Subscribe
Share
Share
Embed
TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays from 11–2 PT on X and YouTube, with full episodes posted to Spotify immediately after airing.
Described by The New York Times as “Silicon Valley’s newest obsession,” TBPN has interviewed Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. Diet TBPN delivers the best moments from each episode in under 30 minutes.
What what... Why why don't you... How do you sound weird today? Are you okay?
Speaker 2:What were you doing this weekend?
Speaker 3:What are
Speaker 2:you talking surfing
Speaker 1:a lot?
Speaker 3:Oh, I was surfing this weekend Yeah. Down in Malibu. Yeah. Having a good time down there.
Speaker 2:That's good.
Speaker 3:Yeah. What do you mean?
Speaker 2:You you... It seems like you're not
Speaker 3:different or something?
Speaker 2:Sharp. Yeah. Something's a little different. I don't know I don't know where where to place it, but, let me tell you about ramp. I'll try and figure it out.
Speaker 2:Time is money saved. I was using his corporate cards, bill pay, accounting,
Speaker 3:and a whole lot more. I was playing on my racing sim last night, so maybe I'm a bit tired.
Speaker 2:Okay. Yeah. That must be it. That must be
Speaker 4:it. How's your phone doing?
Speaker 3:Oh, yeah. My phone, it... It's feeling pretty good. What the heck?
Speaker 1:Who... What
Speaker 3:Who is that?
Speaker 2:It looks like Tyler is wearing a perfect Jordy mask because look at Tyler today. He looks exactly like Jordy. This is crazy. I'm so confused by what's going on right now. No.
Speaker 2:Of course, of course, Tyler is wearing the the Jordy mask, is extremely freaky. When I ran into him this morning, I thought... I didn't clock it as Jordy, actually, initially. I I just thought it was a guest who was here to hang out or say hi, but it is bizarre. You can't really move your mouth that much.
Speaker 2:Right? That's the thing.
Speaker 3:Really move my mouth. I can't breathe through my nose either. It's a bit hard. It's pretty uncomfortable to wear.
Speaker 2:But but do a little spin because the back is pretty solid. They nailed the hair. I think they got it pretty good back there. And I think the sunglasses do a lot of the work. If you take out the sunglasses, you'll give everyone a jump scare.
Speaker 4:You
Speaker 3:get the eyes or No. I gotta keep those on.
Speaker 2:Good. You gotta keep the sunglasses up. But it's helpful because Jordi wears the sunglasses a lot on the show. So I think we're gonna sub the real Jordy back in, but, this is an a plus bit. I I I thoroughly enjoy this.
Speaker 4:Tyler, forgot your laptop. Keep, keep it on keep it on.
Speaker 2:It's so hard.
Speaker 4:Tyler, keep it on for the whole show. Cool?
Speaker 2:Do not do that.
Speaker 4:No. Keep it off for the whole show.
Speaker 2:We we we... We've tested these masks before, and they are so uncomfortable. It feels like they're suffocating. It's absolutely, absolutely brutal, but it's a lot of fun. The chat's saying you got Botox over there.
Speaker 2:Anyway, chip wars going on. There's another spy. There was a spy at OpenAI. Now there's a spy tracking Jensen over at NVIDIA. The wars are are waging.
Speaker 2:Google earnings is today. We have Ice Cube joining. We got lots of stuff going on today. We start
Speaker 3:a little
Speaker 2:Google earnings recap, and then we'll go into the the NVIDIA story? What do you think, Jordan?
Speaker 4:Yeah. Let's do it.
Speaker 2:Cool. So, Google stock is cratering. It's down 12 and a half percent. Earnings miss, rare. And here are the results.
Speaker 2:So revenue consensus was a 100 and 128,000,000,000, came in at a 127.6, like, only a a third of a percent miss down. But to the negative, you usually wanna be beaten these these consensus estimates. Earnings per share, not nearly as good. 30% miss. They were expecting $3 a share, dollars 3.01.
Speaker 2:Came in at $2.12 And so, there was a little bit of nuance there because some of the earnings miss was related to owning SpaceX stock, which traded down in the interval, and so they had to take a little bit of a write down on that. But even if you factor that out, so that was an $8,700,000,000 loss that they technically took on the equity investments. That reduced EPS by $0.55 And so even if you exclude that impact, EPS still would have been $2.67 still below the $3.1 that Wall Street was expecting. So you can factor out that nuance and still get to a place where something went slightly awry. There's a lot of good stuff happening, a lot of other worries, and that's why the market's reacting the way it is.
