Disney’s $1B OpenAI Bet, GPT 5.2 Reactions, Saagar Enjeti Weighs In | Matt Levine, Mike Swan, Mike Gallagher

Summary

TBPN Podcast Summary

Episode: Disney’s $1B OpenAI Bet, GPT 5.2 Reactions, Saagar Enjeti Weighs In
Hosts: John Coogan & Jordi Hays
Guests: Matt Levine, Mike Swan, Mike Gallagher, Tyler, Sager (Saagar Enjeti)
Date: December 12, 2025

---

Episode Overview

This episode dives into the significance and ramifications of Disney's unprecedented $1B partnership with OpenAI, the rollout and community reactions to GPT 5.2, and a robust discussion on the future of AI, prediction markets, sports betting, geopolitics, defense tech, private credit, and broader tech-business culture. Notable thinkers and industry insiders, including Matt Levine (Bloomberg), Mike Gallagher (Palantir), and Mike Swan (Swan Land Company), weigh in on the implications for tech, finance, society, and geopolitics.

---

Key Discussion Points

1. Disney’s $1B OpenAI Investment & IP Licensing

The Deal (02:01–11:15)

• Disney invests $1B into OpenAI, getting a three-year license for AI-generated content of 200 iconic characters (Frozen, Marvel, etc), with a one-year exclusive for OpenAI.
• Disney sent Google a cease and desist, targeting unlicensed character generations online.
• This was shocking to outsiders because Disney is known for fiercely protecting its IP.
• The partnership is seen as inevitable due to the proliferation of AI-generated content, according to the hosts.
• Jordy: “Bob Iger knows that AI generated Disney will happen with or without the company's blessing. So partnering with OpenAI today... makes a lot of sense.” (04:10)
• The deal gives OpenAI a differentiation advantage against rivals (e.g., Google Gemini).
• Viral content expected as users insert themselves/their kids into Disney worlds.

Monetization & Product Impact (05:53–09:59)

• Anticipated shift for OpenAI toward paid consumer/family offerings with Disney content.
• Immediate virality and revenue bump expected as Sora (OpenAI's AI video app) incorporates Disney IP.
• The partnership is timed as Sora's App Store ranking begins to falter, giving OpenAI a “temporary but very real differentiation.”

Brand/Risk Management (14:16–17:06)

• Concerns over potential “jailbreaks” (misuse), such as generating inappropriate Disney content.
• Ongoing tension: How much violence or adult content is acceptable for Disney characters in AI generations?
• John: “Where do you think the line is? ... Can you have Luke Skywalker cut Spider Man's arm off?” (16:10)
• The adult Disney audience is acknowledged as a significant factor.

---

2. GPT 5.2: Public Reaction & Technical Benchmarks

Community Feedback (26:16–28:00)

• General sentiment: 5.2 outpaces earlier models in capability, but not a radical leap.
• Benchmarks show strong improvements, but the “trough of disillusionment” after AI hype is noted.
• Tyler Cowan: “ChatGPT 5.2 also knows exactly which are the best Paul McCartney songs. And it can write a poem in Spanish as good as the median Pablo Neruda poem.” (26:40)

Reasoning Models & Benchmarks (31:00–34:36)

• Discussion on reasoning benchmarks (ARC AGI, math, etc.) and how “maximum available reasoning effort” is now the norm for top labs.
• Debate over the transparency and fairness of AI benchmark reporting.

---

3. Geopolitics, Defense Tech, and Land Investing

Mike Swan: State of Land Investment (58:32–80:21)

• Land remains an underappreciated asset for the tech generation, says Swan, but interest/revenue flux with the stock market.
• Montana/Western ranches saw spikes due to Yellowstone TV, with high yields for properties on blue-ribbon fishing waters.
• Rising interest from tech founders and high-net-worth individuals for “doomsday” and “safe haven” properties.
• Actual yields are low (2–3%), so play is for long-term appreciation and unique tax advantages.
• Most buyers are conservation-minded rather than prospectors for minerals/resources.

Mike Gallagher: Navy Shipbuilding, Deterrence, Palantir (118:01–137:16)

• America needs to ramp up naval shipbuilding to counter China; current fleet shrinking.
• Palantir leveraging AI and autonomy to streamline shipyards and suppliers, saving “hundreds of planning days.”
• US advantage: integrating AI, autonomous vessels in the Navy, improved industrial collaboration.
• US poised to play the world's “arms dealer” role—exporting tech/shipbuilding prowess to allies (AUKUS with Australia highlighted).

---

4. Broader Tech & Finance Trends

Prediction Markets and Sports Betting

Matt Levine and Saagar Enjeti Discussion (85:10–147:47)

• Prediction markets are growing but are predominantly sports gambling businesses.
• Insider trading and regulatory issues: Most platforms officially oppose, but the culture often tolerates it due to the drive for information-rich markets.
• Recent manipulations (e.g., Ukraine war maps) showcase vulnerabilities in “oracle” data for betting—ethics of betting on politics and war discussed.
• Concerns over “vice-ification” of American life: easy sports betting, legal gambling, and weed culture.
• Saagar: “Responsible sports betting would put all these companies out of business. They literally cannot operate without addicts.” (142:02)

AI Fear and Doomer Narratives

• H200 chips now exported to China; debate over whether keeping China on the Nvidia/CUDA stack is a national security risk or pragmatic.
• A sense that public and investor AI doomerism (“one more AI run and it’s AGI!”) has peaked; mainstream now viewing AI as a “credit card”-like technology—useful, but not catastrophic.

Growth Hacking, Newsletters, and Longform Content

• Substack frustrates writers by forcing reading in their app, trying to build a social network around longform—potential business model conflict.

---

Notable Quotes & Memorable Moments

Disney–OpenAI as Turning Point

• Jordy (04:10): “Bob Iger knows that AI generated Disney will happen with or without the company's blessing. So partnering with OpenAI today while setting up negotiations with Google and other players makes a lot of sense.”
• John (16:10): “Can you have Luke Skywalker cut Spider Man's arm off? ...Where do you think the line is?”

AI, Sports, & Gambling

• Saagar (142:02): “Responsible sports betting would put all these companies out of business. They literally cannot operate without addicts.”
• Matt Levine (88:33): “It's 80% sports gambling. That’s a number I made up... but the next leg up is sports gambling. That’s why they’re businesses.”
• Saagar (139:35): “Even if you don't bet, you can't help but think about sport without thinking in betting terms... that's winning in their part.”

AI Doomerism

• John (162:58): “I think this idea that, like, oh just like one more training run and then it’s the super intelligence and it’s runaway ...that narrative is kind of falling by the wayside.”

Land & Geopolitics

• Mike Swan (63:50): “We typically see these properties appreciate at a much higher rate and B, they never go out of style... there’s a finite amount of those A properties that are on legitimate fishing water.”
• Mike Gallagher (121:46): “Because of continuing resolutions, the Navy put about $5 billion in a trash can and lit it on fire.”

---

Important Timestamps & Segments

• Disney x OpenAI breakdown: 02:01–11:15
• Model misuse/jailbreak debate: 11:15–15:50
• Product/market differentiation: 05:53–11:15
• GPT 5.2 rollout & benchmarks: 26:16–34:36
• Geopolitics & land as investment: 58:32–80:21 (Mike Swan)
• U.S. Navy modernization & Palantir: 118:01–137:16 (Mike Gallagher)
• Prediction markets, sports betting, regulation, and AI policy: 85:10–147:47 (Matt Levine, Saagar Enjeti)
• Editorial/tech newsletter business commentary: 190:11–195:07

---

Tone & Takeaways

The episode is characterized by a rapid-fire, irreverent tech and finance tone, with playfulness, skepticism, and a strong sense of realpolitik. Banter moves quickly between serious analysis and comic asides (e.g., movie lists, “landmaxing” slang). There is an undercurrent of both admiration and wariness about the accelerating impacts of AI on culture, business, law, and national security.

Key Takeaways:

• Disney’s OpenAI deal is viewed as a watershed, both for IP holders and AI distribution.
• GPT 5.2 continues to set the bar for consumer and enterprise AI, but “world-changing” expectations are cooling off.
• AI, gambling, and prediction markets are forging new territory, but the social and ethical consequences are murky.
• Private credit and defense spending are driving both American tech and geopolitical strategy.
• Tech’s echo chamber is being pressed by public scrutiny, regulatory headaches, and shifting business models—but debate and critique are alive and well on TBPN.

---

Transcript

[Jordy]

You're watching TVPN.

[John]

Today is Friday, December 12, 2025. Just 13 days till Christmas. We're live from the TVPN Ultradome. The temple of technology, the fortress of finance, the capital of capital. Ramp.com baby. Time is money save. Both easy to use. Corporate cards, bill payments, accounting and a whole lot more all in one place.

[Jordy]

That's right.

[John]

Death Star post. Now it makes sense. It all makes sense.

[Jordy]

It all makes sense.

[John]

It wasn't a vague post. It was, it was, it was just early. A preview of a deal that would take shape four months later. Right. That's what was happening. Sam Altman, of course, what Was this? On GPT5 day, August 6, he posted a picture of the Death Star rising on the horizon. Very confusing post at the time. Now we understand.

[Mike Gallagher]

Now we get it.

[John]

He was saying, hey, one day we're gonna have rights to Star wars property is through this deal with Darth.

[Jordy]

Of course, Darth Sama.

[John]

People did not like this post at the time. Nikita, people were saying you should delete this.

[Sager]

Just delete it.

[John]

There's time to delete this.

[Jordy]

And the timing, the timing was really funny. It implied that they were about to release something, you know, so all powerful.

[John]

Yeah. It was easy to read it that way.

[Jordy]

Yeah.

[John]

You could also read it as like maybe they're going on the offensive against the Death Star, the Empire, which is Google. They're going to attack Google. There were a number of different ways to read into it, but it was, it felt confusing.

[Jordy]

It was confusing. And then, and then it, and then it was. I feel like people were somewhat let down.

[John]

Yeah.

[Jordy]

Right. By, by GPT5.

[John]

Yeah. People were expecting remarkably qualitatively different. That's not what people got. And so the end result was, you know, people just remaining confused. We had a bunch of different takes on it. We think it makes sense now, but now, you know, it's even more clear with the Disney deal. But you wrote about the Disney deal, you dug into the deal and you kind of crystallized your take. So take me through it.

[Jordy]

Yeah. So some of the stuff I talked about yesterday, but I wrote about it for the newsletter today. TVPN.com I wrote 127 days. That's the gap between Sam's Star Wars, Death Star, vague posts and yesterday's announcement that Disney is investing $1 billion into OpenAI and giving them a three year license that allows users generate AI photos and videos of the most popular 200 Disney characters. Most notably, OpenAI is guaranteed a one year exclusive on the IP. And while the post and the deal are probably not connected. I think it's funny to imagine that they are. Right before the deal was announced, Disney sent Google a cease and desist letter claiming Google had been violating Disney's intellectual property by allowing users to generate a variety of Disney characters. Many people outside tech seem shocked that Disney would license their IP in the first place, given their history of ruthlessly protecting it. There's a number of examples of Disney coming after kids birthday parties, or at least that's how they positioned it. Of course these are businesses that are using, effectively using Disney characters to monetize.

[John]

I read your draft and I was like, wait, they sued a child for having a Disney themed birthday party?

[Jordy]

There's two notable examples. One, one is coming after basically a birthday party service company, like a business.

[John]

That sells and we will do your birthday party. And then they were selling and it'll be princess themed.

[Jordy]

Well, so what? They wouldn't, they wouldn't directly call the characters that you could like rent the same names. It wasn't like Elsa.

[John]

Okay.

[Jordy]

But it was clear in the reviews what Disney noted in the reviews. People would call the characters by the Disney name. So that was one of their proof points. And then there was also a story of a father who like wanted to do a spider man tombstone for his like very young son. That passed. And, and I think it was the effectively got blocked. It wasn't necessarily directly by Disney, but anyways, Disney has long standing policy of not letting other people PR nightmare.

[John]

If your legal team comes to you and says like we want to sue.

[Jordy]

A dead person, like no, it was just like it wasn't a lawsuit or.

[John]

Maybe it was a tombstone company.

[Jordy]

They were just saying like, no, you can't make a spider man.

[John]

Sure.

[Jordy]

Anyways, many people outside of tech seem shocked that Disney would license their ip, but Bob Iger knows that AI generated Disney will happen with or without the company's blessing. So partnering with OpenAI today while setting up negotiations with Google and other players makes a lot of sense. Again, I just expect this like cease and desist is the start of a negotiation process in order to get the same type of IP and capability ultimately into Gemini, but in 2027? Not yet. Yeah, well, and maybe not. Right? Like one question I have is they have a one year exclusive. After that period, does Disney say, okay, you can keep having the exclusive, but you need to pay us like $1.

[John]

Billion a year and at least Google's at the table. Negotiate?

[Jordy]

Is that what you mean? Yeah, exactly. So the strategic significance of this deal for OpenAI has been broadly underappreciated, mainly because for a company that frequently talks in the trillions, Disney's investment, a paltry 1 billion, just isn't enough to turn heads. But the advantage this deal gives OpenAI from a product and distribution standpoint is extremely significant. Per the most recent reports, OpenAI has 20 to 30 million paid users out of a total of 900 million global. Disney, on the other hand, had 140 million people visit Disney parks in the last year and 128 million paid subscribers to Disney Plus. If you're an adult spending thousands of dollars to take your kids to Disneyland or a Disney plus subscriber, surely you'll pay an incremental amount to OpenAI to extend and personalize your Disney experience as a parent. Some of the most magical moments with AI that I've had are simply generate. I've talked about this before. I take a real photo of me and my son and I turn it into dinosaur mode, generic design source, Dino mode. It really brings us both a lot of joy. I love these photos. It's his reaction to the picture that I'm getting joy from because he just like, absolutely loves it.

[John]

I had a similar experience where I would like take a picture of like, we'd create a scene of toys and then we'd say like, make these LEGO versions of this or something. But the models got so good at a certain point that I was just like, okay, like, I just made his toys look like toys and it just looks exactly like what I made. I just need to just take a photo. I need like more creativity to come up with something remarkable.

[Jordy]

Yeah. So anyways, I think people, my household is not into the Disney world yet. Kids are just young. But I can imagine how excited, if you're a Frozen superfan, an Avengers super fan, being able to put yourself, your kids into their world I think is going to be pretty exciting. So having a license to generate high quality images and videos of 200 of these characters creates a temporary but very real differentiation for tons of current and future ChatGPT users. Creates a real catalyst to pay. Right. Like, my kids want more outputs. I'm assuming you'll get a handful for free and then you'll have to upgrade and it creates and it's just going to be super viral. Right. These videos are going to be going into family group chats, they're going to be shared online. I think it will. I think it's hard to imagine another Studio Ghibli moment in the way that that happened. But you could imagine that this will be getting a lot of attention. Knowing Sam and Josh, they've likely negotiated to get Sora ChatGPT broad exposure across Disney properties both online and offline. And we already know that select Sora videos will be featured in Disney plus. I think they're going to be taking, really making sure they're hand selecting those because I wonder what that means.

[John]

I wonder if that means the Apple TV app or the Disney plus app on the phone. Because on an iPad, on a phone it feels a little bit more natural. But I mean just in terms of the Star wars property, like there's there are, there are the original Star wars films and then there's young Jedi Adventures which is Star wars for kids. The, you know, there's even less violence. It's more G rated than rated. Even with Bluey, very popular children's show on, on Disney. On Disney plus there are full episodes that are like a full episode might be, I want to say like eight minutes long, but then there's minisodes that are even shorter. So like the short formification is happening within the Disney app already. But I think a lot of parents would have a sort of negative reaction.

[Jordy]

To just a feed.

[John]

A feed? Yeah, an endless scrolling feed of short form Sora content. That's going to be really tricky. It needs to be some. It needs a twist, it needs curation. They said that there's already going to be curation but I wonder how that's.

[Jordy]

Going to roll out curation. But it could still very well be infinite.

[John]

Yeah, well it doesn't need to be infinite.

[Jordy]

Well, I just imagine it could be every week.

[John]

You could truly have a monthly contest everyone prompts to create the most incredible Sora videos. With Disney, I allow the most creative bet on. Yeah, they definitely have to gamble on it for sure. That's, that's a done deal. But, but you could, you could essentially have like a, like a film festival that's running and kids submit their generations.

[Jordy]

And then those film festival of seven second videos. I'm sure Hollywood will love that.

[John]

Back in the, back in the vine days like the creative skill ceiling was incredible. People were doing remarkable, remarkable things with that, with that technology, that short form video they would loop and do all sorts of stuff. I still believe that there's some really interesting things that you can do with generative systems with generative AI. And I imagine that we will see some cool stuff come out of the Disney partnership. But I don't know that I'd want a kid sitting there watching endless slob that seems rough, but I mean, at the same time a lot of parents.

[Jordy]

Are like, the trough comes forever.

[John]

That's great because there are parents out there who are like, no, I'm actually just in the market for something that.

[Jordy]

Will keep their attention today.

[John]

Right now I want them to stop.

[Jordy]

I need five minutes to do this.

[John]

Thing or just need a babysitter.

[Jordy]

Anyway, I finish it out by saying my long held assumption is that over time, everyday consumers won't pay for alarms. There will be great ad and commerce supported alums that provide the monetization to serve great models. But OpenAI's challenge is that even with future hall of Famers like Fiji Simo and Denise Dresser on board, Denise is of course the former CEO of Slack who's now CRO at OpenAI. They can't massively scale monetization of the free product overnight. They can't just say, hey Chad, CBT agent, yeah, create a massive ad platform, don't make mistakes. And I said I don't expect those business lines to really begin ramping until the second half of next year and they need to show continued revenue growth now. Hard to think of a better time for this deal to get done than 11 days into OpenAI's code red. And right as Sora was about to fall out of the app store's top 25. I looked earlier this week, they were sitting at around 24. And again as this, as this new IP actually rolls out to users, I expect it to go right up back to number one. I said, will the functionality be immediately abused? Yes. Will it create uncomfortable moments for Disney's leadership? Yes. Is it a smart move for Disney? Yes. Will OpenAI have to shell out billions to maintain exclusive access over the long run? Yes. Will it be worth it? Quite possibly.

[John]

I want to tell you about Julius AI, the AI data analyst that works for you. Join Melians who use Julius to connect their data, ask questions and get insights in seconds. Second, I want to debate you on this idea that it will be abused immediately. I think it's actually really, really hard to abuse these systems. Like there was the whole, the first Gemini model where people would say, make a, you know, a soldier from the 1940s and it would be a Nazi, but it would be a black Nazi. And so that people were very upset about that because it was like, just made no sense. But I think that the models and the more importantly like the reasoning chains that happen, like it's very clear that when you go to nanobananapro and you say, you know, take this Image and make it Christmassy. It's unpacking that, using Gemini as an LLM first, and it's hydrating it into something that it's actually reasoning about what you asked. Even if you just say Christmas mode, Studio, Ghibli Mode, you give it two words, and it actually is clearly hydrating it to a much broader degree. And I think that that reasoning step happens before, and I also think it happens after, so that even if it accidentally generates Mickey Mouse or someone doing something that they shouldn't be Mickey Mouse holding a gun or something, then it will detect that and actually turn that off. Like, it's been very hard the whole, like, oh, jailbreak it. I got it. To say something crazy like, that's like. It's just like. Seems like a thing of the past.

[Jordy]

What do you think? I just trust that the Internet immediately will figure out if you have hundreds of millions of people trying to jailbreak it, they will pull it off. The other thing that will happen is people using different models that are, like, already don't have the same guardrails and making it look like they're SORA outputs even though they're insane.

[John]

Oh, totally, totally, totally. I'm just saying, like, open source model that's completely unrestricted. You do something crazy and then you throw the SORA watermark on it just.

[Jordy]

To take a shot at Salmon and Bob and Salmon.

[John]

What do you think, Tyler?

[Tyler]

Yeah, I was gonna agree with Jordy. Like, I think, hey, what's this?

[John]

What's this?

[Tyler]

Oh, yeah, I've just been, you know, I got double jaw surgery.

[Jordy]

Double jaw surgery and a little bone smashing.

[Tyler]

I've been bone smashing a bit. Yeah. Just trying to get my looks.

[John]

You're looking fantast. This is remarkable. I really. I really can't. Hats off to the production team. This is a fantastic new feature to allow Tyler to look like the absolute look.

[Tyler]

Like how I do every day.

[John]

Yes, how you do every day. Sheesh. I love it. Yo, Chad's loving it.

[Tyler]

Okay, but I was gonna say, like, yeah, day one, there's gonna be people on X that, like, easily jailbreak it.

[John]

I can't look at it. I can't take you seriously.

[Jordy]

Just look at us.

[Tyler]

And then they're just gonna post it, and then it's gonna go super viral. And then you'll have parents.

[Matt Levine]

Chad.

[Jordy]

No, it says Chad podcast.

[John]

I love it. Banta Automate compliance and security AI that powers everything from evidence collection and continuous monitoring to security reviews and vendor risk. Okay, tell me your actual take.

[Jordy]

Okay. Yeah.

[Tyler]

So I Think like day one.

[John]

Now he's back to, oh, what, what happened?

[Tyler]

Day one.

[John]

There we go. There we go. Okay.

[Tyler]

Day one, you have people who jailbreak it. Even if it's like one person, then it goes super viral next. And then it's like, oh, Mickey Mouse, like shooting a gun. Then it goes viral. Parents see it and they're like, okay, my kids aren't going to be on this because even if it's like mostly like, you're going to have a ton.

[John]

Of backlash where it could be bad.

[Tyler]

Go super viral on CBS News or whatever.

[Matt Levine]

Yeah.

