A (2:37)

Not to extrapolate from Twitter anecdote, but one of the big issues here, which you know, the ghost of Kathy is whispering in my ear, is it is very problematic that all we have is Twitter anecdote. We should have much more than just Twitter anecdote and Goldman Sachs and Apple should be very transparent about the actual facts of whether or not there's disparate impacts instead of just waving and saying, oh, we got a third party to, you know, attest that there's no disparate impact. And Felix, do you want to explain.

C (3:11)

What you're talking about a little bit?

A (3:12)

No, I feel that's your job. Emily, can you please like rewind and give us a little bit of what the hell are we talking about here?

C (3:20)

Sure. Bloop, bloop, bloop, bloop, bloop. That's me rewinding.

A (3:22)

I like it. Are you using your snowball to rewind?

C (3:26)

I am using my snowball in concert with Audacity and other tech marvels and recording this from my home today.

A (3:33)

I'm very impressed.

C (3:35)

So over the weekend, David Heinemeier Hansen tweeted basically that his wife, David Heinemeier Hansen is a well known tech founder developer, tweeted that his wife and he both had Apple cards, you know, issued by Goldman Sachs, but that he had 20 times the credit limit that she had, even though her credit score is higher. They file taxes jointly, they, you know.

A (3:59)

Communal property and they importantly reported the same annual income. So in terms of the data that Goldman and Apple say that they base these underwriting decisions on, she should have come out better than him because they had the same income, but she had a higher credit score.

B (4:16)

Right.

C (4:16)

And so the tweet just went completely viral. And among the people chiming in was the Woz, Steve Wozniak, you know, the co founder of Apple, who said a similar thing actually happened to him and his wife where she had a lower limit than he did. And New York State quickly said we'll investigate this. Elizabeth Warren chimed in calling out Goldman for not because Goldman has spoken and kind of like did a not real apology kind of a thing and said something like we hear you and let us know if this is happening to you. But it hasn't said this is exactly what's in the algorithm. You know, it's kind of being, it's really hedging on that being really dicey, weird.

A (4:56)

I have asked them, I've had conversations with Goldman, I have asked them to send me the details of how they determine whether there's disparate impact, what was determined in this case. I'm not asking them to reveal the entire details of the algorithm but just the outputs of the disparate impact tests. And we will see whether they supply that, but they certainly haven't supplied it yet.

C (5:19)

And you wrote in your newsletter, Felix, that Charles River Associates signed off on the algorithm before the card was issued and said it wasn't discriminatory. But it's not really clear what that even means.

A (5:31)

So, number one, it's not clear what that means. Number two, it's not clear that that is exactly what they did. I have asked them, is this what you did? Did you, you know, test the algorithm and determine that there was no disparate impact against women? And I've received no reply from them. The only people saying that Charles River Associates did this is Goldman. I'm not saying they're lying, but like, I just would love to hear from Charles Trevor directly to see if they actually did what Goldman says that they did. And they are being super quiet as well. And it's all part of this broad culture of secrecy. And everyone who works at Apple knows that it is a super secretive place. Everyone who works at Goldman knows that it's a super secretive place. And they will do things like try to throw you in jail if they think that you have stolen their secrets. And clearly Charles river is a super secretive place as well. And all of this secrecy just doesn't really work well with the desire of people like me and people like David Hanemeier Hanssen to see what's going on behind the scenes of this algorithm.

B (6:34)

Yeah, I mean, I think it's a fair point when you're talking about how credit scoring is probably going to change as we move forward and people are increasingly using complex algorithms. The more complex they get, the more the people who created them probably don't even fully understand what exactly is going on. And also from a legal perspective, I'm guessing that they probably don't really want to know entirely what is going on. And so I'm kind of curious in terms of the auditing of the algorithm that was done, like, what does that actually do to kind of give them a little bit of COVID but not tell them so much that then later they can be sued? I'd just be curious.

A (7:08)

Right.

C (7:09)

And I think one thing we should really highlight here is that Apple, this is the Apple card after all. It's not the Goldman card. I mean, Goldman does the back end, but Apple has all this language, marketing language, about how this is an Apple card, not a bank card. They have been silent. They're not really talking about this very much at all.

A (7:27)

It's kind of amazing to see them throw Goldman under the bus here because the marketing slogan is designed by Apple, not a bank. And then the minute that the question about, well, can you talk to us a little bit more about how this is designed? Because the design looks like it's sexist. They're like, oh yeah, that's a bank.

