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- [00:00]
Katherine Ann Edwards
AI agents are getting pretty impressive. You might not even realize you're listening to one right now. We work 24. 7 to resolve customer inquiries. No hold music, no canned answers, no frustration. Visit Sierra AI to learn more.
- [00:16]
Scott Galloway
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- [00:41]
Katherine Ann Edwards
This month on Explain It To Me, we're talking about all things wellness. We spend nearly $2 trillion on things that are supposed to make us well. Collagen, smoothies and cold plunges, Pilates classes and fitness trackers. But what does it actually mean to be well? Why do we want that so badly? And is all this money really making us healthier and happier? That's this month on Explain It To Me, presented by Pure Leaf.
- [01:12]
Ed Elson
Today's number 33. That's how many Silicon Valley leaders attended President Trump's tech dinner last week. The other number we could have gone with is 66. That's how many knee pack cards were given out before the meal.
- [01:28]
Scott Galloway
Money markets matter. If money is evil, then that building is hell.
- [01:32]
Katherine Ann Edwards
The show goes on.
- [01:37]
Ed Elson
Welcome to Property Markets. I'm Ed elson. It is September 9th. Let's check in on yesterday's market vitals. The major indices all climbed, and the NASDAQ hit a fresh record as traders cheered on a potential rate cut in September. Treasury yields failed to recover from last week's lows, following new employment data. More on that later. The dollar continued its decline. And finally, gold hit yet another record high, surpassing $3,600 per troy ounce for the first time. Okay, what else is happening? President Trump hosted 33 Silicon Valley leaders at the White House late last week. Among those included were Mark Zuckerberg, Tim Cook, Sundar Pichai, Sam Altman, Bill Gates, Sergey Brin, and renowned podcaster Chamath Palihapitiya, notably no Elon, no Bezos, and no Jensen Huang. The stated mission of the dinner was to discuss how to quote, power American AI dominance. But the real mission appeared to be something else. It appeared to be praise the president. Tim Cook effusively thanked Trump for, quote, setting the tone. Sam Altman thanked him for being such a pro. Innovation President Safra Katz, the CEO of Oracle. She thanked him for unleashing American innovation. Ultimately, Trump returned the favor. He said, quote, this is definitely a high IQ group and I'm very proud of them. So much to unpack here. Let's bring in Scott and see what he thinks. Hello, Ed.
- [03:12]
Scott Galloway
You are overpaid. You are totally overpaid. What do I do with all my money? I spent it on beer and pussy and I squander the rest.
- [03:22]
Ed Elson
Hey, Ed, where did you get that?
- [03:25]
Scott Galloway
This was a birthday present from a friend of mine.
- [03:28]
Ed Elson
For those who are just tuning in on audio, we've got a cuddly toy version of Scott Galloway talking to me about beer and pussy.
- [03:35]
Scott Galloway
There you go. There you go. I'm allowed, dude. I'm already financially secure. I can be canceled. You can't use those terms. You can still be canceled.
- [03:45]
Ed Elson
Quote, beer and pussy. It was a quote from my boss.
- [03:49]
Scott Galloway
There you go.
- [03:51]
Ed Elson
Okay, so, Scott, a lot to discuss here. We saw this tech dinner at the White House. All of the leaders of Silicon Valley came and dined with the President. I have a clip that I want to play for you and get your reactions. You're about to hear the voices of Bill Gates, Sam Altman, and Tim Cook, in that order. Let's play it.
- [04:11]
Scott Galloway
Thank you for incredible leadership, including getting this group together. Thank you, Bill. That was very nice.
- [04:17]
Sean O'Kane
Thank you so much for getting us all together. And thank you for being such a pro business, pro innovation president. It's a very refreshing change. We're very excited to see what you're doing to make all of our companies and our entire country so successful.
- [04:30]
Ed Elson
It's incredible to be among everyone here, particularly you and the First Lady. I've always enjoyed having dinner and interacting. I want to thank you for setting the tone such that we could make a major investment in the United States and have some key manufacturing, advanced manufacturing here. I think that says a lot about your focus and your leadership and your focus on innovation. Scott.
