Chapter 1: How is AI changing the landscape of middle management?
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Today's number, $42 million. That's how much the Met Gala raised for the Costume Institute last week, a new record. Ed, this is a true story. As you know, I was invited to the Met Gala and declined, but I was working on my costume and it came down to three finalists. The first was, I was going to go in my underpants as a premature ejaculator and just say, I came in my underwear. Or two. Two.
I forget what the second one was.
Fuck.
Oh, God, Claire, help me out. What I don't understand, I don't understand why you don't pick one. Like, you should pick one joke and commit. OK, Mr. fucking Easter parade life of the party. What a funny guy said no one ever at Elson. Yeah. Yeah. You might be tall. You might be handsome. You might be inordinately rich because you lucked out at a young age.
But no, you're not known as that that hoot and holler and Ed Elson. Yeah, no, I'm sorry, Ed. I never claimed that. I own the humor part of this. Who won most comical in the ninth grade, Ed? Was it Ed Elson? No, I don't think so. Who won Steve Martin in high school? That's right, Steve Martin.
I have to give you some news. My senior superlative in high school was Klaus Klan. Gotta drive back. I'm not the hooter and hollerer. Are you serious? Yeah, I'm serious.
I'm literally speechless. In your senior class, you were a class clown?
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Chapter 2: What are the implications of the pied-à-terre tax in NYC?
You ground me down. Something happened.
I mean, okay, for me, it's divorce, bankruptcy, loss of my mother. The joy has been driven from my soul. What is your excuse? Yeah, no, I don't have an excuse. You were really most comical your senior year in high school? Yeah, close clown. I don't know if it means most comical, but that's what I got. Wow. How was your Germany trip? It's amazing. Every year, I go to Hamburg.
I speak at Online Marketing Rockstars. It couldn't be nicer. People are great. Again, see above beer and sausage. People are fun. They're so literal. You have to show ID to get into your hotel. And I got picked up in some, all these crazy German cars and people are friendly and beer. And did I mention the beer? Oh God, I just love it there.
And I go running around the lake, wherever it is in Hamburg, they have this lake. And I thought I was such a fucking baller. Running seven miles, and then someone reminded me it's the Little Lake and it's three miles. I thought I was running seven miles in record time. So that's the only downside.
Three miles is still pretty good. I hate running. It is so boring.
There is a high you get from running, though.
Yeah, I know. You clearly need to just keep on doing it and then achieve that high, and then you're good. I've never experienced it. I try to like it, and I just can't do it.
How tall are you, Ed? 6'3". You're 6'3", and how much do you weigh? 185. Almost exactly the same height and weight.
That's good, that's good. The dog's in shape, so I'm happy to hear that. Yeah, and what do you do?
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Chapter 3: How do luxury second home taxes affect the real estate market?
I have the same problem as you. When I see you with your shirt off, it's kind of a little pasty, a little soft. You kind of look like the Princeton version of that alien from Close Encounters of the Third Kind. Most comical in high school. That was good. Should we get to the news? I can't do any better than that.
Let's do it. That's pretty good. We'll start, by the way, I just note that we are three weeks out from the Prof G Markets Tour, which is kicking off with a sold-out show in San Francisco on May 27th. But we have tickets still available in L.A., Miami, Chicago, and we are finishing things off in New York City with special guest... Anthony Scaramucci, the mooch, the man, the myth, the legend.
So if you want to come see him and see Scott and see me, go visit propertymarketstour.com to get your tickets. Now, I personally can't wait more guests to come, but the mooch, I mean, no better guest for New York. That is ideal.
Yeah. So we're working on a really great guest in Los Angeles that rhymes with but I don't want to tease it until it's confirmed. And also, by the time this show airs, New York will be sold out. I think New York only had, we have like a 1,200-seat auditorium there, and I think there were like 40 tickets left. So, folks, we will sell out, so please buy your tickets now.
