Epic v. Apple, Facebook’s VIP List and a Friend of Pivot Brian Derrick on the California Recall

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

Scott Galloway: And I'm Scott Galloway.

Kara Swisher: Scott, you're calm today. It's much different than...

Scott Galloway: I'm hungover. Are you? Fashion Week. Daddy goes to some bad Fashion Week parties.

Kara Swisher: Why? Why?

Scott Galloway: Because I'm 10 years into a 70-year midlife crisis. Every 10 years, I'm like, I'm definitely too old to be here. Now, I just managed to suppress that self-awareness with alcohol. So, I go to places.

Kara Swisher: So, you may have gotten so old that you're now cool again, like Larry David, who has a slight resemblance to you in a weird way. He was there at Fashion Week and he was talking on his phone in the middle of the fashion show. It was kind of perfect.

Scott Galloway: Yeah, me and Larry David, that's a comparison I want. He's so talented. Anyway, did you find any fashions you like? Was it very lively? I mean, is COVID, do they care at all? New York is on fire right now.

Kara Swisher: Yeah, it really is. It's beautiful out. It's not that I notice good looking people, but there are a lot of them roaming around the streets right now.

Scott Galloway: Yeah. A lot of parties. I went to a bar the other night, and it was so crowded. I walked in. I'm like, I can't be here. I wouldn't do that. This is just too crazy.

Kara Swisher: Yeah, I wouldn't do that. But I mean, packed, shoulder to shoulder. And people feel – Not cool. The city feels great, Kara. I mean, it really feels very vibrant.

Scott Galloway: Yeah, I know it does. I'm not thrilled with the packed thing. I think we're still vulnerable.

Kara Swisher: Yeah, I agree. But nonetheless, it does feel great on the street, for sure. It feels fun. I just got here and I came from – I arrived at Penn Station, which was not Penn Station. That was a pleasing moment, arriving at the new Moynihan Penn Station, which I had not been at. So talk about that. I love infrastructure.

Scott Galloway: Oh, wow. It's really – like Penn Station is really the armpit of all train stations in America, I think. Anywhere. I would say globally.

Kara Swisher: I would say globally. And it's full of just filth and crazy people and people waiting and crowds. And it's just grime after grime. And ugly. Everything. The whole thing. Highly inconvenient. The new one, you emerge out of. And it's this beautiful. It's not big. But it's not like grand, like, say, Union Station or some others that you come out of in Europe.

Scott Galloway: Every one of them in Europe.

Kara Swisher: But it's quite beautiful and lovely and clean and weird. I was like, where am I? This was something I haven't seen because I used to travel New York quite a bit, and I haven't been. But it was a nice surprise, I'll tell you that, the morning.

Scott Galloway: That's great. That's nice.

Kara Swisher: Yeah, it was nice. You saw Larry David at Fashion Show. You know who I saw?

Scott Galloway: Who?

Kara Swisher: I saw Jesus.

Scott Galloway: No, you didn't.

Kara Swisher: He was a cross-dresser.

Scott Galloway: Really? Who? Get it? Cross-dresser? No, I don't.

Kara Swisher: Oh, my God, that's a terrible joke. Oh, my God. Awful.

Scott Galloway: That's why I'm here, for terrible jokes. Do you know what? We're taping on National Bald Day, just so you know. The staff just informed me.

Kara Swisher: I'm bald, eh? Yeah. Congrats to you, Scott Galloway.

Scott Galloway: I choose to be bald. I shave my head. There's a difference.

Kara Swisher: Okay. I choose to have a shave head. Is there a lot of hair there?

Scott Galloway: No. No, I did it. Literally, I was raising a ton of money in the 90s, and I was starting to lose my hair. My hair used to be my best feature. Granted, low bar.

Kara Swisher: I can't believe it. I cannot imagine you with hair.

Scott Galloway: In grad school, I had a skateboard and a ponytail.

Kara Swisher: I cannot imagine that. That's how you lose your virginity at 19.

Scott Galloway: That's how you don't get laid until you're a sophomore at UCLA.

Kara Swisher: Oh, my God. Which is like dodging bullets in a hail of fire. I wish I had known that, Scott, with hair, but not in fact. We do not. Anyway.

Scott Galloway: I had really good hair. But anyways, I shaved my head. And all of a sudden, the valuations of all the companies I started in the Bay Area went up.

Kara Swisher: Because you look like Lex Luthor. That's really it.

Scott Galloway: Well, you look like an internet guy. An MBA from Berkeley and outdoor plumbing and a shaved head was a recipe to raise money. It's a thing. A ton of money.

Kara Swisher: It's a thing. All right. We got to talk some other things. Speaking of looks, let me just say, Facebook and Ray-Ban, I want to unveil the pair of connected sunglasses. The frames look like standard Ray-Bans, and they include a discrete camera. Let's hear a clip from the Zuckerberg announcement.

Mark Zuckerberg [clip]: We've believed for a long time that glasses are going to be an important part of building the next computing platform and unlocking a whole new set of experiences for people.

Kara Swisher: The glasses do not stream or post directly to Facebook. First of all, I need to take this part. Ray-Ban is mine, Facebook. Like, literally. That is my look. People on the train today recognize me from my Ray-Bans. And now Facebook is sticking. Now, they can't put it in the aviators because they can't put their discrete cameras in there. But everything about it is – I don't know what truck they lined up in front of Luxottica, which owns Ray-Ban now, to give them this money. A discrete camera is not something I want from Facebook. I'm sorry. And we will talk about some other issues they had, some other stories today. But it's also a copy of Spectacles, Snapchat Spectacles, whatever.

Scott Galloway: It's so unlike them to copy Snap.

Kara Swisher: I know. That's a bit of a shocker. Yeah. Yeah, I don't care. I've never understood the camera on glasses thing. And I did think of you. I thought, what's next? They're going to put some sort of listening device and it's a COPPA. I'm like, they're literally – I think this is passive aggressive towards you.

