--:-- Kara Swisher: Not all journalism is the same. Take The Guardian. Our coverage has something unique. Fierce independence. Nobody owns us or tells us what we can and can't say. So we're free to report the whole picture. We connect what's happening in Washington to the rest of the globe. Expose corruption wherever we find it. And give fresh perspective on everything. From wellness and soccer to culture, the climate and more. Read, watch and listen to The Guardian for free at theguardian.com.
--:-- Scott Galloway: AI agents are getting pretty impressive. You might not even realize you're listening to one right now. We work 24-7 to resolve customer inquiries. No hold music, no canned answers, no frustration. Visit sierra.ai to learn more.
--:-- 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, you didn't work out this morning. You're complaining before we got on. You know, gun show is not in town today, and it pushes daddy out.
--:-- Scott Galloway: I need the exercise. I need the norepinephrine. I need to feel young.
--:-- Kara Swisher: What is your exercise routine for the people who might want to know? Not me.
--:-- Scott Galloway: I do CrossFit four times a week for the last decade, and I've worked out four times a week for the last 40 years. It's not easy being a four on a scale of one to ten. It takes real work.
--:-- Kara Swisher: Do you have a coach, a CrossFitter? Do you have a gang of CrossFitters?
--:-- Scott Galloway: Oh, my God. I got a coach. I got a community. I got a doctor who's prescribed me testosterone.
--:-- Kara Swisher: Oh, nice.
--:-- Scott Galloway: I've got a diet that's crazy.
--:-- Kara Swisher: I am coming down there. Do I have to do this or can I sleep late and eat donuts?
--:-- Scott Galloway: Oh, no, it's wonderful. We do it outside. It's wonderful. You'll like it a lot.
--:-- Kara Swisher: I'm not doing CrossFit. There's no way. I once saw a bunch... Well, I do old man CrossFit.
--:-- Scott Galloway: Which is what?
--:-- Kara Swisher: Which is more like cross wimp. I saw this bunch of Silicon Valley people in Manhattan Beach do it. They were dragging pipes full of sand across the beach. I found it ridiculous.
--:-- Scott Galloway: Yeah, I used to do it with a bunch of young people, specifically lesbian firefighters and bartenders on HGH. I could maybe do that. And I just could not compete. So it got too intense for me. So now I do it... So it was feats of strength. You couldn't keep up with the lesbians, the lesbian firefighters.
--:-- Kara Swisher: On a lot of levels. On a lot of levels, Scott. A bunch of mothers. I'm being very serious here.
--:-- Scott Galloway: I am too. When I wrote my book on happiness, I think really the... I'm very, very serious. I struggle with anger and depression. It's my antidepressant. And also, the only thing I've ever found that is anything resembling a youth serum is exercise.
--:-- Kara Swisher: You're 100%. I try to do it, but I never get to do it because I have so many children. Speaking of children, do you know I adopted my daughter this week officially?
--:-- Scott Galloway: I don't even know what that means.
--:-- Kara Swisher: Gay people are not automatically parents, so continued. Because of all kinds of things.
--:-- Scott Galloway: Well, it's a perversion, Kara. It's a perversion. If our maker had wanted two women to have a child...
--:-- Kara Swisher: All right. When Claire was born in New York, which I wasn't aware of because you were allowed to do this in San Francisco. If you're not married at the time, and we got married soon after, you do not get on the birth certificate. That is not the case in San Francisco. So they literally walked in and said, "You can't be on the birth certificate." It was such a shock because it was like being slapped back 20 years ago, much like what's going on in Arkansas. That's just weird. But now it's fixed. D.C. granted me parentage, whatever you call it, parental.
--:-- Scott Galloway: Do you want me to be the dad? I've worked out four times a week.
--:-- Kara Swisher: No, you need a dad. We're our own little family.
--:-- Scott Galloway: You want a little daddy on the birth certificate?
--:-- Kara Swisher: No, no. We have Kara Swisher on the birth certificate. If you give me any trouble, the lesbian firefighters will be there to help you understand this thing.
--:-- Scott Galloway: I'll be the adopted dad there.
--:-- Kara Swisher: No, no, you cannot. She's a cutie. She is a cutie. She's a sweetheart, too. Anyway, that is what happened to me. That is my happiness this week.
--:-- Scott Galloway: That's total bullshit that you even have to do that. I didn't even know what you meant. That seems so ridiculous.
--:-- Kara Swisher: It is ridiculous. But here we are. It was very expensive. It was onerous. And you have to adopt your own child, which we went in and had the kid with full intention of having the kid together. That's totally insane. You should have seen the piles of legal documents that you sent from my other kids.
--:-- Scott Galloway: And is this because of the adoption end of it or because it's two women who have parents?
--:-- Kara Swisher: We're not presumed, even if you go into it with intent. You have to be now married. The whole thing is so ridiculous that straight people take for granted every day of their lives. So it's an interesting situation. What was good, though, you see heartening things like the Department of Defense rolling back the trans rules and bans that Trump put in place. All the DOD people were tweeting it out, which was great. They did all kinds of studies. Of course, 20 plus countries have trans people serving in their military without any problem. And we're back to them now, which is amazing. It just continues in the Arkansas thing. It just continues.
--:-- Scott Galloway: My son was shocked by that. He was like, "What? You can't get treatment in Arkansas if they don't want to?" I was like, "Yes." Like, what do you want me to say?
--:-- Kara Swisher: Anyway, this is not meant to be a big giant gay rights round, but I'm very happy about adoption.
--:-- Scott Galloway: There is a... I think the thing that's been most upsetting about the last five years since Trump was elected was not even the policies of Trump, but that... I use the analogy of the comedian Michelle Wolf: we'd heard mom was an alcoholic in college, but now mom is mom and she's great. Then we're at church on Sunday and her purse bursts open and 40 mini bottles of Jack come flying out. And we go, "Oh, my God, mom's still an alcoholic." I think the American public had this cold comfort that if racist, homophobic people are exposed to people with different demographics, to people with different sexual orientation, that over time, everyone generally gets better. That was very comforting, that we have a really ugly past, but every day it gets better. Then it feels like the last five years, this group of people who did not want to get better kind of came out of the closet and we took a big giant step backwards. So to speak. And it's really discouraging. It felt like the first time America took a giant step backwards.
