Pivot - Live from DLD: Microsoft's AI Future and the FAA Meltdown

Episode Date: January 13, 2023

At Munich's Digital-Life-Design conference, Kara and Scott unpack EU tech regulations, Tesla's many challenges (including Twitter), and OpenAI's future in Microsoft products. Also, what the latest airline meltdown says about US infrastructure. Send us your questions! Call 855-51-PIVOT or go to nymag.com/pivot. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Just go to Indeed.com slash podcast right now and say you heard about Indeed on this podcast. Indeed.com slash podcast. Terms and conditions apply. Need to hire? You need Indeed. Hi, Pivot listeners. We've got something special today. Scott and I recorded this episode live at the DLD conference in Munich.

Let's see how many wiener jokes Scott can make. I have a dachshund. Enjoy. From New York Magazine and the Vox Media Podcast Network, I'm Cara Swisher. And I'm Scott Galloway. Hello, Scott.

And this is Pivot Live from the DLD Conference in Munich, which is Germany, Guten Abend. I actually lived in Germany for almost a year. I lived in Berlin. You were planning to work for a security apparatus. You were learning German, right? Yes, I was. Yes, I was learning German.

And I lived here. I had a scholarship. And it was lovely. I had a great time. Right after the wall fell. And it was really, I lived in, I had a scholarship, and it was lovely. I had a great time right after the wall fell. And it was really, I lived in Kreuzberg, and I still speak German badly. So anyway, we're going to do this in English, if you don't mind. We're going to start off with topics and then some big stories.

There's a lot of news everywhere. And we're going to talk a little bit about the EU and its efforts to rein in big tech, which are ongoing. But there's all kinds of things we're talking about. But we almost didn't make it here. Well, I didn't because I don't fly private like some people I know. The FAA briefly halted departing flights in the U.S. yesterday due to an outage of a system that sends safety alerts to pilots. The White House and FAA says there's no evidence of a cyber attack.

It sounds like a very antiquated system failed. I can't believe it. We already had tons of flight delays this past summer, staffing issues. Southwest Airlines had a historic holiday meltdown. People in the US were thrown off flights because of weather issues. And there's a bomb cyclone thing that's happening across the US. And now there's a river cyclone happening in California. Maybe we should take Europe's approach and build trains that might be great um but what do you think about this because france is moving ahead with a plan to ban some short haul flights

between cities that are linked by train how do you how what do you think about this faa situation just first off just i should disclose i am profane and crude and what you hear is edited. So this is not edited. So I think train travel is amazing. I had my first oral sex on a train. Okay. And so I'll tell you, Kara, that'll be the last time I fall asleep with my mouth open on a train. I warned you.

I'm sorry. Go ahead. All right, more seriously, more seriously, what this reflects is very simple. And that is in America, we have decided that we no longer want to invest in the middle class. And the most obvious productive means of investing in the middle class is investing in infrastructure. Middle class people need to take, need to take municipal transportation. They need public schools. They don't have brittle water filters. And we in the U.S. have decided to optimize everything around the top 1%. So the easiest way to do that on a CapEx level that is indirect is to slowly

but surely squelch public investment. Our airways, it takes longer to get from New York to Dallas now on a aircraft than it did in 1970. And it's mostly because of air traffic control delays and our infrastructure is crumbling. Whereas at R&D, we spend more than any nation in the world because then smart entrepreneurs can come along and put a thick layer of innovation across GPS, across the US Post system, across DARPA, and make billions of dollars. But when it comes to actual infrastructure, Europe and most modern democracies are just well ahead of America, because America has decided that low taxes and a lack of investment in infrastructure is the optimal model. But now some of it, some of it was, first it was this antiquated system, which is just shocking that there's always one point of failure.

And I think Secretary Buttigieg decided to close it down because they didn't know. They didn't know if it was someone going to crash planes into each other. They had no idea. Yeah, it was a system where pilots communicate

about second tier issues that can low probability, high severity, something on the runway. Yeah, exactly. And so the fact that they just had one system and they couldn't like, I mean, basic internet for teenagers is better than the FAA system from the way it was explained to me. And so I think one of the problems is, is why you could see something with the staffing issues in the U.S. because the airlines lay people off. I don't know if it happened here in Europe, but they laid a lot of people off and therefore

staffing issues everywhere I go, staffing issues in the U.S. and many places are really severe. They just don't have enough people, restaurants, airlines and things like that. Sorry. And the other stuff is climate, which you can't really do anything about what's happening in California, right? I mean, you can in the long run, but there are these severe storms, mudslides, road outages. The same thing happened in the Midwest over Christmas, which was a peak travel time. It's that we don't have resilient systems in the U.S. and then the distances are so long, it makes it even worse. So this idea of, we have never had high-speed trains anywhere in the United States, I believe, correct? We have Amtrak. Yeah, we just don't, we don't make those sort of forward-leaning investments.

So what would it take to do that? Well, one, I mean, there is a reason along the Eastern Corridor and the California Corridor, you need a density, but what you need is a different mindset that says that we're going to invest, make long-term investments that can't be financialized. I'll bridge this to OpenAI.

