Pivot · Nov 8, 2019

Twitter and the Saudis, Facebook’s 'Switcharoo', and the 2020 digital ads race

Automatic transcript of the end of the episode, from 30:18. Speakers are labeled by software and may contain errors. Highlighted passages are Scott’s predictions.

Scott Galloway · 30:18 We're studying to the wrong test. We're asking... We're acting... These people decide, okay, the Dow Jones Industrial Average is the most important indicator of the health of The US and 90% of the stocks run by the top 10%. So all it is is a proxy for the wealthy. And if there is in fact a cohort that could probably absorb a hit right now, it is the Dow Jones Industrial Average. And Josh Brown who I think is this incredibly thoughtful guy as the CEO of Ritholtz Management told me or kind of clued me into something that I hadn't thought about and that is if the market were to go down, markets go up and go down and they have to do that to be functioning markets. But if the market's corrected, yeah, the people who own stocks would obviously get hurt and be worse off. So baby boomers own the majority of the stocks, old people own majority of stocks, top 10%. But the people coming into their earning years, 20s and 30s who had the opportunity to buy shares at a more reasonable price benefit from a lower price market. Similar to the way we talk about housing being so expensive and recognize that if the housing markets were to come back a bit or check back a bit in San Francisco or New York, you might actually find people in their thirties who make just as a paltry $500,000 a year could actually afford a house. So the notion that we have to keep the markets going up, it's just it's just not accurate. Kara Swisher · 31:37 Yeah. But people have bought into this holding. Just everyone has because that's how they think about it. Even if they don't have stock, they're like, oh, the stock market's down. Like, it it... It's it's a mentality. Like, there was a really good quote the other day. People like people don't like like rich people. Poor people like rich people. They don't like elites, professionals. So they sort of give these rich people a break over and over again, whether it's aspirational or whatever, or they were smart to get the money. But rich people, they love. It's it's the it's the professional class that they... The elites, they don't like. And it was... It's... You know, they they do link the stock market with their own fate even if they don't have stock. And it's, you know, it's the similar thing that goes... It's been going on, you know, in terms of backing Donald Trump who's just never... Not done anything for these people, but they back him because they they... Because he says, I like you, I guess. I don't really know what the dynamic is there. Scott Galloway · 32:30 But Kara Swisher · 32:30 it... But it's a really interesting it's a really interesting psychological dynamic. Scott Galloway · 32:34 Again, setting to the wrong test. The question in the next debate and what I'd love to see people asking the candidates is which of you is gonna reverse the scariest trend and the scariest number in our society right now and that is three years running, the decline in life expectancy. That's a more important number than the Dow Jones fucking industrial average. We're dying sooner. What difference does it make if your four zero k is up if you're dying sooner? So which presidential candidate is gonna implement policies that helps people live longer and healthier and more prosperous lives? But no one ever asks, okay, let's talk about life expectancy. It's all about the Dow. We are studying to the wrong test, Kara. Kara Swisher · 33:14 I agree. I agree with you. What can I say? And let me just say, one more, I think, fail that... Well, there's a lot of fails I would talk this week. I think, you know, the Saudis once again proved they're the thuggish thugs of Thugville and and then tech for giving them money. But that... I said that before. But I do think this, you, The Wall Street Journal, this is something in your area, and I have a kid applying for college. The Wall Street Journal reported the SAT takers' names and data are being sold to colleges to buy applicants and boost exclusivity Scott Galloway · 33:42 according to the Board. The Kara Swisher · 33:44 nonprofit administers ASCs selling data up to about test takers universities. They're using the the universities then use the data to target applicants they won't likely admit, but recruit them anyway. Ultimately, gives the university appearance of more exclusivity and more income from applicants. Just like... Scott Galloway · 33:59 That's what a 17 year old needs. Right? More rejection in their