Prof G Markets: ByteDance’s Blowout Profit, Kalshi & Events Betting, and Dude Perfect’s Big Deal

Scott shares his thoughts on the latest financial figures from ByteDance and discusses if he would buy shares on the secondary market. He then takes a look at a platform for trading on event outcomes that just attracted a big market maker. Finally, Scott and Ed discuss one of the largest deals in YouTube history, and what it says about the creator economy. Pre-order "The Algebra of Wealth" out April 23rd Vote for No Mercy / No Malice in the Webby Awards Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit 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.

• 0:01Speaker 00

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• 0:44Scott Galloway?

  This week's number, 22 million. That's how many high school and college paper students turned in last year that used generative AI. True story. I used to complain to my mother that the students were making fun of me for being a virgin. Her advice? Stop giving them bad grades. Welcome to Prop G Markets, Ed. Today, we're discussing growth at ByteDance, trading on event outcomes, and a big investment in the creator economy. By the way, Ed was nominated, got an honorable mention for best co-host. That's right.

• 1:27Scott Galloway?

  Which at the age of 15, it's a pretty recent birthday. At the age of 15, it's pretty exciting. So congratulations, Ed. Thank you. I think it was for both of us, but. I got more awards than prostateitis. I don't need this shit. I love the affirmation, but I was more excited, as you can tell. Yeah, well, I'm just trying to signal that I'm humble, so yeah. Have you dropped that line in bars yet? I've been nominated for an honorable mention for best co-host in the Webby Awards. That I was a 2024 Webby honorary. Now I need to try that sometime. Yeah. It's probably going to be really successful. That's an express train to virginity.

• 2:03Ed Elson?

  How was your vacation?

• 2:04Scott Galloway?

  It was good. Thanks for asking. Egypt was, Egypt's one of those trips where I enjoy it more after, and that is, I know just at some point in our lives, we're going to be really, we're just going to love looking at those pictures and remembering how, you know, we were floating down the Nile and all that good stuff. So that was a good family trip. And then I did a trip to Israel on my own. That was much heavier, as you can imagine, but more meaningful. Tel Aviv is an amazing city. I would describe Tel Aviv as kind of Berlin, but good weather on the beach. It's a very cool city. So I really enjoyed Tel Aviv, the food, the people. And then I went to the Gaza envelope and toured kibbutz Farazah, which is one of the 22 kibbutzes that was attacked on October the 7th. Obviously,

• 2:48Scott Galloway?

  that was very deep and heavy, but I'm glad I went. But yeah, glad to be home. And I head to Vancouver on Tuesday, where I meet Greg Shove, the CEO of Section, and Prof. G. Analyst Mia Silverio at TED. And I'm doing a talk called The War on the Young, which I'm excited about. And then I go to New York for the launch of the book. A lot of book promotion, a lot of book parties. I don't know if those things work, but it'll be fun. Although we're number ones, someone said we're number one in new releases in wealth management. I don't know what that means. Please buy our book. If you buy our book and post it on social, this is not a joke, we'll donate 50 bucks to Charity Water, which I love bringing potable water to sub-Saharan Africa. But please buy our book. As Ed, I

• 3:33Scott Galloway?

  got to figure out a way to get Ed up to $9.25 an hour. So, all right, get to the headlines, Ed.

• 3:39Ed Elson?

  Let's start with our weekly review of market vitals.

• 3:48Ed Elson?

  The S and P 500 declined, the dollar rose, Bitcoin dropped, and the yield on 10-year Treasuries jumped. Shifting to the headlines. The Consumer Price Index showed inflation rose 3.5% in March from a year earlier. That's slightly stronger than expected and higher than last month. The lingering pressure of inflation has derailed hopes of a rate cut in June, and investors are now expecting the first cut in the late summer or early fall. Gold hit a record high, up more than 16% year over year. Central banks are driving the surge as they strengthen their reserves, and China just purchased gold for the 17th month in a row to reduce its dependence on the US dollar. Apple doubled its iPhone production in India last year, assembling $14 billion

• 4:31Ed Elson?

  worth of the product in the country. One in seven iPhones are now made in India, though China does remain the largest manufacturer. Nelson Peltz lost his bid for a board seat in his proxy battle at Disney after receiving only 31% of the vote. Shareholders voted to reelect the full board, also rejecting Peltz's other nominee, Jay Rasulo, who received only 12% of the vote. And finally, the Justice Department is investigating whether AI companies could be violating antitrust laws. The DOJ is specifically looking into competitors sharing board members, a practice that the Biden administration is increasingly cracking down on. Scott, your thoughts?

