Scott Galloway's Blog, page 5

After The Fires

My hometown of Los Angeles is experiencing wildfires that have torched a surface area greater than Boston or San Francisco. Students at UCLA, my alma mater, were warned to prepare for an evacuation order that, thankfully, didn’t come. Friends lost homes, others don’t know if their houses are still standing, or they’re contemplating moving back to what feels like a blast zone. At least 12,000 structures have been destroyed. The death toll stands at 25 — given the scale of the disaster, that is remarkably low and a testament to the good work of front-line responders and the broader community. The LA fires will likely go down as the costliest natural disaster in U.S. history. The question now: What happens after the fire? 

Zero to Blame

The first rule of fires is simple: Everyone works together to put out the fire, as fire is apolitical, unemotional, and does not discriminate. But just as electric cars go from zero to 60 faster than cars with combustion engines, digitized information accelerates from zero to blame much faster than analog media. 

Immediately, the left claimed it was climate change and blamed Republicans. Maybe, or perhaps you’re tempting fate when you build hundreds of thousands of tinder boxes in a desert where high and low pressure systems collide to create tidal waves of hot air (i.e., the Santa Ana winds).  

First Lady-elect Elon Musk blamed DEI. The shit-poster-in-chief, Donald Trump, blamed California Governor Gavin Newsom, for failing to sign the “water restoration declaration,” providing much needed water to emergency services. The problem? A: That declaration does not exist. In local news, the billionaire real estate developer who lost in LA’s most recent mayoral election blamed the city for fire hydrant failures in Pacific Palisades; the system was pushed beyond its limits, as water demand was 4x normal demand for 15-plus hours. (Note: The people screaming the loudest about wasteful government spending are always the first to demand government help in a crisis.) 

LAFD Chief Kristin Crowley took time out from fighting the fires to blame Mayor Karen Bass for cutting $17.6 million from the department’s budget. The department’s $895 million budget actually increased by $58 million as a result of the latest union contract. To get that higher pay to firefighters, the department reduced spending on equipment and training. The mayor’s response added to the drama, fueling rumors that the chief had been fired. Right-wing podcasters blame Fire Chief Crowley’s gayness, saying she was a DEI hire. Note: She has outstanding qualifications. We’ve become stupid, hurting others while hurting ourselves, with algorithms and politics that reward divisive rhetoric. Both sides engage in this, but the right is louder and bolder (i.e., more full of shit) than the left. It’s far more likely that climate change played a role in the fires than China, Ukraine, or DEI.

Information Wasteland

Contrary to viral claims on social media, the Hollywood sign didn’t burn down. One clue that the AI-generated images were fake: an extra letter, making it “Hollywoodd.” Adjudicated liar Alex Jones falsely claimed that firefighters were battling the blazes using ladies’ handbags as buckets because officials had donated their equipment to Ukraine. His post on Twitter/X has 29 million views. As an LAFD public information officer told the Wall Street Journal, “It takes people and time to track down or debunk social media rumors — it takes us away from doing more important things.” 

By coincidence, the fires began the same day Mark Zuckerberg, the Immortan Joe of the information wasteland, announced that Meta would end fact-checking and replace the program with community notes. Zuckerberg cited free speech. His decision was about bending the knee and shareholder value. Zuck also made a stupid comment about companies needing more masculine energy. He believes masculinity is increasing your personal wealth by sacrificing the safety of the most vulnerable. No, masculinity is about protecting the vulnerable. See: aerial firefighters demonstrating expertise at enormous personal risk to save lives and protect homes. 

Live, Local, Late-Breaking?

Twice, LA County officials mistakenly sent evacuation alerts to 10 million people. These were potentially dangerous errors. Old-school local broadcasters corrected these mistakes in real time, heading off a catastrophic panic. Meanwhile, Watch Duty, a nonprofit app that tracks emergencies and sends real-time alerts, has had 2 million downloads since the fires began; it’s currently available in 22 states, operating with a team of 200 volunteers and 15 full-time employees. 

Unfortunately, local news is in short supply across the U.S. Over the past decade, there have been $23 billion worth of broadcast TV ownership deals, further concentrating an industry in which the three largest owners already control 40% of all local news stations and are present in over 80% of media markets. Zooming out to include print, radio, and digital, more than half the counties in the U.S. have little or no access to local news. Most of these “news deserts” are located in high-poverty areas and serve historically marginalized communities. People say digital media gives everyone a voice. Maybe. But digital media has definitely drowned out actual journalists. 

Rebuilding Homes

The question isn’t whether to rebuild, but where. Pacific Palisades is a wonderful place to live, but those amazing views of beautiful topography of foothills, mountains, canyons, and ridgelines are located in fire zones. Early estimates put the total cost of the wildfires at $250 to $275 billion. The property insurance bill is expected to easily top $20 billion. California’s insurance market was already in crisis, as leading insurers had done the math and decided to leave the state or not renew policies in fire-prone areas. California’s state-backed FAIR Plan is the insurer of last resort in these areas. Statewide, the number of FAIR Plan policies in 2024 increased 40% from 2023, and 85% in Pacific Palisades. Continuing to underwrite wood-built craftsman homes in Altadena (median home value: $1.3 million) and mansions along PCH is a wealth transfer from California’s taxpayers to some of its wealthiest people. 

This isn’t unique to California; 10 states across the political spectrum, including Florida and Texas, sued a federal flood insurance program after it adjusted premiums to better reflect climate realities. As one meme put it: You may not believe in climate change, but your insurance company does.   

A Crisis Is a Terrible Thing to Waste (for Rich People) 

Governor Newsom has proposed a $2.5 billion Marshall Plan to kick-start rebuilding. That, emotionally, feels right. However, I’d argue it is (yet again) a transfer of wealth from the middle class to the rich under the auspices of a tragedy. Covid caused the greatest intergenerational theft this century. Flushing the markets with $7t in stimulus, 85% of which wasn’t needed, but sent asset prices soaring. This was great for the incumbents (home and equity owners) and awful for entrants — the young, who will have to pay for our largess via deficits. 

The median value of a home in the Palisades is $3.3m, or 8x the national median. I’m not arguing against disaster relief, but against the continued gestalt in our society where we always find a narrative and empathy to bail out the rich while throwing some loaves of bread and a circus at the poor. I live on the water in Florida, where insurance rates have skyrocketed … as they should. Homes vulnerable to the floods and wildfires caused by climate change tend to be in beautiful areas, on the water or in hilly, dry climates. I don’t believe anybody has a birthright to live there and the risks/costs of doing so shouldn’t be transferred to people who can’t live on the beach. Also, will we ever get serious about climate change if we normalize (i.e., bail out) the powerful, who are the agents of change in a capitalist America?    

Make Los Angeles Great (i.e., Los Angeles) Again

Los Angeles will be rebuilt, as it’s wonderful and worth it … regardless of who ultimately bears the cost. After the 1991 Oakland fire, 8 out of 10 residents rebuilt. After disasters, most people decide to stay. The project, however, will put Trump’s biggest policies under the microscope. Trump has vowed to deport millions of people. I’ve written that we won’t do that, as immigrant labor is too profitable. In LA, 28% of the construction workforce is undocumented. Trump’s tariff plan — 60% on goods from China, 20% on everything else the U.S. imports — is an elegant way to turn a no-brainer building boom into an own-goal that’ll make us nostalgic for Covid supply chain disruptions and post-pandemic inflation. My prediction: Trump will turn against his plans, blame someone else for his fatuous ideas, and declare victory while standing next to James Woods at a groundbreaking ceremony in LA.  

GoFundMe (GoFuckYourself)

I donated to several charities and GoFundMe campaigns in the aftermath of the fires. To its credit, GoFundMe has raised millions for people affected by the catastrophe. Since its founding, the for-profit firm, last valued at $600 million in 2015, has processed $30 billion in crowdfunding. That’s a lot of cabbage … for GoFundMe. I paid a 14% fee to donate. An LA County Supervisor complained about the same 14% charge. The company’s VP for communications reached out to me to clarify that its standard transaction fee is 2.9% + $0.30 and insisted that tipping is optional. However, the tip “option” is the default, and I have about as much choice as the service charge on a bill at a Miami restaurant. GoFundMe needs to be more transparent that tips are optional and opt-in — that’s how tipping works. And if the organization really wants a tip, here it is: Don’t treat your customers like assholes and claim an opaque charge is “optional.”

Neighbors

Neighbors are helping neighbors. Mexico didn’t send their best people, they sent some of their bravest, i.e. firefighters. Canada and seven Western states, including Texas, also sent aid. Across Los Angeles and beyond, businesses and regular people didn’t ask if help was needed, they just showed up. My personal favorite: the street vendors who turned the Rose Bowl and Santa Anita Park race track into donation centers. Honorable mention: the 900-plus incarcerated volunteer firefighters working on the front lines for $10 a day. As one of them explained, for the first time in his life he has a job, and the community values his contributions. We should give the same opportunity to every young American by investing in a national service program, as it would benefit every community in the country. 

Love and Fire

I’ve been thinking a lot about love the past decade, as I’m not that good at it — I’ve had few people in my life who I loved and loved me. My definition of “love” used to be caring about someone’s well-being more than my own. This misses the mark, however, as it would mean I only love my immediate family, which I don’t think is true. A better definition: Love is giving witness to someone’s life. To notice them and their lived experience. My friend Rabbi Steve Leder said something that hit hard this week. Calling people and asking if you can help (what I was doing) is the wrong thing to do. The right thing? Just help. Pick up their dogs, drop off food, send a photo of the room in your house they can stay in, wire them cash. Don’t ask, do. Are there people in LA you love? Then give witness to their life, notice what would help. Don’t ask, just give witness, notice, and love them.

Life is so rich,

 

P.S. This week on the Prof G Pod, I spoke with Mel Robbins, an award-winning podcast host, New York Times bestselling author, and renowned expert on mindset. We talked about her “Let Them Theory,” a simple yet powerful concept that can improve your life and strengthen your relationships. Listen here. 

P.P.S. Is AI-driven personalization progress, or an invasion of privacy? Section’s newest event digs into this with former Walmart personalization tech VP Jan Pederson. RSVP for free.

 

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How to Survive the Next Four Years

Jessica Tarlov, a panelist on Fox’s The Five and my Raging Moderates co-host, has emerged as an important voice in American politics. This week I asked her what big lessons we should take from the election, and — more important — what options Democrats have going forward. I’ll be back next week. 

In November, the sane middle, Democrats and Republicans, went to an appointment with the electorate and got a harsh diagnosis. We don’t want to accept it or talk about it. But … we can’t stop thinking about it. 

We’re asking ourselves: How do we survive the next four years? And is there any way to make them less bad than we have every reason to expect they will be? We’re obsessing about some very unpleasant facts. Among them: The GOP won one-third of minority voters and registered a six-point gain among voters without a college degree. Kamala Harris got 7 million fewer votes than Biden did in 2020. Dismal.

The time for grieving, though, is coming to an end. The key to moving forward, I believe, is to combine good governance energy with pragmatism. (And maybe a side order of ruthlessness. As the Bulwark’s Tim Miller recently told me and Scott, “Less agreeableness would be helpful to Democrats in Washington.”) 

That means … deep breath … working with Trump and the GOP on issues where we can find common ground — while holding the line on our principles. 

The Gentle Art of Political Death Cleaning

In the spirit of “new year, new you,” I propose a Marie-Kondo-style mental housecleaning for Democrats. As MK reminds us, the first step on the road to tidiness is throwing stuff away: “To truly cherish the things that are important to you, you must first discard those that have outlived their purpose.”

The main thing to get rid of is wasting resources, energy, and credibility reflexively opposing Trump on everything and reacting to every trollish thing he says. “Resistance” may have been useful last time, but it won’t work now. We’ll just hurt ourselves, politically and mentally. We should also stop trying to remind voters what a sleaze Trump is. They know, and they don’t care.

Americans, by and large, didn’t elect people in November because of their party affiliation; they voted for people they believed were authentic and who would really fight for them. If you’re splitting your ticket for AOC and Trump, it’s clearly not about blue vs. red. 

Democrats must face certain progressive failures, especially in our big cities, and change course. If we want any shot at reclaiming the House in two years, we have to start proving now that we are the real fighters for the middle class, the commonsense party that’s serious about governing and providing better outcomes. 

Fortunately, on the biggest domestic issues — immigration, the economy, health care, and reproductive rights — Americans are broadly in agreement. That gives us an opportunity if we’re smart enough to take it. 

I’m not proposing surrender. I’m proposing principled resilience. I’m also just being practical. I can’t afford enough Botox to rage the way I really want to for the next four years.

Immigration: Give Them the Criminals

For years, Democrats have been minimizing the immigration crisis in Eagle Pass, Texas, and other places on the southern border. Republican governors grabbed the chance to stick it in our faces by shipping people up north. Along with many many liberals, I dismissed this as a cruel stunt. Which it was. But it was also genius politics. 

Here’s the reality we face: There is now majority support for building a wall along the border with Mexico. Incoming border czar Tom Homan is saying we should get ready for roundups, and Texas is offering land for “deportation facilities.” Trump is talking about revoking birthright citizenship. At the same time, a majority of Americans still believe there should be a pathway to citizenship for the undocumented and protections for Dreamers. 