B (7:44)

That would be like, well, they're probably like, everybody hates Goldman anyway.

C (7:47)

I mean someone pointed out, I think it was in the Vox piece you linked to in your newsletter, Felix, but someone pointed out it would be like if there were bugs with the iPhone, it would be like Apple saying, you have to talk to Foxconn about that. Our factory in China is responsible for that. Like Apple needs to take responsibility for the product that it's marketing and that it's claiming to be its own. It can't just as responsibility for it.

B (8:11)

Yeah, I feel like as Apple though increasingly kind of moves away from their wheelhouse as they're kind of trying to expand what they do, I'm guessing that this is going to happen more and more because they're going into industries that frankly they don't know as well.

A (8:21)

You don't actually want Apple to be a bank. I mean, no one wants Apple to be a bank. The whole, there is a huge amount of regulation around bank holding companies and who can own banks and who can be banks. And I think the world would, would be terrified if any of those tech giants became a bank because financial data and health data are the two big types of data that people really want ultra secure and they don't just want sort of floating around in on Facebook.

B (8:52)

Although interestingly as this what the past few weeks we've had Google coming out talking both about having health data and potentially checking accounts.

A (8:59)

Yeah, Google checking account sounds like really weird. I have no idea how that would work. But yeah, they say they want to do that. Facebook is getting back into payments for I think the fourth or fifth time. You know, we'll see whether that works. Apple obviously has this card which has, you know, I mean before this had managed to get enormous adoption and has some enormous percentage of all contactless payments in America are made on an Apple card. And so Apple is actually becoming an important force in payments now and all of this is happening. You know, people would be worried about it if it was banks because people don't trust banks and you know, mistrust of banks is something we've talked about a lot on this show. But I don't think anyone is any is reassured if it becomes tech giants.

B (9:44)

Right. Because I feel like tech giants are kind of becoming the new, the new bad guys. Right. So it's not, it's unsurprising that, you know, Apple had that slogan of we are not a bank, but now they can't exactly say we are not a tech company.

A (9:55)

Right.

C (9:55)

I just think this whole episode highlights the danger for tech companies already losing or have. Have lost the trust of a lot of Americans. And now they're venturing into a sector where Americans, like, absolutely no one likes their bank, no one likes the credit card companies, like tech companies are. Reputations are already suffering, and now they're getting into financial services. And I don't see how this ends that well for them.

B (10:19)

I mean, I think. And they're all clearly. And I probably said this a million times, but I think they're looking at China and they're seeing these models of like Alibaba and Alipay and how lucrative those are becoming. And it make. And it makes sense to a certain extent if you're saying, like, oh, we already have all these people, if we could kind of just connect these buyers and sellers, then we can also expand beyond ads, blah, blah, blah, all of that. Like, you can see why that makes sense. But the problem is that it's just simply a lot harder to do in the United States than it is in China.

A (10:43)

And I want to talk a little bit about, like, brand value. Apple is a hugely admired brand in America. And on some level, it makes sense that people would much rather have an Apple credit card than Apple, a Goldman Sachs credit card, or a Wells Fargo credit card or something like that, because, you know, people don't like Goldman and they do like Apple. And yet it turns out that the reason people don't like banks is not so much that just they have bad brands, but just because these financial services are really nasty and make you feel bad and upset. You know, this is a credit card that charges you interest. And, you know, it does it in a slightly better way and actually in a much better way than most other credit cards. You know, the little behavioral defaults in the Apple card are much better designed from a consumer perspective than the defaults on most credit cards. But in the world of Twitter anecdote here, you know, I wanted to see for myself. I have a credit card. My wife and I have the same income. For the purposes of this credit card. We both, you know, my income all goes into a joint checking account, so it belongs to both of us. And I. So I asked my wife, I'm like, hey, why don't you apply for an Apple card and let's see how your credit limit compares to my credit limit. And we'll see whether, you know, you have the same result as you know, the was had. And so Michelle went ahead and applied for the credit card and this screen came up saying like, can you upload a photograph of the front and back of your state id? Which is not a screen that most people get. And I did a little quick unscientific Twitter poll. It only seems to be about 30% of people get that screen. The screen came up and then nothing happened for a few hours. And then a few hours later they said, oh, there's a problem with your id, you've been declined. And then she tried again with like a better quality photograph of the ID and then she was declined again. And this is like an unpleasant experience which makes her and me feel worse about Apple. And this is, I think the thing that a lot of these tech companies don't understand is that people feel good about Apple. Apple has good brand value precisely because it's not in financial services. And if they move into financial services, people will feel worse about them.