• 5:08Scott Galloway?

  So in order, Consumer Price Index, I got this wrong. I thought inflation was going to crash in 2024, and it's stickier than people think, which is sort of interesting, although the markets don't seem to mind it so far. The thing about gold, I've never understood gold. I guess in a high interest rate environment, although this isn't arguably a high interest rate, it's just what you would call historically a normal interest rate environment, gold surge is somewhat befuddling to me. I guess it's a hedge against inflation. It does have some use cases. I wonder if it plays into an increasing conspiracy economy, and that is because of an attention economy where you get to monetize attention and novelty slash conspiracy slash

• 5:51Scott Galloway?

  dis misinformation is just, there's just more economic value in it that gold plays into that, that if you're worried about the zombie apocalypse or the dollar losing all value, according to every Bitcoin bull, that you think, oh, a safe hedge would be gold. It's sort of like, it feels very survivalist to me, but the news says that it's, that it's central banks investing in gold, I guess because they want to get out of fiat. Any thoughts on the CPI or gold?

• 6:16Ed Elson?

  Yeah, I mean, I'm with you on gold. I feel like people have been predicting the end of the dollar for years, at least four decades, and that's always been part of the narrative with gold of why we need to buy gold, but that's just never come even close to happening. I mean, you look at the dollar today. The US dollar accounts for more than 60% of all global currency reserves. And then the next best option is the euro, which is at 20%. So it's not even close. And now, you know, a lot of people will say, well, you know, the dollar is declining. It's on a downward trajectory, which if you look at the past 10 or so years, that's true. But if you zoom out to a reasonable timeframe, like if you look back to the 90s,

• 7:00Ed Elson?

  it's actually increasing in usage. So in 1990, the dollar made up less than 50% of global reserves. So I think this obsession with gold and with crypto, by the way, is largely being driven by this narrative that's very fun to indulge in. It's exciting to think about what the world would look like if it collapsed and how the US is going to fall and how we're all going to be living in bunkers and bartering with gold coins. But there's just no plausible data that actually supports that narrative.

• 7:30Scott Galloway?

  Yeah, it's weird, though. So you know, my favorite thing in the world is my favorite physical object.

• 7:35Ed Elson?

  I was going to say a dog, but.

• 7:36Scott Galloway?

  Well, that's not a physical thing. That's an animate, an animated thing. Yes, those are my favorite things. They're just, they just beat out my sons. But my favorite inanimate things are one, my favorite object is I have a Ramoa piece of luggage that I absolutely love. But more than anything, I just fucking love money. And what do I mean by that? I love hard cash and I love rolling around with Benjamins and I love paying with cash. I love the way it feels. I love the way it looks. I think a lot of it is deep rooted scarring. When I was in college, I remember going into the bank, not the ATM, because the ATM only issued $20 bills and I needed $10. And I had like $38 in my checking account. So now it's just such a luxury to roll around like a mobster with just a big wad of cash.

• 8:20Scott Galloway?

  And it just, I just absolutely love fiat currencies. The tweet that's got the most retweets of any tweet I ever, or any, whatever you call it, Twitter, Twitter X, was when I said, I'm doubling down on the ultimate, the most innovative payment platform in history, USD. I just, anyways, I love, I love Karen Cash. Probably isn't going to be mugged in the next day. Some gang with AI is going to be like, this is the idiot we want to, we want to, we want to take down. Apple, Apple arguably has the best supply chain in the world. You know, number one consumer products company in the world. And Tim Cook comes out of supply chain. Their ability to pull together $500 worth of sensors and chipsets and sell it for 11 to $1,300 is unprecedented.

• 9:04Scott Galloway?

  The iPhone creates more profits than any company in history. It's the margins of Ferrari with the production volumes of Toyota. And it's a supply chain story. You would argue even verticalization down into their stores. And what's happened over the last few years since COVID is up until COVID, the entire supply chain strategy was optimized for efficiency, which is Latin for cost. But what you've had since COVID was we realized there was no, absolutely no slack in the supply chain. It had been so optimized that if the cheapest place to produce tops for a specialty retailer was in Shenzhen, 90% of our tops were coming there. And then if a virus jumps the lab and they shut down this region overnight or within two weeks, your 550 specialty retailers don't have tops.

• 9:49Scott Galloway?

  And there's no way to, there's no way to replicate that or replace that production quickly. And so you've got to think that Apple is scared shitless about their dependence on their supply chain in China and the geopolitical risks that presents. So this is an example of them scrambling to diversify as quickly as possible. I would bet they would literally veto anything that is an incremental dollar going into China on the back end, not on the front end. You want to spend more marketing on the Chinese consumers such that they maintain that desire and demand for our products, fine. But anything around the back end, the rest of corporate America has woken up and said that the homogeneity of our supply chain is a risk. And we saw how damaging that can be during COVID.