[Jordy]

Nah, I don't buy that. I think, I think it, I think it will be very magical and I think that they'll immediately be getting shared in family group chats and, you know, between friends and I think we're maybe underestimate the adult Disney audience as well.

[John]

That could go two ways. Adult Disney.

[Jordy]

Okay, easy, John. Yeah, it is notable Adult mode and the functionality are rolling out around the same time.

[John]

But the Pikachu getting barbecued, is that a violation? Is that something that they want to stop? If you're Bob Iger and someone shows you that Pikachu getting barbecued video, would you say, no, no, no, I don't want any videos out there of Mickey Mouse getting barbecued. What do you think? Do you think that crosses the line?

[Jordy]

I think Disney execs, if they saw that in a pre IPO world, would send a cease and desist.

[John]

Wait, what do you mean pre ipo.

[Jordy]

Sorry, pre AI world, Pre deal world.

[Matt Levine]

Okay.

[Jordy]

Like, I think that I would imagine that anybody that's been creating content like that, they come after them in the same way that Ferrari, if Ferrari sees you like paint your like Ferrari some crazy color and do donuts, they'll just send you a cease and desist even though you own the car. Right. They care about it.

[John]

I'm just wondering, like internally, where do you think the line is? So you think that they would. You think that, you know, whenever this rolls out, maybe it's already out. It might be out soon, but let's just assume it rolls out. January, you go to Sora, you can generate, you know, Luke Skywalker fighting with Spider man, because those are two Disney properties. Can you have Luke Skywalker cut Spider Man's arm off? Because Luke Skywalker does cut off people's arms in the PG13 rated Star Wars. But Spider man does not ever get cut. He never gets his arm cut off because he's more of a PG character.

[Matt Levine]

Right.

[John]

So how do you blend those two together and I'm just wondering, where is the line for the Disney execs? Like, where would they draw the line? How do they even think about a framework for upholding the brand?

[Jordy]

I think we'll know it when we see it.

[John]

You think so?

[Jordy]

I think it'd be a funny scenario where they only allow violence on Warner.

[John]

Brothers characters, but they don't have the rights. But it's just like, yeah, like you can. Well, they do that in Hollywood. There's some. There's some actors who have it in their contracts that they never will lose a fist fight. Basically they'll say, like, you know, you can cast me in this movie, but if we're. If I'm fighting up as somebody, I don't lose. We can tie, basically. So you know how you watch a lot of, like, Jason Statham and the Rock and like Fast and Furious and they're like bashing you each other through walls for like five minutes, like this crazy action scene, and then at the end you're like, oh, neither of them won't. It's like, that's because it's in the contract. They don't want to be. They don't want to be depicted as, like, losing.

[Jordy]

They don't want to be aura farmed.

[John]

They don't want to be aura farmed. Exactly. They want to use graphite.dev instead. Code review for the Age of AI Graphite helps teams on GitHub ship higher quality software faster. Justine Moore has taken a victory lap. She's been on this case for a long time. She said, I got roasted by the anti AGI crowd for suggesting that IP holders might want their characters in Sora. They insisted that real entertainment companies would never willingly allow their characters to be used in AI Slop. Two months later how the times have changed. Fantastic prediction, Justine. Great work. I completely agree with this take. I think it is interesting how there is just the reality that if you hold ip, you need to exist in the world. You need to exist a lot. You can't just stay on the shelf. You can't be the Humphrey Bogart. And yesterday when Dylan from Puck was here, he was mentioning a bunch of old Hollywood references and I was laughing to myself because I know you have not seen Casablanca and you have no idea what he means by get on the plane or Rosebud or any of these references. You're just like, yeah, totally, dude.

[Jordy]

Yeah, yeah, give me another movie to watch this weekend. Because you tried to get me to. You got me to watch the Fugitive.

[John]

And it was good, right?

[Jordy]

I delivered okay. Movies might be underrated.

[John]

Movies are underrated. You heard it here first. Movies underrated.

[Jordy]

At least in my household. Scroll down here, because I wanted to show another post from Olivia Moore, who said, has Anyone else noticed VO3 has no IP constraints? Prompt Mickey Mouse welcoming you to Disney. Look at this, John.

[John]

Sorry. Yes, I'm pulling up my movies list, which I will read to you in full.

[Jordy]

Anyway, so this was going back. This was going on back June 16th.

[John]

What's crazy is that this somehow looks. This looked so good at the time. And I was like, oh, it's over. It's so over. They can fully do it. And yet this, now, looking back, this looks washed out. It doesn't have. It's, like, overly saturated or something.

[Jordy]

It looks like a green screen.

[John]

Yeah, it doesn't actually look that good to me anymore. And it's because the goal posts have moved, as they always do. Anyway, let me tell you about our daily newsletter. Tech analysis and news daily. Get our daily op ed, top headlines and best posts from the timeline. Every something, every day in your newsletter. It still cuts off. We're working on. I'm just messing with the team here. Anyway, numeral.com, compliance handled numeral worries about sales tax and VAT compliance so you can focus on growth. Numeral.

[Jordy]

Bill Peebles is fired up.

[John]

Do you want to hear. Do you want to hear my full movie camp? This is the full list. You can pick. And, Tyler, you can play along, too. First up, the Godfather. Have you seen it? No. Wow. Okay. Taxi Driver.

[Jordy]

Never heard of it.

[John]

Star Wars. You've seen Star Wars?

[Jordy]

Seen at least a couple.

[John]

Raging Bull?

[Jordy]

No.

[John]

Scarface?

[Jordy]

Yes.

[John]

You've actually seen Scarface?

[Matt Levine]

Yes.

[John]

Okay. Full Metal Jacket.

[Jordy]

But I didn't study it. I watched it, but I didn't take notes.

[John]

Full Metal Jacket?

[Jordy]

No.

[John]

Die Hard?

[Jordy]

Maybe die hard, like 10 years ago.

[John]

You gotta see Die Hard. Goodfellas?

[Mike Gallagher]

No.

[John]

You gotta watch Goodfellas. This is so good. Reservoir Dogs.

[Jordy]

Maybe.

[John]

Falling Down.

[Jordy]

Never heard of it.

[John]

Falling Down's a good one. Pulp Fiction?

[Jordy]

Seen it.

[John]

Okay. Heat?

[Jordy]

Heard of it. Haven't seen it.

[John]

Casino?

[Jordy]

Never heard of it.

[John]

Braveheart?

[Jordy]

Heard of it. Haven't seen it.

[John]

You've never seen Braveheart?

[Matt Levine]

Wow.

[John]

Okay. Hackers?

[Jordy]

No.

[John]

Apollo 13?

[Jordy]

No.

[John]

Contact?

[Mike Gallagher]

No.

[John]

The fifth element?

[Jordy]

No.

[John]

Saving Private Ryan?

[Jordy]

No.

[John]

You haven't seen Saving Private Ryan? Wow. Fight Club.

[Jordy]

Seen it.

[John]

You've seen Fight Club? Thank goodness. The Matrix?

[Jordy]

Seen it.

[John]

American Psycho?

[Jordy]

Seen it.

[John]

Gladiator?

[Jordy]

No.

[John]

See, now we're in the 2000s, so we're more likely. But the fact that you haven't seen Gladiator, I mean, that's a fantastic film. You gotta watch Gladiator, Lord of the Rings.

[Jordy]

At least one.

[John]

What do you mean, at least one? You mean at least once you've watched the full trilogy at least once?

[Jordy]

No, I'm saying I don't think I've.

[Matt Levine]

Watched the full trilogy.

[John]

You just watched a random movie in the trilogy.

[Jordy]

Probably the first one.

[John]

The first one. It's Act One. You didn't finish the Lord of the Rings. It's the three act structure. You can't just watch one and call it.

[Matt Levine]

Call it.

[Jordy]

I guess I can.

[John]

It's ridiculous. Minority report.

[Jordy]

No.

[John]

300? No, you didn't see 300. That's crazy. Troy, the Departed, the Prestige.

[Jordy]

You're just.

[John]

I'm not making things up. No country for Old Men.

[Jordy]

I think I've seen that one.

[John]

The Dark Knight.

[Jordy]

Seen it.

[John]

Iron Man.

[Jordy]

See, now, this is. This is now we're getting into. We've passed. You know.

[John]

Yeah.

[Jordy]

The joke that. I've only seen three now. Yeah, I've seen a handful, but A few handfuls.

[John]

Sicario. Have you seen Sicario?

[Jordy]

No, but I. Okay, that's a good one. I like the.

[John]

Gotta watch the car.

[Jordy]

I like the. I know the memes from it.

[John]

Yeah, we gotta. We gotta run through the rest.

[Jordy]

The chat is. Chad's getting angry.

[John]

There's so many good ones here. Iron Man, Gran Torino, Inception, the Social Network, Tron Legacy, the Town Drive, Enemy, Wolf of Wall Street, American Sniper, Edge of Tomorrow, John Wick, Interstellar Nightcrawler, Mad Max, Fury, Road Ex Machina, the Martian, Sicario, the Revenant, Dunkirk, Blade Runner, 2049. I was Ad Astra, Joker, tenant, Dune.

[Jordy]

I have seen John. I've seen John Wick. I have seen John Wick. Funny story. I was on a flight back from London.

[John]

Yeah.

[Jordy]

And it was like, effectively 3am the whole plane's dark. And Keanu Reeves just walks by my seat.

[John]

Wait, in the actual plane?

[Jordy]

Yes.

[John]

That's wild.

[Jordy]

Just walks by and it was like.

[John]

Wait. And you were watching John Wick on the scene?

[Jordy]

No, I wasn't.

[John]

Oh, okay.

[Jordy]

Okay. Yeah. But he walks by and imagine seeing, like, Keanu, like, you're on an overnight flight, it's dark in the plane and he just, like, walks by. He was using the restroom and I ended up watching it after that.

[John]

Yeah.

[Jordy]

To be fully immersed.

[John]

Anyways, I think Sicario would be the pick. If you have one movie to watch tonight, I would say Sicario. It's a great one. I Know that you're gonna like it in the same way that you liked the Fugitive with Harrison Ford.

[Jordy]

Great build.

[John]

Think bigger, build faster. Figma helps design and development teams build great products together.

[Jordy]

Bill Peebles. Sora meets Disney is gonna be pure magic. Dream come true to be working with them. Let's give it up for Bill Peebles.

[John]

Yeah, seriously, what a great partnership for him. Especially because there's a lot of people that have been pointing to Sora falling out of the App Store charts. Sora is not doing that well. And it's like, that might be true, but Sora is still the number one generative AI video app.

[Matt Levine]

Right.

[John]

It's kind of like winning by default. So it's not like you should cut your losses. It's not like you've been beaten. It's clearly still a category that you want to go after. And so why not go get a big partnership? Why not keep iterating to get to breakout success, to get to product market fit? The model's going to get better. You know, the research team's working on that and now you have more IP and then the actual implementation of the app is going to get better. So congrats to Bill Peebles on the partnership. Job's not finished.

[Jordy]

Yeah, it's already. I mean, it's back up to 15 already, probably just based on the news, even though I don't know that all this functionality is actually available yet. More importantly, Hero Thousand Presents says 5.2. How about 5.2 cold ones with the boys? It's a beautiful Thursday night, folks.

[John]

It's hilarious.

[Jordy]

This latest model is state of the art on Beer Bench, which is if I crack it open, it makes a fizzy sound and I go, hell yeah. Very good. Tyler Cowan says ChatGPT 5.2 also knows exactly which are the best Paul McCartney songs. And it can write a poem in Spanish as good as the median Pablo Neruda poem.

[John]

Tyler Cowan loves the GPT models. He's obsessed with. Have you ever?

[Jordy]

He's the most obsessed. And yet I've never seen somebody make the claim that he was one shot.

[John]

That's true. That's true.

[Jordy]

He's pretty elite.

[John]

He's using responsibly. He's using responsibly. Yeah. I haven't really had a chance to play too much with the new model. Is it already rolling out? Yeah, I am on 5.2 already. 5.2 pro I was working through. I hit 5.2 pro with a question because I wanted to know. So it does feel like OpenAI is a little bit of the coming out of the trough of disillusionment potentially. The vibes have been really bad with the 1.4 trillion but the global economy has not collapsed and the market is rallying. And there were in fact not an Enron scenario. None of the big tech companies blew up. Like we've moved on now maybe it happens but in general it seems like expectations have sort of reset and now we're going into 2026. It's kind of a new game. But OpenAI still has a really dominant consumer business and what looks like it's shaping up to be an oligopoly in the enterprise side or the B2B side. And so nothing is a five alarm fire. They're in the Code Red but it's feels like they will emerge stronger from it. The big question is how will Sam Altman be perceived? Will he be one of the greatest founders of all time? Founders, CEOs and I was trying to benchmark him. Let's say that he lands the plane, gets out of the code Red Baja, blasts his way into the public markets and he winds up being this founder CEO of a multitrillion dollar consumer tech company. He's in the Mag 7. It's, it's the mag. How will he be remembered? And I was, and I was, and I was thinking about how unique his ownership structure would be because for most CEO, founder CEOs if they get the company out into the public markets at a trillion dollars or something like that, they typically own a ton. Steve Jobs is notably at various times not a major shareholder. At one point he owned five and a half million shares out of almost a billion shares. So he had half a percent or 0.6% in 2011. That's reported here. Bill Gates on the other hand, absolutely an absolute dog. 13.7% ownership of Microsoft. So you know, at a trillion dollars that's 137 billion. That's a lot of ownership. Alphabet, Google, obviously both of them became some of the richest people in the world. Today the economic ownership is only around 3% but still significant. Jeff Bezos is at 14% with Amazon. Jensen is at 3.7%. 3.77% of Nvidia. Of course it's been a 30 year trip. Elon Musk almost 20% at Tesla, 19.7%. Meta. Well, it's interesting to think at 13.5.

[Jordy]

Given, given how much dilution OpenAI has had to take and all the shareholders starting as a nonprofit, there's well that. But there's a world where if the company had just been formed as a C corp back in the day in 2015 and they just raised a bunch of rounds, rounds back to back to back and there was a bunch of co founders initially, would Sam actually have, it's rumored what he's going to get something like 7% was a proposal, sure. Would he have less than that in that scenario? Obviously he could get topped up. I don't think in the fullness this will end up working out that badly for Sam.

[John]

Yeah, yeah it is interesting because just like being founder CEO of a trillion dollar consumer tech company that usually is good enough to get you $50,100,000,000,000. But we'll see where it lands. I'm not quite sure what will happen.

[Jordy]

Did you want to run through this post from Greg?

[John]

I'd love to, but first I'm going to tell you about Profound get your brand mentioned in ChatGPT reach millions of consumers who use AI to discover new products and brands. Greg Kamrat, who of course is the president of Arkprize and the creator of some fantastic TVPN trading cards that he's been printing out. That he's been printing out. We were shocked by this. Thank you Greg for the tireless work on that project. It's very fun, very cool and you have such an important day job. We were shocked when we found out that you were making something cool on the side. But he says the jump to reasoning models will be studied for years. They are still wildly underrated. ARC AGI1 has been out for six years. GPT 5.2 is a five order of magnitude scale up and yet it still lands at 12%. Add a bit of reasoning and performance immediately jumps and so you can see the Arc AGI1 leaderboard. GPT 5.2 is only at 12% but when you get to low, medium high, extra high over in the reasoning models or you switch to the pro models, you're getting up to 90% on ARC AGI. Of course, the test that any human can do and yet AI has struggled with for a long time. Not for long. AI is starting to make headroom or make headway on the ARC AGI leaderboard. Very impressive results. Opus 4.5 didn't do too poorly either. Grok 4 of course is also doing well. Who else is? And has Gemini not benched on this yet or have they not been focusing on this? I'm not exactly sure, but I'm excited to see what happens with Arc AGI V3. It feels like we're not even showing those scores yet, because I think that none of the models are scoring at all yet. They're not even finishing. And I think it's an optimization problem to get the least number of moves. But it is interesting because the model card that Sam shared had a caveat around the OpenAI models. I sent this to Tyler last night asking him about this because. So Sam Altman shows OpenAI GPT 5.2 thinking versus GPT 5.1 thinking. And there's huge step ups across SW Bench, GPQA, Diamond Frontier Math, AIME, RKGI1, RKGI2, GDP, VAL. There's jumps of various sizes all over. And then there's also anthropic and Google, Gemini 3 Pro and Claude Opus 4.5 are also benchmark there. And of course, when you read into it, OpenAI's GPT 5.2 thinking wins on almost all these benchmarks, except for the Advanced Mathematics Tier 1 through 3 and Tier 4 where Gemini 3 Pro wins actually. But down at the bottom there's a little caveat and it says OpenAI models were run with maximum available reasoning effort. So these models now have the ability to reason for longer. You can just throw more time at them. But I was asking Tyler. It's weird because this makes it look like OpenAI's cheating and anthropic and Google are doing more of a by the book approach to their benchmarking or whatever. But Tyler was sharing that actually all the labs now run their models at maximum reasoning effort because they all want to maximize the benchmarks.

[Tyler]

Well, yeah, I mean, you're going to run on your best model.

[John]

Yeah, it's just, it's just weird to put that caveat for you and not your enemies. Isn't that weird?

[Tyler]

Yeah, I don't know. That's just like standard practice. Like they're not going to benchmark on the, on their worst model.

[John]

No, no, no, no, they're not. But, but, but if anything you would.

[Jordy]

Want to say just, just you would want to say for all the different.

[John]

All the labs, all the labs are running on maximum available reasoning effort. We're just like that. I don't know. Yeah, we should build a model that reasons for 100 years. What happened? Oh, he's back in shack mode, missing it. This is insane.

[Jordy]

You didn't even. You didn't notice the difference?

[John]

No, I didn't. Because when I'm talking to Tyler, I look at him as I look at his face, I don't look at the screen.

[Jordy]

I'm going to jump in here. So J. Yeah, J BO T A R D over on X says Oracle is a train wreck. How did they not disclose these delays on the call two days ago? And Bloomberg is reporting that Oracle delays some data center projects for OpenAI to 2028. Oracle has pushed back the completion dates for some of the data centers it's developing for OpenAI to 2028 from 2027. The delays are largely due to labor and material shortages of the people asking not to be identified. Oracle has been working to deliver over on a $300 billion contract to supply the computing power necessary to train and run OpenAI's models since it was inked this summer. Even with the delays, the timelines for the project in the US remain ambitious for sites that are set to become some of the largest in the world. I remember when this news broke we talked about how Oracle was basically saying like we're going to build AWS in two years and that just felt like applaud the sort of ambition. But I think some of these delays, labor shortages, et cetera were predictable. Bloomberg says our take on Oracle's massive bet on AI Oracle's AI bet has fast become a bubble barometer. Little bub talk. Oracle spokesperson said in a statement that the company remained confident in its ability to meet its obligations and future expansion plans. There have been no delays to any sites required to meet our contractual commitments and all milestones remain on track. Site selection and delivery timelines were established in close coordination with OpenAI and they said we have ambitious achievable goals for capacity delivery. Yada yada yada.

[John]

The whole market's down today. I wanted to wear a white suit, but it is not the day for that. Did you see Broadcom? We celebrated yesterday. It seemed like they beat earnings but.

[Jordy]

And they revealed their mystery $10 billion customer, Anthropic.

[John]

Didn't people think it was OpenAI? I think at the time everyone thought it was OpenAI. But Broadcom is selling off significantly, down 10%. Really, really bad. Really, really bad news.

[Jordy]

Yeah. So Broadcom revealed during a September earnings call that it had signed a customer that had placed a $10 billion order for custom chips. Tan said yesterday that Anthropic had placed an additional $11 billion order with Broadcom in the company's latest quarter. So at the time, originally in September, Broadcom didn't say who it was. But yesterday Hock Tan revealed. So anyways, so it's selling off because.

[John]

Of questions about Broadcom sales forecasts, contracts backlog and anticipated future margins. Despite reporting a record $18 billion in sales and Strong profit growth. That's what we latched onto from that hilarious post of the crying bear. Well, the bear's not crying now. The bear is rich because the bear was short.

[Jordy]

The bear's, that's.

[John]

The bear is excited. Margins appear to be one area of concern. Chief Executive Hawk Tan said Broadcom's fast growing AI business has lower gross margins than other areas. Its forecast for non AI revenue in the first quarter was flat. So the revenue mix is changing. The margin mix is changing. And so some analysts cast the stock move as an overreaction and noted it came after a 75% run up this year. So far far we can expect it to recover. Wrote a team from Citi Research that reiterated its buy rating on the stock, saying that upside from the AI business will continue to push up earnings estimates. I wonder why the AI business is so much lower margin like we've seen like over the past few years Nvidia has actually expanded margins and grown their gross margins significantly during the AI boom. Broadcom doesn't seem to have the same leverage as Nvidia and so they've been struggling, unfortunately.

[Jordy]

Meanwhile, Apollo According to Compound 248 casually predicting zero returns for the S&P 500 over the coming decade. They put this out yesterday, a note on expected returns in public equities over the coming years. The historical relationship between the S&P 500 forward PE ratio and the subsequent 10 year annualized returns show that investors should expect to get zero return in the S&P 500 over the coming decade. They have a chart below. They're like hey, can we interest you in some private credit opportunities where or.

[John]

You know, the other option? What's the other thing you want to invest in when the stock market isn't looking so good?

[Jordy]

Puts land, land, land.

[John]

And we have Mike Swan on the show landmaxing, the owner of Swan Land company. We saw him advertising, advertising some land in the Wall Street Journal. We said we got to get him on the show and we did. So we're very excited to talk to him in 15 minutes. All about land and his business.

[Jordy]

I've talked about this. Land I think is the most criminally underrated asset by new generation of investors. Nobody wants to make steady returns. Landmaxing. They want to hit the thousand x meme coin. They want to hit the 1% poly market, whatever it is.

