Pivot - Deep Cuts at Twitter, FTX Hack, and Friend of Pivot Joe Coscarelli

Episode Date: November 15, 2022

Kara and Scott discuss the latest belt-tightening measures at Amazon and Disney and the latest round of the Apple v. Epic Games antitrust fight. Also, Twitter’s shrinking workforce, Musk v. Markey, and the mysterious hack that’s just one of FTX’s mounting problems. New York Times Culture Reporter Joe Coscarelli is our Friend of Pivot. He stops by to chat about his new book, Rap Capital: An Atlanta Story. You can follow Joe Coscarelli here. In Wins and Fails, Kara and Scott discuss. Black Panther: Wakanda Forever. Be sure to check out this episode of Into It: A Vulture Podcast with Sam Sanders, which explores the Marvel Cinematic Universe. AND...the latest episode of On with Kara Swisher is about Kara’s decades-long relationship with Elon Musk, why she had high hopes for him in the past, and why she’s disappointed now. Check it out here. Send us your questions! Call 855-51-PIVOT or go to nymag.com/pivot. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Just go to Indeed.com slash podcast right now and say you heard about Indeed on this podcast. Indeed.com slash podcast. Terms and conditions apply. Need to hire? You need Indeed. Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher. And I'm Scott Galloway. How you doing today? What's going on? What's happening?

Today's a good day. I had lunch with this super smart guy named Andy from J.P. Morgan, so I'm making friends. I'm trying to get out and have playdates. You need to have playdates. I do. It's really critical for you. You need little friends to hang around with. 100%. I was thinking about you. I was watching The Crown. I'm need little friends to hang around with. A hundred percent.

I was thinking about you. I was watching The Crown. I'm catching up on The Crown, the new season. Yeah. It's quite good. I remind you of Camilla. That's who I remind you of. No, she has more hair than you do. I like Camilla. No, no. I think Camilla's underrated. Anyway, I love The Crown. It makes me think of Britain. I really like it. It's really good.

The Queen is pretty pissed at Prince Charles. But anyway, today we'll talk about Twitter's rapidly shrinking workforce and also the mystery of FTX's disappearing funds. And we'll speak with New York Times' Joe Coscarelli about how Atlanta has become the center of hip hop. He's one of my favorite writers about us and he does an amazing online interview show with a lot of musicians. I think he could give us some insight into where the music business is going, too. But first, the New York Times is reporting that Amazon will lay off nearly 10,000 employees. The cuts will come from its retail and HR divisions, probably as expected as well from its devices team, which works on things like Alexa. This is not as many. They hired so many people over the pandemic, 500,000, something like that. Also at Disney, is planning to freeze hiring and cut jobs.

According to a memo from Bob Chapik, the company will look for every avenue of operations and labor to find savings. The company's streaming service lost almost $1.5 billion last quarter and Chapik has promised streaming will become profitable by 2024. The new Star Wars show is getting great reviews

called Andor, which many people love. And more layoffs, right? That's really what's happening. It's a, there's a time to plant and a time to reap. Or a time to kill. There's, yeah, look, who would have thought it? We've been talking about this for a while.

And if you just look at the math, if you look at the expense, the exponentially increasing expenses around growth companies that are usually people, you have, and you have revenues that are coming out of the pandemic as sort of pre-pandemic and that is declining, they all lead to the same place. And the only thing, the only suggestion I would give to these companies, I'm having a lot of these calls right now with CEOs and the CEOs of the boards I'm on, go deeper than you want. Because

Americans and CEOs are just naturally very optimistic. And they like to think that any correction is just a V and it'll snap back very quickly. They do. You've talked about this a lot. But there's a proclivity to want to not cut more, correct? I mean, that's really. Yeah, but your ability, the way I see it is, one, when you go deeper than you want, it's like laying off people.

And I realize these are real people. But first off, these folks are the most rehirable people in the economy. These are overeducated people who are very talented and work for the ones we're talking about, who work for places like Amazon and Disney. Their problem won't be getting another job. Their problem will be that they're under the delusion that they're more important than they are. And that is they will go to an organization and they'll expect to get four days of pet

bereavement leave. And that is they have had a marketplace that has told them over and over and over, whatever you want, whenever you want, you're special. And when someone tells you you're special, it's easy to believe them. Sure. And they were special. Let's just say they did get things for a lot. This has been, what, 15 years of this, 13 years of this? Yeah, it's been. So, it's really interesting in human nature. When the markets are good, you don't go, oh, things are crazy and irrational. What you say is, oh, this is normal. And then when they

collapse, you go, okay, this is an exogenous event. Now maybe this is the return to normal. But you're going to see – my prediction is simple. You mentioned Amazon and Disney's layoffs. Times that by three to five, that's the number of people who will be laid off in the next 24 months. We have an increasing interest rate environment. It's going to do its job. People are going to start spending less money. Disney actually had really robust park attendance. It's

got an amazing business, but it's in an arms race and it's spending too much money. Amazon, way overhired, way overhired. But every great company, any company you look at that we talk about has gone through periods where they realized they got out over their skis, they grew too fast in areas that didn't pay off, and they got to come in rashless. And the wonderful thing about America, and what I tell my CEOs, is the faster you move to fire, the more generous you can be with people. I mean, it just makes sense. If we might have fired you in three months, fire them now and give him six months, not three months severance. And also, the wonderful thing about America is that the faster you let a company fire people without the government getting in the way or regulation, the faster you can rehire them. It is not easy to get hired in France because guess what? Every company goes, Jesus, let's think twice because it is impossible to fire this person once they are on the payroll. So it's easy to heckle from the cheap seats. I know.

