Pivot - LIVE from Toronto, Kara and Scott go international!

Episode Date: September 27, 2019

Kara and Scott are live at the Elevate in Toronto -- Pivot's first international appearance! They talk about the continued implosion at weWork and CEO Adam Neumann stepping down. They ask -- have we reached peak "founder"? Wins are whistleblowers and Phoebe Waller-Bridge who is helping Amazon outpace Netflix in streaming content.  Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Bose is a registered trademark of the Bose Corporation. Hi, everyone. This is Pivot from the Vox Media Podcast Network. I'm Cara Swisher. And I'm Scott Galloway. All right, Scott, we're doing it. We're taking Pivot on the road. That's right, everyone. This is Pivot from the Vox Media Podcast Network. I'm Cara Swisher. And I'm Scott Galloway. All right, Scott, we're doing it. We're taking Pivot on the road. That's right, Cara. We've got everything from drink tickets, bribes, extortion, firstborn children, heroin, pictures of baby goats. But we're finally settled on drumroll.

Scott, we have no drink tickets, bribe, extortion, firstborn children, pictures of goats or heroin. But we are going to Toronto. I've been told you're supposed to say Toronto. Toronto? No, Toronto. That's how it's spelled. Anyway, we flew out to Elevate in Toronto to do Pivot Live this week. They say it's south by southwest of Canada.

I hear Michelle Obama is there. Are you ready? Boom. Let's do it, Cara. Here's Pivot Live from Elevate in Toronto. All right, Scott, get yourself together. I'm good. All right, good.

I'm good. So first off, Canada, Toronto. So my father is 89, and when he turned 85, as any good son does, I said, Dad, you're going to be dead soon. Your bucket list, you need to create a bucket list and every year I will take something off your bucket list. He said, okay, I'll think about this and I'll put it together. So every year I said, what do you want to do? And I think it's going to be, well, I want to go home to Scotland or I want to spend time with you and your sons.

And every year for the last six years, it's been the same thing. I want to go to opening night of the Leafs at the Air Canada Center. So four out of the last six years, and he thinks about it every year, and then he tells me the same thing. We go, see, usually the Leafs lose, and then he grabs me and he says, we need to do something very important after the game. And we grab a keg, and we go to the dark reaches of King Street or something,

and he takes me by. And by the way, I've never seen, my dad doesn't cry, and the only time I've ever seen him cry is when the bagpipers come out pregame in the Leafs, and he just loses it. Anyway, after the game, he takes me in a cab to the dark reaches of Toronto. We walk out, tells the cab to wait, and he looks up and he says, do you see that apartment? I'm like, yeah, I see it. And it's this pretty nondescript brick apartment. He's like, third floor, over to three apartments.

See the broken air conditioner I'm like yeah I see it he's done this four times in a row and he holds my hand and he goes that's what you were conceived oh my god he says it angrily like it's my fault anyway so I'm very honest when I say literally for me everything began in Toronto. Oh, my God. So wait a second. Aside for your egregious kissing up to Canadians here. That's right. I was not born in Canada. Are you Canadian then?

No, my parents met here, and then my mom said I was pregnant. Can you become a landed citizen or whatever so you can escape Trump when the time comes? Aren't all Americans kind of honorary Canadian citizens? I mean, aren't we kind of like, for the most part, aren't we brothers in arms or sisters in arms at this point? No. I'm thinking, you know how technology... They don't want us, Scott. Well, that's the point.

You know how in technology there's aqua hires? I think we should have an invasion hire. I think we should invade you and have your leadership take over our country. Well, we'll get to your leadership in a minute. We'll get to your leadership in a minute. We got some issues with your leaders right now. We have worse issues. Yes.

You know, brown face, orange face. It's all a problem right now. Anyway, this is our first international trip, Scott. That's right. That's right. This is our honeymoon. We were invited. It's not going to happen for you. Um, we never know. Yeah, you know, you absolutely know there's

nothing ever going to happen between us. You've been watching the dog. Not in the dog. It's so not right. Your wife is another issue. Anyway, so here we are in Toronto. We have big fans here. We were asked by lots of cities, and this is our first. Well, we've been to New York and done live events there. But someone from Toronto wrote a 10-part thread on how Pivot should scale its business, including its network effects. And I think this selection of Toronto is the best decision we've made so far. Yeah, I think it's going really well.

So let's get started. We would like to know what is going on with Justin Trudeau. We thought he was just dreamy, and now apparently he's not so dreaming. So can, what can anyone give us a, an idea of what's happening? Embarrassment. Embarrassment. So the election is in October. Is that right? Four weeks. Is he going to win? The tallest of midgets. Okay. Um, what's really fascinating to us from the United States and look, listen, we got something going on down south that's pretty major going on this week, an impeachment of the president. But one of the things that was fascinating to me is my kids and I, they like Justin Trudeau. He's got like the appeal, you know, he's got the dreamy thing going on. And, you know, he kind of had a honeymoon period, especially the United States, like come here and be president, this and that, after Trump was

elected. And what was really fascinating to me, my son was 17, my other son's 14. We were like, how bad could it be? Like, someone said he had been in brownface. And we were like, how bad could it be? Like, people possibly did this in college. It's really, it is racist, no matter how you slice it. And, but how bad could it be and then we saw the picture and we thought this guy took a lot of effort to do this and that was was most fascinating it was like that is flawless makeup you horrible man and so that was what was interesting to me and then three times all fantastically done which was horrible in so many ways if you think through the practicality that's this is when it gets really scary,

is you think about the prep, the actual prep, and you put yourself in the room where he's going, yep, this is a really good idea. On a risk-adjusted basis, this makes a lot of sense. Yeah. Imagine, and then you decide to do it a second and a third time, but that's not disqualifying. What is really disqualifying is using taxpayer funds to basically co-opt a foreign government into pursuing his political enemies. That is treason.

Right. But wait, that's our guy. That's our guy. We'll get to him in a minute. But first of all, so anyway, it's a really, you know, we're watching it from afar. But of course, we have our issues in our country. So we should talk. And we do often about Trump.

