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- [00:01]
Scott Galloway
Support for the show comes from Fundrise. For the past seven years, there's been a room in finance most people couldn't enter. A room where you could have invested in some of the biggest names in tech companies like Airbnb and Uber before their multi billion dollar IPOs. I'm talking about venture capital. Fundrise recently took a sledgehammer to those closed doors by launching a venture capital product that's available to anyone. Their mission is to give everyone the chance to invest in the best tech and AI companies before they go public. You can visit funrise.com profg to check. Check out Funrise's venture portfolio and get in early today. All investments involve risk, including a potential loss of principal. Past performance is not indicative of future results. This is a paid advertisement. This is a Monday.com ad. The same Monday.com designed for every team. The same Monday.com with built in AI scaling your work from day one. The samemonday.com with an easy and intuitive setup. Go to Monday.com and try it for free. Megan Rapinoe here this week on A touch more. Gotham FC's Rose Lavelle joins us to talk about FIFA's very first Champions cup, her incredible year of wins, and some of her greatest pranks of all time. Unfortunately, on yours truly. Plus, with the WNBA CBA negotiations still stalled, I gotta ask the question, is it time to worry? Check out the latest episode of A Touch More wherever you get your podcast and on YouTube, Today's number one million. That's the total number of AI domain names registered as of last month. Ed, True story. As I'm trying to unsubscribe because of Resist and Unsubscribe, I unsubscribe from Amazon one, their healthcare offering and I don't know if they're listening to me and using it across their other domains, but whenever I go to Amazon prime now it suggests erectile dysfunction socks. Okay, you don't like that one? Fine. Instead of getting a doctor for a same day appointment, it gives me a picker from a warehouse named Kyle. I told it I had Crohn's and it suggested just turn your body off and on real fast. See what happens. How are you Ed?
- [02:22]
Ed
I'm doing very well. How are you doing? Skull?
- [02:24]
Scott Galloway
I feel very exposed. This resist and unsubscribe thing, a lot of people are saying it's inspiring. And a lot of people are saying that I should have been more organized organized and reached out to them.
- [02:32]
Ed
What do they mean they should have reached out to them? These people These politicians who already had a plan or.
- [02:38]
Scott Galloway
Yeah, or there's activist groups. There's, you know, media personalities who are like, well, this isn't. If you'd reach out to me or these groups that help organize these things. And I'm like, the last thing I want to do is get on the phone with a bunch of media personalities and Brooklynites and get their view on whether Netflix should be on the list or not. That sounds like the seventh circle of hell for me.
- [03:01]
Ed
I think that's exactly right. And there you have your answer. It was the right choice. You don't want to do that. That's a pain in the ass. So you did it your way. I think that's the right way to do it.
- [03:09]
Scott Galloway
I did it my way. That's right, Ed. That's right. And today I'm speaking, no joke, to the senior class president and the senior class at a Michigan high school, such that they're all considering collectively unsubscribing from Spotify. But they want to speak to me first. I have never been so intimidated. I got to speak to, like, 400 seniors at a high school about why they should unsubscribe from Spotify. I think somehow that's gonna. I'm gonna end up in the Epstein files because of that. By the way, I just wanna highlight. I don't think anyone on our podcast is in the Epstein files.
- [03:46]
Ed
Actually, you know what? Oh, have you searched your name?
- [03:49]
Scott Galloway
Yeah. Well, no, I haven't. Kara did. I didn't search. I'm not in the Epstein files. Kara did, and she called me and said, thank God you're not in the Epstein files.
- [03:55]
Ed
You actually are in the Epstein files.
- [03:56]
Scott Galloway
But what.
- [03:57]
Ed
It was an email to Epstein saying, you should read this article. And the article quotes Scott Galloway. It's a guy, one of his buddies, saying, hey, you should read this article about, I don't know, valuations in big tech or something. It's really good. You should check this out. And then in the article it says, professor Scott Galloway says, blah, blah, blah, blah. So you are in the Epstein files, but you're in there because Epstein's buddy thinks that you have good financial analysis. That's right.
- [04:28]
Scott Galloway
Well, there you go.
- [04:29]
Ed
It is getting to the point, though, where if you're not in the Epstein files, then who the fuck are you? You know.
- [04:35]
Scott Galloway
You know what I love? So what is it? The Overton window has been shifted here. I've been seeing all these sex workers on TikTok saying that who's not in the Epstein files?
- [04:48]
Ed
Hunter Biden, we're going to need to audit your algorithm soon, but please continue.
- [04:52]
Scott Galloway
Hunter Biden loved two things. He loved crack cocaine and having sex with grown women. And he looks wholesome now.
- [05:00]
Ed
He looks.
- [05:00]
Scott Galloway
He only did meth and he banged sex workers who were actual adult women. And he looks like something out of the Waltons right now. I love how the window has been shifted.
- [05:12]
Ed
And remember Larry Summers? I mean, he was just associated with the Epstein files. He had to step down from all of his positions. He steps down from the board of OpenAI. Now it turns out there are hundreds of Larry Summers out there, but there are so many at this point. It's sort of like flooding the Zone with shit. You just flood the Zone with so many creeps that now being creepy doesn't matter anymore.
- [05:31]
Scott Galloway
What we need is an institution to go through these millions of pages and say, this is what warrants public scrutiny. This is what warrants a grand jury and an indictment. Exactly. And this is what doesn't warrant public scrutiny. And so everything's being mixed together. I mean, everyone's talking about Dr. Peter Attia. I think he's a fucking distraction. Totally agree. The cabinet members and the President and someone. People who have committed child rape. Those are the people we should be talking about 100%. Anyways. I find the whole thing another example of how people don't appreciate how much benefit we got from institutions we could actually trust. There's no institution we trust to review this and parse out the. Parse out what is credible information that warrants discovery and other information that's just stupid gossip that's going to do nothing but create headaches for people for no fucking reason.
- [06:26]
Ed
And it almost seems intentional to mix them all together. Even the redactions, which don't 100% really make any sense. I mean, they said that they had a rule for the redactions, which was supposed to be victims and children. But then you go through and you see actually a lot of these redactions don't make any sense at all. You have redactions of people who are clearly the perpetrators and they're just blacking out their name. So then you just don't know who sent that very, very alarming email about potentially some sort of pedophilic or creepy, just awful behavior, whatever it is. I mean, the reductions don't make any sense. I'm totally with you. This whole thing is just a total shit show. And it seems like that is the point.
- [07:10]
Scott Galloway
Well, I forget his name, but the guy who sort of invented modern propaganda for the GRU said that he said the key is put out lies, put out truth. Whenever Putin or someone else is accused of something, put out some truth, put out some lies, accuse everybody all the time and just make it such that people are totally confused and just give up and there is no objective truth anymore. And that's what this is.
- [07:34]
Ed
And it's working. It's working really well.
- [07:36]
Scott Galloway
Hundred and because we don't have institutions we can trust that can say, okay, we're not going to release the names of the victims unless they want their names released, but if there is an individual who is, there's credible evidence in these files that this person has impregnated an 11 year old, we're going to let the markets know through a grand jury indictment of this person. And the American public has a right to know if the President of the United States has been mentioned 5700 times or if his cabinet Secretary of commerce claims very stridently that he wanted nothing to do with this guy and still continued to have. You know, I mean, even that you could argue maybe that's not for public discovery or scrutiny, but instead they've just flooded the zone like nothing else and everyone's just confused and had it.
- [08:26]
Ed
Well, we could talk about Epstein files for days, but we have some very interesting market news to get into today. Today we are discussing why software stocks sold off last week. We're also discussing the future of the entertainment industry. We'll get some updates there. And also Anthropic's unbelievable marketing win with their super bowl ad. But to start, let's discuss what happened to software.
