Pivot - Facebook FTC antitrust case thrown out and Amazon vs. Lina Khan

Episode Date: July 2, 2021

Kara and Scott talk about a Federal judge throwing out an antitrust case against Facebook by the FTC and more than 40 states. They also discuss Amazon's motion to have newly instated FTC Chair Lina Khan recuse herself from antitrust actions. In listener mail, Kara and Scott answer a question about young people quitting the corporate world. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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tells you which leads are worth knowing, and makes writing blogs, creating videos, and posting on social a breeze. So now, it's easier than ever to be a marketer. Get started at HubSpot.com slash marketers. Get started at HubSpot.com slash marketers. Have you thought about the MyPillow from Mike? By the way, the reason I bring that up is that is the incredible Simon Holland, who's this funny dad jokes guy on Twitter. And I'm constantly stealing his humor. And I feel like on a regular basis. Why are you doing that?

Why are you stealing other people's dad humor? You've got so much of your own. I want to be loved. And I want to make a coin and drive a Bentley. And I don't know. Do you really want to drive a Bentley? You're in Los Angeles right now. Is that correct, Scott? I am. I'm in LA. How's it going? How is LA? You know, they have new mask guidelines back because of the Delta variant. Did you see any indications of that?

The service staff was wearing masks, but it felt pretty... I mean, I love LA. I don't know how much time you spend here. I grew up here, but I don't spend a lot of time here. But whenever I come in, your plane comes over Malibu and the Pacific Ocean, and then I go to In-N-Out Burger, and then I see the Bougainvillea up and down San Vicente, where I used to run around the perimeter at UCLA. And I'm like, why did I leave LA again? Yeah, yeah. Well, California is burning, but I love California. I think people really like to dump on California, but I think it's one of the most beautiful places in the world. It is really good. Well, good. Are you enjoying yourself there? I miss California. I think people really like to dump on California, but I think it's one of the most beautiful places in the world. It is really.

Good. Well, good. Are you enjoying yourself there? I miss California. I haven't been back in almost two years, which I've got to get back. I've got to get back. Very soon. Very soon, because we'll be having Code there.

Come on out. We'll go to Mr. Chow's. I went to Mr. Chow's last night. We are going to spend some time there in September, you and I, and we're going to have a very good time. I have so many surprises for you for Code. Scott Galloway surprises. It's going to be so good. It's going to be so good. It's going to be so good.

But let's get to the news right now. Let's get to the news. So Robinhood is paying $70 million fine to settle allegations of, quote, widespread and significant harm to customers over the past few years. It's the highest fine by FINRA, which is the agency that oversees this. But I feel like it's a slap on the wrist. Scott, what do you think? Well, so just let's pull some key words from the decision. They use the word reckless. They use the word negligent and damage across millions

of customers. And this is where they got it wrong. Their customer is the brokerage buying their order flow. The people who sign up for Robinhood are its product and its mineral or its input, like a swine to a slaughter. And that is not who they are focused on. And they were fined. They brought up really two things. One, they failed to communicate with people or in any way screen them for their compatibility or eligibility or if they were appropriate investors for options. I mean, think about this. When you buy a stock, you are buying an asset. It's something that has rights to cash flows and ownership in a

corporation. It is an asset. An option is essentially a synthetic that was originally invented to try and hedge people's assets such that if the stock went down, you weren't hurt as badly. Now, if you and I just took a dart and threw it at the S&P 500 and bought one of those stocks, there's less than a 1% chance that'll go to zero. When you buy options, there's an 80% chance within 12 months that that instrument will go to zero. I mean, these are weapons of mass destruction. And I don't mean to infantilize new investors, but the markets have decided that it makes sense for financial services institutions to do some preliminary checking on the eligibility and appropriateness of people to trade options. And the way you become appropriate or the way you get qualified or eligible on

Robinhood is instead of saying my risk tolerance is low, you just click medium and you can be trading options three minutes later. Indeed, you can. And they decided they weren't providing disclosures, communications, and then they said they had not made the requisite investments in technology such that when trading day scaled, made the requisite investments in technology such that when trading day scaled, people were prohibited from, in this instance, from buying certain stocks. So what do you have? You have a company that doesn't make disclosures, a company that obviously doesn't give a good goddamn about the financial well-being of its customer set. And you have a company that hasn't made the investments in technology such that in key moments in the

market when you could be vulnerable, you can't trade. And here's the problem again. And you just, you highlighted it. You teed me up here. This was perfect, except it was missing a zero. Robinhood is about to go public at a market capitalization, they say, of around $40 billion. So they'll probably raise $3 or $4 billion. So this would be like, if on this podcast, you and I could spread misinformation that resulted in financial harm and economic damage to people's livelihoods, but it massively scaled our ability to attract advertisers and said, Karen Scott, you have damaged your consumers. So we're going to find you, and this would be

the exact equivalent, we're going to find you $4. Would that discourage us from doing this? No, this is the thing. They raised $3.4 billion in February. They announced that already. And they already, this is including the $1 billion in funding announced previously. You know, their investors are all sort of the typical ones of Silicon Valley. Iconic Capital, Andreessen Horowitz, Sequoia, Index Ventures, NEA. And so, I think, you know, this reminds me, I'm working on my book about, you know, growing up in Silicon Valley and covering it. I'm working on my book about growing up in Silicon Valley and covering it. And one of the things that reminds me of, although the damage is so much less, was when AOL decided to go all you can eat and then didn't provide the technology and was charging people.

If you remember, and then they had that outage. If you recall, they had that 20-some hour outage, which was people were just relying on it to talk to each other in this way, but they completely, you know, dropped the ball in terms of having, they opened their store and then didn't have the requisite things in place to be able to deliver the goods they promised. And in this case, the kind of responsibilities they have and they're pretending it's a game and then anybody who doesn't say,

you know, who doesn't agree with them and thinks they should be more careful is a bummer or, you know, doesn't understand the Democrat democracy of investors and this and that is just, it's literally like, you remember on Saturday Night Live, they had Bag O' Glass? Do you remember Dan Aykroyd years ago? I don't remember that.

