2021 Predictions: The Great DispersionThe Prof G Show with Scott Galloway
- 1,311 views
- 7 Jan 2021
Scott reflects on the 2020 predictions he got right and wrong and then dives into his predictions for the new year. You'll hear his thoughts on the dispersal of work, hospitality, and healthcare, as well as potential acquisitions, stocks he's watching, and more.
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Episode 43, the atomic number of technicians, the number of Richard Petty's racecar when he won seven Winston Cup championships, three story Microsoft Internet Explorer sponsored a race team, but the car kept crashing.
Go, go, go.
Welcome to the 43rd episode of the Prof G Show, and the first episode of 2021.
Now's the time for us to say
Go fuck yourself 2020.
Anyways, Happy New Year from the dog. Today, we're sharing our predictions from the live stream that took place on the 17th of December. We'll review the predictions we made for 2020 and hold ourselves accountable on the ones we got right and the ones we got wrong. In addition, we'll talk about our predictions for 2020. You want a few disclosures, a few disclosures. I get this wrong all the time. As Eisenhower said, plans are useless, but planning is invaluable.
And I think the same is true of predictions. Predictions are somewhat worthless, but predicting is worthwhile is hopefully this catalyses some discussion within your own organization that helps you develop economic security for you and your family. Another disclosure.
I own stock in the following companies. So many of these stocks. I'm talking my own book, but I don't know if you want to call that.
I generally believe in the themes and trends behind these stocks and I'm trying to vote with my feet and my wallet. Some of them are public Amazon, Apple, Twitter, Airbnb, I own. And then some also eliminate a public stock account and then some private companies, ninety eight point six Better Dotcom and my higher education startup, Section four. So if it sounds like I'm talking my own book, as I referenced before, I am and we're trying to put our money where our mouth is anyways, enough of the disclosure.
Let's get on with it first. We're going to revisit our 2020 predictions after this quick break. Stay with us.
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So let's revisit 2020. Prediction: the Democratic nominee would be Bloomberg or Buttigieg. Got that wrong, enough said. I don't know about you. I'm going to miss the misogyny, the bigotry and the general head up your ass or the stupidity of the last four years. I'm going to miss that. But anyways, welcome Biden and Harris.
Uber exits food delivery. We got that wrong. We got that wrong. As a matter of fact, they doubled down on food delivery, acquired Postmates in this.
To be fair, I'm not a big fan of Uber. I think it's part of the US economy. We figured out a way to take advantage of a permanent underclass and new software to circumvent minimum wage laws. But distinct to that, you have to give the management team kudos for pivoting and taking advantage of the covid-19 pandemic and moving into food delivery, which has surged as ride hailing has declined. And you can see that there's probably saved Hubers market capitalization. You've got to think that Uber would be struggling right now. Have they not made this acquisition?
In twenty four months, FedEx has acquired or down 30 percent. As a prediction I made, Amazon is now spending more money on fulfillment than FedEx or Walmart and has a clean sheet design and is just executing better. And I thought this was going to primarily be the beginning of the end for FedEx and I thought this was going really well. And then Komen came along and distinctive all the death, disease and disability, its mess with my predictions, which is really the tragedy here. And as you can tell, FedEx has surged. Good for them. They're shipping volumes are up. They're going to play a critical role in the distribution of the vaccine. Way to go, guys.
Amazon will be the fastest growing health care company in the world by twenty, twenty five. I'm going to say that we have gotten this right. We are getting it right. Amazon has piloted several health care initiatives on its own employees and has all the assets to create a corpus of your digital health care system, specifically a wearable that tracks a lot of data, including your body mass index, your movement, what foods you order, your purchase history, your demographics, your wealth, whether you're in a monogamous relationship, your zip code, all the actuarial inputs you would need to build an entire vision or image of your digital health.
And they'll be able to not only offer you products and services in a diet, but get off their heels and onto their toes from a health care standpoint and perhaps offer you insurance, diagnostics or even primary care over smart phones or smart speakers. I believe that the relationship Amazon has with eighty two percent of American households and by the way, that's the most trusted relationship in the United States between a corporation and a company, that health care is a natural fit.
And it is clear they are lining up their tanks, their planes and their artillery at the border to go after what is the most disruptive business in the world, specifically the 17 percent of U.S. GDP or the four the three to four trillion dollar business that is health care. The party stops in 2020. We predicted this in December after basically an eleven year bull run and we see a 20 percent correction in the Dow boom that happened. It's also had a vicious right back, but we did have that decline.
I'm going to give us a win there. Private company valuations will continue to decline. We're seeing declines. There are some big winners. But on the whole, there have been more down rounds, approximately double the number of down rounds in twenty twenty than there had been in previous years. Vision Fund two does not happen. Remember, we work doesn't have the same kind of fund, the whole Softbank we work fiasco. Well, we were right here.
This thing has not worked from the start. Take somebody who conflates the luckiest investment in the world. Ten million, fifty million into Alibaba for one hundred million dollar return and they start believing they're a genius and regression to the mean. And karma has a way of catching up to you and vision fun to is not going to happen in twenty twenty. Airbnb becomes more valuable than Uber, you might say. Well that's obvious. Well, it wasn't obvious at the time when we made the prediction, when we made the prediction Airbnb, his value was 30 billion.
