Elon's Twitter Board Reversal, Warner Bros. and Discovery Merger, and Cathy O’Neil on Shame

Kara Swisher: Not all journalism is the same. Take The Guardian. Our coverage has something unique. Fierce independence. Nobody owns us or tells us what we can and can't say. So we're free to report the whole picture. We connect what's happening in Washington to the rest of the globe. Expose corruption wherever we find it. And give fresh perspective on everything. From wellness and soccer to culture, the climate and more. Read, watch and listen to The Guardian for free at theguardian.com.

Kara Swisher: Avoiding your unfinished home projects because you're not sure where to start? Thumbtack knows homes, so you don't have to. Don't know the difference between matte paint finish and satin? Or what that clunking sound from your dryer is? With Thumbtack, you don't have to be a home pro. You just have to hire one. You can hire top-rated pros, see price estimates, and read reviews all on the app. Download today.

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 in Sao Paulo, Kara. Are you?

Kara Swisher: Oh, that's why you're exhausted. Scott was just telling me he's exhausted by all this, although he's been tweeting away. How is it there in Brazil?

Scott Galloway: It's great. So I went surfing this weekend, or held on to a board for dear life. And now I'm in Sao Paulo, which has some of the best food and best architecture in the world. And it's also the most populous city in the Southern Hemisphere. I'm actually very bullish on Brazil. I think Brazil is about to have another moment, if you will.

Kara Swisher: Really? Well, okay.

Scott Galloway: Well, if you think about it, I mean, not that you asked, but its stocks trade at a multiple of seven versus 20 in the US. And I think the reason you're seeing SoftBank down here is that a lot of investors who think the American tech trade may be running out of breath, instead of looking east or west, I think they're going to start looking south. And I think you're going to see a ton of innovation down here, interesting startups. And I'm bullish on Brazil.

Kara Swisher: Yeah, interesting government situation. But nonetheless, I've been there many times. I love Brazil. And Sao Paulo is one that people tend to go elsewhere in Brazil for more fun. But Sao Paulo is really the biggest, one of the most important cities in that part of the world. 12 million people. It's the fourth largest city in the world and is responsible for a third of the GDP here. It's really interesting. And culture is catching up. People think of Rio. Rio used to overshadow it because of that incredible collision of sea, sky, and land that is really dramatic. But I think in some European cities, the culture leads the economy. And I think here the economy came first and now culture is starting to catch up. But I'm actually a big fan. I think Sao Paulo is an interesting city.

Scott Galloway: Anyways, I'm long Sao Paulo and Brazil.

Kara Swisher: Yes. Today we'll talk about Elon Musk's sudden reversal of fortune at Twitter. We'll also get into the Warner Brothers Discovery merger. And I'll speak with author Cathy O'Neill about public shaming, the good, the bad, and the part that makes everyone feel ugly. So we have a lot to talk about. There's a lot going on. I know you feel a little jet lagged, but we'll try to press on if that's okay.

Scott Galloway: A little jet lag. A little jet lag for the dog. A little bit.

Kara Swisher: A little bit. Okay. Did we do a lot of drinking and hanging?

Scott Galloway: Yeah. I've been doing all of those things.

Kara Swisher: Yeah. You look a little sun-soaked right there.

Scott Galloway: Yeah. A little red.

Kara Swisher: A little red. Did you use any sunscreen? You're supposed to do it in that part.

Scott Galloway: I don't have a forehead. I have a five-head. I literally need seven or eight bottles of sunscreen if I just take my hat off. It is dangerous for me to be in the water. I look like the great white sperm whale that's breached and died all of a sudden. All the time.

Kara Swisher: All right. You're in that kind of mood. Excellent. Yeah. So let's start with Jared Kushner's private equity firm received $2 billion from a Saudi fund led by Crown Prince Mohammed bin Salman, who some people call him Mohammed bin... Mohammed Bonesaw. Thug is what I call him. According to the New York Times report, the investment came six months after Kushner left the White House. A Saudi panel that advises the fund reportedly advised against the investment, citing Kushner's inexperience and a wide range of this is a big, big, big stop sign. We wouldn't invest if it were us. But lucky for Jared. Days later, the panel was overruled. Inside the Trump administration, Kushner played a role in defending the crown prince after U.S. intelligence concluded he had approved the killing of Jamal Khashoggi. So I guess it's payback for him in a positive way. Incompetent investor, but why not give him money? What do you think about that?

Scott Galloway: I think it's part of a larger trend in America moving from capitalism to cronyism. Capitalism doesn't survive unless there's a rule of fair play, and that has to start at the top. And it happens everywhere. When the Speaker of the House can trade stocks, which is insane, when she can call Jerome Powell and say, "How are you thinking about interest rates?" and then over pillow talk, her husband the next day trades stocks. That is corruption. When these congressmen and senators, the moment they leave, start making millions of dollars lobbying for the same firms they were listening to and let them write the laws around crypto, which is happening in states all over the nation, that is corruption. And when an individual who takes a role as a senior advisor is saying, "Do not punish the Saudis for their crimes for murder and assaulting journalists," and then a few months later takes billions of dollars in what is clearly a payback, he's unqualified. He's totally unqualified.

