February 11, 2025 • 35 mins
Federal judges continue to declare most of Elon Musk’s activities in Washington to be probably illegal as the question of whether his 78-year-old boss will trigger a constitutional crisis becomes more pressing. At the same time, Musk has been making news in Silicon Valley, with a report Monday that he and others want to buy OpenAI. The proposal may have been a feint, but Sam Altman did take the opportunity to make Musk look small. The OpenAI chief executive said no thanks to the $97.4 billion offer, but added he’d be happy to buy X off of Musk for a pittance by comparison. From Washington, reporter Josh Wingrove joins host David Papadopoulos and panelists Max Chafkin and Dana Hull. Plus, New York magazine tech writer John Herrman comes on to talk about how Musk’s businesses may be benefiting from his role as Donald Trump’s hatchet man.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Well, Elon Musk is
now the richest person on the planet.
Speaker 2 (00:15):
More than half the satellites in space are owned and
controlled by one man.
Speaker 1 (00:21):
Well, he's a legitimate super genius.
Speaker 2 (00:23):
I mean legitimate. He says he's always voted for Democrats,
but this year it will be different.
Speaker 1 (00:27):
He'll vote Republican.
Speaker 2 (00:28):
There is a reason the US government is so reliant
on him.
Speaker 3 (00:31):
Alon Musk is a scam artist and he's done nothing.
Speaker 4 (00:36):
Anything he does, he's fascinating people.
Speaker 2 (00:49):
Welcome to elan Ink, Bloomberg's weekly podcast about Elon Musk.
It's Tuesday, February eleventh. I'm your host, David Papadopoulos. Today
we're talking about what else do Since we last gathered here,
Musk and his band of doze zealots have burrowed themselves
into many corners of the federal government as they frantically
pursued their goal of gutting what they deem wasteful. The
(01:12):
pushback from courses across the country's mounting. Now the question,
or one of the questions, is will Musk and the
Trump administration heed the judge's warnings. And then yesterday afternoon,
a bombshell dropped. Elon was leading a group of investors
offering ninety seven zero point four billion dollars to acquire
open Ai. Is Elon, sirius? Is he just trolling? Is
(01:36):
he messing with rival? Sam Altman, who should be noted,
quickly rejected the bid. To talk Doze, we have Dana Hall. Hey,
they're Dana Hey, David and Max Schaffkin. Max, how you doing?
Speaker 3 (01:50):
David?
Speaker 2 (01:50):
Hello, Hello, as well as Bloomberg political reporter Josh Wingrove
dialing in from Washington. Josh, welcome, sir.
Speaker 5 (01:58):
Thank you for having me. It's an eventful time.
Speaker 2 (02:01):
Indeed it is. And then later on we will welcome
back a special guest, a guy fast on his way
to earning official friend of POD's status. New York Magazine
tech writer John Herman to talk about what he calls
the Elon bailout, as well as the latest chapter of
the musk Open Ai saga. Okay, Josh, so we're going
(02:21):
to start with you there. Doge is on the rampage.
Bring our audience up to speed. It's all happening fast
and furious. Give us the last seventy two hours in
the Doge universe.
Speaker 5 (02:34):
I mean, they are trying to dive into everything, and
Trump has given them license to hit every department, including Defense,
including education, including Treasury, of course, where a lot of
the news has been focused in this past week. But
just to give you a scene, like every time a
headline drops on something they're doing or something that makes
Democrats heads explode or you know whatever, we all go
(02:57):
to the White House for comment, and they've been sort
of like dancing around it a little bit, but Trump
himself consistently really leans in on this to give sort
of license essentially to what Elon Musk is doing with.
Speaker 2 (03:08):
Though Josh really leans into what exactly.
Speaker 5 (03:11):
Trump is leaning into endorsing what Musk is doing. He
putting in caveats here and there, but generally speaking, when
we asked him about it, as was the case a
couple of days ago, as he flew to the super Bowl,
you know, he's sort of blessing he's standing by Elon,
and every time Musks gets in Trump, you kind of wonder, oh,
is this the moment where they're going to crack, because
this is the moment where Trump is going to start
(03:32):
distancing himself, and we just haven't had that happen right
now on the contrary, Trump is really you know, stuck
close to him. And like, for an example, on Sunday,
Trump called us up to the front of the plane
as he flew to the super Bowl. You know, he
had a big sign that's a Gulf of America. We
were over the Gulf of Now, I guess you're.
Speaker 2 (03:49):
The Gulf of America. Yeah, by the way, now to
be seen on Google maps the Gulf of America.
Speaker 5 (03:54):
Max apparently, depending on where you are. But he, you know,
held court for a while and talked about this, and
in particular wandered even into the notion of treasuries being something.
Speaker 2 (04:04):
So just for a second for our audience, treasuries, US
treasury bonds. This is the debt the United States government
has taken on to finance. It's spending when it spends
more than it takes it in revenue, which is the
case in just about each and every year. And I
think nowadays there's roughly about thirty trillion dollars give or
take of US treasury debt out there.
Speaker 5 (04:25):
It's more than that now, but yeah, there's a lot
of it out there. Thirty six I think it was
maybe a more recent number. And the reporting until now
is that the Musk and the Doge team at Treasury
have been focusing on payments that Treasury is sending out,
but Trump sort of suggested that it went even beyond that,
that it wasn't just sending out payments that Trump's team
thinks you shouldn't send out. That it was oh, maybe
(04:47):
the debt that we have isn't as big as we
thought it was. And that really raised eyebrows because then
it raised the notion that we were talking not just
about treasury payments, but that this sort of fraud hunt
extended even towards the debt. And of course, the notion
that the US might start, you know, wavering on whether
it consider it's it's debt legit or not, you know,
has the potential to rattle market. So that kind of
(05:08):
that that that rattled things. I think, I think just
overall on this, Trump is framing this as fraud to
give it political license. He's saying that he was elected
to get rid of fraud and that Elon is doing
his work for him. So he's pushing back on the
suggestion that Musk is you know, an unelected guy sort
of marauding through the government, controlling with the keys to
(05:28):
everything right. So Trump is not only standing by him,
he's like writing in a blanket.
Speaker 2 (05:32):
He's saying, you know, Elon Musk is my guy. Max fraud,
fraud everywhere.
Speaker 3 (05:37):
I don't know what he's talking about with the Treasury thing.
Speaker 4 (05:39):
My best guess is that it's like a calculation question.
It's like it's like how they're going to decide to
calculate the amount of debt or something like.
Speaker 2 (05:47):
That, Max, are redefaulting. Just tell me we're defaulting. I
want to know.
Speaker 4 (05:51):
I think one of the reasons that they're talking about fraud,
I mean, I think it's both because of who Elon is,
but also politically right, Like a lot of the stuff
that Elon is walking towards is super unpopular, and you know,
whether it's like cutting NIH funding. You know, the NIH
is a major cause of a lot of jobs and
(06:13):
a lot of red states, and you can kind of
go down all these charities that they were attacking. There
are lots of things they're doing that voters, senators, congress
people are not gonna like. So that's why they're keeping
it focused on fraud.
Speaker 6 (06:24):
I think I would just like to remind the listeners
that this whole idea of doge was Elon's idea. He
proposed it to Trump on an audio spaces in August
and basically pushed Trump to say yes. And so I
get super frustrated when I see stories that are like
Trump has tapped Musk to like lead an efficiency effort.
This was Musk's plan.
Speaker 2 (06:45):
This is Musk tap Musk.
Speaker 3 (06:47):
Musk pitch this.
Speaker 6 (06:48):
Job for himself and has been given carte blanche from
the executive from the administration to do what he's doing.
Congress is totally flat flooted and has been completely supine
and has rolled over and abdicate. I mean, the whole
concept of separation of powers is being eroded. And now
you're seeing must go after the judiciary whenever there's like
a judge filing like a stay or a tro like
(07:10):
Musk is basically calling out the judge on X. So
like we're seeing like the whole concept of balance of
power completely be eroded, and nothing is going to stop
Elin at the moment as far as I can tell,
and they are already signaling that they're not going to
go along with what the judge says. So and to
Josh's point, like the fact that Musk is doing this
(07:32):
with this sort of widespread power that Trump is supporting him,
and that Congress is sort of left flat footed kind
of works in the administration's favor.
Speaker 2 (07:41):
So Josh on that point that Dana raises on this
administration and Musk's Doze team challenging courts and clearly pushing
through things that they know themselves are very much in
a gray area of the law, and then also to
a certain extent saying well, well, you know, we'll see
(08:01):
how much we abide by what the court says. Presidents
going back for years have pushed the boundaries of the
law and then seeing how the courts reacted. Just how
different is this time around.
Speaker 5 (08:13):
I mean, Trump, with every day, you know, challenges, at
the very least sort of the perceived limits of the
power of the presidency. He really believes in consolidating power.
Even his sort of go to move these first two
weeks executive orders, those are usually pretty flimsy. I mean,
they're sometimes not worth the paper that they're printed on,
but Trump is wielding them like royal decrees and people
(08:36):
are bound to that. So he kind of has kind
of shifted the Overton window on what like an executive
order is and therefore what presidential authority is, and so
Elon continues to test that. I think there are a
couple things to watch for. Number one is do the
secretaries start pushing back, right because he's mucking around in
the back rooms of the Department of the Treasury, the
(08:57):
Department of Education, the Department of whatever. And as long
as the secretaries are buying into that, you know, no problem.
