DeSantis Drops Out, Stock Market Soars, and Guest Aileen Lee

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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 broadcasting from inside Scott's bedroom. No, I'm not. I'm actually in a studio. Not a lot going on there.

Scott Galloway: No, your lovely cleaning person is here. And they feel bad.

Kara Swisher: Anyway, it's great. Cleaning person?

Scott Galloway: Yes, person.

Kara Swisher: I'm trying to be. I'm being woke. I'm being woke. Anyway, I am enjoying your apartment. Thank you for letting me use it. I have some personal stuff. And also, I'm going to see Madonna tonight. Do you know that?

Scott Galloway: That's awesome. And I enjoy it when you're there. It makes me feel good that I have friends there. Madonna, that's going to be really interesting.

Kara Swisher: Yeah, she's being sued in Brooklyn, I guess, where her last show was. This is at Madison Square Garden tonight. But she was late. She was a couple hours late. And so some people felt that was rude of her to do or suing her. I don't care if she's late. I have to go to dinner and then I'll go see Madonna.

Scott Galloway: Yeah. I forget who it was. All the heavy metal bands used to think it was kind of cool to show up four hours late. I'm like, you know, I need to get home, put in my catheter and go to sleep. Let's get this show going. Her constituency is not young. So it's kind of interesting.

Kara Swisher: Before we be like whatever Madonna. So I be curious to see. She was always a performer more than a singer, let's be honest. But always the songs were so fun. It'll be interesting to see if it's like the Rolling Stones, which I think people still find enjoyable. Or it's kind of sad. I don't know.

Scott Galloway: I bet it's going to be great. She has so many talented people around her. And I just think it's going to answer the question that everyone's asking. And that is, where are all the white parents of those Taylor Swift fans? They'll be at this Madonna concert. It's going to be literally the land of 50-something white people. What was your first concert, Scott Galloway?

Scott Galloway: I went to go see Squeeze with Maureen Burke at the Greek Theater.

Kara Swisher: I love Squeeze.

Scott Galloway: And do you know who opened? Who they opened for?

Kara Swisher: Who?

Scott Galloway: They opened for the Go-Go's. And the Go-Go's, everyone in the crowd was so passionate and knew the songs so well from, I think it was Beauty and the Beat, that you couldn't hear the Go-Go's because the audience was singing so loud.

Kara Swisher: I love the Go-Go's. Oh, they were great. My favorite was that they broke up for artistic differences. You got to ride that puppy. If you're that for the Go-Go's, you don't do that.

Scott Galloway: Oh, yeah, you don't give that shit out. Also, like us, we ride that puppy. That's what we do.

Kara Swisher: I would argue those differences were not worth breaking up over. Can we have artistic differences? I think we should break up over artistic differences.

Scott Galloway: Yeah, we have a difference. I fold. I agree. And then we move on.

Kara Swisher: No, no, no, no, you do not. My first concert, thank you for asking, was Kansas.

Scott Galloway: Kansas? Dust in the Wind?

Kara Swisher: Yeah, I was young. God.

Scott Galloway: At least you've got to be a good lesbian. Was this a date?

Kara Swisher: I know. Yes, I went with a boy. Yeah, I think it was like seventh grade. I don't know. It was at, I think it was Jadwin Gym in Princeton, because that's where I grew up. And it was Dust in the Wind. You know, that's a good song.

Scott Galloway: It is a good song. To Styx once. That's soon after Come Sail Away.

Kara Swisher: Come sail away, come.

Scott Galloway: Yeah, I had a much better musical upbringing. At UCLA, we had English Beat, REM, The Clash.

Kara Swisher: Oh, yeah, yeah. I went to REM. I saw Prince perform. I saw George Michael perform. Yeah, anyway. Anyway, it was great. It was great. I did see Bruce Springsteen. He was amazing, too. Also, you know who was really good? Barbra Streisand.

Scott Galloway: Barbra Streisand. I did not see Bess. A fucking hell of a concert.

Kara Swisher: I did not see Babs. She carpeted, when I was younger, it was a cap center in DC. That was after you came out.

Scott Galloway: That was after you came out.

Kara Swisher: It was me and the gays. It was me cause I'm a gay man. But she carpeted all the cap centers. She carpeted it so it sounded better with white carpet. It was such a move. It was such a baller move. Anyway, we have a lot to talk about. That was a nice little walk down memory lane. But let's break up over artistic differences.

[Transition]

Kara Swisher: Today, we have so much to talk about. We'll talk about the shape of the presidential election heading into the New Hampshire primary. And by the way, lots of snow here on the East Coast in general. Major issue on the minds of voters right now. The economy, we'll discuss the good, the bad, and what investors need to keep in mind because the economy's roaring, at least the stock market is. Plus, we'll talk with a friend of Pivot, Aileen Lee. She's the founder of the VC fund Cowboy Ventures. She used to work at Kleiner Perkins, the person who first coined the term unicorn for startups with billion-dollar valuations. And she's got some new things to say about that. So we're very excited about that. But first, Scott, you'll like this one. Apple's Vision Pro will be lacking some key apps when it debuts. Netflix, YouTube, and Spotify have signaled they will not launch on the Vision OS software, also causing Apple headaches. Software makers are not thrilled with Apple's new approach to App Store commissions. You know what we talked about last week. It has been forced to stop selling watches with blood oxygen tracking, and the AI team tasked with validating series accuracy is shutting down and relocating to Texas. Plus, the company has warned that revenue will be flat in quarterly earnings following its longest sales slump in decades. So we're going to try it out. I replaced you with some CNN people, including Chris Wallace.

Scott Galloway: You gave away my spot?

Kara Swisher: I gave away your spot to Chris Wallace.

Scott Galloway: That's okay. We have a table for eight, a red lobster, and we have seven. I'm giving your spot away.

Kara Swisher: Well, okay. Well, okay. Apple people are so sad you won't try it.

Scott Galloway: Yeah, I bet they're real disappointed. I went to that demo with their credit card, and they have this, they rent a loft in Tribeca that feels like the second home of a Bond villain. And then a very high EQ person gives the seventh spiel in a row, who comes up in, you know, Vince, well-appointed clothing, someone who's, you know, very attractive, but not hot, who's also ethnically ambiguous, if white was being ethnically ambiguous. And then they take you through all the stuff and I sit there and I pretend to be polite. I think these things are so awkward. You know, this one you have to see. I'm sorry, you just do. It's a thing, it's a thing.

Kara Swisher: Look, you don't have to wear it. I'm gonna have it, you can try mine. I will let you know.

Scott Galloway: You're getting one? They're sending you one?

Kara Swisher: Yes, with my no, I'm buying it with the Zeiss lenses. I'm getting a free share. But do you have access to it? Because the only well anyway. Yeah you can order it. It actually orders are it coming in a month or so. It's on track for orders. I don't think it's like selling like gangbusters, but it's on track for orders.

Scott Galloway: As long as you're getting regular sex from Amanda, I'm fine with you getting it.

Kara Swisher: Okay. Thanks for that. Let me just say, you're going to try it. My, mine. You're going to try mine.

Scott Galloway: I'll try it. I'll absolutely try it.

Kara Swisher: Okay. All right. When I have it. We'll have a little party over here at your apartment. I'll come in. We'll cuddle. We'll do a little cuddle puddle. We'll do the thing.

Scott Galloway: Okay. Neither of us are cuddlers, let's be honest.

Kara Swisher: No. No, we're not. We really are. I like to sleep by myself.

Scott Galloway: No. I'm always like pillows and Kara.

Kara Swisher: No, I don't like cuddling. When I have sex and I climax, that's my way of saying, can I call you an Uber?

Scott Galloway: Oh, my God. That's good. That's not good.

