Scott Galloway · 59:29
It has the three, the two, the one. Anyways, I just wanna acknowledge the point because when when he called me and told me this, I'm like, okay.
Kara Swisher · 59:34
So this is good. Android. Now I see.
Scott Galloway · 59:36
Thank you for Android, they they... This could be... The... In my opinion, the biggest increase in shareholder value that's fallow is a function of the friction between silos at different companies. The new CEO of Disney should have something called Disney plus plus, and you get Disney plus videos, you get free merchandise, You get the princess experience. And most importantly, when you come to the parks, it's on only Disney plus members days where there are no lines. And it would be the ultimate loyalty program. And Amazon, if they keep... If they added telco and a device into Amazon Prime, I think theoretically, it's worth, you know, it's worth a couple billion dollars to investigate.
Kara Swisher · 1:00:20
They don't do that. They don't do that often. You're right. They just... Like, here you go. Free. Here's... It's like it's like a a club. And you would do that with Amazon because they do deliver really well. They... The thing they do there...... Autonomous? Like The core stuff they do, they do really well.
Scott Galloway · 1:00:34
So But preloaded free Amazon music, free Amazon Zoox, or whatever their their their autonomous is.
Kara Swisher · 1:00:41
Those are cool. Zoox is cool.
Scott Galloway · 1:00:42
And just say, okay, folks, we're gonna take care of you. Amazon is arguably the most trusted brand in the world right now.
Kara Swisher · 1:00:49
Yeah. Kuiper. They could offer that for
Scott Galloway · 1:00:50
big And they say, alright. You don't need you don't need to trust us when you're in front of the TV screen or the computer screen. You should trust us as much when you're in front of the phone screen.
Kara Swisher · 1:00:59
The CEO... The the one person running that division, I'm supposed to meet with him. Anyway, one more quick break. We'll be back for predictions.
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— Predictions segment begins —
Kara Swisher · 1:02:48
Why wait? Ask your doctor, visit botoxchronicmigraine.com, or call 4 to learn more. Okay, Scott. Let's hear a prediction. I'm gonna say very quickly, just so you know, at the time of this taping, SpaceX is aiming to file its IPO within a week, and I predict I will not be asked on the board as you noted in the beginning. I predict that.
Scott Galloway · 1:03:12
People literally don't... If I was your financial... Your wealth adviser, and I kind of have been for the last few years Yeah. You have. But if I gotten a hold of you ten or fifteen years ago, I would have been like, tone down the anti Musk, anti big tech thing, and we're gonna make hundreds of millions of dollars on boards.
Kara Swisher · 1:03:28
I know. I know. I can't do what I just said No. I a can't joker as a terrible person. I can't help myself. That was a joke.
Scott Galloway · 1:03:34
You can't... You know when you text me mean things at two in the morning, it's not a good idea, and you can't help yourself.
Kara Swisher · 1:03:38
I can't. Mean. Some of them are very good.
Scott Galloway · 1:03:42
Can't help yourself.
Kara Swisher · 1:03:43
I get it. I can't.
Scott Galloway · 1:03:44
I can't. Can't. I know I shouldn't drink as much as I do.
Kara Swisher · 1:03:47
Speaking of I was right about these people, I was right. Anyway, your prediction, please.
Scott Galloway · 1:03:53
Okay. So what do we have here? OpenAI is in a five car alarm right now. In the last six months, they have... Oh, and by the way, this this fin... Have you seen the deals of this financing? To top off the round with, I think it's TPG, they are guaranteeing a 17 and a half percent return. What? Yeah. They're guaranteeing to top up the round in private equity. Deal is What's giving you? Along the lines of the following. It kinda makes industrial sense, but it's more of these circular related party deals. They're saying to these private equity firms, if you invest and top up my round, I'll give you... I'll guarantee you a 17 and a half percent return. Now the idea is it makes kind of industrial logic because all of these firms have massive... A massive portfolio company of of firms, which likely means they're going to encourage these firms to adopt at an enterprise level Oh, yeah. OpenAI products. So OpenAI goes immediately. We get
Kara Swisher · 1:04:56
Eat the dog food is what you're saying.
Scott Galloway · 1:04:58
Yeah. We get industrial scale here. And because we're going public and Sam Sam's bankers have probably said, distinct of the problems, you're gonna get x valuation, hundreds of billions or even possibly trillion dollar plus valuation. So he said to the private equity guys, I guarantee you a 17 and a half percent return on your money. The problem is a guarantee at the top of the capital stack means that the people underneath them, the investors, might get squeezed out if a decent amount of returns has to go to the top. But it is more of this kind of what I'll call shell game. And as long as things keep increasing, it's fine. But this is the kind of thing that could absolutely Yeah.