They had all these Ronco games, and one of them was called Bag O' Glass. That's what it reminds me of. It's like, sure, sure, go ahead, do this if you want to. What's the message that sends to the market? So I work with Goldman Sachs. And if I write options or I write calls, someone will call me and walk me through a variety of scenarios. And sometimes they won't let me do it. Sometimes they say, we've decided it's too risky for us and it's too risky for you. And they want to know, they want to make sure that A, they aren't subjecting their own shareholders to

a lot of risk. And B, they want to make sure that I'm thoughtful about the risks I take. Yeah. They look at this decision, as does Charles Schwab, as does Interactive Brokers, as does Merrill Lynch, and go, we're the fucking idiots. Right. Don't show any regard for your consumers. $70 million was a green light. We're going to have to move on this, but it's a green light. It's just not enough money, and it's not going to stop them.

They are not at all chastened by anything. And so, you know, they don't care. This is saying, right on, keep going. And they missed it by a zero. If they'd find them 700 million, that would have slowed down the IPO and would have sent a message

to the entire financial services industries that those of you who actually give a good goddamn about the financial well-being of your consumers, right on. And for those of you that don't, we're going the financial well-being of your consumers, ride on. And for those of you that don't, we're going to hurt you. That's what we're supposed to do.

We're supposed to regulate you, not embolden you. We're going to move on, but it's a theme. Do whatever you want. And, of course, earlier this week in horrible men news, Babel Cosby is being released from prison because his Fifth Amendment right was over. He didn't have his Fifth Amendment right. And so he was released from prison, even though he admitted to doing the things that he was convicted for the second time. It was a technicality because the prosecutor who happened to actually work for Donald Trump during the most recent impeachment hearings,

let him off, essentially gave him carte blanche, very similar to what the one of the prosecutors did to Jeffrey Epstein and stuff like that. So, you know, it emboldens people when this happens when things when things false when regulatory scrutiny is not done correctly, or prosecutors don't do their job in the right way, technicalities get people off. It's really quite disturbing on many levels. Yeah, it's just it's, it strikes me that Britney Spears needs to be awarded an award of the state, but we let Bill Cosby out. Yeah, I know, I know. That was also came out today, right? Britney needs government supervision.

She crazy. Like, that's ridiculous. What a menace he is. What a menace to society. But, you know, correctly, his lawyers did a very good job, and they got him off on a technicality it's not a technicality it's a constitutional well my understanding was i i'm not i'm not defending bill cosby i'm defending the law here yeah is that the the the statements that got him put in prison yeah were offered under under the offer of immunity so they weren't the courts as i it, correctly went back and said,

whether he's guilty or not, the evidence that was used to put him in prison was extracted under the notion of immunity. Yes. No, it's like bad searches. It's bad searches, even if people are guilty. And by the way, if he did it once, he did it lots and lots of times. So, we'll see if this is over for him yet. Just as if Harvey Weinstein's going to California to face the music there. We'll see what happens. It was disappointing. But we agree completely.

But let's get to the big story, speaking of which. Earlier this week, a federal judge threw out antitrust cases brought on by the Federal Trade Commission and 40 states' attorneys general against Facebook. The judge said the case hinges on deals made by Facebook in 2012 and 2014. And this is Instagram and WhatsApp. And the lawsuit was brought too late. As a reminder, the lawsuit asserted Facebook had social media monopoly power with their acquisitions of WhatsApp and Instagram. The judge said the FTC could try again within 30 days, but they'd have to bring more detail. Instagram, the judge of the FTC, could try again within 30 days, but they'd have to bring more detail.

Facebook stock was not surprisingly up 4.2%. The company passed the $1 trillion market cap for the first time. It had been hovering below that for a very long time. Meanwhile, Facebook announced its Substack competitor. It allows writers to publish free and paid newsletters. It can be posted on the web, sent to subscribers' inboxes, shared across Facebook. It's not taking a fee at sign-up. It's trying to do that, trying to put things like Substack out of business. And for context, Substack charges 10% cut of the subscription. So it's pulling a little Microsoft here.

Celebrity writers like Malcolm Gladwell and Tan France, Mitch Albom are among the first people to sign up for the service. I don't think they signed up and they were paid in some way the way Substack does it. So let's take this apart. First of all, Scott, you had talked about judges being the issues in these antitrust cases and other cases against tech. Yeah, the ruling was that it took you too long, but it just, it highlights the need that with the current system, with current antitrust and current interpretation by this current set of judges, we need new laws. That is correct. Antitrust law is loosely based on consumer harm. And the primary metric for evaluating consumer harm is whether prices rose.

And we're talking about free products. So we're trying to regulate, you know, we're trying to regulate, I don't know what the term is, you know, coal in a solar, you know, in an alternative energy universe. We just don't, our laws need updating. And I think Lena Kahn's first job is, or big test is she's going to have to rewrite the complaint. But it just shows current antitrust law, current bench or current judges, we're not going to get there. And it is, there's just no getting around it. It's a setback. It's clear that this is going to be a multi-year thing. Although the thing I found encouraging was that the two people who came out and said clearly we need new laws were Representative Buck, a Democrat out of Colorado, and Josh Hawley, a Republican senator.

Along with Democrats. Yeah. They know they need to rewrite these antitrust laws. But more importantly, people from both sides agree that the laws need to be written. So I think we're going to make progress. It's just going to be a slow grind here. They're going to have to update the antitrust laws, which they have done before. But as it currently stands, it's going to be, and it's happening all over, stuff's getting thrown out in Europe. There just isn't, these companies aren't set up

to be evaluated in an appropriate way. They should be evaluated, we should go back to Brandeis and where they're evaluated on market power, not on consumer harm, so to speak.

Who is the consumer here? Legally, this is going to be very tough for all these companies. And so, I think one, for all these regulators, and they took too long and they waited too long and these,

you should see the list, there's a tweet about the list of how many openings all these companies have in public policy, like hundreds of people, which is going to be used to impact both regulators and judges. And these people are, you know, they're loaded for bear. These tech companies are loaded for bear and they're going to do they're going to use their money and power and influence to do this. So legislators really do need to move quickly to get some of these laws passed. Eventually, I suspect some of them are going to go to the Supreme Court, some of them are going all over the place, but it's going to be a really interesting couple of years if government can stay together and do something about this. But, you know, again,

not a surprise, and Scott, you did talk about this, and I don't think this is going to be the first time that judges are going to overturn things that regulators are attempting to do. What do you think about Facebook becoming a $1 trillion valued company? I think it's the fifth now. I mean, these companies, they're just such incredible business models, and they've demonstrated their ability to kind of, at this point, overrun government. And even if government is able to push back, it's going to be years, not months. Yeah. And so, and they're just, look, there's a great investment strategy is to invest in unregulated monopolies.