Scott Galloway: I think it is. Do you know what it is? Here's the deal. Everyone around me got a pair to try. Not me. They didn't send me a pair. Casey Newton lives in my house. It was delivered to my house. I didn't know what it was. I threw it on his porch. They delivered it to my other tenant, Lauren Good. Let me just tell you, they are just – Andrew Bosworth.

Kara Swisher: Well, hold on. Lauren Good, the other podcast host, is your tenant?

Scott Galloway: Yeah, now she is, yeah.

Kara Swisher: Are you like an encampment for media executives?

Scott Galloway: Well, the other tenants bought their own house, and so Lauren moved in. Now she lives there. Now I have two tech. Yes, it's a tech. It's a wayward home for tech writers. That's what it is.

Kara Swisher: This is hilarious. I don't get it. Is Maureen Dowd in the basement right now?

Scott Galloway: No, no. By the way, she wrote a great article. I'm not even going to go there.

Kara Swisher: So I don't understand the whole Facebook thing, the Facebook and Ray-Bans. Face rounds. What is it? I don't know. I just – I don't understand these things at all. It's not going to work. I was there for the beginning of Google Glass. The idea is good for workers, I guess, and stuff like that. I don't think people are going to go around and do their life. I think it's part of the metaverse thing.

Scott Galloway: Right. He just doesn't have a new fresh idea and they're doing this and they own Oculus. I don't know. Stick with Oculus, Mark. That makes sense to me. Like I got – this is just – these never work.

Kara Swisher: The first Google Glass that came out, speaking of Fashion Week, you know that was my most famous line of all time.

Scott Galloway: Yeah.

Kara Swisher: Sergey Brin. Remember, they put them on a bunch of supermodels or a Victoria's Secret thing. They were all like modeling with those. And actually, the Google Glass are kind of cool looking, right? And DVF was there. So Sergey said, what do I think? And I said, you've just rendered supermodels unfuckable. That's really what I said.

Scott Galloway: You! You're a salty little minx. You love that.

Kara Swisher: Anyway, another thing, President Biden has a new... I don't want to talk about it. Like, stay away. Get off my lawn, Facebook. Get off my fucking Ray-Ban lawn. That's all I have to say. It's just passive aggressive.

Scott Galloway: It is. I think they're doing it on purpose.

Kara Swisher: I don't like it at all. Let's pick Ray-Ban and not give a pair to Kara. That's right.

Scott Galloway: House Democrats want a new privacy bureau inside the FTC. They've talked about creating this for a long time. They're asking for $1 billion to make it happen. That's more than three times the FTC's entire annual budget.

Kara Swisher: Right. It's not going to happen. They were going to do a separate internet agency. Not going to happen. That's what struck me in this article was that the FTC's budget is probably what Facebook spends, I don't know, and six months on PR to convince people that they're not a monopoly. To think about how much money we've been spending and how much, you know, stimulus programs, six to seven trillion dollars, and literally, what, a half a percent of that? Not even that. I mean, just no. These people are outgunned. 300 million.

Scott Galloway: I know. They have like 1,000 people, something like that.

Kara Swisher: It's really, you know, they do need to reform these agencies to deal with the modern age. And I've talked to Amy, we've talked to Amy Klobuchar about that, if you remember Senator Klobuchar. And it's just – it's the right idea, the Privacy Bureau. The issue is they have to actually define privacy. Like what is it? You should be able – one of my tenants, Casey, wrote a good piece about this piece on WhatsApp privacy. You should be able to report bad things, right, even in an encrypted app. You should be able to do certain things. So the question is what is privacy? I think it's going to be the –

Scott Galloway: Well, I wasn't here, but every week I would pretend I was here and I would do wins and fails in my mind. And one of my – Did you just sit in front of a wooden – This is what I would have said. I would sit my 11 and 14-year-old down and go, okay, wins and fails. You know, Preet's was on the money, by the way, but go ahead.

Kara Swisher: Yeah, he got that right in like a hot minute. Preet's was right. Anyways, great. Just pointing out. Yay for Preet. And by the way, in French, it's Preet. It's Preet. Why does he encroach on the genius, which is the infomitable first marginal line of the dog? Anyway.

Scott Galloway: I'm so excited to see you together. We're going to take a picture. I love it.

Kara Swisher: Anyways, the Apple, the biggest fail I thought from a brand standpoint was this Apple hashtag mirroring that went fishing on your phone. When they position their brand around privacy. And I was critical of a move. When you have someone who's shot 17 people, a terrorist, and you get a court order, I believe that Apple should open the phone. And then Apple does a 180 and says, we're going to go on to the client without your permission. It's very complex. And start uploading images.

Scott Galloway: Well, no, that's not exactly what's working. But weren't they going to cross-reference images on your phone?

Kara Swisher: No, they've got to have 30 instances of it. Then it doesn't go. It goes to a moderator. I had Ashton Kutcher and Julie Cordua on Sway.

Scott Galloway: I'm sorry. You're saying that for credibility?

Kara Swisher: No, but they have Thorne.

Scott Galloway: Oh, what does Ashton think?

Kara Swisher: No, they run Thorne. No, they run Thorne. This is a big A deal.

Scott Galloway: What does John Cryer think of antitrust?

Kara Swisher: No, he has Thorne. Thorne is a big deal in this area. It's been around for 10 years. In any case. Anyways, look, you're more knowledgeable than your woman on the street. But you're right. It's a bad look. It's a bad look. But not only was it a bad look, it's contrary to this whole, which I think was a brilliant positioning around privacy as a basic human right. And then you know what the best brand move of the month was? I'm going off script here.

Scott Galloway: All right.

Kara Swisher: Was Brian Chesky announcing that they were going to use their platform to help resettle Afghan refugees. It tapped into the core product. He does that a lot. Remember that Charlottesville he did that? The stock was up several billion dollars on the announcement. I mean it was just good for shareholders, good for the planet. He's done that a bunch of times, things like that, whether it was around Charlottesville or the capital march. He cut them off and Durba didn't help, but it was about housing them when they wanted to come back. He's a little Patagonian in that regard.

