The First Trillionaire?

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Listen to season 14 of Family Secrets on the I Heart Radio app, Apple Podcasts or wherever you get your podcasts. Welcome to the Nick Dick and Paul show. I am one of your co-hosts Nick Bilton and we are recording remotely. Dick, do you want to tell us where you are? I am Dick Costalow coming to you live from my own personal library in Soho, New York. What's the book right behind you with the goat? You know what's not important right now? Good answer. It's from the goat section of the library. Everyone. Everyone should have got a cloven hoof section, okay? I'm Paul, where are you? I am in San Diego, although I was just spent like the last 36 hours in Florida. And as a friend of mine reminded me when I was there, I actually didn't go on the beach and I didn't touch the ocean just on principle. What's the principle of not touching the ocean? I reject the existence of Florida. Were you there for thunder for work? I was speaking actually, semi-related to something I think we're going to talk about, but I was there for a Federal Reserve. They have a, the Atlanta Fed has an annual event on technology and capital markets risk. So they have a two day event and I spoke at that yesterday on the Fed meeting in Florida. Yeah, that's what's, are we talking about the Atlanta Florida Fed or different? This is like like McDonald's franchise. It's the Atlanta franchise or the Florida franchise of the Atlanta Fed. They have different burger prices. Can I just go back to, do you ontologically reject the idea of Florida or do you, or do you sort of just, you know, I've refused to admit I'm here. And if I go to the ocean, it'll be more obvious to me than I'm here. It's really the latter, although I would like to say it's the former, but it's a good point. I can't actually, I have to believe it actually was there because I felt like I was there and I was really freaking hot. I'm going to start using the word ontologically all the time. I would, I think it's an important word to use. But yeah, we were talking about, so there was a, I could two day event. There was a bunch of people talking about central banking, which makes the top of my head fall off. And then they were, we were talking about what's going on in AI, these upcoming IPOs. It was actually a good discussion because you got to find out that, well, it's a little bit like finding out your babysitters really not that much more competent than you are at managing the kids in this, but in a capital markets context. Can I just ask when people in central banking have a discussion about central banking, what is, like give us a, give us a look inside behind the curtain, if you will. Yeah. What an insider discussion about central banking would be about. And then the second to that, I want to add, can you give us a discussion about what they discuss when they're not talking about central banking? No central banking. Oh, continues. There's no, there's no stopping. Central banking is a bottomless cascade. So anyways, what do they talk about when they talk about central banking? Yeah. They talk about my, well, it starts with a song, right? There's the official song, We're All Central Bankers. And then it goes on from there. None of that happens. Absolutely none of that happens. But yeah, it's, it's weird because honestly, I mean, central banking is a bit of a mystery to me. So I tried very hard for the first two sessions to pay attention. And then I was like, you know, I have a session coming up in an hour or two and I haven't finished my slides so I need to go. So I didn't learn that much about central banking and then came back. Oh, that's, yeah. Let me ask you a question. What, what, what, you mentioned AI, where do they all sit in terms of AI job loss, you know, economy? Like, are they, yeah, let us know because whatever they think, the other thing will be what happens. Right. Exactly. That's, that's sort of the, I think that's the right way to go. No, they're very, they, they, they had in the sand like what, where are they? So here's the thing, they're very concerned about it because they actually have decent economy, assume model, the effect of automation on workforce. So I actually think that side of what they do is very good and the Atlanta Fed has tremendous researchers on that stuff. The problem they have is they have no idea how to deal with the effective AI on capital markets themselves. So what's going to happen when you have this bevy and that's the technical term of AI IPO is coming out. What's the implications going to be? What, what don't we know in terms of, I mean, one of the things I was talking about was how AI is going to cause, what's called herding in capital markets is going to make it more easy for people to imitate each other, which creates cascades in capital markets, which in turn creates flash crashes and what have you. So that was sort of my topic that structurally it's going to have implications in terms of risk in capital markets. And again, not too different from what's happened in the past, but huge, much faster, much more consequential because these things are evolving in real time and so on. So I was using that as an example in my talk about what we should expect in terms of a much more fragile and I shall say a wacky capital markets in future. Is there any discussion when you guys are doing these meetings about, we're going to talk about IBOs today, open AI, you know, space. Is it open AI going public? They are they are they are they are they are they are they are they just file. I'm just asking my ass. Oh, got it. Is there any discussion about economic disparity, you know, with the IPO that's about to happen with SpaceX, there pretty much everyone is estimating that that Elon will become the first trillionaire, which is kind of astounding to say out loud, all jokes aside. I mean, you know, thank God. I mean, I mean, I mean, I has been I thought it was going to be you, Dick. I was really betting on it. I mean, it was it was touching. Close. Close. It's pretty close, right? It's the magic of the magic of compound interest. If you give me another hundred years, I'm there. Okay, maybe I can board that on. But yeah, so yeah, there's a lot of conversation about that, but the main thing weirdly that they're interested in is literally what's going to be the impact on capital markets themselves. Because that's what they regulate, right? So they're interested in, you know, what's