OpenAI's TBPN Mistake, SpaceX’s $2 Trillion IPO?, Iran Disables Amazon Infrastructure

Channel: Alex Kantrowitz

Published at: 2026-04-06

YouTube video id: dIL86a_x650

Source: https://www.youtube.com/watch?v=dIL86a_x650

OpenAI buys TBPN. Will it pay off?
SpaceX files for an IPO, and it's a big
one. And Iran has hit Amazon targets in
the Gulf, rendering at least a few
inoperable. That's coming up on a Big
Technology Podcast Friday edition right
after this. Welcome to Big Technology
Podcast Friday edition, where we break
down the news in our traditional
coolheaded and nuanced format. We have a
great show for you today. We're going to
talk all about OpenAI's controversial
buy of TBPN and whether it will pay off.
Also, SpaceX has an IPO in the works
finally. They're looking to raise maybe
uh 40 to 80 million uh billion dollars
at a $2 trillion valuation. Uh we're
also going to talk about some issues in
the private credit world as as it
regards to funding AI infrastructure and
Iran has hit some Amazon infrastructure
and we'll talk about what that means.
Ron Roy is off today. Joining us is Liz
Hoffman. She's Seapor's business and
finance editor and a special guest here
with us today. Liz, welcome to the show.
>> Hey, Alex. Thanks for having me.
>> Thanks for being here. Let's start with
the big news of the week. Definitely had
to check the headline twice on this to
make sure that it was actually April 2nd
and not April 1st. This is from the Wall
Street Journal. OpenAI buys tech
industry talk show DBPN. OpenI is
getting into the business of daily news.
The maker of Chat GPT said it has
acquired TBPN, an online talk show that
aims to compete with Bloomberg and CNBC
in by the minute analysis of technology
news and executive interviews. While
TBPN audience well TBPN's audience
remains modest, averaging around 70,000
viewers per episode across various
online platforms. The show has become
popular among Silicon Valley power
players who consider it more supportive
of their industry than traditional news
outlets. Chief executives who've
appeared as guests include Meta
Platforms Mark Zuckerberg, Microsoft
Satya, and OpenAI's Sam Alman. All
right, I have some thoughts about
whether this is a good purchase or not.
Um, but Liz, I'm curious to hear your
perspective. Uh, can you explain what
TBPN is because there are some people
that still don't know and whether you
think OpenAI is making the right move in
buying them?
>> Yeah, it's a really popular tech talk
show. I mean, it it's on air live for
like a lot of hours every day. Um, and
has has actually has a real following in
Silicon Valley. Has real executives come
on. Um, I don't know whether you know
they would call themselves journalists.
It' be an interesting question to ask
them. um they are clearly there's no
doubt about what side they're on. They
they want the people on their show to
succeed and and it is generally a fairly
light interview. Um but they've they've
like captured a real portion of the sort
of tech media brain space. Um do I think
it's a good move? I don't know. I mean
Sam Alman said he bought it because he
likes it. And uh and you know, one way
to look at it is that you know,
billionaires buy media companies because
they're influential and they like having
a a megaphone. You know, Rupert Morocco
owns a lot of media. Uh Mark Beni off
bought Time magazine. Obviously, Jeff
Bezos bought the Post. Jamie Diamond
gave an interview recently where he was
saying maybe what he'll do after he uh
after he retires is start a media
company. Um you know, it is a sexy fun
thing to own. um you know but but also I
think tech and in particularly AI is
sort of looking around and realizes that
the country is not with them uh and that
they have some questions that they need
to answer and some real push back is
starting to emerge. I don't know that
buying a real industry inside media
company that is mostly talking to people
who already agree with you is is going
to be the way to do that. But um you
know controlling the narrative is not a
new idea.
>> All right. So, first of all, I'll point
out there was a difference. There's a
difference here, which is that these
examples that you gave of Bezos, Beni
off, they're almost like personal side
projects for these billionaires. This is
OpenAI acquiring TPPN as a uh direct
content marketing vehicle. So, that's
very different. So, they expect that it
will not just be a vanity project, but
contribute to the company's bottom line.
And interestingly, they're stopping all
advertising. So then the question is why
do the deal? Um I'm going to read the
best argument that I've heard for the
deal and then I'm going to explain. I'll
give it away. I don't like the deal, but
I'll explain why after I read this and
we can talk through it. All right. So
this is someone who talked about OpenAI
did 3.7 billion in revenue last year. By
the way, the latest numbers are they're
doing like 2 billion a month now. They
spent just a fraction of that to own the
living room of every founder deciding
what to build on. Most people are
treating TBPN as an acqu the TBPN
acquisition as a media story. It's
actually a distribution story. So here's
the thinking. If OpenAI has, you know,
it's going to spend what $1.3 something
trillion dollars in the neighborhood,
maybe a little bit less, maybe a little
bit more over the coming years to, you
know, make this bet that it's AI is
going to work. It's getting into the
enterprise world. All of the companies
that are going to be spending money with
it are they are watching TBPN because it
is this industry publication and like
you mentioned the clips go viral on X.
They have all these executives coming in
at important moments sharing their
perspective on the world probably again
because they think they'll get a
friendly interview and often they do
they do ask some good questions
sometimes and if you are open AI and you
own that network you can reach all the
people who are making decisions. Do I
want to go with open AI? Do I want to go
with anthropic traditional content
marketing? You know, maybe that makes
sense, but this is a big swing and in a
big industry, you need big swings.
Is that logical?
>> I don't know. I think I would take the
other side of that, which is that, you
know, OpenAI seems to think that its
future is mostly direct to consumer.
Like maybe they're going to make a run
and try to catch up with anthropic on
the enterprise side. Um, and not that
they can't do both, but I don't know
that that I think that there's better
like if you really want distribution and
enterprises, go by Salesforce, right?
