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Boomers, Bailouts, and Bubble Trouble: Phil Pods with Prof G’s Ed Elson
170 Plays13 days ago
What happens when a Gen Z podcast host from New York City goes head-to-head with a seasoned analyst on AI, economic angst, and the generational wealth gap?
In this episode of The Horse’s Mouth, Phil Fersht sits down with Ed Elson, the Gen Z co-host of the Prof G Markets podcast with Scott Galloway. Ed brings his sharp, fast-talking take on why Gen Z feels economically betrayed, why AI is fueling more layoffs than we think, and why America is facing a generational reckoning.
This is not your average macroeconomic chat, expect rants, facts, and fire. From sky-high college costs and housing absurdity to the real reason Gen Z isn’t having kids. Ed and Phil go all in on the emotional and economic realities of a generation trying to survive the age of AI and market chaos.
What You’ll Hear in 30 Minutes
- Why Gen Z is worse off than their parents and pissed about it
- The AI lie: It’s not co-piloting, it’s replacing
- Why entry-level jobs are vanishing and who’s to blame
- The illusion of opportunity in a private AI economy
- Why Google might win the long game, and OpenAI may implode
- How New York became unaffordable for all but the 1%
- Why the AI stock narrative is at a breaking point
Guest Snapshots
Ed Elson is a business writer, analyst, and co-host of the Prof G Markets podcast with Scott Galloway. He is also host of the First Time Founders podcast. In 2024 he won the Webby honoree award for “Best Co-Host” and won the Webby Award for “Best Business Podcast” in 2025. His podcast has consistently ranked number one in Business in the U.S. His work has been featured in multiple New York Times bestsellers, including The Algebra of Wealth, Adrift, and Siege. He has appeared on various news outlets, including MSNBC and Financial Times. In 2021 he was the commencement speaker for Princeton University, where he graduated summa cum laude with a degree in Classics.
Timestamps
00:00 – Welcome and Intro: Meet Ed Elson
01:42 – Gen Z in NYC: Privilege vs. Reality
04:45 – The K-Shaped Economy: Winners and Left Behind
07:10 – Housing and College: Gen Z’s Cost Crisis
09:50 – Parents Paying the Bills: Dependency Metrics
11:30 – AI and the Disappearing Entry-Level Job
15:00 – Who Owns the AI Revolution (Hint: Not You)
19:30 – OpenAI’s “Code Red” vs Google’s Quiet Comeback
25:00 – AI Market Whiplash: Bubbles, Circular Deals, and Hype Fatigue
27:30 – From Exuberance to Sobriety: The New AI Narrative
33:00 – Why Google’s Under-the-Radar Assets Matter
34:45 – Wrap-Up: See Ed at the HFS Summit in NYC
Explore More
- Prof G Markets Podcast: https://profgmedia.com/podcasts/
- Ed Elson on LinkedIn: https://www.linkedin.com/in/ed-elson-314283158/
- Phil Fersht on LinkedIn: https://www.linkedin.com/in/pfersht/
- HFS Research: https://www.hfsresearch.com/
- The Horse’s Mouth Podcast Series: https://horsesmouthpodcast.com/
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Transcript
Introduction to Ed Elson
00:00:00
Speaker
So welcome to the latest episode of The Horse's Mouth. I'm your host Phil First and with me today is one of my favorite emerging up and coming podcast hosts Ed Elson who is the sidekick of the famous Scott Galloway doing prof G markets in the mornings and I think he's doing many other things now. So welcome Ed, maybe you could share with our audience a little bit about you and your background.
00:00:25
Speaker
Great to be here. Thank you for having me, Phil. So yeah, my name is Ed Elson. I host Prof G Markets. It's funny you said that um I'm Scott's sidekick. Some people would say that Scott's my sidekick. Interesting framing.
00:00:39
Speaker
So yeah, Scott and I host Prof G Markets. It's a business, money, markets, finance podcast. We talk about literally anything and everything pertaining to the markets. we We host this podcast and put it out there on all platforms every day. So it's daily show.
00:00:55
Speaker
um And we're talking about anything that moves markets, the price of assets, anything that relates to an asset going up or down is something that is in our wheelhouse and that we talk about. So yeah, that's sort of the the long and short of what I do.
00:01:11
Speaker
Wonderful, wonderful.
