Kinda Spooky: META, AI, TSLA

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Speaker 3 Support for the show comes from Public.

Speaker 3 On Public, you can build a multi-asset portfolio of stocks, bonds, options, crypto, and now generated assets, which allow you to turn any idea into an investable index with AI.

Speaker 3 It all starts with your prompt.

Speaker 3 From renewable energy companies with high-free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work.

Speaker 3 It screens thousands of stocks, builds a one-of-a-kind index, and lets you backtest it against the SP 500. Then you can invest in a few clicks.

Speaker 3 Generated assets are completely customizable and based on your thesis, not someone else's. Go to public.com/slash market and earn an uncapped 1% bonus when you transfer your portfolio.

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Speaker 4 Paid for by Public Investing. Brokerage Services by Open to the Public Investing Inc., member FINRA and SIPC.
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Speaker 4 Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice.

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Speaker 5 These days, it seems like AI agents are just about everywhere you turn, every field and every function.

Speaker 10 But without identity, you can't trust they'll serve your business instead of jeopardizing it.

Speaker 12 Fortunately, Okta helps you get identity right by securing your AI agents' identities, giving you a single layer of control, a single standard of trust.

Speaker 7 So whether an AI agent supports supports a single user or your entire enterprise with Okta, you'll turn risk into opportunity.

Speaker 13 Secure every agent.

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Speaker 18 Bloomberg Audio Studios.

Speaker 2 Podcasts, radio, news.

Speaker 2 I feel like we need to address two things. Yes,

Speaker 2 one is that I sound like this. You sound great.
I know. But it's different.

Speaker 19 I have a cold.

Speaker 2 So it's going to be like the best. Yeah.
The best voice you've ever heard on a podcast podcast for like 10 minutes, and then I'm going to lose my voice, and it's going to be over.

Speaker 2 So it'll be great on both accounts. Yeah.
The other thing I want to address is, what are you going to be for Halloween?

Speaker 19 My God, man, I'm so thrilled you asked. I'll probably just dress in all black and put on cat ears.

Speaker 2 Okay.

Speaker 19 But that's what I do most Fridays.

Speaker 2 Yeah, yeah. Right.

Speaker 19 So what about you?

Speaker 2 I think I've dodged this bullet.

Speaker 19 Is it a bullet? Isn't it just joyful?

Speaker 2 It is joyful to take your kids around in their costumes when you're not in a costume. I shouldn't say.

Speaker 2 I see like the people with family costumes like, okay, that's cool. And I kind of want to do it, but like, not enough to.
Yeah. For adults, it's got to be creative.

Speaker 19 There are onesies out there, but I hear your point.

Speaker 2 Yeah, I don't really want to go around.

Speaker 19 I'm really psyched. I mean, not to go around in a onesie.

Speaker 2 I smoke too soon.

Speaker 19 But I'm just, I love Halloween so much. I'm really excited.

Speaker 19 I'm an adult and I don't have a child, so I feel like I can't, but we're going to walk around Hoboken because Hoboken goes hard on Halloween. Okay.
A lot of these.

Speaker 2 This is like sounding like a yes, but okay.

Speaker 19 I mean, I'm not going to like knock on doors and take candy. If someone with a bucket of candy comes up to me and says, do you want a piece?

Speaker 2 I'm not going to turn them down.

Speaker 19 That'd be crazy.

Speaker 2 Are you going to wear your cat ears on air?

Speaker 19 No. No.
I won't.

Speaker 2 I feel like one year I want you to wear like a children's ghost costume, you know, just like a sheet with holes for eyes on air.

Speaker 19 I usually subtly try to dress up.

Speaker 2 on air. I feel like you've worn the cat ear.
I feel like we talked about this last year.

Speaker 2 I totally did.

Speaker 19 Some dedicated listener can tell us. I mean, I always have this like Christmas shirt that I try to sneak in once a year.

Speaker 19 Tomorrow, I think I'm going to wear all black, like a black turtleneck, and just be kind of spooky. Okay.

Speaker 2 Like just subtle cat ears, just a little cat ear.

Speaker 19 Maybe like a cat eye eyeliner.

Speaker 19 But I will mention over and over again that it's Halloween.

Speaker 2 I love Halloween. Yeah.

Speaker 19 I want to put someone in a ghost costume and just have them walk behind me at some point. Just once.

Speaker 2 I think you should actually have a ghost co-host who doesn't say anything.

Speaker 2 That'd be kind of funny.

Speaker 19 They just, like a human in a ghost house.

Speaker 2 I'm just sitting next to someone wearing a ghost customer. Like maybe glasses over the ghost face.