Like find find whatever that last mile
is into these big companies. And I
think, you know, a lot of the spending
that's going to determine whether any AI
really pays for itself, but you know,
who wins this race isn't going to come
from the the companies whose executives
are on TVPN. It's going to come from
like Goldman Sachs and Walmart. I mean,
it's got to it's got to escape the tech
economy to have real enterprise
customers that are just like out in
other industries and like those people
are not watching TVPN. I don't know. I
actually just sort of thought it is a
vanity play and you were saying you that
those those other executives, those
other billionaires bought those things
personally, but like Sam this I assume
this is an OpenAI stock. Actually, I'm
not 100% sure, but that is Sam Alman's
that is his vehicle, right? He he is so
intertwined personally, financially with
OpenAI. I assume you know that that
that's what's going on there. I I'm
skeptical of it, I guess, for like a
slightly different reason, which is, you
know, I remember um go back like 10
years when we work and Adam Newman were
on top of the world and and Adam got
really into surfing and so then he
bought that wave poolool company. like
in general, you know, you you give tech
tech founders enough VC money and they
do they do start to indulge their
personal sort of pet projects. Um, and
that uh I guess at least in that case
was sort of like absolute peak we work
perhaps a uh top tech that one a bit.
>> So I do think that enterprise is going
to be the place that they are trying to
play. Um Greg Brockman was on the show
this week the president of OpenAI and it
was very interesting the way that he
referred to consumer subscriptions. He
said like some some way of saying that
right now consumer subscriptions is the
makes up the lion share of the company's
revenue. But I think that as the company
focuses on um more coding applications.
They're be making this super app which
is going to combine coding and chatbt
and a browser. They are going to try to
work and get that business audience. And
so if you're trying to make the bull
case for this acquisition that is I
think the best way that you could do it.
Um, but I'll make the bare case with you
um, for a couple of reasons. And I think
the the core of it is even if TBPN is
something that is a fan of the tech
industry, the moment that acquisition is
made, you lose your credibility, right?
Like you're you could still be
informative and entertaining. But when
you have a company that owns you as
prominent as OpenAI and in the tech
space and you're commenting on the tech
space, there's no way people will look
at your important interviews and say
how, you know, are they trying to
advance OpenAI's interests in doing this
because ultimately OpenAI's interest is
their interest, especially as we both
suspect if they got paid in a lot of
stock. The question is, how do you end
up showing up at events like they were
front and center at Meta's um big
developer event recently and can are
they going to go now to that event with
the access to the executives as a branch
of OpenAI? They're also reporting into
Chris Leane who's the company's chief
lobbyist. So, I suspect that they will
lose a good chunk of their audience. And
again, it's not a massive audience. It's
about 70,000 per people uh per episode,
which is nothing to scoff at, but it's
not huge. It's obviously tech specific,
but I I suspect that it'll be much much
more difficult for them to do their job
than it was before this.
>> I think that's right. I mean, I'm
talking my own book. You're talking
yours. Independent media is, you know, a
lot of its value is in being
independent. This isn't totally new. Um,
couple years ago, I think it was
Anderson Horowitz like had launched kind
of tried to launch their own kind of
media company. It was the beginning of
Future.
>> Future. Yes.
>> And they were going to disintermediate
the press.
>> Exactly. Right. They they couldn't even
keep up with the story volume. Like they
never publish.
>> No. And there's also that big online
glossy, I think it's called Colossus,
that's always doing these like big glowy
profiles. Um uh they know they have the
feel of like a Vanity Fair, but but are
are not there to poke holes in any of of
these um tech giants, you know. But but
you're seeing a lot more like the all-in
pod, you know. I think Jason was was
tweeting about this saying go direct, go
direct, go direct. You know, the media
ecosystem has changed a lot and and
places like X and and you know, the sort
of long tale of fragmented media make it
a lot easier to to go direct. Um, so
we'll see. I think you're right. I guess
if they really cared a lot about their
credibility, they wouldn't have sold to
a company that they cover. That's sort
of basic media.
>> Correct. So that's that's number one.
And you know, I think there's an
argument to be made against me on that
front, which is just like um you know,
you're like like you said, you're you're
you're salty and one of the people who
believes in values that are long gone
and people just want to be in, you know,
informed without these people who are
who are um salty about things and the
two hosts of DVPN are friendly and
they're going to still have purchase in
the uh AI world. and and I'll accept
that as a counter-argument, although I
sort of I think I was just a little too
harsh on myself. Uh I do have optimism
about a lot of technology. Um but there
are certainly a lot of like we can we
can both agree that there have been a
lot of cranks out there who've just sort
of like, you know, journalism is done
one way. TBPN was never journalism and
they're going to suck at Open AI, too.
And I sort of disagree with that notion.
But I I I think to me the bigger not the
bigger problem here is um this might be
a solution the wrong solution to the
right problem. And by that I mean you're
right Liz and you brought this up.
>> AI has a very big perception problem
right now. And this is something that
AI, you know, they are mindful and even
the reporting that you're seeing uh in
come out in the information in the Wall
Street Journal uh tells us that this
was, you know, part of the aim of
bringing them on. This is Fiji Simo,
OpenAI's head of AGI deployment. She
wrote in an internal memo, "As I've been
thinking about the future of how we
communicate at OpenAI, one thing that's
become clear is that the standard
communication playbook just doesn't
apply to us. We're not a typical
company. we drive a really big techn
technological shift. Simo Simo wanted to
explore new ways to communicate OpenAI's
mission and the impact and applications
of its technology to the public. Uh in
response to questions from OpenAI
staffers about the acquisition on
Thursday, Simo said in an internal
message she believes OpenAI can do
better at communicating publicly about
the benefits of its products. Okay, so
aside from the fact that the people
inside Open AI thought that this was an
April Fool's joke after Simo explicitly
told them no side quests, um, this
rationale, I don't I and listen, I I I
get wanting to change the narrative. I
just think it's the wrong solution
because if you look at the Yuggov
polling and we've talked about it on
this show, who are the people that do
not like uh AI? The most negative group
about AI are people who have not used it
or seen anyone else use it. Uh their
only positive about AI it looks like 22%
of the time and negative 60% of the
time. People that have have seen it used
but haven't used it for themselves are
the most um they have some positive
views but in terms of pure negative
they're the most 62% of them are there.
