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- [00:00]
A
Foreign. Welcome to the R Spacs Scams episode of Slate Money, your guide to the business and finance news of a week in which one of the biggest SPACs of all time was announced. We will see whether that one actually happens or not, whether Bill Ackman manages to buy Universal music group for $40 billion. I am Felix Salmon of Axios. I'm here with Stacey Marie Ishmael.
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B
Hello.
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A
I'm here with Emily Peck.
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C
Hello.
- [00:42]
A
And we are going to talk about spacs and whether or not they're scams. I'm not sure they're scams. I'm pretty sure that maybe one or two of them are scams, but possibly not all of them. We are going to talk about amc, which is the hot meme stock of the minute. We are going to talk about commuting and the return to work and whether there's any chance of being able to fix the system that was broken before and it was broken for the pandemic and will almost certainly realistically remain broken after. But it will be broken in new ways and we'll get to talk about all of the new and interesting ways in which it's broken. We have a Slate plus about the jobs report that came out this week and what it says about the difficulty of hiring people right now. And about halfway through, we even get to talk to Charles Duhigg, has an amazing piece in the New Yorker this week and is also the host of a Slate podcast, or was.
- [01:32]
C
He was the host of season one and he still works on this amazing Slate podcast called how to How To. It's like dear Prudence plus more experts. And you hear firsthand people's stories and problems and it's really fascinating. It's hard to not listen once you get into it.
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A
Stacey Meme Stock of the Week amc. What is going on?
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B
I would like to quote John Authors on this because he said trading in amc, which by my considered comment is that it went down a lot and then came back up a lot. And I'm not in the mood to dignify this by trying to make sense of it. And that is very much how I also feel about what's happening in amc. I mean, we are seeing yet again a very interesting trend and I think a departure from the previous trend, which is like, like companies were like, I don't know what to do with this. AMC is full on, oh, you want to buy some shares? Here's some shares. So they have issued additional common stock. They are attempting to incentivize folks to buy their shares with Offers of free large popcorn. I think it's only one free large popcorn, which does not seem to be a great roi. And they're even putting in their prospectus that actually you probably should not, but our shares right now, but if you do, good luck to you. And then they proceed to sell them. And so I have.
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A
They sold them all within two and a half hours or two hours. I think it was kind of amazingly.
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B
High activity, very high trading volume. And once again, just the question of what is the responsibility, broadly speaking, of kind of regulators and also of retail focused and trading platforms to help folks understand what it is they're doing. Like a friend of mine texted me and was like, I randomly bought some AMC shares and I was like, excuse me, like why are you day trading based on Reddit? And so not to be all like, retail investors are going to get hosed every single time, but retail investors are going to get hosed every single time.
- [03:29]
A
So here's the weird thing that I really genuinely don't understand is that we heard this narrative with Gamestop back in January and everyone said it's gone up. Retail investors are going to get hosed. It's trading at ludicrous levels. And it's all fun and games when you can take things to the moon and enjoy yourself on Wall street beds, but won't you be all like sad face when the stock inevitably crashes back down to zero. And then something kind of amazing happened. Like what everyone thought was this pump and dump scheme where like GameStop would shoot up massively and then crash down to zero. It shot up massively and then it didn't crash. It is still trading at complete, no speed levels. It has been there for months. It is not going down. And hodl, that is, yeah, like we're not just hodling bitcoin anymore, we're now hodling Gamestop. And for all I know people will start hoddling AMC as well. The thing that people thought back in January that these were these flash in the pan spikes and crashes that would cause massive losses, turned out in fact not to happen. The losses might yet happen, probably will happen at some point, but the level of these stocks has remained elevated for much, much longer than anyone thought possible.
- [04:47]
C
Tracy Alloway made this point yesterday and I'll see if I can do it a modicum of justice. But what's happening with amc? It's not just that retail investors are pouring their money in for whatever story they like to tell about amc. Like the company is using the money, it's selling stock, it's Surviving like this was a company that was going to go bankrupt. Now it's okay. Like real things are happening. This isn't just like meme stocks, this is something else. This is a company that's doing better now.
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A
Yeah, AMC probably would have gone bankrupt if it wasn't for its ability to sell stock to Reddit day traders.
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C
This is a real thing that's happening in the real economy.
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B
$900 million and more.
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C
So like this could be a real story of, of success. Like it's crazy to think about because we're like, oh, retail investors, so dumb. What do they do? I don't think they're money. We don't think they're dumb. But it's. This is retail investors having a real effect on a company and actually turning around its business. Which is fascinating.
- [05:46]
B
That's what I mean about like ph of meme stuck right where companies are embracing this. Oh yeah, we're divorced from fundamentals. But now you have this kind of self fulfilling prophecy of aha. But now the fundamentals are here because you made it possible with this trading that you did. And that is wild. It's a completely different way of intervening in markets. It has like equity capital markets. People just like stunned. And I again am just, I am not sure that the sort of, the professional, regulatory and commentariat classes are prepared for what is happening right now.
- [06:20]
A
I think in weird way it's a democratization of what we used to see with Tesla, with Netflix. There were all of these cash burning companies which according to any normal sort of income statement type analysis should be insolvent. And the reason they kept on going was because they had these massive stock crisis and they could issue stock to all of their stuff and the stock kept on going up and the bondholders would look at how much equity value there was and say, well, I would never normally lend money to this company, but there's so much equity value here that there's probably very little chance that I'm ever going to wind up losing money. That if Bush comes to shove, they can always just issue new stock and then especially Tesla would just issue stock over and over again whenever it needed cash. And it worked. And this has created big, genuinely important companies like Tesla and Netflix. But that mechanism of using the stock price to, to grow and, or to just stay alive, I think we have definitely seen that with AMC now institutional.