life. Right. Mean, talk about a lot. Talk about losing the script. Universities are not only supposed to be places of upward mobility, which we have lost the script and now we're just the cast system. We've now decided that we're gonna be points and additional points of darkness and depression for young people when they're applying to schools. It's just that it's just This Kara Swisher · 34:21 should be illegal. Right? This should be... This data sale should be illegal. Correct? Is... Am I wrong? Scott Galloway · 34:25 I don't think you can make it illegal. I think if you really were Kara Swisher · 34:28 Why not? Scott Galloway · 34:28 Because they're they're... It... Buying a dataset and encouraging people to apply, I don't understand what law you would apply to make that illegal. I think we do what you do really well is we just quite frankly shame them. The media writes about this. It's a practice. The majority of faculty that I know, the majority of leadership I know at universities are good people and they can talk themselves like anyone else into incremental decisions that where they create a luxury brand in the form of a university so they can charge more money and pay themselves more. But I think when faced with this data set and the cold hard truth about just how ugly and wrong this is, I think they will correct on their own. I don't think I don't think you need law I don't think you need a law for this. Kara Swisher · 35:04 I don't know. I gotta tell you. I've... The counters I've had with them, and I'm not... Like, I shouldn't even say it because, like, I wanted to move something, and they're just... It's like dealing with the pot... Like like the Soviets. It's like, no. You cannot. Like, it has no, like, customer service, first of all. None of it does. Like, just the Well, they're monopolies. Counters. Scott Galloway · 35:20 Every big city has two good and then they have the rest. Every big city has two Kara Swisher · 35:24 good schools then and they play to your fears, and it 100%. You know, I'm the one actually telling my kid, don't worry about it. You'll something will Scott Galloway · 35:30 They don't even play on your fears. They prey on your hopes and dreams. And that is if you're if you're a middle class, upper middle class family, you've worked your ass off and you think that the indicator of your dream against studying the wrong test is if I get my kid into a good school then I have lived the American dream, I've checked that box instinctively, instinctually and provided my son or daughter. And we as universities have taken advantage of that emotion and we've raised prices faster than inflation, greater than tech, healthcare, and now we've become a source of moral bad. The university system wildly needs Anyways, to be we keep talking about this and I know your son is applying. It's an incredibly stressful time in households. You pretend it's not. You seem to be very cheeky about it. Kara Swisher · 36:16 I don't care as... Well, I am trying to be because it's like as... And... But now, like, you're not just fucking with my son, Louie. You're also fucking with his data. Go fuck yourself. Like, I just... I literally got so furious at this. I was like, are you kidding me just to make him feel bad? Like, ugh. Just like... And then and then it's so unfair to to everyone along this this... The the chain here, like, the kids at every level of income. It's just like it's fixed. Like like, ah, like, you... There really is no... It's a... It's not a meritocracy in any way, like, that seems... Makes any sense. It's like everything's being bought and sold, and it's... It... You do have a sense that universities aren't like this, but, of course, they are. Of course, they are. Scott Galloway · 36:56 You gotta abolish tenure, you gotta start taxing endowments in any university that doesn't grow their freshman seats faster than inflation. We need a Marshall Plan for land grant universities to massively expand wonderful organizations like the University of Texas, University of Florida, University of California. We need an absolute absolute reconstruction of of of our university system and also local local and state junior colleges, which are this kind of unsung heroes Yes. Of our society. Predictions. Should we go to predictions? You wanted to keep it tight? Kara Swisher · 37:24 We will. But let me just tell you something. Yep. You should be the heck secretary of education in the in the Buttigieg administration. There you are. Okay? Scott Galloway · 37:32 Oh, I like that. Yeah. I just put my shoulders back. Kara Swisher · 37:36 It would end in a terrible scandal, obviously. Scott Galloway · 37:39 100%. But it'd be interesting. It'd