Speaker 19 Yeah, I turn to them and like

Speaker 19 say something and then I turn back.

Speaker 2 And they're like, ooh.

Speaker 19 This sounds great.

Speaker 2 All right, we've got your TV show started. Oh, right.

Speaker 19 Man, we're just trying to run out the clock here.

Speaker 2 We should just do the podcast like that. Yeah.

Speaker 19 Ah, scary.

Speaker 2 Hello, and welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money.

Speaker 2 I'm Matt Levine, and I write the Money Stuff column for Bloomberg Opinion.

Speaker 19 And I'm Katie Greyfeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

Speaker 19 We are in the heart of magnificent seven tech earnings, which means we are in the heart of those tech companies just saying how much they're going to spend on AI infrastructure. And it is so much.

Speaker 2 It's really like, either you do or you don't believe that like the entire world is going to change with AI. And if you believe it, you're like, yeah, sure, $10 trillion, no problem, right?

Speaker 2 But it is like, it's easy to be nervous or skeptical or. make fun of those numbers because it's a lot of money.
Yeah.

Speaker 19 Well, something that I've been talking about on television and casually with my friends in the newsroom is how a lot of this, these hopes and dreams and these ambitions of these big tech companies to spend all this money, a lot of it has been able to be funded from free cash flow, but increasingly they're having to tap the bond markets.

Speaker 19 But as you laid out in a column this week, they have stellar credit ratings, so they don't necessarily want to rely too much on the bond market.

Speaker 2 Yeah, it's a mixed bag, right? Like you have a stellar credit rating, so you can borrow in the bond market, but like you can't do too much because then you lose the credit rating.

Speaker 2 So Meta is out this week with a $25 billion investment grade deal. Yes.
But they want more than $25 billion.

Speaker 2 And to do that, they have tapped the

Speaker 2 like,

Speaker 2 I guess, I don't know what you call it. Like people sometimes call it the hybrids market, but also like it's kind of project finance.
Yeah. It's like off-balance sheet financing.

Speaker 2 Basically, like they set up a joint venture where the joint venture will operate their data centers and the joint venture will be owned by, in this case, Blue Owl, but in the general case,

Speaker 2 someone who is

Speaker 2 basically credit firm but is willing to do weird stuff. And so Blue Owl is the equity owner of the data center.
And Meta signs a series of contracts that, in the aggregate, kind of look like debt.

Speaker 2 Like they sign like leases and a residual value guarantee where at the end of the term of the lease they have to buy the chips in the data center.

Speaker 2 But those contracts look enough like debt that Blue Owl can package it into bonds and sell it to Pimco or whatever, but also enough not like debt that it doesn't affect Meta's accounting or its credit ratings.

Speaker 2 Yeah. So it's like not debt of meta for the purposes of like meta, but it is kind of debt of meta for the purposes of the people buying the bonds.

Speaker 19 So you talked about how this is a fantastic trick that if you want to call it that, that has connotations, but it's just like, it's just the thing people do, right?

Speaker 2 It's like, it turns out there are things that are debt and there are things that are not debt, but then there's like this huge middle ground of things that are kind of debt, kind of debt.

Speaker 2 And like, for the most part,

Speaker 2 things are pretty binary for like ratings and balance sheet. Like either it's on your balance sheet or it's not.
Either it affects your credit rating. Like credit ratings are more, not quite binary.

Speaker 2 Like the ratings agency sometimes gives things partial credit.

Speaker 2 But you know, if you like check the red boxes, then it's not quite debt. But you can convince people to buy the bonds because they look pretty much like your debt.
Yeah, give or take.

Speaker 19 You do write, though, that the bonds for the Hyperion.

Speaker 2 Hyperion, the name of the data center.

Speaker 19 They priced with a coupon of almost 6.6%, which was roughly a percentage point higher than Meta's outstanding corporate bonds and in line with the average junk bond yields. So

Speaker 19 I hear what you're saying, but at a certain point, I feel like people and investors see through this.

Speaker 2 They do and they don't, right? I mean, they don't. treat it like meta debt exactly.
Yeah.

Speaker 2 They're happy to buy it at a yield. And they're like, oh, yeah, yeah, it's great.
It's backed by Meta. It has structural features that make it not quite as good as MetaDebett, but

Speaker 2 it trades at a yield that is a reasonable cost of capital for building a data center and kind of keeps it off of Meta's pristine balance sheet. Yeah.

Speaker 19 We're talking about this like weird structure, this SPV that Meta is doing.

Speaker 2 Not that.

