Transcription
I saw some stats the other day that said the subject of artificial intelligence is less popular as like an industry than even ICE in the United States. In part because the big CEOs of these companies are saying that our jobs and our way of life is going to be fundamentally disrupted and people don't feel like they have a say in that. We didn't choose this.
What's your perspective on everything that's going on? There have been few brands that have fallen further faster in the last 18 months than two brands. The United States brand abroad. We used to be the enforcer, the operating system to keep rogue nations in check. The US is now that rogue nation. So the US brand abroad for the first time in history more people feel that China is a force of good in the world than the US. That's never happened before. So the brand US has fallen furthest fastest. The second greatest fall is AI. Your view of AI is directly correlated to your wealth. The only cohort that has a positive rating of AI is people making over $200,000 because generally speaking, wealthy people look at AI as something that's fueling their portfolios. And uh wealthy people are the biggest users of AI. So they see it as a positive. They see it as innovation. They see it as the S&P going up. But if you're an average middle-class person, what you may see is that your electricity bills have gone up and you don't even have access to invest in these companies. And you see some statements from people Sam Alman saying, "Stop complaining about energy costs. Think about the amount of energy it takes to raise a child." So they haven't really managed the brand well. In the last 18 months, it's gone from something kind of scary, but we can be optimistic and a wealth creator to something that's very scary and something that's a wealth creator for the wealthiest already. The brand in the last 18 months has had tremendous tremendous erosion.
When I look at some of the quotes from the CEOs of these AI companies, I've got one here from Elon that says, "AI and robots will replace all jobs. Working will be optional like growing your own vegetables instead of buying them from a store. The challenge will be fulfillment. How do you derive fulfillment and meaning in life?" And Sam Moltman said, "By the end of 2028, more of the world's intellectual capacity could reside inside data centers than outside them." And when I went through Sam's blog several times, I mean, he's talking about a fairly dystopian future. And many of the CEOs, I mean, even Amadea Enthropic talks a lot about, you know, his his bare case for AI and the job disruption that will follow. And so I think I'm trying to get clarity for myself really on like what what is the truth? What's marketing and what's the truth?
And I want to add another point which is I hire a lot of people. And I'm already finding that our framework specifically for entry-level roles has has quite radically changed. And so I didn't believe this stuff like a lot of people told me about oh Sam these guys they're doing marketing to make their company seem powerful. But then when I noticed a change in my own behavior when I'm sifting through these CVs, I thought, oh, maybe things are going to change.
I think it's mostly [ __ ] and catastrophizing in a means of fundraising. Every technology in history goes through a similar arc. There's some catastrophizing. There's some job loss. That increase in productivity results in additional margin, new business opportunities, and employment growth. I don't see any reason why this would be any different. And I think that catastrophizing and talking about this massive destruction in jobs is a way of saying or justifying the massive investments these companies want enterprises to make in their companies. Because if you look at the amount of capital they have committed and the valuations of these companies, one of two things needs to happen in the next 5 years at least in the US. There either needs to be a trillion dollars in incremental revenue from new products from companies that have licensed AI. So L'Oreal does a big site license with say OpenAI. Does it come up with new products? Like how does it justify that investment? We're not seeing a lot of AI moisturizer or cars that are built by AI. I mean, there's AI has hit industrialized robots at Amazon, but there's not a lot you would call new AI-driven or AI products. AI plays a role in the background, but it's very hard for companies right now to point to incremental growth or revenues from AI. So, in order to justify these valuations, then they have to say, all right, there's going to be massive cost savings or efficiencies. And there's some examples. I think Meta Meta has just announced new layoffs because of efficiencies they're getting with AI targeting. So, one of two things needs to happen in the next three three years. Either these companies valuations need to be cut by 50 or 70%. Or you need a massive destruction in the labor market that creates tons of efficiencies that their customers can then flow to the bottom line. And I think what the CEOs are saying is that there's going to be massive efficiencies. I also think that it sounds more interesting and it makes your technology sound more seminal when you say it's changing the world and we don't know how to control it. And quite frankly, I find it a little bit obnoxious that some of the founders and key figures in AI catastrophize just about the time they take a secondary and peace out to the Kotazour. That's not helpful. I'm I'm Dr. Frankenstein and I've created this monster, but I don't know how to deal with it. So, I'm going to go peace out to Sanrope. That's just not very helpful. They always talk about the peril. It's like, well, what do you mean by that? So, the first the first big fear catastrophizing is just this unprecedented job destruction. They've been talking about that for 3 years, but let's look at the data. The unemployment rate in the US is 4 and a half%. Among youth, it's 8.8%. That is slightly below the historical average. The number of new business permits or new businesses started per capita in the United States has doubled in the last 10 years. And we hear about, well, what about Meta? They announced they were laying off, I think, 8 or 10,000 people yesterday. 2019 to 2025, they went from 16,000 people to 80. So even if they go back to 60,000, it takes them back to it takes them back about 24 months. So I don't doubt that there'll be a real dip or a severe V down in certain industries, customer service, probably the legal field, but I believe over the medium and the long term, it's actually going to create more jobs than it destroys. And I don't I think some of the catastrophizing is nothing more than thinly veiled attempt to say my technology is so devastating that it's going to shift society and you should invest at this crazy valuation.