OpenAI was initially funded with the notion by a group of people thinking, we need to fund this because we want to make sure that AI has safeguards on it. These were visionary people that said, okay, we have to be careful that AI doesn't go very dark places. You know who the biggest funder of that was initially? A guy with a hair transplant who's a man-child. Anyways. Yes, that would be Elon Musk, just so you know. Oh yeah, or him.

Yeah. But you have, all of a sudden, people smell money. And now we've come up with some weird structure that pretends it's for not-for-profit, but the first $90 billion are going to go to Microsoft or employees or investors. So about the time it starts becoming a non-profit, it will have had to have been one of the five most profitable companies in history. What extraordinary bullshit. We have the financialization, anything

that shows potential, anything sniffs of a profit opportunity, we immediately snap from the public sphere. I can't imagine the people who initially set this up thinking we want to make sure we have safeguards in it, imagine that all of a sudden it would be the differentiating feature of Bing.

Yeah. We will get to that in a second. But it's true. It's really a problematic situation and problematic for innovation and getting the economy back. Another moving on, Parler's parent company

laid off the one that Kanye was supposed to buy, which we predicted he would not buy. And also, I mean, who would have thought he would have said something anti-Semitic all the time? I don't know. It was such a shock to all of us in the United States. It laid off most of its staff and executives in recent weeks. It's the right-wing Twitter clone. I've interviewed, well, I got its first CEO fired. The second one I've interviewed is married to Candace Owen. Last fall, Parler said it would sell to Kanye. As we said, the deal fell

apart. Twitter also has its own issues right now. The reports that employees walked out of its Asia-Pacific headquarters in Singapore over the weekend for non-payment of rent. It's discussed selling usernames in online auctions. I bought you at douchebag.com. I'm so excited to give it to you for the holiday, for your birthday.

And they're trying to come up with money. Obviously, he's still having problems there. He has recently said he's back at Twitter after spending three days at Tesla, whose stock is off 70%, and apparently he's fixed everything in those three days. Really great work, Elon. Thank you. So what do we think of this? What's going on with social media? Still really problematic in terms of making money.

Yeah, but we knew this, right? Getter, Parler, Rumble, the ones that tried to say their positioning was that you'd be liberated around free speech. And the question is, well, what exactly can you not say on Twitter? What are you going to get to do on these platforms that you can't do?

So positioning them immediately as far right just turned off advertisers. They never got any real traction. But you touched on a couple of things at Twitter, the second order effects. It's a fun spectacle. But the biggest impact, the biggest business strategy of 2023

isn't going to be AI. It's not going to be supply chain. It's going to be how to be tough without being an asshole. And what do I mean by that? The greatest erosion, the greatest fall, the greatest decline in revenues ever incurred by a private company over a billion dollars has happened in the last 90 days. Twitter had a run rate of $5 billion on the day that Musk made his offer. 50 of the 100 biggest advertisers

have taken their budgets to zero, which means the other 50 are probably down somewhere between 20 and 70%. And if that's a proxy for the larger network, you're talking about a business that has gone from a revenue run rate of $5 billion to one to one and a half in 90 days. I challenge anybody to name a company that either without some sort of exogenous shock,

a natural disaster, or a war, where that's happened in the last hundred years. In addition, that $45 billion that he's basically pissed away, this is already the second worst acquisition in history, assuming it's worth five or 10 billion. He's taken 40 billion into the street and immolated it. But in addition, he's going to destroy seven to 10 times the value of Twitter because Twitter, the Twitter virus, has escaped the lab and it's now affecting Tesla. And who is the average Tesla buyer? Is it a hard right Republican in Kansas who's on Medicare? Who buys Teslas? It's guys who like to think they're woke, who have a lot of money, who want to say to the world, I'm rich, but I hug trees, have sex with me.

And as a result of that self-expressive benefit that is Tesla, they have the highest margins in the industry. And what has happened to the Tesla brand? Its net favorability in the last 90 days has gone down. And by the way, anyone been in the new Mercedes, I think it's called ESQ or the BMW i7? That shit's for real. Competition is coming for Tesla at exactly the right time. The thing is, Tesla's still way ahead. I was just visiting Lucid Motors, which is a beautiful car, by the way, another beautiful car. I was actually almost killed by a German man who's designing it.

He was driving me around the streets of Palo Alto in it, which was frightening. But it's a beautiful, powerful, luxurious car. I think Teslas feel like the inside of an egg when you're inside of it and you get rattled around. But all of them acknowledge Tesla is very far ahead from a technology manufacturing, etc. They can't make enough cars for the ones that people want. But competition is coming. China demand is off. What you're saying about Tesla now is like wearing a MAGA hat in the United States for a lot of people

so they don't want to be in them. A lot of the people who bought them, who are not MAGA people, are buying them. And the trucks aren't coming anytime soon. And the cheap cars aren't coming anytime soon. As you know, I have a Chevy Bolt, which I love my Chevy Bolt, $28,000 in the United States. I love it. It's great. There's no way. I would have been a Tesla possibility if they had a lower car, but I never would buy it now. And never again. And my kids are the same way.