- [08:53]
Scott Galloway
Now is the time to buy.
- [08:56]
Ed
I hope you have plenty of the wherewithal. Software stocks got crushed last week. Cloudflare fell 7%. Atlassian fell nearly. Shopify fell 14%. As a whole, software companies lost roughly 12% of their value in just one week. That dragged the NASDAQ 100 into its worst three day slide since Liberation Day. Sell off was triggered by a wave of new tools that spooked investors. Anthropic rolled out industry specific products for legal, finance and customer service. OpenAI also launched a more powerful multi agent version of its coding tool, a new platform to help companies deploy AI agents. Meanwhile, a new AI assistant called OpenClaw can now execute tasks directly through messaging apps like WhatsApp. The fear is that if companies can build their own software with AI, well then why will you keep paying companies to make it for them? So Scott, just absolute chaos in the software market right now. All of the big software names are trading down. You look at the software ETF, IGV, it's down 20% in the past month. Tons of selling happening right now. I have a view on this and I've actually gone into the market and taken some action. But I will start with your reactions to what happened last week and then we can get into the details.
- [10:27]
Scott Galloway
What you just said is thinly failed way of saying you buy these stocks you think are being unfairly punished would be my guess.
- [10:33]
Ed
Yes.
- [10:35]
Scott Galloway
I think what you're going to see is, is that it's going to put margin pressure on these companies and it's going to create a new wave of startups. I think that we talk about Figma and Adobe, Adobe sort of Mercedes. Figma is sort of Toyota. Somebody's going to come up with BYD and that is they're going to use AI to come up with 80% of Adobe for 10% of the price. But at the same time, I still think Adobe is going to be a cash machine because you'll continue to use Salesforce for a long time. Because if you invest all that time in understanding the interface and getting good at it and your employees and your sales teams know how to input data into Salesforce, unless something is monumentally better and it's been mandated from the top levels of the company, they're not switching over. So I, I think you're right. These companies have probably been over punished. What I think the net net though will be is margin compression. Because there's going to be so many startups offering an old Navy version of these software platforms at a fraction of the cost from overfunded startups where a 2, 10, 20, 30 person team can spin up a SaaS platform at a fraction of the cost. It will put I think margin pressure on these folks.
- [11:53]
Ed
I think margin pressure is exactly right. I think that is the danger here. What is interesting though is that the market's reaction has not been one of we're going to see reduced margins or we're going to see some more pressure on margins. The market's reaction is telling us software is dead. AI has killed software. So software stocks down 20% in the past month, just one month alone. The forward PE has gone down from 35 times in 2025-20, lowest level since 2014. We're seeing huge amounts of selling pressure to the point where it's kind of obvious now, like this isn't just oh, we might trim our holdings. This is like sell everything. This is what we would call panic selling. To me this is very Similar to what happened when ChatGPT came onto the scene. And I don't know if you remember what happened, but ChatGPT shows up and everyone decides that search is dead now. Specifically, Google is dead now. And you saw Google stock cratered 40% in the year that ChatGPT was released, actually then started to continue to slide as more products were announced from ChatGPT. Since it bottomed out, Google has obviously been on a massive run. They have risen 280%. And essentially what they did was they learned from ChatGPT, they invested more in AI. They integrated AI into their products. They came up with their own AI product. Their search revenue actually increased. It's up 50% since ChatGPT was released. They got more us. And now Google is, everyone agrees, the winner of AI, at least for the moment. It's now worth $4 trillion in market cap. It is sort of with Apple competing for second most valuable company in the world. And that was an example where the market was confronted with this new technology that really freaked them out. And they decided that they just were going to do away with their models, do away with rationality, and they just decided, fuck it, let's sell. That's exactly what happened. And it, it made Google one of the best buys and we recommended it about a year ago. Similar thing happened, by the way, with, with TikTok. TikTok comes onto the scene. It's really exciting, it's really popular. Everyone decides Instagram is dead. Meta stock falls 70%, then it bottoms out, then it rips up more than 600% in the next few years. They come out with a product that is very similar to TikTok in Instagram Reels. Now, Instagram Reels has almost the same number of users as TIK does, very similar dynamic. So I think that this is the same thing is happening here, and that is we do have a new technology and it could be quite disruptive. But the amount of selling pressure that we're seeing in the markets is just indicative of, again, panic, chaos, confusion. And there are many reasons why I think software isn't dead. You know, the first reason would be there's nothing stopping these companies from integrating AI into their existing products. I mean, this is the same thing we saw with Google. Just because ChatGPT comes along doesn't mean that Google can't get into AI. In fact, that's exactly what they did do. And it worked really well. The other thing that you point out, which I think is a massive point that people are not really recognizing if you are going to cancel an enterprise contract with a software company, say Salesforce, that's not like a small deal. That's like a gigantic pain in the ass. The switching costs are massive. It takes on average more than half a year to find a new service provider. It also has to go to committee. You need to have a bunch of people, executives who have to sign off on the decision. It also costs money. If you're going to terminate the contract, then you have to pay 100% of the remaining fees. This is something that companies do not want to do. You do not want to Change your enterprise SaaS provider because it sucks to do it. And this, by the way, is why these companies have been such great buyers in the past, because the moats are gigantic. It's always been a thing. The switching costs are tremendous. So in order to switch from one of those providers, you need to have a huge body of evidence to show you and to show the committee that yes, going with Claude or going with the other AI tool is a better idea. The other thing they're counting out is the trust they have with these companies, the relationships they have with these companies. They've been working with these companies for years. So again, the idea that, oh, there's a new tool, oh, there's a new startup that they're going to help us with our enterprise SaaS. Meanwhile, we've been working with these companies for years and we trust them and we trust their enterprise security. I just don't think that it's realistic. I think that the selling pressure is way too strong right now. I think markets are overreacting. To me, this is perfect buying opportunity.
- [16:49]
Scott Galloway
I think you're right. And the reality is you want, your emotions are your enemy. And when you hear this news and the narrative and it's a solid one, that AI is going to undermine all SaaS platforms. I get it, you have to be thoughtful about valuations. But the analogy I would use is that when I went to UCLA, everyone talked about the freshman 10 and that is the majority of people end up in the dorms. I forgot to send in my deposit for my dorms and I was so freaked out, my was going to freak out because she wanted me to move out so badly that I rushed to fraternity and ended up getting into a fraternity just because I needed a place to live. It's neither here nor there, but anyways, people want to know about my history. People want to know what music I was listening to in the 80s. REM, Lloyd Cole, English Beat, Tom Petty, you know, Damn the Torpedoes. It was really unfortunate that you weren't born at an earlier age, Ed.
- [17:37]
Ed
I agree.
- [17:37]
Scott Galloway
They called it the freshman 10. And that is you got a meal plan. You paid like you paid. I don't know, I forget. It was 1100 bucks and you got three meals a day in your dorm. Sproul, Hedrick, whatever. And you just go down, you roll down in your pajamas and they had cereal and good food. It was all crazy, crazy fattening. And the notion would be okay. And I remember even someone writing an article saying there's all sorts of different options on campus for food to eat somewhere else was a hassle, inexpensive and required a huge change in consumer behavior. That's the way I see this. And that is there might be a new AI company that comes out that is a better CRM for half the price of Salesforce. Good luck trying to get your entire sales force to figure out a way to input and figure out the interface and the mobile application. You know they're going to say, fuck that, let's just stick with Salesforce. Now the next time they're negotiating next year with a huge site license for, I don't know, McKinsey or whoever who uses Salesforce to manage all their potential clients and people who think that someone with a PhD in a Northern European accent knows any more about their fucking business than they do. The procurement department at McKinsey will use all of these AI CRM startups to negotiate a lower price. But I don't think they're going to swap out a cloudflare of all these companies do such a good job of creating friction to exit.
