Scott Galloway · 51:12
We need to demilitarize the police. Yeah. I occasionally see one of these assault vehicles, and I'm like, Jesus, talk about toxic masculinity gun. I know. Fucking ape shit.
Kara Swisher · 51:20
Yeah. Stuff like that. There are lots of great ideas. Go ahead.
Scott Galloway · 51:24
Sorry. Get it with their assault rifles and their battleware, and it's like, okay. These are board cops in an overfunded district that wanna play GI Joe. I mean, that just can't be healthy.
Kara Swisher · 51:34
No. No. It's mentally not... I I think I've had more bad encounters with the police than you, I suspect. I've had many. I've had many, many, many.
Scott Galloway · 51:41
And how does that... Oh, I had a longer show. I'm just wondering how that plays out for you. And you think it's because... Well, I'll ask you. What are those are those bad experiences?
Kara Swisher · 51:52
I I question things. I would... She... He was... He... One... At one point, he was really giving these two young African American men a hard time, and I was... This was long ago, and I was like, what are you doing? Like... And... Because I felt like I had a, you know, that he wouldn't. Mhmm. But he came at me. I'll tell you that.
Scott Galloway · 52:09
Mhmm.
Kara Swisher · 52:10
And in that case, it didn't... It was... I mean, nothing happened, but it was... I was just sort of like, I see what you're doing. I think that's all I was doing. Another case, I I questioned something. I questioned for for the most minor thing, and I got... I put... I was put in jail. That was my question. I don't know what else to say. I was like... And I wasn't rude. I was just, why do you think you can do that? Right. You know? And I was cuffed and put in jail. That was it.
Scott Galloway · 52:38
And what was the charge? They just
Kara Swisher · 52:40
Resisting arrest.
Scott Galloway · 52:41
I
Kara Swisher · 52:42
really didn't. I was just like, alright. This is ridiculous. It's a long story. I won't go into it, but it was it was stupid. It was so dumb. In any case, it's a very good time to start to take a breath today as... While you're by yourself at home with your tiny turkeys.
Scott Galloway · 52:55
Agreed.
Kara Swisher · 52:56
But it's a really good time to take take your breath and be... But I think pushing back on people who are continuing to punch is Yeah. You really have to start to keep doing that. Anyway Sure. Good question. Thank you, Alex, from Texas. I think we have a long way to go in this country and there... And to get to our better angels for sure. And this... Nothing nothing says that like the holiday season, I guess. I don't think that's true. We should do it all year round. By the way, for the month of December, we're partnering with Yappa to get more listener mail questions. Yappa. Go to New York... Nymag.com/pivot to submit your question for the pivot podcast. These questions have been incredibly thoughtful every week and different, and we really appreciate them. And and and we like talking about them, obviously. Alright, Scott. One more quick break. We'll be back for predictions. I would like a great dazzling prediction from you.
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— Predictions segment begins —
Kara Swisher · 55:19
Okay, Scott. Predictions dazzle us for the holiday weekend, please. You've had so many good ones lately.
Scott Galloway · 55:25
This one's sort of boring, but I'm fascinated by, the whole SPAC phenomena, special purpose acquisition core corporations. And basically, it's... You never underestimate the market's ability to find products for people who have cash in their hand.
Kara Swisher · 55:41
Mhmm.
Scott Galloway · 55:42
And because investment banks and the SEC, have a certain amount of lag and filter and friction around getting public and the market's appetite for IPOs is greater, year sinks back. And it's basically teams go out and they act almost like a desk in investment banker, investment bankers who say, no, I'll evaluate a company. I'll come up with a price. I already get through the logistics of the SEC approval, get this company public, and then boom, just add water IPO. Mhmm. And it's basically... Typically, this year's SPACs have vastly outperformed the rest of the market, but over the medium and long term SPACs have generally underperformed because they're evidence of the hand going deeper and deeper into the barrel to try and find companies and sometimes of lesser quality. There's a reason why some companies don't get through that process in normal times. Anyways, if you look at right now, are are about two fifty five SPACs. And I got this from Terry Kowajas when he did a SPAC Loom Escape, which I thought was really interesting. And 70 of them have found a target, meaning that they've actually purchased a company and other publicly traded companies across six verticals. But a 185 are still looking for a target. Mhmm. And they are armed with $65,000,000,000 in cash. Typically, that cash gets deployed into the company, and then they lever up. You have about $200,000,000,000 in capital right now, and that $200,000,000,000 in capital has a gun to its head. If you don't deploy this capital Two
Kara Swisher · 57:10
years. Right? Is that correct?
