Pivot - Amazon’s HQ2 was a con, not a contest

Episode Date: November 9, 2018

Kara and Scott talk about the upshot of the 2018 midterms, Amazon’s surprise HQ2 announcement and how our perception of social media has been permanently changed by bots and trolls. Learn more about your ad choices. Visit podcastchoices.com/adchoices

This is Scott Galloway. I founded nine businesses, and eight of those nine businesses, a key partner has been QuickBooks, which enables the management team to focus on the levers of really driving value and also provides a dashboard to gain insight into the key operations and finances of the company. QuickBooks has been a pillar of my entrepreneurial efforts. Check out QuickBooks.com. Hi, everyone. This is Pivot from the Vox Media Podcast Network. I'm Kara Swisher.

And I'm Scott Galloway, future ambassador to Estonia after delivering Southern Florida to President Beto O'Rourke in 2020. Oh, Beto. I'm so sad for you, Scott, that you didn't get your Beto as senator from Texas. You must be devastated. You know, gets 49% in Texas, raises money on a national level. You know, hello, Mr. President. So, Kara, key question. A few days in, how do you feel or how are you feeling about the election?

All right. Well, I'm going to say how my son felt. So we get in the car and my son, he wasn't with me. I was at an election party and he woke up. He was reviewing all the things with me. He's 13 years old

and he goes, I got to say, eh. And that's what he said. Eh. Eh. He goes, Democrats really can't deliver it

but the Republicans kind of suck too. And I was like, and scene. That is exactly what the situation is. So, eh. Eh. Whatever. So you're not terribly upset. You're not terribly happy. That is exactly what the situation is. So, eh, eh, whatever.

So you're not terribly upset. You're not terribly happy. You're just sort of meh. Yeah. We just can't have nice things, as they say. We just can't have nice things in this country. So that's the way it is. It's fine.

You know what? Gridlock is good as far as I – in this situation, I'm good with gridlock. So it's fine. That's what we got. That's what we're getting. I'm going to live that. Gridlock is good. So anyway. That's what we got. That's what we're getting. I'm going to live that. Gridlock is good. So anyway.

Bring it down to tech. Do you think this means anything in terms of the tech sector? No, I think they're not going to get regulated now because gridlock is good. You know what I mean? I think there won't be any moves, any serious moves, unless they can all agree on the bipartisanship that technology companies need to be regulated. Maybe that will happen. I think you're going to see a lot of that from the states like Gavin Newsom in California and some other states. You're going to see action that sort of makes the tech companies come to heel a little bit. National level, I'm not so sure. I'm going to have to find out. But

Pelosi is certainly behind it. It's just a question of whether she can get the Senate to do the same. So we'll see. We'll see if we're going to get a privacy bill or anything else. Probably not. So gridlock is the name of the game. So let's talk about big stories. What's going on? Obviously, you had a good prediction last week about Amazon being in the Virginia, the Washington, D.C. area. And, in fact, there were some leaks that it was looking at Crystal City, Virginia,

Dallas, and New York City, actually Long Island City in New York. Tell me what you think about this. So I refer to this not as a contest but a con, and I think it may have blown up in Amazon's face. Because? We'll see. Time will tell. But imagine you're the wealthiest man in the world and you get to pick or you have more options than anyone in the world and you've decided, okay, so I'll personalize this. I lease office space all the time for my businesses

and I always tell my real estate agent, we can lease any office in the world as long as I can walk there from where I live. And that is the exact same instruction that Jeff Bezos gave to this ridiculous con, this ruse. Because if you look at Amazon is now talking about having three headquarters, Seattle, Crystal City, and Long Island City. The Bezos also own three homes. And the average distance from those three homes to a headquarters is 6.4 miles. So this was never a contest.

It was a con meant to induce ridiculous terms that they then took to the cities all along that they knew they were going to be in. Also, the whole HQ two and three is also a bit of a con and bad faith. It's like if you've ever been to your kid's charity school auction and there's a frenzy for bidding on dinner with the headmaster and someone bids 9,000 and someone bids 10,000 and then they decide right then, well, we're going to do two dinners. Thank you for the 19 grand. Because I would bet, Cara, that when they picked two cities

and they went to two and three, they didn't say, well, only half our headquarters is going there. So we're going to let you cut the tax subsidies and the incentives in half. This just has Bill Will written all over it. And I think people started to figure out what was going on.