be interesting. Kara Swisher · 37:43 You would be so taken down, but it'd so entertaining. Scott Galloway · 37:46 Oh my god. The kid... The question is, would you defend me, or would you be like, I knew it. I knew it all along. Kara Swisher · 37:51 I knew it. Scott Galloway · 37:51 I knew it all along. No. Kara Swisher · 37:53 Here's what I'd say. I go, I had no idea, but I'm not surprised. Scott Galloway · 37:56 Yeah. You know? No. You'd be like you'd be like, I'm disappointed, but not surprised. Kara Swisher · 38:01 I have to say, I'm not surprised, but I didn't know anything about it. Like, that's how I would do it. That's how Scott Galloway · 38:06 I get it. Predictions. Kara Swisher · 38:07 So I would get... I would keep my distance and yet, at the same time, insult you. Scott Galloway · 38:11 That's called every woman in my life. — Predictions segment begins — Kara Swisher · 38:13 Go ahead. So we both predicted Facebook banned political ads by Thanksgiving. I actually think Gates' idea on stage at the New York Times yesterday and and also Ellen Weintraub, who said that they should adjust them. I think that's what they're gonna do. Now I've shifted from your prediction, which is that they're gonna ban them. I think they're gonna adjust them and remove targeting. What do you think, Scott? Scott Galloway · 38:32 That's something we can take credit for. Well, my my... So first off, just revisiting some of our predictions. We said that Uber was gonna go down 20 to 40% in the next thirty days and we've already gotten that right. Uber's gotten taken to the woodshed, massively overvalued, the lockup came off, it's gotten hammered, it's still gonna continue to go down. But we have a market that's just incredibly overvalued. And I think we're gonna see... We've talked about this. Private market unicorns cut by 30 to 60% and public market stuff is already getting taken to the woodshed. But my prediction is about WeWork and that is what Afghanistan and Vietnam were to Russia and The United States, WeWork is gonna be to SoftBank. And that is that they've thrown good money after bad. And my anecdotal evidence that this thing can't get... They can pull the nose up on this thing and it will be a bankruptcy or some sort of restructuring probably by q four twenty twenty or q two twenty twenty one is that I've started a new business and I made just such a rookie move, over hired, spent too much money on office space and it's literally taken us six months to unwind that DNA and get back to an agile organization that's where it should be again. Take that times 2,000 and that's what we're talking about at WeWork. And my piece of anecdotal evidence although I do think it's telling is I have a friend that runs an architectural firm and he was telling me the other night that they got a resume from a woman who's an architect who works at WeWork because obviously they're laying off a lot of people. And it's a very liquid market for recent architects architects for recent graduates and he knows exactly what they should earn. And he said this individual should make between 90 at the low end and 110 at the high end and she's making $20.05 at WE. The DNA, not only the DNA of the of the costs around the numbers of office and the growth, but the DNA they have said in terms of their cross cost structure around compensation that if she's an indicator and you can't take salaries down, so you have a DNA of cost structure here. Well, you you can... It's very... It's much easier to fire people than it is to reduce their salary. It's... Try try to reduce someone's salary. Kara Swisher · 40:46 But I had a... I have had people come and saying I burned this much. Bloomberg was like a crazy payer. I'm like, okay. I'm not paying you Scott Galloway · 40:53 that. Yeah. But that's that's enough. They've already made them sick. They already hired this. My point is, as somebody who's tried to unwind bad DNA of an organization and sees how difficult it is even when the organization is only 20 or 30 people. When you have an organization of 12,000 and you have that sort of horrible DNA, you can't. You just... You can't unwind fast enough. Kara Swisher · 41:12 They're gonna have to take it into bankruptcy. Scott Galloway · 41:13 100%. Okay. Cover bankruptcy. That's Q four q four next year, q one or q two of twenty twenty one. Kara Swisher · 41:19 That what... That is good. I like that. I like that. I think that's a good one. My... I don't have a prediction except to say that you should read these Facebook documents. I think, you know, and and people saying this is okay, isn't it? I know they're good at what Facebook's gonna say, and I I met a really delightful Facebook