Google Earnings, Jensen Targeted in Chinese Spy Plot, The Rise of Fake Wall St. Traders | Diet TBPN

Diet TBPN delivers the best of today’s TBPN episode in 30 minutes. TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays 11–2 PT on X and YouTube, with each episode posted to podcast platforms right after. Described by The New York Times as “Silicon Valley’s newest obsession,” the show has recently featured Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. TBPN is made possible by: Ramp - https://ramp.com Public - https://public.com Cisco - https://www.cisco.com Console - https://www.console.com CrowdStrike - https://www.crowdstrike.com Figma - https://www.figma.com MongoDB - https://www.mongodb.com NYSE - https://www.nyse.com Railway - https://railway.com Shopify - https://www.shopify.com/ Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235 https://www.youtube.com/@TBPNLive

• 0:01Speaker 00

  Why, why, why don't you, why do you sound weird today? Are you okay? What were you doing this weekend?

• 0:05Speaker 01

  What are you talking about, John?

• 0:07Speaker 02

  Oh, I was surfing this weekend.

• 0:08Speaker 00

  Yeah.

• 0:09Speaker 02

  Down in Malibu.

• 0:09Speaker 00

  Yeah.

• 0:10Speaker 02

  Having a good time down there.

• 0:11Speaker 00

  That's good.

• 0:11Speaker 02

  Yeah. What do you mean?

• 0:12Speaker 00

  You, you, it seems like you're not.

• 0:14Speaker 02

  You want to sound different or something?

• 0:15Speaker 00

  Yeah, something's a little different. I don't know, I don't know where, where to place it, but, uh, let me tell you about Ramp. I'll try and figure it out. Time is money saved by using your corporate cards, bill pay, accounting and a whole lot more.

• 0:29Speaker 02

  I was playing on my racing sim last night, so maybe I'm a bit tired.

• 0:32Speaker 00

  Okay. Yeah, that must be it. That must be it.

• 0:35Speaker 01

  How's your phone doing?

• 0:37Speaker 02

  Oh yeah, my phone, it, it's feeling pretty good. What the heck?

• 0:40Speaker 00

  Who, what the?

• 0:41Speaker 02

  Who's that?

• 0:42Speaker 00

  It looks like Tyler is wearing a perfect Jordy mask. Cause look at Tyler today.

• 0:47Speaker 02

  Wow.

• 0:47Speaker 00

  He looks exactly like Jordy. This is crazy. I'm so confused by what's going on right now. No, of course, uh, of course Tyler is wearing the, the Jordy mask, which is extremely freaky. When I ran into him this morning, I thought, I didn't clock it as Jordy actually initially. I, I just thought it was a guest who was here to hang out or say hi, but, uh, it is bizarre. You can't really move your mouth that much, right? That's the main thing.

• 1:12Speaker 02

  I can't really move my mouth. I can't breathe through my nose either. It's a bit hard. It's pretty uncomfortable to wear.

• 1:17Speaker 00

  But, uh, but do a little spin because the back is pretty solid. Uh, they nailed the hair. I think they got it pretty good back there. And I think the sunglasses do a lot of the work. If you take out the sunglasses, you'll give everyone a jump scare.

• 1:28Speaker 02

  Yeah. Daisers.

• 1:32Speaker 02

  I gotta keep those on.

• 1:33Speaker 00

  Not good. You gotta keep the sunglasses on, but it's helpful because Jordy wears the sunglasses a lot on the show. So it works. I think we're going to sub the real Jordy back in. But, uh, this is an A plus bit. I, I thoroughly enjoy this.

• 1:46Speaker 01

  Tyler forgot your laptop. Keep, uh, keep it on, keep it on.

• 1:53Speaker 00

  It's so hard.

• 1:54Speaker 01

  Tyler, uh, keep it on for the whole show. Cool?

• 1:56Speaker 00

  Do not do that.

• 1:57Speaker 01

  No, keep it on for the whole show.

• 1:59Speaker 00

  Uh, we, we, we've tested these masks before and they are so uncomfortable. It feels like you're suffocating. It's absolutely, absolutely brutal. But it's a lot of fun. Uh, the chat's saying you got Botox over there. Anyway, chip wars going on. There's another spy. There was a spy at OpenAI. Now there's a spy tracking Jensen, uh, over at Nvidia. The wars are, are waging. Google earnings is today. We have Ice Cube joining. We got lots of stuff going on today. Can we start the Google earnings recap and then we'll go into the, the Nvidia story? What do you think, Jordy?

