Paramount Wins Warner Bros. Bid, Anthropic vs. Pentagon, and AI Doomsday Memo

Summary

Kara Swisher and Scott Galloway open by revisiting Scott’s “Resist and Unsubscribe” campaign—its momentum, the challenge of sustaining it beyond February, and Kara’s advice to resource it properly. They announce a Pivot live show in Minneapolis on March 8 at the Pantages Theater, with proceeds benefiting a local immigration charity, framing the event as a way to turn online outrage into offline civic action.

The episode then moves through politics and business news: their take on President Trump’s record-length State of the Union (heavy on performance, light on substance), followed by breaking media-industry consolidation news. Kara is joined by Puck’s Bill Cohan to unpack Paramount outbidding Netflix for Warner Bros. Discovery, why the price ballooned, what it means for CNN/CBS, the role of Larry Ellison’s capital, and the regulatory and political dynamics surrounding the deal.

Finally, Kara and Scott discuss NVIDIA’s blowout earnings and the broader market’s anxiety about AI-driven disruption—sparked by a widely shared “left-tail risk” memo envisioning white-collar layoffs and a recessionary feedback loop. They connect those fears to tremors in private credit (including Blue Owl) and debate whether AI will concentrate value in a few winners or become a commodity whose biggest benefits accrue to society. They close with Scott’s investing-focused prediction around oversold private-credit/alternative-asset managers and a lighter prompt for listeners about Jeff Bezos and Lauren Sánchez’s Met Gala outfits.

Bookmarks

00:40:33 — AI disruption: going upstream: Scott frames the key question for workers and investors as whether AI lets you move “upstream” into higher-value work or whether it replaces what you do with nowhere to go. He illustrates with his mother’s career: word processing eliminated the secretarial pool she managed, but she transitioned into an executive assistant role because of EQ, reliability, and writing skills. He contrasts jobs like truck driving, where autonomous tech could be a direct substitute, with accounting, where rote work may shrink but more accountants exist because they shift into tax, wealth, and estate planning.
00:41:59 — AI replacing routine legal review: Scott says he used to send nearly every contract—advertising agreements and employment contracts—to lawyers, paying thousands for an associate to review them. Now, he tells his chief growth officer to use AI to review contracts and handle it internally. At the same time, he says he is spending much more on a highly skilled lawyer, Lucy Lee, for complex, strategic work spanning immigration, tax strategies, and estate planning—work he describes as complicated and worth high hourly rates.
00:44:01 — AI hasn’t replaced writing or podcast production: Kara and Scott say AI helps with research, improving drafts, and fact-checking, but they do not find it capable of doing the actual writing at the level they need—Kara jokes that making AI writing work is like trying to make “Fetch” happen. Kara adds that she also expected AI might generate scripts or edit audio for their business, but it hasn’t; instead, they are hiring more people. They do note that using AI may let them produce more output—like launching two podcasts instead of one—by helping generate more datasets to discuss.
00:46:01 — Markets: don’t just catastrophize: Scott cites Andrew Ross Sorkin and Josh Brown on a mindset that changed how he processes markets: “the optimists have beaten the shit out of the pessimists.” He argues that catastrophizing can sound smarter and more compelling—complete with charts about a “zombie apocalypse” or doom loop—but that past economic transitions, like shifts from agriculture to manufacturing to services, were job creators rather than doom loops. He urges asking “what could go right” in the AI scenario.
00:47:25 — AI could lower barriers to starting businesses: Scott reads a passage arguing that the same AI scenario could involve massive job creation because starting a business, creating a product, or providing a service becomes “turnkey” with an agent. The quote claims barriers and costs drop—marketing costs because an agent finds you, logistics and transaction costs near zero—while productivity rises and cost of living falls, creating more margin and opportunities. Scott adds that when he graduated business school in 1992, only two people he knew started a business, whereas now he suspects a third of Stern graduates will try to start some kind of AI company; Kara agrees and says the same is true in media.
00:48:57 — Anthropic vs Pentagon demands; safety tradeoffs: Kara reports that Anthropic rejected the Pentagon’s demand for “unfettered access” to Claude and refused to roll back safeguards despite Defense Secretary Pete Hegseth threatening to pull a $200 million contract; Dario Amodei wrote that threats do not change their position and the company cannot agree in good conscience. Kara then notes Anthropic is also changing its stance on safety: it says it will not stop training potentially dangerous models if a competitor releases something comparable or more advanced, attributing the decision to the pace of AI progress and lack of federal regulation rather than political pressure.
00:54:25 — LLMs as commodities and value shifting to users: Scott argues AI may resemble industries like jet manufacturing or vaccines—transformative for society, but not necessarily producing a few companies that capture enormous shareholder value. He notes vaccines benefited society while Moderna’s stock is down sharply, and says airlines and aircraft makers have barely broken even despite aviation being a huge breakthrough. He observes that LLMs are rapidly reaching technical parity, citing Jan LeCun’s view that they are commodities, and describes his own experience switching between ChatGPT and Claude because each seems better for brief periods. He suggests AI is “reverse engineering every other LLM,” implying competition may center on UI, services, and margin compression, with ordinary users as big winners.
01:00:01 — Epstein files: institutions lack credibility: Kara says the situation has unfolded as it has because institutions “no longer have any independence or credibility.” Scott responds that the release of materials has led to harmful outcomes—nude photos of underage girls being released, victims being doxxed with names and addresses, and confusing or poorly redacted information about alleged pedophiles. Kara counters that the administration has been caught and is not getting away with it, while Scott insists they are mostly getting away with it because confusion and distraction protect criminals as others are shamed or “voted off the island.”
01:00:31 — Billionaires, Epstein, and populist anger: Scott argues the public links extreme wealth with depravity, noting that if you asked people to name five billionaires, the first might be Elon Musk, and others would likely include Jeff Bezos and Bill Gates, plus the president who calls himself a billionaire—and Scott claims those figures appear in the Epstein files. He says this reinforces a belief that the very rich are “protected by the law but not bound by it,” while everyone else is “bound by the law but not protected by it,” fueling a populist upheaval. He adds that the Department of Justice should serve justice, but says this DOJ does not, and Kara agrees that under current leadership the process becomes prurient even if it’s the only available route.
01:00:59 — Need for proper investigative process: Kara says she wanted to bring on Preet Bharara to explain how document and investigative information should be collected and then properly disseminated to the public, and in what format—because that is what their argument is really about. Scott agrees with her framing that it can become prurient, while Kara reiterates that given the current attorney general, it has become the only way to get information out. They also reference Pam Bondi’s remark about the Dow being at “$50,000,” suggesting it will haunt her credibility.

Recommendations

Books

Films / Series

The Apprentice — Referenced as a metaphor for Trump’s State of the Union feeling like a show “winding down.”
The Mary Tyler Moore Show (Rhoda) — Mentioned in the context of their Minneapolis trip and local pop-culture nostalgia.

Articles / Links

Topic Timeline

[00:00] — Sponsor messages (Attio, CoreWeave) and show intro
[00:01] — Banter and setup; “Resist and Unsubscribe” momentum check
[00:05] — Announcement: Pivot live show in Minneapolis (March 8) with charity donation
[00:08] — Scott unsubscribes from Amazon’s One Medical; consumer “unsubscribe” theme
[00:08] — Reaction to Trump’s State of the Union; Democrats’ response and “production value” critique
[00:14] — Breaking news: Paramount wins Warner Bros. Discovery bidding war; Netflix walks away
[00:15] — Bill Cohan on deal mechanics, price inflation, Zaslav’s auction strategy, and Ellison’s motivations
[00:23] — Politics/regulation angle: DOJ/EU review, FCC leverage, and implications for CNN/CBS coverage
[00:33] — NVIDIA earnings deep dive; China guidance and valuation versus growth
[00:37] — Viral AI “doom loop” memo, private credit fears, and Blue Owl market ripple effects
[00:48] — Pentagon vs Anthropic: Claude access dispute, safety posture shifts, and government pressure on tech
[00:55] — Missing Epstein-file materials and broader fallout; debate over disclosure vs prosecutions
[01:02] — Prediction: Scott’s thesis on undervaluation in private credit/alt managers; listener prompt and SXSW plugs

Episode Info

Podcast: Pivot
Author: New York Magazine
Category: News / News Commentary / Tech News / Technology
Published: 2026-02-27
Duration: 1h10m
Episode UUID: 609b4c50-7a4d-461c-8d9d-bde8c83d112e

Podcast Info

Name: Pivot
Type: episodic
Site: http://nymag.com/pivot
UUID: 6fd43fe0-9a3f-0133-2dbd-6dc413d6d41d

Transcript

[00:00:00] Support for today’s show comes from Atio, the AI CRM. If you’ve ever used a CRM and thought why does this feel like a second job, Atio is worth a look.

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[00:00:26] If you need an intelligent CRM that scales and grows with your business from day one, that’s Atio.

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[00:00:43] Support for the show comes from CoreWeave. Everywhere you look, AI is expanding what we thought was possible.

[00:00:49] And at the center of it all is CoreWeave. Medical research and diagnosis, education, complex visual effects for movies, science and technology breakthroughs.

[00:00:57] CoreWeave powers AI pioneers around the world with purpose-built tech, building what’s never been built before. CoreWeave is the essential cloud for AI, ready for anything, ready for AI.

[00:01:06] To learn more about how CoreWeave powers the world’s best AI, go to coreweave.com slash ready for anything.

[00:01:12] This is not the future we were promised. Like, how about that for a tagline for the show?

[00:01:22] From the BBC, this is The Interface, the show that explores how tech is rewiring your week and your world.

[00:01:29] This isn’t about quarterly earnings or about tech reviews.

[00:01:33] It’s about what technology is actually doing to your work and your politics, your everyday life.

[00:01:39] And all the bizarre ways people are using the internet.

[00:01:42] Listen on bbc.com or wherever you get your podcasts.

[00:01:47] I use it when I get like an ear, every time I get an ear infection or something like that or clean out my ears or a cold or a flu.

[00:01:54] That’s a little too much information. Tell us about the ear cleaning.

[00:02:00] Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I’m Kara Swisher.

[00:02:05] And I’m Scott Galloway.

[00:02:06] Resist and unsubscribe. Why don’t you give us an update because February is coming to an end.

[00:02:10] You’ve had over 20 million views across social media, over 1.5 million site visits.

[00:02:14] Obviously, it has a lot of momentum. People mention it to me all the time.

[00:02:17] Your website touts $242 million loss in market cap.

[00:02:22] Talk a little bit about how it’s gone because we have something to announce.

[00:02:26] But first, give me a little update and then you can do the big announcement.

[00:02:29] The honest truth is I’m struggling because it’s taken a lot of time and a lot of effort.

[00:02:33] And it feels as if the momentum is actually accumulative and building.

[00:02:37] And I’ve had a lot of different kind of smaller resistance programs reach out and say, what are we going to do in March?

[00:02:44] Should March be, should we meta-March where we focus on one company or focus on OpenAI?

[00:02:49] Right. And how do we keep it going?

[00:02:53] Because it does feel like it’s building momentum.

[00:02:56] And to just shut it down at the end of the month feels like a loss of effort and momentum.

[00:03:01] So I’m quite frankly, Kara, and I want your advice.

[00:03:04] I’m trying to figure out what to do with it going into March.

[00:03:07] I think you should hire someone specifically, not part of your team, but really hire someone to really keep it going.

[00:03:13] Someone who wears Birkenstocks, lives in Brooklyn.