B (12:53)

Well, but I guess if they could do a little better job, people would feel a little bit better. But I think this could be the problem too. It's like, it's almost reminds me of like Tesla where they're kind of like let's just get all the humans out and we'll bring robots in and everything be better. And it's a disaster. And I wonder if similar things are happening here too. If like they're just, they're using again more complex algorithms, maybe automating a bit more and so then you're getting these results that they did not anticipate.

C (13:16)

I will say though, one thing to think about is I don't think think credit cards are issued to couples based on like, I don't think a credit card company looks at a couple where the say one spouse stays home, the other one works. I don't think the stay at home spouse's income is counted the same as the working spouses income.

A (13:36)

So I, I can jump in here and like having done a bunch of reporting on this, I can explain what's happening here. And this does explain why people are upset about the Apple card and why the Apple card is unique for the time being or pretty unique for the time being most of the time. Let's say that my wife and I apply for an amex card. We will make one application between us for the AMEX card and we will get two cards, one in my name, one in her name. But it's one account and you only apply once and it kind of doesn't matter which one of you applies whose name the primary account holder is, you only make one application. You get one response. And so you don't realize that if you'd applied individually, you might have got different results. The Apple Card is not set up for multiple cards on a single account. It's only set up for individuals, which means that married couples who generally share accounts when it comes to credit cards have to apply separately for the Apple card. And that's something which is extremely rare. And because it's so rare, you know, it just means that these kind of disparities in underwriting outcomes become visible in a way that they are just not visible elsewhere. Because this situation almost never turns up in the wild anywhere else.

C (14:52)

Yeah, I think it does sometimes turn up in the wild because I have my spouse, stays at home. And like, when we apply for credit, things like that, like, we need. Yeah, we need to do it jointly, like you're saying, Felix. And when we have separate cards, we're treated differently. So this claim from Hennemeyer, Hansen and others, you know, who said that, you know, we're the same, we have the same income, we share joint income, whatever. It's just that's not the reality of financial services and underwriting. And that's like, I think a bigger question that needs to be asked, because if that's not addressed, then there is going to be this disparate outcome that seems sexist. You know, that's sort of like, baked into the system beyond Apple and Goldman.

A (15:36)

And addressed in a pretty transparent and open way. Because, like, again, right now, all we have to go on is Twitter anecdote. And, you know, I keep on going back to this one guy on Twitter who's in the app, replies to the HH on Twitter, and he's like, yeah, my wife and I both applied for an Apple cart, and she has a higher credit score and a higher income than I have, and she's still got a lower credit line. Right.

C (16:02)

That's a big question. I saw some of those, too, and that's. Yeah, I guess I could also. And Apple need to answer for this.

B (16:07)

Yeah, yeah. Because, I mean, of course, there are other questions that we could go here back and forth about, like, who's actually making all the payments? And, you know, I mean, a lot of things go into these credit scores, but I think you're right at the end of the day.

A (16:15)

But it doesn't matter what goes into the credit score. If the credit score is higher, then you should get a higher credit line.

B (16:22)

No, I agree.

A (16:24)

And so what we need to do is work out, like, is this true? Like, you know, is this common? And all of these questions are just, we're not getting clear answers to.

C (16:34)

And it's worth noting that in the eu, in the gdpr, there are some regulations that were just put in place on what they call automated decisions where consumers have a right to understand what goes into these kinds of decisions made by algorithm. Like, yeah, you have to.

A (16:51)

I mean, I feel like, I feel like in the case of the Apple Card, they're being very. They're saying quite explicitly, well, it's your credit score, your credit history and your self reported income. And it's just like, really, if that's it, like, it doesn't explain these outcomes, but maybe, maybe they will be a little bit more forthcoming given this outcry. Emily?

C (17:14)

Yeah.

A (17:14)

Tell me about your restaurant habits. Do you generally eat out or do you generally order in?

C (17:20)

Well, we used to be an order in kind of family in Brooklyn, but now we live kind of in the middle of nowhere. So we do a lot of cooking, I'm sad to say, or I'm happy to say, because I think it is healthier.

A (17:30)

Cooking is definitely healthier.

C (17:31)

Cheaper, definitely. Over the years, I've switched from restaurant to ordering in kind of person. I would say. Yeah, Felix, I know you're a restaurant person. I feel it.

