up with an Atlassian, develop some sort of suite here. But as a standalone entity, they are like single title publishing. They are vulnerable. What would be an interesting acquisition or an interesting merger? Zoom and WhatsApp, which will be spun whether Zuckerberg likes it or not. There will be a forced sale of WhatsApp. The dispersion of creativity. Get the traditional gatekeepers out of the way. An example, Etsy, which I think is just inspiring. I would have thought they would have gotten run over by Amazon. But anyway, it's good for them. Roblox will triple in value. This is an incredible company that actually gives a good goddamn about safety and children, that has a flywheel effect, that helps people, helps creators,

• 31:17Speaker 00

  do incredible games for kids. Over a third of their revenues goes out to their creators. Over 50% of kids in the US under the age of 16 have been on Roblox in the last 30 days. This is arguably the most influential company in history as it relates to children. And at the same time, they recognize how important this is. So in their S1, they mention safety 60 times. They mention parental six times, right? This is what we had hoped that Facebook would have been had it not been run by a sociopath. Roblox is the social media company we all wanted. It is a true platform. By the way, by the way, 79% of their employees are technologists. Roblox is more of a tech company than Google or any other tech company.

• 32:01Speaker 00

  This is an incredible firm. When's the last time you saw an IPO pulled because the market was so strong, they thought, maybe we're not thinking big enough? Where's this dispersion going? We're going to see many of these platforms accelerate. And we're going to see many of the traditional gatekeepers get the shit kicked out of them because they like the existing film creative industrial complex, right? Podcasts get featureized. And there's a flurry of acquisitions. Why? If you have an industry where there's high NPS and low multiples and low revenues, then it makes sense for a low NPS, high revenue company to come in and say, I know, I know. If we launch Transparent and The Marvelous Mrs. Mizel.

• 32:43Speaker 00

  And people like us more and we just decrease churn from 80% to 70% or we decrease, we increase renewal from 90% to 93%. We can monetize it in some, in some. High NPS products are used to sell more paper towels and more handsets. And the ultimate arbitrage here is in podcasting. People are very fond and have real goodwill towards their favorite podcasts. But, but the industry is so small, it hasn't really been monetized. So you see these incredible arbitrage deals. Hollywood's essentially been featureized. It used to be a business that had to be profitable in and among itself. But the big guys realized, you know what? I can spend more money than I take in as long as I sign up more Prime memberships

• 33:28Speaker 00

  and sell more handsets. This has effectively featureized all of entertainment, where it's no longer a business in and among itself, but simply a feature to differentiate a better business, specifically Big Tech. They're all going vertical. What happened when House of Cards was launched on Netflix and they went vertical? Their stock skyrocketed. It's happening again. Look at what happened when Spotify was just not vertical, not investing in proprietary differentiated content, not increasing their NPS, and then they do $100 million deal. By the way, Joe Rogan got ripped off. The stock's up 126% since they announced this deal. There's going to be a race to acquire this high NPS talent to differentiate platforms who can monetize it

• 34:13Speaker 00

  to a much greater extent than these companies can monetize themselves. Again, it's the arbitrage of NPS. Take every independent podcast across all categories, and they're starting to get calls from the bigger platforms saying, hey, what do you make? You make 5 million? Would you like 50 million? Because all I need is one basis point, 50 basis point increase in my NPS, and I can monetize it to a greater extent. And you're still the cheapest way for me to differentiate myself. $100 million for Joe Rogan? He got ripped off. Are we going to see a dispersion of education? We're going to see more unicorns in ed tech than almost any other sector as a percentage of how many unicorns there are now. Why? Because people such as myself and my boss

• 34:55Speaker 00

  have transferred $1.6 trillion in wealth from middle-class households to universities. Why? So university administrators can have less accountability and make more money. If it sounds morally corrupt, trust your instincts. What's happening? Huge disruption, specifically at the hands of our cash cows that have decided they don't want to show up to a COVID-infested racist country called the US. And we're seeing an absolute destruction or an absenteeism of international students who are our cash cows. The number of international students that show up for the first time is off 43% and it has declined 16% in general. Look at the number of international students or the decline in the number of international students

