EBay Spurns GameStop’s Bid as ‘Neither Credible Nor Attractive’

Summary

Bloomberg Intelligence Podcast Summary

Episode: "EBay Spurns GameStop’s Bid as ‘Neither Credible Nor Attractive’"
Date: May 12, 2026
Hosts: Paul Sweeney, Scarlet Fu
Notable Guests: Cecilia de Nastasio (Bloomberg Video Games Reporter), Lily Meyer (Bloomberg Retail Reporter), Sid Philip (Bloomberg Chief Correspondent for Global Aviation), Gautham Kunda (Yale School of Management Lecturer, Bloomberg Opinion Contributor)

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Overview

This episode explores several high-profile stories in finance, consumer goods, and technology, with a particular focus on the surprising and controversial takeover bid by GameStop for eBay. The discussion breaks down the business rationales, skepticism from all sides, and deeper strategic questions before branching into major earnings news (Under Armour), international trade implications (Boeing & China), and the promise and pitfalls of AI in forecasting and education.

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Segment 1: GameStop's Rejected Bid for eBay

Main Points & Analysis

Timestamps: 01:54–05:46

• GameStop’s Ambitious Bid

  • GameStop, led by CEO Ryan Cohen, made an unsolicited $56 billion offer to acquire eBay, a company four times its size.
  • eBay rejected the bid, calling it “neither credible nor attractive,” casting doubt on serious intent and feasibility.

• Financing and Strategy Skepticism

  • Industry observers and the hosts question the financial logistics, with Ryan noting:

    “I can get very creative with capital structures, but I have a hard time seeing how they...would finance this thing.” [02:16]

• Lack of Clarity from GameStop

  • Cecilia de Nastasio explains that Cohen never outlined operational synergies or strategic rationale for the merger, even dodging questions in interviews:

    "He never really went out and said, hey, we run a video game...retail company, but also we're doing really well in collectibles... We could have heard that...but he didn't actually really go out and say that." [02:35]

• Current State of GameStop

  • Despite closures and declining brick-and-mortar sales, GameStop is "still hanging on,” per de Nastasio.
  • CEO Cohen’s recent comments include:

    “We could be doing worse. It’s not a great business, but it’s hanging in there.” [03:20]

  • Paul quips, “Not a great line that you want to hear from the CEO of a company stock that you happen to own.” [03:48]

• Motives and Compensation Considerations

  • There is speculation the bid may have intended to boost GameStop’s stock price (potentially for Cohen’s personal compensation based on share performance), but analysts remain confused by the erratic and “highly autonomous” approach.

• Future Steps: Proxy Fight or Publicity Stunt?

  “It’s possible...that this was a publicity stunt.” — Cecilia de Nastasio [05:03]

  • Cohen’s unpredictable style and a manifesto on X (Twitter) advocating for risk-taking set the tone for potential next moves.

Notable Quotes:

• “The way that Ryan Cohen approached eBay wasn’t exactly so friendly… maybe this wasn’t so thoroughly thought out.” — Cecilia de Nastasio [04:12]

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Segment 2: Under Armour’s Missed Expectations and Competitive Landscape

Timestamps: 07:31–11:59

Main Points & Insights

• Earnings Disappointment

  • Under Armour’s earnings and revenue guidance came in below expectations; the stock drops 16%.

    "I think Under Armour disappointed investors...Their revenue for next year...not as high as they expected." — Lily Meyer [07:50]

• External Pressures

  • The Middle East conflict and separation from the Steph Curry brand adversely impacted sales.

• Competitive Retail Landscape

  • Under Armour is struggling in an aggressively competitive market dominated by brands like Nike and Adidas, as well as newer niche sneaker brands admired by younger demographics.
  • The company is streamlining its product range (cutting SKUs) and rethinking its discounting strategies to stabilize margins.

• Athlete Endorsements and Marketing

  • The loss of Steph Curry is significant:

    “If they had stayed with Curry, it would have been flat for the year.” — Lily Meyer [09:42]

  • Under Armour’s future involvement with star athletes remains uncertain.