There's still pain. I think this is a generation of people used to up and to the right, and it's not up and to the right. And, you know, I know a few people have been laid off. And I saw one of them last weekend in New York who – I'm not going to say the company they work for, but they were asking me, when do you think the IPO is going to be? And I said, maybe you should think about when the layoff is going to be. And that company laid off right away, and they got laid off. And it was interesting because they were waiting for this IPO to happen. There are no IPOs. I mean, oh, it's just a delay of the IPO. I'm like, no, they have to lay off. If they're going to get to an IPO, and that's exactly what happened at Airbnb before he did the IPO. Anyway, interesting times and more to come, we suspect. Would this be a bad time to ask Bank of to pay for my vasectomy? Yes, it would be.

Yeah, that'd be bad. Okay. Look, Fox is not going to escape this either. Never mind. I'll do it myself. No company is going to escape this. None Never mind. I'll do it myself. No company is going to escape this. None. Very few companies. Yeah, agreed. Anyway, Apple and Epic are back in court.

Epic will once again argue against Apple's restrictions on third-party payment processes. This is the thing they sort of lost this time before the Ninth Circuit. The appeals court ruling may take up to six months. If the cases go to the Supreme Court, it likely won't be resolved until 2025. If Apple is successful, could companies leave iOS entirely for payments? OpenSea, one of the most popular NFT marketplaces, already does this. You can't buy NFTs in its iOS app. It pushes you to the desktop browsers. Apple is getting more aggressive with its 30% cut. Last month, it announced that it will take a cut of boosted posts on social media networks like Facebook and Twitter. That's advertising, essentially.

So this will be an interesting case. This is just going to wind on forever. Apple kind of won the last round. Eventually there'll be a resolution, but it's not going to be for a long time. I don't know. What do you think? Yeah, this is actually,

so there's news and there's noise. This is news. And it really is monopoly behavior. And what's so extraordinary about this, it's one thing, I mean, I'm a shareholder in both Epic and Apple, and I am absolutely 100% on Epic's side here. And to me, this feels like you buy a jacket and the retailer gets a gross margin on it. And essentially,

Apple is a retailer here. But then every time you use that jacket, you're supposed to pay, you know, super dry or Canada goose again. I find it very strange that just because you have the app, any purchase within the app, you then have to spiff back to the mob. I mean, it feels- Yeah, VIG. It's called a VIG. A VIG, yeah. And if there were more than two app stores, and really, there's really only one app store for anyone who is a storyteller, is wealthy, or has any opportunity for a random sexual encounter. That's called an iOS user. Yeah, but Android's big. But go ahead.

All right. You know what, Kara? Let's be honest. When you have Android, it kind of is like saying to the world, you know, life didn't pan out the way I'd hoped. My brother just shifted from Android to Apple. He had to come over. Yeah. And, I mean, it's sort of like when you roll up in a Mazda or you carry a Discover card.

Nothing wrong. Nothing wrong with it. But it's kind of saying, you know, things haven't really panned out for Bob. No, that's not true. That's not true. A hundred percent. All right. In any case, it's a big vig.

So, they have a monopoly on the 14% of the wealthiest people globally. And it's one thing if you have a monopoly and you charge 30%, which on its own feels like predatory pricing to me. But then anything you do in-app from that point forward. So I think the argument they may make is it's not a commission for the app store. It's the price of using iOS if you want to do any transaction on iOS. But they get 80% margin. It's like a $20 billion. I'm not even talking about the app economy or the initial VIG on the initial purchase, but the in-app purchases post-download of the app, they get something like $20 billion at 80

points of margin. We've just... It's a good business. It's a good business. Yeah, it's an amazing business. I think this will be an interesting case. And they did lose on the first round, Epic did. But they're going back and forth. They were very confident they were going to win in the courtroom here in D.C., but it'll be interesting to see what the appeals court does and then what the Supreme Court does. There's been very little tech regulation or tech legal stuff that they've lost. This would be a big one for sure. And maybe we'll have some people on for both sides of the argument, which would be interesting because I agree with

you. It's a big deal. But OK, let's get to our first big story. Twitter is shrinking over the week and the company laid off over 4000 contractors without warning. That's nearly four-fifths the entire contract workforce, although many people thought, how did they hire that many people, many people who used to work there? The contractors worked across the company, including in content moderation. Markey over the weekend at the center tweeted about the risks of impersonators, although Markey was a little heavy handed as far as I think he was. He also amplified, this is Elon, also amplified conspiracy theories about FTX, money laundering and the Democratic Party. That was interesting. And he complained about the cost of feeding employees and gotten his Twitter spat with one of the program's administrators, which is exhausting because it's such nonsense because these companies paid for the food and used to argue with me of how much it was worth it. They want to cut the cost, just cut the cost and stop making a thing of it.

Anyway, I had a whole show on Elon today. I mean, he's in my long time relationship and it was called Now He's Just Somebody That I Used To Know, which was a song, of course. That's really cute. Thank you. It was almost, we have to talk about Elon, but then I thought a little too serial killer. It was almost, we have to talk about Elon, but then I thought a little too serial killer. Anyway, and then he appeared at an event in Bali, I mean, virtually, where he said he was super tired and nobody should be him.

Tiniest, world's tiniest violin on that one. What's the goal here? I wish he would, like, fix the company. I don't know what to say. He wants to build great features, but he's spending a lot of time tweeting stupid things and alienating people. What do you think? What do you think here? Let's talk about positive things. Did you see the image when he was piped in?

Yeah, it was creepy. He looked like he was on trial in the future. Yeah, I agree. He doesn't need me to feel sorry for him. People don't want you to feel sorry for them. I always say sympathy is not something that menace as well. They don't ask for it. But it just felt, I continue to believe and this is

armchair psychology this guy is unfolding before our eyes unfolding you mean unbundling unwinding you know coming undone whatever the term is the right yeah he does the most insanely uh non-graceful, stupid, mean things. And you can find hundreds, if not thousands, of really smart people who see the genius in it and assume it's all part of some master plan. Maybe they can't explain what it is, but you're playing checkers, he's playing chess.