- [07:22]
C
Yeah, what's interesting with that is Tesla and Netflix are very, these are companies that say like, we are the future, like we're not making money now. But the world is changing. We've disrupted a big industry and eventually, like, we'll be everything. AMC and GameStop, they are supposed to be dead. They're in dead industries. Even before Pandemic, the film industry wasn't doing very well and movie theaters were struggling. And Gamestop, even before the. Especially before the Pandemic, video games people weren't buying them in stores. Like, it's interesting that, that the meme stocks and the retail investors have keyed into these sort of brick and mortar kind of companies that you wouldn't think of as having the inflated stock prices of like a Netflix or Amazon back in the day. Or, you know, it's. I've been thinking about that a lot and I don't really understand if it's like a nostalgia play, almost like, let's save these companies that are great, or if it's like having faith.
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A
There's definitely a hu. Huge amount of nostalgia. It's basically what were the companies that were really hot when the WallStreetBets crowd was in high school? You know, it's BlackBerry, it's Tootsie Roll, it's AMZ, it's GameStop. And they're like, there is a. It's late millennial slash old Gen Z nostalgia play to a large degree.
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C
What about Gen X?
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B
Everyone always forgets about Gen X.
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A
No, no. Like, we're too old for all of this. Come on. Gen X is not participating in this. I genuinely believe that Gen X has completely been left out of the meme stock boom.
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B
I'm going to put a call for. If you are a Gen X person participating in this, please send us a tweet or a comment.
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C
Prove us wrong.
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A
There are Gen Xers in crypto for sure, but I think there are fewer Gen xers in, like, GameStop.
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C
Is that because Gen Xers have more money so they don't have to take as big of risks? Or it's just because they're old. Just old.
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A
We're too old to have ever gone to the movies. In my day, we had to go out. I have no idea. I might be completely wrong about this. I think we should talk about the.
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B
Office, the other place people don't want to go.
- [09:26]
A
Yes, I went to a movie theater and I went to the office this week. So you are the 1%. I am that person. I went to see Cruella in the theaters and it was the first time I've been in the movie theater.
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D
That's not a good thing.
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A
I mean, it's fine, you know, it's Cruella.
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B
That was your post. Pandemic movie. You went to see Cruella. Yeah.
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C
You waited two years and all you could do is a Disney movie. Come on.
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A
There will be more talking about companies emerging from bankruptcy. Alamo Drafthouse. Drafthouse, yes, has emerged from bankruptcy and has announced aggressive expansion plans, including just down the street from me in downtown Manhattan, is opening up a 14 screen cinema at One Chase Manhattan Plaza.
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B
And it's going to be the turnaround, I must say.
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C
Wait, but we were going to talk about work from home because, well, I mean, it's all I've wanted to talk about for the past 16 months. But Bloomberg had a package of stories and one piece claimed that employees were quitting rather than go back to the office because going back to the office is not something anyone actually wants to do. They also had like a Q and A with a remote work specialist, Nicholas Bloom, who sort of like sounded the alarm about a world in which only certain kinds of people go back to the office full time and other kinds of people stay hybrid. And it creates sort of promotion inequality, let's say. So that's why I wanted to talk about it, because should people go back to the office full time? Are we in a new world?
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A
Nick Bloom, who I don't know what he isn't an expert on, he seems to be an expert on absolutely everything. But he's not wrong. If you are an ambitious young professional and you want to get promoted and rise up the ranks, I'm going to come out and say that you're much more likely to achieve that dream if you go into the office.
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C
That's what Jamie Dimon says. Felix, he said work from home doesn't work for those who want to hustle. So you and Jamie are aligned on this?
- [11:22]
B
Well, you, Jamie and CEOs in general. Because that whole thing is really predicated on a model of presentism. Right. Like the way that you impress the boss is showing up and the bosses who generally have more comfortable offices, they generally have offices. They're not in the open plan. They have families, they want to get away from. All of those sort of cliche things about how CEOs behave. But I do think this idea of we should continue to apply old school metrics of performance management to the brave new potential world of work is really frustrating for a lot of people.
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A
It's incredibly frustrating. It's obviously false. But trying to break apart the normative and the realistic, do you see any realistic chance that we will manage in some way to emerge from this pandemic and find ourselves In a world where promotions take place on the basis of ability rather than on the basis of being able to suck up to the.
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C
Boss hard, no, I think you can figure out how to suck up to the boss working remotely. There are ways.
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A
Can you?
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B
Of course.
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C
Yes, definitely. And some companies have gone, they call it a distributed workforce. Right? Companies not in New York, not in Silicon Valley, are like, oh my God, all of a sudden they can hire all around the country and get talent from other places and they're going to figure out how to do promotions without having someone come into the office to suck up. Like you suck up on Slack, send your boss a gif.
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A
But it's more than just sucking up. There's also just institutional knowledge. I think that we've had a year and a half of skilled people being able to work from home and use their skills from home, and that's great. What we haven't had is entry level people really understanding how a company works while interacting with it purely from zoom and never really meeting anyone there. It's much, much harder for those people.
- [13:28]
B
I do think what you're identifying is the fact that most organizations, we are also conflating the experience of working from home in a pandemic with the experience of distributed workforces, which are very different things. And most companies have never had the infrastructure to suddenly go remote. And we're in this weird period where people who just overnight had to not have people in the office have now decided that's the only possible way to that remote work can work. And it is therefore terrible. Right. When you have all of these other organizations and if you look at the tech companies, one of the reasons it's been easier for them is because they've always had to juggle people in lots of cities and lots of time zones and lots of different tax shelters. So the idea of we know how to convey institutional knowledge, we know how to onboard someone who is not going to meet 90% of their colleagues for the first two years is totally entrenched in that culture and in that institution. Other places where if one person happens to not be at hq, that person's totally screwed. That was true before the pandemic and it's not suddenly going to change after.
