Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast.
Speaker 3: I'm joll Wisenthal, and I'm Tracy all the way.
Speaker 2: Tracy, you know, I can never get enough talking about
Speaker 2: late nineties dot com.
Speaker 3: I know you're just gifting episodes to yourself at this point,
Speaker 3: but that's fine. I'm into it.
Speaker 2: That's always been the case for all the years we've
Speaker 2: done this podcast. I've made that comment here and there,
Speaker 2: but you know, recently it has a particular salience because
Speaker 2: people are trying to understand AI. We had that conversation
Speaker 2: down in DC several weeks ago with Blair Levin talk
Speaker 2: about some of the similarities and dissimilarities between AI and telecoms.
Speaker 2: So at least we have an excuse for these conversations.
Speaker 3: There is definitely a newspeg I'm looking at a chart
Speaker 3: of super Micro right now. They just put out results
Speaker 3: that I guess we're disappointing because the shares are down
Speaker 3: about twenty percent. We're recording this on April thirtieth at
Speaker 3: ten to oh four am. And Joe, can I just
Speaker 3: say we can labor this intro as much as you
Speaker 3: want about like similarities with the early two thousands tech bubble.
Speaker 3: But I'm just excited to speak to your old boss.
Speaker 3: That's all I want to get out of this conversation.
Speaker 3: Just Joe stories.
Speaker 2: Okay, that's fine. So this is an episode that I've
Speaker 2: wanted to make happen for a very very long time,
Speaker 2: and the timing is suddenly working out. I don't even
Speaker 2: know what we're really going to talk about, but we'll
Speaker 2: have a good conversation. Yes, we are speaking to my
Speaker 2: old boss. So a couple of major caveats or disclaimers,
Speaker 2: et cetera. I owe this guest a huge chunk for
Speaker 2: my own career and the success and the good fortune
Speaker 2: that I've had in my career. We're going to be speaking,
Speaker 2: of course, to Henry Blodgett. He's the editor of a
Speaker 2: new publication called Regenerator. It's gonna be focused on innovation
Speaker 2: and business and news and tech and stuff like that.
Speaker 2: Of course, the connection to me is that he is
Speaker 2: the founder of Insider. When I joined, I think it
Speaker 2: was called Silicon Alley Insider, and then Business Insider, and
Speaker 2: then Insider. I'm not exactly sure what the final iteration
Speaker 2: of the name was. And of course Prior to that,
Speaker 2: several years earlier, he had been a tech analyst at
Speaker 2: Merrill Lynch, one most famous analysts of the sort of
Speaker 2: tech sector. And of course have to acknowledge the second
Speaker 2: caveat or disclaimer here, which is he was famously or
Speaker 2: infamously prevented afterwards from working on Wall Street. Have to
Speaker 2: mention that maybe it'll come up. But with all of
Speaker 2: this throat clearing out of the way, Henry thrilled to
Speaker 2: have you on the podcast. Finally, this is a little weird.
Speaker 2: I'm actually a little nervous, if I'm being totally honest,
Speaker 2: I'm actually I don't usually get anxious ever in any
Speaker 2: setting anymore. I'm a little anxious talking to my old boss.
Speaker 4: Well, it is great to be here. It's a privilege.
Speaker 4: You guys do an amazing job. And I would say
Speaker 4: the student has become the master.
Speaker 2: No, but for real, thank you so much for coming
Speaker 2: on odd lot. It's really excited. I'm trying to think.
Speaker 3: Oh, this is very sweet.
Speaker 4: I know.
Speaker 2: No, I'm like actually a little bit like a verklemped.
Speaker 3: I'll ask a question, yeah, Tracy, the.
Speaker 2: First question, want to collect myself.
Speaker 3: How did you find Joe?
Speaker 1: Oh?
Speaker 4: I wonder if he remembers I was aware of Joe
Speaker 4: at another publication. I can't remember what it was, and
Speaker 4: I can't remember whether I hired Joe or Julie Hansen
Speaker 4: hired Joe or somebody else. But there he was, and
Speaker 4: we were in an environment where I was surrounded by
Speaker 4: a newsroom full of very eager, excited folks. And again
Speaker 4: and again and again the one who differentiated himself by
Speaker 4: his incredible fascination with and mastery of all things. And
Speaker 4: it's a big We were to write with an internet metabolism,
Speaker 4: which is somewhere between talk radio and magazines, whereas a
Speaker 4: lot of other folks wanted to come in and basically
Speaker 4: recreate the New Yorker. And so we spotted your talent
Speaker 4: very fast, and then your career took off like a
Speaker 4: rocket ship, and we were lucky to have you as
Speaker 4: long as we did.
Speaker 3: I like the idea of people just not finding Joe,
Speaker 3: but just being aware of Joe. It's sort of like
Speaker 3: like the Mister Bean intro, where you just fall out
Speaker 3: of the sky. Joe's just there and everyone kind of
Speaker 3: became aware of it.
Speaker 2: So there's actually a very elegant connection to all of this,
Speaker 2: which was the first time we met was during you know,
Speaker 2: it's like probably Tech Week in New York, and we
Speaker 2: met at a party at Gracie Mansion when Michael Bloomberg
Speaker 2: was the mayor and now we're here at Bloomberg and
Speaker 2: so we met. I was at Paid Content. I was
Speaker 2: covering earnings. You guys at Silicon Alley were covering earnings
Speaker 2: and so forth, and we chatted, and then several months
Speaker 2: later I joined all right, enough about all the personal stuff.
Speaker 3: No, I'm gonna have more questions, but go on.
Speaker 2: You know, I love talking about the late nineties, and
Speaker 2: we'll get small picture, but big picture when you look
Speaker 2: at this incredible enthusiasm for AI and it sort of
Speaker 2: cooled off obviously in the market over the last several months,
Speaker 2: but from a business perspective, it's tons and tons of
Speaker 2: AI interest. You know, what reminds you of the late nineties,
Speaker 2: whether it's telecom or just dot com, and what feels
Speaker 2: dissimilar to you.
Speaker 4: Well, stepping back, if you look at AI as a sector, yeah,
Speaker 4: that is very reminiscent of what happened in the late nineties,
Speaker 4: where in the mid nineties the Internet came along, everybody
Speaker 4: knew it was going to be huge. Yeah, there was
Speaker 4: suddenly a huge scrum of investment capital attracted to it.
Speaker 4: We had this experimentation for five years where a lot
Speaker 4: of people were making money hand over fist. Then we
Speaker 4: went through a devastating crash, which is normally the pattern. Here.
Speaker 4: The same thing is happening within the AI sector. But
Speaker 4: I should step back and say, just to check, I
Speaker 4: looked at the broader tech sector and we are categorically
Speaker 4: not in a tech bubble right now. You look at
Speaker 4: the big Magnificent seven, whatever you want to call them,
Speaker 4: they are trading at high but arguably reasonable earnings multiple.
Speaker 2: And that was the case say six months ago, two
Speaker 2: before we had.
Speaker 4: Some higher multiples, but still thirty times earnings or thirty
Speaker 4: five times earnings for the video, which is the big
Speaker 4: AI stock or the most direct way to play it.
Speaker 4: But yes, if you look in the private markets, and
Speaker 4: this is one thing that's very different is all of
Speaker 4: this is happening in a private right now, So we
Speaker 4: don't have a very good view of the financials of
Speaker 4: these companies.
Speaker 2: But all you need is like a PhD in a
Speaker 2: white paper, you're getting like half a billion dollar valuations
Speaker 2: for these starts.
