Pivot - Elon and Twitter's Wild Ride, Q3 Wins and Fails, and OPEC

Episode Date: October 7, 2022

Kara and Scott give us a break down of the biggest themes of Q3, and wins and fails of the quarter. And of course, the latest with Elon and Twitter. Also, Amazon won’t make any new hires for the rest of the year, Uber’s former Security Chief has been convicted of obstructing justice, and OPEC voted to decrease oil production. A listener asks Kara and Scott to reveal their (news) sources. *NOTE: This episode was recorded on Thursday morning and reflects news at the time. You can listen to Kara’s new show, On with Kara Swisher, 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. Oh, you sound quiet today. Isn't it lovely weather in London today? I have London on my weather app just so I know how you're doing every day. Do you know that? That makes me feel nice. Yeah. Yeah, it's balmy 60 degrees here.

Yeah. Yeah, it's nice, though. It's sunny and beautiful. It gets pretty cold and dark in the winter. It's nice. You're getting so much sun. But first off, the important tooting of some horns on with Kara Swisher is the number one pod in news commentary. And more

importantly, Scott's book Adrift debuted at number seven on the New York Times bestseller list, hardcover nonfiction. Really? I did not know that, Kara. I don't fall into the trappings. How closely? I didn't know I was the number one pod in Newscomter until you told me. But thank you for telling me that. Yeah, and what's more interesting is who's like numbers one through ten. It's basically all your buddies on the far, far right. Like Ben Shapiro is the least crazy of all of them.

I know. I like to top him. Even for a moment, I like to top him. No, you're, it's really interesting. You're number one in news commentary. And it's Dan Bongino, Bill O'Reilly, Megyn Kelly, Mark Levin. I mean, it's sort of. Me and my friends.

That's a Saturday night at the Swisher house. Yes. It's literally the worst after party from CPAC. It's just, and then there's you. Yeah, they're popular. The people who, on the right, they're very, they can't get enough of their grievance, you know, or their anger or whatever. They're very loud. I'm going to interview two of those people, just so you're aware.

But I want to talk about that. It's like, what's the track? I think you can't get, you can get the far left worked up, but no, you can't get people worked up like you can on the right. They're those, it's almost like. I think it's more basic than that. I think, and I do think that, I think traditional media outside of Fox, people looking for that content can't find it as readily as people on the far left can find it on television. So, I think the podcasts have been a place of refuge or whatever, a soapbox. I think media, I mean, the genius, one of the probably the most interesting untapped opportunities that seems obvious in retrospect

is 30 years ago, whenever it was, Fox realized that conservatives don't have a place for media. And I think podcasting- They didn't for a long, radio was the first thing. We had- But podcasting has become kind of a new home for it. Well, it's radio.

It's radio reimagined, essentially. We had Ralph Reed at one of our very early All Things D conferences because of that. Because they had been zeroed out of regular media. They absolutely had. It had been so centrist. And this is where they found Refuge, which was a talk radio, local talk radio, like Rush Limbaugh and that other crazy Glenn, whatever his name is. Glenn Beck?

Glenn Beck. And that got really popular. And Sean Hannity started off in radio. And then they moved to podcasting because it was just another way to do it. And it's even more widespread. I think it makes sense if you get zeroed out. Oh, Candace Owens is in there as well. Candace Owens, yeah.

She's the other woman in there. Well, actually, I'm thinking Kelly. Yeah. But you're holding down the fort. You're literally carrying, you're carrying the blue flag. They can never take our freedom. I am Rachel Maddow, but funnier. Oh, my God.

That's how I look at it. Anyway, we rock no matter what. Anyway, how's your book? And your book, you're going on a lot of book tour things? Or are you doing a lot of Zooms? Oh, no. You just, I mean, I did a book signing thing yesterday just because this guy gave me soccer tickets. So, I felt like I needed to do a book thing for him.

Nice. It's mostly book tours now or you go on podcasts and you go on, you do media hits. I'm doing Morning Joe on Friday. They've canceled on me twice. If they cancel on me a third time, I'm only going to go show up a fourth, fifth, and sixth time. No, I literally, the breaking news of like, oh, the new Fat Bear contest winner is in. Bump the professor and his drifting book. I have, I'm literally the most bumpable guest in the world.

That's exactly, you know what I do? I have a thing is if they bump me, I'm like, I'm never coming on your show again. Like I refuse. Like I get very testy. Yeah, I can't do that. You can do it. That would mean I would be not on any shows. I get, I literally, well, I'll go down into my studio and I'm like, what are the odds I actually go live on this show right now? Oh, really? I'm the ultimate six-man in the NBA.

Yeah, I refuse to go to studios. I'm just terrible. I'm going to, it's all going to end badly for me, but I'm doing what I want to do. Last night, they wanted me to come to the studio, and I said, does that require pants? Because I can't handle that. And then we did it from here. And this is a beautiful studio here. Anyway, we have a lot to talk about.

Today, we'll talk about the latest on the Twitter here, obviously. It's not over yet, obviously. We'll take a look back at the third quarter to see what we've got right, what we missed, pick some wins and fails. And also, we'll take a look back at the third quarter to see what we've got right, what we missed, pick some wins and fails. And also we'll take a listener question about staying informed because we like to stay informed and we like you to be informed. But first, the Supreme Court will hear two cases that could impact Section 230, the Internet's most important law.

In one case, the court will evaluate whether YouTube's algorithms amplified content from the Islamic State. Another suit accuses Twitter of allowing ISIS to post on its network. Both cases are brought by family members of victims who died in the attacks linked to ISIS. This is another one of those slippery slope things that happened around porn and stuff like that earlier. I think that was the last time they sort of degraded some of the rights under 230. Could the court draw a distinction between hosting content and amplifying it? We've heard similar proposals from Frances Haugen and others, including when we talked to her at Code.