Yeah. It's just a good, in terms of risk. Yes, it is. In terms of, it's just, what do I do with my money? Well, I don't know. I'll just find a monopoly that's unregulated. That's a pretty good investment strategy, and it continues to be. I don't see anything slowing these companies down right now.

Yeah, I don't know. We'll see. Time, time, time, time, time. That's what I say. So what about Bulletin? Are we going to sign up for Bulletin? No. They didn't call us.

Will we role play? Are we at a point in our relationship where we can role play? Yes, we can role play. I want you to be Facebook and call me. I have a quarter of a million strong newsletter called No More Sim Alice. I want you to call me and say, hi, I'm from Facebook. Scott, we'd like you to be on Bulletin. Okay. Hi. Hi, Scott. This is Facebook. We'd love you to be on Bulletin. Hmm. Let me think. Fuck you. I'm sorry. Go ahead. Continue now. Scott, we're going to give you a million dollar guarantee to do so. Hmm.

Hmm. Go on. Exactly. That's exactly. Exactly. They're trying to put these. Speaking of Congress, pay attention. They're good.

They're putting they're doing what Microsoft did with Explorer and Netscape. It's the same thing. The low, low price of zero to use. Just a shocker, Kara, they didn't call me. They didn't call me either. They did not call me either. They did not call me either. What do you think of this?

I have mixed emotions on this. I would never in a million years use their tools to do this. There's so many other choices, first of all, which thank goodness, until they put them out of business. They have no interest in media. They have no interest in media at all. Like, this is a company that I think hates media in a way that I've never seen a tech company do. Misjudges it, is wrong about it, doesn't, you know, just only opportunity. And then they lecture you about media.

And it's just, I just, I would not do it in a million years. That's me being, you know, that's me on my moral high ground thing. The other thing is, I would rather have. Threatens newspapers with libel lawsuits if they continue to report on them. Right, exactly. Yeah, exactly. And so, you know, I have issues with Substack, but I still find them fascinating. They hit a really interesting part of the market. I think they are going to struggle, just like Clubhouse is going to struggle. It's the same thing with these things. They can hopefully get bought, I guess. That's what they would do. You know, you have Twitter doing review.

I don't see them lighting the world on fire. You know, you're probably going to see others, the big companies, get into this, right? You could see Google doing something. They have. Google had Blogger for a while. They've all dipped in here, and then they've dipped right out, essentially. This sort of happened a couple of years ago around blogging platforms. And we'll see.

We'll see where it goes. I think they're going to try to featurize it. And, you know, I suppose if you want to do a sub stack for your local lacrosse team or, you know, Cub Scouts, I don't know, I guess. Fine. Whatever. It just, I was sort of fascinated with who they tried to get to go over there. And I'm curious how much money. I would love for someone like Casey Newton to find out how much money they paid Malcolm Gladwell or some of the others to be on there.

But, you know, whatever. I don't think celebrity writers are going to be the thing that pushes this thing over the top, though. There's a couple of interesting trends here. The first is there is something around the creator economy where the traditional gatekeepers, whether it's, I'm meeting with my agent today, they're gatekeepers. Hollywood executives, some young guy with cool glasses gets to decide what movies go into production or don't. And there is a reshaping of the supply chain where these platforms are letting creators, if you will, go direct to consumer. And this notion of dispersion where you get more margin to the initial creator, whether it's self-publishing or putting your videos on TikTok, and then the end user gets the product at a lower cost and with less friction. That is an enormous trend and this is part of that. And that's a good thing. It'll probably take the same path that

Facebook always takes. Facebook said to brands, build your brand page and you will own your customer set and you'll be able to communicate directly with them. And they're saying to great writers like Malcolm Gladwell, come on our new product. We'll promote it. We'll sign up a bunch of people for your newsletter. And that creates a healthier ecosystem, more reason to stay on the platform. But over time, the bottom line is you can't trust Facebook. Facebook at any moment might say, you know what? We've decided you need to give us X percent or we're going to monetize this by doing X, Y, and Z. And you either love it or leave it.

And if you leave it, you leave the entire ecosystem because we're the dominant player. I do think it probably puts the other guys out of business. I think the other guys. I don't know if they'll become the dominant player. They've been in this space before. They've been in the media space before. They've had so many rounds with publishers in so many different ways.

I can't even remember. I was, you know, as I'm researching this book, I can't even remember some of the things they did, right? They had Randy Zuckerberg, Mark's sister, in a closet at Facebook making like videos with famous people who showed up. I mean, they've done 20 different things, including all these deals with the New York Times

and other places. You remember, and they all tend to just go nowhere. And so I think this is just like their dating service. Okay, all right, Casey. Let's use your tenant, Casey Newton. Very talented guy. He has a Substack, right? Right.

Facebook comes to him and says, all right, you're paying 20% to Substack. Pay zero to us and we'll double or we'll increase your user base by 50% because we have this fire hose of 2 billion active users that we can, if we decide we think you're important, we can spray at you. And Casey's going to wring his hands for a minute and go, well, I hate Facebook. They're awful. And Carol will be disappointed in me, but Facebook has the ability because of their quote-unquote monopoly power to put these small innovative companies out of business.

So- I don't agree. I don't think they do. I think they have much less power here. I don't think they do. I think that I've seen them do it before. In case he stays at Substack. I think when, I don't know about that.

I think he'll do it on his own. That's what I think. I think at some point when he gets to the level where he's giving them too much money, he either will strike a deal with them to give them less money, or he will just do what Ben Thompson does and put together tools on his own. And that's going to get more easy.

