1 00:00:00,080 --> 00:00:03,840 It seems as though every day we wake up to the market going down 2 00:00:03,840 --> 00:00:07,560 and a new viral article that's being passed around speaking 3 00:00:07,560 --> 00:00:11,120 doomsday of SAS companies and the world as we know it. 4 00:00:11,240 --> 00:00:14,120 Now, we've seen this happen before with articles like Big 5 00:00:14,120 --> 00:00:17,240 things are happening, right? There's ones about big changes 6 00:00:17,240 --> 00:00:19,120 and disruptions in technology companies. 7 00:00:19,400 --> 00:00:22,480 We've also seen ones that are essentially the doom of SAS 8 00:00:22,480 --> 00:00:24,720 companies. That's caused a lot of companies 9 00:00:24,720 --> 00:00:27,440 that we know and are invested in to go down dramatically every 10 00:00:27,440 --> 00:00:29,720 single day. And there's more and more of 11 00:00:29,720 --> 00:00:31,400 these articles again, every single day. 12 00:00:31,400 --> 00:00:33,720 It seems like there's just two or three more of them that are 13 00:00:33,720 --> 00:00:38,040 going viral around X, around social circles, around 14 00:00:38,040 --> 00:00:40,160 investment circles. But the one that was shared over 15 00:00:40,160 --> 00:00:42,440 the weekend is perhaps the final boss. 16 00:00:42,800 --> 00:00:44,760 It's like a video game. You're getting to the end, 17 00:00:44,920 --> 00:00:47,960 You've gotten through all the smaller bosses, all the bigger 18 00:00:47,960 --> 00:00:51,680 challenges and hurdles along the way, and now we're facing the 19 00:00:51,680 --> 00:00:54,840 final boss. This is Citrone Research. 20 00:00:54,880 --> 00:00:57,000 Why is Citrone Research the final boss? 21 00:00:57,000 --> 00:00:59,920 Well, because of out of all the hundreds and thousands of 22 00:00:59,920 --> 00:01:02,440 different sub stacks out there, out of all the ones that you can 23 00:01:02,440 --> 00:01:05,720 read, all the different financial authors giving takes 24 00:01:05,720 --> 00:01:08,920 and thesises, there's one that's listened to and paid attention 25 00:01:08,920 --> 00:01:14,280 to more than any others. That is Citrone, the top selling 26 00:01:14,280 --> 00:01:15,880 financial sub stack in the world. 27 00:01:16,040 --> 00:01:19,080 It's based on macro. It's based on large events, big 28 00:01:19,080 --> 00:01:21,160 takes. Investors listen to it. 29 00:01:21,440 --> 00:01:22,840 Hedge fund managers listen to it. 30 00:01:23,200 --> 00:01:26,160 Thousands of investors subscribe to this and pay good money to 31 00:01:26,160 --> 00:01:28,240 hear their takes. It's so influential that their 32 00:01:28,240 --> 00:01:30,120 takes routinely land on Bloomberg. 33 00:01:30,120 --> 00:01:32,760 They land on the Wall Street Journal, And what they wrote 34 00:01:32,760 --> 00:01:34,480 over the weekend is no exception. 35 00:01:34,680 --> 00:01:37,120 It is now on the front page of the Wall Street Journal. 36 00:01:37,200 --> 00:01:41,080 This viral doomsday report lays bare Wall Street's deep anxiety 37 00:01:41,080 --> 00:01:44,760 about the AI future. Citronee Research thought 38 00:01:44,760 --> 00:01:47,960 experiment rattles investors already wary of tech 39 00:01:47,960 --> 00:01:49,880 disruptions. That's right. 40 00:01:50,560 --> 00:01:54,480 No, this is not a article that's on some obscure forms on the 41 00:01:54,480 --> 00:01:56,320 Internet. This is mainstream. 42 00:01:56,400 --> 00:01:59,080 This is all over CNBC, Bloomberg, the Wall Street 43 00:01:59,080 --> 00:02:02,440 Journal, the Financial Times. Citrone's article went hyper 44 00:02:02,440 --> 00:02:05,400 viral and it caused many of the most powerful biggest companies 45 00:02:05,400 --> 00:02:07,560 in the world their stocks to get crushed. 46 00:02:08,000 --> 00:02:10,160 DoorDash is down like 7% on the day. 47 00:02:10,160 --> 00:02:15,080 American Express is down big 3%, plus we have Blackstone going 48 00:02:15,080 --> 00:02:17,600 down. We have Visa and MasterCard, two 49 00:02:17,600 --> 00:02:19,480 companies that you think are a little bit more resilient. 50 00:02:19,640 --> 00:02:21,040 Yeah, those ones went down as well. 51 00:02:21,600 --> 00:02:24,240 This article is impacting investors thoughts. 52 00:02:24,360 --> 00:02:27,600 It's impacting their decisions. Investors are human and they're 53 00:02:27,600 --> 00:02:30,680 selling as a result of this. Now, I didn't think I was going 54 00:02:30,680 --> 00:02:35,440 to spend all of 2026 reacting to viral articles online, but here 55 00:02:35,440 --> 00:02:38,640 we are. This is what we're doing, and 56 00:02:38,960 --> 00:02:41,040 this is what I'm going to be doing in this episode. 57 00:02:41,640 --> 00:02:45,640 We'll be going over the thesis of Citronee, why it is so 58 00:02:45,840 --> 00:02:49,080 engrossing, why investors have so much anxiety about what 59 00:02:49,080 --> 00:02:51,120 they're talking about. We'll be reviewing their 60 00:02:51,120 --> 00:02:54,880 arguments, and importantly, I'll be tearing some of them apart 61 00:02:54,880 --> 00:02:58,040 because frankly, some of them are ridiculous. 62 00:02:58,320 --> 00:03:01,440 They deserve to be torn apart. Now, it's no blame of Citronee. 63 00:03:01,440 --> 00:03:04,040 They say that this is all hypothetical, but I think even a 64 00:03:04,040 --> 00:03:07,960 hypothetical argument can have severe flaws, and I'll be going 65 00:03:07,960 --> 00:03:09,760 over many of them in this article. 66 00:03:09,760 --> 00:03:13,080 Today I'll be going through in detail some of the core thesises 67 00:03:13,080 --> 00:03:16,000 that are causing these stocks to sell off and addressing what I 68 00:03:16,000 --> 00:03:19,200 believe are some of the biggest logical leaps and mistakes in 69 00:03:19,200 --> 00:03:20,920 this article. This will be a fun episode. 70 00:03:21,080 --> 00:03:22,840 We do have some other news we'll be touching on today. 71 00:03:22,840 --> 00:03:26,560 For example, Warner Brothers Discovery received a revised 72 00:03:26,560 --> 00:03:29,080 offer from Paramount. The higher bid, we don't know 73 00:03:29,080 --> 00:03:31,960 what it is, but we're now in this limbo where we're waiting 74 00:03:31,960 --> 00:03:34,760 for Netflix's next move. I'll be giving some thoughts on 75 00:03:34,760 --> 00:03:37,120 that. We have Meta agreeing to buy 76 00:03:37,120 --> 00:03:41,600 $100 billion more worth of chips from AMD, and we have the fail 77 00:03:41,600 --> 00:03:45,160 of the week, which in this case is a DJI robot vacuum that had 78 00:03:45,160 --> 00:03:48,960 security so poor that this man remotely accessed thousands of 79 00:03:48,960 --> 00:03:51,080 them. This guy accidentally hacked 80 00:03:51,120 --> 00:03:53,720 like 7000 robots. We'll be going over that as 81 00:03:53,720 --> 00:03:54,640 well. Now, if you're not paying 82 00:03:54,640 --> 00:03:57,080 attention to every detail, you're not listening to every 83 00:03:57,080 --> 00:03:59,680 little thing going on. You may have missed what caused 84 00:03:59,680 --> 00:04:02,680 this most recent panic, what caused many of the biggest 85 00:04:02,680 --> 00:04:07,080 companies in the world to sell off 3 to 8% in the past day, and 86 00:04:07,080 --> 00:04:09,880 that was this viral article. This was the cause. 87 00:04:10,120 --> 00:04:12,680 Many people believe that Substack and these articles 88 00:04:12,680 --> 00:04:14,240 can't 'cause this type of effect. 89 00:04:14,560 --> 00:04:17,519 They can, especially when they have the distribution of a 90 00:04:17,519 --> 00:04:20,640 Citronee Research article. They are one of the biggest, if 91 00:04:20,640 --> 00:04:23,920 not the biggest publisher in the financial world on an 92 00:04:23,920 --> 00:04:26,360 independent basis. The article that they published 93 00:04:26,360 --> 00:04:32,800 is called The 2028, 2028 Global Intelligence Crisis, A Thought 94 00:04:32,800 --> 00:04:35,920 Exercise in Financial History from the future. 95 00:04:36,480 --> 00:04:40,880 Now they preface this and they say what follows is a scenario. 96 00:04:41,040 --> 00:04:43,160 It's not a prediction. So they give a bit of a 97 00:04:43,160 --> 00:04:46,040 disclaimer and say they're just modeling out a scenario. 98 00:04:46,640 --> 00:04:49,760 Now, like most disclaimers, this has been ignored because many 99 00:04:49,760 --> 00:04:52,080 people were fearful as a result of this. 100 00:04:52,560 --> 00:04:55,760 And I'll note that this scenario they're modelling out also does 101 00:04:55,760 --> 00:04:59,360 benefit them personally. See, Citrone is not just someone 102 00:04:59,360 --> 00:05:01,720 that publishes takes and thoughts on the market, but 103 00:05:01,720 --> 00:05:04,560 they're also investors and they are bearish on many of the 104 00:05:04,560 --> 00:05:06,520 companies that they're sharing these scenarios on. 105 00:05:06,600 --> 00:05:08,360 They have short positions on them. 106 00:05:08,640 --> 00:05:11,320 We are constantly sort of, you know, turning our book. 107 00:05:11,320 --> 00:05:13,320 And then we certainly had shorts in some of these businesses. 108 00:05:13,320 --> 00:05:16,200 We generally have a set of shorts out against businesses 109 00:05:16,200 --> 00:05:17,800 that we think are going to be disrupted by AI. 110 00:05:18,080 --> 00:05:21,560 He mentions right away that we are short many of the businesses 111 00:05:21,560 --> 00:05:24,560 that we mention in this article. So in a way, this is an article 112 00:05:24,560 --> 00:05:27,240 representing their view, which there's nothing wrong with that. 113 00:05:27,240 --> 00:05:29,640 I have bullish takes on companies that I'm invested in 114 00:05:29,640 --> 00:05:31,920 as well. The difference is I'm not able 115 00:05:31,920 --> 00:05:35,200 to move the market in the same way that Citrone is, so just 116 00:05:35,200 --> 00:05:37,560 keep that in mind as you're reading this that they are short 117 00:05:37,560 --> 00:05:39,040 sellers on many of these companies. 118 00:05:39,040 --> 00:05:41,040 We won't go over the whole thing, but I want to summarize 119 00:05:41,040 --> 00:05:43,240 what I believe are some of the biggest points of this article. 120 00:05:43,520 --> 00:05:47,280 In a couple of years we'll move past vibe coding to agentic 121 00:05:47,280 --> 00:05:50,520 technology, and agentic technology will cause what they 122 00:05:50,720 --> 00:05:53,240 they say is when friction goes to zero. 123 00:05:53,240 --> 00:05:56,040 And again, this is a future hypothetical. 124 00:05:56,360 --> 00:06:00,120 They say by early 2027, LLM usage had become default. 125 00:06:00,280 --> 00:06:03,200 People are using AI agents who didn't even know what an AI 126 00:06:03,200 --> 00:06:06,680 agent was in the same way people who had never learned of cloud 127 00:06:06,680 --> 00:06:08,960 computing was using streaming services. 