Netflix Breaks a Losing Streak, Zuck Swipes at iMessages, and Guest Ben Smith of Semafor

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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. I just flew in from California and gee, are my arms tired.

Scott Galloway: We're doing dad jokes? Okay, hold on, hold on. Yeah. What do you call a wolf that meditates?

Kara Swisher: What?

Scott Galloway: A werewolf.

Kara Swisher: Oh, nice. That's good.

Scott Galloway: Oh, nice.

Kara Swisher: The dog's lifting you up on a Friday. No, you know, let me just say, I'm at Scott's apartment outside of his fancy studio. He offered me quiche and coffee this morning already. I came in on a red eye. And he was correct that it would take too long to get here. Quiche, coffee. I was on Amonpour. Who says I'm not progressive? Who says I am bringing the bona fides here?

Scott Galloway: Yeah. Yes, you are. Well, thank you for having me. Actually, I'm the new minister of the conservative parliament.

Kara Swisher: Are you?

Scott Galloway: And the lettuce one.

Kara Swisher: The lettuce one. Let us entertain you. There's so many things. You know, if they had just romained, that's one of the jokes on Twitter. As for taping, Liz Truss just announced her resignation. She'll be the shortest serving prime minister in British history. I don't think we should talk about stature or height. I think that's inappropriate. So, Scott, seriously, you go to London and you're like, everyone wants to invite you to their country to see what could happen.

Scott Galloway: Literally, it's going to be impossible for me to get a visa anywhere. I know. But I have decided, they've called me and asked me for my advice. And like one, the campaign slogan should absolutely be a chicken in every pot and a Cialis in every cupboard.

Kara Swisher: Okay.

Scott Galloway: And also, given the dollars a cent, they should change the name of their national sport to soccer ball.

Kara Swisher: Oh, no.

Scott Galloway: That's a good move.

Kara Swisher: That's not a good move. I mean, really. That's a good move. What's the mood in London?

Scott Galloway: The mood?

Kara Swisher: Yeah.

Scott Galloway: I would say it's kind of dour and cynical, so it feels pretty much normal.

Kara Swisher: Right. So they're not—

Scott Galloway: For the UK. This is not even— They're sort of, you know, kind of—I don't want to say bereft or resign, but there's a lot of eye-rolling.

Kara Swisher: Yeah. They're funny, and it's one of those things where I think the government there is—I don't know. It's just like keep calm and carry on. I don't think the British people scare easily.

Scott Galloway: Yeah, yeah. They're not—I don't find them. Maybe it's because I don't know them as well. I don't find them as polarized, nor do I find that they define themselves to the same extent by their politics as we do here. But then again, maybe it's just because I don't know them as well. It's like the functional families are the ones you don't know.

Kara Swisher: Yeah.

Scott Galloway: But it strikes me they have a pretty good attitude about all this stuff.

Kara Swisher: Yeah, it doesn't seem quite as partisan. And they're funny, which is important. It doesn't seem quite as – I mean, there's obviously clear partisanship, but it's sort of like the old days of partisanship versus anything else. and it seems like the Tory party's really fighting each other like crazy, trading emails back and forth and different things. So it'll be interesting to see who's going to get this job this year. I mean, no one's accusing anyone else's father of killing JFK. I mean, they're just sort of just a little bit more civil.

Scott Galloway: Yeah, yeah. Well, they have, I like their whole, you know, prime minister's hour where they actually do go at each other on policy in a very strong way, but it's not ridiculously stupid like ours is.

Kara Swisher: Anyway, today, Netflix bounces back, but will it last? Also, Mark Zuckerberg comes for iMessage. And we'll speak with Ben Smith about the launch of his new publication, Semaphore. Finally, finally debuted. It's quite good, actually. I have to say I'm really impressed so far of the things I've seen. But first, Twitter has frozen employees' stock accounts, which could mean the deal with Elon Musk is moving forward. He himself, on a call about Tesla yesterday, said he was obviously overpaying for it, but he was excited. The company's employee page was updated to let staff know they won't be able to access or trade shares. Twitter shares jumped 1.9% after the news. This is taping. It's at $52, not at $54.20, which is where it needs to be to equal what Elon's going to pay for it. So what thinks you about it?

Scott Galloway: I think it closes next week. I think it's on Rails now. He's stopped ship posting the company. He's stopped trying to set a pretext for exiting the deal. They clearly are doing all the kind of logistics around what a company does when it's confident it's going to close. So this feels pretty, and the market thinks it's going to close. The merge ARB here, the difference between the price and the closing price is pretty small. So the market thinks it's going to close. So I think the more interesting stock to watch next week is Tesfua because we don't know. Down a little bit. Revenue was up. Well, it was down a little bit on what were pretty strong earnings. It missed a little bit on top line, but it beat on the bottom line, which I think is impressive in this environment. But the thing that might put pressure on it is just concern over the type of forced seller he might become as he tries to find the capital to close. Because I don't think anyone, or maybe he's already got the capital. I don't think anyone knows what the hole is. And that is people are unsure how ironclad the commitments are from his buddies who wanted to do join them in the equity side.

Kara Swisher: Yeah.

Scott Galloway: Because there's still sort of like this $10 to $15 billion hole, and no one knows where it's coming from, except it must come from Elon if someone else doesn't step up. And it's hard to imagine there's going to be new capital at this point.

Kara Swisher: Well, I don't know. I'll tell you, I was in San Francisco. They're still like, they want to hang around with them. Not just that. They just want it. They can't have it not work, right? There's so much stuff not working right now, whether it's their crypto investments or, you know, all the VCs are like, things suck right now, essentially. But this one, they kind of want to work, right? So they're going to help this guy because why not bet on him? What do you mean by that? I'm not sure you mean by that.

Scott Galloway: I don't know. It's just people are very loath to say to be anything but, well, if anyone can do what he can. That's pretty much, which is probably a fair estimation. I couldn't think of someone who could really turn this around either. And if you had to pick, you know, if there was a group in front of you, he'd be the one you'd pick. You know, I think, you know, he is a sheer force of personality. And so, and they really kind of got each other's back, these guys. And so I think they're going to, it's de minimis money to them. And if it works, they'll look like geniuses. If it doesn't, they lose a few billion dollars. I don't think they care. I really don't. I get that sense from them. And I know it sounds crazy because it's economically, it's ridiculous. As he himself noted that he's overpaying for the whole thing. So he's just sort of, you know, shrug emoji about that. But other people aren't going to be.