Challenges of Gen Z in Today's Economy
00:01:12
Speaker
And our biggest complaint when we go to our summits and conferences is we don't get enough Gen z generation people coming along and And we we we're trying very hard, for example, on our next summit to get to get more younger folks along. But tell us, what's it like being a Gen Z in New York, trying to forge a living these days? I'd love to hear a bit more about what is challenging, you know what are the opportunities? you know what Is the mindset very different, you think, from the older folks that you're working with?
00:01:47
Speaker
Yeah, I think definitely. I think probably the the other context I should offer here is that I am in Gen Z. So that's why I have exactly a right to be talking about Gen z um which also kind of relates to what is fun and interesting, I think, about the podcast where, you know, I'm 26 years old um Scott is of a older generation, not a boomer quite, but closer to the boomers. So there's a fun sort of Gen Z versus boomer dynamic that we have in the podcast. And then I think people enjoy and seeing the tensions between those two things because our experiences are just vastly, vastly different. And I think that is something it's interesting that you're getting that feedback. I think that is something that people want to hear more of. In terms of my experience,
00:02:31
Speaker
personal experience living in New York um as a Gen Z. Mine is very good. I um get to host this successful podcast. I make a great living doing it. I work with, you know, of a world renowned professor. So my life looks pretty good right now. And so, you know, and I look at a lot of my friends and I went to ah a nice college. And a lot of them ended up going and working on Wall Street and working at big banks. And so I look around at at the little tiny ecosystem in New York.
00:03:04
Speaker
And the reality for me is like, okay, things are actually going pretty well. the obvious ah but here is this is not at all representative of the overall Gen Z experience. And I think that my experience is actually kind of indicative of what is happening, which is we are increasingly devolving into this K-shaped economy where If you're at the top, if things are going well, things are going really, really well for you. And if things are not going well for you, well, life looks extremely different. And there is a giant, I mean, these these worlds, there's many, many moons apart. So in terms of the overall Gen Z experience,
00:03:44
Speaker
um Economically speaking, it's not very good. I mean, you can just look at these things generationally and compare my generation to the economic experiences of previous generations, for example, my parents or my grandparents. And just to sort of put things into perspective,
00:04:00
Speaker
many ah Many asset classes and experiences today for young people are simply unaffordable. You look at the cost cost of housing as an example, which for my generation, it's about six times our annual income. You compare that to my parents when they were my age, it was four times. Compared it to my grandparents, it was three times. So housing has gotten unbelievably expensive in America to the point where young people just have basically no ability but to to participate.
00:04:30
Speaker
ah You look at the cost of college as another example, 42% of my generation's annual income. For my parents, it was 17%. For my grandparents, it was 13%. So we're spending tons of um of our income on college and and paying our college debts, which has also put this generation into a hole. And then there are other things like you know the stock market, just as an example. I mean, the stock market right now is historically very expensive. It's trading at 27 times earnings. You look at my parents when they were my age, it was trading at 11 times earnings. So I think young people are looking around right now.
00:05:11
Speaker
And yes, your life might look okay on paper, like you you're able to feed yourself. Maybe you you your you you have a roof over your head, though I would also caveat that for for many young people, the roof that is over your head is actually a parent's roof. That's also a big problem.
00:05:28
Speaker
Um, but yeah, the, the economic experience for young people today is generally not great. And there are other struggles that we're facing, but the way I would kind of present it is I think that the struggles of young people today are very unique in a way that is going to be a real problem for us moving forward and that we need to really think about solutions.
Living in New York: A Struggle for Young Talent
00:05:50
Speaker
Yeah. I mean, I think it was Ben Shapiro who said that, um,
00:05:55
Speaker
can't afford to live in New York, go move to Austin or something like that, where your rent is 20, you know, 20% cheaper or, and you can, you know, the cost of living is much lower, blah, blah, blah, blah. And that was always the way the American dream evolved, but it feels like it's a bit more broken than that. It's not as simplistic as, oh, let's just go move somewhere cheaper.
00:06:17
Speaker
It's like New York is the heartbeat of media. It's the heartbeat of a lot of the financial community. Are we at risk that we're just gonna lose a lot of young talent from the city and we're just gonna have just rich people living there at some point?
00:06:31
Speaker
I think that's what it has become, which is why I think the mayoral election was so important. It's like, you can only live in New York If you are rich, that's the only way that it's possible. The cost of housing in New York is just unbelievable just just to get by, which is why affordability was the most important thing in that election, because I think the people of New York see what's happening around them. They say, oh my gosh.