So what did they do? They're like, oh, the con is up. They figured out this wasn't a contest and we've abused the Commonwealth and wasted resources and time of municipal officials. What do we do? Announce it into the busiest news cycle of the year. No accident. They announced it last night. Right.

Well, here we are. Here we are. You know, what's really interesting is having a second headquarters. I don't quite know what that means because I've heard rumors of Apple having a second headquarters, et cetera. I'm not sure what the point of a second headquarters is. Money. Give us money. It's a handout. Yeah, but why? Why just call it a headquarters and make it an office? If it was an office, they're just going to call it.

Yeah, but if you call it a headquarters, you get everyone whipped up, and every elected official wants to be the person to detonate a prosperity bomb in their Times Square. So they're willing to write big checks. So it's a new stadium. It's branding. It's a new stadium. Yeah, that's right. It's the Olympics on steroids.

A lot of high fives and ribbon cutting and then 10 years later we realize it was a bad idea. Right. Well, we'll see. I mean, it'd be interesting. I mean, I don't think – it does seem to have gotten flat. The balloon has gotten flat here on this Amazon headquarter thing. I've always thought it was a ridiculous circus. You don't think it's going to be a big deal? No.

It's kind of coming down. On CNBC, they were covering it like breathlessly. I said, I hope you're enjoying the circus. They're like, what do you think? I'm like, not much. I don't think much of it at all. I don't think about it really. I don't think it has that big a deal. I don't think it's that,

you know, I don't know. Analog places just, I just, that whole game is lost on me in every way. But I can see why the, you know, TV or whatever breathlessly covers it. It's just kind of silly, and it doesn't help the, what I really am interested in is how companies that are in the cities, like right now in San Francisco with Prop C, how the businesses help the cities and how they take up their civic responsibility. Because I think especially tech businesses really haven't picked up in terms of what they need to, the responsibility of being a civic citizen of any city they're in. And that's my focus, really. And that's my focus, really. When are they going to actually behave the way, you know, banks did years ago and gave money to the opera or gave money to music or kids, whatever, programs and things like that. So that's what I'm looking for. And you don't think on average they're good citizens?

I think Mark Benioff has been, you know what I mean? But I don't. No, I think they operate in their little Aries and they have lovely kombucha shakes up on the 10th floor and looking down, and they don't participate in the city at large, and they drive up rents. And I don't think – I think there's a reason people, for example – San Francisco, come to San Francisco and see where everything is headed if you want to see the future. You can see haves and have-nots, filthy streets, not a lot of civic engagement by the tech community, which is the biggest employer in San Francisco. And so you'll see. You'll see the future as far as I'm concerned. And we'll see if we can clean it up.

But it's up to now the city officials to clean it up and figure out a way. And most of tech didn't like the idea of Prop C for lots of reasons. Some of them good. Where does the money go? But in general, it's not a feeling that even if they're of the city, they're not of the city. So I think companies have to start acting like they belong to a community. Thank you very much. And do you think they're going to do that on their own?

I approved this ad for Karis for mayor. What? I'm sorry? There you go. I'm in. I'm right behind Beto. So do you think it's fair or realistic to expect they're going to do it or we need to elect people that have the backbone to to hold these companies accountable they should do it they should do it but you know whatever they're they don't so we have to make them that's all that's all you just have to make them yes exactly and not roll over for them and give them these perks and things like that it's

it's just a ridiculous game it's a ridiculous game it's a privilege to live in san it should be a privilege for these companies to be in San Francisco, not a tax break. The most beautiful city in the union. I spent 10 years there. Not anymore. But I don't go back a lot. Don't go back. And when I go there, the impression I get and the way I would sort of describe my experience there is I went to go meet with an individual who runs one of these tech companies who's early 30s, a billionaire, and going into the office, the thing I noticed was the number of severely mentally ill homeless people on the street below that building.

And I thought, we really have become a dystopia. I mean, it is just a contrast. It's changed a lot in the past two years. It's rattling. It is. It's rattling. It's rattling. And so we have to do something about it.