Could you be wrong? Oh, I'm wrong all the time, Stephen. No, but I mean like what's the what's what would have to be the case for you to find out that you were wrong in terms of how you've reasoned up from the first principles of your thinking there?
Job destruction, layoffs.
But what would you have misunderstood for that to be the case? It's like what what did you miss would you have uh misestimated for that to be the case?
Ground zero for the job that was going to go go away was radiologists. You could scan billions of images and radiologists kid mama don't let your your daughter grow up to be a radiologist cuz that job's going away. The new job listings for radiologists in 2026 is up. Because what it ends up is that while scanning the image is important, it's a small part of the job. The value out of a radiologist is diagnosing the illness and then coming up with a treatment plan. And that's as important as ever. The number of coders, job listings for coders year-on-year is up 11%. So people who understand how to use these technologies and come up with different prompts or different means of vibe coding that demand has gone up because now AI can be applied to almost any startup. Where I will be wrong is if there is sustained job destruction and the new jobs created and new businesses and the employment those jobs create doesn't keep up with new jobs. And there is a scenario you don't need 100% unemployment like Musk is predicting. At 20% unemployment the French had a revolution and Weimar Germany turned very ugly. At 20% unemployment especially among youth especially young men tend to get very angry and take to the streets. So you could see a V that's so severe, even if there's a job recovery, if it hits 20% unemployment, that could cause real uh civil unrest. But I just look at the data. I look at the employment numbers. If you didn't know there was this seminal technology that very smart people were predicting a job apocalypse around and you just looked at the data, you wouldn't know there's anything going on there. The the data doesn't reflect that there's some big exogenous meteor meteor coming for the employment market.
Is there a case that this technology because it's you know built on the internet so it has inherent rapid distribution every day Anthropic release a model Chat released something it spreads across the world very quickly and everybody's updating their technology at the speed of light unlike the industrial revolution where you had to build infrastructure and physical infrastructure is there a case that because of the speed of this technology and the proliferation of it that it will be unlike the revolutions of the past?
Right, that's the fear that the V is so severe and so vicious that we don't have time to recover and even if there is more jobs on the other side that there's too much civil unrest around around the V. But so far the V doesn't be decelerating or diving as quickly as people had predicted. I was kind of reminiscing on the way over here. I moved here almost four years ago. The first thing I did, I got off a plane at night and I went to this amazing party at Annabelle's, this Brazilian party with all these hot people everywhere and I thought, I love London. And the next morning I woke up feeling pretty hung over and my team said, "You have this podcast with this young guy." And I said, "Cancel, I'm hung over." And they said, they said, "No, he's really up and coming. He'll like him. He's a nice kid." And I came into this little place in Shoreditch or wherever with all these like cool coffee houses. I had no idea who you were. And within two years, you were [ __ ] everywhere. It was like I'm in the airport and I see your banner on your book. And then I get on the plane and the safety video has you in it. I'm like, make him stop. And my point is where I'm going with this is this place is like uh I mean it feels like the Google Plex. You're hiring like crazy. You're one of the most technically sophisticated people I know in media and yet you're hiring a bunch of organic things, walking around and eating and and going out and drinking and having kids. So you're you're the example. Old media is going to lose jobs, but you're creating. How many people have you hired in the last 24 months?
Across all of our companies, about I'd say about 220.
Okay. And those are high-paying jobs. Those are young people probably making six figures plus. That's a lot of employment. So is the BBC or is the Daily Mail or whatever laying off people? Yeah. But I'm not sure they're laying off people faster than you're hiring them.
Yeah. Yeah. And what I found is that we're hiring a different type of uh person and AI fluency is becoming increasingly important. I say the other thing is the only thing I noticed was 60 days ago I'm I consider myself to be the head of recruitment. We have a recruitment team downstairs and I own a recruitment business. But as I go through that inbox, people that I otherwise two months ago ago would have been, you know, jumping to hire, I'm now pausing because there's new technology that's been launched by these companies in America. That means there's alternative solutions and that's what's giving me pause. People do need to consider ways that they can upskill themselves with these technologies.