Speaker 4: That's right, Yes, it's extraordinary. And I think one thing
Speaker 4: to look at to sort of check the sanity of
Speaker 4: it is, let's look at the biggest one, open Ai. Ok,
Speaker 4: they just did a huge round where they raised forty
Speaker 4: billion dollars at a three hundred billion dollar value. Six
Speaker 4: months to twelve months earlier, investors were being declared absolutely
Speaker 4: insane for investing at one hundred billion and one hundred
Speaker 4: and fifty and now here we are at three hundred
Speaker 4: and So what does that mean? Is it clearly insanity? Well,
Speaker 4: if you look at open AI's fundamental business based on
Speaker 4: what we know, which is again very secondhand and so forth,
Speaker 4: they are doing something like twelve billion dollars of revenue
Speaker 4: this year. Now, stepping back, that is an incredible number
Speaker 4: for a company that is five years old. This company
Speaker 4: is growing a faster rate than pretty much any company
Speaker 4: in history. And if you look at one of the
Speaker 4: financing models from a year ago at one hundred and
Speaker 4: fifty billion dollar valuation, apparently the projection was that they
Speaker 4: would do one hundred billion dollars of revenue in twenty
Speaker 4: twenty nine. If that is the case, and I would
Speaker 4: assume that that number is probably higher now given that
Speaker 4: they've jacked the valuation up, then we're looking at three
Speaker 4: times revenue twenty nine erska. A lot has to go right.
Speaker 4: But if you believe that open ai is going to
Speaker 4: win this next wave in the same way that Google
Speaker 4: or Amazon ultimately won the Internet wave, three times revenue
Speaker 4: for that, even given that they're burning five billion dollars
Speaker 4: a year, you know, you can see how professional investors
Speaker 4: who really actually do know the numbers are getting there.
Speaker 4: So I would just say if you look at that,
Speaker 4: that is probably the justification. And then the other thing
Speaker 4: that people forget, or at least I don't hear when
Speaker 4: I hear this disgust, is that most professional investors are
Speaker 4: investing in preferred stock. That's very different than public markets
Speaker 4: where we're buying common because you have downside protection. Basically,
Speaker 4: for soft Bank and the others who just invested in
Speaker 4: open Ai at three hundred billion, to lose money, open
Speaker 4: has to be liquidated at less than forty billion, Otherwise
Speaker 4: they get all their money back off the top, and
Speaker 4: they may even have provisions in the deal that give
Speaker 4: them a ratchet on top of that that give them
Speaker 4: a return. So it's very hard to really know what's
Speaker 4: going on. But that's that's the thing. So stepping back again,
Speaker 4: you look at that and you say, whoa based on
Speaker 4: today's numbers, Yeah, that is a fantastical valuation, but this
Speaker 4: is probably what investors are looking at now. Another point
Speaker 4: that brad Gersner and others have made about this is
Speaker 4: if you look back in the nineteen nineties, what happened
Speaker 4: with the internet companies. We had the premier companies like
Speaker 4: Amazon and Yahoo had these phenomenal valuations, and then there
Speaker 4: were all of the secondary companies that looked similar, did
Speaker 4: the same thing. We're in the same market, and a
Speaker 4: lot of investors who missed the big ones came roaring
Speaker 4: into I gotta get into Licosts or Excite or info
Speaker 4: seek or CD now they're cheaper than Amazon. I will
Speaker 4: just say that pretty much all of those companies went
Speaker 4: to zero. So the idea now that you can escape
Speaker 4: the incredibly high open AI valuation by investing in Anthropic
Speaker 4: or groc or any of the secondary ones. Maybe that works.
Speaker 4: Maybe there's room for dozens of companies, but if past
Speaker 4: his prologue here, there's gonna be one winner, which and us.
Speaker 4: The last thing I'll say is by the way, it
Speaker 4: might not be open AI because if you look at
Speaker 4: the big winners of the nineteen nineties, Yahoo would and
Speaker 4: they got creamed by Google, which came in during the crash.
Speaker 4: Amazon almost went bankrupt. You did not have to buy
Speaker 4: it in the late nineteen nineties, although I did, and
Speaker 4: then we wrote it down ninety something percent. It almost
Speaker 4: went bankrupt, and then finally seven years later it went
Speaker 4: to the moon. But these things play out. I do
Speaker 4: think we'll have the same sort of pattern in this
Speaker 4: sector that at some point will hit a peak everything
Speaker 4: oh crater. Everyone will pile on and say, oh see
Speaker 4: how stupid every one buddy was, and then a few
Speaker 4: companies will go on and make all of the money
Speaker 4: that was lost worth it for the folks who were
Speaker 4: in the winners.
Speaker 2: I'll just say two things. Having been worked at actually
Speaker 2: two venture backed startups paid content which did sell for
Speaker 2: a little bit to The Guardian and also Insider. I'm
Speaker 2: very intimately familiar with the concept of preferred stock versus
Speaker 2: common stock and how that gets treated in an acquisition.
Speaker 2: And one thing Tracy that I was like working with Henry.
Speaker 2: He actually knows numbers and remembers these details which I
Speaker 2: appreciate in these conversations.
Speaker 3: Yeah, I can tell. Okay, Henry, you just went through
Speaker 3: all the AI stuff, So I'm just going to ask you,
Speaker 3: what's your favorite memory of Joe?
Speaker 2: No, okay, okay.
Speaker 3: Okay, I won't, I want, I wont okay. On AI,
Speaker 3: it strikes me that one of the big parallels, and
Speaker 3: you just touched on it there. But it's the narrative, right,
Speaker 3: and it's the idea that AI is going to change
Speaker 3: the world. Back in the nineties, we had the whole
Speaker 3: the Internet's going to change the world, which was true.
Speaker 3: It was true that the Internet changed the world, just
Speaker 3: potentially not in the way analysts had been forecasting at
Speaker 3: that time. Talk to us about I guess the story
Speaker 3: that is being built around AI. And as a former
Speaker 3: Wall Street analyst, I imagine you are very, very familiar
Speaker 3: with the importance of narrative slash stories in pitching some
Speaker 3: of these investment ideas.
Speaker 4: Yes, I think that if you look at the idea
Speaker 4: behind what's happening with AIS, it's a revolutionary new technology
Speaker 4: that will smash into the economy and have major changes.
Speaker 4: And one of the theories that sounds right to me,
Speaker 4: certainly based on the Internet and other technologies that have
Speaker 4: come in, is that the economy will now adapt and
Speaker 4: there will be three kinds of companies. There will be
Speaker 4: traditional companies that refuse to use AI and ultimately lose
Speaker 4: their competitive advantage, or maybe they are in a business
Speaker 4: that has nothing to do with AI, maybe paint or
Speaker 4: something like that, so it doesn't matter. There will be
Speaker 4: companies that try to integrate AI into their traditional operations,
Speaker 4: and those would be analogous to the clicks and mortar
Speaker 4: companies back in the nineteen nineties and since. And then
Speaker 4: there will be companies that are built around AI, so
Speaker 4: they're not providing the technology, but they are using AI
Speaker 4: in a new way, and that's giving them the ability
Speaker 4: to be vastly more productive or grow at a much
Speaker 4: greater rate. And so I think that that's the way
Speaker 4: we'll see the economy adapt. And I do think the
Speaker 4: storytelling it's not directly related to AI, although part of
Speaker 4: it is one of the stocks that fascinates me right now.
Speaker 4: And this will be the exception to my declaration there's
Speaker 4: no bubble in broader technology. Is Tesla. Tesla has always
Speaker 4: traded at a multiple that has almost nothing to do
Speaker 4: with its current operations and everything.