A (17:42)

I am a restaurant person. I, you know, I think there's a lot of experiential wonderfulness that one gets from eating at a restaurant that you don't get from ordering in from a restaurant. On the other hand, you. I don't have kids, you know, and I totally understand that. That alone changes the calculus enormously. And I do not judge, I will never judge people for ordering in. What is interesting to me is that the ordering in economy, which, you know, insert some weird unscientific generalization about millennials here, does seem to be growing. That economy has been swarmed by big Silicon Valley tech giants like Uber and DoorDash and Grubhub, and they are taking really significant chunks of every check. When you order delivery, they don't just take that delivery fee. They actually take a commission on top of that. And restaurants, a lot of restauranteurs that I've talked to are feeling kind of unhappy about this because they see those deliveries as, on the one hand, being like people who might otherwise have come into the restaurant and spent more money, especially on things like alcohol. And on the other hand, it's like, well, they make less money because they have to give a huge chunk of that check to. To the grubhubs and ubereats of the world. And it's not the only place that tech is sort of taking, you know, extracting rents from the restaurant industry. It's happening in a bunch of other areas as well. And I was particularly interested in this new company called Seated, where you get like, like up to 30% of your check back in the form of Amazon Rewards, basically. And it's like, wow, and now.

C (19:28)

And now Travis Kalanick has gotten a bunch of new Saudi money to make things even worse for the restaurants of the country.

B (19:35)

Is that.

C (19:35)

That's why we're talking about this now, right?

A (19:37)

Cloud Kitchens.

C (19:38)

Yeah.

B (19:39)

Although the thing I'll kind of say, though, is that part of the reason that people would probably invest in that and part of the reason that this is happening is because people's eating habits are changing. And so we can talk about this. And yes, this is putting restaurants at a disadvantage, but it isn't just, you know, tech bros. Taking advantage of people. It's that people's habits are changing.

C (19:58)

And I actually was thinking because. So Travis Kalanick has this company called Cloud Kitchen, which basically gets rid of restaurants entirely, and they just have, you know, these kind of industrial kitchens where you order the takeout and they send the takeout and no one sits anywhere. And he just got like $400 million for it from the Saudi, the Vision fund or whatever.

A (20:19)

At a $5 billion valuation.

C (20:20)

At a $5 billion valuation.

A (20:22)

Which I love the idea of what this does to Travis Kalanick's net worth. He was already like a billionaire from Uber, and now he's just added a couple billion dollars to his net worth by raising money at a $5 billion valuation. Like, oh, great, so glad that Travis got even richer.

B (20:38)

But I mean, it's essentially like what he's talking about is almost like, um, you know, when you have the trucks that everybody gets their lunch at, like, it's this, you know, I think of, like, back in the past where, you know, people actually ate their lunch out, they didn't just eat it at their desks or the fact that you did have people regularly going out to eat. And as I've said, like, I feel like regardless of the tech people coming in, I think it's hard to believe that people were just going to continue doing the same things they did 20 years ago. So I guess the question then is.

A (21:06)

Well, I believe that, but is that good?

B (21:08)

I mean, like, things change. You know, people change. No, I'm saying watch things at home and eat at home.

A (21:13)

I'm saying no, I mean, I, I genuinely believe that in a world where people are increasingly valuing, you know, face to face real world experiences, this should be a boom time for sit down restaurant experiences that should be growing, not shrinking. And I entirely understand what it is about the present moment that makes that 180 degrees false and why people are eating out at restaurants less and getting food delivered more.

B (21:49)

I mean, I think.

C (21:50)

Wait, really wait. People are increasingly valuing face to face interactions. Is that true? I feel like people popular now.

A (21:58)

Yeah. That's why like the conference economy is booming. That's why, you know, that's why the music industry is moving overwhelmingly to live events.

B (22:08)

But I think you also have revealed preference to a certain extent too. Right? Is that part of the reason that a lot of these companies, like your Doordash and whatever, have done well is because people have found, hey, it's actually really nice to eat good food at home and put on Netflix. It's easier. And if you have kids, it's a lot easier.

C (22:25)

Yeah, it's super convenient. You don't even have to. I mean the appeal I always thought of like Grubhub or DoorDash is you pick up your phone, you press a few buttons, you talk to no one, you don't even have to call, you don't call the restaurant anymore and go through like that sort of like torture, torture of ordering off the menu, blah, blah, blah. You just press a few buttons, someone shows up at your door, hands you a bag, you don't even have to talk to them. I mean, it's all about, you know, it's all part of this, this phone society we live in where we're just texting, no one wants to pick up the phone anymore.