[00:03:15] Yes, a lesbian.

[00:03:16] Someone with rich parents, putting them through non-profit.

[00:03:19] Whatever it takes, Scott. Whatever it takes.

[00:03:21] But I think it’s important to have someone.

[00:03:24] Do you drive a Subaru?

[00:03:25] No. That’s what my son does.

[00:03:28] Your son would be great at this.

[00:03:30] What’s Louie doing?

[00:03:31] He’s in San Francisco working for her.

[00:03:32] Oh, perfect.

[00:03:33] No. He is a lesbian.

[00:03:37] Perfect. I don’t know if you’ve heard, but I pay really well.

[00:03:40] You have to put up a lot of dick jokes, but I compensate 50 to 100 percent above market.

[00:03:44] True story. The dick jokes and the compensation.

[00:03:46] I know. Well, I’ll ask him. He does have a job. I will ask him. I will ask him if he wants to help.

[00:03:50] You know who you want is Alex, but he wouldn’t do it.

[00:03:53] Alex is so like, he would engineer the fuck out of this thing.

[00:03:56] He’s in Michigan. He’s taking organic chemistry and computer science and working out and lifting buildings.

[00:04:04] The title that he has for this summer where he’s working his advanced manufacturing product integration engineering intern.

[00:04:12] That rolls right off the tongue.

[00:04:13] I know. I was like, wow.

[00:04:15] Can’t he just say pole dancer?

[00:04:17] Pole dancer. Advanced manufacturing product integration engineering intern. That is what my second son is doing.

[00:04:23] Did I tell you when I was on the college tour with my son, Alec, the first thing, literally the first thing,

[00:04:29] the first impression we got of Michigan was Alex’s fraternity.

[00:04:33] And we were both like, just scared.

[00:04:36] Scared. He’s leaving that for his last year.

[00:04:38] I mean, the floors were sticky.

[00:04:40] Sticky. Yeah.

[00:04:42] I lived in a fraternity and I don’t, I don’t, it like brought back, I’m like, was it this bad?

[00:04:47] Yes. And it smells like beer, old beer.

[00:04:49] Oh yeah. Beer and semen.

[00:04:53] Yeah. I know.

[00:04:54] But yeah, it just.

[00:04:56] Yeah. Yeah. He’s going to live in an apartment for his senior year, but so he’s leaving the frat finally.

[00:05:02] My little boy is on his way.

[00:05:03] Yeah. And the house was clearly built like 200 years ago.

[00:05:06] He looked like Gulliver roaming around.

[00:05:08] Yeah. Yeah, it’s true. You want to go back. I feel like you want to go back for a party.

[00:05:12] Oh, I’m in.

[00:05:13] Okay. All right.

[00:05:14] I’m definitely that pathetic guy that shows up at the fraternity party when he’s invited.

[00:05:17] Yes. No, that’s so sad.

[00:05:19] There was a Seth Rogen movie like that.

[00:05:21] Anyway, listen, we are going back to the Midwest.

[00:05:24] Let me just say, this is not ending.

[00:05:26] I think you should hire someone.

[00:05:27] I think you should keep going, but we are going back to the Midwest.

[00:05:30] We’re not going to Ann Arbor, but Scott and I are coming to Minneapolis.

[00:05:33] We talked about it on the show and then we made it so along with our great team here.

[00:05:37] And you can see us live.

[00:05:39] We’re going to celebrate, resist and unsubscribe and keep the momentum going.

[00:05:43] We’re going to do a live show at the Pantages Theater on Sunday, March 8th.

[00:05:49] We will be there.

[00:05:50] A week from Sunday.

[00:05:51] Minneapolis, here we come.

[00:05:53] I want to meet Rhoda from Mary Tyler Moore.

[00:05:56] That’s why I’m going.

[00:05:58] And you know what?

[00:05:59] I hope she’s wearing a raspberry beret.

[00:06:01] That’s right.

[00:06:02] Get it? Get it, Kara?

[00:06:04] Little local humor there.

[00:06:07] Talk about the tickets.

[00:06:08] They’re not available yet, right?

[00:06:10] They go on sale.

[00:06:11] I think by the time that’s there, as they’re on sale, we’re going to be donating all proceeds

[00:06:15] to the Minneapolis Immigration Center, I believe it’s called.

[00:06:19] But we want to do something.

[00:06:21] Well, A, I said this.

[00:06:22] You’ve been very supportive and we’ve decided.

[00:06:24] I’ve decided I want my efforts off the fucking keyboard and off mic to be a fraction

[00:06:31] of the virtue signaling and action I claim to want to have.

[00:06:36] And so I pitched you on this idea and we thought, let’s go to Minneapolis.

[00:06:40] We want to bring some economic activity.

[00:06:42] We want to salute them.

[00:06:44] We want to basically say over and over that they fucked with the wrong cowboy when they

[00:06:48] came to Minneapolis.

[00:06:50] It’s going to be a nice event.

[00:06:51] You, of course, are totally well connected.

[00:06:53] We’re going to have a bunch of fun and famous surprise guests.

[00:06:56] Hopefully, yes.

[00:06:57] And we’re going to do a live show and basically nod to the incredible Americans known as Minneapolisans.

[00:07:04] We love the Minneapolisans.

[00:07:06] If you jump straight to the website, you can find a link to buy them when the tickets are available.

[00:07:11] We think they’re going to be available on Friday at resistantunsubscribe.com.

[00:07:16] We’ve got a thousand tickets.

[00:07:17] Again, the money goes straight to charity.

[00:07:20] We’re going to run this show on pivot, too.

[00:07:23] So we’ll talk about some current events, but we’re going to focus on what’s happening here

[00:07:27] with Resist and Unsubscribe because we know we have a lot of fans there and we love Minneapolis.

[00:07:31] We love what the city has done and we want to give back in some way.

[00:07:35] And this is one of the many ways because what happened to you was heinous.

[00:07:40] And at the same time, tech companies have a lot to do with this.

[00:07:43] Like, let’s be clear.

[00:07:45] And so we really what Scott is doing here is giving you guys have resisted and we are going to do our little part.

[00:07:52] And it’s a little part compared to what Minneapolis has done.

[00:07:55] But tech is not the only reason, obviously, but it’s played a part in where we are today.

[00:08:00] And so we’re going to resist and unsubscribe and everyone’s going to unsubscribe.

[00:08:04] Speaking of unsubscribed, Scott unsubscribed from One Medical, which is an Amazon product.

[00:08:09] Did you have the 99 a year or 199 a year?

[00:08:12] 199 a year.

[00:08:13] And were you using it?

[00:08:14] A little bit. Yeah, absolutely.

[00:08:16] And I love the service. I just hadn’t used it in several years.

[00:08:18] Yeah, I use it when I get like an ear infection every time I get an ear infection or something like that or clean out my ears or a cold or a flu.

[00:08:25] That’s a little too much information. Tell us about the ear cleaning.

[00:08:28] Tell us about the ear cleaning.

[00:08:29] I get a lot of wax in my ears.

[00:08:31] And so I’ve unsubscribed our entire family from it.

[00:08:33] Just when you thought care could be less attractive to a heterosexual.

[00:08:37] Anyway, I’m doing just fine, by the way.

[00:08:40] Anyway, we’ve got a lot to get to today, but March 8th, Minneapolis tickets will be on sale soon.

[00:08:47] Please come. We want a full house.

[00:08:49] And we’re super excited to see you.

[00:08:51] We’ve got a lot to get to today, so we’re going to dig in.

[00:08:53] First, President Trump delivered the longest State of the Union ever on Tuesday, one hour and 48 minutes,

[00:08:58] which of course said Americans were telling him we’re winning too much.

[00:09:03] Did you watch, Scott?

[00:09:05] I was honestly late.

[00:09:06] I watched.

[00:09:07] I did what I did with almost all media broadcast on traditional cable.

[00:09:10] And that is I watched it in bits and pieces on TikTok and Reels the next day.

[00:09:15] I felt like for Republicans, I felt as if they were attending their ex-wife’s wedding when you’re still on her health insurance.

[00:09:24] But she controls the military.

[00:09:27] I felt like dear leader in the Duma where they thought I better stand and applaud or I risk execution.

[00:09:33] Yeah, totally.

[00:09:34] So I found it, I don’t know.

[00:09:37] Quite frankly, I thought it was a bit of a nothing burger.

[00:09:39] I agree.

[00:09:40] He didn’t say a hell of a lot.

[00:09:41] I thought he came across as quite robust, to be fair.

[00:09:44] He came across as robust, but he moved very quickly by the end into very deflated.

[00:09:50] If you watch the whole thing, he started off real energetic, and then he got mean.

[00:09:56] He was normal-ish for him, and that’s a very low bar.

[00:10:00] But as the night progressed, he got super mean, calling the Democrats crazy.

[00:10:04] And then that fucking idiot in the back, JD Vance, was like, he looked like such a dope.

[00:10:11] He has no right being to be president.

[00:10:13] Sorry.

[00:10:14] He’s just such a dope.

[00:10:16] The Supreme Court went and stony faced.

[00:10:19] And every time Trump did something like the Democrats are crazy, the Republicans, as you said, jumped up like a bunch of dancing monkeys.

[00:10:26] Essentially, the Supreme Court sat down.

[00:10:28] The military looked straight ahead, which was really interesting.

[00:10:31] And of course, the Democrats sat down, and they wanted the Democrats to have photos of the Democrats not agreeing with immigrants shouldn’t kill American citizens.

[00:10:39] They wanted photos like that.

[00:10:40] I thought it was mendacious.

[00:10:43] And if you look at any of the lie stuff, there’s a lot of it.

[00:10:46] I thought it veered into cruel, as usual.

[00:10:50] And then the worst part was it was dull.

[00:10:53] It was actually dull.

[00:10:54] And that’s, to me, the worst part.

[00:10:56] And of course, the numbers show much less people watch at 28 million versus 36.

[00:11:00] It doesn’t have any staying power.

[00:11:03] And he denied Americans were suffering.

[00:11:05] That’s one of the things which I thought was a mistake.

[00:11:07] I thought from a political standpoint, is it Abby Spanberger?

[00:11:10] Is that her name?

[00:11:11] Yeah, Abigail Spanberger.

[00:11:13] Governor of Virginia.

[00:11:16] I thought her rebuttal was outstanding.

[00:11:19] And I came up with an idea.

[00:11:20] I want to pitch you.

[00:11:21] And I’m serious now.

[00:11:22] And I actually called one of our favorite senators.

[00:11:25] And I said, I have an idea.

[00:11:27] I think they should hire.

[00:11:30] If you think about, essentially, the Democratic response should turn into what the halftime show is to the Super Bowl.

[00:11:37] And that is a halftime show had almost no relevance 40 years ago.

[00:11:41] Now it’s bigger than the Super Bowl.

[00:11:43] I said, hire Jay-Z’s Rock Nation.

[00:11:46] Fill a stadium with 10,000 rabid Democrats.

[00:11:50] Yeah, and then you get all excited.

[00:11:51] Music, cool intro, amazing artists, graphics, visuals, great lighting.

[00:11:58] Because the problem is, the follow-up, whether it’s Marco Rubio responding, the response always comes across as flat because it lacks the sex and the majesty of the rotunda.

[00:12:07] Yeah, it needed to be jazzed up.

[00:12:08] I agree. The lighting wasn’t good.

[00:12:09] Let’s sex it the fuck up.

