Pivot - It's time for Facebook's board to step up

Episode Date: November 23, 2018

Kara and Scott talk about how Facebook's C-suite has responded to reports of mismanagement. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Pivot is brought to you by our founding sponsor, SmartWater. What makes SmartWater delicious? It's pure, it's crisp, it's vapor distilled with electrolytes added for taste. Learn more at drinksmartwater.com. Hi everyone. This is Pivot from the Vox Media Podcast Network. I'm Kara Swisher. And I'm Scott Galloway broadcasting live from Pleasure, California.

Pleasure, California? You're in California? That's my kind of deep liberal intellectual joke. You didn't see the president talking about the tragedy in Pleasure, California? No. Paradise. Oh, it was all over the news. Jerry Brown and Gavin Newsom staring at their feet as Donald Trump lamented about the tragedy in Pleasure. What he meant to say, I think, was Paradise. I mean, as big as they look on the tube, you don't see what's going on until you come here.

As big as they look on the tube, you don't see what's going on until you come here. And what we saw at Pleasure, what a name right now. But what we just saw, we just left Pleasure for Paradise. And what we just saw at Paradise is just, you know, it's just not acceptable. Oh, man. I just don't pay attention anymore. I say something stupid every 15 minutes. You've just had it. Yeah, I've just had it. I'm busy focusing on Facebook, which is what we're going to focus on is the big story this week. Obviously, the Facebook debacle and the updates

on it. We talked about it last week in the story in the New York Times, and it's just gotten worse. I hosted a show this week with Mark Benioff on MSNBC, and I brought in Alex Stamos, who was the CSO, the chief security officer at Facebook, and also Shira Frankel, the New York Times reporter who worked on the story. And we talked more about it. And it seemed to have gotten worse, if possible. What do you think of what's happened there? Well, the thing I've noticed, and I'd love to get some insight from you on the term worse, what has actually come out since we last spoke. The thing I've noticed is the knives have come out for Cheryl.

For sure. And specifically for her. Even Alex was sort of, he seemed to be, I don't want to say making excuses for Mark, but it feels like the worm has turned on Cheryl and everyone's piling on. But let's go back. What has gotten worse since the last time we spoke? I think the reaction by Facebook, especially Mark Zuckerberg about this, sort of calling it bullshit,

you know, just the get your backup attitude. Like, hey, we didn't do anything wrong here. What are we getting all this? It's just such a typical mentality in that company. I've seen it on internal message boards and things like that. And what's interesting is to have like the reaction you got at Google among employees over that sexual harassment story, which was that's enough. And we need to change and, you know, 20,000 people stepping out versus an attitude from the top. And,

you know, obviously, Google's said nothing, because they just put their heads down as was appropriate for the situation. But in terms of Facebook, instead, it's like, so what? Like it was it just feels like a so what? Screw you kind of attitude that is sort of shocking. And it's not that you want someone to put on a hair shirt and cry at you, but it is like totally inappropriate, the reaction, as far as I could tell. And what have you heard about the definers and their denials that they did nothing to foment fake news. Has anything else come out on that? Well, the head of it, the guy quoted in the story who said he tried to muddy the waters, which I think most PR people do. He was just being honest about PR, I think, the negative side of PR. You know, he says he didn't, this was not what he was intending to do. He was just pointing out and why should, he was defending himself.

I would never I would never push nationalists or anti-Semitic people. And yet it's fair to point out that Soros is funding this. And I don't think they realize there's a difference between pointing out one group of people funding and another, especially with all the heavy attacks that Soros gets that are much the Koch brothers do brothers do not get racial or anti-Semitic attacks. They just don't. You know what I mean? Like they don't get the same level of it. They're just rich guys like trying to manipulate the election. And so I think it's a very, it's a powder keg over near Soros and not near the Koch brothers. And they were trying to, again, false

