Hey everyone, Edson here. I have big news. We are launching our new Prof Markets YouTube channel on April 6th. The link is in the description. We hope you will subscribe now and join us there starting next week. Until then, here's the episode. Today's number is four. That's how many car accidents Tiger Woods has now been involved in after he rolled his car over in Jupiter Island, Florida last week. Today's other number is 20. That's how many dollars it would cost you, Tiger, if you simply ordered an Uber.
Welcome to Prof Markets. I'm Edson. It is March 31st. Let's check in on yesterday's market vitals. The Nasdaq fell as a tech sell-off deepened. The index is firmly in correction territory heading into its final day of the quarter, down 13% from its October peak. Meanwhile, the S&P also declined and the Dow was flat. Treasury yields dropped after Jerome Powell indicated the Federal Reserve will look past the oil shock and keep rates steady. His comments came as Brent crude prices rose to more than $116 per barrel.
Okay, what else is happening? Some of the most powerful people in tech are now formally advising the White House. President Trump has named 13 industry leaders to the president's council of advisers on science and technology, also known as PCAST. Appointees include Mark Andre, Jensen Huang, Mark Zuckerberg, and Larry Ellison. Their mandate is to advise the White House on science and tech policy, and their goal is to ensure that, quote, all Americans thrive in the golden age of innovation. Co-chairing that council is David Saxs, whose time as AI and crypto czar has come to an end, and also Michael Katzios, director of the White House Office of Science and Technology Policy. Joining us to discuss this council and what it means for AI policy, we're speaking with Liz Hoffman, Semafor business and finance editor and host of Compound Interest. Liz, welcome back. So, I want to get right into this. These councils have existed for a long time. FDR had his first one in 1933. Historically, it seems like they've usually been academics, but this time it's really industry leaders. It's the people who are actually building this technology. People like Zuckerberg, Jensen Huang, Mark Andre, etc. What do you make of this council? And is it surprising in any way to you?
First, I think there was a missed opportunity in not getting the acronym to be podcast. I don't think you'd have to try that hard. The presidential order directing council of whatever. Because that is the crew here. Yeah. No, I think you're right and that's extremely intentional. There was, you know, David Sax was talking about this and said, I think, quote, these are doers. And you know, you can feel however you feel about the politics here. But you know, one complaint that was really widely felt in the private sector about the Biden administration was less the sort of policies they were pursuing than the personnel pursuing them and the sort of access that private sector people had. Like, say what you want. Even in Trump's first term, he would say something that, you know, the private sector didn't like, but they would call up Steve Mnuchin. They would call up Gary Cohn and there would be this back and forth and that totally went away during the Biden administration in the sense that people were making decisions who would never run a P&L, who would never run a balance sheet, never really ran a business for a living. That has obviously come back. So that I think is the most charitable and sort of least politicized view of all of this and seems fine to me. AI is really important. It's really important economically. It's really important for national security. And I think, you know, we'll all remember that Senate hearing, you know, where a bunch of the big tech executives were being questioned by senators who clearly just had no idea how they made money. I mean, that knowledge gap between people doing the regulating and writing the laws and the industries they're regulating has been pernicious before. And so, you know, that's one way to look at it. The other is this is just another sort of corridor of power that is cropping up and that there are a lot of asks from the industry and they now have a more direct line to people who can give them what they want.
Wouldn't the conflict of interest here, though, to play devil's advocate, wouldn't it be that the people who are supposedly going to regulate this technology are also the people who are most heavily invested in this technology? They're the ones who are incentivized to profit from this technology. I mean, it would be one thing if you had a council of people with whom technology leaders could speak with and maybe who had some background in technology, but it's literally Jensen Huang. It's literally Mark Andre. It's literally the people who are most invested, who want to profit off of this thing. Is that not a conflict?
