Transcription
I really think people should go back and look at what happened after the NASDAQ bubble in early 2000 and how long it took. I mean, it took a decade to get back to the prior highs. And I don't Bitcoin already took out the highs. So, I'm separating it as it's a financial asset that needs to be part of people's portfolios. I still think this is related to a dramatic overhang on the illiquid markets.
Describe this overhang of the illiquid market.
What's going on guys? Today we got a great episode with Jordy Visser. In this conversation, we talk about Bitcoin's IPO moment. What is happening with Bitcoin's price? Why are people so disappointed? Should you be worried? And how is it going to affect your portfolio? We then also talk about things like Tesla, artificial intelligence, the stock market, and how Jordy is currently viewing what's going on with the political arena and things like the New York City mayor race. Jordy always brings great insights and I always learn a ton. But this conversation in particular, it's very nuanced and it weaves together tons of different trends that we've been talking about over the last couple of months and I think it will help you better form a worldview in terms of where we're going, what the issues could be and how your investment portfolio can evolve to meet all of those opportunities. Here's my latest conversation with Jordy Visser.
All right, Jordy, I thought a great place to start this week's conversation is you wrote this very viral piece about Bitcoin going through its IPO moment. This distribution from the people who were early investors in Bitcoin who owned a lot of Bitcoin, uh, selling it into the market. What are your views now given that Bitcoin is trading around $100,000 and it seems like that distribution is really starting to impact the price?
Well, I think the the the concept of the IPO distribution, which I feel very strongly about just terms of thinking about what's been going on this year and just going back and putting in the context of assets and I think that's the one thing um whenever I speak with the community and I hear the frustration, there's always some correlation or some part of the asset market that fits into Bitcoin. And I I mean this is this goes with any IPO in general. Meaning you can't separate the market from the asset. And in the case of Bitcoin, let's leave it alone as not not crypto. Let's treat it as a financial asset. So the bond market's been garbage, which we know about. But I think if you break down the parts that are relative for for Bitcoin and you go back and you go, okay, except for Bitcoin, what's actually worked over the course of the last four years with inside the crypto space, the altcoins have they're still not up to the highs as as an index as they were back in 2021, 2022. And if you look at similar markets to the altcoins, you get into the VC world, you get into the private equity world, you get into the private credit world, you get into the commercial real estate world. All of those have been under some form of distribution and markdown for a while. So in theory, all coins have actually done better. Bitcoin's obviously gone up during that period. So, I just think whether it's 100 grand, whether it's 110, whether it's 95, whether it's 90 at this point, uh, everyone needs to take a pause, take a deep breath. If you're in this for the trading side, there's still more selling that needs to happen. Uh, if you believe the numbers and you believe that about 10,000 people own about 33% of Bitcoin, you throw out Satoshi's number, you're still dealing with, you know, 30% 28% of $2 trillion. So, if there was a true distribution, which I think there will be, I don't understand how it's hard for people to imagine that if you bought put a million dollars into Bitcoin 11 years ago. I mean, you've gotten a thousand times. Uh, you don't want to have 80% of your net worth in one asset. And so, I think the distribution is happening. Uh, I really think people should go back and look at what happened after the NASDAQ bubble in early 2000 and how long it took. I mean, it took a decade to get back to the prior highs. And I don't Bitcoin already took out the highs. So, I'm separating it as it's a financial asset that needs to be part of people's portfolios. But the parts that it doesn't need to be part of people's portfolios, meaning the altcoins, the things that don't have institutional adoption. I still think this is related to a dramatic overhang on the illiquid markets that are having an impact on this space. And over the course of unfortunately the last two weeks for people that wanted to see some kind of a bid, now you've had a dramatic fall in a lot of these nonprofitable speculative stocks.
>> Describe this overhang of the illiquid market.
So again, I think people have underestimated how much money is in the illiquid markets from the VC world. And I mentioned this in in the paper. Uh, you obviously had a bubble in crypto that peaked in the late 21 early 22 period, but you also had massive SAS investments. So then rates go higher, that obviously hurts, but then AI happens. And artificial intelligence is an incredibly disruptive force, not just to uh, to public companies that aren't adopting to it. But in particular, a lot of those SAS investments like look what's happened to Salesforce.com and Adobe public SAS companies. AI has made SAS a questionable investment place. And so when you have VCs that have a lot of investments tied into this, at the same time, you've seen the stories from the endowments needing capital and trading things at down levels. You've seen the problems that have shown up in first brands recently in private credit. Uh, you've seen the private equity public companies that have gone down. I think this overhang of illiquidity in there is driving people more towards the liquid markets. I think that's one of the reasons why the public markets have done so well in spite of that because there are earnings that are growing. But that illiquid market doesn't get counted as much. It's one of the reasons why if I look a year out and everyone that's focused on the Clarity Act, tokenization is needed and it's needed to bring real-time pricing. So one of the reasons that pension funds, endowments, insurance companies had invested in the illiquid markets was because there was no mark to market. So no mark to market is a good thing when markets are going higher and these things are just kind of getting new valuations. But when they're not getting up rounds, it's a problem. And I think the altcoins and all the investments inside the crypto space are going through what happened after the do-com bubble. And let me get rid of the public markets. The VC market was hurt a lot too. And what happened was Google is probably the most famous and biggest of the IPOs that happened in 2004. And if you go back and look at, you know, Google coming to the market, that was a big deal because they needed cash. They needed to deliver some liquidity out into the LPS and I think that's a big part of what's going on.