equivalencies. It just drove me crazy. It's sort of this idea that we're moving into that everything is of equal weight. But I think the fact of the matter is Facebook was seen to be just like every other big company, which was they will stop at nothing to get their aims, right? And they just don't want to be seen that way. And I would just be comfortable as them saying, yeah, we're a rapacious, normal company that wants to make profits at all costs. And that's the way we are. I just wouldn't just appreciate like some honesty instead of this, we're good people kind of thing, which has been exhausting. I've never believed it, but it's exhausting, I think. It's bringing up some, I think, some really interesting issues around big tech. And the first is, I believe that Sheryl Sandberg, excuse me, is a protected class, this inspiring progressive on

top of a protected class, and that she would have been fired had this company not been a dual class stock company, making it impossible to fire Mark. Because now the board doesn't want to be the board that fires the woman. So in a weird way, we have this perverse culture in big tech where women have to navigate this Hunger Games-like environment, trying to figure out a way to navigate all these terrible, defy death at every turn. It's not easy in this bro culture of engineering and programmers to get to the top. But then once you do, I would argue you become a protected class. And I think Sheryl Sandberg is a protected class. And yesterday I had Bloomberg, the AP, I forget who else called me and say, you know, what can Sheryl do? And my answer is she can be fired. I think she should have been

fired several months ago. And because they can't fire Mark, he's ended up being her heat shield. But I think she should have been out several months ago when Cambridge Analytica came along. And I want you to respond to that. I still put it on Mark. I'm sorry. I just, it's so typical. I mean, I agree. She's running things too, but he's the, oh God, he just can't be like, he's like the, like the, I don't want to call him a mutant, but he can't be killed. Right? Like he's the guy without the, what's the, Deadpool. He's like Deadpool.

You can't kill him. You can stick him in the leg and he can do everything. And he just, and interesting, Margaret Sullivan. More like Jason. Isn't Jason from Friday the 13th for better or not? I don't watch those movies, Scott. I don't watch any horror movies. I will not do it for myself since I saw Halloween when I was a young girl.

That was the end of my horror movie phase. Exorcist did it for me. Oh, really? That was it. No more scary movies. No more scary movies. So I think that one of the things Margaret Sullivan in the Washington Post, a tremendously good columnist, wrote was that he should – I think she's writing for a larger audience, that he should step down as chairman, having no accountability whatsoever. He's chairman and CEO,

founder and controlling shareholder. He's got all the cards. That he should give up one of his cards so that at least there's some level of accountability, even if it's just a fig leaf of accountability. But I think he has no accountability. And so first step is to me is to remove him from chairmanship and put a real person in there who's going to like, who has, who gives exactly zero fucks, right? Like that's what you want, right? And then, and like, I could do it, um, and then go from there and then see what happens. And I think holding them to account is really important so that there's someone who doesn't care if there's repercussions and then people can judge it from there rather than this sort of coddling board that coddles, just coddles and coddles and coddles. and I'm guessing Susan Desmond Hellman, are tougher behind the scenes. I can't imagine Peter Thiel or Marc Andreessen are. I think they're probably highly supportive of this behavior. And nobody wants to pay.

Nobody wants to pay. This very suggestion of payment is a problem, that you suggest that people pay. So I've been thinking about this a lot. I love corporate governance. I've served on a bunch of boards, and I'd like to remind you and everybody else of that because I'm deeply insecure. But I have served needs to be done here. And I would agree with you that he needs to give up the title, but that's the wrong title. He needs to relinquish the CEO role. What has gotten Facebook here to this point isn't going to get them where they need to be. And there has been such egregious errors. Carlos Ghosn was summarily removed from office,

incarcerated for what looks like abusing expenses. This is the Nissan. This is the Nissan guy. Arguably the Mark Zuckerberg of the automobile industry. I would argue the most respected operator in the world of manufacturing, or at least automobiles for the last 20 years. Sounds like an expense in propriety. I think he's in jail as we speak. Jim Brett, CEO of J.Crew, grew same-store sales, navigated a nearly impossible environment in retail. I think the merchandise looks great. Disagreement regarding the future of the company with the board. He's been fired.