It's absolutely a conflict, but I mean, this administration is full of them, I think. Right. You know, and it's a slightly less pernicious one than like people's kids making a lot of money on crypto deals and Trump selling half of his family business to the Middle East. I mean, you don't have to look far and wide for, you know, things that are genuinely problematic. I'm not that bothered by this one because I guess what's the alternative, right? That again, you have this being regulated by people who have no idea what it is. I would also say that there is a surprising and actually slightly comforting range of ideas and viewpoints within the AI community about actually how best to regulate this. I would be more concerned if everyone was just full steam ahead, but there are real, like, you know, Anthropic has put out a different version of how this technology ought to be used and regulated. There are states that sort of have their own point of view. I don't know, but I don't think that the argument or the alternative is a whole lot better where you have got a bunch of like octogenarian senators trying to oversee this. I would also say, and look, David Sax has been a real lightning rod. He's the presidential adviser sort of chairing a lot of this stuff. I think it's hard to argue that he is richer now being in the White House than he would be if he was in Silicon Valley like actually investing in this stuff. So, I don't know. Yes, it is. You got to be worried about it. But as the knowledge gap between the people regulating huge sections of the economy and the people in them gets wider, I'm not really sure there is a better option than to bring people to the table. By the way, the one group of people not in this are the big AI models themselves. And you wonder whether this isn't going to end up being some kind of, you know, origin story where like Elon Musk's turn to the right, a lot of it kind of goes back to his snub from the Biden EV council. I don't know. I was surprised to see that group, Sam Altman, those folks not included here.
Right. Elon Musk wasn't in it. I guess he had his fallout with the president. Sam Altman wasn't in it. Dario Amodei, that one a little less surprising, but yeah, you would expect to see Sam or Dario or other folks who are running these models. But I guess I just want to push back for a moment because I mean, with David Sachs as the example, it seems as though his policy, his approach to AI regulation has been let's not really regulate AI. Let's make it kind of a free-for-all. And at the same time, he was still invested through his investment firm Craft Ventures in a lot of companies that were building in the AI space. And it does seem that that is kind of the risk here. I agree with you. Having a bunch of octogenarian senators who don't really know what they're talking about on this council advising on things that they've literally never built products in seems like a bad idea. But it also seems like a little bit of a bad idea to have the individuals who are most incentivized to build policy not that necessarily protects Americans, but that allows them to profit as much as possible. And it just makes me think, can we not find some sort of happy medium? Can we not find some people who aren't balancing their other job as a VC in Silicon Valley and being a special employee for the government? People who could actually do the job of regulating, but who also have some fluency in the language of business. I don't know, someone like you. Could we not get people in there who know what this is about but who also aren't going to be totally incentivized to simply get as little regulation as possible to profit as much as possible?
Yeah, I was not invited, nor was my colleague Reed Abagatti, who actually knows a lot about this stuff. Sure. Obviously, yes, there's like a million AI safety groups and like having them included would be the normal thing to do. Like that's not generally how this administration operates or they don't have a lot of respect for precedents and how we've kind of consistently done things. Yes, I agree. But, you know, I do think that, you know, there's always been this gap between regulators and the people they're regulating. But like, for example, the Federal Energy Regulatory Commission, FERC, regulates utilities. Like there's a sort of price of having people who understand the industry in the regulatory seat is kind of allowing that revolving door over time, right? Letting people come in and come out and get paid in the private sector. That's how you get them there in the first place. This one, they don't need that, right? These guys are so wealthy and there's not a lot of incentive to bring them in to a true regulatory role. And so I really do worry that this is that the knowledge gap is just going to be incredibly wide here for a technology that is very powerful and developing really quickly. Yeah, I guess the thing that would make me maybe a little bit more comfortable is this is an advisory council. They're not actually writing the laws, but they're going to have some sort of advisory role and maybe they'll shape things in some capacity. I guess the question then becomes how significant are these councils really? Do they really influence policy in a way that is meaningful? And you'd be hard-pressed to find one, you know, during the Biden administration and probably in certainly Trump won when you remember, by the way, like no CEOs really wanted to be kind of anywhere near that administration from an advisory perspective. You know, they tend to crop up kind of around national emergencies and you go back to '08 and there was obviously a lot of private sector input into how that problem would be solved or honestly even the pandemic, right? Warp Speed had an advisory council with a bunch of pharma CEOs. It was a huge win and I often say like it's weird. Warp Speed was one of the biggest wins from Trump's first administration that he completely walked away from, right? It totally worked. It was in fact very popular. But he never took any credit for it because the politics had shifted around it. So we'll see. There's a balance to be struck between sort of being regulators being in opposition to the industry they regulate while trying to sort of tap their expertise or at least have some open lines of communication. I think often is helpful. This one seems fairly lopsided in that respect, but there's just, you know, I hate saying AI is different. This time is different. This technology does fundamentally feel different to me. And so I think that having private sector involved is probably helpful and understanding that not all of them want necessarily exactly the same thing. They are competing with each other very aggressively, which is not where I like to put my eggs, but could be a little bit of a check on this sort of one-way push.