A (22:56)

It sounds horribly dystopian and yet also very realistic.

B (23:00)

Yes, because yeah, if people didn't like doing it, it wouldn't be successful.

A (23:05)

So my feeling is that you're right about diagnosing what is going on. Even though I'm sad about it. I think this is absolutely correct. But one of the implications of that is that restaurants as an industry are going to wind up spending more higher and higher rents on tech services. And I feel like the restaurant industry was precarious enough to begin with and that if they wind up having to spend a, you know, wind up paying a whole bunch of money to DoorDash and Uber Eats, as well as people like OpenTable, as well as people like Seated, as well as people like Yelp or whoever the services are that get them good reviews on Yelp, because without a good review on Yelp, you'll never make any money. You know, all of these kind of services add up and they all eat into your profit margin. And it just makes trying to open a restaurant more and more precarious in a world where restaurants have historically been one of the foremost ways in which immigrant families especially can, you know, enter the middle classes. And this just gives me a bit of a sad.

C (24:12)

Yeah, no, it's definitely sad. And I think there, I mean, I'm not happy about this sort of retreat, this retreat from the public sphere and the sort of dying of the rise of takeout is sort of hastening this kind of public retreat where we're all like just going back home into our apartments and staring at screens while we eat our sad takeout. I think it's really bad. And I think the. There are real benefits to having restaurants and places where you gather and have to sort of interact with each other. And there can be really interesting encounters. I think we saw last year, or maybe it was this year, where, you know, people from the Trump administration tried to eat at restaurants and they had to encounter the public and it was very uncomfortable for them. And that's sort of like a very extreme example. But there's a benefit to having to go out into the public sphere in a democracy, you know, so in addition to being bad for immigrants, because owning a restaurant or working in a restaurant is sort of like a step up into the economy, it's just bad for the citizenry, I think, maybe a little. Even though ordering grubhub is nice and.

A (25:14)

Convenient, there is something democratic about restaurants. I mean, obviously some are very exclusive, but the countries with restaurants are the countries that didn't used to have so much of an ability. It's like that. What you often find if you look back on history, the history of people having food cooked for them is very much the history of people being able to employ servants to make food for them. And then there's this massive democratic revolution where people don't need to employ a full time cook to make food for them. And they can just go out to a restaurant and just pay someone to make food on a, you know, occasional basis. And it really revolutionizes how people eat. And it was a wonderful revolution. And, you know, maybe this is the next step of that, that you don't need to go anywhere to pay to. To pay someone else to cook for you. You can just press a button on your phone and someone in Travis Kalanick's Cloud kitchen will whip up, you know, a Tycom gar or something and deliver it to your house. I just, I do agree with Emily that that is a backward move in terms of civil society.

B (26:33)

I don't know, I just think it's a lot. I mean, I just think it's nostalgia for the way things were and this idea that change must always be scary and bad and, and yeah, right now I'm not saying there aren't some downsides, but it also works really well for a lot of people and we'll see what happens in the future.

A (26:52)

Emily, we have a new Netflix on the block. It's called Disney and it launched with great fanfare. Did you sign up?

C (27:02)

I did not sign up. I have Verizon as my Internet provider and then I heard we could get free Disney, but alas, it's not true. Not all Verizon subscribers can get Disney. But anyway, yeah, this little company you may have heard of called Disney is now doing streaming all Disney's content. So all the movies that everybody loves, plus all the Star wars stuff, well.

A (27:25)

Let'S, let's rewind massively. It is far from all of it. Eventually in many years time, it will be all of it. But Disney signed multi year deals with a whole bunch of online services which they need to honor. So you can't just turn on Disney and see all of the Star wars movies. You can, or all of the Marvel movies or all of the Pixar movies. You do get a bunch of their back catalog and you do get the Simpsons.

C (27:52)

Yes, for $7 a month, which is.

A (27:54)

Cheaper than Netflix or free if you manage to have the right kind of Verizon account or stuff like that. I mean we just had the launch of Apple TV plus as well. And a lot of these things in trying to make a dent against the two big giants in the space which are Amazon prime and Netflix, are basically signing up people for massive free trial, year long free trials, that kind of thing in an attempt to hook people. I can tell you I got my free trial to Apple TV Plus. I watched about 10 minutes of the morning show and I gave up. It was atrocious. So I'm not quite sure how much.