• 2:35Speaker 01

  Yeah, let's do it.

• 2:35Speaker 00

  Cool. So, uh, Google stock is cratering. It's down 12 and a half percent. Earnings miss, rare. And here are the results. So revenue consensus was a hundred and, 128 billion. Came in at 127.6. Like, uh, only a, a third of a percent miss down, but to the negative, you usually want to be beaten these, these consensus estimates. Earnings per share, not nearly as good. 30% miss. Uh, they were expecting $3 a share, 301, came in at, uh, 212. And so there was a little bit of nuance there because some of the earnings miss was related to owning SpaceX stock, which traded down in the interval. And so they had to take a little bit of a write down on that.

• 3:20Speaker 00

  But even if you factor that out, so that was an 8.7 billion loss that they technically took on the equity investments. That reduced EPS by 55 cents. And so even if you exclude that impact, EPS still would have been $2.67, still below the $3.01 that Wall Street was expecting. So, um, you can, you can factor out that nuance and still get to a place where something went slightly awry. Uh, there's a lot of good stuff happening, a lot of, a lot of other worries. And that's why the market's reacting the way it is. So the first key takeaway is that cloud is just a monster business. There was very interesting reporting years ago in 2018, that back in 2017, Larry Page had considered pulling the plug on Google Cloud.

• 4:05Speaker 00

  He was like, we're competing with AWS. There's two executives that were sort of fighting at the time. There's too much going on. Maybe we shouldn't even be in this business. Maybe we shouldn't even do cloud and have a cloud platform. Well, uh, that, it's a completely different world today because cloud is so important to the business. Revenue doubled to 30.7 billion. Operating profit tripled to 11.1 billion. Operating margin is at 36.2%. It's a fantastic business. If it were independent, it would, uh, be worth an incredible amount of money. Hundreds of billions, maybe a trillion dollars right there just in that value. And so Google and Alphabet truly has become this diversified, uh, portfolio of bets. Search is just one of them. They got YouTube. They also have, uh, cloud, obviously.

• 4:50Speaker 00

  So the cloud backlog now is $561 billion of companies, labs that have gone to them. We just saw this with OpenAI buying cloud and TPUs. There is a lot of demand for their services. And what's interesting is that you can look at that number, 561 billion, that's a ton. Is that over 10 years? So, you know, we saw in the Anthropic S1, uh, some of these contracts go out, you know, to 2033, 2036. But 55% of that cloud backlog is expected to be recognized as revenue within two years. So even though you have this big number, you're getting half of that, 275 billion, something like that. Uh, over the next two years, that's pretty quick for a business that did 30.7 billion in revenue.

• 5:34Speaker 00

  Like you're getting 250 coming really fast. So that should be driving valuation upwards. Uh, search advertising though, growth slowed. Last quarter was 17%. This quarter came in at 12%. AI is accelerating query volume, so they are seeing a ton of token production. You see that when Sundar steps on stage and shows the, the progress of their models, the, the diffusion of Gemini models. Uh, query AI mode is, is actually taking share. People are using it, uh, in place of the default search. Not really by their choice a lot. It just sort of pops up a lot of the times. It monetizes less effectively than traditional searches right now. What's interesting is that at the end of the day, it's a person asking a question and getting a bunch of pixels on a screen.

• 6:17Speaker 00

  And if you're on your phone, it's a vertical screen that's, you know, uh, nine by 16, right?

• 6:22Speaker 01

  Square for some.

• 6:23Speaker 00

  Square for some, if you're on the duo.

• 6:25Speaker 01

  You're Mark Gorman.

• 6:25Speaker 00

  We're Mark Gorman. But at the end of the day, if you're Instagram, you want to monetize every pixel that you're showing the person while they're on Instagram. If you're Google, when someone asks a question, you want to monetize every pixel with ads. And that's what has happened with Google search over the past decade, right? Uh, there was a time when it used to be a very clear call out for one sponsored post at the top. And now it's been, you scroll the whole first page and it's all ads. AI mode isn't that. AI mode might have some monetization going on, but it's not, every single sentence is a sponsored ad just yet. They gotta get there. They're not going to talk about that because that's rough and that's complicated. But it's going to be a hard road to figure out exactly how do we monetize the full response?