going to happen when this supply comes to market? What is the impact of a larger versus smaller float and all this kind of stuff? Because this is really, really unusual for a bunch of reasons that we can get into. And that's the stuff that actually was a good conversation. And I talked to a few, they actually have some external people there who are who run, you know, in excess of like four or five hundred billion dollars in large index funds, who were there to, you know, as part of the conversation. And these guys are like shitting themselves and they're shitting themselves because they're forced buyers, right? Meaning that once these things are added, if it's added to the index, they have to buy it. They have to buy it. And so this is a huge problem because they're going to be a material fraction of these indices over the next three, six, 12 months. And I'm a forced buyer and that means I'm a forced seller of other things to fund being a forced buyer. So these flows are very consequential and then the limited float makes it even worse. Yeah, we talk about that for a second. The limited float on space, like I believe is only five percent of the total. Can you guys just just for the people who are listening who are not attending the same conferences as Paul? Can you explain the limited float and what the consequences are of that? Why don't you talk to her? I was always actually thinking about you in this context today. What was the float when Twitter went out? I think it was 10 percent. Yeah, 70 of 70. And who decided that? Do you remember? I mean, what do you think decided it? The idiot bankers? The big marker in the room. No, I'm kidding. There's no chance it was you. I was just kidding. I didn't have anything to do with that stuff. We went through Goldman and who was lead left and my CFO and I had long discussions about it. But wait, take it. It was 70 million share floats. Can you explain how it works? Yeah, sure. Yeah. for people who haven't read the goat book behind me. I'm not sure. Or the people who haven't been Twitter CEO. Yeah, there you go. Yeah, probably more people have read have been Twitter CEO than the read the goat book. Yeah, yeah. For the very few people left who haven't been one of the Twitter CEOs, I'll describe it for you. The float is essentially you have, you know, you have some number of shares. Let's just say it's for the sake of ease. It's there's a hundred total shares in the company. And the investors have 40 shares and the CEO has five shares. And the employees have options to buy, you know, another 10% of the shares. And you're about to go public. What you do is you issue more, you issue more new shares. And if you have, you know, if you have a hundred shares and you want to like, hey, we're going to issue, you know, another 10% and you make those available to the public or sorry, make those available in the IPO. You go out for two weeks before the IPO and you try to drum up demand for those 10 shares, you know, obviously it's a lot more shares than that. It's, it's times of millions of shares. Millions of shares. And again, in the case of the Twitter IPO is 70 million shares. And in fact, what you try to get, what you try to do is you try to generate many, many times multiple of the 70 million shares that you're going to issue. So you're trying to get, you know, fidelity to sign up for 30 million shares and Janice to sign up for 40 million shares. And on and on and on and there are dozens and dozens of these institutions that you go talk to. And, and you know, we had, I think we were like something like 50 times over subscribed. And what that enables you to do is the night before the IPO, you actually say, okay, I'm going to give fidelity, you know, seven, I'm going to give Janice two and I'm going to, and then, you know, the bank, but it has to add up to the 10. That's the key. Yeah, it has to add up to the, it has to add up to the 10%. And the case of, and so what, what, what, what a large float versus a small float means is in SpaceX's case, only issuing 5% of, of only issuing 5% new shares. What that does is you're going to have crazy demand because it's the hottest IPO in a long, long time. And Elon, spending this narrative about the future of the company. And we're going to go to Mars and have data centers in space, etc, etc. But if you're only issuing 5% of the new shares, and you've got this crazy demand, what happens when you have a lot more demand than supply, opening, opening morning, which we've seen with Figma and CyriBris and on and on, on, opening morning price goes through the roof because people just start bidding it up from the moment it's the moment it's about to open. And the bankers are, you know, trying to, before the stock even opens, the bankers are trying to, you know, gin up the, up the price by pumping it and having their, having their, you know, having their sales people on the phone with customers and, hey, I've got, you know, this is going to go, this is going quickly, but I can get you this many shares of SpaceX, but the price is going up, you got to come, you know, come, come in now, I'm going to open all this stuff that you would do to hype the thing. So what ends up happening is you have these big, particularly with a small float, and then I'll shut up. You have these big opening day pops, as they call them, where, hey, we price it at so and so, but the price at the end of the day ends up being two, three, xx. You could end up with the SpaceX day one trading it over $2 trillion, I think. I think you will. Which seems crazy, which even like three months ago, people were like, well, it's not going to be over like 1.5 trillion. I think it, yeah, I agree. I think it easily, easily be over to, yeah. Yeah, I think it, I think it'll be over $2 trillion. This is one quick question. In market cap in total. Yeah, yeah, yeah, yeah, nothing. You're right. Total gross market. When you, I remember when you did the Twitter IPO, it did pop, but when Facebook's IPO, it hit the floor and the bankers had to, had to hold it at the floor. Why, why were those different versus? Well, what you want as a, what you, you know, I mean, people always have retro, narratives and retrospect. What you really want is to, you know, pray, what you price the shares the night before. So, in Twitter's case, we price them at $26. And the people get to buy them at $26. And I'm not going to overcomplicate any of this with the green shoe and all this nonsense, because we could