- [19:10]
Ed
Exactly.
- [19:10]
Scott Galloway
I remember when I was not running, but I was starting on my red envelope. I think we were using Oracle and Broadvision and Oracle was it powering our database, but trying to switch out of Oracle, they purposely make it almost impossible. These companies do a really good job of making it easy for you to sign up. Like I find when I check out of a hotel, they make it so easy for me to pay. They're like, okay, we've already taken the payment. What's really hard is if they charge you for breakfast you didn't order. It takes, you know, several calls and years to get your money back and it's not worth it. It's the same thing here. These companies will experience margin pressure because the procurements departments will have a lot of options and they'll threaten it. But they're not going to tell their 4000 media department at L' Oreal to start using some other software program to figure out how to track clients or payables or whatever.
- [20:16]
Ed
Right now these companies, their revenues are growing and they're actually growing at double digit rates. So it's not that people are upset with the product right now. They actually like the product. And every company that has an enterprise relationship with one of these software companies, they're going to be trying to find reasons to continue the relationship because it's too much of a pain to get out of it. They don't want to do that. In addition, they're going to be integrating AI into the products themselves. So it's not like, I mean, it's not as if Salesforce suddenly doesn't have AI. Salesforce is investing a lot in AI right now and they're going to roll out those products to their customers. So I think it's a lot of hysteria over something that is not that meaningful. And you know, it's rare that you have these moments where there is such, such momentum in the selling pressure among the markets. And so I think these are the moments where you want to go in and buy. Mark Mahaney calls these kinds of companies D dislocated, high quality companies. That is, you want to find good companies that are experiencing some level of dislocation. I have a few names that I have bought and who knows what will happen to the prices because the markets are going crazy right now.
- [21:34]
Scott Galloway
What did you buy? Inquiring minds want to know.
- [21:36]
Ed
So I bought three stocks. The first stock was Adobe. And just a disclosure, Adobe has sponsored this podcast in the past. I made this pick last week and I stand by it. It's down 9% since Monday night. It's down nearly 40% in the past year, trading at 17 times earnings. The S&P average is 29 times earnings. Its five year average, its five year PE average is 37. So the assumption is AI is just going to kill Adobe overnight. But again, this is a large enterprise company.
- [22:10]
Scott Galloway
Wow. It's at a five year low.
- [22:11]
Ed
It's getting absolutely decimated right now. But it's used by 98% of Fortune 500. We've also talked about this with the research team. They have this major tailwind which is short form video. Everyone's trying to hire video editors right now and every video editor is using Adobe Premiere. They've got a lot of things going for them and they're going to start integrating AI. So I think Adobe is a buy right now. We've discussed that. I also think Salesforce is a buy. It fell around 11% at first. It kind of recovered again. We'll see how it trades in the next few days. You got to move quickly here. It could be that by the time this episode airs it's, it's back up. But it's down 45% in the past year, trading at 27 times earnings. Its five year average is 73. It's growing at double digits. Its RPOs are up 12%. Again, this is like a massive enterprise SaaS company which again has really large moats. My third pick that I bought is ServiceNow. Trading at nine times sales. Five year average of 16. People just assume AIs killed it. But again, they're integrating AI. They've got $1 billion in AI revenue in the pipeline for 2026. They're integrating with Anthropic and OpenAI. They've signed contracts with these companies. So those are some buys that I've gone with. Again, do whatever you'd like. I think that these are good opportunities. And then the other thing that you could consider right now is just like buying the etf, which is called igv, just the whole software etf. But my view is, you know, it's possible that there are going to be some losers here. So I think it's better to go in and start picking some winners. But that's what I've gone for. I also would have gone for Microsoft as well, but most people have just huge amounts of Microsoft exposure already. But that's gotten pummeled as well. And again, it doesn't really make sense because Microsoft owns a huge portion of OpenAI already. So if OpenAI is going to kill Microsoft, well, Microsoft already owns it. So it's going to be totally fine.
- [24:13]
Scott Galloway
I really like your thesis. I was asked, I didn't think of software companies. I was asked a couple months ago, what are the companies that if you had to bet, if you had to go short companies because of AI, boom. Which companies would you pick? And I picked two. I picked OnlyFans. And I think I told you like six months ago, someone called me and said, do you want to be a part of an investor group and to buy only fans? I'm like one, no. And two, why would you think I'd be interested in this?
- [24:39]
Ed
Yeah, why wouldn't they think you're interested?
- [24:42]
Scott Galloway
I've never, I've never signed up for anyways, I've never signed up for a porn site or anything like that. Although those gay hockey players from Harvest Moon or whatever it's called.
- [24:51]
Ed
Oh hell yeah.
- [24:52]
Scott Galloway
Rivalry. I would definitely like 499aminute. I'd do that. Like, hey, I love your program. Anyways, I'm unsubscribing from HBO Max and so I'm binging the gay hockey thing and I'm rethinking everything, Ed. I'm rethinking everything. Anyways, back to what were we talking about? Oh, AI OnlyFans. I think it's fucked. I think you're gonna be able to get a really hot person, you know, doing whatever it is they do on OnlyFans for 3% of the price. With AI and the other company, it's not really a software company, it's a research company and it's the company that acquired my company. I think Gartner is fucked. And that is every research report they put out. Their events are still really powerful, but every research report they put out. I feel like almost any IT manager or any CTO could get a similar level of feedback with a two minute prompt. And their stock at this in the last year it's off 72%. My guess is that an activist is going to come in there and say you need to lay off 70% of the people and use AI and offer have a kind of a what Figma is to Adobe. Gartner's going to need to come up with a lower cost product. But I hadn't thought about the software guys getting this badly hurt. But if you use Adobe, you're fluent in Adobe. It's its own language, it's its own job requirement. And we like figma. All the kids are using Figma in design design schools. It's also gotten crushed.
- [26:24]
Ed
Gotten crushed.
- [26:25]
Scott Galloway
Yeah. I own Figma. Anyways, we should timestamp this and come back in 3, 6 and 12 months and see how these stocks are doing. ServiceNow is an interesting one. I've spoken at their conferences, but I don't know that much about the company.
- [26:44]
Ed
Yeah, it just again, massively oversold. But your Gartner point is an interesting one because Gartner would be one of those companies that is in that bucket of companies that have been absolutely crushed due to the AI thesis. But this is where I think stock picking actually does come in handy and it actually is useful. I mean I know that we're usually pro ETFs just, you know, does diversified indices. But when something like this happens, where a technology comes in and it just decimates the whole narrative of an industry and it's not unreasonable. I mean the idea that AI is going to massively disrupt software is a very reasonable pick. The point being there are going to be winners and losers. It's possible that there will be losers in this, which is why you want to go in and figure out, okay, what are the winners here? Because right now everyone is being undervalued. Right now everyone is getting sold, regardless of what you're doing with your business. And that's why I think I've chosen a few names as opposed to going for the whole bucket of companies themselves. Because I do think it is reasonable to look at what's happening and say, okay, well, this company isn't taking AI very seriously. This company's product actually isn't very differentiated and their relationships with their enterprises isn't as strong as some others. Therefore, this one actually will get burned. And maybe Gartner is one of those companies. But it is a moment where it's like, okay, if everyone's selling at some point, you do need to go in there and start, as Buffett says, being greedy while everyone else is fearful.