B (28:34)

Value there is, although I feel like I have a little bit more faith that Disney is going to do this well than Apple as Disney's been in the content business for a while.

A (28:41)

So Disney had an enormous number of signups. It was like 70 million or something crazy. Or 7 million.

C (28:48)

10 million.

A (28:49)

10 million. Anyway, millions of signups and people really want to watch the mandalorian I think, which is some Star wars thing. And. And there was of course, the inevitable tech glitch and everyone got blue screens of death and couldn't sign up and that kind of thing. Because Disney had only spent $3 billion buying a streaming company, Bamtech, to make sure it was all seamless, could scale without any problems. But like, I think the general consensus is that they will figure out the tech problems, that the IP is incredibly compelling, that they have all of these franchises that people are going to want to watch and that really Disney plus could well be powerful enough to. To be a compelling alternative or at least addition to. Well, and Amazon.

B (29:40)

Yeah. And especially because it has such good content for kids. Not that Netflix does it, but obviously Disney's going to be better. And I do think though, this kind of idea of like the streaming wars that you kind of hear about, I question that a little bit because I do think that will probably get to a point where people aren't just going to own one streaming service.

A (29:55)

No, people already own two or three, especially if they have Amazon prime, which they don't think of as a streaming service. The interesting thing about Disney plus is that Disney is bundling it with Hulu and ESPN in like a big bundle for this at like $15, something like that. And that's a pretty compelling thing because the one thing which you've never really been able to get on OTT up until now has been sport, live sports. And so now you get ESPN and you're like, boom, now I get everything.

B (30:25)

Otherwise you have to go through your parents Dish Network to watch games. I'm not saying I did that last.

C (30:29)

Weekend, but I think one thing this shows is that there's no one streaming service that has it all. Like, as more and more people unplug from cable, nothing is actually replacing cable. It's. We're all using this kind of like mishmash of different streaming services. And it, at some point it's just going to be this sort of polarized kind of, you know, choose your own adventure landscape. And although I feel Disney comes close.

A (30:57)

I mean, now that they've bought Fox, now that you have this bundle of Disney, Hulu and espn, that really does come as close as I think anyone's going to get to a one size fits all, you can eat kind of bundle, like, yeah, you miss out on that Netflix show or that HBO show or that Amazon prime show, but in terms of being able to just turn on your television and want and watch something which you will enjoy watching, it will serve that Purpose.

B (31:25)

Agreed. I mean, I think because Netflix almost is increasingly becoming like a channel as it creates more and more of its own content and is less reliant on the content of others. So it's like you go to Netflix for specific shows in the same way that you'd go to HBO for specific shows. Whereas it does seem like, as you were describing, this kind of bundle that's a little bit more like cable. You know, I, I do think you could get to a point where people are spending as much as, if not more than what they were previously spending on cable.

A (31:52)

However, although that's pretty hard. Yeah, cable bills were enormous. And, you know, I feel like no one's going. You don't need more than. I feel like if you have that Disney bundle of Disney plus Hulu and ESPN and that's like 15ish dollars and you have Netflix for another 15ish dollars and you have Prime. Anyway, so the margin, prime is zero.

B (32:13)

And maybe Showtime, maybe HBO, but like.

A (32:15)

Even, you know, that's 30 bucks, which is way lower than a cable bill.

C (32:19)

And you still pay for high speed Internet access.

A (32:22)

Right, right. But often you are paying for high speed Internet access anyway, even when you had cable tv.

B (32:27)

Right. But what I also think is interesting though, about this model that is obviously a little different than cable is that you can often kind of start and stop a lot.

A (32:34)

Right.

B (32:35)

Because, I mean, I know that with Netflix, like, if I want to watch one thing on Netflix, I'll do it. And then if I don't watch TV for six months, I won't pay for Netflix for six months and then I'll start it up again.

C (32:42)

Yeah, I think that that'll be an increasing strategy, like succession. Fans sign up for HBO Max, which is coming out soon. I mean, there are a couple of services still to come out, HBO Max and Peacock, which is like NBC's gonna be NBC's free streaming service. And they, they took back Friends and the Office from, from Netflix, which was like very big draws for Netflix. And one point I think is interesting to contemplate would be the effect of it. If net neutrality kind of really goes away, the streaming services that are tied up with Internet providers may wind up with some kind of sinister advantage here. You know, like HBO.

