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- [00:10]
A
Hello and welcome to the Occupy French Starbucks edition of Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. As ever, Anna Shymansky is here.
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B
Hello.
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A
And Emily Becker for the Huffington Post.
- [00:29]
C
Hello.
- [00:29]
B
And.
- [00:30]
A
And we have a bona fidey Frenchman. We have a man who is French from his well coiffed hair to his very toes, Mr. Rob Cox of Breaking Views.
- [00:40]
D
Bonjour.
- [00:42]
A
Rob Cox is not actually French, but you live in Paris now.
- [00:47]
D
I do.
- [00:47]
A
And you are going to tell us all about what's been going on with the yellow vest for us you insist on calling them because you're now French. They're Giles Jaune. You are going to help us understand what has been going on with Tesla this week and why they have suddenly seemingly cared much more about cost cutting of late than growth. We are going to talk about Facebook and their moderation and how well it's going. Spoiler alert. Not very. And we are going to talk a bit about a bit more, I should say about 3G, which is this international quasi Brazilian company which bought Kraft Heinz and wound up not doing very well with it. And it's gonna be like a super gnarly, interesting, awesome episode of Slate Money. So all of that, plus, if you're a Slate plus member, existentialism from Emily Peck about, you know, she's coming over all Jean Paul Sartre. You have no idea. This is gonna be a good one. So stay tuned. This is all coming up on Slate Money. So the big news of this week, or one of the big news, as teased by Elon Musk on his Twitter account in a tweet that may or may not have violated the agreement with the sec, was that he is going to actually sell the Model 3 for $35,000, which he kept on saying he was going to do. And it never did. It was always much, much more expensive. Like when he started telling it, it was over $70,000 and everyone was like, this is the entry level car. But now he says you can actually buy a Model 3 for $35,000. Although if you want all of his sexy new software doing like self driving things, it costs like $8,000 more.
- [02:42]
C
Like if you want wheels.
- [02:44]
A
Yeah, exactly.
- [02:45]
B
If you want the car to come find you in a parking lot, if.
- [02:47]
A
You want the terrifying, if you want it to be like kit in, like drive away, you're like, car, come rescue me, then that costs extra. But I mean, I love that we're living in the future and that's actually like an optional extra on a $35,000 car. I mean, that's kind of awesome. So in any case, he is in cost cutting mode. Weirdly, he's closing down all of his stores. He is making it so that you can only buy Teslas online.
- [03:18]
C
Seems great to me. We were just talking about this before you walked in. Buying cars online seems fine because buying cars at the dealership is the worst.
- [03:26]
A
Well, I think buying cars at most dealerships is the wor. But buying cars at a Tesla dealership has not been the worst because they aren't working on commission and they don't have that, you know, intermediate. They're not middlemen who are not owned by the company.
- [03:40]
D
It's a showroom more than it is anything, right? You go in, you choose the color, you kind of steering wheel, all that kind of stuff and. But there's nobody there going, come on, you know, and sort of taking your kid, giving him a lollipop and saying, come on, you really want your dad to buy this car? They don't do that. But I mean a lot of it. In a sense he's in a race for time, right? He has got dwindling cash.
- [04:04]
B
He just used.
- [04:05]
A
On Friday he spent $920 million to pay off a five year bond that he borrowed in 2014. There was thought not just a few months ago that he might only have to pay $460 million and the rest he could pay with stock. But it turns out that the stock isn't high enough. So he's a convertible thing. I don't think that's so bad. But you're saying, Rob, that he's running out of cash and that he's got this kind of cash problem.
- [04:33]
D
Well, he doesn't want to go out and raise or may, may find, struggle to raise additional equity capital. So you might as well do what you can to sort of, you know, jettison anything that's hold, you know, that's, that's pulling him down. So it may be the cost of the rental costs, all that kind of stuff. With all the stores around the world, there'll be other things. I'm sure there'll be lots of perks. There may be people, all that kind of stuff. He's in a race to get to sell as many of these, these cars at 35,000, which by the way, have limited, you know, drive. I think they go up to 100, 220 miles, which a lot of people tell me is not really long enough. I mean people who buy these things use these cars and you've got to get. He wants to do this as fast as he can while hoping that battery prices, which I think is probably the most expensive component in the car, come down. Right.
- [05:20]
A
So I want to just pick up a little bit on what you're saying there about how he might find it difficult to raise equity. I don't think he would find it difficult to raise equity. I think he would find it easy to raise equity. And I think that if he did raise equity, the stock price would actually go up rather than down. I feel like he has this weird sort of aversion to. He used to be like a blitzscaler. He used to be part of the PayPal mafia like Reid Hoffman and Peter Thiel and people like that who he co founded PayPal with, who are just like, spend as much as it takes as quickly as it takes to grow as fast as possible. And now he switched from that and he's not raising any more equity for reasons which I don't entirely understand.
