Deep Cuts at Twitter, FTX Hack, and Friend of Pivot Joe Coscarelli

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.

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

Scott Galloway: And I'm Scott Galloway.

Kara Swisher: How you doing today? What's going on? What's happening?

Scott Galloway: Today's a good day. I had lunch with this super smart guy named Andy from J.P. Morgan. So I'm making friends. I'm trying to get out and have playdates.

Kara Swisher: You need to have playdates.

Scott Galloway: Yeah, I do.

Kara Swisher: It's really critical for you. You need little friends to hang around with.

Scott Galloway: 100%. I was thinking about you. I was watching The Crown. I'm catching up on The Crown, the new season.

Kara Swisher: Yeah.

Scott Galloway: It's quite good.

Kara Swisher: I remind you of Camilla. That's who I remind you of.

Scott Galloway: No, she has more hair than you do. I like Camilla.

Kara Swisher: No, no. I think Camilla's underrated. Anyway, I love The Crown and it makes me think of Britain. It's really good. The Queen is pretty pissed at Prince Charles.

[Discussion continues]

Kara Swisher: Today we'll talk about Twitter's rapidly shrinking workforce and also the mystery of FTX's disappearing funds. We'll speak with New York Times' Joe Coscarelli about how Atlanta has become the center of hip-hop. He's one of my favorite writers about us, and he does an amazing online interview show with a lot of musicians. I think he could give us some insight into where the music business is going, too.

But first, the New York Times is reporting that Amazon will lay off nearly 10,000 employees. The cuts will come from its retail and HR divisions, probably as expected as well from its devices team, which works on things like Alexa. This is not as many. They hired so many people over the pandemic, 500,000, something like that. Also, Disney is planning to freeze hiring and cut jobs. According to a memo from Bob Chapik, the company will look for every avenue of operations and labor to find savings. The company's streaming service lost almost $1.5 billion last quarter. And Chapik has promised streaming would become profitable by 2024. The new Star Wars show is getting great reviews called Andor, which many people love. And more layoffs, right? That's really what's happening.

Scott Galloway: There's a time to plant and a time to reap. Or a time to kill.

Kara Swisher: Yeah, look, who would have thunk it? We've been talking about this for a while. If you just look at the math, if you look at the expense, the exponentially increasing expenses around growth companies that are usually people, and you have revenues that are coming out of the pandemic as sort of pre-pandemic and that is declining, they all lead to the same place. The only suggestion I would give to these companies — I'm having a lot of these calls right now with CEOs and the CEOs of the boards I'm on — go deeper than you want. Because Americans and CEOs are just naturally very optimistic and they like to think that any correction is just a V and it'll snap back very quickly.

Scott Galloway: They do. You've talked about this a lot.

Kara Swisher: But there's a proclivity to want to not cut more, correct?

Scott Galloway: Yeah, but your ability — the way I see it is, one, when you go deeper than you want, it's like laying off people. I realize these are real people, but first off, these folks are the most rehirable people in the economy.

Kara Swisher: Yes.

Scott Galloway: These are overeducated people who are very talented and work for places like Amazon and Disney. Their problem won't be getting another job. Their problem will be that they're under the delusion that they're more important than they are. They will go to an organization and they'll expect to get four days of pet bereavement leave. They have had a marketplace that has told them over and over, whatever you want, whenever you want, you're special. And when someone tells you you're special, it's easy to believe them.

Kara Swisher: Sure. And they were special. Let's just say they did get things for a lot. This has been, what, 15 years of this, 13 years of this.

Scott Galloway: Yeah, it's been.

Kara Swisher: So it's a whole generation of workers. In human nature, when the markets are good, you don't go, "Oh, things are crazy and irrational." You say, "Oh, this is normal." And then when they collapse, you go, "Okay, this is an exogenous event." Now, maybe this is the return to normal.

Scott Galloway: My prediction is simple. You mentioned Amazon and Disney's layoffs. Times that by three to five, that's the number of people who will be laid off in the next 24 months. We have an increasing interest rate environment. It's going to do its job. People are going to start spending less money. Disney actually had really robust park attendance. It's got an amazing business. But it's in an arms race and it's spending too much money. Amazon way overhired.

Kara Swisher: Way overhired. Right.

Scott Galloway: Every great company, any company you look at that we talk about, has gone through periods where they realized they got out over their skis. They grew too fast in areas that didn't pay off. And they got to come in and rightsize. The wonderful thing about America, and what I tell my CEOs, is the faster you move to fire, the more generous you can be with people. It just makes sense. If we might have fired you in three months, fire them now and give them six months, not three months severance. The wonderful thing about America is that the faster you let a company fire people without the government getting in the way or regulation, the faster you can rehire them. It is not easy to get hired in France because every company goes, "Jesus, let's think twice because it is impossible to fire this person once they are on the payroll."

Kara Swisher: It's easy to heckle from the cheap seats. I know. There's still pain. I think this is a generation of people used to up and to the right, and it's not up and to the right. I know a few people have been laid off. I saw one of them last weekend in New York, who I'm not going to say the company they work for, but they were asking me, "When do you think the IPO is going to be?" And I said, "Maybe you should think about when the layoff is going to be." That company laid off right away and they got laid off. It was interesting because they were waiting for this IPO to happen. There are no IPOs. I mean, literally, there are no IPOs.

Scott Galloway: Well, exactly.

Kara Swisher: But it still was this idea. They were in this head like, "Oh, it's just a delay of the IPO." I'm like, "No, they have to lay off if they're going to get to an IPO." That's exactly what happened at Airbnb before he did the IPO. Anyway, interesting times and more to come, we suspect.

Scott Galloway: Would this be a bad time to ask Bankoff to pay for my vasectomy?

Kara Swisher: Yes, it would be. That'd be bad. Okay.

