Pivot - 2018's biggest stories and 2019 predictions

Episode Date: December 28, 2018

Kara and Scott talk about some of the biggest stories in tech and business of the past year. They also make some big predictions for 2019.  Learn more about your ad choices. Visit podcastchoices.com/adchoices

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And I'm Scott Galloway. And we're just about through with 2018. On the show, we usually break down the big news stories of the week, but this week, we're going to take on the whole year. Scott, let's talk about all kinds of issues for 2018. Let's. So let's start with the top, which was obviously Facebook and Cambridge Analytica and the whole Facebook thing, right? Yeah.

Would you say that was the top story this year? Yeah, I think so. I think that – no doubt about it. The notion that this might lead to the breakup in the beginning of 2018. So I do a series of predictions. I get a lot of them wrong, but they're fun to talk about. But one of the predictions was that the breakup of big tech begins in 2018. And I'm curious to hear that. Do you think that's – would you say that's correct or incorrect that the breakup of big tech has begun? I think the contemplation about the strength of big tech and whether they should be regulated has begun. I don't think there's going to be any breakup. So you think the immunity

that'll kick in here or the blowback will deform it'll take will be regulation, not antitrust? Yes. Yeah. I don't know. I don't know. I think that certain companies antitrust is one, but you're only going to have one shot at these companies. And so which company do you shoot out? Which one is the right one? Is it Amazon? Is it Google? Is it, you know, Google hasn't been shot at yet by any of the regulators, if you think about it. And they've been around much do you shoot out which one is the right one? Is it Amazon? Is it Google? Is it, you know, Google hasn't been shot yet by any of the regulators, if you think about it. And they've been around much longer than Facebook and other companies.

Yeah, they're the luckiest, though. I mean, they have the ultimate heat shield in the Zuck and Ms. Sandberg. Facebook's the best thing that happened to them because they're probably more frightening. Right. They would be, so let's talk a little bit about Google and Facebook.

And I want to propose a solution. You tell me why this does or doesn't work. But one of the scariest things about our economy right now is the fastest growing parts of our economy are, in tech at least, are search, cloud, mobile, hardware, and social. And you can't start companies in those industries because there's a big dominant player or a duopoly. So we have innovation being cauterized. I feel this is the era of non-innovation. So the notion of breaking them up, let's start with Google. 93% of intention to action is controlled by one company,

which I think is a bad idea. Explain intention to action, please. Okay. I type in how to overthrow my government. It's the first piece of content I get a voter registration form or instructions on how to build a dirty bomb? And I'm not suggesting we put search back in a bottle, but is it cool or are we down with one company controlling 93% of that process? What's the most – I'm going to get existential here. What's the most important process? Is it when a solar flare comes off the sun and heats us? Yeah, that's pretty important.

Is it the moment of life or conception? A lot of dispute over that, that's pretty important. Is it the moment of life or conception, a lot of dispute over that, that's pretty important. But intention to action, three billion times a day, that's a pretty important process, right? Absolutely. And we don't know how they're figuring it out, and they don't want to tell us, and one company controls 93% of it. So the question is, well, how do you break up that concentration? And my answer here, and I want to hear your feedback, is that you spin, you force a breakup of YouTube. And in the first corporate strategy meeting of YouTube, they decide that the way they all get homes in the Hamptons or Napa or whatever it is they do with their stock option appreciation is they start doing text-based search. And in the first corporate meeting of Google, Sons, YouTube, they decide to start doing video search because they're no longer coordinating.

And we have two viable players overnight. And I think that that's good for the world, good for the planet, good for the economy. Right. These breakups. It is interesting. I was thinking this on the subway coming down here. I was thinking about Amazon, for example. I was trying to think what would get Amazon? Obviously, having all this information about what people buy and sell and what things of other people's that they buy and sell. So what of other people's that they buy and sell. So what they have a proctoring, all the brands sort of pushing back on Amazon. Amazon knows what everybody buys and sells, so it could start to understand what businesses are good to

invest in or not. So they have extra data information that allows them to facilitate dominance in other areas. And so that's, is that, is that antitrust? Is that, I was just thinking, wow, they really do know how much toilet paper sells and what kind and where. They have more information than Walmart ever did because they know about everybody's toilet paper sales. And so it's just, I was just thinking, is that an undue advantage? Is that actionable? Is that something people should be worried about? If they are one of the bigger sellers, they can of course make the argument. They're one of the argument there's so much retail going on. That's their argument.

