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All we have done here is massively erode brand America. It's gone from freedom,
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generosity, military might, prosperity, risk, aggressiveness, opportunity, rule of law to toxic uncertainty. And that
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that brand does not command margins. It commands negative [Music]
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margin. Hi everyone, this is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Cara Swisser. And
00:00:30
I'm Scott Galloway. How you doing, Scott? Guess what? Guess what? We are Webbby winners once again. Oh my god. I
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just want to thank the academy. Okay. The Pivot won the Webbby award and the people's choice award. Both of them. We
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like the people of us for the for the best business podcast and the judges. Yeah. The judges and the people. We've
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got we got a lot to get to today, but let's take a moment. And also, you won for Prof. What did you win over there?
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Uh, not we run uh for PropG Markets or for Raging Moderates, we were an honore,
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which just means please send in your $1,300 a year next year to be considered for something. Yeah. And then, by the
00:01:08
way, this business, we should be in the awards business. Yeah. This is such a racket. And then Prop Markets won the
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people's choice award, but not the judges award. So the cultural elite or the deep state wanting they judged you
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wanting has decided they're smarter than the people who picked property markets but pivot there was just sort of no
00:01:28
argument across anybody across the board. Will this make us more obnoxious or less obnoxious? Probably more. I
00:01:35
think I think we're pretty much hitting the limit of of obnoxious. I don't I can't imagine Yeah. I don't I don't see
00:01:41
us getting more. Yeah. I got a lot of congratulations and I'm like it's the webbby. It's a webbby. We're very happy. We're going to We have to think of a
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fiveword acceptance speech for that, by the way. Oh, yeah. Yeah, that's right.
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Right. Scott Gallery is my husband. There you go. I don't like that enough.
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Do you have any idea? Think of one. Think of one. You're going to go get it. I maybe Well, what someone's going to go get in uh It's My team's been to the
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dinner. They love it. They say it's a ton of fun. It is. Oh, I love it. I remember I got the uh the lifetime achievement whatever. You're going to
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get mine some. It was so much fun. Lifetime achievement award. It was lovely. I had a lovely time there. I had
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met lots of lovely celebrities that I like to this day. Midlife crisis award. I want an award for best midlife crisis.
00:02:24
Like really leaning in. Let me ask you a pressing question. If you could win any award, right? I You and I are not award
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people. We really aren't. Um but what would it be? What award would you want to have other than the adult video um
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tripod award? Um obviously tripod award. That's good. I just made
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that up. My nickname in the fraternity. Don't ask me why. Okay. Don't ask me why. Okay. What would be the award? A
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real life award. A real one. I don't know. The National Medal of Freedom, whatever it is, with at the White House.
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They pin it on. They put the thing on you. Maybe it' be at the Kennedy Center. I don't know. Yeah. No, not anymore. No.
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That'll come back though. Um I know. I don't really care about Priests. Don't want a Nobel. Um. Did you win any awards
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in your life? Have you won any? I was thinking about that. The last award I won from these other than these Webbies is in Yeah. Did you have a high school
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poll? Uh, no. You know, most handsome, most successful, most likely to succeed.
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You didn't have that in your high school? No. I went to a snotty private school, but go ahead. They don't. Uh, I did. I won most comical and Steve
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Martin, which dates me. Oh, wait. You Is there a Steve Martin award and most comical? Well, they did these things
00:03:30
like, you know, Richard Prior so we could get the black kids. I mean, we didn't. We thought we were being woke and yet we were being very racist. And
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we had all these, you know, celebs that you were supposed to be in the 80s like, you know, the the blondie or, you know,
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they said this is who you are. Steve Martin. That's perfect. Actually, I won Steve Martin and I won most comical. Oh,
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I see that. I see that. Most comical. That's so funny. You weren't like best,
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you know, handsomest job. No. Not most likely to succeed, not smartest, not most likable, none of that. None of
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that. Yeah. No. I I have won uh I won the bun award in my freshman year of
00:04:05
college which was the journalism journalism. Yeah, it was I I won as a freshman of seniors got it and I and it
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upset the entire ecosystem and the seniors hated me for winning it as a freshman. I think they hated you for other reasons. I'm just going to go out
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on another limb. Fair point. I won a lobe award once. I Oh, that's big. That's journalism, right? Yeah. Yeah.
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This was all You're doing what I'm doing. You asked me not really caring. You just wanted I'm just I didn't know.
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I wanted to actually keep in mind we only have 90 minutes here. So rifle through your awards.
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No, I haven't won much. I'd like I would like to win the MacArthur Genius Award. That's what I Oh, that would be that
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would be pretty cool. That's the one I want. You know what award be thirsty for it to win it though? have to pretend you're you know what award I aspire to
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but will never happen just through randomness is there's something called I think it's called the cargi award and
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it's basically the burning car award and that is they give about I think between
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60 and 100 a year to people who have risked their own life on the spot to save someone else's life so it's
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literally rushing into a burning house interesting I would run into burning house to save I think you would I would
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I would have a burning house to run her too. It's a good word. It's a really interesting I I love those sorts of
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philosophical questions though that in faced with that type of situation and by
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the way to be more thoughtful. Men are more likely to run out in the field and try and save their
00:05:27
comrades and get shot doing it. And women are more likely and we hate to establish any sort of gender roles here,
00:05:32
but men are more women are more likely to like let's think this through and not be idiots. Yeah. Yeah, like how do we accomplish the mission without dying and
00:05:39
slow down and be more thoughtful? And quite frankly, that peanut butter and chocolate is really useful in all
00:05:46
situations, including combat situations, right? Are you good in a in a in a jam? I did Outward Bound. I was pretty good
00:05:52
in a jam a lot. I I I'd like to think I don't I see you doing We're all going to
00:05:59
die. We're all going to die. We should do like a survival thing. That would be interesting. Yeah. And now you'd want me
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along. I'm good at calming down emotionally fraught situations when people get upset. I break up fights a
00:06:12
lot of bars. Not a lot. I've done it like three or four times. I always establish dominance and that's the how I work. Oh, really? Yeah. And those I was
00:06:18
surprised. I was really kind of like it was sort of Lord of the I did Outwardbound and a bunch of other things like that and I I literally was like I
00:06:25
shall be running this now. We shall do what I say. Um but I find as I get older
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I'm really happy for someone else to take charge. Yeah. You'd be a good team member. you'd be especially if she's
00:06:35
wearing leather and I have to pay her a couple hundred euros but leather. Yeah. Anyway, anyway, we have a lot to speak.
00:06:42
Congratulations on the Webbby again. We're very excited. Thank you, Webbby awards. And congratulations to our team. And team. Yes. All the team. Should we
00:06:49
name them? Go ahead. Taylor. Good. Zoe, Taylor, Lara, everybody. And name every Drew is amazing for us. We've got Who's
00:06:55
Drew? Oh, the tech guy has been with me 15 years. Memo to self. Remember Drew. Anyway, we thank Do we thank Fox? Yeah,
00:07:01
Fox. Sure. Sure. A shot. Yay. Yay. Vox. Vox. Yay. The suits. The corporate.
00:07:08
They don't really headquarters. That's not fair. They don't wear suits. They're not suit people. They're not suit people. They're They're actually lovely.
00:07:14
Can you imagine if we've been with them seven years? What does that say about how easygoing and nice they are? They
00:07:20
have to be between the two of us. We've been with them. The chances for a blowup
00:07:25
between you, me, any third party. Yeah. Yeah. Are big. Has he ever yelled at us?
00:07:30
No, he never does. No. Jim's the nicest guy. Jim's the nicest guy in media. Yeah, he is. He really is. He's the nicest guy in media. Anyways, enough
00:07:37
about us. Enough about us. Thank you, Webby Awards. It's welld deserved by us, let's just say. Okay. All right. We've got a lot to get to today, including
00:07:43
there's so much going on. Elon announcing he's stepping back from Doge following Tesla's terrible earnings
00:07:49
report, just as we predicted. Uh Trump uh sends uh the markets on yet another
00:07:54
wild ride because he's so ridiculous. Um, but first, uh, Instagram co-founder Kevin Cyester testified this week that
00:08:01
the app was underfunded after Meta bought it, boosting the FDC's argument the company was illegally
00:08:07
anti-competitive. Cester said that Zuckerberg was not investing in the Instagram uh, app because he saw it as a
00:08:13
threat to Facebook, which he felt was better. He was incorrect, but that's what he felt. Um, I've interviewed
00:08:18
Cyester and let me um, let's listen to this clip because they used it in the trial to try to impugn Kevin Cyester. uh
00:08:25
we were struggling to keep the set up $500 million valuation and then Mark came along and was like hey how about I double that and you get to keep working
00:08:32
on what you love and you get all the expertise of Facebook you get to work with me Cheryl Shrep etc. Um, that
00:08:39
sounded like a really good deal. And if you look in retrospect, I think it was a great deal. Think about all the things
00:08:46
we've accomplished being part of Facebook. All the things we have plugged into, whether it's hiring, spam
00:08:52
fighting, the ad system. I mean, we have thousands of sales people who are basically selling ads for Instagram and
00:08:58
we snapped our fingers to access them. So, a lot of really great stuff. Snap your fingers. Yes, I snap my fingers.
