By coinnews 
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Welcome to Stocks and Translation Broadcasting from the New York Stock Exchange. I’m Jared Blicky, your host, and with me as always is a voice of the people, Sydney Freed. First, please like, subscribe, and comment on Stocks and Translation on Spotify, Apple Music, Amazon, or YouTube, and today we are welcoming Dan Newman, who’s the CEO of Futurum Group. He is the author of 7 books including Human Machine, which explores the relationship between humans and tech, including AI. So we’re going to lean.into tech talk today and our word of the day is bubble. We throw it a lot, we throw it around a lot when asset prices happen to be soaring. So how does AI fit into the paradigm? And this episode is brought to you by the number 90%. That’s Taiwan’s share of the global pie for advanced semiconductor manufacturing. What it means to be this dependent on one island for the future of tech. So Dan, I’d love to get your take on what you think of the recent market action. It’s been kind of crazy things.Settled down a little bit. How are you seeing it?
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Haveyou ever seen such a massive convergence of different, you know, external factors? You’ve got the tech trade, the word of the day bubble. People have been saying for a while it’s a bubble, but it wasn’t the trade itself that took the markets down. Then you’ve got tariffs and the trade wars as a whole. This is a complete paradigm shift in every single way. We are reordering the world’s trade structure and whether you like it or not, no matter what side of politics you’re on, this is happening.Um, and so for a lot of people I think they were unprepared even though in many ways the administration was sort of signaling what was gonna happen. It was like that whole take Trump seriously, not literally or literally not seriously thing that everyone has. And so you see everything from hedge funds having massive losses and dealing with unwinding, you’re seeing the dollar being manipulated, you’re seeing bonds being played with, you’re seeing names like Nvidia that were.Rock solid gold over the last couple of years, basically since Chat GPT’s advent falling to now trading at what did I see half of the forward earnings of Costco. So people believe Costco is a longer term, more valuable buy than Nvidia. It’s just absolutely wild times.
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Itis, and we’ve seen a lot of those correlations break down.And this kind of segues into our word of the day, which is bubble. Now a market bubble forms when asset prices rise far above their true value, driven by hype or speculation, and it usually ends in a sharp drop or crash, and we’ve used all qualifying words here, no quantifying, uh, because it’s easier to see in hindsight. And so some people will look at the rise and a little bit of a fall here for some of these stocks like Nvidia or maybe some of the ETS, but was that really a bubble?
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The altcoins were a bubble. OK. Trump coin was a bubble. AI in many cases is not a bubble. Now there are outliers. There were companies that just threw the word AI or dot AI into their ticker, and they got explosive growth for a short period of time. That’s a bubble. Nvidia trading at a For multiple that was no higher than it was 4 and 5 years ago while growing to $100 billion of free cash flow.Well, basically owning 94% of the market and powering the world’s AI, I don’t think it’s a bubble. You look at companies like Broadcom powering all the hyper scalers. You look at, you know, just a number of the businesses that are playing out here, like everything, it’s bifurcated. It’s not all is a bubble, but in the end, we are in a trade war with China. We are in a global reordering and AI is actually.The difference between global economic leadership over the next few decades and falling behind. So you see why we’re spending so much focus on China because it’s either us or it’s them.And why we’re pulling back Nvidia it’s because it really matters, not a bubble.
3:46 spk_2
Butthen what are some of the calling cards of a bubble? Like how can you, I know we said sometimes it’s hindsight, but are there some things people can look at ahead of time tosee? Yeah,
3:57 spk_1
and I think there are parts of the AI trade like I went back to and said, look, just saying we’re gonna do AI, you know, we did a survey, uh we partner with a company called Carney, a big consultant.firm and we talked to, you know, it was hundreds of CEOs that ran companies over a billion dollars of revenue every year. We’re, you know, we’re asking them what they’re focused on and, and how big of a threat is getting ahead in AI and the vast majority of them genuinely understood how important it was to get ahead in AI. Now, having said that, you have $325 billion of capex, so the bubble of Google and.Microsoft and Nvidia is not a bubble right now because they are investing and they are building. Now, where’s the bubble? Do these big infrastructure investments become what I would like to do a Chinese ghost city, right? They built the city, no one goes there. We’re building out all this infrastructure, but every quarter you sit around, you listen to Microsoft, and they say, oh, we are now generating $10 billion annual run rate from all of this investment. Last I checked they.Spent they’re gonna spend 80 this year. So I think some of this is when does it start to translate to those CEOs implementing solutions and then they go back, we’re we’re getting value from this. We’re running more efficiently. We have agents that are doing tasks for us and actually helping us make money and run our businesses better. I think that gap in there, that white space is where a bubble could potentially exist.But there’s so much investment going into seeing that that doesn’t become a bubble. This is not the internet bubble.