They don't want to get in one. We were going to rent over the holidays. We were in Palm Springs, and there was a possibility of renting a Tesla. And my sons go, not that douchebag. That's exactly what they said. And I'm like, okay, we'll get the GMC, whatever. And it was great. It was a hybrid car, and it was great.

The almost near-per perfect analogy is Netflix. For eight years, because Hollywood couldn't get their act together and didn't want to attack a legacy business that was creating billions of dollars by putting a movie with a man in tights and a cape in the movie theaters for six weeks and then putting it onto cable and selling it, they didn't want to make the requisite investment

in streaming. And Netflix really for eight to 10 years had absolutely no competition. Absolutely none. And then all of a sudden competition came in, margins got compressed. We started running out of credit cards to buy subscriptions and the stock went down 76%.

Yep. Tesla really has had no competition for the last eight years. And I don't think they're way ahead. When I was in, I spent, and I'm biased. I dislike the man. I think he's a menace and terrible for, a terrible role model for young men. Besides that, I think there is competition coming.

I think the new Mercedes. Mostly the Mercedes and BMWs. They were fantastic. Japan's going to be coming. Anyway, it'll be interesting to see what happens. But Parler is dead, from what I can tell. We're going to go through a couple ones quickly before we get to two big stories. We've got limited time here, although we're just going to keep talking because we

feel like it. Disney. Disney getting an attack from Nelson Peltz who is a very famous and very well-regarded activist investor. He's done that to P&G. He's on the Unilever board and Bob Iger declined to put him on the board of Disney. Bob Iger, of course, just came back

to Disney. He hip-checked the Bob 1, 2 out. He's Bob 1. What do you think of that very Bob Iger, of course, just came back to Disney. He hip-checked the Bob 1, 2 out. He's Bob 1. What do you think of that, very briefly? So Disney stock is at a five-year low. And Disney made the mistake that most old economy companies made, and that is they started showing profits consistently. And once investors get their lips around the crack cocaine of profits, if you take the pipe away, they become very irritable. Whereas their competitors, specifically Netflix and Amazon, never got their investors really wet on the metric of profits. The metrics were always subscriber growth, right? Or viewership. Yeah.

And so Disney is in this atmosphere where they have to invest billions of dollars. Disney's business, if you look at it, is actually pretty strong. The parks are pretty strong. The Disney Plus on a subscriber level is off. But the only way they can go toe-to-toe with Netflix and Amazon and Apple is to make these extraordinary investments that really ding their profits in the stocks at a five-year low. A tactical mistake on Iger's part. I've served on a shit ton of boards. The best mistake on Iger's part. I've served on a shit ton of boards. The best way to silence an activist, the CEO never wants to put an activist on the board because the CEO gets to decide their compensation. So they want to have people that

like me a lot on the board. And so anyone who feels like maybe they don't like me, they try and get off the board. They have big egos. They circle the wagons. The smartest- Yeah, this is an error by Iger. It's interesting because in an interview with me, he even said Disney's not quite big enough even. It's just almost too small to compete with the Apples and Amazons. He was talking about Warner and others. And so I think this was a misstep by him. I think it was a—I'm surprised.

He's usually very—he's the cashmere prince. The easiest way to silence an activist is put them on your board because then they have to maintain confidentiality. But there's a non-zero probability. You could see Disney, if its stock continues to go down, to get split up and be put in play. Because that streaming network is amazing for anyone but Disney in terms of their existing capital and shareholder base. Their shareholder base is used to profit.

It's still such a strong company altogether. My daughter watches Frozen on Endless Loop, my three-year-old. And recently I went to the store and there was frozen string cheese. And it wasn't frozen, it was frozen string cheese. And it was all the characters

on the sticks of string cheese. And I had to buy them because she screeched until I did. And then I texted Bob Iger, I go, go fuck yourself with of string cheese and I had to buy them because she screeched until I did and then I texted Bob Iger I go go fuck yourself with this string cheese that's enough I've spent enough on anyway he enjoyed that I didn't realize he was wrangling with Nelson Pace goes I'm busy right now and I'm like with what the string cheese is upsetting me anyway um let's move on uh we're gonna go to our big stories. Artificial intelligence, you just mentioned it.

Microsoft is talking about integrating artificial intelligence into its office suites and products. Reports say Microsoft's products, such as PowerPoint, Outlook, and Word, could incorporate technology from OpenAI, the group behind ChatGPT. Microsoft already uses OpenAI products in its co-pilot tool, which tells programmers write code. And last week we heard that chat GPT potentially could come to the Bing search engine. That's a successful piece of shit. So now it could be revived. Bing, Bing, Bing, Bing. Steve Ballmer introduced Bing at one of our conferences,

and he kept saying throughout the interview, Bing, Bing. It was super weird. But what do you think? Who's getting the better deal? You seem to think Microsoft is doing well here. Why is OpenAI hugging Microsoft so much? I've been, the whole thing, I'm still trying to wrap my head around it.