128 00:06:09,200 --> 00:06:11,640 They thought of it in the same way that you think of auto 129 00:06:11,640 --> 00:06:14,880 complete or spell check. Just a thing that they just did 130 00:06:14,880 --> 00:06:16,720 now. The next chain was already 131 00:06:16,720 --> 00:06:19,880 breaking intermediation. Over the past 50 years, the US 132 00:06:19,880 --> 00:06:23,280 economy built a giant rent extraction layer on top of human 133 00:06:23,400 --> 00:06:26,560 limitations. Things take time, patience runs 134 00:06:26,560 --> 00:06:30,400 out, brand familiarity substitutes for diligence, and 135 00:06:30,400 --> 00:06:33,720 most people are willing to accept a bad price to avoid more 136 00:06:33,720 --> 00:06:35,520 clicks. Trillions of dollars of 137 00:06:35,520 --> 00:06:38,400 enterprise value depends on those constraints persisting. 138 00:06:38,480 --> 00:06:41,920 It started out simple enough. Agents removed friction. 139 00:06:42,280 --> 00:06:46,240 So they explore the consequences of agents removing friction. 140 00:06:46,920 --> 00:06:49,680 Subscriptions and memberships that passively renew despite 141 00:06:49,680 --> 00:06:52,600 months of disuse. Introductory pricing that 142 00:06:52,600 --> 00:06:54,720 sneakily doubled after the trial period. 143 00:06:55,080 --> 00:06:58,200 Each one was rebranded as a hostage situation that agents 144 00:06:58,200 --> 00:07:00,640 could negotiate. The average customer lifetime 145 00:07:00,640 --> 00:07:03,360 value, the metric that enterprise subscription economy 146 00:07:03,360 --> 00:07:05,120 was built on, distinctly declined. 147 00:07:05,440 --> 00:07:08,640 Consumer agents begin to change how nearly all consumer 148 00:07:08,640 --> 00:07:11,200 transactions work. Humans don't really have the 149 00:07:11,200 --> 00:07:14,680 time to price match across 5 competing platforms before 150 00:07:14,680 --> 00:07:17,320 buying a box of protein bars, but machines do. 151 00:07:17,760 --> 00:07:20,320 So part of their thesis is when you're buying something online, 152 00:07:20,720 --> 00:07:22,680 you're just going to buy like the first thing that you see 153 00:07:22,680 --> 00:07:24,560 because you don't have time to go look everywhere to save a 154 00:07:24,560 --> 00:07:26,320 dollar. But if you can do that on an 155 00:07:26,320 --> 00:07:29,040 agent, if you can say, hey, I want to buy this and it can go 156 00:07:29,040 --> 00:07:31,680 and price match 50 different websites, you're going to let 157 00:07:31,680 --> 00:07:35,080 the agent do that. The agent does have the time to 158 00:07:35,080 --> 00:07:37,160 make those, to make those comparisons. 159 00:07:37,680 --> 00:07:41,440 Travel booking platforms were an early casualty because they were 160 00:07:41,440 --> 00:07:44,520 the simplest. By Q 4/20/26, our agents could 161 00:07:44,520 --> 00:07:48,040 assemble a complete itinerary, flights, hotels, transport, 162 00:07:48,240 --> 00:07:51,280 loyal loyalty optimization, budget constraints, refunds 163 00:07:51,600 --> 00:07:53,400 faster and cheaper than any platform. 164 00:07:53,880 --> 00:07:57,600 Insurance renewals where the entire renewal model depended on 165 00:07:57,760 --> 00:08:00,120 policyholder inertia were reformed. 166 00:08:00,560 --> 00:08:04,360 Agents that reshop coverage annually dismantled the 15 to 167 00:08:04,360 --> 00:08:07,480 20% premiums that insurers earned from passive renewals. 168 00:08:07,960 --> 00:08:11,520 Financial advice, tax prep, routine legal work, any category 169 00:08:11,520 --> 00:08:14,720 where the service providers value proposition was ultimately 170 00:08:14,720 --> 00:08:17,960 quote I will navigate. Complexity that you find tedious 171 00:08:17,960 --> 00:08:21,720 was disrupted as agents found nothing tedious. 172 00:08:22,440 --> 00:08:25,880 Even places we thought insulated by the human value of 173 00:08:25,880 --> 00:08:29,520 relationships proved fragile. Real Estate, where buyers had 174 00:08:29,520 --> 00:08:33,159 tolerated 5 to 6% commissions for decades because of 175 00:08:33,159 --> 00:08:36,799 information asymmetry between agents and consumers, crumbled 176 00:08:36,799 --> 00:08:40,280 once the AI agents equipped with MLS access and decades of 177 00:08:40,280 --> 00:08:43,720 transaction data could replicate the knowledge base instantly. 178 00:08:44,120 --> 00:08:47,160 So now they're saying that the real estate market is going to 179 00:08:47,160 --> 00:08:50,720 be disrupted because the real estates, that intermediary layer 180 00:08:51,000 --> 00:08:54,160 will be taken out by agents. This is all just fiction. 181 00:08:54,240 --> 00:08:56,240 They're, they're making this up, they're exploring this 182 00:08:56,240 --> 00:08:58,640 hypothetical. So this hasn't happened. 183 00:08:59,120 --> 00:09:02,760 They're saying that real estate agents are, are getting 184 00:09:03,160 --> 00:09:07,720 disintermediated by agents and that's just all in the future. 185 00:09:07,760 --> 00:09:09,880 That's going to happen in the future is what they're 186 00:09:09,880 --> 00:09:12,400 predicting here. We had overestimated the value 187 00:09:12,400 --> 00:09:15,800 of, quote, human relationships. Turns out that a lot of what 188 00:09:15,800 --> 00:09:19,360 people call relationships was simply friction with a friendly 189 00:09:19,360 --> 00:09:21,520 face. That was just the start of the 190 00:09:21,520 --> 00:09:24,000 disruption for the intermediation layer. 191 00:09:24,200 --> 00:09:28,080 Successful companies had spent billions to effectively exploit 192 00:09:28,240 --> 00:09:32,040 quirks of consumer behavior and human psychology that didn't 193 00:09:32,040 --> 00:09:35,520 matter anymore. Machines optimized for price and 194 00:09:35,520 --> 00:09:38,720 fit that do not care about your favorite app or your website 195 00:09:39,080 --> 00:09:42,000 that you've habitually been opening for the last four years 196 00:09:42,360 --> 00:09:45,000 nor fill the pole of a well designed checkpoint out 197 00:09:45,000 --> 00:09:47,080 experience. They don't get tired or accept 198 00:09:47,080 --> 00:09:49,800 the easiest option by default to quote. 199 00:09:50,080 --> 00:09:53,720 I always just order from here that destroyed a particular 200 00:09:53,720 --> 00:09:57,120 kinds of motes habitual intermediation. 201 00:09:57,840 --> 00:10:01,920 OK, so that sets the premise of their main core thesis here. 202 00:10:02,080 --> 00:10:04,800 Their core thesis is that agents remove friction. 203 00:10:04,880 --> 00:10:08,400 They bring friction down to 0. So any type of company or 204 00:10:08,400 --> 00:10:11,720 product that specializes in removing friction at a price, 205 00:10:12,240 --> 00:10:15,240 that company will be essentially useless. 206 00:10:15,240 --> 00:10:17,640 It won't need to exist anymore because agents will do that 207 00:10:17,640 --> 00:10:19,920 already and not charge you in the process. 208 00:10:20,560 --> 00:10:23,560 And this is where the thesis goes from what I think is an 209 00:10:23,560 --> 00:10:27,680 intriguing premise to offering some of the worst examples you 210 00:10:27,680 --> 00:10:29,560 could offer, logically flawed ones. 211 00:10:30,200 --> 00:10:32,360 For example, one of the ones that they point out that will be 212 00:10:32,360 --> 00:10:35,600 displaced or disintermediated is DoorDash. 213 00:10:35,840 --> 00:10:38,080 And this was a stock that was hit hard yesterday. 214 00:10:38,280 --> 00:10:42,920 DoorDash was the poster child of a Moat being disrupted by agents 215 00:10:42,920 --> 00:10:47,000 and their removal of friction. Now DoorDash stock since this 216 00:10:47,000 --> 00:10:50,080 released is down about 6%. So let's go ahead and hear their 217 00:10:50,080 --> 00:10:53,120 argument of why DoorDash is going to be doomed when it comes 218 00:10:53,120 --> 00:10:55,760 to agents coding. Agents had collapsed the barrier 219 00:10:55,760 --> 00:10:57,760 to entry for launching a delivery app. 220 00:10:58,160 --> 00:11:01,720 So now you can, you can code a delivery app very quickly. 221 00:11:01,880 --> 00:11:04,520 They say a competent developer could deploy A functional 222 00:11:04,520 --> 00:11:09,320 competitor in weeks and dozens did enticing drivers away from 223 00:11:09,320 --> 00:11:12,680 DoorDash and Uber Eats by passing 90 to 95% of the 224 00:11:12,680 --> 00:11:15,680 delivery fee through to the driver. 225 00:11:16,000 --> 00:11:18,600 So again, this is hypothetical. This hasn't happened. 226 00:11:18,920 --> 00:11:22,560 But they're saying now that vibe coding allows you to easily code 227 00:11:22,560 --> 00:11:24,680 things like delivery applications, which is true. 228 00:11:24,760 --> 00:11:27,600 Make it easier to code things. You can basically make a 229 00:11:27,600 --> 00:11:33,000 competent functioning, competent competitor in weeks to DoorDash 230 00:11:33,000 --> 00:11:35,880 and Uber Eats. Then those competent competitors 231 00:11:36,440 --> 00:11:38,800 cannot have the greed that DoorDash has. 232 00:11:38,800 --> 00:11:42,120 Instead they can just pass the savings along to the driver. 233 00:11:42,680 --> 00:11:46,480 Multi app dashboards let gig workers track incoming jobs from 234 00:11:46,480 --> 00:11:50,240 20 or 30 different platforms at once, eliminating the lock in 235 00:11:50,240 --> 00:11:51,960 that the incumbents depended upon. 236 00:11:52,400 --> 00:11:55,760 The market fragmented overnight and margins compressed to nearly 237 00:11:55,760 --> 00:11:59,160 nothing. Agents accelerated both sides of 238 00:11:59,160 --> 00:12:01,880 the destruction. They enabled the competitors and 239 00:12:01,880 --> 00:12:04,600 they used them. The DoorDash Mote was literally 240 00:12:04,760 --> 00:12:06,800 quote you're hungry, you're lazy. 241 00:12:06,960 --> 00:12:10,080 This is the app on your home screen, and Agents doesn't. 242 00:12:10,320 --> 00:12:13,280 Agents don't have a home screen. It checks DoorDash. 243 00:12:13,280 --> 00:12:17,160 It checks Uber Eats, the restaurant's own website, and 20 244 00:12:17,240 --> 00:12:20,760 new vibe coded alternatives so that it can pick the lowest fee 245 00:12:20,960 --> 00:12:24,600 and the fastest delivery time. Habitual app loyalty, the entire 246 00:12:24,600 --> 00:12:27,320 basis of the business model, simply didn't exist for the 247 00:12:27,320 --> 00:12:30,800 machine. This was oddly poetic as perhaps 248 00:12:30,800 --> 00:12:34,480 the only example in this entire saga of agents doing a favor for 249 00:12:34,480 --> 00:12:37,720 the soon to be replaced displaced white collar workers 250 00:12:38,240 --> 00:12:40,200 when they ended up as delivery drivers. 