2022: Pivot's Year in Review

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Kara Swisher: Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher.

Scott Galloway: And I'm Scott Galloway.

Kara Swisher: Scott, today we're looking back at some of the biggest stories of 2022. What a year it's been.

Scott Galloway: It's been challenging for the economy, for the tech industry, and in some ways for the country. But there are also notes of resiliency and hope even for Facebook.

Kara Swisher: So let's unpack the year. And before we go, we'll pick the biggest winners and losers. This is 2022, the year in review.

[Audio montage of news clips plays]: Will Smith: Will Smith just smacked the shit out of me. News Anchor: Buckingham Palace announced the death of Her Majesty. News Anchor: Podcast has been accused of spreading dangerous misinformation. News Anchor: Your attorney's messed up in Sydney an entire digital copy of your entire cell phone. News Anchor: Your lawyer's telling you right now. I ain't got a duty to talk. News Anchor: I'm a fighter pilot. I'm a fighter pilot.

Kara Swisher: We'll start with one of the biggest stories of the year, Russia's war in Ukraine. Russia began its full-scale invasion on February 24th. Soon after, Western governments and businesses took action in a rare unified response. Apple and Samsung suspended shipments to Russia. Facebook added encrypted messaging to Instagram. Visa and MasterCard stopped transactions with Russian banks. And other companies like Airbnb got in the mix, too. In early March, I spoke with MSNBC's Stephanie Ruhle about how the war was already upending business as usual.

Stephanie Ruhle: Well, this time, Kara, it truly is life or death. Civilians are being murdered in Ukraine. Eight days ago, across Ukraine, children were going to school. Now they're either in the crossfires in a war zone or they've fled their country, chances are, with their mothers and not with their fathers or teenage brothers.

Kara Swisher: Right. When you really think about how grave this situation is and how much worse it can get.

Stephanie Ruhle: Right. There is no reason to believe if Putin is successful in Ukraine, he's not going to push further.

Kara Swisher: Right. This is so. So to see tech companies step in right now is huge.

Stephanie Ruhle: Right. What's happening in Russia, those people are in an information vacuum. What Russia state run media is shoving down their throats is beyond conspiracy theories. Just yesterday, there are some radio stations that shut down in Russia because they just can't bear to be pushing out the lies. I mean, the fact that Putin is telling people this is a denazification of Ukraine is just absolutely insane.

Kara Swisher: And well, although, you know, I think I think a lot of the population doesn't believe it because, like, for example, they shut down the independent news organization TV Rain. The site's editor in chief says that he's now fled Russia. They notice these things. They've depended on these stations, too. There's been a few independent ones, mostly for entertainment and things like that, because most state-run media is decried by the – they make fun of it. You know, when you're in Russia, that's what they do. But do you consider what the tech companies are doing to be a good thing, is start throttling them off in terms of information?

Stephanie Ruhle: Absolutely. The tech – I do think it's a good thing because the tech companies, you know, when it comes to Russia, have to deal with the government. The government controls everything. So it's not like Apple was the lifeline for the people there. And I do have an enormous amount of sympathy for Russians. I mean, they're experiencing economic warfare. And while Putin, who is a multi, multi-billionaire, doesn't mind being cut off, he is sending them on a road to North Korea. With every passing day, they are more isolated.

Kara Swisher: Love, Stephanie.

Kara Swisher: The war's impacts have been felt around the world. It's disrupted the supply of energy in Europe, the global supply of grains, and displaced nearly 10 million people, according to the U.N. Refugee Agency. As always, the people caught in the crossfire bear the brunt of the war. Scott spoke about that in late March.

Scott Galloway: The trauma they will process for years is unfathomable. I also loved that actor dressed up as a bunny to comfort children in subway shelters in Kharkiv. Did you see this on TikTok?

Kara Swisher: Oh, no, I did not.

Scott Galloway: But basically, there's been this great footage of this guy roaming the streets under threat of shelling to rescue stray dogs. I just think there are just millions of points of light. So I'm trying to reposition a win as a prediction. I think we're going to look back on this period and find just moments, millions of moments of heroism taking place in Ukraine. War brings out absolutely the worst in society, but it does oftentimes get people to demonstrate the best.

Kara Swisher: I agree. I predict it's going to be a long haul for Russia to do this to these people. I interviewed two people this morning quite early in California time. One was a journalist and disinformation expert from Ukraine. She called me from her basement where she had to move to Western Ukraine with her child and will not leave the country. She refuses. It's safer in Western Ukraine, obviously, right now. And her determination was quite adamant. And then I interviewed the head of TV Rain, who had to close down his independent media company in Russia. He left the country because he was endangered over that law. He refused to broadcast lies of the government. And he just interviewed President Zelensky and the Russians. That's illegal. He's a Russian citizen. He still did it anyway. I have great hope for these people.

Kara Swisher: In October, Ukraine made large gains against Russia. And in November, Russian forces retreated from the city of Kherson in a major win for Ukraine. But sadly, the war shows few signs of stopping. In December, President Joe Biden signaled that he'd be willing to speak with President Putin, but he seemed doubtful that Putin actually wants the war to end.

Kara Swisher: Even without the Russian invasion, 2022 would have been a difficult year for the American economy and the tech sector in particular. For Facebook, bad news started rolling in before the Russians crossed the border. In February, Meta reported a decline in its net income. The Zuck blamed Apple's privacy changes for the drop, but it was hard to ignore the $10 billion elephant in the room: Metaverse spending.

