Felix Salmon (3:27)

So I want to talk about corporate earnings to lead off this here show. And we don't do that very often because corporate earnings are mostly boring and we can mostly ignore them. And every single public company comes out with corporate earnings every single quarter. And there's lots of public companies and there's lots of quarters. And when you read these earnings reports in the paper, your eyes just glaze over and you're like, why do I care? This one I think is worth bringing to broader attention because it is absolutely batch it and the number is $62 billion. That is the net earnings, the net profit of Alphabet in the first quarter of 2026. Alphabet, of course, being the company we know and love as Google. And never in the history of humanity has any company made this much money in a single quarter. It's not even close. Like, was there a couple of quarters where a mega tech company might have made like 30 something billion in a quarter? Yes, this is 62 billion. This is up. What did you say, Emily? Like 84% from the previous quarter. 81% from the previous quarter. It's almost double where it was the previous quarter. It is almost impossible to get your brain around the idea that you could make that much money in a single quarter. I kind of can't, to be honest. The number is just too big for my poor human sized brain. But it's interesting for a number of reasons, not only just because it's big, but also because it wasn't meant to be this way. Right. The story that we've been told about AI has in large part been this whole thing of like, oh my God, all of these companies are just spending insane amounts of money on AI and it's this big black hole that they're pouring money into somehow for all that, they're pouring hundreds of billions of dollars into a black hole. They are making profits the like of which we have never seen before. Oh, and one other thing I should also mention is that Meta, which is the company we know and love as Facebook, came out with quote unquote disappointing earnings which sent its shares down. Google shares went up, Facebook shares went down. These disappointing earnings were 33% higher than the previous quarter and also a massive record high, and also like north of $30 billion in a single quarter. These are just completely insane numbers.

Emily Peck (5:50)

The key number in the earnings, I think, is the increase in search revenue. Search revenue went up nearly 20% to $60 billion. And I think if I'm an investor in Google, that's really comforting because like you were saying, AI is supposed to essentially kill search and search revenue. You're supposed to never want to Google anything again because you want to go to your ChatGPT or your Claude and ask it questions. And I'm doing that. But most people are still going to Google and searching for things, and they've integrated the AI into search and they're still making lots of money off of it.

Felix Salmon (6:24)

So, two questions about that. Number one, I think you're absolutely right that we sort of coastal elite types are perfectly happy asking ChatGPT and Claude all of the questions we want to ask, but normies are still Googling, because why not? But number two, and this is the thing, like, it's not just revenue which went up, it's profits that went up. And the thing that I was told over and over again is that the cost to Google of me doing a search on Google has skyrocketed. Because it used to be that I would go to Google, I type in my search, and they would look up their database and they would say, like, here's the pages you can go to now. I go to Google, I do a search, and they have to run a whole like, LLM query, which is very expensive on their AI. And they gave me a whole bunch of AI junk at the top of the page that I always ignore because I hate it. And the idea there was, or this was like the received opinion at least had somehow filtered its way to me that the profit margins on that Google search page had suddenly plunged and might even be negative because of the cost to Google of providing those AI search results. We should also mention that the reason the shares only went up by 10% rather than going through the roof is that the stock market is not convinced that this $62 billion quarterly profit is the new normal or sustainable. There was a bunch of weird, like, one off, we have a share portfolio that went up in value by $30 billion or whatever buried inside there.

Elizabeth Spiers (8:06)

Yeah, that also helps with earnings.

Felix Salmon (8:08)

You know, this is something which, by the way, Warren Buffett used to complain about all the time, which is that under US gaap, the Generally Accepted Accounting principles, which you need to use when you file your quarterly earnings. Every time his. His stock portfolio went up, that was earnings for Gap, and every time it went down, that was losses for gaap. And so he was like, you can't. It's really hard to tell how Berkshire Hathaway is doing as a company because all of the Berkshire Hathaway earnings are dwarfed by the random volatility in the stock market. So if Google has a very concentrated stock portfolio in, I don't know what, it has shares in Nvidia or something, and those shares go up a lot over the course of the first quarter, then that can sort of occlude the reality. But even so, I mean, the first quarter was good for stocks, but as Emily has written that April was even better.

Emily Peck (9:03)

Best month since 2020.

Elizabeth Spiers (9:04)

Yeah, the search numbers are really interesting because the sort of doomsday scenarios that everybody's worried about, and you see this, especially if you work in publishing, is a scenario that's called Google Zero, where basically everybody kind of resorts to using the AI version of search. And then Google isn't sending any traffic to companies that make original content. And then the other sort of nightmare scenario is for Google, although I doubt this will ever happen, where they don't have any original content to make anymore because the publishers have all gone out of business. And so that's the model collapse scenario. But I think the fact that their revenue keeps just climbing is indicative that we're not anywhere near either of those scenarios.

