Speaker Johnson, Meta Lawsuit, and Elon's Twitter-versary

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

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[Sound of a fire alarm]

Scott Galloway: This is a test of the hotel's life safety sound system.

Kara Swisher: Scott, what is that? What was that? I can't interact with other people right now.

[Intro music plays]

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

Scott Galloway: Scott, what is going on there in Vegas? Have you done something bad? Are you in an episode of The Hangover?

Scott Galloway: No, I just didn't like the current speaker. So I pulled the fire alarm. Word is he's a Christian nationalist. So I figured if I pulled the fire alarm at the win, I could delay the vote. Is that wrong?

Kara Swisher: That's wrong.

Scott Galloway: Is that wrong?

Kara Swisher: It's just stupid, not wrong.

Scott Galloway: Well, I went to the sphere, which, by the way, is incredible. Incredible. And I saw, I've never, I saw you too. I haven't seen that many white people since I saw Taylor Swift. It seemed like the Lexus to Remember September event. It was just couldn't have been any whiter. I mean, it was just, and it was wonderful. Bono looked great. And Lady Gaga came out. And The Sphere.

Kara Swisher: Oh, that's good.

Scott Galloway: Yeah. It really is incredible.

Kara Swisher: Yeah. Yeah, I think The Sphere is what I'd be looking at. I literally could not go see you two. I can't. I just can't.

Scott Galloway: Why not?

Kara Swisher: I've never liked them. I've never liked them.

Scott Galloway: Oh, my God. They're amazing. They're like the Dave Matthews band to me. I'm like, oh, no, thank you.

Kara Swisher: But did you like it? Were they good?

Scott Galloway: Well, I love you two. And Vegas is always awesome. And I'm here with three friends. My friend Greg, who I have known for 30 years. My friend Lee, who I've known for 40 years. And my friend Adam, who I've known for 49 years. Every year for my birthday, we come to Vegas for the last 35 years.

Kara Swisher: That's lovely. That's a lovely thought of all of you there. There's no good way to make this transition in any way, although it's nice that you're with your friends. But I want to mention the horrifying news out of Lewiston, Maine, where at least 18 people were killed, 13 injured in mass shootings at a restaurant in a bowling alley on Wednesday night. As of this recording, the suspect is still at large, if you can believe that. There's an intensive manhunt underway and a shelter-in-place order for several towns in the area. This is another gun tragedy, another mental illness tragedy, it looks like, from what they're talking about, the person of interest. I just, this is, I don't, there's no words. I don't have any.

Scott Galloway: Yeah, difficult to say anything that hasn't been said.

Kara Swisher: Yeah.

Scott Galloway: I think it's important, and I appreciate you bringing it up because you said something that always struck me, that humans are adaptable. And unfortunately, we've adapted to this. It's become normalized in our society.

Kara Swisher: Yeah, it's a big gun culture in Maine. I have a lot of friends from Maine. And, you know, I just, it's not the reason for it. It's fine if you are safe and they have all kinds of gun checks, but they don't. And so this person had been, that's the suspect. Let me just underscore, he's a person of interest or the suspect had been in a mental health clinic, apparently. And so I don't know why he still had a gun after that. I don't know. We'll find out more because it's an unfolding story. But again, our hearts go out to the people in Maine. But that'll be the NRA will spin into action and talk about his mental health issues. And what bears repeating is that we do not have a monopoly on mental health issues.

Scott Galloway: No, other countries certainly do.

Kara Swisher: We do not, other than teen depression, which is there is some evidence that we might be doing worse in other countries. But in terms of mental illness, we don't disproportionately over-index or under-index. What we disproportionately over-index is that we give everyone, including people struggling with mental health, access to weapons of war.

Scott Galloway: Bards, yeah. That's the delta here. That's true.

Kara Swisher: In Maine, people don't realize this, they tried to pass gun control laws, and then it ended up being even looser restrictions under the previous governor. Anyway, it's a tragedy. It's another, it's an American tragedy is what it is. Speaking of another issue in the news, Republicans finally chose a speaker. But who exactly is Mike Johnson? I'm not liking what I'm reading about him. Plus, the landmark suit filed against Meta and Elon's first year at X. But first, the UAW and Ford have reached tentative agreement on a new contract that could bring an end to the nearly six-week strike for at least that company. The UAW says the deal includes a roughly 25 percent pay increase over four years, cost of living wage adjustments and major gains on pensions and job security. The deal also needs to be approved by the UAW local leaders, then ratified by a majority of Ford's 57,000 union members. It continues to negotiate with GM and Stellantis, which are the other two big auto companies. But Ford is the first one to – I assume they'll settle relatively quickly. Again, this is something you thought would happen.

Scott Galloway: Look, I like this. In about 1975, wages and productivity disarticulated from one another. When productivity went up and there was greater shareholder value, wages went up and everybody shared. And then the wage line went flat and capital kept, productivity kept going up into the right. And this is an instance of what, you know, where I think unions played a productive role. I think what happened here should have happened, and that is the auto industry is healthy. It's not like writers or actors where there's 10 people who want to move to L.A. and do it despite the fact there aren't enough jobs. So these workers actually have some leverage. The industry is doing well. The increases in wages will cost them or the increase in labor costs will cost them about an additional $1.3 billion, I think, or $1.5 billion, which is about 13% of their operating profits. So I think this is a good thing. I think that these workers were due. They hadn't had a raise in a while. 25% is real money. They have other stuff, including pensions and bigger starting salaries.

Kara Swisher: And people get- 6% a year.

Scott Galloway: People get to senior status faster. We need to push money from shareholders and capital back into labor. And the UAW handled this well. They were targeted. They were strategic. They understood where they had leverage, where they didn't. The initial deal was for 20%. Their bogey was 40%. They ended up at 25. And to your point, GM and Stellantis will probably settle soon after. So I think it's a good thing.

Kara Swisher: Yeah, probably. And it'll be a four-year deal, which is good. In other news, President Biden is set to unveil an executive order on artificial intelligence next week. This will be the government's most significant attempt to regulate the technology. The order is expected to establish guidelines for federal agencies, which the Biden administration is directing their agencies to use how to use AI and also steer companies towards best practices. You and I are going to the announcement, aren't we?