[00:12:11] Because if you listen to what she said, if you read her response, it was outstanding.

[00:12:17] The lighting was bad.

[00:12:18] The setting was bad.

[00:12:19] They can’t compare.

[00:12:20] It’s like going from the Greek theater to you’re, you know, you’re watching something on laser disk.

[00:12:26] I hated myself for thinking that, but I’m like, the lighting’s bad and the setting’s bad.

[00:12:30] It’s not good. It was too far away and it was too close.

[00:12:33] When I was renovating a house in the Hamptons, let’s bring this back to me.

[00:12:38] I used to go to the 7-Eleven and a bunch of guys would roll up and I’d say, OK, I need some guys to do stunt setting or something like this.

[00:12:47] For my general contract, I would just sit in the passenger seat with a bunch of cash.

[00:12:51] And I had no less than 12 or 15 workers at any time at my house doing shit.

[00:12:56] And at night, I’d roll in and they’d all be in the kitchen with a VCR and a big like four pizzas and like 24.

[00:13:05] It was either Modela’s or something else.

[00:13:07] And they’d have this bad black and white TV and all these guys would just be sitting around watching porn.

[00:13:12] Oh, yeah.

[00:13:13] And I remember thinking, this is odd.

[00:13:16] This is odd.

[00:13:17] This story is odd.

[00:13:18] But go ahead.

[00:13:19] This is odd. No, that’s it. That’s the whole story.

[00:13:21] OK.

[00:13:22] That’s the whole story.

[00:13:23] Don’t do that, Democrats.

[00:13:24] Do not have Modela pizzas and porn.

[00:13:26] This is what a douchebag I was.

[00:13:28] I had a sand beach volleyball court.

[00:13:31] OK.

[00:13:32] You’re losing the resistance on subscribed people.

[00:13:34] I was so optimized for the ladies.

[00:13:36] All right.

[00:13:37] OK.

[00:13:38] Hello.

[00:13:39] You have progressed to a better person and now you’re a lesbian going to Minneapolis.

[00:13:42] I’d like you to wear Birkenstocks, by the way.

[00:13:44] I think that would be great.

[00:13:45] Anyway, it was a nothing burger.

[00:13:48] And he looked mean.

[00:13:50] And I thought he really got and started doing the blah, blah, blah at the end.

[00:13:55] He didn’t say anything.

[00:13:56] He didn’t say anything.

[00:13:57] He teased tax cuts, which I was interested to see.

[00:13:59] OK.

[00:14:00] How are you going to pay for those?

[00:14:01] He didn’t say anything.

[00:14:02] Didn’t talk about AI much.

[00:14:03] He didn’t do anything forward.

[00:14:04] He didn’t really talk about Iran much.

[00:14:07] The show is winding down.

[00:14:09] That’s what I thought.

[00:14:10] It reminded me of the end of The Apprentice.

[00:14:13] It wound down.

[00:14:14] It suddenly wasn’t interesting.

[00:14:15] And that’s what I thought.

[00:14:16] He was mendacious.

[00:14:18] It was mendacious and cruel, but that’s sort of table stakes with him.

[00:14:22] Doll is what I thought.

[00:14:24] Hi, everyone.

[00:14:25] Scott and I just recorded earlier today, but I’m jumping on because a major story just

[00:14:29] broke.

[00:14:30] After a long battle, Paramount has won the Warner Brothers discovery bidding war, at

[00:14:34] least for now.

[00:14:35] Netflix has released a statement saying the deal is, quote, no longer financially attractive.

[00:14:39] It never was.

[00:14:41] And it was, quote, always nice to have at the right price, not a must have at any price.

[00:14:46] Paramount had upped its offer to buy all of the company for $31 a share and added all

[00:14:50] kinds of bells and whistles.

[00:14:52] And Warner determined that offer was superior to Netflix because it was, actually.

[00:14:56] So I’m joined now by Pucks Bill Cohen to break this all down.

[00:15:00] Bill, you and I have been texting about this for a long time.

[00:15:03] You thought it would be quick and Paramount would get away.

[00:15:05] I said this was going to go on, on and on.

[00:15:08] And it has.

[00:15:09] Well, like, since December, I think we’ve been, whenever it sort of broke.

[00:15:13] But talk a little bit about your overarching things and we’ll talk about a few other things.

[00:15:17] Oh, look, I think this, Caro, is the outcome that had to happen.

[00:15:21] You know, whereas Netflix was saying it was nice to have at the right price.

[00:15:26] It was getting to be nosebleed territory.

[00:15:29] Paramount, this is existential.

[00:15:31] I mean, without this, they’re just like an $11 billion company, which once upon a time

[00:15:36] would be nothing to sneeze at, but now it was a pipsqueak in this landscape.

[00:15:40] And so they needed Warner Brothers’ discovery, all of it, to make what the Ellison’s hope.

[00:15:47] You know, if they hadn’t done this, then their original premise for the Paramount deal

[00:15:52] wouldn’t have made much sense and their equity wouldn’t do anything.

[00:15:56] So this was kind of existential for them.

[00:15:59] They had to pay up.

[00:16:00] They had to win.

[00:16:01] And kudos to David Zaslov for running one of the best M&A processes.

[00:16:05] I’ve seen it a long time.

[00:16:06] You know, for people who forget, yesterday I had read that Netflix had to walk away from this

[00:16:12] because it was just ridiculous.

[00:16:14] It was an insane price.

[00:16:15] And Warner was at $10 a s ha rerece n tl y, an d i tp o pp e d t o$ 31.

[00:16:21] Was there $21 of excellence that had been created?

[00:16:25] Not at all, from nothing, right?

[00:16:27] It’s like whipped cream or something.

[00:16:28] Well, it actually got as low as $7 a share.

[00:16:31] Yeah, I remember.

[00:16:32] Right, I do remember.

[00:16:33] And it was expensive at that.

[00:16:35] I was recommending people buy at that price because I thought they would pay down the

[00:16:40] debt and make something of it.

[00:16:41] But you know, ever since September 11th when Paramount first began to hint that it was

[00:16:47] interested in buying this and it offered $19 a s ha re, w e^{'} v e g o n e f ro m$ 7 to $31, and what?

[00:16:58] Not because the companies have performed particularly that much better.

[00:17:03] I mean, they’ve performed fine.

[00:17:05] And Warner Brothers has some hit movies.

[00:17:07] But it’s just because of the scarcity value, the fact that he ran an incredible auction

[00:17:13] process, kept them on both sides on their toes the whole way.

[00:17:17] And especially this last bit of jujitsu was just beautiful to watch.

[00:17:24] Yeah, yeah.

[00:17:25] I said he won the Jeff Bukas Award for turning chicken shit into chicken salad and feeding

[00:17:30] it to a nepo billionaire.

[00:17:32] Jeff Bukas was the last guy at Warner Brothers to make a fortune selling the company to AT&T,

[00:17:40] and now Zazz has done it again.

[00:17:42] And sold again.

[00:17:43] So let’s break it apart a little bit because one of the things that had begun to dawn on

[00:17:46] me, and you and I, I always thought Netflix was the better owner in terms of taking these

[00:17:50] assets and doing something significant with them.

[00:17:53] I felt like the purchase, the paramount is not going to be as good an owner.

[00:17:57] It’s still too small.

[00:17:58] Instead of a leaking, lumbering media ship, it’s a bigger lumbering ship.

[00:18:05] I don’t see how they’re going to, just because they’re slightly larger, be that much better

[00:18:11] unless they are run by someone who’s more experienced.

[00:18:15] Like I think David Ellison should get out of the way.

[00:18:17] And I know they have Jeff Shell, very talented, George Cheeks, many others.

[00:18:21] But they really, they don’t have the executive fortitude, I think, to do much with this.

[00:18:27] And Netflix later can come swooping in and take off parts.

[00:18:30] So how do you look at it?

[00:18:31] Look, I know they’re very excited over at Paramount about winning.

[00:18:35] I know they’re very excited about their business plan and what they think they’re going to

[00:18:38] do with this.

[00:18:39] You know, they’re going to have to combine CBS and CNN.

[00:18:42] I can only imagine what the feelings are over there.

[00:18:45] Bad.

[00:18:46] Probably not great.

[00:18:48] You know, there’s a lot of bloat probably on the CNN side that’s going to once again

[00:18:53] come under the axe.

[00:18:55] You know, as we’ve discussed many times, Kara, I think David Ellison has blundered a few

[00:19:02] times already out of the gate.

[00:19:04] Taylor Sheridan losing that.

[00:19:06] That was a big, big loss.

[00:19:08] Bigger.

[00:19:09] Bigger than the CBS disasters.

[00:19:11] Which are nothing either.

[00:19:15] You know, overpaying for, you know, UFC or whatever it is.

[00:19:19] I mean, you know, so I think there’s, you know, they’ve got a lot to prove.

[00:19:25] But nevertheless, they’ve got a lot to prove.

[00:19:28] But they also, this was existential for them.

[00:19:32] They had to win.

[00:19:34] And for Larry Ellison, I mean, if it weren’t for Larry Ellison, we wouldn’t be here.

[00:19:38] We wouldn’t be talking about this.

[00:19:39] We wouldn’t have this discussion.

[00:19:41] They would never have been taken seriously.

[00:19:42] They never could have done the deal.

[00:19:44] So it’s Larry’s unbelievable amount of equity that he’s willing to step up.

[00:19:49] It’s something like $45 bi ll i o n o f e q u i t y,$ 25 billion from Middle Eastern sovereign

[00:19:56] wealth funds and the rest from Larry and, you know, Jerry Cardinal at Redbird Capital.

[00:20:04] With most of it coming from Larry, I mean, this is an unbelievable amount of equity,

[00:20:08] an unbelievable amount of debt.

[00:20:09] It’s probably going to be like the largest LBO kind of in history, except they’re not

[00:20:13] taking the company private.

[00:20:14] They’re, you know, it’s remaining a publicly traded company.

[00:20:17] Let me ask you in that regard, you know, would you compare it to what Elon did at Twitter?

[00:20:22] Like, I don’t know.

[00:20:23] Someone was like, well, can’t they do what Elon did, meaning the bankers sort of gave up

[00:20:27] and he managed to get his money back because he squeezed it into a different company?

[00:20:31] I don’t think they have that choice here.

[00:20:33] They just have the media company, correct?

[00:20:35] Hey, well, you know, if they want to create AI and create an AI company and everybody

[00:20:42] is going to go crazy for it and then have the AI company buy the media company and then,

[00:20:47] you know, merge it with SpaceX, okay.

[00:20:49] I mean, you can do, you want to go do all those crazy things?

[00:20:52] Maybe they can pass it off onto somebody else.

[00:20:55] Maybe Elon will buy it.

[00:20:57] You know, Elon could buy it out of petty cash.

[00:21:00] He could.

[00:21:01] Why did Larry Ellison do this?

[00:21:02] Because he seems to me, he’s a smart customer about a lot of things.

[00:21:06] This seems like buying a yacht or something.

[00:21:09] Well, he has a yacht.

[00:21:10] What am I talking about?

[00:21:11] But you know what I mean?

[00:21:12] It seems so unlike him.

[00:21:14] Perhaps he’s old.

[00:21:15] Perhaps he wants to leave his legacy for his son who likes to make movies.

[00:21:18] What is, because from a financial point of view, this is not a Larry Ellison move to me in my mind.

[00:21:24] No, this is, you know, they’re going to have 70 plus billion of debt here, Kara.

