The Averaging Machine

Hello dear show notes readers!

Dan's wife and kids were off camping leaving him time to watch the whole of Glengarry Glen Ross in a single sitting. Why does nobody make movies like that anymore? Scale homogenizes. Once a film has to sell in China and Germany and everywhere at once, it gets sanded down to the middle. Dan claims that AI is the same kind of averaging machine globalization always was. I say the same corporate dispersion that flattens taste also spreads it. I pulled into a new Chinese chain half a mile from the plant in Texas, sat down, and it tasted exactly like what I ate in Chengdu. You don't get that without a machine pushing it outward. Homogenization and discovery are the same engine running in two directions.

The back half turned macro. Dan walked through his Amazon Prime Day strategy: pulling ads to zero while everyone else bids each other into the ground, taking a worse revenue number for a much better profit one. You win by managing the downside, not chasing the upside. Then the paper-cuts of inflation: a little tariff, a little fuel, a little Hormuz, and a tungsten-carbide problem most people will never hear about that's quietly tripling my industry's tooling costs. Each piece feels transitory, but what if the sum is sticky? Which got us to Warsh taking the Fed chair and a genuinely fun thought experiment: if today's inflation is mostly a supply-side problem, does hiking rates actually make it worse?

Go build something this week.

Cheers, Sean

Shows/Films Discussed

• Glengarry Glen Ross (1992) — dir. James Foley, written by David Mamet; Jack Lemmon, Al Pacino, Alec Baldwin, Ed Harris, Alan Arkin, Kevin Spacey, Jonathan Pryce
• A Few Good Men (1992) — Dan's "another small-set, big-writing movie" reference
• The Hunt for Red October (1990) — referenced for Alec Baldwin's prime (he played Jack Ryan)
• Scent of a Woman (1992) — referenced for Al Pacino's heavy-hitting years

Tools & Platforms Mentioned

• Nano Banana — Google's Gemini image model; my example of the under-funded founder generating 500 versions of a vision for $100
• Amazon Seller / Advertising — the Prime Day ads-strategy and B2B-placement discussion
• Walmart Marketplace — "Amazon five years ago" on ad maturity

Companies Discussed

• Amazon (seller-side ads, fees, B2B placements)
• Walmart (marketplace maturity)
• Alphabet / Google (Berkshire's $10B placement)
• Berkshire Hathaway
• Anthropic (referenced in the "free call option on AI" riff)
• Apple / AirPods; Dyson (and the $100 knockoff)
• YGF Malatang — Katy, TX — the YangGuoFu Malatang location Sean stopped at ("two billion bowls served," tasted like Chengdu)
• SLB / industrial-consumables suppliers (Sean's input-cost discussion)

Links & References

• Derek Thompson — the journalist whose recent interview with a neuroscientist (on how AI is reshaping how we think, read, and produce) anchored our front-half discussion
• Dan Wang — Breakneck — callback to our earlier talk about America drifting toward a "lawyerly state"
• Kevin Warsh — newly confirmed Fed Chair; Dan's referenced long-form Hoover Institution interview
• Berkshire Hathaway invests an extra $10B in Alphabet (CNBC, June 1, 2026) — the "free call option on AI"
• The midwit meme (IQ bell curve) — and the Dunning–Kruger effect it inverts
• Chinese tungsten prices surge in 2025 amid export controls (Fastmarkets) — the carbide/APT cost story

Unqualified Fact-Check 🔍

We said some things. Here's how we did.

🟢 = Nailed it | 🟡 = Close enough | 🔴 = Whiffed it

🟢 The Glengarry Glen Ross roll call. Dan rattled off "Lemmon, Baldwin, Arkin, Spacey," and Pacino. All correct. The 1992 film (dir. James Foley, written by David Mamet) starred Jack Lemmon, Al Pacino, Alec Baldwin, Ed Harris, Alan Arkin, Kevin Spacey, and Jonathan Pryce — and yes, it's basically one room and a lot of rain, so the actors were the budget.

🟢 Baldwin "after Hunt for the Red October," Pacino "Scent of a Woman timeframe." Both sharp. The Hunt for Red October (1990) had Baldwin as Jack Ryan, two years before Glengarry — squarely his young prime. And Scent of a Woman (1992) is the same year as Glengarry — the one that won Pacino his Best Actor Oscar. Dead-on era placement on both.