This is often forgotten, but in 2014, the U.S. Intelligence Committee asked social media companies to keep ISIS accounts up because they were intelligence gold mines. So will Twitter bring that up in court? I don't know. What do you think? What is your thoughts on this? Well, one of the ideas, and this was an idea originally proposed by a guy I admire a great deal, Jeff Bukas, who said that once a platform algorithmically elevates a piece of content,

then they're essentially no longer a platform, they're a media company. Yeah. That they are purposely editing and giving stuff, you know, they're making an editorial decision which makes them a media company, which means they should be subject to the same libel laws as every other media company. And YouTube, the gift that keeps on giving for YouTube is one, I think Susan Wojcicki is very likable. And I think that has been a great heat shield for them in terms of the scrutiny that I think they deserve. And then also the gift that the ultimate heat shield has been meta.

But YouTube has a, you know, has a reputation for playing a significant role in radicalizing young men. The other key component of this story that doesn't get enough attention is my thesis all along has been that essentially the way it breaks down is the senators get their moment to wave their finger at Mark Zuckerberg and have a photo opportunity about being tough on tech. And then they go into a confidential Senate intelligence hearing. And essentially the dialogue, I believe, or I would speculate, goes something like this. Zuckerberg and his lawyers go, do you want us to continue to give you information on the Taliban's nieces and aunts when they're on Instagram? And the Senate Intelligence Committee goes, yes, we would like it if you would continue to do that.

And he says, all right, then back the fuck off. Because I think these things are the ultimate espionage tool. And I'd be shocked if they're not cooperating with our U.S. government in exchange for a lack of scrutiny. That's quite an allegation, Scott Galloway. That feels like a plot of a Harrison Ford movie. We'd be stupid not to do it. We'd be stupid not to do it. I get it.

But in this case, I think they are going to, there's going to be a, you know, I don't know what this Supreme Court will decide, but there could be a significant, another degrading of 230. You know, that's the way it's going in general in terms of protections. There was that when they had the, you know, the porn stuff and child trafficking, and people were

very worried. And there's always a reason to do something like this. And of course, there's a thing happening in Texas. I mean, these companies are going to be subject to all kinds of, wins both ways, by the way, not just keep them up, no, take them down, no, keep them up, keep them down. And they are editorial companies. They do manipulate these things. And it's a version of editorial. It's not traditional editorial, but it's certainly an edit. They make decisions like this all the time. And so it's going to be hard for the court to decide what's hosting content and being a neutral platform and amplifying it. And I think it'll get really quite into the weeds of what that means. Yeah. What I don't get, though, is that I think a more important story would be that legislatures

are taking up the notion of additional carve-outs to 230. Because unless the law changes, I don't, the Supreme Court, my understanding is, will just interpret the law as it currently stands, and this will get nowhere. Because they'll just wrap themselves in 230 and say well they have been known to still move beyond their purview haven't they yeah meanwhile the opec plus cartel voted to decrease oil production just in time for the midterms the move will likely raise the cost of gas and could help russia fund its war in ukraine russia is an opec member the u.s opposed the move the white house called it short-sighted. What thinks you of this? I mean, they're greedy. That really seems to be at the

heart of this. If you want to understand politics and history, you just, you have to understand energy supply. Energy has really dictated and shaped the world for the last hundred years. And there's just no getting around it. This is a giant fuck you to the West. Yeah. Okay. So the U.S. is not a member of OPEC, Russia is. And what is the ultimate and tragic irony is to a certain extent, we, especially the West and especially Europe, are funding this war or funding Russia's incursion into Ukraine because we continue to buy, and understandably, oil out of Russia. So, Russia says, look, we need your help. We're a member of OPEC. It benefits all of us. Let's cut supply. And I wouldn't also, and again,

just putting on my conspiracy hat, I just wouldn't be surprised if this, let me back up, Latino voters. The presidential election is going to be decided by swing voters, moderates. And Latinos are, Democrats make the mistake of believing that people of color are more liberal than they actually are. No, no. I think most people have gotten that message by now. And Latino voters are, their number one issue for Latino voters is the economy. And the number one issue around the economy is inflation.

voters is the economy. And the number one issue around the economy is inflation. And I wouldn't put it past Jared or former President Trump to reach out to their buddies in Saudi Arabia and say, we would really love to see higher oil prices because Trump will get back in if inflation doesn't quell. And I mean, the election is probably going to be won or lost, potentially based on the economy and specifically our ability to show progress against inflation. Because regardless of whether or not Biden had anything to do with inflation, and the reality is our inflation in the United States is the same or less bad than it is anywhere else. And it was all about printing money during COVID, i.e. Donald Trump that's created this inflation and also Vladimir Putin's disruption of supply chain, voters don't care. Voters say, okay, is the economy good or bad? And that's kind of where swing voters are. Yeah, I think that's right. I think they're all so greedy. I think this is an

opportunity. They don't want the prices to go down. And, you know, the fist bump didn't work for Joe Biden, and he doesn't have a lot of influence over them. That's clear. I don't think Russia's the only one here. Jared raised, what, $2 billion? Yeah, $2 billion. Based on his incredible track record as an alternative investor? Yeah. I mean, so they're pretty tight. Yep. It does feel very fixed. And I think they definitely are betting on

the Trumpers versus Biden, hoping to weaken him. We'll see if that works. It certainly is an effective way to get people focused on the price of gas, which is where people really pay attention. And of course, the media does too. The price of gas, the price of gas, and then tweets, pictures of it. A couple of short things. Amazon isn't hiring. It told recruiters that it won't make any new hires for the rest of the year, and it's not alone. Meta and Lyft have both announced hiring freezes. A lot of hiring freezes everywhere, but Amazon's freeze is limited to its retail business only. It's still hiring at AWS, the cloud hosting juggernaut. You know, just a sign of the times, right?

People aren't buying as much, and here they are, and they overhired probably. I think AWS is the most valuable company in the world. It's just trapped inside an e-commerce company. The cloud continues to grow, continues to be a consolidated market where they have almost, I wouldn't call it near monopoly power, but you want to talk about a cartel. I mean, cloud, there's really kind of two and a half competitors, I would argue. Some people would say that Cloudflare or Salesforce are competitors, but not on the scale of Amazon or Microsoft or Google. But we talked about this.

When your SG&A is up 40 and 60% or 30% and your stock is off, I mean, Meta stock year to date is off some what 62%. I mean, it's just staggering. Amazon's off. All of these companies have taken a, you know, not a huge hit.