But we'll talk about that in a minute, what's going on there. But I think that we have to do a big story breakdown. Let's begin. Let's begin with WeWork. Yep. You all following our work on WeWork? Do they have WeWork in Toronto? Yeah. Okay. So this week, the CEO,

Adam Newman, is out. And the question is, have we hit peak founder? Now, we're talking about WeWork, even though both Scott and I think that WeWork is not a tech company. Scott, how do you feel about this? I think people feel like you're somewhat responsible for this situation. Yeah. So the autopsy on WeWork will be death by S1, which is our perspective, prospectus or the SEC. It was actually a victory for the markets because if you look at what's happened to WeWork in the last 30 days, it's a company that Goldman said was going to go public, who was taking them public at a range of 60 to 90 billion, you know, twice the value of Ford Motor. And now it's worth zero. It literally is worth probably less than zero. It's got $42 billion in long-term leases and $3 billion in revenues, and it loses a billion and a half dollars. So for every dollar it spends

in top line with no margins, it loses 50 cents. And it's not a company that's scaling, that has great gross margins like a Google or even a Peloton, which is supposed to go public today, where it has positive gross margins. And once it gets to a certain top line, it would be profitable. This is a company that's similar to Uber. As it grows, this grows its losses. So it's literally worth zero. So we've had probably the greatest destruction in shareholder value over a 30-day period that we've seen in a long, long time. But here's the good news. There is a silver lining here. The mandatory disclosure by our government agency, the Securities and Exchange Commission, put out something that kind of was a whistle call for this incredible competence that is still sort of alive and well in American business and Canadian business called

math. And people showed up and saw this thing and said, okay, including myself and said, and Kara said, something is very wrong here. So all of a sudden, the value went from $50 billion to $20 billion to $10 billion to now it's zero. But who's incurred those losses? This is the good news. Yes, we're getting to our next victim here. He's slowly. Adam, one of the employees lost a lot of money, which isn't good news. Obviously, a lot of hurt and a lot of employees. The Mubalata Fund out of the UAE lost a lot of money. And who lost the most money?

The company that has washed the dirty money of the Saudi Public and Investment Fund and then has moved dollars into the U.S. and is leaving with dimes. I think this is the ghost of Khashoggi, who, by the way, was dismembered by a bone saw funded by the Saudi government. And basically, as far as I'm concerned, Saudi Arabia, you should definitely invest in Vision Fund too. Right. So here's the deal. Today, interestingly enough, MBS was saying,

it happened on my watch. He was washing himself of responsibility of Khashoggi and then kept saying it happened on my watch. He was washing himself of responsibility of Khashoggi and then kept saying it happened on, he said it to Martin Smith, which is in a documentary that's coming out, that it happened on my watch, but didn't take responsibility, which was astonishing.

Yeah, I can. We definitely pivoted away from WeWork there. Okay, but no. That was me. I always like to get into dismemberment of journalists, but it is related, this idea of where the money comes from. And I think more to the point, one of the things that people talked about

is the focus was a lot on Adam Neumann and his pot smoking, and he bought a surf company, and he bought this and that, and he was a bad manager, essentially. But the fact of the matter is people enabled this behavior and allowed it, which happens with tech companies. And he's a bad manager, essentially. But the fact of the matter is, people enabled this behavior and allowed it, which happens with tech companies. And he's not a tech company, startups, in a way, this sort of founder, allowing them to behave in juvenile manners. And so I think the real problem here is the board of directors of this company, which has allowed it to go on and continued.

And what was amazing was that SoftBank, which I think was essentially like provided the sugar to like a toddler essentially, like a whole giant bowl of sugar to this management and then said, I can't believe this management is doing what it's doing. And so it seems to me that the board reform is a big deal, whether it's the board of Facebook, which has no power, or the board of this company. And I think we have to really look at these investors. Because what happened after the Wall Street Journal story about him lighting up on a plane, like, honestly, I don't care if he does that.

What airline is that? It's Air Private Plane, which you and I are never going to get on. So what was fascinating about that is they immediately then went after him as if they didn't know the difference. They were shocked. They were shocked. Shocked and horrified. I know. And so that's what's really, to me, really the most annoying part of this.

It's not so much Adam Neumann. Look, he's an interesting entrepreneur, great idea, great brand, but is running a non-economic company, essentially. But that this board gets off, and SoftBank gets off, and Masayoshi Son gets off. And they shouldn't.

They are completely responsible for it, as far as I'm concerned. But again, you have to discern between a public company that is supposed to be representing stakeholders, including the community and all the retail investors who've piled into this. If WeWork had gone public, a union worker in Detroit, a teacher in Ottawa through the Ottawa teachers would have been a shareholder most likely in WeWork and then would have incurred those losses. So the tragedy here, the tragedy of the commons

was prevented. And if you look at SoftBank Vision One, it was a $100 billion fund. It's basically impaired now. It's probably not going to work because two of their biggest investments, Uber and WeWork, which they invested $20 billion and $100 billion into, if one of them sneezes, Vision One catches a cold. And right now, Vision One fund from SoftBank has full-blown pneumonia. So the notion that this thing is going to work, it's just not going to happen. And then there's some, it has 40% of the fund has what's called a preferred return, meaning it gets 7% per year in cash. And so they're taking the few good investments they have,

the proceeds of the few good investments they've made, and they've put it back into the 40 preferred, which means the remaining 60 billion of the fund, which you could think of as common, is severely impaired. So SoftBank's adventures playing in traffic are about to come to an end. It'll die with a whimper, not a bang. But this does represent something more fundamental in that just as there's a tension between capital and labor, there's a tension between capital and founders. And when I was starting companies in the 90s, the general viewpoint was a founder was there to start a company, but they were crazy and irresponsible. And as soon as the company became real, you brought

in some old guy with gray hair like Jim Barksdale to take over. You needed adult management. And then Steve Jobs changed everything because they brought in all these guy with gray hair like Jim Barksdale to take over. You needed adult management. And then Steve Jobs changed everything because they brought in all these gray hair old white guys who almost ran Apple into the ground. And then the crazy founder came back and took the company from $2 billion to $300 billion. And Bill Gates was the first founder to take a company from zero to half a trillion dollars all on his own. And all of a sudden, all the power swing back to the founders. And then you started seeing secondary sales. When I was starting companies, you weren't allowed to sell shares, even after the company went public because of the message it would send. Now founders have way

too much power and they're seen as almost Christ-like. And I speak from experience here that if you tell a 30-something-year-old male, he's Christ, he's inclined to believe you. And that is what happened here. You called him We Christ, is that right? We Christ, that's Christ. He's inclined to believe you. And that is what happened here. Yeah. And all the other things. You called him we Christ? Is that right? We Christ. That's right. I think the best one I saw on Twitter was we just.

