Figma’s IPO is Finally Here, Fed Holds Rates Steady & Amazon’s $20M AI Licensing Deal with the NYT

Summary

Prof G Markets Podcast Summary: July 31, 2025

Hosted by Scott Galloway and Ed Elson, "Prof G Markets" delves into the latest developments affecting capital markets, offering insights to help listeners build financial literacy and security. In the July 31, 2025 episode titled "Figma’s IPO is Finally Here, Fed Holds Rates Steady & Amazon’s $20M AI Licensing Deal with the NYT," Scott and Ed explore significant market events, regulatory impacts, and major corporate deals shaping the financial landscape.

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Market Overview

Ed Elson opens the discussion with a snapshot of the previous day's market movements:

• S&P 500 and Dow Jones Industrial Average experienced declines following the Federal Reserve's decision to hold interest rates steady.
• NASDAQ saw gains ahead of earnings reports from major tech giants, notably Meta and Microsoft. Meta's stock surged by 10% in after-hours trading after reporting a 22% year-over-year revenue increase, surpassing analyst expectations by nearly $3 billion. Similarly, Microsoft saw a 7% increase after announcing a 34% year-over-year growth in Azure revenues and raising their capital expenditure guidance by $10 billion for the year.

Notable Quote:

"With Azure revenues up 34% year over year, the company also raised their CapEx guidance for the year by $10 billion."
—Ed Elson [04:50]

Scott hints at upcoming discussions:

"Tune in on Monday for a full breakdown on all of the big tech earnings from this week, including tonight's reports from Amazon and Apple."
—Ed Elson [04:55]

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Figma’s Highly Anticipated IPO

A major segment of the episode centers on Figma's IPO, a significant event in the tech sector for 2025.

Key Points:

• Figma, a prominent design software firm, is set to go public with a target valuation of nearly $19 billion.
• The IPO is expected to raise approximately $1.2 billion, with initial shares priced between $30 to $32, up from the original $25 per share after strong demand.
• The offering is nearly 40 times oversubscribed, marking it as potentially the hottest IPO of the year.
• Both hosts express strong bullish sentiments, predicting a massive first-day pop in Figma's stock price, drawing parallels to past successful IPOs like Airbnb and Reddit.
• Scott Galloway emphasizes the company's robust fundamentals, citing Figma's high net retention rate of 134%, placing it in the top 5% of all SaaS companies.

Notable Quotes:

"Figma has swept in and has said, okay, there is a middle ground. There is an E class in between the C and the S class. It's a Mercedes metaphor."
—Ed Elson [06:20]

"I'm going to go 30% up."
—Scott Galloway [15:34]

"This is crafty markets IPO of 2025, unless something else blows our socks off, we're excited about this one."
—Ed Elson [15:14]

Discussion Highlights:

• Ed shares personal anecdotes about the overwhelming demand, illustrating the IPO's popularity.
• Scott underscores Figma's strategic importance in the design software market, positioning it as a disruptor that challenges established giants like Adobe.
• The hosts debate the impact of regulatory actions, particularly how EU antitrust decisions prevented Adobe from acquiring Figma, thereby fostering a competitive environment beneficial for investors and the broader market.

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Federal Reserve’s Interest Rate Decision

The episode also delves into the Federal Reserve's recent decision to hold interest rates steady, marking the fifth consecutive meeting without a rate cut.

Key Points:

• The Fed maintained the target interest rate at 4.25% to 4.5%.
• Notably, two Fed governors dissented, advocating for an immediate 0.25% rate cut—a first since 1993 where multiple governors opposed the majority.
• Ed anticipates no rate cuts until at least September, emphasizing Jerome Powell's cautious stance and his reliance on forthcoming economic data, particularly the Q2 GDP report and inflation data.
• Despite a 3% GDP growth in Q2, Ed argues the figure is misleading due to distorted trade balance metrics influenced by recent tariffs, suggesting the need for more definitive data to inform policy decisions.