• Tariffs and Refunds in Retail

  • Major apparel companies are now discussing tariff refunds as a potential financial upside. The process and policy framework are still murky.

---

Segment 3: Boeing’s Ambitions in China and Product Evolution

Timestamps: 15:25–19:30

Main Points & Insights

• Trump Administration’s China Visit

  • President Trump travels to China with U.S. executives, including Boeing, raising hopes for a major aircraft order.

• Expectations for Boeing

  • Boeing aims to secure its first significant Chinese order in nearly a decade:

    “We understand it’s going to be 500 737 MAXs and a large number of widebody planes.” — Sid Philip [16:07]

• Strategic Need for China

  • Chinese airlines, running low on new aircraft supply, are seeking to maintain growth by tapping Boeing. Previous political friction and pandemic disruptions held back purchases.

• Innovation vs. Stability in Aircraft Development

  • Boeing must balance innovation with operational reliability.

    “Boeing is working on something that’s more evolutionary rather than revolutionary...The last thing airlines need is uncertainty.” — Sid Philip [17:18]

  • Despite new orders, ramping up production—currently and in the coming years—requires new factory investments and careful regulatory management.

---

Segment 4: AI’s Power — and Pitfalls — in Prediction and the Workplace

Timestamps: 22:35–29:41

Main Points & Analysis

• AI and the ‘Black Swan’ Problem

  • AI excels when forecasting within the bounds of its training data but falters in unpredictable, unprecedented scenarios (e.g., extreme weather, financial crises).
  • Gautham Kunda:

    “AI is incredibly good at understanding stuff that happened within its training data set and incredibly bad at understanding stuff...outside its training data set.” [22:57]

• Historic Parallels in Finance

  • Kunda points to the use of Value-at-Risk models pre-2008 as a warning:

    “It works right up until it doesn’t...When it fails, it’s not just a normal failure, it’s a catastrophic failure.” [24:04]

• Workforce Impact: Jobs Created and Destroyed

  • The evidence for AI fuelled job destruction is mixed—firms may blame AI for layoffs that reflect other structural changes.
  • Transition pains are real, even if net job totals remain stable.

• Education and AI

  • AI as an amplifier: It can dramatically boost capable individuals’ output but doesn’t help novices much.
  • Key skill: Knowing when the AI is wrong, particularly important in education and technical roles.
  • Concerns about cheating with AI tools prompt more in-person testing; students are warned they “cheat themselves” when using AI shortcuts.

Notable Quotes:

• “The ability to ask AI the right question...you have to know enough to know when the AI is wrong. That is actually...the single most important skill.” — Gautham Kunda [28:15, 28:25]
• “What you want here isn’t the grade. What you want is the learning. And you get the learning from doing the work, not by asking ChatGPT to do it for you.” — Gautham Kunda [29:29]

---

Memorable Moments

• Unfiltered CEO Honesty:
  • Ryan Cohen’s blunt self-reflection ("We could be doing worse") surprises hosts and listeners.
• Snapshots of Market Skepticism:
  • The incredulity at GameStop’s attempt to buy eBay is palpable throughout.
• Pragmatic Insight on AI:
  • Kunda’s MIT anecdote about the “Six Sigma event” and the real meaning of model failure is both educational and memorable.

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Conclusion

This episode provides an inside look at high-stakes corporate maneuvers, international business diplomacy, and the intersection of technology and traditional industries. Expert guests and hosts combine skepticism and expertise, challenging company narratives and exploring the unintended consequences of innovation—whether in retail, aviation, or the rise of AI.

---

Key Segment Timestamps

• [01:54] — GameStop’s Bid for eBay
• [07:31] — Under Armour’s Earnings and Competitive Analysis
• [15:25] — Boeing, China, and the Next Generation of Jets
• [22:35] — Gautham Kunda on AI’s Limitations and Societal Impact

---

For further detail, listeners are encouraged to consult the full episode.

