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Felix Salmon: This ad free podcast is part of your sleep plus membership.

Felix Salmon: Hello. Welcome to the WTF SBF episode of Sleep Money. Your guide to the Business and Finance news of what has been a completely batshit week.

Eli Lilly, Emily Peck: Wild stuff.

Felix Salmon: Wild stuff that was like.

Lizzie O’Leary: Totally fucking bananas.

Felix Salmon: Totally fucking bananas. I am Felix Salmon the access. I’m here with Emily Peck of Axios. Hello. And we have a special guest. Hello. Who are you? Special guest.


Lizzie O’Leary: I’m Lizzie O’Leary, also of Slate and I host the podcast. What next? TBD.

Felix Salmon: And you and I are going to be talking on what next DVD TBD all about SBF WTF.

Lizzie O’Leary: OMG.

Felix Salmon: Fdic. CC FTX US Chapter 11 fml. It’s a shit show in the world of crypto this week, so we are going to be covering the crypto shit show. We are going to be talking about Twitter of course, because that has imploded. Sorry. Shit show Emily apologizes, but it was her idea, she’d say.

Felix Salmon: We do need to talk about this now. We are going to talk about metal, which laid over 11,000 people, which you may not have noticed amidst all of the chaos. We have a slate plus about the Paul Allen sale and generally is just an awesome episode because Lizzie’s on it. So keep on listening. It’s all coming up on the slate money, so obviously we need to start with FTX. This has been dominating my entire week and it is a wild story. Emily, as the kind of person who’s been at least from afar. Like what? What do you what do you think the big story is here?


Eli Lilly, Emily Peck: The big story is yet again. Everyone was fooled by a young boy genius, Sam Bankman-fried, who graced every cover of every business magazine, following in the footsteps of Elizabeth Holmes, Jeffrey Skilling, and probably a lot of other fancy scammers.

Felix Salmon: But Newman.

Eli Lilly, Emily Peck: Avenue and.

Lizzie O’Leary: Probably some others who haven’t fallen. Yeah, yeah.

Eli Lilly, Emily Peck: He he the Emperor had no clothes. SBF, as he was known, ran FTX, which is a crypto exchange, but also an investing firm called Alameda an apparently he used money that people trusted and put on. FTX You took it customer money. As far as I understand it, took it off the exchange, used it for other stuff, and then when people wanted it back, it was gone.


Felix Salmon: Well, specifically, what he did was he lent it to Alameda. He took roughly half, according to reports he took, there was roughly $16 billion. That people had on the exchange that, you know, if I put on the trade, you know, I need to. Put collateral on the exchange or just leave stuff on the exchange. They had roughly $16 billion of customer crypto basically on the exchange. He lent about half of that to Alameda, which is completely insane.

Lizzie O’Leary: Bad. It’s bad. Bad. Regulators think that’s bad.

Felix Salmon: Well, if you if you if you were regulated, it would be illegal. Of course, he was based in the Bahamas precisely because they didn’t have any regulation for that kind of thing. And so that’s just a very bad look for any exchange to lend that much money to an affiliated hedge fund. Even worse, the collateral he took for that loan was his own token FTT that he could just make up from thin air. And so that’s an even worse look. Put those two things together and the guy looks just way out of his depth. The weird thing is that he gave an interview last year to the Odd Lots podcast, not the one everyone is talking about, where he talks about black boxes and bonuses.


Lizzie O’Leary: And Matt and Matt Levine calls the whole thing a Ponzi.

Felix Salmon: And but but the previous one a few months earlier, he went into enormous detail about how it’s incredibly dangerous for an exchange to lend a large amount of money to a single client because that can be the end of the exchange. He knew exactly what he was doing. But what seems to have happened is that. Alamy either wound up needing to borrow a whole bunch of money for two big reasons. And and he’s like, Well, there’s nowhere else we can get it. We’re just going to have to lend it out of FTX funds. And that was the beginning of the end.


Lizzie O’Leary: So I have a question. If he had done this and Coindesk had not published this article, that that showed kind of Alamitos balance sheet was super wonky and. Begun. What I think we can safely say is a bank run. Really? If that had not happened, would we know any of this? And would FTX be intact? Like what it’s just doing?

Felix Salmon: If it’s a super interesting question because. All of crypto is just based on faith. It is the ultimate faith based community.

Lizzie O’Leary: I mean, much like money itself.

Felix Salmon: Well.

Lizzie O’Leary: But governments are involved.

Felix Salmon: Yeah, like governments. Governments can force you to pay your taxes in their currency. And if you don’t pay your taxes in their currency, they can send you to jail. Right. That none of that exists in crypto. There’s no actual legal need for anyone to own any crypto ever. If a Bitcoin is worth $15,000 or $20,000 or $50,000, it’s only because people think it is. If they all decide we don’t think there’s anything there and sell it, it’s going to be worth zero. There’s no intrinsic value to anything in crypto. So that’s the first thing, right? Like they’re for anything that is built on crypto is inherently. Based on trust and faith that there is some value in here.


Felix Salmon: And for a long time there was some value in FTX and specifically there was a lot of value in the stock. And then one day there wasn’t value in the FTT token. Any decent exchange should be able to survive that because it’s just an exchange and they don’t. An exchange doesn’t need a lot of balance sheet. And in fact, the FTX US exchange could easily have survived that.

Lizzie O’Leary: Because what they had, they had the reserves on hand. They had some countries or.

Felix Salmon: Well, no, because the FTX U.S. exchange never did this thing called re hypothecation. FTX was doing lending customer funds out to it to someone else. The FTX us-eu exchange never even issued ftt this exchange token. In fact, if you were in the U. If you were in the US, there was no legal way for you to buy FTT at all. So the U.S. exchanges, because of fear of regulators, were all actually basically fine. But but FTX us was tiny in comparison to FTX the main thing in the Bahamas. And so, yeah, basically anything in crypto, if people lose faith in it, it goes to zero.


Eli Lilly, Emily Peck: And so to answer Lizzie’s question, though. But so if not for the Coindesk piece, perhaps people wouldn’t have lost faith in FTX at that.

Felix Salmon: So. So yeah, FTX just I don’t think we’ve mentioned this yet has filed for bankruptcy. Its liabilities exceed its assets. The whole thing is going to be a Delaware shit show.

Felix Salmon: But the precipitating events were that there were a few precipitating events. One was the SBF got into a big fight with CS. Who’s the other big whale in the crypto space?


Lizzie O’Leary: The Binance.

Felix Salmon: The CEO of Binance, which is by far the biggest exchange in crypto. Binance is like ten times bigger than FTX. So and CC had a stake in FTX because he, you know, very early on had invested in FTX and. Because they were having a big fight. CS He wouldn’t apparently give information about his wealth to SBF, who needed it because he needed to detail all of the wealth of his shareholders in order to get various US U.S. licenses. FTX bought out. CS He paid $2 billion for his stake in FTX and then you needed to find that $2 billion somewhere. And that was basically the first problem.