Felix Salmon (9:46)

And I don't think Google cares that much. You know, like, there's a huge amount of crappy content on the Internet. And I think what has happened and what is actually accelerating in this era where half of the pages on the Internet are just AI slop is that when people go to Google and they want to look something up, they actually prefer it not just for convenience, but also for quality, when Google just gives them what they're looking for rather than sending them to some page that is probably AI slop and terrible. And why would I want to go there? Like, the original version of Google 1.0 of like, we are going to index the Internet and point you to places on the Internet and drive traffic to places on the Internet. And our business model is making you go away from Google has basically disappeared at this point. And now if Google can just provide you with all of the information you need via its own AI and its own database, everyone just prefers that.

Elizabeth Spiers (10:47)

Well, I'm not even sure that it's that most people are searching on mobile. And if you're using the mobile version of Chrome and you do a Google search and you get a Gemini answer first you have to click out of it to see the rest of the results. So it's very design oriented that way. But also the SERP still matters, you know, search engine ranking. So at least now if you do click out of that box, most of the top results are going to be from legitimate sources, not AI slob like you have to go down a page or so to get to the crap. And I think when that starts to degrade, then we have a sort of real problem.

Felix Salmon (11:21)

It is already degraded to be like number one, the top search result is, is objectively worse than it was 10 years ago. But number two, which is more important? Most people don't even get to the top search result not only because they need to click out of the AI stuff that Google is presenting, but also because the first 2, 3, 4 search results are often sponsored links, ads basically that Google has sold.

Elizabeth Spiers (11:50)

Well, I agree with that. But also I just wanted to point out that last week I was looking for Trump's poll numbers a week after the 2019 impeachment. And the AI answer that I got was that, well, when Trump was impeached in 2026 and it made up an impeachment scenario that happened a couple of months ago. So I think, you know, the more people get educated about AI, what might undermine them is just if people understand how frequently AI hallucinates and if they're needing to use it for something that's actually crucial, they need alternatives to that.

Emily Peck (12:19)

I'm worried about the whole ecosystem of the Internet. Like when AI first came out, I and a million other people wrote about like death of SEO search engine optimization. Because like Felix is saying, we'll never want to go to the Internet to find the information. It'll just be right there in AI. And then all the sites and the websites that produce SEO type content, some is slop and has always been, but a lot of it has been good. Like sometimes I want to go online, I want to find out polling results from 2019, Donald Trump, Google. And I want to go to the original source or I want to find, often it's my own articles. I'm not going to lie. Emily Peck Credit card debt, whatever I wrote about 10 years ago, I want to find it. Whatever the information is, I want to go to Google and find the primary source. So my concern has been if there's less money in that, if no one's going to the primary sources anymore, then the primary sources start to go away and like, what are we left with? It's just like cannibalism at like. I don't understand.

Elizabeth Spiers (13:17)

There's another doomer scenario for that and that's the dead Internet scenario where basically almost everything on the Internet is either bots talking to each other.

Emily Peck (13:26)

The buzzword now in media is geo. Instead of SEO Generative engine optimization, where you're optimizing your stories so people find them in ChatGPT or Claude. But I don't really understand how that works yet, or if it drives any meaningful revenue for anyone or just keeps your site, I guess, relevant or something. But it seems like a big concern.

Felix Salmon (13:49)

So yeah, we've had a couple of sort of iterations of the Internet. At the very beginning it was just the World Wide Web, this sort of utopia as imagined by Tim Berners Lee, where everyone. It was like a read write web where everyone would have their own webpage and link to each other and put up their own stuff. And it was very sort of democratic and flat. And you would have somewhere like Yahoo that might create an index or something like that, but it was just a web of link. And then we moved more into the Google era where there were like portals and places you went first and places you went to look things up and search was the driver. And that created the model that Elizabeth is saying is kind of going away now where you could actually. Well, I mean, yeah, where the biggest websites started being able to sell ads on their website. And that became a business model. And then if you got a whole bunch of traffic and a lot of that traffic would come from Google, then advertisers would pay you to put ads on your website. And you could make millions of dollars if you had a big website by running ads on your website. And this lasted for probably longer in hindsight than we. It lasted for long enough that people kind of started getting into the mindset that it was normal and that this was just like the way way things should be. And then as the ad revenue started moving away from websites and that model started failing and we started moving more into the sort of web2 thing where people would just hang out on Facebook and Twitter and social media sites and they wouldn't be like surfing the Internet so much anymore. Then we started moving into like the current era of paywalls and people actually having to pay money to read things on the Internet because they feel that those sites that they're paying money to are providing the kind of information that they value and are willing to pay for. Where we go in A world where people don't particularly value that anymore. I have no idea.

Elizabeth Spiers (15:50)

Well, it's funny, I was talking to a reporter the other day who was writing a story on Gawker and the origin of it, and he was asking me about traffic numbers in the early days. And I said, well, they're really low compared to what we're used to with publishers now. There were like 50,000 unique users a day. And he seemed confused by that. And I said, well, you have to remember, there was no social media then. We had Friendster, but nobody was linking to news articles off of it. And there was no search. I mean, search was Alta Vista. You didn't have Google search. So, you know, fast forward 10 years, most independent publishers who are websites probably got around 15% of their traffic was a direct traffic, meaning somebody's typing in the URL and going directly to the site. The rest of it was entirely search, referral and social, and mostly search and social. So that completely changed the way that publishers built their business models. And now if search and social are less reliable and they're starting to go away, there has to be a new shift again.