00:06:56
Speaker
We're getting completely priced out. The only people who seemingly are able to live here are the masters of the universe. And so that that is that is what is happening in New York. I think there's now gonna be kind of a shift where they're going to at least attempt to address some of these problems. Some of the solutions that ah the the new mayor Mamdani has suggested, i don't think make a lot of sense, but that's kind of beside the point because the the real point is why people voted for him.
00:07:26
Speaker
And it's because he recognized the struggles um of the people of New York in a way that know that basically none of the other candidates came even close to him.
00:07:37
Speaker
But, you know, you mentioned how things are more affordable elsewhere. That's true. But still, when we look at the overall general data across the entire population, it's still very
AI's Impact on Entry-Level Jobs for Gen Z
00:07:50
Speaker
bleak. And this is part of my issue with when we kind of zero in on New York, is it's so unrepresentative of what is happening everywhere else that in a lot of ways it becomes a distraction.
00:08:01
Speaker
And so one thing I like to think about is like, you know, there's there's the economics that we've talked about. And then I also like to think about sort of what I call the life-anomics. And that is the the data that tells us the story of people's lives and what is actually happening in people's lives in America, specifically young people's lives. And, you know, one example that I would point to is just looking at the average age of a home buyer in America, which in 1980, was years old.
00:08:29
Speaker
And today it is 50 years old. So that's an example of just like the the demographics of the people who are going out and buying houses has just radically changed over the past 50 years. The other stuff that I think is really important is what I said about living with people's parents. A third of Gen Z today, and these are Gen Z adults, these are people who should be moving out of the house. A third of us still live with our parents. We've never seen numbers this high. I think even crazier than that, perhaps, is the fact that half of our parents of Gen Z, again, adult parents, are still supporting us financially.
00:09:06
Speaker
So we have this huge issue where we've become so dependent on the wealth and prosperity that has been gone by previous generations. And we're not figuring out ways to access that wealth and take control of our own lives, which I think describes so much of the behaviors and the philosophies of young people. The fact that, you know, record numbers of young people just don't want to have children today.
00:09:30
Speaker
And I think a lot of older generations say, why is that? That doesn't make any sense. And I think a lot of people say, oh, it must be because of, you know, young people are all worried about climate change. And maybe there's like a small percentage of young people who are worried about that. But I think the larger problem young people just look around. They're like, having a child is just too expensive.
00:09:50
Speaker
I can barely figure out how to get my own life together. So the idea of taking responsibility for one, two or three more people is just ludicrous. It doesn't make any sense. And so these are kind of the issues that I think we are going to run into. And I think then the question becomes, okay,
00:10:09
Speaker
How are we going to empower young people and how are we going to perhaps redistribute some of the wealth that, I mean, i hate to say it, has just been divided between young versus old.
00:10:22
Speaker
And I do think that that has been kind of the the defining demographic rift, at least in America over the past 20 years. Yeah, yeah. know and um but I remember when was, I finished college, I think my dad said, right, I'm paying off your 700 pound overdraft and you're out on your own.
00:10:40
Speaker
you don't You're off the payroll, but there that that seems to have shifted. But fast forward to today, we've obviously discussed affordability and this widening hugely widening gap between the haves and the head littles.
00:10:55
Speaker
What is the impact of AI going to have? Because, you know, we have a lot of big tech firms that we work with, we know very well. enterprises, a lot of them are pulling back on hiring college grads. They're letting a lot of quiet layoffs happen because they feel they can leverage AI to do a lot of these entry level jobs, anything that requires training is not necessary. And, know, I'm in the research industry and the impact of AI on the work that we do is widely discussed at the moment. It's, you know, and it's advancing in a very fast pace.
00:11:32
Speaker
What is the viewpoint? Do you think this creates a big opportunity for the younger generation because they're more AI savvy, they're more native to using these technologies? Or do you think this is just changing the whole dynamic of what a young person coming out of university is going to do with their career?
00:11:52
Speaker
I have a more negative perspective on this. And I wanna just point out that I was very willing and excited to embrace an optimistic view of ai And in many cases I i do, but you know the story that we were told with ai is that it wasn't going to replace you. it was going to be your your partner. I mean, look at Microsoft, the name is literally co-pilot.
