October 31, 2025 • 29 mins
Katie and Matt discuss Halloween costumes, AI capital spending, hybrid financing, K-cup JVs, investment grade private credit, the metaverse (?!?), the OpenAI reorganization, OpenAI capital needs and governance, Elon Musk’s pay package, Tesla succession and getting cut off at the JPMorgan office pub.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. I feel like we
need your address things. Yes, go One is that I
sound like this.
Speaker 2 (00:12):
You sound great, I know, but it's different.
Speaker 1 (00:14):
I have a cold, so it's going to be like
the best, the best voice you've ever heard on a
podcast for like ten minutes, and then I'm going to
lose my voice and it's going to be over. So
it'll be great on both accounts.
Speaker 2 (00:24):
Yeah.
Speaker 1 (00:25):
The other thing I want to address is what are
you going to be for Halloween?
Speaker 2 (00:27):
Oh my god, man, I'm so thrilled you asked. I'll
probably just dress in all black and put on caddiers. Okay,
but that's what I do most Fridays. Yeah, right, what
about you?
Speaker 1 (00:36):
I think I've dies this bullet?
Speaker 2 (00:38):
Is it a bullet? Isn't it just joyful?
Speaker 1 (00:40):
Is joyful to take your kids around in their costumes
when you're not in a costume? I shouldn't it? Like
I see like the people with family costers, like, Okay,
that's cool, and I kind of want to do it,
but like not enough to Yeah, for adults, it's got
to be creative.
Speaker 2 (00:55):
There are onesies out there, but I hear, yeah, I
don't really want to cut around really psyched. I mean
not to go running a one sie. I spoke too soon,
but I'm just I love Halloween so much. I'm really excited.
I'm an adult and I don't have a child, so
I feel like I can't. But we're going to walk
around Hoboken because Hoboken goes hard on Halloween. A lot
(01:18):
of these.
Speaker 1 (01:19):
Yes, but okay, I.
Speaker 2 (01:20):
Mean I'm not going to like knock on doors and
take candy. If someone with a bucket of candy comes
up to me and says, do you want a piece,
I'm not going to turn them down. That'd be crazy.
Speaker 1 (01:30):
Are you going to wear your cat ears on air?
Speaker 2 (01:33):
No? No, I won't.
Speaker 1 (01:35):
I feel like one year, I want you to wear
like a children's ghost costume, you know, just like a
sheet of holes for eyes on air.
Speaker 2 (01:41):
I usually subtly try to dress up on air.
Speaker 1 (01:44):
Like you've worn the cat I feel like we talked
about this last year, but you really did.
Speaker 2 (01:48):
Some dedicated listener can tell us. I mean, I always
I have this like Christmas shirt that I try to
sneak in once a year. Tomorrow, I've I think I'm
going to wear all black, like a black turtleneck and
just be kind of spooky.
Speaker 1 (02:00):
Okay, just subtle, just a.
Speaker 2 (02:03):
Little maybe like a cat eye eyeliner. But I will
mention over and over again that it's Halloween. I love Halloween. Yeah,
I want to put someone in a ghost costume and
just have them walk behind me at some point, just once.
Speaker 1 (02:15):
I think you should actually have a ghost cut host
who doesn't say anything.
Speaker 2 (02:18):
That would be kind of funny. They just like a
human and a ghost, like yeah, like.
Speaker 1 (02:25):
Many glasses over the ghost pace, you know.
Speaker 2 (02:27):
Yeah. I turned to them and like say something, and
then I turned back like this sounds great.
Speaker 1 (02:36):
I've got your TV shows all right, podcast.
Speaker 2 (02:38):
Now, we're just trying to run out the clock here.
Speaker 1 (02:42):
To the podcast like that.
Speaker 2 (02:43):
Yeah scary.
Speaker 1 (02:49):
Hello and welcome to the Money Stuff podcast, your weekly podcast.
Where are you talking about stuff related to money? I'm
Matt Levine and I write the Money Stuff column for
Bloomberg Get Thing.
Speaker 2 (03:00):
And I'm Katie Greifeld, a reporter for Bloomberg News and
an anchor for Bloomberg Television. We're in We are in
the heart of magnificent seven tech earnings, which means we
(03:23):
are in the heart of those tech companies just saying
how much they're going to spend on AI infrastructure, and
it is so much.
Speaker 1 (03:31):
It's really like either you do or you don't believe that,
Like the entire world is going to change with AI.
And if you believe it, you're like, yeah, sure, ten
trillion dollars, no problem, right, But it is like it's
easy to be nervous or skeptical or make fun of
those numbers because it's a lot of money.
Speaker 2 (03:46):
Yeah. Well, something that I've been talking about on television
and casually with my friends in the newsroom is how
a lot of this these hopes and dreams and these
ambitions of these big tech companies to spend all this money,
A lot of it has been able to be funded
from free cash flow, but increasingly they're having to tap
the bond markets. But as you laid out in a
column this week, they have stellar credit ratings, so they
(04:08):
don't necessarily want to rely too much on the bond market.
Speaker 1 (04:12):
Yeah, it's a mixed bag, right, Like you have a
stellar credit rating, so you can borrow in the bond market,
but like you can't do too much because then you
lose the credit iting. So Meta is out this week
with a twenty five billion dollar investment grade deal. Yes,
but they want more than twenty five billion dollars and
to do that they have tapped the woo like I guess,
I don't know. You call it like people sometimes called
(04:33):
the hybrid's market, but also like it's the kind of
project finance. Yeah, it's like off balance sheet financing. Basically,
like they set up a joint venture where the joint
venture will operate their data centers, and the joint venture
will be owned by in this case Blue Owl, but
in the general case someone who is uh, basically credit
(04:56):
firm but is willing to do weird stuff, and so
Blue Oul is the equ the owner of the data center,
and Meta signs a series of contracts that in the
aggregate kind of look like that. Like they sign like
leases and a residual value guarantee, where like at the
end of the term of the lease they have to
buy the chips in the data center. But those contracts
look enough like debt that Blue Owl can package it
(05:19):
into bonds and sell it to Pimcar or whatever, but
also enough not like debt that it doesn't affect Meta's
accounting or its credit ratings. So it's like not debt
of Meta. For the purposes of like Meta, but it
is kind of debt of Meta for the purposes of
the people buying the bonds.
Speaker 2 (05:36):
So you talked about how this is a fantastic trick
that if you want to call it that that has connotations, but.
Speaker 1 (05:44):
It's just like it's just the thing people do. Right,
It's like it turns out there are things that are
debt and there are things that are not debt, but
then there's like this huge middle ground of things that
they kind of that that and like, for the most part,
things are pretty binary for like ratings and balance sheet.
Either it's on your balance sheet or it's not. Either
it effects your credit anying credit atings are more not
(06:05):
quite binary, like the ratings agency sometimes gives things partial credit.
But you know, if you like check the right boxes,
then it's not quite debt. But you can convince people
to buy the bonds because they look pretty much like
your debt.
Speaker 2 (06:18):
Yeah, give or take you do, right though. That The
bonds for the Hyperion Hyperion the name of the data center.
They price with a coupon of almost six point six percent,
which was roughly a percentage point higher than Meta's outstounding
corporate bonds and in line with the average jump on yields.
So hear what you're saying. But at a certain point,
I feel like people and investors see through this.
Speaker 1 (06:41):
They do, and they don't, right, I mean, they don't
treat it like Meta debt exactly.
Speaker 2 (06:45):
Yeah.
Speaker 1 (06:45):
They you know, they're happy to buy it at a
yield and they're like, oh, yeah, it's great. It's like
it's backed by Meta. You know, it has structural features
that make it not quite as good as Meta debt,
but yeah, so it trades that a yield that is
a reasonable cut the capital for building a data center
and kind of keeps it off of Meta's pristine balance sheet.
Speaker 2 (07:05):
Yeah, we're talking about this like weird structure, this SPV
that Meta is doing.
Speaker 1 (07:12):
It's weird ish a little, but it's also like, you know,
the basic format of doing some sort of project finance JV.
