VALUE: After Hours (S05 E44): Bill Brewster on Elliott activism on Crown Castle, Value vs Growth

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In their latest episode of the VALUE: After Hours Podcast Jake Taylor, Tobias Carlisle, and Bill Brewster discuss:

  • Small Cap Stocks: A Hunting Ground for Opportunities
  • Tesla’s $30 Trillion Market Cap: Is It Really Possible?
  • How Peloton Lost Its Cool Factor: A Case Study in Brand Mismanagement
  • Unveiling Investment Truths from Antiquity: Lessons from Stonehenge
  • Elliott: Crown Castle Stock Underperforms Under Jay Brown’s Leadership
  • SBF Org Chart – A Well Kept Secret
  • From Fire to Pencils: The Amazing Technological Achievements of Humans
  • Elon Musk Discusses Impact of Rising Interest Rates on Model 3 Pricing
  • Forbes 30 Under 30 – Worse Than The Madden Curse
  • Elizabeth Warren Takes on ‘Big Sandwich’
  • Binance CEO CZ Pleads Guilty to Money Laundering Charges
  • The World’s Biggest Single Stock Market Investor Owns 1.5% Of All Globally Listed Shares
  • The 10-year Treasury Yield Has Come Back From 5% to 4.37%

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

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Tobias: We are live. This is Value: After Hours. We got the whole crew together. Billy’s back. I’m Tobias Carlisle, Jake Taylor, and Bill Brewster. What’s happening, Billy? What’s news?

Bill: I don’t know, you tell me. I’m just scrolling a bunch of things at–

Now you’re going to have to pay royalty.

Jake: Some unauthorized music.


Bill: No, man, things are good. How’s everything here?

Jake: Life is good.

Bill: What’s going on with the value spread?

Tobias: Yeah, it closed up, but I don’t think it’s been helping out value much.

Jake: [laughs]

Bill: No, that’s not ideal.

Jake: Yeah, what’s going on here?

Bill: That’s not how we thought it would happen.

Jake: I was promised a triumphant return to glory.

Tobias: Yeah, that’s what I was going– [crosstalk]

Bill: Oh, nobody ever said when.

Jake: [chuckles] What’s going on?

Tobias: I don’t know, I think it’s not been a great run, honestly, for value. I think I saw today that the growth is outperforming value by 23% for the year or something, like whatever that means, but it was for them.

Jake: So, you’re telling me there’s a chance.

Tobias: Getting smashed again. It seems a little bit unfair.

Jake: [laughs]

Bill: Yes. It seems like every day, Microsoft just goes up [crosstalk]

Jake: Is it back to all-time highs? Did it get above–?

Tobias: Yeah, it went through all-time highs about a week ago, I think.

Jake: Wow. Congrats, everybody.

Tobias: Congrats to the longs. Yeah.

Bill: That’s right. It’s been a while since they won.

Jake: [crosstalk] other name so haven’t, right? I mean, Amazon I think is still below, Google’s below.

Bill: Yeah. Meta is close. It’s not there.

Tobias: I think they’ve all done pretty well. Meta has had a banging year.

Bill: Amazon? Yeah. I don’t know. Hang on, I’ll pull up– [crosstalk]

Tobias: There’s like a 100 [crosstalk] percent for the year, I think. Actually– [crosstalk]

Bill: Yeah, Amazon still got a ways to go.

Tobias: Ark is something like 50% plus for the year, and it’s down from its peak.

Jake: How far down?

Tobias: Ah, not much. It’s a bit. I just eyeballed the chart, but it’s at like $46. I guess it started around $30, but it’s been higher.

Bill: See, Ark innovation-

Jake: We’re so back.

Bill: -man, it was high. Whoa. That was like Dazed and Confused high.

Jake: Oh. The irony that you had to pause for a while to–

Bill: What?

Jake: [laughs]

Tobias: Let me do a shoutout.

Jake: Yeah, geography lesson time.

Tobias: I think–

Bill: I think Ark top ticked at $156. My Lord.

Tobias: It is amazing. Kennesaw, Georgia. What’s up? Nashville, Tennessee. Antigonish, Canada. Cupertino. Winter Park, Florida. Miami. Norberg, Sweden. Toronto. Lund Sweden. Sweden in the house. Ottawa. Brandon, Mississippi. Deano’s in Townsville. Good man. What time is it there? Like 06:30?


The World’s Biggest Single Stock Market Investor Owns 1.5% Of All Globally Listed Shares

Jake: Speaking of the Nordics, did you guys catch-

Bill: We talking AM?

Jake: -the Norwegian manager that runs like the sovereign wealth fund for Norway. Have you guys heard of this guy?

Tobias: No.

Bill: I’ve not.

Jake: Oh, he did an interview with Mauboussin recently, and Ian Cassel wrote a post about it. It’s interesting. It’s probably worth listening to. But they have something like 1.5% of all the global equities on planet Earth.

Tobias: Wow.

Jake: yeah. [laughs]

Bill: Smart.

Jake: That’s big.

Bill: Smart.

Tobias: [crosstalk]

Bill: We should do that with the government. Let’s own shit.


Tobias: Chicago. Tallahassee. New Brunswick, Canada. Dubai. Leeds. Savonlinna, Finland in the house. Dallas. San Diego. Salem. What’s up, Salem?

Jake: Wow.

Tobias: Griefswald. London Town, enjoying a pint. Good man.

Jake: [laughs]

Tobias: Edinburgh. Old Ocean, Texas. Cool. Good show.

Jake: All right.

Bill: A truly global listening base or a bunch of people VPNing in and saying that they’re from somewhere that they’re not.

Tobias: Colorado. Well, Southern Hemisphere representing Deano’s on watch for the entirety of the Southern Hemisphere.

Bill: The homie in Townsville, it’s 04:33 AM.

Tobias: 04:30. Sorry, Dean. Wow. What an effort.

Bill: Yeah. Or, you’re just like a total degenerate. I don’t know which one,-


Bill: but either way, that’s a tuning in.

Jake: Either way, we love you.

Bill: Yeah.

Jake: [laughs]

Bill: Every Monday, I get hammered and I stay up for my guys of Value: After Hours. It’s amazing.

Tobias: It’ll be Wednesday. It’ll be Wednesday morning.

Bill: Yeah, that’s right. Yeah, my bad. Can’t even do that.

Jake: [laughs]

Tobias: He’s not that much of a degenerate. It’s not a Monday night drink. It’s a Tuesday night drink.

Bill: It’s a good point.

Tobias: Sunday night drink.

Jake: That’s fine.

Bill: Yeah, that’s right. He put in a good day of work this week.

Tobias: The week [crosstalk] Tuesday night.

Bill: You’re not wrong.