>> Now, are you worried at all about Bitcoin sitting at $100,000? It went to, you know, 125. I think everyone was very excited. We're down now um, you know, 20 25% to 100K. Um, I think I see a bifurcation in the market sentiment wise. Some people will tell you, hey, this is just consolidation right at that 100K level and it's kind of setting a base to go back to 125 and maybe even higher through the end of the year. Um, you still got, you know, the Tom Lees of the world who are going out and saying, you know, kind of uh, higher price targets through uh, 2025. On the other hand, there are some really smart kind of cryptonative type investors who say, "Hey, that's it for the cycle. We're going back down. I'll get excited again when Bitcoin is, you know, 50, 60, maybe $70,000." Uh, how do you decipher between those two different viewpoints?
>> Well, this gets back into what I said. So, I I'm a macro person that spends my time thinking about what the world's going to look like in five years. So AI will continue to do two things for Bitcoin and for crypto that just keep me in the exact same path. And then I'll get into just kind of the near-term things that I think people should be looking at as part of the cycle. Um, on the one side, AI is going to drive massive amounts of dollars into the new financial guard rails. So I don't think you can say Bitcoin and not connect it back to the innovation that will be happening. There's a reason why historically stable coin market cap was very correlated to Bitcoin. So if the market cap was going higher in stable coins, you'd expect it to be happen in Bitcoin. Well, now we have the market cap going higher, but Bitcoin is not going higher. And I think eventually that will normalize and people will realize that the more volume and dollars that are going into stable coins, the more that is the same function of what Bitcoin served. One of the things that happened with stable coins, and I've listened to a lot of Brent Johnson in particular, um, if you haven't had him on,
>> Milkshake theory.
>> Milkshake theory. Exactly. Well, he's recently done a report on stable coins. And I think, um, in a world where most people in Bitcoin say the dollar needs to weaken, he's actually making the argument on stable coins that stable coins are going to serve the purpose of something that I believe that initially Bitcoin was thought of. And that could mean the dollar goes higher and Bitcoin goes higher. And I think people have to separate these correlations. So I'm a big believer that the innovation that's coming from stable coins, the network effects that are coming, the need for dollars to flow in the space eventually from the VC world once they're freed up from what's gone on will keep the innovation going. But you have to remember that the other part that we've talked about this entire time and now we've seen with the election in New York City, the job losses or the the job pressure that comes from artificial intelligence continues the main theme that I always believed in Bitcoin. So when I came to the conclusion in my mind that Bitcoin was a part of the endgame, I've referenced Joseph Shumper here every single month that we've spoken um, creative destruction. He forecasted that eventually we will get to socialism. Okay? Doesn't have to be at the countrywide level, but the reason that socialism becomes something is because people start believing that they need to have money handed to them. And that's because of the inequality that reaches a point that people want they want fairness. Um, Bitcoin is at the end of the day represented to me a new system where the democratization of a whole bunch of things happen. And the part of the democratization that goes on is an education that comes with AI. AI and crypto are both democratizing forces in my opinion and they match up at the very end. So there has to be a new system and with the government's embracing the new financial guard rails, we still have three more years of this administration to make sure that all of these things happen. And when the clarity act gets through, it's another bipartisan vote that will create the clarity on the structure. And I think that will serve as a point. One thing just to to to bring up for for what you said and so people can start to feel good. The most optimistic thing right now is that sentiment is so brutal. Um, when sentiment gets this bad, it's good. And so if I go back to the fiat world, I still believe that the public equity market is going higher. If I thought we were going to have a 50% correction in equities, I'd be worried about Bitcoin at 100, at 98, at 97. But liquidity begs liquidity into assets that are going to do well. And Bitcoin will eventually get its chance again. And it will have worn through a lot of overhead supply from whales while the distribution goes on. And I will say it again and again, I'd rather have a million people owning a billion dollars than one person owning a billion dollars. If you want a stable market with lower volatility and a trable market, I think the innovation's there. I think the macro structure is there, the inequality is there, and I also think that we're at a point where sentiment is just a big positive.
Now, um, AI stocks still seem to have a pretty strong bid. There's been some volatility there, though. Um, there's a very clear supply demand imbalance when it comes to power generation, data centers. Um, but it does feel like now, uh, there's a growing sentiment that maybe these AI companies have more of a headwind than people previously thought. We've seen Open AI, uh, Sam Alman's gotten questioned multiple times of, hey, if you're going to go invest $1.4 trillion, where are you going to get the money from? We have seen some controversy around uh, Sarah Frier talking about the government backstopping some of this and then some clarifications coming out saying well, we didn't really mean backstopping, we meant this other thing. Um, I think one of the other components is like should the United States get into the data center and the compute business and you know, are they going to look at this as a national security issue? Is this all noise and people are just trying to figure out little things to talk about on a day-to-day basis, kind of like a soap opera, or are there real things that are changing here that maybe are changing your mind about these AI stocks and and kind of the uh, the broader trend?