They didn't invent that for data centers.
Speaker 2 (07:22):
That's true.
Speaker 1 (07:22):
It's been done for a while and a lot of
industries in different forms. And you know, I wrote this
week about it's very general purpose. And so Carrig Doctor
Pepper is putting its k cup manufacturing in JV so
that it can borrow against the k cups without tarnishing
its credit rating to do an acquisition.
Speaker 2 (07:40):
Okay, so it's not weird. I do feel like a
lot of folks, myself included, have thought more about this
in the past two weeks, and maybe I have. Ever,
it's a concept that's being more widely socialized than perhaps
in the.
Speaker 1 (07:53):
Past and higher profile.
Speaker 2 (07:54):
Yes, that's the thing.
Speaker 1 (07:56):
And the other thing about it that is interesting is
that it's really interacting with the private credit right. Yeah,
you look at all the private credit firms and stereotypically
private credit means leveraged acquisition finance. And the reason for
that is because you know, private equity sponsors are willing
to pay up for flexible, fast, guaranteed debt, so you
can make money doing that, Like you can charge more
(08:17):
than the public markets would if you can offer sponsors
like user friendly product financing their acquisitions. But then, like
you know, these private credit firms, like they have a
lot of insurance clients, they want to deploy a lot
of money. They need to eventually get into investment grade debt,
and it is harder to get into investment grade debt
because you go to like Meta and you say I'll
buy your bonds and metas like, sure, our bond's price
that you know, that's right, and it's not super exciting
(08:40):
for private credit. But then you do this project financing,
and you can do a thing that gets an A
plus rating and also has a yield. And also you're
not competing in the same way with the public markets
because regular public market bond investors can't necessarily buy two
point five billion dollars of equity in a data center, right,
Like the private credit firms are a little bit more
(09:01):
flexible and like what kind of financing arrangements they can do,
and a little bit more creative, and so they can
do this to get tens of billions of dollars of
investment grade financing, which is what they want.
Speaker 2 (09:10):
Yeah, I do want to talk more broadly about META, Yes,
but before we get there, so you made the point that, okay,
even with this what they're working out, they also tap
the market, the public market for that twenty five billion
dollar bond. Apparently it was super oversubscribed according to our reporting.
But you think about.
Speaker 1 (09:30):
You know, META has capacity to do hundreds of billions
of dollars then, and they don't do it because they
want to keep good rating. So they Yeah, they want
to met a bond.
Speaker 2 (09:37):
Yeah, one hundred and twenty five billion dollars of bids
for this twenty.
Speaker 1 (09:40):
Five So like over subscribe never means anything.
Speaker 2 (09:42):
Yeah, well nothing truly means anything, Matt. But something I've
been thinking about, not just as it relates to Meta,
but all the spending that all these big tech companies
are doing. You think about the typical profile of investing
in tech from the equity market perspective, It's like, Okay,
these companies have pristine, tidy balance sheets, they're very capital
(10:04):
light businesses, et cetera, et cetera. And I do wonder,
you know, if the nature of investing in the tech
space is starting to change, And I keep asking people.
Speaker 1 (10:15):
That just not capital light these days? I know, I
know it's the opposite.
Speaker 2 (10:19):
It's just you think, like five years ago, the conversation
was about you know, intangible assets, and that week.
Speaker 1 (10:26):
Meta right like five years ago was Meta called Facebook. Yeah,
but like you think, like the stereotypical business model of
Facebook is like it serves a web page, right, It's
like marginal cost is zero, right, so it's scales like
really really effectively. So Facebook is this classic investment where
you know, venture capitalists put money in and it goes
from being a dorm room project to being a one
(10:47):
hundred billion dollar company with kind of no additional spending. Yeah,
and that switch just flipped and now it's just everything
is a trillion dollars of data centers.
Speaker 2 (10:57):
Well, I love talking about meta because you remember the
reason why Meta is called meta because they do. Hey,
one's so big on the metaverse, which I never talked
about before Mark Zuckerberg was lighting money on fire.
Speaker 1 (11:12):
I don't really know what that entel, but it would
be funny if there were like data centers out there
that were optimized only for the metaverse and are now
just like tumbleweed is blowing through them.
Speaker 2 (11:21):
I love it. I love it. But that led to
Meta's year of efficiency, et cetera.
Speaker 1 (11:26):
It was this whole thing and now the opposite.
Speaker 2 (11:28):
Alphabet and Microsoft. You can make a case for why
they're going so hard on AI when it comes to Meta.
I'm not sure what the payoff is. They said that
they're investing so hard because it's going to help better
target their advertising. But is that is that? Is that
(11:48):
a trillion dollar endeavors? It's wild, it's wild, and I've.
Speaker 1 (11:53):
Learned is that the purpose of the economy is to
serve customized ads.
Speaker 2 (11:57):
For sure, for sure, all the water sources be damned.
But I don't know. I'm curious to see how this
plays out for Meta Apparently, Mark Zuckerberg did say on
the earnings call they reported on Wednesday this week that
the company has options if it ends up spending too
much on infrastructure. In one scenario, he said, the company
could use the extra computing capacity for its core business.
(12:18):
In another, it could sell the power to other companies.
Speaker 1 (12:21):
Or or really good metaverse.
Speaker 2 (12:24):
That metaverse, really good metaverse.
Speaker 1 (12:27):
Yeah, there's the centers full of legless Mark Zuckerberg.
Speaker 2 (12:31):
I mean, they're still committed to that in there. I
believe that falls under the Reality Labs division, which reported
a loss of four point four billion dollars for the
third quarter.
Speaker 1 (12:40):
On revenue of twelve cents revenue.
Speaker 2 (12:42):
Of four hundred and seventy million. I'll have you know. Anyway,
I think it's super interesting. At least Mark Zuckerberg's thinking
about the prospect of maybe they're overbuilding.
Speaker 1 (13:08):
Also, we're in hundreds of billions of dollars of a
spending open AI is a regular company.
Speaker 2 (13:12):
Now I know it's exciting so regularly anti climactically.
Speaker 1 (13:17):
Yeah, I was assuming there'd be like years of litigation,
and like all the state attorney generals and Microsofts were like, okay, good,
it's fine, So cool. They did their.
Speaker 2 (13:26):
Conversial at this moment too. Elon Musk is a bit distraction,
which will brew we'll get to I'm sure he'll keep suing,
but yeah, we'll get to that anyway. Open Ai apparently
is so normal that maybe they're going to IPO in
next two years or so.
Speaker 1 (13:41):
Yeah, sure, maybe, right.
Speaker 2 (13:43):
That's what Reuter's told us.
Speaker 1 (13:44):
Sure. I just feel like any large private tech company
might IPO in the next two years.
Speaker 2 (13:49):
I know, but this one I feel like it urgently
needs to really. Okay, Yeah, they've committed to like one
point four trillion dollars of spending. Where are they going
to get the funds.
Speaker 1 (14:00):
From, like an IPO? Maybe a little from an IPO?
Sam Almons, if open Ai and Fanny and Freddie I'll
go public like next year, God, what IPO?
Speaker 2 (14:10):
So many good podcasts? No. Sam Almons said that I
think it's fair to say that it's the most likely
path for us, given the capital needs that we'll have. Yeah,
during a live stream on Tuesday.
Speaker 1 (14:20):
Matt find the the public equity markets and the public
bond markets and the project finance markets. It's amazing, so
much money for AI. Yeah, so they're a normal company.
Speaker 2 (14:32):
I don't know, a normal company.
Speaker 1 (14:33):
Owns twenty seven percent.
Speaker 2 (14:35):
Twenty seven percent.
Speaker 1 (14:37):
The nonprofit owns twenty six percent but has like super
voting board control. It's very hard. Yeah, you be like,
we started as a non profit. We shore donations. Theydn't
think that much in donations, but in donations, and now
we're a five hundred million dollars private company for the
benefit of our investors. And one way to sort of
(14:58):
smooth that transition is that the nonprofit will continue to
control the company and have like supervoting rights. I don't
know how that will go for an IPA, but it'll
go fine. Like no one cares. You could imagine being like,
if this company is not run for profit, maybe I
shouldn't invest in it. Yeah, seeking an enormous financial return,
(15:18):
But no one has ever had that thought.