What nobody wants, however, is more criminals in the U.S. Instead of terrorizing undocumented immigrants en masse — an approach certain to cost huge amounts of money and create social disruption and backlash — we should concentrate on kicking out crooks who are here illegally.

The sanctuary city, which was originally supported by tough-talking Republicans including Rudy Giuliani, was conceived to encourage undocumented immigrants to participate in American society, in part so they’d feel safe working with police to catch the bad guys among them. That was a good idea and local authorities should continue to work with ICE on those kinds of cases — but not participate in mass deportations.

Congressional Democrats seem to have gotten the memo. Earlier this week, Senators Ruben Gallego and John Fetterman said they would sign on to the Laken Riley Act, named for the Georgia nursing student murdered by an undocumented immigrant last February. The legislation, which passed in the House, requires federal authorities to detain any undocumented immigrant found guilty of a theft-related crime. It’s far from perfect, but it is good policy and politics.

Economy: It’s About the Middle Class, Stupid

It is impossible for the incumbent party to win when two-thirds of voters believe the country is headed in the wrong direction. Inflation and the lack of affordable housing drove millions of Democrats to vote GOP, and kept even more of them on the couch. 

Democratic messaging on the economy was, not to put too fine a point on it, really shitty. We kept telling people that all the economic indicators were pointing the right way. Those numbers, though, meant nothing to people struggling to feed their families. What we must do now is save them from the economic disaster headed their way if Trump’s fiscal plan is implemented. 

First, tariffs. The vast majority of economists (and anyone else who knows how trade works) recognize that Trump’s tariffs — anywhere from 10% to 60% on goods from China and 25% on goods from Canada and Mexico – mean things are going to get more expensive for already stretched American consumers and businesses. Higher prices for produce, higher prices for building supplies, higher prices for cars, etc., etc. 

But while sweeping tariffs are a terrible idea, some targeted ones make sense. President Biden, for instance, quietly kept the vast majority of Trump’s tariffs on China and even expanded some. That tells me there is fertile ground here for a middle position: opposing big dumb tariffs on our friends while supporting those that actually protect American workers from our rivals’ unfair trade practices. 

Second, taxes. Trump wants to make his first-term tax cuts permanent through a massive reconciliation bill to be passed in the first half of 2025. How will those tax cuts be financed? By cutting programs that help the average American, of course. At the same time, Trump’s plan to lock in tax cuts for rich people will add $4.6 trillion to the deficit. The deficit is an abstraction nobody talks about except during an election year. We need to do a better job telling voters that big deficits contribute to higher costs now and only swell the huge collective debt our kids will be on the hook for later. The deficit is an enormous tax hike on our children.

How should Democrats respond to Trump on taxes? In a targeted way. Catchy Trump policies along the lines of “no tax on tips,” which opens the door to tax abuse by the wealthy, should be nonstarters. And his proposal to cut the 21% corporate tax rate to 15% is lunacy which we should fight. But we should consider permitting deductions for auto loan interest and other moves that would support the middle class. Everybody thinks they are overtaxed; some of us actually are.

On regulation, we need to show we know the difference between cutting red tape and tossing out necessary protections for citizens and the environment. The Supreme Court’s recent Chevron decision limits the power of regulators.This should force us to take a closer look at the regulatory state and pare it back where that makes sense. At the same time, we have to hold the line where it doesn’t: For instance, Trump’s plan to let companies willing to invest a billion dollars in the U.S. breeze through environmental permitting. (Forget about any meaningful cuts coming from DOGE, BTW; it has no practical power, and Musk is already admitting he’ll fall short of his stated goals.)

Trump’s stated goal is to cut 10 regulations for every new one — let’s come up with our own cut first. Burdensome regulations on small businesses and housing development should be our focus. Check out what’s being done about housing in Austin, or NYC Mayor Adams’s City of Yes proposal as examples of empowering economic policy. 

Republicans have the slimmest House majority since 1917, and GOP budget hawks on the far right such as Thomas Massie and Chip Roy are raising hell about spending. That creates a middle way where moderate Democrats and Republicans can make sensible budget, tax, and regulatory cuts while still protecting key entitlements. 

Health Care and Reproductive Rights: Create a National Baseline

Some places offer more room to compromise than others. This election cycle put the threats to our health care and reproductive rights into scary focus. We made a big deal out of these issues during the campaign, and we need to make a bigger deal out of them now: Over 60% of Americans approve of the Affordable Care Act (a historic high), and 70% of Americans support abortion rights in the first trimester.

JD Vance’s vague “deregulating ACA” idea of putting sicker people into higher-risk pools is terrible. The anti-vax, anti-science movement embodied by RFK Jr. is frightening and could go far beyond slashing access to Covid vaccines. Dr. Mehmet Oz’s support for Medicare Advantage for All would imperil Medicare as we know it. The movement in many red states to chip away at reproductive rights or cancel all access to abortion outright is intolerable. We need to fight these people and things as hard as we can.

Fortunately, while Trump talks a big game about getting rid of Obamacare, all he really wants and can expect to do is make some trims around the edges. The proof of that is that despite years of sabre rattling, all he has now, he says, are “concepts of a plan” to replace the ACA. Whatever else he is, he’s not stupid. Trump knows better than to try to cancel a profoundly popular program. With this in mind, Democrats should take the lead on improving Obamacare by offering proposals focused on lowering the cost of premiums, fixing the “family glitch,” and reducing cost sharing for new enrollees.

On reproductive freedom, though, we need to hold the line. While some states (Arizona, Nevada) voted both for Trump and for abortion rights, in others (Louisiana, Texas), reproductive rights are under sustained attack. 

Here I think we should call Republicans’ bluff. Democrats should propose legislation that sets a federal floor for legal abortion, modeled on the European standard, permitting abortions during the first 15 weeks of gestation nationwide. This approach would codify the national consensus into federal law, ensuring no state can restrict abortion access before 15 weeks. At the same time, liberal-leaning states would remain free to allow abortion access beyond that point if they want. 

Putting such a measure to a vote would force moderate Republicans to make a public choice: Will they stand with the majority of Americans, who support abortion in the first trimester, or with anti-reproductive-rights extremists?

One Day at a Time

I haven’t talked here about climate or foreign policy or other issues, not because they’re not important, but because we need to focus specifically on the issues voters just told us were most important to them. Also, Scott asked me to keep this to around 2,000 words.

Those weighty matters are conversations for another day. (For the record, I’m for expanding the Abraham Accords and against invading Greenland and Panama; Mexican President Claudia Sheinbaum doesn’t need any help renaming large bodies of water).

I have no illusions that any of this is going to be easy. I also know I’m saying something a lot of Democrats don’t want to hear. (Along those lines, check out the comments sections for recent New York Times op-ed pieces by James Carville and Long Island Democrat Tom Suozzi. Some parts of the Upper West Side are determined not to learn anything from the election.)

If you are searching for signs of hope, look at the electoral success of Democrats who subscribe to the kind of principled pragmatism I’m suggesting: Governors Josh Shapiro, Gretchen Whitmer, and Jared Polis are the top examples. Senator Fetterman gets it. Representatives Jared Golden and Kristen McDonald Rivet get it, too. 

Raging against Trump is a powerful (and fun) drug. Many of us have indulged, and we’ll be tempted many times again (insert Serenity Prayer here). I don’t rule out freakouts, but let’s try to save them for special occasions. Getting through the next four years, minimizing the damage while taking the wins we can get, is going to take calm and discipline. 

Our best hope of winning back disaffected Democratic and independent voters is to recognize the difference between being right and being effective. We’ve spent most of our efforts on the former; let’s move to the latter. It’s time to forget about the donkey and the elephant for a while. 

—Jessica

P.S. On the latest episode of Raging Moderates, Jessica and I considered the long shadow cast by Jan. 6. Listen on Apple or Spotify

P.P.S. Section is hosting an event next Friday: Rethinking Marketing with AI. If you represent your brand in any way, you should be there. It’s free to RSVP.

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2025 Predictions

Predictions are a terrible business. If you get it right, the events leading up to the prediction render it less bold. If you get it wrong, you’ll be reminded of your gaffe 10k times a day (i.e., Twitter). The purpose isn’t really to be right, in fact, but to catalyze a conversation. Every year, we make predictions. We start by holding ourselves accountable. Here are our predictions for 2024, followed by our predictions for 2025.

Power Couple: OpenVidia

Since the launch of ChatGPT in November 2022, investors have added a staggering $8.2 trillion to the market valuations of tech’s Big Six firms: Alphabet, Amazon, Apple, Meta, Microsoft, and Nvidia. For context, the 2024 federal budget was $6.8 trillion. Companies that referenced AI during their earnings calls registered a 12% increase, on average, in performance, compared to a 9% increase for those that didn’t mention it.

The AI ecosystem is settling into three layers: applications (Duolingo, Netflix, Tesla), AI models (Anthropic, Gemini, OpenAI), and infrastructure (AWS, Google Cloud, Nvidia). Two companies dominate. OpenAI has doubled its annualized revenue to $3.4 billion in the past six months. And its ChatGPT accounts for 56% of premium LLM subscriptions, i.e., people pulling out their credit cards. Over the past 12 months, Nvidia has reported $96 billion in revenue — 4x its 2022 total. I look at peer-reviewed research to evaluate whether a technology is enduring: Nvidia chips are cited in 19x more research than those of its competitors combined. For two companies to dominate a technology this early is extraordinary. 

The AI Company of 2025: Meta

No business is better positioned to register progress in AI than Meta. Nine out of 10 internet users (excluding China) are active on Meta platforms. The company has access to more unique human language data, i.e. raw training data, than Google Search, Reddit, Wikipedia, and X combined. In terms of compute, Meta has purchased more Nvidia Hopper GPUs (advanced AI hardware) than any U.S. company other than Microsoft, giving it unmatched AI training and deployment capacity.

Palindrome: Service-as-a-Software

So far, the benefits of AI have accrued to existing players. The next set of winners will be firms that capitalize on service-as-a-software, i.e., taking human-intensive services and putting a thick layer of AI on top to scale with less labor. This is a fancy way of saying there will be more consumer-facing AI applications. The real cabbage, however, is in routinizing back-office functions (e.g., accounting, compliance, customer service, etc.).

Technology of 2025: Nuclear

AI’s chokepoint is energy. A ChatGPT query demands 10x the energy of a Google query. The majority of the 10 most valuable companies in 1980 and 2024 were/are in energy and tech. However, the construction of acres of data centers and the energy investments needed to power them reflect a deeper convergence. AI is accelerating Big Tech’s transformation from an industry that sells computers into an industry that sells compute. In a knowledge economy, compute is energy. 

Wind and solar are great, but they lack the scale and reliability of nuclear power. One nuclear reactor produces the equivalent of 800 wind turbines, or 8.5 million solar panels. Nuclear is also carbon-free: 48% of the clean energy in the U.S. comes from nuclear. Nuclear power may be the worst-managed brand in history. Every energy source has tradeoffs in emissions and externalities. I believe nuclear energy represents the best trade. If you gathered all the used nuclear fuel produced by the U.S. in the last 60 years, it would occupy only 10 yards of a football field. (Note: Do not go anywhere near that field.) 

Get Used to It: Drones

Radar, jet engines, nuclear power, GPS, and blood banks were all developed during wartime. There’s something about war, and the potential loss of a civilization, that inspires creativity. At the outset of the war in Ukraine, Russia’s defense budget and standing army were 10x and 5x the size of Ukraine’s, respectively. Drones are the premier technological innovation birthed by the conflict.  

Drones provide constant surveillance capabilities and enable precision strikes at a fraction of traditional costs. A successful drone strike can yield a 100,000% return (e.g., $400 drones routinely destroy $4m tanks). 3D printing, AI, and micro-cameras have converged to shape the latest David vs. Goliath sequel. Using drones for last-mile delivery of Comtrex and commuters, search and rescue missions, and monitoring and maintenance in manufacturing and agriculture should reap substantial gains.  

Musk Bids for Warner Bros. Discovery/CNN … Or Another Iconic Media Firm

The Wall Street Journal reported that Elon is addicted to Ketamine. I believe that’s the delivery mechanism, but the nicotine (where his real addiction resides) is attention. For 10% of his net worth ($44b for Twitter) he can impose himself on all of us, nearly all the fucking time. Q: If he’s going to come undone, can’t he do it like the rest of us, in private? 

Anyway, WBD has a market cap of $26b (plus debt). If the idea sounds outrageous, it isn’t. John Stankey (CEO, AT&T) put a condition on the sale of WBD that it had to be a single class of stock, to get the greatest price and net the company a takeover premium; in the words of Gordon Gecko, WBD is breakable, i.e., it can be acquired. After his fallout w/Trump, and the public’s increasing fatigue (Jesus, make it/him just go away) threatens to push him out of the spotlight, Elon will force himself back into the news cycle by (again) becoming the news. He could also buy MSNBC, as (unlike MSNBC) he does have a sense of humor. 