And there has been enough going on here, whether it's fomenting lies, deflect, contamination of elections, people being pulled out of cars and hanged. I mean, there's enough here. Infections, people being pulled out of cars and hanged. I mean, there's enough here. There are CEOs fired every day for a fraction of the infractions that have taken place here. And I think the board needs to reach down, find these spherical objects called testicles, and demand that he give up the CEO role or they all resign en masse. And if the CEO was to say, look, boss, we realize you're in charge, but that doesn't mean we have to take it. They are fiduciaries. And they are not only fiduciaries for shareholders, they're fiduciaries for teens, they're fiduciaries for the Commonwealth. And they need to all hold

hands around the campfire and say, this guy needs to give up the CEO role or we're out of here. And if Mark Zuckerberg is left alone without a board, that is going to make life very difficult for him. So the board needs to act as fiduciaries for the country. They need to act as fiduciaries for teens. They need to act as fiduciaries for people who are being injured in other countries. They need to start acting like it. And I don't think the board has come under enough scrutiny here because clearly they are going on background in the New York Times and giving cover your ass quotes. So they do have some power here. They should fire Sheryl Sandberg immediately. People are fired for much less egregious activity than Ms. Sandberg.

She's done really well. She's going to have a fantastic future. She's made a billion dollars. I think she deserves all of it. But it is time for her to go, and it is time for him to relinquish the CEO role, and it is time for the board of Facebook to do their damn jobs. Well, that's not going to happen, Scott. Boom. Boom. Boom, says Scott, none of which is going to happen. I'm beating my chest. Playing our game of fantasy world of internet.

Sorry. The plane. The plane. It's not happening. I mean, something has to happen. At least some sort of come to Jesus kind of thing has got to happen in some way. I just don't know who's going to. A long time ago when they were like, this has to happen at Uber.

I'm like, who's going to do it? Like, which of these board members is going to throw Travis under the bus? Like, which one? Which one? And finally, like, what's the actual, same thing happened when Marissa Mayer was sort of badly managing Yahoo. I was like, which one is going to do it?

Because I don't see anybody, like, moving except for, like, reporters and stuff like that. And so I think if more stuff comes out, but this particular company is so not, the employees are so docile, it's really quite fascinating. They're docile. I don't know how else to put it.

Facebook employees, you are the most compromised group of people on the planet, let me just say, and you've done it for years. Thing after thing, you never object to anything that I can tell, and you're docile. Thank you very much. That is my speech to them. And then they also, the company tends to twist things. There's a really funny tweet by Corey Ciara, whatever. He said, there was a thing

about Facebook COs, Sheryl Sandberg tells Nora O'Donnell, we absolutely did not pay anyone to create fake news. And this guy goes, cool, Sheryl Sandberg and Facebook didn't do the one thing no one has accused them of doing. So they're changing the tune. Like they didn't accuse them of cover up. I think Sheryl Sandberg noticed really clearly that they keep addressing things in her article that she didn't write. And so it creates a false narrative around what was said in the Times piece. So we'll see where it goes from here. I'm not as – I don't think anything's going to happen. I think it will blow over.

To your point, my suggestion is – Hurricane Facebook will continue to ravage the countryside and will say that there's no climate change going on. What you might find, though, I do think this is going to happen in the next 30 days. I think Facebook has made itself such an incredibly ripe target. One of two things may happen, and that is I do think you're going to see a group of senators or congresspeople decide to propose legislation or threaten legislation. It's just become too ripe a target. The other interesting wild card here is some sort of activist play. I've had some conversations with activist investors.

Facebook is now so cheap that it may be a shareholder reason. That's, again, the decline in stock. I was saying the stock will get them. You're right. Shareholder loss. Dan Loeb, calling Dan Loeb kind of thing. Well, there may be a capitalist shareholder reason to break them up, that this company actually might be worth more as separate entities than it's trading at right now.

I mean, it's actually by most – I mean, and I've said this all along, and full disclosure, I own all of big tech because I love owning monopolies and growing economies. But I do think Facebook is good for you. It makes it easier for you. I'm ethical. Jesus, I hate myself. Yeah. So I think you could see an activist step in. I don't know what leverage they have. Where's the soft tissue here? But at some point there's a capitalist argument to break them up, which would solve I think a lot of it. But you're going to see somebody's going to pop up. I don't know if it's Warner.