Speaker 2:So, the first key takeaway is that cloud is just a monster business. There was very interesting reporting years ago in 2018 that back in 2017, Larry Page had considered pulling the plug on Google Cloud. He was like, we're competing with AWS. There's two executives that were sort of fighting at the time. There's too much going on.
Speaker 2:Maybe we shouldn't even be in this business. Maybe we shouldn't even do cloud and have a cloud platform. Well, that... It's a completely different world today because cloud is so important to the business. Revenue doubled to 30,700,000,000.
Speaker 2:Operating profit tripled to $11,100,000,000 Operating margin is at 36.2%. It's a fantastic business. If it were independent, it would be worth an incredible amount of money, hundreds of billions, maybe a trillion dollars right there just in that value. And so Google and Alphabet truly have become this diversified portfolio of bets. Search is just one of them.
Speaker 2:They got YouTube. They also have cloud, obviously. So, the cloud backlog now is $561,000,000,000 of companies, labs that have gone to them. We just saw this with OpenAI buying cloud and TPUs. There is a lot of demand for their services.
Speaker 2:And what's interesting is that if you look at that number $561,000,000,000, that's ton. Is that over ten years? So, you know, we saw in the Anthropic s one, some of these contracts go out, you know, till 2033, 2036. But 55% of that cloud backlog is expected to be recognized as revenue within two years. So even though you have this big number, you're getting half of that $275,000,000,000 something like that, over the next two years, that's pretty quick for a business that did $30,700,000,000 in revenue.
Speaker 2:You're getting $250,000,000 coming really fast. So, that should be driving valuation upwards. Search advertising, Growth slowed. Last quarter was 17%. This quarter came in at 12%.
Speaker 2:AI is accelerating query volume, so they are seeing a ton of token production. You see that when Sundar steps on stage and shows the progress of their models, the diffusion of Gemini models. Query AI mode is actually taking share. People are using it in place of the default search, not really by their choice a lot. It just sort of pops up a lot of the times.
Speaker 2:It monetizes less effectively than traditional searches right now. What's interesting is that at the end of the day, it's a person asking a question and getting a bunch of pixels on a screen. And if you're on your phone, it's a vertical screen that's, you know, nine by 16. Right? Square for some.
Speaker 2:Square for some if you're on the Duo.
Speaker 3:You're Mark Garman.
Speaker 2:You're Mark Garman. But at the end of the day, if you're Instagram, you wanna monetize every pixel that you're showing the person while they're on Instagram. If you're Google, when someone asks a question, you wanna monetize every pixel with ads. And that's what has happened with Google Search over the past decade. Right?
Speaker 2:There was a time when it used to be a very clear call out for one sponsored post at the top and now it's been you scroll the whole first page and it's all ads. AI mode isn't that. AI mode might have some monetization going on, but it's not every single sentence is a sponsored ad just yet. They got to get there. They're not going to talk about that because that's rough and that's complicated, but it's going to be a hard road to figure out exactly how do we monetize the full response.
Speaker 2:Everything that we're showing to the viewer should have a lot of things, a lot of links and and and offers and brand messages that are monetizable, paid for, bidded auction style to really maximize every view that they get. And so that is the coming challenge, but they've been doing this for twenty plus years. And so that is the path that they're on. The last thing, Google spending $200,000,000,000 on AI infrastructure this year. 2026 CapEx guidance, 195,000,000,000 to $2.00 $5,000,000,000 right in that $200,000,000,000 range.
Speaker 2:They are also signaling expect that they expect a significant increase in 2027. Q3 spending alone was 51,400,000,000 So they're already on their $200,000,000,000 run rate, and next quarter should be higher, following quarter should be higher, etcetera. So let's go. And then the last thing is that Gemini crossed a billion MAU, monthly active users. The first party AI model, the API is doing 32,000,000,000 tokens a minute.
Speaker 2:Hard to say what that means in the modern era because there's so many models that are more token efficient and really just getting stuff done, getting answers, satisfying users is what matters. But it's up 40% quarter on quarter. Clearly, they're serving more models. More people are using them. And then, of course, they announced Gemini IV Carbon, the newest frontier model, the day or before earnings, two days before earnings, sort of trying to reassure investors that they are still on the frontier, that they're that the benchmarks look good and that the adoption will come and more importantly that they are vertically integrated.