Lizzie O’Leary: That’s where the internal lending came from.

Felix Salmon: That’s where some of the internal lending came from. And then the other thing he needed is he needed to borrow like 500 billion, $500 million because he you know, there was this company called Voyager that went bankrupt and he kind of rescued Voyager. So he suddenly needed all of this cash in order to get all of this cash. He wound up borrowing money and also issuing a bunch of FTT tokens. Right. So a large chunk of what he paid for his stake in FTX was in FTT.

Eli Lilly, Emily Peck: Which is just made up money.

Felix Salmon: Which Lamers has made that money. But like everything in crypto is made up. So like, fine, whatever. But then what happens is he wakes up one morning, sees a report in Coindesk saying, See, FTX tokens are basically all owned by Alameda. And this is like, shit, that’s not a good look. So he’s like, I’m just going to sell these. The minute he decides to sell them. Everyone else is like, Oh shit. And then, as Lizzie says, you have this bank run style situation.


Lizzie O’Leary: And then the price would have plummeted. Like it was like the price was plummeting because easy was selling and.

Felix Salmon: Well, the price is plummeting because everyone is selling it. Right. But. But then. Emily had a wonderful line a bit earlier. FTX is when you say.

Eli Lilly, Emily Peck: Oh. SB So Sam Bankman-fried when that starts happening, he’s like, Don’t worry, everyone’s going to get their money. My first priority is you, the customer. And then, you know, people aren’t getting their money. He’s filed for bankruptcy. And I said, SBF is no FDIC. And that’s the that’s why in the U.S., we don’t we don’t have bank runs at regular banks. People, You’re you put your money in a bank it says FDIC and a little placard and you know whatever happens to the bank your money back.


Felix Salmon: More to the point, SBF is no SIPC either. Right. Like when.

Eli Lilly, Emily Peck: We don’t know what.

Felix Salmon: That is. When MF Global.

Eli Lilly, Emily Peck: Is, he probably.

Felix Salmon: Knows. So there are very, very, very there were very close parallels between what happened to FTX, what happened to MF Global. Do you remember MF Global? That was John Cosines Little Investment bank. Oh, you.

Eli Lilly, Emily Peck: Remember the you talk about that we’ve been through.

Lizzie O’Leary: So we’ve been through so many collapses. Like I’m like, which one is that?

Felix Salmon: MF Global was was brought down by basically the same thing which was re hypothecate in customer funds. And in that.

Lizzie O’Leary: Fancy word, what does that mean?

Felix Salmon: It basically means lending them out to someone else and not keeping them. You know.


Eli Lilly, Emily Peck: You’re not supposed to.

Felix Salmon: As Al Gore would put it. But the. So anyway, so John, cause I know MF Global was messing around with customer funds and that was bad and wrong. But ultimately, MF Global investors were protected because there is SIPC insurance, another which is basically the securities industry version of the FDIC.

Lizzie O’Leary: Securities Investment.

Felix Salmon: Protection Corporation or something. Something.

Eli Lilly, Emily Peck: Is that why am I well, this may to you in the weeds, but is that why am I for a1k Money is also safe, like if fidelity goes out of business.

Felix Salmon: Exactly.

Eli Lilly, Emily Peck: Yes. Yeah. Yes. Okay. So my follow on K money is safe and my money money is safe because it’s FDIC insured. So but if I put my money in crypto, it is not safe.

Felix Salmon: Exactly.

Lizzie O’Leary: Well, if right now, I mean.

Felix Salmon: Well, I mean, to be fair and you know, I’m going to come out and say this and it’s going to come up and blow in my blurb in my face because everything is moving so fast. To be fair, it seems as though Americans with crypto are a safe and they still manage to keep their crypto. It was only the people who were dealing with like these offshore Bahamas exchanges who stand to lose a bunch of their crypto.

Eli Lilly, Emily Peck: Because the Coinbase CEO came out in a blog post or I read, I was reading something where he said, When you give us your money, we put it away and we keep it for you one for one, and you can get it back like they’re not they’re not doing what a bank does, which is they take the bank takes your money and lends.


Lizzie O’Leary: But, but it’s, but it’s also like lending long or you.

Felix Salmon: Know so like there has.

Eli Lilly, Emily Peck: The backstop of regulation.

Felix Salmon: Is.

Lizzie O’Leary: Going to keep that tier one capital on hand.

Felix Salmon: The coin the Coinbase situation is a bit complicated because there are two different ways you can hold money at Coinbase. One is where they just custody your crypto for you and the other one is where you have an account at Coinbase with crypto in it. Okay. And one of them it is absolutely undeniably your crypto and you own it. And the other one it is actually a Coinbase liability to you. But he is right that all of that crypto is kept in, you know, a walled off garden, as it were, you know, for your on your behalf. And that even if Coinbase went under, you should be able to grab it. It’s just there’s never been a bankruptcy where that has been tested. So we don’t know for sure.

Felix Salmon: But just to put things in perspective, Coinbase has roughly $100 billion worth of crypto, just people holding their crypto on Coinbase. Okay. FTX was not a custodian in that sense. FTX, as we said, held about $16 billion, but that was all crypto that was being traded. That was, you know, people were going long and short and yield farming and all the rest of it. The, the big place where people keep their crypto is Coinbase is probably the biggest in the world. And yeah, that’s American, it’s regulated, it’s listed on the stock exchange and it seems relatively safe. Obviously the crypto can go down in value, but if you have one bitcoin today, you’ll probably have one bitcoin tomorrow.


Eli Lilly, Emily Peck: And do you think that fact about Coinbase keeps crypto having some kind of value? Like even though what’s happening with SBF is very destabilizing to crypto overall, there are sort of these things that put a floor in place that means crypto will still could, still, should still have value.

Felix Salmon: Well, one of the problems is that. Because everyone is so scared of American regulators that they do things like set up separate exchanges, finance us and FDA for us and that kind of thing. And the result of that is that 95% of all of the crypto activity in the world happens offshore. It does not happen in the United States.

Lizzie O’Leary: This is where I have a question about Sam Bankman-fried. Sam Bankman-fried spent a lot of time lobbying people in Washington, testifying in in front of Congress, like making friends, asking for regulation of crypto. What was he doing? Was this like an elaborate feint to, you know, play some regulatory arbitrage and say, we want the CFTC to regulate us because they won’t be as intense as the SEC or like. Like, what was.

Felix Salmon: He doing there? This is every single crypto CEO like CS is always says the same thing if you ask him. I’ve interviewed him a few times and he always says I want clear regulation. There is literally no crypto CEO in the world who doesn’t come out on a regular basis and say, We want clear regulation, just show us the rules and write them down and then we can follow them. But right now there’s no rules and so we don’t know what we’re doing. And it’s a fair point. And obviously, you know, America is where, you know, a huge amount of money is is where we’re huge, where very kind of where regulators with global reach live. It’s where, by the way, FTX is filing for bankruptcy. Even a FTX is a Bahamas based organization so that.