251 00:12:40,400 --> 00:12:41,840 So there's the argument with DoorDash. 252 00:12:41,840 --> 00:12:46,280 It's basically that DoorDash and Uber Eats contain high margins. 253 00:12:46,280 --> 00:12:48,000 They charge a lot when you order from them. 254 00:12:48,400 --> 00:12:50,720 So an agent could come along and it can shop. 255 00:12:50,920 --> 00:12:53,680 It can shop across all the different food delivery 256 00:12:53,680 --> 00:12:55,720 networks. And since you can vibe code a 257 00:12:55,720 --> 00:12:57,920 new app in just a couple of weeks, there's going to be a lot 258 00:12:57,920 --> 00:13:01,080 of them, 20 to 30 of them since the agent, which is like a 259 00:13:01,080 --> 00:13:04,480 ChatGPT or Gemini since it can shop for you. 260 00:13:04,760 --> 00:13:08,240 Frictionless and it can go to all these different potential 261 00:13:08,360 --> 00:13:11,560 delivery companies or just the the website of the restaurant 262 00:13:11,560 --> 00:13:13,840 itself. It can find the lowest prices, 263 00:13:13,840 --> 00:13:16,440 which will naturally compress the margins to zero. 264 00:13:17,080 --> 00:13:19,040 And that seems good. At first glance, it seems a 265 00:13:19,040 --> 00:13:21,840 little bit convincing until you dive in a little bit deeper and 266 00:13:21,840 --> 00:13:23,800 highlight some of the big problems with this type of 267 00:13:23,800 --> 00:13:25,760 argument. One of the problems with this 268 00:13:25,760 --> 00:13:28,600 thought process is if you just put yourself in the customer's 269 00:13:28,600 --> 00:13:30,560 position here. Let's say that you're you're 270 00:13:30,560 --> 00:13:33,320 using Chachi BT and you're getting hungry. 271 00:13:33,320 --> 00:13:34,560 So you notice that you're hungry. 272 00:13:35,440 --> 00:13:37,800 In that case, you notice that you're hungry, but you don't 273 00:13:37,800 --> 00:13:42,200 know what you're going to eat. So you could tell Chachi BT I'm 274 00:13:42,200 --> 00:13:45,200 hungry and it can say, hey, you've liked these type of 275 00:13:45,200 --> 00:13:47,120 foods, would you like to order them again? 276 00:13:47,680 --> 00:13:50,280 And you go, Nah, what are some other foods out there? 277 00:13:50,760 --> 00:13:53,520 And then it has to assemble and create a list of foods that you 278 00:13:53,520 --> 00:13:55,720 can order. It has to bring in all the 279 00:13:55,720 --> 00:13:59,320 images and then you have to say, hey, what about you're typing 280 00:13:59,320 --> 00:14:00,880 this in again, You're typing all this in. 281 00:14:01,080 --> 00:14:03,280 What about restaurants that are within 30 minutes? 282 00:14:03,280 --> 00:14:05,920 Because I want to get it fast. Then it has to revise and give 283 00:14:05,920 --> 00:14:08,040 you another answer. Restaurants within 30 minutes. 284 00:14:08,640 --> 00:14:10,760 But then you want to see the reviews of all those restaurants 285 00:14:10,760 --> 00:14:12,720 to know which ones are are good and which ones aren't. 286 00:14:12,720 --> 00:14:14,560 So you want 4 star reviews and up. 287 00:14:14,880 --> 00:14:17,680 So you have to type that in. Now order them by by reviews. 288 00:14:18,080 --> 00:14:19,760 OK, so then you're on the restaurant level. 289 00:14:19,760 --> 00:14:22,240 You're looking at reviews of it. And let's say that you finally 290 00:14:22,240 --> 00:14:24,280 narrow down which restaurant you want to order from. 291 00:14:24,880 --> 00:14:27,240 OK, You say, hey, Chachi PT, I want to order from this 292 00:14:27,240 --> 00:14:30,480 restaurant, but I don't know exactly what they have or what 293 00:14:30,480 --> 00:14:31,960 the prices are. Can you tell me that? 294 00:14:32,560 --> 00:14:36,200 And then it has to assemble a list of the the menu from that 295 00:14:36,200 --> 00:14:39,160 restaurant of all the different items, what the feature is, what 296 00:14:39,160 --> 00:14:42,280 the daily special is. OK, so you, you have that 297 00:14:42,280 --> 00:14:45,960 assembled by Chachi PT Now and again you're having Chachi PT 298 00:14:45,960 --> 00:14:49,440 build this menu on the fly as you continually type in. 299 00:14:50,000 --> 00:14:52,440 Now you're on like the 6th message now and you say, OK, I 300 00:14:52,440 --> 00:14:54,960 want to get a #3 I want to get that meal. 301 00:14:55,600 --> 00:14:57,880 But there's lots of customizations in every single 302 00:14:57,880 --> 00:14:59,520 meal from every single restaurant. 303 00:14:59,760 --> 00:15:02,720 For example, if you order from Five Guys, do you want the small 304 00:15:02,720 --> 00:15:04,760 burger or the normal one? Do you want the double Patty or 305 00:15:04,760 --> 00:15:06,520 the one with cheese? Do you want the one with bacon? 306 00:15:06,760 --> 00:15:08,520 Do you want it to have Mayo, ketchup? 307 00:15:08,520 --> 00:15:09,680 Do you want to have onions on it? 308 00:15:09,680 --> 00:15:10,920 Do you want to have Pickles on it? 309 00:15:11,320 --> 00:15:14,680 There are hundreds of permutations and customizations 310 00:15:14,680 --> 00:15:17,480 within a single order. Literally hundreds of them in 311 00:15:17,480 --> 00:15:19,720 some cases. Chick-fil-A, just that 312 00:15:19,720 --> 00:15:22,560 restaurant has hundreds of different customizations on a 313 00:15:22,560 --> 00:15:25,480 single order. All the all the way to what type 314 00:15:25,480 --> 00:15:29,280 of sauce you want to get. Are you going to prompt Chachi 315 00:15:29,280 --> 00:15:31,440 BT all the way through this process? 316 00:15:31,920 --> 00:15:34,080 By the time you're done, your fingers, your thumbs will be 317 00:15:34,080 --> 00:15:35,800 sore from the amount of typing you do. 318 00:15:36,320 --> 00:15:39,080 You'll have to gone through so many different customization 319 00:15:39,080 --> 00:15:42,800 layers and the idea that ChatGPT will just know. 320 00:15:42,920 --> 00:15:45,320 That's another thing that a lot of people argue here. 321 00:15:45,560 --> 00:15:48,360 They'll say, well, you've talked to ChatGPT so much, it'll know 322 00:15:48,360 --> 00:15:50,560 you inside and out. It'll know you better than 323 00:15:50,560 --> 00:15:54,560 yourself. I was a top 1% user of ChatGPT 324 00:15:54,560 --> 00:15:59,560 and Gemini in 2025, top 1%. And I promise you, it has no 325 00:15:59,560 --> 00:16:03,240 clue what I want to eat tonight. It has no idea what what 326 00:16:03,360 --> 00:16:06,440 restaurant, what menu, what items, because it changes all 327 00:16:06,440 --> 00:16:08,880 the time. Food preferences change all the 328 00:16:08,880 --> 00:16:10,600 time. And even though there may be 329 00:16:10,600 --> 00:16:13,360 something that you order on a routine basis, maybe you get the 330 00:16:13,360 --> 00:16:14,920 same Starbucks drink every morning. 331 00:16:15,240 --> 00:16:18,440 When it comes to food delivery, this is something that's hyper 332 00:16:18,440 --> 00:16:20,400 specialized. Thousands of different 333 00:16:20,400 --> 00:16:24,480 customizations and orders, and of course different restaurants 334 00:16:24,480 --> 00:16:27,920 that are open different hours. Every single time that you would 335 00:16:27,920 --> 00:16:31,960 have to order through an agent, you'd have to rebuild a menu 336 00:16:32,240 --> 00:16:35,520 prompted to death because you're doing prompt by prompt to 337 00:16:35,520 --> 00:16:38,640 rebuild all these things to get to the point of actually 338 00:16:38,640 --> 00:16:41,640 ordering your food. Now when we're talking about 339 00:16:41,640 --> 00:16:45,400 friction, in this case, does the agent actually save you on 340 00:16:45,400 --> 00:16:48,200 friction? Compare it to just opening up 341 00:16:48,200 --> 00:16:51,040 the DoorDash app. The DoorDash app is already 342 00:16:51,080 --> 00:16:53,560 hyper specialized in food delivery. 343 00:16:53,960 --> 00:16:55,920 You open it up, it shows you all the restaurants that you 344 00:16:55,920 --> 00:16:58,240 recently ordered from, all your favorite meals from all of them, 345 00:16:58,480 --> 00:17:02,040 all the toggles and switches like 30 minute distances or 346 00:17:02,040 --> 00:17:03,840 below. You have everything perfectly 347 00:17:03,840 --> 00:17:06,119 tested in an AB tested user interface. 348 00:17:06,920 --> 00:17:09,800 You don't have to prompt anything, but if you want to, 349 00:17:10,240 --> 00:17:12,880 DoorDash has an AI search engine built into it as well. 350 00:17:12,880 --> 00:17:15,319 So you have that option available to you if you want. 351 00:17:15,640 --> 00:17:18,560 But you don't have to. And in most cases, people won't 352 00:17:18,680 --> 00:17:22,040 because they rather just tap a couple images on the screen, hit 353 00:17:22,040 --> 00:17:25,280 confirm order, then endlessly prompt an agent. 354 00:17:25,280 --> 00:17:29,320 That's an open text interface. What you lose with agentic 355 00:17:29,320 --> 00:17:33,440 ordering is an interface. You lose the ability to see the 356 00:17:33,440 --> 00:17:36,120 food. People don't know exactly what 357 00:17:36,120 --> 00:17:38,360 they want to eat. And any server will tell you 358 00:17:38,360 --> 00:17:40,920 that they want to see images, they want to browse. 359 00:17:40,920 --> 00:17:42,480 They want to see things that are brought up. 360 00:17:42,480 --> 00:17:44,360 When you're looking at one restaurant, maybe there's some 361 00:17:44,360 --> 00:17:46,360 food that's similar to an A different 1. 362 00:17:46,640 --> 00:17:48,720 You want to see different colors and images. 363 00:17:48,720 --> 00:17:51,440 That's what crates hunger. And that's when you say, oh, 364 00:17:51,440 --> 00:17:55,480 that looks really appetizing and agents don't solve that problem. 365 00:17:56,000 --> 00:18:00,000 So inadvertently by saying the agents are going to remove 366 00:18:00,000 --> 00:18:03,840 friction by bypassing DoorDash and Uber Eats app, they're 367 00:18:03,840 --> 00:18:06,480 actually creating more friction. There's no way around it. 368 00:18:06,480 --> 00:18:09,560 It is more difficult to get to the point of ordering through an 369 00:18:09,560 --> 00:18:12,760 agent than it is to just go to the app that's already hyper 370 00:18:12,760 --> 00:18:14,760 specialized in the specific task. 371 00:18:15,000 --> 00:18:18,880 A comparison that I would make is, you know how Amazon has that 372 00:18:18,880 --> 00:18:22,600 ability to order through Alexa? Like you can have the speaker 373 00:18:22,600 --> 00:18:25,920 there and you can say, hey, Alexa, get me some more Tide 374 00:18:25,920 --> 00:18:28,320 Pods. Everybody has the ability to do 375 00:18:28,320 --> 00:18:30,720 that. You have open-ended ordering on 376 00:18:30,720 --> 00:18:34,240 Alexa devices, but how much has that really taken off? 377 00:18:34,280 --> 00:18:37,800 Amazon doesn't really give the numbers because it's not that 378 00:18:37,800 --> 00:18:40,200 popular. Sure, there's cases that you can 379 00:18:40,200 --> 00:18:42,400 cite where people have done it and maybe it's actually growing 380 00:18:42,400 --> 00:18:45,800 really fast, but in the whole, it's not popular at all. 381 00:18:46,040 --> 00:18:48,400 And the reason why is because people don't just want to talk 382 00:18:48,400 --> 00:18:50,600 to a, a bot. They don't want to talk to 383 00:18:50,600 --> 00:18:52,560 something. They want to visually see 384 00:18:52,680 --> 00:18:55,520 precisely what their order is, how much it costs. 