When is the AI bubble going to burst?
How do you AI proof your job? How should colleges handle AI and prepare students for a shifting job market? I'm Henry Blodgett, and on my show Solutions, I've been exploring all of those questions and more with experts who have actual answers. We hear enough about our problems.
Let's solve them. Follow Solutions with Henry Blodgett. Today's number?
“Four. That's how many car accidents Tiger Woods has now been involved in.”
After he rolled his car over in Jupiter Island, Florida last week. Today's other number is 20. That's how many dollars it would cost you Tiger if you simply ordered an Uber. Welcome to Proftry Markets, I'm Ed Nelson. It is March 31st. Let's check in on yesterday's market vitals.
The Nasdaq fell as a tech sell-off deepened. The index is firmly in correction territory, heading into its final day of the quarter down 13% from its October peak. Meanwhile, the S&P also declined, and the Dow was flat. Treasury yields dropped after Jerome Powell indicated the Federal Reserve
will look past the oil shock and keep rates steady. His comments came as Brent Crew prices rose to more than $116 per barrel. Okay, what else is happening?
Some of the most powerful people in tech are now formally advising the White House.
President Trump has named 13 industry leaders to the President's council of advisers on science and technology, also known as P.Cost, appointees include Mark and Dresden, Johnson Huang, Mark Zuckerberg, and Larry Ellison. Their mandate is to advise the White House on science and tech policy. Their goal is to ensure that, quote, all Americans thrive in the golden age of innovation.
Co-chairing that council is David Sacks, whose time as AI and crypto zah has come to an end. And also, Michael Cratzio's director of the White House office of science and technology policy joining us to discuss this council and what it means for AI policy. We're speaking with Liz Hoffman, Semifore Business and Finance editor and host of Compound Interest.
Liz, welcome back. So I want to get right into this. This has these councils have existed for a long time.
FDR had his first one in 1933.
Historically, it seems like they've usually been academics, but this time it's really industry leaders. It's the people who are actually building this technology. People like Zuckerberg, Johnson Huang, Mark and Dresden, etc.
“What do you make of this council and is it surprising in any way to you?”
First, I think there is a missed opportunity and not getting me acronym to be podcast. I don't think you'd have to try it at heart, presidential order, directoring, council, whatever, because that is the crew here. No, I think you're right, and that's extremely intentional. David Sacks was talking about this and said, I think, quote, "these are duers."
You can, you know, fill out everything you feel about the politics here. But you know, one complaint that was really widely felt in the private sector about the Biden administration was less the sort of policies they were pursuing than the personnel pursuing them and the sort of access that private sector people had. Like say what you want, even the Trump's first term, he would say something that, you know,
the private sector didn't like. But they would call up Steve Manucci and they would call up Gary Cone and there would be this back and forth, and that totally went away during the Biden administration in the sense
that people were making decisions who would never run a PNL who would never run a balance sheet,
never really under-written risk for, you know, for a living. That has obviously come back. So that I think is the most charitable and sort of least politicized view of all of this and like seems fine to me. AI is really important. It's really important economically. It's really important for national security.
“And I think, you know, we'll all remember that Senate hearing, you know,”
we're a bunch of the big tech executives who are being questioned by senators who clearly just had no idea how they made money. I mean, that knowledge gap between people doing the regulating and writing the laws and the industries that regulating has been pernicious before. And so, you know, that's one way to look at it. The other is this is just another sort of quarter of power that is cropping up and that there are a lot of asks from the industry,
and they now have a more direct line to people who can give them what they want. Wouldn't the conflict of interest here, though, to play devil's advocate? Wouldn't it be that the people who are supposedly going to regulate this technology are also the people who are most heavily invested in this technology? They're the ones who are incentivized to profit from this technology. I mean, it would be one
Thing if you had a council of people whom with whom technology leaders could ...
who had some background at technology, but it's literally Jensen Huang. It's literally
Mark Andreason. It's literally the people who are most invested who want to profit off of this thing is that not a conflict? It's absolutely a conflict, but I mean, that the administration is full of them.