Kara Swisher: Let me just say, speaking of Twitter employees, we did a really good session with Bill Cohen the other day sort of covering this whole thing and where it's going. And one DM'd me with a message for you after the Twitter spaces. And they said, great space earlier, but with all due respect to Scott, whom I love, even though he doesn't follow me, the big jerk. If Elon keeps Parag, it's literally the worst of both worlds for employees. The only reason some people are staying is because they know Parag's days are numbered. He is not popular or respected. The company needs a real CEO, not Parg or an Elon acolyte, but an actual business person with plans or at least a modicum of emotional intelligence. You had suggested that Elon keep Parg just to keep things calm, but he is not popular internally. That is 100% true. It's really, I was shocked to read that. It's just a good reminder. I think I had this, I don't know, external perception. One, I like Parg because I feel bad for him and I feel like he's actually handled himself from an external standpoint pretty well. But I clearly don't know what's going on inside the company. That was really eye-opening for me. I didn't realize, and people call you and this is why you're, you know, part of the reason you became one of the most iconic tech journalists is that people call you and give you the real skinny. I had no idea there was that sort of animosity or a negative view of him. He just seems so likable, quite frankly.

Scott Galloway: Well, I think because he hasn't sort of been a troll about it. I mean, and that's like a low bar. But, you know.

Kara Swisher: Yeah, he sounds like the adult now.

Scott Galloway: Yeah, but a lot of these employees aren't going to do very well with this. They're not going to, he's going to get a payout, Parag is. And so are top executives, and you'll probably see him leaving. I wouldn't be surprised if Vijay Gade left, who is the chief counsel, the general counsel, who did a lot of, who was involved in a lot of those decisions around Trump and stuff. They're all going to get money. and very comfortable.

Kara Swisher: Oh, they're all cashing out.

Scott Galloway: Yeah, and why shouldn't they? Nice to know you. See you later.

Kara Swisher: The one that isn't, as Bill noticed, is Prince Alwale.

Scott Galloway: Alwale, yeah. Because he stayed. And, you know, I think they're just going to, like, muscle it out. That's my, I just get the sense. I mean, things are really somewhat dire in the venture world, the investment world. And so why not make a bet here? I just feel like.

Scott Galloway: There's some truth to what you're saying. The thing that struck me the most about those text messages that came out was just the level of sycophantry among his close friends, but also people who were so excited to have proximity to him that they were willing to engage in what is just, bottom line, a stupid, irrational deal. And what I don't get is, I understand if you're an individual and you want to hang out or you're a friend. You're Larry Ellison, you're worth $100 billion and you're like, you like him, he's your mentee. Sure, boss, here's a billion dollars. Let's go, You know, see you on the yacht. And, you know, I want to be supportive. What I don't get is some of these VCs.

Kara Swisher: Yeah, we've talked about this.

Scott Galloway: I mean, Andreessen Horowitz has to answer to their limited partners.

Kara Swisher: Do they?

Scott Galloway: And they have to mark their book, meaning that they have to have a third party come in and say, this is the value of your investments. And that mark is – it kind of dictates what they get paid, how they raise money. And so oftentimes that ends up being the tail that wags the dog where somebody on the board will put money into an up round even though the company isn't worth that so they can continue these consensual hallucination of marks that don't reflect the actual value of their portfolio. And I don't understand how anyone is going to put $800 million in this company as Sequoia is doing and then not objectively say, okay, in the first quarter, we need to mark that down to $100.

Kara Swisher: Well, first of all, it's going to be a private company. We're not going to know a lot. That's one thing. And the other part is he's got, I'm just telling you, it's really interesting because I won't go into it, but he sent me somewhat of a testy email about a tweet he didn't like of mine. And at the same time, I'm like, I'm kind of in the middle with you, Elon. I'm like, so your stands are super. I think you've been very supportive of Elon, actually.

Scott Galloway: Well, no, he doesn't think so. So whatever. It doesn't matter. I don't care.

Kara Swisher: What a shocker. But I don't care. I don't care. I honestly don't care.

Scott Galloway: I think you have – okay, as someone who knows you and knows the situation fairly well, I think you have given him the benefit of the doubt over and over and over.

Kara Swisher: Yes, but he doesn't think that. And it speaks to him. You know him. And you do give him the benefit of the doubt. But I think that's – gosh, he needs more friends like you that have credibility because it seems like you either have to be a total fucking sycophant.

Scott Galloway: Or a detractor.

Kara Swisher: Or that's it. You're either with me or you're against me. So his detractors are equally problematic. You know what I mean? When I said, why shouldn't he be paid for services of Starlink? It's not a charity. Neither the head of Lockheed. I think that's just a very logical thing. They came out of the woodwork. It was crazy. This guy has like either people who are super committed to him, who are just, I have to say, really unpleasant on Twitter and unpleasant in general. And just can't like imagine any kind of actual dialogue about the pluses and minuses. And then his detractors are off in the same way. Someone was like, it's like he's a heroin dealer and they're, you know, he gave him Starlink and now he's taking it. I'm like, oh, my God, literally hardly. Like, he doesn't have to. And so it's a weird situation. So I see these people in Silicon Valley sticking with him. It is closing, though. We think it is pretty much closing. And he kind of acknowledged that on his Tesla call. And we'll see where Tesla goes. In interesting, speaking of companies that are a little bit under pressure now, Jeff Smith, the founder of activist hedge fund Starboard Values. announced a significant stake in Salesforce on Tuesday. Smith noted that significant opportunity remains at the company. It could be giving investors better returns. Its multiple is not the same as others, or there's some number. There's some of the enterprise companies. Shares have fallen around 40% this year, but jumped 6% after the news. It's not clear if Starbird intends to take it on the board. In response, Salesforce said it is, quote, focused on continuing to execute its strategy, quote, outlined at Dreamforce. Salesforce is one of our sponsors, but we don't give anyone special treatment. So it's really interesting. I think they're performing not as well as their comparables in a number of statistics around the company. And so Jeff, who is a very smart investor, sees a lot of opportunity here. What do you think?