Speaker 2 (15:20):
Yeah, or ever will. Yeah, that's so clean.
Speaker 1 (15:22):
It's like I is definitely looking to give you a
high financial return on your investment, which is nice.
Speaker 2 (15:29):
So do you not take Samulmon at his words, which
words that they need to do this to get the
capital that they need to know.
Speaker 1 (15:36):
I believe that they need to do this to get
the capital. But like even now that they're a for
profit company, they're a public benefit company, which is slightly
less than for profit but still pretty for profit. But
they're controlled by a nonprofit board, right, Like the nonprofit
boards to put the interest of humanity first. But no
one cares about that. No one's worried about that.
Speaker 2 (15:58):
I thought that a nonprofit board couldn't fire members.
Speaker 1 (16:02):
Well, they're not going to fire him like that, lesson.
Speaker 2 (16:05):
Well I know that, but even other members, like other
open AI executives. So when when you say they're in control,
I mean, what does that mean if they're not going
to fire the people running it?
Speaker 1 (16:14):
That's a good question the board of directors, right, So,
like typically one of the main things the board does
is decide whether or not to do a merger. And
they're too big to do a merger, you know, yeah, right, Like,
I don't know how much operational control they have. One
thing the board of directors does is fire the CEO
if he does a bad job. But there's a constraint
on that job number one, Right, Like the board of
(16:36):
open Ai within recent memory has fired Sam Altman, not
for doing a bad job of developing products or leading
the people or achieving shareholder value, but for the crime of,
I don't know, something else. No one really understood it.
But it was kind of in the ballpark of like
not being for the benefit of humanity or like deceiving
(16:57):
the board. And I'm like, no one really knows, and
they quickly unfired him and then fired themselves. Yeah, so
that won't happen again.
Speaker 2 (17:04):
Yeah, that was just about two years ago.
Speaker 1 (17:06):
Yeah, it's amazing in theory, Like you can look around
a lot of like boards of big founder led tech startups.
Sometimes those founders do weird stuff and you can imagine
a board firing them, but you can't really because they
never would. You know.
Speaker 2 (17:20):
There's been so many natural segues to yes.
Speaker 1 (17:23):
Right, let's move straight along.
Speaker 2 (17:25):
Okay, Well, the only thing I was going to say
is that when it comes to the capital needs, obviously
we've talked a lot about the private markets and the
public markets melding that if you're a private company, you
can get most of the funding that you need in
the private markets. This obviously is such an extreme example
that maybe it's not even worth mentioning, but it is
a limit perhaps of the private markets.
Speaker 1 (17:47):
Yeah, sure, right, I tak that point, although we're not
there yet, right, No, this is like they're rumored to
be interested in going public in twenty twenty.
Speaker 2 (17:54):
My mind, they're already public for now. They have floated
a trial balloon with Reuters.
Speaker 1 (17:58):
No, Like, what do they need capital for? They need
to like get chips and data centers and compute like
they're getting all of that, right, but they're funding it
with vague promises of future trillions of dollars of capital raising, right,
Like they have not needed to go public to meet
their enormous capital spending needs yet. Yeah, right, they're incurring
obligations that might require going public. But loo, I agree
(18:21):
with you that, like, if Sam Altman is feeling the
pressure to go public, that does show some limit on
the ability of private markets to fund absolutely everything. Yeah,
that he's got a five hundred billion dollar company that
keeps signing trillion dollar deals and is not public. So true,
the limit is we haven't hit it yet.
Speaker 2 (18:56):
If we're looking for another segue, SpaceX obviously is private
company that has a lot of capital needs.
Speaker 1 (19:02):
Yes, so it turns out that shooting rockets to Mars
costs much, much, much less than training chatbots.
Speaker 2 (19:08):
What a world. It's what a world, right, Elon Musk,
he's the whole company, the whole board of Tesla. Well really,
Robin Denholm has been on a media tour.
Speaker 1 (19:18):
Yeah, Robin Denholm and the board of Tesla are going
around to big shareholders and also frankly media, Yeah, to
drum up support for Elon Musk's big pay package because
the sharelders have to vote on it, and the big
shaholder advisory firms Iss and Glass Lewis have recommended that
the sharelders vote against giving Elon Musk a pay package
(19:40):
that has a nominal value of one trillion dollars. Yeah.
I really don't like that framing. No, because like basically
what it is that they want to give Elon Musk
twelve percent of the company, and twelve percent of the
company right now is worth one hundred and eighty billion dollars.
There's a lot of money. Yeah, not a trillion dollars.
But in order to justify doing this, they're like, we'll
(20:01):
only give him twelve percent of the company if he
hits like these really ambitious operational and stock price targets,
and if he hits all those targets, the company will
be worth eight point five trillion dollars, and his twelve
percent package will be worth a trillion dollars. But like
they're trillion dollars today.
Speaker 2 (20:17):
Yeah, they're not giving him a trillion dollars, right, They're.
Speaker 1 (20:21):
Giving him the chance to get twelve percent of the stock.
Speaker 2 (20:25):
Well, listen, you don't like the trillion dollar framing, but
everyone listening to this podcast now is thinking about it differently.
Speaker 1 (20:31):
So no, they're not. It's fine anyway. But yeah, I
wrote today on Thursday, it's interesting to me, like the
trillion dollars is really embarrassing. No one wants to vote
to give Elon Musk a trillion dollars. Yeah, I think
it sounds insane. It's clearly like part of the pushback
to the proposal is it's a trillion dollars, right. Elon
Musk has been very clear that what he wants is
to control twenty four percent of the votes of TESLA.
(20:53):
He's like, I don't want to be voted out by
like dom shaolders. I want to have like enough voting
control that I have a lot out of control, but
not so much that I can't be voted out if
I become insane, which is okay. And so it seems
to me the obvious solution there is to give him
twenty five percent of the voting power without giving him
any more stock, which is not easy to do, and
(21:13):
in fact, in an interview with the Ft, Robin Henholmes said,
we tried to do that and we couldn't find a
way to do it. I don't know, man, it seems
to be like you could do it. You could like
find a way to give him super voting shares. You
could get shareholders to approve that, and then you wouldn't
have to give him a trillion dollars. You could just
be like, we're giving him twenty five percent of the
vote because that's what he wants.
Speaker 2 (21:30):
Robin Denholm went on Bloomberg TV. You could have stopped
her in person and told her about that idea. I
was writing, you were busy, it's busy, well, and.
Speaker 1 (21:40):
I wrote it, and she can whatever, because surely they've
had that idea, because she did say to the Ft, like,
we tried to do it, and it couldn't find a
way to work. But I don't know why I couldn't
find a way to make it work.
Speaker 2 (21:50):
Yeah, it didn't tricky. Didn't you say we searched high
and low or something.
Speaker 1 (21:53):
It seems tricky. Like I'm not saying it's trivial to
be like, we're going to give this guy a new
super voting share, but you know, yeah, doesn't seem impossible.
So no, that's just the guy.
Speaker 2 (22:04):
That was an interview she did with The Financial Times.
She also went on Bloomberg Television and said that the
board is looking at internal CEO candidates should Elon Musk leave.
Speaker 1 (22:14):
Right, They're definitely going around being like if this Preybaggers
doesn't get approved, he is out the door, which is
you know, maybe. Yeah.
Speaker 2 (22:21):
She said that the company has a deep bench of executives,
which I always like hearing because we never hear from
them or about them.
Speaker 1 (22:29):
So I think she's also said there's no Elon mark too. Right,
it is possible that you can have both a deep
bench of very excellent car executives and also not have yeah,
Elon Musk light waiting in the wings. You know.
Speaker 2 (22:41):
Well, apparently one of them is their global production chief.