But the people who regularly lose use AI
compared to that 62% only 26% of them
are entirely negative or more negative
and positive on AI. And that is TBPN's
audience. The people that regularly use
AI. When you think about the
cross-section of the public that needs
to hear this message,
>> it's not them, it's the other people.
And TBPN doesn't cater to them. And
that's why is the wrong one.
>> Yeah. No, which is why I actually just
think this is a this is just a thing Sam
wanted to do. It seems to me that the
simplest solution is is the easiest one
and you know they're going to have to um
you know follow a a much broader public
discourse strategy to convince um the
huge swaths of the public that really
just increasingly by the day hates this
technology and is terrified of it and
doesn't like the people founding it and
you know is afraid of losing their jobs.
I mean, I I don't think um I don't think
this is going to change the narrative.
And um I guess I'd be surprised if
really smart people inside OpenAI
thought it would. This just seems to me
like this is a thing Sam likes, so his
company bought it.
>> Interesting. Liz, why do you think
>> But I'm going on TVN next week, I think.
So, I will ask them what they what they
make of all this. See if we can flip the
interview a little.
>> That That's the way to do it. Why do you
think people are so negative on AI?
>> Uh well, they're afraid of it. I mean
just literally afraid that it will take
their jobs which is a very normal fear
and not inaccurate in directionally at
least here. But I also think it's just
dystopian like it is look I like AI like
I I mean this obviously a magical
technology it has huge economic
potential benefits. It you know you talk
to people in for example healthcare and
biotech about what it could do on the
drug discovery and this is like magic
stuff. Um, but it feels like it doesn't
have anyone in the driver's seat and I
don't think that Silicon Valley in
general has done a good job showing that
they can be trusted with much of
anything. Um, and even they say they
don't really understand it. You're
talking about a really powerful
technology being developed by people who
like charitably do not look like the
average American, do not behave like
them, are unimaginably wealthy, like
have weird habits about like, you know,
they're all like they're all slightly
cartoonish. Um, and then you see it
showing up in your communities in these
big faceless data centers that are to
varying degrees we can argue about how
true this is. taking your energy, taking
your water, like you know, putting
they're faceless and they are um really
scary. And this like this is not a huge
mystery to me why people hate this
stuff.
>> And and you're right, like the people
who use it seem to like it. You see the
benefits of it. Um but yeah, I mean this
has a huge huge image problem and um
you're starting to see real backlash in
local communities and I don't think
that's something that these big
companies have thought a lot about or
they're starting to now and realizing
that they are um woefully uh illquipped
to tell that story.
>> Yeah, they're noticing it. I mean, they
notice that they have a narrative issue,
but it does not seem like TBPN will be
the answer to that. Uh, interestingly,
just as we started to uh, head to the
recording booth, so to speak, some news.
This from the Wall Street Journal.
OpenAI top executive Fiji Simo to take
medical leave from the company. Open
product and business chief Fiji Simo,
who by the way is now the head of AGI
deployment. Um, she's taking medical
leave from the company for several
weeks. an absent that that that sorry an
absence that comes as the startup
revamps its leadership ranks and
prepares to make its public market
debut. In an internal note to staff,
Simo said a neuroimmune condition had
worsened and that she had postponed
medical tests and new therapies to stay
focused at work since starting her job
last August. It's now clear that I've
pushed a little too far and that I
really need to try new interventions to
stabilize my health. There's more
shakeups happening within OpenAI. Open
eye is making other changes to executive
team to its executive team handing
former Slack executive and revenue chief
Denise Dresser commercial
responsibilities that were per
previously the purview of operating
chief Brad Litecap. Litecap will now
focus on special projects. OpenAI said
it doesn't have any immediate plans to
appoint any new COO which is the role
that Litecap held previously.
Constant change within OpenAI and it
continues. Yeah, I mean these companies
the the arguably setting aside the
people working on the technology, I
think the key role at these companies is
chief commercial officer. How do you
commercialize the stuff and and monetize
it? And kind of getting back to where we
started on like where is the enterprise
business? How do you get those
subscriptions? Um, you know, I use
OpenAI a lot, but I don't think I've
ever given them a dollar. So, like how
do you how do you take this from the
lab, you know, into into the real
economy?
I have one last point on this then we
can move on. Um, OpenAI, especially
under Fiji's leadership, has been in
recent weeks much more focused, no more
side quests, shutting down Sora. And so
there's been, I think, a lazy argument
that that
yeah, a lazy argument that buying TBPN
is a side quest, which it invariably is,
but I think it misunderstands this no
side quest uh directive, which was all
about compute. You don't want to waste
compute on side quests. If you want to
focus on the core thing, yes, it will
take some attention, but I don't think
TBPN is exactly going back on the on the
command about side quests here.
>> Yeah, I don't think that show is sucking
up a ton of compute.
>> No, definitely less to make these human
generated videos than the AI generated
videos, which is kind of an interesting
moment in time for those again going
back to the job loss thing, for those
who think AI will immediately take over.
Well, it takes a lot of compute to do a
lot of these things. And it's not easy
as easy as saying let's just allow the
AI to do it.
>> No, you're seeing on the other side
these too. These tokens are expensive,
right? I mean the bills that are
starting to rack up people who use it.
It's a bit of a sticker shock there too.
>> Yeah. So you have the token prices, you
have the video prices and so this moment
where AI will take over everybody's
jobs, I think is a little bit overblown.
But you had a very interesting
conversation with Larry Frin, CEO of
Black Rockck about a few things and
first is uh AI jobs that he talks about.
He says AI is going to create many jobs
and we're not prepared as a society to
fulfill those jobs. That's a crisis.
That's an interesting perspective. Can
you talk a little bit more about that?