[00:21:29] It’s a lot of debt.

[00:21:30] You know, maybe they have 11 or 12 billion of cash flow.

[00:21:35] Maybe it’s a lot of debt.

[00:21:38] They’re going to have to make a lot of cuts.

[00:21:40] They, you know, they believe they’re going to deliver quickly.

[00:21:42] You know, every buyer, every buyer who puts together a leverage company thinks they’re going to deliver quickly.

[00:21:50] Sometimes they do.

[00:21:51] Sometimes they don’t.

[00:21:52] Maybe Netflix will get another chance at this when the thing flounders.

[00:21:56] But why did Larry do this?

[00:21:57] I think it’s edible.

[00:21:58] I mean, I think he wanted to do this for his son and he started down the path to do it.

[00:22:03] You know, it went from 19 was their first bid to 31.

[00:22:09] I think he felt like, you know, his ego was involved if he didn’t do it, that, you know, he’d have egg on his face kind of thing.

[00:22:15] And he’s got now Trump expecting him to, you know, change the dynamic of the two companies in terms of the politics.

[00:22:22] And so I think he felt like he had to do it.

[00:22:25] And once he’d started it and, you know, he basically caved and gave Zazz everything he wanted, every little detail.

[00:22:31] Correct. Which is so unlike Larry Ellison.

[00:22:33] I was like, sort of like, what a chump.

[00:22:35] I never called Larry Ellison a chump before, but I feel chump that Zazzalov rents circles around them.

[00:22:40] Yeah.

[00:22:41] He got into deal heat and gave Zazzalov everything he wanted.

[00:22:44] I mean, they’re happy over there.

[00:22:45] Yeah, I know, because they’re like, they’re like, you know, they’re pumping fists.

[00:22:49] But honestly, I was like, oh, dear.

[00:22:51] Oh, oh, dear.

[00:22:52] That’s what I kept thinking.

[00:22:53] There’s going to be a hangover for this.

[00:22:55] There’s definitely going to be a hangover.

[00:22:56] So two more questions.

[00:22:57] You mentioned Trump.

[00:22:58] One of the things that everyone’s worried about, of course, is Larry Ellison owning TikTok.

[00:23:01] He does, and Oracle owns 15% of TikTok, which isn’t a huge amount.

[00:23:05] It’s a significant amount, but it’s not the most amount.

[00:23:08] And owning CBS, which I think was a falling knife.

[00:23:11] So I’m not really clear why everyone’s, they’re obsessed with it because it’s a good story.

[00:23:14] But it’s not a, I would say, you know, we just did an analysis of Pivot and we have more people in the demo advertising.

[00:23:20] You know, all of these companies do, all these cable companies.

[00:23:23] So it’s not, it’s the news organization.

[00:23:26] And CNN has been declining.

[00:23:28] Like, let’s be clear.

[00:23:29] Like the numbers have been declining.

[00:23:30] All of cable has, not just CNN.

[00:23:32] What, do you think it’s a political thing or what?

[00:23:37] Or also, lastly, Trump’s running out of time, right?

[00:23:41] Trump is absolutely running out of time.

[00:23:43] So look at, address the political issue.

[00:23:46] And then secondly, the regulatory issue could still get very ugly with Democrats attacking this if they get back into control of the legislature.

[00:23:54] Correct?

[00:23:55] Presumably.

[00:23:56] Well, let’s take the regulatory, you know, first.

[00:23:59] They made a big deal of them getting through Hartscott-Rodino, which meant there wasn’t going to be a deep dive into this by the DOJ.

[00:24:10] Although they could still come back and take another look at this now that it’s a kind of a different deal, a new deal.

[00:24:16] They could, they probably won’t, but they could.

[00:24:18] They got the EU.

[00:24:19] They were definitely working the EU.

[00:24:21] You know, David and Jerry Cardinal were over there working the EU.

[00:24:25] They think they’re in good shape with the EU.

[00:24:27] So they think between the DOJ, the EU, and Trump being on their side because he’s going to, you know, give them the political, you know, format that he wants and be supportive of him, which, you know, whatever.

[00:24:44] It’s ridiculous if you ask me, but, you know, that they think they’ve got the regulatory situation in hand.

[00:24:52] You know, politicians make a lot of noise about these mergers, but they have no say in the approval of them.

[00:24:59] So even if the Democrats take the House in, you know, November, I’m not sure what, you know, this is going to be, this could very well be over by then.

[00:25:10] You know, they put in the so-called ticking fee.

[00:25:13] If it’s not over by the end of September, which is obviously before the elections, they’re going to owe Warner Brothers shareholders another 50 cents a share or $650 million.

[00:25:25] So the impetus is to do something quick, to get it quickly done.

[00:25:31] Some things they can’t control, but I mean, they obviously are very confident.

[00:25:35] They’re highly confident, Kara, they’re going to get this through the regulators and, you know, they’ll give Trump what he wants.

[00:25:42] And I’m not sure the Democrats, even if they take the House, can do anything about what CBS and CNN broadcast.

[00:25:49] I mean, it’s up to the FCC and that’s still in Trump’s pocket and, you know, Trump blithering away, you know, asking for them to give him favors and bend the knee.

[00:25:59] Or get rid of Jake Tapper or whoever they want, whoever he’s mad at at the moment.

[00:26:02] Might be part of it, yes.

[00:26:03] Yeah.

[00:26:04] So when you think about where Netflix goes from here, I think it was the smartest move.

[00:26:08] The stock is going to soar.

[00:26:10] They have plenty of money to do things.

[00:26:11] They’re so innovative.

[00:26:12] They’re such great operators, right?

[00:26:14] They’re sort of, it’s not a bad thing.

[00:26:16] They could do a distribution deal for some of this content and then later just wait until the knife falls, right?

[00:26:22] Presumably.

[00:26:23] What would you do if you were Ted?

[00:26:25] I thought this is exactly what he was going to do.

[00:26:27] Right.

[00:26:28] And this is what I wrote that exactly he should do yesterday.

[00:26:30] And then I don’t know whether he reads it or listens to me or whatever, but he did exactly the right thing.

[00:26:35] He looks smart.

[00:26:37] Stock is going to move up after moving down like 30 percent.

[00:26:41] He takes his $2.8 billion breakup fee and builds out his new movie studio in New Jersey and gets content deals and, you know, looks smart and disciplined.

[00:26:52] And that’s what investors like.

[00:26:54] Looks like the good guy.

[00:26:55] He does.

[00:26:56] He looks like the good guy and he can move on from this.

[00:26:59] It was going to be a headache for him if he got this.

[00:27:02] Sometimes the smartest thing you can do in a deal, Kara, is to walk away.

[00:27:06] And he did the smartest thing.

[00:27:08] So he’s going to get plaudits all around.

[00:27:10] You know, he could read the tea leaves.

[00:27:12] He wasn’t, it was going to be a regulatory nightmare for him to get this through.

[00:27:15] Trump was not going to make it easy for him.

[00:27:17] He already bloviated about firing Susan Rice and Ted didn’t do it.

[00:27:22] And so, you know, who knows what was going to be in store for Ted.

[00:27:25] But he did the smart thing here.

[00:27:27] So very last question.

[00:27:28] When you think about what happens next for consolidation, this is obviously Comcast has got to be like, what do we do?

[00:27:35] Disney’s got to go, what do we do?

[00:27:37] Netflix now looks like it’s willing to play at least because it wasn’t an acquire very much like Apple.

[00:27:42] But it is.

[00:27:43] They’re very opportunistic now.

[00:27:45] And now they’ve had this.

[00:27:47] They’ve never done this before.

[00:27:48] Now they know, right?

[00:27:49] They’ve done.

[00:27:50] They’ve worked on a big deal.

[00:27:52] What do you see next if you could make a prediction?

[00:27:55] Well, I mean, it’s quite, you know, a lot of people have been thinking that Comcast would, you know, spin off NBCU and maybe, you know, Netflix and NBCU get together.

[00:28:08] But, you know, I don’t really think Netflix needs to do any of that.

[00:28:12] I don’t either.

[00:28:13] Now they got a little taste of it.

[00:28:14] Maybe they thought, well, they walked around the, you know, the Warner Brothers lot.

[00:28:19] That was kind of fun.

[00:28:20] And now I guess maybe they could walk around the Universal lot.

[00:28:23] They’re building their own lot.

[00:28:24] I’m not sure they need to do it, but if they want to do it, I think there would be opportunities.

[00:28:28] You know, there’s Amazon Prime.

[00:28:31] There’s, I’m not going to do anything with Disney, I don’t think.

[00:28:34] But NBCU, there are some smaller studios they could get their hands on, you know, AMC and things like that.

[00:28:41] I don’t really see that they have to.

[00:28:43] I think Ted sort of had fun here.

[00:28:46] He showed his metal.

[00:28:47] He showed he can be a dealmaker.

[00:28:48] He got a merger agreement and he showed himself to be disciplined.

[00:28:52] And he comes out, he’s the big winner in all this.

[00:28:55] Him and Zazz, of course.

[00:28:57] Zazz is the $600 million winner.

[00:28:59] I swear this guy, this guy, Mr. Discovery.

[00:29:03] Mr. Diners drive-ins.

[00:29:06] He ran the M&A deal of the century.

[00:29:08] I got to give it to him.

[00:29:10] I got to give it to him.

[00:29:11] I always run him down when I see him.

[00:29:13] I joke with him.

[00:29:14] I say he looks like a lesbian.

[00:29:16] But I have to say, he did a great job here for his shareholders, right?

[00:29:21] I mean, literally $7 a share.

[00:29:24] Amazing, amazing deal.

[00:29:26] And good luck, Ellison’s.

[00:29:27] Good luck on catching the car.

[00:29:29] Good luck.

[00:29:30] We’ll wait for the sequel.

[00:29:31] All right.

[00:29:32] The other winner here is you.

[00:29:34] You’ve done an amazing job in covering this.

[00:29:36] And I like debating with you.

[00:29:38] And it’s really helpful because it’s smart and it’s clear and you’re non-romantic about any of this.

[00:29:45] Anyway, I appreciate it.

[00:29:47] Go to Puck to check out Bill Cohen’s reporting.

[00:29:50] And we’ll take a quick break.

[00:29:51] And Scott and I will be back with NVIDIA’s earnings.

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[00:31:05] A lot of companies are deploying AI agents now.

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[00:32:05] Hey, Kara Swisher here.

[00:32:07] I want to let you know that Vox Media is returning to South by Southwest in Austin for live tapings of your favorite podcasts.

[00:32:14] Join us from March 13th through the 15th for live tapings of Today Explained, Teffy Talks, ProfG Markets, and of course, your two favorite podcasts, Pivot and On with Kara Swisher.

[00:32:26] The stage will also feature sessions from Brene Brown and Adam Grant, Marques Brownlee, Keith Lee, Vivian Tu, and Robin Arzon.

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[00:32:41] Visit Vox Media dot com slash S-X-S-W to pre-register and get your special discount on your innovation badge.

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[00:33:05] Scott, we’re back with more news and video reported better than expected fourth quarter earnings with a profit hitting 120 billion.

[00:33:12] Only a handful of other companies including Alphabet, Microsoft, and Apple have made over $100 billion in profit in a year.

[00:33:18] Net income for the company doubled to $43 billion. Revenue in the data center business rose 75%.

[00:33:27] Talk about that because Wall Street was also rattled this week by a viral memo from market analysis firm Citrini Research, a very good research group.