But if they start pushing back against that, then you
start to get power struggles and power struggles. Of course,
we're a defining feature of the first Trump administration so
far sort of you know, kept down in the second
Trump administration. But if that starts happening, you know, who
(09:19):
knows how that's going to shake out.
Speaker 4 (09:20):
Scott Bessen is one that I yeah, Treasure Sector last week,
you know, Musk they had this whole you know, back
and forth over does he have read only access? And
and Trump was saying, you know, Trump and the Trump
administration was essentially saying that, look, he can he can
look at the data, but he can't do anything with it.
Speaker 3 (09:38):
And then musco'es on Twitter and says there are still.
Speaker 4 (09:40):
Billions of payments in fraud going through the Treasury payment system,
which kind of sounds like an attack on Scott Bessen, right,
You're you're sort of saying like, uh, Scott Besson doesn't
have control all this. And again, this thing that Josh
brought up earlier, it's some idea that maybe some of
the bonds that we have or you know, we don't
have to pay the debt on or whatever like. It
definitely seems like that is undermining part of what Scott
(10:02):
Besen has to do, and you could imagine that leading
to conflict.
Speaker 2 (10:06):
Now, Dana, as Josh was intimating, Musk and his crew
are about to head into the Department of Defense. They
are there already. The stakes once they're in there, for
any number of reasons, suddenly really ratchet up quite a bit.
Speaker 6 (10:22):
Yeah, and that's because the Defense Department is a huge
part of our overall budget, and because Musk is a
defense contractor, so SpaceX has a lot of contracts with
the Department of Defense for both rocket launches and starlink,
and he has said quite publicly, including during a conversation
at West Point, that the future of warfare is AI
and drones. Well, guess who has an AI company? Elon Musk,
(10:45):
Guess who has you know, makes military hardware and drones.
You know his buddies at and Drurro. So you're going
to see a real shift in terms of the way
the Pentagon does procurement, and Elon and his friends have
an enormous amount of gain.
Speaker 3 (10:58):
There attempted shift.
Speaker 4 (11:00):
Oh for sure that the it's just going to actually
happen because again, same thing I brought up about the
NIH and I've said this before on this podcast, these
defense contractors are major job creators. I don't know that
Musk is going to have as much rope as people
think he will.
Speaker 3 (11:14):
Cutting the defense.
Speaker 4 (11:15):
Well, again because of the conflicts of interest, and because
we're talking about jobs.
Speaker 2 (11:19):
I think going after USAID and it's roughly what Josh,
forty billion dollars year budget that largely of course goes
overseas to people who do not vote in US elections,
is one thing. Going after large contracts for the military
industrial complex I think is an entirely different thing. The
(11:39):
Secretary Defense Pete has Get says he welcomes Elon with
open arms. That one is going to be very interesting
to see how it plays out now, Josh, but they're
on the ground in DC. What is the mood on
the Democrat side, my understanding is their phone lines are
blowing up from irate constituents saying, damn it, do something.
(11:59):
What's the sense there? Where do they stand in forming
a credible opposition to Musk and Trump.
Speaker 5 (12:05):
They're in a really tough spot because conservatives are mostly
delighting in what Musk is doing. I think that that's
an important factor to look at here. If people think
that there's some sort of pressure building up on Trump
within the Republican Party, within the broader conservative movement, it's
just not there. And so for Democrats when they go
and do some you know, stunt or whatever, trying to
(12:26):
like go into these agencies that are being dismantled, the
problem is that that only sort of feeds the perception
that is delighting conservatives who are wanting Trump to really
make structural changes to the broader state. And so that
is really the trap that they're in. Not only are Democrats,
of course, you know, kind of rudderless right now, but
more broadly, they don't really have any tools that would
(12:48):
be effective to sort of crank up the pressure on this,
whether it's at USA AID or others. The blowback that
Max alluded to is going to come more from when
they start hitting red states, for instance, when banks gets
hit by funding cuts.
Speaker 2 (13:01):
Max. That is a good point that according to a
CBS poll they came out. I believe on Monday, Donald
Trump's approval numbers are up since his inauguration. I believe
Americans a greater number of Americans now approve of him
and what he's doing visa v from before.
Speaker 4 (13:18):
It's true, although Elon Musk's numbers are not haven't looked
so good. There's been a couple of poles I haven't looked.
I don't know if anything's come out this week, but
last week there were two poles, you know, showing that
Musk's numbers had fallen since the election pretty badly. So
I think Josh is right, like I think, and what
you're saying, like picking on these kind of soft targets
like USAID or whatever, like the pain is going to
(13:40):
come later.
Speaker 3 (13:40):
The pain for Trump politically is you've.
Speaker 4 (13:43):
Made a lot of promises and like, what have you
actually done except for so a lot of chaos, right,
Like fifty billion dollars is not that too much money
in the scheme of things and a lot of these
things that Musk has done either. They sound very dramatic,
and there's been a real cost for the civil service,
but it's not clear that he's gonna come away from
this having achieved a whole lot. And then if you
(14:05):
put that on top of you know, creating chaos in
red states or or pissing off voters, I mean, you know,
we are seeing some activation of grassroots Democrats.
Speaker 2 (14:17):
This reminds me actually that we're still playing out. I
believe as we speak is the Musk team's offer of
buyouts to all federal employees. I think we're still I
think that's been paused by a judge. Yeah.
Speaker 4 (14:27):
Yeah, And so far they've got sixty thousand people. They
get one hundred thousand retirements each year, so like that
is not a big number, that's a small number. And
so again like tons of talk, tons of chaos, pain
in a very few specific areas. But I don't know
that he's actually done all that much despite the crisis
that that Dennis.
Speaker 2 (14:47):
Well, one thing that he has done, and with this
we will wrap here on this first segment, is you know,
I was dead wrong. I thought the first thing those
was going after was daylight savings and that they were
going to make it permanent. And I'm a little disappointed
that they have not gone pennies. You got it a penny.
Whoever's pushing back on the death of the penny, just
(15:08):
zip it, man, I mean, the penny's gotta go it.
The penny is truly absurd. And after they're done with
the penny, Max, they can go for the nickel. Max
Bold bold.
Speaker 3 (15:18):
Talk from Bobdopolis over here.
Speaker 2 (15:21):
Wow, when you're done Nix and the penny, Nicks the nickel,
Josh Wingrove, you are going to be a or You
already are a very very busy man, and you will
continue to be so and as a result, we will
have you back on again soon.
Speaker 5 (15:33):
Thank you all for having me. I'll keep letting you
know when we see him in the White House.
Speaker 2 (15:41):
Okay, we're now joined by John Herman, New York Magazine
tech writer. John. Welcome back to the show. Thanks for
having me. Okay, John, So you were last on a
year ago. Man, we were so young and innocent.
Speaker 3 (15:53):
Porn. We were talking about porn.
Speaker 2 (15:54):
We're just you know, and god, what do we you know?
What do we know? We had no idea what we
were in store for, and Musk was really if you
think about it, he was essentially a nobody, right right,
And now every time you shake the magic eight ball
and see something goes on in the world, it just
comes up Musk. Now, John, you have written a piece
(16:15):
recently where you lay out what you believe to be
the bailout, as you call it, that Elon is getting
as he jumps into the government and does all these things,
and is he buddies up with with Trump. I got
to tell you just off the bat, I'm going and
I'm a little dubious on this bailout thing here, So
convince me of it.
Speaker 1 (16:34):
Yeah, I mean, as a term it's a little provocative,
But I do think this is a strange time, confusing time,
and it's helpful to sort of back up and try to,
you know, in the spirit of the show, look at
you know, Elon Musk first principles and try to figure
out what's going on. On one hand, you've got someone
who is very open about like attempting to mingle his
(16:54):
own business interests in ways that are often unconventional and
in some cases like challenged in court. So his portfolio
of companies is like used, you know, to support one
another in ways that are you know, he has a
sort of fundamental belief that he his success is sort
of fused with the fate of the world, that he
is sort of destined to save the world. He says
(17:16):
this all the time. You can, you know, doubt his sincerity,
but in my view, it's it's you know, real in
some sense, he's really like, you know, he believes that
what he's doing is this, and I think.
Speaker 2 (17:26):
The three of us here, Max, Dan and I all
very much believe that he does.
Speaker 1 (17:30):
So we've got those first principles. Now, what happens if
you add the United States government to that portfolio of companies.
In the view of someone who thinks this way, you
start to think about how the government helps Musk, and
he tends to talk about more how how Musk can
sort of change the government. So you've already talked on
this show about the obvious overlap with companies like SpaceX,
which has enormous contracts with different agencies and different parts
(17:51):
of the government. And and we'll have even more through
through Starlink. We can talk about Tesla, various subsidies things.
Speaker 2 (17:58):
So, how does Musk's relationship with this administration, his very
cozy relationship with this government help for instance, X right.