Jake: What’s new in the world of Billy Brewster?


Elliott: Crown Castle Stock Underperforms Under Jay Brown’s Leadership

Bill: Oh, just fun stuff. I don’t know, I’m interested in this restoring the Castle report that Elliott or pitch deck that Elliott put out yesterday or two days ago.

Jake: They are going after Crown Castle arguing that the CEO is misallocating capital to fiber and small cells. I think it’s a well-done pitch book, which you would expect out of Elliott Management.

Jake: Yeah, those guys seem to know what they’re doing.

Bill: They do indeed. I am curious whether or not this particular team has expertise in the domain. I know that the firm, they’re going to say has expertise, but I wonder about the actual people running this process, because the argument makes a whole lot of sense to me. If I turn around where if you’re stopping capital misallocation, it’s not like you got to fix the core business. You just got to stop some idiot from doing something or fire the idiot.

Jake: If I remember right, Crown Castle does like small cell towers.

Bill: Well, yeah, macro cells. And then they’ve diverted a bunch to fiber and small cells, which I think Elliott has a fairly compelling case at this stage that– Let’s put it this way. The stock has underperformed peers. Elliott has cited their presentation in 2020, where I think they advocated for some reasonable changes in management compensation. It was not done or their suggestions were not implemented. Since then, Crown Castle, I think has appointed a few people to the board that don’t have tower experience.

So it’s like one of those things that if they can shake things up and people are upset enough– I did find if you pull it up, it’s called Slide 35, I found this slide to be somewhat insulting. The slide is titled Stock Performance since Jay Brown became CEO. And it says, “Days where buying CCI versus SBAC was a good idea.” 1,877 days, bad idea. Good idea, 7 days. And then where it was a better buy than American Tower, 1,881 days, bad idea. 3 days, good idea. So they’re really going at this guy.

Jake: They’re using just saying that outperformance on an individual day or what–? [crosstalk]

Bill: No, not individual.

Jake: How do you get–? [crosstalk]

Bill: Not individual. They’re saying, out of 1,884 days, the stock has underperformed on 1,881 of them, and it’s unlikely that is a good sign. They go through the economics, but their basic argument is the fiber build out generates returns less than desirable, to say the nicest possible way.

Tobias: What would they do instead? What’s their proposal? What’s the counter proposal?

Bill: Well, I think that they would say that you probably need to potentially expand internationally or just really max out the macro site, the cell towers in the US, and rather than diverting cash flow for just growth, just dividend it out. I think their point is just stop doing anything other than towers because towers are a really good business and all you’re doing is ruining the economic value of the franchise, which I like those because I’d rather start off with a really good core piece of a franchise than try to turn around something broken.

Jake: Yeah. Addition through subtraction.

Bill: Yeah. So I don’t know what you watch for, I don’t know if you watch the proxy to see if they start compensating on return on invested capital, or I don’t know if you watch to see if some of the board members get kicked out, I don’t know what the sign is that you look for to see is this campaign, does it have some runway behind it? Because if it does, I’m intrigued.

Tobias: All right, Elliott. [crosstalk]

Bill: Yeah, they’re not bad at what they do. Rumor has it.

Jake: But will they bring in a battleship and [chuckles] seize anything?

Bill: They should.

Tobias: I was at a wedding where someone was representing that their fund– a British bloke was representing that his fund had done what Elliott had done. And I was like, “Oh, mate, it’s just not your lucky day. I work in this business. I know who it was, and it wasn’t you.”

Jake: Really?

Tobias: Could have told this story at any other wedding, you’d probably been okay? Yeah.

Bill: You call him out on it, or did you just walk away?

Jake: Yeah.

Tobias: I just said out, Elliott did the same thing.

Bill: Yeah, that’s just shocking story. It reminds me of when Paul Singer did it.

Jake: [laughs]

Tobias: Yeah.

Jake: Amazing.

Bill: Or, his firm did it.

Jake: What are the odds?

Bill: Yeah. Boy, that’s wild that the second time it happened wasn’t covered, bust alas.

Tobias: We didn’t hear about the second time.

Jake: And yours was in South America too? My God, what were the chances?

Bill: Yeah, it’s crazy. You must not be very good at PR, bro. How big did you say your fund is? Oh, anyway, not that size matters. It’s how you use it.

Jake: In that instance though, I do think you’d benefit a little bit for some size-

Bill: You’d hope.

Jake: -when you’re getting your own army.

Bill: Yes. Yeah, that’s right. Be tough to do with a PA.

Jake: Yeah.

Bill: Unless you had a real nice PA, which is possible. So anyway, that’s the thing that’s crossed my desk recently that I found most intriguing.


Jake: Any macro thought to share? Yeah.

Tobias: Yeah, what’s happening in this market this year?

Bill: I have no macro thoughts. I’m trying to figure out, if cable is what I thought it was or if it’s not, I have sold to get rational. I think it’s an example of one that I talked about so much that I’m not sure that I was able to look at it in the right way. So I’m still not sure how I feel and I’m not sure that it’s the best risk reward. I know I don’t like wireless. That I’m certain of. I just don’t know if that means that I like cable. So I’ve spent some time on that. I don’t know, man, I’m a little pissed that I feel like I missed when rates ticked five, but you’re not going top tick everything.

Tobias: What would you do there? You wanted to short them at five?

Jake: You want to– crosstalk]

Bill: No. I wouldn’t mind locking in some yield. I’m a boomer. I enjoy income, which I know is like a crazy thought, but especially when it doesn’t have credit risk associated with it. But we’ll see. Maybe they’ll go higher.

Tobias: It’s fallen off pretty quickly. Last time I saw it was like 4.37 or something like that.

Jake: For the 10-year?

Tobias: I thought so. Yeah. Is that right?

Bill: It could be.

Tobias: Just making stuff up.

Jake: Yeah.

Bill: No, it could be. It sold off hard. Yeah, 4.36. That’s a big difference from 5. That sucks.

Tobias: Quickly too.

Jake: Why is that?

Tobias: I don’t know.

Jake: What’s happening?

Tobias: I don’t know anything about rates. I don’t know how any of that works.

Bill: Yeah.

Jake: They go up and they go down? [crosstalk] It seems like they mostly go down. [laughs]


The 10-year Treasury Yield Has Come Back From 5% to 4.37%

Tobias: I talk about the yield curve, but I couldn’t tell you why any part of it does any part of it. It has been interesting, actually, that– It looked like it was going to close pretty quickly, that inversion, and it was racing and then like mid-September or beginning of October, something like that. Because it was all that talk about the steepener, the bear steepener where the 10-year races up and the curve normalizes by the back coming up in line with the front, rather than the front coming down, which is a bull steepener or something. I don’t know what any of that means, but I was pointing out that it was closing and people were saying, “No, it’s closing in the wrong way. It’s the bull steepened and not the bear.” Whatever. But then since that 10-year has come back from 5 to 4.37, the inversion, it’s reinverted pretty significantly. I don’t know what any of that means. Just observing.

