From Streaming Bills to Cell Service: How AI Could Transform Consumer Spending

SPEAKER_1 (0:00)

For more, we're joined by Eddie Yoon, co-founder of Category Pirates. Eddie, thank you for being with us in studio, and certainly a perfect day for you to be here. You have been holding up that consumers are spending more, but they're feeling less happy. We certainly got confirmation of that with the five-month low we got from you, Mish, this morning.

You also highlight household spending is up though. We're up a little bit more than 6 percent over the last 12 months compared with 4.3 percent a year ago. As you look at those figures, how much of that is reflecting a genuine uptick in consumer spending and consumer strength versus just the rising cost of maintaining the same lifestyle that they had a year ago?

Eddie Yoon (0:41)

I think you nailed it with the last part. Most of it is higher prices, not increased consumption, and that's the real issue is that, that can't be sustained very much longer. Many of these brands and companies have really driven revenue largely through pricing not by unit volume, and that's not sustainable for sure.

So consumers are actually going to take matters into their own hands. We see a wave. The second wave of AI that's coming is going to be how they find some, what we call stupid savings and stupid spending. Everybody, every marketing budget has 10 percent of stupid in it, and every consumer, if you look at your credit card bills, you got 10 percent of stupid in it, and the next round of AI is going to help you find that and deploy that into better uses.

SPEAKER_1 (1:18)

So this is people who are going to then start to do exactly this question mark we've been having, especially as Muse has come out. They're going to release their data to these AI and ask it to run through and say, where am I wasting money? Where do I have double accounts? People, that's one of the most common things I've seen for people who are using Muse is, I have multiple streaming accounts to the same services and things like that. Is that fall in that same category of money they're going to then redeploy elsewhere?

Eddie Yoon (1:44)

Yes.

You nail that again because sometimes you have duplicate subscriptions to the same company which I did and I was like, I had no idea for about eight years running. Other times you'll have subscriptions from different brands in the same category that you don't actually need. So there's a lot of stupid spending and waste that needs to be uncovered. Now, the trick for Meta and Muse, Muse is great.

I'm a big fan of Alexander Wang. I think he is the most important hire since Sheryl Sandberg and that's saying a lot because she drove 415 billion in market cap in her 14 years that she was there. But with Muse, Wang has driven $200 billion of market cap in the 15 months that he's been there. So he's got a big head start. Muse is great and the notable sign is Wang is not the same as the other leaders of AI. The problem with AI or the people leading it today is that their IQ outstrips their EQ. They say things that have not proven to be true and scare a lot of people, and it turns out you can be so smart you're stupid. Economists have predicted 3 percent of recessions and that just goes to show you, you're going to be scared 33 times before the real one comes along. So here's the thing with Meta and Muse is that a lot of people don't trust Meta. So there will be some people who will use Muse to get the personal savings. I did not trust Meta in one of them, and that's going to be the one where you go from 2 percent of how you as households spending on paid AI subscriptions, whereas 91 percent spend on streaming services. That's the trajectory. The question is timing, and the bridge to get there is trust, and that's why I think ultimately, Alphabet and Apple are the ones who will solve it because they already have our data and they already have our trust.

SPEAKER_1 (3:15)

So you brought up a great point there, the streaming, everyone feels as though everyone has streaming. It's north of 90 percent. Many of us have many streaming subscriptions. But if AI is the next useful subscription and we only are at 2 percent adoption here, how quickly do you view the average American catching up here? If we're at 2 percent, we've certainly seen the adoption of agentic shopping move at warp speed. People are using it, again, to try to save money, to source the best deal, to be more efficient in stores. How quickly do you view this adoption in households happening for people to really find a way to redeploy that misused money?