- [06:05]
D
Well, it'll cost him. It'll be extremely expensive. That's why the convertible bond is not in the money. So, you know, raising equity now means he'd dilute himself, he'd dilute his shareholders. I don't know whether the stock would go up or not. It is sort of like this binary bet on. There's been all those years of building up spend, spend, spend anything you can to prove the concept, get it going. Now it's about actually making profits, like actually making this model work. And so it is, it's very binary. And that's reflected in the stock price being, you know, way below 420.
- [06:36]
B
Yeah. And part of the.
- [06:37]
D
Yeah, among other numbers.
- [06:40]
A
But to tie this into the bigger picture, what he has done is he has made this extreme pivot from growth stage to cost cutting. And he is really taking a page out of the 3G playbook, the Kraft Heinz playbook of saying, I want to run this company as lean as possible. If I'm going to be able to sell a car for $35,000 and make money on it, I need to cut costs absolutely everywhere. And haven't we just learned from Kraft Heinz that this is not a move that works?
- [07:12]
B
Okay. I think there is a bit of a difference between zero based budgeting and Tesla.
- [07:18]
A
Okay, what's the difference?
- [07:19]
B
So zero? Well, first of all, like if you're looking at the 3G model, if you're looking at zero based budgeting, you're talking about every year starting out from zero. And then you have to justify every single expense and every department has captured.
- [07:31]
A
Elon has basically said that he's doing.
- [07:33]
B
What he is doing is trying to scale back from just wasting cash and throwing cash at every. Like there is a huge difference between what we saw at Kraft and what Elon Musk is talking about.
- [07:46]
D
I think that's what you do with the costs in a sense is the question. So I mean what he's cost cutting is fine. There's nothing wrong with cutting costs. Like you should make your company as efficiently as possible. It's what you do with what comes down falls to the bottom line. Do you reinvest it to make the company stronger? Do you reinvest it in the cars? So in a sense what he's doing is making the cars cheaper.
- [08:08]
A
So the biggest difference, to answer my own question between 3G and Tesla, is that they're a big. Is that he's not dividending, he's not rent anything, he's not, he's not paying any, he's not doing any buybacks, he's not doing any dividends. Insofar as he's saving money, he's reinvesting that money back into the company.
- [08:26]
B
Yeah, but I mean I think it's. Yeah, I think when you're talking about a company like the 3G model, the belief was that you took over big legacy brands. That the idea was, well, these don't actually need any advertising. These don't really need, you know, in store discounts. So we can cut these costs, it'll still generate the same revenue. And those costs, the costs that we're saving, we can then reinvest that into research so that we can develop new products and grow revenues. That was the original idea. The problem with that, of course, is that these revenue brands turned out not to have the same value. And the question is, is Tesla enough of a brand, does it have enough value that you could cost cut costs substantially and it would still be able to generate a lot of revenue?
- [09:09]
D
I thought though, rather than reinvest that money, what they were doing with 3G and maybe restaurant brands and Anheuser Busch, this sort of 3G model was actually to dividend out as much of that cash to the owners as possible.
- [09:25]
B
Which is rather than, I mean the whole idea of ultimately the long term strategy is that when you make this company so efficient and it's doing so well, that that will generate the revenue that will create the sales growth.
- [09:40]
C
But I don't think that was what happened in practice at Kraft.
- [09:43]
B
Definitely not.
- [09:43]
C
I mean they, they first, they overestimated the brand Value considering consumer tastes were changing and when they cut costs and that was very successful, they didn't reinvest in innovation. I mean there was this one pathetic article. The article wasn't pathetic, but their big breakthrough at Budweiser, for example, coming late in the game after you know, everyone's switching away from, from beer, especially that kind of beer. Their big innovation was Bud Orange. Like that's just not innovation. I think the difference also between like craft 3G and a company like Tesla's and they're just totally in different stages. Craft is sort of like they had to innovate like mad because of the changing, the changing landscape. Whereas Tesla's kind of like ahead of the changing lands if they're an electric car company.
- [10:31]
A
But Anna's question about the future is, is germane here because Elon said on his announcement call that he basically has so much name recognition and so much brand value at this point that he doesn't need the stores in shopping malls anymore. Because everyone already knows about Tesla. Everyone already wants a Tesla. He's like, he's like, I can now coast on the brand value I've already got. I don't know, I don't need to invest bringing it to people. I don't need to do like sales and marketing anymore. The cars will sell themselves SG and a get cut. And I feel that that was what's.
- [11:11]
D
Sgna sales, general expense, administrative expense.
- [11:14]
A
And like I feel like that move of like my brand is amazing and it sells itself is exactly the same move that 3G made with craft.
- [11:23]
D
I mean everyone knows Belveda, you never need to invest.
