I am good. Welcome to Raging Moderates. I'm Scott Galloway.
Jess, what to talk about? But before we get started,
Nothing's happening at all.
Slow news day.
Make sure to subscribe to stay up to date and support the show. We'll also take your questions at the end of the show, so drop them in the chat as we go. All right, let's get into it. A powerful man who is facing accountability. Nvidia CEO Jensen Hong has resigned following reports of affairs with two women, including a businesswoman US intelligence believes may have ties to Beijing and the senior Nvidia executive who he also appears to be having an affair with or with, past tense, now during, I don't know. The board launched an investigation. Lawmakers demanded accountability and shareholders sued the company. CFO Colette Crest will take over as interim CEO. So much to unpack here, Josh. Uh I'll talk about the business end, but first you talk about the political end. What do you think this means? What kind of ramifications do you think this has on the Trump administration, defense, security department? You any any thoughts here about how this impacts Washington?
Well, my first thought is I can't believe how quickly this all happened. I mean, usually these things are slower burns. Um, and I think the Nvidia executive who ended up coming forward with the whole story and also had an affair with him knew that once she came forward with this that it would be, you know, a matter of hours uh until something changed. Uh, the political ramifications are massive. uh the Wall Street Journ Journal and New York Times both reporting that when Jensen was on Air Force One to go to China in 2025 and came to the White House state dinner with shei back in September, uh Trump and his team knew about the affair with the Chinese honeypot. That is insane that they knew that someone directly tied to the Chinese Communist Party uh in their group, their tiny group that could go on Air Force One and be part of this delegation was being exposed in this way. Obviously, there's a craven money angle to this and the idea that our entire economy is being propped up by seven companies, which I want you to talk about more. But when you think about accountability and what investigations look like in the new term once Hakee Jeff and Chuck Schumer are in charge, this is one of the things that springs to mind. Like how is it possible that the Trump administration were comfortable with this or even if they were uncomfortable that they still made themselves or twisted themselves into a pretzel to allow something like this to happen. Um, we will, I assume, never find out exactly what it is that the spy, I believe her name was Alice, right? Uh, was relaying back to the Chinese government, but you have to have the expectations that it is absolutely everything possible and that while he slept, she was digging through his stuff, the kinds of things that he was telling her, and they've been photographed together going back years at this point. Um, so enormous ramifications for the Trump administration right now, but also for the agenda of the Democrats, uh, as they're looking to, you know, what it what it looks like to actually have some power on Capitol Hill.
Yeah, I I would argue that this isn't a story about infidelity. This is this is quickly going to be a story about uh, national security. And just to give people a sense for how serious this is and just the ramifications here. So just here are some of the most sensitive applications of Nvidia compute or chips that potentially could have been compromised or close the delta between America's leadership in technology and weapons and China's uh nuclear weapons. Uh, these chips simulate nuclear detonations, modeling weapons aging, validating stockpile reliability, autonomous weapons, AIdriven drones, target recognition, coordinated drone swarms, hypersonic missiles, simulating aerodynamics, extreme temperatures, flight behavior, intelligence and surveillance, satellite image analysis, facial recognition, tracking individuals and military movements, cyber warfare, AI assisted vulnerability discovery, missile defense, processing radar and sensor data, biological and chemical threats, molecular modeling and protein design, military command and control, combining satellite. I mean, this is just going to get when you think about how many people, whether it's people in universities, whether it's people the brightest scientists in the world at Lawrence Livermore Lab, whether it's our millions of servicemen and service women, whether it's hundreds of thousands of people working to build the best aircraft carrier in the world trying to keep Americans safe. And to think that, okay, Jensen Hong always had these two rules for staying CEO, you know, don't get fired and don't get bored. It ends up there was a third rule. And it ends up that I I think this is going to be the greatest national security breach in history.
