Elon’s Power Play, Ozempic Insurance Costs, and the Future of ESG

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

Scott Galloway: And I'm Scott Galloway.

Kara Swisher: Get excited, Scott, because we're doing things a little differently today. It's a special show with Pivot listeners calling in and asking us their questions on all sorts of topics. We're going to meet the people, Scott. The people. They have spoken.

Scott Galloway: I don't like surprises. At 49, I could slip and break a hip when you do this to me.

Kara Swisher: I think you're going to love it. Are you scared people aren't going to like you? They're going to yell at you?

Scott Galloway: I got passed out a long time ago, Kara.

Kara Swisher: Good. Our listeners are wonderful, and we're glad to actually meet them in person, in real life, but not really in real life. Remote, but real life.

Kara Swisher: But first, let's talk about some stuff in the news before we get to our fantastic listeners. Apple is making a big change in its apps for payment policy, and the move is facing a backlash. The company issued new policies around payment after the Supreme Court declined to hear the appeal in the Apple Epic antitrust ruling. Developers will be required to pay a 27% commission if using an alternative payment method in the App Store. Epic CEO Tim Sweeney called it a bad faith compliance plan and said Epic will contest it in district court. What do you think?

Scott Galloway: They're trying to get within the bounds of the law from what I understand. It's just evidence that we need more competition. A 27% commission on downstream payments within an app... I just don't... the notion that you could buy a product, you own the product, and then if within it... it just makes absolutely no sense to me. That just strikes me as so egregious. I think they should get a payment on some level for keeping the streets clean or giving distribution. Distribution is expensive. Retailers get paid for end caps, et cetera, as you know. But what would that be? I think they're sort of playing games here, especially with the government looking at them so strongly. I don't know if this is the best of ideas. I see why they're doing it, but I would have to agree. It looks bad. Just feels like a lot.

Kara Swisher: And also, if you're going to charge people and have the app store, then you shouldn't have your own apps because you immediately have a 27% advantage. So how does Spotify ever compete with Apple Music when Apple Music starts with a 27% advantage because they don't have to pay these usurious fees? So which is it? You could make the argument that they provide the infrastructure, but if they're providing the rails and they see everything that's shipped on the rails, they shouldn't go into the business of retail and then charge retailers these onerous fees to ship their clothes. It feels like it's literally the definition of anti-competitive.

Scott Galloway: I wonder if they shouldn't charge fees to people they compete with. Could that be a way to do it? Like they could charge you, not others that they don't compete with. Or if they're in their direct business, they can't charge them. I get their arguments about safety. I do. And I get their arguments about they own the rails and they've created the distribution. There is a cost for that. And there should be a payment for making that. But you're right. Competition is the only way to handle this. But there isn't going to be nine cell phone app stores. And by the way, that would be onerous to these companies to make a different app for every phone, too.

Kara Swisher: Right. So, I think it's really... I don't know. They're going to get in trouble for this one.

Scott Galloway: But your buddy Barry Diller outlined it perfectly. Look at credit card companies, huge infrastructure investments, huge due diligence on who are merchants you can trust, security, safeguards, and they take between one and a half and three percent.

Kara Swisher: Yeah, I would agree. Barry Diller's a very smart man.

Kara Swisher: Anyway, also CNN CEO Mark Thompson is sharing his plan for the future. A lot of what we discussed this last week because I had interviewed him and he said almost the same things. Thompson sent a memo to staffers this week publicly outlining a new organizational structure for the company built around the future, not the past. He told the Wall Street Journal he's looking to monetize CNN content potentially through subscriptions. He was being more experimental. I think he's looking at it much stronger than that. That was my impression from our interview. He also says he wants to find a better way to show CNN videos on phones. These are all sort of table stakes. CNN's been very behind here. I think he talked about bringing everything together instead of having these silos. I think that's smart. He's kind of just cleaning it up and bringing them into the future. That seems to be my impression of this.

Scott Galloway: If you want to understand what a CEO is going to do at a company, look at their most successful tenure somewhere else. That's the strategy they'll implement. And Mark Thompson's big victory at the New York Times was he recognized the world was moving away from an ad-supported media model and basically moved towards subscription, made some acquisitions and got much more disciplined about putting their content behind a paywall and moved the company from, I think it was a quarter of the revenue was from subscription to over 50% or pretty close. As a result, the company not only enjoyed an increase in earnings, but more specifically, its multiple on those earnings went up because investors like subscription revenue a lot more than ad revenues. With subscriptions, people usually take longer to cancel.

Kara Swisher: Or they stay there because they like what they're getting. And The Times has added things on, like cooking. Well, we have to pay for that one. But they added things, Wordle, connections, things like that.

Scott Galloway: The other thing that struck me was that Andrew Morse and Rebecca Kutler and Jeff Zucker had the right strategy, but it was probably the wrong execution. If you had a tighter, crisper, higher production value version of the news, I think you could charge for it. So CNN Plus, it was exactly the right strategy, but it should have been news behind a paywall, not news anchors doing their book club.

Kara Swisher: Jake Tapper's book club. I just like to say that over and over.

Scott Galloway: It shouldn't have been Scott Galloway, although my program was outstanding.

Kara Swisher: I liked your show.

Scott Galloway: I appreciate you saying that. But it should have been Anderson Cooper giving you either a four, eight or 12 minute loop on today's biggest stories. The other day I made the mistake of turning on TV and I went to CNN and I went to Fox and they were just trying to stretch out the most boring content. They had all this live footage from basketball from high school gyms talking to people like, "Well, why are you voting for Donald Trump?" Oh my God, this is so bad. The thing that kills broadcast news and broadcast cable is the clock. They have to fill the damn clock. But if they just had it really tight and they had a bug on HBO Max or on Max and you could hit it anytime and it'd be like, "Do you want your seven minute loop on news? It's going to be our best news people. It's tight. And we're going to charge you for it."

Kara Swisher: Tight seven. Yeah, I would agree. One of the things I told Mark when we were talking, and I think I said this earlier this week, was the problem with CNN Plus is it was no CNN. That's what you're there for. And that's the brand. And he talked about that. The other stuff, it's not known for Anderson Cooper's parenting tips. It's known for news. News, news, news has a fantastic news brand. And so they have to lean into news and people will pay for it. People pay for the news, the Wall Street Journal, the New York Times. And then you add on other things that are kind of fun for them, right? Kind of interesting and fun things or necessary things.

Scott Galloway: Well, Stanley Tucci, like having an orgasm when he eats salami.

Kara Swisher: Yeah, I know. But they got rid of that. That's over at National Geographic. They've got to have a... what do you pay for? There are things you absolutely... if you don't have to sit and wait for the news, I think that's valuable to a lot of people. And I think people will pay for it. One of the things he did say, though, is he's not going to do a lift and shift from his New York Times. He goes, "I don't think I'm just going to do the New York Times thing here."

Scott Galloway: I had that done. I was a surgeon of Beverly Hills. Oh, wait, never mind.

Kara Swisher: He goes, "Don't think I'm just going to New York Times." I'm like, I think you're just going to do the New York Times thing here because it actually makes sense for this product. It's a news product. It's a global product. They've got reporters all over the world, and they waste their time talking, doing stupid stuff that isn't valuable to people.

Scott Galloway: Yeah, and they fact-check their information. It's not entertainment, it's news.

Kara Swisher: Yeah, they have hundreds of reporters. They have so much news that's coming out of their ears. And they do a great job at that. And he's really smart. I think he's going to have a good year, as you said, you thought Warner was going to have a good year because of him.

Scott Galloway: I was on with Christiane Amanpour last week. I like to say that because I think it gives me a lot of credibility.

Kara Swisher: Lastly, very quickly, any thoughts on this Dean Phillips controversy over DEI? You love the DEI topic. He got a million dollars from Bill Ackman. And Bill Ackman, of course, because he can't stop tweeting publicly, said he was teaching him about DEI and things will change fast. It looks like he was buying Dean Phillips. And on his website, he changed DEI to something else. I forget what it was. Restorative justice. I don't really know. It looks like he was bought and paid for. And then, of course, he says, "I can't be bought." But it looked like it was gone from diversity, equity, inclusion to equity and restorative justice, which I think is even... I don't even understand that. So any thoughts? It looked like, but then Ackman couldn't help but take another lap because he loves to take a lap.

