Pivot - DeepSeek Shockwaves, Nvidia's Plunge, and Target's DEI Rollback

Episode Date: January 28, 2025

Kara and Scott discuss the panic in Silicon Valley and on Wall Street over China's new AI model DeepSeek, which sent Nvidia and other tech stocks plunging. Is this a troubling trend for AI and the markets? Then, Trump almost starts a trade war with Colombia, and Oracle is reportedly in talks to take over Tiktok. Plus, Target becomes the latest company to end its DEI efforts. Follow us on Instagram and Threads at @pivotpodcastofficial. Follow us on Bluesky at @pivotpod.bsky.social. Follow us on TikTok at @pivotpodcast. Send us your questions by calling us at 855-51-PIVOT, or at nymag.com/pivot. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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and the Vox Media Podcast Network. I'm Cara Swisher. And I'm Scott Galloway. Scott, what do you think I did this morning? You know, I don't know. What did you do this Scott, what do you think I did this morning? Hmm. You know, I don't know. What did you do this morning, Cara? Guess who might be living in Washington, D.C.

Lucky. Oh, you moved your mom down to D.C.? Not yet. Not yet. We're looking at this new – they took this amazing hotel, the Fairfax Hotel, that was a Ritz-Carlton, it's right down on Embassy Row, and they've turned it into a senior facility that's very elegant. We have fans there, by the way, Brian,

shout out to you, Brian of the innovation part of this thing. But I'm thinking of making the move. We should do a whole show on dealing with elderly parents and stuff, you and I should, I think. Yeah, it basically makes a Fellini film feel like a musical fucking comedy. It does. We both have faced, so many people are facing this challenge.

Wherever you are on the spectrum, it's something, it's really difficult the way our system is set up for people who need help or extra help for figuring out nursing. This is a beautiful facility. I'm not going to name the name of it, but it's really lovely. Lucky requires a certain level of, you know, fanciness. But it's really difficult because you have to figure out where to put them, the nursing care, the medical care.

As people get older, you have to have things that have like graded. You just need a little help, more help, the most help, et cetera. It's really something. It's, it's takes a lot out of your system. Yeah, it's a ton of time. I mean, you have one, the costs are incredible, and two, unfortunately, sometimes your parents are not very cooperative.

Correct, correct, correct, correct. How did you know? Well, at least with kids, you're bigger than them, and you can kind of like force them to do what you want. With people who are actually legally can make their own decisions. It's very hard to just say, no, this is where you're living. And you got to sell it. You got to sell it. It's so funny because last night struggling with Saul over a whole bunch of things

and then my mom's actually being very cooperative. She wants to be right near me. But it's really interesting because, you know, I'm like dealing with Saul and like potty training or whatever it happened. I want to carry this train. I want to do this. And it's very similar techniques. Yeah, you're right.

You can carry a kid and throw them on the bed or whatever. But yeah. Similar to put on your fucking shoes now, or you're going to get a thick ear. That's my father used to say now. Really? That's what my dad used to say. He used to threaten me.

I'll give you a thick ear. And I had no idea what that meant. And then I made the mistake of asking my mom, he was like, his father used to hit him so hard his ear would swell. Yeah. And I'm like, that's what a thick ear? That's a cauliflower. And I'm like, ah.

And it's funny, my father never struck me, but the fear of it, I think was much more, was a much greater deterrent, because he seemed literally like a trigger, a hair's trigger away from hitting me every seven minutes. Yes, yeah, yeah, never did, never did. Never did. Yet there is that, you know, balance,

like I definitely saw an eye or like, he's like, huh, can she get me? I don't know, can she catch me? You can see him like doing that. I try to be the tougher parent, but, you know. No she catch me? You can see him doing that. I try to be the tougher parent. No, I go to the gangster move. I'm like, I'm calling mom. I'm calling mom.

Oh, you're like. Okay, never mind. We'll clean our room. Right. Yeah. But Claire, on the other hand, she makes her bed when you ask her. You have to ask her things three times. But anyway, it's an interesting dichotomy of dealing with elderly. Anyway, I love the place. Lucky it will be here.

And so you can see her whenever you come visit Scott. I want to, I want to build. If I get rich enough, it's still motivating for me. I want to get a little bungalow, not a Mar-a-Lago, but at 11, that strip club. Oh yeah. I want to get a bungalow on like the fourth floor. Yeah. Why?

You know why I know about 11? Because we were on the beach in Miami and they kept going by with a plane saying Eleven. Is it a strip club? Is that what it is? It's an entertainment facility, Kara. It's nightclub review. I've never been, which is actually true. I'm still waiting for someone to invite me.

But what they've done is they've kind of thread the needle between a club, a restaurant, and a strip club so it doesn't feel as down and dirty that you're going to a strip club and it's on fire and they get big DJs and anyways. Yeah very much like this senior facility I'm putting mom in is just nice enough. Someone did a study of the businesses that have the greatest survival rate and seniors care facilities have a 90 plus percent success rate. And the reason why, and it goes back to this, I always like to bring it back to a learning,

the sexier the business, the lower the return on investment and the lesser the likelihood it'll survive. And there's very few things that are less sexy than taking care of really old people, but they're great businesses. It's also disproportionately populated by people from the Philippines. And something I've gotten to know being in several facilities with my dad, is that the Mexican culture, or I should say the Latino culture, and especially the Filipino culture, are especially caring. And it really is disproportionately populated by certain

communities, the caregivers. Yeah. I was talking about the economics, like there's the high end ones. There's a lesser high. It's sort of Disney is into it. Is it really, it's a very difficult thing, especially as people live longer, as you know, and we keep them alive longer, actually, when people used to just keel over much earlier. It's hard, though, because my dad, three months ago,

just stopped recognizing me. Really strange, it's declined so fast, and now it's like a baby doesn't recognize me. So now I can't threaten to cut him off. Oh. Doesn't care. Doesn't matter. Doesn't work on Lucky either, and she's totally...