Speaker 2 It's weird-ish a little, but it's also like, you know, the basic format of doing some sort of project finance JV,

Speaker 2 they didn't invent that for data centers.

Speaker 19 That's true.

Speaker 2 It's been done for a while in a lot of industries in different forms. And, you know, I wrote this week about it's very general purpose.
And so Keurig, Dr.

Speaker 2 Pepper, is putting its K-cup manufacturing into a JV so that it can borrow against the K-Cups without tarnishing its credit rating to do an acquisition.

Speaker 19 Okay, so it's not weird. I do feel like a lot of folks, myself included, have thought more about this in the past two weeks.
Oh, yeah, me too. Than maybe I have

Speaker 2 ever.

Speaker 19 It's a concept that's being more widely socialized than perhaps in the past.

Speaker 2 And higher profile.

Speaker 19 Yes, that's the thing.

Speaker 2 I mean, the other thing about it that is interesting is that it's really interacting with private credit, right? Yeah.

Speaker 2 You look at all the private credit firms, and stereotypically, private credit means leveraged acquisition finance.

Speaker 2 And the reason for that is because, you know, private equity sponsors are willing to pay up for flexible, fast, guaranteed debt. So you can make money doing that.

Speaker 2 Like you can charge more than the public markets would if you can like offer sponsors a user-friendly product financing their acquisitions.

Speaker 2 But then, like, you know, these private credit firms, like, they have a lot of insurance clients. They want to deploy a lot of money.
They need to eventually get into investment-grade debt.

Speaker 2 And it is harder to get into investment-grade debt because you go to like Meta and you say, I'll buy your bonds. And Meta's like, sure, our bonds price at this rate.

Speaker 2 And it's not super exciting for private credit. But then you do this project financing, and you can do a thing that gets an A-plus rating and also has a yield.

Speaker 2 And also, you're not competing in the same way with the public markets because regular public market bond investors can't necessarily buy $2.5 billion of equity in a data center, right?

Speaker 2 Like the credit firms are a little bit more flexible in what kind of financing arrangements they can do and a little bit more creative.

Speaker 2 And so they can do this to get tens of billions of dollars of investment grade financing, which is what they want. Yeah.
I do want to talk more broadly about meta.

Speaker 19 Yes. But before we get there, so you made the point that, okay, even with this, what they're working out, they also tapped the market, the public market, for that $25 billion bond.

Speaker 19 Apparently, it was super oversubscribed, according to our reporting. But you think about

Speaker 2 super oversubscribed.

Speaker 2 Meta has capacity to do hundreds of billions of dollars of debt, and they don't do it because they want to keep good ratings. So they

Speaker 2 want a meta bond. Yeah.

Speaker 19 $125 billion of bids for this $25 billion.

Speaker 2 So oversubscribed never means anything. Yeah.

Speaker 19 Well, nothing truly means anything, Matt.

Speaker 19 But something I've been thinking about, not just as it relates to Meta, but all the spending that all these big tech companies are doing, you think about the typical profile of investing in tech from the equity market perspective.

Speaker 19 It's like, okay, these companies have pristine, tidy balance sheets. They're very capital-light businesses, et cetera, et cetera.
And I do wonder

Speaker 19 if the nature of investing in the tech space is starting to change. And I keep asking people that.

Speaker 2 Tech is not capital light these days, right? I know. I know.
It's the opposite.

Speaker 19 It's just, you think, like, five years ago, the conversation was about, you know, intangible assets and that sort of thing.

Speaker 2 Like Meta, right? Like, five years ago, it was Meta called Facebook. Yeah.
Pretty close.

Speaker 2 But like, you think about like the stereotypical business model of Facebook is like it serves a web page, right? It's like marginal cost is zero, right? So it scales like really, really effectively.

Speaker 2 So Facebook is just this classic investment where, you know, venture capitalists put money in and it goes from being a dorm room project to being a hundred billion dollar company with kind of no additional spending.

Speaker 2 Yeah. And that switch just flipped.
And now it's just everything is a trillion dollars of data centers.

Speaker 19 Well, I love talking about meta because you remember the reason why meta is called meta?

Speaker 2 Because

Speaker 19 hey, why am I so big on the metaverse, which I've never talked about before? Mark Zuckerberg was lighting money on fire.

Speaker 2 I don't really know what that entailed, but it would be funny if there were like data centers out there that were optimized only for the metaverse and are now just like Tumbo Weed is blowing through them.

Speaker 2 I love it.

Speaker 19 I love it. But that led to Meta's year of efficiency, et cetera.
It was this whole thing.

Speaker 2 And now the opposite.