Scott Galloway: Yeah. And you know what your second best line is? Speaking about privacy, the second best line. Just close second to making models on Fockeball is when you said that people should, people should, wait, what did you say? People should have secrets. You said something along that. Or people should be able to have secrets. That really stuck with me. I like that.

Kara Swisher: What's your secret?

Scott Galloway: Oh, gosh. We're going to need a bigger boat.

Kara Swisher: Okay. All right. We have to get to our big stories, but I just want to say SpaceX is launching its first ever all-civilian mission to space. The four-person crew will orbit the Earth for three days. The mission is funded by tech billionaire Jared Isaacman, also on board, a physician's assistant at St. Jude's. The mission aims to raise $200 million for the Children's Hospital. I think this one's okay. I'm good with this one. This one feels like it's a good marketing moment. Real people are going in space. It's not some ridiculous billionaire's joyride kind of thing. I kind of like this. I think this is the right way to do it.

Scott Galloway: Well, I would describe Virgin Galactic as being brand or marketing driven. Blue Origin being, quite frankly, ego-driven. It's one guy who's decided to play with his rocket. I think SpaceX is engineering-driven. And he is better managed. And look at the difference between the SpaceX and Blue Origin.

Kara Swisher: Yeah, they're orbiting the Earth, yeah.

Scott Galloway: These guys, like, shot up to the Klarman line. Big fucking deal. Basically going twice as high as a private plane. Is that true? Anyways, about 60 miles up. Is it 60 miles or 60 kilometers? Anyways, this thing is actually going into, you know, near orbit and circling, orbiting them. Orbiting the Earth three times. I mean, this is kind of the real deal.

Kara Swisher: It is. These things make me very nervous. I don't think people appreciate how dangerous space travel is. I mean, the term space means that, you know, there are billions of particles in every square meter in our atmosphere. Space wants to kill you.

Scott Galloway: That's exactly right. Not only does space want to kill all organisms, space doesn't want to let any material survive.

Kara Swisher: No, nothing. Things degrade, things decompose. So all of this, whenever they get off the launch pad, because you're basically taking several hundred megatons of a flammable fluid and pointing people and saying, okay, hold on. And then, I mean, you just hold your breath because it's very dangerous. That's not what happens here. But if it doesn't, I think this is the way to do it, stuff like this. Real people orbiting the earth, raising money, getting people interested in the technology. It seems like a good way to spend money in that. Rather than just doing a woohoo, fly over the world. I just find that irritating.

Scott Galloway: Anyway. Yeah, agreed.

Kara Swisher: All right, on to our first big story. Apple is expected to reveal a new iPhone today, but the biggest update may be in its App Store. That because of a ruling in the Epic versus Apple lawsuit which came down in Apple favor with one big exception. A judge ruled that Apple does not have to reduce the fees it charges developers in its app stores. It currently from 15 to 30. Fortnite Epic game maker remains banned from the app store however, because they broke their contract. However, the judge allowed the developers can use the non-app store payments to get around the Apple store fees. That's a big change. It's a big win. Epic still filed an appeal because it didn't declare Apple a monopolist, et cetera, et cetera. It's a really interesting ruling. And to me, Apple did win because they were going in this direction anyway, with their previous settlement the week before. And Mark Gurman, who writes really well about Apple, was like, look, it's not that much money for them. They were going in this direction anyway. And most people will probably still pick Apple as the payment system. So what do you think about this?

Scott Galloway: Mark Gurman.

Kara Swisher: So let me guess, he's your dog walker.

Scott Galloway: No. Anyways. Not yet. Look, this was an interesting case of the media deciding, oh, wouldn't it be more interesting to say epic fail for Apple, right? And the reality was it was probably more of a win for Apple. And it distills down to what a lot of antitrust lawyers on both sides of the issue will say, and that being a monopoly isn't illegal. It's abusing monopoly power. And what they've said is, okay, my understanding of the ruling is the judge has basically said, you've invested a lot, you've done a good job. People get utility from this. Consumers clearly love it. They don't feel angry that they have to wait for someone to come install their cable between the hours of one and five and three months because you have a regulated monopoly. But what they've said is it's monopoly abuse. You can continue to charge 30%. You can continue to have somewhere between 55 and 85% market share depending on how you calculate it. But what you can't do is that once someone's downloaded the app, then decide that all tail activity within the app, you get a commission on. They saw that as monopoly abuse. So I thought it was more of a win for Apple, if you will, than for Epic.

Kara Swisher: I actually did think the judge did a good job. She was very – it seemed like she sort of cut the baby a little bit kind of thing.

Scott Galloway: Yeah, split the baby 100%.

Kara Swisher: And I think she was very deft in doing it, but she definitely didn't go far. She didn't want to lose on appeal, obviously. Now, Epic is appealing this and it's going to keep going upwards. But I feel like Apple was going to give on this. I think Gurman is right that people probably use Apple's – it's a couple billion in there. They don't care. They make so much money everywhere else, including the new iPhone presumably. So it's an interesting – it was – they could have been – they missed a really tough ruling. They did not get the tough ruling that maybe many people think they deserve, which I think is interesting. Have you heard anything about the new iPhone or what it's supposed to be?

Scott Galloway: No, I don't. I haven't looked at it at all. I usually go to Apple events. I used to go to Apple events, but no more. They're all virtual. And I think they like it that way.

Kara Swisher: You know, they were so cool when Jobs was doing them. They honestly were. They were fun. It was sort of like a Trump rally, but for tech reporters, I guess. Anyway, I don't know. I don't know. They'll probably have a better camera. It'll probably be sleeker. Who knows? Something like that. I found an iPhone, and I just want to say to the original owner to please stop calling my new phone. I will probably get it because I'm on that every year you get a new iPhone thing. No, I'll probably get it. I like my iPhone.

Scott Galloway: Smell you. Smell you with a new iPhone.

Kara Swisher: Smell me. Last thing, aside from this, I think Epic's probably not going to win on appeal. But, you know, they've got a really good lawyer. There's a woman named Christine Barney who works for them. But I think Apple's not the focus of – I think Apple's moved enough that they're assuaging some of their critics. We'll see. They're not the easiest nut to crack compared to a lot of the others. That's all. So South Korea did, though, pass a law essentially banning Apple's and Google's monopoly on App Store payments. This was the law that people were worried about and that Apple and Google tried to get the Biden administration to move in on and they didn't. So this law essentially forces them to use payments. So they're going to have to just do this.