- [28:22]
Scott Galloway
Agreed.
- [28:25]
Ed
We'll be right back after the break. And if you're enjoying the show so far, send it to a friend. And please follow us if you haven't already. Support for the show comes from Monarch. What are your financial goals this year? Are you saving for a down payment? Is this the year you finally get out of debt? Or maybe you want to take that bucket list vacation? Whatever your goals are, there's only one way you'll get there. Set yourself up for financial success this year. Monarch is the all in one personal finance tool designed to make your life easier. It brings your entire financial life budgeting, accounts, investments, net worth and future planning together in one dashboard on your phone or laptop. Feel aware and in control of your finances this year and get 50% off your monarch subscription with Code Markets. And Monarch makes it easy to share your finances with a partner. You can view your assets together and individually. And according to their data, the company reports that 7 out of 10 of their members say using Monarch improved their financial conversations with their partners. Set yourself up for financial success in 2026 with Monarch, the all in one tool that makes proactive money management simple all year long. Use code markets@monarch.com for half off your first year that is 50% off your first year@monarch.com with code markets.
- [29:52]
Scott Galloway
Support for the show comes from Fundrise. Investing in companies already in The S&P 500 can sometimes feel like you're being served someone else's leftovers. It's still a great meal, but it's hard not to imagine what the food tasted like when it was fresh out of the oven. Historically, only venture capital investors reserved access to the best tech companies in the world that hadn't gone public yet. And that meant the rest of the world simply had to sit on their hands and wait for an ipo. Fundrise says they're completely upending that dynamic with its new venture capital product. With just a $10 minimum investment, Fundrise's mission is to give everyone the access required to invest in the best tech and AI companies before they go public. There's nothing wrong with letting, but now if you want with fundrise, you can take a seat at the table alongside the biggest names in tech investing. Visit funrise.com profg to check out Funrise's venture portfolio and start investing in minutes. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. This is a paid advertisement. Support for the show comes from Vanta. If you're a business owner, you may have noticed that both risk and regulation are ramping up and customers expect proof of security just to do business. And demonstrating trust to customers and prospects is critical to closing deals, but it can also be costly, time intensive and complex, vanta says. That's where they come in. Vanta automates your compliance process to bring compliance, risk and customer trust together on one AI powered platform. They automate the process of achieving and maintaining compliance with over 35 security and privacy frameworks including SOC2, ISO 27001 and HIPAA. This helps companies get compliant fast and remain compliant, opening doors to next level growth opportunities and freeing up valuable time. And Vanta doesn't just help you check boxes, it helps you build real trust at scale. With continuous monitoring, real time reporting and security reviews, you can share instantly. Vanta makes it easy to prove your security posture to customers, partners and investors. So instead of scrambling for audits and spreadsheets, you get a system that works in the background, keeping it compliant, reducing risk and helping your business move faster. With confidence, you can get started at vanta.com markets. That's V A N T A dot com markets vanta.com markets.
- [32:12]
Ed
We're back with property markets. It was a busy week in the entertainment industry. Disney finally named its next CEO, Josh d'. Amaro. He is the head of its Experiences division. He'll take the helm from Bob Iger next month. Meanwhile, Netflix and Warner Brothers Discovery executives were on Capitol Hill to defending their planned mega merger. What started as an antitrust hearing quickly veered into a broader fight over political bias. Senator Eric Schmidt went as far as accusing Netflix of producing quote the wokest content in the history of the world. So, Scott, we've got leadership shakeup at Disney. New CEO going to replace Boiger. And then we had this antitrust hearing in Washington investigating the acquisition of Warner Brothers Discovery. Let's start with the antitrust hearing and let's start with just some of the highlights from that hearing. Let's play a clip.
- [33:03]
Scott Galloway
Generally, Netflix has no political agenda of any kind. I would tell you that. Well, then why is your children's program so full of this highly sexualized, highly controversial, highly controversial agenda? I don't, I don't, I don't understand it. It seems strange to me. Respectfully, sir, it's because it's inaccurate. We have millions of hours of children's programming. I get you're saying it's not there. You don't, you don't have trans, you don't feature trans characters, trans story lines, trans themes. I'm saying we. It's not in your programming. I'm saying we feature a wide variety of stories and programs to meet a wide variety of people's tastes. Why is almost half of it. Why does almost half of your children's program feature this highly controversial, highly sexualized material?
- [33:45]
Ed
What?
- [33:45]
Scott Galloway
That does seem strange to me.
- [33:47]
Ed
Netflix content is synonymous for the modern phenomenon of race swapping. Both historical and real and fictional characters. Netflix continues to push sexual and gender theory on kids. And maybe this is what was being referred to earlier. 41% of G rated kid approved series contain LGBTQIA plus content.
- [34:07]
Scott Galloway
You have a wide range of programming on HBO. Name one program that is designed to appeal to conservatives. We don't design our programming to appeal to liberals. I can think of a lot that are designed to go to liberals. Name one. Let me ask you, do you think CNN is fair and balanced? Sir, I'm not involved with cnn. And in fact, they're not part of this transaction.
- [34:26]
Ed
Remind you this was an antitrust hearing. Scott, your reactions.
- [34:30]
Scott Galloway
JD Vance goes to Europe and lectures EU leaders on their lack of free speech. And now the Republican party is claiming that private companies have an agenda and they're not allowed to. So to be fair, CNN is biased, Fox is biased. And private media companies are allowed to have a bias because consumers have a bias. Netflix is probably the most politically neutral of all of them. They were getting shit two years ago for airing Dave Chappelle because progressives were freaked out about what they felt were anti trans comments. So which is it? I know Ted Sarandos. For the life of me, I could not figure out what Ted Sarandos politics are and I think he wants to keep it that way. So this notion somehow and also I don't even need to know the data and I know that it's bullshit that 50% of kids content features an LGBTQ. That is not their agenda. They're just trying to get kids to spend more and more time watching Netflix. They don't have any sort of agenda along those lines. And even if they did, guess what? They're allowed to. The antitrust is a real issue here and that is if Netflix also owns hbo, do they consolidate the market at the high end artisanal subscription content? That's a real issue. If Paramount, CBS is allowed to own CNN and TikTok, is that also an antitrust concern? That's a real issue. But this is what's going on. The Ellisons give money to Republican lawmakers. The Ellisons are trying to come up with a reason for Netflix to not be able to acquire Time Warner. And so they are ginning up a bunch of Republican senators to create some sort of controversy or reason why Netflix should not be able to acquire Time Warner. There are reasons why neither Paramount, cbs, slash the Ellison should be allowed to acquire it. There are reasons Netflix should not be allowed to acquire it. They are antitrust. It has nothing to do with the bias or the lack thereof of their content. And this is Senators Hawley and I forget the other guy who are just fucking coin operated who've been told by the Ellisons we don't want to have to pay more. So go create controversy and some sort of bias among people who have absolutely no ability to think critically about when regulators should weigh in and they shouldn't. Quentin Tarantino films have a fucking bias. They're allowed to sell to whoever they want. This isn't about an editorial bias. This is about a concentration of power that would lead to higher prices, of which there are real concerns. And Senator Booker actually thoughtfully tried to address these concerns. But instead you have coin operated senators with the Ellison's head so far up their ass you can barely see their legs dangling out of their asses, trying to pretend they give a flying fuck about free speech and that somehow Netflix is too progressive and the right answer to oh, CNN doesn't have a bias, it's more fair and balanced. He should have said, I believe it's more fair and balanced than Fox and I believe Fox has the right to do whatever the fuck they want. And people can decide if they want to watch or have advertising. This was supposed to be about concentration of power that transfers Capital and power from consumers and workers to shareholders. That is a real concern from both bidders. But this is how it's supposed to work. Whoever shows up with the biggest check gets pre approved for the acquisition. And then there is review across the doj, the FTC and cfius around security concerns and antitrust. Instead we're thinking somehow that they're not allowed to have a bias even when there isn't one. Anyways, thank you for my TED Talk.