We just. For Jesus. We just. Yeah. We just. But also we've hit kind of peak what I'll call yoga babble. And that is, okay. Peak what?

Yoga what? Yoga babble, right? Okay. We claim that they were elevating our consciousness no no they're renting fucking desks right and now peloton today is supposedly going public this delivers happiness no they sell exercise equipment like chuck norris and christy brinkley did with the bow flex i mean it's it's pretty soon someone's going to come out you know some company's going to come out that sells i don't know rents plants as a service and say, we're curing cancer because of carbon recapture or something. But we've had enough.

And there is, I'm doing this, trying to do this analysis right now, looking at kind of fraud splaining or BS in the S1 and then look at the returns. And I think at some point we need to return to companies saying, okay, this is what we do. We buy, we rent real estate, and then we rent it out short term. That's not sexy. And one of the things you mentioned, how many times they mentioned Adam Neumann in the S1. Again, it's not just a victory for math, it's a victory for text, like words.

But they had the word Adam and they couldn't do this company without him. You remember, a hundred and some times, the importance of Adam and the importance of Adam and Adam is really important. What happens now from your perspective? Here they have this sort of steaming pile of desks. What do they do?

They've hired this guy who I met many years ago named Artie Minson and others. They're going to be co-CEOs. But really, what do they do now? Well, the interesting contrast right now is between we and Uber. And they're similar companies in the sense that they were both terrible businesses losing money where they replaced vision and growth instead of profits, or they replaced profits with vision and growth, and they weren't scaling to a point of profitability. To a certain extent, we is blessed in the sense that it's now valued at zero.

So getting back to five or 10 billion in value is an attractive, doable action item. So what they will do is lay off a third to half of their employees. They will sell the wave pool companies. They will focus- They're going to sell off all the companies. They're selling three of the companies, including Meetup and some other stuff they bought. They will focus on margin expansion instead of top line growth because it is a differentiated product. I actually think the We product and several ones I've been into is a differentiated product. They did evolve the marketplace. And they will build, if they are swift and crisp at this and have an adult conversation with their investors, it'll go something like this. You fucked up. You trusted us. Do you want to invest or do you want to get washed out? Because

this is going to zero if SoftBank doesn't put any more money in. They will rationalize the business and they could turn it into a three or five billion dollar business. So they could actually pull this off. Whereas Uber is still in consensual hallucination with the marketplace that it's worth 30 or 40 billion dollars. It's not. So they have no choice but to try and continue the heroin, to continue the ayahuasca trip, right? And continue to grow like crazy. So Dara Khosrowshahi can't pretend, can't move, bust a move to profitability because that would involve substantially slowing growth. Raising prices, for example. Raising prices, pulling out of certain cities where Uber just doesn't work. Paying their drivers more. Paying drivers minimum wage.

Right. So to a certain extent, we is blessed with a bit of a crisis is a terrible thing to waste. And we could, in fact, emerge from this and be a nice little company, three to five billion dollar valuation, which is not bad. Whereas Uber has painted itself into a corner. And until the stock declines 60%, 80%, which will happen over the next 24 months, it won't have the burning platform to make the requisite changes it needs to make and become a profitable, rational company. Right. So one of the things that I might dispute with WeWork, I think these things have a trend cycle. I used to cover retail, and I remember the trendy retailers used to, oh, they always say,

we can fix it, but ultimately it loses its attraction by its constituents, which would be millennial small businesses and startups. And there's a lot, it's easy to compete. There's no moats for WeWork. It has sort of weird, shitty wallpaper and beer. Like, what is the... It's really good beer, though.

Okay, fine. But, like, what is the... Why would you go there over something, except if they have convenient places where you want to set up offices at prices that are decent and things like it's it's like an exercise club that's what it reminds me of it's like an equinox essentially and so why would you not shift i think it's i don't think it has quite as much what would you do if i think there's going to be empty WeWorks all over the world.

I think it's over. So if there are empty WeWorks over there, what they've done is the company's been structured similar to what hotels do. So at the Four Seasons, a Toronto company, a fantastic company, the Four Seasons doesn't actually, they only own a couple of their hotels because owning hotels is a terrible business. So they find wealthy people who are excited about owning a Four Seasons the same way you're excited about owning a Ferrari dealership, and they put all the capital risk on them, and they take, I don't know, 6% to 8% of top line. It's a fantastic

business. But what they also do is they ring fence the businesses by creating what's called an SPE, a special purpose entity, meaning that if the WeWork in Toronto on King Street goes out of business, they can declare bankruptcy of that SPE and walk away from that landlord. And this is interesting, and that is the next stories on We will be the blast zone. In other words, We's at ground zero and it's going to get fried, go from 50 billion to zero. But who just kind of gets burned and who gets leukemia in 20 years in terms of the rings out from the blast zone that is the disaster that is we. And one of those blast zones, two or three degrees, will be the commercial real estate market in New

York where they're the largest tenant. In Chicago, they're the second largest tenant. Because we could technically start cherry picking and just walking away. And the deal they have with folks is they say, okay, we'll agree to a 10-year lease deal, but you need to put $3 million in TIs into this floor in terms of reclaimed wood and beautiful paneling and built-in beer taps or whatever it does. So you could see some real estate owners take a real bath here because the individual properties aren't cross-collateralized by the parent company. So they won't be empty, They'll be shut down. Yeah, I think shut down.

And I think what will be interesting to see is if they get the money back from Adam Newman, the $700 million. I don't know how you get it back. I don't know how you – You sue. There will be lawsuits. I just don't see anything good here. I think everyone's going to take it. So Adam Newman sold $700 million in stock.