00:12:18
Speaker
It's going to co-pilot with you. um And it's very interesting. Basically, as soon as we saw ah the the the massive potential of AI, essentially when Charged GPT was released, suddenly you saw all of these studies coming out from the AI companies that were building these technologies saying it's not going to replace people.
00:12:39
Speaker
Trust us. It's not going to happen. It's actually you're going to work with the AI. And the fact that they were so quick to say that and to put all this money into coming out with these studies and these research reports saying, no, no, no, no no it's not going to replace you. It's going to work with you. That to me was kind of the tell.
00:12:56
Speaker
OK, it's going to replace us. And. That is essentially what we have seen over the past, I would say, three, four, five months. We are increasingly seeing layoffs specifically from companies that are adopting AI.
00:13:11
Speaker
And a lot of times they won't say that it's AI, but in some cases they are flat out recognizing it. I mean, Chegg was a great example. they said Yeah, we don't need people anymore. We can just lay them off. AI can do the job for us. Amazon is obviously going to be a huge example, which is one of the largest employers in the US. And then we saw these internal documents showing they're going to lay off thousands of people, and not just in in the the white collar workforce, which we've already seen, but also in the blue collar workforce, because AI gives us the ability to automate a lot of the robotic functions that are used in these fulfillment centers. So
00:13:43
Speaker
I think what we're kind of beginning to realize is like, actually, yeah, ai probably is going to take your job depending on what your job is. There are more AI exposed jobs out there.
00:13:57
Speaker
And if you're just going to stick your head in the sand and say, no, no that it's going to work with me. It's going to enhance my abilities in the workplace. I think that you're making um kind of a grave error there. So I do think that this is something that we need to grapple with. I take the argument that a lot of people make, which is over the long run, these technologies add more than they take away.
00:14:22
Speaker
I think that's definitely true. We look through any transformative technology through history, whether it's railroads or the electric grid or the internet. I mean, over the long run, no one can deny they create value that is accreted to basically the shareholders who own shares in the businesses that create these technologies.
00:14:42
Speaker
But what we don't think about in those conversations are the individual lives that just get omitted from the story. And just as an example, you know, the computer, it's like people say now, look, the computer created a bunch of jobs.
00:14:57
Speaker
And, you know, the the sure, there were typists who who, you know, were made redundant, but look how many jobs were created, which is true. But over the course of 20, 25, 30, 40 years, and the reality is there were actually many typists whose jobs were deleted.
00:15:14
Speaker
And suddenly they had nothing to contribute to the workforce, especially if they were older. And then the question of how to retool those individuals became a huge issue. And the trouble is when we when we have these very macro level conversations, the lives of those individuals just aren't really given the recognition or the weight that they probably deserve. So I think that for young people,
00:15:36
Speaker
You do need to recognize and you do need to genuinely process and and and account for the risks of ai and the potential that it actually could take your job. And in addition, what we're seeing is that there is one group that is getting most acutely targeted by the AI layoffs, and it is young people.
00:15:56
Speaker
It's people with entry level jobs who are just entering the workforce. So AI is going to be massively transformative. It's going to create huge amounts of value. And I think most people agree with agree on that. There are a few doomers out there say, oh, it's useless. I'm not with that at all. But it is going to ah pose a threat to many people's careers.
00:16:17
Speaker
And then i think the question from there becomes, okay, How do you protect yourself against this? And we could go into what you do from a career perspective. But I think what is most obvious is like with every transformative technology throughout history, what you want to do is figure out a way to be the one who owns the technology.
00:16:40
Speaker
And this is the story that we've seen in America over and over again. It's you have the owners and you have the owners, the people who own the assets that make the money for them. And this is the the giant rift in society. And it's the rift that has led to the massive, unprecedented and inequality that we've seen. And my concern is that we are not getting enough people into owning the AI.
00:17:06
Speaker
And I think the the most obvious and pressing example of this is the fact that the most important AI company in the world, most people would agree, OpenAI, is private.
00:17:20
Speaker
It's a private company. um And some people say, oh, that doesn't matter. I think it matters tremendously. I mean, this is a half a trillion dollar company that is supposedly looking at being has its sights on becoming a trillion dollar company. And somehow it's not a public company. We've never seen a half a trillion dollar private company.
00:17:44
Speaker
And yet that's what it is. And it is the most transformative technology we've seen when ChatGPT launched to completely change the trajectory of our economy.
00:17:54
Speaker
And yet you can't own it. And you compare that to Apple, as an example, which went public, it was able to be owned by public investors at around a $10 billion dollars valuation.