>> Nothing is changing. I I view the infrastructure story as a bit of a sideshow. Um, it will get funded. Uh, it'll some a lot of it's going to be in debt. Uh, but it's the adoption that matters. I don't know how many times you can say that this is electricity and that the apps, the adoption, the businesses, the profit margins, it's all to come. We're still in the very early stages. We've only done the training side. The inference side just started this year and the adoption is growing. I I know a lot of institutional hedge funds don't read the earnings report of Tesla or Palunteer because they're overvalued. And so if they're not going to own them and ownership from a hedge fund perspective is very low in those names. But if you go through Palunteer's earnings that happened this week and you read the numbers, they're staggering. Forget the valuation. I just mean the adoption side which how many companies are now using Palanteer. Forget the government. These is their enterprise, their commercial business. The numbers are going rapidly. The reason I kind of jump into that, that is the next phase. The AI agents, the digital employees that we talked about, which are already having pressure on businesses or on on labor, uh, that is the story. Whether people like it or not, if earnings per share are growing, then stocks are going to go higher, especially if the government is in a position, particularly right now, where they have to support the market. And I don't mean support it where they make sure it's going down. I actually mean making sure that the parts of the economy and labor, we're going into a midterm election. He's still got power to make sure once we get through the shutdown, I think the shutdown will lead to things happening once we get through AIPA and we figure out what is going to happen because we're now in that un uncertainty period. So, I think people are getting nervous. But when you say AI stocks, and this is the thing that I I I really want people to know. I wrote something on this where it was connecting QE to adoption of AI. Um, QE was a hey rates are going to be moved to zero so you can go buy back your stock which is earning 6% and you can go borrow money at zero. It was financial engineering. The same thing that happened helped commercial real estate. The same thing that happened private equity. The same thing that happened VC. The same thing that happened all of that zero rates. The zero interest rate policy was a massive stimulus for the market. This stimulus is coming from artificial intelligence through profit margins. And again, it's a bigger stimulus if you go through and realize that if you cut expenses by 5%, you're getting the operating leverage. That's a much bigger number than the financial engineering that was going on for for companies with buybacks. So I do think the expense reduction leads to just greater reality in the equity market. And here's the thing I'll tell people that have happened in the last two weeks. So if people are getting nervous about the bull market, number one, banks made new all-time highs in the last four weeks. Equal weight S&P, I keep hearing how bad the breath is. Equal weight S&P made new all-time highs last week. The S&P made new all-time highs. Global markets, it's a similar story. Meaning European bank stocks made new all-time highs this week. When banks are doing well, that means the economy is fine. Meaning credit might seem bad because we've got private credit going up, but if the banks are going higher, historically when we have bare markets, breath starts to weaken beforehand. Yes. But you see that in equal weight S&P that's not happening. At the same time, you see it in banks because their equity price starts going down while the debt is going while the credit spreads are widening. We don't have credit spreads widening. So, I think everything is fine. I think this is a another normal pullback. And I do think when we get through this one, the Bitcoin story will start to resume at that point.
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Now, um, the jobs report that we recently got uh, this Challenger jobs uh shows that there's basically more set uh more uh decline in the job market than you know, I don't know, any October in the last 20 years or whatever. I think back to uh 2003. Do you worry about this stuff?
No, we're we're. It's funny because I write about it almost every week and I write about it from the perspective of people need to pay attention to it on both the the societal level of the pressure that's happening and and the politic the politics direction that the country's going through um with I mean just what happened but when you have the elections that have kind of put the Republicans to pay attention as to what's going on. The way the government solved this is they go spend more money um for the next election. And so I fully embrace the fact that if anything happened after this week, it's a reminder that the young people in this country are feeling the strains. Now whenever people get bearish and they start worrying about things, the unemployment rate is still sitting near all-time lows. There are still labor shortages inside the country and that's not going away. Um, it's just not I've called this a a very big problem in being undermployed. So, if you have a college education, you expected to have a certain type of job. You don't want to have to go take a job at in that doesn't match up with what your education or your degree was. And I think there's a lot of people that are in that. And that's why when I made the joke with you about take a walk in Williamsburg and you'll hear the complaints like out outside just out loud, everyone talking. This is a normal course of kind of unfortunately the displacement that's going on. I do think it'll look a little bit better because the PMIs to me are going to go higher because of the stuff that's happening in the middle part of the country. I do think manufacturing jobs are going to start to become a bigger story next year. So I imagine the unemployment rate is going to stay around the same level, maybe migrate a little bit higher. I don't expect AI agents to replace every digital worker. I do think it's going to press on things, but in the end that just means more government handouts are coming and it's going to come in the form of the stock market going higher with profit margins and with them supporting the people that are angry and need to vote.
