Elon and Russia, the Metaverse, the Economy, and Alex Jones

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: So, Scott, I flew into San Francisco last night and it was six hours late. Let me just say six hours.

Scott Galloway: Six hours delayed from the ground or getting?

Kara Swisher: From the ground. Yeah. There was some part missing and they had to drive it from Dallas. It took them six hours to do an hour drive. So that was something.

Scott Galloway: So you're feeling awful.

Kara Swisher: No, I don't feel awful. I just feel punchy. I'm a little tired. I also saw you on Stephanie Rule this week.

Scott Galloway: That's right. Me and the ruler.

Kara Swisher: I was also on Stephanie Rule. Me too. She was back from being sick. Supreme ruler. What were you talking about?

Scott Galloway: What do you think I was talking about? Elon. I was talking about my book, *Adrift*.

Kara Swisher: Oh, *Adrift*. American 100 Chart. You know, Stephanie is a good friend. She's very supportive. Did you see her picture of her sick and she managed to slip in my book? Just casually. She's a saucy little man.

Scott Galloway: Can I just say, she looks better sick than I do on any day I'm well. She looked totally glamorous with the headscarf and everything else. She's got that crazy energy that you're drawn to.

Kara Swisher: Yeah, yeah. She's great. I was thinking about her and you. You guys remind me of each other. You both work nonstop and are really into your kids, really into professional life. There's a big overlap and you don't hide the overlap.

Scott Galloway: No, no.

Kara Swisher: You guys remind me of each other.

Scott Galloway: Oh, really? Except she's incredibly glamorous and I am not.

Kara Swisher: Anyway, today we'll talk about Meta's latest steps or missteps toward the metaverse. Also, Jamie Dimon predicts doom and gloom for the economy. We'll talk about that and President Biden's response. But first, Elon Musk says he hasn't spoken to Vladimir Putin about the war in Ukraine. That's his response to a report this week, claiming that the two spoke recently before Musk tweeted about a peace plan that mirrored Russian talking points. Scott, this might be your fault. Here's what you said about Elon last week.

Scott Galloway: [Clip from previous episode] This guy does not want to go under oath. What happens when they ask questions about, it seems like a lot of text messages aren't in here. So questions like, "OK, you just put out a tweet last week that feels very supportive of the Russian viewpoint. Have you had any contact with any affiliates of Putin?"

Kara Swisher: Oh, Scott, that's fascinating. Musk, as I said, denies the whole thing. The Kremlin also denies the two spoke. But Scott, earlier this month, you spoke with Ian Bremmer, whose report is at the heart of all this. Let's play a clip from that discussion on Prof G.

Scott Galloway: [Clip from Prof G] I'm deeply disappointed that Elon would come out publicly carrying Putin's water like that. I think it was deeply irresponsible. I know that he's not known for acting responsibly outside of his core areas of business. But still, when he starts hitting geopolitics, he kind of makes me want to start designing electric vehicles, right? Because I'm roughly as capable.

Kara Swisher: We should note that conversation occurred on October 4th before Bremmer's report came out about him talking to Putin. But there's so much to talk about. What do you think about this? Could it affect the board's decision to sell to him if it comes out that he did talk to Putin and then push Putin's talking points or maybe his government contracts? I mean, it's really interesting. I still think he can say whatever he wants about the war, but interesting developments. Could he be trying to get out of it? I don't know.

Scott Galloway: So there's a few things here. The first is anyone who knows Ian Bremmer knows that he's a straight shooter. And also, he has no incentive to lie. Someone's lying here, which means that Elon is lying. The question is, which lie did Elon tell? It's obvious that he told Bremmer that he had spoken to Putin and that Putin outlined his red lines. Now, is that a lie? Did he not speak to Putin? Maybe he didn't. And he was just exaggerating his importance or dialogue.

Kara Swisher: Very viable thing.

Scott Galloway: Yeah, very viable. You can see a guy like that saying, "Oh, I talked to Putin and these are the three things." Although it is a little bit eerie that he put out that tweet. Where did it come from? That is now being used in Russian media as a talking point. That Americans—the wealthiest man in the world and the premier American technologist—is in favor of this. That does not help us. That is, in my view, aiding and abetting the enemy. So he's either overestimating his dialogue and lied to Bremmer, or he's lying now and he's had conversations. And he cannot go under oath because someone who tells us many lies isn't going to get picked apart and put themselves in all sorts of jeopardy. What he has likely done here, if he in fact had this conversation with Putin, is he's violated the Logan Act.

Kara Swisher: Well, if it's negotiation, but go ahead.

Scott Galloway: The Logan Act is a federal law that criminalizes negotiation by unauthorized American citizens with foreign governments having a dispute with the United States. You're not supposed to have discourse with other world leaders who we are in the midst of a war with.

Kara Swisher: Okay, but let me push back because we're not technically in a war with them. And CEOs talk to world leaders all the time. It's not even—I remember—

Scott Galloway: Okay.