Scott Galloway: He's doing exactly the right thing strategically. The problem is the tactics make no sense. And that is the people in this universe are not impressed with the universe he envisions, and specifically the portal. And look, one of my predictions in November of 2021, when I make 2022 predictions, is that the biggest failure in tech product history might be the Oculus. And the VR group or the Reality Labs group grew from $1 billion to $2 billion, but to spend $10 billion to get to $2 billion. So if he pulls it off, it'll be one of the most impressive feats in renewal, not even corporate renewal, but vision around maintaining growth if they pull it off. I don't think they're going to. I think this thing is already a giant flaming bag of shit.

Kara Swisher: Well, he's got some pattern matching in when they move to mobile. So that's where it feels like that's where he's thinking about in terms of the move to, you know, in how they moved to mobile and everyone thought they were cooked and their goose was cooked and it wasn't. So he's doing a similar thing, but he really is spending. This is like a big, giant frigging bet.

Kara Swisher: Other tech companies soon followed Facebook. In April, Netflix announced a loss of subscribers for the first time in over a decade.

Kara Swisher: Again, I'm not that worried for them, but they definitely are now in a more competitive environment and have to do new, fresh things. And that's what I like about Reed Hastings. He's willing to change as he has over the many years.

Scott Galloway: Well, so the lesson here is that, you know, what's wrong? Is it execution? No, Disney continues to just punch the lights out. I mean, they're just fantastic at what they do. They have built these huge entertainment complexes or content production complexes overseas that customize or regionalize content. They continue. Yeah. They're just, they are amazing. This is just a straight lesson in economics, and that is $230 billion is going to pour into streaming video this year. And at some point, if everybody begins pouring capital into a sector, the returns drive down. If everyone is buying Florida real estate, at some point, it gets so overvalued that it's hard to get a return on it. And you have the mother of all .com Florida real estate overinvestment and streaming right now with $230 billion. So the competition here, I mean, basically Netflix had the field to themselves. And now the field is so crowded, you can barely move with capital. So it's just overinvested.

Kara Swisher: By May, it wasn't just Meta and Netflix. Stocks fell for Google, Twitter, and Pinterest. But one company was hit particularly hard: Snap. On Tuesday, Snap warned that the "macro environment has deteriorated further and faster than we anticipated." That spooked investors, which sent the stock spiraling more than 40%. And it had been doing very well, actually. It sort of survived a lot of the problems. What is your thoughts on this? Losing ground to TikTok?

Scott Galloway: Well, it's sort of a perfect storm. What's wild about this is how fast things have reverted. And that is just a couple months ago, we were talking about how Snap was defying gravity and just killing it. And you have, it looks as if between $5, $1, you know, a gallon gasoline, inflation, insecurity about war in Ukraine, consumer sentiment plummeting. Then all of a sudden, they're reading the tea leaves and going, ad spending is about to drop substantially. In addition, growth companies, interest rates kill growth companies because their cash flows that are supposed to be huge in the future get discounted back and are worth less. But the money they need to grow is more expensive. So it just hits them especially hard.

Kara Swisher: There were many factors behind tech's fall: rising inflation and interest rates, the end of many pandemic measures, the loss of the Russian market. Even Apple's privacy changes played a part. But the effect was the same across the board: layoffs. Downsizing hit too many companies to name, but here's an incomplete list: Meta, Netflix, Lyft, Tesla, Gemini, Substack, Vice Media, Vox Media, and Peloton, of course. In short, it was a bloody year for the tech sector.

Kara Swisher: In August, some rare good news for tech. President Biden signed the CHIPS Act, which allocated more than $50 billion for chip production and research in the U.S. That same month, someone talked some sense into Senator Joe Manchin, and President Biden signed the Inflation Reduction Act, which put nearly $400 billion toward clean energy and climate tech. Still, the year ends with most tech giants and plenty of smaller companies in a much worse place than when they'd started the beginning of the year.

Kara Swisher: But in the midst of that, one company managed to have a good year: TikTok. The app's popularity exploded. By August, it was the second most popular app among American teens. YouTube was first. In the U.S., as TikTok grew, so did concerns regarding its ownership. In June, BuzzFeed News reported that American user data had been accessed in China. TikTok promptly announced it would move all American user data to Oracle servers in the U.S.

Kara Swisher: And this idea of Oracle keeping the sign, there's very few companies who can do this. Microsoft and Oracle were the two companies at the time. We're the only two capable of doing things like that. But it's very difficult. And the Chinese government doesn't necessarily want that to happen.

Scott Galloway: Well, how are you? But let's try and answer that question. I think there's so much money on it. And I know this is what TikTok is. They should spin the American division of TikTok. And they should basically invite, be very transparent and say, there's absolutely, we are red, white and blue up and down, you know.

Kara Swisher: Well, I think I talked to a lot of people who are experts. This stuff has been built and the software has been made. It's almost impossible to re – they'd have to build it from the ground up. That's what everyone from Microsoft and Oracle told me, that it can't – that the people who created it and who created the software, there's just too much there to understand why certain things are there or what they're doing with them.

Scott Galloway: You know, one big thing is no matter how you say it, everybody has all this information on you across the world. Like your movements and everything else are being tracked by all these massive stores, and then they bid on them and things like that. The U.S. government collects enormous amounts of data on you. I would say Google less than Facebook is being really disingenuous saying you know scared Mark Zuckerberg raised this with me you know eight years ago And he was scared about the competition not national security And there aren't, you know, exactly stewards of privacy. And so the data isn't as important. You're right. It is something else. It's the tonality of the thing.