And I mean, just imagine what might have happened here. So Jensen had been actively advocating for selling more chips into China. Everyone thought, okay, that's wrong, but he just wants to get the share price up. As far as we know, this played out. Jensen, my love, it's Alice. I've got such terrible news. Someone who claims to be from the CCP called me and said they're going to unmask our affair in the most aggressive, uncomfortable, ugly way possible. But they said that maybe they won't if you continue selling chips into my company uh more than we need. The commerce department went down there and found unpacked boxes of GPUs, meaning they were likely going somewhere else. You could even see them B. I mean, I think the sh the lawsuits here are going to be so extraordinary. What if Binance finds out that the North Korean hack of $6 billion was using AI, possibly powered by Nvidia chips, possibly secured or given access to by China who got these chips from Mega Speed, they could if they can if anyone connect can connect anything to AI potentially fronted by Chinese LLMs, they are going to have a case against the negligence of Jensen Hong. And to give you a sense for the market's reaction here in in after I was trading yesterday, the stock was off about $400 billion. Theoretically, Miss Wong is worth more than Oracle. What do I mean by that? The company last night in after hours lost the value of Oracle. And I think you're going to see them connect this I think Democrats when they get the gavvel if you will are going to try and connect this to a total ab abandonment or negligence or careless disregard for our national security when one CEO of one of the most valuable companies in the world is throttling back defense systems for Ukraine potentially without the president's knowledge. The president's pointing fingers at him. He's pointing pictures fingers at the president and that the president knew about this and didn't stop it. So this is this is the biggest story. This is the biggest business story of the year. And what happened between I think so I said a few days ago there's no way he gets out of this and the board appeared to be supporting him initially. We talked about this. The board members it's a group of fairly middling boards. They've been there on average of like 12 15 years. One of the board members, just as an example, the CMO of NFL in hasn't worked since 2018, but since being on the board has made $80 million and the board announced a quote unquote independent council and I've first off independent council, independent's doing a lot of work there because typically an independent council always comes back with a recommendation based on one thing. Who's paying for the independent council? and this council was going to come back saying mistakes were made, but there's nothing that gets in the way of Jensen uh leading this company. I would bet in the last 72 hours uh some people from our security apparatus have sat these board members down and started asking them questions and outlining scenarios here that could have taken place. And then and then each of these board members called their own personal attorney. And the personal attorney of these board members said, "Unless you want to be charged with crimes or negligence against the state, you need to swiftly cauterize this." And then I think they did another meeting yesterday and they said, "Okay, he's out." But this is this is likely I mean if every and I apologize for here but if every Fortune 1000 CEO had a Wonder Woman's golden lasso around them and had to fess up to any indiscretions romantically 100 to 900 of them would be out the next day or would have to admit to it. This is not about sleeping. This is not about infidelity. This is about national security and this is just getting started what might have gone on here and the vulnerabilities. This is I think this is a very big deal and I think it's going to have a lot of ramifications for the protocols around how these companies acquit themselves. If all of a sudden it comes out that some anthropic executives were potentially in any way having relationships with potential spies that could that could shove the IPO that's supposed to happen next week. This is the tentacles of this are going to go everywhere. Any thoughts, Jess?
Yeah, I'm cur excuse me, I'm curious what you know about Colette Crest, who's now the interim CEO, and what you think the future of Nvidia looks like. Is this one of those companies that can survive and continue to thrive without, you know, their big figurehead and the intellectual juice behind the company, or do you think, excuse me, do you think they're going to struggle?
