Kara Swisher · 39:29
Services when they invest in companies whose sole purpose is to automate human jobs? That's a big question. That is an interesting It's an interesting line of questioning.
Guest · 39:37
That's a very interesting question.
Kara Swisher · 39:38
Test the robots.
Guest · 39:39
And again, you won't be surprised when I say that my answer is is no to that. So not in a direct way. So one could argue that companies may need to become more responsible participants in the societies from which they profit. You know, becoming that more responsible participant may incur costs for that company, that cost will reduce the returns. Inherently, the VCs are the shareholders in those companies, and therefore will, you know, pay that tax by virtue of having their returns reduced. And so all of the focus on correcting the consequences should be on the companies and the boards that have fiduciary duties to the shareholders and to the communities.
Scott Galloway · 40:22
In late nineteen ninety nine, I started an e commerce incubator in New York and it was funded by Maveron, JPMorgan, and Goldman Sachs. And we took funding in December 1999. So I just want to say I'm sorry, Rana, that didn't end well. That didn't end well. But that's neither here nor there. So do you
Kara Swisher · 40:42
It's not neither. It is neither.
Scott Galloway · 40:44
Venture capital returns, it seems to me are largely a function of, well, deal flow and where you invest in terms of where in the cycle. Do you worry that you could be outstanding at what you do and we're and we're in a this trope where that it seems to me private market valuations are just crazy. Are you worried that you're going to overpay? Is this the wrong time? Venture firms are closing on record funds, valuations are sky high. Isn't it... It... Isn't this just the wrong... Are you worried about valuations and where you're entering the cycle, if you will?
Guest · 41:18
I always have a very healthy paranoia about overpaying and what that'll do to to returns. And so, yes. But I'll also add, I think there's a third pillar to what makes venture successful, and that is the ability of the underlying investor to really have a differentiated view of the sector or the industry in which they are investing. And so expertise is more likely to survive those kind of cycles than investors who are who are generalists.
Scott Galloway · 41:47
Mhmm.
Kara Swisher · 41:47
Alright. Rona, this is so great. Such a fantastic conversation. I really appreciate it, and good luck with
Guest · 41:53
your new job. Thank you so much.
Kara Swisher · 41:54
Good luck.
Guest · 41:54
Have a great day.
Kara Swisher · 41:54
Job. Alright. Thanks a lot. Okay. Now it's time for listener mail. First, we have a video question. Let's watch.
Speaker · 42:01
Jungle cat and big dog, huge fan here coming to you from Los Angeles. My question, though, is about global expansion. Do we see today's new generation of innovation... Innovators and big companies narrowing their focus to US markets or European markets and avoiding the emerging markets like Latin America, where I do most of my business, because of the combined effect of the pandemic and the protectionist kinda nativist politics that's going on in The US, in Brazil, and in Mexico. Really curious your thoughts.
Kara Swisher · 42:31
Oh, it's a great quest... That is a great question.
Scott Galloway · 42:35
Carol, what are your thoughts?
Kara Swisher · 42:36
Well, I do think that we are getting to this splinter net, this idea of where it is. I think the pandemic is gonna accelerate it. I think there's gonna be less aggressive investing worldwide, you know, until this is solved. Obviously, things change after that. But, you know, it was already so Silicon Valley centric for people in Silicon Valley and a lot of the venture capitalists there, and they still have a bulk of the money no matter how you slice it. There have been good signs of, you know, venture capitalists, local venture capitalists in each of these markets. And I think that's how it has to happen. There has to be great venture capitalists in Europe like, Rana or or or in Latin America. I don't think it's gonna come from, this country. And I I think China at this point is out of the picture for a lot of a lot of companies were were opening, venture. Money was going there. Innovators were staying there. But if you're a Chinese company, you're you're not... It's... You you put yourself in harm's way, at least right now, and especially if Trump wins for a lot of problems, I think it's not helping... None none of this native stuff is helping innovation at all whatsoever. Scott?
Scott Galloway · 43:40
Yeah. Was interested in what Rana said about she still still sees as the center of, capital formation is The United States. I've always felt that that the best investment you can make in innovation is kind of K through 12. And that is people still typically, people with options, people who are investors or entrepreneurs are people who usually have more options than your average bear. And number one in their selection criteria, I don't even think is money typically, it's quality of life. And if you look at the centers of innovation, they typically are a couple things. One, they're a bike ride from a world class engineering university, I still think higher ed is the secret sauce is the ground zero if you within a bike ride of Stanford, there was more wealth created from '92 to '99 in all of Europe since World War Two. And the second is investing in society, investing in accommodative man, investing in public education, investing in infrastructure, investing in a tax system and a healthcare system that works. And that's the biggest threat to us is at some point, San Francisco becomes such a dystopia that regardless of the money, people just don't wanna live there. So an investment in schools is an investment in innovation. I'm still very bullish on Europe and The US because I still think they're the best places in the world to live. Mhmm.
