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- [00:00]
A
Hey, welcome back to In Good Faith. My name is Philip DeFranco, and every week I'm talking to people I think are the most important and influential people in the world. And this week I spoke to Maxinomics, who also has been blessed with the name Phil Rayton.
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Phil.
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A
He's a content creator who specializes in helping you see the invisible strings and trends in the world. And today we agreed and disagreed on a number of things. We've talked about why you can't afford to buy a home if AI is all it's cracked up to be, why money isn't backed by gold. If Ticketmaster was right about Taylor Swift, and if Trump's tariffs are actually working, I feel ridiculous because it's not like it's one thing. But, you know, Phil, what is actually driving housing prices? Is it a lack of supply? Is it Blackstone buying up all the homes? Is that overstated? What are your thoughts there?
- [00:40]
B
The first thing we have to ask here is housing prices are expensive is the way I like to look at it is to boil it down to its absolute basic unit. So what exactly is a house? Let's start there. What is a house? All right, so you have the house itself, which is a structure, and that's built on top of land. The house at this point in time, where we are, is not really that expensive. So what has happened over the last 50, 60, 70 years is the price of the land underneath the house has gotten significantly more expensive than the building on top of it. That changed around the great financial crisis. Everything went down to. All right, so here are the numbers. Let's do this. The numbers are in the major areas that people really want to live in. The cost of the land under the house. Let's take like Santa Monica or, you know, a highly desirable area in Phoenix or New York, Raleigh, whatever it happens to be, the land under the house is about 70 to 80% of the total cost of the house. To put it another way, if you demolished a house on a very desirable piece of property and rebuilt it, you would. If you demolished the house, you could still sell the property, the piece of land, for 70 to 80% of listing price. It wouldn't cost that much to actually build the house. I mean, it would still cost hundreds of thousands. But that's not really where the cost is. It happens to be in the land. So the first thing is to look at that like, the house is a structure. It's built on the land. But when I have been looking at this, there are a few things that have just Continuously turned in my mind to think about. So let's ask the question of is there enough housing? Let's start with supply. Okay, and the way to ask that question first is how many units of housing are there per population? That's got to be the first thing to ask. If the population is growing, the number of houses must go up at the same rate. So here's a very surprising stat. In 1970, the number of units of housing per person was.342. Today I. Can I, can I ask you to guess? Phil, I'm curious what you would guess.
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A
Wait, it was. Okay, wait, say it was 0.342. So you're saying how many people per house?
- [02:58]
B
Yeah. Yep. So, population. So if you take the number of housing units and you divide it by the population, back around 1970, 1965, it was 0.342. So for me, back in 1965, there were 0.342 houses, right? Because there's more than one person in the house. So that's how many houses there were per person. If people think there's a houses shorting today, that number should be lower. If we have more supply than that, it should be higher. So I don't mean to put you on the spot, I'm just curious, as somebody that I haven't had this conversation with before, if you'd be willing to guess at what number that would be?
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A
Well, so I feel like you're gonna say it's the opposite of what you expect. So like. Yeah, so, okay, so I mean, let's say I'll just throw a random number and just expose myself for how stupid I am. Say 0.75.
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B
No, no, no. I mean, you're definitely not, you're definitely not stupid. And I'm sorry to put you on the spot, but I was curious.
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A
No, you're great. You're great.
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B
This is why I have you up.
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A
Because I'm like, I'm so ignorant when it comes to it.
- [03:55]
B
So it's gonna. So today it's 0.432. There have never been more units of housing per person in the United States at any point. We are at an all time high. So the idea that there is a housing shortage on a national level is just false. That just is the case. However, there are a variety of factors that skew how people perceive that. So. So the first one is looking at the structure of the people that are in the house. Right? So if you have a house, you have a land. A home is the people that, that go inside the house. So if there are 0.432 units of housing per person, that means that there are less people living in each house. And that's true. So one of the big things that's driving the housing shortage is back in 1960, and this is. I keep going back to 1960, 1970, because when you get on the Internet, you see the memes. It's like, oh, back in 1975, you could buy this house for so much less. And, you know, it was so much better back then. Things have changed significantly. And it's not just the housing, it's not just the pricing. So back in 1965, about 8% of homes were occupied by a single person. 8%. Just so there was just one person living in that home. Only 8% of housing units had that. Today, it's 29%. It has gone up so high that when you think of the number of housing units from that lens, just starting there. And we'll get into other things, but there are fewer people living in each house. And of course, that makes sense, because when you look at, like, New York, when you look at San Francisco, you look at all the single people that move to these cities or anywhere desirable, and they're staying single longer, they're not having kids for a much longer period of time. So while we have more housing stock, there are far more. There are far fewer people living in each unit. And we could even back this out a little bit. There's this whole other layer. We talk about young people, but people that are getting older, the baby boomers and so forth. What's, you know, called the silver generation of housing at this point in time, anybody that's a widower or, you know, 70s, 80s, they're just not moving. So even that is contributing to just one person in each household.
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A
So it feels like. Okay, so it feels like there is a bit of a sandwiching, a closing in. But so does that mean, like, a decent chunk of what we're seeing as far as homes being inaccessible to a lot of people because you have people in it or single people in it? Is that part of this is fueled, I don't know if by bachelordom, or is it more like the lonely loneliness epidemic? Is that kind of tied in to a certain degree?
- [06:43]
B
It's a good question from. Yeah. On that cultural perspective, I don't know what exactly is fueling that. So it's hard to say. I mean, I stayed single really, until I was about 30. I don't know if it's necessarily loneliness or if it's just People waiting longer. When we say that there's a loneliness epidemic, I think that that more pertains to men than women, I would think, but I'm not sure. I'm not, I don't really play around in the lonely epidemic.
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A
I think part of the reason I ask is right, because the, the average age of like a first time homebuyer hasn't gone up to around 40 these days.
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B
Yes, yes.
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A
Right. So when I think about like, who's feeling the most pain, I often think of kind of like the 20 to 35 year olds. Obviously the generation after them is going to be, who knows fully what they're, they're, they're walking into. But that's, I'm always kind of thinking, thinking about that. So it is very interesting when you're talking about single occupancy, but I want to go back to Blackstone. Is that an overstated problem right now or, you know, private equity scooping up homes? Is that as big as a lot of people have been saying?
- [07:53]
B
I would say no, but I definitely know actually the answer is absolutely no. So if you look at total housing stock in the United states, there's about 142 million units. It's hard to pin down the numbers. Exactly. But it's a million to less than a million units that are being held by investment firms. So it's really not that, that many. However. However, the faceless organization of BlackRock is very easy to blame. It is less easy to blame, though you hear it a little bit. By far, short term rentals that are on Airbnb significantly more than like a BlackRock. So the, the BlackRock, the investment bank, so forth, maybe a million units. It's the short term rentals that are at 2.4 million. And even more problematic than that is they sit in some of the most desirable areas that people want to live in. Like, that's the point of having a short term rental. You buy the rental in somewhere that people want a vacation that people want to be, and you squat on it and you rent it. If there's a, if there's a finger to point, you could point it at blackrock if you want. Sure. Anybody that's taking supply is, is going to, you know, help prices go up. But if you wanted to point a big finger, it would be more at short term rentals, which is harder to do because we all use them. So it's not like we don't get some utility out of Airbnb. Not we all use them, but a lot of people use them. So we all get some utility out of Airbnb. We kind of get that. That's the. We kind of get that. That's something we're willing to put up with to, to a degree. But I do wonder. And that has, that has changed over the years. Right? There's been a lot of. On Airbnb, but that's the finger that I would point if I were going to.