“I think, you know, and it's a slightly less pernicious one than like people's kids making a”
lot of money on crypto deals and Trump selling half of his family business to the Middle East. I mean, you don't have to look far and wide for, you know, things that are genuinely problematic. I'm not that bothered by this one because I guess what's the alternative, right? That again, you have this being regulated by people who have no idea what it is. I would also say that there is a surprising and slightly comforting range of ideas and viewpoints
within the AI community about actually how best to regulate this. I would be more concerned if everyone was just full steam ahead, but there are real, you know, Anthropic has put out a different version of how this technology ought to be used and regulated. There are states that sort of have their own point of view. I don't know, but I don't think that the alternative is a whole lot better where you have got a bunch of like oxygenary incentives trying to oversee this.
I would also say, and look, David Sachs has been a real lightning rod. He's the
“presidential advisor of sort of cheering a lot of his stuff. I think it's hard to argue that he is”
richer now being in the White House than he would be using Silicon Valley, like actually investing in this stuff. So I don't know. Yes, it has got to be worried about it, but as the knowledge gap between the people regulating huge sections of the economy and the people in them gets wider, I'm not really sure there is a better option than to bring people to the table. By the way, the one people, one group of people not in this are the big AI models themselves. You wonder whether
there isn't, this isn't going to end up being some kind of, you know, origin story where like Elon Musk turned to the right, a lot of it kind of goes back to his snub from the Biden EV council. I don't know. I was surprised to see that that group, Simaltman, those folks, not included here. Right, Elon Musk wasn't in it. I guess he had his fallout with the president. That went a little less surprising. Yeah, you would expect to see Sam or Dario or other folks
who were running these models. Right, but I guess I just want to post back for a moment, because I mean, with David Sax as the example, it seems as though his policy, his approach to AI regulation has been, let's not really regulate AI. Let's make it kind of a free fall. And at the same time, he was still invested through his investment firm Crawf Ventures in a lot of companies that were building in the AI space. And it does seem that that is kind of the risk here. I agree with you
having a bunch of oxygenary incentives who don't really know what they're talking about on this
council advising on things that they've literally never built products and seems like a bad idea.
But it also seems like a little bit of a bad idea to have the individuals who are most in incentivized to build policy, not that necessarily protects Americans, but that allows them to profit as much as possible. And it just makes me think, can we not find some sort of happy medium, can we not find some people who aren't balancing their other job as a VC and Silicon Valley and being a special employee for the government? People who could actually do the job of
regulating, but who also have some fluency in the language of business. I don't know if someone like you, I can come and talk to people in there who know what that know what this is about, but who also aren't going to be totally incentivized to simply get as little regulations possible to profit as much as possible. I was not invited nor was I calling Rita Forgotty who actually knows a lot about the stuff. Sure, obviously yes. There's like a million AI safety groups and
like having them included would be the normal thing to do. Like that's not generally how this administration operates. So they don't have a lot of respect for precedence and how we've kind of
consistently done things. Yes, I agree. But you know, I do think that there's always been this gap
between regulators and the people they're regulating. But like for example, the federal energy regulatory commission, for regulatory utilities. There's the sort of price of having people who understand the industry in the regulatory seat is kind of allowing that revolving door over time,
“right, letting people come in and come out and get paid in the private sector. That's how you get”
them there in the first place. This one, they don't need that. These guys are so wealthy and there's not a lot of incentive to bring them in to a true regulatory role. And so I really do worry that this is the big that knowledge gap is just going to be incredibly wide here for a technology that is very powerful and developing really quickly. I guess the thing that would make me maybe a little
Bit more comfortable is that this is an advisory council.
but they're going to have some sort of advisory role and maybe they'll shape things in some capacity. I guess the question then becomes, how significant are these councils really? Do they really influence policy in a way that is meaningful? You'd be hard pressed to find one during the Biden administration and probably in certainly Trump one. When you remember by the way, like no CEOs really wanted to be kind of anywhere near that administration from advisory perspective,
you know, they tend to crop up kind of around national emergencies and go back to O.A. then there was obviously a lot of private sector input into how that that problem would be solved.