• 10:33Scott Galloway?

  Nelson Peltz, kind of sick of talking about it. This was our prediction, that if it goes to a board meeting, if it goes to an annual meeting, it means the incumbents are going to win. I don't think Nelson's ever going to go on the board because I think the stock's going to go up. And the great thing about being an activist is that if the stock doesn't go up, you get on the board and you can, you know. Show what a big swinging dick you are and show up and be disruptive or you know, you win, so to speak. You win board seats. But how you really win is you lose because the stock keeps going up and then you sell your position, you make a shit ton of money and your investors want to put more money and you get to hang out in Florida where Nelson hangs out. So my prediction moving forward is that Nelson is never going to get a board seat because the stock's going to continue to go up. And investors don't kick out incumbent

• 11:16Scott Galloway?

  board members as long as the stock is going up. And then the Justice Department investigating whether AI companies could be violating antitrust laws around shared board members? I think that's really interesting. And that you pointed this out, that AI is more consolidated than we think. And what you've seen around like this OpenAI kind of jujitsu move where they, they, Microsoft effectively controls it, but never really acquired it, thereby not triggering an antitrust review by the FTC or the DOJ, that all of these kind of investment deals, and you pointed out that Microsoft is in three of the five biggest ones or something, is a really elegant covert, you know, stealth way of avoiding antitrust

• 12:01Scott Galloway?

  scrutiny. And the shared board members is really interesting because the problem is you don't, you want to make sure that companies aren't coordinating with each other and that it's, you know, it's sort of saying, like Steve Jobs, I guess Eric Schmidt, I think Eric Schmidt used to be on Apple's board or? That's right. He stepped down in 2009. Yeah, once, once Google decided they were in the handset business or the Android business, Steve Jobs was like, I don't need Eric Schmidt knowing what our plans are. But if they're coordinating, if they're both, both have similar investors, that's bad for competition because effectively it goes from five companies to two or three because they kind of wink at each other and go, okay, we're going to take this part of AI, you take that part of AI. What are your thoughts, Ed?

• 12:43Ed Elson?

  What's very interesting now is that, you know, this is a law that it's technically called interlocking directorates. It's a law that's been around for 100 years. It's barely been enforced until about two years ago, when the Biden administration started cracking down on it. And since then, we've seen around 25 public companies whose directors have stepped down from the board. Now, They're also targeting boards that have indirect relationships with each other. So just as an example, there's this software company called Solar Winds Corp. Three directors had to step down, not because they served on the board of a direct competitor, but because they were affiliated with a private equity firm that was invested in a direct competitor. The private equity firm was Toma Bravo. They were invested in Dynatrace.

• 13:28Ed Elson?

  So in other words, the Biden administration has set a precedent, which is you can't advise a company and at the same time advise a firm that has a financial interest in that company. This is everywhere in AI. Right off the bat, I can name you three illegal board positions in AI right now.

• 13:45Scott Galloway?

  Name them, you high IQ bitch nominated for best co-host. Name them. I'm calling your bluff. Name them.

• 13:51Ed Elson?

  Microsoft. Microsoft's on the board of OpenAI. It's, you know, they say it's a non-voting board seat, but that's still a board seat. And Microsoft is also an investor in Mistral and Inflection, which are both AI companies that directly compete with OpenAI. That's one right there. Another one is Reid Hoffman. Reid Hoffman's on the board of Microsoft. He's also a co-founder of Inflection. Brett Taylor, he's on the, he's a chairman of the board of OpenAI. He's also on the board of Salesforce, which is an investor in Anthropic and Mistral. All I can think is what's going to happen when the DOJ launches a full-fledged investigation into this thing? Because I would bet that no AI company is safe. And, you know, this hasn't gotten that much media attention, but I'm with you.

• 14:36Ed Elson?

  I think this is probably the most important headline in this episode because this affects everyone in big tech.

• 14:42Scott Galloway?

  Occasionally you stumble upon insight and this is a big stumble for you. You're absolutely right. I mean, and that is really insightful and I didn't, you articulated much better than I could because all the companies you mentioned should be going at it, going at full body contact violence towards each other, trying to come up with ways to give the New York Times more money such that they can crawl the New York Times when no one else can. But by virtue of the fact they're down with sharing board members, that means they're coordinating. That means that they're cooperating, coordinating and cooperating with each other, which is exactly anti-competitive. And when you talk about a concentration in wealth, and when you talk about an industry that is now worth more than almost any other industry

• 15:22Scott Galloway?

  other than maybe software, there's trouble in Mudville. This is total bullshit. I love, I love the framing you put it through, and it absolutely should be an early and often hardcore investigation by the DOJ and the FTC. And the idea that this technology, this powerful, is coming out of the gates so concentrated with a lack of competition is frightening.