Emily Peck (16:48)

I think it's interesting because the constant if search revenue goes away for all these publishers and search traffic goes down, which I think is already happening, Google is fine. They're still making money. They're still selling ads to the information you look up on Google. It doesn't really matter if you go to axios.com or bloomberg.com or wherever, if you stay on Google and you get the information, they could still sell an ad to it. They're still good. It's the publishing ecosystem and the rest of the Internet that's all in trouble. But Google is still fine. It like ate the Internet, basically.

Felix Salmon (17:19)

And I think one of the things that happened in the first quarter especially, or that is happening right now, is that again, back in the early days, Google came up with these two products, AdWords and AdSense. Right? And so you would be like, I'm selling widgets. And so when someone searches on widgets, I will buy that word and Google will display my ad for widgets next to the search results for widgets. And you would like manually type in and you would bid things and there would be like auction mechanisms. No one is manually typing in search words anymore. Search words that they want to buy the ads for. Right? That is all AIs now. It's all robots. The robots are working out what search terms they want to buy, how much they want to buy them for what the roi is on each thing. You know that old canard attributed to Lord Levis where he says, half of the money I spend on advertising is wasted. I just don't know which half. Like, now if you spend your money on advertising on Google or Facebook, the amount that's wasted is like 1% because everything is optimized. You have dashboards up the wazoo. And what has happened is you now just have you set your robots to work 247 buying AdWords and AdSense and little banners and search results and all the rest of the products that Google and Facebook and Instagram and all those people have. And those robots are competing with each other to basically throw as much money as they can at Google. And Google is loving this. So number one, that's good for Google, but number two, that is also by its nature terrible for the entire rest of the Internet that if you are like a poor human ad salesperson at Axios and you go along to a company and you're like, can I have a meeting with you where we can have an English language conversation? And then eventually you write me a check so that I can put some native ads in my newsletters and they kind of look at you like you're talking in oldie English and they, you know, you're Chaucerian English and they don't even understand the language that you're talking because, no, they don't even have a media buyer anymore to do that because everything has been automated and everything is an AI that's sending all of the money to Google.

Emily Peck (19:29)

My colleague Sarah Fisher, who's a great media reporter, reports on the advertising industry, talked to Slate's own Lizzie o' Leary for an episode of what Next? Tbd, I think maybe last week, and sort of described the way the advertising industry works now. It's really good, worth listening to. And she basically described it. It's like everything else. It's freaking K shaped, right? One leg of the K up, one down. So now it's either companies are splashing out on like a Super bowl ad or a really, really exciting, expensive, fancy ad that's just for brand awareness, or they're doing like the robot advertising, super targeted, super automated, blah, blah, blah. There's no like in between. And once again, that is bad for publishing and for the overall Internet. Like, we're losing all the in between.

Felix Salmon (20:17)

I am less nostalgic for the world where the incentive to create reliable information was that if, if millions of people came to your website, then you could sell ads to advertisers who would want to reach those millions of people. It kind of sort of worked if you squinted, but it didn't work very well. And I do think that world is now clearly in the past and behind us, and we all grew up in it and we all kind of internalized it and we are entering a new world. And the new world might be worse and it might be better, but I feel like that world was clearly suboptimal in a bunch of different ways. And so it is conceivable that the world we're entering might be better. But you're right, we still have this question of where are the incentives going to come from to create reliable information. Right now the incentives are coming from this idea that people are more likely to pay subscriptions for a website if they consider that website to be reliable. I don't know if that's true or not, but it seems to be at least as good, maybe as the one where like you needed to attract a whole bunch of traffic. I don't know. It's all terrible.

Emily Peck (21:42)

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Elizabeth Spiers (22:36)

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Elizabeth Spiers (24:41)

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Felix Salmon (24:59)

let's move on to talk about Bill Ackman. Because everyone's favorite poster hedge fund manager guy basically announced about a year ago that he was going to raise $25 billion by listing his hedge fund. And everyone was like what? And he's like yeah, you get to buy into my hedge fund. It's going to be listed on the stock market as a closed end fund and people are going to give me $25 billion and then I'm going to invest that money and I'm going to charge a 2% management fee and everyone wants to invest with me, because I'm Bill Ackman. And so I'm going to have $25 billion. And then the best thing is because it's in the stock market, it's a closed end fund, they can never pull their money out, they can't withdraw. All they can do is sell their shares to someone else. And everyone looked at him and said, bill Ackman, you're crazy. And so he tried to do this and failed. Fast forward to this week and he actually kind of did a sort of very small and unsatisfying version of this where it was 5 billion, which was the minimum he needed to do to get a bunch of institutional support. And then he also threw in a bunch of shares of his management company that is getting the 2% fee as a kind of sweetener to persuade people to invest in his hedge fund. And even then, everyone who invested in his hedge fund wound up losing money.