PR guy, John Pinnett, yesterday. I gotta say — Predictions segment ends — Scott Galloway · 41:38 You know, I'm good friends with John. Kara Swisher · 41:39 Not a good look. Scott Galloway · 41:39 I'm good friends Kara Swisher · 41:40 with John. Oh, yes. He's your pal. He's lovely. What a delight. Scott Galloway · 41:43 Dark gone to side, but he is a wonderful man. Kara Swisher · 41:46 I did. He told me. He told me you told him that. But let me just say he's delightful and smart and interesting. I just don't know how I've got... It must be... It's gonna be an incredible PR job for him and others there to be like, okay. Let's let's tell you what this really means. And so I I think it's... I think that is to watch what what this goes out because they've sort of... They feel like... It feels like a like a moment. Like, it's gotta stop. And I have to tell you, a lot of people on this panel I had, a lot of people at the conference were, like, focused like a laser on Facebook in... More than anything. So they're Scott Galloway · 42:17 Blood offering. We need a blood offering. Kara Swisher · 42:19 Blood offering. Scott Galloway · 42:20 Although, you know what I'm doing? I was gonna You Kara Swisher · 42:22 know how that turned out? We're not gonna say for those Scott Galloway · 42:24 But Facebook has added a ton of value to my life because I'm literally... They are such geniuses at delay in obfuscation and wallpapering over corruption. We have this new rescue dog, gangster, and we're not sure if it's a dachshund or a Doberman. But I think it's a dachshund because dachshunds are impossible to house train. But my only job at home is when he is out of the crate is to watch him. And of course, whenever I'm home alone, Gangster goes and he takes a big dump on the only expensive thing we own, this carpet that's worth a good 4 or $500. And then my wife comes home and goes ape shit and I am so good. You know what I say now? I'm like, yeah, I'm like, you know what? We need to do better. Or I'll say to her I'll say to her, I'm sorry. I need to reestablish trust. Trust is the most important thing. Or I'll say to her when the dog's in the crate and hasn't shit in ten minutes, I'm like, I'm proud of the progress we've made. So I'm announcing here and now. I'm taking this to the next level. I am gonna start dressing as Sheryl Sandberg at our live events. We're talking Oscar de la Renta. We're talking Christian Louboutin. Kara Swisher · 43:21 We're going drag. Scott Galloway · 43:22 We're We're talking events. You are Oh my god. I am so ready to go drag. No. I have more legs Now, than a bucket of we gotta pick Kara Swisher · 43:30 You do not have nice legs. Scott Galloway · 43:31 On Twitter, I wanna hear from our dozens and dozens of fans that our next live pivot, should I cross dress as Sheryl Sandberg or Rebecca Newman? Rebecca Newman's more poochy. She's a little bit... But I can go there. I am so ready to cross dress. I'm Johnny Depp in that tell. Kara Swisher · 43:47 I am just protesting. It is time. I I literally wanna tell listeners that I knew nothing about it, but I'm not surprised. Scott Galloway · 43:54 So ready. Women's fashion is so much more interesting, and I I have a model's body if I were a woman. I'm so ready. Kara Swisher · 44:02 Inklings that Scott was a problem. Oh Scott Galloway · 44:04 my god. Kara Swisher · 44:04 I am so shocked by this behavior. Scott, it's time to go. Scott Galloway · 44:08 Seriously. In a poochy dress, I am a tall drink of lemonade. A tall drink of lemonade. Kara Swisher · 44:13 Appropriate tarting with inappropriate terrorism jokes and moving on to drag. It's just risky go. So ready. Have a question or idea or company Pivot to mercilessly take down over the next couple of months, shoot us an email at pivot vox media dot com. Also, we're hiring for a new producer for Pivot. Please apply at voxmedia.com/careers if you think you're the right person to join the team and can deal with this giant situation with Scott. Scott Galloway · 44:38 This situation. Of course, Kara Swisher · 44:39 you didn't know about, but you're not surprised. Scott Galloway · 44:41 We go. There There we go. Wait. Hold on. Our credits. We gotta do our credits. Kara Swisher · 44:45 Go ahead. Do it. Scott Galloway · 44:46 Our producer is Rebecca Sinanis. Our executive producer is Erica Anderson. And special thanks to Rebecca Castro, Drew Burrows. If you like Pivot, tune in next week or leave us a review or download wherever your favorite podcast can be found. I did that. Wrote from memory. Kara Swisher · 45:07 Oh my god. Thanks, Jolise and Peppa from Box Media. We'll be back next week after another breakdown of all things tech and business.