But you should buy some on the IPO. Yeah, exactly. I don't know. I just see nothing but disaster here. But we'll see what happens to it. I mean, I think more interestingly, I was just going to ask what our next company is, our next company to needlessly attack.

Next thing? No. You know what? We do a public frigging service. You're welcome on WeWork, by the way. Uber seems to be. You've been trying really hard to get at Tesla. It's not working.

He may be Jesus, Elon Musk. So what an odd Jesus, but there you have it. What company? Is it Uber? It seems like Uber. You're sort of getting a little head of steam about Uber going on. Yeah, but we've been talking about this a long time. Slash Lyft.

Ride hailing makes no sense. Uber's a great company, probably also worth $5 to $10 billion, just not $30 to $40. Global brand, it's probably the first and the last brand that the global affluence see when they come and leave Assyria. It has great technology. I don't know how many of you, as much as I criticize Uber, Uber's changed my life.

I really do love... I love the service. So there is something there. It's just that the valuation, the valuation that you see it as, and it's... But can it ever be an economically sound business? Yeah, they'll raise prices.

They'll pull out of two-thirds of the cities. They're going to be forced to pay people a living wage and stop being in the business of exploitation and be in the business of actual transportation. I mean, that's the problem with tech right now, is its core competence is the exploitation of workers, as opposed to trying to liberate us and put us on the moon. That's become their new core competence, whereas you have 24,000 mostly white, mostly college-educated people at HQ dividing the value of Airbus, but our 4 million driver partners are making less than minimum wage.

And when we say driver partner, that's Latin or American for no health insurance, no minimum wage protection, no dignity. And things have finally, again, there's always a tension between capital and labor. Things have swung so far back to capital in the United States that we're starting to see, I think, immunities kick in and people say, all right, enough already. Just stop it. And hopefully Uber is ground zero. And California, do you want to talk about some of the legislation? Yeah, California has AB5. Are you all aware of AB5? They passed a law against Ubers and Lyfts, contractor workers, where they treat them like employees. And this is a big topic for our dreamy politician,

Gavin Newsom, who looks a little like Justin Trudeau. He does. He does. He's the governor of California, and right now he's in a war with the Trump administration over a number of things. California is really leading the way on privacy legislation, on emissions,

on, they made a separate deal with the auto manufacturers to fight the Trump rollbacks. And also AB5, which is the first really significant piece of legislation talking about gig workers, especially in tech businesses,

which they're used indiscriminately all over the place, as employees deserving of benefits, deserving of rights, instead of treating them like the chattel that they've been treated like. And so it was a real shot across the bow of all those guys. It's not just Uber and Lyft. It's lots of them. And so Postmates. It just goes to all their businesses. Postmates. It just goes to all their businesses. And it'll be interesting because this is something I call him Governor Newsom. Gavin and I have talked about a lot

for years and years the idea that we have to have a new designation for workers. It's been somewhat of something he's talked about for a much longer time than I think people realize. And so what is a worker today I think is a really important question. Yeah, the gig economy. I just immediately kind of lost the idea of Gavin Newsom and Trudeau in the same room. I think they should mate. We should abscond with their children and invade Australia. I think that would be the perfect army of handsome, smart people. All right. All right. Wait, let's talk about a Canadian company. Can we talk about Shopify?

Shopify. All right. Oh, my God. All right. Let's do something positive. Oh my God. How do you say, how do you say in Canadian? Gangster. Yeah. You're a gangster, right? Oh my, what an incredible company. I love, by the way. You love Shopify. Do you own stock? What's going on here? No, I don't own stock. I own in stock at Shopify. Tell me why you love this Shopify. I own stock on Amazon, which is bad for the planet, bad for the world, and an incredible lack of code. And good for Scott Galloway. Okay. I have no desire to be a professor in tie-dye barking at

the moon. I'm all about the vengeance. Okay. All right. So Shopify. Why do you love it so? So this is so interesting. The threats to companies, the dragon slayers never come from where you think they're going to come from. And the idea, so they have filled, Shopify is this incredible company, as far as I can see, that has filled this wide space where basically Amazon tells every brand and third-party seller, we're your partner. And the reality is Amazon partners with brands and third-party sellers the way a virus partners with a host. And that is, it always ends up, you know, well for one of them. And Amazon has now got this terrible reputation as a terrible partner. So there's this wide space of, okay, who could be an e-commerce platform and actually be our partner?

And that is ship stuff in our own boxes, give us our data, provide features and services, but we kind of own the customer and the data set. And that's Shopify. And the growth has been unbelievable. And then Shopify is now off their heels and onto their toes. One of the first few companies that's actually landing counter punches on Amazon and it's been a billion bucks to build out their own fulfillment network so they could do 48 hour delivery. So this is, it's really interesting. We thought that the thing that was going to come after Amazon was going to be out of DC. Right. Instead it could potentially be out of Canada. So it's really, Shopify is. Instead it could potentially be out of Canada. So it's really, Shopify is probably, I would argue right now,

other than regulation and maybe ethics, the greatest existential threat to Amazon is Shopify. And it's just, it's exceptionally exciting. I haven't been this excited about Shopify since I was sending text messages on my Blackberry about a Canadian company. By the way, I really miss those delicious keys. Who misses those keys? We all do. Oh, that was lovely. Yeah.

