← Money Rehab with Nicole Lapin
Money Rehab with Nicole Lapin
Are IPOs Still Buying Opportunities? Ed Elson on the State of IPOs and that Big, Beautiful Bill
01:00:33
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- [00:00]
Nicole Lapin
Foreign.
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Ed Elson
I'm Nicole Lapin, the only financial expert. You don't need a dictionary to understand. It's time for some money rehab. 2025 was supposed to be this big comeback year for IPOs. All the headlines said so. And by the way, an IPO or initial public offering is just what we call it when a company goes public, meaning you or I or anyone with.
- [00:27]
Nicole Lapin
A brokerage account can buy shares of that company.
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Ed Elson
Tesla, for example, IPO'd in 20 and since then it's been publicly traded, so.
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Nicole Lapin
Anyone can invest in the company.
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Ed Elson
This is opposed to SpaceX or Neuralink, other elon companies which are private, meaning only super plugged in people and or accredited investors can invest. IPOs went through a brutal freeze in 2022 and 2023. This is thanks to a bunch of economic factors, but namely interest rates, the fall of Silicon Valley bank. Now, in 2025, the market was supposed to thaw, but it might not be that simple. So some investors say that the big IPOs we've seen this year were carefully engineered to look better than they were. Some think that retail investors though, can still profit from these big investing debuts. Today you'll hear what side I'm on. And to break it down, I'm joined by Ed Elson, who is Scott Galloway's co host on Prof. G Markets. It was so fun to speak with Ed because we have similar paths. He got started younger than most people in finance, like I did when I started working on the floor of the stock exchange at just 18 years old. So I know that when you're the youngest person in the room, you really, really to know your stuff to prove that you belong there. And Ed does that incredibly well. Today, Ed and I break down how IPOs actually work, who profits on day one, and what regular investors need to know before jumping in so you don't get burned. Ed also gets into his concerns around the big beautiful bill and how it could make it even harder for Gen Z and Gen Alpha to build long term wealth.
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Nicole Lapin
Here's our conversation. Ed Elson, welcome to Money Rehab.
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Scott Galloway
Thank you for having me. Good to be here.
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Nicole Lapin
It's really good to have you. The first time I listened to your show with Scott Galloway, who is a friend of our show, the first thing I did think was, is this his kid? And then I went to your Instagram and I was like, wow, I'm not the only powerful. Because it says not Scott Galloway's son.
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Ed Elson
He talks about his boys all the time.
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Nicole Lapin
And then I see you.
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Scott Galloway
I know.
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Nicole Lapin
And you have a Baby face.
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Scott Galloway
Yep, yep. I look exactly like him. And I've got the shaved head to look like him as well. So I have to clarify for everyone. No, I didn't get the job because.
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Nicole Lapin
I'm his son and you are not his son. But you can see that you guys have a big age gap. What is that age gap?
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Scott Galloway
If I can do the math in my head, I think we're about 35. 35 years difference. I'm 26. 34. I'm 26. He's 60. He just turned 60. He liked to say he just turned 50, but the truth is he's 60.
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Nicole Lapin
That's a good pairing. I like it. Whatever you guys are doing, I'm buying it. And recently you guys talked a lot about some of the big IPOs in the news recently. You say you're not excited about them. Tell me why.
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Scott Galloway
Yeah, I've just looked at the list of the companies that are going public. I mean, if we were to just go through them here, what do we have? We have Circle, which has been making a lot of headlines.
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Nicole Lapin
Core weave.
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Scott Galloway
Yeah, core weave as well. Chime. Those have been the big, sort of the big splashy IPOs that we've seen so far this year. And then we have all of the other companies that are going to go public in the pipeline, like Klarna, Cerebras, Gemini. So my view on this is, you mean the IPO market's been frozen over for quite a long time, and it had this big pop in 2021, and then since then, basically, it's fallen flat. And everyone's been really excited for the IPO market to come back and for companies to go public. We kind of just want to see new companies. And this was supposed to be the year that the IPO market kind of came back to life. That was what everyone was getting excited about. And also, this was in large part connected with the election, where people were excited about the idea that Trump was going to bring back M and A and bring back business, and we're going to see all these companies again. So it is kind of coming back. We are seeing more IPOs. The trouble is, I just look at those companies and I don't want to invest in any of them. And I can sort of go through why I don't want to invest in them. I could go through Circle, for example, where I tried to figure out, okay, what is this company? What do they do? They are a stablecoin company, which basically means that they issue a cryptocurrency that is pegged to the US dollar. So it's, it's, it's basically a cryptocurrency that tries to not be crypto because crypto is so volatile. So we want to be something else. Let's be, let's be a stable co. And then I look at their business model and I realize that 99% of their revenue just comes from interest on US treasuries. And so I'm like, that's not very exciting. I could just own a Treasury myself. I don't see why you need to invest in some shell company that's going to invest in Treasuries for you and then it's going to have this kind of insane crypto fueled rise that we've seen in the stock market. So that's company I'm not that interested in. Core Weave is another big splashy AI company. You look into it, it seems very exciting and then you start to realize that this is actually a subsidiary of Nvidia. And the only reason this company is able to exist is because it gets all of these GPUs from Nvidia and Nvidia owns 5% of the company. So this isn't really a very good standalone company. If that contract with Nvidia were turned off, then suddenly the company would basically disappear. I look at Klarna, which is a buy now, pay later company and my view is that is just a credit card company that's being rebranded as something else. And what do they have? They've got a 20% rise in losses as of this most recent quarter because everyone is defaulting on their payments. I mean you might have seen that stat that 60% of Coachella tickets were financed with BNPL. My generation, young people love Buy now, pay later. Buy now, pay later. My generation loves this stuff and I think the reason they love it is because these products were sort of sold to us as something that isn't credit. They said, oh, we've got this cool new thing and it's got a nice pink logo and it's very exciting. It's called Buy Now, Pay Later. It lets you buy stuff now and you pay for it later. Of course, that is literally the definition of credit. So long winded way of saying, I look at these companies and I'm not impressed by them. And there are a lot of other companies out there that are not going public, which I would love to invest in. We could go through them. But right now the IPO market is back, but I don't want really any part in it.