Scott Galloway: Good luck with that. I mean, yeah, maybe it's underperformed the market for the last couple of years, but Mark Benioff and Salesforce have made so many people so much money. He's considered one of the better CEOs in tech. I don't know what the morale is there, but I actually think he's considered a good CEO. This is such a large market cap company. I don't know what its stake is, but I think it would be very difficult to amass the kind of position you would need to get a lot of board suits. I just don't think this is – I think there are targets that are so much more ripe than this one.

Kara Swisher: People are wondering if he'll step down as CEO. You know, Brett Taylor is his co-CEO, but Mark has an ultimate say. The question is, is he interested in other things like his media investments and some of his social stuff versus this? And they definitely underperform versus other people in the sector on a number of key metrics. I was reading up on a lot of the analyst things. That said, he does have goodwill. He's a larger-than-life figure. But I don't think Jeff Smith would pounce like this if he didn't. He did this, if you recall, when Balmer was CEO of Microsoft and a bunch of other times.

Scott Galloway: But the way an activist investor works or the way it usually plays out with a company like this is you lose it the first election. You're basically, when you do this, you're putting the company on notice. And that is typically when someone files a 13D like this and raises their hand and says, these are my issues with the company and why it's underperformed and I'm here to help unlock value, quote unquote. that the first annual meeting, if he tries to elect directors, which is usually his only means of real influence and change, the shareholders will give the incumbent management team, unless they've done something really awful, the benefit of the doubt. It's the second one where you win if they don't get there. So basically, something like this, at worst for management, gives them sort of, I would call it 18 to 24 months to try and show that they can get renewed momentum But I was actually surprised to see this I didn think I thought I just think there so many more opportunities out there that are riper And I think Mark Benioff I can imagine he just doesn have very good relationships with his biggest shareholders

Kara Swisher: Yeah. I think it might give him an opportunity to retire upstairs, like chairman and stuff like that. I don't know.

Scott Galloway: Well, you would think when he appoints a co-CEO, that's a route to that.

Kara Swisher: Yeah, but he still is. But his co-CEO is like off, like fielding missives from Elon Musk.

Scott Galloway: Well, that'll be over. That'll be over and he'll move along. So I don't think they're going to ask Brett on the board of Twitter. Brett's a lovely guy, by the way. I think it's just a question if they can sort of improve it a little bit. I think Jeff will be very happy with the stock going up. It's certainly undervalued, again, compared to other things. We'll see. We'll see. He does have goodwill. Although you hear stuff inside of all these companies. There's always like sort of a kind of thing.

Kara Swisher: So let's get on to our first big story. Netflix has been renewed for another season. The streaming giant broke its losing streak and added more than 2 million new subscribers in the last quarter, many of them outside the U.S., beating estimates and forcing the market to take red notice. Netflix stock grows, pulling off a small money heist. Oh, my God, these are all shows on Netflix. But when it comes to continued growth, Netflix says, don't look up. Going forward, the company won't offer guidance on the number of subscribers. This is really interesting, but it'll instead focus on revenue. and its ad tier will roll out very soon with Microsoft. There's also, interestingly, on the call, they were talking about their very good relationship with Microsoft. So some people are thinking about a merger there. Microsoft certainly could buy Netflix. They're very aligned on gaming and a bunch of things. I thought that was really interesting. I still think Netflix is a purchase opportunity for someone. So what do we think? This new subscribers, only 100,000 were in North America, 2.4 million new subscribers.

Scott Galloway: Yeah, this was a great quarter for them. I mean, more than anything, the market takes your multiple on EBITDA way up or way down based on momentum. And their momentum has largely been negative for the last several quarters. And this kind of changes the momentum. They're growing again. Operating income was down, but everything else was up. Paid net subscribers increased two and a half million, which is, you know, when you add the population of Sacramento and San Francisco and a quarter of subscribers, I think everyone had worried that they're just we'd run out of people or that these companies had run out of people with credit cards to find. And that's not true here. Revenue grew six percent, you know, and it looks like the stock might have been oversold. Cash flow from operations skyrocketed. They kind of had their chest out and their shoulders back and said they expect four and a half million paid net sub additions in the next quarter. So, it's, you know, there's just no getting around it. This was, we're not going anywhere. We're still the big dog in the space. And they, you know, are very aggressive. And then this deal with Microsoft, I don't see how this would, that would be a really interesting combination in terms of, I mean, that would be a juggernaut.

Kara Swisher: I don't know. That's a deal that I think would get a lot of FTC scrutiny.

Scott Galloway: Will it? Why?

Kara Swisher: You know, they're worried about the Activision one going through. There's some rumors about that. But if it's back divisions I go through, this is what I would go for. You know, they looked at Discord. They looked at TikTok. They're not uninterested in the space. And they, you know, Netflix is moving forward with gaming, announced it will open a gaming studio in California. Satya Nadella is close to Reed Hastings. Reese Hastings is on the board of Microsoft. Brad Smith, I think, is on the board of Netflix. It's just there's a lot. He's obviously have to recuse himself. But there's a lot of really interesting. I just, you know, I just when I was hearing some of the comments of the CFO, I think it was the CFO on the call, it was interesting. I was like, huh, it just tickled my little tickler.

Scott Galloway: It tickled my tickler, whatever that is.

Kara Swisher: Well, it makes, as you think about it, it hits your gut. And it's one of those things when it hits your gut and you start thinking about it, it's more feasible than you think. Microsoft has a $1.8 trillion market cap. And I think Netflix is around $120 million. So they'd have to pay a premium, so call it $200 billion. It'd be about a 10% dilution. So it's not – it's doable for Microsoft. It's absolutely doable. And it would also provide – They have so many good brands there now. It would really push them. You know what they could do? Steal the cloud service from AWS, too. FYI, for Azure. I don't know if that would be something that's not attractive to them. That's interesting. Netflix has to be one of the biggest cloud services consumers in the world. It's AWS. That would be a real blow to Andy Jassy. Anyway, just interesting.

Scott Galloway: That is interesting. This is just literally, I was sitting in the cab on the way here and going, huh, this seems interesting. And just some of the comments seemed interesting. There's so many links between these two companies that are really significant links and, you know, mutual respect links kind of things. And Reed has a very similar personality to Satya, which is to say they're very easy to deal with, but smart kind of people.

