Code Galore, No More Instagram for Kids, and Friend of Pivot Jim Bankoff

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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 a dog is in the city of angels.

Kara Swisher: That's right. You're welcome. You're welcome. Here we are at Code.

Scott Galloway: Here we are.

Kara Swisher: Here we are at Code. I'm actually in a studio in West Hollywood taping this because I just did an interview with Monica Lewinsky. Sorry I'm late. How about you?

Scott Galloway: It's good except this place smells like pot, so I'm in like a hot box.

Kara Swisher: You say that like it's a bad thing.

Scott Galloway: I feel like I'm going to be very light for Code.

Kara Swisher: Well, lunch is at noon. Lunch is at noon. We're going to talk about everything. We're going to chat about some of the big headlines. First up, Facebook is pulling the brakes on Instagram for kids. The head of Instagram, Adam Mosseri, announced on Monday that Facebook will pause the project. In quotes, the app has been targeted toward children younger than 13. Scott, I'm just going to let you go.

Scott Galloway: Well, just before we even jump into that, just being in Los Angeles, you know there's an app. I mean, this is really wild. There's an app in Los Angeles that you can download, and you can have drugs delivered to your house in real time. And it's not age gated. You can have drugs delivered to your house even if you're under 18. And you know what the app's called?

Kara Swisher: What?

Scott Galloway: Instagram. Get it? But here's the thing. I know it just for all, I don't know how to get young women off of Instagram and to not have more suicidal thoughts, but I do know how to get young men off of Instagram.

Kara Swisher: How?

Scott Galloway: YouPorn.

Kara Swisher: Oh my God. I am so... No, give me a cogent answer of them doing this, pausing it. Give me a cogent answer.

Scott Galloway: Well, it's just ridiculous. They want... okay, great. And in other news, Ralph Lauren has decided to stop clubbing seals to make fur collars. I mean, big deal. It's ridiculous this was even ever even. And by the way, paused? Paused?

Kara Swisher: Yeah.

Scott Galloway: This isn't what should be going on. And this shouldn't be... they've decided to pause disseminating something that is clearly... we know that it's bad for youth. The government should be doing what it has done with every other substance or material that has ended up being bad for young people. They either age-gate it or they regulate it. We age-gate alcohol and tobacco. We put NC-17 on porn, but yet we've decided to celebrate Instagram's putting a pause on Instagram kids. Well, good for them. Regulators, get off your ass. Do something.

Kara Swisher: I agree. Completely. I mean, it's amazing. They're just, of course, they said they're going to consult people, right? They're not calling us, are they? They're not going to call us.

Scott Galloway: Yeah.

Kara Swisher: I'm sure they're going to be very thoughtful about what we think. You know what? They should have us in there to yell at them. That would be very helpful.

Scott Galloway: Yeah, that's what they need. We wouldn't go, though.

Kara Swisher: That's what they need. We wouldn't go, would we?

Scott Galloway: No, we wouldn't go.

Kara Swisher: That's what we need. Anyway, second thing. What do you think?

Scott Galloway: I think it's bullshit. They should never do it. They should drop the project. They should stop messing with us and not do it. They have not shown the requisite responsibility to create a safe service for adults. They shouldn't be doing it for children.

Kara Swisher: Thank you. I mean, the entire public relations department and Nick Clegg at Facebook, they're the modern-day Joe Camel. Ignore the cancer. It's fun. It's cute. Just stay away from our children. This is tobacco. That's it. Get away from our kids. Get away from it. It gives you insight that they even contemplated this. Okay. Who thought, "Oh, yeah, that's a good idea"? Who thought that? If they were more responsible, I would be, "Okay, all right, I'll listen to you. And I want you to make sure you're incredibly safe." Snapchat had said it. I'd be like, "Okay." But Snapchat's not saying it. The rest of them aren't saying it because they know the difficulties. Anyway, I think whatever. You don't get any claps from us, Facebook.

Kara Swisher: The other thing is Pfizer's CEO says we should return to normal life within a year with the help of annual COVID booster shots. Others do not agree. There's all sorts of approvals waiting, including for kids 5 to 12, which look like they're coming right away. So what do you think about this?

Scott Galloway: Well, there's been certain... I've had a really nice weekend here. I love Los Angeles. I grew up here. I went to UCLA to, you know, go around my own stomping grounds, which is amazing. I did a hike in Runyon Canyon. I just love Los Angeles. But the image that really struck me was I'm staying in the hotel next to the hotel where we're having the conference. And I looked down and I saw this line. I'm like, "What is it, a Supreme store or something?" At 7:30 in the morning. And I realized they were all in waiter's uniforms. And there must have been an hour-long wait for the entire staff at the Hilton. And they were in line. And I figured out, "Oh, they're in line to get tested." You know why? Tara Swisher. Go ahead.

Kara Swisher: [Laughs]

Scott Galloway: And it's really funny, a kid I grew up with, this really nice kid that I bonded with named Brent Seals, a total scrappy entrepreneur, has a ticket selling company. And then he pinged me this morning and said, "I'm doing the testing at Code." And I thought, "God, that's an agile entrepreneur for you. Live events get canceled. Now he's in testing." Anyway, but the thing that just struck me, Kara, there's just no getting around it. This is really sad. It's sad that we're still here. None of us expect it to still be here. And what you have is a nation that is blessed with an unbelievable supply chain. We are very innovative. We're producing the best vaccines in the world. And then we have the second most vaccine hesitancy in the world just behind Russia. And I keep hearing all these people when these conservatives get COVID, I'm like... and then you see people on Twitter saying, "Thoughts and prayers." I'm like, "Well, trust me on this. The prayers work much better when you're vaccinated."

Kara Swisher: Yeah. Well, we're doing it because...

Scott Galloway: It's just discouraging.

Kara Swisher: We're testing for instant infectiousness. And if you're infectious, you can't come. I mean, you know who pushed me? Mark Benioff on this issue. Mark started texting me. I mean, he's very... So we're doing masking, testing, and vaccination requirement. And I know I'm going to get some pushback.

Scott Galloway: Well, it's more than that. If you leave the property, when you come back, you've got to be tested again.

Kara Swisher: I'm like, "I'm stuck here."

Scott Galloway: Yes, indeed.