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Nicole Lapin
I would love to go through them for sure. There's a wish list that I have as well. If I could get in to some of that secondary, that would be awesome. But I think you're hitting on the point that retail investors are excited because the overall atmosphere is yay M and a bullish on IPOs, but the insiders do way better than what we would get as a retail investor. However, I did just open my brokerage account as you were talking and I have a lot of equities, but my greatest performers and I sorted by percent gain. So the highest percent gain are core weave and Reddit. So core weave up, you know, about 300%, Reddit up about 200%. I was, you know, early in those IPOs, but I wasn't. It wasn't the astronomical growth that the insiders would get. Right?
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Scott Galloway
Yes. Yeah, I think you're hitting on. I mean, let's be clear, right now you're sitting pretty as well. And by the way, I think Reddit is a great company and I think that was probably the most interesting and most long term valuable IPO that we've seen. And that one actually got me pretty excited. Core weave I'm skeptical of because of the issues that I described with its reliance on Nvidia, but like one dominant client.
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Nicole Lapin
So you're also saying these fundamentals aren't stellar.
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Scott Galloway
The fundamentals aren't. Aren't incredible. That's all I'm saying. And that's not to say that, that you shouldn't own these companies. I think it's perfectly fine to go out and buy them. That's just to say I'm not that excited about them. And a lot of people are trying to get it all hyped about these companies as if it's the new Amazon. And I look at a lot of these companies, I'm like, this thing isn't really going to last. So they've had significant pops, many of them. I believe that a large part of that is hype. There's a lot of headlines and a lot of excitement because people are so desperate to get their hands on something new because we haven't seen any IPOs for so long. So that's one piece of it. You also mentioned the idea that the insiders are winning. And that is also true, though I think it is a slightly separate point. I think what you're getting at there is what we are seeing with these IPOs and the massive pops that they're registering in basically a day or maybe a couple of days. That is a big benefit to the institutional investors who receive allocation at the very outset of the IPO and receive that allocation from the investment banks and the underwriters who set up these IPOs. And so basically what's happening is there is a theory going around, one that has been propagated by my co host, Scott Galloway, that a lot of these IPOs are specifically being and intentionally being underpriced such that you can get just a really big splash in the headlines. And the reason that would be a good thing for an institutional investor who gets allocation in the IPO is you get to buy in at a very cheap price and then the next day the Stock pops like 50%, which basically means that the institutional investors who got allocation into the company way before anyone else, they're getting a 50% gain. And then everyone else who's trading on your Robinhood or your we Bull, those people are getting much smaller gains. But I don't see that as a major problem in the ecosystem right now. I think that's sort of part and parcel of IPOs. I think, you know, the people who get allocation generally are the winners. But that is a dynamic that, that a lot of people think is happening. In particular, my co host Scott.
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Nicole Lapin
Yeah, I mean, retail investors can do quite well. I did quite well. And with my, you know, little baby bit of those companies and, you know, the biggest IPO story of the year, Circle surged 168% on its debut. So of course there's a question of whether or not it was, you know, price low. So it could have a big pop and then the momentum and the hype, rinse, repeat. Let's take a step back for our listeners who hear a bunch of IPO talk and mumbo jumbo, but aren't necessarily sure why a company IPOs. So can we just really, really zoom out here. Why are these companies and maybe in the process tell me which ones you are excited about. If they ever IPO'd, I would assume something like Stripe.
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Scott Galloway
Exactly.
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Nicole Lapin
Why would they want to do that?
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Scott Galloway
Yeah, so the reason you IPO initial public offering, the reason you go public as a company is to raise money. It's a financing event. And the reason it's great is because you suddenly get access to just large amounts of money from public investors, both institutional investors, and also retail investors like you and me. So that's a big piece of it is to raise capital. Another big piece of it is liquidity. If you're a founder and you have all of your net worth tied up in the company you founded, you want an opportunity to sell your shares and convert it into dollars. The IPO is a good opportunity to do that because it allows you to sell your shares to the public. So that's another big thing. And then probably the third thing, and this is more of a new development, is public awareness. You get a lot of media attention, you're in the news, you get to ring the bell. It's a big public splash and that can bring attention to your business. So that is generally speaking why you'd go public. Now, in the past, it's primarily been a financing event. That's primarily been the reason why a company would go public. Because if you need money to grow your business, the way you do it is you raise a couple of rounds from venture investors, from someone like a Sequoia or an Andreessen Horowitz, and then you go into the public markets and that's your financing event. That's how you raise money. But increasingly, what we're seeing is there's so much money in startup land in Silicon Valley that a lot of these companies actually don't need to go public anymore. A lot of these companies, what they can instead do is just keep on raising money from all of these venture funds.
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Nicole Lapin
E, F, G. Crazy rounds. Usually it's like a series A, B, C, D. And then that's it.
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Scott Galloway
And then that's it.
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Nicole Lapin
The Alphabet has continued.