Speaker 2:So, even if they don't show up on the ramp data and the open router data, just having the frontier model internally is super valuable because it will drive YouTube, it'll drive AI search, it'll drive internal workloads. All... There'll all be all these things where they aren't going outside for costs, and they will be vertically integrated.
Speaker 4:Yeah. Seems like it's gonna it's gonna be incredibly strategic to be able to get Frontier Intelligence at 90% low, you know Exactly. Lower than market prices.
Speaker 2:Exactly. Exactly. And then there's a whole bunch of other interesting things. They can fine tune their own models. They can optimize them for their infrastructure.
Speaker 2:The model that works in Google search, it does feel different than a Claude model or a GPT model because it needs to be really fast because people expect that from the AI search results. And then on YouTube, expect something different. You expect something that can piece... Can crawl over all the transcripts of YouTube with no, you know, robot block up, no captchas and whatnot if you're asking for extra context. So lots of lots of optimism there, but rough day in the market, at least.
Speaker 4:And a little bit rough for Berkshire, who, their sort of blended, price per share of their recent $10,000,000,000 investment is around $350 per share. They did some part into class a, some into class c
Speaker 3:Mhmm.
Speaker 4:Down pretty, pretty dramatically from that point. Alphabet now sitting at $280 a share in, just around six months.
Speaker 2:Got it.
Speaker 4:And, yeah, it's it's basically like the OG Google bear case is, like, rearing its head again. Yeah.
Speaker 2:Right? Yeah. That's right.
Speaker 4:That's right. You know, they've been... It became sort of important. They've been... There there was a viral threat.
Speaker 4:I'll I'll try to find it. Are you
Speaker 2:talking about from levels.io maybe?
Speaker 4:No. This was... Basically, guy, July 23, Max Anderson says, as someone who has personally spent 500 ks month on Google Ads for years, I can tell you with certainty this revenue growth in search is artificial and extremely unhealthy for Google's business long term. He goes on to make a bunch of points, have been refuted in different ways, but Sattrini brought it up yesterday. The souffinator at the time pushed back on a lot of this, but either way, it just felt like search was already perfectly optimized.
Speaker 4:I think I was bringing this up probably over a year ago, like, have you actually paid attention to a Google search recently? Where it's like, for certain queries, it's hard to find an organic result. Yeah. Right? Where it's like ads at the top, first three results are ads, then you have maybe one or two organic results and then a bunch more ads.
Speaker 2:I mean, have you have you... Do you understand the structure of, like, finding a mattress on Google? It got so crazy that, first off, there would be Google Shopping callouts that are also paid for. There'd be a Google Shopping widget. Then there would be three or four sponsored results.
Speaker 2:So the links would be, you know, specifically this brand, specifically this brand, just directly brand keyword advertising. But then you'd go down and you get to mattress review sites, and they'd all been purchased by the various mattress companies. Like, there was actually no where to end up. There was nothing that you could go to. There was no, like, Wikipedia.
Speaker 2:And and, yeah, it's been it's been crazy. But but this stuff's just sticky. People are just in their flows still. So that's why you only see, like, slight deceleration. It's not like falling off a cliff or anything like that.
Speaker 4:Yeah. Anyway. One other interesting detail. So Microsoft had earnings as well. Yeah.
Speaker 4:CapEx came in at 38,370,000,000. Estimate was 45,900,000,000. So Google was 51,360,000,000. Estimate was was 55.7.
Speaker 3:Yeah.
Speaker 4:This wasn't because they didn't want to spend the money, it was because of delays. Yep. So they're like, they're trying to spend money.
Speaker 2:Powered shell delays.
Speaker 4:Yes. There's a variety
Speaker 2:of different This whole rumor of like, there's a whole bunch of GPUs that are waiting to get racked because stuff is slow and there's permitting and you're bumping up against the real world, the physical world. It doesn't really matter where demand is. And everyone who's selling tokens is higher is pretty happy to be like, yeah, we wouldn't hate if our margins were good this quarter even though we were delayed on supply. Like, getting supply constrained isn't the end of the world for most people. On the AI build out and strategy specifically, I'm just new tie, new new I'm just new at AI, I guess, has a breakdown of some rumors saying that the internal models' reasoning jump comes from more aggressive RL, including training in games and simulated environments.