Apple's held up pretty well, but everyone else has taken a hit like everyone else. And they just continue to hire and hire and hire. So most companies in the unicorn stable would pray for a hiring freeze. I think a lot of them continue to quietly but consistently lay off people. Yeah, no, I would agree. And then lastly, Uber's former security chief has been convicted of obstructing justice for covering up a 2016 data breach at the company. That year, hackers stole the user data of millions and millions and millions of Uber customers and also drivers. The security chief, Joe Sullivan, who I've wrangled with, quietly paid the hackers $100,000 and had them signed an NDA.

Sullivan told Uber executives about the hack, but later misled federal investigators and never notified the public of the breach. This is so common at these companies. Now, he did tell his bosses what he had done. The case sets a new precedent for security executives being held liable for hacking issues. A really interesting case. This is not the one I thought Joe Sullivan would go down on, but he was sort of mixed up with Travis Kalanick and all kinds of allegations around his behavior and their behavior when they were at Uber, I remember. I've forgotten a lot of the different things they had been accused of doing, spying, etc., by different companies. This is interesting. He did something, he made a move and didn't

inform them. I have, of course, written about this a number of times. Yahoo had done it. You know, they do that. They don't tell the public. And, you know, I think right now a lot of people, this was way before ransomware was a thing. The FBI is trying to crack down on companies paying the ransomware. Any thoughts? Well, this is a big deal. LA Unified School District has had a huge hack. You know, these school districts are underfunded. They don't have the budget to hire the best and brightest in cybersecurity.

And then these criminals find the softest tissue, and it might be a school district, and they don't care. And they're threatening, and they've already started to release confidential data on their students and their teachers. And it's a very difficult position for the government, because if they impose kind of the Israeli, we don't negotiate with terrorists, it will, over the long term suppress it. But at the same time, I know a lot of small businesses that get attacked. And at the end of the day, they're like, for 34 grand, yeah, where do I send the Bitcoin? So, this is a tough one. What's interesting about this case, and I think it's important, I think that the feds need to breach or penetrate the legal shield of corporations

because there's too much aggressive behavior, there's too much skirting of the law, there's too much amoral. There's not enough algebra of deterrence that, okay, if I sort of play fast and loose with the law and I'm not honest with consumers or I do something that's just, quite frankly, immoral, as long as I do it under the auspices of the corporation, the corporation might get fined, but I'm not in any real trouble. I have a set on- Right, so that's why this is interesting.

You've talked about this, yeah. Well, nothing around social media, around all the problems we've been talking about, nothing really changes structurally until someone everybody recognizes does a perp walk. And people talk about Sarbanes-Oxley being the key component of financial regulatory reform. No, it wasn't. It was Michael Milken in handcuffs. And when Michael Milken was arrested and sentenced to prison, it sent the mother of all messages to everyone on a bond trading floor, to everyone running an investment bank.

You better check in with the lawyer and make sure what we're doing is legal. Yeah. Because if it's not. See, back then it was sort of, huh, I don't know. I think the more issue that I have here is notifying the public. I literally can't tell you how many stories I've written. I'm remembering a Yahoo one I wrote, and actually Alex Stamos was the one that argued

to notify the public, and the company didn't want to because it would affect their email numbers or this and that. Notifying the public of a breach seems to be the first step of all this stuff. 100%. And so they don't. And some do, some don't.

They take a long time. This will be appealed several times. I was talking to some people at Uber, and they're like, it's shocking but not a surprise, I think is what they said. This is the new Uber people, not the old Uber people.

Joe worked for Travis County. Do you have any idea what the potential penalties might be? Is this... Jail, I think. I think jail. Wow. I believe.

I think so. We'll find out. We'll I think. I think jail. Wow. I believe. I think so. We'll find out. We'll find out. I'm pretty certain it's jail time. Okay, let's get to our first big story. Elon Musk says he intends to buy Twitter for $54.20 a share. We had our emergency meeting about that, Scott, but things have continued apace.

They're obviously in negotiations, still not there yet. Also, in recent weeks, Musk and Twitter reportedly held unsuccessful talks about buying the companies for less than $44 billion. Like we said, they were trying to settle, which is what we talked about. That was my prediction. So you're thinking he's not serious, and I think he is. I just think it's going to be, he tried every trick in the book to get out of this. It didn't work. And then he probably just decided, did it put a pencil out and thought, well, it's not that much more money to own it than pay them whatever it takes to get out of here. And there was lawsuits galore. There was all kinds of stuff, as we talked about. Your thoughts? Well, after our kind of emergency pod in the media, and I'll include myself in this bucket, I thought, okay, wow, it's going to happen. It's going to close. And my editor-in-chief, Jason Stavros, who was a lawyer for 12 years, a corporate litigator, called and said, keep in mind, this letter is essentially just Elon Musk asking Twitter to disarm unilaterally. It says, hey, I'm willing to move forward. I intend to move forward, but on the condition that you stay or suspend the case. And he said, this is likely what happened.

And everything he said kind of resonated as true. And tell me if you think this sounds true. He said this week, he was supposed to be deposed next week. This week was what they call deposition practice, where they bring in a lawyer he's never met before, never seen before, and he pretends to be the other side. And they have an actual court, and they have him take an oath. And then this guy, this actor, this corporate litigator is getting paid a lot of money to pretend to be the other side, starts asking him questions. And he said that probably freaked him out, what happened. The time amount, the amount well in my in my favor and the mother of all like hi i have absolutely no shame and just to confirm i'm capable of just blatant lies he canceled without notice 24 hours the deposition he was supposed to give two days ago and you know

what the excuse was he gave no what was it covid exposure he was worried about COVID exposure. A guy who refused to close his plant in Alameda down under a mandatory closure in the height of the pandemic is worried about COVID exposure. Any port in the COVID storm, in any case. Yeah, yeah. Anyways, he's doing anything he can to put off this trial. And Jason said to me, he goes, look at his behavior. Okay, he said that he was starting a Twitter competitor. That was a lie. Then he said he was going to invest in Twitter or he was buying shares but didn't disclose them.