Scott Galloway: Look, I started giving money to politicians about five, seven years ago. And I wasn't disturbed by the fact that you can give money to politicians. I was disturbed by how cheap they are. You get a lot of access for not a lot of money.

Kara Swisher: Yeah, they're cheap.

Scott Galloway: And I thought, wow, with a decent amount, I can't even imagine the kind of influence the Kochs brought. And obviously there are Democratic donors too.

Kara Swisher: Yeah.

Scott Galloway: I think Thiel only spent $30 million, which is like in his kitchen drawer. It was just striking to me how much access you get with just a little bit of money. So, basically Citizens United said that money is voice, it's speech. And so this is how America works. People who give money get to influence policy. And I don't think that's news to anyone. It wasn't good for his campaign. What Ackman represents is what Musk represents. Since when we wanted to put a man on the moon in the 60s, we were spending 3.5% of GDP on the Apollo mission, and NASA was the one putting a man on the moon. The highest incremental marginal tax rate was, I think, in the 70s or the 80s. It's since then gone down to 37 for current income and 22 for long-term capital gains. The result is a shift of capital from the government to wealthy individuals. And now wealthy individuals get to decide if we shoot projectiles into space. And they also get to decide what DEI means and if we implement it at our universities. So Bill Ackman is just the latest incarnation. It's like government. You don't like government doing it? We don't like Bill Ackman doing it either.

Kara Swisher: Well, this is the least productive legislative session since the depression, and stepping into that void is money.

Scott Galloway: And specifically Bill Ackman. If you think about shareholder activism, it's going direct to the shareholders around the board, going direct to shareholders saying, "Kick the bums out." Basically Bill Ackman is saying, "I'm going to take my capital, my army of PR executives, my communications, my proxy solicitors, my social platforms, and quite frankly my fearlessness, my intellect, my aggressiveness, and I'm going to go direct to citizens or direct to the university. I'm going to bypass elected officials." And here's the problem. We now have individuals who suffer from, at a minimum, a really terrible bout of Twitteria and are attention monsters and might, in fact, be abusing drugs as opposed to leaning on democratically elected officials to make these decisions.

Kara Swisher: I agree. Let me finish by saying there's a great piece by Kurt Andersen in The Atlantic. It's called "Bill Ackman is a Brilliant Fictional Character," a close reading of his remarkable social media posts. And I think by "remarkable," he wasn't thinking they're remarkable. But this paragraph I thought was fantastic: "Taken together, these recent posts of Ackman's are like a novella, an exquisite piece of satirical fiction in a digital epistolary form. They have the voice of an absurdly self-regarding, unreliable narrator, a hot-headed, self-righteous, born-rich billionaire investor who considers himself intelligent and virtuous, persecuted by villains as he fights for justice in the honor of his defenseless goddess wife, and reveals his foolishness and awfulness and possible derangement in the course of a week-long public tantrum." I love Kurt Andersen. And I wish Spy Magazine existed because short-fingered Bulgarians are back. Ackman and Musk have a lot in common in these guys. They can't... they become addicted to the attention.

Scott Galloway: What did you say? Twitteria?

Kara Swisher: Like diarrhea. Twitteria.

Scott Galloway: Twitteria. I love it.

Kara Swisher: Scott, I feel like that's a column for you.

Scott Galloway: Thank you. I liked it.

Kara Swisher: But they suffer from it. Bill Ackman has eaten the same fruit plate that was washed in water in Cabo San Lucas and is now literally like uncontrollably spraying feces into the world anytime he feels.

Scott Galloway: Oh, my God. That happened to me in New Mexico. It was lettuce.

Kara Swisher: It happens to a lot of us in Mexico.

Scott Galloway: It was lettuce. Oh, wow.

Kara Swisher: By the way, my favorite... I'm going to... we're going to get to our listeners because that was beautiful. I don't want you to say another word because that was beautiful. That was fantastic by Scott Galloway. And I need you to write about it. Anyway, let's go on a quick break. When we come back, we'll take some calls from our Pivot listeners.

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Kara Swisher: Scott, we're back. Let's get to our first listener call. Our guest already looks horrified. He's already regretting this decision. As he should be. He's already regretting this decision. And I hope that he chastises you for your behavior. Anyway, we're going to meet the people, Scott. And this is the first person, which is our first listener call ever. So this is a very exciting thing. Sean, welcome.

Sean: Well, hi, Kara and Scott. Thanks for having me on. I'll try to set the bar as low as possible for the subsequent listeners who are asking questions so they don't have a tough act to follow. So I'm a longtime listener and I'm an attorney. And I worked in private practice as a litigator for a while, and the past few years I've worked in the public sector.

Kara Swisher: Can I ask you a number of questions? Do you like the penis jokes?

Sean: No, not that one. I appreciate Scott's humor, but I feel like now being on the podcast, I'll be unemployable for the foreseeable future.

Kara Swisher: So that's what we like to do here. We like to ruin careers.

Sean: Can I ask you another question?

Kara Swisher: You sound like you're from New York.

Sean: I am.

Kara Swisher: I thought so. Brooklyn or Staten Island?

Sean: Ah, Long Island.

Kara Swisher: Oh, Long Island. Yeah.

Sean: Long Island. All right.

Kara Swisher: Thank you, Sean. Let's listen to your question.

Sean: So it's about Elon. And it's something of a legal question, but it's way outside of my area.

Kara Swisher: Who? Elon. We've never heard of him.

Sean: Yeah, you don't talk about him on this show.

Kara Swisher: No, not a lot.

Sean: So here's my question. In buying the platform, Elon's turned himself into the main character on Twitter, and he's repeatedly posted controversial tweets. In multiple instances, Elon's tweets have had a negative impact on the financial interests of X, not to mention Tesla. So what I want to know, if you guys have any insight into this, particularly you, Scott, since you've served on boards over the years, is there some reason, legal, practical, or otherwise, that no shareholder has pursued legal action against Elon, asserting that his tweets have constituted a breach of his fiduciary duties? And I'm putting that unsuccessful 420 lawsuit from a few years back in a separate bucket because it involved alleged fraudulent misrepresentations about the company itself, whereas some of his other tweets are just lightning rods for controversy that caused the stock price to dip. So I'm wondering if you guys have any insight on that.

Kara Swisher: Well, before Scott starts, there are some shareholder lawsuits around how he and his behavior is noted in them, in several of them happening at various times. He's won quite a few of them, including that one with the shareholders. But there are a number of shareholder actions happening. But go ahead, Scott, why don't you talk about being on a board? Because I haven't been.

Scott Galloway: Well, you have to distinguish between a private and a public company. A public company is fertile hunting ground for plaintiff's attorneys who, when they see anything resembling behavior that they think is bad for shareholders, they can initiate a class action suit. Typically, in a board meeting, you get a list of all the legal actions and they're numerous. Plaintiff's attorneys, while they play a really important role as a check on corporate America, there are quite a few of them who... the ecosystem has it that they file a suit and many companies will just settle. There's incentive to file a lot of suits against companies that don't see the distraction and the potential downside as worth it. And so they'll just settle. He's probably... when you're talking about X now, that it's a private company with a relatively finite number of shareholders, it's unlikely they filed suit because they're all his buddies. And as far as I can tell, the only reason they initially invested was hope that they would curry favor with him and have the opportunity to invest in the follow-on round of SpaceX or be one of the book runners. Sequoia, I can't imagine, consciously made a rational decision in isolation to put whatever it was, a couple hundred million dollars into X. But they think this is an ecosystem. We want to be involved in all of his other ventures. We want to have an opportunity to participate. It's a vig. It's essentially a vig to hang with Elon.

Kara Swisher: In the Muskosphere.