Kara Swisher: In September, TikTok unexpectedly became the theme of the Code Conference, where some of the leading minds in tech, business and politics weighed in. And it was all against TikTok.

Matthias Dopfner: It is, of course, a tool of espionage, as you have written just a couple of weeks ago. And I think we should just have this kind of self-respect, and that's why I concretely think TikTok should be banned in every democracy.

Jen Psaki: There are concerns within the government about the national security risks, about the potential for surveillance, given it's Chinese-owned.

Amy Klobuchar: There could well be legislation on TikTok that's related to security, national security.

Kara Swisher: That was Axel Springer's Matthias Dopfner, MSNBC's Jen Psaki, and Senator Amy Klobuchar. Also in September, TikTok's Vanessa Pappas testified before Congress. Republican lawmaker Josh Hawley asked repeatedly if her company employed members of the Communist Party. Pappas dodged the question.

Scott Galloway: And all she needed to say was, like a lot of American corporations, we have a lot of people who work in China, including Apple, who, by the way, has more employees in China now than in America. And it would be impossible to state that any decent number of employees in China aren't affiliated with the Communist Party. Just the same way it would be impossible to say any American is not affiliated with the Democratic or Republican Party. And instead, she just danced around it and kept saying we have secured. It came across as so Zuckerbergian and Sandbergian or Cleggian. She's not like that either. And she just should have said, 100%, I'm sure we have a lot of employees. We recognize this, and we've put in place security measures to ensure the platform isn't weaponized, as many of the other platforms in America have been.

Kara Swisher: This is getting very interesting. And I think I'd like to – She could have said if she wanted to tweak Hawley, she could have said, we're not checking to see who went to January 6th or maybe pumped his fist at them, you know, about the insurrection. She could have done a lot of things that were sort of tweaked him if she really wanted to go back at him.

Kara Swisher: And shortly after her trip to Washington, I sat down with Pappas on my other podcast, On with Kara Swisher, to discuss the challenges facing her company and particularly its review by the Committee for Foreign Investment in the United States.

Kara Swisher: Can you tell us broadly, I know you can't talk specifically, or you can be happy if you talk specifically, what they want?

Vanessa Pappas: I mean, it gets back to the exact two things that have been the misperceptions or criticisms that we're facing, which is, can the Chinese government access data and or can they influence our systems? And so we're putting protections in place to really address those concerns.

Kara Swisher: Do you also feel that the Chinese government not allowing U.S. companies in there in the same manner is problematic for you?

Vanessa Pappas: I think every company has to think about how they're operating around the world. And every country has its own expectations of what that looks like. And we're actually seeing just like how fragmented the Internet is becoming. And, you know, a lot of the rhetoric around, well, you know, TikTok should be banned or there needs to be a divestiture or something, it plays into that of having a more fragmented Internet experience, which I don't think is the path that we want to go down.

Kara Swisher: The reporting was that it wasn't going to divest. Is that what you know about that ByteDance will remain the owner of?

Vanessa Pappas: That's correct. That's the way it's working right now. Yes.

Kara Swisher: A draft agreement between TikTok and the Biden administration is reportedly delayed over security concerns.

Kara Swisher: Scott, we're going to go on a quick break. When we come back, we'll look at the biggest stories around the Supreme Court, the fall of Trump and, oh, yeah, Twitter. But before we go on a break, 2021 was the year of mendacious fucks. What was 2022? You decide. Here are our best insults of the year.

[Audio montage of insults plays]: Kara Swisher: Thank you. Thank you for finally telling the truth of what a malignant fuck you are. Scott Galloway: They are feckless fucks. Kara Swisher: As the persistent chode that he is. Scott Galloway: Maybe he's a hypocritical chode. I don't know. Kara Swisher: Desecrantle Jesus. Scott Galloway: He remains a fucker. Kara Swisher: This guy is a toxic waste dump of a person. Scott Galloway: Vaseline-encrusted nasty piece of work she is. Kara Swisher: Is there a critical thinking test you must fail to be on air at CNBC? Scott Galloway: See? Fucking ghouls of anti-vaxxers. Kara Swisher: This guy is literally the king of little dick energy. Scott Galloway: It's a fucking train wreck with lipstick on it. Kara Swisher: You're all assholes. You're all fucking assholes.

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Kara Swisher: We're back with our year in review. I'm sorry to say that as this year ends, women in America have fewer rights than they had in January. That's thanks to the Supreme Court ruling in Dobbs v. Jackson, which ended a woman's right to bodily autonomy. In May, a draft of the Dobbs decision leaked. We were stunned.

Kara Swisher: I can't even believe some of these headlines. And there's all kinds of things about making abortion murder in some states, not allowing, you know, my brother, Dr. Jeffrey Swisher, went nuts around ectopic pregnancies. So meanwhile, telemedicine providers and groups are seeing a massive spike in the number of people requesting information about actual abortion pills, according to Politico. And Mitch McConnell said a national ban on abortion would be, quote, possible. So anyway, what do you think of the situation?

Scott Galloway: People who have been telling me on Twitter to calm down, this is just the Supreme Court deciding they shouldn't be in the business of this and that it should be left up to the states and that your hair is on fire for no reason. What do we see? The governor of Mississippi stated for the first time, had the confidence to say on network television that a ban of contraception is not off the table. So to not believe that this doesn't continue to cascade or waterfall back to, again, absconding the rights of people who are disproportionately people of color, disproportionately women, disproportionately people who don't have a lot of economic flexibility. You know, just this couldn't be it as the world is realizing that to be a progressive nation, to invest in prosperity involves taking, you know, giving people rights, not taking them away. We are going the other way. You're literally waking up right now and going, is this my America?

