The Prof G Pod with Scott Galloway
Sports Betting, Challenges Facing Young Men, and The Fall of Sam Bankman-Fried — with Michael Lewis
Thu, 12 Dec 2024
Michael Lewis, a New York Times bestselling author and the host of the podcast Against the Rules, joins Scott to discuss the state of sports betting, the challenges young men face, and the controversy surrounding his book, Going Infinite, which explores the rise and fall of Sam Bankman-Fried. Scott opens with his thoughts on the Omnicom-Interpublic merger. Algebra of happiness: say yes. Subscribe to No Mercy / No Malice Buy "The Algebra of Wealth," out now. Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices
Chapter 1: What are the challenges facing young men today?
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Episode 328. 328 is the country code belonging to Guyana. In 1928, Mickey Mouse first appeared in the sound cartoon Steamboat Willie. What's the difference between Disney Plus and YouPorn? Disney Plus wants you to hate your stepmother. Go!
Go!
Welcome to the 328th episode of the Prop G Pod. In today's episode, we speak with Michael Lewis, the host of the podcast Against the Rules and New York Times bestselling author of several books, including The Fifth Risk, Flash Boys, and The Big Short.
We discuss with Michael the state of sports betting, the challenges young men face, and the controversies surrounding the book Going Infinite, which explores the rise and fall of Sam Bankman Freed. I really enjoyed this conversation. He's a very Simply put, Michael is a great storyteller and has written some of the kind of iconic books of our time. Okay, what's happening?
I'm home in London before heading to South Africa for the holidays. I'm super excited. I'm taking my sister and her family. My sister is turning 50, which in the Galloway household means she's turning 40. And love hanging out. You know, it's wonderful. So my sister and I never lived in the same household. I was raised by a single immigrant mother.
My dad, that was my dad's second wife, as far as we know. Pretty sure there was another one that we don't know about. And then he started his third marriage while he was married to my mother. Bad form. Bad form. And he married Linda, who is Ashley's. They had a daughter, and that was Ashley.
And Ashley and I always got along, but part of it was we didn't live together, so we were just kind of, you know, just 10 years difference between the two of us. And as we got older, we became kind of – it was sort of fun to just sort of wake up and realize you had a sibling that you got along with and you still felt that familial bond with and we had been close siblings.
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Chapter 2: How has the legalization of sports betting changed the landscape?
Yeah, you know, IPG's on bottom here. If you're at headquarters, in admin, in middle management, you're not client-facing, you're not ringing the register at IPG, folks, let's be clear, you're on the green mile.
And while John Wren will paint a vision of the future and how there'll be a lot of growth and they don't have an immediate layoffs plan, okay, stick around to get the severance, but be clear, if you're not directly linked to a client or a critical, mission-critical function, and you're making a good living, you're about to be consolidated.
We'll be right back for our conversation with Michael Lewis. Welcome back. Here's our conversation with Michael Lewis, New York Times bestselling author and host of the podcast Against the Rules. Michael, where does this podcast find you?
Smoketree Ranch off the side of Palm Springs, which is a gated community created by Walt Disney and some of his pals way back when. Wow.
Let's buzz right into it. In the latest season of your podcast, Against the Rules, you investigate sports betting, which we talk a lot about here on the pod, which you refer to as a great social experiment. Walk us through the state of play of this experience and where you think we're headed.
So in 1992, Bill Bradley, then a senator, created essentially a federal ban on sports betting. It exempted Nevada, but basically it was against the law. And the Supreme Court repealed that in 2018. And the new law of the land is states can legalize it if they want to, and 39 states have. And about two-thirds of the American population has access to sports betting on their phones.
About one-third still doesn't. And the industry here is dominated by two companies, FanDuel and DraftKings. They have, a little hard to say exactly, but say roughly 70% of the market.
And they were, before they were sports gambling companies, they were daily fantasy sports companies, which gave, they actually was the perfect, the perfect thing to be before mobile sports gambling is legalized as a daily fantasy sports company. You know all the customers, you have data on all the customers. Sports bets in America have...
skyrocket it's a little again a little hard to say because hard to know what numbers to trust because there was a there was an illegal market that presumably is not quite as big as it used to be but but it's gone from the legal market has gone from a few billion to over 100 billion a year and there's just starting to be some academic research showing the social effects of this.
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Chapter 3: What are the social impacts of sports betting?
You bought the claims. And if I could have, I would have. Oh, really? Oh my God. I mean, it just seemed pretty obvious that they weren't worth 10 cents on the dollar. Well, I wasn't that smart.