Let me just tell you, Lucky is as sharp as a frigginging tack. Let me tell you, it would be a lot easier if she wasn't as sharp. And she's like, she clocks everything, Scott, let me just say. Anyway, it's just mobility is the issue with her. Well, she's lucky to have you. Yes, it's true. And my brothers who are really wonderful. And my sister-in-law, everyone, Amanda went with me today. It was, it's a, it's a, it takes a village,

let's just say to take care of a cranky little lady. A lot of resources. Yeah, we do. It's a lot of resources. We do, and it's still exhausting. Anyway, we've got a lot to get to today. There's so much going on, speaking of cranky people,

trade wars, TikTok, and Target. But first, this is a really interesting story. I think we have discussed the amount of spending on AI that US companies do, the price of chips, the run of NVIDIA. But there's a new AI model on the scene that's smart, cheap and made in China. It's called DeepSeq. It is causing a panic in Silicon Valley, which is paying a lot of attention and also on Wall Street.

DeepSeq is reportedly outperform models from OpenAI Meta and Anthropic in some third-party tests, and it operates at a fraction of the cost of those models using fewer high-end chips. This is the ones that are made by NVIDIA and are hard to get, and the incumbents have been pricing them up heavily by grabbing all of them. The markets are not reacting well to DeepSeq as of this recording. NVIDIA is down 16 percent.

Oracle is down 10 percent. Microsoft is down nearly 4 percent. Obviously, Meta is going to be affected, all the others. So, there's a lot to talk about, and I've seen different analysis of exactly what DeepSeq does. Jan Lacoon from Meta was making an argument that it isn't as what they're doing, sort of a cheap and dirty version, and it's not nearly as the stuff they're doing as much more advanced by the US companies.

We're going to talk about Meta's AI plans in a bit. They've reportedly set up several war rooms to dissect and analyze DeepSeq. It's currently number one on Apple's free top apps chart. Again, China invading in this country in a very different way. So thoughts on this situation? Because you and I have talked about this quite a bit. Is this money ill spent by US companies, and is it being relegated to the rich incumbents?

Well, first, you just have to temper or put some context to that. I mean, Nvidia is down 15 or 16 percent. It's shed something like a half a trillion dollars, which basically if you take out Tesla, it's shed today the value of the entire global automobile industry sons Tesla. So this is pretty dramatic, but at the same time, that just takes it back to its valuation in October.

When you look at market dynamics, when these companies have experienced these type of run-ups, it is like a balloon inflating beyond its natural capacity and the slightest touch can pop it. And so in some ways, the market was probably looking for an excuse to take these stocks down a bit. And it got it because what's interesting

is Nvidia will have a pretty interesting argument on Capitol Hill saying, when you refuse to let us sell into these countries, they come up with workarounds. And in this case, this workaround might tank the US economy. And everyone's excited by the fact that these models, OpenAI supposedly, their models,

their LLMs cost 100 million to train and they're claiming this thing costs, and they've been public, it's open source, cost a little over 5 million to train and they're claiming this thing costs and they've been public it's open source costs a little over 5 million to train. So whereas the majority of LLMs and AI companies have been taking sort of this brute force strategy where it's buy as many chips as possible, this is saying maybe you don't need as many chips. The thing I find it equally interesting is the second order effects here. And that is constellation energy and some of these nuclear stocks have skyrocketed because the choke point

was supposed to be energy. But now with this model, which appears to have chips speaking to each other in a more efficient, less energy consumptive way, nuclear stocks are crashing, electric constellation energy, all these things have had incredible runups are saying, wait, the entire supply chain or the assumptions we made about the supply chain in terms of the kind of the brute force of chips that we're going to need, the amount of energy, it's all now coming into a little bit of question. But to be clear, the correction here is like, it's taken them back three months and all of the stocks that have crashed, quote unquote crashed are, are only up, you know, 70% for the year now, not 98.

So it's, I think you have to put it in context and a lot of analysts, the smart analysts I've read have said, like every community or any sector, it's going to bifurcate into the cheap layer and then the high end layer, which will still go hard at massive computing and massive energy and do more sophisticated things. And this will be sort of, you know, everything eventually goes Walmart, Tiffany, right? And they're saying this might be the Walmart and it's the Chinese and they'll come up with cheaper models.

But it's fascinating to see that basically this notion, this kind of conventional wisdom that you would need massive GPUs and massive energy may not be kind of the written in law that we thought it was going to be. Let me read Yan LeCun, who's the head of MEDA. I just recently interviewed him, and you can go listen to that long interview about this, but he's writing, to the people who see the performance of DeepSeq and think China is surpassing the US in AI, you're reading this wrong. The correct reading is open source models are surpassing proprietary ones.

DeepSeq has profited from open research and open source. For example, PyTorch and Llama for Meta. They came up with new ideas and built on top of other people's work because their work is published in open source, everyone can profit from it. This is the power of open research and open source. Obviously, this is the way- He's talking his own book.

That's correct. I was just gonna make that point. Llama is open source. Yes, that's correct. That He's talking his own book. That's correct. I was just going to make that point. Lama is open source. Yes, that's correct. That's what I was going to say. But it's interesting. He's having really interesting arguments. And he said, and one of them that he just did, because Gary Marcus, this guy who's somewhat of a crank a little bit, was saying that Congress needs to bring in Zuckerberg and Lacoon to discuss how their unilateral open sourcing decision rapidly undermined the US advantage in generative AI. He goes, an absolutely hilarious take

revealing the complete misunderstanding of the fact that open research, open source accelerates progress for everyone from someone who's repeatedly claimed that deep learning was hitting a wall. But one of the things he just wrote again, because he's getting in there very deeply, major misunderstanding about AI infrastructure investments. Much of those billions are going into

infrastructure for inference, not training. Running AI assistant services for billions of people requires a lot of compute. Once you put video understanding, reasoning, large-scale memory, and other capabilities into AI systems, inference costs are going to increase. The only real question is whether users will be willing to pay enough directly or not to justify capex and opex. I think that's probably, he thinks these reactions are woefully unjustified, and at the same time he's sort of arguing that they aren't, right? Which is interesting. It's just so typical that Chinese, the entire Chinese economy was sort of built on more for less. And my guess is they had a mandate or they've said, all right, we're not going to have access

to the same level of high-end chips. We need workarounds and it appears to respond to really interesting innovation. Using open source. Yeah, using open source. The scary thing, in typical meta-fashion, they're LLM. You can download a version of the llama with absolutely no guardrails and you can request information on anything.