Speaker 2: To do with Elon some imagined future business that's going
Speaker 2: to produce a mountain of cash, and it's always six
Speaker 2: to eighteen months away.
Speaker 4: People used to talk about Steve jobs ability to create
Speaker 4: a reality distortion field. Elon Musk is much better at
Speaker 4: it than Steve Jobs. Was to the point where he
Speaker 4: can go on an earnings call on a disastrous quarter
Speaker 4: like Tesla had, tell a story about robotaxis and humanoid
Speaker 4: robots and trillions of dollars of revenue, and he's going
Speaker 4: to go from spending less than a tiny percentage of
Speaker 4: his time at Tesla to a little bit more of
Speaker 4: his time at Tesla, And in the week since the
Speaker 4: stock is up twenty percent. That is because of two things. One,
Speaker 4: Elon's ability to tell an amazing story, and that is
Speaker 4: what leaders have to do. They have to rally people
Speaker 4: to work together to create a better future. And then two, importantly,
Speaker 4: it's not just storytelling. Elon has done on the business
Speaker 4: side some things that are simply astounding. One of the companies,
Speaker 4: if you created only one of the companies he's created,
Speaker 4: that would be a hall of fame performance for most entrepreneurs.
Speaker 4: He's created a of them, the rocket company, the satellite
Speaker 4: internet company, Tesla, which you people, forget, no new car
Speaker 4: companies to survive for seventy five years, and suddenly he
Speaker 4: builds one, and even now in its demolished state, Tesla
Speaker 4: is still has the single best selling car on the planet.
Speaker 4: It's amazing. So that's what storytelling is, and so much
Speaker 4: of what I think Michael Moritz from Sequoia said this
Speaker 4: the other day, so much of what he would teach
Speaker 4: in business school if he were teaching a course, is
Speaker 4: not finance or financial analysis or accounting, but how to
Speaker 4: tell a story and get your not just your investors,
Speaker 4: although that's important, but your employees on board and excited
Speaker 4: about this great thing that you're going to build, and
Speaker 4: the suspension of disbelief. And I do think that Elon
Speaker 4: Musk is extraordinarily good at that, and by the way,
Speaker 4: Sam Altman must be extraordinarily good at it too, or
Speaker 4: they wouldn't be where they are, you.
Speaker 2: Know, going back to the late nineties or I guess
Speaker 2: the early two thousands. You know, obviously we remember Ao
Speaker 2: well time Warner is the deal that we associate with
Speaker 2: a peak of euphoria. But from a sort of actual
Speaker 2: fundamental standpoint, what was the first sign to you that
Speaker 2: a cool wind, a cool breeze was coming on. Do
Speaker 2: you have a memory of like, oh, maybe some of
Speaker 2: these growth forecast because when you think about, well, what
Speaker 2: could dent private AI valuations or what could even dent
Speaker 2: you know, public one, or what could invented tesla, was
Speaker 2: there a moment is like, huh, is not quite living
Speaker 2: up to what I thought in terms of some of
Speaker 2: the numbers, et cetera.
Speaker 4: Yes, definitely, But I should also say this benefits from
Speaker 4: the twenty twenty hind side, sure, which is if you
Speaker 4: wanted the one of the features of these periods of
Speaker 4: market history, and if you look at all of them,
Speaker 4: you go back to two lips. So you look at
Speaker 4: the nineteen twenties or the PC bubble in the early
Speaker 4: nineteen sixties or seventies I think, or eighties, you know,
Speaker 4: they all share these features. And one of the things
Speaker 4: that I remember very clearly about the nineteen nineties is
Speaker 4: pretty much every year you had a deafening chorus of
Speaker 4: people saying, this is lunacy, it's just a bubble, it's crazy,
Speaker 4: it's a fad. And every year there was a pullback
Speaker 4: of twenty to thirty percent, where everybody freaked out, and
Speaker 4: you had enormous numbers of stories written saying, see, everyone
Speaker 4: was a moron, they were all insane, and it's over now.
Speaker 4: And then I like how.
Speaker 3: Henry talks in business inside our headlined.
Speaker 4: We would then roar off to new highs, and then
Speaker 4: the same thing would happen the next year. So if
Speaker 4: any one of those had led to the crash, we
Speaker 4: would all look back and say, see that was the thing.
Speaker 4: And I will say that the other thing you find
Speaker 4: in these bubble periods is that they're two kinds of people.
Speaker 4: There are the people who think that the world is
Speaker 4: forever different and all the old valuation metrics can be
Speaker 4: discarded because it's different this time and so forth. And
Speaker 4: then they're the people who think, no, we are in
Speaker 4: a bubble, but I'm going to ride the bubble right
Speaker 4: to the end, and then I'm gonna get off right
Speaker 4: at the top. Boddy else crashes. So I would say
Speaker 4: that by nineteen ninety eight, and I wrote a lot
Speaker 4: about this at the time, I was very much in
Speaker 4: the we are in a bubble camp, but I was
Speaker 4: also in the camp of the internets of profound technology
Speaker 4: that's going to radically change things and create very huge companies.
Speaker 4: So my investment recommendation early on at Merrill Lynch was, hey,
Speaker 4: if you're good, by the way, don't touch these things,
Speaker 4: if you're not incredibly risk tolerant, because there's just way
Speaker 4: too much risk. But if you are, buy a few
Speaker 4: of them so you have some diversification, and plan to
Speaker 4: hold them for five to ten years. And that's what
Speaker 4: I did myself. And I look back at in my
Speaker 4: investment in AML, my investment in Yahoo and others, and say,
Speaker 4: what on earth was I thinking? What an idiot wish
Speaker 4: I hadn't. Fortunately, my investment in Amazon, despite almost going
Speaker 4: to zero, that actually over ten years paid all back.
Speaker 4: So that is the way to do it. And you know,
Speaker 4: no public investors are investing in AI now, but if
Speaker 4: you were going to, I think that sound and I
Speaker 4: would even tighten the screen tighter, which is like, only
Speaker 4: invest in the best ones because everybody else is going
Speaker 4: to be toast. But with that big preamble, what was
Speaker 4: the moment?
Speaker 2: So in two.
Speaker 4: Thousand, as I recall part of what it happened, part
Speaker 4: of what was fueling the bubble. And you find this
Speaker 4: in every bubble, is that there is something that is
Speaker 4: goosing the fundamentals of the companies that is actually attached
Speaker 4: to their valuations and what's happening in the markets. And
Speaker 4: so I was really looking for that. And usually it's debt,
Speaker 4: like people are borrowing margin dad or the dead and
Speaker 4: in the telecom sector in the nineteen nineties, that's what
Speaker 4: it was. All these telecom companies buying, borrowing so much money,
Speaker 4: they're buying all the Cisco equipment, everything else. And eventually
Speaker 4: that train stopped and crashed. But in the consumer internet sector,
Speaker 4: which is where I was focused, like advertising, I was
Speaker 4: looking for that leverage. I knew that the problem was
Speaker 4: that you get embedded in the leverage in the system.
Speaker 4: And in the star summer of two thousand it started
Speaker 4: to break down, but I still didn't see what it was.