But Shopify is a really exciting company. Move along, Scott, as they say. Super exciting company. Yeah, it is. It's an interesting question. The idea of where you go in the sides of these sort of big open spaces. I just did a podcast yesterday with the CEO of Super Awesome, which is not a gaming company, but makes software to help companies create kid-friendly websites and things like that with identification, with moderation, with community,

so that it hews to laws all around the world, like COPPA in the United States or GDPR Kids in Europe. I don't know what the law in Canada is, but I'm sure every country seems to have a law around kids and online. And so just recently, the FTC fined Google, I think it was CouchChange, but it was about $150 million. I think it was maybe something like that. And also TikTok and the way they market to kids and also protections of kids. And there's this big open space of a company that can ride through the idea of creating a video streaming service. And besides offering software to lots of media companies and tech companies that are in this space in order to comply,

media companies and tech companies that are in this space in order to comply, they're now going to create a video streaming service by taking all the influencers on YouTube who YouTube has ignored, essentially, that are in kids' areas and not protected, and pull them over to this new platform. So I think there's all these open spaces with these companies. Essentially, YouTube is created for adults and has kids' stuff on there and hasn't done enough. And so everything in Silicon Valley, this CEO, and I thought it was really smart, was talking about every single thing in Silicon Valley is created for adults and not

for kids or other constituencies, and the other constituencies are growing like crazy. And so it's an interesting idea, like Shopify or Super Awesome, is that there's a space where these companies have failed miserably, and to take advantage of that space, I think, is a great business opportunity. And there's tons of them out there, whether it's against Google or Facebook or anything else. So the question is, can someone compete in a smaller area against YouTube and create a really significant business? Same thing with social networks. The same things with ad platforms, online ad platforms.

And so, you know, especially given that right now people really, tech companies are not the favorite, even though they're saying it's only the media saying this. But I think most people feel very uneasy about tech companies, such as how do you all feel about Google making a smart city? Silent. I'll give you an outsider's view. I actually think it would be a really interesting experiment. And I think it would be a great thing. And I think everyone would learn a lot. They have the capital. They're very good at what they do. But here's the problem. It's from Google. It's like, do you know the Facebook portal,

the camera they were trying to put in? It's actually a. It's like, do you know the Facebook portal, the camera they were trying to put in? It's actually a really, it's a wonderful product. It has real innovation. The problem is it's brought to you from a guy who puts a piece of tape over his camera. And, but he wants you to put a camera in your home. And these companies have lost so much trust and so much faith. The guy running Google sidewalks, a guy named Dan Drachteroff is a really high integrity, thoughtful person. That's the kind of person you would want overseeing massive capital investments in your city. He was the deputy mayor of New York and he did a great job. But the problem is it's from Google and people

have just are worried that they start using terms like surveillance capitalism. So I wonder if it's going to be DOA. I don't know where it is here, but it creates such hostility. And going back to your notion around kids and white spaces, I would like to think that there are white spaces and opportunities that great companies like Shopify move in and take advantage of. The problem is, is that for the most part, what you see is for every Shopify, there's a thousand acorns or startups trying to fill those white spaces. They get crushed. That A, can't get funding because they're competing against a monopoly. If you look at seed funding across our economy, the categories that get no seed funding are the ones that compete with the fork because no one wants to fund an e-commerce, a tech hardware, a search engine, or a social company right now because no one wants to be the VC partner who

says, yeah, I tried to compete against Amazon. So you have a lack of funding. Then you have companies that are incredibly rapacious competitors and will put out, as soon as they see anyone that's any threat, they either try and spend them to death, legislate them out of business, or they acquire them. And then they put in onerous non-competes and non-solicitations so the innovators and the employees can't go do anything. So the branch either grows for their own company or it gets cauterized. So there's really, I see only a few things we can do. The first is antitrust, and we talk about this a lot. And this is what I think Canada,

and it's weird to say this is an American who owns all of their stocks, that the other thing that could happen here that could really foment a conversation around better behavior and better checks is if a country banned one or more of these platforms. They said, you know, we have an important election coming up and there's evidence that Facebook,

you haven't placed the requisite safeguards to ensure our elections aren't weaponized by a foreign government that has an agenda here. Hey, YouTube, we're sort of fond of this thing called kids. And we've decided that the more time they spend on YouTube and the more time they spend on social media, the more prone they are to be admitted to an emergency room for self-cutting and self-harm.

So you're smarter than us. We can't figure this out. We're just going to ban you. We're just going to see what it's like to be in Canada without Facebook for a year. And then shit gets real. And then they sit down and say, okay, the jig is up. Let's figure this shit out.

Because right now they've fomented this false narrative that these problems are really difficult. And we're proud of the progress we've made. Oh, trust me. You kick their asses out, they'll figure it out. So any country, in my view, that has the backbone, I think this is an important, this could be a big, and it could be a smaller nation. It could be Uruguay or someone. This could be a big, and it could be a smaller nation. It could be Uruguay or someone.

But until someone says, you know what, we just don't have the artillery to go toe-to-toe with you and figure this out. These problems are complex. So we're moving to an outright ban. It's also the money, too. I, again, just interviewed a commissioner for the FTC, the commissioner for the Federal Election Commission. In the United States, we don't have a quorum for our Federal Election Commission, so they can't act on any campaign finance, for example, which is another story. But the FTC has $300 million in budget and 1,000 people against the whole U.S. business environment. What's the budget for the FTC?

$300 million. Okay, so versus Adam Neumann sold $700 million in stock. That gives you a sense. That's America. Yeah, welcome to America. That's America. And it used to have 1,800 people, welcome to America. That's America. And it used to have 1,800 people,

and now it has 1,100. So it's a really, you know, talk about government growing. It is not growing. It's actually contracting. And so what's really interesting, what you're saying, and what you're saying about Google maybe has ideas,

here's my problem. Why are, why, for example, why does Mark Zuckerberg know about education just because he can give someone a billion dollars? I don't know why we take, I'm with Anand Girgar on this. Why do we have, let's just tax them and have our elected officials decide on policy rather than billionaires. I just don't think they, and they don't know how to, you think they know how to run things. What is their, did they take courses in city management? Did they take courses in, they just don't have any expertise. What they have is money and an enormous amount of

arrogance that they can build a better city. Now they could work in conjunction with cities to help them, but there's no evidence that they're good at anything except what they do. And frankly, they're not that, they need to mind their P's and Q's and do their own business, fix their own problems. And that what they tend to do, and do, and this is very typical if you know them, is they're over here making search. And then suddenly they're like, now space. And you're like, fix search. And you're like, but space. And you're like, what?