• 15:45Ed Elson?

  We'll be right back after the break with a look at ByteDance.

• 15:59Scott Galloway?

  Support for the show comes from Built. Most of us work hard to earn our keep, but usually there's no one around to hand you a cookie when you successfully pay your monthly housing bill. No one except Built, that is. Built has expanded from the original renter rewards program, and they have a lot more going on for members now. For example, members can earn points on mortgage payments, too. Every housing payment gets you points that get you a lot more than baked goods, such as flights with top travel partners, including United and Hyatt, Lyft rides, Amazon.com purchases, and much, much more. Here's another benefit of Built membership. You also get access to what they call a neighborhood concierge. You can make restaurant reservations, book fitness classes, and find new local spots, all while rewarding you at more than 45,000 merchant partners. It's simple. Being a renter

• 16:42Scott Galloway?

  and now owning a home feels a lot better with Built. You can download the Built app and join the membership for where you live at joinbuilt.com/profg. That's J-O-I-N-B-I-L-T.com/profg. Use our link so they know we sent you.

• 17:03Ed Elson?

  We're back with Prof G Markets. ByteDance grew its profits 60% year-over-year in 2023, registering $40 billion in EBITDA. The TikTok owner also increased revenue 50% to $120 billion. Now, we should note, these are internal figures, and they aren't independently audited. But if they're accurate, then ByteDance has surpassed its rival Tencent in both profit and revenue for the first time ever. It's also catching up to Meta, which brought in nearly $135 billion in revenue last year. So Scott, ByteDance is killing it in the face of its greatest existential threat thus far, which is a potential TikTok ban or sale in the US. What do you make of these results?

• 17:44Scott Galloway?

  What's really interesting here is that arguably, I would argue ByteDance is the most undervalued company in the world right now. So EBITDA of $40 billion, and my understanding is although there are some restrictions around who can sell stock, the board has to approve a stock sale, but my understanding is in the secondary market, the company is being valued at 250 billion. In other words, the company offered to buy back shares from employees at 250 billion. So that's the mark. With EBITDA of 40 billion, that means that the enterprise value to EBITDA on ByteDance right now is six times now versus Tencent, which is 12 times, which isn't growing nearly as fast, Alphabet, amazing company,

• 18:24Scott Galloway?

  20 times, and Meta is 22 times. So the cloud cover, the illiquidity of the stock, and the cloud of the geopolitical tensions between the US and China make ByteDance, I would argue, the most undervalued company in the world right now. Why? Well, Scott, what if it gets banned in the US? No, it's not going to get banned. It's going to be divested. There's too much. My general go-to around any dispute in business is simple. Money wins. Look where the most money would end up in people's pockets, and whatever that course of action is, will be the course of action that that company, not their concern for teens, not whether they spend or don't spend, just say, okay, where is the money?

• 19:08Scott Galloway?

  Money wins. And the amount of money these guys are going to make, once this cloud cover is removed, and they can hold on to the market by divesting it or coming to some sort of accommodation, which they could with the White House, is going to send the value of these shares skyrocketing. But six times, I mean, you're talking about... I think Ford and General Motors, you know, there's these sleepy industries trade at this multiple.

• 19:31Ed Elson?

  Just on the secondary markets, I mean, it is a little confusing because according to employees, they've been restricted from selling their shares. And there was this whole FT article about this that we were discussing. At the same time, I've also seen articles that investors have been selling on the secondary markets. Granted, they're struggling because there are so few willing buyers right now, but it appears that some have sold. And in addition, I went on some of these secondary market platforms like Equities Zen and Forge Global. And indeed, ByteDance is listed as a tradable company there. So it's not totally clear, but it appears that in some situations, you can sell on the secondary markets, but there are some restrictions on employees. Given all that, and considering that the

• 20:16Ed Elson?

  multiples that you just referenced, six versus 22 for Meta, say some secondary markets broker approached you with an offer to buy the shares at the previous valuation, which was $268 billion. Would you consider it?

• 20:30Scott Galloway?

