Scott Galloway · 54:40
You get long term capital gains treatment. It's called the carried interest loophole. It's the most insane unfair part. The wealthiest... Literally, wealthiest people in America pay lower taxes than people who get a commission or a tip or something on something else. So let me be clear. The compensation structure of these firms is totally fucked up. Having said that, coming in... I've worked with a lot of private equity firms. They come in, and you're right. They will cut costs. And a lot of times, it doesn't work. And a lot of times, in most times, it not only saves the company, makes it stronger, and it makes the employees and the community and the people who stuck with it wealthier. In addition, private equity also invests. I'm... I coinvested with Apollo and Yahoo. They they bought it from Verizon, and they are proactively investing to try and give Yahoo a fighting chance of being one of the key players, and Yahoo has thrived under private equity ownership. So the notion that they're just these evil folks coming in, it's just not it's just not accurate. You might say, alright. There's tax loopholes we gotta close here. But if you didn't have private equity out there, this is what would happen. The most immediate... If you put real taxes or prohibitions on what industry's private equity could go into, The guy Craig Spodak in Delray has the best dental practice. He will eventually get bought by private equity. His ability to retire small business and medium sized business owners will make a lot less money because they won't have these giant pools of capital coming to them saying, look, Rather than opening... Rather than operating one dental clinic in Delray, let's operate 50 of them. We can all have one marketing, one CFO. This place is gonna make more money. You're gonna sell me most, but not all of this company, and we're all gonna make a lot of money because we have the capital, the infrastructure, and the expertise to make this a more valuable, robust business. Are there examples of private equity bought purchase firms where they lay on too much debt, they take out their money, and then basically let the company die? Yeah.
Kara Swisher · 56:36
That's a lot of movies starting with Gordon Gekko, Wall Street.
Scott Galloway · 56:39
But that that is not... A private equity player that comes in, you... These people aren't stupid. They're not gonna just sell you the company at a price where you could just layer on a shit ton of debt. I remember talking to Jeff Buchis, the former CEO of Time Warner, and an offer was made for his company by a rival that we talk about a lot. And he said, no. I could go out and and pay that just by borrowing debt. I'm not gonna I'm not gonna let you use my debt capacity to buy me out. So the notion that these companies get bought for a price where you could just go layer it with debt and then shut it down and the private equity players ride off into the sunset, that's just not economic reality here. So they play a valuable part of the ecosystem. They juice up the prices of asset owners and small and medium sized businesses. They should just pay more taxes.
Kara Swisher · 57:26
I think we do get our visions from Hollywood, which finds the worst cases and portrays them that way. And obviously, there's been a lot of devastation individually, and it matters to everyone who's been devastated. Right? But a lot of the times, they do grab things that are on their way down. Right? On their way down. Need... But not everything does need consolidation. We need
Scott Galloway · 57:46
But but I'll just... I'll give you one more quick example. A close friend of mine is the best cosmetic dentist in Los Angeles, David Frey. He did my veneers, and I I I don't know if you've noticed. Have a gorgeous smile there.
Kara Swisher · 57:56
Your teeth look fantastic.
Scott Galloway · 57:58
I have a gorgeous smile. Yeah. It's my best feature out of my my sublime skin tone on the smile on my back with the tramp stamp. Anyways, he will eventually... His retirement is... He's at the age where he's got another ten years left on his tires... Tread on his tires. He will eventually sell, I would bet, to a private equity firm that'll say, David, we want you to keep growing, and we're going to do a better job in marketing. We understand technology. We can buy the best software around scheduling. We can buy
Kara Swisher · 58:25
Which he doesn't wanna do.
Scott Galloway · 58:26
Which he doesn't know how to do and doesn't have the capital to do. It'll give him a retirement. It'll it'll make sure that his business brings in more cosmetic dentists, more hiring, and the investors in the private equity firm, which largely consist of public pension funds, firemen, cops, widows, whatever, this is a key part of the economy.
