AI Hype vs. Reality, Plastic Surgery as Self-Investment, and the Future of Local Journalism

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Welcome to Office Hours with PropG.

This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind.

If you'd like to submit a question for next time, you can send a voice recording to officehours at profgmedia.com.

Again, that's officehours at propgmedia.com.

Or post your question on the Scott Galloway subreddit, and we just might feature it in our next episode.

You're welcome.

First question, I have not seen or read these questions.

Our first question comes from the user Interesting Ad6601 on Reddit.

They say,

My question is about AI.

I'm a big believer in AI.

I've directed my career to learning everything I can about AI because I want to be part of that future.

I'm concerned about the short term.

So much money is being spent on infrastructure.

The current investment pattern reminds me of the year 1999.

Billions were spent on the backbone of the public internet because everyone knew the internet would ultimately transform the economy.

Markets got way ahead of themselves.

In 2000, we paid a big price.

How is the AI boom different from the internet buildout boom and crash of 2000?

I get different forms of this question a lot.

So it sounds similar, but it's a different genre.

It's a different song.

And that is the earnings growth.

If you look at oftentimes NVIDIA, which is kind of the infrastructure company or the safe bet, if you will, if you believe in AI, but you don't have the skills to pick out which LLM or which company or which application, the safe thing feels like you just go into NVIDIA, which seems to be powering and is, I think, 90% of the processing or 90% of the queries in AI.

And people oftentimes equate it to Cisco.

And people don't remember this.

From 1999 to 2001, Cisco and Amazon lost 90% of their value.

Cisco really never recovered.

It recovered somewhat, but nothing like the ripback of Amazon.

And we have what is a pretty staggering investment.

And in 2024, about $400 billion went into AI infrastructure, data centers, chips, cloud.

Meanwhile, generative AI revenue in 2024 was about $45 billion.

That's so basically a 10-to-1 investment multiple.

I mean, that's staggering, right?

Usually, you know, we're spending about $10 for every $1 revenue, which means you are anticipating an explosion in revenue, right?

Revenue is projected to hit $1 trillion by 2028, but near-term monetization remains thin.

U.S.

CapEx now equals 6% of GDP.

That's greater than the Internet CapEx at the 2000 peak.

And NVIDIA alone posted $27 billion in revenue last quarter up 120% this year.

That one firm dwarfs all of 1999.com leaders.

And that's the difference.

In 2000, the valuation or the P ratio in the NASDAQ was around 80.

And the top names in the NASDAQ today trade around 32.

So that's still elevated, but it's much more grounded.

Is this a bubble?

It may be, but the pop here will be a boom, not a sonic boom, because these companies' earnings are pretty dramatic.

Having said that, having said that, if I were to guess how an economic global recession, if someone were to say in 18 months, we are in not only a U.S.

recession, we're in a global recession, and said, try to guess what was the string that people pulled on, that started kind of the run for the exits.

If you look at current valuations of all the AI companies, Built into that assumption is the following, into their valuations, that they're either going to create a trillion dollars in incremental revenue over the next three to four years, or they're going to help companies cut a trillion dollars in costs that will flow to the bottom line.

So far, I haven't seen companies creating a great deal of additional revenue.

I haven't heard a lot, I haven't heard L'Oreal or General Motors say, because of AI, we've increased our revenues.

What they're saying is, because of AI, we're confident we can reduce our costs.

And they're saying this very quietly.

So I think the majority, if not all, of that trillion dollars, if it happens, is going to come from cost savings.

Now, what does that mean?

If you think about America, 150 million people work,

let's say a half of industry is not, is somewhat immune from the impact of AI on employment.

Like, you know, chiropractors, massage therapists, pipe fitters, construction, they are somewhat immune.

If you go into a restaurant, whatever it might be, they're somewhat immune from AI.

So let's assume half of industry probably is going to incur a devastating loss in labor or employment due to AI cost efficiencies.

That leaves half the employment base or around 75 million jobs.

Let's generalistly say $80,000 or $100,000, including load cost per job.

To save a trillion dollars, that means you need the destruction, if you will, of about 10 million lawyers, consultants, bankers, et cetera, all the people who are vulnerable to AI.

Okay, what does that mean?

If that comes from an employment base of 75 million,

you're talking about a 14 or 15 percent destruction in employment.

And while that may not sound devastating, a 14 to 15 percent destruction in employment over three years in any industry is basically Armageddon.

That means no one is getting hired.

No, one in seven people are getting fired.

That would be really serious for the labor markets or

those valuations got to come down by half, at least.

And that is the total valuations of AI got to come down by half.

But we're going to see one of two things happen, in my view, either a fairly serious destruction disruption in human capital, employment across certain industries, or these companies come down and that will put pressure on not only the NASDAQ and the S ⁇ P, but the U.S.

economy and the global economy.