They're only 2% of retail or whatever the number they always throw out. But it's a really interesting question. You don't just sell things, you have the data about things selling. And so that was interesting. And the same thing with Google. They don't just yield the search results.

They know what everybody is searching on. I've always called Google the database of human intentions. I mean, if you go to Google, people don And so you have this, I've always called Google the database of human intentions. I mean, if you go to Google and people don't realize you go there, you used to go there and used to see words coming across the Google system. They used to have, they have a ticker tape essentially that went by or they sometimes have it on stairs and things like that. And you'd see things like, like horses, condoms, this, you'd be like, what are people searching

for? Like you were, I would sit there and try to figure out what the intention was and you just realize that it's all of human intention and which is hard to quantify but they certainly can again they have undue advantage as yelp has said as other people have said over what people knowing paths are made by walking they know where everybody's walking and i think that's that to me is a really interesting like i'm not a lawyer but that's a really who if everyone knows where everyone's going the companies that know where everybody's walking. And I think that to me is a really interesting, like I'm not a lawyer, but that's a really, if everyone knows where everyone's going, the companies that know where everybody's going

are the most powerful purveyors of anything. Yeah, if you own the platform, you shouldn't be competing with the downstream providers. It's like owning all the railroads and you get to see not only what's on the rails, but where it's going, the profitability of it. So when you see that shipping jackets to Minnesota is just a great business, high margin, and then you start opening jacket stores and then

maybe not providing access to the same communication or same transportation of those jackets as you were before, that the platform shouldn't be competing. In terms of legality, the current antitrust law does not support the breakup of these companies because it's based – That's right. It's kind of the Bork consumer test. And how do you decide – how do you say that something is creating consumer harm when it's free? And I would argue that with Google and Facebook, we've conflated the end consumer with the actual consumer. I think the consumers here are the advertisers. And there's real consumer harm because P&G and Unilever have no choice.

And as a result, they're paying unfair or undue rents. No marketer has any choice. They have to be there, right? 100%. I mean, they're all – I think most of them are really upset by what's going on, but they cannot reduce their advertising. Because television doesn't work anymore or doesn't have the same efficacy. And all of that, the analysts have broken out their online growth from their offline growth.

And their online growth is much more important. And the only way they can drive online growth is going to one or two players. And that's Facebook or Google. Amazon is more frightening in the sense that it can move markets without actually competing. It can take the value of any consumer stock down 30%, 30 days and 30 press releases because everyone's just so shit scared of them. And also this very strange dynamic where they have access to infinitely cheap capital. We've never had a company get to be

the most valuable company in the world, which they were for a hot minute two weeks ago, without ever having to achieve meaningful profitability, which creates this dynamic that no company can compete with. The only company that's sort of similar is Netflix. If you really look at Netflix financials, you could argue, all right,

they're outspending everybody without this demand to be profitable. And you might say, well, that's fine. That's great for the consumer. Long-term, I don't think it is because we don't know what we're missing. Try and start an e-commerce company right now. It's nearly impossible to get an e-commerce company funded right now. And everyone gets excited about Away and Casper. I think they're all sort of, they all kind of vary between fucked and semi-fucked. And we all want to think that they're going to be great. It's very hard for them to break through. They're too big that others fail.

It's not too big to fail. It's too big. They're so dominant. They're so dominant. The old Brandesian notion of antitrust was based on channel power. Alina Khan kind of wrote the seminal piece, this 27-year-old law student who's shaking up antitrust. But, you know, anti-competitive behavior across all of them, too dominant in every market, cauterizing. And they don't compete with each other.