Scott Galloway: Look, Vox is not going to escape this either.

Kara Swisher: Never mind. I'll do it myself.

Scott Galloway: No company is going to escape this. None. Very few companies.

Kara Swisher: Yeah, agreed.

[Discussion continues]

Kara Swisher: Apple and Epic are back in court. Epic will once again argue against Apple's restrictions on third-party payment processes. This is the thing they sort of lost this time before the Ninth Circuit. The appeals court ruling may take up to six months. If the cases go to the Supreme Court, it likely won't be resolved until 2025. If Apple is successful, could companies leave iOS entirely for payments? OpenSea, one of the most popular NFT marketplaces, already does this. You can't buy NFTs in its iOS app. It pushes you to the desktop browsers. Apple is getting more aggressive with its 30% cut. Last month it announced that it will take a cut of boosted posts on social media networks like Facebook and Twitter. That's advertising, essentially. So this will be an interesting case. This is just going to wind on forever. Apple kind of won the last round. Eventually, there'll be a resolution, but it's not going to be for a long time. I don't know. What do you think?

Scott Galloway: Yeah, this is actually — so there's news and there's noise. This is news. It really is monopoly behavior. What's so extraordinary about this — I'm a shareholder in both Epic and Apple, and I am absolutely 100% on Epic's side here. To me, this feels like you buy a jacket and the retailer gets a gross margin on it. Apple is a retailer here. But then every time you use that jacket, you're supposed to pay Super Dry or Canada Goose again. I find it very strange that just because you have the app, any purchase within the app, you then have to spiff back to the mob. It feels like a vig.

Kara Swisher: The VIG, yeah.

Scott Galloway: If there were more than two app stores — and really, there's really only one app store for anyone who is a storyteller, is wealthy, or has any opportunity for a random sexual encounter. That's called an iOS user.

Kara Swisher: But Android's big. Go ahead.

Scott Galloway: You know what, Kara? Let's be honest. When you have Android, it kind of is like saying to the world, "Life didn't pan out the way I'd hoped." My brother just shifted from Android to Apple. He had to come over. It's sort of like when you roll up in a Mazda or you carry a Discover card. Nothing wrong with it. But it's kind of saying things haven't really panned out.

Kara Swisher: No, that's not true. That's not true. 100%.

Scott Galloway: All right. In any case, it's a big vig. They have a monopoly on the 14% of the wealthiest people globally. It's one thing if you have a monopoly and you charge 30%, which on its own feels like predatory pricing to me. But then anything you do in-app from that point forward. I think the argument they may make is it's not a commission for the app store. It's the price of using iOS if you want to do any transaction on iOS. But they get 80% margin. It's like $20 billion. I'm not even talking about the app economy or the initial vig on the initial purchase. The in-app purchases post-download of the app, they get something like $20 billion at 80 points of margin.

Kara Swisher: It's a good business.

Scott Galloway: It's a good business.

Kara Swisher: I think this will be an interesting case. They did lose on the first round. Epic did. But they're going back and forth. They were very confident they were going to win in the courtroom here in D.C. It'll be interesting to see what the appeals court does and then what the Supreme Court does. There's been very little tech regulation or tech legal stuff that they've lost. This would be a big one for sure. Maybe we'll have some people on for both sides of the argument, which would be interesting because I agree with you. It's a big deal.

[Discussion continues]

Kara Swisher: Let's get to our first big story. Twitter is shrinking over the weekend. The company laid off over 4,000 contractors without warning. That's nearly four-fifths of the entire contract workforce. Although many people thought, how did they hire that many people? The contractors worked across the company, including in content moderation. One person who's not showing a lot of moderation, the chief twit, he tweeted insults at Senator Edward Markey over the weekend after the senator tweeted about the risks of impersonators, although Markey was a little heavy-handed as far as I think he was. He also amplified — this is Elon — conspiracy theories about FTX money laundering in the Democratic Party. That was interesting. And he complained about the cost of feeding employees and gotten into a Twitter spat with one of the program's administrators, which is exhausting because it's such nonsense. These companies paid for the food and used to argue with me about how much it was worth it. They want to cut the cost, just cut the cost and stop making a thing of it.

I had a whole show on Elon today. I mean, his and my long-time relationship. It was called "Now He's Just Somebody That I Used to Know," which was a song, of course.

Scott Galloway: That's cute. That's really cute.

Kara Swisher: Thank you. It was almost — we have to talk about Elon, but then I thought a little too serial killer. Anyway, he appeared at an event in Bali, I mean, virtually, where he said he was super tired and nobody should be him. World's tiniest violin on that one. What's the goal here? I wish he would like fix the company. I don't know what to say. He wants to build great features, but he's spending a lot of time tweeting stupid things and alienating people. What do you think?

Scott Galloway: Let's talk about positive things. Did you see the image when he was piped in?

Kara Swisher: Yeah, it was creepy. He looked like he was on trial in the future.

Scott Galloway: Yeah, I agree. He doesn't need me to feel sorry for him. People don't want you to feel sorry for them. Sympathy is not something that men accept well. They don't ask for it. But it just felt — I continue to believe, and this is armchair psychology, this guy is unfolding before our eyes.

Kara Swisher: Unfolding, you mean? Unbundling, unwinding, coming undone, whatever the term is.

Scott Galloway: Coming undone is the right word. He does the most insanely non-graceful, stupid, mean things. You can find hundreds, if not thousands, of really smart people who see the genius in it and assume it's all part of some master plan. Maybe they can't explain what it is, but you're playing checkers, he's playing chess.

Kara Swisher: That's exactly the right analogy.