And I was watching Sri Ramaswani at Neva talk about this. Ramaswamy at Neva talk about this. It seems as if already Sam Altman, who's a really smart guy, says that AI, by virtue of the technology, will likely become a commodity faster. And at the end of the day, you need the infrastructure and the computing power. Supposedly, it's about two cents per query of processing power, which is seven times what a Google search takes. So if you're going to have hundreds of millions of queries a day, that's real cost and investment. We're going to lose about 550 million.

But if you think about, he's going vertical. And that is he wants to find somebody who has the processing powder, who has a huge cloud infrastructure and already has a front-end monetization tool. So it already struck me that the people who really understand this company are like, we're not going to have much differentiation for very long.

We need to vertically integrate forward with a front-end business app and sit on top of unbelievable computing power. And I can't help but think the greatest concentration of IQ in history through the 60s, 70s, and 80s was NASA because we got the best German scientists out of World War II. But the greatest concentration of IQ

ever assembled right now in history is at Google. And I wonder what Google is going to do. They've been eating away at Google Workspace is taking bytes out of Microsoft. Microsoft is still the dominant productivity suite, but there's others. But they've been eating at it. And Google has started to really rein in a lot of its crazy stuff. All his, you know, the moonshot stuff is staying on the moon. What have you heard about chat, GP? I'm still...

You know, here's what's interesting about it is it's the first time, when you think about cryptocurrency, I still believe it's, just Sam Banker and Freed aside, it's still an important, the blockchain stuff is important. We don't know where it's going. When the internet started, someone said to me, I don't get what it is. I don't get what I use. What is it? And I said, it's everything.

And they're like, what? I go, everything. And they're like, what does that mean? I go, I don't know. I don't know what it's going to make, but it's everything. And you can start- It's not like an ad for Bitcoin. I know, it's true. But Bitcoin isn't everything. You started to see the uses of it, whether it was when you got Yahoo, uses, uses, uses. And then the efficacy became obvious very quickly, right? Whatever happened to rollout, you're like, oh, I like that. But you didn't know what it was going to be. And that's how I feel with ChatGPT. you didn't know what it was going to be and that's how i feel with chat gpt i don't know what it's going to be but you're

already starting to see either entertainment uses writing press releases there's all kinds of things it could replace it's essentially what um spreadsheets digital spreadsheets did for accounting you just plug the numbers in and it does it. This is going to do for text and then photos and stuff like that. And so I don't know what it's going to do, but it feels like it has efficacy and you can see it at work, even if it's stupid and it answers dumbly. That's at the beginning of this. They're like, someone once said it's, they're like dolphins now and they're going to surpass human brain ship very soon, but they're, they're still dolphins, right? They're incredibly smart.

So I think we don't know quite what's going to happen, but I do think you can see in your head where it could work. It could start to begin to it's not as fuzzy as like what am I going to use cryptocurrency for except for speculative? And I don't feel like doing that. The thing we do know will happen

is this is the year of AI in terms of fundraising. Just as everyone showed up- All the money from crypto will go. 98 and 99 saying, oh, we're not Williams-Sonoma, we're Williams-Sonoma.com. I can't imagine the number of new companies that are going to be AI powered or AI this. I don't know if the reality will catch up to the perception,

but it feels so exciting. It's going to be a new gold rush in terms of capital. Yeah. And you look at a mental health nonprofit used GPT to provide counseling for 4,000 people before pulling the plug because they said simulated empathy feels weird. You know, I guess, you know, it'll be interesting to see if they could get it right. One of the issues when I was at the MIT Media Lab once, they were using therapy for robots for therapy and they could never get the eyes right. One of the issues, when I was at the MIT Media Lab once, they were using therapy for robots for therapy, and they could never get the eyes right. The answers were good, the eyes were off. CNET, the website, the news website, has been publishing AI-written articles since November. And next month, an AI-powered chatbot will help a defendant in the U.S. fight a traffic ticket in

court. I mean, things like that, like who would have thought of that? You know, we'll see. I think we're going to probably go through that bad actor cycle like we did with cryptocurrency. I think this is the story of this year because I think these big companies, by the way, the most dominant people continue to be Apple, Facebook, Meta, Amazon, and Google, and Microsoft. So it'll still be the big companies dominating, but it'll be interesting to see innovation. Yeah, but if you talk about Amazon, Facebook and Google, take Microsoft out.

We always talk about big tech as if they're all equivalent. It's really now Big Apple. But they're headed into the headset. That's what they're going to introduce this year, this headset that costs- Oh my God, what an enormous bag of shit that's going to be.

Yeah. I love the notion that people think, or under the impression, anyone will put anything on their face that must make them more attractive to other people. And the first thing that happens when you put anything on your face from a tech company is it's a prophylactic. And you'll never conceive a child. This will be the Hermes watch. It'll get a ton of press. Much people will try them. You'll never conceive a child. This will be the Hermes watch. It'll get a ton of press. Much people will try them. You'll get one.