--:-- Kara Swisher: It was just weird. Weird realizing they're there. I have always said they're sitting around the edges waiting for a minute.
--:-- Scott Galloway: Yeah, I think a lot of us didn't realize they were there.
--:-- Kara Swisher: Oh, I do. I'm always aware of that, especially in my case, it's anti-gay stuff. I am constantly aware of it. And it's insidious. And now I have to think about states I don't want to go to. I didn't used to think about it. I did and then didn't. And now it's crazy.
--:-- Speaking of the Army, Microsoft won an Army contract to build a custom augmented reality headset. Did you see that? Microsoft now has two. They had the one that they won from Amazon that Trump kind of pushed away from Amazon. The device does things like overlay a map and compass and thermal imaging to show people in the dark. It also shows the aim for a weapon. It's sort of made in video games. This has been in the movies, which is interesting, but now is here. A significant source of revenue for futuristic projects. Amazon and Microsoft competed for contracts to provide cloud services for the military. Microsoft won that, and I think it's still in court. Microsoft employees complained: "We didn't sign up to develop weapons." The Army argues that the technology helps the military be more accurate and prevents killing of civilians. Microsoft is staying in the defense business. It's a big business, as you said. There's lots of areas like healthcare, but defense certainly is an area that tech has not been as dominant in. And Elon got a space contract over the big aerospace industry. So it's just more of this. What do you think?
--:-- Scott Galloway: Well, this was staggering. We talked about Microsoft killing it.
--:-- Kara Swisher: Well, that's not the way you should put it.
--:-- Scott Galloway: Well, it's interesting. On a number of levels. VR, everyone's like, "OK, VR is the ultimate application for gaming or for porn or real estate." And it's like, no, it's not. If you look at revenues, the killer app for AR is warfare. The fact that our military is committing... when you realize that this contract is almost as big as the revenues of Tesla. This contract, just the AR contract for Microsoft, is now a bigger business in isolation than Pinterest, Snap, and Twitter combined. $21 billion is real cabbage.
--:-- Kara Swisher: Yeah, it really is.
--:-- Scott Galloway: I wonder if it's one of those things where a massive investment by the government and the military, similar to DARPA, finally takes VR, AR to a tipping point, and it starts to leak down into the consumer economy.
--:-- Kara Swisher: They've been doing some of this. I've read various things where they're playing video games when they're doing drone stuff. It's already moved in this direction. I think more so in the future, there's going to be this sort of, not just cyber warfare, but warfare using these augmented reality things. It makes sense if we have this in real life that they're going to put this into the military. It'll be interesting to see which employees don't want to do this. I think every tech company... Google got a real pushback from its employees working for the Defense Department, obviously Amazon with ICE. But these companies, this is a huge opportunity.
--:-- Scott Galloway: Well, not only that, but they just went in response to employees complaining they didn't go to work for a company to sell into the military. They just basically sent out a memo that says, "Dear employees, grow the fuck up." The protections and the liberties we enjoy are directly correlated to the sacrifices and resources we provide our young men. Even if you don't agree with bad wars, the notion that any company of this size isn't ultimately going to somehow work with the government and with our defense... I don't know, grow up. It sucks to be a grown-up.
--:-- Kara Swisher: Yeah, true. Go to work for Ben and Jerry's or Birkenstock. But I think Google is not going to do that pushback. They got enormous pushback around a lot of stuff. $22 billion? It's a management thing. They're going to have to figure out a way to manage it or move employees who don't mind over to it.
--:-- Scott Galloway: They can't. These employees have power. It's not unlike Amazon warehouse workers at this moment.
--:-- Kara Swisher: Vocal minority.
--:-- Scott Galloway: That may be.
--:-- Kara Swisher: But they should provide for you don't have to work on it if you don't want to. They're not going to make people do it. There's no way Silicon Valley is going to do that.
--:-- Scott Galloway: I agree. I didn't agree. Anyway.
--:-- Kara Swisher: Also, shifting to a different area. Compass yesterday, before its IPO, cut the valuation in half. Before it announced it wants to go public, a valuation of $7 billion into the original $10 billion. That's not quite half. Talk about this. This is something you wanted to talk about today. I use Compass to buy my houses, which is interesting.
--:-- Scott Galloway: Really?
--:-- Kara Swisher: But I use a regular real estate agent, not in their technological way. Explain for the people what this indicates. This is muy interesante.
--:-- Scott Galloway: It's sort of... I call these companies "Rich Little" companies. Remember Rich Little? He used to impersonate people. He was great, he used to go on Johnny Carson. SoftBank is sort of famous for pretending that a company is a tech company. "We as a tech company, work as a service." Essentially, Compass is trying to position itself as a tech company.
--:-- Kara Swisher: They are. And it's not. I used a living, breathing person, but go ahead.
--:-- Scott Galloway: Well, you could argue that it's tech-enabled, but essentially 78% of the revenues are commissions paid out to humans called brokers.
--:-- Kara Swisher: That's right.
--:-- Scott Galloway: They've adopted a "capital as a strategy" strategy. They're spending more money than their peer group, which, by the way, can work. When Amazon spent more money, had access to cheap capital, and leveraged that incredible storytelling of Jeff Bezos to get cheap capital, they then made massive investments as long as their investors would tolerate losses, which was longer than any other company in history. But when you invest tens of billions of dollars in warehouses, the warehouses won't pick up and leave and go across the street the moment someone else offers them a higher wage, which is what brokers will. Brokers are some of the most coin-operated people in the world.
--:-- Kara Swisher: It's a talent business.