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What I hear, and I’ll come back to that in a second, what I hear from these tech CEOs is they don’t want to be left behind. They, they see the horizon and they, notwithstanding all the short-term vicissitudes, which is mainly to the downside, uh, they, I think they’re holding on to that vision, but I am reminded by the tech.Bubble and so I want to go back to 2001 where you had here’s an analogy we had um fiber fiber optic cable was being laid down in vast sloths for essentially the first time and before that it was dial up so we we knew everybody needed it and it’s gonna be here forever and we got to lay all this stuff down but it was overbuilt and so it became really cheap when we had the dotcom crash. I’m wondering if.Uh, all this, all this investment just becomes fodder for the next rally in a few years and we got to go through some kind of correction first. Well,
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we’regoing through some type of correction. That’s why I said if you actually saw, you know, I just keep using Nvidia, but you actually see that their forward earnings isn’t really any higher than it was 4 or 5 years ago right now with all the growth they’ve had, that’s an interesting.You know, that would be interesting given how stable the company has become and how much it has grown. Now you mentioned the internet bubble. I think diffusion here is an important word, you know, I know bubble is the word of the day, but let’s talk about diffusion. How fast does technology end up getting into the system? We saw, you know, when it went from radio.To television, to, you know, internet and obviously everything between social media and then chat GPT. How fast did that diffuse? So the internet was built out and it had a similar sort of forward investment like we’re seeing today and then all these companies, pets.com and all these things, and now they all exist. And, and by the way, e-commerce became massive, but that diffusion time. So when I talked about the white space, I think we’re talking about diffusion time and I think what we’re seeing here is, you know, right now we’re.You know, Sam Altman is saying, I’m melting my GPUs. I have too much demand on, on our, on our anime.Right, Ghibli. What if we actually start building useful enterprise things, not just, you know, a cool cartoon of the three of us sitting here, and all of a sudden you’ve got agents that have thousands of concurrent things being done, real meaningful transactions, um, and, and work flows being created all with AI. How much compute horsepower are we gonna need? How much economic value does that create? And why can’t we and aren’t we? And by the way, we can do many of these things even today.
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You know, it reminds me of looking at some of those old timey movies from the 50s and 60s where you see those huge pools of typewriters and people just banging away on typewriters and there were vast, there was like a whole cottage industry of people who just type stuff and then that went away. We have personal computers, so, and to your point, all of this is speeding up and the, the chat GPT adoption rate was one of the fastest, if not the fastest in history.So how fast does this get? Because AI seems to be adding a 0 onto its capabilities every year. We’re talking about a magnitude of order every year, and you put the exponential math on that. We’re getting to infinity pretty soon.
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I think it’sweeks. I mean, every week it’s like the, it’s the LLM, you know, you’ll see every few weeks. Gemini, you know, with Google comes out with something new. You see the next generation of silicon and chip development that comes.By the way, I love your analogy of the people tapping on typewriters in the book Human Machine. We talk about gas lighters. You know, we love the word gaslighting. You know, there used to be people in the towns before electricity actually you would climb up on a ladder and light the gas lamps. Um, and by the way, when, when that job when electricity, everyone said, what’s gonna happen to all the gas lamps and all the gas lighters? Well, they’ll be out of work. You know, we’ve seen this, and that’s why I’m such a techno optimist in many ways. It’s like, look, none of us are quite.Smart enough to read the tea leaves of exactly what everybody’s going to do that gets displaced, augmented, replaced with AI, but what we do know is every industrial revolution that we’ve had, it’s created more economic power, more growth, more capacity and more jobs. Now I’ll be the first to admit I have two daughters. I have a 2, almost 24 year old that’s finishing grad school and a 2020 year old that’s at, uh, Baylor doing her first year and she’s an entrepreneurship.And she’s, you know, saying I want to go into marketing. I’m like, I don’t know. I feel like you can just tap that into chat GPT. And, and the point is though, but that’s the, the, the blind spot that we all have is like, it feels like, well, I could create the visual now. I can, I can create a little graphic. I can use Canva, I can use chat GPT. I can use this, butIf we can see the future, I think AI powers an economic revolution and going back to the trade wars, I think that’s why we’re fighting so hard, and I think that’s why Nvidia is being used right now as a bargaining chip.