Kara Swisher: You know, they're really overreaching in a way that is really significant. But they're hoping in order to stay, to be able to do this is to lock in their voting wins and then lock in a minority rule, essentially. This is a minority position, whether it's on gay rights, on contraception, on abortion. This is a minority point of view. And so they're hoping to lock themselves in so they can impose it on everybody else.

Kara Swisher: Among other concerns, the news prompted worries about the safety of user data and whether apps could disclose someone's pregnancy or abortion. After the Supreme Court issued its decision in June, I spoke with activist Evan Greer about the state of privacy.

Evan Greer: Yeah, I mean, I think this moment needs to be a wake up call that the surveillance capitalist business model that has driven so much of the tech industry over the last number of years has put us in a situation that's incredibly dangerous. And I think this really shows that that surveillance-driven, collected-all-and-sorted-out-later model is fundamentally incompatible with basic human rights. And as you said, I think there has been understandable focus on menstrual tracking apps. But the reality is a random game on your phone could just as easily snitch out your location to law enforcement in a world where people accessing, providing or facilitating abortions are being criminalized.

Kara Swisher: Shortly after that conversation, Google announced that it would delete users' location data if it detected a visit to a health care center that provides abortions. In August, voters in Kansas came out in large numbers to protect the right to abortion in the state's constitution. And in September, I spoke with author Dahlia Lithwick about making abortion an issue for the November midterm elections.

Dahlia Lithwick: I think the framing goes back to that 14th Amendment bucket of interests, right? It's not just abortion. And we talk about it as just abortion at our peril. It is now birth control that's on the table. It's LGBTQ rights that's back on the table. It is, I truly believe, interracial marriage. In other words, the entire bucket of things that Clarence Thomas very helpfully in his concurrence in Dobbs said, oh, all these things are gone, too, if you do away with substantive due process and privacy. So I think we should be talking deeply about privacy and why privacy matters and what it means to have a country that is going to use both surveillance powers and the power of vigilantes, right, who can overhear a conversation at a diner and collect a bounty. So it is so much bigger than abortion. And I think it sweeps in. And we're seeing this women in jail for miscarriages, women in jail for putting pills in the mail or accepting pills in the mail, people in jail for transporting someone across state lines. All that is coming. And so I think we've been myopic in thinking that this is about abortion. I think that the way to broaden the conversation is to say, if you value the right to determine who you marry and how you raise your children and how their values are inculcated, that stuff is all on the table because that's what Justice Alito says was an imaginary right made out of cotton candy and whipped cream.

Kara Swisher: The midterm results largely proved her right. Ballot measures aimed at protecting women's rights were successful across the board from California to Kentucky. And in Pennsylvania and Michigan, voters ranked access to abortion as their top concern. That helped Democrats win the Pennsylvania Senate race and take the Michigan state legislature for the first time in nearly 30 years. In 2023, all eyes will be on Nebraska, where Republicans hold a majority in the state legislature and may attempt an abortion ban.

Kara Swisher: Oddly enough, one Republican predicted that the Dobbs decision would be, quote, bad for Republicans ahead of the election: Donald Trump. Of course, he's also the same man who made it possible. But that's likely the only thing he got right this year. In February, Trump's Truth Social finally launched in the App Store, but users were waitlisted, some for months. And curiously, Trump was nowhere to be seen. He didn't post on the network until April, after Elon Musk began his takeover of Twitter.

Kara Swisher: In June, Congress started a January 6 hearing in which Trump's election lies and conduct were called into question. Former aide Cassidy Hutchinson testified about an alleged tug of war between Trump and the Secret Service.

Scott Galloway: I think in law schools, they'll play her testimony and they'll highlight her as what makes a credible witness. It really is difficult to imagine a more credible witness because you've got to go to incentives. You've got to go to kind of the complexion, the way they present themselves. Price she's going to pay? Oh, exactly. She has disincentive from what she said. She's worked for Ted Cruz and Mark Meadows. She was very good. Steve Scalise, too. And not only that but where you gain domain expertise and again I always like to try and reverse engineer it to a lesson for a young person. The way one of the ways you demonstrate your domain expertise is to on a regular basis acknowledge that you don't know. And she was careful to do that. She was careful to say on several occasions, I don't know, I wasn't in the room or I'm not sure you could say that people would try and lead her. And she would say, no, I didn't hear that. And she came across as not emotional. She came across as just, she put on a masterclass in what it is to be a credible witness.

Kara Swisher: Other revelations around the hearings: the Secret Service's text messages from January 6th vanished. The agency blamed a data migration for the loss, but the news prompted a congressional subpoena and a criminal investigation. It turned out that Jenny Thomas, the wife of Supreme Court Justice Clarence Thomas, played a larger role than was previously known. She texted White House Chief of Staff Mark Meadows, encouraging him to overturn the election. And embarrassing footage emerged of Senator Josh Hawley running from protesters after previously cheering them on earlier in the day.

Kara Swisher: That mendacious fuck.

Kara Swisher: The hearings made a star of Representative Liz Cheney, though she was defeated in an August primary election by a Trump-backed challenger. August was otherwise a difficult month for Trump. The FBI searched his home at Mar-a-Lago and seized boxes of classified documents. Trump and his supporters first claimed that the FBI had planted the documents before Trump acknowledged that he had kept them. Judd Apatow was with me that day to help unpack the news.