So appointing the CFO is basically the board's way of saying don't panic. A finance chief person is the person you hand the keys to when you want the car parked, not necessarily accelerating. The first thing I do on boards is I introduce myself to the CFO and say, "Is it okay if I call you after board meetings and they always say yes?" Because the CFO is typically the source of truth. The CEO is someone who is really handy with adjectives and embellishment and can turn chicken into chicken salad in front of the board and say that our shitty earnings are we're actually signs of growth. You call the CFO for a source of truth. They're usually the stabilizing force. It's a really good idea. The key term around all of this is the idolatry of innovators. The fact that famous hedge fund managers and most of Silicon Valley is saying, "Oh, humans going to be human. Boys will be boys. We should get past this. Who's only human?" Oh my gosh, CEOs are fired for so much less than this. And again, it's the idolatry of the dollar. If you create trillions of dollars in shareholder value, according to Silicon Valley executives, you are no longer subject to the law, norms of national security, fidelity around your obligation to the country. And then the flip side of that idolatry of innovators is the following. The ridiculous notion that all of AI, much less this company, is dependent upon one person who was clearly distracted and spending a lot of time in Southeast Asia. You cannot Greatness is in the agency of others and five a five trillion dollar company is in the agency of a ton of incredibly competent people. There are probably a dozen outstanding potential CEOs walking the halls of Nvidia. The we we always like to believe we fall into this ridiculous notion that there are these Jesuslike figures that are singular. Oh, Steve Jobs, Apple is done when Steve Jobs is out. The creativity is gone. Oh, wait. Tim Cook has 15xed the company. Oh, wait. Sergey, Larry, and Eric, the dream team. What will happen to Alphabet when they're gone? Oh, what's going to happen? It's going to quintuple its market cap. How will Microsoft ever survive without Bill Gates? Oh, it's not only survived, it's thrived. So again, ridiculous excuses that we would or a different set of standards for someone because they've created shareholder value versus every other citizen or every other executive in history. And then this notion that there are these Jesus-like figures that are singular. So in some I was asked to go I was asked to do a hit for MS now and I couldn't work it out but I said to summarize this is only going to get worse in terms of national security but I believe Nvidia stock will likely be up at the end of the year because if you look at the stock right now it's trading at where the average S&P company trades and even if you take out 20% of the chips that supposedly potentially shouldn't have been sold to bad actors. This company is growing much faster, is much more profitable and is got much broader modes than say a Caterpillar or a Ford or a Proctor and Gamble. So this is going to be a very tumultuous 30 60 days. But absolutely the company can continue to thrive. And what's probably more important to the AI market is the Anthropic IPO that's coming up because that'll give a signal on the demand side. If Anthropics IPO goes well and these frontier LLMs continue to show that they're growing fast enough to to provide them with the cheap capital to buy Nvidia chips. That's more important than whether he was sleeping with five people. The thing that's going to be unfurl here in a very weird way and a very ugly way is going to be all the scenarios around what potentially the nation or Jensen's recklessness has done in terms of diminishing, eroding, and really damaging national security. This will go down likely as the biggest security breach in the biggest national defense compromise breach, whatever you want to call it, in history.
So, you would buy the dip?
Yeah. I I look like to it, Scott. I don't know if you should give out advice like that, but like did you buy the dip?
Uh, I haven't bought Nvidia. I typically don't trade stocks. I during the middle during the middle of the year, but Nvidia right now, and I don't like to make stock recommendations, but I, you know, my prediction is the stock's up by the end of the year. The stock right now has had such an overhang on it that right now it's like I said, it's trading like at the same multiple of some pretty boring companies. And it's an incredible company. And again, I know these guys or I know some of them. They're just like us. They're they're incredibly talented people. It's such an insult to the team at Nvidia. It's like you could have the most amazing quarterback ever. You could have I know whoever you think it is, Steve Young or Joe Montana or Joe Nameoth or Aaron Rod. Yeah. I you know who pick Tom Brady. pick the quarterback of the if he doesn't have an amazing line and amazing receivers and a running back to take pressure off of him, he goes 0 for 18. And to believe you can build a company like this with this design, supply chain, corporate development, sales, financial management, I mean, is just ridiculous. the overhang here. The thing that could screw it up is they might be subject to just a crazy amount of of of lawsuits. But the company itself without Jensen, I mean, let me put it this way. He was clearly distracted. He was clearly, you know, he was clearly, you know, the most valuable company, the most valuable company in the world got brought down by the, you know, kind of the what I'll call the oldest the the oldest playbook in the world. So, yeah, I I would argue that this company, again, my prediction is the stock is up from here. I don't think um this has been such a cloud over the company. But again, I think the anthropic IPO is going to say more about the AI market than what happens uh with Jensen.
Okay. I would if this were raging moderates estrogen edition, I would then say I would like to talk about the actual affair. And now I've like dissected all these videos of Jensen and his wife like dancing at events and how she's looking at him and he's just surveilling the room and like looking for what other eye connections he can make and like what his glow up meant to all of it. But we should move on to politics. But the affair does matter to me and I continue to be stunned. I know I'm in the throws of like little kids and like I love my husband and we're too tired to have affairs anyway, but this stuff just grosses me out so much. And that they're they're just doing it all the time and with multiple people and to these women who built these companies with them like when you were a dork in school and they were your lab partner up until these you know trillion dollars worth of companies. My estrogen is mad about this.