Speaker 2:Simulation hypothesis is going strong. Strategies learned their transfer to research mathematics and other fields, and obvious Stokes and ETH show the scale of the improvement in anthropics in a similar direction with its internal quad model. Musk's digital optimist hiring explicitly calls for manufacturing measuring transfer from games into general computer use. And so, Ashley Vance over at Core Memory is saying, does this mean we're just in the midst of Demis Hassabis's original vision of how to get to AGI? After a kind of brief, brute force period, the games are the path to AGI.
Speaker 2:And it is interesting that Google has stayed the course with Genie when a lot of the other labs I mean, Anthropic has famously been like, We're only focused on coding. We're not even doing images. OpenAI has done a bunch of, like, quote unquote side quests. Some of those side quests were too compute intensive, like Sora. Some of them, like computer use.
Speaker 2:Remember Operator? Do you remember Operator? Like, it was the original, like, go and computer... Use a computer and a virtual computer to go and click on buttons on a website. And it was pretty janky at the time, but now it's basically solved.
Speaker 2:And that was actually a good investment on the side. And it'll be interesting to see which way Genie goes. Like, it could just be, oh, it's only fun and it's really expensive, or it could be like, hey, this is a really, really great next leg up for training potential. And it's a really valuable asset for them to have internally. I think that's what people are are debating right now.
Speaker 2:You wanna stay on
Speaker 4:Google News or in NVIDIA world. Yes. In the Times today, NVIDIA chief seen as target of Chinese spy plot. A Chinese businesswoman who had a close relationship with Jensen was found to be passing intelligence to Beijing. President Trump was briefed and took no action.
Speaker 4:That's interesting. American spy agencies had gathered striking intelligence, a top executive at a Singapore based data center. Company was under scrutiny for possibly steering advanced NVIDIA AI chips to China and now American officials had concluded that she was a Chinese intelligence asset funneling information to Beijing. But what came next was even more alarming. Surveillance of the executive Alice Wong, a Chinese citizen revealed that she had developed a close relationship with Jensen.
Speaker 4:For years, Washington had worked to deny China the technology needed to match or surpass The United States in the intense global competition for superiority in AI. The discovery that Beijing was getting reports from someone with direct access to mister Huang, one of the most powerful figures in the AI revolution, as well as an influential ally, president Trump set off alarms at the White House. Roughly a year ago, mister Trump was briefed about the intelligence findings which have not been previously reported and chose not to do anything with the information. So good opportunity to rewind and talk about a show that we did on October 10 Mhmm. Where we talked about this company
Speaker 2:Mhmm.
Speaker 4:And the CEO, Mega Speed.
Speaker 2:Mega Speed. And he called it a great name.
Speaker 4:Mean, it is a
Speaker 2:great name. I gave her a round of applause for being a...
Speaker 4:The name is fantastic. Reporter? That's that's... I... Know, it's always good to say something nice.
Speaker 4:Yeah. So the the name is fantastic.
Speaker 2:Totally.
Speaker 4:So I asked Chad to kind of summarize our discussion.
Speaker 2:Yes. How did our page
Speaker 4:did hold a question and a finding. So did you discuss Alice Wong, the CEO, accused spy? Finding, yes. Did you discuss her access to Jensen? Yes.
Speaker 4:Did you highlight her Chinese state media background? Yes. So she had been a reporter for Chinese state media prior to starting a sort of Malaysian Singaporean hybrid Is
Speaker 2:non Chinese state media?
Speaker 4:Did we question Mega Speed's activities?
Speaker 2:We have independent media. Right? So if you were... If you do anything in the media, it's by definition you're working for the government?
Speaker 4:No. I mean, I I don't think that's, like, actually how they're defining it.
Speaker 2:Okay. Oh, this is, like, an actual state media? Like, being like, press secretary.
Speaker 4:Yeah. You can make the argument that all their media is gonna come under the influence Yeah. Of the state. Did you discuss Alice Wong? Yes.
Speaker 4:Did you discuss her access to Jensen? Yes. Did you highlight her Chinese state media background? Yes. Did you question Mega Speed's activities?
Speaker 4:Yes. Did you explicitly suggest she was a spy? No. Could the discussion be interpreted as raising suspicions? Yes.