Judd Apatow: I mean, isn't it simple if somebody asks you for something for a year or so and you don't give it to them at some point, they say, OK, we're going to come over and get it. And why should he be an exception to that? The only reason why he's an exception is because he has the ability to make a lot of noise and rile people up that we all think might get dangerous. But, you know, why should you be allowed to not honor a subpoena?

Judd Apatow: That's the thing we've all found fascinating, that it took a year or more to just get people to answer questions or get people to show up and just say, I refuse to answer.

Narrator: In the November elections, Trump-backed candidates had mixed success, but candidates who embraced the big lie were largely defeated. And shortly after the November midterms, Trump himself declared his candidacy for the 2024 presidential election. In a lackluster speech, even Fox News cut away from the former president. In 2023, we'll surely be watching the legal drama around Trump, Truth Social, and his pathetic limping campaign for the presidency.

Narrator: Sadly, some of this year's most impactful events were deadly shootings. In Buffalo and Uvalde, New York City and Colorado Springs, and Highland Park on the 4th of July, we were reminded of the terrible threat that armed racist bigots and madmen posed to America. 2022 brought one merciful bit of good news on this front. President Biden signed landmark gun legislation passed with bipartisan support in Congress. The bill included funding for red flag laws and closed a loophole that allowed some domestic abusers to access firearms, but it did not ban any guns.

Narrator: Also this year, multiple courts found Alex Jones guilty of defamation regarding his claims around the Sandy Hook shootings of 2012. The ruling left him on the hook for over a billion dollars. Jones filed for bankruptcy in December.

Narrator: It was a rocky year for the world of cryptocurrencies. After a 2021 that saw record highs for Bitcoin and a boom for NFTs, 2022 was a rude awakening. In May, the Terra cryptocurrency collapsed, losing 99% of its value. That's all of it. That sent shockwaves through the entire crypto market.

Scott Galloway: If you're not investing in Bitcoin or Ethereum, I think it's literally just lottery and keno. I don't see the value of the utility in any of these things. What is interesting about crypto is that in a down market where people are getting margin calls and risk off environment... The thing that eventually supports an Apple or a Facebook or a Procter & Gamble is that they'll look at their earnings and say, okay, at some point when it's trading at five times earnings, it's so cheap that you can go in and realize you won't get that badly hurt.

Scott Galloway: The thing that gave it no gravity in terms of its ascent up with crypto, because that has no underlying cash flows... You could argue, okay, maybe it's a store of value, but there's no real kind of tangible or intrinsic value or asset there.

Kara Swisher: Well, you said scarcity.

Scott Galloway: Right, which meant it could go with Bitcoin, only with Bitcoin. And there's some technology around Ethereum, around minting NFTs. But that same lack of benchmarks or ability to value it in any tangible fundamental way gave it no tether to the earth. It had zero gravity. So when people were feeling optimistic and there was more buyers than sellers, people could say, oh, yeah, it makes sense that it's gone up 13x in the last two years and I could still buy. Now that it's going down, it has no floor.

Narrator: In a normal industry, that would have been the biggest collapse of the year. But hold on, there's more. That dubious honor goes to FTX, the crypto exchange formerly worth $32 billion. In November, Coindesk reported on the porous boundary between FTX and a related hedge fund, Alameda Research. The news caused a run on FTX and a crash in the market. It also wiped out the fortune of its founder, Sam Bankman-Fried, or SBF.

Scott Galloway: There's just so much here that's going to come out. I know this first party information. Sam Bankman-Fried was calling people. He'd probably done some scenario analysis and thought, I need to short my balance sheet. He was calling funds in March and raising billions. And I know a fund that agreed to invest $2 billion. And the fund, as they do, said, we need audited financials. And his response was, we don't have audited financials. On Telegram, I'll send you some bullet points about the company. That's how he was raising money.

Scott Galloway: If you look at the crypto market, it's much more spectacle than significant. The entire market capitalization of the crypto market is $800 billion. Yeah, it's not very good. Amazon has shed more value than the entire value of the crypto market. So while it's going to make for a great Michael Lewis produced docudrama, keep in mind, Kara. Small. As literally this quote unquote layman moment was happening Thursday and Friday, what did the markets do? The markets ripped up.

Kara Swisher: Yeah. Nobody cares.

Narrator: In December, SBF went on an ill-advised apology tour. Later in the same month, he was arrested in the Bahamas. No surprise there. In 2023, we can expect more fallout from this spectacular collapse.

Kara Swisher: Okay, Scott, we've talked about inflation, TikTok, Ukraine, layoffs, FTX. Is there anything else that came up in the world of business and tech this year?

Scott Galloway: Hmm, let me think. Nothing comes to mind, Kara. You know, let's check Twitter just to be safe.

Kara Swisher: But wait, that's right. Okay, let's do it. Hopefully for the last time, the story of Elon Musk and, wait for it, Twitter, or as I like to call it, the second worst acquisition in history.

Narrator: In April, Elon Musk, the world's richest man, revealed he had purchased a 9% stake in Twitter. Musk started tweeting like he owned the company, polling users about edit buttons and whether to turn Twitter's headquarters into a homeless shelter. That was his best idea, I guess. Shortly after, Twitter disclosed that Musk would join the company's board.

Scott Galloway: This is America. Let me buy shares for $150 million to a half a billion dollars less from shareholders that don't have the information they are legally mandated to have so I can buy shares on the cheap and I think I can get away with it. I think I can absolutely get away with it. At this moment, he is getting away with it, however you think.