- [09:36]
A
Yeah, I think it feels like. It feels like there's two things there because I think the we and I always have to kind of disconnect myself from that because I'm like, there are, I mean, there's really. I mean, there's probably more. Well, there's definitely more. People are living through like three different realities based off of their, their income levels in, I think, the country right now. But I was going to go back to. I mean, it kind of touches on Airbnb, but it also kind of touches back on the ability to, to build. How much do you think zoning restrictions and overregulation impact the ability to build more? And then how much of this, I mean, you were touching on this, you know, is about the lack of regulation or the lack of cracking down on using, buying up places for short term rentals?
- [10:20]
B
From my economist brain, I would say that cracking down on short term rentals is a significantly worse solution than allowing more building. So a ton of it is regulation and zoning. I think that this is one of those things that will always be difficult to solve from a cultural, personal perspective. Everybody kind of wants their thing to stay their thing, no matter how you look at it. We are all protective of our family. And selfish isn't the right word, but we are all incentivized to look out for ourselves and our family. Well, I don't know where you are. I live in a place where I don't really want 100 unit apartment complex built on the next block. It would just change the nature of the community. So I get that that's not a good mindset for helping to build, but I think it's one that the majority of people have and you just have to recognize that. How to crack that. I honestly don't have a solution to it. Generally speaking, the incentive. Finding an incentive is the best way to make building happen. So I would say regulation and building is by far the biggest dampener of building. And you can see specifically. So this is one. I got to put a pin in this. We got to come back to the income thing and the average age of home buyer. But we'll get, we'll I'll come back there in a minute. So one of the big things. Here's a, here's a fun thing. In New York, 40% of, of apartments are rent controlled. They call it rent stabilized now, but they're rent controlled. In San Francisco It's 70%. It's over 70%. I think it's like 77% at this point in time. And rent control, especially in these kind of markets, completely demolishes the desire to build. If you tell somebody, listen, you can build a house here, but you can only charge so much for it. The incentive to build goes way down. Or just in the sense of like some of the regulations say, all right, you will. Or some of the rent control says, all right, if you build a new tower here, you don't have to, or we won't rent control it. You can do whatever you want for it. We'll only make you rent control 20%. However, the developer and the person that's going to own the building in the future is looking around like, oh, well, that's all rent controlled. That's all rent controlled. Why in 10 years wouldn't you just change it and rent control my apartment or rent control my building? So it has this chilling effect in, in these major areas like San Francisco and in New York. And so one of the things when you think about rent control is all right, but you're keeping people's apartment prices down, housing prices down. One of the things that does is allow people that wouldn't stay to stay. So we talked about one person living in a unit. If one person can afford a 40$500 two bedroom unit in San Francisco, but they couldn't afford a $5,500 two bedroom unit in San Francisco, they are pushing out the family with one child that could afford it. So that single person now takes up two bedrooms. What it does, it just distorts the market. So the very first thing I would say is rent control should probably go. I know that that's controversial in a lot of ways, but ultimately it would be better in these major cities to watch rent control go to the wayside.
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A
So I got to ask with that then, because how do you kind of separate the two things? I'm so fascinated. What like where this conversation is going and what the reaction, the audience reaction is going to be like, how do you, how do you separate? I guess the idea of it sounds like you're very like pushing for free market versus kind of the promotion or idea of like supporting. I think what a lot of people would probably call NIMBYism of like not wanting 100 unit apartment building being built in a nearby area. Because how it impacts maybe, you know, your home value, which might be like a three bed, two bath or whatever it is in that specific area. How do you kind of separate those two things?
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B
Right, So I would separate them. But you're wondering how I square them together.
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A
I guess. Yeah, obviously, because obviously it's like, because obviously, like the whole situation, it can be very easy for someone to try to simplify it into a tweet. And so I'm trying to kind of understand kind of the nuances of. Okay, you think, you know, rent control needs to go. I mean, I know a number of people who own properties and contractors who agree with you, and then I know a lot of people that disagree with that. So I hear you there. But then if those people aren't going to have access to kind of the other apartment buildings that you're talking about that would ideally lower the price and make it accessible to someone that is just trying to get a living wage or something like that and not get, I don't know. In New York, there's a lot of talk about people being kicked out of their, you know, where they were born and raised because a bunch of elites are kind of moving in and taking up their space. So I don't know, how does it, how does it all kind of. Yeah, how does it square?
- [15:25]
B
Great question. Okay, so let's, let's do the NIMBYism part first. Generally speaking, that is a mindset in smaller towns and communities where you have a bunch of houses. So I think that that is going to be very difficult to solve. But in cities, when we're talking about rent control, we're talking about the big cities, generally the places that people want to live, Los Angeles, San Francisco, Miami, New York, so on and so forth. And the way you square that. So here's what happens. All right, so you have a rent controlled building, you cap the amount of rent. And what's so crazy about rent control is that there are people living in New York today that are two three bedroom house that are paying 2,000, $2,500. They've had that rent control for like 30 years and they're not going to move. There is no incentive for them to ever change the ownership of that apartment. When you remove rent control, what happens is developers come in, there is an incentive to build a lot more. So as long as you do not cap the rent, you see a ton of building happen. The units that are Currently there, which tend to be older units become cheaper. Developers come in, they build luxury units, they build higher end units, and all the people that were in the buildings before that were in the older buildings start to move into the newer amenities, the bigger rooms, the bigger buildings. And you see the square footage of the geography increase and the geography or the square footage of each average unit increase and you see the people that have money start to move into the higher end units and the lower end units become a little bit cheaper. They, over time. This doesn't happen all at once, of course. But yes, some people would. I guess the best way to look at like ending rent control isn't like, it isn't like we're gonna pull everybody's rent stabilization like in a year from now. Like we're just gonna end it completely. I think the better way to do it would be to put on the books the, of the municipality going forward. You cannot have rent control, like just make it a law or whatever, whatever you call it.
- [17:48]
A
Are you saying like grandfathering these units.
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In, that's what's currently done, tenants? Yeah, that's what's currently done. I mean, and you could, you could phase them out. You could, you could say over the next 10 years we're going to phase out rent control within. We're going to allow rent control or rent to go up 10% per year for each of the next 10 years, or 5% per year just to get it back all the way to the level, to, to level playing field. Yeah. The idea of rent control is you just, you just depress supply. There's just no incentive to, to build. There's a. This is going to get very interesting. Not to go on about rent control, but Los Angeles just enacted legislation that capped rent control to beneath the average inflation for the year. So if inflation was 3% per year, you have, you can only raise rent by 2%. If that holds. If that holds. There are a lot of people around the country and there are a lot of people around the country that will want to see this go to the Supreme Court. It would fall under due process, the appropriation of property by the government. If the government tells you you can't price something to at least keep up with inflation, that's the government saying, we are going to take a slice. And this has been a thing for a long time that people want to see rent control go to the Supreme Court. This is the first case that I know of or the first instance that I know of that gives a very clear standing for the Supreme Court. To actually even just listen to the case. So if they hold that up, this could become a national issue. And if the Supreme Court hears would be interesting. Yeah. Given the makeup of the court at the moment. Yeah.
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A
So, I mean, given the makeup of the court right now, do you think it would, it would go the conservative way right now?
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B
It's hard to say. I mean, it's hard to predict those things. I'm not a constitutional scholar by any stretch of imagine, stretch of the imagination, but the opinions that I have read from justices suggest some limitation, I think would be imposed. I do, I think that free reign rent control would probably be ended to a degree.