Notable Quotes:

"Jerome Powell is extremely cautious. He said the words wait and see 11 times in the press conference."
—Scott Galloway [08:00]

"This is a case study in the good. Regulation and competition create economic growth and wins across our tax base, employee base and give people better products at a lower price."
—Ed Elson [14:47]

"The question is whether or not Jerome Powell is going to look at this GDP data and decide yes, I should cut rates. And the answer to that question is almost certainly no."
—Ed Elson [11:50]

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Amazon’s $20M AI Licensing Deal with The New York Times

In the realm of corporate agreements, Amazon's $20 million licensing deal with The New York Times marks a significant development in AI content utilization.

Key Points:

• Amazon will pay $20 to $25 million annually to license The New York Times' content, enabling AI models like Alexa to use Times reporting in responses.
• This deal is highlighted as the first AI content licensing agreement from The New York Times, setting a precedent in compensating content creators for AI training data.
• Ed critiques the deal's magnitude relative to Amazon's overall revenue, noting that $20 million is less than 4% of Amazon's $640 billion revenue in 2024.
• The discussion raises concerns about whether the deal adequately compensates for the value of content in AI development, suggesting that true compensation could warrant hundreds of millions to billions.
• Market reaction was tepid, with The New York Times' stock initially rising by 4% but later closing down 1%, indicating investor skepticism about the deal's long-term benefits.

Notable Quotes:

"The markets told us the real story here. The New York Times stock initially jumped on the news about 4%, but by market close, that had completely reversed and the stock ended down 1%."
—Ed Elson [14:30]

"This AI companies could not survive if they didn't have access to the content that lives across the Internet."
—Ed Elson [13:40]

"For Amazon, it is equivalent to two months of revenue from one single client in the AWS division."
—Ed Elson [13:30]

Discussion Highlights:

• Ed emphasizes the disproportionate nature of the deal relative to both companies' valuations and revenues.
• The hosts debate the broader implications for content creators and AI companies, questioning the sustainability and fairness of such agreements.
• The episode underscores the ongoing tension between content valuation and AI's reliance on expansive data sources.

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Conclusion

The July 31, 2025 episode of "Prof G Markets" provides listeners with a comprehensive analysis of pivotal market events:

• Figma's IPO emerges as a standout, promising significant returns for investors amid strong demand and solid fundamentals.
• The Federal Reserve's cautious approach to interest rates reflects ongoing economic uncertainties influenced by trade policies and lagging economic indicators.
• Amazon's AI licensing deal with The New York Times sparks a critical conversation about the valuation of content in the age of artificial intelligence.

Through engaging discussions and insightful commentary, Scott Galloway and Ed Elson equip their audience with a deeper understanding of the forces shaping today's financial markets.

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For more insights and daily updates on the capital markets, financial literacy, and security, tune into "Prof G Markets" every weekday on the Vox Media Podcast Network.

Transcript

[Ed Elson]

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[Scott Galloway]

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[Ed Elson]

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[Scott Galloway]

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[Ed Elson]

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[Scott Galloway]

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[Ed Elson]

How are you, Ed?

[Scott Galloway]

I'm doing well. How are you?

[Ed Elson]

I'm good. I'm indoors where my air conditioning is screaming at you. You're asking a lot of me. I may break down at any moment. It's about 140 degrees here at Ed, it's pretty hot here in New York.

[Scott Galloway]

It's terrible. Is your AC working? Is that the problem, or.

[Ed Elson]

At the moment, but fortunately I only pay $11,000 a month in HOA fees. So it's, you know, you get what you pay for. Which means my air conditioning can go out at any moment.

[Scott Galloway]

Yeah. Love it. Well, we want to get your take on Figma about to go public. I'm very bullish. I've made my case. What are your views on this ipo? What do you think we can expect?

[Ed Elson]

Well, two people that I trust immensely. The first is Katherine Dillon, who teaches a course on visual language at People Don't Know. Ed Ellison gets some of the credit. Scott Galler gets most of the credit. But the real strength here is Katherine Dillon, and she's a professor of the arts at Tisch, and she's not easily excited. And when we talked about Figma a couple years ago, she said the first thing I have my students do is learn figma. And then you weighed in saying that you thought it was a great ipo. And I've been looking at it, by the way, just in the spirit of full transparency, I'm desperately trying to find shares in this thing. And the funniest thing was I called a friend or a guy I've dealt with at an investment bank that I have some money with, and he picked up the phone and said, scott, I cannot get you shares in figma. He knew exactly where I was calling.