Also sort of a lie. He then said he was going on the board. No, he didn't do that. He started insulting them and said he's buying the company. He then said he was going on the board. No, he didn't do that. He started insulting them and said he's buying the company. He then started complaining about bots. He then withdrew his bid, said he was going to try and walk from the... I mean, he said, Scott, how much veracity? If you get something from Elon Musk saying this is your intention, he's like, how seriously should you take it? He's definitely trying to do tricks. You know, sooner or later,

a fox runs out of tricks, you know, and gets caught eventually. And I think in this case, one of the more interesting things is his banks. That's the I think the big thing is that the financing doesn't come through, can use his behavior as an as a reason for not giving the money, saying he trashed the stock, which is kind of ironic. And then apparently, if they don't want to do the financing, the judge could force him to sue them for not keeping to their commitments. I mean, the whole thing feels like if he doesn't buy it, buying it is the easiest thing he could do here. Buying it for the money he said he would buy it for and not a penny less and not a penny less. But you said they've been, you know, people saying they've been pursuing a settlement. This is how the settlement talks have likely gone.

He's like, you have bots. I want out. And they're like, nope, 5420. And he says, okay, I'll buy it for 30% less. And they say, well, let us think. No, 5420. I mean, they have had the same answer all along because they know their lawyers have said,

it is, there are a few jobs right now that are more rewarding and more enjoyable than being a member or a senior lawyer in charge of the Twitter, representing the Twitter board for Wachtel. Because they have, they've showed up with a cannon. I mean, they have everything they need. They don't even have to do that much work. This board, who has been a terrible board, is handling this rather well, I think. 100%.

And they've been a terrible board. Let's be clear. This is not, they are not paying themselves in glory. Meanwhile, Musk tweeted that he wants Twitter to be part of a super app. He called it X. For those who don't know, X was his original company that, where I met him, it was a payments company that merged with PayPal, x.com. He still owns the URL, as far as I know.

And he's talking about a super app like WeChat, I guess, which is also very hard. He doesn't have the money to do it, to do this. And, you know, the government looks askance on this idea, of course. So it's an interesting question. He probably should put payments in Twitter, as we've talked about, commerce, communication, this and that. But I don't know if Twitter is going to be suddenly, I'm going to go, ah, Twitter, this is what I want for my entire suite of communications on the Internet. That's a big hill to climb. It's a smart move though.

You asked. Sure. If you can do it. You asked in our last episode, what should a Musk Twitter do? It was subscription, I think some additional layer of identity verification. But the third thing that we didn't discuss is payments. I mean, he has a lot of credibility, experience, and background in payments.

He's had people offer to help finance that equity hole to have a background in payments, or at least crypto. Sure. And if he could credibly start getting Twitter traction, that's why Jack Dorsey is not coming back, I don't think. Twitter traction. That's why Jack Dorsey is not coming back, I don't think. I think that the only way this company gets back to, I mean, keep in mind, Kara, he's just got to be like hating life right now. He's paid $44 billion or he may be forced to pay $44 billion for a company that's probably worth 12 or 15 right now. That. That hurts. Yeah, it does.

Day one, I'm down $30 billion. I mean, that's just, day one, I'm off the value of Fiat Chrysler. I mean, it's just, these numbers are just mind-blowing. He paid too much for this muffler. But one thing that could probably restore value pretty quickly or aggressively is if you try to take advantage of the fact that some of the wealthiest people in the world are very interested in Twitter and he tried to turn it into a payments platform and got some traction and then said, all right, the third leg of the stool, maybe I do a deal or even merge with Lyft and I'm technically the only American super app. Yeah, that's interesting. But he's going to have to make a lot of relationships, and he's going to need a staff that can do it. I've heard from a lot of staffers today from Twitter,

and they're not being like liberal hand-wringing at all. They just are like, this chaos is ridiculous, and we don't know what the hell he's going to do. Let me just read you one person who wanted to make it clear to me. Hey, Kara, I just listened to yesterday's pivot, and I think I heard one of you saying something about employees getting full vests immediately for the vast majority. That's not true. If we stay, we vest quarterly, as we do now, just at 54.20 a share. If we leave, we get nothing. I wish more people understood there's literally no short-term upside for us, for most of us. And then said,

this whole saga has been so fucking exhausting, let alone when I have friends congratulating me on my non-existent windfall. I also heard a local San Francisco business boarder saying as much when I heard, blurg. And I said, well, the higher-ups are going to do rather well. And they said, oh, I know all the higher-ups will get gilded parachutes. The conflict of interest is well-covered territory among us. I'm still deciding what I'm going to do, but it's not work for anyone who gives shelter to Donald Trump in 2022. It's a big deal here. Fortunately, I have choices not everybody does. By the way, if you work for Twitter and you want to send us messages, please keep in touch. We'll read them. We want your intelligent thoughts on it. And thank you so much for the person unnamed who did a really

smart way to talk about it. So just first off, I have the same sentiment you do and that this person, thank you. And I know you do and I do. I appreciate that kind of feedback because I learned from that. And typically, and what it immediately dawned on me that this person is highlighting is that there is a two-class party system around stock options. Yep. And that is when I would hire a CEO for one of my companies, they would negotiate what's called either a single trigger or a double trigger. And the single trigger is if there's a change of control, usually about 50% of my shares vest. Sometimes people try to negotiate a single trigger where all of it vests, but a double trigger is, okay, some of it vests

on change of control and then some of it vests if I get fired early. Otherwise, it's just normal vesting. So some of it accelerates, some of it doesn't, or all of it accelerates on change of control based on how much leverage or how badly you want this CEO. So, Parag, I would bet Parag has basically a single trigger where he gets all of it. Oh, he's going to do well. All the top executives do. But you're right. Probably the rank and file, it just continues. They're stuck there at the 54 vest. Here's the thing, they continue to vest.

In a private company. But the company's not worth it. That actually, let me put it this way, they could leave and leave some money on the table and go to Snap or somewhere else, but they'll be vesting a lot of money. But I got to think, most of them are, the people who are late in their cycle are just going to exercise their options, get the hell out of Dodge. Right, that's correct. Who wants to deal with this shit? Right, that's what it is. I think it's where you are in that cycle.