[Transition]

Kara Swisher: Anyway, Nelson Peltz is making a lot of noise over at Disney. I will push people to a Bill Cohen piece about this, what I thought was super smart about what's happening. He's been covering it really well. Peltz thinks that he and his former Disney chief financial officer, Jay Rosullo, could be, quote, Batman and Robin if shareholders would just elect them to the board. Peltz's goal is to boost stock performance, partly by increasing streaming profit margins, which currently lose money under CEO Bob Iger, as if he's not working on it. Bill was making this point, is that Peltz has no particular expertise here to do a lot of the things that Iger is probably working on right now. It's this try-on fund. He's also got one of the other big Pearl Mudder shares. He's voting them. They're pushing back on Iger. I think Iger has made some good moves here by bringing in some very significant board members, including the former, I think, chairman of Morgan Stanley, who knows about, you know, one of the things is who's going to replace Iger. I don't know. What do you think? Peltz keeps trying.

Scott Galloway: If the question is, is Bob Iger this first ballot Hall of Fame CEO who looks to be doing the right things, or should they put Peltz on the board? The answer is yes. Put him on the board. He's purchased $3 billion worth of stock.

Kara Swisher: No, he doesn't have $3 billion. He has some, and then he's using Ike Plumerotters, which was not well reported by the journal, but it's a little bit different. But go ahead.

Scott Galloway: Well, he has beneficial ownership of $3 billion in shares, which I would bet, and I don't know this, but I would be willing to speculate that is more ownership than the entire board combined.

Kara Swisher: Yes, it is by a large...

Scott Galloway: This is what a board is supposed to be. This is what a board is supposed to be. The non-management, but go ahead. Sorry.

Kara Swisher: A board is supposed to be fiduciaries for the stakeholders, which is Latin for shareholders, but in a woke world, we've expanded that to stakeholders. But 90% of the time it means shareholders.

Scott Galloway: Okay. And there's no better way to be a better fiduciary than to own a shit ton of shares. In addition, just strategically, it shuts him up. He's going to be pissing and heckling from the cheap seats for the next 12 months, once you put my advice, and I've been through this a lot as both a person trying to get on boards and a person on boards where there's someone trying to storm the gates, the fastest way to get them to shut up is just put them on the board. Come on in.

Kara Swisher: Well, Bill is making, Bill Cohen is making the argument by this guy, he calls him the smiling crocodile or some other name for him. And that he, when he gets on boards, he gets rid of CEOs. He's got like, he's a very crafty fella. So he was saying it's not, he's only going to be on for a year. It's not going to matter. He doesn't have the expertise. That was what Bill Cohen was saying, and I would tend to agree with him, is that, you know, it worked for him to ignore him last year. And given the moves Iger has made, including putting these very qualified people on the board who have all the abilities in the areas they need help in, what do they need this guy for, just to shut him up?

Scott Galloway: Generally, what you find when you get on a board after a hostile proxy contest, and nobody wanted you on the board, especially the existing board, but they're forced to have you on the board, which is, this is what the case would be. You find out one, you're not as smart as you thought and B, they're not as dumb as you'd hoped. And the only way-

Kara Swisher: I don't think he thinks Bob Iger's dumb, but go ahead, but go ahead, go ahead.

Scott Galloway: Well, you understand my meaning here.

Kara Swisher: Yeah, yeah.

Scott Galloway: You recognize that the situations are complex and these are usually smart people trying to do the right thing. Sometimes you do get on the board and the first thing you do is kind of, there's two board meetings that happen at every company. There's the actual board meeting, and then there's the actual real meeting that happens in the parking lot after where the two or three directors that matter get together and say, do we think this guy or gal is really the right person? That's the second board meeting. That doesn't happen with Bob Iger. He's such an accomplished executive. He's so smart. From all I can tell in terms of how he's moving around the chess pieces, he's doing exactly what he should be doing. This entire thing is going to be a distraction for the next 12 months. And Nelson Peltz is smart and is going to have an army of PR people constantly shitposting the company turning everything from chicken salad into chicken shit. Put him on the board. Make peace with this guy or put on a representative.

Kara Swisher: I'm going to go opposite you. I think he's doing just the right thing. He's put two new people on the board who address the issues that Peltz has.

Scott Galloway: Yeah, great directors.

Kara Swisher: You know, new ones. And I suspect he is moving very carefully towards who's going to take over him. And the guy from Morgan Stanley certainly did his changeover rather elegantly. So, you know, Peltz isn't obtuse. He does understand what he's doing here with the jazz hands and everything else. But, you know, he's persistently not had him on there. And I don't know. I think Iger's, we'll talk about this later, but I think Iger's strategy with DeSantis was correct. Like, punch him in the nose and then just wait.

Scott Galloway: Yeah, just wait him out.

Kara Swisher: Wait him out. You know, we'll get to that in a minute, but we'll see what happens here. I don't think he's going to put him on the board. You think he should. Do you think he will?

Scott Galloway: I think there's so much ego involved now and they're so angry at each other. I mean, what it comes down to is this. If someone is willing to put that kind of capital at risk in your company, it automatically qualifies them as a decent fiduciary and they should be appointed to your board.

Kara Swisher: Okay. All right. We'll see what happens.

[Transition]

Kara Swisher: One of the things we've been talking about in recent weeks, anti-Semitism on campuses and DEI initiatives. Well, according to new reporting by the New York Times, shocker, that's largely because of a very coordinated effort by a conservative think tank called the Claremont Institute. The Times obtained thousands of documents revealing the efforts to fight what they call, quote, the leftist social justice revolution in American schools. You've got to read this piece. It's really, I mean, it's just, this is what we all thought. They did this with parental rights. They do this on every issue. And they're very good at it, including judicial, putting people in place like that group, the Federalist group or whatever, that put judges in place. Also, I've said this a lot, that it's a plan. And I think Hillary Clinton was right. There is a vast right-wing conspiracy. I don't think it's a conspiracy. I think it's a plan. And in relation, and something you wanted to talk about, Harvard announced task forces to tackle both anti-Semitism and Islamophobia last week. Former Harvard President Larry Summers blasted the university's choice of the person to lead the anti-Semitism task force because it's someone who he says, now I'm just going to use him, has downplayed the issue. And he said he lost confidence in leadership there. So Larry Summers is angry. So tell me what you think.

Scott Galloway: But I haven't read the Claremont whatever it's called papers. Can you give us a sense of what they're up to?

Kara Swisher: This is how we're going to do it. These groups, whether it's Heritage or Claremont, have these thinkers or Manhattan Institute, another one on the right. They come up with these plans of, you know, this is our 10-point plan to do this. This is how we're going to court politicians, how we're going to do this, how we're going to do that. And they act like it's a bottoms up thing. It's very similar to everybody wants book banning. Everybody wants parental rights. That worked for a second and a half for Glenn Youngkin. And then voters were like, just a frigging second here. It doesn't, you know, I think it's, look, it's what Democrats do. Republicans happen to be very good at it, right? Especially right wing ones in terms of going from the bottom to the top to the bottom top and really using all the various levers to create a movement. And in some cases it works, like with trans people and swim and athletes. It didn't work with the bathrooms, right? Their little effort didn't work because it didn't land well. But it's definitely not coming from grassroots anything. They create grassroots excitement. And so this is just like, look, this is how they do it.