[John]

Well, let me tell you about Adeo, the AI native CRM. Adeo builds scales and grows your company to the next level. There is the timeline has been in turmoil over Klein and Some posts are getting deleted, so I don't even know if we're going to be able to pull these up. But here's what happened. Yeah. Break it down.

[Jordy]

Somebody at Klein commented on a picture from a hackathon.

[John]

Yes.

[Jordy]

And said, imagine the smell.

[John]

Yes.

[Jordy]

People thought he was making. They thought it was like a racist comment.

[John]

Yes.

[Jordy]

People started piling on.

[John]

Yes.

[Jordy]

The CEO initially defended him and said, I'm like, I know I can vouch for this guy. He's fine. People kept piling on. The CEO ended up turning around and said, actually, we've let this guy go.

[John]

Yeah.

[Jordy]

And then now the CEO is getting even more. More hate on from letting the guy go. And then now he's deleting the post. And so. And so maybe the guy maybe ends up rehiring. Feels like damage is pretty done at this point, I'd imagine. You know, I'd imagine this. This engineer that was formerly a Klein sure finds a new op. It'd be hard to imagine him saying, like, going back and saying, like, I'm actually going to rejoin the team that just.

[John]

I have a brief screenshot saved a little bit. I think I can. I think I can read it, some of it. This is the CEO of clients says a few days ago a tweet from our head of AI offended a lot of people and it definitely offended a lot of people. There's an article in the Hindustan Times in India. Like, this is like newsworthy in India. Well, I don't believe his original tweet was intended to be offensive. His response, refusing to apologize does not reflect my position or Klein's. We recognize this caused real pain and that deserves blah, blah, blah. And so the rest is cut off. Lulu says this stinks. She's not a fan of it.

[Jordy]

Yeah. She says re comms mistakes, everyone makes them. Sometimes things fall flat. It's happened to me and it also happens to people much smarter. But betraying people or principles is in a different category. It's more precise, preventable, and less excusable. Cowardice doesn't happen by accident. In the case of Smell Gate, it could be argued that Posh made the first kind of mistake, overlooking how the joke could be interpreted. But then the CEO inarguably made the second kind of mistake, and that one to me is much worse. Nat Eliason posted Friend of the show. I'm not sure if he's in the chat today. Said considering the unanimous reaction to the CEO's post saying that he will fight that they let go of the engineer Nat says will he fire himself now only seems fair. So I don't know, I don't know if it'll get that far, but certainly.

[John]

The entire company gets fired. Fireception just everyone gets fired. No, the funny thing is that the only reason I know about this joke is from a bunch of Indian friends who seem to have been making it on anonymous accounts years ago in some sort of funny attempt to reclaim the. The formerly racist joke.

[Jordy]

But Lulu says when you cave to the mob instead of standing by your employee and now people are more mad at you than before. And she quotes, your worst sin is that you have destroyed and betrayed yourself for nothing.

[John]

Yeah, it's really odd because it feels like although it was going viral, like this just feels like something that would have blown over at least like take a breather, take a week or two. Just like, you know, take some time off to think about the action. It feels very reactive to do it like within a 24 hour news cycle which like can just amp up so quickly and then fall out. Okay, I guess the Hindustan Times is not very serious. It's the Gawker of India apparently, so don't worry about that. I guess I'm wrong on that. Thanks for fact checking me, Siraj.

[Jordy]

Frank says is responding. Trump in an interview yesterday said that he would consider eliminating taxes on gambling winning.

[John]

So crazy.

[Jordy]

Frank says prediction markets be like, nevermind. It is gambling.

[John]

It is gambling because they always use trade. They always use. It's not bad. You trade on future trade on sports, trading on this. Wait, actually.

[Jordy]

And yeah, it is interesting to think about creating taxes for gambling.

[John]

Taxes on tips. I remember that was like a thing during the election. Did that ever go through? Because I remember we were joking. We're like, oh, we're going to tip everyone here. I think everyone made that joke at some point. Apparently it is a glorified tabloid, so don't. If you're an American CEO and the Hindustan Times is putting you in the truth zone, let it be known that maybe take it with a grain of salt. Anyway, this just feels like a whole series of people. It's like Trump likes being edgy and funny, making jokes and he says, I'd consider it. And then watcher guru takes it and turns it into a viral thing and then somebody dunks on it and they get viral points and it all feels deeply unserious and not really like it's going to reshape the market anytime soon, but it certainly is a funny headline.

[Jordy]

Yeah, I think a lot of people would hope that he'd be like, no, we're not going to create tax incentivized gambling in this country. But he didn't.

[John]

Stranger things have happened.

[Jordy]

Stranger things have happened.

[John]

What is this? Classical theist says increasing the incentive to gamble as an answer to the affordability crisis is nothing short of diabolical. That is. Yeah, very, very rough.

[Jordy]

I don't know.

[John]

Yeah, it seems like the thing you should tax extremely highly. Seems like the best thing to potentially tax. Arthur Pigou in shambles, the Pigouvian tax creator. Are you familiar with Pigouvian taxes? It's basically this idea that you can use taxes to shape behaviors, incentives. So if you don't want people to drive gas guzzling cars, you just increase the tax on gas. Gasoline. Instead of, instead of trying to make something illegal or promote something or incentivize something, you just shift the tax to be tax on tobacco. People will smoke less, in theory, of course. Cigarettes, they're addictive.

[Jordy]

I mean, California's done, done this so aggressively with gasoline in the state and arguably it's worked.

[John]

I mean, there's a ton of electric cars in California. Like there really are less gas guzzling cars. So if that was the goal, mission accomplished, right? It kind of worked. What do you think?

[Tyler]

Taxes, I was going to say, isn't that like the idea behind the land value tax?

[John]

Yes, a little bit. It's not, it's not quite the same. Land value tax is more.

[Tyler]

Because you're incentivizing people to develop the land.

[John]

Yes, yes. But I think tax is more as like the opposite, like the negative. Like it's a way to. It's a way to disincentivize negative externalities, like negative behavior. But I suppose it works both ways. Anyway. Yeah, this was interesting, this scoop from Alex Cantrowicz. Did you see this? So Alex Kantrowitz from Big Technology. What a great name. He says Scoop OpenAI CEO Sam Altman gathered news leaders for lunch in New York City on Monday. He told them enterprise AI will be a massive priority for OpenAI in 2026. And Greg Brockman says, yeah, enterprise AI is going to be a huge theme for 2026. What's.

[Jordy]

And this tracks with hiring Slack CEO as CRO, right?

[John]

Totally. Yeah.

[Jordy]

Yeah. The question is what, what, what does this actually look like? Right. I think a lot of people are using ChatGPT at work. They're using a variety of LLMs. There was another going after Harvey.

[John]

That's the big question. Harvey seems to be doing really well. And I think of law firms as enterprises and I think of law Firms as potential targets for an OpenAI Enterprise Plan. Am I crazy?

[Jordy]

Yeah. I don't think you're crazy. Okay, there was a funny post here from Peter Gurness. Not a super serious post, but I think it's worth reading. He says, last quarter I rolled out Microsoft copilot to 4,000 employees. $30 per seat per month. 1.4 million annually. I call it digital transformation. The board loved that phrase. They approved it in 11 minutes. No one asked what it would actually do, including me. I told everyone it would 10x productivity. That's not a real number, but it sounds like one HR. Asked how we'd measure the 10x. I'd said we'd leverage analytics dashboards. They stopped asking three months later. I checked the usage reports. 47 people had opened it. 12 had used it more than once. One of them was me. I used it to summarize an email I could have read in 30 seconds. It took 45 seconds plus the time it took to fix the hallucinations. But I called it a pilot success. Success means a pilot didn't visibly fail. The CFO asked about our roi. I showed him a graph. The graph went up and to the right. It measured AI enablement. I made that metric up. He nodded approvingly. We're AI enabled now. I don't know what that means, but it's in our investor deck. A senior developer asked why we didn't use Cloud or ChatGPT. I said we needed enterprise grade security. He asked what that meant. I said, compliance. He asked, which compliance? I said, all of them. He looked skeptical. I scheduled him for a career development conversation. He stopped asking questions. Microsoft sent a case study team. They wanted us to feature. They wanted to feature us as a success story. I told them we saved 40,000 hours. I calculated that number by multiplying employees by a number I made up. They didn't verify it. They never do. Now we're on Microsoft's website. Global Enterprise achieves 40,000 hours of productivity gains with Copilot. The CEO shared it on LinkedIn. He got 3,000 likes. He's never used Copilot. None of the executives have. We have an exemption. Strategic focus requires minimal digital distraction. I wrote that policy. The licenses renew next month. I'm requesting an expansion. 5,000 more seats. We haven't used the first 4,000, but this time we'll drive. Adoption. Adoption means mandatory training. Training means a 45 minute webinar. No one watches. But completion must be tracked. Completion is a metric. Metrics go in dashboards. Dashboards go in Board presentations. Board presentations. Get me promoted, I'll be SVP by Q3. I still don't know what Copilot does, but I know what it's for. It's for showing we're investing in AI. Investment means spending. Spending means commitment. Commitment means we're serious about the future. The future is whatever I say it is as long as the graph goes up and to the right. 134,000 likes on that one.

[John]

What a long post. You go, that's fantastic. I was thinking about the fact that we now have a data point for Agent Force revenue and we also have a data point.

[Jordy]

Okay. You have to take that with a grain. You have to take that with a grain of salt because Salesforce is or they are the greatest to ever do enterprise sales. And we do know that they're selling AgentForce as like an add on.

[Matt Levine]

Yeah.

[John]

And I'm going with this.

[Jordy]

Okay.

[John]

But first I'm going to tell you about Restream One Livestream 30 Plus Destinations. If you want a multi stream, go to restream.com. okay. So my point was you can actually get to a dollar per token because we've also seen that leak of how many tokens they're generating. Remember? And everyone was like, oh, Benioff's like not generating that many tokens and so you can see that he's probably making the most dollar per token of anyone in the industry because you can look at other companies and see how many tokens they're generating their rough revenues. And we can work through all the math. Tyler, have we done this with Anthropic or OpenAI? Because we were looking at rough revenue token how much they've done it.

[Tyler]

Yeah, I think I tried doing this at some point. It's just so hard because they, they don't like break it up in a nice way. Like I think at some point Demos said they're doing like over a quadrillion a month.

[John]

Sure.

[Tyler]

But then what is the revenue? We don't know.

[John]

Yeah, we don't know for.

[Tyler]

And then for OpenAI like we, I think we knew their API token count.

[John]

Yeah.

[Tyler]

And then the, the revenue was leaked but it was overall revenue wasn't broken up.

[John]

Yeah.

[Tyler]

So you can maybe estimate it based off subscription percentage.

[John]

But still, still I feel like we got to, we got to put together the Agent Force numbers to figure out.

[Tyler]

Agent Force must be because I mean I think the leaked like 3 trillion or something. It was a very low amount and.

[John]

They'Re making like half a billion dollars. So they're printing and that must be like 99.999% margin too, right? Like, how much does it cost to generate a trillion tokens? Like 10 bucks or something? I don't know.

[Tyler]

Well, yeah, I think we also calculated this too because we wanted to get on the OpenAI.

[John]

Yeah, yeah, yeah, yeah.

[Tyler]

So if you do the batch tokens and like the 4.0 model, it's like 20 bucks.

[John]

Can you imagine? Adios. Just sitting there like, yeah, cogs. 10. $10. I made half a billion. Now I don't know. Yeah, yeah. Tokens are the new page views, the new eyeballs. But we should, we should actually get both of those numbers in a spreadsheet and see if there's any other numbers we can pull through because I would love to see them. In the meantime, let me tell you about Gemini 3 Pro. Google's most intelligent model yet. State of the art reasoning, next level vibe coding and deep multimodal understanding. What are you laughing?

[Jordy]

A post went very viral a couple days ago. Someone saying, come on now, because Tubi has a movie out called the Grinch that Stole Bitches. And Tubi responded to me, responded tis the season. Incredible, incredible response from the Tubi team.

[John]

Yeah. And did you see this? Sorry, did you see this chart crime from. This is from Riley. Riley says, put this on a shirt. So OpenAI launched a merch store called supply.OpenAI.com Very fun. Bunch of shirts in there. You can get basketball, you can get a bunch of cool stuff. But then Riley. Riley's sort of dunking and saying, like, put this on a shirt. It's like how crazy the financials are over at OpenAI. And I get it. Like merch store, probably not the biggest priority while you're in code red on your core product. Like, that's a legit concern. But, but the financial times, like, like what, what are we doing with this chart? This is a crazy, crazy chart. So first off, this says OpenAI's estimated balance sheet. But then it has revenue on here. And like revenue doesn't go on the balance sheet. So like, what, what are we doing? And like, it's like, I'm just so confused by this. And so total cost of cloud compute. That's the, that's the purple bar down there. Cogs also don't go on the balance sheet. So both of those don't belong there. Then the red dots are new equity fundings that they're planning to do and that should go on the balance sheet because that's assets that come in. But then free cash flow that comes from the cash flow statement. So it's just like this is such a chart crime from anyone who has respect for the three statements.

[Jordy]

This is the financial.

[John]

This is the Financial Times. I have a lot of respect for the Financial Times. I love the Financial Times. But I was just very shocked. I mean it's more like OpenAI estimated financials. I don't know. It's sort of an interesting chart. It's also just very weird how there's like bars and dots and it's like what does the bar mean? What does the dot mean? Like it's like the dot feels like it's more of like, I don't know, it's a very confusing chart. It does tell an interesting story though which is that they're projecting revenue increasing while costs also increase and they're gonna have to raise more money and eventually they're gonna lose a lot of money. There's gonna be negative free cash flow for a number of years. Then eventually they will turn positive.

[Matt Levine]

I don't know.

[John]

It seems like it's a bold five year plan. We've heard about this. It's funny to see it laid out like that. But ultimately they're, you know, like whether or not they deliver is sort of immaterial to their merch efforts.

[Jordy]

Anyway, what OpenAI is not going to like the post I read after you talk to me about cognition.

[John]

Cognition. The team behind the AI software engineer Devin crush your backlog with your personal AI engineering team. What? What post are you pulling?

[Jordy]

Jacob Elordi says he has no tolerance for AI and finds the whole conversation around it so effing boring he would not like the show. He says I would much rather kiss on the beach and read a novel and be sunburned. Most pick me moment of It's a.

[John]

Crazy line of the year.

[Jordy]

It's a crazy line but it resonated. 91,000 people agree.

[John]

This is hilarious. Yassin made who makes technical deep learning tutorials says yo Jacob, come on my live tomorrow we're going to be review this paper. It's almost as good as the stuff you mentioned. See you tomorrow, buddy. And it's a surprising effect of negative reinforcement and LLM reasoning. That's a very very funny.

[Jordy]

Okay, one more post before we start. Landmaxing suck says God blessed us again. Shocker. A thousand year American empire and open source intel is reporting a major deposit of rare earth and critical minerals has been uncovered in Utah which the Wall Street Journal calls the most significant critical mineral reserve in the U.S. okay, we did it. Again.

[John]

We did it again.

[Jordy]

If you're a nation without, you know, a lot of critical minerals, it's probably a skill issue.

[John]

This is actually a good transition to our next guest, Mike Swan. Before we bring him in, let me tell you about Privy. Privy makes it easy to build on crypto rails, securely, spin up light label wallets, sign transactions, integrate on chain infrastructure all through one simple API. We will bring in Mike Swan, the managing owner of Swan Land Company. Mike Swan, how are you doing? Welcome to the show.

[Mike Swan]

Doing well, gentlemen.

[Matt Levine]

How are you?

[John]

Merry Christmas. Thank you so much for taking the time to come talk to two, I don't know, probably random people.

[Jordy]

What was the timeline here? We saw the ad. Was it Monday?

[John]

Yeah, it was in the, it was in the weekend edition of the Wall Street Journal in the special mansion section. We saw the Swan Land Co. Advertisement and we were like, we've wanted to invest in land. We think that there's a lot of people in our audience.

[Jordy]

I've talked on the show before. I think the new generation of investors, they want to buy crypto coins, they want to be trading options, they want to do NFTs, all this stuff. They want to, but maybe they should.

[John]

Just be buying land.

[Jordy]

And I feel like land is just kind of overlooked, but certainly not by you. So we were excited to have you on the show to give us kind of an update on your business and how investors are approaching the asset class lately.

[Mike Swan]

No, thank you for having me on, gentlemen. It's really, I've really been looking forward to joining you and, and sharing a little bit of what we see in our, in our arena out here in the west, as far as ranch properties, investment properties in the Rocky Mountain west, which we primarily serve. Basically right now, what we're seeing is, as we always have, that, you know, land in the western part of the United States isn't going out of style anytime soon. Especially in Montana. We saw an explosion with, with the rise of the, the Yellowstone phenomenon and how that, that really hit us out here.

[John]

Wait, was it actually driven by the show? The show really caused people to think about it.

[Mike Swan]

It amplified what we were already seeing out here in our, in our market, but it certainly didn't, it didn't slow down the process of the interest in, in Rocky Mountain ranch property. So, of course, you, you receive the phone calls that, you know, talking about the train station and, and all the entertaining aspects of what RIP and that show went through. But that's obviously Hollywood doing its best to portray our part of the world in a very unique and Unrealistic light.

[John]

But.

[Mike Swan]

We continue to see investments in our part of the world. Our market's very cyclical as we see many of the markets and we study those and keep very close tabs on what the markets are doing. But you know, currently, right now, with, with the stock market where it is and the cash and the financial sector being as strong as it is right now, the capital flow has really been out of real estate. It's. It's gone into the market. It's going to stay in the market until we see, until we see some corrections there. And then, and then typically we see that pendulum swing back.

[Jordy]

That's somewhat counterintuitive. I would imagine some folks, maybe some smarter investors, when they feel like markets are maybe a little bit overheated or overvalued, might say, hey, this is a good time to rotate into a less liquid asset like land or ranches and have some stability. What you're saying is it's maybe the opposite. A lot of people just wait for a correction and then get maybe a little bit scared at that point and then seek more stability?

[Mike Swan]

No, I think we're going to start seeing that in Q1, Q2 of next year. I think we're going to start seeing that movement back into the, back into our arena. But we've certainly seen a slowdown. You know, early 25, all the way through 25, it was a relatively slow year outside of some, several large transactions that we've seen in the, in the marketplace. But we feel as far as looking at the markets and the economic indicators as well as the financial people that we work with, that we're going to start seeing that come back into the market early in, early in 2026 and really see it ramp up in our, in our neck of the woods. So, you know, our focus right now is, is getting quality listings, getting them priced well, getting them priced in the market. We continually see anywhere between a 10 and 20% rate of appreciation in these western Montana ranch properties.

[Jordy]

That's year. Is that year over year.

[Mike Swan]

I'd say that's over a five to seven year period is what we typically see, especially in the Rocky Mountains. Now, there's a lot of factors that play into that. We see properties where you have a quality water component, fishing component, hunting component, there's timber on the property, different amenities like that obviously have a higher rate of appreciation than straight agricultural land where you're grazing cattle. But there's getting to be a real appetite in the investment world for these quality A properties, just like there are with with, with quality stocks or quality business investments, whatever it may be. We see the same thing in the, in the Rocky Mountain portion of, you know, in our real estate world as well.

[Jordy]

Yeah. How many, how many people out of the buyer pool really care about having a, like a high quality water source on the property? I think our audience primarily works in and around tech. Every once in a while a headline will pop up of some tech founder buying a doomsday ranch. I think a lot of people like the idea of having a place with a dedicated water source that if stuff hits the fan, they can escape there. But what percentage of the buyer pool really actually cares about making sure there's, you know, a lake or a river or some type of natural spring? I'm assuming a lot of these properties you can just drill down and access well water. But how does that, you know, a lot of it.

[Mike Swan]

Jordy deals with the fishing aspect of it. The blue ribbon trout fishing in Western Montana is some of the best in the world. So. So primarily it's more of a recreational driven component of these properties and it is necessarily an end of times or a doomsday aspect to the property. So the fishing we always refer to, to quality fishing water on these properties is really the golden thread on, on ranch real estate and recreational real estate in the Rocky Mountains in that A, we, we typically see these properties appreciate at a much higher rate and B, they never go out of style. And there's, there's only. There's a. There's a finite amount of those A properties that are on legitimate fishing water available in the Rocky Mountains. So when they do come available, they're, they're typically in very high demand.

[Jordy]

And the premium over the pre. Is. What's the, what's the, what would you say the premium is over a property that doesn't have a running water or a lake or any of those things? Is it 50% is 100%, 200%.

[Matt Levine]

Each.

[Mike Swan]

Each one of these is so unique, Jordy. That's what's hard about it. But it's, it's significantly higher. Then you go to the timbered properties, the properties that are in the mountains with the mountain setting and that everybody sees in the magazines that you obviously recognized in the magazine ads that we put out. But the timber, the elk, the big game are always an attractor as well as to those investment grade buyers. Back to what you were talking about from the tech standpoint, it's remarkable how Bozeman's exploded as really an emerging, an emerging market in that tech industry. We're seeing a lot of tech people, high net worth tech individuals relocating in Montana, relocating in, in the Rocky Mountains in general as well as buying large properties. You know, we were tied by a lot of NDA documents and NDA contracts but, but there are a number of high net worth individuals that re that are relocating out here for a number of reasons. One is from a safety standpoint they see Montana as very safe. They see the Rocky Mountain west is very safe. As you see the crime rates in some of these urban areas that regardless of your political affiliation, there's concern about it. And I think as there continues to be concern about that, we're going to continue to have people that are driven to this market seeing as a safe, secure place to, to raise their family, to have their kids, to have their family, you know, a family compound where they can gather at.

[John]

Yeah.