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A
I think also people really do overindex on the big tech employers, in particular, the kind of employers who really do have their pick of the most qualified, brightest, most experienced potential employees, versus going back to JP Morgan, you know, Jamie Dimon has like 100,000 employees. I don't know what the numbers, but it's a lot of employees, many of whom are not super high performing investment bankers but hourly wage workers at Chase who are moving data around, pushing paper around and trying to take that kind of infrastructure and move it remote has been incredibly difficult for the banks. They really have struggled during the pandemic and you can see how they're just going to be like, no, it just doesn't work for us. Come back.
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B
I want to reference Dr. Tressie McMillan Cottam because she just wrote in substack about the kind of the class distinctions between who gets to be trusted to work from home and who doesn't. Which is exactly the flip side of the point that you're making. Right? It's that, well, the lower level people who are only here because we make them are not able to continue to do this labor in the confines of their own home is very much a prevailing attitude. And I don't know if it's actually true. I don't know how to separate the perception that folks with lower level jobs are inherently less trustworthy than folks pulling down $250,000 a year. I can say, having worked with the ostensibly super smart tech people pulling down $250,000 a year, there's significantly less between those two groups of people from an intellect and personality basis than PR would suggest.
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A
I think that's right.
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C
We shouldn't underestimate how game changing the technology that is available to us to work remotely is right now. I mean I remember when I started at HuffPost in 2011. Yes it was in person, but like most people just sat with their laptops and talked to each other on Gchat.
- [16:43]
B
Meeting it face to face heyday of digital media.
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C
It didn't really matter as much as I think people think. That always shocked me. I was like we have to have a stand up where we can all face to face talk about ideas. But often the best brainstorming would take place in the office over first campfire and then Slack and Gchat. I don't think the face to Face matters as much as we think it does. And the other piece of it of course is commuting, which I don't know if you guys want to talk about, but I'm into.
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B
You want to talk about your 66 mile commute?
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C
That just gets me to the Bronx.
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A
I used to commute from the East Village to Times Square when I worked at Reuters. Oh my dear God. Really? Leaf blowers. There aren't any leaves. There's nothing to blow.
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C
Just leave this in the podcast.
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B
It's incredible.
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A
He's blowing a bush. The bush is not gonna blow.
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C
Dear God, Work from home. It's great.
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A
Yeah. Bring back podcast studios. That's what I have to say. So, yeah, I used to commute for years from the East Village of Manhattan to Times Square, and I did this on my bicycle. And if you are riding a bike from the East Village of Times Square, you are in a lot of traffic, and you are basically in this kind of Zen mode of just basically concentrating on not getting killed by traffic and not dying. And it's this little pocket of air in your day when you get to just not be thinking about stuff all the time. And all you're doing is you're just, like, moving through traffic and you're getting to where you need to, and you're getting a little bit of exercise and you're getting a little bit of fresh air. And then at the end of it, you know, log into your computer and you're like, okay, now I'm getting to work. But like, that, you've had that sort of cleansing brain space of not having to think. And it worked for me. And maybe that was not a normal commute, but I think commutes can be helpful.
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C
Okay, there's this amazing, again, substack that I read this morning by a guy named Luke o' Neill in response to a Boston Globe piece that makes that argument Felix, that, like, without the commutes, how will we ever find the time and space to have our moment of Zen to think? And the response to this was like, are you effing kidding me? Commuting is a hellscape for so many people in this country. Like, it's two hours in the car in traffic, or it's, you're stuck on.
- [19:12]
B
New Jersey transit only in the subway.
- [19:14]
C
Standing room only, or you're stuck in a tunnel for 45 minutes and it's hot and you don't know when you're going to move again. Like, people were just like, oh, yeah, I love commuting because I loved the puzzle of not knowing if it's going to take me 30 minutes to get home or 90 minutes to get home or, like, oh, yeah, I love commuting because I love, like, inhaling the fumes from traffic. Anyway, commuting is mostly bad because infrastructure in the United States, I think, is mostly really bad and neglected. And if employers want us to go back to the office, they should work on policy solutions to the problems of commuting in New York City, there should be better treatment for bike riders, protected.
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B
Bike lanes, the Hill I will die on.
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C
Yeah. New Jersey Transit could use an update. The Metro north certainly could use an update. Yeah. I think the notion that, like, commuting is this great break. I think there's other ways people could find a break that still allows them the space not to have to commute. We know that it's bad for people's health. We know that people with extra long commutes, I think, don't live as long. I might be wrong, but we know it's bad for health.
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B
Yeah, It's a lot of research.
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C
Time away from your family. There are all these comments of people saying, I lost ten pounds since I had to stop commuting. I'm eating better, I started exercising, I see my children at night. I don't know. These are all benefits to working from home.
- [20:29]
B
I think one of the things about the conversation about commuting is, again, it's benchmarked against the pandemic. And one of the things that happened in the pandemic is your workday just expanded to fill the space that had previously been given to commuting, which was essentially the time when you had an excuse that you're like, I'm on my bike. I can't respond to this email right now, or this increasingly does not work because everywhere on the subway has WI Fi, but I'm on the train. I don't know what's going on. And I don't think it's only people reacting to. Not like missing a commute or not missing a commute. I think they're also reacting to the complete inability to separate any time at any moment of their day from the demands of having to work. Right. And at least some of the people who are trying to go back to the office, at least some of the people who have a view on commuting, are trying to recreate boundaries that were taken away from them by the fact that the very second you woke up, nobody else is out, nobody's doing anything, and so you just start working, or you're expected to start working immediately and to basically never end.