Speaker 4:So it was too early to go out and say like Yeah. You know, we didn't have any real details around the situation, but the whole situation was so suspicious. I'm surprised it's taken this long for it to kind of bubble up.
Speaker 2:Yeah. Yeah. No. It's very, very tricky. Yeah.
Speaker 2:I mean, seems like at at the very least, it's like she is being accused of being deployed to figure out how to gain access to advanced AI chips. So how can how can more NVIDIA chips land in Malaysia? Right? Because the more the more chips that get to Malaysia, the more inference that will be available for
Speaker 4:Yeah.
Speaker 2:China, essentially.
Speaker 4:Matthew's in the chat pretty much saying what we're all thinking, fool me once, shame on you. Fool me twice, you get fooled. Can't get fooled again.
Speaker 2:That's a great quote. George w Bush.
Speaker 4:One of the best quotes in
Speaker 2:One of the best.
Speaker 4:White House history.
Speaker 3:Yeah. There's an old saying in Tennessee. I know it's in Texas, probably Tennessee. This says, fool me once. Shame on shame on you.
Speaker 3:If fool me, we can't get fooled again.
Speaker 2:Well, Jensen has not responded to this. He he has not actually posted since October
Speaker 4:Here's 20 the thing. Have they had interactions over the last?
Speaker 2:We've been pictured together. Right?
Speaker 4:Over the last year, though.
Speaker 2:Oh, interesting. This might be, like, kinda old.
Speaker 4:I think it might be I think it might be old news.
Speaker 2:Yeah. Yeah. Yeah. You'd imagine if, like, the the New York Times is on the hunt that, like, the CIA would also be like, hey. You gotta stop talking to this person.
Speaker 2:They are trying to get information out of you. Something like that. I don't know. It'll be interesting to see what happens with mega speed with Malaysia in general. Like, it's kind of a canary in the coal mine, that chart of compute by country.
Speaker 2:If Malaysia continues to ramp compute capacity, it's like we don't know the cause, but we know that there's a problem. If you're measuring a like an athlete and you're noticing like insane blood glucose levels or something, like, you might notice that there's a problem before you can diagnose it. Malaysia seems to be in that camp of, like, it's odd if they're scaling dramatically. Yeah. Given the local...
Speaker 2:This... The local economy.
Speaker 4:It's suspicious.
Speaker 2:Yeah. And so... I don't know. I mean, there's there's a whole bunch of chip sanction, chip control legislation that could be expanded, reworked, changed. There's also...
Speaker 2:I mean, the incentive is just so high. We've heard about people taking hair dryers and removing labels from servers to get them across the... Across borders. It's it's an extremely valuable......
Speaker 4:Was called super micro?
Speaker 2:I think it was super micro. But anytime that there's these geopolitical walls, there's just such an incentive for arbitrage. I remember hearing about people that in the Russia Ukraine war would take basically like a first class fight to a Western democracy, buy a DJI drone at like a Best Buy for a thousand dollars or buy a bunch of them, put them in their suitcase, fly them into the closest country, hop on a train or a bus, get into the conflict zone, and be able to sell them for like, $10,000 apiece. And so that arbitrage is just like, okay. One trip, if I have 10 drones with me, I make a 100...
Speaker 2:I make $90,000 in profit. Yeah. People do that. It's the same thing with with NVIDIA GPUs. So there's going to be an incent...
Speaker 2:A huge incentive not just to steal them and divert the cargo and do whatever you can, but also get close to the CEO, see what you can do, learn what is their actual process for making sure that chips aren't diverted. Right? How how can we mitigate the diversion as much as possible, or divert as much as possible? Right? And so, it's an ongoing battle.
Speaker 2:But another example of the high geopolitical stakes of the AI race is this the moment that AI 2027 was talking about? China wakes up. Wakes up and starts spying, like starts going more aggressively. Wouldn't
Speaker 4:that... They've been doing
Speaker 2:this for a for a couple of years then. Yeah.
Speaker 4:Should we go down the rabbit hole?
Speaker 2:Yes. We should. Let's see. Simulated markets. The simulation hypothesis.
Speaker 2:So this... I went down this rabbit hole a couple days ago because you got served this video too on Instagram. Right? You saw...
Speaker 4:Well, we have the exact same...
Speaker 2:We have the exact same feed. For some reason, Instagram doesn't show us any ads and sends us the exact same videos at the same time. I mean, this is just the nature of, like, things that go viral. Everyone sees them. But let's
Speaker 4:But we specifically are sending posts back and forth all day.