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Scott Galloway
Exactly. The Alphabet continues to expand. I think Stripe is on its series H round. Maybe I've got that wrong, but they are almost halfway through the Alphabet. They might end up getting to Q, I don't know. But this is a new development and it's something that makes me a little bit upset as a young person who wants to build wealth because there are so many high quality companies that I would like to invest in. You mentioned Stripe. I would love to invest in Stripe. Massive, great reliable payments company. I would love to invest in OpenAI. That is the number one AI company. I want a piece of the pie. I believe in AI. I think it is providing tremendous value. I use Chat GPT many times a day. It's a huge part of my life. I want to own a piece of that. But it hasn't gone public. It hasn't IPO'd. I'd also like to own a little bit of ByteDance, which owns TikTok. TikTok is the new social media. I want to own a piece of that. I can't because bytedance hasn't gone public. I want to own a little bit of Space X. Space X I think is going to be transformative to our economy. I'm not a huge fan of Elon Musk personally, but I can set that aside and recognize that Starlink is a huge development in technology. I want to own that, but I can't because they haven't gone public. And what is basically happening is that because there is so much money in the startup world, in venture world, these companies don't need to go to the public for money anymore. They don't need money from you and I because they can get it from Sequoia, they can get it from Andreessen, and they can keep on raising these venture rounds to infinity. And this is to me a big problem because I think what we're finding is that regular people, and I often like to speak for young people because that is my demographic and we're getting screwed on multiple dimensions right now. There are very few opportunities for us to build real meaningful wealth. And that is new and it didn't used to be the case even in the world of tech. And I'll just give you some numbers here to put this in perspective. I mean, you've got OpenAI, which is valued at $300 billion right now, and it's not public. Apple went public at a valuation at a market capitalization of $7 billion. And that's in today's dollars. So just think about that. If you were a retail investor, you were able to get in on Apple at 7 billion. Now it's 3 trillion. But today, now we've got OpenAI at 300 billion and we don't have the opportunity to get into that. You look at Microsoft, it went public at a $2 billion valuation in today's dollars. Amazon, $1 billion, they went public when they were quite small and it was open and available to the rest of us. But what is happening is these high quality companies are being gatekept to the private institutional investor community, the accredited investors, the people who are already rich, and then the shitty companies, in my view, and excuse my language, the shitty companies are being flung out into the public markets for us regular people, for us young people who aren't rich yet to invest in. So my view, I'm not going to build generational wealth on Circle, which is a shell company for US Treasuries. I might build it with OpenAI, I might build it with ByteDance, but I can't do it right now because they're not public.
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Nicole Lapin
Yeah. And when a company goes public, just to sort of continue the explanation, they do have a moment at the New York Stock Exchange. If that's where they're being listed. But they can't just march in to the exchange, ring the bell. In order to go public, a company needs an underwriter, which you mentioned, usually it's a big I bank to help set up the price, manage the process. Now, you would think that underwriters would want a stock price to be high and there might be, you know, more of a incentive for them to do that depending on, you know, what the circumstance is. But we've seen it priced low and then a crazy pop and sometimes a correction. Right. So who actually benefits the first day of trading?
- [18:45]
Scott Galloway
Well, I think it depends on, it depends on what happens to the stock. I mean, if it pops on the first day of trading, then the bank kind of wins because it's seen as a successful ipo. I think that's a slightly stupid reduction to call an IPO successful, but that's the way it's seen and that's what the banks want. So the banks want to see a little bit of a pop. So that's a reason to underprice. And then the other people who win are the institutional investors who got allocation in the ipo. And the reason they win, as I mentioned earlier, is if you bought at 60 and then suddenly the stock pops on the first day, it goes to 100, then you've just made $40 on your share. So that's, that's, that's good news for them. If the stock falls, then, you know, it might be seen as an unsuccessful ipo. The bank might be not very happy about that. But you could also make the argument that maybe the founders and the employees are the winners because it basically means that they got to sell, they got to sell their shares at a pretty high price. And then it went into the market and the market said this isn't worth it. So, you know, depends. But I would say that just in terms of the Dynamics of how IPOs work just had a sort of more granular level. There's a little bit of an incentive to underprice them because you largely want to build that momentum and get that big first day pop.
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Nicole Lapin
Yeah. And there's a lockup in some situations, like insiders can't trade, but basically the public gets leftovers after the VIPs have already gotten fed. And I think that's the core of what's upsetting you. And in a recent episode of Profit Markets, Scott talked about his allocation in the Airbnb IPO, which was priced at 60 bucks.
- [20:35]
Ed Elson
Ish.
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Nicole Lapin
Then the first trade was like 160, but now it's down to 130. So retail investors who invested at 160 are down. So what's the lesson here? Don't buy on the first day?
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Scott Galloway
I don't think. Not necessarily.
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Ed Elson
Hold onto your wallets.
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Nicole Lapin
Money rehab will be right back.
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Ed Elson
And now for some more money rehab.
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Nicole Lapin
In a recent episode of Property Markets, Scott talked about his allocation in the Airbnb IPO, which was priced at 60 bucks.
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Ed Elson
Ish.
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Nicole Lapin
Then the first trade was like, 160, but now it's down to 130. So retail investors who invested at 160 are down. So what's the lesson here? Don't buy on the first day?