Kara Swisher · 58:46
Yeah. Okay. Alright. There we have it. Anyway, if you got question on your own that you'd like answered, send it our way. Go to nymag.com/pivot to submit a question for the show or call 85551 Alright, Scott. One more quick break. We'll be back for predictions.
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Kara Swisher · 59:12
Botox, onabotulinum toxin A, prevents headaches in adults with chronic migraine. It's not for those with 14 or fewer headache days a month. It's the number one prescribed branded chronic migraine preventive treatment.
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— Predictions segment begins —
Kara Swisher · 1:01:00
Okay, Scott. We're gonna hear a prediction. I'm gonna make one. Gene Smart is gonna be brilliant as well as Maya Rudolph on Saturday Night Live, which is premiering this week. Fiftieth Wow. Fiftieth year. Incredible. Incredible. Lorne Michaels, you gotta give it to him. You gotta freaking give it to this guy. They have... You know, everyone's like, oh, it's not funny anymore. It's been very funny for fifty years. I mean, on the whole, like, some bad stuff. But when you look at, like, the people that have gone through there, even... You know, there was one... They were showing sort of fifty years of it. You just are astonished by the talent that's wandered through that place and left and come and gone and stuff like that. So it's gonna be it's gonna be a great show. I love Gene Smart, and Maya Rudolph is gonna make a great Kamala Harris, so I'm very excited. So it's your prediction.
Scott Galloway · 1:01:44
So my prediction is that gaming and casino companies and rehab clinics, which which by the are being rolled up by private equity arm and Novo Nordisk and GLP one drugs are all gonna boom. And unfortunately, reverse engineers are a pretty dark place. And that is we are essentially, and I referenced this earlier in the program, we are using godlike technology to provide so much immediate DOPA to young people as their brains get wired that we set them up for a massive craving for DOPA, which makes them more prone to addiction. And now twelve percent of twelve percent of boys and men over the age of 12 have a substance use disorder compared to six and a half percent of women and girls. Boys are especially vulnerable to this DOPA craving. And about one in ten children who play video games show signs of addiction, and fifty percent of American teenagers feel addicted to their mobile devices. Fast food triggers DOPA releases in the brain's reward system, and over a third of kids eat fast food every day. And there's a new study that just came out that shows when a state legalizes gambling, there are twenty five to thirty five percent more bankruptcies. And so what you have essentially is the brightest people in the world, the most... The deepest resource people in the world are spending a lot of their time trying to get kids addicted to fast dopa when they're young, and the downstream externalities are just gonna be enormous. And what are we... I was thinking about this. What are we supposed to do as parents? Kind of our entire mission is to give them what I'll call slopa, and that is slow dopa. And that is like, okay. I work out with my son. I... One of the most... I'm I'm... My my my... I was sold a bag of shit about this boarding school nonsense that he'd be home on weekends. My home... My son is home 24 on the weekend, and it is, like, one of the worst thing that's happened to me. Anyways, it's... Having said that, it's one of the nice things that's happened to him. But every night or almost every night, I try and get on FaceTime with him for seven or nine minutes, and I do, like, this mini CrossFit workout with him. And I just like seeing him, and he likes it because he's at the stage I was, and that is he keeps growing and he's, you know, rail thin. But he's starting to see muscles, and the whole idea is slow dopa. Like, okay. You work hard. You work out every day. And in and in six, eight, ten weeks, you get you get some DOPA. You study hard for your GCSEs in biology. You put it off. You get a nine on his GCSEs in biology, which we're hugely proud of. Our entire fucking mission is to create slow DOPA. Invest. Be disciplined. You won't get the DOPA right away, but over time, you're gonna feel something exciting and more rewarding, and that is you're gonna get a dopamine rush when you realize achievement and success from long term investment. That's the basis, I think, or