And then it'll be in the drawer with your Fitbit and your FuelBand. Yeah, could be. I just found my Google Glass the other day. I feel like that was the single greatest line I ever wrote. Although now today, it's not as, it seems a little. You're more hopeful though for those. I am, I am, I am. When Google Glass came out,

when Sergey, he took it to the Victoria's Secret thing and they wore them. Do you remember that they were wearing them and walking down the aisle with them? Diane von Furstenberg, wasn't it? She was there, yeah, DVF was there. And they called me and they said, what do you think? I said, you've rendered supermodels unfuckable.

Nice. Which I think you can't say now. I believe it's cancelable at this point. But, oh, well, I just said it. So there you have it. And so we'll see where it goes. I do think that actually we'll have applications. And I'm very eager to see what Apple does.

Because, you know, we didn't think those, when those AirPods came out, even though you go on and on, everyone made fun of them. Great product, the AirPods. I think they will make something worth looking at, and we'll see where it goes from there. We'll be right back with more from the DLD Conference. Fox Creative. This is advertiser content from Zelle. When you picture an online scammer, what do you see? For the longest time, we have these images of somebody sitting crouched over their computer with a hoodie on, just kind of typing away in the middle of the night. And honestly, that's not what it is anymore.

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This is not your area of expertise necessarily, but I'm definitely paying attention to regulation. The US and the EU are racing to regulate tech giants. This month, European regulators fined Meta more than $400 million. That's €390 million over privacy violations. Meta says it will appeal. Meanwhile, President Biden is calling on Republicans and Democrats to unite against what he called big tech abuses and ask for legislation on privacy, competition, child safety. Of course, all that legislation was in the U. the US Congress and none of it passed last year. And now with the current Democrat-Republican split, nothing is going to pass in the House,

except for whatever Marjorie Taylor Greene, I'm sure, will do something against Jewish space lasers this year and take care of that problem. But otherwise, there's nothing going to happen. The U.S. is in the lead when it comes to Microsoft's pro-taker of Activision Blizzard. The FTC is suing to block the deal. EU regulators aren't quite there yet, but that could be a real problem for that deal. Many think it's not going to go through. Last month, they sent a questionnaire to game developers. So FTC is on the case, but it doesn't look like a great, there's a lot of competition in games, by the way. And then there's TikTok. The president Biden signed a bill banning TikTok on government devices at the end of last year. Meanwhile, TikTok's CEO is on a goodwill tour of the EU addressing reports the company is tracking U.S. journalists.

They actually have done that. Should the EU do more to regulate TikTok? The U.S., you know, they've just created a new China subcommittee in the House. So you're saying a lot. Let's back up to the EU regulation, right? Yep. The regulation that the EU has passed is exponentially has more teeth, more mating, and it's more elegant than anything that has happened in the U.S. That is correct. And from what I understand,

I've read of your regulation, you're demanding interoperability. And you're basically saying you're having this really crazy notion that hate speech that is illegal offline is illegal online. It sounds pretty obvious, but no one's done it until the EU just now.

And this is a big deal. And it's also getting around this one problem we faced. And that is Facebook decided 10 years ago that the smartest thing we could do for shareholders was break the law. Oh, we're depressing teens and we know it? Lie. And if they find out we're lying and they fine us? Okay. Oh, our data is being used to weaponize elections. We could get fined. No problem. We are such a cash volcano that any fine they come up with will not be worth complying with the law.

And part of this regulation in the EU says a percentage of their global revenues. So that shit gets real fast. When you start talking about a fine that could be five or 7% of global revenues, all of a sudden they go, okay, the world just changed for us. We need to start doing these things. And it makes sense that you would have more abiding regulation. Why? A third of my class, of my

students at NYU will go to Amazon. 10 of them will go to Google. We have huge ups. We're net gainers in the US from big tech. As much as we rail on them, they create ecosystems, a ton of shareholder value, incredible employment, great highly paid jobs. You get all of the calories of big tech. You get the weaponization of election, the coarseness of your discourse, the destruction of jobs, media companies. You get team to... You get all of it, but you get none of the great tastes. As far as I know, there aren't that many hospital wings or universities in Munich named after Google or Facebook billionaires. So you get all of the downside and a fraction of the upside,

which stiffens the backbone of EU regulators. And you're going to see the EU lead in regulation. Because in the US, we have a system, an election system where all you need is to give money to our elected representatives and you make them a compelling offer. I'm going to give you a lot of money. The fastest expense, growing expense line for big tech is lobbying in Washington. There are more full-time lobbyists working for Amazon and living in DC than there are sitting US senators. And the value proposition is this, I'm going to give you a shit ton of money. Okay, what do you want from me?

I want nothing. I want you to make sure nothing happens. And we saw that happening with Senator Klobuchar, who promised these antitrust bill would pass, the privacy bill would pass. None of them did. And they targeted her as someone who's ruining the internet. And, you know, it's interesting

because the Republicans are sort of anti-tech and more focused on China than anything else, but very anti-tech comparatively. And so is the Biden administration. And yet nothing happens. They just there's a lot of noise and not a lot of action. Kevin McCarthy, though, is quite tight with the tech titans. He's been visiting them and getting money from them. And so the whole thing is just nothing happens. No legislation happens and no privacy legislation happens.