Kara Swisher: I'm going to be tested. You're stuck with me, Scott. We're together for the next two and a half days. So we're going to talk about that at Code with Andy Slavitt from who worked for the White House, who we've talked to before, and also Nancy Messonnier. So we'll talk about that in a second.

Kara Swisher: Lastly, China banned crypto. The market doesn't seem to care. What do you think about this?

Scott Galloway: This is really interesting. And quite frankly, it's probably a proof point for the strength of cryptocurrencies.

Kara Swisher: Yeah, they bounce back.

Scott Galloway: Yeah, every time there's been a hit to crypto, it looks in retrospect as if it was a buying opportunity. The interesting thing here is that the beneficiaries are decentralized exchanges, DTX, Sushi, and Uniswap. And that is an exchange like Coinbase, for example. It's centralized, and it's a platform, and it can be tracked. And it's those platforms in China that are being shut down. But if you have a cold storage hardware wallet and you go through Uniswap or a decentralized exchange, effectively you're off the grid. And those require smart contracts to execute the trade. So you're seeing Ethereum bounce back and you're seeing these decentralized exchanges not only bounce back, but each new high.

Kara Swisher: They are.

Scott Galloway: It's sort of playing into a little bit the narrative behind crypto. And this is the power of it. It's its decentralized nature that a government, a central bank can't... or unfortunately the IRS or the FBI can't track these flows. What they're trying to do, and I think there's a lot at play here. And that is China's crackdown is really interesting. Games, antitrust, monopoly power, data, teens, tutoring. And now they're going after crypto. And you look at all these things and you say, it's really interesting with the things they're going after. But they're also trying to play finance. They're trying to launch their own stable coin. And I think America should do that as well. I think America should do that as well. But I think it's fascinating.

Kara Swisher: What would you call it, the Eagle coin?

Scott Galloway: The Eagle coin, I guess.

Kara Swisher: Eagle coin, yeah, something, right? Yeah. So we're going to have Gary, speaking of regulating cryptocurrency, we've got SEC chair Gary Gensler at Code this week. Scott is talking to him, and we will definitely ask about this. It's a big topic, but you're right. It really, the bounce back, except in China, obviously, the crypto exchanges there are feeling hurt, is really interesting. It's going to be interesting.

Scott Galloway: It's interesting to see how it plays out. I mean, I heard a very interesting theory or viewpoint from someone and said that America's lax or either call it poor regulation around entrepreneurship or just terrible oversight. We've been overrun. It depends how you want to frame it. But you might see a flow of human capital or innovation capital out of China into the U.S. But a lot of people say, no, China has decided not to subvert national interest, economic interest. So I just think it's the biggest story that's getting the least coverage. And that is what China has decided to do. You know, people would say to me, "Well, Scott, you complain about this all the time. What would you do if you had a magic wand?" And quite frankly, that's what China is. China doesn't have a magic wand. It has an autocratic fist. And they've just said, "We've done a lot of analysis. This is bad for kids, this is bad for income inequality, this is bad for economic instability," and they've come in with a hammer.

Kara Swisher: Social unrest.

Scott Galloway: Yeah. They've got a bigger problem with that. But quite frankly, all of this kind of adds up to one thing, and that is crypto is bigger than China. And if China kicked out...

Kara Swisher: Crypto is bigger than China. That's something to say.

Scott Galloway: Well, if China kicked out Apple or China kicked out Nike, you'd see a much more severe reaction in their stock than you've seen in Bitcoin and Ethereum. And this probably plays to Ethereum because of smart contracts.

Kara Swisher: Absolutely. I find it really interesting.

Scott Galloway: Yep.

Kara Swisher: Anyways, but right now, I would say all of this kind of is a bit of a confirmation of the power of cryptocurrencies. And one thing Gensler said, he said that he compared all of these altcoins or what I've referred to as shitcoins as wildcat banking when there were too many banks kind of starting their own currencies. And the question is, is that the right analogy or are all these coins just different stocks?

Scott Galloway: Or trading cards.

Kara Swisher: We decide that trading cards, baseball cards, have value. And is it really fair to call them wildcat banks? So I think that interview tomorrow with Gary Gensler, it's going to be fascinating.

Scott Galloway: Yeah, we'll ask him that.

Kara Swisher: All right, so let's start with our first big story. I think it's our only big story today. We're recording this on the first day of Code. Let's go through the list of speakers and the things we're going to do. For those who don't know what Code is, it's my conference. I've had at first with Walt Mossberg. Now I do it by myself. And I have help with people like Scott Galloway and many others.

Scott Galloway: Thanks for that.

Kara Swisher: Thanks for that. I could hear you say like, "Oh, maybe I shouldn't say it's mine" with the dog on the phone.

Scott Galloway: No, but it is. I am. It is now. You're right. I'm just showing up. But the dog is going to do a lot. And by the way, the dog and I are going to have our own conference in Miami together.

Kara Swisher: That's our conference. Little sunshine, little Latin, little sex feel.

Scott Galloway: Hello. This is my house.

Kara Swisher: Anyway.

Scott Galloway: Oh, you think? This one's mine. Like every cousin in the world is here. Like every Swisher in the world is here.

Kara Swisher: No, no, no. There's only my son and my brother. The Sultan of Wokistan has arrived.

Scott Galloway: God.

Kara Swisher: My mother, my son, and my brother are here. Everybody else stayed at home of my giant clan. Dr. Swish, Bain, and Lucky. Lucky's looking good.

Scott Galloway: He is here. I'm interested to see Lucky's fashion.

Kara Swisher: Okay, good. I'm so glad. But let's not talk about my mother. Let's talk about the speakers. So first of all, you're talking to Sam Harris, and you're also giving a presentation. Why don't we talk about what you're doing first?

Scott Galloway: First off, the thing I was just saying to the team, I'm intimidated. I used to punch these decks out like there was no one's business. And this is the first live presentation I think I've done in 18 months, and I don't want to disappoint you. So I've been spending a lot of time on it. And I think we have trouble processing everything that's happening. And I love Daniel Kahneman's theories around slow and fast thinking. And when you're overwhelmed with information and you have to process it really fast, i.e. a crisis, you go fight or flight or friend or enemy. And I think we've taken a lot of concepts, whether it's crypto, whether it's online trading, whatever it might be. And I think we have a tendency to go very binary and say this is overhyped or underhyped. So my presentation is what things are underhyped and what things are overhyped. And I'm trying to figure... I'm going through everything from health care to crypto to different unicorns and trying to say, "Is this, you know, space travel? Is this underhyped or overhyped?" So anyways, title of my presentation is "Underhyped, Overhyped?"