• 35:39Speaker 00

  as a percentage of the student body of the top MBA programs. This is just in 12 months. In some, in some, they're just not coming to school. We did an analysis of which universities would be hit hardest or do the best post-COVID. Our methodology is simple. We looked at value, their credential, essentially the brand. We looked at the experience. It's based on a company called Niche of Student Life. And we looked at the NPV, the present value of the bump you got from that education and that credential. We then did all of this, or set all of this over tuition. And we looked at vulnerabilities, specifically the shock absorber of the endowment per student. If you have a lot of money, you can weather almost any storm. And also their vulnerability or their comorbidity around those international students who are their cash cows.

• 36:24Speaker 00

  The more international students, the more cash cows you are likely going to lose during the pandemic. And then, and then we disarticulated and parse these into four quadrants. And what did I get the next day? A lot of activity on this post, probably more activity on this post than I've ever received. And for the first time, not one, not two, but three cease and desist letters. Isn't it nice to be threatened to spend 35 years of your life without ever getting any sort of legal action? Threatened, much less. Pursued and then to have chancellors and university administrators send you cease and desist letters. Specifically, they wanted us to say this data is not accurate and stop trashing us because we're worried our students aren't going to show up and pay full freight for our near

• 37:06Speaker 00

  Ivy-like experience that we're overcharging for when we foist the feces of a university-like experience. In other words, give them a Hyundai worth of education for a Mercedes-like price. We're going to see a massive inflow into the disruption of ad tech. $750 billion is no longer to be getting dispersed through the traditional channels of universities. And as a result, we're going to see an explosion in remote and online learning and also hybrids that partner with universities. The dispersion in healthcare is probably the most exciting disruptive transition and stakeholder value in history. Walmart is going to continue to get further, deeper, deeper into healthcare with acquisitions. Our healthcare in this country is shameful.

• 37:50Speaker 00

  We spend more than any country in the world, except we have worse outcomes. So the way to describe healthcare would be the same way to describe San Francisco as a city: expensive, but bad. Walmart has the scale. They actually, actually have a fantastic means of testing their healthcare. And Walmart, there's a Walmart closer to Americans than most hospitals. They're going to roll out healthcare incrementally through acquisitions and innovation similar to what they're doing with their health clinics, where they offer primary care and standard procedures at a very reasonable cost. Amazon will begin to perform the Jedi mind trick they perform on most industries on healthcare.

• 38:32Speaker 00

  And over the next 12 months, they will literally grab $100 billion from existing healthcare companies just by threatening to go into healthcare and just with press releases. Look what happened. Look what happened to these guys. Every time Amazon announces good numbers, its stock goes up and other retailers go down. Why? Because people have figured out what's good for Amazon is bad for the rest of retail. Well, what is about to be good for Amazon is about to be bad for the rest of healthcare. This is a company that added $1.5 trillion at the ...of other retailers. What does it need to do, though? It has a law, it has a problem, the law of big numbers. It needs to add about a half, quarter of a trillion dollars in top line revenue to maintain the velocity of its stock. It's going to go after healthcare. Healthcare companies, the 10 biggest, add at $80 billion in market capitalization.

• 39:17Speaker 00

  What does that mean? What does that mean? Where's that coming from? When Amazon announces that it's doing something with Berkshire Hathaway and JP Morgan, everybody else begins to shed value to Amazon. And we're going to see the same thing over and over this year. The dispersion of markets, right? We're no longer going into brokerages. We're no longer dealing with stockbrokers. It's coming to our handheld phone. Dispersion is not all good. There are some very dangerous things because it disperses and it skips not only channels of distribution, it can skip regulation or sometimes needed, needed friction. I believe 2021 is the year we get a new menace that joins Lyft and Uber and Facebook. The new menace is online trading app, Robinhood.