Scott Galloway: Yeah. What's unusual, though, is it relates to what I have never seen. I don't think anyone's seen in governance. Earlier this week, he essentially took to Twitter to demand that he would get 25% voting control. And I think he knew that that would be impossible for a post-public company because he would be retroactively trying to create a new class of stock that had super majority voting control. I think he knew that wasn't possible. So the only way to get there would be to increase his stake and award him options that would get him to that 25% mark. He has options that if he exercises now, take him from 13 to 17%. And I have never seen a CEO... I've been on boards where CEOs stamp their feet and threaten to leave over their compensation. I've never seen a CEO take to Twitter and threaten the company publicly. But he is effectively a walking plaintiff's attorney dream. But he's created so much shareholder value. And Sean, after your response, I'd love to get your thoughts here. My sense is he sees the legal expenses as an expense of doing business the way he does business. He invites them. He knows they're going to come. But the dollars are so enormous here that he'd rather be aggressive, raise his profile, even at the risk of shareholder lawsuits. Kara, what do you think?

Kara Swisher: You know, I think a lot of CEOs do this privately. They hold up a board or threaten things like that. And so he's just doing it publicly because he's that guy, because he gets to be that kind of asshole. But what's interesting is, as Scott said, a lot of tech companies have these dual class shareholders, and he didn't do it at the time Tesla was created and probably wishes he had, but they can't do it now. Now, what's interesting about this is he's essentially saying, "I will withhold my leadership from you unless you do this." That's what he's saying. "I will not help you in the future. I won't help it with AI." Even though he's touted the company as an AI company and a robotics company, which it has very advanced robotics, it has very advanced AI, "I'm not going to help you make wealth anymore until you pony up this money." Now, the other problem besides the fact that it can't make a dual class structure, which I think would be to his liking, but it doesn't matter. He effectively runs the board. The board is not an independent board in any way or doesn't behave like an independent board. This is a lawsuit over his compensation package actually going on. A shareholder said his compensation package was outsized and it didn't require him to work full time. He's complimented the Twitter board, but it's not a good look. It looks like he's sort of blackmailing the board. That's what it looks like, although he said they like it.

Scott Galloway: It's sort of like an abused spouse. Stockholm syndrome.

Kara Swisher: Yeah. Well, I don't think they like it. I get the impression they don't have a choice with this guy. And so they can't do anything until... this will make this lawsuit win if the board doesn't... if they suddenly award him this, because that's precisely what the lawsuit is saying.

Sean: Yeah, I mean, I think, first of all, they moved their corporate base from... they were previously incorporated in Delaware and they moved to Nevada. And when you bring these shareholder lawsuits, I think that's one consideration and the laws where they're incorporated. I think Nevada might have an intent requirement for these breach of fiduciary duty lawsuits, like as opposed to just careless behavior. There might be some intent requirement. And I think Scott makes a really good point about how the people who are in bed with him at this point, not only do they know what they were getting into, but they wanted that access. So that makes sense to me. But on his recent tweets, Kara, you brought up the fact that sort of the AI aspect of this. When I read that story, he wasn't just saying, "I'm not going to work on some of these AI issues." I think he was at least implying that he was going to do it elsewhere.

Kara Swisher: Yeah, take it elsewhere.

Sean: Right. And does that change the calculus a little bit? He's not just saying he's not going to do X. He's saying, "I'm going to essentially perhaps compete with you" to his own company.

Kara Swisher: Other people... I don't know if he has a non-compete. I don't know. I have no idea. But I assume there is an issue here because there's IP too, right? If he takes people... the guy at Google got in trouble for going over to Uber, right? There's all kinds of law about this. And I think that's what's interesting. He's essentially blackmailing them. The issue is, will they do anything about it? And so far, this board has done nothing. Now, that opens them up to liability. But from talking to them, I don't think they feel like they have any power. I think they feel like they have none. And he's just doing it right to their face. It's not unlike what Trump does to the GOP. It's like, "I'm just going to primary you." That's what he's saying from a business point of view. And so he puts them in a terrible position and they cannot like it. And so, I don't know. This guy breaks rules all the time. And sometimes it's good and interesting. And sometimes he just has decided not to play by any rules that anybody else has. And again, just like Trump in the court, who yells in court at the judge and makes faces? He did yesterday and he's still not in contempt. So I don't know. I will see what happens. But both Scott and I... and I don't know if you think this thing, this board is just a paper tiger, not even a tiger. What is it, a paper?

Paper mache.

Kara Swisher: Yeah, I mean, I think Scott's talked repeatedly about how the corporate governance here is, to say the least, lacking. So, yeah. It's a real test. To say it's even uncharted water here is an understatement. It's not calculus. It's a different math that's never been seen before because typically boards will err on the other side.

Scott Galloway: Boards are usually full of what I call FIPs, F-I-P, formerly important people. And sometimes their ego absolutely gets the best of them and they won't do what's right for shareholders because they get angry and say, "Well, this activist, I'll show him. He's gonna show up and threaten me." Or the CEO does something that pisses them off and they fire the CEO even when maybe they should have just dealt with the ego of the CEO.

In this instance, think about how just crazy this is. Elon Musk is the wealthiest person on the planet. The primary source of that wealth is Tesla. So he is now turning to the company that made him the wealthiest person in the world and threatening the board publicly on a platform that he bought by selling Tesla shares, that unless they pay him another $70 billion, he's going to take his ideas to another company while he's working at Tesla. There are like eight different things here that any other board would fire the CEO for.

But what you have is his brother. You have several people who are so conflicted here, VCs. One person was involved in SolarCity. This is literally an implosion in governance. And the retort would be, at the end of the day, it's about increasing shareholder value. And this guy has done it. So the argument would be he has earned the right to play by a different set of rules. But I've never seen anything resembling this.

Kara Swisher: Yeah, we've got to go, Sean, but he's an adult toddler and they're giving him sugar. I don't know what else to say. And they're going to keep giving him sugar until he breaks something, which he's done many times.

Anyway, Sean, thank you so much. It was great to chat with you. We hope you don't lose your job, but it was a great question. Thanks, Sean. I appreciate it.

Sean: Thanks very much.

Kara Swisher: All right, bye. Let's move on to our next caller. A doctor who reached out to us following one of our discussions about weight loss drugs. Hello, Dr. David Rooney, as in—no, it's Rooney, Rooney, right? David Rooney.

David Rooney: Yeah.

Kara Swisher: Do you love macaroni?

David Rooney: I do love macaroni. Who doesn't? And cheese.

Kara Swisher: Take the mackerel off, but you'll love me too. Okay. All right. Okay, perfect. You're a robotic surgeon with a personal finance website. This is fascinating. Can you tell me just briefly about this?

David Rooney: Yeah, so that started because I don't like to be told I can't do anything. I graduated from the United States Naval Academy with no financial literacy and then thought I was doing okay. Then the great financial crisis started and I called in to add some money to my account. And they told me I couldn't because the funds were closed. And then they told me I didn't warrant getting a financial advisor because I didn't make enough money, which didn't make any sense to me because I made the most money in my family at the time.

So I created a chip on my shoulder and I started learning as much as I could about finance. Next thing you know, I had accumulated a lot of knowledge. Fast forward to the pandemic and I was watching people lose their jobs and I couldn't understand what was going on and why these things were occurring. My brother challenged me to help as many people as I could by just putting the knowledge in my head out there on the internet.

Kara Swisher: Good for you. Well, congratulations, Macaroni. Okay. So let me, what's your question? You're also a doctor. So what did you want to talk about, weight loss drug affordability?

David Rooney: Yeah. So, Professor Galloway, you mentioned that Ozempic can be a world changer, right? It can be a thing that leads to further breakthroughs and behavioral modification and getting people off of things they might be addicted to. Because that is a benefit that has seemed to occur that they've seen in observation. People stop drinking as much, gambling as much, things of that sort.

The thing that we never really consider, and healthcare gets a bad rap, right? It's clearly not a good system that is designed well for the times that we're in. However, the thing that always slips underneath people is the fact that insurance plays a big role and goes unregulated to the degree that they determine who can afford what they can afford. Most people can't afford a $400 emergency and the average car payment is $1,000, but Ozempic and the other GLP-1 agonists might be $1,200, right?