They mostly stay in their swim lanes, although you're starting to see them bump up a little bit against each other. But it feels like there's a little bit of an— I liken it to semi-trucks running down the highway and no one can get by, like five of them or three of them or whatever. Yeah, you end up in the tire well. Yeah. It's like, what happened to that company? You can't go around any of them at all.

And the media companies can't go around them. E-commerce companies can't go around them. And one of my themes for this year, I think, over the next year is going to be this, where does innovation come from and what's in its way? And it seems to me these big companies are in the way of innovation. A hundred percent. Four things are in their way. Amazon, Apple, Facebook, and Google. Well, Apple, would you put Apple in there? Let's talk about that. Apple, the first trillion dollar company, then was pushed aside and that.

Yeah. One of the predictions was that, and I've been making this prediction for four years, was that Amazon would become the most valuable company in the world and become more valuable than Apple. And it happened for about three minutes a couple weeks ago. But look at Apple. Apple pre-installed on a billion iOS devices an absolute horrible music service. It's not a good music service. Spotify is far superior. But two quarters ago, Apple Music started growing faster in the U.S. than Spotify because it's preloaded.

And that's the whole – I don't think that's just it. My kid just started using it because he liked it better. Like Apple Music? He did. They all are sifting to it. He told me. He's like, all the kids are going to Apple Music.

I was like, what? From Spotify? There's no way. He doesn't use Spotify Discovery that you like Apple Music? I'm just telling you. That's just blowing my world up. But you have this advantage where if you're already pre-installed on everything and then you can charge a 30% tax to Spotify and then you're slow getting them the tools they need to update it for the iOS,

for the App Store, should companies be in that business? When they own the access, should they be going vertical and competing with these guys? And try and start a music streaming company right now. It's near impossible. It's the giant. It's the land of the giants. Well, and the data is terrible, too. We've talked about this metric before,

but there were twice as many new businesses being formed every day in the Carter administration than there is now. And there's this false notion that we live in an era of innovation. No, we don't. We live in an era of non-innovation. I agree with you. Wither innovation. It's coming from China.

It's coming from elsewhere. So that's your notion. If I turned it back to you and said, if your theme is where is innovation coming from, innovation. It's coming from China. It's coming from elsewhere. So that's your notion. If I turn it back to you and said, if your theme is where is innovation coming from, you think it's coming from China? I think it's coming from not here. Yeah, not here.

Not here. Not invented here. And we invented everything. All right. We're going to take a quick break. Stay with us. Coming up next, we'll hear an advertiser segment from Microsoft Azure about digital mapping. from Microsoft Azure about digital mapping.

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We're talking about sort of predictions for 2018, trying to wrap up and some things that Scott predicted and what did or did not come true. One of the things you talked about a lot, Scott, was tech spins, that there was going to be a spin of AWS, Amazon's AWS. There was going to be a spin of AWS, Amazon's AWS. There was going to be a spin of Instagram. There haven't been any spins, Scott. Yeah, it's coming.

All right. I think AWS, I think it'll be done prophylactically. We talk about this, and on the spin, it'll be one of the 10 most valuable companies in the world. I asked the head of AWS,

and he said he wasn't looking for a spin. What's he going to say? Well, he really was quite definitive. Would he? He said there's't looking for a spin. What's he going to say? He really was quite definitive. Would he? He said there's no need for a spin. He'd make so much money. Yeah, but he's already wealthy beyond compare. So some behind-the-scenes gossip.

When I was on the board of the New York Times, I suggested we spin about.com because the management team had bought this thing to use it as digital earrings to accessorize an analog body. And it was growing fast. And at one point it was worth a billion dollars. I'm like, let's spin this thing. It's ridiculous. And I made a huge mistake, and that is I mentioned the spin to some of the people about it. And they were all like, great, we're going to be rich.