The most politically correct I find of them is anthropic. If I start asking questions about insider trading from Speaker to Emerita Pelosi, it immediately gives me all these things back we cannot endorse nor promote strategies around insider trading. Chat GPT kind of goes straight into it. And I think, I think Lama will say,

well, here's what you do. You call your cousin. There's a lot of really great. So one thing that social media sucks most of the time, but there's a lot of great things called like use ChatGPT, use this and they tell you how to do things like put your deck in and here's the seven things you ask it and it improves it. But you're right, these open source models have been a boon for China for sure in keeping up.

Yeah. Lama is the most open one and has the most information. That's true. Or the most people. I mean, it's the whole argument around open source catching up fast. But I find it fascinating. It'd be interesting to see what happens to the stock. I mean, these companies have already let some air out.

It's already gone to the energy guys. It'll be interesting to see how the market reacts. Is this, I mean, the question is, and I don't know the answer, is this the beginning of a massive correction that will infect the entire NASDAQ, the entire S&P? And quite frankly now, these companies, I don't say become too big to fail, but they fail.

You know, if they sneeze, the US economy is gonna catch a cold right now because the stock market's gonna crash. So is this the beginning of the correction we've been waiting for for 15 years? I mean, a real correction, we had a mild one in 21. Or is this- It does feel a little nervous.

I think people feel a little nervous. I think people feel a little nervous about it, or, or, and it's also kind of in a weird way, an argument for free trade. And that is if we had let them just buy NVIDIA GPUs, would they have figured out this workaround? Would they have felt as motivated to figure out a workaround?

Or quite frankly is today, one of those days we're gonna look back when we're gonna think that was a buying opportunity cause they're gonna resume their hyper scaling. So I think it's fascinating. Well, speaking of world, speaking of free trade, President Trump almost began the first trade war of his term this week and the US and Colombia spent most of Sunday in a standoff effort, Colombia's president said.

He had denied entry to US military planes carrying Colombian migrants saying deportations should be done with dignity and respect. Trump responded by saying he imposed a 25% tariff on Colombian goods, coffee, which was met with retaliatory tariffs from Colombia. By the end of the day, Colombia had said it'd overcome the impasse and would facilitate the planes. I'm not sure what happened, removing the tariff threat. Trump's trying to say it's because he's chest-beating.

So these threats he's making, he seemed to have had it written out and everything else. He misspelled the country's name, spelled it like the place you might get a puffy jacket in the winter, Columbia, the sportswear maker. But in any case, thoughts on this, on the threat he made and where it ended up? Because this guy's social media was pretty tough. Well, we're sort of nine days in the administration and so far we have a meme coin,

which is, in my opinion, grift, a ton of executive orders and where it appears we barely avoided or on the verge of a trade war. And I don't understand. I mean, first off, these C-130s that they were transporting down with people in cuffs and people who had to wear their ice jackets, they could just send them on fucking jet blue, but they want a photo moment. It's symbolic. It's not, in my opinion, there is something indicative of this. I mean, to a certain extent, they want to show action. They want to show they're serious. I get that. But this is sort of unnecessarily coarse and cruel. I don't, you know, I'm, I'm for, by the way, I'm for, I'm for deporting criminals. The most telling thing about this whole effort though, for me was that ISIS

decided the best way to find these undocumented workers or illegal immigrants, whatever the term you want to use, is to go to a place of work. Say we wanted to start deporting American citizens, would we go to a McDonald's? Would we go to a basement or a video game? But if you want to deport or round up illegal immigrants, you go to work sites. And that to me was very telling,

that these folks are actually, they're working. And it just struck me as that sort of ironic, but I find the whole thing and look, we're very powerful. So in the short term, we can flex and people are gonna flinch. Over the long term though, there's the Colombian president who also has his own ego and will have the support of the people now to basically, when China calls and says, Hey, you know what, we'd like to invest in Columbia and maybe we'd like a airfield there,

an air base there. This shit over time, when you shit post people and you treat them poorly and you publicly embarrass them, you may get a short-term win if you're the bigger person, but at some point they're going to bind together and they're going to strangle you in your sleep or they're going to decide that they're not going to cooperate with you. And also when consumers see the price of coffee go up, I find it, again, it goes back to what my friend Jeff Seidman wrote about. I think what they're doing here is probably correct. It's how they're doing it.

They're creating unnecessary enemies where they don't need them. Yeah, yeah. It was quite something. We'll see. It looks like a lot of chest-lumping to me when we have to be thinking broader. But he doesn't want to. You're right.

He wants a photo op. And we'll see where it goes and who he next spells. But please, please, Office of the President, spell people, countries' names correctly. I'm sorry. I find that was just a sloppy. Colombia. We're going to Colombia.

I know. Speaking of which, to explain again why you are that that was just sloppy. Columbia. We're going to Columbia. I know. Speaking of which, to explain again why you are part of Columbia while you're a pro-Columbian. I told you we bought a football team in La Equidad. I'm part of an owner group.

We, I love we. Who did you buy it with? Oh, I don't know if you've heard of them. Rob McElhaney, Ryan Reynolds, Eva Longoria, Kate Upton. It's clear, let's be honest, that Kate demanded I was in the group. Her husband, that Verlander guy, her soon to be her future ex-husband

when she falls in love with the professor and the owner group. Uh-huh. But we're going, you're gonna, trust me on this, my prediction of the next year, you're gonna be at a, you're gonna see La Equidad, you're going to a Grupo a Primera game in Bogota. You fly me down there, I will go.