- [11:26]
C
Yeah, but I think, but I think the difference is with Craft they were wrong about Kraft. Like one Mac and cheese, there's no pricing power to like the middle of the supermarket, but there is power in like we were just talking about Elon Musk is name and the Tesla brand. Like people were like waiting to buy these cars. They're very excited about the cars.
- [11:46]
B
Emily, I do think you're right in that there is a difference here in that part of the problem with the model that they had in relation to Kraft was that customer what, what customers wanted was changing. They didn't necessarily want these old legacy brands. Whereas Tesla is not a legacy brand. It is decidedly a new brand of where tastes potentially could be changing. However, I do question whether you can really see something still at these price points that is going to be able to long term be cash flow positive if you're not doing much outreach at all to customers.
- [12:25]
C
And you guys were Saying this before, like, maybe Tesla's just like a bespoke car company. And the best bet, they've scaled as much as they can, they've grown as much as they could and now maybe the best thing is like someone should maybe buy them.
- [12:37]
A
This is the key. The thing which I always come back to in my head is Elon Musk's compensation package where he doesn't earn any kind of salary from Tesla and instead he has options on 20 million shares which only kick in when he reaches a market cap of like first 100 billion and then going all the way up to like 600 billion. And, and he, the whole way that this compensation package is structured is to give him every incentive to do things like grow as fast as he can and to become really big and not be bespoke and reach everyone.
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D
Maybe that's, you've answered your question about why he doesn't want to raise equity capital and therefore.
- [13:27]
A
No, like if you want to maximize market cap, then issuing new shares is great.
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D
Well, it depends on the contract. We don't know what that. I have no idea what provisions are there, but there's probably something that says that you can't just issue a bunch of shares forever to get to the, you know, I'm sure there's some restriction on that, but it also means he might not be willing to sell. It actually could create a bunch of perverse incentives.
- [13:49]
A
I thought of that, but I, yeah, I think that's, I think he's really, he has like stuck in his head this idea that once he's reached Model three, he should be able to grow just from internal cash flow and he should never need to borrow or issue new stock ever again. And I think probably most high growth companies, and he is a high growth company would not do that and would be happy. The stock market is desperate, desperate to find high growth money losing companies that it can invest in. These companies are very common in the private markets. They're almost non existent in the public markets. They're very rare but, and when you can find them, the stock prices are generally, you know, go through the roof. It strikes me that that's what Elon should want to be.
- [14:46]
B
No, I mean he's. This is also the difference between Tesla and a lot of other, you know, tech companies that we talk about is Tesla. This is a very capital intensive industry. This is a very, it's very expensive to produce the product. There are also a lot of legacy competitors that are increasingly moving into this space. I do think that he's, is In a. Just much different place than. If you're talking about, you know, just the kind of the next start of.
- [15:12]
D
The next unicorn, the lift or whoever.
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B
Yes.
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A
So, Rob.
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D
Yeah.
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A
You now live where, in the 9th.
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D
Arrondissement of Paris, do you wear a.
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A
Beret and smoke cigarettes?
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D
I do not wear a beret.
- [15:29]
A
Do you smell of garlic? Do you ride a bicycle?
- [15:31]
D
No. I do sometimes. I can't.
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B
I have a baguette.
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D
I have been seen with a baguette. That is true. Walking my half French dog around the streets of the 9th are.
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A
What's a half French dog?
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D
He's half poodle and he's poodle French. Yeah, yeah. So he speaks French better than I do.
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A
Where are we going? Oh, yes, we were.
- [15:56]
D
We just went to France.
- [15:57]
A
We just went to France. No, we're just setting the scene here. Are the Teslas in Paris, are they common?
- [16:01]
D
You don't see them so much. There are electric cars, there's a lot of the sort of Renault versions of them and you see the charging stations all over the place. They're not Teslas, but there's, you know, there's definitely. And there are a lot of incentives to have those kinds of cars in France. And actually throughout, if you go to the Netherlands, you'll see the taxis are actually Teslas.
- [16:21]
A
And so tell us, tell us a little bit like, why you moved to France and what you found when you got there.
- [16:29]
D
Well, you know, it's a good time zone when you have to think about, you know, the global news cycle. Asia, Europe, United States. It's kind of perfect for what I do. It's also a place I'd never lived before. I also was sort of getting to the point where I needed to get out of the noise a bit here in the States. And the other alternative would be, of course, your native land of the United Kingdom, which are obvious reasons you might.
- [16:54]
A
Not want to live there.
- [16:55]
B
Right.
- [16:55]
D
So you can't get away from the noise about Brexit there. It's similar to here, where it's very difficult to get out of the whole Trump dynamo.
- [17:06]
A
So in terms of, like, if Trump and Brexit are 100 and they just dominate the entire conversation and drown out everything else, where does politics lie in France? All of this noise around the yellow vests and Macron's unpopularity and stuff. Like, on a scale of one to Brexit, where would that land?