00:18:07
Speaker
So you've got $10 billion versus half a trillion. And so again, we have this issue where the value is being sequestered among a handful of people. And it's the people who are already rich. It's the people who are accredited investors, which literally by the laws of, by the, the, the,
00:18:23
Speaker
um securities laws in America mean that you must have a minimum net worth of a million dollars. Either that or you're making $200,000 a year for multiple years in a row. But literally the bylaws of American securities law say in order to be a part of that club, you have to already be rich.
AI's Transformation of Enterprises
00:18:44
Speaker
Those are the rules. And the same is true of Anthropic as well. So those, I'm sorry for the rant, but those are my concerns right now when it comes to AI. No, no, no, no. Thank you for sharing. very much and I've heard bits and pieces of that from you over the last few months. So it's good to hear put it all together in one. and And it does feel like we're headed for some type of correction. I hate to say it. you know I've been trying to be one of the more positive people who talks about the incredible upside of
00:19:16
Speaker
where this is all heading. I mean, the the amount of usage of AI is off the scale. Everyone is using it, literally everybody. Like people who walk past their computers now, they will check GPT on or something. they They're using it for everything.
00:19:29
Speaker
And we talk about something, we call it the AI velocity gap, where us as individuals are impairing ourselves hell of a lot. like we're It's a low risk in your own personal life to connect your calendar, your Gmail, use your recipes, get legal advice, do whatever you want with this stuff. And then you go to the workplace and the chances are data is sitting siloed in these horrible old databases or your SAP or Salesforce. Decisions are made by committee.
00:19:59
Speaker
Everything is dysfunctional still. And then my concern for enterprises is you're going to lose your top talent who really have figured AI out because they're going to want to work for companies which are much more slick.
00:20:10
Speaker
They know how to own these technologies. They know how to build disruptive business models that are different. So I just feel this massive crunch happening where a lot of enterprises are just going to be unable to really embrace AI themselves and just do simple things like get a handle on their data, get a handle on their markets, that sort of thing. Those are the companies that are going to be laying off because they just can't afford to keep existing. And then you're going to get a lot of these emerging firms who are just much more slick and nimble in this market. i mean
00:20:42
Speaker
My own company, HFS, we compete with Gartner and Forrester and these businesses, and we we're a fraction of their size. But our clients care about its advice and influence. They don't give a crap how many boots are on the ground or how many reports you publish, right? And that sort of thing. So I just see a whole lot of disruption happening in the market with a lot of smaller, medium-sized companies emerging. which i does which I do think creates opportunities for young people. you know I'd love to hire smart talent who come in, who are great with other people, who are driven and that sort of thing.
00:21:17
Speaker
um It's the big enterprises which I think are gonna be really hit by this. And someone said recently in a very profound way that, half of the global 2000s is just going to be gone in a couple of years and the other half will probably do really well.
00:21:31
Speaker
But there's a lot of companies that are just going to get bulldozed and the speed of of it which this is happening is is really quite mind blowing. Yeah, it is fascinating. and I think what has also been so fascinating about 2025 is the ways in which the narrative around AI has just whipsawed back and forth so violently and literally carried with it trillions of dollars of market value.
00:21:59
Speaker
um Because, you know, i we've... talked about this on the podcast a lot, but you know the market right now is a giant bet on AI. And you look at when ChatGPT was launched, since then, 75% of the returns in the S&P have been because of AI. They've been AI-related stocks.
00:22:18
Speaker
And so what is fascinating throughout, I mean, 2025 was such an interesting year to be observing markets because it became so obsessed with AI to the point where any slight fluctuations in the narrative would would have massive, massive effects on people's portfolios. I remember, for example, just a few months ago when this study study came out from MIT, and no one really understood what the study even said or how it was carried out. But the study basically had this one line that was reported on by many, many institutions, many, many newspapers and outlets that said that 95% of companies that are using ai are not seeing an ROI on their AI investments.
00:23:06
Speaker
i doubt I doubt anyone really read the article itself, but they saw the headline. It freaked a lot of people out. And you saw the markets.