And I got so taken to the woodshed by everybody else that don't talk about a spin. And, of course, it ended up being worth $200 million or $300 million, and they sold it for less than they bought it. But that was – tech spins usually do really well. They look at eBay and PayPal. Instagram, I think, would be an interesting spin, although I think that's less likely. But AWS, I think, is coming down. Okay. All right.

He said no. He said no. He was pretty definitive. Andy Jassy. That's like asking a board if they support their CEO. They all say yes until the day they. Okay. All right. He said no. He said no. He was pretty definitive. Andy Jassy. That's like asking a board if they support their CEO. They all say yes until the day they fire them.

Okay. All right. So Amazon Web Services is a spin. It would be one of the biggest companies. It's the fastest growing part of that company. That's the other part is whether it should be pulled

out of that company. That's right. It would instantly become one of the 10 most valuable companies in the world with a huge multiple and it's obviously in an area that's competitive

and yet they dominate. they have been dominating. And no pure play way to play the cloud right now as an investor. Right, exactly. I mean, you can buy Microsoft, you can buy Google, you can buy... You have to crawl over a search engine, you have to crawl over a software company,

no pure play to play. Well, why doesn't Google spin off its cloud business? That's actually a really good question. Yeah, the head of it just left. They have a new head of it. Is that right? Diane Greene. Yeah, they could do it just left. They have a new head of it. Is that right? Diane Greene. Yeah.

They could do the same thing. But think about AWS. AWS is a market leader. Right. And it's growing faster. Is it growing faster? It's the market leader.

All right. They probably will spin AWS off. We'll see. He said not. I believed him. I believe whatever people tell me, Scott,

these tech people, I just believe whatever they say. Okay. So when I believe whatever people tell me, Scott, these tech people, I just believe whatever they say. Okay. So when I got right, Facebook stock peaks in 2018, and it did. And it's off 33%. And you know what actually might go after or might be the remedy for Facebook is at some point, if the stock keeps going down, is that you might see shareholders start to put – it might be capitalism that steps in here and fixes things because I think it peaked at about 215.

I think it opened today at 135 or 138. That's a big drop. It is a big drop. Okay. So where's it going? Let me give you a prediction for it. Well, I've already made the prediction. I think it's going a lot higher because I think all the headline news doesn't translate to a deceleration in business.

And the company looks, on most traditional metrics, cheap. By the way, full disclosure, I own all of big tech because I love owning monopolies and growing markets. Okay. All right. Facebook's spinning off Instagram. You see them doing that? That could cause them, give them some money. Yeah, that's probably less likely, but I think you're going to see, again, I think you're going to see a spin among big tech prophylactically. Not purchasing, not buying more things. It's kind of hard for them to buy stuff that raises any sort of DOJ attention right now. I think that there's stuff they'd like to buy. To spin out, not spin in. I think there's going to be a big spin.

What would they like to buy? That's a really interesting question. So personally, I think Netflix should buy Spotify. I think they would own subscription media if they did that. And Spotify is down about 20% from the IPO. And it would be, I think, about a 10% dilution for Netflix. Spotify has not gotten into video. Yeah, but that's

talk about peanut butter and chocolate. Yeah, that's a fair point. Oh, I like that one. Video and audio and one subscription fee and I think that would be super, super powerful. What do you like?

What do you think is that fair to an acquisition? That's a good one. I hadn't even thought of that one. No? Netflix and Spotify? No, I never thought about that. Yeah, that feels right.

I thought someone might buy Netflix. There's really few companies that have the balance sheet now. Right. Not even Disney. Right. A while ago, I thought someone would have bought it, but they didn't. No one did. Yeah.

I'm sure they were offered money. Maybe they just didn't do it. Yeah. So another one of my predictions, I thought Disney was going to be a viable competitor to Netflix. It hasn't happened. I thought Disneyflix was going to launch, but instead they're trying to figure out, it's the innovator's dilemma,

how they protect these businesses. So they're talking about these subscription-based verticals, so in sports and in kids. And they need to take a lesson from Netflix and just offer Disneyflix. So seven days early, access on the next Star Wars film, your best cabins on Disney cruises. Do you think they have the innovation

and energy to do that? I think Disney's remarkable. Okay. I think they're remarkable. The problem is they have current investors and they want to change a tire going 60 miles an hour and maintain their current profitability.