- [20:01]
A
Yeah. I don't know. I mean, once again, this is layman looking from the outside. That's why I'm so fascinated to talk with you. It just, it looks like, isn't there something, not necessarily exactly in the middle, but something where there is breathing room regarding some of the rent control measures and things like that and just building more units. Because I know that you were talking about like a lot, a lot hasn't changed regarding the amount of housing, but I don't know, especially when I lived in California, the number of people that were like, yeah, we need to build, we need to build a million units. And then something would come up where it's like, okay, well, it's also going to happen near us. And they're like, oh, no, no, no, I meant like in downtown Los Angeles. I didn't mean here.
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B
Right.
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A
I didn't mean in a way that could affect me. And so it's very interesting, like seeing the, the disconnect. So. And I know, I also think, yeah, it is interesting based off of location, what I think the, the average price for a home in Little Rock, Arkansas, I think in the past month was like $200,000. New York, same place would go for $800,000 or, sorry, average place is $800,000. So I don't know, we could, I feel like we could stay on this for a while, but I do want to switch to, to something else. How do you think AI is going to impact the workforce? Let's say in the next two years, five years and then 10 years, it's.
- [21:19]
B
Definitely going to have an impact. The, the place to start with where AI is going is the people that are using it the most. If you look at usage of AI amongst those that are closest to it, developers, people in Silicon Valley, people that are working in media, usage is just skyrocketing. So if you, if you go to your average startup here, In Silicon Valley over in Palo Alto, it is all AI. That is what they are using and they are doing a phenomenal job using it from what I've heard. And I'm not, I'm not an investor in this, this area, but I do follow it very closely because it is the start of a lot of things. So it's important to, it's important for me to keep tabs on it. And everything that I hear is that the founders that are coming in today, the startup founders are coming in today, they're all AI native and their teams are all AI native and their output per wor worker is significantly higher. In fact, there are entire groups of investors and firms that will only invest in startups in silicon coming out of Silicon Valley. Now if they are AI first and in term and that means they are using AI first. And so when you look at any, this is in the two year time frame or this is just a measure of looking at the two year time frame. If you look at any of the usage statistics, the number of tokens used, and a token is generally a word. So anytime you type a query into ChatGPT or any of the other bots, every word that comes out is a token. And that token is predicted. We won't get into how it's done, but that's a, that's a token. The token usage is just absolutely skyrocketing. So over the past 12 months, since about November last year, a little bit more than 12 months, Google has seen, if I remember correctly, a 50x increase in token usage. You'll see the same thing with grok, once it released its models. Every chart that you look at is just going up and to the right at just a phenomenal effect. So what we're seeing is the power users, the super users, people that use AI a lot. And it makes a lot of sense. The product fits for them, they're using it. And I think it's only a matter of time before that trickles farther and farther down the right early adopter. We've got the person that comes in next and then we've got the late stage people. So all the people that are on the front lines are using it a ton developers are already fully immersed in AI and part of the reason for the token usage is, you know, as a, as a developer or an engineer, you can say you want this code written and then it writes all this code and it queries itself on the back end. It does all this stuff that's more than just like answer this question. So if we look at that, what is happening there on the engineer side, it's hard for me to think that that's not going to come to the rest of the professions. And the reason for that is quite simple. The paper that was put out in 2017 that got this whole thing started, the title of the paper was all youl need is Attention. And it's the transformer architecture that, that does this whole prediction thing that can be applied to just about anything. It was written for text and that's why we have chatbots. That's why we have done all of this. Takes the corpus of, you know, everything that we've ever learned, books, posts, whatever, and shows it to AI and just trains it over and over and over again. Takes a chunk of text out, blanks out a word and says, predict this next predict the word that's blanked out here. It gives us predictions, right? And if it gets it right, it adjusts its assumptions. That's how AI works. But it works for everything. It works for images. If you break an image down into different sections, you can use the same process. If you, if you take video, you now have a 3D matrix that represents a pixel and time. So you can do this for so many different things. The thing that stops it from, from moving forward though is compute. That's why you see all of these data center build outs. If you're going to predict a word, it's four numbers. It's not easy matrix math, but it's relatively easy compared to predicting the next frame of video. And so you need more compute. And that's why these companies are looking at data centers and saying, we're going to build one the size of Manhattan. They're looking into the future and saying, all right, we got text, but that's not really that useful. You know, what's really useful is being able to see the world. Not, not, not to go on. But the glass half full, glass half empty thing, you know what's going to happen in five, 10 years. Right now we have text and we're getting a lot of knowledge. But when you think about what really is knowledge and wisdom. So I can type this thing into the computer and it's going to give me a very good answer, right? But a, AI doesn't know what the world is. So consider this. I could show a banana to a five year old. They know what it tastes like, they know what it feels like. That is incredibly deep knowledge that AI does not have. AI has no idea what a banana. It can tell you based on what it's read, but it has no idea what a banana actually tastes like, what it feels like, what it smells like, how to predict the weight of it. These are all areas of knowledge and reasoning that we humans have that AI is nowhere near. So we can predict, just our eyes can predict the way a shadow is going to move as, as the sun changes. We can predict, you know, how long it's going to take me to walk to that gate. A 5 year old can do that, a 10 year old can do that. What we take as extremely smart intelligence from AI is just a subset of what humans can do. So if the data center build out continues, which will be a struggle around electricity in five, 10 years, we're going to be so much deeper into this than we really know. So where does it go is really a question of electricity. Are we going to allow these data centers to be built or not? That's becoming a real struggle. But in five to 10 years, robotics will absolutely be a thing if data centers are allowed to take root.
- [27:39]
A
Yeah, I mean whenever I see something coming from like figure or I see little bits and pieces, I'm like, oh wow. Okay, so this isn't just, this is definitely not just going to come for managerial positions and not, not maybe complete eliminations, but trim downs there. But it does feel like it's going to impact factories which we're going to, we're going to touch on in a minute. But I mean, do you think then AI is all trying to think it's, it's everything that it's cracked up to be. Like is it, is it 100% the future? Do you have bubble concerns that I've seen people talking about? I think that, I think it's overstated. We'll see. Famous clip. It cuts to five years from now of it being compared to like the dot com bubble. But do you think it's 100% this unstoppable thing? If I know you mentioned energy, if we get on the, the nuclear, nuclear energy train.
- [28:35]
B
I do doesn't necessarily have to be nuclear energy. I do think it's an unstoppable train. I do. For the simple reason that we know how to do it. The cat's out of the box. Pandora's box has been opened. If there are two people, if there's me and there's somebody else and somebody else has AI access to all that intelligence at their fingertips, do I not want to have access to it? I like, like, do I want to be at that disadvantage of somebody that needs to know stuff and I think that that will just, just that fear alone, good or bad, not saying that that's it's a good thing, but that fear alone will be enough incentive to drive it forward. And you see the race. This, there's, there's a China component to this too. China vs the US if China moves forward with it as fast as they can, it would be very hard for the US to be like, you know what? We're, we're just not going to do this. We're will. Will just. If it does get that good and we aren't there and we don't get there, but another country does or an adversary does, nobody wants to be that far behind. So whether it's good or not, I do think that the cat is out of the bag. And this is. We're going forward with this.