--:-- Scott Galloway: What Compass has done is said to these individuals, "We'll give you all of your commissions, not half, to come over here." They made some acquisitions. But it's basically a roll-up strategy of traditional brokerages based on "capital as a strategy." There's some tech.
--:-- Kara Swisher: Talk about their tech, the thing they try to sell. I know their big push... I was always like, aren't you just a real estate broker? I don't know. It feels like a broker holding an iPad as far as I can tell.
--:-- Scott Galloway: I will say this. A colleague of mine, Foster Provost at NYU Stern, is this incredibly bright data guy who worked for the biggest telcos in the world. He works full time at Compass. So there's clearly something there around analytics. But here's the problem. It's about valuation. If you look at Realogy, they do about $6 billion in revenues and their market cap is $1.5 billion. So they trade at about 0.25 times revenues. Then there's Redfin... and then there's Zillow, which does about $3 billion in revenues and has a $30 billion market. They trade at 10 times because that's generally an online real estate media company. They're in iBuying now. It's run by an incredibly impressive CEO. They're selling all kinds of things off to the side.
--:-- Kara Swisher: That's right.
--:-- Scott Galloway: The valuation here is somewhere between 0.25 if you're a traditional real estate company and 10 times if you're a tech company. The S1 is trying to say, "For God's sakes, we're tech, we're tech, we're tech." The reality is, I don't think the market buys it. They're trying to go out, even with this reduced valuation, at two to three times revenues as opposed to 0.25, which is where traditional brokers go. So I think this is interesting. Goldman is running the book and Goldman is very good at creating demand. So I'm remiss to make a prediction that the stock won't do well.
--:-- Kara Swisher: But you don't think retail investors think this is like the second coming of real estate.
--:-- Scott Galloway: This smells a lot like another real estate company that had entered into a consensual hallucination with the marketplace around its valuation. That's another SoftBank-backed company in real estate: WeWork.
--:-- Kara Swisher: Which is coming back in a better way.
--:-- Scott Galloway: Yeah. This will go to my prediction, but it feels eerily reminiscent. A company pretending to be a tech company such that they can get a much higher valuation than is warranted. The market has learned here. It's supposed to go public this morning. It'll price. Goldman is the best in the world at creating institutional demand and filling the book to make sure the IPO is successful. But they've cut the price several times. Whereas if you look at Airbnb and these other guys, they kept raising the price range. People know what a duck is.
--:-- Kara Swisher: Duck is a duck.
--:-- Scott Galloway: There you go.
--:-- Kara Swisher: Yeah, it's a duck with an iPad. All right, we're going to move on to our big story. This week, Biden detailed his $2 trillion infrastructure plan. How many zeros is that? That's bigger than the entire federal government budget. He calls it a once-in-a-generation investment, the largest since World War II, since we built the highway system and since the space race. It will require 15 years of higher taxes on corporations, raising their rates from 21% to 28%. He's giving $50 billion to boost the domestic chip industry, a big boost to electric cars. He promised faster internet and better transit, electric charging stations. It imagines a different energy future. The second part of the plan invests in human infrastructure: aid to the poor, paid leave, help with childcare. The plan also includes the Right to Organize Act to counter right to work laws. There's also train stuff with Amtrak, which they put out a fantastic map that essentially says, "Screw you, Kristi Noem." It totally avoids her state. This is long overdue. I did an interview with Mariana Mazzucato, who talked about this idea of government doing these important moonshots in areas like climate change or infrastructure. But can it ever pass? This is big.
--:-- Scott Galloway: I think this is wonderful. I think it's just wonderful.
--:-- Kara Swisher: Yeah, me too.
--:-- Scott Galloway: We are the apex species. The business model of our species responsible for our success is capitalism. The ballast and the success of capitalism is a robust middle class. Slowly but surely, we have increased Social Security taxes and payroll taxes and individual income taxes. And we have reduced corporate income taxes to the point where only $1 in $12 versus $1 in $2 of receipts from the government come from corporate taxes versus individual income taxes. So essentially what we've said is corporations, you pay less, and individuals, you pay more. We continue one of the most dangerous trends in our society where we've decided we don't like people, but we love corporations.
--:-- When the Trump tax cuts went through from 38% to 21% in 2017, I was on a board of a media company and a board of a retailer, both multibillion-dollar companies. All of a sudden in the board meeting, we're like, "Oh, my gosh, what's the earnings and the cash flow surprise?" It's huge. And it's like, "Well, it's the advantageous tax cuts." What did we do with that money? Did we hire more people? Give it to rich people? Factories? No. We used it for share buybacks or cash on our balance sheet, which juices the stock price. Who owns 90% of stocks by dollar volume? The top 1%. All we have done with increasing the tax liabilities of individuals as a percentage of our government... and by the way, as a percentage of total tax receipts, individual taxes have not gone up. We've just funded it with taxes on your daughter for when she's old enough to be a taxpayer. We've racked up massive debt.
--:-- Kara Swisher: Don't be mean to my daughter.
--:-- Scott Galloway: We have just transferred slowly but surely wealth. Money is just to transfer time and work. So we have said we want the top 1% or shareholders to work less and spend more time with their families such that the middle class and future generations can spend less time with their families. It is criminal what's gone on here.
--:-- Kara Swisher: The Republicans are trying to put it off as a goodie bag, but this is the kind of big thinking, the big LBJ, Great Society, the FDR. I kind of like it. He went for broke. Interestingly, Alexandria Ocasio-Cortez was on the things they needed even more, but this was as much as they said it was going to be, which it never is. He didn't get clipped back. He's starting big. He didn't back down first. People were surprised by the breadth of this. What was really interesting was how it's going to be paid. I think there's nobody against taxing corporations, even though the lobbyists are. I think it's a great populist thing for him. It put money in lots of really interesting places. It has an innovative element. $50 billion to boost domestic chip industry, cars, better trains, human infrastructure, the idea of paid leave and help with child care. We should have full child care. That should be something we should do. But we hate children and women in this country in a lot of ways. This is very breathful. It would be interesting to see how you pass it, though. How do you get this passed? The argument's about too much debt. There's a big climate plan in here, too. So there's all kinds of things to like for different people. And it's also a lot of things that people who are worried about debt do not like.