>> He was really talking about bluecollar
jobs um that you know which were already
really in in short supply the people to
fill them. You're talking about welders
and electricians and um you know which
is in some ways like the last jobs that
the robots will take that you know HVAC
plumbing that stuff seems hard for AI to
do in the physical world. Um and it's
like acutely needed now to build all the
data centers that Black Rockck and and
others are are financing and and
throwing up to to service you know
OpenAI's compute needs and all of that.
Um, you know, but on the broader jobs
front, I guess it is a lot easier to
see, and maybe this was true of past,
you know, industrial revolutions. People
talk about this as the fourth industrial
revolution. It's a lot easier to see the
jobs that AI will kill than the jobs
that it will create. Um, and
particularly in the knowledge economy,
these are, you know, I spent the last 15
years covering Wall Street and these are
big pyramid businesses where a lot of,
you know, they hoover up these kind of
young graduates from, you know, from the
IVs and from business schools and they
spend a bunch of years doing like kind
of drudge work like is consulting,
investment banking, that kind of thing.
A lot of PowerPoint presentations, a lot
of spreadsheets and I can actually today
do almost all of that. Um, and so, you
know, the other thing Larry said in the
interview was that, you know, you're
going to see this cohort. He was
basically saying like, woof, the like
class of 2026, right? Like there's going
to be a couple years where the skills
gaps are just really, really wide. And
we're going to see I think we're going
to see massive youth unemployment. You
know, that, you know, 25 to 22 to 25
year old cohort for the next couple
years. It's already, you know, elevated
beyond the national unemployment. And I
think you are just going to see that
skyrocket. Um, and that's really bad. We
don't have a solution for it. Yeah.
>> Yeah. I mean, you all like I could see
the firm saying, "We have AI to do that
entry-level work." On the other hand, I
might be scrambling to university
campuses to try to get these
22-year-olds who understand AI into my
organization and working with it for my
company. I think you're actually worried
about that gap like couple years like I
I think you know I'm I was sort of
internet native right um and maybe but
wasn't probably not mobile native like I
got my first job in 200 I think I had my
first job before I had my first iPhone
if that helps you um and then so you had
then you had mobile native employee base
I'm not sure how helpful that was mobile
is obviously a big platform for our
lives but it's fairly intuitive um but I
I think you may end up with a generation
of workers that just get skipped. Like
I, you know, what's what's what are
people saying? Like I'm not going to
lose my job to AI. I'm going to lose it
to someone who knows how to use AI. And
so I am endeavoring to learn how to use
AI. But I'm like afraid of high
schoolers. Not I'm not afraid of 25 year
olds right now cuz I don't I don't think
they are um in a much better boat than
than slightly older people who kind of
understand the internet but are not AI
native. Um, and there's the same
argument I think I've been thinking a
lot about this actually like with the
SAS apocalypse and the tech companies
and the shake out there that I wonder
how much of an advantage it is going to
be to be an AI native company, right?
There's a lot of questions of well, can
Salesforce just do enough with agents
and build enough of its own AI to remain
relevant and sticky. Um, but but the
real question to me is the AI native
companies that are being built directly
on top of these models. like is there
something in the DNA there that makes
that makes them win in the way that you
know really with the exception of of
Microsoft um that that premobile
generation of tech companies just got
got totally overshadowed and overtaken
by the ones that were built right on top
of the internet and
>> what's your best guess as the answer to
that one?
>> I don't know. I don't know. But I think
um I I I I suspect that there that this
is this is a bigger technological leap
than anything we've seen certainly since
the internet. It is bigger than mobile.
And I think there's probably something
in the DNA of of AI native companies
that will will help them succeed. Like I
was just been on a tour some talking to
a bunch of lawyers recently and like you
know they're using Harvey they're using
Lakota uh you know Thompson Reuters has
spent a lot of money on on AI and and
they have this thing called co-consel
and that's actually a perfect case study
like can Thompson Reuters this you
knowund something year old you know big
professional services and media
organization build enough AI to remain
relevant or does Harvey just come and
say like we just we just built this all
in anthropic and by the way we have 50
employees and we're not hiring anymore.
I mean that is that is where the
economics start to go sideways for
legacy companies.
>> Definitely. I mean this was the argument
that Sam Alman made to me at the end of
the year last year where I asked him
about the competition with Google and he
goes basically there going to be two
types of companies. Ones that try to
bolt AI on and one that build ones that
build AI from the ground up. He goes
we're building AI from the ground up.
They're bolting it on. That's why I
think we have the chance to win. I he
might be right, but that's obviously
that is the right question to ask about
about big tech right now.
>> Um we just got new jobs numbers in. Are
we seeing anything in terms of AI job
loss in the new in the new numbers?
>> Not really. The jobs numbers came out
today for March pretty good actually and
on the on the heels of some couple of
months of like very very bad ones. I
think there was uh there was a report
yesterday from a private um data tracker
called Challenger Gray that you know it
does track sort of what it counts as AI
related job losses that are obviously
growing quickly. I my theory on this is
that AI is an excuse for companies to do
layoffs just like the tech isn't good
enough. It isn't embedded in enough
workflows to like maybe outside of tech
companies. You know, Mark Zuckerberg has
talked a lot about kind of what what a
meta engineer is and isn't doing right
now. And um so maybe there like they
will hire more slowly. I think it's air
cover. These are companies that
massively overhired, you know, in the
late 2010s through the pandemic. Didn't
want to fire people in the middle of a
of a pandemic cuz it makes you look bad
and then couldn't then were kind of
frozen for a couple years and couldn't
quite figure out what to do. I think AI
is just air cover.
Yeah, I saw unbelievable data from
Indeed this week actually at a
conference down in Dallas where you
looked at software developers and I'm
just going to describe the contours of
the chart cuz I was asking about whether
we've seen an increase in developer
hires or developer listings on Indeed
and we have but it's this small tick up
and then you scroll back to about 2020
2021 right midco and there's a mountain
of new listings. So clearly there was
just a massive hiring phase and you know
people are trying to figure out what it
means for their companies in 2026 still
and when they realize they've overhired
they say AI because it's a lot more
convenient and forward-looking to say
that than to say oh we mismanaged
our company.