I went to eighteen and at the same time Uber valuation was approximately double. So we said, OK, these things are going to revert. Where are we now? They're primarily equal. And that is because of the pandemic, because of a great move around acquiring a ride hailing excuse me, a delivery company, Uber stock has surged, but it hasn't surged as much as Airbnb. And Airbnb is on the precipice of eclipsing Uber market capitalization. As a matter of fact, it may have happened today.
Why is Airbnb such an incredible gangster company? It is a platform. It has incredible moats around network effects and as we're seeing, it is accelerating. One hundred and fifteen percent up on the first day of the IPO, Twitter attracts an activist investor or as a choir. I wrote a letter to the Board of Twitter Management or to the board of directors. Interesting. I did not hear back. They did not write the dog back. And to be blunt, I felt that Twitter having a part time CEO is on the verge of comical.
I've been on several. A company boards and dozens of private boards, and I've never met a CEO who can manage two firms at the same time, so maybe Dorsey has some super power I'm not aware of. And if Twitter moves just one, three, 10 percent of its revenue to a subscription model, I believe that the stock would surge. And as a result, Elliott, one of the largest hedge funds in the world, read my letter and basically showed up and signed it with it with a one billion dollar pen, got three seats on the board, which means that the board knew that they were outgunned and they gave up board seats incredibly, incredibly fast.
The stock has continued to go up. And I believe I believe that the stock will hit seventy dollars per share if the board continues to pull its head out of its ass and fires there. Part time CEO moves him up to chairman so he can have peace with dignity and shows any pulse around subscription. I think that's going to happen this year. By the way, management teams and boards don't put out letters confirming or validating or reinforcing the CEO's job unless they're about to fire him and he's looking for peace with honor or a graceful exit.
What do we also have here with our part time CEO? We have part time revenue growth. Look at the usage patterns there. Up to be clear, this is a fantastic product. Yeah, yeah. The revenue growth does not match, does not match their user growth, whereas that the other social media firms snap and Facebook revenue growth is outpacing user growth. What is wrong with this movie? When I see Spicks, the stock drops, this guy opens his mouth and people say, wow, great product, great opportunity, shitty part time CEO.
And every time he speaks, he reinforces our instincts here. Let's sell this stock with a. We'll be the worst performing unicorn in 20, 20, and the tough thing about predictions is when you get them right, they seem obvious in retrospect, but a little a little one on one on. When we made this prediction, we made it a long time ago before they even launched. As a matter of fact, the CFO of the company was a stern grad, called me and said, hey, boss, can you not dance on our grave before we've been bird?
You're not helping. So I quited the hell down, but not after I said this thing made absolutely no sense. And look at the headlines and the excitement coming out of the gates for Kibbie. Oh, my God. Quick bite bites. It's going to be awesome, right? They secured one hundred million dollars of ad commitments that had a launch. Remember all the excitement about the new Judge Judy? Right. I wrote this post in February saying this thing made absolutely no sense.
And now what skill, what vision did we bring to the party here? Math, simply put, for every billion dollars in content that you get from Apple, they only charge you eighty three cents a month. Netflix gives you a billion dollars in content in exchange for eighty one cents a month. And guess what could be thought by slicing stuff up into three or five or seven minute segments that they could charge you eight bucks for every billion dollars in content.
That just made no sense. They showed up to a square. They showed up to a Howitzer fight with a squirt gun. This thing just right out of the gate. So it's a terrible value proposition. They were outgunned. What do you know? What do you know? Just after six months, by the way, if you're working at QB, the best thing that can happen to a success, the second best thing that can happen is quick failure.
So the second best thing happen to the folks at QB and the people who work there, whereas failing over decades or a decade like I did a red love. That shit hurts. That shit hurts. So failing fast, don't feel sorry for them. They are just fine. Apple goes full Rondo and hits two hundred bucks a share. That's the prediction here. OK, so how is their stock price increase. Three and a half fold on a mild increase in top line revenue and bottom line revenue.
Simple a move to a recurring revenue bundle. They've gone from nine percent recurring revenue five years ago to almost twenty four percent. My guess is they like when they get their lips around the crack pipe of shareholder growth at the hands of the most accretive action in business history and moving to a recurring revenue bundle, as we call it, as we call it, the Rondeau when they go full rondeau. This is the most accretive action in business history and need you need to be a CEO.
Not only thinks about top line and bottom line, but your business model and moving into a monogamous relationship with your consumers, said Apple took forty two years, forty two years to get to a trillion dollars and then it took five months to get to two trillion on the back of a recurring revenue bundle. Apple is going full Rundell in twenty twenty one. What does that mean they're going to take their Billig Joey bag of donuts Bad news bears existing Rondo right there Apple won and they're going to add in this and they're going to add in the watch and they're going to add in the airport pros and they're going to add in the iPad.
You know the ship we love Apple for and they will say to the billion wealthiest people on the planet, iOS users, if you go in with us, if you establish a monogamous relationship at fifty one hundred two hundred bucks a month, you get all of this early, you get a preloaded. The biggest mistake, the biggest mistake we make is marketers. And Apple has realized this. Who's probably the best marketer in the world is that choice is not a good thing.