>> Now, um, Peter Teal, there's two things that have been uh kind of resurfacing. Uh, one is um Peter was on stage with Andrew Rossin and was asked about Bitcoin in particular. Uh, at the time he basically said, you know, Bitcoin could go a little bit higher, but he doesn't think that there's the asymmetry uh still left that maybe early people uh were very attracted to. It seems like that is becoming a more consensus view today. As always, Peter being a little bit ahead of the curve. Um, more importantly maybe is there's this email that got surfaced. Uh, he's emailing I think the Facebook board and Mark Zuckerberg and he basically says, we can fight this socialism trend, but when the young people are telling you that they're in student debt, they can't afford a home, like all these problems, you better pay attention, you better understand why. And it looks very prescient now, kind of in hindsight where this a couple years ago he basically was saying whether you agree with them or not, whether you think it's a good idea or not, it is still reality. And so we need to understand this. Um, is this just Peter being Peter and always ahead of the curve or is there something else here connecting? You know, Bitcoin's not going to go up nearly as much as people think it is. Socialism is a reality. We need to pay attention to it. Like it does seem like it's a world view that maybe is more rooted in what now people are saying is happening than, you know, people would have given him credit for two, three, four, five years ago.
>> Sounds a little bit like the Williamsburg conversation we had with the mom Donnie vote.
>> Yeah. Well, I listen, I was wrong on uh on Cuomo, right? And uh, and you know um, the thing that maybe uh, is most interesting to me about the uh, the entire uh, New York City mayor election is it's not the people who the policies are targeted at helping. Right? And uh, I heard a term recently that I thought was uh, was really interesting and and I'm going to uh, forget exactly how they described it, but they basically described downwardly mobile overeducated uh workers. And it was this whole idea of like, you know, kind of like a millennial or right below millennial generation being downwardly mobile rather than upwardly mobile from a socioeconomic standpoint, >> and then being highly educated in the in the traditional sense, but then realizing that maybe this isn't actually the thing that works. And I think it's uh um, I think it's either Ken Griffin or Jeff Bezos at the America Business Forum down in Miami. I saw a clip of them talking >> and they said, you know, part of the rise of Mamani and socialism and all this stuff is you have people who are leaving Ivy League education with degrees, sometimes multiple degrees, and they're realizing that their job prospects and their value in terms of the economic capture may not be as high as the guy down the street who works in oil and gas and understands engineering. And so now all of a sudden they're angry. They're upset. They feel almost like they were sold a bill of goods that is not true. And so the person's point was this is what's showing up, right? Like this is the outlet for that uh, that anchor. I I think it's right. And again, if if you take let's take 23 year olds and say cuz when you go through the voting um and I heard this, I didn't see it in in the paper, but uh, it makes a lot of sense. Uh, for people that have lived in New York City the longest, Slew won. For people that have been here between I think it was 5 and 10 years. Yeah. Um, Cuomo won. And then people that have been here less than 5 years, it it was Mandani. Um, so >> and there's been a huge influx of people who have been here less than 5 years. Yeah. >> Yeah. And there's a lot of young people that are in that in that in that uh age group obviously in terms of the people that make it up here. Here's the thing about it. The 23 year old right now, 25-year-old that little they grew up on the iPhone. And this is one of the things that I think people have to recognize with what Peter Teal said in 2020. And you have to think about when he said when he sent Mark Zuckerberg, Cheryl Samberg, and Mark Andre was on that email, too. And he described that this is a reality like they just think differently and it's there you have to remember that was before co so the it was actually January of 2020 that that email from what I I remember seeing with it and that was 3 years before the release of chatbt so for anyone believing that this is solely about the jobs the disruption from AI it is not solely about this this is about in my opinion exponential change which has both given people the phones. So, the ability to organize, if you go back to the Arab Spring, I mean, Eric Schmidt wrote a great book, and I forget who he co-authored it with, so I'm not going to make sure we go through it, but he wrote a book that this is a reality of the smartphone, like allowing people to to get together in mass and fight back against dictatorship. So, politics are changing a lot because of exponential age. They're we're destroying the upward mobility, the corporate ladder, which people went to school for, they have debt for. So his argument is correct. That's not going to change anytime soon. We're not going back to a world where, oh, I get a job and I stay at a company for the next 20 years. So this is a point where the the the youth in the country is just going to have to vote. They're going to have to fight for change and they're going to have to go through it. But the world will evolve over the course of the next decade. So when you get into the fourth turning, that's kind of what this is, right? When you read the book and you realize a generational shift. So the fourth generational shift. I reference my grandmother a lot teaching me about the Great Depression because she was born in 1920. So now you fast forward and you know my kids, they grew up in a much better world than my grandmother grew up. They grew up in a a better place than I did as a kid. Um, I think this is a reality check for everyone that's going to take some time to play out. In the end, I I I believe Alon Musk, his view of abundance and his view of kind of this world where the way that you solve the problems of inflation and this cost of living is they eventually do get things that are free. So, if you vote for it and you think socialism is going to do it, that's not going to work. But if it comes through innovation and it comes through technology, well then you're starting to get into a world that not only Alain Alon Mus believed in Joseph Shumpert didn't actually get to this part of the book, but Milton Freriedman is someone that's getting more connected for me back to this. I'm going to write a paper on it cuz people need to read some of the work that he did and some of the things he said cuz he was antisocialism. He was kind of anti- the Fed. Uh, but he wrote a lot of great papers about freedom. Uh, and capitalism. And I think that's what eventually we'll get back to. It's just going to take some time.