Speaker 19 Alphabet and Microsoft, you can make a case for why they're going so hard on AI. When it comes to Meta,

Speaker 19 I'm not sure what the payoff is. They said that they're investing so hard because it's going to help better target their advertising.

Speaker 19 But is that

Speaker 2 the highest purpose of it?

Speaker 19 Is that a trillion-dollar endeavor?

Speaker 19 It's wild. It's wild.

Speaker 2 One thing I've learned is that the purpose of the economy is to serve customized ads. For sure.
For sure.

Speaker 19 All the water sources be damned, but I don't know. I'm curious to see how this plays out for Meta.

Speaker 19 Apparently, Mark Zuckerberg did say on the earnings call, they reported on Wednesday this week, that the company has options if it ends up spending too much on infrastructure.

Speaker 19 In one scenario, he said the company could use the extra computing capacity for its core business. In another, it could sell the power to other companies.

Speaker 2 Or, or. Or.

Speaker 2 Really good metaverse.

Speaker 19 Metaverse?

Speaker 2 Really good metaverse. Yeah.
Data centers full of legless Mark Zuckerberg atoms.

Speaker 19 I mean, they're still committed to that.

Speaker 19 I believe that falls under the Reality Labs division, which reported a loss of $4.4 billion for the third quarter.

Speaker 2 And revenue of 12 cents.

Speaker 19 Revenue of $470 million, I'll have you know.

Speaker 19 Anyway, I think it's super interesting. At least Mark Mark Zuckerberg's thinking about the prospect of

Speaker 19 maybe they're overbuilding.

Speaker 1 When you give to a non-profit, how do you measure success? You'll hear a lot about things like low overhead costs and efficient fundraising. But what about the actual impact on people's lives?

Speaker 1 GiveWell, this episode's sponsor, focuses on that impact.

Speaker 1 They've spent more than 70,000 hours on research to help donors fund highly cost-effective programs that save or improve lives the most per dollar.

Speaker 1 GiveWell has spent 18 years researching global health and poverty alleviation and only directs funding to the highest impact opportunities they have found.

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Speaker 3 Support for the show comes from Public.

Speaker 3 On Public, you can build a multi-asset portfolio of stocks, bonds, options, crypto, and now generated assets, which allow you to turn any idea into an investable index with AI.

Speaker 3 It all starts with your prompt. From renewable energy companies with high-free cash flow to semiconductor suppliers growing revenue over 20% year over year.

Speaker 3 You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one-of-a-kind index, and lets you backtest it against the SP 500.

Speaker 2 Then you can invest in a few clicks.

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Speaker 4 Paid for by Public Investing. Brokerage Services by Open to the Public Investing Inc., member FINRA and SIPC.
Advisory services by Public Advisors LLC. SEC Registered Advisor.

Speaker 4 Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice.

Speaker 4 Complete disclosures available at public.com slash disclosures.

Speaker 5 These days, it seems like AI agents are just about everywhere you turn.

Speaker 7 Every field and every function.

Speaker 10 But without identity, you can't trust they'll serve your business instead of jeopardizing it.

Speaker 12 Fortunately, Okta helps you get identity right by securing your AI agents' identities, giving you a single layer of control, a single standard of trust.

Speaker 15 So, whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity.

Speaker 16 Secure every agent, secure any agent.

Speaker 17 Okta secures AI.

Speaker 2 Elsewhere in hundreds of billions of dollars of AI spending, OpenAI is a regular company now. I know.

Speaker 19 It's exciting. So regular.

Speaker 2 Like anticlimactically. Yeah.
I was assuming there'd be like years of litigation, and like all the state attorney generals and Microsoft were like, okay, good, it's fine. So go,

Speaker 2 they did their conversion.

Speaker 19 At this moment, too, Elon Musk is a bit distracted, which

Speaker 2 we'll get to. I'm sure he'll keep suing, but like, yeah, we'll get to that.

Speaker 19 Anyway, OpenAI apparently is so normal that maybe they're going to IPO in the next two years or so.

Speaker 2 Yeah, sure. Maybe.

Speaker 19 Right. That's what Reuters told us.

Speaker 2 Sure. I just feel like any large private tech company might IPO in the next two years.

Speaker 19 I know, but this one, I feel like it urgently needs to. Really? Okay.

Speaker 2 Yeah.

Speaker 19 They've committed to like $1.4 trillion of spending.

Speaker 19 Where are they going to get the funds, man?

Speaker 2 Not from like an IPO. Maybe a little from an IPO.

Speaker 19 Sam Altman said,

Speaker 2 if OpenAI and Fannie and Freddie all go public like next year, God. Like,

Speaker 2 what? IPO.