Scott Galloway: We are.

Kara Swisher: They're letting us in the White House. How is that?

Scott Galloway: We're influencers.

Kara Swisher: They're bringing in influencers, they said, and that is us, apparently. But maybe you can answer the question that my kids asked when I showed them. I got the invite, and I was very excited, and it was a nice moment. My kids were really impressed. Why are they inviting us?

Scott Galloway: Because we're influencers, Scott, because we influence them.

Kara Swisher: Are you being serious?

Scott Galloway: They think that we're going to be fond of this?

Kara Swisher: Yes.

Scott Galloway: Yeah. They want us there. You know, maybe a little, you know, hello, Mr. President Biden, that kind of thing. And, you know, I think us being there, we'll see if we like it.

Kara Swisher: We don't let me tell you, White House, if we don't like it, we'll say so. I mean, it's great. The president will tell the agencies how to behave. And I think that's appropriate. But ultimately, this is something Congress has to do, you know, pass laws around AI. It's not going to be by executive order, but it's good. He's been doing this a lot in on AI and because the Congress refuses to act. But it's still not enough, certainly. and best practices, that's a good thing. You know, they've been having a lot of these meetings. And we're there to just be the pretty ones. I have a feeling they are going to have six or seven Secret Service people on you alone. And we'll see what happens when you go there, if you ever come out again.

Scott Galloway: Well, I heard you're having an affair with a female spy. They refer to it as lesbianage.

Kara Swisher: That's good.

Scott Galloway: That's good.

Kara Swisher: Oh, my God. That's not good. That's so bad. Why is that good? That is not good in any way.

Scott Galloway: I think the idea of you and I at the White House is fantastic. I think it's fantastic. We're going on these adventures. We just were in California. We had a really good time at this beautiful resort in Napa. And now we're doing this. This is nice, our little adventures. But if you get near the Situation Room, I'm going to order them to tackle you. That's the situation.

Kara Swisher: Well, hold on, hold on. Let's just go a little bit behind the music here. I get invited, and so you find a way to muscle your way.

Scott Galloway: I didn't find a way. I was also, it said Kara and Scott, by the way, my name first. And no one forwarded.

Kara Swisher: It's Scott Callaway.

Scott Galloway: No, I got it. My advice has gone. I will send you the invitation to both of us. And they forgot to forward it to me. It came into our pivot email. And they were wondering why I hadn't responded. I have been hauling a suit around the great.

Kara Swisher: You're wearing a suit?

Scott Galloway: Oh, not me. I'm going to the White House.

Kara Swisher: You're not wearing a suit?

Scott Galloway: No, I've been there a hundred times now.

Kara Swisher: You've never been there. How exciting.

Scott Galloway: Yes, I know. Which means I know you're a hundred times more important than me.

Kara Swisher: No, I've never been there. I didn't say that.

Scott Galloway: I've just been there a hundred times. I've lived in Washington.

Kara Swisher: Well, yes, you did. Kind of. A little bit.

Scott Galloway: No, I didn't.

Kara Swisher: A little bit. I didn't stop with your weird insecurity about everything. I just happened to live there.

Scott Galloway: My insecurity is called Common Sense. Have you met me?

Kara Swisher: All right. I covered it as a reporter. So I have obviously been there. It's wonderful. You're going to love it. I'm really excited. It's a thrill every time I go there, I have to say.

Scott Galloway: Yeah, I'm really excited. There's a lot of checking, a lot of people. You have to give your things. It's going to take a minute to get in there, just so you know.

Kara Swisher: That doesn't – I think that's the smart thing to do. And I am going to get you a special tour because I know people. I'm really excited. I can't wait to see you at the White House. Anyway, we'll see what happens. We'll see. We'll listen, see what the executive orders say. Then we'll have a commentary on it. And then hopefully Scott will not be jailed. That's a 50-50 chance on that situation.

Scott Galloway: You know, I have never, I have never been, I've never had any interaction with law enforcement. I've managed to avoid all that.

Kara Swisher: You're just about to. There's a lot of it at the White House and it needs to be there.

Scott Galloway: My friends in the agency, I hung out with a guy from the CIA at that Apollo thing.

Kara Swisher: Yeah, you did.

Scott Galloway: You know what's interesting about AI? A couple of things I learned from the AI panel. I think you may have hosted it or moderated it.

Kara Swisher: I probably did.

Scott Galloway: You weren't listening. Someone said that they think that it'll be great for agencies. And the example they use was the IRS. They said that AI will be able to sort through very complicated tax returns and say, okay, this is where they own money. This is likely where they're not being honest. And then the other thing that really struck me was that this partner in a law firm who was there said they've been testing AI. And what they found is they not only use AI to make a lawyer more efficient, but they have AIs speak to, generative AI speak to the other party and negotiate. And they ended up in the majority of times coming to the same agreement or price settlement as lawyers.

Kara Swisher: Yeah, faster, faster too.

Scott Galloway: Yeah, in like a tenth of a second, right?

Kara Swisher: Yeah, it's really going to impact law. That is absolutely true.

Scott Galloway: Yeah. And also what I would say is there was someone from the Central Intelligence Agency, our former CIA individual in charge of cyber defense, Andy, I forget his last name, really impressive guy.

Kara Swisher: Yeah.

Scott Galloway: And also we had former Secretary of Defense Esper there. Impressive, man. And then the former ambassador to Russia is at Stanford. Was it McCauliffe? McFauliffe. Anyways, McFauliffe. And I'll tell you, every time I meet these individuals, I just feel better and better about America. These are both sides of the aisle, both all of them super smart, super devoted, very honest, very open. And you can just tell all of these guys, you know, they were hanging out with a lot of masters of the universe who had made tens, if not hundreds of millions of dollars. And the only difference is one group of people decided to serve their country.

Kara Swisher: Yeah.

Scott Galloway: These are really impressive, hardworking people.

Kara Swisher: I would agree. I would point out that Esper was fired by Trump for doing his job and not attacking. That's like a merit badge of moral compass.

Scott Galloway: I know, but it's incredible that this is who Trump was firing, this very impressive guy.