In China head tom Ju, which is funny, I guess
because initially when I read that headline, it was like, oh, well,
it's going to be really interesting to see if like
Elon Musk fires all of them, because he has CEO,
so he could, but I guess there's potential internal candidates.
Speaker 1 (23:01):
Yeah, I don't think he will. I think, like, if
you take them at their word, that Elon Musk might
quit if he doesn't get this control. Yeah, it would
still be a terrible idea for him to sabotage Tesla
on his way out the door. Like he could be
mad at the shareholders and he could be like, I'm
going to spend my time on something where I have
more control, because what I want to do is build
(23:23):
a robot army, and I need to have twenty zero
present voting control of anywhere I build a robot army. Right,
you believe what they're saying. Right, That's still not a
reason for him to sabotage Tesla because Tesla remains more
or less the majority of his wealth, right, and so
like if he were to leave in a huff, the
stock would tank, Yes, but if he were to leave
in a huff, but also saying, I've left this in
(23:45):
charge of my good friend who's really good at this,
Tom Hu, then it's better for his wealth than leaving
in a huff and burning it down on his way
out the door.
Speaker 2 (23:56):
That's true. He seems logical way to think about things, Matt.
Speaker 1 (24:01):
Yeah, you know he's not illogical.
Speaker 2 (24:05):
No, he does host somewhat emotional.
Speaker 1 (24:08):
Weird stuff, but I think he's going to be rational.
Speaker 2 (24:11):
Well you know, well, maybe find out but probably not.
Speaker 1 (24:15):
Probably not. Probably the shareholders will appear of the package. Yeah,
I'm guessing. I don't. I don't have no basis in
saying that. I just they always do.
Speaker 2 (24:21):
Well, it's thirty percent of their investor bases retail shareholders.
Speaker 1 (24:25):
He'll be fine. Yeah, they're like creating drama, but they'll
be fine. But if they're not fine, I'll be very
interested to see if he quits.
Speaker 2 (24:31):
Yeah, me too, mail Bag, mail Bag.
Speaker 1 (24:36):
I do want to talk briefly about some emails.
Speaker 2 (24:39):
Yeah, I'm not going to sing mail bag with us mail.
Speaker 1 (24:42):
Bag those voice. But I don't know if you listened
to last week's podcast episode, But if you did, insisted
entirely of Katie reciting facts about the new JP market Headquarters.
But here are some more facts about the new JP
Market Headquarters.
Speaker 2 (24:54):
I was worried that people wouldn't like that.
Speaker 1 (24:57):
But I was sure people would like.
Speaker 2 (24:58):
People did well. We got a lot of age. This
is from Eric Okay. I went on a tour of
the HQ as part of an annual meeting earlier this year,
and during the tour they highlighted the HVAC system for
the flag. It is actually capable of mimicking the conditions
outside the building, so the flag always waves in the
way it would if it were outside. Man, it must
(25:18):
be going crazy today because it's raining. There's a story
it's raining in the lobby. Maybe it's like the Hogwarts
ceiling really good.
Speaker 1 (25:28):
Yeah, because we were talking about like there's a flag
in the lobby that blows in the breeze and yeah,
you mentioned the fanning system and I was like, is
it a guy with a desk fan on a stick?
And no, it's a very fancy HPY system that makes
it rain inside.
Speaker 2 (25:41):
I have to say that the flag was waving like
there would have to be a strong gust of wind
the way it was waving last Tuesday, and I don't
remember it being that one. Dy outside maybe.
Speaker 1 (25:50):
Like mimics but somewhat amplifies.
Speaker 2 (25:53):
Yeah, it enhances, it makes it a little Yeah, definitely.
Speaker 1 (25:57):
This is from Riot regarding Matt's observation that the building
has a precarious overran. I don't want to say it
just looks sick. It might fall on you. Yeah, surely
you were aware of the design and construction flow of
the City Court building in the late seventies. This is
taught in basically all engineering programs today. I assume it
must be well known in finance circles too. I think
less well known in finance, but not unknown. But yeah,
there's a city building.
Speaker 2 (26:18):
I did not know this.
Speaker 1 (26:19):
So it's on like near us. It's at like six
o one Lex. It's like just kind of down the
street from the Bloomberg offices, and they built it in
the late seventies and it's very cool. It's like very
much like you know, there's a plaza underneath it and like, yeah,
big massy building is on top of like little stick legs.
And the famous engineer who designed it didn't take into
account quartering wing winds. Quartering winds they're like the winds
(26:41):
that don't hit the thing head on. And then like,
you know, it's a fancy building, and so a couple
of like engineering and architecture students like studied it for
class projects and they were like, wait a minute, if
this gets a wind from the run direction, it'll fall over.
And they emailed him or they wrote to him, and
he was like, oh, no, you're right, And so they
like know while people were working in the building every
night they'd go home and like people would come in
(27:03):
and shore up the bolts in the building to make
sure it didn't fall over.
Speaker 2 (27:06):
Right, that the engineer was humble enough to take the feedback,
but also maybe he should.
Speaker 1 (27:09):
Skis a little grab. It's like he contemplated the suicide.
Speaker 2 (27:12):
Oh that's not good. But I was gonna say maybe
he shouldn't work again.
Speaker 1 (27:16):
I think he was fine, but yeah, it was a
little not a great day for him.
Speaker 2 (27:19):
I can't wait to read the Soukapedia article. I will
say I would love to see the JP Morgan lobby
flag in a quarter England. Yeah, sounds pretty cool.
Speaker 1 (27:27):
They should do that, just as like a little engineering
and side jack.
Speaker 2 (27:29):
Yeah Nick Nick says, I just went to a meeting
there and wanted to share a couple of things. Apparently
the pub doesn't start pouring beer until four pm. The
rumor going around was that Jamie Diamond himself was refused
to drink at three pm. We haven't fact tracked any
of this, By the way, I kind of don't.
Speaker 1 (27:46):
Believe that Jamie Diamond was like wandering down to the
in office pub at three pm and to be like,
I'll have a beer, Like that doesn't sound like.
Speaker 2 (27:53):
DAMMI maybe they like Also, I don't like you.
Speaker 1 (27:56):
Could imagine him being like I'm going to do a
little like stunt of like order a beer to like
demonstrate the pub to people, and like he wasn't served.
Speaker 2 (28:03):
Yeah, but I feel like they would make like refuse
him once but then be like, actually, here's the pier.
But I don't know. I only have a parasocial relationship
with Jamie Diamond, so I'm not actually sure.
Speaker 1 (28:13):
Right, we do need to interview the bartender who a
drink at the Jamie Diamond controlled pub, and.
Speaker 2 (28:21):
I want to go there and we can look at
the flag.
Speaker 1 (28:25):
If you're that bartender.
Speaker 2 (28:27):
Yeah, no, I want to do a podcast from the.
Speaker 1 (28:30):
Pub Whipping Wind. The pub is the pub is not.
Speaker 2 (28:33):
In that's on the thirteenth floor. The flag is in
the lobby.
Speaker 1 (28:36):
We're going to do the podcast from the pub.
Speaker 2 (28:38):
It'll happen.
Speaker 1 (28:44):
And that was the Money Stuff Podcast.
Speaker 2 (28:46):
I'm Matt Levine and I'm Katie Greifeld.
Speaker 1 (28:48):
You can find my work by subscribing to the Money
Stuff newsletter on Bloomberg.
Speaker 2 (28:52):
Dot com, and you can find me on Bloomberg TV
every day on the Clothes between three and five pm Eastern.
Speaker 1 (28:59):
We'd love to hear. You can send an email to
Moneypod at Bloomberg dot net, ask us a question and
we might answer it on the air.
Speaker 2 (29:06):
You can also subscribe to our show wherever you're listening
right now and leave us a review. It helps more
people find the show.
Speaker 1 (29:12):
The Money Stuff Podcast is produced by Ana ma Aserakis
and Roses Ondan.
Speaker 2 (29:17):
Our theme music was composed by Blake Maples.
Speaker 1 (29:19):
Amy Keen is our executive.
Speaker 2 (29:21):
Producer, and Sage Bauman is Bloomberg's head of Podcasts.