Speaker 19 So many good podcasts.

Speaker 19 No, Sam Altman said that I think it's fair to say that it's the most likely path for us given the capital needs that we'll have.

Speaker 2 Yeah, fine.

Speaker 19 During a live stream on Tuesday, Matt.

Speaker 2 Fine, fine, fine. They'll tap the

Speaker 2 public equity markets and the public bond markets and the project finance markets.

Speaker 2 It's amazing. So much money for AI.
Yeah, so they're a normal company. I don't know.
A normal company owns 27%.

Speaker 19 27%.

Speaker 2 The non-profit owns 26%, but has like

Speaker 2 super voting board control. It's very hard

Speaker 2 to be like, we started as a non-profit, we took donations, they didn't take that much in donations, but they took donations.

Speaker 2 And now we're a $500 billion private company for the benefit of our investors.

Speaker 2 And one way to sort of smooth that transition is that the nonprofit will continue to control the company and have like super voting rights. I don't know how that will go for an IPO, but it'll go fine.

Speaker 2 Like, no one cares. You can imagine being like, if this company is not run for profit, maybe I shouldn't invest in it

Speaker 2 seeking an enormous financial return. But no one has ever had that thought.
Yeah. Or ever will.
Yeah, that's so quaint.

Speaker 2 It's like OpenAI is definitely looking to give you a high financial return on your investment,

Speaker 2 which is nice.

Speaker 19 So, do you not take Sam Altman at his words?

Speaker 2 Which words?

Speaker 19 That they need to do this to get the capital that they need.

Speaker 2 Oh, no. I believe that they need to do this to get the capital that they need.

Speaker 2 But like, even now that they're a for-profit company, they're a public benefit company, which is slightly less than for-profit, but still pretty for-profit.

Speaker 2 But they're controlled by a non-profit board, right? Like, the non-profit board still has a

Speaker 2 mission to put the interests of humanity first. But no one cares about that.
No one's worried about that.

Speaker 19 I thought that the nonprofit board couldn't fire members.

Speaker 2 Well, they're not going to fire him.

Speaker 19 Well, I know that, but even other members, like other Open AI executives. So when you say they're in control, I mean, what does that mean if they're not going to fire the people running it?

Speaker 2 That's a good question. Thank you.
So the board of directors, right?

Speaker 2 So like typically one of the main things the board does is decide whether or not to do a merger and they're too big to do a merger, you know? Yeah. Right.

Speaker 2 Like I don't know how much operational control they have. Like one thing the board of directors does is fire the CEO if he does a bad job, but there's a

Speaker 19 constraint on that. Job number one.

Speaker 2 Right.

Speaker 2 Like the board of Open AI,

Speaker 2 within recent memory, has fired Sam Altman, not for doing a bad job of developing products or leading the people or achieving shareholder value, but for the crime of,

Speaker 2 I don't know, something else. No one really understood it.
But it was kind of in the ballpark of not being for the benefit of humanity or like deceiving the board in some way. No one really knows.

Speaker 2 And they quickly unfired him and then fired themselves. Yeah.
So that won't happen again.

Speaker 19 Yeah. That was just about two years ago.
Yeah.

Speaker 2 It was amazing.

Speaker 2 In theory, you can look around a lot of

Speaker 2 boards of big founder-led tech startups. Sometimes those founders do weird stuff, and you can imagine a board firing them, but you can't really because they never would.

Speaker 19 There's been so many natural segues to

Speaker 2 move straight along. Okay.

Speaker 19 Well, the only thing I was going to say is that when it comes to the capital needs, obviously we've talked a lot about the private markets and the public markets melding, that if you're a private company, you can get most of the funding that you need in the private markets.

Speaker 19 This obviously is such an extreme example that maybe it's not even worth mentioning. But it is a limit, perhaps, of the private markets.

Speaker 2 Yeah, sure. Right.
I take that point. Although we're not there yet, right? No.
This is like they're rumored to be interested in going public in 2020.

Speaker 19 In my mind, they're already public.

Speaker 2 For now, they have floated a trial balloon with Reuters. No.
Like, what do they need capital for? They need to, like, get chips and data centers and compute. Like, they're getting all of that, right?

Speaker 2 Like, they're funding it with vague promises of future trillions of dollars of of capital raising, right? Like

Speaker 2 they have not needed to go public to meet their enormous capital spending needs yet. Yeah.

Speaker 2 Right. They're incurring obligations that might require going public.