Elizabeth Spiers (26:16)

You know, he already did this once and his London fund is worth 18 billion and it's trading at a discount of a third of net asset value, which is what you absolutely do not want to happen with a closed end fund that's in a public market. So why is he doing this again? Why is he trying to make fetch happen? Like, I don't understand it, to be clear.

Felix Salmon (26:35)

Like once the fund is out there in the market, on some level, he doesn't care if it's trading below Nav.

Elizabeth Spiers (26:41)

I think his investors do.

Felix Salmon (26:42)

Yeah, his investors do, but he doesn't. That's the whole point, right? He has that money. He is investing the full amount of money in that fund. He is extracting 2% per year from that fund. Let's say that fund is worth $10 billion, right? He's getting $200 million of fees every year just from that fund. That fund might be trading with a market cap of $7 billion, but he's not assessing the fees on the market cap. He's assessing the fees on the actual money in the fund. What's more, no one can withdraw their money from the fund. All they can do is sell their shares to someone else. So that money is his forever. It's permanent capital. If you're saying that he's terribly sad that the fund is trading below Nav, obviously he has an ego and he would love people to say, oh, people love my fund so much that they are willing to bid above par for it. But in the grand scheme of things, he's a capitalist and he likes free money and this is just free money for him.

Elizabeth Spiers (27:42)

Do we really think he would have had trouble raising money in a private placement? Like why does he need to be public in that case he'd still get the fees?

Felix Salmon (27:49)

Well, no, I think he absolutely would have had difficulty raising money in a private placement, which is precisely why he wanted to do this closed end stock market fund thing. Right. Like hedge fund managers for decades have been like going out and saying, give me your money and I'll charge you two and 20. And he's been doing that for decades. But like that doesn't seem to be working for him as well as it used to. Like we're living in the world of people pod shops now and he kind of looks a little bit like a dinosaur. And the point about those private hedge fund investors is they can take their money back if the returns aren't to their liking or the risk profile isn't to their liking, or they just look at his tweets one day and say, I don't want to invest with a hedge fund manager who tweets stuff like this. Then they can turn around and say, I want my money back. And so no, he doesn't want that risk. He wants to be able to have that money in perpetuity.

Emily Peck (28:39)

The one thing I learned about this whilst talking to Claude instead of Google about this topic and story was that the fund is just a portfolio of some stocks that you could just buy on Robinhood and not pay a fee.

Felix Salmon (28:54)

Like why he's saying that he's gonna, he's basically given up short selling at this point. He made his name as like a short selling activist. He's like, yeah, I'm not gonna do that anymore. I'm just going to pick a dozen really good companies and buy shares in them and they're going to go up. And I'm just such a good stock picker that you should pay me 2% a year to do that.

Emily Peck (29:13)

But like what? Like can't you just find out the 12 to 15 stocks he's picked and then go buy them yourself and like not pay the 2%? Like what? Like why is this something that exists?

Felix Salmon (29:26)

The fund needs to like reveal its holdings every quarter, I think. And so there's a little bit of a lag in terms of, but not that much of a lag because he said that he wants to be a Warren Buffett style long term investor, right? So like Warren Buffett will say, like it doesn't matter whether you bought on Monday or whether you've bought like a month later. I'm buying and holding for decades. And if that's the way he thinks, and that's the way you think. You can totally just replicate the contents of PSUs in your own Robinhood account and not pay Bill Ackman 2% for the privilege.

Elizabeth Spiers (29:56)

Okay. He has two funds, though. PSUs takes a bunch of stakes, minority stakes in companies, and then he has another one called Howard Hughes holdings, for reasons who knows where, he takes majority stakes in just a handful of companies. So I guess if your strategy is like, I don't know, how many companies is PSUs, is it a larger index where he's got 100 companies, or is it more like 8?

Felix Salmon (30:18)

He's saying about 12. But yeah, you're right. He loves complexity. Like, he keeps on comparing himself to Warren Buffett, but Warren Buffett had one fucking company. It's called Berkshire Hathaway, and you could buy shares in it and it didn't charge a management fee. And Warren Buffett wasn't taking 2% a year for being the CEO. In fact, he paid himself almost nothing with Ackman. He has a hedge fund. He has Howard Hughes. He has Pershing Square, he has Pershing Square Holdings. He has Pershing Square us. He has the thing in London. He has all of these different vehicles and they're all very complicated and they all this web of things and you can buy in at different areas and it's complex as fuck. And it's the least Warren Buffett thing you can imagine.

Elizabeth Spiers (31:03)

You think he was doing this just because he thinks that he has a brand now and 2 million followers on X and that there was going to be a lot of retail excitement around it.

Felix Salmon (31:10)

That's exactly what he thought. He was convinced that because he's such a successful poster and Elon Musk has given him like, you know, super boosts on Twitter, that all of his followers on X were just going to follow him into the IPO. And it turns out that of the $5 billion he raised in this IPO, it was like, what, 700 million was retail or something? It was kind of pathetic. And his dreams of becoming this sort of man of the people hero with an army of Reddit, Wall street bet types kind of following him into battle, saying, here, take my money and invest it in Universal Music or whatever. No, just didn't happen.