Speaker 4: And you know what it was. What it was was
Speaker 4: the incredible public market appetite for these securities, both on
Speaker 4: the death side and the equity side. And so every
Speaker 4: new company, as you said, I think there was something
Speaker 4: like four hundred companies that went public in nineteen ninety nine,
Speaker 4: just insane. Every new company would go out and raise
Speaker 4: thirty million dollars. They would immediately spend five million on
Speaker 4: a portal deal with Yahoo, and they'd spend five million
Speaker 4: on Sun Microsystems servers, and they'd spend five million on
Speaker 4: Oracle and so forth. And they were all losing huge
Speaker 4: amounts of money. So what was actually happening was even
Speaker 4: though they weren't borrowing money, they were getting money from
Speaker 4: the public markets, and they were turning into actual spending with.
Speaker 2: So i iwer an investor in an IPO that was
Speaker 2: turned into revenue for Yahoo.
Speaker 4: That's flattered Yahoo's revenue exactly. And then mean, in meantime,
Speaker 4: you had this narrative that had been going on for years,
Speaker 4: not a week, but years, where all of the old
Speaker 4: economy companies and their management teams, we're getting totally shamed
Speaker 4: by resisting the Internet. Meanwhile Amazon puts up these extraordinary
Speaker 4: numbers every quarter. You know, it's not Barnes and Noble
Speaker 4: is not going to kill them. In fact, they're going
Speaker 4: to kill Barnes and Noble. That started to become clear.
Speaker 4: So you have panic in the traditional economy saying we
Speaker 4: are the train is leaving the station, and if I
Speaker 4: don't get on that train or run after it, I'm
Speaker 4: going to get fired. So even all those guys started
Speaker 4: competing for the Yahoo deals and others, and so you
Speaker 4: just just tremendous creation fundamental revenue. And then when the
Speaker 4: ipo market closed and the debt markets start to close,
Speaker 4: suddenly the tap got cut off. And within nine months, Yeah, Yahoo,
Speaker 4: one of the best stocks in my sector, dropped I
Speaker 4: think ninety three percent because all of its revenue disappeared.
Speaker 4: And so that was the leverage. And so something will
Speaker 4: be happening here that's like that. And maybe a lot
Speaker 4: of companies are panic spending on AI because they don't
Speaker 4: want to look like the behind the times. Maybe a
Speaker 4: lot of consumers are trying AI and they're not going
Speaker 4: to actually figure out how to use it in a
Speaker 4: way that's profitable. So there may be a lot of
Speaker 4: leverage getting built into the system. And by the way,
Speaker 4: very obvious one is we have this theory right now
Speaker 4: that open AI. You know, it's all about just building
Speaker 4: bigger clusters, spending more on Capex and Microsoft. Now they're
Speaker 4: all spending eighty billion dollars a year on Capex. We
Speaker 4: may have another deep seek moment. Right It's suddenly like oh,
Speaker 4: we can do it, but with a little software trades,
Speaker 4: don't need to spend all that much on the chips,
Speaker 4: and then everything's going to crash.
Speaker 2: Tracy. I've been joking that if you're an investor in
Speaker 2: a big tech company, you probably hate to see the
Speaker 2: huge amount of capex being spent, But the only thing
Speaker 2: worse would be a big decrease in the amount of
Speaker 2: capex being spent, because that would be the actual signs
Speaker 2: and to come.
Speaker 3: Yeah, well, okay, so on this point, I mean, you
Speaker 3: touched on this earlier when you were talking about how
Speaker 3: a lot of the financing for AI right now is
Speaker 3: coming from the private markets. But it seems to me
Speaker 3: that the incestuousness in the tech industry, or maybe the
Speaker 3: circularity is a better way of putting it, this is
Speaker 3: the issue, right And when I see some of the
Speaker 3: things going on right now, like for instance, you know,
Speaker 3: hedge funds loaning core weave based on GPU GPUs, that's it.
Speaker 2: Or in video yeah, investigative clue weave so that they
Speaker 2: could buy in video chips exactly.
Speaker 3: Yeah, this seems very like circular slash incestuous to me.
Speaker 3: And at the same time, because so much of it
Speaker 3: is happening in the private market between hedge funds and
Speaker 3: private equity and these private deals, it seems very difficult
Speaker 3: to track.
Speaker 4: That's right, and that is absolutely happening. We're seeing it.
Speaker 4: And then the other thing that I think people aren't
Speaker 4: talking about it. I said it earlier, I said, I
Speaker 4: hope Navidia, my goodness, it's one of the big the
Speaker 4: pure playway to play AI. It's only trading at thirty
Speaker 4: thirty five times earnings. That's reasonable, okay, But that's reasonable
Speaker 4: based on Navidia having monopoly power, being the only hose
Speaker 4: of these chips, just selling an extraordinary number of them
Speaker 4: over the last year or two or three. And what
Speaker 4: happens if demand for those chips drop or China vaults
Speaker 4: past us and chips suddenly we don't need them anymore.
Speaker 4: There's a better way to make AI other than buying
Speaker 4: so many chips, then their earnings are gonna crash. And
Speaker 4: maybe Navidi is actually trading at two hundred times next
Speaker 4: year's earnings. We don't know yet. We just know in
Speaker 4: hindsight and so forth. But to your point, that's exactly
Speaker 4: the way to look at it. And I would say,
Speaker 4: stepping back from it, We're still pretty early in terms
Speaker 4: of time in this wave. We're only a couple of
Speaker 4: years in where it's really getting going, and so you know,
Speaker 4: maybe it's nineteen ninety seven as opposed to late nineteen
Speaker 4: ninety nine. I don't know. And that's one thing I mean,
Speaker 4: I'm one of the things I'm trying to figure out
Speaker 4: is Okay, Navidia's edge, how long do they keep that?
Speaker 4: And the reason the deep Seak announcement was so unsettling,
Speaker 4: and by the way, Navidia stock has crashed and not
Speaker 4: recovered since then, is that they seem to have figured
Speaker 4: out a way to produce similar quality technology without the chips,
Speaker 4: and then you have a lot of people coming back
Speaker 4: and saying, oh, no, they bought them or they're using
Speaker 4: them in Vietnam Jeff's paradox. Yeah, exactly. But that's why
Speaker 4: Navidia is not recovered is because people don't believe that.
Speaker 2: Yeah. And of course now people are also talking about
Speaker 2: Huawei getting significantly better and that their chips could be
Speaker 2: closed maybe one generation behind. So the prospect of further
Speaker 2: deep seek moments, so to speak, is certainly out there,
Speaker 2: and of course that could also threaten open eyes valuation
Speaker 2: just given how much you know you know deep seek
Speaker 2: is open source, and whether you can actually monetize that
Speaker 2: AI edge that they have, presuming they still have an
Speaker 2: AI ed lot of questions. I'm gonna throw a different
Speaker 2: curve ball into the conversation. So you mentioned Elon mentioned Amazon,
Speaker 2: Jeff Bezos was an investor in Insider, correctly. I don't
Speaker 2: know if you ever talked to those guys anymore or whatever.
Speaker 2: Elon obviously the most public phase of techs, you know,
Speaker 2: warming towards Trump and Bezos to some extent. He was
Speaker 2: at the inauguration too. I've asked this question to others
Speaker 2: and I still don't what happened, not like, is it
Speaker 2: wrong or right or whatever? What changed in tech from
Speaker 2: your perspective such that these people who were extraordinarily successful
Speaker 2: under the sort of existing way we think about economics
Speaker 2: and politics, that they felt compelled to throw their support
Speaker 2: to varying degrees by someone who, at a minimum setting
Speaker 2: aside his success, really wants to change the system. Where
Speaker 2: did that come from?
