Kinda Spooky: META, AI, TSLA

Summary

Money Stuff: The Podcast

Episode: “Kinda Spooky: META, AI, TSLA”

Host: Matt Levine (Bloomberg Opinion)
Co-host: Katie Greifeld (Bloomberg News/TV)
Date: October 31, 2025

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Episode Overview

On this Halloween edition, Matt Levine and Katie Greifeld dig into the enormous capital spending boom among the biggest tech companies, including Meta’s off-balance-sheet AI spending tricks, OpenAI’s transition to a “normal” company facing IPO rumors, and the drama around Elon Musk’s Tesla pay package. The episode, filled with sharp wit and technical insight, explores whether the nature of tech investing is fundamentally changing, the oddities of modern finance structures, and leadership power struggles. There are also some lighter moments, including Halloween costumes, the JP Morgan HQ’s famous lobby flag, and mailbag tidbits.

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Main Discussion Points & Insights

1. Halloween Banter and Show Kickoff

• Tone: Playful, personal, and sets a lighthearted mood.
  • [01:44–04:23] Katie loves Halloween and plans a “cat ears” costume, while Matt gently ribs her for her enthusiasm and suggests she should have a ghostly co-host.
  • Memorable line:
    Matt (about Katie dressing up):
    “One year I want you to wear, like, a children’s ghost costume. You know, just like a sheet with holes for eyes on air.” (03:09)

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2. The Massive AI Spending Boom: Meta, Debt, and Off-Balance-Sheet Magic

• Magnitude of Tech AI Investment

  • [04:34–05:05] They highlight that tech companies, particularly in the Magnificent Seven, are now pouring staggering sums into AI infrastructure.
  • “Either you do or you don’t believe that the entire world is going to change with AI. And if you believe it, you’re like, yeah, sure, $10 trillion, no problem.” (Matt, 05:05)

• Meta’s Financing Tricks and Off-Balance-Sheet Data Centers

  • [05:46–08:38] Matt explains Meta’s recent $25 billion bond deal and their use of “hybrid” or off-balance-sheet structures (through JV ownership by firms like Blue Owl) to keep debt from affecting their credit rating.
    • Meta sets up a JV to own data centers, which are financed so that, in economic substance, it’s similar to debt, but not classified as such on Meta’s balance sheet.
    • Investors treat these bonds almost like Meta debt, but they yield more—closer to junk bond territory.
  • Quote:
    “It’s like not debt of Meta for the purposes of Meta, but it is kind of debt of Meta for the purposes of the people buying the bonds.” (Matt, 06:37)

• Rise of Creative Project Finance in Tech

  • [08:55–10:44] The discussion expands to other industries (like Keurig Dr Pepper’s K-cup JV). Katie and Matt note that these financial engineering tactics are becoming more common—and higher-profile—as private credit funds seek new ways to deploy capital.
  • “Private credit firms ... can do this to get tens of billions of dollars of investment-grade financing, which is what they want.” (Matt, 10:36)

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3. Changing Nature of Tech Investing

• [11:09–13:26] Katie asks if the era of “capital-light” tech is over, as companies like Meta and others are now investing heavily in physical infrastructure.

  • Five years ago, tech was about scaling with low marginal cost and intangible assets. Now, it’s a trillion-dollar data center arms race.
  • Quote:
    “Tech is not capital light these days.” (Matt, 11:49)

• Meta’s AI Gambit and the Metaverse

  • [13:00–14:33] They joke about Meta’s pivot from the Metaverse (“data centers optimized only for the Metaverse... tumbleweeds blowing through them,” Matt, 12:46) to massive AI build-out, and wonder if targeted ads justifies this scale of spending.
  • Katie notes Mark Zuckerberg’s claim that excess compute could power either their core business or be sold to others, while Reality Labs continues to run major losses ($4.4 billion on $470 million revenue last quarter).

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4. OpenAI Becomes a "Normal" Company—and Why That's Weird

• OpenAI’s New Governance Structure & IPO Rumors

  • [16:43–18:57] The hosts recap OpenAI’s formal transition to a standard company, despite its wonky nonprofit/for-profit hybrid legacy.
  • IPO talk is swirling, but Matt is skeptical (“any large private tech company might IPO in the next two years,” 17:19).
  • OpenAI’s complex ownership: nonprofit board control, but most value to private holders.

• Tension Between "Benefiting Humanity" and Profits

  • [19:10–20:55] Matt is cynical about the nonprofit board’s influence on actual management (“no one cares... No one’s worried about that”).
  • They joke about the infamous Sam Altman firing: “...the board of OpenAI...has fired Sam Altman not for doing a bad job of developing products...but for the crime of, I don’t know, something else. No one really understood it…” (Matt, 19:50)

• Private vs. Public Funding: Is There a Limit?