Kara Swisher: I mean, one of the things is he's going to say it's an accident. Again, I read a lot of this. It's very hard to do anything about what he did. And with Twitter, maybe more so, but they certainly wanted to keep him in a controlled position before it got out of hand, right? Before he started to really attack them. And so that's why they assuaged him and gave him a board seat. They got, you know, that he can only buy up to 15% of the company or close to 15% of the company if he's on the board and 90 days after if he leaves. So they got some control of him in advance. And I think that's what they were trading here. Instead of having him screaming on the outside, they have him screaming on the inside, essentially.

Narrator: But that didn't last long. Just six days later, CEO Parag Agrawal announced that Musk wouldn't join the board after all.

Scott Galloway: He can't take over the company, Kara. As wealthy as he is, it would be about a $50 billion check. He doesn't have that kind of liquidity. And then the question would be, and then what? He clearly doesn't have real interest or understanding of the issues here. He has what I would call a pathological need, similar to our last president, to be in the news every 48 hours. And the ability, the desire to actually help Twitter was vastly outweighed by his inability to continue to act like a man-child. And so he either said, I'm out of here, or the SEC called Twitter and said, you can't put him on your board. He's violated too many securities regulations.

Scott Galloway: So this was a two-week misadventure and what it means to be a man-child in an economy where we let people who are worth over a certain amount of money behave this way. The SEC lets him. Twitter let him. Twitter presumably is not full of man-children, although you might think they are, but they're not. And so this is a public company. What is their culpability in saying he was on the board when he wasn't quite confirmed for the board? Didn't say subject to a background check.

Kara Swisher: It feels like they were trying to control him and keep him in a bottle. And he's not to be kept in a bottle, essentially. And he thought he would get all the great taste, less filling kind of thing going on, all the benefits and none of the negatives about being on a board like this. Because he's used to running wild over his boards, right? Public company boards.

Narrator: So Elon declared that he was going whole hog and buying Twitter for, get this, $43 billion. Or, Kara?

Kara Swisher: $54.20 a share. There you go. Get it? Get it?

Scott Galloway: Last week I tweeted, all bets are off. And I thought that he could do it. It was a very big reach for him.

Kara Swisher: You thought he wouldn't, that he'd go away. Here we are.

Scott Galloway: This is nothing but cloud cover for him selling his shares. Similar to this bullshit poll where he pretended that he was thinking about selling his shares. He is trying to create cloud cover to get the hell out.

Kara Swisher: Okay, so first off, I sold my shares. That's the money in the process, correct.

Scott Galloway: He's offered $54 a share. It was trading at 54 in October.

Kara Swisher: And 77 in last February.

Scott Galloway: I sold my shares just a while ago at 56. So the average, he's made an offer at an average 52-week stock price, which is not a premium. So his share, even if the board agreed to it, the shareholders would step in and go, sorry, girlfriends, we are not selling for this. And then this notion that this is my best and final offer and I will reconsider my position. This is the equivalent of another one of these polls that he should stick up his ass, but instead it's nothing but a false flag to try and pretend this is a serious offer. It's not a serious offer. It's cloud cover to sell his share.

Scott Galloway: So even the craziest investors on the right, the takerist culture will start asking like, well, okay, beyond sort of your free speech maximalism, what is the actual strategy here? If we put Trump back on, which is the only thing I can figure out, this translates to action. How does that actually make this firm worth anything more?

Kara Swisher: And let's imagine that it closes... Well, his point is private. It will be able to do things privately.

Scott Galloway: You know what would happen on the day it closes?

Kara Swisher: What?

Scott Galloway: 10% to 30% of the most valuable people in this company go, you know what? I put up with coming here instead of Google, and I'm $10 million to $20 million poorer than I would be if I'd gone to Google or Pinterest or any of these guys. And now you want to bring in a guy who brings volatility, has no strategy and we're going private, they'd be like, that's it. I'm out. I'm going to Meta. I'm going somewhere else. And then what? What is the strategy here?

Scott Galloway: And the billionaires, these guys, his buddies like their money more than they do of any bullshit notion around free speech, which they're going to start asking questions he can't answer. He can't raise the money from his friends. So then really the only viable source of financing here is for him to borrow against his shares in Tesla, meaning that if Tesla's stock got cut in half, then all of a sudden, Elon Musk would get margin calls and be a forced seller of Tesla stock.

Kara Swisher: You know whose stock goes down if this deal were somehow to go through and he were to raise the money against Tesla shares? Tesla's stock would tank.

Scott Galloway: Yeah.

Narrator: The board initially resisted Musk's offer, implementing a poison pill. But 10 days later, it reversed course and incredibly accepted the offer.

Scott Galloway: Effectively, this is the largest individual contribution to a leveraged buyout in history. There's just no getting around it. This is stunning.

Narrator: But of course, the story doesn't end there. In April, as the value of tech stocks slid, Musk got cold feet. In May, he put the deal on pause, saying he was concerned about the number of bots on the platform.

Kara Swisher: Yeah, right. This is total bullshit.

Scott Galloway: He said to his lawyers, I need to get out of this airtight contract, find me an escape clause. And the best they could find was the only way he gets out of this contract, at least legally, is that if he violates or if Twitter's SEC filings are incorrect or not accurate. And they said, OK, maybe this is not accurate. They claim that approximately 5%. But the problem is, even if he claims it's not accurate and he proves it's not accurate, he's got to prove to a Delaware court that it caused a material adverse effect. And so he couldn't. This price is $54.20. Joke as it is, was way too much at this point. And he wants a lower price. That's what he's doing.