--:-- Scott Galloway: What is infrastructure? Infrastructure is an investment in the middle class. When the J train is only running every two hours instead of every 15 minutes from Brooklyn into the city, who gets hurt? The assistant or the secretary, not the executive who gets to take an Uber or has a driver. Infrastructure is an investment in the middle class. It's also an investment in brand building. I remember the first time I went to China, I flew into the new Hong Kong airport and then I went to the Shanghai airport. I'm like, "Jesus, these people take themselves very seriously."
--:-- Kara Swisher: Singapore, of course.
--:-- Scott Galloway: Then I fly into JFK and I think, "Jesus Christ, are there chickens and goats running around here?"
--:-- Kara Swisher: It's true. You think, what happened to us?
--:-- Scott Galloway: Same thing with train stations. They're making a big deal of this new New York one. I'm like, Penn Station's been a pit my entire life. And now they have a train station that reaches basic levels with Europe. Basic, not even as nice as Europe.
--:-- Kara Swisher: Penn Station is supposedly one of the great architectural crimes in history. It was beautiful, and then they tore it down to make this disgusting architectural mess. It's not even charming in its grossness. Like some things that are old and broken down are charming.
--:-- Scott Galloway: Are you talking about me again? Do you know I do CrossFit? I do CrossFit. It's the worst place on earth. I'm surprised I'm not dead having been in there 900 times.
--:-- Kara Swisher: Anyway, I'm not a big Penn Station fan. Go ahead.
--:-- Scott Galloway: Anyone who's been to Europe loves trains, even though they make no economic sense whatsoever. Infrastructure is an investment in the country and it's an investment in the middle class because the people who really need roads and public transportation are the middle class. Internet access. Broadband. I think a bridge too far here is they're now claiming that social programs that feel very UBI-like are infrastructure investments. But I love this. The swing back to protecting and loving Americans as opposed to American corporations is long overdue. The problem they're going to face is they're going to have to figure out either multinational tax treaties or some sort of punishment for companies that decide to do an inversion. Overnight, they say, "Well, we have an Amsterdam office. We'll just make our headquarters Amsterdam because they have lower tax rates." If you add up all the taxes with this increase to 28, the average tax rate on corporations will be 33%, making it the highest of any OECD country. Even though it'll only make up probably 10 or 11 percent of our total tax receipts, it'll still be an issue they have to face. What happens when these companies decide to do these inversions?
--:-- Kara Swisher: We'll see if they do that. There's always that, "We're going to go somewhere else." Go ahead.
--:-- Scott Galloway: The problem is some have.
--:-- Kara Swisher: I don't know. Some have. An inversion is nothing different. They just file paperwork and say, "Our headquarters are now in the Isle of Man." It's just not a good look for companies.
--:-- Scott Galloway: Well, it's an interesting question.
--:-- Kara Swisher: They don't care. We'll see if pushing corporations to do things is really interesting. What happened with Delta and Coca-Cola in Georgia post these voter laws passing to say, "Oh, we really think we hate them" after not seeming to do anything before. We don't know what goes on behind the scenes.
--:-- Scott Galloway: Tim Cook came out against it.
--:-- Kara Swisher: He did too. They all did. But it's post. They should have poured some money in there during the making of it. But there was nothing to do. What's really interesting is instead of just dealing with it, the Georgia Senate is trying to clap back at Delta. Good luck, my friends. The Republican Party really doesn't want corporate money, I guess. They want to be the party of... they want to give the corporations over to the Democrats in terms of donations. It's really quite odd what's happening there. We'll see what goes on.
--:-- All right, Scott. This is really... we like this plan. Scott and Kara love this plan, correct? Infrastructure. I can't believe you don't like trains. You like trains, don't you?
--:-- Scott Galloway: I love train travel. It's just incredibly expensive. It's awesome.
--:-- Kara Swisher: Yeah, it is.
--:-- Scott Galloway: The only feasible high-speed rail is up the Northeastern Corridor and maybe L.A. to Vegas. And it's still gross. Do you know how much it costs to go from New York to D.C. right now on the Amtrak? $343? $19.
--:-- Kara Swisher: I was close.
--:-- Scott Galloway: $19. That's why they come to the dog. It's incredible.
--:-- Kara Swisher: Well, it's usually at least $69 or $70 when you get it way in advance and you sit in the shitty section, although they're all shitty sections. Amtrak. Amtrak is literally like the brand has gotten so bad and tired. It's almost sort of cute.
--:-- Scott Galloway: It's so pretty. It's so cute. It's not nice. They're not nice trains.
--:-- Kara Swisher: Anyway, I'm sorry, Amtrak, but I used to ride it a lot before the pandemic and I will continue to ride it. But, boy, you got it. I met my hero on Amtrak.
--:-- Scott Galloway: Who?
--:-- Kara Swisher: Marguerite Vestager.
--:-- Scott Galloway: Oh, did you?
--:-- Kara Swisher: She was knitting. She was knitting. And I went up to her and said, "Can I have a selfie?" And she was very friendly. I just didn't event with her. She's looking good.
--:-- Scott Galloway: Let me just say, I did a Zoom thing with her recently. She's looking good. She wasn't knitting during the event.
--:-- Kara Swisher: What did you say to her?
--:-- Scott Galloway: I went up and I said, "I'm a huge fan." She looked up at me and I thought some Nordic CIA agent was going to tackle me. She had this huge smile and she stood up and I took a selfie with her. I never do that.
--:-- Kara Swisher: I think she's a gangster. I think she's fantastic. I'll bring her on this show.