• 40:00Speaker 00

  Robinhood traders trade 88 times the number of options when size adjusted as any other platform. We also have an organization that is not thinking of its investors as, as the customer, but the product that produces data that they then sell to other hedge funds who front run these trades or want insight in what the dumb money is doing. And they are able to garner much more revenue than any other firm based on the trading data of their products, specifically their consumers. What could go wrong here? Options that is total share of revenues, these very dangerous exotic instruments that are not for first time investors, over indexed at Robinhood. And we're also seeing the algebra deterrence is not working here.

• 40:43Speaker 00

  The SEC is now finding them for a second time for not being transparent around how they are monetizing their consumers' data. They find them 2 million, then 10 million. And guess what? Robinhood, like Facebook, just don't give a shit, right? Why would you? If you have a parking meter in front of your house that costs 100 bucks and the ticket is 25 cents, let's break the law. And that's what Robinhood is doing, similar to what Facebook did when they continued to wave the middle finger in the face of regulators because it doesn't matter. We can write, we can stroke For $5 billion, that's about 11 days of cash flow. Look at Charles Schwab when you want to invest. You get messages saying the following. Make sure you have your short-term needs covered. A relatively low-risk investment. What happens when you go onto the Robinhood app? Right?

• 41:27Speaker 00

  Hi there, instant access. You're gonna get instant deposits. Get your first free share of stock now. And then you do anything, and boom, boom, what happens? It starts to rain confetti. Let's create behavioral triggers that release dopamine and get you addicted in a bull market. What could go wrong? We are considering additional criteria and education for customers seeking Level 3 Options authorization to help ensure customers understand more sophisticated options trading. What are they talking about? They're talking about their response to a 20-year-old Alex Kearns who received an errant, incorrect statement from Robinhood saying that he was down $700,000. No, the firm's $700,000.

• 42:11Speaker 00

  And seeing no way out, decided that his way out was to throw himself in front of a train. And this is their response. And to be fair, what have they done? Fucking nothing. I don't know these two founders. All I know is they don't have sons. If we could go back in time and stop one menace from depressing our teens and weaponizing our elections, would we do anything about it? That's where we are now. These two are menaces. There is good news. The Massachusetts Secretary of Commonwealth, Galvin, says Robinhood is a reckless company, gamifying investing. More of this to come. Goldman Sachs CEO puts out a very thoughtful note that the markets are overvalued, it's

• 42:55Speaker 00

  bad, all this volatility, yet they've decided they're gonna be the lead underwriter for Robinhood. Boss, walk the walk. Make the music match the words. This company has no business in the market. Supposedly, when Robinhood had an outage last week, volatility skyrocketed and volume went way down. What could go wrong? This room is not only bad for young men, it is bad for the markets and injects systemic risk into the markets. Next prediction. SPACs underperform. We've seen record levels of SPACs, right? I mean, unbelievable number of SPACs. Record year. And we're seeing about, we've seen about $70 billion that is still un-SPACed,

• 43:39Speaker 00

  meaning it's been raised, but they haven't found a target. Special Purpose Acquisition Corp., you go raise money, and then you say, "I'm gonna go find a target. I've done all the hard work of getting a company public." Boom, Just Add Water, public company, they get to be, they get to trade right away. And so, we're gonna go out and find a great private company. So, $70 billion, it's usually, it's usually leveraged two or three to one with additional debt, once they find a target. But we've seen incredible, incredible interest in this, because never underestimate the market's ability to produce a product when people have cash in their hand. Just think of it as when you're in New York and it starts to rain, before you know it, there's umbrellas for sale everywhere. Well, there are a ton of umbrellas for sale right now in the form of SPACs. What does this mean?

• 44:24Speaker 00

  There's $200 billion searching for private companies right now. That means if these SPACs buy General Motors, Ford, Boeing, Fiat Chrysler, Delta, United, JetBlue, and American Airlines, they would still have money. The question is, are there that many great private companies that are sort of IPO-ready? And most likely, the answer is no. Bitcoin surpasses $50,000. As we've been writing this or preparing, we've been working on this presentation for a month. I think Bitcoin is up $5,000 to $7,000. I think of Bitcoin, I don't fully understand it. But the way I think about it is, I think about it as a company and a brand. And right now, even with its run-up to, I think, $23,000 a day, it has a market capitalization of $400 billion.