00:09:04
Um, yeah. No, but I guess my point is like I get it. It's like which would have happened without the other kind of
00:09:09
thing. I mean I bet you we would have been successful as an independent company as well. So they were using this
00:09:15
to say that he was happy there. And now let's listen then to a clip from 2023 at
00:09:20
South by Southwest where I interviewed Kevin. I think the worst part of the sale was just like trying to both
00:09:27
accomplish something great with the company and also merge it into a company that didn't quite know how to look at
00:09:34
you. Were you a competitor? Were we excited to own you? Like it's like a
00:09:39
roommate who moves in and you're like, "Oh, like this person's really cool, but also their stuff's everywhere, right?"
00:09:45
That's kind of what it felt like for eight years. And but bad roommate. Yeah. It's like, are there any good roommates?
00:09:52
I don't know. Maybe that's the reason why like people shouldn't have roommates, but I like it was challenging, but we did
00:09:59
great things. That's the attitude that Kevin had for a long time. He was very frustrated internally. Mark was petty
00:10:04
with him, I think, and jealous. I I think that's no question. Um, it was an
00:10:10
interesting it's an interesting trial. It was interesting that they had Kevin there and not interestingly Evan
00:10:15
Spiegel, who turned down, who I interviewed yesterday, by the way, in Washington, um, at Snapchat, who had
00:10:21
turned down and then Facebook proceeded to blast them by taking all their ideas. Um, any thoughts on this? I mean, I
00:10:28
think people pro publicly try to put on a good face, right? you've been in these situations, Scott? Yeah. Look, Kevin
00:10:35
strikes me as a very talented entrepreneur. I don't doubt that anything he says is there's some
00:10:41
veracity to it. Um, but you know, he cast their check. What a shocker. The
00:10:48
current CEO or the the CEO was on top and wanted to wanted to maintain his
00:10:53
platform, his kind of firstborn Facebook, maybe even at the expense of Instagram. But the thing that sort of
00:11:00
countered all this is whatever he was feeling or whatever resources he was trying to starve one of the kids from,
00:11:06
he clearly changed his mind because Instagram is now responsible for over half of uh ad revenue and it's growing
00:11:13
faster. And so at some point it's a better product. At some point the Zuck realized this and has absolutely turned
00:11:20
it into a a monster of business. So that may have been true then, but
00:11:26
clearly if that was true, Mark has Mark has seen the light. And uh what what I
00:11:34
have found or what is interesting, I had dinner with um Jonathan Height the other night and he actually said, you know, I
00:11:42
get so emotional and biased about this stuff. He said some of the controls that Meta has put in place for parents, even
00:11:47
though they're not easy to use and you know, you can criticize them. He said the the one that gets away with more
00:11:53
than or doesn't get the scrutiny it deserves and he thinks is actually the most mandacious is Snap. Really
00:11:59
interesting. Why? Uh well, things like their add-on feature where you can um uh
00:12:04
the core components of it he uh he kind of said are sort of tailor made likely
00:12:10
unintentionally for drug dealing and for people reaching out to minors because that that feature where you can add on
00:12:16
people near to you immediately. It adds people near to you is perfect for a drug dealer. I I I suppose I I I would push
00:12:24
back because I think they've always been doing done a lot of moderation. They've always imp when they have a problem, they fix it. They don't like belly ache
00:12:32
about it. Um there's like they had a whole problem. Um and I'm just saying
00:12:38
they fix things quickly and they do moderate. They moderate much heavier and they don't what I'm saying is the
00:12:43
attitude isn't gh what are you talking about? It's like oh we should fix that. Like I think I I would agree. I think
00:12:49
it's a it's a location thing and it's more for your friends and therefore it opens it up more. But I you know I have kids on it. I would rather have them on
00:12:56
Snapchat than Facebook cuz I think they got inundated on Facebook. Well, they're not going to be on Facebook. No young person's on Facebook or Instagram. Snap.
00:13:03
I think Snap is actually pretty scary. And also the whole zeitgeist of it where it's disappearing messages. It was
00:13:10
right. I mean, isn't that kind of Isn't that kind of perfect for people looking to reach? Doesn't that promote a certain
00:13:16
level of lack of accountability? But in this war in this information, I don't think that's why they did it. I think it was because they thought privacy was
00:13:23
critical. That's not why they did it. I was there. Regardless of whether I I don't think any of those people are looking to harm children, right? But
00:13:30
when they have features that make it easy for adults to reach out to minors,
00:13:35
you know, isn't that a problem? It is. But I don't agree with Jonathan. I think Facebook has done less and been more
00:13:42
resistant to dealing with things. And they're the big dog. I would agree with you. I agree. And I think um I think
00:13:47
Snapchat is I I'd rather have my kids and I get the location feature and if kids open it up, there are things you
00:13:53
can do to it to stop that, right? You can you it has it's much more open to fixing and it certainly has had an
00:14:00
issues around drug dealers and things like that. Every one of these platforms has I'm just saying platforms like who
00:14:06
have had problems like Reddit and Snapchat have always been willing to change in ways and admit in ways
00:14:12
Facebook never has. And you know, I I ultimately I think Facebook doesn't really matter because they're the
00:14:18
biggest and they have the most impact on everybody. I think that's a fair point, especially through Instagram. And so they should be the most responsible. H
00:14:24
what my kids are on Snap though. Aren't your kids on or I guess kids have aged out of it. I think I think Louis doesn't
00:14:31
use it as much. Um but they he definitely that was the only one he used. Um and there there was one
00:14:36
incident where I did catch him with a girl on Snap, but using the location features. Um I told you that, didn't I?
00:14:42
I caught he he went out. He left the house and I found him on Snap because he's so dumb with his technology and I
00:14:48
said, "I know exactly where you are. I'm coming to get you." And um Oh, come on. Be a brother. Help him. Actually, his
00:14:55
brother turned him in. His brother is the one that turned him into me. Um uh but his brother narked on him. Yeah.
00:15:01
Well, he's like, "Lou is not here." And then we like, "Let's use the snap feature." It's a long story, but he wrote me the most legendary text of all
00:15:08
time, which is why I love him so much. I I wrote him and I said, "I can't." He took an Uber. He used my Uber to get to
00:15:15
a do some sort of hotel. So, a lot of breadcrumbs. It sounds like he wanted to be He was I was like literally. So, he
00:15:20
wrote I wrote I'm like, "You are so grounded." I texted him, "You are so grounded. I'm going to kill you." And he
00:15:26
he writes back. He goes, "Sometime it going to be like that, Chief." And that's what he I'm gonna read it at his
00:15:32
wedding. I love that line. Sometime like that, chief. Anyway, um let's when I was
00:15:39
um you're about to enter into this period of when I was a child a senior in high school, I asked four women to my
00:15:46
prom and all of them said no. Yeah. And my friend Adam Markman who I think felt empathy for me. Wow. Um set me up with a
00:15:53
woman uh uh actually one of the most beautiful women I've ever met. This woman named Lena, I posted the picture
00:15:59
of her on my uh Instagram. Anyways, Lena and I went to the Winward prom and I was
00:16:06
so excited. I was telling my mom I was going to a prom and she went with me and I rented a tuxedo and I didn't know how to put the [ __ ] thing on cuz I'd
00:16:12
never worn a tuxedo before. I didn't know how to do cuff links or anything. Anyways, um I said and she said, "Well,
00:16:18
what are you going to do?" And I'm like, "Well, the after party's near here." And I'm like, and I'm like, and I've got a
00:16:23
key. I just might bring her back after all of this to hear. And right, and I
00:16:28
did manage to get her back to my place. And you know what? There was firewood in
00:16:33
the fireplace that my mom had put in there. Oh, no. Your mom's so good. Wasn't that nice? She was She looked at
00:16:39
me and I was 6'2, 140 lbs with bad acne and she's like, "He needs all the help.
00:16:45
He needs Well, you were about to enter this period with your young men that you
00:16:50
have. So, I hope you've done a good job." Anyway, anyway, my kids are, you know, my mom used what she said to me.
00:16:56
She's when I was talking about my women troubles, which was mostly an inability to get a woman in my life, she would
00:17:02
look at me and she'd be like, "Wine, wine, wine, wine, wine, wine." I did do
00:17:09
I mean, you have to do the responsible things, the sex talk, the condom talk, everything else. But, um, just treat
00:17:15
women well was the one that I really pushed on him. Anyway, we got to move on. I told you about the sex talk I had
00:17:21
with my son, right? Yes, you did. We're not going to do that again. when I went into his room with a banana and a condom. I know you told this story. And
00:17:27
he said, "What's the banana for?" And I said, "Well, I can't get hard on an empty stomach." Oh my god. Never gets
00:17:33
old. You can't tell that joke. Never gets old. It gets old. It gets old. Never gets old. Once again, I'll be here
00:17:39
all week. Try the ve. All right, we're going to The invading Poland one is not allowed anymore. Oh, by the way, that
00:17:46
joke's not allowed anymore. I need to correct it. It's wrong. What? the Polish cavalry. That was uh an attack meant to
00:17:52
divert uh German forces and it was effective and it's an insult to the brave men of the Polish cavalry. That
00:18:00
attack was actually an effective diversion of German um they weren't tanks, but German armored vehicles. I've
00:18:06
had literally eight Polish historians reach out to me and say, "Stop." Joke.