That's exactly the right analogy. Yeah, you got a lot of that. I saw you got a lot of that. As much as you would like to think this is all part of some master plan and that Twitter is going to emerge from the ashes and be amazing and that he's going to put us on Mars and he gets it and we don't, no, he's a brilliant man who's going to move the world forward and he should get all that credibility. But be clear, he's incredibly fallible. And when you fall into this dangerous notion that we have Jesus Christ clear, he's incredibly fallible. And when you fall into

this dangerous notion that we have Jesus Christ, whether it's a guy who says, make America great again, you know, we got to stop this cult. Jesus Christ, they're not there. Let me just interject. I think the nation is healing in that regard. I think, you know, the repudiation of Trump, I think a lot of people are like, a lot of people, I'm getting more of like, oh, wait a second, after all this, maybe he's not so smart. I think a lot of people are wising up and not immediately buying the codswallop that tech pushes at you about these brilliant people. That to say, like you said, let's be kind. These are really special people in many ways and smart and they were there at the right time, whether it's luck or, you know, it's, there's an expression, is it smarter to be lucky or lucky to be smart? And so I think it's a combination of those things. I would give, I always give credit. Like when I,

people are like, see, he was an idiot the whole time. I'm like, oh no, his car and rocket stuff is really quite impressive. Like, and they're like, it's not. And I'm like, you know what? You don't have to like him, but for goodness sake, acknowledge what's special here. This is not special. And I'm not sure what's going on. I mean, do you think, he says he wants to build things. He's cutting costs. That makes sense. I don't think that doesn't make sense. The way he's doing it is casually cruel. And I do think when I saw that number of contractors and several people wrote to me, they're like, that was a lot of contractors. And I agree that was was too many and that's how you cut and raise contractors to save costs and because it's easier because they work for third parties by the way for the most part

and so it's it's you don't save cost and health benefits but you that's how you well they're easier to fire that's that's correct yeah exactly so i i see that happening i was surprised by how many there were and i could see that's a very easy thing. The food thing is just nonsense. Whatever. Just cut the cost. You know, whatever. So is Google.

Google's doing the same thing. Last year, they were cutting food costs. But I don't know what the goal here is. Is he trying to buy up Twitter's debt? Does he want to kill it and write it off as a loss? Does he want to go bankrupt? Is he just mad that he has to own it? And so he's doing a giant billionaire tantrum? I don't know.

I'm not sure. I called a bunch of people this weekend, and everyone has a theory, but everyone's sort of unifying around nobody knows. Because the latest theory that he's intentionally trying to bankrupt it doesn't really make a lot of sense. Doesn't make any sense. Because he'd wipe out the equity, and then they'd have to put the company up for bid, and a higher bidder could come in. A judge would not look favorably on him in bankruptcy court. But if you look at, I got, someone sent me a list of the debt. If you look at the debt here and the interest payments, he's already in trouble. The company's already, my guess is, not able to make its debt payments.

So he's going to have to call back his equity players. He's gonna have to do more for selling and file more forms. This has just gotten, you've never seen an acquisition get this ugly this fast, but there's something, and I don't know if I got the pronunciation right here, but an origa, do you know what that is? No.

It was a title given to a slave charged with accompanying a Roman general. Okay. And the general, charged with accompanying a Roman general that was and the general charged with accompanying a Roman general that was awarded a triumph through the streets of Rome. So, you know, they basically have ticker tape parades for a general who conquered another army. Yeah, I saw Cleopatra, go ahead.

This slave, the origa, was appointed by the Senate, and this origa was charged with a relatively simple task, and that is to follow the general and on a regular basis whisper into the ear of the general during the succession, memento homo. And that means, remember, you are only a man. Oh, wow. And I thought that was so powerful that this, you know, what was considered one of the greatest civilizations. Yeah,umphs. Most enduring civilization said, right at your biggest moment, that's when you need to be reminded consistently by somebody that you are only a man. And I feel like Elon Musk has never needed an origa more than anyone.

You know what? I need to get you one. I'll be your, I kind of your origo. You kind of are my origo. I am. Oh, come on, Scott. I usually am like, what? You text me late at night and get angry at me. I do not. I haven't done that in a long time.

Like it was literally twice and you're like still recovering. Michelle Sandberg called you and read you the riot act and you still wanted to hang out with her and her fancy friends. No, I did not. I have not seen Cheryl in years. Anyway, it's a tough time. And, you know, one company is buying up ads on Twitter. It's SpaceX. That's kind of interesting, moving money between his companies. Now, advertisers who have left Twitter, General Mills, Audi, General Motors, Pfizer, Volkswagen, Mondelez, which is the maker of Oreos. I think Eli Lilly's not too happy about those fake tweets.

They've been spending a lot of time getting rid of those, which is a waste of time because he shouldn't have done the thing in the first place. So now he's caught more costs. So the advertising is not there. It's really, I mean, I have talked to all the advertisers and they're like, no way am I going in here, which is kind of interesting. Everyone's looking for an excuse to pull their advertising from any channel and he's given them the mother of all excuses over and over. It's easier to put it over at Facebook or wherever or not at, or just keep it for yourself. He's also going to court on Monday, which is today, when we're taping this to defend his Tesla pay package from a shareholder lawsuit. They call him a part-time employee. That's sort

of the Jack Dorsey argument, I guess. He's certainly spending a lot of time on this and tweeting ridiculous things. So he does have other jobs. I really think corporate governance matters. And that is that it's in some ways, it's along the line of this origa. And that is you need people who aren't you, who are fiduciaries, remind you of when you're not supposed to do stuff. And I'll give you an example. In late 99, coming off of Red Envelope, I had a shaved head, a degree from Berkeley. I was young. I had a good rap. I could raise tens, if not hundreds of millions of dollars for those companies in this space called the internet.