And companies should – are part of the civic fabric of a society. And they have to move in. And they should do it on their own. But, you know, we'll make them. We'll have to make them. That's all. Let me finish this other big story, the divided Congress. What do you think the divided Congress means?

So I think there's this fissure on a bigger level. And I think of it how it translates to business, and that is we now have about 70 percent of the Senate is elected by about 30 percent of the populace. A lot of these red states don't have big populations. These are the lost population, or they just get two senators regardless of the fact that Wyoming has a population that's smaller than most congressional districts. Wyoming has a population that's smaller than most congressional districts. But at the same time, over the last 10 years, if you look at who's accreted the majority of the income gains, they tend to be people in the cities with college educations, which is Latin for progressives. So you have the economic power or the people capturing the income gains that are progressives,

and yet you have the political power going to the red states. So what I think you're going to see, Kara, over the next several years is kind of this woke is a business strategy, similar to what Nike did with Colin Kaepernick or Dick's getting rid of assault rifles. I think that a lot of companies are going to decide to try and be overtly political and appeal to progressives who don't feel represented politically, but quite frankly frankly have all the money. Yeah. So you're going to see increasing political viewpoints. Yeah, like Nike, Patagonia.

Starbucks. Yeah. Companies are going to come out and say, hey, progressives, we're your company. And it might be a principle thing to do. It might be generally how they feel, but it's also a shareholder driven thing to do. Yeah, that's interesting because you have the money.

That's interesting. What Land O'Lakes did with that awful person. That's right. I almost gave his name. He won. I can't believe it. That I can't believe. Yeah, you're going to see a lot of that.

Whatever. Oh, God. I'm glad Land O'Lakes did that. All right. So we're going to take a break, and then when we get back, we're going to talk about a lot of other things. a lot of other things. In the next advertiser segment brought to you by QuickBooks, we'll hear from a business owner who turned their side hustle into a full-time career. 78% of small businesses in the U.S. have a workforce of one, but it's not easy turning your skills, your passion, yourself into a business. Here's the story of one guy,

Nat, who never backed down and turned his side hustle into his full-time gig. Nat's story is brought to you by QuickBooks. My name is Nat. I teach yoga and I share music for a living. The job I had right before making this leap into teaching was working for a large tech company. I was leading a retreat over in Hawaii, and I think it just clicked. I can do this for a living. There were fears about where I'm at with that career. You know, if I step out now, will I be able to get back in?

You know, those moments of fear, I had to just be honest with them and say, I trust this. I mean, it's a total trip to turn yourself into a business and you have to be confident enough to say, here's who I am and here's what I offer. I don't want to get into the mindset of, oh my God, my money, my money. So I use smarter business tools to really kind of check my cash flow and also for tax preparation. That gives me the comfort I need. It's a reminder for me every single time I teach that this life is so short and you got to go out there and just do it. You got to live it up. QuickBooks knows you never back down. That's why they're in your corner with smarter business tools. QuickBooks, backing you.

Learn more at QuickBooks.com. This has been advertiser content. Thanks to the sponsor of our show, QuickBooks. For Nat's story, learn more at QuickBooks.com. That's QuickBooks.com. Now back to our show. All right, Scott, what's up? What's next?

So let's try something out. The midterms are over, but can we come up with an assessment of how fake news, how did social media do? Were we influenced? What happened here? What's your view? Well, it's interesting. I was just talking about this with, I was just talking to WNYC in New York about this. I think that they're trying, they're starting to clean it up, obviously. They keep announcing how many, like, I took off 30 accounts, whatever. This is a cockroach problem, right? This is going to be an ongoing problem. It's not going to be something they've just cleaned up.

And so I think what we've got to do is as the stories die down, like the Russia story or whatever, we've got to really hold these companies' feet to the fire on persistently making it a cleaner and cleaner place. And sort of it reminds me, I was trying to think of an analogy, but it's like they're chemical companies that are dumping stuff into the river. They're going to have to clean it up now. And they've got to figure out a way. Now, look, there's been some damage. There's been some poisonings. But they've got to clean it up now and figure out a way to do what they do

and grow how they want to grow without continually doing this. So every time they make an announcement, they call me, I don't care. I was like, this should be your job. It's like saying the New York Times should spell the word and right. I just, I feel like we've got to make it their jobs and make sure they realize