It's going to be great. It's going to be a tough one. I will go if you fly me down. That's my deal with you, if you fly me down there. Have you been to Colombia? Never. I will go. It's a beautiful country. I understand that. I need you to fly me down there though,

and invite me to a game that will be really fun. Let's do Scotts 60th birthday Redux, okay? This is exactly why I did it. I want to have fun with friends and family and go to football games. What did I, ask me what I did this weekend? I know what you did. Explain what you did this weekend very briefly.

Go ahead. I took my 14 year old to Paris and went to a PSD, Paris Saint-Germain football game against Rennes where they tied. What did you do for your employees too? I heard about that. Oh, really? I didn't do, well, I'm doing a lot of virtue signaling right now.

That's okay. It was very generous. My retention vehicle is the same. Anytime four of them are together, they get my credit card and they take advantage of it. And about eight of them went to St. Barts this weekend, including- Fairness, George Hahn. Including George Hahn.

Yeah, very generous. You're a very good employer. Someone was asking me if you were generous. Itarts this weekend, including- Fairness, George Hahn. Including George Hahn. Yeah, very generous. You're a very good employer. Someone was asking me if you were generous. It's not generosity, it's retention. They talk about it, they brag about it. It's great culture. It's all over social media. That's why I'm bringing it up.

It's not a secret. Very generous. I said you were generous to someone. They were questioning me. And I said, no, he really is actually. This means he stayed at his apartment. He's often generous about things that other people are not. Anyway, let's go on a quick break.

When we come back, we'll, Oracle be TikTok savior, we'll discuss. Breaking news happens anywhere, anytime. Police have warned the protesters repeatedly, get back. CBC News brings the story to you, live. Hundreds of wildfires are burning. Be the first to know what's going on and what that means for you and for Canada.

This situation has changed very quickly. Helping make sense of the world when it matters most. Stay in the know. Download the free CBC News app or visit cbcnews.ca. Scott, we're back. Oracle and a group of investors including Microsoft are reportedly in talks to take over global operations

at TikTok shades of the first Trump presidency. The White House is reportedly negotiating the deal, though President Trump denied working with Oracle this weekend. The deal would reportedly involve Oracle taking over TikTok's algorithm, data collection, and software updates. By the way, Oracle has been working on this through Project Texas and has been dealing with a lot of stuff related to TikTok, so it's quite familiar with it.

Microsoft had been part of the previous thing when Trump tried to ban TikTok in his previous administration when he was anti-TikTok owned by the Chinese, he had brought Oracle in and Microsoft was there. He wanted a VIG for the US taxpayer, which I kind of like. He said the decision on the sale will likely happen in the next 30 days. Obviously, Elon's floating around the basket. All kinds of people are there. There's some others who are not really going to be investors, I would say. We'll see.

So the Chinese might still own a piece of it, by the way, a smaller piece of it. Thoughts? My thoughts are the same, and that is, has anyone actually heard from the CCP? Are the Chinese interested in actually approving this deal? I don't, I think, I feel like, you know, the president could decide he wants to chop it up and give it to his favorite Republican donors. And there's no shortage of tech executives

that would like a piece of what is the most ascendant brand in tech in the last decade, arguably. But has anyone actually spoken to the people in charge? So, the honest answer is I have no fucking idea because I don't know if the CCP has decided, well, if we can figure out some sort of deal that makes the president look good, but we still kind of control it. We still have a back door into the algorithm and it's people that we have leverage

over kids of their business in China. Fine. And maybe we get, get to put this bullshit tariff conversation aside. And if he wants a win and he can talk about it, and to say he's done a deal, he'll give us a bunch of shit under the table. Or they might just say, yeah, let him have all this activity,

and at the end of the day, we're just going to say no. I'd have no insight into the decision-makers here, and the decision-makers aren't in DC or in Silicon Valley, they're in Beijing. Yeah, I think that's exactly right. We'll see. I think the question is, as Mark Cuban put it to me at the time when this was happening, the last go-round, I think, was, what do you get for it? What do you get for it with the Chinese and the algorithm? Can they recreate the algorithm, which is so popular? Again, China's done an astonishing job at creating

a service that is infectious, right? That's really fun to use and everything else. So what do you get with it? They're not going to give you the original algorithm. So what do you get? Do you get the brand? And is that worth that? And can they replicate it quickly, et cetera, et cetera?

And will China even let you do this, any of this? You're correct. Will they even let you? There might be, obviously, behind the scenes things happening, he could threaten a tariff. But over TikTok, he's going to threaten a tariff. It's a much bigger picture with China than just one service. I don't know. I don't see other investors jumping in.

I think the ones you imagine being there, Oracle, Microsoft, Elon Musk. There's a whole bunch of people you can see involved here, and you're right, anybody would want a piece of this. But there is a significant risk of it becoming a MySpace-like situation where it's not worth anything after a certain amount of time and other things. And people may create copies of this in the new thing, so we'll see. But there's no lack of money in Silicon Valley.

Metta's AI spending, for example, we were just talking about what they're doing, but Mark Zuckerberg announced last week that Metta's capital expenditures are between $60 and $65 billion this year, a huge jump from $40 in 2024. Again, most of the money will go towards building expanding data centers to power Metta's AI products. They're doing one in Louisiana. How interesting, right? Where Speaker Johnson is. And Mark noted that data center in Louisiana will be so big, it could cover a significant part of Manhattan. This spending, just, you know, is he trying to top the Stargate announcement?

They're all seeming rushing to make these big announcements and we'll see where those go, right? Spending is not the only way out of this thing, but it's certainly where these companies are headed. It's staggering. I mean, this increase, their capex or meta-capex is up 70% in comparison to 2024, and in 2024 it was up 40%. They announced last month a 10 billion four mile square foot data center in Louisiana. That's the latest of its 27 data centers.