Speaker 4: Do you think? I think it's a great question. I've
Speaker 4: spent a lot of time actually looking into that and
Speaker 4: talking to people and trying to figure it out. And
Speaker 4: what I've been struck by is the level of personal
Speaker 4: anger involved. Even after the election, after President Trump won,
Speaker 4: there were what I would describe as victory laps taken
Speaker 4: by some very powerful and influential folks in Silicon Valley,
Speaker 4: and even then, like you just hear some seething anger
Speaker 4: and desire for payback. And I think it's a few things. One,
Speaker 4: I do think the Biden administration did not do a
Speaker 4: good job of making the technology industry writ large. And again,
Speaker 4: this is one of the United States most powerful, successful industries.
Speaker 4: We had led the world not feel even a little
Speaker 4: bit appreciated. In fact, the whole anti billionaire rhetoric where
Speaker 4: we've got to get the pitchforks and so forth, it's
Speaker 4: all bad Biden administration. You know, you really need to
Speaker 4: diss Tesla back then and Elon Musk when he was
Speaker 4: clearly waffling at that when we're in.
Speaker 2: A period of we were saying that EV's are an
Speaker 2: exist central part of America's not even invited.
Speaker 4: To the conference or what it was, so so I
Speaker 4: think that was part of it. I do think the
Speaker 4: lack of a better way to describe it, the woke
Speaker 4: wave and Silicon Valley companies feeling like they were being
Speaker 4: were attempted takeovers by the employees over the CEOs. I
Speaker 4: think there's a clap back effect there, and then I
Speaker 4: think there's just a purely financial calculation, which is, look,
Speaker 4: we have a job to We had to look out
Speaker 4: for our companies and our investors and so forth, and listen,
Speaker 4: this administration, referring to the Biden administration, is way too
Speaker 4: much regulation and process and the clear they don't like
Speaker 4: what we do. And at that point, ironically, most people
Speaker 4: in business did think that the Trump administration would be
Speaker 4: a pro business administration, and for a day it looks
Speaker 4: that way, and now it does not. In fact, it
Speaker 4: looks like the most anti United States business administration in
Speaker 4: anybody's memory hundreds of years. So I think that's where
Speaker 4: it came from. And I also look in Silicon Valley
Speaker 4: also has an inherent kneejer contrarianism, and I think that
Speaker 4: was at play also too. It's like, oh, everybody thinks something,
Speaker 4: then why are they wrong? And what's the other way
Speaker 4: of doing it? But I also do think it is
Speaker 4: shifting back now, not to the point where anybody who
Speaker 4: supported President Trump publicly or campaigned for him or whatever
Speaker 4: is we'recanting. In fact, when that comes up, it's always, oh,
Speaker 4: and look at the alternative we are. This universe is
Speaker 4: so much better. But I will say they're saying it
Speaker 4: a little bit less enthusiastically than they were.
Speaker 3: A month ago, a little less loudly.
Speaker 4: Yes, And I am starting to hear, well, you know,
Speaker 4: maybe the tariffs, maybe it was good that we're highlighting
Speaker 4: the problems in China, But like.
Speaker 3: It's an expensive media.
Speaker 4: Could there have been a better way to do it?
Speaker 4: Could you have actually had a long term plan, and
Speaker 4: could you have phased it in so you didn't go
Speaker 4: and punch American companies in the mouth along with consumers?
Speaker 4: Is there something behind the trade war? Because in the beginning,
Speaker 4: remember it was all just hey, he's negotiating and shooting
Speaker 4: from the hip. They're gonna be on their knees in
Speaker 4: the office tomorrow morning. I don't hear that much anymore.
Speaker 4: And I think actually folks who had thought that President
Speaker 4: Trump is a quote free trader or actually realizing no, actually,
Speaker 4: the guy who.
Speaker 2: Loves you can't defend that one about tariffs for forty years.
Speaker 4: You can't defend loves teriffs, and so I do hear that,
Speaker 4: and I do hear fears that the longer this lasts,
Speaker 4: it might have really lasting impact. And so I think
Speaker 4: it's coming around.
Speaker 3: So I assume you're still connected to a bunch of
Speaker 3: startups and founders and you're working on your own new
Speaker 3: thing right now, what's the funding environment like at the moment?
Speaker 3: Are you seeing people that uncertainty around policies start to
Speaker 3: feed into funding for you know, things that potentially are
Speaker 3: not at all directly related to manufacturing or tariffs.
Speaker 4: I don't know what's happened in the last month in
Speaker 4: the venture market, especially the second year of the for
Speaker 4: series A and so forth. My guess is the early
Speaker 4: investing is pretty much fine as long as the capital
Speaker 4: is there a company that has a small valuation, that's
Speaker 4: probably there. But usually where you see it is in
Speaker 4: Series A, Series B, series C. Because venture capitalists are
Speaker 4: very tied to the exits. One of the real problems
Speaker 4: in venture capital for the last really five ten years,
Speaker 4: it's been the IPO market has been so sclerodic. You
Speaker 4: have to be a colossal company, and so that's why
Speaker 4: a lot of companies have looked for exits. But I
Speaker 4: will say that one of the big problems with waging
Speaker 4: a trade war this way, where literally overnight you decouple
Speaker 4: two economies that are deeply interlinked, is that it is
Speaker 4: impossible for companies to plan. And Apple is a very
Speaker 4: good example. They spent decades building a world class global
Speaker 4: supply chain that benefited the entire world, including the United
Speaker 4: States consumers. We get these amazing iPhones for the price
Speaker 4: we get them for. And to effectively say guys, you
Speaker 4: got to put that supply chain on a ship and
Speaker 4: get it to Texas by tomorrow morning is just not
Speaker 4: going to happen. And so Apple is doing what any
Speaker 4: intelligence company would do, which is saying, you know, look,
Speaker 4: I do think that this there's gonna be this long
Speaker 4: term pressure to a couple from China. We need to
Speaker 4: diversify a little bit for a lot of reasons. So
Speaker 4: what do they do. Do they move IP production for
Speaker 4: the United States back to the United States.
Speaker 2: They do not.
Speaker 4: They moved to India, which someone will spike the football
Speaker 4: and say that's exactly what we wanted to happen. India
Speaker 4: is a friend, China's an enemy. I will appall most
Speaker 4: of odd Lot's listeners by saying that I actually do
Speaker 4: not believe that China's enemy, and I liked, I actually
Speaker 4: liked the fact that our economies which super integrated. And yes,
Speaker 4: the trade relationship is unfair, and yes, there are a
Speaker 4: lot of things that America and the allies that used
Speaker 4: to have could have done to bring China to the
Speaker 4: table and make it fair and open up the markets.
Speaker 4: But United States companies did a hell of a lot
Speaker 4: of business in China and still do and that is
Speaker 4: now at risk, along with our metals and everything else.
Speaker 4: And by the way, again I understand from a political perspective,
Speaker 4: the virtue of having an enemy. It's very easy with
Speaker 4: divide the world. It's us versus them. But the more
Speaker 4: we are enemies to me, the more risk we're eventually
Speaker 4: going to actually end up in a real war. Not
Speaker 4: just that I like the interlinkedness we live in a globalized,
Speaker 4: integrated economy. I think imagining that the United States can
Speaker 4: suddenly just decouple itself and we're thrilled, I think that
Speaker 4: what's going to happen is the rest of the world's
Speaker 4: going to knit together and go on without us. And
Speaker 4: so even going back to the premise for the trade war,
Speaker 4: I have issues Just.
Speaker 2: To be clear, I don't think the you know, there
Speaker 2: is no odd lots house of view on anything littlone
Speaker 2: our listeners. I think if you know, if there is
Speaker 2: something closed, it's actually quite a bit of.