spend another half hour on that. So, setting that aside. I don't know if the green shoe. You price them at $26. And if the price in the morning pops to $45, and we opened it like $43, your investors and your team and everyone's like, well, you raised, you know, $26 times $70 million, you raised that much money. Yeah. But the price opened at $43. You're at stupid. You should have priced the shares at $43, because there's obviously demand of $43. And then you would have made almost twice as much money in your IPO. But now, you know, that money's been left out to the people who bought the shares at $26 and turned around and flipped them at the opening bell and blah, blah, blah, blah. So, a lot of people would tell you Facebook actually had a great IPO, because they priced the shares to perfection and made as much money as there was demand for. So, they got all that money themselves instead of leaving a bunch of money on the table to have an opening day pop, which looks good, but doesn't help the company. Now, yeah, that's a, but that's a really good point, though. I mean, because people try to have it both ways that if there's a pop, they say you left money on the table. If there isn't a pop, they say, well, you just mispriced it and it's like, dude, you can't have it both ways. One of the other is going to be things. Going to what's going to happen in the next few weeks with SpaceX and OpenAI, what is the strategy from those companies because we do know it's going to pop? So, how are they going to price it versus if it wasn't? It doesn't matter what they price it at. It doesn't matter. No, there's going to be, it'll be. And this is part of the problem is because it's such a story, like a story stock. This is not like buying black and decar. This is buying something that people feel like is the future, whether it's space, or AI, whatever else. And when you get a small float, strong narrative, marquee names, those kinds of things, the price is honestly irrelevant. It's just a thing. And so, yeah. And who better to price, who better to be out there on CNBC the morning that it goes public than Mr. Narrative? I mean, Elon is the, as we have seen with Tesla year after year after year, he's the master. The guy is just really, really good at selling the narrative. And the next, you know, yeah, this is happening right now, but wait till you see what's going to happen next year. And he's just, he's obviously graded that as evidenced by Tesla's market cap versus, you know, it's numbers. But here's the thing though that I was pointing out at this is what I was talking about. But the fed thing is that the comparisons to the dot com hot IPOs is wrong now. And the reason is that the market is structurally hugely different now from what it was 10 years ago, 20 years ago, and people have missed it. And the market is structurally very different. And the big difference is, quiz questions, 10 points, index funds. And so the big difference is index funds, because something like 35% of the US market are passive investors now. It was like 10, 12 back then. So it's like 35% to 40% is index funds. Index funds are passive investors. They're not doing what they call in the business price discovery. They're like, I don't do it. I don't care what the price is. All I know is if it's x% of a cap of a market cap weighted index, I need that percentage of it. And then it gets worse. It gets more circular, right? Because if I know that they know, then I know I should be buying the stock in advance of them, because the higher it goes, the more they have to buy. Right? And so you get this, used to be called index arbitrage. But this isn't like index arbitrage. It's more like, you know, the scene in Oppenheimer, where like Teller says, like, if we don't stop doing this, we're going to like burn down the atmosphere or something. This is like burn down the atmosphere stuff, because there's no end to that when passive index investors are half the market. They must continue, they must buy it at any price to fill out the portfolio at index weight. And there's been an accommodation made under the rules to allow this thing to be into the indices much faster than usual. So that's going to happen and it's going to happen at kind of an atmosphere burning scale. Wait, just let's just help people understand that piece for a second, because what Paul just mentioned is important. It used to be the case. I believe this was the case. It used to be the case you had to wait at least a year before you could be added to the S&P 500 or the, you know, pick your pick your favorite index. And what's been happening recently is a bunch of lobbying on behalf of these, you know, IPOs that we were talking about here coming to market. Like, hey man, why wait? You know, obviously it's going to be part of the S&P 500. And this index and that index, let's just get it in their ASAP. Well, the tragic lip side of that is what Paul's just describing. You know, you're coupling jamming it into the indices right away with a tiny float that's kind of already drive up to man around what we know is going to be a crazy narrative that, you know, may come true next week, may come true in 10 years. And the weird thing is you run into this problem, Paul's describing. Wait, Paul's right. Even if they hadn't changed the rules though, this would have happened anyway as the pro-versity, because for the reason Dick just said, which is, these things are so big, they're not doing SpaceX a favor per se. This is just map. At the market cap, SpaceX is likely to come to market. Whether it's in the index in three months or 12 months, the effect in terms of being able to frontrun all these passive investors is the exact same. It just happens at a relatively standard date. But the same crush of people saying, I know these guys have to buy it. I know they have to buy it in huge scale. The supply is constrained. This is going to be terrific. I'll frontrun the bastards. Think again. More Americans listen to podcasts. than add supported streaming music from Spotify and Pandora. And as the number one podcaster, IHeart's twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only IHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business. Think IHeart. Streaming, radio, and podcasting. Let us show you at iHeartAdvertising.com. That's iHeartAdvertising.com. Number one hits. Millions of records sold. Awards sold out to us. You think that Jonas Brothers are satisfied? Nope. It's podcast time. We asked other people questions because we're sick and tired of being asked questions. Hey, Jonas is available now and their first guest is a big one. Paul Rudd. 