Scott Galloway: This is my feeling. But it also kind of highlights that these rulings, they're going to have to change the law. If we do, in fact, believe that big tech's power has become bad for the economy and bad for job growth, and I think there's a lot of evidence of that, you're probably going to have to have a fundamental shift in antitrust laws because as they're interpreted now, it's going to be very difficult for Lena Kahn. I just hope the FTC and the DOJ doesn't become like the Los Angeles Rams in the 80s when Joe Namath is literally almost in a wheelchair. We decide to draft him or we take David Beckham to the LA Galaxy. It's like we don't need kind of these formally important and impressive. We need people to come there and actually get shit done. And so you don't want a dream team that then loses to Croatia in the semifinals of the Olympics. I don't know where I got that. But anyways.

Kara Swisher: In any case, you're right. They've got to be very careful. Like I said about MGM last week, they should not be pursuing cases that are not going to be winning cases.

Scott Galloway: They have to have winning cases is what you're saying.

Kara Swisher: Yeah. It's true. So we need to take a break. And then when we come back, we'll discuss a new story about Facebook. Not flattering. I know you're surprised. And we'll talk to a friend of Pivot about the California recall, which is today.

[Ad Break]

Kara Swisher: Scott, we're back with our second big story. Even as Facebook claims to clamp down on harmful speech, it carves out exceptions for millions of celebrities, politicians, and other public figures. That's according to a new report from the Wall Street Journal. It's a really terrific story. Documents reviewed by the journal detail the use of quality control system called XCheck, where VIP users are whitelisted exempt from the usual rules. XCheck includes at least 5.8 million users and has various elite tiers. An internal review from 2019 found that, quote, we are not actually doing what we say we do publicly, and that, quote, these people can violate our standards without any consequences. Facebook seems to have misled its own oversight board in describing the system. What a shock, saying that it was used in, quote, a small number of decisions.

Scott Galloway: Oh, this comes as a shock to me. I don't know about you.

Kara Swisher: Yeah, this is just – I'm shocked, Sarah. I'm shocked. It's like the Melania thing. She was asked to tweet to stop the attack on the Capitol, and she said no. This is a new book by Stephanie Grisham. I mean, like, I'm shocked by this once again.

Scott Galloway: Melania?

Kara Swisher: So, well, it's a story that Stephanie Grisham, who was her press secretary, has written a book. And in it, she said she tweeted, she texted Melania, do you want to, we need to tweet something about the attack on the Capitol. And she said no. She wouldn't want to do that to stop the attack. Anyway, in some ways we knew this. Facebook let Trump out of a lot, speaking of Melania, Trump out of a lot of things that other people couldn't, just labeled it misinformation when it was kind of forced to. But the post stayed up. Facebook says the system is designed to protect VIPs from having their post mistakenly deleted or hidden. So what do we do here? I mean, look, this system is untenable. That's the only thing I could think about. I just thought it is – I actually think Facebook should be elevating and deprioritizing certain individuals. I don't think – They don't want to do that.

Scott Galloway: Well, they are doing it. They had their fallback position is we want to give voice to the unheard and we want to give everyone a platform such that they could let really damaging, noxious content run unfettered because a lot of that content inspires engagement. But they have been editing. They have been making these kind of judgment calls. So that's fine. And I think they should be making those judgment calls, but they also have to accept responsibility for the editorial voice that they're shaping and putting out. And that editorial voice has been one of the most damaging propaganda voices in history.

Kara Swisher: Yeah, Trump brought this all into a sharp relief. They were sort of wandering around doing this forever, and Trump became the test case. I like that. Good stuff.

Scott Galloway: Yeah. Good stuff.

Kara Swisher: But is that sharp relief unfuckable now?

Kara Swisher: Jesus Christ. I brought it into sharp relief. I think this company is and has always been that way. But nonetheless, not as people. It's in the stock. It's performing like crazy. Not as people. I'm talking about a company. I think that this is – one of the problems with Facebook is it just piles on, that they lie to the public or they say one thing. The other thing is the author wrote me back and he's like Jeff Horowitz and he says, "Well, I can't – one thing, I didn't know it was this bad. And two, that they wrote it all down." And I wrote back to him, "Welcome to the Thunder Zone," with a picture of Tina Turner, obviously. And then I said, "They write it down because they don't think there's anything wrong with it. And they're proud of it even." And then every now and then one person who sort of leaves the building is like, "Just a second here. This could be problematic."

Scott Galloway: And so it goes to this idea that they don't like any dissent within this company. They don't have anyone in that room being an irritant. They're all in violent agreement with each other, the people that work there. This is the problem with groupthink. I'm on a board of a company and they were talking about a merger with other companies and the controlling shareholder kind of busted in the song why it was a good thing. I didn't push back, but I wanted a discussion and I highlighted the other issue. The lead director called me and said that didn't land well. "It's important we get along." And I'm like, "Boss, the thing that Enron's board and Theranos' board had in common was they all got along really well." It's not our job to get along. Our job in a company and at a board and even among senior management meetings – and I hate it because I have a big ego. I was on an editorial call this morning at Prop G and someone said, "Scott, that's fucking stupid. That makes no sense." My ego gets all angry. But unlike Mark Zuckerberg, I recognize a key part of shaping the right solution is evidence and respectful debate and conflict.

Kara Swisher: The thing about Facebook that they've always held true to is the moment they put anyone with any gravitas or backbone on the board, that person soon leaves.

Scott Galloway: It's more to employees too. They acquire a company and these amazing companies are clearly led by leaders who have a viewpoint and probably don't back down when Mark Zuckerberg says, "We want to give voice to the unheard," or "We promised we wouldn't use your data or make it interoperable with our other platforms, but we've decided to do that." And then when these guys or gals push back, before you know it, they've decided to leave. The key to Facebook is clearly, "Everybody try to figure out what Mark thinks and get there first." That typically leads to bad places.