🟡 "54 cents of every dollar you spend on Amazon goes to Amazon." Dan cited a survey of large sellers and flagged he's personally more efficient. The widely-cited figure (Marketplace Pulse) is that Amazon's total take — referral fee, FBA fulfillment and storage, plus advertising — reaches up to ~50% of seller revenue, with ads being the technically-optional piece that pushes it there. 54% is plausible for a specific large-seller sample, just a hair above the headline number. Directionally right; "every dollar" is per-seller-revenue, not per-consumer-dollar across all products.

🟢 China is "playing with the APT market," and carbide tooling costs have spiked. Correct, and Sean was actually conservative. China imposed export controls on tungsten products — including ammonium paratungstate (APT) — on February 4, 2025. Chinese tungsten-product prices surged more than 200% through 2025, and the European APT benchmark was up roughly 557% from its pre-control baseline by March 2026. Sean's "up about 3x since August" understates it; the China-as-cause attribution is spot on.

🟢 Warsh "is the chair, he's been confirmed, he's in the seat now." True. Kevin Warsh was confirmed by the Senate 54–45 on May 13, 2026, and sworn in as Fed Chair replacing Jerome Powell. He's also a Hoover Institution visiting fellow, so the long Hoover interview Dan watched checks out.

🟢 Berkshire put ~$10B into Google, a small slice of its cash. Confirmed. CNBC (June 1, 2026): "Berkshire Hathaway invests extra $10 billion in Alphabet, deepening bet on AI," bringing Berkshire's total Alphabet position to roughly $26.6B — still pocket change against its cash pile. Sean's "$400 in your pocket, you invest $10" analogy is about right, and "a free call option on AI" is a fair read of the structure.

🟡 "Donut theory" of interest rates. Sean floated the idea that inflation can rise if rates are too low or too high, with a sweet spot in the middle — and openly admitted he couldn't remember the source ("read it three years ago"). There's no established economics term called "donut theory," but the underlying intuition isn't crazy: it overlaps with neutral-rate (r-star) reasoning and the fiscal channel, where high rates funnel interest income to wealthy savers who then spend. We're scoring the instinct as defensible and the label as a Sean original. If anyone finds the original piece, send it our way.

Final Score: 5 green, 2 yellow, 0 red. A strong showing for a Saturday-morning ramble. The film recall alone deserves a green star on the fridge. Dan, your Amazon math was close enough that we'll let the robots keep the change.

Chapters

• 00:00 — Cold open: "There's no movie about the maintenance team"
• 00:14 — Welcome / "Are you ready for today?"
• 00:30 — Dan watches Glengarry Glen Ross in one sitting
• 01:14 — Homogenized Hollywood: movies as an averaging machine
• 01:56 — Franchise math: why the small films don't get made
• 04:17 — Derek Thompson and the Instagramification of everything
• 06:34 — Dispersion aids discovery ("tastes like Chengdu")
• 09:00 — "Zero value in the new economy": taste, judgment, synthesis
• 11:18 — Tool literacy and the technical-language advantage
• 12:40 — Nano banana and the under-funded founder's lookbook
• 13:55 — Declining-everything charts; creation as touch grass
• 15:44 — The midwit meme and the inverse Dunning-Kruger
• 18:12 — Shiny-object syndrome has a bright side
• 19:27 — The grind nobody posts
• 21:00 — No movie about the maintenance team (in context)
• 21:37 — The pit crew, Monaco, and managing the downside
• 23:17 — Amazon Prime Day: going for less, not more
• 26:18 — Conversion rate, deprioritization, and B2B placements
• 28:55 — Amazon vs. Walmart maturity; 54 cents on the dollar
• 30:58 — Replacement parts, knockoffs, and landfills
• 32:03 — "We've calibrated": the world hasn't slowed, but we have
• 32:45 — The paper-cuts of inflation: consumables and tungsten carbide
• 35:57 — The T-word, and Warsh takes the chair
• 36:51 — Donut theory: does hiking fuel supply-side inflation?
• 38:37 — Walking the chapters: housing and the pre/post-2022 divide
• 43:46 — Healthcare, childcare, food, energy
• 45:57 — Boomers, interest income, and where inflation hides
• 48:29 — "Let's take it down a point" / let her rip
• 49:18 — The cure for high prices; the risk of the next shock
• 51:05 — Berkshire's free call option on AI
• 53:05 — Equity vs. debt, WACC, and uncapped upside
• 54:35 — Sign-off: go build something / touch grass