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For Vietnam. I've taken a hit from Japanese ground fire. Do you read me? They're pouring petrol all over him. He's holding matches. I'm on a landmine. For freedom. Get out, freedom. Come in. Run. Saigon, starring Kelly Marie Tran and Rob Benedict. Staying here's madness. The world should hear about this. There's a fire coming to this country and it's going to burn out everything. Listen to Saigon. On the iHeart Radio App, Apple Podcasts, or wherever you get your podcasts. When you, we've talked offline about how worried you are about these IPOs. Can you explain why? Now that you know the float size, now that you know the revenues and so on and so forth. What do you worry about and why? Well, exactly this. This idea that because of this feedback loop. Spell out the worst case scenario. Burn the atmosphere. No, that's not. I'll be interesting. No, so because of this feedback loop. So the feedback loop means the higher the price goes, the higher the price goes. Not because of a momentum thing, like some wacky momentum dudes driving it higher. No, but because half the market are passive investors who are buying what are called market cap weighted indices, meaning that the higher your market cap is, the larger a share of the index you are. So I have to buy more of you as your market cap goes up. There's no end to that process if the company is large enough. You're forcing, you're creating a force cycle of buyers where every new buyer creates a new buyer. And the thing gets bit up to extreme levels to fill out this position in the index for no other reason than algorithmic, right? These in because of being gaming, they're going to be out of indexes. And so that's a much more troubling phenomenon than even if they've done a large flow. Because if they do a large flow, let's flip this around. If you do a large flow, what are we worried about then? Well, we're worried that a much larger piece of it comes public. There's more liquidity, but that also means the buying happens sooner, right? Because all of a sudden now there's far more shares out there. The marginal buyer can get stock. And so that's going to pull money from other places, right? So all of a sudden it's going to be like, "Gram is ETF." It's like, wait a minute. Google's not doing so well. I thought they were doing well. And it's like, no, no, no, no. You sell the most liquid names to fund your purchase of SpaceX because you can, right? Not because I hate Google. So all kinds of very strange things are going to start happening at huge scale because of these second order effects. Whether in it weirdly enough, it doesn't matter whether it's a large flow or a small flow, it's just the consequences are different because of this feedback loop. By the way, my ETF that I call a gram is ETF. Isn't doing nearly as well as I thought it would want to launch it. Yeah, I'd blame Elon. That's probably it's SpaceX related. We talked on an earlier show about the race to see who was first because a lot of the capital will go into that. And so it now appears that SpaceX is going to be first or open AI and so on. What does this mean for Anthropic, which is clearly going to probably be last? Yeah, I honestly don't, unless we actually do burn down capital markets, I don't think it'll matter. It'll just be a series of wild, wild gyrations because of these small flowed IPOs, causing a price spiral, causing all kinds of index arbitrage going on. And the markets will be just wildly oscillating as a result of it. And you'll get these uncapped prices and what have you. But I don't, these things are sufficiently not overlapping that there's an appetite for all three of them. And it's massive. In part, I had someone tell me the other day and I was just sort of thinking this is madness. This guy just been laid off by a major tech company and he said, I'm going all in on all three of those IPOs because owning those is my future because I'm no longer have a gig. And I'm like, you're basically going to, he said, yeah, if they're going to take all the jobs, then I want to belong those three. And I'm like that, you're going to see a lot of this very narrative driven. If this is the future, I need to belong at any price. Check, I have a question for you. So when you were, we talk a lot about the CEOs of these companies and how rich they're going to get. And, you know, the countless billionaires are really minted and the one trillionaire, unless you of course beat them to it and then there's two. But what did you see that we should expect from the IPO, from the employees once they were able to, once they got rich, like what were some of the narratives and things that you still happen? - Bailing like rats. - Like we were already seeing, I remember I lived in San Francisco at the time and I was on a journalist's salary and I remember going to, we were trying to buy a house. We were trying to buy two bedroom house and we would go to these houses that would lines of 400 people in Facebook and Twitter t-shirts and so on. And they would literally, I remember one guy who was face timing with a friend, he was like, I'm on my way to brunch but I might buy this house on the way. What do you think? And like going for hundreds of thousand over asking or cash, there was just a story this week about a house with four people, I believe were murdered in or died in that went from 700,000 over asking for this. - Yeah, I saw that. - What happens, what psychologically, what are the downstream effects of all this, specifically on the employee-based and then also kind of economically in the places that they live? - Well you just hit on one, which is, I mean, the house that sold for 700,000 over asking where four people were murdered in it is one thing. I think what was more-- - Congratulations on winning that bid poll, by the way, the people. - I love, I also bought the Amity Bill House, you know the one in Amity Bill House, I got that one too. It's a whole portfolio of mass murder, I've got it. (laughing) - Yeah, the more shocking price was that there was a home in San Francisco that was priced at 7.5 million that sold for 15 million. - Yeah, it's double. - Wow. - And so that's, while there's some secondary liquidity in these names and the stripes and the others, but not yet tons of liquidity, just wait what, just