I don't know if it's Bennett. I don't know if it's Greg Walden from Oregon. Well, they have. They've been releasing a lot of—I've gotten a lot of press releases. And I've gotten a lot of congressional people call me. You're right. That's absolutely—but we'll see if they have any ability to do anything. I do not think they do.

I am not—I am concerned that they have no power to do anything. Anyway, we're going to take a quick break. Stop talking about Facebook. And please stay with us. And we'll be back in a second. Pivot is brought to you by our founding sponsor, Smartwater. So we both run businesses, manage day-to-day, and now host a podcast. I have a lot of podcasts.

We're working hard, and so does Smartwater. It's vapor distilled, whatever that is, for purity with electrolytes for taste. It's water that keeps us hydrated as we work hard. And look, you work hard. You deserve a great tasting, hydrating water. Learn more at Smartwater.com. Okay, we're back, Scott. We're going to talk about the fails and the wins of the week. We've been talking about a lot of failure. We are. We're such an unpleasant pair, I think.

Is there a win? But we're more unpleasant together. Yes, double the lack of pleasure. Any wins that you see? Anything that you think is a good thing? You know, so I love Thanksgiving. Do you love Thanksgiving? I do.

As I get older and I realize the finite nature of my life, I'm an atheist. I think this is it. I know. I'm about to get sappy. I'm trying to have a moment with our dozens and dozens of fans, Kara. Okay. So it's Thanksgiving, and there's a lot of great research on happiness. And the number one source of happiness is the number of deep, meaningful relationships you have. But tied for second are physical fitness and then gratitude and being grateful. And I'm trying to be more grateful. And I'm thinking

about all the wonderful things I'm thankful for. And the government gets a lot of grief because the individual heading the government is very controversial. But if you look at what's happened to government employees, the sector that's lost the most employees over the last 10 years has been retail. But a close second is actual government employees. State tax coffers are really low. And so you've seen a lot of layoffs at the municipal, local, and federal level. And I have on my Twitter handle that I'm the product of big government. The generosity and vision of the University of California gave me an incredible opportunity. When my kid was speech delayed, the state of New York stepped in and gave him occupational therapy, and now he's thriving now. You know, even more recently, I think about all the folks out on the West Coast doing a great job,

the first responders, and I think about the brave men and women who put a bullet in the eye of Osama bin Laden. So I am thankful. I am thankful. Most of my income comes from capital gains. So the 23 cents on the dollar I give to municipal, federal, and local government officials, I am thankful for them. I think they do a great job. Oh, God, Scott. All right. You're going to go there.

I was going to say Jeff Bezos. Steve Carell playing Jeff Bezos Saturday Night Live was a win of the week. I win. The tro the week. I win. Controlling Trump. I win. That was pretty good, though. Okay. Actually, I'm going to go in your zone.

I thought Gavin Newsom, who's the incoming governor of California, literally held it together. I know him very well. And he was holding it as tight as possibly. I think he couldn't stand being there. The tour? He was a leader. You mean the tour of the fire scene? Yes, he was a leader.

Where they were staring at their feet? Where Jerry a leader. Where they were staring at their feet? Where Jerry Brown and Gavin Newsom were staring at their feet? They were leaders. I know they wanted to toss him in the Pacific Ocean. It was when he kept saying the wrong things and the fire and the raking. And they just sat there and they took it for the betterment of the people there to focus on the people of California who are suffering. And I thought that was a great thing.

I'm very excited about the leadership of Gavin Newsom as governor of California. I thought Jerry Brown's been a was a great thing. I'm very excited about the leadership of Gavin Newsom as governor of California. I thought Jerry Brown's been a great governor also. But I think Gavin is, let me say this about Gavin Newsom. When he did the gay marriage thing way back when, and I got married during that period, it took a leader to do that. And he suffered politically really badly at the time for what he did, the stance he made on gay marriage and opening it up. And he suffered and it was a setback to his political career. And that to me is leadership. So I'm very excited to see if he can really step up in leadership and not like saying something, snarking at Trump right when

Trump was misbehaving in a terrible tragedy was, I just, I wouldn't have been able to hold it together, I'll tell you that. So I'm looking forward to, I thought that was a win for Gavin Newsom. What do you think about Brown-Newson ticket? He's going to be a big deal in this tech stuff. I think he's going to be a big deal. Yeah? Do you think he's a big deal for 2020? I don't know. I don't know. I don't know. What about Brown-Newson? What do you think of that as a ticket? Brown Newsome. Oh, no. It's too much California.