Kara Swisher: Good. Okay. And Sam Harris? What are you going to say? Neuroscientist? Very interested in psychedelics, correct?

Scott Galloway: Yeah, I'm just an enormous fan of Sam. I think he's courageous and a very interesting thinker. And we're going to talk a little bit. He's really into this notion of flow and microdosing. And he's cataloged pretty meticulously his own experience with psilocybin.

Kara Swisher: How do they call... psilocybin?

Scott Galloway: Psilocybin, I don't know. Good times. And so we're going to talk a lot about that. So anyway, I'm a... he lives here, so it'll be nice to speak to him and explore that stuff.

Kara Swisher: I'm fascinated by that stuff. Have you ever thought about doing one of these supervised... a lot of my... not all my friends, most of my friends have done some of these supervised trips where they have like a massive dose of I don't know if it's ketamine or MDMA. And then somebody asks them questions and they kind of unlock all the things in your life. And you kind of address things that you haven't addressed. And I not exaggerating, I think the majority of the people I talked to have done it and describe it literally as a life-changing experience.

Scott Galloway: Yeah, that's why we have a whole day of it at Code. Just so people know, we have a mind and body thing. And one of the panels is all on psychedelics. We're very interested in that as a business and as sort of replacing problems with opiates and things like that. PTSD and severe depression. And I'm a big believer in suppressing things. Like I know I got some shit to deal with, but I'd rather just keep it suppressed. I think that's one of my core competences is I just keep that shit buried.

Kara Swisher: No, don't do that. Keep it buried.

Scott Galloway: I'm very self-actualized. Don't need to deal with it.

Kara Swisher: I don't bury anything. Are you?

Scott Galloway: No, I don't bury it. Yeah. Uh-uh. Yeah. No. Okay. Although one time someone asked...

Kara Swisher: Well, I'd suggest you bury a little bit more. I suggest...

Scott Galloway: No, I'm not burying anything.

Kara Swisher: You pour a little bit more dirt on some of that stuff. Let's go through some of the speakers. I'm resting my voice. I want your comments. This really is an ad for Code. Am I getting paid for this? This is an infomercial. I want to know what you should talk about. Stop it. I want questions. I want questions.

Scott Galloway: Mark Benioff.

Kara Swisher: Mark Benioff.

Scott Galloway: Well, I'm really interested. So I think the thing I find fascinating about Mark, I mean, okay, Mark is one of the wealthiest men in America and has kind of redefined CRM and SaaS. He is the king of SaaS. And so there's a lot of interesting questions around him going up against Microsoft and productivity. But I find the more interesting thing is that Mark Benioff, I don't think he'll be remembered for CRM or Salesforce. I think he'll be remembered for what I'll call breaking the code of the white guy. And that is these tech CEOs generally have a code where they don't go after each other. And he was the first one to say, "You know what, Jack Dorsey, you should pay your taxes in San Francisco and stop hiring lobbyists to not pay our fair share." And he's come out and said that Facebook are cigarettes. And he said it before. He said that to me, to Kara Swisher. And I would put a wrinkle in that. I think there's actually some very positive, when regulated, I think social media is and can be positive. But they spend all of their time and innovation covering up the negatives. I think it's not actually tobacco. I think it's really more opioids than it is tobacco. There's some effective uses for it. Opioids can be very helpful in certain supervised applications. But anyway, back to Mark. I think Mark will go down as someone who... you need in every to make real change, a key component, a key actor in real change is what I call class traitors. And that's people like Teddy Roosevelt. Teddy Roosevelt turned on the people who elected him. He was elected by the big railroad companies and their money. And then he turned around and said, "You're bad for America. I'm breaking your ass up. Thanks for putting me in the White House. And now I'm breaking you up." And Mark Benioff...

Kara Swisher: That is an excellent question.

Scott Galloway: Mark Benioff is a class traitor. He's broken the code of the white guy. And I think that's what he's going to be remembered for. And I think he'll be remembered as a positive force in history around this.

Kara Swisher: I like this question. All right. Next one. Margrethe Vestager, speaking of regulating these people, she's come all the way from Europe. Obviously, she is... I'm trying to pronounce her name correctly. I just didn't. Margrethe de Vestier.

Scott Galloway: Vestier.

Kara Swisher: Vestier. Anyway, what should I ask her?

Scott Galloway: Well, I'm excited. I think I told you once, I spotted her on an Amtrak train knitting.

Kara Swisher: Yeah.

Scott Galloway: And I was staring at her so much. She's a knitter, I told you that. I was staring at her so much, I'm like, "This woman's probably going to think I'm stalking her." So I went over and introduced myself, and I took a picture with her, and she couldn't have been more gracious. I just find her incredibly impressive. The question you need to ask her, though, is quite frankly, has GDPR, have the things they've done in Europe, have they worked? Because a lot of people would argue all they've done is cemented and actually played to big tech's favor. That it's the small and medium-sized media companies that have had to incur all the costs, and the bigger companies have actually extended their lead. So, you know, what has Europe done, what they've done in terms of regulation, has it worked or has there been an element of it backfired? And then the next thing I would ask is, if America doesn't regulate these companies, what does she think they can do in Europe? What will happen? Does she ever see a European nation kicking one of these companies out? Because I would argue...

Kara Swisher: Or arresting.

Scott Galloway: Or arresting. Well, my understanding is that there's certain executives at Facebook that are reticent to fly over UK airspace for fear their plane will be commandeered down and they'll be arrested for refusing to testify. But I would... I like her, but has what she and Europe done, has it worked? I'm not sure it's worked, Kara. I'm not sure it hasn't made things worse.

Kara Swisher: That's a good question. I'm totally using you as a... you know, like cramming for the exam, essentially.

Scott Galloway: There you go. Just so you know.

Kara Swisher: Ari Emanuel.

Scott Galloway: You're Paula Gabriel. I used to look at her test when I was in eighth grade. I used to look over and like say, "Wait, what is that?"