Scott Galloway: And by the way, the Gulf funds, ultra investments, they're very sophisticated. They hire some of the brightest people in the world. It was PIF, the public investment fund of the Kingdom of Saudi Arabia. It was actually the adult in the room on WeWork that called Masa and said, "Okay, stop with the crazy shit. We're no longer funding your adventures in crazy." These are very sophisticated investors. Uber. They were in Uber. And so as a result, when they looked at Jared's fund, they said, "This is a Joey Bag of Donuts, ridiculous amateur hour. We're not investing." So the fact they got money is nothing but payback. And it's part of a larger trend that affects the left and the right. If you want to serve in the most deliberative body in the world, if you want to work for the greatest experiment in history, and that is the United States government, we have to acquit ourselves of this type of conflict and corruption. And the thing is, Kara, it's getting worse, not better.

Kara Swisher: Well, the only problem is it's happened since the beginning of time, and it's just accelerated here with the Trumps criming in plain sight, right? I mean, whether it was the gift story that they just keep the gifts. And apparently the Saudis leave bags of jewels and money on people's beds when they visit there. So I think they just didn't keep track of gifts they were given or any of the protocols. So even pretending that you were not part of this, but this whole revolving door has been nothing new, whether between Dick Cheney going to Halliburton or whatever. It's not new. It's just more obvious to people. And as you know, the way people feel about the government being just part of a scam is probably higher than ever. So I don't know. I find this one particularly distasteful, especially when people are talking about Hunter Biden, who obviously benefited from being the son of Joe Biden. But in this case, it's an out-and-out trade of money, especially when the Saudis themselves were saying this is just a terrible investment. It feels like a payoff in this regard, a very obvious payoff.

Scott Galloway: Yeah, I do think we can fix it. When I was in public finance, our fixed income at Morgan Stanley, I remember the East Bay Municipal Utility District. We were financing a new hydroelectric power plant or some such, and they were in town, the treasurer, and I said, "Let's grab dinner." And he said, "Okay, fine." And when the check came, he said, "I have to pay for dinner. You can't solve this stuff." And when you have dinner with journalists, usually they say no, I'm paying. So I think there are ways. I think this is a very solvable problem. I think this is actually one of our more solvable problems.

Kara Swisher: All right, well, I don't know. I just think this is very typical and they're just doing it in plain sight. And in this case, it's a payoff for his behavior. And the amount of money he and his wife made while in office is really quite large. And it's basically just making clear what's been clear for years: this is often government can be a kleptocracy. So as it's happened in other countries which we make fun of, in fact, this is where we are in that regard. I hope there was something they could do, but there's no benefit from being in government except that you benefit afterwards, right? You don't make money. There's this insane wealth of people that are constantly, even the president coming out and doing these books and these speeches and everything they do. It's not limited to anyone. But it's certainly everything's for sale. That's really pretty much it. And I think people know that. And that's why people have such disdain for the government. I don't know how the people who are doing this can pass laws about this, right? I don't know how that happens.

Scott Galloway: I think the Trump family crime organization just decided to make it explicit rather than implicit. And to me, it's the same thing because it goes, this is a talk about a bipartisan thing here. From what I understand, for example, Kevin McCarthy is out in Silicon Valley right now saying, "I'll slow down this legislation if you give us money right now to get an office in the midterms" to tech companies and stuff. It's all quite scammerific, as I would like to say.

Kara Swisher: Anyway, speaking of that topic, thousands of Etsy vendors are on strike this week. The move comes in response to Etsy raising transaction fees from 5% to 6.5%. A petition calls on Etsy to cancel the fee increase, crack down on resellers, improve support, and let the sellers opt out of off-site ads. The petition has over 28,000 signatures as of Monday morning. Another thing of these power of the platforms, it's not just limited to Apple, let's just say. These platforms have enormous power over sellers, whether it's Amazon or Apple or anybody else. And some of these people are fighting back because they're the ones that sort of paint the fence for these companies. What do you think about that?

Scott Galloway: Yeah, again, I'd love to see the data on what's happening across union membership because I think there are some very well-publicized examples. I just don't know if this is more than just well-publicized small examples. I'd like to see the numbers on actual union. I bet union membership has either flat to down in the last 12 months when you look at the gross numbers, but we'll see.

Kara Swisher: But this isn't union membership. These are people sellers on these platforms. They don't have a union necessarily. They're just united, which is somewhat different. If these people are sort of at the mercy of these platforms, something has to settle out here. And I find it more important than you do that people are pushing back, whether it's government doing this or platforms or something like that, is that they're not getting their fair share. And I think it's a very resonant thing for politics, the idea that there should be more equalization around data, around personal data, around your role on a platform, what you contribute and things like that. I'm not one that just thinks the rich get richer and that workers sort of get screwed. I think there is a movement of people who feel like it's time, but maybe I'm being too positive.

Scott Galloway: What the federal government should have been doing for a long time and isn't or hasn't been doing, finally, the market, it's gotten so bad that the market stepped in. Frontline workers are just enough. And now supply and demand is so out of whack. And while everyone acts as if their hair is on fire because someone won't bring them their Cobb salad for nine bucks an hour, meanwhile, CEOs are making 23% more year on year. Finally, frontline workers and lower wage workers have said, "No, we'd rather just not work or do something else," whether it's working in an Amazon warehouse for 22 bucks an hour or flipping on a gig app, whatever it might be. And so the market is adjusting. It shouldn't have come to this. The federal government should have moved in a long time ago, in my view, and ensured certain minimum working standards, including wages for people. But the market is finally moving in, if you will.