- [38:24]
Ed
It's completely ridiculous and again, it was a hearing on antitrust and it just completely devolved into a trial on Wokeness. And I feel like this is yet another reminder, and I know we say this all the time, of how stupid these Senate hearings are. Like every time these hearings are happening, it's just a giant display of political theater. None of it even matters. And I think it's so funny that these people, these, these Republican senators default to the Wokeness argument, probably because they don't really know where to land on the antitrust argument. Because the trouble is that you've got all these different players in here and they don't really know who to side with. Because on the one hand, like, oh, maybe Netflix is woke, so maybe they should be against them. But on the other hand, Paramount's controlled by the Ellisons and the Ellisons are big tech and but you know, historically they've been against big tech, but also a way the Ellisons have been donated to Donald Trump, so who are we supposed to side with? So it's almost like Wokeness is just the default backup calling card that you immediately knee jerk reaction go to when you don't really know what the fuck you're talking about. And that seems to be what has happened in this Senate hearing, which was supposed to be again, what do you do when an extremely large entertainment company is purchasing another extremely large entertainment company and most of these entertainment channels are now going to be housed under one company that has like very legitimate and serious monopoly concerns. There are also decent arguments on the other side about the role of YouTube and Instagram and TikTok and all these digital platforms, but it's almost like that stuff is boring to them. They don't really understand that that's business stuff. We don't really care. I'd rather talk about LGBTQ and transgender actors in children's shows because that's something that I know my supporters are really going to get riled up about. Is it going to have any impact on the transaction? Is it going to change the trajectory of monopolization in America, Fuck no. But it doesn't matter because again, it's all for the clips, it's all for the drama, it's all for the show. And this was just another reminder of that.
- [40:29]
Scott Galloway
You know how people say the politicians are speaking to a crowd of one? Like whenever Secretary Noem speaks, she's just thinking, does he want me to say this? Does he want me to say, they're all playing. They're all playing.
- [40:40]
Ed
I haven't heard that. That's good.
- [40:41]
Scott Galloway
They're all playing to Senate, to President Trump, Senators Hawley and I forget the other one. They all had an audience of one, but it wasn't President Trump. It was Larry Ellison. And unfortunately, the only people who demonstrate any actual domain expertise or any fidelity to what the actual hearing was about was first and foremost Senator Klobuchar. I mean, here's the thing. If we're going to talk about affordability, throwing $40 billion at soybean farmers while pissing off China and then taking that money and giving it to Argentina, who's now, none of this shit works. Tariffs are inflationary. Nobody wants to have an adult conversation. If you want to bring inflation down, the two things we need to do, and there's a variety of things, but the two biggest things, free trade, get rid of all these ridiculous tariffs, reduce tariffs, there'll be some losers. Some businesses in manufacturing and services will go out of business in the U.S. but eventually, when you protect your domestic markets, at some point your competitors abroad own fucking everything. And then eventually they come for your launch. And two, massive antitrust. I'm finally like, have enough money and enough influence right now. I know I'll have. If there's a Democratic president, I'll know I'll have his ear. And amongst a variety of things, whether it's mandatory national service, $25 an hour, minimum wage, single payer healthcare, whatever it is, I'm gonna push so hard and say the way you oxygenate the economy, the way you bring down prices over 2, 5, 10 years is massive antitrust. As voters, we're lazy. We're looking for a quick fix. Oh, gas prices are down. That has nothing to fucking do with us. That's about shale in Canada. That's about geopolitics. That's about Saudi Aramco deciding to open or close or tighten a spigot. That has nothing to do with anything. If you want prices to come down, you need massive free and open trade. And you need specifically to break up all of these monopolies who are charging monopoly rents, but nobody wants to have an adult conversation around the hard structural work of actually bringing down prices. But the fact, and I hate the fact that we're talking about these village idiots who are coin operated at the hands of the Ellisons as opposed to Senators Klobuchar and Booker who actually want to talk about the issue at hand.
- [42:54]
Ed
No, I 100% agree. It does feel that every time an antitrust lawsuit comes up or there is an implication that there could be potentially a monopoly on the table, we always come up with an excuse as to why it isn't actually a monopoly. In this case, it's the YouTube and Instagram and TikTok argument. The argument is if YouTube exists and if TikTok exists and if Instagram exists, then you know, they're competing against these platforms, which, you know, I get. I understand that argument and it makes a lot of sense. However, are we ever going to have a moment where we decide, actually, no, this isn't okay. I mean, the same thing happened with Google and the Google antitrust case. And then they decided, oh yeah, you were operating a monopoly. But AI came along and AI really destroyed the business. And so now we found another excuse to not have any antitrust enforcement. It just seems that every time we come up with some reason, whether it's wokeness related or otherwise, as to why we shouldn't be implementing any form of regulation. And so, yeah, it's not a surprise that the market looks the way it does because we've just decided that we don't really want to do anything about it. Let's also talk about Disney's news CEO Josh d'. Amaro. He's the head of parks. He's going to be taking over on March 18th when Bob Iger will be stepping down. He's been working at Disney for 28 years. He has been crucial to expanding the Disney experiences business, which is basically their parks and cruises, which is now the core piece of the business. And this is a whole other conversation, but it is fascinating how that has changed where the. The highly capital intensive piece of the business which is operating a theme park used to be way undervalued by investors, but now the narrative has flipped. They're less interested in certainly the linear, also kind of the streaming. They're very excited about the experiences. He's been running that business. So now he's going to be taking over as CEO. Do you have any reactions to this new pick and the end potentially of the reign of Bob Iger?
- [44:58]
Scott Galloway
Bob Iger is the guy that after coming back from Vietnam a War hero decided to go back and had his legs blown off. That was one of the worst personal decisions in corporate history. For him to start heckling from the cheap seats around his successor and then convince his board that he should go back and shed shareholder value. I mean, it's just been. And a lot of it isn't his fault. He's basically, you know, the market has poured honey on him and sent him hunting for bears. I like that. That's like something that Brian Williams would say. That's like having a moose in a convertible. Anyways. Why does that make me happy? Ed? Look, this company will have an overhang. This is also a buy. This company is going to have an overhang until they're able to get rid of their linear stuff. And that is Disney, Nat Geo, abc. Because in a conglomerate structure. And I experienced this at the New York Times where I was on the board, Ed, for two years. I don't know if you knew that, but yeah, I know it's very impressive. But here's the bottom line. We had some great assets. We owned 17% of the Red Sox. We owned the seventh tallest building in the world. We owned a really outstanding media company called the New York Times. And then we had all these shitty regional papers that were a melting ice cube. And what happens in a conglomerate business model? We also owned about.com, anyways. What happens in a conglomerate model with stuff that makes no sense? The market hates it. And the market finds the shittiest business and assigns that multiple to the entire business. And essentially every analyst report and Q and A and earnings call or the investor relations or Bob Iger on a call goes something like this. Parks, unbelievable business with an incredible moat around it. Film studio doing well, creating IP that is drafted into our parks. Singular experience. No one can compete with our parks. If you don't take your kids to a $1,400 a night shitty hotel with shitty food and take them to Disneyland four or five times, by the time they're 10, someone's going to call child services on you. Disney streaming is getting some leverage. It has singular positioning around family. People say they've missed stuff and they've missed trends. I don't buy that. I think Disney still does a great job with their ip. Very talented people, outstanding culture. All of it's great. And then they have to go. But our linear platform showed 8% decline in revenues and 14% decline in EPS. As soon as they shed that shit and go good bank, bad bank, or sell it to a consolidator and it's all about the parks and it's all about the experiences cruises and the streaming and the studio. This company goes up substantially in value. Disney is at a 10 year low and Bob has clearly had the for sale sign out on those networks. But I don't think he's gotten. No one has offered him probably the price he wants. He probably has an unrealistic view of the value of ABC on espn. By the way, ESPN used to be the cash cow for Disney. Just to tell you how much things have changed. The other thing is, I wonder if the last six months are going to be awful because the fact that he's leaving, he's actually leaving ahead of schedule, says to me that he looked at the back half of the year and went, oh, fuck, I don't want to be around for this. And by the way, I loved your interview with Rich Greenfield. I always learned when I listened from Rich. And you had him on. You had them on markets, right? When did you have Rich on?