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So go ahead. What do you like in tech right now because we are seeing tech stocks fall.Is it a buying opportunity forpeople?
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So let me wrap in my question. Is it the, uh, is it the first movers? Is it the hyper scalers? Have we, is, are the winners yet to be determined like we haven’t even seen them yet. There are companies being formed right now. Yeah,
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it’svery interesting you ask that. II recently did an interview and I was talking about the reordering of the Mag 7. Now I’m gonna use this as a bit of a metaphor and then I’ll give you a couple of names that I really like, but like the metaphor is right now with trade being reordered, there’s gonna be companies that’s gonna take a few years to get back to, to stasis, right? They’re, they’re gonna have to move manufacturing. They’re gonna have these tariff impacts and, and then of course you have recessionary for.Is that they have a big exposure to consumers, so I looked at like Apple and Tesla, and I’m like, even though Tesla doesn’t have a lot of reordering of its supply chain, it’s very consumer dependent. Like our consumers feeling good, wanting to spend money, um, and then they’re losing the market. So I don’t like those that much. And then there’s kind of this middle which is like the ad brigade companies. It’s the, it’s the Googles and the metas, uh, and the Amazons. Now they’re big commerce, big ad platforms.That’s really interesting though, because they have a ton of small business exposure. The marketplaces are very dominated and it’s, it’s the consumer again. So it’s like, well, I like their cloud businesses a lot, I think enterprises and cloud has to grow. I think that consumers and small businesses, I’m super weary right now with everything that’s going on, but then at the top of it, I look at like a Microsoft, which has very little consumer exposure. Most of their revenue is enterprise and cloud and AI and then I look at um Nvidia, which again I’m not.I’m not a pure Nvidia bull. I actually really genuinely believe like Broadcom, the XPUs, new infrastructure investments are going to disrupt part of their market share, but they’re super enterprise centric at this point, like 90+% of their income comes from these hyper scales, the $325 billion of CapEx commitments. So I’m like, I like those more. So I’d like to answer your question now after 5 minutes of rambling on. I really like companies that have very low consumer exposure and I like companies that haveMinimal supply chain damage being done by this and enterprise AI build out for the future isn’t gonna slow down. The best companies in the world are going to see this as smaller, weaker companies with less operating leverage are actually going to be haltered and faltered by this whole thing, halted and faltered by this whole thing. They can invest big because we know we’re gonna come out of this. We know at some point we’re gonna get a aru social post that says, I just did the best, biggest deal in the world with China.And we’re gonna
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hearit behind us right here on Wednesday.