Kara Swisher: Just so you know, just a very quick thing we mentioned last week. It's been a year since Elon Musk purchased Twitter, and the report card is, as we have said, not great, which we predicted. Daily active users are down compared to a year ago. U.S. app loan loans are down 57 percent. According to third-party data, X's top five advertisers are spending 67 percent less on ads than they did before the acquisition. There's also the subscription plan hasn't paid off. Content moderation dump fire seems to be getting worse every day. Elon tweeted that he was going to buy Twitter to help humanity. I don't think he's helped himself. He is all saying these are all wrong, of course, has said that and everything's up and to the right. So has Linda Iaccarino. But it's pretty clear the business is cratering in a really significant way. A lot of it having to do with just changing the name. I want to share a prediction you made right here a year ago as the acquisition was about to go through.

[Audio clip plays]

Scott Galloway: You're going to see in the next three to six months a direct, credible new competitor to Twitter. There's just too much opportunity here. It's been so poorly run for so long. There's so many addictive, wonderful qualities to the notion of a microblogging platform. There's just too much opportunity here. And so many users, so many advertisers are just sick of the Dorsey, Elon sideways. So there's so much human capital that's experienced in the sector. So my prediction is you're going to see a competitor emerge.

[End of audio clip]

Kara Swisher: Yeah, it's come true. Threads, I would say, is probably the most significant one. But it's, you know, there's a lot of them. There's a lot of them.

Scott Galloway: Yeah, the thing I got wrong was I didn't think or know it was going to be threads. Obviously, we hadn't heard of threads yet. But essentially, Twitter had 100% or 99.9% of the quote-unquote microblogging market. And now has 82% because a new competitor, Threads, has 18%.

Kara Swisher: Yeah, and there's more. There's others. The real thing the real stat here is that a year post X is singular Twitter is singular I cannot think of another company in non time that has lost somewhere between 55 and 70 percent of its revenue that over a billion dollars in a 12 month period. I've never seen it. This is the greatest meltdown or poor business performance in history. And my theory, my theory is that he wants the company to go down so much that he can buy back the debt on pennies on the dollar. And he has hired a CEO and he said, go to that, go to Kara Swisher's conference and act aloof, stupid, ignorant, and like you don't know what the fuck you are doing. And Miss Yaccarino said, I got this.

Scott Galloway: I don't think she meant to do that, but that's funny.

Kara Swisher: I, you know, there's a lot of rumors around her, whether she's going to stay just recently. I've heard quite a few.

Scott Galloway: Really?

Kara Swisher: And is the rumor she's going to be fired or she wants out. I'm trying to track it down. I just have heard a lot of it recently, just this week. And it was, I don't know why there's so much noise. You never know. You never know that there's names of people who would replace her. Maybe she's sick of it. I don't know. I'm sure she'd deny it or say we're wrong. I'm just telling you there's a lot of noise out there, Linda, about you. Whether it's true or not, I don't know, because I haven't done enough reporting. By the way, traffic to his account has doubled. He's basically said, I don't want advertisers to see anything. And if they see anything, there's a chance it'll be next to a swastika because I fired the whole safety team. But I want more and more people to come to my profile.

Scott Galloway: Yeah. What's interesting is I talked to some people at the event we went to about that, about what's happening. And the reason why, you know, there's the expression, and you've used it, that banks are not storage facilities. They're moving companies, right? They move money. And that some things are storage facilities, right? Some financial instruments are storage. And that these banks should not be holding this debt, but that they can't get rid of it because of the loss is so big. And so they're sitting there. And it's sort of a death grip between Elon and them of who's going to blink first, right? And so if it goes down to the price it is, he's hoping to get it out from under them, this debt, buy up this, I think it's $13 billion in debt. And there are buyers out there, but Elon will always pay a penny more, right? And so, you know, who's going to, will he declare bankruptcy? Will they force him into it? Doubtful. I don't think he'd want to take the L here and be like Cersei walking through Westeros naked, having someone behind her.

Kara Swisher: That's a visual. Shame, shame, shame. Right. Anyways, but I don't think he – the reason why when I talk to big investors, I say if this thing goes out, they're saying that they think it's going to go out at 85 cents. And what you were referring to is that the banks have to report the loss on their next earnings call when it trades, the first trade when they move it. And they experienced an unprecedented acceleration in interest rates for 12% coupon on debt on a company that has massively declined in value. In concert with a dramatic increase in interest rates, they just got caught holding a melting ice cube. And once they sell it, they have to recognize those losses. So they're hoping, they were all, and the three of them are coordinating, Sparkleys, B of A, and Morgan Stanley. They're all hoping that the markets would recover. But my guess is not officially, but Musk has sort of a rofer here, a right of first refusal. And that is they'll go get the best offer they can from a big credit investor. And then they'll turn around to Elon and say, wouldn't you rather just not have anyone with any debt against you?

Scott Galloway: Who will fire you, by the way? Who will fire you?

Kara Swisher: Well, they won't have that power, though, as long as he makes those interest rate payments. When you have debt, you don't have governance right. What you have is just a claim against the company that's first in line in the cash structure.

Scott Galloway: Yeah.

Kara Swisher: Well, I'm saying if he doesn't pay.

Scott Galloway: Yeah, right. He can hold it. He can wait them out. As long as he's willing to lose money, which he has been, obviously, he's plenty of it. He's in the power position, sort of, in a weird way.

Kara Swisher: Yeah, I don't. I mean, some people have said that he's massively over levered. But I just think the increases in value of his holdings that at the end of the day, 12% on 13 million is, what is that? That's 1.56 billion a year in interest payments. He has that change in his couch cushions. So I don't think he's going to. As long as he wants to hold it, as long as he's interested in it, he can do it. And their banks are fucked. The banks should have never made that loan, but they did. And here we are. Actually, make a prediction now. Do you think he'll get a hold of it?

Scott Galloway: I think he'll get a hold of it. That's my guess. He'll get a hold of the debt. I don't know. I really don't. If he has to buy the debt, I mean, keep in mind, it's face value of $13 billion. If it comes out, if they can get $0.85 on it in the free market, that means he—

Kara Swisher: They're not getting $0.85. Everyone says $0.40 to me. I have to say I've talked to him.