Choice is a bad thing. Choice is a tax. What do we want? We don't want more choice. We want fewer choices. We just want to be more confident. And the choices presented, they just peel off 10 percent of the people signaling have sex with me. I'm a better storyteller. I'm a baller. I make money. You should have kids with me. Your kids are more likely to survive if you have sex with me and we procreate than if you have sex with someone who has an Android device.
True story. True story. So if they just get ten percent of their iOS base, that's one hundred million people and one hundred bucks a month. They have ten billion dollars a month and recurring revenue boom, two hundred dollars a share boom, three trillion dollar market capitalization. It's coming. Our prediction, we said that Disney would win round one of the streaming wars. And you say, well, that's obvious. Well, it wasn't obvious back when we said that this is where Disney was.
The Disney Channel had not worked. People had a head start on them. People had more capital. This is where we were when we made this prediction. And then what happened a year later? Disney has absolutely sprinted out of we're talking like steroid. Ben Johnson out of the blocks here. It has been inspiring both on Anami side and on a new subscriber's side.
We also predicted that Shopify and Roku would be the new kids on the block, that these companies were coming into their own and we would achieve an altitude or an elevation they hadn't done yet. And oh, my gosh, look at these two.
Look at these two. We're so proud. We're so proud. Canada. Oh, my gosh. It's good to see Canada. Can you imagine a Canada right now says, are we in an apartment living above a meth lab called America anyway? Anyway, different talk show up. One hundred and sixty and one hundred and ninety five. Shopify now worth more than FedEx, the largest mall operator, Simon and Nordstrom, and look at these metrics around Roku.
Oh my gosh, Roku.
I don't really know what Roku does. I just know that they are killing it. We said that tick tock. And Microsoft was a total head fake and there was no way this would happen. Why? Because distinctive what the current administration would like to believe. We are a nation of laws. We're also a nation of immigrants. Anyways, 50 percent of PhDs in the U.S. are immigrants. Hello. Hello. 70 percent of the Nasdaq by dollar volume run by first and second generation immigrant.
I know. I know. Our team gets a first round draft choice from every team in the nation, but we don't want that. We want to be xenophobes and really fucking weird and say to everyone, no, we don't want the best people in the world. We're going to be strange bigots. Well, guess what? We're a nation of laws and distinctive. The current administration deciding to slice up and fork up the corporate world and distinctive Microsoft going for this bait.
What idiots did you really think this was going to happen? This made absolutely no sense whatsoever. Oracle didn't win either. They've just become a minority investor. Why? Because she's in charge here. China co-ops is an autocracy and has control over all of these firms. By the way, Tick-Tock is, in fact a security risk. And there is no reason that these firms, Chinese firms, should have unfettered access to our markets if we don't have access to theirs.
But unilateralists, stupid. One hundred and forty character decisions were not sustainable.
So that's a wrap for 2020. Not bad for us. We got 11 of the 14 predictions on the nose or near nose. We have one more quick break before we bust into our 2021 prediction. Stay tuned for our thoughts on potential acquisitions, the great dispersion of a number of industries and more. The New Year is here and marks a fresh start for your small business, whether you're shifting business hours or hiring more remote employees. One thing that remains unchanged is the importance of having the right people on your team.
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Welcome back. Let's talk about this here, let's talk twenty twenty one first prediction and the face of antitrust, Facebook's stock increases and Amazon spin. Have you noticed the distinct of this horrible crime against humanity that the FTC actually wants to break up Facebook, as does any other lawmaker that sees their eyes on the governor's mansion, who's an AG right now? And what do you know? Facebook's stock didn't move. As a matter of fact, we've known this is coming for about three months and Facebook stock continues to accelerate.
In addition, there are now two points on the line of anti-trust, two points. The first was the DOJ action against Google. The second was the FTC and the AG's against Facebook.
Who's third? Whose third? It's going to be that company in Seattle. But Bezos is smarter and probably more ego driven than any of the rest of us. Why? Because he's my age and is having the mother of all mid-life crisis. By the way, I can relate to this because I'm in the midst of a midlife crisis. That's the bad news. The good news is I believe I'm going to grow out of it in about 40 or 50 years.
Anyways, anyways, there's no one who's going to tell Bezos to break up. So he's going to say, no, I'm breaking up with you and he's going to spend AWB and AWB will be the most valuable company by two thousand and twenty five. By using its vast troves of data and money, Facebook has squashed or hindered what the company perceived to be potential threats. The bottom line is they have shown up and said join or die. But more than that.
More than that. What what what could have what's happened? That's the problem with innovation. Suppression. When antitrust when the DOJ has been asleep for 20 years, we don't know what could have happened with WhatsApp. I believe that WhatsApp might have gone into video or collaboration. Do you think WhatsApp would have sat by and let teams or Let's Slack or let Zoom developed into the companies? They are I believe WhatsApp would be worth more right now and will be worth more when it's an independent company.
But however, the sociopath and his lipstick on cancer are aligning troops up at the border. Almost a third of lawyers at Facebook have been hired in the last twenty four months. He is not going to go down without a fight, but oh my brothers, he is going to go down and my sisters, the whole is less than the sum of its parts here as a split up firm similar to John D. Rockefeller when they took Standard Oil and split it into thirty four companies, Mark Zuckerberg will get wealthier.