>> Totally. And Jack Dorsey can you know
lay off a bunch of people and say it's
AI and maybe people believe him but but
I I think it's it's totally an excuse
and like the software developer is an
interesting one. We had I was talking
the other day to the chief commercial
officer at Enthropic and you know he was
sort of saying that you have all of
these developers but they are basically
managers of a bunch of uh of bots that
are writing the code. I think like 99%
of the code um for for um for Claude is
is written by Claude. And like that's
fine. That person has a job that's a
slightly different job. But it's the
it's the people who aren't hired to be
those junior developers. I mean this is
a this is a a like an exponential trend
not a not a linear one to me because of
the econ the industries that are being
so hit by this are these knowledge
economy jobs and they have the widest
pyramids of of any big companies just
you think about kind of the the junior
associates the the the baby investment
bankers the baby lawyers the baby
consultants that pyramid is going to go
from this to like this to this to this
and I think you know it's going to end
up being
>> explain to those who are listening
>> explain to those who are listening what
you're doing with your hands.
>> Oh, sorry. I uh I was I was making the
pyramid get uh get narrower at the base
until it eventually turns into a chimney
and then maybe even a diamond where like
the actual the biggest chunk of of the
workers are are um you know people your
age, my age who are like pretty
competent at managing a bunch of agents
and then you have some senior people at
the top like generating a bunch of
business.
>> That is crazy. All right, I definitely
want to talk about the SpaceX IPO
because uh Elon Musk and Co have filed
for that IPO and we also have some news
about uh Amazon data centers in the
Gulf. Uh and potentially we can talk
about what's going on with private
credit and AI. So, we're going to do
that after the break, but first Liz, I'd
love for you to shout out you have a new
podcast and people should go and find it
and listen to it.
>> I do. Thank you. Um yeah, you looked
like you were having so much fun in
podcast land, we decided to uh to join
your ranks. Yeah, we launched a show
about six weeks ago called Compound
Interest. It's our business and finance
show and it's weekly interviews with
people who are like right at the middle
of these big forces that are are shaping
how businesses are run and how markets
are are functioning. Had a run of great
guests. We've had um we had Dar Uber on
kind of talking about what a driver, you
know, the the future of Uber is, as he
tells it, essentially tucking the robo
taxis in at night. The kind of care and
feeding of these big autonomous fleets
was super interesting. had a great chat
with the partner who runs the kind of
America first fund inside Andre and
Horowitz about like what on Earth
venture capital is doing in these big
capital intensive defense industries
like blowing up drones and drilling
mines. So So yeah, it's been it's been a
lot of fun, but it's given me a lot of
respect for um for what you do. Um it's
it's harder on the other side of the
mic.
>> Yes, it's definitely it's a it's a you
got to take some time learning it. It's
a different thing. All right. So, I
definitely want to get to our second set
of stories and we're going to do that
when we come back right after this. And
we're back here on Big Technology
Podcast talking about all the weeks tech
news with Liz Hoffman. She is 74's
business and finance editor. Let's talk
SpaceX IPO. Um SpaceX, they're going to
try to go public at a valuation of$2
trillion. I think they're going to look
to raise something like 40 to80 billion
in this IPO. Um, what do you think about
this? Is this sort of where you expected
it to land? I mean, it looks like
they're going to, this is, according to
Bloomberg, at more than $2 trillion,
SpaceX's valuation would increase by
nearly 2/3 in a matter of months. The
company's acquisitions of of Musk's XAI
company valued SpaceX at 1.25 trillion
uh in February.
>> Yeah. I mean, on on the one hand, I find
it kind of comforting as a finance
reporter. Like, I've had this theory for
a long time that these companies were
eventually going to have to go public,
that it stayed private for so long, that
that was really the story of kind of the
late 2010s and early 20120s that there
was just so much private money out there
that like who needs the public markets.
But actually, what this generation of of
big startups is doing, as we've been
talking about, is super capital
intensive. They're, you know, it's
really expensive to build rockets. Um, I
think SpaceX actually is profitable. Um,
so so in a bunch of ways it looks really
different than that generation of
companies, software companies that went
public in the 2010s.
I mean, what I'm watching for is like
that's a lot of money. It's got to come
from somewhere. I mean, it's it's weird.
Like we don't usually think of IPOs as
like market rotational events that
require a bunch of money to move out of
one set of investments and into another.
But like $80 billion is that would be
three times larger than the largest IPO
ever which was itself
10 times larger 20 times larger than the
average IPO. I mean that was that would
have been the Saudi Aramco IPO IPO in
2019 that raised 25 or$30 billion. But
the average IPO over the last 25 years
raises about $200 million. And so that
is an easy job for investment bankers.
But, you know, I wrote the other day
that that giant sucking sound you're
going to hear in the markets, you know,
this May and June is is bankers running
around asking for $80 billion, which by
the way, I think they'll get. This is a
profitable company that like seems to do
an important thing really well. And Elon
Musk is an incredibly um good salesman.
People want to to invest in his
companies. But that's got to come out of
somewhere actually. And I think if
you've got stocks, you know, still
beaten down by the war by then,
investors are going to be pretty
reluctant to crystallize those losses by
selling. Like, I don't know. I think you
actually, this is a big enough movement
of money that you might see some weird
knock on effects in kind of more liquid
markets. You know, I'd have my eye on
treasuries if I were if I were a betting
woman. So, uh, yeah, I mean, it's it's
giant, but I think it's I think it is
good. I think that you know Anthropic
just to take an example is as valuable
at what is it four or 5 years old now as
Google was when it was 15 as Amazon was
when it was 25 and all of its wealth has
been created in the private market in in
the hands of a relatively small number
of people whereas 99% I think Google was
worth $20 billion when it went public so
99% of its $4 trillion of value has
acred in public hands and I think that
is generally good to go back to what we
were talking about earlier where um
there is like a the the wealth gap that
AI is threatening to just massively
explode I think is like a really
dangerous political force to keep an eye
on and so like I would encourage these
these companies to go public.