Investment Opportunity: Emerging Markets

The S&P 500 outperformed Vanguard’s All-World ex-U.S. index ETF +56% to +23%, respectively, from 2023 through 2024. Historically, when U.S. equities fall, emerging markets rise. These cycles typically last about a decade. I believe we’re (over)due for a course correction. The U.S. stock market now makes up 50% of the total market cap globally; when stocks get this expensive, returns go down, and capital looks for greater returns elsewhere. Since 1989, emerging markets have typically outperformed developed markets by 27% after a Fed rate cut. Demographics are destiny; the growth in working-age populations favors India, Indonesia, and other developing nations. The share of institutional capital invested in the markets is at a cyclical low. A reversion to the mean would represent inflows of $910 billion to emerging markets.  

The X factor is Trump. He’s called for a 10% to 20% tariff on all imports and a 60% to 100% tariff on goods from China. I don’t believe he’ll follow through, though, as tariff is Latin for tax. At the first hint of inflation, alarm bells will sound and the adults in the administration, looking at the bond market, will respond crisply and force the administration to slow their roll. And Republicans in Congress will find their backbones when they realize that 90% of the presents under the Christmas tree come from China, and their dear leader is, post-2026, a lame duck. 

Platform: YouTube

Netflix didn’t win the streaming wars, YouTube did. Last year, YouTube, which spends zero dollars on content — it shares revenue with creators instead of paying them — became the first streaming platform to reach 10% of all television viewing. Eighty-one percent of Gen Alpha viewers said they watched YouTube recently, compared to 62% who said they watched a subscription streaming service, and 44% who said they watched TikTok. In the U.S. and U.K., one-third of kids aged 8 to 12 said YouTube was their No. 1 career choice; movie star didn’t make the list. Also, YouTube is the No. 1 podcast platform, adding a tailwind no other streamer has. If Alphabet were forced to spin off YouTube, the company would likely be worth half a trillion dollars, vs. Netflix’s market cap of $350 billion. 

Media: Podcasts

I’m talking my own book here, but I’ve been in the podcasting business for almost a decade, and this is the first time I’ve called it the media of the year. The only ad-supported medium growing as fast as Meta, TikTok, Alphabet, and Reddit is podcasting. Of the estimated 3.2 million pods, 600k put out content each week, and I estimate only 600 are economically viable. This is a striking concentration of power, with the top 10 pods commanding 35% of the listenership. Kamala Harris would have needed to appear on CNN, Fox, and MSNBC three hours every night during prime time for two weeks to reach as many people as Donald Trump did going on Joe Rogan. 

Podcasts’ share of attention is well ahead of their share of ad revenue. This delta will close. Since the election, our pods have seen a 30% increase in revenue. My prediction is that pods’ ad revenue will grow by 20+% in 2025. Listenership will continue to grow as well, and the ARPU, like those of Meta and Alphabet, will increase dramatically as advertisers discover this is where young, successful consumers have been hiding.  

IPO: Shein (Disclosure: Investor)

One-third of Gen-Z consumers say they’re “addicted” to fast fashion. Traditional retailers release 100 new styles a week. Fast fashion retailers put out 100 styles per day. Shein pushes out 7,000 styles per day. Its operations are remarkably asset-light, as Shein is an IP business that doesn’t own any factories, trucks, or stores. Instead, its software tracks activity on the site, sends orders to factories based on their ability to calibrate demand, and then puts in motion the transportation. Also, there are effectively no returns (the Achilles’ heel of any retail business), as the products are so cheap people don’t go through the hassle of sending them back. Similar to other asset-light winners (e.g., Airbnb, Nvidia, Uber), Shein’s revenue per employee dwarfs that of the incumbents. 

Business Trend: M&A

A historic amount of cash is on the sidelines. Since 2003, private equity’s dry powder, i.e., the committed capital not yet allocated, increased 8x to $4 trillion. Corporate cash holdings total $4.1 trillion. Context: U.S. GDP is around $27 trillion. 

The average closing time for U.S. dealmakers in 2022 was 161 days, a 14% increase since 2018. For deals exceeding $10 billion in value, closing times have surged by 66%, to an average of 323 days. Over the past four years, Lina Khan has been an aggressive antitrust enforcer, and the Biden administration has published 209 “economically significant” regulations — more than any president since Reagan. The lesson? Elections have consequences. Setting aside whatever grievances Trump may hold against specific tech and media companies, the perception is that his administration will likely be more friendly to M&A. Some predictions re who will be on top of some big transactions: Comcast, Uber, and (see above) Musk. Also, I believe someone will take Intel and/or Boeing private. 

Tech Movement: Banning Phones

When we look back on this age, the thing we’ll regret most is letting our kids become addicts. The substance is social media, the delivery mechanism is the phone. On a typical day, a teen receives 237 notifications. One study found that 97% of kids use their phone during school hours for a median of about 43 minutes per day. Think about that: Basically every teen in America misses 10% of school every day. 

Giving students unrestricted access to phones has been a great move, said no teacher ever. Banning them in school is a return to sanity. The good news: 18 states have passed laws restricting the use of phones in school, and roughly three-quarters of schools have policies restricting their use in the classroom. Better news: Our response, while slow, is bipartisan. Best news: Test scores have improved by 6% in schools that have banned phones. 

Chemical: Testosterone

Women are ascendant (something to celebrate), while young men are struggling. There has never been a cohort that’s fallen further, faster than young men living in Western democracies. The percentage of young men aged 20 to 24 who are neither in school nor working has tripled since 1980. Workforce participation among men has fallen below 90%, while median hourly wages are $3 less per hour, adjusted for inflation, than they were in 1970. This is deadly; over the past 20 years, America’s incremental deaths of despair totaled 414,000, exceeding the 407,000 Americans killed in World War II. It’s also a mating crisis, as women traditionally mate horizontally and up socioeconomically, whereas men mate horizontally and down. When the pool of horizontal-and-up young men shrinks, there are fewer mating opportunities. And without the guardrails of a relationship, young men behave as if they have … no guardrails.  

Families feel this. I believe the 2024 election was about struggling young people, especially struggling young men. If your son is in the basement vaping and playing video games, you don’t really care about trans rights or Ukraine, you just want change, i.e., chaos and disruption. The Trump campaign saw this and flew into the manosphere with coarse language, crypto, Rogan, UFC, and Hulk Hogan. Trump gained 15% with young men — the biggest pivot from Democrats to Republicans of any age group. Another big shift was among women aged 45 to 64. I believe those are the mothers of struggling young men. America elected President T; the “T” stands for testosterone. The election was supposed to be a referendum on women’s rights. It was instead a referendum on failing young men.

2025 Will Be a Great Year for You

How do I know this? A: I don’t. However, I do (really) hope your year is full of prosperity and time with loved ones. I’ve read that if you write a goal down, it’s 40% more likely to happen. And I’ve done this — see two sentences ago. So we have that going for us.

Life is so rich,

P.S. All our podcasts are available on YouTube, including Office Hours, where I answer your questions.

P.P.S. Section CEO Greg Shove is talking to Reid Hoffman (the guy who founded LinkedIn) about AI’s ability to unlock our superpowers on Jan 29. Don’t miss this one.

The post 2025 Predictions appeared first on No Mercy / No Malice.

People Are The New Brands

Scott’s away this week on a safari. I’m not sure what a Prof G safari looks like, but it likely involves tented camps with fine china, Zacapa, and remote NAD treatments.

In his absence, I’m keeping the lights on. Yes, me, Ed Elson, Scott’s 25-year-old co-host on Prof G Markets. I get paid to make Scott appear younger and more relevant, i.e., keep him abreast of trends in business and tech. Plus wardrobe advice — the guy dresses like an aging skateboarder.

This week I’m sharing my thoughts on a long-brewing trend that came to a head in 2024. It’s simple: America has fallen out of love with brands and in love with people. This is evident in every corner of American life — from politics and business to technology and media. People are the new brands.

Some context: What I lack in age and wisdom, I make up for in screentime. I spent almost seven hours scrolling the internet yesterday — average for me, below average for my generation. I am a product of the greatest digital transformation in history, and the erosion of traditional brand value is happening downstream of this transformation. Scott concurs. Where our views differ, however, is that while he believes digitally-enabled products and services have replaced brands, I believe people have.

First, some numbers: Gen Z spends an average of 109 days per year looking at a screen. Eighty percent of our waking hours are spent consuming information, up from 40% in 1980. We see 208 ads per hour — 10x more than our parents did at our age. As a result, we are more anxious, distracted, and depressed than any generation in history. We all know this but do not comprehend it. Like frogs in boiling water, we’ve been slow-cooked by screens.

The most important number is 12%. That’s the share of Americans who say they have zero close friends, up from 3% in 1990. Meanwhile, half the country says they’re struggling with loneliness. These numbers took off when Apple put computers in our pockets, and they’ve been climbing ever since.

There is an epidemic of loneliness in our country that extends far beyond the lives of Gen Z. We’ve underestimated its impact — loneliness touches everything, from the media we consume and the products we buy to the relationships we (don’t) form. When we reflect on the winners and losers in 2024, we will bucket them into two categories: those who capitalized on loneliness and those who didn’t. Moreover, we’ll realize that, in this society of lonely people, we find a lot more to love in a person than a brand.

Cravings

Meta naturally insists the loneliness epidemic has nothing to do with social media. Common sense suggests otherwise. We now spend 70% less time with our friends than we did a decade ago. There is no question: The phone has replaced our friends.

Research shows our bodies are not OK with this. Loneliness has a neurochemical impact similar to that of hunger, in that it activates the same parts of the brain. The longer we go without social interaction, the more we crave it. Interacting with other people is not a human desire but a human need. For the past decade we’ve starved ourselves of this essential nutrient.

The implication is simple: Whether they know it or not, near everyone you know is craving a friend. The best visualization of this subconscious craving is the internet, which has been overrun by billions of people in search of other people. TikTok is an endless stream, not of landscapes or products or experiences, but people. Same for YouTube, where the highest-performing videos are those with thumbnails featuring a giant human face. Meanwhile, on Instagram, pictures with human faces are 38% more likely to get a like than those without. The algorithm is the truest reflection of our cravings, and the algorithm has been very clear: We crave people most.

For lonely people, however, simply seeing someone is not enough. What we really want is to know them, to understand them, to be familiar with the intimate details of their life and for them to understand us. In other words, we want a friend. Many have watched in confusion the extraordinary rise of online influencers — people who make millions posting videos of their daily coffee routine or workout regimen. Much of this can be explained by our chronic lack of friends. Research shows Gen Z views their favorite influencers in the same way they view their friends. We know what clothes they wear, what food they eat, and what brands they buy. This has radically transformed the retail economy, so much so that 40% of us now consult an influencer before we make a purchase.

Parasocial

The technical term for this phenomenon is “parasocial relationship.” Per the Tech & Science dictionary: “a relationship a person imagines having with another person whom they do not actually know.” Parasocial is mostly used in reference to Instagram and TikTok. But I believe our parasocial relationships affect everything. If I had to describe 2024 in one word, it would be parasocial.

This is evident in my industry, podcasting. Joe Rogan has become more influential than the world’s largest news networks. His podcast gets 3x more downloads than the average primetime viewership of CNN and MSNBC combined. Many have misdiagnosed this tectonic shift as a left vs. right phenomenon, i.e. “CNN is woke/liberal; Rogan is anti-woke/conservative.” In the context of loneliness, however, that’s a red herring.

The key distinction between CNN and Joe Rogan is that one is a brand and the other is a person. This distinction is embedded in everything, from the name (CNN vs. Joe Rogan) to the logo (red letters vs. a face) to the product (“the news” vs. normal conversation). In a world of chronic loneliness, the person is more compelling. It’s no accident the name of our pod is Prof G.

One might argue that Abby Phillip is a person. But this neglects the intimate nature of podcasting as a medium. Abby Phillip reads off a teleprompter, wears makeup and a suit, and sits in a multimillion-dollar production studio. Rogan wears a T-shirt and talks with his buddies in a room that looks like a converted garage. For millions of Americans, Rogan isn’t a newscaster or even a celebrity, he’s a friend. And you will find this dynamic at all the top podcasts in America. (Side note: I surveyed 10 friends on their preference between Abby Phillip vs. Joe Rogan; none of them knew who Abby Phillip was.)

Beast Mode

Hollywood is suffering at the hands of the same trend. The 2024 Academy Award for Dumbest Purchase goes to Larry Ellison’s son, David, who, after getting caught up in a bidding war with the children of two other billionaires, spent $8 billion on Paramount Global. Every character in this transaction suffered from Hollywood Derangement Syndrome, believing the Paramount brand still holds any cultural currency. It doesn’t. Meanwhile, they didn’t comprehend that Hollywood is up against the same unbeatable enemy that cable news faces: people.