• 7:07Speaker 00

  Everything that we're showing to the viewer should have a lot of things, a lot of links and, and, and offers and brand messages that are monetizable, paid for, bidded, auction style, uh, to really maximize every view that they get. And so that is the, that is the coming challenge, but you know, they've been doing this for 20 plus years. And so that is the path that they're on. The last thing, uh, Google's spending 200 billion on AI infrastructure this year. Uh, 2026 capex guidance, 195 to 205 billion, right? In that 200 billion range, uh, they are also signaling that they will, uh, expect, that they expect a significant increase in 2027. Q3 spending alone was 51.4.

• 7:50Speaker 00

  So they're already on their 200 billion run rate and next quarter should be higher. Following quarter should be higher, et cetera. So let's go. And then, uh, the last thing is that Gemini crossed a billion Mao, monthly active users. The first party AI model, uh, the API is doing 32 billion tokens a minute. Hard to say what that means in the modern era because there's so many models that are more token efficient and really just getting stuff done, getting answers, satisfying users is what matters. But, uh, it's up 40% quarter on quarter. Clearly they're serving their models. More people are using them. And then of course they announced Gemini for Carbon, the newest frontier model, the day or before earnings, two days before earnings,

• 8:30Speaker 00

  sort of trying to, uh, reassure investors that, uh, they are still on the frontier, that they're, that the benchmarks look good and that, uh, the adoption will come and more importantly, that they are vertically integrated. So even if they don't show up on the Ramp data and the Open Router data, just having the frontier model internally is super valuable because it will, it will drive YouTube, it'll drive AI search, it'll drive internal workloads. There'll all be all these things where they aren't going outside for costs, uh, and they will be vertically integrated.

• 9:01Speaker 01

  Yeah, it seems like it's, it's going to be incredibly strategic to be able to get frontier intelligence at 90% low, you know, lower than market prices.

• 9:11Speaker 00

  Exactly, exactly. And then there's a whole bunch of other interesting things. They can fine tune their own models. They can optimize them for their infrastructure. The model that works in Google search, it does feel different than, uh, than a Claude model or a GPT model because it needs to be really fast because people expect that from that, uh, from, uh, the, uh, from the AI search results. And then on YouTube, you expect something different. You expect something that can piece, can crawl over all the transcripts of YouTube with no, you know, robot block up, no CAPTCHAs and whatnot, if you're asking for extra context. So, um, lots of, lots of optimism there, but rough day in the market at least.

• 9:50Speaker 01

  And a little bit rough for Berkshire, who, uh, their sort of blended, uh, price per share of their recent $10 billion investment is around $350 per share. They did some part into Class A, some into Class C, um, down pretty, uh, pretty dramatically from that point. Alphabet now sitting at $280 a share in, uh, just around six months.

• 10:15Speaker 00

  Got it.

• 10:16Speaker 01

  And yeah, it's basically like the OG Google bear case is like rearing its head again.

• 10:21Speaker 00

  Yeah, yeah, that's right.

• 10:22Speaker 01

  And, you know, they've been.

• 10:25Speaker 00

  It became sort of before.

• 10:26Speaker 01

  They've been, they've been, there, there was a viral thread. I'll, I'll try to find it.

• 10:30Speaker 00

  I think you're talking about from, uh, Levels IO maybe?

• 10:35Speaker 01

  No, this was, uh, basically this guy, July 23rd, Max Anderson, says, "As someone who has personally spent 500K a month on Google Ads for years, I can tell you with certainty this revenue growth in search is artificial and extremely unhealthy for Google's business long-term." He goes on to make a bunch of points, which have been refuted in different ways, but Zatreeni brought it up yesterday. The Sufanator at the time, like, pushed back on a lot of this, but either way, it just felt like search was already perfectly optimized. I think I was bringing this up probably, you know, over a year ago. Like, have you actually paid attention to a Google search recently? Where it's like, for certain queries, it's hard to find an organic result, right? Where it's like, ads at the top, first three results are ads,

• 11:20Speaker 01

  then you have maybe one or two organic results, and then a bunch more ads.

• 11:24Speaker 00

  I mean, have you, do you understand the structure of like, finding a mattress on Google? It got so crazy that, first off, there would be Google Shopping callouts that are also paid for. There'd be a Google Shopping widget. Then there would be three or four sponsored results. So the links would be, you know, specifically this brand, specifically this brand, just directly brand keyword advertising. But then you'd go down and you'd get to mattress review sites, and they'd all been purchased by the various mattress companies. So, like, there was actually nowhere to end up. There was nothing that you could go to. There was no, like, Wikipedia. And, and yeah, it's been, uh, it's been crazy, but, but this stuff's just sticky.