00:23:16
Speaker
I mean, they didn't collapse, but they certainly corrected in a really big way right off that article ah was released. Then we see... the exuberance comes back. And usually it it came back because Nvidia would come out with a good earnings report, which they continue to do every single quarter. They come out with these incredible earnings. And then suddenly the market says, oh, no, no, it's we're totally fine. We've seen it more recently with the circular deals that a lot of people have been talking about, people realizing that You know, Nvidia is investing in OpenAI and then OpenAI takes that investment, turns around, buys the chips from Nvidia and then the money goes to Oracle and Oracle does the same thing. All of these circular deals where people are basically recycling each other's revenues, which feels very, very 1999, 2000.
00:24:04
Speaker
It's very bubblicious. People are very concerned about the bubble. That was the predominant narrative. And then again, Nvidia reports earnings. Oh, actually, Nvidia is doing really well. Everything's fine. So it's been such an interesting year for the narrative on AI and the way that it has been fluctuating and the the powers of fear and greed pushing and pulling against each other in the market. And no one can really decide. I mean, you know, we had this conversation with our company today. We're like, what actually is the sentiment on AI right now?
00:24:39
Speaker
Is the world bullish or is the world bearish? Everyone seems to be talking about this bubble. Every time you open up any newspaper, if you go on The Wall Street Journal, you go on The Financial Times, the front page has a headline about how we are probably perhaps maybe in a bubble. And then at the same time, you look at the stock returns and it's just been unbelievable this year. So getting a handle on what the narrative actually is telling us and what it's going to do, I think is going to be crucial. And if I had to make a prediction based on what you've just said there and related to what you've just said there,
00:25:15
Speaker
about where the narrative is going. I think that in the past year or so, the narrative has has been driven by a sense of ai exuberance, ah maybe a whimsical vision of the future. It's basically whoever can go out there and say the most, and and illustrate the grandest vision of ai possible and raise the most amount of money. Those are the people who have been rewarded. So Jensen Huang is really, really good at this. So is Sam Altman.
00:25:48
Speaker
They're really great at going and saying, we're going to capture everything. Artificial general intelligence is going to change the world. But I do think that in the past couple of months or so, that story has begun to sort of run out of steam. People aren't as captivated by that story. They've heard it too many times. And now they're looking for a new story. And I think the story for AI in 2026 is not going to be one of exuberance and and and grand visions of the future. It's going to be one of sobriety and responsibility.
00:26:21
Speaker
It's going to be the companies, the AI companies that will outperform compared to others are the ones who say, we have a realistic vision of what we can do with ai We're not going to spend like crazy. We're not going to raise crazy amounts of debt to finance these operations. We're going to manage our balance sheet in a kind of boring and traditional way. And we're going to do this steadily.
00:26:44
Speaker
And i think that is a dynamic that we often see. If you had that approach in 2025, you were not rewarded. But my if I had to make predictions for 2026, I do think that those are the kinds of companies that will be rewarded. I think Anthropic versus OpenAI i is a perfect dichotomy of this.
00:27:00
Speaker
Anthropic has been a lot more responsible with the management of their balance sheet compared to OpenAI. OpenAI has been the number one in 2025. I could see Anthropic being the number one in 2026. What do you think of Google coming at this very hard? but They're sort of like, they've emerged very rapidly from the shadows and seem to be almost taking the lead now in terms of browser usage with AI, things like that.
00:27:25
Speaker
And they, you know, they're pretty responsible. And I know Scott's a big fan of Google, but wait what's your view on that? I've been extremely bullish on Google for a while. And this was probably our best call of the year is we pretty much bottom ticked Google earlier in the year. And we were saying Google is a buy because Google was a really interesting example of a company that got unfairly punished and caught in the crosshairs of this weird narrative shift that was happening with AI, where people basically decided there's this thing called ChatGPT,
00:28:00
Speaker
And currently the way people access information on the internet is they use Google. And so if ChatGPT has come along, then it's going to to start to eat Google's lunch. And that's a big, big problem for Google, which makes all of its money essentially from advertising on search.
00:28:16
Speaker
um So that was the narrative. And by the way, they were very fair to say that because Google had expressed that concern themselves. i mean, Google had literally put out a code red. They called it a code red, a memo to the employees of the company saying, we're very worried about this thing called ChatGPT. So understandably, the market said, we're worried about this too. What is so interesting is it has literally flipped where just this week we're recording this early December, OpenAI put a code red out to their employees.
00:28:50
Speaker
They put out a memo saying code red, we are worried about this thing called Gemini, which is of course, Google's competitor to ChatGPT. And so Google has been one of those companies that I agree actually has been extremely responsible. It's easy to be responsible when you're already way out ahead, which they are. OpenAI is in a harder position where if they want to compete with big tech, they kind of have to go all or nothing.