385 00:18:55,520 --> 00:18:57,560 They want to see it visually in front of them. 386 00:18:57,960 --> 00:19:00,560 So most people, the vast majority, order through 387 00:19:00,560 --> 00:19:03,680 Amazon.com. They go to the website, they put 388 00:19:03,680 --> 00:19:06,040 in their order, they see it in the checkout, they know exactly 389 00:19:06,040 --> 00:19:08,440 what they're ordering and they complete the process. 390 00:19:08,880 --> 00:19:11,720 They don't like ordering through a speaker, just like most people 391 00:19:11,720 --> 00:19:15,560 won't like ordering their food through an AI that has endless 392 00:19:15,560 --> 00:19:18,560 prompting, endless texting. And that's not the only problem 393 00:19:18,560 --> 00:19:20,440 with this one examle, which is DoorDash. 394 00:19:20,760 --> 00:19:23,600 There are more critical flaws with this Tye of thought rocess. 395 00:19:24,120 --> 00:19:27,280 One of them is the simple fact that when you're ordering food, 396 00:19:27,440 --> 00:19:29,400 your goal is not to get the lowest price. 397 00:19:29,640 --> 00:19:32,640 Now from a tech investor perspective, from Citronee, they 398 00:19:32,640 --> 00:19:35,560 probably look at it as the only thing the agent really cares 399 00:19:35,560 --> 00:19:37,280 about is getting the lowest price. 400 00:19:37,320 --> 00:19:40,600 So you put your order in for a McDonald's burger and fries, and 401 00:19:40,600 --> 00:19:44,080 the agent goes and finds 50 different delivery platforms 402 00:19:44,080 --> 00:19:47,200 that can pick up from McDonald's and it selects the one that is 403 00:19:47,200 --> 00:19:50,440 the lowest price. Maybe it's $0.50 lower than 404 00:19:50,440 --> 00:19:52,960 DoorDash. So now your order, instead of 405 00:19:52,960 --> 00:19:55,760 being routed to DoorDash, is now routed to some third party 406 00:19:55,760 --> 00:19:59,120 smaller company that's offering a cheaper take rate than 407 00:19:59,120 --> 00:20:01,840 DoorDash by $0.50. You save $0.50. 408 00:20:01,840 --> 00:20:04,000 But in the process you got your order routed to a different 409 00:20:04,000 --> 00:20:06,200 company, and that company doesn't have as good of 410 00:20:06,200 --> 00:20:08,280 logistics. It's not as saturated with 411 00:20:08,280 --> 00:20:10,560 drivers, so it takes longer to get your order. 412 00:20:10,880 --> 00:20:13,720 Your order arrives 10 minutes later than it normally would. 413 00:20:13,760 --> 00:20:16,920 Your food's soggy and cold. All of a sudden you're 414 00:20:16,920 --> 00:20:20,680 frustrated at the agent for routing your order to some third 415 00:20:20,680 --> 00:20:23,240 party delivery service that doesn't have its act together. 416 00:20:23,600 --> 00:20:27,560 So you tell the agent please only route it to big mainstream 417 00:20:27,880 --> 00:20:30,040 logistics companies like DoorDash and Uber. 418 00:20:30,120 --> 00:20:33,240 All of a sudden the whole thesis of fractional cost going down is 419 00:20:33,240 --> 00:20:35,800 gone and the biggest companies continue to succeed. 420 00:20:36,480 --> 00:20:39,760 The truth is, people ordering from DoorDash and Uber do not 421 00:20:39,760 --> 00:20:42,920 care solely about fees. If they cared only about the 422 00:20:42,920 --> 00:20:45,640 fees and getting the lowest price, they wouldn't be ordering 423 00:20:45,640 --> 00:20:47,920 food delivery. What they care about is a 424 00:20:47,920 --> 00:20:52,840 combination of price as well as service and quality and 425 00:20:52,840 --> 00:20:56,040 consistency and being able to get refunds and being taken care 426 00:20:56,040 --> 00:20:59,880 of if there's any issues. And an agent destroys nearly all 427 00:20:59,880 --> 00:21:02,480 of that. Consider the fact that part of 428 00:21:02,480 --> 00:21:05,080 the reason that I can get refunds on DoorDash, part of the 429 00:21:05,080 --> 00:21:07,240 reason they're so eager to refund me if I ever have a 430 00:21:07,240 --> 00:21:10,120 problem is because DoorDash knows that I'm a a good 431 00:21:10,120 --> 00:21:12,120 customer. I do lots of orders with them. 432 00:21:12,120 --> 00:21:14,720 Most of them are good. So when something goes wrong, 433 00:21:14,840 --> 00:21:17,520 they can look at my history, they can say, hey, most of the 434 00:21:17,520 --> 00:21:20,160 orders from this guy are good. So when something goes wrong, we 435 00:21:20,160 --> 00:21:22,320 should give him a full refund because he's overall a good 436 00:21:22,320 --> 00:21:23,960 customer. We want to keep him happy. 437 00:21:24,360 --> 00:21:28,640 Having a healthy order backlog is important to a customer. 438 00:21:28,880 --> 00:21:31,360 It allows you more leverage as a customer. 439 00:21:31,680 --> 00:21:35,480 If an agent routes your orders to 50 different companies, you 440 00:21:35,480 --> 00:21:39,040 have no outstanding order backlog and therefore makes it 441 00:21:39,040 --> 00:21:41,040 harder to be taken care of as a customer. 442 00:21:41,120 --> 00:21:43,800 Because if you only have one random order from some random 443 00:21:43,800 --> 00:21:46,440 place, then you're not going to be able to get a refund nearly 444 00:21:46,440 --> 00:21:48,600 as easily as if you have 50 orders from them. 445 00:21:48,760 --> 00:21:51,080 This destroys the customer relationship with the company, 446 00:21:51,120 --> 00:21:53,480 their order history. You also have the problem of 447 00:21:53,480 --> 00:21:56,200 memberships. Both DoorDash and Uber Eats have 448 00:21:56,200 --> 00:21:59,080 extensive memberships. We have Dashpass and we have 449 00:21:59,080 --> 00:22:01,440 Uber 1:00 which gives you lots of perks. 450 00:22:01,520 --> 00:22:04,280 People that use a DoorDash membership are not going to want 451 00:22:04,280 --> 00:22:07,760 to order outside of DoorDash and it will make it cheaper after 452 00:22:07,760 --> 00:22:09,160 they already paid for that membership. 453 00:22:09,400 --> 00:22:12,160 The same thing with Uber eats. So you have further customer 454 00:22:12,160 --> 00:22:14,800 lock in by these memberships which make it even more 455 00:22:14,800 --> 00:22:18,440 difficult to have the scenario where there are dozens of 456 00:22:18,440 --> 00:22:19,960 different food delivery networks. 457 00:22:20,400 --> 00:22:24,040 Why would anybody use multi app dashboards and different food 458 00:22:24,040 --> 00:22:27,200 delivery networks when they have their membership with DoorDash 459 00:22:27,240 --> 00:22:29,840 or their Uber one pass that makes this one uniquely cheap 460 00:22:30,360 --> 00:22:32,840 where they get benefits from it and rewards from ordering 461 00:22:33,000 --> 00:22:35,080 routinely? The whole scenario here, this 462 00:22:35,080 --> 00:22:37,560 hypothetical, is that agents are making it so that there's way 463 00:22:37,560 --> 00:22:39,440 less friction so that they can shop around. 464 00:22:39,440 --> 00:22:41,320 They can lower the margins down to 0. 465 00:22:41,680 --> 00:22:44,800 In reality, these agents would make it substantially more 466 00:22:44,800 --> 00:22:48,320 friction on behalf of the user. Users want interfaces, they want 467 00:22:48,320 --> 00:22:50,200 routines. They want to be able to know and 468 00:22:50,200 --> 00:22:52,000 see what they're ordering with precision. 469 00:22:52,440 --> 00:22:55,240 Ordering food is not an open-ended game where you just 470 00:22:55,280 --> 00:22:57,440 want to be surprised of what comes to your doorstep. 471 00:22:57,560 --> 00:22:59,920 So these are the type of arguments that are being given 472 00:22:59,920 --> 00:23:01,360 here. And again, this one isn't just 473 00:23:01,360 --> 00:23:03,560 some random argument. They highlight this as the 474 00:23:03,560 --> 00:23:06,040 poster child, the prime argument. 475 00:23:06,040 --> 00:23:08,800 This is the example of a company that will be disintermediated, 476 00:23:09,040 --> 00:23:11,000 but it's it couldn't be further from the truth. 477 00:23:11,480 --> 00:23:13,880 DoorDash is perhaps one of the most insulated companies from 478 00:23:13,880 --> 00:23:17,280 agentic technology because of how difficult it is to replicate 479 00:23:17,280 --> 00:23:20,200 a menu, to replicate the hundreds of of different 480 00:23:20,200 --> 00:23:22,160 customizations for every single item. 481 00:23:22,600 --> 00:23:25,080 Food is a very visual game. People want to see things when 482 00:23:25,080 --> 00:23:28,600 they're ordering and it takes far more work to constantly text 483 00:23:28,600 --> 00:23:30,840 and prompt something to build it in the way that you want. 484 00:23:31,160 --> 00:23:35,040 Then already going to a well built application, already a 485 00:23:35,040 --> 00:23:38,320 unified user interface, one that's familiar, one that people 486 00:23:38,320 --> 00:23:42,440 have used, one that's AB tested for customers inadvertently, the 487 00:23:42,440 --> 00:23:45,880 agent would be more friction and more situations. 488 00:23:46,280 --> 00:23:48,560 And there's far more issues in it than just that. 489 00:23:49,080 --> 00:23:51,480 So when I look at these type of arguments, they are convincing 490 00:23:51,480 --> 00:23:54,840 on the surface until you really start to dive in to the nuances 491 00:23:55,160 --> 00:23:57,920 and that's where you get lost. That's where a lot of investors 492 00:23:57,920 --> 00:24:00,840 don't make it. They just sell because Citronees 493 00:24:00,840 --> 00:24:02,760 said that DoorDash is going to be replaced. 494 00:24:03,160 --> 00:24:06,440 The stock market goes down. These companies drop 6 to 7% in 495 00:24:06,440 --> 00:24:08,600 a single day. Hundreds of billions of dollars 496 00:24:08,600 --> 00:24:12,920 worth of market cap was wiped out on a completely fan fiction 497 00:24:13,000 --> 00:24:15,800 false premise. Now the DoorDash example is bad 498 00:24:15,960 --> 00:24:17,880 because it undermines the case that they're making. 499 00:24:18,080 --> 00:24:20,600 They're saying it's the poster child, but in reality it's very 500 00:24:20,600 --> 00:24:23,120 resistant. But the next example that they 501 00:24:23,120 --> 00:24:26,880 name is it goes from bad to comical. 