wait to see what that's gonna be like here in this next year when all three of these things are out. I mean, I think the SpaceX IPO, I think they read this correctly, it will mint 12 new billionaires and over 100 new center millionaires. - Yeah. - There's not infinite real estate, as we know, in San Francisco or Austin or New York or-- - I was just gonna go through the roof on most desirable places. - I was talking to an agent in Aspen who was saying that in the first, I think I told you this, but in the first half of the year, he's done 100 million grossing sales, biggest six months ever and it's on time, when he said like 80% tech money. So there's a-- - Yeah, it's talking to an agent in New York that told me the biggest sale, biggest, the same thing. And it's all tech. - It's all tech and here's the thing though, you said he said, well wait, they haven't gone public yet. Bankers are very clever about creating structures that allow you to pledge your stock in advance of the IPO and you're not supposed to do it, but it doesn't really matter, it happens anyways. And so you can pledge your stock as collateral in advance of the IPO and then get alone to actually make these kinds of purchases and then flip it post IPO and satisfy the debt obligation and now all of a sudden I'm the proud owner of a wildly overpriced Manhattan townhouse. - I literally know people who I've spoken to with some of these companies that are doing exactly those deals, they're selling their stock with a promising. know for 90% of the value that the potential IPO, they're going off and buying $17 million townhouses. Yeah. The thing that happens, and I would say that Elon and Sam are a little bit insulated from this because they've already been involved with public companies, whether it's obviously in a launch case, a bunch, and in Sam's case, he's sort of been through that if you will with Reddit and others in certain ways, obviously not to CEO Reddit, but understands what goes on. The interesting challenge for executive teams inside these companies is before the IPO, in the years before the IPO, in 2022, we were evaluated, I'm making these numbers up, in 2022, we were evaluated a billion dollars, and then in 2023, we were evaluated $10 billion. And there's like, you know, you're worth a billion dollars for a year until there's the next fundraise, and then, oh wow, it's neat. My stock is now worth five times as much. And then you're worth that much. And no one's going around on April 15th and going, "Hey, why is the stock worth $10 billion?" It's like, well, that's just what we raised that eight months ago, or six months ago, or whatever. You get it. There's just, you raise money and like, hey, we're not worth this much. Okay, great. And multiply times the number of options you have, and you go, "Great, I have this much money and potential wealth." The day you go public, that start changing constantly. And I remember that in the, you know, after the Google IPO, there was this sort of ridiculous notion that I think Larry or Sarah Gay said about, like, hey, you got, don't look at the stock price. Of course, like, that's like saying, you have a certain number of options times some magic number. Don't look at the magic number. Like, yeah, I'm good. Guess what? I'm going to look at the frickin' magic number. I'm going to look at it all the time. Yeah. And so, say it like, hey, don't focus on that right now. Like, yeah, easy for you to say. You just made $4 billion. You don't have to pay attention to it all the time. I'm trying to buy a house or whatever. You get it. So, the challenge once you go public, maybe this is most important for Dario who hasn't been, you know, involved in running a public company is, the day the company goes public, the stock just starts to fluctuate for any reason or no reason. And you know, remember specifically, vividly, I've told the story a bunch of times, the, you know, a price that we put $13 on the cover of the S1 and that was after six, seven years of work. Then, two weeks after the road show, we priced the stock at 26. So, company doubled in value after two weeks for not really any other reason, other than a lot of people on the stock. Pretty good. Yeah. And then day one, closed at 43. You know, so I got back and told the company like, hey, congratulations. I don't know what you guys did today, but you like doubled in value of the company. But then they couldn't sell for six months. Well, no, no, no, I mean, I'm as kind of, I said that by way of saying, hey, just remember, there's going to be days when the stock goes down by like whatever percent for no reason. Don't come up to the hallway and call me and go like, what happened, you know? Yeah, yeah. Right. But guess, guess, so I thought I was like super proud of myself because I've inoculated myself and the company from random fluctuation and the stock price. Guess what happens when the stock goes down 5% one day. So walk up and go, hey, what happened? So what's going on? There's this whole other management of expectations versus, you know, hey, I thought I was, you know, and then the worst thing is for folks like, Minneck can imagine if you went and talked to Dylan Field, you would say, you know, the worst thing possible was that the stock went up to like whatever $170 on day one because people that day multiplied their thousand options times $170 and we're like, I am in six months, I will be worth this much money. And you know, the king of Toledo. And then you know what they say now, like, what is the stock going to, I wonder when the stock will get back up to 170? Like, that was a fake price, man. That was a fake price. What are some of the, what are some of the, that's the way people think. What are some of the, could you have any funny stories or any fascinating stories of some of the stuff people bought? Oh, I've seen so many crazy things. I don't, unfortunately, I should go on an IPO. I won't, I won't, I won't. I bought this letter back here in my library. He bought the go book. Yeah, it's really good. But don't forget, there's a whole clove and hoof section. I mean, I know a guy who bought four for Arise and was pissed off that he didn't get the fourth one for free. By three, by three, yeah, one free. Yeah. And so, hey, man, I got an ice cream guy down the street and he does it. Yeah, what's the deal? If I get the salted caramel in the strawberry and the chocolate, I get the vanilla kicker. What should get the scoop? I don't know. How do you