And they have to hold hands. And Bob Iger is one of the few people that has the credibility to do it and say, we're going to take profitability way down, but we're going to be in 20 million households with one recurring revenue Disney-like product. And unfortunately, it doesn't look like they're going to do it. Now, that sort of comes into your other prediction about the rundle, the revenue bundle.

Is that what you're calling it, the rundle? The rundle. It's not awful. I need something better. It sounds like something Amish people do on their wedding night. I think that's the dirtiest thing I've ever heard you say. Baby, it's rundle time. So Scott, despite the fact that you're using it as a strange sexual term, what actually is a rundle?

So it's a shitty term that means recurring revenue bundle. I need something better like brundle, but yeah, recurring revenue bundle. Okay. So there's a lesson here, and that is we as humans don't understand the pace of time, and that is we constantly underestimate it. So you go Equinox, $150 a month. I work out three times a week, so it's 12 times, $12 a workout. The reality is I work out once every six weeks. It costs me $200 to go hang out at Equinox once every six weeks.

So you want a business that's tied to the clock, and how that translates to a business model is recurring revenue. And that's why software companies and syndicated research traded a multiple of revenues and shitty companies like media that are transactional or retail, where you have to reinvent your business every 24 hours, traded a multiple of EBITDA. So I think every company that adds more than five, $10 billion in value in 2019, the fastest growing part of their business is going to be a recurring revenue. The relationship they have. Netflix is recurring revenue. Recurring revenue.

Spotify is recurring revenue. The hot thing, recurring revenue. So every business in America that's over $10 or $20 billion and wants, an example, Restoration Hardware. And Gary Friedman was considered a technological Luddite, but probably the best merchant in the last 20 years. Restoration Hardware Membership Program. Are you a member of that?

Yeah. It seems like something you would do. No. No? No, I don't know. It's $100 or $150 a year, 95% of their transaction volume. They've grown their revenues 20% or percent, but their stock is up 150 percent. So every company is now sitting looking at the board saying, how in a low growth environment do we grow our revenues 20, maybe 30 percent over the next five years, but double our stock price, which doesn't make

sense. The only way you can do that is through a different business model. And that all points to one direction. That's recurring revenue. How do we get recurring revenue? So how would we move to recurring revenue? This is the thing you need in recurring revenue. And that is you have to be like Adobe who did it. They used to sell Mac or Meteedia Director for $1,200 or $1,300, and they said, we're just going to start charging $25 a month. First off, you need real leadership because you've got to take profitability down. The second thing, unfortunately, you need that's the harder part is you need massive capital because in order to get people to commit to a long-term relationship, I think everything comes down to this. You can probably tell biology and

sex. All right. I'm waiting for this one. Go ahead. Here it comes. Let's rundle, baby. Anyways, if you—but think about it. In order to get you into a monogamous relationship, there has to be a lot on the other side. To say, I'm giving up all the rest, it's like that William Hurd movie, The Year of Living, or Eastern Promises. Well, not Eastern Promises. Whatever. Anyways, he says, William Hurd is this total mobster, and he says, I've just never met one that made me want to give up the rest. So in order to get someone to enter into a monogamous business relationship, you have to offer them a lot.

And the way you do that was just with an unbelievable offering. So Netflix, a billion dollars of content for every $1 a month. So how do we do it? Vox would need to come up with substantial capital and figure out a way to charge people a monthly fee for access to their content, put it behind a wall, take profitability way down, and pray that people start pulling out their credit cards. But on 50% of the revenue, they could have three times the value. But you have to cross the precipice and hold hands and go through the fire and be armed with a massive amount of capital to convince people to enter in to this, again, this monogamous business relationship. But not everyone has that. Like Nike, you could see that.