And it's really shaping up nicely. We've got some really good, some good and controversial guests. I'm super excited. It's going to be very fun. Let's get into our stories. We've got a lot to talk about.
you'll have plenty of the wherewithal.
The conversation around AI and jobs is evolving. It's no longer just about AI replacing individual workers. More companies are starting to suggest that it could eliminate layers of management as well. Coinbase CEO Brian Armstrong announced plans to cut roughly 14% of staff last week, citing both market volatility and the speed at which AI is reshaping the business.
PayPal made a similar move, saying it plans to reduce its workforce by 20% over the next two to three years because of AI. And perhaps the clearest expression of this new thinking came from Jack Dorsey, who said, quote, "'Most companies using AI today are giving everyone a co-pilot, which makes the existing structure work slightly better without changing it.
We're after something different, a company built as an intelligence with no need for a permanent middle management layer.'" So, Scott, there's kind of a lot to this story here. Obviously, we've got the layoffs. Coinbase laying off 14% of the staff. That's 700 employees. PayPal saying they're going to lay off a fifth. We've had other announcements of layoffs. Freshworks laid off 11% of the staff.
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Chapter 4: What trends are emerging in the alcohol industry?
economy, which is that AI isn't just going to replace workers, but it's going to replace managers. That is what Brian Armstrong said in his letter, which we can get into, to employees. He wants to cut out middle management, and that is exactly what Jack Dorsey has described too. Let's just listen to a short clip of Jack Dorsey explaining this, and then let's get your reactions.
One measurement of how far along we are would be the depth from me to any other individual in the company. And I would say our max depth right now is probably five folks between me and anyone in the company. I would want to get that down to two to three this year. And in the most ideal case, there is no way everyone in the company reports to me.
That is the vision with AI. No layers, no middle management. Everything just goes directly to the CEO, assisted and enabled by AI. Scott, what do you make of this trend? Do you think it's going to happen?
Well, keep in mind, Jack Dorsey is the person that put out the following tweet. Bitcoin will save humanity. That's an actual tweet and he believes it. He believed it. Look, we always have these fever dreams of flattening the organization and AI will flatten organizations is in my view, executives speak for, we think we can fire the people who remember why this place works.
Everyone on a regular basis romanticizes deleting middle management until they realize middle management was mostly absorbing the chaos from their fucking incompetent leadership. The only way an organization scales is if you have reporting relationships and metrics and cultural norms that are enforced by people with some maturity and seasoning. And I hate to tie this, folks, this is management.
As a company grows and there's more and more layers, is it a healthy thing to take out people? In the 1980s, this started in the 1980s with a book called Re-Engineering. And basically these guys wrote a book saying, America because of its monopoly power in manufacturing had grown just fat and happy and never went through the calling of the organization.
And what they did was basically every Fortune 500 company laid off anyone with a VP in their title. And they found out that they really didn't miss them and they juiced their earnings. My father basically got re-engineered out of work by the time he was 53 and kind of never recovered.
And that created additional strain on our relationship, and he never really found the confidence to apologize for abandoning me. But anyways, most comical in high school. Dealing with the pain, Ed. Dealing with the pain. I couldn't cry, so I made others laugh. But anyways. Exactly. There's always a fever dream of flattening the organization.
Now, there's something to the notion that everyone does their work. So let me just use... Prof G, I do work, you do work. Even the person who's considered, who manages the company, Catherine Dillon, she does a lot of actual work and it makes her a better manager. I'm all for the player coach.
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Chapter 5: How are GLP-1 drugs influencing consumer behavior?
And I find that thoughtful feedback, and I've gotten better at this since I got older. When someone does something especially strong or whether I think they need to improve, I go memo to the file. And then in the review, we talk about it. Young people, not even young people, everyone really appreciates feedback.
And the idea that when we review you and Claire and bring you in and just have the AI review you and then decide your bonus, what horseshit? I mean, the funniest thing about this is this is billionaires describing this as empowerment while simultaneously installing surveillance software and demanding 24 by seven output from the three remaining employees.