The individual who’s levied the greatest damage on Hollywood is YouTuber MrBeast, whose portfolio includes hits like I Survived 7 Days in an Abandoned City and I Built 100 Houses and Gave Them Away. MrBeast has mastered the art of the parasocial relationship. Put simply, he’s a friend who gets up to interesting stuff. Last year, MrBeast racked up more than 1 billion hours of viewing time, more than any of the top shows on Netflix. He’s one of the millions of YouTubers swinging the pendulum of power away from brands and toward individual people. This trend has been well documented (“the Creator Economy”), but it was ratified this year when analysts valued YouTube at $455 billion. That’s 20% more valuable than Netflix, and more than twice as valuable as Disney. Streaming or AI didn’t take down Hollywood; people did.

GOPerson

As with podcasting, this presidential election was also less about left vs. right than it was about people vs. brands. No one understood this better than Donald Trump, who doubled down on his parasocial relationship with millions of Americans while actively disassociating from the Republican brand. It was the ultimate people-over-brand strategy.

What drove this home for me was a leaked video of Trump watching the Democratic National Convention with his team. “Too many thank yous,” he says about Harris’s speech. “Is she crazy?” At first it looks like a watch party, then the tone changes. “Get that out right away,” he orders. A staffer types out his exact words, then blasts them across social media channels. Throughout the rest of the speech, Trump live-dictates his thoughts. With each thought, another tweet. The team’s job is to publish anything and everything that pops up into his head — no edits or cuts, just the raw Trump.

Call it narcissism or flooding the zone with shit, but what’s most striking is Trump’s determination to livestream his persona to his followers. He’s so determined, he hired someone to type out his thoughts. Think of the millions of lonely people watching that convention, craving Trump’s live commentary, perhaps because they share his politics, but almost certainly because they want his friendship.

Now compare this to the Harris strategy of carefully written speeches and manicured interviews. The Harris team managed its candidate the same way a corporation manages its brand. Every detail was consumer-tested. Every message, board-approved. By November 5 it was clear that the candidate was not Kamala Harris but the Democratic Party. She had become a brand, not a person. And, the person won.

Person, Inc.

The corporate world has started to wake up to the power of the person, but the movement was started years ago by Elon Musk. From the beginning, Musk knew he was Tesla’s greatest commercial. This is why the company never ran ads. Instead, like Trump, he plastered himself everywhere — at every conference and on every network. His tweeting frequency went from mildly obsessive to clinically insane. He quickly amassed nearly 200 million Twitter followers, then bought the platform. People wonder how Tesla commands a valuation premium 10x greater than its peers while spending only four ad dollars per vehicle sold. The answer is Elon Musk.

Other companies have picked up where Elon left off — most notably, Meta. Meta’s worst rebrand happened three years ago when the company tried to wash away its sins by switching from Facebook to Meta. It didn’t work, and brand trust tanked. Its best rebrand, however, came this year, when Mark Zuckerberg went from awkward coat-and-tie-wearing Senate-hearing prop, to gold-chain-donning T-Pain-loving jiu-jitsu fighter. In addition to leaning into his personality, Zuckerberg has made himself more public. He posted 71 Instagrams this year, documenting everything from Taylor Swift concerts to UFC fights. In 2021 he posted just 29 times, mostly product announcements. The extent to which the Zuck has put himself on display this year is astounding. But more important, effective: Since the rebrand, Zuckerberg’s favorability score among what was once his most hostile cohort (18- to 34-year-olds) has increased 73%. This is what it means to choose “person” over “brand.”

Honorable mentions go to Spotify and Shopify. I’ve spoken before about the need for CEOs to ditch highly polished press releases and embrace TikTok instead. In line with my belief that people > brands, TikToks show us who is running the company in a way press releases can’t. This is starting to happen. Spotify’s Q2 earnings update this year came in the form of a short selfie video filmed by CEO Daniel Ek. Shopify President Harley Finkelstein did the same. Memo to CEOs: This is the way to do it. Brands and logos and press releases do not resonate with us anymore. We are interested in your people — who they are, what they care about, and what they have to say — not your brand. The most overvalued firm in tech, Palantir, isn’t a tech company, but a CEO (Alex Karp) masking as a public company.  

Reality Check

The premise of my argument is more important than the argument itself: We have become a society of lonely people, and our loneliness is permeating everything we do. This is a harrowing truth, and I’m grateful that Surgeon General Vivek Murthy has lent the issue the gravity it deserves by declaring it a national epidemic.

I remind you that more than 1 in 10 Americans today have no close friends. Single-person households now make up 29% of all households — up from 13% in 1960. We are more socially isolated than ever before. These are important facts for businesses to know if they are to understand their customers, but they’re also important facts in and of themselves.

Clarence

It’s the holidays, which means cheesy movies and trite truisms. I personally find myself increasingly confident that these movies and truisms are correct. This Christmas I’ll be watching It’s A Wonderful Life, and I look forward to Clarence’s always timely reminder to George Bailey at the end of film:

Remember: No man is a failure who has friends.

Happy Holidays,

Ed

P.S. If you liked this and want to hear more from me, find me on Instagram, LinkedIn, or X. Or tune in to Prof G Markets.

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Think Slow

A media ecosystem that focuses on engagement, vs. enlightenment, will get you to whatever conclusion sanctifies your beliefs. The recent murder of a CEO immediately triggered my reflexive go-to that this is a function of the struggles that young men face.. But here’s the truth, I don’t know…and neither do you. At least not yet. We don’t have nearly enough information to draw conclusions and we live in a society where everyone fast forwards to the end and without having watched the film, believing they know what happened and why. We are increasingly deferring to our gut and emotions, vs. slowing our thinking. The Jedi master of the importance of the pace of our thinking, Daniel Kahneman, passed away earlier this year.  Several media outlets have contacted me re the murder of the United Healthcare CEO and, in a nod to Professor Kahneman, my comment has been…I don’t know.. 

This post re the Israeli-American psychologist’s work was published in April. Here’s what I had to say about Kahneman’s ideas following his death last March.

Daniel Kahneman, who died last month, leaves an extraordinary intellectual legacy. Few people have unpacked our behaviors with greater insight than Kahneman and his longtime collaborator, Amos Tversky. In the wake of his passing, we’ve been reflecting on the many ways his work has shaped our thinking. Something I wish I’d figured out when I was younger is that greatness is in the agency of others. I have often tried to identify a guide or sherpa for different aspects of my life. Jesus and Muhammed Ali are my Yodas around social issues (love the poor, be fearless and poetic) and Peter Drucker informs my views on the economy (the purpose of an economy is to create a middle class), etc. Professor Kahneman helps me navigate the strait between instinct and decision. Some thoughts:

Homo Irrational

Kahneman studied how humans make decisions, and the shortcuts our minds take, unbeknownst to us. These shortcuts are efficient; they foster a key skill for survival, the ability to make rapid decisions with incomplete information. We have to make thousands of decisions every day, and we couldn’t leave the house if we had to objectively analyze every choice: breakfast, outfit, route, music, etc. 

Our efficiency comes at the cost of accuracy: Many instinctual decisions will be poorly calibrated (i.e., wrong). To facilitate the requisite speed, our brain buttresses our decisions with artificial confidence. Kahneman’s body of work demonstrates that we are often wrong but frequently confident. These shortcuts and mistakes are present in the structure of our brains, and impossible to avoid, but recognizing them helps us discern between trivial and important decisions and invest the appropriate intellectual capital. Put another way, take a beat and you increase the likelihood of making a better decision. 

Though he was a psychologist by training, Kahneman got his Nobel Prize for economics. Before him, economists “relied on the assumption of a ‘homo œconomicus,’” as the prize committee wrote, a self-interested being capable of rational decision-making. But Kahneman “demonstrated how human decisions may systematically depart from those predicted by standard economic theory.” That dry language obscures an intellectual nuclear detonation. Expectations about human decisions — whether to work at a certain job, how much to pay for a specific good — are the foundation of economic theory. Kahneman showed those expectations were incorrect.

Loss Aversion

One of Kahneman and Tversky’s earliest insights was the simple observation that we feel the pain of loss more intensely than the pleasure of profit. It’s irrational to an economist, but we put more value on not losing $100 than we do on gaining $100.

 

We also have a skewed perception of probable gains and losses: We overestimate the likelihood of unlikely things. Insurance is a profitable business because people would rather suffer a series of guaranteed small losses (premiums) to avoid the risk of a single but unlikely catastrophic loss. The healthy profit margins of insurance companies reflect our tendency to overestimate the likelihood of calamities. Overestimating an unlikely outcome is also the secret behind the lotto, which offers terrible odds. Some examples of how this has influenced my actions. (Note: I am not claiming these are the right way to put Kahneman’s insights to use, just my way.) What I’ve done:

I actively limit the number of decisions I have to make to preserve neuron power for the key ones. I have other people order for me at restaurants; I have a uniform for work/working out, wearing the same thing every day, and someone else buys my clothes. I delegate the majority of decisions at Prof G Media — I participate in a one-hour weekly editorial meeting and check in with my executive producer 2x per month on business issues. I have not planned a vacation in 20 years or put anything on my calendar in 10. Despite having made more than 30 investments in private firms over the past decade, I review few documents, and rarely even sign them. (That’s all handled by counsel.) I try to reserve the largest possible cache of gray matter for research, thinking, storytelling (writing, presentations, etc.), and investment decisions. Over the next five years, I plan to outsource all investment decisions so I can focus on storytelling.

Seven years ago, I canceled all my insurance coverage — health, life, property, flood, etc. I don’t own a car, but when I did, we purchased the minimum amount required by law. This is a position of privilege (don’t cancel your health insurance), as there is no disease or property loss that would cause me financial strain. Since adopting this strategy, I’ve saved $1.4 million in premiums.

My belief in the market’s collective loss aversion has reshaped my investment portfolio over the past decade. The majority (90+%) of my investments used to be in publicly traded stocks. That share is now less than 20%. Instead, I lean into my access to private companies, as I can absorb big losses and withstand illiquidity. Per Kahneman, there have been periods of real pain. In the last 12 months I’ve registered four wipeouts — four investments that dropped to zero. However, two other investments registered a 4x and 25x return. My net return has beaten the market, but it’s been more taxing (emotionally) than just investing in SPY, as I have trouble shaking the big losses — again, making Kahneman’s point.  

Take a Beat

Prospect theory won Kahneman his Nobel, but he’s best known for his seminal  book, Thinking, Fast and Slow. The titular concept — that we have two thinking systems, a fast one for intuitive, emotional insights, and a slow one for logical, calculated decisions — is something that has saved me from … me, dozens of times. 

Our fast thinking system is an incredible tool. It allows us to drive cars, compare prices, recognize friends at a distance, and play sports. But its availability makes us lazy. Why do the hard work of thinking through a problem when we can just “go with our gut”? In any decision of consequence, it’s good policy to slow down, get out of the stimulus-response cycle, and let your slow thinking catch up. That’s not to say we should disregard our gut — just don’t let it take the wheel. 

Specifically, I try to be vigilant about not letting my fast system make decisions that merit the attention of my slow system. Often these are reactions to things that upset me. Last week, a journalist who’s active on social media posted on Threads that Jonathan Haidt and I were “grifters,” and that I did not care about young people. This pissed me off.  

Feeling threatened, my lizard brain took over, and I saw the situation as a conflict, a threat to my standing in the community. That framing, courtesy of my instinctive, fast thinking system, dominated my consciousness for the next four hours, distracting me from my kids and vacation. I drafted an angry response to counter the threat. 

Then I shared the situation with several members of my team. Able to evaluate the situation dispassionately, they were universal in their response. “Let it go.” I was just playing into an attempt to draw attention with ad hominem attacks the algorithms love. (e.g. Trump or Musk.) The learning, other than social media is a cancer? Speaking to others, before acting, is a great way to slow your thinking. 

Happiness, Diminishing Returns, and Taxes

In 2010, Kahneman and another Nobel winner, Angus Deaton, published a study which appeared to show conclusively that income was strongly correlated with happiness at low income levels, but that income above $75,000 had no impact on happiness. The study was widely celebrated, but in 2021 a much less famous academic, Matthew Killingsworth at Wharton, published a paper reaching a contrary conclusion, based on a sophisticated smartphone-based happiness tracking system. 

Rather than ignore the unknown academic challenging him, or using his global fame to undermine the upstart, as is the norm in Congress or pretty much anywhere else, Kahneman teamed up with Killingsworth. They engaged in a collaboration alongside a third academic neutral to the dispute — a process Kahneman pioneered. Working together, they found that Kahneman’s original study had measured the decrease in unhappiness but hadn’t captured the upside high-income people enjoyed. When more carefully measured, happiness did continue rising with income. However, there were dramatic diminishing returns. There were real gains to happiness in moving from $100,000 income to $200,000, but to see that same gain again required another doubling of income to $400,000. Extend the curve, and it flattens further. 

I believe this should influence tax policy. A substantial increase in the progressivity of income tax would offer a net positive in overall well-being. According to the IRS, 26,576 U.S. households reported income of over $10 million in 2020, totalling $824 billion in income. We collected $210 billion income tax from these filers, or 25% of their income. If we collected an additional 25% of just the income over $10 million, there would be little impact on the lifestyle or happiness of these taxpayers. 

But the additional $140 billion in revenue could cut child poverty in half ($100 billion) and end homelessness ($20 billion). These investments would generate a massive increase in the well-being of our commonwealth and a huge economic boon. (These societal ills cost us trillions in lost productivity.) Plus, we’d have enough left over to pay for most of NASA ($25 billion). And rich people love space.