“Or honestly even the pandemic right, Warp Speed had a advisory council with a bunch of pharmacy”
Eos and it was a huge win and I often say like it's weird Warp Speed was one of the the biggest wins from Trump's first administration that he completely walked away from, right? It totally worked.
It was in fact very popular, but he never took any credit for it because of the politics had
shifted around it. So we'll see I think there's a balance to be struck between sort of being regulators being an opposition to the industry they regulate while trying to sort of tap their expertise or at least have some open lines of communication. Ivan Goften is helpful. This one seems fairly lapsided in that respect, but there's just you know, he's saying AI is different. This time is different. This technology does fundamentally feel different
to me and so I think that having private sector involved is probably helpful and understanding it not all of them won't necessarily exactly the same thing. They are competing with each other very aggressively, which is not where I like to put my eggs, but could be a little bit of a check on this sort of one way push. All right, Liz Hoffman, 74 Business and Finance editor and also host
of compound interest. Liz, thank you always appreciate your time. Always found Ed.
After the break, SpaceX is filing for liftoff. If you're enjoying the show, please follow our new Profty Market's YouTube channel, starting next week, that is where you will find all of our content on YouTube. Support for the show comes from in Cognay. If you knew that identity thieves were sniffing around and digging through your garbage to get your private information then you probably wouldn't keep leaving your bins out at night. Same goes for your online privacy. If you knew bad actors were
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It's going to be fun. We rarely agree. But we almost never disagree and we're always learning.
That's true. You can subscribe to the curiosity shop on YouTube or follow in your favorite podcast app to automatically receive new episodes every Thursday. This week on Network and Chill, it's my birthday and I'm turning 32. So I'm sharing 32 life lessons. I've learned that have actually changed my perspective. These aren't the picture perfect Instagram, infographic versions. These are the real hard, uncomfortable truths about money,
career, relationships, and everything in between. I'll explain why choosing a rest day is
“non-negotiable or your body will choose it for you. Why you should never take advice from anyone.”
You don't want to be. And why nobody is actually looking at you. So you should just go for it. Plus, I'm breaking down why you should always negotiate your salary. Why individualism is making you broke. And yes, why you should try eating a popsicle in the shower after a bad day. Listen, wherever you get your podcasts or watch on youtube.com/yourrichbf. We're back with Proftry Markets. SpaceX is preparing for its biggest launch yet.
According to the information, the company aims to file its IPO prospectus imminently. It's reportedly targeting a valuation of $1.75 trillion and hopes to raise $75 billion in the offering.
That would make it the largest IPO in history.
which had already absorbed the social media platform X, which begs the question, will Tesla be the next Musk property to join the SpaceX conglomerate. Lots of questions here. Here to help us break it down. We are joined by John McNeill, CEO of DVX Ventures, former Tesla President, GM board member and author of the new book, The Algorithm. John, good to see you. I'm going to get right into this here.