[Jordy]

What, what kind of opportunities are there to actually monetize and generate yield on a, on a ranch property? Obviously if you can just buy a piece of land and let it appreciate over time. Are there opportunities to actually utilize some of these properties even if you're not there to generate some type of incremental yield?

[Mike Swan]

Absolutely. The ROIs on these is much lower than what a standard investor would demand out of their portfolio. So a lot of it when we're working with buyers is changing that mindset that we're looking at long term appreciation. Obviously the depreciation schedule and the depreciable assets that are contained within these properties is of significance to a lot of these buyers that they can use directly on their, on their tax returns. But typically the ROI on, on a cattle ranch, if you can get a 2, even a 3% return on some of these is quite good. The land prices have gotten to the point where it really agriculture is making. It's hard for agriculture to really sustain and to pay for any of these. I had a good friend of mine, ag family, tell me that you know, really the ability agriculture to pay for these ranch properties. Farming is a little different but on a, on a strictly cattle standpoint, finding a way to get cattle to pay for these properties really that that wagon came unhitched back in the 70s. So today it's more of looking at how you can get the agricultural operation to pay for your operation, to pay for your expenses, hopefully get a decent paycheck out of it. But where you see the return is obviously when you go to sell that real estate or you look to 1031 out of an existing operation and upgrade into something a little larger in a Possibly not so desirable area that isn't commanding these record prices from a recreational standpoint, if that makes sense.

[John]

Does it feel like essentially most of the land that you're seeing come across your desk has been properly surveyed such that people aren't seeing it as a gamble they're not buying and saying, oh well, like maybe there's a chance there's gold there, or oil, because we just saw a. There was a new rare earth element deposit that was found in Utah, and the Wall Street Journal called it the most significant critical minerals reserve in the United States. A whole bunch of rare earth elements. And that seems like how were we not looking for that already? But I imagine that most of your clients are not thinking about their land purchases as lottery tickets. Right. So how do you think about these, like, wild card events that seem to be happening and yet what is your client base actually experiencing?

[Mike Swan]

You know, we really don't see that in our client base. Typically what our clients are looking for is preservation. We have buyers that are typically very conservation minded that look at the, at the land is how they can improve it, how they can possibly reduce man's footprint on that landscape, enhance the wildlife, enhance the agricultural components, enhance the land. So when they leave it, it's a little better off. A lot of what our role is, is actually educating these buyers to, you know, there's a great shot right there in a ranch that we have listed in northern Montana. But a lot of these new buyers that are in our arena today are looking at ways to, that they can help preserve the west, which is very refreshing in a lot of ways. They want to find ways that they can preserve the agricultural way of life, that ranching way of life. Oftentimes we'll see buyers that'll come in, acquire an asset, and then go back to that owner and say, okay, we understand that the margins in agriculture are very tight. Let's, let's relook at this asset and say, okay, if we have an influx of capital and we have the ability to put some capital into this property, what can we do to enhance it both from a production standpoint, but also from a recreational and a conservation standpoint as well. Looking at it through a little different set of glasses and possibly what that operator has been looking at it in the past and finding ways that they can better preserve the ground, preserve that landscape, preserve that Montana, that western way of life, and not just come in and look at mining it, developing it, carving it up, putting small ranchets on it or whatnot. We've really seen a Shift away from that development aspect into more of a conservation minded buyer.

[Jordy]

What's the process if you acquire a piece of land, actually build on it? We're based here in California and the process is absolutely insane. I live in Malibu. If there's a, there's a property that you might look at, it might be reasonably priced, but you're looking at maybe six years to actually develop plans, get them approved and actually start, you know, getting, getting to the point where you could really occupy the space. What's it like in Montana from, from everything from a permitting process through even just like labor costs, all that stuff.

[Mike Swan]

I don't know if I want to answer that question necessarily. I don't want to see a big, big rush all of a sudden into our. But I think you'd be pleasantly surprised, Jordy. It's significantly smoother. We don't have the bureaucracy in Montana that you'd see in a lot of other states. Obviously there are processes, there are permitting processes as far as building permits, electrical permits and whatnot, but nothing remotely close to what you deal with in California. It's much more personal, it's much more hands on, it's much more streamlined and not always is it, you know, with that being said, we have a development here in Montana called the Yellowstone Club, which you may or may not be aware of, which is turned into quite a billionaires resort area. Very, very high end, very high end. It's the who's who in the financial sector that are residing in that area. And what we're seeing is really the high, high end construction taking place in that kind of, in that sector of our state. It, you know, we'll see some building in the more remote areas but, but not the extravagant building like, like we see up in the Yellowstone Club.

[Jordy]

Yellowstone, you'll have more modest, like a two bedroom condo for 20 million. Is that pretty commonplace? Yeah, yeah, yeah.

[John]

How much does it, how much does it cost in, in general to work with you in general? Is there a floor price or how do people start to get into ranches, farms, land? What are all the different financial products or actual opportunities that you see? People come to you with a lot of it.

[Mike Swan]

John is just sitting down with a client and interviewing them. We spend a lot of time up front. Our time is money. Just as a lot of our clients, their time is money as well. So we like to spend a lot of time upfront interviewing them, understanding what their goals and objectives are. Looking not only short term goals and objectives, but long term goals and objectives, not just of them. Specifically, but also their buyer, where are they at with their family? You know, what are their, what are their, you know, what time of year do they plan on using the property? What do they want to get out of the property? What are they looking at long term, you know, talking a lot from the construction standpoint, what those times look like, what are those time frames, getting them hooked up with the right people so they're, they get good quality information. So what we do is, is a lot of times is, is spend that upfront time. So, so when we have a buyer that comes out and says, Mike, we've, we've sat down, we spent several hours with you on zoom calls or personal meetings. A lot of times we'll fly to the client, we'll sit down with them at their house in California, Texas, east coast, wherever it may be, sit down and have that face to face meeting. What we do extremely well is personalize a process that so many clients feel is very impersonal. And that's really been our niche that we do extremely, extremely well. We're very high touch. These are big decisions with big dollars tied to them, them. And so we want to make sure that a, there's no surprises. We want to make sure that we're totally upfront where we have everything on the table. We, we, we inform and educate our buyers as best as we possibly can so there's no surprises. That's the last thing any of us want is dealing with surprises when we get into a multi million dollar or, or 100 million dollar transaction is surprises. So a lot of that is done up front and we sit down and talk them through that right up front. We explain the good, the bad and the ugly about these processes, timing, costs and trying to make sure that those goals and objectives that they have are realistic. And so once we get on track with that, we're very strategic. We like to say, we shoot, you know, we like to aim like a laser versus a shotgun. So we're very, we're very direct in how we approach these processes. So we put a property in front of a prospective buyer. It's something that they need to look at. We've, we've vetted it, we've gone through it, we've, we've visited the property, we've gone through and already done a lot of the due diligence already up front before they ever even set foot on the property. So again, being efficient in the process, that's one of the things that we stress within our office is being efficient with our time. There's no wasted motion in what we do. And we can we convey that to our buyer, and we convey that even to our sellers, that everything we do has a purpose. We have very strict, very, very systematic protocols in everything we do. And, you know, I gotta be honest with you, gentlemen, what we do, we're not building rocket ships here. Real estate is personal, and it's being able to execute at a very high level. And that's one of the things that we do and we feel we do exceptionally well. We've transacted more $100 million plus ranch property.

[Jordy]

What's the total volume that you guys have done if you're able to share?

[Mike Swan]

Oh, boy. I couldn't even tell you, Jordy, right now.

[Jordy]

But it's in the billions.

[Mike Swan]

Absolutely. Yeah, absolutely.

[Jordy]

Hit the gong for Mike. We got a gong here. I got two more questions.

[John]

You gotta do the question.

[Jordy]

Yeah, yeah, yeah. But I got one more before that.

[John]

Okay.

[Jordy]

Any restrictions on building an airstrip on a large enough ranch? If I want to. If I want to create a ranch and fly a PC12, land that or a PC24. Is that all fair game?

[John]

We have several plants with airstrips on.

[Mike Swan]

Their properties, private airstrips.

[John]

Okay, let's get going again.

[Jordy]

Again. And then we have a question. Question we like. We like to ask all of our guests, but it's particularly relevant for you. What's. What's the biggest fish you've ever caught?

[Mike Swan]

Oh, you know, as crazy as this sounds, I don't fish a lot. Oh, I really don't. You know, we.

[Jordy]

You're too busy landmaxing?

[Mike Swan]

We're. We're busy. You know, and. And when I'm not. When I'm not at the office, we have a small farm that my family and I have.

[John]

That.

[Mike Swan]

That's kind of my therapy. I. I get my hands in the dirt, and it's where I work.

[Matt Levine]

Work.

[Mike Swan]

We're avid. Avid sports fans, so we travel around watching our local college teams and. And my son is a college athlete, so. So my wife and I, we spend a lot of time on the road following him. And so I. I think one of these days I'll probably take up fishing. I do. I do like to go to Canada with some. With some good friends, and we go up and fish walleye and pike in. In. Up in the. In northern Canada. But around here, I just don't have time to get on the rivers too much. And it's crazy sounds. We get on some of the most spectacular fishing water that you could ever imagine that very few people in the world ever get to see. And you know, with that being said, some of my colleagues here in the office are exceptional and very accomplished fishermen. So that's probably a better question for them. I like to work too much.

[Jordy]

I'm with you. I'm with you. Great stuff. Well, thank you for coming on Breaking it Down and I'm sure there'll be another LAN story in the news sometime soon and we will reach out.

[Mike Swan]

I appreciate you having me on. Gentlemen, thank you very much.

[Jordy]

Yeah, great to meet you.

[Mike Swan]

Merry Christmas to both.

[Jordy]

Merry Christmas.

[John]

Have a great day. We'll talk to you soon. Let me tell you about Fall, the generative media platform for developers develop and fine tune models with servos, GPUs and on demand clusters. Up next, we have Matt Levine in five minutes. But let's go back to the timeline and clarify something with Augustus Dirico. He says, am I tripping or did TBPN used to stand for Technology brothers Podcasting network? He says, technology Business Podcasting Network. Did we get gentrified bros? What happened? Jordy, break it down for?

[Jordy]

I mean I think real one. I think real ones will always know what the TV and TBPN stands for.

[John]

Yes.

[Jordy]

We actually never refer to TVPN as like four words. It's just always the initials.

[John]

Always the initials. Yes.

[Jordy]

You leave it up to the audience to interpret.

[John]

Yes, it's becoming a thing. But it is actually on our website. It is spelled out on our website. It says technology business programming network. I still get that wrong often. I say production network. It's not production, it's programming network. Of course, it's a nod to espn. Of course. Technology and business is what we talk about. And so that made sense.

[Jordy]

And technology brothers, TB always remains.

[John]

Yes.

[Jordy]

In our hearts.

[John]

Eternal. Eternal or epsilon.

[Jordy]

What's up with. What has Rivian been up to this week? We should play this clip. We should.

[John]

RJ has been on a tear. He's making a serious run at self driving. He needs to chip. He's chipped up.

[Jordy]

Let's play this with sound, please.

[Sager]

And now for the first time on R2, we're adding a third sensor, the LiDAR.

[John]

Well, they're doing lidar. That's crazy move. That's bold, right? I don't know.

[Tyler]

Yeah, clearly no one clapped when he go back.

[Jordy]

That was a really awkward pause.

[John]

Dramatic.

[Sager]

And now pause. For the first time on R2 we're adding a third sensor, the LIDAR. The LIDAR.

[John]

People are like, no, my iPhone camera is going to get fried. That's a weird Thing apparently lidar on certain cars, not all of them can be so strong that if you point your camera at it with your phone, it can permanently damage the sensor. And so what about your eyes recalls? I think it actually only hurts the phone. It doesn't hurt.

[Jordy]

Okay. Don't worry.

[John]

You're good.

[Jordy]

Okay. Totally good. Nick, could you bring over that bag right there? What bag? We gotta see this. Look. We signed up for Picnic, TK's new service. Let's see this. Let's see this. What did you get?

[John]

Tripicnic. Tripicnic.com.

[Jordy]

Look at this. We're supporting Travis Kalanick, Cloud Kitchens team.

[John]

This is unhappy.

[Jordy]

What'd you get? You got a. You got a. Would you get a slop bowl? One slope, one slop bowl. Anyways, looks fantastic. We're excited to check this out. One of one of one of our interns.

[John]

Good branding.

[Jordy]

Signed up for the service.

[John]

The orange bag stands out with the green background.

[Jordy]

Here you go. You can have your lunch.

[John]

Feels like a. Yeah, yeah. This. This is iconic. This is going to be seen all over the place.

[Jordy]

He's cooking. They're cooking.

[John]

He's literally cooking. Well, let me tell you about public.com, investing for those that take it seriously. They got multi Asset Investing interested in yields. They're trusted by millions, folks.

[Jordy]

Tyler posted yesterday. You're telling me I brainwashed this Colt.

[John]

Yes.

[Jordy]

Didn't get into the three figure like club, but Kristen, what are you talking about? Top 20 tweets of the year. So you made her top 20.

[John]

Top 20. That's good. Yeah.

[Tyler]

I only need four more likes. I'm at 96.

[Mike Gallagher]

Yeah.

[Jordy]

Help him out.

[John]

Go give it a like. Go give it a like. There's a chance. I tried to artificially give it a boost by, quote, tweeting that one and not the other ones, but it did out. It did perform the best. Right? Correct. Because we ran the experiment, we posted all four of Tyler's jokes and per my prediction, the did a brain.

[Jordy]

You can turn the Gigachad filter off now, Tyler. You can turn it off. It's kind of an old bit at this point.

[John]

Ridiculous. Ridiculous. Well, we have Matt Levine from Bloomberg and Money Stuff joining the show. He's in the Restream waiting room. Let's bring him into the TVPN ultradome. Merry Christmas, Matt. How are you doing?

[Matt Levine]

Merry Christmas. Merry Christmas.

[John]

Thank you so much for taking the time to come on the show on a Friday.

[Matt Levine]

Thanks for having me.

[John]

Great to meet you.

[Jordy]

And thank you for creating wonderful content that at times we have remarkable.

[John]

Yeah.

[Jordy]

Many times included in our show.

[John]

Triple glaze. Yeah. We love the work. It's been fantastic.

[Matt Levine]

Thank you. Thanks.

[John]

I did want to start with a little bit of background. I wanted to know about the day that you decided to become a journalist. What was the transition like? What was like the first inciting element in that story?

[Jordy]

Did you know we were headed towards a hyper financialized world where we would be able to write about in this very conversation?

[Matt Levine]

I don't know, man. I was working at Goldman when I decided to become a journalist. I was already pretty hyper financialized. The day I decided, I went to my boss and I was like, I'm quitting to go to Deal Breaker, which is a financial gossip blog. And he was like, that's fine. You can stay for another two weeks and finish up your work. Then he was like, wait, did you say dealbook? And I said, no, Deal Breaker. And he's like, okay, you have to leave the book. We really.

[John]

That's remarkable. Well, I wanted to take your temperature on a bunch of different topics. The first might be prediction markets. I mean, Jordi was joking about it being able to gamble on this very conversation.

[Jordy]

Yeah, we've had some uncomfortable moments throughout the year where people flood into our chat and they're betting on what Sam Altman is going to say or Mark Zuckerberg is going to say on one of our conversations. And it becomes very distracting because everyone's just saying, say this, say that. Obviously trying to influence the. Manipulate the conversation. But, yeah, it's been.

[Matt Levine]

I get a lot of those people. I get a lot of. The overlap between prediction market people and my readers is pretty high. So there's a lot of people emailing me.

[John]

So, I mean, one of my main questions is, how do you actually get to some sort of ground truth for what's going on with prediction market? Because there's a world where it was this incredible crystal ball for understanding the election. Then it turned into, okay, this is going to give you information about all sorts of different things in the world. And then you peel back the onion and you think, maybe there's just a lot of sports betting going on. How do you actually think about the shape of the business today and where it's going?

[Matt Levine]

I think that this stuff about what people will say, you look at the volumes on these things, they're thousands of dollars. There's a lot of stuff that is fun to write about because it's weird and silly and susceptible to manipulation, but it's just not that big when people talk about these Companies raising at huge valuations and becoming huge companies. It's 80% sports gambling. That's a number I made up. It's, you know, it may be less than that as a volume matter, but like, it's. It's like the next leg up is sports gambling. Right? I mean, that's what, that's why they're businesses. I think if you talk to them, like, their view is sports gambling is this huge opportunity for them to, you know, get people there. Right. To get customers who really like gambling and to get professionals who can make money gambling against the sort of, like, you know, dumb money customers. And then once you have that, it's easy enough to expand into, you know, markets that make us more informed about the future of the world. I don't know that that's true. And like, if they end up just being weirdly regulated casinos, then, like, that's possibly still a really good business.

[Jordy]

The question is, how does the market actually evolve? Because you have every traditional sports book adding prediction markets. And so if you have new businesses that can be in 50 states on day one, maybe that grows the market a little bit. But overall, you know, what, what is, what is the sort of like total enterprise value that all the popular online trading and or betting platforms can really sit at is kind of unclear, right? Maybe.

[Matt Levine]

Yeah. I mean, like, like, clearly the big opportunity is like, cannibalizing sports betting. The other thing is, like, it's not clear what they are because they're exchanges. Right. So they're not making money by trading against customers. Right. And so, like, one possible evolution of the market is you end up with people who are either literally sportsbooks or who are like, kind of like hedge funds that are replacing sportsbooks, being market makers on these platforms and sort of, you know, making their money by trading against retail flow. But like, you know, they're a separate business from the. The actual, you know, calcium polymarket platforms.

[John]

Yeah. Do you have an idea of how sophisticated like Wall street is around sports betting? Because you have to imagine that, like, at some point Jane street or Citadel said, like, well, what if we just went and put someone in Las Vegas and started trading? Could we make an edge there permanently? It feels like there might be a wave coming where Wall street starts having, like, serious desks dedicated to sports betting.

[Matt Levine]

But.

[John]

Or is that already happening? Or do you think that won't happen?

[Matt Levine]

It's already happening, right? I mean, like, Susquehanna is the big one who, like, yeah, you know, famously have a sports desk and like, other big kind of like high frequency trading Market making firms are dipping their toes into it. I think it's hard for them to get into like traditional sports book trading. But it's very.

[Jordy]

Yeah, because if you're too, if you're too regulated exchange, if you're too good, you just get booted.

[Matt Levine]

Traditionally you get limited. And it's like, it's just like a different interface and a different regulatory interface too. Like if you're trading on a commodities exchange, you're trading on a commodities exchange. I can do that. So I think they're very much getting into it. And if legal sportsbooks regulated as commodity exchanges are here to stay, then it's also just like whether or not it's a good business opportunity. There's a huge personality overlap. Like you go to these high frequency trading firms, like it's the same type of analysis, the same type of adrenaline. So like they're very happy to get into sportsbooks.

[John]

How are you thinking about insider trading on prediction markets? It feels like we've, I mean this, this week it seems like multiple people have been making the steel man argument that it's good.

[Jordy]

Yeah. The problem is, is in some ways it feels like if you don't have insider trading, then it's just a bunch of people guessing. And if you do have insider trading, then you potentially get greater accuracy and more value out of the markets. And so it just feels like a very tough, I mean, it's very tough for the prediction market platforms themselves to actually talk about.

[Matt Levine]

Right. My impression is that everyone who started a prediction market is a true believer in the idea that the job is to make markets as informed as possible. And they all secretly love insider trading, but they're also trying to get approved by the cftc and so they have to say, we do not allow insider trading. I think the rules are weird, right? I mean, the rules of insider trading in commodity markets are less strict than they are in securities markets because traditionally they're for like, you know, grain producers hedging their grain production. So like you're supposed to insider trade and I think like maybe a little bit of that philosophy will be imported into the prediction markets. But I mean, if you look around at like the Justice Department is going after, you know, baseball players for rigging, gambling and baseball, like no one. There's no appetite for legal insider trading in most of the markets that, that, you know, will be big money in prediction markets. So I think that the regulatory situation is kind of going to shake out, that insider trading is kind of prohibited, but maybe like a little harder to monitor than it is in the stock market, but definitely, philosophically, people in this market don't want that.

[John]

Do you think we just need a big bombshell case or story to sort of catalyze some action around that? Because it feels like the sports book is that. Yeah, I guess. But sportsbooks have existed for a long time, so I'm interested in understanding what would actually change. Because. Because for what, like, I don't know, 50 years. It's been, you know, longer. It's been for decades. It's been illegal or, you know, against the rules for a baseball player to go and put a big bet against them and then throw the game. And so that should just. I would imagine that that framework just kind of carries over to prediction markets, but maybe if it's lagging, then we won't actually get codified until there's a big headline case.

[Matt Levine]

Yeah, I think they'd be more caught up in prediction markets.

[Mike Gallagher]

Right.

[Matt Levine]

I think the prediction markets have rules saying you can't use material on public information, whereas, like, the sports books, the sports book club, those rules too. Right. But, like, I think that, I think that it's going to be pretty codified like that. But, you know, you're going to have a lot of, like, the sports stuff. The sports leagues have a real interest in policing and, you know, the Justice Department has a real interest in, you know, that's a, that's a sexy case to bring if you're, like, you know, arresting baseball players. You know, people betting on, like, you know, Google search results maybe is a little bit less interesting and a little bit more lucrative.

[Jordy]

Yeah, that makes sense.

[Matt Levine]

And, like, also, we, like, live in a world where, like, fraud enforcement is just kind of less of a priority. So, like, people will definitely get away with stuff in the next few months.

[John]

Yeah.

[Jordy]

How did you process Trump saying he, quote, would consider eliminating taxes on gambling winnings?

[John]

This is him joking around or something.