  • [21:00–22:22] They debate whether OpenAI’s rumored IPO means private markets finally can’t meet the capital needs of giant AI companies. Matt says the limit hasn’t been reached yet: “He’s got a $500 billion company that keeps signing trillion dollar deals and is not public.” (Matt, 22:11)

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5. Tesla/Elon Musk Compensation Saga

• Tesla’s $1 Trillion Pay Package Debate

  • [24:32–27:12] Robin Denholm (Tesla chair) is on a media campaign to drum up shareholder support for Musk’s enormous compensation package, nominally valued at $1 trillion if all stretch targets are hit.
  • Matt disputes this framing:
    “They’re not giving him a trillion dollars. They’re giving him the chance to get 12% of the stock... Right now [12%] is worth $180 billion... not a trillion dollars.” (Matt, 25:57)
  • Notable: Matt argues Tesla could simply give Musk super-voting shares to meet his demand for control, rather than more stock and potential dilution; Robin Denholm claims they tried and failed to find a way to do this.
  • “It seems to me like you could do it. ...You could just be like, we’re giving him 25% of the vote because that’s what he wants.” (Matt, 27:01)

• Succession and Power at Tesla

  • [27:40–29:32] The hosts ponder Tesla’s succession planning. Denholm touts a deep executive bench, but Matt points out we never hear from them.
  • They rationalize Musk would have no incentive to sabotage Tesla if he leaves, since his wealth is wrapped up in company stock.

• Shareholder Dynamics

  • [29:57–30:07] With 30% retail shareholders, the outcome is uncertain, but Matt expects the package to be approved:
    “He’ll be fine. ...They’re like, creating drama, but they’ll be fine. ...If they’re not fine, I’ll be very interested to see if he quits.” (Matt, 30:02)

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6. Mailbag and Lighthearted Listener Notes

• [30:10–34:14]
  • Listener emails on the new JP Morgan HQ:
    • The flag in the lobby is animated by an HVAC system that mimics outdoor conditions—even wind and rain, like a “Hogwarts ceiling.”
    • The story of the Citicorp Building’s construction flaw and late-night retrofits (Matt: “...every night they’d go home and people would come in and shore up the bolts…” [32:30])
    • Rumor that Jamie Dimon, CEO, was refused a beer at 3pm at the in-house pub (Katie: “...we never hear from them or about them.” [27:57])
  • Running joke: Doing a future podcast live from the JP Morgan HQ pub as wind whips around the iconic lobby flag.

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Notable Quotes & Moments

• On Meta’s Off-Balance-Sheet Debt:
  “It’s like not debt of Meta for the purposes of Meta, but it is kind of debt of Meta for the purposes of the people buying the bonds.”
  — Matt Levine, [06:37]

• On the Changing Capital Needs of Tech:
  “Tech is not capital light these days.”
  — Matt Levine, [11:49]

• On OpenAI’s Governance:
  “It’s very hard to be like, we started as a nonprofit, we took donations...and now we’re a $500 billion private company for the benefit of our investors...the nonprofit will continue to control the company—have, like, super voting rights. I don’t know how that will go for an IPO, but it’ll go fine. Like, no one cares.”
  — Matt Levine, [18:10]

• On Tesla/Elon Musk’s Compensation Package:
  “They’re not giving him a trillion dollars. They’re giving him the chance to get 12% of the stock.”
  — Matt Levine, [25:57]

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Important Timestamps

| Topic | Timestamps | |------------------------------------------|--------------------| | Halloween banter & costumes | 01:44–04:23 | | AI infrastructure spending (Meta, etc.) | 04:34–10:44 | | Meta’s financial engineering | 05:46–08:38 | | Changing tech company business models | 11:09–13:26 | | The Metaverse and targeted ads | 12:38–14:33 | | OpenAI’s corporate transition & IPO | 16:43–22:22 | | Elon Musk’s Tesla pay package debate | 24:32–29:57 | | Tesla succession and shareholder drama | 27:40–30:07 | | Mailbag: JP Morgan HQ, Citicorp story | 30:10–34:14 |

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Overall Tone

• Knowledgeable, witty, and self-aware; the hosts mix wry skepticism with deep technical insight. Despite tackling complex finance structures, they keep the conversation accessible and highly entertaining.

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For Listeners Who Missed the Episode

This episode is a must-listen for anyone curious about:

• How and why tech giants are finding new (sometimes sneaky) ways to fund their outsized AI ambitions
• The shifting landscape of tech company risk and valuation in the AI era
• The quirks and ironies of shareholder control (Tesla, OpenAI)
• Amusing asides on corporate headquarters and Halloween in the Bloomberg newsroom

The hosts’ blend of detailed explanation and dry humor makes even intricate financial engineering sound engaging—and occasionally “kinda spooky.”

Transcript

[Kelly Cavagnaro]

Hi, I'm Kelly Cavagnaro, Managing Director, Head of North America Institutional Distribution at Janice Henderson Investors we believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy. Your valued assets and our valuable insights. Your mission and our vision working in harmony to seek the right investment opportunities. Janice Henderson Investors Investing in a brighter future together.

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[Matt Levine]

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[Commercial Announcer]

Bloomberg Audio Studios Podcasts, Radio news.

[Matt Levine]

I feel like we need to address two things.

[Katie Greifeld]

Yes, go on.

[Matt Levine]

One is that I sound like this.

[Katie Greifeld]

You sound great. I know, but it's different.

[Matt Levine]

I have a cold. So it's gonna be the best voice you've ever heard on a podcast for like 10 minutes, and then I'm gonna lose my voice and it's gonna be over. So it'll be great on both accounts.