Emily Peck (31:53)

Berkshire, they own companies. They run real companies, real businesses that sell candy, soda, et cetera. Like, they're not just they invest in stocks, but they also invest in real companies and manage real companies and do real economy things. It's not just financial engineering.

Felix Salmon (32:10)

It's roughly 50. 50 in Berkshire.

Elizabeth Spiers (32:12)

Yeah, but they are, to emily's point, they are kind of sui generis. In terms of how they're structured. And what they do. And what their origin story is, was. I think part of the lore around berkshire. Is that people think of warren buffett in his early days. As somebody who was really the kind of guy who would go out and buy a company. And then install operators who knew how to run it. And he went into complex industries. He made a lot of money in the early days off of super catastrophic insurance with general reid. And not a lot of people were really equipped to kind of make those investments. That really were like, you are buying a company. And ackman doesn't have any kind of track record in doing that.

Felix Salmon (32:50)

The insurance thing was not the early days of berkshire. The insurance thing came later. And was the thing that sort of superpowered his investments. Because when you become an insurer, you wind up getting something called float, which is a little bit like what bill ackman is looking for. In terms of permanent capital from the stock market. The insurance premiums that people pay to you. Are yours to do with as you wish. To a first approximation, no one can ask for them back. And at some point, you're going to have to pay out on the claims, if there are claims. But while you have that money, it is yours, and there's no risk of withdrawals. And so he used all of that money that he was getting from the insurance policies. To go out and start investing in coca cola and american express and burlington northern and all the rest of it. And so that's how berkshire hathaway became so big and so successful, Is because he had that leverage from having the insurance company. And a bunch of other hedge fund managers have tried to set up. What they call captive reinsurers, Normally in the cayman islands and stuff like that, and with varying degrees of success. But berkshire is the only one that's really a listed public company like that. And as elizabeth says, there's no one else quite like it. Certainly not psus and certainly not howard hughes.

Emily Peck (34:05)

The one short I know bill ackman for is herbalife, which was a failed short, which is really interesting to me, because herbalife is a ponzi scheme. I mean, we have, I think, a bunny talks on herbalife and other kinds of pyramid schemes like it. Like, I do wonder, what has he famously shorted successfully?

Felix Salmon (34:24)

I think it was something called mbia. It was a really tough battle that he faced against this endurer. And he actually kind of lost that battle, too. But then the financial crisis happened and all of the mortgage bond insurers blew up and he kind of just got lucky that way and made a fortune. The most famous short that Bill Ackman did probably was the one where he shorted basically all of the bonds of all of the companies in America in February 2020, because he reckoned that Covid was coming and everything was going to go pear shaped. And then Covid did come and everything did go pear shaped and all of the spreads gapped out and he covered that short in like a month and he made like a billion dollars in one month.

Emily Peck (35:10)

There's a character based on that trade in industry, which I also did a podcast about that people should listen to on Money Talks.

Felix Salmon (35:30)

Slate Money is sponsored this week by Vanguard. To all the financial advisors listening, let's talk about bonds for a minute. Capturing value in fixed income is not easy. Bond markets are massive, murky and let's be real, lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. Vanguard bonds are institutional quality. That's not just a tagline, it's a commitment to your clients. It means top grade products across the board. Some managers out there promise big returns, which usually come with big risks. That can mean a rollercoaster ride for investors. Vanguard takes a steadier approach. They don't go all in on risky bets. Instead, they focus on reliability and consistency. It's not always flashy, but it sets the standard for what dependable investing should look like. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself@vanguard.com audio that's vanguard.com audio all investing is subject to risk. Vanguard Marketing Corporation distributor. Slate Money is sponsored this week by the Stopsky Foundation's podcast Break Fake Rules, Change Big Giving for Good. If you're into learning more about money markets and the policies that shape them, then this is a show that we want to put on your radar. The show examines the fake rules holding the systems in place that shape the flow of charitable money and power in America and which rules we must break to secure a better future for all. You'll hear from the actual rule breakers, the folks in government and nonprofits who are tired of the status quo and the finding ways to fix how extreme wealth shaped society. For instance, there's an episode with Marlene Engelhorn which is called the Only Honest Philanthropy Abolishes Itself. I like that idea. And there's another one with Nikki Marin Baena saying, how do we break the fake rules of a broken immigration system. Basically, there's a bunch of conventions and actual laws governing charitable institutions, and some of them make no sense to listen to. Break Fake Rules. Search for Break Fake Rules in your podcast app. That's Break Fake Rules, Which is a good segue to the whole corporate branding and forced fun thing. I have to admit, I am not an industry watcher, but I'm going to assume that there's not a huge amount of just Kumbaya. We're all one happy family in this company and we love each other and look how great our merch is and we just support each other.