Kara Swisher: I would agree. I would agree. I just think there's more going to happen here. Perhaps I'm wrong, but I think there's more. It has the same idea as the Kushner thing, that the rich get richer and they grab what they want and the others don't get that. And I think there's going to be a pushback on it. But anyway, speaking of which, let's get to our first big story. Elon Musk has tweeted himself out of a job. The world's richest man will no longer join the board of Twitter after he spent the weekend tweeting policy proposals and criticism of the platform. Among his ideas: Twitter Blue should cost about per month and include a lot more. Subscribers should receive an authentication checkmark, but not the same one that verified users get. Users should be able to pay in Dogecoin, maybe. There should be no ads. He also thought we should take the W out of Twitter and apparently call it Titter, which I actually thought the Trump social network should be called that. Musk has since deleted some of those tweets, including one in which he suggested turning Twitter's headquarters into a homeless shelter. Jeff Bezos tweeted his support of that idea. That seemed odd. Also, some of those ideas, the good ones, Scott has been pitching Twitter subscriptions since at least a year, two years or more. So he's not quite the insufferable numbskull that Elon thinks, because he's actually using Scott's ideas and many other people's ideas. So Elon lasted less than one Scaramucci at Twitter. So what do you think, Scott?

Scott Galloway: So I read about this and thought, okay, what is likely happening here? And at this point, it's just speculation. But my guess is that one of the following things has happened. Somebody at the SEC or someone with knowledge of how the SEC works that should have been in the room all along has said, "Okay, these polls are a problem in and among themselves. They connote that you're testing things that might be revealing insider information. They don't help management to begin testing management ideas going around management." When you are at a company where the employees are your key asset, as they are at almost any firm, but especially at a services firm, and you're headquartered in San Francisco, to start tweeting, "Should this be a homeless shelter?" And worse, I don't mind vulgarity and profanity. I'm a vulgar, profane person. But when I'm on the board of a company that has what I call any type, you just don't say, "Should we call the company Titter?" That is not on a risk-adjusted basis a smart thing to do for a director who's supposed to be serving as a fiduciary for employees. It just goes back to this notion that when you get this rich, you can start acting like a child all the time. And then you decide a few days later, "Oh, I'm not going on the board," because he's probably figured out he was going to have to report his sales and his purchases. And it's a lot more fun to heckle from the cheap seats than to actually be a grown-up. And you have to be sort of a grown-up when you're on the board. That's my take. What are your thoughts, Kara?

Kara Swisher: Well, I think Twitter has made a mess of this, I have to say, because they let him on. They seem to let him on. They had him on the website. They have all these very good board members who must be horrified, right? And not in this sort of pearl-clutching way, but what the hell is happening here? That's how Elon and others would like to paint it and make it into a circus that it's not. This is a company with employees and everything else. And I don't want to seem like mama here, but oh, for goodness sake. I did laugh at the Titter thing because I had made that joke previously. But you're right. He's not quality. When he has his companies, he can do this, right? His board lets him do this. And that's up to the SEC to intervene, which it never does. In this case, it's someone else's company, and he can't come in and crap all over it like this. It just can't. He can make suggestions internally. He can have a lot of influence. He could work with people. That's not his style. So that's what I said. Someone's like, "How can he do this?" I'm like, "This is who he is." And so if it's not his company that he has full control of, that's an issue. So in the letter, Twitter said fiduciary. They were like risks. They were using all kinds of words, background check. That's always like, "Whoa, what did they find?" Who knows? And they sort of sending all these warning shots that to me were really odd. They must be under huge legal pressure right now, including shareholder lawsuits. And then lastly, he could do a hostile takeover now, presumably, although it would seem like a stupid financial move on his part. But he certainly could gather some of his more obnoxious friends. I mean, this weekend, Peter Thiel took a ridiculously cheap shot at Warren Buffett at a Bitcoin conference, just again, for the cheap seats of the bros that cheer him on. What a child. So anyway, it just feels like this idea of flamethrowers and rockets and tunnels is not the same thing as what he's doing now. So what do you think he's going to do?

Scott Galloway: We predicted this last week. I think he's going to get bored of it and move on. And the summary that we put forward last week, I think, is cogent. And that is, there are few people who've added more value to the things they focus on. But when it's a side hustle, whether it's Etsy or Dogecoin or Bitcoin, or in this case, Twitter, he brings volatility, not value. And I think there's a lesson here. Like it or not, Elon Musk is probably the role model for more young men globally than any man in the world right now, whether he deserves that position or not. And what I would encourage young men to think about is when you walk into a situation and you have some power and you have some influence, ask yourself, "Am I here to add value or to create volatility?" Because it's a sugar high and it feeds into your testosterone around risk-taking and feeling aggressive and important to start rocking the boat and saying things because you can, but are you adding any value? And I think he serves as a cautionary lesson around how power corrupts.

Kara Swisher: I think it's a cautionary lesson around how our institutions have lost a lot of ability to push back against individuals like this. And imagine, how much do you think Twitter management and the board have gotten done in the last two weeks? Zero. It's all been a circus. It's been a ridiculous boy circus, essentially. It's like Jackass. It's like the movie that's coming out. I'm going to enjoy seeing it, but this is what it's like. It's like an ongoing episode of Jackass, which is funny when they're shooting people out of cannons, but not here. He can't take over the company, Kara. As wealthy as he is, it would be about a $50 billion check. He doesn't have that kind of liquidity. And then the question would be, and then what? He clearly doesn't have real interest or understanding of the issues here. He has what I would call a pathological need, similar to our last president, to be in the news every 48 hours. And the ability, the desire to actually help Twitter was vastly outweighed by his inability to continue to act like a man-child. And so he either said, "I'm out of here," or the SEC called Twitter and said, "You can't put him on your board. He's violated too many securities regulations." So this was a two-week misadventure and what it means to be a man-child in an economy where we let people who are worth over a certain amount of money behave this way.