Speaker 2 But I agree with you that if Sam Altman is feeling the pressure to go public, that does show some limit on the ability of private markets to fund absolutely everything. Yeah.
But

Speaker 2 he's got a $500 billion company that keeps signing trillion-dollar deals and is not public. So

Speaker 2 the limit is. We haven't hit it yet.

Speaker 3 Support for the show comes from Public.

Speaker 3 On Public, you can build a multi-asset portfolio of stocks, bonds, options, crypto, and now generated assets, which allow you to turn any idea into an investable index with AI.

Speaker 3 It all starts with your prompt. From renewable energy companies with high-free cash flow to semiconductor suppliers growing revenue over 20% year over year.

Speaker 3 You can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one-of-a-kind index, and lets you backtest it against the SP 500.

Speaker 3 Then you can invest in a few clicks. Generated assets are completely customizable and based on your thesis, not someone else's.

Speaker 3 Go to public.com/slash market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com/slash market.

Speaker 4 Paid for by Public Investing, brokerage services by Open to the Public Investing Inc., member FINRA and SIPC. Advisory Services by Public Advisors LLC.
SEC Registered Advisor.

Speaker 4 Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice.

Speaker 4 Complete disclosures available at public.com/slash disclosures.

Speaker 5 These days, it seems like AI agents are just about everywhere you turn, every field and every function.

Speaker 10 But without identity, you can't trust they'll serve your business instead of jeopardizing it.

Speaker 12 Fortunately, Okta helps you get identity right by securing your AI agents' identities, giving you a single layer of control, a single standard of trust.

Speaker 7 So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity.

Speaker 13 Secure every agent.

Speaker 16 Secure any agent.

Speaker 17 Okta secures AI.

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Speaker 19 If we're looking for another segue, SpaceX obviously is a private company that has a lot of capital needs.

Speaker 2 Yes, it turns out that shooting rockets to Mars costs much, much, much less than training chatbots. What a world.

Speaker 19 What a world, right? Elon Musk,

Speaker 2 he's the whole company, the whole board of Tesla.

Speaker 19 Well, really, Robin Denholm has been on a media tour.

Speaker 2 Yeah, Robin Denholm and the board of Tesla are going around to

Speaker 2 big shareholders and also, frankly, media to drum up support for Elon Musk's big pay package because the shareholders have to vote on it.

Speaker 2 And the big shareholder advisory firms, ISS and Glass Lewis, have recommended that the shareholders vote against giving Elon Musk a pay package that

Speaker 2 has a nominal value of $1 trillion.

Speaker 2 Yeah. I really don't like that framing.
No. Because basically what it is is they want to give Elon Musk 12% of the company.

Speaker 2 And 12% of the company right now is worth $180 billion, which is a lot of money. It's not a trillion dollars.

Speaker 2 But in order to justify doing this, they're like, we'll only give him 12% of the company if he hits like these really ambitious operational and stock price targets.

Speaker 2 And if he hits all those targets, the company will be worth $8.5 trillion and his 12% package will be worth $1 trillion.

Speaker 2 But like,

Speaker 2 a trillion dollars today. Yeah.

Speaker 19 They're not giving him a trillion dollars. Right.

Speaker 2 They're giving him... the chance to get 12% of the stock.

Speaker 19 Well, listen, you don't like the trillion-dollar framing, but everyone listening to this podcast now is thinking about it differently.

Speaker 2 So no, they're not. It's fine.
Anyway. But yeah, I wrote today on Thursday.
It's interesting to me, like the trillion dollars is really embarrassing.

Speaker 2 No one wants to vote to give Elon Musk a trillion dollars. Yeah.
Like it sounds insane. It's clearly like part of the pushback to the proposal is it's a trillion dollars, right?

Speaker 2 Elon Musk has been very clear that what he wants is to control 24% of the votes of Tesla. He's like, I don't want to be voted out by like dumb shareholders.

Speaker 2 I want to have like enough voting control that I have a lot of control, but not so much that I can't be voted out if I become insane. Which is like, okay.

Speaker 2 And so it seems to me that the obvious solution there is to give him 25% of the voting power without giving him any more stock, which is not easy to do. Yeah.

Speaker 2 And in fact, in an interview with the FT, Robin Denholm said, we tried to do that and we couldn't find a way to do it. I don't know, man.
It seems to me like you could do it.

Speaker 2 You could like find a way to give him super voting shares. You could get shareholders to approve that.
And then you wouldn't have to give him a trillion dollars.

Speaker 2 You could just just be like, we're giving him 25% of the vote because that's what he wants. Robin Denholm went on Bloomberg TV.

Speaker 19 You could have stopped her in person and told her about that idea.

Speaker 2 I was writing.