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A
I felt very guilty this week. On Wednesday night, I got this data in which I really wanted to put in my newsletter that comes out on Thursday mornings. And I go into the place where the chart people at Axios hang out on Slack. I'm like, can I? It's 9:30 at night and I'm assuming no one's here, but I would really love this to be turned into a pretty histogram. And within like, you know, 20 minutes, I had a Pretty histogram and shout out to Sarah Wise, who was amazing and thank you Sarah and I love you and you're amazing. But there is also something wrong about Sarah being up at 9:30 and making histograms for Felix Hammond like that. You know, it's of kind. On one hand it's good, but on the other hand it's like not good.
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B
Yeah, it's mostly not good.
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C
And I don't think even if we go, if everyone goes back to the office, that piece will stop.
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B
Yeah. This is the conversation about burnout expressed structurally. Right. It's like if you have no boundaries and if your office or wherever or whoever you're working for is unwilling or frankly unable to accommodate the need for people to not have to be just keeping one eye on slack just in case it sort of doesn't matter where you are because that could be happening to you in the office, it could be happening to you at home.
- [22:56]
C
We should also mention, I guess, I mean, Stacey, you basically did, but this is a rich people problem. A lot of it is. I mean, only 16% of employed people are working from home according to the latest jobs report. So most people don't even have the luxury of being forced to work all the time, I guess is one way of thinking about it.
- [23:15]
B
Well, other people have the luxury of being forced to work all the time, but just for like wages rather than salaries.
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A
I would love to know how many waged employees, like people on hourly wages, work from home. You know, there are some, but I don't think it's a lot.
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B
No, there was a decent amount of folks who would otherwise work in support. Quality control, customer service. I had one hilarious customer service encounter where someone was like, they just shipped me my machine at home and I haven't figured out how to use it. So I can't see your account details. You call back. I was like, sure. But going back to this idea of wage workers and sort of precariousness, a version of this does happen to people on sort of minimum wage and contract labor where they have no control over their schedules. And you had some really good reporting a couple of years ago about folks who would just be waiting by text to see when their next shift was and not having any ability to plan their lives around it. Just be like in an hour you have to be at work, you don't know. And so all of the bad behaviors, whether they're applied to sort of salaries, whether they're applied to wages, come down to the exertion of managerial control and the fact that people will experience that in different ways depending on social status, et cetera. But it's really prevalent throughout whatever we call the economy in 2021. Is there anything good about work? I don't think so. Yeah, it's fun.
- [24:40]
C
It's fun talking to you guys. Does this work?
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B
Oh, yeah. This is also work. That's true.
- [24:44]
A
I can tell you that. Like, my wife is very upset at Slate money for not reopening the Slate studio.
- [24:51]
B
Like, the overhead transfer of expense and inconvenience to individuals rather than like buildings and offices is an under reported phenomenon of this whole thing. Like, I've been involved in discussions with people where they're like, we're going to give them a $50 allowance to buy a chair. Do you know how fucking expensive a chair is? A chair does not cost $50.
- [25:11]
C
Our electric bill went up a lot.
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A
This is an underreported part of the housing boom. Right? Is that effectively what's happened is that demand for offices has become demand for houses and so that extra demand has pushed housing prices up. Yeah. Emily, I think this is the week to talk about spacs. We have a big news hook here, which is that Bill Ackman wants to take Universal Music Group public at a $40 billion valuation. And we thought that spacs were dead, but maybe spacs are not dead. And you found an awesome New Yorker article about this week?
- [25:49]
C
Yes, I found a New Yorker article this week.
- [25:53]
B
All by yourself?
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C
Good job. Me?
- [25:55]
A
Good job. You?
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C
It was about chamath.
- [25:58]
A
Come on, we need some good pronunciation through here. Stacey, can you do this one?
- [26:04]
B
I think it's Palihapitaya Habitia.
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D
Very close.
- [26:08]
B
Wait, please correct me.
- [26:09]
A
Is there another person who has come joined us?
- [26:12]
D
I heard the New Yorker and spax being intonated and I decided I had to do. This is Charles Duhigg, the author of the article. Wait, wait.
- [26:20]
A
Can I just click my fingers and authors of articles just turn up on Slate money. This is the best thing I've ever come across in my life.
- [26:27]
D
Well, the weirdest thing is that some days you just click your fingers and I just suddenly show up and I have no idea why I'm there. And then I just let myself out the back door. So at least this time I. I'm here.
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A
Charles, you wrote the article. You're the expert.
- [26:39]
D
Expert's a strong word, but yes, yes, I wrote a very long article.
- [26:43]
A
You spoke to Chamath multiple times.
- [26:46]
D
I did, I did.
- [26:47]
A
Did you learn how to pronounce him?
- [26:49]
D
I believe it is Chamath. Polyhapitia but actually, I liked Stacy's pronunciation more.
- [26:53]
B
I spent some time on YouTube trying to make sure I could pronounce it correctly last night. I like trying to get people's names right since I butchered Shira ovadi's.
- [27:02]
C
So I assumed since we would have Charles on, he would take the lead, tell us who chamath is, and explain why he wrote the piece. So I didn't study on YouTube, but that was smart, Stacey, which Emily was.
- [27:15]
D
Kind enough to read.
- [27:17]
A
It was a great piece. It is a great piece. We can highly recommend it. And your theory, Charles, I really like this. Is that the chamath story is much bigger than spax. The chamath story is really a meta story about stories and storytelling and how this very financialized world that we used to live in has seems to have become a throwback to the world of like. Well, what we do is we just listen to storytellers and we buy into their stories and we throw lots of money at them.
- [27:47]
D
That's exactly right. So throughout economic history, There are these periods when it seems like storytellers come into the ascent. And people basically, like, give up all logic and rationality and just love listening to the storytellers and believe whatever they say. And in fact, if you look throughout history, this happened with, for instance, the creation of mutual funds.