Jake: What does that move us all the way back to? Like, I don’t know, four months ago or something?

Tobias: Yeah, it’s back a few months. It’s back a couple of months, something like that. We probably saw these numbers late last year as well. So that’s like the size of the dip, but it’s the longest one we’ve ever seen. I don’t know what any of that means. Longest one we’ve ever seen. Not the deepest one, if you go back and look at the late 1970s, looks the same. Late 1970s was weird. It gets very steep, and then it flicks back normal, and then it gets very steep again. I don’t know if that was the Fed trying to tamp down on inflation by jacking up rates and then everything got a heart attack when it did that, so it slowed back down again. I don’t know, dude, it makes me a little bit nervous seeing it like that.

Jake: Risk on baby, I guess.

Tobias: It seems to be. But I don’t know, there’s a lot of liquidity around. There’s a lot of stimulus. That inflation reduction act is very stimulative.

Bill: Yeah, it is.

Jake: Is it reducing inflation yet?

Tobias: [laughs] That horse is bolted.

Bill: It’s a long-term investment in that.


Elizabeth Warren Takes on ‘Big Sandwich’

Tobias: The weekend flights, that was the most flights we’ve had on TSA. Most people through the TSA checkpoints. Everything went pretty smoothly according to the TSA.

Bill: Ah, yeah, you got the JetBlue, Spirit merger. That’s interesting. Kind of come around to thinking that should get done.

Jake: How do you guys feel about big sandwich suppressing us, keeping us all down as the consumers?


Tobias: Does she focus on things like that? It’s so strange. Of all the things you could focus on—The NAR charges 6% on every sale of a house or recommends they’re– [crosstalk]

Bill: Yeah.

Tobias: And ignore that, and then talk about some sandwich joint buying another sandwich joint. It’s not like there’s a restricted supply in sandwiches.

Jake: We’re all getting Jimmy John. [laughs]

Bill: Yeah. The fucking realtor cartel needs to be broken up. I was complaining about this to somebody. It was actually my mother, who’s a realtor, which-

Jake: Yeah, there you go.

Bill: -she’s a little bit mad at me, I don’t know.

Jake: [laughs]

Bill: But I was like, it’s 6% of gross, right? What’s the average loan to value on a house? Like 60%? So, what’s 6% of 40? You’re fucking taking 25% almost. I know my math off, but I’m mad, so I’m going to exaggerate for a fact.

Jake: Yeah. [laughs]

Bill: It’s like you’re doing this in a job that anyone could do. Now not anyone can do it well. So why are people so freaked out that these realtors all of a sudden have to actually negotiate whether or not they’re worth the 3% fee?

Tobias: It seems like a big question.

Bill: Newsflash. Most of you aren’t. Sorry if you’re listening. I’m just telling you. You’re not. But some are. And those people deserve to get paid a lot.

Tobias: But you could also get paid on– We do a 360 view of the inside of a house. We charge this and there’s a markup on that. Like, you just charge per– I think they do that anyway, but–.

Bill: Well, this is what I actually said to my mom. I said, “I think you’re actually a good realtor. I think you’re somebody that’s not going to put somebody into a house that can’t be remodeled.” Because one of the worst things is you buy, like, fundamentally a bad layout and you think you can knock down walls, a realtor says, “Oh, you just bump that wall out. It’s not going to cost anything.” You figure out, “Oh, my God, I can’t actually just do that.” So I said, I think you deserve the fee, but I don’t see why 3% is just this default that everyone has to pay. Like, this is absurd.

Jake: It’s 2X global number.

Bill: Just think of the amount of equity you’re just extracting in fees, and then, oh, well, it’s the seller that has to pay it. Okay, I’m sure it’s not baked into the price. What a stupid comment that is.

Jake: Yeah. [chuckles]

Bill: [gasps] Anyway. So hopefully those fees do come in.

Tobias: Consumer seems to be in pretty good shape. Consumers spending a lot.

Bill: Yeah, I don’t know.

Jake: Just think how much better they’ll be when their sandwiches are cheaper. [laughs]

Tobias: It’s been so long since I’ve had a big sandwich, the footlong. I don’t even know if they [unintelligible [00:18:44] foot anymore.

Bill: I thought you meant a sandwich from Big Sandwich, but actually, truly a big sandwich.

Tobias: The Art of Value says, “Love a big sandwich.” Yeah, that’s what I thought too. Every time I see big sandwich, I think, “Yeah, I should get a big sandwich.”

Jake: Yeah, that sounds good. Let’s do that.

Bill: The– shoot, what was it? United Wholesale Mortgage? That was pitched to me a while ago, and I didn’t buy that. That was a good pitch.

Jake: Do we need to add context to our comments that this is about Elizabeth Warren’s posting or whatever? I don’t know, maybe people outside the US might not know. She’s basically doesn’t want Subway and some other sandwich– [crosstalk]

Tobias: [crosstalk]

Jake: Yeah. Merge because apparently there’s not enough competition between restaurants, even though it’s probably the most competitive industry on planet Earth.

Tobias: If you define it narrowly enough as footlong Subway sandwiches, then there’s only like– How many [crosstalk] there?

Jake: Like 6. There’s 10. I don’t know.

Tobias: Jimmy John’s, Mike’s, they’re that style of sandwich.

Jake: Yeah. Subway, Firehouse Subs. That might be more local in my area. I’m not sure.

Tobias: Any hoagie from anywhere?

Jake: TOGO’S.

Tobias: But if you define the sandwiches a little bit more broadly than just that Subway, that’s a pretty big market.

Jake: Is a taco a sandwich? I don’t know if we ever figured that out either. Now it’s really– [crosstalk]

Tobias: Is hot dog a sandwich?

Jake: Yeah. [chuckles]

Tobias: Asking the real big philosophical questions now.

Jake: Getting into the deep stuff.

Bill: This might upset some mind.

Jake: [laughs]

Bill: I don’t mind the government being a little bit more– I don’t mind US taxpayer resources going to try cases where there’s a legitimate interest that deserves to be heard, but is a loser. I do obviously think that the subcase is a silly use of any type of brain power. But like the Spirit, JetBlue merger, I am all for the government bringing that kind. It may be a losing case, it may look dumb. Now I get it. I fundamentally thought that it made sense to bring it. I still think it makes sense to bring it. I’m not really all that. I think we’ve made enough mistakes.

Tobias: What about Ticketmasters? Go after Ticketmasters.