I do think he's a really interesting... I think people always discount Gavin Newsome. Maybe because he has fantastic hair and skin. I don't know what they do. They always discount him. And I always... Every time I... All the time I spend with him, I know he has the thing about what happened personally.

That he had a drinking problem and caused his friend... I get that. He's got controversy in his thing. But I do think he's got a lot of thoughtfulness. I'm a big fan of his. So I'm hoping for great things from him as governor. I'm hoping. And I think, again, Brown deserves an enormous amount of respect and thanks, kudos for his running race this week. And I think they're going to matter on day. I think he's going to matter on tech. And I'm going to make him matter. In any case, I'm going to write about him running race this week. And I think they're going to matter on – I think he's going to matter on tech, and I'm going to make him matter in any case. I'm going to write about him soon.

So predictions, predictions. We need to wrap it up here. What are some of the predictions that you have before we finish up this week? What do you think is going to happen? You had a good one last week about Amazon, everyone becoming a subscription service of some sort or a loyalty program. Yeah, it clearly resonated with you. Well, you know, a lot of people agreed with you. Did they?

I think that's just because they just feel sorry for me because you beat me up every week. They're coming to my defense. Oh, please, big baby. You're going to see... Wow, wow, wow. Poor me. I think you're going to see two to three private company CEOs

announce that they're exploring a run for president. I think the most likely, obviously Bloomberg, but that's not really private sector. But I think Bob Iger from Disney and Howard Schultz from Starbucks. Oh, you're going for Iger? I say no to Iger. I've asked him directly. He said absolutely not. Really?

He said no way? Yeah, I think his wife doesn't want him to run, too. I don't know. I just get the sense. I think no way for him. Willow Bay, Stern grad. She went to NYU Stern too. I don't know. I just get the sense. I think he's – Willow Bay, a Stern grad. She went to NYU Stern. I love Willow Bay. She is a wonderful journalism –

She's great at USC. I love Willow Bay. She's fantastic. I also – Gavin Newsom's wife is amazing. Not that people – she does this astonishing documentaries on all kinds of things. No, not her. That's a bad one. That's his bad first wife.

Come on. No. Oh, she's a naughty girl um no um years ago i was when she was married to him he she replaced him at an event i was at a gay dinner some sort of gay like a big you know one of those things at a ballroom and literally she was so filthy her she was so she was so potty mouth that like even the gay guys were like okay that's enough like it was like in san francisco if you can shock a room full of gay people in san francisco you are way on top of

that i have to say it was dirty it was a dirty i just decided i liked her good for her well it was interesting i was sort of like whoa oh no oh no hold on and it was uh that doesn't happen i live in the castro of san francisco there's very little looking shot of Kara Swisher. But no, Jennifer Newsom is amazing. But away from people's voices, I don't think Bob is going to run. I do think Howard is going to run. I do think Bloomberg's going to run, for sure. Yeah. And who do you think has a better shot? Bloomberg? Well, they're both billionaires, right? Bloomberg. Bloomberg. Yeah, I think you're probably right. By the way- I think he missed the boat last time. He should have done it. He just choked. That was his moment.

That was his moment. I agree with you. It's a shame. I thought he was a great mayor. Yeah. Have you seen the movie Queen? No, I have not. It's fantastic.

Oh, wait. Is it called Queen or is it called Bohemian Rhapsody? Bohemian Rhapsody. Is it called Bohemian Rhapsody? It's fantastic. I mean, it's really a wonderful movie, and it's an inspiring movie about how creativity is just being fearless. It's really a wonderful film.