A (33:21)

HBO is now owned by AT&T.

C (33:24)

Right, Right, exactly. And the other one I'm thinking of. Oh yeah. And this Peacock service through, it's owned by Comcast. Comcast. So there may be, you know, down the line, those kinds of services might be much cheaper. The. They have, they own the Pipes and.

A (33:42)

Or they can monetize the pipes in some other way. Or like if, you know, if you're getting at and T cell service and you get HBO Max for free and then they manage to target ads that you better. I do think that the evolution of ads on these services is going to be super interesting one, like we've had this kind of golden era where Netflix, Amazon and HBO have all been basically ad free and people have become accustomed to that. And I think it's one of the reasons that Hulu doesn't have the same salience in the culture is that people like, oh, you know, do I need to watch ads? Like technically there's a version of Hulu you can buy which doesn't have ads, but they don't really push it very hard. They want to have that outlet, they want to have inventory for advertisers. They want to be able to make money from advertisers. I think Peacock is the same way. But it'd be super interesting to see whether people are willing to pay money for an online service that also includes ads beyond the I don't know how many subscribers Hulu already have. So it's quite a lot. I think it's like 20 million.

B (34:46)

Yeah, I mean. And I will be interesting to see what happens with Netflix, especially if the economy turns a little bit. Just because Netflix, unlike a lot of the others, is a pure play. Right? Just pure play streaming. And it doesn't have the back catalog that a lot of these other guys have. And it has so much debt. It has all these content liabilities. It's already paying a fairly high rate on its debt. And so I will be interested to see. I think that they, even though right now they appear obviously like the leader beyond anyone else. I'll be really interested to see what happens in a more significant downturn.

C (35:21)

And the one other thing I wanted to say was how I see this fitting in with the restaurant conversation we just had.

B (35:29)

You order food and watch Netflix?

A (35:30)

No, I mean they all connect.

C (35:32)

They are connected. So back in the days before there was cable and everyone watched the same, like three or four channels, we had a public discourse that was far less polarized. And that's not a coincidence. There been studies and research that backs us up. Basically we had sort of a shared understanding of the truth because we all connected on the same media. We all watched the same news, we all saw the same movies basically. But then cable came along and kind of blew that up. And now we see what happens when you have like a Fox News and an Emmy, NBC News. And people are getting different versions of the truth. And our public discourse has, you know, along with that become much more polarized. And now with the rise of streaming, that polarization and I think that disconnect from, you know, civic society essentially is gonna. Is becoming much worse and will get much worse and will sort of deepen world we live in where no one has the same kind of. No one has a shared reality or a shared culture. It's the average.

A (36:35)

I feel like Disney is a shared reality. Like Disney.

B (36:38)

I'll watch Frozen.

A (36:40)

It crosses all political divides. It brings everyone together, with the possible exception of like the Handmaid's Tale on Hulu, which is definitely a blue state thing. But no, I mean, you know, sports is largely universal. Star wars is universal. The Avengers at Universal. Frozen 2 is gonna be Universal. Disney has done a good job of being universal. I like that idea. I do just want to ask Anna one thing, though. When she's talking about this coming downturn and how Netflix will fare, do you mean an economic downturn? I mean, I feel like on some level, Netflix is a little bit like cheap beer. It's like one of those things which can actually outperform an economic downturn that people, like, retreat into their homes and just do. And just, you know, just do Netflix instead of going out to the movies or, you know.

B (37:33)

Oh, that is actually an excellent question because I would argue it's less of just like a kind of recession thing. You know, As I was just saying, it is. You could think of it as like lipstick. It's the idea of it. It's this. It's this small little treat that doesn't actually cost that much that you'll actually have more of in a downturn. I'm more talking. If you actually went into like a financial downturn where the access to capital was a little bit harder and a little bit more expensive, you have a company that's so debt dependent, that's where I think they could get into a little bit of trouble.

A (38:01)

Lumber's round. Okay. Okay. Anna, go first because I know you're worried that someone else will have your number. So what is your number?

B (38:08)

22.

A (38:09)

I do not have 22. Emily, do you have 22?

C (38:12)

I do not.

A (38:12)

Okay, you can breathe a sigh of relief. No one else has 22. What is 22?

B (38:16)

That is the weight of Victor the cat.

A (38:19)

Oh, it's Victor the Russian cat. Exactly. I love Victor the Russian cat. He's a little bit chubby.