You'd want to buy their whole – you believe in the Nike brand, for example. Or a blank brand. Imagine – I don't know if you're having – Whole Foods could be a relationship you might want to have. For your health, right? And say – but even take Nike out. Well, Amazon would be Whole Foods, right? I'm having problems with my knee.

I'd rather go to an orthopedist that's Nike approved that maybe claims to understand more about aging athletes. I would love a Nike, a set of pre-approved ingredient branded Nike hotels that have a certain level of quality of gym. Maybe have your vapor shoes there or whatever they're called. Have concierge that's focused on fitness, and food that's just not like pre-diabetes turned into a menu. Right, got it. So I think there's opportunities. There's a series of brands that would let you say, okay, take me off the table.

I'm yours. I love you, and I'll enter into this long-term relationship. I think that's huge. I think every company, including this one, has to think about it. The Rundle is your thing. I think my prediction for the next year that we go on that we talked about is these IPOs that are going to happen. Finally, we're back in IPO land with some of these. And what do you think is the biggest?

Uber. Okay, that's the biggest. Airbnb. Does that work, though? I don't know. I mean, if Uber doesn't come out at $120 billion, do you think the markets – Uber has to come up with the ability to say we're a platform and start delivering food or finding other businesses that are more profitable. Oh, Uber Eats is becoming really quite substantive.

Yeah. Do you use Uber Eats? I do. It's interesting. It's a big – it's between them and – Caviar? Well, caviar is – no, that's not a strong player. That's owned by Twitter still.

It is owned by Twitter, yeah. Which is weird. I love it, by the way. I love caviar. But the other ones are Grubhub and was the other competitor. And then Postmates. Got it. And there's another one.

There's another one. DoorDash. There's a lot. Yeah. DoorDash, I think, is one of the bigger ones because they've got a lot of deals with the Chipotles of the world and stuff like that. So you're talking about IPOs.

We have Airbnb, Uber, Pinterest. What are supposed to be the other ones? Maybe Pinterest. I don't know. You don't think Pinterest gets out? I don't What are supposed to be the other ones? Maybe Pinterest. I don't know. You don't think Pinterest gets out? I don't know. Supposedly it's a billion

in revenue. I don't know. Yeah, it's if Condé Nast reinvented itself for a digital age. But I like that other one. Houzz. I don't know.

Houzz on Azure. We've had her. The CEO is the one who's really great. That's super impressive. So what if you had to, if you were going to buy money in the private markets right now

banking on an IPO that pops, which is your favorite? I don't know if they pop, but I think Airbnb if they execute it correctly. If they execute it correctly, if they get into like they're thinking of a travel more than travel in for content they're thinking about, which is kind of adjacent, not just the magazine, but other travel content. You could see them, if they did it right, if they did, but they're running into more competitors. That's the issue is they run right into – they start to get into planes and everything else.

That's a buzzsaw. That means they have to execute beautifully. They could potentially – Airbnb would be a decent – They are classy though. They could be a decent nominee for most innovative company of 18. Their Airbnb experiences where they merchandise – But it's not big yet. It's not big yet.

But it's growing 5,000 percent a year. Yes, that's the thing. A dollar and 50 bucks. Everything they do is well done. So I always like a company. I use their products a lot as a consumer and I like them. Have you used their luxury offering where they have someone help you check in? I have. I like it. It's well done. So tell me about it. What is it? It's just nice. It's just well done. They're plus properties. I'm about to use one. I've used them a couple of times and they're great. So you like Airbnb. You'll stay at Airbnb over in a hotel.

Yes. And why is that? If they got into hotels, I would use their hotels. But why? What is it about? I don't know. Everything they do is easy. I just click on it. It's just like, I'm looking for a place for the summer. And I looked at VRBO and others and different things. You like Airbnb. I like their selection. I like the way it looked. I like the way the site worked. I like my credit card there.