Scott Galloway: Yeah, so it sounds like it's another what I'll call unproductive attempt to find a vehicle or a battlefield to engage in culture wars, to try and make the other side look stupid as opposed to actually going after the issue. And the issue is, and I think there's some merit here, that universities have morphed from being centers of excellence to places of social engineering or some sort of political indoctrination. And a lot of people on the right feel that it's very one-sided. And I think there's some truth here. And when it goes too far, it can end up in bad places. And ultimately, the snake might eat on its own tail and you might have instances of racism. And I think we've seen this on campus. Having said that, what is the solution where everyone can rally around as opposed to just giving people fodder from the extremes to try and shitpost each other? And where I move to is like, how do we move to solutions? And I think the following is to acknowledge that affirmative action is a good thing, that some people need a hand up. The question is, should it be based more on the adversity you faced as opposed to some sort of race-based affirmative action? And then all of this, again, is a bit of a misdirect, because there's a couple of things that need to be addressed that would solve these problems. DEI is not an issue or the problems with it. There are somewhere between 35 and 5 certificate or diploma granting institutions in America if you include the technical schools et cetera junior colleges. 3 of those 3 have to go find students. In other words their demand is not as great as their supply. The only time this becomes a debate is at the, quote-unquote, elite universities that are in the habit of creating such scarcity and playing off the hopes and dreams of middle-class Americans that they got to send their kids to school, that it becomes very heated around who gets in. And so one, you solve a lot of these problems if you just force them, if you put them on the hook for bad student loans, and two, you force them to grow their freshman classes as fast as population or faster, they lose their nonprofit status. The other thing we do need to address is there are now nine employees at MIT that are non-faculty for every tenured faculty member. The number of administrators at the University of California, my alma mater, has grown 60% in the last couple decades. And the result is an explosion in cost. And if you want to talk about the ultimate vehicle for discrimination, it's making college inaccessible for the majority of the public. So I want to move away from these culture wars and start talking about-

Kara Swisher: They don't want to move away from the culture wars. They're not really interested in solving the problem. They're not really interested in-

Scott Galloway: The greatest DEI initiative would be to have more kids have access to the great on-ramp to the middle class known as higher education. But they're not interested in that. They want to find an empty vessel that they can feel their anger into or their extremism and they want to politicize it. It's just unproductive.

Kara Swisher: So what's the problem? They moved from trans-bathrooms to trans-athletes to, and this is just the right. By the way, the left does it too, but the right is quite good at it, is the issue. To parental rights, to, you know, look at Moms for Liberty is exactly that. And look, it's collapsed on itself, right? They're all having three. That's the threesome. Now it's the threesome.

Scott Galloway: I'm in. Whatever it is, I'm in.

Kara Swisher: Yeah. Yeah. So it's just they like come up with these like, what can we scare the American? And it isn't about sleuths. It's the same thing with immigration. Nobody wants to do intelligent immigration. It's just a lot of screaming. And they get into that breach, which I think is why you should look at these. They move. They're like, what can we do to upset and disturb people such that it often doesn't work, actually, because I think voters sort of are like, just like with the abortion stuff. Like, they're like, yeah, no, we want abortions or, you know, or we don't want abortions, but we want the abortion rights. People move. Just like with the abortion stuff. Just like with the abortion stuff. Like, they're like, yeah, no, we want abortions. Or, you know, we don't want abortions, but we want the abortion rights. People move, they move into these angry areas and take advantage of it. And it's not honest. It's not an honest discussion of it. And that's why it drives me crazy. And they're always, they're just so frigging sneaky. I don't know what else to say. And that's what, when you read this, you're like, oh, God. But then these things do get out, like the Trump stuff. This is what Trump is going to do in so many, you know, in this many weeks of targeting people, loyalty tests, et cetera, et cetera. Now, if I was Democrats, I wouldn't want this out, right? Like, look what they're going to do. It's stupid for these people to write these plans, but they kind of have to have plans if that's, they have to be ready to go from, you know, day one, essentially, day one of the dictatorship, as Trump likes to say. So it's just, I don't know what to say. Tell me what you think of this. You were particularly struck by the Larry Summers thing. Larry Summers blasts a lot of stuff. But in this case, he really did. He did one of those Bill Ackman level tweets, which I'm like, just write an essay for the New York Times, Larry, or something. But talk to me about that, because that really, you thought that was important.

Scott Galloway: I thought it was really damning because, you know, Larry's on the inside and he was the guy telling everyone in the midst of the controversy around President Gay to take a breath. So, you know, he's well respected, served in the Obama administration. So when he comes out and starts attacking from the inside, I think it's pretty damning. Just to go back to solutions, the scary part of all of this from the far right, in my view, is that they have noticed that they get a disproportionate number of people who don't go to college. The college voter usually goes moderate or democratic. And so I think the far right sees a vested interest in having fewer people go to college, which I think is a terrible, a terrible objective, or to diminish the standing of higher education in the United States, which quite frankly is next to weapons and movies with men in capes, one of the things we do the best here in the United States. If you had a drug that made you dramatically less likely to be depressed, obese, get divorced, ever own a gun, and dramatically more likely to enter into long-term relationships, to vote, to have children, to be a big taxpayer, to run for office, you wouldn't want to hoard that drug. That drug called higher education. So why can Republicans? I mean the key would be, I think that would satisfy moderates on the right, is to reinstitute a zeitgeist at universities that said, look, one of the biggest... Of course, bring this back to me. One of the biggest compliments I get after my class is people will say to me oftentimes, I don't know your political views. And I'm like, that's the victory. You're not supposed to know. I'm supposed to present both sides, have you argue them out, and make your brain, damage the muscle in between your ears such that it grows back stronger. And we should ask or demand that professors and administrators leave their politics at the door the same way we should ask students to say, we're not here to protect you from things that offend you. That's not our job. And if words offend you, you should call your parents and have them come pick you up because you're not ready for college. And then dramatically, and then reduce all these departments that quite frankly never go away and are very expensive, focus on excellence and helping kids develop economic security for them and their families, dramatically expand enrollments, dramatically reduce costs. And a lot of these heated issues go away. They could go away. In Summers' case, for people who don't know, he's objecting to the person they made co-chair, and his name's Penciler, I guess. And he goes, Professor Penciler has publicly minimized Harvard's anti-Semitism problem, rejected the definition used by the U.S. government in recent years of anti-Semitism as too broad, invoked the need for the concept of settler colonialism in analyzing Israel, referred to Israel as an apartheid state, and more. While he does not support BDS, he made it clear that he sees it as a reasonable position. Now, he said none of this, in my view, is problematic for a professor at Harvard or even for a member of a task force, but for the co-chair of an anti-Semitism task force that is being paralleled with Islamophobia task force, it seems highly problematic. So I think he's trying to get rid of this one guy. And he thinks he's far from the ideal chairman, and he thinks they should have someone else. I don't know who he thinks that would be. But, you know, I think he's trying to make something happen by posting and putting pressure, sort of a Bill Ackman kind of thing, which, of course, has pretty much backfired quite a bit on Bill Ackman, I would say.

Kara Swisher: In any case, we'll see what happens, but you're right. I do believe we, you know, the right, the extremes have gotten a hold of the conversation.

[Transition]

Kara Swisher: Okay, let's get to our first big story. The New Hampshire primary is about to get underway and the Republican field has narrowed down to two candidates. Finally, Donald Trump and Nikki Haley. Very different. Over the weekend, Ron DeSantis dropped out of the race. Bob Iger had a big party for him coming back to Florida.

Scott Galloway: No, he didn't.

Kara Swisher: Endorsing Trump and which is what Gavin Newsom said he would do within weeks. And also using a falsely attributed Winston Churchill quote. Well done, Ron. You had a shitty debut on Twitter. It didn't work. And now you misquoted Winston Churchill. Were you surprised by DeSantis' timing? And now that Nikki Haley gets a two-person race, how long, you know, she's not going to win in New Hampshire from what the polls are saying. Thoughts?

Scott Galloway: I was surprised. I thought he was going to wait till New Hampshire. And what you just said is exactly right. The metaphor for his entire campaign was his launch event on X. It was awkward. It was operationally a total clusterfuck that came across as incompetent. And if you look back on it, I don't even remember Governor DeSantis being on it. And that's the perfect metaphor for his campaign. It was awkward. It was logistically, it was so poorly prosecuted despite a massive amount of money. And I don't remember anything that kind of Ron did other than stories about how awkward he was and how bad the campaign was going.