Kara Swisher: I'm just going to ask a few more. Ari Emanuel.

Scott Galloway: Oh, gosh. Their company makes no sense as a public company. Their stock's off and it should be. Like, how is there any synergy there between professional bull riding and managing Brad Pitt? I just don't understand WME as a public company. What is the story there? And what are they going to use the proceeds for? Do they think they're going to roll up? I mean, just there's certain endemic or things about the company itself. And then I would... what is the changing role of talent management in streaming? I'd just be very curious. He's at the helm of the bobsled in terms of the changes here, and he sees the capital flows. I would want to understand from him, I'm like, "Okay, winners and losers, what do you think happens to the cable bundle? Has the decline been overestimated? What do you think happens to live sports and live events?" I mean, he really does see the flows of what people are spending money on and where the talent is going. So I would go down two tracks. One, WME as a public company makes no sense to me. Tell me why it does. And then two, give us your winners and losers in the world of content and talent, because he really is at the forefront. And also, I would just be... I mean, if you have enough time, he's kind of famous for a management style that is very... what I'll call... and quite frankly, I think that management style is underrated. I think being honest and I don't call it terse, but I don't think that... I think there's a Hallmark channel version of business and then there's what business is. And I'd be curious if and how his management style has changed over the last decade.

Kara Swisher: I think he's going to say something bad on stage. I think he can't help himself. We'll see.

Scott Galloway: Or good.

Kara Swisher: Isn't that what we want?

Scott Galloway: Good. Yeah.

Kara Swisher: Oh no, it's good. I always enjoy talking to him. A couple more. Ted Sarandos. He's the CEO and chief content officer of Netflix. This is going to be a good one.

Scott Galloway: Well, Netflix has stalled a bit. Its stock has lost its trajectory. I mean, it's still an amazing performer over the last five or 10 years, but it's kind of... Disney Plus has come in. There's a massive capital coming into the place. Apple TV. I'd be curious. I mean, the problem... I'd say, "Who are your... who does he see as competitors?" But he'll lie and say, "Oh, our competitors are everything and everyone."

Kara Swisher: Yeah, time.

Scott Galloway: I would want to know. I think it's going to be difficult for them to extend. Do they believe it'll be difficult for them to continue to maintain their momentum without going vertical? Every company that's gone over a trillion dollars, which is what Netflix needs to do to attract investment capital, has one thing in common. They've gone vertical, whether it's Amazon going into fulfillment, whether it's Apple going into their own microchips in their own retail. Well, Netflix, in my view, needs to go into the device business. And because at $17 billion in content, I mean, I guess it could go to $20 or $30 billion. But it strikes me that they need... do they have any plans?

Kara Swisher: What vertical?

Scott Galloway: Well, a device. It strikes me that one of these players... I mean, Apple is already starting to sweep the Emmys. And I think a lot of it... I'll be honest, like Ted Lasso. I think Ted Lasso is a cute show. If it wasn't owned by a monopoly that stuck it in front of my face because of unnatural monopoly power, I think it could have easily been forgotten. I think it could have easily gone absolutely nowhere. The Queen's Gambit could have been screened on Mars and we would have found it. That was genius. Ted Lasso was cute. And he's now competing against a company that can put content in front of a billion people and get decent cute content at the Emmys. I mean, he's now competing with folks that are vertical. I wonder if and how they plan to go vertical. But the problem is he's not going to say anything because he's a public company.

Kara Swisher: Well, I hope so. We'll see. We'll see. All right. I have three more. Quick. Lisa Su, head of AMD. Obviously, they did that deal with China many years ago and some other things about making things. And now the company's roaring. At the same time, we have a chip problem across the world. Obviously, I have to talk to her about China. Anything else?

Scott Galloway: Well, the fastest means to grow your economy is through intellectual property theft. And the intellectual property theft of the next decade that could have a huge impact on the U.S. and probably more of a strategic impact on Taiwan is China's in the midst of incredible IP theft around... what is it, DRAM? I think it's a real threat to our national security and probably to their company. My feeling is basically China is in the midst of building up their own chip and microprocessor industry. And what can be... does she see it as a threat and what can be done about it? I think this is really serious. That if China does what they did to apparel or to Siemens or to cell towers or to... they basically just through... what people don't realize is they think that our covert espionage efforts are about spies killing each other and stealing nuclear codes. No, they're not. It's much more boring. It's about stealing trade secrets from companies.

Kara Swisher: Right, right.

Scott Galloway: That's where the majority of the espionage takes place. And China is better at it and more brazen. And I think it's a real problem when they start becoming... when they basically take tens or hundreds of billions of dollars in research and just steal it from the U.S. and China and start producing their own microprocessors. I think it's a real threat to her firm. Anyways, curious what you would say.

Kara Swisher: And she won't say anything. Two more?

Scott Galloway: She's probably worried about being disappeared.

Kara Swisher: Thanks for my belief in my ability to elicit information.

Scott Galloway: No, I believe you can ask great questions, I just think...

Kara Swisher: Anyway, I'm sorry, go ahead.

Scott Galloway: All right, Satya Nadella, head of Microsoft. Speaking of cybersecurity. How have they escaped any big tech scrutiny? They were the bad guy. They've gone from Darth Vader to Luke Skywalker. How have they pulled off the ultimate acrobatic move and become the bad guys to the good guys? What is it about his leadership style and what they've done that's given... no company in history has done a better job of starching their hat white. And it's just amazing. Microsoft, most valuable company in the world for a while, now second most valuable. And nobody ever talks about them as a monopoly. Nobody ever talks about their externalities. They've done an amazing job at that. And I would ask them... it's arguably... everybody talks about IBM's renaissance, Apple's renaissance, Microsoft's renaissance. I mean, there's just no getting around it. I mean, they never went... they never did poorly. But for 10 years, the stock went flat. And then it's been an unbelievable performer. I would love to know what are the two or three things. I mean, despite missing social, despite missing search, despite missing mobile, they continue to just perform. And I would love to just know... he's got... it's going to be tough for him to be very honest about his own company, but I'd have to kind of love to ask the same question in the same vein as Ari Emanuel. I would love to know. I think Satya Nadella is a very deep, smart, practical thinker. I'd love to know, "Satya, what technologies are overhyped and underhyped in your view? And like, is it voice? Is it AI? Is it driverless technology? Like what is underhyped and overhyped in your view?" I'd love to get his take on stuff.