• 12:05Speaker 00

  People are just in their flows still, so, uh, that's why you only see, like, slight deceleration. It's not like falling off a cliff or anything like that.

• 12:12Speaker 01

  Yeah.

• 12:14Speaker 00

  Anyway.

• 12:14Speaker 01

  One other interesting detail, so Microsoft had earnings as well. Capex came in at 38.37 billion, estimate was 45.9 billion. So Google was 51.36 billion, estimate was, was 55.7.

• 12:27Speaker 00

  Yeah.

• 12:28Speaker 01

  This wasn't because they didn't want to spend the money, it was because of delays. So they're like, they're trying to spend money.

• 12:33Speaker 00

  Powered shell delays.

• 12:34Speaker 01

  Yeah, just a variety of different factors.

• 12:36Speaker 00

  This whole rumor of like, there's a whole bunch of GPUs that are waiting to get racked because stuff is slow and there's permitting, and, uh, you're bumping up against the, the real world, the physical world. It doesn't really matter what the demand is. And, uh, everyone who's selling tokens is higher, is, is, is pretty happy to be like, "Yeah, we, we, we wouldn't hate if our margins were good this quarter, even though we were delayed on supply." Like, the supply constraint isn't the end of the world for most people. On the AI buildout and strategy specifically, uh, I'm just new tie, new, new, I'm just new at AI, I guess, uh, has a breakdown of some rumors saying that "The internal model's reasonable jump comes from more aggressive RL, including training in games and simulated environments.

• 13:19Speaker 00

  Simulation hypothesis is going strong. Strategies learned there, transferred to research mathematics and other fields. Navi Stokes in ETH show the scale of the improvement. Anthropic's in some, a similar direction with its internal Claude model. Musk's digital optimist hiring explicitly calls for manufacture, measuring transfer from games into general computer use." And so Ashley Vance over at Core Memory is saying, "Does this mean we're just in the midst of Demis Hassabis's original vision of how to get to AGI? After a kind of brief brute force period, um, the, the games are the path to, uh, to AGI." And it is interesting that, that Google has stayed the course with Genie,

• 14:01Speaker 00

  when a lot of the other labs, I mean, Anthropic has famously been like, "We're only focused on coding, we're not even doing images." Uh, OpenAI has done a bunch of, like, quote-unquote, "side quests." Some of those side quests were too compute-intensive, like Sora. Some of them, like, computer use, remember Operator? Do you remember Operator? Like, it was the original, like, go and computer, use a computer and a virtual computer to go and click on buttons on a website, and it was pretty janky at the time, but now it's basically solved, and that was actually a good investment on the side. Um, and it'll be interesting to see which way Genie goes. Like, it could just be, "Oh, it's only fun and it's really expensive," or it could be like, "Hey, this is a really, really great next leg up for training, uh, potential,

• 14:45Speaker 00

  and it's a really valuable asset for them to have internally." I think that's what people are, are debating right now. Um, do you want to stay on Google or move on?

• 14:52Speaker 01

  Big news in Nvidia world.

• 14:55Speaker 00

  Yes.

• 14:55Speaker 01

  Uh, in The Times today, Nvidia chief seen as target of Chinese spy plot. "A Chinese businesswoman who had a close relationship with Jensen was found to be passing intelligence to Beijing. President Trump was briefed and took no action." That's interesting. Uh, "American spy agencies had gathered striking intelligence. A top executive at a Singapore-based data center company was under scrutiny for possibly steering advanced Nvidia AI chips to China." And now, "American officials had concluded that she was a Chinese intelligence asset funneling information to Beijing, but what came next was even more alarming. Surveillance of the executive, Alice Wong, a Chinese citizen, revealed that she had developed a close relationship with Jensen. For years, Washington had worked to deny China the technology needed to match

• 15:36Speaker 01

  or surpass the United States in the intense global competition for superiority in AI. The discovery that Beijing was getting reports from someone with direct access to Mr. Wong, one of the most powerful figures in the AI revolution, as well as an influential ally, President Trump, set off alarms at the White House. Roughly a year ago, Mr. Trump was briefed about the intelligence findings, which have not been previously reported, and chose not to do anything with the information." So, good opportunity to rewind and talk about a show that we did on October 10th, where we talked about this company, uh, and the CEO, MegaSpeed.