As a matter of fact, every stakeholder benefits in a break up. Shareholders, the taxpayers, VC backed companies, the employees who have more options. Competition is a wonderful the only the only person who doesn't win is the CEO who wants to sit on the Iron Throne of all seven realms, not just be king of the north, break their shed. BWC, the most valuable company in the world that is prophylactically by Bezos, the great dispersion. Big theme here, big theme here.
We've been talking about covid-19 be more of accelerant than a change agent. What is the real trend here, though? It's dispersion and that is value. The core value a company offers is being dispersed to the end consumer and skipping the traditional channels of distribution, be they stores, be they movie theaters, be they traditional sales channels. And I think this is arguably the biggest trend in business and will create the most shareholder value. We've had globalization, we've had digitization and we've have now dispersion.
And that's the theme of our predictions, the ability to distribute products and services over a wide area and where and when they are needed most, removing unnecessary friction and cost. First, big trend dispersion of headquarters, right, if you want to hear denial, get someone who owns an office building in a movie theater in the same room. Oh, people can't wait to get back to work. No, they can't. People can wait there as a cohort that wants to go back to work, specifically young people looking for mentors, friends and mates.
A third of people meet their mate at work. By the way, that's not necessarily a bad thing. Different talk show, however, we're going to see a dispersion of headquarters to residential, specifically commercial real estate is going to move to residential. We're also going to see a renaissance in coworking. I'm not a big fan of we work, but we're going to see coworking pop up again. Why? Because most people are still working from home. And even when they return, they're going to be used to having the flexibility to stay at home, which will absolutely decrease, structurally destroy demand across full time office leases.
But we're going to need to see a need or renewed a renewed need for coworking space. Just look at San Francisco coworking space to a certain level, takes out the volatility of both the cost on the demand and the supply side of commercial real estate. In just 12 months - this is crazy - San Francisco registered its lowest then could see rate ever commercially and then it's highest. That's what a pandemic will do to you. We're also seeing a lot of people are increased number of searches, Google searches for coworking, and we see a lot of firms who are permanently adopting a work from home option.
Young people, more than anyone want to be in offices, you're seeing Facebook and Google and Amazon doubled down on urban real estate, huge leases signed in New York as they realize the key to their business, a secret source is a double E twenty five year old out of Dartmouth. And she wants to spend a couple of years in cities and they're building these Zanardi campuses for the cohort.
Specifically, young people that want to come back to the office predicted Airbnb will be bigger than the top five hotel chains combined and hits two hundred dollars a share in some. This is the strongest brand in the history of hospitality. Look at the number of searches for any city. When you're looking for a hotel room, they dwarf every other search for hospitality combined. Nobody says, Oh, I got an Expedia and San Francisco. Oh, I decided to get a booking dotcom on my business trip.
No one says that this is the strongest, biggest, deepest brand in the history of hospitality or travel. Seven million rooms, more than the biggest players combined, and also also a true tech company that has a greater percentage of their employees. Are actual technologists or engineers greater than Amazon, Lyft or Uber? We have a juggernaut here. We have a juggernaut. I predicted that this thing would be worth one hundred billion dollars. And the IPO, I was wrong.
It was worth ninety, but it's worth more. Look at how much it's worth right now or will be worth. I believe it's going to be one hundred twenty billion dollars by the end of the year, which puts it at two hundred dollars a share. I believe Restoration Hardware and Sonos will reach a thousand dollars and forty dollars a share respectively. Why? Because some of that trillions of dollars in commercial real estate is going to disperse into the home and there just aren't that many good brands in the home.
Remember when you looked at a million or two million dollar home and they bragged that they had a subzero freezer, so a twenty five hundred dollar item was being used to sell a million dollar home? Well, so now some restoration hardware to the best brands in a sector that is about to absorb a trillion dollars, an unexpected stakeholder value in capital. We've seen their stock prices increase, but it's just getting started, in my view. Disclosure, I don't know.
I don't own stone or restoration hardware. And you're going to see these companies rocket again, permanent permanent demand destruction across a ten to twelve trillion dollar asset class. And where is that money going to go? It's going to go into residential. Who else here has realized, wow, that carpet looks really shitty or maybe I need a nicer apartment or maybe it's time I put in drapes or I would like I don't know. Now, it's kind of funny in here.
I'm going to make it nicer. That is what everyone is thinking. And every house across America, plywood costs and residential real estate have hit all time highs and we're just getting started. Why else? We spend 17 percent of our budget on transportation. We're not commuting as much. What are we going to do with our money? We're going to put it where we're not commuting from, specifically our homes. What does this mean? The great dispersion of HQ to residential is going to be amazing for the brands on top of the X axis here.
And it's going to be an incredible shedding of value from some of the companies below the X axis here. Apple acquires Palatine. That's right. There has never been a brand that better fits to another brand than Peloton does to Apple. Y why? There's a dispersion of the sweat of the industrial sweat complex to the home. Simply put, gems are dying. There will be a mild resurgence. They will still exist. But we're going to lose somewhere between ten and thirty percent of that value of gems.
Where's it going to go? Into your garage and into different types of weights. Look at what's happened to work at home equipment. It is absolutely surge peloton. It's better to be lucky than good. Peloton is both. And you're going to see Apple come in and decide. I know. I know. We want connected fitness in this incredible company that has Apple like brand Apple like margins and has a market capitalization of thirty two billion dollars, which is crazy, maybe overvalued, maybe not.