And I was very full of myself. And I went and raised $15 million at a pre-money valuation of $35 million to start an e-commerce incubator in New York called Brand Farm. Not because it made sense to start it in New York, but mostly because I wanted to live in New York and wanted an excuse to relocate to New York. in New York, but mostly because I wanted to live in New York and wanted an excuse to relocate to New York. And I had Goldman Sachs, JP Morgan, Maveron, all wonderful investors and like a who's who of wealthy, successful people. And I raised the money and my company that I'd started, Profit, a brand strategy firm, I said, I want them, I want them to do the brand strategy and the positioning for all

these companies I'm going to push out or punch out. Kind of like an Idea Labs, but in New York. And my board at Brandfarm said, this is an inter-party deal. They may be the best firm for it, but you need to bid it out. And we would prefer that you had an arm's length vendor here. And by the way, at a minimum, the board at Tesla, I can guarantee you two things. Good corporate governance would be for a group of board members to just check it and go, make sure that we're getting as good or better rates on Twitter. That SpaceX is getting

value for their money, and this makes sense. And I can guarantee you that did not happen. There is no checks and balances here. There is no board. By the way, SBF, do you know who was on his board? Who? Nobody. Yeah, that's right. Oh, his friends.

In the condo. The condo called people. He didn't have a board. No, condo kids. The condo kids, yeah. I mean, that is sort of like peak. I mean, a pretty basic question if you're going to give money to an exchange of a 30-year-old. And I'm an ageist. I believe President Biden is too old to govern. And I think

20-somethings are usually too young to be fiduciaries for tens of billions of dollars in other people's money. And if you don't have the self-awareness to go, you know, I haven't figured it all out since I just got out of, you know, since I just got out of MIT. And anyway, if you weren't self-aware enough to surround yourself with a group of people who can give you advice on this stuff. And by the way, Musk has never had this. Elizabeth Holmes had a board, a lot of old guys and smart guys. But, you know, I'm just saying.

And what's happening to Elizabeth Holmes? That's an interesting one. I know. I'm just saying, you just, you can get around these people. And the Tesla board is a rubber stamp. Come on. And I like some of the people on it. What, you mean his brother? Well, among other people. His brother's on the board. I know. Yeah, you can't have your brother on the board. Stop me. Stop. Stop right now,

Auriga. That means I am the general. And I'm an Auriga to you. Generalissimo, jungle cat. So let me just say one thing to you, Scott. Memento mori. I'm going to say to you, Scott. Memento Mori. I'm going to say that at every show. Memento Mori. I'm going to whisper it into your ear. I'm going to scream it at you, really. I surround myself with people who push back all the time.

Too much, actually. Anyway, we advise that you focus on the company and not at creating weird conspiracy theories around food and Sam Bankman-Fried. Did you ever have any interaction with SBF? Did you know him? Yes, one time. I didn't have him at Code. He wanted to, we'd thought about it. And then I didn't really understand it.

Like you said, I was like, I don't know what he's doing. And it feels sketchy. And he seems like the most stable of this sketchy group, but it's still a sketchy group. And then he wanted to do it from remotely. And I just, no, I just never did. And then one time I had to do a remote thing. New York Times dragged me into something. It was like a five-minute conversation for their staff, and I was incompetent to the task.

I didn't know enough. So I just luckily missed that interview. I probably would have been tougher. I thought Matt Levine did a great interview with him where he essentially said what you're running is a Ponzi scheme. And he agreed with him, which was kind of interesting. All right, Scott, let's go on a quick break. When we come back, a mysterious hack is the least of FDX's problems. And we'll speak with a friend of Pivot, Joe Coscarelli, about Atlanta, hip hop and Spotify. Fox Creative.

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and guides that make it easy to get home projects done. Out. Beige. On beige. On beige. In. Knowing what to do, when to do it, and who to hire. Start caring for your home with confidence. Download Thumbtack today. Scott, we're back. The collapse of FTX has somehow gotten worse. Hours after filing the bankruptcy on Friday, the exchange was potentially hacked. Crypto assets worth hundreds of millions of dollars were stolen from the exchange. An FTX administrator warned users to delete all FTX apps

and avoid the website, calling it malware. Oh, that's great. Meanwhile, there are new revelations about Sam Bankman-Fried, who resigned as CEO. He was the second largest donor to Democrats in the midterm election. Another FTX CEO, Ryan Salameh, gave millions, almost nearly as much, to Trump-backed Republicans. Bankman-Fried was a large investor in Sequoia and other VCs to the tune of $500 million. In a very good move by Elon Musk, he did not take Sam Bankman-Fried's money and actually questioned whether he had it. Smart on Elon's part. Over the weekend, as his net worth dropped

from $16 billion to zero, he appeared to be playing video games online. He, of course, slept awake of charitable giving. All his charitable giving stuff, which was quite extensive and performative, that was one thing that made me kind of, what is he up to? Those people all quit. They were all effective altruists, and this is what they pushed, which I thought was just, that I thought was nonsense. FTS was based in the Bahamas, not the US. He never really left there except for sometimes. The US was working on regulatory regimes around it, but never finished, hadn't finished it yet, around crypto, etc. I don't know if better regulation could have, could have. They were working on it. They were working on it, but never finished, haven't finished it yet around crypto, et cetera. I don't know if better regulation could have. They were working on it. They were working on it,

and pretty quickly compared to other tech legislations. I mean, there's just so much here that's going to come out. And it would be the Jesus Christ of investing if there was an organization that was a Catholic church. I think you could argue that Sequoia Capital are the best investors in the world. They just consistently are one of the best performing venture capital firms in the world. So, I know this first party information. Sam Bankman-Fried was calling people. He'd probably done some scenario analysis and thought, I need to short my balance sheet. He was calling funds in March and raising billions. And I know a fund that agreed to invest $2 billion. And the fund, as they do, said, we need audited financials. And his response is, we don't have audited financials. On Telegram, I'll send you some bullet points about the company. That's how he was raising money.