Disassociate

Ideas are yours to play with, disassemble, shape, and apply where needed. I’ve taken the idea of “slowing down” and mixed it with atheism and stoicism to enhance my personal relationships. When my kids are disagreeable (i.e., awful), or my partner is upset/angry, I often respond as if it’s a threat to my authority or value. I reflexively escalate and get back in their face(s). I now try to disassociate. What I mean by that: I take myself out of my “self” and see someone I care about upset. Being an observer, vs. being in the line of fire, inspires different emotions. 

When my kid is agitated, I recognize it’s more about what they are experiencing elsewhere, and they know that — no matter how unreasonable they are — I will still love them unconditionally. When my partner is upset, my role is to notice it, to give witness to their life. Their emotions matter, regardless of my ego or the perceived criticism. I can take arrows, get shot in the face, and never lose sight of my role as their protector. I am the man of the house. If that sounds like we digress to traditional gender roles, trust your instincts. I’ve slowed down, thought about it, and determined it works for us.

Life is so rich,

P.S. All the best for the holidays from the team at Prof G Media.

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Killing the Cat

Jaguar, a brand that’s been in a coma for years, is trying to wake up … and it’s gasping. The car-free “Copy Nothing” kickoff video and the rollout of a pink concept EV at Art Basel Miami have inspired well-earned mockery. The launch rivaled Elon’s “We Robot” event for the “all chip, no salsa” product launch of 2024.  Getting attention is key to any marketing campaign, so mission accomplished. Sort of.

Tata Motors, which owns Jaguar and its stablemate Land Rover, has also succeeded in further eroding what’s left of Jaguar’s brand equity. Jaguar trashed its iconic logo, all its current models, and its traditional promise of speed, power, and elegance. In their place is an uninspired and generic brand mark, a concept model that will never be put into production, and an incomprehensible promise: something about good-looking people, bright colors, and exotic haircuts.

A lot has been said about this HBR case study that’s writing itself, including some predictable culture war bullshit about Jaguar having gone woke. Most of this misses the larger point, which is that Jaguar’s move is further proof that the brand age is over. 

Do No Harm

Just as doctors have a Hippocratic oath, chief marketing officers ought to have a similar pledge: “First, do no harm…”  

I’ve advised lots of big consumer brands about their marketing, and I’ve noticed that CMOs recognize their days are numbered and are desperate to show visible motion, whether it makes sense or not. Often that activity, devoid of progress, means spending lots of money on a “new” agency stocked with sharply dressed young people who will host events giving awards to whoever’s spent the most money across the advertising industrial complex. “I’m honored to be part of this brand’s history and am shocked how well my predecessors managed the brand,” said no new CMO ever. The typical incoming speech: “Thank God I’m here — we need to redo everything.”

Which is usually self-defeating. For about 50 years following World War II, it was good business to churn out a mediocre product and then surround it with emotion (i.e., branding). On any given night about 60% of America was in one of three places, ABC, CBS, or NBC. Via the miracle of TV advertising, a few cents’ worth of peanut paste could be transubstantiated into a jar of maternal love, as “Choosy mothers choose Jif.” 

In the age of the internet, network television is in hospice. Exhibit A: the proposed merger of Omnicom and Interpublic. When I started Prophet, a brand strategy consultancy, these firms were the Alphabets and Metas of the economy; now they’re consolidating, two emaciated polar bears fighting over fewer seals and sharing a melting piece of ice. The previous sentence is both awful and wonderful. Mostly the former.

Brands mean a lot less than they used to. Consumers now have a range of weapons of mass diligence to help them find and rate products, starting with Google and social media. I travel constantly, so I used to rely on well-known brands when booking hotels in cities I didn’t know well. The name Mandarin Oriental, or Four Seasons, meant I could consistently expect and get a 7- or 8-level customer experience. Lately, though, I’ve been using ChatGPT and other AI tools to find 9s that better fit the moment, and me: the gym at The Soho House Berlin; the rooftop restaurant at the Waldorf in Beverly Hills, the bar at Chiltern Firehouse. If I sound like a privileged douchebag, trust your instincts.

The internet has diminished the power of even strong brands, and it’s penetrated the shield of good branding from mediocre products (e.g., Nike, Intel, Target, etc.). A product or service that cannot fulfill its promise to make you smarter or sexier can’t reverse its fortunes by listening to Don Draper. And inventing and refining a great product, fixing its supply chain, and improving your customer service is a lot more work than turning to Midjourney and asking for a new logo.  

No Sale 

Jaguar’s problem for a long time has been products that didn’t live up to the brand promise. Well after its swinging London ’60s heyday, Ford bought the company in 1989, and it’s now owned by India’s Tata. It still manufactures the cars in Coventry, U.K., thus technically preserving the Britishness that’s key to its brand identity.

Although they’ve improved, the cars continue to be dogged by a lingering reputation as mechanical nightmares. Anybody who drove one was making the statement: “I am a gangster who probably owns two of these status symbols, because one is always in the shop.” Stylewise, Jaguar’s current lineup has little of the elan of the legendary E-type or other classic models. In terms of sales in the premium car market, Jaguar is an afterthought behind category leaders BMW and Audi. With a few exceptions, Jaguar hasn’t been able to make anything in the $50,000+ price range that anybody wants to buy.

Jaguar’s current business response to this makes sense: Management decided to wind the company down and relaunch it. Jaguar is ending production of its three current models and retooling to produce an all-new all-electric line. It’s also decided to abandon the premium market and go further upscale into luxury cars priced at around $400,000. This is a smaller market with fatter margins, so the company is closing some dealerships. 

All of which points to something that’s gone mostly unremarked in the chatter about Jaguar’s rebrand. The move is another symptom of growing global income inequality. New billionaires are being minted at a rate of about 270 per year, while the middle class — even at the upper reaches, what marketers call the “mass affluent” — continues to disappear. Jaguar doesn’t see any growth selling to lawyers and dentists, but it does see a future selling to entrepreneurs and financiers. 

It’s going to be at least a year, however, before any new-era Jaguars go on sale. No one outside the company knows how they will look or what will be under the hood. The clunky pink Type 00 sports-tank Jaguar introduced in Miami is a concept car: It will never go into production. I’ve been to a lot of car conventions and seen a lot of concept cars. In my view, they are a waste of effort and money, no matter how sexy. They’re shiny one-off marketing props. Ivanka Trump is (seriously) more likely to be president than the Tesla Robovan is to ever be produced. 

Talking Pictures

So, with a dark year ahead of it and no new product ready to show customers, Jaguar decided to fix the one thing that wasn’t broken. 

The new brand mark makes it seem Jaguar is relaunching as an AI consulting firm. The logo looks as if it was designed by AI and never tested with real people. According to one respondent to an entirely un-scientific survey I conducted on Instagram, it “would be a great logo for a kitchen knife set.” 

One of the most precious things a company can possess is a powerful logo, one that imprints itself on the eye and instantly tells the brand’s story. Humans are visually oriented. Written language is only about 5,000 years old, and the printing press is less than 600 years old, but visual communication via drawn or painted images dates back to our Neanderthal ancestors. That’s right — it may even predate our existence as a species. We process visual information about 60,000 times faster than we do words. Researchers at MIT once estimated that the human brain can correctly identify an image in as little as 13 milliseconds.

When I talk about logos in my marketing class, I demonstrate their power by asking students if they can identify a mark using just their peripheral vision. Great logos — the Nike swoosh, the McDonald’s arches, the Mercedes “three-pointed star” — are immediately recognizable even almost outside our plane of vision. An effective logo needs to be meaningful, resonant, distinctive, and scalable. Jaguar’s pouncing cat, which it called the “leaper,” was all that. 

There are few things in nature stronger and more agile than a jaguar. As sleek and beautiful as they are lethal, they’re the apex predator of South America’s jungles and deserts. Stealthy and fast, they kill by pouncing from behind and piercing their prey’s skulls with jaws and teeth capable of penetrating artillery shells. Also, they’re the only animals that, when hunted, will turn around and hunt their hunters. (Not really, but go with it. It’s on-brand for the cat.) Jaguars look arrogant AF and rightfully so. The old logo and mark told that story; the new logo says “We hired some MIT grads who, for $800k, told us to lay off everyone in our customer service department and replace them with Salesforce’s Agentforce.” 

Jaguar’s leaper now survives only in a faint echo of the original, the negative space in a field of horizontal lines on a small side panel of the Type 00. To take the greatest visual metaphor in automotive history and kill it is to destroy shareholder value. It’s the essence of CMO malpractice. It’s just as stupid and wasteful as if Disney responded to a spate of weak releases by taking Mickey, Moana, Darth Vader, and Elsa out and shooting them.

It’s also a rejection of everything that ever made Jaguar … Jaguar. Not just the grace and power of the animal, but also the brand’s Britishness. There is nothing feline or Rule Britannia about the Type 00. And for all that talk about “Copy Nothing,” the car’s silhouette is reminiscent of the Rolls-Royce Spectre, and its sharp edges and lines recall the Cybertruck. The Jaguar people who signed off on all this richly deserve to have their careers pounced on. 

Think Different

Branding is about differentiation and creating a sense of scarcity. That means leaning into whatever you have that makes you stand out. If you’re going bald, shave your head completely. If you’re a tall woman, wear heels. If you need glasses, get the biggest pair you can find. 

Jaguar is abandoning its differentiators while at the same time trying to enter the high-end luxury market, where being singular is the whole shooting match. The higher you go in price, the more eccentric it gets. 

In my view, Jaguar should not have spent a dollar on marketing before it had an inspiring, ready-to-ship product to show the public. 

The companies that have added the most value in the past 10 years barely advertise at all. Netflix now has a market cap of about $400b; in 2014 it was about $21b. Alphabet’s market cap 10 years ago was roughly $390b; today it is $2.5t. 

Those companies and others took dollars out of advertising and put them into making better products and getting them to customers faster and cheaper than their competitors. Amazon didn’t win e-commerce with a marketing campaign; it won by doing the hard work of guaranteeing free delivery in 48 hours. Others have won by going asset light: Nvidia uses suppliers for all of its manufacturing; Shein, the fastest-growing apparel company in the world, has no stores and no warehouses. 

It’s not too late for Jaguar to ditch its rebrand and start all over again with a strategy where a great product is not an afterthought to a marketing campaign. This is, in a way, an opportunity to announce that, after a huge outpouring of goodwill toward the iconic metaphor, they are going “Old Coke” and reverting. However, we shouldn’t hold our breath. The current landscape of reality-TV stars and misinformation has rid the corporate world of one important and simple phrase: “We fucked up.”

Life is so rich,

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Media Consolidation

The hottest product in tech is Bluesky, adding 1 million users a day since the election. CEO Jay Graber says the platform will never have ads, as ads are the road to “enshittification.” OK then. Ad-supported media, as a whole, is one of the least volatile businesses over the last century — accounting for 1.5% of GDP, and rarely straying from that number. Inside the sector, things are less tranquil (i.e., more chaotic). In an attention economy, money follows eyeballs. I believe we’ll see ads on Bluesky eventually, but for now, let’s talk about consolidation in the broader sector.    

Burmese Pythons  

Stories about Burmese pythons litter the local news in Florida. These snakes get big, really big. The serpents can grow to as much as 16 feet long and weigh hundreds of pounds. This presents a problem, as most owners are 5 foot 9 and soon discover their roommate situation is unworkable. Owners release the snakes into the Everglades, where they begin taking down alligators and deer. An alien species to the ecosystem of swamps, marshes, and mangrove forests, they’ve established themselves as the apex predator, and their population has exploded. The threat to Florida’s ecosystem is so great that mitigation efforts include employing full-time snake hunters and organizing state-sponsored hunting competitions. The winner of one competition earned $10,000 for nabbing 28 pythons — a drop in the bucket against a species that lays 30-plus eggs at a time and can reproduce asexually. After three decades, the U.S. Geological Survey concluded in 2023 that the python is winning. 

Unlike the classic apex predator, which evolves alongside its prey, a nonnative apex predator arrives with such disruptive force that instead of dominating an ecosystem they transform it. Legacy media looks like Florida 30 years after the arrival of the Burmese python. A nonnative apex predator (digital) is out-hunting and out-reproducing the previous apex predator (legacy media). 

Winner Take Most

Digitization lowers the barrier to entry, giving everyone access to everything. Initially, this looks like competition with extra protein, but over time it becomes consolidation on steroids, as digital ecosystems are winner-take-most/all based on who establishes leadership and access to the cheapest capital. Amazon registers 37% of e-commerce in the U.S., while its nine closest competitors (Walmart, Apple, Target, etc.) account for 23% combined. Nearly two-thirds of the world’s social media ads are sequestered to Meta. Since 2014, 90+% of internet searches are done on Google; the second-most-popular search engine, Microsoft’s Bing, commands less than 4% of the global search market. Three companies, Match Group, Bumble, and eHarmony control the entire digital dating marketplace. There is also consolidation on the customer end, where 10% of men get 80% to 90% of the dating opportunities. 