Scott Galloway: I saw you got a lot of that. As much as you would like to think this is all part of some master plan and that Twitter is going to emerge from the ashes and be amazing and that he's going to put us on Mars and he gets it and we don't. No, he's a brilliant man who's going to move the world forward and he should get all that credibility. But be clear, he's incredibly fallible. When you fall into this dangerous notion that we have Jesus Christ — whether it's a guy who says "make America great again" — we got to stop this cult. Jesus Christ, they're not there.

Kara Swisher: Let me just interject. I think the nation is healing in that regard. I think the repudiation of Trump — a lot of people are like, "Oh, wait a second, after all this, maybe he's not so smart." I think a lot of people are wising up and not immediately buying the codswallop that tech pushes at you about these brilliant people. That said, let's be kind. These are really special people in many ways and smart and they were there at the right time, whether it's luck or — there's an expression: is it smarter to be lucky or lucky to be smart? I think it's a combination of those things. I always give credit. When I have people who are like, "See, he was an idiot the whole time," I'm like, "Oh no, his car and rocket stuff is really quite impressive." And they're like, "It's not." And I'm like, "You know what? You don't have to like him, but for goodness sake, acknowledge what's special here."

Scott Galloway: This is not special. I'm not sure what's going on. Do you think he says he wants to build things? He's cutting costs. That makes sense. I don't think that doesn't make sense. The way he's doing it is casually cruel. When I saw that number of contractors and several people wrote to me, they're like, "That was a lot of contractors." I agree that was too many. That's how you cut and raise contractors to save costs. It's easier because they work for third parties, for the most part. You don't save costs and health benefits, but that's how you do it.

Kara Swisher: Well, they're easier to fire. That's what I heard.

Scott Galloway: That's correct.

Kara Swisher: Yeah, exactly. So I see that happening. I was surprised by how many there were, and I could see that's a very easy thing. The food thing is just nonsense. Whatever, just cut the cost. So is Google. Google's doing the same thing. Last year, they were cutting food costs. But I don't know what the goal here is. Is he trying to buy up Twitter's debt? Does he want to kill it and write it off as a loss? Does he want to go bankrupt? Is he just mad that he has to own it? So he's doing a giant billionaire tantrum? I don't know. I called a bunch of people this weekend, and everyone has a theory. Everyone's sort of unifying around nobody knows. There's the latest theory that he's intentionally trying to bankrupt it. That doesn't really make a lot of sense because he'd wipe out the equity and then they'd have to put the company up for bid and a higher bidder could come in. A judge would not look favorably on him in bankruptcy court. If you look at the debt here and the interest payments, he's already in trouble. The company is already — my guess is not able to make its debt payments. So he's going to have to call back his equity players. He's going to have to do more selling and file more forms. This has just gotten — you've never seen an acquisition get this ugly this fast.

Scott Galloway: There's something — and I don't know if I got the pronunciation right here — an Auriga. Do you know what that is?

Kara Swisher: No.

Scott Galloway: It was a title given to a slave charged with accompanying a Roman general. The general was awarded a triumph through the streets of Rome. They basically have ticker tape parades for a general who conquered another army.

Kara Swisher: I saw Cleopatra. Go ahead.

Scott Galloway: The slave, the Auriga, was appointed by the Senate. This Auriga was charged with a relatively simple task: to follow the general and on a regular basis whisper into the ear of the general during the succession, "Memento homo." That means, "Remember, you are only a man."

Kara Swisher: Oh, wow.

Scott Galloway: I thought that was so powerful. What was considered one of the greatest civilizations, the most enduring civilization, said right at your biggest moment, that's when you need to be reminded consistently by somebody that you are only a man. I feel like Elon Musk has never needed an Auriga more than anyone.

Kara Swisher: You know what? I need to get you one. I'll be your Auriga. You kind of are my Auriga.

Scott Galloway: I am. Come on, Kara. I usually am like, "What?" You text me late at night and get angry at me.

Kara Swisher: I do not. I haven't done that in a long time. It was literally twice and you're still recovering from it. Because Sheryl Sandberg called you and read you the riot act and you still wanted to hang out with her and her fancy friends.

Scott Galloway: No, I did not. I have not seen Sheryl in years.

[Discussion continues]

Kara Swisher: It's a tough time. One company is buying up ads on Twitter. It's SpaceX. That's kind of interesting, moving money between his companies. Advertisers who have left Twitter: General Mills, Audi, General Motors, Pfizer, Volkswagen, Mondelez, which is the maker of Oreos. I think Eli Lilly's not too happy about those fake tweets. They've been spending a lot of time getting rid of those, which is a waste of time because he shouldn't have done the thing in the first place. So now he's caught more costs. The advertising is not there. I have talked to all the advertisers and they're like, "No way am I going in here." Everyone's looking for an excuse to pull their advertising from any channel. He's given them the mother of all excuses over and over. It's easier to put it over at Facebook or wherever or not at all or just keep it for yourself.

He's also going to court on Monday, which is today when we're taping this, to defend his Tesla pay package from a shareholder lawsuit. They call him a part-time employee. That's sort of the Jack Dorsey argument, I guess. He's certainly spending a lot of time on this and tweeting ridiculous things. So he does have other jobs.

Scott Galloway: I really think corporate governance matters. It's in some ways along the line of this Auriga. You need people who aren't you, who are fiduciaries, to remind you of when you're not supposed to do stuff. I'll give you an example. In late '99, coming off of Red Envelope, I had a shaved head, a degree from Berkeley. I was young. I had a good rap. I could raise tens, if not hundreds, of millions of dollars for companies in this space called the Internet. I was very full of myself. I went and raised $15 million at a pre-money valuation of $35 million to start an e-commerce incubator in New York called Brand Farm. Not because it made sense to start it in New York, but mostly because I wanted to live in New York and wanted an excuse to relocate to New York. I had Goldman Sachs, J.P. Morgan, Maveron, all wonderful investors, a who's who of wealthy, successful people. I raised the money and my company that I'd started, a brand strategy firm, I said, "I want them to do the brand strategy and the positioning for all these companies I'm going to push out." Kind of like an Idea Labs, but in New York. My board at Brand Farm said, "This is an inter-party deal. They may be the best firm for it, but you need to bid it out. We would prefer that you had an arm's length vendor here."