[Jordy]

Yeah, it was kind of offhand, but then the nature of the Internet today is you have like 100 accounts on X that are like pseudo news wire accounts, and they'll take one line out of context and then blast it out and they'll get a bunch of engagement. And then you realize, you look to, like, an actual credible news source and you realize that, you know, again, fully, fully taken out of context. But do you think we should be incentivizing gambling in the country?

[Matt Levine]

So a couple of things. One, no, two, you know, like, like, like being the friend to crypto has paid big political dividends to him. And, like, if you're sort of looking around for what other like, aggressive young male demographics you can appeal to, you might be like, oh, I'll give the gamblers what they want. And then the other thing is there is this weird situation where the tax bill may be somewhat accidentally limited to deductions of gambling losses. So you can only deduct 90% of your gambling losses, which, if you are a professional gambler, is quite devastating. And one theory is that that has been very good for the prediction markets, because there's an argument that if you are trading on prediction markets and you win some and lose someone, you win 51% of your bets, you can deduct all of your losses. Whereas if you're doing that on a sports book, you can ded 90% of your losses. And so it's the difference between being profitable and unprofitable. As far as I know, that was sort of an accidental consequence of all of this. But you could imagine a Trump, like Trump administration liking the prediction markets and wanting to send business their way.

[Jordy]

Yeah, I want to talk about the potential SpaceX IPO. A lot of people have been processing it in different ways. Some people were surprised this was, was happening, just given that SpaceX has thrived in the private markets and has plenty of access to capital and Elon has had a number of bad experiences in the public markets. I have a kind of working thesis that this could be a spite IPO. I think we're going to see a lot of IPOs next year. And if you're raising a billion dollars, let's say, if you're going to float at like a 50 billion, you know, if you're a $50 billion company and you only need to raise a billion dollars, you're not really threatened by IPO. But if you're a foundation model lab such as OpenAI that wants, or Anthropic that wants to raise tens of billions of dollars, it's very possible that a $1.5 trillion SpaceX IPO could kind of like suck the oxygen out of the room. Is, you know, I want you to kind of give us your take broadly on it. And I'm curious if my tinfoil hat that schizo theory has, has any merit.

[Matt Levine]

Yeah, I don't really know. Okay, so first of all, like, I, you know, I read companies might go public next year all the time. So I don't, I don't know. I mean, I assume it's true, but like, I'm not totally sure too. Like, one thing I've read is that the use of proceeds for this hypothetical $30 billion IPO is to put data centers in orbit. And like, you know, this gets to your spite theory. Like in a world where there's, you know, $10 trillion of broadly speaking AI CapEx needs, like there's going to be competition for that and there's going to be like, like, like SpaceX can kind of. SpaceX has been able to raise as much money as it wants in the private market and like, you know, achieve a, you know, $800 billion valuation and like send rockets into space and be like a fairly capital intensive company while staying private. But like if the next leg is, you know, they need tens of billions of dollars of AI ish spending, then you might reach the limit in the private markets. And yeah, you might reach a little bit in the IPO market too. Right. Like you might, like there might just not be enough money to go around for all of these AI companies. And then I don't know why SpaceX is in the AI company category other than this data.

[Jordy]

Well, so, so here's, here's the other Elon complex. Yeah, but the other theory is like there's a world where XAI could get rolled into SpaceX and taken public around the space data center narrative. And I think that there's a lot of people that would be excited about that narrative even if other people in the space economy are saying, hey, space data centers will happen. But it's probably more like a ten year timeline versus a three to four year timeline.

[Matt Levine]

Yeah. Also I've read that they're looking at a $1.5 trillion valuation on like $22 billion of revenue. It's all in a pretty deferred timeline.

[Jordy]

It's in orbit. It's in orbit.

[Matt Levine]

Yeah. You're not paying for that year's earnings. Right. So you need some sort of 10 year story to tell.

[John]

Yeah, but I mean, to be fair, it would be easier for, I mean, at least I believe it'd be easier for SpaceX to acquire XAI then Tesla to acquire XAI because of acquisition laws around a public company buying something big versus a private company buying something big. Does that sound roughly correct? Like would you handicap.

[Matt Levine]

Oh yeah, it sounds roughly correct. Although I mean Tesla has form of buying, you know, other Elon companies and. Yeah, you know, has moved to Texas in order to make it easier. Right. Like I don't think Tesla would have that much trouble buying, but they would get sued, you know, if you do it in SpaceX.

[Jordy]

Well, I think, I think part of the challenge is that Tesla Shareholders might say like, hey, we already have a really good AI team. We've been working on self driving, like we don't need Xai. We don't necessarily want to dilute ourselves, you know, whatever Xai's current valuation is or whatever price it would come in at. So I just guess I just feel.

[Matt Levine]

Like the sort of standard Tesla shareholder approach is like we're going to trust Elon's intuitions on these things. And I mean they bought like, you know, Solar City, Solar company, right?

[Jordy]

Yeah. But there was, there still was pushback and that was like a much, I'm assuming 1% of the. That'd be 1%. Like SolarCity was like 1 point something billion, wasn't it? It wasn't like it was much smaller. It wasn't like a hundred billion. Like I'm assuming Xai has a lot of debt. They raised a lot of equity. It would be somewhat.

[John]

It has the Twitter debt as well. It has a lot of debt rolled in. Well, speaking of debt, Netflix had to issue some debt for this Warner Brothers deal. I'm interested to know your thinking around how the Warner Brothers process will go. Are we going to wind up in a quiet period for the rest of the, the year as we go into the holidays, or you think it'll be, you know, just as, as, just as many headlines as there have been. Where do you think it actually lands? What's the nature of the story?

[Matt Levine]

I don't know. It's been surprisingly quiet to me. I think it's weird that, that Paramount first of all launched a tender at the price that was rejected. Right. Rather than saying we're going to raise a few bucks and go to the shareholders, they launched at the price that the board said no to and that they've said publicly that it's not their best and final offer.

[Mike Gallagher]

I know.

[John]

Is there any logic where that makes sense?

[Matt Levine]

Okay, so I think that where that makes sense is that it's not a real tender offer. Right. Like they can't close a tender offer for reasons including antitrust, but they clearly want to do a friendly deal with the board. Right. And so I think that. And saying very clearly we could give you an extra two bucks if you sign a friendly deal with us is a good way to get to the board and to try to strike a deal with the board. So I think that's the logic there. But I don't know what the board is doing. I think the board likes the Netflix deal. I also think that Paramount has two things going for it. One is that they think they've offered more money, or certainly they can offer more money. And then the other is they really think the Netflix deal is dead on. Sort of antitrust slash, Trumpy reasons. And I don't know how that plays out because that's a potentially year long process and presumably nobody wants to wait that long. But I think there's some ability to wait a few weeks and see if Trump says nastier things about Netflix to try to, you know, pressure the board to come to a deal. I don't know. I'm surprised that there's been so little news, right? I mean, like since Monday, like no one, like, who would have expected someone to raise their offer by now.

[Jordy]

It's a good point.

[John]

Yeah. What was your. Have you formulated a take on the OpenAI Netflix deal? We kind of landed on Disney deal or. Sorry? Yeah, OpenAI Disney deal. We sort of landed on it being like sort of an interesting way to create less commoditization in, you know, the AI application layer, the consumer chat experience, they all are starting to feel very similar. I don't know if you felt this way, but it feels like all the models are sort of at the same level. The benchmarks are pretty similar. Well, if you can get Spider man in one and not and the other, maybe that's a differentiator. Have you, have you processed that deal similarly or do you have a different frame of mind around it?

[Matt Levine]

I haven't thought that much about it, but that seems right to me. And it is like, you know, it's like, you know, you think about like the Netflix Warner situation, right? Like you have like, you have like content distribution services and then they have like content libraries, right? And there's some combination of acquiring the content and making, you know, commercial deals with the content providers. Right. Like, like here. One possibility is that the AI chats are ultimately the next, you know, dumb entertainment channel, right? And so if you have the good properties in your dumb entertainment channel, then like when people are like, oh, I want an AI to create a movie about me, I'll go to the one that has like the Disney characters like that. I don't know, it kind of makes sense, right? And it's like a, like the thing that is striking to me is that the AI companies talk about this sort of fundamental reshaping of society and discovering super intelligence and then they're a little bit consumer entertainment products. But if you're a consumer entertainment product.

[Jordy]

You want the Disney characters, also adult entertainment.

[Matt Levine]

Yes, yes, right, right. Disney character porn.

[Jordy]

It really has to be, it is funny that Adult Mode and Disney will be rolling out in the same effectively 30 day period.

[Matt Levine]

So yeah, I don't know enough about the deal to know if they like have. I hope they have.

[Jordy]

I hope they have a carve out.

[John]

They do have a carve out. They do. This was confirmed. They did say that there are lots of restrictions on what you can and can't do with a Disney character in OpenAI properties. I'm sure that was key. It's wild.

[Matt Levine]

We're see the jailbreaks. That's going to be great.

[John]

There will be some jailbreaks, I think. There won't be that many jailbreaks. I think in the last two years they've gotten pretty good at locking it down. So that was kind of my prediction, I'm sure. But there will always be chaotic stuff. It's inevitable with AI and the Internet. What? But how should tech people be thinking about the growth of private credit? I feel like there was an era where folks in tech were understanding that the foundation model companies, Anthropic OpenAI were operating at a truly unprecedented scale. The capital war was bigger than Uber Lyft. It was bigger than anything folks in tech had seen. It was certainly more capital consumption than consumptive than Google was before it IPO'd. And so all of a sudden, by a lot. So all of a sudden you have tech people that are grappling with the prospect of a $10 billion debt financing for something that is, you know, feels like a startup. It feels like a startup project. And so it was easy to point the sound, the alarm bells like debt is coming, debt is scary. Debt blew up the economy and 2008, it's going to happen again. But you talk to a lot of people in private credit and they say no, there's plenty of areas where people pay their debt obligations on time. How have you processed the. Is Nvidia holding up the global economy? Is OpenAI going to blow up the entire global economy? Those types of Cassandra esque narratives that have spiraled and maybe are coming back down to earth now.

[Matt Levine]

Yeah, I don't know. I mean it's fascinating that, you know, like insurance companies investing in investment grade debt are like ultimately underwriting like a stream of payments from startups. Right. I mean, kind of what is happening here?

[Jordy]

Deeply unprofitable. Deeply unprofitable. Deeply unprofitable startups.

[Matt Levine]

Yeah. But also a lot of it is like people underwriting a stream of payments from Facebook, which.

[John]

Is very profitable. Yeah. Like the Blue L data center for meta superintelligence 1 GW. The Hyperion thing, it's like Meta's going to pay that bill. At least I think so.

[Matt Levine]

Right. And if you had made like an equity bet on like if there had been a way to make an equity bet on like Meta's pivot to the Metaverse, like you would have lost all your money but like presumably they paid their supplier bills for that, right?

[John]

Oh, totally.

[Matt Levine]

There's a difference there. If you're underwriting these hyperscalers mostly these are very investment grade, very cash flowy companies that could turn off the capex if they needed to. But. Right. I mean you're underwriting a lot of fixed payments on Capex and it's.

[John]

It.

[Matt Levine]

Seems a little aggressive for a credit investor, but they're all like, one thing about private credit is like, it's not going to blow up the economy. Like it's, you know, it's like insurance companies making these bets. So it's a little bit longer term capital. Yeah. But I don't know.

[John]

Is there anything in the economy right now that gives you the same sort of jitters that you had during your famous interview with Sam Bankman Fried, where it felt like at the time you were clocking, like, this just doesn't make sense. The math doesn't math. Like it feels like we're frothy, where everyone kind of goes around saying like, yeah, we're in a bubble, but at the same time it feels like it's a bubble that's built on some real stuff, even the prediction market stuff. It's like, I can at least trace the cash flows. I might think that sports betting isn't the greatest thing, but at least I know that the businesses are going to make money.

[Mike Swan]

Right.

[Matt Levine]

Like, you know, AI sort of replaced crypto as the sort of darling of a lot of investors. But it's just, you can, you can. The consumer product is very tangible. Right. Like the crypto stuff is all like, oh, I'll make tokens that other people can trade for more tokens. And like it didn't wait.

[John]

That actually sounds like AI too, because I make, I make anthropic tokens. They sell them to you. You made cursor tokens inside.

[Matt Levine]

The circularity is if you want to be troubled by the circularity, it's a little weird. But the difference between that and crypto, where no one. The thing about Sam Bankman Fried that was obvious at the time was that he didn't care about crypto. He wasn't like, oh yeah, this is a world Changing product. It was like, oh yeah, this is a casino where people will give me money. And like, AI is. There's a lot of people who are true believers in it. And again, they've like rolled out consumer products that have. Disney's gonna license its characters. Right? I mean, like, there's a real sort of, there are many real obvious use cases. And so like, there's a lot of value being created. And then the question is like, is it commensurate with the, you know, $10 trillion of debt that's being incurred? And that's, it's not obvious, but it's like, you know, there's, there's something there, there's not.

[Jordy]

How much, how much would I have to, how much would I have to pay you for you to agree to not use any AI for the next year?

[Matt Levine]

I'm kind of a Luddite. Like, I mean, I use AI, but.

[Jordy]

I'm assuming it's like for research here and there, like better kind of search.

[John]

Give us the prompt for your column. Give us the prompt.

[Matt Levine]

People pretty regularly email me. They're like, I asked ChatGPT to write about this in the style of Matt Levine. It did pretty good. And they sent it to me. I'm like, okay, I'm safe for like another three months.

[John]

Yep.

[Matt Levine]

It's like never, never close.

[John]

No, it just never gets a flavor or something. I don't know.

[Matt Levine]

The answer to your question is less on you than. Yeah, yeah.

[Jordy]

How have you been processing Oracle over the last six months or so? They're getting zero credit for their backlog. Their five, half a trillion dollar backlog, I think. Are they trading at less than, less than the backlog? Currently people have brought up the dot com bubble and obviously are drawing comparisons between the two moments. But what's your view.

[Matt Levine]

About Oracle being not the darling of the IO bubble? I don't really know. Which is not, I don't know enough about Oracle's backlog, but I think they're not just, they're not the name that people go to as the AI darling. I don't know, the dot com bubble is like, it seems like a reasonable comp in that it just feels like obviously even if there's a huge shakeout, there will be huge value. You know, there'll be an Amazon of this bubble. Right. Like there'll be big important survivors of it. Which, you know, again, like.

[John]

I can't.

[Matt Levine]

Say wasn't true of crypto, but like, there's nothing inevitable about that in crypto.

[Tyler]

Right.

[Matt Levine]

Like that was, you know, like, there's the possibility of nothing happening there, whereas here it's like the changes to the economy and to society are kind of already tangible.

[Jordy]

The thing that's somewhat of a narrative violation is the median crypto fund has actually done pretty well over the last few years. And it's possible that the median venture fund AI focused.

[John]

It is very much like.com boom. It's like you gotta be in Google or Amazon or you're probably in a lot of trouble. And with crypto, because it's so liquid, there were so many funds that were trading in and out, even if something went way down, it's like, well, they already distributed. They got out early. Like, you know, there's tons of ways to make money.

[Matt Levine]

Yeah.

[John]

I don't know.

[Jordy]

One kind of random question on your workflow. I'm assuming people email you kind of like, tips all the time that are really trying to, like, feed you information on their enemies, things like that. How do you kind of.

[Matt Levine]

I'm not an investigative reporter, and so, like, I don't. I'm not that useful for that. But, yeah, people are like, you should write about this.

[Jordy]

But how do you. Yeah. What's your process? What's your. What's your process for trying to figure out.

[John]

You should call it.

[Jordy]

What if that is, like, actually real? Because, I mean, we, we get that where people are trying to, like, convince us of certain narratives and, and we're trying to process, you know, maybe off air, trying to process how real something actually is.

[Matt Levine]

You know, again, I don't, like, do a lot of investigative stuff, so if people are like, oh, look into this secret thing. No. Yeah, so like, they, you know, like, if I'm. If they're sending me information about their enemies, it's like, here's their 8K filings, and I can read them myself. And I do try not to. I used to, like, find it flattering when, like, you know, big finance people were like, let me tell you about this. And then I was like, they're just shopping me their version. So I try not to.

[Jordy]

Yeah, sure.

[Matt Levine]

Try not to either have those conversations or if, like, I have conversations with the hedge fund manager about how their position is so good. I just don't write about it because it's, like, too easy to be. To be flattered and persuaded into thinking that what they say is right. And so, like, I just try not to expose myself very much.

[John]

That's good.

[Matt Levine]

Yeah. I just try to, you know, like, like people like, oh, this is an interesting thing. Like, okay, send me the Public documents. And I'll read them and I'll make my own thoughts about it.

[John]

There's a balance. Somewhat related question.

[Matt Levine]

You have to get some information from some people, but like, I try not to be hearing their opinions.

[John]

Somewhat related question. What is your theory on why Bloomberg is able to retain top journalistic talent? They've seen very little churn over the last couple years relative, relative to other legacy outlets. What's going on? What's the secret sauce?

[Matt Levine]

I mean, there's a lot of things, like, we have a great audience. Like, the audience is so good. Like, it's so, you know, like, the feedback that I get from readers is like, they're so smart. Like, it's. It's so concentrated in the financial industry. So, like, the audience is so good. It's the best business model in media. Like, we're a good, stable, profitable company in a world where that is not true of a lot of legacy media. And I mean. And you know, and there's a flywheel where like, your colleagues are great. Like, I really like, like, I wouldn't leave Bloomberg just because my friends are all here. Yeah. And then the other thing is, like, it is a huge organization that nonetheless gives people a lot of freedom to do weird stuff. Like, would I do, like, I've been doing this for like 10 years and. And if I tried to do it at another media organization, they would have various stylistic objections and I'd say, are you sure you can do it this way? I feel like I proved out the model and so Bloomberg just lets me do it. But Bloomberg does that a lot. Right? I mean, Odd Lots just had its 10th anniversary party this weekend. Odd Lots is a weird overnight success. Yeah. It's like a program that just a lot of people in media would have been like, well, that won't work. And Bloomberg is bit a little. Let them do it.

[John]

Right.

[Matt Levine]

So there's a lot of stuff like that where it's a huge organization that also is like quite experimental agile. Like. Yeah. And like gives people a lot of freedom.

[John]

That's really cool. Yeah, that's a great take. Well, thank you so much for taking the time to.

[Matt Levine]

Thanks for having me. This was fun.

[Jordy]

Really enjoyed.

[Matt Levine]

Yeah.

[Jordy]

This is very educational, letting us bounce our theories off you.

[Matt Levine]

Yeah.

[John]

Well, have a great rest of the year, Have a great rest of the day and we will talk to you soon. Thank you so much.

[Jordy]

Cheers, Matt.

[John]

Goodbye. FIN AI, it's the number one AI agent for customer service, Automate, the most complex customer queries on every channel. With FIN AI, our Next guest is Mike Gallagher. Mike Gallagher from Palantir.

[Jordy]

He's the head Gallagher.

[John]

I don't know if that one's going to stick, but hopefully he's here. Welcome to the Stream. Merry Christmas. How are you doing? Do you have some Christmas music for Mike Gallagher?

[Matt Levine]

Thank you.

[John]

How are you doing?

[Matt Levine]

Merry. Good.

[Jordy]

How are you guys?

[Mike Gallagher]

What's the nickname?

[Jordy]

The Gallagher that didn't stick?

[John]

No, that one's not sticking. Have you had any nicknames throughout your career, throughout your life?

[Mike Gallagher]

Mostly just Gallagher. G Money for a while.

[Jordy]

G Money. Yeah, I think that's it.

[John]

Mixmaster Mike G. Was that on the Hill?

[Jordy]

What's that?

[John]

Was that on the Hill?

[Mike Gallagher]

G Mont.

[Jordy]

No, that was like high school, college.

[John]

I imagine it was the door. That sounds like a high school name, not necessarily one in Congress. But anyway, it's great to catch up with you. I hope you've been having a wonderful year. It seems like Palantir's been on a tear. I'd love for you to take us through the news today and kind of get us up to speed on what's happening in shipbuilding specifically, and then I'm sure we can zoom out and talk about shipbuilding more broadly and just geopolitics and competition.

[Mike Gallagher]

Well, I wonder if we couldn't reverse it. It's important to make the geopolitical case first. First of all, you guys seem to be crushing it as well. I see you everywhere. I have, like, merch in my office now. All my friends are constantly on your show. So congratulations on all your success and taking over the world. It's very cool to see.

[John]

Thanks for coming on so early and helping us. It was huge.

[Mike Gallagher]

Hey, listen, some call it the Gallagher bump, you know, that you've now a beneficiary of Gallagher nadir bump.

[John]

Gallagher bump. The G money bump. Anyway.

[Mike Gallagher]

Yeah, that's right. My entire, like eight years in Congress was devoted to this question of how do we enhance deterrence with respect to China. And if you look at it like there are things we need to do in the short term. Killer robots, a lot of the stuff Anduril's building, you know, long range precision fires. But over the long term, if you just look at a map of the Pacific, we need a bigger navy. Right. We had a four structure assessment that called for a 355 ship Navy. When I was a freshman member of Congress in 2017, we made it the official policy of the United States to get to a 355 ship Navy as quickly as possible. As quickly as practically possible was the language. And then the size of our fleet continued to shrink. It's on track to bottom out at 279 Ships in 2027, which happens to be the year that Xi Jinping has set for having his military ready to invade Taiwan should he make the decision to move. So if for no other reason than if you look at geopolitics in the most fundamental sense, the collision of geography and politics, we need a larger Navy to preserve the peace. We need to start cranking out ships. We have the high, low mix of ships now. The reason we haven't been able to do that, I think is a combination of factors. Right. We have had an inconsistent demand signal from previous administrations and that's usually what the shipyards say. It's like we don't know the right mix of ships that the Navy wants to build. You have inconsistent budgeting from Congress. Right. I mean, we go from omnibus bills to big beautiful bills to continuing resolutions. Continuing resolutions are particularly destructive for the Navy. A former sector of the Navy said because of continuing resolutions, the Navy put about $5 billion in a trash can and lit it on fire. All of this is to say, as.