Jake: Oh.

Bill: Well, yeah. [crosstalk]

Tobias: It just seems to me like there are more obvious ones that people are more upset about. I’ve literally never heard anybody complain about Subway sandwiches.


Tobias: There’s only Subways.

Bill: Yeah.

Tobias: What about [crosstalk] Starbucks? [unintelligible [00:21:30] Starbucks has got a bigger footprint than Subway. Maybe that’s not true. I don’t know. I don’t know how many stores they got. It feels like it’s true.

Bill: Yeah. The Sub thing is stupid. It’s really dumb.

Tobias: I haven’t had a Subway since the late 1990s or something like that.

Bill: Yeah. Well, and also, if you’re from Florida, you know that public Subs are the only subs.

Jake: Ooh.

Tobias: [unintelligible [00:21:50]

Bill: Wawa. Wawa’s hot. If Wawa had Subs immediate entrant to the sub game. They probably do have Subs.

Tobias: Get after big taco.

Bill: Yeah. No, that’s silliness. I don’t know, some of the other ones I kind of get.

Jake: Yeah, I think that’s the real issue is that we’re distracting from actual legitimate cases by this stupid standing.

Bill: She’s just an idiot that put out a tweet. I don’t think that we should give it that much attention here.

Jake: But it’s fine. [chuckles]

Bill: Hopefully, somebody above is like, “All right, we’re not going after the sandwiches.”

Jake: [laughs]

Bill: You’d hope that at some level of decision making, they’re like– [crosstalk]

Jake: Cooler heads prevail.

Bill: Yes.

Tobias: It’s got to be bigger fish to fry like–

Jake: Big fish.

Tobias: Big fish.

Jake: Yeah.


Bill: Here’s a thought. Not a great business, you’re welcome. But we’re on a value podcast, and no one cares about business quality. I kid, I kid, I kid.

Tobias: [laughs]

Jake: Sir, those are joined at the hip.

Bill: Correct.

Jake: [laughs]

Bill: Allegiant could be a beneficiary of this JetBlue and Spirit merger should it get passed and they’re about to have, what is it, the Sunseeker hotel. Come on. That’s interesting. That model is not the worst model in airlines. It could always just play Delta I guess, but they’re going to be more attacked on the margin. I don’t know, these are just the thoughts that go through my head.

Jake: What’s the Sunseeker thing? I never heard of that.

Bill: I’m pretty sure it’s in Orlando. It’s definitely in Florida. Basically, they’re becoming a cruise company without the cruising. They fly to the hotel, and then it’s like an all-inclusive hotel all through allegiant. Low cost. Low-cost model is a pretty good model. It’s worked throughout the world. So, we’ll see.


Forbes 30 Under 30 – Worse Than The Madden Curse

Tobias: You see, there’s a Forbes 30 under 30.

Jake: Are we on there?

Tobias: For anyone out, which– No, I’ve forgotten again. Past that again.

Bill: We, unfortunately, are too old.

Jake: Fake news.

Tobias: I identify as a 29-year-old. 26-year-old.

Jake: Well, who are we to say otherwise?

Tobias: I think that the DOJ and the FBI love it when they come out with those 30 on the 30s. It’s like minority report. It’s like a little glimpse five years into the future.

Jake: Is that right? Who’s going to be with the hands behind their back?

Tobias: That’s it. The strike rate from some of those has been pretty impressive. Like, the one that had SBF, they’ve put.

Jake: Wow.

Tobias: SBF. Yeah.

Jake: It’s like the financial version of the Madden Curse, basically, huh?

Tobias: Yeah, Madden Curse.

Bill: Except you go to jail, you don’t have a bad season.

Jake: [laughs] Fair enough.


SBF Org Chart – A Well Kept Secret

Tobias: Michael Lewis is still out there. He said that this is pretty inflammatory, but he said that the trial of SBF was like a lynching.

Bill: Oh, I don’t think it was like a lynching.

Jake: So I think I watched that interview. He was talking with– Who’s the other biographer of our times?

Bill: Are you going to say this is fake news?

Jake: Huh?

Bill: You’re going to say this is fake news that it wasn’t actually a lynching comment?

Jake: No, but when you hear all these things in context, they’re never–[crosstalk]

Bill: You are going to put context around this. It’s a podcast, Jake. This immediate context.

Jake: Yes.

Bill: Jeez.

Jake: Right.

Bill: You’re defending Michael Lewis. You’re a racist.

Jake: Yeah, exactly. [laughs]

Bill: No, I’m sure he didn’t say it the way that it may have sounded.

Jake: I think he said, you had to be careful about mob rule like that. It’s scary when you’re on the other side of it.

Tobias: Wasn’t he convicted in a court of law with 12 of his peers? Isn’t that how it works? That was a very quick conviction.

Jake: Yeah. It seems right. It seems like he was basically just stealing money out of there, right?

Tobias: Yeah, I don’t think that was a– It was complicated by the fact that there was some technology there, but ultimately, it’s just a fraud.

Jake: Now, one of the interesting things from that interview that he did was apparently there was no chart at all for that company, if you even call it a company. They didn’t even know who to go after because they didn’t know who even worked there.

Bill: Smart.

Tobias: Smart.

Bill: That is smart. Don’t put it on paper.

Jake: Yeah.

Tobias: Got to get them with a Rico or something like that.

Jake: It’s not written down anywhere, so who knows? Like, “Do you even work here?” “No, I never worked here.”

Bill: Yeah, everything’s on. WhatsApp, and Signal encrypted deleted.


Binance CEO CZ Pleads Guilty to Money Laundering Charges

Tobias: They took down CZ from Binance too. That was like a four point something billion dollar fine CZ has to turn himself into, which he’s already done. He’s been charged with a whole lot of criminal charges.

Jake: Does he have the money to pay that?

Tobias: He was able to pay the four. Yeah, he came up with the four. He’s come up with a, whatever, $150 million bail too I think, something like that. It’s a big number. They say that he’s made 20 or something out of it, so the four– But then I don’t know, whatever the charges are there, they’re pretty serious. Do you think that any of those other guys get like– Coin is public.

Bill: They are public, aren’t they?

Jake: Yeah. I always got the sense though, when I looked at that, I did a fairly deep dive on it a couple of years ago now. But I think they always tried to really push hard to stay on the right side of regulatory, including moving a lot slower than the other ones because of that and even trying to– It seem like a little regulatory arbitrage at play to me there, but I don’t know.

Tobias: I think part of the problem for the SBF was that Alameda was doing a lot of the trading on the site. It was creating a lot of the liquidity and creating a lot of the marks too. When all of the trading got turned off, they had some algorithm that was going through and bidding more than– It was just bidding stuff up all the time, and you couldn’t see it until the trading got turned off. And then when it got turned off, you could see the step change in the prices that shouldn’t have been happening.