Kara Swisher: Yeah.

Scott Galloway: By the way, at a minimum, the board at Tesla — I can guarantee you two things. Good corporate governance would be for a group of board members to just check it and go, "Make sure that we're getting as good or better rates on Twitter."

Kara Swisher: Yeah.

Scott Galloway: That SpaceX is getting value for their money. This makes sense. I can guarantee you that did not happen. There is no checks and balances here. There is no board.

Kara Swisher: By the way, SBF — do you know who is on his board?

Scott Galloway: Who?

Kara Swisher: Nobody.

Scott Galloway: Yeah, that's right.

Kara Swisher: Oh, his friends. Nobody. In the condo. The condo called people. He didn't have a board.

Scott Galloway: No, condo kids. The condo kids, yeah.

Kara Swisher: That is sort of like peak — a pretty basic question if you're going to give money to an exchange of a 30-year-old. I'm an agent. I believe President Biden is too old to govern. And I think 20-somethings are usually too young to be fiduciaries for tens of billions of dollars in other people's money. If you don't have the self-awareness to go, "I haven't figured it all out since I just got out of MIT" — if you aren't self-aware enough to surround yourself with a group of people who can give you advice on this stuff. Musk has never had this. Elizabeth Holmes had a board, a lot of old guys and smart guys.

Scott Galloway: I'm just saying. What's happening to Elizabeth Holmes? That's an interesting one.

Kara Swisher: I know. I'm just saying you can get around these people. The Tesla board is a rubber stamp. Come on. I like some of the people on it.

Scott Galloway: What, you mean his brother?

Kara Swisher: Well, among other people. His brother's on the board. I know. Yeah, you can't have your brother on the board. Stop me. Stop right now, Auriga. That means I am the general. And I'm an Auriga to you. Generalissimo, jungle cat.

Scott Galloway: Let me just say one thing to you, Kara. Memento mori.

Kara Swisher: I'm going to say that at every show. Memento mori. I'm going to whisper it into your ear. I'm going to scream it at you, really. I surround myself with people who push back all the time. Too much, actually. Anyway, we advise that you focus on the company and not on creating weird conspiracy theories around food and Sam Bankman-Fried. Did you ever have any interaction with SBF? Did you know him?

Scott Galloway: Yes, one time. I didn't have him at Code. He wanted to — we had thought about it, and then I didn't really understand it, like you said. I was like, "I don't know what he's doing, and it feels sketchy." He seems like the most stable of this sketchy group, but it's still a sketchy group. Then he wanted to do it from remotely, and I just — no. I just never did. One time I had to do a remote thing. New York Times dragged me into something. It was like a five-minute conversation for their staff, and I was incompetent to the task. I didn't know enough. So I just luckily missed that interview. I probably would have been tougher. I thought Matt Levine did a great interview with him where he essentially said, "What you're running is a Ponzi scheme," and he agreed with him, which was kind of interesting.

Kara Swisher: All right, Scott, let's go on a quick break. When we come back, a mysterious hack is the least of FTX's problems, and we'll speak with a friend of Pivot, Joe Coscarelli, about Atlanta, hip hop, and Spotify.

[Ad break]

Kara Swisher: Scott, we're back. The collapse of FTX has somehow gotten worse. Hours after filing the bankruptcy on Friday, the exchange was potentially hacked. Crypto assets worth hundreds of millions of dollars were stolen from the exchange. An FTX administrator warned users to delete all FTX apps and avoid the website, calling it malware.

Scott Galloway: Oh, that's great.

Kara Swisher: Meanwhile, there are new revelations about Sam Bankman-Fried, who resigned as CEO. He was the second largest donor to Democrats in the midterm election. Another FTX CEO, Ryan Salome, gave millions, almost nearly as much, to Trump-backed Republicans. Bankman-Fried was a large investor in Sequoia and other VCs to the tune of $500 million. In a very good move by Elon Musk, he did not take Sam Bankman-Fried's money and actually questioned whether he had it. Smart on Elon's part. Over the weekend, as his net worth dropped from $16 billion to zero, he appeared to be playing video games online. He left a wake of charitable giving. All his charitable giving stuff, which was quite extensive and performative, that was one thing that made me kind of, "What is he up to?" Those people all quit. They were all effective altruists, is what they pushed, which I thought was nonsense. FTX was based in the Bahamas, not the U.S. He never really left there except for sometimes. The U.S. was working on regulatory regimes around it, but never finished, haven't finished it yet around crypto, et cetera. I don't know if better regulation could have.

Scott Galloway: It could have. They were working on it. They were working on it and pretty quickly compared to other tech legislation.

Kara Swisher: There's just so much here that's going to come out.

Scott Galloway: It would be the Jesus Christ of investing if there was an organization that was a Catholic church. I think you could argue that Sequoia Capital are the best investors in the world. They just consistently are one of the best performing venture capital firms in the world. I know this first-party information. Sam Bankman-Fried was calling people. He'd probably done some scenario analysis and thought, "I need to short my balance sheet." He was calling funds in March and raising billions. I know a fund that agreed to invest $2 billion. The fund, as they do, said, "We need audited financials." His response is, "We don't have audited financials. On Telegram, I'll send you some bullet points about the company." That's how he was raising money. And he got the money. Sequoia put out this memo that they've since deleted, basically lauding his genius and pointing to him.