- [48:15]
Ed
We had Rich on on last week. That's right.
- [48:17]
Scott Galloway
You do this some days when I'm not on anyways. That's what you call scale, by the way. Do you see all the, all the stuff behind me?
- [48:24]
Ed
I do, I do. I love it.
- [48:26]
Scott Galloway
How awesome is that?
- [48:26]
Ed
It's great.
- [48:27]
Scott Galloway
Oh, and who noticed it first, by the way? And why?
- [48:30]
Ed
Who noticed it first? I don't know.
- [48:32]
Scott Galloway
Let me put it this way. Who's not up here?
- [48:34]
Ed
Who's not up there?
- [48:35]
Scott Galloway
Kara Swisher. She gave me so much shit. I'm like, let's be honest, Kara, let's go. You're my ex wife. These are all my Belarusian hookers. I am so down. These people are making me money, giving me more joy. And you're just the first wife.
- [48:50]
Ed
Oh, man. Belarusian hookah.
- [48:52]
Scott Galloway
I can't afford the Russian hoes. I go for the Belarusians anyways. That's probably a hate crime. This is.
- [49:00]
Ed
Don't worry about it.
- [49:02]
Scott Galloway
This is. Disney is, I think, an undervalued asset. The Parks guy is the right pick. These things are. They're gonna, I believe the back half of the year might be rough for them because of our head up your ass tariff economic warfare against our strongest ally, Canada. Anyways, the park's amazing, the film studio amazing. The streaming media company is starting to get real momentum. They have to get rid of. And by the way, the new co, whether it's the independent, whether it's just bad bank and they spin them out on their own or someone consolidates them, that will Also be a good stock to own because it's a different complexion of capital. As long as you reduce costs faster than revenue declines, you can churn out and consolidate all the other cable guys. I think that's going to be a good stock. But until they do this, good bank, bad bank, it's always going to be assigned a multiple of a shitty cable ad supported company that is not growing. And the reality is Disney is growing. I believe if the new CEO sold all of the linear. All of the linear, right? Nat, Geo, espn, abc. I think if they sold it for a dollar, the stock would go up.
- [50:16]
Ed
I think I agree.
- [50:18]
Scott Galloway
Because everything they're doing is an apology. Everything is. Yeah, but. Yeah, yeah, yeah, but the overhang of these linear networks, the confusion of the business strategy, the constant apologizing for the last 20 minutes of the earnings call is just an enormous overhang on the stock.
- [50:38]
Ed
100% agree. I think the question now being when is it going to happen? And potentially it's going to happen now that they have a CEO, because you know, remember you've been calling this for a long time. You've been saying this is an issue not just in the last few months or the last year, but I think you've been saying this for years now. They have to get rid of the linear assets. I would imagine that everyone's going to be hammering on Josh tomorrow's door demanding the same thing. So I wonder if, now that we've got a new CEO in the building, is it actually going to be possible? Perhaps you have a prediction on if this is actually going to happen or not. But I will ask you the question. Do you think it's going to happen in the next, say 12 months?
- [51:22]
Scott Galloway
The good bank, bad bank, the sale of the linear assets.
- [51:24]
Ed
Yeah.
- [51:25]
Scott Galloway
Oh, they've been for sale for two years. It's just a question of who can show up with an offer. And I imagine there's probably some content or, who knows, creative contracts that are sort of trying to unmess or unfry or unscramble an egg. But these, it's not a matter of if, it's just when. So. And I think they were probably hoping they'd get a better price for ESPN and they just never got the number they wanted. But absolutely, this guy has. Typically what happens with a new CEO, you can do almost anything and your board just rubber stamps it. You have a honeymoon period. So whenever you have a new CEO, you want to say to him, boss, okay, go hard, go early, because you have license to do whatever the Fuck you want right now? He should do it. If he can do it right away, do it immediately.
- [52:17]
Ed
By the way, it's starting to sound like forced seller territory. And I mean, it's. There's two options. Either you sell it to a private entity or you spin it and you take it to the public markets. But you know, we saw what happened with Versant. They did the spin, it went terribly. The stock's been absolutely crushed. So I wonder if they're going to be looking for a private buyer. Either way, it seems like they have to sell. It's making me think that you need to put a consortium together and make them a somewhat measly offer that they must accept. I feel like that could be an awesome investment response.
- [52:56]
Scott Galloway
At 4.3 billion, it's one year returns. It's off 35%. You're right. Someone needs to roll up these things and make a go of it. These actually can be really good stocks. Cable news is still a good. I think what they also might be waiting for. And I'd be curious to get Rich's view on this. Typically these companies lose money. It's like the dirty secret, especially retail, is they lose money for 48 weeks and then for four weeks from Thanksgiving to Christmas, they just print money. I think in some of these cable news, I don't know if Disney owns local stations or not, but they make a shit ton of money around the election. And that guy who hosts ABC News and also the fact that CBS News went from 5 million viewers a night to 4 million probably hasn't held the value of ABC. So my guess is they keep thinking, all right, someone's offered us. The problem is the only buyers right now are smart.
- [53:54]
Ed
That's good. You should be one of those smart buyers.
- [53:56]
Scott Galloway
Yeah, but the problem with smart buyers is they want to pay market value. What he's looking for is some drunk kid with a rich father to come in and overpay for the thing he's hoping for, a Skydance, Paramount, Warner Brothers, like valuation. And no one's going to give him that because all the people who will buy these linear assets actually have calculators and they want, and to be fair, these things, it's very dangerous right now CNN, I think CNN's viewership is off 30 or 40% year on year. So they keep waiting for a better price and every day the price probably gets worse. So, yeah, at some point I think you're right. I think there's probably an opportunity for a PE player to come in and.
- [54:42]
Ed
Say, here's A shitty, shitty offer. You must take it.
- [54:45]
Scott Galloway
Well, I'm sure they've already had those or for Versant to come in and take this out. But any price at this point is accretive to the core business in terms of shareholder value. I'm excited to see what happens for the next 12 to 24 months. I think it's a buy here. I like this. I can never find value anywhere. I like your idea around these software stocks that may have been over punished. And I do think Disney is an opportunity Disney's going to have. Usually you don't get an activist with a new CEO because they like to give the guy the benefit of the doubt as a honeymoon phase. But I wouldn't be surprised if someone, a Peltz like figure or somebody is taking is starting to acquire or aggregate shares here. If this thing keeps going down, somebody's going to show up.
- [55:34]
Ed
Josh d' Amara just needs to prey on either a drunk child of a billionaire showing up or a Saudi crown prince of some kind.
- [55:43]
Scott Galloway
Saudi can't own it. Gulf can own ABC News.