In my industry, podcasting, the concentration is extreme even by digital standards. Of the 600k podcasts that produce content each week, the top 10 capture half the revenue. Put another way, to build a business in podcasting that pays people well and retains talent with high opportunity cost(s), you likely need to be in the top 0.1% by listenership. As a member of UCLA’s crew team, I was 3.5x more likely to be an Olympian than a successful podcast host.

Consolidation

In the late 1990s a wave of internet startups introduced a nonnative apex predator called streaming into the television media ecosystem. Thirty years later, most of those startups are dead, but their species has transformed the ecosystem such that streamers are the hunters and legacy media the prey.

To paraphrase what Ernest Hemingway said about bankruptcy, legacy media consolidated gradually, then suddenly. Here’s the gradual part: Over the past four decades, we’ve gone from an ecosystem where the number of companies controlling 90% of American media has gone from 50 to 6. Deregulation, financialization, and lax antitrust enforcement incentivized consolidation, but the shift from analog to digital made it a necessity, with the legacy media companies bulking up to keep from being devoured by digital. The sudden part happened last month, when Comcast announced it would spin off its cable assets — USA, CNBC, MSNBC, and E!, along with digital properties such as Rotten Tomatoes and Fandango — into a holding company called SpinCo. 

Good Bank / Bad Bank

My first serious relationship in NYC was with a wonderful woman who suffered from bipolar disorder. We broke up for a simple reason: I did not know who I was going to wake up next to in the morning. When a company has a profitable but declining business (cable) and a growth business (streaming), investors don’t know who they’re living with. They don’t know how to value the asset, so they assign the multiple of its worst business to the entire company. The divestiture of assets in different life cycle stages provides more clarity to investors, and ultimately creates a smaller whole that’s greater than the sum of its parts.

The SpinCo cable assets generate about $7 billion per year in revenue. Meanwhile, Peacock, Comcast’s streaming service, reduced its losses from $565 million to $436 million (YoY). But more important for a growth asset, its revenue increased 82% (YoY) to $1.5 billion. I predicted SpinCo a year ago. I’ll make another prediction now: SpinCo will become a vehicle for acquiring other cable assets. 

Warner Bros. Discovery and Paramount are likely sellers, as both have profitable streaming units that are weighed down by legacy assets. When Max swung from a loss of $1.6 billion to a profit of $103 million (YoY), Warner Bros. Discovery saw its stock fall 12%. Paramount+ turned a $49 million profit in Q3, but Paramount’s market cap is down 19% this year. Disney, the only legacy player to see its stock increase after its streamer reached profitability, says it’s not selling its linear assets (ABC, FX, ESPN, etc.) as those networks are deeply integrated into Disney+. 

Interestingly, all three companies are betting on bundling strategies, i.e. consolidating cable content in one app, without the cable infrastructure. Netflix, the nonnative apex predator, says it’s strong enough to hunt solo. I think Bob Iger is either wrong or he’s playing poker and holding out for a better price. If Disney sold its cable assets for $1, I believe it would be worth more within a year, as it would offer a cleaner story re streaming, movies, and the parks vs. Bob apologizing every quarter for ABC and ESPN’s lackluster performance.

Distressed Assets

The second-best investment I ever made was in a Yellow Pages company. At the time, these assets were declining at 7% to 12% per year, but they were still throwing off a lot of cash flow. We acquired one Yellow Pages company after another, on this basic thesis: Together we can survive, even prosper; alone, we’re all dead. Our strategy was simple: cut costs faster than revenue declined by retaining the top 10% of sales people, closing headquarters, and laying off nearly everyone at HQ. That we were able to pick up these assets on the cheap meant that every year we increased cash flow. Coda: Ultimately, the company returned to growth as a customer relationship management firm.  

Distressed assets can be great businesses, as they can be bought on sale and typically don’t go away as quickly as people believe they will. The median age of an MTV viewer is 50 years old; the median age of an MSNBC viewer is 70 years old. Those aren’t attractive demos for advertisers, but those audiences are likely to continue tuning in for the rest of their lives. As long as ownership stops trying to inject Botox and filler into a senior to make it look young again, they can generate increasing cash flows with linear assets, by cutting costs faster than the rate of decline via consolidation.

Means of Production

In television, the platform has always been bigger than the talent. In podcasting, and the creator economy, it’s the converse. Net neutrality protects the little guy from getting muscled out on distribution, as the distribution is accessible and free to everyone. The means of production are relatively cheap — my podcasting kit costs around $1k, a decent TV studio can run $400k+. There is little sustainable enterprise value in a podcast company; what matters isn’t capex or infrastructure, it’s talent. That’s why a small number of individual podcasters are getting rich, but not a lot of podcast company shareholders. Podcasters command a greater share of revenue, and they’re orders of magnitude more efficient than TV studios, resulting in better pricing for advertisers.

Wealth Transfer 

A cable news anchor recently told me he expected his compensation to decrease 80% with his next contract. He isn’t Rachel Maddow, though her new contract at MSNBC reportedly will pay her $5 million less per year. Puck calls this “The Great TV News Comp Depression.” But it’s not just cable news. I recently had lunch with an Oscar-nominated movie star (flex) who told me he’d worked for scale, i.e. the guild minimum, on his last few films. On the scripted television side, where salaries historically increased with each new season, networks are cutting pay to keep shows afloat; CBS reportedly cut pay for the cast of Blue Bloods by 25%. Industrywide, actors have seen their median hourly wage decline by 56% since 2013. Television writers, who went on strike with zero leverage just as their employers were scaling back content budgets and shifting production overseas, are 1.5x more likely to work for the guild minimum than they were a decade ago. 

Netflix Python

An apex predator released into the wild has reproduced asexually, doesn’t need distribution partners, and is devouring the ecosystem. Since launching its original content business in 2012, Netflix’s market cap has increased 7,337%. This means the industry is booming for all involved, no? The dominant means of production for scripted television is Netflix, which has flexed this muscle to reshape the flows of value. Specifically, it has reduced production costs, while massively investing to create an explosion in the amount of content, transferring value from all parts of the ecosystem to the company’s shareholders and subscribers. If you live in L.A., you’ve likely given 4 stars to a former producer of a reality-TV series.  

There are 180,000 members of SAG-AFTRA, and last year 86% of them didn’t qualify for health insurance, as they made less than $26k. Constant reminders from CNBC re the market touching new highs masks a deeper issue: As in the future described by William Gibson, the future/prosperity of media is here, just not evenly distributed. AI, Netflix, and the Big Tech platforms are eating everything, and they have few, if any, predators. The deer and alligators (industry workers) have no means of defense, because they’ve never encountered this species/technology before. The result is an atmosphere of anxiety and fear. These emotions are common sense.  

Life is so rich,

 

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F1 Is at an Inflection Point

Just as my obsession with relevance and economic security have often crowded out what’s really important — relationships — I’ve let my preoccupation with the election results crowd out the blessings in my life. God, I’m so fucking sick of politics. So … let’s talk about cars. Fast cars.

I’m in Vegas for Formula 1. Actually, the truth is, I’m not here for the race — It’s more a desperate attempt to avoid the inevitable melt into irrelevance, which I believe can be arrested  by extending my adolescence. Also, I love Vegas. The last race I went to was the inaugural Miami Grand Prix in 2022. It was a great time, despite F1 races being boring: here he comes, there he goes. And so on … and so on … and so on. 

The real fun is found far from the track. The vibe is money, tech, and glamour, a Super Bowl for the super rich. If Nascar is Android, F1 is iOS.

In Miami I went to a dinner party on the beach hosted by Carbone, a fabulous restaurant, right in the middle of a Covid flare up. Fab. U. Lous. Wyclef Jean played to 700 people crowded into a hot tent with no ventilation. I had two thoughts: “I’m getting COVID tonight” and “It’s worth it.” I was right on both counts.

Drive to Survive Rebrand

F1 has long had large and rabid fan bases in Europe and South America, but that enthusiasm didn’t land on U.S. shores until 2017, when Liberty Media bought a controlling interest in the league. Under new boss Greg Maffei, F1 took a big swing at America. Targeting young people, Maffei and the F1 Team built an iconic brand, in the most competitive market, in less than a decade. There were races with celebrities in attendance — Tom Cruise, LeBron James, Rihanna — new sponsorships, and an aggressive social media presence. 

However, Liberty’s gangster move was the Netflix docuseries Drive to Survive. Now in its sixth season, the show is rewriting the playbook re how sports leagues market themselves. It’s a behind-the-scenes look at “a lot of young, good-looking guys,” as Maffei once told CNBC, hard-charging billionaire team owners, and high-tech pit crews competing in a series of überluxe international locations. (F1 wasn’t the first to try this; the NFL’s Hard Knocks premiered on HBO back in 2001.)

By focusing on individuals and harnessing the power of storytelling, Drive to Survive used streaming to introduce U.S. viewers to drivers who were superstars overseas, among them Lewis Hamilton and Max Verstappen. It gave newbie (read: American) fans a compelling point of entry and became a fount of bingeable video that was easily shared, particularly on Instagram. There are accounts devoted to what Hamilton wears as he walks on red carpets. 

Tribal

Tribal rivalries, betrayal, greed, revenge — all the stuff humans are hardwired to love in a lustrous package every week. Champions muse about “having a target on my back.” Young guns talk about “being hungry.” Everybody obsesses about forces beyond their control. Shakespeare knew this turf pretty well — Marcus Aurelius would have felt at home. The song remains the same; the actual game being played is unimportant. 

The results: Liberty paid $4.6 billion for F1; it now has a market cap of about $22 billion. In 2023, F1 generated about $3.2 billion in revenue, up from $2.6 the year before, most of it from promotional deals with host cities, media rights, and team sponsorships. 

TV viewership has doubled since Liberty took over (though the U.S. audience pales beside those of the NFL and other big team sports, and it’s only a third of Nascar’s). In 2022, F1 signed a three-year deal with ESPN (up for renewal next year) worth $270 million. American TV viewership of this year’s Miami Grand Prix was 3.1 million, the largest ever for a U.S. race. Meanwhile, between 2017 and 2021 the average age of an F1 fan dropped from 36 to 32. About 40% of fans are now female. Earlier this year, Liberty announced it had bought a majority interest in MotoGP, which is to motorcycle racing what F1 is to autos. 

 

Owning a team (F1 has 10) used to be a money pit for a brand or a billionaire in the throes of a midlife crisis. Now teams are a legitimate asset class. Oracle is paying Red Bull $100 million to put its name on their car. Mercedes paid $176 million for its team in 2010; it’s now worth $1.5 billion. The Phoenix Suns and Chelsea FC were recently purchased for $4B and $5.3B, respectively.

No Joy in Sin City

So: Media, tech, increasing value, and Wyclef Jean. Everybody’s happy, right? Sort of. The mood in Vegas this year is subdued, a bit chastened even. For starters, the business face of all this success, Maffei, is out. His contract expires at the end of this year, and Liberty announced he’ll be leaving, to be replaced temporarily by Chairman John Malone. Malone is brighter than me, but that won’t stop me from making the following assertion: He retired/fired the wrong guy. 

Maffei has doubled Liberty’s shareholder value in the past 12 months and received comp averaging $25M per annum. David Zaslav has been paid an average of $115M for the last three years to destroy two-thirds of Warner Bros. Discovery’s shareholder value. 

Maffei says he’s ready for something new; Liberty thanked him and said 2024 made a fitting capstone to his brilliant tenure. Who knows what really happened? Liberty is also restructuring assets with spinoffs to tell a cleaner story. Maybe Maffei didn’t want to drive a smaller car, or didn’t want to deal with the Department of Justice’s antitrust investigation — it’s looking into F1’s rejection of a proposed new team from retired driver Michael Andretti. Maybe a sale of F1 is looming. (Liberty says it’s not.) Or none/all of the above. Whatever the reason, Maffei leaves a sport that, while still thriving, is at an inflection point. 

Pain Points

Last year’s much-hyped Vegas Grand Prix was something of a shit show: Race fans complained that prices were crazy and getting around the event was difficult; drivers complained about the track; casinos, bars, and restaurants complained about disruption. U.S. Grand Prix sites, with a few exceptions, don’t have the infrastructure that European and South American sites do. Courses, grandstands, and other structures tend to be ad hoc affairs. Fans watching at home have complained about glitchy streams on ESPN+ and other services.

Meanwhile, F1 still hasn’t completely shaken the funk of last season’s uncompetitive races, which wafted into 2024. Max Verstappen won so many — 7 of the first 10 this year — that a lot of bored fans tapped out, and TV viewership and social media engagement have sagged. It all feels very 1990, when Pete Sampras was so dominant, and boring, that people felt he’d ruined tennis. 

Seasoned race fans point out that periods of dominance by a hot driver have always been part of the sport (think Michael Schumacher), and it was just a matter of time until the other teams figured out how to take him on. Which seems to have happened recently: While Verstappen is a lock to win Driver of the Year for a fourth time, competition for the team championship has gotten much livelier.