Kara Swisher: Was that a blowjob? Oh, my God.

Scott Galloway: As the type of genius they invest in. Slurp, slurp is what I thought when I was reading it. So that investment went from $200 million to zero.

Kara Swisher: Yeah.

Scott Galloway: I want to take out of this, other than being Monday morning quarterback, a key investment criteria: recognize nobody is as smart as you think or as dumb as you'd hoped. The key to investing, in my view, is diversification. Even if you think — I remember when I got into a Kleiner Perkins deal, I got to invest in something called Della and James, which was a wedding site.

Kara Swisher: Do you remember them?

Scott Galloway: Yeah. I'm like, "Oh, my God, I'm getting in a Kleiner deal." Because I think Prophet was doing their brand strategy. They gave us the opportunity to invest. I thought, "Oh, my God, these are the smartest people in the world." I scraped together a quarter of a million dollars, which was a lot of money for me back then.

Kara Swisher: Still a lot of money.

Scott Galloway: It went to zero in like eight months.

Kara Swisher: Wow. How did you feel?

Kara Swisher: You know, I've gotten used to that emotion. So this is interesting because the Binance CEO CZ — who, by the way, better be careful himself — tweeted calling this a shit show and saying all of crypto will be blamed even if it's one guy's fault. The crypto community has been lobbying for more oversight, including Sam Bankman-Fried, by the CFTC. I know there's — I've been talking to both the CFTC people and SEC people. They've been going back and forth. They say they're being more cooperative than before. Obviously, withdrawals are rising. A lot of these other companies are getting sucked into the maelstrom. Binance has issues of its own, let's just say. You can read about it very extensively. What's amazing is that everybody has been covering this really well. I found out a lot of stuff probably after the fact. What's most interesting is two people, actually. Michael Lewis, who just literally is always in the right place, has been following Bankman-Fried for six months now. Now he's going to be selling rights to the book. I remember him telling me this in an interview. He previously wrote *The Big Short*. Hopefully I think he'll probably write an honest book. He will probably get the ding that why didn't he report it at the time, but you know, he's not — he's a book writer.

Scott Galloway: No, he's not. Michael Lewis has a reputation for never letting the truth get in the way of a good story.

Kara Swisher: Oh, stop it. Hold on. He's a fantastic storyteller, but if you look at the actual data around Billy Beane and Brad Pitt, it's not that exceptional. It's — anyway. I think he's a great storyteller. In any case, we're saying the same thing. He's in the right place. And the same thing with Walter Isaacson, who's written many books on Ben Franklin. He wrote, obviously, the Steve Jobs book. He's been trailing Elon.

Scott Galloway: Michael Lewis deserves everything he's received. He's a fantastic storyteller. He is not a journalist. This will make for a great Netflix drama. And here's my point. This whole crypto thing — by the way, if you become an acronym, I think that means you're about to kill a journalist or go bankrupt. It's not a good forward-looking indicator when all of a sudden your name becomes an acronym. Like SG. I can't call you SG.

Kara Swisher: No one calls me that.

Scott Galloway: See, I'm still in the running. No one calls me that. But anyways, if you look at the entire crypto market — wait, what's your middle name?

Kara Swisher: I don't even know what it is. I'm not telling you.

Scott Galloway: Come on, then I can make one.

Kara Swisher: You are very reckless with my emotions.

Scott Galloway: What is your middle name? Seriously? Honestly? I honestly want to.

Kara Swisher: I don't have a middle name. My parents were poor. My parents were lazy and didn't give a shit and didn't think long enough to give me a middle name.

Scott Galloway: You have to have a middle name. My dad wanted to name me Scott with one T after Scotland, which would have been really cool. And by the way, if they just moved me to Scotland and it gave me long enough for me to have a Scottish accent with my rap and a Scottish accent — hello, player.

Kara Swisher: You know what I would have named you? Ewan?

Scott Galloway: Barbara. You would have named me Barbara? Barbara Galloway. But go ahead. This is — if you look at the crypto market, and I'm thinking about doing a blog post on this, "News Versus Noise," coining or parroting Jessica Yellen's great site. But if you look at the crypto market, it's much more spectacle than significant. The entire market capitalization of the crypto market is $800 billion.

Kara Swisher: Yeah, it's not very.

Scott Galloway: Amazon has shed more value than the entire value of the crypto market. So while it's going to make for a great Michael Lewis-produced docudrama, keep in mind, Kara — small. As literally this quote-unquote "layman moment" was happening Thursday and Friday, what did the markets do? The markets ripped up.

Kara Swisher: Yeah. Nobody cares.

Scott Galloway: So. Yeah. It's still interesting.

Kara Swisher: Yeah, and we're fascinated. It's the same way — another example: 3,750 layoffs at Twitter, three times the news stories of a layoff that's a third of the size. Amazon loses Facebook in value.

Scott Galloway: That's right. So the crypto market is more spectacle now than it is significant.

Kara Swisher: All right, let's bring in our friend of Pivot. Joe Coscarelli is a cultural reporter for *The New York Times* focusing on pop music. He's also the author of *Rap Capital: An Atlanta Story*, about how Georgia's most populous city has become the center of the hip-hop world. Welcome, Joe. We're not hip-hop experts. My sons are, so we appreciate you coming on. But there's a lot of things we want to talk about around your book and also Spotify and the music world and online. I know you're super well-versed in that. So talk about the book itself. Atlanta has taken the hip-hop crown, and most of its history has been New York and L.A., I believe, according to my sons. But I quizzed them this morning. Tell us a little bit about how Atlanta became this.

Joe Coscarelli: That's about right. You know, traditionally, New York and L.A. are thought of as the hip hop centers. There's been stuff out of Chicago over the years.

Kara Swisher: Britain.