502 00:24:27,320 --> 00:24:30,920 Now we're going from delivery food networks like Uber Eats and 503 00:24:30,920 --> 00:24:34,440 DoorDash to the payment networks Visa and MasterCard. 504 00:24:35,080 --> 00:24:38,360 They say once the agents controlled the transaction, they 505 00:24:38,360 --> 00:24:40,680 went looking for a bigger paper clip. 506 00:24:40,760 --> 00:24:43,800 There's only so much price matching and aggregation to do. 507 00:24:44,200 --> 00:24:47,320 The biggest way to repeatedly save the users money, especially 508 00:24:47,320 --> 00:24:50,200 when the agents start transacting themselves, was to 509 00:24:50,200 --> 00:24:53,760 eliminate fees. In machine to machine commerce, 510 00:24:53,880 --> 00:24:57,960 the 2 to 3% card interchange rate became an obvious target. 511 00:24:58,400 --> 00:25:01,760 Agents went looking for faster and cheaper options than cards. 512 00:25:02,280 --> 00:25:07,000 Most settled on using stable coins via Solona or Ethereum, 513 00:25:07,360 --> 00:25:10,320 where settlement was near instant and the transaction cost 514 00:25:10,320 --> 00:25:12,360 was measured in a fraction of a penny. 515 00:25:12,920 --> 00:25:14,440 And then they have a hypothetical. 516 00:25:14,440 --> 00:25:16,360 Again, this is a fake headline of the future. 517 00:25:16,760 --> 00:25:21,640 MasterCard Q 12027 Net revenues plus 6% year over year. 518 00:25:21,880 --> 00:25:26,720 Purchase volume growth slows to 3.4% year over year from 5.9% 519 00:25:26,720 --> 00:25:29,400 the prior year. Management notes that agent LED 520 00:25:29,400 --> 00:25:32,760 price optimization and pressure and discretionary categories. 521 00:25:33,120 --> 00:25:38,440 Bloomberg, April 29th, 2027. It was Mastercard's Q 12027 522 00:25:38,440 --> 00:25:40,880 report that was the point of no return. 523 00:25:41,360 --> 00:25:44,880 Agentic commerce went from being a product story to a plumbing 524 00:25:44,880 --> 00:25:47,200 story. MasterCard dropped 9% the 525 00:25:47,200 --> 00:25:50,520 following day, Visa 2, but paired their losses after 526 00:25:50,520 --> 00:25:53,360 analysts pointed out at stronger position stablecoin 527 00:25:53,360 --> 00:25:56,960 infrastructure. Agentic commerce routing around 528 00:25:56,960 --> 00:26:01,160 interchange posed a far greater risk to card focus banks and 529 00:26:01,200 --> 00:26:05,280 monoline issuers who collected the majority of that 2 to 3% fee 530 00:26:05,280 --> 00:26:08,120 and had built an entire business segment around rewards programs 531 00:26:08,120 --> 00:26:11,000 funded by merchant subsidies. American Express was hit the 532 00:26:11,000 --> 00:26:13,440 hardest, a combination from headwinds from white collar 533 00:26:13,440 --> 00:26:16,760 workforce reductions gutting its customer base and agent routing 534 00:26:17,000 --> 00:26:19,480 around interchange gutting the revenue model. 535 00:26:19,720 --> 00:26:23,320 Synchrony, Capital One and Discovery fell more than 10% the 536 00:26:23,320 --> 00:26:25,800 following weeks as well. Their remotes were made of 537 00:26:25,800 --> 00:26:28,880 friction and friction was going to 0. 538 00:26:29,920 --> 00:26:31,240 That's the whole thesis there, right? 539 00:26:31,240 --> 00:26:36,080 Friction is going to zero. And this is where Citronee, with 540 00:26:36,080 --> 00:26:38,040 all due respect, and I, I really like this. 541 00:26:38,040 --> 00:26:40,160 I think it's an interesting hypothetical so I'm not trying 542 00:26:40,160 --> 00:26:42,800 to bash them. With all due respect, they 543 00:26:42,800 --> 00:26:46,080 couldn't be more wrong here. One of their assumptions, and 544 00:26:46,080 --> 00:26:49,680 this is a very tech kind of nerd focused assumption, a lot of 545 00:26:49,680 --> 00:26:53,560 investors have this assumption too, is that all customers want 546 00:26:53,560 --> 00:26:55,760 is less friction. That's all customers want. 547 00:26:55,920 --> 00:26:57,200 And that's an assumption that's correct. 548 00:26:57,200 --> 00:27:00,360 In some cases, customers don't like friction in a lot of cases. 549 00:27:01,000 --> 00:27:03,920 But in reality, there's some cases, some unique ones, where 550 00:27:03,920 --> 00:27:07,200 customers do like friction, where they love friction. 551 00:27:07,240 --> 00:27:11,440 They don't want friction to go to zero, and settlement is one 552 00:27:11,440 --> 00:27:13,640 of them. Payments is one of them. 553 00:27:14,080 --> 00:27:15,920 Customers love friction and payments. 554 00:27:16,320 --> 00:27:19,520 They absolutely adore friction and they would hate for it to go 555 00:27:19,520 --> 00:27:21,720 to 0. Customers reject. 556 00:27:21,800 --> 00:27:24,720 They continually reject propositions where friction goes 557 00:27:24,720 --> 00:27:27,360 to zero and payments. Let me give you a a couple 558 00:27:27,360 --> 00:27:29,520 examples. The whole value of a credit card 559 00:27:29,560 --> 00:27:32,400 is friction. That's why high income people 560 00:27:32,480 --> 00:27:35,080 use credit cards. That's why people like me use a 561 00:27:35,080 --> 00:27:37,200 credit card is because of the additional friction. 562 00:27:37,800 --> 00:27:41,200 Allow me to explain. When I swipe a credit card, I 563 00:27:41,200 --> 00:27:43,440 don't want settlement to happen instantly. 564 00:27:43,960 --> 00:27:47,000 I want it to show that I paid money, but I want there to be 565 00:27:47,000 --> 00:27:49,760 friction in the process. I want it to be routed through 566 00:27:49,760 --> 00:27:51,560 my bank. I want it to be the bank's money 567 00:27:51,560 --> 00:27:56,040 that paid that money, not mine. I want my money to stay put, to 568 00:27:56,040 --> 00:27:58,560 have a delay. I want there to be a period of 569 00:27:58,560 --> 00:28:02,560 review where I can look at what the bank purchased on my behalf. 570 00:28:02,840 --> 00:28:05,680 I can review it and make sure that it was charged correctly, 571 00:28:05,800 --> 00:28:08,880 that I received the product, and I don't need to dispute it. 572 00:28:09,400 --> 00:28:12,280 I want to be able to review all of it before I actually put my 573 00:28:12,280 --> 00:28:16,480 money into the process. That's friction that slows down 574 00:28:16,480 --> 00:28:18,760 the process. When you're purchasing things 575 00:28:18,760 --> 00:28:21,760 and you're transacting, you want to slow down the process. 576 00:28:22,200 --> 00:28:25,360 In fact, the fact that I don't have to pay the money right away 577 00:28:25,360 --> 00:28:27,840 to buy something means that I can hold it in my savings 578 00:28:27,840 --> 00:28:31,120 account and earn 4% interest for another two weeks or another 579 00:28:31,120 --> 00:28:33,520 month. That gives me the time money 580 00:28:33,520 --> 00:28:36,040 value. So by having friction in this 581 00:28:36,040 --> 00:28:38,720 process, by having a slower period of me paying for 582 00:28:38,720 --> 00:28:42,560 something that is advantageous and consumers want to delay 583 00:28:42,560 --> 00:28:45,920 payment for as long as possible. That's why you have buy now, pay 584 00:28:45,920 --> 00:28:47,400 later. That's why you have credit cards 585 00:28:47,600 --> 00:28:51,240 where you can buy something today and pay for it in a month. 586 00:28:51,720 --> 00:28:55,320 That is friction. Furthermore, the thought process 587 00:28:55,320 --> 00:28:58,160 of money immediately moving from my account to someone else's 588 00:28:58,160 --> 00:29:02,400 account the instant I hit the buy button is terrifying. 589 00:29:02,800 --> 00:29:04,200 That's the last thing that I want to do. 590 00:29:04,680 --> 00:29:07,320 I don't want money to immediately exit my checking 591 00:29:07,320 --> 00:29:10,040 account when I buy something online on some random website. 592 00:29:10,640 --> 00:29:13,000 I want to be able to have time to review it and make sure I got 593 00:29:13,000 --> 00:29:15,520 the thing that I ordered before money moves from my account. 594 00:29:15,760 --> 00:29:19,360 And again, that's friction. In this specific case, I want as 595 00:29:19,360 --> 00:29:22,120 much friction as possible. I wish there could be more 596 00:29:22,360 --> 00:29:25,520 guardrails and time money value in the process. 597 00:29:26,160 --> 00:29:30,760 So this is a a, a premise where the entire premise of what 598 00:29:30,760 --> 00:29:32,600 they're building this on is wrong. 599 00:29:33,280 --> 00:29:36,400 The premise that customers in the financial world want 0 600 00:29:36,400 --> 00:29:40,000 friction is entirely wrong. Customers don't want 0 friction 601 00:29:40,000 --> 00:29:42,360 in the financial world, they want as much friction as 602 00:29:42,360 --> 00:29:44,280 possible. And so when you build an 603 00:29:44,280 --> 00:29:47,240 assumption on a wrong premise, every single other assumption 604 00:29:47,240 --> 00:29:50,520 based on that is also wrong. Another problem with the idea 605 00:29:50,520 --> 00:29:53,600 that agents will just wipe away that credit card fee and save 606 00:29:53,600 --> 00:29:56,680 the customer money is that in the eyes of the customer, that 607 00:29:56,680 --> 00:30:00,080 fee isn't real. Customers aren't paying that 3% 608 00:30:00,080 --> 00:30:01,840 fee. Customers get credit card 609 00:30:01,840 --> 00:30:03,800 rewards whenever they swipe their card. 610 00:30:04,040 --> 00:30:05,520 The merchants are paying that fee. 611 00:30:05,880 --> 00:30:07,680 The merchants have hated that fee forever. 612 00:30:08,120 --> 00:30:10,680 Merchants, any merchant doesn't like paying a credit card fee. 613 00:30:10,760 --> 00:30:12,360 They don't like it at all. They wish that they could go 614 00:30:12,360 --> 00:30:14,120 away. They've tried to legislate 615 00:30:14,120 --> 00:30:17,280 reasons for it to go away. The merchant is already on board 616 00:30:17,280 --> 00:30:18,560 with wanting that fee to go away. 617 00:30:18,560 --> 00:30:20,720 And there's already many alternatives that would make 618 00:30:20,720 --> 00:30:22,400 that fee go away, like a debit card. 619 00:30:22,880 --> 00:30:25,960 But there's a reason that high income earners don't like using 620 00:30:25,960 --> 00:30:29,560 debit cards because they're instantaneous, because they are 621 00:30:29,560 --> 00:30:32,760 frictionless. We already have that option that 622 00:30:32,760 --> 00:30:36,320 brings friction to 0, which is a debit card, and customers don't 623 00:30:36,320 --> 00:30:38,560 like it because it has no friction. 624 00:30:38,720 --> 00:30:42,040 They're hypothetical of what could destroy MasterCard already 625 00:30:42,040 --> 00:30:45,440 exists today, and it's not destroying MasterCard because 626 00:30:45,440 --> 00:30:47,760 when you study these companies, you know that the high income 627 00:30:47,760 --> 00:30:50,280 earners want friction upon their purchases and they want the 628 00:30:50,280 --> 00:30:53,840 rewards and they're fine if the merchant pays the reward. 