And he got the money. Sequoia put out this memo that they've since deleted, basically lauding his genius and pointing to him as- Was that a blow job? Oh, my God. As the type of genius they invest in. Slurp, slurp is what I thought when I was reading. So that investment went from 200 million to zero. Yeah.

And it goes back, and I want to take out of this, other than being Monday morning quarterback, a key investment criteria, recognize nobody is as smart as you think or as dumb as you'd hoped. And the key to investing, in my view, is diversification. Because even if you think, I remember when I got into a Kleiner Perkins deal, I got to invest in something called Della and James, which was a wedding site. Oh, I remember them. Do you remember them? Yeah. And I'm like, oh, my God, I'm getting in a Kleiner deal.

That's all. Yeah, because I think Profit was doing their brand strategy, and so they gave us the opportunity to invest. And I thought, oh, my God, these are the smartest people in the world. And I found, I scraped together a quarter of a million dollars, which was a lot of money for me back then. Still a lot of money. It went to zero in like eight months. Wow. How did you feel?

You know, like I've gotten used to that emotion. So this is interesting because the Binance CEO, CZ, who, by the way, better be careful himself, tweeted, calling this a shit show and saying all of the crypto will be blamed even if it's one guy's fault. The crypto community has been lobbying for more oversight, including Sam Bangenfried by the CFTC. I know I've been talking to both the CTFC people and SEC people, they've been going back and forth. They say they're being more cooperative than before. Obviously, withdrawals are rising. A lot of these other companies are getting sucked into the maelstrom. Binance has issues of its own, let's just say, you can read about very extensively. What's amazing is that everybody has been covering this really well. I found out a lot of stuff, probably after the fact.

What's most interesting is two people, actually, Michael Lewis, who just literally is always in the right place, has been following Bankman Freed for six months now. Now he's going to be selling rights to the book. I remember him telling me this in an interview. He previously wrote The Big Short. Hopefully, I think he'll probably write an honest book. He will probably get the ding that why didn't he report it at the time. But, you know, he's a book writer. No, he's not a journalist. Michael Lewis has a reputation for never letting the truth get in the way of a good story.

Oh, stop it. Hold on. He's a fantastic storyteller. Stop it. Hold on. He's a fantastic storyteller. But if you look at the actual data around Billy Bean and Brad Pitt, it's not that exceptional. Okay.

Anyways. I think he's a great storyteller. In any case. We're saying the same thing. He's in the right place. And the same thing with Walter Isaacson, who's written many books on Ben Franklin. He wrote, obviously, the Steve Jobs book. He's been trailing Elon. Michael Lewis deserves everything he's received.

He's a fantastic storyteller. He is not a journalist. This will make for a great Netflix drama. And here's my point. This whole crypto thing. By the way, if you become an acronym, I think that means you're about to kill a journalist or go bankrupt.

It's not a good forward-looking indicator when all of a sudden your name becomes an acronym. Like SG. I can't call you SG. No one calls me that. See, I'm still in the running. No one calls me that. Okay.

But anyways, if you look at the entire crypto market. Wait, what's your middle name? I don't even know what it is. I'm not telling you. Come on, then I can make one. You are very reckless with my emotions. Just what is your middle name? You want to, can I?

Yeah, I want to know. Seriously? Honestly? I honestly want to know. I don't have a middle name. My parents were poor. Now, my parents were lazy and didn't give a shit and didn't think long enough don't have a middle name. My parents were poor. My parents were lazy and didn't give a shit and didn't think long enough to give me a middle name.

My dad wanted to name me Scott with one T after Scotland, which would have been really cool. And by the way, if they just moved me to Scotland and it gave me long enough for me to have a Scottish accent with my rap and a Scottish accent, hello, player. You know what I would have named you? Ewan? Barbara.

You would have named me Barbara? Barbara Galloway. But go ahead. This is, if you look at the crypto market, and I'm thinking about doing a blog post on this, News vs. Noise, coining or parroting Jessica Yellen's great site. But if you look at the crypto market, it's much more spectacle than significant. The entire market capitalization of the crypto market is $800 billion. Yeah, it's not very big. Amazon has shed more value than the entire value of the crypto market.

So while it's going to make for a great Michael Lewis-produced docudrama, keep in mind, Cara, as literally this quote-unquote layman moment was happening Thursday and Friday, what did the markets do? The markets ripped up. Nobody cares. Yeah. It's still interesting. Yeah, and we're fascinated. It's the same way, again, another example, 3,750 layoffs of Twitter, three times the news stories of a layoff that's a third of the size. Amazon loses Facebook in value, yeah.

That's right. So the crypto market is more spectacle now than it is significant. All right, let's bring in our friend of Pivot. Joe Coscarelli is a cultural reporter for the New York Times focusing on pop music. He's also the author of Rap Capital, an Atlanta story about how Georgia's most populous city

has become the center of the hip hop world. Welcome, Joe. We're not hip-hop experts. My sons are, so we appreciate you coming on. But there's a lot of things we want to talk about around your book and also Spotify and the music world and online. I know you're super well-versed in that. So talk about the book itself. Atlanta has taken the hip-hop crown, and most of its history has been New York and L.A., I believe, according to my sons. But I quizzed them this morning. Tell us a little bit about how Atlanta became this. That's about right.