Kara Swisher: Yeah. Yep. And how a lot of his cultural war stuff just didn't land with people. They wanted other things. You know, Trump is good at this stuff. He's good at the insults. DeSantis isn't. And at the end, he was really insulting, insulting Trump a little bit more than he was, which he should have been doing from the start. Like really calling it, which is Haley is doing right now. She's talking about him being adult Trump. She's really leaning into Trump is old, which is interesting. I'm not sure it'll work at this point because everyone does think he's kind of crazy Uncle Don. That's sort of baked into it. What crazy shit is he going to come out of his mouth at any one time? But he got her mixed up with Nancy Pelosi. He's been doing a lot of cognitively questionable things, right?

Kara Swisher: I just, and people are used to it. But DeSantis is, you know, DeSantis is just someone people don't like. They just, the more you saw of him, the less you liked of him. And I think that, I'm sort of perplexed as how well he did in Florida. Like everybody loved him. People think he got COVID right. And he also deserves some credit for how he approached COVID.

Scott Galloway: Yeah, but that's it. It didn't last very long.

Kara Swisher: Because I'll tell you, on the national stage, he's deeply unappealing. And I hate to say that because he's not an unhandsome man. He's got a very handsome family. Like he's got all the pieces, but he just seems like someone... The best one I saw was when he was doing his speech. Someone was like, "AI still has a long way to go because he looks like he does." He has like, I don't know what it is, but it's this weird affect that is just...

Scott Galloway: Comes down to one word: likable. And he's not that word. Because if you look at him, he's out of central casting. Served his nation in the military, Yale, Harvard. He was an athlete. He was captain of his baseball team. I mean, I know that sounds kind of trite, but if you're captain of a varsity athletic team, it means you know how to pull people together. He was in the Little League. He went to Little League championships or whatever. People respect you, a successful governor. And what's interesting about, or one of the things I noticed that was sort of interesting is that in state and even Congress and Senate races, whoever has the most money wins like nine out of 10 times. That's no longer true in the presidential race.

Kara Swisher: Jeb Bush had the most money. Totally.

Scott Galloway: And this guy had a ton. Flatline. He spent, I think he's, what did he spend? $55 million? Some enormous amount of money. So Haley has really broken through in a way, but she still doesn't have enough in the modern Republican Party. In any other year, she'd be the winner, right? Because she's actually honing her message. People think she's a little cautious. But it looks like it's going to be Trump-Haley, but she's really leaning into...

Kara Swisher: You know, it was interesting because Newsom said, "Ron, in three weeks, as you're insulting Trump right now, in three weeks, you're going to kiss his ass. You know, you're going to get on your knees for it." I think he said "on your knees." But Haley, what do you think of her prospects at all in terms of, obviously, she's not going to win. But what can she do from a marketing perspective?

Scott Galloway: I don't know. I'm so biased here. I really hope that she surprises. And I don't know if she's going to all the polls. But if you look at New Hampshire, they take pride in being independent. I mean, they take pride in, they like to be contrarian. New Hampshire never wants to match the poll. So I'm hopeful that our message resonates. They have a lot in the... The most interesting or the X factor about the New Hampshire primary is that independents can vote in it. Actually, anyone can vote in it. But I, you know, there's just no getting around it. Every day we go on, the Republican primary looks oranger and oranger. And I hope this is kind of the last stand for the non-Trumpers in the GOP. And then it becomes a war between the justice system and Donald Trump in terms of what happens.

Kara Swisher: What would you do? We're not experts in politics, but in marketing, what would she, to stay in long? Obviously, here's the one thing. She stays in and something happens to him, she's out front, right? That's the goal here is just stay in long enough so that something legally bad happens to him. Or he says something really nutty or something disqualifies him. I would assume the bet here is that, is I'm going to stay in until you fall, until you trip, front runner, essentially.

Scott Galloway: I would link him to Biden. And the linkage, I would use the connective tissue, I would use his age. Which she's doing. I would run clips of Biden falling and of Trump making stupid comments and Trump slipping and saying, "Isn't it time for vigor? Isn't it time for youth? Isn't it time for a fresh perspective? These people were born as our GIs were returning home. These people, each of these individuals has between a 6% and 10% chance of dying every year, according to insurance actuarial tables. Isn't it time for something new?" And I would absolutely clot him and clump him in with Biden around the notion of age. And I'd show pictures of her. She's very vigorous. She's very attractive. She's young. And just say, "It is time. We are the most innovative, aggressive, youthful culture in history. And so should your leader be as well."

Kara Swisher: She's leaning into this. What else could she do? He's legally... She's also leaning into, "He could go to jail. You know he could go to jail, people, and we're going to lose. And then we're going to have Biden." That's her basic argument.

Scott Galloway: Yeah, the secondary message is the only way we lose, the only way we lose is if you put up Trump. Put me up against Biden, this is a lock. And by the way, all those people on the left who play identity politics, the Republican Party, just as we're the party that freed the slaves, as we're the party that brought down the wall, we're going to be the party that says to the rest of the world, we're about merit. And the person who deserves to be president happens to be the person who's going to be the first woman in the White House.

Kara Swisher: Well, here's the thing. A lot of voters have... There was some really interesting reporting on people worried about... I can believe it. There have been women leaders all over the world, but there's still an issue in this country about a woman leader. But one thing that's clear is a Biden rematch is something nobody wants. Voters' satisfaction... It's just crazy. That's what we are going to end up with? That is really, it's like, "No, no, no, no." Oh, like that's where, here we are. What's interesting, Biden is, I think, smartly first attacking Trump. He can't attack him on cognitive issues, but Haley's doing that. He's leaning into reproductive freedom, which I think is smart. Rallies this week. He's rolling out new ads. He's trying to do all these executive orders around abortion as much as he can. I think Trump's big hand-wavy thing will be the vice presidential candidate choice. And that could be Elise Stefanik, who is speaking of unlikable, like completely unlikable. She had a big moment with the DEI thing, but she's really quite a, just a terrible person. I don't know what else to say. She's so unlikable. But there's also Tim Scott, there's Kristi Noem, there's a whole bunch of people. So that will be his big, he's got to have someone.

Scott Galloway: Senator Scott would be a good choice. Stefanik, I don't know. That seems like mean and meaner. And she's the only... No one had heard of her before until she refused to certify the election. And she's saying she's refusing to certify it again if Trump doesn't win. He needs a solvent. He needs someone credible, thoughtful, likable. He should absolutely pick a non-white or a female. That would inoculate him from all the accusations that, you know, deep in his heart, he's a bigot or whatever. Senator Scott checks a lot of boxes. I mean, the one I'm scared of is that Nikki drops out and that's his VP. I think they would win.

Kara Swisher: He's not going to. She's really... I can't imagine him picking her now. She's like, "He's old." What is she going to say? "Oh, what I meant when he was old was that he was not that old."

Scott Galloway: Oh, VPs have said worse and been selected as VPs.

Kara Swisher: Yeah, that's true. That's true. Kamala did. She certainly did. Yeah.

Scott Galloway: But this is, he takes this rather seriously.

Kara Swisher: Kamala is vice president.

Scott Galloway: No, but she insulted Biden, if you remember.

Kara Swisher: Okay, but yeah, that's what we're saying. She was on the stage because she's got an incredibly impressive track record. I don't think there's a lot of affection between the two of them. I don't know what's happened there, but it hasn't worked. And it's all about winning. I don't think they... And I think that's a mistake. I think they need to pick someone that they get along with but they don't... They pick someone who can help them win.

Scott Galloway: Yeah, yeah. I will see what he does, but it'll be interesting. But nobody wants this election. Nobody wants it, which is really amazing. Everyone's like, "Ugh." It's like this show.

Kara Swisher: And not only that, the whole world, with everything going on right now. I had Ian Bremmer on my podcast, and he said something that struck me. He said, "No one wants this election this year. Everyone wishes they could put it off a year. It's like the wrong year to add this into the mix."

Scott Galloway: Yeah, yeah, absolutely.

Kara Swisher: Just FYI, the latest episode today of *On with Kara Swisher*, I talked to historian Heather Cox Richardson about how we got there, being in the age of Donald Trump and the rise of authoritarianism. That was elegant cross-promotion.