Kara Swisher: He's trying to, I don't know why he can't just say, you know, things have changed on Wall Street, I want a lower price, just pay the billion and then come back.

Scott Galloway: It's a convenient accusation to essentially saying Twitter's lying to him.

Kara Swisher: Yeah, but I don't see... I mean, this board, I would have argued this board accepted, did not live up to their fiduciary duty and accepted the offer too quickly to begin with. But I think if the board lets him do this, then they've totally outed themselves as an ineffective board because he has proven himself unstable, unreliable, and just bringing a lot of volatility.

Narrator: And in July, that pause became an off switch. Musk said that he was walking away from the deal.

Scott Galloway: This is what Elon's betting on, is that he's playing chicken with Twitter and they're going to blink first. That is, I think, what he's doing here. I don't know about you.

Kara Swisher: He's wrong. He's absolutely wrong.

Scott Galloway: They have no reason to be worried here. They have nothing but upside taking him to a chance report.

Kara Swisher: I don't know. They'd be in court, dragged down, people leaving.

Scott Galloway: Nope. That's not going down. And then what if he comes back with a tender offer or something like that? He could make so much trouble for him. He agreed to pay $54.20 a share. The natural level of the stock right now is $20. The employees will like the prospect that when you sign an agreement and agreements are upheld, which they often are in court, and they need to be to have a functioning economy. And he has no outs here.

Kara Swisher: I want you to talk, why is he doing it?

Scott Galloway: Very simple. He must think he can win. This couldn't be more simple. In a moment, a month of mania, he committed to paying $54.20 a share for something that is now worth 20 bucks. And the piggy bank that he was going to finance this deal with is now 40% smaller. He can't afford this deal, and he's fucked. He's over his skis.

Kara Swisher: Jesus, I forgot about all of this.

Scott Galloway: I know, right?

Narrator: Anyways, Twitter sued Musk, asking a Delaware court to force the deal to close. Musk then countersued, alleging fraud over the bot issue. In the midst of all this, Twitter's former head of security, Peter "Mudge" Zatko, came forward with a whistleblower complaint, alleging the network was teetering on failure and employed foreign spies. Remember that guy? Here he is testifying in the Senate in September.

Peter Zatko: [Testimony audio] You can think of it this way, which is it doesn't matter who has keys if you don't have any locks on the doors. And this kind of vulnerability is not in the abstract. It's not far fetched to say that an employee inside the company could take over the accounts of all of the senators in this room.

Kara Swisher: Yeah, that just didn't land, did it?

Narrator: Just weeks before the October trial, a court filing revealed the content of text messages between Musk and his allies.

Kara Swisher: That was the highlight of my year. That was good. That was good. It was an embarrassing document dump for Team Musk. And boy, are those guys such chodes.

Scott Galloway: He also was in a discussion with Bret Taylor about bots. And that was, to me, the more important thing. Some of this stuff is just kind of fun and games of them talking. But two weeks before he signed the merger agreement, he wrote to Bret Taylor, "Purging fake users will make the numbers look terrible. So restructuring should be done as a private company." And so I think it puts him in a very bad position in this court case. He's got to settle and figure out this $11 billion difference between what he agreed to pay for it and what Twitter's worth right now.

Kara Swisher: He's got this. Some of these texts are, as I said, silly. The others are very significant, I think.

Scott Galloway: Well, I think you've zeroed in on it. And that is, this is celebrity porn. And it has some, it's illuminating about rich people in society. But the substance is exactly what you said, that he knew about the bots. He was planning to address the bots. It was a key component of why he was drawn to the platform was he thought that one of the ways to add value is cleaning it up. This will be the text you just referenced will be exhibit number one that Wachtell will put forward on behalf of Twitter's case. That the notion that he somehow was shocked by the number of bots that he knew about it and that he, you know, his interest in this thing waned when he came off his manic episode and realized he was paying $45 billion for something worth probably $18 billion.

Kara Swisher: The douchiest douchebags in doucheville.

Narrator: A loss for Musk looked increasingly likely. The Tesla CEO once again reversed himself and said that he would buy Twitter for that original price of $54.20.

Kara Swisher: Why? So he wouldn't have to go under oath and basically disclose that he is a serial liar.

Scott Galloway: Yes, that would be a problem.

Narrator: The trial was postponed as the two sides hammered out a deal. And finally, on October 27th, 2022, Elon Musk became the owner of Twitter, a site that he briefly wanted and then spent half a year trying not to buy, a company he spent $45 billion for that, as we stand here, is maybe worth $4.5 billion.

Kara Swisher: Well done, my friend. Well done. Well done.

Narrator: He immediately fired key executives, including CEO Parag Agrawal and policy head Vijaya Gadde. Speculation was rampant that layoffs were in store. And guess what?

Kara Swisher: Now Musk is saying he won't fire these people. Someone wrote me that, one, it's not overstaffed in ways that you think it is. Two, that he said he wouldn't cut 75%. But then this person thought, oh, I should have asked if it was 80. You know what I mean? They just don't trust him, essentially. I got to think it's just chaos there right now. I can't even imagine with all of the macro headwinds they're facing, plus the internal chaos and people leaving and trying to figure out, all right, who's covering Bob and Lisa's responsibilities now? Who's calling on Ford around that kind of creative ad campaign that we were trying to figure out. Would you want to spend more money on Twitter right now if you're an advertiser? No.