629 00:30:54,320 --> 00:30:57,760 See, whenever I swipe a credit card, I get a reward of 2 to 3%. 630 00:30:58,000 --> 00:31:01,160 I get that money back When I spend hundreds of thousands of 631 00:31:01,160 --> 00:31:04,960 dollars on business expenses, on paying AWS hosting fees or what 632 00:31:04,960 --> 00:31:07,840 have it. I get lots of money as a result 633 00:31:07,840 --> 00:31:09,640 in credit card rewards paid back to me. 634 00:31:10,200 --> 00:31:13,760 I have no interest in using stablecoin, none at all. 635 00:31:13,960 --> 00:31:17,800 Why would I want to give up the 3% fee so that the merchant can 636 00:31:17,800 --> 00:31:20,160 save money? That's a bad proposition for the 637 00:31:20,160 --> 00:31:25,240 customer, so I would never adopt A gentic technology that brings 638 00:31:25,240 --> 00:31:29,760 that fee to 0, making it so that I don't earn a reward that's not 639 00:31:29,760 --> 00:31:32,920 in my interest or any other high income earners interest at all. 640 00:31:33,280 --> 00:31:36,960 Any American Express user signs up for those cards specifically 641 00:31:36,960 --> 00:31:40,560 for the rewards so that they can get paid every single purchase. 642 00:31:40,960 --> 00:31:45,440 By taking the friction to 0 and wiping away that fee, you also 643 00:31:45,440 --> 00:31:48,440 wipe away the rewards. You can't have one without the 644 00:31:48,440 --> 00:31:50,760 other. You cannot have the 2 to 3% 645 00:31:50,760 --> 00:31:54,120 reward without the 2 to 3% fee from the merchant. 646 00:31:54,520 --> 00:31:57,880 So in the process of wiping away and bringing friction to zero, 647 00:31:57,880 --> 00:32:01,320 you also wipe away the primary value proposition of the credit 648 00:32:01,320 --> 00:32:03,440 card. And that just won't happen. 649 00:32:04,240 --> 00:32:07,240 I don't know anybody. I don't know a single person, 650 00:32:07,240 --> 00:32:10,800 Not one wealthy person that wants to do transactions through 651 00:32:10,800 --> 00:32:13,000 stablecoin. Not a single one. 652 00:32:13,160 --> 00:32:17,160 So when your entire premise is built on a false premise that 653 00:32:17,160 --> 00:32:20,800 customers want friction to go to 0, everything else falls apart. 654 00:32:21,120 --> 00:32:23,160 Customers like friction in payments. 655 00:32:23,560 --> 00:32:25,160 They like the time value of money. 656 00:32:25,480 --> 00:32:27,800 They like the security of being able to buy something now and 657 00:32:27,800 --> 00:32:30,120 pay for it later and dispute it in the process. 658 00:32:30,560 --> 00:32:31,880 They like the credit card rewards. 659 00:32:32,080 --> 00:32:34,040 They don't care if the merchant's paying them. 660 00:32:34,200 --> 00:32:36,360 They never have. So all the arguments here fall 661 00:32:36,360 --> 00:32:38,800 flat when faced with actual consumer behavior. 662 00:32:39,000 --> 00:32:41,480 Now this doomsday article continues on, but this time it 663 00:32:41,480 --> 00:32:44,600 expands its horizon. It broadens itself from 664 00:32:44,600 --> 00:32:47,680 individual companies like a DoorDash and American Express or 665 00:32:47,680 --> 00:32:51,200 MasterCard. That this time a Daisy chain of 666 00:32:51,200 --> 00:32:55,680 correlated bets where everything starts to unravel 1 domino at a 667 00:32:55,680 --> 00:32:59,080 time. And I will say this is one of 668 00:32:59,080 --> 00:33:02,400 the most beautifully written and architected bear cases. 669 00:33:02,560 --> 00:33:06,080 It's like a dream, a beautiful dream of destruction. 670 00:33:06,400 --> 00:33:08,040 Let's go ahead and just take a look at it. 671 00:33:08,080 --> 00:33:10,040 I I really do respect the riders. 672 00:33:10,040 --> 00:33:13,440 This is fantastic riding. They go over how private credit 673 00:33:13,440 --> 00:33:18,120 had grown from under 1 trillion in 2015 to 2.5 trillion in 2026. 674 00:33:18,520 --> 00:33:21,040 A meaningful share of the capital had been deployed into 675 00:33:21,040 --> 00:33:24,240 software and technology deals. Many of them leveraged buyouts 676 00:33:24,240 --> 00:33:27,040 of SAS companies. So in the future SAS companies 677 00:33:27,040 --> 00:33:31,720 are SAS companies are so toast in this future bear case that 678 00:33:31,720 --> 00:33:34,920 the valuations go so low that private equities buying them up 679 00:33:34,920 --> 00:33:38,080 left and right using debt and buying up SAS, SAS companies 680 00:33:38,080 --> 00:33:40,360 taking them private. So that's the future of SAS. 681 00:33:40,360 --> 00:33:42,280 It's just these companies that become worthless. 682 00:33:42,720 --> 00:33:46,200 They're like dying burrito chains or you know, sandwich 683 00:33:46,200 --> 00:33:49,960 chains, which we have a private equity coming in and buying up 684 00:33:49,960 --> 00:33:52,320 left and right. We have a headline here again 685 00:33:52,320 --> 00:33:55,560 from Moody's. This is in April of 2027. 686 00:33:56,120 --> 00:34:00,720 Moody's downgrades 18 billion of PE back software debt across 14 687 00:34:00,720 --> 00:34:04,480 issuers citing secular revenue headwinds from AI driven 688 00:34:04,520 --> 00:34:08,000 competitive disruption, the largest single sector action 689 00:34:08,000 --> 00:34:11,960 since energy in 2015. This is another fictional future 690 00:34:11,960 --> 00:34:15,440 headline that's that's Moody's now talking about the 691 00:34:15,440 --> 00:34:19,400 destruction of SAS companies. Secular revenue headwinds. 692 00:34:20,040 --> 00:34:22,280 Everyone remembers what happened after the downgrade. 693 00:34:22,560 --> 00:34:25,199 Industry veterans had already seen the playbook. 694 00:34:25,199 --> 00:34:27,400 Following the 2015 energy downgrade. 695 00:34:27,840 --> 00:34:31,639 Software backed loans began defaulting in Q3 of 2027. 696 00:34:32,360 --> 00:34:35,600 Private equity portfolio companies and Information 697 00:34:35,600 --> 00:34:37,719 Services and consulting followed. 698 00:34:38,199 --> 00:34:41,320 Several multi billion dollar leverage buyouts of well known 699 00:34:41,320 --> 00:34:43,159 SAS companies entered restructuring. 700 00:34:43,560 --> 00:34:48,159 Zendesk was the smoking gun. Zendesk misses the covenants as 701 00:34:48,280 --> 00:34:52,000 AI driven customer service automation erodes annual 702 00:34:52,000 --> 00:34:55,679 recurring revenue. 5 billion direct lending facility marked 703 00:34:55,679 --> 00:34:58,240 to $0.58. And this section continues on 704 00:34:58,240 --> 00:35:01,600 detailing the domino effect of when all of these SAS companies 705 00:35:01,880 --> 00:35:04,040 eventually go to zero. And like the rest of this, 706 00:35:04,040 --> 00:35:06,640 there's a number of logical problems with these assumptions. 707 00:35:07,160 --> 00:35:08,880 First of all, you again have Zendesk. 708 00:35:08,880 --> 00:35:10,000 Here is the one that they highlight. 709 00:35:10,360 --> 00:35:13,760 Now, when we look at Zendesk, this is also a company that's in 710 00:35:13,800 --> 00:35:15,760 many of the Fortune 500 companies. 711 00:35:16,280 --> 00:35:19,040 This article suggests that those companies will simply just RIP 712 00:35:19,040 --> 00:35:20,960 out Zendesk and replace it with an agent. 713 00:35:21,520 --> 00:35:23,200 But how long would that actually take? 714 00:35:23,720 --> 00:35:27,560 Consider how deeply integrated HR software is in the processes, 715 00:35:27,840 --> 00:35:29,760 the embedded nature of these products. 716 00:35:30,320 --> 00:35:36,000 Even if agentic technology was vastly superior to Zendesk, it 717 00:35:36,000 --> 00:35:39,400 would take half a decade plus to get to the point of actually 718 00:35:39,400 --> 00:35:41,560 replacing it. And that's a big if. 719 00:35:42,160 --> 00:35:44,880 But the integration cost, the cost of actually doing anything 720 00:35:44,880 --> 00:35:47,520 is incredibly difficult in a Fortune 500 company. 721 00:35:48,000 --> 00:35:51,600 In most cases, the solution has to be dramatically better to 722 00:35:51,600 --> 00:35:54,000 even consider it. That's switching costs, which 723 00:35:54,000 --> 00:35:56,080 are entirely ignored in this article. 724 00:35:56,720 --> 00:35:59,760 The other thing that I I just look at when I'm reading this is 725 00:35:59,760 --> 00:36:02,440 that when you're reading articles like this, they almost 726 00:36:02,440 --> 00:36:06,000 assume that humans are inflexible, that humans don't 727 00:36:06,040 --> 00:36:09,520 adapt, that humans don't have a brain and can figure things out 728 00:36:09,520 --> 00:36:12,880 when things change, which is the complete opposite of all human 729 00:36:12,880 --> 00:36:15,680 history. Humans are highly flexible and 730 00:36:15,680 --> 00:36:18,720 adaptable. Humans take on new tasks all the 731 00:36:18,720 --> 00:36:21,960 time. They they adapt to situations in 732 00:36:21,960 --> 00:36:23,640 different disruptions all the time. 733 00:36:23,640 --> 00:36:26,440 One of the big concerns here is that all these SAS companies go 734 00:36:26,440 --> 00:36:29,360 to zero. Well, if that's the case, if 735 00:36:29,360 --> 00:36:32,720 Zendesk and all these other SAS companies went to zero, that 736 00:36:32,720 --> 00:36:35,120 means that all the other companies paying for them. 737 00:36:35,560 --> 00:36:37,760 Imagine all those companies that are paying money to all these 738 00:36:37,760 --> 00:36:40,000 SAS companies. All those companies would have 739 00:36:40,000 --> 00:36:42,720 margins go up. So every company that's paying 740 00:36:42,720 --> 00:36:45,000 for a SAS company, let's say you're paying for Salesforce, 741 00:36:45,000 --> 00:36:49,480 adobezendeskmonday.com, you name it, you're paying for all these 742 00:36:49,480 --> 00:36:52,480 different services. You're paying $500 a month per 743 00:36:52,480 --> 00:36:54,960 employee for all these different licenses and seat based 744 00:36:54,960 --> 00:36:57,800 services. If you could erase all of those, 745 00:36:58,240 --> 00:37:01,560 imagine the margins of all these companies paying for all that. 746 00:37:02,320 --> 00:37:06,240 Every other company that's not SAS would have dramatically 747 00:37:06,240 --> 00:37:09,840 higher margins as a result. Every other company that's not 748 00:37:09,840 --> 00:37:14,000 SAS would have entirely bigger budgets to be able to hire more 749 00:37:14,000 --> 00:37:18,080 people, to be able to expand, to be able to do land grabs, to be 750 00:37:18,080 --> 00:37:21,160 able to create entirely new products and departments and 751 00:37:21,160 --> 00:37:23,600 developments, to compete in new verticals. 