Was jet dotcom where three billion dollars. No. Was it worth ten billion dollars. Probably to Walmart. Yes. Is Palatine worth thirty three billion dollars. I don't know. Is it worth more than that to Apple. Yes. Apple has a two trillion dollar market capitalization. That means that they pay a 30 percent premium and pay 40 billion. That's a two percent dilution to acquire connected fitness in home. What does that mean? They get more and more of the all important attention graph.
And that's what they are all trying to do. They're all trying to be the access code, the operating system for our digital lives. And this would be a baller move that increases anywhere from 30 to 60 minutes a day. The amount of time you are staring at IOC dispersion of retail, first it went to warehouses in your doorstep. Now it's moving to our phones and our tablets. There will be big acquisitions by Shopify and or Zoom. These stocks are so rich.
This currency is so incredibly inflated. I'm not sure I'd say overvalued because they're incredible performers, but they are going to go shopping. We haven't seen anything like this. Good. For them, Shopify, forty one fold since. In the last five years, that gives them the ability and the need to go by real, but we've also seen incredible acceleration in the gambi they managed, but they haven't made any acquisitions. I expect they will make an enormous acquisition in twenty, twenty one.
The stock performance obviously extraordinary here of Zoome. One hundred and thirteen billion. I am less bullish on Zoome. I do not think it is sustainable. I believe that Zoome will either acquire or merge with a big big company in twenty twenty one. And the real interesting thing here Zoome could be the AOL of twenty twenty one. Why. Why they are up against. They think they're a great white shark, they think they're the bad ass or the ocean but the apex predator simply put an orca which is smarter, that is Microsoft with teams and sales force with slack might show up and offer video and eat their lunch.
I think Zoome is very vulnerable and there's one hundred and thirteen billion dollar market capitalisation is likely inflated. They will recognize this and try and pull a Steve case and merge with a traditional big EBITA company, maybe another telco. And I believe that merger will likely go down in history as one of the worst mergers or acquisitions in history. Zoome either has to buy their way out of this or sell. This is not sustainable. They are playing the Giants and the giant is about to smack them hard.
They need to either hook up with an Atlassian, develop some sort of suite here, but as a standalone entity, they are like single title publishing. They are vulnerable. What would be an interesting acquisition or an interesting merger? Zoome and WhatsApp, which will be spun whether Zuckerberg likes it or not, there will be a forced sale of WhatsApp.
The dispersion of creativity get the traditional gatekeepers out of the way. And example Etsy, which I think is just inspiring. I would have thought they would have gotten run over by Amazon. But anyways, good for them. Roadblocks will triple in value. This is an incredible company that actually gives a good goddamn about safety and children. That as a flywheel effect that helps people, helps creators do incredible games for kids over a third of their revenues goes out to their creators.
Over fifty percent of kids in the US under the age of 16 have been on roadblocks in the last thirty days. This is arguably the most influential company in history as it relates to children and at the same time, they recognize how important this is. So in their S-1, they mentioned safety 60 times. They mentioned parental six times. Right. This is what we had hoped that Facebook would have been had it not been run by a sociopath. ROBLOX is the social media company.
We all want it. It is a true platform, by the way, by the way. Seventy nine percent of their employees are technologists. Roadblocks is more of a tech company than Google or any other tech company. This is an incredible firm. When's the last time you saw an IPO pulled? Because the market was so strong, they thought maybe we're not thinking big enough.
Where is this dispersion going? We're going to see many of these platforms accelerate and we're going to see many of the traditional gatekeepers get the shit kicked out of them because they like the existing film Creative Industrial Complex. Right podcast get feature eyes and there's a flurry of acquisitions. Why? If you have an industry where there's high ASPs and low multiples and low revenues, then it makes sense for a low NPS, high revenue company to come in and say, I know, I know if we launch Transparent and the marvelous Mrs.
Misao and people like us more and we just decrease churn from 80 percent to 70 percent or we decrease, we increase renewal from ninety percent to ninety three percent, we can monetize it in some and some high end products are used to sell more paper towels and more handsets. And the ultimate arbitrage here is in podcasting. People are very fond and have real good will towards their favorite podcast. But but the industry is so small it hasn't really been monetized.
So you see these incredible arbitrage deals Hollywoods essentially been featuring, as it used to be, a business that had to be profitable in and among itself. But the big guys realized, you know what, I can spend more money than I take in as long as I sign up more prime memberships and sell more handsets. This is effectively feature ised of entertainment where it's no longer a business in and among itself, but simply a feature to differentiate a better business, specifically big tech.
They're all going vertical. What happened when House of Cards was launched on Netflix and they went vertical? Their stock skyrocketed. It's happening again. Look at what happened when Spotify was just not vertical, not investing in proprietary differentiated content, not increasing their apps. And then they do a hundred million dollar deal. By the way, Joe Rogan got ripped off. The stock's up one hundred and twenty six percent since they announced this deal. There's going to be a raise to acquire the.
High end talent to differentiate platforms who can monetize it to a much greater extent than these companies can monetize themselves. Again, it's the arbitrage of NRPs. Take every independent podcast across all categories, and they are starting to get calls on the bigger platform saying, hey, what do you make to make five million? Would you like 50 million? Because all I need is one basis point, 50 basis point increase in my apps and I can monetize it to a greater extent.