>> Yeah. So this would put SpaceX at bigger
than this is again according to
Bloomberg all but five of the companies
in the S&P 500. So only Nvidia, Apple,
Alphabet, Microsoft, and Amazon would be
bigger than it. It would be bigger than
Meta and Tesla. And by the way, I think
speaking of places that we could see
people move money from and to, I think a
lot of Tesla shareholders might say,
"Oh, if I I'm doing this to bet on Musk.
If I could get a hold of um SpaceX,
which has like a clear I think a clearer
trajectory like Tesla right now is a bet
on Optimus and
>> SpaceX is like a bet on space and AI. I
might just sell some shares from Tesla
and buy in SpaceX and that could be very
interesting.
>> I think that's right. Though I would
also say I think one of the
underappreciated reasons that that they
are taking SpaceX public is to merge it
with Tesla ultimately, right? like Elon
Musk has been collapsing his his empire.
And just as a practical matter, it's
pretty hard for a private company, even
a big one, to buy a big public company.
Just doesn't work that well. You got to
come up with a lot of cash. You can't
use your stock. And so I I would assume
that Tesla gets merged in at some point.
And so then it's just a question of like
you can do the math and what's the sort
of cheapest way to to get yourself a
share in the combined Tesla SpaceX. I
don't know.
>> That's very interesting. Yeah, maybe
that will happen. That will be crazy. um
one super Musk company and uh
>> I think that's where it's headed and
he's done this before. You know, he
bought Solar City with Tesla sort of
famously complicated deal and had some
theory of the case that they were going
to put solar panels on the cars and they
they never really did but uh but yeah,
it's clearly what he's been up to with
XAI and X and and um SpaceX and all
that. Okay, I want to talk quickly about
the story that I just published today in
big technology. Um, and that is that um,
we have some reporting that Iran has hit
um, enough sites in Bahrain and Dubai
that belong to Amazon that there are a
couple of availability zones in those
regions that are hard down according to
some internal communication that I was
able to see and that they're going to be
unavailable for an extended period of
time. So this is from the internal memo
that I was able to get a hold of. The
two regions continue to be impaired and
services should not expect to be
operating with normal levels of
redundancy and resiliency. We are
actively working to free and reserve as
much capacity as possible in the region
for customers and services should be
scaled to the minimal footprint required
to support customer migration. So, not
only have these sites been hit, um, but
the company is asking employees within
AWS to depprioritize them. And I think
this is interesting. I mean, we're we're
about to enter week six of the war. And
now the IRGC is threatening multiple
other US tech giants, including
Microsoft, Google, Apple, Intel, and a
bunch of others. So, if this war
continues to keep going, we could
actually see a lot of big tech
infrastructure in the Gulf, um, which
was obviously built because there's
access to money, access to energy there,
um, and and big investments have been
made there, uh, we we could see it
targeted.
>> Yeah. Do you think I mean, I'll ask you
a question like you you covered these
companies. Do you think this war has
made them I'll give you my thoughts on
from the Wall Street side, but do you
think this has made them rethink this
massive rush into a region that like has
just been volatile and violent forever
in the last 5 or 10 years? Like built a
lot of fancy hotels and had a lot of
money and sort of tricked people into
thinking it was safer than maybe it is.
I will say this, I think there's a lot
of optimists out there in the business
community and so my read on their
perspective is they are hoping that this
is going to be the last war for a while
and it's not something that will
continue to go on. Basically, they
they're viewing it as a war to finish
wars. Um, and you almost have to view it
through this optimistic lens because,
you know, think about what we're hearing
now from the AI labs, right? Like they
have gone through basically all the
funding they can get um in the Western
world and now they're like sort of at
the final boss before the IPO, which is
the Gulf States, and then they're going
to go to the public markets. So, it's
like one of the last remaining sources
of capital for them. And I think like we
talked a little bit earlier about how
Silicon Valley can sort of have this,
you know, rosecolored glasses on
situations. Um, and and this might be
one of them. So that that would be my
perspective on it.
>> I mean, this is what happens. You VCs
are all like up into the right dreamers.
Um, I don't know. You said war to end
wars and I just like that is what
everyone said about World War I, too,
right? So I I don't know that that gives
me bad vibes. It's it's interesting
because you know Wall Street has kind of
made the same rush into the Gulf that
that big tech has for similar reasons
and um I don't know. I mean I I think
it is a people business fundamentally
you're talking about hard assets and
actually I was just talking the other
day to um the guy who runs uh a big
business at AON the insurance brokerage.
I was like, I I wonder what's happened
to the cost of literally you can buy war
insurance which you know um ensures
these assets against war and terrorism
and damage. And he said prices have gone
up, 1900%. And the available coverage
for any single asset has gone from 3
billion to 100 million in the matter
matter of a couple weeks. Yeah. You used
to be able to get it for like 50 basis
or 25 basis points and now it's costing
5% in premiums up front. So um you know
the people who underwrite risk for a
living think there's a lot of risk of of
bad stuff happening to these assets. But
then on the people's side, you know, for
a while, like being in the Gulf was, I
say this in air quotes, like it was a
hardship posting, right? You would get
more money in an expat package and on
top of getting to pay no taxes for a
couple years, your Goldman Sachs would
send you out there. And it was a it was
a hardship posting. And I think it was
just on the verge of becoming not that.
It was just on the verge of being
another global office for these big
multinational companies. And I wonder
whether you know the people who have the
expats who've left during the war like
want to go back and and at what cost.
>> All right, I'm going to do two
follow-ups here. First of all, um what
do you think the lack of the ability to
ensure will do to company's ability to
build there? I would imagine that the
tech the tech giants will be able to
keep building no matter what uh because
they have so much money. But who knows?
And then yeah, what happens if the
people don't want to go back?