- [17:26]
D
Well, remember, my French isn't very good, so I see people talking about it nonstop. It's on the radio and I say, ah, I'm Blissfully unaware. I know they just said Macron and Gilets Jean. And I get the words and I'm certainly getting better, but it doesn't overwhelm me in quite the same way, simply because I don't. I don't speak the language. But it is as soon as I got there. This is the irony. So you try to leave the United States, avoid the UK and you get to France, as I did in early December, literally landed on December 8th. I think it was the biggest expression, manifestation of the Gilets Jaunes in the country, with tens and tens of thousands. It's a little bit like Trump's inauguration. On the numbers, if you ask the French police, they say one thing. If you ask the Gilets Gendes, they give you another. But it was, you know, so as soon as I got there, it was maybe kind of like the same thing, except it's different. It's a French expression. So there's, you know, there's people on the streets lighting Citrons on fire and smashing sock gen ATMs and things like that.
- [18:25]
A
So what? So it has really morphed into something which it's hard to pin down. What exactly, this yellow vest movement once, and without going into the whole history of it, where are we now? Is there like a group of coherent demands actually emerged from this movement?
- [18:45]
D
No, no. As you say, it started as a sort of protest against taxes, which were meant to sort of, you know, charge people for their use of carbon, you know, diesel taxes, gas taxes.
- [18:57]
A
And that's where the yellow vest came from. That's how it came from, is that it was a vest which all French people have to have to have it.
- [19:02]
D
In your boot, and then you bring. And they brought it. And it started from the countryside, if you will, where most people still have to use their cars. In Paris, of course, everyone uses the Metro or rides their bike with their baguette, but it is completely metastasized into this general, let's bring on the Sixth Republic revolutionary sense.
- [19:23]
B
Well, this is what I find very interesting about France, just in general, is that on the one hand, there is this kind of cliche about France that they're always going to the barricades. That's the common thing. But then on the other hand, it seems like a deeply, deeply conservative movement in a lot of ways. And I feel like, and I say that in the small C conservative, in which I mean that, like, it's about not wanting to liberalize the labor market. It's about not wanting to kind of alter the kind of post War, French society. It's about not wanting, I think often to allow non white people into France. It's, it's in a lot of ways, you know, it's wanting subsidies for many of these different French industries. It's about not wanting competition to come in.
- [20:06]
D
I mean it's all of that depending on who you talk to. This is the thing about, you know, to your question, Felix, I mean there is, it's not really clear what you. In fact, I interviewed a Gilet Jean guy who lives in Paris who is one of their propagandists. He does all like the Facebook, you know, videos and things like that. When they occupied a Starbucks, for instance, and they all look really jolly there and I think a lot of them were ordering, you know, their four year old lattes. Right? Yeah, per two and then the, you know, but so you ask him, he doesn't care about the gas tax. He just thinks we need to get rid of this sort of the rich and the elite. Macron represents that. I mean Macron is, you know, he is a product of that, you know, the elite schooling in France, which, you know, it's not like Harvard. I mean there are like 60 people a year that go to these universities, these schools. I mean they're extraordinarily elite and they're very often from privileged backgrounds. I think it's like 80% or 70% of them are. So there's a sort of rise up against elite and this is what kind of actually links it with what we've seen in the United, the populism of the United States or in the UK or in Italy. In fact, in many respects what's happened in Italy with the League and the Five Star Movement is that government in Italy right now basically looks like the Gileg Jean in power. It, it's not. On the one hand it wants to kick out immigrants. On the other hand, it's very liberal.
- [21:34]
B
And that it wants universal basic income.
- [21:35]
D
Universal basic income. I mean it's really, it's kind of pinned down.
- [21:39]
A
That's really interesting. Like if the Gilets Jaunes, insofar as they have kind of vision of what they want, it's not dissimilar to the Italian government. So let's ask you that, like, how's the Italian government doing?
- [21:53]
D
Well, you know, they're, you know, there's a spat between the French and the Italians, which is quite interesting. The French pulled their ambassador. I mean, so Salvini and dimaio, who the two, the CO guys running Italy, even though it's Conte Is the. Is the Prime Minister. They're the deputy prime ministers have both insulted the French on numerous occasions. They, for instance.
- [22:12]
A
Okay, I love them already.
- [22:13]
D
Well, yeah, I think, I mean, maybe you guys talked about this, where they went after the French franc, the African franc. Right. And said this is, you know, keeping Africans poor, you know, any number of. So they are really, they are representing this sort of anti.
- [22:30]
A
Elite.
- [22:30]
D
I mean, so.
- [22:32]
A
But domestically, is it working out for them?
- [22:34]
D
No, the economy is actually not doing very well. And I had the opportunity to interview Conte, the Prime Minister, when he was in Davos, a place I know you guys have down on Davos.