• 16:10Speaker 00

  MegaSpeed, you called it a great name.

• 16:13Speaker 01

  I mean, it is a great name.

• 16:14Speaker 00

  And I think we gave her a round of applause for being a reporter.

• 16:17Speaker 01

  The name is fantastic. That's, that's, that's, I, you know, it's always good to say something nice.

• 16:20Speaker 00

  Yeah.

• 16:21Speaker 01

  So the, the name is fantastic.

• 16:22Speaker 00

  Totally.

• 16:22Speaker 01

  So, I asked chat to kind of summarize our discussion.

• 16:26Speaker 00

  Yes.

• 16:27Speaker 01

  And I did a question and a finding. So, "Did you discuss Alex Wong, Alice Wong, the, the CEO, accused spy?" Uh, "Finding, yes. Did you discuss her access to Jensen?" "Yes. Did you highlight her Chinese state media background?" "Yes." So, she had been a reporter for Chinese state media prior to starting a sort of Malaysian-Singaporean hybrid scam.

• 16:50Speaker 00

  Is there, is there non-Chinese state media?

• 16:52Speaker 01

  Did we question MegaSpeed's activities?

• 16:55Speaker 00

  They don't have independent media, right? So if you, if you do anything in the media, it's by definition, you're working for the government?

• 16:59Speaker 01

  Uh, no, I mean, I don't think that's like, actually how they're defining it.

• 17:03Speaker 00

  Okay. Oh, this is like, specifically like, like being like press secretary.

• 17:07Speaker 01

  Yeah, you can make the argument that all their media is going to come under the influence of the state. "Did you discuss Alice Wong?" "Yes. Did you discuss her access to Jensen?" "Yes. Did you highlight her Chinese state media background?" "Yes. Did you question MegaSpeed's activities?" "Yes. Did you explicitly suggest she was a spy?" "No. Could the discussion be interpreted as raising suspicions?" "Yes." So, um, it was too early to go out and say, like, you know, "We didn't have any real details around the situation, but the whole situation was so suspicious." I'm surprised it's taken this long for it to kind of bubble up.

• 17:40Speaker 00

  Yeah, yeah, no, it's, it's very, very tricky. Yeah, I mean, it seems like, at, at the very least, it's like, uh, she is being accused of being deployed to figure out how to gain access to advanced AI chips. So, how can, how can more Nvidia chips land in Malaysia, right? Because the more, the more chips that get to Malaysia, the more inference that will be available for China, essentially.

• 18:04Speaker 01

  Matthew's in the chat, pretty much saying what we're all thinking. "Fool me once, shame on you. Fool me twice, you get fooled. Can't get fooled again."

• 18:12Speaker 00

  It's a great quote, George W. Bush.

• 18:13Speaker 01

  One of the best quotes in White House history.

• 18:17Speaker 00

  Yeah.

• 18:17Speaker 03

  There's an old saying in Tennessee, I know it's in Texas, probably in Tennessee, that says, "Fool me once, shame on, shame on you.

• 18:31Speaker 03

  If fool me, we can't get fooled again."

• 18:33Speaker 00

  Uh, well, Jensen has not responded to this. He, he has not actually posted since October 7th, October 26th.

• 18:40Speaker 01

  Have they had interactions over the last?

• 18:43Speaker 00

  We've been pictured together, right?

• 18:44Speaker 01

  Over the last year, though.

• 18:45Speaker 00

  Oh, interesting. This might be like, kind of old.

• 18:48Speaker 01

  I think it might be, I think it might be old news.

• 18:51Speaker 00

  Yeah, yeah, yeah. You'd imagine if like, the, the New York Times is on the hunt, that, like, the CIA would also be like, "Hey, you gotta stop talking to this person. They are trying to get information out of you," something like that. Um, I don't know. It'll be interesting to see what happens with MegaSpeed, with Malaysia in general. Like, it's kind of a canary in the coal mine, that chart of compute by country. If Malaysia continues to ramp compute capacity, it's like, we don't know the cause, but we know that there's a problem. If you're measuring a, like, an athlete and you're, and you're noticing, like, insane blood glucose levels or something, like, you might notice that there's a problem before you can diagnose it.