Scott Galloway: Oh, I don't think it's $0.40. If it was 40 cents, that would be an effective coupon of 25 or 28%. And anyone would take that risk because Twitter is worth $5 billion. Anyways, but I've read 85 cents. So whatever it is, but he's still called 70 cents. That makes his guy to come up with $9 billion. He does. To buy that. I don't know. It's a lot of money.

Kara Swisher: Yeah.

Scott Galloway: You're right. It's a death grip. That's what they said. But then again, the guy's worth $250 billion. And this is the problem. There was a wealth tax that was being proposed as rearing its head again. I used to be against it. I think it's sort of private property wants to pay taxes. You can't really come in and start taking money from people. I'm now of the mind when I see our deficits and just how much money has been crowded in the top 1%. And you have an individual who can make these sorts of decisions that have such enormous impact on the world because of the aggregation of wealth. I'm now starting to think we do need a multilateral, some sort of wealth tax. But anyways, I just think it's insane that someone can make these sorts of purchases.

Kara Swisher: Yeah, interesting. We'll see what happens. But, you know, I do think he's in the poll position in this case in a really loser way, but still. OK, let's get to our first big story. After three weeks, three failed candidates and hours of closed door negotiations. It sounded rather testy. We finally have a speaker of the House, Louisiana Congressman Mike Johnson. Yes, you have never heard of him. That is correct. Johnson was elected on the first ballot Wednesday in a 220 to 209 vote with the support of all House Republicans. They all got exhausted, I think. I think this guy got lucky that way. To give you a sense of who he is, since no one's ever heard of him, he's an evangelical Christian, a social conservative. And let me just say, he's a social conservative, social conservative, who's opposed certifying the 2020 election. In fact, he was at the forefront of that, the forefront of that, not just one of the many. He was at the top of that pile. Voted against aid to Ukraine, is anti-abortion, has worked to ban same-sex marriage, and last year sponsored a bill that basically a national version of Florida's don't say gay law. As you might imagine, I'm loving him. No, he's really unqualified for this job. And the fact that he's second in line to the president is terrifying. This guy is unqualified for this job. And so far to the right of most Americans, it's really quite astonishing that they went with him. I can't believe it, but Jim Jordan's less problematic than this guy.

Scott Galloway: Yeah. I mean, based on my initial read, it's just David Duke without the baggage. You know, it's just, if you read this guy, his background, first off, his statement was really troubling. He said that God had ordained this.

Kara Swisher: Right.

Scott Galloway: And when someone actually believes that God has ordained this, and then don't say gay, Bill. I think he believes it.

Kara Swisher: Yeah.

Scott Galloway: I think the most he claimed that school shootings were a function of them teaching evolution in school. And then and even equally disturbing, if not more disturbing, he used a more elegant, you know, legal language means of trying to arrest the peaceful transfer of power. So the second in line is just enormously disappointing. If you think more broadly, I believe our government is essentially being run by or kind of on three pillars, if you will. The first is, economically, our policies are dictated by what's best for the top 1%. Whether you look at our tax policy, whether you look at bailouts, it's really like, okay, throw some loaves of bread and some circuses for the bottom 90, but it's really all about ensuring the 1% stay as wealthier or wealthier. On social policy, we've become this white Christian nationalist government. I mean, if you look at what has happened from a public policy, a social policy standpoint, whether it's Roe being overturned, I mean, school, ridiculous proposals around. It's very Handmaid's Tale.

Kara Swisher: It is.

Scott Galloway: It's white Christian nationalist. And then the third thing is, in order to pacify the far left of the left, well, let's engage in reckless spending and have $7 trillion in expenditures with $5.5 trillion in receipts. Well, the only thing that passes for anything bipartisan is reckless spending. Oh, you want to cut taxes? You want more social spending? I know, let's do both. And so what you have is a country that is, in my opinion, where every country is making progress, is regressing. And the notion that, as you said, the second in command, tried to get in the way of a peaceful, on an economic level.

Kara Swisher: He didn't try to get, he was the key lawyer. This is not just some guy who just is like, oh, Trump is going to yell at me. This guy went into it with great enthusiasm and threatened other members. It's not, It's a very different level of involvement. And this guy was right at the top of this thing. Hand-selected by Trump. He tried to get in the way of the peaceful transfer of power. And this is the person that's supposed to oversee the administration of the certification of the next election?

Scott Galloway: Yeah, that's a troubling situation.

Kara Swisher: Oh, and he believes God doesn't like gay people? I mean, this is—I just hope Kamala and the vice president and the president don't travel together.

Scott Galloway: I agree. I was thinking that myself. that thought that this guy might be president.

Kara Swisher: Yeah.

Scott Galloway: Also, the other Republicans are worse. The ones that don't believe, these middle squishes who actually resisted Jordan didn't resist this guy because he's friendlier and wears a nicer suit. No one knew him. Like that's, you know, no one knew him.

Kara Swisher: But here's the thing. What was really disturbing was that photo of all of them when a reporter asked a legitimate question about his election denial stuff. And the Republicans, including some old lady in the front, were booing and yelling, shut up. In response to that video, I tweeted, puerile self-emoliation combined with toxic suck-upery and pathetic power jostling and a desperate need for attention. This is the GOP 2023. I can't believe they voted for this guy if they wouldn't vote for Jordan. I don't even get it. Jordan's less so of this guy. Let me just say, he also has a podcast with his wife, Kelly, their podcast co-host. They have a show called Truth Be Told. Let's listen to a clip from earlier this year where the two talked about what scared them about some members of Congress.

[Audio clip plays]

Mike Johnson: Some of these voices now are in this chamber arguing that our rights do not come from God. Think about how scary that is. If you believe your rights come from government, then it means you don't really owe any allegiance at all to God. You have no accountability.

Kelly Johnson: Well, you're not free. You're not free because the people who are governing you and giving you things in exchange for those things always comes a sacrifice of your liberty.

Mike Johnson: Absolutely.

[End of audio clip]

Kara Swisher: Okay. It's called the Constitution, sir. This is the guy in charge of the Constitution right now. I think I met them. I actually think I met them at a key party in Boca Raton.