go to stay in business with a business like this? This is crazy. I know a guy who, we all, we can't believe in Steeler ship is a killing sips with stupid business real review. I will give it. It was, it was great. We all know a guy who started his own micro dosing chemist lab in his home so that he could make sure that his micro dosing drugs were at the, the, I know this Chris. I can't say names. I don't speak. Yeah. Yeah. Later, you'll tell later I'll tell you. Is this you? Yeah. Yeah, it's because I've been involved in so many IPOs. All right. So here's a question I have for both of you. And I know the answer. Nick, before you go there, I can I just go somewhere just, and this is, I mean, this is a question for Dick, but I mean, I've seen it too is like the next thing after they do the bad math of here, we've gone public. Here's how much I'm worth. And I need three per hour for our, for four hours for the price of three and whatever else they're up to. The next thing that happens is they say kind of F you and they go because the stick you had to keep them motivated kind of goes away. Like, you know, I'll find I'll say, okay, I'm an entropic. I'm mission driven, baby, I'm going to be like a GI to the max and whatever else. And all of a sudden you got the, yeah, yeah, you know, you know what? Maybe a GI later. Yeah, yeah. AGI is all great and everything, but that yacht in the parry is super, super compelling. Right. And this kitchen won't renovate itself. There's all of these important constraints. And people become, and I've seen this so many times, people become so wildly distracted, especially at this scale because they do the math that Dick was describing and they say, like, what am I doing? Why am I hanging around here? Maybe I can go to one day a week or whatever. And I'm going to work remotely because I'm going to spend most of my time in like Panama surfing and I'm building out in the state there or whatever else. And that has an impact on the companies. The companies now, all of a sudden, because generally speaking, the people who have the largest takeaways are some of the most senior people who were there the earliest. And they have an all had prior exits and they're like, and they're not all like sociopaths who are just keeping score forever. And they just bail. Whether they actually physically bail or just emotionally bail, they bail. Wasn't it you, Dick, that told me years and years ago that there was some guy at Google who used to, who had to, they acquired his company and he was like, I don't want to do this anymore. And he used to go sit on the roof every day. And there were people there, after the Google Quad fee burn, I was starting to work, starting to work at Google. For people in Mountain View who were wealthy due to the, you know, have being early employees or acquired and the stock price continuing to go up, who would literally just play beach volleyball on the beach volleyball court between the four buildings at building 41, 42, 4, 3. And I would be like, that guy's been playing beach volleyball since 10 a.m. Is anyone going to say anything? No one ever did. Yeah. That's crazy. But you see that. And I mean, in the data is really pretty compelling that you end up in this spiral post-IPO where it's, it's actually a really, I mean, it's hard to feel much sympathy because of, you know, all the sentient millionaires being minted. But nevertheless, from the standpoint of the companies, you know, with themselves, they change really dramatically. And, you know, you, you, you, they generally speaking are much less, you know, ferociously competitive plays. You get a different types of class of employees in there. And, you know, it's, it's really unpredictable what comes next. But that's also didn't, that didn't happen with like you have an instance where that didn't have with the company like Navidia, who had gone public before and now had this new innovation and so now people want to grow. Yeah, but Navidia was fucked before it wasn't fucked, right? Yes, exactly. I mean, Navidia was a mass for years and then unfucked itself and then, you know, in all likelihood, we'll refuck itself. Things are all technical equity, add-on, let's do things by the way. Speaking of the former sales side, add-on. Think again. More Americans listen to podcasts than add supported streaming music from Spotify and Pandora. Plus only IHeart can extend your message to audiences across broadcast radio. Think IHeart. Streaming, radio and podcasting. Call 844-844-IHeart to get started. That's 844-844-IHeart. Hey, it's us, the Jonas Brothers and guess what? We have some big news. What's the news, news news? We created our own podcast called, "Hey Jonas, we invented a podcast?" Well, we didn't invent it. We just concluded first. We're able to do podcasts. Pretty wide range of podcasts. We're starting a trend. But this one's extra special. So how do we actually come up with the name "Hey Jonas, guys?" I honestly don't remember. I think it was on a call about what we should call it. Oh, we are thinking, I'm originally calling it, "Hey Jonas, we invented a podcast." it one of the early names of our band before Jonas Brothers. This is how you guys remember going down. - Yes. - I have a very different memory of this. - We were talking about a thing, a bit for the podcast. 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The books, the tropes, the adaptations, the drama, the discourse. - And what all of it says about how we actually love, yarn and obsess. - We're going to weathering heights. - Which for the record is not a romance novel. - And yet it has haunted the romance genre for 200 years. - We're getting into dark romance, age gaps, certain Russian hockey players. - And sentient objects in love, which is a thing. - That's the kind of conversation where having every episode. Listen to the Radio 831 podcast on the iHeartRadio app, Apple podcasts or wherever you get your podcasts. (upbeat music) - The other thing that happens and is gonna happen again, but it happens sort of after the, there was this string of your members, kind of sort of like Facebook, LinkedIn, Twitter, Uber, Dropbox, all that stuff sort of happened in a little window there. The other thing that's gonna happen is that you get this, the haves and the have-nots, the people that didn't make a ton of money and that's one of the three IPOs and are like, you know, they just have this, you know, the sucks. And now, housing is like this $7 million house went