[Scott Galloway]

He knew he knew I was calling. Wow.

[Ed Elson]

Look. So in a world of AI, everything looks kind of anodyne. And you can create a website, but design still is at an enormous point of differentiation. And if you look at both Atlassian and IBM, and I thought this was telling, the ratio of designers to coders that they hire has gone from like 1 to 50 or 1 in 70 to 1 in 10. And that is the corporate world realizes the power of design. Adobe, which is an incredible company, some people would argue has become over engineered. It's got $150 billion market cap. They kind of own the Canva came out. I would argue Canva is sort of the entry level kind of clip art player. And then Figma has swept in and has said, okay, there is a middle ground. There is an E class in between the C and the S class. It's a Mercedes metaphor. But this company is just incredible. If you look at Uber, Uber burned $21 billion from 2009 to 2021. This company has raised 750 million and has a billion and a half on Its balance sheet, meaning that it's operationally run incredibly well. And then there's this. I think it's called the score or the SAS score, I forget what it's called but essentially you add or the rule of 40, you add the growth rate plus the profitability of the operating margins. And if it's above 40, you have a great SaaS company. This company is trading at 64, which puts it in the top 5% of all SaaS companies. And then I always used to evaluate at the end of the year L2's metrics. My subscription based analytics company based on logo renewal and dollar renewal or what they call net retention. And the net retention or the dollar renewal at Figma is 134%. Meaning that if a customer is spending $100 on Figma the next year and you take out people who don't renew, on average they're spending 134 or $34 more per year. The metrics on this thing are just, are incredibly strong. It's in a category that's growing. The metaphor I would use is that it's OpenAI to search. And that is, I think Adobe is going to be just fine. It's still the market leader, a little bit over engineered. And the AI or the open AI is stigma coming in with kind of a more, I don't know, collaborative. That's what they're sort of known for. They're really good at collaboration. 80% of the Fortune 2000 are using the product. I think this, and I want you to talk about this, I think this is the. Every year we pick an ipo. Last year we picked Reddit, the year before Lemonade, the year before Airbnb. This is my pick for IPO of the year. I think this thing is going to scream out of the gates.

[Scott Galloway]

Yeah, I'm 100% with you. I think we're looking at the IPO of the year and we'll see throughout the day any predict. I mean it sounds like you think the stock is going to see a massive pop, is that right?

[Ed Elson]

So managements have learned that in an IPO it's not only a fundraising event, but a branding event and they're willing to price it below the market. I have, as I referenced before, I've been calling around trying to find shares. I can't find them. And the most recent number I've heard is that this IPO, a good IPO is usually 12 times oversubscribed. People put in an order for a million dollars thinking they'll get Clipped back. And so it's 12x over subscribed. The latest number I heard is this. This thing is 40x over subscribe. So I think this spring has wound so tight and for people who are fortunate enough to get into this ipo, I think you could see, and it's dangerous for numbers on it. I think this thing could explode. I think this is the. The biggest IPO of what I'll call a real company, not a fashionable crypto company since a Reddit or an Airbnb. Yeah, I think my prediction here is this thing is up dramatically on the first trade. What are your thoughts? What do you think's going to happen here?

[Scott Galloway]

Massive pop. Huge pop. No question about it. I mean, there's the demand that we're seeing, as you say, 40 times oversubscribed. I love that anecdote that you tried. I mean, if anyone should be able to get in to the latest tech ipo, it's you. So the fact that. And the fact the most.

[Ed Elson]

My brother, Goldman and J. If they only. If they only cared what AD Elson thought, I should absolutely be in this IPO. But no, they want to go with people like BlackRock and Blackstone.

[Scott Galloway]

The fact that you give Goldman a call and not only is the answer no, but he knows what the question.

[Ed Elson]

That'S where I'm going 100%.

[Scott Galloway]

That, to me, tells me that the demand is just through the roof on this thing. So that's the demand side of it. But then you can also just look at the fundamentals of it. Just think about a couple of years ago when we were discussing the acquisition of this company by Adobe, and Adobe wanted to buy the company for $20 billion. And, you know, we talked about that at the time, didn't go through because the EU antitrust division didn't let them, which, by the way, is a great thing for retail investors. And that's another Talk track. But $20 billion back in 2023, I believe, and since then, revenue's gone from $500 million to $820 million. And yet the company's being priced below the acquisition price. We're looking at less than $19 billion for this thing. So both on a fundamentals level and in terms of the hype and demand, I think you're going to see a huge pop. We'll see. I hope we don't get proven wrong, but that would be my guess.