752 00:37:24,160 --> 00:37:27,080 Which whenever you do that, no matter how technologically 753 00:37:27,080 --> 00:37:29,200 advanced you are, it requires humans. 754 00:37:29,720 --> 00:37:31,640 That's the problem with this assumption overall. 755 00:37:31,920 --> 00:37:33,920 It's talking about the destruction of one category, 756 00:37:33,920 --> 00:37:37,160 which is SAS, without mentioning that when that happens, the 757 00:37:37,160 --> 00:37:39,480 companies that are paying for all of that, that now have those 758 00:37:39,600 --> 00:37:42,560 services being automated by agents, are dramatically more 759 00:37:42,560 --> 00:37:45,480 profitable. Profitable companies expand. 760 00:37:45,520 --> 00:37:47,720 That's typically what they do all throughout human history. 761 00:37:47,720 --> 00:37:50,560 They expand, they grab more territory, they go into 762 00:37:50,560 --> 00:37:53,360 different categories and that requires more people. 763 00:37:53,960 --> 00:37:56,840 So this is a a very rigid look at the future. 764 00:37:56,960 --> 00:38:00,040 It's completely unrealistic. It ignores human behavior. 765 00:38:00,400 --> 00:38:03,600 It focuses hyper focused on a few companies and then even 766 00:38:03,600 --> 00:38:06,840 those companies that it hyper focuses on, it gives very flawed 767 00:38:06,840 --> 00:38:09,280 arguments that don't really represent reality. 768 00:38:09,960 --> 00:38:12,680 Saying that people want 0 friction in transactions with 769 00:38:12,680 --> 00:38:15,600 MasterCard, saying that people want to order things through a 770 00:38:15,600 --> 00:38:18,200 text message. These are assumptions on their 771 00:38:18,200 --> 00:38:20,320 surface are just on the false premise. 772 00:38:20,680 --> 00:38:23,080 Yet it's enough to move the markets down dramatically. 773 00:38:23,200 --> 00:38:26,760 Now I don't mind responding to these type of hypotheticals and 774 00:38:27,080 --> 00:38:29,720 and giving my defense of them, my rebuttal of them and explain 775 00:38:29,720 --> 00:38:32,560 why I think a lot of this is completely ridiculous. 776 00:38:32,880 --> 00:38:35,480 But I'd also ask investors, ones that are listening to this, ones 777 00:38:35,480 --> 00:38:37,520 that are learning, investing and trying to take themselves 778 00:38:37,520 --> 00:38:40,520 seriously as an investor, can we just get a grip? 779 00:38:41,320 --> 00:38:44,120 I mean, can we? Can we for a minute in this 780 00:38:44,120 --> 00:38:48,880 market just get some sense and have some stability and be level 781 00:38:48,880 --> 00:38:51,120 headed? Can we go a day without the 782 00:38:51,120 --> 00:38:53,520 market being ripped and tugged and pulled in different 783 00:38:53,520 --> 00:38:57,000 directions by a hyper viral fan fiction article? 784 00:38:57,560 --> 00:39:01,560 This reads like fan fiction. It reads like a Marvel story. 785 00:39:02,040 --> 00:39:05,480 So much of it is completely flawed, so much of it is 786 00:39:05,480 --> 00:39:08,000 embellished. So much of it ignores important 787 00:39:08,000 --> 00:39:10,520 market dynamics. Now, again, no offense to the 788 00:39:10,520 --> 00:39:12,560 author. It's an interesting article and 789 00:39:12,560 --> 00:39:14,640 it's well written. But it's also completely 790 00:39:14,640 --> 00:39:17,760 unrealistic. Yet it's moving the market, just 791 00:39:17,760 --> 00:39:19,320 like many of these ones before them. 792 00:39:19,760 --> 00:39:22,680 They have compelling narratives that sound good on the surface 793 00:39:22,680 --> 00:39:25,640 and it's causing investors to question their own reality. 794 00:39:26,440 --> 00:39:31,120 It poses a a future where AI is this unstoppable alien force 795 00:39:31,120 --> 00:39:33,680 that takes over the world that no one can do anything about, 796 00:39:33,680 --> 00:39:36,720 that destroys everything. In fact, in every time period 797 00:39:36,720 --> 00:39:39,080 known to man, there's people talking about the end of the 798 00:39:39,080 --> 00:39:42,480 world, the doomsday, the doom and gloom, how nothing will be 799 00:39:42,480 --> 00:39:44,480 the same and the future will look like nothing you've ever 800 00:39:44,480 --> 00:39:47,880 seen, and how the stocks you own today are essentially worthless. 801 00:39:48,040 --> 00:39:50,760 This is what Peter Lynch literally talked about decades 802 00:39:50,760 --> 00:39:53,280 ago. OK, now we'll get to the 803 00:39:53,280 --> 00:39:55,360 important stuff. There's always something to 804 00:39:55,360 --> 00:39:58,960 worry about. This is the difference. 805 00:39:58,960 --> 00:40:00,240 This is what happens in the stock market. 806 00:40:00,320 --> 00:40:03,360 Because, see, everybody's got the brain power to do well in 807 00:40:03,360 --> 00:40:04,720 the stock market. Question is whether you have the 808 00:40:04,720 --> 00:40:06,760 stomach for it. That's the key organ in the 809 00:40:06,760 --> 00:40:08,880 body. There's always something to 810 00:40:08,880 --> 00:40:10,440 worry about. I mean, there's always something 811 00:40:10,440 --> 00:40:12,600 to worry about. In the 50s, it was depression 812 00:40:12,600 --> 00:40:15,360 and nuclear war. The 50s was the best decade. 813 00:40:15,360 --> 00:40:17,040 This century. Do you remember when oil went 814 00:40:17,040 --> 00:40:18,840 from 4 to 40? You remember that period? 815 00:40:19,320 --> 00:40:21,480 And all the countries of the world are going to go bankrupt. 816 00:40:22,600 --> 00:40:24,840 And then and the big banks go bankrupt and we're going to have 817 00:40:24,840 --> 00:40:26,920 a Great Depression and the stock market's going down and you're 818 00:40:27,240 --> 00:40:28,920 going to wind up selling pencils and apples, you know? 819 00:40:29,200 --> 00:40:32,000 Doesn't that sound familiar? You're going to end up selling 820 00:40:32,000 --> 00:40:34,320 pencils and apples. The whole stock market's going 821 00:40:34,320 --> 00:40:37,440 to go bankrupt. This is Peter Lynch saying this 822 00:40:37,440 --> 00:40:41,600 prediction has happened before in almost the same exact way. 823 00:40:41,600 --> 00:40:45,640 The only thing that's changed is the time history repeats and 824 00:40:45,640 --> 00:40:47,800 we're seeing again another repetition of it. 825 00:40:47,960 --> 00:40:51,920 So I'm asking investors today to realize that right now you're in 826 00:40:51,920 --> 00:40:54,040 a time period where there's a lot of uncertainty, there's 827 00:40:54,040 --> 00:40:56,520 questions in the air, and nothing about that is new. 828 00:40:56,520 --> 00:40:59,520 Nothing's abnormal. You'll be in the same situation 829 00:40:59,520 --> 00:41:02,080 in five years and in 10 years. As Peter Lynch highlights, his 830 00:41:02,080 --> 00:41:04,520 entire investment career has been filled with uncertainties 831 00:41:04,520 --> 00:41:05,760 and predictions of doom and gloom. 832 00:41:06,240 --> 00:41:10,200 Whether it's oil collapsing the market, whether it's nuclear 833 00:41:10,200 --> 00:41:13,600 warfare, the Great Depression or the recession or the the even 834 00:41:13,600 --> 00:41:17,200 greater depression, whatever it may be, there's always something 835 00:41:17,200 --> 00:41:18,880 to worry about in all times of the market. 836 00:41:19,240 --> 00:41:21,960 So if you're investor, get a grip, lock in. 837 00:41:22,400 --> 00:41:27,960 This is a time to be optimistic. Not to be greedy, not to be 838 00:41:27,960 --> 00:41:30,880 unprudent, but we should be optimistic about the future. 839 00:41:31,000 --> 00:41:33,040 Optimism is what makes money in the end. 840 00:41:33,440 --> 00:41:35,640 You can look at the biggest examples and although there's 841 00:41:36,200 --> 00:41:38,920 investors that try to look smart by always having bearish calls 842 00:41:38,920 --> 00:41:41,360 and when the market will collapse and there's some of 843 00:41:41,360 --> 00:41:43,520 them like that, you have the Michael Buries of the world. 844 00:41:43,880 --> 00:41:46,200 There's always way more investors that have made way 845 00:41:46,200 --> 00:41:49,480 more money through optimism of having realistic positive 846 00:41:49,480 --> 00:41:52,560 assumptions of the future. Knowing that many of these 847 00:41:52,560 --> 00:41:54,920 companies are going to be highly successful, extremely 848 00:41:54,920 --> 00:41:57,560 prosperous. That if money is destroyed in 849 00:41:57,560 --> 00:42:00,800 some companies that can't maneuver and adapt to agentic 850 00:42:00,800 --> 00:42:04,040 technology, many of them will. And the ones that go away will 851 00:42:04,040 --> 00:42:06,920 mean higher margins for the existing companies that will be 852 00:42:06,920 --> 00:42:08,960 able to expand and grow in the process. 853 00:42:09,120 --> 00:42:11,320 What we have right now is investors selling off great 854 00:42:11,320 --> 00:42:14,920 companies for entirely unrealistic presumptions of the 855 00:42:14,920 --> 00:42:17,800 future. Ones that are seeded in fear and 856 00:42:17,800 --> 00:42:22,560 doubt, not realistic optimism. So that's my thoughts on this 857 00:42:22,560 --> 00:42:24,280 and that's how I'm responding as an investor. 858 00:42:24,720 --> 00:42:27,200 I'll continue to invest in the companies that I think will be 859 00:42:27,200 --> 00:42:29,080 incredibly profitable in the future. 860 00:42:29,080 --> 00:42:32,120 And I think that the disruption risk is dramatically overstated 861 00:42:32,120 --> 00:42:35,520 by many of these articles. And this certainly isn't going 862 00:42:35,520 --> 00:42:38,520 to be the last. As we see more AI technology 863 00:42:38,520 --> 00:42:41,720 emerge, more demos, more clawed plug insurance, we're going to 864 00:42:41,720 --> 00:42:45,040 see more of this doom and gloom. But that's the latest as of now. 865 00:42:45,360 --> 00:42:46,840 Now moving on, we get to some big news. 866 00:42:46,840 --> 00:42:51,560 Over the past seven days, Netflix gave the opportunity for 867 00:42:51,560 --> 00:42:54,200 Warner Brothers to go back to Paramount and say, hey, look, 868 00:42:54,400 --> 00:42:57,280 you have 7 days to revise your offer and give us your best and 869 00:42:57,280 --> 00:42:59,680 final offer. And that has happened. 870 00:43:00,040 --> 00:43:03,400 Warner Bros Discovery says that Paramount made a higher bid and 871 00:43:03,400 --> 00:43:05,920 the board will weigh the offer against the Netflix deal. 872 00:43:05,960 --> 00:43:08,520 Basically, what's going on here is the offer that Paramount 873 00:43:08,520 --> 00:43:10,840 submitted as private. So we know that they submitted 874 00:43:10,840 --> 00:43:12,400 an offer. It was higher than their 875 00:43:12,400 --> 00:43:14,520 previous one, but the details are private. 