Speaker 1 (29:25):
Thanks for listening to The Money Stuff Podcast. We'll be
back next week with more stuff.
Bloomberg Audio Studios, podcasts, radio news. I feel like we
need your address things. Yes, go One is that I
sound like this.
Speaker 2 (00:12):
You sound great, I know, but it's different.
Speaker 1 (00:14):
I have a cold, so it's going to be like
the best, the best voice you've ever heard on a
podcast for like ten minutes, and then I'm going to
lose my voice and it's going to be over. So
it'll be great on both accounts.
Speaker 2 (00:24):
Yeah.
Speaker 1 (00:25):
The other thing I want to address is what are
you going to be for Halloween?
Speaker 2 (00:27):
Oh my god, man, I'm so thrilled you asked. I'll
probably just dress in all black and put on caddiers. Okay,
but that's what I do most Fridays. Yeah, right, what
about you?
Speaker 1 (00:36):
I think I've dies this bullet?
Speaker 2 (00:38):
Is it a bullet? Isn't it just joyful?
Speaker 1 (00:40):
Is joyful to take your kids around in their costumes
when you're not in a costume? I shouldn't it? Like
I see like the people with family costers, like, Okay,
that's cool, and I kind of want to do it,
but like not enough to Yeah, for adults, it's got
to be creative.
Speaker 2 (00:55):
There are onesies out there, but I hear, yeah, I
don't really want to cut around really psyched. I mean
not to go running a one sie. I spoke too soon,
but I'm just I love Halloween so much. I'm really excited.
I'm an adult and I don't have a child, so
I feel like I can't. But we're going to walk
around Hoboken because Hoboken goes hard on Halloween. A lot
(01:18):
of these.
Speaker 1 (01:19):
Yes, but okay, I.
Speaker 2 (01:20):
Mean I'm not going to like knock on doors and
take candy. If someone with a bucket of candy comes
up to me and says, do you want a piece,
I'm not going to turn them down. That'd be crazy.
Speaker 1 (01:30):
Are you going to wear your cat ears on air?
Speaker 2 (01:33):
No? No, I won't.
Speaker 1 (01:35):
I feel like one year, I want you to wear
like a children's ghost costume, you know, just like a
sheet of holes for eyes on air.
Speaker 2 (01:41):
I usually subtly try to dress up on air.
Speaker 1 (01:44):
Like you've worn the cat I feel like we talked
about this last year, but you really did.
Speaker 2 (01:48):
Some dedicated listener can tell us. I mean, I always
I have this like Christmas shirt that I try to
sneak in once a year. Tomorrow, I've I think I'm
going to wear all black, like a black turtleneck and
just be kind of spooky.
Speaker 1 (02:00):
Okay, just subtle, just a.
Speaker 2 (02:03):
Little maybe like a cat eye eyeliner. But I will
mention over and over again that it's Halloween. I love Halloween. Yeah,
I want to put someone in a ghost costume and
just have them walk behind me at some point, just once.
Speaker 1 (02:15):
I think you should actually have a ghost cut host
who doesn't say anything.
Speaker 2 (02:18):
That would be kind of funny. They just like a
human and a ghost, like yeah, like.
Speaker 1 (02:25):
Many glasses over the ghost pace, you know.
Speaker 2 (02:27):
Yeah. I turned to them and like say something, and
then I turned back like this sounds great.
Speaker 1 (02:36):
I've got your TV shows all right, podcast.
Speaker 2 (02:38):
Now, we're just trying to run out the clock here.
Speaker 1 (02:42):
To the podcast like that.
Speaker 2 (02:43):
Yeah scary.
Speaker 1 (02:49):
Hello and welcome to the Money Stuff podcast, your weekly podcast.
Where are you talking about stuff related to money? I'm
Matt Levine and I write the Money Stuff column for
Bloomberg Get Thing.
Speaker 2 (03:00):
And I'm Katie Greifeld, a reporter for Bloomberg News and
an anchor for Bloomberg Television. We're in We are in
the heart of magnificent seven tech earnings, which means we
(03:23):
are in the heart of those tech companies just saying
how much they're going to spend on AI infrastructure, and
it is so much.
Speaker 1 (03:31):
It's really like either you do or you don't believe that,
Like the entire world is going to change with AI.
And if you believe it, you're like, yeah, sure, ten
trillion dollars, no problem, right, But it is like it's
easy to be nervous or skeptical or make fun of
those numbers because it's a lot of money.
Speaker 2 (03:46):
Yeah. Well, something that I've been talking about on television
and casually with my friends in the newsroom is how
a lot of this these hopes and dreams and these
ambitions of these big tech companies to spend all this money,
A lot of it has been able to be funded
from free cash flow, but increasingly they're having to tap
the bond markets. But as you laid out in a
column this week, they have stellar credit ratings, so they
(04:08):
don't necessarily want to rely too much on the bond market.
Speaker 1 (04:12):
Yeah, it's a mixed bag, right, Like you have a
stellar credit rating, so you can borrow in the bond market,
but like you can't do too much because then you
lose the credit iting. So Meta is out this week
with a twenty five billion dollar investment grade deal. Yes,
but they want more than twenty five billion dollars and
to do that they have tapped the woo like I guess,
I don't know. You call it like people sometimes called
(04:33):
the hybrid's market, but also like it's the kind of
project finance. Yeah, it's like off balance sheet financing. Basically,
like they set up a joint venture where the joint
venture will operate their data centers, and the joint venture
will be owned by in this case Blue Owl, but
in the general case someone who is uh, basically credit
(04:56):
firm but is willing to do weird stuff, and so
Blue Oul is the equ the owner of the data center,
and Meta signs a series of contracts that in the
aggregate kind of look like that. Like they sign like
leases and a residual value guarantee, where like at the
end of the term of the lease they have to
buy the chips in the data center. But those contracts
look enough like debt that Blue Owl can package it
(05:19):
into bonds and sell it to Pimcar or whatever, but
also enough not like debt that it doesn't affect Meta's
accounting or its credit ratings. So it's like not debt
of Meta. For the purposes of like Meta, but it
is kind of debt of Meta for the purposes of
the people buying the bonds.
Speaker 2 (05:36):
So you talked about how this is a fantastic trick
that if you want to call it that that has connotations, but.
Speaker 1 (05:44):
It's just like it's just the thing people do. Right,
It's like it turns out there are things that are
debt and there are things that are not debt, but
then there's like this huge middle ground of things that
they kind of that that and like, for the most part,
things are pretty binary for like ratings and balance sheet.
Either it's on your balance sheet or it's not. Either
it effects your credit anying credit atings are more not
(06:05):
quite binary, like the ratings agency sometimes gives things partial credit.
But you know, if you like check the right boxes,
then it's not quite debt. But you can convince people
to buy the bonds because they look pretty much like
your debt.
Speaker 2 (06:18):
Yeah, give or take you do, right though. That The
bonds for the Hyperion Hyperion the name of the data center.
They price with a coupon of almost six point six percent,
which was roughly a percentage point higher than Meta's outstounding
corporate bonds and in line with the average jump on yields.
So hear what you're saying. But at a certain point,
I feel like people and investors see through this.
Speaker 1 (06:41):
They do, and they don't, right, I mean, they don't
treat it like Meta debt exactly.
Speaker 2 (06:45):
Yeah.
Speaker 1 (06:45):
They you know, they're happy to buy it at a
yield and they're like, oh, yeah, it's great. It's like
it's backed by Meta. You know, it has structural features
that make it not quite as good as Meta debt,
but yeah, so it trades that a yield that is
a reasonable cut the capital for building a data center
and kind of keeps it off of Meta's pristine balance sheet.
Speaker 2 (07:05):
Yeah, we're talking about this like weird structure, this SPV
that Meta is doing.
Speaker 1 (07:12):
It's weird ish a little, but it's also like, you know,
the basic format of doing some sort of project finance JV.
They didn't invent that for data centers.
Speaker 2 (07:22):
That's true.