Kara Swisher: It's not even saying—this is the exact "by unauthorized Americans." He's unauthorized and he's an American citizen with foreign governments having a dispute with the United States. We are having a dispute. To your point, the act has never been enforced. No one has ever been sent to prison because some people would argue the Logan Act is actually a violation of the First Amendment, that you can say what you want. But what do we have here? We have, as always, he finds a way to be in the headline every day. In addition, it looks like he's flipping off the switch for Starlink and communications over Crimea. He was reportedly refusing a Ukrainian request to activate Starlink in the area because he's worried it will escalate the war.

Scott Galloway: He's being—

Kara Swisher: So he's making these decisions now. He gets paid by the government. He can sell it or not. But this is where we are, Kara. We have an enormous infrastructure called the federal government with some very talented people. We elect them and they get to appoint incredibly impressive people like Secretary Blinken who devoted their entire lives to try and figure out foreign policy and the relationships and the nuance. And now we have people that because they're wealthy and innovators believe they have license and jurisdiction to potentially—and we don't know if it happened—start having conversations at the highest level and entering into negotiations and parroting talking points to the American public. It's not just free speech. I get it. I'm not denying his authority to say these things, but he has a lot of impact on people. A lot of tech bros will now say, "Oh, that's what we should do."

Kara Swisher: Well, they're already in that camp. The David Sacks of the world were already in that camp. Elon's the newest member, actually.

Scott Galloway: But when they start echoing these talking points that we should recognize Crimea and go to the peace table, I just—talk about the mother of all aiding and abetting and being unproductive. And then he's deciding warfield technology. Do we want him deciding that?

Kara Swisher: All right. He's not deciding. The U.S. government has plenty of opportunity to get it from another vendor. He doesn't have to. I'm not defending it, but he doesn't have to. Second thing is he can say what he wants if we're not in an actual war with them, which maybe we are behind the scenes, but we certainly aren't that I've heard of. What I think is really interesting is what it does to the Twitter deal also. I think he probably—look, I think he definitely either exaggerated to Ian, which would be my choice of the things he did, or he talked to him. It's one of those two. It's not Ian lying. The third option is just not true. But one of the things that's interesting is having just watched Ken Burns' documentary on the Holocaust, when we weren't at war with them, which was before we were at war with the Nazis, there was a great long period and there was a struggle about whether to get into it or not. Obviously, with some very influential people, including Henry Ford and Charles Lindbergh in particular.

Scott Galloway: That's exactly the right analogy, Charles Lindbergh.

Kara Swisher: Pushing, right. So it's interesting, would the board of the New York Times at the time sell the company to Charles Lindbergh on the eve of World War II, for example? That's where it is more. Is it a Charles Lindbergh or a Henry Ford kind of situation? He certainly walked back the Kanye remarks. He said, "Welcome, friend." And then afterwards, he said he spoke to him and thought it wasn't cool. So he knows when there's a line, speaking of red lines, although troublesome. It took him a minute to figure out that what Kanye was saying was anti-Semitic. So where do you imagine this going?

Scott Galloway: Well, there's two things. There's geopolitical ramifications of whether it makes America less safe or makes our negotiations more difficult or emboldens Putin to be increasingly aggressive, thinking that our most famous citizens and our most successful citizens are on board.

Kara Swisher: It happened in World War II, but go ahead.

Scott Galloway: I agree. And Lindbergh is the right analogy. There's no one more famous than Charles Lindbergh by far. Famous, heroic, incredible accomplishments, well-deserved admiration globally, and was an apologist for Hitler. In retrospect, it's easy to play Monday morning quarterback. He probably thought he was doing the right thing for America, but we look back on it now and think, "That was not a good look." The geopolitics aside, the question I would just ask—I don't think anyone's going to pursue the Logan Act here. There's been some—you could also argue, well, maybe he was authorized to back channel. I find that highly unlikely because the people I know in government don't have a very high opinion of Elon Musk.

Kara Swisher: No, they don't.

Scott Galloway: The question I just put forward is, I think these individuals in tech have benefited more from America than almost any cohort of any country in the world in terms of the huge infrastructure investments that the middle class and the government provide. They build a thin layer on that and they become magnificently rich and magnificently powerful. I don't think he's done anything illegal here. That's my guess. I just would argue, he continues to demonstrate what I would call really poor citizenship and also really reckless. I don't think that he should be having these types of conversations, if he's having them, thinking that his judgment should—

Kara Swisher: Well, I've experienced it before. He told me he was going to convince Trump around immigrants. And I kept calling him Jesus, tech Jesus. I said, "You're not tech Jesus." Nothing happened to Henry Ford. Nothing happened to Charles Lindbergh. Except for history happened. I'm not suggesting we put him in prison. I'm suggesting we look back on Charles Lindbergh and say his legacy is deservedly diminished substantially.

Scott Galloway: Diminished. It's completely tarnished.

Kara Swisher: Okay, fair enough. Diminished, tarnished. That's what's going to happen here, I suspect. But let's go to the second part of your question.

Scott Galloway: The effect on the Twitter deal. None. Because in a capitalist society with private companies, the shareholders—whatever we talk about, whatever blah blah we talk about trying to move to stakeholder capitalism—shareholders are kind of the first nine of ten considerations usually. Larry Fink and Vanguard want their $54.20. He is up a river. He doesn't want to go under deposition. They have already marked it. They're going to get their stock. And they're not going to let him out of this. The chancery court is ready to enforce it.