Lizzie O’Leary: They can get American bankruptcy protection.

Felix Salmon: Is that they’re filing for bankruptcy is better for.

Lizzie O’Leary: Them.

Felix Salmon: Yeah, well well, also because it felt like we did a little bit of work on this Axios on Thursday. Turns out the Bahamas doesn’t actually have a bankruptcy regime. All you can do in the in the Bahamas is just liquidate yourself. Yeah.

Lizzie O’Leary: So, so. So America looks great in that respect.

Felix Salmon: So so, you know, the entire crypto world would really quite love it if there were clear rules in America. No one can really come to any agreement on what those clear rules should look like. The crypto world wants a bunch of like your specials. So we’re going to make special rules just for you. Kind of rules while you know, the Warren Buffett and Jamie Diamond’s of the world is saying, like, why can’t they just play by the same rules that the rest of us play by? It gets very complicated very quickly. But yeah, I mean, in principle, no one likes I mean, certainly SBF didn’t like the idea that Americans couldn’t legally access the FTX exchange. He wasn’t happy about that.

Eli Lilly, Emily Peck: But what the fundamental question I feel I must repeat Lizzie’s question is this guy was doing shady stuff and at the same time was saying, please regulate me. So you’re saying, Yeah, that’s just what everyone says. But he wasn’t saying, please catch me doing shady stuff.

Felix Salmon: Well, I mean, according to him, he, he didn’t realize how much risk he was taking because he couldn’t read his bank statements properly. And so he didn’t realize how many loans he had outstanding. Come on, man. I mean, like, you.


Lizzie O’Leary: Know, 30. Okay, But but if you if Ian Allison from Coindesk can read your bank statements properly, you can’t.

Felix Salmon: One would think. But yeah, I mean, the thing that I think you can say about Jeff Skilling, Adam Newman, SBF basically all of them, with the possible exception of Elizabeth Holmes, is that they. Believed in themselves.

Felix Salmon: I I’m I’m almost certain that SBF didn’t think he was doing bad things when he was doing the bad things. And he did say, like at the end he’s like, Oh shit, I made a big error of judgment. Like the big and the big error of judgment, by the way, was quite recent when he made that big loan from FTX to Alameda, which wound up blowing up the whole company and turns out to have been, yeah, an error of judgment. You could say that when your net worth 32 billion to 0. But but yeah I you know I just think that in terms of chronology, most of what he was saying about like please regulate me pre dates, payoffs of 3 hours, capital voyage buying out seas and all of the kind of stuff that ended up taking down FTX. Right.

Lizzie O’Leary: So I think I know the answer to this question, but I want to pose it anyway. So you, you mentioned the big banks. A lot of the big banks have been dabbling in crypto, right? They’ve been getting like tiny little bits of exposure. Are any of them exposed to this?

Felix Salmon: And again, this is where U.S. regulation turns out to have been amazing.

Lizzie O’Leary: Because they’re only they’re only playing around with U.S. crypto.


Felix Salmon: Well, it’s not just that they’re barely even playing around with U.S. crypto like the U.S. banks are so closely regulated and their compliance officers are so cautious that the minute anyone of the U.S. Bank says we should get into crypto, the compliance officer kind of looks at them and raises an eyebrow and they’re like, Yeah, never mind. So they don’t. And so for as far as I can tell and it’s a little bit early to say this because things are moving very fast.

Lizzie O’Leary: Yeah.

Felix Salmon: But so far, you know, this is absolutely massive in the crypto world. It is impossible to overstate how much the bankruptcy of FTX is just blown a hole.

Lizzie O’Leary: This is not Terra Luna. This is much, much, much.

Felix Salmon: Much, much bigger. This is the biggest and most consequential, you know, implosion since 2014 in the crypto world when Mt. Gox suddenly disappeared overnight. Yeah, but. But like so far, I have seen basically zero real world repercussions to this. And I think that.

Lizzie O’Leary: Well, except for people who lost a lot of money.

Felix Salmon: Well, okay, here’s my question. Who lost money?

Eli Lilly, Emily Peck: I tweeted. And if anyone.

Lizzie O’Leary: Was an interesting question, I don’t.

Felix Salmon: I don’t think I don’t even think any real people lost money here. Right? Not directly. Like, obviously, if insofar as you own Bitcoin and Bitcoin has gone down, you know, you have lost money. But as I say, those $16 billion that was on FTX was like professional crypto hedge fund types. It wasn’t normal saver.

Lizzie O’Leary: It wasn’t.


Felix Salmon: Normalcy.

Lizzie O’Leary: Like I would like to buy .001 Bitcoin.

Felix Salmon: And if you do, if you do say that, yeah you keep it on on Coinbase and and it certainly and FTX wasn’t out there saying like we are going to pay 20% interest on Stablecoins like Coinbase. Like, like Celsius was right. So number one, it’s no Americans, but number two, like it wasn’t, it wasn’t that kind of a business. It was an exchange. It wasn’t a place where people kept their money. So I don’t think there were that many losers here beyond just the equity investors in SBF and all.

Lizzie O’Leary: That and all the effect of altruism, people who’ve been funded by him.

Felix Salmon: Yeah. And do they.

Lizzie O’Leary: Have to give back their countryside Manor house is. I think it’s.

Felix Salmon: A very good question. Will MacAskill resigned from the FTX family? MacAskill, an Oxford professor.

Lizzie O’Leary: You know.

Felix Salmon: Active.

Lizzie O’Leary: Altruism prophet.

Eli Lilly, Emily Peck: Have we ever talked about effective altruism?

Felix Salmon: Maybe we have a bit, but like. But yeah, so this is definitely bad for effective altruism because like, it’s is far from clear that SBF for all of his grand talk about effective altruism.

Eli Lilly, Emily Peck: Which is what?

Felix Salmon: Which is really well, I mean, put that to one side for one minute. But like it’s, you know, it’s like this weird kind of utilitarian long term. Anyway, put that to one side. He he did have a fund. The fund said that it had made $160 million in commitments, which is like I know, I reckon FTX spent more than that on the naming rights for a miami sports arena, and it’s not even clear how many of those commitments were actually funded. So I don’t think he actually gave very much money away. And yeah, so this is a definitely a big black eye for this movement, which we can have a whole other conversation about at some point.


Eli Lilly, Emily Peck: Okay. And the other losers would be the I don’t know how many FTX employees or Alameda employees.

Felix Salmon: Very few.

Eli Lilly, Emily Peck: But they’re all losers, really?

Lizzie O’Leary: Not a lot in risk management?

Felix Salmon: No. I mean, there’s one that’s not.

Lizzie O’Leary: A big department.

Felix Salmon: There. There was like a period of 24 hours where people thought that Binance was going to buy FTX and Binance has like 4000 employees or whatever, and they come in to do due diligence and they realize FTX has like 70 employees and they’re like, You can’t do that. Like, you know, you need more employees to do all of the risk management and compliance and everything and they want. Walking away.

Lizzie O’Leary: They took a quick look under the hood were like, absolutely not.