- [28:07]
A
Funds.
- [28:07]
D
When mutual funds first came along in the 1920s or got popularized, There were all these storytellers who would basically spin these tales of getting rich through mutual funds. And then it happened again with credit cards in the 1960s. And Mike Milken, the king of junk bonds in the 1980s, would tell these stories about how junk bonds can revolutionize the world. And in fact, he actually made fairy tales manifest by coming up with this idea called the highly confident letter. That he would tell a fairy tale on a piece of paper about being able to take over a company. And once he published that into the world, the company was say, okay, we give up. You're going to take us over anyway. The raider can have us.
- [28:42]
A
And he also had this wonderful thing called fallen angels. Like, if you have something which already exists called fallen angels, how can you not resist that? And you're right. And like, even ackman. I remember going to a couple of his legendary press conferences back in the day where he'd do his slideshows and he'd be very fluent. And you'd come out of it going, well, of course this company is massively overvalued. And it's going to zero because. Because I have fallen into your reality distortion field.
- [29:09]
D
That's exactly right. And it turns out that there are certain periods when the investors minds become more flexible, more open to hearing storytellers, right? So throughout history, it turns out when you talk to historians, they say, well, usually it's after something like a war or a big recession, some kind of massive upheaval. Oftentimes what you'll see is you'll see a new technology has emerged that allows stories to spread in a new way and much faster than in the past. Very frequently you also see like conspiracy theories floating around. And there will usually be some group that you've never heard of before that suddenly becomes fantastically rich and inspires everyone else to figure I can become rich too. And of course that describes right now, right? That's the post pandemic. That's Twitter. That's these conspiracy theories like QAnon that are spreading. That's like people like Chamath who 5 years ago nobody knew who Chamath was. And now everyone's like, oh my gosh, there's this billionaire that I've never heard of before and all these people who are making money. We are living in this moment, moment when historically stories have power. And some people are better storytellers than others, right? Some people are fantastic storytellers. Guys like Chamath. And what's the story he's telling Spax that there's a new way of going public that magically takes all the problems of the economy and makes them disappear. And of course it turns out that the people who get most rich off spacs are the people who make smacks like Chamath himself.
- [30:33]
C
And one thing was interesting about Chamath and other storytellers is he brings his own powerful personal story. And I think that's so pivotal for so many people. You notice as a writer or in any realm, like he has an interesting backstory that he tells. You have it in your piece right at the top about going to McDonald's and eating six Big Macs. But I'm getting ahead of myself. You probably should tell the story.
- [30:58]
A
Well, it's a rags to riches story. And it's also one of those things which like rhymes a lot with a lot of the crypto stories that we hear where like you can be a no. 1 and suddenly become massively wealthy, that you don't need to have gone to Harvard Business School to make money in this world anymore. And, and it's. I think we've. That's the kind of story that we have heard over and over again. That Charles will tell you, has been driving these kind of manias for centuries.
- [31:26]
D
That's exactly right.
- [31:27]
C
But his story, I mean, he's an immigrant to the United States. He came here, his family had nothing and he bec. That's like the most iconic American story.
- [31:36]
D
He lived on welfare in Canada. They were refugees. You're exactly right. It's this iconic American story. And he knows that. Right. All of these guys usually know that. They know how to package their story to these narratives that we're accustomed to celebrating. And they also realize that they need to be controversial. So if you follow Chamath on Twitter and he's about 1.5 million followers, he says and does ridiculous things. He takes pictures of his six pack abs and posts them, right? He says things like, you find out who the true corporatist scumbags are. He says that hedge funders should lose everything and they shouldn't be allowed to go to the Hamptons anymore. And he's going to turn it into a sleepway camp for poor kids even though he's a guy who himself yachts off the coast of Italy regularly. Like, they understand that when you're a storyteller, a, you should tell stories that people are kind of familiar with and B, you should just be fun as hell to watch. Like you should be controversial, you should be sexy, you should be. All of these things that as storytellers are ourselves we look for because we know how interesting they are, are one.
- [32:35]
A
Thing I find very interesting about Chamath as an American billionaire. He's one of the few American billionaires, I guess Donald Trump would be another, but there aren't that many who is very vocal about how rich he is and loves to come out and say I just made another $3 billion on these stocks or whatever. There's this thing that normally happens when you become a billionaire in America that you start saying, well, really I'm not something, something philanthropy something, and you start getting very quiet. Whereas Chamath does the exact opposite.
- [33:04]
D
It. I think that's exactly right. And I think it is worth mentioning that as a brown man, he's Sri Lankan. You know, he's born in Sri Lanka as a brown man in America. And as a brown billionaire, like he has this ability to say things that other people can't say because he speaks from a minority perspective, because he speaks as an outsider. And I think that's really powerful, A, because it gives him the ability to talk about things that otherwise people might. Might cast their eyes upon critically. Right. He can celebrate his wealth But B, because it's very inspiring for a lot of people in the Valley who aren't white and who feel like their diversity has been ignored or used against them for years. That finally there's this person that they can point to to say, like, look, this is someone who speaks for us. He's an immigrant like us. He's someone who could talk about racism like us, from a firsthand perspective.
- [33:53]
B
I would note just one or two things on that, which is the idea of person who's provocative on Twitter equals successful business is something that, like, Aaron Levy tried for Box. And there was absolutely a moment when I am convinced that some of the reason that people were using Box is because they liked his whatever thought starters on Twitter. How that played out in the long term. Hmm. I think the second piece is there are. I think part of the attraction to him is it allows white people to be like, well, no, look, a brown person said this.
- [34:26]
D
Oh, that's interesting.