Speaker 2:So it's like you guys like the same thing? Yeah. So there's this video.
Speaker 4:Yeah. We have the... We'll we'll each send the same video
Speaker 2:Yeah.
Speaker 4:To each other.
Speaker 2:And I'm just like like we're just like Scroll up. Every... Yeah. Scroll up. Everyone will
Speaker 4:send this in the night.
Speaker 2:Everyone sends the same video. But there's Two reels
Speaker 4:passing in the night.
Speaker 2:That has the title losing our house because Really?
Speaker 4:Day Really, Tyler? What happened?
Speaker 3:I had to take it off.
Speaker 2:Oh, you...
Speaker 3:Had to take it off.
Speaker 2:Wow. Oh. Had to take
Speaker 4:it off. I'm sitting here in the capital of show business Yeah. And you got a little bit uncomfortable with with with your character....
Speaker 2:Ben Macklin behind you over your shoulder. He looks like a little angel on your shoulder. I like the way it's framed right now. It's great. Let me tell you about Console.
Speaker 2:Console builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. So, this video came up, it says losing our house because of day trader. Did you notice this? Not because of day trading, but because of day trader. So already odd grammatical error, but play this video because it's designed to sort of rage bait you and go go viral.
Speaker 2:And it has this saxophone getting louder song. And it's the whole family. This would normally be a tragedy. Like, you're losing your family home. But Yeah.
Speaker 3:Really dark.
Speaker 2:It's super dark, you're like, this is awful. Like, what is going on? But if you dig into this person's if you dig into this person's account, the next video is like, I lost my house day trading and, like, here's how I'm planning to win it all back. And then it's like, click my link in bio. And then you click on the link in bio and it's like, here's my trader...
Speaker 2:Mastermind. I have a free course, and then I have a $49 course, and then I have a $100 course. And so all of this is actually a funnel to an info product, and this is designed to go viral. And I don't know if they lost the house or not. Like, I I I have no idea.
Speaker 2:It could be that they're doing better than ever because they're not actually trading at all.
Speaker 4:Very, very counterintuitive way to market an info product being like, I just lost my house because I was bad at something. Now follow me as I run it back up.
Speaker 2:Maybe.
Speaker 4:It's weird. Don't. It's it's... Again, it's like it's... I saw it and it made me very sad.
Speaker 2:Yeah. Totally. Like, that is the correct emotional response, but the nature of the algorithm and negativity bias on social media is this is something that you see and you're like, oh, this is horrific. I can't look away. And then a lot of...
Speaker 2:There's just a funnel. And some people click and they watch another video and they're like, oh, this is this is inspiring. She's she's working her way back up, and they're they're they're staying in the game. They're they're not they're not, you know, hanging up their jersey, I guess, or whatever you wanna
Speaker 4:They're not quitting right before they hit it big.
Speaker 2:Basically, that's the pitch. And, yeah, it's really, really dark. So so I I I started going down this because I was like, okay. Who's on the
Speaker 4:other side of trades? Because it just, like... It it it sticks in your mind because it is such a tragic scenario. Totally. But then what's interesting is they're just like spinning it as, oh, yeah.
Speaker 4:Well, it's all good. We're... I'm sticking... I'm... You know, I'm not...
Speaker 4:We're not giving up yet. Yeah.
Speaker 2:Yeah. So it's very, very odd. But there's actually a... Something very interesting going on because when you see that, you think casino style gambling, you think that somebody took their capital if they have their nest egg, their kid's college fund. Like, when I was a kid, like, the the the don't gamble meme was he gambled away his kid's college fund.
Speaker 2:Like, that was the most degenerate thing you could do as a father. It would be gambling away money that was in your retirement, money that was saved, your nest egg, your rainy day fund was gambled away, usually at a physical casino because you couldn't resist the temptation of blackjack or poker or slots or something. Then we came to the era of the phone and all of a sudden it became sports betting, offshore betting casinos, crypto casinos, people were losing money on crypto. But again, crypto is a moment where you have to put capital at risk. You have to have the nest egg.
Speaker 2:This is different. So, there are people that are getting fleeced and losing money, but what's interesting is that it's not that they're taking a nest egg and putting it in a stock that then goes down and they pick the wrong stock. That's not exactly what's happening. Oftentimes, they're doing is they're signing up for subscriptions to trade fake stocks. It's a simulated market that gives them the the feeling of, okay, maybe one day they will be able to get good enough at day trading that they will have access to capital.