[Jordy]

We were trying to figure out why, what are the dynamics that that causes that waste? Yeah.

[Mike Gallagher]

The biggest issue is under a continuing resolution, you basically agree to fund a previous year's levels. You can't have new starts. Right. You can't fund new things, whether it's a new ship class or a new innovative AI program or a new robot. That scares the hell out of Xi Jinping.

[Jordy]

Right.

[Mike Gallagher]

And then there's just also a lot of uncertainty hanging over a cr. The usually short term, hard to do long term planning. There's other phenomenon where the military actually, because of how messed up Congressional budgeting is, the Pentagon fails to spend about $15 billion a year. So think about that. For the last 10ish years, we've lost about $125 billion in defense appropriations money that was appropriated for defense that went unspent. It goes back to the treasury, it sits in abeyance for five years and then it evaporates like that's for $125 billion. Like I could build you a regional military that could definitively prevent World War three if I was unrestricted in how I could use that money and how quickly I can move.

[Jordy]

Certainly you could have prevented the decline in the Navy's number of ships, like you mentioned just a bit earlier.

[Mike Gallagher]

Exactly. I think there's another thing, right? Like we obviously went to war in the Middle east after 9, 11. I was part of these wars, I deployed twice to Iraq. The Navy was largely the bill payer for these, for these wars, we had a large infusion of money into ground forces and overseas contingency operations. What we didn't spend money on was investing long term in the future naval fleet and growing the size of that fleet as well as the mix of capabilities on various ship platforms. And then we had cost overruns in key programs, whether it's the Ford class carrier, Columbia class submarine, you know, the Constellation class frigate, the littoral combat ship prior to that. So all that is to say, for the first time in a long time, now in the Trump administration, under the leadership of Secretary Phelan, the Navy is taking advantage of some money that was appropriated by Congress for non traditional bets on leveraging AI and autonomy and applying it to shipbuilding and bringing in Palantir, in this specific case, to turbocharged production in key shipyards, both public and private yards, and 100 key suppliers. So this is $448 million over two years. It's based on pilot work that we've already done at various shipyards and suppliers, the results of which have been incredibly promising. At one shipyard, we saved over 100 or 200 planning days, 20 planning days a week, you may ask yourself. There's only seven days in a week, but that's because there's four people whose full time job it is. They spend 160 hours working on mandraulic processes. Now with our Software, it takes 10 minutes. At another supplier, a process that used to take 200 hours for manufacturing bill of materials is now down to 12 seconds. So just by modernizing the underlying software, leveraging AI, it's our belief that we can maximize production at the shipyards and then link the suppliers to the shipyards and all of that, what's called the maritime industrial base, to the Navy itself. So key Navy officials in general and the Secretary of the Navy in particular can look at the maritime industrial base and understand what's going on in real time and make critical allocations decisions. Because a lot of what's happening at the yards, particularly the public yards, is just, just simple decisions about what do I buy now, what do I not buy now? And there's really no, like, there's no, there's no source of truth to make a sophisticated judgment on that. And that's what causes us to waste money and time. So this is all about maximizing production, getting more ships in the water, and ultimately fulfilling that geopolitical need for a bigger and more lethal Navy.

[John]

Are there sailors that don't have boats right now, or are we going to recruit a bunch more sailors as we build out the physical boats in the Navy? I mean, I'm just wondering because I imagine if you, if you are, you know, an American citizen, you join the Navy, your dream is to be on a boat and then they're like, oh, we're all out of them. You got to stay on land. That's got to be depressing. But, but do you think there'll be a recruiting push for more Navy sailors as we build out our fleets? Or are these going to be autonomous boats? Like, are these support ships? Like how do we think about the, the human side of the future of the American Navy?

[Mike Gallagher]

Sure, it's a great question. I mean, one thing we've seen in recent years was a full on recruiting crisis that had little to do with the decline or the growth of the fleet and more to do with a lot of, at the time it was in my opinion, a misguided push for diversity, equity and inclusion initiatives that were based on species political science that really turned off a lot of people. We had a retention crisis as well. The interesting thing is, at least in most services, that's starting to turn around. I was just at the Reagan National Defense Forum, they release a survey every year and one thing that the survey results reveal is that the so called Hegseth reset is extremely popular among current service members, which is important because that's the big recruiting pipeline. It's usually someone who is serving or recently served to tell someone else, yes, you should join the military and among veterans, so, so when it comes to things like gender neutral combat standards, you know, and, and some other changes, this is wildly popular. So the recruiting crisis has gotten better. I actually think over time it's not going to be a problem if we stay on that trend. Because in this, the second part of your question, yes, more of our ships are going to be autonomous. They're still going to be destroyers that are complex man ships, they're still going to be carriers, there's still going to be submarines. Submarines are our biggest asymmetric naval advantage right now. But increasingly, I think you're going to start to see a lot more autonomous vessels in the fleet, both autonomous surface vessels and undersea robots. And that's where you have, I think, as we talked about before, I believe what's most exciting about the current moment is you have so many people in your world, right in the investing world that are that are that are that are willing to put capital into non traditional defense tech Startups that are building really cool capabilities for the Navy. And I think this is a really exciting moment for the non traditionals. I think the defense industrial base is going to look a lot healthier four years from now where, you know, Palantir shouldn't be the last company to enter the S&P 500 as a defense technology company. We, we need five more companies like that. And so I actually think the companies are building autonomous vessels that are building killer robots that are building long range precision fires, you know, hypersonic missiles, like Castellian in California. I think it's a great moment for all those companies.

[Matt Levine]

Yeah.

[John]

Have you. I mean, it's hard to like, pick a favorite branch of the military, but it feels like, well, Marine Corps, obviously.

[Mike Gallagher]

It's the Marine Corps.

[John]

Oh, yeah.

[Mike Gallagher]

I mean, it's not hard.

[John]

It's not hard.

[Mike Gallagher]

I'm a Marine.

[John]

So.

[Jordy]

Yeah, hit the gong for the Marines.

[Mike Gallagher]

Let's go.

[Jordy]

We're not picking favorites. We certainly will.

[John]

But I am super fascinated by this Palmer Luckey line that he's been delivering a few times about. He wants America to be the world's, not the world's police, but the world's arms dealer. And so the idea that maybe, you know, if he's building something that can shoot down a drone, that goes in the hands of the Ukrainian service members. And maybe America doesn't put boots on the ground in Ukraine, but we do put equipment that can neutralize an attack for a Ukrainian soldier. And so I'm wondering how that interfaces with the naval strategy in your mind. Do you think that are there already boats that we're going to be supplying to other allied navies? We want to build up our own navy, but. But is there also an incentive to build up ally navies as well? And what role do you think the US will ultimately play in that dynamic?

[Mike Gallagher]

100%. Well, first of all, Palmer is at the leading edge a lot of this stuff. And one thing that gives me hope as we look at this new Cold War with communist China is like, I think our, you know, our private sector leaders. Palmer's a great example of this.

[John]

Yeah. Oh, did we lose you? Oh, no.

[Jordy]

A nation state again.

[John]

What a coincidence.

[Jordy]

Wow.

[John]

He starts mouthing off about near peer.

[Jordy]

Competition, immediately taken down.

[John]

They get immediately taken down. Well, question. We're under cyber attack. Very clearly. We thank you for bearing with us. Well, we have the moment I mentioned. I know, I know.

[Mike Gallagher]

Chinese navy.

[John]

It's crazy. Okay. Anyway, kick us back off.

[Mike Gallagher]

Well, I made it simpler. I think it goes both ways, right? Like we are seeing foreign shipbuilders, world class foreign shipbuilders like HD Hyundai with the Palantirs had a long standing partnership with. They represent, I think, 17% of the global tonnage that's built. And a lot of the work that we're now applying to American yards is built on some of the lessons we've learned in applying AI to Korean shipbuilding. Hanwha, et cetera, are trying to invest in America. Hanwha bought the Philly shipyard and that's great. We need more shipyards. We need that investment, that sort of. And they're going to have, you know, American subsidiaries that are doing important work. So that's one thing. And then on the other hand, and I think maybe the Aukus agreement, this was the arrangement we had to provide nuclear submarine technology to the Aussies is an example where we can take what we're best at, that is building nuclear submarines and share it with our closest allies and get more interoperable vessels west of the international dateline to enhance our collective combat power. I think this gets to a broader issue, really. The promise of Aukus and a promise of a lot of our alliances in the Indo Pacific is that we can start to build out something resembling a free world technological industrial base where humans with appropriate clearances, technology can float seamlessly between the borders of countries that we truly trust. And then if you layer on geography and you look at, okay, Taiwan, the first island chain, the second island chain, we need countries, including treaty allies like Japan to invest more in their military there. We have a really positive story in terms of Japan, what's happening in terms of their investment in asymmetric capability. It's probably one of the best developments for deterrence in the last 20 years in the region. So the answer is yes, all of the above. We need to be, we need to have a more coherent foreign military sale process where we can provide our best technology and our companies can sell around the world. We make it easy for them. But we also want to leverage areas where our allies might have key capabilities either to invest here in America or we can fight as a team. And that's where a different sector. What Palantir does with our maven smart system, you know, we are the solution for joint all domain command and control. This is how you see the battlefield, how you see the enemy, how you see yourself. We obviously want us to have a similar, if not identical picture. When we're thinking about how do we fight China with the Aussies, with the Japanese and with other key allies, we have to Fight as a team in order to enhance deterrence on a timeline that's actually relevant.

[John]

Yeah, makes a ton of sense, Jordy. Anything else?

[Jordy]

Not sure how much you can comment or riff, but what should people be paying attention to in regards to Venezuela? As a casual geopolitical spectator, I saw that video floating out that very clearly at the top. It said unclassified or declassified. It felt I didn't want to read too much into why it was immediately looked like seals taking over. But what should people be kind of paying attention to on that front?

[Mike Gallagher]

Well, it's almost similar in my mind to some of the recent naval operations we saw relative to the Houthi rebels in centcom. You know, I started this conversation off laying out the challenges we've had with shipbuilding. That being said, what our recent operations in the Middle east and what our current operations in Southcom and in Western Hemisphere demonstrate is that we are still the world's best military far and away, and we have capabilities that nobody else has. Now, that should not be a cause for complacency. Like, we need to build off that. We need to keep investing more in the military. But like our sailors, our soldiers, our airmen and marines, like, when you give them a mission and a difficult job to do, they will get it done. And if you are an enemy of the United States, like, you should be on notice. When we have presidential leadership combined with military professionalism, there's almost no limits to what we can achieve. And so I welcome a renewed focus on our own hemisphere when it particularly, particularly where it intersects with Chinese and Russian influencer in our hemisphere. That being said, what I'm most concerned about over the next five years and beyond is what is the conventional balance of power in the Indo Pacific region? Because what I've been saying now for a decade is that Xi Jinping is serious when he talks about taking Taiwan by force. And all these operations, whether in the Middle east or whether they're in, you know, off the shores of Venezuela or in the Caribbean, will look like child's play compared with a major naval war with China over Taiwan. The scale is almost hard for us to imagine because we just haven't fought a war on that scale since World War II. Really, since the battle of Leyte Gulf in World War II, we haven't seen something of that scale. And I think one of the disadvantages, I almost hate to call it, that, that we have, is that in a. In a republic like ours and a democracy like ours, we're very sensitive to casualties, rightly so. We have an all volunteer military. We don't want to spend lives uselessly. Right? I mean, the American people won't stand up for that in a, in a dictatorship, in a Marxist Leninist system like that in China. I don't think Xi Jinping cares if he loses 10,000, 20,000, 50,000 PLA soldiers to achieve his lifelong ambition. This is actually a lesson that endures from the last time we fought the communists on the battlefields of Korea, on the Korean peninsula. They were just far less sensitive to casualties. So I only bring that up to say there are certainly lessons that are relevant across the world, but there are certain things peculiar to the nature of the adversary we face in China that I don't think is we. That I think makes it a much harder problem to deal with than Venezuela, if that makes sense.

[Jordy]

Yeah, completely.

[Mike Gallagher]

What's up with the gong? Can I ask about the gong? Is that I, you know.

[Jordy]

Of course, a Galagon. There we go.

[John]

The gong is usually a celebration of funding rounds, big numbers, milestones. Yeah, I mean, there's big numbers. This is a, this is obviously a massive deal. And so, yeah, totally gong worthy.

[Mike Gallagher]

And the packers beat the Bears. So we have a lot to celebrate.

[Jordy]

You know, there's a lot going on.

[Mike Gallagher]

A lot of numbers.

[John]

And we should ring the gong every day that Xi Jinping doesn't invade Taiwan, because that sounds terrible and I don't want that to happen. And you just delivered a very chilling, you know, potential sci fi future where that doesn't happen. It's miserable. But thank you for everything you're doing to stop that from happening because I very much want peace in the world and in the Indo Paycom region and of course you and the rest of the team over here, great to have you on, working very hard on that. So thank you so much. Appreciate the update for taking the time to come and chat with us.

[Mike Gallagher]

Thank you guys.

[John]

Merry Christmas.

[Mike Gallagher]

Peace on Earth.

[John]

Peace on Earth.

[Jordy]

Peace on Earth.

[John]

See you up next. Turbopuffer, serverless vector and full text search built from first principles and object storage. Fast 10x cheaper and extremely scalable. We have Sagar and Jetty, the co host of Breaking Points with Crystal and Sager, obviously the realignment podcast. The second time on the show. He's also a girl. Dad, welcome to the show. How are you doing?

[Jordy]

Looking sharp.

[Sager]

Good to see you gents.

[Matt Levine]

Good to see you.

[John]

Great to see you. How's the family? Merry Christmas. How's the holidays?

[Sager]

Thank you. Merry Christmas to you all. Family's doing well.

[John]

That's great.

[Sager]

She's old enough that we've got her pigtails going. This is true.

[Jordy]

Girl.

[Sager]

Dad. Yeah. As good as it gets.

[Matt Levine]

Yeah.

[John]

That's amazing. Well, well, I'm glad that that's going well because it seems like everything else on your timeline is not going well. If you had to pick one to snap your fingers and eliminate, would it be, you know, rising energy prices from AI data centers or sports betting at the. At the touch of everyone's finger all over the world?

[Jordy]

Impossible. Impossible.

[Matt Levine]

Question.

[Sager]

Very tough. Because one is going to Wait, wait, be before you.

[Jordy]

Before you say, is it okay if I bet on this?

[Sager]

I'm sure somebody already out. There's going to be a market that. That's going to exist. In terms of which one that I would pick, I don't know. Both are going to be very financially draining to the American household. Sports betting in the immediate term would probably be the one that would ban immediately, but power use in the future.

[Matt Levine]

Well, yeah.

[Jordy]

What was that reason? There's a reason. There's a. I saw a study floating around that in states that sports gambling was legalized, like the average credit score drops like 10 points or somewhere in that range. So it has like effectively a direct impact on.

[John]

Do you think that sports betting is something that will come for us all? Because the odd thing is that I have.

[Jordy]

Yeah, John and I. John and I have like some weird genetic immunity because we went to Vegas for F1 and didn't gamble at all. Had no. I have zero interest in gambling.

[John]

I don't have the bug or something. It just doesn't do anything for me if I sit down, actually.

[Sager]

Why it comes for us all. Yes, I'll tell you why it comes for us all. Even when. If you casually watch sports. Casually watch the NFL. I don't sports bet. I think sports betting is bad. I still know the line on every game.

[John]

So in a way.

[Sager]

Because that's how I'm drawing. No, I'm like, oh, well, so and so is the favorite or the over under on how many yards somebody is going to throw. I shouldn't know that. People should know, but I do. Even just casually. You know, last time I was on here, I talked about how I think that there's a media bubble in sports because I think sports gambling is just pumping all these money into people with microphones who talk about sports. But that's part of the issue is in all mainstream sports coverage from espn. Pardon my take, everywhere you go, a daily segment is I like the over, I like the under. Here you're going to take the first half and so even if you don't bet, you can't help but think about the sport without thinking in sports betting terms. And that's what I would say is like frame domination, you know, where even for people who don't bet, they have to think in betting terms. So that's a winning. That's winning in their part.

[John]

Yeah, maybe I have a weird, like a weird perception of it because I also don't watch sports. I really, I really, I watch like movies a little bit. But, but there's no, there's no sports that I follow like, regularly. And so I'm like, I'm not even getting into the top of the funnel for this stuff. And so it's really, really hard to ladder me down. And so I'm a little bit more.

[Jordy]

So of course you were excited to hear that Trump would consider eliminating taxes on gambling.

[John]

This must have been good for you.

[Sager]

Well, okay, let's talk about this though, guys. Because he said gambling winnings. Gambling winnings. And what I was crashing out about was there are no winning gamblers. It doesn't exist. There's a longitudinal study of sports bettors. Only 4% of people over five years ever took profit. 4%.

[John]

So it is a skill. Percent. I'll take those off. You're telling me there's a 4% chance that I could be one of the greatest gamblers ever? I love those odds. I'll take them all day.

[Sager]

It does exist.

[John]

I got the over on me becoming a generational gambler.

[Sager]

I will tell you if, if I had to bet, I would bet on both of you. But, but statistically it would be a bad bet. And so the reason I was crashing out is because that is going to give advertising to casinos and sports betting apps who are like, all your winnings are tax free. There are no winnings. The winnings are fake. 96% of you are losers. And all it will do is it will increase that funnel of people who may not previously have sports, but like, it's tax free winning. I mean, I can't lose. Right. Except I'm going to lose.

[John]

Yeah.

[Sager]

So I think it's, it's really disgusting. Basically just giving away.

[Jordy]

Well, we don't know it's going to happen yet. It was.

[John]

Hopefully it doesn't go anywhere. Just him having fun. Well, since you're the resident puritan on this show, I mean, do you believe that you can response that you can drink responsibly, you can have a glass of wine every once in a while? Obviously you don't want to Become an alcoholic. Can you ever responsibly sports bet? Like super bowl squares? Super bowl squares. That was the only thing that I ever did in college was I was in an office setting. And they said, hey, there's squares. You. You put down $10. Whoever gets the square gets 100 bucks or something.

[Sager]

I have never said people can't responsibly sports bet. But what I want to highlight is that responsible sports betting would put all these companies out of business. They literally cannot operate without addicts. Like, what I'm trying to highlight for everybody is responsible sports betting would end the industry as we know it. The vast majority of the profit comes from a very small percentage of the customers, which is why, look, this is the casino model, right? The mo. The whales are the ones who fuel everything and they lose the most. So that's why they shower these people with gifts and they call them every day and they invite them to games and then send them to concerts. And all this stuff is specifically to milk them. Yeah, we're as much money.

[John]

Basically a sales SDR that calls you with like a custom parlay for your specific. Oh, I know you like this player and I know you love betting on the coin flip, so we're going to get you coin flip.

[Jordy]

What did you. What did you think about the. The, like an MBS policy in Saudi on, like, you gotta be in your bag to be getting. Yeah, cracking open a cold one.

[Sager]

So, I mean, in principle, I'm smiling a little bit, but no, I mean, because I lived in the Gulf, guys, I can explain this to you. That's just a way to target the Indian laborers. So I oppose it. So the way that it works over there is that they create this entire social structure so that all the Indian, Pakistani and all these other laborers, like the day laborers are basically excised from all palace society. And they don't want them drinking. So they're just going to set an income cap to make sure that the foreign laborers don't get to have a drink as well as their own people. And it would just apply to like, the wealthy white expats. So because I know that it's just basically going to further immiserate their, like, slave labor population. I do oppose it. But, you know, just broadly, you know, I just want to get to the fact, you know, from the gambling thing, like, there is no such thing as a gambling company that can operate profitably without with responsible gambling, like if it literally would cease to exist. And remember, because people always forget this, the sports betting apps, if you're actually good. They ban you. They literally do not allow you to place any large wagers or they limit.

[Jordy]

They limit you. They say, we want you to be responsible here.

[Sager]

No, no, they don't limit you because you're responsible.

[Jordy]

No, I'm joking.

[Matt Levine]

Yeah.

[John]

I think Nate Silver is banned from sports betting.

[Sager]

He is?

[Tyler]

Yeah.

[Sager]

He's a.

[John]

He's.

[Sager]

He's limited on all the major apps. My major question, when somebody tells me they're like, oh, I'm pretty good. I'm like, oh, really? I'm like, have you ever been limited? And they're like, no. I'm like, yeah, you're a loser. Then I'm like, if you're any good, you would just be limited. It means you're a statistical loser.

[John]

Yeah, well, you need, like, a complicated network of, you know, people that can make better shadow accounts. It's a whole thing. And I mean, we were just talking to Matt Levine about this. Like, Susquehanna has a desk, like an actual trading arm of their firm. Like, it's very serious. Like the guys. Some guys. Oil and gas. Now there's people that are trading. Trading the. I can't name a sports team.

[Sager]

The sports lines.

[John]

The Yankees. Yeah.

[Sager]

Anyway, well, that's the thing. The real betters, they don't care about the sport at all. They're just looking for value. They're, like, constantly. They're always betting on, like, golf and tennis. Where. Cricket.

[John]

Yeah, this one is up at 2am halfway around the world. But it works for you, so you're gonna play. Right. But I mean, in terms of, like, the actual politics of this, how does this. How does this wind up becoming, like, where does this go over the next four years? It seems like Trump's sort of, like, leaning in, but is this actually going to. Is there a constituency here of people that want to say, like, hey, maybe we need to rethink this at the national level?