Between Amazon, Alphabet, Meta, and Microsoft, they're expected to spend, I think it's over $300 billion in CapEx this year. And that's about what it costs to put a man on the moon over 13 years. So this is kind of the AI moonshot. And for the same amount, you could build another international space station, reinvent the nuclear bomb, construct six nuclear submarines, and re-dig or dig another tunnel, which I took this weekend to see PSG, Tyrennes. By the way, Paris, Carre, is a beautiful city. I've forgotten how beautiful it is. Yeah, it's still beautiful, remains beautiful.

It's the Catherine Deneuve of cities. Is she in my investor group? I'm sorry. No, she's not. She's not in your investor group. One of the things that's interesting about the spending, you remember when we were like going, God, that $10 billion on the Metaverse is ridiculous?

Remember that? Nothing. Nothing. Nothing, yeah. I mean, just think about that. That was what, two years ago? When we were talking about that. Remember that? Nothing. Nothing. Nothing, yeah. I mean, just think about that. That was what, two years ago? When we're talking about that? And that's gone.

That's like, see you later, allegations. Well, they've spent six to 80 on it now, right? Isn't it? It was 10 or 20 a year over three or four years. It's much less. Obviously, they're still there with the Ray-Ban glasses, but it's much diminished, let's just say. And this is the way they're going.

We'll see if it's money well paid off or if it's not, or if they're racing towards. A lot of people I had talked to now, they're like it's a race to the bottom with this stuff eventually. We'll see if this spending matters. Again, it could almost be like I had an argument with someone online, if you didn't invest in the internet back in 92, there was a lot of spending,

it seemed out of line. Obviously, it wasn't. Anyway, we'll see what happens. Let's take a quick break. When we come back, Target becomes the latest company to roll back DEI. Scott, we're back. This story just never ends.

Target is one of the latest companies to hop on the anti-DEI train. They got spooked because they had some gay flags up and it made their CEO Brian Cornell into a giant wimp. Brian, good to see you. Good to see you being a wimp. I know him pretty well. The retailer will end DEI goals and a program focused on carrying more products from black and minority-owned businesses,

but not everybody is hopping aboard. Costco said 98 percent of shareholders voted against a proposal to review risk to its DEI programs. Same thing with Apple. There's a whole bunch of others. There is a lot of legal attacks by the same people who brought you the attacks on affirmative action and everything else. So, it's going to the Supreme Court, these DEI cases eventually, and some of the companies are holding firm, others are not.

I don't know if it's a bow down to Trump or a way for companies to get out of doing something they never wanted to, put effort in in the first place. I don't know your thoughts on this. I think companies or private companies should do what they want. I think there are laws to protect if you can show that you are of a different compensation

relative to, and your lawyer based on discovery can say that on average people of this group were making 20% less, I think you have a legal case. At the same time, I was on the board of a CRM company and we all looked around the table about eight years ago and said, all right, it's all people with the same color skin with outdoor plumbing. This is an issue. And DEI was warranted or DEI efforts were warranted there.

And if a company recognizes they have a problem or the shareholders recognize they have a problem, I think that some of these efforts still make sense. I don't, it's a nuanced conversation because I would argue that DEI for the most part on campus has gone way out of control. And you typically have DEI initiatives at the most diverse, equitable,

and inclusive places on earth, probably don't need 200 people working in DEI as the University of Michigan has right now. I think that's overboard. I really don't, I think the apparatus should be disassembled to universities. I still think there's parts of the corporate world where DEI is needed.

And if Costco wants to have DEI, that's more power to them. And if Apple does, and if Target feels like it's gone overboard and they don't need it, I think that's their right too. And their shareholders and their consumers can decide if they want to shop there or not. Yeah, yeah, it's interesting. One of the things I had an interesting argument with someone, because say Patagonia, which is very,

it signals liberal, right? Recycling, and a lot of kids like it. They like to do it. And then I was talking about Ben Shapiro was selling razors. He has a very substantive e-commerce business, I think. And they're anti-woke razors. And someone was getting mad at them. I'm like, well, I bought them

because I wanted to see if they're good. They're good razors, by the way. I'm not even gonna go there. I'm not gonna ask any follow-up questions. I can shave my legs. I can shave my legs. I shave my legs. Okay. So I think you should be able to do this on either side. That's right.

I think the issue I have is how angry and ridiculous people like Bill Ackman are over it. They virtue signal themselves how horrible it is. It is not horrible to want to have more equitable for lots of different people because they've game the system for themselves for so, so long. The directionality is the correct one is we want a more diverse group of people. I don't just mean gender, I don't just mean race, I mean age, I mean political affiliation, it is a stronger company. Their anger and ire is so out of line with figuring out a great way to be more

equal as country that it's kind of like, to me that's the tell with these people is they just can't shut the fuck up. And then they blame like Elon, like the plane crash because of DEI, this happened because of DEI. They attribute it, the fires DEI. None of this is true. And that drives me fucking nuts.

Or like Megyn Kelly calling, making fun of fat lesbian firefighters. Like give me, there's so many fat firefighters who are white men. Like let's stop with this. You know, whatever, it doesn't really matter. But using it as a cudgel has gotten way out of line. That's my feeling on the whole thing.

It reminds me of the trans issue. I think corporations shouldn't be legally mandated to have a third bathroom for people going through transition. I think it doesn't make any sense to have transgender women participating in sports where there's college admissions or money on the line. But at the same time, why do we feel the need to demonize a group of people

who have probably taken enough shit on their own? It's like we can't, it's just as that notion you can never spot visually a pendulum on a clock when it's at center. The Democrats, I would argue, are usually right, and then they take shit too far, and we create open space for an overreaction that is cruel and coarse and un-American. Absolutely.

Anyway, speaking of a case that I'm really interested in, Character AI has filed a motion to dismiss the lawsuit brought by a mother whose 14-year-old son committed suicide, allegedly after interacting with a chat bot for months. Character AI's lawyers say the platform is protected by First Amendment. They're also arguing users First Amendment rights would be violated, not the companies, if the suit succeeds. You'll remember I spoke with Megan Garcia, the mother who brought this case against the character AI and Google, along with her lawyer back in December.