But then again, I could be wrong.

Thanks for the question.

Question number two also comes from Reddit.

Loose Ad3529 asks...

Hey, Scott, I'm a 20-year-old male.

Beginning my professional career, I'm considering spending a large portion of my savings and investments on plastic surgery to correct a very noticeable facial feature.

I believed it could significantly boost my confidence and improve my appeal personally, professionally, and romantically, but the realest part of me worries I'm being superficial or insecure for doing this.

Is spending money to change your appearance foolish, or is it just modern form of self-care and personal investment?

This is a tough one because

I think Instagram has led to a level of body dysmorphia that is really unhealthy.

And that is, I meet people and they'll say, I'm thinking about getting my nose done.

And I'm like, your nose is perfect.

Or I'm thinking about

getting, you know, a chin implant.

Or, and I look at them and I'm like, and what's interesting is this really impacts mostly the most beautiful people in that as they become obsessed with perfection and start doing procedures that are a little, in my opinion, the bar is too low for when people get procedures, especially young people getting Botox.

I'm like, trust me, folks, that stuff is coming.

Wait as long as you can.

I get a Pico laser.

I get Botox when I'm in New York.

So I'm not immune from this vanity.

I make the argument that, I don't know,

I'm on TV a lot, so I can't look like the fucking bride of Frankenstein.

It's not easy being a four on a scale of one to 10.

You know, it's not easy just looking mediocre.

Anyways, I have a lot of stuff done, so I'm not one to talk, but a couple of things.

One,

without seeing you, I just can't tell.

If you have

a fairly awkward, weird nose or something that could be corrected and substantially improve your physical presence and your confidence.

I say do it.

I think people should do whatever makes them feel good about themselves while having some third parties validate that in fact it is something that other people notice or whether they're just channeling their insecurities through some sort of weird body dysmorphia and overknowing it too.

I would not spend money on elective surgery that is going to be debt.

I think you have to save this money.

I think you have to be willing to pay for it.

I would do some shopping around.

It's like any other market.

And I'm not saying you go to Walmart to get your nose done or whatever, but I think you want to be a thoughtful consumer around this stuff and not necessarily assume that the most expensive is the best.

But also, I would talk to some people.

I would talk to some people you trust and say, all right, you know, be honest with them.

This is how, are you going to spend?

Your savings for the last 10 years to get corrective surgery on your ears that, quite frankly, other people don't really notice?

This is a very personal decision.

And what I have found with decisions like this is it's very difficult when it comes to your looks to read the label from inside of the bottle.

So, this is what we're going to do.

We're going to find some people we trust and can be honest with us and say, I'm thinking about having this done.

This is my financial situation.

Do you think it's worth the money?

Because there are probably certain things here.

If you, you know, if you have severe scarring, and a surgeon can really help that, then I would say, yeah, if that's going to make you feel much better about yourself.

But if it's going from being,

you know,

on a scale of one to 10, from a six to a six and a quarter, and it's a lot of money, I would say, okay, work out and just figure out, you know,

figure out other ways to make yourself feel confident.

I don't think there's anything wrong with surgery.

I think people should do things to make them feel better about themselves.

But I think this is the kind of thing where you need several third-party opinions here.

And oftentimes, when I don't like the way I look, I'm looking for a quick fix that will make my life better, not recognizing it's not the fact that my nose goes off to the right.

I got kicked playing, kicked in the face playing soccer when I was in high school.

And you can probably tell my nose goes to the right.

And then it happened to me again boxing.

And I've thought about fixing that.

And I found that whenever I really get serious about fixing my nose, it's quite frankly because I don't like my life.

And I'm thinking that fixing my nose is going to make my life better.

No, it'll make my nose maybe a little bit better.

But at the end of the day, I've decided it's just not worth the money.

And more than that, it's not worth the cost in terms of downtime.

And at this point, I'm just going to start leaning into the ugly.

That's kind of a good feeling.

I'm just going to lean into the ugly.

Let's summarize.

This is a very personal decision.

And you need third parties to really be honest with yourself about whether it's worth the cost.

Do not use debt to get surgery.

40% of households have medical or dental debt.

And I just think that's got to be incredibly, I don't know, weighing on them, stressful on them.

And,

you know, figure out if it's really worth,

if you've got a shit ton of money and it bothers you, yeah, why not?

But you probably don't have a shit ton of money, so you need to do the cost,

you know, the cost-benefit trade-off here.

I apologize, I can't be more help, but I'm just loath to tell someone to get surgery or not to get surgery without knowing some more nuance around this question.

You need a kitchen cabinet here that'll be honest with you, and some doctors to give you a sense of whether it's worth it given your current financial situation.

Appreciate the question.

We'll be right back after a quick break.

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Welcome back under our final question.