Kara Swisher: Yeah. Good ones. All right, last one. By the way, Scott and I are going to do one. I didn't know you were going to do this. I'm doing this literally. I know. That's what I want. This is all extemporaneous. I need help. I need help.

Scott Galloway: Oh, my God.

Kara Swisher: By the way, Scott and I are going to do a mind and body panel with all kinds of psychedelics and body people. That's going to be fun on the third day. But last but not least.

Scott Galloway: I did not know that, quite frankly. I did not know that. But anyway, I'm looking forward to it.

Kara Swisher: I'm looking forward to it. Just show up. I'll handle it.

Scott Galloway: That means your co-host canceled and they've said, "Okay, bring in Scott."

Kara Swisher: No, you were always the co-host. Last but not least. You keep asking me and going, "Should Stephanie Ruhl do this instead of you?"

Scott Galloway: No.

Kara Swisher: "Should Stephanie Ruhl do this instead of you?"

Kara Swisher: Other than talent and being much hotter than me, she has nothing on me. She has nothing. All right. There's plenty of other speakers like Jason Kylar, Chris Krebs, all kinds of people coming. Casey Means, we've got Nancy Messonnier, got all kinds of people coming. But last but not least, Elon Musk. I mean, I would ask him a lot. One, cryptocurrency is so powerful and it plays such a huge role. And he plays such an outsized role now. He's moving markets. Does he feel any additional responsibility to maybe have more impulse control around tweeting things when he can take markets up or down? Or does he just like, well, that's just who I am and that's just part of it?

Scott Galloway: He said two or three years ago that there'd be a million autonomous Teslas on the road within 12 months. I haven't seen one. I would ask some hard questions, but I would also give him some softballs. What, I forget what it was called, Discovery 4. He just showed up with a fucking elephant gun of space tourism, sending people around the earth three times versus this ridiculous, like, send people up to the height of where, Citation 10. And what Virgin and Amazon did was literally, they brought a squirt gun to a gunfight and he is killing it around, I think SpaceX is just performing like crazy.

And the other thing, and this is part of my presentation, you know what I think is really underhyped? You know what changes the world? It's not going to Mars, which is space exploration. It's space execution. You know who is going to change the world? Is it the Boring Company? And that is, there are the richest people in the world who've had the most impact have done one thing. They've all built time machines. Amazon Prime is a time machine. Netflix is a time machine. If your kids only watch Netflix, they save 11 days a year in commercials. Healthcare is going to build a time machine and give a woman who's managing her child's diabetes eight of the 12 weeks back a year that she spends managing that kid's diabetes. If we can create from an 80-minute commute to a 10-minute commute, the most crowded corridors in the world, he's going to give thousands of years back to humans. And not only that, if you start transporting, what we've learned through COVID is the future is not about us getting around the world faster. It's about bringing the world to us faster. And if you build these tunnels, I think the really exciting thing about them is through, and it's boring, but the boring shit is what moves your older value. It's moving goods through so you can get your stuff in 10 minutes instead of 48 hours. I love when people make fun of him. I think the Boring Company is hugely underrated. I'd like to know more about it and what his vision is for it.

Kara Swisher: This was good. This is excellent. I like this. We should do our own conference.

Scott Galloway: Oh, we are.

Kara Swisher: Yeah, we are. Except it's in Miami. If you think I'm fun and out of control here, oh my gosh, wait till we get to South Beach. We see a little salsa dog. We see a little El Perro. That's right.

Scott Galloway: Oh, no.

Kara Swisher: That's right. All right, Scott. Let's go on a quick break. When we come back, we're going to talk to a friend of Pivot, continuing this ad, Jim Bankoff of Vox Media. Who's Jim Bankoff? Who's Jim Bankoff? I don't know.

Scott Galloway: Oh, wait, he's our boss.

Kara Swisher: He's our boss. We don't care. Yeah.

[Ad break]

Kara Swisher: Okay, let's bring in our friend of Pivot, Jim Bankoff. Jim is the CEO and co-founder of Vox Media, and that makes him our boss, kinda. He joins us today to discuss the state of the industry as we head into Code. Jim, welcome.

Jim Bankoff: Welcome. It's so good to be here. So good to be here. My first time on Stay Tuned with Preet, and I couldn't be more excited.

Scott Galloway: Little CEO humor.

Kara Swisher: You mean Preet? Preet Bharara? You mean the guy? You bring in Preet, you do a full spread in the Wall Street Journal, you bring in the dog, and like, I didn't meet you for a year. You like threw your number seven person at me to go have coffee. I'm not bitter, though. I'm not bitter.

Jim Bankoff: Hey, I noticed that when you brought that awesome Prof G podcast over the Vox Media podcast network, all of a sudden, Anderson Cooper shows up. Was that happening before Big Dog?

Scott Galloway: That's because we're very close. We're very close. All right, let's get to some stuff in this. This is a legitimate question. So I would say the analogy here is you're Phil Jackson and Kara's Michael Jordan. I'm Scottie Pippen.

Kara Swisher: Aren't we really your boss?

Scott Galloway: Your turn.

Jim Bankoff: You know what? Absolutely. I am here to serve. 100%.

Scott Galloway: And who's Scottie Pippen and who's Michael Jordan?

Jim Bankoff: Well, I mean, Kara's Michael Jordan and you're Scottie Pippen. Clearly. And your name is Scott, so that's appropriate. But in all seriousness, I am honored to be on the Pivot podcast. You guys are, I am not only, you know, involved as a colleague, but I love the show. So let's go. Let's do it.

Kara Swisher: Okay, enough of that shit. All right, my real question here.

Jim Bankoff: Okay. All right, ask.

Kara Swisher: So you're, we've been using this term, helm of the bobsled. So ad-supported media, and Vox still is technically ad-supported media, or a lot of it is. And that is we got New York Magazine, we got Podcasts, which seemed to be one of the few ad-supported mediums that is actually growing. What is your observation around advertising? What mediums? I mean, is there a future in ad-supported media? And even if it's digital, even if it's podcasts, like what are you seeing out there? What are the trends?