Speaker 1 (07:22):
It's been done for a while and a lot of
industries in different forms. And you know, I wrote this
week about it's very general purpose. And so Carrig Doctor
Pepper is putting its k cup manufacturing in JV so
that it can borrow against the k cups without tarnishing
its credit rating to do an acquisition.
Speaker 2 (07:40):
Okay, so it's not weird. I do feel like a
lot of folks, myself included, have thought more about this
in the past two weeks, and maybe I have. Ever,
it's a concept that's being more widely socialized than perhaps
in the.
Speaker 1 (07:53):
Past and higher profile.
Speaker 2 (07:54):
Yes, that's the thing.
Speaker 1 (07:56):
And the other thing about it that is interesting is
that it's really interacting with the private credit right. Yeah,
you look at all the private credit firms and stereotypically
private credit means leveraged acquisition finance. And the reason for
that is because you know, private equity sponsors are willing
to pay up for flexible, fast, guaranteed debt, so you
can make money doing that, Like you can charge more
(08:17):
than the public markets would if you can offer sponsors
like user friendly product financing their acquisitions. But then, like
you know, these private credit firms, like they have a
lot of insurance clients, they want to deploy a lot
of money. They need to eventually get into investment grade debt,
and it is harder to get into investment grade debt
because you go to like Meta and you say I'll
buy your bonds and metas like, sure, our bond's price
that you know, that's right, and it's not super exciting
(08:40):
for private credit. But then you do this project financing,
and you can do a thing that gets an A
plus rating and also has a yield. And also you're
not competing in the same way with the public markets
because regular public market bond investors can't necessarily buy two
point five billion dollars of equity in a data center, right,
Like the private credit firms are a little bit more
(09:01):
flexible and like what kind of financing arrangements they can do,
and a little bit more creative, and so they can
do this to get tens of billions of dollars of
investment grade financing, which is what they want.
Speaker 2 (09:10):
Yeah, I do want to talk more broadly about META, Yes,
but before we get there, so you made the point that, okay,
even with this what they're working out, they also tap
the market, the public market for that twenty five billion
dollar bond. Apparently it was super oversubscribed according to our reporting.
But you think about.
Speaker 1 (09:30):
You know, META has capacity to do hundreds of billions
of dollars then, and they don't do it because they
want to keep good rating. So they Yeah, they want
to met a bond.
Speaker 2 (09:37):
Yeah, one hundred and twenty five billion dollars of bids
for this twenty.
Speaker 1 (09:40):
Five So like over subscribe never means anything.
Speaker 2 (09:42):
Yeah, well nothing truly means anything, Matt. But something I've
been thinking about, not just as it relates to Meta,
but all the spending that all these big tech companies
are doing. You think about the typical profile of investing
in tech from the equity market perspective, It's like, Okay,
these companies have pristine, tidy balance sheets, they're very capital
(10:04):
light businesses, et cetera, et cetera. And I do wonder,
you know, if the nature of investing in the tech
space is starting to change, And I keep asking people.
Speaker 1 (10:15):
That just not capital light these days? I know, I
know it's the opposite.
Speaker 2 (10:19):
It's just you think, like five years ago, the conversation
was about you know, intangible assets, and that week.
Speaker 1 (10:26):
Meta right like five years ago was Meta called Facebook. Yeah,
but like you think, like the stereotypical business model of
Facebook is like it serves a web page, right, It's
like marginal cost is zero, right, so it's scales like
really really effectively. So Facebook is this classic investment where
you know, venture capitalists put money in and it goes
from being a dorm room project to being a one
(10:47):
hundred billion dollar company with kind of no additional spending. Yeah,
and that switch just flipped and now it's just everything
is a trillion dollars of data centers.
Speaker 2 (10:57):
Well, I love talking about meta because you remember the
reason why Meta is called meta because they do. Hey,
one's so big on the metaverse, which I never talked
about before Mark Zuckerberg was lighting money on fire.
Speaker 1 (11:12):
I don't really know what that entel, but it would
be funny if there were like data centers out there
that were optimized only for the metaverse and are now
just like tumbleweed is blowing through them.
Speaker 2 (11:21):
I love it. I love it. But that led to
Meta's year of efficiency, et cetera.
Speaker 1 (11:26):
It was this whole thing and now the opposite.
Speaker 2 (11:28):
Alphabet and Microsoft. You can make a case for why
they're going so hard on AI when it comes to Meta.
I'm not sure what the payoff is. They said that
they're investing so hard because it's going to help better
target their advertising. But is that is that? Is that
(11:48):
a trillion dollar endeavors? It's wild, it's wild, and I've.
Speaker 1 (11:53):
Learned is that the purpose of the economy is to
serve customized ads.
Speaker 2 (11:57):
For sure, for sure, all the water sources be damned.
But I don't know. I'm curious to see how this
plays out for Meta Apparently, Mark Zuckerberg did say on
the earnings call they reported on Wednesday this week that
the company has options if it ends up spending too
much on infrastructure. In one scenario, he said, the company
could use the extra computing capacity for its core business.
(12:18):
In another, it could sell the power to other companies.
Speaker 1 (12:21):
Or or really good metaverse.
Speaker 2 (12:24):
That metaverse, really good metaverse.
Speaker 1 (12:27):
Yeah, there's the centers full of legless Mark Zuckerberg.
Speaker 2 (12:31):
I mean, they're still committed to that in there. I
believe that falls under the Reality Labs division, which reported
a loss of four point four billion dollars for the
third quarter.
Speaker 1 (12:40):
On revenue of twelve cents revenue.
Speaker 2 (12:42):
Of four hundred and seventy million. I'll have you know. Anyway,
I think it's super interesting. At least Mark Zuckerberg's thinking
about the prospect of maybe they're overbuilding.
Speaker 1 (13:08):
Also, we're in hundreds of billions of dollars of a
spending open AI is a regular company.
Speaker 2 (13:12):
Now I know it's exciting so regularly anti climactically.
Speaker 1 (13:17):
Yeah, I was assuming there'd be like years of litigation,
and like all the state attorney generals and Microsofts were like, okay, good,
it's fine, So cool. They did their.
Speaker 2 (13:26):
Conversial at this moment too. Elon Musk is a bit distraction,
which will brew we'll get to I'm sure he'll keep suing,
but yeah, we'll get to that anyway. Open Ai apparently
is so normal that maybe they're going to IPO in
next two years or so.
Speaker 1 (13:41):
Yeah, sure, maybe, right.
Speaker 2 (13:43):
That's what Reuter's told us.
Speaker 1 (13:44):
Sure. I just feel like any large private tech company
might IPO in the next two years.
Speaker 2 (13:49):
I know, but this one I feel like it urgently
needs to really. Okay, Yeah, they've committed to like one
point four trillion dollars of spending. Where are they going
to get the funds.
Speaker 1 (14:00):
From, like an IPO? Maybe a little from an IPO?
Sam Almons, if open Ai and Fanny and Freddie I'll
go public like next year, God, what IPO?
Speaker 2 (14:10):
So many good podcasts? No. Sam Almons said that I
think it's fair to say that it's the most likely
path for us, given the capital needs that we'll have. Yeah,
during a live stream on Tuesday.
Speaker 1 (14:20):
Matt find the the public equity markets and the public
bond markets and the project finance markets. It's amazing, so
much money for AI. Yeah, so they're a normal company.
Speaker 2 (14:32):
I don't know, a normal company.
Speaker 1 (14:33):
Owns twenty seven percent.
Speaker 2 (14:35):
Twenty seven percent.
Speaker 1 (14:37):
The nonprofit owns twenty six percent but has like super
voting board control. It's very hard. Yeah, you be like,
we started as a non profit. We shore donations. Theydn't
think that much in donations, but in donations, and now
we're a five hundred million dollars private company for the
benefit of our investors. And one way to sort of
(14:58):
smooth that transition is that the nonprofit will continue to
control the company and have like supervoting rights. I don't
know how that will go for an IPA, but it'll
go fine. Like no one cares. You could imagine being like,
if this company is not run for profit, maybe I
shouldn't invest in it. Yeah, seeking an enormous financial return,
(15:18):
But no one has ever had that thought.