The labor market is definitely reshaping and it might reshape faster, but I'm not sure it's going to be the apocalypse. There'll be winners and losers. For example, for the last 30 or 40 years, the unemployment rate among college grads has been lower than non-college grads. It's shifted this year. The unemployment rate among non-college grads because of the boom in vocational work is now lower than the unemployment rate among college grads.
And if you think about it, you're like, okay, well, that's bad for new college grads. But at the same time, all of these data centers need carpenters, welders, plumbers. So, there's been booms in other parts of the employment market. But yeah, the employment market's absolutely reshaping. But when I graduated from business school, a lot of it, quite frankly, is your generation is spoiled. What do I mean by that? When I graduated from Berkeley in 1992, 40% of us had a job on graduation day. Meaning 60% did not have a job. I would bet that kids in my class at Stern, I bet 40% of them were starting their own business. Because with AI when I graduated, there were two there were two entrepreneurs in my class and the second person was my co-founder. We were the only business started in the high school of business from 1992. I would bet there's going to be 30 to 50 businesses that are started on graduation day. There's kids dropping out of their second year of business school to start businesses because they just raised $10 million in a Series A. Now, you have to have certain skills, a certain type of personality, a certain facility with technology. I'm actually quite excited about this. We're starting to see an uptick in productivity, which should result in incremental um profitability. Will some people be on the wrong side of the trade? Absolutely. Do we need to do a better job of providing more unemployment, more retraining? Denmark spends 2% of GDP on retraining and vocational training. We spent 2% in the US. So, we're not good at retraining. We're really bad at it. Actually, we're not good at taking care of the people on the wrong side. But, as a global in terms of global employment, I just don't I think that catastrophizing is is dressed up fundraising.
What do you think about what Elon's doing with um Optimus? Because if you bring those two forces together, you got Optimus robots, these humanoid robots where he says there'll be I mean some of the quotes that he said, I mean it might be marketing, but he's predicting that you won't need to be a surgeon because there'll be so many Optimus robots that are more advanced than any surgeon on earth. So Optimus robots will be doing surgery. Um, and if you combine intelligence with sort of physical um, physical power that comes from these robots, that does beg the question where human skills remain outside of the relational stuff and Maslow's serving Maslow's hierarchy of needs. That's the one of the things I contend with. I'm like, you're seeing in China especially how robots are really changing production lines. And I saw this video the other day of I think it was in India or Bangladesh where they had their factory workers have cameras on their heads. So that they could film their hands because they're they're intent on replacing them with robots. This combination of intelligence plus robotics feels like it's two tsunamis at the same time.
I think that's right. But let's use the surgeon as an example. I think the robot in the context of surgery will be not a replacement but a supplement. And that is there'll be a large class of surgeons who know how to weaponize robotics to be better surgeons and quite frankly do two surgeries a day instead of one. I think most brain surgeries take four or six hours using robotics and precision instruments. A great neurosurgeon will be able to increase the productivity and the accuracy of their surgeries. My big tech stock pick of 25 was Alphabet because it was trading at a P of 17. I just saw it as being ridiculously cheap because everyone thought OpenAI was going to put it out of business. My big tech stock pick for 26 is Amazon because I think where robotics really hit the rubber meets the road in terms of shareholder value is the collision of AI and industrialized robots and there are 400,000 um industrialized robots in the US and there's a million at Amazon. So a million Amazon is two and a half times the number of industrialized robots as the rest of the nation combined. But the notion that we're going to have someone in our house bringing our tea, a robot, I don't buy that at all. I think that automated robotics, the collision of advanced manufacturing in China and using AI with robotics will yield tremendous advantage. Amazon is saying they're going to double their largest business, which is their retail business by 2032 without an incremental hire using robotics, industrialized robots. And they were early. They made an acquisition 10, 15 years ago of a robotics company called Kiva. But the notion that there's going to be a robot bringing me my tea here, that's [ __ ]. The scary thing for me that I'd want to know more about is weaponized uh industrialized robots as warriors because I wonder, you know, there's this you can go some weird places, but again, I think AI and robotics, yes, this notion that we're going to have robots serving us our food or in our house, I don't I don't see that.
It's interesting because well I guess one could argue that we we already have robots in our houses but they just don't move. So the quite the leap really is would you allow a robot to move through your house? Because I mean a Hoover is a robot. A fridge is kind of like a robot especially the smart fridge is. You one could say a TV is a robot, a smart TV, but the difference is they don't move through our house or would we allow the Hoover to move itself and then once we allow that would we allow it to potentially bring us something?