Jake: Just washing everything.

Bill: Every once in a while, I want to think that the market isn’t crazy. And then I see that Coinbase has a $30.4 billion valuation. It makes one wonder why.

Tobias: Oh, if it’s not crazy, then we’re all out of a job.

Jake: What?

Tobias: If it’s not crazy, then we’re all out of a job. We’re all out of a gig. Rely on the insanity.

Bill: My feed, which has crap estimates, estimates a billion in 2024 cash flow. I’m sure that’s not right. There’s a billion of stock-based comp last year. What, last 12 months. So there’s your cash flow. Cool. [Jake laughs] And then you got $30 billion that you get to pay for. That’ll work.

Jake: But once it gets to scale, then all that money is going to flow.

Bill: What’s the London Stock Exchange trade for? That’s an actual business.

Tobias: It was for sale. It went up–

Bill: It’s like the same multiple. This makes no freaking sense.

Tobias: I think it went for like £4.5 billion. But this is a while ago now, 10 or 15 years, probably.

Bill: Yeah.

Tobias: Who bought that? I just can’t do it. Can’t remember.

Bill: SIBO. I don’t understand what people are doing, man. I just don’t get it. It’s a lot. You’re paying a lot for a little. That’s the answer.

Jake: Well-

Tobias: It’s on the come.

Jake: -time will reveal the right answer.

Bill: Yeah. Well, the answer is there’s no growth in relative I guess from– I’d much rather on LSE or SIBO to Coinbase all day. But I am a guy on a podcast.

Tobias: They’re good businesses, the exchange. They’re a little bit cyclical, but otherwise, they’re probably not going away. I don’t know. Is the American Stock Exchange still there? What did that become? [crosstalk] swallowed.

Bill: It’s probably nicey now.

Jake: What happened to that one that was like the long-term stock exchange? Remember when that was trying to get going a couple of years ago? I think they were doing some delay on the bids, so that you couldn’t do the high frequency trading. There seemed like some intelligence behind that.

Tobias: [crosstalk] Marc Andreessen pushing that. Who was the–?

Bill: Yeah.

Jake: The guy originally founding was, I think, an Asian-American guy. I can’t remember who it was now.

Bill: New York Stock Exchange acquired the American Stock Exchange.

Tobias: I think the listings into the– Does it still exist?

Bill: I’m sure it’s some subsidiary. I don’t know, the routing you might be able to see it on. But I think the problem with the long-term stock exchange, Jake, is it’s not a great business model. You see, you want to encourage trades and the commissions.

Jake: Yeah.

Bill: So that may have been the fundamental flaw in what [crosstalk] great idea.

Jake: Those are rookie numbers, you’re going to need to pump those up.

Tobias: Do get listing fees.

Jake: That’s true.

Tobias: Listing fees probably depend on volume or market cap or something like that.

Bill: What happened over at the long-term stock exchange, Rick Santelli? Well, today, it traded $10 million volume. Next.

Jake: [laughs]

Bill: Awesome.

Jake: Haven’t seen a good rant out of him in a while, have you? I feel like he’s–

Bill: Oh, I think he top tick rates, if I recall correctly. But I don’t watch the network enough.

Tobias: Top tick rates suggesting they were going higher.


Bill: Yeah. I watched David Faber and Malone. Faber is the man. He is a great interviewer, that guy. But Malone had some interesting things to say.

Jake: Oh, yeah? Like what?

Bill: I don’t think they’re particularly bullish on Paramount’s future. I don’t know, they’re very cavalier long-term about fixed wireless. I’m not sure I understand it, but then again, I also do. I think there’s these times in history where the difference between being right and wrong is very thin. And then when you look back at it and you’re like, “Of course, people were right then.”

Jake: Seemed obvious.

Bill: Yeah. Right now is not obvious to me. Probably to other people it is. Not to me.

Jake: Yeah. Although, in the five years of this podcast, have there been that many times where it felt super obvious?

Bill: The melt up. The melt up felt obvious and good.

Jake: Only to you. I don’t feel like Toby and I were on Team Meltup.

Tobias: I was on Team Meltdown.

Bill: I wish I was on Team Exit the Meltup when I was, but whatever.

Tobias: It’s been amazing to watch some of those round trips, just in every–

Jake: Oh, my gosh.


How Peloton Lost Its Cool Factor: A Case Study in Brand Mismanagement

Bill: Yeah. A lot of the things that I think are really interesting. I think Peloton would fundamentally be a good brand today, if the pandemic never happened. But once you go to Disney and you start seeing fat guys in Peloton gear, it’s no longer really a fitness thing anymore, right? It’s just something that everyone can have. I think when it was just a hardcore cycling network of people, there was something like club like about it. And once it got mainstream, it lost a little bit of what made it cool.

Tobias: I feel like it’s just like every other exercise– [crosstalk]

Bill: Yeah, just any other fucking bike, you know?

Tobias: Don’t you think it’s like every other fat– There’s both legs sitting in basements. [crosstalk]

Jake: I don’t think so. Look at Ferrari, for instance. They’ve been able to always undersell the demand in such a way– That discipline has kept them from just being another car.

Bill: Yeah. I think that Peloton could have maybe done something not– Yes, similar to that. If they had gone tried to sell n -1 bikes or n -100 to really err on that side of like– Because something that is consistently interesting to people, at least from what I’ve seen, is cycling classes and people that like cycling, that is a very serious group of people that enjoy that type of workout. I think they’re not the only business that happened to. It’s interesting to look back three years and be like, “Man, that may have been the worst thing that ever–” What was perceived to be the best thing that ever happened to that company was actually the worst.

Jake: Yeah, I think you’re probably right.

Bill: I don’t know. Zoom obviously benefited and kept it. We’re on Zoom right now. Whether or not the stock is a good buy is different, but it accelerated that company. But Peloton, I actually think the pandemic hurts.


Jake: Zoom is no Qurate. [laughs]

Bill: Oh, my beloved Q. That’s another really good one.

Tobias: Has that already run out? Has the timeline run out on that?

Bill: Oh, yeah, that was gone a long time ago on for– [crosstalk]

Tobias: Because I thought you were smart. You’re like two years plus a Christmas shopping session.

Bill: Yeah.

Jake: Yeah. Just long enough to get that extra fire in the warehouse. [laughs]

Tobias: Squeeze that last little bit.

Bill: Yeah, man. What was so interesting about that is for so long, they were investing in that warehouse after– I’m pretty sure it was after the HSN, QVC. I think that warehouse came with HSN. I may have that slightly wrong, but they really drove a lot of efficiency through that warehouse. And then it’s like the core of your logistics catches fire and now all of a sudden, you’re not serving your best customers, and your best customers start to get mad, and then the ones that came in that were performing well leave. I’m like, “Fuck that.” It was a shame. I love that business.