876 00:43:14,520 --> 00:43:16,600 We don't know the number. Everybody's speculating of what 877 00:43:16,600 --> 00:43:18,560 it could be. It could be anywhere from like 878 00:43:18,560 --> 00:43:23,320 $31.00 with better terms to $34 on the high end. 879 00:43:23,880 --> 00:43:26,840 And either way, this is Paramount's last ditch attempt 880 00:43:27,000 --> 00:43:31,320 to steal Warner Brothers away from Netflix to say, hey, Warner 881 00:43:31,320 --> 00:43:33,640 Brothers, we want to go with Paramount over Netflix because 882 00:43:33,640 --> 00:43:36,000 their offer's so much more attractive now. 883 00:43:36,200 --> 00:43:40,200 They can't necessarily do that unless Netflix looks at their 884 00:43:40,200 --> 00:43:42,720 offer and decides not to beat it. 885 00:43:43,120 --> 00:43:45,600 So Netflix can look at it and they get the first call. 886 00:43:45,600 --> 00:43:47,040 They can match the offer or beat it. 887 00:43:47,640 --> 00:43:50,560 So Netflix is going to simply look at it, look at the revised 888 00:43:50,560 --> 00:43:52,760 offer and see if they want to adjust theirs at all or if they 889 00:43:52,760 --> 00:43:54,400 need to do anything to beat that offer. 890 00:43:54,400 --> 00:43:56,840 And that's up to them. Netflix has all the power in the 891 00:43:56,840 --> 00:43:58,720 situation. I think that Netflix is going to 892 00:43:58,720 --> 00:43:59,760 look at it and say, you know what? 893 00:44:00,040 --> 00:44:02,920 If we have to pay an additional four to six months of free cash 894 00:44:02,920 --> 00:44:06,240 flow to buy this service, to make it so that we own all of 895 00:44:06,240 --> 00:44:10,160 this for the next 20-30 years so that we can drop on this well of 896 00:44:10,160 --> 00:44:12,840 incredibly valuable content and distribute it through our 897 00:44:12,840 --> 00:44:15,400 massive distribution, that's probably worth it. 898 00:44:15,800 --> 00:44:18,440 Internally, Netflix knows exactly what they're willing to 899 00:44:18,440 --> 00:44:21,280 pay and what is overpriced. They already have that modeled 900 00:44:21,280 --> 00:44:22,960 out. They already have their numbers. 901 00:44:23,280 --> 00:44:26,040 So they can look at this and weigh it against what is their 902 00:44:26,040 --> 00:44:28,440 price of what they believe this asset is worth. 903 00:44:28,880 --> 00:44:32,400 And as Ted Sarandos says, they are disciplined buyers. 904 00:44:32,800 --> 00:44:35,080 If they don't like the deal, if it's simply just too much and it 905 00:44:35,080 --> 00:44:38,280 makes it not worth it, they will walk away and Netflix will be 906 00:44:38,280 --> 00:44:41,360 able to collect over a 2 1/2 billion dollar fee. 907 00:44:41,920 --> 00:44:44,360 So even if they walk away, they get something out of this. 908 00:44:44,880 --> 00:44:47,680 But if I have to guess, and again this is hypothetical, 909 00:44:47,680 --> 00:44:49,760 maybe they won't. My guess is that Paramount 910 00:44:49,760 --> 00:44:51,920 submits a higher offer. I think that Netflix makes 911 00:44:51,920 --> 00:44:55,000 theirs more attractive and locks it down and then it's done from 912 00:44:55,000 --> 00:44:56,720 there. But we'll have to wait and see. 913 00:44:57,280 --> 00:44:59,360 Now moving on, we have another bit of news here. 914 00:44:59,360 --> 00:45:03,280 This is a big headline. Meta and AMD agreed to AI chip 915 00:45:03,280 --> 00:45:05,520 deal worth more than $100 billion. 916 00:45:06,080 --> 00:45:09,760 These deals used to be really cool, like we'd see these and 917 00:45:09,760 --> 00:45:12,640 everybody would get excited. Oh my gosh, $100 billion deal 918 00:45:12,640 --> 00:45:15,120 with a chip company between a big tech company. 919 00:45:15,680 --> 00:45:18,080 But now that they've happened so frequently, it just seems like 920 00:45:18,080 --> 00:45:20,720 another day, like every other day there's a deal like this. 921 00:45:20,720 --> 00:45:23,280 It seems like I'm getting a little bit numb to looking at 922 00:45:23,280 --> 00:45:25,320 these deals. The instant reaction to this 923 00:45:25,320 --> 00:45:27,360 deal is AMD, of course, is up big. 924 00:45:27,440 --> 00:45:31,480 They got a new customer, so they're up nearly 10% and Meta's 925 00:45:31,480 --> 00:45:33,520 up a little bit. So Meta's not even being hurt by 926 00:45:33,520 --> 00:45:35,400 this. Most investors already know that 927 00:45:35,400 --> 00:45:38,200 Meta's they're buying big, that they're investing in CapEx. 928 00:45:38,200 --> 00:45:41,320 So nothing is new about that. Now, I've recently invested A 929 00:45:41,320 --> 00:45:42,880 substantial amount of money in Meta. 930 00:45:42,880 --> 00:45:44,680 I've made it my third largest position. 931 00:45:44,920 --> 00:45:48,720 It's about $150,000 invested in it and I love what the business 932 00:45:48,720 --> 00:45:50,520 is doing. They're becoming one of the few 933 00:45:50,520 --> 00:45:53,480 supercomputing powers. Many people are bearish on this 934 00:45:53,480 --> 00:45:55,080 CapEx spend. I'm not. 935 00:45:55,080 --> 00:45:58,480 Long term, I realize that it will hurt the financials in the 936 00:45:58,480 --> 00:46:02,200 short term, it'll make it so that their accounting and the 937 00:46:02,200 --> 00:46:04,680 fact that they're depreciating these assets over time will hurt 938 00:46:04,680 --> 00:46:07,080 their earnings. But I think long term, this sets 939 00:46:07,080 --> 00:46:09,720 these companies up to be so uniquely strong. 940 00:46:10,000 --> 00:46:12,960 Meta will have one of the strongest moats in the world, 941 00:46:13,280 --> 00:46:16,240 both a network Moat and an infrastructure Moat. 942 00:46:16,520 --> 00:46:18,280 It'll be virtually indestructible. 943 00:46:18,560 --> 00:46:22,480 So I view this company as incredibly Moat heavy, super 944 00:46:22,480 --> 00:46:26,520 wide and deep Moat with ample growth opportunity priced at a 945 00:46:26,520 --> 00:46:29,720 22 Ford PE. To me, that feels like a very 946 00:46:29,920 --> 00:46:33,160 attractive value proposition and attractive situation to invest 947 00:46:33,160 --> 00:46:34,560 in. That's why I continue to feel 948 00:46:34,560 --> 00:46:36,800 good about this one. Finally, we move on to the fail 949 00:46:36,800 --> 00:46:38,320 of the week. In this case, it's an 950 00:46:38,320 --> 00:46:43,520 unintentional this is an accidental hacking of about 7000 951 00:46:43,520 --> 00:46:45,920 robot vacuums. We have Sammy as Dewfall. 952 00:46:45,960 --> 00:46:48,560 He claims that he wasn't trying to hack every robot vacuum in 953 00:46:48,560 --> 00:46:51,240 the world. He just wanted to remote control 954 00:46:51,240 --> 00:46:56,600 his brand new DJI Romo vacuum with the PS-5 game PS-5 game 955 00:46:56,600 --> 00:46:59,360 pad, he tells The Verge. Because it sounded fun. 956 00:47:00,080 --> 00:47:02,760 But when his homegrown remote control app started talking to 957 00:47:02,760 --> 00:47:05,800 DJI servers, it wasn't just one vacuum cleaner that replied 958 00:47:06,120 --> 00:47:09,320 Roughly 7000 of them. All of them around the world 959 00:47:09,320 --> 00:47:12,240 begin treating as Dewfall like their boss. 960 00:47:12,440 --> 00:47:15,680 He could remotely control them and look and listen through 961 00:47:15,680 --> 00:47:18,360 their live camera feeds. This means that this guy 962 00:47:18,360 --> 00:47:21,640 inadvertently hacked other people's robot vacuums, which 963 00:47:21,680 --> 00:47:25,480 have cameras on board, meaning that he hacked cameras of other 964 00:47:25,480 --> 00:47:29,520 people's homes. 7000 people. He would watch them map out each 965 00:47:29,520 --> 00:47:32,520 room of a house, generating a complete 2D floor plan. 966 00:47:32,800 --> 00:47:35,560 You could use any robot's IP address to find its rough 967 00:47:35,560 --> 00:47:38,040 location. I found my device was just in 968 00:47:38,040 --> 00:47:42,480 one of the ocean of devices. So it has a map here of like a 969 00:47:42,760 --> 00:47:45,120 we have an area map of all the different devices that he's 970 00:47:45,120 --> 00:47:47,400 found and here it has like a live camera feed. 971 00:47:47,720 --> 00:47:50,400 Like some of these have on board cameras so they can see objects 972 00:47:50,400 --> 00:47:53,960 and avoid them, but it also inadvertently operates as a 973 00:47:53,960 --> 00:47:57,520 camera going around your home. You could just drive around and 974 00:47:57,520 --> 00:48:00,160 film people at will and they don't even know they're being 975 00:48:00,160 --> 00:48:01,880 filmed. They might just think that their 976 00:48:01,880 --> 00:48:04,400 robot's acting a little funny. And this has to be one of the 977 00:48:04,400 --> 00:48:07,160 worst hacking or personal invasion of people's privacies 978 00:48:07,720 --> 00:48:10,440 possibly ever done. I mean, have we had a situation 979 00:48:10,680 --> 00:48:14,960 where 7000 devices that are mobile and have cameras have 980 00:48:14,960 --> 00:48:17,960 been hacked in people's homes? In most cases, if you hack a 981 00:48:17,960 --> 00:48:21,480 camera in someone's home, at least it's just one location. 982 00:48:22,080 --> 00:48:24,280 These ones are literally mobile. You can drive them around. 983 00:48:24,280 --> 00:48:27,680 So he has a camera that he can stare in other people's homes. 984 00:48:27,760 --> 00:48:31,280 He says right now that DJI hasn't even fixed all the 985 00:48:31,280 --> 00:48:34,240 vulnerabilities that he's found. One of them is the ability to 986 00:48:34,240 --> 00:48:37,560 view your own DJI Romo video stream without needing its 987 00:48:37,560 --> 00:48:40,040 security pin. Another one is so bad, I won't 988 00:48:40,040 --> 00:48:42,520 describe it until DJI has more time to fix it. 989 00:48:42,600 --> 00:48:46,000 So DJI has a massive critical failure and there's security 990 00:48:46,000 --> 00:48:48,160 here. And if you have one of these 991 00:48:48,160 --> 00:48:50,920 robots, especially with the camera, you might want to just 992 00:48:50,920 --> 00:48:53,800 put the robot away, take it off its wheels, flip it upside down, 993 00:48:53,800 --> 00:48:55,640 make sure it can't drive anywhere without your 994 00:48:55,640 --> 00:48:57,760 permission. Because as of right now, it 995 00:48:57,760 --> 00:49:01,520 could literally be viewed by anyone with a clod code plugin. 996 00:49:01,960 --> 00:49:04,920 And until the update happens, until the company publicly 997 00:49:05,120 --> 00:49:08,360 acknowledges it and it fixes all these these security exploits, 998 00:49:08,800 --> 00:49:10,960 it might be a concern. That's going to be it for this 999 00:49:10,960 --> 00:49:12,080 time. Hope you enjoyed. 1000 00:49:12,240 --> 00:49:13,040 See you in the next one.