Well, another another prediction here is it just goes to what I'll call estrogen. There's a pretty decent probability that a ton of philanthropies are about to get billions of dollars, tens of billions over the next 24 months because this look, this has got to put a strain on their family and their marriage. And what typically happens when people get divorced is the side of the divorce that has estrogen, the female, the Melinda Gates or the Mackenzie Scott, they go about giving away tens of billions of dollars. This is a sexist statement, but there's something about the female billionaire brain that just bluntly is more philanthropic. That's not to say there aren't a lot of philanthropic male billionaires, but it just seems like standard pattern recognition that the moment Melinda or McKenzie get their 20, 30, 60 billion, they start giving it away. And um you know, I'm not and also look I fidelity and we'll get some push back on this. Fidelity is somewhat correlated to opportunity. Rock stars and athletes have a tough time remaining monogous because men for millions of years have been sort of taught that it's your job to spread your seed to the four corners of the earth and women are taught to use the much finer screen to pick the strongest, smartest, and fastest seed resulting in evolutionary progress. It's not pretty. That doesn't mean we can't have a modern society and people shouldn't reflect character to modulate their instincts. But where you see it really in spades in the tech community is that a lot of these a lot of these CEOs didn't have a lot of game when they were young. They didn't have a chance to go to St. Barts and party on a boat with women and have I mean all of us, not all of us, most of us want a period in our life where quite frankly we can have some, for lack of a better term, fun. And most of these guys never scratched that itch because they were captaining the math team. They stayed home from prom and they've been working nonstop. And Jensen met his wife in college and I like this story. He was, you know, if you look at pictures of Jensen in college, he wasn't exactly George Clooney. And he met someone and he said to her, I love this. He said, "If you let me tutor you every Sunday, I promise you I'll get I'll get you straight A's." That's how they met. And this guy never had that chance. It doesn't excuse it. But what you find with these guys is they wake up one day and they put on a leather jacket and they're worth $180 billion and all of a sudden they're the sexiest man in the room and they have a chance to to behave the way they wanted to behave when they were 19 or 22 and never got the chance to. But this is this this is a story as old as time, but it's a story that plays out in high decibel volume in the valley because these guys never had a chance to kind of sew some oats, if you will. Most of them most of them were at Carnegie Melon working their asses off and you know and basically you know you know never really had I mean the dynamics here around chemistry and um you know the male ego but for this guy I mean people have been calling him a traitor. I don't think this is a question of treason. It's just a question of how could you be this stupid?
And that is, do you realize commerce executives were going down to Mega Speed? When he met her, Mega Speed had two $3 million on its balance sheet. Now it has two billion. Commerce executives got suspicious and went down to the company and found unpacked boxes of GPUs, meaning they were probably just in a way station there waiting to be shipped somewhere else. And he never he never thought he might be compromis. Our security apparatus gave him a heads up and he's been feeding them the wrong information just the way we turned spies during the Oppenheimer days and fed fed um fed the Germans faulty information around how to get to you know splitting the atom. I thought maybe this is a giant security operation. He's been cooperating with our security apparatus. I think that is giving him and the Trump administration as we learn more about this too much credit. But again, I don't I think the stuff around the stuff around infidelity and his failings is not going to be the story here. The story is going to be just how serious this breach was. And also this is notice how Trump hasn't said a lot in the last 48 hours.
When they when they say, "Okay, let me get this. You guys are aiding and abetting the invasion of Europe by Putin and now you're handing over our most sensitive information even after you knew it or enabling the handover of the most sensitive information or the confiscation or the theft of the most sensitive information and you didn't intervene. So I I think this I used to think that he would resign, get out of the hearings, peace out. Now I'm thinking, oh, these hearings are coming and they're not only going to be they'll be about Jensen, but what they'll really be about is how this administration has shown no fidelity and no respect for the expertise, the commitment, the the expense, and the sacrifice our defense department, our army, Navy, Air Force, Marines, our security apparatus have made over the last 80 years to try and make us uh more lethal and more safe and to ensure that our weapon systems had an advantage over the Chinese and the CCP. They likely I I think what you're going to find is this was like maybe a decade of progress around our national security. We just gave up a decade potentially to the CCP. I think this is a big deal.