Kara Swisher: I was fascinated though by what happens once he gets it. Bill Cohen had an amazing piece about what happens. Apollo pulled out. Apollo wasn't ever in, really. But they will be in. They love a cheap debt and they will buy this debt at 50 cents on the dollar. And then Elon's in a world of trouble. This company—he lays out a scenario where this company becomes worth nothing. It is. But less than nothing. He's going to owe money on top of it, unless he wants Apollo and the other debt hedge funds to get in there. What a—I'm not a Wall Street person, but boy, that's something else.

Scott Galloway: Let's talk about that because Bill's article is outstanding. The enterprise value of a company is a function of its debt, and then the equity makes up the difference. So if a company is worth $10 and has $5 in debt, it owes $5 to banks and creditors, that means the equity value is worth $5. The reason Warner Brothers stock has gotten so hammered is it has $55 billion in debt. So if people go, "This company's worth $70 billion," they'd let the equity trade at a valuation of $15 billion. On day one, let's look at this company. When he made the offer to acquire it, the stock was at $32. If you believe that Twitter has not outperformed Snap or Meta, which it has not, you could argue it's underperformed. That means the natural value of Twitter without this exogenous action of Musk means the fair value for Twitter right now is $12 or $13 bucks, or about $10 billion. They're issuing $13 billion in debt, which means day one, when Musk shows up with $33 billion in equity—$23 from him, $10 from his buddies—they're burning it. The equity value is worth zero the day they take it over. Less than zero. And then he has to pay the debt down. The debt holders could force it into—it could be owned by Apollo.

Kara Swisher: I just was like, oh my God. 100%. They longed it on. Scott, I keep telling you this. We should get into debt equity.

Scott Galloway: We should do that, yeah. The interest on that debt—that $13 billion—is going to be greater than Twitter's free cash flow. He's going to have to call his buddies and go, "Oh hey, remember me? I talked you into this terrible deal that's now worth zero." Not only is it worth zero, but if you want to hold on to any chance of having equity that recovers, then he might have to buy the debt so that he doesn't lose control. Anyway. Before that, he's going to have to call all his buddies and say, "We've got to put another billion dollars in this year. And I'm going to call you back in another six months and ask you for more money because we can't afford to make our debt interest payments." And Apollo and a bunch of people are about to come in and seize the company. You win, buddy. You have caught the car.

Kara Swisher: They suddenly don't stay bros. They're all loving to hang out. "Hey man, I was with Elon this week" or "I was with blank." Supposedly some of his buddies are already trying to get out of this thing.

Scott Galloway: No, they can't, though. Whatever money they put in is locked. It's worth zero. The only one who could give a fuck probably is Larry Ellison, but the rest of them—that's a big check to just throw into this incinerator. How does Sequoia Capital—Sequoia Capital committed $800 million to this because they want to be close to Elon and in his deals. How did they go to their limited partners? How did they go to the University of Michigan and CalPERS and the Retirement Fund of Ottawa Teachers and say, "We're burning your money because we want to stay tight to Elon?"

Kara Swisher: You know what I have to say? This super app better work. That's all I got to say. I hope it does. Honestly, I hope it does at this point. I really do. I'm like, go for it. Anyway, but not with my money.

[Ad Break]:

Kara Swisher: Up next, Alex Jones owes Sandy Hook families almost a billion dollars. That's the verdict from a Connecticut courtroom where Jones stood trial for defamation. This is Jones's second loss in court related to his Sandy Hook conspiracy theories. He still faces a third trial, which could come later this year. Of course, the right wing erupted saying that he had First Amendment things and they don't understand legal things about defamation. This guy is getting just what he deserved. He knew it was a lie. He kept repeating it for profit. And he damaged these people, these poor people who were already damaged. I couldn't have happened to a bigger piece of shit.

Scott Galloway: Yeah, this is really heartening. It's kind of a uniquely American thing in a bad way that we are one of the few places in the world where we argue with reality this hard and this long at such a cost to so many real, decent people. We let an argument take place here and a dispute take place and ignore the truth and engage in mendacious both-side-ism at huge cost to people who had already endured what most of us thought would be the ultimate cost. And it wasn't.

Kara Swisher: That's right.

Scott Galloway: We let a guy weaponize media, weaponize conspiracy theory, weaponize social media platforms. That was what got him the most jump. And why did he do it? Because he's crazy? No, because he's smart and saw a profit motive.

Kara Swisher: Yeah.

Scott Galloway: There's something very upsetting here about American culture that we would let this happen for so long. But there's also the arc of American justice—it's curved and jagged, but it does bend towards justice over the long term.

Kara Swisher: Over the long term. Let me say one thing that's disturbing is some of these right wingers, they're like—I was like, "Can you just stop?" Everything has to be about, "Oh, they're trying to quash our speech. The regime is trying this and that." I was reading a bunch of them on the plane last night and I literally kept saying, "Fuck you." How can you—it's shameful. It's defamation. It's in the law. It's been there forever. It's not a new fresh thing. This guy cynically and egregiously violated every tenant of decency. That's not illegal to do that, but he certainly defamed them and caused injury. And they proved it in court, and now he's going to keep trying. But the full-scale bear hug of this guy by Trump and others is really—you would think they'd go, "Okay, just no. We're going to walk away."