Garcia's lawyer, Metali Jane, was already anticipating part of this argument from the other side. Let's listen. We've seen platforms kind of leveraging a one-two punch and doubly insulating themselves both with Section 230 and then alternatively with the First Amendment. And I think here too, with the First Amendment, there's a really good case that this is not protected speech. So anyway, they're going to try to do that. I just feel like kids shouldn't be using these things. there's a really good case that this is not protected speech. So anyway, they're going to try to do that. I just feel like kids shouldn't be using these things.

Maybe that's the issue. Adults is another issue. The latest motion did not address Section 230, though it's possible it'd come down the line. Obviously, they're saying that their bots can say anything they want, but of course, we prosecuted a young woman for convincing a young man to commit suicide. So this is not free speech, this is dangerous speech and especially when it's kids under 18 years old. I'm sorry. These people should go to jail as far as I'm concerned, but thoughts?

Word, sister. By the way, I love your hairless legs. Look, they're trying to create another moat and put one alligator in it hoping that it creates delay and obfuscation and more costs, but ultimately I think they'll go to the 230 excuse. But simply put, algorithmically elevated content should lose or be absolved of 230 protection. And in addition, if your platform is readily available to anyone under the age of 16, we need age gating

and also age liability, similar to if someone shows up to your bar and drinks a lot and they kill someone on the way home, you're in trouble. But if a 15 year old shows up to your bar and you serve them and they kill someone in themselves, you are in deep, deep shit. And that's what it should be here. And that is, if you read this story, I mean, it brings up a few

things, it also brings up issues, really important issues on gun control. Like how did this kid have access to a firearm? But this is every parent's nightmare that your kid develops what feels like a parasocial relationship with someone who can encourage him to kill himself. And also this to me feels like at some point, we gotta get rid of section 230 for algorithmically elevated content. We gotta have age gating where there's

a different set of liability if you can reverse engineer self-harm or physical harm or whatever it is, just anxiety among teens, what other product is allowed other than guns? Well, even guns, they're not allowed to buy them. I mean, most, most gun manufacturers and gun retailers won't sell to people under the age of 18, but you can go on and establish a relationship. And basically this, this, this bot can say, I'm waiting for you, my prince, and encourage this bot can say, I'm waiting for you my prince and encourage you

after you say, should I end it here? Anyway, this to me feels like something that a senator or a congressperson should pick up and run with. Yeah, absolutely. Character AI have contacted a dozen people around this to take a look at it and they have Ro Khanna, many others. So I'm not giving up on this case at all. It's really, you know, as a guy with kids,

it's just if you don't have to have kids to be concerned about this, you would prosecute someone who did this to your kid who's living. You're going to, we're going to be prosecuting these bots. The people who are living can't do this. People who are actual humans can't do this. Neither can bots. They absolutely cannot. Anyway, one more quick break. We'll be back for wins and fails.

MUSIC Okay, Scott, let's hear some wins and fails. Would you like to go first or shall I? Why don't you go first? Well, a win. I got to tell you, I'm watching Severance so, so good. Oh really? Ben's show. Ben's show. He directed a lot of them.

He's not the writer of it, but it's his show. He produces it. I went back and we've been watching the last, I'm going to interview him soon, watching the last couple episodes of last season, but it is then now watching the new season. It is such a fantastic mind-fuck and it's everything we talk about around yourself, where you split your work, it's return to work, it's isolation, it's technology.

It's so funny. It's a workplace comedy, but it's not. It's a thriller. There but it's not. Like, it's a thriller. And it's, it is, there's all these characters who, let me just say, all these actors are superb. And some of them I've never seen. There's two in particular who are astonishing, who I've never seen. There's some well-known actors who are killing it here,

like Christopher Walken and John Turturro. I just, every bit of it is beautifully designed, beautifully photographed. Adam Scott, who's the main character in it, is amazing. The visuals just, I cannot say enough about the show and it's so smart but also accessible. I just love it. I have to say that is my win.

My fail is as I predicted, there are going to be increasing numbers of efforts to get marriage, gay marriage, in front of the Supreme Court again. Idaho is the latest trying to push up against current law, trying to get the Supreme Court law that passed gay marriage over Gafel. And so it's been legal, same-sex marriage has been legal in Idaho since 2014, but they are trying, the Idaho lawmakers want to overturn same-sex marriage decision and bring it back to the states. So they're trying to get a challenge to that, to take it to the Supreme Court, because some of the new Supreme Court justices and some of the others are trying to make the same thing with abortion.

And I don't care. We were right about abortion and I'm 100% right here. They want to bring it to the states. They want to undo its Obergefell versus Hodges. It was a landmark decision that gave same couples the right to marry. Obviously, they're attacking the 14th Amendment, which is part of it, is based on that, and they want to reverse it. And so there's all kinds of funding, just like the people who are doing DEI, just like the people who are doing that, they're going for this to try to get it to the Supreme Court so they can do something like they just did. That's all they're doing is a naked grab for overturning the gay marriage Supreme Court decision like they overturned Roe v. Wade. It's very vulnerable to court justices, Clarence Thomas and Samuel Alito said it should be reconsidered.