Kara Swisher: I was going to say, you mean they're not assholes? It's been difficult, you know. But, well, Sachi is probably one of the nicest people I've met in tech in many, many years. But Reid has an edge to him. But he's also really smart. It's hard to deny. And he doesn't take cheap shots. He's never taken a cheap shot at me, at least. And arguably one of the greatest pivots in the history of business. I mean, they were mailing out DVDs.

Scott Galloway: Yep, they were.

Kara Swisher: You know, I think I'm working on my book on Silicon Valley. And there's a scene I just wrote of he – I had him, Jason Kylar from Hulu, and Chad Hurley from YouTube. This is early on in all these people's careers at Sundance. I don't know when it was. It was 20 years, 15, 20 years ago. And they put us in the basement. And we kept saying, this streaming is going to be big. And no one paid attention to us. They're like theaters, theaters, theaters, you know. And this online stuff is silly. And I'll never forget. I thought, oh, my God, I had the three really important people in this space in one place. And I just always thought he was quite visionary. I've always thought he was a visionary. Around a lot of stuff.

Scott Galloway: Yeah, but most importantly, who had the best cocaine?

Kara Swisher: I've never seen cocaine, Scott. Do you know that? I've never seen it in person. I don't know if it's in the drawer here. I'll be looking after we get off. But I've actually, I told you that story when I went back to my college reunion. I went back to the reunion, the fifth reunion, and someone was like, man, you had a cocaine problem in college. I was like, I've never seen cocaine. They thought I was on cocaine, even then I wasn't. I've never done blow. That's one drug I've never tried.

Scott Galloway: It's very Wall Street-y. I'm surprised you didn't with your Wall Street career.

Kara Swisher: Anyway. No, no cocaine. All right, Leo DiCaprio. Let's go on a quick break. When we come back, Mark Zuckerberg has a message for iMessage, and we'll speak to Semaphore's Ben Smith.

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Kara Swisher: Let's pivot to some listener mail. This is gonna be our big story. This one came in via voicemail, but Lara likes it a lot. So let's play.

[Voicemail plays]

Khaled: Hi, Kara and Scott. My name is Khaled. I grew up in Oakland and am now settled in Montreal, Quebec, where I can confirm the American dream is alive and well. Why wasn't there way more pushback in the press on Tim Cook's dismissive buy your mom an iPhone comment in Kara's interview with him a couple of weeks ago? iPhones are luxury devices that most of us cannot afford or don't see the value in. Will this comment be remembered as Tim Cook's let them eat cake moment before someone's head is severed. I laugh uncontrollably and cry unexpectedly listening to the podcast, and your advice has saved my marriage with three young kids, so what you're doing is important for all of us. Thanks.

Kara Swisher: I like him. Khaled.

Scott Galloway: I like him. Khaled. Wow. There's so much in there. We saved his marriage. We're going to be doing an episode about kids, just so you know. We're going to be doing one. Montreal, that's where I'll be living soon, I suspect, at some point.

Kara Swisher: Let me just say, that was an interesting comment. And actually, it wasn't dismissive. He was joking with the guy who was talking about some issues around Android, I believe. Not to make it personal, but I can't send my mom certain videos or she can't send me certain videos. And so we leave her on. Buy your mom an iPhone. And I don't think he was being like, buy my expensive device. This is what they sell for. I think he was like, they're easier to use. I don't think he was talking, you know, in a snotty way. That's not what I recall. I don't know. I didn't think that was anything different. I don't know. What do you think, Scott?

Kara Swisher: So first off, he's right. The average median household income in Brazil is around $40,000. I mean, in Hungary, I think an iPhone is a month's salary. So he's right. But here's the thing. That's on purpose.

Scott Galloway: The iPhone and Apple are the strongest luxury brand in the history of mankind. And key to a luxury brand is scarcity and also self-expressive benefit. One of the features of the iPhone is that not everyone gets one. That way, if you're one of the billion people that can afford it, or finds it important enough to save for it, you communicate to the rest of the world that you're one of the billion. You're one of the 14% of the people on this planet who is a storyteller, has money, is good at what they do, is creative. That makes you a more interesting person and a better potential mate.

Kara Swisher: Right.

Scott Galloway: The whole point of the iPhone is to have the highest margins and to be scarce. It's really the first in business history where the market leader is the high-priced product. It's usually Toyota that's the market leader. It's usually Budweiser. Apple has 50% market share in a very wealthy country, but globally, it's still Android. That's where they're making the money. He's right. In most developing markets, most people could never afford an iPhone. But what you have with the iPhone is the production volumes of Toyota with the margins of Ferrari. And they never make a really cheap one. They've never gone there. They've thought about smaller ones, but they don't want to do it.

Kara Swisher: They don't want to do it.

Scott Galloway: In the product world, everyone says it's the strongest brand in the world. I say bullshit. The strongest brands are MIT and Stanford, education brands. But in terms of a consumer product, there's nothing like the aspirational value of Apple. Because if you have money, you buy an iPhone. That's their strategy. They see that exclusivity as a feature, not a bug.

Kara Swisher: Yeah.

Scott Galloway: There are two real vulnerabilities: what regulators are going to do around the App Store, and China. Those are their big vulnerabilities. This is not one of them. And I don't think he was being dismissive. He was making a joke.

Kara Swisher: Oh, yeah, that was fine. He wasn't being... interesting. By the way, Montreal, I used to go there every year for Formula One. It's the most European city in North America. Great city. Great food. Bagels, so good. It's wonderful. We thought about living there, actually.

Scott Galloway: You thought about living in Montreal?

Kara Swisher: Yeah, it's beautiful. Amanda speaks French. We like Canada.

Scott Galloway: Have you been there in the winter?

Kara Swisher: Yes, I know. It's rough. A lot of snow. Just getting back to Apple, Mark Zuckerberg took a swipe at iMessage earlier this week, trying to push himself up with a photo of a billboard making fun of the way the app makes Android messages show up in green bubbles. That'll show them. They must be panicked at Apple.

Scott Galloway: Oh, my God.

Kara Swisher: In an Instagram post, he called WhatsApp, quote, far more private and secure than iMessage.

Scott Galloway: Oh, no. You signal that. I literally don't use Instagram, WhatsApp, or Facebook because I don't trust them with my data. I just don't.

Kara Swisher: By the way, I trust Apple with my data, but I'm still wary about everything they do. There's just no way I would trust data to Zuckerberg compared to... me. But look, WhatsApp is a nice application. It's not a bad product. I just don't know why he's doing this.