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Scott Galloway
I don't think. Not necessarily. I think if you've done your homework on the company and it's the first day of trading and you think the price is good value, I think that's fine to buy on the first day. I don't think that's a problem. I just think the thing that you want to be wary of is that the first day is generally the most hyped. There's just like a ton of press, a ton of media, and in short, a ton of people who are basically being paid to convince you that the stock is a good buy. And that's just something that you want to be wary of. You don't want to be buying a stock just because you saw it in the headlines and your friend told you, oh, this is such a great stock. And you've been seeing it on cnbc. That's. That's buying into the hype. And I'm someone who's more attracted to value investing. This is sort of the, the Ben Graham, Warren Buffett school of thought. I think you want to be focused on the value. And so that's the only. That's the only reason you might want to be cautious about suddenly going in on the first day and buying at the IPO is because you want to be aware of your emotions and aware of your psychology and recognize. Okay, maybe I'm a little biased here, because I've been hearing about this every second on cnbc. That's the only thing that I would caution against in terms of Scott. That example you mentioned, Scott was one of those VIPs with Airbnb. And what happened was he got allocation into the IPO, which meant he got to buy it at 60. And then the first day it went way up. And then I think it hit a peak of around $160. So Scott did pretty well. And it is true that if you are an early institutional investor you do get VIP access and that's just the reality of it. And the rest of us get as you kind of say, the scraps. But I'm less upset about that than I am about the fact that many of these companies, as I mentioned, these private companies aren't just only giving VIP access and then giving us the scraps. They're not letting us invest at all because there's so much money in the private markets. And that's the thing that I am probably more upset about.
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Nicole Lapin
Yeah, I mean back in the day your examples of Microsoft, I think, billion, Amazon, Apple, you weren't seeing these types of huge funds that you are today, like now.
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Scott Galloway
Exactly.
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Nicole Lapin
Bytedance is not coming to us to crowdfund. They're going to sovereign wealth funds and huge like multibillion dollar funds that didn't exist back in the day.
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Scott Galloway
That's exactly right.
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Nicole Lapin
Are you saying that regular people can't get rich from individual stocks anymore? I mean mine is kind of the counter example because I did quite well on those initial IPO days.
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Scott Galloway
Yes. And this is not to take away from that and my view is on some of these companies that you'll see a decent pop. But I doubt that these are going to be the next Apples and the next Amazons and the next Microsoft's. That's all I'm saying. These IPOs can be fun. Exactly. And over many, many years. And this is the thing is that a lot of, I mean my parents generation, they made a lot of money. People like my co host Scott, they made a lot of money investing in these companies that grew just astronomically over the course of decades. And you know, that's how a lot of them got rich. But the trouble is the companies that are entering the market now are not as high quality in my view. Maybe I'll be wrong. Maybe Circle and Core Weave will be the next Google and Apple. I just don't think they will. I think if there's any company that's going to be the next Google, it's probably something like OpenAI. It's probably one of these really powerful LLM companies. But as I say, they're not public yet. So it is really hard, I think to build long term wealth in the stock market right now. And it's not just a matter of the IPO market is a little bit rigged. I mean the stock market as a whole is a little bit rigged as well in the fact that, I mean this is a historically very expensive stock market and the S and P right now is trading at around 25 times earnings. And that's actually, it's come down a little bit but when my parents were my age it was trading at 11 times earnings. I mean the whole thing was on a more than 50% discount compared to today. And so I think you look at what's happening in the stock market, you look at what's happening in the housing market where the cost of housing has gone insane, home prices are at record highs. I think it is becoming very difficult to build meaningful long term wealth as a young person. I think it's easy or easier to have these get rich quick schemes. I think you can buy some very hype stocks and some meme stocks and you can see if you can make a bunch of money trading Gamestop or trading some crypto and trading Pepe Coin, whatever your crypto du jour is. But I don't think that's going to make you money in the long term. And that is what we've been seeing with a lot of these people, a lot of whom are actually losing money on these crypto trades.
- [27:19]
Nicole Lapin
I totally agree with you that the new class of IPOs, the Klarna's and the Geminis that are coming up are not going to be the Apples and the Microsoft's. But to be fair, if we went back in time, if you were smart enough to get in early on those companies, there were huge risks at the.
- [27:39]
Ed Elson
Time and also a ton of other.
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Nicole Lapin
Companies have to IPO. You know, there's the Mag 7 that's driving a lot of those multiples but you have 493 other companies, you know, many of which are doing well. Not Amazon well though, not metal well. So I think you're talking about degrees of how much growth potential there is. But there still is growth potential if you get into the market. So I think we should, yeah, clarify that. You know, getting rich slowly and in a boring way with non sexy next Amazon next gen companies is not the worst way to go. It's way better than whatever coins you just mentioned for sure.
- [28:29]
Scott Galloway
Yeah, exactly. And it all comes back to fundamental. I mean someone could make the argument to me that people wrote off Amazon back then and Gemini is the next Amazon. That is an argument that someone would make is that I'm writing them off as these silly dumb companies and people were doing that back in the day too and I'm sure that was happening a little bit. But I think you do have to go back to the fundamentals of where the value is being provided and Then I think you have to also look at how is, how are these companies providing value into people's everyday lives? That's the real test for me. And I think when the Internet was happening and Apple was coming out with these incredible technology products that many people were starting to use, that was significantly enhancing their lives. That, to me, is a testament to the value that Apple was providing. And I don't think that many of these companies that are going public are providing that level of value, but there are companies that are providing that level of value and they're not going public.
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Nicole Lapin
True. So we're just talking about the degrees of growth potential here. There's still room to grow when you're getting into these IPOs. And if you start investing in the secondary market, you can, you know, be like early Scott Galloway and get some allocations into these companies on a secondary market. There are, you know, funds that do that. There are ways to get involved. My husband invested in SpaceX on a secondary platform. There are, you know, insiders that get allocations that then, you know, go out to some of their friends and family. So there are ways, if you're getting into a private equity investing game.