Jim Bankoff: So absolutely, there's a future in ad-supported media. I'll start off by saying the best media businesses are multi-revenue stream, and Vox Media is multi-revenue stream. But since your question was about advertising, I won't talk to you about the subscription stuff that we do and the licensing stuff that we do.

Kara Swisher: But we want an overview, Jim. We need an overview of the whole market.

Jim Bankoff: As it relates to advertising, the advertising market is growing and digital is continuing to take share from the billions and billions that still haven't migrated from broadcast and cable and even print and other forms. And so digital is a growing pie. I think that the issue is that if you are subscale, it's harder to do it well. If you can't make the investment, and that's for a few reasons. Advertisers don't want to spread their money across a lot of smaller sites. It's in smaller properties. It's a pain for them. But also, if you're subscale, you can't afford to invest in quality, whether that's quality ad products or quality measurements or whatever. So our strategy has been to carve out a big segment where we think we can win, which is IP or intellectual property driven, creatively driven, high quality advertising. And we've grown big because of that. And I think, you know, other people have other strategies, but it's working for us. We've seen great growth. The pandemic year for everyone was flat to down, but we've roared back. And, you know, the other thing about advertising, quite honestly, is it's cyclical. And, you know, as the market has gotten better, you know, through as the economy has gotten better, more generally, advertising has rebounded. And we're certainly seeing that.

Kara Swisher: All right. So you're not down on it.

Jim Bankoff: It's not for everyone, but I'm not down on it for sure.

Scott Galloway: But is this all headed to kind of a, it just logically think, well, this is headed towards a Netflix model. Do you see in one year, three years or never that Pivot will be behind a wall or that all of the Vox podcast will be behind a wall and we'll be charging five bucks a month because those revenues are valued at a multiple of revenues versus the business we're in, which is valued at a multiple of EBITDA? Will that happen? Will it take longer than we think? It just seems if you look at scripted content and video, that's where it's headed. Why has that not happened with audio and podcasts yet?

Jim Bankoff: I think that, again, the best businesses have dual revenue streams or maybe even more than that. If you look at where three of us remember the good old days of cable and and Liberty Media and John Malone and all that stuff, you know, subscription fees and advertising fees together. And that's where I think it's going. And that's where I think podcasting is going, too. So, you know, and I think it's an opportunity for the talent, you guys, for creators to benefit from both of those revenue streams. And, you know, what we're focused on is creating a quote unquote platform where we could help creators by giving them promotion, monetization, infrastructure, all the things you need to be successful. And I think it's going to be a great business. We're obviously like really long on podcasting. We have the Vox Media Podcast Network and we're going to keep doing it.

Kara Swisher: All right. But he didn't answer his question. Is it moving over to subscription?

Jim Bankoff: There will be more subscription, but it's not going to pivot entirely to subscription. There will be advertising and subscription. And by the way, I take issue with the premise that logically everything is moving to a Netflix model. Like ad support of podcasting is growing. It's profitable. It is, you know, it, there's a big, long tail. And if you're not, you know, if you're not one of the more successful ones, like any other industry, it kind of consolidates around the top, but, but it works, you know, it works for creators. It works for businesses. So, so no, I don't think it's inevitably going to a Netflix model. I do think it's going to a dual revenue stream model. And we're excited to be part of that.

Scott Galloway: I joked around about, I joked around about like Stay Tuned with Preet to start off, but you know Preet has upwards of, Cafe Media which is, you know, the company that we acquired, um, that is led by Preet, they have, um, tens of thousands of paying subscribers in addition to a big flagship model, uh, podcast that is ad supported.

Jim Bankoff: He has tens of thousands paid subscribers. Tens of thousands paid subscribers.

Scott Galloway: But pause there. What's the difference in content and podcast that warns people or catalyzes people to pull out their credit card versus endure an ad from Athletic Greens or ZipRecruiter?

Jim Bankoff: More focused, more niche. I think even Netflix has its share of blockbusters, but Netflix, I think, is particularly strong because it appeals to hundreds or if not thousands of different particular interests. You can do the same thing in podcasts. I think the large, broader ones are going to be ad supported. And then the more micro targeted ones lend themselves to subscription.

Scott Galloway: And have a fan base.

Jim Bankoff: Right. And have more of a fan base.

Kara Swisher: One of the things that I think a lot of people are thinking about is the impact of a pandemic on your business. I'd love to sort of, you know, running a business, obviously there's the remote work part, the creation part, but in general, what has been the impact and how do you feel now, even though we're not quite out of it. We had to do a lot of stuff at Code around COVID, obviously. We canceled last year. That's one part of your business. You have remote issues. Talk a little bit about managing in a pandemic.

Jim Bankoff: Well, yeah, I'm glad you brought it up, Kara. And it's, you know, we're definitely, you know, it rages on in Delta variant and we are taking it incredibly seriously here at Code. We're taking it incredibly seriously at Vox Media in terms of office. And, you know, there's a lot of decisions to be made. And I guess, you know, aside from things that people have already talked about, like, you know, making sure that everyone is safe is paramount. And we take, you know, we're focused primarily on that. But the interesting thing is different people in our employee base, and we now employ about 1,300 plus full-time people, people have different needs. People have different opinions on things. And we are working hard to listen, but also make some decisions so that we can move forward. They expect us to lead. And we're trying really hard to gather as much information so that we can do that. So for us, that means we're in a position where we can provide our employees with flexibility at this stage.

Kara Swisher: Do you think everyone has to do that? Is that what every employer is going to have to do?

Jim Bankoff: I think information economy employers, where it's not literally essential to always have in-person collaboration, are probably going to have to lighten up around coming and forcing people to come to the office. I recognize there's value in that. And I've heard a lot of the discussions on Pivot and elsewhere about, and I agree that there is value in that, particularly for creativity, for innovation, getting human connectivity in person is important. Having said that, that's not every day. And that's not every person. It doesn't have to be a one-size-fits-all model. And I think what we're going to have to work our way through collectively is understanding a finer cut at this. It's not as simple as everyone's back in the office because I say so, but it's not as it's also not as easy as do whatever you want. You know, I think we're going to have to figure out the in-betweens there and different companies have different needs and IT is going to help us get through this. But, you know, it's going to vary from company to company and employee base to employee base and individual to individual.