[Katie Greifeld]

Yeah.

[Matt Levine]

The other thing I wanna address is what are you gonna be for Halloween?

[Katie Greifeld]

My God, man, I'm so thrilled you asked. I'll probably just dress in all black and put on cat ears.

[Matt Levine]

Okay.

[Katie Greifeld]

But that's what I do most Fridays.

[Matt Levine]

Yeah, yeah. Right, right.

[Katie Greifeld]

So what about you?

[Matt Levine]

I think I've dodged this bullet.

[Katie Greifeld]

Is it a bullet? Isn't it just joyful?

[Matt Levine]

It is joyful to take your kids around in their costumes when you're not in a costume. I like, I see like the people with family costumes, like, okay, that's cool. And I kind of want to do it, but like, not enough to. Yeah, for adults. It's got to be creative.

[Katie Greifeld]

There are onesies out there. But I hear your point.

[Matt Levine]

Yeah, I don't really want to go around.

[Katie Greifeld]

I'm really psyched I mean, not to go around in a onesie. I smoke too soon. But I'm just. I love Halloween so much. I'm really excited. I'm an adult and I don't have a child, so I feel like I can't. But we're going to walk around Hoboken because Hoboken goes hard on Halloween. A lot of the artists.

[Matt Levine]

This is, like, sounding like a yes, but okay.

[Katie Greifeld]

I mean, I'm not gonna, like, knock on doors and take candy. If someone with a bucket of candy comes up to me and says, do you want a piece? I'm not gonna turn them down. That'd be crazy, right?

[Matt Levine]

Are you going to wear your cat ears on air?

[Katie Greifeld]

No, I won't.

[Matt Levine]

I feel like one year I want you to wear, like, a children's ghost costume. You know, just like a sheet with holes for Eyes on Air.

[Katie Greifeld]

I usually subtly try to dress up.

[Matt Levine]

I feel like you've worn the cat. I feel like we talked about this last year about your eyes.

[Katie Greifeld]

We probably did. Some dedicated listener can tell us. I mean, I always. I have this, like, Christmas shirt that I try to sneak in once a year. Tomorrow I've. I think I'm going to wear all black, like a black turtleneck and just be kind of spooky.

[Matt Levine]

Okay. But like just subtle cat ears.

[Katie Greifeld]

Just little cat ears. Maybe like a cat eye eyeliner. But I will mention over and over again that it's Halloween. I love Halloween.

[Matt Levine]

Yeah.

[Katie Greifeld]

I want to put someone in a ghost costume and just have them walk behind me at some point. Just once.

[Matt Levine]

I think you should actually have a ghost co host who doesn't say anything.

[Katie Greifeld]

That'd be kind of funny. They just. Like a human in a ghost co.

[Matt Levine]

Host sitting next to, like, someone like, maybe glasses over the ghost face, you know?

[Katie Greifeld]

Yeah. I turn to them and like, say something and then I turn them down.

[Matt Levine]

What are you thinking? They're like, oo.

[Katie Greifeld]

This sounds great.

[Matt Levine]

Got your TV show sorted.

[Katie Greifeld]

Now let's do a podcast. Man, we're just trying to run out the clock here.

[Matt Levine]

We should just do the podcast like that.

[Katie Greifeld]

Yeah. Ah, scary.

[Matt Levine]

Hello and welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money. I'm Matt Levine and I write the Moneystep column for Bloomberg Opinion.

[Katie Greifeld]

And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television. We are in. We are in the heart of Magnificent Seven tech earnings, which means we are in the heart of those tech companies just saying how much they're going to spend on AI infrastructure. And it is so much, it's really.

[Matt Levine]

Like either you do or you don't believe that the entire world is going to change with AI. And if you believe it, you're like, yeah, sure, $10 trillion, no problem. Right? But it is like it's easy to be nervous or skeptical or make fun of those numbers because it's a lot of money.

[Katie Greifeld]

Yeah. Well, something that I've been talking about on television and casually with my friends in the newsroom is how a lot of these hopes and dreams and these ambitions of these big tech companies to spend all this money, a lot of it has been able to be funded from free cash flow. But increasingly they're to tap the bond markets. But as you laid out in a column this week, they have stellar credit ratings, so they don't necessarily want to rely too much on the bond market.

[Matt Levine]

Yeah, it's a mixed bag, right? You have a stellar credit rating. So you can borrow on the bond market, but you can't do too much because then you lose the credit rating. Meta is out this week with a $25 billion investment grade deal. Yes, but they want more than $25 billion. And to do that they have tapped the woo. I don't know what you call it. People sometimes call it the hybrids market, but also it's kind of project finance. It's like off balance sheet financing. Basically they set up a joint venture where the joint venture will operate their data centers and the joint venture will be owned by, in this case, Blue Owl, but in the general case, someone who is basically credit firm but is willing to do weird stuff. And so Blue Owl is the equity owner of the data center. And Meta signs a series of contracts that in the aggregate kind of look like debt. Like they sign leases and a residual value guarantee where at the end of the term of the lease they have to buy the chips in the data center. But those contracts look enough like debt that Blue Owl can package it into bonds and sell it to Pimco or whatever, but also enough not like debt that it doesn't affect Meta's accounting or its credit ratings. So it's like not debt of Meta for the purposes of Meta, but it is kind of debt of Meta for the purposes of the people buying the bonds.