[00:33:37] The memo laid out a scenario where the AI systems trigger mass white-collar layoffs, push unemployment above 10%, and ultimately lead to a stock market crash.

[00:33:44] Citrini said the post was designed to prepare investors for potential left-tail risks as AI makes the economy increasingly weird, stressing that it’s a scenario, not a prediction.

[00:33:55] Even so, the S&P dropped 1% on Monday, though some of it was over concerns about tariffs.

[00:34:00] The companies specifically named in the memo included Uber, DoorDash, American Express, IBM all saw steep declines.

[00:34:07] It was an interesting memo and it was a thought experience.

[00:34:10] The markets were already rattled by Blue Owl Capital, a major private credit lender, announced its halting of quarterly redemption for one of its funds and selling $1.4 billion in loan ads as the company’s stock fell.

[00:34:22] We’ll get to that in a second. I’ll talk a little bit more.

[00:34:24] Stick with the first with Citrini and NVIDIA earns.

[00:34:31] I’ll talk about NVIDIA before I talk about Citrini.

[00:34:34] Revenue, $68 bi ll i o n v ers u s$ 66 expected up 73% year-on-year, up 20% quarter-on-quarter.

[00:34:44] Non-GAAP earnings, $1.62 v ers u s$ 1.53, up 82% year-on-year.

[00:34:49] Data center revenue, $62 billion, up 75% year-on-year.

[00:34:54] Their gross margins, 75%.

[00:34:57] Their fiscal, 2026 revenues.

[00:34:59] Huge margins were crazy.

[00:35:01] $216 billion, up 65%.

[00:35:04] I think that may be more revenue than like every streaming media company and movie studio combined since the launch of ChatGBT.

[00:35:12] NVIDIA has grown its data center business roughly 13-fold.

[00:35:16] And this quarter marked the best revenue growth rate of the entire fiscal year.

[00:35:19] So its revenue growth on the law of big numbers, it seems to be more like network effects.

[00:35:24] It keeps getting better at scaling.

[00:35:26] Q4 73% year-on-year growth beat Q3 at 62, Q2 at 56, and Q1.

[00:35:32] As they get bigger, they’re growing faster.

[00:35:35] They’re literally defying gravity.

[00:35:39] Notably, they’re leaving out China from its future guidance, according to the CFO,

[00:35:44] while small amounts of H200 products for China-based customers were approved by the U.S. government,

[00:35:48] we have yet to generate any revenue, and we do not know whether any imports will be allowed into China.

[00:35:53] China was previously 20, almost a quarter of NVIDIA’s data center revenue, but that’s now gone.

[00:35:59] It doesn’t seem to have hurt them.

[00:36:01] And the thing is, it’s still not expensive.

[00:36:03] It trades at roughly 24 times forward earnings, which is only slightly higher than the S&P.

[00:36:08] So you have a company that’s the most dominant company in history at that moment is trading what the S&P is trading at.

[00:36:16] And because of the fears around AI and maybe because of the stock acceleration, it’s only up.

[00:36:22] It’s basically flat.

[00:36:23] It’s up 4% this year.

[00:36:25] And then you have all these companies announcing they’re spending two-thirds or three-quarters of a trillion dollars on CapEx this year.

[00:36:33] And most of it or a lot of it is going to NVIDIA.

[00:36:36] NVIDIA Alphabet is flat.

[00:36:38] Amazon’s down 7% year-to-date.

[00:36:40] Meta’s flat.

[00:36:41] Microsoft is down 15% year-to-date.

[00:36:43] But Big Tech is getting punished for spending money, and NVIDIA is getting punished for collecting it.

[00:36:51] NVIDIA’s on the right side of that CapEx.

[00:36:54] So one of those must be wrong.

[00:36:58] Either these companies are making good investments, or I guess maybe the thesis is they’re overspending and it’ll slow down.

[00:37:05] Should we talk about Citrini?

[00:37:07] Yeah, Citrini was interesting.

[00:37:09] There was the other one a couple weeks ago that was another thing like everything’s going to change.

[00:37:13] That one, Schumer, Matt Schumer, whatever his name is.

[00:37:16] There’s been a couple of these that have actually had real impact as they’ve been written.

[00:37:21] They’re thought experiments in many ways, but they are interesting.

[00:37:26] But go ahead, Citrini.

[00:37:27] Well, essentially, I would describe it as an A-plus creative writing project from a super bright high school student.

[00:37:35] And it’s written in the past tense.

[00:37:37] It says, OK, this is how we hit this massive recession, and the market lost a third of its value.

[00:37:42] And I think it’s a really interesting thought experiment.

[00:37:44] What they’re essentially saying is that AI is going to create this negative feedback loop where it makes white collar workers so much more productive so quickly

[00:37:53] that companies can do layoffs and hire fewer workers, which results in an unemployment spike, less consumer spending.

[00:37:59] And because companies fall under revenue pressure, they’re forced to cut costs.

[00:38:04] And how do they cut costs? More AI, and it creates this downward doom loop.

[00:38:08] Now, you could make the same argument for any technology, right?

[00:38:12] At 1.90% of us working in agriculture now, it’s less than 2%, but that happened over 200 years.

[00:38:18] These guys are saying this is going to happen over 24 months.

[00:38:23] And what’s happened is it’s really cut.

[00:38:26] Obviously, we talked about last week it’s gone after the SaaS companies, the software companies, who they believe you’ll be able to replace Adobe,

[00:38:34] Figma, or Salesforce just with thoughtful internal prompts.

[00:38:37] And it’s really well written, and it’s got great branding.

[00:38:42] They coined the term ghost GDP, and that is economic output can grow while the benefits of that growth never actually reach most people.

[00:38:49] The other surprising victims here, and this will come back to my prediction, is a lot of publicly traded P.E.

[00:38:57] or private credit companies, whether it’s Apollo or TPG or Blackstone, have been, their stocks are down 20%, 30%,

[00:39:06] because they own a lot of software companies.

[00:39:09] And there’s a fear that as private credit lenders, basically they act like banks to companies who are non-traditional borrowers,

[00:39:16] that a lot of those companies might not be able to make good on the money they’ve borrowed.

[00:39:20] Let me just throw in some stats.

[00:39:22] You’re talking about Blue Owl, which is a major private credit lender.

[00:39:26] The company stock fell 10% on the news last week because of these sell-offs.

[00:39:31] Shares are at a 52-week low.

[00:39:32] The sell-off then rippled across the whole private credit sector, which probably wasn’t fair.

[00:39:37] Apollo, Aries, Blackstone, and others sliding.

[00:39:40] Blue Owl said it is not halting investor liquidity, it’s accelerating the return of capital.

[00:39:44] I love how they do that.

[00:39:46] Mohamed El-Aryan, former CEO of PIMCO, suggested this could be a canary in a coal mine moment,

[00:39:52] comparing it to the early warning signs for the 2008 financial crisis.

[00:39:57] So this is all linked together.

[00:39:59] This idea of worry for all of these things, especially private credit lenders.

[00:40:05] Some are not as concerned, some are more concerned.

[00:40:09] We’ve got a lot of letters from people saying what should they be concerned and what’s going on here.

[00:40:14] But they are definitely, as you’re noting, they’re linked, correct?

[00:40:17] All this is linked to this spending, this massive spending by the tech companies.

[00:40:21] The way I would try and describe the dynamic here and to understand if you’re a risk

[00:40:25] and where you want to think about investing your own human capital and your own financial capital

[00:40:29] is the following.

[00:40:31] My mom used to run the secretarial poll at Southwestern University School of Law in downtown Los Angeles,

[00:40:38] where I actually worked in the mail room in high school.

[00:40:41] And she oversaw 20 secretaries who would write up the exams and the legal research of all the professors.

[00:40:47] That’s gone.

[00:40:48] Word processing has taken that away.

[00:40:50] At the same time, my mom then became an executive assistant

[00:40:54] because she has good EQ and she’s smart and reliable and can write well.

[00:40:58] If you look at truckers, AI will be a substitute for truckers.

[00:41:05] Truck drivers via autonomous are in real trouble.

[00:41:08] At the same time, accountants, you’re going to see a lot of their rote accounting work go away,

[00:41:15] but there are now more accountants than ever because they move upstream into things like tax,

[00:41:21] wealth planning, and estate planning.

[00:41:24] Which presumably AI eventually will be able to help you with that.

[00:41:28] I call my accountant Mamie, who’s amazing, all the time for little and big things.

[00:41:33] Presumably, at some day, I won’t be talking to anybody, but it seems very artisanal on my part.

[00:41:40] It seems like a lot of work by Karis.

[00:41:42] It’s like pumping gas.

[00:41:44] That’s the right example.

[00:41:45] I used a lot of lawyers.

[00:41:47] I used to send every agreement I did, advertising contract,

[00:41:51] whatever it was, an employment contract I sent to our lawyers.

[00:41:55] They charged me $1, 000,$ 2,000, $3,000 to have an associate review it.

[00:41:59] Now I say to our chief growth officer, no, use AI, review it, and you do it.

[00:42:04] I trust you more than with AI, you’re as smart as a low-level lawyer.

[00:42:08] At the same time, I’m spending dramatically more on a very talented lawyer at a firm that’s actually

[00:42:17] called Citroen on this incredibly smart woman named Lucy Lee, who figures out everything from immigration

[00:42:25] to tax strategies to my estate plan, because that shit is complicated.

[00:42:29] Because you want her to be using AI on your behalf, right?

[00:42:32] Because presumably, she’s also using it.

[00:42:34] Yeah, but she can call me and say, Scott, have you thought about turning this company into an

[00:42:39] S course so you can, in five years, qualify for 1202?

[00:42:44] She’s incredibly strategic and smart and charges $1,500 an hour.

[00:42:49] So the bottom line is wherever you are in the world, do you have an opportunity to use AI to go upstream,

[00:42:54] or is AI basically going to take everything you’re doing and you have nowhere to go upstream?

[00:43:00] But the story of technology disruption is the same, and I don’t think it’s any different here.

[00:43:06] And that is, it will take out the boring rote work, and you either take that additional margin and go

[00:43:12] upstream and invent new jobs, new higher paying jobs, or you get outsourced.

[00:43:16] The V here, or the correction, might be more severe, and America’s bad at taking care of those people.

[00:43:23] Again, we spend 0.2% on retraining.

[00:43:25] Denmark spends 2% of GDP on retraining.

[00:43:28] We also don’t do it well when we try to do it.

[00:43:30] It doesn’t quite work right.

[00:43:32] But look at what we’re in the business.

[00:43:33] I would have thought, so for example, I’ve been writing books, and I thought of my latest book.

[00:43:38] I’m starting my newest book.

[00:43:39] I thought, oh, AI is going to play a huge role.

[00:43:41] It plays a role in research, in improving, and in fact checking.

[00:43:46] But the writing is still…

[00:43:48] Yeah, I agree.

[00:43:49] I’ve been trying to make it.

[00:43:51] Fetch is not happening for me in AI and writing.

[00:43:54] It’s not. It just isn’t.

[00:43:55] But even look at our business.

[00:43:56] I would have thought, okay, AI can produce the scripts.

[00:44:00] AI could edit, and it doesn’t.

[00:44:03] We’re hiring, I know you are, at Property Media, we’re hiring more people.

[00:44:09] So I don’t…

[00:44:10] And we use AI, what we might do, we might launch two podcasts instead of one,

[00:44:15] because AI will help us produce more data sets that we can talk about.

