Pivot · Oct 15, 2021

Facebook’s Blacklist, Apple Trims iPhone Production and William Shatner Went to Space

Automatic transcript of the end of the episode, from 42:11. Speakers are labeled by software and may contain errors. Highlighted passages are Scott’s predictions.

Scott Galloway · 42:11 Not like that. But my point Kara Swisher · 42:12 is My... Well, we have San Francisco doctors. We send pictures, and then if they've... They look at it, they're like, get in right now. Scott Galloway · 42:17 Whatever. You went to four fucking proms. Anyway, so... But I should be able to hold up an app onto my head, and it should go, okay. Kara Swisher · 42:25 Just not with your doctors. Yes. You can. Scott Galloway · 42:27 Well, I'm not talking about that. I'm talking about AI that says, get into a dermatologist right now. Or, you can do it when you get back from from hanging out with, you know, Don Lemon at the studio at CNN plus. Kara Swisher · 42:38 Get yourself... I'm sure Don Lemon has a really good dermatologist. Scott Galloway · 42:41 I think he and I are gonna be good friends. Kara Swisher · 42:42 I don't think so. Scott Galloway · 42:43 I don't think No. I think he and I are gonna be Speaker · 42:45 good friends. Kara Swisher · 42:45 I don't Scott Galloway · 42:45 think so. Kara Swisher · 42:46 Yeah. I think not. Yeah. Scott Galloway · 42:46 Think probably he's gonna get jealous of our friendship. Kara Swisher · 42:49 No. I don't think so. I think none of this is gonna happen. Anyway, The Onion... Just so you know, had... This is a fun... Don't know funny. I had an article this week. Scott Galloway · 42:55 Speaking of which, Kara Swisher · 42:56 The Onion. White House supply... White House warned supply chain shortages could lead Americans to discover the true meaning of Christmas. Scott Galloway · 43:03 That's good. Yeah. Everyone's saying order your toys now. Kara Swisher · 43:06 Yeah. Whatever. I'm not Scott Galloway · 43:07 You know what it's gonna do, though? It's gonna, like, massively increase downloads of digital product. It's gonna be literally the... The last, but another nail in the coffin of toy stores because everyone's gonna die. It. The digital supply chain is still pretty robust. Kara Swisher · 43:18 Plenty of toys in the toy store. Scott Galloway · 43:20 Have just My kid, we we broke down and gave him Assassin's Creed. Now he wants, like, a Grand Auto Theft Auto, Kara Swisher · 43:26 and I'm like, no freaking way. I held the line on that one. Scott Galloway · 43:30 No. Just kidding. Kara Swisher · 43:31 No. No. My... One time when that was happening when... I think it's Grand Theft Auto, I was like, don't they shoot prostitutes? And and my son was like, oh, oh. He goes, just bad ones. And I was like, what? Bad ones. No. No. Just bad ones. Have guns. I was like, no. Like, it's not happening, boys. And then I think I thought it was a good mother. No. Scott Galloway · 43:51 I... The thing that really turned me off was it showed a bunch of high school senior boys trolling around going, let's find us some lesbians. Kara Swisher · 43:57 He would say Chappelle. Anyway, let's pivot, to a listener question. Scott Galloway · 44:02 You've got you've got... I can't believe I'm gonna be a mailman. You you you got mail. Speaker · 44:06 Hi, Kara and Scott. This is Emily in Washington DC. I've heard you talk favorably several times now about the German rule that puts employees on the boards of companies. But if that's so great, then why so many German scandals involving massive lapses in board oversight, Volkswagen, Deutsche Bank, Wirecard, etcetera. As Scott knows, a board should be able to push a company to innovate and change in ways that management might not be able to do on its own. But employees are very risk averse about their own companies. So the more employees on the board, the less interest it would probably have in questioning assumptions or making major pivots, right? So how do you make the argument in the American case without our companies becoming less ethical, innovative, adaptable, and profitable? Thanks. Kara Swisher · 44:49 Mhmm. That's a good question. I'm gonna let you take this one, Scott, but I have to say, I think she's she's kind of right, but kind of wrong in that I think you need more than one, and I think American employees are less go along, get along than other employees. But what do you think, Scott? You've been a very difficult member of board so many times, so talk about this. Scott Galloway · 45:08 Yeah. I've been on seven public company boards and about 15 private boards. And I really... I find, corporate governance fascinating. It's something I like. It's something... Anyways, I think it's important. And so essentially a board is supposed to, you're supposed to demonstrate two words, care and duty. You're supposed to act as a fiduciary and show concern for all the stakeholders. And you also have a duty to basically understand the numbers and make sure that the audit committee isn't going to find unwelcome surprises. And I think that actually I wouldn't link the two. I think that German employees or more employees on boards is a really good thing because power is a function of proximity. The reason that the number one person the CEO at a firm makes on average two to 10 times what the number two person makes is the number one person is in the board meeting all the time and gets to sit and establish a personal relationship with the compensation committee. And they're always deciding, erring on the side of, oh, he or she is a good person and we need to be generous. And I mean, the CEO, everyone talked about CEO compensation. The thing that hasn't been done that's more shocking is the number one person literally makes a multiple of what the number two person makes. And it's a function