Scott Galloway: Trump?

Kara Swisher: Trump. Joe Rogan.

Scott Galloway: Yeah, yeah, I know. He hasn't had him on for a while, but yes. I would argue that most people on the left and on the right realize this is just beyond the pale.

Kara Swisher: I agree.

Scott Galloway: That same phenomenon you're describing, though, when Musk started parroting Putin's talking points and he got huge blowback, all of these sycophants, some of whom you've already mentioned on this show, immediately go to their go-to: "We're not allowed to have a conversation anymore in this society. The woke mob wants to shut down every conversation." It's like, no, we're having a conversation. Your guy is aiding and abetting the enemy. That's our view as part of this conversation. We're not shutting you down. We couldn't get you to shut the fuck up if we tried. But they immediately want to create a distraction of, "Oh, this is about free speech and the woke doesn't want to engage in a conversation." It's like, no, we're engaging in a conversation. You just don't have a leg to stand on.

Kara Swisher: Also, he's lost in court and he's going to try everything. He's demonstrated he's trying to hide money all over the place. It's astonishing. He declared bankruptcy based on the debt owed to a company he controls.

Scott Galloway: That's correct. He said on his show right after, "You think they're going to get my money?" You know what I think? I think they're getting you. And I will not stress these tech companies that did nothing about this at the time when they absolutely could have done it, relied on this ridiculous—

Kara Swisher: That conversation I had with Mark Zuckerberg, I had it with all of them. And it's on tape where I'm like, "Are you kidding me? This guy is defaming them." And, "Well, you know, we can't all agree." I'm like, "No, no one agrees with this." It's not a bigger principle. He defamed them. And in court, it was just—they need to really look hard at what they did here and think very hard.

Scott Galloway: My dad used to say this: America almost always gets it right over the long term. I think that's what happened. A billion dollars sends a strong message to people who want to engage in conspiracy theories and lies so they can profit off of other people's pain.

Kara Swisher: We'll see. Anyway, we're going to get to our big story. Meta unveiled its long-awaited mixed reality headset this week. The latest step in its march toward the metaverse. The new Quest Pro VR headset costs an eye-popping $1,500. By the way, Apple's reportedly is going to be $3,000. But that is more than three times the price of Meta's last VR headset, which I have, which is a quite good one. The new gear is getting favorable views, even if the market for it is unclear. It's a good piece of equipment that they built. But one group that's apparently not sold on the tech: Meta employees. *New York Times* reports that Meta is pressuring staff to attend meetings in virtual reality and forcing them to buy headsets. The *Times*'s Kashmir Hill spent more than 24 hours in Meta's Horizon Worlds and said she found a somewhat vibrant community that reminded her of early AOL chat rooms, but was not a great—she kind of was like, "What is this? What is going on here?" Anyway, what thinks you?

Scott Galloway: So the reviews are pretty good. It's supposed to be a really elegant piece of equipment. It's supposed to be—visible Oz when you put it on and see what it can do. I think the right metaphor would be the Laserdisc. I used to run a Laserdisc player in grad school because you could get the Criterion Collection of *Blade Runner*. And it was amazing. I have one still. This is a niche audience in gaming that will never get any sort of return on investment on the $65 billion they're supposedly going to spend on the metaverse over the next several years. My only hope—and I'm going to start talking up Meta or the Oculus and the new Quest—because the best thing that can happen in business is success. The next best thing is that you fail fast. I really hope there's enough signs of life here that they continue to invest in this and that they fail slowly.

Kara Swisher: I see what you're doing, but go ahead.

Scott Galloway: I hope this is a slow death. I think it's a really elegant device. I think they should stay the course. I think they should show the world that Meta is in fact a very innovative company. And I think Mark Zuckerberg is, in fact, at his core, a genius. He's had some issues, but he's a genius. And they should continue to make massive investments because they need to reinvent the company.

Kara Swisher: Yeah.

Scott Galloway: I think they're on the right track. I think they need to stay the course.

Kara Swisher: Wall Street doesn't think so. It's really interesting. I think he gave some interviews this week, which are actually pretty good. Of course, not to me. But he's talking about these issues. Two things: he won't talk about Elon, and he doesn't say much about Apple. I think when Apple wanders in here, they have just the right approach. It's $3,000. It's a niche product. We'll get the price down eventually and everyone can have it. I think he must be terrified about what Apple's going to introduce. It'll probably come in just like it did in lots of markets and just suck it up. It's just going to go from bad to worse. And it won't be Apple that freaks him out. It'll be massive amounts of evidence every day that his huge vision, his kind of bet-the-ranch thing, was and is the biggest mistake in technology or maybe even the biggest corporate mistake of this decade. It's going to be difficult to find another example of a company that spends—if they in fact end up spending $60 to $70 billion on this for this kind of thud.

Scott Galloway: This is a really interesting divide. Remember Magic Leap?

Kara Swisher: It's around still. It's run by a former Microsoft executive who's quite confident. They've moved into surgery and enterprise.