Kara Swisher: What's Twitter's role here, culpability? Because, look, we all know what Elon does. And I know I'm not – someone said I was saying he should be able to do this. He just does this. I don't know what to say. Again, I'm not his mama. But the SEC lets him. Twitter let him. Twitter presumably is not full of man-children, although you might think they are, but they're not. And so this is a public company. What is their culpability? And saying he was on the board when he wasn't quite confirmed for the board, didn't say subject to a background check. It feels like they were trying to control him and keep him in a bottle. And he's not to be kept in a bottle, essentially. And he thought he would get all the great taste, less filling kind of thing going on, all the benefits and none of the negatives about being on a board like this. Because he's used to running wild over his boards, right? Public company boards. And so what is Twitter's role here from your perspective?

Scott Galloway: Well, I don't know if Twitter had a responsibility or how much they knew about his lack of disclosure once he breached the 5%. If they knew about that, then the question is, do they have an obligation to file a 13D or disclose that they knew he'd blown past the 5% and was acting actively? I don't know if that responsibility is on them. I don't think Twitter is culpable here. I think Twitter, when they have a 9% shareholder say, "I want to be involved," I actually think the smart thing to do is to offer them a board seat and to welcome them. I don't think Twitter is culpable. When the board member then starts taking polls, then starts going around management, then starts this series of adolescent behavior that creates a distraction for the board, all of a sudden the board turns into all these circus clowns following the elephant scooping up his shit. Within 10 minutes, they're like, "Jesus Christ, maybe we made an error in judgment." And somebody has got to call this guy and speak to his lawyers and say, "Just so you know, this is what it means to be on a real board. And we're trying to pretend we're a real board." So I don't really fault Twitter here. This is about Elon Musk and his lack of control and our society's willingness to enable him.

Kara Swisher: Yeah, I get it. I think they were trying to control the situation. And that was why. They tried to control this person who is not controllable, which we warn people. He's not going to be controlled. He's not going to shut up. He doesn't want to be on a real kid board. And I think one of these things is these boards can be so indulgent, but in this case, not so much. And then when he said it's going to be lit with the pot stuff, it's just this is not a look that Twitter wants to have. And again, small company. Now, one thing I do think is if his rich friends start getting involved, they could do this as a game. They could, they don't mind wasting money. Peter Thiel, look at the things he's been saying. They've got unlimited funds. So they could do some damage here if they wanted to. So that's my only thing, is that they could, I've seen various scenarios of how they could do a hostile takeover. It certainly would be a disaster financially for him. And he should focus on the things he does well, like cars and space and things like that. But there's something about, he just can't quit Twitter. This is a romance and a very toxic one at this point that he can't quit. So it'll be interesting to see what the next move is. He may just move on and hopefully avoid an SEC problem, but we'll see. What do you predict?

Scott Galloway: We made this prediction last week. He gets bored and he leaves. And it happened in about 96 hours. And his boredom was expedited by some limited amount of requirements that he act like an adult, not capable of doing that. "I'm out of here. I'll go find things that I can continue to be more of an adolescent." And also this has been bad for shareholders because a combination of his wealth and his errant behavior has made him a walking poison pill. And that is the firm is no longer acquirable because everyone's going to say, "Well, is he buying more shares? Might he hook up with another takerist like Peter Thiel?" No one is moving in here now. So this is ultimately, what is this? It's more volatility than value, a walking poison pill, and huge distraction for the management team.

Kara Swisher: I'm not sure they were coming in. I've talked to a lot of CEOs who might have bought this company, and they were like, "We weren't getting near this thing." Like, I've made my rounds, you know what I mean? And they were like, "Ha-ha!" Anyone who was, no way, we're not touching this. But I just think they weren't touching it before, but now they're really not touching it. In any case, I think we're going to have to keep watching this story. I think it's a distraction for Twitter, which was trying to sort of bring itself back up under this new CEO. I think they hugged him a little too hard right at the beginning. They could have had a little more like, "We're excited, we'll see," that kind of thing. And they didn't do that. They were trying to slow him down. And he is unstoppable. When an unstoppable force meets an immovable object, one of them has to get out of the way. And in this case, they were not going to rein in this guy. And he doesn't care to be reined in. And we'll see what the government does. But I suspect not a lot. I just really don't see them moving in either. But we'll see. We'll see what happens, Scott. We're going to go on a quick break. When we come back, Warner Brothers begins its new chapter, and we'll speak with a friend of Pivot, Cathy O'Neill, about online shaming.

Kara Swisher: Mint is still $15 a month for premium wireless. And if you haven't made the switch yet, here are 15 reasons why you should. One, it's $15 a month. Two, seriously, it's $15 a month. Three, no big contracts. Four, I use it. Five, my mom uses it. Are you playing me off? That's what's happening right now. Okay, give it a try at mintmobile.com/switch. Upfront payment of $45 for three-month plan, $15 per month equivalent. Required new customer offer, first three months only, then full price plan options available. Taxes and fees extra. See mintmobile.com.