Transcript

[Paul]

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[Ryan]

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[Podcast Host]

Bloomberg Audio Studios Podcasts Radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Paul]

One of the stories, Paul, that's got you and me scratching our heads is eBay GameStop's bid for eBay, a company that is four times its size. Ryan Cohen, of course, making this very dramatic takeover offer for the company. EBay has now rejected that $56 billion takeover offer, calling it neither credible nor attractive. I think that pretty much tells you what it thinks.

[Ryan]

I did investment banking for a long time and I can get very creative with capital structures, but I have a hard time seeing how they're going to how they would finance this thing.

[Paul]

All right, let's bring in Cecilia de Nastasio. She is our video game reporter here at Bloomberg.

[Ryan]

Nice.

[Paul]

Great to see you, Cecilia.

[Cecilia de Nastasio]

Thank you for having me.

[Paul]

What was the thinking behind GameStop and making a bid for ebay?

[Cecilia de Nastasio]

You know, we actually didn't get a lot of insight into what CEO Ryan Cohen thought that the proposed synergies could look like. He never really went out and said, hey, we run a video game, you know, retail company, but also we're doing really well in collectibles. We're doing really well selling Pokemon cards. Ebay also doing really well selling Pokemon cards and baseball cards. We could have heard that in any of the interviews that Ryan Cohen gave, but he didn't actually really go out and say that. In fact, when he was given questions about what the combined company could look like, he often sort of dodged.

[Ryan]

So, I mean, what's the story with GameStop these days? I mean, I'm not a gamer, thank goodness. Most of my kids are not gamers. But it's almost a meme stock. What's the real call in this company these days?

[Cecilia de Nastasio]

You know, it's interesting because GameStop could be doing a lot worse than it. Than it is doing. You know, they shuttered, you know, thousands of stores over the last couple of years. Used to be a big, ubiquitous presence at your neighborhood strip mall. And, you know, gamers are increasingly purchasing their wares in online marketplaces and not at these. At these physical storefronts. But GameStop is still hanging on. CEO Ryan Cohen said, you know, we could be doing worse. It's not a great business, but it's hanging in there.

[Paul]

We could be doing worse. Not a great line that you want to hear from the CEO of a company stock that you happen to own. So, having said all of this, there's been some reporting that perhaps Ryan Cohen just wanted to boost the stock price of GameStop because there's some clause, I guess, in one of his compensation packages that if the share price reaches a certain level, he gets another big payout. Can you talk us through what's going on there?

[Cecilia de Nastasio]

It's really hard to say. If the companies did end up combining, then it's possible that he would have been able to receive that payout and he would have been very happy. Happy. But also at the same time, a lot of analysts pointed out that the way that Ryan Cohen approached ebay wasn't exactly so friendly. You know, he. It was an unsolicited bid. He didn't publicly state what he thought the synergies could look like. When ebay came back saying that the deal felt neither credible nor attractive, I think that kind of speaks to this idea that, you know, maybe this wasn't so thoroughly thought out. I think a lot of analysts are very, very confused about the tenor.

[Ryan]

You did a lot to improve that outlook there. I mean, what a disaster. That was so do you think GameStop would pursue a proxy fight and take it to that next step?

[Cecilia de Nastasio]

It's possible. You know, Ryan is a very unpredictable executive, which is part of what makes him really fun to cover. He has he posted a manifesto on X, formerly known as Twitter, describing how he thinks American business people are often taking a really risk averse approach to running their companies and he's really trying to carve out a model for something really different. So it's possible he would pursue the proxy fight. It's possible also that this was a publicity stunt.

[Ryan]

Do we know who his advisors are, his investment bank advisors? The only thing I saw was he's got a financing letter from TD securities

[Paul]

which again tells you highly confident, highly

[Cecilia de Nastasio]

confident for $20 billion, 30 years.