Scott Galloway: I have no idea. I use WhatsApp. But I was on a board call yesterday and everyone's like, "Should we start communicating on Signal or Telegram where it disappears?" I'm like, folks, just assume at some point everyone gets everything. We keep going further and further to the fringe. I remember in my late 20s, I had a group of guys and we used to take trips together. We were always going to these crazier and crazier edge-of-the-envelope places. It feels like with communications, everyone's trying to find the next thing they are under the illusion is secure and that no one can hack. I just don't think it exists.

Kara Swisher: I know. The CIA, if you go into a facility, you're not allowed to bring your phone.

Scott Galloway: Same with the White House. They've just given up. You can't bring your phone. You have to put it in a little box. It's kind of cute.

Kara Swisher: Interestingly, Meta has super app ambition for WhatsApp. The rest of the world is super popular. They're trying to do that the same way Elon has talked about at Twitter. Good luck with that. Also, there was a big outage in South Korea. The super app Kakao crashed last weekend and people were stranded. These super apps make me nervous. Had you heard of Kakao?

Scott Galloway: Yeah, I wrote about it. It's basically 90% of South Korea's population uses it. 6 billion in revenue. Asia is a very different way of using apps. They use super apps. It's one-size-fits-all. We're different in a lot of ways.

Kara Swisher: Anyway, let's bring in our friend of Pivot, Ben Smith. He is the co-editor of Semafor, a news publication that launched online this week. For his inaugural article, Ben looked at the culture clash inside the newsroom of his last employer, The New York Times, and had some fiery quotes from James Bennett about his departure over the Tom Cotton op-ed. It was really fantastic. I'm getting their newsletters and they are really good. Welcome, Ben Smith. First, congratulations on your launch. Tell us how it's going. How's traffic? Have your employees unionized yet?

Ben Smith: Thank you. We're feeling great. It's going great. When you launch something new in this media environment, I was bracing for something to go wrong, people to hate us. Instead, people were interested in what we were doing and mostly just made funny, friendly jokes about us, which I think is the absolute best case scenario for a launch. A couple of our stories really hit. So I'm happy. Now we just have to do it every day for the next hundred years.

Kara Swisher: I have been reading it and looking at it. It's really well done. It's very easy to navigate. It reminds me of that column in the Wall Street Journal years ago where you learned all your news really quick, except a little more lively. Your newsletters are quite good and easy to read and fast and really thought out. I was surprised because I get them all and some of them are just onerous. They're too long and too much information.

Ben Smith: If we could just stop this interview right here and tell your readers to sign up at semafor.com, I'll turn off the interface and go on my merry way.

Kara Swisher: Then you hit with a big column about The New York Times. A lot of it resonated with me. Tell me why you picked that, and you managed to get James Bennett, who we both know pretty well, to give a pretty fiery quote. He hasn't really talked about it, but he still seems pretty pissed about what happened to him.

Ben Smith: I think the Times is the most important institution in American news, maybe with the BBC in global news. It seemed like it made sense to write about it. I just left there. My first column when I got there was about the Times, so there was some symmetry. It's an institution that's genuinely very successful right now, really well managed on the business side. Meredith Kopit-Levine is making a lot of interesting moves. She was very fast to acquire Wordle, took a big risk on The Athletic. There's a lot of action on the business side. The editorial side in the best of times is hard to manage. I've never really been in a place except for so far where I ask people to do things and they do it. That's shocking to me. That's not how newsrooms normally work. My colleague, Gina Chua, is the reason anybody ever does anything here. But it's very hard to get people to do things in newsrooms. The more people you have, the harder it is. They have hired a lot of journalists. Then 2020 was this very public moment of the Times taking a real stand on a big journalistic question: should we include Tom Cotton's controversial op-ed or not? They decided the answer was no, and that that op-ed could get people hurt. I don't think the leadership thought it then, and they don't think it now. They're trying in a lot of subtle and quiet ways to roll it back. The question is, can you take a huge moment like that and roll it back quietly? I'm not sure. That's something people disagree about.

Kara Swisher: James had other issues, like the Sarah Palin thing was tough, but every editor does. I thought it was a very insightful column, having been there. The thing you're referencing is the advice you got: just don't try to change anything. I did not get that advice. "Don't go changing to try to please me" was pretty much it. They don't try to please anybody.

Ben Smith: There's another great old Jill Abramson line. When reporters would come asking for special things and promotions, she would say, "Look, The New York Times is the prettiest girl at the dance. Not you."

Kara Swisher: That's fair. I wouldn't say that. The willingness to change is less so than other places. In their defense, some of their really successful things, like The Daily, are products of experimentation and change. It's a complicated, big place.

Ben Smith: Yes, exactly.

Kara Swisher: Scott, start.

Scott Galloway: Good to see you, man. Thank you for your... I think we talked for that column, and I was looking through the quotes, and all the good ones had so many curses in them that I wound up cutting them.

Ben Smith: Well, trust me, I'm used to that. By the way, I really enjoy spending my weekend day with you for pieces that I don't end up in. So please continue to call on me.

Scott Galloway: No, it's the cost of that level of self-promotion. Anyways, Ben, this isn't about me.

Ben Smith: I owe you one, Scott.

Scott Galloway: What is the opportunity? Where did you think the white space was with Semafor? What's the need that's not being met?

Ben Smith: If you talk to people or look at public opinion research on the media, tons of consumers are really unhappy with what they're getting. The two biggest things: they feel really overwhelmed and they don't know what to trust. We saw it less as looking at the map and circling white space and more as how do you do better at those two things. Take consumer complaints seriously. Every industry other than news routinely thinks, "Do people not like our razors? We should make the handles longer or shorter." In news, when consumers complain, people are like, "You are being lied to by evil people and we're not going to change."

Kara Swisher: That's a fair point.

Scott Galloway: What's different about the format or channels? Are you going to try and be in podcasts? Is it newsletters? What's the distribution strategy?