Emily Peck (38:23)

Well, actually, the industry, at least in the first couple of seasons, is based on a fake investment bank called purepoint. And they're always wearing Pure Point gear on the show. Like when they go to the gym, they have Pure Point T shirts on or Pure Point sweatshirts on. Like when they are shown on the weekends or like waking up from a Coke binge or whatever, they're wearing the Pure Point. And I even spent some time texting back and forth with the editor of Slate, Hilary Fry, about how I wanted to purchase because HBO sells purepoint sweatshirts and T shirts and mugs and stuff. And I was like, should I buy one? I really wanted the merch.

Felix Salmon (38:57)

How much did they cost?

Emily Peck (38:58)

30, 40 bucks?

Elizabeth Spiers (38:59)

That scans for investment banks. Because especially, and you might not know this if you don't live in New York City, but like, when you get an influx of college students who are new analysts at JP Morgan or Goldman or whatever, they're always carrying around the same canvas bag that has the same grosgrain embossed handle. It's a status marker. Now, I think tech is a little bit like that in Silicon Valley. In fact, Palantir just made a $239 French chore coat. They made 420 of them because all the tech bros just need to use 420 and everything. And the reason why is that they say they're celebrating re industrializing America via AI somehow. But that's where we are.

Emily Peck (39:39)

Because the short coats, like, that's where the term blue collar somehow comes from. These coats were for the working man to wear.

Felix Salmon (39:46)

Yes, but the point being that like in Silicon Valley, there has for many, many years been this culture of the devs come in wearing the corporate merch. It's the opposite of going to a cool rock band where you wear anyone's T shirt except for the band that you're seeing. Like in Silicon Valley, you wear the T shirt of the band that you're working for, and everyone does it. And then at some point, a few of these companies, Palantir definitely among them, started selling this merch, not just giving it away to employees and friends of the company, but actually selling it on the Internet because they reckoned that, like, people wanted to buy it and wanted to represent, and they were like, great. And Palantir has started doing these sort of, as you say, tiny little additions, these drops, and they always sell out in 30 minutes. And everyone's like, ooh, I have a collectible limited edition Palantir chore coat. And everyone just rolls their eyes. Do you remember when Elon Musk did, like the flamethrower?

Elizabeth Spiers (40:44)

Yes. The boring company flamethrower.

Emily Peck (40:47)

No.

Elizabeth Spiers (40:47)

And they did sell out. I mean, the people who are fanboys, really. Although to be fair, the Palantir chore coat took five hours to sell out. Not 30 minutes. But it's a.

Emily Peck (40:57)

That's kind of a long time for just 420 items, isn't it? Five hours?

Felix Salmon (41:02)

Yeah.

Emily Peck (41:02)

I mean, the target dropped by a good designer is going to sell well.

Elizabeth Spiers (41:05)

Their selling point was this is for people who really love Palantir. And I was like, what kind of person? I need to know what kind of person really loves Palantir.

Emily Peck (41:15)

The coat itself is pretty cute, I thought.

Elizabeth Spiers (41:17)

It is, and I hate that.

Felix Salmon (41:19)

It's not a bad coat. So, yeah, the big question here, the whole point we're trying to have this

Emily Peck (41:24)

segment, what is the point?

Felix Salmon (41:25)

It's this idea of building affinity to a company, either as a consumer or as an employee. And companies really put a huge amount of effort into making their employees feel as though they're part of something really cool. And, Emily, how many Axios retreats have you been on now? I lost five at some point. Yeah, maybe five.

Emily Peck (41:47)

I'm about to go on another one. And yeah, when there's always merch, there's a T shirt. I have mugs. I have a blanket. I have a candle.

Felix Salmon (41:55)

You have a like a sort of football jersey type thing with your employee number on the back.

Emily Peck (42:00)

No, that's a good idea. We should get that going. I was saying I have so much. I mean, just having a corporate job for these decades. I have all my Axios merch. I have a HuffPost makeup bag that I still use. I have an AOL no patch.com/it notes that we all still use in my house that say patch.com that was like AOL's local news attempt. I have a Yahoo T shirt that I Handed down to my daughter, who she wears it. And then after a while, like, Felix, you're saying people wear it to be cool. I wear some of these garments because I'm too cheap to go out and buy T shirts. I just have free ones. And that's how you get older. And then all you're left with is branded merchandise from employers past.

Felix Salmon (42:43)

You and me, Emily, because we are cheap. The single warmest jacket I own is this incredibly high quality North Face jacket that was given to me by Reuters when I was going to Davos. And they were like, you need a jacket for cold weather and to go skiing in. I'm like, yes, I do. And they're like, here's your jacket and I still have it because I'm cheap. And I was never. I'm not going to go out and buy another one. Do I want to spend the amount that a Patagonia puffer costs? No. But did I go to a conference once where someone gave me a Patagonia puffer for free? Yes. Does it have an Ericsson logo on it? Yes. Do I care? No. I'm perfectly happy to go around advertising at Ericsson because it's a nice buffer.

Emily Peck (43:22)

So what is the. This is for Elizabeth. We'll know. Why do employers give us this stuff? What is the goal?