Speaker 1 (18:08):
So SpaceX is an obvious contractor X is like further
away from what we think of as you know, the
normal operations of government. But it's Elon Musk's probably most
distressed asset, not his most financially important. He is using
it now to sort of like you know, command his
(18:29):
incursion into government, so it's become very very visible, but
also like his his proximity to power has real value
to X. He is currently in the process of suing
advertisers for what he says is an illegal boycott of
X right, which is a lawsuit that I think a
lot of people didn't take very seriously when he first
filed it. Well it's certainly unconventioned, certainly, but he amended
(18:50):
it recently. And some of these advertisers are coming back
because you know, maybe they were content to ignore Elon
Musk before he was the president's right hand man.
Speaker 2 (19:00):
John John, I will just warn you that the last
person who said on this podcast that that the advertisers
were coming back got blown up by Max, So you know, no,
they're not that coming back is coming back. Mean, Hey,
here's two chits, here's two tokens. I'll put on your
board to you know, to appease mister Musk. Are they
really coming.
Speaker 1 (19:20):
Back the numbers, I mean, we don't know the full numbers,
but they are signaling that they're, you know, more open
to coming back than they were.
Speaker 2 (19:27):
That's one piece.
Speaker 1 (19:27):
Another piece is that AX is sort of becoming a
little bit like truth social This extension of the government
communications program the the NTSB, for example, announced in a
in a post on X that was where they were
going to be messaging about recent air disasters, which is,
you know, a small thing but also potentially a sign
of like a bigger thing.
Speaker 2 (19:45):
Right. This is an extension of the Max Chafkin theory
that that's what X has become. It's become the media
ar you're just I mean.
Speaker 4 (19:50):
But this is like the least important of Musks companies
that are benefiting so went from the dynamic that you
that's like it's like saying, well, how is Musks video
game playing? How is the Trump administration benefiting his his
status on path of exile? Like it actually might be baby,
but like honestly spaceds Tesla are way bigger companies with so.
Speaker 3 (20:12):
Much more to game.
Speaker 1 (20:13):
Twitter's is the least important, but it's like really visible
and really like I think a lot of people pointed
to Musk's takeover of Twitter as like a playbook, which
I think is useful, but you sort of extend that
a little bit further and you're like, okay, how does
it flow the other way? And there are these real
benefits to being someone who everyone is a little bit
scared of. The advertisers, maybe come back, People have to
use your platform, people have to pay attention to your platform.
Speaker 2 (20:35):
Tell us though, how this is a net positive for Tesla,
because that's not screamingly obvious.
Speaker 1 (20:40):
No, the Tesla situation is weird. I feel like that
statement holds true pretty much at any time that you
talk about Tesla's stock. For example, it's this weird company
in that it's a major automaker that sells a ton
of cars and has real financials. It is also, to
a great degree kind of a mean stock, and that
depends on Elon Musk's reputation promises about the future, some
(21:01):
of which are kind of crazy and some of which
just seem a little premature. You know, it's a mixture
of like can he deliver?
Speaker 2 (21:07):
Will he deliver?
Speaker 5 (21:08):
Is this made up?
Speaker 2 (21:08):
Now?
Speaker 1 (21:09):
In addition to that, you've got this this you know,
sort of implied connection to the establishment in the biggest
possible sense. So not only does Elon Musk say, okay,
listen to me, I know we had a bad quarter,
which they did. Don't worry about our cars. Think about
our cyber taxis, think about our humanoid robots that we're
working on, think about AI, think about these things with
(21:31):
you know, vague future dates, and you know, we're we're
doing this cycle again. But also what if and think
about this, investors, what if I now can't lose What
if I am like the supreme government connected.
Speaker 6 (21:43):
There's some clear examples where Tesla is really well positioned.
So example, one tariffs. Tesla does it make cars in Mexico.
They make all of their cars that they sell in
the United States in the United States, so they are
sort of like insulated from tariffs compared to Ford and GM.
The second thing is the Heavy Program, So like the
Trump administration just funded just basically froze or halted all
(22:06):
of the payments that go out to the states to
build a network of high speed electric vehicle chargers. Halting
those payments really disrupts all the plans that these states
had to kind of build out a charging network, but
it really helps Tesla, which actually already has a charging
network that a lot of other automakers use. And so
in small ways you're seeing the administration do things that
(22:27):
do benefit Tesla. And what's you know, what I try
to remind people is like, you know, Elon has very
smartly played both sides of the aisle, because like Tesla
got enormous benefit from the Inflation Reduction Act and now
Trump is like walking back a lot of that. But
it's it's it's like they're not walking back forty five X,
which is the manufacturing text credit. So like Tesla wins
(22:49):
no matter what, like they are going to be okay.
The biggest risk to Tesla right now is just the
brand and of Elon's craziness and the sales plummet in
markets like Europe and the US.
Speaker 2 (22:59):
Yeah, and to that point, and max I in my
absence last week, I do appreciate you guys talking about
the collapse in sales in California, which were followed then
by a collapse in sales in Germany and I think
France that happened around the same time. And these are
big numbers, down sixty percent or so all that, I
guess certainly does seem to square with a drop and
(23:21):
Musk's approval rating. And I guess if right now there
are any checks or leverage that must detractors have on him,
maybe this is the extent of it.
Speaker 4 (23:32):
The sales you mean, yeah, yeah, I just to want
to reiterate one thing Danna said, which is like really important,
Like it would be awesome for Musk if he could
just like get the Defense Department to hand him like
a ten billion dollar check for something, or to like
just have the federal government like pay him directly, you
buy some Starlink satellites by a Mars mission, make have
(23:55):
Tesla as the new designer of military jeeps or some
crazy stuff like. That'd be great, But that stuff is
going to be more difficult, it's politically difficult. But just
stopping stuff benefits his companies enormously, Like if he is
able to like pull up the ladder behind him on
tax credits, or if he is able to for evs,
if he is able to slow down other providers of
(24:16):
rural broadband, which he appears to be doing, like all
these things with Starlink, all these things like help him
and so he's gaining just by like cutting things, and
we haven't even started talking about writing checks.
Speaker 2 (24:28):
I do think addition by some truck, I do.
Speaker 4 (24:31):
Think the thing that John is saying that is really
smart is that people see Elon as this like, you know,
he's this amazing capitalist. He has all this influence. He's
the world's richest man, but he is vulnerable in certain ways.
And like one of the reasons he did this with
Trump is because I think he had vulnerabilities and and
like those vulnerabilities continue today, and and by it's not
(24:53):
just the sales thing, it's by by making himself a
political force, by by allying this closely with Donald Trump,
a guy who is, yeah, his pull numbers have gone
up a little bit, but he's not that popular. Musk
is eroding some of the things that have made him
very powerful. And you're seeing that in the stock price, right,
Like Tesla stock has fallen by like eighty bucks over
the last few days, you.
Speaker 2 (25:13):
Know, since the inauguration. I was looking at this this morning.
Twelve of the sixteen trading sessions since the inauguration, Tesla
stock is down. It's not plunging each and every day,
but it's down and it's down. Yeah, it's now down
about seventy percent.
Speaker 4 (25:25):
I do think that the traders who have bid this
stock up for no particularly good reason other than the
fact that Elon has proximity toward Trump are thinking, like
John says, hey, heads, he wins, tails, he wins whatever,
but you are seeing more reasons to doubt him, and
like that is what is driving the stock down.
Speaker 2 (25:47):
Okay, Dana Elon Musk says he and some other investors
want to purchase open Ai. Tell us about this and
where it currently stands.
Speaker 6 (25:59):
So I guess they made a bid for open Ai,
and Sam Alton immediately responded and was like, open Ai
is not for sale. So I don't know where this
currently stands. I just think that like Elon is doing
what Elon does, which is to sort of be like
the big bully pulpit and in the middle of, you know,
upending the American government, He's like trying to go on
his m and a spree and and Sam is like, no, like,
(26:22):
we're not.
Speaker 2 (26:22):
For sale, Max, is this a legit attempt? You're right
furiously scrouching down.
Speaker 4 (26:28):
I was making sort of like a matrix on like
how realistic is this acquisition offer?
Speaker 3 (26:32):
For Elon Musk. So like on one side you have.
Speaker 4 (26:36):
Threatening to buy Coca Cola to put the cocaine back
in it, like clearly a joke offer. And then on
the other side you have buying Solar City, which was
like clearly a serious offer.
Speaker 2 (26:44):
Yes, Twitter swimming somewhere.
Speaker 4 (26:47):
In the middle because it was a joke, it seemed like,
but then it became a serious thing, buying Liverpool Football Club,
which has he has kind of joked about.
Speaker 3 (26:55):
I'd say, close to the Coca Cola thing.
Speaker 4 (26:57):
This feels like, I'd say, smack in the middle of
this chart because it's not a serious.
Speaker 2 (27:03):
So to the right of Liverpool, to the.
Speaker 4 (27:05):
Right of if this, yeah, on the left, farthest on
the left is the least serious.
Speaker 3 (27:09):
Farthest on the right, that's right dead center.
Speaker 4 (27:12):
And I say that because it's not a serious offer
in the in terms of the size, this is like a.