Scott Galloway: So you both develop organically and acquire podcasts. And there are, I think something like now 1.2 million podcasts. And I would venture that a thousand generously, it's probably a hundred of those or 0.01% are self-sustaining economically. If you really did the hard economics on them, what, is there an algorithm or what are the, what's the criteria filter that you look at and say we need three or three or four of these boxes to be checked for what will ultimately be a successful podcast. What makes a successful podcast when you look at something?

Jim Bankoff: You know, you're right. It's a hits driven business. It's not dissimilar from so many other creative endeavors for better or worse. If you look at the top songs on Spotify, or if you look at the top shows on Netflix, you know, it's definitely that kind of thing. And to answer your question, though, it's a hard thing to answer because if we had that specific formula, everyone would be doing it. We'd be doing it all day long. So like other creative endeavors, there has to be spark. But generally speaking, it's around relevance. It's around rapport. There are different types of podcasts that your audience, and you know, they're interview shows or talk shows that are scripted. So you know, the format is less important. It's more about like the relevance. And you know, it's been said before, it's such an intimate medium. The other thing about it is that it, you know, podcasting, unlike say a website or even a TV show, requires an investment of time. And so it's harder for new podcasts to break in is one thing I've found. We find our favorites. I have my favorites like Pivot, but they take an investment. And even if I go from 1x to 1.5x, it's still going to take me half an hour to listen to a podcast. And there are only so many you can fit in. And so I think the good ones have to keep innovating and staying good. And then the new ones, I think it's going to be an increasingly higher bar to break in and grow an audience.

Scott Galloway: One more question. So you manage, you said, 1,300 people and we have a really young, what I call information age workforce. When you observe people, are there certain characteristics that you observe and you think that person is going to do really well? Like what advice can you give to young people in terms of the things, the qualities, the competences they should double down on? Because you think that's what is kind of the elements that seem to succeed in a company like ours.

Jim Bankoff: Great, great question. You know, the workforce has changed so much since I entered it. I, you know, I, and in a lot of positive ways, you know, I had to endure unpaid internships that, that allowed, you know, a lot of people of privilege to excel when, you know, and things like that. So the workplace is changing in a positive way. I tell people sometimes if a friend asks for an internship for their child, I tell them like about the hardest way for your child to get an internship is going through me because like, you know, we we're going to we're going to go through a rigorous process to get people in the door. But so I think things have improved a lot. But to answer your question about what it takes to be successful, that probably hasn't changed a lot. And what I like to tell people is think like your boss thinks and and what problems are they trying to solve? And what you know, I'm the CEO of this company. Like, let's think about the problems that I have to solve. And in addition to being very good at the start, I don't think like, I'm sorry, go ahead.

Scott Galloway: Think about anybody.

Jim Bankoff: In addition to like being as masterful as possible at the thing that you were hired to do, whether it's be a producer for a podcast or be a copy editor or be a salesperson or an IT professional, whatever it is, you have to master that. But then also think about the bigger problems that are trying to be solved and and collaborate the you know to get there. Yeah, that's that's one thing I'd say.

Kara Swisher: Yeah, yeah, that was a nice way of saying how do you deal with all the millennials which is Scott's persistent question usually. So the last question I have, because we got to get going because I got to get ready, I gotta get my hair did for Code to make you some dough.

Scott Galloway: Sorry, go ahead.

Kara Swisher: I'm so excited for Code, there I said it.

Jim Bankoff: All right. Okay, there.

Kara Swisher: Okay, SPAC. We would like some money. So you see media companies attempt to go public via SPAC with mixed success. What is your next move, Jim Bankoff? Jim, I just want to say this is really important because Professor G is sort of interesting, but if I get tens of millions from the SPAC, I'm fucking fascinating. Make me fascinating, Jim Bankoff. How do we get there?

Scott Galloway: If we get there, can I come on the boat?

Jim Bankoff: Yeah, 100%.

Scott Galloway: Yes, he already has a boat.

Kara Swisher: That's not true. I don't have a boat. I got seasick. Anyways, I'm sorry. All right, whatever.

Jim Bankoff: So we've worked really hard at Vox Media to put ourselves in a position where we can determine our own fate. I think there have been a lot of companies that have, as there always have been, that have resorted to different kinds of financing to kind of get while the getting is good. And sometimes that, and you can say the same thing about SPACs that you could say about an overheated venture market or anything else. But we're going to do what creates and realizes the most value and the most potential to grow the kind of company that we want to grow. Of course, we're going to treat our shareholders well, but we're going to treat our other stakeholders, employees, advertisers, partners, et cetera, well in that process. And we're going to use financing as a means to do that. And so if the SPAC market is the right way to do that, we'll look at the SPAC market right now.

Scott Galloway: You should be a public market CEO because you just said nothing. You just absolutely said nothing.

Kara Swisher: I was just thinking that.

Jim Bankoff: I'll give you some more tea on this. I think there are a lot of companies that are using SPACs because they have to. Because they have to do an acquisition or because they have to get out somehow. Like, we're not one of those companies. Like the bloom is off the SPAC. And so, like, you know, do we find value in the right kind of liquidity? Yes. Do we find value in the right kind of currency so that we can continue to pursue more and more ambitious acquisitions in addition to the organic growth? Yes. Like we will be doing those things. And, you know, if a standard IPO gets us there, great. If a SPAC gets us there, great. If some other form of financing gets us there, great. But we're not in a position, you know, we're a profitable company. Like, we don't have to like SPAC or die. So, we'll be opportunistic in terms of capital.

Scott Galloway: Year-on-year revenue growth, 2020, 2021.

Jim Bankoff: We're not disclosing that. We're a private company, but up and to the right.

Scott Galloway: And, you know, meaning- Okay, hold on. 20%, 40%?

Jim Bankoff: Meaningfully up.

Scott Galloway: And we're profitable EBITDA margins good good same better worse but same better than media companies?

Jim Bankoff: They're strong and they're growing. And they, you know, they're and they're growing while we are still importantly investing in our business, you know, investing in our people and investing in the technology that enables us to be more efficient.

Scott Galloway: Where does most of our growth come from? Organic or acquisitions?