- [34:27]
B
So it's okay. I do think that when you have folks like Chamath who are really outspoken on certain issues that aren't actually particularly controversial, like, that's shit white people say and rich people say all the time, it becomes permissible in the discourse because it's been seen as blessed by another person who's also a billionaire but happens to have a different background from them.
- [34:46]
D
That's super interesting. Do you think that that's a bad thing? Do you think that it's unhealthy?
- [34:51]
B
I don't think I'm ascribing a moral judgment to it. I think it's more that sometimes, especially in the Valley, like the foot jokes that we hold up are useful instruments of things that a lot of other people wanted to say or felt that they couldn't get away with saying. And now they have an easy cause to align themselves to.
- [35:11]
D
That's super interesting. That entirely might be part of it. That might be part of one of the reasons why he's so popular. And he is incredibly popular. Right. He has a lot of friends. He has a lot of supporters, particularly for someone who has as many detractors as he has, like, I would say, half the people I spoke to who knew Chamath, who had worked for Chamath, hate Chamath. They just. They think he's a narcissist. They think he's a bad person. And he has done these things that objectively I think many people would look at. His wife had cancer, and he divorced her very soon after she discovered she had cancer. He was carrying on Having this affair basically in public in a way that was completely embarrassing to her and was scandalous. He talks about himself incessantly and talks about himself in these. These heroic tones. But then there's these other people, like Kara Swisher and a lot of people who I respect a huge amount who really like him, who, like, say, look, like I like this guy. Like, he's interesting and he's fun to hang out with, and I think he's smart and I think he's genuine. Neil Cat, y', all, who's like a former Solicitor General and prosecuted Derek Chauvin for the murder of George Floyd, someone I really respect. He really likes Jamath. They're really good friends. And so he is a complicated individual.
- [36:21]
A
My question for you, Charles, did you get this amazing banker quote up near the top of the piece where the bank is, like, very cynical, but also very admiring about the way in which you can wheel Chamath out in front of a bunch of Midwestern investors and they're just, like, completely snowed by his story and what he's saying and will wind up throwing money at him. And what I want to know is, did that banker admire Chamath or was it just a cynical, like, oh, this guy is a great way to extract money from the buy side?
- [36:54]
D
Oh, no. That banker really admires Chamath because he wishes he could do what Chamath does. He actually tells his clients, be more like Chamath. And at one point. And we should get back to spacs, because that's the core of this, right? At one point I was like, you know, from everything you're saying, it sounds like Chamath is a great salesman for spacs, but it does sound like the average investor in a SPAC is going to get fucked. And the guy was like, like, well.
- [37:14]
A
Yeah, of course, of course, of course, the Chamath spacs. And we should mention this because we haven't said it. The Chamath spacs, like, they, they came out in a blaze of glory in 2020, and then the story of them in 2021 has been like, just a complete down and to the right story. And he just came out this week announcing four more specs in, like, biotech. And you're like, who's going to buy those, given how terribly all of the old spacs have performed? But apparently someone was.
- [37:43]
D
And the nice thing about SPACs is it doesn't matter he gets paid whether there's a bunch of people to buy it or not. And this is the fundamental thing about spacs. Is the question is, are SPACs a scam today, or will they be a scam years from now? And the answer today is absolutely. Any retail investor who buys into a SPAC after it's gone public, after it's found an acquisition target, you are asking to lose money. And the biggest reason why, why is because 20% of the SPAC is given to the sponsors, given to whoever creates it, someone like Chamath for free.
- [38:15]
B
No skin in the game.
- [38:17]
D
If you bought a share of stock and then I said, I'm gonna take 20% of that stock and I'm gonna give it to someone, the broker, for free, there's no way you would make money off stocks. It doesn't make any sense. And they're absolutely a scam. And of course Chamath's SPACs are down because all SPACs, eventually that are coming out right now are going to go down. But that was also true of mutual funds in the 1920s. It was true of credit cards in the 1960s. It was true of junk bonds in the 1980s. Over time, what will happen, and we're already seeing it with this Ackman SPAC, is that SPACs will get more rational. The rules will get more firm. The people who are bringing them to market, the sponsors, will be able to line their pockets less because people will be more skeptical. The investors will become better trained. They'll stop believing these magical stories about getting rich just because you happen to buy a SPAC as opposed to an ipo, and then it will become a part of our economy that actually works normally, the same way that junk bonds work today and mutual funds work today.
- [39:11]
A
I mean, I think it's worth just reinforcing what you just said there, that the Ackman SPAC economics are unique and much less bad to investors than most other SPACs and certainly than Chamata SPACs. But also, it does kind of make you think, right? You get like a huge fintech company like sofi, and they can raise new rounds of money on the private market. They can try and go public in an ipo. They can do a direct listing. They have a bunch of different options for how they want to finance themselves going forward and whether and how they want to go public. Public and looking at the big, long menu of options. Oh, and of course, they have an endless stream of SPAC sponsors coming up and saying, you should do a SPAC with me. And given all of those options, the one that they decided to choose in the end was Chamath. And they were like, yeah, we think we should go with Chamath. And I think on the one hand, you can see why it could be good for them to have this very charismatic billionaire coming out and talking about how they're the aws of finance or whatever, like random, random slogan he's managed to come up with is. But on the other hand, it also makes you think, well, maybe sofi is not as really robust a business as all that. If they wind up having to get into bed with this hugster, that's very fair.
- [40:25]
D
I mean, as you guys know, a bunch of celebrities have gotten behind spacs, right? There's like the Colin Kaepernick spac and the Jay Z spac and the Shaquille o' Neal spac. And so I called one of these guys, so the finance guy guys who basically started a SPAC and put a celebrity into it. And I was like, explain the logic to me. Like, what on earth can a celebrity add to this? And he said, well, look, there's two things. Number one, we need to find a company to merge a SPAC with, right? That's how a SPAC works. It goes public, and then it finds a company, they merge and the company's now public because the SPAC is public. He says, we need to find a company, and there's a lot of competition for these companies. And if I have a celebrity, if I have Jay Z and I'm like, hey, Jay Z's going to come to this meeting.