  In a heartbeat. Yeah. I mean, my biggest wins have been running into the fire, buying companies with big addressable markets that for whatever reason, bad cap structure, some sort of cyclical trend, or in this case, a geopolitical overhang have really impacted the stock. Because A, it's a global company. I think it's worth more than 250 billion even without the US market. And then right now, you get to, you get to buy TikTok at six times? I think this is an unbelievable opportunity. I would have to, I would have to go through the mental anguish of pretending I give a flying fuck about politics and

• 21:12Ed Elson?

  That's the problem.

• 21:12Scott Galloway?

  morality. And, and then at the end of the day, I mean, I could not get over, and we're on record, what a screaming buy Meta was in late 2022. And we said it over and over, stock pick of the year. It was trading at six times. I was at the moment, it's just like, it's sitting on a cash volcano. And I didn't buy it because people have, you know, I've been shamed on, on social for, okay, okay, you constantly shitpost this company, you're going to buy it. What I, my advice to people is like, look, to young people especially. I get it. If you want to take a stand, good for you. But your first obligation is to develop economic security for you and your family in a capitalist society. So vote for people that will regulate these companies, but you know, do, do what

• 21:56Scott Galloway?

  you need to do to get economic security. In other words, daddy's gonna load up on the tick and the tock.

• 22:04Ed Elson?

  I can't wait to get all of this shit next week.

• 22:07Scott Galloway?

  Would you buy it? Would you buy it?

• 22:09Ed Elson?

  Oh, yeah.

• 22:10Scott Galloway?

  Yeah. That's because you're a closet Republican. Total closet Republican.

• 22:23Ed Elson?

  Wall Street is beginning to take interest in an untraditional asset class, event contracts. What is an event contract? Well, essentially, it allows you to bet on the outcome of anything. For example, the chance of a rate cut by June, or whether Congress will force the sale of TikTok, or what the highest temperature in Miami will be today, or how many Oscars June Part Two will win. The most popular destination for these kinds of transactions is a platform called Calci. Calci was the first company to receive regulatory approval on event contracts, and it recently inked a deal with Susquehanna, one of the biggest market makers in the world. Susquehanna is now setting up a trading desk for Calci's

• 23:04Ed Elson?

  event contracts, which will strengthen liquidity in this new market. Scott, you're in the business of making predictions, but how do you feel about betting on them?

• 23:13Scott Galloway?

  First off, I think they should be allowed to do it. I think, I don't like to infantilize people. People want to bet on stuff. Eighty-five percent of the people that do this are going to be fine and enjoy it. This is not investing. Investing is an opportunity to buy a company and kind of everybody wins. It's not a zero-sum game. If, if, if the population keeps growing and technology and innovation bring productivity up, the entire global economy should grow, meaning that the value of an asset that you have ownership stake in via a share of stock goes up, and there's no loser there. This is, you're betting against a counterparty, and someone wins and someone loses. This is gambling, and the house takes a small cut. This is gambling. This is speculation.

• 23:55Scott Galloway?

  People have the right to gamble. I like to gamble. I enjoy it. I see this consumption. I expect to lose everything I go down to the casino floor with. What I hate about this economy is that our instincts haven't caught up to the frictionless access to gambling of a smartphone. And that is when you have Kevin Hart and Charles Barkley telling you that this is fun and you're smart and you have insight into the Kansas City Chiefs. I worry that young men who are bored, looking for a dope ahead, who don't have a lot of economic prospects, don't have the guardrails of friendships or a romantic partner, just start gambling a lot. And this is another opportunity to gamble. So, you know, I don't like it. I don't know what you do about it. I think you just have to educate young men

• 24:38Scott Galloway?

  and young people on their brains and why we are risk aggressive and that 15% of people who are men who gamble, it becomes a problem for and it has the highest suicide rate. You know, all that good stuff. But, I mean, I guess the good news is it's not like, it's not like riding options. You can't lose more than you bet. They say it hedges your risk. That's bullshit. This is pure, this is pure Robin Hood pretending to be investing and it's just gambling. I think it's innovative and interesting. I think it'll probably do well, but I don't know. What should we bet on here? Not that, not that I'm above betting. What should we bet on? I don't think we should bet on any of this, to be honest. I'm certainly not going to. Are you putting the money up? Uh, sure. I'll put up, I'll put up some hard cash. What, what is, okay, what are

• 25:23Scott Galloway?

  the things we could, we could bet on here? Will the child tax credit be passed before election day? Uh, cost for yes, 73 cents. Cost for no, 31 cents. I guess that means you get a dollar back if you've spent 73 cents. Oh, so the market, their, their market believes the child tax credit will be paid. This, it's sort of interesting from a data perspective because the wisdom of crowds is pretty interesting. Will ChatGPT-5 be revealed this year? 82 cents to get a dollar. In other words, yes, the market thinks there's a four and five chance. 19 cents, no. Tesla robot taxi revealed on time. 61 cents for yes, 44 cents for no. That's the one I would take. I would go no on that because I think the jazz hands.