And then, you know, then you're in a private company where you're not going to benefit. And you deal with Donald Trump. And who knows what Elon's going to do, as brilliant as he is. He's also a very difficult employer from what I understand. Very tough. It's just like, how do you get the best? He'll still attract people, let me be clear. He's going to attract people. And, you know, the Trump thing may backfire. People get tired of Trump after a while. He's exhausting. And I think exhaustion

is what I'm hearing from a lot of people. If he walks away from the deal, does he lose his Twitter account? What do you think is going to happen now? Because it's still not settled and it could settle over the weekend. Let's be clear. And you obviously said his Twitter presence is very important to success. Give me two scenarios you think are plausible here, or the one you think is most plausible. I think this deal closes because I think Twitter has shown that they are steadfast and confident and they've been right. They're like, no, you signed an agreement and we're ready for our 5420. Here's our wiring information. And anything short of that, we're moving forward with the case.

And you're going to have to sit in front of a chancellor under oath and answer a bunch of questions that the media is just going to go crazy for the answers. And not only that, you want to see Mark Zuckerberg sweat. I'd be very curious to see the perspiration on Elon Musk when he goes under oath around some of his activities around what's gone here. So I do think this probably closes. But in between now and then, there's probably going to be hijinks. And Bill Cohen said that when you abuse Wall Street like this, they remember. I wouldn't be surprised if there's lawsuits.

I wouldn't be surprised if Morgan Stanley lawsuits. I wouldn't be surprised if Morgan Stanley, who committed $13 billion to the deal, has to go out and sell these bonds at $95. That's a $650 million loss. They might sue him and go, you broke the agreements for us to do the financing. So I think there's sort of more hijinks coming from a just pure like- And let me just be clear, this judge is not going to take it, not going to drop this thing until the money's in their bank. The letter was sort of laughable. It was like, okay, I intend to close. Now suspend the lawsuit.

Twitter's not going to suspend the lawsuit. There's going to be a lot more hijinks around the financing. He could own it right away. I know a lot of the people on the right are celebrating. Let me just tell you, you never know what he's going to do. You just don't know what he's going to do. And this is a very troubled business. Let's get to the heart of that.

It's a very, very troubled. He'll make a lot of noise, a lot of hand-waving once he gets a hold of it. I can't imagine that the next couple of quarters they're going to report social is down, the economy is slowing, and there is no way. This has not been an unbelievably unwelcome distraction, and probably key people, slowly but surely, have been hitting the exit.

And the other thing here, and I was thinking about this for the last few days, I don't think he's going to let Trump back on the platform. Oh, interesting. All right. I do, but go ahead. I don't know Elon Musk, but I think I understand men his age. And I think this guy would rather put out a tweet that shows he is aiding and abetting the enemy and parroting Russian talking points. As long as he's the story that day, he doesn't care that he looks less patriotic and looks like a useful idiot. I think these guys, I think both

Trump and Musk share a common psychopathic tendency that they have to be the story every day. And I think Musk deep down doesn't want Trump to be the story every day. Because when Trump had Twitter, it kind of pinged back and forth. Sometimes Trump was the story, sometimes Musk was the story. Do you know what has happened to Musk's ability to control all media headlines since Trump was kicked off of Twitter? It's gone up dramatically. I don't think he wants to share the spotlight with Trump. And he'll come up with a reason to keep him off the platform. Another thing to put on the pile, I'll tell you that. You know, he'll still be, if he still goes too far, then Musk will have to throw him off, which is yet another thing. And he has said he would do that. And everything, and everyone's like, who gets to decide?

I'm like, Elon Musk will get to decide. That's who gets to decide. A hundred percent. He owns the thing. He's a very innovative business person. And certainly without all this noise, he probably, if I had to pick anyone to figure this out, he'd be on the top of the list. It's just that he managed to make a mess of it, even though probably he's one of the more appropriate owners if you had to go through people who could really get things moving there. And he has a record of doing this. And some of which is just, you know, hand-waving circus acts, some of which is really substantive innovation.

So that's the shame here. If he had just finished the deal back then, it might be better. Twitter might have been better at this point. Yeah, but what most people do in a deal like this is they show up with a management team, or at least at least this is who I'm thinking about. But as always, this guy never wants to give anyone the mic for, you know, that's it. The birthday cake is all mine and all the slices go to, let me think, me. You'll have to find a very good CEO. I had an exchange with him. I said, you need a good CEO. I don't know what to say. And management who really people believe in.

And you know what's going to happen? The first time that Tesla or SpaceX have anything bad happen or missing numbers, everyone's going to, rightfully, all analysts are going to be like, the guy's distracted. I mean, think about it. This is a guy trying to get people, I mean, trying to put rockets and satellites into space and also manufacture a car. Do you know what he did all last week? dark courtroom fielding questions from an actor, a lawyer pretending to be Twitter's counsel, trying to figure out how they're going to answer very uncomfortable questions. That's what he did all last week. And so, this thing is an enormous distraction for him. I guess the only point is that he's capable of great innovation and excitement and really cool

stuff. He's like Janus. I've decided he's the Greek god Janus. Like two faces. There's two faces of this guy. And you just don't know which one you're going to get. I just made a little historical reference there. Oh, my God. I think that's like the widest thing you've said in 48 hours.

I know. Let's go on a quick break. When we come back, we'll pick some wins and fails for Q3 and take a listen to a question about reliable sources. I bet you never thought we would go to Roman gods, but here we are. Fox Creative. This is advertiser content from Zelle. When you picture an online scammer, what do you see?

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quarter of 2022 is over. Let's go through some of the biggest themes of Q3 and pick out our wins and fails. First, layoffs, which we just talked about. Tech's brutal year showed no sign of stopping in Q3. Layoffs hit companies large and small. A partial list, Netflix, Shopify, Snap, Clarina, Peloton, Rent the Runway, Medium, Kitty Hawk, the flying car startup backed by Larry Page, and hiring freezes have become common, enough that recruiters are out of work. Ironic? Yes. So will Q4 bring more pain when we start

cycling back to boom times? People are back and forth on this. That's a tough one. I don't see a rip back. I don't see a V here because we've been doing so much to monkey to put more steroids into Elvis. The Elvis economy here, I think we'd be better off just letting the markets kind of like burn for a little bit. But as it relates to layoffs, what we're going to start seeing, we're not even going to see layoffs.