Speaker 4: Well, what I will say is in odd lots, yeah,
Speaker 4: if we think, sure the same way, that's true. What
Speaker 4: I hear when I talk to some of my friends, Yeah,
Speaker 4: I really clad and is oh my god, listen, Oh
Speaker 4: you are the most naive human in America. How can
Speaker 4: you not understand that this is not a gladiatorial fight
Speaker 4: to the death and China is our enemy and we
Speaker 4: must sock it to them. I just simply do not.
Speaker 4: That's interesting because is a cooperative activity. It's like a
Speaker 4: potluck dinner.
Speaker 2: This is a good So I would say, if there's
Speaker 2: something close to a house view, which there is no
Speaker 2: house view, it's a certain admiration, high level of admiration
Speaker 2: for what's been accomplished technologically in China and economically over
Speaker 2: the last several decades, and not a gladiatorial sense, but
Speaker 2: there are areas where it creates risk. But I do
Speaker 2: get the impression, especially in DC, that this is this
Speaker 2: idea of US verse China. It's got to be the
Speaker 2: most bipartisan view that there is in the world, you
Speaker 2: would say, in your circles and tech and media that
Speaker 2: shared that view absolutely.
Speaker 4: And Ezra Klein and Tom Friedman of The New York
Speaker 4: Times have a great podcast about this. Tom Friedman is
Speaker 4: written about this. And another guy who's very outspoken from
Speaker 4: the Silicon Valley community about it is Bill Gurley, formerly
Speaker 4: a Benchmark who basically say this idea that we're going
Speaker 4: to beat China in Ai and we're going to quote
Speaker 4: win the Ai War, it's crazy, It's not gonna happen.
Speaker 4: And that's the real message from Deep Seek. And here
Speaker 4: we have all of this plotting, like how can we
Speaker 4: keep the Navidia chips away from China? We got to
Speaker 4: maintain our advantage and so forth. Meanwhile, all these companies
Speaker 4: suddenly appear in Vietnam and everywhere else that the whole
Speaker 4: lo and hold have huge data centers filled with Navidia
Speaker 4: chips that anybody can use, and so forth, and we've
Speaker 4: got to now agree we're going to send them less
Speaker 4: powerful chips, although even President Trump's not thrown that out,
Speaker 4: costing Navidia investors five billion dollars a year. I just
Speaker 4: think again, the more integrated our economies are, the better.
Speaker 4: I do think the best way to approach the China imbalances,
Speaker 4: and they are real, would have been to get together
Speaker 4: with Europe and a lot of other countries in Asia
Speaker 4: and say, hey, guys, we love working with you, but
Speaker 4: you got to change a few things. You got to
Speaker 4: open the markets a little bit and so forth. And
Speaker 4: I just I think one one thing I hope that
Speaker 4: everybody in Washington, and I think Wall Street tends to
Speaker 4: have a much more clear eye view of it is Listen,
Speaker 4: China is going to be much bigger and more powerful
Speaker 4: than the United States. They are. That's okay, we blew
Speaker 4: past Europe seventy five years ago. You know what, people
Speaker 4: still live in Europe. They still have culture, they have
Speaker 4: good lives, they have good jobs, and you know what,
Speaker 4: we're not fighting them. They're not fighting us because we've
Speaker 4: got more powerful. So I think the United States has
Speaker 4: got to get over this idea that we rule the
Speaker 4: world forever and we got to keep down China. China.
Speaker 4: I mean, look at it as a human being. Twenty
Speaker 4: five years ago, poverty in China was appalling for hundreds
Speaker 4: of millions of people, and they have now moved.
Speaker 2: Out of product shortenary.
Speaker 4: That is a good thing, not a bad thing. It's
Speaker 4: a good thing. And the richer countries get, the less
Speaker 4: likely they are to defend themselves with missiles and so forth.
Speaker 4: So I just think we should step back and look
Speaker 4: at this idea that's been created and as you say,
Speaker 4: extraordinarily bipartisan in NBC in particular, that China is going
Speaker 4: to be our enemy forever. We got to beat them.
Speaker 4: We're not gonna beat them, it's not gonna happen. But
Speaker 4: we can still take care of our own security, build
Speaker 4: amazing companies, get richer, have a remarkable country, and coexist
Speaker 4: and work with China. That's my view, and you can
Speaker 4: tell me.
Speaker 2: I like it, I like it, I like it.
Speaker 3: Can I go back to one of the disclaimers in
Speaker 3: the intro, not about Joe, the other one about you
Speaker 3: being sort of excommunicated from wallst And part of that
Speaker 3: was based on well all of it was based on
Speaker 3: research from the tech bubble, right, And as a consequence
Speaker 3: of the tech bubble, we saw lots of new regulation
Speaker 3: around how analysts can actually publish research, and Chinese walls
Speaker 3: in investment banks and things like that looking back on
Speaker 3: what was published back then versus what's being published now
Speaker 3: on AI, do you see similarities? Do you see improvements
Speaker 3: as a result of some of those measures taken in
Speaker 3: the early two thousands.
Speaker 4: I think that the well, stepping back, yes, thank you
Speaker 4: for bringing up my ex conversation, still just a mortifying
Speaker 4: episode to me, and I am so grateful to you too,
Speaker 4: And there so many other people in the last twenty
Speaker 4: five years who've given me this second chance and so forth.
Speaker 4: And you know, I learned a ton about that process.
Speaker 4: Elliott Spitzer, who was the guy who went after me obviously,
Speaker 4: and everybody we had our own thing afterwards, and suddenly
Speaker 4: he had his own trouble, and then I was on
Speaker 4: his show and he was on my show, and life
Speaker 4: goes on, and we even had a lunch together at
Speaker 4: one point. So life goes on, but a very much
Speaker 4: learning experience. And by the way, because we talked about
Speaker 4: bubbles earlier, that is the final feature of these episodes.
Speaker 4: And John Kenneth Gallbraith has written about this, where there's
Speaker 4: a huge backlash against the folks who were sort of
Speaker 4: held up as being the geniuses and doing really well.
Speaker 4: And that's how the society moves on and so forth.
Speaker 4: So anyway, I wish I hadn't been in the middle
Speaker 4: of that, but I was, and so forth, and it's
Speaker 4: too bad because I love Wall Street. But anyway, you
Speaker 4: look at research. I'll tell you what I think the
Speaker 4: biggest thing that has been lost that sucks, and it's
Speaker 4: not actually research. It's the fact that we don't have
Speaker 4: an IPO market anymore. And my view at the time
Speaker 4: and now is that the more opportunities investors have, the
Speaker 4: better and early stage tech IPOs are highly risky. Most
Speaker 4: of them end up going out of business. People lose
Speaker 4: their shirts and so forth. But I I don't think
Speaker 4: that necessarily the job of the public market is to
Speaker 4: make it impossible for investors to lose their shirts. I
Speaker 4: think actually it is to create a range of options.
Speaker 4: We had this amazing you know, the public markets in
Speaker 4: the nineteen nineties were terrific. You could raise a lot
Speaker 4: of money and so forth. Now by the time you
Speaker 4: go public, the vast majority of the gains have already
Speaker 4: been grabbed by professional investors, and so you know, smaller
Speaker 4: investors can't even get at them. So I would say
Speaker 4: that I think the IPO market back then was better.
Speaker 4: And I think the discipline of company going public is good.