• 26:05Scott Galloway?

  Of Elon Musk are the size of a Tyrannosaurus Rex's. Although Tyrannosaurus Rex has small hands. Small, tiny hands. Itty bitty Tyrannosaurus Rex hands. Deadpool three rotten tomatoes score above 84. I love Ryan Reynolds. I do. You know, people think I look like Ryan Reynolds, but they say. I did know that, yeah. You've mentioned it maybe 10 times, I want to say. After the fire. That's my favorite part. After he is maimed. I look like post fire Ryan Reynolds. We'll make a bet. We should make a bet. We'll bet the Deadpool three rotten tomatoes is above 84. So we have to spend 60 cents to get a buck back. And I'm going to say that the robot taxi, the Tesla robot taxi

• 26:48Scott Galloway?

  will not be revealed on time, although we should look into that. Anyways, you know, we need Mia Silverio. She's our chief investment officer. What do you think?

• 26:57Ed Elson?

  Well, I think the point that you make about the wisdom of crowds is an important one. And I think that's the argument that you'd have in favor of having something like this. Because for the longest time, the CFTC said no to these types of event contract markets. Because their argument, as you said, is this is gambling. It's gaming. There's no economic benefit here. But yeah, I think that there's this informational benefit that we get from leveraging the wisdom of crowds, which is, you know, if you have a large liquid market where there's money on the line, it can be a great tool for drawing out knowledge from different groups and then hopefully arriving at the most rational answer and the most rational price. So I think there's an argument here that this could actually be good for us. It can make us smarter.

• 27:41Ed Elson?

  It can help us make better decisions. We'd be more informed. It could lead to a more efficient market. And I understand I'm kind of doing Kalshi's bidding here, but I'm wondering what your response would be to that.

• 27:53Scott Galloway?

  I mean, here's the bottom line, Ed. The way to make a shit ton of money is to tap into a flaw in instincts in an area that is underregulated. Americans spent a record $120 billion on sports betting in 2023. That's up 28% from 2022. This translates into 11 billion in revenue. In 2023, our net revenue, that's up 45% year on year. In sum, gaming, other than AI, gaming is growing faster than any business in the world.

• 28:24Ed Elson?

  Gambling, you mean?

• 28:25Scott Galloway?

  Yeah, gaming gambling, yeah, there you go. And because men are supposed to be more risk aggressive in terms of trying to find hunting and mating opportunities, you end up with this, this, this soft tissue in the species. And then because we have The Walking Dead in DC that doesn't have kids addicted to gaming apps, because all their kids are now 55, I'm telling you that this does not end well. You are going to see, and this will be my prediction, in two to five years, you're going to start to see articles about another reason why male suicide is skyrocketing in

• 29:06Scott Galloway?

  the US and is four to one male to female, is more and more men are killing themselves because they get in too deep, because they got in way over their head, way over their skis because of gambling apps. So what do you do? That's the hard part. I don't think you can infantilize these kids. A certain portion of those revenues does go to gambling education and gambling education has dramatically risen along with the revenues here. But I think we got to teach young people in school, basic kind of neurochemistry and adulting and basic financial literacy that says, hey, as a young man, you are especially vulnerable. If you want to take a little bit of money and instead of going to the movies, or instead

• 29:48Scott Galloway?

  of buying a skateboard, you want to do this, fine, but don't think that this is in any way investing and do not, do not gamble money you can't lose. It just discourages the shit out of me that the wealthiest, most resourced, brightest people in the world are trying to figure out how to fuck young people and tap into a flaw in our instincts and an absolute blind spot around regulation. Anyways, that's my TED Talk.

• 30:12Ed Elson?

  We'll be right back after the break with a look at one of the biggest deals in YouTuber history.

• 30:30Scott Galloway?

  Support for the show comes from Upwork. Trying to scale your business? At some point, you're probably going to hit a point where you need some help. Sometimes the best way to break through that is bringing in the right talent at the right time. Upwork can help. Upwork is a one-stop platform where you can find, hire, and pay expert freelancers across more than 125 categories. Whether you need specialized skills for a single project or extra support to keep up with demand, it's easy to connect with experienced professionals, review their work, and find the right fit. You can move faster without taking on the commitment of full-time hires. And for businesses that need the very best talent, Upwork Business Plus provides access to the top 1% of freelancers on the platform. AI-powered matching connects you with qualified candidates in under six hours, cutting down the time spent searching.