Felix Salmon: Right. So yeah, FTX were there were very few and also.

Lizzie O’Leary: Contributed to this.

Felix Salmon: There were employees who, you know, if you were an employee at FTX, you’re you know, you’re a loser if you are an equity investor in FTX, which would include the employees, but also people like Sequoia. You lose whatever you invested. But that’s just the PC game.

Lizzie O’Leary: Yeah. That actually is my favorite part of this whole story is that Sequoia had this glowing profile of SPF on their website and they took it down.

Felix Salmon: 14,000 words of hagiography.

Lizzie O’Leary: They just tried to pretend it wasn’t there.

Felix Salmon: But the also the weirdest thing.

Lizzie O’Leary: Wayback Machine can come for you, my friends.

Felix Salmon: The weirdest thing was that apparently this is what the information reported. SBF managed to find like half a billion dollars to invest in Sequoia. Another VC? Yeah, where that came from, I have no idea.


Eli Lilly, Emily Peck: So this guy is broke now. He could just go home, live with his parents or something.

Felix Salmon: Well, Bloomberg still reckons he’s down to his last 960 million or something.

Lizzie O’Leary: Oh, okay. So he had some real money. Well, we just ftt.

Felix Salmon: We really don’t know. No one has a clue. He has not a whole bunch of different entities filed for bankruptcy on Friday. There was FTX and FTX, us and Alameda. But SBF personally did not. So we. We don’t really know.

Lizzie O’Leary: Well, will we learn any of this now that it looks like a whole bunch of federal regulators are investigating?

Felix Salmon: Well, so apparently federal regulators have been investigating FTX U.S. for months. Mm hmm. And they were worried about various shenanigans going on in FTX U.S., but probably not like super, super consequential ones that could bring down the entire company. But yeah, there’s no doubt that now the bankruptcy is happening in the US. And FTX US has filed for bankruptcy. Yeah. The US regulators are going to be keeping an eye on this for sure.

Eli Lilly, Emily Peck: I think SBF should go back live with his parents, who I think are professors or something at.

Lizzie O’Leary: Stanford Law Tech.

Felix Salmon: So apparently you can just currently see.

Lizzie O’Leary: I mean like maybe he should not actually, because that is like the opening chapter in the SBF comeback stories.

Felix Salmon: Well, apparently I’m down. This is Sandhill Road.

Eli Lilly, Emily Peck: Not.

Felix Salmon: One of the weird things is that SBF Dad was working for FTX.

Lizzie O’Leary: Come on.

Eli Lilly, Emily Peck: Shaking my head. Just shaking my.


Felix Salmon: Head. But we should change subject completely and talk about like of one of the kids who raise billions of dollars to create a tech company. And then everything started going horribly wrong. But no one could control him because he had complete control of the company.

Eli Lilly, Emily Peck: Yes.

Felix Salmon: How’s Mark Zuckerberg doing?

Eli Lilly, Emily Peck: I mean, he’s doing better than some other boy geniuses that I know. But yeah, this week for the first time, Facebook, which is now called Meta, which Felix won’t really let us say, but we’re going to say it. Meta did have did layoffs let go of about 11,000 employees, which I think is like 13% of the of the company’s staff. And my LinkedIn, I don’t know if you guys look at LinkedIn, but I do it’s just flooded with former meta employees saying like I was laid off today. Please help.

Felix Salmon: Emily, Emily is a big fan of looking at LinkedIn and never more than recently. Now that all of the job postings, salary ranges.

Eli Lilly, Emily Peck: We could talk about that some other.

Lizzie O’Leary: Times. A good laugh.

Eli Lilly, Emily Peck: Well, right now, LinkedIn is flooded with these former meta employees who I mean, those jobs were cushy jobs, according to a story that Felix shared with us. A lot of projects that Facebook started and abandoned never got rid of the staff behind the project. So a lot of people were just kind of like floating around the company and not really doing anything kind of like that. Silicon Valley The early season of Silicon Valley, where the guy works at the the fake Google company. Yeah. And his project gets killed and he just like, sits on the roof all day and drinks big sodas and stuff. I had I know a lot of people that got laid off. I don’t mean to disparage 11,000 people. A lot of them are doing work, real work. But Meta had done a lot of over hiring and finally kind of.


Lizzie O’Leary: Well, they also hired, what, 30,000 people during the pandemic. They did a huge expansion over the past couple of years. Yes. Because it seemed like things were going gangbusters for them.

Felix Salmon: Well, I mean, this is this is my war going. And I have a very basic theory for tech industry employment, which is that when your stock is going up and the stock market is rewarding you for hiring people and growing, you hire people and grow. And when your stock is going down and the stock market is saying that it is worried about your costs and you should fire people, then you fire people.

Eli Lilly, Emily Peck: Yeah. And they had never had to do that before. Fire people. This is like their first big layoffs.

Lizzie O’Leary: I mean, I said this before we came to the studio, but Mark Zuckerberg has got to be extremely psyched that FTX blew up this week and that Twitter is in some sort of death. Absolutely been. And a spiral because this is the third biggest story in tech. And otherwise, it would have absolutely dominated the tech news. And it’s not.

Eli Lilly, Emily Peck: And tech, I mean, there’s the site layoffs that FII that I follow, and they track layoffs in tech. And this month we’re talking on November 11th, there’s already been like 22,000 people laid off in tech.

Lizzie O’Leary: High lit.

Eli Lilly, Emily Peck: At strip, left Twitter. Of course, you just mentioned the suspect pen, which is tech real estate. But yeah, Facebook is about half of the layoffs and it’s Amazon’s.

Lizzie O’Leary: In a hiring freeze. And I feel like, yeah.


Felix Salmon: Yeah, I.

Lizzie O’Leary: Feel like Andy Jassy is like.

Felix Salmon: They’ve been leaking stuff to the Wall Street Journal saying like, you know, our devices unit lost $5 billion a year and we’re going to have to like. So yeah, a bunch of people are firing people. But my question for you, Lizzie, is. To what degree is the 11,000 people who got laid off at this week, which is a lot of people? How to what degree is that just a function of this pivot to the metaverse like? I feel like he is spending so much money on the metaverse, it is going nowhere. Everyone seems to agree that it’s a complete black hole. He’s never going to make a return on it. That is why. The stock imploded like Facebook’s revenues have been more or less flat. Its stock is down 80%. If his stock if he hadn’t done that and the stock hadn’t imploded by 80%, would you have done these layoffs?

Lizzie O’Leary: So, okay, I’m going to I’m going to say two different things. And I should admit that I’m cribbing in part from Jeff Hurwitz from The Wall Street Journal, who I had a long conversation about this with. Certainly, employees think that that is what is going on. They are mad that, you know, Mark is super into VR with no legs, although I guess they got legs. Now we’ve got fake logos. I mean, it’s just ridiculous. Anyway. I. And so they think like he took a flier on this crazy bet and we are all suffering for it.

Eli Lilly, Emily Peck: Yeah.