Scott Galloway: I know. I was trying to do that. Please listen to Kara's podcast so she can afford a hotel when she's in Manhattan.

Kara Swisher: No, no, no. Would you like me to stay in a hotel? I've already told you I like it when you're there.

Scott Galloway: All right. Well, you just, okay, fine. I like it when you're there.

Kara Swisher: No, no. Otherwise the plants would die. Not that I have plants.

Scott Galloway: I literally... You don't have plants. He has no plants. You have no plants.

Kara Swisher: Oh, my God. Anyway, let's go on a quick break. When we come back, the economy and the stock market continue to defy expectations. And we'll speak with a friend of Pivot, Aileen Lee, about the world of unicorn startups.

[Break for advertisements]

Kara Swisher: Scott, we're back. The stock market is hitting record highs. Job numbers are good. Inflation is falling and the Federal Reserve might be cutting interest rates. Also, consumer happiness is rising, according to all those consumer happiness surveys. They're moving, it's ticking upward. It looks like the U.S. economy might be able to avoid a recession, according to a recent survey of economists, not even a soft landing. What do you think was going on? Treasury Secretary Janet Yellen was touting soft landing weeks ago and said, "My hope is it will continue." I guess we're continuing to soft land, if at all. What is your take on all the good news?

Scott Galloway: What strikes me is more so than all the good news, which is exceptional, is the consumer dissonance or the citizen dissonance. And that is, Americans have a unique ability to credit their character and their grit for the raise they're getting and then blame the government for inflation. And so even though the wages are rising faster than inflation, now there's real wage increases, they still blame the government.

Kara Swisher: Well, it's ticking up. It's ticking up. That Michigan survey just suddenly went the other direction.

Scott Galloway: Yeah. But it's just very strange. The White House doesn't get any credit for it.

Kara Swisher: Yeah, it's starting to.

Scott Galloway: I hope you're right. But, and, you know, this goes to my win. We literally have, now granted, it's not distributed equally. We have... No one could have predicted if someone had said, "America is going to pull off this economy, they're going to figure out a way to have the lowest inflation of the G7. By the way, they're going to massively increase... For all the shitposting and all the far right lights say, 'Drill, baby, drill.' We're producing more energy than ever. We're the largest energy producer in the world. And if you look at our competitive advantage against China, if China decides to get into a hot war with anyone, and at any number of choke points, their energy supply gets shut down.

Kara Swisher: Yeah, they're going to have to invade Russia.

Scott Galloway: They would be in such a world of hurt. And we're energy independent. Not only energy independent, we produce more energy than we consume, which is remarkable given what gluttons we are. So it's just striking that consumers don't feel better.

Kara Swisher: It's getting better, but...

Scott Galloway: It's ticking up.

Kara Swisher: I think people still feel they're paying too much for food or the kind of the daily... But although I went and got gas and I was like, "Oh, this is low." This is like, I mean, I guess I'm one of those people who doesn't think about it that much compared to people who have a really tighter budget. But I was like, "Wow, this is not expensive for the first time in a while." And I paid attention to like the $4 and $5 gas. Employers added 216,000 jobs in December, which is a large and expected number. Weekly jobless claims reported were the lowest since September of 2022. There's a lot of layoffs in a number of sectors, but I think that's people cleaning up, like all this stuff in tech looks like it's around assistant, which AI, they're getting ready for AI and getting rid of stuff they don't need anymore. So that seems to be cleanup, right, of where things are going or getting ready for something else. Two things. If you were looking to invest right now, what advice would you give them? And then I want to ask you a quick question about the housing market. Where would I invest?

Scott Galloway: Look, my feeling is it's dangerous to listen to people like me and talking heads on podcasts make stock recommendations. And I like it because it's fun. And I tell young people, take a third of your money and put it in stocks because A, you'll learn, you learn about the markets. And also it's kind of fun and you can feel good when it goes up and beat yourself up a little bit when it goes down. But for the most part, what you want to do, if this market has taught us anything, don't try and pick the needle in the haystack, pick the whole haystack and buy the whole market because-

Kara Swisher: The haystack approach.

Scott Galloway: Go ahead.

Kara Swisher: It's true.

Scott Galloway: Unless you were a genius and maybe you didn't have to be a genius, but people talk about their wins and they don't talk about their losses. Seven stocks were responsible for 70% of a gain last year and you think you're smart enough to pick the seven of the 500. So instead, just buy the entire 500 and what do you know, what were you up in the teens last year? If you do that, if you compound going into your primary income earning years, what the market has done since 2008 at 11%, that means every seven years, you're doubling your money. And just from an emotional and mental wellbeing, this is what you want to do. You want to focus all of your mental, physical, and emotional energy on your day job. And you want to turn your investing over to an outstanding professional that is really good at what they do, but at the same time is really inexpensive. And that's called an index and an ETF fund. So if you could get someone... You're not good at building your own home. What if you could find someone to build your home that was outstanding at building homes and was really cheap? That's called an index or an ETF fund. Don't buy a stock, buy the market. And the temptation to believe that you're smarter than everybody and all of these, the financial industrial complex, which will teach you that this old looking guy or all these Quan people and PhDs have some sort of special insight or they're investing in ESG, whatever it might be, whatever the branding is, they are ripping you off. They are ripping you off. So anyways, my recommendation on where to invest is just start investing and invest in index or ETF funds.

Kara Swisher: Yeah, that's in the stock market. The economy, the housing market is still kind of all over the place because of the interest rate and the 30-year interest rate is at 6.6%, higher than before the pandemic, obviously, how high prices are higher. But that's because... I'm just talking to a friend of mine who's a very big realtor in D.C. And she was saying there just isn't stock. It's in the middle area. She goes in the top area and the cheaper area, it's doing okay. But there's no stock to sell. She said she didn't think people were as fixated on rates as they were. They don't want to move because of that. And that's one of the issues is not having enough in the market to move it around. And she was thinking it was going to jump in the spring. She felt like people were just like, "I feel I'm tired of waiting" kind of thing or to move or to buy. But that's one area that's been sort of a laggard.

Scott Galloway: Yeah, one of my predictions for my 2024 deck is that housing is going to boom, not price. What happened last year was sort of suspended... You had to suspend the natural order because what we unintentionally did was create these unexploded devices inside a home called a mortgage at 2.5%, where no one wanted to leave. That life is aggregating at the dam. What I mean by that? Death, divorce, disability, people having kids, people needing to move for a job, whatever it might be. All of that demand is building. And the moment I think interest rates get kind of below six-ish, the moment that people start dying and more housing stock comes available, the moment that some of the supply that's being constructed comes on the line... I think in Q4, you had the lowest transaction in like decades.

Kara Swisher: That's what she was saying, yeah. She said it's right in the middle. She said it's not at the high, it's not at the low. You know what I mean? Like the apartments and things like that. But go ahead.

Scott Galloway: I think you're going to see, back half of this year, just a ton of people... I don't want to say throw in the towel, but go, "Okay, interest rates are below... Maybe I can pick up a mortgage with a five handle on it. We've been talking about moving home. We just had our third kid." Oh, did you hear the house down the street? Mrs. Robinson just died. There's a house. I just think that all of that life doesn't stop marching on. And when you think about housing, the biggest component in housing are life events. And those have not stopped the last year. They're just building up. Which is why prices are higher.

Kara Swisher: Are higher. Yeah.

Scott Galloway: But you're seeing wages go up. You're seeing interest rates come down. And life continues to march on. I think we're going to see an absolute boom in sales volume at the end of the year.