• 31:13Scott Galloway?

  Upwork also takes care of contracts, payments, and other administrative tasks, so you can spend less time managing logistics and more time focused on what's next. Visit upwork.com/profg right now and post your job for free. That's upwork.com/profg to connect with top talent ready to help your business grow. That's U P W O R K dot com slash prof G. Upwork.com slash prof G.

• 31:45Ed Elson?

  We're back with Prof G Markets. A popular YouTube channel called Dude Perfect, known for its viral videos of sports trick shots, has raised more than $100 million from a private investment firm. Dude Perfect has more than 60 million subscribers on YouTube, putting it in the top 50 most subscribed channels. Now, the creators behind it are hoping to use the fresh capital to expand beyond that platform. They want to grow their consumer product offerings, launch a streaming site, and host more live experiences. They even want to build a theme park. Scott, in terms of financials, the only number we have is their 2022 revenue, which was $25 million.

• 32:26Ed Elson?

  Now, I'm sure it's grown, but for a company that's likely valued at, I don't know, at least $200 million to $300 million, they raised, on the low end, $100 million, on the high end, $300 million. Twenty five million dollars in revenue feels very low. So what do you think this private equity firm, Highmount Capital, sees in Dude Perfect?

• 32:51Scott Galloway?

  What they see is the next Mr. Beast. What they see here is an opportunity that this, the media is headed this way. And they see, all right, this is the future. This is the next generation Disney that has a flywheel that creates a ton of media. They get some money, but then can be, you can monetize that goodwill and that viewership by getting people to come into the Dude Perfect stores. Or maybe I think they're planning a Dude Perfect park or Dude Perfect licensing agreements. It's the Disney flywheel that's trying to be recreated here. And increasingly, I mean, we're talking about this on the call. I had, I was talking to Fareed Zakaria, who is on the podcast. By the way, our last two podcast guests on Prof G have been Fareed Zakaria and Jonathan

• 33:35Scott Galloway?

  Haid, who are the number one and number two best sellers. And it's clearly because they were on our podcast. Let's just be honest. You know, mediocre books, these guys aren't that credible, but coming on this pod. Huge platform. It's just huge. Anyways, I was talking to Fareed and basically the future of media is if you want to make really big money, you've got to be multi-dimensional or multimedia. And that is Fareed does an amazing Sunday morning show. He has books. My guess is he will launch a pretty successful podcast. To be mono-medium, it's really hard to make a living because if you're fortunate enough to be really good at podcasting, it's really hard.

• 34:18Scott Galloway?

  And the way you make money is that 20 or 30% of your viewers would be willing to give you trial at a low cost in another medium. The same way Disney says, okay, our Star Wars movies, we squeeze that lemon as hard as we can, but then we build rides at the parks and then we build licensing agreements through Hasbro. In other words, you get a huge cost advantage over other stores and over the other toy manufacturers because 20, 30% of your customers from another medium are willing to engage in the new medium at a very low cost. And the same thing's going to happen in media. Your analysis, though, is the right one. And that is at some price, almost every company is a good or a bad investment.

• 35:01Scott Galloway?

  And to me, the thing that struck out is that they're raising a hundred to 300 million. Typically, typically, investors want a quarter to a third of the company unless it's a private equity firm that's buying the whole thing. Private equity is usually for companies that are cash flow positive and bigger. This is a growth investment, which means this company is valued at what looks like somewhere between 300 and 600 million dollars. And the fact that I had 20 million in kind of media sales, I just think I wouldn't get near this if I were an investor. I think it'll be fun to watch, but this to me feels as if they're overpaying.

• 35:36Ed Elson?

  You mentioned this trend in the creator economy where you have these individual creators, whether it's on YouTube or in podcasting or even Instagram and Twitter where they're going out and they're starting their own diversified media businesses. Mr. Beast, you know, he's a YouTuber, but now he's launched a company that sells chocolate bars at Walmart and it's actually been very successful. It has its own burger brand. It even has a nonprofit arm to the company. Another example would be Alex Cooper from the Call Her Daddy podcast. You know, she's now launched her own podcast network and that's a lot of that is because she just doesn't want to be solely reliant on her own show.

• 36:17Ed Elson?

  You know, we do that a little bit, I would say to the, to a lesser degree, but I'm wondering if you have any similar ambitions for this company. You know, we're primarily a podcast company, but you're not going to be podcasting forever. Do you have any plans or objectives to build out Prof G into something bigger than the podcast, maybe a Prof G network, Prof G brands? Do you see us growing into something similar to what Dude Perfect has done?

• 36:46Scott Galloway?