Kara Swisher · 44:55
Okay. Alright. So then I I I... It's a really great question. We really appreciate it, Rob, from California. Now audience questions here. Which tech company will lead the revolution in telemedicine and health care? Let me say, I've been around the block so many times with Google and others, China, Microsoft, Vault, there was like a million things, and they all sort of... It never happened. Like... And Apple certainly is is very active, and they they would be at the forefront of this because they've got the the phone and the devices and things like that. And Google also, but they seem to have pulled back under Sundar Pichai. We can ask him that when he's here, on our show. What do you where do you think? Who do you think the player? Amazon is the one we talk about all the time that could be a really big player in in healthcare.
Scott Galloway · 45:42
So unfortunately, it won't be there'll be small companies that'll make a lot of money as acquisitions, but the companies that will are most likely to dominate healthcare as they are any other sector where there's margin and shareholder value creation because of a neutered DOD and FTC is big tech. So let's go through each of them. Off, Facebook, not possible. No one's gonna tell Facebook they have diabetes or an STD. They're off. Apple is largely, in my opinion, overrated as a healthcare company. I think it's more show and utility and branding than it actually is data sets that will help them in real healthcare. Google has the culture, the greatest concentration of IQ since NASA in the 60s is at Google. But unfortunately, their healthcare has been more moonshot, things like cure death. And I think when an adult showed up, Ruth Porat, she focused them and probably took them I don't want say off the table in healthcare, but I think there'll be a provider of tools as opposed in the business. The fastest growing healthcare company in the world will be Amazon. Amazon, vis a vis Prime and Alexa, they know your body mass index, the food you eat, whether you're in a monogamous relationship, your economics, your zip code, all the indicators and signals of disease and morbidity. And they have they will have the ultimate actuarial data set. And what they're really good at is sitting on top of a data set and deciding which businesses to insource I. E. High margin businesses like dermatology, or insurance or diagnostics, and which shitty businesses to outsource I. E. Pediatrics, and they'll just let pediatricians on their platform and take a cut of it. So get ready to come home and have Alexa say, hi, Rob, are you interested in cutting your healthcare costs by 50%? Say, Alexa, tell me more about healthcare, fastest growing healthcare company in the world by 2020, 2023, 2024 will be Amazon.
Kara Swisher · 47:29
What about any of the actual health care companies? Do you see like an Anthem or or, any of the others or not at all? Can they can they innovate their way in here the way Hollywood has done a relatively good job finally moving into streaming and entertainment, stuff like that.
Scott Galloway · 47:46
I don't know. I don't know much about health care, but my sense of these guys is that they have so they have such incredible... It's the ultimate innovator's dilemma. They have so much vested interest vested interest in maintaining the status quo that their best people are primarily weapons of mass entrenchment, lobbying. To a certain extent, COVID-nineteen will create more innovation in healthcare because all of a sudden, the government has demanded certain levels of HIPAA compliance and torn down barriers such that we could deliver medicine remotely. And that was over the objections of the healthcare industry that has a vested interest in what is one of the most efficient deliveries of one of the most important services in the world, US healthcare, that has resulted in incredibly negative externalities for our society. So I think they're going be more focused on delay and obfuscation than they will be on innovation.
Kara Swisher · 48:32
Alright. Okay. Very quickly. We're going running over. So let's get these questions quickly. How long until the Internet is considered a right necessary like other public utilities? I just talked about this today with someone. I I I... They want... They wanna behave like public utilities, but not have any of the laws that govern public utilities. And there is a big question whether Internet access and other things should be a right and not, something that you have to just pay for, and some people get them and some not. I think this educational problem we're having with kids from remotely just shows that completely. Everyone should have robust Internet access, and it should be, done like a utility. Scott?
Scott Galloway · 49:09
Yeah. I agree with you. The first line of defense when we want to break these guys up is you need natural monopolies that have the size and girth to offer the incredible, you know, to make the kind of investments they need to make. And what that spells is utility. So they want to be, they want to have the power of utility. They just don't want the regulation. But to your point, Kara, think you're right. I think they need to be treated more like utilities. And then this massive investment in five gs, I don't know, that'll be super interesting whether that we see the same spillover effects we saw from DARP and all that good stuff.
Kara Swisher · 49:41
A 100%. Last last very quick question. How could Twitter and TikTok merger compete with the likes of Facebook, Instagram, and even YouTube? It's not gonna happen. So you're not gonna see that. Correct, Scott?