[Katie Greifeld]

So you talked about how this is a fantastic trick that if you want to call it that, that has connotations.

[Matt Levine]

But it's just the thing people do, right? It turns out there are things that are debt and there are things that are not debt, but then there's this huge middle ground of things that are kind of debt, kind of debt. And for the most part, things are pretty binary for like ratings and balance sheet. Like either it's on your balance sheet or it's not. Either it affects your credit rating. Like credit ratings are more not quite binary. Like the ratings agency sometimes gives things partial credit, but you know, if you like check the red boxes, then it's not quite debt. But you can convince people to buy the bonds because they look pretty much like your debt.

[Katie Greifeld]

Yeah, give or take. You do write though, that the bonds for the Hyperion.

[Matt Levine]

Hyperion, the name of the data center.

[Katie Greifeld]

They price with a coupon of almost 6.6%, which was roughly a percentage point higher than Meta's outstanding corporate bonds and in line with the average junk bond yields. I hear what you're saying, but at a certain point I feel like people and investors see through this.

[Matt Levine]

They do and they don't. They don't treat it like Meta debt. Exactly. They're happy to buy it at a yield and they're like, oh yeah, it's great. It's like it's backed by Meta. You know, it has structural features that make it not quite as good as metadata, but yeah. So it trades at a yield that is a reasonable cost of capital for building a data center and kind of keeps it off of Meta's pristine balance sheet.

[Katie Greifeld]

Yeah, we're talking about this like, weird structure, this SPV that Meta is doing that we like.

[Matt Levine]

This is like. It's weird. Ish. A little. But it's also like, you know, the basic format of doing some sort of project finance. Jv, they didn't invent that for data centers.

[Katie Greifeld]

That's true.

[Matt Levine]

It's been done for a while in a lot of industries in different forms. I wrote this week about it's very general purpose. And so Keurig Dr. Pepper is putting its K cup manufacturing into JV so that it can borrow against the K cups without tarnishing its credit rating to do an acquisition.

[Katie Greifeld]

Okay, so it's not weird. I do feel like a lot of folks, myself included, have thought more about this in the past two weeks.

[Matt Levine]

Oh yeah, me too.

[Katie Greifeld]

Than maybe I have ever. It's a concept that's being more widely socialized than perhaps in the past.

[Matt Levine]

And higher profile.

[Katie Greifeld]

Yes, that's the thing.

[Matt Levine]

I mean, the other thing about it that is interesting is that it's really interacting with private credit. Right?

[Katie Greifeld]

Yeah.

[Matt Levine]

You look at all the private credit firms and stereotypically private credit means leveraged acquisition finance. And the Reason for that is because, you know, private equity sponsors are willing to pay up for flexible, fast, guaranteed debt. So you can make money doing that. You can charge more than the public markets would if you can offer sponsors a user friendly product financing their acquisitions. But then these private credit firms, they have a lot of insurance clients, they want to deploy a lot of money they need to eventually get into investment grade debt. And it is harder to get into investment grade debt because you go to Meta and you say, I'll buy your bonds. And Meta's like, sure, our bonds price at this rate and it's not super exciting for private credit. But then you do this project financing and you can do a thing that gets an A plus rating and also has a yield. And also you're not competing in the same way with the public markets because regular public market bond investors can't necessarily buy $2.5 billion of equity in a data center. The private credit firms are a little bit more flexible in what kind of financing arrangements they can do and a little bit more creative. And so they can do this to get tens of billions of dollars of investment grade financing, which is what they want.

[Katie Greifeld]

Yeah, I do want to talk more broadly about Meta.

[Matt Levine]

Yes.

[Katie Greifeld]

But before we get there. So you made the point that, okay, even with this, what they're working out, they also tap the market, the public market, for that $25 billion bond. Apparently it was super oversubscribed according to our reporting. But you think about super oversupply because.

[Matt Levine]

You know, Meta has capacity to do hundreds of billions of dollars of debt and they don't do it because they want to keep good ratings.

[Katie Greifeld]

Yeah.

[Matt Levine]

They want to met a bond.

[Katie Greifeld]

Yeah. $125 billion of bids for this. 25.

[Matt Levine]

So like oversubscribe never means anything.

[Katie Greifeld]

Yeah, well, nothing truly means anything, Matt, but something I've been thinking about, not just as it relates to Meta, but all the spending that all these big tech companies are doing. You think about the typical profile of investing in tech from the equity market perspective. It's like, okay, these companies have pristine, tidy balance sheets, they're very capital light businesses, et cetera, et cetera. And I do wonder if the nature of investing in the tech space is starting to change. And I keep asking people that too.

[Matt Levine]

Tech is not capital light these days.

[Katie Greifeld]

I know, I know, it's the opposite. It's just you think like five years ago the conversation was about intangible assets and that's when you think Meta.

[Matt Levine]

Right. Like five years ago it was Meta called Facebook.