>> So, a couple things that I find interesting. Um, I don't know if you saw recently, there was this very viral tweet about uh somebody in Austin, Texas. They pulled up Uber and they pulled up the Tesla robo taxi app and it was something like uh 6x or 5x cheaper for the Tesla robo taxi versus Uber. Now, it's unclear if there's any subsidization going on, right? If you remember when Uber and Lyft first came out, you could in San Francisco go across town for like three bucks. It was like amazing. And you're like, "Thank you VCs," right? Um, obviously it's not $3 now. So there there may be some of that going on, but there is still a significant reduction in cost. Um, I think two things happen. One that is technology that is obviously making it more affordable for transportation, which I think uh has shown throughout history to be kind of the trend and how you actually get prices down. But the second thing is it calls into question like is Tesla going to buy Uber as a pure customer acquisition strategy and basically just say listen, you've already gone all around the world spent all this money to acquire all these users, we should just go ahead and save your company because you're going to get destroyed through this creative destruction of we don't have drivers and we have a cost advantage and is there something there where these two companies actually uh Elon becomes the owner of Uber?
>> I wouldn't put anything past him for um for doing this. But I will say that the advantage for him, so you're talking about buying the users makes sense. I I think he believes as I do, which is things go viral based on a very simple concept, and you already brought it up, the ability of offering things to people without human beings reduces the cost dramatically. And that's the reason why the profit margins are starting to become a major thing because you've heard the numbers. Global economy. So the total sum of all the transactions of the world $120 trillion. Okay. Total compensation $60 trillion. So if you eliminate all human beings working theoretically, uh, then you have infinity, you know, because you have a zero on the denominator. All all of this stuff is like uh
>> Jordy Visser removes all human labor.
>> Well, if people get things for free and they don't have to work, and this is the part that it goes through it. If kids right now, if you took a poll of the people that are mad about the situation that Peter Teal wrote about, he wrote a lot of things in there. The inflation was not part of it then because we didn't have CO. That's why I brought up the CO co reset things to levels. Uh, I don't remember if we talked about it last week. We probably did, but like Chipotle >> is is exactly that that age group. Um, I mean I have two well three kids between the ages of 21 and 25. Chipotle was kind of their bread and butter for where they were eating. And when you take something that was $8 and you move it to 19 and the quality of it goes down and the size of it goes down like we watch a Snickers bar do over time when we were kids or sorry I'm much older than you when I was a kid.
>> Damn Snicker Bars are too damn small.
They just got smaller and smaller and they're going through that phenomenon now and I don't know how it's going to turn around for the company unless they can reduce the prices off dramatically. And the reason Chipotle is so interesting is because there's less people working at Chipotle than there is McDonald. So the way the the prices have gone up to levels that I think have made it more challenging for people. So the question is how much of it is the corporate ladder? How much in terms of the inability to move higher? How much is it the inflation? I I I don't know.
>> But I think that this is uh, you're bringing up a good point with the Chipotle thing, which is it is price and quality degradation, which could be associated somewhat with ingredient quality and things like that, right, of uh, of price. But I actually think that there's also a labor component. And it's a well documented thing of these businesses have a very hard time finding and keeping labor. But when you have a uh friction to finding good labor that stays for a long time, now all of a sudden you may actually stop uh, start training a little bit less cuz this person's not going to be here for the next 5 years, right? you may uh, have to go into pools of candidates that you otherwise wouldn't have if you had a line out the door of people who wanted to work there. And so you start to almost get this like reinforcing downward spiral of I'm having to increase my prices. I'm having to decrease the quality of what's going into the product and oh by the way the human who is making the product is not as well trained is not, you know, the the type of person that we would pick first. you now have a situation where of course it's going to get worse and the prices are going to be higher and so then you get the customer that goes away. Well, if your customer is going away, your profit margins are going away and it just ends up in this spiral that it's kind of hard to see how do you stop it.
>> Well, this is why the printing of the money for COVID was such a problem. Um, and and and I don't think people have analyzed it enough to just say that okay, if you raise price, if you print a lot of money, you have a supply thing and you have to move prices up because of supply constraints and food, whatever it is, and then the wages go higher. It's very hard to take wages down. So CPI stays up at these high levels and wages stay up at these high levels. So you can slow the wages down. You can try to find a way to reduce the amount of people, but at some point you're running as lean as you can run. So you have to find another option. The other option is to reduce the quality, change uh, where you're getting stuff to a cheaper thing, move off organic, whatever you want, and then shrink the size. But then the people that are getting paid who can't live in the city because their housing costs have gone higher for the exact same reason, they start revolting and they say, "Okay, I'm only going to go eat here once a week as opposed to twice a week." And that's what in the commentary was said. So, everyone's kind of cutting back on what's going on. I believe the only way to resolve this. Historically, it's a recession, meaning you just a bunch of places go out of business. You reset the prices lower. If that's not an option and the government's still spending, then that means we're constantly in this inflationary period where we don't allow recessions to happen. And that's why I say there's no chance of a recession because the financialization of the market's gotten too big that it would immediately turn into something that they were trying to avoid in the first place. So what you're left with is Chipotle has to restructure their business some way. I don't know how AI can help their business, but I do know this, there will be new companies that come that just like robo taxis that enable restaurants to actually have cheaper pricing.