Kara Swisher: Yeah, it'll be interesting to see if the economy helps Biden. I think people, it may be perfect timing for him. I'll tell you that. We'll see. We'll see. Anyway, very exciting times. And I think it is running down. But let's bring in our friend of Pivot to talk about where investing is going. Aileen Lee is the founder and managing partner of Cowboy Ventures, a seed-staged VC fund. 10 years ago, she famously coined the term "unicorn," referring to VC-backed startups with billion-dollar valuations. She's now assessing what's happened since then and also looking at the newest unicorns in a TechCrunch piece titled "Welcome Back to the Unicorn Club, 10 Years Later." And also, I really like Aileen. She's in my book that's coming up where I have a chapter of people I like. It's a very short chapter in Silicon Valley.

Scott Galloway: You are mentioned in it very briefly.

Kara Swisher: Honored.

Scott Galloway: It's fine.

Kara Swisher: So it's also... You're one of the few women VCs, prominent ones.

Scott Galloway: Too few.

Kara Swisher: Too few. And you worked at Kleiner Perkins. But a lot has happened since you first came up with the unicorn concept. I want to know what jumped out at you as the biggest change from 10 years ago. The number of unicorns has ballooned in the last decade, going from 39 to 532, as you note. But first, say why you picked that again to remind people. And then what was the biggest change?

Aileen Lee: Yeah. First of all, thanks for having me. I'm a frequent listener, so it's fun to be on. OK, so 2013, I had a pretty new fund. I was just getting started, didn't have a lot of portfolio companies. And so I was trying to think... And Seed, there's not a lot. These are unknown companies. They're off the radar. You know, more than half the time when we're investing, the people need the money to start the company. So no one's heard of them before. And so I basically said, "Let me just, if I had started 10 years earlier, what are the best companies I could have invested in?" And start making that list and then figure out like, "How would I have met them? Where did they go to school? What did they do before? Where did they work? Did they pivot? You know, how much did they raise? How would I have found them?"

Kara Swisher: You're talking about sourcing, which is how VC, that's the key part of really good ventures, right?

Aileen Lee: And also, yeah, just what lessons learned, right? So basically came up with a list of 39 companies that were less than 10 years old and had basically grown to be worth over a billion dollars in public or private markets, which are just U.S. because we just invest in the U.S. And so it's a different kind of definition than I think some of the unicorn lists you'll see out there where they basically track every company that's ever been started. And our definition is for companies that are less than 10 years old. So we found 39. And at the time, they were mostly consumer. They mostly had exited. They mostly had gone public or been bought. And, you know, Facebook, now Meta, was the big one at the time. And there's also a lot of commerce companies like Groupon and Gilt. And then basically the term wound up taking off in a way that I didn't really expect.

Kara Swisher: Why'd you pick unicorn?

Aileen Lee: You know, it's funny. I, in writing the piece, because there was a lot of analysis and using the definition over and over again, like, you know, "a company that was less than 10 years old and had been, had grown to be worth over a billion dollars," just a really annoying thing to have to write or read over and over again in a piece. So I tried to come up with a shortener, like "home run," "monster hit," and substituting in "unicorn" made it so much more fun to read. But it also captured something that I wanted it to, which is that it's special. You know, it's rare. It's a little magical. Like, you have to have timing and luck and a bunch of other things.

Kara Swisher: All right. So now, fast forward. So 10 years later, we basically rebuilt the data set and we have grown from 39 to 532. So it's 14x more. The pendulum shifted massively from being basically 80% of the value in the list was consumer 10 years ago, it's 80% enterprise now. And enterprise companies basically, you know, the list grew 14x, enterprise companies, I think grew 26x in terms of the number of companies. But then when you kind of look under the hood, we realized that 93 versus 66% having exited 10 years ago, 93% of them are what we call "paper corns," which is they are on paper only. They are still privately valued. And 60% of them are what we are calling "Zerpacorns," where they basically raised their last round during the time when interest rates were basically zero. So 2020-ish, 2021. And so we basically, and also, so then when you look at how many of them are paper corns, how many are Zerpacorns, over almost half of them are trading at below a billion dollar valuation in the secondary markets. So we basically did a lot of triangulation. We said, "Okay, this data set of 532 is probably going to shrink, you know, because a lot of these companies are running out of runway. They raised in 2020, 2021, when valuations were, and public market valuations were really high, and they are burning through their cash and trying... A lot of them, there are a lot of quality companies in this batch. So we think the batch will probably shrink to about 350. And so this set will get smaller. And the other thing that we noticed is capital efficiency really tanked. So one of the positives of the 2013 batch was enterprise companies had 26X capital efficiency. So they were worth 26 times what they had raised. The capital efficiency got a lot worse. And they were two and a half times more capital efficient than consumer companies in 2013. This batch, across the board, whether you're a consumer or enterprise, the capital efficiency on average is 7x, which is a big decrease. And if you look at how much companies like Apple or Microsoft or Salesforce have grown in the past 10 years, you would have been better off investing in the public markets than a lot of these companies.

Kara Swisher: But AI changed the unicorn game. You say there's also OpenAI looks through the first super unicorn or super corn.

Aileen Lee: Yes. So we, in the first analysis, we coined this term "super unicorn," which is a company that becomes worth over $100 billion. Which would have been Facebook in that group.

Kara Swisher: Yeah, Facebook was.

Aileen Lee: And Facebook did it within 10 years, which is pretty unusual. But companies like Cisco or Intel, like other companies that basically kind of represent big, important new waves of innovation, wind up becoming these mega unicorns. So it looks like OpenAI. And also in the first batch, we only had one Meta. But then three more became super unicorns over time. So OpenAI looks like it's going to be the first one, but I think there will be many.

Scott Galloway: Really nice to meet you. I have a snarky question that's more of a comment than a question because just listening to you speak inspired three or four questions. But with respect to you were talking about your analysis around how to generate deal flow and target in on the right individuals and the right concepts. 1700 freshmen at Stanford, 1500 at Harvard, so 3,200. 40% are male, so that's 1,280. 50% are white, so that's 640. Wouldn't the smartest means of establishing deal flow just be to maintain relationships with the 640 white men from Stanford and Harvard that graduate every year? Isn't that where about 80% of all venture capital goes to those 640 people?

Aileen Lee: No, not anymore. Actually, that was like I would say one of the positive things that came out of the new analysis was that, yes, in 2013, a high percentage of the people went to what we call like top 10 schools. And a high percentage of them were technical. So they studied computer science. That has changed a ton. So in the new analysis, I think basically no school like Stanford, Stanford had the most market share of the founder set, which also went from 100 people to 1,300 people, but it had 5% market share. So there has been, it looks like, a democratization of where people went to school.

Scott Galloway: Is this the number of concepts or actual capital allocated?

Aileen Lee: Oh, no, this is in the number of where the founders went to school. So if you look across the 1,300 founders, they grew up in all different kinds of places. Actually, most of them were not technical in terms of what they studied. And also, they're in different geos. So in 2013, 70% of the unicorn companies were in San Francisco. And San Francisco lost market share. It's down to 45%. New York is almost 20%.

Scott Galloway: Wow.

Aileen Lee: But also Boston, LA, Austin, Denver, San Diego. Which is what we thought would happen.

Kara Swisher: But you did note that in terms of gender representation, you said there are more founders named Michael, David and Andrew than there are women unicorn CEOs. At this rate, we won't reach gender representation until 2063, when we'll all be dead, by the way.

Aileen Lee: I'm hoping that the democratization of schools and backgrounds is the leading indicator and that gender will follow because that's definitely an area I would love to see more progress.

Kara Swisher: I read that 80% of all capital allocated from the venture community last year was into AI or AI-related startups. Do you think there's a bubble in AI in terms of valuations in the venture market?

Kara Swisher: There is, I think, going to be a lot of change in the next decade. I do think that phrase, like you know how people talk about trends like short overhyped and long underhyped, I do think that might be the case in AI. There's no question in my mind that AI is going to be kind of under the hood of all the software we buy in the coming decades. But kind of who is building that software and short-term winners versus long-term winners, I think it's going to be very dynamic.

Aileen Lee: In the analysis, one of the things that caused this huge run-up in unicorns was just how much more money went into venture capital. Funds got really big, and they raised a lot faster than they ever have before. So they've got all this dry powder. And instead of chasing recaps, they are putting it into the new hotness.