Joe Coscarelli: Yes. The U.K. is big right now. But basically for the last 30 years, Atlanta has been this sort of pesky upstart. And it just keeps taking the crown over and over again. That starts with groups like Outkast and LaFace Records. Usher came out of Atlanta. TLC. Some record men in the 90s really started making a name there because it was a black mecca. It's this place that's known for civil rights. It's known for historically black universities and colleges. There's a real creative energy there. And it's also affordable. It's the South, but it's a city. From then on, they created this infrastructure and it just allowed generation after generation of sort of more experimental rap artists to really come from nowhere.

Kara Swisher: Killer Mike is there, right?

Joe Coscarelli: Yeah, Killer Mike came out of the same Dungeon Family scene that Outkast did. And you just get these — it has a small town feel. I think that's really important for any music scene. When you think of Laurel Canyon in the 60s and 70s, or you think of London for punk music and post-punk in the 70s and 80s. It's these groups of people who grew up together — their family, their friends, their rivals.

Kara Swisher: And they create communities.

Joe Coscarelli: Exactly. I interviewed Killer Mike about that, about the ability to communicate. And it's not just hip-hop, there's others.

Kara Swisher: So talk about the impact of hip-hop, because it seems like hip-hop dominates everything now. People tried to ignore the influence of hip hop for so long, ever since the late 70s, early 80s, when it really became mainstream. People were saying, "Oh, this is a fad." We've seen this with rock and roll as well. But now we're at a moment where hip hop is outlasting rock in terms of its flexibility as a genre and its cultural dominance. You see it in tech, you see it all over the internet, TikTok. Every slang word that people are using comes from rap music. Even people who don't know who these modern artists are, their influence trickles down. Or more accurately, it trickles up through young people, through teenagers. This is the youth music of my lifetime. And you see it in sports and in business. All these Fortune 500 companies are trying to borrow cool from these rappers. Is it because of streaming? Is that what has made it more so as it's moved forward?

Joe Coscarelli: Streaming really revealed that rap was the dominant mode for music and popular culture. It changed who the gatekeepers were. And it allowed us to see in raw numbers on Spotify, on Apple Music — go open your iPhone and go to the Apple Music charts. It has dominated songs one to a hundred. Maybe a little bit of Taylor Swift in there. But these are rap artists. These are regional rap artists, specifically southern storytellers, really dominating this conversation. Streaming, I think, just opened people's eyes to this. And now you have all of the old fashioned companies and gatekeepers trying to play catch up because they see where the raw energy is.

Scott Galloway: Rap, I would say — maybe with the exception of superhero films — it's the dominant cultural force in entertainment over the last 20 or 30 years. Money, popularity, everything. What do you think of the pillars that led to that moment? It had to be more than just the music. I always think of it as sort of cultural appropriation — the music you listen to is the culture you want to absorb personally. What were the pillars that made this the moment for rap? And I'm also curious if you see any of those moons lining up around another art form.

Joe Coscarelli: Youth culture has always been about danger and sex and pissing off your parents. We've seen that since NWA — except rock and roll is not risky anymore. Rap is subversive. It's fun. It's party music, but it's also telling you stories about a world that you might not get to see every day. It works on two levels. That's something I really wanted to drive home in the book — there are people who relate to this music firsthand. This is music that is telling of underprivileged neighborhoods, of racism in America, of a forgotten generation of specifically young black men. People relate to that struggle. When you have a groundswell of neighborhood stuff — and this is why Atlanta has always been so great — even in the internet era, the Atlanta stuff is really happening on the ground. It's a grassroots scene. These artists are local celebrities, sometimes even before they start making music, from just being guys who are known to get money and be in the club.

Scott Galloway: Like Nashville for country.

Joe Coscarelli: Exactly. Like Nashville for country. There really is this grassroots scene. And then you get the kids from all around the country who want to borrow some of that cool. We've always seen that in youth culture. And rap music is youth culture.

Kara Swisher: They're also very active on social media. You're saying TikTok and things. There's a real different relationship between artists and fans now, I think. There's these direct relationships. How does that affect it? Because it feels as if they follow the people, not the labels. The way they discover stuff is so different than the way we did. We sort of got an album drop in very traditional ways. But the way they discover stuff is really fascinating. How they trade it among themselves. "I found this. What about this?"

Joe Coscarelli: Definitely. The fan base is so intelligent online and so young. Rap was really primed for this because rappers were always sort of making their own way. When technology democratized the tools needed for the industry — when you didn't have to go to a studio and spend hundreds of dollars for an hourly recording session, you could just do it on your laptop, upload it, shoot a video in your house, upload it to YouTube, start an Instagram page, make your own dance craze. This is a DIY culture. Then you have the corporations that can swoop in and take it international. But this happened from the jump. You think of somebody like Soulja Boy. I don't know if you guys remember that dance craze. That was almost 20 years ago at this point. But he was one of the first rappers to be on MySpace, promoting himself hands-on with the crowd. This is something that has just grown and grown. These artists can do it basically by themselves.

Kara Swisher: You're also talking about entrepreneurship. One of the reasons I wanted to interview Killer Mike is because he had a lot of things going on. He had a bank, he had a restaurant or a club, all kinds of things. Can you talk about the entrepreneurship?

Joe Coscarelli: Yeah. Whereas you think of rap music, you think of success. This is music that comes from struggle. You have to start from nothing. You have no credibility. Unlike in rock or in punk — you think of the independent rock of the 80s and 90s, and selling out was the antithesis of the ethos. Whereas in rap, it is all about what you can achieve. It's about showing other people from your neighborhood that you came up with — the people who might not have made it out — what is possible. Because of that, think of Jay-Z, one of the best known businessmen in America at this point, someone who is looked to as a hero. For every Jay-Z, there's hundreds of local artists who do the same thing for their direct community. It's all about the proximity. From behind our computers, we might look at these guys and think, "What's with all this jewelry? What's with these fancy cars, these big houses, the materialism of rap?" But this is coming from a place that was told over and over again in America that it could never achieve anything. These echelons of the art world, the stock market, were not for them. When you overcome what some of these guys have and women have overcome, these material possessions are trophies and their armor and their middle finger. They're an FU to America and the power structures that we live under.