Speaker 2 (27:17):
Low ball nine, wildly undervalues the company.
Speaker 4 (27:22):
But I do think he could create chaos for Sam
Altman if he goes to the negotiating table, right and like,
to me, this feels like, you know, in poker terms,
like big stack bully, like if you have an insane
amount of money you can, you and negotiations can do
all sorts of things. You can sort of push people
away from negotiating table, you can.
Speaker 3 (27:41):
So like, maybe he's just trying.
Speaker 2 (27:42):
To cause on the other side, isn't isn't Microsoft on
the other side alongside Sam Altman.
Speaker 3 (27:48):
Yeah, but I think they have a pretty good stack too. No,
I don't think.
Speaker 4 (27:51):
That Microsoft is necessarily as willing to raise hundred hundreds
of billions of dollars to what buy out Microsoft.
Speaker 3 (27:59):
I mean, the Microsoft has already bet a lot of
money on this company.
Speaker 4 (28:03):
So, like, I don't like again, like, I don't know,
I don't know how, I don't know what open ass
finances look like.
Speaker 3 (28:10):
This seems like a low ball offer.
Speaker 4 (28:12):
But I would have to think that if he started
negotiating with them, he could create problems as sam Altman
tries to raise, you know, additional funding and sam Altman
is trying to negotiate an equity stake for himself as
part of this conversion to a.
Speaker 2 (28:27):
Yeah, we actually have a clip of Sam Altman and
some things he said to us I'm Bloomberg TV earlier today.
Speaker 3 (28:34):
Do you think Musk's approach then is from a position
of insecurity about x Ayon probably his whole.
Speaker 2 (28:39):
Life is from a position of insecurity. I feel for
the guy. I feel fair, I do. Actually I don't
think he's like a happy person.
Speaker 1 (28:45):
I do feel for him.
Speaker 2 (28:46):
Okay, so John Herman, hit me with your theory on
all this.
Speaker 1 (28:50):
I mean, with the caveat that none of this is
inevitable and this could all go catastrophically wrong for a
musk in a variety of different ways. He is I
think like making this bid from a position of what
he feels is strength again because of his sort of
like incorporation with the government. So if we return to
the sort of like bailout framework here, Xai is is
(29:12):
by a lot of metrics doing very well. They're developing
very quickly. They're catching up really.
Speaker 2 (29:16):
Fast, spending a bunch of money, Valuations climbing.
Speaker 1 (29:19):
Sure, and he's able to raise a bunch of money
for Xai for you know whatever. But it's not like
it's making any money. It's still catching up. It doesn't
have customers, really, it's not in the conversation with like programmers.
Speaker 2 (29:30):
Does it not have the US government as a customer.
That's the thing.
Speaker 1 (29:33):
Now, it might you know what, if you know open
Ai the clear leader in this moment in the you know,
sort of loosely defined AI industry that is getting its
first big federal contracts, that is developing all these tools
for major, major potential contracts. Here, what if they suddenly
had a competitor that had, like right a first refusal
for basically every federal federal contract that had the term
(29:54):
artificial intelligence in it. And you talk about those intruding
into all these different agencies and showing up this very
small team claiming to use AI to do analysis to
streamline operations. That's all kind of made up right now.
They don't have the tools to really do that, but
it is a pretty clear telegraphing of a plan to
say like, hey, yeah, now we know everything, we have
(30:15):
all the data, We are better positioned than anyone, and
are politically connected for you know, a market that basically
doesn't exist yet. Why don't we you know, why wouldn't
we win this? I don't mean to spell this out
as like a complicated plot, but it's more just like
if you're Elon Musk, if you are this sort of
like intuitive power seeking person, you're in the position you're in,
(30:36):
You're like, all right, I've got an AI company. I
hate Sam Altman. You know, I'm going to try to
buy them, and I'm going to take every federal contract
while I'm on this run.
Speaker 6 (30:44):
And by the way, I'm going to announce that I'm
trying to buy them on the first day of this
like Global AI summer in France, when like everyone is
focused on AI and when everyone is like and Sam
Altman is in France, and I'm just going to like
put out this like news that I'm trying to buy
his company while he's at this conference abroad. It's like,
that's like a classic move to grab the news cycle.
Speaker 2 (31:03):
Yeah, and stick it to Sam and the process while
he's trying.
Speaker 4 (31:05):
To raise money at a valuation that's four x right,
undermining the fundraise too right.
Speaker 2 (31:11):
And that, by the way, beyond Sam Altman telling Bloomberg
TV that Elon is just a very insecure man. He
also his main theory was Elon is just messing with us.
Elon is trying to throw sand in the gears here
as we try to achieve certain things, and and we're
going to do our darkness not to let him achieve it. Now, Max,
when I guess I ask you this, you our feud
(31:33):
watcher of all feud watchers. And I guess I just
wonder if you strip out you just strip out Elon
Musk versus the entire Democratic Party and all those who
support the Democrats. So we're throwing that out as a feud.
I guess of all the old feuds that Elon used
to have and that used to watch and plot on
(31:54):
your on your matrix, number one is this number one?
Is it the only one that's left?
Speaker 3 (31:58):
You know? It does feel that way a little bit, right, David.
Speaker 4 (32:01):
And and it's it's such a juicy one too, because
Sam Altman and Elon kind of have some things in
common here, right. They're both these like guys who have
these grandiose make these grandiose statements. You know, Sam Altman
is talking about, Oh, we're gonna have agi, it's gonna
cure cancer or whatever.
Speaker 3 (32:16):
You're just ask the AI to do something.
Speaker 4 (32:18):
It's like a lot of he's like writing a lot
of checks with his mouth that he can't necessarily cash,
you know, exactly like Elon Musk. And it does have
this quality of these two like masterful self promoters suddenly colliding,
which I think makes it great. I have been trying
to just racking my brain trying to figure out ninety
seven point four?
Speaker 3 (32:35):
Did I get that right?
Speaker 2 (32:36):
Now? That's right?
Speaker 3 (32:37):
Like what's that number?
Speaker 4 (32:38):
Like where's the twenty? Is it ninety seven point four two?
Because otherwise, like I don't know where he got this number,
Like where's the four to twenty joke?
Speaker 3 (32:46):
Where's the sixty nine jokes? I want to know where
the number came from?
Speaker 2 (32:50):
Will I'm I bet you by the time we record
next week, someone will have cracked the code.
Speaker 1 (32:55):
Or we'll get one of those delayed announcements like the
Fork in the Road sculpture. Ye know, we'll get committee.
Speaker 2 (33:00):
Yeah, we'll get something like that. All right. So John,
not to put you on the spot here, but you
you heard you listened to Max beause he laid out
the metrics of Elon Musk and his bids and how
serious or not serious they are. When we have you
back on a year from now, mister Hermann, is Elon
Musk the owner of Open Ai? Yes or no?
Speaker 1 (33:19):
I'm going to say probably not, but no, that's that's
my that's my guess. We'll have bigger things.
Speaker 2 (33:28):
To worry about. I see, Okay, we'll be talking about that.
Speaker 6 (33:32):
I'm gonna say no.
Speaker 4 (33:33):
No, Max, I mean I want to say yes to
be different, but no, no, it's not gonna happen.
Speaker 2 (33:38):
No, no, and no. So it's totally happening, you know.
Oh you know, by the way, Max, we almost forgot here. Uh,
the biggest news of them all right, if you're really
I mean, I can't believe we're leaving it for last.
Elon has a new name on his x account.
Speaker 3 (33:54):
Oh god, I don't even want to say Harry Balls.
It's Harry Balls. It's his name, okay Ball. This is
like the most powerful person in the world.
Speaker 2 (34:03):
This is what he's doing with his time. There are
a lot of you know, a lot of this.
Speaker 1 (34:06):
A lot of my feel probably this whole bailout, can
see comes from the feeling of having to look at
Twitter again and having to see Elon Musk post all
the time, having to acknowledge the jokes, having to say
doge the meme from twenty eleven or twenty twelve. Maybe
I saw this, It's maybe I should sure go to
a therapist about this, but you know.
Speaker 3 (34:24):
No, it is.
Speaker 2 (34:25):
It is true. Every time I read the word, I
read doge, and I yeah, each tree one just thinks
God this is become. This is all so absurd. I
mean this was just a a meme, coin joke. That
is now, before.
Speaker 1 (34:36):
That, ten years before that, it was just a meme, right,
there were people writing about how it was worn out
in twenty twelve, you know, just a cute little thing.
And here we are, here, we.
Speaker 2 (34:44):
Are dedicating our lives to it. This is our lives work,
mister Chaffkin, John, thank you for joining us. Thanks for
having me back. Max, Dana, Thanks as always, you've brought
me down, David.
Speaker 3 (34:53):
But it's great to be with you.
Speaker 6 (34:55):
Always a pleasure.