They're not interested in the thing they do. It's like me suddenly deciding, you know, hey, I think it would be really good to sing and dance in a Hollywood musical. Like, no, this would be bad. I'm not even good on TikTok. Like, this is just, it's just, it's a mentality that they could, you'd never see, let me just say, you'd never see Steve Jobs doing this. And I, you just, he wouldn't all of a sudden say, I think I'll fix it. He's making, he's just selling a freaking iPhone. That's what he does. And he, you know, he was actually not very, even though he was a marketing he, you know, he was actually not very, even though he was a marketing romantic, you know, they just sold iPhones

or they sold AirPods or whatever they were doing. And that's, it's just like, I just, this mentality that they have to do something else and they have better solutions, I think is false. And we assume it because they're so rich that they must know better than us. And I know a lot of rich people and the expression I use for them all the time is they're

so poor, all they have is money. Like it's really interesting. If they would partner with government, that would be great. But in this case, I think Google is looking for a lot of gimmies. Like how different are they than any other? They're looking for tax gimmies. They're trying to take Like, how different are they than any other? They're looking for tax gimmies. They're trying to take development money from the city. This is taxpayer money, and they don't deserve it. They shouldn't have it.

And if they're so, they did it in San Francisco, trying to wire the whole city. They tried to do that, make the whole thing wireless. That didn't work because they got bored of it. The same thing, at one point, Larry and Sergey wanted to put chairlifts in San Francisco to make it easier to go up the hills. And literally, Mayor Newsom, at the time, had a meeting with them. And I remember like, why are you meeting with them over this insane fucking idea?

And it was because they were the Google founders. Like, why do they get to be, we have a lot of crazy people in San Francisco. They don't get to have lunch with Gavin Newsom to decide to put chairlifts in San Francisco. Now, thank goodness we don't have them. It's a bit of the, we talk about this a lot, the Pablo Escobar effect. And that is Pablo Escobar wreaked havoc in his country, was bad for the world, but then decided to build parks, right? I'm more important to Columbia than the government or the rule of law,

and I'm going to build parks. And I remember the image I like. I remember being in the 11th grade and seeing the space shuttle brought to you by, in my opinion, the greatest source of good in history, the American middle class and technology. And you saw the space shuttle and it had this funky arm with a big Canadian leaf on it. Remember that? My guess is pretty soon in America, we'll have Elon Musk's picture on the space shuttle. But something tells me Canadians would never put whoever the CEO of Shopify on their space arm. Yeah. You know, in Canada and in general, across what I'll call, I don't know, you guys are, let's be honest, it doesn't come to the right. You cut the tops off of trees.

And that is your taxes are higher here. And no one likes taxes. But in the U.S., we have the mother of all welfare queens, and it does try into Toronto. I just thought it was so cute how you thought you had a shot at HQ, too. Yeah. That was just so adorable, Toronto. You did not.

We kept telling you you did not. That was so adorable. No. The you you did not. That was so adorable. No. The proposal you put in. It was nice. And sending the maple syrup. The font was great. And come to Toronto, and we have great universities.

Was there maple syrup? Do you ever think a man in the midst of a nuclear midlife crisis who spends 300 days a year in rainy Seattle is going to decide he needs to spend more time in the winter in Toronto? Do you think a guy whose biggest threat to his wealth is antitrust regulation was going to spend money in a place where there are no American elected representatives? This literally, and this is kind of indicative, and you were a victim of this, he was always coming to New York. Because guess what?

And I relate to this. A 54-year-old man with a little bit of money in his pocket wants to roll in New York. Yeah. Especially when he's about to be single. Yeah. And because when Jeff Bezos goes into any city in America with $150 billion, he's the wealthiest man in the city. When he rolls into New York with $150 billion,

he's the wealthiest man in the city and the sex into New York with $150 billion he's the wealthiest man in the city and the sexiest man alive he looks good though he's jacked he looks good anyway don't tell Toronto the truth they were not interested in you it's not you it's them anyway

we're going to get to win there's and lose in a second you know what? I have this whole page on Trump, but let's just ignore that asshole today. And let's throw in Netanyahu and Boris Johnson. Like, honestly, Boris Johnson. He's like Trump, but not Teflon. What is the opposite of Teflon? Like everything Trump should get, this guy gets, and he keeps losing, and he still is an asshole. Like, did you see that speech in front of Parliament? Astonishing. You're all, the Supreme Court's wrong. You're all wrong. I was like, you know what, sir? In any case, I'm not going to do anything

except that Nancy Pelosi, I think, did a fascinating job of control. And then if you do yourself a favor and listen to her speech, I think she's really good at what she does. We'll see where it ends up. There's some testimony today. But I do think it depends on how this goes. Obviously, he might be impeached by the House, but the Senate will not. Moscow Mitch is not going to take him out. When it ukraines, it pours, right? Yeah, exactly to take him out. When it ukraines, it pours, right?

Yeah, exactly. Did you just say when it ukraines, it pours? Boom! How much do we love that? Come on. That poor guy. There was a great story in the New York Times. Everyone in the back, come on up.

Give the dog some love. Yeah, come on up. Come on in. All right, Scott, let's take a quick break for some good old-fashioned American ads. That's great. Ruining the world. We'll be back in just a minute with more Pivot Live from Toronto. 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.

That's Ian Mitchell, a banker turned fraud fighter. These days, online scams look more like crime syndicates than individual con artists. And they're making bank. Last year, scammers made off with more than $10 billion. It's mind-blowing to see the kind of infrastructure that's been built to facilitate scamming at scale. There are hundreds, if not thousands, of scam centers all around the world. These are very savvy business people. These are organized criminal rings. And so once we understand the magnitude of this problem,

we can protect people better. One challenge that fraud fighters like Ian face is that scam victims sometimes feel too ashamed to discuss what happened to them. But Ian says one of our best defenses is simple. We need to talk to each other. We need to have those awkward conversations around what do you do if you have text messages you don't recognize? What do you do if you start getting asked to send information that's more sensitive?

Even my own father fell victim to a, thank goodness, a smaller dollar scam, but he fell victim and we have these conversations all the time. So we are all at risk and we all need to work together to protect each other. Learn more about how to protect yourself at vox.com slash Zelle. And when using digital payment platforms, remember to only send money to people you know and trust. Support for this show is brought to you by Nissan Kicks. It's never too late to try new things. And it's never too late to reinvent yourself. The all-new reimagined Nissan Kicks is the city-sized crossover vehicle that's been completely revamped for urban adventure. From the design and styling to the performance, all the way to features like the Bose Personal Plus sound system,

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Let's get back to a pivot live from Elevate in Toronto. I wonder if they have free psychological testing. Is that a hint? What is the win? What is your win? So I always get her name wrong. Phoebe Waller. Bridge.