Scott Galloway: Yeah, no dick jokes on that podcast. They sound like fun people to roll with. I'm sorry. So as an atheist, I don't have... Wait, I don't get it. I don't have an invisible friend. What does this mean for me? I'm not. I shouldn't pay taxes. I don't have rights.

Kara Swisher: That means you are. You cannot make dick jokes on this podcast next year when he takes over as king. He's not exactly a household name. Do you think that's an asset?

Kara Swisher: This is kind of where we are in terms of our politics. It's easier if you don't have a track record to run on. People knew who Jim Jordan is, and it sunk him. Nobody knows who this guy is. They didn't have enough time to look into the fact that he's blatantly homophobic.

Scott Galloway: If you look at the most unstable nations in the world, they generally are run by people who you can't reason with and can't negotiate with because they think God is on their side. When good people do really bad things, it's usually because they live in a society where old men have convinced them that God is on their side and that they are morally superior because of the God they worship. It's one of the basic foundations of our society is that we're secular.

Kara Swisher: Yep. He also rules over one of the poorest districts in the United States, by the way. Real problems of poverty there. Even Susan Collins, a reporter asked what it'd be like to work with him, and she said she'd have to Google him. You've got to be kidding me. But now we know, it's very clear what this guy is pretty quickly once you start to read up on him.

Scott Galloway: Yeah, I don't know what this means.

Kara Swisher: What do you think this means for the Republican Party and for the elections? Do you think this hurts them?

Scott Galloway: I think they're fucked. He's not just anti-abortion, he's real anti-abortion. He's way down that lane. So I think that's a problem because the electorate has indicated they're not. There's the government shutdown coming up, so who knows where he stands on this? I think he's inexperienced at running this, so that's an issue.

Kara Swisher: I think he's anti-gay and anti-abortion is not particularly good. That ship has sailed for most of the electorate, not for these people, but most of the electorate. I can't tell how much of it is just my anger and depression growing as I get older, but I look at the far right, white Christian nationalists. I'm incredibly disappointed by some of what you would think of as bastions of far less progressive leadership or thought on campuses.

Scott Galloway: Yeah, I can tell you the faculty on these campuses are just absolutely flummoxed at what we're seeing.

Kara Swisher: Yeah, I agree. But you know what, Scott? I liked Ronald Reagan when I was 17 years old. So I don't know what to tell you. I think people come around as they become better educated.

Scott Galloway: I can't get over that. I got so much shit in my fraternity. I was literally ostracized because I was the one guy supporting Mondale.

Kara Swisher: Were you?

Scott Galloway: I don't know why I liked Reagan. I guess I liked the message of hope. Morning in America. I was tired of Jimmy Carter.

Kara Swisher: I think Ronald Reagan is cuddly compared to these guys. He was your basic conservative, although he was heinous on AIDS and things like that. But nonetheless, you can understand. We're so far away from Reagan. This guy is a dangerous person. Everyone's like he's Jim Jordan with a jacket and a smile. I looked at a picture of him holding the gavel and he had a little smirk on his face. I thought, oh, he's preening. He's a fussy preener. He knows exactly how he looks all the time. I don't think Jim Jordan does. That's a compliment, actually. But he's quite a dangerous choice.

[Transition to break]

Kara Swisher: Anyway, Scott, let's go on a quick break. When we come back, we'll talk about Meta getting sued and take a listener mail question about leadership styles. When is it OK to be an asshole?

[Ad break]

Kara Swisher: Scott, we're back with our second big story. Meta is facing a major legal battle. 41 states and Washington D.C. are suing Meta, saying the company harms kids by building addictive features into Instagram and Facebook. No shit, Sherlock. A 233-page federal complaint alleges the company engaged in a scheme to exploit young users for profit by misleading them on safety features and harmful content. Another no shit, Sherlock. Consequences for Meta could include financial penalties and restitution. Meta said in a statement it agreed with a commitment to providing teens with safe, positive experiences online, but also expressed disappointment with state officials taking this path. This is something you've talked about a lot. What do you think of this sweeping action? There's lots of other multiple lawsuits. Attorneys general from 33 states filed a federal suit together, and eight states in D.C. are filing separate suits.

Scott Galloway: It reminds me a little bit of the tobacco litigation. I think it'll be drawn out. I think it'll get to the right place, but it'll be a decade. Unfortunately, the numbers are just so enormous, they'll be able to register tens of billions. I don't know if you saw their earnings. They're nothing short of staggering.

Kara Swisher: Yeah, we're going to talk about those in a minute. They are stunning.

Scott Galloway: My first thought was, who are the nine states that didn't join this? I think when we look back on this era of big tech, we're going to feel bad about the monopoly abuse. The decile of companies who are the most valuable are running away with the stock market, and that's just not good for the economy. I think we're going to look back on the weaponization of our elections, vaccine misinformation, and we're going to regret all of it. I think it's all going to be dwarfed by one regret: I think we're going to look back on this era and think, how the fuck did we let this happen to our children? Right at the center of that is going to be Meta. I hope this grinds through the courts more quickly than it should. I don't know the legal complaint. I don't know how they attribute it back to specific harm when they'll have very talented psychiatrists and experts saying, no, it's concierge bulldozer parenting. They'll have discovery. They'll be able to see emails. They'll be able to see what they thought at the time.

Kara Swisher: The problem is, the fines to date haven't been an algebra of deterrence. It's been an algebra of incentive. It's like, this is just the cost of doing business when we get these civil penalties.

Scott Galloway: I just can't understand why social media isn't age gated. Why does a 14-year-old girl need to be on Instagram or Snap? It doesn't make any sense to me.

Kara Swisher: Remember, they wanted to do Instagram for kids. Come on.

Scott Galloway: If you were Meta, how would you handle this?

Kara Swisher: Just wait them out.

Scott Galloway: I would do exactly what they are doing. Ignore the damage I am doing to the world because I'm making a lot of money and having a great career and everyone around me is so friendly and so nice that this can't be that terrible a place. Let the chief legal officer and our army of lawyers ask really thoughtful questions, hold us up in court, pretend to give a good goddamn and call for regulation.

Kara Swisher: It's protecting teens. We're for teens.