• 45:07Speaker 00

  Or if you took all the coins, times the value, it's $400 billion. It's about the worth of Johnson & Johnson. I think of this thing, though, as somewhat true or not, its perception is it's a hedge against inflation, it represents liberty, and it represents the new gold. And the thing about this is, you can create a go-bag, and you can stick $10 million of gold in your head with an access code, where you can't do that with gold. Or you can do it with Bitcoin, you can't do it with gold. So, I believe this asset class is gonna breach $1 trillion, which means it goes to $50,000. If that sounds like very unsophisticated analysis, trust your instincts. But that doesn't mean I'm wrong. Doesn't mean I'm wrong.

• 45:50Speaker 00

  Bitcoin is now getting the institutional support to give people the security. Mainline investors to start putting a percentage of their assets into Bitcoin. And then if you look at the government's ability, all governments' ability to just print tremendous amounts of money, you could make an argument that in fact, cash is going to incur a decrease in purchasing power, and that this might be seen as a more sophisticated, more millennial, more hip version of gold as a hedge to inflation that may in fact become a tangible threat soon. This is evidenced by the fact that the increase in Bitcoin seems to be inversely correlated to people pulling out funds, or correlated to people pulling funds out of gold ETFs.

• 46:34Speaker 00

  In other words, people perceive Bitcoin as being gold-like and are transferring their assets in gold into Bitcoin. And by the way, there's a lot more than $400 billion invested in gold right now. Let's talk about the dispersion of media. Disney stock will rise 30% on move to a rundle. Now, we made this prediction, again, about a month ago, and the stock is up 20 or 30% since then, but it still has a lot of legs. Go on LinkedIn, go on LinkedIn, do some basic searches and you can find out. They are lining up the rundle tanks at the border. Look at all the jobs, look at the descriptions of all the jobs they are looking to fill right now. They've also done a major reorg to go full rundle and rally around Disney+. Why? Because they've decided, what is strategy? All strategy boils down to one thing.

• 47:19Speaker 00

  What can we do that is really hard, that other people can't do? Well, what other people can't do is launch a series on Young Lando, or take Jedi Ashoka and put her on TV, or monetize $100 billion in acquisitions of Pixar, Lucasfilm, and Marvel. This company has so much momentum right now. Oh, and by the way, let's give people a baby Yoda doll and give them the opportunity to take their sons to Disney and have a special edge of galaxy experience where they make their own lightsabers. Oh, and by the way, if you want to come to our parks when it's not crowded, you need to be a Disney+ member, and maybe even we get you a better cabin on Disney Cruise. This is the ultimate rundle. Anyone with kids has to join this thing called Disney Plus.

• 48:04Speaker 00

  They'll have pricing power and the marketplace will look at their revenues and it'll recast the multiple on this company, similar to what's happened to Apple over the last five years. We wrote about this. By the way, just as Snap has been the product planning and development department for Facebook, who has been the strategy department for AT&T and Disney? That's right, us. Anyway, we're going full rundle. AT&T's stock hits $40 a share and/or divest HBO or CNN. They had an acquisition. They've lost control of the narrative. Stocks are now more narrative than they are numbers, and they've lost control of the narrative. The narrative right now is basically the following. It's basically you made a bad acquisition. Well, they are gonna get control of the narrative. They're gonna take it back.

• 48:48Speaker 00

  They did the baller move here, despite all the complaints of people making tens of millions of dollars with the existing channels of film and Dutch. What a shocker that the head of CAA and Christopher Nolan making between 10 and 50 million dollars a year off the existing infrastructure think it's a really bad idea. We are going to see the multiple on AT&T go up. For every one basis point in multiple that AT&T gets back by recasting and reclaiming the narrative, they increase their market capitalization by $1.7 billion. And this is how they're gonna do it. This was the baller move of media when they decided to take everything directly to HBO Max. And by the way, who decided to agree to their terms all of a sudden? Roku. Why? Because HBO Max has just gotten a giant EpiPen tea therapy, whatever the hell you want to call it.