Phoebe Waller Bridge. Fleabag. Yeah, the creator and star of what I think is the best series of the last few years. I'm not playing Monday Morning Quarterback. I've loved this for a while. Top winner at the Emmys, four awards, best comedy. And it also indicates kind of an interesting shift, and that is Amazon Prime is finally starting to make inroads against Netflix.

So they signed a deal with her. $20 million a year to create more stuff. And Jeff Bezos said, bring me my Game of Thrones, and instead of a dragon, he got a dame, but it's working for him. And Amazon is now in, I think, about 100 million homes versus 150 for Netflix. People with Amazon Prime watch five hours a week versus 10 for Netflix. But it just shows how incredibly powerful infinitely cheap capital is when you can go into an adjacent industry and start monetizing it, as you said,

across paper towels. But I think it's probably a pretty negative forward-looking indicator for Netflix because just a quick micro class here. If you think about all the companies that have gotten past $300 or $400 billion in market cap, they have several things in common, but one of them is they're vertical. They build and manufacture their own products, they distribute it,

and then they control the end distribution. Google controls your Android phone. Apple has their own stores now in addition to their own phone. They're totally vertical. Amazon, obviously, totally vertical. Controls up until, can even put stuff in your home now with Ring. Netflix got to about $150 billion, but they're not vertical. And I think, and this goes to a prediction, but I think Netflix is going to start to erode value as all these other companies find reasons to spend billions on content to distribute across their loyalty programs, their hardware devices. And Netflix

is not vertical. They don't control the TV. They don't control the screen. So I think an interesting acquisition would be for Netflix to acquire Sony, because not only would they get a lot of original content, reverse integrating them back into content creation, they would get owned and operated platforms in the form of Sony televisions and Sony Playstations, and they could control the distribution, if you will. That's never going to happen. Not going to happen. Why not?

Reed Hastings, but move along. Reed Hastings won't do it. Won't do it. Well, you're talking about a Broadway show. Give me Netflix acquiring Sony. I mean, there's unrealistic and there's unrealistic. So you think the win is, Phoebe, with this idea. Oh, I'm sorry, Phoebe, Fleabag, it's wonderful if you haven't seen it.

It's an inspiring show, but the winner is Phoebe Waller-Bridge. All right, my winner this week is whistleblowers. I love a whistleblower, as you might imagine, but I like whistleblowers who do this legally and are protected by our governments. I think it's critical to the functioning of a democracy that whistleblowers have protections. And in two cases, MIT, the Media Lab, and I actually just did an interview with Whistleblower Aid, which is the group that helped Ronan Farrow find this whistleblower at MIT, this woman who was in the development department and was able to legally bring forward emails that, of course, implicated a lot of people at MIT in taking

money from Jeffrey Epstein and hiding it. I thought that was a great system to work in the right way. And then secondly, in this case, this whistleblower is also involved in this, in the Ukrainian whistleblower, the intelligence officer, who is trying very hard to remain anonymous. I have 14 seconds where Trump tweets his name. I'm, like, worried about that. But, or his or her name. I don't know if it's a woman. I think that whistleblowing is critically important in this age, especially when there's so much digital footprints for these people.

The Trump administration happens to be completely incompetent in how it just writes everything down. Now we are going to lean on the Ukraine or the Ukrainian president. There was a good joke, it's a nice country you have there. It would be a shame if something happened to it. It was the, it was the sort of this mobster mentality that they just like, and releasing that, the phone call, just even the small amounts they released is just, it's literally like, yeah, I did the, I did the murder, here, let me show you the body,

like kind of stuff. It was, it's really interesting interesting but it starts with a whistleblower so i think whistleblowers are the best people ever when they do it in the correct way i like that yeah and and my loser my loser was going to be founders but i talked about i'll pick a new one and i'll couch it in something positive i do think i'd like to think that the immunities are kicking in across a number of dimensions in a weird way the immunities kicked in around disclosure around we and said you know we're sick of private companies foisting these unicorn feces on tourists at the startup zoo in the retail markets, and we're not going to allow you to kind of inflict that sort of economic loss on retail investors. I'd also like to think that their immunities are kicking in around what I call soft fascism, and that is leaders in Europe and in

the U.S. who have decided to bypass Congress, demonize immigrants, and effectively not condemn violence against their political enemies. And the repudiation of Boris Johnson, where 23 of his own party defected to the other side, I think is a very hopeful sign. And I'd like to think in America, the immunities are kicking in as well. So my loser is the soft fascism that passes for what is a leadership in some what traditionally have been great democracies.

So my loser is soft fascism. I know that makes no sense. Help me, bring me back Toronto. Shopify. Soft fascism. Soft fascism. I shouldn't have drank this early. Okay, listen. Soft fascism. Soft fascism. I shouldn't have drank this early. Okay, listen.

Soft fascism sounds like a meal of some sort. Well, we're such wimps in the U.S. I go on Fox television. What's a soft fascist? We're such wimps as progressives. I go on Fox News because I consider myself part of the resistance. I want to go behind enemy lines. And because I've called for the breakup of Dick Tech,

they introduced me, no joke, as a socialist. And I'm like, well, you say that like it's a bad thing. Seven of the 10 happiest countries in the world have one thing in common. They're socialists. And by the way, happiness is not only a function of thinking, oh, my kid can get a Gulfstream because he might go to MIT because we're rich. And the only people in America who get to innovate are people with rich kids, top 100 universities, more people from the top 1% of income households and the bottom 60% who gets into Google, Facebook, universities, more people from the top 1% of income households and the bottom 60% who gets into Google, Facebook, Amazon, and Apple, the kids that go to the top schools. So do the math. We used to be about upward mobility of middle-class kids like us.

