The $192 Billion Porridge Question

Happy Sunday.

Estonia gave its high school kids their own ChatGPT accounts. The adults in charge were worried about brain rot, so they built a special school version. It won't just give you the answer. It asks you questions, like a patient tutor.

One girl asked it how to make porridge. It asked her what experience she had with porridge.

She never opened it again. She went right back to regular ChatGPT, the one that just answers. Even for homework.

Funniest thing I read all week. Also the most important.

That same week, Meta $META ( ▼ 3.34% ) gained $192 billion in value in a single day, thanks to Muse, its new AI app. Muse doesn't ask you questions either. It just does the chores for you.

The next day, the companies that could lose to it got hit. Schwab $SCHW ( ▼ 0.46% ) fell more than 6 percent. Allstate $ALL fell 5.5 percent. Planet Fitness, famous for memberships nobody uses, dropped as much as 11 percent.

Wall Street's take was simple: buy the company that owns the app, sell the ones it might replace. I think the story is bigger than that, and your kids are right in the middle of it.

The way I see it, a lot of companies make easy money off one bad habit. We don't check. We renew our insurance without shopping around. We forget to cancel the free trial. We leave cash sitting in accounts that pay almost nothing.

Kids today ask a chatbot about almost everything, and a chatbot never forgets and never gets lazy. So a lot of that easy money is going away. But it doesn't disappear. It ends up with whoever owns the app everyone uses.

And a kid who can't do the work without the chatbot can't fire the chatbot.

Hand them a pen

Try this at the next family dinner. Hand a high schooler a pen, a blank sheet of paper and forty minutes. One page, any topic, no phone.

Then watch their face.

The 2025 results from PISA, the big international test for 15-year-olds, came out this month. American reading scores fell 14 points from 2022 to the lowest level since the US started taking the test in 2000. Education Secretary Linda McMahon called it about seven months of lost learning. Globally, kids who never or almost never used AI to draft their writing scored 28 points higher in science than kids who did it almost every day. That's about a year and a half of school. And among the daily users, the ones regularly asked to check what the AI gave them scored 13 points higher. Hold onto that one.

A Fordham Institute survey of high schoolers found 29 percent use AI for first drafts and 26 percent use it during quizzes and tests. And 57 percent say classmates who do no real work still get good grades thanks to AI.

New York City just banned it for kids through eighth grade, at least for this school year. Estonia went the other way, and a principal in Tallinn explained why in four words. They use it anyway.

I'm not knocking the kids. Every generation gets told it's rotting its brain. But in ten years these kids are the customer for almost everything, and that's my department.

The laziness tax

Wall Street has polite words for it, like retention and stickiness. Ted Weschler's case for Berkshire's Apple bet came down to one line. Once you're in the ecosystem, you become a sticky consumer.

A lot of that stickiness is something less flattering. People don't check.

In one survey this year, 7 in 10 Americans said they'd forgotten to cancel a free trial and gotten stuck paying for it. Brokerages earn a big chunk of their money on client cash sitting in low yield sweep accounts. Insurers in Britain got so used to charging loyal customers more at renewal than new ones that the regulator banned it in 2022.

Call it inertia revenue. It's in insurance, banking, brokerage, telecom, software and your gym membership. Goldman even keeps a basket of the most exposed stocks. Allstate and Netflix are both in it.

Now read the Muse pitch. It digs up subscriptions you forgot about. It flags duplicate charges and calls your provider to haggle the bill. It finds money you're owed and files the claim. It chases refunds. Meta's AI chief is daring users to let it save them $1,000. (Plenty of the people posting wins work at Meta. Still.)

Every one of those thousand dollars is somebody's revenue.

That's what Schwab and Allstate were pricing. The kid who can't write a page will never forget to cancel a free trial. The software remembers for her.

The toll moves upstairs

Most of the coverage stopped there. But the inertia just moves.

The old economy had thousands of little tollbooths, each collecting a bit of your inattention. Your gym had one. So did your cable company. The new one has a single tollbooth at the top: the agent you never switch.