- [22:47]
A
We're down.
- [22:48]
D
But you know, and we said his argument was, look, you can't right now. All of this is the previous government. Previous government. These are. You have to wait to see our universal. They don't call it universal, but it's like a citta dinansa di redita, whatever it is, this idea of a basic income, all that kicks in in the spring. He's saying, just wait till the spring, everything's going to be great and the economy's going to grow.
- [23:07]
C
Italy's going to do universal basic income starting in the spring. How much is it going to be.
- [23:11]
B
The money they don't have?
- [23:12]
D
Yes, it's like less than a thousand euros a month. I think maybe it's 800 and I think there are like 4 million Italians that may qualify for it.
- [23:19]
A
It's not entirely universal.
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C
Universal isn't.
- [23:21]
D
Yeah, it's not universal. Universal. It's basically a basic income that's not quite universal. And. And they say kicks in, everything's gonna be hunky dory. Of course, by then we may have. It's Italy. So come on, there'll be another government, right?
- [23:34]
A
Yeah, it's true, but. So in terms of popularity, have they retained some of the popularity that brought them into power?
- [23:43]
D
Yes, unlike Macron. So Macron won the election.
- [23:47]
A
Yeah, he was super popular when he was.
- [23:48]
D
Well, ish. I mean, you remember they went to. In France, you go to the second round if you don't get a majority in the first round. So in the second round it was him against Marine Le Pen. So who is viewed as a sort of quasi fascist ultra. Right. Most people sensibly said, no, I'm not. So it wasn't like an overwhelming mandate really for Macron. It was just like.
- [24:09]
A
Although he did then overwhelmingly win in the parliamentary elections as well.
- [24:13]
D
Marche crushed it in the elections. In the parliamentary elections. Now, if you look at Macron's approval rating is somewhere like 20 to 30%, depending on the pollster. In Italy, Salvini's league has actually risen quite a bit over the year. Plus that they've had, well, year that they've. Since the election. So five Stars actually lost a bit. Even though they were a majority. They were, sorry, the largest party in the elections last March. Now you have Salvini and the League up with, I don't know, something like 30%. That's not approval rating. That's. If you had a vote today, they would get that much in the Parliament. This is why people are talking about the idea that he might actually seek elections after the European parliamentary.
- [24:58]
A
Is the League still an explicitly regional party? Because it was always the Northern League.
- [25:04]
D
Yeah, it was Lega Nord, now it's Lego. So they've branded nationally, but their support has gone up across in the south a bit. But the Five Star movement is much more popular because they bring you things like the big.
- [25:19]
B
Well, this is why it's not surprising you have Macron coming in saying we need to actually liberalize our labor laws, we need to reduce some benefits, we need to reduce some taxes, increase some taxes. And because we need growth, we need investment. And then you have Italy saying, I'm gonna give you everything. It's not surprising that one of those is going to be more popular than the other.
- [25:43]
D
Yeah, exactly.
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A
Emily, Hi. Your favorite social media, Panopticon. It's back in the news.
- [25:53]
C
It is.
- [25:53]
A
Tell us a little bit about the latest Facebook revelations.
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C
You cannot escape Facebook, can you? So this week there were two stories that were really interesting, probably more. But there was one by Casey Newton in the Verge that was a behind the scenes look at Facebook's moderators who work as contractors for a company called Cognizant. And it was, I mean, it was pretty good. It was a great feature story. These, these workers are. They're forced to force. They must look at just really awful content all day long. Beheadings, shootings, graphic sexual content. And they're really messed up. They're riddled with anxiety. The ones Casey Newton spoke to, they're smoking pot outside so that they can like deal with their work. They're apparently having sex in the stairwells, some of them, because they see so many conspiracy theory videos. According to his reporting, they believe in the conspiracy theories, like, and all, I mean, the 911 ones, all the good ones, all the ones you're familiar with, some of them have just come to sort of believe them.
- [26:58]
A
Momo is the conspiracy theory du jour. Just as a public service announcement that the latest conspiracy theory is called Momo and it's some evil like bird woman who's trying to get your kids to kill themselves on YouTube. It's by Jeff, in case your preschool teacher starts like warning you about this. It's all fake. It doesn't exist. Pay no attention, don't worry about it. Your kids can watch YouTube without wanting to.
- [27:29]
D
Sounds like a horror movie.
- [27:31]
A
Like these things come around. This is one. This one has been around for over a year. But the thing which has really struck me is the degree to which a bunch of like middle class moms have like really bought into it with, with zero evidence. But anyway, back to Facebook.