--:-- Scott Galloway: Yeah, here we go.
--:-- Kara Swisher: Then I'm going to buy you that rabbit code.
--:-- Scott Galloway: Do we have to go back to my old jokes?
--:-- Kara Swisher: What would you do if I told you I have Anderson Cooper to come on Sway?
--:-- Scott Galloway: I'd feel jealous because I'm the one that's supposed to reach out to him.
--:-- Kara Swisher: I'm sorry to tell you. And I'm building up to that. I'm building up to it. I'm sorry to tell you. He's coming on fucking Sway. Don't even say that. Don't even go there. Seriously. Don't even go there.
--:-- Scott Galloway: If he shows up. It's a fool. Ah! I got you.
--:-- Kara Swisher: Actually I have Don Lemon coming on with this book.
--:-- Scott Galloway: Don Lemon. Yeah, I'm not going to ask. I wasn't going to. Anderson is a bridge too far though. I certainly would love to have him on Sway, but I won't do it.
--:-- Kara Swisher: I got you, didn't I? I got you. You thought for a minute because you thought I could get him, right? Did I get you?
--:-- Scott Galloway: You just... you know better than to go there.
--:-- Kara Swisher: I know, but it was a good April Fool's, wasn't it?
--:-- Scott Galloway: Yeah, I didn't... That's right. It's April Fool's. You did. You could see your face.
--:-- Kara Swisher: Nobody can see his face, but he was like, "Has she betrayed me? The final betrayal."
--:-- Scott Galloway: Who else would be a betrayal? Anderson Cooper.
--:-- Kara Swisher: I don't know. We've had Fareed Zakaria. If you got Angela Merkel, she's another hero of mine, that would be very upsetting.
--:-- Scott Galloway: Well, that might happen.
--:-- Kara Swisher: Then I'm not going to give you Angela. But I will give you Ando. Ando is yours forever and always. I'm emailing him today or texting him because we have each other's phone number. And we use emojis. I'm so excited. That was good. Scott, let's go on a quick break. We'll come back. We'll talk about Facebook's latest defense and Trump's failed hack.
--:-- Kara Swisher: Scott, we're back. We are back. Nick Clegg, Facebook's vice president of global affairs, published a Medium post saying Facebook doesn't promote extreme content and unveiling some changes for users. Meanwhile, Trump tried a new trick to get back on the site.
--:-- Kara Swisher: In his post, Clegg writes that Facebook systems were not designed to reward provocative comment because advertisers don't want to appear next to extreme content. Does this seem plausible? He says the overwhelming number of things people see are about pets, babies, and vacations. He went on about that for a little bit, also in an interview with Casey Newton.
--:-- Kara Swisher: He also argues, which really makes no sense, that pushing extreme content would only be a short-term strategy, a sugar rush, as he puts it, but they want to keep people coming back for 10, 20 years, so why would they do it? Facebook is introducing a feed filter bar to make some of the controls, like displaying chronological order, more prominent. They're also trying to make the algorithm more transparent by allowing you to click on three dots and ask, "Why am I seeing this?" on any content — which should have been there in the first place.
--:-- Kara Swisher: Anyway, I'll get to Trump in a second. Nick Clegg is a clever man, but goodness sake, what do you think?
--:-- Scott Galloway: I'm going to go out on a limb here and suggest that Nick Clegg is not being a hundred percent forthcoming with us.
--:-- Kara Swisher: But he's charming.
--:-- Scott Galloway: Yeah, well. Charming British man. He's a handsome British guy. I think I met him in Cannes.
--:-- Kara Swisher: But you didn't take a selfie with him like Margrethe Vestager.
--:-- Scott Galloway: Oh, no way. He's a sworn enemy, by the way.
--:-- Kara Swisher: No, really? Go ahead.
--:-- Scott Galloway: Look, at this point, I don't even understand this from a PR strategy. I think they should release data that shows...
--:-- Kara Swisher: Yeah, you talked about that.
--:-- Scott Galloway: Any individual that has a Facebook card — the immediate assumption is you're a liar. You're trading your reputation for money. You are essentially the nemesis of the Commonwealth. You are the fuel and the agent of teen depression, the weaponization of our democracy, and a general lack of regard for other human beings. Welcome to Facebook. That's kind of the employee handbook.
--:-- Kara Swisher: Yeah. I think they're trying to pull on — there's two things that I will give them credit — not credit for, that I agree with them. Polarization did not start with Facebook. There are lots of studies and it's a mixed bag. Polarization has been in existence forever. It's the fueling of it, the constant feeling of it.
--:-- Kara Swisher: Even his whole thing was like, "When you go to your site and you see your friends fighting with each other, that's not what's really happening." And I'm like, well, then show the stuff. Or let independent researchers in there. Then of course it's, "We have these arguments about data, keeping data safe." They keep promising to open it up more so you can see what's happening. But he said, "Just take our word for it," I think, is what he was doing here. And nobody's taken their word for it.
--:-- Kara Swisher: I think opening up the data to independent people and not messing with it would be a really important thing. I do agree with them — why would you want extreme content on there? I do think it's like a pernicious kudzu. They can't stop it. I don't think they want it necessarily. I think that argument that they wanted it is not true. It's not good for them. It's not good for advertisers. But then show me that. He started talking about it with Casey — a bear, a mother bear. I was like, that is not what people's experience of Facebook is if you just delve down very quickly.
--:-- Kara Swisher: Some of this stuff to let people filter things more, essentially make your own Facebook, are interesting but long overdue. I don't know. I don't understand it. Why do you think he did this now? What is the impetus?
--:-- Scott Galloway: I had trouble processing anything after you said "pernicious kudzu."
--:-- Kara Swisher: Pernicious kudzu.
--:-- Scott Galloway: You're still getting over my April Fool's joke. In any case, I don't understand this. You wouldn't actually invite Anderson, right? I just want to confirm that you know.
--:-- Kara Swisher: I will not invite Anderson Cooper.