Scott Galloway · 57:11
Yeah. In eighteen to twenty four months, you have to return it to your investors, and that's a no no. Your investors, they can give you the money to hold on to it for two years and then return it. So you have $200,000,000,000 with a gun to its head right now trying to find, private companies that might be ready for prime time. And, you could say, well, these things are gonna underperform. It means there's a bidding war. True. But the market also won't take a company just because you overpaid for it and let it trade at that. So there is there is some sanity to it.
Kara Swisher · 57:38
Yes. There's a government
Scott Galloway · 57:40
What I think this means isn't this a boring prediction. I think that this year's returns in the first half of twenty twenty one for venture capitalists are going to be probably record returns because you have companies that were gonna go public in two or three years potentially, go public in q four, q one, q
Kara Swisher · 57:58
complex and interesting prediction.
Scott Galloway · 58:00
Oh, I don't know about it.
Kara Swisher · 58:01
It is complex. You're you're... What you're doing is you're saying, look. Venture capitalists were gonna go public in two years and had to be sitting on these assets. Now they can get them out the door and take the money and run essentially.
Scott Galloway · 58:11
You can. If you... Say you have a 30 to 50,000,000 or a $100,000,000 a year recurring revenue company, and we're thinking once we get to 200, we'll call the bankers. Yeah. You've had a dozen SPACs call you and say, we're ready to go. We can be trading in thirty days. Is this
Kara Swisher · 58:25
smart for these companies to be public this this young?
Scott Galloway · 58:29
Well, what you've seen in the marketplace is access to cheap capital is kind of the the core competence, and and you identify yourself. IPOs, the reason these guys aren't stupid, the reason they do still do traditional IPOs and give 7% to the underwriter is it's basically a giant signal saying we're the disruptor, we're the leader in the space. And then all of a sudden this capital, stocks are two components, narrative and numbers. And now that the narrative is 70% and the numbers are 30%, whereas it used to be flipped, anything that identifies you or signals that you're gonna have access to cheaper capital, you're the disruptor, which leads to access to cheaper capital, which means you can make more forward leaning investments in your peer group. You know, there's definitely something to an advantage.
Kara Swisher · 59:08
If you're good, unless it's a lot of bullshit stuff, which you know SPACs in the past that's sort of been
Scott Galloway · 59:13
That's right.
Kara Swisher · 59:13
The the rap on them when it wasn't so trendy. Right?
Scott Galloway · 59:17
That they they were
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Scott Galloway · 59:19
That's right. They were awkward teenagers that hadn't shown they had the ability to to kind of compete in in the big leagues. So they were triple a. You're drafting... Basically, you're drafting triple a ball players into the majors and hoping that they can grow into it because all of a sudden baseball
Kara Swisher · 59:33
Well, yeah, it's like
Scott Galloway · 59:34
The number of teams are expanding. The number of teams
Kara Swisher · 59:36
are investing. Dollars, figure something out. Right? Kinda thing.
Scott Galloway · 59:39
But you have... I mean, there are so many companies now. I've invested in a couple privates, recently in EdTech.
Kara Swisher · 59:46
Hoping for a SPAC? Your people, your companies?
Scott Galloway · 59:48
I don't know enough about it. I'm one of those people that I think you're better off maybe, I think better off waiting, but smarter people than me get to make those decisions. But I invested a year ago in EdTech in a FinTech company, won an online mortgage company called better.com and another health tech company called ninety eight point six, they get a call a day from us back saying we're ready to go. And so if you think about all of these companies that are kind of late stage growth companies, their value has skyrocketed because all of a sudden everybody's calling So them with I think it's gonna translate to venture capital for venture capital as an asset class over the last twenty or thirty years has underperformed other asset classes. The majority of the returns are not only sequestered to a small number of venture capitalists, but a small number... Or small number of venture capital firms, but a small number of venture capitalists within those firms.
Kara Swisher · 1:00:41
Yes. Indeed.
Scott Galloway · 1:00:42
But this... I think the I think the returns of this vintage, if you will
Kara Swisher · 1:00:46
So now everyone looks like a genius for false reasons.
Scott Galloway · 1:00:48
A 100% because all of these companies, and some of them are great companies, but most of them are good companies that have some momentum, are all of a sudden big time.
