Pivot · Apr 16, 2021

The crypto-surge, Bernie Madoff's dark legacy, and a question on Russia slowing Twitter

Automatic transcript of the end of the episode, from 34:48. Speakers are labeled by software and may contain errors. Highlighted passages are Scott’s predictions.

Kara Swisher · 34:48 Use it because our attention spans are too short? And do we buy that they're actually doing it because of the platform's content issues or because so many people are posting pro Navalny anti Putin messages? Would love to hear your opinion about this. Thanks both. Huge fans of the show. Kara Swisher · 35:01 Oh, that's a fascinating question from Claire. Claire, thank you so much. You know, they're slowing it down because of Navalny. That's it. You know, I don't think they care about their people or or how they're they're doing child pornography, etcetera, they'd shut it down. You're right. That's what they would do. And I don't think it's particularly effective to do so. It is an interesting idea to slow it down, but I think more we have to get to the cause, the root causes of the problem. I doubt The US would ever do something similar with Twitter at all. I don't know. Scott, you're a shareholder. What do you think? Scott Galloway · 35:32 Well, I'm gonna go out on a limb here and posit that perhaps the Russian government isn't being totally forthcoming. And if I had to guess what's going on here, it's that their scientists and they have very smart, very smart intelligence unit, the GRU, has figured out a way to garner information and is basically engaging in espionage. And part of that ability to hack into people's user profiles or anticipate actions on Twitter and inform their security apparatus is to slow down. It's they're getting access. My guess is they're getting access to what information they're trying to garner on Twitter. But before the public has a chance to trade or the media in that information, they get to slow it down, alter it, or have some sort of intelligence edge. But the notion that they're doing this for I mean, that's just ridiculous. This is a this is some very smart people in the GRU who said, we can anticipate actions, we can anticipate media stories, we can spin shit before it gets spun for us on Twitter, and we'll pretend to be open, we'll pretend to be engaged in Western commerce. And we have this the bottom line is the GRU, the Mossad, the Chinese security apparatus, could in any of their wildest dreams invented a espionage vehicle called Twitter and Facebook. Yep. This is the GRU trying to figure out a way to better leverage that security apparatus internally or domestically. Kara Swisher · 36:59 The balmy stuff. I think they're Scott Galloway · 37:01 just I think that's right. Speaker · 37:02 It's just a Kara Swisher · 37:02 way to do it without doing it. Scott Galloway · 37:03 Haven't thought of that. I think that's smart. Kara Swisher · 37:05 So is it gonna affect Twitter? Do you think this will this will happen with with countries if it works all over the world, presumably? Oh, they already do. They already... Mostly people turn it off. Most countries block it or turn it off in some way instead of something like this, the slowdown. Scott Galloway · 37:21 I I don't think... I I can't imagine. I would have bet they're getting less than 1% of their revenue out of out of Russia. So I don't think it's a... It's interesting just theoretically and what happens to the service and and how they're, you know, how they're exploiting social media. And social media executives have not shown a concern for how their platforms are exploited by bad actors to the detriment of the government and the nation that's given them so much that they don't, you know, they don't really appreciate or my opinion. Anyway, so I don't I don't think this is a I don't I don't think this is a big deal. Twitter's bigger issue is that Square continues to innovate like a bat out of innovation hell. Did you just see Cash App is like on fire, and yet Twitter continues to push out stuff at about onenine the velocity of Square, which is exactly correlated to the fact that Jack Dorsey's wealth is nine x at Square versus it. Literally, the product development and innovation at Twitter is one ninth what it is at Square Kara Swisher · 38:27 directly Twitter. Scott Galloway · 38:28 I can Kara Swisher · 38:28 honestly there. You think they're still, like, slow as molasses? Scott Galloway · 38:32 Well, it's gone from it's gone from awful to bad, so I'll give them that. But but look, seriously, look at the product innovation at the place where Olive Dorsey's wealth is. It's staggering. The Cash App, they've come in and they've kicked they've kicked Venmo's ass. Yeah. And they're doing Cash App for business. They're doing... They're trading now in crypto. Yeah. Anyways, I got off I got off point here, but I don't... I think back to Russia and Twitter, this is a GRU move. And, you know, what we do Kara Swisher · 39:06 Information based. Information need based is that they're doing it. Claire, they're not doing it to help people. Let's just be clear. Russia does nothing to help people. That's not love to do things to hurt people. In any case, it's a really interesting story, and thank you for the great question. Scott Galloway · 39:20 Great question. Kara Swisher · 39:21 Got one more quick break. We'll be back for predictions. Chronic migraine: 15 or more headache days a month, each lasting four hours or more, can make me feel like