There's no reason to go to Facebook. It's like getting a website. Remember all those website companies that would put up a website for you in seconds? Whatever. There were a million of them. And then there was MySpace, but there were versions of that. I can't remember their names. There were so many that were going to do this. I just don't think creators, I think the creator, all these creator outcomes, including I was talking to

someone, I was talking about sports stars, they don't want to go with these big companies anymore. They want to do things on their own and they know what they're valued at. You know what I mean? And more and more, they'll have tools to do so and reach customers directly, reach fans directly. And so, I don't know. I don't think you need Facebook in this case. I think you can find, I don't think they own the media space in quite the way you think they do. That's my feeling. I think Casey will probably leave SubSec, but I don't, this is me just saying this off the top of my head. But I think that the stink of Facebook, no, he wouldn't do it. It's the stink of Facebook. I don't know how else to put it. It's interesting because the

stank. I interviewed Ron Klain, who's the Biden's chief of staff here today. And one of the things he did tell me when he said something that was off his talking points was I asked him about social media and vaccinations. We were talking about the Delta variant. And he said directly, I've told Mark Zuckerberg directly that we ask unvaccinated people, why aren't you vaccinated? And they tell us things that are just completely wrong. And we asked them where they heard that the most common answer is always Facebook. This is the cheapest stuff Biden has. I don't know. I still think. The stink of Facebook. I still think they have such command, they have such custody of so many people they can make or break, I think, almost any content idea, conspiracy theory if their algorithm

decides to. I don't think so. I think Amazon and commerce much more so. I think we'll disagree on this. I think I've seen them try this before and they suck at it because they just suck at it. They suck at media, and they will always suck at media, and they don't care. Google did the same thing. We're giving the courts recent setbacks around antitrust. Maybe this emboldens them to just go buy these companies. Maybe so. I mean, if there wasn't antitrust scrutiny right now, wouldn't one of them already have bought Substack?

No, because they think this is a lot of trouble. Media is a lot of trouble for them. They don't want to get near this. They should stay away and make their little money, you know, sucking up people's personal data and vomiting it back up to them. I just don't, I don't know why they would want to move into the space that much. It's just, it's because they can't stand being insulted, just the way American Dreesen is going to make future, like, go for it, go for it, all of this. Oh, so you think they're trying to influence me. I don't see it as quite as malicious as that. I don't think it's malicious.

I just think it's not much money for a lot of noise. I don't know. I just wouldn't get into the media space. Media space takes a lot. You've got to have a certain amount. And there's all these really cool ways. I think you just described our show. I think that's the tagline for our show.

Not much money. A lot of noise for not a lot of money. We're like Sizzler. We're like the ad for Sizzler. I don't have a lot of money. I don't have a lot of class. Sizzler. We will be watching.

We will be watching. But just so you know, Facebook, Scott Galloway, it can be sold for a million dollars. I just proved it to you. Oh, a lot less than that. A lot less than that. All right. What is your number? Okay, 500,000?

I'm Facebook, 500,000. I don't know. Do I get to hang out? I don't know. Would they invite me to cool parties? I'm in. No, they do not have cool parties. Trust me, I've been to them.

They're not cool. They're uncool. They're actually awkward. I came to grips with the fact a long time ago that I'm a whore, and now I'm finally down with the fact that I'm a cheap whore. Yes, you are indeed. Anyway, again, once again. I'm the information economy sex wooka.

Yeah, you are not. You are not. There's nothing wrong with sex work. Anyway, Scott, let's go on a quick break. Big fan. And come back to talk about, all right, Amazon coming for Lena Kahn and a listener mail question. Fox Creative.

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that builds campaigns for you, tells you which leads are worth knowing, and makes writing blogs, creating videos, and posting on social a breeze. So now, it's easier than ever to be a marketer. Get started at HubSpot.com slash marketers. Okay, welcome back. Amazon has petitioned for new FTC chair, Lina Khanahn to recuse herself from antitrust investigations into the company. Lena was sworn in as a chair of the FTC in June. When she was a law student at Yale, she wrote a blockbuster paper that got her all kinds of attention called Amazon's Antitrust Paradox. motion saying, given her long track road of detailed pronouncements about Amazon and her repeated proclamations that Amazon has violated antitrust laws, the reasonable observer would conclude that she can consider the company's antitrust defenses with an open mind.

Oh, dear. What do you, honestly, honestly, I don't know what to say here. Scott, what do you think? This is like a hard friggin' no Amazon. How dare you? But go ahead. This is the same virus that infects Robinhood and all of big tech. And that is they're under the impression that they can totally overrun

government, that they can overrun our elected officials, they can overrun, make any argument, regardless of how moronic, disingenuous and dangerous. This is an attempt to intimidate people to say, we can slander you and you won't be able to go into government. Because this is similar to saying, all right, if you're in law school and you write a paper on the risk of derivatives, and then you end up as chair of the SEC, that might, obviously, they might diminish your ability to be the SEC chair because you have shown a bias, i.e. domain expertise. So Amazon's basic argument is if you show any of the domain expertise that we're supposed to have in government, it diminishes your ability.

This is so fucking ridiculous. It is. And the fact that they even wrote this and have the stones to say it, or as Stephanie Ruhl would say, would have the vagina to say this, shows that we have totally decided big tech can overrun government. This is- Yeah, I was not surprised.

The notion that, oh, because you've demonstrated domain expertise, it inhibits or restricts your ability to be a neutral arbiter. That's the point. You're supposed to have domain expertise around these issues. Conflict of interest is if Lena Kahn—

By the way, these are political appointees eventually. You know, three Democrats, two Republicans. In this case, it used to be three Republicans, two Democrats. This is like, of course they have a point of view, Amazon. Hello. That's the point. That's the point. That's how they got there.

I mean, if she was the largest shareholder in overstock, that's a conflict of interest. I was trying to think of a competitor at Amazon. There isn't one. This is domain expertise. So now big tech is so emboldened, feels like government is such a weak competitor, and the media is so, I don't know, such a sycophant to anything they say that they're going to claim that, oh, now domain expertise conflicts you. You know, it's interesting because it does go into, you know, when they have hearings for Supreme Court, you know, what's your stance on, they try not to say. But they have, you know, jurisprudence or whatever behind them. So, you've seen their cases.

And so, it's a really interesting, it's just infected everything that you can't have a point of view and then also be changed. Look at the Supreme Court this session. They've done some things, you know, you're like, whoa, I thought that was that, and now it's that. Like, I think it doesn't bring into the idea that people can have their minds changed, for one, with good arguments. And instead of good arguments, they're saying she has a point of view. They should spend their time trying to convince her why she's wrong versus trying to impugn her in this way. It's just ridiculous. It's just ridiculous. It's so ridiculous.