Kara Swisher: All right, question. What's your question? What are we going to do about it?

David Rooney: So the question is, how do you envision that insurance is going to change in the future in order to reflect the vision that you see carrying out?

Scott Galloway: First off, Dr., it always sounds patronizing when I say this, but I mean it. As someone who went to Annapolis—I decided not to go there, I went to UCLA—I appreciate your service.

To be fair, if you're in the top decile of income earners in the United States, I think you have access to the best healthcare in the world. But it's the bottom 90 who are subsidizing it. And I think that one of the culprits, if you will, is the insurance industrial complex, which does a very good job of flying below the radar. They make it very difficult for a mother with childhood diabetes to get her money back, such that she gives up and you end up with insurance breakage. They overcharge young people who are very healthy and don't need insurance to subsidize old people who need a disproportionate amount of health care.

I think insurance in the United States on a lot of levels is literally one of the biggest economic taxes that the poor pay. And I've talked about this a lot. I am not insured because I can afford not to be insured. It's poor and middle-income households that can't be insured.

Now, as it relates to GLP-1 drugs, I do think over time, the benefits are going to be so obvious and also the amount of capital going into the exploration of GLP-1 drugs is going to be so massive that it's going to create competitors and bring the cost down. And I do think the government's going to get involved. It's not getting out to the rural areas where people are obese and it's really impacting their lives in a negative way. I do think the market to a certain extent and government hopefully will start to increase the distribution or disperse GLP-1 drugs. I'm hopeful that happens.

Bigger, broader issue, we need some form of health care reform that gets rid of this ridiculously fat and happy, expensive middleman that has weaponized government and creates regulatory capture called the insurance industrial complex.

Kara Swisher: Yeah, I think one of the things that Scott has talked about a lot, and I think it's important, is to understand the system is good for nobody, including doctors. My brother's a doctor, as you might know. And I've never talked to any doctor who likes the insurance system or the billing system. They're so captured by it and spend a lot of time dealing with it that they should be treating patients, right? Or they want to be treating patients.

And I don't know, from your perspective, everybody gets screwed but these insurance middlemen in some fashion, and it's completely unfair. And for these drugs, which have been around for a long time for diabetes and everything else, they still gotta be tested. But I think Scott's right. At some point, there's gonna be so many of them, the price naturally will come down. But that's not always been true with drug prices, right?

Scott Galloway: It hasn't been.

Kara Swisher: But one might imagine at some point an over-version of these things, right? That it's going to be so in demand and it will start at the top and then—I hate to use the word trickle down, but this one I think will in that regard. But it should immediately, the government should immediately be doing testing to try to deal with obese populations to cut prices on this diabetes epidemic. As Scott calls it, it's the insurance industrial complex. There's a diabetes industrial complex, which keeps people living, but their healthspan dies long before their lifespan. There's a good story in the journal about this. And that's where the costs come in. And they make all the money with these very sick people who don't have to be that sick. What are your thoughts, very briefly?

David Rooney: Briefly, it hasn't really come out. But if you talk to people who work in healthcare, you're going to notice that the economic incentives for insurance companies and the pharmaceutical companies not to reimburse this or not to add this to the formulary is completely there. To the fact that if you look at the starting doses of these medications, they're no longer available. So you can't even start people on these. And people are starting to cut corners. People with diabetes. You can't start people on this medication if weight loss is the cure.

If we think about it, diabetes, the first management is diet and lifestyle modifications. And if you add this into the armamentarium of doing that, then that is a thing that can take place. I think we focus on the top 5% because we're a capitalistic society, and we leave the rest of folks behind, and then we complain about how they can't catch up when, in fact, our system is doing it. We waited a long time to change the insulin prices, right? Like, I don't have a lot of faith that this is going to change anytime soon. And I see a lot of people saying how great this is. But I used to be poor. I was homeless. I remember what it's like for my mother trying to get medicine. This sucks. It's physically painful to watch someone suffer.

Kara Swisher: I would agree with you. This is something I feel like, especially as the studies come in and they have good results, that the government needs to get involved in. It's a national health crisis in many ways. And this is so typical of so many drugs, but in this case, it's one that could really save costs.

Scott Galloway: What you just said, Kara, people are living longer and longer but they're not healthier, which means they're more expensive. And there are fewer people paying to subsidize their Medicare. So the system is not sustainable. But the healthcare system in the US is perfectly American in the sense that everything we do in America is optimized for the top 10%, because as America is optimistic, we all believe we're going to be in the top 10%. So we want access to the best health care in the world. Not acknowledging that if you're in the bottom 90, you're not only not going to get the best health care, you're going to get bad but expensive health care. It creates tremendous strain and adds misery upon misery in the United States. For a lot of reasons, the health care system in the United States is just not sustainable.

Kara Swisher: Anyway, Dr. Roney, we've got to go, but it's a really great question. All right. Thank you so much. We really appreciate your question.

David Rooney: Yes, ma'am. I appreciate it. You guys have a blessed day.

Kara Swisher: Thank you, doctor.

Scott Galloway: Thank you.

Kara Swisher: Up next, we have someone with a question about AI. Tell us your name and where you're from and what you do.

Suzanne: Sure. Good morning. It's exciting to be here. My name is Suzanne. I'm the dean of students at a very rigorous, independent high school. And my question, coming from a very highly resourced school that is much more concerned with getting it right than being right, and we're really wrestling with AI right now. So my question is, do you believe that AI tools in education enhance or hinder students' creative abilities? And how can educators balance the use of AI, the fact that it's coming, it's going to be here, with the need to really develop critical thinking skills and creativity?

Kara Swisher: Great question. I'll start, Scott. You were around for the dawn of the internet age, correct? Or when they were, you know, remember Apple, you saved box tops or whatever to get computers in schools. You remember that era, correct?

Scott Galloway: Yeah.

Kara Swisher: So I think this is a very similar shift. A lot of people at the beginning of that, everyone was putting computers in schools without thinking it through properly, right? And some of it worked and some of it didn't. And some of it was, people were worried about websites or where kids went and protection. And were they wasting their time? Were they playing games? It went on and on. And then everyone got laptops. Was that worth it? I think it reminds me quite a bit of that, except in this case, people are already computer literate. Your students are all highly literate in computers. They have grown up with computers.

And so it reminds me a little bit of that. But to say it's a hindrance or an asset, it's both. It's going to be a hindrance. There are all kinds of problems you're going to see. The media goes crazy about copying or plagiarism. I think that's been around forever. It's just a new way to plagiarize and probably a better way, a faster, better way. But you'll figure that part out. And I think you'll have your own software. And there is software that does that.

But I do think one of the things that you should do is embrace it and use it so you as teachers understand it. I talked to Randy Weingarten about this. I was sitting in the audience with her at the AI thing where Biden put out the executive order. And she turned around, she goes, "I'm not against this." To me, because I'm always like, "You're so negative, Randy." And she was like, "I'm thinking, I'm learning, I'm doing this." And I think that's probably the thing I say to most teachers: you yourselves have got to understand it because the kids absolutely get it. And they'll get it really quickly.

Scott Galloway: Nice to meet you. I had this warm emotion come over me. When I was at UCLA, and I realize you're at a high school, I was close with the dean of students, Ray Goldstone, and the assistant dean of students, Peter Weiler. They were both just such wonderful men. And all they did was put out fires all day. I remember thinking, when there was just an awful problem, no one knew what to do. It ended up at the dean of students. Call Suzanne. Call Suzanne. So thanks for your good and challenging work.

I'm an AI optimist around this stuff. If you're trying to teach a kid how to write and put together a paragraph, subject, no fragments, new thought, new paragraph, then there's going to be AI tools that can look at it. It's similar to how we have tools now to see if they're plagiarizing. You're going to have those tools. But in general, outside of them teaching them how to write prose, I think it's a tremendously powerful tool.

I remember in my second year of business school, my professor of manufacturing, Sarah Beckman, who was just this outstanding professor. I remember the moment when she said, "I don't mind you using spellcheck." Some professors actually back then didn't; they thought it was cheating for you to use spellcheck. And as someone who writes a lot, I can tell you that what I've found so far, and Kara is using the exact right word, is that what AI produces is very anodyne. It doesn't compel or move anyone to emotion.