00:18:12
Yeah. Stop the I think just because it's not funny. But anyway, let's keep going. It's not the only legal trouble Meta is
00:18:18
dealing with. Meta and Apple are the first companies to be fined for violations of the EU's digital markets act. Of course, they were going, this is
00:18:24
going to happen, antitrust rules. Meta about 230 million. Apple's 570 million.
00:18:30
Both have been giving $60 to comply. Um, it's hardly any money. Um, so any
00:18:35
thoughts on that? Any thoughts on that on the antitrust? Yeah, they the
00:18:40
Europeans are are extracting funds. I think they're probably not going to pay and they'll just keep, you know,
00:18:46
objecting to it for a while. The question I have are maybe I'm hoping you know more about this than I do, but is
00:18:51
it okay, everything's fine and continue? Because that's a parking ticket in terms of their No, they have to comply with
00:18:56
the rules. So they they have to decide what to do. They can pull out of the things. They could close down services.
00:19:02
They've done that in various countries. I think in Canada, Facebook pulled out of news. They don't put news on there
00:19:08
and only right-wing there was a great piece about how sort of right-wing blather invades social media there
00:19:14
because Facebook has pulled news organizations out of because of something they didn't like. So they'll have to either comply with the rules or
00:19:21
they're going to have to leave. And this is I mean okay so the good guys you could argue are winning
00:19:27
here. So the EU find both they find them both for violating the new digital markets act. And it's the first time
00:19:33
that the law has been has been enforced. There's 570 million for Apple and 230
00:19:39
million for I just said that. Yeah, but we'll say it again. All right. Okay.
00:19:44
Okay. So, anyways, I'm saying it again. I know you have research in front of you, but go ahead. Keep going. Uh uh
00:19:50
yeah. And then uh so what is that half of what Apple and Meta make in one day?
00:19:56
So the question is the question for me is is it going to happen every month unless they change their behavior or is
00:20:03
this like that old fine where they effectively That's it. Are like, okay, you were bad. Now continue to be bad and
00:20:09
you got caught this time and we're finding you, but it's not going to I find out. I do not know that. Any
00:20:15
Europeans can write us, but um I don't know. I think they I think they're going to do other things to not comply because
00:20:22
compliance is problematic across the globe from what I understand. They'll figure out some workaround of some sort.
00:20:28
Um but I will find out and I will let you know next week. Is there any predictions for that Medicaid from your perspective? I most people think it's
00:20:34
pretty weak, but systems testimony was definitely strong, I think. Well, I do believe one of these
00:20:42
companies, I don't know which one, is going to prophylactically spend something. I I think that they're so smart that when they feel the wolves
00:20:48
circling Google, they're going to get out ahead of it and go to them and say, "All right,
00:20:54
um, what's our blood offering here? What if we spun uh what if we sold Chrome to
00:21:00
OpenAI or what if we uh spun Instagram? I I don't know. Or WhatsApp. I think one
00:21:06
of them I think we're going to see our first spin in the next 12 months. All right, that's a good prediction. I don't think it's going to be Facebook. He's
00:21:11
very stubborn. Um but I suspect Google, which has a much tougher case, u this case, they feel very confident over at
00:21:18
Meta about this particular case. Just so you know, they're very competent. although they they they sort of
00:21:23
communicate um on social media like they're desperate, which is interesting. So um next one. Former Alaska Governor
00:21:30
Sarah Palin has lost the retrial of a 2017 defamation lawsuit against the New York Times. Palin filed a lawsuit after
00:21:36
the Times ran an editorial claiming she had engaged in a political incitement ahead of the two 2011 shooting of Gabby
00:21:42
Gfords incorrectly drawing ties to an advertisement. The Times uh issued a correction in under 24 hours. Palin's
00:21:49
legal team argued the mistake was actual malice. The bar for actual malice is high. Established in 19 19 1964 case
00:21:56
very famous New York Times versus Sullum which the Trump administration is trying to get overturned and or changed.
00:22:01
Protects uh news outlets from liability while they uh when when they publish false statements uh as they did as long
00:22:09
as they did not do so knowingly or willingly or or with actual malice. Supreme Court Justice again Thomas and
00:22:15
Gorsuch have called for the court to revisit the malice standard for for well-known people. If you're not a well-known person, you can you can sue
00:22:22
for defamation much easier. Obviously, Palin is super wellknown. Um so she came
00:22:28
back the second time. It was like in two hours. Um uh you know the the the um the
00:22:35
Times had great lawyers FYI. And also the person who made the mistakes, James Bennett, who has since left the Times,
00:22:41
apologized to Palent Palen on the stand this time and actually cried. I I I know him pretty well. Um I thought it was
00:22:47
quite dignified for he for him to do so, like to apologize like that. I think it probably really helped the case. Um I
00:22:54
don't think Yeshua's ever going to win, but I think this is over. This is the last stop for her unless I don't know if she can keep appealing. But any
00:23:01
thoughts? I think she's just a trivial question at this point. um she caught
00:23:06
this moment of charisma and fire and then over the course of the last 10 or
00:23:13
12 years uh Governor Palin has just revealed herself to not be a serious person. Yeah, it's a very serious way.
00:23:19
You usually do jokes, but go ahead. Well, and then and then I I think this is actually really
00:23:25
important because I think this would have inspired a ton of Yeah. The reality is when you're one of the key tenants of
00:23:32
America that's really wonderful is pretty much anyone can say pretty much anything about pretty much anybody. If
00:23:37
you if it ends up, you know, you're spreading misinformation against someone less powerful than you, not famous, and
00:23:45
it it creates economic harm or undue stress, then you have a liel or slander case. And I think the, you know, the law
00:23:51
mostly gets it right. And they said in this case, look, you are doing, you are such a public figure. You continue to
00:23:57
say like kind of, you know, insane things. People respond. People cover you. People are quite frankly biased
00:24:03
against you. And they're allowed to be biased against you. And she was unable to prove that. Look, I I to me this
00:24:10
seemed fairly obvious. But people were worried about this case and a lot of others including why George
00:24:16
Stephanopoulos they settled for that thing that he did to Nancy Mace. They were wor I think there were probably
00:24:21
some sort of texts that he was warned several times in that case um or something. So there was something there
00:24:28
for the reason Disney caved there must have been um but but they I talked to people at Disney they were worried that
00:24:33
it would go to the Supreme Court. like they everyone's worried about a Times versus Sullivan case getting to the
00:24:38
Supreme Court, which it eventually will because the right is very much intent on cutting back, you know, they're trying
00:24:43
to get rid of slap laws. They're trying to get which protects journalists from being, you know, nuisance lawsuits in
00:24:50
many states, not every state, which is why they try to sue in places like Texas and other places. Um, but they're on the
00:24:56
march trying to overturn these things, just like Trump tried to overturn the Civil Rights Act this week. Anyway, uh
00:25:03
it was good for the New York Times. It was it was the right decision. You're right. And lastly, late Zappo's f
00:25:09
co-founder Tony Sheay did have a concrete plans for his 1.2 billion dollar fortune when he died. The recently found will according to the
00:25:15
Wall Street Journal. This was interesting. I know Tony very well. It was a sad end to a lovely person who was
00:25:21
quite troubled. The document notes that if any family members challenges wishes, all will receive nothing. marks um $3
00:25:27
million for Shea's uh alma mater Harvard and allocates over uh um a whole bunch
00:25:34
of money to undisclosed uh recipients he wanted to surprise. Um he left a lot of
00:25:39
post-it notes of of things and so he was sort of he had a real problem really
00:25:45
essentially a drug problem at the end of his life and uh they thought he had died without uh instructions but and and he
00:25:51
really the last part of his life during CO was really disturbing I think. Um, so
00:25:56
you know it's it's a I'm glad he gave money to Harvard and other places, but it it just reminded me of a very sad
00:26:02
story of of tech. It is really sad and it's a I remember being invited. He had
00:26:08
created this kind of, for lack of a better term, kind of cool e-commerce hub commune kind of thing. In Vegas. Yeah.