[Ryan]

But we don't normally know who his other advisors are.

[Cecilia de Nastasio]

He's a highly autonomous individual.

[Paul]

Stay with us. More from Bloomberg Intelligence coming up after this. If your finance team spends more time finding data than using it. If there's one entity here and one here and one here and one here. If scaling your business feels like starting over, you need the Intuit ERP. Intuit Enterprise Suite is the AI native ERP solution that's powerful, painless and proven. Learn more at intuit.com erp so there's

[Gautham Kunda]

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[Podcast Host]

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Ryan]

Under Armour reported some numbers today. I didn't see them, but they can't be good. The stock's down 16% here. But I know somebody who does know what's going on here. Lily Meyer, she's a retail reporter for Bloomberg News, joining us live here in our Bloomberg Interactive Broker studio. What did Under Armour have to say that maybe the market didn't go for?

[Lily Meyer]

Yeah, so I think Under Armour disappointed investors. I think that their revenue for next year or this current year is not, not as high as they expected. And their earnings per share was also lower. They also mentioned the Middle east conflict as impacting their sales and the split from the Steph Curry brand hitting their bottom line.

[Ryan]

My question with Under Armour. I'm a Nike person, by the way, full disclosure, always have been, and I'm not switching. But it's competitive. I mean, there's Nike out there. Adidas, for those of us in the know, we pronounce it that way and I'm just not sure. And it's, there's so many niche players. I mean, the kids are here at Bloomberg. They were on all different kinds of sneakers that I've never seen before. How does Under Armour fit in there, do you think?

[Lily Meyer]

Yeah, I mean, I think it's a really competitive space like you described, both on the footwear side and the apparel side. I know Under Armour, as part of this restructuring plan that they've been going through recently, has been trying to really slim down the number of SKUs that they sell, you know, kind of streamline the products and also cut back on, on their discounts.

[Ryan]

So is this, you know, I understand that it's really a product driven business. You can't just crank out the same sneaker year after year after year. I mean, every year it's like fat. It is fashion. Do they have the resources that have the capabilities to really compete against the, I guess the bigger players?

[Lily Meyer]

Yeah, I mean, it'll be interesting to see the hard thing with some of the retail innovation cycle is that it takes like 18 months, you know, to start seeing some of that new product actually hit the shelves. So I'll be interested to see what, what they come out with.

[Ryan]

You mentioned they, they lost Steph Curry. That's a big name. How did they think about using athletes as part of their marketing promotion strategy? Is, is it core to them and how big of a loss was like Steph Curry?

[Lily Meyer]

Yeah, so for Steph Curry, I mean, that was a big, a big deal. They had worked with the Curry brand for a long time. That was a really essential part of their basketball business. So this quarter they said that for this Coming year, the Curry brand separation made it so that their revenue was down slightly. If they had stayed with Curry, it would have been flat for the year. So it'll be interesting to see, you know, if they try and sign more big names or what, what comes next.

[Ryan]

I mean, there's kids coming out of college every year. Are they going to be aggressive? What did they say their strategy is there? Because I'm. It's a tried and true strategy, particularly for athletic wear. Nike seen it. I mean, Michael Jordan, you know, that's the great example. But are they committed to that part, that strategy, do you think?

[Lily Meyer]

Yeah, that's a good question. I mean, they definitely work with athletes. I'm curious to see how that will evolve moving forward, especially without Curry.

[Ryan]

What's the, what's the tariff situation with some of these shoe companies these days? I mean, is it. Do we even. Do they even talk about it anymore? Because I know a lot of the retail companies they used and others as well used to just give you a number. It cost us 500 million this quarter or 40 million this, this quarter. Is it still an issue for these apparel companies?

[Lily Meyer]

Yeah, it's interesting. So it switched a little. Now they're talking about what their expected tariff refund will be. So they're baking that in. More on the positive side, I think, you know, there's a lot we still don't know about what companies will get out of tariff refund, if they'll get the full amount, what that process will actually look like, how long it will take. But that's the discussion now is, you know, the upside from that refund.