But when I'm writing—I'm writing a blog post tomorrow on Bill Ackman and how basically money has taken the place of democratic institutions—and I was trying to come up with unexpected consequences. And I typed into GPT-4, "What are the most unexpected but enduring consequences of the COVID pandemic?" And it came up with 10 things and eight of them I knew, but two were different. And I'm incorporating that. I think it's great for expanding creativity.

What I would want to be doing is wrapping my arms around it and having classes, not even classes, but maybe part of class, like: What are the right prompts to make your paper better? What are the right ways to think? What could you ask that would give you more examples? I think it's really exciting.

Kara Swisher: Yeah, that's why you need to use it. I advise everyone to use it every day for different things, even if you're not going to use it. One of the things that I think would work well is timelines. There are certain things, why do them? You can sit in front of an encyclopedia or the Internet. Imagine the Internet used to just take you to the pages and then you pulled off of them. Some people more than others, including Bill Ackman's wife, but off of Wikipedia. People have been doing that for a while, paraphrasing or looking up in encyclopedias. This is like that. It dives into the content itself, which is why they're in so many content fights with content makers. Content makers should be suing them or doing a deal with them.

But you have to be thinking of what it could be used for and how you can not waste time with students and get them to the real discussions. There's no reason why they have to use an encyclopedia or research papers to do a timeline when it could do it for you. It's not a skill to do that. It's just not. And that's fine. A lot of reporters are very reticent to use it. I was having an argument about headlines. I was like, why are we writing headlines anymore? We can pick them.

What's important is then the teacher intervenes when the student learns about being factual, how to use the research. Learning how to research—and this is how people are going to research in the future—is a critical thinking skill. And so once you have that, it's like clay. What are you going to make with it? And that's where teachers have to step in. But to assume they're going to cheat immediately is a terrible way to think of your students, right?

Suzanne: No, absolutely. And we don't. It's really more that we want to use these tools and teach the students how to use them in ways that are helpful. But we also want to make sure that their creativity isn't limited. So I love Scott's example that he typed in, "Give me 10 unexpected consequences." Eight of them he knew, two he didn't. And that's great. But we also want to make sure that our students aren't just going to that list of 10, which we know the large language models are pulling from stuff that's already happened. So how are they going to bring their own stuff into it?

And the other thing that I'll say, and I am very familiar for somebody of my age with what's going on, is that we know that all learning happens in relationship. So we need to make sure that the customized tutoring that Khan Academy wants to do or Grammarly doesn't take the place of those relationships, which is something that I think is so important. And here we are still seeing the impact of the isolation of the pandemic on our youngest students and their socialization skills.

Kara Swisher: Agreed. I think that's smart. I mean, I think that's why you need to join with the students who are also figuring it out. Avail yourself to their knowledge. I think they feel very good about that, explaining to you how they're using it. And one of the things is, I agree with you on in-person stuff. My son's at Michigan right now. He was having some difficulty with a physics thing, and he was using AI. But he also goes to a tutoring thing where there's a person there so they can discuss the ideas. And I think you can do them in conjunction with each other. For some reason, people think it's either or. And I do think technology can really aid you.

Again, join with them. I think too many teachers, when they talk to me, are like, "How are they gonna cheat?" I'm like, "Well, how are they gonna learn? Why don't you think that way?" So it could be interesting, right? Maybe they could design things. I think you're talking about serendipity, the serendipity of learning, right?

Suzanne: Yes, correct.

Kara Swisher: Yeah. So it's a really exciting time. And you can see it going sideways rather quickly.

Suzanne: Sure. And one of the things that's so important always is that the use of AI is no different than using any other unauthorized source. And so we already have tools in place for that. So it's not fear, more just—

Kara Swisher: Yeah, you don't know. Well, you know what? It'll get better. I'm sorry to tell you. It's going to get better. The last part of my book I just finished, I used an AI thing as a joke at the end. And then I said, it's really bad. They wrote an end to my book that I said, "This is just terrible." But I said, "I'm going to get worse and it's going to get better."

Scott Galloway: Yeah, it's the worst it's ever going to be right now.

Kara Swisher: And it's just such a—it's mind blowing to think about it that way.

Suzanne: Yeah.

Kara Swisher: Anyway, we appreciate it and we appreciate your work with students. By the way, Kara, both those things are happening.

Scott Galloway: What?

Kara Swisher: What? I'm getting worse.

Scott Galloway: Me too.

Kara Swisher: Oh, Scott.

Scott Galloway: Anyway, thank you.

Suzanne: Thank you.

Kara Swisher: He's insufferable. All right. Thank you, Suzanne. All right, bye.

[Break]

Kara Swisher: All right, Scott, let's go on one more quick break. When we come back, we'll take some more calls.

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Kara Swisher: Scott, we're back with our special call-in show, taking questions from our listeners. Let's go to our next caller. Andy, how you doing? Andy Fishtrom?

Andy Fishtrom: Scott, we're back with our special call-in show, taking questions from our listeners. Let's go to our next caller. Andy, how you doing? Andy Fishtrum, how you doing? From Sausalito, one of my favorite places. Welcome.

Kara Swisher: Hey, it's a foggy, chilly morning here.

Andy Fishtrom: Yeah, but we can't complain. It's 30 below in the Midwest, so we have no right to complain.

Kara Swisher: It's very cold here in Washington, too. And I'm sure London's a delightful, sunny place where Scott is. So you help students apply to MBA programs.

Andy Fishtrom: I was head of student affairs at a business school called INSEAD for seven years. And so I speak MBA. I am also a wedding photographer. And then I started working at Whole Foods part-time this year, which I really, really love.

Kara Swisher: Fantastic. You know, Scott and I are getting married. We're looking for a wedding photographer.

Scott Galloway: Congratulations.

Kara Swisher: No, kidding, kidding, kidding. Never happens. So you want to ask a question about the repercussions of US AI regulations on safety and global competition.

Andy Fishtrom: Yes, I do. So, you guys, I don't often yell at the television, but when I saw those congressional hearings, I thought they were just total bullshit. I think putting guardrails on American companies will—I don't think we shouldn't do it, but I think it will stifle competition. I don't think we're going to keep the bad actors from launching the nukes or taking down the banking system. So I wanted to hear your guys' thoughts on if those congressional hearings meant anything, if regulations on U.S. companies will help, and what, if not, what you think the solution might be.

Scott Galloway: I think a lot of people feel the same way you do, that anything we do that reduces the competitiveness of American companies results in a lack of economic growth, a lack of tax revenue for our Navy, a lack of opportunity for our young people. What I think, though, a bigger problem has been is that that has become such conventional wisdom that it's no longer wise. And what's happened is the industry that is the largest by market capitalization globally and probably has the most impact—technology—has effectively no regulation.

I think we have a lack of regulation as it relates to AI. I don't think the regulation should be on the front end. I thought that to your point, Andy, I thought the idea of an AI pause was ridiculous. It's like Iran, North Korea, and China aren't going to pause. But that was tech people doing that, not government.

Kara Swisher: But go ahead.

Scott Galloway: Yeah, I just thought it never made any sense to me. Where I do think you need regulation is to say to a company, look, the executive order from the White House—you could be cynical about it, but I think it's a start. And I don't think it's doing anything that really inhibits the competitiveness of US AI.

And also, I think that these companies, unlike tech, should be put on notice that if your AI results in externalities that do real harm to our democracy, to health, to misinformation, and you know what's going on, and you decide to try and delay and obfuscate by saying "we need to do better" or have PR tours, I think those firms need to get hit hard.

I think pesticides are a good thing. I think fossil fuels are a good thing. But we have an EPA and an FDA, and we have no such agency in tech.

Kara Swisher: Let me give you two examples. One, there are no laws for internet companies to regulate. There's none. There's zero. 20 years in, the richest, most wealthy people in the world. There's obvious damages, right? Because there's no regulation. There's no privacy regulation. There's no data transparency. Competitively, all these companies dominate. There's not enough. I'm more worried about the small startups that don't get to be created. They die in the crib.