Speaker 19 You were busy.

Speaker 2 I was busy. Well, and I wrote it and she couldn't, whatever.

Speaker 2 Because surely they've had that idea. Because she did say to the FT, like, we tried to do it and it couldn't find a way to work.
But I don't know why they couldn't find a way to make it work.

Speaker 2 Yeah, it didn't seem tricky.

Speaker 19 Didn't she say we searched high and low or something?

Speaker 2 It seems tricky. Like, I'm not saying it's trivial to be like, we're going to give this guy a new super voting share.

Speaker 2 But, you know,

Speaker 2 it doesn't seem impossible to me as just the guy.

Speaker 19 That was an interview she did with the Financial Times. She also went on Bloomberg television and said that the board is looking at internal CEO candidates.
Should Elon Musk leave? Right.

Speaker 2 They're definitely going around being like, if this paypal doesn't get approved, he is out the door, which is, you know, maybe.

Speaker 19 Yeah, she said that the company has a deep bench of executives, which I always like hearing because we never hear from them or about them.

Speaker 2 So I think she's also said there's no Elon Mark, too, right? It is possible that you can have both a deep bench of very excellent car executives and also not have

Speaker 2 Elon Musk light waiting in the wings, you know.

Speaker 19 Well, apparently, one of them is their global production chief and China head, Tom Zhu, which is funny, I guess.

Speaker 2 Because

Speaker 19 initially, when I read that headline, I was like, oh, it's going to be really interesting to see if Elon Musk fires all of them because he is CAO, so he could. But I guess fires all the

Speaker 19 potential internal candidates, yeah.

Speaker 2 I don't think he will. I think like if you take them at their word that Elon Musk might quit if he doesn't get this control,

Speaker 2 it would still be a terrible idea for him to sabotage Tesla on his way out the door.

Speaker 2 Like he could be mad at the shareholders and he could be like, I'm going to spend my time on something where I have more control because what I want to do is build a robot army and I need to have 25% voting control of anywhere I build a robot army.

Speaker 2 believe what they're saying right

Speaker 2 that's still not a reason for him to sabotage tesla because tesla remains yes more or less the majority of his wealth right and so like if he were to leave in a huff the stock would tank yes but if he were to leave in a huff but also saying i've left this in charge of my good friend who's really good at this tom zhu tom zhu then it's better for his wealth than leaving in a huff and burning it down on his way out the door that's true he seems

Speaker 2 though i I understand.

Speaker 19 It's like a very logical way to think about things, Matt.

Speaker 2 Yeah. You know, he's not illogical.
No.

Speaker 19 He does post somewhat emotionally.

Speaker 2 It's weird stuff, but I think he's going to be rational.

Speaker 19 Well, you know, we'll maybe find out, but probably not.

Speaker 2 Probably not. Probably the shareholders will approve the package.
Yeah. I'm guessing.
I have no basis in saying that.

Speaker 2 They always do.

Speaker 19 Well, 30% of their investor base is retail shareholders.

Speaker 2 He'll be fine. Yeah.
They're like creating drama, but they'll be fine. But if they're not fine, I'll be very interested to see if he quits.
Yeah, me too.

Speaker 2 Mailbag. Mailbag.
I do want to talk briefly about some emails. Yeah.

Speaker 2 I'm not missing Mailbag with a Mailbag.

Speaker 2 I don't know if you listened to last week's podcast episode, but it consisted entirely of Katie reciting facts about the new JP Market headquarters.

Speaker 2 But here are some more facts about the new JP Market headquarters.

Speaker 19 I was worried that people wouldn't like that.

Speaker 2 I was sure people would would like that.

Speaker 19 People did. Well, we got a lot of engagement.
This is from Eric.

Speaker 2 Okay.

Speaker 19 I went on a tour of the HQ as part of an annual meeting earlier this year, and during the tour, they highlighted the HVAC system for the flag.

Speaker 19 It is actually capable of mimicking the conditions outside the building, so the flag always waves in the way it would if it were outside. Man, it must be going crazy today because it's raining.

Speaker 2 There's a storm. It's raining in the lobby.

Speaker 19 It's like the Hog Ort ceiling.

Speaker 2 Really good HVAC system.

Speaker 2 Yeah, because we were talking about there's a flag in the lobby that blows in the breeze. And you mentioned the fanning system.
And I was like, is it a guy with a desk fan on a stick?

Speaker 2 And no, it's a very fancy HVAC system that makes it rain inside.

Speaker 19 I have to say that the flag was waving, like there would have to be a strong gust of wind the way it was waving last Tuesday. And I don't remember it being that windy outside.
Maybe it like...