[Katie Greifeld]

Yeah, pretty close.

[Matt Levine]

But like, you think about, like, the stereotypical business model of Facebook is like, it serves a webpage, right. It's like marginal cost is zero. Right. So it scales, like, really, really effectively. So Facebook is just this class investment where venture capitalists put money in and it goes from being a dorm room project to being a $100 billion company with kind of no additional spending. And that switch just flipped and now it's just everything is a trillion dollars of data centers.

[Katie Greifeld]

Well, I love talking about Meta because you remember the reason why Meta is called Meta, because.

[Matt Levine]

No, I don't.

[Katie Greifeld]

It went so big on the Metaverse, which you never talk about before, Mark Zuckerberg was lighting money.

[Matt Levine]

I don't really know what that entailed, but it would be funny if there were like, data centers out there that were optimized only for the Metaverse and are now just like tumbleweed is blowing through them.

[Katie Greifeld]

I love it. I love it. But that led to Meta's year of efficiency, etc.

[Matt Levine]

It was this whole thing, and now the opposite.

[Katie Greifeld]

Alphabet and Microsoft. You can make a case for why they're going so hard on AI when it comes to Meta. I'm not sure what the payoff is. They said that they're investing so hard because it's going to help better target their advertising. But is that.

[Matt Levine]

Purpose of.

[Katie Greifeld]

Is that. Is that a trillion dollar endeavor? It's wild. It's wild.

[Matt Levine]

One thing I've learned is that the purpose of the economy is to serve customized ads.

[Katie Greifeld]

For sure, for sure. All the water sources be damned. But I don't know. I'm curious to see how this plays out for Meta. Apparently, Mark Zuckerberg did say on the earnings call they reported on Wednesday this week that the company has options if it ends up spending too much on infrastruct. In one scenario, he said the company could use the extra computing capacity for its core business. In another, it could sell the power to other companies.

[Matt Levine]

Or really good Metaverse.

[Katie Greifeld]

Metaverse.

[Matt Levine]

Really good Metaverse.

[Katie Greifeld]

Yeah.

[Matt Levine]

Data center is full of legless Mark Zuckerberg, Adam.

[Katie Greifeld]

I mean, they're still committed to that in their. I believe that falls under the Reality Labs division, which reported a loss of $4.4 billion for the third quarter and revenue of $0.12. Revenue of 470 million. I'll have you. Anyway, I think it's super interesting. At least Mark Zuckerberg's thinking about the prospect of maybe they're overbuilding.

[Kelly Cavagnaro]

Hi, I'm Kelly Cavagnaro, managing director, head of North America Institutional Distribution at Janice Henderson Investors we believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy. Your valued assets and our valuable insights. Your mission and our vision working in harmony to seek the right investment opportunities. Janice Henderson Investors Investing in a brighter future together.

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[Matt Levine]

Elsewhere in hundreds of billions of dollars of AI spending. OpenAI is a regular company now.

[Katie Greifeld]

I know. It's exciting. So regular.

[Matt Levine]

Actually, like anticlimactically. I was assuming there'd be like years of litigation and all the state attorney generals and Microsoft were like, okay, good, it's fine. So go ahead.

[Katie Greifeld]

And they did their commercial at this moment too. Elon Musk is a bit distracted, which we'll get to.

[Matt Levine]

I'm sure he'll keep suing, but like.

[Katie Greifeld]

Yeah, we'll get to that. Anyway, OpenAI apparently is so normal that maybe they're going to IPO in next two years or so.

[Matt Levine]

Yeah, sure, maybe, right?

[Katie Greifeld]

That's what Reuters told us.

[Matt Levine]

Sure. I just feel like any large private tech company might IPO in the next two years.

[Katie Greifeld]

I know, but this one, I feel like it urgently needs to really. Okay, yeah. They've committed to, like, $1.4 trillion of spending. Where are they going? To the funds, man.

[Matt Levine]

Not from, like, an IPO. Maybe you're a little from an IPO.

[Katie Greifeld]

Sam Altman says, Would it be funny.

[Matt Levine]

If OpenAI and Fanny and Freddie all go public, like, next year?

[Katie Greifeld]

God.

[Matt Levine]

Ipo.

[Katie Greifeld]

So many good podcasts. No, Sam Altman said that. I think it's fair to say that it's the most likely path for us, given the capital needs that we'll have.

[Matt Levine]

Yeah, fine.

[Katie Greifeld]

During a live stream on Tuesday. Matt.

[Matt Levine]

Fine, fine, fine. They'll tap the public equity markets and the public bond markets and the project finance markets. It's amazing. So much money for AI. Yeah. So they're a normal company. I don't know. A normal company owns 27%.

[Katie Greifeld]

27%.

[Matt Levine]

The nonprofit owns 26%, but has, like, super voting board control. It's very hard to be like, we started as a nonprofit, we took donations. They didn't take that much in donations, but they took donations. And now we're a $500 billion private company for the benefit of our investors. And one way to sort of smooth that transition is that the nonprofit will continue to control the company and have, like, super voting rights. I don't know how that will go for an ipo, but it'll go fine. Like, no one cares. You could imagine being like, if this company is not run for profit, maybe I shouldn't invest in it.