- [30:28]
Scott Galloway
Yes, more expensive. More expensive because there's, there, there are more degrees of separation. But yes, it is, it is possible, but it's a lot harder to do and, and it is more expensive. But I think that is the next step is we need to figure out ways to open up the startup world to regular investors. One of my big issues is that the investment laws right now, I just don't think are very fair. Basically, the rules are that you need to be an accredited investor to invest in these private companies. That's the legal framework right now.
- [31:03]
Nicole Lapin
And which is a joke, by the way, which is crazy alpha test that you have enough money and can lose the money that you invest.
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Scott Galloway
Exactly. And I mean, if you want to be an accredited investor, there's a test that you can take to become an accredited investor. But all the other option is you can have a net worth of a million dollars or you can make $200,000 for two consecutive years in a row. So the idea that we're saying, like, we're protecting this very incredible batch of investments and saying, no, no, you can only invest in these if you're rich, because only if you're rich will you understand how money works. That, to me, is a level of patronization to retail investors that I don't think is fair. And I think as we're seeing, we're seeing huge growth in Those companies and those accredited investor laws are in the. In the process of changing, actually, and they need to change.
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Nicole Lapin
I agree 100%.
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Scott Galloway
Yeah.
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Nicole Lapin
You're a young guy. I feel like I could be your mother. I remember reporting on the floor of the exchange when, you know, Apple launched its ipod and things like that. So I'll just say, you are a young guy. You talk a lot about, you know, the fact that the game is rigged.
- [32:21]
Ed Elson
Data pointing to that.
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Scott Galloway
Yeah.
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Nicole Lapin
So why, Ed, did you get into this world of economics and investing?
- [32:27]
Scott Galloway
I kind of stumbled into it, I would say. I. I mean, I was a big fan of Scott Galloway, who is my now co host, when I was in college. And I just liked the way that he simplified topics down into a way that was easy for me to understand. And I was interested in the things that he was describing. I was interested in the issues that he was talking about, specifically as it related to young people. And so I basically decided I need to go figure out how to work for this person. And I was able to get connected to him. And how.
- [33:07]
Nicole Lapin
How did you find him?
- [33:09]
Scott Galloway
My friend, one of my good friends from college, I learned that his mother knew him, and so I called her. I said, I'm obsessed with this guy. Please can you connect me if you have his email? So she connected me on an email, and he sort of reluctantly took my call, and we talked for like an hour about life and about business, about markets. I told him about what my situation is, and then he offered me an internship. I started interning with him. One thing led to another. I started doing more work with him on his TED talks and his books. And then one day he said, let's do a podcast and you'll be the co host. And so I think that's probably why I'm here on this podcast right now.
- [33:55]
Nicole Lapin
Your idols.
- [33:57]
Scott Galloway
Yeah, exactly. That is a genuinely, I think, is the right move.
- [34:03]
Nicole Lapin
So now that you've worked your way up with Scott, how do you feel about money in general? Is it emotional to you? Is it just a game? Is it just numbers? Are you hopeful?
- [34:19]
Scott Galloway
I think. I think it is emotional. I think people who view money as just numbers, I don't think really understand what it is. I think money, I think it reflects everything in our lives. I think that's why, by the way, I love covering the markets because the markets really encapsulate everything. They are just a distillation of emotion, of psychology, of conflict, of business. They, they. They encapsulate everything. And so that's why I'm fascinated by It. But you know, in terms of how I feel about money, it's extremely important to me because I think what our generation, my generation doesn't really understand is that we're getting quite poor just in when you compare it to other generations. I mean, I talked about what's happening with the stock market in terms of how it's getting so much more expensive, how it was at a 50% discount for my parents, but it's also true of home prices, which are now six times our annual income. And for my grandparents, home prices were three times their income. I mean, even like the cost of college, which is more than 42% of our annual income. And for my grandparents it was 13%. The average age of a home buyer right now is 50. In 1980 it was 30. And then I look around and I see these statistics that a third of us are still living with our parents. And I think if we as young people want to make sure that we live fulfilled and dignified lives, then we have to get smarter about it and we have to start understanding what is happening because no one's just going to hand it to us. I mean, we really have to get smart on how to build wealth for ourselves and how to build meaningful lives. And right now we're not on a very good track. So that's sort of a long winded answer, what money means to me. But it's also a big question, so I don't blame myself.
- [36:29]
Nicole Lapin
It's a big question. It was great answer. So thank you for that texture. You also have talked about the big beautiful bill as it relates to young people and some of the issues that you just brought up. You say that it's a wealth transfer from young people to old people. Can you explain what you mean by that?
- [36:53]
Scott Galloway
Yes. This is going to add 3 to $5 trillion in deficits over the next decade. And the word deficit might sound kind of boring or uninteresting. I think the best way that we could sort of put into context what that means, basically right now we spend $900 billion just servicing our debt in America. It is our second largest federal expenditure. That's going to increase to $1.8 trillion by 2034, which basically means we're going to be spending most of our money on just servicing the debt, on paying interest. So what is basically happening is we keep on swiping the credit card as a nation right now because basically because we're greedy. We want more and more and more and we want to keep on adding to these deficits. We want to keep on adding to the debt. And what is eventually going to happen is that someone is going to have to pay for this. Someone's going to have to get the check. And the reality is the person who's going to get the check is young people. It's going to be people like me, essentially, who are now subsidizing the lifestyles of these old people. And basically, after they're dead, suddenly we're going to have this giant debt that we have to deal with. We're going to have all of these interest payments, and it's going to be a lot more difficult for us to pay for all the other stuff in America. So this is my big issue with it. We are adding so much money to the deficit, and the reason it's happening is because we're basically making a bunch of tax cuts for rich people. And that goes directly against the interests of my cohort, which is young people, because we are the ones who are going to have to pay for it. And that's the real problem right now.