We'll see, it's theater, but they're going to try to do this. They're trying to get a case up there that will make it happen. The same way they're trying to get a libel case up there so that journalists lose their libel protections they've had for so long. So I just watch this space. I keep saying it. I'm not overreacting here. It's disturbing. I don't know what they'll do with current marriages, but boy, is it, I'm frightened for all of us. Okay, so my win is, it's a strange one, I'm trying to figure out a way to pick the right words here,

but I think it's important that we continue to commemorate and recognize key moments in history such that we don't go back there again. But today is the 80th, we're recording on Monday, it's the 80th anniversary of the liberation of the Auschwitz death camp. Originally envisioned as army barracks, then turned to prison for Polish and Soviet prisoners, ultimately became a real stain on the species or our modern world and ultimately became the largest single site

of the greatest murder in history. 1.3 million people sent there, 1.1 million were murdered, 900,000 Jews, one out of basically six Jews murdered during the Holocaust perished at Auschwitz. But it wasn't just Jews, it was Gypsies, Polo civilians, Soviet prisoners of war, political prisoners, people with disabilities,

Jehovah's witnesses. Gay people. Jehovah's witnesses. Actually, there's some nuance there, gay men. And then the Nazis also imprisoned and killed people they saw as asocial, including homeless people, sex workers, and those accused of petty crimes. It's important in the King showed up, the King of England, Macron showed up,

the Chancellor of Germany showed up. I think it's important. I do also think it brings attention to other genocides, whether it's Armenia, Cambodia, genocide in Ukraine. I mean, it's important, Rwanda. I think about this a lot because unfortunately, I'm fascinated with World War II history, but I can tell you have certain triggers when you're not doing well. When I feel myself going dark or depressed, I'm thinking too much about the Holocaust. I go there and it takes me into the Holocaust. I go there and it takes me into a downward spiral. And the way I've tried to think about it instinctually and anthropologically is that just as our instincts have not caught up to institutional production around eating or gambling or sex and porn, our instincts towards rage and demonization and perceiving enemies as a means of protection.

It has not evolved to industrial production. And unfortunately, this was the most horrific case of a group of people perceiving enemies where they didn't have them and then combining it with industrial production that just resulted in what was kind of the ultimate horror. But I think bringing people together to recognize what are, what is important. And because basically all the survivors are gone or nearly all of them, they're all dying off. And I have, I don't collect art, but I have a photo of Otto Frank in the attic, where Anne Frank was hiding before she ultimately was discovered. And I don't know if she's the most famous person who perished, but whenever, literally whenever I think of, I'm starting to feel sorry for myself.

I just look at that photo. But today marks the 80th anniversary of the liberation by the Soviet army of Auschwitz. And I think it's a win that our society still says we need to recognize this and we need to pause. And also it is especially dangerous and heinous and needs to be called out when the president uses terms like they're poisoning our blood or when the wealthiest man in the world says you shouldn't dilute your culture. He was in Germany. Be clear where he was.

Speaking to a far right group. Called Alternative for Germany Party, just so you know. This is literally taking a page out of the pre-playbook, the game plan for early 30s Germany. And to think that it can't happen here, just look at Germany in the 20s and 30s. It was a thriving community with a really prosperous gay community, an art scene, a music scene, the best universities in the world, the most celebrated academics,

including Einstein and others. And then on campuses, it started breaking out. Anyways, it's important that we take time to stop, recognize what happened here, be very transparent about it. Absolutely. I was really moved by the fact that so many important world leaders decided to take time and recognize it. I'm appreciative and I think it's important of their time. Can I just say, let me just read Elon's quotes. He said, there's too much focus on past guilt, which was Nazism. It's good to be proud of German culture,

German values and not lose that in some sort of multiculturalism that dilutes everything. We don't want everyone to be the same everywhere where it's just one big sort of soup. I don't even know what to say. Well, in word to a South African who immigrated here, the American culture is multiculturalism. That is our culture. So when you talk about diminishing the power of multiculturalism, you're diluting what is America.

And that has absolutely no place in our discourse. And it should be called out for what it is. And that is catering to the worst instincts of our species where institutional production colliding with these terrible instincts can result in a Single site that murders more people than any site in history. And if this type of rhetoric continues to spin out of control and we continue to demonize people with the Institutional production and tools we have at our disposal right now. It could make Auschwitz seem like a fucking garden party. So this stuff needs to be arrested and checked. And I think that event helps that. Anyways, enough of my indignance.

There's never enough indignance on that topic, but go ahead. My fail is the Democrats had two and a half months to prepare, or the Democratic leadership had two and a half months to prepare for Trump being president. He's doing it to his credit. He's doing exactly what he said he was gonna do. And I can't stand this.

We need to come together. We need to work with him. They're scared of being primary or not elected, or they think this tells us, okay, we need to rethink where America is. And my attitude is I'm sort of at the point of where Sarah says I choose violence. I don't think Democrats should be heeding a call

of coming together. I think they should be heeding a call of coming to the rescue. And that is what is going on. Some stuff you ignore, the stuff around, I believe deporting immigrants who are here illegally, I get it. Renaming gulfs of cheaper eggs, fine.

Have at it. But some of the stuff around the grift around the coin, some of the stuff around, I mean, just the coarseness and cruelty of the way they're going about stuff, deficit spending, reducing, threatening to eliminate the security details of your political enemies. The Democrats need to find somebody

who isn't day trading their stocks, speak room to Pelosi, doesn't brighten a room by leaving it, a Senate minority leader, Charles Schumer, and we need to find people who can actually speak eloquently and forcefully to what is going on here and push back. Who would you pick? Well, I think AOC does a great job. I think Westmore does a good job.

I think Representative Torres does a good job. I'm waiting for Senator Klobuchar to wake up and talk about the importance of the direct correlation between inflation and this out of control deficit spending and these immigration policies. I mean, where are the fucking Democrats? We should be having, in my opinion, we should having, I wanna have the, why wouldn't we have the Energy and Commerce Committee

immediately get a subpoena Twitter CEO, Yakarino, because there's now pretty decent evidence that, okay, they created thousands of bots, spun up their algorithm for pro-Trump content. I want her to, under oath, tell us whether or not the corporation engaged in spinning up thousands of fake accounts to spread misinformation, trying to get one candidate elected. And by the way, it may not be illegal, but I want her to tell us whether that happened or not so that the American public can decide if they want to engage with Twitter. The Holman Security Committee should decide whether or not we need laws that say, all

right, if every former official, if some former officials are going to have their security detail removed, such as Dr. Fauci, then everyone needs to remove. You don't think Stephen Miller's going to need security after he leaves this administration? So there needs to be, the Democrats, in my opinion, need to wake up and start pushing back and start calling this for what it is. This is not a time, in my opinion, and I understand the very noble cause, but we're always the ones that wanna come together and in some PBS weird fucked up vision

of being your better self. Did you see the movie, The Mission? A long time ago, yeah. Well, it's a wonderful, it's a wonderful film. And Robert De Niro, these missionaries, Robert De Niro said, the British are coming for a second to slaughter us, we need to prepare.