Scott Galloway: Speaking of which, Nadella made a surprising appearance at Meta's event this week. Satya Nadella, Microsoft CEO, announced a ton of integrations with Meta's devices, including Microsoft Teams and Windows 365 and Xbox Gaming. At the same time, it also announced a new team that will create Metaverse apps for industrial use cases. He's being quiet. He's doing the right things. I think Magic Leap—I saw some fascinating things around the device, but it's still ridiculously heavy and onerous. Microsoft had been in here with HoloLens, but they certainly didn't invest this much in that. I just have this feeling that Apple will come in with mixed reality rather than fully immersive, although I suspect you'll be able to do fully immersive virtual reality. Mixed reality uses a camera to reproduce what you see and then adds graphic layers or different layers on top of it. You can even go full gaming. Your living room can turn into a game landscape. It's augmented reality. Tim Cook talks about it a lot. It's helpful. Like, "I'm in the airport. This is where the taxis are." And then it shows you the way. Microsoft has thought about this for years, too. I've seen them make these really cool future videos that were talking about ideas like use cases like this. There are going to be these glasses and people will be wearing them the way they wear AirPods now. They will be augmented reality. There will be some virtual reality. Eventually they'll be very cheap. But $1,500? Not today, my friend.

Kara Swisher: Yeah, I don't think Apple's is gonna work either. The difference is it'll be a $2 or $3 billion write-off. It'll barely be a speed bump for Apple. And for Meta, it'll destroy 70 or 80% of their equity value. It's gonna, in my hope, basically hamstring the company. I'm hoping this is a career-ending injury for the good folks at Meta. I personally believe it's anthropological. People won't put anything on their face that doesn't raise their cheekbones or make them look younger. We're only going to put things on our face to make us more attractive to potential mates. And these things basically say "don't have sex with me." I don't think they work. I don't think they're worth the utility.

Kara Swisher: My kids are not interested in them. I've tried to get them to use our current Oculus. I think they will be gimmicky. People like me and you, mostly you, will wear them, report on them, and then no one will use them, and no one will be caught dead wearing them out.

Scott Galloway: All right, though I do love my AirPod Maxes, and I could see them adding stuff to it. That is elegant.

Kara Swisher: Let me just tell you, Amanda Katz—we were going—I'm replacing everybody's technology because most of my family was back in the 1950s. They refused to get new iPhones and I took them all to Apple stores.

Scott Galloway: Nextel phones. I want my Nextel back. That was a good phone.

Kara Swisher: It was a good phone. So I had these AirPod Maxes, which I love. And Amanda Katz, who does not like technology, is like, "I'll make do with the tin cans I've used for years." That's the kind of attitude she has. She wanted a pair of them because she's like, "These are the best." It was fascinating. I was like, "Huh." So you do like it when it's good. Very expensive headphones.

Scott Galloway: Anyway, something else Mark Zuckerberg was talking about was he gave an interview to Alex Heath of *The Verge*. Good job, Alex, by the way. Of course, I asked for an interview. He said no.

Kara Swisher: At the time of the launch, he asked Mark whether TikTok should be banned. Good question, Alex. He wouldn't answer about Elon, but he answered about this. And between us, he has told me he thinks Elon's nuts. But essentially nuts are just like, "What's going on with that guy?"

Kara Swisher: Zuckerberg pointed to different ways business is conducted in the U.S. and China. Another thing he talked about with me several years ago, trying very hard to focus me and others on China. Let's listen.

[Clip plays: Mark Zuckerberg speaking] Mark Zuckerberg: I don't know what the solution is, even though I do think it's a real question. In the U.S., there's such a clear distinction between the private and public sector. But when I travel overseas, one of the things that's surprising to me is in most other countries around the world, those sectors are blended so much. They almost don't believe that America operates the way it does. And China, more so than any other country that I've been to. The notion that an American company wouldn't just obviously be working with the American government on every single thing is completely foreign there, which I think does speak to at least sort of how they're used to operating. So I don't know what that means. I think that that's a thing to be aware of.

Kara Swisher: That was an interesting answer, don't you think? Of course he knows. Of course he's talked about it. Of course he's attacked Chinese, attacked TikTok. I love the smooth glove thing he's trying here, but whatever.

Scott Galloway: I don't know. Do you have—you don't have this feeling. I was not expecting a clip of his voice. I hear his voice, I'm like, who is that? And then I realized who it is and I literally recoil. It's not nice.

Kara Swisher: That's—he's fine. He has a fine voice.

Scott Galloway: I'm about to hear something that's a mix between sociopathy and just total bullshit. And that's what that was. As soon as I caught up to what he was saying, it's like, oh, he's clearly now going back on everything he's ever said about corporate strategy because he would like to see—Calgon, take me away. All right. Take me away. What is going on here? I would actually advise you to listen to mine two years ago. He was quite strong on China. And now, "I don't know how it works. I have been told on my many travels across the globe that the government works with the companies. During my sojourns, I've made the observation. China seems to be a little more down that highway of meddlesome highway. But who's to say? I just don't know."

Kara Swisher: Honestly, he knows. Whatever you think of Elon's intelligence around this, Mark knows. He obviously doesn't make political pronouncements, but he understands what's happening in China really well. I give him the compliment because he was quite good in my interview. And now he's as dumb as a box of hammers.