00:29:19
Speaker
And so that's the that's the approach that they're taking. I think it could end quite badly for them. um But Google, it's been ah it's been a fascinating story. And to be clear, they really didn't change much.
00:29:30
Speaker
mean, they have been working on Gemini for a long time. The product has definitely improved. They came out with Gemini 3 recently. But ultimately, it's been a story of slow progression.
00:29:42
Speaker
They had a little bit of market share with Gemini to begin with. It's slowly been creeping up and creeping up. They're now at about 15% market share in AI chat tools. And so it's been an amazing comeback. And it it has been fascinating how the narrative, again, totally flipped.
Google's Strategic AI Advancements
00:30:00
Speaker
for Google off of off of not that much. um I mean, they they the products that they can they put out there did not they they didn't change much materially in terms of Google's business and their earnings have not been that different. It really was a narrative change that helped Google. And now that they're definitely more fully valued. I think they've almost doubled in just a few months. unbelievable.
00:30:27
Speaker
Yeah. I think it was about a year ago that you and Scott um brought up the Google conversation for the first time and you were very bullish back then. And I have to thank you. i went in and bought some stock.
00:30:38
Speaker
Let's go. thought I love it. That was actually a very good piece of advice. yeah And yeah, that helps you cover your speaking fee for our summit that you're going to be speaking at in in a few months time. I love it. And the other thing to just note about Google I mean, people talk about the conglomerate tax, which is essentially the tax on the multiple on your on your stock price, because people kind of forget about all of the great businesses that you have in your arsenal. Scott talks about this a lot. And Google is the perfect example of this. i mean, people kind of know that Google owns YouTube, but not enough people know that Google owns YouTube.
00:31:19
Speaker
A lot of people forget that Google owns YouTube and a lot of people forget that YouTube is the most viewed streaming platform, not just on mobiles and laptops, but on TVs.
00:31:32
Speaker
It is more popular by a significant margin on people's actual TV sets in their living rooms than Netflix. And this is another thing that I think people kind of don't fully comprehend. They kind of know it, but they don't fully internalize that and certainly didn't when it came to the valuations of the company just a few months ago. And another good example, again, Waymo.
00:31:56
Speaker
waymer i mean Waymo is the most ascendant autonomous vehicle company in the world, pretty much. And you look at Tesla's valuation where they're trading at a ridiculous multiple. And the whole thing is basically a bet on they're going to come up with these robo taxis and it's going to transform the way we get around, which, OK, I'll buy it. But Google owns Waymo or they own more than half of Waymo and Waymo is crushing Tesla when it comes to taxes. They've built an actual network on the ground in San Francisco. I live in New York. They're testing Waymo vehicles in New York. As we speak, this is just an incredible technology company that again,
00:32:40
Speaker
the value is going to be accreted to Google. I think this is another example of a business within the Google or Alphabet conglomerate that wasn't being fully appreciated. It probably is now. Right.
Conclusion and Future Engagements
00:32:53
Speaker
I will save the robo-taxi conversation to the next time we talk because I'm super excited about that and the impact that's going to have on society is it's quite mind boggling what's going on because people weren't even aware there's a number of cities now using these things and it's going to hit New York, it's going to hit London and you know it's going to be very interesting how that's going to evolve.
00:33:16
Speaker
Absolutely. Well, listen, this has been tremendous Ed. It's great hearing your views. I'll tell everyone here that Ed will be joining our summit in May in New York City. It's at Appella, which is on the East River next to the UN building.
00:33:33
Speaker
And we'll get you on stage and you can spend some time talking with our our audience, which are big decision makers in tech, but are also in enterprise. And um I know they're goingnna love hearing from you. I look forward to it very much.
00:33:45
Speaker
I can't wait. i'm really excited about it. and thank you for having me on this podcast. This was great, Phil. Terrific.
00:33:54
Speaker
Thanks for tuning in to From the Horse's Mouth, intrepid conversations with Phil First. Remember to follow Phil on LinkedIn and subscribe and like on YouTube, Apple Podcasts, Spotify or your favourite platform for no-nonsense takes on the intricate dance between technology, business and ideological systems.
00:34:13
Speaker
Got something to add to the discussion? Let's have it. Drop us a line at fromthehorsesmouth at hfsresearch.com or connect with Phil on LinkedIn.