Ben Smith: To take format first, we're making a big bet on a transparent format that takes people's complaints about news articles literally. They can't tell the difference between the news and the journalist's opinion. It's not that they think journalists aren't supposed to have opinions. They just want to know that you know the difference between a fact and your point of view on that fact. You're an expert. I care what Kara's point of view is on the fact, but I also like that she knows the difference between her point of view and the fact. We're trying to do that in a totally literal sense. Break the article up that way, include room for legitimate disagreement, leave space for global perspectives. We're doing that on the web and in the newsletters. In terms of distribution, it's an interesting moment. There was this moment when blogs were an unprofessional, first-person, analytical, rambly, unedited form. Then in '04, '05, '06, '07, places like Recode, The Verge, Politico professionalized that form. They said you can take the conventional values of journalism and reporting and use reverse chronological digital publishing for them. I think newsletters are in a similar place. They had been a first-person, Substack meant "this is my take, it has a lot of typos and it's very long." Now, a newsletter is a delivery vehicle for professional journalism. It needs to connect to the values of newsletters and have a level of personal connection, but it can be professionalized and edited. You can see an evolution from Politico and what Mike Allen did, to Axios, to Morning Brew.

Kara Swisher: This is interesting. I just got Jim VandeHei's book about brevity. Sometimes at Axios, it works. The idea is a good one, but sometimes it feels bereft.

Ben Smith: I'm a huge fan of Axios. They also asked, "What do consumers complain about?" One thing is that shit is just too long. They addressed it totally literally and frontally. I don't think Cliff's Notes are the only useful thing in the world, but short updates on the news are really useful. That doesn't mean people don't want insight, nuance, or depth. There are different problems you can solve.

Kara Swisher: We called it "reported analysis" at Recode. That's how I thought of it.

Ben Smith: It's an old newspaper genre. At the Times, only the metro columnist and the media columnists were permitted to do it in a voicey way for random historical reasons. That's a very transparent way to communicate. What we're doing is a very stylized version of that. We're not thinking of ourselves as a newsletter company. The web is a first-class citizen. We're heavily invested in video and events.

Kara Swisher: You built out newsrooms at BuzzFeed. What are you worried about in building out a newsroom?

Ben Smith: Oh, my God, it's the second day. I'm worried about everything.

Kara Swisher: I'm sorry you have to answer that question today.

Ben Smith: The moment is very different. BuzzFeed really rode the rise of social media in a very strategic way that Jonah got before anybody else. That social media moment is basically over. We're building into a new moment that's much more about a direct connection to readers who really know who you are, listeners, and watchers. We're making a big bet on journalists who are going to operate in a very open way. There's no trick to showing that you can be fair to people. It's not like we're saying our social media policies require you to hide your actual views. It's more like we're saying you better not have insane views in real life. We've hired incredibly ambitious, great, fair-minded people. I don't think you can fundamentally hide the ball about who you are these days if you want an audience. They have to know that you're an expert, that you've learned a lot and know things and have analysis. But also know that sometimes you're going to get that wrong and respect people who disagree with you.

Kara Swisher: You mentioned BuzzFeed. BuzzFeed has raised over $700 million through 11 rounds over the last decade plus, and it's worth $285 million now. What's the business model and how are you going to avoid being something that's relevant but has lost investors a lot of money?

Ben Smith: I don't want to spitball about BuzzFeed's valuation. It's not my expertise.

Kara Swisher: Let me phrase it another way. Do you have outside investors?

Ben Smith: We do. One of the things that made me most excited about doing this venture is that my partner, Justin Smith, is the best media operator of his generation. He has been really successful at making money for people off high quality news for his whole career. We are building this in a way that wasn't... we started BuzzFeed News at a moment when our investors wanted growth and focused on growth, and we figured out the exact business model later. That's not how we're doing this. We're thinking incredibly hard about how to build a business that's totally aligned with quality journalism from the start. That's what I'm obsessed with. I don't want to be in a place where the journalism is out of step with the business. I want the business to be journalism.

Scott Galloway: What are your role models? When you think "we want to be the X of Y," do you have role models that are your North Star with a few tweaks?

Ben Smith: The X of Y. I don't know. What do you think, Scott?

Scott Galloway: I look at Axios, Puck, and The Brew as three examples of new media doing really well. It strikes me that you just scream a podcast to me. You have a nice voice, Ben. I think a lot of your stuff is longer form.

Ben Smith: Remember when you called me late at night talking about that? "Should I have a podcast?" I did have a podcast, but I have a short attention span.

Scott Galloway: What's going on here? He calls me. I have other men call me late at night.

Kara Swisher: Just please. I don't want to talk about that.

Scott Galloway: And she texts me angry in the middle of the night. I don't know what's going on here. I can only imagine. Expletives late at night. I'm sorry. Go ahead.

Kara Swisher: All right. Moving along. Semafor. I do think those places you mentioned—Axios, Brew, Puck—there is a new generation right now. These things come in waves and respond to what's happening in the world. I hope we're part of that generation that is trying to think about what people who love news want now and responding directly to it, with all the advantages of starting from scratch.

Ben Smith: One thing that is really important in the news business: you have to have news. I spent much of my career caring only about scoops. "What's the problem with the news? Not enough scoops." It took me a while to realize that to most readers, most days, they don't care if it's a scoop. They care if it's interesting to them. They care if it's presented in a way that makes sense. My revised and humbled theory is you have to focus on building formats and approaches that totally make sense. People meet them where they are, but they may never see them if you don't break news. So that's my continued justification for scoops.

Kara Swisher: I think you have to be useful. Useful is now the more important thing. Entertaining is important. "You can't get anywhere else" is important. But useful. I have begun to cut my reading to only things I find useful, or something I learned something from. Let me ask you, Scott asked about other things. You had done an interview before you launched with Tucker Carlson, got a little bit of pushback. Is that an area you're interested in, podcasts, or do you feel like you need multiple revenue streams?

Ben Smith: I'll quote Scott from our conversation that I didn't quote him on in my article. I'm trying to make up. The news is not something where there's a silver bullet and it becomes some massive growth business because you figured out one cool trick. It's a tough business. If you operate really well and are smart, you can make a pretty good business. That means you can't be ideological about revenue. You have to go where people are. That means events, the web, newsletters, video, and certainly audio. All of the above.

Scott Galloway: Do you have any learnings or advice for other entrepreneurs?

Ben Smith: It's day two. I don't want to give anybody advice. One piece of advice: hiring incredibly capable product and tech people, not necessarily many of them, but incredibly capable people who are even-tempered, turns out to be a great way to launch a digital product.