Scott Galloway: Just wait them out and fight the battle. Take 1% of your operating profits in terms of lobbying and legal costs. Then if a $5, $10, $25 billion fine gets levied against you in three, five, or seven years, no problem, because we've made a lot more than that.

Kara Swisher: Depressing. Although interestingly, I've been talking to a couple of Meta people who are there and all of them are like, it's the best company I've worked for. So well run. And we'll talk about that in a second. And they're like, I hate myself. Every one of them has a version of "I hate myself for this." They're definitely like, how can I get out of here intact with my soul? They understand what's happened here.

Scott Galloway: My theory has always been that the more sinful or damaging to society the company is, the more talented and likable the people are and the better they treat their employees. Smartest organization I worked at, top to bottom, nicest people, some of the best treated employees? Chevron. Right up there, Altria. Right up there, Exxon. They treat their employees really well because they're usually really profitable. Then you meet with the management at Tom's and you're like, God, what assholes. The more socially minded, I think there's an inverse correlation between how well companies treat their employees.

Kara Swisher: Patagonia does a nice job.

Scott Galloway: It comes back to the same thing. The more romantic and sexy a business sounds, the more awful the industry is. Go to work in fashion and see how much fun that is.

Kara Swisher: So, listen, here's the thing. They are really good at business. We should note it wasn't bad news for Meta this week at all. The company just reported that revenue rose 23% to $34 billion in the third quarter. Profit was $11.6 billion, more than double from last year. They had a lot of costs last year because of the metaverse. By the way, another company running ahead of everyone else, Netflix, posting strong earnings, adding 8.76 million global subscribers during the third quarter. Revenue rising from $7.9 billion a year ago. Good job, both of these guys from a business point of view.

Scott Galloway: The most underreported business story of this week was Meta and Netflix's earnings. What they have pulled off is arguably unprecedented. The majority of big tech's massive acceleration in shareholder value is a function of one thing: they're investing in growth. They are smart. They know how to spend their money. Their expenses go up 15%, their revenues go up 18%, their profits go up 20 or 30%. What Meta pulled off this quarter, I have never seen before. They spent less money. Their operating expenses fell 7% year on year as they reduced their headcount by 24%. They reduced headcount, they reduced investment, and their revenue accelerated 23%. When you have the champagne and cocaine of reduced costs but accelerating revenue growth, you end up with an increase in year-on-year earnings of like 100-plus percent. I've never seen it. Netflix did the same thing. The Writers Guild effectively transferred wealth from the linear guys to Netflix. What was central to Meta's performance was AI. They're using AI to increase engagement on the Reels function of Instagram. They've also used AI to circumvent the non-tracking functionality put in place by Apple.

Kara Swisher: Their advertisers are actually claiming that. You're right. They also are being a little creative with Threads. I have to say, I think it's a good product. They moved away from their metaverse bullshit. Threads doesn't make any money yet, but they're doing something interesting. You can see it on a path towards making money. Mark Zuckerberg is just a very good operator, like Bill Gates was in his heyday. Just a good business person.

Scott Galloway: The other thing at Netflix is, first of all, they're cleaning up the passwords. A lot of people converted to the ad tier that weren't paying before. Their advertising business isn't going as well yet, but that doesn't mean it won't. They have costs across the globe compared to other media companies. They can equalize it across the globe and save money. They're in an excellent position.

Kara Swisher: Someone said at the thing we were at, did anybody ever cancel Netflix? No one canceled because it's a product that's necessary. They raised their prices 15% coming out of a strike that was supposed to cripple content makers for five months. They felt confident.

Scott Galloway: I believe the ad product will eventually go away or they'll just let it die.

Kara Swisher: Really? Why? Tell me.

Scott Galloway: The key attribute of any company that wants to build a company worth over $100 billion is they build a time machine. The core attribute of Netflix is that if you only let your children watch Netflix, they save 11 days a year watching commercials. That ad tier, I just don't think it's going to be worth the division. I think it's for the rest of the world, not necessarily for Americans.

Kara Swisher: It's like the cheaper iPhone, I guess. It's fine. They did fire some of their ad people that were initially with them. We'll see where it goes. Let's talk a little bit about Snapchat. I think it's a great company with a great product. They did well this quarter. But Facebook added the revenue of Snap in one quarter. Snap's revenue grew 5%, which is great because it reversed two straight quarters of revenue declines. They have 400 million people. They have a 12% increase in daily active users. Engagement increased. But their net losses have expanded from $72 million same quarter two years ago to $368 million this year. It just wasn't a great quarter. It was just okay.

Scott Galloway: The market has decided to transfer revenues from Google to Microsoft. Microsoft inspired investment in AI across their Office and search. The revenues were up and people are punishing Alphabet, which all of a sudden seems under managed, and transferring that capital to Microsoft. If you look at the multiples now on enterprise value to price to sales, Meta's at 7x, Snap's at 3, Microsoft's at 12, and Google's at 5. Google actually looks cheap. I personally think Snap will be bought up by someone because it's a great product.

Kara Swisher: It should be. It's subscale. Their $4 a month subscription service has 5 million subscribers. That's $250 million. The AI, my AI, is working really well. But who should buy them?

Scott Galloway: I don't know.

Kara Swisher: It's not a bad property to look at. They continue to try. It's a little engine that tries. My kids use it. It's fantastic.

Scott Galloway: It's fantastic, and it's subscale. It's really too bad. I think they're screaming "buy me" to someone.

Kara Swisher: Maybe Apple. I don't know.

Scott Galloway: I don't think Apple wants anywhere near social.

Kara Swisher: Netflix. Why not?

Scott Galloway: Their business is fine on its own. That's the problem. Snap makes for a great acquisition, but by who? Disney can't afford them now.

Kara Swisher: I did an interview with Dara Khosrowshahi that's appearing soon. One of the things he was talking about was his ad business on Uber and Uber Eats, getting big, getting interesting.

Scott Galloway: That makes total sense. They know where you're going. Start running ads.