Hi, Scott.

I'm a local news anchor, and I was recently listening to your Pivot podcast where you spoke about the Steve Colbert show being canceled, the fact that they have 200 employees, and your podcast had 15, and you were making more money.

It made me think a lot about the news industry, you know, particularly local news.

And you might know that we're consolidating.

My company, in particular, is buying a lot of stations, assuming the FCC allows it.

And so, as somebody who is trying to survive in this changing landscape, I'm wondering what advice you have.

One idea I have is to start a podcast.

I cover health stories.

So I'd like to expand my stories in a podcast, you know, have deeper conversations.

But I want to know like exactly what I should be doing to make it.

I love my job as a journalist.

I want to continue.

I just want to also make a living.

So any advice you have is really great.

So

I think you're being smart to think about this because the market is bigger than any individual performance.

What do I mean by that?

You could be the greatest TV journalist or local TV journalist in Lubbock or Austin or Sacramento, and still it is really it's going to be a really difficult way to make a living the next 10 or 20 years because local news now is basically where old people get their weather.

And the thing that was keeping local news alive was the local news employment act was politics.

And because of Citizens United, where they decided that money was speech, so much money has gone into

campaigns.

And they thought, okay, who votes?

Old people.

Old people still watch local news.

So

the Hearst family and some other people went around buying up local news stations in swing states, knowing that every 24 months there'd be this tidal wave, the tsunami of advertising to local news where they would reach voters.

And then came Trump.

And this is where, quite frankly,

local news stations and people such as yourself are, quite frankly, are fucked.

And that is Trump didn't go newsy.

He didn't go on local news stations, much less Fox, MS, NBC, or CNN.

He went on podcasts.

And I think you're about to see an enormous transition or reallocation of spending out of broadcast news, cable news, into podcasts and direct response vehicles, you know, the traditional guys, Meta and Alphabet.

And we're already seeing it.

So what do you do?

Quite frankly, I just think you're thinking the right way, and that is as long as you're there and you're making a good living, use it as a platform and try and create a flywheel.

What do I mean by that?

If you're a good journalist, and

which probably means you know how to write, you know how to cover issues, can you write books?

Can you write newsletters?

Can you host conferences?

Can you get a speaking gig going?

Can you produce a podcast?

If you want to produce a podcast, start right away because there's a natural moat.

What is that natural moat?

This could be the worst podcast in the world today, and 160,000 people are going to listen to it because the dirty secret of podcasting is the RSS feed.

The Profit G RSS feed means that anything we put into our RSS feed gets downloaded to a quarter of a million iPhones that moment.

And the dirty secret number two is that advertisers consider that a listen.

So Joe Rogan, who's been doing this for 14 years, has this huge built-in moat

because millions, probably 20 million people, every time he puts out anything, get it downloaded onto their phone and advertisers go, that's 20 million listens.

So I think this is one of those things where you go, ready, fire, aim.

It is a very difficult business.

Now, if you, in fact, break in to the top two, three, 500, it's an amazing business because the means of production is really inexpensive.

What do I mean by that?

Your local news station, as little as they're paying you, costs a lot of money because it's probably union.

They have cameras, they have office space, they have a van with a satellite link up.

They have some older dude they have to pay a lot of money to, although that's going to change.

They have producers behind the camera.

I mean, it's just that shit, the means of production is expensive.

The ultimate example, Stephen Colbert, going from 200 people to probably eight when he goes to a podcast, going from 60 million in revenue to 20 million.

He'll still make 10 million a year, but the 192 people that don't make an honor to the podcast arc from his show are going to be getting their real estate license.

So this is what you want to be thinking about.

If you're really committed to journalism, you got to build a flywheel.

Is it newsletters?

Is it speaking gigs?

Is it a book?

Is it a podcast?

In sum, I'm not here with a message of hope, but you're thinking the right way.

And I'd be thinking, should I be writing a book?

Should I be writing a news column?

Should I be trying to figure out a really interesting rap on a certain angle and get gigs hosting and speaking at conferences?

Should I be thinking about a podcast?

But you're smart to be thinking this is one part of the flywheel, but it's not going to sustain a growth career.

It is, you would much rather be good in an industry that's growing, which is podcasting.

Books are actually holding their own, events are growing, than great in an industry that is melting, which is the industry you're in right now.

I apologize I'm not more optimistic.

What I will say is that you're thinking the right way.

I appreciate the question and best of luck to you.

That's all for this episode.

If you'd like to submit a question, please email a voice recording to officehours at profitmedia.com.

That's officehours at profitgymedia.com.

Or if you prefer to ask on Reddit, just post your question on the Scott Gallery Galloway subreddit, and we just might feature it in an upcoming episode.

This episode was produced by Jennifer Sanchez.

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Thank you for listening to the PropGPod from PropG Media.