SpaceX Goes Public + What IPOs Tell Us About Capital Markets

This transcript was generated using AI and may contain errors.

PATTERSON:
SpaceX is about to go public. It’s estimated to raise around $75 billion, making it the largest IPO in history, at a valuation that could reach $1.77 or so trillion. As I like to say, that’s trillion with a T.

MALLABY:
And it’s likely that Anthropic and maybe perhaps probably OpenAI will follow this year. And if all three manage to do an IPO, we’re looking at kind of $200 billion or so of fresh capital raised in IPOs, which would exceed the total amount raised in IPOs over the whole of the last three years.

PATTERSON:
So I get the SpaceX hype and with about two dozen banks in the mix raising these funds. You know, when you go around New York City right now, there’s a lot of anxious yet quite happy bankers. But the chatter around SpaceX and Elon Musk, you know, I think is missing something, Sebastian.

It’s an equally important conversation about what these IPOs say about the structure of our capital markets. I’m Rebecca Patterson.

MALLABY:
And I’m Sebastian Mallaby.

PATTERSON:
And this is The Spillover. Sebastian, by now we all have Friday, June 12th circled on our calendars. It’s the day SpaceX is going to start trading.

You know, I have always been slightly obsessed with space and space exploration. I don’t know if I ever told you, but when I was growing up, my dream was to be an astronaut. I was raised in Florida and I literally could watch shuttle launches and the space shuttle going over the coast as it took off.

I started University of Florida hoping to be an aeronautical engineer.

MALLABY:
I think you told me about growing up in Florida and loving to pick up seashells as you walked along the beach, which is kind of a different vibe. But you kept this whole space thing a secret. Do you still want to go to space?

PATTERSON:
I do. If I got the opportunity, I’d do it in a heartbeat.

MALLABY:
Really? Surely ever since Katy Perry went up with the, you know, Jeff Bezos gang into space, the whole vibe has changed. We’re kind of away from that, you know, right stuff.

Tough guy.

PATTERSON:
Astronaut thing these days. Okay. I hear it.

I hear it. Let’s just put a pin in that one for now and get back to these IPOs. Okay.

It’s all right. It, it, look, it just feels to me like part of this story, the market structure is either being underappreciated or honestly, and some of the things I read is just being misrepresented.

MALLABY:
I mean, you’re on the board of Vanguard, right? So market structure, the way all this stuff works, this is your bread and butter, right?

PATTERSON:
Yeah. Yeah. Oh, I love being on the Vanguard board.

It’s an incredible company and has really great leadership. But of course, when I’m talking today, this is my view, not Vanguard’s, but either way, market structure is something I’ve always enjoyed researching. You know, maybe with that, Sebastian, I’ll just kick us off.

One thing I’ve been thinking about is what SpaceX and some of these other potential mega IPOs mean for equity supply. When we think of any price of anything, including market prices, at the end of the day, it’s a demand and supply. And I’ve seen some commentary in the last several days suggesting that last Friday’s market sell-off was in part exacerbated by fears about new equity supply that could come onto the market through these IPOs.

I think that issue is of equity supply is interesting because usually demand gets all the attention. You know, every day when you turn on Bloomberg, CNBC, whatever you read or watch, you hear about retail demand, institutional demand, sentiment, flows, positioning, that’s all demand. But the supply side matters a lot as well.

And we’ve had plenty of years where investors weren’t jumping into stocks, but the market stayed relatively well supported or even rose thanks to shrinking supply. I actually did some digging before we had our conversation today and was reminded of 2018. We had President Trump in his first administration back then, and he had cut, as we remember, corporate taxes pretty sharply.

And that freed up a lot of funds for companies, and they used some of those funds to buy back their shares because that can help support equity prices. We had more than $806 billion in U.S. buybacks in 2018. At the time, that was a record.

But if you remember that year, it was also quite interesting for a lot of more anxious things going on, including the first Trump trade war. And we saw that anxiety reflected in the equity demand side of the equation. We actually saw big equity outflows that year.

Yet, the S&P 500 major equity indices only fell very, very modestly, mainly supported by that shrinking of supply. So demand fell, but supply fell almost just as much.

MALLABY:
So I guess then the worry is that this year could potentially be kind of the reverse of 2018, right? Because you’ve got these big IPOs coming, and we could see hundreds of billions of new equity supply coming onto the markets. Is it kind of anti-buyback time?