Scott Galloway · 49:54
I originally Maybe you will. I originally kept so excited about this because when you think about it, it's kinda... It would be the ultimate gangster move for Xi or for the Chinese because, alright, Trump says you have to sell to an American company, and they say... And I I think they're just gonna stick up the middle finger and nod and just wait till the election and then do whatever they want. But say they decided, okay, we need to sell to an American company. The ultimate jujitsu move here was to sell to Twitter because Twitter at $28,000,000,000 evaluation of TikTok 40 to 50, that means effectively TikTok has acquired an American company. And that just would have been such an interesting gymnastic move to say, fine, you want us to be acquired by a US company, fine, we'll end up buying a US company, I. Twitter. And it would have in some ways been elegant because you would have Like
Kara Swisher · 50:38
the AOL time hard work.
Scott Galloway · 50:39
That's exactly right. And then Vanessa Pappas would have been Twitter needs a full time CEO. I get the sense that Ms. Pappas is a really competent leader. And two, they need a strategy Mhmm. And they need product innovation. So it would have been elegant. I don't think it's gonna happen, but it was kinda... My mind was blown when I thought about how how a man bite Yeah.
— Predictions segment begins —
Kara Swisher · 50:58
Exactly. Twitter has stuck its thumb in the eye of its best customer, recently, president Trump. Anyway, one more thing we have to do before we wrap up today's show is Scott and a surprise guest to make predictions. Okay. Let's go to that. Professor Gallery, before you make your prediction, I have asked a special guest and a good friend of mine to... And who... To send in her prediction. Let's play it.
Guest · 51:24
Recognizing that we're all totally overwhelmed by tech, Karen Scott are gonna radically pivot, and their next generation of entrepreneurs are gonna join them in destroying all physical tech and using all of the items that they can gather from it as repurposed. So one's gonna be a Macrame artist who's weaving cords and wires into wearable pieces. The next is taking keyboard keys and doing mosaics to make tables that we can live within our COVID houses. The third is gonna be taking all the collective precious metals like, aluminum and copper and gold and melting them down to make a new kind of post Bitcoin coin, a coin coin actually, and pieces of jewelry.
Kara Swisher · 51:56
That's that's Susan Cryer. Suzanne Cryer, who's a good friend of mine. And she is... She played Laurie Bream on HBO's Silicon Valley. She... It was literally the best character on that show. It was a venture capitalist. It was an amalgam of every venture capitalist I've ever met, and she's terrific. So, Scott, anything to add? Please make your... Last week, Kathy Griffin. Now we have, Suzanne, which was great, Cryer. What do you... What is your prediction? Very quick because we have to go.
Scott Galloway · 52:22
We made our first prediction. Trump, she will play Trump, tell me he's handsome, and he will brag that they're making progress. And as a function of that extending the deadline on banning Tik Tok when he realizes that he doesn't control the studio audience here and he's made another stupid strategic move. Nothing happens. It's a lot of fun for the media, but basically, they just wait and and, there's no acquisition, and we wait till the election, and then we see what happens.
Kara Swisher · 52:49
What do you think will happen to Biden? You have to follow that up. Do you have any thoughts? He's got a
Scott Galloway · 52:53
drop I I just don't... Look. You know what you could see? Here's another prediction. China takes a medium sized company, not Apple, and says, okay. Not... I'm not even Starbucks. We've decided you need to sell to a Chinese company. I mean, the Chinese are now carrying a bigger stick than us. That's what we just don't realize. We have, I mean, we are just as dependent upon them as they are on us. Granted, we're a consumer economy with a customer, but they're the supplier. And they can start making noises to it. The worst mistake you can make in strategy is that you assume you are punching a speeding bag. Got into boxing, I was amazing on the speeding bag, I entered a boxing tournament, I got knocked out. And the reason my nose bends right is because I was under the impression that my competition wouldn't hit back. And this is the fundamental error and strategy and geopolitical strategy is you assume your competitor cannot hit back. The Chinese can hit back and they have fists of stone right now and we have fists of Trump. Guess who gets the shit beaten out of them?
Kara Swisher · 53:48
That was good. All right then.
Scott Galloway · 53:50
That was good. The dog is back. Capital d. Capital d. Sign us out.
— Predictions segment ends —
Kara Swisher · 53:56
Thanks so much to everyone who's been joining us live for pivot school. And don't forget that our last episode is this Wednesday, September 2 at 10AM Pacific, 1PM Eastern. We'll be talking about education and the recovery with the president of Howard University, Doctor. Wayne Frederick, and the superintendent of the Los Angeles Unified School District, Austin Buettner. Get your tickets now at pivotschool.com. You can also shop pivot school swag at pivotschool.com/shop. Thanks again for listening, and see you on Wednesday.