[Katie Greifeld]

Yeah.

[Matt Levine]

Seeking an enormous financial return, but no one has ever had that thought. Yeah. Or ever will.

[Katie Greifeld]

Yeah. That's so quaint.

[Matt Levine]

It's like, OpenAI is definitely looking to give you a high financial return on your investment, which is nice.

[Katie Greifeld]

So do you not take Sam Altman at his words?

[Matt Levine]

Which words?

[Katie Greifeld]

That they need to do this to get the capital that they need?

[Matt Levine]

Oh, no. I believe that they need to do this to get the capital. But, like, even now that they're a for profit company, they're a public benefit company, which is slightly less than for profit, but still pretty for profit. But they're controlled by a nonprofit board. Right. Like, the nonprofit board still has a. To put the interests of humanity first, but no one cares about that. No one's worried about that.

[Katie Greifeld]

I thought that the nonprofit board couldn't fire members.

[Matt Levine]

Well, they're not going to fire him. We learned that lesson well.

[Katie Greifeld]

I know that. But even other members, like other OpenAI executives. So when you say they're in control. I mean, what does that mean if they're not going to fire the people running it?

[Matt Levine]

That's a good question.

[Katie Greifeld]

Thank you.

[Matt Levine]

And then the board of directors. Right. So typically one of the main things the board does is decide whether or not to do a merger. And they're too big to do a merger, you know. Yeah, right. Like, I don't know how much operational control they have. Like, one thing the board of directors does is fire the CEO if he does a bad job. But there's a constraint on that job, number one. Right. Like the board of OpenAI, within recent memory, has fired Sam Altman not for doing a bad job of developing products or leading the people or achieving shareholder value, but for the crime of, I don't know, something else. No one really understood it, but it was kind of in the ballpark of not being for the benefit of humanity or deceiving the board in some way. No one really knows. And they quickly unfired him and then fired themselves. So that won't happen again.

[Katie Greifeld]

Yeah, that was just about two years ago. It was amazing.

[Matt Levine]

And in theory, you can look around at a lot of boards of big founder led tech startups. Sometimes those founders do weird stuff and you can imagine a board firing them, but you can't really, because they never would.

[Katie Greifeld]

There's been so many natural segues to.

[Matt Levine]

Yes, right. Let's move straight along.

[Katie Greifeld]

Okay. Well, the only thing I was going to say is that when it comes to the capital needs, obviously we've talked a lot about the private markets and the public markets, melding that if you're a private company, you can get most of the funding that you need in the private markets. This obviously is such an extreme example that maybe it's not even worth mentioning, but it is a limit perhaps of the private markets.

[Matt Levine]

Yeah, sure, right. I take that point. Although we're not there yet. Right. No, this is like they're rumored to be interested in going public in 2020.

[Katie Greifeld]

In my mind, they're already public for now. They have floated a trial balloon with Reuters.

[Matt Levine]

No, like, what do they need capital for? They need to like get chips and data centers and compute. Like they're getting all of that. Right. They're funding it with vague promises of future trillions of dollars of capital raising. They have not needed to go public to meet their enormous capital spending needs yet. Right. They're incurring obligations that might require going public. But I agree with you that if Sam Altman is feeling the pressure to go public, that does show some limit on the ability of private markets to fund absolutely everything. But he's got a $500 billion company that keeps signing trillion dollar deals and is not public. True, the limit is we haven't hit it yet.

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[Katie Greifeld]

If we're looking for another segue, SpaceX obviously is a private company that has a lot of capital needs.

[Matt Levine]

Yes, it turns out that shooting rockets to Mars costs much, much, much less than training chatbots.

[Katie Greifeld]

What a world.

[Matt Levine]

What a world, right?

[Katie Greifeld]

Elon Musk, he's the whole company. The whole board of Tesla. Well, really, Robin Denholm has been on a media tour.

[Matt Levine]

Yeah, Robin Denholm and the board of Tesla are going around to big shareholders and also frankly, media to drum up support for Elon Musk's big pay package, because the shareholders have to vote on it. And the big shareholder advisory firms, ISS and Glass Lewis have recommended that the shareholders vote against giving Elon Musk a pay package that has a nominal value of $1 trillion. Yeah, I really don't like that framing. No, because basically what it is that they want to Give Elon Musk 12% of the company, and 12% of the company right now is worth $180 billion, which is a lot of money. It's not a trillion dollars. But in order to justify doing this, they're like, we'll only give him 12% of the company if he hits these really ambitious operational and stock price targets. And if he hits all those targets, the company will be worth $8.5 trillion and his 12% package will be worth a trillion dollars. But, like, they're not worth a trillion dollars today.

[Katie Greifeld]

Yeah, they're not giving him a trillion dollars.

[Matt Levine]

Right. They're giving him the chance to get 12% of the stock.

[Katie Greifeld]

Well, listen, you don't like the trillion dollar framing, but everyone listening to this podcast now is thinking about it differently, so.