- [05:00]
Scott Galloway
Oh, God, Ernst. I mean, look. All right, so the argument is these guys are charged with being fiduciaries for shareholders and nothing has the ROI of regulatory capture and or getting on the right side of an autocrat. And they're doing what they're supposed to be doing in terms of shareholder value. They should never use the term stakeholder value again because they've decided that democracy, the well being of the other 490s and P companies, Rule of law, the notion that we don't play favorites, that we pass law systemically such that it's not socialist and you don't pick winners and Losers. I mean, all of this has just gone out the window. This is about nothing but shareholder value. And from Altman or Cook's standpoint or any of those folks, the only person there that I think is actually I give a bit of a hall pass to is I do think Bill Gates is trying to figure out a way to get USAID or certain components of it restored for the right reasons. I think he is focused on the health and well being of the world and has recognized that Trump is coin operated, except he's more ego coin operated. Tell him he's handsome, give him an award, thank him for his leadership and he rewards huge benefit to those companies at the expense of the rest of the S&P 490. Because if you look at these tariffs, they're purposely designed such they don't impact any of these companies. Nvidia, he's getting a Vigon, which is pure socialism, but Meta and Alphabet, really the tariffs don't slow them down, they slow down everybody else. And then the kind of the dark cloud here is that this is very reminiscent of 30s Germany where a lot of industry got in bed with Hitler and as a result used him as a political pawn to destroy the labor unions. And those companies that supported Hitler vocally outperformed the ones that didn't. And slowly but surely industry got weaponized and pretty soon there was no one to speak out. This is a dangerous precedent. I find all of this very disturbing and on a lighter note, just almost sort of comical because I think these guys are literally like throwing up in their mouth when they're there, being put on display. Your thoughts, Ed?
- [07:27]
Ed Elson
Well, I agree with all of that. I'd love to hear more about what you think happened before that dinner because all that I could think about when I was watching that is just the total loss of dignity among all of those men. Very powerful individuals. I said this on social media, but my view is the line between that dinner and sex work is extremely slim. And all of those guys did that on camera. And you know, Tim Cook going on there and saying how much he enjoys interacting and having dinner and thanking him profusely for the opportunity to dine with him. Sam Altman doing the same thing. I can't understand how they were able to bring themselves to do that. I mean, did someone take them aside before the dinner and say, hey, here's what you gotta do and then we're gonna give you a contract, but what you gotta do is you gotta get out there and we're gonna put it on camera and you're gonna say thank you Mr. President for everything you've done for us. Is that because if I'm them, I'm mortified at this. And the fact that the entire nation saw it, the fact that it was all on camera and these are guys who I assume kind of care about how they're viewed publicly or maybe not. I mean, how do we justify the loss of dignity in this situation?
- [08:48]
Scott Galloway
Well, I don't know. Think about the things you and Claire do for me.
- [08:54]
Ed Elson
I was gonna say Tim Cook sounded like me in my end of year review.
- [08:57]
Scott Galloway
Ok, here's the difference. You're not already billionaires like I. I understand this behavior from people trying to develop economic security for them and their families. I get it. If you h. Have a total ego driven boss and you figured out all you need to do is compliment him and you'll get a promotion and you'll make more money, I get it. But what I don't understand about these people is Sam Harris, one of my role models, said something that kind of changed my view on this stuff. And he said if you have economic security and you have people who love you unconditionally, you have an obligation to speak your mind. And if the least vulnerable among us don't speak out against an insurrection, don't speak out against deploying National Guard to the streets, don't speak out against a tariff policy that is going to destroy jobs and raise prices, who don't speak out against, you know, demonization of the transgender and gay community of which make up a valuable part of the workforce. Then who the fuck can I mean, Tim Cook and Bill Gates and you know, Sam Altman, they're sort of bulletproof. No matter what happens to them, you know, if shit gets real for them, they can get in their go bag and go live in New Zealand and have and shove $10 billion of the Bitcoin up their ass. They're fine. They're bul. Bulletproof. I know I sound like I'm tremendous virtue signaling and righteousness here, but what is the point of being this brilliant, aggregating this much wealth, this much power if you're just gonna. If you're just gonna prostrate yourself like this. And these guys know what they are saying and his policies, they know it is wrong. They know it. They're smart guys. Many of them are from special interest groups themselves. So I'm totally flummoxed that these individuals have decided I'm not worth enough money. But all that is needed for evil to triumph is for good men to do nothing. And in this case, all that is needed for evil to triumph is for billionaires who have a lot of power to do not only nothing, but to validate this weird mix of socialism and fascism that is taking place in the White House. That's my TED Talk.