We're going to see some companies go away. I mean, some of the companies you talked about, I believe there's a non-zero probability in the next six to 12 months, companies like Virgin Galactic and Rent the Runway could go out of business or go chapter 11. Or if Rent the Runway doesn't sell their customer list, if you look at the numbers, it just makes no goddamn sense. It just doesn't work.

The business doesn't work. WeWork is getting the shit kicked out of it, which I thought would be a great post-pandemic business. So you're going to see, I mean, all these other businesses are amazing businesses, but I think the layoffs are just getting going because for 13 years, we've had extraordinary employment in this sector. So, I don't, and by the way, I don't, you know, I think it's a good thing. I think we have to bust out of this notion. Markets are cyclical. They can't rip up unless occasionally they rip down. The thing that fueled kind of the economy, loosely speaking, for the last 20 or 30 years was interest rates got so high, and then we got to lower them slowly, which was like having a nice,

consistent, strong breeze at our back. Right. So no V. What's your letter then, if it's not a V? Oh, gosh. It looks like an L. It looks like a U. A U. Okay. Or it might be a staircase down. I mean, it's easy to say when you haven't taken a lot of pain, but I don't think you could argue the economy has taken that much pain yet. Well, it has for people, not us. When the market, despite the fact market going down, it's had its worst first half since in a long time, but it's crashed to levels of where it was, what, two and a half years ago? I think people are on the edge. I think a lot of people are less than paycheck to paycheck now. It's even worse, especially with the conflation. But that's been true for a long time. That's about income inequality, not the economy right now, or not about cycles.

That is true. That is true. But they did have their job choice. They did have their job choice. There was a lot more movement and ability to get a job. I think it's going to dry up rather quickly. All right, what's the win here? I think the win here for me is there's going to be innovation because this always happens whenever there's a contraction. It happened in 2000. It happened in 2008.

So there's always opportunity in a downturn because things get devalued. People try new things. I think people leaving Twitter, there's going to be a lot of cool companies from the people who are either disgusted by Elon Musk or just don't want to stay there for them, just no good money for them, no good opportunity.

I think that's a positive thing. What's your positive thing? Yeah, it's the same thing. New business applications are at recent highs. People rethink their lives and see opportunities. A recession is the best time to start a business. I've started nine businesses and I've spent a lot of time going through. I've had successes, I've had things that have just gone meh, and I've had stuff crash into a fiery flame of despair and depression. met and I've had stuff crash into a fiery flame of despair and depression. And the only thing I can figure out to try and figure out signal from noise around which companies were successful and which ones weren't was when I started them. Specifically, when you start a company in a recession, people are less expensive, office space is less expensive, potential clients. I've always had B2B companies except for Red Envelope.

Your clients are much more open to new ideas. And you imprint on the company this DNA of scrappiness, innovation, and low cost. We don't have. We didn't raise $80 million in our Series A. Never good to have more money. And it also imprints a certain discipline. And if you have a company that's working, there's no illusion that this is working in a recession. It's either working and it's a good business or it goes out of business right away.

You don't lie to yourself as much. And then when the economy comes back, you have this sleek, you know, this streamlined boat ready to just catch that wind. boat ready to just catch that wind. And then when I started companies in 1999, when I started them in 2006 or something, when the economy was booming, all of them out of business. Too easy to raise money. The people available weren't that good. The people you could find were like mediocre but expensive. Ah, mediocre but expensive. Is that the name of our band? I'm starting a hotel chain called Mediocre But Expensive. That's most of them, actually, Scott. All right, so fails? You go first.

Well, there's a lot. The subscription business model has not been as strong, and there's way too many of them. You've talked about the Rundle and this and that, but all of the subscription businesses that have had layoffs, I think it's something people cut when they have money problems. It's something I've always done. Lots of different ways to make money because one of them always breaks. One of them always breaks. So I think you have to really rethink of what your value

as a subscription is because it's going to slow down rather substantively. And so you have to have something people have to have. And even then, tough. I think that there's been a lot of pumping and dumping. I think that the euphoria that we've had the last three or four years is embodied by SPACs or crypto. You take a charismatic person, you take a large Twitter following, you could take a desire of retail investors that don't feel like they have access to the inside good deals because they're not VCs or they don't know somebody. And look, you don't want to infantilize people. Life is one of the best, I saw what the motor and said something that

was struggling me. The best regulation is life lessons. And everyone's lost money and everyone's made stupid decisions. And you, hopefully the next time your decisions are less stupid. But what's gone on here, I think we're going to find out, was the enormity and the amount of capital just burnt and destroyed. It does. You do learn. You do learn a lot. You know, I once invested in a lesbian bar, lost all that money. I knew it, though. Yeah, but that was consumption. That was worth it. Yeah, that might have been. No, it really wasn't. I didn't have that good of time. I don't drink. That's like me investing in a strip club. Whatever. Who cares if I get my money back?

Candy? Destiny? Get over here. I think making mistakes is part of it. And I think in this environment, when you have these contractions, including jobs, like you really have to think hard about where you want to work. You're not going to just have whatever you want to do. And you have to be more than mediocre, I think.