[Matt Levine]

No, they're not. That's fine anyway. But yeah, I wrote today, on Thursday, it's interesting to me, like, the trillion dollars is really embarrassing. No one wants to vote to give Elon Musk a trillion dollars. Yeah. Like, it sounds insane. It's clearly like part of the pushback to the proposal is it's a trillion dollars. Right. Elon Musk has been very clear that what he wants is to control 24% of the votes of Tesla. He's like, I don't want to be voted out by, like, dumb shareholders. I want to have, like, enough voting control that I have a lot of control, but not so much that I can't be voted out if I become insane, which is like, okay. And so it seems to me that the obvious solution there is to give him 25% of the voting power without giving him any more stock, which is not easy to do. And in fact, in an interview with the ft, Robin at home said, we tried to do that and we couldn't find a way to do it. I don't know, man. It seems to me like you could do it. You could find a way to give him super voting shares. You could get shareholders to approve that and then you wouldn't have to give him a trillion dollars. You could just be like, we're giving him 25% of the vote because that's what he wants.

[Katie Greifeld]

Robin Denholm went on Bloomberg tv. You could have stopped her in person and told her about that idea.

[Matt Levine]

I was writing.

[Katie Greifeld]

You were busy.

[Matt Levine]

I was busy. Well, and I wrote it and she can. Whatever. Surely they've had that idea because she did say to the ft, like, we tried to do it and I couldn't find a way to work, but I don't know why they couldn't find a way to make it work.

[Katie Greifeld]

Yeah, it's tricky. Didn't she say we searched high and low or something?

[Matt Levine]

It seems tricky. Like, I'm not saying it's trivial to be like, we're going to give this guy a new super voting share, but, you know, doesn't seem impossible to me as just the guy.

[Katie Greifeld]

That was an interview she did with the Financial Times. She also went on Bloomberg Television and said that the board is looking at internal CEO candidates should Elon Musk leave.

[Matt Levine]

Right. They're definitely going around being like, if this pay package doesn't get approved, he is out the door. Which is, you know, maybe.

[Katie Greifeld]

Yeah. She said that the company has a deep bench of executives, which I always like hearing because we never hear from them or about them.

[Matt Levine]

So I think she's also said there's no Elon Mark 2. Right. It is possible that you can have both a deep bench of very excellent car executives and also not have. Yeah, Elon Musk light waiting in the wings, you know.

[Katie Greifeld]

Well, apparently one of them is their global production chief and China head, Tom Zhu. Which is funny, I guess, because initially when I read that headline, I was like, oh, it's going to be really interesting to see if, like, Elon Musk fires all of them because he is CEO. So he could. But I guess fires all the potential internal candidates.

[Matt Levine]

Yeah, I don't think he will. I think if you take them at their word, that Elon Musk might quit if he doesn't get this control. It would still be a terrible idea for him to sabotage Tesla on his way out the door. He could be mad at the shareholders and he could be like, I'm going to spend my time on something where I have more control, because what I want to do is build a robot army and I need to have 25% voting control of anywhere I build a robot army. Believe what they're saying. Right. That's still not a reason for him to sabotage Tesla because Tesla remains more or less the majority of his wealth. Right. And so if he were to leave in a huff, the stock would tank. But if he were to leave in a Huff. But also saying, I've left this in charge of my good friend who's really good at this, Tom Zhu. Tom Zhu. Then it's better for his wealth than leaving it a huff and burning it down on his way out the door.

[Katie Greifeld]

That's true. He seems.

[Matt Levine]

No, I understand.

[Katie Greifeld]

It's like a very logical way to think about things. Matt.

[Matt Levine]

Yeah. You know, he's not illogical.

[Katie Greifeld]

No, he does post somewhat emotionally.

[Matt Levine]

It's weird stuff, but I think he's going to be rational.

[Katie Greifeld]

Well, you know, we'll maybe find out, but probably not.

[Matt Levine]

Probably not. Probably the shareholders will approve the package. Yeah, I'm guessing. I don't. I don't have no basis in saying that. I just. They always do.

[Katie Greifeld]

Well, 30% of their investor base is retail shareholders.

[Matt Levine]

He'll be fine. Yeah, they're, like, creating drama, but they'll be fine. But if they're not fine, I'll be very interested to see if he quits.

[Katie Greifeld]

Yeah, me, too.

[Matt Levine]

Mailbag.

[Katie Greifeld]

Mailbag.

[Matt Levine]

I do want to talk briefly about some emails. Yeah, I'm not gonna sing Mailbag with a mailbag with his voice, but I don't know if you listened to last week's podcast episode, but if you did, it consisted entirely of Katie reciting facts about the new J.P. morgan headquarters. But here are some more facts about the new J.P. morgan headquarters.

[Katie Greifeld]

I was worried that people wouldn't like that, but.

[Matt Levine]

No, I was sure people would like that.

[Katie Greifeld]

People did. Well, we got a lot of engagement. This is from Eric.

[Matt Levine]

Okay.

[Katie Greifeld]

I went on a tour of the HQ as part of an annual meeting earlier this year. And during the tour, they highlighted the H Vac system for the flag. It is actually capable of mimicking the conditions outside the building. So the flag always waves in the way it would if it were outside. Man, it must be going crazy today because it's raining. There's a storm.

[Matt Levine]

Do you think it's raining in the lobby?