Getting the Easy Stuff Wrong

The downturn, though, highlights two weaknesses. While F1’s marketing has been brilliant, it has had trouble providing: 1) a consistently great product (i.e., high excitement, competitive races) and; 2) a consistently great experience at an affordable price for fans who aren’t wealthy. F1 must balance its luxe, aspirational vibe with a simple fact: Most auto racing fans are not rich. 

A fan on a budget would have to spend at least $2,200 for a bare-bones Vegas Grand Prix weekend. Given last year’s fiasco, it’s not surprising that hotel prices are way off this year. 

The hardest things in business are pricing and compensation. F1 blew the pricing. Wimbledon’s Center Court has a capacity of 15,000, and seats there average $200. The seating capacity at F1 Vegas last year was 100,000, and grandstand tickets were $2,500. It may have set a record for the worst demand/elasticity forecasting of any event its size in history.

I’m not, as I said, into racing, so I don’t know what kind of rule or organizational changes F1 needs to make it harder for another Verstappen to dominate and kill viewership. A secret to the NFL’s success is a draft system that helps keep all teams somewhat competitive. In the last five years, 94% of NFL teams have appeared in the playoffs. Similarly, in an attempt to maintain some level of parity, F1 has implemented spending caps. 

Also, F1 would be well served to do more to foster young U.S. talent and produce a homegrown superstar. At this year’s Brazil Grand Prix, half of Argentina showed up to watch Argentine driver Franco Colapinto. American fans need someone they can get that excited about.

Harmonic Convergence 

Netflix could keep applying the Drive to Survive formula to new sports, going to teams and saying, “Pay us $100 million and we’ll do two seasons of what it means to play for the Boston Red Sox.” Or take a league in a second- or third-tier pro sport, say pickleball or lacrosse, to the next level at a lower price point. Magazine publishers do this — their most profitable businesses are custom jobs (e.g., that Four Seasons magazine in your hotel room).

What is definitely going to happen, though, is that sports teams are going to keep increasing in value, even though they’re shitty businesses in terms of cash flow. As long as the fastest-growing demographic group is billionaires, who tend to be at the age where the fear of death erupts, and leagues maintain monopoly power, we’re going to see a continued increase in the terminal value of teams. Most of them will lose money every year. Then, in a few years, they’ll sell at extraordinary multiples to the next generation of men in their sixties still trying to impress their dads. 

However well or badly F1 handles the bumps it’s hitting now, what it has done with Netflix may become the default sports media model. You’re going to start to see media businesses, celebrities, and streaming companies come together to build sports-entertainment enterprises. Imagine Tom Cruise and Disney not buying the Anaheim Ducks, but an entire league. 

Something More

There’s something more here. One in 7 men can’t name a single friend, and 1 in 4 can’t name a best friend. The Premier League, the NFL, and F1 give men license to bond and express emotions in a safe place. In addition, these events happen in the most wonderful venues ever constructed: not on a fucking screen. We are a social and emotional species, and being part of a collective watching people with speed, strength and alien-like instincts compete … puts us in the moment. 

I’ll be at F1 this weekend, and, for a few moments, I’ll be in that moment. Pardoned from the past, where my anger/depression won’t let me forgive myself, and distracted from the future, where I’m focused on garnering more relevance and money. I’ll be there, watching the collision of men, machines, technology, and culture. But, more than anything, I’ll just be there. 

Life is so rich,

P.S. Pod Save America’s Jon Favreau joined Jessica Tarlov and me on Raging Moderates this week to discuss the road ahead for Democrats. Listen and follow here on Apple or here on Spotify. (If you are still listening to Raging Moderates via the Prof G Pod, move on over to the dedicated Raging Moderates feed so you don’t miss this episode.)

P.P.S. Section’s CEO & COO also write a great weekly newsletter called Personal Math. This week’s post, about AI’s effects on our self-worth at work, is worth a read — and a subscription.

 

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The Testosterone Election

I believe the more interesting conversation than why she lost, is how he won. We on the left try to comfort each other with the cold (i.e., freezing) comfort of “he barely won the popular vote,” or “Wisconsin was decided by just 30k people,” but the reality is Donald Trump destroyed Kamala Harris. Trump, for the first time, won the popular vote and took all seven swing states. It was a political earthquake that rendered legacy media and knocking on doors as 20th century relics. Trump gained 13 points with Latinos, and the quake even shook races in California. (Note: the Golden State is still counting ballots.) The aftershocks will be felt for the next four years (and beyond), but we know where the epicenter was.

Social Contract, Broken

Despite a 51-48 split in the popular vote, three-quarters of Americans agree on one thing: We’re on the wrong track. That’s been the political reality for most of this century — high levels of dissatisfaction, resulting in a series of “change” elections. The reason? Voters recognize that millennials and Zoomers aren’t as prosperous as their boomer and Gen X parents. One example: In 1981 the median age of a homebuyer was 38, today it’s 54. 

The epicenter of the 2024 political earthquake wasn’t immigration, bodily autonomy, or democracy. It was the social contract between America and its citizens. The contract is straightforward: Work hard and play by the rules, and your children will have a better life than you did. For the first time in 250 years, that contract has not held.

President ‘T’

During an earthquake, solid ground is an illusion. I learned this in 1971, when the Sylmar quake devastated Los Angeles. The movement of tectonic plates, usually just a few centimeters per year, goes unnoticed until they slip, releasing enough energy to rip apart the ground beneath your feet. Tectonic plates meet, pressure builds, and ultimately breaks apart at the fault line. If the epicenter of this election was America’s social contract, the fault line was masculinity. 

Before the election, I predicted the outcome would be decided by whoever presented a more aspirational vision of masculinity. The reasoning was correct; the call was wrong. Instead of seeing men as providers and protectors, voters embraced crypto, the UFC, and Hulk Hogan. Tesla, Bitcoin, Ethereum, and Dogecoin are up 29%, 25%, 24%, and 106%, respectively. (Note: the S&P is up nearly 4% over the same period.) And we Democrats were stood up, left bereft by voters motivated by bodily autonomy … who didn’t show up. 

Trump was able to distance himself from the bodily autonomy issue. Five of the seven states that voted for pro-choice amendments split the ticket on the issue, pulling the lever for the former president. America elected President T, only the “T” doesn’t stand for Trump, but testosterone. How Americans vote should be taken seriously re the direction of the country, but much of the rhetoric has been ugly and should not be normalized.

Man Down

I receive a lot of emails from worried parents, particularly mothers, along these lines: “I have a daughter who lives in Chicago and works in PR and another daughter who’s at Penn. My son lives in our basement, vapes, and plays video games.” 

Young American men are in a crisis of underemployment and under-socialization. Soaring college costs affect people regardless of gender, but since 2011, the percentage of young men enrolled in college has dropped from 47% to 42%. Manufacturing jobs, once a ticket to the middle class for men without college degrees, have been offshored. Housing is increasingly unaffordable; nearly 60% of men aged 18 to 24 live with their parents and 1 in 5 still live with their parents at 30. Many men are stuck: isolated, despairing, and unproductive, prone to obesity, drug addiction, and suicide, susceptible to misogyny, conspiracy theories, and radicalization. They make inadequate mates, employees, and citizens. 

Burn

An African proverb states: “The child who is not embraced by the village will burn it down to feel its warmth.” When young men are struggling, they, and their parents, vote based on an attribute vs. an issue. That attribute this cycle was disruption. These voters didn’t vote for the party that believes the solution for young men is to act more like women, or even traditional Republicans. They opted for whoever would disrupt an America that’s broken its most basic contract. As Cersei Lannister said: “I choose violence.” The electorate chose chaos.  

When parents see their kids hurting, they become single-issue voters. From 2020 to 2024, Trump gained 15 points among 18- to 29-year-old men. The mothers of young voters (women ages 45-64) voted for Trump more than any other age group of women, including women over 65. Their fathers (men ages 45-64) voted for Trump at a higher rate than any other male age group — except for men over 65, who supported him by one percentage point more. The boys burned down the village to feel its warmth, and their parents gave them the matches.

The Kids Aren’t Alright

In April I gave a TED Talk about America’s war on the young. The war is being waged on nearly every front, but one especially revealing battleground is our social safety net.

If it seems like we care more about senior citizens than our children, trust your instincts — recall that we let the Child Tax Credit expansion expire post-pandemic. Meanwhile, Social Security remains the third rail of American politics, with old people electing older people who vote themselves more money. To paraphrase Warren Buffet, there is a generational war in America, and my generation is winning. 

It’s Still the Economy, Stupid

After a campaign where most of the oxygen was consumed by performative pandering over culture war issues, voters reminded us that their No. 1 issue is the economy. America is a platform that provides two things: the defense of our shores and citizens and economic opportunity. Everything else comes in a distant third. In a capitalist society, the fastest path to expanding and protecting rights is simple: Give people more money. When you put expanding rights ahead of increasing economic opportunity, you’re treating the symptom, not the disease. 

In America — and this has not always been the case and should be celebrated — your opportunities are more a function of your economic weight class than your identity. Demographics are no longer destiny. Today in America you’d rather be born non-white or gay than poor. Our spending priorities (entitlements), tax policies (capital gains and mortgage interest deductions), and fiscal policies (bail-outs of incumbents) are nothing but a transfer of wealth from young to old. Compared to 40 years ago, the average 70+-year-old is 72% wealthier, and the average person under 40 is 24% less wealthy. In addition, social media notifications remind them 210 times a day that everyone “else” is killing it. The most noxious emission in America is not carbon but shame.  

The disease is simple to diagnose: Young people don’t have enough money. We should treat the disease, not with leeches (tariffs) and cocaine (tax cuts for the wealthy), but treatments that are proven to work. 

A few suggestions … 

Do the Minimum

Seventy percent of minimum wage workers are between 16 and 34. The fastest way to put more money in their hands is to give them a raise. I believe the federal minimum wage should be $25 per hour. 

Ask What You Can Do for Your Country 

Only 18% of 18- to 34-year-olds say they’re proud to be an American. We should require/encourage one or two years of (paid) service for young people. Service builds grit, camaraderie, connections, and social conscience; it heals political divisions and restores faith in the country. The left will cry fascism, the right communism. Angering both extremes is a tell for good policy, which generally appeals to the center rather than the fringes. Note: When the extremes agree, it’s usually centered on reckless spending or antisemitism. 

Get Fit

JFK challenged Americans to improve their physical fitness. The President’s Physical Fitness Test emphasized performance, but it was replaced by the Presidential Youth Fitness Program, which emphasized health. We should do both, as some studies have shown that physical strength and exercise are 1.5x as effective as antidepressants at battling depression. 

Build, Baby, Build

We have a shortage of affordable housing. One conservative estimate suggests we need to build 3 million housing units. This isn’t rocket science. Building housing at that scale would create more than a million jobs and generate billions in tax revenue. The private sector responds to incentives. This should likely be done via a tax credit, vs. regulation.

Nuclear Option

FDR’s New Deal put millions to work, building the Hoover Dam and LaGuardia Airport and bringing electricity to the South. Eisenhower’s Interstate Highway System — a project of immeasurable benefit for jobs and commerce — continues to pay dividends 70 years later. Today we need carbon-free energy to combat climate change and fuel the AI revolution. Nuclear accounts for 20% of our total power output and half of our clean energy. Increasing our nuclear output 3x would likely create 1.5 million jobs. Nuclear energy feels more masculine than wind and solar — I’m hopeful Trump will embrace it.

IRS Jovem

We should take a page from Portugal and grant a tax holiday for 18-35 year olds as a means of staunching generational wealth transfer. The Portuguese government recognized the most talented young Portuguese had one thing in common: They’d left the country. The new tax benefits extend over 10 years, including no taxation for the first year. The program is meant to help retain and attract young professionals. In the U.S., we have the most anxious and depressed younger generation in history. The incumbents will plead complexity as a mis-direct from a simple solution, more prosperity (i.e., money). The program would not be that expensive, as it requires no increase in the administrative state, and young people don’t generate much tax revenue to begin with.  

Make Education Affordable Again 

Nothing says “we believe in you” like education. Some public universities offer free admission to students who meet minimum academic requirements. This should be the rule, not the exception. Any university that has an endowment over a billion that’s not expanding its freshman class faster than population growth should lose its tax-free status. It’s no longer a public servant but a hedge fund offering classes. 

Also, we should bulk up on vocational training and paid apprenticeships, as many people, especially men, thrive in careers that require strength, sweat, and technical skill. These are good-paying jobs shamed by the zeitgeist in our society, which says if you’re one of the two-thirds of families whose kid doesn’t graduate from college you and your kid have fucked up (see above: shame).

Make Dating Great Again

Young people are having less sex. This contributes to a delay in unlocking adult milestones (marriage, kids) and sets up a demographic time bomb. Without the prospect of a romantic relationship, women pour energy into other relationships and work, men into addiction and resentment. Remote work is a disaster for young people — a quarter of all couples meet at work. We need to get more young people into an office, classroom, or some other environment where they’re serving in the agency of something bigger than themselves (see above: national service).