- [11:23]
Ed Elson
At to that point, the combined net worth of the individuals in that room was $600 billion. But it's not enough.
- [11:31]
Scott Galloway
Not enough. It's not enough.
- [11:34]
Ed Elson
All right, we appreciate your time, Scott. Enjoy your night.
- [11:37]
Scott Galloway
All right, signing off. I forgot the headphones. Hold on. Get back to work.
- [11:44]
Sean O'Kane
Dad.
- [11:44]
Ed Elson
Get back.
- [11:45]
Scott Galloway
Get back to work.
- [11:48]
Ed Elson
What?
- [11:49]
Scott Galloway
You don't realize how lucky you are.
- [11:50]
Ed Elson
I want one of those.
- [11:52]
Scott Galloway
Yeah. All right, thanks, everybody.
- [12:00]
Ed Elson
The August jobs report is in and the data paints a concerning picture of our economy. Just 22,000 jobs were added in August. That was well below the 80,000 that economists had expected. Industries across the board were hitting. Factories shed 12,000 jobs in August. Construction lost 7,000 and the federal government cut 15,000. Meanwhile, the June jobs number was revised down to a loss of 13,000 jobs. That was the first decline we've seen since 2020. Following the release, the major indices declined, bond yields dropped sharply, and the chance of a rate cut in September rose to 100%. Okay, to unpack these numbers, we are bringing on our favorite labor economist, Catherine Ann Edwards. Catherine, thank you very much for joining me on the show.
- [12:57]
Katherine Ann Edwards
Thank you for having me.
- [12:58]
Ed Elson
So, not a good report for August. 22,000 jobs added. Economists expect 80,000. Let's just get your initial reactions to what we saw in this jobs report.
- [13:12]
Katherine Ann Edwards
If I'm being honest and sassy, my first thought was somebody's getting fired today. My second thought was this is weak. This is another weak jobs report. And if you take into account the revisions that we've seen and the deteriorating kind of unemployment rates, this is really our fourth or fifth month of solidly weakness. Jobs reports.
- [13:37]
Ed Elson
Yeah, weakness almost everywhere. I think one thing that stood out to me was the unemployment among young people. Unemployment overall is at 4.3%, but for 16 to 24 year olds it's 10 and a half percent. Any reactions to why that is happening? Is that AI, why are young people not finding jobs, you know, as.
- [13:57]
Katherine Ann Edwards
As heartless as this going to make me sound? Unfortunately, young workers are themselves a labor market indicator with the least amount of experience. They tend to be the, you know, kind of first fired, last hired when it comes to strength of labor market or strength of the overall labor market. So if they see high rates, it either means that we are heading into weakness or coming out of it, which is why their rates are so high right now. I think the AI story is really just unproven. And it wouldn't account for 10% or 10 and a half percent. I mean, it's tempting to find a fall guy, but truly what is hurting young people right now is a weak economy. And that would explain, I would assume, at least 90% of it.
- [14:40]
Ed Elson
So presumably this isn't the end of this. We're going into an increasingly weak economy. I assume that is what you're suggesting.
- [14:48]
Katherine Ann Edwards
I mean, it all depends on what happens next. At this point in time. The source of weakness is domestic economic policy coming from the administration, none of which is fixed, all of which is reversible.
- [14:59]
Ed Elson
Manufacturing, construction, jobs, that was another. Another sector that fell dramatically. I thought we were going to see a revival of blue collar work. It appears that the opposite is happening. Do you know what's happening in those industries?
- [15:14]
Katherine Ann Edwards
Well, over the past year, we have lost roughly 80,000 manufacturing jobs from August of last year. So whatever the intended effects of tariffs, you know, it's not helping manufacturing. And if you look at surveys of manufact employers, which is considered really vital to our understanding of economic strength. And so not only do we survey these employers separately, but we also ask them for their opinion. And in the Texas survey of manufacturers and various surveys where we ask these business leaders, what is going on in your business? They will say it's tariffs, tariffs, tariffs. They can't plan, they can't price, they can't hire, because they have no certainty. The notion that, you know, tariffs up equals more manufacturing here is a very overly simplistic, to the point of purposefully naive way to describe how manufacturing is generated in the United States. Not to mention that manufacturing employment in the US Will reflect automation in addition to actual production. So even if production is moved back here, it's not necessarily going to come with a job.