[Katie Greifeld]

Maybe it's like the Hogwarts ceiling.

[Matt Levine]

Really good H Vac system. Yeah, because we were talking about, like, there's a flag in the lobby that blows in the breeze, and you mentioned the fanning system, and I was like, is it a guy with a desk fan on a stick and. No, it's a very fancy H VAC system that makes it rain inside.

[Katie Greifeld]

I have to say that the flag was waving, like, there would have to be a strong gust of wind the way it was waving last Tuesday. And I don't remember it being that windy outside.

[Matt Levine]

Maybe it mimics, but somewhat amplifies yeah, enhances. Makes it a little, you know, zhuzhes it up a little.

[Katie Greifeld]

Yeah, definitely.

[Matt Levine]

This is from Ryan regarding Matt's observation that the building has a precarious overhang. I don't want to say precarious. It just looks like it might fall on you.

[Katie Greifeld]

Yeah.

[Matt Levine]

Surely you are aware of the design and construction flaw of the Citicorp building in the late 70s. This is taught in basically all engineering programs today. I assume it must be well known in finance circles too. I think less well known in finance, but not unknown. But yeah, there's a city building.

[Katie Greifeld]

I did not know this.

[Matt Levine]

So it's on like near us. It's at like 601 Lex. It's like just kind of down the street from the Bloomberg offices. And they built it in the late 70s and it's very cool. It's like very much like, you know, there's a plaza underneath it and like big, massy building is on top of like little stick legs. And the famous engineer who designed it didn't take into account quartering winds. Quartering winds. They're like the winds that don't hit the thing head on. And then it was a fancy building and so a couple of engineering and architecture students studied it for class projects and they were like, wait a minute. If this gets a wind from the wrong direction, it'll fall over.

[Katie Greifeld]

Oh my God.

[Matt Levine]

And they emailed him or they wrote to him and he was like, oh, no, you're right. And so they like, while people were working in the building, every night they'd go home and people would come in and shore up the bolts in the building to make sure it didn't fall over.

[Katie Greifeld]

Great that the engineer was humble enough to take the feedback, but also, maybe he should have.

[Matt Levine]

Wikipedia is a little grim. It's like he contemplated suicide.

[Katie Greifeld]

Oh, that's not good. I was going to say maybe he shouldn't work again.

[Matt Levine]

I think he was fine, but yeah, it was a little. Not a great day for him.

[Katie Greifeld]

I can't wait to read this Wikipedia article. I will say I would love to see the JP Morgan lobby flag in a quarter England. Yeah, sounds pretty cool.

[Matt Levine]

I should do that just as a little engineering inside jig.

[Katie Greifeld]

Yeah. Nick. Nick says I just went to a meeting there and wanted to share a couple things. Apparently the pub doesn't start pouring beer until 4pm the rumor going around was that Jamie Dimon himself was refused a drink at 3pm we haven't fact checked any of this, by the way.

[Matt Levine]

I kind of don't believe that Jamie Dimon was like wandering down to the in office pub at 3pm to be like I'll have a beer. Like that doesn't sound like Jamie Dimon.

[Katie Greifeld]

Maybe they like also, I don't know.

[Matt Levine]

I mean he could have like, you could imagine him being like, I'm gonna do a little like stunt of ordering a beer to demonstrate the pub to people and he wasn't served.

[Katie Greifeld]

Yeah, but I feel like they would refuse him once but then be like actually here's the beer. But I don't know. I only have a parasocial relationship with Jamie Dimon, so I'm not actually sure.

[Matt Levine]

Right. We do need to interview the bartender who gives a drink to Jamie Dimon at the Jamie Dimon controlled pub in the J.P. morgan office.

[Katie Greifeld]

I want to go there and we can look at the flag.

[Matt Levine]

If you're that bartender, get in touch.

[Katie Greifeld]

No, I want to do a podcast.

[Matt Levine]

From the pub, the Whipping Wind.

[Katie Greifeld]

Yes.

[Matt Levine]

The pub is not in the that's.

[Katie Greifeld]

On the 13th floor. The flag is in the lobby.

[Matt Levine]

We're going to do the podcast from the pub.

[Katie Greifeld]

It'll happen.

[Matt Levine]

And that was the Money Stuff Podcast. I'm Matt Levine.

[Katie Greifeld]

And I'm Katie Greifeld.

[Matt Levine]

You can find my work by subscribing to the Money stuff newsletter on bloomberg.com.

[Katie Greifeld]

And you can find me on Bloomberg TV every day on the close between 3 and 5pm Eastern.

[Matt Levine]

We'd love to hear from you. You can send an email to moneypodlumberg.net Ask us a question and we might answer it on the air.

[Katie Greifeld]

You can also subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show.

[Matt Levine]

The Money Stuff Podcast is produced by Anna Mazarakis and Moses Ondahm.

[Katie Greifeld]

Our theme music was composed by Blake.

[Matt Levine]

Maples, Amy Kean is our Executive producer.

[Katie Greifeld]

And Sage Bauman is Bloomberg's head of podcasts.

[Matt Levine]

Thanks for listening to the Money Stuff podcast. We'll be back next week with more stuff.

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