a spectator in my own life. [Ad break] Speaker · 39:45 Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection, causing serious symptoms. Alert your doctor right away as difficulty swallowing, speaking, breathing, eye problems, or muscle weakness can be signs of a life threatening condition. Patients with these conditions before injection are at highest risk. Side effects may include allergic reactions, neck and injection site pain, fatigue, and headache. Allergic reactions can include rash, welts, asthma symptoms, and dizziness. Don't receive Botox if there's a skin infection. Tell your doctor your medical history, muscle or nerve conditions, including ALS Lou Gehrig's disease, myasthenia gravis or Lambert Eaton syndrome, and medications, including botulinum toxins, as these may increase the risk of serious side effects. Kara Swisher · 40:21 Why wait? Ask your doctor, visit botoxchronicmigraine.com, or call 4 to learn more. [Ad break] — Predictions segment begins — Kara Swisher · 40:54 Okay, Scott. You had some great predictions last week about LG handset. I really like that. What's next? What's your next prediction? Scott Galloway · 41:02 Well, I I talked about this earlier in the week. I think the best value... There's so few stocks I like. I think everything's overvalued. We made this... I think Alibaba is a fantastic stock right now now that the overhang of this amount. So I think it's trading at like $2.20 or $2.40. I think it's 300 by the end of the year. Think on a risk adjusted basis, it's a fantastic a fantastic stock to own. Compass, we predicted this. Compass is a now a broken IPO, and I think it's in the single digits. Kara Swisher · 41:29 Yeah. Explain that. Explain that, that it's... That... Well, Compass is a broken IPO. Scott Galloway · 41:34 Well, it's sort of, you know, it's like your your bar, your bat mitzvah. Everybody remembers your reading from the Torah and how you did, and I don't know how I got got there with this. But an IPO is basically a moment. Kara Swisher · 41:45 Tangents this week, but go ahead. Scott Galloway · 41:46 Yeah. But it's... It... You only go public once. And it it... Basically, it's a moment where the whole world establishes your momentum. Mhmm. And they say, okay. That's why the pop is so important because it's like, oh, clearly, there's something here. Clearly, this is a stock that keeps going up, and everybody says... And the the direction feeds on itself. And that's what I just find so disingenuous about this notion that that Coinbase wasn't a broken IPO. Compass is now a broken IPO. It's below its offer price. And this is after, the thing about Compass, this is after they cut the valuation by a third and the number of shares available by 50%. So I think this thing has all the makings of a of a trade where the corners are collapsing. And I I think it's Kara Swisher · 42:29 about $18 went public. $18. Yep. Scott Galloway · 42:31 At 20, it's at 18. I think it's single digits. And I think on a risk adjusted basis, the best Internet or the best stock buy in the world right now is is Alibaba. Kara Swisher · 42:41 Yeah. Yeah. Started... Compass started at 20, I guess, '20? Scott Galloway · 42:45 That's right. Kara Swisher · 42:45 And now it's 18. And that was... Would you say Scott Galloway · 42:47 Well, I have another prediction. Can I Kara Swisher · 42:48 make that one? Go ahead. Yeah. Go for it. Scott Galloway · 42:50 So I had a conversation. I'm so blessed. I have these these really smart dudes and a few women, including yourself in my life that call me and say, you're all fucked up. You don't know what you're talking about. No problem. I get very upset, and then I learn from it, and I realize I'm blessed to have these people in my life. And one of those people is Roger McNamee. And I did a post on crypto, and he called me and he said, you're missing the bigger threat here. And I said, what do you mean? Kara Swisher · 43:14 He decided like this, Scott. Scott Galloway · 43:16 Scott, you're missing Kara Swisher · 43:17 He he talks slow. Scott Galloway · 43:18 He's so good. He goes he goes, first off, I read your post, and it's brilliant. [Ad break] Scott Galloway · 43:24 you can bring these points down to... He always starts with, a real, like, a wonderful comment. He's a very charming guy. Yeah. Anyways, and he said, look. And he really kinda blew my mind with this. He said, we need to have a talk about the security threat or the threat to our sovereignty that is cryptocurrencies. And that is maybe we want weaker sovereigns. But if you think about a nation, and I've been thinking about this a lot, it's really two things. It's the ability to tax, and it's the ability to impose violence, or specifically take aircraft carrier forces and deploy force in favor of your interests, which has led to a nation that has 5% of the population and 30% of our resources. Our contracts are enforced. People are scared to try and interrupt our supply chains. Our ability to leverage or deploy violence is an enormous asset for us, and it's funded by our ability to tax our citizens. And if you don't pay your taxes, again, more violence than a man with a gun shows up and puts you in a cage. And if with... Without the ability to do those two things Yeah. You're... You really don't have a nation. You have a protocol or a platform to use a a crypto term. And crypto is probably the greatest threat to those two sovereign assets. Kara Swisher · 44:40 Yep. The dollar. Scott Galloway · 44:41 If you look at ransomware, if you look at the ability to launder money, if you look at the ability to perhaps engage in tax evasion, if you look at the potential risk to the markets with extreme volatility or something that ends up being the... Like, something that makes Bernie Madoff look kind of cute and cuddly Yep. You know, it all kind of roads lead to crypto. And the problem is just as 92% of our elected representatives who are supposed to regulate big tech don't have a background in technology or engineering. I've always said my thought here is I understand crypto better than 99% of the population, and I do not understand crypto. So I can't even imagine how few of our elected representatives and our regulars actually understand Kara Swisher · 45:22 Yeah. It definitely needs to be addressed. Jan Mellon's gotta get on this. Scott Galloway · 45:26 So that's my prediction. My prediction is I think that there's not... Not only is there a new sheriff in town with Biden, there's about... There's a new sheriff that has 40 additional IQ points, and that is the people that Biden is surrounding himself with just in general are just much smarter. Kara Swisher · 45:44 Okay. Scott Galloway · 45:44 And I think that Janet Yellen and some of the people in the administration are gonna recognize that this is an existential threat, and we're gonna see Kara Swisher · 45:53 some I do too. Scott Galloway · 45:54 Decisions here. Because what you have with China, what we have with India, especially China, especially with Russia Kara Swisher · 46:00 Yeah. Scott Galloway · 46:00 They have a vested interest in ensuring or seeing if cryptocurrency can unseat the dollar as a default currency. Kara Swisher · 46:07 Peter Peter Thiel, he said it the other night. Remember? In the Nixon speech. Scott Galloway · 46:11 There's some truth to it. But, anyways, we're about to see... You know, everyone's talking about over... The SEC says we're gonna look at SPACs. Jesus Christ. Kara Swisher · 46:18 Look at Scott Galloway · 46:18 crypto for god's sake. And by the way, they might decide this is a healthy, robust component of capitalism. We're gonna let a thousand flowers bloom, but I want... I'd like to see really smart people Indeed. It's it's a terrible situation. Kara Swisher · 46:31 But maybe at the speed that they they regulated text, which is tech... Which is to say never, which is kind of interesting. Scott Galloway · 46:36 We'll see Kara Swisher · 46:37 where You we know, oddly enough, Roger Mcmee literally just texted me and said, oh my god, the umbrellas, you and Claire, are a continuing source of joy to me. I posted a picture of me and Claire with these umbrellas. Scott Galloway · 46:48 Good, isn't he? Kara Swisher · 46:49 I know. He just was, it just was funny. Scott Galloway · 46:51 Roger mentioned And you what he had with Roger? What? He might be wrong, but his heart's in the right place. He's literally doing He's all of this attacked because by Kara Swisher · 46:57 the by the Silicon Valley people because he's... They see him as a... They try to make fun. Scott Galloway · 47:01 A turncoat. Yeah. Kara Swisher · 47:02 They do. Try to make him look like a boob and stuff like that. It's Scott Galloway · 47:05 not fair. Yeah, but he's as close to an academic or the spirit of academia, which is to pursue the truth regardless of who it offends. He's not doing this for money. No. He's not talking his book. He's doing it because he thinks this is an existential threat He to our Kara Swisher · 47:18 found Jesus, as they say. Scott Galloway · 47:20 Yeah. Yeah. I'm a big fan Kara Swisher · 47:21 of Roger. Anyway, Roger, he's a big fan of yours. He agrees with you. Anyway. Alright, Scott. That's all the time we have. Don't forget, if you have a story in the news, if you wanna hear our opinion or submit your questions at... Do it at nymag.com/pivot. Scott, can you read us out and then take off on your fabulous — Predictions segment ends — Scott Galloway · 47:40 Today's show was produced by Rebecca Sinanis, Ernie and Todd, engineer of this episode. Thanks also to Hannah 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 wherever you listen to podcasts. If you like the show, please recommend it to a friend. Thanks for listening to Pivot from Vox Media. We'll be back next week for another breakdown of all things tech and business. The Swisher family invades the beach of Galloway. Kara Swisher · 48:03 Week. I'm coming. On down. I'm coming down. Scott Galloway · 48:06 That's right. You better lock up your Kara Swisher · 48:08 liquor, as I like to say. You're gonna look through all your things. There's gonna... There better not be a weird room. Someone actually said that to me. Scott Galloway · 48:15 They said, wonder if Kara Swisher · 48:16 Scott has a weird room at his Scott Galloway · 48:19 The weird room is called my house. Kara Swisher · 48:21 I know. But they said like a special room. Like a panic room? I... No. I think it was more like a dungeon. Scott Galloway · 48:26 Fairly boring at the Galloway episode. Kara Swisher · 48:27 Feel like it was a dungeon. I was like, I don't think he has a dungeon. I literally was... It was someone that is a credible person asked me this. I will be looking for that dungeon. Scott Galloway · 48:36 A WandaVision and playing with a puppy. That's the Kara Swisher · 48:38 weirdness Okay. We're very excited to come. We'll see you next week. [Ad break] Scott Galloway · 49:47 See store [Ad break]