Speaker 2 (15:20):
Yeah, or ever will. Yeah, that's so clean.
Speaker 1 (15:22):
It's like I is definitely looking to give you a
high financial return on your investment, which is nice.
Speaker 2 (15:29):
So do you not take Samulmon at his words, which
words that they need to do this to get the
capital that they need to know.
Speaker 1 (15:36):
I believe that they need to do this to get
the capital. But like even now that they're a for
profit company, they're a public benefit company, which is slightly
less than for profit but still pretty for profit. But
they're controlled by a nonprofit board, right, Like the nonprofit
boards to put the interest of humanity first. But no
one cares about that. No one's worried about that.
Speaker 2 (15:58):
I thought that a nonprofit board couldn't fire members.
Speaker 1 (16:02):
Well, they're not going to fire him like that, lesson.
Speaker 2 (16:05):
Well I know that, but even other members, like other
open AI executives. So when when you say they're in control,
I mean, what does that mean if they're not going
to fire the people running it?
Speaker 1 (16:14):
That's a good question the board of directors, right, So,
like typically one of the main things the board does
is decide whether or not to do a merger. And
they're too big to do a merger, you know, yeah, right, Like,
I don't know how much operational control they have. One
thing the board of directors does is fire the CEO
if he does a bad job. But there's a constraint
on that job number one, Right, Like the board of
(16:36):
open Ai within recent memory has fired Sam Altman, not
for doing a bad job of developing products or leading
the people or achieving shareholder value, but for the crime of,
I don't know, something else. No one really understood it.
But it was kind of in the ballpark of like
not being for the benefit of humanity or like deceiving
(16:57):
the board. And I'm like, no one really knows, and
they quickly unfired him and then fired themselves. Yeah, so
that won't happen again.
Speaker 2 (17:04):
Yeah, that was just about two years ago.
Speaker 1 (17:06):
Yeah, it's amazing in theory, Like you can look around
a lot of like boards of big founder led tech startups.
Sometimes those founders do weird stuff and you can imagine
a board firing them, but you can't really because they
never would. You know.
Speaker 2 (17:20):
There's been so many natural segues to yes.
Speaker 1 (17:23):
Right, let's move straight along.
Speaker 2 (17:25):
Okay, Well, the only thing I was going to say
is that when it comes to the capital needs, obviously
we've talked a lot about the private markets and the
public markets melding that if you're a private company, you
can get most of the funding that you need in
the private markets. This obviously is such an extreme example
that maybe it's not even worth mentioning, but it is
a limit perhaps of the private markets.
Speaker 1 (17:47):
Yeah, sure, right, I tak that point, although we're not
there yet, right, No, this is like they're rumored to
be interested in going public in twenty twenty.
Speaker 2 (17:54):
My mind, they're already public for now. They have floated
a trial balloon with Reuters.
Speaker 1 (17:58):
No, Like, what do they need capital for? They need
to like get chips and data centers and compute like
they're getting all of that, right, but they're funding it
with vague promises of future trillions of dollars of capital raising, right,
Like they have not needed to go public to meet
their enormous capital spending needs yet. Yeah, right, they're incurring
obligations that might require going public. But loo, I agree
(18:21):
with you that, like, if Sam Altman is feeling the
pressure to go public, that does show some limit on
the ability of private markets to fund absolutely everything. Yeah,
that he's got a five hundred billion dollar company that
keeps signing trillion dollar deals and is not public. So true,
the limit is we haven't hit it yet.
Speaker 2 (18:56):
If we're looking for another segue, SpaceX obviously is private
company that has a lot of capital needs.
Speaker 1 (19:02):
Yes, so it turns out that shooting rockets to Mars
costs much, much, much less than training chatbots.
Speaker 2 (19:08):
What a world. It's what a world, right, Elon Musk,
he's the whole company, the whole board of Tesla. Well really,
Robin Denholm has been on a media tour.
Speaker 1 (19:18):
Yeah, Robin Denholm and the board of Tesla are going
around to big shareholders and also frankly media, Yeah, to
drum up support for Elon Musk's big pay package because
the sharelders have to vote on it, and the big
shaholder advisory firms Iss and Glass Lewis have recommended that
the sharelders vote against giving Elon Musk a pay package
(19:40):
that has a nominal value of one trillion dollars. Yeah.
I really don't like that framing. No, because like basically
what it is that they want to give Elon Musk
twelve percent of the company, and twelve percent of the
company right now is worth one hundred and eighty billion dollars.
There's a lot of money. Yeah, not a trillion dollars.
But in order to justify doing this, they're like, we'll
(20:01):
only give him twelve percent of the company if he
hits like these really ambitious operational and stock price targets,
and if he hits all those targets, the company will
be worth eight point five trillion dollars, and his twelve
percent package will be worth a trillion dollars. But like
they're trillion dollars today.
Speaker 2 (20:17):
Yeah, they're not giving him a trillion dollars, right, They're.
Speaker 1 (20:21):
Giving him the chance to get twelve percent of the stock.
Speaker 2 (20:25):
Well, listen, you don't like the trillion dollar framing, but
everyone listening to this podcast now is thinking about it differently.
Speaker 1 (20:31):
So no, they're not. It's fine anyway. But yeah, I
wrote today on Thursday, it's interesting to me, like the
trillion dollars is really embarrassing. No one wants to vote
to give Elon Musk a trillion dollars. Yeah, I think
it sounds insane. It's clearly like part of the pushback
to the proposal is it's a trillion dollars, right. Elon
Musk has been very clear that what he wants is
to control twenty four percent of the votes of TESLA.
(20:53):
He's like, I don't want to be voted out by
like dom shaolders. I want to have like enough voting
control that I have a lot out of control, but
not so much that I can't be voted out if
I become insane, which is okay. And so it seems
to me the obvious solution there is to give him
twenty five percent of the voting power without giving him
any more stock, which is not easy to do, and
(21:13):
in fact, in an interview with the Ft, Robin Henholmes said,
we tried to do that and we couldn't find a
way to do it. I don't know, man, it seems
to be like you could do it. You could like
find a way to give him super voting shares. You
could get shareholders to approve that, and then you wouldn't
have to give him a trillion dollars. You could just
be like, we're giving him twenty five percent of the
vote because that's what he wants.
Speaker 2 (21:30):
Robin Denholm went on Bloomberg TV. You could have stopped
her in person and told her about that idea. I
was writing, you were busy, it's busy, well, and.
Speaker 1 (21:40):
I wrote it, and she can whatever, because surely they've
had that idea, because she did say to the Ft, like,
we tried to do it, and it couldn't find a
way to work. But I don't know why I couldn't
find a way to make it work.
Speaker 2 (21:50):
Yeah, it didn't tricky. Didn't you say we searched high
and low or something.
Speaker 1 (21:53):
It seems tricky. Like I'm not saying it's trivial to
be like, we're going to give this guy a new
super voting share, but you know, yeah, doesn't seem impossible.
So no, that's just the guy.
Speaker 2 (22:04):
That was an interview she did with The Financial Times.
She also went on Bloomberg Television and said that the
board is looking at internal CEO candidates should Elon Musk leave.
Speaker 1 (22:14):
Right, They're definitely going around being like if this Preybaggers
doesn't get approved, he is out the door, which is
you know, maybe. Yeah.
Speaker 2 (22:21):
She said that the company has a deep bench of executives,
which I always like hearing because we never hear from
them or about them.
Speaker 1 (22:29):
So I think she's also said there's no Elon mark too. Right,
it is possible that you can have both a deep
bench of very excellent car executives and also not have yeah,
Elon Musk light waiting in the wings. You know.
Speaker 2 (22:41):
Well, apparently one of them is their global production chief.
In China head tom Ju, which is funny, I guess
because initially when I read that headline, it was like, oh, well,
it's going to be really interesting to see if like
Elon Musk fires all of them, because he has CEO,
so he could, but I guess there's potential internal candidates.