Kara Swisher: Do those people exist? Is that what you're saying?

Ben Smith: Those people do exist. I've never actually had a launch before where there was not a moment of everybody screaming at everybody else because the site went down. Mark Wilkie, Kellan Henry. Incredible.

Kara Swisher: When you think about what you're doing, a lot of journalists have been going off on their own. You and I have talked about Substack before. I think that time is moving in a different direction. You tried to get a lot of different people. Everyone I talked to said, "Oh, I talked to Ben about a job." Everyone I had a cup of coffee with. Ben never called me, just so you know.

Scott Galloway: You're in the Kara Swisher business, Kara. I'm too expensive.

Kara Swisher: Don't we know it. OK, do journalists need bosses anyway? What was your pitch to them? You've gotten a lot of great journalists.

Ben Smith: I'm incredibly thrilled with the people we hired. Liz Hoffman, maybe the best Wall Street reporter at the Wall Street Journal, didn't need to come. My pitch is that for a certain kind of reporter who likes to break news, who can break news, who's going to have high-stakes conflict with powerful people, it's hard to do that on your own at Substack. You need editing, legal support, a brand that will have your back. Sometimes you need to hide behind when there's some huge conflict. At the same time, you know that people read you and connect to you, that you're providing more than one-thousandth of the value of your big news organization. You're providing a huge portion of it. My pitch was the best of both worlds. You have a great newsroom with the legal, design, editing, and colleagues. But we're going to attach ourselves to your coattails rather than vice versa. We're totally invested in your career and see that as a plus, not a minus.

Kara Swisher: Did you give your employees stock options?

Ben Smith: Yes.

Kara Swisher: Okay. What do you think is the biggest story that hasn't been told in media? When you're trying to think of things that will differentiate you or you want to own, is there anything you're latching on to?

Ben Smith: In terms of running a newsroom, there's a cynicism and exhaustion right now in big newsrooms. In TV with video, people are like, "Ah, video. We pivoted to video. Pivots to video are so annoying." That's insane. Most human beings are watching more and more digital video in short form and consuming lots of news that way. People are doing incredibly creative things on TikTok around news. Just because a bunch of the news industry had a bad experience with a particular Facebook program is an insane reason to walk away from this incredibly powerful form and medium. That's something that is nuts. Although maybe not the biggest story in the world. I would say TikTok broadly is the biggest, most under-covered story in media.

Kara Swisher: Absolutely. I would agree with you. Video has gotten my attention a lot. I don't know why I'm thinking about it all the time, but you're absolutely right. It's because of TikTok and places where you see the power and creativity all at once. Anyway, Ben, good luck. I hope it works out well. I don't usually like to slather you in compliments, but I'm really enjoying what you've done.

Scott Galloway: Ben, no joke. She walks into my apartment this morning. Doesn't say hi. Just says, "Semafor is so good." Those were literally the first words out of her mouth.

Ben Smith: Thank you guys so much. You've been there. I'm at this incredibly emotionally fragile place right now. It's so nice to hear things like that. Thank you.

Kara Swisher: You're emotionally fragile. Trust me, it gets worse, Ben. Welcome to the world of entrepreneurship. You think this is the worst day of your life? It's the worst day of your life so far, Ben.

Ben Smith: It's a good day so far. So thank you.

Kara Swisher: Yes. All right. Scott, let him have a day. Let him have a day. Anyway, you can read Ben Smith and plenty of other great writers at semafor.com. They also have newsletters, of course. Ben, good luck. Congrats, Ben.

Ben Smith: Thanks, Kara. Thanks, Scott.

Kara Swisher: It's a true story. They didn't try to hire me. Scott, what do you think about that?

Kara Swisher: That was a really interesting interview. It's exciting that the market is doing what it's supposed to in journalism. And these big platforms are shedding acorns that will someday be trees, so to speak. I think it's a very healthy market. And I love that these things are getting funded because it hasn't been traditionally a sector that gets a huge return for investors.

Scott Galloway: Well, that's true. That's true. And, you know, Puck is similar. I'm very pleased with their success. I find it so useful.

Kara Swisher: All right, Scott, one more quick break. We'll be back for wins and fails.

[Ad Break]

Kara Swisher: Okay, Scott, let's hear some wins and fails.

Scott Galloway: My win is just, I just have one win because I wanted it to stand on its own. And I've done this win two or three times. Mackenzie Scott, again, continues to inspire. I don't know if you saw, but she's pledged $85 million to the Girl Scouts. I think kind of the next big crisis, and there's so many competing. We talk about failing young men a lot. I think there's a real crisis in America of loneliness. A recent study came out that one in seven men don't have a single friend. We're a social species, and I think COVID and our phones has really separated us and sequestered us from one another. At the end of the day, when people don't touch, smell, feel, and socialize with each other, they start to die. We can't accomplish anything, whether it's offspring, friendships, creating great things that move the world forward, or feeling loved or having the chance to love other people. It's kind of the point of all of this is connection, and we're losing those connections.

The Boys and the Girl Scouts are wonderful organizations. The Girl Scouts has about 3 million members globally. It counts amongst its alum two-thirds of every female senator, the Williams sisters, Taylor Swift. They're wonderful organizations. I was a Boy Scout, and I think it plays a special role for a certain type of young person. I don't want to stereotype them, but when you're young, Boy Scouts for me was a place I found my own. Everyone assumed I was a nerd, right? And a nerd is awkward, but everyone assumes that just because you're awkward and a nerd, that must mean you're super smart and do great in school. No, I was a nerd that didn't do that well in school. It's like, okay, well, where do you find your people? You're not an athlete. You're not in honors English. And where I found it was Boy Scouts. Single mom. It was just such... every Wednesday night, Troop 42 in Culver City.

Kara Swisher: I didn't know that, that you were a Boy Scout. They've had their share of controversies and they've tried to fix themselves. As will anything that deals with children.

Scott Galloway: Well, let me say, my dad is an Eagle Scout, was an Eagle Scout.