Elizabeth Spiers (43:28)

I think the merch, especially if they expect you to wear it out of the office, is just free advertising for them disguised as perk for you. In the same way that corporate retreats are kind of supposed to be fun for you, but really what they want you to do is trauma, bond, and then come back closer as a team.

Emily Peck (43:44)

Oh, we should talk about this.

Felix Salmon (43:45)

Yeah, we should talk about the Plex retreat. The Wall Street Journal a couple weeks ago had this amazing article, this sort of oral history of the world's worst ever corporate retreat full of, like, tarantulas and sunburn.

Elizabeth Spiers (43:57)

And I think it should have been a red flag that it was supposed to be Survivor themed.

Felix Salmon (44:03)

They had a Navy SEAL making people, like, throw up on the beach.

Emily Peck (44:07)

The oral history, they're like, we weren't particularly athletic and, yeah, they were throwing up engineers. The woman who fell in the pile of fire ants and then was just itchy for the rest of the trip and had to get the injections of antihistamine. And then at one point, she gets itchy again and some random person dressed in pink, she says, someone dressed in pink gave me a shot. I hope they knew what they were doing. And I was like, what?

Elizabeth Spiers (44:32)

My favorite detail was that they had a Survivor, like, challenge where they would all get a platter of food and they'd have to eat whatever was on it. And on one of the platters was a dead tarantula. And the guy who was supposed to be doing the challenge was like, look, man, I'm from Texas. I've seen tarantulas before. They don't freak me out. He goes, but I did have to hesitate about eating one. So they asked him what it was like, and he was like, it was pretty horrible. I mean, those hairs.

Emily Peck (44:57)

Oh, God. But then it starts with the CEO. The retreat is in. Is it Honduras or something? And they get there early, and the CEO is like, they told me not to eat any fresh food because I'll get sick. And then you're supposed to only eat the fried food or this or that. And he. And he goes, but I had to have my salad. And I was like, bro, what are you doing? And so then he eats the salad and proceeds to get sick and describes himself as dying. He gets E. Coli. Whoever's idea this was, to write this and do it as an oral history. And it was 10 years ago. And they're. I just. What an amazing article.

Elizabeth Spiers (45:35)

Like, at one point, a porcupine fell through somebody's ceiling.

Emily Peck (45:39)

But at the end of it, to your point, Elizabeth, at the end of it, they're all like, that was the greatest trip I ever took. We still think about it. We had the best.

Felix Salmon (45:48)

They hated it at the time, but 10 years later, they laugh about it. You know, like, that's what you always say. Laugh about this one day.

Emily Peck (45:54)

Yeah. So is that. That's what they want retreats to be like, so just a crazy experience that you trauma bond and you never want to leave your workplace because no one

Elizabeth Spiers (46:02)

will ever understand without getting sued.

Felix Salmon (46:06)

It is probably superior to putting everyone into a hotel conference room and showing them a PowerPoint presentation of like, you know, your North Star and your strategy document.

Emily Peck (46:17)

Yeah.

Elizabeth Spiers (46:18)

Yes. I would probably take the survivor retreat over that.

Emily Peck (46:21)

I would also complain about it the whole time. But then in hindsight, think it was the most amazing thing that's ever happened because I saw my co worker eat a tarantula. E. Coli. But I guess the retreats are even more popular now than they used to be because people work hybrid and remote, and so everyone does have to meet in person.

Elizabeth Spiers (46:39)

Before COVID I was working with a company that was completely remote. Anyway, they were a tech company and they would do retreats every three months or so because they were so spread out. They were like, everybody's on slack all day, but if you don't put people in the same room, they don't bond enough.

Emily Peck (46:55)

It does help to meet people in person.

Felix Salmon (46:56)

Yeah, Slack is. Slack is a surprisingly bad bonding mechanism. And actually, as someone who works in an office now, just being able to bump into people walking around the office, it's good. I approve of that. And it's worth any amount of merch. We should move on to a numbers round. I think I'm gonna kick off this week. 100.2. Emily knows what this one is.

Emily Peck (47:38)

100.2.

Felix Salmon (47:39)

100.2. 100. 2 is the American government's debt to GDP ratio.

Emily Peck (47:46)

Oh, yeah, talk about that.

Felix Salmon (47:48)

We have now officially reached the point at which national debt is greater than 100% of GDP. As of March 31, the national debt was 31.26 trillion and GDP was 31.21 trillion. And so, yeah, we now have more debt than gdp. This doesn't in and of itself mean a huge amount, but it's a nice round number which I feel like we should mark at some point on Slate Money.

Elizabeth Spiers (48:14)

Well, I was told we had a genius businessman for president who really understands debt.

Felix Salmon (48:19)

So, yeah, so you have as much debt as you can. He's the king of that. You got to do more. But I remember back when people were talking about creating this single European currency, the Euro, and they were like, let's just make sure that all of the countries in Europe standardize on what was known as the Maastricht criteria, where the deficit couldn't be more than 3% of GDP and the debt couldn't be more than 60% of GDP. That was like, if you stay within those limits, you're like a grown up adult country. Now here we are, we have a deficit of 6% to debt to GDP ratio of 100%. And that feels perfectly normal.