[00:44:21] We’ve got to figure out…

[00:44:22] One of the things I was talking about this morning,

[00:44:24] we’ve got to figure out how to make Fetch happen with it, right?

[00:44:26] And that’s sort of a slower process, as you know.

[00:44:29] One of the things someone was like, oh, is it all going to be over?

[00:44:31] I’m like, imagine a 2000.

[00:44:33] I went to see a Hollywood executive, big name.

[00:44:37] And when the thing crash happened, he goes, I’m glad that’s over.

[00:44:40] And I’m like, what?

[00:44:41] You have no idea what’s coming, right?

[00:44:43] So I think we’re in the…

[00:44:45] It doesn’t mean that all of them are going to survive,

[00:44:47] but several will, and it is a significant change.

[00:44:51] And the question is, was it fair for Apollo to get dragged down

[00:44:54] in this blue owl thing?

[00:44:56] Probably not, but that’s how Wall Street reacts.

[00:44:58] So you may see…

[00:44:59] That’s the opportunity.

[00:45:00] You may see an enormous decline in NVIDIA or any of these tech companies,

[00:45:05] but are they really going away?

[00:45:07] Is this really going to decimate them?

[00:45:10] What it’s going to do is have every company re-figure

[00:45:13] where this cost structure is.

[00:45:15] That’s what it’s doing.

[00:45:16] You’re going, do I need all these lower-level lawyers?

[00:45:18] And that is a significant problem.

[00:45:20] And one of the things that it creates is,

[00:45:23] if we throw all these people out of work, they’re going to be mad.

[00:45:27] And there’s all kinds of social issues there and political issues.

[00:45:31] And the question is, what do we do about it?

[00:45:33] And that’s hard because we’ve tried retraining,

[00:45:36] and listen, it hasn’t always worked.

[00:45:38] And we spent a lot of money on retraining.

[00:45:40] It can get sucked up into political bullshit,

[00:45:43] which is, let’s give everybody jobs.

[00:45:45] Then other times it works, like during the Depression.

[00:45:48] We have wonderful things that they did during…

[00:45:51] High-speed rail up and down the West and Eastern seaboard.

[00:45:54] There’s a lot of infrastructure.

[00:45:56] But look, both Andrew Ross Sorkin and Josh Brown,

[00:46:02] who I’ve had on Profit in Markets a lot,

[00:46:04] said something that really impacted the way I process

[00:46:08] and how I approach markets.

[00:46:10] And it’s the following, and they’re right.

[00:46:12] The optimists have beaten the shit out of the pessimists.

[00:46:16] So the key question you’ve got to ask yourself

[00:46:19] in something like this with respect to the markets

[00:46:21] is ask yourself, what could go right?

[00:46:24] Because there’s a temptation by academics and thought leaders

[00:46:28] to catastrophize because you sound…

[00:46:30] They should too.

[00:46:31] Well, you sound smarter when you catastrophize.

[00:46:34] It sounds scarier and more interesting,

[00:46:36] and you put some bar charts around you

[00:46:37] talking about the zombie apocalypse

[00:46:38] and a downward spiral doom loop.

[00:46:40] Well, okay, the doom loop around moving from agricultural

[00:46:44] to manufacturing to service, it wasn’t a doom loop.

[00:46:46] It was a job creator.

[00:46:47] So let’s talk about what could go right here.

[00:46:50] And this is from a guy named…

[00:46:53] I think his name is Zevi Moshowitz, in open quote.

[00:46:57] Actually, this scenario does involve massive job creation.

[00:47:01] Starting a new business, creating a new product

[00:47:03] or providing a service is now a turnkey thing

[00:47:05] you can launch with an agent.

[00:47:07] All sorts of barriers and costs involved are gone.

[00:47:09] Marketing costs drop almost to zero

[00:47:11] because their agent finds you.

[00:47:13] Logistic costs are almost zero.

[00:47:15] Transaction costs are almost zero.

[00:47:17] Wages for anyone you hire are down

[00:47:18] and their productivity is way up.

[00:47:20] The cost of living is way down,

[00:47:22] which creates more margin,

[00:47:24] more opportunities for new businesses.

[00:47:25] I’ve been struck.

[00:47:27] When I got out of business school in 1992,

[00:47:31] there were two people that started a business

[00:47:33] and the other was my business partner.

[00:47:35] There was only two of us.

[00:47:37] Now, I would bet a third of the grads from Stern

[00:47:41] are going to try and start some sort of AI company.

[00:47:43] Same thing with the media people.

[00:47:45] Same thing with the media people.

[00:47:46] I started off having to work for a big firm.

[00:47:48] I don’t need to.

[00:47:49] Anyway, we have to move on, but it’s really…

[00:47:51] We should keep this discussion going.

[00:47:53] It’s very important because I think you’re right.

[00:47:55] It’s easy to catastrophize,

[00:47:56] and you should be thinking about those things.

[00:47:58] It’s just a question of what’s the other side of that?

[00:48:01] Where are the opportunities?

[00:48:03] Just like we were talking about with Netflix.

[00:48:05] All right, Scott, let’s go on a quick break.

[00:48:07] When we come back, we’ll talk about Pete Hegseth

[00:48:09] threatening Anthropic.

[00:48:18] Scott, we’re back.

[00:48:19] Anthropic has rejected the Pentagon’s demands

[00:48:22] for unfettered access to Claude, as we thought they might.

[00:48:25] Defense Secretary Pete Hegseth had given the company

[00:48:28] a deadline to roll back certain safeguards

[00:48:30] or risk losing a $200 million Pentagon contract.

[00:48:33] Anthropic CEO Dario Amodi said in a blog post

[00:48:36] that the, quote, threats do not change our position

[00:48:39] and that the company, quote,

[00:48:40] cannot in good conscience accede to the request.

[00:48:43] Good for you, Dario, not to accede to a moron.

[00:48:47] On the other hand, the AI company that’s spent all about safety

[00:48:50] is dropping its core safety pledge, too.

[00:48:52] It announced this week that it won’t stop training

[00:48:55] potentially dangerous AI models

[00:48:57] if a competitor releases something parable or more advanced.

[00:49:00] They’re doing other things, but they say the move reflects

[00:49:03] the speed of AI progress and the lack of federal regulation,

[00:49:06] not of political pressure. Thoughts?

[00:49:08] The best performing organization in history is the U.S. military.

[00:49:11] At close second is the U.S. corporation.

[00:49:13] It’s created more wealth.

[00:49:15] In the last, Christ, in the last 17 years,

[00:49:18] U.S. corporations have created more shareholder value

[00:49:20] than all of Europe since probably the 60s.

[00:49:26] One company, Nvidia, is worth more

[00:49:28] than every publicly traded company in Germany and Spain.

[00:49:31] Now, why is that?

[00:49:33] One, we have incredible research universities,

[00:49:35] we have a very risk-aggressive culture,

[00:49:37] and we have the deepest pools of capital in the world.

[00:49:40] We have $5 mi ll i o n p ers t a r t u p v ers u s$ 1 million per startup in Europe.

[00:49:45] And why do we have such deep pools of capital?

[00:49:48] Because when people invest here,

[00:49:50] they know the rules that that company will have to play by.

[00:49:53] And when governments start interfering

[00:49:55] and picking winners and losers and saying,

[00:49:57] oh, the rules have changed,

[00:49:59] you’re going to have an absence or a flight of capital,

[00:50:01] which, by the way, has happened.

[00:50:03] And this bullshit, sclerotic, blood sugar level socialism

[00:50:07] where the government is deciding

[00:50:09] who should get to acquire Warner Brothers

[00:50:11] or that we should own a share,

[00:50:13] a golden share in a steel company

[00:50:15] or which microchip companies the governments can invest in

[00:50:17] because a failed casino owner and talk show

[00:50:21] or reality show host seems to believe

[00:50:23] he understands business better than the private sector.

[00:50:26] And we are already…

[00:50:28] This isn’t a theoretical lesson

[00:50:32] in why I hate Trump, reflecting my biases.

[00:50:35] This has already happened.

[00:50:36] They point to, over the last year,

[00:50:39] the S&P is up 14%, but it’s not.

[00:50:41] On a dollar-adjusted basis,

[00:50:43] the dollar has weakened so much,

[00:50:45] it’s more up mid-single digits.

[00:50:47] And by the way…

[00:50:48] Europe is up more, as you noted.

[00:50:50] Every single major market,

[00:50:53] from South Korea to Germany to the FTSE

[00:50:56] to the KOSPI in South Korea,

[00:50:58] has massively outperformed the S&P.

[00:51:02] And one of the reasons is,

[00:51:04] when you now invest in a US company,

[00:51:07] there’s unnecessary risk from the government

[00:51:11] if you, for whatever reason,

[00:51:13] the Pentagon decides that we don’t like you.

[00:51:16] And guess what?

[00:51:17] Anderl and Palantir are working very closely

[00:51:23] with the government to help them track down spies,

[00:51:25] to maybe even track down immigrants using social media.

[00:51:28] A lot of people would say that’s a violation of privacy rights.

[00:51:31] A lot of people don’t want to work for a weapons company.

[00:51:34] Well, guess what?

[00:51:35] I love your saying.

[00:51:36] You don’t like Chick-fil-A, you don’t have to eat a Chick-fil-A.

[00:51:39] Maybe you don’t work there.

[00:51:40] Maybe you don’t invest there.

[00:51:41] But guess what?

[00:51:42] They get to do what they want.

[00:51:45] Regulated competition,

[00:51:47] and you get to decide what business you’re in or not in,

[00:51:51] just as Anthropic might decide

[00:51:55] that we are not comfortable working and providing data

[00:51:59] and computing power to help surveil US citizens.

[00:52:03] They get to make that decision.

[00:52:05] That’s right.

[00:52:06] By the way, I think they’ll do better.

[00:52:08] Everyone’s like, oh, they’re going to get blacklisted.

[00:52:10] I’m like, I think this is good for them.

[00:52:11] It might be good branding.

[00:52:12] It might be good branding, it might be good.

[00:52:14] By the way, that they can do what they want

[00:52:16] and decide what they want to do on everything.

[00:52:19] And then you, the consumer, as we know, decide what you want to do.

[00:52:22] And one of the things that Hicks says is always,

[00:52:25] he’s either doing pull-ups or this nonsense.

[00:52:28] Another person, never run a successful business, just so you know.

[00:52:32] A lot of these people in the Trump administration

[00:52:34] never run a successful business, including the president himself.

[00:52:38] Really has driven so many businesses into the ground.

[00:52:41] Let Dario Modi do what he wants, but to threaten him?

[00:52:45] It’s called the private regulated competition,

[00:52:47] and everyone gets to and has to play by the same rules.

[00:52:51] Elon will take it for you.

[00:52:53] Just go to Elon.

[00:52:54] And by the way, the reason why it’s a problem

[00:52:56] is because most of the people in the Defense Department

[00:52:58] think Claude is better, right?

[00:53:00] That’s the issue.

[00:53:01] They don’t want to give their better product to do what they want.

[00:53:04] This, to me, is ridiculous.

[00:53:05] And by the way, on the safety thing,

[00:53:07] you know all these people are going to do whatever it takes,

[00:53:09] and they may be more safe, anthropic,

[00:53:12] but they will do whatever it takes to compete.

[00:53:15] Right, correct?