• 49:32Speaker 00

  They all of a sudden have unbelievable new mojo, and they are either gonna show everybody the invigorated story that'll take AT&T's stock up, or they will spin HBO and possibly CNN, who is going to go behind a paywall. Why? Because advertising is a tax on the poor and the technologically literate, and no good content should be ad-supported. We spend two weeks of a year watching commercials. Reed Zakaria, one of my professional role models. Amazing show. 14 minutes of commercial time. And what do they get for that? For pelting you with reminders how much it sucks to get old? And say, "We can solve your opioid-induced constipation or make your legs less restless." They get 23 cents for shoveling that shit down your throat. Right?

• 50:16Speaker 00

  Or for 14 minutes of ads, they get 23 cents from an advertiser. And this is a great show that advertisers love. Another way of thinking about this is the advertising industrial complex and Time Warner believes that your time is worth approximately a dollar an hour. No, it's not. No, it's not. Your time's worth more, at least a buck 10, maybe more, maybe more. So what are they gonna do? They're gonna recognize the way you create trillions of dollars, or at least billions of dollars in shareholder values, to invent a time machine. Netflix isn't a media company, it's a time machine. If you only let your kids watch Netflix, they save two weeks of their life a year with advertising. The markets realize this and realize non-ad-supported recurring revenue companies are a better business

• 51:00Speaker 00

  and have taken their stocks up substantially over the last 12 months. It's a better business model. What's the most bulletproof media company in the world right now? The New York Times. It's not old versus new, it's subscription versus ad-based. And the New York Times, which gets 2/3 of its revenue from subscription, is now monetizing them to the tune of 66 bucks a piece. We're going to see the best content on the progressive side go behind a paywall. Let's summarize. This is the beginning of the end of big tech as we know it. We're going to see antitrust. However, however, Facebook's stock will increase in the face of antitrust. The only person who loses here is the Zuck. And Amazon is gonna prophylactically spin a WS. The dispersion of HQ is gonna result in a coworking renaissance.

• 51:45Speaker 00

  Restoration Hardware breaches 1,000. Sony, Sonos, $40 a share. Airbnb becomes worth more than Uber. Apple acquires Peloton. We're seeing a dispersion of retail. Big acquisitions for Shopify and/or Zoom, which could be seen as the AOL of 2021. This thing is very... Vulnerable, sitting on top of $120 billion market cap. We're seeing a dispersion of education. We're going to see more unicorns in education as a percentage of existing unicorns of any other sector. We're seeing a dispersion of creativity. Roblox triples in value. Podcasts get featureized and we see a flurry of acquisitions of the strongest ones that are still independent. A dispersion of markets. People are recognizing that dispersion is not necessarily a good thing if we don't have friction or regulation.

• 52:30Speaker 00

  Robinhood is being recognized for what it is, a menace. SPACs will underperform. There's too many hunting too few good companies. Bitcoin hits $50,000. We see a dispersion of healthcare. Walmart gets into healthcare via acquisition. Amazon starts to perform their Jedi mind trick and drain the 10 biggest healthcare companies of their market capitalization. And we're seeing a dispersion of media. Disney stock will continue to accelerate based on their baller rundle. There was a sleeping giant that was prodded and poked and is finally waking up. The AT&T stock hits $40 a share and/or it divests HBO and CNN goes behind a paywall.

• 53:17Speaker 00

  That's it for this episode. Our producers are Caroline Shager and Drew Burrows. If you like what you heard, please follow, download and subscribe. Thank you for listening. We'll catch you next week with another episode of The Prof G Show from Section 4 and the Westwood One Podcast Network.

• 53:41Speaker 03

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