They never do it to a man, I don't think. I have to say that. You know, and not a, you know. I don't think this is, I don't think this is anything to do with gender. I do. It never happened. Never happened. There's, you know, there's scuttlebutt and whisper campaigns and things like that. But this is a full-on assault, I think, in some ways.

I think you want it both ways here. I think one of the reasons Lena is the FTC chair is because she's a woman. Oh, I'm going to get shit for that. No, no, no, no, no, no, no, no. I'm going to push back. She was a very popular pick for President Biden who was trying to show the world I am not some white guy from the 50s and 60s. I'm going to make key appointments. No, he just looked a little further.

He just took a little effort to look around a little wider beyond his group of people. I think it was a great choice. But I think that I'm not sure she'd be FTC chair at 34 if she were a man. I think this president is committed to having appointed officials that look, feel, and smell like America, which is the right thing. But I don't think Amazon would have gone out. If a dude was the FTC chair, they would have gone after him as well. I don't think this is a male-female thing. We'll see if he goes after Tim Wu.

We'll see what happens here. But in any case, Professor Wu, that guy's a gangster. They should spend their time convincing her she's wrong and changing her mind, which is what you do, just do a Supreme Court justice who definitely change their mind,

who shift, become more liberal, mostly they become more liberal when they join the Supreme Court, interestingly enough. And so it's, you know, look at John Roberts. No one thought he would have decisions he's been having. He's just been convinced or persuaded or argued at or debated to. And that's how this should work.

They should have a point of view, and she does. And she said a lot. I did a long interview with her. I'm sure they'll use parts of that. I was thinking, I went back and looked at it. I'm like, oh, they'll use this, they'll use that, they'll use this. And so, you know, it's just, this is just, this takes a set to do that. I don't, oh, they'll use this. They'll use that. They'll use this. And so, you know, it's just, this is just, this takes a set to do that.

I don't even say it's a second set. It's such a, I'd love to be in the room with the Amazon lawyers that do like, hey, let's try to like, you know what I mean? In the old days, they've been like, no, we're not doing that. We're just going to make our case, right? In this case, they said,

they pulled the trigger on this one. And I just find this appalling. I'm sorry. I don't think it's their lawyers. I think it's their communications team that says, how do we create doubt and distraction? And well, let's immediately start attacking just the idea and the FTC chair, and it'll create a sideshow. And if you say something long enough, and Fox News will run like, is Lena Kahn, should she be recused? They'll put the question out there. They don't love Jeff Bezos. This is a hard one for them. Like, they don't like Jeff Bezos more.

No, they won't. With tech, it's very hard for the right wing to get all hot and bothered about it, except that they're suppressing your speech. And in this case, Jeff Bezos is a, you know, Trump had a weird obsession. By the way, that was weird on top of that. I thought that was unfair to Jeff Bezos in that case. But in any case, this is a hard no. And by the way, we'll get a call from Amazon. I'll get a call from Amazon after this appears. They are so on it. Really?

Oh, yeah. I was on CNBC once. I think I got off and they called five minutes later or something. It was like within a very short time period. And I said something about their headquarters in New York. I don't even remember. I think it was you that was, I was saying something you said,

and I wasn't even saying what I thought. Anyway, it was interesting. Yeah, that's interesting that they call you. The only time, the only, I always get, so-and-so's gonna be in town, the CEO of, and then, do you wanna join them for an intimate dinner as they outline their vision on technology? They'd like to have breakfast with you.

And I'm like, I don't wanna,. The last thing I want to do is hang with these people. And they always come back like, you have an obligation. You're out there saying that. And I'm like, I have an obligation. I'm not a journalist. Kara Swisher has an obligation to be turned down. I always get that call, the hey girl call. Hey, girl. Hey, I heard you said this. And we have a different point of view like anyway stay open with hey girl hey girl it's like that it has that tone like hey girl let me just tell you something bad about yourself anyway it's just it's they always start mine they always start with we love your work over here oh yeah yeah that comes in and i'm like yeah i bet you just adore it i bet you just just think

they must have a thing that goes off and like an alarm that goes off in PR. Anyway, we'll see. They have crawlers. Every time the same thing. Actually, some of the PR people are great. I will just say all of the tech. There's so many good PR people in tech. I miss jumping that.

He and I used to be friends. Awful people. There's both. There's both. There's a lot of great ones. And the ones that are great are the ones that are really like, okay, I didn't like that, Kara. And here's why. No, it'll be nice.

We'll get to catch up with all of them in hell. In hell, Kara. Listen, you're for sale for facing for a million dollars. I'm going for different reasons, but I'll be there. You would take a million. I wouldn't take. They put $10 million in front of me. I wouldn't take it. How do you like them apples? How do you like that? Not at all. Well, there's a reason the dog is at the Beverly Hills Hotel doing edibles and eating a Mr. Chow. I'm a whore. There's some upside to being a whore. Yeah, that's true. That's true. All right. Listen.

You should see the bougainvillea here. It's beautiful. This is going on. We have lots to get to. Okay. Let's pivot to a listener question. Roll tape. You've got, you've got, I can't believe I'm going to be a mailman. You've got mail. Hey, Karen Scott. It is Tati. I am coming to you live from New York City. I love the podcast, love the tweets and love the gratuitous selfies. But I wanted to ask you live from New York City. I love the podcast, love the tweets, and love the gratuitous selfies, but I wanted to ask you a question about the labor shortage and the mass exodus from the corporate workforce. We're seeing a lot of people after COVID not going back to their hospitality and manufacturing jobs, but we're also seeing people leave their cushy corporate

jobs. Why do you think that is? Where do you think they're going? What do you think companies need to do to keep them there or get them back? And if you were 27 and feeling that itch, what would you do? Thank you so much. I hope you guys have an amazing rest of your week. Oh, I like Tati. Breathy Tati. Tati. Tati's great.