- [41:01]
A
Meeting.
- [41:02]
D
Every single company says yes, because they all want to meet Jay Z. They maybe don't want to join the spec, but they're like, I want to meet Jay Z. That sounds awesome. But number two is that when you do the acquisition, when you take the company public through the spac, the back door, you need to get on CNBC and be able to tell your story, right? There's so many of these things that attention, when storytelling is, in a sense, when we're in a storytelling economy, the number one most precious commodity is attention. And so the question is, how do you convince CNBC to put you on and let you tell your story? Well, number one, if you say, hey, I have Jay Z on cnbc, then Andrew Ross Darkin is like, man, you should. You were definitely gonna give you some time because I'd love to have Jay Z on cnbc. Normally we can't land them. And number two is that once you are on CNBC and you can tell your story, you know, lots of people are going to be listening because they just think that Jay Z's cool.
- [41:53]
C
Yeah, yeah.
- [41:53]
D
And so Chamath has the same thing. Chamath went and he demanded time on CNBC and they would give him 20 minute, 30 minute chunks of time on CNBC because they know. And I talked to a producer over at cnbc. He makes great television. He says crazy things, right? We love watching people say crazy things. It's like watching the Real Housewives on cnbc who wouldn't show up for that.
- [42:18]
C
You have to remember that financial instruments are boring and, and boring to talk about. Like, you say mutual funds and I'm going to bed, I'm taking a nap. There's nothing exciting about it. So storytelling really is important. If you want people to. If you want to sell your stuff, you have to make it way less boring. And that's what people like Chamath can do. And so many other people that have good stories, like for a while, Uber had a good story with Travis at the helm. They were outrageous and, like, you paid attention for some reason. Mark Zuckerberg had a good story at Facebook for a long time. I don't really understand why, because I don't think he was the storyteller there. I think the press did that for him for some reason that I don't understand.
- [42:58]
A
But, like, Elizabeth Holmes had an amazing story.
- [43:00]
D
Amazing.
- [43:01]
C
Yeah. There's like the stories that the press gloms onto, and then there's Chamath and people using social platforms to do it themselves. And I think there's interesting differences there. But at the bottom, finance is boring and you need these people to make it interesting. Right.
- [43:16]
D
And I think, I think it's healthy when finance is boring. Like, finance is supposed to be boring.
- [43:20]
A
It should be boring. Your money should be boring people.
- [43:23]
D
Yeah. Although, like glasses wearing, like number crunchers, they show up.
- [43:27]
A
Right?
- [43:28]
D
Some of you are wearing glasses, no offense. But when the number crunchers show up, things work pretty well, right? Like, you don't earn a huge amount of money, but you don't lose a bunch of money. The economy just chugs along healthily, except.
- [43:39]
A
For when the glass is wearing. People like invent CDO squares and then it all goes horribly pear shaped.
- [43:45]
D
Well, what's interesting is that they invent CDO squares, but they don't get really popular until the storytellers step in and tell them how to tell that story.
- [43:53]
C
Right.
- [43:54]
D
Long Term Capital Management's a great example. We think of Long Term Capital as, which of course everyone remembers was the hedge fund that blew up and almost brought down the economy. You think of them as like number cruncher glasses wearers. And they were for a little while. But then the storytellers came in and that's when everyone started learning about long term capital management. Once they had perfected the story and they got the storytellers on board, that's when it gets dangerous. But that's also when you create new things, right? The storytellers get us to believe in these new financial instruments and suddenly people say, I'm going to throw my money at building the marketplace and the infrastructure that's needed for that thing to persist. And then they get wiped out, but the infrastructure is left behind.
- [44:33]
B
I just want to note on behalf of the glassesware is that some of us also tell stories.
- [44:38]
D
It's true. It's true.
- [44:39]
B
We can multitask.
- [44:42]
D
An excellent point. And they're very fashionable glass glasses.
- [44:44]
A
Let me just say, Charles, since you're here, I think you should stick around for the numbers round.
- [44:50]
D
I love it.
- [44:51]
A
I'm going to start because I love these stories. I'm going to stick with the stories theme with my number, which is 50, which is the big headline that came out this week from United Airlines which said it was going to buy as many as 50 supersonic planes from this company called Boom. And they've definitely buying 15 and they might buy another 35. And now everyone is talking about like Concorde 2.0 and we're going to have like supersonic plane travel all over again. And I'll believe it when I see it. Like in the best case scenario, this isn't going to happen until 2029. But the boom story is now like we have sold planes to United. So at this point we're a real company and it's totally going to happen.
- [45:34]
B
Totally. 100% for sure.
- [45:37]
A
For sure. 100. We know this. Like there's what could possibly go wrong. Stacy, do you have a number?
- [45:41]
B
My number is 40 today. Saturday is the 40th anniversary of the first five known and reported cases of AIDS in the United States. And there's a whole bunch of really interesting and frankly tragic commemorative reporting that is coming out this weekend. So I hope that folks will have some time to, to take a look and see what the history and the present of HIV and AIDS in America looks like.
- [46:08]
C
Is there anything specific to point us to, to read?
- [46:12]
B
One of the things that I really appreciate is that AIDS related deaths globally have fallen by more than 40% in the last 10 or 11 years. The challenge is you're starting to see significant uptake in infections among very young girls, particularly in Sub Saharan Africa. And so a lot of the work that folks are doing around education, et cetera, we're just like sort of moving around the world in phases to try to get this condition and disease under control.