- [55:46]
Ed
Fair enough. We'll see. But fair enough.
- [55:48]
Scott Galloway
I think they should have that anchor. I forget that guy. He looks ethnically ambiguous. I think they should have him do the evening news with his shirt off if they want to juice ratings. That guy's dreamy. I'd like to see him take up hockey and fuck a bunch of dudes in a locker room. Is that wrong, Ed?
- [56:02]
Ed
Not wrong. I think that might be your fifth heated rivalry mention in the last couple weeks. I'm starting to think that you are binge watching this and watching it again.
- [56:12]
Scott Galloway
You watch four episodes of that thing in the row. You rethink everything, Ed. You rethink.
- [56:18]
Ed
I can't wait.
- [56:19]
Scott Galloway
Everything.
- [56:19]
Ed
Okay, let's move on to our final story here.
- [56:21]
Scott Galloway
That was a good segue. Let's get him off the gay hockey. Let's get him off back price earnings Antitrust here.
- [56:31]
Ed
Anything quick, go to commercial. We'll be right back. And for even more markets content, sign up for our newsletter@profgeumarkets.com Subscribe.
- [56:51]
Scott Galloway
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- [58:31]
Ed
Nine years of bring back the snack wrap and you've won.
- [58:34]
Scott Galloway
But maybe you should have asked for more. Say hello to the Hot Honey Snack wrap. Now you've really won. Go to McDonald's and get it while you can.
- [58:49]
Ed
We're back with profit markets. Anthropic used the super bowl to take a shot at OpenAI. And it worked. The company dropped its ad early, building buzz before the game and remind reminding everyone that the super bowl is still one of the biggest marketing stages there is.
- [59:04]
Scott Galloway
How do I communicate better with my mom? Great question. Improved communication with your mom can bring you closer. Here are some techniques you can try. Start by listening. Really hear what she's trying to say underneath her words. Build conversation from points of agreement. Find a connection through shared activity, perhaps a nature walk. Or if the relationship can't be fixed, find emotional connection with other older women on Golden Encounters, the mature dating site that connects sensitive Cubs with roaring cougars. What would you like me to create? Your profile? What's the difference between me and you?
- [59:55]
Ed
You, Zach for our audio listeners, the tagline at the end reads ads are coming to AI but not to Claude. As a reminder, OpenAI recently announced that it would begin testing ads on ChatGPT. That news caused a stir online as Sam Altman once described ads as, quote, a last resort for us as a business model. So Scott Big Win big for Anthropic. This ad went mega, mega viral. Everyone is dunking on OpenAI. Everyone's making fun of OpenAI with these ads. Sam Altman had a pretty hilarious and pathetic tweet that he put out which we can get into. Let's start with your initial reactions.
- [60:33]
Scott Galloway
It used to be that the right commercial could change a business's trajectory. When Hyundai came out with this commercial saying 7 year warranty, Coca Cola's. Occasionally there's an ad that is so breakthrough and grabs people emotions. It just just juices sales and rejuvenates the company. That almost never happens anymore because people aren't watching. The audience has become so fragmented and people immediately go on their social graph or online and due diligence on whether this product actually is worth it or not. This is the biggest moment in broadcast advertising as it relates to impact on the markets we've seen in a long time. This is the moment that Anthropic begins an ascent in valuation. Past OpenAI and in my course on brand strategy we have a bunch of different models and constructs for evaluating brand and strategy. And one of them I call laddering. And that is you say we're this, they're this. And you find points of differentiation that pass three hurdles. Differentiation, Are we truly different? Relevance, does anyone care? And three, is it sustainable? So we're Democrats, we're for bodily autonomy, therefore denying a woman's rights. Is it differentiated? Yeah, we are truly different on this. Is it relevant? No, we'd like to think it is. But family planning and abortion rights never show up at the ballot box as much as we'd like to think it's going to happen this time and is it sustainable? Can we own it? Anthropic has done laddering here. They've said, okay, we're not going to have ads. That is a point of differentiation because the number one use case for AI at corporations is what? Ed? Very good, Ed. Okay, we'll all go by service now.
- [62:13]
Ed
But anyway, so I don't know, what's the answer?
- [62:15]
Scott Galloway
It's therapy.
- [62:16]
Ed
Oh, therapy.
- [62:17]
Scott Galloway
People are revealing their most intimate questions and concerns to AI. And the thought that this person is going to take all your personal information and start saying, oh, you seem to be suffering from depression. Have you thought about Lexapro from Hoffman Laroche? I mean, you know what you're getting with Google, you know that they're going to take you to a place they can further monetize and mix in some util information. We have been opening up so much about our most personal information to AI, that the thought that they're going to put in ads, it really is different. Anthropic has said, no, we're not going to do that. It's hugely relevant to people because people are already scared and worried about AI and the thought that they're going to start taking all of our history and all of our most intimate secrets to prostitute us to advertisers. And it's also most likely sustainable. I think it'll be difficult for Sam Altman to go back on it because he has all these growth projections he has to live up to, including going back. Back on his word and saying he wasn't going to do porn. Now he's saying he's going to do porn. And the execution here around these ads, oh, my God, this is Whedon Kennedy, like Nike ad material. Whoever did these ads, this ad is going to get. If the super bowl is like the super bowl usually is, it's a shitty game. This ad is going to get more attention than the game itself. This is a pivotal moment that still shows that advertising can be relevant. Whoever's the agency here, their phone is ringing off the hook. They're getting. There's always kind of a hot agency for a while that they do at a great ad campaign. And people are under the illusion that these guys, if we bring in these people and they wear black and they party with us and they're really attractive, so we'll waste a lot of money on them that they can rejuvenate our business. This is a big moment for Anthropic and this execution. They've already gotten 10 times the ROI on the super bowl commercial before it's even run. This is. I'm blown away, Ed. I'm totally blown away, 100%.
- [64:21]
Ed
Sam's response was hilarious. He put out an essay on Twitter. This is Sam Altman, the CEO of OpenAI. He said, quote, first, the good part of the Anthropic ads. They are funny. And I laughed. But I wonder why Anthropic would go for something so clearly dishonest. He goes on to say, I guess it's on brand for Anthropic Doublespeak to use a deceptive ad to critique theoretical deceptive ads that aren't real. But a Super bowl ad is not where I would expect it. We are committed to broad democratic decision making in addition to access. One authoritarian company won't get us there on their own, to say nothing of the other obvious risks. It is a dog. Blah, blah, blah, blah, blah. No One fucking cares. Sam Altman, he got roasted and he's trying to make this argument that, you know, it's not true how they're portraying the ads in ChatGPT. We're not going to be surreptitiously putting the ads in there and trying to recommend them while you're doing your therapy, which may be true. Maybe the ads will be a lot better than that. Maybe it'll be a lot less dystopian than Anthropic has suggested with this ad. Point is, no one fucking cares. It was a good ad. It was funny the way that they even nailed down the voice of ChatGPT, which is this like awkward, monotonous, sycophantic, very annoying voice that everyone has gotten sick of. Like, it's just a good ad and they clearly are demonstrating they have their finger on the pulse here and that's all that matters. And so for Sam Hoffman to come out and give this essay on critiquing the details of this ad, it's like, this is some of the worst PR comms that we've ever seen. And I mean, it just rubs salt into the wounds everyone's turning on. OpenAI anthropic is emerging as the winner. You said that this was like the coming of age moment for Anthropic. I totally agree. For me, it has parallels to the Apple ad. The 1984 Apple ad, which was regarded by many as like the greatest commercial of all time, also aired during the super bowl and also took a direct shot at a competitor, which at that time was IBM. And the whole idea was saying through, you know, undertones, the sort of subtext of the ad was that IBM is Big Brother. They're going to have this mind control, they're trying to take over the world. Apple's going to be the company that liberates you with personal computers.