So many years ago, I interviewed Mark Zuckerberg, and he started with this argument. I called it the "Xi or me" argument. Like, "If we're not big, China will win." And I was like, "What would you pick?" I go, "I don't like my choices at all. Is there a third choice where we do something else?"

The reason U.S. technology is so good and everything starts here is one, because it's innovation, and two, because it comes from the bottom up. China's top down. Now, they do a pretty good job top down. Let's be clear. That's a way to do it. But I think that there's good in the fact that even though this plane just blew out a window, most planes don't blow out windows, right? But now we're going to look at these bolts. There's a good reason why our meats aren't tainted for the most part, right? Or else it's a problem if they are, that there's repercussions.

I think the problem with this industry is they don't just have no regulation, they have immunity. They have immunity. And so you can't even sue them. So a lot of these lawsuits against pharmaceutical companies, maybe they're too much, but a couple of them absolutely chills their bad behavior.

Lastly, the person who they consider a class traitor, Mark Benioff, was the first person to me to talk about them like cigarette companies. They're like cigarette companies. And so it's fine if people want to smoke cigarettes. Nobody's stopping them. I don't think there's been much innovation in cigarettes. But if there is danger, they need to tell people so people can make a cogent decision about it. And if they withhold, which the cigarette companies did, as do the tech companies, they get to go to court and they get to lose in court.

And so I think that's our issue with it: there's zero laws and they have immunity and they're the richest people in the world. So, like, yes, you're right with your metaphors. Regulating the food industry makes the food safer. Regulating airlines, airplanes makes them safer. But will regulating AI make it safer? There's a lot of dangers. I mean, should we have—here's a good one. Say you're a regulator, you're just as smart as regulators I know. Would you like to have global laws against killer robots? Probably, right? Don't you think?

Kara Swisher: Or maybe we should, anybody should make. Global laws, sure.

Scott Galloway: Yeah, but that means it has to be in the U.S. too.

Kara Swisher: Should people, you know, you could not necessarily do AI, but cloning. Should we be able to clone children? Well, maybe we should talk about that as a society, right? I think there's a lot of stuff. Should people be able to build nuclear bombs using AI? Should they be able to use AI to game the stock market and crash it? Like, there should be some sense of what could happen wrong. And that's the role of the government. Now, I agree. It's not, I'm not a big regulatory person, but I think more than zero is better and removing immunity. And then I'm good with it. If they can be sued like they are right now by the content, they were scraping content and they're suing. Well, before you couldn't really sue them. They kept winning on fair use. Now it's not clear. So I feel like if you have some guidelines and guideposts, it's a better, it creates a better situation for small startups to rise up. You may not agree with me.

Andy Fishtrom: You know, it's funny. Working at Whole Foods part-time, I work with people who are very young, like 22, and I'm 58. And they're like, "Uncle Andy, what was it like before the internet? How did you make plane reservations?" And I was like, "Oh, you know, we just stood on the roof of our house with smoke signals, right?" So it's going to be fun to have this conversation in 10 years and hear what we're talking about today. One of the things, I'm curious, can I ask you one quick question, then we got to go, is do you know the Palm thing they have there now?

Kara Swisher: Yeah, yeah.

Andy Fishtrom: That you can pay with your palm. Are a lot of people doing that? Because I said no fucking way to the lady who was trying to sell it to me.

Scott Galloway: So it's awesome. I mean, it for people who forget their wallet, forget their phone, which is a lot of people. And I feel like that ship sailed a long time ago with you know when you look at your phone it uses the same technology. And yeah, people are doing it. There's no nefarious, I mean, as far as I know. I don't think there is.

Kara Swisher: I just was like, not today, Jeff Bezos. You know, it's interesting where people choose to make their stand. Like, I'm never doing that.

Andy Fishtrom: So the answer is yeah, I would say anecdotally it's probably about 50 percent of the customers so far.

Kara Swisher: Oh wow, that's amazing. Anyway, wow, that's a lot.

Andy Fishtrom: Anyway, real quick Scott, I'm just getting to know you. I've been a Kara fan for a long time and now I've heard you're doing this book on masculinity which is exciting. I also want to know what you don't like about short people because I'm short and I hear you mention short people sometimes. I'm just teasing, I'm just giving you shit.

Scott Galloway: Let's leave it at that.

Andy Fishtrom: That hurts.

Kara Swisher: He can't take it.

Scott Galloway: He can dish it out.

Kara Swisher: He can dish it out, Andy.

Andy Fishtrom: Andy, thank you so much. What a great question. Thanks you guys. Keep doing what you're doing.

Scott Galloway: By the way, I'll give you some height for that hair.

Andy Fishtrom: Deal.

Kara Swisher: Oh nice, it's a trade.

Andy Fishtrom: All right, thank you. Thanks guys. Bye.

Kara Swisher: Hi Karen Scott, I love your show. Thank you. Welcome Betsy, this is our next caller. We have another AI question about OpenAI. Betsy, how you doing? Can you tell us what you do?

Betsy: Yeah, sure. I'm a former professor. I used to work in quantitative finance and I'm a data scientist. And now I'm the founder and CEO of a social media startup.

Kara Swisher: Cool. What does it do? Name?

Betsy: The app's name is Kinder. It's in beta. It's in a quiet beta. We're working on basically a bold way to disrupt the economic model of social media in a non-toxic way.

Kara Swisher: Wow. Oh, that's a big job. From being a professor of quantitative finance to running a social media company?

Betsy: I was a professor of astronomy. Then I worked in quantitative finance.

Kara Swisher: Yes. It's all very similar to data science. Where did you teach, Betsy?

Betsy: I was at UC Irvine.

Kara Swisher: Oh, the anteaters. Yeah. UCI.

Scott Galloway: Yeah. Greatest gift to America, the great University of California system. I'm UCLA and Berkeley all the way through undergrad and grad. I love UCI.

Betsy: Yeah, it was a nice place. It was hard to leave, I have to admit.

Kara Swisher: How's the startup life going?

Betsy: Oh, startup is a big adjustment. You know, I really spent most of my career in academia. So it's been a learning curve, I will say that.

Kara Swisher: Are you happy you did it?

Betsy: Yes, I am happy I did it.

Kara Swisher: Cool. Thank you.

Betsy: Yeah, it's one life to live. Anyway, you have a question about OpenAI and Sam Altman and dangers?

Betsy: Yeah, yeah. Given the drama late last year and the way it was resolved, are there any checks and balances left to stop him and the company from doing damaging things or dangerous things to make money? I'm worried given the lack of government regulation, especially, and I think it's a pretty major concern.

Kara Swisher: Well, I would say, I covered a lot of that, broke some of the stories on it, is that I think it's so public. He's certainly constrained that way because it was out in the open, this accelerationist versus decelerationist, although I think that's kind of a black and white thing, and this is a much more gray area. I do think the publicity around it certainly is a check in a lot of ways. If they do things and it gets known, he certainly has a lot of, I guess, I'm not going to say enemies, but people, the decelerationists are watching him. So that's one thing. He doesn't have that much power there. Another is although he's backed by Microsoft and the employees, that could easily change if he abused his power. I think people were surprised how supportive the employees particularly were. I was. I thought that said a lot. That said, I think you have other people like Adam on the board who has been a foe, I would say, of him. And so I think it's a question of who is the board, who they pick for this board. And there's all kinds of names. I have put forth several like Dr. Fei-Fei Li and some others that I think. And if they get a board that is—what happened was the board got out of whack with decelerationists trying to make their move on him. And that wasn't right either, right? The whole thing—so they've got to get a board that has people that are skeptical and people that are optimistic. And perhaps most more in the middle where they understand both. I do think more than most people, he is less rapacious than other people I've covered, for sure. No question. And much more thoughtful. But that said, he is a very tech optimistic person and he is AI optimistic. And lastly, I do think the government has to move in and do some guardrails. There are a couple that are very clear, just like they didn't do on the internet in terms of privacy, in terms of use of content, in terms of safety, checking for safety issues, and monitors that are independent of all of these companies, not just OpenAI.