Lizzie O’Leary: I also think they overhyped during the pandemic. And and he sort of took responsibility for that. And I think that they are in this moment of like, oh, is is there some sort of not I’m not going to say recession, but like troubled time ahead. Are there troubled times ahead? So I think there like these multiple factors that are.


Felix Salmon: Do you think that Facebook is. Particularly exposed to, for lack of a better word, like US GDP growth. Is that a big thing for Facebook?

Lizzie O’Leary: No, I think what’s happening is that Facebook, the social media company, is actually fine. Like they they make money. That division is doing fine. But they have kind of maxed out at U.S. user growth. Right. So they are more affected by other countries having big yikes moment than the U.S. having big yikes moments. I mean, I think in their in their Facebook division. Right. Like, that’s where they are trying to grow users. But I, I think they have obviously taken some big expensive bets on stuff that they have said we don’t expect to pay off in the in the near term. We expect it to maybe pay off in a decade. But investors are like, no, we would like our money now. Thank you very much.

Eli Lilly, Emily Peck: I mean that nothing they have done has been a success. Like Facebook is a success.

Lizzie O’Leary: Everything Instagram is a success, but everything else is something like what was this?

Felix Salmon: I mean, Instagram was an acquisition, right?

Eli Lilly, Emily Peck: Yeah, I’m saying they’re only successful. Things are acquisition.

Felix Salmon: The only thing the only product the Mark Zuckerberg made that was that was a success. Really. The stories which was copied from Snapchat.

Lizzie O’Leary: Yeah. And reels is a tik-tok clip.

Felix Salmon: Yeah. But reels isn’t actually successful.

Lizzie O’Leary: No, it’s reels is where people like me middle aged moms see tiktoks that were cool two weeks ago. Yeah.

Felix Salmon: Do you see ads on reels?


Lizzie O’Leary: I can’t remember.

Felix Salmon: Because I feel so. I feel like.

Lizzie O’Leary: So. Like I can’t think about anything other than my.

Felix Salmon: I feel like I feel like Tik Tok has done a pretty good job of getting a fuck ton of ad revenue. Yes. And that reels kind of hasn’t. Even though Instagram is just this advertising giant, it’s where everyone wants to advertise.

Lizzie O’Leary: And and apparently Elon Musk buys stuff on Instagram as he told us.

Felix Salmon: And like, yeah, and we should probably just mention, you know, that there’s this massive sound of like the entire ad world leaving Twitter en masse and they’re probably going to want to just take that to Facebook.

Lizzie O’Leary: But the other thing that is happening, and I should mention this, this is, again, something that that Jeff and I talked about a lot has changed in the online ad world since Apple started putting in app tracking transparency.

Felix Salmon: So this is this is a.

Lizzie O’Leary: Drug out of online advertising. And that’s how I mean, so yeah, so Facebook made a lot of its money.

Felix Salmon: So Apple made this big change about user tracking. Every single online media company said, this is going to be terrible, don’t do this. And there was this huge parade of horribles. It’s all going to be bad for us. It’s going to be bad for the entire industry. It happened. And it turned out to be basically a complete nothing burger for everyone except for Facebook. Facebook, for whatever reason, and literally no one understands this. Facebook was hurt, really, really hurt by it. And why Facebook was incapable of dealing with it when everyone else seemed to deal with it fine. No one understand.


Lizzie O’Leary: So I think actually an interesting thing to do in the future, here’s a good story for you, is to compare what happened to Facebook and Google when this change happened. Right. Because those two together are, what, half of the online ad market. More, More two thirds. I mean, it’s something absurd. And so they were both hugely dependent on on online advertising. And then kind of what did this change do to each company? I don’t know. Maybe Facebook, just like.

Felix Salmon: You know, we do, though, like giggles. I don’t know. Google kind of blinked and said and shrugged and went on with its life and its revenues were barely affected. Facebook got really hurt.

Eli Lilly, Emily Peck: So just to back up as if I’m remembering this because I remember talking about it with Stacy, basically, this is the feature on my iPhone where it says, Do you want to be tracked by Facebook, Google, whatever.

Lizzie O’Leary: When you are not on our app?

Eli Lilly, Emily Peck: Pretty obvious what would not It’s not obvious, but I would think everybody hates Facebook. So they say no. And for Google, they’re like, Oh, that’s fine. I’m on Google Maps.

Felix Salmon: No, no, it’s not that. It’s not. No, the point is that everyone just says no to everything.

Eli Lilly, Emily Peck: Oh, everyone says no to everything yet.

Felix Salmon: And yet Google still manages to sell ads despite that and Facebook doesn’t.

Eli Lilly, Emily Peck: Oh, that is quite a puzzle.

Lizzie O’Leary: Yeah.

Eli Lilly, Emily Peck: We should figure it out. We’ll be right back.

Felix Salmon: Okay. So we’re going to talk about Elon and fake brands. Oh, fine, fine. I mean, it was your idea, Emily.


Eli Lilly, Emily Peck: Yeah, because listen, it was all theoretical before the other times we talked about Elon Musk about it was like theoretical deal talk, and we talked about like the bankers and the loans and the money and like, I’ll be honest, like, I didn’t care that much and I was annoyed by it, but now it’s affecting me. Felix And I’m upset. Like Twitter is a mess. This week has been a mess.

Eli Lilly, Emily Peck: Twitter and every day, every minute Elon Musk is saying something that contradicts what he said, you know, the hour before and it’s a total mess. He fired half of the Twitter staff. Then he said, oops, we fired some people that probably should come back. All the people who worked on security for the site, which is really important because Twitter, I mean, you just tap it and it’s a mess. And and the spam and the scammers come running. The people who handle security are gone. The people who work with advertisers are gone. Advertisers are gone. When I look at my feed, it’s all like the weirdest ads I’ve ever seen. It’s like looking at, I don’t know, some like sixth rate news site or something. And then he tried to sell Blue check verification for $8.

Felix Salmon: Without verifying.

Eli Lilly, Emily Peck: Without verifying who who they were. And obviously, that’s all going to be a mess. And it was quickly a mess, As Lizzie was saying, a bunch of people are pretending, pretended to be companies. They bought the $8 check and they’re like, I’m Eli Lilly and.

Lizzie O’Leary: Apple is free. I like I have been. Oh, just so wait. So then losing my mind at the fake brand treats like we have overflown the government of Brazil, You cheeky. Oh.


Felix Salmon: I know. Yeah. That’s like the fake George W Bush account.

Lizzie O’Leary: The fake A second Tesla has hit the World Trade Center.

Eli Lilly, Emily Peck: Oh, my God.

Lizzie O’Leary: Some Tesla real. They also had a fake pope.

Felix Salmon: I mean, a fake Jesus.

Lizzie O’Leary: A fake Pepsi that just tweeted Coke is better.

Felix Salmon: And so, yeah. So this is.

Lizzie O’Leary: This is the own slave American girl.