PATTERSON:
So you would think so. What you said makes 100% sense to me. But when you look at the data, actually, that’s not what’s happening.

Share buybacks this year have been strong globally and exceptionally strong in the United States. It’s actually fairly similar to the story in 2018. So here we are, fast forward, President Trump’s second term.

We get more corporate tax cuts, frees up more capital for companies, and guess what they’re doing? They’re buying back some of their shares, and they’re trying to support their stock prices in the process. And what’s really interesting, Sebastian, is it includes the tech companies.

Even though these tech companies are spending like crazy to build out their AI infrastructure, they’re also using some of their capital to buy back shares. I saw a research report recently from Goldman that said corporate repurchases this year could be something around $1.5 trillion. So contrary to a lot of the chatter that you and I are both hearing about just supply, when you put the new supply from IPOs together with the buybacks, the net outcome is actually almost a wash.

That’s what’s expected anyway.

MALLABY:
Why, Rebecca, you busted a popular narrative right there.

PATTERSON:
I think the same thing is more or less true for the bond market. So once again, we’re seeing an AI-related supply deluge. There’s been a lot of commentary around the fact that Amazon, Alphabet, Meta, Microsoft, Oracle, these five companies, just five companies, have issued around $121 billion in corporate bonds last year.

And that was a huge jump from the year before. And this year, it appears to be an even faster pace of issuance, according to the data that I’m seeing from investment banks. Alphabet raised around $31.5 billion in February, and then with a 100-year century bond, which is pretty unusual. And then Amazon raised $37 billion in early March, followed the following day with another $14.5 billion in euros. So lots and lots of issuance coming from these tech companies in equities and in bonds.

MALLABY:
Yeah, I mean, those bond numbers really are a bit crazy. First of all, the 100-year bond always strikes me as insane. I mean, how does anyone know who can pay back 100 years from now?

How many companies still actually exist 100 years later, even if they’re flying very high now? So I’m always a bit mystified by the 100-year bond. But anyway, I saw recently a Dealogic number suggesting that the big five hyperscalers that you just mentioned issued 50% more bonds in the first half of this year than they did in the entirety of last year.

But so far, this deluge of supply, as you called it, doesn’t seem to be having a major impact either on bond interest rates or on the spreads of these corporate bonds against government bonds.

PATTERSON:
No, exactly, exactly. Look, there’s definitely some challenges under the hood, if you will, in particular corners of the bond market, but we’re not seeing any issue for credit markets at the aggregate level.

MALLABY:
Yeah, so big picture, what we’re saying is that the public markets are likely going to absorb both the issuance of new equity and the issuance of new debt. So in other words, corporate America is saying, we need ungodly amounts of capital to go build out AI infrastructure. And Wall Street is saying, sure, no problem.

To which one might say, you know, yay, American capital markets, you gotta love it. But before I sound too much like a cheerleader, maybe we should segue to another market structure issue around these IPOs, because that’s where I think I get to be a little more critical of how the system’s working.

PATTERSON:
Okay, well, I like critical, Sebastian. And I agree with your summary so far, though, whenever I hear yay, capitalism, capital markets, the paranoid investor in me always goes, yeah, what am I missing?

MALLABY:
But anyway, down 20% the next day, for sure.

PATTERSON:
Exactly. What’s top of mind for you?

MALLABY:
Well, ever since I wrote my book on venture capital, I’ve had this view on growth, equity investment, meaning, you know, the financing of these unicorn companies specifically. And because I think that’s dysfunctional, that growth equity world, I’m sort of happy to see these three big unicorns try and probably succeed in at least two cases to go public.

PATTERSON:
Well, The Power Law, that’s the book you’re referencing that you released, I think it was four years ago now. Look, that is a great read and an incredibly useful deep dive into the venture capital piece of the broader private equity market. But Sebastian, I want you to keep talking here.

Why are the private markets for big tech firms dysfunctional?

MALLABY:
Well, thanks for the free publicity. I always take that happily. But look, to answer the question, my book was offering a pretty positive take on the very early stage venture capital investments at Series A, you know, this is an incredibly effective way to get tech companies off the ground, get them to a point where they’ve got product market fit, and they’re starting to get revenues and so forth.

Where I’m critical is in the later investments when they pass a billion dollar valuation. And the reason is that the governance just changes dramatically at that point, when you’re early on, and you have a Series A investor, and you’re an entrepreneur, you got to listen to what that investor says. Because if you don’t listen, and the Series A investor is not on your side, you won’t be able to raise the next round of money.