I bought them for 23 cents, but because it's better to be lucky than good because of the surge in crypto, they're now probably, the payout's going to be somewhere between 120 cents on the dollar and 150 cents. And other than- other than patting myself on the back for one of the few good investment decisions I've made in the last year, if everyone gets their money back.
Now, granted, he committed fraud. He took customer accounts from people who thought they were investing, you know, putting their money in a deposit, not even investing. And then he used it to take risks they had not signed up for. So that's illegal.
But one, given that everyone's given their money back, given, I don't understand the difference between what Sam Bankman-Fried did and what John Corzine did at MF Global, I think it was called.
You're taxing my memory there, but yeah. Do you remember that? Yeah, I do remember. You did the same thing. Can I back you up a sec? Because I really wanted to ask you about this. I took a keen interest in the market in claims on FTX because it seemed really clear to me.
that what the bankruptcy people were saying, or signaling, that it's like, it's this dumpster fire and there's nothing there, and boy, just be incinerated, all this money, that that wasn't true. And it was amazing to me how cheaply these things traded at first. How did you even think to buy claims?
I'm fascinated by, I've invested across every asset class, from angel to venture to growth to public. And by far, the best asset class is distress, because similar to biology, people don't want to hang around old people. So the best businesses are businesses dealing with old people. And the best asset class is distress. So I look at bankruptcy filings. And I was fascinated by this.
I got the bankruptcy filing from the court. I read through it. And in the bankruptcy claim, it listed all their assets. cash, some Bitcoin, et cetera. And one of the assets that just popped out to me is they had invested $500 million in Anthropic.
Anthropic is the number two AI company, LLM, and I couldn't find for the life of me what the valuation was that they invested at, but I figured it was somewhere between $3 and $5 billion. So I took the most conservative number, which meant that one of the things that FTX, the bankrupt FTX, had that would ultimately be distributed to the claimants was 10%, I assumed, of of Anthropic.
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Chapter 4: What is the controversy surrounding Sam Bankman-Fried?
The thing that troubled me most about Sam Bankman-Fried as a subject is I was genuinely interested in him right from the moment I met him, but it worried me that so many other people were. Uh, and, and the only thing that kept me going was that I had this privileged view of it.
But what I really like with the subject is like the Oakland A's, when nobody gives a shit about them, but I see there's something great there. And, and that's, that's the, that's the stuff. It's like, that's when you know you're in the right place. It's like, you're there for some genuine reasons because there's no ingenuine reasons to be there.
Arbitraging your personality against the rest of the world. I love that. Michael Lewis is the host of the podcast Against the Rules. He's also a New York Times bestselling author of several books, including The Fifth Risk, Flash Boys, and The Big Short. In addition, some of these have been made into great movies, The Big Short, Moneyball, and The Blind Side, all nominated for Academy Awards.
Grew up in New Orleans and remains deeply interested and involved. in the city, but now lives in Berkeley, California, alma mater, go Bears, with his wife, Tabitha Soren, and their children. If I could give my kids any skill, Michael, it would be your skill, and that is you are a fantastic storyteller. Really appreciate your time. Thanks for having me, Scott. Algebra of happiness. Say yes.
I went shooting this weekend. And when I say shooting, I mean out to the British countryside where you dress up in this kind of Guy Ritchie-like gear, stayed in an old kind of interesting castle. And then in the morning, a bunch of Brits took us out and seemed like a lot of them and a lot of dogs. And we murdered birds. This is not something I'm into. Let me be clear.
When someone described this to me, it sounded like Chinese water torture. But here's the thing. I have some friends in my life that I really like and are wonderful, interesting people. And they love it. And they love it. And you could just tell they wanted to share the experience. So I said yes.
And when I had to get up at O'Dark 100 hours to put on wellies or whatever they're called and then figure out a way to go, like, fire a rifle, which I have no desire to do with animals. Anyways, my point is... that these experiences really bond you to people.
I know these are good friends, but we feel even closer to them now because we got to share in something that they're really passionate about. On the flip side of that, it's something I didn't do, something I was bad at. I really never developed any hobbies in my 30s and 40s. I like movies. I like drinking. I like travel. That's
And the thing about being around people that are passionate about something, even if it's kind of old world Britain and these shoots, it's intoxicating. Just sharing it with them and seeing how into it they were. The majesty, the detail, the clothes, the technology, the history. Say yes. And if you find something you like, then love it and lean into it.
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