All right, Liz Hoffman, Semafor business and finance editor and also host of Compound Interest. Liz, thank you. Always appreciate your time.
We'll be right back. And if you're enjoying the show so far, be sure to like and subscribe to the Prof G YouTube channel at the link below. Support for the show comes from Incogni. If you knew that identity thieves were snooping around and digging through your garbage to get your private information, then you probably wouldn't keep leaving your bins out at night. Same goes for your online privacy. If you knew bad actors were rooting around trying to steal your private information, you'd want to protect yourself, right? That's where Incogni comes in. Incogni removes your data from people search sites and data brokers. It works automatically in the background doing all the messy work of requesting your personal data removal and dealing with the data brokers' objections. Your private information like your full name, email, home address, gender, phone number, education, relatives, social security number, even your employment history and shopping habits will be protected with Incogni. Incogni hides in databases that you may not even know exist. Your data is constantly being collected, shared and sold without your knowledge. And Incogni can help you stop strangers from finding your personal information online. Take control of your personal data today. Visit incogni.com and use code PROF for 58% off.
We're back with Prof Markets. SpaceX is preparing for its biggest launch yet. According to The Information, the company aims to file its IPO prospectus imminently. It's reportedly targeting a valuation of $1.75 trillion and hopes to raise $75 billion in the offering. That would make it the largest IPO in history. Earlier this year, Musk merged XAI into SpaceX, which had already absorbed the social media platform X, which begs the question, will Tesla be the next Musk property to join the SpaceX conglomerate? Lots of questions here. Here to help us break it down, we are joined by Jon McNeill, CEO of DVX Ventures, former Tesla president, GM board member, and author of the new book, The Algorithm. Jon, good to see you. I'm going to get right into this here. You just published a book called The Algorithm. It's basically about how Elon built both Tesla and SpaceX. And now SpaceX could be going public. It could be the largest IPO in history. As someone who has worked with Elon and someone who's written about this company, what do you make of this company now going public?
The basis of the approach in The Algorithm is simplicity and that's Elon's organizing principle is simplicity. So I think there might be three reasons why Tesla may become a part of SpaceX and these entities might combine. I don't have any inside knowledge but these three reasons are pretty significant. So the first is it's easier to run one public company than two. And so that is simplicity argument number one. But I think beneath that it solves a couple of problems. Tesla is essentially becoming an autonomy company in terms of humanoid robots and car robots. And so both of those things rely on AI as their operating system. And so Tesla, as you know, invested $2 billion into X earlier this year. But combining the entities of Tesla, SpaceX, and X into one entity would put the AI resources closer to the application at Tesla. So I think that's a second reason. And a third reason is, you know, there's been a lot of talk about Elon's frustration with his portion of the cap table at Tesla. He wants more and this would seemingly help to solve that problem of combining Tesla in given his significant SpaceX ownership. He would sort of solve the problem of who the majority shareholder is at Tesla and when one moves. So I think those three things probably point to this being a higher than 50% chance of happening.