I don't know what made me think of that, Cara, but go see it. It's fantastic. I shall. I'm going to go see something else, probably the one with Viola Davis. I'm going to go to a lot of movies. My children are in Cuba. Your children are in Cuba? What are they doing?

My ex took them there. They're in Cuba. They're in Cuba? My kids have like the frigging life of Riley. They go everywhere. My kids have met like the Dalai Lama

and Desmond Tutu. And they have a... My kids are... Anyway. Yeah, I have no predictions, but I like your predictions. My predictions is I'm going to have a lovely

weekend, a quiet weekend without my kids, but I miss them terribly. Oh, you deserve it, Kara. You deserve it. Actually, my son actually wrote me, and I put it up on Twitter. He goes, you have to pick up the phone because you're our emergency contact when we're in Cuba. And he goes, no, I'm in a podcast excuse. I was like, oh, my God. He sent my number completely.

So I had a wonderful, and I know you hate the soft stuff. And by the way, I'm convinced. Someone asked me about you. I said you're an igloo. Crunch on the outside, soft on the inside. I think you're a lot nicer than you portray. But anyway, my kid screamed in the middle of the night last night. I lost a tooth.

I lost a tooth. We went up there. And, of course, he looks like a boxer. Just get hit in the face. And we said, okay, put your tooth under and write a letter. And he wrote this hilarious letter asking all these questions. You know, where do you live? What's your name?

Do you have a pet? How old are you? And we, of course, wrote a letter back. And he came running into bed this morning and read all the answers. And it was just one of those, like, where are the cameras? Like a Hallmark Channel. It was just so wonderful. Yeah, it's nice. I hope he doesn't listen to this. I hope he doesn a Hallmark channel. It was just so wonderful.

I hope he doesn't listen to this. I hope he doesn't listen to this. No, he's eight. He's eight. He doesn't. Are you kidding? My wife doesn't even listen to this. My family has absolutely no interest in what I do. None whatsoever. I miss those days of those letters I wrote as Santa. I was an excellent Santa, I have to say. I had a lot of advice for the children. I typed everything, obviously, because my handwriting was easy to understand. Not to understand that they'd figure it out, but I have to say. I had a lot of advice for the children. I typed everything, obviously, because my handwriting was easy to understand. Not to understand that they could figure it out, but I miss those days.

But they're over now, Scott. They're gone forever? All right. Gone forever. Where's the time going, Kara? Just like the prospect of Mark Zuckerberg stepping down. It's slipping by. It's going by, day by. He has Thanksgiving break to have everyone forget and have Trump say something dumb.

And then we move on to the next news cycle. All right, Cara, I need to wrap it up here. Any last words? No, I have no last words. No last words. Well, looking forward to speaking next week. Yes, we'll have lots more to talk about, I'm sure, as we move into the Christmas season, especially on Amazon and all kinds of things.

Rebecca Sananes produces this show. Nishat Kerwa is Vox Media's executive producer of audio. Thanks also to Eric Johnson. Thanks for listening to Pivot from Vox Media. Join us next week for more breakdown of all things tech and business. If you like what you heard, please subscribe on Apple Podcasts

wherever you're listening. We're fans of our founding sponsor, Smart Water. Delicious Smart Water is vapor distilled. People, vapor distilled for purity, okay? That's even more distilled with electrolytes added for taste. for purity, okay? That's even more distilled. With electrolytes added for taste, it leaves us feeling refreshed and ready for the next challenge. Learn more at drinksmartwater.com. Hey, Pivot listeners. This is Kara Swisher. And Scott Galloway. It's the week of Thanksgiving, but we're feeling thankful for all of you for letting us make this show. If you're feeling extra generous this week, please leave us a rating or a review on Apple Podcasts.

If you're listening on your phone right now, just head over to the show page and swipe down. And if you're not on Apple Podcasts, just tap the link in the show notes to get there. And while you're at it, we'd also appreciate if you took a minute this week to rate and review our other shows, Recode Decode, Recode Media, and any other podcast you'd like. Five stars for us, Scott. Thanks, everyone. And what a wonderful country. What a wonderful age.

So much to be thankful for. Happy Thanksgiving.