So there’s a check and a balance, there’s oversight. And I tend to think that’s a good thing, whether you’re a entrepreneur, or an athlete, or just a writer, you know, you benefit from having an investor watching you or a coach giving you advice, or an editor, you know, fixing your sentences. I think all of us are better with checks and balances.

PATTERSON:
No, I agree, agree completely. Okay, so then what switches?

MALLABY:
So when you get to this unicorn point, the whole thing switches, because the growth investors who take over at that point when you need to be able to write a much larger check, traditionally, do not go on the board of the company they write a check to. They do not vote their shares other than in support of the company founder. They often give the company founder super voting shares, which entrenches their power still further.

And I mean, that’s, you know, that’s not oversight. And I think at that point, the risk is you get entrepreneurs like Travis Kalanick of Uber, or Adam Neumann of WeWork, who are both very talented in their own way, but had big flaws. And once the oversight diminished, because of getting into that unicorn phase, when there’s too much founder friendliness, we know without the oversight, both Adam Neumann and Travis Kalanick kind of drove their companies off the rails for a bit.

PATTERSON:
What I hear you saying is that in the early days, you get the oversight and you need the oversight. As they get bigger, you still need some oversight, but you’re just not getting any. And that’s already been a problem for SpaceX, correct?

MALLABY:
Yeah, I mean, Musk controls the company. Nobody can challenge him. And that’s reflected in the numbers.

Understand that it’s a funny mix of stuff that really is great, like Starlink, super profitable and successful satellite communications company. But then there’s also Twitter now called X, which was basically acquired, you know, out of the ego of the chief person posting on it, who was none other than Elon Musk. And he wanted to own it.

And it didn’t really fit with the rest of his business. But what the heck, he went ahead and did it. And I don’t think that makes any money at all.

And then the AI stuff, you know, my most recent book is about AI. And I know the backstory of why he got into AI. And it’s basically this sort of hubristic side of him, the kind of vainglory that can’t bear to be left out of the most consequential technology of our time.

And so he thought he had it with rockets, when that turned out to be not true, because there was something even bigger in the form of AI. He had to muscle his way in. And he’s losing money on that big time Grok.

The AI model that he produces isn’t very good. A large chunk of the team that he had has just quit. And so all he’s left with, to be fair, is that he did build good hardware for training models on he doesn’t have a good model to use it for.

But he’s going to rent that space out. And he’s just done deals with both Anthropic and OpenAI. And so he’s going to get a lot of revenue from the hardware.

But you know, being a Neo cloud is not really the same as succeeding as at AI, which is what he was trying to do.

PATTERSON:
Right? No, I’m with you so far. I guess what I’m having trouble reconciling is, when you look at the proposed public structure of SpaceX, it doesn’t feel like you’re going to get much oversight or improvement going from private to public at all.

I mean, the details that I’ve been reading are pretty extraordinary. You know, after the IPO, Musk is going to be CEO, chief technology officer and chairman all at once, sitting on top of a nine member board. And he’s going to have a dual share class structure.

That’s, that’s not unique, but still, you know, he’s going to hold about 42% of the company’s equity, but there will be two share classes. So he’s going to have something like 84 or 85% of the votes. He’ll get to select his own board.

And SpaceX’s bylaws are also pretty extraordinary. I mean, shareholders, and I’m going to quote now, irrevocably and unconditionally and quote, waive jury trial rights and are barred from class action suits. So if they have a problem with the company, all they can do is arbitrate.

That’s it.

MALLABY:
Yeah. I mean, I take your point and that all does sound very alarming. I guess I could, you know, come back to you and say, look, you know, that kind of situation is pretty unusual in the public markets, but it’s sort of standard in the private markets and that’s the difference.

And there’s going to be more scrutiny of what Musk is up to once he’s public, you know, SpaceX is filing a regular, regular reports and has to comply with SEC oversight and so forth. I mean, it just becomes harder to abuse your power or amass too much power once you’re out there on the public market. And so maybe at the margin, there’s some benefit there, but also look another way to look at this is, you know, maybe Elon Musk is a little bit like Donald Trump, right?

Neither of them faces much in the way of checks and balances, but the one thing they do respect is the markets. And if the markets swing against SpaceX, once it’s public and you can see it, you know, being traded every day, you see the price is like a constant verdict on the quality of Elon Musk’s behavior and management at any given time. And you know, if it’s going down, that’ll send a signal and he might even respond to that.