[Sager]

Well, already the tide is turning, guys. More recent Gallup polling show that all age groups, including young people, the most increase is against sports betting. The governor of Ohio, Mike DeWine, he actually said that if he could go back in time, he would never legalize sports betting. Knowing what he knows right now. I think people can feel it, man. It's the most expensive advertising. Real estate in the world is all being bought by these gambling companies. You can intuitively feel that this is off. You know, nobody's getting rich if they're able to afford all of the stuff they're able to put in front of you. So I think America's beginning to turn the Trump administration very recently, you know, you didn't let me crash out on what I'm crashing out the most on, which is weed. But, you know, the Trump administration is making their vice play right now. You know, they're doing very badly with young voters, so they want to try and reschedule weed. And, yeah, let's do some gambling winnings. And the TikTok thing, it's like this libertarian kind of giveaway. But I think that really misunderstands why all of these younger people are even turning on the administration for economic reasons in the first place. The reason they resort to all of these horrible vice activities is because they cannot afford, or at least feel they cannot afford, the very basics of life, like health insurance, being able to buy a house, crushing interest rates for a mortgage. So I would spend more of my time on that rather than a cheap trick like weed. But, you know, that. That would require actually doing something.

[John]

Maybe you get busted for weed, the arresting officer flips a coin. 50% chance you go to jail. 50% chance you get.

[Jordy]

Let's. Let's talk about another thing. I'm sure you're thrilled about the Disney OpenAI deal. Yeah, I think it's. I think it's incredibly bullish for OpenAI.

[John]

It's really good.

[Jordy]

So I just. I want to get. I want you to agree with me first that it's bullish for OpenAI, at least over the next year, that they're going to have exclusive profit.

[John]

Yes, yes, yes. Literally, because. Yes, literally, because, like, like, if you're a dad and your kid comes to you and says, like, like, I want to be in Frozen or I want to be in Star wars, well, there's only one app that can deliver that. And even if Nano Banana is a little bit better for today, it's like, you'll go to Sora because it's there.

[Sager]

Yeah, sure. It's bullish for users, for creating more users. I think it's one of the worst things that I've ever seen. I mean, last time I was on here on the show, I was like, sam Altman is like, yeah, we're going to do AI porn. And I was like, oh, well, I thought you were going to cure cancer, but okay. And so now we're gonna have Disney princesses to addict children, like you just said, so that daughters and, you know, others will come to their dads and say, can you create a video of Elsa doing. Saying my name and doing this, this and this. So that we're continuing to breed the phone Addiction. And as you guys all know, we're also gonna see the most disgusting pornography known to man as a result of. Yes, I know that they have pretty good at children.

[Matt Levine]

They.

[Sager]

No, they're not. No, they're not. Have you guys been on Sora? Have you been on Sora or Grok or any of these? They're not that good at it. Okay. You people, people have been playing around with, trying to create.

[Jordy]

Yeah, John, John, John is a, is a, is a little too confident that the, the pretty.

[John]

I'm pretty confident.

[Jordy]

Yeah. I just think. I, I don't. The Internet will always figure out a way to jail.

[Sager]

Exactly. They will always find a way.

[John]

Earlier in the show I went to Sora and I said, put me in a Sora video fighting Spider man and Darth Vader. And it said this content may violate our guardrails concerning similarity to third party content. So whatever deal they announced, they haven't implemented it yet because I got completely blocked. But I don't know, as I've scrolled, I don't scroll Sora that often. But as I've scrolled, I have not seen shocking stuff. I was reflecting with George about some of the crazy, crazy stuff that was on the Internet when I grew up. I mean the stuff that people would send you a link to, you'd open it up, it would be like jump scare level. I feel like I have not gotten that from ChatGPT randomly. I have not gotten.

[Jordy]

I think if you want to make the argument that this is so bad because it's gonna get kids more addicted to devices and their phones, you just gotta go even further and say, well, we should ban all electronic devices for children. Or, and maybe, maybe, maybe. You're speaking my language, brother. Well, how do you, how do you feel about some of the, how do you feel about that new law in Australia that's, that's banning social media. Oh, I love it.

[John]

Yeah.

[Jordy]

You don't think it's going to create a bunch, but you don't think that.

[John]

Why not put it on the parent? Why?

[Jordy]

I mean, yeah, so my concern, there.

[John]

Is plenty of evidence out there. There are plenty of access controls. You can set a passcode. You can. I mean, yes, like the really inventive 13 year old can go out and make the money to buy the iPad and hide it under their bed every night. But like in general, parents do have the ability to, you know, effectively be the own authoritarian of their home. Why do you need the government? Why do we need a nanny stuff.

[Jordy]

Yeah. My concern with these laws.

[Sager]

Well, as you guys understand.

[Jordy]

Yeah, go ahead. Yeah. My main concern is if you tell a group of young people like, hey, you can't use these apps, there will be new apps created, it's not hard to make a social media app. And there'll be new kind of homegrown wild west social media apps where there's no. The properties aren't doing any content moderation. They don't have any groups that are trying to make sure that pedophiles are not able to get on, et cetera, et cetera. So I think it'll just create a bunch of dark corners of the Internet that could very well be worse for kids.

[Sager]

Kids, it's certainly possible. But to just answer like the spirit of the question, which is basically like, why should parents not be the sole responsible ones for this? In the same way that social media only works when everybody's on it, not being on social media works best when nobody's on it. And so if you talk to Jonathan Haidt or others, what the mo. The best and most successful experiments for schools, for example, which are phone free or people who are opting out of social media is being able to be in a social network where everybody else is also not on social media. Because one of the things that's often raised is like, oh, they're missing out on, I don't know, school drama or communication for this, this and this. And they feel as if they're explicitly removed by the parent from like the social way that their high school or their social network operates, whereas by explicitly making it a top down way of saying no, nobody's engaged in it, it's going to facilitate a lot more actual life, like pro social, real social behavior and make it easier in order to basically look at the end of the day what we're trying to talk about. And this is what I always argue with libertarians like, no, this idea of like a totally free society is ridiculous. Like there are so many different ways in like you could act, quote, freely, which would impinge upon my freedom. That's why we have, you know, we have government enforcement mechanisms. Ultimately what we're trying to do on this is to decide what is the optimal way and for our outcomes to facilitate happiness in the family unit and for our children. And there's just too much evidence here on social media and on phones. So that's why I get with the SORA thing, especially in the totally unfettered, like wild west that we live in here in the US I just know this way that this is all going to go In a perfect world where everybody is very informed. But you know, right now, in a lot of ways there's a huge class divide on phones, like from the very, very richest people, you know, are probably the least likely to actually give phones to their children. But the Anxious Generation might be the best selling book in the United States. But let's all be honest, like it's a class signifier. Right. It's something that the top 25, 30% have read, are implementing, have the time to be able to. And then the iPad kid thing is still definitely not yet fully known, you know, for a lot of other people. And so I, I think everyone should try to live under a more uniform standard. And yeah, that's why broadly I take your concern, dude, about Australia and you know, like back water ways to get around it. But the government's sending a signal and we have enough data on gambling on other, all other vices that when you send these signals, especially with a real information campaign, the behavior will reduce. And there's a lot of different ways we can deal with those. The backdoor ways of getting around it. Never make anything zero. How do we try to facilitate the best outcomes for everybody, for all of our citizens? That's the way I would look at the Australia policy.

[Jordy]

Have you ever thought of setting up, you know, breaking points? You know, one of these neocities, you know, you go down to South America and set up your Puritan.

[Sager]

Oh, it's down to Honduras. Yeah, down to Honduras. No, I don't have enough money for that. Right. I don't have nearly enough to buy off the president and then get him pardoned whenever he deals drugs. That's. That's not my bag. I'll leave that to a few of the other guests on your show. But no, look, I mean, at the end of the day, like, we have our country. We can just do it here. We don't need to leave. I think that the people.

[Jordy]

That's always been our point of view.

[John]

Yeah, no, no, that makes sense. Let's talk about H2 hundreds. Nvidia is now able to export them to China. The previous rhetoric was we're not going to give China the bat. We're not going to give them the second best. We're not even going to give them the third best. We're going to give them this nerf to H20 chip that's two generations behind, blah, blah, blah. Now we're giving them the second best. Effectively. The argument in favor seems to be keep the government out of the boardroom. And Jensen is A founder of an American company. Let him sell everything. Again, to your eye, it doesn't seem like you're doom pilled. Is this nuclear weapons? No, it's a slop.

[Matt Levine]

Let them.

[Jordy]

Yeah, if slop is so bad. Don't you want, don't want our enemies?

[John]

Don't you want.

[Sager]

They're much smarter than us and they're not going to allow any of that over there about Sora or about image generation.

[Jordy]

Do they, do they, do they really though? Do they have like incredibly high rates of youth unemployment? Are they not using the phone to kind of medicate?

[John]

What are those 20% doing all day?

[Sager]

Yeah, I mean that's a great question, you know, is it phone related social media? I'm not entirely sure. They don't seem to have the same issues at least, least in our way. Obviously they're going to have their own unique circus set of circumstances.

[John]

But on H2, imagine, imagine being one of these unemployed Chinese youth and having no job, but also no slop, no sports betting, no weed. What are you doing all day?

[Sager]

You're getting shamed by your elders for not having a job. That's what we need.

[John]

All right, I suppose that's a good thing.

[Sager]

Yeah, no that's, that's, that's great.

[John]

Yeah, that's what you're studying. Maybe you're practicing, maybe you're growing. You're studying the blade. Yeah, hopefully you're studying the blade.

[Sager]

Studying the blade.

[John]

But anyway, sorry, H200, it seems like.

[Sager]

A 200, you know, to say what your, your kind of articulation of the H200 policy, it's more complicated and I've spent the last couple days interfacing with some of the guys who are Pro exporting H200. I'll give their, their argument, Their argument is to keep, keep China on the US and Nvidia technology tree as long as possible. So what would happen according to them is if we cut off H200, what it would mean is that Huawei would have the impetus and the incentive to not only compete, but to have all of the developers in China and everybody there explicitly build the software. Everything on top of that. Right. And so the argument that was posed to me was that it was a bad idea and a mistake take to not have Android be very. To not have Android and other operating systems that are explicitly US based be dominant in China and that the domination of Harmony OS is actually bad for the United States. And here was my counter and I'm really curious for what you guys think is that in a World, as we see with Apple, where we see a huge portion of US Business which is based in China, there has never been, at least in my opinion, over the last last 25, 30 years since the PNTR with China, the reopening of trade relations, we have never had a situation where we have a huge business penetration in China. And that company ever really stands more for American interests. Usually what happens is that the Chinese use US Market penetration, like US Companies market penetration, to make that company a lot more malleable to Chinese interests and to basically make them this multinational actor which because of their ability, policy and scale, they can shape for their own interests and strategic, let's say, direction. So the point that I really am trying to make here is that I understand the technology tree argument entirely, but the longer that Jensen, Nvidia and others see China as this gold mine, which he obviously does, you know, he's over there once a quarter kissing their ass on camera, you know, out.

[Jordy]

Well, they have a, they have a, they have a. A dedicated like R D center in Shanghai.

[Sager]

Yes, right. But not, it's not just that he goes there and explicitly is like, I want to continue to do in business in Beijing as long as possible. He's been lobbying for, against a lot of these export controls. It's obvious that a lot of his stuff is getting transshipped via Singapore or whatever. Even the Blackwell chip. I'm sure you guys saw that very recently with the deep sea research that came out. But the point, the point remains. He knows it's good for his business. The more that this remains kind of an opening, it's gonna have somebody have to straddle both sides and it's gonna be a lot more beneficial, I think, for the ability of the Chinese to shape him as opposed for us to be able to have our companies working in our national interests. And look, I mean, more libertarians who are listening to the show would say our company shouldn't even work towards our national interest. Their sole job is to make profit. I think that's a ridiculous argument. You know, sitting here in Washington and especially just over the last 30 years, I just don't think that there is a good example from Hollywood to tech or anywhere else where they've made a lot of money in China and they become, you know, very reliant on that business line where they have not shaped themselves as lobbyists against, you know, any more hawkish Chinese action.

[Jordy]

I think the, my read on it generally is that selling into China will make it more expensive for them to reduce their reliance on the USAI stack, they still will do everything that they can to reduce that reliance, which they are. Yeah, but yeah, it's going to be more expensive because there's clearly the Chinese companies and AI have a lot of demand for chips and dollars that they spend with Nvidia and other players or dollars that aren't going back into local, you know, kind of national champion.

[John]

I'm trying to think of the counterexample and all I can come up with is the Hermes Birkin bag as we've exported the Hermes Birkin bag to check.

[Sager]

Well, that's French. That's a French company, not a U.S. company.

[John]

But they have become dependent on it and the more Birkins that they buy, the harder it is to rip out the authentic Birkin bag. Much like the Nvidia GPU where the Cuda stack and the open source Cuda ecosystem has been built up around. No, I'm still somewhat sympathetic to the, to the, you know, hooked on the AI stack. I get it.

[Sager]

I just want to say I don't think it's fully. I don't think it's wrong. I think it misses the forest for the trees. They're looking at it purely from a technology question. I'm trying to point out the dangers of extending this relationship. And also look, let's look at the Chinese side. The Chinese were like, yeah, we may not even allow H200 hundred in the country because they want Huawei to compete. They want to.

[Jordy]

Yeah. But I think they said that, I think they said that because of Lutnick's comments that they were very offended by which he was like, we're trying to get him addicted. We're not going to give them our first, second, third, fourth. We're going to give them our fifth best. And they were like, actually we don't want any.

[John]

And also like, the country's not a monolith. Like, it's very clear that like, even if the CCP says like absolutely not their band, like there's still a world where like a Chinese company smuggles them in and uses against the CCP's will because, and like that could have a dynamic where that boosts the Cuda ecosystem further. Although I don't know why you'd be open sourcing Cuda software if you're stealing Nvidia or smuggling Nvidia in. That's probably a good way to draw the ire of the ccp, but who knows? Of course we'll see how this plays out. I still think a lot of, of the reason why this H200 news is not so much of a firestorm is because this year has been somewhat of the end of the AI doomer narrative. And just we've been backing off this idea that these are nuclear weapons. More and more people have been using the models for. I mean, ChatGPT is 3 years old now. OpenAI is 10 years old now. And after 3 years of everyone saying, or all the, the wild crazy people in Silicon Valley saying, it's going to kill you next year, it's like, okay, boy, who cried wolf? One sky is falling the second.

[Jordy]

Yeah. Or it's going to kill you more slowly because everyone falls in love.

[John]

Yeah, yeah. It's become more abstract. And so I think this idea that, like, oh, just like one more training run and then it's the super intelligence and it's run away and it's going to completely dominate. And like, it's either the United States or China. That narrative is kind of falling and by the wayside a little bit. And so I think people are maybe more accepting of export controls loosening. My question is just like, do you agree with me that it was a phenomenal L by the tech community to come out so early with this AI is going to kill everyone narrative? That just feels like AI is the first technology that we've had since the phone. Social media software in the cloud, the Internet, all of those were products that. I feel like they were technologies that were enjoyed by people for years. And then we had the conversation about what are the phones doing to us. But we got 10 years of like, phones are cool, right? And then we got, okay, maybe we should, you know, understand out of the gate, we hate it.

[Sager]

That's why I'm, I'm not yet ready to say, like, oh, they stopped saying that. I'm like, no, they still say it, guys. Like, Elon was on Rogan the other day being like, like, hey, you know, you're never even gonna have to work again. Like, don't worry about it. And Jensen, what did he say recently on Rogan? He's like, all knowledge in the world will be AI. And that's fine. I was like, is it?

[Jordy]

Yeah.

[John]

I mean, I was watching. So I was watching Sam Altman on Fallon and, and, and Fallon comes to him with the, with the premise of, like, give me the pros for ChatGPT. Give me some examples of how people can use it for good things. And then he's like, and I gotta ask you about the cons. Like, what are the cons of this technology? And I was like, no, if Tom Cruise was sitting there doing the interview and he's like, give me some reasons why moviegoers might like the new Top Gun. And then he's like, now give me some reasons why people might hate the new Top Gun. Tom Cruise would be like, what are you doing? No, I'm not talking to you about the negatives of my movie. Get out of here. I'm here to promote my movie. And same thing with, you know, any technologist that goes through the normal late night circuit. Normally it's like, oh, wow, you, you invented this new trinket, like, and you can buy it at the local Walmart this Christmas. Like, amazing. You, you made a gadget. And with AI, we just, it's always about the, like, the negative has just been so drilled.

[Jordy]

Well, that's because it's new. People don't.

[John]

Yeah, that's what I'm saying.

[Jordy]

Yeah. It's like you could write a story every day about violence that happens in grocery stores. Right. But it would not. Grocery stores have been around so long. It's.

[Matt Levine]

Yeah.

[Jordy]

Every time you walk into a grocery.

[Sager]

Store, who controls all grocery stores? Okay, so it's like, you know, it's a little different. And look, I mean, again, to their point, like, Sam and them don't do themselves no favors. Like when he's like, I can't imagine raising a baby without Chatgpt. Look, maybe just me, I'm like, whoa, man, I don't know. Again, again, it's just one of those where, look, they sold domination of our lives, our tech, our. Not only in terms of our digital lives, but saying that they were going to take away our physical ability to work education. They said we're going to take away all knowledge and we're going to feed it back to you. So I'm still not ready.

[Jordy]

You're extrapolating. You're extrapolating.

[Sager]

He said all knowledge will be AI.

[John]

But you're sort of piecing together like three different statements, which is fine.

[Sager]

Yeah.

[John]

Because that's how people perceive the tech industry.

[Jordy]

All Reddit, all Reddit will be AI. Be one human on Reddit, just running around.

[Sager]

That's the, that they say, guys, they're like, you don't need to work anymore. What's this, Dario? I mean, you guys are acting like this is three years ago. I'm talking about like three months ago. You know, all the comments I just made, I think are literally all within the last month. So the, they're continuing to feed the narrative and I think people believe them. And I Think that's the danger?

[Jordy]

Well, fear really sells to the capital markets. Like if you're somebody that has capital and somebody tells you that all jobs are going to go away or huge half of all knowledge work, what do you want to do with your money? You want to give it to the guy who's going to take away the jobs. Right. And so I think that is the challenge is these people are having to go around and give the optimistic vision one hour and then the next hour do the fear based version of the story. And then the next hour do the optimistic and. But then the content just gets shared everywhere. Right. So it's like then everybody sees it and they're like, wait, I don't really know what to believe at this point.

[Sager]

Yeah, I mean last time I was on the show, John, I have stolen your line completely. Credit card. I thought it was the best comp that I've heard is you, you were like, I think this will be like the credit card. We just made transactions more frictionless. It created more wealth, people built on top of it. And in general people's lives were like mostly better. And it didn't, you know, like horribly change anything, but it definitely was very valuable. I love that comparison. That's kind of the modal one that I'm working with right now.

[John]

Leaks into all the different cracks. And I mean there was data yesterday from our sponsor ramp that 55% of businesses are, they don't pay for AI and that's like. And it's slowing down. It's like flatlining too. So it's sort of like a bombshell. Like, okay, like there's a lot of businesses out there that are just like, I'm good. And it's like they are good because they're using other products that probably have enough AI in them.

[Jordy]

And so if they're on, they're indirectly buying AI because they hired a creative agency to make a logo and the creative agency uses AI or whatever or.

[Sager]

There'S, you know, their back end finance and all this. I totally agree with you guys. But that also doesn't justify the valuations. And that also doesn't.

[John]

It might actually. It might justify the valuations. I think it doesn't, it doesn't, it doesn't justify the panic and the fear and it's going to kill everyone. It's like, it's like if we're talking about the credit card, it is like much more incremental. But of course there are other sides because we have the social media angle.

[Sager]

I agree that that's where it'll end up. I'm mostly with, with you. But I can't help but take them all a little bit seriously. I mean, these are the wealthiest, most powerful people in the world. So, like when the wealthiest guy in the world says, I don't need to work anymore, and especially if you're walking out there and you feel it very out of control of your own life and you hear that, you hear about the data center stuff that I've talked about here, you have a lot of fear about your own children and their addiction. You're watching their behavior. I mean, do you guys ever see your kids as, you know, like, my daughter is seven months old, man, and she's crawling for the phone like it's, it's, it starts so early, like already. I'm like, oh my God, I can't even use this thing in front of her. That makes me concerned. Does it make me a doomer? No, but it does make me feel like it makes me immediately calculate some of the downsides of the use of technology.

[John]

Letting her go for that phone might be what gets her into the 4% of gamblers that wind up making money. You gotta start. You gotta start.

[Sager]

You forgot about that.

[Jordy]

You're right. Right.

[John]

Is there, is there an optimistic story being told by the cannabis industry about weed anymore? I feel like that one is just like, people are just like, ah, okay. It's.

[Sager]

Well, they're still faking medical benefits, which is completely bullshit. But yeah, I mean, they're, they're still talking about supposed medical benefits. There's a huge new study that just came out in jama. Almost all of the so called medical benefits. Total bs. It's all fake. People just want to get high. It is what it is. Oh, you know, oh, somebody, you know, they're always talking about people with cancer, seizures, epilepsy, though the anxiety one is the fakest one out of all of them. But yeah, I mean, they're always, you know, oh, it helps me sleep. And it's like, well, it knocks you out. That doesn't mean it helps you sleep, but it's like, does alcohol help you sleep? No, it actually makes you sleep, you know, 10 times worse. You may not be, you know, awake, but that doesn't mean that you're asleep.

[Jordy]

You'll be happy to know we were looking, we were looking at a new studio space here in la and it checked every single box. There was a great space and. But right across from it, you could see out the window like a pot store. And I was like, no, way. There's no. I just don't want to look at the flashing lights. And the.