[Ed Elson]

Yeah, but the observation here, other than a desperate professor trying to find. Trying to find shares in a hot ipo, is the learning here is that regulation and antitrust are really important. And there's a certain trope fomented by the far right and by incumbents that oh no, you don't need antitrust. Let let your thoroughbreds run and acquire companies. I believe the acquisition offer was late 2022 and it was valuing the company at 50 times revenues. Now investors, if you can get in on this, are going to be able to buy the company for 16 to 20 times. And so investors win. Here investors have an opportunity to invest in a company that's growing faster, that it's a disruptor and they get access to a different stock to diversify in the space of design as opposed to just piling into Adobe, which is a great company. Let's talk about clients now. Organizations. Corporations have a second competitor that they can negotiate with, which forces Adobe. Adobe Express is much more collaborative. The reason why they're much more collaborative and they've invested a shit ton of money in R and D to become more collaborative is they feel Sigma nipping at their heels. Sigma, what's so interesting about this is Figma got a billion dollar breakup fee. They took 750 million of that imported into R&D in 2020, 2024. So you saw R and D spending go up, employees win. Typically when a company is acquired, 18% of the people at the acquired company end up leaving. In an IPO, you end up with hiring of 23%. So it's an increase in employment. So clients, corporations win because there's more competition, which means people have to come up with better products at a lower price. That is innovation. Investors win because they have another opportunity to diversify and invest in a pure play that's growing faster and the employment market wins more tax revenue. I mean this is just, this is why competition is so important. And the lesson here is that good regulation matters and it works. And what's most interesting I find about this whole thing is that it wasn't our FTC or DOJ that created a great independent company and competitor that grows the economy. It was EU regulators and that is the FTC and the doj and what it can best be described as a deep slumber of antitrust in the United States was going to let this go through. And then the EU said sorry, girlfriend was going to let this go through. And because they wouldn't let it go through, the deal didn't go through. And here we are with an opportunity to invest in a company at 18 times revenues as opposed to 50 times revenue.

[Scott Galloway]

So EU, remember what people said, people said, oh, the EU's suppressing innovation. Meanwhile, Adobe invests more in R and D. You see massive AI investment from Figma and now you get to invest in this company and you don't have to. I mean, now you can get some real exposure to this versus again, as you said, piling into Adobe. And that would have been your option otherwise.

[Ed Elson]

Yeah. And look, this is, this is a case study in the good. Regulation and competition create economic growth and wins across our tax base, employee base and give people better products at a lower price. So let's take a guess. So I'm comfortable saying that this is crafty markets. IPO of 2025, unless something else blows our socks off, we're excited about this one. Let's take a guess. First trade. What do you think? It's up from the pricing.

[Scott Galloway]

I'm going to go 30. 30% up.

[Ed Elson]

Yeah, that sounds right. I'm going to go.

[Scott Galloway]

What do you think?

[Ed Elson]

I'm going to go 40 or 50. I think the spring is wound so tight here. There's been such a. Not only is the mark is there a dearth of IPOs, as you have pointed out, there's a dearth of great companies going public that aren't fashionable. Not to shitpost on circle, but it's fast. Crypto is fashionable right now. This is not fashionable. This is just a great company with great underlying fundamentals that can sort of justify a above market valuation. So I'm going to take the over under here and I'm going to go that. I think it's going to be higher than 30%. I think at some point during the day it'll be up 40 or 50% or more. This feels very Airbnb ish to me.

[Scott Galloway]

Watch the stock tank.

[Ed Elson]

There we go. There we go. Property markets.

[Scott Galloway]

Good. Remember the inverse index?

[Ed Elson]

Yeah, There you go.

[Scott Galloway]

Well, now I'm really praying for a stock pop. Thank you for your time, Scott.

[Ed Elson]

Thanks, brother. Good to see you.

[Scott Galloway]

Good to see you. Bye. Bye. After the break, a look at the Fed's interest rate decision. Stay with us.