Speaker 2 (35:03):
This episode was produced by Stacy Wang Anna Masa Rakus
is our editor, and Rayhan Harmanci our senior editor. Blake
Maples handles engineering, and Dave Purcell fact checks. Our supervising
producer is Magnus Henricson. The elon Ing theme is written
and performed by Taka Yasuzawa and Alex Sugiira. Brendan Francis
Newnham is our executive producer, and Sage Bauman is the
(35:24):
head of Bloomberg Podcasts. A big thanks to our supporters
Joe Weber and Brad Stone. I'm David Papadopoulos. If you
have a minute, rate and review our show. It'll help
other listeners find us. See you next week.
Bloomberg Audio Studios, podcasts, radio news. Well, Elon Musk is
now the richest person on the planet.
Speaker 2 (00:15):
More than half the satellites in space are owned and
controlled by one man.
Speaker 1 (00:21):
Well, he's a legitimate super genius.
Speaker 2 (00:23):
I mean legitimate. He says he's always voted for Democrats,
but this year it will be different.
Speaker 1 (00:27):
He'll vote Republican.
Speaker 2 (00:28):
There is a reason the US government is so reliant
on him.
Speaker 3 (00:31):
Alon Musk is a scam artist and he's done nothing.
Speaker 4 (00:36):
Anything he does, he's fascinating people.
Speaker 2 (00:49):
Welcome to elan Ink, Bloomberg's weekly podcast about Elon Musk.
It's Tuesday, February eleventh. I'm your host, David Papadopoulos. Today
we're talking about what else do Since we last gathered here,
Musk and his band of doze zealots have burrowed themselves
into many corners of the federal government as they frantically
pursued their goal of gutting what they deem wasteful. The
(01:12):
pushback from courses across the country's mounting. Now the question,
or one of the questions, is will Musk and the
Trump administration heed the judge's warnings. And then yesterday afternoon,
a bombshell dropped. Elon was leading a group of investors
offering ninety seven zero point four billion dollars to acquire
open Ai. Is Elon, sirius? Is he just trolling? Is
(01:36):
he messing with rival? Sam Altman, who should be noted,
quickly rejected the bid. To talk Doze, we have Dana Hall. Hey,
they're Dana Hey, David and Max Schaffkin. Max, how you doing?
Speaker 3 (01:50):
David?
Speaker 2 (01:50):
Hello, Hello, as well as Bloomberg political reporter Josh Wingrove
dialing in from Washington. Josh, welcome, sir.
Speaker 5 (01:58):
Thank you for having me. It's an eventful time.
Speaker 2 (02:01):
Indeed it is. And then later on we will welcome
back a special guest, a guy fast on his way
to earning official friend of POD's status. New York Magazine
tech writer John Herman to talk about what he calls
the Elon bailout, as well as the latest chapter of
the musk Open Ai saga. Okay, Josh, so we're going
(02:21):
to start with you there. Doge is on the rampage.
Bring our audience up to speed. It's all happening fast
and furious. Give us the last seventy two hours in
the Doge universe.
Speaker 5 (02:34):
I mean, they are trying to dive into everything, and
Trump has given them license to hit every department, including Defense,
including education, including Treasury, of course, where a lot of
the news has been focused in this past week. But
just to give you a scene, like every time a
headline drops on something they're doing or something that makes
Democrats heads explode or you know whatever, we all go
(02:57):
to the White House for comment, and they've been sort
of like dancing around it a little bit, but Trump
himself consistently really leans in on this to give sort
of license essentially to what Elon Musk is doing with.
Speaker 2 (03:08):
Though Josh really leans into what exactly.
Speaker 5 (03:11):
Trump is leaning into endorsing what Musk is doing. He
putting in caveats here and there, but generally speaking, when
we asked him about it, as was the case a
couple of days ago, as he flew to the super Bowl,
you know, he's sort of blessing he's standing by Elon,
and every time Musks gets in Trump, you kind of wonder, oh,
is this the moment where they're going to crack, because
this is the moment where Trump is going to start
(03:32):
distancing himself, and we just haven't had that happen right
now on the contrary, Trump is really you know, stuck
close to him. And like, for an example, on Sunday,
Trump called us up to the front of the plane
as he flew to the super Bowl. You know, he
had a big sign that's a Gulf of America. We
were over the Gulf of Now, I guess you're.
Speaker 2 (03:49):
The Gulf of America. Yeah, by the way, now to
be seen on Google maps the Gulf of America.
Speaker 5 (03:54):
Max apparently, depending on where you are. But he, you know,
held court for a while and talked about this, and
in particular wandered even into the notion of treasuries being something.
Speaker 2 (04:04):
So just for a second for our audience, treasuries, US
treasury bonds. This is the debt the United States government
has taken on to finance. It's spending when it spends
more than it takes it in revenue, which is the
case in just about each and every year. And I
think nowadays there's roughly about thirty trillion dollars give or
take of US treasury debt out there.
Speaker 5 (04:25):
It's more than that now, but yeah, there's a lot
of it out there. Thirty six I think it was
maybe a more recent number. And the reporting until now
is that the Musk and the Doge team at Treasury
have been focusing on payments that Treasury is sending out,
but Trump sort of suggested that it went even beyond that,
that it wasn't just sending out payments that Trump's team
thinks you shouldn't send out. That it was oh, maybe
(04:47):
the debt that we have isn't as big as we
thought it was. And that really raised eyebrows because then
it raised the notion that we were talking not just
about treasury payments, but that this sort of fraud hunt
extended even towards the debt. And of course, the notion
that the US might start, you know, wavering on whether
it consider it's it's debt legit or not, you know,
has the potential to rattle market. So that kind of
(05:08):
that that that rattled things. I think, I think just
overall on this, Trump is framing this as fraud to
give it political license. He's saying that he was elected
to get rid of fraud and that Elon is doing
his work for him. So he's pushing back on the
suggestion that Musk is you know, an unelected guy sort
of marauding through the government, controlling with the keys to
(05:28):
everything right. So Trump is not only standing by him,
he's like writing in a blanket.
Speaker 2 (05:32):
He's saying, you know, Elon Musk is my guy. Max fraud,
fraud everywhere.
Speaker 3 (05:37):
I don't know what he's talking about with the Treasury thing.
Speaker 4 (05:39):
My best guess is that it's like a calculation question.
It's like it's like how they're going to decide to
calculate the amount of debt or something like.
Speaker 2 (05:47):
That, Max, are redefaulting. Just tell me we're defaulting. I
want to know.
Speaker 4 (05:51):
I think one of the reasons that they're talking about fraud,
I mean, I think it's both because of who Elon is,
but also politically right, Like a lot of the stuff
that Elon is walking towards is super unpopular, and you know,
whether it's like cutting NIH funding. You know, the NIH
is a major cause of a lot of jobs and
(06:13):
a lot of red states, and you can kind of
go down all these charities that they were attacking. There
are lots of things they're doing that voters, senators, congress
people are not gonna like. So that's why they're keeping
it focused on fraud.
Speaker 6 (06:24):
I think I would just like to remind the listeners
that this whole idea of doge was Elon's idea. He
proposed it to Trump on an audio spaces in August
and basically pushed Trump to say yes. And so I
get super frustrated when I see stories that are like
Trump has tapped Musk to like lead an efficiency effort.
This was Musk's plan.
Speaker 2 (06:45):
This is Musk tap Musk.
Speaker 3 (06:47):
Musk pitch this.
Speaker 6 (06:48):
Job for himself and has been given carte blanche from
the executive from the administration to do what he's doing.
Congress is totally flat flooted and has been completely supine
and has rolled over and abdicate. I mean, the whole
concept of separation of powers is being eroded. And now
you're seeing must go after the judiciary whenever there's like
a judge filing like a stay or a tro like
(07:10):
Musk is basically calling out the judge on X. So
like we're seeing like the whole concept of balance of
power completely be eroded, and nothing is going to stop
Elin at the moment as far as I can tell,
and they are already signaling that they're not going to
go along with what the judge says. So and to
Josh's point, like the fact that Musk is doing this
(07:32):
with this sort of widespread power that Trump is supporting him,
and that Congress is sort of left flat footed kind
of works in the administration's favor.
Speaker 2 (07:41):
So Josh on that point that Dana raises on this
administration and Musk's Doze team challenging courts and clearly pushing
through things that they know themselves are very much in
a gray area of the law, and then also to
a certain extent saying well, well, you know, we'll see
(08:01):
how much we abide by what the court says. Presidents
going back for years have pushed the boundaries of the
law and then seeing how the courts reacted. Just how
different is this time around.
Speaker 5 (08:13):
I mean, Trump, with every day, you know, challenges, at
the very least sort of the perceived limits of the
power of the presidency. He really believes in consolidating power.
Even his sort of go to move these first two
weeks executive orders, those are usually pretty flimsy. I mean,
they're sometimes not worth the paper that they're printed on,
but Trump is wielding them like royal decrees and people
(08:36):
are bound to that. So he kind of has kind
of shifted the Overton window on what like an executive
order is and therefore what presidential authority is, and so
Elon continues to test that. I think there are a
couple things to watch for. Number one is do the
secretaries start pushing back, right because he's mucking around in
the back rooms of the Department of the Treasury, the
(08:57):
Department of Education, the Department of whatever. And as long
as the secretaries are buying into that, you know, no problem.