Scott Galloway: So, Kara, when you refer to Fei-Fei Li, are you referring to the Sequoia Capital professor of computer science? By the way, Betsy, just a quick question. Do you think that brands should be, companies, private companies should be branding academic positions or have we become, I don't know what's the term, total whores?

Betsy: I, so it's hard. In astronomy, it's not such a big issue, right? Like I'd be thrilled for brands to support astronomy research, but to support.

Scott Galloway: Well, companies have done it for, people have done it for decades, like the Scott Galloway chair of Ding Dongs or whatever. But I think it's something that has to be monitored, right? It's too much fox guarding the hen house, potentially.

Betsy: 100%. We're seeing that play out. So back to your question. Okay. So initially, OpenAI was supposed to be not a regulatory check, but it was initially formed to do thought leadership that would provide a viewpoint and research to keep the dangers present, such that we could address them when other private companies started producing externalities. But here's the thing. Billions of dollars showed up. And once this company identified itself and became the leader in the space and became worth $90 billion, if you think about a concern for humanity versus shareholder value, shareholder value smothered the concern for humanity in its sleep. And I don't care how many boxes have a mission statement around altruism. Microsoft doesn't control this company right now. And so is, I would argue, Sam Altman is also like a close second or number one, because $90 billion, by the way, creating $90 billion creates a lot of value and good in our ecosystem. That's the reason-

Kara Swisher: He's not on the board, just so you're aware now, right now.

Scott Galloway: Who's not on the board?

Kara Swisher: Sam Altman's not on the board anymore.

Scott Galloway: But he's not. I get it. I get it. When 90% of your company is willing to walk out of the door with you, you kind of own the company.

Kara Swisher: That's right, but that's because they like how he's working. But I get you. The money is the thing that Scott is getting wrong is that the reason they-

Scott Galloway: Oh, I get more than one thing wrong, Kara. Come on, let's be honest.

Kara Swisher: The reason they raised all that money is because it costs so much to do it right. They needed the money to do it. And that's, they couldn't raise it for, you know, for altruistic reasons. No one was going to hand it over.

Scott Galloway: Well, but they raised it.

Kara Swisher: Yeah, but they didn't. They raised it so they could build generative AI, not so that they could study it.

Scott Galloway: Oh, I think they were going to do that all along. I think, you know, when Elon talked about it a decade ago, it was because he was worried about the power of Google and Facebook and Amazon and stuff like that, that they would control the destiny of humanity.

Kara Swisher: This is a for-profit company. Yeah, it is. We called this out a year ago. When you looked at the structure that they tried to wrap all this bullshit and wallpaper over the notion that this wasn't a for-profit company by saying that, well, actually, once they get above 100 billion in profits, it goes back to the nonprofit entity.

Scott Galloway: Here's the bottom line. With private, special-purpose companies, jazz hands bullshit, unless it's a pure nonprofit, and sometimes nonprofits are not really nonprofits. For-profit companies are so outstanding at making money, they should be trusted to do nothing else. That's what they do. That's what they do. And while we keep hoping they're better angels, they're gonna show up and they're gonna give a good goddamn about democracy or teenage girls, they don't. And I'm not saying they're bad people, but when you live in a society where you have better access to healthcare, better access to powerful people, a broader selection set of mates, and you can take care of your kids and your parents if you make a shit ton of money, the incentive to wallpaper over externalities in this incredible platform called a for-profit are going to be so great that you have to have a huge check and balance in the form of, first of all, government regulation, but a robust media and journalism sector, plaintiff's attorneys, a fair and balanced legal system, because Sam Altman and Microsoft left to their own devices are going to do some amazing things for technology. They're going to make a lot of people rich. They're going to add value to the world. And someone needs to be able to hit them hard if they do the same thing that social media and these other organizations. But all this jazz hands around it being different entities and altruism, that's just bullshit.

Kara Swisher: I think that's lost, though. I think that's gone. I think that's gone. And they sort of have pushed those people off. And by the way, those people were also power hungry in a weird way.

Betsy: Can I ask two sort of follow-up questions if you have time? So one would be, I think part of the problem with OpenAI is it's not just what OpenAI does, right? They provide their service through an API that anyone could use to do something. And it's not even going to be easy to tell what people are doing with it, even if they were monitoring it. So you have to be pretty far in knowing what people are doing to deploy.

Scott Galloway: Yeah, sort of like the Apple App Store, right?

Betsy: Yeah, the Apple. Is it going to be Google App Store, which is like the Wild West, or is it going to be more Apple oriented? But go ahead.

Betsy: Right. But also with just some kind of transparency so you could see what people are actually doing. I think that's part of the executive order from the White House, is that there is a requirement, I don't know if it's a requirement or a request, for additional transparency, because Google will not release their algorithm. We don't know, if you're concerned about young men being radicalized on YouTube, which many are, we don't know how it's happening. They won't release their algorithm. And I think part of that, I don't care, tell me if I'm wrong.

Scott Galloway: Well, they're special, Scott. They're special. Okay? Tell me if I'm good.

Betsy: Kara, maybe you know this, but I think part of the executive AI order out of the White House had language in it about you have to be more transparent in terms of what you are actually building here.

Kara Swisher: Yes, it did. Yes, it did. And also safety checks, independent safety checks. Go ahead. What's your other one?

Betsy: The other one is about government-formed guardrails. I worry about the model for this. And I think I've heard you mention the SEC as a potential sort of model for this. But if you think about, like, they're not embedded in what's happening. And so, you know, they investigated Madoff. They didn't figure it out.

Scott Galloway: A new agency is what we think should happen. And that's led by Scott and Kara. That's who we have. Or as we like to call it, Scara.

Kara Swisher: Scara. There needs to be, that should be our couple's name.

Scott Galloway: That's a good one.

Kara Swisher: I think there needs to be a new agency. And we can't call it information agency. It's got to be technology. Just like the FAA or anything else. That's my feeling is because this is special. The FTC can't handle it. You know, it's hard for these agencies that have other things to do, like monitor pork makers or whatever. We got to go, Betsy. But we do appreciate this. But I agree. We think there should be another agency because what will happen is they'll take advantage of the disorganization of this by government. And so nobody will be able to get their hands on them, which is how they handle it.

Scott Galloway: Betsy, most importantly, do you live in the OC?

Betsy: No, no, I moved away to New York when I left academia.

Scott Galloway: There you are, not so bad. One of the most beautiful places in the world.

Kara Swisher: Can I ask you one more quick question, even though our producers just say we have to move on, is what's your biggest fear? Very briefly.

Betsy: My biggest fear is that the entire economy changes to work around AI and then things like income inequality and then just transparency of what things, what's happening, right? How much do humans control what's happening? Starts to really erode.

Kara Swisher: That's a very good concern. What are these fuckers up to? It's been my life's work. Anyway, I appreciate it. Thank you so much. Go Anteaters.

Scott Galloway: Go Anteaters, whatever that is.

Betsy: Great to meet you. Thanks, Betsy. Thank you.

Kara Swisher: Changing gears here, we have a caller with a question about something Scott will no doubt have thoughts on, ESG. Welcome, Luke. Tell us what you do and then what your question is.

Luke: Hi, Kara, Scott. My name is Luke. I'm calling in from Atlanta, longtime listener across all your shows. So I appreciate the opportunity to be able to join an episode. And Scott, actually, a couple of years ago, I gifted a friend of mine who was struggling personally with your book, Algebra of Happiness, and it had a meaningful impact on him. So I appreciate your work.

Scott Galloway: Thanks for saying that.

Luke: My question is around ESG or environmental, social, and governance. I've spent seven years as an investor relations professional at one of the largest retailers in the country. And one of the biggest sea changes that we've seen has been the interest from investors on ESG and the topics that underpin ESG. And I agree that it's probably not the best naming, but it's really not the words or the letters that matter. It's the ability to analyze the risks from things like climate change or water or a company's inability to invest in its workforce. It's more understanding what the risks mean to a company's bottom line. So over the last few years, my role has evolved, and I primarily focus on engagement with institutional investors on everything from our company's climate transition strategy to whether we're paying our associates equally across gender and race. Scott, you've recently commented that you think we're seeing the end of ESG. So my question is, why would institutional investors who have built ESG research teams and integrated ESG metrics into their investment thesis abandon these concepts? And secondly, what's wrong with investors considering risks like climate change or unequal pay in their investments or where they're considering to invest?