And I think it'll be up to the EU to take care of this, honestly. I think that's the only thing. And the EU wants to is now pushing tech companies around telcos and things like that. And of course, Meta vaguely threatened to leave Europe last year over regulation on moving data out of the EU. Really kind of ridiculous. In any case, keep going, EU, because... Can we just talk about TikTok? Because I know there's a lot of regulators here and a lot of people who have influence. Yep.

I love TikTok. I think it's amazing. I'm a huge consumer of it. I think it's just incredible. I think it's one of the largest threats to democracy we've had in the last 50 years. And if you believe like me, there is no separation between the CCP

and a Chinese company where they can disappear for a CEO for four weeks. Imagine if Jeff Bezos just disappeared for four weeks and then showed up in Tokyo and said, I've taken up painting. That's what they've done. So if you like me believe there is no separation between the CCP and Chinese companies, if you believe that China has a priority or a strategic imperative to make the West, Europe, and the U.S. less powerful, and you recognize that all of our children, all the young adults younger than 28, spend more time on TikTok than every other streaming media company combined, wouldn't they be stupid? Wouldn't they be ignorant to not put their thumbs on the scales of anti-Western content?

Income inequality, systemic racism, democracy doesn't work. That's what I would do. This is a, TikTok either needs to be spun to Western assets in those domains or it should be banned full stop. And we keep talking about espionage. It's not an espionage tool. That's what Facebook is for. It's the ultimate propaganda tool.

We are going to raise a generation of civic, military, government, and business leaders that feel a little shittier about Germany, London, France, and U.S. Because the CCP is going to put their thumb on anti-Western content. It should be banned. The government had moved to take it off of all government phones, the use of it on government phones and used by government officials. The second thing is across the U.S. there's lawsuits right now of using it in schools or Seattle has a lawsuit. We'll talk about that more in London. But it's really, there's growing controversy around the uses of it.

And it leaves even out the addictive nature of it, which I think is, the problem is it's a great product and it's an addictive product. You can't stop looking at it. So they've perfected that in the ways other companies haven't. In any case, let's finish with predictions and we have time for a few questions.

Predictions, go ahead. Go for it. So I have two predictions. I tried to do some research on EU-based tech companies. Germany's fallen behind. There's just no getting around it. The rise of China hasn't hurt US, it's hurt Europe. All the big companies, the biggest companies in the world, it used to be US and then Europe. Now it's US and China.

We still have as many unicorns. China's rise has really come at the expense of the EU. And Germany, despite having a much larger economy, has half the market capitalization of its tech companies of the UK. I don't know why, but clearly there's something not working in terms of you look at how outstanding the culture and the education and the work ethic in Germany relative to your tech output, the culture and the education and the work ethic in Germany relative to your tech output. It's just not working. But I did find one company, and this is my prediction. The biggest tech IPO in the EU, it probably won't be in 23, it'll be in 24, is a German company. Does anyone want to guess? And I might not be right, but this is my prediction. The biggest tech IPO in the EU will be a German company. Solonis. 400 million in revenue last year,

growing 50% this year, 90% logo renewal, which is no churn, 140% dollar renewal, meaning everybody that renews is spending 50% more. Business performance software. This company, every metric. I spent a lot of time thinking about software and investing. I've never seen anything like this in a private company. So I think this is going to be,

I hope this inspires a lot of follow-on investments, a lot of VCs popping up. Although difficult because look, they were just showing Stripe and Instacart are way off. They were supposed to go public. All these tech stocks are down. It's going to be hard. Oh, look, the markets are cyclical.

The wind is in our face now in the world of tech, but when the wind comes back, the great companies are still there. This is a company that every metric I've seen is just killing it. It's just doing really well. Do you have a prediction? I have one more. Sam Bankenfried is guilty. He's guilty? Yeah. Will he be found guilty? Yes. Yeah, I think you're right. Yeah, his unmade bed, three-year-old toddler boy act is getting very exhausting. He's a 30-year-old man who stole money from people. Oh, by the way, Sam Bankman Freed said he's not guilty. Well, then.

So my other prediction is that in 50 years, when we look back on the West, supposedly at the end of your life, the thing you regret the most is that you were so hard on yourself. You wish you'd been more forgiving of yourself. And I think we're going to wish we'd been more forgiving of ourselves and acknowledge the best trade in 2023 will be the capital, the weapons, the intelligence we are supplying to Ukraine. For just 6% of the military's budget, we are kicking a murderous autocrat in the nuts over and over and over. We have removed 50% of the kinetic power of Russia.