You know, traditionally, New York and L.A. are thought of as the hip hop centers. You know, there's been there's been stuff out of Chicago over the years. Britain. Yes. You know, the U.K UK is big right now. But, you know, basically, for the last 30 years, Atlanta has been this sort of pesky upstart. And it just, you know, keeps taking the crown over and over again. And that starts with groups like Outkast and LaFace Records. You know, Usher came out of Atlanta, TLC. Some record men in the 90s really started making a name there because it was a black Mecca, right? It's this place that's known for civil rights. It's known for historically black universities and colleges. There's a real, just a creative energy there. And it's also affordable. It's the South, but it's a city. And from then on, they created this infrastructure and it just allowed,

you know, generation after generation of sort of more experimental rap artists to really come from nowhere. Killer Mike is there, right? Yeah, Killer Mike came out of the same Dungeon Family scene that Outkast did. And you just get these, it has a small town feel. And I think that that's really important for any music scene. feel. And I think that that's really important for any music scene. You know, when you think of Laurel Canyon in the 60s and 70s, or you think of London for punk music and post-punk in the 70s and 80s. And it's these groups of people who grew up together, their family, their friends, their rivals, and they really... And they create communities. I mean, I interviewed Killer Mike

about that, about the ability to communicate. And it's not just hip hop, there's others. But so talk about the impact of hip we're at a moment where hip hop is outlasting rock in terms of its flexibility as a genre and its cultural dominance. You see it in tech, you see it all over the internet. TikTok, every slang word that people are using comes from rap music and even people who don't know who these modern artists are their influence trickles down or more accurately it trickles up through like you're saying your sons through through young people through teenagers this is the youth music of my lifetime uh and you see it you know in in in sports and and in business you know all these all these Fortune 500 companies, they're trying to borrow cool from these rappers. Is it because of streaming? And is that what has made it more so as it's moved forward or not? Streaming really revealed, I think, that rap was the dominant mode for music and popular culture. It changed who the gatekeepers were, and it allowed us to see in raw numbers on Spotify, on Apple Music,

go open your iPhone and go to the Apple Music charts, and it has dominated songs 1 to 100. Like you said, maybe a little bit of Taylor Swift in there, but these are regional rap artists, specifically Southern storytellers in there. But these are rap artists. These are regional rap artists. Specifically, you know, southern storytellers really, really dominating this conversation. And yeah, streaming, I think,

just opened people's eyes to this. And now you have all of the old-fashioned companies and gatekeepers trying to play catch-up because they see where the raw energy is. Rap, I would say maybe with the exception of superhero films, it's the dominant cultural force in entertainment

the last 20 or 30 years. Money, popularity, everything. What do you think are the pillars that led to that moment? It had to be more than just the music. It had to be, I always think of it as sort of cultural appropriation, that the music you listen to is the culture you want to absorb personally. What were the pillars that made this, you know, in those last two or three decades, the moment for rap? And I'm also curious

if you see any of those moons lining up around another art form. I mean, youth culture has always been about danger and sex and pissing off your parents. And we've seen that since NWA roll. Yeah, since NWA, except rock and roll is not risky anymore. Rap is where the is, is it's subversive. It's fun. It's, it's party music, but it's also telling you stories about, you know, a world that you might not get to see every day. And I think it works on two levels. And that's something that I really wanted to drive home in the book is that there are people who relate to this music firsthand. This is, you know, music that is telling of underprivileged neighborhoods of, of racism in America, of, of forgotten,

of a forgotten generation of specifically young black men and, and people relate to that struggle. And I think that, you know, when when you have a when you have a groundswell of neighborhood stuff, and this is why Atlanta has always been so great is because even in the internet era, the Atlanta stuff is really happening on the ground. It's a grassroots scene. These artists are local celebrities, sometimes even before they start making music from just being guys who are known to, you know, however it is, get money and be in the club and see and be seen. Like national for country. Exactly.

Like national for country, yeah. And there really is this grassroots scene. And then you get the kids from all around the country, like, who want to borrow some of that cool. And I think that we've always seen that in youth culture. And rap music is youth culture. They're also very active on social media. You're like saying TikTok and things. You've used all these things.

There's a real different relation between artists and fans now, I think, in a lot of ways that there's these direct relationships. How does that affect it? Because it feels as if that they follow the people, not the labels, not nothing. The way they discover stuff is so different than the way we did. We sort of got an album drop and then you, you know, very traditional ways, but the way they discover stuff is really fast and how they trade it among themselves. Like I found this, what about this? Yeah. The fan base that is so intelligent online and so young and rap was really primed for this because rappers were always sort of making their own way. And then when technology democratized the tools needed for the industry, when you didn't have to go to a studio and spend hundreds of dollars for an hourly recording session, you could just do it on your laptop, upload the shoot a video in your house, upload it to YouTube, start an Instagram page, make your own dance craze. This is just, this is all, this is like a DIY culture.

And then you have the corporations that can swoop in and take it international. But it's really, and this happened from the jump. You think of somebody like Soulja Boy. I don't know if you guys remember that dance craze. You know, that was almost 20 years ago at this point. But he was one of the first rappers to, you know, be on MySpace, to be promoting himself hands-on with the crowd. And this is something that has just grown and grown and grown. And these artists can do it basically by themselves.

Well, you're also talking about entrepreneurship. One of the reasons I wanted to interview Killer Mike is because he had a lot of things going on. He had a bank, he had a restaurant or a club and all kinds of things. And so can you talk about the entrepreneurship? Yeah. So whereas you think of rap music, you think of success. This is music that comes from struggle. You have to start from nothing, basically, or you have no credibility. And then unlike, you know, in rock or in punk, you know, you think of the independent rock of the 80s and 90s, and selling out was the antithesis of the ethos. Whereas in rap, it is all about what you can achieve. And it's all about showing other people from your neighborhood that you came up with,

the people, you know, who might not have made it out, what is possible. And I think because of that, there's a real that, you know, think of Jay-Z, one of the best known businessmen in America at this point and someone who is looked to as a hero. And then for every Jay-Z, there's hundreds of local artists who do the same thing for their direct community. And I think it's all about the proximity because, you know, from behind our computers, we might look at these guys and think, oh, what's with all this jewelry? What's with these fancy cars, these big houses, the materialism of rap? But this is coming from a place that was told over and over again in America that it could never achieve anything. These echelons of, you know, the art world, the stock market were not for them. And I think, you know, when you overcome what some of these guys have and women have overcome, you know, these material possessions are trophies and they're armor and they're a middle finger.