Eli Lilly, Emily Peck: So then they quickly had to be like, okay, well, we’ll sell the checkmarks, but then we’ll put a little official on the on the real blue verified checkmarks. And you’re like, guys, that was with the check. Anyway, you’re okay. You’re going to do that.

Felix Salmon: That lasted, what, 6 hours?

Lizzie O’Leary: Like, I had a conversation with Senator Chris Murphy and he was like, So I had one checkmark and then another one, and then that one went away. It was like, I don’t know. Did the senator.

Eli Lilly, Emily Peck: Come on, he really is messing it up.

Felix Salmon: And Oh, and then, and then the, the biggest piece of all is that the entire, like legal and compliance team quit en masse the day before. They had to certify that Twitter was in compliance with its FTC consent decree because it clearly isn’t. If you read the FTC consent decree, it is absolutely obvious that, like if you roll out a new product, you need to have done all of this work on making sure that it’s safe and blah, blah, blah. And Ellen, of course, being Ellen has done none of that. There’s quotes from his lawyer basically saying Ellen isn’t scared of the SEC and he builds rockets. He’s not scared of the FTC. But like the FTC, meanwhile, is tweeting out excuse me, we are watching this very carefully and we take this stuff very clearly, very seriously. And no one is above the law. And the difference between the FTC and the SEC is that the FTC can send you to jail. Really? Yes.


Lizzie O’Leary: That seems.

Eli Lilly, Emily Peck: I.

Lizzie O’Leary: You know, significant. Can I just say this is like one of my favorites? This is actually Elon Musk. Really? For really like Musk.

Felix Salmon: How many checkmarks? Sure.

Lizzie O’Leary: Going forward, accounts engaged in parody must include parody in their name, just not in bio. And somebody tweeted like surreal substitute teacher losing control of class vibe just like everything I’m sorry like lots of people have lost their jobs. People have lost a way to communicate like dissidents in Saudi Arabia. I am worried about because the Saudis now have the second largest stake in Twitter. But like the dunking is a whole.

Felix Salmon: Yeah. So so basically Kathy Griffin and Manu’s idea of, you know, friends of the part and all of these people change their name to Elon Musk and then got banned. But but yeah, another thing which just like you know, this has been the mother of all shit shows, but one of the other things that happened along the way was that there was a report that anyone who invested more than $250 million in Twitter, which would include the Saudi government, now gets full access to the Twitter firehose, which is every single thing that everyone said a real.

Lizzie O’Leary: Bad.

Felix Salmon: Which seems really bad.

Lizzie O’Leary: I mean, that’s what I was talking to Chris Murphy about, because he was like, they should have a serious review.

Eli Lilly, Emily Peck: Should I delete my account?

Felix Salmon: I think should I.

Eli Lilly, Emily Peck: Do like my direct all my like direct messages because I’ve done like reporting on Twitter, you know?

Felix Salmon: Yeah, probably the Saudis can see this probably.


Lizzie O’Leary: I mean, but also but also like I don’t think it matters. I think they know anyway, right. Like I don’t think tweeting, deleting your DMS is going to make a difference or.

Eli Lilly, Emily Peck: Deleting my account either.

Lizzie O’Leary: It it’s all there now. It’s there.

Eli Lilly, Emily Peck: Is Twitter. Look, is this is he breaking it permanently That’s I don’t know.

Lizzie O’Leary: So if it goes into bankruptcy will some lovely person buy it?

Felix Salmon: So like there is there is a plan. My friend Rick Webb has this idea that what he wants to do is just someone should just buy Twitter for like a dollar, put him in charge, and he’s going to be like, I am not going to grow revenues. I am not going to do anything. I am just going to shore up the infrastructure, make sure that it works, make sure that it’s safe, make sure that you are in compliance. Twitter has $4 billion in the bank.

Lizzie O’Leary: In cash and.

Felix Salmon: Cash.

Lizzie O’Leary: So what’s Ireland doing Going out, charging people eight bucks a pop?

Felix Salmon: I mean.

Lizzie O’Leary: I think.

Felix Salmon: They I think they rolled that one piece on talking about how last year Ellen keeps on talking about negative cash flows and how it’s losing $4 million a day or something. If you’re losing $4 million a day, it still takes a while to get to $4 billion. But more to the point, Twitter only has negative cash flows because he loaded it up with, you know, $13 billion of debt.

Lizzie O’Leary: Right. They have like a billion bucks in debt service a year.


Felix Salmon: So if you do if you do a debt for equity swap and then like turn all that debt into equity in like new Twitter, like a very boring CEO in charge who’s not trying to grow it, not trying to turn it into a, you know, the biggest company in the world or a super app or a banking app or a savings account app, whatever it is you don’t want, and just tries to make it into a Twitter that works. And then in the couple of years time when you have a Twitter that works, then you start building on that.

Lizzie O’Leary: Like I volunteer to be CEO. Exactly. I don’t know anything about running a company, but you know what? I could I could do a better job. I wouldn’t be tweeting through.

Felix Salmon: It, literally.

Lizzie O’Leary: Which seems to be.

Felix Salmon: Bad. Yeah, literally, you could have a black bag of flour as CEO and would do a better job. Elon Musk.

Eli Lilly, Emily Peck: Although he claims that traffic is up to Twitter because everyone can watch the cars.

Felix Salmon: It’s like refresh, refresh, refresh.

Eli Lilly, Emily Peck: I think I’m just putting it out there that the government should take control of Twitter and it should be like NPR or PBS or something.

Felix Salmon: Yeah. And then you put you put.

Lizzie O’Leary: A.

Eli Lilly, Emily Peck: Big room. Don’t ruin NPR for me.

Lizzie O’Leary: Hey, big time out. The government. The govt has $0.01 on the dollar. I believe this is a correct. I might be getting that wrong, but it’s like a tiny, tiny, tiny, tiny, tiny. Any amount of money that they put into NPR. I just want to dispel the notion that it is owned by the guy. As a former anchor employee and a former Minnesota Public Radio employee. But it should be very important to know Emily.


Felix Salmon: Emily says No, she just meant BBC.

Eli Lilly, Emily Peck: BBC. I want it to be a non-profit, the government.

Lizzie O’Leary: Non-profit, but it’s not owned by the government. Okay.

Eli Lilly, Emily Peck: To be clear.

Lizzie O’Leary: Someone because I think I think that’s a myth. But then.

Felix Salmon: Emily, Emily said, owned by the government in Miami. This is on on the Axios slack until it’s just been owned by the government was like, Which government? I vote for Belgium. And Emily’s like, Why? You know? And so I’m like, But clearly you don’t want the American government in charge because the American government says, show the Belgian government, hey, Belgian government barely exists. This is why you want the Belgian government to do it, because like, it’s basically the government equivalent of a bag of flour.

Eli Lilly, Emily Peck: Listen to me. We just had a whole segment, Belgium. We just had a whole segment, Felix, in which you explain why people in the U.S. were firewalled from the horror of the FTX shit show because of the government regulation at play. So to say the U.S. government is a shit show is inaccurate. Purely based on what you told us, Mary, 10 minutes ago.