- [38:49]
Nicole Lapin
So basically, kicking the can down the road.
- [38:51]
Scott Galloway
Kicking the can down the road, yeah.
- [38:53]
Nicole Lapin
So with all these changes, you don't feel like it's bigger or more beautiful?
- [38:58]
Scott Galloway
Not at all. I'm shocked that this even went through. And I'm especially shocked considering what Trump was saying at the beginning where he said, we're going to balance the budget. That was what he said in his address to Congress. And it got the loudest applause of the entire night. And literally everyone was standing up, clapping, cheering ruckers. Applause. Okay, we're going to balance the budget. I thought we all agreed that this deficit thing was a big problem. I heard about it constantly. I hear about it in the news. I see Moody's is downgrading our credit rating. I see that Fitch and the S and P downgraded our credit rating. Everyone's saying, hey, this deficit thing is kind of a big deal. You might want to rein it in. And then suddenly, this big, beautiful bill comes out, and it just completely ignores everything we've been talking about for the past year. Two. Two years, three years. It's a total reversal of what this administration said they were going to do. So, I mean, people are calling it the big ugly bill, whatever you want to call it, this is bad. And the people that will affect most in the short term, it's going to affect poor people, because we're getting rid of, you know, Medicaid, we're getting rid of SNAP benefits. It's taking money from them. And we're Subsidizing that or, sorry, that is a subsidy for the tax cuts that we're implementing for the richest. So tax breaks for the rich take from the poor in the short and medium term, and then in the long term, keep on spending, spending, spending, while not increasing your tax revenue. That's going to hit young people.
- [40:40]
Ed Elson
Hold onto your wallets.
- [40:41]
Nicole Lapin
Money rehab will be right back.
- [40:46]
Ed Elson
And now for some more money rehab.
- [40:51]
Nicole Lapin
So the big beautiful ugly bill and the conflict in the Middle east have been dominating financial news cycles. Of course, there are other stories evolving as well. What's something that you think has been overshadowed that we should be taking a closer look at that's not getting as much airtime?
- [41:09]
Scott Galloway
Yeah, there's. There's so much distraction right now. It's just, I mean, as Bannon said, flood the zone with shit. That's exactly what's happening. There are so many stories that are distracting from what really matters. The good news is the big beautiful bill is getting the attention it deserves. That is important. And I think we all need to understand what the stakes are with that bill. So I'm glad that's sort of been in the spotlight and I'm glad that it is in the spotlight. One other story that I think probably isn't getting enough attention, which probably deserves more attention, in my view, is what's happening with Trump's crypto projects. Trump Coin, Melania Coin, World Liberty Financial, American Bitcoin. I mean, these are all crypto companies that are in some way tied to the President. And look, regardless of your political views and regardless of what you think of Trump, I personally don't love the guy, but we can set that aside. What he's doing with this crypto stuff, it's unexcusable. You can make a steel man argument for everything else he's done. You could figure out a way to justify why you need to deport people. You could maybe figure out a way to justify why this big beautiful bill is important. You could maybe make some trickle down economics argument. I don't think that makes any sense, but you could start to fashion an argument. There is no argument you could make as to why it is even remotely acceptable for the President to leverage his power and leverage his image to sling totally valueless and meaningless assets to the public in a way as a means of transferring wealth from his supporters to him and to his insiders. That is exactly what's happening right now. I mean, you just look at Trump Coin. There were.
- [43:25]
Nicole Lapin
Now they have their cell phone.
- [43:26]
Scott Galloway
Yes, now they have a cell phone. Now they have the cell phone. At least you can use the cell phone. That's the only thing that I would say is great. What are you going to do with your Trump Coin? There's nothing to do with the Trump Coin. And there was a handful of insiders who knew what was happening with that Trump Coin project, who knew when he was going to tweet about it, who knew when it was going to launch. They knew all of the details, and Those insiders made $1 billion on the Trump Coin. So that already sounds pretty disgusting, and it makes you uncomfortable that that's what happened. But then, remember, crypto is a zero sum game. So every time you win, there's a loser on the other side of it. Because remember, the Trump Coin has no value. There's no cash flows. No one's getting anything from this. So someone has to lose. There were 600,000 retail investors who cumulatively lost $4 billion on Trump coin. And that is just so full. So what is happening right now is the President is getting him and all of his buddies and his cronies, they're getting rich by basically just plucking money from their supporters. And that, to me, there's nothing that can excuse that. It's the most shameless grift and the least defensible grift we've ever seen in this country. And I think that's the part that probably deserves more attention. There's a lot of stuff happening in the news cycle, a lot happening in politics, but in my view, that should be getting a lot more attention. By the way, it's very hard to crack down on this because he's also stacking the SEC with his acolytes and people who are pro crypto. He's basically installed officials who won't regulate it such that he can go out there and steal from his supporters. I find it so awful on so many dimensions, and that's why I think it deserves a little bit more attention.
- [45:36]
Nicole Lapin
Yeah. Where is that other 3 billion?