- [16:23]
Ed Elson
Yeah, the one sector where we saw some growth was healthcare. 31,000 jobs last month, more than every other sector put together. And that's kind of been the story of the year. Healthcare has been responsible for a third of all employment growth over the past year. And this is something that you pointed out when we had you on the podcast. Basically, the job market is being buoyed, held together. It's all propped up on healthcare. Why is that happening?
- [16:53]
Katherine Ann Edwards
Well, it's healthcare, and education services is about as large as healthcare. So together they account for around 60% of job growth over the past year. And then government, including state, local and federal accounts for about another 9%. So you're getting about 70% of net job growth coming from sectors that do not necessarily reflect economic activity because their demand is not based necessarily on people's pocketbooks. This is incredibly troubling, but at the same time, it's also reaffirming that we have cushion in our economy and we're not fully exposed to cyclical activity. We have some strength buried in there. And it doesn't feel like strength to know that because we have a lot of old people, healthcare is big and won't decline. But at the same time, I mean, there's a lot of people's jobs, that's a lot of people's livelihoods. And so it's helpful to have acyclical industries in our economy. We wouldn't want the inverse say of every industry we have is perfectly exposed to every mindset fluctuation of economic activity. In some ways, this is good that we're seeing this stabilization, but it itself is an indicator that something needs to be stabilized, in this case the rest of the job market, which is looking weaker.
- [18:05]
Ed Elson
Fed rate cut. After this, the probability of a Fed rate cut went to 100%. Do you think it's time to cut rates? I mean, we've still got inflation.
- [18:17]
Katherine Ann Edwards
I know the market is counting on it and that the market has priced it in. I just, I worry that it's. It's being a little premature. The idea of a rate cut is really premised on the notion that if you give Americans a little bit more money to spend through having lower cost of borrowing, that that will boost economic activity. You know, it's the difference between a car payment with an 8% rate and a 7% rate or a 5% rate. You have more money when you're not spending as much on interest rate. But it's not clear to me that that is. What is that that would be a salve in the economy right now, or that it would be sufficient of a salve, given that what is happening to economic activity is the burden of tariffs, the burden of tariffs on producers who can't hire or who have higher prices from supply chains. I worry about the salience of interest rate policy when basically the call is coming from inside the House. Right. This is not a natural slowdown of economic economic activity. It's one that's being imposed by tariff policy and reinforced by federal layoffs and being reinforced by immigration policy. So if I were the Fed, I would be very worried about how effectual this policy will be. I know the market will be happy and the President will be happy, but do I actually think it's going to improve the economy? And of course, the risk is that, you know, unlike the boost that you can get from interest rate policies, we know tariffs have not had their full effect on prices. And in fact, that is exactly what Powell said in Jackson Hole. And of course, we all forget that because an hour later he tried to fire Lisa Cook. Very, he's very good at, he's very good at burying the lead. But the, the, you know, Powell said unequivocally, like, we have not seen the full extent of tariff price growth. So I know, I know the market wants a rate cut. I just think that the Fed has to, has to worry that if they cut rates and it doesn't have a large effect on the economy and prices still go up, they will be in a worse position one month later and they'd be better off waiting until more data comes in. However much we want action, it might not be good to act. It doesn't feel quick, but it could very easily, in hindsight, seem premature.
- [20:34]
Ed Elson
Lots more to discuss. We'll have you on for a full episode very soon. Katherine, we really appreciate your time. Thank you for joining us.
- [20:41]
Katherine Ann Edwards
Thank you.
- [20:44]
Ed Elson
That was Katherine Ann Edwards, economist, economic policy consultant, and the host of the Optimist Economy podcast. I recommend you check it out. So the good news is Trump is probably going to get what he wanted. As we said, the probability of a rate cut this month is now 100%. According to Wall Street. Rate cuts are pretty much guaranteed now. Why is that? Is that because we've finally gotten inflation under control? Is that because prices are coming down? Is that because we are hitting the 2% Fed target? No, no, no. In fact, inflation is ticking back up because of the tariffs and we've yet to even see the numbers for August. We're cutting rates not for good reasons, but for bad reasons. We are cutting rates because hiring is slowing, unemployment is rising, and jobs are drying up. Let's be very clear, that is why we are cutting rates. Meanwhile, the CPI report is coming out on Thursday. My prediction, even more inflation. As Catherine said, the tariff impact is not fully come through yet. And the CPI report, after that, my prediction, more inflation again. And after that, more inflation again. The tariffs are coming due and yet at the same time, the Fed is loosening because of what we're seeing in the job market. And that basically leaves us with one thing left to do. Three words for you, Buckle your seatbelts. We'll be right back after the break. And if you're enjoying the show so far, be sure to give Profit Markets a follow wherever you get your podcasts.