Kara Swisher: Support for Pivot comes from LinkedIn. From talking about sports to discussing the latest movies, everyone is looking for a real connection to the people around them. But it's not just person to person. It's the same connection that's needed in business. And it can be the hardest part about B2B marketing, finding the right people making the right connections. But instead of spending hours and hours scavenging social media feeds, you can just tap LinkedIn ads to reach the right professionals. According to LinkedIn, they have grown to a network of over 1 billion professionals, making it stand apart from other ad buys. You can target your buyers by job title, industry, company roles, seniority, skills, and company revenue, giving you all the professionals you need to reach in one place. So you can stop wasting budget on the wrong audience and start targeting the right professionals only on LinkedIn ads. LinkedIn will even give you $100 credit on your next campaign so you can try it for yourself. Just go to linkedin.com/pivotpod. That's linkedin.com/pivotpod. Terms and conditions apply. Only on LinkedIn ads.

Kara Swisher: Scott, we're back with our second big story. We're going to do it very quickly. The odds of a Shark Week, Sex in the City crossover just went up. The merger of WarnerMedia and Discovery closed on Friday. The deal brings Warner Brothers, CNN, HBO, and the same company as the Food Network, TLC, and HGTV. And leading it all, David Zaslav, one of the highest paid CEOs in media at $246.6 million. A lot of that's in stock, but still. On Monday, shares of the newly formed Warner Brothers Discovery briefly surged before falling. They haven't been doing very well, and it also has $55 billion in debt. Some people, Hollywood people, sort of pals of Zas, which they call them that, are saying this is going to be a big surprise. You and I do not feel that way. I feel it's too small. The debt is huge. They're going to try to do savings of $3 billion, which means layoffs. They might merge streaming services, HBO Max, with Discovery Plus and possibly CNN Plus. So what do you think about this so far? Just very briefly, what is the long and the short of it from your perspective?

Scott Galloway: The things that will impact the future of the new Discovery Warner or Warner Plus, whatever they're calling it, are things people aren't talking about. One, interest rates with $55 billion in debt. Interest rates just play a big role in your life. Two, if they're able to cut costs and show synergy around, I think it's 110 million subscribers they have combined and be a viable number two to Netflix, that will start to take the stock up and make things easier for them. And three, if there's huge pressure on AT&T to reduce their debt and an activist shows up and says, "I'll take HBO for 20 or 30 billion." I mean, what would HBO be worth to Amazon or Apple, right?

Scott Galloway: Then it might get broken up because the thing, and the thing people don't talk about, it's a single class share of stock. And similar to Twitter, the reason we're going through this nonsense with Twitter is because it's a single class of shares and can be acquired. And that same is true now of Discovery. It has a single class of shares.

Scott Galloway: So I think, and I'll go to my prediction because I have to log off here because the wireless is so bad in Brazil after me talking up Brazil forever. You're going to see an activist in here in the next 12 to 24 months, Kara, because at some point, Zaslav will deliver all of the calories of streaming, really high costs, with none of the great taste. It won't have the growth of Netflix or Disney Plus. The stock will get hit when they look at that $55 billion in debt overhang. And then someone will show up to their 71% shareholder and say, "How'd you like to take your debt down here by $20 or $30 billion? And I'll take one of these amazing assets off your hands." And the thing's going to get broken up. So unless they get traction fast, an activist is going to come in here. This is now the best assets assembled in the media world that is technically in play from day one.

Kara Swisher: Yeah, this is something Elon should be looking at or somebody. Absolutely.

Scott Galloway: Don't even say that. Jesus Christ, don't even say that.

Kara Swisher: Well, he's not going to come in here. He doesn't know how to do this. There's plenty of interest here. No, he's not going to win against an Apple or anybody else. But I think that's an interesting thing. So what activist or company, correct?

Scott Galloway: Oh, it could be any number. If this thing pukes, and at some point every company hits a bad quarter, you could see anyone from Dan Loeb or Ackman or a ton or Elliott come in and say, "We've done a sum of the parts analysis." And they don't even have to come in. They just go straight to Stankey and say, "We'd like to do a deal here and help you reduce some of that debt." And as interest rates go up, they're going to be fairly receptive to these ideas. So this company either has to show that the whole is greater than the sum of its parts pretty damn fast, and also that they know that the synergy around streaming is real, like pronto, or this is going to be a dinner bell for activists and private equity firms.

Kara Swisher: I feel like we should form a DAO and buy it. I think we should have done that with Twitter. I'm in. I'm in.

Scott Galloway: You know what I mean? It's interesting because one of the things-

Kara Swisher: Dog gal. Crazier things have happened. We should. Because, you know, Casey and I talked about that in Chicago. Why don't we form a DAO to buy Twitter now or something like that? We'll call it the Jungle Cat and Her Roommate's DAO. Not my roommate, my butler.

Kara Swisher: But one of the things when we talk about antitrust, I was at this conference with Senator Klobuchar, et cetera. By one estimate, in 1983, 50 companies owned 90 percent of American media. Today, the number is down to 6 to 12. That said, this is too small. This is too small. It just is too small and not enough technology. I don't know what else to say. And I've said this to David Zaslav, and he's like, "We know how to make content." I'm like, so does anyone with money. They can buy their way into this so easily. And not in the Sony way, not in the old pattern mapping of Sony coming in and losing all kinds of money. These people are very smart. This is not the same thing as what happened before. These companies are way too small to compete. Even Disney is very close to the smallness, but can possibly make it.