And the other thing actually is that it’s not merely that I want, you know, companies to go public because I think the governance might on the margin be better. It’s also just, I’d rather have these dynamic growth companies in the public market, which I think would be better both for them because they could raise more capital more cheaply from a distributed share ownership base. And by the way, that’s why they want to go public, right?

I mean, that’s incredible. Now, it might be slightly different businesses that are included in the mix between now and 2028, which, you know, right now, as you said earlier, we have Starlink, the satellite internet network, Rockets and xAI. Whatever the mix is, it would be an incredible run.

Retail investors, in theory, should be benefiting from that.

MALLABY:
Yeah. Although you were talking about revenues there, and I’m a bit old fashioned on this. I would quite like to know about profits.

PATTERSON:
Of course. Of course. That goes without saying.

Revenue matters, but it’s only one part of the story. I agree.

MALLABY:
The Information had a nice article citing a Goldman analyst. I think relevant particularly perhaps because Goldman is part of the, you know, lead advisory team on the roadshow. But these guys themselves are saying that, you know, SpaceX’s capital expenditures, um, you know, through 2028 could be around 360 billion.

So that’s swamping the 160 billion in revenue, which you were just talking about. So bottom line, we just don’t know if SpaceX is going to make money or not. But Rebecca, I mean, we talked now about two different market structure issues.

We’ve considered the impact of the flood of fresh equity issuance and bond issuance on the capital markets. And we’ve talked also about whether we’d rather have these, you know, kind of dynamic companies in the public market or the private market. But there’s another market structure angle as well, which is what does including a company like SpaceX by itself, or maybe Anthropic and perhaps OpenAI as well, including those in the equity indices.

I mean, what does that mean? Should a company like SpaceX even be considered suitable for a benchmark? Equity index, it’s unprofitable for the moment.

It’s a leverage bet on the future of space economy and AI. And it’s way riskier than most other companies in the indices. So maybe the average passive investor in an index doesn’t or shouldn’t want a piece of it.

I mean, we’re both old enough to remember that indices like the S&P 500 traditionally exclude unprofitable firms. And that’s for a reason, you know, during the dot-com bubble, the index included a number of, you know, highly valued, but unprofitable dot-com companies that were kind of being cropped up because they were in the index. And therefore they automatically attracted capital from passive investors.

And that allowed the zombie companies to carry on for longer than they should have. It prolonged the bubble, it exacerbated the eventual bust, and that’s not a good thing. And in contrast, the fact that when Elon Musk took Tesla public, you know, he had to wait for a while before he could be included in the S&P 500 was suitable because it wasn’t profitable.

And so keeping it out might’ve been a good thing.

PATTERSON:
I agree, but I think maybe you’re exaggerating the problem a bit. You know, it is absolutely true that the Nasdaq 100 index, which is often traded through a passive ETF structure called QQQ, has changed its rules so SpaceX can join the Nasdaq 100 in 15 trading days. And normally that would have been three months in place previously.

So they’re making things nice for Elon. And I think he probably asked for that in order to go with the Nasdaq, but the Nasdaq never has had a profitability hurdle. So including SpaceX in 15 days rather than 90 days, I don’t know how big a deal that is, but there is a narrative now that this rule change is unprecedented and horribly bad and so forth.

And look, index providers have evolved their rules as companies change, the markets have changed for decades. I remember, believe it or not, back in 1984 when British Telecom went public. So there was what they call a seasoning rule, let the company trade for a little while, let the volatility work itself out and things settle before they get included in an index.

That rule was suspended. So it was fast-tracked by the FTSE 100 back then. So this idea of shifting timeframes, it’s not the usual practice for sure, but it’s certainly not unprecedented.

It’s happened many times before.

MALLABY:
Okay. Well, that was an impressive history lesson, Madam Vanguard Director. A great point.

And I can say I’m going to be outgunned here, but carry on. What about the other indices other than the Nasdaq 100?

PATTERSON:
Yeah. The one that I’ve been focused on, honestly, is the New York Stock Exchange and S&P 500 index. So S&P did adjust inclusion rules for SpaceX for some of its indices, the total market index and the Dow Jones US total stock market index.

That’s a mouthful. And this was a surprise to a lot of people, I think. S&P held firm on its rules for inclusion in its flagship, which is the S&P 500.