- [29:42]
A
Yeah. It feels like whenever we're on this topic, it's such a weird thing to preface a question. It's like if you separate the ethics from it. Do you think AI blank Because. Yeah, I mean, even here on. Or where a lot of people will be watching this on YouTube, it's like there's been a lot of pushback to how, how much YouTube has integrated it, especially for the short form content and like, the integration of like Nano Banana. That's been just because so much of what we get is. You know, I think it's understood that so many of these models have been trained off of content that's been stolen. And the, the settlements that we've seen be made, they're going to be just a fraction of actually the people that had their content stolen. MKBHD, Big Tech YouTuber talked about his content being taken, but at the same time, you have Disney making a deal for Sora because it seems so inevitable and that there is and there is something to be learned that that's happening. And I don't know. I will say I feel very thankful to be. I think I classify as an elder millennial, because I feel like I was born at a time where everything was introduced. So I learned how to use everything. And it wasn't the, it wasn't the default because I do have a concern of people using AI as a replacement for their brain rather than a tool to further elevate what they're doing. Like, when I look at AI and how I use it, it's usually to like, reorganize things that I have already created or people on my team have created or helped me with scheduling because it just, it hallucinates. It's still to this degree like, you know, granted, it's, it's one agent chat. It was like GPT 5.2. I was like, hey, is this technically a war crime? Did Donald Trump commit a war crime? And it's like, well, Donald Trump's not currently president. And I was like, what, How'd you, how is that the area you fucked up on? Thank God. And so it's like. And so I'm like, okay, I can't use these things. And that concerns me because, I mean, when you're talking about all these companies that are like, hey, we have to be AI first. It's anecdotal, but I've heard, I've talked to a lot of people at manager and employee level positions that are like, they're telling us to use it and they don't even know how. Like, they don't, they're not telling us how to use it. They're like, just be more productive and they're throwing it. And, and so that's where I get into the idea of like, how much is it a bubble? When I make the, when people make the dot com comparisons, I go, okay, well, not everything's pets dot com. There were Amazons and I think there are a number of Amazons out there. So I don't know, do you have, do you have those concerns or you think that's just kind of this messy.
- [32:18]
B
Sideshow, the specifically on like the dot com bubble or, or just I, okay, people do have the exact same concerns in terms of like hallucinating how, how good it is. And I do have thoughts on the dot com thing, but like the hallucinating thing, I agree it's definitely not perfect and it's hard for someone to just pick it up and know how to use it. Pro tip, I use, I use AI quite a bit. I use AI quite a bit. It's easy to get answers from. There are certain things that it does, like processing CSVs that I can pull stuff out of. And ultimately I have to stay ahead of the curve. I do look at this as a technology where I do not want to fall behind. I need to know how to use this right out of the gate. Let me figure out how to use it, let me figure out its strengths, its weaknesses. So it is difficult to ask an employee who is already spending their time doing their thing to basically trial run AI, whatever it happens to be. If you're using it for research, whatever tool you're giving them, you're asking them to play around with something that is not a guarantee. Right? It's not Excel spreadsheet, it's not sum equals and then you're going to get the thing for sure. So on the employee side, I can see that frustration. Pro tip for those that do want to use this is when you're looking for truth, when you're trying to assess truth out of a model, is to take one. You really should pay. You should pay for the not free model. You should pay for as much as you can get. You should get the best possible model. And then if you really need to know if this is like a critical thing that you have to be right on, you need to triangulate it across multiple models. You need to take the exact same prompt, you put in one and put it into the other three or, and, or, and or you need to take the response from each of them and plug them into the other three to see and ask it to fact check what's missing here. And then you can get a much more distilled view of what is true from the response and what's not true. But even then, if it's absolutely has to be critical, you cannot be wrong on it. You need to look through the sources like there is, there is a responsibility that you have. The better way to look at ChatGPT and all the bots isn't as you know, an instant answer. Like you're not getting an instant answer. What you're getting is a much faster aggregation of the Internet. It's a much faster search tool than Google search was. So instead of doing what you were doing with search and then scouring the blue links and going through the ads and all that garbage to find like oh, there it is or reading the research paper, it aggregates all that for you so much faster. Gives you a summary that a very talented person would give you. But even very talented person make people make mistakes. So if it needs to be critical, you have to still do the work. So I agree with you, Philip. I am also an elder millennial and I feel so blessed to one not have been born with phones, not have the Internet, be able to play outside all the time as a kid and not have AI so or social media. Like I, I have heard people say that we are one of the most blessed generations because yeah, we got to do everything, you know, before all that but have been young enough to pick it up as we go. And I think that that's pretty true. I'm very grateful for the time that I was born. Just pure luck. Just pure luck.
- [35:42]
A
Yeah, I love that when I was in like my most Emotionally vulnerable state where every my hormones are raging. And prime dick pic sending and taking age. You had flip phones that even if you took a photo, you're not even really sure necessarily what you were seeing.
- [36:01]
B
For sure. Going back to the razor.
- [36:05]
A
I'll get back to the pod in a minute. But first let me ask, you know, you ever open your email in the morning and think, huh, weird. Why is Gmail telling me to change my password again? Because yeah, it turns out 183 million accounts just leaked and millions of Gmail passwords, they're floating on the dark web. That's very real. Or you have security researchers confirming that the leak came from a massive third party database, not even Google proving that you could be doing everything right and still get exposed because someone else messed up. You know, among other things, if you're reusing passwords, one breach, it can unlock your entire digital life. Gmail, socials, banking, everything. That's why today's sponsor, NordVPN is a must have. NordVPN's dark web monitor and password protection alert you if your email or password shows up in a leak before hackers can use it. And their threat protection blocks shady links, malware and trackers before they load. And all your traffic fully encrypted so your data stays yours even if the site that you're on doesn't secure it. And personally, I use NORDVPN everywhere. Airports, hotels and coffee shops with WI fi that looks like it was installed during the Bush administration. It's fast, it's private, and it lets you browse, stream and travel without stress. Hey, get an exclusive discount on a two year plan plus four extra months free at nordvpn.com ingoodfaith that's nordvpn.com ingOODfaith and it's risk free with their 30 day money back guarantee. So Phil, another thing I wanna jump into is golds, right? Growing up there was always like people talking about like, is there really gold in Fort Knox? I never really fully understood the gold standard. I watched your video, I felt like I, I could kind of make sense of it. But I guess for the people that are listening now, can you explain without doing the full video, like the idea of the gold standard and how we've now diverted from it?
- [37:41]
B
Sure. Okay, so in a nutshell, the gold standard was very simply every dollar, every coin had to have a specific amount of gold stored in a vault somewhere before the coin or the dollar could be minted and given to the public. The more gold that you had in the vault, the more coins and, And. And the more cash you could put out into the world. And in reverse, if you lost some of that gold, if that gold disappeared, you had to take coins or gold or coins or cash out of circulation, period. That was the legal thing. This was a US thing. This was. This was the 1800s to about 1931. And then we went on a quasi gold standard. From 1931 to 1971. Cash was gold and gold was cash. That's. That's how it worked. So the amount of money that was in circulation was tied to how much gold we could either pull out of the ground or get from just about anything from trade. You could. You could trade was a big source of gold, right? You were always looking to bring gold into the country so that you could give more cash to your people to spend. That's how it worked. And we went off of that in about 19. We went off of that in 19, de facto, in about the 1930s and in 1971, in full. In the 1930s, the US stopped allowing citizens to go to the window at the Fed or at a bank. That's actually how it worked. You could go to any commercial bank and you could give your cash and you could get gold back. And the commercial bank would then go to the US Government and say, hey, we gave out this much gold. We need you to give us this much cash back. So that's how it worked. We stopped allowing citizens to do that in. I believe it was 1931, might have been 1933, but it was in the 1930s. So in practice, the gold standard for is just like. Or how we experienced. It ended for people in the 1930s, but in the plumbing of the financial system, it ended in 1971 because the United States was beholding of the gold standard for other countries. Other countries could say, hey, we've got a million dollars in US Bills in our bank. We want our gold back. And they could do that. They would, you know, come to the United States, give them their cash, and they would get their gold back. Nixon abruptly ended that in 1971. That was the end of the gold standard. It was a very big deal. But the problem with the gold standard, and here's. Here's where a lot of people will disagree. All of the people, the gold, the bitcoin people, is that without cash, without easy access to cash, it's very hard to make loans. It is. It depresses the economy. If a bank must have a certain amount of cash in its vault in order to give A loan. If it doesn't have that cash it can't give that loan. Loans are what? Credit loans, debt, whatever you want to say. Good or bad. Again not a value statement. Here are what drives the economy and this has been for millennia.