Kara Swisher: The things they say, like "We don't do this" and then they do it. Of course they do it, but they're actually proud of it, and they honestly don't think there's anything wrong with it. Pointing out that the Snapchat camera's a problem – when I was talking to Evan Spiegel, he's like, "We make it clear it's a camera so that people know they're being recorded." The Facebook one, you can't tell it is. There's a small white light on the glasses, and that's it. They think that's a good thing, that people are possibly being photographed and recorded. And that's the difference. I made it big and yellow and it looks like a camera. This is the same thing: they don't think there's anything wrong with coddling these people and letting them do what they want and then lying about it when someone says, "What?"

Scott Galloway: Their problem was Trump arrived. Trump has sort of blown this company. Everything that's happened to Facebook is related to Trump – we see the badness in it is related to Trump.

Kara Swisher: But there's a bigger meta theme here. If you're going to screw up and violate people's privacy or weaponize the election, you don't want to do it once. You want to do it a thousand times because we don't know where to look and what to focus on with Facebook. It's almost become just noise. It's become Muzak in the background, their total disregard for the Commonwealth and their incredible competence to lie and then still put on a smiley face and get on stage and act like we're proud of the progress we've made. Jesus Christ, what progress is that exactly?

Scott Galloway: Between COVID, between Trump, between all the shit with big tech, we're missing so many dumpster fires. When the house is on fire, you can't focus on the plumbing. I hope this Bitcoin introduction in El Salvador brings some focus to the new leadership in El Salvador, which is a 40-year-old who used to run a disco, slowly dismantling the democracy there.

Kara Swisher: Oh, but Bitcoin, Scott.

Scott Galloway: Well, I know, but let's talk about Bitcoin. That's what they want to talk about, as opposed to this guy slowly but surely dismantling any remnants of democracy in El Salvador. There's just so many tragedies all over the world that we don't have the luxury of focusing on anymore because it's such a shit show, deservedly between the pandemic. But big tech has basically – it's like the war on drugs made us more vulnerable to terrorism because we were doing stupid things like trying to track every inbound drug into the nation. It just took valuable resources away from more pernicious threats. I feel as if the same thing is happening with big tech. Facebook has basically created cloud cover for every other company that wants to do bad shit.

Kara Swisher: But yet we go on, Scott.

Scott Galloway: Yeah, we do. We move on. We go to Fashion Week.

Kara Swisher: We go to Fashion Week. I couldn't show up. I'm wearing literally an old T-shirt and pedal pusher pants right here, sweatpants.

Scott Galloway: You can show up anywhere. By the way, I do. I hate to admit it. People are like, "How's Kara? Where's Kara?" On the train today? Six people.

Kara Swisher: Six people?

Scott Galloway: Six people. Nice. People really, they're really thrilled. They're like, "We're so glad Scott's back."

Kara Swisher: I'm like, "Okay. Go on."

Scott Galloway: That's right. They like us. They like us. Daddy's home.

Kara Swisher: They really like us. Yes, that's true. Daddy's home. Let's bring on our friend of Pivot, Brian Derrick. A political consultant who has worked for Lambda Legal and Senator Kirsten Gillibrand. His Instagram stories were chicken soup for the liberal soul around the 2020 election, where he dropped frequent civics lessons and soothing electoral updates. "Hi, friends. It might seem really early to be talking about the midterms, but the organizing and fundraising that happens in the next six months will likely determine which seats are actually winnable one year from now." He continues to motivate voters at the local level on Instagram and through his platform Oath. So he joins us now to break down what's at stake in the California recall. This is very exciting. So, Brian, welcome to Pivot.

Brian Derrick: Well, thank you so much for having me on.

Kara Swisher: So let's give us some quick background here. Explain the recall in like 30 words or less. Why is this happening?

Brian Derrick: Essentially, the recall is an effort by Republicans to remove Governor Gavin Newsom from office in California because he responded strongly to the pandemic and fought for basic public health measures. Republicans have seen that as an opportunity to grow their base, fundraise in California, and try to recall him from office.

Kara Swisher: He also did some dumb things. Let's be clear. Like he did that dumb dinner, for example, possibly the most elite restaurant in all of California.

Brian Derrick: Yeah, I think there's definitely blame to go around. But the good news today is that he is very likely to survive this recall. All data that we have points to him coming out successful and going on to run again in 2022.

Kara Swisher: That's right. There's another election. How much money has been spent here?

Brian Derrick: The governor has raised to date about $80 million through both committees that he's been fundraising through, compared to his nearest opponent who has raised about $13 million. He's by far been the dominant fundraiser in this space. Republicans have really failed to show that they were going to have a true path to victory that was going to allow them to fundraise anywhere near.

Kara Swisher: And how much are California voters having to spend to do this?

Brian Derrick: The recall election itself will cost upwards of $200 million. There is a real cost associated with putting this on the ballot and asking all 58 counties of California to hold an election in the middle of a pandemic.

Scott Galloway: First off, and most importantly, do you know who Tormund Giantsbane is? Do you watch Game of Thrones?

Brian Derrick: I do.

Scott Galloway: They call me Giantsbane. Want to know why? He's the guy with the beard who has murder in his heart. You look like a handsome version of him. And by the way, I just want to shout out to our producers. I asked for better looking people and they delivered.

Kara Swisher: Brian, you are just fucking dreaming. Would you please ask a question? You are dreaming. Enough of bothering the death.

Scott Galloway: Is that triggering? Okay, isn't this recall literally the best example? Just as Marx said, capitalism would collapse on itself. Isn't this some evidence that democracy, when it's taken too far, collapses on itself? You decide mid-cycle that you put in place a construct where if someone is really upsetting the populace that voted for them and you get enough signatures, you get a recall. That all makes sense. But we're now in a situation where the sitting governor can get 49.9% and a whack job conservative talk show host can get 13%. And congratulations, Governor Elder. Isn't this an example? Shouldn't we be using this as a catalyst to revisit the entire recall construct?