- [45:40]
Scott Galloway
So, right, right, right. Well, there's the $1 billion that happened. That was at the very beginning. There's more money that is being made on the Trump Coin. And by the way, there's also a lot of money that's being taken out of the system through fees. And again, Trump and his buddies are taking the fees. So very shady stuff happening. And it's very tough to track where all of the money is going. But as a general rule, if you're on the inside, you're making the money because you know how to Game the system. And if you're on the, on the outside, you might think you're going to make some money, but ultimately, in the long run, you're going to lose.
- [46:22]
Nicole Lapin
Can we play a game of bullish or bearish?
- [46:24]
Scott Galloway
Absolutely.
- [46:26]
Nicole Lapin
Okay, so it's easy. You say bullish or bearish. Tesla.
- [46:32]
Scott Galloway
Tesla. I'm bearish.
- [46:33]
Nicole Lapin
I probably disagree. I think it's probably underpriced, especially with.
- [46:36]
Ed Elson
The robots and things coming out, but.
- [46:38]
Nicole Lapin
Then it's proxy for the companies that aren't public. But please tell me why you're bearish.
- [46:45]
Scott Galloway
Well, I just think that it's overpriced at 191 times earnings compared to the rest of the auto industry. 400% premium. My view is the whole proposition of Tesla depends on the Robotaxi. That's what drives the valuation, because you've got declining vehicle sales, you've got a brand that is under a lot of pressure because of what Elon's been doing. And so the Robotaxi has to work. And we saw a launch over the weekend, which is promising, which is why I'm not a mega bear on Tesla. I'm only slightly.
- [47:21]
Nicole Lapin
You're a baby bear.
- [47:22]
Scott Galloway
Baby bear. But the launch was not that great. I mean, they still had Tesla employees in the vehicles who had to sort of monitor the safety situation. It was only open to a handful of Tesla influencers. The launch didn't blow me away. And I think what you, what you need for that valuation to really make sense is the Robotaxi needs to be. It needs to be signed and sealed as legitimate and that it's going to make a real amount of money and it needs to get all of the regulation, it needs to get all of the safety clearances. And to me, I'm just not quite there yet. I think that the Robotaxi launch was promising, but it could be better. And you look at Waymo, which is doing incredibly well. So that's why I'm bearish on Tesla.
- [48:12]
Nicole Lapin
Okay, so Waymo, let's transition into Alphabet.
- [48:17]
Scott Galloway
Alphabet. I'm bullish. Bullish on Alphabet. I think it's the most undervalued big tech company. Search has been extremely resilient, despite what's happened with ChatGPT. They own YouTube and I think YouTube is the most underrated media asset in the world. A lot of people don't realize this, but it is the biggest streaming platform in America, makes up 12.5% of total TV viewing time, which is more than Netflix. So I'm a bull on Google. I think Waymo is incredible as well. They've got a great AI team, a lot of AI exposure. I think they're doing everything right and they're pretty cheap right now.
- [48:54]
Nicole Lapin
Waymo, a subsidiary of Google. Uber.
- [48:59]
Scott Galloway
Uber. I am bullish. I think the question for Uber was the profitability. That was what people were really worried about is that, yeah, they had this massive taxi network, but they weren't making money. They were profit negative, but they're firmly profitable now. They figured that out. They've figured out a way to get costs way down. They have massive scale and also they're now using all of that to get into the Robotaxi business. They're partnering with Waymo, they partnered with a few other Robotaxi companies. I think they're going to be a big Robotaxi player trading at 15 times earnings. I think that's pretty good. So I'm pretty bullish on Uber.
- [49:42]
Nicole Lapin
Meta.
- [49:44]
Scott Galloway
Bullish on Meta too. They had a pretty disastrous year a couple of years ago, but they have bounced back so hard. They're at three and a half billion daily active users. Just to put that in perspective, that's 40% of the global population that use a meta product every single day. It's just insane to me. They're using AI, they're leveraging AI, which is turbocharging to ad business. Ad sales keep climbing, they keep bringing costs down. They've got the Ray Ban meta glasses, which have actually been a pretty big success. I'm pretty skeptical of all of the Metaverse stuff, but those glasses have actually been pretty good. They're monetizing WhatsApp now with with ads. I just think there are a lot of opportunities for meta, a lot of backup plans and again, it's not too expensive. So I like Meta.
- [50:34]
Nicole Lapin
Did you see this business where Sam Altman came out and said that Zuck is trying to steal their engineers with like $100 million signing bonus just for to sign.
- [50:47]
Scott Galloway
Not only so crazy. I was wondering.
- [50:50]
Nicole Lapin
Trying to win this game.
- [50:51]
Scott Galloway
Yeah, exactly. I wonder. I was wondering if maybe this was some sort of PR scheme by Sam Altman to attack Facebook because it makes it makes matter not look very great if they're that desperate. Either way, I'm still bullish on matter and I think I can be bullish on OpenAI at the same time. But that news was crazy.
- [51:11]
Nicole Lapin
I did say not mutually exclusive. I know the answer to this, but circle.
- [51:16]
Scott Galloway
Yeah, bearish. Bearish on circle.
- [51:18]
Nicole Lapin
Big Bear.
- [51:18]
Scott Galloway
Yeah, Big Bear. I don't think there's long term value there. I think There's a lot of hype. I think it could keep, keep popping over the next few months or so but I'm interested in long term value. I don't think it's a, I don't think, I don't think it's a ten year play.
- [51:33]
Nicole Lapin
McDonald's, McDonald's.