00:26:15
In Vegas. And yeah, uh, he invited me to speak. They used to do these little gatherings and everyone said, "Oh, you
00:26:21
should go. It's a total party." Mhm. Yeah. And I never I never went. Uh but his is sort of a tragic lesson on if you
00:26:29
don't keep some perspective around why people are around you. Yeah. And also he
00:26:34
he made he's a big boy. He made his own decisions. But there's you know they
00:26:40
there's this I forget the adage the more famous you become the the lonier you get is essentially. And he struck me as
00:26:46
someone who really struggled Yeah. with loneliness. And when I was with I met with the head of uh uh Warner Brothers
00:26:54
film and I like to we spitball ideas and one of my ideas I think the most you know there was that whole raft of big
00:27:00
tech there was bad blood we crashed right the one about Uber and I said the
00:27:06
most interesting one hasn't been told. I think the story of Tony Shay is actually the most interesting story. I that's a great idea. It is interesting. I mean I
00:27:12
spent a lot of time with Tony and interviewed him num many times. He was a gentle soul. Uh we would have a running
00:27:18
joke because he he was a hugger. He'd always like come here. He did this happiness tour which sort of was a a
00:27:23
tell. He was so sad he needed to have a happiness tour. Um but he was always like, you know, I'm going to hug you and
00:27:29
I said I'll break your arms if you do. I did a video which I would send you but you wouldn't watch of my tour of their
00:27:34
of their Zappos office. It was a very cult like kind of you know how uh Japanese companies they do calisthenics
00:27:40
together and that kind of stuff. He was trying to have this sort of happiness thing and he had a guy who was head of
00:27:45
happiness there and would take you through on the tour and you know they'd have all this like c a lot of candy
00:27:51
happening a lot of sugar a lot of like creative stuff in the in the office with
00:27:57
the people and everyone had their own little teams. It was I found it I said I called it forced fun. I was like I don't
00:28:03
want to have any forced fun with people at work. And um but he he tried to create these ethos and he say did the
00:28:08
same thing in Vegas, you know, creating trying to revive downtown Vegas and it was a lot of it was very much about him
00:28:16
and he had this holocray thing. We wrote about it a bunch in at all at uh recode.
00:28:22
Um he had a whole theory of management and it just was I remember last time I
00:28:27
saw him I thought which was he came to code every year and he play he's a very good poker player and he was drinking he
00:28:33
had a certain drink he drank a lot of um oh I can't remember it was not absin but
00:28:38
it was like that it was something fernet he loved fernette that was it um and um
00:28:43
and he was so sad you could tell and was sort of was jo you you know forced
00:28:49
forced jcularity and Uh but a very gentle soul. Anyway, so um back to me.
00:28:56
Um and I'll relate this to nitrous. I love nitrous and I have terrible dental hygiene. I've come out of the closet as
00:29:03
somebody I brush my teeth twice a day. That's it. I think I've flossed maybe six times in my life. Oh, I love flossing. It's like it's literally like
00:29:09
social shaming. And I go and every time I go into the dentist to get my teeth cleaned, they're like, you know, your gums are a little bit inflamed. You
00:29:15
really should do this. I'm like, look, you're going to give me a bunch of [ __ ] a bunch of pics, a bunch of devices. I'm not going to use any of it. I get my
00:29:21
teeth cleaned every three months. I want you to turn the nitrous up. I want you to turn on Tom Petty. I will be back
00:29:27
here in three months. But save the [ __ ] speech. I don't have good dental
00:29:36
hygiustal complex. No. If you get your teeth cleaned every three months, that's that's that that helps. You're I'm
00:29:42
you're going to have no gums and I'm going to I'm going to laugh at your dentures someday. You need to do those things. You need to have a I'm sending
00:29:48
you a water pick. You need a water pick at least. It's a Water picks are great. I love I do a water pick twice a day. I
00:29:55
love it. It's great. My gums are excellent. Anyway, let's go on a quick break when we come back. Enough with a water. No joke. My son My son won't come
00:30:02
to our bathroom anymore because I traumatized him by chasing him around with a water pick. But Oh, okay. Okay.
00:30:08
True story. All right. When we come It's not a weapon. When we come back awesome weapon to Tesla and Scott makes a great
00:30:14
prediction. Scott, we're back. Elon says he's shocker of shocker. Elon says he's scaling back this time at Doge starting
00:30:21
in May, claiming his work is mostly done, which means he got nothing done. He will instead be allocating more of
00:30:27
his time to Tesla. The announcement came in the wake of Tesla's brutal earnings report with net income falling 71%
00:30:33
during the first quarter of 2025 in a letter to shareholders. The company referenced changing political sentiment
00:30:39
that could have meaningful impact on demand for our products in the near term. You think Tesla's shares were up
00:30:44
over 5% following his announcement he's returning to the company, which is shocking because I think him not returning to the company is probably
00:30:50
better for it. And as of this recording, it's still up. Uh we've of course been calling this for weeks. Scott, let's listen to what you said back in
00:30:56
February. Doge and Elon Musk are going to fade away because you can be sure
00:31:01
he's doing the math. And he's like, even if I can even if I can't get rid of all those pesky regulators, I'm still losing
00:31:08
money here because my sales are plummeting. Because the general public across the US, much less Europe, when
00:31:15
they see these idiots surrendering to Putin, and when they see the type of recklessness and they see that they're
00:31:21
not saving any money, all they're doing is making our government less competent.
00:31:27
Uh, you're going to see Tesla sales continue to plummet, Tesla stock continue to go down, and I think he's
00:31:32
going to fade back to the corporate sector. Boom goes Scott Galloway. You This is why we want a Webby. This is
00:31:39
why. This is why. So, um, it all came true. Um obviously uh the the besides
00:31:45
the the shares being up though mo if you look take apart the report they would have been drastically nonprofitable had
00:31:52
it not been for selling emissions things that Trump is trying to get rid of and investments I think in Bitcoin or
00:31:58
something like that. It earned this 595 million and again these regulatory credits other automakers which are going
00:32:05
to be rolled back uh was critical to that. Um it wasn't because of cars. Um,
00:32:11
have you think do you think the companies let's go for more uh has the company been permanently damaged? And again, I would underscore it's not just
00:32:16
the political stuff. They haven't made a great product. They made the Cybert truck which is a dud and they haven't
00:32:22
rolled out great products at other car makers because all other car makers are going up in EVs and hybrids. So more
00:32:28
than 47% Americans have a negative view of the company according to a new CNBC survey. More and more than 52% have a
00:32:34
negative view of Musk. So how do they get out of the brand hole? Also financially um he's touting robo taxis
00:32:41
which he says will move the financial needle in a significant way. This is not true. He's got competitors with Whimo.
00:32:46
He's predicting one million units of the Optimus robots in less than 5 years. I think Optimus Robots is the Cybert truck
00:32:52
of the next thing that he's doing. So what do you see in the next couple of Let's have some predictions from Scott
00:32:58
Galloway on this topic. Yeah, but whatever I predict about Tesla tends to be wrong. I'm not talking about the
00:33:04
stock because I think you were right about I'm talking about can he pull out of this hole one. Can they pull I think
00:33:09
they can't but I I want love to know what you think. Well, it all comes down to one thing. It's very mundane. It's
00:33:15
product. If they come up with a a hit product, they're kind of back. The
00:33:20
problem is is that this has become a meme stock. And keep in mind, automotive
00:33:26
revenue declined 20% yearon year, Cara. Right. They're now they're now the fastest declining automobile company I
00:33:33
think in the world. I'm having trouble thinking of an automobile company that declined 20% yearonear. And what is just
00:33:38
so [ __ ] cynical about Elon Musk is he goes after he, you know, parachutes into
00:33:44
town with a chainsaw and starts talking about government waste. Without government subsidies,
00:33:50
Yeah. this company would have lost money. Yeah. It's just so incredibly cynical. It's government large s and
00:33:56
subsidies. these emissions, these regulatory that are the only reason that Tesla kept in was in the black. And then
00:34:02
the the thing about Tesla that said that we're not even an automotive company and if we are a different an automotive
00:34:09
company, we're an entirely different type of automotive company is they could point to the fact that electric cars have much fewer parts, dramatically
00:34:17
collapsing the supply chain. He milled a lot of his own products, which would increase margin. He was he's technically
00:34:24
the most ver vertical automaker in the world. And also to Tesla's credit, it's the most Americanmade car in America,
00:34:29
meaning more parts that go into their car are from America. And as a result,
00:34:35
in 2022, uh Tesla had operating margins of 20%,
00:34:40
which is staggering. That's double that's at least double what the other big automakers report in terms of
00:34:46
operating margin. But what's happened this year, this quarter, their operating margins have dropped to 2.1%.