Brian Derrick: That is a very suit point. To explain that point a little bit further, the recall breaks down into two questions. Question one: should Newsom be recalled? If greater than 50% of voters vote yes on that question, whoever wins a plurality or the most votes on question two will become the governor, regardless of how many that is. It could be that no candidate has ever become governor in the United States in any state with less than 30% of the vote. If Newsom is recalled, it would likely be historic that someone with very little support in the state became the governor. To your point, I don't think this is a great example of how this aspect of democracy should function. It's really through serendipity that we ended up here. California has the lowest bar to recall elected officials in the entire country. There have been 179 recall attempts in California in the past.

Scott Galloway: Exactly.

Brian Derrick: Exactly. And there have only ever been four gubernatorial recall elections in the United States, two of them, including this, in California. The reason we're actually here is because the original recall effort failed to get enough signatures in the time allotted, which, again, is the most time any state is allowed to gather those signatures. But a judge extended for four months, gave them four more months to collect those signatures to make this recall happen. They only had a million of the approximately 1.5 million they needed by the original deadline and needed an extra four months to get across the finish line.

Kara Swisher: Yeah, the whole thing is just stinky. So what are the major differences between this recall and the Gray Davis recall, which did work for putting Arnold Schwarzenegger in office?

Brian Derrick: The primary differences are the political landscape of California has shifted left for the last three presidential elections. Democrats have won a greater and greater vote share of California votes. Now registered Democrats are outnumbering registered Republicans two to one in California. If everyone were to go cast their ballot, it would not be a close election, which is why it's just about turnout. The other important difference between this and 2003 is that Newsom's approval rating is actually quite high. It definitely hit rough spots, especially after the missteps that we already mentioned. But his approval rating has consistently been over 50%, whereas I believe Gray Davis was in the 30s at the time that he was recalled.

Kara Swisher: Okay, Scott. Do you think there's a trend or this will represent that the pendulum swung too far and there's an overcorrection? We might come back from this notion that state legislatures can impeach a governor mid-cycle. At some point you just say, "Well, we have elections for a reason. If someone's unpopular, you get to vote for them in a maximum of 48 months, and usually it's two years or less from now." Do you think we're going to move back to just saying, "Okay, elections are where we decide who does and does not deserve to be in office"? Are we going to continue to see this kind of nonsense? Is this peak mid-cycle weirdness?

Scott Galloway: No.

Kara Swisher: I hope so. No, says Kara. I hope so.

Scott Galloway: That is why in many states there's a requirement that an elected official is convicted of a crime in order to be recalled. California does not have such a requirement. My hope is that this is the extent of people's short-sightedness with wanting their electeds to face immediate accountability for any public policy disagreement they have with them.

Kara Swisher: Or say it's fraud because there's been an uptick in the voter fraud narrative on Fox News and social media. There are all sorts of reasons why the 2020 election, in my opinion, was full of shenanigans. My fear is they're going to try that in this election right here in Recall. "Pay attention to the voter fraud going on in California because it's going to have big consequences not only for that state, but for upcoming elections. They're doing this again. He's going to win because of fraud."

Scott Galloway: I think that is possibly the most consequential outcome of this election, assuming that Gavin Newsom stays in office, which I believe is very likely. Republicans have really consolidated around this narrative of voter fraud. Every election is a fraud. Everything they lose is a fraud.

Kara Swisher: Exactly.

Scott Galloway: And you hear them repeating it across Fox News. Donald Trump has chimed in multiple times about this election to say that it must be rigged. Larry Elder is doing it. If you look on his campaign website, already the no results are out for this election. And it says, and I quote, he's asking people to sign on to "investigate and ameliorate the twisted results of this 2021 recall election" when we have no results.

Kara Swisher: A lot of tech people involved in this. Chamath on one side and David Sachs, I think. They've gotten strangely quiet, haven't they? Like, "Oh, fuck, look what we've done." He's sending me answers to four questions I have tomorrow for my column. But Chamath is doing it. And then Reed Hastings is on the other side. Can you talk about this tech involvement? Because that's been funding. There's not a lot of money on that side, but there is tech money involved. And it was sort of started by them in a weird way. It felt like it was started by them.

Brian Derrick: Absolutely. I think it's important for people to know that there's no limit on the campaign contributions that are allowed to participate in this kind of election. You have donations of one million plus dollars being made on both sides of the aisle. If you have those kinds of resources, I do think that people see the governor of California as being an important player in those kinds of tech conversations and public policy narratives. They want to make sure that they have their voice heard in who's going to be pushing or advocating against any kind of regulation in tech.

Scott Galloway: It just feels like the Cold War where we have the Soviet Union, one tech billionaire on one side, and we have America, another tech billionaire on the other side. And then Vietnam or these ridiculous recalls where they have proxy wars where it ends up being Reed Hastings versus somebody else. This democracy is just kind of stuck in the middle. It's these guys pulling the levers. It's a weird form of Cold War. It represents so much bad shit, too much money in politics, recall.

Kara Swisher: So I'd love, Brian, and you kind of swim in this stuff. We have a part of the show where we do predictions. I would love for you to just shoot from the hip on some predictions or thoughts around 2024 or what we are missing around politics wherever you feel comfortable. It's like a civics lesson. Give us some stuff that you think is going to play out in the next couple of years.

Brian Derrick: Absolutely. In the near term, I think we are likely to see a "smoking gun" come from the sham audit in Arizona, which Republicans have been dragging on for many months. I see that completely changing the direction that Republicans take for both the 2022 midterms and the 2024 presidential election.

Kara Swisher: A smoking gun that adds fuel to the flames of conspiracy?

Brian Derrick: That will add a lot of fuel to the conspiracy fire. You already have some Republicans who are claiming some twisted kind of victory out of that audit that's been debunked many times. I think what we should expect is for Republicans to double down and triple down and to seek the rock bottom that seems to not exist in terms of questioning the legitimacy of our free and fair elections in order to boost their polling and fundraising numbers.

Kara Swisher: Except when they win and then it's not a problem, right? Is that correct?