Listen, let me just explain to you, Tati. This is what I would say is one of the things that came out this week was that innovation and company creation has peaked for the first time in 10 years during the pandemic. I think people are looking at their lives. They're sitting in their like wherever they are at home. They've been away from the office. It's caused them to think about not just jobs, but how they conduct their jobs, how they conduct their relationships about their children, about education. Everybody is refiguring everything. And why would you go back to one, shitty jobs, as I said, and I don't think, I think people who work in retail are really great,

but they get treated not as well and they don't get paid as well as they should. Same thing with teachers or in manufacturing. And if you have better choices, you start to make them. So I think this is not, I don't think this is a surprise. Why would you want to do that if you're look, you know, if you realize life is short, which this pandemic has shown all of us, even if you weren't at risk? Thank you, Scott. Now, say something that's not highly offensive to Tati. I think you summarized it well. COVID is an opportunity for all of us to kind of slow down and rethink and reevaluate our priorities.

Yeah. And there's two questions here. priorities. And there's two questions here. So if you look at one of the things that's really exciting about this crisis or coming out of this crisis is that unions have been totally ineffective at helping the middle class maintain wage strength. But what has helped, and for the first time, I'm sort of a fan of, I don't want to call it universal basic income, but basic income in the latest bailout package has put enough money in people's wallets that they're like, well, if I don't go to work for eight bucks an hour, I won't starve. And I think that's a wonderful thing. I think we need to create, I think the best union in the world right now is some sort of payment system or transfer system that lets people decide,

I don't want to be a frontline worker and put myself in harm's way for eight bucks an hour. And it's bringing up wages. And I think that's a good thing. I think it's discouraging that CEOs and companies and shareholders and media act so shocked and kind of, I don't know, dismayed that people don't want to work 40 hours a week so they can live in their car. So I think it's time that wages come up dramatically. And then the question around being 27, though, I'm much more boomer kind of dad here. And that is, I think America becomes more like itself every day, and it's capitalist. And your ability to provide opportunities for your children, your ability to get good healthcare, wrongly or

rightly, is based on your economic security here. And there are trade-offs. I'm not suggesting you shouldn't calibrate those trade-offs. But my advice to people in their 20s is to buck up and work very hard and try and put yourself on a path to some level, some level of economic security. Because it is very important in the US. So when I talk to kids who are- Yeah, not just that though. Although I think people, when they reevaluate with it, like look, my son, who was at NYU this year, his freshman year, and he didn't like it. I mean, he liked New York, he liked the classes. But he made him think about whether he wanted to go to college right now.

And he's working at a job. He's an assistant butcher, essentially, and loving it, learning about business. He's learning about negotiations with vendors. He's learning about customer service. And he loves it. And let me just say, he's a great employee and he's making pretty good money,

because DC has a $15 minimum wage. And I don't know. And he's like, can money, you know, because D.C. has a $15 minimum wage. And I don't know. And he's like, can I maybe take a year off? I'm like, absolutely. Rethink about how you want to conduct your life. And I think that's – I think a lot of people are doing that. I think your son has a safety net. And the safety net drives a Kia Sorento for some reason.

No, he will not take my money. He spent – it's interesting. He's like, I don't want to take your – Yeah, but – All right. Yes, he does technically. Yes, yes. He's a young white don't want to take your – Yeah, but – All right. Yes, he does technically. Yes, yes. He's a young white male with wealthy parents.

Agreed. He has a different set. Yes, true, true. He has a different – True. His downside, if you're a lower middle class person of color and you're at NYU, get the fucking degree. Yeah. Get the fucking degree.

Agreed, agreed. And then decide you want to be a butcher or a chef. Right, right, right. It is – America is a terrible place to not have money. A hundred percent. When you're young and you don't have kids and you don't have spouses, that's when you burn the jet fuel. That's when you set yourself, you learn stoicism.

Focus, work your ass off and make more money than you spend. Start saving money and put yourself in a position to have a healthy household such that you are not radically stressed in a society that says to you, if you don't make good money, we are going to make your life really, really stressful. So you would advise, what would you advise if you were not just 27, if you were in your 20s, like early, late, mid, early 20s to mid 20s, late 20s, what would you suggest right now? Because this, this boom in entrepreneurship has been fascinating. Oh, fantastic. This is, and this goes to my prediction, this is the great age of entrepreneurship.

I don't think, on a risk-adjusted basis, as someone who started nine companies, I don't think you want to be the founder. That is incredibly risky, incredibly stressful. I think joining a small company that has shown some traction, like what I'll call letter D, you know, they've raised their first round of capital. I think on a risk-adjusted basis, that is the sweet spot because a lot of the risk has been starched out, but it's still small enough you can enjoy being part of building something and you can get good equity. But more broadly speaking, your job as a young person is not to find your passion. Don't believe that

bullshit. If someone's telling you to follow their passion, it means they're already rich. your passion. Don't believe that bullshit. If someone's telling you to follow their passion, it means they're already rich. Your job is to find something you are really good at and then become great at it. And about the moment you're about to give up and think, God, this is so awful and so harsh and so full of bullshit politics, that means you're making progress. Persevere through those things. Start building economic security. And once you start getting the economic accoutrements of being great at something, the prestige, the camaraderie, the respect, you will become passionate about whatever that thing is. That is your job in your 20s. Play soccer on the weekends, be a DJ, invest when you're rich in that great cannabis dispensary.

Agreed with that. But let me just say, I think the first part we said is much more important, is that companies have to realize, I've had lots of friends whose reservations have been canceled because they don't have enough staff, that people don't. They've got to make these their business plans in terms of how they're going to misuse people's sweat equity, essentially. Yeah, but this is a wonderful thing. We have said, and I think the Biden administration deserves credit for this most recent bailout, which is more than 50% is going to individuals, whereas the previous CARES package where more than 50% was going to corporations and organizations. And finally, there's an effective union in America, and it's called the US government. And it said that it is better, we're going to give people enough money so they don't starve, and it's going to force... But you summarize this perfectly. If you're a cool little restaurant, right, doing a great job offering consumers great tapas, well, good for you. But if the

only way that business can run is by finding people who need flexible work and because they have no other options, they will take seven, eight bucks an hour, then that taparia should go away. That's fine. That's fine. And there's certain businesses that just shouldn't be around if they need to be driven on software that circumvents minimum wage laws. Lyft and Uber should be much smaller businesses.