00:34:53
So this is an unprofitable government subsidized. I mean this is Delorean. This is this is a
00:35:01
company that's riding on government subsid for the kids what Delorean is. Just so you Oh, do you remember John? So
00:35:07
yes, I do. John Delorean was kind of a man's man in the 70s. I think he came from Chrysler GM and he was considered
00:35:13
the best automobile designer. He designed the Pontiac GTO and he raised a [ __ ] ton of money to start a new uh uh a
00:35:22
new automobile company called Delorean that was famously portrayed in Back to the
00:35:27
Future. And he got huge subsidies from the United Kingdom to say the United Kingdom said, "All right, we're going to
00:35:33
give this company enormous subsidies to try and reinspire manufacturing domestically, similar to a tariff." And
00:35:40
then the car was kind of underpowered and just didn't have any consumer reception. And then this photo came out
00:35:46
of I think it was a warehouse in Ireland showing thousands of t of excuse me of
00:35:51
Deloreans just sitting there. Yeah. He was on the ropes. The UK said no more subsidies. It was not selling. And
00:35:58
basically they set up a sting the US government to try and entrap him and they did and gave him the opportunity
00:36:05
and seduced a guy in my opinion unfairly who was desperate to pull his company out of this tail spin. and he agreed to
00:36:12
finance or take part in what was ultimately a cocaine trade and he was arrested on the spot. Uh I believe he
00:36:18
served some time and then he converted to Christianity and you know he he was he was the you want to talk about a fall
00:36:24
from grace, he was also married to one of the most beautiful women and a big model at the time at the Christina Ferrara I think her name was. That's
00:36:30
right. But he was an American icon that really fell from grace. And there's a couple I mean a lot of life lessons
00:36:37
here, but more specifically cars are almost impossible to make on a single
00:36:42
platform. Riven, which is an amazing car, if you buy one for 80 grand, it's costing them 120 grand. It's all about
00:36:49
scale. Yeah. And when the sales of Tesla go down, you it takes it's it's an
00:36:55
especially big hit to earnings because this is a business all about scale. And when you start descaling, your profits
00:37:01
are the tail of the whip. But it's insane that this company and the stock went up. That's what I don't get. Well,
00:37:07
because they think, you know, it's a meme stock. Like it's never Here's the problem. He has been warned by his own
00:37:13
employees about the cyber truck. He was warned about Ver, you know, different things where they warn him. The other
00:37:18
thing is, as we talked about last week, rolling rolling odometers faster, all stuff like that, saying we're going to
00:37:24
like I think this week he said he was he keeps going on and on about self-driving. that is not he's nowhere
00:37:30
near he's been bragging as you noted you put the list of things he's told untruths about um or just well he's
00:37:37
dreaming I'll say his dreams of what's going to happen and so if he he's got to deliver and not promise and the same
00:37:43
thing with Doge um 202 trillion oh one two two trillion not one trillion two
00:37:48
trillion I'm going to save and then they they can they can say 160 billion and
00:37:53
even that David Fenold has taken apart he he probably has cost the government more through this Doge thing than he has
00:38:01
created. What he's done is he's destroyed things the right wing wants destroyed like USAD or his the
00:38:08
regulators that are against him. He's not done any significant changes to the way the government works which you know
00:38:14
and again as we both pointed out maybe the government works a lot better than you think. There's fewer government
00:38:20
officials. I would Evan Spiegel was pointing this out. There's fewer government workers than there were 20 years ago and there's just more
00:38:26
regulations. That's for sure. Um but he's just hasn't this is like he has now
00:38:31
become an overpromiser and underd deliverer and that's what he's doing here with these
00:38:37
ridiculous talking about the robo taxi. Let me just you Uber has $12 billion in
00:38:43
revenue. That's it. That's far from a trillion dollar business. The second one optimist robots. Are you going to buy an
00:38:50
Optimus robot, Scott? I I don't know. Are you like a million units? This is
00:38:55
okay. These guys are geniuses in saying that we have to put something out there in the future that's exciting and
00:39:00
exotic. They will never have to deliver up to that people can at least fill their dreams and somewhat justify so
00:39:08
that I can have Kathy Wood say there's going to be a billion robots and justify my irrational valuation. By the way,
00:39:14
just I need to correct this. He was found Delorean was found not guilty. And
00:39:19
I just want to go back to this for a second. Uh in ' 82 he was charged with cocaine trafficking after FBI informant
00:39:26
James Hoffman solicited him as a financeier in a scheme to sell 220 pounds. It was total entrapment. Yeah.
00:39:32
At the time, you know, Tesla or sorry, Delorean was on the verge of bankruptcy
00:39:39
and a guy approaches you who's a federal agent and says, "I have a way for you to make a lot of money if you fin if you
00:39:44
sell 200 pounds of cocaine." And he said, "Yes." And then they try and charge him. I mean, you want to talk about government overreach and then
00:39:50
agree. Anyways, but I don't I'm sorry. Back to Tesla. The robots. Give me a [ __ ] break. I mean, come on. That
00:39:57
That is even more pie in the sky than a million self-driving uh Tesla taxis,
00:40:02
right? That is just insane. And by the way, the robots they featured at that big event were being controlled by
00:40:09
people self-driving. So, you want to talk about jazz hands? Um I But people
00:40:16
were excited that he's back and focused on Tesla. So good for them. I have learned to stay away from this stock.
00:40:22
But this is a company now that is is underperforming Ford Motor by a a long
00:40:30
shot and yet trades at 70 times earnings and Ford trades at whatever 10. So yeah,
00:40:35
also crazy to tell you he he did the Cybert truck guys. He did the Cybert truck and
00:40:42
it's talk about a disastrous car and the cost when he could have been doing smaller cars the way they were doing
00:40:49
them in Japan, adorable ones. I bet they would have done a great job at those like uh and all the different There's
00:40:55
ones in Japan, there's ones in China. Instead, he had to do his ridiculous I have a small penis cyber truck and this
00:41:02
is where we are. We'll see what he does. I we'll see. Interesting to see if one last thing. Steve Bannon who was at this
00:41:08
conference I was at yesterday um uh was noting and we I can't believe I agree
00:41:14
with Steve Bannon on many things but he said we need an absolute detailed list
00:41:19
of the fraud he found a detailed and and checked independently list of the fraud
00:41:24
he found and a detailed list of any data that he has touched so that we know if
00:41:30
he took it anywhere like these two things like the data they've been collecting and coalescing around in a
00:41:36
cert in a in It's what what have these people done with the data. Steve Bannon is correct about this because it's going
00:41:43
to show that very little was saved and we have to have an independent assessment which we're not going to have until the end of the Trump
00:41:49
administration. But, you know, I would agree with that and we're not going to get that. But that's that's we'll see.
00:41:55
Well, we don't know what's going to happen to this stock because people have a thing with this guy. But he's definitely on a downward plunge, I
00:42:01
think. Well, let's talk a little bit about Doge. He's claimed on stage he was going to find $2 trillion in savings,
00:42:07
right? Um he's claimed 150 billion, which is obviously a lot less than$2 trillion. And so far it looks as if it's
00:42:14
approximately uh they claim now they're saying 150 billion. It looks like it's more like 60 billion and they can't even
00:42:20
validate or confirm those savings. If if you were to look at this as an audit of a $7 trillion company, the fact that
00:42:28
they have gone in with full license and what I'll call incredible adjectives and embellishments and exaggerations around
00:42:35
quote unquote fraud and waste. The US government has come out with literally the cleanest bill of health of any
00:42:41
organization that would undergo this type of reckless audit. The people, the auditors weren't there to give them a
00:42:46
clean bill of health. The auditors were there to try and make them look stupid and exaggerate in efficiency and get rid of certain things. as I noted. Yeah. And
00:42:52
every time they think they found something, or not every time, but most of the time they think they found fraud, waste, or inefficiency, and they posted
00:42:59
it, someone someone did a little bit of research on Google and said, "Actually, that's not accurate. You're exaggerating
00:43:06
Yeah. the savings or the waste of the fraud here." And by the way, I don't think there's been a single case where they've said there's fraud here and
00:43:14
we're we're we're charging these people. Yeah. So what entity what what
00:43:19
organization in the world could you have this type of bias aggressive unbridled
00:43:24
audit that's doing 700 billion a year in sales much less 7 trillion and get this
00:43:31
clean bill of house although I don't even think they did a very good job like who knows what's there who there might I'm certain there's fraud all over the
00:43:37
place is Medicaid and everything else but they didn't do the Pentagon it was all it was all and a lot of this
00:43:42
spending we can't it's already it's stuff we can't touch and that's the real problem whether it's Medicare whether
00:43:48
it's defense spending there's certain stuff that can't be touched social security and it's a bigger problem of
00:43:54
listen at the heart we shouldn't be have these deficit these enormous deficits we overspend um we have too many
00:44:01
regulations and that's a really good thing to attack but this has just been a ridiculous jazz hands this was nothing
00:44:08
but a weapon of mass distraction if the US was a household it makes 50,000 a
00:44:14
year it spends and it has household debt of $370,000. And the bad news is that all
00:44:21
of the kids in that house are going to have to inherit that debt even after mom and dad die. Y and we don't want to have
00:44:28
an adult conversation. The adult conversation is the following. It's a chainsaw. If you believe that fiscal
00:44:34
responsibility means not spending $7 trillion and $5 trillion in tax revenue,
00:44:39
all roads lead to the same place, folks. You either have to cut costs or cut cut spending or you have to raise taxes. And
00:44:46
if you want to cut spending, you have to go after one or all of three areas. And that's either entitlements, social
00:44:53
security, Medicare, Medicaid, defense spending, or uh the interest rate, the
00:44:59
interest on our debt. Those are the three big If you don't go after one or all of those things, you're not serious
00:45:06
about cutting correct our expenses. Or you have to acknowledge that the
00:45:11
wealthiest in our society have figured out a way to weaponize the tax code and have an alternative minimum tax. The majority of very wealthy people pay very
00:45:17
little in tax relative to their income or increase corporate taxes. And what's the answer folk folks? All of the
00:45:24
[ __ ] above. Yeah. But nobody they they talked about it this week, Trump people, and then they just have been
00:45:31
indicating no taxes on rich people. Well, when I when we interviewed leader
00:45:37
Jeff, I think there's an opportunity for the Democrats to say we're the adults in the room. We're going to have to means
00:45:43
test social security extra wish and Scott Galloway should not get social security. It's called a
00:45:48
social security tax, meaning you pay into it, it might not get it back. It might it's for the the better common
00:45:53
good. It's not called the social security pension fund. We are going to have to figure out a way to get our medic our medical costs from $13,000 a
00:46:00
person down to 6,500. We're going to do that by lowering the age eligibility of Medicaid and Medicare which do a great
00:46:05
job until we have nationalized healthcare. We're going to have to cut military spending at some point or make it more efficient. And we're going to
00:46:12
have to announce that we are going to put $40 billion a year, $7,000 a year in
00:46:18
every baby's 401k that they don't have access till they're 65 and announce that we are doing away with all social
00:46:23
security in 65 years. And then in 30 years, interest rates will come down as people see a light at the end of the
00:46:28
tunnel where we get to do away with this $ 1.3 trillion and growing tax on young people. But nobody wants to have a
00:46:34
[ __ ] is running for president. That's a really nice I like all that. Well, but the Democrats have an opportunity here
00:46:41
because the reality is the swing voters in every election that determines the president. It's not based on transgender
00:46:46
rights. It's not based on Ukraine. As much as as important as those issues are, they don't swing elections. What
00:46:52
swings elections is people in their 30s who are moderates who basically vote on who they think will give them the best
00:46:58
prospects to establish economic security and have a reasonable life. And it swings back and forth. It's a swing
00:47:04
issue. And over the last 40 years, Democratic administrations have created 40 million jobs. Republicans have
00:47:10
created 1 million. Democrats need to seize. We're the adults in the room. We have to have an honest hard conversation
00:47:18
around our deficits and our fiscal and monetary policy because this is not sustainable. And you know what? People
00:47:23
will respect it. And then when I ask leader Jeff, what they say is, "Well, at some point we're going to have that conversation." At some at some point
00:47:29
tomorrow needs to be today. I think I think citizens are ready for this conversation. No, today. Yesterday. I
00:47:37
agree. I think you need to run for president. As Ed said, apparently Ed was telling you should run for president. That's That's a very good You should You
00:47:43
should be in more involved in politics, Scott. I think you should. Anyway, I'll note also Alphabet, by the way, Tesla we
00:47:49
think is is in in the crapper. Um I'll note, by the way, I just want I just want to I've been doing research. You
00:47:54
blew my mind with the notion of combining Tesla, XAI, and
00:48:00
SpaceX, you know, and I'm I'm just like that has totally blown my mind about it.