- [51:35]
Scott Galloway
I am bearish. They just saw their biggest sales decline last quarter since COVID and I think you have to assume it's GLP1s. I mean Ozempic, WeGovy. The usage on those drugs is seriously catching on. It's not just a trend. I saw this report recently that WeGovy usage among Gen Z rose 50% last year. So these are legit, they're here to stay. I think it's around 2% of the American population is currently using these drugs and I think we can expect that number to keep climbing. But ultimately that's not going to be a good thing for any fast food companies. So I'm not, I'm not super, super bullish on, on McDonald's, dare I say bearish.
- [52:23]
Nicole Lapin
So bullish on Eli Lilly, Novo Nordisk, the makers of these trucks.
- [52:28]
Scott Galloway
Yes, I think a lot of it's been, been, been priced in but ultimately yes, I'm pretty bullish on, on, on Novo Nordisk and Eli Lilly. I'd want to take another look at those, at the pricing and the valuation but directionally, yes, bullish on those companies.
- [52:44]
Nicole Lapin
Bitcoin.
- [52:47]
Scott Galloway
Bitcoin is just a tough one. As you know, I'm not a fan of the crypto industry and I'm not a fan of crypto assets, but bitcoin is the only crypto asset that I, that I accept in its, its logical argument in, in the sense that it is the digital gold. That's what a lot of people say. And my trouble with gold is I'm more interested in investing in companies that generate cash flows. Again, this is Warren Buffett type thinking. I'm more interested in Nvidia, which is going to generate chips and provide value to society and generate cash off of that than I am in investing in something like gold, which is basically just going to sit in a vault. And bitcoin is the equivalent of that. It's digital gold. And I think, I think that's fair. Having said that, gold has been on this fantastic run recently and what we are continuing to find is that gold is the safe haven asset when things are scary, when times are tough, people start investing in gold. And so if everyone decides, okay, bitcoin is the digital version of that and it is increasingly beginning to look like that. Then I'm, then I'm down with Bitcoin. And I could see how it could, how it could have a serious run up over the long term. But the Warren Buffett in me says, but what's the point? I mean, if we, if It's World War 3, what are we going to do with our bitcoin and our gold? I mean, we're going to want food, we're going to want water, we're going to want bullets and guns. What's the point in any of this? So I'm going to go with bullish in the, in the short and medium term, bearish over the long term, because I think if we really need this Safe Haven asset, I don't think it's going to be bitcoin. I think it's going to be food, water and bullets.
- [54:38]
Nicole Lapin
All right, what's a stock that you're feeling bullish on that we haven't mentioned? Maybe it's a defense stock or a concept like an spv.
- [54:47]
Scott Galloway
I think something we haven't mentioned would probably be the European market, specifically the German market. What we're seeing with the dollar is that the dollar is down around 10% since Trump took office. And basically what is happening is that there's a huge amount of institutional capital that is moving out of the US because quite frankly, they are frightened by what's happening in terms of tariffs and what that will do to the economy, and they're starting to repatriate those, those investments and move into European markets. And that's why we've seen a big run up in the German stock market, for example, and also the European stock market at large. So if I had to be bullish on something that we haven't discussed, really, I would probably say European index funds and. Yeah, the dax Germany.
- [55:40]
Nicole Lapin
All right. We end our episodes, Ed, by asking all of our guests for a tip that listeners can take straight to the bank. You've given us so many tips, so I just want to know if there was a time that you needed money, rehab and what you learned.
- [55:54]
Scott Galloway
Yeah.
- [55:54]
Nicole Lapin
Figuring that time out.
- [55:56]
Scott Galloway
Yes. You know, it's tough because I'm young and so I actually haven't made any huge mistakes yet, and I'm sure I will. I mean, I've made some dumb purchases here and there, but overall I haven't had to deal with any really big life decisions like buying a house. I would like to, but I need to keep working or having a kid, etc. So I don't Know if there's been a big mistake that I've made so far that, that I need some money. Rehab on. There is one big decision, though, that I got right, and that was probably my career decision. I was pretty lost for a long time as to what I wanted to do and what my talents were and what my passion was. And I think that's something that a lot of people could probably relate to. And I think the best thing that I did that turned out to be really great for me financially and in terms of just my overall life experience was I focused on not working for something, but working for someone. And that is, I identified someone who I really resonated with, someone who I really admired, someone whose life I generally liked, and I thought that I wanted to emulate. And I basically did everything I could to get as close as possible to that person. And that was Scott, my co host. And I think that was a really good decision because what I. What I have learned is that the success of a company, the success of a business, most of it is just a function of the people who you work with and the people who work at that company. And so I think that the best thing that you can do for your career is to identify someone who you think is really, really great and try to get as close as possible to them, try to work for them. So I hope that's okay to. To choose something that I think I've gotten right versus something I've messed up.
- [58:03]
Nicole Lapin
And also, and don't make it weird because honestly, it could have worked out really badly tracking down Scott. It worked out great, which is awesome, by the way.
- [58:13]
Scott Galloway
That's a. That's a really good. That is a very good point. You want to do it, but within reason, you want to find someone who, you know. You don't want to go off to LeBron James or Lionel Messi. Do something that actually is reasonable. Find someone. Maybe it's someone in your network, maybe a friend of a friend. Yeah. All of this within reason.
- [58:34]
Nicole Lapin
Don't make it weird. Well, you are going to mess up in your life. And when you do, please come back and tell us about it.
- [58:41]
Scott Galloway
I cannot wait. I'll see if I can mess up as soon as possible. I can be back on the show.
- [58:50]
Ed Elson
I'm Nicole Lapin, the only financial expert. You don't need a dictionary to understand. It's time for some money rehab.
- [58:57]
Nicole Lapin
Have.