You just published a book called The Algorithm. It's basically about how Elon built
both Tesla and SpaceX. And now SpaceX could be going public. It could be the largest IPO in history. As someone who has worked with Elon and as someone who's written about this company, what do you make of this company now going public? The basis of the approach in the algorithm
“is simplicity. And that's Elon's organizing principle is simplicity. So I think there might be”
three reasons why Tesla may become a part of SpaceX and these entities might combine. I don't have any insight now, but these three reasons are pretty significant. So the first is it's easier to run one public company than two. And so that's that's simplicity. I argue at number one. But I think beneath that, it solves a couple of problems. Tesla is essentially becoming an autonomy company in terms of humanoid robots and car robots. And so both of those things rely on AI as their operating
system. And so Tesla, as you know, invested two billion dollars into X earlier this year,
but combining the entities of Tesla SpaceX and X into one entity would put the AI resources closer to the application at Tesla. So I think that's the second reason. And the third reason is you know, there's been a lot of talk about Elon's frustration with his, his portion of the cap table at Tesla. He wants more. And this would seemingly help to solve that problem of combining Tesla in given his significant SpaceX ownership. He would sort of solve the problem of who the
“majority shareholder is at Tesla in one one move. So I think those three things probably point to”
this being a higher than 50% chance of happening. You took lift public. You were the kind of the company C-O-O. So you were there for an IPO. I mean, just as an observer here, if you're trying to combine SpaceX with Tesla, is it not going to be a lot harder if SpaceX is its own public company? It has all of its new regulations. You've got all these retail investors in the mix at that point. Why wouldn't they just combine the two things now? Why take it public first and will that not
make things more complicated down the road? You're right. It makes it more complicated to do it post the SpaceX IPO. Not impossible, but more complicated. You invite in, I think, an extra layer of regulators. Whereas you have one company to look at now versus two then. So I think I think it is easier now to do, but I'm not sure they want to slow this down because Elon's got this line in the sand where he wants this done by his birthday. Just on the evaluation here, 1.75 trillion dollars, that would
make it the 7th most valuable company in the world that would make it more valuable than Meta. It would also make it more valuable than Tesla, which is quite striking. I'd love to get your reactions to this valuation target that they're shooting for, 1.75 trillion dollars. Does that make sense to you? If you break it down first and say, let's add up the pieces. You've got the SpaceX business, which has got 90% market share in launch and call it 99% market share in satellite internet.
So two kind of monopoly positions in that business. And then you've got XAI, which is competing in the world of the trillion dollar valuations of open AI and then maybe three quarters of a trillion for
“anthropic. So putting those two pieces together, you've got to depend, I think, a lot on retail”
investors to look past any fundamental financial metrics on what would justify that valuation, which I think is why they're preserving a third of the IPO for retail. I think they need that retail demand, not only for the valuation, but to your early point, this is going to be the largest
capital race in history with 75 billion dollars. So they're going to need everybody from institutions
to retail investors coming to the table to fill in that book. That's a big, big order book. It seems to me that Elon is clearly a master of a lot of things, but this is kind of a criticism
Here in coming.
which is exactly what is happening with SpaceX here. I mean, you look at the fundamentals of
“fact that they've, I think they did around $15 billion in revenue. They want to 1.75 trillion”
valuation. I wish what you say yes, because this is entirely different business. This is space. This is going to change the world. And then when we start to talk about the idea of merging SpaceX with Tesla, to me it starts to sound like we're doing a lot of fundamentals laundering of some kind to basically make us forget about the fact that Tesla sales are not that great right now. And make us start looking to the future and get all excited about all these things such that we all
down to pay extraordinary multiples for these for these shares. Would you not say that that is perhaps what is happening here and does that not make you, I don't know, a little bit uncomfortable,
maybe. I would say I've never met somebody as good at their promote is Elon. He is incredible.