that that's what they need to do. So let's move to the how. And I want to propose an idea and you tell me why it would or wouldn't work. So I'm fascinated with this concept of identity. And I'm in Los Angeles right now, and everyone is just so friendly in the Starbucks line. And then in the moment,

there's a little bit of anonymity and you're in your car. There's road rage everywhere. And then take that times 10 when you can invent a fake identity or a hundred of them on Twitter or YouTube. And there's not only a lack of civility, there's people willing to engage in things that are unthinkable and damaging to the fabric of our society. Why wouldn't we demand or legislate

that when people go online on formats that have shown themselves to be very powerful, influence elections, suppress voter turnout, that you have to have an identity and be who you say you are. Yeah, I think that's critical. I think being anonymous makes sense in some cases, in some countries, that's the problem, and being able to protect yourself in countries that are autocratic. And so I think it's a big question, but in other countries, it's not the case. And I always think that being anonymous, and these bots, it drives me crazy that they haven't been able to handle these bots, because these bots gin up anonymous, and these bots, it drives me crazy that they haven't been able to handle these bots because these bots gin up trouble and then humans get involved with them. And so to me, the bottom, the lowest bar is going to be have to get rid of bots and to make a lot

of this advertising transparent. And it starts with that and get rid of fake accounts. Get rid of fake accounts and make sure everybody who has an account is a person. Whether it's a good person or not, that's going to be harder to decide. But make sure they are actually a person. And I think that's the—I've always thought anonymous was always a problem anywhere you go because people act badly. So the people—I've heard smart internet analysts say that if that was—if any sort of identity mandate was actually put in place, that Twitter would basically go out of business. That you have something between a third and two-thirds of all Twitter traffic that they advertise to justify their entire ad business or their ad model would literally just go away.

The two-thirds of it is bot-driven and noise. Yep, yep. That's the problem. They don't want to show exactly how unpopular they actually are. You know what I mean? I think that's with a lot of things. And, you know, again, these companies would be better off creating a better service. I don't get why they want to have, you know, a shitty experience for people. I don't, you know, that's the It has a goodness to it that always gets superseded by the badness. And so it's really, to me, it's really, it should be a business problem that they should recognize that. So I don't know. Yeah. So I'm going to put my tinfoil hat and come across as a conspiracy theorist, but I write a lot about politics and I haven't,

you know, I've been very critical in certain instances about the GRU in Russia. And whenever I'm critical about Russian activity, I immediately get comments saying, Scott, love your stuff, but you got to get off the Russia bandwagon. And I started noticing that same sentence structure, same theme across different areas where I post my content from different sources and different identities. And now I generally believe that if I were an economy 1 15th the size of the US and I wanted to wreak havoc or promote my agenda, I would identify a thousand people of influence or in

my case, a million people of influence and set these troll farms loose on them. And I now believe that there are bots or bad actors going after almost anyone and responding and putting up content and they're not who they say they are. Does that sound, am I paranoid? Which doesn't necessarily mean I'm wrong. But do you think this is happening? No, I think, yes. I mean, broadly, yes. These are well-orchestrated campaigns by different people. And the thing that you have to realize is they don't care what side they're on, right? That's the thing. They'll go after Samantha Bee.

They'll go after Roseanne Barr. They'll go after—what I think is going to happen is when they start going after, and they are starting to do, is companies and affecting, like, Disney. Or it's happened already to NVIDIA. It's happened. Like, when they start to really, especially with video manipulation and things like that, you know, you ain't seen nothing yet. It's not going to be a tweet. It's going to be serious manipulation of video of other kinds of things.

And I think we're just at the beginning of that for sure. But, you know, it's going to be a great future for us, Scott. That's where it's going. I'm in a down mood today on the internets because I think they have— I was wondering how you were doing. I was trying to think of something to cheer you up and I couldn't think of anything. You know what. I'm in a down mood today on the internets because I think they have— I was wondering how you were doing. I was trying to think of something to cheer you up, and I couldn't think of anything. You know what? You know what?

Scott Walker lost. I'm good with that. I feel good about that. It would have been nice to see Ted Cruz go down. Dana Rohrabacher lost. Oh, yeah. But did Devin Nunes go, or is he still there to drive us crazy? Nunes?