Kara Swisher: Just to put some numbers around it, Warner has, this is one of the most important media companies in the world with incredible assets, and its equity value is about 2% of Facebook. I mean, the numbers here, this thing is trading. It's not even a pimple on the elephant of the media landscape if you include Google and Facebook in terms of equity value. Now, if you add in debt, its enterprise value starts to get up more around $70 billion, and that's real. But the equity value here, somebody could basically – equity does control the company as long as it's profitable. I just – this thing is too ripe, Kara. It's too ripe.

Scott Galloway: Yeah, this debt is – this debt, everything. He can't – he's got to cut. He's got to cut. He can't – he could buy things, right? He could buy things, correct? That's the one way someone was putting it to me on a thing. I was like, okay, but so could everybody else. What could they buy? What could they buy? I don't think, I actually don't think they have that much capacity given all that debt. They could merge. I mean, they could say to Hulu, "Okay, we've all got to bulk up." But I think it's more likely to go the other way. I think they're more likely to go good bank, bad bank, and take HBO and some programs from CNN Plus that might be working. And some of the subscription stuff and say, "Okay, that's the cool kids that trade at a different multiple." And then trade the declining but massively profitable business of ad-supported cable and just milk the shit out of it. I'm not sure those things go together. It's difficult to find a company that has pulled off both of those at the same time.

Kara Swisher: Right. So just for fun, here's how ABC News covered the merger of AOL and Time Warner in 2000, they called it "the most dramatic instance of new media supplanting old media. The deal will be the biggest corporate merger of all time, as well as an aggressive bet on the online delivery of media is the wave of the future." I was there and Ted Turner said it's better than sex, I think, at the time. I am worried for this. I think if David Zaslav was smart and he'd make a lot of money, if he thought about this as flipping. Flipping, do they own that? Does HGTV own the flipping shows, the house flipping? This is a house flipper, Dave. Probably. I'm sorry. He's going to call me. He's going to say, "Kara, stop doing this." But nonetheless, Dave, it's a house flipper.

Kara Swisher: Anyway, we're joined now by our friend of Pivot, Cathy O'Neil. She's a mathematician, data scientist, and author. In her latest book, *The Shame Machine*, she looks at the double-edged sword of public shaming, how it can help improve society, but also how businesses, governments, and social media exploit shame to increase profits and other cruel ends. Welcome, Cathy O'Neil.

Cathy O'Neil: Thanks so much for having me.

Kara Swisher: Scott Galloway had to duck out because his internet from that fantastic country of Brazil sucks. So let's talk about the book. Talk about what you've done before so people understand your background in this area.

Cathy O'Neil: Sure. I'm a mathematician and became a data scientist. Actually, first I became a quant in finance right during the crisis. Then I switched to becoming a data scientist. And I noticed that the algorithms I was building were kind of just making lucky people luckier and unlucky people unluckier. And I started to really dive into the bad side, the dark side of algorithms, the dark side of big data. And I wrote a book called *Weapons of Math Destruction*.

Kara Swisher: Very funny.

Cathy O'Neil: And yeah, so I was researching, actually, the way shame came up for me was that I was researching that book, I was talking to teachers who had been fired with an algorithm that nobody could explain to them. And I would ask them, "Well, what did you say when they told you that you had a bad score and you're getting fired?" And they'd say, "Well, I was told it was math and I wouldn't understand it." And I was like, "Oh, well, what did you say next?" Because I was like, that's bullshit. What kind of answer is that? And it was more than one, more than two of the teachers I talked to were like, "Well, I sort of accepted that." And I was like, that's shame, right? That's math shame.

Kara Swisher: Because it's math. Because sometimes math is correct, right? Math is, you know, I sometimes look at like WeWork or some other things and I'm like, math doesn't add up in those kinds of things. But in this case, it was used in ways that confuse. As intimidation.

Cathy O'Neil: Intimidation. So social media, so it moved on to this idea of shame. How did you get to shame and math, essentially?

Cathy O'Neil: Well, I started from that point. I was like, that's math shame, but it doesn't work on me because I'm a mathematician. But then I was like, but it's very powerful. In fact, it actually was so powerful, it made those people feel so bad about themselves that they ceded their rights. And I was like, what kind of power makes us cede our rights? It happens before we can think through things. And that was an observation I had.

Cathy O'Neil: A couple years later, I was doing my own research for bariatric surgery. And I was thinking of myself as a very enlightened fat person who can handle this. And I was really interested in not getting diabetes. And I started doing my research, of course, on Google. And I was inundated with the shame, the ads for all sorts of fat shaming ads, which, by the way, I had been a data scientist, I knew exactly how that ad ecosystem works. I knew exactly why they were targeting me based on my search terms. But it had this incredible effect where I was incapable of concentrating. I was like, I will buy anything, I will do anything. I will subscribe to any crackpot theory to stop feeling this way. And I was like, oh, that's shame. That's the same power I saw happen to those teachers.

Kara Swisher: The idea is shame is mathematical in this case, in what you're being fed or what you're searching and then being fed because of that.

Cathy O'Neil: Well, shame is algorithmically produced, yes, online. And it's not, of course, new.

Kara Swisher: No, because shame's been around for a long time. People can do it without math, just like a good dig or a dunk. It takes advantage of human capabilities in this area.