Emily Peck (48:56)

Well, I mean, it's not the highest that the debt to GDP ratio has ever been. That was.

Felix Salmon (48:59)

I think it's the highest outside wartime.

Emily Peck (49:02)

Right. Outside of wartime. It was after World War II. It was like 106%.

Felix Salmon (49:06)

Wars are expensive and they tend to do bad things to gdp. So, yeah, but then it came down very rapidly after the war. What we have right now is a situation where it's only going to go up. There's no real world in which it starts coming down. So that's the thing that people are scared about. It's not so much the level as it's the first derivative. It's rising very quickly during a period when the Economy is relatively healthy, and that's never a good combination. Emily, what's your number?

Emily Peck (49:33)

My number is negative 7.04 or negative $7.04. That's my number. Oh, you want to know what it is? It is the price of natural gas from this hub in West Texas called Waha, the West Texas Waha natural gas. And it's negative $7.04 per million BTUs. This is the price of natural gas from the specific area in West Texas where they are making oil, drilling oil, processing oil, and the natural gas is a byproduct and they sell it. But they've made so much of the oil that there's so much natural gas that they have run out of room to store it. So they now have to pay people to take it off their hands. And why it matters is because the US makes its own natural gas. And this gives us an insane advantage over the rest of the world in this war that we have started, where in Europe and in Asia they are struggling to afford the natural gas. And here in the US we're basically floating on a sea of natural gas. We are so abundant that some people are paying to get rid of it. So I thought that was interesting. I have a story in Axios.

Felix Salmon (50:45)

The petrochemical industry is super interesting in that there are lots of mining related reasons why you can't just stop producing natural gas when the price goes negative. You have to keep on producing it. And then you're like, shit. Iran actually has this problem too. They have been producing all of this oil. They can't just stop producing oil. It's really hard. And then they're like, shit, what are we meant to do with that? They're just putting it in like jerry cans. They're like, we have way too much oil. We don't know what to do with all of this oil. It's a real problem.

Emily Peck (51:12)

Yeah, Someone was telling me they just put the oil wherever, like in old rusted tanks. They don't care. And the guy who I was talking to was like, we would never do that in the U.S. like, no one else would do that, but they're going to do it. And I was like, good for them.

Felix Salmon (51:25)

Elizabeth, what's your number?

Elizabeth Spiers (51:26)

It's technically two numbers. It's 1, 2, 2. So that's the number of minutes that you can listen to an AI generated podcast on Amazon for specific product.

Felix Salmon (51:36)

So it's not 122. It's like between one end.

Elizabeth Spiers (51:39)

Between one and two minutes.

Felix Salmon (51:40)

Oh, okay.

Elizabeth Spiers (51:41)

This is from a business Insider story by Katie Nautopoulos. It's titled the World's Least Necessary Podcast. And so Amazon, now you can. And I don't know why anyone would actually do this, but you go to a product page and they have an AI generated podcast between two bot hosts who discussed the product based on the product description and some of the customer comments. And she embedded one of these into the story. And it's for a rapid relief diaper rash product for adults who are experiencing incontinence. And it's unwittingly hilarious because it's very super upbeat in the way that all the AI podcasts are.

Felix Salmon (52:23)

Weirdly, as someone who's never listened to an AI podcast, I wouldn't know how upbeat they are.

Elizabeth Spiers (52:28)

We had one of our voices at one point. I don't think it was overly upbeat,

Felix Salmon (52:34)

but I feel like we're just always upbeat.

Elizabeth Spiers (52:36)

Anyway, maybe we can have Jessamyn embed the Rapid Relief diaper Ash product podcast.

Felix Salmon (52:41)

Or maybe not. Please, please.

Emily Peck (52:43)

No, I'm curious.

Felix Salmon (52:44)

Yeah, I think that's it. Please God, let that be it, Jessamine. Do not be embedding any AI generated diaper relief podcasts. If Amazon wants to embed podcasts in Slate money, they have to pay us our going rate, God damn it. But that's it for us. This week. We are going to go off and try and make money via the subscription route. Please go ahead and subscribe to Slate plus and if you subscribe to Slate plus, you will listen to our Slate plus segment, which is great. It's all about bizfluencers. All of the Gen Z's who are making tiktoks of their work days. Otherwise, thanks for listening. Thanks for emailing us on Slate money@slate.com thanks to Jessamine Molly for producing and we will be back next week with more sleep money. Parle tu francais? Hablas espanol par Liano. If you've used Babbel, you would. Babbel's conversation based technique teaches you useful words and phrases to get you speaking quickly about the things you actually talk about in the real world. With lessons handcrafted by over 200 language experts and voiced by real native speakers. Babbel is like having a private tutor in your pocket. Start speaking with Babbel today. Get up to 55% off your Babbel subscription right now at babbel.com acast spelled B A B B E L.com ac acast rules and restrictions may apply, traffic

Elizabeth Spiers (54:18)

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Emily Peck (54:33)

Com.