for $15 million and I didn't, and that's $7.5 million was out of reach. And now it's double. I didn't, my inability to buy the $7.5, you know, is still an inability to buy the $7.5, but now it's $15. So you get this really, we're gonna have this amplification of the lives of comparison and the haves and the have-nots that will be, if it's not, it already is, but it will be a lot worse. - And it'll be worse in part because I think people, well, we've all seen the statistics, but like AI is less popular than ice, right? I mean, it's profoundly unpopular technology, the notion that this technology that is profoundly unpopular and it's like eating up farmland near my town or whatever else is also making all these people rich who are then bidding me out of things and what have you. This is a really like a bad mixture. So we have a chemical reaction, right? - Yeah, I wanna say something about that. It is remarkable to me that these executives at these companies aren't out talking to America and helping them understand why it's important that we build these data centers. Let's just, for the sake of our ignore, whether it is or is it important that we put in the state center. The fact that they're not out there with a, here's why this is important, you know, we-- - Well, they're not out there because it doesn't benefit their egos, like that's just the reality. - I mean, let me, however, okay, let me just-- - I think they're not out there because they want plausible deniability, they want distance from it because they know it's unpopular. - Agreed, disagree. I think they're not out there because they're not thinking, they're like, it's just gonna happen. Let's not, that's not my problem. Well, it is your problem because it's not gonna happen if you don't change the narrative pretty soon. I mean, you've got these people, let's just use, let's use the stupidest one. (laughs) The morons behind the Salt Lake City Data Center have decided to hire Jackass number one, Kevin O'Leary from the guy from Shark Tank who's a Canadian-- - Hey, those guys. - Who's out in public, by the way, he's doing interviews. - Yeah, he's out in public. - On both Tucker Carlson and on, you know, whatever lefty podcast, saying like, all those people are like paid protesters - Yeah. - and paid by the Chinese. Like, if you wanna infuriate both the ravaging and the average and the left wing you person in Utah, all that tell them that Kevin O'Leary thinks they're just paid protesters by the Chinese. Like, who thought it would be a good idea to hire the FTX spokesperson to come be the spokesperson for the Data Center in Utah? It's like the dumbest thing ever. So, there needs to be a really quick flip in the way these things are being sold across America to Americans. - But the way-- - They're not gonna-- - No, no, you're totally right. But part of the problem is, we saw the other one that's just as bad in many ways, was Fermi, which was a Data Center complex in Northern Texas, which was run by, well, it was associated with former Texas governor Rick Perry and he created this kind of entity that was going to be this massive gigawatt Data Center complex. They're gonna have nuclear power. They're going to have natural gas and everything else. And they went public with nothing. And so they went public like last fall. It was lost stock lost like 80%, 90% of its value. They did went full mega on their conference calls because we all know that's good for earnings and it's not spoiler. And then now most of the management team is left and everyone's pretending they had nothing to do with it. So the moral of this story is, why are these kinds of people attracted to these projects? Because they just see them as apartment complexes, real estate with yield, data centers or just apartment buildings to them. And there's yield and prime tenants. These hyperscalers are fantastic credits. And so they're like, I don't really care what's going on inside the data center. All I know is Google's good for it. It's a 12 year lease. The buildings can get paid. And so they just want the yield and this is the disconnect. You got real estate speculators speculating because they've got prime credits paying them a high yield. And that's what brings in people who don't look at all familiar from a tech standpoint. And are exactly the types like O'Leary and others that are making people go, honestly, this is the pitch. Wait, the larger thing going on here is that there is, there has and there have nots, right? There is this, we just talked about the fact that 12 billionaires, one trillionaires, what is going to happen? It's going to be a new version of the touching Christmas song, one trillionaire. I like your version. I read a story with one of the 12 managers talking about the number of people that will get rich from this and the rise of inequality. You've got AOC talking about how there shouldn't be billionaires. And so on, this wealth management-- Wait till she-- wait till she learn about the trillionaire. That it's completely 100% unsustainable as a society for this amount of wealth to flow to such a small number of people. And then you're talking about, yes, people hate AI because they think it's going to take their job, which it probably is, unless you're a plumber or a hairdresser. It's all of this-- Paul, you've talked about the fact with the data center thing that it's this perfect storm of X, Y, and Z happening. Aren't these IPOs in the even bigger, perfect storm of the wealth inequality? And-- Oh, of course. One last point on this. I remember when the Twitter IPO happened and Facebook and everything. And I was-- It was when you get dragged into this. And I wrote a story, The New York Times, that at the moment of that IPO, the value of homes went up so much in San Francisco. They wasn't a single home or apartment that a teacher, a firefighter or policeman could afford in San Francisco. And it's like, what happens when this takes place on a massive societal level that is 1,000 times more impactful than the social media gets? The history of societal breakdown is kind of riddled with exactly that. This incredible growth and inequality is associated for the last 1,000 years. Whenever you see that, it often leads to breakdown because people feel like the spoils went to a relatively small number of people, often because of sweetheart deals. in this case, I suppose it's slightly different. But nevertheless, the point being that it's profoundly destabilizing for society. And