Scott Galloway: There's an authenticity to it that resonates with people. I wanted to talk about Spotify. I know you've thought a lot about it. From a consumer and a business standpoint, I don't think any company has distilled an entire medium down to a searchable icon. I think what Spotify has pulled off is nothing short of remarkable. At the same time, it's off 75% from its high. It's worth $16 billion, which isn't a lot. It's below its IPO price. From a consumer standpoint, you look at Spotify and you would just go, "Remarkable, this should be worth more than Amazon or Meta." That's what I would think if I didn't know the business. Why has this business from a shareholder standpoint not worked?

Joe Coscarelli: People don't value art. I don't know how else to put it. The idea that you can have almost the entire recorded history of human music at your fingertips for however much it is a month — the labels are making a ton of money. Spotify and streaming in general rescued an industry that was long gone. When they got off their highs of selling a little plastic disc for $20, and when that train stopped, people thought it was a wrap for this industry. But we see this over and over again in the arts, and especially because the labels are the ones really making money off of this. Artists out here are struggling. You see artists complaining about the fractions of a penny that they're making. Unless you're a Drake or a Taylor Swift or a Lil Baby, people aren't really making money off of these streams. Once people realize that everything is just there for you, the math just isn't there to be able to support all of these record companies and also the artists for the piddly monthly fee that we're paying. And there's endless new discovery on TikTok.

Kara Swisher: One of the things was the rise of Trump. One of the things I was noticing — he was a popular figure in rap for a long time. He's in hundreds of songs. Talk a little bit about the political aspects of this. They certainly had negative responses to Trump, but he was also something to manipulate for entertainment.

Joe Coscarelli: Trump is nothing if not a pop cultural icon. Throughout the 90s, he's been courting rappers for 20 or 30 years. There's a Nancy Jo Sales piece in *Vibe* from the 90s about Trump hanging out at clubs with rappers. Up until his very last day in office, he was doing this. He pardoned Lil Wayne and Kodak Black in his last wave of his magic wand. You saw this in his relationship with Kanye as well. He's always after the Black community. They see him as an outlaw in a similar way. There's a kinship there between certain rappers and Trump in the way that he's been able to say and do whatever he wants. Also in his tackiness, his flashiness, his vulgarity, his willingness to put his wealth front and center. It's been complicated. Hip hop, just like the black community, is not a monolith. There are as many anti-Trump songs as there are pro-Trump songs. But he operates in this celebrity milieu. He's always been able to maneuver his way around it.

Kara Swisher: Now, you mentioned Kanye. I mean, you've had the same reaction we all have.

Scott Galloway: I will say this: Kanye is a sneaker mogul who used to rap. He hasn't been really relevant — now he's not a sneaker mogul anymore. He really hasn't produced anything relevant in a while, has he?

Joe Coscarelli: Almost nothing of note. This guy has gotten away with saying whatever he wants for decades. I think he just continued to push it. You're a billionaire, you're removed from your roots, you're removed from your music career, which is the thing that initially people paid attention to you for. We see this over and over again with the richest and most powerful people in the world.

Kara Swisher: We've noticed.

Joe Coscarelli: Yeah. As soon as people stop telling them no, they're just going to keep pushing. Kanye is in his mid-40s. His time is up in the rap world. He's had this success in fashion and as an influencer and as a provocateur. But I think he's out of runway right now. How the mental health stuff interacts with that is way above my pay grade.

Scott Galloway: Joe, would you counsel someone to go into the music business right now? Do you think it's a good business? At 22, just out of college, I'm interested in music. I'm interested in tech. I'm interested in pharmaceuticals. Would you counsel for or against going into the music business?

Joe Coscarelli: If you want to be behind the scenes, there's more opportunity than ever. The streaming services, the labels, the publishing companies — you see private equity hedge funds getting in the catalog business. This is a booming business right now with streaming. Being an artist has always been an unforgiving field. Fame is a disease. Wanting fame is a disease. If you want to be a musician, it better be the only thing you can think about at any given moment. It better be in the top 0.01%.

Scott Galloway: Exactly.

Joe Coscarelli: But on the business side, sure. There's definitely innovation to be found and money to be made.

Kara Swisher: All right, great. What's the next capital? Rap capital? What's the upstart now?

Joe Coscarelli: New York is coming back. There's these drill scenes in Brooklyn and the Bronx. Unfortunately, they are quite tied to gun violence and tragedy, especially among young people. But this is America and people can't look away from that stuff. That's what we want in our movies, in our TV, and in our music — violence and drama.

Kara Swisher: I've been listening to a lot of drill.

Scott Galloway: Well, good for you.

Kara Swisher: Not by choice. Not by choice. But nonetheless, I know a lot about it now. Anyway, the book is called *Rap Capital: An Atlanta Story*. It's out now. Thank you, Joe Coscarelli. We really appreciate it. People should watch out for Joe's amazing stuff on *The New York Times*. His videos make me understand stuff I don't understand. I think they're wonderful. Thank you so much.

Joe Coscarelli: Thanks so much. Thanks for having me. It was fun. Nice to meet you, Joe.

Kara Swisher: He's a thoughtful writer. I've always liked him.

Scott Galloway: Yeah, he's a great writer working for *The New York Times* writing about rap culture. It says something really wonderful about America.

Kara Swisher: Scott, one more quick break. We'll be back for wins and fails.