Anyway, another big story this past quarter, inflation. Q3 opened with inflation on the rise, but it fell slightly through July and August. Now, who knows? Joe Manchin surprised everyone with a sudden pivot, and Congress passed the Inflation Reduction Act in August. In September, the Fed raised rates again, and now OPEC. So I'm not sure we're having a soft landing. Can inflation be tamed at all? And if inflation is too much money chasing too few goods, is the answer more goods? I don't know. What do you think about this? Yeah, so on a basic level, inflation is too many dollars facing too few products. And it's important to remember that the reason we, the two primary drivers of inflation are that one, in America, there was a global coordinated quantitative easing and spending

to create liquidity and ensure we didn't have an economic crash. And to a certain extent, that's a victory when the largest economies coordinate and do the same thing and make sure that there isn't an economic catastrophe. So that's a win. Most countries put about 17 to 23% of their GDP to work. Trump put 27%. We overdid it. So there's too many dollars out there. So if you were going to blame anyone for the demand side, it would be Donald Trump. The only nation that spent more as a percentage of their GDP on stimulus was Singapore. And then on the supply side, we've had a supply shock courtesy of Vladimir Putin, where he's come in and interrupted the food supply chain and the

energy supply chain. So I think you just got to make sure you got to understand and when voters go out and are angry or angry or the Republicans try and position Biden as it being his fault, inflation in the U.S. is less bad than it is most places. And it's just it's just a little bit sophomoric intellectually to blame Biden for our inflation right now. And then on the supply side, we have to make big investments because just as nine women can have a baby in a month, you can't build a semiconductor plant overnight. But my prediction, and I've said this, I think inflation is going to come down faster than anyone thinks, especially in the US. The dollar is incredibly strong, which takes all of our-

I did think that into low-pec thing. I do think that the incredible gains of the Ukrainian army against the Russians makes the likelihood the conflict might come to an end in the next six months more likely. The energy markets will perceive that. So what is the win here with this? You had just talked about that everybody gets a little bit leaner and meaner. Is there any win in this? I don't see any win in this. This is not good for poor people. It's not good. It's fine for rich people who can ride it out, of course. But I don't see any win in the

inflation. I don't think a cleansing is, this is the way to do it. But your thoughts? Inflation is good for very few parties. It's hard to find a winner with inflation. And inflation is typically, if a government is ransacked or kicked out, and you don't know what happened, but you have to guess, and if it's really abrupt, the number one reason is inflation. Because basically, inflation takes everyone's quality of life. Their ability to go to Disneyland, their ability to buy chicken and beef is based on their purchasing power. And typically wages don't keep up with the cost of goods and inflation.

So as a result, you have a decline in the quality of life for everyone, which everyone feels, everyone's angry. And justifiably or not, they blame the current party in power. So I think it's hard to find, to think of a winner around inflation. Maybe the Republicans in the midterms, it could come right back again.

But it's just so ironic that- I mean, they can have as many abortions as they want, but if they are able to get that message through, look, Oz is stronger and all of the Republican candidates who are lagging are doing better because they're zeroing on two things, inflation and crime. But the biggest win, despite, there's some very negative things, right? I mean, being on the precipice of war, and one thing Ian Bremmer said is, whenever you have approximately, he said, essentially, the European Union and NATO are at war in every respect of the term with Russia, except they don't have troops there. We're providing weapons, intelligence, training. We're there. And he said, anytime you have a shooting match like that, it could go to a very bad place very fast. So we all have a vested interest in just getting

that shit cooled down as quickly as possible. But I think the biggest win that's come out of that and inflation and some of the very negative things in the world is that for the first time, I would argue, Europe is actually a union. For the first time, we've had, at least to a certain extent, some sort of bipartisan agreement around what to do in Ukraine. And everyone has said for the last 20 or 30 years, the reason why Americans are turning on each other, the primary reason, and I actually believe it's social media, but in a lack of contact with each other, physical contact, but most people would argue we don't have the external threat we used to, right? We don't have the Nazis. We don't have Russians. And now all of a sudden we have an external threat. And what do you know? We seem

to be more unified in the West than we've been in a long time. That is true. Okay, Scott, let's pivot to a listener question. You've got, you've got, I can't believe I'm going to be a mailman. You've got mail. But first I want to mention, we get a lot of emails thanking Scott for his comments on Molly Russell. Scott, that touched a lot of people. Very nice. Very nice. Thanks for that. Okay. I'm just saying people, we got a lot of emails. Thank you. People like that. I like when Scott comes out. By the way, it's a message.

Don't be scared to talk about your feelings. And Scott is not in any way scared of that. So that's a really good thing. You all should be. I don't have control of it, but I will say this. A lot of men wouldn't do that. I'll tell you that. Yeah, but this, and this is, and I say this a lot on my podcast.

And we get 82%, I think we have 82% male listenership. From the age of 29 to 44, I never laughed out loud really hard, and I never cried. I lost the capacity to like really have an- Yes, men have emotions from A to A often. Well, we're taught that part of your role, and I think there's some value here, is to be the strong one and to be a stoic. And I think there's some value there.

And here's the problem, that if you don't at some point get in touch with your emotions and really lean into them, you start A, really living life, and B, you become numb to what's really important to you. You become numb to what you find inspiring. You become numb to figuring out this relationship with this person is really important to me.

You become numb to empathy for other people. So I tell young men, when you find something that moves you or upsets you, bring on the sloppy part because you're gonna learn more about yourself and you're gonna start slowing time down and you're gonna realize how wonderful things are and things you miss and things that are important to you.

And also in something I still haven't mastered, when you find something funny, try your hardest to laugh really hard. Yep, that's true. Because it's infectious. One of the things I love, I think the success of our podcast, Cara, is that I say something off color or inappropriate or weird

and people pause and then you laugh out loud and you give everyone permission to laugh. True. There is nothing more joyous than hearing people laugh or weird and people pause and then you laugh out loud and you give everyone permission to laugh. There is nothing more joyous than hearing people laugh and you want to lean into laughter and try as hard as you can to laugh out loud a lot because you know what happens? I try not to take people too serious. In some cases, yesterday someone was talking about that right-wing dating story. I think it was Naeem on. She wasn't saying it was terrible, but people were like, the left was losing its mind over it. And I'm like, what do you care?

Like, whatever. Like, whatever. You should have that attitude towards a lot of things and enjoy some things and not get overly overwrought about the things that are not worth getting overwrought about and getting overwrought over the things that are completely over that way. Sad. Be sad about sad things. Be happy about happy things. Anyway, our question today comes from Paul in Canada. Let's listen.

Hello, Scott and Cara. It's Paul from Canada calling. Really enjoy the show. I'm wondering, you two are so incredibly well-informed and up-to-date on current events, political events globally. What are your sources of information? What are your news feeds?