Brian Derrick: That is correct, but they don't seem to know when that is. For example, they continually question the validity of mail-in ballots. But of the 16 states that had more than 50% of voters cast their ballot by mail, Donald Trump won in nine of them. They really don't seem to know when to quit. A lot of it's not based in any kind of factual reality. But it is great for their fundraising numbers. Trump raised $280 million.

Scott Galloway: Well, that's really the heart of it, isn't it?

Brian Derrick: Right, exactly. That's the heart of it.

Kara Swisher: So let me ask you, when did you decide to run the civics class on Instagram and your local election resource platform?

Brian Derrick: I got a question during the 2020 Democratic presidential primary from a friend about delegates and why there were thousands of these delegates and who are they and how does it work. The simplest way I had to explain it to him was to draw it out. So I did that on a whiteboard, made a video, and sent it over. I also posted it online. That was sort of how it all began. People really seemed to appreciate contextualizing what was happening in the news within our system of governance and the importance of the structure around what was happening. I continued to do that through both stories and posts and on my whiteboard and tried to be as responsive as I could to people as they would submit more and more questions. I also do think that it is a generalization, but true, that Democrats tend to look to federal government and federal officials to solve their problems, when in reality, a lot of times the decisions that we want to be made differently are happening down the street in City Hall or in our state house.

Kara Swisher: So therefore this local election resource.

Brian Derrick: Exactly. I wanted to push people to look local and participate locally.

Kara Swisher: Is that the best way to get through? I don't think they're done by any stretch. My son and I had just a really fascinating conversation about politics yesterday. I think they're quite up on things, but it's a good way to reach them, presumably. Do you have a broad range of people looking at that or is there a demo that looks at it? Because some of the best COVID stuff was stuff on Instagram. I have to not just Instagram, but TikTok, actually. Some of the misinformation, but people ignore the good stuff that comes through on those platforms.

Brian Derrick: Absolutely. I think my core demo has been Democrats who have felt really low or unenthusiastic or not included in the conversation, haven't understood where they can make their voice heard. That really spans all ages. That's young people who are a little bit disaffected with the system. That's older folks who might have lost a little bit of faith in the movement. Being able to show people exactly where they can make their voice heard and have the greatest impact is the best way to challenge that kind of powerlessness that people might be feeling in a really overwhelming time and brutal news cycle.

Kara Swisher: Right. Scott, last question. Your picks for Democratic and Republican nominees for president of 2024.

Scott Galloway: Oh, good one.

Kara Swisher: Who you would like or who is most likely? Let him do both. Let's do both. Here we go. We want your brain, not your heart here.

Brian Derrick: Okay, sure. I think that the most likely scenario seems to be Donald Trump versus Joe Biden. Round two.

Kara Swisher: Really? So you think Biden's going to get there and you think that Trump announces and gets the nomination?

Brian Derrick: I think that recent tidbits and headlines have pointed to Trump running. I think he will clear the field. I think people will run against him. I think it'll be very difficult to do so. And I think that if he wins the nomination, or even before that, Joe Biden will feel compelled for the same reasons he felt compelled to run in 2020. He will feel compelled to run again. So that's why I say that seems like the most likely scenario.

Kara Swisher: Who would you like?

Brian Derrick: If Trump does not run, I think we're looking at possibly Pence or, if it goes the other way, Josh Hawley on the Republican side.

Kara Swisher: Do you think Liz Cheney has any chance or Nikki Haley?

Brian Derrick: I do not see a moderate Republican rising to the top in this climate.

Kara Swisher: Isn't that weird that Liz and Nikki are considered moderate?

Brian Derrick: Exactly. You're absolutely right. Somebody with at least one foot in this reality that the rest of us are living in, I guess, is the only way that I could possibly describe them.

Kara Swisher: And then?

Brian Derrick: And then likely Vice President Kamala Harris on the left.

Kara Swisher: Okay. Well, there it is. Brian, thank you very much. We appreciate it.

Brian Derrick: Thank you for having me on.

Kara Swisher: His Instagram is at BrianDerrick underscore. And also his resource platform, O's, and vote. Everybody vote in the election, and then we'll see what happens. Thank you so much.

Scott Galloway: Thanks, Brian.

Kara Swisher: We'll be back for wins and fails.

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Kara Swisher: Okay Scott, wins and fails. I'm gonna start. I ventured into a theater for the first time in like two years, really two years.

Scott Galloway: Yeah.

Kara Swisher: I double masked. The person I went with had some money and bought all the seats on every side of them. So we were like not surrounded. It was kind of interesting.

Scott Galloway: I think there's a couple of words for that. First is white. Second is privilege. I'm sorry. Go ahead. You bought the theater up?

Kara Swisher: I just went as a guest. In any case, I didn't know this was happening. I went to see the new Marvel movie, Shang-Chi.

Scott Galloway: Oh, is that good?

Kara Swisher: Fan frigging-tastic. It was funny. Awkwafina. It was amazing. It was well done. It was gripping. Michelle Yeoh was in it, who I love. She could read a phone book and I'd be thrilled to watch her. But she kicks ass. There's an actor, Tony Leung, and he's really amazing because it's a very conflicted role. This guy has to fight his father. I got to tell you, it was tremendous.

Scott Galloway: Really? Is it OK for kids? Can I take my boys?

Kara Swisher: Yes. Oh, yeah, yeah. There's not even slight amounts of anything in it. I love that. It's kick ass. And again, Awkwafina is amazing. Everyone in it was great. It was wonderful. It was totally worth it. Do you have a fail?

Scott Galloway: I do not.

Kara Swisher: Well, yes, a lot of them. All these people dying of COVID still continues to shock me. And then that story in the Washington Post.

Scott Galloway: About the guy who couldn't get in a hospital because all the COVID people.

Kara Swisher: Couldn't get in a hospital, yeah. The COVID people. I'm sorry they're sick, but fuck you people. This guy shouldn't have died. He should have been able to get an ICU.