Speaker 4:Well, and these platforms pitch it as do your simulated trading with us.
Speaker 2:Yes.
Speaker 4:And if you're good Yes. Then we will give you then we will stake you. Yes. And we'll give you capital that you can trade. We'll basically turn you into a mini hedge fund.
Speaker 2:Yes. Exactly. Exactly.
Speaker 4:And we did a little bit of research on these companies and they're shockingly large. Found And there's a lot one of them. Yeah. We found one that has done hundreds of millions of of fees Yeah. Which for them is like clearly like better than software margins.
Speaker 4:Right? Because they're just have... They basically have like a fake trading app. Yeah. And they're like, yeah, place your trades.
Speaker 4:It's tied to real data. Yeah. But then they just promise this, pay the $100 a month, prove that you're good at trading, and if you're good, we'll give you capital. Right? Yes.
Speaker 4:Because it it it'll be a win win. But of course, over time, a lot of these companies have been exposed as Ponzi schemes where
Speaker 2:Oh, exactly.
Speaker 4:They take other customers' money and and basically, like, you're doing the simulated trading and they're they're like, you get an attaboy, like you did a good job, and then we're giving you like a reward. And so they'll pay them which I think is of what makes this process addicting, which has driven some of these people to go and get a bunch of subscriptions. Yeah. Which is just like very very strange because every subscription could be a $100 a month. Yep.
Speaker 4:Multiplying that out, it's like you could just be investing. But when you're investing, nobody nobody says good job. Yeah. If you do a little bit better. Yeah.
Speaker 4:I'll give you a bunch of capital to invest. Yeah. Right? Because people... Like LPs are not sitting around being like, how do I back the next, like, stay at home day trader?
Speaker 4:Yeah. You know? Like...
Speaker 2:No. 100%. Like, these were so, like, jarring to me because I saw multiple reels from people who were like, I I have a prop trading account or I'm working with a prop firm or I blew my account or I blew an account or several accounts. And I was just like, you are not working with Citadel or Jane Street. Like, this is just...
Speaker 2:This does not compute. Like, you're not on the phone. Like, your counterparty is not a a a a a hedge fund. Like, something else is going on. And it turns out that the counterparty is basically a SaaS product that shows virtual trades that are completely simulated.
Speaker 2:And the crazy thing is that I I originally said this. I was like, imagine... Like, look at this horrific story. Imagine being at, like, Citadel or Jane Street watching this and being like, this is the person on the other side of the Right? But it's not.
Speaker 2:They're not. It's actually not the hedge fund that's making money off of this. It's the independent...
Speaker 4:The hedge funds would love to be trading. They would love to be trading against these people.
Speaker 2:Yeah. They're like, get in the real market. Go on a real go
Speaker 4:on Don't real be scared. Yeah. Don't be scared.
Speaker 2:Come on. And and we'll make a penny every time you make a trade. Like, we're happy with with doing market making. But instead, it's these firms that are that are actually just taking a $100 a month from people. They'll do it on credit cards.
Speaker 2:And so that's where you get people. Again, we don't know if this one's real or not, but there are actual people who who will put multiple $100 a month subscriptions for these simulated trading challenges on their credit cards, and they're not even putting any capital in the market. So there's actually no chance of, like, oh, you actually did get into a good stock, and it did well. Like, it's it's purely fake. It's crazy.
Speaker 2:Crazy. Crazy. Well, I mean, the market in... Overall is in a rough spot. The Nasdaq is down 1.3%.
Speaker 2:The Dow is down point 25%, the headline. Alpha that sheds 500,000,000,000 in market value in the stock's worst day ever. These best day ever, worst day ever headlines are increasingly common. The swings are crazier than they've ever been. There's a lot going on, but we'll cover it here on the show.
Speaker 2:So thank you for tuning in. Leave us five stars on Apple Podcasts and Spotify. Tyler, you wanna take us out with a truth nuke? You didn't get much time on the show today, honestly. Other than
Speaker 4:As yourself.
Speaker 2:The game. Yeah. Sort of LARPing Jordy over there. But we got a Drew the rolling flashback. We will see you tomorrow at 11AM.
Speaker 2:Goodbye.