Instead, we're upward mobility about crazy upward mobility about rich people. So the notion that you not only have happiness from what you can get, but happiness from fear from what could be taken away from you. Right now in America, and you don't suffer from this, oh, your wife has lung cancer, which also means you're going bankrupt, right? So the notion that we have some sort of, we have modern societies that have capitalism where you can be rich, you can have the spoils of being great at what you do, but at the same time, you take away these immense, disastrous fear and anxiety from people, that's something that we should all aspire to.

So we are, I think, learning and this notion that they can call us socialists. Well, you know what, boss? I'm fine. Call me a socialist. I'm going to start calling the far right what it is that have taken over some of these governments, and that is they're fascists. Fascism is a refusal to condemn violence. It's a demonization of immigrants and it's extreme

nationalism. What better describes the administration overseeing where I live right now or some of the very dangerous things that's going on in Europe. So fine, I'm a socialist, you're a fascist. Let's get to it. All right. Okay. Wow. I'm running for office. That's got to be out of it. I'm just a Democrat. We'll see how that goes. Well, I'm hoping. I hope for the best. I hope for the best. I plan for the worst. So my fail is Facebook buying a startup, which I've interviewed the CEO of this company, that's researching how to implement non-invasive brain impulses that could do things like text with your thoughts. So Zuckerberg in our brains. I thought Facebook dating was bad enough. Yeah. So I'm finding this to be problematic, that Facebook keeps marching into areas that I think, again, they should work on their business.

And they have been. They've been trying to fix their problems for sure. But I think I know they have to keep growing, but it seems a little desperate to move from all kinds like Libra and which is going to see enormous problems all over the globe. And of course, it's only their own wallet, even though they say it's an independent or it's just not. It's so linked to Facebook. They're going into either Libra or they're going into dating and now they're going into mind control. So, or minds controlling, whatever. I don't think there's a difference. I find it fascinating on one thing that they still continue to be this ambition and a little bit desperate because they just can't, you know, their business is doing rather well, like really make their business as good as it could be.

I wish they would do that instead of, you know, it feels like this will make a great press release. This will be, and then it'll go nowhere. It reminds me of when Google started doing like 53 moonshots all at once, when I wish they would just fix their search and YouTube and things like that. So I think Zuckerberg in our brains is my fail of the week. Yes, absolutely. You have to quickly make a prediction. Okay. So I love stocks in the markets. Peloton's going public today. It may already be public. But typically what happens is when a company goes public and does really poorly, fewer companies get out and it casts a pall across the entire market. So the markets are typically

not only rear view looking, but they can only see five or 10 feet behind them. So when a company has a tremendously poor IPO, it literally cuts the number of companies that can get out in half. And when a company has a great IPO, a flurry of companies come to the market. And I would describe this right now, we're in a bit of a chill, not only from what's happened with Uber, but the We company going from 50 billion to zero has put it in chill. So Peloton is going out today, and it's a really interesting company. It has 45 points of gross margin on its bikes. These are Apple hardware like margins. It has a recurring revenue stream. It does in fact of gross margin on its bikes. These are Apple hardware-like margins. It has a recurring revenue stream. It does, in fact, have kind of a SaaS element to it.

They've managed to unbundle this app, this paid-for app from the bike, which is impressive. It's growing like crazy. It's also losing money. It's going out at any... The price at the high end of the range would shock me last night. It's going out. I think it's going to decline in value, but it'll hold. So I think it's going to decline in value, but it'll hold. So I think it's going to be off 10% to 30% in the next six months and hold. We also have a Hollywood agency, a famous Hollywood agency, going public in the next couple weeks, Endeavor, which is this incredible collection of assets,

but it's not entirely clear the synergy there and the valuation they're trying to go out. So I think what we're about to see is companies, these great good to great companies get out, but they're going to recognize a 10 to 20% decline in value, but then they will hold. We're not going to see the 50 billion to zero. So my prediction, and I realize this isn't that enthralling, is that the stocks that come out over the course of the next three to six months- People are more careful. Are going to be, yeah, people are going to be a little bit more measured. It's going to be a little bit more PG-13, and we'll see a small check back, but they won't collapse the way we saw we collapsed.

And next year will be a lot of IPOs. Supposedly, Palantir, Airbnb. Pinterest, perhaps. Pinterest is already out and doing quite well, actually. Pinterest is probably the best performing of the tech guys this year. But the big one will be Airbnb. Airbnb will be the huge one. Can we end? Yes, we can. Just a second. Can we end? All right. Yes. All right. So here's the thing, all right? Capitalism with a conscience. Freedom from fear being taken away from you.

A series of good universities that are affordable for the middle class. The American dream is alive. The problem is it's alive in Canada. You are such a suck up to the Canadians. Oh my God. The big dog is smelling your butt and he likes what he's finding. All right. You are our brothers in arms. You are an inspiration for us. And as my dad reminds me, every Sunday night you have the fastest front line in hockey. Thank you, Canada. Thank you. Come to America.

We are with you. All right. Thank you very much. This is Pivot live from Toronto. I'm Kara Swisher. Who are you? You have to say, I'm Scott Galloway. And I'm Scott Galloway. All

right. Thank you very much, everyone. That's our show. What do you think, Scott? Should we up and move to Canada and get gay married? What do you think? I'm in. I'm in. You know, every marriage is a triumph of hope over experience, and I'm trying to be more hopeful. So let's get on it. Between the two of us, we're coming up on nine or 10, aren't we? Exactly. Anyway, thanks, Canada. We love you. We do. Today's show was produced by Rebecca Sinanis and Eric Johnson. Eric Anderson is Pivot's executive producer. Thanks also to Rebecca Castro, Drew Burrows, and Nishat Kerwa. Thanks to the people of Toronto and Elevate for having us. Scott, you want to thank the people of Toronto? Yes. Thank you so much., do you want to thank the people of Toronto?

Yes, thank you so much. Go Leafs! Make sure, I don't even know what that is. Make sure you subscribe to the show on Apple Podcasts. If you like this week's episode, leave us a review. Thanks for listening to Pivot from Vox Media. We'll be you next time. crossover vehicle that's been completely revamped for urban adventure. From the design and styling to the performance, all the way to features like the Bose Personal Plus sound system, you can get closer to everything you love about city life in the all-new,

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