of proximity. So having directors be more proximate, if you will, or closer to workers on the floor is really important because that is part of the reason that we're always, you know, I think if somebody really, I think if we on boards had much more contact with the people serving the food, the people at the cash register, I just think they'd make more money. I think we'd see that these are people who are good people trying hard and struggling, really struggling. So I think it's a good thing. Now Germany, I think that's a different thing. Some of the scandal there, I think what happens with great companies that have done really well and are icons of the nation, it's easy to enter into consensual hallucination that things are working or to overlook things or to just get quite frankly fat and happy and not do your work as a director. And I've been guilty of this. Sometimes on the train down to the meeting, I'm reading the board book the day before and if I'm really good, look at it the weekend before and I start highlighting things and I will call the CFO before the board meeting and saying, don't want to take too much time with the board but I have questions about this, about this, about this. Our margins have gone from this to this. I don't understand why. That's what a good director is supposed to do. And what you need here is the same thing we've been talking about across big tech. You don't find Facebook 5,000,000,000, you find them 50 or you do a PERP walk. The incentives are wrong here and that is the algebra of disincentive is wrong here or deterrence. And that is when Enron collapses, nobody, there's been like 11 directors that have ever had to even come out of pocket with money. And the bottom line is if you're on the board of Theranos, if you're on the board of Yeah, Iran Kara Swisher · 47:59 I'm suffering. Scott Galloway · 47:59 And you really fuck up like this in terms of oversight and governance, quite frankly, there should be a penalty. You should actually have to come out of pocket with your own money. And guess what? Directors are gonna start doing their, you know, start really thinking about reading that board book and asking the right questions. Kara Swisher · 48:15 Or not being directors. Like there is director's insurance. Scott Galloway · 48:18 Or deciding maybe that's not worth the risk. But it's a really good gig. On most boards, public company boards, get between $150,000 and $300,000 a year in comp for what are effectively four or six days. Everyone says, oh, we're not going be able to attract good directors. Bullshit. I have people calling me every week saying, hey, I would be willing to go on boards. Everybody wants to be on boards. Yeah. I just don't... I don't buy that. There's a line out the door of people wanting to boards. Kara Swisher · 48:43 What... What's it like to be a difficult director? It's a very... Is there a lot of pressure? I mean, you've had that happen in the New York Times. You had it in several... You talked about one the other day, I think, where you were kind of the the skunk at the garden party. What is that like to do that? It's... There's a lot of... It's hard. Correct? I mean, in terms of instead of agreeing with everybody. They... There's a... There's an impulse to shut down that kind of stuff. Scott Galloway · 49:05 It's super fucking uncomfortable. I accused the most famous venture capitalist in the world and the most powerful venture capitalist in the world of using our company where I was on the board as a dumping ground for the failed products of his other technology companies. And not only was it right, it was the right question for a director. And on the way to the airport, they called me and said they were kicking me off the board. Wow. And it was devastating for me. I mean, was really devastating. I remember thinking, I got to the airport return the car and I'm like, I don't even know what to do next. This is so clearly wrong. And I'm so clearly outgunned. Kara Swisher · 49:40 You should have called terrorist Scott Galloway · 49:41 I can't go up against a billionaire. I don't know what to do here. And the Boer dynamic was everyone try to figure out what the billionaire's thinking and get there first. Mhmm. But that is your job. It happened to me two months ago, I know I'm trying to portray myself as a hero. I get it wrong a lot. Kara Swisher · 49:58 No. I imagine you're very difficult on boards, but go ahead. Scott Galloway · 50:01 We're supposed... You you know what the boards of Theranos and Enron all had in common? Kara Swisher · 50:05 Nondifficult. Scott Galloway · 50:05 They got along really well. That's not our fucking job. Kara Swisher · 50:09 Yeah. I agree. Scott Galloway · 50:10 Our job isn't... Wanna be respectful. You wanna be thoughtful. You wanna be open to pushback. You wanna say thank you for that. I was wrong. I feel better now, your job on the board is to have a little bit of friction in sparks and say, that doesn't make any sense to me. What you're saying doesn't make any sense. Or we need the Kara Swisher · 50:26 It's CFO also to come planned. And so like, it's like a dance number when these boards have Scott Galloway · 50:32 It's like a lot of them are like country club meetings. It's like lunch after a round of golf. Kara Swisher · 50:36 Yeah. Do you remember Evelyn y Davis? She was a board activist. You know, she was a shareholder activist. And she'd show up at meetings like Giant Food when I was a young reporter. Everyone would roll their eyes, and I was like, I love this. She's causing them problems. And not everything she said was right. She was a little... She was out... Some of her stuff was a little far out. But at the same time, I was like, good. She's asking them questions. Good. She's... And the stuff they do to limit