We have basically run the world's longest advertisement that Europe and the US, when they join hands and actually agree on shit, we are an insurmountable force. This is, we are going to look back. are an insurmountable force. We are going to look back. We are going to look back, I think, and maybe hopefully sooner and say, why didn't we celebrate each other and celebrate? Europe is a union again. NATO is out of a brain coma, right? We are no one, no one no one and by the way no boots on the ground from germany in the u.s that's kind of a free gift with purchase right we're going to look back and think this was

this was one of the greatest accomplishments of the west of the last century i just say though you're i just interviewed your friend ian bremer and his top risk is russia turning into a rogue state going nuclear they're like iranian on yesterday. I agree. He's wrong. That's the danger. Anyway, that's a good prediction. So we're going to get some questions from the audience. Oh, my other prediction is George Santos is lying

about quitting. That's our hope. He said he's not quitting, but he's lying about that. Things are so much better in Germany when George Santos was Chancellor. He was Chancellor. I don't know if you know that. Things are so much better in Germany when George Santos was chancellor. He was chancellor. I don't know if you know that. He's a congressman who literally every time he says something,

the latest one is he's a volleyball champion. How honest? I have to give it to him. He's an excellent liar. Anyways, they don't know who he is. The congressman just lied about everything. We'll be right back with more Pivot in Germany. Questions from the audience.

Let's go. Oh, and by the way, I'll say there's a fan named Andreas couldn't make it tonight because he has a daughter in the hospital. Get well. We want to say that to him, his daughter. All right. Questions. Let's go. Hi, I i'm ava rapaport from munich yeah um i run an intercultural uh country role a youngster network and i would like to understand why the world is not supporting iran people in their fight for their freedom? That is an excellent question. There's a lot of attention.

It's something we've talked a lot on our various shows about, and I have to say I think the U.S. press is actually doing a pretty good job covering it, especially the executions and the sentencings just recently. I've noticed there's an uptake in media coverage of this. But, you know, there's, because we'd rather look at some ridiculous circus in the House over voting and whether Matt Gaetz is smiling or not and that kind of thing.

And so what's happened with at least the Republican Party in the U.S., this is just from a U.S. perspective, is that they don't have, the focus is on so many other things, including the political chaos in a U.S. perspective, is that the focus is on so many other things, including the political chaos in the U.S., that they're not focusing in on what's happening in Iran. And then there's Ukraine, and then there's the weather stuff and the energy crisis and everything else. And so there's risk after risk, and it gets pushed further down the list. That's my impression. I have noticed an uptake, especially as they become more and more

murderous. That's all you could say. They're murderous, rogue thugs. They're getting more attention for it. I'm not sure there's much we can do about it, especially since they're aligned with Russia now in such a significant way. But Scott? I don't think the world is missed that you see news about Russia and you see men fleeing. And then you look at Iran and you see women taking huge risks and trying to inspire a revolution, inspire a better world. I went to UCLA. I lived with my two roommates who are Iranian. I've never understood why the U.S. and Iran aren't great allies.

The Iranians I knew in L.A. felt more American than Americans. I mean, I felt like this was such a culture that felt so similar to me as America. But we don't have time. It's dangerous. But I guess the question, I feel like your question was pregnant with a comment, and that is, what should we be doing? Because my sense is we put in pretty harsh restrictions and sanctions against iran um i mean should we be should our security apparatus be more aggressive would you want to see us take military intervention i guess the question is what do we do what should we be doing that we're not yeah yeah it should be

a more unified approach would be guessed all another question. We have time for two more. Hi, Clyde Hutchison. Long-time listener, first-time caller. Just say Elon Musk disappeared today. Okay. What would yourself and Scott do with all your spare time?

You know, we didn't really talk about him that much today. He happens to be an open AI investor, that's all. He happens to be an open AI investor. That's all. He hasn't been quiet. He said a number of stuff. I think people are getting tired of him, actually. Even though I hate to tell you, people write us and say, stop talking about Elon.

But when we do, the numbers are crazy. It's like Trump. You know, stop talking about Trump. But then everybody wants to read about him. And that's an unfortunate thing I think the problem is he is really in many ways a visionary and like Tesla and the rockets and even Starlink no matter what you think the geofencing he's doing which I think is appalling there's so many astonishing things and then this jerk shows up on the other half so I think it's difficult and I think his story is a lot bigger

than you think because he's involved in um foreign policy you know he's involved in space travel and national security um it's more than just him being a jerk on twitter it's a it is a bigger story so i i don't think he's going to disappear i think though there is a good there's an interesting chance as he becomes, the question is, is he like a Thomas Edison or is he Howard Hughes? Right? I think that's real.

And you know how that ended. Charles Lindbergh. Charles Lindbergh. You know, you don't know what's going to happen to him. The U.S. has been littered with visionaries like this. But I got the sense from your question,

you feel like we talk about Elon too much. Is that accurate? If I read into the second layer of your question. You're worried about us? We're fine with that. I invite that. I need more characters. We'd like more characters.