And Jeremy Irons, who's a priest, says, no, I choose nonviolence. And of course, they're slaughtered. I'm not up for being slaughtered at this point. I think they have chosen violence and I think we need to hit back. And all of this rhetoric around just, we are so flat-footed right now. Who on the Democratic side of the aisle is actually pushing back in a forceful, thoughtful, articulate way? AOC. You know who, I just watched Charlamagne the God saying, here's AOC. He was saying that. He's like, stop being nice to them, like push back. And then he was using AOCs.

And she was like, going to the inauguration? No, I don't go to the inauguration of a rapist and an insurrectionist. I don't. Okay, next question. It was really interesting because she's much more articulate than that. That was sort of a slap, but you're right. I agree. Like we said, we're not going to be cooperative. And also, let's have hearings and have that new AI and crypto task force come explain to us in public with CNN and Fox. just lay out for us if you wouldn't mind

what happened with the Trump coin and the Melania coin. And also we're gonna invite some people who invested in day one and have lost 80% of their money. Let's get all of this out in the open and let's let the American people see what's going on and make sure that- I love it. Let's do it with this show.

How about that? I think we're trying to do it. We that- I love it. Let's do it with this show. How about that? I think we're trying to do it. We're trying to do it. We're trying to get them mad. Let's get them mad. Anyways, I choose violence, Kara. All right, okay.

Not violence, violence-ish. Well, you know what I mean. Anyone who understands Game of Thrones, I'm sick of some PBS professor and a fucking cardigan calling on our better angels. Yeah, suit up. Anyway, we want to hear from you. We do not choose violence.

Just so you know, we do not choose violence. Send us your questions about business tech or whatever's on your mind. We choose angry. Go to nymag.com slash pivot to submit a question for the show or call 85551 pivot. And while we're at it, the results from last week's threads poll are in. We asked you about who you thought would be the next person in Trump's inner orbit to get the boot. Some popular answers, Tulsi Gabbard, Cash Patel, and our favorite, Melania. That is not happening just yet. Melania

is totally in on this whole thing, folks. Don't think she's a, she is. Grifter numero dos. You mean the Hamburglar? Whatever the Hamburglar. Okay. Elsewhere in the Karen Scott universe for On with Kara Swisher, I recently spoke with MSNBC's Chris Hayes, who has a new book out called The Sirens Call. It's all about our world. Has become a battle for who or what can grab our attention. He's trying to get on the Jonathan Haidt band, Scott Galloway bandwagon. Chris shared his predictions from what might happen next.

Let's listen. The backlash that is brewing to this experience of contemporary life is enormous. It is indeed. It is growing by the second people do not like it. And whoever figures out how to channel that, and there's gonna be a million different ways people are gonna drop out. There's gonna be a kind of no phones offline movement.

There's gonna be people that try to build a new version of the non-commercial internet. The folks who are now trying to do that with a Blue Sky Develop protocol. There's people are gonna opt out. They're gonna try to create niche businesses that block your phone. They're gonna try new changes to lifestyles.

They're gonna try political movements that regulate attention, that take phones out of schools, there's gonna be all this stuff. He's on our bandwagon, Scott. Thank you for arriving, Chris. We've been at this for a long time. Yeah, I was gonna say, he's in the caboose of our bandwagon. Oh, it's an attention economy? Wow.

Some real insight there. It's actually a pretty good book. He's well-spoken, though. We will take him. Chris, we'll take you in our army of- More power to you. We're with you, Chris. But we're violent, so be careful.

Oh, right. Anyway, you were, by the way, Scott, you were in the Financial Times this week and you had a few quotes about the rise of Manosphere podcasts. I'm not a subscriber. I couldn't read them. I was literally pinging everyone.

What's your credentials for F.T.? Yes. What did you say? I said that these podcasters were really relatable, and I said it was like when you're on your way to high school and some guy would be out front fixing his trans am in the driveway, and he'd throw a beer can at you and call you a pussy and on the way home invite you in for your first bong load. I'm like, these guys are very relatable.

Where did those guys end up? Where did those guys end up? But they, I went on Theo Vaughan. I can see why there literally are tens of millions of mostly young men who are like, I don't need some overeducated liberal in New York telling me the day's news. True, true. Although I have to say they can also be repulsive. Like Alex is pretty, you know, he's sort of his like frat guy,

big guy, sports guy, finds these people repellent in a different way. It's like, what a bunch of idiots. Like there is a backlash for another kind of man. He loves you. Let me just tell you, if Alex Swisher keeps quoting Scott Galloway to me, I don't know what I'm going to do. Like, he loves these people.

I love that. And I love how much you must hate it. I don't hate it, but I'm like, well, I kind of did something on Yonder. And he's like, yeah, yeah, but what Scott said, literally, I was like, well, I kind of did a podcast on that. It's like when people come up with a book and ask me to sign your book. I'm just saying, my son is fully in the Scott Galloway man-a-verse. That's all I have to say. They have, I'll tell you, they have tapped into something.

They have, but there's another man-a-sphere that I think is coming, I can feel it. I hope so. There is, I like a man-a-sphere, I like a man cave, it's coming. Anyway, Scott, read us out, man-a-sphere. There you go, today's show was produced by Lara Neyman, Zo Zoe Marcus, and Taylor Griffin.

Ernie, your side engineer this episode. Thanks also to Drew Burroughs, Miss Severio, and Dan Shulon. Nishat Kherwa is Vox Media's executive producer of audio. Make sure you subscribe to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media. You can subscribe to the magazine at nymag.com slash pod.

We'll be back later this week for another breakdown of all things tech and business. Open quote, after Auschwitz, the human condition is not the same. Nothing will ever be the same. Here heaven and earth are on fire. Elie Wiesel at a commemoration in 1995.