Cathy O'Neil: I would say that exactly. I'd say it even hijacks our natural impulse. And it's not just to shame ourselves like this. This is like, I'm ashamed of myself as a fat person for being fat. That is a large part of the shame machine. That's what I talk about, sort of like the weight loss industry trying to make teenage girls feel bad about period funk and sell them a product that probably gives them a yeast infection. That's the kind of thing. There's a standard traditional way of making someone feel ashamed so they buy your product.

Cathy O'Neil: But then I thought to myself, actually, the biggest shame machines of all are the social media platforms because they don't shame us directly and then make us buy a product, but rather they create the perfect system, the atmosphere so that we shame each other and thereby profit them by staying on social media fighting with each other.

Kara Swisher: Right, right. I was actually talking about this. They were talking about shame having been around, not just shame, but this kind of thing having been around. I said it's different because yes, of course, but it weaponizes and amplifies in a way that has never happened before. Can you distinguish between good shame and bad shame? Because there have been a lot of benefits from seeing a lot of these videos of police. However you feel about the police, seeing these videos or the way people are treated or having some of this stuff that's accurate go around. Is that a good shame versus a bad shame?

Cathy O'Neil: Yeah, I think it is. I mean, that's exactly the kind of question I was trying to answer for myself. I'd also been part of the Occupy Wall Street movement where it was shame based, as is every civil rights movement. Every movement is trying to hold authority to account, saying, "Hey, powers that be, you're not acting in the ways that you claim. You have ideals and norms, shame on you." And that is, of course, appropriate. So yes, I distinguish in my book between what I call punching down shame and punching up shame. But it basically has to do with who has voice and who has choice. So if you shame somebody who doesn't have the choice to conform to the norm, that's bullying. Similarly, if you shame somebody who has no voice, they can't defend themselves, they can't be seen improving or being redeemed, that is also punching down. And social media almost always, not always, but almost always conditions us to punch down.

Kara Swisher: So one of the biggest news around shaming this past year involved Facebook's study about teen girls' self-esteem and body image. In your book, you write about similar personal experience. Now, a lot of people see the research isn't quite there, that it's not just because it's correlation isn't causation, right? That we're not clear and there needs to be more research. And of course, that's what got most of the attention because politicians can seize upon that and say, "See, Facebook makes girls feel bad." I'm kind of in the middle. I think there needs to be a lot more research, including data from Facebook, where we really begin to understand if there really is causation here and where it begins. Because women have been attacked for centuries now, and it's just the latest version of the tool to do so.

Cathy O'Neil: Yeah, well, two things. First, I did interview a lot of young women who absolutely described things happening to each other and to themselves that I could not have imagined when I was their age. And it all had to do with Instagram and these body-tuning apps.

Kara Swisher: Yeah, anecdotally, it's clear. It is, yeah.

Cathy O'Neil: And to your second point, yes, I absolutely agree that we don't have scientific evidence, but I'd argue, and I'm sure you agree, that that is by construction, right? These social media companies sit on their IP laws so that they don't have to give access to researchers to do the science, and they don't let the science happen. And there's a reason they don't let the science happen, namely because it would be bad news for them and they would be found to be liable and they don't want that to happen. So it's pretty simple. If they had any idea that they would be cleared by letting researchers in, I'm sure they would. Similarly, if Weight Watchers worked, we'd know about that. But if they don't work, they just depend on the failure of their product to get repeat customers.

Kara Swisher: Right. So when you think about what's happening, because public shaming is a problem of personal behavior. Some people are better at it than others. Everyone's susceptible to it. I've watched people I have, especially around COVID stuff. There's been a lot of people I liked before who have surprised me with their ability to shame people. I'm kind of good at it. I'll admit it. But I tend to punch up rather than down, which is my preferred way of punching. And I do punch. There's no question about it. And how do you, is that personal behavior or do networks, what do networks and these notions do to make that so when you're thinking about it? Do they feed you more or let you see things?

Kara Swisher: I want to resist. But again, today, Lauren Boebert did something really awful about gay people. And I was like, you know what, honey, no way. Not going to let this one go by. And I thought I should let it go by. And then I thought I shouldn't. And then I was talking to a friend of mine who's trans. They're like, "Don't let it go by." And I'm like, "Okay, I won't let it go by." And you know what I mean? But at the same time, I'm not sure how much impact it has on her.

Cathy O'Neil: Well, none on her because she seems impervious.

Kara Swisher: Right. There's a question of whether it works. And then there's a question of whether it's appropriate. And those are separate questions. And of course, there are some people that are actually psychopathic and will never feel shamed. But you can still possibly shame the people that support them. Look at what has happened in Russia, for example.

Cathy O'Neil: Yes. My feeling, well, I think the most important thing to know is that it actually lights up our pleasure center to shame other people, so it feels good. So it makes sense that we do it a lot, especially because we are served the most outrageous thing that happened or was said by people in a slightly different inner circle on social media than we happen to be in. So it feels good. But number two, it feels even better because our friends or our followers champion our shaming attempts. So we are conditioned to not only enjoy it, but also to do it repeatedly and to feel like we're being supported in our doing it, even when it's inappropriate. So that's the nature of social media. But of course, I will say that when you shame people in power for something they have a choice about, and they should change and they should do better, that's not inappropriate.

Kara Swisher: All right. Okay. It might not work. I think I'm being an asshole sometimes. Anyway, when you write, you write just a couple more questions. Some of the first shamers we meet are our parents. It's something I think about a lot. I had a bit of a shaming mother. How does the problem extend beyond social media? And as a mathematician, how do you quantify that?