Speaker 4: Bill Gurley's talked a lot about this, So I think
Speaker 4: that's too bad that we've lost that. And I think
Speaker 4: in research, I don't look back. In the nineteen nineties,
Speaker 4: analysts were asked to do lots of different jobs. There
Speaker 4: were articles in Wall Street Journal all the way along.
Speaker 4: You know, analysts wear two hats. They write about stocks,
Speaker 4: and they also talk to companies about raising money, and
Speaker 4: the companies have to like them, or of course they
Speaker 4: would never choose the firm to take them.
Speaker 1: Come.
Speaker 4: Analysts were in a position where they're doing a lot,
Speaker 4: and I would say, as an analyst, now okay, fine,
Speaker 4: now it's just right about stocks and talk to investors
Speaker 4: and so forth. But interestingly, one of the big things
Speaker 4: that was cited is proof that there was some deep
Speaker 4: corruption in research, which I do not believe there was,
Speaker 4: was that so many of the ratings were positive, So
Speaker 4: many of the ratings are still positive. And you know what,
Speaker 4: h there are a lot of reasons for that. One,
Speaker 4: analysts only cover the companies that they like. Generally, nobody
Speaker 4: likes a beyar. You go out and just insult a
Speaker 4: company all day you know, what are you doing? And
Speaker 4: it's see when the markets are going up, especially in
Speaker 4: a sector like this, you know, most stocks go up,
Speaker 4: so there are a lot of reasons for it that
Speaker 4: have something to do with something else, and it's just
Speaker 4: been interesting to watch that that really hasn't changed that much.
Speaker 2: You know, in a way, it feels like we kind
Speaker 2: of have the worst of both worlds with early stage
Speaker 2: investing because we don't have the sort of companies going
Speaker 2: public when they're young. But I keep seeing you know,
Speaker 2: you see them on the subway, like these ads like
Speaker 2: invest in private companies through an app, and it's like
Speaker 2: you're not getting any information, you have no idea what
Speaker 2: valuations you're getting at. And so they they're finding these
Speaker 2: ways to suck in retail money because they're attracted to
Speaker 2: these ideas of or buy SpaceX on the secondary market
Speaker 2: with no you know, no ten queues or anything. So
Speaker 2: in a way, it feels like this sort of worst
Speaker 2: of both worlds in terms of the public's access to
Speaker 2: early stage company.
Speaker 4: That is totally right. And in fact, when I first
Speaker 4: saw the first one of those go by in some
Speaker 4: feed or email, like oh, you can invest in this
Speaker 4: new organic wine company where there's no booze and so
Speaker 4: forth or whatever it happens to be. WHOA. I had
Speaker 4: the same reaction that Gordon Gecko had when he got
Speaker 4: out of jail in the Second Wall Street movie, where
Speaker 4: he's like, my god, all this stuff is legal now. Yea,
Speaker 4: so it's legal, and you're right, it's terrible all this
Speaker 4: secondary trading where you have no idea what the company's
Speaker 4: financials are, and you have no idea what the capital
Speaker 4: stack looks like, and how much preferred stock is piled
Speaker 4: on top of the crappy common stock that you're buying
Speaker 4: from some employee. You have no idea. So yes, I
Speaker 4: think we're much better off in the world where it's
Speaker 4: just out there. And by the way, ninety five percent
Speaker 4: of investors shouldn't go anywhere near early stage tech idea.
Speaker 4: It's IPOs ever, no matter how much money your friends
Speaker 4: are making. But there's a difference. Yeah, it's hard, but
Speaker 4: there's a difference between having a choice like that and
Speaker 4: just preventing it. And unfortunately that's where we are. And
Speaker 4: I just don't think it's the financing pipes have rerouted.
Speaker 4: Companies are getting money. That's great, but I think having
Speaker 4: a little bit more ability to go public earlier would
Speaker 4: be great.
Speaker 2: There's so much we could talk about and we could,
Speaker 2: you know, we could. We haven't talked at all about
Speaker 2: the media business in part cause like I don't know,
Speaker 2: it's a little naval gazing, etcetera. We could take that
Speaker 2: in a million different directions. Let me just say this
Speaker 2: simple question. Could you start a business insider today? Business
Speaker 2: insider I think started two thousand and six, or was
Speaker 2: ali insider now it's twenty twenty five. What's different today
Speaker 2: that you either you could or you couldn't make that bet?
Speaker 4: I think you could make it, I think far less
Speaker 4: likely to be successful because if you look at a
Speaker 4: media business, there are two pieces to it. There's the
Speaker 4: editorial and there's the distribution. And really what the Internet
Speaker 4: did and what enabled some new companies for a while,
Speaker 4: a lot of new companies, but some new companies to
Speaker 4: grab hold in a way that would have been much
Speaker 4: more difficult before is distribution got completely blown up. You
Speaker 4: look at newspapers, you look at cable, you look at
Speaker 4: all these different legacy media businesses. They were all protected
Speaker 4: by the technology of the time. Internet blew all of
Speaker 4: that up and very importantly, it created eight hours during
Speaker 4: the workday where you were between the morning newspaper and
Speaker 4: the TV evening news where lots of cool things were happening. Hey,
Speaker 4: you want to know what's happening, And suddenly you have
Speaker 4: on your desktop Business Insider at Silicon Alli, Insider is
Speaker 4: telling what's going on. And by the way, you have
Speaker 4: four hundred and thirty two websites that are reporting different things.
Speaker 4: It's very convenient to have it all brought into one
Speaker 4: place for you, especially if it's adding analysis. It's like
Speaker 4: having a TV host, or it's like having you guys,
Speaker 4: but at your convenience on a website. So we early
Speaker 4: on had a lot of people addicted to that. You
Speaker 4: couldn't build that today because the web has been completely
Speaker 4: deprecated in terms of its influence. Everything has moved to apps.
Speaker 4: We're much more in a world where the media distribution
Speaker 4: looks much more like what it did in the TV
Speaker 4: and paper days, where it's controlled distribution. Shelf space matters,
Speaker 4: you don't have very much, and so now the big
Speaker 4: new companies that are being built are being built with
Speaker 4: direct distribution like email and app and so forth. And
Speaker 4: that's how my own media consumption has shifted. I was
Speaker 4: a huge, diehard web guy.
Speaker 2: Yeah, me too.
Speaker 4: And now it's just with the paywall situation, which is brutal,
Speaker 4: like you've got to sign into every site on every platform.
Speaker 4: It's infuriating. It's much easier to just go to the app.
Speaker 4: So things have changed. So the original model for businesses
Speaker 4: it would not have worked. I do new models work,
Speaker 4: and business owners do very well, very so proud of them.
Speaker 4: Very hard to come through this period and survive.
Speaker 2: And we are, by the way, Tracy, when I was
Speaker 2: hired at Business Insider, the name of the vertical that
Speaker 2: I originally worked for have been going fifty minutes without
Speaker 2: saying it. There's the name that children not go mention
Speaker 2: clusterstock dot com.
Speaker 3: This is how I used to link to your work.
Speaker 3: I wrote for Joe Clusterstock.
Speaker 2: Henry Blodgett, thank you so much for coming on. Odd
Speaker 2: lots could talk for a long time.
Speaker 4: Let me a little of special bonuses, Tracy, What is
Speaker 4: it about? Joe? Was like, what is so? I'll tell
Speaker 4: you one, Tracy. When you're trying to build a startup
Speaker 4: what has been described as hustle culture and since insulted
Speaker 4: as hustle culture as we have this big backlash to
Speaker 4: work life balance and oppressive bosses and all other stuff.
Speaker 4: It actually really matters. You are running for your life.