Kara Swisher: Into the new hotness. So what are some other sectors outside of AI where there's the most successful unicorns? What are you seeing? Obviously, enterprise is one.

Aileen Lee: And so consumer is not as represented?

Kara Swisher: Not as represented.

Aileen Lee: But the first set was pretty one-size-fits-all products like Meta or a Workday or ServiceNow. The thing that we saw in the new set is we basically created 19 different sectors like climate or health care or mobility or logistics. And there are now unicorns in all these different sectors. So it's kind of like tech is spreading out across all these learning tech, ed tech, like all these different sectors of society that didn't exist 10 years ago, which I think is pretty exciting.

Kara Swisher: Is there one that sticks out for you?

Aileen Lee: I mean, I was just kind of amazed. Some of it, I think, is a reflection of free capital in this zero-percent period. But you've got unicorns, like there's a unicorn that sells software to parking garages to manage their spots and utilization and stuff like that. So there are companies being built in all kinds of sectors.

Scott Galloway: My understanding is that the majority of returns are not only aggregated to a small number of firms, but a small number of people at those firms. Is that it? Am I overstating it? When we talk about income inequality.

Aileen Lee: I think it's changed a lot. There are so many more firms now. It's funny, when I used to work at Kleiner, one of the Kleiner founders talked about the first fund. He said basically they made a bunch of investments and it wound up being like two peaches in a bucket of piss. You basically put together a portfolio, you invest in, say, 20 or 30 companies, and one or two of them winds up being an outlier that returns the fund or generates multiples of the fund. I think there are so many funds now, I don't think it's super concentrated anymore. It's really quite spread out. There are going to be a lot of funds that are pretty under the radar that wind up having... and a lot of it also is your fund size is your strategy. So depending on how big your fund is, it's going to have a big impact on returns.

Scott Galloway: And the funds have gotten so enormous. I mean, it just strikes me that I think I've read that General Catalyst is raising a $6 billion fund. I would imagine that the ideal scenario is they want companies that at some point will be very capital hungry. Do you think that's driven down returns, the impetus to put together or put to work so much capital? My follow-on question is, one, is the torrent of capital that's coming to venture, it just seems logical it would push down returns. And two, and this is anecdotal, but it doesn't mean it's not true, I'm now getting more calls from people trying to raise money or sell their stakes in companies, vis-a-vis a secondary, as opposed to finding fresh capital. So has capital pushed down returns? And what are your thoughts on the secondary market on these venture-backed companies?

Aileen Lee: Yeah, I think when you go beyond a billion dollars and you're managing billions of dollars, it's just a different business. And I think the return expectations are going to be different. It's a different LP, right? You've got big pensions, big sovereigns that want to have allocation across asset classes. They want to be in venture, but they have big checks to park. They want to park $100 million, $200 million. We're a seed fund, so we're focused on a more curated strategy, investing early and generating high returns. Our fund is $140 million. But if you've got a $2 billion fund, when you just do the math on what kind of return you can generate and how many five or $10 billion companies are going to be... it's just a different return profile, but LPs think about it differently.

Scott Galloway: Yeah.

Kara Swisher: So from your seat as the head of a firm, because you went off on your own, when you look at your analysis, where do you think about putting your money? Where do you find the opportunities? Because you were in a lot of consumer for a while, and you've done a lot of different things. Where do you think the opportunities are from your perspective?

Aileen Lee: Yeah. I mean, when you look at the companies that we've invested in that are doing the best, a lot of them are what we call category creators. So its founders had an idea in a market that didn't really exist or people didn't think was a big market. Like, I don't know if you've spent time with Guild, based in Denver. It's an upscaling company that partners with enterprises to help hourly workers get an education and get skills so that they can have career evolution to a higher paying job. What they do didn't exist. There was no competition and it was a wide open market. But there were a lot of questions about whether there was a big enough market and whether enterprises would adopt it. And it's going great. We're really proud and happy because it's also kind of a double bottom line company where it's actually good for society and it can be a great business.

We were investors in a company called Drata in San Diego. Two brothers who didn't work in traditional tech companies, didn't work in security, and they had an idea for a better mousetrap. They were kind of like a third or fourth player in a space. And what they're doing at Drata is amazing, and customers love the product.

Kara Swisher: What does that do?

Aileen Lee: They basically built a security and compliance platform to help enterprises get SOC 2 compliance or be GDPR compliant or HIPAA compliant, things like that. And it didn't really exist, a kind of real-time compliance platform. They had an idea for a new paradigm that people weren't doing it that way.

Kara Swisher: And when you look at things, what are you most worried about? What are the ones you're like, "Oh, God, this is a problem"?

Aileen Lee: Actually, I just want to go back to that. When you think about some of the companies that are most valuable today, even the consumer space that a lot of people can relate to, like Airbnb and Uber, no one had a shopping list for "I want to invest in a company where people are renting out their couches." I think that's what's really exciting, that you being open for business, meeting founders who have these seemingly crazy ideas, and they wind up being huge businesses.

Scott Galloway: Yeah, I remember when I was raising money in the 90s, and I think that's why some of my questions are probably a bit outdated, if you will. But I remember thinking it would be so great to be a venture capitalist, that there were just more of these guys—and it was almost always guys—who always win or figure out a way to always win. And it was just so hard to start a company. I think it's entirely flipped. I'm curious if you... the power dynamic and the leverage. Like, you weren't allowed to do secondary sales when I was an entrepreneur. Now they use it as a means of differentiating their offer. They're like, "We'll give you 5 million bucks to take off the table." Anyway, I get the sense, and I'm kind of giving you a softball here, I don't think there's ever been a better time to start a company.

Aileen Lee: I totally agree.

Scott Galloway: Capital. If you're in St. Louis, it doesn't matter where you are. With the cloud, you can get to letter M for what it used to cost to get to letter B. If you get any traction, a VC will find you. Make the case or tell me. Validate my thesis. There's never been a better time to be an entrepreneur in America.

Aileen Lee: Yeah. I mean, also, if you look historically at the numbers, some of the biggest, most successful companies were started during downturns.

Scott Galloway: Yeah. 100%.

Aileen Lee: So I think just the scrappiness, the grit, people know it's going to be a long game. It's a marathon. Everything's cheaper. Easier to build a company.

Scott Galloway: Well, I mean, money is not as cheap as it was three years ago.

Aileen Lee: No, what I mean is office space and people.

Scott Galloway: Oh, yeah, totally. And people can be anywhere. So I totally agree. I think venture has changed a lot.

Aileen Lee: But I'm part of a nonprofit called All Raise, where we're trying to change the composition and culture of the venture industry. And we've made some progress.

Kara Swisher: How's that going?

Aileen Lee: We have a long way to go. When we started, women were 8% of the industry and 75% of firms had not a single female partner. Now we've almost doubled it. So we're almost at 16% women. But still, that sucks. So we've got a long way to go. But it's changed. I think there are a lot more specialists now. So if you do dev tools or enterprise infrastructure or commerce, there are funds that just focus on what, crypto, Web3. Versus before, you're right, Scott, like every, when I worked at Kleiner, they said, "Hey, your job is to do great diligence and help with post-investment support. Sourcing is not part of your job because we see everything. You're not going to get promoted for sourcing something because we get it all." And that's not the case anymore.