• 19:32Speaker 00

  Uh, Malaysia seems to be, uh, in that camp of like, it's odd if they're scaling dramatically.

• 19:42Speaker 01

  Yeah.

• 19:42Speaker 00

  Given the local, the, the local economy.

• 19:45Speaker 01

  It's suspicious.

• 19:46Speaker 00

  Yeah. Uh, and so, I don't know. I mean, there's, there's a whole bunch of chip sanction, chip control, uh, legislation that could be expanded, reworked, changed. There's also, I mean, the incentive is just so high. We've heard about people taking, uh, hair dryers and removing labels from servers to get them across the, across borders. It's, it's an extremely valuable.

• 20:08Speaker 01

  That was called Super Micro?

• 20:09Speaker 00

  I think it was Super Micro. But anytime that there's these geopolitical, uh, walls, there's just such an incentive for arbitrage. I remember hearing about people that, in the Russia-Ukraine war, would take basically like a first-class fight to a Western democracy, buy a DJI drone at like a Best Buy for a thousand dollars, or buy a bunch of them, put them in their suitcase, fly them into the closest country, hop on a train or a bus, get into the conflict zone, and be able to sell them for like, $10,000 apiece. And so, that arbitrage is just like, okay, one trip, if I have 10 drones with me, I make 100, I make $90,000 in profit. People do that. It's the same thing with, with Nvidia GPUs. So there's going to be an incentive, a huge incentive, not just to steal them and divert the cargo and do whatever you can,

• 20:54Speaker 00

  but also, uh, get close to the CEO, see what you can do, learn what is their actual process for making sure that chips aren't diverted, right? How, how can we mitigate the diversion as much as possible, or divert as much as possible, right? Um, and so, it's an ongoing, ongoing battle. But another, another example of the high geopolitical stakes of the AI race is this, the moment that AI 2027 was talking about, China wakes up.

• 21:24Speaker 00

  wakes up and starts spying, like starts going more aggressively.

• 21:28Speaker 01

  Wouldn't that, they've been doing this for a while.

• 21:30Speaker 00

  I guess they've been awake for a couple of years then, yeah.

• 21:31Speaker 01

  Should we go down the rabbit hole?

• 21:33Speaker 00

  Yes, we should. Um, let's see, simulated markets, the simulation hypothesis. So this, I went down this rabbit hole a couple of days ago because you got served this video too on Instagram, right?

• 21:46Speaker 01

  Well, we have the exact same.

• 21:47Speaker 00

  We have the exact same feed. For some reason Instagram doesn't show us any ads and sends us the exact same videos at the same time. I mean, this is just the nature of like things that go viral, everyone sees them, but let's.

• 21:58Speaker 01

  No, but we specifically are sending posts back and forth all day.

• 22:01Speaker 00

  So it's like you guys like the same thing.

• 22:03Speaker 01

  Yeah.

• 22:03Speaker 00

  So there's this video.

• 22:04Speaker 01

  Yeah, we have the, we'll, we'll each send the same video.

• 22:07Speaker 00

  Yeah.

• 22:08Speaker 01

  To each other.

• 22:08Speaker 00

  And I'm just like, like we're just like.

• 22:10Speaker 01

  Scroll up.

• 22:10Speaker 00

  Yeah, scroll up. Everyone will just send the same.

• 22:12Speaker 01

  Passing in the night.

• 22:13Speaker 00

  Everyone sends the same video. Um, but uh.

• 22:16Speaker 01

  Two reels passing in the night.

• 22:18Speaker 00

  That has the title, losing our house because.

• 22:21Speaker 01

  Really?

• 22:22Speaker 00

  Day.

• 22:22Speaker 01

  Really Tyler?

• 22:23Speaker 00

  What happened?

• 22:24Speaker 01

  I had to take it off.

• 22:26Speaker 00

  Oh, you did have the mask?

• 22:26Speaker 01

  Had to take it off.

• 22:28Speaker 00

  Wow.

• 22:28Speaker 01

  Had to take it off. Sitting here in the capital of show business.

• 22:32Speaker 00

  Yeah.

• 22:33Speaker 01

  And you got a little bit uncomfortable with a, with, with your character.