- [27:45]
C
So back to Facebook. So the piece goes on about how these workers are in terrible conditions. They make $28,000 a year, whereas the average Facebook worker makes $240,000 a year. I mean, it's ridiculous. And then later this week, some Facebook full time employees came out and said, like, why are we contracting out Content moderation. These people should be full time employees. So there's that piece. And then Vanity Fair had a more. Had kind of like the flip side story of the people at the top in Facebook who are coming up with the content moderation rules. And I'm gonna use a highly technical term for how it's going. I would call it a shitstorm. Shit show. One of those. You can pick.
- [28:24]
A
We can pick Angela Merkel's favorite word by the way she uses it all the time.
- [28:29]
C
And the way the piece sort of lays it out, it's like Facebook is regulating the speech of 2.3 billion people across multiple countries. And it's, you know, it's really, really hard. And. And then the sort of like downside down. Valid result of that. Anyway, the result of that in part are these moderators who are basically suffering from a host of issues working for this allegedly great company that's so great to work for. It's like all these tech companies have these sort of shadow workforces, you know, there was a story in BusinessWeek recently about Apple contractors, you know, and they're always. These contractors are always waiting in line to go to the bathroom in these stories. It's a common thread. So that Apple contractors also, they only have, you know, 15 minute breaks. So they're all running to the bathroom at the same time, waiting online. Same with the Facebook workers are all running to their lockers to get their phones.
- [29:21]
A
I mean, can they not like stagger the breaks?
- [29:24]
C
Seriously, I don't understand why they can't figure out the break situation, but it's definitely a problem. Or like, make more bathrooms. Doesn't seem like a huge issue. I'm not saying raise their hourly wage, just toilets.
- [29:35]
D
Right. It strikes me it's the 20 years ago we had this conversation about Nike or something like that. They'd have these sweatshops in Bangladesh and then the articles would be written and we'd find out they were working in pretty hellish conditions. Maybe you just don't expect this as part of the Facebook social network information economy, that there's also these really crummy, terrible, and kind of dangerous, at least to mental health. At least that's the way the article portrayed it.
- [30:04]
B
The only thing I would say is, and I'm not trying to defend this, but I'm just saying that. But I feel like this article was a very salacious article that was written to make a certain point. It spoke with 12 people. Now, if when they actually showed where the people were working, I wouldn't necessarily call those hellish conditions. And also the idea that they're constantly just looking at very, very violent content, that doesn't necessarily seem to be true. Now, having said that, even if you have to look at one beheading, that's. That's a lot. So I'm not saying that there's no problem here. Also, the median per capita income in Arizona is $29,000. So I'm not saying they couldn't pay them a little more. But comparing them to workers in Facebook, those completely different jobs, completely different areas, I'm not sure if that makes.
- [30:53]
D
Plus, they get to have sex in the stairwell.
- [30:56]
B
And that was the other thing. It was like. It just seemed to me like they were talking to someone who brought a gun to work and thought that was a good idea. So I'm not saying that we don't potentially have issues here. And Facebook has also, like, been pretty, like, has said explicitly, like, they realize that this is a very difficult job and it's very hard to do what they're trying to do. And honestly, I think it's probably impossible.
- [31:19]
A
So, I mean, I think this is. This is the key takeaway from all of this, is that, like, Facebook has not worked out how to do this key part of its job at a high level. It has not worked out how to do this key part of its job at a low level. And I mean, for those of us in the press who have to deal with, you know, the Facebook public relations team, I can guarantee you they have not worked out how to do this key part of their job at the middle level either. They haven't. Like, it's very hard actually to work out where Facebook is doing anything right except for selling ads. It's extremely good at selling ads. And, you know, we should talk about the recent Wall Street Journal article which was saying that, like, a whole bunch of apps on your phone, even if you have never signed up for Facebook in your entire life, even if you have no connection with Facebook, you can download, you know, period tracker apps and they will report back to Facebook when you get pregnant so that you, you know, Facebook can then serve you ads when you're just surfing the Internet. You know, you don't need to have a Facebook account for Facebook to know who you are and to start selling you baby strollers or whatever. It's crazy.
- [32:34]
C
Well, that was a sign of that. Once again, Facebook really is sort of floundering to regulate itself, and it's sort of scaled too much and doesn't. It's just this octopus out of control, but also a sign again, that the workforce, the tech workforce is so bifurcated. And, you know, there was a quote, and I think it was in like. Like a Bloomberg write up of the Casey Newton piece where someone from Facebook said, like, you know, we're not gonna be like Kodak, you know, we're not gonna take janitors and make them go to the C suite or any. Like, that's not how it works. Because if you do it like Kodak, you have to do a lot of layoffs, which I thought was kind of like, come on, you guys are supposed to be smart. Figure out.
- [33:11]
A
Wait, hang on. So the idea that Ursula Burns could start off, like, as a janitor, basically, and then become CEO, that's like. That's a bad thing. Why?