12:21 spk_1
You’regonna hear a roar. And the point is once that deal is done, um, the markets are gonna absolutely rip. I, I genuinely believe that
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they
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did
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last Wednesday.So hold that thought. We need to take a short break, but coming up we’re gonna be talking about the concentration in chip stock fabrication, and today’s runway battle is a look at entrepreneurship through the lens of Formula One racing and the Premier League. So stay tuned.This episode is brought to you by the number 90%. Now that is Taiwan’s share of the global market for advanced semiconductor fabrication, which is really a story about Taiwan’s semi. And Dan, there’s a lot to dig into, including political history as well, and geopolitics and, you know, tech writ large.But I, I think this might come as a surprise for some people, but Taiwan Semi is a manufacturer of Nvidia chips. Nvidia doesn’t fabricate their own chips. Um, it’s done on this small island outside of China, and what do you think about all this? How stable is this? Have you ever
13:23 spk_1
been to Taiwan? I have not. Yeah, it’s warm, um.Actually, most of the companies we call chipmakers don’t make their own chips. Just to be very clear, there’s this whole category of fabulous, so AMD and Qualcomm and Nvidia, none of them broadcom. They don’t make none of them are chips. Well, they’re all chip designers, fabulous chip designers. So that’s, uh, there’s something for the people,
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chip design. I gotta
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stop writing chipmakers and I
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mean the media sort of broadly calls them semiconductor and chipmaker, and they’ve they’re, they’re doing some very important work, but what we did over the past several decades was we basically outsourced the entire trade, so.Not only is 90% made in Taiwan, but 0% of what we consider to be the leading edge at at this point going into that chip sack bill was made in the US, so we completely 100% outsourced our capacity to make leading edge chips for smartphones, leading edge chips for, uh, enterprise and servers, the leading edge chips for automobiles to the world. Is that risky? Of course it’s risky. There’s this massive macro conflict that’s going on. China genuinely believes it has rights to Taiwan and at some point that is gonna create a probably a war.Some type if uh we don’t settle this whole trade battle and if I was the US and I said what would happen if all of a sudden China did, uh, escalate the conflict, our innovation here would stop. Now TSMC has brought some of its chip making back, uh, is just now starting to, to make capacity as some of their, you know, I don’t want to get too technical, but their newest, we’ll call the newest types of chips that can power smartphones and servers. Uh, we had Nvidia make a commitment to build half a trillion dollars here. AMD Lisa Su made a similar commitment.You know, they’re planning to bring even newer. So the long story short on all this is.We have to mitigate this risk. Part of this trade deal is also about IP because even if we bring manufacturing here to the US, TSMC’s $165 billion commitment to build here, we don’t own the IP. So even at a moment where some sort of conflict escalates, we’d be frozen.In time because they’re all their all their IP sits in Taiwan. This is also a reason I’ve been a big advocate for a strong intel. Now Intel’s got all kinds of complexity. They’ve got all kinds of struggles on their balance sheet. They’ve got a new leadership. I admire Lit Bhutan. There’s some interesting.Potential conflicts of interest with China that could escalate right now with him and his investments, but we need a strong intel. We need TSMC to come here. We need Samsung to bring their leading edge here. We need to make chips here. Now I don’t know about bolting phones together here and I don’t know about purses and handbags and textiles, but we need to make chips.
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Are
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we
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going in the right direction right now?
15:56 spk_1
I think we’re starting to move in the right direction. Look, the, just quickly on the trade stuff.I believe in a lot of what the ideology is about bringing back key manufacturing, building the futures type of, of manufacturing facilities, which, by the way, are not full of people sewing Nikes together. It is building smartphones and building servers and all these types of things.Having said that, I’m absolutely losing my mind with all the, the whips saw. I, I do not know what to make of it. Are we negotiating with 70 countries? Are we going to get a first deal? Can we isolate China? Um, but they’ve been stealing RIP for a very long time, and that’s a, you know, besides hacking our infrastructure and stealing our RIP, I mean that isn’t a friend. I don’t know how else to describe that, but.We build a lot of great things, we develop a lot of great things here, and for a long time they’ve taken it um and used their, their independence, their sovereignty to excuse them for taking our technology.
16:53 spk_2
What’s one of the biggest reasons why we don’t produce more chips here already in the US?
17:00 spk_1
Yeah, I mean, the same reason we outsourced almost every industry in the world. And remember, on a services and software basis, we actually have a trade surplus with most parts of the world. We’re not talking about that a lot, but that whole sort of sector of manufacturing, we’ve really struggled. Uh, Taiwan’s been a good partner to us, and they make a great product and Intel, of course, having faltered a little bit.And only made chips for themselves, so they weren’t fabricating any leading edge or advanced chips for anyone else. They’re changing that now. Intel has a foundry and they’re trying to get some, some, some traction there, but it was just a big oversight. I mean, at some point, you know, like every accordion effect of every market, you take the accordion out too far. We outsourced all of our industries and you saw Elon Musk proved, and again.Uh, difficult character, you know, so I won’t, I won’t paint whether people like him or not, but he actually did show that we could bring manufacturing of automotive back here, build an advanced capable automobile at a competitive price in the United States. So it is possible, but it takes a lot of risk. It takes, uh, it’s just not as easy to do. And in other parts of the world, even our own carmakers, GM, Ford, they all did a, I mean, Ford did better, but a lot of them outsourced a lot of because it was the economics were better, and we reward economics that returned value to shareholders.