Jake: It’s a hard game, and that’s where all the debt makes you fragile to that type of thing, right?

Tobias: You got veggies today–

Bill: Yes. I reluctantly will admit that.

Tobias: -JT?

Jake: Yeah. I do.

Bill: Shoutout to the homie, David Rawlinson.

Tobias: Keep the string unbroken.

Bill: I don’t know, if he would like me calling him his homie, but he’s a great guy. Great guy.


Unveiling Investment Truths from Antiquity: Lessons from Stonehenge

Jake: All right, veggies. So, as you know, I was in London last week. While I was there, I took the family to see Stonehenge. So that’s what’s in my background here. I actually took this picture, and I have to say I was quite impressed with it. A lot of times, those things underwhelm. But the stones are a lot bigger than you might expect. There’s this feeling that you’re really on hallowed ground. I felt like I was part of some deeper history while I was there. There’s kind of an aura to it. So, a little bit about it.

It was built in several construction stages over 1,500 years and starting in 3000 BC. This is 5,000 years ago, which is absolutely insane. They really are a feat of ancient engineering. But we should probably also note that they weren’t smart enough to know that it was BC at that point. But we had this lovely tour guide, and shoutout to Lucy, and she taught us all kinds of historical facts while we were there. One involved a bit of magic. And so Geoffrey of Monmouth was a Catholic cleric from Wales who lived around 1000 AD. And Stonehenge, at that point, was actually like four-fifths of its known age by then, which is a crazy way to frame it. But Geoffrey is remembered for his– [crosstalk]

Bill: Wait, can you explain that to me?

Jake: 1000 AD-

Tobias: It was 4,000 years.

Bill: -was 1,000 years ago and then you had 4,000 more years before that when Stonehenge was built.

Bill: Ah, okay. I think I do follow.

Jake: Yeah.

Bill: Roger.

Jake: So, this Geoffrey, he’s remembered for his structuring and shaping of the Merlin and Arthur myths. His works created the vast popularity which still continues today. He’s viewed as the major establisher of the Arthurian canon. And so, before that, the stories were basically an oral tradition like Homer’s Iliad. One of Geoffrey’s stories in there was how Merlin moved Stonehenge. The legend goes that Merlin had giants pick up the stones and transport them to their current site on Salisbury Plain, and reassemble them there as a monument to Britons who were killed while fighting invading Saxons. And so, they were effectively like giant tombstones.

The odd thing is that Geoffrey was actually right, not about the giants and the magic, but that the stones were moved from far away. And in fact, they were moved 180 miles from Wales. And relatively, recently, we found out that the site where the stones like we found the actual site where they originated. And so, there’s this kernel of truth in the ancient story of Merlin that had been hiding there all along in plain sight that they had been moved. Taleb’s pointed out before that, “There’s often something smart that emerges from the crucible of history of kind of old wives’ tales.” Like, “Why does it keep getting passed down?” And for instance, it’s bad luck to put your hat on a bed, apparently. That’s not because it’s bad luck, but it’s because that increases the chances of you transmitting lice or bedbugs or whatever if you put your hat on the bed. And then there’s also the Lindy effect, which the longer that something’s been around, the more likely it is to persist.

There must be a reason why it existed for so long that it’s been able to survive volatility and stress for that whole time period. So, it’s probably able to survive future volatility. And this also harkens back to the segment we did on Chesterton’s fence, where like, “Don’t take down a fence that you don’t understand why it’s there to begin with.” There’s actually some math around the Lindy effect, where imagine that there’s an equal probability between something being 1% of its lifespan and then 99% of its lifespan. So, if you think on average there, 50% is the mathematical average, obviously. So, if you know nothing else, then halfway through the lifespan is the logical guess.

So anyway, hearing all these ancient stories got me thinking, “Are there investment truths from antiquity that we might be wise to explore?”

Tobias: Was anything carved on the like, value spread is wide hoping for value spread to close, any– [crosstalk]

Jake: Yeah. Actually, it said like sell and go away.


Jake: Yeah. So, the first one, we’ll talk about is Aesop’s Fables, and specifically his observation that a bird in the hand is worth two in the bush. This gets into appropriate discount rates, risk minimization, the time value of resources, maybe even a little bit of over certainty bias and variance drain if we squint hard enough. I think there’s something to be said about betting on sure things. It’s what Buffett would probably tell us.

Next, we have a verse from the Bible, and this is the Book of Ecclesiastes, Chapter 11, verses 1 and 2. And in this, King Solomon says, “Cast your bread on the surface of the waters, for you will find it after many days. Divide your portion among seven, or even eight, for you do not know what disaster may occur on the earth.” So after all this debate that the three of us have had over the years, we now know what the ideal position sizing is, and it’s apparently [Tobias laughs] seven or eight holdings.

Tobias: [laughs]

Jake: So, I’m glad that we could put that to bed. And then lastly, what we’ll cover is the Talmud Portfolio. The Babylonian Talmud was this book of ancient wisdom, and it was compiled around the year 500 AD. So this 1,500 year old wisdom is like, it’s old portfolio management and asset allocation strategy. I think this is the first time I heard about it was probably from our friend Meb Faber, who’s talked about this before. But the Talmud Portfolio is one-third in business, one-third in land, and then one-third in reserves at hand, you would call it. How would you break that up then, like one-third in business, what do you think that that counts?

Tobias: Yeah- [crosstalk]

Bill: No, I think that would be equity real estate.

Tobias: -one-third real estate, one-third cash.

Bill: Yeah.

Jake: Yeah.

Bill: That’s possibly true. Yeah. I like, what is it, the Markowitz portfolio. The 25-25-25-25?

Tobias: What’s the other 25?

Bill: You got like gold, cash, bonds, equities.

Jake: That’s not far off probably from what this is. Business, you would put private equity in stocks. Land, maybe more called like real assets, I would say like real estate, commodities, probably. I don’t know what else you might stick in there. And then the reserve is probably cash, bonds, gold,-

Tobias and Jake: Crypto.

Jake: Sure. Crypto, of course.

Bill: Got to do crypto.

Tobias: [laughs]

Jake: Yeah. Anytime you can get 12 years’ worth of lending effect for something. Stability of an asset, that’s what you want to go for. Anyway, so there’s a few pieces from antiquity that might be some ancient wisdom. This is what I was thinking about while I was wandering around Stonehenge.

Tobias: Did you have a look at the notch that lines up for the solstice?

Jake: I did. Yeah.