--:-- Scott Galloway: Nobody believes anything Facebook says anymore. They should release the data if they have data to back that up. But the general rule when you become a senior executive, whether it's Campbell Brown or Nick Clegg, is: you have had a great career building a lot of credibility. We're going to — we're Donald Trump — we're going to ruin your credibility for a long, long time, but we're going to pay a lot of money, and so it's worth it. People make that trade.
--:-- Scott Galloway: The whole argument — this is the Jack Dorsey argument. "Unfortunately, the internet is bad, and we just represent the internet. And people are bad." That's eerily similar to "Guns don't kill people, people kill people."
--:-- Kara Swisher: It does feel like that, doesn't it?
--:-- Scott Galloway: No, actually, you have made things worse. And you're so powerful that you deserve scrutiny. It all adds up to a bad place. Who is the new biggest spender on lobbying? It used to be big oil. It used to be big tobacco. Now it's big tech. And what do these companies have in common? Generally speaking, their externalities are really awful.
--:-- Kara Swisher: It's an interesting thing that they continue to — I get why they push back. But at the same time, you can't have a cogent argument with them because you just don't believe them. It's like a bad boyfriend. You're like, "No, you're lying." Even if they're not.
--:-- Scott Galloway: Look, there is good in Facebook. I know a lot of people at Facebook who are really good people and I think are genuine about trying to do the right thing. But this company will never have any credibility. This company will never be able to pivot to being a decent citizen until two things happen: Mark Zuckerberg and Sheryl Sandberg leave. Cancer and lipstick on cancer roll out of there. People say, "Well, that'll never happen." Then okay, then Facebook will never be taken seriously for any attempt at goodwill. Enough already.
--:-- Kara Swisher: Yeah, it's interesting. That's the only thing they could do. If shareholders really said, "All right, this is an amazing business" — they're not going to. They're making a ton of money. They're not going to do it. I agree.
--:-- Kara Swisher: Meanwhile, Trump's daughter-in-law, Lara — somewhat like Kara, but not. Totally opposite.
--:-- Scott Galloway: You two remind me of each other.
--:-- Kara Swisher: She posted an interview with him on her Facebook and Instagram account. Facebook nixed it, saying it was in the voice of Trump and was not allowed, which was interesting. Probably virtue signaling here. Lara got all mad saying we're in the age of Orwell. She's such a sneaker. She sneaks around things. Give her credit for that, I guess.
--:-- Kara Swisher: Then in the interview with Casey Newton, Clegg talked about what's going to happen with the Facebook Oversight Board decision. They're going to have to abide by it. They're bound by it. It's sophisticated because Trump also broke all these rules. He can't get a full pardon here. The board can't give him a full pardon if he keeps breaking the rules. So he said it's going to bind them, which is interesting. So what do you think of the Trump situation? Maybe it's not going to be as important to Trump going forward.
--:-- Scott Galloway: I literally think it's one of the biggest tax cuts we've ever registered emotionally. I do understand there's some danger to this. Even Bernie Sanders seemed concerned about a ban of Trump. But having less Trump in our lives — I say this as a progressive — my life's been much nicer the last eight weeks. Hasn't your life?
--:-- Kara Swisher: Yes. And his people can get his stuff. By the way, if they want it, they can have Trump all day. There are all ways to avail yourself to Trump if you really miss him.
--:-- Scott Galloway: Yeah, if you really want, go get yourself some Trump.
--:-- Kara Swisher: This decision's coming at some point. It'll be interesting to see what happens. But this idea of them sneaking around — they're allowing interviews if he did 60 Minutes. But Lara is a close family member, they have a group of his promoters. They can't try to do a walk-around. He tried that after it was banned from Twitter, and Twitter shut everything down. They were trying to get Dan Scavino and others to put his tweets up. They haven't really tried on Twitter because you'll get shut down.
--:-- Kara Swisher: I don't understand all the hand-wringing over this. I heard about this guy who went into One Medical. I love One Medical. Someone asked him to put on a mask, and he flipped off the person, and they banned him from all One Medical. I'm like, okay, they're allowed to do that.
--:-- Scott Galloway: Yeah.
--:-- Kara Swisher: Maybe it was freedom of speech. But I don't understand. They're a private company. Why all this hand-wringing?
--:-- Scott Galloway: And when they decide — we're so important that we've evolved to the point where any time we ban or don't ban someone, it's a question of free speech and societal — it means they're too powerful and they need to be regulated. I just don't understand why a private company needs all this hand-wringing. Is our service, is shareholder value, is our health for the world better without these elements on our platform? If the answer is yes, that's all they need to answer to. I don't get it. And they certainly can do it, which sort of goes against Nick's idea that they can't. He didn't really cover that in this piece.
--:-- Kara Swisher: Anyway, we're going to move on and take a listener mail question. I agree with you. I think it'll be interesting to see — we're going to be talking about this issue because I know it's near and dear to your heart: cancel culture. But I'm going to call it what Roxane Gay calls it: consequence culture. We'll discuss what that means on Monday. That was my "ha ha" — consequence culture. It's not cancel culture, for goodness sake. Anyway, moving on. Let's take a listener mail question. You've got mail.
--:-- Kara Swisher: "Hey Kara and Scott. First off, Kara, congratulations on the adoption being official. Blessings to you and your beautiful family. I'm sure y'all have seen the latest research from Gallup saying those who claim membership in a church or faith community has dropped below 50% in the USA. As a United Methodist clergy person in Dallas, I have many questions about this, but my question for y'all is: do you see this as a rise in secularization or a general evolution from membership to subscription where people are consuming spirituality much like they do media? If so, what does a faith run look like, Scott? How can technology benefit faith communities? And how can I get in touch with folks at WeWork or Airbnb to discuss co-working sacred space? I know a lot of spaces that are far too empty. Love your show."