We were thrilled with ChatGPT. Let me just comment. On the ground, the biggest impact on business, I think, in tech is inspired by an action of Elon Musk. And that is, you have to acknowledge, and every CEO in tech has noticed that Twitter, as much as I was hoping the site would crash, is working. And it's a minimum viable product right now, or an acceptable product with 75% fewer employees. So you got to imagine in every boardroom, they're going, okay, what if we took our employees down 20 or 30% and managed to hold on to all the revenues? And this is a prediction I have for 2023. I do a

predictions tag. You're going to see revenue growth decline in big tech, and they're going to have the most profitable quarters in history because they're looking at Twitter and go, if he can do this with 75% less people, can't we do what we're doing with 20% less? And we don't have to tweet terrible things. I mean, I think they love him. Trust me, those tech CEOs love what he's doing. They don't want to do it themselves necessarily, but they will the actions not the not the crazies the crazy stuff is all his all right two more quick questions right there this woman right here hi huge fan of the show giselle hi so i'm an executive coach and my clients are all dealing with questions very often of mental health scott you've spoken a lot about it you're a huge advocate

as we think beyond now how do we take mental health into consideration for the decisions that we're making and the people that we're affecting? That's a great question. It's an important one. Scott and I were just talking about it before. My son is doing his college things and he's just too wound up and they just had a mental health day at school. And he's always like, why are they having mental health days and not incorporating it into the entire scheme instead of talking about it which was interesting because anyway go ahead yeah I think a lot about this I struggle with it and I think we've one of the wonderful things about what's happened in the west over the last just as cancer was de-stigmatized I think mental

health is in the process of being de-stigmatized and people are open and can talk about it. However, I would argue it still hasn't been de-stigmatized for men. I think one way to take your career path off of kind of being the CEO as a male is to talk openly about your struggles with mental health. I don't think that's a good resume builder.

So I still think there's work to do from a public perception standpoint, but I also believe that social media, and there's evidence my colleague at NYU, Jonathan Hyde, has shown that about the time social media went on mobile, you saw a dramatic uptick specifically with young girls in hospital admissions and self-harm and self-cutting. And what's the point of any of this bullshit if our kids aren't mentally well? So I think

we have to hold social media accountable. And I think we all need to just be, I can't tell you whenever I talk about the mental health struggles I've had, how many men reach out to me. And I'm talking about men who just never talk about it before. Yeah. You could have a men's movement. You could be like Jordan Peterson. Thanks for that. Yeah. Thanks for that. Just thinking about it out loud Yeah, you could have a men's movement. You could be like Jordan Peterson. Thanks for that. Yeah. Thanks for that. Just thinking about it out loud, sorry.

Got it. And so it just, it's very basic. When I'm talking about mental health, I try to do this and it's tough for me because in general, I don't like people. I'm trying to be open to new friendships. I'm trying to reach out and say, hey, what's going on?

I'm trying to be nice. Do you want to grab coffee? I think especially men, I think we need to do a better job of like being open to new relationships. I was just going to make a friend for Scott in London. I'm making him go to dinner to meet someone. He set up a play date for me.

I'm going to do the final question. Selena Milanovic, a biomedical engineer working at Siemens. And my question is about digital health. We made a few comments earlier about the importance of very strict and very smart ways of regulating the topics relating digital and AI. However, when it comes to healthcare, this might be really a showstopper for Europe. So countries, for example, like the US or other countries in Asia might actually develop a lot quicker than we can in Europe because they have a little more flexibility and leeway.

So should we have a double standard in creating, let's say, regulation for companies that are using artificial intelligence for entertainment versus companies that are, let's say, are using AI for health? Yes, I do, and I think you're wrong. I think the U.S. is quite strict on digital health issues. They may be porous. That's different. That's about systems, but it's quite strict. You know, that's the one area. That's why it hasn't developed as quickly.

We have to be thinking hard about the privacy issues around health. I mean, really. I mean, Amazon knows more about your mental health than you realize, given what you buy and things like that. But I think it's, I think definitely stuff around entertainment should be different than it should be around mental health. That said, all of it is data for the system, right? Anything you do, you'll be tracked the rest of your lives. And so it all goes into health, whatever you eat, whatever you buy, whatever you go, whatever you do. And so we can't think of it not as an ecosystem because it's all

part of the same things. But regulators should be very smart about healthcare, travel, EVs. They have to get smarter and it will involve a lot more regulation. Last word? I do think you want to err on the side. I hate to say this, but Section 230 and a lack of regulation in the 90s was probably the right call for tech. And it resulted in some externalities, but we failed to then implement regulation to get it in control. And I was fascinated with the fact that the EU has fallen. I mean, your biggest market cap tech company is that chip company in the Netherlands. The biggest one here is SAP. And they're like 15% of the valuation of big tech. And I'm like, what? It doesn't make any sense. You got an educated

populace. You're digitally very savvy. It just doesn't make any sense. And one of the things that kept coming up is that a lot of regulation that tries to envision and put in place safeguards. Before things happen. And so it's a balance, but there's no doubt about it. The outcomes appear to favor a lack of regulation and being a little bit more promiscuous

in terms of what your innovators can do. Yep. Anyway, thank you so much. Sorry we went over time. We really appreciate it. Thank you, Munich. Just a quick programming note. Our next episode of Pivot will tape in London and will come out Wednesday, the 18th, instead

of our usual Tuesday drop. But I promise it will be worth the wait. That was Pivot, live at the DLD Conference in Munich. Today's show was produced by Lara Naiman, Evan Engel, and Taylor Griffin. Ernie Entretat engineered this episode. Thanks also to Drew Burrows and Miel Saverio. Make sure you subscribe to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media.

We'll be back later this week for another breakdown of all things tech and business.