Speaker 1 (23:01):
Yeah, I don't think he will. I think, like, if
you take them at their word, that Elon Musk might
quit if he doesn't get this control. Yeah, it would
still be a terrible idea for him to sabotage Tesla
on his way out the door. Like he could be
mad at the shareholders and he could be like, I'm
going to spend my time on something where I have
more control, because what I want to do is build
(23:23):
a robot army, and I need to have twenty zero
present voting control of anywhere I build a robot army. Right,
you believe what they're saying. Right, That's still not a
reason for him to sabotage Tesla because Tesla remains more
or less the majority of his wealth, right, and so
like if he were to leave in a huff, the
stock would tank, Yes, but if he were to leave
in a huff, but also saying, I've left this in
(23:45):
charge of my good friend who's really good at this,
Tom Hu, then it's better for his wealth than leaving
in a huff and burning it down on his way
out the door.
Speaker 2 (23:56):
That's true. He seems logical way to think about things, Matt.
Speaker 1 (24:01):
Yeah, you know he's not illogical.
Speaker 2 (24:05):
No, he does host somewhat emotional.
Speaker 1 (24:08):
Weird stuff, but I think he's going to be rational.
Speaker 2 (24:11):
Well you know, well, maybe find out but probably not.
Speaker 1 (24:15):
Probably not. Probably the shareholders will appear of the package. Yeah,
I'm guessing. I don't. I don't have no basis in
saying that. I just they always do.
Speaker 2 (24:21):
Well, it's thirty percent of their investor bases retail shareholders.
Speaker 1 (24:25):
He'll be fine. Yeah, they're like creating drama, but they'll
be fine. But if they're not fine, I'll be very
interested to see if he quits.
Speaker 2 (24:31):
Yeah, me too, mail Bag, mail Bag.
Speaker 1 (24:36):
I do want to talk briefly about some emails.
Speaker 2 (24:39):
Yeah, I'm not going to sing mail bag with us mail.
Speaker 1 (24:42):
Bag those voice. But I don't know if you listened
to last week's podcast episode, But if you did, insisted
entirely of Katie reciting facts about the new JP market Headquarters.
But here are some more facts about the new JP
Market Headquarters.
Speaker 2 (24:54):
I was worried that people wouldn't like that.
Speaker 1 (24:57):
But I was sure people would like.
Speaker 2 (24:58):
People did well. We got a lot of age. This
is from Eric Okay. I went on a tour of
the HQ as part of an annual meeting earlier this year,
and during the tour they highlighted the HVAC system for
the flag. It is actually capable of mimicking the conditions
outside the building, so the flag always waves in the
way it would if it were outside. Man, it must
(25:18):
be going crazy today because it's raining. There's a story
it's raining in the lobby. Maybe it's like the Hogwarts
ceiling really good.
Speaker 1 (25:28):
Yeah, because we were talking about like there's a flag
in the lobby that blows in the breeze and yeah,
you mentioned the fanning system and I was like, is
it a guy with a desk fan on a stick?
And no, it's a very fancy HPY system that makes
it rain inside.
Speaker 2 (25:41):
I have to say that the flag was waving like
there would have to be a strong gust of wind
the way it was waving last Tuesday, and I don't
remember it being that one. Dy outside maybe.
Speaker 1 (25:50):
Like mimics but somewhat amplifies.
Speaker 2 (25:53):
Yeah, it enhances, it makes it a little Yeah, definitely.
Speaker 1 (25:57):
This is from Riot regarding Matt's observation that the building
has a precarious overran. I don't want to say it
just looks sick. It might fall on you. Yeah, surely
you were aware of the design and construction flow of
the City Court building in the late seventies. This is
taught in basically all engineering programs today. I assume it
must be well known in finance circles too. I think
less well known in finance, but not unknown. But yeah,
there's a city building.
Speaker 2 (26:18):
I did not know this.
Speaker 1 (26:19):
So it's on like near us. It's at like six
o one Lex. It's like just kind of down the
street from the Bloomberg offices, and they built it in
the late seventies and it's very cool. It's like very
much like you know, there's a plaza underneath it and like, yeah,
big massy building is on top of like little stick legs.
And the famous engineer who designed it didn't take into
account quartering wing winds. Quartering winds they're like the winds
(26:41):
that don't hit the thing head on. And then like,
you know, it's a fancy building, and so a couple
of like engineering and architecture students like studied it for
class projects and they were like, wait a minute, if
this gets a wind from the run direction, it'll fall over.
And they emailed him or they wrote to him, and
he was like, oh, no, you're right, And so they
like know while people were working in the building every
night they'd go home and like people would come in
(27:03):
and shore up the bolts in the building to make
sure it didn't fall over.
Speaker 2 (27:06):
Right, that the engineer was humble enough to take the feedback,
but also maybe he should.
Speaker 1 (27:09):
Skis a little grab. It's like he contemplated the suicide.
Speaker 2 (27:12):
Oh that's not good. But I was gonna say maybe
he shouldn't work again.
Speaker 1 (27:16):
I think he was fine, but yeah, it was a
little not a great day for him.
Speaker 2 (27:19):
I can't wait to read the Soukapedia article. I will
say I would love to see the JP Morgan lobby
flag in a quarter England. Yeah, sounds pretty cool.
Speaker 1 (27:27):
They should do that, just as like a little engineering
and side jack.
Speaker 2 (27:29):
Yeah Nick Nick says, I just went to a meeting
there and wanted to share a couple of things. Apparently
the pub doesn't start pouring beer until four pm. The
rumor going around was that Jamie Diamond himself was refused
to drink at three pm. We haven't fact tracked any
of this, By the way, I kind of don't.
Speaker 1 (27:46):
Believe that Jamie Diamond was like wandering down to the
in office pub at three pm and to be like,
I'll have a beer, Like that doesn't sound like.
Speaker 2 (27:53):
DAMMI maybe they like Also, I don't like you.
Speaker 1 (27:56):
Could imagine him being like I'm going to do a
little like stunt of like order a beer to like
demonstrate the pub to people, and like he wasn't served.
Speaker 2 (28:03):
Yeah, but I feel like they would make like refuse
him once but then be like, actually, here's the pier.
But I don't know. I only have a parasocial relationship
with Jamie Diamond, so I'm not actually sure.
Speaker 1 (28:13):
Right, we do need to interview the bartender who a
drink at the Jamie Diamond controlled pub, and.
Speaker 2 (28:21):
I want to go there and we can look at
the flag.
Speaker 1 (28:25):
If you're that bartender.
Speaker 2 (28:27):
Yeah, no, I want to do a podcast from the.
Speaker 1 (28:30):
Pub Whipping Wind. The pub is the pub is not.
Speaker 2 (28:33):
In that's on the thirteenth floor. The flag is in
the lobby.
Speaker 1 (28:36):
We're going to do the podcast from the pub.
Speaker 2 (28:38):
It'll happen.
Speaker 1 (28:44):
And that was the Money Stuff Podcast.
Speaker 2 (28:46):
I'm Matt Levine and I'm Katie Greifeld.
Speaker 1 (28:48):
You can find my work by subscribing to the Money
Stuff newsletter on Bloomberg.
Speaker 2 (28:52):
Dot com, and you can find me on Bloomberg TV
every day on the Clothes between three and five pm Eastern.
Speaker 1 (28:59):
We'd love to hear. You can send an email to
Moneypod at Bloomberg dot net, ask us a question and
we might answer it on the air.
Speaker 2 (29:06):
You can also subscribe to our show wherever you're listening
right now and leave us a review. It helps more
people find the show.
Speaker 1 (29:12):
The Money Stuff Podcast is produced by Ana ma Aserakis
and Roses Ondan.
Speaker 2 (29:17):
Our theme music was composed by Blake Maples.
Speaker 1 (29:19):
Amy Keen is our executive.
Speaker 2 (29:21):
Producer, and Sage Bauman is Bloomberg's head of Podcasts.
Speaker 1 (29:25):
Thanks for listening to The Money Stuff Podcast. We'll be
back next week with more stuff.
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