Kara Swisher: They're doing rather well in that area. Freight is not doing as well, but that certainly is. Anyway, let's pivot quickly to a listener question. You've got mail. This question comes from Marcus in Sao Paulo, Brazil. "Hi Kara and Scott. A quickish question on leadership. Scott talks a lot about how he learned to be a more positive, thoughtful, and considerate leader. However, he did reach a considerable level of success and wealth while he still had a much different style. While I do appreciate when he promotes this humane attitude, I wonder if a thoughtful, considerate person would have had the same opportunity when the market dynamics and social status dynamics still seem to reward assholeness rather than kindness. In a nutshell, Scott, do you think you'd be in this position that you are today had you been a nicer version of yourself when you started off?" What a good question, Scott. Could you be where you are without being an asshole?

Scott Galloway: The answer is yes. The way I would describe effective leaders in business is they have three attributes. First, they demonstrate excellence. Typically, the CEO is as good or better than anyone in the building at one thing, whether it's selling or having a great analytical mind. You have to be really good at something. Second, they hold people accountable. You can call that being an asshole, but set out very clear goals for people. When people aren't meeting those objectives, you sit them down and say, "You're not meeting your objectives. You need to let me know how I can be helpful here, but you're not going to survive here if you continue to miss your numbers." It's a difficult conversation that is really easy to avoid. Great leaders hold their people accountable. Strategic firing — everyone talks about hiring. I never bought this Hallmark Channel movie that if we just find the right role for them or it's the culture's fault. No. Some good people sometimes should just be let go. They're just not working out. I've always been slow to hire and quick to fire. In a small company, you can't have people who aren't working out. The quicker you can fire them, the more generous you can be in terms of severance payments. Finally, the team with the best players wins. Empathy is a form of compensation. I'm going to get to know you and what you really value. Some people want to have their name in media, so if you get an inquiry from the New York Times, say this is the person you should speak to. Some people want to manage other people. Try to figure out their unique wants and needs and show that you're on their side. People follow excellence. If they think you're going to make a lot of money, they'll follow you because they'll get the draft off your success. What I didn't do was I thought that being provocative, rude, or aggressive in a meeting demonstrated leadership. If I was talented and a bit of an asshole, then I was a genius. Whereas if I'd been talented and just a little kinder on occasion, that was considered just talented. I really do regret some situations, especially with young people. They needed more watering. There are a few people I fired and I regret it. I should have worked harder to figure it out, especially with a young person.

Kara Swisher: I don't think you're as much an asshole as you think you were. And I don't think Steve Jobs was either.

Scott Galloway: Well, you might have. He didn't work with me.

Kara Swisher: You were kind of just more strange than anything else, as I recall. Let me do a dramatic reading from my book, Burn Book, in the section about Scott. "In 2017, I attended a tech event in Germany called DLD, Digital Life Design. I watched as Scott Galloway, an NYU Stern business professor of brand strategy and digital marketing, delivered what was a wacko presentation that included him donning a wig and lip syncing to George Michael's 'Freedom 90' for way too long. While Scott's casual arrogance was familiar to me, his insights were fresh anew. I invited him to join me on Recode Decode, and he said yes."

Scott Galloway: Oh my God, my nipples are hard.

Kara Swisher: I know. When does this book come out? There's more. There's a lot more about you in there.

Scott Galloway: I think there's more to you than that. What you realize is if you attain any level of power and influence, a tiny bit of kindness, a tiny bit of generosity goes so far. The most wasted resource in the world is good intentions.

Kara Swisher: I would agree. When someone's doing a good job, when you admire somebody, especially when they're younger than you and you're in charge, to pull them into a conference room and go, "This was outstanding" or "You are such an impressive person" — more praise goes so far.

Scott Galloway: It does.

Kara Swisher: Although it works the other way too. A lot of tough people are really tough on me. Be honest, be straight. I wasn't much of a screamer as a boss. I don't like being a boss. I don't think I was necessarily what people would imagine. I don't really like managing.

Scott Galloway: There's nothing wrong with it.

Kara Swisher: Good question from Brazil. Marcus, thank you so much. Scott remains an asshole. Trust me. He has some asshole qualities. And strange. You are still strange. You would put on a wig if you could much more than you would. Anyway. Hello. What are you going as for Halloween?

Scott Galloway: I'm going as Deadpool after the fire. People think I look like Ryan Reynolds after he's mutilated in that fire.

Kara Swisher: I love Halloween.

Scott Galloway: Daddy's going to Deadpool.

Kara Swisher: I hate costumes. I'm going as Kara Swisher. I'm wearing soft pants and a general "I can't stand this" attitude. Although I do enjoy taking the kids trick-or-treating because Claire is all into it now and she has 17 costume changes. This is the year Saul gets it. He sort of got it last year, but he's two now. When they become two and they do trick-or-treating, the penny drops and they're like, "This is a fantastic fucking racket. Free candy. I dress up. It's amazing." I remember Claire, you could see her go, "Wait a second here. This is fantastic." I'm super excited for that moment for Sol.

Scott Galloway: I absolutely loved having little kids. My favorite outfit was my youngest one as Einstein. My oldest one was an artist once. A good friend of mine, his daughter this year — they're Jews, but it's hilarious — the daughter is going as Santa Claus. The power move as a dad is I used to sneak their candy when they were asleep. Now I eat it in front of them.

Kara Swisher: Do they still do trick-or-treating? They're a little too old, right?

Scott Galloway: They're too old. Their father still does. Teenagers show up with no costumes and a bag. I'm like, "No, you must perform for Carousel."

Kara Swisher: I do not go trick-or-treating. Amanda likes to dress up. She goes, and I sit in front of the house with the candy.

Scott Galloway: I absolutely love it.

Kara Swisher: If you've got a question of your own you'd like answered, send it our way. Go to nymag.com/pivot to submit a question for the show or call 855-51-PIVOT. All right, Scott, one more quick break. We'll be back for your weekly prediction.

[Ad break]

Kara Swisher: Okay, Scott, let's hear a prediction.

Scott Galloway: I just want to acknowledge this sounds tinfoil hat and a bit paranoid, but that doesn't mean I'm wrong. I think at some point in the future, we're going to find out that the CCP was using TikTok to manipulate and divide America with a disproportionate amount of anti-Israel content that they're elevating. I think they see this as an issue that is dividing America.

Kara Swisher: You think they're actually manipulating it? Isn't it just people?