Scott Galloway: I just want to finish where we started. Mark, the Zuck and Meta employees regarding the metaverse. You be you. You just keep on keeping on. Way to go. This will pay off. Keep investing. Stay the course, my friends.

Kara Swisher: Let me say something that's going to make you angry at me. I kind of hope it works. I'm like, oh God, it would be kind of interesting if a really creative person got here. I was watching a bunch of Steve Jobs videos the other day. I was like, I'd love to know what he thinks of this, right? Like, he was a great thinker. Same thing with Twitter. Like, what would he do? I kind of wish they could fix Twitter, right? And in a way that's profitable, that'd be great, too. I'd like both of these things to work. I just don't think either of these people could make them work.

Scott Galloway: And listen, Elon's probably this. Hold on. The metaverse is working. It's called Epic Games. It's called FIFA. It's called the App Store. This vision of headsets and this and that—that's what I mean. You want headsets? I don't know.

Kara Swisher: It's getting there. It's getting there. All right. Okay. All right. Well, we'll see, Mark. But you really do know a lot more about China. Anyway, Alex, good interview. Anyway, let's go on a quick break. When we come back, we'll talk about what's coming in the next economy and take a listener mail question about the best mattress for stashing your cash.

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Kara Swisher: Scott, we're back with our second big story. Once again, it's the economy, stupid. Inflation rose more than expected in September by 0.4%. The S&P extended its losing streak on the sixth day this week, hitting its worst day since November 2020. The one thing everyone seems to agree on: more is coming. JPMorgan Chase CEO Jamie Dimon warned that the recession is likely six to nine months from now. Meanwhile, the ARK Investment CEO Kathy Wood says the real risk is deflation and warned the Fed is making a mistake by raising interest rates. The president has milder views. Biden said this week that he doesn't think there will be a recession. If there is one, it'll be very slight. So what thinks you? You have said that inflation will fall faster than anyone's expecting. Please unpack this.

Scott Galloway: Well, people in elections tend to overestimate. In marketing, they call it consumer dissonance. People say one thing and then they behave differently. I think people talk a big game about social issues and then they go into the voting booth and they pull a handle or fill out a bubble based on economic issues. So I do think the election is going to come down to two things. I think the Roe issue has really energized educated women and Democrats—wow, we didn't think this could happen, and it has. I also think we'll probably gain some moderates who think this is just a bridge too far. But I still think the overriding issue is going to come down to the economy. And the quickest signal around whether we're getting things done under the economy will be inflation. I've been wrong so far. The first signal is that inflation is not waning. But I just don't see how the dollar can be this strong without the prices of products coming down.

Also, there's an X factor here. The X factor is Ukraine. I believe that the majority of scenarios are going to reflect really well on the Biden administration. I think when we get to a situation, if it gets hotter, people are going to be glad that Biden and Blinken are in there. I think they're going to say at the end of the day, we feel pretty good about having this guy with this experience, the way he's handled it so far. If you think about what FDR did—FDR was sending armaments over the Atlantic to help support Europe as they were pushing back on fascism. And Biden, and he doesn't get enough credit for this, they're sending a lot of natural gas over to Europe in hopes that they can get through the winter and push back on this tyranny. I think there's a lot of parallels here with World War II.

Kara Swisher: All right, but the economy itself—our economy, because it will matter from an election point of view, but just from an economic pain point of view—what is your thought?

Scott Galloway: We're going to go into a recession. A recession has typically happened every seven years. It's been 13 years. It's overdue. It's like, enough already. Bring it. And Jamie Dimon's interview—when he was asked to define what a recession is, he had the best answer. He said, "Something that happens every seven years." But anyways, you asked about the economy. A dollar that is going to be amazing for our ability to control inflation, unfortunately, is wreaking havoc around the world, especially for developing economies that borrowed in dollars and now have to pay it back. It's going to crowd out every other piece of discretionary income that they have. You're going to see tremendous havoc. Our dollar is literally fucking with the world right now because it is so strong. But in terms of the American economy, yeah, I think we're going to go into a recession. I think we'll see inflation come down. And I think that our inflation will drop faster than it will anywhere else in the world.

Kara Swisher: Interesting.

Scott Galloway: There's a lot of pushback from China around COVID restrictions. They're tired of the restrictions. They want to get back to business themselves. Get back to work. When people sit down—if they really—I mean, again, we're asking people to be rational. But OK, the pandemic, we've walked back. 400 people a day are still dying. The pandemic is not over. But it looks like we've come back from the precipice. It looks like we are, for the first time, have real unity in the West. And it's working. It really is working. It's extraordinary what's going on here. And I believe that inflation will come down. And there's a chance that if the market perceives this recession is coming but it's not going to be terrible, and they see an end to the interest rate increases because inflation starts to come down, you probably see the markets come out. I mean, it's impossible to time this shit. And I have a tendency to talk my own book because the idea of Trump getting back in office scares the shit out of me. But I think the economy—I think the market's going to fall pretty dramatically from here. And nobody knows.

Kara Swisher: But everybody complains that the markets dropped so much. The market's back to where it was just two or two and a half years ago.

Scott Galloway: Yeah, I thought 20% more. Yeah.