- [22:25]
Scott Galloway
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- [24:34]
Katherine Ann Edwards
They say an apple a day keeps the doctor away. Well, why not make it a limited edition Groony Smith Apple Vitamin Snack Pack from Groons. This isn't a multivitamin, a green scummy or a prebiotic. It's all of those things and then some. And bonus, it tastes great.
- [24:49]
Ed Elson
All Gruyn's daily gummy snack packs are.
- [24:51]
Katherine Ann Edwards
Vegan, nut, gluten, dairy free and packed with more than 20 vitamins and minerals. Grab your limited edition Groony Smith Apple Groons, available only through October. Stock up because they will sell out. Get up to 52% off when you go to Gruns Co and use the code vox.
- [25:12]
Ed Elson
We're back with Prof. G Markets. Tesla has unveiled a new pay package for Elon Musk, worth a potential 1 trillion. The plan ties his compensation to performance targets over the next decade, including an Eightfold increase in Tesla's market value and also the deployment of 1 million bots. The payout will be entirely in Tesla stock, which vests only if he stays for at least seven and a half years. The shareholder vote on this package is scheduled for November 6, so there is a chance that it'll get shut down by investors. However, probably a small chance. Shareholders overwhelmingly approved Elon's previous pay packages. Last year, 72% of voting shares supported the $46 billion package. This plan could also get struck down by the courts, which is exactly what happened to his 2018 pay package. We've discussed that at length. So in sum, the path to becoming a trillionaire, it won't be without its challenges. One of those challenges may be achieving the milestones that were laid out in the Tesla filing that proposed the package. For more on those details, those milestones, our producer Claire Miller spoke with Sean O', Kane, senior transportation reporter at TechCrunch.
- [26:28]
Sean O'Kane
The first big milestone that Tesla lays out on the product side. And again, this is not in any sort of order, but the first one that's in the list is 20 million vehicles sold by 2035. And the reason that really stuck out to me is that Musk spent a long time promising that Tesla was going to make 20 million cars per year, and by 2030, so there. Tesla had a far greater ambition. Just a few years ago, the idea that Musk had bandied around was that they were going to build gigafactories on essentially every continent, localize the production to every market that they wound up in, and that they would be able to make and sell 20 million cars per year. And that really started to fall apart when the company walked away from the factory that it had started building in Mexico. And now the board really just wants to hold him to a much more reduced version of that, of 20 million cars by 2035. And what's really interesting about that is the company's already sold 8 million vehicles. So they then they sell about 2 million per year, even as the sales kind of slip. So it's a far more achievable goal than the version that Musk had been promising of just a few years ago.
- [27:38]
Katherine Ann Edwards
Next one is the Robotech taxi goal. Can you walk us through that one?
- [27:42]
Sean O'Kane
Tesla really wants 1 million robo taxis on the road in order to unlock parts of this compensation plan. And this is, again, something that Musk had talked about for a long time in 2019. It was one of his most audacious claims that I think he's made, which is saying something for Elon Musk.
- [28:01]
Katherine Ann Edwards
Right?
- [28:01]
Sean O'Kane
He said that there would be a million robo taxis on the road in 2020. And it's, you know, that clearly has not happened. The company has finally launched its first sort of trial run of a Robotaxi service in Austin, and they're doing a similar ish version with some more limitations in the San Francisco Bay area. But it's. We're still five years away from that original promise of this will happen by 2020. And now he has even more Runway to accomplish that goal.
- [28:31]
Katherine Ann Edwards
The next one is 1 million, quote, unquote, bots. What does that mean?
- [28:36]
Sean O'Kane
I thought this was really interesting because I think, like many others had just sort of saw that and assumed at face value, this was a direct reference to the Optimus humanoid robot that Tesla's been developing. It's the only real robot that they've been developing, you know, outside of the robots that they use in their manufacturing, which are all from third parties, pretty much. But the board really clarifies in some of the more fine print of this agreement that this can actually mean a couple different things, and that it's not just about selling optimus bots at that level. And again, we have a disparity in the numbers here. Musk, even recently, like very recently, has been talking about making as many as a million optimus robots per year by 2030. At one point, he even said maybe even 2029. And now he's only being held to doing a million over the next 10 years, and with a looser definition for what that means. So this doesn't necessarily mean there will be a million Optimus robots in the next 10 years. It could be less than that and a mix of some other things that the board accepts the definition of as bots.