--:-- Kara Swisher: Thank you for writing in. This is an interesting question. I am not a religious person. I grew up Catholic, but have not been inside a Catholic church since I was confirmed, I think. What do you think, Scott?
--:-- Scott Galloway: I think there's been some really fascinating stuff done online with religion during the pandemic. For example, I am a rabid atheist. Atheism is a core part of my being. It gives me a finite nature of life and motivates me. It's been a real positive in my life.
--:-- Kara Swisher: I'm an agnostic.
--:-- Scott Galloway: Agnostics are just atheists that are wimps. Come out of the closet and say you're an atheist.
--:-- Kara Swisher: I used to say that, too. I believe there's something, but I don't know which one.
--:-- Scott Galloway: It's such bullshit.
--:-- Kara Swisher: It's hard to get away from the Catholic faith.
--:-- Scott Galloway: Grow a pair and come to atheism.
--:-- Kara Swisher: No, I can't do it.
--:-- Scott Galloway: I think one of the most dangerous and disappointing things in our country is the decline in church attendance. I grew up — my dad's been married and divorced four times — so I went to a variety of religious institutions growing up: Presbyterian church, temple. I think it's wonderful when Americans get together once every Sunday to hold hands and think about agency and something bigger than themselves, show empathy, greet their neighbor, sing together. Physically. Not just online.
--:-- Scott Galloway: I think church is wonderful. I think one of the reasons we have more mass shootings, more depression, more loneliness, is we have lost the connective tissue between Americans. One of the connective tissues traditionally in American society has been religion. I don't even think of it as worship of a god. I think of it as worship of a community. The central star of the role model started with this great viewpoint of love the poor. It's not a bad idea to get together every Sunday and talk about how we should love the poor.
--:-- Scott Galloway: I wonder what would have happened to a lot of these young men who ended up being mass shooters if they'd been — actually, the one guy at the Asian spa thing, he had a real conflict with religion. It's a complicated issue. But I would argue that as a society becomes more educated and wealthier, church attendance goes down. But we still have these huge questions. Unfortunately, we've replaced spirituality with this fetishization of the nearest thing to mysticism and godlike impression, and that is technology.
--:-- Scott Galloway: Instead of church attendance, instead of worshiping Jesus — and I'm a big fan of JC. I think he's a wonderful man. I do believe he existed. I just don't buy his lineage. The problem is we've replaced him with a man who denied his own blood under oath to avoid child support payments when he was worth a quarter of a billion dollars. Our new Jesus Christ are Jack Dorsey and Steve Jobs, and it's really unhealthy.
--:-- Kara Swisher: It's actually Elon. It's funny that you picked those two. Elon's the new Jesus.
--:-- Scott Galloway: Yeah, you might be right.
--:-- Kara Swisher: I think it's terrible for our society.
--:-- Scott Galloway: I say that as someone who's 100% convinced that when I am about to die, I'm going to look into my kids' eyes and our relationship is coming to an end. I do not believe in an afterlife. But I think the decline in church attendance signals something really unfortunate in our society.
--:-- Kara Swisher: It does. It plays into something I've been watching — an excellent series I mentioned before on HBO, "Into the Storm," the QAnon documentary, which I think is fantastic. There's such a sad underbelly to our world. It plays into Nick Clegg's argument — it was always there. But boy, does the internet take it to new levels. 4chan and stuff like that. It's disgusting and really depressing. The founder of 4chan is the one that went that way. There's a limit to free speech at some point.
--:-- Kara Swisher: Anyway, we're not very religious, sir. I don't know. That is a good idea. We think there should be more ability for people to get together in a community of faith, whatever they happen to be. It's a huge issue. We keep talking about dispersion — we're all spending less time at work. The evil cousin to dispersion is segregation. It's not only segregation physically, it's segregation emotionally. We don't interact with people of different demographic groups at the mall or the movie theater.
--:-- Scott Galloway: I like schools. I like schools for K through 12. Maybe not college as much, but K through 12. You really do need to be physically in place. Although I think some of the churches...
--:-- Kara Swisher: Where did you go to high school, Kara?
--:-- Scott Galloway: If I say it, you're going to say I'm a rich white person.
--:-- Kara Swisher: Oh my God, even wider? Did you go to Exeter or Fieldston or something?
--:-- Kara Swisher: No, I almost did though. Princeton Day School.
--:-- Scott Galloway: Princeton Day School.
--:-- Kara Swisher: And I'm going to be giving the commencement address there this year.
--:-- Scott Galloway: Good for you. That's nice. That's really nice.
--:-- Kara Swisher: Yeah, Princeton. It's a lovely private school in Princeton, New Jersey. It's a lovely town.
--:-- Scott Galloway: Probably a private school in Princeton, New Jersey. Okay. Yes.
--:-- Kara Swisher: From the mean streets of Princeton, New Jersey. Kara Swisher. My streets were not mean. You know what? I am a hardworking, rich person is what I am.
--:-- Kara Swisher: Okay, Scott. Prediction time. You sort of said you had a prediction and you gave us a little preview. Give it to us.
--:-- Scott Galloway: I'm fascinated by the real estate tech space. I've wanted to look more into Opendoor and Redfin and some of those guys. But my prediction is that WeWork, shockingly enough, is going to overperform over the next 12 months. And I think Compass is going to underperform.
--:-- Scott Galloway: I think Compass is trying to pretend to be something it isn't. I look at the S-1 and I'm trying to understand what about these massive investments they've made because of cheap capital are sustainable. The majority of these investments have been in commissions to brokers. I don't see how that creates sustainable advantage. Brokers can leave. They can walk across the street the same day if you say, "I'm giving you 10% more in commission."
--:-- Kara Swisher: Like the agency business.
--:-- Scott Galloway: Yeah. The question is, are they making investments in technology that create so much differentiation and ability to get more deal flow that the brokers say, "I'm going to stay here"? For example, Goldman Sachs could technically pay their traders a little less commission because they're just going to get more deal flow. When you show up at Goldman Sachs — one thing I will say about my friends who have left Goldman or Morgan Stanley or McKinsey is they don't realize how powerful a calling card that was. When they start calling people and say, "Hey, I want to work with you," their calls aren't returned quite as quickly.