  So this is, this is probably a good time to announce the new line of Prof G catheters. Is your, is your blow not blowing?

• 36:57Ed Elson?

  I quit.

• 37:00Scott Galloway?

  I don't erect all this function, Dr. But that was too easy. I don't know, two headed, two headed glass dildos? I'm trying to think what would really work? What would really work? A line of rum? I don't know, my own edibles?

• 37:13Ed Elson?

  That'll be good.

• 37:13Scott Galloway?

  That's what I should do, actually, a line of edibles.

• 37:14Ed Elson?

  Yes, that'd be fun.

• 37:16Scott Galloway?

  So this is what we have been, in all seriousness. We've started getting better at YouTube. We're probably making, I don't know, what are we making? We're not making a lot there right now.

• 37:24Ed Elson?

  We're barely making money, yeah.

• 37:25Scott Galloway?

  Okay, everything's stuck. A small acorn turns into a giant redwood, young Ed.

• 37:31Scott Galloway?

  The books, we have seven-figure-plus contracts for our books. The pods make mid-millions. The newsletter, we haven't monetized yet, but I think we probably will. We're getting inbound interest in advertisers for, you know, hundreds of thousands of dollars. Our speaking business is a multimillion-dollar business. So now, if we wanted to get really aggressive, we would raise money, hire a president, and start looking at other opportunities like this. The bottom line is, and this is more, it comes down to personal thing, I mean, there's two ways to pay yourself: cash and be profitable and grow kind of slow to medium, or take capital and try and flip the model and make the compensation for all the people around equity where we try and grow this business for five or 10 years, and then sell it to

• 38:16Scott Galloway?

  another media company or something like that. But I don't have any plans for branded products. I have, we have been approached, someone, one of the big talent agencies who is in the business of finding people with a profile and connecting them with products, who did Kim Kardashian at Spanx, called and said, "Would you do a credit card around saving?" And I looked at it and I thought, "I don't like the fees here. This kind of goes against what I think." Anyways, so, we would consider it, but it's like anything else. It's a matter of focus and bandwidth. Do you have any ideas for us, Ed? Any product? Any product extensions?

• 38:49Ed Elson?

  Maybe we should just create a theme park or something. Just keep it simple.

• 38:52Scott Galloway?

  I like that. I like that. A panic room? A room where you're going and you feel anxious, just super fucking anxious and old?

• 39:02Scott Galloway?

  I'd like that. This is angry land. This is depressed land.

• 39:08Scott Galloway?

  Yeah, I would like to design a theme park.

• 39:10Ed Elson?

  And give you a dose of ketamine at the end.

• 39:11Scott Galloway?

  There we go. Ketamine therapy over here. Passive-aggressive rides over here. Yeah, I like that. I like that.

• 39:18Ed Elson?

  Good. We've got a plan. Let's take a look at the week ahead. First quarter earnings season kicks off with the banks. Goldman Sachs, Charles Schwab, Bank of America, Morgan Stanley and US Bank are all reporting. We'll also see earnings from Netflix, Johnson & Johnson and Procter & Gamble. Do you have any predictions for us?

• 39:37Scott Galloway?

  Well, my prediction was going to be that banks are going to surprise with the upside because everyone was expecting interest rates to come down. And actually, banks benefit from net margin income and that is they want to loan out money at 7% and they want to give you 3% or 4%. So the margin's expanding in a higher interest rate environment and companies. And there's been consolidation. A lot of regional banks have seen outflows to the big banks. So I think that actually the stickiness of inflation and higher interest rates is going to result in an earnings surprise to the upside. But I like the prediction we made. Real time here is that is I think in two to three years, we're going to see the externality of the frictionless gambling environment where these companies are preying on the poor instincts or the weak instincts of individuals and the fact that our regulators are so old that

• 40:22Scott Galloway?

  they don't really think about the challenges the young men face. And I think we're going to see unfortunately, some very negative externalities from an explosion of what is the second fastest growing business in the world right now, and that is online gambling.

• 40:38Ed Elson?

  This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our executive producers are Jason Stavers and Catherine Dillon. Our associate producers are Jennifer Sanchez and Alison Weiss. Mia Silverio is our research lead and Drew Burrows is our technical director. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Wednesday for office hours and we'll be back with a fresh take on markets every Monday.

• 41:40Speaker 03

  This podcast is supported by Anthropic, the public benefit corporation behind Claude. Everyone's got a hard question about AI. Anthropic was built to surface those questions and share what it finds along the way, because there's hope in hard questions. Ask yours at claude.ai/spotify and keep thinking. That's claude.ai/spotify.