Speaker 2 mimics but somewhat amplifies

Speaker 2 enhances like makes it a little you know jizzu it up a little yeah definitely this is from Ryan. Regarding Matt's observation that the building has a precarious overhang.

Speaker 2 I don't want to say precarious. It just looks like it might fall on you.
Yeah. Surely you were aware of the design and construction flaw of the Citicorp building in the late 70s.

Speaker 2 This is taught in basically all engineering programs today. I assume it must be well known in finance circles too.
I think less well-known in finance, but not unknown.

Speaker 2 But yeah, there's a city building.

Speaker 19 I did not know this.

Speaker 2 So it's on, like, near us. It's at like 601 Lex.
It's like just kind of down the street from the Bloomberg offices. And they built it in the late 70s, and it's very cool.

Speaker 2 It's It's like very much like, you know, there's a plaza underneath it and like big massy building is on top of like little stick legs.

Speaker 2 And the famous engineer who designed it didn't take into account quartering winds. Quartering winds.
They're like the winds that don't hit the thing head on.

Speaker 2 And then like, you know, it was a fancy building. And so a couple of like engineering and architecture students like studied it for class projects.
And they were like, wait a minute.

Speaker 2 If this gets a wind from the wrong direction, it'll fall over. Oh my God.
And they emailed him or they wrote to him and he was like, oh no, you're right.

Speaker 2 And so they like, you know, while people were working in the building, every night they'd go home and like people would come in and shore up the bolts in the building to make sure it didn't fall over.

Speaker 19 Great that the engineer was humble enough to take the feedback, but also maybe he shouldn't.

Speaker 2 Wikipedia is a little grim. It's like he contemplated suicide.

Speaker 19 Oh, that's not good.

Speaker 19 I was going to say, maybe he shouldn't work again.

Speaker 2 I think he was fine. But yeah, it was a little not a great day for him.

Speaker 19 I can't wait to read this Wikipedia article. I will say, I would love to see the J.P.
Morgan lobby flag in a quarter England. Yeah.

Speaker 2 Sounds pretty cool.

Speaker 2 They should do that just just as like a little engineering subject. Yeah.
Nick.

Speaker 19 Nick says, I just went to a meeting there and wanted to share a couple things. Apparently, the pub doesn't start pouring beer until 4 p.m.

Speaker 19 The rumor going around was that Jamie Dimon himself was refused a drink at 3 p.m. We haven't fact-checked any of this, by the way.

Speaker 2 I kind of don't believe that Jamie Dimon

Speaker 2 was like wandering down to the in-office pub at 3 p.m. to be like, I'll have a beer.
Like, that doesn't sound like Jamie Dimon. Maybe they like, also, I don't know.

Speaker 2 I feel like he could have, like, you could imagine him being like, I'm going to do a little like stunt of ordering a beer to demonstrate the pub to people, and like, he wasn't served.

Speaker 19 Yeah, but I feel like they would make like refuse him once, but then be like, actually, here's the beer.

Speaker 2 But I don't know.

Speaker 19 I only have a parasocial relationship with Jamie Diamond, so I'm not actually sure.

Speaker 2 Right. We do need to interview the bartender who refers to a drink to Jamie Diamond at the Jamie Diamond-controlled pub in the Looking Morgan office.
I want to go there.

Speaker 2 And we can look at the flag. If you're that bartender, get that.
Yeah.

Speaker 19 No, I want to do a podcast from the pub.

Speaker 2 The Whipping Wind. Yeah.
The pub is. The pub is not in the.

Speaker 19 That's on the 13th floor. The flag is in the lobby.

Speaker 2 We're going to do the podcast from the pub. It'll happen.

Speaker 2 And that was the Money Stuff Podcast. I'm Matt Levine.

Speaker 19 And I'm Katie Greifeld.

Speaker 2 You can find my work by subscribing to the Money Stuff newsletter at Bloomberg.com.

Speaker 19 And you can find me on Bloomberg TV every day on the close between 3 and 5 p.m. Eastern.

Speaker 2 We'd love to hear from you. You can send an email to moneypod at bloomberg.net.
Ask us a question, and we might answer it on the air.

Speaker 19 You can also subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show.

Speaker 2 The Money Stuff Podcast is produced by Anna Mazarakis and Moses Andam.

Speaker 19 Our theme music was composed by Blake Maples.

Speaker 2 Amy Keen is our executive producer.

Speaker 19 And Sage Bauman is Bloomberg's head of podcasts.

Speaker 2 Thanks for listening to the Money Stuff Podcast. We'll be back next week with more stuff.

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