I I get that. Uh, and I agree and I think this is another ding, by the way, on Marco Rubio looking ahead to 2028 because he was the China hawk in all of this. Um, and obviously he would have been aware of whatever the Trump administration, you know, at large was aware of uh, visav the honeypot sitch. Um, and it was already bad enough that they were, you know, defending selling these more advanced chips. Um, but I think this is a big blight on all of them, but there will be more to come.
Yeah, it's it's it's Yeah, this is going to be C-SPAN porn that we're going there's there's going to be a lot here. So,
My favorite kind of porn.
There you go. A man who isn't facing enough accountability is Secretary Hagsath. After narrowly escaping impeachment, he had another rough day in the spotlight. This time on Veterans Day during a visit to the tomb of the unknown soldier soldier. Hexath Entourage was caught laughing and chatting before an army sentinel had to remind the group to show some respect. Not exactly a good look for the Pentagon chief.
And while Hexath walked away from impeachment, 11 Democrats are facing backlash for missing the vote that could have changed the outcome. But the impeachment fight is just one of several headaches for Republican leadership. Representative Thomas Massie has continued his procedural maneuvers to force uncomfortable votes for Republicans on issues including the Iran War and the Epstein files. I tuned in yesterday to see what you and Aaron had to say. I was shocked. I felt like everything was turning up blue. Like I just got spoiled by all the momentum we had and I thought, "Okay, occasionally you have to take an L."
I feel as if yesterday was the first L we took when I found out that we didn't have the votes potentially because of some people who missed the vote. But I tuned in and I thought you and Aaron had an interesting take on the mechanics of what went down or specifically what did not go down yesterday. Can you summarize for us?
Yeah, I mean I will say before I get into the minutiae of like how many votes we had and how many votes the Republicans had and how Mike Johnson would have ensured that this never went through anyway that this is embarrassing and bad and should not have happened and that Democratic leadership has not had a good enough answer as to how this was allowed to happen. And if they did want to say we just want to do this in January when we control the gavvels and there's no way that you would actually get this to go anywhere because a majority Republican Senate and the way that Trump is being is never going to vote to convict. I think that would have been acceptable to people to say, "Oh, our work starts what is it going to be like January 4th?" Um they get uh sworn in on the 3rd and then you know that is effectively the day one. But when you have Democratic social media accounts saying things like impeach Hegsath now and then your members or just some of them can't get back from a cocktail party. It is a bad look. Um would it have changed things? No. Mike Johnson. So the Republicans were missing seven Congress people. Mike Johnson has kept a vote open over 10 hours before. They would have just waited until everybody got back and it wouldn't have gone through. And there's a very strong argument which I would have made and I am going to make because here I am that the eight articles of impeachment that Massie brought were far too broad and that you should be doing this piece by piece. And that's essentially what's going to happen when the Democrats come in and control the committees. You will have the pieces showing up in different committees and they'll move forward on that basis. And Massie is going to pair back the articles of impeachment. Those are the quote unquote uncomfortable votes that he's going to force Republicans to take about the war in Iran. What happened uh in Venezuela, also what happened in the Caribbean seas where we are just taking out fishing boats that weren't naroterrorists no matter how many times Secretary Hegsth tells you that that's what happened. Um, so that's in general my take and I agree with you that it doesn't feel after you have this blue tsunami and that big promises are made about action and also accountability that you flub something like this. You know, Nancy Pelosi being on the West Coast, it's one thing there's a congressman uh Koreah who's actually ill and couldn't make it. But I think, you know, the imagery of Pat Ryan and, you know, Pat Ryan has a a very particular set of feelings about Secretary Hegsath and obviously he's served our country honorably as well, but if you have him checking himself out of the hospital after back surgery to make sure he can get there to vote, it's not an excuse that you couldn't run fast enough or make it the mile and a half back to the House. And I think it's just an enormous unforced error and you need better answers from leadership. Not just Hakee Jeff, but Katherine Clark, the whip. This is your job. It's like it's the title for you. So I think that people should, you know, spread the love in terms of who you're pissed off about, pissed off at for what happened.
So he was on the greenest of the green miles and he's got like a 60-day stay of impeachment, but this is going to come back in January, don't you think? Sorry, I was going to cough again. Uh, yes, definitely. Um, I think that it is, you know, on on the list for sure. Um, I'm actually, excuse me, I'm interviewing Hakee Jeff tomorrow and I'm going to be asking about the priorities in that sense, but yes, it's coming back.