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[Scott Galloway]

Compensation to promote lpl. Investing involves risk, including potential loss of principal. LPL Financial LLC Member Finras IPC we're back with Prof. G Markets. The Federal Reserve held interest rates steady for its fifth straight meeting, however, two Fed governors pushed for an immediate quarter point rate cut. That is the first time since 1993 where more than one Fed governor has dissented. Well, first off, we're going to take a victory lap. Back in May when most of Wall street agreed that we would get a rate cut in July, I took the other side of that bet. I predicted we would not get a July rate cut. I predicted that the earliest time we would see rates come down would be September. The expectations for a rate cut, which most traders believe will happen in July, that actually came down a little bit. There was an 80% probability of a rate cut coming in July and came down to 70%. So the net net is there is less of an expectation that we will get rate cuts soon in the summer, but it's still sort of a high probability. They think 70%. That's what the markets believe. I'm going to take the other side of this. The vibe I got here was that Powell is extremely cautious. He said the words wait and see 11 times in the press conference. And I think what he's doing is he's clearly waiting to get the data. He wants to see what is the actual impact of these tariffs. And we haven't seen that yet. So my prediction after this press conference, I think we're not going to see a rate cut until September because I think Jerome Powell is waiting for more data. Specifically, I think he wants to see the Q2 GDP report. And that's not going to come out until the end of July. And my view is only then will he decide that he has enough data to actually make a decision, which would mean that the next time that he could potentially cut rates, if that's all true, would be September, could be possibly even later. But my prediction, this isn't going to happen. We're not going to get any cuts until September at least. So there you have it. No rate cut. We're still at a target rate of 4.25 to 4.5%. And according to Jerome Powell, the Fed has, quote, made no decisions about whether to cut rates in September. Now, why did he hold rates steady? Well, as I said before, I think Jerome Powell wanted more data. He wanted more information because as we've discussed many times on the show, if you implement a tariff in April, you're not going to see the economic impact until sometime in the late summer or in the fall because it just takes a while for the cost of the tariffs to funnel through. So if you were to cut rates in July, you would essentially be making A decision based on zero relevant information. And as we know, Jerome Powell likes to make informed decisions. He likes to see the data and then decide. And so that's why a rate cut wouldn't make sense here. Now, the question then becomes, when will Jerome Powell decide that he is adequately informed? And that is an important question, because as we also saw yesterday, the GDP data for the second quarter just came out, and it looked pretty good. GDP grew 3%, which reversed the contraction we saw in the previous quarter, and it also blew past expectations. So does that mean then, that Jerome Powell now has his evidence? Does he have proof that America's doing well and that tariffs are no problem? Well, probably not. Because unfortunately, the reality of this GDP report is that it is just as noisy and misleading as the last one. You might remember in Q1, GDP fell 0.5%. And a lot of people were quick to say, look, the economy's doing badly. But as we discussed, that number was actually quite misleading. It was, in reality a byproduct of this wild swing in our trade balance, where businesses imported tons of new products in anticipation of the tariffs, which had this distorting effect on the gdp. Without getting too into the weeds, Imports are a tricky thing to measure. They're technically subtracted from GDP in the GDP equation, but they're supposed to be accounted for in our measures of consumption and inventories. The trouble is, the government just doesn't have a great way of measuring inventories. They have to rely on estimates, which is why we saw this huge mismatch in the data last quarter, which made things look way worse than they actually were. So it wasn't that the economy actually declined 0.5%. It's that the volatility in trade made the data extremely noisy and as a result, unhelpful. And that's why you're likely to see some serious revisions to that data in the coming months. So with this GDP report, the same thing is happening, but flipped. Tariffs have been implemented and imports have dramatically declined. So now we have the same mismatch, but in the other direction. And that's why GDP grew so sharply. Now, why does any of this matter? Well, because the question is whether or not Jerome Powell is going to look at this GDP data and decide the yes, I should cut rates. And the answer to that question is almost certainly no. The data is way too noisy, and it doesn't really tell him anything. He needs to see something else, specifically data that tells him the story of what tariffs are doing to prices. Because, remember, that is what this is all about. It's all about inflation. So yes, he might cut rates in September. The markets are saying 50, 50. I'm pretty skeptical. But if he does, it won't be because of this