But if they start pushing back against that, then you
start to get power struggles and power struggles. Of course,
we're a defining feature of the first Trump administration so
far sort of you know, kept down in the second
Trump administration. But if that starts happening, you know, who
(09:19):
knows how that's going to shake out.
Speaker 4 (09:20):
Scott Bessen is one that I yeah, Treasure Sector last week,
you know, Musk they had this whole you know, back
and forth over does he have read only access? And
and Trump was saying, you know, Trump and the Trump
administration was essentially saying that, look, he can he can
look at the data, but he can't do anything with it.
Speaker 3 (09:38):
And then musco'es on Twitter and says there are still.
Speaker 4 (09:40):
Billions of payments in fraud going through the Treasury payment system,
which kind of sounds like an attack on Scott Bessen, right,
You're you're sort of saying like, uh, Scott Besson doesn't
have control all this. And again, this thing that Josh
brought up earlier, it's some idea that maybe some of
the bonds that we have or you know, we don't
have to pay the debt on or whatever like. It
definitely seems like that is undermining part of what Scott
(10:02):
Besen has to do, and you could imagine that leading
to conflict.
Speaker 2 (10:06):
Now, Dana, as Josh was intimating, Musk and his crew
are about to head into the Department of Defense. They
are there already. The stakes once they're in there, for
any number of reasons, suddenly really ratchet up quite a bit.
Speaker 6 (10:22):
Yeah, and that's because the Defense Department is a huge
part of our overall budget, and because Musk is a
defense contractor, so SpaceX has a lot of contracts with
the Department of Defense for both rocket launches and starlink,
and he has said quite publicly, including during a conversation
at West Point, that the future of warfare is AI
and drones. Well, guess who has an AI company? Elon Musk,
(10:45):
Guess who has you know, makes military hardware and drones.
You know his buddies at and Drurro. So you're going
to see a real shift in terms of the way
the Pentagon does procurement, and Elon and his friends have
an enormous amount of gain.
Speaker 3 (10:58):
There attempted shift.
Speaker 4 (11:00):
Oh for sure that the it's just going to actually
happen because again, same thing I brought up about the
NIH and I've said this before on this podcast, these
defense contractors are major job creators. I don't know that
Musk is going to have as much rope as people
think he will.
Speaker 3 (11:14):
Cutting the defense.
Speaker 4 (11:15):
Well, again because of the conflicts of interest, and because
we're talking about jobs.
Speaker 2 (11:19):
I think going after USAID and it's roughly what Josh,
forty billion dollars year budget that largely of course goes
overseas to people who do not vote in US elections,
is one thing. Going after large contracts for the military
industrial complex I think is an entirely different thing. The
(11:39):
Secretary Defense Pete has Get says he welcomes Elon with
open arms. That one is going to be very interesting
to see how it plays out now, Josh, but they're
on the ground in DC. What is the mood on
the Democrat side, my understanding is their phone lines are
blowing up from irate constituents saying, damn it, do something.
(11:59):
What's the sense there? Where do they stand in forming
a credible opposition to Musk and Trump.
Speaker 5 (12:05):
They're in a really tough spot because conservatives are mostly
delighting in what Musk is doing. I think that that's
an important factor to look at here. If people think
that there's some sort of pressure building up on Trump
within the Republican Party, within the broader conservative movement, it's
just not there. And so for Democrats when they go
and do some you know, stunt or whatever, trying to
(12:26):
like go into these agencies that are being dismantled, the
problem is that that only sort of feeds the perception
that is delighting conservatives who are wanting Trump to really
make structural changes to the broader state. And so that
is really the trap that they're in. Not only are Democrats,
of course, you know, kind of rudderless right now, but
more broadly, they don't really have any tools that would
(12:48):
be effective to sort of crank up the pressure on this,
whether it's at USA AID or others. The blowback that
Max alluded to is going to come more from when
they start hitting red states, for instance, when banks gets
hit by funding cuts.
Speaker 2 (13:01):
Max. That is a good point that according to a
CBS poll they came out. I believe on Monday, Donald
Trump's approval numbers are up since his inauguration. I believe
Americans a greater number of Americans now approve of him
and what he's doing visa v from before.
Speaker 4 (13:18):
It's true, although Elon Musk's numbers are not haven't looked
so good. There's been a couple of poles I haven't looked.
I don't know if anything's come out this week, but
last week there were two poles, you know, showing that
Musk's numbers had fallen since the election pretty badly. So
I think Josh is right, like I think, and what
you're saying, like picking on these kind of soft targets
like USAID or whatever, like the pain is going to
(13:40):
come later.
Speaker 3 (13:40):
The pain for Trump politically is you've.
Speaker 4 (13:43):
Made a lot of promises and like, what have you
actually done except for so a lot of chaos, right,
Like fifty billion dollars is not that too much money
in the scheme of things and a lot of these
things that Musk has done either. They sound very dramatic,
and there's been a real cost for the civil service,
but it's not clear that he's gonna come away from
this having achieved a whole lot. And then if you
(14:05):
put that on top of you know, creating chaos in
red states or or pissing off voters, I mean, you know,
we are seeing some activation of grassroots Democrats.
Speaker 2 (14:17):
This reminds me actually that we're still playing out. I
believe as we speak is the Musk team's offer of
buyouts to all federal employees. I think we're still I
think that's been paused by a judge. Yeah.
Speaker 4 (14:27):
Yeah, And so far they've got sixty thousand people. They
get one hundred thousand retirements each year, so like that
is not a big number, that's a small number. And
so again like tons of talk, tons of chaos, pain
in a very few specific areas. But I don't know
that he's actually done all that much despite the crisis
that that Dennis.
Speaker 2 (14:47):
Well, one thing that he has done, and with this
we will wrap here on this first segment, is you know,
I was dead wrong. I thought the first thing those
was going after was daylight savings and that they were
going to make it permanent. And I'm a little disappointed
that they have not gone pennies. You got it a penny.
Whoever's pushing back on the death of the penny, just
(15:08):
zip it, man, I mean, the penny's gotta go it.
The penny is truly absurd. And after they're done with
the penny, Max, they can go for the nickel. Max
Bold bold.
Speaker 3 (15:18):
Talk from Bobdopolis over here.
Speaker 2 (15:21):
Wow, when you're done Nix and the penny, Nicks the nickel,
Josh Wingrove, you are going to be a or You
already are a very very busy man, and you will
continue to be so and as a result, we will
have you back on again soon.
Speaker 5 (15:33):
Thank you all for having me. I'll keep letting you
know when we see him in the White House.
Speaker 2 (15:41):
Okay, we're now joined by John Herman, New York Magazine
tech writer. John. Welcome back to the show. Thanks for
having me. Okay, John, So you were last on a
year ago. Man, we were so young and innocent.
Speaker 3 (15:53):
Porn. We were talking about porn.
Speaker 2 (15:54):
We're just you know, and god, what do we you know?
What do we know? We had no idea what we
were in store for, and Musk was really if you
think about it, he was essentially a nobody, right right,
And now every time you shake the magic eight ball
and see something goes on in the world, it just
comes up Musk. Now, John, you have written a piece
(16:15):
recently where you lay out what you believe to be
the bailout, as you call it, that Elon is getting
as he jumps into the government and does all these things,
and is he buddies up with with Trump. I got
to tell you just off the bat, I'm going and
I'm a little dubious on this bailout thing here, So
convince me of it.
Speaker 1 (16:34):
Yeah, I mean, as a term it's a little provocative,
But I do think this is a strange time, confusing time,
and it's helpful to sort of back up and try to,
you know, in the spirit of the show, look at
you know, Elon Musk first principles and try to figure
out what's going on. On one hand, you've got someone
who is very open about like attempting to mingle his
(16:54):
own business interests in ways that are often unconventional and
in some cases like challenged in court. So his portfolio
of companies is like used, you know, to support one
another in ways that are you know, he has a
sort of fundamental belief that he his success is sort
of fused with the fate of the world, that he
is sort of destined to save the world. He says
(17:16):
this all the time. You can, you know, doubt his sincerity,
but in my view, it's it's you know, real in
some sense, he's really like, you know, he believes that
what he's doing is this, and I think.
Speaker 2 (17:26):
The three of us here, Max, Dan and I all
very much believe that he does.
Speaker 1 (17:30):
So we've got those first principles. Now, what happens if
you add the United States government to that portfolio of companies.
In the view of someone who thinks this way, you
start to think about how the government helps Musk, and
he tends to talk about more how how Musk can
sort of change the government. So you've already talked on
this show about the obvious overlap with companies like SpaceX,
which has enormous contracts with different agencies and different parts
(17:51):
of the government. And and we'll have even more through
through Starlink. We can talk about Tesla, various subsidies things.
Speaker 2 (17:58):
So, how does Musk's relationship with this administration, his very
cozy relationship with this government help for instance, X right.
Speaker 1 (18:08):
So SpaceX is an obvious contractor X is like further
away from what we think of as you know, the
normal operations of government. But it's Elon Musk's probably most
distressed asset, not his most financially important. He is using
it now to sort of like you know, command his
(18:29):
incursion into government, so it's become very very visible, but
also like his his proximity to power has real value
to X. He is currently in the process of suing
advertisers for what he says is an illegal boycott of
X right, which is a lawsuit that I think a
lot of people didn't take very seriously when he first
filed it. Well it's certainly unconventioned, certainly, but he amended
(18:50):
it recently. And some of these advertisers are coming back
because you know, maybe they were content to ignore Elon
Musk before he was the president's right hand man.