00:48:06
As long as you attribute it to me, just attribute it. Don't I I I do. that the idea of him merging all of those
00:48:12
companies like I can't wrap my head around what that would be. He's got to he's got it's the only move. It's the
00:48:17
only move is the only move. It's a move and he would do it. That's the two things I I knowing him I don't know him
00:48:24
well anymore but knowing him as I had known him and it's the move. It's the jazz hands move of all time. It'll be
00:48:30
loud noisy. It'll be what a genius. Here's the last thing I'm going to say about this. All you people that were go
00:48:36
were like slathering like over Elon when he was visiting Congress and prot we all
00:48:42
love Doge. You don't all love Doge. You just you you are the Republicans should
00:48:47
be embarrassed for all the all the kissasserie they did to this guy um and what he was doing and not and and
00:48:53
abregating their responsibilities as legislators. Just handing it over to this guy and saying you fix it was the
00:49:00
most irresponsible thing. And someday there is going to be a reckoning at some point and you are not going to be look
00:49:07
you have not you've not bathed yourself in any kind of glory. You bathed yourself in embarrassment and suckup. So
00:49:13
that to me is really um the the lesson here. We'll see where it goes. But you
00:49:18
know I see why Donald Trump did it. The rest of you are grotesque. So is Donald Trump. But anyway, I'll note Alphabet
00:49:24
earnings are coming after we record. So, we don't know what's going to happen and or anything they might say about uh the the case that they both cases they've
00:49:31
lost, but we'll discuss next week cuz they're really at a crossroads. Google certainly is. All right, Scott, let's go
00:49:36
on a quick break. When we come back, we'll talk about Trump trying to calm the markets after his own comments
00:49:41
created chaos once again. Scott, we're back. It's another whiplash week on Wall
00:49:47
Street. President Trump's attacks on the Fed chair uh Jerome Powell, calling him a major loser and criticizing his
00:49:52
policies rattled the market earlier this week, triggering a major selloff of stocks and bonds. Uh Trump later said he
00:49:57
had no intention of firing Powell. By the way, he can't. It's very hard to do so. So, it doesn't matter what he
00:50:03
thinks. He also indicated some easing of tariff tension with China, although China uh has sort of pushed back on
00:50:10
that. Comments did still fuel a market rebound. But as of Thursday morning, China is calling any reports of tariff
00:50:16
talks quote baseless rumors directly aimed at Trump there, sending the Dow down briefly, although the S&P 500 has
00:50:23
been staying steady once the again the markets uh seem to have spooked Trump um
00:50:29
as they should. Uh he met with CEOs of Target, Walmart, and Home Depot on
00:50:34
Monday. I was interesting Amazon wasn't there, but who reportedly warned about tariffs leading to price surges and
00:50:39
empty shelves within weeks. a dozen states also sued to block Trump's tariff, arguing he doesn't have the
00:50:45
authority to impose them. Even though he says he's not firing Powell, he's been undermining him. He's trying to blame,
00:50:50
he's going to blame him for all this with the attacks. Uh he continues to act like he has some sort of control over
00:50:56
this. Um let's talk about that for a minute. Well, actually, let me go through everything. And with China,
00:51:02
Trump said this week that tariffs on Chinese goods will come down substantially, but won't be zero. And that the US, they weren't before. And
00:51:08
the US and China are actively talking, which I said China denies. One White House senior official told the Wall
00:51:14
Street Journal that China tariffs would likely get reduced any roughly between 50 and 65%. Another Trump blink seems
00:51:20
imminent. Um again, Scott Bessant and Elon Musk got in a fight. I think it's it's sort of in our rearview mirror.
00:51:26
Scott Bessant won with the IRS pick. Um this kind of chaos is just in insane. It
00:51:33
seems like he's just shooting himself in the foot over and over again and then pretending declaring victory when he he
00:51:39
goes back on the stupid thing he did. Let's hear what you think about this, Scott Galloway. Well, the only two
00:51:46
things you have to remember in a negotiation are not to make it emotional, not to have it be a win-lose,
00:51:52
and to always show a credible willingness to walk away. This guy gets an F on each of
00:51:59
those. He's insulted them. His vice president has called them peasants. He makes it emotional. He pisses off.
00:52:06
People are human. If I'm a Canadian, I don't want to work with you. I'm willing to sacrifice my own economic prosperity.
00:52:12
Travel's down. Everything's down. You want to talk about and I was thinking about it today. Bill Aman on an
00:52:18
unrelated note. Bill Aman came out with this tweet that sent Herz stock up a
00:52:24
100% and he said he'd been aggregating a stake for a long time and he said that
00:52:29
because of these tariffs the value of Hertz's automobile fleet is it's a 14
00:52:36
billion fleet or 12 billion fleet the cost of cars is going to go up so much because of these tariffs that it's an un
00:52:43
that it's an underappreciated asset in the sense that their their Herz fleet is now worth 1.2 2 billion more. And I'm
00:52:50
like, this is the ultimate interpretive dance because one, that's like saying my
00:52:55
liver and my lungs are more valuable than than they are to me. Well, I'm sort of fond of them. Like, how are you going
00:53:01
to harvest unless Herz announces it's selling its autofleet, which they're not going to. Well, they sell some of it.
00:53:07
They do. They do have a division that sells cars. Yeah, but they have a division that buys cars. Yes, that's correct. So, so it should be a net
00:53:14
neutral, right? actually a net negative be because new cars will be more those costs will be more than the increase in
00:53:20
the value of the used cars you sell. And then the counterveilling force of this what I'll call gymnastics and
00:53:26
interpretive dance to try and turn chicken [ __ ] into chicken salad is that the majority of auto the automobile
00:53:33
rental market is based on tourism and tourism is absolutely crashing. And
00:53:38
let's just talk about reality here as we're trying to boost the manufacturing sector that employs 11 million people.
00:53:45
Has anyone noticed while we were sleeping that tourism is [ __ ] crashing and also employs 12 million
00:53:52
people? So all of this interpretive dance around these sickop fans trying to
00:53:57
either pump a stock they have an activist uh position in or trying to claim that this guy's playing 40 chess.