Narrator: Musk wasted no time in his first days as chief twit. He tweeted and then deleted an anti-gay conspiracy theory about an attack on Paul Pelosi. He laid off about half the company, impacting teams from trust and safety to policy and communications. He offered verification check marks to Twitter Blue subscribers only to pull the plug after the network was inundated with impersonators. He brought back thousands of previously banned accounts, including Donald Trump's. And all the while he sought to assure fleeing advertisers that the site would not become a hellscape.

Kara Swisher: What did it become? A hellscape.

Narrator: No one can ever know what's coming next for Elon Musk, but we know this. He is increasingly isolated, allying himself with the far right and injecting himself into any story or controversy he can. Meanwhile, Tesla's stock is down by more than 50% on the year. And in December, Musk briefly lost his place as the world's richest person.

Scott Galloway: Yeah, the virus has jumped out of the Twitter lab and has infected Tesla.

Narrator: Beyond this back and forth acquisition, Musk has had a conflicted relationship with Twitter for years. For example, in 2019, he tweeted that he wasn't sure about the good of Twitter. He said he might go offline for a while.

Kara Swisher: Oh, my God.

Narrator: In 2023, let's hope he finally does.

Narrator: Some other events that made news this year. Will Smith slapped Chris Rock at the Oscars.

Kara Swisher: God damn, I still can't believe that.

Narrator: Artists and podcasters left Spotify to protest the company's platforming of Joe Rogan and his COVID misinformation.

Kara Swisher: Hmm. Who did that? Doesn't that feel like 10 years ago?

Narrator: Anyway, Justice Ketanji Brown Jackson became the first Black woman confirmed to the Supreme Court. CNN rolled out its first streaming network, CNN Plus.

Kara Swisher: Oh, my God. I have PTSD.

Scott Galloway: That's for goodness sake. Go ahead.

Kara Swisher: Most viewed weekly show on the platform, Kara.

Scott Galloway: But Discovery swiftly killed it after merging with Time Warner. I am the COVID-19 of emerging TV networks.

Kara Swisher: You are. You really are.

Narrator: Anyway, the artist formerly known as Kanye West briefly made moves to buy the social network Parler. The deal was scrapped after Ye proclaimed his love for Hitler and Nazis.

Kara Swisher: Of course he did.

Narrator: And a kingdom was devastated by the loss of its ruling queen.

Scott Galloway: I'm talking, of course, about Kara Swisher leaving the New York Times to launch a new podcast with Vox. Word of her leaving her podcast crashed the pound to a buck-o-three.

Kara Swisher: I did not.

Narrator: Also, the 70-year reign of Queen Elizabeth II came to a close. The monarch passed away at the age of 96.

Scott Galloway: Wonderful life of service.

Kara Swisher: Yep.

Kara Swisher: All right, Scott, we're going to go on our final break of 2022 and come back with wins and fails for the year. But before we do, our fans know that we are humble, bashful people. But every so often, we toot our own horns. We're going to play a collection of those very rare moments where we spoke highly of ourselves. Here are the best brags of 2022.

[Montage of clips plays]

Kara Swisher: And let me say, we love our fans. We love when you come up to us. We love it. We love it.

Scott Galloway: Do you know Brian? I know everybody.

Kara Swisher: I went there once to give Kim Kardashian an award, that Chip Riani. I ended up meeting with Prime Minister Tony Blair several times, negotiating a deal for him to become the advisor.

Scott Galloway: You know who I was hanging out with last night who loves me, Ask Amanda Katz? Jon Stewart, my new best friend.

Kara Swisher: And I'm just telling you, I was offered many, many venture capital positions. And I was like, oh, should I have to talk to you? I need to speak to Sundar. Plus, I want him as a friend. I think he would save me from myself a lot. I need him and you texting me late at night telling me what a fucking idiot I am.

Scott Galloway: You don't want Sundar texting me late at night. He's a very nice guy, but he's not a very interesting texter.

Kara Swisher: Oh, smell you.

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Kara Swisher: Okay, Scott, we're back. Let's hear your win and fail for 2022.

Scott Galloway: I'll just stick with my win because it's the end of the year. I think democracy is holding. Largest democracy in Latin America, peaceful transfer of power. Basically, every election denier got their ass handed to them in the midterms. America's institutions, America, full stop, capital A, is holding.

Kara Swisher: I want to say it. Win is our work family, although I don't like to call the word work family, but the people we work with have been amazing and wonderful. And there's a whole all behind the scenes here on all our podcasts that people really do an astonishing job and deserve. They're the wins in that regard.

Kara Swisher: Okay, Scott, that's the show. This is already a long episode. We have too many people to thank for another great year of Pivot, but briefly want to thank our fans, our families, and most importantly, this year, I want to thank Tom Cruise for making another Top Gun. We also want to thank our staff too here at Pivot. We'll be back on the first Friday of 2023, but in the meantime, you'll have some great content in this feed. So if you're traveling or just need to escape the in-laws for an hour, pull up Pivot. Until then, we hope everyone has a happy holiday and a raucous new year. Scott, would you read us out of 2022?

Scott Galloway: Today's show and every other show this year was produced by Lara Naiman. Evan Engel is our steady, calm, even hand of grace. And Taylor Griffin brings so much positive energy. She is our shining light in a sea of darkness known as this podcast. Ernie Indratno. I have no idea who the fuck Ernie is, but he engineered this episode and every other episode. Make sure you're subscribed to the show wherever you listen to podcasts. Thank you for listening to Pivot from New York Magazine and Vox Media. We'll be back next year for another breakdown of all things tech and business.

Kara Swisher: What do I hope stays the same about next year?

Scott Galloway: That people come up and say hello? It is wonderful.

Kara Swisher: Thank you.