A lot of companies going through this, my prediction, are about to discover that institutional memory was not inefficiency, it was the fucking company. So the connective tissue oftentimes is management. Does that mean there aren't cases of where it becomes fat, inefficient, and the management becomes to actually add negative value? Yes.
In my opinion, the greatest example of this, hands down, is academia. What you have in academia is tenured faculty become unproductive about the time they get tenure and you can't fire them. Universities actually have to put millions of dollars aside in an escrow account because they acknowledge this person's about to become very unproductive.
The problem is because we have been able to really effectively sequester supply or artificially constrained supply, we've been able to raise tuition faster than inflation and universities have become so fat. MIT has 16 people working at MIT for every one who actually teaches.
But in the private sector, I mean, there's a bit of a healthy cycle around going through and trying to flatten the organization, make sure everyone's doing their job, there's more transparency, there's less bureaucracy, there's more speed or reducing time to market. I get it. But somehow the notion that AI, you're gonna work for an AI and then it's gonna reduce the management
or leadership or guidance or mentoring or giving people their compensation or solving problems in HR. So anyways, my point is, this is yet again, another example of these guys who over-hired who are looking for a way to juice their valuation and thinking big thoughts about AI. Can AI supplement management?
I'm sure it can, but I actually think this is one place where AI is absolutely not going to live up to the hype.
So that's a really interesting point, and I agree. And, you know, we should... recognize that the stock market hit another record high last week. And the reason that it hit another record high is because of AI. It's because of these chip stocks, which are absolutely ripping right now. AMD, Samsung, Intel, Micron, Seagate, SanDisk, which, as we've discussed, is up 4,000% in the past year.
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Chapter 6: What is the connection between alcohol sales and health trends?
Sam Altman is very obsessed with the idea of a one-person billion-dollar company. Can one person operate a billion-dollar startup? Is that possible? And the idea is that you'll have one person managing the agents who will do everything for you. The AI is going to completely transform the business. You're saying that's probably not going to happen. And I think I agree with you.
The idea of you walk into your performance review, which is a big part of what it means to be in an organization and be at a company, and an AI shows up and evaluates you on all these different metrics, and you disagree with the AI for various reasons, and you try to prompt it, and either it vociferously agrees with you because it's just a sycophantic technology, or it doesn't make any sense, or it has the wrong data, et cetera, that to me is just never gonna happen.
But it seems to be increasingly the basis on which this entire stock market is kind of rallying behind. And I'm just not sure it's going to work. I can get behind the idea of AI doing menial tasks. But the idea of managing people, the idea that an AI would be the core of a business and the humans are around it, which is becoming very popular, I'm just not sure about it.
And I wonder if it does mean that we're seeing too much hype here.
My last year, before I sold the company at L2, I took someone into a conference room and I said, it's obvious to me you have a substance problem. What's going on? And within 10 minutes, I found out this person had tried to take their life twice in the last three months. You're supposed to go to fucking Claude for that? I mean, and AI takes you to the average of everything that's been out there.
You think Claude's gonna come up with breakthrough products that are just so fucking crazy they end up being crazy genius? We're mammals. And the other thing this indicates is that these guys are so nihilist and so void of any real fucking emotion. I get the notion of wanting to be more profitable with fewer people. I'm in a services company. We're in a services company.
The expenses go home in the elevator every night or whatever. go home to Brooklyn Park or leave their basement, whatever it is you guys do. I have no idea. I heard we have an office in Brooklyn. I'm never coming. Anyways, I heard there's a cardboard cutout of me there, which makes me happy. We go to the cutout for our reviews. Anyways, I get it.
We're about to launch our eighth podcast and I've challenged the team, we're not gonna have any incremental hires. Use AI and technology to figure out how we all become more productive and launch another podcast. Fine, I get it. But the notion, the fever dream of no one managing you in one person teams, when I was in Hamburg, as is always the case,
When I'm alone, I got upgraded to this beautiful room with a deck and it was a spectacular sunset. I'm overlooking the lake and it's as if it didn't happen because no one is with me to share it. It just doesn't matter. There's nothing. And the idea that you're gonna find purpose and motivation and work without sharing it with the team,
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Chapter 7: How does the market respond to shifts in consumer preferences?