And you're still the cheapest way for me to differentiate myself. One hundred million dollars or Joe Rogan, he got ripped off, are going going to see a dispersion of education. We're going to see more unicorns and edtech than almost any other sector as a percentage of how many unicorns there are now. Why? Because people such as myself and my boss have transferred one point six trillion dollars in wealth for middle class households to universities. Why? So university administrators can have less accountability and make more money if it sounds morally corrupt?
Trust your instincts. What's happening? Huge disruption specifically at the hands of our cash cows that have decided they don't want to show up to a covert infested, racist country called the US. And we're seeing an absolute destruction or an absenteeism of international students who are cash cows. The number of international students that show up for the first time is off forty three percent and it is declined 16 percent. In general. Look at the number of international students or the decline in the number of international students as a percentage of the student body of the top MBA programs.
This is just in 12 months and some in some they're just not coming to school. We did an analysis of which universities would be hit hardest or do the best post covid. Our methodology is simple. We looked at value their credential, essentially the brand we looked at. The experience is based on a company called Nesh of Student Life. And we looked at the NPV, the present value of the bump you got from that education and that credential. We then did all of this or set all of this over tuition and we looked at vulnerabilities, specifically the shock absorber of the endowment per student.
If you have a lot of money, you can weather almost any storm and also their vulnerability or their comorbidity around those international students or their cash cows, more international students, the more cash cows are likely going to lose during the pandemic. And then and then we disarticulated and passes into four quadrants. And what did I get the next day? A lot of activity on this post, probably more activity on this person I've ever received. And for the first time, not one, not two, but three cease and desist letters.
Is it nice to be threatened to spend thirty five years of your life without ever getting any sort of legal action threatened, much less. Pursued and then to have chancellors and university administrators send you cease and desist letter specifically, they wanted us to say this data is not accurate and stop trashing us because we're worried our students aren't going to show up and pay full freight for our near ivy like experience that we're overcharging for when we when we foist the feces of a university like experience.
In other words, give them a Hyundai worth of education for a Mercedes like price, we're going to see a massive inflow into the disruption of ADTECH. Seven hundred and fifty billion dollars is no longer being dispersed through the traditional channels of universities. And as a result, we're going to see an explosion in remote and online learning and also hybrids that partner with universities. The dispersion in health care is probably the most exciting, disruptive transition and stakeholder value in history.
Wal-Mart is going to continue to get further, deeper, deeper into health care with acquisitions. Our health care in this country is shameful. We spend more than any country in the world, except we have worse outcomes. So the way to describe health care would be the same way to describe San Francisco as a city. Expensive but bad. Wal-Mart has the scale. They actually actually have a fantastic means of testing their health care. And Wal-Mart, there's a Wal-Mart closer to Americans than most hospitals.
They're going to roll out health care incrementally through acquisitions and innovation similar to what they're doing with their health clinics, where they offer primary care and standard procedures at a very reasonable cost. Amazon will begin to perform the Jedi mind trick. They perform on most industries on health care. And over the next 12 months, they will literally grab one hundred billion dollars from existing health care companies just by threatening to go into health care. And just with press releases, look what happened.
Look what happened to these guys. Every time Amazon announces good numbers, its stock goes up and other retailers go down. Why? Because people have figured out what's good for Amazon is bad for the rest of retail. Well, what is about to be good for Amazon is about to be bad for the rest of health care. This is a company that added one and a half trillion dollars at the expense of other retailers. What does it need to do, though?
It has a law. It has a problem. The law, big numbers. It needs to add about a half quarter of a trillion dollars in topline revenue to maintain the velocity of its stock. It's going to go after health care, health care companies, the ten biggest add at eighty dollars billion in market capitalization. What does that mean? What does that mean? Where's that coming from? When Amazon announces that it's doing something with Berkshire Hathaway and JPMorgan, everybody else begins to add value to Amazon and we're going to see the same thing over and over this year.
The dispersion of markets. Right. We're no longer going into brokerages. We're no longer dealing with stockbrokers. It's coming to our handheld phone. Dispersion is not all good. There are some very dangerous things because it disperses and it skips not only channels of distribution, it can skip regulation are sometimes needed, needed friction. I believe twenty, twenty one is the year we get a new menace. The Joynes, Lyft and Uber and Facebook. The New Menace is online trading app Robinhood.
Robin Hood traders trade eighty eight times the number of options when size adjusted as any other platform. We also have an organization that is not thinking of its investors as as the customer, but the product that produces data that they then sell to other hedge funds who front run these trades or want inside and what to dumb money is doing. And they are able to garner much more revenue than any other firm based on the trading data of their products, specifically their consumers.
What could go wrong here? Options. It is total share of revenues, these very dangerous exotic instruments that are not for first time investors over index at Robin Hood. And we're also seeing the algebra of deterrence is not working here. The SEC is now find them for a second time for not being transparent around how they are monetizing their consumers data. They find them two million than 10 million. And guess what? Robin Hood, like Facebook, just don't give a shit right.