Kara Swisher: That's wonderful, yeah. And it was interesting because when they were sort of anti-gay, the whole anti-gay thing, which they've changed. Even Spielberg was very integral to changing lots of people where they did. I said, I'm not going to have my sons join it because of their attitudes towards gay people. And they changed, they have changed. I had a really interesting discussion with someone at the main thing. Because they heard me say my father was an Eagle Scout and it's one of the greatest disappointments that I won't send my kids there and it's now too late. Obviously they're too old, but I always felt it probably helped him. I have a wonderful picture of him in his Boy Scout uniform as a young kid. And you can tell he was with a bunch of kids. At its best, it's great. When it has failings like that or the other controversies around lots of things, it's terrible. But you're right. I think you could just see my dad in this picture, I'll have to show it to you, with his friends as Boy Scouts. You could see their bonding was going on. You could see he was so happy. It's one of my favorite pictures of him. This is where you learn about the Boy Scouts.

Scott Galloway: Unfortunately, the Boy Scouts, like so many things, got politicized. I think their leadership made some terrible decisions that were very judgmental and not very accepting. But here's what the Boy Scouts was. I was a kid living in a condominium in Westwood and once a month we went camping. We were told the last thing we would do, I always remember this, is we would walk all of us in a long line and make sure that the place that we had camped, there was no sign of us ever being there. I got merit badges in fire safety and knot tying. I mean, things you would never, ever be exposed to. I made friends and just kind of found your own. And this $85 million investment, again, from Mackenzie Scott, who doesn't want any credit, doesn't want to do press releases, doesn't want her name. They don't want to call it the Scott Girl Scouts. We need to restore connective tissue at a very young age. We're losing that. She's really become a very special donator.

Kara Swisher: You know, the Boy Scouts are still... I was just looking at a story, they had to sell thousands of acres to compensate for sexual assault victims. Let's not leave that out. They didn't handle those complaints very well. But they're moving forward. At some point, you have to move forward. And the Girl Scouts, I've never had a discussion with Amanda about whether I would have Claire in it, but I would kind of like it. I would kind of like it. I was very sorry my kids were not in the Boy Scouts. I know it sounds crazy, but I was very sorry I couldn't at the time, but they were so adamant about gay people. It was so unpleasant and nasty, but then they changed.

Scott Galloway: Look, I think the biggest question here is that $85 million gift to the Girl Scouts. The question really on everyone's mind is where is she going to store 34 million boxes of Thin Mints?

Kara Swisher: I love Thin Mints.

Scott Galloway: Yeah, Thin Mints right up there. Those girls really know how to sell.

Kara Swisher: Oh, my God. But you know what? That's important. It's important that young girls and young boys learn how to sell.

Scott Galloway: Anyways, no doubt, especially the Boy Scouts have had their issues. Wonderful organizations. I can speak from the heart that it was a really nice part of my growing up. I was really moved. I think this is not only a generous gift, but it's a thoughtful one because we are struggling. We are facing a crisis of loneliness and to create more and more connection at a very young age is a wonderful thing.

Kara Swisher: Do you have a fail?

Scott Galloway: I don't have a fail, but I'm sure I'll think of one.

Kara Swisher: Do you have any wins and fails? Kevin McCarthy making those comments about Ukraine before he gets in office. These people are crowing way too early. They're peaking way too early. Whether they win or not, they'll probably win the House. I don't know.

Scott Galloway: Okay, here's my fail. You just inspired a fail because I always have a tendency to like right of center, left of center reaction. The fail here is a total misunderstanding of economics by the Democratic Party right now.

Kara Swisher: Oh, okay.

Scott Galloway: Joe Biden's decision to release an additional 10 or 15 million barrels from the Strategic Petroleum Reserve is stupid and purely political. West Texas Intermediate crude is trading at 85 bucks. That is not a historical high. The whole point of our strategic reserves is to ease short-term shocks. We are not in the midst of a short-term shock. This sends mixed signals to producers who we've been telling to drill. It also is totally ineffective because it's not a lack of oil that's hurting us right now, it's refinery capacity. And then you have Senator Warren come out and say that she's really worried about Kroger and Albertsons, not realizing the people she needs to break up are the manufacturers, specifically big ag and big chicken. The retailers, it's actually a fairly competitive low margin business. So the Democratic Party risks snatching defeat from the jaws of victory because they don't understand the basics of economics and don't seem to want to talk to an economist and say, "Okay, does this make any sense what we're talking about?" My fail is continued misjudgment or poor judgment around true economics and how to communicate what is actually going on in the marketplace. That was a rant.

Kara Swisher: All right. You interrupted my "Kevin McCarthy is an idiot" rant, but that's all right. I don't mind.

Scott Galloway: Sorry. You offered me quiche this morning, so I'm going to give you a pass.

Kara Swisher: Wasn't that nice? I do think the Republican Party has to be very careful about how they win. Look what happened to Liz Truss.

Scott Galloway: Oh, come on.

Kara Swisher: They're very arrogant. Come on. Their arrogance levels are off the fucking chart right now. And I agree. The economy has been very important to voters. Everyone sees that. The Democrats have not been good enough about touting their wins, especially around their infrastructure bill and the Inflation Reduction Act. In Ukraine. They've done a terrible communications job about things that were good pieces of legislation. That said, the Republican Party, with the piece that Marjorie Taylor Greene did from The New York Times from a book, was bragging, like, "I'll be in power." I literally am like, "Oh boy, this is... here you go. Now you're running things." I think it's a real mistake on their part. I think they need to keep their mouth shut if they want to do all the terrible things they promised. I just feel like they're a little too confident. And that's always... I think voters can shift on a dime these days. I don't think they're committed to anybody. And maybe that's a good thing.

Anyway, that's the show. We'll be back on Tuesday with more pivots. Scott, it's lovely to be at your lovely home. And now I'm going to go in search...

Scott Galloway: It's lovely to have you, Kara. It's nice and lovely.

Kara Swisher: I'm going in search of different drugs and things while I'm here because I'm very tired and I need to wake up.

Scott Galloway: Oh, no. She's doing my stash.

Kara Swisher: Doing your stash. But we'll be back. We have so many good shows coming up. We've got year-end things. We're going to be doing a parenting special because we're such good parents. And we have much more to come. There you go. Read us out.

Scott Galloway: Today's show was produced by Lara Neiman, Evan Engel, and Taylor Griffin. Ernie Indertot engineered this episode. Thanks also to Drew Burrows and Emil Silverio. Make sure you subscribe to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back next week for another breakdown of all things tech and business.

Kara Swisher: Would you like some quiche?

Scott Galloway: Hands off my Cialis.