report. It'll be because of the inflation data, most likely the PCE data, which is set to come out today. But even if that's good, it's highly possible he'll look at it and conclude, actually, this still doesn't tell me the story of tariffs because as we've seen, the pass through is taking a really long time to show up and it takes even longer when your tariff policy is changing every five minutes. That's the story we're hearing in earnings this week. All of these companies saying, we haven't raised prices yet because we still don't really know what the tariff situation is, but the plan is to raise them. So is that story going to be told in this month's inflation data? No, it won't. So in sum, we're still not in a place that is all that different from where we were three months ago. The data still isn't telling us much. And if we believe that Jerome Powell will only cut rates once he knows what the data is telling him, once he knows what the real story of tariffs is, then I think if we were to place bets, we would have to bet that he won't cut rates next month. Once again, it's a toss up. The markets are split on this. But given what I think I know about the guy, and given what I think I know about the way he makes decisions, I don't think he's going to cut them. A high profile deal between a tech giant and a media heavyweight finally has a price tag. Amazon will pay the New York Times between 20 and $25 million per year to license its content. The deal allows Amazon to train its AI models on content from the Times and feature excerpts across its products. That means that Alexa can now respond to your questions using Times reporting. Okay, so this is the latest in this AI content licensing story that we've watched unfold over the past couple of years. As you probably already know, a lot of these AI chatbots have been scraping data from books and journals and newspapers. Basically, anyone who makes content and the people who make that content have understandably wanted to get compensated. And it's been a struggle. We've seen multiple lawsuits filed against the AI companies. We've seen actors and authors and journalists all coming together to say, hey, stop stealing our stuff. And then we've also seen some deals made. The financial Times, for example, struck a deal with OpenAI last year. So did News Corp. Reuters struck a deal with multiple AI companies. But this is the very first AI deal we've seen out of the New York Times. And the way that this deal has been presented, at least in the media, is that it is a big win for them. According to the Wall Street Journal, the deal is a, quote, meaty payday for the New York Times. According to the Verge, a big price tag. According to LinkedIn News, a mega content deal. And, you know, maybe it is for the New York Times, but I do think it's worth zooming out to consider what this means for the other party in this transaction, what this means for Amazon. For context, Amazon raked in $640 billion in revenue in 2024. AWS alone did more than 100 billion. This deal is worth $20 million, which means that for Amazon, it is equivalent to two months of revenue from one single client in the AWS division. And so you do have to ask yourself, is this really a big price tag? Did the New York Times actually win here? Well, you could certainly make the argument that they did. Again, $20 million for the new York Times is maybe a good amount of money. It's about 1% of its revenues. But even if that seems good to you, you still have to think big picture here. You have to consider what these AI companies would be worth if the data they used to train their models didn't exist. And the answer is zero. These AI companies could not survive if they didn't have access to the content that lives across the Internet. And that isn't to say that a company like OpenAI couldn't survive without the New York Times. But it is to say that OpenAI couldn't survive if the New York Times had banded together with every other publisher in America, and they all said in unison, no, you cannot access our content unless you pay us. That right there is the difference between a valuation of $300 billion and a valuation of zero. And so you have to ask, what would that contract be worth? Would it be hundreds of millions? Would it be billions? Would it be hundreds of billions? I don't know. But I'm pretty sure that whatever it would be, it would make a $20 million contract look like peanuts. I don't know for sure, but that would be my guess. So, sure, the New York Times had a meaty payday, but if the New York Times were serious about this, a meaty payday would not cut it. If the New York Times were serious, they'd be thinking of ways to double, triple, quadruple its market cap. That's what's at stake here. And once again, despite the flashy headlines, the markets told us the real story here. The New York Times stock initially jumped on the news about 4%, but by market close, that had completely reversed and the stock ended down 1%. Put another way, 20 million in revenue gained, 100 million in market cap lost. So this wasn't a win for the New York Times. This was an opportunity that they decided to miss. Okay, that's it for today. Thanks for listening to Profit you Markets from the Vox Media Podcast Network. I'm Ed Elson. Join us tomorrow for our conversation with Kevin Gordon, director and senior investment strategist at Charles Schwab.

[Ed Elson]

Lifetime. You have reunion.

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