They're an FU to America and the power structures that we live under. Well, there's an authenticity to it that resonates with people. I wanted to talk about Spotify. Sure. Because I know you've thought a lot about it. And what I see from a consumer and a business standpoint, I don't think any company has distilled an entire medium down to a searchable icon. I think what Spotify has pulled off here is just nothing short of remarkable. And at the same time, it's off 75% from its high. It's worth $16 billion, which isn't a lot. It's below its IPO price. I mean, from a consumer standpoint, you look at Spotify and you would just go, remarkable. This should be worth more

than Amazon or Meta. That's what I would think if I didn't know the business. Why has this business from a shareholder standpoint not worked? People don't value art. I don't know how else to put it. You know, I think the idea, like you're saying, that you can have almost the entire recorded history of human music at your fingertips for however much it is, you know, $9.99 a month. And the labels are making a ton of money, right? Spotify and streaming in general rescued an industry that was long gone when they got off their highs of selling a little plastic disc for $20. And when that train stopped, people thought it was a wrap for this industry. But I think that we see this over and over again in the arts, and especially because the labels are the ones really making money off of this. Artists out here are struggling.

You see artists complaining about the fractions of a penny that they're making. Unless you're a Drake or a Taylor Swift or a Lil Baby, you know, like people aren't really making money off of these streams. But I think, you know, it's hard once people realize that everything is just there for you. The math just isn't there to be able to support all of these record companies and also the artists for, you know, the piddly monthly fee that we're paying. And also there's endless new discovery on Tick Tock. One of the things was the rise of Trump. And one of the things I was noticing, some of them, he was a popular figure in rap for a long time.

He's in hundreds of songs. Talk a little bit about the political aspects of this, because they certainly had negative responses to Trump, but he was also something to manipulate for entertainment, too. I mean, Trump is nothing if not a pop cultural icon. And throughout the 90s, you know, he's been courting rappers for 20 or 30 years. There's a Nancy Jo sales piece in Vibe from the 90s about Trump hanging out at clubs with rappers. And up until his very last day in office, he was doing this. He pardoned Lil Wayne and Kodak Black in his last wave of his magic wand. know, he's always after the Black community. And they see him as an outlaw in a similar way. There's a kinship there, I think, between certain rappers and Trump in the way that he's been able to say and do whatever he wants, but also in his tackiness, his flashiness, and his vulgarity, his willingness to put his wealth front and center. And I think that that's been complicated.

You know, there's, I mean, hip hop, just like the black community is not a monolith. There are as many anti-Trump songs as there are pro-Trump songs. But he, you know, he operates in this in this celebrity milieu and he's always been able to maneuver his way around it. Now, you mentioned Kanye. I mean, you've just had the same reaction we all have. Look, I will say this. Kanye is a sneaker mogul who used to rap. He hasn't been really relevant. Now he's not a sneaker mogul anymore.

He really hasn't produced anything relevant in a while, has he? Almost nothing of note. This guy's gotten away with saying whatever he wants for decades. And, you know, I think he just continued to push it. You know, I think you're a billionaire, you're removed from your roots, you're removed from your music career, which is the thing that initially people paid attention to you for. And we see this over and over again with the richest and most powerful people in the world. We've noticed.

Yeah, as soon as people stop telling them no, they're just going to keep pushing and pushing. And I think, look, I mean, Kanye is in his mid-40s. Like, his time is up in the rap world. And he's had this success in fashion and as an influencer and as a provocateur. But, you know, I think he's out of, he's out of runway right now. And, you know, how the mental health stuff, you know,

how the mental health stuff interacts with that is like, you know, way above my pay grade. Joe, would you counsel someone to go into the music business right now? Do you think it's a good business? At 22, just out of college, I'm interested in music. I'm interested in tech. I'm interested in pharmaceuticals. Would you counsel for or against going into the music business? I think if you want to be behind the scenes, there's more opportunity than ever. I think the streaming services, the labels, the publishing companies, you see private equity hedge funds getting in the catalog business. I think this is a booming business right now with streaming. I think being an artist has always been

an unforgiving field. I think fame is a disease. I think wanting fame is a disease. If you want to be a musician, it better be the only thing you could think about at any given moment. And it better be in the top 0.01%, right? Exactly. But on the business side, sure. I think there's definitely innovation to be found and money to be made. All right, great. What's the next capital, rap capital?

What's the upstart now? I mean, New York is coming back. There's these drill scenes in in brooklyn and the bronx unfortunately they are you know quite tied to gun violence and and tragedy especially among young people but look this is this is america and people can't look away from that stuff yeah that's what we want in our movies in our in our tv and in our music it's violence and drama. I've been listening to a lot of drill. Well, good for you. Not by choice, but nonetheless, I know a lot about it now.

Anyway, the book is called Rap Capital, an Atlanta story. It's out now. Thank you, Joe Coscarelli. We really appreciate it. And people should watch out for Joe's amazing stuff on the New York Times. His videos make me understand stuff I don't understand. I think they're wonderful. Thank you so much.

Thanks so much. Thanks for having me. This was fun. Nice to meet you, Joe. He's a thoughtful writer. I've always liked him. Yeah, he's a great writer working for The New York Times writing about rap culture. I mean, it says something really wonderful about America.