Jim Bankoff: Most of our growth comes from organic. But when we look to do acquisitions, we look to not only acquire new properties, but also new capabilities that will help us grow. And our biggest one to date was New York Media. That was a home run. New York Mag, Vulture, Intelligencer, Strategist, et cetera. It's just a home run in terms of more weight in the advertising market, but also a new subscription revenue stream with New York Mag Digital, an e-commerce powerhouse with the Strategist. So we're going to continue to look for opportunities that not only grow us in both, but grow us in quality.

Kara Swisher: So in other words, we got to get going because I really do have to get to the stage. I got to get to the stage.

Scott Galloway: We'll smell you.

Kara Swisher: Shut up. Elon is waiting for me.

Jim Bankoff: All right. You two are going to kill it. I can't wait.

Kara Swisher: Listen, you need to make a prediction. It can't be Code. It would be great.

Jim Bankoff: All right. Well, an obvious one is consolidation is going to accelerate. We're going to be an acquirer. We're not the only ones. So look for that to happen. I'd say another thing, though, and this will go contrary to Scott's Netflix's inevitable thing, is I think the rise of advertising-supported VOD, AVOD, as it's called. Right now, YouTube kind of dominates that market, but YouTube is not a substitute for, say, linear cable. American households are not going to be able to buy five different subscription things, you know, and they're going to turn to who do you like services like Roku, like Pluto, like Amazon, you know, and I think that's going to be a viable market.

Scott Galloway: So you think the Peacock strategy with the paid options make sense?

Jim Bankoff: Well, you know, I think Peacock could be one, you know, Roku could be one. There you know, we're going to see how it shakes out. But, you know, the ad supported, you know, it's a big country and not, you know, as I said before, not everyone has the income to buy to kind of rebundle things on their own.

Kara Swisher: All right. All right. Perfect. All right. This is great. Your hair is on point.

Scott Galloway: I think he's one of the more handsome media executives.

Jim Bankoff: Oh, thank you for saying that, Scott.

Kara Swisher: Yeah, he is a handsome executive. The thing is, Jim, my only doubt that you're going to get us to the promised land is you're just too fucking nice.

Jim Bankoff: You know, fuck off. And have a great-

Kara Swisher: There we go. You're learning. Let's end on that. Let's end on that.

Jim Bankoff: All right. Thank you, Jim.

Scott Galloway: Maybe I will get rich.

[Ad break]

Kara Swisher: Okay, wins and fails. Scott, I'm just going to have you do them because my voice needs resting. So I don't want to pollute my win with a fail.

Scott Galloway: My win is Angela Merkel stepping down after 16 years. I think that unfortunately, I hope she doesn't mark the end. I hope she just marks the pause in what is an unhealthy... Well, I think there's been an unhealthy transition in our leaders from character to charisma, where we've gone after sort of these charismatic, loud, you know, in a digital world of Twitter, it's more about how loud and persistent you are versus the veracity or the character of your comments. And I think Angela Merkel reeks of character. And if you look at Germany through the last 16 years, I mean, America has been a bit of a shit show. Asia has been an emergent China. If Europe had been an aggressive shit show with national, I mean, there are components of Europe that have been a problem, but the engine of Europe, we talk about the United Kingdom because inherently we just want white people to talk about white people who speak English is thinking they'd set the tone. Germany is the engine of Europe, and it's been a stable, it's been a remarkably consistent grower of its middle class. It's been a liberal society that's managed to grow its economy. I love the fact that she is not an ideologue, but she has, she herself is quite conservative, but she didn't get in the way of gay marriage. She understood that she wanted to go where Germany wanted to go. The majority of people who are not, who have immigrant parents has exploded there, which I think is a good thing. I think she represents a real steady hand, a real ballast for Europe over the last 16 years. I think she's, and only that she started, she started, I like the fact, you know what she did?

Scott Galloway: She got a PhD in quantum chemistry. And she represents this terrible word that I don't think is terrible. She represents intellectualism. She represents being smart.

Kara Swisher: All right, okay, but just, I mean, I think she definitely led, as someone said on Twitter, this 16-year tenure was an example of steel with grace, I would agree.

Scott Galloway: Yep.

Kara Swisher: That said, the center-left Social Democrats won the biggest share, and her outgoing center-right union block was very close, but Social Democrats are now in charge. And a seat held by Merkel since 1990 was run by a candidate in the other party. She was born in 1993. So I think it's very healthy, but the change is afoot in Germany for sure.

Scott Galloway: Yeah, but just my win. A quantum chemist has been the most stable hand of 16 years in the last century. And I think she's led a remarkably honorable life. She could have left after eight years and gone on boards or gone to work for a private equity firm.

Kara Swisher: Agreed.

Scott Galloway: But her heart is with Germany. Let's give it up for Angela Merkel. Chancellor Merkel. Angela. We love her. That's my win.

Kara Swisher: All right, I agree with you. Good one. Okay, no fails. I'm not going to have any wins. The win is going to be you on stage with me at Code. Go on. Go on. That's what it's going to be. I'm being nice.

Scott Galloway: That's right. I'm bringing it.

Kara Swisher: Thank you for answering my questions.

Scott Galloway: I'm nervous.

Kara Swisher: Don't be nervous about the speakers. It's really helpful to me. That was my win is getting good questions out of you.

Scott Galloway: Well, thanks a lot.

Kara Swisher: Anyway, we're going to take listener questions on Friday's show as usual. Record yours at nymag.com slash pivot. Okay, that's the show. We'll be back on Friday to take apart what we are going to make in the next few days. We're making content, especially Scott Galloway and many others. We're going to be on stage. So we're going to have a lot to talk about. Scott, read us out.

Scott Galloway: Today's show was produced by Lara Neiman, Evan Engel, and Taylor Griffin. Ernie Indretot engineered this episode. Thanks also to Drew Burrows, my man, coming to me with L.A. Next to me, tall and handsome, giving me some street cred when I go running on San Vicente later. Make sure you're subscribed to the show on Apple Podcasts. Or if you're an Android user, check us out on Spotify or, frankly, wherever you listen to podcasts. If you like the show, please recommend it to a friend. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back later this week for another breakdown of all things tech and business. I love L.A. I'm staying at the Waldorf Astoria. And this morning I met two actors. And I asked them for more coffee. I asked them for more coffee. Let's get on it. Let's get on it, Kira.