Tobias: There’s one that’s a peak and one that’s [crosstalk] something like that. Is that true?

Jake: Yeah. The other one I think is for the summer and there’s one for the winter supposedly, and they both are captured there.

Tobias: Is it not just–?

Jake: I think they’re different. I don’t remember exactly the specifics of it, but I just remember being impressed that they could figure out on this day that perfectly lines up.

Tobias: Yeah.

Jake: That’s pretty good.

Tobias: How’d they do that?

Jake: And also, I didn’t realize this either, but let’s say like two pillars and then a stone sitting on top of it. Well, on top of those pillars, there’ll be like a knob on top of it that had been carved into it, like a dome. And then on the top piece, it’s hollowed out to match that dome. So, almost like a Lego sits on top of it. So, they’re not just resting on it in a haphazard way. It’s perfectly designed to fit together, and that helps with the stability, which is how you probably needed to do it to keep it from falling over for 5,000 years.

Bill: It’s truly amazing.

Tobias: What if [crosstalk] somebody knocking it over?

Jake: Like by yourself, as a human? No way. [crosstalk]

Bill: Okay. But what about Toby and I after, I don’t know, kettlebells for two straight weeks and a whole bunch of protein?

Jake: Then yes, definitely.

Bill: Okay.

Jake: They weigh like 40 to 50 tons-

Tobias: All right, not going to move that -[crosstalk]

Jake: -each one. You’re not moving that.

Bill: We might need one NFL lineman, Toby and I. But we’d be good.

Jake: If you got a big enough running start.


From Fire to Pencils: The Amazing Technological Achievements of Humans

Bill: Yeah, that would clearly work. No, that’s really interesting. I don’t expect you to say yes, but I think you would like my interview with this guy, Andrew McAfee, and he wrote this book, The Geek Way. It’s about how humans work together and changing group behavior and stuff. One of the examples that he gave– I’m going to mess it up, but he’s basically talking about how we pass things on to each other. But as a civilization, we need to work together. He used the example of fire. If you just had to create fire, like, I think any of us, if we were sent out into the wilderness tomorrow, there might be like 10 of us that could survive. But we don’t really know how to create fire anymore, right?

Jake: Yeah.

Bill: It’s like collectively working together as a group. And you look at something like Stonehenge, how do it work? How did they do it back then? How is it this perfect still? It’s amazing what humans were able to do. The pyramids, whatever. Have we really evolved that much is the question.

Jake: No, not like from a DNA standpoint. We’re not much different than them.

Bill: Even technologically– [crosstalk]

Jake: How they move that so far like hundreds of miles to move these giant stones when you just dragging them along, basically.

Bill: That’s what I’m saying. My wife and I are on Santorini. When the volcano erupted there, it covered this civilization that lived there, and they’ve excavated it. And the technology that they had and the plumbing that they had and the ability to run actual working plumbing through the city– Back then, obviously, they weren’t on Zoom and whatever, but I think technology, it’s amazing. Humans have always been very technologically savvy.

Jake: Interview, did he talk about like I, Pencil. Have you heard of this? So it’s Leonard Read was the one who wrote it. The idea is that literally no one on Earth knows how to, by themselves, make a pencil. All the little pieces, the components, how do you mine the lead? It’s all distributed in our brains across hundreds, thousands of people that have to combine together just to make a simple pencil.

Bill: Yeah, that would be similar, I think, but different.

Jake: But same.

Bill: But the same.

Jake: [laughs]

Bill: I think you’d like that book. I think you’d like that book a lot, actually.

Jake: Sounds like something I’d be into.

Bill: Yeah. A lot of it’s like avoiding hierarchy. He’s a professor at, I think it’s MIT. I guess he noticed a common denominator on how– He doesn’t think tech is the right word because GM has a bunch of tech in it. So, you can’t call GM not a tech company because they do have tech. So, he called this group of companies that does business in a way that eliminates hierarchy, I guess politics, for lack of a better term. He called that the geek way. And that’s why the book’s called The Geek Way. It’s interesting. So that’s that.

Jake: Coming to the Amazon box near me soon.


Small Cap Stocks: A Hunting Ground for Opportunities

Bill: Yeah. The other thing your veggies reminded me of a little bit is like– So Peter Mantis is pitching the idea of these life sciences companies. I think some of the smaller ones, if you can get your head around them, like, some of the higher valuations– There might have been a grain of truth in what people saw. And now that small caps have been decimated– I don’t care what the sector is. I just think there’s probably some opportunity still from this grain of truth turning into misery in people’s accounts and people still don’t want touch this stuff. I’m convinced there’s opportunity in small. Convinced.

Jake: Like cheap pipelines, basically?

Bill: Yeah. I’m sure it’s throughout different industries, but I just think that there’s things that ran up and then got decimated. That’s got to be a good hunting ground in general right now, because they have not reflated all the way. I’m certain of that.

Jake: Yeah.

Tobias: Universe of Smalls is quite big at the moment because it includes a whole lot of mid-caps too.

Jake: [laughs]

Bill: Yeah.

Tobias: Former mid-caps.

Jake: Yeah.

Bill: Yeah.

Jake: Soon to be micro caps. [chuckles]

Tobias: Yeah, it seems to be the trend.

Jake: Unless you’re-

Bill: Right before, it’s not though.

Jake: -mega cap.

Bill: It’s the trend until it’s not the trend. And then you have the 1990s to 2007 scenario where it’s like, “Oh, wow, look at all these things that performed really well.” They were left for dead.

Tobias: If you look at small value versus the expected return in large growth, I think large growth is like half small value at the moment. But that’s where small value has no momentum, large growth has a lot of momentum. So, the momentum is a shorter-term thing. It peters out eventually and then probably the underlying– [crosstalk]


Tesla’s $30 Trillion Market Cap: Is It Really Possible?

Jake: Let me ask you, guys, a philosophical question. I’ve heard the thesis pitched before for Tesla as, why it’s a $30 trillion future market cap company? Because the biggest market cap at any given era has grown at this somewhat geometric looking rate, it’s like 10X whatever it was before. And so, if you go work backwards– That line does hold up to be true. Is there a natural limit to that? Is there an upper bound where you would say like, “Well, no, you can’t go from $3 trillion to $30 trillion on the next round, or do you think there is some truth to that”?

Tobias: I think it’s highly likely that the next one is in that scale. I don’t know how long it takes to get to 30, but certainly. In my lifetime, there’ll be a 30.

Jake: By 2030.

Tobias: Too soon, I would say.

Bill: Yeah, that’s soon.

Tobias: I don’t think it’ll be Tesla. I think it could be Microsoft or Google or something like that.

Jake: At $30 trillion. Wow. OpenAI?

Tobias: Print enough money.

Bill: Yeah.