What do you go to read and listen to? What keeps you up to date on all of these events? Love the show. Thanks very much. Cheers. Ah, Paul from Canada. What a nice question. Twitter.

We read Twitter a lot. I follow really well on Twitter, so I find people's stories, and then I go from there to the stories. I read the New York Times, the Washington Post, Politico, all those things. I take a look at them. I read a lot more newsletters than I used to. I really am enjoying Oliver Darcy's Just Taking Over Brent Stelter's newsletter.

I love all the Puck News newsletters. I dip in on the information sometimes. Casey Newton, I read. I know it's George Conway is actually a very good tweeter and he actually links to a lot of stories that I wouldn't have found, for example. Lots of people. I just, I wander all over the place and I add people as I've, during Ukraine, I had a bunch of people. I'm not reading it as much as I did.

But I don't know. What about you, Scott? I don't read physical anything, but go ahead. Yeah, we get asked this all the time. And I wish there was a more sort of compelling answer that, this is my secret go-to. In the 90s, my secret go-to was this weird magazine called American Demographics. What? Yeah, literally talked about demographics. I'm so surprised you never got laid, but go ahead. That's a shocker, right? That's how you stay a virgin until you're 19. Anyways, I'm the same as you. For me, it's not as organized. Twitter is kind of where it all starts.

And I get a lot of morning emails, like Bloomberg's email. I get the five things from CNN. I get the information's email. I mean, I just kind of spend almost, I would say, it feels like an hour, two hours every morning, although it's chopped into little pieces in between things, just reading and looking at stuff. I love the FT. just reading and looking at stuff. I love the FT. If I have one hard piece,

for me, it's like a great meal just to sit down with the FT. And I think it makes me look smarter to have that salmon thing wrapped around me. But I don't have like a go-to. Do you have a go-to? For me, it used to be the New York Times. I have turned off the New York Times a little bit. I still think they have amazing journalists,

but sometimes I read stuff and I'm like, that just feels wrong to me. Yeah, I don't read a whole paper. Increasingly, it's Twitter, 100% over the years. The people I follow, I always find something. I use Twitter's news for you. I don't use Facebook at all. A lot of people do to get news. I don't use Instagram. I think that's it. I think Twitter really is the center. And then you have individuals. You brought up Matt Levine. I think he's fantastic. I love Shira Oveday. I think she does a great job.

I read almost anything she puts out. I love reading Maureen Dowd. Also this morning, when I wanted to learn more about OPEC, I immediately went to the Daily and said, do they have something on the OPEC? I find if you want to go single issue, find a great media source and listen to a podcast. I think it's an interesting

way to learn. Also, may I just say, I also watch TV. I do. I watch cable at night. Some of it's good. Some of it's bad. What do you watch? I'm curious. I didn't know you watch TV. Oh, I just leave it on Stephanie Rule. I certainly do. Love Stephanie. I'm having to be up then. And some of it I find very just like predictable. And I wish there was some innovation in that space, very much so. And I also consume conservative stuff. I read the Bulwark.

I was just on the podcast with Charlie Sykes, who I think has some very intelligent, smart, substantive questions. I don't just read sort of, I read widely, let's just say, read widely. So, but I do watch TV. I started watching BBC. It just makes me feel more British.

Does it? Do you like BBC? Well, you know what? There's something to be said for, I now believe, whatever you want to call it, government-supported media, because they do try to call balls and strikes and hit it down the middle. Right. Yep. Yep. It's nice. I think it's healthy to have both, to have a two, to have a layer. That's right. I think they do a great job. All right. If you've got a question of your own you'd like answered, thank you, Paul. Send it our way, our nymag.com slash pivot to submit a question for the show or call 855-51-PIVOT. All right, Scott, one more quick break. We'll be back for prediction. Okay, Scott, let's hear a quick prediction.

I think that Elon has screwed over so many people. And I think this 60% or 70% decline on day one and the value of that asset means a lot of the equity players are probably going to back out. And also, the idea of trying to make a super app, I think, is a really interesting idea. So, I think that Sam Bankman-Friedman. Sam Bankman-Friedman. He was on those texts. Although, Elon kind of trashed him. Do I have to listen to that Bitcoin nonsense?

Right. But you're going to see, I think you're going to see, he's going to have to raise more equity because I think the kind of Wall Street crowd is just kind of had it with this guy. Yeah. He's going to have to get his friends. Because what he says literally means nothing. And the amount of time he wasted of very talented people who have a very high opportunity cost is extraordinary. Yeah, he's going to have to go to the faux crowd. There's a lot of people in that crowd. Would you invest if he came to you and said, insufferable numbskull, would you invest? Would you give him the 5420 price? I wouldn't invest in that. I would invest in the debt. I'd be at the top of the cap structure.

I would invest in the debt because I don't think you can get that now. But anyways, he's going to raise money from a payments guy slash sycophant. He's got to hit the sycophant source of financing. Always a sycophant when it comes to Elon Musk, and that's probably true. Anyway, thank you, Scott. This has been a fantastic show, and we'll be back for more. Number one, on with,

I'm on with Kara Swisher. Me and my friends of the right. Yes. You know, I have to say, I'm going to read one thing, Amanda's tweet about your tweet, which was very funny. I couldn't help but wonder,

had I accidentally married a right-wing talk show host? Yes, yes, yes. Do you start talking conservative before you guys go at it? Just to get things kind of hot and angry? We need a federal law. Come here, you bitch!

Social media companies should be forced not to censor us because we're always, we never shut up. Can I show you that list? It's, they never shut up. Can I show you that list? It's, they never shut up. They're not censored. Look at it.

It's Dan Bongino, who I'm. We shouldn't be talking about sex in school. By the way, I'm trying to get Dan to come on. It's been an ongoing effort. And he always said he was bigger than me. But Dan, guess who has the bigger penis? Kara Swisher. That's my cue.

Today's show is produced by Lara Naiman, Evan Engel, and Taylor Griffin. Ernie Entretide engineered this episode. Thanks also to Dubrow's Emil Silverio. Make sure you subscribe to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back next week for another breakdown of all things tech and business. On with Kara Swisher, numero uno, ahead of the crazies. Crazy, crazy, crazy, and Kara.