[Ryan]

Now companies have actually, you have to go like, file and say, I want a refund right now. Has the Nike done it? Like, I'm thinking of the, the big, big name in your retail. Has Nike actually done that, for example?

[Lily Meyer]

Yeah, so a lot of major retailers have, have sued for tariff refunds. And I think it'll be interesting to see as, as they become more of a reality how companies will go about it.

[Ryan]

There still really isn't a str. Isn't, I guess a policy framework to get the money right?

[Lily Meyer]

They're still working on that from my understanding. I think it's, it's, it's still in process.

[Ryan]

If Nike gets money, they do with it, do they give it back to me who paid a tariff on my kicks here or what? We don't know that.

[Lily Meyer]

Yeah, I mean, I think that will be really an interesting thing to watch. I think consumer reaction will be interesting. You know, consumers who have had to face those higher prices, but also the company that's had to shoulder a lot of it.

[Ryan]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Ryan]

for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds and crypto, and they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R and D spend small cap stocks with improving operating margins, or the S&P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on Public you just type in a prompt and their AI screens thousands of stocks and builds a one of a kind index. You can even backtest it against the S&P 500. Then you can invest in a few clicks, go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market and paid for by Public Holdings Brokerage Services by Public Investing member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor crypto services by ZeroHash sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures at.

[Paul]

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[Podcast Host]

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Ryan]

All right, so President Trump leaving today for China. He's got a plane full of executives, including an executive for Boeing.

[Lily Meyer]

Yep.

[Ryan]

And Boyd, you think about a company that's leveraged to China? I always think of Apple, but Boeing's right there. And we want to talk to Sid Philip about that, Bloomberg chief correspondent for Global Aviation, because this could be one of those trips where somebody, you know, China announces a gajillion plane deal. And, you know, actually it's something that

[Paul]

the CEO has kind of hinted at already, saying that, you know, Trump's visit would be, quote, a meaningful opportunity for us.

[Ryan]

Yeah. Sid Philip, he does all this stuff for Bloomberg News. What are you expecting here on this trip for Boeing? What do you think Boeing wants to get out of this?

[Sid Philip]

So Boeing's looking to secure its first big order from China in almost a decade. And so we understand it's going to be 500737 maxs and a large number of widebody planes. And that would be significant because the Chinese airlines haven't really ordered any Boeing planes in a while.

[Ryan]

And is that just because they're mad at us?

[Sid Philip]

They were mad at and, and there was Covid in the middle of it. And so the Chinese airlines actually need those planes because they don't really have a supply of Boeing. I mean, they operate both Airbus and Boeing planes, and they don't really have a supply of planes beyond the2030s. And so if they want to keep expanding, if they want to keep adding more service, they need those planes. And this order is a way to get that.

[Paul]

Okay, so this order is a way to get that. I guess if you're an airliner, you're thinking, what's the next thing Boeing is selling that I want to get my hands on? I mean, you know, not tomorrow, not next month, but down the road as I plan my fleet. Does Boeing have an answer to that? Because it feels like the company has spent so much time writing itself that it hasn't really put as much, at least outward energy, into innovating the next jet.

[Sid Philip]

So that's, that's the really big question that the CEO Kelly Ortberg is really looking at. So while obviously you have the short term and the immediate issues that they have to ramp up production, they have to ramp up cash, like cash generation, reduce that debt pile. The bigger question for Boeing is where do they go from here? And the 737 is basically a long derivative of a 1960s jet. And so for Boeing, they need to decide what they do next. And that will be crucial in the sort of duopoly that they have with Airbus. And Airbus has been talking about how they are working on their next generation of product that they're aiming to get out in the middle of next decade. And that would basically allow airlines to get something that's more fuel efficient and allows them to fly greater distances with more passengers on them. And so what we understand is that Boeing is working on something that's more evolutionary rather than revolutionary. Because the, the last thing airlines need is uncertainty. And when you have a product that's revolutionary, it always comes with teething issues. It comes with all sorts of complications with new technology and how that whole meshes together with existing infrastructure.