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Kara Swisher: Okay, Scott, let's hear some wins and fails.

Scott Galloway: My loss is — America has always been about individuals and exceptionalism, and I think it's gone too far. A big source of comfort for me is atheism and believing that there is no Jesus Christ. As America has become more educated and wealthier, our reliance on a super being or church attendance goes down, but we still try to find these all-knowing individuals that will lead us to the promised land. I think it's gotten out of control. I'm going to call it a cult of personality. The big fails last week were individuals — this Jesus Christ idolatry of the individual. Believing that everything a tech person does is genius and they're infallible. Believing that a 30-year-old is not subject to any sort of corporate governance. Believing that an individual who consistently — whether it's Kari Lake or Donald Trump or whoever it is — is bigger than our democracy. You should trust them. When they say there's voting irregularities, even though they have absolutely no evidence of that, we should defer to them because they're Jesus Christ. Last week was a fail for these cult-like figures. It directly goes to my win. My win is institutions. Institutions matter. The connective tissue around a nation, a culture, are institutions. It's what binds us together. Whether it's the electoral process and the democratic process — the largest democracy in Latin America, Brazil, is holding a peaceful transfer of power. Whether it's the Arizona Electoral Board, which appears to be holding — run by a Republican named Bill Gates, weirdly enough.

Kara Swisher: But go ahead.

Scott Galloway: Whether it's the SEC or FINRA that people are all of a sudden finding have value — these institutions that actually think about this stuff and try and protect retail investors. That institution called FDIC insurance — what do you know? It has value. This is a terrible week, but nature is healing. I'm not an optimistic person, Kara.

Kara Swisher: You are not.

Scott Galloway: Last week was a wonderful week for the West. NATO, the European Union, the U.S. dollar, the Fed — I think is doing a good job. Biden's meeting was G, calming things down. Anyone who decides that they are bigger than the electoral process — and we've had not very many, but we have had some Democrats who lost elections. The Georgia election was largely, in my view, won by a person who said, "I refuse to fall prey to this notion around election misinformation." The Republican mayor won. I think in large part because he was seen as sane. He wasn't falling into this idolatry of innovators or this cult worship. Our institutions matter. Last week was an enormous win for institutions across the West.

Kara Swisher: All right. Mine — I would say, I haven't seen it yet, but I really want to. *Black Panther: Wakanda Forever*. I saw it.

Scott Galloway: Oh, don't tell me yet.

Kara Swisher: $180 million opening weekend. Highest November debut ever. By the way, Sam Sanders, host of the *New York Magazine* podcast *Into It*, talks with *New York Times* cultural critic Wesley Morris — another fantastic guy — about what big franchises like this actually owe fans. Did you love it?

Scott Galloway: Did you love it?

Kara Swisher: You're going to love it. It's a little slow in parts, but it's a great movie. It's an important film because — and I apologize, I'm hijacking your win.

Scott Galloway: Yeah, you are.

Kara Swisher: For the last 30 or 40 years — actually, I don't know, the last 400 years — we've been romanticizing in film really strong, good-looking white dudes. This movie has so many strong, beautiful women of color. Angela Bassett nominated — oh, I love her. She should have won Best Actress for *What's Love Got to Do with It*. She is an amazing actress. She is wonderful in this. The whole movie has all these incredibly strong, beautiful women of color.

Scott Galloway: Tell me not more. I love Angela Bassett. She's one of my favorite actresses. I would put her near the top. I love her. I find her poignant and beautiful and funny, everything else.

Kara Swisher: The other thing is Dolly Parton — speaking of which — gets $100 million from Jeff Bezos for being herself. She can give it away to charity. I thought that was great.

Scott Galloway: Well, it's good to see Dolly finally have some money.

Kara Swisher: No, but she's giving it away to charity.

Scott Galloway: Good, good. Give away Jeff Bezos's money. Give all the money to Dolly Parton to give away. He announced he's giving his money away, right?

Kara Swisher: Yeah, he's giving his money away. But nonetheless, Dolly Parton should run it all.

Scott Galloway: And then Kari Lake's failure here — she's been such a nasty piece of work. Awful. Terrible American. I have to say, *SNL* nailed her. By the way, someone who made fun of Trump's weight a couple of years ago, made fun of the Republicans a couple of years ago, and then had the — I'll tell you why she lost. She had to insult a dead man, John McCain, in front of McCain's supporters. "Get out of here." Who says to voters, "Get out of here, I don't want you"? Republican voters, when you're running as the Republican candidate. They gave her a big "fuck you." She's not going to lose by a lot, but it looks like she's losing right now. It's well-deserved given what a nasty piece of work — a Vaseline-encrusted nasty piece of work she is. Some serious Faye Dunaway plays Joan Crawford energy there. Whatever. Just bad. Both of those are nicer. Just deserves. And by the way, *SNL* — if you haven't seen it, Cecily Strong nails it.

Kara Swisher: Oh, my God. Genius. It was creepy. It was just fantastic. Go do yourself a favor.

Scott Galloway: Anyway, that's our wins and fails. Nature is healing. Things are getting better, we hope. And Kara is making friends in London.

Kara Swisher: Memento mori, as we like to say.

Scott Galloway: There you go.

Kara Swisher: We want to hear from you. Send us your questions about business, tech, or whatever's on your mind. Go to nymag.com/pivot to submit a question for the show, or call 855-51-PIVOT. Scott, that's the show. We'll be back on Friday for more. Please read us out. Today's show was produced by Laron Neyman, Evan Engel, and Taylor Griffin. Ernie Intertot engineered this episode. Thanks also to Drew Burrows and Emil Severio. Make sure you're subscribed to the show wherever you listen to podcasts. 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.

Scott Galloway: Memento homo. You are only a man.