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Hard pivot here. This week’s runway showdown is all about execution and entrepreneurship. Maybe there is a tie in. First down the catwalk, it is the gritty midfielder, scrappy boots, tape wrapped ankles, and a nose for the goal. This look is pure hustle. The entrepreneur who plays both ends of the field, grinding out wins from pitch to product. This footballer has been bruised by market cycles but still controls the tempo, but right.Behind him smooth as carbon fiber comes a precision pit crew, matching uniforms, calibrated tools, every moment measured in milliseconds. This is one seasoned operator optimized, systematized, and ready to scale. So Dan, who wears the execution better in today’s market? Is it the street smart player who’s building it brick by brick or the highly efficient tactician who shaves off tents with every turn?
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I’m a brick by brick builder, um, but, uh, but you like
19:04 spk_0
F1.
19:05 spk_1
I love them both. So, you know, it’s, uh, we’re recording this on the day of the quarterfinal of the, uh, Arsenal, Real Madrid game. I’m, I’m, I’ve got my hat in my bag, my Arsenal hat, I’m wearing it around town, but I’m a diehard Flon McLaren fan.And it’s been great because both of our, both my racing team and my soccer team were terrible for about 5 to 10 years and now they’re both terrific. I love it.
19:27 spk_2
Dan, this one’s a little over my head. Not gonna lie to you.
19:30 spk_1
Yeah, I’ve got the sports, the sports, but I
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wanted to kind of.Dig into some of your personal background. You had the title Chief executive officer, CEO at the age of 28 for a company called United Visual. Talk to us a little bit about your career journey and some of the biggest lessons you’ve learned.
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Yeah, it, it, it, I had a really interesting, uh, fast start and as I’ve gotten older, I’ve become more comfortable talking about it, but my wife and I, now we’ve been married almost 24 years. Um, but we had our first child out of wedlock. I was, I was 19, I was 20 years old when I found out she got pregnant, 21. I went to school full time, ended up going to work for my dad, uh, who was an entrepreneur himself, uh, for just a very short.Period of time. And, and I was super motivated. And the biggest thing that happened to me was I was motivated because I felt like such a failure that I knocked up my college girlfriend at the time. Like I said, it’s worked out beautifully, 3 children, 24 years of marriage. But at the time, I felt like, you know, so I wanted to really prove something to the world. Went to work for my dad, finished my undergrad, um, really quickly, my dad was in trucking. And, you know, after a couple of years, I’m like, well, I’m gonna take over the.Family business, all will be well. My dad explained to me that I needed to get my CDL and go on the road for 2 years if I wanted to take over the business. I said, Dad, I don’t like trucking that much. Ended up getting into tech, into music because I was a classically trained in the piano. Um, got into music technology, started actually, uh, selling in a retail store, found out I was really good at selling technology and music. It was like systems for DJs and production.So the long, long, long path of this was I went from that to working at United Visual when I was just a few years older selling corporate because that was an enterprise technology play that sold video conferencing solutions. Um, I did really, really well at that, um, ended up getting hired by a bigger manufacturer. 4 years later Unit Visual comes back to me asking me to come back and run their sales, um.In one year and after that they asked me to run operations and then within a few months they actually asked me to be their CEO. 67 year old company promoted from within, promoted from within, uh, at 28 years old, uh, running. It was a couple 100 person company. It wasn’t a huge company, but it was a good sized business and it was an old established union shop, integration shop and the and the SI side.Um, everything’s possible. I mean, that’s one of the things I learned, uh, you know, you gotta grind, you gotta work hard, but you know, then I obviously came up through tech, learned tech, um, learned chips, learn networking, and so, you know, that’s now we’re going 1516 years into the past of building this research company.But, uh, there’s a whole lot of great journeys, 7 books I’ve written, some of them document that, uh, of going from kind of being in, being in music, being in tech, being passionate about it, learning the industry, and by the way, you can go to school for finance, you can go to school for, um, computer engineering and science. Everything now is about how quickly you can unlearn, relearn, you know, and learn again because the bottom line is nothing I learned in college and I did my master’s and I taught graduate school in the middle of all that. Nothing I did in that whole period of time.Has had as big of an influence as just getting your nose to the grind and learning every day.
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Great story and we gotta end right there. We have wound things down at Stocks and Translation. Be sure to check out other episodes in our site or wherever you find your podcasts.