even worse now, because people see it as a job loss. They see it for, for, you know, look at the news today with respect to Intuit or Cisco or whoever else I saw. Oh, Matt, I was letting all go people. I mean, whatever you think about those people and what they've previously made from these companies or whether they have too many people, the notion that you can make a seclean separation is just ridiculous. It's misguided. And that goes back. Dick's been spot on about this. That these guys are just clueless. That they just don't think through the consequences because they're too busy getting theirs. I would have to, and Nick, importantly, to the questions you just asked, you know, when you had the Vanderbilt in the Rockefellers, they sort of realized, hey, we've got this civic duty to give back and build opera houses and create the Rockefeller, you know, donate this 5,000 acres to an appended on the Grand Teton National Park and build the Rockefeller Center there because otherwise people are going to react precisely the way you guys just described. The current group of people who we're talking about who are about to take these things out don't seem to exhibit any awareness of the fact that they better start working on that playhouse and that opera theater and that-- There's just none of them. There's no realization or awareness. They better start helping people understand why this is good for them. -Without, with that, with it, it's worse though. -It's worse than this. -They're building bunkers. -Yeah, they're building bunkers. -They're also in court saying, I know you are, but what am I? -Yeah, really? -The exception of the Zuckerberg Hospital and the Costal Loan Goat Farm, I can't think of anything that-- -Yeah, well, you know, Mark, Mark, you can rightly say, Mark, as someone who thought, like, okay, I gotta start giving back and I'm gonna donate to-- -But I can't think of anyone else that's really done it. I mean-- -Bennyoffs donated. -Yeah, Bennyoff, but has Bayzo's. I can't think of-- -Just like the scene from the Romans. See, what have the Romans done for us? Sure, Bennyoff donated the hospital. But what else has Bennyoff done for us? He's-- oh, yes, the hospital and the children's ward. -But what can I ask? -Why do you think that this generation is just doesn't think like that? -To, you know, inwardly focused and not outwardly focused, that's as simple as that. -I want to look at-- -Look at-- -Look at what-- -And not so great as generation problem. -Look at what they spend their time doing. Basically yelling at each other on Twitter. -Yeah, you know? -Good point. -Yeah. -Yeah. -Thanks for that. -Back and forth the whole time, but I just think, like, they're not even the idea that, you know, I think who is it? Is it-- is it-- Altman has some kind of bunker in New Zealand. -They will have bunkers. -They call it-- -Right, right. -They call it apocalypse insurance in San Francisco. -Yeah, yeah, yeah. So in Amadez, we've been talking about how, you know, this is going to basically destiny. These messages really resonate with scared people. And I just think that, you know, there's basic PR. They could be viewing that it at least would help a little bit, even if it doesn't deal with the fundamental inequality problem. And I just-- it's remarkable to me how badly it's gone. Can we talk about the bunkers for one second? I have a theory-- -I thought you were about to say I have a bunker. -And I have a bunker. -I don't have a bunker. -I have a theory. -I have a theory about the bunker. And it's based on Evan Osnos from New York, who was writing an article on the big tech preppers, like Peter Teele and Sam and other-- and other-- several years ago. And he had a conversation with me on the phone. He's like, what do you think about all that? And our conversation, you know, I was basically like, I think if things really go south, and it hits the proverbial fan, if you've got a bunker in, you know, Big Sur, and with the gold bars in the basement, and your own generator, and guns, and canned food, the thugs on the street are going to go see the house up there with the lights on, where all the gold bars are. -You just became bonds. -Yeah, I think-- -I think if things really, really go wrong, you know, you want to know how to remove your own appendix and skin a swirl, and the bunker is not going to be that outful. -No, I don't think so. If you had a bunker, would you want to fucking live there? Like, would you really-- -This is what I'm saying. -And the rest of your life, even if you could, even if it was fortified, and you had your gold bars protected. -Yeah. -Yeah. -No, if Brockman and Sam were in the bunker, I think it's around 72 hours before one of them. I'm like, I wish this guy would shut the fuck up. [ Laughter ] -That's too funny. It would be awful, but, you know, you're trying to be logical about something that's really just-- I don't know. It's this fear that they think society's heading towards this inflection, where it's me versus you, and it's all against all, and all this kind of thing. And the message resonates with people. And they're like, "Okay, if he's saying that, then I'm in. I get it. I should be like, you know, getting my cans and shotguns and everything else, because these guys, they can't protect themselves. What am I to think I can?" So-- -And on that touching note about bunkers in the end of civilization, thus ends another episode of the pressing of the duimmers arrest. No, but you know what, though, in all seriousness, I think putting aside the whole burn the atmosphere thing, it's going to be really, really interesting to see what happens with-- like to go back to the beginning-- with a 40% index fund market that has to soak up three of the large-- four of the largest IPOs in history, and everybody has their head and their ass about it. And it's going to be really interesting to see what happens. And then all of a sudden, of course, something big and stupid will break, and it'll be like, who could have known? -Who could have known? -This is my-- -I don't know. -By interesting, Paul means I can't wait to see-- I can't wait personally waiting to watch-- -To watch from my bunker. -To watch. -To watch my bunker. -All right. -That's true, actually. -Tick, I just want to wish you luck in the race against Elon. It's really first trillionaire. I'm rooting for you. -Thank you. -Thank you. [MUSIC PLAYING] -Hey, guys, it's us, the Jonas Brothers. 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