- [40:42]
A
So that's what I was going to ask. Is the whole modern world essentially built on debt then yes.
- [40:48]
B
For sure. 100.
- [40:50]
A
How does that work? Everyone just owes everybody?
- [40:52]
B
Yep. Everyone owes everybody. Everyone has some level of debt to a degree. It's not necessarily. It's not necessarily a bad thing. It pulls forward growth. It sounds bad. And it would be better to have zero debt. But if you have zero debt in a lot of ways you're not really maximizing potential.
- [41:16]
A
Sound like my accountants. I hate it.
- [41:19]
B
Yeah. I mean it's. If you are on and a lot of people. I'm not suggesting to go into debt or anything and it's nice. It feels really good to have no debt and to. To be running an all cash balance. But if you are not using the credit that you have access to to a degree you are minimizing your potential in output. As long as it's utilized well. That's a key thing. Is the debt that's being taken on being well utilized.
- [41:50]
A
Yeah.
- [41:51]
B
No.
- [41:51]
A
I mean I don't know. When I hear that I understand it. I just. I don't know. Maybe it's. Maybe it's my age finally showing and a few hits I've taken. I'm so risk averse. I'm like talking to my accountants. I'm like. But have you ever been poor? Because it sucks. I don't know if you know this. It's horrible. So I'm not gonna maximize everything. But no, I mean I think it's all. It's obviously, you know, balance. But I mean to. Because there are people out there and you've probably seen them that think that we should return to a, a gold standard. Are they just kind of delusion posting?
- [42:24]
B
Yes. But I, I say that without like with, without out judgment. Yes, it. It is. It is a delusion. So here's what happens. This is another incentive thing. Right? If money is backed by gold and I know that, and I know the price of gold is going to be 10% higher in a year. I have no incentive to buy that car that I want or that I even need. It would be better. It would be smarter. It would be rational for me to wait a year for my money to be worth more. Meanwhile the car company that has to build that car has to buy the parts and all the labor for it today, it won't be ready for a year. So it has, over that period of time, spent money. It's now lost money. And so in doing that, every time it spends a dollar today, it loses a dollar tomorrow, because all the cost it took to make the car, it's now worth 10% less in the future. That's not great. Me, I am looking at things and I'm saying, all right, I have, you know, the value of my money has gone up. Things are getting cheaper for me. One thing that's a problem, though, is I have a loan. I took a mortgage out on my house, okay? If I took a $300,000 mortgage out of my house and the value of my money went up, technically in a year, the value of that mortgage is $330,000. And I've only paid off a little bit at a time, that's fine, because the value of my money and my income is going up at the same time as the debt. It works out, it balances. This is one of the big things with the gold standard is debt is a real problem. So those two things are going up at the same time. That's okay. I'm not really gaining money. I'm gaining money as long as I don't take on more debt that's going to accrue in value or that's going to go up in value. However, the car company that I work at that is losing 10% per car that it makes because it has to sit on all that inventory and labor for a year now has to do layoffs. If we don't do something, we're going to keep losing money. They lay off some people. I'm one of them. And so now my income is not going up at the same time as the debt that I have is going up. So any time that I spend without income, the value of my debt becomes a much bigger problem. So between the idea of the value of debt. So when we have debt today, Let me explain this for listeners. If they don't quite understand, if I have debt today, If I have $1,000 in debt today, it's going to be not as valuable to the person that owns that debt. In a year from now, because of inflation, it'll go down by about 3%, right? That would be different under the gold standard, where the. Where the value of money appreciates. It would be worth less or it would be worth more. It would be worth more to them, and that would be harder for me to pay down. So you have this thing where businesses have to pay for things upfront and the value of debt to the debt holder goes up, which makes it much harder to pay off. These two factors are just a huge depressant for the economy. And this is the main reason why we got off the gold standard. Debt was a problem or debt is a problem with that. And it disincentivizes the building of things.
- [45:44]
A
On the note of money and affordability, though this is not an essential, but it is connected as far as, like the, the way things are purchased and the value of a dollar. The Ticketmaster CEO said back in July of this year that the concert tickets are actually still undervalued compared to kind of things like high value sporting events. You compared Taylor Swift or Beyonce to the Super Bowl. Do you think he's right?
- [46:08]
B
It's a great segue. He has to be right. He has to be right. And the reason we know he has to be right is when you look at the secondary markets, the price of a Taylor Swift ticket or a Super bowl ticket is way higher than the face value price of it. So when you look at, yeah, if you can buy something at a very low price and arbitrage it somewhere else for a much higher price, which is what that is, tickets go on sale. I, as a person or a scalping business which does exist, buys as many tickets as I can, sells them on StubHub. That is telling us that the face value of a ticket is much lower than the market clearing price. So from a pure economic standpoint, the CEO of Ticketmaster is correct there.
- [46:51]
A
And so I was, I was really interested in your video where you kind of focused on it because some people, I think they, they called it kind of pro Ticketmaster. It felt like you were saying this singular statement that coming from Ticketmaster is correct. Is there. Do you think that there is actually like a, a solution that is currently out there or could be out there that that solves the problem of, you know, an artist saying, hey, I want to make my concert accessible, versus the reality of there are huge institutions or groups of people that know how to use technology to scoop up massive amounts, amounts of tickets to make money off of and bring pain to consumers. Is there a solution that you've seen work there?
- [47:35]
B
There is a solution. And artists aren't going to like it. Artists hate it, actually, because artists don't like Ticketmaster. Okay. The solution is to limit ticket resale to just the Ticketmaster platform or prevent resale entirely. Which means. Yeah, there's two solutions, actually. All right, so the first is to prevent retail or resale entirely. So if I buy a ticket, when I get to the gate, I have to show id. That's how I get in. The name and all the details have to match the ticket. This is a problem with the experience of going to a concert. You don't have to do that now. It creates way more friction to get in the door. There's always going to be problems. You have to have a support system to deal with people that don't have their license or the name doesn't match or whatever it happens to be. So nobody really wants to do that. It sounds minor, just showing your id, but in practice, it becomes a bigger deal. Also, when you buy a ticket, sometimes something does come up. Do you want to spend $500 on a Taylor Swift ticket only to have something happen in your life? You know, a kid gets sick, whatever it happens to be. And you can't go. So you're taking that option away from. From people. And that's. Those are the two main reasons why most artists don't do this, but some do. I think it was the Cure that did this three or four years ago, and it worked. The other option is to go through one. It doesn't have to be Ticketmaster, but it. But because of how they own a bunch of stadiums, it probably would. The way to do this is to only allow resale of tickets on the platform that originally had the sale. So, you know, Taylor Swift concert sold all her tickets through Ticketmaster. Her tickets could be resold on any platform. StubHub, SeatGeek, whatever it happens to be, as well as Ticketmasters, Resale, StubHub and SeatGeek don't cap the price of their tickets. That's not what they do. They don't have a relationship with Taylor Swift. To say, how much do you want us to cap the price of these tickets that are coming onto our platform for your concert? That's not what they do. They don't really have a great incentive to do that either. The higher the ticket price goes on their platform, the bigger the fee comes in. So it doesn't really make sense for them. It does make sense for Ticketmaster, which has a resale platform. If Ticketmaster. If an artist went to Ticketmaster and say, all right, I'm doing the. Or Taylor Swift goes, I'm doing the Eras tour. I only want tickets for these tiers to be priced at this maximum, and I'm only allowing those tickets to be bought and sold on your platform. So regular sale happens on your platform and they can only be resold on Ticketmaster resale. You have to cap the price of those tickets you've issued them. You know all of the details around them. When somebody lists them, you have to make sure that they only sell them at the same price. There can be no change in price. Artists hate Ticketmaster, so they definitely don't want to do that. That's one of the things where you find artists aren't really interested in giving Ticketmaster even more power. Okay, so you get our resale, too. And then there's all sorts of computer conspiracy that, you know, artists sometimes buy a swath of their tickets and then sell them on the resale market at hugely inflated values. I doubt that there's. I doubt that there's much to that, but those are the two ways you could definitely fix it.