I don't think so. I think he's in a district. I think he represents his district pretty well, actually. Oh, all right. Well, good. He's not head of the committee anymore. Goodbye, Devin. Like, he's the worst.

He's the person who uses tech for bad. There's someone I would really like to—maybe I'll interview him and let's see how that goes. Anyway, last thing. We have predictions, but we're going to contextualize it, too. So we always end the show on a prediction. And give us a prediction. Let's just do a prediction. You have one, correct?

Do you have one to bring to us? Because you were good on the headquarters. You've been good on a couple of predictions. Casper has still not been sold, but otherwise you've been pretty good on. Oh, that hurts. Casper will absolutely be sold. I think you're right. Okay, so this is more macro,

but I think the consumer world is going to distill to a small number of what I call recurring revenue bundles. And similar to what Amazon has done with Prime, you're going to see some kind of mega brands, a Nike or a Walmart, decide, okay, I'm in charge of all of your, not only your shoes,

but your fitness and maybe even your healthcare. You can get a knee replacement from a Nike indoor store, orthopedic surgeon. You could stay at a hotel that figures out a way to get you breakfast. It's not terribly unhealthy for you that has a gym that is Nike approved. Where did you come up with this scheme? Is this your next book? This is what I do. This is how I fake making a living. I just call it a scheme.

That wasn't really nice, but it is a scheme. Yeah. No, but I think recurring revenue bundles are going to be the next big thing. If you look at a company that makes more than $10 or $20 billion or creates more than $10 or $20 billion in market value over a 12-month period, you're going to—it's going to be an equivalent or a mimic of what Prime is to Amazon. So, like, you're an Apple person or you're this person? 100%. But it might go places you might not think.

Apple might say, we have a watch picking up on your health patterns. Cara, you would love Lululemon. And we're going to do a relationship with Lululemon. And you're going to let us know where you are. And we're going to deliver stuff to you and make your life easier around health and fitness. I'm going to give you a big fat no on this. I don't think they're going to get this. You don't buy it.

They don't buy it. I don't buy it in any way. I don't think Apple has any, I don't think they have any say no to this. Health and fitness. I'm going to give you a big fat no on this. I don't think they're going to get into this. You don't buy it. They don't buy it. I don't buy it in any way. I don't think Apple has any, I don't think they have any expertise to do this, and I don't think they have any interest in doing it. So I don't think they will. I think they're going to sell you a phone. That's what they're going to do. And people are going to stick to their knitting, as I like to say. They've all got to get into recurring.

By the way, the phone. You may want them to, but they're not going to do that. Apple's not going to get me Lululemon. By the way, my son wears Lululemon, FYI. He likes their shorts. Every company, this is the key, every company has to enter into monogamous relationships. Right now, they're dating, which is expensive and hard. They have to enter into monogamous relationships. Really? They can't be promiscuous?

That's 100%. Think about what's happened with airlines, where it's all distilled down to a small number of networks. I'm flying Air France. It's an inferior airline, but I'm in this monogamous relationship with SkyTeam because I've fallen in love with Delta because I fly Delta a lot. So now I do this stupid, I'm in this relationship with SkyTeam that I can't get out of. And that's what's going to happen. It's going to be a series of four or five small networks, one for your media, one for your apparel, one for your travel, one for your health. And it's going to be a race to see what brand can be that bundle. Ridonkulous, Scott. I think it'll just be Amazon.

Ridonkulous? Amazon's just a store. You're hanging out with your teenage voice too much. Ridonkulous. No, he's not. He's very smart. That's a good one. So my prediction, a bold prediction around recurring revenue.

Ridonkulous. I think Amazon is it. And your prediction is I'm wrong. Because Google could have done it. That's ridiculous. Google could have done it. That's ridiculous. Google could have done it. Any of these companies could. I don't want a relationship with Google when I'm getting my lunch or Nike.

I want shoes from Nike. I don't want my lunch from Nike. Oh, my Nike lunch is ripe. It's delicious. It involves carrots. You wouldn't want Emirates to plan all your travel? No, I wouldn't want Emirates because you know what? Since I've been insulting the Saudis and everybody else over there so much for their dirty money,

I think I would not want to fly on their airlines because I think I would be flown somewhere. Would you want Amazon to give you and your family your health insurance? No. No. But I'll tell you, here's where I do like – here's where your redonkulous idea does work. Say your Airbnb, I do trust them on experiences. They can do adjacent things, hotels and airlines. I could see that relationship becoming a little more serious. I would trust them because I trust them on their Airbnb homes.