- [33:22]
C
It's a fantasy. And if you treat your. I mean, the way I read it was like, if you treat your janitors really well like that, you'll just wind up laying them off anyway. So this is how we're doing it.
- [33:32]
D
I guess my takeaway from the whole thing is, to be honest, I didn't realize the degree to which they outsourced such an important part of their problem. Right. So if you look at it, this is the thing that is going to either make or break Facebook. Whether they allow this kind of content, whether they're allowed to be manipulated, and all that kind of stuff, that seems to be really important. So it's completely contracting outward to some. What is it called? Cognizant.
- [33:56]
C
Cognizant.
- [33:57]
D
This incredibly existential part of their business. Just alone. And then the fact that, yeah, okay, it was probably. I mean, if any of us were writing that, we'd definitely have talked to the guy with the gun and got the story about sex and the stairwells into it. Let's face it, that does make the story. But the fact is, these are apparently real people who are taking on this incredibly important function at really arm's length from the company. That was the other thing. You know, you show these differences of, you know, and it was well done and said, like, this person's paid a dollar more for supervising the person who's on the thing, and then the person who's brought in to be an expert on a subject gets a dollar more an hour. You realize that? Actually, I'm not sure to your point. I guess Emily is, have they really taken on board how serious the problem is?
- [34:46]
C
Yeah, these are. They're sort of treated like blue collar jobs, but they're not. They're white collar jobs. They're using discretion and judgment. Even though Facebook is desperately trying to make very specific rules, like, it's never going to work.
- [35:01]
A
One of the key things from the Vanity Fair piece is that this is not something which you can do by creating, like, hard and fast rules. Like, the hard and fast rules are always going to create edge cases, and you need a bunch of discretion and common sense. Otherwise you wind up preventing comedians from saying men are scum.
- [35:25]
C
Right, Right.
- [35:26]
E
We had Casey Newton on if then this week, and one of the things that he said that I thought was really interesting was aside from obviously the cheaper labor aspect of it, he thinks part of the reason Facebook doesn't want to deal with this is that they really just want this to be done by machines. Possible.
- [35:42]
B
I think that's exactly right. Because I think what they're doing is they're saying, like, we're going to get a cheap labor force that's going to create a lot of data. We're going to feed that to our AIs. Big, better algorithms. We don't care if the workers just kind of revolving door. I actually think that's probably correct.
- [35:54]
C
And they did say in the Vanity Fair piece that they've gotten way better at at least naked pictures and one other kind of bad content. Their AI has gotten a lot better at getting rid of it.
- [36:05]
A
Let's have a numbers round. Emily's got a number. I can tell she's excited.
- [36:09]
C
It's two.
- [36:10]
A
Oh, that's a good number.
- [36:12]
C
It's the number of companies that Gap is splitting into.
- [36:14]
A
Ah, the Gap story.
- [36:16]
C
The Gap is splitting up, you guys. Oh, my God.
- [36:19]
A
It's splitting into a. It's a bit like a good bank and a bad bank. Yeah, Old Navy, where the bad bank is the Gap.
- [36:26]
C
Yes. Old Navy is becoming its own thing. It's going to be run by Sonia Singal, who will be, who will raise the number of female CEOs in the Fortune 500 to a whopping 28. Yay. And then all the rest of the companies will be in another brand which they haven't even named yet. They're just calling it Newco. They can't figure it out, which is hilarious to me.
- [36:49]
A
Whenever companies split up, they always talk about, we're going to create this new co and they always call it Newco until they pay some branding consultant a gazillion dollars to come up with an actual name. And then John Battelle, who started Federated Media, he's one of these, like, classic early Internet. He was at Wired and that kind of stuff. Early Internet publisher. His, his company is actually called Newco. And I love the fact he's just like, yeah, I'm just going to call it like the, the placeholder name.
- [37:19]
C
Also. I didn't realize Old Navy was a such a juggernaut. $8 billion in sales, which is the basically the equivalent of all the other brand sales because it's really, really, really cheap.
- [37:30]
B
And that's the thing. It's low end and high end.
- [37:31]
C
Everything in the middle, the middle is dying. And as we see with all these other things, Facebook, jobs, etc. Middle class.
- [37:40]
E
Yeah.
- [37:40]
A
Which brings us back to the original question of can Tesla succeed as anything other than the high end brand, which we are not going to answer on this show. My number is $31 million, which is the new asking price for the Neverland Ranch, which has been on the market for basically ever since Michael Jackson died. It was originally put on the market for $100 million. Didn't sell, obviously. And the woman who listed it for $100 million and is now relisting it for $31 million gave this absolutely glorious quote saying that the reason why it didn't sell for $100 million is. Wait for it. That people realize that $100 million isn't chump change.
- [38:31]
D
Surely there's some Saudi prince who this thing. And does the wonder wheel work or whatever it was on the Ferris wheel?