Scott Galloway: Well, you know, last week, our prediction, we talked about the lack of leadership from and literally on cue the next day, mandatory vaccinations. Just in terms of media, I love talking about media. I'm watching a great series called Mr. In Between, which is out of Australia. I'm just fascinated with Australian culture. It's called Mr. In Between with this really talented guy who also writes the show named Scott Ryan. It's about a low level criminal. There's a human side of it that, you know, criminals have families too. But that's not my win or my fail. My fail is I watched CNBC interview, I think, I believe her name is Deirdre Bosa, and she interviewed the CTO and chief legal counsel of Tether. As far as I can tell, and the part of my brain that should be able to understand cryptocurrency has clearly died because I still can't get my head wrapped around crypto. But essentially, Tether is sort of a money market fund where a lot of people who hold foreign currencies can't buy Bitcoin with their Argentinian pesos. So they convert it to the stable coin called Tether and it doesn't create a digital trail for the triggers currency reserve restrictions or tax. A lot of people don't want a digital trail around their currency flows or capital flows. And then they buy these tethers and then they buy Bitcoin. A dramatic amount of Bitcoin is purchased in Tether, the stable coin. And Deirdre did a great job of asking some very basic questions of what are you doing with this money?

Scott Galloway: And they claim that they're buying commercial paper, which would mean about one of the five or 10 biggest commercial paper purchasers in the world. And no one can find anyone who has sold them commercial paper. No one can find an intermediary that is willing to disclose that they're purchasing commercial paper on their behalf. And they're working with like Delta Bank of the Cayman Islands. I mean, this thing, it was literally something out of a movie. It feels like a Bond thing, speaking of movies to come. It doesn't smell like teen spirit. It smells like fraud. And if Tether ends up to be not legitimate, the amount of cryptocurrency that is purchased with Tether, it could literally tank the entire market. So my fail is the lack of disclosure around cryptocurrency and specifically around Tether. And I'm late to the game here. A lot of people have done great work around this. But this smells like it could be really, really bad. It literally sounds like a Bond movie, like someone who has this and is – It's not like a Bond movie. It sounds like Bernie Madoff.

Kara Swisher: Oh, Madoff made me –

Scott Galloway: They won't disclose where this money is actually going. The securities they're supposedly purchasing with it. Anyways, my win is –

Kara Swisher: Yeah, this area is going to be full of this kind of stuff for a while until regulators move in and have some sort of – Not that that's not going to stop some fraud, but it does put –

Scott Galloway: My win is I think Carter, Jimmy Carter, was a terrible president and a fantastic ex-president. And there are two roles. And you can have a lot of influence as an ex-president. You speak with a very big voice. And I think that the individual who will go down perhaps as great a contrast as there has been in history of someone who was a terrible president but a fantastic ex-president. And there was further evidence, I thought, of the 9-11 memorial is George W. Bush. There is little cultural overlap between violent extremists abroad and violent extremists at home. But in their disdain for pluralism, in their disregard for human life, in their determination to defile national symbols, they are children of the same foul spirit. And it is our continuing duty to confront them. I think his decision to not only to go into Afghanistan and then decide to build schools and set up a democracy in a small NATO nation and then use that as a jumping off point to Iraq. I mean, literally first ballot hall of fame of catastrophic geopolitical decisions, a terrible president. But I also think he speaks with a lot of gravity and heart and soul as an ex-president. And some of his comments at the 9-11 memorial, I think were really courageous.

Kara Swisher: You know, he said that – I'm not courageous about – I'm sorry. I got to push back. I think that stuff – I'm not forgiving him for the whole thing, the Mideast thing.

Scott Galloway: I didn't say we should forgive him.

Kara Swisher: No, I know. But he's getting a – because he's so adorable now, I think people give him a pass. I think that was a great speech. He should have said it earlier. I mean, he said some important stuff.

Scott Galloway: No, no. But he talks about that while there's little cultural overlap between people who attack these towers, they have the same disdain as domestic terrorists. He said there's a tremendous sign that they come from the same – they wreak of the same foul spirit. And that was a brave thing to say for a Republican to say these people on January 6th, these insurrectionists, are no different than the terrorists who attacked us on 9-11. I thought that was a courageous thing to say for a Republican.

Kara Swisher: Let me ask you a question. Why is it brave? It's the truth. Why is that brave for him to say – we applaud people for saying what they should have said six months ago. The only person who actually was doing this – What other Republican has shown that bravery?

Scott Galloway: There's been a bunch. There's been a few.

Kara Swisher: Okay, that's one. And Kitzinger. That's one. I know. What I can't believe is the bar is so low that we can only name a few. I just find it like it's not brave to do the right thing. I am shocked that there's not more. I know we should give it to him because he does paintings and he's real nice now and he hugs Michelle Obama. But I got to say, where were they when it mattered, when they had a chance to go at Trump? They didn't. They didn't. They didn't. They didn't.

Scott Galloway: I think my win is George W. Bush, his speech at the 9-11 memorial. And I think he will go down similar to Jimmy Carter as a terrible president who became a very productive and thoughtful ex-president.

Kara Swisher: But I agree with you. I don't think that – I mean Afghanistan – I'm with you on the Jimmy Carter part. You with me on Jimmy?

Scott Galloway: Yeah, he didn't do anything that bad. Like he wasn't great, but he wasn't Afghanistan bad. There's nothing as oppressive as a weak and feeble government. And Jimmy Carter proved himself, in my opinion, to be a weak and feeble government. Anyway, my win is George W. Bush's speech at the 9-11.

Kara Swisher: All right. Well, we will go with that. We will go with that, Scott. That's the show. We'll be back on Friday for more. I'm looking for a good listener question for Friday's show. If you've got one, submit it to nymag.com. We've had amazing questions from the audience. They've been terrific. Scott, will you please read us out?

Scott Galloway: Today's show is produced by Lara Naiman, Evan Engel, and Taylor Griffin. Ernie Entretot engineered this episode. Make sure you subscribe to the show on Apple Podcasts or if you're an Android user, check us out on Spotify. If you like the show, please recommend it to a friend. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back later this week for another breakdown of all things tech and business. Tormund from Game of Thrones. He's a political consultant now. Nice to see him reinvent himself. I promise you don't come back me.