- [50:48]
A
Whenever I hear things like that, if it's not already happening, I'm like, it feels like we're just giving them ideas. Yeah. Oh, wait, I want to. I want to. It's actually still on the topic of money, but different avenue. I watched your video on tariffs, which I believe was. Might have been around January of this year, and so I'm interested to know if your thoughts have changed about them. But in your video, you kind of talked about tariffs being used like a tool. And I feel like in this year, we've seen it used as a tool, but, you know, there are different tools. Some precision tools, others being a sledgehammer. I've seen a lot of other economists talking about it really feels like someone is swinging a sledgehammer. Are you. Are you seeing how tariffs are being used this year as being somewhat close to a norm, or maybe not, as I use this word a little loosely, but not as crazy as a lot of people will kind of see them to be.
- [51:46]
B
I view tariffs as they're being implemented as the way that it initially had to be done. If you wanted to start a tariff regime and you wanted to bring this back, how are you just going to do it? Little piece by piece? It had to be blanket. This is just purely strategic. And I'm not saying that it is the way to go about it or not, but if you want to bring tariffs back as a tool, even as a precision tool, you really have to start by clamping everything down and saying we are going to swing the tariff hammer whenever and however we feel like it. If you fall out of line with the thing, it's a psychological thing just as much as it is a technical thing. Right. If a country knows that you are willing to put 100% tariffs on that, even though a lot of them had been rolled back, that it is now on the table. The Overton window has shifted. That gives tariffs significantly more power going forward. So it is a sledgehammer. I agree. I think strategically it was the only way to do it and that over time they'll likely be refined down. We'll see what the Supreme Court says. I am curious, Yeah, I am curious to see how that comes out.
- [52:59]
A
But what do you think that since. Since. Because I think it's been 8 months ish since the Liberation Day tariffs and you had like the 15% and then the varying rates and then the change ups from there. Do you feel like they have been successful in what they're doing?
- [53:16]
B
Yes, for two reasons. So the first reason is what did tariffs do? Tariffs started the national conversation around other countries practicing trade in a way with us that was very detrimental to us. So it elevated the conversation around China. China is doing these things. All of a sudden the conversation started talking about IP theft, you know, undercutting prices, subsidies, industrial policy in China. That became a big, basically a household topic of discussion which was needed to be had. That is true. A lot of the stuff around China we did need to talk about. We can talk about whether or not we want cheap stuff and what, what trade offs we're willing to make. But most people didn't know what trade offs were making and how the other team was playing the game. So at a minimum we all got to have that conversation. We've got to debate it back and forth. The second one is I think that we can all see that to a degree it is working. And you look at the tariff number, the tariff revenue that's come in is significant. You know, it's supposed to be a $400 billion run rate, I guess. Yeah, a run rate this year, like the US government's going to take in $400 billion in tariff revenue. That's a pretty big deal that says a lot to people. And I think what that will do. And again, I'm not going to say whether or not that that's a tax or whether or not it's the best way to do it. Forget about that and just say every politician in Washington is looking at $400 billion in tariff revenue and going, huh, that is money that I can spend.
- [54:53]
A
Isn't. Isn't part of the concern though that it's actually more of a. Almost a shell game. Might be too harsh or maybe perfectly accurate where we're saying look at this money. But then because of the tariffs and because of the impacts it had, it's had on certain sectors that all of a sudden, you know, you have an administration saying we need to bail out the farmers who have been impacted horribly because of trade. So it's like, okay, well, so then we're taking more of that money. And then you have with Costco and others suing the administration saying like, hey, we're like we're losing money, so how much money gets moved there? And so the big shiny thing, is it really the big shiny thing if we break down all the different negatives, things that have gone into the red or things that need to get pulled away? Because it's, it seems like obviously, like it's hard to talk about an entire situation when we point to, you know, specific areas. But doesn't, you know, having to do a massive bailout for farmers and those farmers also saying, like, this isn't going to help us in the long term. Doesn't that show us that at least in certain sectors it's not working? Because I know that you've said it doesn't feel like it has been inflationary because it's not inflationary everywhere, but it is seemingly inflationary and devastating in certain pockets. Yeah.
- [56:12]
B
So the way I would look at this, I do, I would prefer to not have tariffs in a free market. I really do. It does distort things. There's no, there's no way to say that it doesn't. However, in order for there to be a free market, it's got to be free market amongst all trading partners, not just the United States and a variety of others. So what we're seeing happen here right now is all of this terror revenue, tariff revenue that's coming in. It is giving, it is leverage. Right. So if the United States has no tariffs up, it has no leverage to make trade deals with other countries. There's nothing to threaten. Like, there's nothing. There's no carrot, there's no stick. So if you have tariffs up right now, all of that revenue that can come in, while it might distort some markets, and it certainly does. Yep. Soybean farmers, whatnot. There is now revenue to offset that and help the soybean farmers. It's not perfect, it's not great, but it will help the US Trade representative to go to other countries and say, listen, you can't make kids make couches with their feet for 10 cents a day like that. That doesn't work for us. That doesn't work for us or whatever it happens to be we now have leverage to push other countries that are our trading partners to trade on a more fair playing field. This is something that people have been talking about for 15 years and we just had no leverage. There was no reason to do this. And tariffs give us that leverage. It distorts the market. Hopefully we can move back to a free market position in due course and in a not long period of time. But for the moment in the game of trade, it is in a lot of ways zero sum. No country, it's not. It is positive sum, but it is also zero sum. From the perspective of no country is going to take worse trade terms than they can possibly get. If they can finagle themselves better trade deals for their country, they will take it 100%. And the US just had no power in trade deals. None. So, yeah, I mean it sounds.
- [58:10]
A
Yeah, I was going to say I was like, we're going to see how it plays out because it does feel like we are in this pocket of time and I won't even lock it into this administration. I think it gets into the. How can you count on America when every two to four years, but primarily four years, we could just be a. Your, your, your friend all of a sudden has a completely different personality. So it's like, how do you, how do you count on that? It does feel like if there was a time where we're pushing people to find ways around us some in ways that the. Like the current administration wants and you know, different avenue Europe dedicating more money to their militaries. Right. Things like that. But they're having to deal with a very real situation around them. I don't know it. I just, I go back and forth. I hear you on the. It's a tool that, that is used primarily because it gives us something to pull back and take away how it's been done chaotically. Just talking to a lot of people who kind of were of your mindset of like, how long is this going to last? They did big buys before the tariffs hit and now are more and more feeling the stretch and the pain and the having to change and mess with their margins. That's been interesting. But another aspect, right. How we've seen tariffs used in the past is bringing manufacturing back to the, to the United States. Right. We saw. Or new manufacturing as well. We saw that with. Even in one of your videos you talked about trucks. Right. In America. So we got people to build manufacturing here. But is there a little bit of a disconnect in the goal there? Not only maybe with Affordability. But there is, it does seem like there is this belief that, okay, we're going to get more manufacturing facilities here in the country, but is it actually going to create jobs? If, like we were talking about, everything's going with automation, right. You could have all these like, dark facilities that really aren't going to help the, if we're talking about it in a sense of bringing jobs back into the economy. Right. Is that, Is that kind of maybe a little bit of a, A little bit of a smokescreen?