Yeah, on the first one I would take the
other side of that. They have a lot of
money, but you know, in the same way
that you can't get a mortgage on your
house if you don't have home insurance,
like that's just a requirement. The bank
requires it because the collateral is
the house. Uh you cannot get financing
to build these these data centers
without an insurance policy. Um, and as
you say, these companies have a lot of
money, but like they've required, look
at what Meta was doing in in Louisiana
as a big data project and they uh took a
lot of private money from uh from Blue
and PIMCO and the market because they
don't want on their balance sheet. So,
you can't insure this stuff, you can't
build it.
>> Okay. And the people
>> Oh, uh,
>> I think the people will go back. I think
they're just going to People are
motivated by ambition and money. They
will go back.
>> I think that's right. And there is
something to living a tax-free free
lifestyle in the Gulf that is quite
attractive to the right kind of person.
But but I do think it probably sets back
the kind of full inclusion of that
region into into the the global sort of
high finance set, you know, a little
bit. For sure.
>> Definitely. Have you been out there?
Have you spent time out there before?
>> You know, it's funny. I I have uh I was
in Saudi Arabia last year. in in Abu
Dhabi the end of um in December and I
remember flying in and I don't know why
it hadn't occurred to me but you're
flying into Abu Dhabi and out the right
side of the plane is is the Arabian
Peninsula and and the Emirates and then
the left side right across the across
the Gulf is Iran. I mean, it is it is
when you go it's it's easy to forget
because you're in Abu Dhabi and there's
a galleria and there's a Four Seasons
and like it feels um very western and
there's a lot of rich people in suits
walking around, but it it's like I I
wrote about this a couple weeks ago. It
is a nice house in a bad neighborhood.
>> Yeah, I was in Qatar over the summer and
I think I've said this on the show so it
might not be Newground but just a little
too hot for me. I mean, maybe it was the
season that I was there for, but and I
generally like,
>> but it was, I think, above 100 degrees
Fahrenheit at night, and I never seen
this before, and I don't think I'll ever
see this again unless I go back to Doha.
In downtown Doha, the sidewalks are
airond conditioned, which means that as
you walk down the sidewalks, you feel a
cold breeze coming up. And that is
because there are vents underneath the
sidewalk blowing cold air and turning
what is a 100 degree night into
something that feels more like an 80
degree night.
>> No, but I think that's a little bit of a
metaphor for the whole place, right?
Like this is a structurally problematic
region of the world that they have
engineered into feeling a little more
comfortable than it probably ought to.
>> That is that is a good metaphor. Okay,
so last thing that I want to talk about
before we go. Um, you talked about
private credit. We talked about how Meta
um used Blue Owl effectively to build
some of its data centers and things have
we've talked about this on the show a
bit but we can talk about a little bit
more. Things are getting a little hairy
for these private credit companies. This
is your story this week. Blue Owl faces
withdrawal flood as private credit
jitters persist. Investors rushed out of
Blue Owl's flagship and technology
focused credit funds as uh as jitters
continue to sharpen in private credit.
its largest fund, a $ 36 billion pot of
corporate loans, uh received redemption
requests for 22% of its assets, uh and a
smaller $6 billion fund, uh saw a 41%
withdrawal rates and blue all cap, both
of those at 5% withdrawals. So
basically, this means a lot more people
uh want to go and get their money out of
these uh these private credit companies
um than it's willing to distribute. And
is this the be I mean everyone's
wondering is this the beginning of a
crash that's going to take down the
whole economy because they made these
you know investments that might not pay
off in AI infrastructure. What's the
truth?
>> Yeah. All right. I think you have to
unpack it.
>> Yes it is.
>> Oh okay. We have to unpack. All right.
>> What what we are actually seeing and and
those redemption numbers we are seeing a
slowmoving run on a bank. So to go back
a couple years remember when Silicon
Valley Bank like failed over a weekend
because everyone took their deposits
out. That is basically what is happening
in the private credit industry
>> because of the way these funds are set
up. You you noted that they they they
gated at 5% and that is true, but that's
what they're supposed to do. These funds
are required to make quarterly offers to
buy back. These are non-traded funds. So
you own a share in it, but it's not like
you can trade it on an exchange, but
every quarter you can go to Blue and
say, "I'd like my money back for the
share." and they'll give it to you as
long as in aggregate not more than 5% of
people of you know want to do that. So
that's that's what they're designed to
do because remember they're holding
loans that they can't buy and sell very
easily. So they keep some cash on hand
to to fund those those withdrawal
requests and when everything's working
fine it's working fine. But obviously
this is designed to malfunction when
there's panic which is where we are now.
So for the moment it's a bank run which
is a liquidity problem. They have
illlquid assets. people want their money
back. That is not a fixable problem. So
that's where we are on that side. The
other question which you're getting at
is is there a credit quality problem?
Are the loans themselves bad? And
>> yeah, why are people making this run? Is
it just behavior or talk about that?
>> It is partly behavior. Um it's partly
look like for the first, you know, 6
years it was around Blue just raised
money from sophisticated institutional
investors. And it's not just Blue, it's
Blackstone and KKR and Apollo and all of
these HBS big firms. And then they said,
well, we're kind of tapped out there,
but there's a whole bunch of individual
people. What if we sold it to them, too?
And because people live their lives
differently than institutions, you have
to give them this quarterly liquidity.
So, this is sort of like they were this
is a consequence of their own actions
and their own desire to keep growing and
to find new new places to raise money.
Um the question of whether the loans
themselves suck, that is a fair
question. We don't actually know. A lot
of them are certainly there's this
vintage of lending from call it 2021 and
2022.
Probably some real bad loans there. They
raised too much money. This was the the
sort of peak software. They were making
these loans. I don't know if you've
talked about them on the show yet called
um ARR loans. Usually banks underwrite a
company's ability to borrow based on its
profits. But tech companies, especially
fast growing ones, don't have profits.