• 22:37Speaker 00

  Ben Macklin behind you over your shoulder. He looks like a little angel on your shoulder. I like the way it's framed right now. It's great. Uh, let me tell you about console. Console builds AI agents that automate 70% of IT, HR and finance support, giving employees instant resolution for access requests and password resets. So, uh, this, this video came up and it says, losing our house because of day trader. Did you notice this? Not because of day trading, but because of day trader. So already odd grammatical error, but play this video because it's designed to sort of rage bait you and go, go viral. And it has this saxophone getting louder song.

• 23:20Speaker 00

  And it's the whole family. This would normally be a tragedy, like you're losing your family home.

• 23:28Speaker 00

  But.

• 23:28Speaker 01

  Yeah, really dark.

• 23:29Speaker 00

  It's super dark and you're like, this is awful. Like what is going on? But if you dig into this person's, if you dig into this person's account, the next video is like, I lost my house day trading and like, here's how I'm planning to win it all back. And then it's like, click my link in bio. And then you click on the link in bio and it's like, here's my trader, trading mastermind. I have a free course and then I have a $49 course and then I have a hundred dollar course. And so all of this is actually a funnel to an info product. And this is designed to go viral. And I don't know if they lost the house or not. Like I, I, I have no idea. It could be that they're doing better than ever because they're not actually trading at all.

• 24:10Speaker 01

  Very, very counterintuitive way to market an info product, being like, I just lost my house because I was bad at something. Now follow me as I run it back up.

• 24:21Speaker 00

  Maybe it's weird, but.

• 24:22Speaker 01

  It's, it's, it's, again, it's like, it's, I saw it and it made me very sad.

• 24:27Speaker 00

  Yeah, totally. Like that is the correct emotional response, but the nature of the algorithm and negativity bias on social media is this is something that you see and you're like, oh, this is horrific. I can't look away. And then a lot of, there's just a funnel. And some people click and they watch another video and they're like, oh, this is, this is inspiring. She's, she's working her way back up. And they're, they're, they're staying in the game. They're, they're not, they're not, uh, you know, hanging up their jersey, I guess, or whatever you want to call it.

• 24:55Speaker 01

  They're not quitting right before they hit it big.

• 24:57Speaker 00

  Basically, that's the pitch. And yeah, it's really, really dark. Um, so, so I, I started going down this because I was like, okay, um, who's on the other side of these trades?

• 25:07Speaker 01

  But yeah, it's interesting because it just like, it, it, it sticks in your mind because it is such a tragic scenario.

• 25:15Speaker 00

  Totally.

• 25:15Speaker 01

  But then what's interesting is they're just like spinning it as, oh yeah, well, it's all good. We're, I'm sticking, I'm, you know, I'm not, we're not giving up yet.

• 25:23Speaker 00

  Yeah. Yeah. So it's very, very odd, but there's actually a, uh, uh, something very interesting going on because when you see that, you think casino style gambling, you think that somebody took their capital. If they have their nest egg, their kid's college fund, like when I was a kid, like the, the, the don't gamble meme was, he gambled away his kid's college fund. Like that was the most degenerate thing you could do as a father. It would be gambling away money that was in your retirement, money that was saved, your nest egg, your rainy day fund was gambled away, usually at a physical casino because you couldn't resist the temptation of blackjack or poker or slots or something. Then we came to the era of the phone

• 26:06Speaker 00

  and all of a sudden it became sports betting, offshore betting casinos, uh, crypto casinos. People were losing money on crypto, but again, crypto is a moment where you have to put capital at risk. Like you have to have the nest egg. This is different. This is people that are, so there are people that are, uh, getting fleeced and losing money. But what's interesting is that it's not that they're taking a nest egg and putting it in a stock that then goes down and they pick the wrong stock. That's not exactly what's happening. Oftentimes what they're doing is they're signing up for subscriptions to trade fake stocks.

• 26:44Speaker 00

  It's a simulated market that gives them the, the feeling of, okay, maybe one day they will be able to get good enough at day trading that they will have access to capital.

• 26:54Speaker 01

  Well, and these platforms pitch it as do your simulated trading with us.

• 26:59Speaker 00

  Yes.

• 26:59Speaker 01

  And if you're good.

• 27:00Speaker 00

  Yes.

• 27:01Speaker 01

  Then we will give you, then we will stake you.

• 27:03Speaker 00

  Yes.

• 27:04Speaker 01

  And we'll give you capital that you can trade. We'll basically turn you into a mini hedge fund.

• 27:07Speaker 00

  Yes, exactly, exactly.

• 27:09Speaker 01

  And, uh, we did a little bit of research on these companies and they're shockingly large.