And to your point, like Tesla is a declining car business with declining margins, margins have fallen by half in the last two years. And yet it's worth twice as much as all other car companies combined. And so he has got an ability to get people to defy
“financial logic around these valuations. And I think, you know, there are plenty of people”
to last a lot of money saying, I mean, they're short or I'm not participating in Tesla. And I've learned not to bet against the guy, but he is unique in his ability to to get people to look that past financial metrics and financial fundamentals. What do you think this means for the
automobile industry? Obviously, that's really your expertise here. If Tesla were to merge with
SpaceX, I mean, if we're really combining those two things, does that have any downstream implications for the other players for, say, GM? I can't see any in the sense that we're all kind of racing towards the same existential issue, which is autonomous cars and factory automation to compete with the Chinese. Those are the two issues that ought to be on every car manufacturer's mind. And I don't think it changes that dynamic at all. And those are clearly the two things that
Elon's got Tesla pointed at us as well. All right, John McNeill, CEO of DVX Ventures, author of the new book, the algorithm. I got a copy. I don't have a with me, but I have it at my apartment. I appreciate you sending it to me, John. Really appreciate your time. Great to talk to you. Before we end, a quick update on the Iran war. As of this week, we have officially been at war for more than a month. This is week five of the conflict. And just as a reminder, we are now officially
over the amount of time Trump said this war would last. On day two, Trump told us this would take quote four weeks or less. He then separately told the New York Times that it would take four to five weeks. Pete Heggseth also followed up and said quote, this is not Iraq. This is not endless. Well, here we are in week five. We are now breaching the original estimations of the duration of this war. Very similar to what happened with Iraq. And there is still no indication that we are
anywhere close to ending this. In fact, yesterday we learned that our military presence in the region had grown by roughly ten thousand troops. We also learned that Houti rebels and Yemen are now joining in on this war. Iran is also now making threats to attack American university campuses in the Middle East. And Trump is threatening to quote completely obliterate target island while the Pentagon makes arrangements for even more ground operations. In sum,
this war is far from over. Which also means we must now brace for even more economic impact. Here is just a quick update on how prices have risen since we invaded Iran. We'll start with oil. The price of which has now risen nearly 60% as a result. Gas prices in the U.S. are now up more than 30% and over in Europe, that number is now 75%. We also discussed how this affects the price of fertilizer. A couple of weeks ago, I imagine how fertilizer prices had risen roughly 25%
“will now, that number is almost 50%. Fertilizer is of course essential for growing food,”
which means that grocery prices will also be affected. But many other goods will be affected too. Things like construction materials and therefore housing costs also consumer packaging, home electronics, and many, many more. And as a result, inflation expectations are now rising even
Higher.
full percentage point higher than what they had previously estimated in December. Let's also check
“in on how this war has affected the markets. Since we invaded, the S&P has fallen roughly 7%.”
The Dow has also fallen roughly 7% shout out to Pam Bondi who literally called the top in her Senate hearing. European stocks are down 8% Japanese stocks are down 12% in fact, global stocks as a whole have lost roughly 9% of their value since the start of the war. That is more than 10 trillion dollars in market value, which has evaporated over the course of a month. As for the
direct cost to the government, the bill has now risen to more than 25 billion dollars. That is money
“coming directly out of the federal budget. It's also enough money to cover health insurance for”
2.7 million Americans. That was a lot of numbers, I know. But the reason I'm highlighting these numbers is because we are now getting to a point in this war where we are actually starting to lose track of them. The longer this goes on, the more we forget just how expensive this is,
not just in terms of dollars, but also in terms of lives. I can also give you the death toll.
We are up to more than 4.5,000. So it's now getting to that stage where we start to view this
“not as a tragedy, but as a statistic. We are becoming desensitized to the destruction that is”
happening in Iran, which is why we have to keep track of it. We have to remind ourselves where we were a week ago or where we were a month ago. And we need to reflect on what our expectations were at that point in time. We need to consider what used to sound like a big number. And then compare it to the numbers that we are seeing today, which have of course gotten even bigger. And only then will these numbers actually have any meaning. Only then will we appreciate just how
detrimental this war really is. And hopefully, hopefully, once we do that, we will start to have a more appropriate response to all of this. We might react to these headlines with an appropriate level of outrage. As opposed to doing what we did with Iraq, we're no one really understood what was happening. So they just reacted passively and with a sense of general confusion. Hopefully, that won't happen this time. Hopefully, we'll actually do something about it. But that isn't going
to happen if we don't keep track. We have to continue to know the numbers. And more importantly, we have to make sure we all understand what those numbers actually mean. Okay, that's it for today. This episode was produced by Clim Miller and Alison Weiss, edited by Joel Pattson, and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is down to the lawn, Isabella Kinsel, Kristen O'Donuch,
and Mia Salvario, and our social producer is Jake McPherson. Thank you for listening to property markets. From property media, if you like what you heard, give us a follow. I'm Ed Elson. I will see you tomorrow.