Kara Swisher: So still that takes it back not that far. I mean, it's so funny when I talk to people under the age of 40 and they're like, "Oh, the economy is bad" or "the stock market's bad." I'm like, you don't know what bad is.

Scott Galloway: Were you doing that grandpa thing? "Oh, in my day we had to like—"

Kara Swisher: Well, okay. From 1999 to 2001, you were around. Cisco, which was considered the old stalwart amazing network infrastructure tech company. And Amazon, the hottest new company—lost 90% of their equity value. Amazon.bomb. If you put $100 in Amazon and Cisco, it was worth 24 months later, it was worth $10. Amazon.bomb. The majority of what I'll call the real pain has kind of been sequestered to the really growthy stuff in crypto. We haven't seen like what I'll call—I mean, in 2009, do you remember the way stocks went down? I don't know if you checked your portfolio back then. It was crazy.

Scott Galloway: Anyways, I think it's overdue.

Kara Swisher: I don't ever look at it. Ever.

Scott Galloway: That's arguably one of the best investment strategies. One of the people I work with was like, "Have you looked at it?" I'm like, "No. I'm not going to. If I turn a certain age and I need the money, I'm fucked, but I will just not look at it until I need it."

Kara Swisher: To that point, there was an analysis—I think we mentioned this a few weeks ago—the best performing cohort of investors: dead people. Because they didn't trade. Their accounts just stayed, no fees. That's me. That's Kara Swisher. And they just left it alone. And over time, the natural trajectory of the market is up. People having babies, they're more creative, more intelligent, more productive. The economy's natural trajectory is up.

Scott Galloway: That said, and I will end on this, the people who are going to suffer—people who live paycheck to paycheck—the prices of these things going up is going to affect them rather dramatically. It's not everyone who owns stocks, which is a lot of people, too. But everyone is going to feel the pain, but the pain will be more abrupt to people who it matters—food and gas prices. But one of our failures as a society is we studied to the wrong test. Everybody knows that the NASDAQ or the Dow was up or down today, but we're not spending enough time talking about we're back to record levels of opioid overdoses.

Kara Swisher: I wonder, did you write a book called *Adrift* about charts? We're all obsessed with the NASDAQ.

Scott Galloway: Yeah. Who gives a fuck where the NASDAQ is? 54,000 people are going to die in unmarked graves, basically, from opioid overdoses. We studied to the wrong test.

Kara Swisher: Speaking of people that deserve to go to jail, the Sacklers, let's bring that up again. Okay, Scott, let's pivot to a listener question. You've got—you've got mail.

Scott Galloway: I can't believe I'm going to be a mailman. You've got mail.

Kara Swisher: All right, this question comes from Jess. I'll read it. "I'm a mid-40s single mom with a VP job in tech. I have a great salary, own my home, robust 401k, savings, and trade accounts. My question is, in this economy, should I temporarily reduce my 401k contributions in lieu of holding more cash? No investments seem to be giving a great return right now, and rumors of recession and more Credit Suisse-type problems make me think I should increase cash reserves. Bottom line, where should I put my savings now? Love all you do. Thank you, Jess." There you go, Scott. You have another minute to bang on. Is it gold in the safe? Money in the mattress? What?

Scott Galloway: Well, first off, just let me say that this woman is what makes the world go around—single mothers who are working and managing all that. I would like to—it's impossible to time the markets. And a 401k is an amazing way to save money because it's tax advantaged. Stay the course. The only thing you might want to consider is that in a 401k or most tax advantaged investment vehicles, you get some influence over how it's allocated. They've always said that over time, generally speaking, the mix should be 60/40 equities to bonds. And most people have gone to like 80 or 90 equities because there's been such a run up in equities. What I would just consider doing is speaking to your financial advisor or someone at Fidelity or Vanguard or someone who is knowledgeable, and try to speak to more than one person because there is a collective wisdom of crowds, and say, "Should we consider increasing our allocation of fixed income?" Because for the first time, fixed income credit investors are getting the yield they deserve based on the risk. So for the first time, I'm looking at bonds. I haven't invested—I bought like one bond in my life. But this Twitter paper that's going out—it might go out at an effective yield of like 16 or 20 percent.

Kara Swisher: Yeah, yeah.

Scott Galloway: And if they're $13 billion, the company is probably worth at least $10. So the creditors would get almost all of their money back even if shit got really bad, and they're going to get paid well. So stay the course. I would say buy Elon debt. That's what you should do. That's probably a good—and someone else will probably be owning the company if he continues to be our national leader on foreign policy. Just to wrap up: stay the course. Don't try and time the markets. If you're smart and you're already doing the right things, which clearly you are, but you may want to talk to whoever's managing your money and say, "Should we be thinking about increasing allocation to bond funds, low cost ETFs, index funds?" And then focus on your work and your kid. That would be mine.

Kara Swisher: That's what Kara Swisher does. That's what Kara Swisher does. I have some money in cash and stuff like that. And I'm thinking of buying Scott's house in London at some point at this reduced rate. It's worth 20% less.

Scott Galloway: I know. I'm waiting. I'm waiting. I'm waiting.

Kara Swisher: It's all cash.