Kara Swisher: All right. So I have a last question for you, Aileen. If you were starting now, you've been through the big firms, the small firms, what would you do right now? I think a lot of people started companies because it seemed like a cool thing to do. And people need to know that economies go in cycles. It's funny, I used to work in the fashion business. There's a lot more in common with the fashion business and tech cycles and economic cycles than I think people realize. But in the past five years, there was so much software, especially in enterprise, that we were in this best-of-breed zone where people could find an app that they thought was going to make their job more effective and then bring it in-house. And so before you knew it, you had 500 or 600 different software packages inside an enterprise. And given what's happened in the economy and public market valuations and multiples, everyone's more focused on margins and budgets and security. So CFOs and CIOs and heads of engineering and CTOs are saying, "Hey, we need to shrink the number of people that are inside our walls. We need to tighten up security. We need to tighten up budget." So they're cutting. Budgets are tight right now for enterprise software. And so selling something new is tough. There's a lot more headwinds than there were three or four years ago. And so founders, if they have an idea and they know that they can deliver quick value, whether it's to a consumer or to an enterprise, because I think the bar is higher now. But like Scott said, I think it's an amazing time in general.

We also looked at this thing that we call the software power law, where even though we think this herd is going to shrink, I think given how much investment is going into chips and into compute and into storage, that's just going to grow. And as a result, people are going to be able to build more and more powerful, capable software. And we're going to have more exciting software companies in the future.

Kara Swisher: Ah, perfect. All right, Aileen, thank you. We got to go. But you are the original unicorn.

Scott Galloway: Thanks, Aileen.

Kara Swisher: You have to get credit. It's been a huge term. It's been really important, even though some things can be reductive. I thought this one was enduring. Happy 10-year anniversary.

Aileen Lee: Thank you. Thanks for having me on.

Scott Galloway: Thanks, Aileen. Thanks so much.

Kara Swisher: All right, Scott, don't you like her? She's so smart.

Scott Galloway: Yeah, very impressive. All right. One more quick break. We'll be back for wins and fails.

[AD BREAK]

Kara Swisher: Okay, Scott, let's hear some wins and fails. I'm going to start with my win. I saw, I'm interviewing Ava DuVernay, who I love, who's a great director. I've loved all her work. She has a movie called *Origin* out that is about Isabel Wilkerson, who I interviewed at the *New York Times*, who wrote the book *Caste*, which removes racism from the discussions about why certain groups are pushed down by others. And she made this amazing connection between the caste system in India, the Nazis in Germany, and the American South that I thought was just brilliant, because she removed race from it. And she's talking about the caste system and all the different pillars of it, including controlling marriage, including inherent superiority. And it really started... nobody thought she could do it. And she's a Pulitzer Prize winner, a brilliant woman. And then Ava's done a movie about this very difficult and sometimes academic, very thinky book that is wonderful because it's about Isabel and her life and her family and her mother and her husband and this journey of this book. And she uses a documentary style very up close. She takes a very difficult issue and makes it into the most wonderful of movies.

At the end, which was one thing, speaking of women investors, all of a sudden on the screen, Anne Wojcicki's foundation, Laurene Powell Jobs, and Melinda Gates are producers, which means they funded some of it. And I was like, "What?" I had no idea they were in it. So I was like, "Wow, this is amazing." It is such a good movie. I loved *Mean Girls*. I loved *American Fiction* also, as I said, all these great movies. But this one is... I couldn't believe it. At the end I turned to my man and I'm like, "She pulled that off. I did not think she could pull it off." It's a heartfelt movie about a very difficult issue around why we discriminate. And it moved toward, like you were talking about solutions with people, it moved toward, "Let's think about this differently." And I really appreciated that. Let's think about this in a more complex way. Maybe it's not just racism. Maybe it's something else that explains how we push people down.

Last thing I'll say is there are some very difficult scenes, especially around racism, that are this little kid in a pool in Georgia, I think it's Georgia, that is just so upsetting, as well as showing the way she shows the Middle Passage. It was so devastating and yet there wasn't a lot of it, but it was an astonishing display of directorial skill. One of the things that it ends on, and this is not a new fresh thing, is she somehow makes it into a metaphor about this house that's in the book, too. And she says, "Let's not talk about how the house got this way." That's what we do a lot. Like, "I didn't do slavery. I didn't do Nazism. I didn't do the caste system in India. Let's not talk about how the house got here, but what we're going to do with it now. Now it's your house. So what do we do? Let's not talk about who did this. We have the cracks. What are we going to do about it?" Amazing movie. Amazing movie.

And the fail, of course, was Ron DeSantis. What a fail. Starting from the Twitter thing. Just a terrible, terrible candidate.

Scott Galloway: Deserved fail.

Kara Swisher: Deserved fail. And Donald Trump in the courtroom, the way he's behaving is just astonishing that he's not in jail right now for contempt. But go ahead.

Scott Galloway: I'll draft off your win. I liked it. My fail is, and I'm trying to put a lesson in here, DeSantis' speech where he suspended, or announced he was suspending, his campaign. I think there's a lesson in there, and that is people remember how you leave. You can spend 10 years working at a company. You can do an outstanding job, and 51% of your brand and how people remember you is how you behave after you've decided you're leaving. And you should always absolutely resist the temptation to stick up the middle finger on the way out. You should be gracious. You should thank everybody. I mean, if they've treated you really poorly, you should lawyer up. But other than that, you need to err on the side of grace and generosity. People remember how you leave, how you end a relationship. It might not be working out. You may not feel like you were treated very well, but you err on the side of grace.

And when he gave his speech, if he wants to endorse Trump, that's fine. Where he really blew it... he said, "I'm worried about Nikki Haley's reheated corporate governance, corporatism."

Kara Swisher: Yes, he can't stop.

Scott Galloway: He shit-posted another Republican governor and his brand has actually gone down. Most presidential runs enhance a person's brand just because of awareness. I mean, it was worth it for Vivek Ramaswamy to run for president. Similar to Andrew Yang, he's now kind of a public figure and he'll have influence. Imagine, I mean, these people are just so poorly advised. Imagine if Governor DeSantis had said, "You know what, first I'm going to call out Vivek Ramaswamy for injecting new ideas into the race. What an impressive young man, but we haven't seen the last of him. Chris Christie says it how it is, calls it as he sees it, and was an interesting voice in the campaign. And what a great race the former governor and ambassador Haley has run. I wish her the best. And I look forward to working with her." He would have burnished his brand and potentially set himself up for more success in Florida.

Kara Swisher: It wasn't his advisors, Scott. It was him. This is him. He has shitty advisors.

Scott Galloway: Let me just say his PR person is one of the most unpleasant.

Kara Swisher: Well, supposedly it's his advisors, his wife. But everyone around him is so unkind, ungenerous, unpleasant, and really shits. This is my lesson to young people. It is so easy to give into your instincts to take now that you have nothing to lose, to speak your mind and go after people and jab them. Don't. Don't. Real grace is being magnanimous, generous. And if he had done that, it would have gone viral. It would have been everywhere. And everyone would have thought, "You know what, maybe I'll give that guy another look." Instead, he cemented his brand as an asshole.

Scott Galloway: And every president that won, maybe with the exception of Nixon, has a certain charisma or likability to them. And this was an enormous opportunity to counter the image that people have of him on the negative side. I would say yes. Be likable. That's my fail.

Kara Swisher: That's a good one. All right. I'm glad that you dropped my mind. Again, see *Origin*. You should see it, Scott. You would love it. I'd love to know what you think too. Anyway, thank you so much. What a very full and rich show. And again, we want to thank all our questioners from last week's, all our audience who came and did questions for us in our call-in. We love that. We got great reviews for it and we're going to do it again. But what a smart group of people listening to this show and we really appreciate that. We want to hear from you, as we said. Send us your questions about business, tech, or whatever's on your mind. Go to nymag.com slash pivot to submit a question for the show or call 855-51-PIVOT. Scott, that's the show and a fantastic, cuddly show it is. We'll be back on Friday for more. Read us out.

Scott Galloway: Today's show was produced by Lara Naiman, Zoe Marcus, and Taylor Griffin. Ernie Enchotot engineered this episode. Thanks also to Drew Burrows and Neil Severio. Nishat Kerouac is Vox Media's executive producer of audio. Make sure you subscribe to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media. You can subscribe to the magazine at nymag.com slash pod. But we'll be back later this week for another breakdown of all things tech and business. Kara, have a great rest of the week.