Institutional Expertise and American Governance

Support for the show comes from Odu. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other Introducing Odo It's the only business software you'll ever need It's an all in one fully integrated platform that makes your work easier CRM, accounting, inventory, e commerce and more And the best part, Odu replaces multiple expensive platforms for a fraction of the cost That's why over thousands of businesses have made the switch. So why not you Try Odoo for free at odoo. com That's O doo d. com Support for the show comes from Odu Running a business is hard enough So why make it harder with a dozen different apps that don't talk to each other Introducing Odu It's the only business software you'll ever need. It's an all in one fully integrated platform That makes your work easier. CRM, accounting, inventory, e commerce and more. And the best part, OdDu replaces multiple expensive platforms for a fraction of the cost That's why over thousands of businesses have made the switch. So why not you? Try Odoo for free at odoo d. com That's odoo d. comot Remember the three Rs, reading, writing, and arithmetic? Well, we aren't really doing that second one anymore. On average, teachers report spending as little as ten minutes a week on teaching handwriting explicitly in kindergarten classrooms. This week, unxplain it to me Handwritings recession and Rennaaissance. Find new episodes Sundays wherever you get your podcasts Welcome to the Wek from ProfG Media, where we break down what mattered and what it all means. I'm George Han and it's Friday, june nineteenth. Today, the biggest IPO in history finally landed, minting the world's first trillionaire Then Is the Iran war over And finally, historian Heather Cox Richardson on expertise, power And America's Future at two hundred fifty Let's get into it SpaceX went public this week After years of waiting, the largest IPO in American history finally landed opening at one hundred and fifty dollars a share an eleven percent jump from its offering price and climbing from there. By day three, SpaceX was briefly worth more than Amazon Elon Musk is now the world's first reallyllion air. But Scott wasn't celebrating His argument What happened this week wasn't a market event It was financial engineering. And what I don't think people are focused enough on here and there's been news on it, but it's really, I think the whole shooting match is that Musk threatened not to go public on the NSDAQ unless they waive the twelve month requirements for him to be included in the NASDAQ one hundred. So they backed down. They blinked. The SMP said no The Dow Jones said no, but the NASDAQq blinked. and the result is they're immediately included in these indices. If it's at two trillion dollars and there's fifty trillionars of market cap in the NASDAQ one hundred. That means all the indices that track the NASDAQ one hundred now have to put four percent of their assets under management into SpaceX stock, creating anywhere between twenty and call it fifty billion dollars in additional demand that no IPO uh is, you know, benefits from. In addition Traditional IPO rules are that you have to issue at least ten percent of your shares. They didn't. They issued five percent. So massive artificial demand or demand that no one else has benefited from from constrained supply that no one else has been able to manufacture And what you have is a pop percent or twenty five percent pop on what I think is manufactured scarcity. Now The question is where do you go from here? And I would argue, someone called me and said I have access to share. shouldhould I do it? I said I think you should, but I would look at this as a trade, not as an investment becausecause eventually that manufactured scarcity begins to Leak. When the dust settled SpaceX was trading at one hundred and twelve times last year's sales. For context Meta went public at twenty eight times trailing revenue Google Ten And just as investors were digesting the biggest IPO in history Another piece of the AI story emerged AI's financials leaked and the numbers We're staggering Here's self proclaimed AI skeptic Ed Zitron who first reported on the leak So last year, OpenAI spent about thirty four billion dollars to make about thirteen point zero one sorry, o seven billion dollars Dob It had about twenty two billion dollars in cash at the end of the year. lost about twenty one billion dollars. That thirty eight, thirty nine billion dollars number is what I would describe as gap voodoo There is some very strange stuff and I'll be going into this in future episodes going on in the balance sheet and everything with this company. They turned from a nonprofit to a for profit, though they've remain profitless last year, which means that they have their net loss is quite strange, it like thirty eight point five billion dollars. But the number I'd like to come back to is they lost twenty one billion dollars from operations. And they spent astronomical amounts on sales and marketing. they spent seven point five billion dollars on cost of revenue, nineteen point one eight billion dollars in R and D But that sales and marketing costs, that five point seven three billion dollars is one I really like to hammer on because What? It's like it's just it's just like it's like excuse but well, how much did you spend How much of today's AI boom is being driven by fundamentals And how much is being driven by the belief that someone else will pay even more tomorrow Morningstar recently estimated SpaceX's fare value at roughly seven hundred eighty billion dollars less than a third of where it's currently trading And on markets this week, Howard Marks co founder and co chairman of Oak Tree Capital Management the moment in historical perspective So I wrote in a memo recently this year. and I think it's true If this technological innovation with its exuberance doesn't produce a money losing bubble It'll be the first And now it could happen you know, you can't rule these things out And you know, maybe this is a good time for me to introduce the rejoinder of the Uh' the optimist What do they say? This time it's different Okay, that was true about the railroads. It was true about radio, It was true about computers and the internet. But this time it's different And this time we have a development of incaalculable, unlimitable Uh, Value So there this time, it's really true that there's no price too high That's what they say. Right. But the problem with that is they always say that This time it's different is never different. And they've set it in each of those bubbles that I mentioned, I