You know, SpaceX may not have a wait in the S&P 500 until the middle of next year because S&P requires the company to be profitable under GAAP accounting rules in its most recent quarter and across a sum of four previous quarters. Plus they have a 12-month waiting period. So mid-27 is probably the earliest SpaceX can get in the S&P 500 unless SpaceX changes the rules.

But look, SpaceX had a almost $4.95 billion loss last year and reportedly had about a $4.28 billion GAAP loss in the first quarter of this year. So that profitability hurdle, they’ve got some work to do. But, you know, I think what S&P is doing is completely reasonable, especially when you think about, as you just mentioned, the 2000 dot com bust.

I think the main point I’m just trying to make is that the decision negates this popular narrative that you were reflecting a little bit right now. You know, the media coverage suggesting that investors will all own SpaceX whether they want it or not. That’s not correct.

A lot of indices will have it. But the S&P 500, which is the benchmark for so many passive and active managers, it’s not going along with it. And I’ve dug up some numbers to show I mean here.

MALLABY:
I’m ready to capitulate already, but go on.

PATTERSON:
All right. All right. At the risk of going on too long, I am going to give you a couple of numbers because I think it’s interesting.

So S&P Dow Jones Indices tries to track how much money is tied to their different indices. And at the end of 2024, that’s the latest data we have. It was estimated that we had about $20 trillion with a T indexed or benchmarked to the S&P 500 alone.

$20 trillion. The Nasdaq 100 is around $1.4 trillion. So the S&P 500 is 14 times bigger than the Nasdaq.

Again, the vast majority of passive investors out there in the world aren’t going to be owning SpaceX. So the fear that they’re all getting, pardon my French, are all getting screwed by buying at the top, so to speak, it’s just wrong.

MALLABY:
That’s a really good point as well. And what you’re saying actually makes me feel a little bit better in a funny way because it affirms my prejudice that the public markets generally work quite well and probably better than that universe where the growth equity investors, my bête noire, are calling the shots.

PATTERSON:
Well, look, I definitely think I’m risking getting on a soapbox with some of this stuff, Sebastian. I think you and I both have some strong views today, but I have just one more point here. So we’ve established that SpaceX will be in the Nasdaq 100, but have you read or do you know yet, I know you’re on the road, what the weighting is going to be?

MALLABY:
No, I don’t, but I get the sense I’m about to know.

PATTERSON:
Yeah, I’m going to tell you. So the estimates are that SpaceX initially will represent something like a 0.5 percent weight in the Nasdaq 100.

MALLABY:
0.5. Okay. So basically nothing will be there.

PATTERSON:
Well, look, it’s actually a bigger weight than more than half of the stocks in there. So it’s not nothing, so to speak, but it is important to keep in mind. People see this 1.75 trillion valuation for SpaceX. You have to remember what’s getting included in the equity indices is the so-called float, and that’s a fraction of the company. It’s just about 4% of it. So it’s still enough to generate billions of dollars of passive investment flows into SpaceX and the company’s footprint absolutely is going to grow over time.

But the main issue here is that for now, SpaceX should not be dominating anyone’s performance or portfolio.

MALLABY:
Yeah. So the idea that passive investors are being Musk-bombed willy-nilly against their will, that’s just a myth.

PATTERSON:
And the other thing I’d say too is one of the beautiful things about American capitalism, and there are some, is how creative it is. And so Musk is polarizing enough that I don’t rule out at all that some smart, creative entrepreneur out there is going to launch some anti-Musk or non-Musk investment vehicle. You already have ETFs that focus on executive character.

So they’re morals. I don’t know how you quantify that. There’s also fundamentally based ETFs that weight things like cash flow and dividends, and that usually reduces the scope for companies like Elon Musk’s to be included.

And there’s technology, as you and I both know, AI today that’s making it easier and easier for people to really customize portfolios down to the stocks they own. If people want to avoid a Musk company, I think they can find ways to do that.

MALLABY:
And that’s going to be a super interesting and important thing to keep in mind, I think, over the next 6-12 months, because a lot of the chatter around the stock market will inevitably be Musk-flavored. So it’s just good to keep in mind that that’s going to be the chatter, but it’s not actually the experience of most investors in the market.

PATTERSON:
When we think about Musk really just dominating the narrative right now, I’ll give you an example I found yesterday of that. I went on Kalshi, one of the prediction markets that we’ve talked about before, and I found an entire page of bets revolving around SpaceX and Elon Musk. And I’m hearing chatter that Bitcoin’s price last week was falling in part because those, you know, hold on for dear life investors were selling because they wanted to get more SpaceX.