your ability to ask questions as shareholders, the way it's sort of choreographed is really ridiculous. These things are choreographed and they should not be... There should be places where people get asked questions for public companies. Anyway But Great question. Scott Galloway · 51:09 Generally speaking, just to just to wrap this up, there is a difference between being right and effective. This is where I failed on boards is that I've come in too hot and it's reduced my effectiveness. And two, what I will say is I am shocked. I've worked with a couple 100 directors. I'm pleasantly shocked how many directors take it very seriously, really do a lot of work offline and really get to the bottom of stuff. And also I will say this, I think most CEOs appreciate, I have a reputation as being a difficult director and there's no hiding it. And guess what? I constantly get asked to go on boards because CEOs, it stresses them out in the meeting, but guess what? Most CEOs are usually pretty open to it. They like the pushback. Yeah. They... As long as it's respectful and it's not totally disruptive. Kara Swisher · 51:55 Nobody likes... But a lot of them do reward board members with all kinds of Denny's and so they behave. Scott Galloway · 52:01 Well, we're we're rewarded the day we show up. Yep. Your your compensation is fixed. Kara Swisher · 52:05 Yeah. I get it. Scott Galloway · 52:06 You can tell when you get on a board if it's like a cooked board with all their buddies, but most of them aren't. Most of them are trying to do their job. Kara Swisher · 52:12 Okay. Alright. That was an excellent question. Send us more. If you've got a question you're curious about, go to nymag.com/pivot and submit it for the show. Thank you, Emily. Alright, Scott. One more quick break. We'll be back for predictions. [Ad break] — Predictions segment begins — Kara Swisher · 53:16 Okay, Scott. Give us this week's prediction. Scott Galloway · 53:20 You know, I literally was, hadn't thought of when I was trying to... I I think it goes to... I think Apple and Amazon Mhmm. Are, gonna bump up against each other. So look. You know, they're all bumping up against each other in different ways. They're bumping up in video or they're bumping up in cloud, Google and Amazon. They're all kind of bumping up against each other in big ways. I think the next big bump, if you will, is going to be in healthcare between Amazon and Apple. I think they both see that one of the greatest opportunities to create shareholder value is the dispersion of healthcare away from doctors' offices and hospitals to our devices in our homes and our Alexas and our iPhones. And when you look at Amazon's wearable, the halo and the fact that obviously Apple has a huge advantage in wearables but at the same time Amazon has a huge advantage in distribution and also in smart speakers. I think that they're both. You're going to see a flurry of new apps and programs and recurring revenue programs. And even Amazon I think is going to get into diagnostic and health. But I think Apple and Amazon are about to like meet in a dark alley over healthcare and start going at each other. Kara Swisher · 54:35 Meet in a dark alley not to cooperate, to fight. Scott Galloway · 54:38 Oh yeah, that was the wrong analogy. Kara Swisher · 54:40 Duke it out. Scott Galloway · 54:40 That was the wrong analogy. It's about to be, it's about to be like an, it was kind of a brewing simmer. It was a border skirmish. It's gonna turn, I think Apple and Amazon are both gonna be like, that's, they're gonna be both the fastest growing healthcare companies in the world over $1,000,000,000. Kara Swisher · 54:57 There's nowhere else to go. Scott Galloway · 54:57 And they're going they're gonna go after each other. Kara Swisher · 54:59 Yeah. Scott Galloway · 54:59 They're gonna they're gonna increasingly... It's like, Elon... While Elon and Bezos are sword fighting with their dicks in near orbit, Tim Cook and Andy Jassy are gonna have a real fight. Kara Swisher · 55:10 Over healthcare. Scott Galloway · 55:11 A bare knuckle fight over who gets to leave Hilton. Kara Swisher · 55:13 And Elon and Apple over cars. So we'll see. Scott Galloway · 55:17 Elon and Apple over cars. The more important one is probably the fight between all of them and cloud. Yep. You know, there's interesting ones, and then there's the ones that that are more important around shareholder value. Kara Swisher · 55:27 Competition. Look at that. I bet things will be fair. Scott Galloway · 55:31 Do you have any predictions? — Predictions segment ends — Kara Swisher · 55:32 No. I don't. I never predict. You're the predictor. I predict you will have more predictions. Anyway, I predict that you will never have that hair back that you had in high school. Scott Galloway · 55:40 Mhmm. Kara Swisher · 55:41 And I predict Scott Galloway · 55:42 Hello, Billy, Shatner. Kara Swisher · 55:43 That that I will Scott Galloway · 55:44 Hello, Billy. Kara Swisher · 55:45 Never go to another prom again even though I went to four. Let's just point that out. Anyway Scott Galloway · 55:49 My prom photo. Huge online. Kara Swisher · 55:52 Anyway, let's read us out, Scott. Read us out. Scott Galloway · 55:54 Today's show is produced by Lara Naaman, Evan Engel, and Taylor Griffin. Thanks also to Drew Burrows. Ernie and Jutot engineered this episode. Make sure you subscribe to the show on Apple Podcasts. Or if you're an Android user, check us out on Spotify or, frankly, wherever you listen to podcasts. Thanks for listening to Pivot from Vox Media. We'll be back next Tuesday for another breakdown of all things tech and business. Hello, little Billy Schatner doll. [Ad break] Speaker · 56:41 Fall savings are happening now at The Home Depot. 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