Why would you if you have a parking meter in front of your house, that goes one hundred bucks and the ticket is twenty five cents. Let's break the law. And that's what Robin Hood is doing, similar to what Facebook did when they continue to waive the middle finger in the face of regulators because it doesn't matter. We can right. We can stroke a check for five billion dollars. That's about eleven days of cash flow. Look at Charles Schwab.
When you want to invest, you get messages saying the following. Make sure you have your short term needs covered, a relatively low risk investment. What happens when you go on to that Robinhood app? Right. Hi there. Instant access. You're going to get instant deposits, get your get your first free share of stock now and then you do anything and boom, boom, what happens? It starts to rain confetti. Let's create behavioral triggers that release dopamine and gets you addicted in a bull market.
What could go wrong? We are considering additional criteria and education for. Customers seeking Level three options, authorization to help ensure our customers understand more sophistic options trading, what are they talking about? They're talking about their response to a 20 year old, Alex Kearns, who received an errant incorrect statement from Robin Hood saying that he was down seven hundred thousand dollars and showed the firm seven hundred thousand dollars and seeing no way out decided that his way out was to throw himself in front of a train.
And this is their response.
And to be fair, what have they done? Fucking nothing. I don't know. These two founders, all I know is they don't have sons. If we could go back in time and stop one madness from depressing our teens and weaponize our elections, would we do anything about it? That's where we are now. These two are menaces. There is good news. The good news, the Massachusetts secretary of Commonwealth, Galvin, says Robin Hood is a reckless company ramifying investing.
More of this to come. Goldman Sachs CEO puts out a very thoughtful note that the markets are overvalued. It's bad all this volatility, yet they've decided they're going to be the lead underwriter for Robinhood boss. Walk the walk, make the music, match the words. This company has no business in the market. Supposedly, when Robin Hood had an outage last week, volatility skyrocketed and volume went way down. What could go wrong? This storm is not only bad for young men, it is bad for the markets and injects systemic risk into the markets.
Next prediction, sparks underperform. We've seen record levels of sparks, right, I mean, unbelievable number of sparks, record year, and we're seeing about we've seen about 70 billion dollars that is still unspent, meaning it's been raised, but they haven't found a target Special Purpose Acquisition Corp. You go raise money and then you say, I'm going to go find a target. I've done all the hard work of getting a company public. Boom, just add water public company.
They get to be they get to trade right away. And so we're going to go out and find a great private company. So 70 billion dollars, it's usually it's usually leveraged two or three to one with additional debt once they find a target. But we've seen incredible, incredible interest in this because never underestimate the market's ability to produce a product when people have cash in their hand. Just think of it as when you're in New York and it starts to rain before you know it.
There's umbrellas for sale everywhere. Well, there are a ton of umbrellas for sale right now in the form of icepacks. What does this mean? There's two hundred billion dollars searching for private companies right now. That means if these impacts by General Motors, Ford, Boeing, Fiat Chrysler, Delta, United, JetBlue and American Airlines, they would still have money. The question is, are there that many great private companies that are sort of IPO ready?
And most likely the answer is no. Bitcoin surpasses fifty thousand dollars as we've been riding this or preparing. We've been working on this presentation for a month. I think Bitcoin is up five to seven thousand dollars. I think of Bitcoin, I don't fully understand it, but the way I think about it is I think about it as a company and a brand. And right now, even with its run up to, I think, twenty three thousand a day, it has a market capitalization of 400 billion dollars.
Or if you took all the coins, time to value. It's four hundred billion. It's about the worth of Johnson and Johnson. I think of this thing though is somewhat true or not. Its perception is it's a hedge against inflation. It represents liberty and it represents the new gold. And the thing about this is you can create a go bag and you can stick 10 million dollars of gold in your head with an access code where you say you can't do that with gold or you can do with Bitcoin, you can't do with gold.
I believe this asset class is going to breach a trillion dollars, which means it goes to fifty thousand dollars. If that sounds like very unsophisticated analysis, trust your instincts. But that doesn't mean I'm wrong. Doesn't mean I'm wrong. This thing is now Bitcoin is now getting the institutional support to give people the security mainline investors to start putting a percentage of their assets in to Bitcoin. And then if you look at the government's ability, all governments ability to just print tremendous amounts of money, you could make an argument that, in fact, cash is going to incur a decrease in purchasing power and that this might be seen as a more sophisticated, more millennial, more hip version of gold as a hedge to inflation that may, in fact, become a tangible threat soon.
This is evidenced by the fact that the increase in Bitcoin seems to be inversely correlated to people pulling out funds or correlated to people pulling funds out of gold ETFs. In other words, people perceive Bitcoin is being gold like and are transferring their assets in gold into Bitcoin. And by the way, there's a lot more than four hundred billion dollars invested in gold right now. Let's talk about the dispersion of media. Disney stock will rise 30 percent on move to a Rundell.
Now, we made this prediction again about a month ago, and the stock is up 20 or 30 percent since then, but it still has a lot of legs. Go on LinkedIn, go on LinkedIn and do some basic searches. And you can find out they are lining up the Rondeau tanks at the border. Look at all the jobs, look at the descriptions of all the jobs they are looking to fill right now. They've also done a major reorg to go full Rundell and rally around Disney.