Kara Swisher · 1:00:55
Yeah. I agree. I'm I'm a trouble ahead, but this is not gonna end well for most of these guys. Public investors are going to pay the price. It was really interesting. One million years ago, I think I've told this story. Don't think I've told One of the Goldman Sachs banker was telling me about this company they were gonna take public, and they said they're pre... They told me they were pre revenue. I'll never forget this. We're pre revenue. And I was like, what? And he goes, well, it's a pre revenue company, Carrie. I really think you should write a p... Because they wanted pieces in the journal to, like, gin up these excitement around these companies. And I was like, you know, I'm looking out my window right now, and there's an old lady walking down the street. Why don't you just go mug her rather than take shareholder money? This is ridiculous, this bullshit narrative you're spinning up on these companies that aren't ready for prime time. And so I'll never forget the word pre revenue. I I was sort of, like, fascinated by that. And so I do think it it has... It's it's it's gonna be sloppily enforced. Maybe it'll change under the Biden administration, And we're gonna see a lot of turkeys, speaking of turkeys, amid all the the promising companies. And that... When there's too much money sloshing around out there, everybody gets sloppy.
Scott Galloway · 1:02:07
A 100%. We're in what I would call, you're seeing a lot of what I would call the feces round, and that is maintain momentum so we can fling unicorn feces at tourists at the zoo. But there's pre revenue companies now that are pub... Virgin Galactic is pre revenue.
Kara Swisher · 1:02:22
Yes, I got that.
Scott Galloway · 1:02:24
You know, there are there are a lot of them, and some of them will go on to be amazing companies.
Kara Swisher · 1:02:28
Exactly.
Scott Galloway · 1:02:28
But it's
Kara Swisher · 1:02:29
But there's only one Amazon among the group. Like, there's not seven. There's not... Maybe there's seven. Who knows? I don't know how many are going public. So that's... He did a 150 of them? That there's already a 150 of them?
Scott Galloway · 1:02:39
Well, no. There's a 165 right now out there just among these seven verticals that have capital and are looking for companies to acquire.
Kara Swisher · 1:02:47
Do you have a SPAC secretly, Scott?
Scott Galloway · 1:02:49
I do not. I've been contact... I'm sure you have too. I've been contacted about going on the board of spax, but I... The whole space kinda scares me.
Kara Swisher · 1:02:56
They want they want your name.
Scott Galloway · 1:02:58
The whole thing just sort of scares me. It's just sort of, it does feel very frothy. And the thing about froth is that by the time... When you start calling something frothy, that usually means it's gonna get even frothier for another twenty four months. So it's hard to be the the Debbie Downer because oftentimes things keep going, and there will be some amazing companies that started as SPACs. Right? And there already are some great companies that that got public via visa... Visa via
Kara Swisher · 1:03:25
real bad outcomes, which is already already... Which is... What I think is interesting is it's... Speaking of reform, it's trying to reform the IPO system. Right? This is where it's a reaction by... You know, you saw that big Bill Gurley essay about it. Like, oh, they leave too much. And instead of just reforming the IPO system, this is the answer, which means too much froth, I think. We'll see where it goes, but it is interesting, and we will keep watching it. That is a good and complex prediction, Scott. That's really, really good.
— Predictions segment ends —
Scott Galloway · 1:03:53
Predictions, Kara?
Kara Swisher · 1:03:54
Anything I do not. I do not. I predict that, we are going to have a great 2021, Scott, you and I together. And
Scott Galloway · 1:04:01
That's nice. Thank you for saying
Kara Swisher · 1:04:02
that. Spending Thanksgiving next year together. Think we will. We won't because we're such losers. Here we are. We like doing it. We like to bring content to our people. Alright. So that is the show. I don't have a prediction for today, but I will think of one for next week. How about that? Okay. That's the show. As a reminder, we love listener mail questions, and we're trying something new. Go to nymag.com/pivot to submit your question for the pivot podcast. The link is also in our show notes. Scott, happy Thanksgiving.
Scott Galloway · 1:04:29
Likewise, Kara.
Kara Swisher · 1:04:30
From the Swisher family, including Louie in the basement. I hope you have a beautiful time with your beautiful family.
Scott Galloway · 1:04:36
Thank you for saying that. Likewise.
Kara Swisher · 1:04:37
Please read us out.
Scott Galloway · 1:04:39
Today's show was produced by Rebecca Sinanis. Fernando Finite engineered this episode. Erica Anderson is Pivot's executive producer. Thanks also to Hana Rosen and Drew Burrows. 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. If you liked our show, please recommend it to a friend. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back next week for a breakdown of all things tech and business. We hope that you are giving thanks with people that you love immensely or not with people unfortunately or not with people. Why? Because you love them immensely. We will see you next week.
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