>> Well, we've seen this now. There there's been two things that have been going on. I don't know for the last decade that I've been investing in early stage startups. Uh, one is um, there's been a plethora of companies who uh, I remember there was a company who wanted to use uh chefs at home >> that then could deliver to their neighbors. Uh, I have seen uh all of the cloud kitchen you know uh type stuff where hey, we're going to basically have six different restaurants that all operate out of this one and just have a digital you know storefront people can order it as delivery only. Um, I've also seen uh companies who have used robotics. Um, I remember there was a company out in California that uh they basically created a robotic arm to do uh like bagels uh eggs and coffee and they would put it inside of these universities. Um, you just go to the online like people have been trying to assault this space for quite a while. It's really hard, right? Right? Whether you want to use robotics or a new business model, you not only have just like execution risk of you got to go build a new business, but to get to scale with these new things is very, very difficult. And I think that, you know, one of the best entrepreneurs of our entire lifetime is Travis Kalanick at Uber, >> if you're going to name it. Yeah. >> And he, you know, gets removed from Uber. We're not going to unpack uh how how crazy and unfair that was, but it happened. He goes and starts cloud kitchens. Yep. And he basically is going to go all in on food delivery and changing the economics, etc. From what I understand, um, there's a big real estate component to it. There's a big uh, you know, kind of software coordination and logistics type thing. And there's also the creation of the food.
>> It's going well, but it's not you know, hundred billion dollar company that uh the Uber kind of uh, you know, runaway train was.
>> Mhm. It makes you kind of think, can these businesses actually do this? So, if if the best entrepreneur can't do it, if the, you know, hundreds of startups that are attacking them can't do it, can McDonald's do it, can Chipotle do it? I don't know.
>> You know, again, I I live in Williamsburg. I live in an apartment. I'm probably twice as old as the average person in in the building. When I wake up in the morning, even if it's, let's say, 6:00 and I leave on a Saturday, inevitably there'll be a bag waiting at a door, even at that early of a time. So, Door Dash is running around the clock. People still order food in and they want to do that. And so, if you find a way to make the food cheaper to where there's no actual office space, and when Travis, he's talked about this a lot on the on on the All-In Pot. I think he's been on two or three times this year. Um, and I remember listening to it one. It was when we were in Miami. He was on and I remember because I remember walking around listening and it was the first time I had heard of Cloud Kitchen. It was the first time I had heard of the idea and he talked about it. I do think people just have to accept the fact that we're going to find ways to reduce prices by not having as many people working in it. Um, it might take time to get there, but that's why when you think about humanoids and you think about the things that are coming over the course of the next decade when people start to get worried about AI and I always go back to this is a certainty, this is not a guess. We are just like every part of exponential innovation has happened. You can doubt it for a period of time, but the reality is the benefits that are going to come come at a time where companies need to be competitive. So you go back to the Milton Freedman thing and you think about his whole thing was about competitiveness, competitiveness, competitiveness, which is what capitalism is. The problem is right now the government is just too big and that was his other angle. And if the government gets too big and they create this not hyperinflation, but they create this thing where it brings it to a level where rates can't go down far enough.
>> And I don't think we want rates to go down far enough. I think we actually want them to go down slow because if we just go back and let people refinance again and try to continue to go, how long is it going to take before these businesses that should be out of business go out of business and maybe they go start and do something else and they figure out a better way to make money and reset everything? But we need to reset a lot of the economy and I think that's going to happen and I think the restaurant industry has to go through it. I personally think as someone who has enough money to go out to dinner, I learned how to cook a long time ago. It's 80% cheaper to cook at home for quality of meal. That's That's
>> Even close. Yeah, it's not even close.
>> Um,
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Elon Musk, he got a lot of money. He can afford dinner.
>> He didn't get it yet.
>> No, no, no, no. He's already got a lot of money, but he now uh officially got approved for his trillion dollar pay package, which before we let all the critics get in the comments and start yelling and screaming, he doesn't get a trillion dollars unless he basically pulls off the impossible.
>> Now, I wouldn't bet against the man, and I think he's probably going to get a lot of it. What's your read on uh 75% approval? I think uh 75% of the votes uh approved this pay package. Obviously, it's very uh controversial, contentious. Uh, some people think it's absurd. Other people think that uh he's underpaid. How do you look at it?
Well, first of all, Tesla is a cult stock, so it's got a lot of Bitcoin qualities to it. Nobody knows how to value it. So, people that went to college and the best colleges in the world don't know how to react to it. He's a polarizing figure. Um, it's the most important story in the world for me next year. I, you know, I've said it before. I've written a paper about it. We've talked about it here. We are on the cusp of something big. Uh, Adam Jonas's, you know, moment that he wrote about last week that we talked about. If people haven't paid attention, and I read something in today that Tesla is a problem of the market. It's overvalued. It's a major issue. Those people have not spent time
On the TAM associated with the robo taxi market in the way that you described it and humanoids. Robo taxis are here. It is coming. And yes, there will be accidents just like there are with human beings driving drunk or texting while they're driving, which is a huge problem for the world. Robo taxis are safer. Are they perfect? No. Every single month, it's getting better. And because of artificial intelligence, it's accelerating at a pace, which means you should expect every upgrade of the software to be better and better. And I think people just need to go through and realize that the iPhone that you had back in 2010 could not handle video. And that didn't actually happen until, you know, 2020, 2021. And it really wasn't until during COVID that you could sit on the phone and watch a full-length movie without having to be on Wi-Fi. So, I think people just have to accept the fact that it's robo taxis next.