- [66:51]
Scott Galloway
How? Prevail. On January 24th, Apple Computer will introduce Macintosh and you'll see why 1984 won't be like 1984.
- [67:05]
Ed
It's just a good ad. It's like a good message. It's something that resonates. That's exactly what Anthropic has done. And you know, I said a few months ago, I think you agree, Anthropic is going to be the heavyweight champion of AI in 2026. The narrative on AI is beginning to waver. And a trillion dollar AI spending plan, it just isn't quite what it used to be. It doesn't sound as sexy as it did say 12 months ago. And that may well, mean pain for OpenAI, which has of course been leading this charge. But more importantly, it might mean new opportunities, opportunities for other companies that are taking a different approach. It might mean the beginning of the rise of a new heavyweight champion, a new AI winner. It does look like that winner could well be anthropic. And I feel like this is kind of the moment where everyone realized, yeah, this is actually happening.
- [68:09]
Scott Galloway
I don't think Altman was well advised here. I think he should have said, when you're the market leader and they're still the market leader, you don't reference the competition.
- [68:17]
Ed
Yes.
- [68:18]
Scott Galloway
Don't say you never talk about them. And if he'd been asked about it, he should have said, I've seen it, it's a great ad. That's it. That's it. Because anything beyond that looks defensive.
- [68:27]
Ed
Totally agree.
- [68:28]
Scott Galloway
And he might put out a separate release talking about, okay, I want to clarify some things around our ads. What they will be used for, what they won't be used for, where they can add value. Anything around medical information, anything around relationships, we will not be inserting. But when you respond to the number two player, which they still are right now, you're basically saying, I'm scared. Hertz never referenced Avis. Koch never referenced Pepsi. You don't ever reference your competition when you're the number one player. And he just comes across, he comes across as defensive and he's been caught flat footed. I get it. But he should, his only thing should have been, yeah, of course I saw the ad. I think they did a great job. Good for them, nothing more. And then maybe give it some distance and then put out something about, all right, let's talk about our advertising. What it will be used for, what it won't, why we think it's such an incredible opportunity to add value to our customer base. Why it'll be a huge revenue opportunity, let's be honest. And what it will not be used for, such that you can, you know, if you're talking about, we will, we will not take pharmaceutical ads. I'm obsessed. Whenever I get any of my health information, I upload it to ChatGPT. I want to know there's no pharmaceutical influence here telling me, oh, okay, you, you know, whatever it is, you have shoulder pain, I just don't want, I want to know that they're doing their best to give me. I mean, AI should be the clean, well lit place of the Internet to a certain extent around information. It gets it wrong. But their heart should be in the right place. So yeah, this is a seminal. I believe this is a seminal moment. I believe that when we look back on this, this will be seen as a big moment in the AI wars.
- [70:21]
Ed
Would you agree? This could be like the 1984 Apple ad moment. I feel like that was Apple's mom, the computer revolution. I mean, this is it, right?
- [70:29]
Scott Galloway
It's a great analogy. This is that kind of landmark broadcast advertising moment.
- [70:34]
Ed
It's very exciting. It's also kind of interesting to see the return of advertising, which I feel like people have been sort of counting out that advertising is kind of dead or it's boring and, you know, the Mad Men era is over. But it's kind of fun and exciting to see what a great ad can do for your business. I mean, we'll see what the ROI will actually be. But it's already gotten millions of views. And this is before it was actually aired on the Super Bowl. This was just the pre release. They just posted it on social media, got millions of views across the Internet in literally under 24 hours. And I find it exciting and cool. And I'm sure if you're working at an ad agency, it's also fun and exciting and cool to see just such a good. Clearly created by humans as well. Like, this was clearly someone who's used ChatGPT a lot, who understands the nuances and annoyances of the product. Like, this is a very human commercial and they've come out there and they put it out there. It's resonated so much with so many people. It does feel like this is kind of like the resurgence of the golden age of advertising. And I just love that it's going to be on the super bowl, which of course is the grand stage for advertisers around the world.
- [71:45]
Scott Galloway
By the way, the creative partner, it was produced by Anthropic, but the creative agency is a group called mother, which is independently owned. It's not owned by one of the conglomerates. This is going to be, my guess is the next year they'll sell because everyone will want to talk to them and they'll realize it's the right time to cash out. By the way, let's bring this back to me, Ed, please. When I was right out of business school, I met this guy named Warren Hellman, and I'd started Profit, my brand strategy firm. And he said, I've got a great assignment for you. And he goes, I'm going to pay you to go to Levi Strauss and company board meetings. I don't want you to speak to anybody. I Don't want you to be politicized. And at the end of the board meeting, I want you to stand up, up and give us your honest, thoughtful advice. And I was like, 29. I mean, that's a dream job, right? And they invited two other people for their unfiltered advice. For the next two years of board meetings, they invited a guy named Leo Lee Clow, who was head of TBW I Day, and a guy named Nigel Bogle from the hot agency of that time, bbh. And we listened to the whole board meeting, and then we'd each get 20 minutes to just stand up and give our piece. And so it was a strategy guy, yours truly and two creative guys, agencies. I haven't seen an ad man in a board meeting in 20 years. No one gives a fuck what agency people think anymore. And if you go to I've been going to Cannes for a long time. Every year, the amount of beach space, the fabulousness of the parties gets smaller and smaller for wpp, ipg, Omnicom, Havas, and it gets bigger for the tech guys. I mean, the lack of intellectual currency and influence of the ad market is just. It's just shriveled up and gone away. It's striking how little people care about their viewpoints. Ad agencies used to be in every strategy meeting, they used to be seen as a key thought partner. Now literally no one gives a shit what they think.
- [73:38]
Ed
But maybe this is going to change things. Probably not, but maybe this is a blip.
- [73:43]
Scott Galloway
This will mother's going to get a ton of business, unearned business, because everyone will be like, we hired the same agency that did the Anthropic ads. And then they're going to sell to one of the big conglomerates and go open a bar in the Bahamas or something. That's what I would do. That's what I would do. Start a hockey team.
- [73:59]
Ed
I love that. Okay, let's take a look at the week ahead. We'll see the employment report and consumer price index for January. We'll also see earnings from Apollo, Lowe's, Coca Cola, BP, Spotify, CVS, Robinhood, Ford, McDonald's, Shopify and Airbnb. The earnings continue to roll in. Scott, do you have any predictions?
- [74:19]
Scott Galloway
We've already made it. In 12 months, Anthropic is going to be worth more than OpenAI. This is a big moment. Anthropic has gone after the enterprise market. Smart move. OpenAI has kind of dominated consumer, sort of. The analogy I would use is 25 years ago, Dell versus Gateway, and Gateway went consumer and Dell went small, medium sized business. We know how that turned out. Anthropic has gone enterprise. OpenAI has built a consumer business. And I think there's been a series of missteps at OpenAI. I think Anthropic is going this way up and OpenAI is going down. And within 12 months I think Anthropic's raising at 350. OpenAI claims are raising at 850 within a year and I don't know what the relative numbers will be, but in a year Anthropic is going to be worth more than OpenAI.
- [75:15]
Ed
This episode was produced by Claire Miller and Alison Weiss. Mia Silverio is our research lead. Our research associates are Isabella Kinsel, Dan Shalon and Kristin o'. Donoghue. Benjamin Spencer is our engineer, Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to welcome to Profg Markets from Prof. G Media. Tune in tomorrow for a fresh take on markets. Love as the world. And the.