[00:53:16] Look, I think the reality is, and this is the danger,

[00:53:19] and this has been one of my core theses all along,

[00:53:21] is that we have fallen under the assumption

[00:53:24] that every breakthrough in technology results

[00:53:26] in a small number of companies that are able to ring fence distribution,

[00:53:29] capital, or IP and create trillions of dollars for their shareholders.

[00:53:34] I wonder if AI is more like jet manufacturers or vaccines,

[00:53:39] and that is it will be an enormous innovation

[00:53:41] that will change society for the better, I’d like to think.

[00:53:44] But there aren’t going to be a small number of companies

[00:53:46] that capture a ton of value,

[00:53:47] that the real winners will be stakeholders,

[00:53:49] but those stakeholders will be citizens.

[00:53:51] I think we have massively benefited from vaccines.

[00:53:54] Moderna is now down 90%.

[00:53:56] There’s no one company that’s made hundreds of billions of dollars

[00:53:58] from vaccines.

[00:54:00] If you added up all of the profits and losses

[00:54:03] of all airlines and Boeing and Amber and Airbus,

[00:54:06] it’s barely even a breakeven,

[00:54:08] and yet skirting along the atmosphere at seven-tenths the speed of sound

[00:54:11] is, in my view, for my life, the greatest breakthrough in history.

[00:54:15] Now, my general impression is people ask me all the time,

[00:54:18] which LLM do you like?

[00:54:19] I have favorites, but it only lasts for two weeks.

[00:54:22] I think AI is putting AI out of business,

[00:54:24] and that is if you look at the data,

[00:54:26] they’re all getting to technical parity.

[00:54:28] It is so hard to maintain.

[00:54:30] You know, Jan LeCun said this exactly.

[00:54:32] He says they’re all the same.

[00:54:33] They’re commodities. They’re commodities.

[00:54:35] I use both ChatGPT and Claude,

[00:54:39] and then for like 72 hours, I’ll be like,

[00:54:41] oh, ChatGPT is better. It’s less politically correct.

[00:54:43] And then I go, wait, Claude is better at editing.

[00:54:47] And then I go back and forth, and here’s the thing.

[00:54:49] AI is reverse engineering every other LLM.

[00:54:52] So it’s going to be about things like UI.

[00:54:54] It’s going to be margin compression,

[00:54:55] and I wonder if we’re going to be the big winners.

[00:54:57] And services.

[00:54:58] And these companies are going to spend

[00:55:00] a massive amount of capital.

[00:55:02] Yeah, I know. I agree.

[00:55:03] We’re getting a lot of free.

[00:55:04] We’re getting a lot of free.

[00:55:05] 100%.

[00:55:06] All right, we do have to move on.

[00:55:07] We’ll see what happens here,

[00:55:08] but Pete Hicks says you’re a moron.

[00:55:10] Okay, this is a story I just want to say again.

[00:55:13] I knew this had legs.

[00:55:14] Dozens of FBI witness interview summaries

[00:55:17] appear to be missing from the DOJ’s latest Epstein files

[00:55:20] released.

[00:55:21] Some of those are missing interviews

[00:55:23] that are tied to a woman who accused Donald Trump

[00:55:25] of sexually assaulting her decades ago.

[00:55:27] The DOJ said in a statement that the only materials

[00:55:29] we have been withheld were either privileged

[00:55:31] or duplicates.

[00:55:32] This is nonsense.

[00:55:33] Democrats in the House Oversight Committee

[00:55:34] are now investigating whether the DOJ

[00:55:36] purposely withheld materials.

[00:55:37] The New York Times followed this.

[00:55:39] So did NPR broke it, and independent journalists

[00:55:43] broke it.

[00:55:44] New York Times has followed.

[00:55:45] This is really a bad cover-up.

[00:55:47] What they’ve done here is kept…

[00:55:49] They should just put it out there

[00:55:51] or investigate Donald Trump, one or the other.

[00:55:54] He’s certainly not exonerated.

[00:55:55] By the way, other people are taking a lot of fallout

[00:55:58] from Epstein this week.

[00:55:59] This is not stopping, folks.

[00:56:00] It’s not over till it’s over.

[00:56:02] Bill Gates apologized to the Gates Foundation

[00:56:04] for his ties to Epstein and also two affairs he had.

[00:56:07] He talked about them publicly, finally.

[00:56:09] He kept stressing they were older,

[00:56:11] just old enough, at least.

[00:56:13] Larry Summers is resigning from Harvard

[00:56:15] over his Epstein connection.

[00:56:16] The World Economic Forum president is also resigning.

[00:56:19] Peter Mandelson, former U.K. ambassador to the U.S.,

[00:56:21] was arrested over allegations that he shared

[00:56:23] confidential government information.

[00:56:25] The former Norwegian, I think, prime minister

[00:56:28] was hospitalized with suspicion of suicide over it.

[00:56:31] There’s a Columbia professor who’s a very prominent neurologist,

[00:56:36] I think.

[00:56:37] All these people are paying the price, let’s just say,

[00:56:39] either related or nearby.

[00:56:42] Trump obviously didn’t say anything in the Epstein files,

[00:56:44] doesn’t like the State of the Union.

[00:56:46] I don’t think he can ignore this.

[00:56:47] I think this is not going away.

[00:56:49] It is chasing him.

[00:56:51] And it will not happen until they do.

[00:56:53] As you say, they have to deal with the perpetrators.

[00:56:56] And if he is one of them, he has the right to be investigated.

[00:57:01] And he should be investigated.

[00:57:02] So should all of these people.

[00:57:04] There’s still going to be repercussions

[00:57:06] for everybody in this world.

[00:57:08] There just is, whether your judgment was bad or whatever.

[00:57:11] You know how I feel about this, and it’s an unpopular take.

[00:57:14] I don’t think the files should have been released.

[00:57:16] I think the agency that aggregated the information

[00:57:19] should have reviewed it with the help of outside litigation counsel,

[00:57:24] and they should have communicated in one way to the general public,

[00:57:27] and that is with grand jury indictments and announcements.

[00:57:30] This administration wasn’t going to do that

[00:57:31] because their own president was possibly…

[00:57:33] And so what have they done?

[00:57:34] They’ve created weapons of mass distraction.

[00:57:36] I don’t know.

[00:57:37] I think there’s repercussions here.

[00:57:39] I’m going to go the different way.

[00:57:40] Because you’re focused on it.

[00:57:42] The reality is the following.

[00:57:44] There appears to be enough evidence

[00:57:46] that warrant an investigation by…

[00:57:49] And again, to your point,

[00:57:51] unfortunately we don’t have the institutions to do this correctly,

[00:57:55] but the way this should play out is the following.

[00:57:57] The attorney general should be announcing

[00:58:00] or the Department of Justice

[00:58:01] that they are forming a special counsel

[00:58:03] because there are credible accusations of rape

[00:58:06] against several people,

[00:58:08] including the president of the United States.

[00:58:11] And all this other bullshit.

[00:58:13] Larry Sumner sending stupid fucking emails

[00:58:16] because he’s pathetic to Jeffrey Epstein.

[00:58:19] I think that’s a distraction, Kara.

[00:58:21] Again, I know.

[00:58:23] I know you do.

[00:58:24] I don’t.

[00:58:25] I think it shows about judgment,

[00:58:26] and we can decide who we want to affiliate with.

[00:58:27] I think it’s fine to do both.

[00:58:29] And if I had AI go through every one of your texts and emails,

[00:58:32] I couldn’t reflect you as having poor judgment?

[00:58:34] Not to the extent of…

[00:58:35] Look, Jeffrey Epstein is a unique figure here.

[00:58:37] You know that.

[00:58:38] And he represents something bigger, which is…

[00:58:40] Did they commit crimes?

[00:58:42] I get it, but our whole world…

[00:58:43] By going after everyone that hasn’t committed a crime

[00:58:45] because America loves to shame people,

[00:58:47] we are losing focus on the people who raped children.

[00:58:50] Yeah, but all kinds of people got in trouble

[00:58:54] because of shaming things,

[00:58:55] and some people got in trouble because of whatever.

[00:58:58] We have a history of this.

[00:59:00] Actors back in the 50s lost their jobs.

[00:59:04] But that’s fine.

[00:59:05] But that wasn’t the FBI investigating,

[00:59:07] going on a fishing expedition for real crimes

[00:59:09] and then shaming.

[00:59:10] Neither is this.

[00:59:11] Listen, this is TMZ’s wet dream.

[00:59:13] And unfortunately, we’re not creating the incentives

[00:59:15] such that if you’re a single mother

[00:59:16] and your daughter ends up on an island,

[00:59:18] that there’s less chance she’ll be raped.

[00:59:20] We’re not protecting women.

[00:59:21] We’re not protecting children and women here.

[00:59:23] We’re not protecting women and children.

[00:59:25] You’re absolutely right.

[00:59:26] I think it’s part of a whole…

[00:59:28] Instead, every celebrity is just going to start using Signal now.

[00:59:31] I don’t know about that.

[00:59:33] I don’t know about that.

[00:59:34] I think it is linked to the feeling

[00:59:36] that the rich have no impunity, which you talk about.

[00:59:39] And that’s part of a trend.

[00:59:41] And it’s okay to have these other things,

[00:59:43] but they should do…

[00:59:44] I’ve said special counsel over and over again,

[00:59:46] but they were forced into it by Thomas Massey and Ro Khanna

[00:59:50] because they wouldn’t do their job.

[00:59:52] And they didn’t do their job

[00:59:53] because they’re under the thumb of Donald Trump.

[00:59:55] And so if they’re not going to do their job,

[00:59:57] this is the only way.

[00:59:58] I get it, but this is what’s happened, unfortunately,

[01:00:01] because our institutions

[01:00:02] no longer have any independence or credibility.

[01:00:05] They have released nude photos of underage girls

[01:00:08] they have doxxed them, listed their names

[01:00:11] and their addresses without their permission,

[01:00:14] and redacted and confused information

[01:00:16] around the actual people who have evidence

[01:00:19] that they’re pedophiles.

[01:00:20] I mean, this just couldn’t be…

[01:00:21] But they’re not getting away with it, as you can see.

[01:00:23] They got caught.

[01:00:24] See, I disagree.

[01:00:25] I think they’re mostly getting away with it.

[01:00:26] I think the wrong people are being prosecuted and shamed

[01:00:29] and voted off the island,

[01:00:31] and the criminals are loving it

[01:00:33] because there’s a ton of confusion and distraction.

[01:00:36] I think they’re going to get the criminals.

[01:00:37] The one thing, and you’ll agree with this,

[01:00:39] I was thinking about it the other day,

[01:00:40] is if we asked the general public to name five billionaires,

[01:00:44] I think three of them would be…

[01:00:46] The first one would probably be Elon Musk.

[01:00:48] The second would probably be…

[01:00:50] Jeff Bezos.

[01:00:51] See, I think it would be Bill Gates.

[01:00:54] He was sort of the original billionaire.

[01:00:56] And then the third would be the president,

[01:00:58] who calls himself the billionaire president.

[01:01:00] So I bet those three would be the three of the first five

[01:01:06] that people said who are billionaires.

[01:01:08] They’re all in the fucking Epstein files.

[01:01:10] So anyways, my point is,

[01:01:12] you can understand that the public has decided

[01:01:15] that once you get to a certain point of wealth,

[01:01:18] you engage in a level of depravity

[01:01:21] and feel that, again, I love this saying,

[01:01:24] you’re protected by the law but not bound by it,

[01:01:27] whereas the rest of us are bound by the law

[01:01:29] but not protected by it.