Yeah, I get I just don't the the stuff I've seen on actual application of these robots and keep in mind these individuals, the job of the CEO now is it used to be to underpromise and overdeliver. Now it's overpromise and underdeliver and create a vision that creates cheap capital so you can pull the future forward. My understanding is three years ago we had a million autonomous Tesla taxis on the road and that did not happen. In 2016, M said or 2017 there was going to be autonomous was two years away driving. So their job is to predict a very exciting future. But I also think Musk in particular is very good at saying look over here as he stuffs a rabbit into a hat. I mean Tesla is an automobile company. So he's got to create stories to justify its 155 times earnings when most automobile companies trade at 10 or 15. So it's robots and it's space. It's connectivity with AI and autonomous and robots. It's constantly look over here because I think it's very difficult to justify the valuations he's raising money at. So, and to be clear, he as much as anybody is able to pull that vision forward. He's launched 90% of the rockets sent into space have been by SpaceX. But this is a company that's trading that has 16 billion in revenue with 8 billion in profits. And it's going to go out in its IPO at a projected valuation of 90 to 110 times revenues. When Google went public, it went out at 10 times revenues and it was growing 10 times as fast. So, what is this? The key attribute of an innovator right now is storytelling. And that is to make sure the promise is way ahead of the performance such you can access cheap capital and pull the future forward. But a lot of this stuff I find is a lot of jazz hands.
He's always he's you know he's often known for being wrong about his timelines. But he does seem to deliver magic to the world.
The best product in my mind, the two the two products that have changed my life from a technology standpoint, most underrated product is AirPods. If AirPods alone, you know, Tim Cook just stepped down, were its own product, it'd be a Fortune 50 company. I think it's I don't even think it's technology. I think it's the most profitable ubiquitous piece of jewelry in history. I just walk around with them in my ears now, right? And then the best product I think of the last few years has been Starlink.
That's amazing.
I just think it's absolutely. I've done podcasts from planes. I can talk to my sons on FaceTime. That product is, you know, all airlines are flying the same tin can, same routes, same bad food, a real point of differentiation for them. And that's also in maritime. I think Starlink is the best tech product. So, power to him. When they go public, is it an is SpaceX an amazing company or is it overvalued? The answer is yes. Two can be true at the same time.
What do you think of Tesla? Because for me it's m I don't think people in Britain realize this or other parts of the world, but for me the first time I got in the Tesla that I I got in LA and pressed the location and took my hands off the wheel, all I had to do is occasionally look forward, which they're removing now. And it took me three and a half hours to Joshua Tree without any intervention. And the the safety record in it is is safer than if I had driven myself there. It's just magic to me. And then when I watched this, the space rockets come down and be caught with the chopsticks. Incredible.
I go, this is just magic. Incredible.
And so when when he I've got to be honest, when he says that these Optimus robots are going to be I go, do you know what he's delivered a lot of magic in the past that no one would have thought possible. Can you even imagine 10 years ago him saying that what people would have said if you said we're going to launch this massive sort of 70ft skyscraper into the air and then we're going to catch it on chopsticks.
Staggering. Incredible.
And then we're going to relaunch it again. And then we're going to catch it again.
You would have gone impossible.
Edison of our generation. But you asked about Tesla. Uh, I bought a Tesla. Incredible product, far superior to anything on the market. He deserves credit for inspiring the EV race, which will be good for the environment. But the reality is everyone's caught up. The fastest growing automobile company in history is BYD. BYD,
Chinese company.
BYD is basically an 80% of a Tesla. Some people would say 100% of a Tesla for 40% of the price. If there weren't ter if there wasn't a ridiculous tariff war right now, BYD I think would be the number one EV in the United States. It's eating Tesla's lunch. In addition, what I think is gonna happen about Tesla, credit where it's due, change the market, inspire the EV race, good for good for the planet. But when you look at its valuation right now, I think what you're going to see is when SpaceX goes public, there's a lot of money in the market that wants to get some of that Musk Rizz what you were talking about. This guy is incredible. I don't care how expensive it is. I want to invest behind Elon Musk. I get it. That money is about to come out of Tesla, which people are finally figuring out is just a great car company that should be trading at 30 times earnings, not 150, and it's going to go into SpaceX. So, I think the boost, the retail surge in SpaceX you're going to see and the valuation they're planning to go out at is just extraordinary. Some of that is going to come at the cost of Tesla. I just I think people are waking up to the fact that Tesla's a great auto company. It should be trading at about a fifth of the valuation it is now.
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