Scott Galloway: All I can tell you is if I worked for the NSA and the CIA, and I had a neural plant into every Chinese youth, into their brains, I would be putting my thumb on the scale of content that diminished their view of their leadership and their society. They would be stupid not to be doing this.

Kara Swisher: They do deny this rather vehemently, the U.S. people running the company.

Scott Galloway: I doubt the U.S. people have anything to do with it. I think this would be so easy and elegant and insidious. I think there's data coming out from a guy who's been tracking this pretty closely. It certainly looks like it. That doesn't mean there's proof.

Kara Swisher: I've been the one sounding the alarm for years.

Scott Galloway: It's a prediction. I think you're going to find out that when the CCP saw an opportunity to create more division — the biggest threat globally isn't Hamas. That's a huge threat. It isn't Putin, although that's a huge threat. The biggest threat in America is that we are dividing internally, and technology and gerrymandering and minority rule is ripping this nation apart. The greatest geopolitical weapon against us isn't tanks. It isn't kinetic power. We spend more than anybody else. We have the finest fighting force in the world. It isn't economic. We continue to attract the most seminal breakthrough technology in history.

Scott Galloway: It's all within a bike ride of SFO called AI. The only way to come after us, the only way to reduce our power and what is the greatest experiment in history called U.S. democracy is to get us to continue to hate each other. And the cheapest, most elegant, most insidious way to do this, when you, again, have control over America's youth, is to start raising topics that divide us. I think they would be stupid not to be doing this.

And some preliminary research on anti-Israel content — and I realize it sounds paranoid. And as a Jew, I realize there's some bias here. But I have been shocked at the amount of pro-Palestinian and anti-Israel content coming out of high schools and colleges. And then when I think, where do they get their information? Where are they getting this information? And all roads lead to the same place. It's TikTok. So we'll see. But I think in several years, we're all going to say, "Oh, that was obvious they were doing it," and find out they were. I think it's happening. I think it's happening right now.

Kara Swisher: Interesting prediction. I'm going to make a short prediction.

Scott Galloway: Yep.

Kara Swisher: There's something off about this speaker. There's something creepy, off, weird.

Scott Galloway: Yeah, thanks.

Kara Swisher: No, but I think he's in for a world of hurt. I think not just this crazy shit, just that one podcast thing we ran was already problematic. But there's something wrong with him. And I don't know what it is. This is just me as Kara Swisher, Spidey Sense reporter. I think he's in for a world of hurt — not because people are trying to get him. It's that, I don't know, there's something off. There's something off about him. I don't say this about Jim Jordan. I think Jim Jordan's a terrible person. And I think he looked the other way. But we knew him. He was the devil we knew.

Scott Galloway: What you're saying is he hasn't been vetted.

Kara Swisher: Yes. We don't — the deep corners of this guy's life have not been, there's been no flashlight on him. I mean, the thing about Jim Jordan is pretty much everything had been aired. He's so performative, this guy. You know, I have a lot of relatives who are religious in the way he is, and I find them genuine. I don't like a lot of what they say, but there's something off about this guy. That's just Kara saying something.

Scott Galloway: Will he be at this White House thing?

Kara Swisher: I don't know. Let's see. We'll sidle up to him.

Scott Galloway: He's a speaker, right?

Kara Swisher: Yeah.

Scott Galloway: Make a pass at him.

Kara Swisher: Make a pass at him? Yeah. I don't know.

Scott Galloway: All right. I'll make a pass at him. We'll see.

Kara Swisher: Anyway, we'll both make a pass at him. I'm trying to think what is more disturbing.

Scott Galloway: No, we're going to make a pass at him. Anyway, we are going to have a good time at the White House. We still won't be there. And when we tape next, it'll be before we go. So not until Thursday, we'll have a report, which you may read of in news accounts. But we will be here in Washington together on Monday.

Kara Swisher: Yeah, I felt bad now that I was being cynical. I feel really honored to be invited, and I'm looking forward to it.

Scott Galloway: I know. You were super excited.

Kara Swisher: White House people. I am excited.

Scott Galloway: Scott Galloway is super excited. He's never been there.

Kara Swisher: We'd like to put the dog on, as they say, for Scott Galloway. And there's a ton of fans in the White House, just so you know.

Scott Galloway: There you go. It'll be fun.

Kara Swisher: There you go. All right, Scott, we're almost done. But I hear you're going to be on Bill Maher tomorrow.

Scott Galloway: Fourth time tomorrow.

Kara Swisher: Wow. I never get invited back.

Scott Galloway: I'm going on with that total gangster, the woman from Fox. He's like insanely reasonable.

Kara Swisher: She's my friend. Say hi, Jess Tarlow.

Scott Galloway: Your friends are there?

Kara Swisher: Yes, of course I am.

Scott Galloway: She seems like an impressive person. And you know who they're interviewing at the beginning of the show?

Kara Swisher: Who?

Scott Galloway: Andrew Cuomo.

Kara Swisher: Oh. Yeah, so that should be interesting.

Scott Galloway: Wow, you got a good one.

Kara Swisher: Jessie is great. Jess is great. Say hi to her. She's amazing.

Scott Galloway: Yeah, I will. I'm excited about that.

Kara Swisher: She's so smart. She just basically bitch slaps Judge whatever the five, whatever her name is. No, I turned on — I remember I turned on the TV a few weeks ago, and I saw this woman making all sorts of sounds. And then I looked down, and it was a Fox logo, and my mind literally slipped and broke a hip. Fantastic. I'm like, what show is this? She's great. I'm excited you're going there. Say hi to Bill.

Scott Galloway: Say hi. He's probably mad at me because I'm not very nice to him.

Kara Swisher: No, he's not. He likes you. They all like you.

Scott Galloway: I doubt it.

Kara Swisher: Anyway, Scott, that's the show. We'll be back on Tuesday with more Pivot. Please read us out.

Scott Galloway: Today's show was produced by Lara Neiman, Zoe Marcus, and Travis Larchuk. Ernie and Dertot engineered this episode. Thanks also to Drew Burrows, Mille Severo, and Gadim and Bain. 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 care.

Kara Swisher: I'll see you in our nation's capital.