He made a bet on vision. And I've said it before and I'll say it again. I don't think enough people have spent the time comparing what Waymo did versus what he did. Both of them can coexist. Both of them can have autonomous driving. Both of them can be cheaper than Uber. That's great. But for Elon Musk to focus on vision, which is a necessity, and you had Dan Ives on recently, this point of Tesla being at this moment, it's the gateway to humanoids. It's humanoids on wheels. And so, I think next year is the year that the market gets really exuberant. If you want to find a bubble, think about what it means to actually have humanoids to be able to replace like Amazon is saying they're going to do, but its other businesses as well. We're just getting into the part where AI agents and humanoids are going to be coming at the exact same time. And you're going to start to see this in profit margins next year. So, I fully expect margins for public companies to be going higher in a big way next year. That means stocks will be going higher. It also means the disruption to labor will remain. The Fed will be cutting rates and ahead of the midterms, the government's going to have to spend money. AI is causing all of this. And if you don't want to say AI, it's exponential innovation. Do not fade exponential innovation.
Last thing I want to talk about is you wrote this uh this paper and the title of it is make your AI bed small steps to empowerment before the world races past you. I know that you're becoming very interested in how can you help people prepare for this world understand how to thrive in this kind of AI uh driven world. Can you talk a little bit more about this idea of making your AI bed?
>> Yeah, this is going to be um kind of my focus for the people that have followed me and have asked reached out and asked questions. They're the ones that triggered this because starting around, I'd say June of this year before I went to Maine, uh, I started doing a lot more in my videos about artificial intelligence and using it to find companies, showing people how I was doing that, going through the earnings reports, whether it's Perplexity, Gemini, uh, Claude, OpenAI, it doesn't really matter. I use all of them all day long and people started asking questions like, "How do I do that? How can I go through it?"
I'm 58, turning 59 years old in March.
>> What?
>> Yeah, I know. It's amazing, isn't it?
>> You come in here looking 21, got a fashionable shirt on. God dang, man. I hope that I look like you at 58, 59, you know.
>> Well, I'll teach you how to make
>> for those that don't know, I was on TV earlier, so I have makeup on, so it makes me look about two years younger, but I still don't look as good as you. There you go. So, I try.
>> It's the energy level. I still have it. It's It's constant. It's a lot of yoga. Um, now th this is important. So, um, we've never talked about this. Have you seen Admiral McCraven's
>> one of my favorites?
>> Okay.
>> Make your bed. Get a win in the morning.
>> Make Make your And for every parent out there who's watching, I'm going to look at the camera for this one.
>> Woo.
>> The holiday season's coming up. Um, Admiral McCraven's commencement speech was great, but if you get the book, it's a tiny little book. give it to your kids.
>> It's like what? A couple rules for uh for living like a great life, right?
>> Yeah. And it's very simple and it makes it very easy. But the make your bed component, which is the part I'll focus on here because there's a lot. I'm going to do a long form paper on this and I will publish it in sub I will post it in Substack. Um
>> subscribe to Jordy Substack.
>> Subscribe. Thank you. I owe you a bagel, don't you? You you went out there. Subscribers are up. Everyone hit the button.
>> It helps if you write a piece that gets millions.
>> I know. that that did >> you just call it good timing so I get a little bit of credit.
>> All right. Um the whole point of his speech to make it simplified was every day you get up some days are good, some days are bad. To start your day, make your bed. No matter how bad your day is, no matter how hung over you are, no matter how sick you feel from your bad Chipotle, make your bed. Get up, make your bed to start your day off. Everyone needs to do the same thing with artificial intelligence. If you want your kids to be able to embrace and not be fearful, which is all this takes, you have to use AI. AI is the gateway to entrepreneurship. You and I both I think where we connect is on entrepreneurship.
>> And everything that he wrote in that book from a Navy Seal to entrepreneurs, it all is the same thing.
>> Accept the failure and then get up and go do it again. Mhm.
>> All of these points of never giving up. He mentions all of them and there's 10 like points in there that are very very important in today's world. The parents of the world my age and older, we got a job and we assumed when we got that job we'd be at that company for 10, 20 years. We'd have a pension fund. We retire at it. Okay, that stopped a long time ago. But for today's kids, they have to take two, three jobs. They may have to take a job at the company that goes out of business 6 months later. They got to look for another job. they may end up in a dead-end situation. I say this all the time. If you joined a big company and you're not happy, stay in that job. Start making your bed and doing AI every day for 5 minutes a day and then the next week 10 minutes a day and then the next week 15 minutes a day. Look on YouTube. Go look for things. I'm going to try to make it easier for people because it is just something that is a lifestyle change. And once you make the lifestyle change to be an entrepreneur and you embrace AI, you have empowerment. And empowerment is something that's important. I spoke with someone yesterday. I mentioned to you before the show, um, a younger person, entrepreneur, but he asked me for my story, which we've never really talked about, but I am a natural introvert. I like to sit in a room and think. That's what I like to do. I like quiet. I like don't want to manage people. I don't want to be around people that much. And when I got to Morgan Stanley, it was very hard for me to
>> feel special right now.