[Paul]

Yeah, we've seen that play out before.

[Sid Philip]

Exactly. And so for the airlines, they want something that's stable, allows them to sort of keep going as usual and not sort of rocking the boat too much. And that's really key for Boeing. So how do you derive more fuel efficiency using evolutionary technology? And that's where we see Boeing sort of going in terms of their next products.

[Ryan]

10 seconds. If I get a big order today from China, they can't even make the planes. Boeing, I mean, they have to build another factory or two.

[Sid Philip]

So Boeing is in the process of opening a new Factory for the 737 and they are looking at ramping up production and they've been talking about how they've got these short term goals. So they're currently looking at 42amonth. They're going to ramp up to 47amonth, then 52amonth and 60. So essentially for Boeing, they have a sort of stepped up plan to ramp up production. Depending on how the FAA sort of signs off on it, the production will be in the US it will be in the US So Boeing produces all its planes in the us.

[Ryan]

Stay with us. More from Bloomberg Intelligence coming up after this.

[Adobe Representative]

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[Ryan]

Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds and crypto, and they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R and D spend, small cap stocks with improving operating margins or the S&P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on Public you just type in a prompt and their AI screens thousands of stocks and builds a one of a kind index. You can even backtest it against the S&P 500. Then you can invest in a few clicks, go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by Public Holdings Brokerage Services by Public Investing member Finra SIPC Advisory Services by Public Advisors SEC Registered Advisor crypto services by ZeroHash sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete [e-mail] disclosures being a small

[Paul]

business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now, and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools looking for tips and advice, their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business. Learn [e-mail] business chase for business Make More of what's Yours the Chase Mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank NA Member FDIC Copyright 2026 JPMorgan Chase Company.

[Podcast Host]

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple, Apple CarPlay and Android Auto with the Bloomberg Business app Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Ryan]

AI, it's impacting seemingly all parts of our life, all parts of business and the economy, and that includes weather forecasting. But maybe some shortcomings there. Our next guest has some thoughts there. Gautham Kunda. He's a lecturer at the Yale School of Management and he is a Bloomberg Opinion contributor. You say AI isn't built for bad weather's black swan era. What do you mean by that?

[Gautham Kunda]

Gautham hey Paul, Good to be back. So it's about weather forecasting, but it's not just about weather forecasting. It's about the fact that we're using AI all over the place as a tool to use the past to predict the future, which is maybe the most fundamental of all human activities. And it's incredibly important. And it turns out that as long as you have enough and rich enough data about the past, AI can be incredibly good at it. Even better than the tools we've used in the past, which in the case of weather forecasting involve airplanes and physics models and supercomputers and weather satellites. So all of that is great. The problem is that the weather is changing, so the weather of the past may not be a good guide to the weather of the future. And AI is incredibly good at understanding stuff that happened within its training data set and incredibly bad about understanding stuff that's happen happening outside its training data set. And as I said, that is about weather forecasting. But it's not just about weather forecasting, it's about anywhere where we're facing this problem of using the past to predict the future. But the past is not like the future.

[Paul]

And in your column you write it will work right up until it doesn't. AI models have a tendency to fail in the biggest moments. And one example you give that I think anyone who's over the age of 18 can relate to is the value at risk models that banks used during the great financial crisis, where they relied on past data to predict how much risk they can each take on.