You achieve things together. Maybe you raise kids that aren't horrible together. You build a business. The most rewarding businesses I've had, hands down, I have a core set of like technically co-founders and we build something together. So the idea, their fever dream of like, I want...
They all want a singularity where one of them controls everything and gets 100% of all revenue and all profits by distilling all economic value to no human but them. They're the one. And there is a certain nihilism in it all. And that is, there is something to be said of, and there's a balance here. In my companies, I'm doing some virtue signaling right now, I've always said,
There should be two or three people. I've always had small companies, right? They started zero. Once we have someone in HR or CFO, I either step down from the CEO role, become the chairman, because I don't have those skills to scale a company, and I don't want to deal with that stuff.
But until then, I've always said, we should have two or three people that are one or two bad decisions away from living in their car. They're not, you know, they have bad judgment. They do stupid shit all the time. They're not what I'd call, there's no way they're leaving us for Google. Let me put it that way. A little bit down on their luck maybe. And guess what?
The business can be a great means of a little bit of social good. And also the notion, this is basically the notion that part of an organization, if you think of stakeholders, And I didn't get this. I always thought my goal was to pay people less than market and figure out other tricks of the trade to get them to stay and retain them.
And then what you realize as you get older is that what is more rewarding is to build a profitable company and slightly overpay people. And if there's some fat in the organization, and if there's a few people who quite frankly, you know, not gonna get a job anywhere else, but work, you know, work hard are good people and maybe they're not, you know, amazing. Okay, that's okay too.
And in some countries, the objective of a lot of the owners is to increase employment. Now you have to balance that with making sure the organization can survive and has profitability. But this is, again, this singular messiah complex that is nothing. There's only one stakeholder and it's shareholders. And I can figure out technology to replace people and we can all work singularly.
And then eventually the AI will take out those singular teams and replace them. And then there will just be one. It'll be Jack Dorsey and Elon Musk. who each own 49% of the world and do a lot of ketamine. And if they're good enough, they will provide UBI for all of us such that we don't rise up and kill them. I'm not a fan, Ed. I'm not a fan of this whole line of thinking.
I think it's bullshit, and I think it's unhealthy, and I think it's nihilistic.
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Chapter 8: What predictions are made for the future of consumer spending?
Like it's just a depressing, it goes back to that crazy quote that we saw from Sam Altman, where he said that AI consumes less energy than human beings and children. It's like, you've got the entire system wrong. You don't understand what the point of any of this is. And to go back to your point about like, we're heading towards a place where Elon Musk owns half of world GDP.
I mean, I would just point out John D. Rockefeller was the richest American in history. Everyone agrees that he's supposed to be the guy, the richest guy ever. His, he owned about, his net worth was about one and a half percent of US GDP. If the SpaceX IPO goes to plan, Elon is going to be worth closer to 3.5% of GDP. So he'll be more than double as rich as the richest American ever.
So Elon is now the richest American in history and by a huge, huge margin. And it is getting to a point where it is quite scary and it is downstream. of this glorification of how much value can we accrete into the hands of a smaller and smaller set of people. And they're literally glorifying, let's do it into one person's hands. One person's going to create all of this. It's just strange.
It's a strange thing to be so excited about. We'll be right back after the break. And by the way, we are heading out on tour at the end of the month. So if you want to get a ticket to a show near you, head to profgmarketstour.com.
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This week on Net Worth and Chill, I'm joined by Tank Sinatra, the meme king, with over 15 million followers across Tank's Good News, Influencers in the Wild, and his personal account.
Tank is breaking down what the meme economy really is, how much a single sponsored post pays, why major brands are throwing serious money at jokes, and how meme culture, think Preparation H, starter packs, and a perfectly timed screenshot, is actually reshaping how we think about money and value.
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