So I could see that if it's adjacent. If it's adjacent, Scott, I would do it. Otherwise, no thank you. Yeah. So Airbnb is absolutely one of them. Airbnb could move into all sorts of travel and just kind of take you off the table. If Airbnb suddenly wants to buy me shoes, no thank you. That's all I'm saying. Yeah, but think about how many places I could go. Airbnb, it's either going to be Airbnb or Expedia or another, the Four Seasons is another kind of brand

that could probably come up with a recurring revenue bundle. Yeah, Four Seasons. Is that where you stay, Scott? Is that where you stay, Four Seasons? Do you know what Four Seasons is? Well, this is an interesting point. Oh, you're stuck going there.

The Four Seasons and the Ritz-Carlton, I used to always stay at those two brands. One, because they do a decent job. And two, whenever I travel, someone else is paying usually. Interesting. But I've stopped staying at these brands and it represents kind of the end of the brand era because I no longer need to defer

to the shorthand of the brand. And I can go on my social graph or these weapons of diligence, TripAdvisor, Google, and I can find out that the Waldorf, an aging brand that I would never associate with in LA, is actually the cool new hotel. And that's where I'll stay. So you're seeing, at least in travel, kind of new and innovative is the bomb.

And brand is declining importance. So kind of the sun has passed midday on brand. Interesting. Interesting. You know what Four Seasons is? Holiday Inn for rich people. Anyway, because they're all the same. Hit me where you go.

Thank you. That is my thought. Actually, I don't know. There's huge variance. The Holiday Inn in Austin or Chicago, pretty weak. I'm sorry. The Four Seasons in Austin or Chicago, pretty weak. The Four Seasons in Toronto or in Budapest.

All right, Scott, I'm enjoying your hotel recommendations right now. I love hotels. I travel to hotels, not to cities. In San Francisco, there's strikes going on because of robots delivering food and one of the reasons. Anyway. Although, speaking of robots, I just rented a car from Hertz. And I'm rethinking that, in fact, Uber may be worth $120 billion. And we should replace every individual with robots.

Have you rented a car recently? Yes, I do it all the time, Scott. I think it's an awful experience. It is an awful experience. You're right. You're right. It's an awful experience. It is. But you're right. It's an awful experience.

It is. But you're right. That's a very good thing that needs to be revamped. But we're going to discuss that another week because I have things to do. I have things to do. You do. I've got to go watch the Trump press conference right now. What is on the slate for Kara? What's the most interesting thing you're doing this week?

This week? Oh, I'm going to be interviewing Mark Benioff, but I can't tell you for who or why. It's a big interview. It's going to be on TV. So, Mark Benioff. Wow, and you're a big fan of Mark's. It's a big interview. It's going to be on TV. So, Mark Benioff. Wow, and you're a big fan of Mark's. Yes, I am, and it's going to be at the top of Salesforce Tower. That's all I'm going to say. I'm going to try to helicopter in and then jump from the helicopter, take a rope down the building, and then crash through the window and then start the interview. What do you think? Better yet, I think he should be like a terrorist

and you should have like a Mussolini speech. Yeah, that's something like that. Something like that. Something along those lines. Just to trust the entire city. Anything for audience. Anyway, Scott, I've got things to do. Good stuff, Kara. Have a good rest of the week.

Looking forward to talking next week. By the way, if you have any questions for us or stuff you'd like to hear or cover on this podcast, shoot us an email. Hibbit at voxmedia.com. Our show is produced by Rebecca Sinanis. If you have any stuff you'd like to hear or cover on this podcast, shoot us on Apple Podcasts or wherever you're listening. When you're a business owner, it can sometimes feel like the odds are stacked against you, but QuickBooks knows you never back down. That's why they're always in your corner, making it easier for you to manage your business so you have time to take care of the details that matter most. No matter what your version of success is, QuickBooks can give you the smarter business tools to get you there. QuickBooks, backing you. Learn more at quickbooks.intuit.com. That's quickbooks.intuit.com.