Speaker 2 (19:00):
John John, I will just warn you that the last
person who said on this podcast that that the advertisers
were coming back got blown up by Max, So you know, no,
they're not that coming back is coming back. Mean, Hey,
here's two chits, here's two tokens. I'll put on your
board to you know, to appease mister Musk. Are they
really coming.
Speaker 1 (19:20):
Back the numbers, I mean, we don't know the full numbers,
but they are signaling that they're, you know, more open
to coming back than they were.
Speaker 2 (19:27):
That's one piece.
Speaker 1 (19:27):
Another piece is that AX is sort of becoming a
little bit like truth social This extension of the government
communications program the the NTSB, for example, announced in a
in a post on X that was where they were
going to be messaging about recent air disasters, which is,
you know, a small thing but also potentially a sign
of like a bigger thing.
Speaker 2 (19:45):
Right. This is an extension of the Max Chafkin theory
that that's what X has become. It's become the media
ar you're just I mean.
Speaker 4 (19:50):
But this is like the least important of Musks companies
that are benefiting so went from the dynamic that you
that's like it's like saying, well, how is Musks video
game playing? How is the Trump administration benefiting his his
status on path of exile? Like it actually might be baby,
but like honestly spaceds Tesla are way bigger companies with so.
Speaker 3 (20:12):
Much more to game.
Speaker 1 (20:13):
Twitter's is the least important, but it's like really visible
and really like I think a lot of people pointed
to Musk's takeover of Twitter as like a playbook, which
I think is useful, but you sort of extend that
a little bit further and you're like, okay, how does
it flow the other way? And there are these real
benefits to being someone who everyone is a little bit
scared of. The advertisers, maybe come back, People have to
use your platform, people have to pay attention to your platform.
Speaker 2 (20:35):
Tell us though, how this is a net positive for Tesla,
because that's not screamingly obvious.
Speaker 1 (20:40):
No, the Tesla situation is weird. I feel like that
statement holds true pretty much at any time that you
talk about Tesla's stock. For example, it's this weird company
in that it's a major automaker that sells a ton
of cars and has real financials. It is also, to
a great degree kind of a mean stock, and that
depends on Elon Musk's reputation promises about the future, some
(21:01):
of which are kind of crazy and some of which
just seem a little premature. You know, it's a mixture
of like can he deliver?
Speaker 2 (21:07):
Will he deliver?
Speaker 5 (21:08):
Is this made up?
Speaker 2 (21:08):
Now?
Speaker 1 (21:09):
In addition to that, you've got this this you know,
sort of implied connection to the establishment in the biggest
possible sense. So not only does Elon Musk say, okay,
listen to me, I know we had a bad quarter,
which they did. Don't worry about our cars. Think about
our cyber taxis, think about our humanoid robots that we're
working on, think about AI, think about these things with
(21:31):
you know, vague future dates, and you know, we're we're
doing this cycle again. But also what if and think
about this, investors, what if I now can't lose What
if I am like the supreme government connected.
Speaker 6 (21:43):
There's some clear examples where Tesla is really well positioned.
So example, one tariffs. Tesla does it make cars in Mexico.
They make all of their cars that they sell in
the United States in the United States, so they are
sort of like insulated from tariffs compared to Ford and GM.
The second thing is the Heavy Program, So like the
Trump administration just funded just basically froze or halted all
(22:06):
of the payments that go out to the states to
build a network of high speed electric vehicle chargers. Halting
those payments really disrupts all the plans that these states
had to kind of build out a charging network, but
it really helps Tesla, which actually already has a charging
network that a lot of other automakers use. And so
in small ways you're seeing the administration do things that
(22:27):
do benefit Tesla. And what's you know, what I try
to remind people is like, you know, Elon has very
smartly played both sides of the aisle, because like Tesla
got enormous benefit from the Inflation Reduction Act and now
Trump is like walking back a lot of that. But
it's it's it's like they're not walking back forty five X,
which is the manufacturing text credit. So like Tesla wins
(22:49):
no matter what, like they are going to be okay.
The biggest risk to Tesla right now is just the
brand and of Elon's craziness and the sales plummet in
markets like Europe and the US.
Speaker 2 (22:59):
Yeah, and to that point, and max I in my
absence last week, I do appreciate you guys talking about
the collapse in sales in California, which were followed then
by a collapse in sales in Germany and I think
France that happened around the same time. And these are
big numbers, down sixty percent or so all that, I
guess certainly does seem to square with a drop and
(23:21):
Musk's approval rating. And I guess if right now there
are any checks or leverage that must detractors have on him,
maybe this is the extent of it.
Speaker 4 (23:32):
The sales you mean, yeah, yeah, I just to want
to reiterate one thing Danna said, which is like really important,
Like it would be awesome for Musk if he could
just like get the Defense Department to hand him like
a ten billion dollar check for something, or to like
just have the federal government like pay him directly, you
buy some Starlink satellites by a Mars mission, make have
(23:55):
Tesla as the new designer of military jeeps or some
crazy stuff like. That'd be great, But that stuff is
going to be more difficult, it's politically difficult. But just
stopping stuff benefits his companies enormously, Like if he is
able to like pull up the ladder behind him on
tax credits, or if he is able to for evs,
if he is able to slow down other providers of
(24:16):
rural broadband, which he appears to be doing, like all
these things with Starlink, all these things like help him
and so he's gaining just by like cutting things, and
we haven't even started talking about writing checks.
Speaker 2 (24:28):
I do think addition by some truck, I do.
Speaker 4 (24:31):
Think the thing that John is saying that is really
smart is that people see Elon as this like, you know,
he's this amazing capitalist. He has all this influence. He's
the world's richest man, but he is vulnerable in certain ways.
And like one of the reasons he did this with
Trump is because I think he had vulnerabilities and and
like those vulnerabilities continue today, and and by it's not
(24:53):
just the sales thing, it's by by making himself a
political force, by by allying this closely with Donald Trump,
a guy who is, yeah, his pull numbers have gone
up a little bit, but he's not that popular. Musk
is eroding some of the things that have made him
very powerful. And you're seeing that in the stock price, right,
Like Tesla stock has fallen by like eighty bucks over
the last few days, you.
Speaker 2 (25:13):
Know, since the inauguration. I was looking at this this morning.
Twelve of the sixteen trading sessions since the inauguration, Tesla
stock is down. It's not plunging each and every day,
but it's down and it's down. Yeah, it's now down
about seventy percent.
Speaker 4 (25:25):
I do think that the traders who have bid this
stock up for no particularly good reason other than the
fact that Elon has proximity toward Trump are thinking, like
John says, hey, heads, he wins, tails, he wins whatever,
but you are seeing more reasons to doubt him, and
like that is what is driving the stock down.
Speaker 2 (25:47):
Okay, Dana Elon Musk says he and some other investors
want to purchase open Ai. Tell us about this and
where it currently stands.
Speaker 6 (25:59):
So I guess they made a bid for open Ai,
and Sam Alton immediately responded and was like, open Ai
is not for sale. So I don't know where this
currently stands. I just think that like Elon is doing
what Elon does, which is to sort of be like
the big bully pulpit and in the middle of, you know,
upending the American government, He's like trying to go on
his m and a spree and and Sam is like, no, like,
(26:22):
we're not.
Speaker 2 (26:22):
For sale, Max, is this a legit attempt? You're right
furiously scrouching down.
Speaker 4 (26:28):
I was making sort of like a matrix on like
how realistic is this acquisition offer?
Speaker 3 (26:32):
For Elon Musk. So like on one side you have.
Speaker 4 (26:36):
Threatening to buy Coca Cola to put the cocaine back
in it, like clearly a joke offer. And then on
the other side you have buying Solar City, which was
like clearly a serious offer.
Speaker 2 (26:44):
Yes, Twitter swimming somewhere.
Speaker 4 (26:47):
In the middle because it was a joke, it seemed like,
but then it became a serious thing, buying Liverpool Football Club,
which has he has kind of joked about.
Speaker 3 (26:55):
I'd say, close to the Coca Cola thing.
Speaker 4 (26:57):
This feels like, I'd say, smack in the middle of
this chart because it's not a serious.
Speaker 2 (27:03):
So to the right of Liverpool, to the.
Speaker 4 (27:05):
Right of if this, yeah, on the left, farthest on
the left is the least serious.
Speaker 3 (27:09):
Farthest on the right, that's right dead center.
Speaker 4 (27:12):
And I say that because it's not a serious offer
in the in terms of the size, this is like a.
Speaker 2 (27:17):
Low ball nine, wildly undervalues the company.
Speaker 4 (27:22):
But I do think he could create chaos for Sam
Altman if he goes to the negotiating table, right and like,
to me, this feels like, you know, in poker terms,
like big stack bully, like if you have an insane
amount of money you can, you and negotiations can do
all sorts of things. You can sort of push people
away from negotiating table, you can.