I had a problem. It was solved in a second. The place I was renting, there was some construction going on next door. And the person who was renting told me they don't have to necessarily, but they did. And I was able to unbook. And when she was – if she unbooked me, she would have lost a point as a special member with a special host or whatever. And if I had unbooked, I would have lost a point as a special member, with a special host or whatever. And if I had unbooked, I would have lost a certain amount of money. So, but there was no, there was a real problem there, but that I didn't want to stay somewhere.

There was backhoes in Hawaii. And so they just handled it well. They're just, I mean, maybe it's because I'm a carousel. I don't know, but it was just like, it's just an easy platform to use. And I like the platform. I sound like an ad for Airbnb, but I use it a lot. I'm trying to think of things I actually use. I use the New York Times app.

I use Airbnb. I use Amazon. I'm trying to think of things that are – And Uber, right? Uber. Yes, I do. It works really well. Uber's amazing, yeah.

So my Airbnb story – I don't use Airbnb, but I have a store. I used it once in Geneva because I couldn't find a hotel. But I live in – or just until recently, I lived in faculty housing, which is the ugliest blocks, the ugliest buildings in Manhattan. It looks like public housing in Gdansk, Poland. But once you get to a certain level of whatever it is you are, you get faculty housing. So I'm in faculty housing, and I said, oh, I should put it on Airbnb because I'm out of town a lot. We had all these pictures taken, put it on Airbnb.

Like within six hours, I got a letter from the housing department, anyway, students saying you violated housing policy. We're kicking you out of faculty housing. Oh, my God. And I had to call the dean and go, this hurts my feelings. This hurts my feelings. And they backed down. But anyways, I almost got kicked out of faculty housing. All right.

So you were trying to do a scam, in other words. I didn't know. All right. Not very self-conscious. I think about putting my places on Airbnb. I'm just saying I never would think of that. And I don't. As long as you're not in faculty housing.

I'm not. I own my house. I just don't want people in my house. That's my issue. It's like, do I actually want people? I think you should brand it. And I don't, you know. As long as you're not a faculty house. I'm not. I own my house. I just don't want people in my house. That's my issue. It's like, do I actually want people? I think you should brand it. Kara Swisher's house. I think you'd get a premium.

Touch my things. Come and see how I live. See my cats. No, there'll be no cats there. I would not leave my cats. Yeah. People from Airbnb. Anyway, that's going to be an interesting IPO.

The Uber IPO is going to be interesting. We'll see how the market, if there's the big, the small R recession small R recession or the big R recession, it's going to be an issue. That'll affect everyone this year. And I think that's the last thing we should talk about, recession. If there is, we're all sort of screwed, correct? Well, isn't it time? Carl Quintanilla at CNBC. By the way, do they keep inviting you back?

I haven't been invited back. I'm there weekly. I used to be too. I have a contract with them. Oh, you do? They don't invite me. So you get paid? Yeah. Okay, I'm free and they don't invite me back. Okay'm there weekly. I used to be too. I have a contract with them. Oh, you do? They don't invite me. Yes, they have to invite me. So you get paid?

Yeah. Okay, I'm free and they don't invite me back. Okay, all right. Maybe you're just a pain in the ass. By the way, CNBC, you hurt my feelings. We're inviting you to the Coke conference. Anyways, yeah, I got that going for me. Great.

So the, where were we? Oh, these guys. Recession. Recession, a little R. Okay. Where do we get from Carl? What's your, I don't understand. Why are we mentioning this?

Oh, he put out a great tweet this morning. Apologies. Put out a great tweet this morning saying, did we really think this was going to unwind easily with all this quantitative easing? The unbelievable market ascent we've had over the last 10 years. I read this tweet and I'm like, I don't want to sell everything because he's probably right. But yeah, it's time. I just hope we time it perfectly such that the president gets blamed for it.