- [29:45]
Katherine Ann Edwards
The final One is the 10 million Full Self Driving subscriptions. How realistic is that one?
- [29:53]
Sean O'Kane
Getting to 10 million FSD subscriptions is actually kind of a tough thing to peg because we don't know how many they have. I thought it was interesting in the agreement when they're qualifying, when the board is qualifying reaching 20 million vehicles sold, for example, it just openly says, hey, we've sold 8 million vehicles to date. But they don't come and back up how many FSD subscriptions they have in the fine print for that goal. I think in part because they don't want to reveal that yet. And it's not something that's publicly tracked. That's internal data that Tesla has held very tightly, I think in part because the adoption rates have never really been where they wanted them to be. We've seen them go through all sorts of promotions and deals. They do free trials. They, you know, when they first started doing free trials, they announced it would only be for a certain amount of time and then they blew through that window and kept giving them to people they were giving them to people who didn't even ask for them. They've changed the pricing around, they've lowered it, they've offered subscriptions. So without really knowing how many there are now, I think you could probably safely assume there's a few hundred thousand people who have FSD on their vehicles. Maybe as high as like a million or a touch more. It's hard to say for sure how difficult it'll be to get to that 10 million figure over the next 10 years. I think by law of large numbers, as long as they keep their sales at least level with where they've been, they will get there, but we won't really know until the company really tells us. Because they don't release that number unless it gets to a point where they start to become more proud of it and then maybe they will actually disclose it. The only way we can kind of do it is maybe sort of reverse engineer some of the revenue that they've booked for full self driving driving. But even that itself is a kind of a nightmare with a lot of assumptions baked in that that doesn't really give us an accurate answer.
- [31:38]
Katherine Ann Edwards
So from the board's perspective, what is the logic behind these milestones?
- [31:44]
Sean O'Kane
These are the things that are most core to what Tesla is and in fact I think that that instructs us on, on why the vehicle sold goal is Kind of diminished in my eyes because Tesla doesn't really want to be a car maker anymore. At least Elon Musk does not want to sell cars anymore. I think that's been made pretty clear over the last two years. But these other pieces, the robots, the full self driving and the robotaxi sort of network effect that they're really aiming for by having that many on the road, those are the things that have been core to the company's outrageous valuation up till now. So even setting aside the idea that they want to go to $8.5 trillion value over the next 10 years, those are the things that have gotten it way over its skis as far as its current valuation. And so I think part of me sees this as the board wanting to justify that current valuation to some extent, in addition to putting a flag in the ground out in the distance and saying this is where we're headed to for investors and everybody else who's following along.
- [32:48]
Katherine Ann Edwards
So the board has been here before. They've awarded Elon with an extraordinary compensation package and it was struck down after a shareholder lawsuit. Are they not concerned they'll run into the same issue here with this even bigger number?
- [33:05]
Sean O'Kane
It's tough to say. I mean, I'm sure someone will sue over it once it's approved in November. I would expect it to be approved. There's always legal challenges to these things, but what's important to remember is that Tesla reincorporated itself away from Delaware and into Texas. And this is a plan that was written with all of that in mind. And so the previous plan that had been awarded to him in 2018 was all under Delaware corporate law. You know, it was a far more known environment for shareholders and lawyers and all the people who get involved in those kinds of proceedings. We're really in, you know, not to make a pun, but like the wild west here with Texas and its corporate law, which is thin on precedence, and we're really just in a new regime. We've got a new business court being set up there, and we just don't know. You know, I think we can safely assume that it will be more friendly than Delaware to the corporations that incorporate there and less friendly to shareholders. So I would expect we see some challenges to this in some sense. But I also just think that this is going to have a better chance of surviving than that previous plan.
- [34:13]
Katherine Ann Edwards
As you walked through those, those milestones and broke them down for us, it really, it almost sounds like this plan was designed to lower the bar for Elon such that he can actually leap over it this time. Given that he's failed to deliver on these objectives before, I'm curious if we can get a prediction from you. Do you think he will be able to accomplish the milestones and receive that full trillion dollars?