Speaker 3 (27:41):
So like, maybe he's just trying.
Speaker 2 (27:42):
To cause on the other side, isn't isn't Microsoft on
the other side alongside Sam Altman.
Speaker 3 (27:48):
Yeah, but I think they have a pretty good stack too. No,
I don't think.
Speaker 4 (27:51):
That Microsoft is necessarily as willing to raise hundred hundreds
of billions of dollars to what buy out Microsoft.
Speaker 3 (27:59):
I mean, the Microsoft has already bet a lot of
money on this company.
Speaker 4 (28:03):
So, like, I don't like again, like, I don't know,
I don't know how, I don't know what open ass
finances look like.
Speaker 3 (28:10):
This seems like a low ball offer.
Speaker 4 (28:12):
But I would have to think that if he started
negotiating with them, he could create problems as sam Altman
tries to raise, you know, additional funding and sam Altman
is trying to negotiate an equity stake for himself as
part of this conversion to a.
Speaker 2 (28:27):
Yeah, we actually have a clip of Sam Altman and
some things he said to us I'm Bloomberg TV earlier today.
Speaker 3 (28:34):
Do you think Musk's approach then is from a position
of insecurity about x Ayon probably his whole.
Speaker 2 (28:39):
Life is from a position of insecurity. I feel for
the guy. I feel fair, I do. Actually I don't
think he's like a happy person.
Speaker 1 (28:45):
I do feel for him.
Speaker 2 (28:46):
Okay, so John Herman, hit me with your theory on
all this.
Speaker 1 (28:50):
I mean, with the caveat that none of this is
inevitable and this could all go catastrophically wrong for a
musk in a variety of different ways. He is I
think like making this bid from a position of what
he feels is strength again because of his sort of
like incorporation with the government. So if we return to
the sort of like bailout framework here, Xai is is
(29:12):
by a lot of metrics doing very well. They're developing
very quickly. They're catching up really.
Speaker 2 (29:16):
Fast, spending a bunch of money, Valuations climbing.
Speaker 1 (29:19):
Sure, and he's able to raise a bunch of money
for Xai for you know whatever. But it's not like
it's making any money. It's still catching up. It doesn't
have customers, really, it's not in the conversation with like programmers.
Speaker 2 (29:30):
Does it not have the US government as a customer.
That's the thing.
Speaker 1 (29:33):
Now, it might you know what, if you know open
Ai the clear leader in this moment in the you know,
sort of loosely defined AI industry that is getting its
first big federal contracts, that is developing all these tools
for major, major potential contracts. Here, what if they suddenly
had a competitor that had, like right a first refusal
for basically every federal federal contract that had the term
(29:54):
artificial intelligence in it. And you talk about those intruding
into all these different agencies and showing up this very
small team claiming to use AI to do analysis to
streamline operations. That's all kind of made up right now.
They don't have the tools to really do that, but
it is a pretty clear telegraphing of a plan to
say like, hey, yeah, now we know everything, we have
(30:15):
all the data, We are better positioned than anyone, and
are politically connected for you know, a market that basically
doesn't exist yet. Why don't we you know, why wouldn't
we win this? I don't mean to spell this out
as like a complicated plot, but it's more just like
if you're Elon Musk, if you are this sort of
like intuitive power seeking person, you're in the position you're in,
(30:36):
You're like, all right, I've got an AI company. I
hate Sam Altman. You know, I'm going to try to
buy them, and I'm going to take every federal contract
while I'm on this run.
Speaker 6 (30:44):
And by the way, I'm going to announce that I'm
trying to buy them on the first day of this
like Global AI summer in France, when like everyone is
focused on AI and when everyone is like and Sam
Altman is in France, and I'm just going to like
put out this like news that I'm trying to buy
his company while he's at this conference abroad. It's like,
that's like a classic move to grab the news cycle.
Speaker 2 (31:03):
Yeah, and stick it to Sam and the process while
he's trying.
Speaker 4 (31:05):
To raise money at a valuation that's four x right,
undermining the fundraise too right.
Speaker 2 (31:11):
And that, by the way, beyond Sam Altman telling Bloomberg
TV that Elon is just a very insecure man. He
also his main theory was Elon is just messing with us.
Elon is trying to throw sand in the gears here
as we try to achieve certain things, and and we're
going to do our darkness not to let him achieve it. Now, Max,
when I guess I ask you this, you our feud
(31:33):
watcher of all feud watchers. And I guess I just
wonder if you strip out you just strip out Elon
Musk versus the entire Democratic Party and all those who
support the Democrats. So we're throwing that out as a feud.
I guess of all the old feuds that Elon used
to have and that used to watch and plot on
(31:54):
your on your matrix, number one is this number one?
Is it the only one that's left?
Speaker 3 (31:58):
You know? It does feel that way a little bit, right, David.
Speaker 4 (32:01):
And and it's it's such a juicy one too, because
Sam Altman and Elon kind of have some things in
common here, right. They're both these like guys who have
these grandiose make these grandiose statements. You know, Sam Altman
is talking about, Oh, we're gonna have agi, it's gonna
cure cancer or whatever.
Speaker 3 (32:16):
You're just ask the AI to do something.
Speaker 4 (32:18):
It's like a lot of he's like writing a lot
of checks with his mouth that he can't necessarily cash,
you know, exactly like Elon Musk. And it does have
this quality of these two like masterful self promoters suddenly colliding,
which I think makes it great. I have been trying
to just racking my brain trying to figure out ninety
seven point four?
Speaker 3 (32:35):
Did I get that right?
Speaker 2 (32:36):
Now? That's right?
Speaker 3 (32:37):
Like what's that number?
Speaker 4 (32:38):
Like where's the twenty? Is it ninety seven point four two?
Because otherwise, like I don't know where he got this number,
Like where's the four to twenty joke?
Speaker 3 (32:46):
Where's the sixty nine jokes? I want to know where
the number came from?
Speaker 2 (32:50):
Will I'm I bet you by the time we record
next week, someone will have cracked the code.
Speaker 1 (32:55):
Or we'll get one of those delayed announcements like the
Fork in the Road sculpture. Ye know, we'll get committee.
Speaker 2 (33:00):
Yeah, we'll get something like that. All right. So John,
not to put you on the spot here, but you
you heard you listened to Max beause he laid out
the metrics of Elon Musk and his bids and how
serious or not serious they are. When we have you
back on a year from now, mister Hermann, is Elon
Musk the owner of Open Ai? Yes or no?
Speaker 1 (33:19):
I'm going to say probably not, but no, that's that's
my that's my guess. We'll have bigger things.
Speaker 2 (33:28):
To worry about. I see, Okay, we'll be talking about that.
Speaker 6 (33:32):
I'm gonna say no.
Speaker 4 (33:33):
No, Max, I mean I want to say yes to
be different, but no, no, it's not gonna happen.
Speaker 2 (33:38):
No, no, and no. So it's totally happening, you know.
Oh you know, by the way, Max, we almost forgot here. Uh,
the biggest news of them all right, if you're really
I mean, I can't believe we're leaving it for last.
Elon has a new name on his x account.
Speaker 3 (33:54):
Oh god, I don't even want to say Harry Balls.
It's Harry Balls. It's his name, okay Ball. This is
like the most powerful person in the world.
Speaker 2 (34:03):
This is what he's doing with his time. There are
a lot of you know, a lot of this.
Speaker 1 (34:06):
A lot of my feel probably this whole bailout, can
see comes from the feeling of having to look at
Twitter again and having to see Elon Musk post all
the time, having to acknowledge the jokes, having to say
doge the meme from twenty eleven or twenty twelve. Maybe
I saw this, It's maybe I should sure go to
a therapist about this, but you know.
Speaker 3 (34:24):
No, it is.
Speaker 2 (34:25):
It is true. Every time I read the word, I
read doge, and I yeah, each tree one just thinks
God this is become. This is all so absurd. I
mean this was just a a meme, coin joke. That
is now, before.
Speaker 1 (34:36):
That, ten years before that, it was just a meme, right,
there were people writing about how it was worn out
in twenty twelve, you know, just a cute little thing.
And here we are, here, we.
Speaker 2 (34:44):
Are dedicating our lives to it. This is our lives work,
mister Chaffkin, John, thank you for joining us. Thanks for
having me back. Max, Dana, Thanks as always, you've brought
me down, David.
Speaker 3 (34:53):
But it's great to be with you.
Speaker 6 (34:55):
Always a pleasure.
Speaker 2 (35:03):
This episode was produced by Stacy Wang Anna Masa Rakus
is our editor, and Rayhan Harmanci our senior editor. Blake
Maples handles engineering, and Dave Purcell fact checks. Our supervising
producer is Magnus Henricson. The elon Ing theme is written
and performed by Taka Yasuzawa and Alex Sugiira. Brendan Francis
Newnham is our executive producer, and Sage Bauman is the
(35:24):
head of Bloomberg Podcasts. A big thanks to our supporters
Joe Weber and Brad Stone. I'm David Papadopoulos. If you
have a minute, rate and review our show. It'll help
other listeners find us. See you next week.
Host
David Papadopoulos
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