one of the basics of parenting. And the most well resourced companies in the world are are fighting us. They're trying to give kids a sense that I need fucking immediate gratification right away. And I see it not as much now, but with my youngest, when he was on screens, action, reaction, action, reaction, TikTok, action, reaction. Don't like this video? No problem. I can get to something with dopa. It's funny. It's titillating. And then he gets off the fucking screen, and it's like, where's the dopa? So you know what he starts doing? He starts wreaking havoc in the household to get a reaction. He has to have a reaction. And I think we are setting up an entire generation of young people, maybe even more so among boys, who are totally into online gaming, gambling, drugs. And Richard Reeves just came out, the president of the American Institute of Boys and Men, just came out with this really frightening study showing that deaths of despair have skyrocketed since 2000 and 2004, people who die by suicide, violence, gun deaths. But more than anything, it's been drugs, opiates, and drug addiction. And I think we're gonna continue to lose more and more and more as long as the greatest shareholder value increase in history is putting fucking Tim Cook outside of junior high school with a bunch of smack. This this is happening every day across America, and we're starting to see signals. Oh, you legalize online gambling. There's an entire generation that needs that DOPA, and boom. Bankruptcy skyrocket. My prediction, gaming, rehab clinics, Novo Nordisk that produces GLP one, which has been shown to be effective against these types of addictions, are gonna skyrocket, and it's gonna be nothing but a transfer of wealth from government who has to cover those bankruptcies, cover those hospitals, and families are gonna pay an extraordinary price.
Kara Swisher · 1:06:28
Yep. Well, that's a big one. Wow. There you go. Wow.
Scott Galloway · 1:06:31
I'm gonna go drink beer. I'm going to the fucking tenth for October 1. I'm gonna go drink beer.
Kara Swisher · 1:06:36
Okay. I think beer. Go to the beer Garten. I forgot one thing, one more prediction for me. My brother David just turned 60.
Scott Galloway · 1:06:44
Oh, nice.
Kara Swisher · 1:06:45
And I wanna wish him the next... I predict he's gonna have a great next twenty, thirty years of his life, and he's been a great brother. And I don't talk about him that much, but he's fantastic.
Scott Galloway · 1:06:56
You've become increasingly fond of him just in the time I've known you.
Kara Swisher · 1:06:59
Well, I don't love the conservative stuff, but that's okay. He's
Scott Galloway · 1:07:04
Separate the person from the politics. Separate the person from the politics, Jared.
Kara Swisher · 1:07:08
I try. He's a great guy. He's a great guy. He's a great dad, and he's a he's a he's a very good brother, and he's great. He's a great son to my mom. He's been great. But happy birthday, David. Happy birthday.
Scott Galloway · 1:07:19
Well, can I ask you a question?
Kara Swisher · 1:07:20
Sure. Mhmm.
Scott Galloway · 1:07:22
When you're both really fucking old, which you are already, and he's getting there. When you're really old and you're hanging out and you're holding each other's hands and you're, like, reflecting on life as you get towards the end Yeah. Are you gonna remember what a great guy he was and what a great daddy was or that he was a conservative?
Kara Swisher · 1:07:36
Of course. Oh, thank you, Scott. Of course. I still... I always remember what a great guy he is.
Scott Galloway · 1:07:41
Take that, Brene Brown. Take that.
Kara Swisher · 1:07:43
Oh my god.
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Scott Galloway · 1:07:45
She has nothing on me.
— Predictions segment ends —
Kara Swisher · 1:07:46
We'll import another psychologist in here. Okay, Scott. That's the show. We'll be back on Tuesday with more pivot. Please read us out, Scott.
Scott Galloway · 1:07:55
Today's show is produced by Lara Naiman, Zoe Marcus, and Taylor Griffin. Ernie Intertaud engineered this episode. Thanks also to Drew Bose and Mia Savario. Nishat Kerwa is Vox Media's executive producer of audio. Make sure you subscribe to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media. You can subscribe to the magazine at nymag.com/pod. We'll be back next week for another breakdown of all things tech and business. Gorilla Panic. That is so my favorite brand of edibles.
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