Felix Salmon: Well, no, the reason Mary. Mary, the reason why everyone in the US is protected from the crypto implosion was not because the government knows what it’s doing, but because the government doesn’t know what it’s doing. And everyone is acting like a complete chaos monkey and suing people who try to follow the rules, not seeing people who don’t try to follow the rules. And everyone’s just like trying to stay well away and just keep their head down and do absolutely nothing that could be remotely interesting. And that’s why they do everything offshore. So like, that’s not like sensible regulation. That’s just being completely batshit. Hmm.


Eli Lilly, Emily Peck: I don’t know. I think Twitter should be owned by either a non-profit entity or the government.

Felix Salmon: Of Belgium, of.

Eli Lilly, Emily Peck: Fine of.

Lizzie O’Leary: Belgium. For me, it’s no.

Eli Lilly, Emily Peck: Offense me or Lizzie.

Felix Salmon: Or Lizzie. Let’s just give it to Lizzie.

Eli Lilly, Emily Peck: Although I don’t know, I feel like being a CEO. Lizzie could turn you into some megalomaniac.

Lizzie O’Leary: No, because I promise to surround myself with people who tell me I’m being a dumb dumb.

Felix Salmon: But I think. I think. I think seriously, I.

Lizzie O’Leary: Would hire my husband who’d be like, Can you practice the breathing that we teach our toddler? Impatient. Right now. Let’s all take a deep breath.

Felix Salmon: I do think, you know, in some glorious ideal world, it would just wind up getting given to, like, the Wikimedia Foundation of Science.

Eli Lilly, Emily Peck: Great.

Lizzie O’Leary: And then Twitter would ask you for $5.

Felix Salmon: Every time you open. Exactly. And that would be fine. Please.

Lizzie O’Leary: Please give us the money.

Eli Lilly, Emily Peck: I mean, that’s what Twitter is, was for a while when Elon was asking us for $8. Oh, yeah. Let’s go.

Felix Salmon: Let’s go. All right, let’s. Let’s do a numbers round.

Felix Salmon: Lizzie. So we have a numbers round every week on the slate money.

Lizzie O’Leary: I am prepared for that.

Felix Salmon: Pick a number, any number and just tell us what that number is. I will give you a minute. I’m going to start with Emily.


Eli Lilly, Emily Peck: Okay. I have this number and it’s silly. And last night I was telling my husband the number and then he was like, why is this interesting? And I was like, I’m not sure, but I’m just going to go with it. Okay? The number is 40, and that is the number of rotisserie chickens that a man named Alexandra Tyminski ate over a 40 day period in Philadelphia. One rotisserie chicken per day.

Felix Salmon: Okay.

Eli Lilly, Emily Peck: For reasons of, I don’t know. To entertain people purely.

Lizzie O’Leary: Because it’s Philly, I think is the answer that you’re looking for.

Eli Lilly, Emily Peck: Yeah. And he’s called the Philadelphia Chicken Man. And yeah, originally he was going to eat the chicken for only 30 days. But then a miracle happened and the chicken lasted for 40 days. I don’t know. I’m just making that up. And he just he extended it and now he doesn’t want to eat rotisserie chicken ever again. And I just want to say that I think rotisserie chicken is like one of the marvels of modern capitalism in grocery stores. But that, again, my husband was still like, why is this interesting? And I’m like, But it’s great rotisserie chicken. That’s all.

Felix Salmon: I have. Okay. So I love the economics of rotisserie chicken. Absolutely fascinating, because as we all know.

Eli Lilly, Emily Peck: We all know.

Felix Salmon: A rotisserie chicken which is cooked and has a bunch of labor in. It costs less than the raw chicken is uncooked and has much less labor in it. And so everyone’s like, how? Yeah.

Lizzie O’Leary: And and head exploding.


Felix Salmon: And you get the same.

Lizzie O’Leary: Issue at Union Market.

Felix Salmon: Yeah, I’m almost positive it is true at Union Market it’s always had both at Union Market the. Equivalent to that is the Grand Central Oyster Bar, where six Oysters Rockefeller cost less than.

Lizzie O’Leary: Yeah, okay. Because those were like the questionable oysters. We decided to cook.

Felix Salmon: Them, but that’s the same as the chicken. They take the chicken that’s about to go off and they turn it into rotisserie, right? Sure. About. Yeah. That’s why it’s cheaper.

Eli Lilly, Emily Peck: I don’t want to know. Felix, you’re ruining it. I thought it was a shipwreck because it was like a loss leader, like, for a Costco. That’s why they never raise the price of their you.

Felix Salmon: No, it’s because it’s a way of using up the chickens that you would otherwise need to throw away, because. Are you.

Eli Lilly, Emily Peck: Sure? Yes. They’re always smiling.

Lizzie O’Leary: You’re not just making this up.

Felix Salmon: I’m not making this up.

Eli Lilly, Emily Peck: But can we also say that the rotisserie chicken is more delicious than the chicken you make at home? Nine times out of ten. That’s an acknowledged fact, right?

Lizzie O’Leary: I got to say, you got to put in a plug for something. No rats. Oh, yeah, I did find that thing is amazing, but I made that one was good.

Eli Lilly, Emily Peck: I don’t know. Rotisserie. Anyway, that’s my number. Okay. Do you got one now?

Lizzie O’Leary: Now I have. I got one. You got my numbers. One as in the 1st of October because my household has been sick since then and this actually has a story like a news story attached to it, which is this kind of staggering explosion in illnesses among young children right now.


Felix Salmon: Is this RSV?

Lizzie O’Leary: Yep. Yep. Respiratory syncytial virus. We did not have RSV, although I know my best love in from Vanity Fair. Her daughter had RSV. She came on my show to talk about RSV sucks colds, enterovirus rhinovirus, obviously COVID the flu. So there’s this huge surge because there were all these kids who did not have like, you know, regular old normal interactions the past two years. And now they’re doing that and we’ve dropped all our our COVID protections and they’re all sick.

Felix Salmon: It’s the new not normal and all sick.

Lizzie O’Leary: I have been sick since October 1st.

Eli Lilly, Emily Peck: I don’t know if I should have come in today to see you.

Lizzie O’Leary: Sorry, man. I mean, I’m not really sick anymore now. I just have like a sort of what sounds like a smoker’s cough.

Eli Lilly, Emily Peck: Okay. All right, cool, cool.

Lizzie O’Leary: Cool, cool.

Felix Salmon: Cool.

Eli Lilly, Emily Peck: Yeah, I’m calling it the. The triple.

Felix Salmon: Damage is triple.

Eli Lilly, Emily Peck: Demic.

Felix Salmon: And then hospitals.

Lizzie O’Leary: Are like, right. Usually pediatric, your pediatric urgent care is hugely overwhelmed.

Felix Salmon: Yeah, and it is it is a kind of COVID rebound, right? Yeah. I think I’m going to tease the Sleepless.