[Gautham Kunda]

That's right. And that's another case of a tool that works really, really well under normal circumstances so well that it gives you confidence, right? It makes you start to rely on the tool. You might even enshrine it in regulations so that when it fails, it's not just a normal failure, it's a catastrophic failure. So that's one layer of problem. The second layer is that often these tools can start to get used by people who aren't the people who built them and so who don't necessarily understand them very well. I was at MIT during the financial crisis, and I remember a very senior risk management person at one of the banks at MIT saying to a group of us, I saw Six Sigma events on three consecutive days, so the markets are weird. And I just stared at him and I said, that doesn't mean that the markets are weird. It means that your tool has failed. Because Six Sigma events three days in a row will not happen in the entire lifespan of the universe. Right. That's how rare we're talking about is. And this was a person who, you know, they were very smart, but they didn't understand what this meant.

[Ryan]

So, you know, I think one of the AI question marks Gotham right now is, is AI going to create jobs in this economy or destroy jobs in this economy? I'm not sure we know that. Do you have any thoughts on that?

[Gautham Kunda]

Well, I think we know that the answer is both. It's going to destroy some jobs, it's going to create others. But the data on AI job destruction, the actual empirical data, is pretty weak. It looks more like companies that overhired or that are looking to cut costs and are kind of blaming AI for what they did. But at the same time, there are going to be some big transitions. And, you know, all of the standard models that we have, they're all about like, you know, bank tellers or things like that that tell us new technologies don't create job, don't. Don't destroy jobs. They don't destroy jobs in aggregate, but they destroy some jobs. And the transition can be really hard for the people who are going through it.

[Paul]

So you are a lecturer at the Yale School of Management. How does higher education prepare young people graduates? Those who have some working experience are going back to school and want to come out with a better skill set to prepare for this world.

[Gautham Kunda]

So I think there are two things we need to think about really hard here. One is that one of the really interesting things about AI, at least as it's currently structured, is it seems to be a magnifier, not a compressor. Right? So if you think about, like power tools. Power tools and construction equipment, made brute physical strength less important if you were working in manual labor. So they compressed the differential and productivity between people who are physically very strong and people who are less strong. But there are other sorts of Technologies that they increase the differences in capability. So someone who normally would be twice as capable becomes 10 times as capable. AI looks more like something in the second pool. It looks like it takes people who are good and it makes them great. But it's not that useful if you're not already an expert in the field. And so school, someone has to create those experts. That's the one thing that schools can do. The second thing is that schools are at their best. And not all schools do this all the time. I'm not defending saying that at all. But at their best, schools can teach people to think independently of these skill sets. And you're even seeing AI companies coming out and saying that humanity skills are really, really important. Yeah. So something I've been quoting at all my programmer friends with great joy is when there was all this turmoil before, people were saying they were, you know, the response was, you guys need to learn to code. Right. And so now the AI is doing the coding and I said, you guys need to learn to ode.

[Ryan]

I mean, that kind of goes to one of the things I'm learning from the young folks is it's the ability to ask AI the right question.

[Paul]

The prompts.

[Ryan]

Yes, the prompts. And in your world, your day to day at a university environment, Gotham, how's AI impacting your world?

[Gautham Kunda]

So a lot in multiple different ways. But it's not just learn the prompts. You have to know enough to know when the AI is wrong. That is actually, I found the single most important skill, so I used AI to help me create the syllabus for a course. It was amazing. It took what would have been a week of work and let me do it in a day. I was blown away. But several of the things that it gave me were wrong in ways that you had to be an expert to understand were wrong. But another expert would have seen this and thought I was an idiot. Right. So that was a really important distinction. And what you're seeing first is, look, cheating is a huge problem. We've had to crack down on that. Written exams, take home exams, I think. I'm really sorry to hear that, see that happening, but it's really happening. And I tell my students on the first day, I'm like, you probably can cheat. And look, honestly I can't tell you if I'm going to catch you or not. The tools to catch you are not that great. But you're going to cheat yourself. Like, what you want here isn't the grade. Nobody cares about your grades. What you want is the learning. And you get the learning from doing the work, not by asking ChatGPT to do it for you.

[Podcast Host]

This is the Bloomberg Intelligence Podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 10am to noon eastern on bloomberg.com the iHeartRadio app, TuneIn and the Bloomberg Business App. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.

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