Today’s venue for connection, or lack thereof, is online dating. But, like every other sector that’s been digitized, it’s become a winner-take-most arena. A small number of men garner all the attention, leaving a man of average attractiveness totally shut out of the market, which validates his sense of worthlessness. And the top decile of men are given license to engage in Porsche polygamy, which doesn’t encourage the formation of long-term relationships and issues a hall pass for bad behavior. Who wants more economically and emotionally viable men? A: Women. How do we get young people pairing? A: Make more men more attractive by leveling up young people economically.

Shooting Match

AI, GDP, S&P, innovation, shareholder growth … these things are all means. The ends are deep and meaningful relationships. They are everything. And the center of (literally) everything is the well-being of your kids. When they’re not doing well, they and their mothers become the mother of single-issue voters: change/disruption. 

So … how did Trump win? A: His campaign determined the best way to win over young men and their parents was to act like a young bro himself. Think about it: rockets, crypto, Rogan, coarse language, offensive jokes. This election was supposed to be a referendum on women’s rights. It wasn’t. It was a cold plunge into testosterone.  

Life is so rich,

P.S. Josh Brown joined us last week on the Prof G Markets pod to discuss how the financial landscape could evolve in Trump’s second term. Listen here on Apple or here on Spotify.

P.P.S. Section’s big Black Friday deal this year is 40% off the first AI for Business Mini-MBA of 2025 for everyone who joins the waitlist before Nov. 22. This is no longer an optional skill — I’d encourage you to take advantage.

Correction: Last week we incorrectly cited the source on our chart on the median age of audience for select media. The correct source is Amplifi Media and the chart has been corrected and republished, with our apologies to CEO Steven Goldstein. 

 

  

 

The post The Testosterone Election appeared first on No Mercy / No Malice.

The Podcast Election

I’m still in my pajamas — haven’t changed since Tuesday night. I’m also drinking a fair amount and toggling between Netflix shows: Nobody Wants This, which is pleasant but über cliche (i.e., stupid); and Monsters, which, as the father of two boys, I find just plain disturbing. In sum, for me, it’s Covid again. Even my stocks are going up … so 2021.

I’ve received 22 emails in the past 24 hours (when I’m down, I obsess over inconsequential data as a coping mechanism) asking for my thoughts on the election. My reflexive desire, or megalomaniacal belief, that I can comfort strangers, leads me to remind them that “nothing is ever as good or as bad as it seems,” and that the U.S. remains the U.S. — the richest and freest country on Earth. This election was neither what I wanted nor expected, but I’m still very much looking forward to moving back to America.

I just read the previous paragraph, and it’s sort of true. Sort of. My disbelief and despair are shapeshifting to anger. A narcissist (President Biden) crowned an untested candidate and asked her, in 107 days, to overcome the crises of immigration and inflation and the burden of an unpopular incumbency. When two-thirds of the country says we’re on the wrong track, there’s no way someone from the current administration can credibly claim to be a change agent, much less the disruptor people are looking for in an age of rage. 

I am going on AC360/MSNBC/Smerconish to discuss the male vote — this election gave us the opposite of the expected referendum on bodily autonomy; it was the Testosterone Election. The only thing I’m (fairly) certain of is what medium played a pivotal role, for the first time, in young people’s decision to violently pivot to Trump: podcasts. And that’s what this post is about. 

New(er) Media 

New forms of media periodically reshape our culture and politics. FDR mastered radio, JFK leveraged TV, and Reagan nailed cable news. Obama energized young voters via the internet. Trump hijacked the world’s attention on Twitter. This year it was podcasting. The three biggest media events of this fall were the debate and Harris and Trump’s respective appearances on Call Her Daddy and The Joe Rogan Experience.

Almost half of adult Americans, 136 million people, listen to at least one podcast a month. The global audience is now 505 million, a quarter of the internet’s reach. When Trump went on Joe Rogan, Lex Fridman, and This Past Weekend w/Theo Von, he was embracing the manosphere and riding a tectonic shift in media: The most efficient way to reach the largest and most persuadable audience (i.e., young men) is via podcast. Nothing comes close.

Reach and Focus

 

Rogan has 16 million Spotify subscribers and can reach many more people across a variety of other platforms: In just three days after the live podcast, his three-hour-long conversation with Trump was viewed 40 million times on YouTube. The audio downloads likely exceeded 15 million. There will be a lot of second-guessing re what the Harris campaign should have done. Getting on a plane to Austin to visit Rogan would have been a layup.

Lamestream Media

By comparison, when Trump appeared on Fox News’ Gutfeld!, which averages about 3 million viewers, he reached 5 million people, and the full episode has been viewed 2.3 million times on YouTube. To reach as many people as he did via Rogan, Trump would have had to do at least three separate one-hour hits on cable TV shows with numbers comparable to Gutfeld! There are only a handful of those, and they’re all on Fox, the top-rated cable news channel. Any other news network would have been a waste of his time. The typical viewership for CNN is below 1 million, and CNBC’s is less than 100k. 

Anyway, the comparison is apples to cocaine. Specifically, the audience on the pods is not only exponentially bigger, but also much more valuable (i..e, younger, more male, and more persuadable). What if a campaign could gather the tens of millions of undecided or persuadable voters who may/may not vote and put their candidate in front of them for three hours in an environment that sets the candidate up for success? The Trump campaign achieved this by prioritizing podcasts. 

Catheter TV

Among Fox’s 3.5 million regular viewers, 70% are 50 and over and 45% are women. The No. 2 cable network, MSNBC, reaches 1.5 million viewers most days; its median viewer is a 70-year-old woman. So: a big audience of young men vs. a small audience of older women. People listen to pods to learn; they watch cable TV to sanctify what they already believe. The former is (much) more appealing to candidates and advertisers. 

Rogan’s demographic is 80% male, 93% under 54, and 56% under 34. Men under 34 are the Great White Rhinos of advertising, the most valuable beast in the consumer jungle, and they’re increasingly difficult to find. The average listener to my Prof G podcast is 35, male, and makes about $150k a year. This is an audience I sometimes — affectionately! — call stupid. They have disposable incomes and are in the meeting-and-mating years, meaning they’re prone to buying all kinds of high-margin stuff to try to increase their sexual attractiveness. 

They’re also the cohort ambitious politicians want to reach. Both Minnesota Rep. Dean Phillips, who launched a short-lived primary challenge to Biden, and Massachusetts Rep. Seth Moulton, who loudly called on the president to drop out after his disastrous debate performance, have come on the Prof G pod and been nice to me, and they’ll likely come back. It’s not my charm. Both want to be president and recognize they have to build name recognition with young men. The calculus is simple math: Just as newspapers lost relevance to Google and Meta, cable news is losing relevance to podcasts. 

Money Follows Attention 

We have transitioned from a fossil-fuel-based economy to an attention economy, full stop. If you command attention, revenue will follow. Note: The best-performing tech IPO of 2024 is the fourth-most-trafficked site in the U.S., yet the company was valued at only $5.7b when it debuted on the Nasdaq seven months ago. Since then the market cap of Reddit (Nasdaq: RDDT) is up 274%. The only ad-supported medium growing as fast as Meta, TikTok, Alphabet, and (now) Reddit is podcasting. Podcasting revenue grew 18% this year, similar to Alphabet (15%) and Meta (17%). 

Podcasts’ share of attention is well ahead of their share of ad revenue. This delta will converge. I believe podcast revenue is going to grow faster than that of every other digital platform, with the possible exception of TikTok. My guess is that, next year, pods’ ad revenue will grow by 20+%. Listenership will continue to grow as well, and the ARPU, like those of Meta and Alphabet, will increase dramatically, too, as advertisers discover this is where young, successful consumers have been hiding. Podcast CPMs now are about $18 for a 30-second ad and $25 for a 60-second ad. 

Friend 

When people approach me in the wild, it’s easy to discern where they’ve been exposed to my content. A high five and some bro-ey banter, video. If they greet me like a friend they haven’t seen in a while, podcast.

It’s a very intimate medium. You are physically in somebody’s ear, in a private setting — washing the dishes, working out, walking the dog. It’s just you and them. That’s one reason advertisers like podcasts, as the audience’s “I’m being sold to” screen is more porous. A listener’s guard isn’t up. Tom Brokaw never had that kind of relationship with his audience. 

That level of intimacy also makes podcasting a great medium for interviews. In his conversation with Rogan, Trump seemed unusually relaxed and comfortable, a guy you could grab a beer with. And that’s typical for a pod. The medium has a zeitgeist where hosts generally try to present their guests in a good light. Unlike cable TV, the hosts aren’t looking for a gotcha moment; we let the guest “run.” 

Initially, people accused pods of being … radio. They aren’t. Pods aren’t shackled to the clock, for the listener or the podcaster; they’re on-demand (i.e.,streaming). And hosts decide how much time a topic deserves, or doesn’t. Think about this: One of the key commercial advantages of movies over TV was the producers’ control over the cadence and length of their content; they didn’t have the 21- or 41-minute guardrails that network TV later imposed. Rogan thought Trump’s story was worth three hours of his audience’s time, not one or four. TV anchors and radio hosts are asked to create differentiated art using a one-size canvas.

Talent Sits on the Iron Throne 

Broadcasters sink a lot of capital into state-of-the-art studios, satellite trucks, transmitters, fiber optic cables, people, etc. Podcasts don’t need any of that stuff. That capex was a moat that created leverage for the networks and their shareholders, who captured most of the medium’s profits. They controlled the means of production. The moat’s now been crossed.

When I go on CNN or another TV network, I travel to a studio staffed by numerous skilled technical people. The network pays their salaries and benefits, and gives them offices and snacks. A decent TV studio can easily run $400k. It’s also inefficient. My show on CNN+ (weak flex) took a dozen or more people the better part of a week to pull together 21 minutes of content. AWESOME content … but still.

Now my studio looks like a pretentious footballer’s Dopp kit. I doubt it cost $1k. Assembled by my tech guy, Drew, it travels with me everywhere. Any place that has broadband, or even just cell reception, I have a studio that can produce content. I’d speculate a third of my podcasts are done from somewhere other than my (home) studio. Think about how efficient this is. It enables me to host or co-host three pods a week and appear on many more. That kind of portability wasn’t physically possible pre-Covid. Meanwhile, net neutrality ensures that any podcast I go on is available to anyone, anytime. There is no technical reason I could not, in theory, reach every one of the 5.25 billion humans on the planet with a digital device. 

In broadcast and cable TV, the platform has always been bigger than the talent. In podcasting, it’s the other way around. There is little sustainable enterprise value in a podcast company; what matters isn’t capex or infrastructure, it’s talent. That’s why a lot of individual podcasters are getting rich, but not a lot of podcast company shareholders. 

All you really need to start is a computer and an internet connection. You don’t have to run the obstacle course of suits you’d encounter trying to get into TV or radio or any other old media. Which is another reason advertisers love podcasts: There are fewer hands in the talent’s pocket and fewer hands in their pockets, resulting in a greater ROI on ad spend. 

Low capex means the profits can be enormous once a podcaster covers the costs of producing two pods a week (e.g., two or three producers and a part-time sound engineer). The Prof G podcast portfolio (Prof G, Prof G Markets, Raging Moderates) will register 2025 revenue of approximately $10m. We employ five producers, two analysts, and a technical director/sound engineer. Few businesses garner $1m+ per employee. Pivot, the podcast I co-host with Kara Swisher, does more revenue, with even fewer resources. (Note: Vox, our distribution partner, is responsible for ad sales.)

 The pods that make the jump to lightspeed (covering their fixed costs) — and few do — are very profitable businesses. The best part? A: As I have a great team, with some people I’ve worked with for a decade or more, I spend 8-12 hours (total) per week on the pods. The leverage on (my) time is substantial. The cocktail of broad reach and low overhead translates to more for less for advertisers and talent.

Winner Take Most (Everything)

All the moons have lined up, and podcasting is on an upward spiral. But as with most everything digital, podcasting is a winner-take-most/all proposition, because everyone has access to … everyone. A scant handful of pods, those with the biggest listenerships, capture nearly all the ad revenue. By some estimates, of the 600k podcasts that produce content each week, the top 10 get half the revenue. Put another way, to build a business in podcasting that pays people well and keeps the attention of a host with high opportunity cost(s), you likely need to be in the top 0.1% by listenership. 

Math Is Fun

The odds of success are admittedly long. If you’re a high school drama student who goes on to join SAG-AFTRA, you’re 2x more likely to win an Academy Award than have a sustainable pod. As a member of UCLA’s crew team, I was 3.5x more likely to end up in the Olympics than telling dick jokes (and making a good living) on a successful podcast. I could do this all day …

The political power of podcasting is only beginning to be felt. This election was supposed to be a referendum on bodily autonomy: It wasn’t. Historically, the candidate who raises the most money wins: She didn’t. In each election the victor is likely to be whoever best weaponizes an emerging medium: He did. By far the most potent media weapon this time was podcasting. 

Life is so rich,

P.S. Jessica Tarlov and I discuss the election results on a special Friday edition of Raging Moderates available on Spotify and Apple podcasts.

P.P.S. Section is hosting a free event on AI safety and the risks of AGI with the executive director of the Center for AI Safety, Dan Hendrycks, on Nov. 21. AI that can do what we do is closer than you think, so join this free event and learn something.

 

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