Plus, why? Because they've decided what is strategy. Our strategy boils down to one thing. What can we do that is really hard that other people can do? Well, what other people can do is launch a series on young Landow or take Jedi Ashoka and put her on TV or monetize one hundred billion dollars in acquisitions of Pixar, Lucasfilm and Marvel. This company has so much momentum right now. Oh, and by the way, let's give people a baby Yoda doll and give them the opportunity to take their sons to Disney and have a special Edge of Galaxy experience so they make their own lightsabers.
Oh, and by the way, if you want to come to our parks when it's not crowded, you need to be a Disney class member and maybe even we get you a better cabin on Disney Cruises. This is the ultimate rondeau. Anyone with kids has to join this thing called Disney. Plus, they'll have pricing power and the marketplace will look at their revenues and recast the multiple on this company, similar to what's happened to Apple over the last five years.
We wrote about this, by the way, just as SNAP has been the product planning and development department for Facebook, who has been the strategy department for AT&T and Disney. That's right, us. Anyway, we're going full Rendel, AT&T stock, it's forty dollars a share and or to divest our CNN, they had an acquisition. They've lost control of the narrative. Stocks are now more narrative than they are numbers and they've lost control. The narrative, the narrative right now is basically the following is basically you made a bad acquisition.
Well, they are going to get control of the narrative. They're going to take it back. They did the baller move here, despite all the complaints of people making tens of millions of dollars with the existing channels of film. And that's what a shocker that the head of CAA and Christopher Nolan making between ten and fifty million dollars a year off the existing infrastructure bank. It's a really bad idea. We are going to see the multiple on AT&T go up or every one basis point and multiple that AT&T gets back by recasting and reclaiming the narrative.
They increase their market capitalization by one point seven billion dollars and this is how they're going to do it. This was the baller move of media when they decided to take everything directly to Max. And by the way, who decided to agree to their terms all of a sudden, Roku. Why? Because HBO, Max, has just gotten the giant EpiPen t therapy, whatever the hell you want to call it, they all of a sudden have unbelievable new mojo and they're either going to show everybody invigorated story that'll take AT&T stock up or they will spin HBO and possibly CNN.
Who is going to go behind a paywall. Why? Because advertising is a tax on the poor and the technologically literate and no good content should be ad supported. We spend two weeks a year watching commercials. Fareed Zakaria, one of my professional role models. Amazing show. Fourteen minutes of commercial time. And what do they get for that? For pelting you with reminders how much it sucks to get old and say we can solve your opioid induced constipation or make your legs less restless.
They get twenty three cents for shoveling that shit down your throat. Right. Or for fourteen minutes of ads, they get twenty three cents from an advertiser. And this is a great show that advertisers love. Another way of thinking about this is the advertising industrial complex. And Time Warner believes that your time is worth approximately a dollar an hour. No, it's not. No, it's not. Your your time, Swarthmore. At least about ten. Maybe more.
Maybe more. So what are they going to do? They're going to recognize the way you create trillions of dollars or at least billions of dollars in shareholder value is to invent a time machine. Netflix isn't a media company. It's a time machine. If you only let your kids watch Netflix, they save two weeks of their life a year with advertising. The markets realize this and realize non ad supported recurring revenue. Companies are a better business and have taken their stocks up substantially over the last 12 months. It's a better business model.
What's the most bulletproof media company in the world right now? The New York Times. It's not old versus new, it's subscription versus ad based. And The New York Times, which gets two thirds of its revenue from subscription, is now monetizing them to the tune of sixty six bucks apiece. We're going to see the best content on the progressive side go behind a paywall.
This is the beginning of the end of big tech as we know it. We're going to see antitrust. However, however, Facebook's stock will increase in the face of antitrust, as the only person who loses here is the Zuck. And Amazon is going to prophylactically spin AWS.
A dispersion of HQ is going to result in a coworking renaissance. Restoration Hardware becomes a, breaches a thousand. Sony Sonos, forty dollars a share. Airbnb becomes worth more than Uber. Apple acquires Peloton.
We're seeing a dispersion of retail. Big acquisitions for Shopify and or Zoom, which could be seen as the AOL of 2021. This thing is very vulnerable, sitting on top of one hundred and twenty billion dollar market cap.
We're seeing a dispersion of education. We're going to see more unicorns in education as a percentage of existing unicorns than in any other sector.
We're seeing a dispersion of creativity. Roblox triples in value. Podcasts get featurized, and we see a flurry of acquisitions of the strongest ones that are still independent.
A dispersion of markets. People are recognizing that dispersion is not necessarily a good thing, if we don't have friction or regulation. Robinhood is being recognized for what it is - a menace. SPACs will underperform. There's too many hunting too few good companies. Bitcoin hits fifty thousand dollars.
We see a dispersion of health care. Walmart gets into health care via acquisition. Amazon starts to perform their Jedi mind trick and drain the ten biggest health care companies of their market capitalization.
And we're seeing a dispersion of media. Disney stock will continue to accelerate based on their baller rundle. It was a sleeping giant that was prodded and poked and is finally waking up. AT&T stock hits forty dollars a share and or it divests HBO, and CNN goes behind a paywall.
That's it for this episode, our producers are Caroline Chagrinned and Drew Burrowes. If you like what you heard, please follow downloader and subscribe. Thank you for listening.
We'll catch you next week with another episode of the produce show from Section four and the Westwood One podcast network.