think, So All noody, including me should say definitively that this is a bubble, that the people who invest in these early stages of AI will lose their money, that the people who invest in the companies you named U will pay prices They'll never see again You must be alert to the possibility The Siller PE ratio A measure of how expensive stocks are relative to long term earnings Now sits above forty But The last time it got this high was nineteen ninety nine. Back then, investors believe the internet had changed the rules. Now maybe AI has. We are officially in dot com territory We'll be right back after the break Support for the show comes from LinkedIn. If you're a small business owner, you don't need me to tell you how much hiring great people matters. But the time and resources you have to spend to get it right are precious commodities. sourcing, connecting with and screening candidates can quickly eat into time, better spent on your customers. That's where a LinkedIn hiring Pro comes in. It's designed to be your hiring partner, helping you source the right candidates faster That way, you can hire with confidence without making it feel like a full time job. LinkedIn hiring Pro simplifies the entire process all the way from writing your job post to shortlisting candidates and running AI powered initial interviews. 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And the best part, ODU replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses have made the switch. So why not you Try Odoo for free at odoo d. com That's O doo. com Support for this show comes from Odoo. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing OdDoo. It's the only business software you'll ever need. It's an all in one fully integrated platform That makes your work easier. CRM, accounting, inventory, e commerce, and more. And the best part, ODu replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses have made the switch. So why not you Try Odoo for free at odoo d. com That's Odoo. com. Welcome back After one hundred and seven days of war, the United States and Iran announced what the White House called a breakthrough. Problem It's not exactly a deal It's a framework, or, as Scott says, a memorandum of understanding A sixty day negotiating period meant to produce an actual agreement later The hardest questions Nuclear enrichment, sanctions relief, frozen assets. remain unresolved On Rging moderates this week, Scott and Jessica Tarlov discuss And then the uncomfortable truth that no one wants to own up to is that Iran has way more leverage after the escalation than before it. We come out of this weaker They come out of it stronger. Let me just repeat that An honest analysis of this Iran comes out of this stronger We come out of it u weaker, your thoughts I wholeheartedly agree with you and would just add that even if they got exactly the same deal, the fact that they know that they can shut down the strait of Hormz. whenever they want and hold the world hostage is an enormous bargaining chip And you know, we're quibbling over the Iranians basically saying, no, we're not, it's not going to be toll free. R? Like we can work towards that perhaps, but it's not going to go from you know, sixty to zero Right when this reopens tomorrow or when the blockade gets lifted Ian Bremmer joined the show earlier this week and made a similar point his argument Even if the final terms resemble the old nuclear agreement The geopolitical context has changed dramatically. Well first, one obvious thing is that the JCPOA was not a unilateral U S deal It involved the Europeans, it also involved the Chinese and the Russians. So you had a lot of countries that had various degrees of influence in equities in their relationships with Iran that had a stake in ensuring that the deal actually held up, that the inspections actually went ahead, that the sanctions that remained on Iran remained on Iran, all of these things. So that's one point is that this new deal, it's only going to be the Americans And if the Iranians feel like they have more leverage going forward, then breaking an agreement that's only with the United States is less consequential than breaking a deal that involves countries like Russia and China that Iran really does not want to antagonize for other reasons The broader concern isn't just what's in the deal, but what the war accomplished After months of escalation billions spent and global energy markets repeatedly thrown into turmoil, we're left with an uncomfortable question Did the United States end up with a better outcome than the one it started with. On this week's Conversations episode, Scott spoke with historian Heather Cox Richardson As America prepares to celebrate its two hundred fiftieth birthday They reflected on power expertise and why so many voters have become skeptical of institutions Here's Heather. And one of the things that jumps out to me about the people in power right now is the degree to which they have simply said, well, I'm going to put the best people in charge. or I read a book. I then can go in and I can negotiate Middle East peace in a way that nobody who's studied this and been trained and so on has been able to do for forty years And the thing about that is we have never put those people at the highest levels of our government before. The idea that you just have a hotline to the universe or God or to intelligence, And in this moment, it seems to me that that idea overlaps strongly with Trump's sort of fascist traditional ideas about some people being better than others And that, I think is interesting because that's one of the reasons that evangelicals adhere to him as closely as they do And I I I don't really know how to grapple with that. What do you think about that I think in America it has become a national pastime of crit being critical of our government. and I would argue our government is the best performing organization in history And I think we haveve just taken for granted at every level how how thoughtful and credential people in the CDC are and the diplomats who try and hammer out cross the T's and dot the e's of an incredibly complex deal like this and that we have essentially ah gutted and neutered the competence of the best organization in the world. And Americans have taken for granted believing that that these things just operate on some sort of autopilot And I think we're about to figure out in a very painful way that no, there were very smart people working at the TSA. There were very smart people working in the IRS. The CDC, those people were there for a reason And when we decide to take out our entire Iranian diplomatic corps Um