[John]

There was another. There was another studio that we looked at where it was like the Royal Flush of gambling sin companies. It was like. But the previous three companies had been like an adult content tent, a weed company, and then also a gambling company. We were like, that is just a cursed building.

[Jordy]

It was like an amazing, amazing, amazing building. We sold our broker.

[John]

We're like, sorry, it's just like, it has bad vibes. Like, we can't possibly be there.

[Sager]

I totally agree. Oh, John, we should do debanking on the corner thing. Yeah, tell me. Yeah, this is so interesting, guys. So you guys know about the whole debanking, you know, Andreessen, Zuckerberg, Everybody Goes.

[John]

Operational choke point 2.0 operation.

[Sager]

So the Treasury. The Treasury Department takes this seriously, and they conducted a study and they just put out their report two days ago from the Office of the Comptroller. And I was reading it this morning, and it's like, oh, they've unfairly targeted gun companies. I was like, okay, you know, that's bad. They've untargeted. Unfairly targeted oil and gas. I'm like, oh, that's esg. We hate that. They're like, the banks have untouchably, unfairly targeted the adult industry. And I was like, whoa, whoa. I was like, hold on a second, second. Wait, What?

[John]

What was that?

[Sager]

So they are actually pressuring. The Trump administration right now is pressuring, via this report, banks to do business with porn companies. Now, why do the banks not want to do business with porn companies? It's not just vice clauses. It's because they're afraid of the internal standards that these companies have been doing now for decades, where they're often in violation of the law whenever it comes to children, exploitation, all of this. And they don't want anything to do with that. That's why only fans, you know, had that problem at one point. So our great. The debanking conversation is now basically being weaponized, you know, by the government to potentially force the largest financial institutions to do business with major porn companies.

[John]

So this is where Jamie diamond needs to.

[Jordy]

The whole.

[John]

He's like, I've had enough. If you twist my arm on this one.

[Sager]

House, come on. The idea. He doesn't want to do business with porn companies because he has a heart like, get out of here. Okay? Like, they're desperate to take their money. They just don't want that.

[John]

I don't know about that. It's not that big of an industry. JP Morgan has, like, trillions.

[Sager]

Come on. What was it, 2.2 billion from consumers in the US just last year. It's not nothing.

[Jordy]

What is that?

[John]

Yeah, what is that?

[Sager]

That's only.

[John]

That's only fans you're talking to AI.

[Jordy]

What do you. We had a guy. We had a guy on the show earlier who brokers big land deals, ranches. What do you think the odds are that Breaking Points a decade from now is just based on, like, a big ranch property in Montana? And you're just yelling into the microphone.

[Sager]

It's possible, man. You know, regenerative farming, just fully off the grid. Except for Starlink. Right. I'll need Starlink to be able to zoom in, to be able to do shows like this, but it wouldn't be a bad idea.

[Jordy]

I put it at 55%.

[Sager]

You want to make a market? Should we make a market on Cali? Yeah, I'll make it a market. What. What was Tarik's exact quote, by the way? Taric, if you're listening, I've been trying to get in touch with you, man. Please, come on my show. But Tarik, what. What exactly did he say? He's like, our goal is to be able to create.

[Jordy]

Going on Breaking Points is like Sam going on Tucker.

[Matt Levine]

Yeah.

[Sager]

Hey, that was good for Sam, wasn't it? Because it showed that he was open to difficult conversations.

[John]

So no PR person in Silicon Valley believes that, but I actually do agree with you. I do think it was good.

[Sager]

No, I mean, look, if you're going to live in a world where you're going to, you know, make all of these claims, and you're going to have a high level of distrust already from the democratic populace, then you're going to have to go out there and defend your business. I mean, all of the big tech companies have been doing that, or had done that for a decade prior. I know that they all now think that that was bad. I totally disagree. I think going on podcasts where you're just fluffing your product all the time makes you look even more disingenuous and you should come face hard questions. But, yeah, I mean, he said we're gonna make a market between every difference of opinion and. Yeah. So, look, Mr. Tarek, I would love to speak with you about why you think that's a good idea and vision for our future and some of the protections that you may have in place. John, did you read the prediction thing I sent you about the Russian map? I love this story. This just came out, so I actually used to be an intern there. It's called isw, the Institute for the Study of War here in Washington. What they do is they create battle maps. And so there was a poly market market for like 1.3 trillion on this particular map that was trading on this map. And there was like a 33, 000 payout if Russia seized a particular town in Ukraine on this date. And the story that's now come out is that the guy who worked at the think tank altered the map specifically for that date so that the market would resolve in that 33,000% payout for that specific date of bet. And now the think tank has actually come out and said that they fired that person and that he violated their internal principles by going in and editing this map beforehand. And it was a sizable enough market. We're not talking about one of these $5,000 ones. We're talking about 1.3 million. So I just want to highlight that just in terms of how these prediction markets and all that should work. I've been reliably told no realistically large market even trades on anything degenerate. I can't think of anything more degenerate than betting on the fate of individual Ukrainian towns in a war.

[Jordy]

Well, the really. The really dark.

[John]

What if you just.

[Jordy]

Really dark.

[John]

What if you just load. What if you just load a billion dollars into a world peace contract.

[Matt Levine]

Oh.

[John]

And then everyone has an incentive to bring world peace around.

[Sager]

You're gonna need a hell of a lot more than 1 billion. If you're gonna shame me about 2.2 billion, you're gonna need a shitload more than 1 billion.

[John]

Yeah, maybe trillion dollars.

[Jordy]

But I do believe in the next, call it one to two years, we'll see even darker markets specifically around individual people. Like, John was joking offline yesterday. He's like, jordy, I'm going to load a market that Jordy's going to have a. I'm going to put a million dollars into a market that Jordy's going to have an amazing year next year.

[John]

Because I'm betting on you.

[Jordy]

He's going to bet on me because he's my friend. He wants to bet on me. And what happens? Somebody says, well, if I can make Jordy have a bad year, I can make a lot of money. So there you go.

[Sager]

Anyways, guys, the one I'm worried about the most is elections, because, you know, now we have state, not. Not just the national level. I don't think the national level will be as corruptible. But what I worry about the most is Individual counties and these markets already exist. So I mean, come on, like if you guys know anything about our election system, an individual clerk in an individual county, the ability to swing, let's say a mayor's race. And people on Polymark already do these like parlay esque style debate, you know, bets where they'll be like all X counties in the state will go for Trump or something just because they have a little bit better odds. These are massively open to manipulation. County level races, mayoral at the state representative level. There is just way too much ability. Like, like the one I just gave you all is the classic example of somebody being able to manipulate just because it was based on a think tank map and they couldn't, they never thought, oh, some guy making probably 25 grand a year who makes the map isn't susceptible to a 1.3 million dollar market. But I mean in a lot of cases, our election infrastructure, it relies on volunteers. You know, it's not even people who are paid. So I'm very worried about stuff like that or individual primaries where there's not as much scrutiny. They the, yeah, I mean already we've seen the, there was the Google Insider. Did you guys see that one?

[John]

I couldn't get to the bottom of that because what was weird was that that was, that was published by one of the, one of the, Yeah, I.

[Jordy]

Was like why are they, why are they admitting to this? And it's like, no they're not. They're bragging.

[John]

So and so I, I, I, I don't know. I don't know that I should even believe that it's real because it's so counterintuitive that you would like kind of self snitch in that way. It was very, very bizarre and I didn't see it like truly fact check. So I just kind of wrote it off as like, who knows, just chaos on the timeline. Right. I don't know. Anyway, thank you so much for coming on the show, Jordy. Anything else? We could do this all day, but we'll have to have you back a couple weeks.

[Jordy]

What are you doing anything fun this weekend? Let's lighten it up.

[Sager]

Not this way. We're going shopping. Final. Final Christmas. That's all it is.

[John]

Merry Christmas. Let's play some Christmas music. Thank you so much for coming.

[Sager]

Thank you guys for having me. Love you guys.

[John]

I love you guys.

[Jordy]

Love you, dude.

[John]

I'll see you. Bye. Let me tell you about getbezel.com. what a great way to go shopping for a luxury watch. You can shop over 26,000 luxury watches fully authenticated in house by Bezel's team of experts. You can head over to getbezel.com you can also get the your loved one a billboard for Christmas.com out of home advertising made easy and measurable. Plan, buy and measure out of home with precision. You know, you can also put an eight sleep under the Christmas tree. Eight sleep dot com.

[Jordy]

How'd you do last night?

[John]

Without exception. Fall asleep faster. Sleep deeper, wake up energy.

[Jordy]

I better have one.

[John]

Eight sleep last night. I got a 90. I got a 90. Lay that sound.

[Sager]

If you're.

[Jordy]

You're cooking the books. You're cooking the books. You're cooking the books. You're putting a bunch of weights. You're putting a bunch of weights in the bed when you leave in the morning.

[John]

No, no, no, no, no, no. Tyler loaded $10 into no John will have a good sleep. And so I had to do it to win the $10.

[Jordy]

Hope everyone enjoyed the conversation with Sager. I think it's. It's critically important that TVPN not just be an echo chamber of capitalism, libertarianism. And, you know, I think it's important.

[John]

Tyler, what do you think about echo chamber?

[Jordy]

It's important to have an open dialogue.

[John]

You like an echo chamber?

[Tyler]

I love echo chambers.

[John]

I love echo chambers.

[Matt Levine]

I was gonna say.

[Tyler]

I mean, I was born in that. I feel like I disagree with every single one of his points.

[John]

Okay.

[Tyler]

Like, elections, like, that's like, there's so much value in the information of, like, who people think is gonna win.

[John]

Yes.

[Tyler]

But if you're a local business owner, there's a local election. Like, there's. And maybe one of the candidates says, oh, we're going to do this tax. We're going to start change the regulation around building certain types of buildings. There's so much value in knowing that.

[John]

Yes, yes. Seeing that six months in advance, even one month in advance, that is valuable.

[Tyler]

If he's saying that someone has the incentive to actually mess with the election, I mean, that's like a felony. So after one person, does he think that more people at the ISW are gonna mess with the map?

[John]

Yeah, I don't know.

[Tyler]

Yeah, it's like one.

[Jordy]

Okay.

[Tyler]

Yeah. The first time it happens, it's bad.

[John]

It's like, yeah, if there's, if there's, if there's economic incentives to meddle in local elections, like, yeah, at the end of the day, there are laws. I don't know.

[Matt Levine]

I think.

[John]

Yeah, I would be much more worried about a normalized situation of the Opposite where, where the insider trading not changing the underlying outcome of reality based on a big market, but the opposite. Like you know how the market will resolve. So you size up the market as much as possible. But we're clearly going to be grappling with both of these issues going forward.

[Jordy]

Sean in the chat says, lock me in the echo chamber, never let me out.

[John]

That's amazing. Well, speaking of Sean, we got a post from Sean Frank here. He said we are in the Shop ads beta and it has been great. Eric Seufert has a story here. He says Shopify is expanding shopping with a new ad format that allows merchants to recommend products on other merchants websites. So you're already in the checkout flow. You're buying a Ridge Wallet and you see. Would you like some Tokovas to go with that Ridge Wallet? That's basically what's happening. Very cool. David Stickland says, tell me why you would want to encourage someone to click away from Ridge to another website after you paid to get them there. And I think the answer is that it's basically like an after sale post purchase. You have someone and you can cross sell. So you're not necessarily surfacing an ad that will take someone away from your checkout at the most value valuable point.

[Jordy]

It's that, yeah, the shop, the way I use the Shop app is for like tracking an order, right?

[John]

Yeah.

[Jordy]

And so if I'm in there and I bought something and then I get served something else that says like, hey, you bought this, you might like that. It's a, it's a pretty, it's, it's just a valuable ad placement. I think it's pretty additive. Well, speaking of advertising, John wander.com Here's.

[John]

An ad for wander.com Book a wander with inspiring reviews, Dreamy Bad stuff, Top tier cleaning and 247 concierge services.

[Jordy]

Quinn had a post here. I've been seeing this lately. Meta has a special ad unit that they reserve for themselves. It's like a personal ad.

[John]

Yes.

[Jordy]

For the Meta Ray Ban glasses. I've gotten this actually multiple times this week. It's a fantastic placement. And what's notable is you actually have to hit the X to close it out. So if you just see it and scroll past it and you close the app and join again, it'll just be back there. So really one of the greatest ad units of all time.

[John]

Fantastic ad unit.

[Jordy]

Well, well done to the Meta team. And yeah, sometimes you got to save the best for the family.

[John]

I mean, I would advise this to anyone who's starting A sunglass business.

[Jordy]

Get a few billion daus on a.

[John]

Major social app so that you have effectively limited administration.

[Jordy]

Take it public.

[John]

Yeah. Have a bunch of cash from that.

[Jordy]

And then invest that into the sunglasses.

[Matt Levine]

Yep.

[John]

I mean, these. With this ad unit like these, the glasses better move. I better see some big numbers.

[Jordy]

Yeah.

[John]

Because everyone should be aware of these at this point. But, you know, it is hard.

[Jordy]

It is a good gift. Right. It's the kind of thing a lot of people wouldn't necessarily buy for themselves, but they'll, you know, get some enjoyment out of it if. If it's under. If it's in a stocking Flo over at Lindy is highlighting Max Meyer's post. Asked about by the Wall street journal whether spending 500 million renovating the 5th Ave. Tiffany flagship, Bernard Arnault replied, you cannot dream when you talk numbers. When you create desires, profits are a consequence.

[John]

And I just need to be creating desire.

[Jordy]

That is one of the hardest lines.

[John]

Unironically, the most profound business insight I've read this year makes sense that it would come from the biggest luxury company and industry that only exists because of its ability to create desire. Arguably the clearest distillation of the function of marketing. I have no idea if that can be applied to tech at all. I agree with With Flow that it is a profound business insight, but I think it should probably be used sparingly because I can imagine so many scenarios where an enterprise software CEO would go off and spend $500 million renovating an office and realize that it did not really move the needle for their business because what they are selling is not a Birkin bag.

[Jordy]

Yeah. In other news, Lululemon stock, hashtag Lulu, surges over 12% after the company's CEO says he's resigning. This is not what you. Not as a manager, as an executive, a public company. You never want the stock to rip when you resign. I'm wondering if we get Chip back in the driver's seat. He's been.

[John]

Oh yeah, he was kind of an.

[Jordy]

Activist, kind of a proxy fight. I would be interested to see what he would be able to pull off back in.

[John]

Speaking of other stock pops, this is insane.

[Matt Levine]

Google.

[John]

Google is about to turn a $900 million investment in SpaceX into $111 billion if the $1.5 trillion valuation materializes. There are some crazy big tech like circular deals, I'm pretty sure. Didn't Jeff Bezos invest in Google? If he held, then he gets SpaceX stock as well and it all goes back to Bezos.

[Jordy]

Jefe boss, the final boss.

[John]

The jefe boss.

[Jordy]

The final word. Determinism. Zeke in the chat is going Tyler Potter and the echo chamber of secrets. We should actually build an echo chamber around your desk, a small echo chamber, just so that your own ideas and thoughts are just constantly reflecting back on you.

[John]

It's very comforting to see these AI input names sell off, says Bucho Capital Bloke very unbubly confirms we are very much in a more rational, discerning next phase of the AI buildout and adoption. I agree with that. It does feel like there was a world where going into the end of the year, we were talking about valuation as a function of tokens or, you know, ipoing any company that could just throw a dot AI or, or, you know, throw it, throw an AI name on their company and we, we, we backed backwards from that abyss. Fortunately, I think so I've been happy.

[Jordy]

Well, yeah, you didn't have to havea.AI domain. You just had to say, we're going to do something with AI at some point. You got a pretty big premium.

[John]

Chipotle rang the bell at the New York Stock Exchange, but they didn't hit the gong on TVPN yet.

[Jordy]

4,000 restaurants.

[John]

4,000 restaurants. 4 thousand restaurants. And we'll see. They're under intense pressure from Sweetgreen. Sweetgreen's putting 400 grams of protein in every bowl now. Something like that. Can Chipotle turn it around? Win Jordy Hayes back as a daily customer?

[Jordy]

I would love to see that.

[John]

We'll find out. Maybe 2026 is the year. We'd love to see it. I'm still Chipotle.

[Jordy]

I still love that in tech you have people that are like, well, like, I can predict out pretty well the next one to two years, but after 10 years, the way that we're accelerating, it's very hard to predict Chipotle's. Like, in 10 years, we will add 300 new Chipotle locations in these key metros. Samuel?

[John]

Yeah. Things are more certain when you've been running business for a long time, I suppose. Well, in other financial news, Wealthfront raises $485 million in IPO, valuing it at 2.6 billion. Let's go. Let's go. Oh, my God. If the SpaceX IPO ticker is SCX, that will be crazy. It probably will. SPACs would be better, though. I'm rooting for SPACs.

[Jordy]

There's no way SPACs has terrible. No aura. I'm not saying I advocate for sex, but I think that Elon will do that.

[John]

Can't he just get $X? He likes X. Let's just do that. How about that? Anyway, what else is in the news? Is there anything else we should cover? There's some news around Substack. I guess Substack changed their how much you can read without installing the Substack app. They're really pushing the Substack app. Gurgly Orzoz is. Orzoz is upset about this. He says my paid subscribers cannot even read my email without installing the Substack app. Eric Newcomer says wtf Bullish for Substack if they get everyone to install their app, obviously. D like yeah. And Max Child is there saying I was wondering if this was a growth hack. And Derek Newcomer says for Substack. Yeah, it's for their app would be very interesting. I don't know if this is. You should subscribe tvpn.com you should drop your email. You get a free newsletter. We don't have a paid version. I don't know if this affects us. We'll have to figure it out.

[Jordy]

We'll have to talk to Brent us. The newsletter is pretty long and again.

[John]

And so it's not sending the full thing in the, in the email you.

[Jordy]

Continue reading in the app. Which is just, it's, it's, it is this, this kind of decision. I like Substack as a business but this decision is good for Substack and it's not good for the reader and it's not good for the person sending.

[Matt Levine]

Right.

[Jordy]

I don't. They could argue that it'll have a long term benefit because people might be more engaged in the app. They might be more likely. But again, when you look at the data, at least for us, like 95% of readers are reading it in their email. They're not reading in the Substack app yet. Substack wants to change that, but I can see why people would be frustrated here. And this is why the traditional email platforms have pushed back on Substack and said like look, they want to become a social network. They want to, they want to build a garden. They're building a garden. Then they're going to put some walls up. Right now it looks like this beautiful garden. You can just come in and I.

[John]

Mean if they get the app cooking, they're going to put ads in that thing and they're going to print. It's going to be a great business. On the flip side, we are big fans of being in the big social media feeds. Like we have not like we love X, Love Instagram, love YouTube. These are algorithms, platforms. If there were to, if Substack were to become an algorithmic, you know, long post app, basically like Twitter with more words, I think we would be.

[Jordy]

The long trough.

[John]

Yeah, the long trough. We would be okay with that. I mean, we would certainly be the first ones because we have no paid subscribers.

[Jordy]

Yeah. But the whole premise of Substack and you know, you look back at every, all the marketing materials is like, own your audience, have a direct relationship with your reader, don't be disintermediated by the platforms. And so to come out and make a product decision like this and you see where this goes, it feels at odds with everything that the company is built on.

[Matt Levine]

Yeah, yeah.

[John]

I mean, at the end of the day, for me, it's about like, can our business model flourish in the long form written text of and whether it's delivered. There are a certain amount of people that read our newsletter in their email. If we can get them all to read in the app, it's kind of six in one and half a dozen of another. To me, it is sort of neutral. And the bull case is that by going into the app, our stuff can go more viral and we wind up getting more views on average per post. But you live and die by the content, just like we do on YouTube, just like we do on Instagram, just like we do on X, just like we do anywhere else. It would be a unique thing. And every time that a feed switches from subscriber enforced to algo, creators always hate it. This is what happened with YouTube. YouTube, the default homepage used to just be your subscriptions. And then people realized that you could just bomb the subscriptions feed with a million videos and you'd get tons of impressions. And eventually they went algorithm feed and they show you a single video from Mr. Beast or whoever you're subscribed to. Maybe you're subscribed, maybe you're not. Maybe they just know that you'll like it. And you could see that same thing happening with newsletters. You open up the Substack app and it says, hey, look, today TVPN put out a fantastic newsletter. Here you go. Other days it wasn't good, so we're not showing it to you. And that's weird because that's not the substack model, that's not the email model. I think people would revolt. But there is a world where being in that feed, being able to go viral within the Substack app is actually a net positive. It's sort of like a Darwinian survival scenario. Like, you really have to. You have to thrive, you have to fight it out. You have to earn every view, earn every impression. But we'll see. We will assess.

[Jordy]

Yeah, I mean, it is notable. I don't. I don't think Chris or Hamish have responded to any of the criticism. Maybe they're responding on substack. Maybe over there.

[Matt Levine]

Maybe.

[John]

Maybe we should have it on the show, debate it more.

[Matt Levine]

I don't know.

[John]

It's interesting. Anyway, that concludes our show for the day. Have a great weekend. Merry Christmas. Thank you for listening. Leave us five stars and Apple podcasts and Spotify and we will see you on Monday.

[Jordy]

And next week is Christmas week. You thought this week was Christmas week.

[John]

We're just getting started.

[Jordy]

We're just getting started.

[John]

We're just getting started.

[Jordy]

We're just getting started. You're not going to be able to see us. There's going to be presents. We might be dressed up.

[Matt Levine]

Yes.

[Jordy]

We might be interviewing public company CEOs while dressed up to wait and see. We hope you have an incredible weekend. Thank you for being with us this week. We'll see you soon.

[John]

Goodbye.

[Jordy]

Love you.