- [46:42]
A
One of the things that really struck me when I was looking at New York City when it was the epicenter of the COVID pandemic, and was I was looking at the number of deaths to Covid in New York City. And even if you add them all up, it's still a fraction of the number of New Yorkers who died of aids. Really, like, people really forget how AIDS just completely hollowed out New York generation.
- [47:05]
D
And it was younger people. Right. It was obviously under 36. That's a good reminder, Stacy.
- [47:11]
A
Emily, do you have a number?
- [47:13]
C
I have a number. My number is 66. That is the number of miles round trip it would take me on today, which we're recording on Friday, to get to the nearest Krispy Kreme so I could get two free donuts. Because they're giving away two free donuts.
- [47:31]
A
This is why you need to move back to New York City, Emily.
- [47:33]
C
It honestly is.
- [47:35]
A
Are they going public again, Felix?
- [47:37]
B
They are.
- [47:38]
C
I was so confused by this. They announced this week their plans to go public. And I was like, hang on. I know. I read about Krispy Kreme going public and it going terribly wrong. But. And that's what happened in 2000. They went public. It went terribly wrong. Everyone stopped eating donuts, which. Why would anyone stop eating donuts? I don't understand. And it all blew up and now they're trying again. So that's something to think about.
- [48:02]
A
They, like, they file for bankruptcy. Right. And so they. And now they're coming back out. Yeah.
- [48:06]
B
Yep.
- [48:06]
C
People like donuts again and they really. Their vaccine. Normally they give you only one donut for your if you're vaccinated, but today is donut day Friday.
- [48:15]
B
So I feel like they could have filed their S1 on donut day. That would have been.
- [48:19]
C
They should have done that. Oh, my God. But the donut giveaway has been very successful for them, which shocker, I guess. Guess so. They should do that forever.
- [48:27]
A
I think it's just as successful as the popcorn giveaway at amc. If you buy us.
- [48:32]
D
If you buy a share of free popcorn.
- [48:34]
A
And everyone's like, great, let's buy this.
- [48:37]
B
Yeah.
- [48:37]
C
Because people will drive 66 miles and spend all that money in gas to get the free donut. Makes no sense. Is exactly like the free popcorn giveaway also makes no sense. Just make some popcorn at home, people. It's delicious. And so cheap.
- [48:50]
A
All right, Charles, we need a number from you.
- [48:52]
D
Okay, so My number is 10,000. And it has to be in comparison to another number, which is in the last seven days in Japan, the number of COVID cases has been 2,926. And I am prophesying as. As folks probably know, Japan is committed to holding the Olympics there this summer. Despite the fact that the Japanese Doctors association has come out and said this is a terrible idea. Despite the fact that many Japanese citizens think this is a terrible idea, Japan has said the Olympics are going forward. And I think what's going to happen is that we are going to see an explosion in Covid cases in Japan. And the reason why that's dangerous is because the narrative right now is on the side of controlling this thing. Right? Not all over the world, but the story that we're telling ourselves is we are getting ahead of COVID Vaccines are working, and you're. Then you're going to have this high profile event that the entire world watches, and we're going to see an explosion in Covid cases. And for a number of people all over the world, it's going to make them think, actually, maybe I shouldn't be confident. I thought that we got this Covid problem solved.
- [49:56]
A
I think that's correct. People should not be confident, especially in Japan, which, for reasons which I genuinely do not understand, has barely started on its vaccination program. The number of vaccinated Japanese people is tiny. They want tens of thousands of volunteers to work the Olympics. And to a first approximation, none of those volunteers are going to be vaccinated come the Olympics. You're like, how? What? No. How hard can it be to just take those people and vaccinate them?
- [50:22]
D
But no, again, the economy lives and dies on stories because that's what informs consumer confidence, et cetera. We're basically looking at, like, going to be a terrible story. We know it's coming, and we're doing absolutely nothing to try and make that story better before it starts unfolding.
- [50:37]
A
So. So, Charles, the last time you came on this show, you made a bold prediction that Donald Trump was going to stop tweeting. This prediction turned out to be magnificently false.
- [50:47]
C
And wait a second, wait a second. It's true. He's not on Twitter anymore. They kicked him off. He does not tweet anymore.
- [50:55]
D
I just got my timing wrong, man. I would have won that bet.
- [50:58]
A
You would have won. Exactly. You were just early.
- [51:00]
C
Chelsea, wait a second. You owe him a stake.
- [51:03]
B
This is like SPACs are going to be profitable. It's great.
- [51:06]
A
But I feel like this is the thing, the numbers round. There needs to be a numbers round bet. I'm going to take the other side of this and I'm going to say that the Japan Olympics is not going to happen.
- [51:17]
D
Ok. Ok. I like it. We steak dinner on the line here.
- [51:20]
A
Maybe we can have another steak dinner.
- [51:22]
D
I love it. Okay, let's find out. The most interesting part about this is that the Japanese officials have been so dogmatic that like they're going to continue these games and what it's like we're like a month and a half a month away. It would be crazy to cancel them now. But I like this bet. I think it's going to happen. You're taking the other side. Look, this is a marketplace in action.
- [51:41]
A
Exactly. Okay, I think that's it for the show. Charles, thanks for like dropping in, parachuting in from where are you in like Santa Monica?
- [51:51]
D
Santa Cruz. Santa Cruz, California.
- [51:53]
A
You're right next to Chamath. You're like right in the heart of Silicon Valley.
- [51:57]
D
That's right. I am literally right next to Chamath and pretty close to the ocean, so it's pretty great.
- [52:04]
A
Well, thank you for being amazingly awesome and brilliant and thanks to all of you guys for listening and thanks to Jesmyn and Molly for producing and yeah, we'll be be back next week on Slate Money.