Speaker 4: And the way Jeff Bezos described it to me after
Speaker 4: he invested was, you know, you guys have effectively created
Speaker 4: this little flame that you hold in the palm of
Speaker 4: your hand, and that is a huge accomplishment, Like you've
Speaker 4: created fire out of nothing. But all around you the
Speaker 4: winds are blowing. They're these huge forces that are threatening
Speaker 4: to snuff it out. Like nurture that flame, protect it,
Speaker 4: make it grow. Eventually, it's a fire. So to do
Speaker 4: that you actually need people who are totally dedicated, and
Speaker 4: Joe was extraordinarily dedicated. We had a team of a
Speaker 4: few folks who are around Joe's age who really made
Speaker 4: business inside are possible because they were so into it.
Speaker 4: And then the other Joe Wisenthal attribute that I think
Speaker 4: has contributed to alots becoming the thing that everybody has
Speaker 4: to listen to and so forth is Joe has a
Speaker 4: remarkable ability to inspire other people to get excited about
Speaker 4: the way he sees the world and to work with him.
Speaker 3: And the lines moving on the to.
Speaker 4: The point where yes, the new York Times famously, back
Speaker 4: in those early days, wrote a profile of Joe Wisenthal
Speaker 4: which one could have interpreted as this poor man is
Speaker 4: insane and he's going to drop dead, and this sounds
Speaker 4: like hell on Earth, which is like twenty four hours
Speaker 4: a day, I twitching waiting for the jobs report all
Speaker 4: that stuff. But instead Joe turned it into this incredible
Speaker 4: positive and everyone's like, oh my god, I want to
Speaker 4: not only be like Joe, I want to work with
Speaker 4: Joe and so forth. And I think your audience feels
Speaker 4: that enthusiasm. One of the things you used to say
Speaker 4: to me a lot, which I loved, was everything is interesting. Yeah,
Speaker 4: and people like try to find the one thing that's interesting,
Speaker 4: like when you really dive in. And so you've taught
Speaker 4: yourself well about markets and stuff. So anyway, this is.
Speaker 3: Actually the foundation of odd lots, that everything is interesting.
Speaker 2: So all right, we gotta stuff. I can't hear anything.
Speaker 2: All right, We're good, We're good, Thank you very much.
Speaker 2: I'm just gonna say I, I don't know how many
Speaker 2: people I've told this. I don't know if I've told you, Henry,
Speaker 2: I've told my therapist only. There were weekends in like
Speaker 2: twenty ten and twenty eleven. This is true where I
Speaker 2: would like wake up on a Saturday. This is I mean,
Speaker 2: this is like real disturbed, unbelling stuff. And something I
Speaker 2: think is I couldn't have had children in those years.
Speaker 2: I know I had children later had been really hard
Speaker 2: and I would like wake up and I don't I
Speaker 2: almost don't want to say this. I'd like want to
Speaker 2: like punch a pillow because it was like so intense,
Speaker 2: I need to get that out. And a few times
Speaker 2: I started typing emails to you because I was like
Speaker 2: so like upset, and then I was like, actually, have
Speaker 2: nothing to be upset about, Like there was nothing specific.
Speaker 2: Was just like anyway, very intense times and difficulty but
Speaker 2: rewarding times. There was nothing wrong, but there was nothing wrong.
Speaker 2: It was just like this was like this sort of
Speaker 2: hot house called it's too much because.
Speaker 4: You bring up a good point and maybe odd lots
Speaker 4: listeners interested in this too, like we have in the
Speaker 4: past five seven years.
Speaker 2: Yeah, there's been this huge backlash. This is what again
Speaker 2: to that because it was like sort of damage.
Speaker 4: And oppressive businesses and these terrible sol jobs and so forth.
Speaker 4: And what I will say is, and I think you
Speaker 4: saw it too. Seeing it in my own life a
Speaker 4: lot is that Actually work can be incredibly therapeutic when
Speaker 4: you can find something that you can dive into. Yeah,
Speaker 4: it becomes flow state. Not to the point where it's
Speaker 4: totally obsessive and you're stressed all the time. That's terrible.
Speaker 2: I guess what all I meant to say was it
Speaker 2: was necessary and I get the backlash is absolutely it
Speaker 2: was a necessary energy too much, and I get the
Speaker 2: backlash anyway. Henry Blodgett, thank you so much for coming
Speaker 2: on odd blods.
Speaker 4: It's such a privilege to be here when you utilizes
Speaker 4: do a great job, and I will keep listening.
Speaker 2: Thank you so much. Tracy. I'm sort of like a
Speaker 2: little emotionally rattled after that episode in a way I
Speaker 2: usually don't get after recording our typical podcasts. I have
Speaker 2: to admit, do you.
Speaker 3: Think you impressed your old boss? I think you did.
Speaker 4: I think so.
Speaker 2: I think he's proud. I think I you know, yes,
Speaker 2: Do I still have this really intense like memories of
Speaker 2: like trying to surpass traffic goals and things like that
Speaker 2: from those years. Absolutely, And I think that sits in
Speaker 2: my mind still today when I look at like podcast
Speaker 2: download numbers or the Apple business charts and stuff like that.
Speaker 3: Yeah, And also, I mean I take the point that
Speaker 3: if you're a startup, you're running towards a proverbial finish
Speaker 3: line that actually never really comes, and so there's a
Speaker 3: sense of urgency, but it's it's working at that was
Speaker 3: clearly unsustainable, right, It's unhealthy.
Speaker 2: Which I said I couldn't have had children.
Speaker 4: Yeah.
Speaker 3: Also, well, I was going to say it locks a
Speaker 3: certain proportion of the population out of talking for that
Speaker 3: particular market.
Speaker 2: Which percent one hundred percent. You know, Tracy, you mentioned
Speaker 2: that Henry sort of speaks and business insider headline. Business
Speaker 2: insider headlines turned out to be very influential to headlines
Speaker 2: all over them and so talking to Henry it is
Speaker 2: sort of like seeing where to some extent, like modern
Speaker 2: media came from. I mean, they were like a handful
Speaker 2: of these, you know, BuzzFeed was obviously another one, et cetera, Gawker,
Speaker 2: We've talked to Nick Denton. There were a handful of these,
Speaker 2: like really important media brands of that era that to
Speaker 2: this day, like their own influence right now probably diminished,
Speaker 2: but their influence more broadly on how like you know,
Speaker 2: reporting et cetera evolved is clearly evident to this day.
Speaker 3: Well, Henry's been influential in a number of right, like
Speaker 3: not just on media, but he ended up being very
Speaker 3: influential on Wall Street, And we talked a little bit
Speaker 3: about that. You know, what we should do once this
Speaker 3: episode publishes, we should look at the transcript and just
Speaker 3: pick out, like every sentence that would be a BIA headline.
Speaker 3: I bet you'd get like dozens, if not hundreds, that.
Speaker 2: Should be one of our newsletters when this Yeah, I
Speaker 2: think that would actually be really fun.
Speaker 3: All right, shall we leave it there.
Speaker 2: Let's leave it there.
Speaker 3: This has been another episode of the Audlots podcast. I'm
Speaker 3: Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 2: Follow our guest Henry Blodgett. He's at h Blodgett. Follow
Speaker 2: our producers Carman Rodriguez at Carman armand dash Ol Bennett
Speaker 2: at Dashbock and Kale Brooks at Kale Brooks. From our
Speaker 2: odd Lots content, go the Bloomberg dot com slash odd Lots.
Speaker 2: We have all of our episodes in a daily newsletter.
Speaker 2: And you can chat about all of these topics twenty
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