Boomers don't need, not boomers, millennials don't need to take SUVs to the airport. They don't, you know, we need to reinvest in public infrastructure. So I think this is wonderful what's going on and bringing up finally the wages of lower income workers. And it was the government that finally stepped in and said, you know what, we're the union. Unions are totally ineffective and have been ineffective and have been a fantastic foe for corporate America because they're so fucking weak and stupid and poorly managed and corrupt. Hello, unions. Okay. And finally, wages are rising.

Finally, the economy is starting to recognize that if you're going to be the wealthiest nation in the world, you've got to start acting like it. What I find interesting is Republicans always say people don't want to work and they'd rather just take the handout. You know what? Rich people do this, re-evaluate their life, where people who have degrees re-evaluate. I'm going to make a pivot. Everybody gets, you know, great idea, good idea, fine, you know, do something fresh and new and entrepreneurial. When other people say this is not what we're being paid is shitty and we want better terms, they call them lazy. Like, oh, and we're not going to work because we're getting money over here. The ability to make choices is the sign of a real society on all levels. It's very American too. One of our core competencies in

America is we leave. And that is, we're not afraid to leave a country and come for something better. My dad's core competence is leaving. Whenever he was in a company or a state where things weren't going well for him, he packed his bags and he moved to Phoenix. He just said, I'm out. And Americans, if you look at European or even other cultures like in Japan, they tend to stay with the same employer. They tend to stay in the same geography. In America, the fluidity of capital, your ability to allocate capital to where it'll be most productive, is an unbelievable component of an innovative society. And our human capital here is not afraid to get on a plane or in a car and just drive west. This is true.

Although I don't think we take as good care as we can of the things like health care. We really leave them no, like, if you mess up or you get injured. We're slowing down the fluidity of human capital because people can't leave because of the lack of portability of health care. No, I get that. That's what I'm saying. We should protect them more to be able to use this thing. It's an interesting talent. I have a similar talent.

I go. I go. In fact, recently I was working on something. You get in your career. Kia, you don't look back. I don't look back. Someone was, like, saying do this. And I just, I literally wrote back a one word answer to a negotiator. I went, no. I just was like, no. I didn't know what to do. I was like, no, thanks.

Occasionally, like after a long weekend with my kids, I sometimes just want to get in my car and drive. I said that to Amanda. I was like, I would like to be in Hawaii in a shack. I was like, we were getting some oysters at this really wonderful oyster bar called the Matunik Oyster Bar here. And there was a little house across the way. And this guy was getting his little rowboat in his little house. And I'm like, I would like to be that person. I just want to say having kids is hugely overrated on a day-to-day basis.

And that's more advice to 27-year-olds. It is not. Condoms. No, wrong. Condoms. No, wrong. Condoms. Taddy, don't listen to this asshole. Don't have kids at a young age. Do not have kids at a young age.

They're great. They're great. We're going to- When you're older. No. When you're older. And you can lubricate it with a lot of help. No.

No. No. This is not true. Oh, yeah. No. No. I don't have help much of the time. Anyway, I do have a lot of advice.

Daddy needs to sleep in. All right. Okay. Daddy needs to sleep in. Have right, okay. Daddy needs to sleep in. Have someone you can hand them to. You want to love your kids and love yourself? Listen, you've gotten canceled 12 times during the show, and I'd like to limit it to 12, if you don't mind.

We're going to go through. We have one more quick break. Well, Facebook is going to call me. All right, okay. Yeah, they're not. Okay, Scott, one more quick break. We'll be back for predictions. And my prediction is they're not going to call you.

The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Mike Gitlin. Through the words and experiences of investment professionals, you'll discover what differentiates their investment approach, what learnings have shifted their career trajectories, and how do they find their next great idea? Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. Support for this show comes from Constant Contact. You know what's not easy? Marketing.

And when you're starting your small business, while you're so focused on the day-to-day, the personnel, and the finances, marketing is the last thing on your mind. But if customers don't know about you, the rest of it doesn't really matter. Luckily, there's Constant Contact. Constant Contact's award-winning marketing platform can help your businesses stand out, stay top of mind, and see big results. Sell more, raise more, and build more genuine relationships with your audience through a suite of digital marketing tools made to fast-track your growth.

With Constant Contact, you can get email marketing that helps you create and send the perfect email to every customer and create, promote, and manage your events with ease, all in one place. Get all the automation, integration, and reporting tools that get your marketing running seamlessly, all backed by Constant Contact's expert live customer support. backed by Constant Contact's expert live customer support. Ready, set, grow. Go to ConstantContact.ca and start your free trial today. Go to ConstantContact.ca for your free trial. ConstantContact.ca. Hi, Scott. We're going to go through a lot of predictions next week, including the fact that you're not going to be chair of the FTC, which I'll tell you more about in a minute.

But give us one for this week, a very short one, because we've got a very important close this week. Record year for new business startups. Just to every point we've been talking about, people are reevaluating their lives. There's more venture capital available than ever. When people come out of a crisis in an organization, they're's more venture capital available than ever. When people come out of a crisis in an organization, they're much more open to doing things differently. We have between commercial office space, healthcare, education, you have five or six trillion dollars being thrown up in the air and it's going to land in different places. This is really exciting. This is a new era

of entrepreneurship. We're going to see new business formation go back to where it was in the Carter administration. It has been in a huge slump where only people of a certain gender, ethnicity, certification could start companies or really successful companies. Venture Capital is recognizing they want to evaluate CEOs based on their skills and their grit, not necessarily, you know, there was sort of a profile, drop out of Harvard, go to work for a hedge fund, then you can raise money. And now they're saying, well, it's more than that. So I think this is very exciting. This is a great, one of the wonderful things about America and the reason we always seem to get through things, we're like that Terminator guy that can remorph when an arm gets cut off. We adapt faster to economic changes than

any country in the world. This is a great era of off. We adapt faster to economic changes than any country in the world. This is a great era of entrepreneurship. We're going to see more new businesses started in the second half of 2021, in any six-month period in the last 30 or 40 years. Well, we are going to hold you to that, and I'll explain that later. But before we go,

today is Rebecca's last day producing Pivot. We love Rebecca. Rebecca, come on and tell us where you're going, because this is quite a doozy this is exciting yeah uh it's bittersweet but i'm going to be the head of audio for archwell overseeing the creative partnership between the duke and duchess of sussex and spotify so megan and harry why don't you say say it? More than that. Don't be, oh, aren't you a little, oh, you're so coy. Come on, don't be so coy.