They have revenue. And so they based it
on annual recurring revenue. Said,
"Well, this company's making a lot of
topline money. Let's lend them. Let's
let's make that the metric. Let's
change, you know, 10,000 years of
lending economics. Make that the
metrics." And then like 3 years when
they've got a profit, then we'll kind of
flip we'll flip a switch and the loan
will start behaving like a traditional
loan. And then they got to 3 years and
none of those companies had profits and
they're like, "Oops." So obviously the
credit underwriting was pretty bad on a
bunch of that stuff. Um, but you know,
Blue Owl was able to sell a couple weeks
ago, they had this problem in another
fund and they were able to sell I think
like a billion and a half of loans at
99.7 cents on the dollar. So, I don't
know. I think like most of the loans are
probably fine. And by the way,
not to like you're I'm sure your
listeners understand a capital stack
like the credit this is senior secured
credit which is the safest place to be
in any kind of corporate financial
structure. If you think there's a
problem there the equity underneath it
whether that's this is mostly private
equity is like a zero. So it is weird,
you know, if you imagine this is like a
a flood waters coming in, it's weird to
have the people on the top floor
panicking first before the people on the
ground floor. And yet that's what's
happening. And so that makes me think
that this is sort of more emotional and
technical and less about the and the
loans themselves might be bad, but I
don't actually think that that is what
is informing what's happening now.
>> Okay. Uh Andrew Osorin was recently on
talking about the similar thing that
private equity would have the problem
before private credit. So let me just
see if I can understand where the issue
would be and you tell me how off I am
because I'm going to be off here. Um, is
it that private equity has invested a
lot of money in software companies and
now there's this thing that's called AI
that sort of throws the value of those
software companies and those companies
ARR into question and so therefore the
private equity companies that have bet
in these soft bet on these software
companies begin to fail and then when
they fail private credit starts to fail
and that's how you get this case
cascading
economic disaster is that the worry
>> that's how I mean sort of that is how
finance works right which is that if a
company gets in trouble the first losses
are borne by the shareholders right and
then the creditors get whatever is left
so as a practical matter that's true
these companies their revenue would go
away their profits would go away they
would be unable to repay their loans
their lenders would force them into
bankruptcy the equity is zeroed out. And
so that's where you would look at firms
like Toma, Bravo, Vista, right? These
like really tech like these are big PE
firms that only own enterprise software
companies. Basically, they own tech
businesses. Um, so that's where you're
actually looking for the problem. And
then the creditors will get what's left.
And some of those loans will be we call
impaired. And they might lose some
money. Maybe they only get 90 cents back
on the dollar that they lent. But that
equity, which is hundreds of billions of
dollars of equity sitting under sitting
junior to this credit, is worthless. Um,
the reason that people aren't talking
about this as much, um, I will say I I
started writing about this like 3 months
ago and I was like, where is the panic
there? And the answer is that it's
actually they just haven't marketed
those funds to individual investors the
same way that private credit has. So the
twitchiest,
>> why does the equity become worthless?
because
it's jun I'm trying to think how to
explain this in a way that isn't going
to be like super boring. It is in
finance speak it is junior it is a
junior claim. So if you think about
building a house foundation the equity
>> correct the the private credit is in the
penthouse when the flight comes in
>> the equity is on the ground floor. So
they're they just bear the losses first
and then it goes up to the you know the
preferred equity and then the junior
credit. But the the private credit these
are senior claims that are secured
mostly by assets. There's going to be
something these guys
>> software company fails actually the
credit private credit companies get the
whatever is left of the assets first and
then private equity.
>> Yeah, exactly. If they've lost money,
the equity has lost all of their money.
Isn't it interesting that um private
credit is funding the establishment of
these AI infrastructure
uh builds as those AI infrastructure
builds then go to effectively undercut
all these companies that private equity
has invested in.
>> We're we're all funding our own demise
at all times. I I would I would not just
like a slight technical point. the part
of Blueowl that is doing the uh that the
data center stuff is like a business
that they bought that's actually
unrelated to their credit business. But
yes, um you know, Blackstone's probably
a good example of this. They got a big
uh uh data center business. They have
QTS and a bunch of these data centers
that are, you know, creating the
technology that is sort of wreaking
havoc in their private equity book that
is then wreaking havoc in somebody
else's private credit book. So
>> unbelievable. We are all funding our own
demise.
>> Yes. Except us in independent media.
We're doing the Lord's work. You and me,
Alex.
>> That's right. Yeah. Well, of course, you
know, for anyone who's making a big
finance decision about big technology,
we'll use ARR and not anything else,
right? To make
>> decision. Obviously. Yeah. But I didn't
go back to where we started like what
are you going to sell this podcast where
TVPN just put a pretty good comp out
there for you. So, but obviously on a
revenue basis, I would never ask you
your profits.
>> Uh, big technology for those who are
wondering, we're not for sale. We're not
going to open AAI. We're not going to
Anthropic. We're not going to XAI. We're
not going to Salesforce. We're not doing
that. Uh this this show, this newsletter
uh that I write is staying independent.
We're not selling. Um and I'm going to
just keep doing this for next 20 or 30
years and then retire. So stick with us.
>> Hold on to your integrity.
>> That's right. I mean, I also I'll just
say it. I enjoy doing this. I don't want
to work for somebody else. It's like I
said at the beginning, um, you know, the
second you come inside a company, you're
now that company's content marketing
arm. You're not doing what you did.
You're doing something completely
different. Um, and that's that's not uh
what I'm interested in doing. If you
want to advertise on the show, that's a
different story. You can advertise for
you can advertise here. We're happy to
hear from you. Check out the email
address in the show notes, but um but
no, not for sale.
>> All right. Good to know.
>> I think that's the case. Yeah. So, all
right. The podcast is called Compound
Interest. Liz Hoffman has been our
guest. Liz, welcome. First time having
you on the show. This was really fun.
Thank you for coming on.
>> It was a pleasure. Anytime. Um, thanks
for having me, Alex.
>> My pleasure as well. All right,
everybody. Thank you so much for
listening and watching. We'll see you
next time on Big Technology Podcast.