Scott, one more quick break. We'll be back for wins and fails. Okay, Scott, let's hear some wins and fails. My loss is America has always been about individuals and exceptionalism, and I think it's gone too far. And a big source of comfort for me is atheism and believing that there is no Jesus Christ. And I think that's gone too far. And a big source of comfort for me is atheism and believing that there is no Jesus Christ. And I think that as America has become more educated and wealthier, our reliance on a super being or church attendance goes down, but we still try to find these all-knowing individuals

that will lead us to the promised land. And I think it's gotten out of control. We call it a cult of personality. But the big fails, if you will, and this is a good thing, the big fail last week was individuals or this Jesus Christ idolatry of the individual. Believing that everything a tech person does is genius and they're infallible. a tech person does is genius and they're infallible. Believing that a 30-year-old is not subject to any sort of corporate governance and believing that he is infallible, believing that an individual who consistently, that Kerry Lake or Donald Trump or whoever it is, are bigger than our democracy, and you should

trust them. And then when they say that there's voting irregularities, even though they have absolutely no evidence of that, that we should defer to them because they're Jesus Christ. Last week was a fail for these cult-like figures. And it directly goes to my win, and that is my win is institutions. And institutions matter. The connective tissue around a nation, a culture are institutions. It's what binds us together.

And whether it's the electoral process and the democratic process and the largest democracy in Latin America, Brazil is holding peaceful transfer power. Whether it's the Arizona Electoral Board, which appears to be holding. Whether it's – Run by a Republican named Bill Gates, weirdly enough, but go ahead. Whether it's the SEC or FINRA that people are all of a sudden finding have value, that these institutions that actually think about this stuff and try and protect retail investors, that institution called FDIC Insurance, What do you know? It has value. Yeah. So this was, I think, a big week, a terrible week.

Nature is healing. I'm not an optimistic person, Cara. You are not. Last week was a wonderful week for the West, whether in the last- Ukraine? Ukraine? In the last year, NATO, the European Union, the U.S. dollar, the Fed, I think, is doing a good job. The meeting was G, calming things down. Anyone who decides that they are bigger than the electoral process.

And also, we've had not very many, but we have had some Democrats who lost elections. The Georgia election was largely, in my view, won by a person who said, I refuse to fall prey to this notion around election misinformation. The Republican there won, and I think in large part because he was seen as sane. He wasn't falling into this idolatry of innovators or this cult worship. So, our institutions matter. Last week was an enormous win for institutions across the West. All right. Mine, I would say, I haven't seen it yet, but I really want to, Black Panther, Across the West. All right.

Mine, I would say, I haven't seen it yet, but I really want to. Black Panther, Wakanda Forever. I saw it. Oh, don't tell me yet. Scores $180 million opening weekend. Highest November debut ever. By the way, Sam Sanders, host of the New York Magazine podcast, Intuit Talks with New York Times cultural critic Wesley Morris,

another fantastic guy at the New York Times, about what big franchises like this actually owe fans. Did you love it? Did you love it? Did you love it? You're going to love it. So it's a little slow in parts, but it's a great movie. And it's an important film because, and I apologize, I'm hijacking your win. Yeah, you are.

For the last 30 or 40 years, actually, I don't know, the last 400 years, we've been romanticizing and film like really strong, good-looking white dudes. really strong, good-looking white dudes. This movie has so many strong, beautiful women of color. Angela Bassett nominated, who should have won Best Actress for What's Love Got to Do With It, is an amazing actress. She is wonderful in this. And the whole movie has all these incredibly strong, beautiful women of color. Tell me not more. I love Angela Bassett. She's one of my favorite actresses. I would put her near the top of my favorite. I love her.

I find her poignant and beautiful and funny, everything else. The other thing is Dolly Parton, speaking of which, gets $100 million from Jeff Bezos for being herself. She can give away to charity. I thought that was great. Well, it's good to see Dolly finally have some money. No, but she's giving away to charity. Good, good. Give away Jeff Bezos' money. Give all the money to Do Dolly finally has some money. No, but she's giving it away to charity. Good, good. Give away Jeff Bezos' money.

Give all the money to Dolly Parton to give away. And he announced he's giving his money away, right? Yeah, he's giving his money away. But nonetheless, Dolly Parton should run it all. And then Carrie Lake's failure here is she's been such a nasty piece of work. Awful. Terrible American. I have to say SNL nailed her, rather.

And by the way, someone who made fun of Trump's weight a couple of years ago made fun of the Republicans a couple of years ago. And then, I'll tell you why she lost. She had to insult a dead man, John McCain, in front of McCain supporters. Like, get out of here. Who says to voters, get out of here, I don't want you, Republican voters, when you're running as the Republican candidate, you know, they gave her a big fuck you. And she's not going to lose by a lot, but it looks like she's losing right now. And it's well-deserved, given what a nasty piece of work.

Vaseline-encrusted, nasty piece of work she is. Some serious fade-down-away plays Joan Crawford energy there. Just bad. And both of those are nicer. Just deserves. And by the way, SNL, if you haven't seen it, Cecily Strong nails it. Oh my God, genius.

It was creepy. It was just fantastic. Go do yourself a favor. Anyway, that's our wins and fails. Nature is healing and things are getting better, we hope. And Scott is making friends in London. Memento mori, as we like to say. There you go.

We want to hear from you. Send us your questions about business tech or whatever's on your mind. Go to nymag.com slash pivot to submit a question for the show or call 855-51-PIVID. Scott, that's the show. We'll be back on Friday for more. Please read us out. Today's show was produced by Laren Naiman, Evan Engel, and Taylor Griffin. Ernie Intertott engineered this episode. Thanks also to Drew Burrows and Emil Severio. Make sure you're subscribed to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back later this week for another breakdown of all things tech and business. Memento homo. You are only a man.