- [60:18]
B
The. Is it a smokescreen?
- [60:19]
A
Are you saying, of saying, saying that we're going to bring jobs to America? Because we're going to bring, we're going to put these guys in a position, these guys being mainly companies where they're going to need to have their manufacturing in the United States because you're not going to want to deal with a lot of the tariff chaos, even though it's like, it's not a black and white situation because there are all these different parts and materials that come from all over the world anyway. But that it would bring back jobs because I think that's probably going to be overstated with how much we're seeing automation implemented at these facilities.
- [60:52]
B
Overall, with automation, I am certainly in the Jevons paradox camp where while we have some jobs are certainly going to get automated. We've just seen it throughout history over and over and over again where a new technology comes in and a bunch of other stuff sprouts out. The car is the most famous example of this. Of course, you know, horses and everybody that dealt with that got, got put out of business. But like, look what the car did. I am firmly in that camp. I think that humans are consistently looking to do better and more things. I don't know what it is or what the psychological part of that is, but most people want to go out and do more each day. And I think that that just pushes everything forward. So when we, when we get something like AI or automation within a factory, I don't think people are just going to sit around. I think they're going to figure out what to do with that and to, you know, make more, to do more. So just overall, and I don't know, I'm not, I would not prophesize that I know how that is going to shape up. I actually don't think anybody knows how it's going to, but I do think that it will shape up. Given the look back on history. That's just how it always happens on the, on the bringing back manufacturing. I Think it's really important to. I remember the memes that went around when this first happened, and it was like a guy in a sock factory in a Patagonia vest, and it said, make the sock. And it was like, trump over and make the sock. And he's like, sewing a sock. Very funny. I don't think. I mean, that kind of manufacturing isn't coming back. It's definitely not coming back. I think that that's the wrong way to look at it, is bringing manufacturing back as though we're bringing it back from overseas. I think the right way to look at it is bringing back manufacturing from a ground level of building the next era of manufacturing in the United States as opposed to letting it all be built somewhere else. And that's the key difference. It's going to take time, I guess. When I think about tariffs, one of my big concerns is of whether or not they will work to bring manufacturing back, is will they be around long enough for new manufacturing to come about? We have a presidency every four years. Right. This could change. Things could change in the legal system. So it's not entirely clear that the timing will be there. But we don't really want to bring back old manufacturing. We don't. Nobody really wants to do that. But new manufacturing could sprout up a ton of opportunities in a variety of sectors. And why would we want to not have that here? It's not even depriving another country of it. It's just, why would we not want to have that here? And so tariffs help incentivize the next era of manufacturing to happen in the United States. Even if parts come in again, this is like the sledgehammer tariff thing. If you know that things can be changed, building here just becomes easier.
- [63:42]
A
When you say new manufacturing versus old manufacturing, what's the difference? You're saying there?
- [63:46]
B
So we're not going to. We're not going to manufacture jeans here. We're not, you know, we're not going to sew shirts. We're not going to make microphones. But, like, when we look at AI or all of the new stuff coming forward, do we want every robot that is built by one of these robotics companies to be built in a foreign country? Is that what we want? Do we want the entire drone industry? Every drone you see flying in the sky, the police drones, the military drones, they're all made in China, almost all by one company. Dji, there are some American companies for military drones.
- [64:20]
A
Yeah, but I mean, are we then shooting ourselves in the foot when we're Then removing the restriction and allowing Nvidia to sell chips to China.
- [64:28]
B
Great question. It depends on the chips and it depends on. Here's what technology people will tell you.
- [64:35]
A
Yeah.
- [64:35]
B
When you want somebody to get adopted into your ecosystem, you want them to use your product. So if you want USAI to dominate, you want people to use it. If you want people to use usaid, you want them to use Nvidia chips because they're going to get stuck on the Nvidia software stack. They are going to be disincentivized to create their own chips to build rival chips. And this is why, after hearing this is, this is why now that Nvidia and the administration are saying we'll sell some of the high end chips to China, you're hearing whispers from out of China of no, no, no. We want you to use the Huawei chips because we want Huawei to become the dominant chip manufacturer. We need them to catch up. We need the demand from our domestic economy so that we can make more advanced chips. The idea of selling some advanced chips and it's still not the most advanced to China is a lot of, a lot to do with that. It's a strategic move to disincentivize China to make advanced chips, which actually they would struggle to do anyway for supply chain reasons of silica and the manufacturing process. But it's to dissuade them from trying to go down that path as well as getting them stuck into the US AI stack.
- [65:56]
A
So definitely an interesting take. It's going to be interesting to see how it, it all plays out as we wind things down. I kind of want to know you a little bit because I didn't see like one of those Draw My Life videos that everyone did a billion years ago. What were you doing before Maxonomics? What's your story? How did you get into this?
- [66:12]
B
Sure, great question. I kind of fell backwards into this through. So I have a pretty diverse history. I have a deep software engineering background that would probably be my, my closest thing to trade that you would say. And the way that I got into Maxonomics is, I mean if we go all the way back, we go all the way back to high school. I bought my first stock when I was 15 years old under my mom's name. Got into the markets pretty quickly. I've sure. And in high school it was around the poker craze that started to come out. You might remember this in the early 2000s, we played thousands of hours of poker. So I've played thousands of hours of poker Both live and digital, which is a risk game strategy kind of thing. Love games. So in my youth I just kind of got baptized into looking at trade offs and all of that that you would think of from like an economics or markets perspective. As I get through later in life, software engineering became my big thing. And what got me to Maxonomics is I built a couple of finance websites years ago, five, six years ago, and they took off. They were doing very well. I was writing for one of them and it was doing very well. And this is, this is the rise of TikTok. My fiance and her friend were like, you've got to do TikTok. Like, people love your writing. You've got to do short form video. Absolutely refused to do short form video. I didn't watch short form video. I didn't really pay attention to it at all and tried it. Of course the start was awful, but started to realize we were pretty good at it, got very good at it and over a period of time just put down a big enough catalog that somebody reached out to me from Morning Brew. A lot of people don't know this. I had started Maxonomics, moved from writing almost entirely to video. And then Morning Brew reached out. Maxonomics is part of Morning Brew. They reached out wanting to bring Maxonomics in as a company to buy the company out. And so we ended up going through that process. I almost didn't take that email. I got a cold email from one of the people. I was like, ah, you get those sometimes. You probably get them as a creator from time to time. It's like, do I really want to take this? My fiance was like, you're taking the Morning Brew one. So after a few months we, we negotiated a thing. I came on board and it's been about two years there where, yeah, just get to produce all of this stuff and do the research, the writing. It's an incredible, incredible place to be. And I got, I got lucky to be here for sure.
- [68:53]
A
What a. What percentage of I want to go somewhere and do a thing is part of your like, concept or writing process? Like, do you go, I want to go skiing. I'm going to do a video about ski resorts and Morning Brew is going to expense it or is it just. Is it all like, where are the questions and ideas coming from?