Right. But yeah, it's- On that note. It's definitely, it's definitely time. So recession, I think that will affect the IPOs. It'll affect all these businesses. You realize there's about one third or two thirds fewer stocks than there were 30 or 40 years ago. So I think a lot of these companies are signaling that they might, so I think Pinterest, who's threatened to go public every year for the last five years, is basically saying we're

for sale, come buy us. Yeah. Because I don't think their revenue has accelerated as fast as they'd originally projected. The projections around Pinterest revenue five years ago would be somewhere between $3 billion and $5 billion now, and they're only at $1 billion, which is still an incredible company. And I'm shocked no one's just shown up and offered a Me Too product

like Zuckerberg and just put them out of business. I don't think that company ever gets public. I think they're basically raising their hand and saying, you know, there's a lot of them. Rent the runway. A lot of these companies who said they were going to go public or threatened to go public and can't quite seem to get out. So I think maybe one or two of those guys get out.

Get one or two and then the rest get bought. Yeah, or just continue to decide the timing's not right or whatever. Yeah, just wait it out. Yeah, that's right. Because we're going to end up with four. It's going to be kind of an eh year next year. We're going to end up with five public companies. Your prediction is an eh year.

It's tough. It's tough to get out. We'll see. I'm hopeful. Yeah. But I don't know. All right, my theme, wither innovation. Where does innovation come from?

That is going to be my theme for 2019. Yeah, but you said you referenced it geographically. Yes, it could be geographic. Okay, but I would argue that the center of all innovation in no company can create more than $10 billion in value in a year unless it's a bike ride from a university and that we need a massive investment in universities. That's where I think innovation happens is right around – in and around a university. That will be one of the many things we'll discuss next year. Okay. So geography, what about culture?

What about culture inside of a company? What's a culture of innovation? Oh, I don't know. That's a big topic, Scott. That is a't know. That's a big topic, Scott. That is a big topic. That is a big topic. You know, it's certainly not what's going on on Facebook. There's a lot of morale problems there right now.

And so that's an interesting question, though. So Facebook Watch, it sounded, I read an article on it, it actually sounded pretty innovative and pretty, like they were doing a pretty good job. And I thought, my God, it's impressive. Anyone gets anything done over there right now. Yeah. Well, we'll see.

Have you thought about a Facebook Watch program? No, never. Now my team watches you on that damn Twitter thing where you just talk and then there's all these cards. They love it. I'm doing it tomorrow. Or maybe today. I might do it today. I might do it now from NBC headquarters.

From NBC headquarters. Yes, I am. I'm going to wander around SNL and search for Kate McKinnon and ask her out on a date. What do you think? Jimmy Fallon. Actually, Kate McKinnon. She's, wow, she's an incredibly impressive talent. I'm just going to wander around.

What a talent. Do you know her? No. What do you think? All lesbians know each other? No. Jesus. So I had all sorts of answers for that, and I decided, you know, I'd rather not end my

career, and I kept it to myself. Yeah, keep it to yourself. Finally. In any case, Scott, happy 2018. I'm looking forward to 2019. This has been a bad year. And I hope you get to rundle Kate McKinnon. I'm sorry.

I'm sorry. Excuse me. Put that back in. Where's my comfort monkey? Where's my comfort monkey? All right, Scott. By the way, you, me, and Kate McKinnon in South Beach. That's enough, Scott.

Or in the Lower East Side. We could kill it. That is enough. We, we could kill it. That is enough. We could just slay it. You must stop and save your rude and obnoxious thoughts for 2019. People would think I'm so interesting. They're like, look at the old guy. Can I just tell you, Me Too is not over, Jess.

Let me just tell you that. Jesus Christ. Anyway, we'll be back in 2019. Thank you so much, Scott. Thank you, Kira. Happy Holidays. And we'll be back next week and into the new year. Rebecca Sinanis produces the show.

Nishat Kerwa is Vox Media's executive producer of audio. Thanks also to Eric Johnson. Thanks for listening to Pivot from Vox Media. Join us next week for more of a breakdown on all things tech and business. If you like what you heard, please subscribe on Apple Podcasts or wherever you're listening. Thank you. when you build your next generation of smart apps on Microsoft Azure. Clear the way for unparalleled productivity with end-to-end development and management tools. Integrate cloud capabilities across your environment with the only consisted hybrid cloud.

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