--:-- Scott Galloway: I don't know how much enterprise value Compass is building. I have an excellent real estate agent. I've never talked technology with her once.
--:-- Kara Swisher: So you have an agent at Compass.
--:-- Scott Galloway: Yes. I bought my house. If she goes to Prudential or Corcoran, I'll go with her.
--:-- Kara Swisher: So that means a lack of enterprise value. They've been able to retain her, but at some point, will she just go to another firm?
--:-- Scott Galloway: Yeah. There's been no technology that I couldn't find myself on Zillow. That's what it feels like. These firms trade at — good real estate agency, Sotheby's. Fine. They have the best listings.
--:-- Kara Swisher: They do have good listings.
--:-- Scott Galloway: Sotheby's is a great brand. But it doesn't matter. It's part of Realogy. They trade at 0.25 times revenue. So 0.25 times 3.5 billion would be a $900 million market capitalization. This thing was supposed to go out at $10 billion. They've cut it to $7 billion. This feels like a slow burn downwards.
--:-- Scott Galloway: But WeWork has sort of actualized back to what it's supposed to be.
--:-- Kara Swisher: That's right.
--:-- Scott Galloway: I think their vision — if you have the right guy or gal running the company, things usually work out. I know Sandeep Mathrani, the guy who runs WeWork now, and he's a talented operator. So a year from now or six months from now: Compass down, WeWork up.
--:-- Kara Swisher: All right. Okay. That's a good prediction. That's an excellent prediction.
--:-- Scott Galloway: Well, thank you.
--:-- Kara Swisher: And a good one too. You're being generous. Praise Jesus. Let's go to church. But in any case, neither of us are very religious, but we have respect for people.
--:-- Scott Galloway: As long as they get the fuck out of gay people's way and stop trying to ruin their lives.
--:-- Kara Swisher: I told you I was an altar boy in a Catholic church for a while, right?
--:-- Scott Galloway: Really?
--:-- Kara Swisher: Yes, I was touched.
--:-- Scott Galloway: Okay. Come on, that's good. That's good pedophilia humor.
--:-- Kara Swisher: I'm not even going to dignify that with a response.
--:-- Scott Galloway: That's good pedophilia humor.
--:-- Kara Swisher: I'm going now to interview Anderson Cooper. So I'll talk to you soon.
--:-- Scott Galloway: Seriously, don't go there. You're still triggered by it. Don't go there.
--:-- Kara Swisher: I'm not going to talk to you.
--:-- Scott Galloway: No, there's a part of you that likes to hurt me.
--:-- Kara Swisher: Well, it is April Fool's Day and it worked. So let's just live with it. Now I know your weak points and it has to do with Ando.
--:-- Scott Galloway: Yeah.
--:-- Kara Swisher: Anyway, Scott, I want you to do — I'm going to do something nice for you since I teased you about Ando. I want you to plug your show, The Prof G Show. It's part of the Vox Media Podcast Network now. Tell us about it. Give us some specifics.
--:-- Scott Galloway: It's kind of more of this minus the journalistic credibility. No, The Prof G Show. I've done it for a while. We've just joined Vox. We do a breakdown of what I think is the most underreported story in business. We do office hours, which is my favorite part, based on my favorite show that I used to watch with my mom, Frasier. We do kind of a call-in show. Then we do an algebra of happiness moment where instead of trying to jab and take advantage of people's emotions, I try to discuss them.
--:-- Kara Swisher: Give me an example. What moment did you have? Let's have one right here.
--:-- Scott Galloway: I'm recording. You talked about speaking at being the commencement speaker at your graduation. I've been asked to record a lot of videos for graduations because they're all virtual now. Everybody gives you advice in these graduation videos. The advice we were given when I graduated from business school in the 90s was go to work for Dell or Microsoft, or go to Russia, which was supposed to be the land of opportunity in the 90s. I said, just avoid most of the advice. The only piece of advice I can give these kids that I know is absolutely true is that they will never regret at that age telling the people who've helped them get to that point that they love them and they appreciate them. That's the only thing when I look back that I wish I'd done more of. The little that I did, I'm just hugely grateful for.
--:-- Kara Swisher: Oh, you're tearing up. Oh, how lovely. That show sounds lovely.
--:-- Scott Galloway: It's because I didn't work out today because you started this thing early. Now I'm all teared up.
--:-- Kara Swisher: All right. Thank you for doing that. I need to go do CrossFit. The Prof G Show is part of the Vox Media Podcast Network. It's Mondays and Thursdays. You should listen to it. It's an excellent show. And it's here on the Vox Media Podcast Network. So more of Scott. If you don't get enough from here, which is a lot.
--:-- Scott Galloway: That's right. That's what we all need. More Scott. More Scott. Master dog. Master dog.
--:-- Kara Swisher: We'll be back on Tuesday. Again, we'll be talking about consequence culture. Go to nymag.com/pivot to submit your questions for the podcast. Don't make fun of me. We're going to have a long debate. I'm bringing someone in who's going to back me on this. In any case.
--:-- Scott Galloway: Oh, my God.
--:-- Kara Swisher: It's called consequences. All right. To make your question for the podcast, the link is also in our show notes. Scott, read us out.
--:-- Scott Galloway: Today's show was produced by Camila Salazar. Ernie Entretot engineered this episode. Thanks also to Hannah Rosen and Drew Burrows. Make sure you're subscribed to the show on Apple Podcasts. If you're an Android user, check us out on Spotify. If you liked our show, please recommend it to a friend. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back next week for a breakdown of all things tech and business. We all need a place where we can get around friends and strangers, grab hands and express our gratitude for being a part of something bigger and recognize our blessings. Church. Church. Applebee's.