Scott Galloway: Literally, I thought I was a fucking genius. I'm like, "I'm going to buy all cash because the pound's at a record low of $1.26." I move in and it's a buck three. I've lost 20%.

Kara Swisher: Oh, come on. Once again, rich people's problems.

Scott Galloway: The only consolation I have is that when Musk moves into this house called Twitter, he's down 70% on day one.

Kara Swisher: All right. I love that. That's schadenfreude. I love it. All right. Anyway, if you've got a question of your own that you'd like answered, send it our way. Go to nymag.com slash pivot to submit a question for the show, or call 855-51-PIVOT. All right, Scott, one more quick break. We'll be back for predictions.

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Kara Swisher: Okay, Scott, let's hear our prediction. Let's make it tight.

Scott Galloway: So this is just sort of putting a fine point on everything we've been talking about. The Twitter transaction is going to close, and almost immediately, it will probably not be the worst acquisition in history. Time Warner or AOL's acquisition of Time Warner is probably the worst. But I mean, people call out Google's acquisition of Motorola where they lost $13 billion. On day one, let's look at this company. It has a billion dollars in EBITDA. And right away, it's going to have $13 billion in debt. I was on the board of a publicly traded media company, and whenever our multiple—our debt to EBITDA—went over three, equity investors got scared. This starts at 13 times debt to EBITDA. In addition, by any sane metric, these people are paying $54.20 for a stock that's worth $10 to $15. This deal closes, and on day one—the moment it closes—what's unique here is when AOL bought Time Warner, it took everyone a year to recognize that this was the worst acquisition in history. Within 60 seconds of closing, the world is going to realize that this is the second worst acquisition in history. Which means Elon will do something loud. I don't know, something. He'll like marry Kim Kardashian.

Kara Swisher: Oh God.

Scott Galloway: Something like—oh yeah, because then Kanye would be mad.

Kara Swisher: Oh God.

Scott Galloway: He'll try to do a lot of hand waving. He's going to have to wave those hands.

Kara Swisher: Oh, there's going to be a lot of jazz hands coming out of this closing. Payments. Ah, we're going to do it. Let's annex Canada. Like, all good. Sure, why not? I have got to go off. I've got to interview—you know who I'm interviewing today? I'm at Lesbians Who Tech. That's why I'm in San Francisco.

Scott Galloway: Who did that with you two years ago?

Kara Swisher: It was the second heterosexual male to be on stage at Lesbians Who Tech. You were the hit. This one's in San Francisco.

Scott Galloway: Can I just relive that moment?

Kara Swisher: Sure.

Scott Galloway: We're about to go on stage. They go, "Ladies and ladies, please welcome Kara Swisher and Scott Galloway." And you turn to me, and in the most stern, mom-to-son voice, you go, "Don't make fun of the disabled or transgender people." And then walked out. And I'm sitting there. I'm like, this person thinks I would make fun of disabled or transgender people.

Kara Swisher: You said those exact words. You were very serious. "Don't make fun of disabled people or transgender people." And then we walked out on stage. You did a good job. They loved you. Anyway, I've got to interview Brian Chesky, who is very excited. I'm going to interview a congresswoman who's doing a data act around women's health, Sarah Jacobs. But then I'm interviewing Chasten Buttigieg about gay parenting. It's going to be quite the day.

Scott Galloway: Oh, he followed me. He followed you?

Kara Swisher: Oh, see. I want to roll with that guy. Ask him if he wants to grab dinner.

Scott Galloway: You know what? We can do it in D.C. We're going to have a play date.

Kara Swisher: You always say that. "Well, to come to D.C." You're like, "I don't know where you are." It's the rabbit coat. My dad's third wife—he used to promise her a rabbit coat, and it never happened. Okay. Anyway, we're going to miss you at Lesbians Who Tech. Speaking of things, I'm going to finish. I was talking to someone who did some investments, got some investments by one of the billionaires. I'm not going to say which one. And things didn't go well. And I said, "Didn't I tell you that?" And they said, "This is what you told me. You said, 'Do you know the difference between billionaire owners and terrorists?' And he said, 'What?' And I said, 'You can negotiate with terrorists.'" Which I thought was another good one, just like that.

Scott Galloway: I don't believe I said that to you. I don't even remember saying that, but see, I had your best interest in mind.

Kara Swisher: Oh, you were very serious. And you were very worried that I was about to mock the disabled.

Scott Galloway: Well, I didn't want these lesbians to take the stage and kill you. I thought that would be bad for my career, really.

Kara Swisher: Yeah. No, I realized it was out of concern or protection, but anyways. Anyway, you did beautifully. I'll say hi to all the lesbians from you, but that's the show. We'll be back on Tuesday with more Pivot. There's so much more to come. There's so much happening. Scott, thanks for waking me up here in San Francisco at this very early time.

Scott Galloway: You're very welcome.

Kara Swisher: Today's show was produced by Lara Naiman, Evan Engel, and Taylor Griffin. And Ernie Indratot engineered this episode. Thanks also to Drew Burrows and Miel Saverio. Make sure you're subscribed to the show wherever you listen to podcasts. Thank you for listening to Pivot from New York Magazine and Vox Media. We'll be back next week for another breakdown of all things tech and business. Meta employees, stay the course. This will pay off.

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