- [69:15]
B
Dude, I wish I could say that it was like that. It's like, I want to go skiing and I'm talented enough or skilled enough to put together a great video on ski resorts at the same time. So like we're going to go skiing this thing I want to do, I'll figure out how to wrap something around it. Unfortunately, that's not how it works. It's the inverse. It's how do I make the great thing. And then it. Does the thing happen? Does it, you know, some entertainment happen around it? But yes, when, when there's a good thing to do, it is pretty fun. So yeah, the ski resorts video, I was able to get 15, 15 runs in just shooting video up and down. So it does happen. It does happen.
- [69:55]
A
Okay. Because when I was watching that video I was like, it was inspiring me because I was like, I have this downtime after Christmas. And I was like, I really want to go to Whistler. And then I had seen a lot of people do or last time I was there, a lot of people started complaining. It was either there or Utah. Started complaining about the epic pass which you did a video on. And I was like, I was like, I wonder if he's like, I want to go. I'm going to take someone to a trip in Europe and we're going to talk about the difference in public transit. Something like that. How about. One of the fascinating things to me is I bring so many people on and so many people are kind of like fantastic natural communicators like yourself. Was that always the case? Were you a good student? Yeah. I don't know. Did it come naturally to you or is it something that you had to work on? I know you said you were writing a lot at first.
- [70:46]
B
The SO one, I gotta have a Las Vegas trip sooner or later. I'm gonna do a video on casinos and that's gonna be, that's gonna be the next funded trip. To your, to your question though I was a terrible student. I have always been kind of self exploratory, looking at things that I find interesting in the moment. So it's not that I was a bad student. I just hated the pace at which school moved. I. It was just so slow. Things were not fast enough for me to pay attention to and there were just a variety of things where it's like, do I really need to learn this thing? I get there's like a well rounded education, but I don't want to learn Spanish too. It's just not interesting to me. I probably won't need to use it. It's. This is a waste of my time. I know exactly what I want to spend my time doing. So I was a terrible student for just about ever. But that coincided with I would read a book in the back of class. I was that kid that, while annoying to teachers, wasn't disruptive, it was more. I more got along by just minding my own business. Listen, I'm not going to do this thing, but I'm going to read in the back of your classroom, and I won't disturb anybody, and I'll try to not make it seem like anybody else should do this.
- [72:09]
A
What a badass way to be nerdy. What a badass. Like, what a badass way to be nerdy. There's something. There's something very strong about. I know you're trying to teach me something, but I'm going to learn this instead. You're not, like, you're not playing video games. You're not doing the TI83, like, hack stuff. You're just. You're like, I got a good book.
- [72:29]
B
Oh, yep. I've loved to read for my entire life. I. I still read quite a bit, though. Less than I would like. Life does get more busy. There was another part in there that I missed of your question.
- [72:43]
A
Sorry, this is. No, no, no, no, no. You're good. The last thing I'm going to ask you, and maybe it'll come up there. What is your favorite video that you've ever made? I know that if someone asked me this question, I'd hate it because I have such a big output, but especially around people that, you know, there's a lot of. There's a lot of preemptive thought put into it.
- [73:07]
B
Right.
- [73:07]
A
You're not just kind of reacting to the day. Is there. Is there one that you're like, I really. I really love. And maybe that it's coming from a place of just. For you, it felt fulfilling or like just really strong or even maybe audience reaction. I know those tone, those two don't always necessarily coincide.
- [73:26]
B
I'm glad you brought it up. Ticketmaster. Taylor Swift.
- [73:29]
A
Yeah. What is it? What is it about it? I know that I think I might have mentioned it off camera, maybe I said it during the podcast, but I like that you put it out, because I think you even seemingly knew that there was going to be pushback because, like, no one's rooting for. For Ticketmaster.
- [73:42]
B
Yes. I knew that it was a controversial take, and very few people had. I'd never actually really heard anybody talk about that. The. The economics behind it and how to think about it. And so I thought that that was a very interesting topic. Also, from a creative aspect, there's a segment in there where we look at the. Oh, I'm gonna blank on the name, the famous painting that was sold, the most expensive painting, the way that that was shot and the creativity around that is just one of my favorite segments in all the videos that I've done is just totally different than what we normally do. But then we get to, I need to do some, some cut downs of this and put them on short form video. Because there are segments in there that are so good. One of them is the VPN thing. I don't think people really realized how they touch the Ticketmaster Taylor Swift scalping thing through the use of a vpn. So there's just so many different things baked into that video that like this affects your life. This is pretty cool. And here's something that you didn't know. And I just felt very. It's just one of those really creative things where I sit down and I'm like, wow. I'm like really proud of how this all came out. It's different in a lot of different ways. So the VPN thing, I'll just touch on it here real quick. The reason you see so many VPN ads is they don't all do this, but many of the big ones do. They sell your computer to other people. So when you buy a vpn, hola, VPN is the one that the major scalpers use. 150 million people are users of Ola VPN. And what that means is you install their software on your computer and when you make a request to the Internet, you hit enter on a webpage and it loads, that goes to a different computer. It goes through the servers of OLA VPN and then it's routed to somebody else's regular computer onto the site, like Ticketmaster. So Ticketmaster doesn't see where it's coming, it's coming from you, but then it goes to a server and then is rerouted to somebody else's computer. So if I'm here in California and I wanted to make it, want it to look like I'm sending a request to Ticketmaster from New York, I can tell OLA VPN to do that and it will do that. So my, my location is masked. And what is so interesting about that is. Or I'm sorry, yeah, you got a little bit differently. I got a little bit backwards. You as a regular OLA VPN user don't actually have that power. You do get masked, like where you're gonna be. But then, hola, VPN can take all the computers that are using it and sell access to another company. A company can say, we're gonna send A ton of traffic to OLA vpn. We want it all to come out of residential laptops in zip codes of X, Y, Z. Take our traffic, route it through those laptops, send it to Ticketmaster so that Ticketmaster sees it as though it's a normal computer request. Ticketmaster will block everything that comes from a server on AWS or what happens. So your computer will act as. It will go, like, literally physically go through your computer if you have OLA VPN up. If a scalper is doing a big sale, there's a very good chance that one of their requests goes through your computer if you have OLA VPN running. And I think that that's just so fascinating. It's one of those, like, why is this free? It's because you're the product.
- [77:06]
A
Absolutely. I mean, when you were talking about VPNs in general, I thought you were going to say, because it's a money printing business. And I was like, yeah, that's why. There's like a billion of them. And you kind of have to like, kind of look at the. The quote unquote, like upper echelon to be like, okay, what is the most private, what is not, what's. Which ones are not doing that. Because when I, When I watched that video, I was like, what? That's how it was working. Because I always wondered how they did it at mass scale. But, Phil, thank you so much for the time, man. Like I said, we have to chat in 2026. I was going to ask you at one point how you think things are going to go. I know you said, who really knows? Let's aim for a December, see what came to fruition. If certain things are overstated, if they were actually understated, it'll be a good time. But main thing, thank you so much for the time.
- [77:57]
B
Yeah, let's do this again sometime. Thanks for having me on.
- [77:59]
A
And that, dear listener, is the end of today's podcast. And if you're listening to me here at the end and you're somehow not subscribed, what are you doing? Definitely subscribe. I've got weekly conversations that come out, usually Tuesday or Thursday. If you like this one, I definitely recommend you check out one of our last two. No matter what, let me say thank you for watching I love yo Faces and I'll see you right back here next week.