[01:01:30] So you can see that there is a real populist upheaval

[01:01:34] and a real populist uprising here.

[01:01:36] But again, I think the Department of Justice

[01:01:39] is there to serve justice.

[01:01:41] It’s not this Department of Justice.

[01:01:43] If there was any other Department of Justice,

[01:01:45] you might expect a little bit of decency.

[01:01:47] Fair point.

[01:01:48] This is the only way.

[01:01:49] You know we should have,

[01:01:50] and I was going to do this,

[01:01:51] but maybe we do it on pivot.

[01:01:52] I wanted to get Preet Bharara on

[01:01:54] to talk about the process of document collection,

[01:01:57] investigation collection,

[01:01:59] and then how that information is properly disseminated

[01:02:02] to the public and in what format,

[01:02:04] because that’s what we’re talking about here.

[01:02:06] You’re right.

[01:02:07] You’re right.

[01:02:08] It gets prurient.

[01:02:09] But at the same time,

[01:02:10] it’s the only way given Pam Bondi is the most,

[01:02:12] another moron.

[01:02:13] Yeah, but Kara, the Dow is at $50,000.

[01:02:16] Yeah, $50,000.

[01:02:17] She’ll never live that one down.

[01:02:18] Anyway, let’s take a quick break,

[01:02:20] and we’ll be back for predictions.

[01:02:29] Okay, Scott, let’s hear a prediction.

[01:02:31] So I just like to,

[01:02:33] I wrap my predictions of what I’m doing personally

[01:02:36] in terms of my own finances,

[01:02:37] and this is not financial advice.

[01:02:39] I’m just telling what I’m doing.

[01:02:41] I think that just as SaaS companies have been oversold,

[01:02:45] some of these PE,

[01:02:46] or what they call business development

[01:02:47] or private credit companies have been oversold.

[01:02:50] So just some of the ones,

[01:02:51] again, I’m going to create a basket

[01:02:52] because I’m about diversification at this point.

[01:02:55] But for example, Apollo,

[01:02:57] which has taken a huge hit,

[01:02:59] is trading at 14 to 17 times earnings.

[01:03:01] So a company with double-digit earnings growth

[01:03:04] and double-digit assets under management growth,

[01:03:07] which is the capital they deploy and how they make money,

[01:03:10] the S&P is trading at a P of 20,

[01:03:12] and Apollo is trading at 14 to 17 times.

[01:03:15] TPG is trading at about a one-third discount

[01:03:19] to fair value estimates.

[01:03:21] It’s got unbelievable fundraising,

[01:03:23] and it’s expanding their fee earnings.

[01:03:26] And again, the price reflects pessimism

[01:03:29] more than growth trajectory.

[01:03:30] And by the way, there’s absolutely no evidence

[01:03:32] other than creative writing

[01:03:33] that any of these companies are experiencing.

[01:03:35] I work or co-invest with some of these companies.

[01:03:39] They’re fucking juggernauts.

[01:03:40] They’re raising more money than ever.

[01:03:42] But it’s public feeling about it.

[01:03:43] Investor nervousness.

[01:03:44] Sentiments.

[01:03:45] Yeah, sentiment.

[01:03:46] There’s narrative in their numbers,

[01:03:48] and I believe over the medium and long term,

[01:03:49] the numbers went up.

[01:03:50] So it’s an opportunity.

[01:03:51] It’s an opportunity is what it is.

[01:03:52] These companies have shed between 20 and 40% of their value

[01:03:56] in the last 12 months while continuing to grow their AUM

[01:03:59] and their fees.

[01:04:00] Blue Owl, it’s got a 7% to 8% dividend yield

[01:04:07] because of market discounting private credit fears.

[01:04:10] So there’s a growth versus valuation, in my view, mismatch

[01:04:13] in that all of these companies are growing their assets

[01:04:15] under management and their fees,

[01:04:17] which is what essentially is their revenues.

[01:04:20] And the sector has had multiple contraction or compression

[01:04:23] due to private credit liquidity fears

[01:04:25] because of some of these creative writing projects.

[01:04:28] And in my view, the market is pricing risk more aggressively

[01:04:33] than current earnings trends justify.

[01:04:35] That’s my thesis.

[01:04:37] So I’ll just wrap it up.

[01:04:39] My one line thesis is the following.

[01:04:43] Compressed multiples and durable fee growth

[01:04:47] plus strong fundraising.

[01:04:49] And I know these companies, they’re really well run.

[01:04:52] In my view, all adds up to potential relative undervaluation

[01:04:55] versus the broader market.

[01:04:57] All right, I like it.

[01:04:58] It’s the same thing you were talking about last week.

[01:05:00] Look for opportunities, including you, Netflix.

[01:05:03] Just so you know, next week we’ll be talking about

[01:05:05] Hillary Clinton’s testifying about Epstein.

[01:05:08] Anyway, we’ll be talking about that.

[01:05:09] But I want to actually get our listeners to write us in,

[01:05:12] give their own prediction.

[01:05:13] Jeff Bezos and Lauren Sanchez have been named honorary chairs

[01:05:16] of the year’s Met Gala.

[01:05:17] They essentially are paying for it, and that’s how that happened.

[01:05:20] The dress code is fashion is art.

[01:05:23] I want to know what you think Lauren and Jeff will dress up as.

[01:05:26] What art thing will they dress up as?

[01:05:30] There’s only two things I’m certain about their wardrobe.

[01:05:34] Boobs.

[01:05:36] 100%.

[01:05:37] Whatever she’s wearing.

[01:05:38] Both of them.

[01:05:39] She’s not wearing an outfit.

[01:05:40] Her breasts are.

[01:05:41] And I’m here for it.

[01:05:43] I think she’s a beautiful woman and have at it.

[01:05:48] But let me be clear.

[01:05:49] Be fair.

[01:05:50] He’s been improving his boobs too.

[01:05:51] But go ahead.

[01:05:52] Let’s be clear.

[01:05:53] There is like Vogue and Conde Nast.

[01:05:57] They’re smart people.

[01:05:58] They invest in cable companies.

[01:06:00] Those assets, the magazines have literally been just like a slow burn to irrelevance.

[01:06:06] Hurst is invested in all these incredible data companies like Fitch and this airline data company.

[01:06:11] They’ve actually grown the revenues.

[01:06:12] Conde Nast has not.

[01:06:14] But the reporting I want to see, the only thing I know,

[01:06:18] is that Lauren’s going to have her girls in the window and I’m here for it.

[01:06:23] And two, somehow, indirectly, there is an exchange of money here.

[01:06:28] There is.

[01:06:29] Are those already out?

[01:06:30] Oh yeah, no.

[01:06:31] They’re like backing it.

[01:06:33] They’re paying for it?

[01:06:34] Yeah.

[01:06:35] Anna Wintour chucked them down.

[01:06:36] They turned them upside down, got their wallet, put them on the cover.

[01:06:39] They’re paying for the whole thing.

[01:06:40] Put them upside down and certain things moved and certain things didn’t.

[01:06:43] That’s correct.

[01:06:44] The money moved out of their pockets.

[01:06:46] And now they get to be the king and queen.

[01:06:48] Good for them.

[01:06:49] We would like, I feel good about this.

[01:06:50] I’m here for his midlife crisis.

[01:06:52] I can’t help it.

[01:06:53] I like Jeff Bezos.

[01:06:54] What are they dressing up?

[01:06:55] I want listeners straight in and we’ll read them.

[01:06:57] What art will they dress up as?

[01:06:59] We need specifics.

[01:07:00] Sexy Mona Lisa.

[01:07:01] I hope we get invited.

[01:07:02] I’d like to go to that.

[01:07:03] Do you think they’ll invite us?

[01:07:04] No, I don’t think they will.

[01:07:05] All right.

[01:07:06] We want to hear from you.

[01:07:07] Send us your questions about business tech or whatever’s on your mind and whatever you

[01:07:10] think Lauren and Jeff are going to wear.

[01:07:13] Go to nymag.com slash pivot to submit a question for the show or call 855-51-PIVOT before we

[01:07:18] go.

[01:07:19] As we said, Scott and I also besides Minneapolis, we’re both returning to South by Southwest

[01:07:26] in Austin for three shows on the Vox media podcast stage.

[01:07:30] It’s a total South by Southwest takeover because we are the king and queen speaking of which

[01:07:35] we will have his boobs out just so you know on the platter.

[01:07:38] First, I’ll be doing a live taping of Prop G Markets with Ed Elson on March 13th where

[01:07:42] every person over the age of 40 will come up and go, I love your pocket.

[01:07:45] Is Ed single?

[01:07:46] I have a daughter.

[01:07:47] Literally, I’m so sick of people trying to set Ed up.

[01:07:49] Well, he’s more handsome than you are.

[01:07:51] He’s very handsome.

[01:07:52] He’s a nice kid too.

[01:07:53] I mean, it’s a low bar.

[01:07:54] And then on March 15th at 10 a.m., I’ll be doing a live taping of On with two special

[01:07:59] guests I’m really excited about.

[01:08:01] Finally, we’ll take the stage together on March 15th at 1130 for a live taping of Pivot.

[01:08:06] Pivot, you can touch Scott’s body parts the whole time.

[01:08:11] You stop there.

[01:08:12] Yeah, anyway, last year’s Pivot taping at South by Southwest featured whiskey shots,

[01:08:17] partial nudity, IPO predictions and some smart questions from our audience.

[01:08:21] Love it.

[01:08:22] So we’re going to double the fuck down on that and you don’t want to miss it.

[01:08:27] I love by Southwest.

[01:08:28] Aren’t you excited?

[01:08:29] Yeah, I’m excited.

[01:08:30] I’m excited to hang out with you.

[01:08:31] I’m excited.

[01:08:32] We’re doing a lot of traveling together this year.

[01:08:33] Oh, it’s part of the Vox media podcast stage presented by Odoo.

[01:08:35] The stage also features sessions from Brene Brown and Adam Grant, Marques Brownlee, Ested

[01:08:41] Herndon.

[01:08:42] As long as Estair Perel is there to tell me that I’m OK.

[01:08:45] I don’t know if she’s going to be there, but nonetheless, learn more and get a special

[01:08:48] discount on your innovation badge at Voxmedia.com slash S-X-S-W.

[01:08:53] That’s Voxmedia.com slash S-X-S-W.

[01:08:57] We will see you there.

[01:08:59] OK, that’s the show.

[01:09:00] Thanks for listening to Pivot and be sure to like and subscribe to our YouTube channel.

[01:09:04] We’ll be back next week.

[01:09:05] Today’s show is produced by Lara Neyman, Zoe Marcus, and Taylor Griffin.

[01:09:08] Ernie Intertide engineered this episode.

[01:09:10] Manola Moreno edited the video.

[01:09:12] Thanks also to Dubros, Mia Severo, and Dan Chalon.

[01:09:15] Nishat Kherwa is Voxmedia’s executive producer podcast.

[01:09:18] Make sure to follow Pivot on your favorite podcast platform.

[01:09:21] Thanks for listening to Pivot from New York Magazine and Voxmedia.

[01:09:24] You can subscribe to the magazine at nymag.com slash pod.

[01:09:27] We’ll be back next week for another breakdown of all things tech and business.

[01:09:30] One of my role models, Sam Harris, said that if you have economic security and people who love you,

[01:09:36] and I’m blessed with both those things, you have an obligation to speak your mind.

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