This is Megan and Harry, what? I will never be royal. Royal. Like, this is so cool. Can we meet them? That's the first step. Can they come on our show? Talk about the mother of all upgrades.

Harris Swisher and Scott Galloway to Megan and Harry. Yeah, that must have been a tough decision whether to leave or not. That took her all of a quarter of a second. I'm in, yes. We haven't made the offer yet. I'm in. I'm in. They're doing it with Spotify. Fascinating. Spotify and Netflix and all those are hiring all the fancy people like

the Obamas, etc. So what are they doing? Meghan and Harry. We haven't, we're still working on it. I'm going to start in August and I'm going to be moving to LA. I'm the New York girls going to LA. And, you know, I don't really have anything specific to share. And I think I should take this time to talk about how handsome Scott is. I really don't think we spend nearly enough time talking about how handsome Scott is.

All right. All right. Rebecca, what would you like? I can't believe someone in our universe is going to work for Megan and Harry. How did that happen? I don't know. We don't know,

but it did happen and we feel great about it. Rebecca, let's give Rebecca the stage for 14 seconds. Essentially. I know you're going to call me sappy, but I really, really do want to go on a mini rant about just like watching the two of you as leaders over the past couple of years, because like I started this show and it was like just the two of you. And I just so, Kara, you are just like an absolute emblem of breaking the glass ceiling for all of us.

And I want to thank you for personally believing in me because that meant so much in my life. And like all women in media are just following in your footsteps. Thank you. And we all owe you a debt of gratitude and your place in the world has given me permission to be my fullest, most ambitious self in a world that like consistently asks me to shrink, to which I say, hell no. Don't shrink. Scott, what I want to say to you is I had no financial

education. I was like a waitress stuffing dollar bills into my pockets until pretty recently. And you have given me the tools to really understand how money works in my personal life. And then also how money works like on a macro level and how it transfers power and really what it means. And with that knowledge, it's made me better at understanding sort of like what our responsibility is to one another and to the government.

And I just, you know, by watching you guys do these things that you just do because you're just you, I've gained so much that maybe you couldn't know on a day-to-day basis. And then one final thing, which is that I listen to all the listener mail questions. I really do, genuinely, all the listeners. And they come from New Zealand, they come from Germany, they come from Hawaii, they come from all over the world. And we only get to pick one,

but they're so good. Our listeners are so smart. And I believe that smart questions are better than smart answers. So go to newyorkmag.com slash pivot to submit your questions to the show. And that's it. Rant over. Boom. Thank you. Wait, so just let me get this. Kara helps you be a more courageous woman,

and I've helped you balance your checkbook. I was looking for something. I don't get anything more than that. No, literally. Well, so this is what I was actually going to say. Oh my God. This is the truth is the first day of the pandemic. I can't believe you're fishing for compliments. Go ahead. The first day of the pandemic, when it was, when the pandemic shut down, Scott called me and I was like oh crap like what did i do what did the show miss like what happened and scott called me and he said hey rebecca i just want to see how you're doing and if anything if your family needs anything if you

need anything i want you to call me and that was it and i i didn't say need anything because i had this job but he's a softie and he's a good one. And for anybody out there who's like, you know, like Scott's more of a feminist than you'd think he is. I'm going to say it. Yeah. Not much of a feminist. But he is indeed. In any case, Rebecca, you've been a wonderful, not just employee.

Listen, no more compliments for Scott. Rebecca, you've been a wonderful employee and you've been a wonderful producer and you've saved Scott's ass numerous times. Let's just be clear. Yes. Thank you for saving me from myself, Rebecca. And thank you for building this. We're in big trouble now. I don't think you're going to have the same problems with Harry and Meghan. In any case, we can't wait to hear these shows that you make. One of the things that Scott and I like to do, and Scott can finish up talking about is we love when people leave us. I know it sounds crazy, but I've had a lot of employees over time and I love seeing them be successful. I love seeing them move on. We never, I never get mad when people move on. I think people should always pursue what the next thing is. And you've

had your learnings here and you've improved drastically and now you're ready for your next challenge. And so we think that's great. And anyone who employs, especially young people, be generous when they're going off. That's one thing I have to say, is be happy for people leaving you and moving on and doing better things. We feel good about that situation. But anyway, Rekha, you're a treasure, and they are lucky to have you. You may say the final words.

Yeah, plus one on everything Kara said. Thank you for everything, guys. Thank you. All right. So Pivot March is on, as we say. We'll actually be off this Tuesday enjoying the long weekend. But next week, we're going to kick off something a little different, our quarterly review series. Ooh, fun.

Like any good business, it's good to take stock of how well you've done so far and forecast what the future might look like. So going forward, every quarter, we're going to round up our biggest wins and fails and see how well we did with our predictions. We are accountable to you. That's how we feel. Unlike some other companies, we are accountable to the mistakes we made

and the good things we made. We don't just want to tout ourselves. We want to also reflect. And we'll also make some new ones. Catch that episode next Friday. Scott, read us out. Today's show was produced by Rebecca Sinan. It's Ernie Intertide, engineer of this episode.

Thanks also to Drew Burrows. Make sure you subscribe to the show on Apple Podcasts. If you're an Android user, check us out on Spotify, frankly, wherever you listen to podcasts. If you like the show, please recommend it to a friend. Thanks for listening to Pivot and Vox Media. We'll be back next week for another breakdown of all things tech and business. Thank you for your support, your expertise, and your grace, Rebecca Sinanis. We will miss you. Part of that compensation for our disappointment will be watching you progress. Make us proud.

Thank you so much, guys. Thank you. Thank you so much, guys. Thank you. Support for this podcast comes from Anthropic. It's not always easy to harness the power and potential of AI. For all the talk around its revolutionary potential, a lot of AI systems feel like they're designed for specific tasks performed by a select few. Well, Clawed by Anthropic is AI for everyone. The latest model, Clawed 3.5 Sonnet, offers groundbreaking intelligence at an everyday price. Clawed Sonnet can generate code, help with writing,

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