00:54:04
Just can't look at data. Right. And and also back to Trump, he's been very I
00:54:11
like that he turned on Blackman the way I had. But go ahead. He's been talk. I mean, it's like I would describe the day
00:54:17
he announced that is remember when you go to interpretive dance, you look at modern art and you're like, "Oh, you don't want you want to be cool." And you want to say, "Oh, it's beautiful." And
00:54:23
then you look at the next person, you're like, "This makes no [ __ ] sense." Yeah. I mean, this is his announcement that they have this undervalued asset is
00:54:30
really modern art/interpretive. Also, may I note they have a lot of Teslas that nobody wants to rent. They did this
00:54:35
whole remember they have they have tons of Teslas that when's the last time you rent it's a shitty business in
00:54:41
structural I agree but I'm just saying they whack deal every time they try to give me one I'm like no I shall not and
00:54:46
apparently nobody wants to rent a Tesla anyways it speaks to his brand to Bill
00:54:52
Aman's brand that he puts out a tweet of an insane thesis that makes no sense if you actually look at the data well the
00:54:59
stock doubled you got to give it to him the guy's brand clearly still means something in the market but back to back
00:55:04
to Trump highly emotional creating enemies and agit where he doesn't need to. That will only reduce our negotiating leverage when people will
00:55:11
put their own ego now like him ahead of actual prosperity and fidelity to their stakeholders and to citizens and to
00:55:18
their economy. And two, a credible willingness to walk away. He imposes a
00:55:23
145% tariff and then hours later says, "Yeah, that the tariffs on Chinese goods
00:55:30
will come down substantially but won't be zero." Then why the [ __ ] did you go to 145%.
00:55:36
Mhm. This guy has he is competing against people who are willing to starve
00:55:42
millions of their own people and he thinks he's going to intimidate them with 145. I meant no I it but they're
00:55:48
going to come down. They're going to do you're about we're about to enter the stage where they try to figure out a way
00:55:54
right to basically somehow put lipstick on a peg here and call victory and stop
00:56:00
all this nonsense. The tariffs are going to be remarkably similar to what they
00:56:06
did what they were before all of this nonsense. But you're going to have all these people trying to spin how it's
00:56:11
some sort of great deals. They're coming to me for deals. They're trying to kiss my ass. That whole thing. Oh, stop you
00:56:18
sad pathetic. All we have done here is massively erode brand America. It's gone
00:56:25
from freedom, generosity, military might, prosperity, risk aggressiveness,
00:56:30
opportunity, rule of law to toxic uncertainty. And that that brand does
00:56:35
not command margins. It commands. So what does he do? Okay, you look first of all, Besson's trying to affect him
00:56:42
obviously and he seems to have gained a bit of an upper hand against the two clown the clown show of Howard uh
00:56:48
whatever his name is and Elon and there was a there was an altercation a very loud altercation between Besset and Musk
00:56:54
over IRS head who which the Treasury Secretary should pick FYI not Elon Musk.
00:57:01
Um he was trying to pick a sickopant to take over the IRS where our money comes from. Um, and uh, what would you do if
00:57:08
you were Bessant right now? Like what besides leave like immediately? What
00:57:13
would you do? Well, he's kind of already done it. He clearly leaked that that interaction and he's saying, "I'm on top
00:57:20
and I've had it with this guy." Yeah. Uh, Trump is scared. He's seen as Bisen
00:57:25
is seen as like a sickopant, but is potentially the guy in the Oval Office that will take stuff off his desk so he
00:57:32
doesn't even see it. That he is sort of an adult in the room. He has a reputation versus Lutnik that's just
00:57:37
considered, you know, a clown that is now engaged in full-scale corruption
00:57:43
with his son starting a crypto company. Jesus Christ. I know the crypto stuff.
00:57:49
Just when you thought this couldn't get any more corrupt, Vent is seen as a very credible guy and behind the scenes is
00:57:55
basically saying, "Okay, I'm gonna do my best here. I know this is [ __ ] batshit crazy. This is we know where
00:58:01
this goes." Blink blink blink. Try and try and run Vaseline over the lens of
00:58:08
incompetence here and pretend this is a victory. I never made this mistake and I'm not. The tariffs are going to be
00:58:14
look remarkably similar to where they were before. Mhm. And all that's happened is we have eroded our image
00:58:20
around the world to the detriment of our So what would you do? You're sitting in the Oval Office. He has you and you for some reason go and he listen he's
00:58:27
listening to you. What would you say to Trump to do right now besides if I if he would listen to me? stop taking whatever
00:58:33
you're taking that you I would I would immediately I would pretend to have discussions declare victory and leave
00:58:39
just like literally find a country that's willing to do something for you
00:58:45
come up with a bunch of fake reasons for why this was uh anything but what it was which was insanely damaging and
00:58:51
literally get back to the economy and try and repair as many of our alliances as possible and go on and go on the
00:58:59
mother of all behind the scenes apology tours because this is going to start
00:59:05
showing up in earnings calls. I think China might say, "Oh, you want to go back to where we were? [ __ ] you. You've
00:59:12
been out banging hookers and doing blow and ignoring our children. Now you've decided you want to be married again. Sorry, boss." Mhm. Sorry. I'll be at my
00:59:19
sisters. It's a nice metaphor, isn't it? Yeah. Anyways, speaking for a friend speaking for I think I I don't know. I
00:59:25
think the Chinese and the and the Europeans are now like, "Huh, what what a life without these obnoxious Americans
00:59:31
being 100%." Like, "Hey, I think a divorce sounds great." Like, I I'm sure
00:59:37
that's what they're thinking. Do you know what I mean? Like, my tennis bro is texting me. Wait a minute. Just a minute
00:59:43
here. My friends are going to St. Barts. That sounds pretty good. He needs to What an
00:59:49
idiot. What a [ __ ] The thing is if he did a couple of things, all his stupid followers would would like clap clap
00:59:55
like the they'll they'll pretend that it was genius and 40 chess. So move to that
01:00:00
part of the program as soon as possible, right? You you I mean you you literally have to put the fire out here. You have
01:00:07
to put the fire out. But I don't know if he's But think about he's been listening to Wall Street. Wall Street is the one
01:00:14
that speaks with the the adult in the room is the tenure. We've been saying that. I look I don't I I'm glad Bent is
01:00:19
there but I do think the raft of them I think we're about I think we're on the cusp of a few of them being fired should
01:00:27
go what a thirsty well not even he is they most of them should go but I think
01:00:32
he's going to try and blame a lot of this on incompetence and saying you know I got some bad information these folks
01:00:38
did the wrong thing I've moved them out he's going to he's going to throw a bunch of them as a as a you know into
01:00:44
the volcano if you will right yeah Um, yeah, but they're certainly not going to tax the rich. That's Look, a step back
01:00:50
from the wrong direction is a step in the right direction. So, if you were really if you were really advising the
01:00:56
guy, you'd say as elegantly, as gracefully, and as respectfully as possible, you need to stop this [ __ ]
01:01:01
really, really quickly and behind the scenes say, call Prime Minister Carney
01:01:07
and say, congratulations, and by the way, you're a fantastic friend. A lot of
01:01:13
this was posturing. I want to apologize to you personally. What can we do? This makes this better for both of us. He all
01:01:19
he needs is affirmation. It's so sad. It's such a sad sad state at this age in
01:01:24
his life that this is all he needs. But here we are. Anyway, uh Scott, one more
01:01:29
quick break. We'll be back for predictions. Okay, Scott, let's hear our predictions. You've kind of let loose a few during the show here, but well, um
01:01:37
some good ones. I This is This is always dangerous, but I'm going to do it anyways. Alphabet's reporting. We're
01:01:42
talking about Thursday. Alphabet's reporting at the end of the day and I think rumors of Alphabet's struggles
01:01:48
have been greatly exaggerated. I still think while chat GPT is ascending dramatically and presents does present
01:01:55
an existential threat to search, YouTube is just an absolute juggernaut and you
01:02:01
talk about Whimo. I just think this company is so wellrun and Google continues to be the largest toll booth
01:02:07
in the history of mankind. I think that they're going to beat and and I I think
01:02:12
they're going to have I think they're going to beat expectations this afternoon because I think some of those expectations have been beaten down. And
01:02:18
then I another one I think in the next 12 to 24 months we're going to see a a spin prophylactically in big tech for
01:02:24
the first time. And then I pick one. Pick one. I'm going to pick we'll each pick one. I say YouTube. Well, maybe the
01:02:32
advertising. I think it's the ad business. You're right. YouTube. I'm sorry. Ad business alphabet. We would like YouTube, but is probably the
01:02:39
business. And then the most interesting one, and this is I'm putting words in your mouth or taking your words, and I
01:02:45
will credit you. Tesla right now has um I think it's
01:02:50
like a $750 billion market cap, right? And when you think about if you when
01:02:58
you're essentially when you're doing acquisitions or mergers, you want to do them when your stock it's god it's 86
01:03:03
billion. You want to do mergers when you have a really strong valuation because
01:03:09
you end up Steve Casease sold AOL when he knew there was no way it was going to be worth a fraction of that in a matter
01:03:15
of months or years. So that's when you sell your company. The problem is no one will buy Tesla for $85 billion except
01:03:26
XAI, right? Or SpaceX. Yeah. And so your idea is so interesting because what he
01:03:32
could try to do is say okay I I Jazz hands will only last so long. At some
01:03:38
point people start you know saying okay enough is enough here folks. That $800
01:03:43
billion market cap is going to come way down. So the idea of taking a large revenue base which you get from an
01:03:49
automobile company putting on top of it the impression and the valuation of AI with the data set of X and also maybe
01:03:58
some of the gross and and RZ and unbelievable coolness of SpaceX which would that would be a lot. Maybe it
01:04:04
keeps that independent. But I think your idea is really insightful that the way
01:04:09
to maintain that ridiculous $800 billion valuation is to cash it in now and he'll
01:04:15
have maintain a huge stake and potentially do kind of one one that's
01:04:22
going to five plus one plus one equals four or five. I think you're right. I think there's going to be I think Tesla
01:04:29
is going to be folded in to an AI company or an AI company that makes I
01:04:35
just I I love that self-driving because when you said it the moment you said it I thought that would be really smart
01:04:42
that I knew from a shareholder perspective. Yeah, it makes sense and it's also like him. It's very like him. He's hiding very bold and he has control
01:04:49
of his board, right? Yeah. He doesn't care. He'll tell the board this is what we're doing. Yeah. He's not scared of
01:04:54
shareholder losses. Well, I wonder if he'll take it private then. There's not a lot of revenue in any of these things.