- [38:40]
A
No, the Ferris wheel's all gone. They took out all of the children's attractions in time for the hbo.
- [38:46]
C
I was gonna say that's gonna help the brand value Of Neverland.
- [38:49]
A
It's really not. I think they actually changed the name as well. I think it's the ranch formerly known as Neverland.
- [38:57]
B
It's just a symbol.
- [38:58]
D
The archdiocese could buy it.
- [39:01]
A
Thanks, Rob. We needed that. Thanks. What's your number?
- [39:05]
D
143 million.
- [39:07]
A
Okay.
- [39:08]
D
That is the amount that Oprah Winfrey has taken out of Weight Watchers since she first bought in. She paid $43 million a few years ago for a stake. She's put some more money in and exercised a lot of options. She sold 143 million and she still owns a stake. Stake of $100 million. Pretty good. And she has options, I think, on another $40 million. That's good for her.
- [39:28]
C
She's so great.
- [39:30]
D
The stock, as you probably saw, it cratered earlier this week, which got us to look at it. I couldn't believe it had gone up 15 fold since the time she first invested in it. I guess sometimes a personality attached to a brand isn't the worst thing.
- [39:45]
C
But I thought Weight Watchers isn't doing well, like its real brand.
- [39:48]
A
It's not even Weight Watchers. No, it's ww. And so what. So what caused the run up and what caused the cratering?
- [39:57]
D
Well, I think the run up, a lot of it was basically Oprah's star attraction. She's now got skin in the game, no pun intended. And she was put, you know, was able to pitch it. And so a lot of her followers loved it. So that's why. That's obviously why it went up.
- [40:12]
C
Oprah, if you're listening, by Huffington Post.
- [40:16]
D
But I don't know, I think there's just a. There's so many other ways to follow your weight and all that kind of stuff. There's so many apps that have come up, things like Noom, all these things. That seems to be the assault that they're not quite prepared to face to battle.
- [40:34]
B
Yeah, my number is $175,000. So if you want to have dinner with the Ethiopian prime minister, it will cost you $175,000.
- [40:45]
A
I mean, do you get like caviar with that?
- [40:48]
B
We don't know. And that's actually the low end of what apparently they are pricing these per plate dinners. So basically they want to raise a lot of infrastructure money for infrastructure spending, but they don't want to do it in traditional ways. So they are, I will say, I kind of respect the fact.
- [41:05]
A
Collateralized dinner obligations.
- [41:07]
B
He also, he apparently also like had auction. He auctioned off his watch. That was also about $200,000. Now, granted, they're targeting a billion dollars, so they're gonna have to have a lot of these dinners. But I just thought it was interesting that it was so, like, kind of explicit about, like, you wanna buy time with the prime minister, pony out the cash. I was like, well, you're being straightforward.
- [41:27]
D
And he's a newish guy.
- [41:28]
B
He is.
- [41:28]
D
He was elected, like, last year. Right.
- [41:30]
B
And there've been some good things with opening up with Eritrea, releasing political prisoners. I mean, there's. There's. It's. It's a complicated.
- [41:36]
D
But it's a very poor country. Needs a lot of infrastructure. It's big. I mean, what is it, 80 million.
- [41:41]
B
People or something like that?
- [41:41]
D
So, you know, it's. I mean, people like this guy.
- [41:45]
B
It's true. I mean, so that's why I say so.
- [41:47]
D
$175,000.
- [41:48]
B
Hey, it's not that bad. That's what I'm saying.
- [41:49]
A
Yeah, but I mean. But so this is, I guess, an alternative to the base case thing, which is just take it all from China, right?
- [41:57]
B
Pretty much, yes.
- [41:57]
A
And so this is his way, like, please, please give me all of this money so that I don't need to become a vassal state of the Chinese.
- [42:05]
C
So you're gonna do, like a GoFundMe?
- [42:09]
D
Yeah.
- [42:10]
A
So go to www.helpouttheethiopians.com, but bid yourself $175,000 and you can have. And does it need to be in Ethiopia, this dinner? Will he come, like, anywhere in the world?
- [42:23]
B
No, I'm pretty sure you have to go there.
- [42:25]
A
It's a beautiful country, apparently.
- [42:27]
D
Unbelievable.
- [42:30]
A
So I think that's it. Thank you very much. And coming up on Slate plus, we have Emily talking about existentialism.
- [42:37]
C
Finding your purpose in your life, in your work, is an empty project that will leave you, in the end, feeling despair.
- [42:45]
B
I don't. I very much disagree with that. I very much disagree with that.
- [42:50]
A
So listen to that if you're a Slate plus member. Otherwise, thank you for listening to Slate Money. Thank you to Max Jacobs for producing, and thank you very much to Mr. Rob Cox for coming in.
- [43:02]
D
My pleasure.
- [43:03]
A
We will talk to you next week on Slate Money.