So look, I’m sure we’re going to have options and we’re going to have levered ETFs on SpaceX listings shortly after the IPO.

MALLABY:
So if I get my news about the markets by reading a subreddit about crypto, I’m going to get the sense that, you know, SpaceX is at the total center of it all. But the thing to remember is, it’s not.

PATTERSON:
Correct. That’s absolutely right. Still, I suspect, whether we want to or not, we’re going to feel compelled to come back to SpaceX in the future, whether we’re talking about…

MALLABY:
We kind of enjoy it. Come on, come on.

PATTERSON:
Yeah, yeah, yeah. This has been a fun conversation. You know, look, technology, space, the spillovers from these huge AI firms.

I mean, these are important issues. So of course, we’re going to talk about Musk again in the future. But maybe for now, why don’t we wrap with something catching our attention this week?

You have been on the road nonstop, my friend. So what’s caught your eye on your travels?

MALLABY:
Yeah, I have indeed been on the road. I was just over the weekend in Durango, Colorado with my oldest son, who took me river rafting, which was delightful. And then I went to speak at a conference in Phoenix.

And now I am in Berlin, because I’m speaking tomorrow at a conference in Berlin. And so it goes. But actually, in a way, the best thing that happened to me recently, on my extended book tour, is nothing to do with all these exhausting flights I’m taking everywhere.

It was just a kind of one of these virtual, out of the blue experiences where, you know, I opened up my newspaper apps on my phone. And in the London Sunday Times, there is op-ed by Rishi Sunak, the former Prime Minister, first of all saying that, you know, The Infinity Machine, my book is quote, superb, which was nice. But then, you know, he makes a point, which is basically what we’ve been saying to each other on the spillover, which is that, you know, if a European country or some middle power wants to have sovereign AI or control over AI, control over that kind of technology destiny, rather than trying to build an entirely independent, you know, cloud and models and the whole bit, which is pretty much impossible, you know, hard, even for the United States and pretty much impossible for others, it’s better to actually control one piece of the supply chain, which will then give you some leverage.

And this is the choke point idea that our colleague at CFR, Eddie Fishman, kind of coined and talks about, that if you have, you know, influence over something important that other people need, you can use that as a bargaining chip to get what you want in terms of economic interchange and including on AI. And so for example, in the UK’s case, and this is from Rishi Sunak’s article, the British chip design company Arm has its designs embedded in fully 99% of all the smartphones in the world, including China. I mean, I looked that up specifically afterwards.

Does that include China? Yes, it does. You know, chip designs from Britain are in the Chinese chips as well.

So it’s an example of how, you know, to a surprising degree, lots of middle powers have these little niche, uh, you know, power sources in terms of they’ve got something that other people want.

PATTERSON:
Yeah. Well, that’s a great statistic. Um, and congrats on the, on the book.

Um, I guess my, my thing this week also kid related, but this time it’s on the U S job market. You know, I have one daughter in college and one about to graduate high school Thursday later this week. So maybe it’s not a surprise that I’ve been reading a lot about youth unemployment in the United States.

Um, the New York fed just published some very interesting research about the topic. Uh, they found that 64% of the dramatic rise and it has been a dramatic rise in youth unemployment in the United States since the pandemic can be explained by remote work. So employers apparently are reluctant to hire the same number of junior staff just because it’s so much harder to train them and mentor them.

And the fed suggests that this rather than AI, at least for now is the biggest challenge for new graduates. So I thought that was really interesting.

MALLABY:
Wow. So the demon is not AI. The demon is video conferencing technology.

PATTERSON:
How do I say that is right in German. Das ist.

MALLABY:
Das ist richtig.

PATTERSON:
Das ist richtig. Okay.

MALLABY:
Always happy to help you with a few European languages. Tschüss. That means goodbye.

PATTERSON:
Auf Wiedersehen. Yes. Auf Wiedersehen. Tschüss.

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Our episode today was produced by Molly McAnany, Gabrielle Sierra, and Jeremy Sherlick. Our video editor is Linus Manchester. Our sound designer and audio engineer this week is Justin Schuster. Research for this episode was provided by Liza Jacob and Ishaan Thakker. You can subscribe to our show on Apple Podcasts, Spotify, YouTube, or wherever you listen to podcasts.