Felix Salmon: My number is 6.2%, which is the average compound annual growth rate that you saw on the paintings that Paul Allen sold that he had bought previously at auction, some beautiful paintings. There were some amazing paintings. And we’re going to talk about these paintings on Slate Plus. And it was an amazing sale which got like $1.6 billion. And we’ll talk about this and say like, what super fascinating is this guy was an amazing art collector. He had the best in the world. He managed Christie’s managed to pull together this incredible sale. Everyone came to it, everyone overpaid. And even after all of that, at the best possible time to sell, he still underperformed the stock market. So do not listen to anyone who tells you that art can outperform stocks. That’s my that’s my lesson there.


Eli Lilly, Emily Peck: Well, we’ll talk about it more in the plus.

Felix Salmon: We’ll talk about it more in the plus.

Eli Lilly, Emily Peck: The questions about that.

Felix Salmon: For the for the rest of us. You know, we plebs who don’t subscribe to sleep laughs. I think that’s it for Slate Money this week. Lizzy, you came on incredibly short notice. You are amazing. We love you.

Lizzie O’Leary: Now come on my podcast.

Felix Salmon: Now. I’ll come on you all. Bye, guys. It’s a, you know, mutual podcasting society right here. Very important. Thanks to Anna Phillips for producing. And yeah, we’ll be back next week with more sleep money.

Eli Lilly, Emily Peck: I was just realizing, like Paul Allen, Microsoft co-founder. Nice legacy, nice art like in it. In a world where we’re talking about these terrible tech CEOs, it’s like maybe Paul Allen was not so bad and he’s not creepy. Nice art, is he? I don’t.

Felix Salmon: Think he died in 2018 before me too, so he.

Eli Lilly, Emily Peck: Doesn’t get me tude. Yeah. So but.

Felix Salmon: Yeah. So Paul Allen was famous for building that weird Frank Gehry music thing in Seattle, which I can’t really stand, to be honest. But it turns out that he also had one of the most amazing art collections in the world. And then his estate basically said, We’re going to sell a huge chunk of this art collection and give all the money to unspecified charity. Oh, I see. I really want to know what charity it goes to. I hope it’s not just some perpetual foundation that’s actually going to charity, but effective altruism.


Felix Salmon: Yeah. Just like Will MacAskill can move over to to the Allen estate. But yeah, so it turns out he had five paintings that sold for over $100 million, which used to be a big deal. The whole show was just astonishingly high quality. He got the whole art world, got really excited about it. Everyone pulled in and really started like over bidding. And it seems like this is the one part of the world, like with the stock market going down and the bond market going down and the crypto market going down and the housing market going down and the car market going down and everything like that. But the art market is like at its peak right now.

Eli Lilly, Emily Peck: Yeah. What’s that about? I was trying to I think I had one note for you on this, which was like, is there no recession? Like, why are people spending lots of money on?

Lizzie O’Leary: Is it an alternative investment thing? Is that a hedge?

Eli Lilly, Emily Peck: Is it uncoil, Is it an uncorrelated.

Felix Salmon: Asset, isn’t it? Well, it is. Clearly it. Yeah, that’s it. Because it’s going up and everything else is going down.

Eli Lilly, Emily Peck: But you are saying I read a piece, I think it’s out today, Saturday, where you said if Paul Allen had just taken the money he used to buy the art and put it in the stock market, he would have the results would have been higher, but.

Felix Salmon: It wouldn’t have been as beautiful.

Eli Lilly, Emily Peck: Right. Of course.

Lizzie O’Leary: Like, don’t buy it because it’s an asset. Buy it because it’s pretty, right?


Felix Salmon: Yeah. I mean, like he he clearly loved the you could see throughout the collection how much he loved these paintings and. It’s really hard to look at your S&P 500 index fund and go, Oh, I really love my index fund. You know, you don’t get the same satisfaction from owning stocks you do get from me.

Eli Lilly, Emily Peck: How can you tell someone loves their art collection By looking at their art.

Felix Salmon: Because there were these wonderful sort of cross themes. If you look at, for instance, there was this amazing Georgia O’Keeffe landscape. And, you know, I can just imagine him hanging it next to that, Suzanne. And they you know, they’re very similar color palette. Yeah, similar caliber. You could see themes running through it. And he wasn’t really into sort of conceptualism, right? Like, he bought beautiful objects and much of impressionist.

Felix Salmon: Much of what the art world has done in recent years has really moved into kind of much more conceptual art. And he’s like, I have no interest in that. What I just want to do is buy the most beautiful objects that money can buy. And that’s exactly what he did. And it was that’s clearly like the mood right now. People are like, Oh my God, look at the cynic. Look at this, Monet, Look at the season and look at this. Floyd And they’re like, These are gorgeous, gorgeous paintings and we’re willing to pay enormous. He had a Botticelli, for fuck’s sake.

Lizzie O’Leary: Wow. Oh, I don’t think I realize that. Yeah. This is the rare moment where I get to vaguely utilize my artistry concentration.

Felix Salmon: It was a very it was a very good Botticelli, too. And it sold for like $42 million. Yeah.

Eli Lilly, Emily Peck: All the artists I’ve heard of. And I don’t have an art history minor any.

Lizzie O’Leary: Any. I mean, I haven’t done anything with it for 25 years, and we’re good.

Eli Lilly, Emily Peck: Okay. But yeah, I’ve, I’ve actually heard of the artists and like, when I looked at the pictures of the paintings, I was like, Oh, these are nice. Which is usually does not happen when I hear about this stuff.

Felix Salmon: Yeah, I mean, I was going back and forth with my copy editor Access. She was like, Oh my God, did you see that Wayne Tebow thing of sardines? I’m like, Oh my God, it was so beautiful. Oh.

Eli Lilly, Emily Peck: It’s nice. It’s an uplifting story.

Lizzie O’Leary: Too.

Eli Lilly, Emily Peck: Okay, so invest in art because it’s nice. Yes.

Felix Salmon: Yeah. Go out by beautiful thing.

Lizzie O’Leary: But this is like invest in housing because you need something to live it.

Felix Salmon: Yes. Well, I didn’t know if that’s not even an investment. That’s just covering your natural housing. Sure. It’s like we are all born short housing and we need to cover. No one is born short, Art. You know, we just buy we go long art because we love it. And I can just tell you as someone that is.

Lizzie O’Leary: I talk at my dinner table. I was born in short housing. I love you feel like.

Felix Salmon: But yeah, like you go you go long because you love it and you live with it and it makes you very happy every day.

Lizzie O’Leary: It’s just because you’re married to an artist.

Eli Lilly, Emily Peck: Is that the ultimate going long on art? Yeah.

Felix Salmon: No, I will. I will. I will tell you that my wife, you know, we we collect art together and we make decisions together, but. In terms of just living with the art and showing it and that kind of stuff. Probably that lends more to wards me than towards her.

Eli Lilly, Emily Peck: Interesting.

Felix Salmon: There you go. Slate Plus listeners.

Eli Lilly, Emily Peck: By Slate Plus.