B (38:27)

He is. He's big bone.

A (38:29)

He's he's 22. He's not 22 kilos. He's 22 pounds.

B (38:32)

22 pounds, exactly. Yeah. So there is this guy who was trying to take his cat on board this Aeroflot flight, and they were like, your cat is too fat. So he was like, what I will do is I will put out, I will delay this flight, and I will find someone in Moscow who has a smaller cat. And so he did. And so then he checked into the new flight with this smaller cat, Sophie, I believe the name of the cat. And then once he was checked in, he swapped out for. For Victor. The cat got on his flight, and then he posted a Facebook. A Facebook post where he was kind of bragging about this with some delightfully cute photos.

A (39:10)

Victor was looking out of the window. He was on his lap. And then the. The mean people at Aeroflot wound up seeing the Facebook post and said, you cheated. And then they stripped him of his air miles. They did.

B (39:25)

They did. Apparently had a lot of miles.

A (39:28)

But Victor got to fly and. Wait, is he going on a diet now?

B (39:31)

It's a very good question.

A (39:33)

I think there was some talk about Victor going on a diet so that he can get back onto a plane legitimately, but it's an awesome story. My number, since Anna didn't do it, I'm gonna have to mention this. My number is $1.25 billion, which is the amount of money that we were contrived to lose in the third quarter, which is kind of amazing that you could lose $1.25 billion in one quarter, especially given that you didn't even IPO. Often the quarter after you IPO is an expensive quarter because there's a lot of weird stock accounting which happens. But this is the quarter that. Okay, WeWork was meant to go public, and they presumably spent a bunch of money preparing to go public, but it's not like a billion dollars. And they have never lost so much money in one quarter. Not even close. So they have their work cut out.

B (40:29)

Well, they do.

C (40:30)

Maybe John Leguere can fix it all.

A (40:32)

Oh, yeah, that's the idea. We'll just get the guy from the phone company to come in and Fix WeWork. I love the idea of John Leger coming in to take over WeWork. I'm going to put the probability of this happening at about 4%. I just don't think it's going to happen.

B (40:47)

Only seems to know so many people.

A (40:50)

Yeah. So Marcelo Klaue, who's the chairman of WeWork, used to run Sprint when Sprint was fighting with T Mobile. And Sprint of course is owned by Softmax bank. And now T Mobile is buying Sprint and like the whole thing is so incestuous. Emily, what's your number?

C (41:08)

I'm going to go with 45.

A (41:09)

I like that number.

C (41:11)

Okay. 45 is the number of consumer CEOs that have left under pressure in 2019 alone, which is a rate like double what it was two years ago because the whole consumer sector is being roiled right now by the Internet and other stuff. So like that's the CEO of the Gap is gone. McDonald's, Tupperware bunch of people. Sort of an interesting statistic about how consumer retail is doing.

A (41:35)

Which the CEO of Tupperware lift.

C (41:37)

Yeah. CEO of Tupperware, which. Who even thinks about Tupperware? Not me.

B (41:41)

It's probably why.

A (41:42)

I mean I live, I live in a household, I have to admit, with, with a surprisingly high Tupperware usage. Although I'm not sure, I'm not sure if it's a Tupperware brand. It's just like that's the thing, resealable containers of some brand. But I don't know if it's Tupperware brand. But I can tell you that it never occurred to me that, you know, Tupperware had a CEO who might be forced out because something. Something Internet. Was that the reason?

B (42:08)

Because you were buying the non Tupperware Tupperware on Amazon?

C (42:11)

I don't know why the Tupperware CEO has left actually. But we were just talking about Tupperware parties recently at work. Again, I don't.

A (42:18)

That's right. They had the craziest sales force situation. Yeah. I wonder.

C (42:24)

Here's the headline.

A (42:25)

Oh, what's the headline?

C (42:26)

Resigns after stock falls 73%.

A (42:30)

Well, that. That' do it. Yeah. Well, yeah, that's really all you need to know right there. If you're the CEO of a company whose stock falls 73%, then yeah, I think that's it for us this week. Unless you're a Slate plus listener, in which case you will be treated to Anna Shmansky's Bolivian stylings. Cuz yeah, we want to talk about Bolivia a bit. We'll do that on Slate Plus. Otherwise, many thanks to Jessamine Molly for producing and many thanks for listening. Do keep the emails coming on slatemoneylate.com and we will talk to you next week on Slate Money.