>> Yeah, I like you. I like Matt, too. I like Erica. It's great. It's a whole audience of people I like. Makes me feel good. I could stay here all day. Um, when I got to Morgan Stanley, I had to do something to get that out of me. And what actually changed for me is once I built the confidence up by realizing just because I didn't go to the best school, that didn't mean I wasn't as smart as everyone. just because I didn't have the training and I wasn't as prepared as they were coming out of college for the job that if I put in the work and I learned on my own time and I spent the time that good things would happen and that empowerment comes from that feeling and that confidence you gain through actually accomplishing things. So if you go back to the make your bed argument and since you're a military person since you can relate to someone who stands on stage and simplifies it to make your bed everything good starts with making your bed. That's what it is.
So, I just don't talk about my kids, but I got a young son and uh, you know, little boys, they fall over a lot. A lot.
>> Some big boys do, too.
>> Yeah. And so, uh over the last couple of weeks, I've been telling him, "When you fall over, you get back up. When you fall down, you get back up." And it's got to the point now where he understands that. And so, when he falls, he will say, "Fall." And then he will very happily get back up and show me he got back up. And then sometimes he'll just come in the room and he will literally say to me fall and he'll throw himself on the ground to get back up to show me that he's learned this. And so we were watching football last weekend and every time someone got tackled. He would point to the TV and he would yell fall and then when they would get back up he would start clapping and I realized I was like, "Oh my god, you can program
>> the child to understand get back up." And I think it's very similar to this whole idea of like make your AI bed is especially for parents, right? If if you're in your 20s, like you got personal responsibility. You got to do it for yourself. No one's coming to save you. No one's going to come tell you to do this all stuff. But if you're a parent, you actually don't need to spend that much time. But if you can instill in your kid to use these tools, it will completely change their life. And it's probably one of the best things you can do for their professional outlook. It used to be, hey, put them in the right school, put them in these things. The schools aren't teaching them this stuff, right? And so as a parent, it is the inspiration and the accountability that if you can get the kid to start to use the tools, you'll be shocked because soon they're going to be teaching you as the parent how to use the tools.
Yeah.
>> And what to do?
>> Again, even more than just the tool, as someone who's curious and likes to learn. So I I I came back from Maine yesterday. Uh and I'm I'm in my Elon Tesla. Uh I'm not biased towards the company. All right. Um it's a 5 and a half hour drive by the time I charge and and park. Four of those hours were spent with me brainstorming with ChatGPT. Four hours of the ride. So if you can imagine starting a conversation and it started with Milton Friedman. It started it migrated into the movie Good Will Hunting. And I won't go through why, but I'm chatting with something that has and it doesn't the verbal voice mode does not have 160 IQ, but it has a really high IQ. And so if you imagine going out to dinner and being able to meet with the person that you want to meet with to ask them questions, you said to me when we decided to do this, your north star was just speaking with smart people. That means you're trying to learn from other people, which is a great quality to have. ChatGPT is a way to learn about everything. And as a parent in particular, you everyone cares about their kids' future. They need to be using artificial intelligence yesterday and they need to be using it every single day. And even if it's just talking about current events, big stories that have happened, and you're doing it on voice mode as a family, it will change their life forever. And there's no better time to start than this morning. My wife hates when I walk around talking on the voice mode because I don't want to put in headphones. Uh but it is amazing and uh you I mean you can very quickly go down these rabbit holes, but uh to your point, you're talking to a smart friend, but also um superhuman intelligence. It starts to make connections and bring up things that you would never think to even ask it about. And so, um I think it's very, uh very valuable. Where can we send people to uh to subscribe now that you have so many subscribers on Substack? Where where can more people go to subscribe?
>> YouTube is a place where I'm I I think people should subscribe if for no other reason. That is where they can see what I'm doing on AI. They can send their kids there. Um I do take pride in the fact that I try to use analogies and simplify things on very complicated topics in a way. Uh it is it is 45 minutes of a lot of information, 100 plus slides usually, but it goes very fast. And if they go there and they subscribe and they come each week, I guarantee them they will learn about macroeconomics, they'll be up to date on AI. I will show them which podcast that I listen to so that they can gather similar information. And then finally, I do spend a lot of time connecting it back to crypto. Crypto is not a speculative asset. It is the future of capital. I I don't know how to say it to people. It really will displace all of the capital markets. I'm a big believer in that. and we're in the very early stages of it and the tokenization part that starts next year is going to be a major force just like stable coins were this year and everything will be looking more up as we get into next year.
I love it. Thank you so much for doing this. Please go subscribe to a Substack. Go subscribe to YouTube. I watch every video so I appreciate you putting it together. I feel like I get like the uh uh appetizer that we publish on Saturday and then I get the main course on Sunday which is uh which is always good. So, thank you so much and we'll do it again next week.