- [34:44]
Sean O'Kane
I think some of these will get accomplished. I mean, 20 million vehicles sold, like I said, we're already at 8 million. I think that one has the best chance of these to come to fruition. The other ones, I think it's kind of a toss up. I think it's important to remember he did accomplish, and the company did accomplish what felt like outrageous milestones at the time in 2018. That got him the full value of that pay package before it was struck down by Delaware courts because of just essentially how it was negotiated. And you can haggle maybe a bit about some of the specifics of how some of those were accomplished. I mean, Tesla announced a big order with Hertz at the time that was supposed to be worth a ton of money to the company. And they never came anywhere close to fulfilling that order book. But that was what pushed them into the territory of a trillion dollar company, which was one of the things that was a cornerstone of that 2018 package. I don't think we'll see as much manipulation around that this time because these are a bit clearer as far as some of the goals go. And I think it'll be a little bit harder to massage some of that. But I think it'll be a difficult thing for it to be fulfilled completely, even up to the idea that the last piece of the puzzle on this particular pay package is the idea that Musk needs to help the company form a sort of concrete succession plan. And without that, there's a portion of the shares that won't come to him in the end if that doesn't happen. So, you know, 10 years is a long time, but there are some little things like that along the way that I think could be prove almost even more challenging to unlocking this full trillion dollars than even some of the just more straightforward operational milestones.
- [36:24]
Katherine Ann Edwards
All right, well, thank you, Sean. We really appreciate your insight on this.
- [36:27]
Sean O'Kane
Yeah, anytime.
- [36:29]
Ed Elson
That was Sean O', Kane, senior transportation reporter at TechCrunch. Before we end here, I think a lot of people would probably ask themselves, why would Tesla pay Elon Musk $1 trillion? Why? Why that number? I'll just point you to the company's proxy statement, which actually tells us exactly why they're paying him. Quote, the special committee determines that the interim award is needed to retain Mr. Musk. The statement continues, The Special Committee believes Mr. Musk's ability to recruit and retain talent is a significant advantage for Tesla. Failing to retain him would not only mean the loss of his talents, but could also lead to an exodus of the talent he has enabled Tesla to attract. Okay, makes sense. The statement reiterates, the stock award is, quote, critical for retaining Mr. Musk. Mr. Musk, quote, must be retained. It is also, quote, important to shareholders that we find a way to again, retain Mr. Musk. Quote, retaining Mr. Musk is in the best interests of Tesla and this package is, quote, designed to retain him. Retain, retain, retain. Put another way, we are now at the stage of capitalism where the amount of money required to retain your CEO to just keep him around, keep him interested, to get him into the office, the number is $1 trillion. Let me put that into perspective for you for a moment. What could you do with a trillion dollars? Here are some things you could do. You could fund universal childcare in the US For a decade. You could pay for the education of every child in America for more than a year. You could pay the entire annual interest on the US national debt. You could also end world hunger three times over. Or you could incentivize your CEO to stick around and get in the office. That is where we're at in America. That is how insane this inequality thing has gotten. The fact that 11% of the nation is currently living below the federal poverty line. And at the same time, the only way to pique the interest of a car company CEO, the only way to get him to not be distracted, the only way to retain him, is to pay him $1 trillion. Now people will say, Elon's different, he's special. This is an exception. Well, I'll just tell you, it's actually not just Elon. It's actually CEOs all across the nation. This is a trend. 60 years ago, the average American CEO made 20 times what their employees make. The number today is 285 times. Put another way, if the average employee wanted to make as much as their boss makes in one year, they would have to work for 285 years. They would have to start their career in 1740, 40 years before the founding of America. So, yes, this is a story about Elon Musk. It's a story about Tesla. But it's also a story about America and the way this country has decided to reward people. The fact that there are individuals now who have so much money that you can only incentivize them with a carrot of a trillion dollars. That tells me maybe, just maybe, the system isn't quite working the way it's supposed to. Okay, that's it for today. This episode was produced by Claire Miller, edited by Joel Patterson and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our research team is Dan Shalon, Isabella Kinsel, Kristen o' Donoghue and Mia Silverio, and our technical director is Drew Burrows. Thank you for listening to Profg Markets from Prof. G Media. If you liked what you heard, give us a follow. I'm Ed Elson. I'll see you tomorrow.
- [40:39]
Katherine Ann Edwards
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Ed Elson
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Ed Elson
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Sean O'Kane
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Katherine Ann Edwards
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