01:04:59
Can't take it private. No one will fund it. No one will. There's not a lot of revenue. Well, you know, I don't think
01:05:05
the Starlink party I mean SpaceX is part of it. They they have they don't my guess they don't they don't make that
01:05:11
much money. They probably um and they've been hurt themselves, but I think it's they're very expensive to run that
01:05:17
thing. And I I I'd love to actual see the numbers from that. If someone wants to send them to me, I'd love to see
01:05:23
them. I don't think they're wildly profitable by any stretch of the imagination, but you know, and finally,
01:05:29
Cara, the prediction u the the geopolitical prediction. So, Donald
01:05:34
Trump is having a huge impact globally, including what leaders are elected or
01:05:39
not elected, but it wasn't the impact he thought he was going to have uh in the Canadian elections for
01:05:46
uh prime minister. My prediction is that Mark Carney of the Liberal Party is going to prevail and that is after
01:05:52
overcoming a 25 point deficit coming into the year. And why is the Liberal
01:06:00
Party going to prevail here? Donald Trump, he has so pissed off Canada and
01:06:07
uh the Conservative Party u nominee for prime minister is aligned with Trump and
01:06:12
considered a more Trumpian candidate and boy has Canada turned off Trump. So in
01:06:19
some Trump has elected in my opinion or will elect uh Prime Minister Mark Carney
01:06:25
of the Liberal Party and has swung the Canadian elections 25 points because of
01:06:32
how repellent they find Donald Trump and the Conservative party has been contaminated by Trump. So he is getting
01:06:40
world leaders elected just not the world leaders that everyone uh had anticipated or certainly not the ones he had hoped
01:06:46
for. In some I think the underdog here Mark Carney is about to be the next
01:06:51
prime minister of Canada um solely because of the unpopularity of our American president. Do you have a
01:06:57
prediction? I don't. I don't. I predict I'm going to go to White House correspondent dinner parties this
01:07:03
weekend. Oh, I was going to go but I'm not in town. Why not? I got asked by a friend of yours to be their date and I
01:07:08
was really excited. She's much She's totally cool. I won't say who it is, but a friend of mine had asked you to be.
01:07:14
Oh, a friend of ours. Oh, okay. Oh, yeah. You should have. Oh, I know who it is. Um, uh, you should have come. Emily
01:07:20
Ratikowski. Just saying. It's not Emily, right? Yeah, there's a bunch. There's every every single media company like Axios is having something. Substack and
01:07:29
so much fun. Substack, but the parties are fun. I hate I hate to say it. Um, parties are fun. Uh, I don't go to the
01:07:36
event itself ever, but there's like NBC's having a party after the French Embassy. The NBC party. No, it's fun.
01:07:43
It's fun. I'm tell I love that French embassy. Um, it's so ridiculous. It's so like end times kind of partying kind of
01:07:50
stuff. I was wrong. I don't want to go. You have literally said nothing that sounds remotely. Um, let me think. Oh,
01:07:56
uh, UTA has a really cool party. It's really fun. Oh, I had that. You just take ariththrami. Oh, wait. No, I'm
01:08:01
sorry. UTA. No, they're fun. They're fun. They're fun parties. They are indeed fun parties. And and my friend
01:08:06
Tammy had it has the famous White House correspondents brunch. I'm convinced Tammy's running the CIA. She's running
01:08:12
the She's so quiet. And then she'll pop up and be like, the the president of Gabone wants to meet with you to talk
01:08:18
about a shipping lane deal. And I'm like, what the [ __ ] Who is this woman? She's great. She has a famous brunch.
01:08:26
That's really fun. That's really fun. Actually, where does she get all her power? I don't She's everywhere. She's
01:08:31
everywhere. She I lit I couldn't get into I couldn't get my visa done. I couldn't get my passport. She's like give me five minutes and all of a sudden
01:08:37
like the the ambassador to Britain is calling me and sending me a car with my passport. It's it's like who is this
01:08:44
woman? Tammy had it is the queen of white house correspondence weekend. She is she's Michael Clayton. She's a total
01:08:51
fixer. Seriously, she's also lovely. May I say she brings the best toys and went to the
01:08:58
She's from Pittsburgh. She was in Pittsburgh this weekend. She's the best. We love that. Tammy Hadad. Anyway, um uh
01:09:03
we So I wish you were here. We'd have a good time. I met Tammy Hatad before I met you. We were doing a conference
01:09:09
together. I don't think I'd ever met or I met you for a podcast, but we went to I think it was South by Southwest, but I
01:09:14
showed up and this woman came up to me and she was so nice and so in my face. I'm like, "Who is this very friendly woman?" And I said, and I saw I saw it
01:09:22
was so adorable in the back. It was in the makeup room. There was this little adorable boy asleep on the couch. And
01:09:29
I'm like, I should probably pregame with Cara. And they go, where is she? And she goes, and then they pointed at the little boy. You were sleeping on the
01:09:35
couch. You look like a nine-year-old boy. It was so loud. I'm like, she can
01:09:42
sleep here. And that was my one of my first images of you where you were just on a couch sleeping with hundreds of
01:09:48
people around you. I love to sleep. I'm such a good sleeper. You're like Winston Churchill. I can sleep anywhere. It's so
01:09:54
true. Anyway, Tammy's great. and she's she's she's very tall and she's got this great shock of white hair and it's she's
01:10:00
fantastic. She looks fantastic lady. Anyway, Tammy, good luck this weekend. I will see you at the party. We want to
01:10:06
hear from you. Uh send us your questions about business tech or whatever's on your mind. Go to nymag.com/pivot to submit a question for
01:10:13
the show or call 85551 pivot. Elsewhere in the Scott and Cara universe, this week on ProfitG
01:10:18
Markets, Scott who's on a tear, uh spoke with Ryan Peterson, the founder and CEO of Flexport, who is was the he replaced
01:10:26
someone that he brought in from Amazon. It's a leader in global supply chain management about the impact of tariffs.
01:10:31
What a great person to to to tap. Let's listen. If they don't change anything and this 145% duty sticks on China,
01:10:37
it'll it'll take out like mass bankruptcies, you're talking like 80% of small business that buys from China will
01:10:44
just die. and millions of employees will be unemployed. I mean, it's sort of why I'm like, they obviously have to back
01:10:49
off the trade. Like, they can't be that they just do that. I don't believe that they're that crazy. That's a great idea
01:10:55
to do an interview there, Scott. That's great. Really interesting. I love supply chain stuff. I I invested, one of my
01:11:01
best investments of the last few years was I invested in a company called Zero 100, which was supply chain research. I
01:11:06
I think I think if you look at dull investments, that's where you make your big bucks, isn't it? Dullish. Quick lesson. Quick lesson. When you're
01:11:14
thinking about how to allocate and invest your most precious assets, your financial capital, and even more precious, your human capital, it's very
01:11:20
easy. ROI on the X side of the scale, sex appeal on the uh uh on the X-axis.
01:11:28
It essentially the sexier the business, the lower the ROI. If someone wants you to invest in a members club downtown for
01:11:35
artists and creatives, join the club. Do not invest. If someone wants you to invest in software as a service for
01:11:41
scheduling healthcare maintenance workers, if it sounds so [ __ ] awful you wouldn't want to work there, that's where you write a check. Okay? Because
01:11:48
anything that's sexy is overinvested, which drives down returns. The less sexy, the more return on your invested
01:11:54
capital. Also, think about that in terms of your career. If if you're going for something sexy, you better get bright
01:12:00
green lights that you're in the top 1%. Otherwise, find something boring. And this is what creates passion, mastery,
01:12:05
artisansship, and be able to take care of your kids and your parents. I love that, Scott. So, don't invest in Scott
01:12:11
Gallery because he's dead sexy. Hello, ladies. Okay, that's the show. Thanks for listening to Pivot and be sure to
01:12:16
like and subscribe to our YouTube channel. We'll be back next week. Scott, read us out. Today's show was produced
01:12:22
by Larara Neman, Zoe Marcus, and Taylor Griffin. Ernie or Todd engineered this episode. Jim M edited the video. Thanks
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also to Jubos, Miss Searo, and Dan Shalon. Nishak Kurwa is Fox Media's executive producer podcast. Make sure
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you subscribe to the show wherever you listen to podcast. Thanks for listening to Pivot from New York Magazine and Vox Media. You can subscribe to the magazine
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at nymag.com/pod. We'll be back next week for another breakdown of all things tech
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and business.