Scott Galloway: That's a really thoughtful question. I think everything you outlined is not ESG. I think it's smart shareholder-driven actions. I think having a workforce to represent your customer base and the community, doing scenario planning around the threats and opportunities around whatever it might be, climate change. I think of those as just being shareholder-driven activities, forward-leaning investments that pay off. I think if you want a strong workforce, a robust workforce, all of the things you mentioned are smart for the bottom line. The issue I have with ESG, and it's not black and white. I think that it comes from a good place. The issue I have with ESG is who gets to decide what the metrics are around E, S, and G. And I find that in many instances, ESG has been weaponized and companies study to the test and figure out a way to get an award, even though they're an airline consuming 2 billion gallons a year as an ESG company. It's become somewhat meaningless. So the idea of thinking thoughtfully about climate change, your role in the community, having a robust, diverse workforce, contributing back to society, I think all of that makes sense. My fear is that ESG has become essentially, one, a branding opportunity for alternative investment funds who underperform the market to charge incremental fees by saying they're going to do the work of ESG for you. And that it's nothing but a marketing ploy for the alternative investments community that has underperformed the S&P by exactly the amount of its fees. And it's also used by some companies as a giant misdirect from the harm they're actually doing. Remember British Petroleum and the ad campaign Beyond Petroleum, and they'd have ads of all these guys in lab coats studying algae when about 99.99% of their efforts and capital were all about drill, baby, drill. So I find some of it, quite frankly, is just BS and not productive. Everything you mentioned to me is just smart, shareholder-driven strategies.

Kara Swisher: So let me say one thing, though. I mean, you can leave out the fact that the right is trying to weaponize these things too. I don't know when the word inclusion became a negative thing. I just don't understand why inclusion is a bad thing. But they made it bad. They made it feel like bad. It reminds me a lot of if you remember when they were trying to reform healthcare, which is a laudable thing, they got a lot of traction through death panels. Like there weren't going to be death panels, but the words worked. And so they managed to make these things ugly, which are also laudable things. I think what Scott's talking about is there becomes, whether it's DEI or ESG, there becomes these little industries that arise that aren't necessarily good for it. Even if for shareholders to focus on climate, if your company today and you don't understand the climate crisis is coming, you're going to be out of business because you're going to be impacted in some way, whether you're an airline or a hotel or a retailer. Second thing is if you don't understand how workforces are changing and if you don't create an equitable workforce. And again, when did equity become a terrible thing? It's not a terrible thing, but it is, right? Same thing with diversity. Diverse companies make for better companies from study after study after study. And I think what's happened is it's gotten captured by a certain segment of people that are trying to make political points on it, whether it's Ron DeSantis or Ramaswamy or whoever. And so, you know, again, I think Scott's right. Overall, it's laudable. Not just laudable. That's not what they should do, but it's good business to do it, right? And I think that's how it's not been sold, good business, you know, appeal to greed. Corporate America answers to the bottom line. And so I think most of their DEI initiatives have been somewhat rooted in, one, either actually thinking thoughtfully about shareholder value or, two, using it as a head fake. And that's not a good thing.

Scott Galloway: I think at universities, DEI has gone so far that the snake is eating its own tail. And that what we've ended up with, Harvard brags that 51% of its freshman class is nonwhite, which to me means you don't have, you've just reshuffled the elites. Letting rich Asian kids into Harvard doesn't solve the problem. And diversity to me, one, we have anti-discrimination laws, and we should. If you can prove that you were not hired or you were fired because of something you can't control, your sexual orientation or your race, you have a legal case against that company. And I think that's a wonderful thing. And it goes back to the importance of regulation. I think there's a difference between equality of opportunity and equality of outcomes. I think certain industries and certain positions are just naturally going to attract certain people more than others. And I think that's okay. And I think oftentimes we spend too much time and energy and make companies less productive trying to calibrate our workforce to some weird metric that someone has put pressure on us to study to.

Luke: Yeah. And I honestly agree with a lot of the points. I think the term has been, to use Larry Fink's words, hijacked from both the left and the right. This sort of stuff is not going to solve all the world's problems, nor is it the cause of all the problems or the downfall of corporate America. You know, it is, at the end of the day, ESG is just a set of alternative non-financial metrics that firms can consider or not consider on the potential impact. But yeah, I think it often gets confused with impact investing and things like that, which have a different incentive model versus ESG. And it's, the way I view it, and I think a lot of corporates view it as purest form. It's just a way, new metrics to mitigate risks at firms.

Kara Swisher: Can I ask you a question? Has it been very hard to incorporate now, given all the noise around it?

Luke: ESG less so than DEI, but... Yeah, it has. As Scott pointed out, there's a lot of pushback, primarily from the political arena. But I honestly think that sort of pressure is helpful. It helps sort of weed out the BPs who are greenwashing and using it as a head fake. And it's forcing companies to be much more thoughtful and sharp in how they articulate on these topics. And they don't get ahead of their skis on some of the things that they're talking about and are looking at things clear-eyed and honest when they discuss it with investors or the public at large.

Kara Swisher: I have one more question. I would assume climate would be the most important thing, not just to save the world, but it's a business necessity. Complexity on some level, correct?

Luke: Yeah. Understanding the risk that climate's going to pose, whether it's if you have stores and flooding areas are changing, you know, that's going to impact real estate of companies or how you're able to source certain raw materials if those raw materials are impacted by climate change. So it's just understanding the risks, but that is primarily one of the bigger focus that we see.

Kara Swisher: Yeah. And you would even see it with guns, with retailers, with, you know, retailers have been plagued by shootings and everything else. Everyone's, my feeling on this whole thing is businesses in this case, if they want to do this, that's great. That's the leadership and you buy into those companies. If it's Patagonia, people are buying into it for that reason. Customers are using it for that reason. In a lot of ways, it's like let people do what they want, right? Rather than forcing them to. But most businesses that are a little more, I don't want to use the term woke because it's gotten so badly, but that are a little more progressive in that regard tend to do a little better. You can't certainly rule by being like you're in the 1950s. But I think a dynamic workforce, especially among young people, they want other things, it seems to me. It seems when you talk to them. And I don't think it's because they're woke. I think it's just they want different things. And you should decide what your company is at the very beginning. What a great question. We appreciate how thoughtful. One of the things that's great about doing this is how thoughtful our listeners are, much more so than we are, really. I appreciate the time. This was great. Thank you so much for your question.

[Luke's call ends]

Kara Swisher: Scott, how great was it to talk to all these listeners? I mean, they're really smarter than we are. That's the conclusion I just made.

Scott Galloway: I generally registered an emotion of intimidation because I thought, these people probably see through my bullshit. I mean, I was struck at how thoughtful and smart these people were.

Kara Swisher: They are, aren't they? It's crazy. They're so smart. They're so good. And they like us. That weird professor of astronomy from the Anteaters. I know astronomy. A guy, a smart corporate guy, a guy who likes Whole Foods. Doctor, Navy doctor, doctor. It's so good. All bad. Wow, I'm so impressed. Those were all really thoughtful questions. And what I liked about it is they're thinking about these questions and I hope we all help you all think about them. We don't, one of the things that's critical and the reason we're asking them questions is because we don't have all the answers. We're just, you know, a couple of white chicks sitting around talking. And so it's really important to get other people's perspectives. We always like them even when we don't agree and they challenge us. So anyway, if you've got a question of your own and you would like answered, send it our way. Go to nymag.com slash pivot to submit a question for the show or call 855-51-PIVOT. You can all see now why we love our fans. We love them because they're so smart, much smarter than us. Scott, that's the show. We'll be back on Tuesday with more Pivot. Please read us out.

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