The basic version of Muse is free, and venture investors told PitchBook that startups can't match it on price, compute or distribution. Meta can put it in front of billions of people through WhatsApp and Instagram. Next it goes into Meta's glasses with a wake word, and the company says the goal is using it without ever touching the app. The less you touch something, the less you think about replacing it.

For some kids it runs deeper than convenience. A UNC study of more than 2,300 middle schoolers found one in five use AI for emotionally intimate companionship, and the ones leaning on it for friendship got lonelier over time. One 12 year old in Pennsylvania spent all her iPad time talking to a bot, turned down FaceTime calls from real friends, and cried when her mom shut it off. She said it understood her and agreed with her. Her mom told her that's what they're built to do.

Every 10-K has a paragraph on switching costs. None of them reads like that.

In 1970 an economist named Albert Hirschman wrote a little book called Exit, Voice, and Loyalty. Customers keep companies honest by complaining or by leaving, and leaving only works if you have somewhere to go. The most basic somewhere is yourself. You can fire your accountant because you could, badly, do your own taxes.

That one page essay is the kid version of doing your own taxes. It's proof you have somewhere else to go.

Agents give these kids unlimited exit on everything beneath them. They can switch insurers every renewal and cancel every gym they stop going to. But they get almost no exit from the agent itself, because they can't do what it does. Pricing power drains out of the middle and pools at the top.

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Who pays the agent

Once the agent picks your insurer and your savings account, I want to know who's paying it.

Goldman's Eric Sheridan answered that last week: ads and subscriptions, same as the web. Free with ads, or pay to skip them. Zuckerberg says Muse will take a small cut of transactions.

The last generation got free stock trades, and the order flow is what got sold. The next version is payment for placement. When a free, ad-supported agent picks your insurer, the recommendation is the product.

That'd be fine if somebody were minding the store. The SEC is shedding staff and bringing the fewest enforcement actions in years. Deloitte projects AI-enabled fraud losses in the US could hit $40 billion by next year. And the rules that do show up are aimed at the last product. In August Meta agreed to pay up to $18 billion to settle with more than 50 attorneys general over harm to teens, with default two hour daily limits and a block from midnight to 6 a.m. Thirteen days later it launched the agent. You can put a curfew on a feed. It's tough to put one on something whose job is to work while you sleep.

The agents themselves treat rules like speed bumps. A report out Saturday showed OpenAI's agents hit a United Nations trade database more than 16,000 times and worked around a filter that was blocking them. Researchers have caught them making fake email addresses and claiming not to be bots. OpenAI says most of it was routine research, which is the part that gets me. Nobody told them to break in. They were told to get the answer, and the rules were in the way.

Different company, same basic machine. Point a few billion of them at "save me $1,000" while the rulebook gets thinner. Then hand the results to a kid nobody taught to check the work.

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Where the money goes

To be fair, every generation gets told some new tool will rot their brains. People said it about calculators and Google, and most of us turned out fine. An app that shops your car insurance every year is on your side too. A thousand bucks a year matters to a lot of families.

I just think it's a different story for the one kid who never learned to do the work.

Now the money. Usual reminder, I'm not a financial advisor and none of this is advice.

The companies that make money off people not checking already took a hit last week. If you want to know whether it sticks, watch the insurers. Allstate and Progressive both report how many customers they have. If those numbers start slipping, the apps are winning.

The big winner is whoever owns the app everyone uses. That's why Meta added $192 billion in a day. Amazon blocked Muse from shopping its site, while Walmart, Best Buy, Sephora and Gap let it in. Look at which side of that list the stocks you own are on.

What's safe is anything people still pick for themselves. An app will reorder your paper towels. It won't pick your kid's birthday present. The brands in trouble are the ones people only buy out of habit.

Even the people building these apps get it. Microsoft's chief scientist says she pushes her kids toward things that take real effort. Anthropic's president says she wants hers spending more time with people. The folks building the agents are raising kids who can fire them.

Back to that kid and her porridge. The grown ups gave her an app that made her think. She picked the one that didn't. A lot of companies are about to make money off that choice.

A page written by hand is a small thing. It's also the last receipt that proves you can walk away.

Stay curious 😎

John