Cathy O'Neil: Well, as a mathematician and former quant, I quantify it by how much money it makes most of the time, or how much power it propagates. Like, there's a lot of shame in situations like Catholic abuse of children, because the victims themselves were shamed as a way of avoiding changing the system itself. And that was not about money, although it ended up being about money. At the time, it was just about perpetuating the power, the status quo. So that would probably be a way of quantifying it, although that's not really numbers. But you're right. Shame is inherently a social thing. It's not something that you would invent if you were by yourself, but we're never by ourselves. We're in communities, and our very first community is our family. So our parents are likely, our family are likely to be the first people that shame us, and that's a very important evolutionary reaction to the feeling, "I have to behave or I'll be expelled from my community, and I might even die of exposure." Historically, we would die of exposure if we were expelled. So it's really important that shame works. The problem is it's been hijacked by profiteers.

Kara Swisher: Right, profiteers. So last question, who is profiting the most in the new age of humiliation? If you had a stack rank, a couple of people that profit, who would it be?

Cathy O'Neil: Oh, I would say Mark Zuckerberg profits the most. And to your exact point about avoiding actual science being done on the statistics of who gets harmed by these shaming systems that he's built. That's because he doesn't want to be punched up at. So good for you for doing so as much as you can. The system has to change. I will also say, by the way, that probably the biggest shame machine in our country that is a physical machine is the prison system. It is inherently shaming. And we are so used to it that we don't really question it. But if we look at other countries, other models, we'll realize that it doesn't have to be so undignified.

Kara Swisher: So last question, what do you do to stop this? Is there anything? People tend to like it. You know, I think it's one of the things I do spend a lot of time is never with Mark talking about his personal stuff or his looks or things like that. I find that so distasteful. And, you know, people are always like, "Kara, don't you hate his hair?" I'm like, "Back the fuck off. Don't talk." I did it to Bill Maher. He started to insult him. I was like, "You really shouldn't talk about looks and hair at this moment, although you have better hair." But it has hardly anything to do with your criticism. And so talk about that. How do you separate what's cruelty from what's okay, I guess? There has to be some level of shame in any society.

Cathy O'Neil: Oh, yeah. Yeah. Shame, we shouldn't throw it away. We should just use it carefully. So we shouldn't shame people based on things they can't actually change, like their looks. We should shame people only on things that they can change. And we also have to actually understand what it means to change. It's one thing to say, "Go on a diet." It's another thing to actually lose 100 pounds, and that's really, really difficult, if not impossible for most people, or to quit smoking or to stop smoking heroin or whatever it is. There's an enormous amount of assumption on the shamer's part that this is a choice when it really isn't a choice.

Cathy O'Neil: That's on a personal level. We can just choose not to do it. We absolutely must choose not to shame our children for their looks or their weight, for example. At a systemic level, to the extent that we have control over the design of systems, like whether it's a social media platform or a prison, we have to look for dignity violations, which I talk about in the book. They are signs, red flags that you are building in shame, you're embedding shame into your process, and we should avoid them at all costs.

Kara Swisher: So there is, though, my last question, there is a part of the DNA of the United States. Trump is not fresh and new. You know what I mean? Like, this is not, he's just, like I said previously, criming in plain sight of stuff that people were doing. They were talking about Jared Kushner and taking the money. I was like, they all take money, but just quietly. So if you had to change one thing, what would it be besides human nature, which I think is impossible?

Cathy O'Neil: I don't think it's possible to change human nature, but I do think we have become more punitive, to your point. And yes, we are. We've always been punitive. We've wanted to see people punished, and that is a fact about us. But I think our thirst for vengeance and revenge and punishment has gotten accelerated and overdone in the age of social media. And I do think that the social media engines are responsible for that.

Kara Swisher: All right. The book is called *The Shame Machine: Who Profits in the New Age of Humiliation?* Thank you, Cathy O'Neil.

Cathy O'Neil: Thank you so much.

Kara Swisher: All right. We'll go on one more quick break. We'll be back for predictions. Scott, let's re-hear that prediction of yours in a short and sweet way.

Scott Galloway: Until last week, the most influential media firm in the world that was in play was Twitter. And it's because it has a single class of shares and it was dramatically overvalued. That is no longer true. It has a human walking poison pill that is erratic and the wealthiest man in the world. Nobody wants to deal with them. So the thing is no longer in play. Now, the media firm that has the greatest assets in a single class of shares and is in play from day one, i.e. now, is Warner. An activist shows up in the next 12 months with ideas on how to, quote unquote, add value minus all the ridiculous fucking Twitter polls.

Kara Swisher: All right. Those are some good predictions. I predict, I don't know. I think Elon and his friends like Peter Thiel are in a nasty mood, lots of money. They could drive themselves right into a wall kind of thing. I just don't. I think at some level they don't give a fuck anymore. So I don't know. I'm a little in the I don't know camp.

Kara Swisher: But anyway, as always, we want your questions. If you've got something to ask about business, tech, media, or just need some fashion advice, just reach out to us. Go to nymag.com slash pivot or call 855-51-PIVOT. The link is also in our show notes. We'll be back on Friday for more. And I will read us out because Scott has got to go. He's got other things to do in Brazil. Scott, enjoy Sao Paulo and get some rest. I would really like you to get some rest. I know you're tired.

Scott Galloway: Thanks, Kara. I appreciate the concern.