• 27:15Speaker 00

  And there's a lot of them.

• 27:16Speaker 01

  And there's a lot of them.

• 27:17Speaker 00

  Yeah.

• 27:17Speaker 01

  We found one that has done hundreds of millions of, of fees, which for them is like clearly like better than software margins, right? Because they're just have, they basically have like a fake trading app.

• 27:30Speaker 00

  Yeah.

• 27:31Speaker 01

  And they're like, yeah, place your trades. It's tied to real data.

• 27:34Speaker 00

  Yeah.

• 27:35Speaker 01

  But then they just promise this, pay the hundred dollars a month, prove that you're good at trading. And if you're good, we'll give you capital.

• 27:42Speaker 00

  Yeah.

• 27:42Speaker 01

  Because it'll be a win-win. But of course, over time, a lot of these companies have been exposed as, um, Ponzi schemes. Where they take other customers' money and, and basically like if you're doing the simulated trading and they're, they're like, you get an atta boy, like you did a good job and then we're giving you like a reward. And so they'll pay them, which I think is part of what makes this process addicting, which has driven some of these people to go and get a bunch of subscriptions.

• 28:13Speaker 00

  Yeah.

• 28:13Speaker 01

  Which is just like very, very strange because every subscription could be a hundred dollars a month.

• 28:17Speaker 00

  Yep.

• 28:18Speaker 01

  Multiplying that out, it's like, you could just be investing, but when you're investing, nobody, nobody says, good job.

• 28:24Speaker 00

  Yeah.

• 28:24Speaker 01

  If you do a little bit better.

• 28:25Speaker 00

  Yeah.

• 28:26Speaker 01

  I'll give you a bunch of capital to invest, right? Because people like LPs are not sitting around being like, how do I back the next like stay at home day trader?

• 28:34Speaker 00

  Yeah.

• 28:34Speaker 01

  You know, like.

• 28:37Speaker 00

  No, 100%. Like it, it, these were so like jarring to me because I saw multiple reels from people who were like, I, I have a prop trading account or I'm working with a prop firm or I blew my account or I blew an account or several accounts. And I was just like, you are not working with Citadel or Jane Street. Like this is just, this does not compute. Like you're not on the phone, like your counterparty is not a, a, a, a hedge fund, like something else is going on. And it turns out that the counterparty is basically a SaaS product that shows virtual trades that are completely simulated. And the crazy thing is that I, I originally said this, I was like, imagine, like, look at this horrific story. Imagine being at like Citadel or Jane Street,

• 29:22Speaker 00

  watching this and being like, this is the person on the other side of the trades, right? But it's not, it's actually not the hedge fund that's making money off of this. It's the independent.

• 29:29Speaker 01

  The hedge funds would love to be trading. They would love to be trading against these people.

• 29:33Speaker 00

  Yeah. They're like, get in the real market. Go on a real, go on a real trading app.

• 29:37Speaker 01

  Don't be scared. Don't be scared.

• 29:38Speaker 00

  Come on, and, and we'll make a penny every time you make a trade. Like we're happy with, with doing market making. But instead it's these firms that are, that are actually, um, just taking a hundred dollars a month from people. They'll do it on credit cards. And so that's where you get people. Again, we don't know if this one's real or not, but there are actual people who, who will put multiple hundred dollar a month subscriptions for these simulated trading, uh, challenges on their credit cards. And they're not even putting any capital in the market. So there's actually no chance of like, oh, you actually did get into a good stock and it did well. Like it's, it's purely fake. It's crazy, crazy, crazy.

• 30:17Speaker 00

  Well, uh, I mean, the market in overall is in a rough spot. Uh, the NASDAQ is down 1.3%. The Dow is down, uh, 0.25%. Uh, the headline, Alphabet sheds half a trillion in market value in the stock's worst day ever. These best day ever, worst day ever headlines are, are increasingly common. The swings are, are crazier than they've ever been. There's a lot going on. Uh, but we'll cover it here on the show. So thank you for tuning in. Leave us five stars on Apple Podcasts and Spotify. Tyler, you want to take us out with a truth nuke? You didn't get much time on the show today, honestly, other than.

• 30:54Speaker 01

  As yourself.

• 30:55Speaker 00

  Yeah. Sort of LARPing Jordy over there. But we got a true new. We will see you tomorrow at 11 a.m.

• 31:02Speaker 01

  See you tomorrow.