Jake: Well, that’s fair. That’s part of the equation, for sure.

Tobias: 2030 seems too close.

Jake: But it hasn’t grown at a 3% rate like inflation either.

Tobias: It wasn’t that long ago that $1 trillion was–

Jake: Heard of.

Tobias: When would we go through $1 trillion? What was the first trillion-dollar company?

Jake: Is it Amazon?

Bill: I don’t know.

Jake: Apple?

Tobias: Microsoft.

Bill: My first thought was Microsoft. My second thought was Apple. And I thought self, the second thought is probably right.

Tobias: So, there’s a few now, and Microsoft’s at three.

Bill: Yeah.

Tobias: 10 I guess is the next mark.

Bill: Yeah.

Tobias: 10 to 30, like that could happen–

Jake: But at some point, you have to have the income to justify that valuation. We’re starting to talk about huge percentage of GDP to make that happen.

Bill: That’s the thing. So, with Tesla, you’ve got to truly believe in the royalty per mile driven as an efficient use of capital, I think one. And two, it’s got to be capitalized in a made way. Then you’ve also, I think, got to believe in power generation. I think you probably also have to believe in the idea that these robots are going to hop off of autonomous trucks and fix the trucks, and so they own the delivery. And then I think you also probably have to believe like one or two more other things. I have a hard time believing any of those. Like, we’ll see this. Cybertruck looks as goofy as the Aztec to me.

Jake: [laughs]

Bill: Maybe I’m wrong. I heard Musk say, it’s the most utilitarian car that he could possibly think of. I guess we’ll see. I like the Model S. I think what he’s doing with the Model 3 is really interesting. I think he’s trying to drive down the cost to the point that it is truly a commodity for people to own and that they don’t care, whether or not they rent one or it comes to them autonomously or whatever, and they’re just all fungible. I think it’s an interesting vision.

Jake: When has anyone ever wanted to pay $150,000 for utilitarian?

Bill: Well, but that’s a first adopter. I agree with you. But I think his point would be, “I’ve got to get him out and then I’ll drive the cost down.” I understand, people think he’s a fraud. Forgive me for saying anything positive about him.

Tobias: There’s no way he’s a fraud. The cars are real. The launches are real. All of that is real.

Bill: Yeah.

Tobias: He might be promotional, but no entrepreneur. He’s not going to get to where he is if he’s not promotional. You’ve got to sell that vision.

Bill: That’s right.

Tobias: I want to put your guesses in for the next $30 trillion company. When we hit there, we’ll go back and we’ll revisit and we’ll give the Nostradamus, a shoutout. David—[crosstalk]

Bill: It’s a uranium company. Jokes on you all.

Jake: [laughs]

Tobias: Yeah. That’s Right.

Jake: Whoever lands the gold asteroid.

Tobias: Dimitrios Koutsoumpos says, “TSMC or Intel or Samsung.” Says good bets.

Jake: Wow.

Tobias: “Apple” from Drew Ector. Drew also says, “Saudi Aramco.” There you go. There’s an off the run guess. Yeah. That’s an oil and gas one. That’s probably peak oil, peak margin, peak multiple on peak oil.

Bill: I don’t know, man. $30 trillion is a whole lot of money.

Tobias: Tesla. There was the Tesla guess.


Elon Musk Discusses Impact of Rising Interest Rates on Model 3 Pricing

Bill: I’m pretty sure it’s still the last earnings call on Tesla is worth a listen. I thought it was a fascinating call to listen to. It is just– [crosstalk] .

Tobias: [crosstalk]

Bill: He was talking about how the increase interest rates. Maybe we’ve talked about this, if we have. I’m sorry, I’m repeating myself. But he was talking about how the increase interest rates has offset what he’s been able to do to drive the cost of the Model 3 down. And since people buy a payment, the total cost has not moved, and he was lamenting that a little bit. And then he was talking about like, how hard he thought the Cybertruck would be to develop– Manufacture, not develop. But to actually manufacture. And the whole time I thought, “This dude thinks different,” and I still don’t understand and I don’t need to.

Tobias: The Cybertruck is supposed to be out on the 30th. Cyber Friday? No, Cyber Thursday?

Jake: That’s something we’ve talked about before. I don’t think I’ve ever come to a good answer, but that idea of low rates overclocking the natural exploratory mechanism of capitalism looking for like, “Let’s try new things. Let’s throw spaghetti against the wall.” Theoretically, there’s more money available to throw spaghetti against the wall, and see what sticks, and maybe you explore the boundary at a faster rate, and maybe you find new technologies.

I get where Musk is coming from. I don’t know if the cost though is necessarily worth it. Like, you end up with– Potentially, you destroy a lot of capital along the way. I don’t know exactly how you tell whether that burn rate was worth the– the juice was worth the squeeze.

Bill: Yeah, I think I agree on that.

Jake: But I said a question. I don’t know the answer.

Bill: That’s what I think I agree on.

Jake: [laughs]

Bill: I don’t think I know either. I think I’m exactly in the same spot.

Tobias: What’s the Peter Thiel thing? We were promised flying cars and all we got was [crosstalk] something.

Jake: 140 characters. That was Twitter.

Tobias: [laughs] Twitter. Well, I don’t know– [crosstalk]

Bill: It’s on him as much as anybody, know?

Tobias: He gave us Facebook. Yeah, it is.

Bill: I’m not sure. I think life’s quite nice.

Jake: I agree with him that there’s been an over– Maybe for a while there, there was an overemphasis on information technology as tech, and less so on materials and biology hardware. Like, other things that would have been considered old tech. Like, airplanes used to be super tech at a certain stage.

Bill: Yeah. Well, I think you’re going to see a lot of tech in the body. We’ll see. This CRISPR stuff that got approved in the UK. I don’t know what it is. It’s very provocative. I like it. No, but I’m like rooting for it and there was a good breakthrough I guess that the Washington Post wrote about today. I tweeted it out about—Hopefully, they can figure out a way to mitigate some cancerous effects by reducing some genes that I think the spine lets out. I don’t know exactly what it is, but I’m just saying I’m positive.

Jake: Yeah. Anything to lower medical costs would be a huge win for us.

Bill: yes.

Tobias: Me too. AI, AI, AI for the algorithm.

Jake: [laughs] We’re going to the top of the charts now.

Tobias: All right, dudes. That was fun.

Bill: Indeed.

Jake: Good session.

Bill: Had a good one.

Jake: Billy, we got to have you back on before the end of the year, so that we can go through–

Bill: Shoutout to the 10– [crosstalk]

Jake: -go through all our predictions and see how bad we were.

Bill: No, I am going to pretend that I didn’t do any predictions [jake laughs] and then we’ll make other predictions.

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