Kara Swisher · 1:05:40
That sounds
Scott Galloway · 1:05:41
brushed or trickled. If they don't people go
Kara Swisher · 1:05:42
like you, Scott. That's not... That's like a let me pay you to be my friend.
Scott Galloway · 1:05:46
Well, this is
Kara Swisher · 1:05:48
Don't like it.
Scott Galloway · 1:05:48
It's a really... That's the most interesting component of the deal is a... You never offer. I have never seen... It's a preferred return that aggregates. Just to put in invest in? I would I would want... For OpenAI, I feel that... What I would wanna do is the following of just being purely capitalist. I'd want allocation in the IPO because Sam is smart, and Sam and his bankers will say, Okay, the first trade of this is likely going to be $80, so let's price it at 50 so we can say we're the best performing IPO of
Kara Swisher · 1:06:20
the Yeah, can do those tricks. That's nothing new.
Scott Galloway · 1:06:22
It's a once in a lifetime branding event, the IPO. So the investment banks have an incentive because they get to buy shares at a discount. They get to give shares to their buddies and institutions at a discount. And the firm, a modest dilution, 3% to 5% dilution, gets a branding event that they're in the news for the rest of the year as the best performing of the year or a great performing IPO of the year. So they leave... Quite frankly
Kara Swisher · 1:06:45
SpaceX is gonna leave the
Scott Galloway · 1:06:46
money on the table, and it's yet another transfer of wealth from the lower middle class who don't have access to pre IPO or to the IPO.
Kara Swisher · 1:06:55
Don't you think SpaceX will leave them in the dust?
Scott Galloway · 1:06:57
SpaceX? In terms of an IPO?
Kara Swisher · 1:06:59
Yeah. That'll get all all stuff going.
Scott Galloway · 1:07:01
That'll all be about valuation because while SpaceX while SpaceX has the biggest moats in the history of business as far as I can tell, they're talking about a $1,500,000,000,000 valuation on 13,000,000,000 or 14,000,000,000 in... I mean, that's a 100 times revenue. So it's all about pricing. But anyway, so this this... Where I was headed is the following. It is a five car alarm, and Sam and his board are smart. They are focusing. First area of focus, Sora, we barely knew you. You're gone. The next area of focus, it won't be a headline item. It'll be euthanized slowly. It is IO, and that is the $6,500,000,000 acquisition of Johnny Ives' company to build hardware. This is the metaverse on a smaller level. This is... Mark Zuckerberg's consensual hallucination cost Meta shareholders 70,000,000,000. This is gonna cost 6,500,000,000 to OpenAI. It was an all stock transaction. But there is no way... If I am on the board and I am Sam Altman, and I'm like, okay, playtime's order. I am losing my core business to Anthropic. We need to focus that they're not gonna... They're gonna decide to not play in the traffic of hardware. So there's been delays, technical difficulty, unclear product definition, high cost.
Kara Swisher · 1:08:29
I think I'd buy the Amazon phone first, so that's a bad sign because I wouldn't buy the Amazon.
Scott Galloway · 1:08:33
Brutal category. And then if you look at what's going on here, persistent technical problems. All right?
Kara Swisher · 1:08:39
Yeah, of course.
Scott Galloway · 1:08:40
Compute constraints, always on AI reliability, privacy concerns, interaction without screens. Basically, this isn't... Right now, IO or the division of quote unquote open AI's hardware products, it's not just about execution risk. It's unsolved product physics.
Kara Swisher · 1:08:57
I love it.
Scott Galloway · 1:08:57
And the timeline the timeline keeps slipping. I've been tracking this originally Let
Kara Swisher · 1:09:02
me give you a piece of advice that I heard a long time ago. Hardware is hard.
Scott Galloway · 1:09:06
Well, was originally... Get this, Kara. It was originally expected around 2026, and now they're saying it's not shipping before 2027. Guess what? It's never gonna ship.
Kara Swisher · 1:09:15
Oh, alright. There's a prediction right there. Alright. We'll see what happens. Anyway, great job on your prediction. I like this new one. And by the way, next week, I just want people to know, speaking of predictions, Jeffrey Epstein's lawyer and accountant just told congress they were never interviewed as part of a formal federal investigation. We're gonna talk about this next week because we're not gonna let Epstein out of the news either. Trump is making all sorts of hand waving to... In order to pay it, but this to me was a malpractice on the part of federal investigators, any... You know, that they were not interviewed as part of a form... I mean, you you might talk to the lawyer and accountant, seems to me. They might they might know a few things. In any case, we'll see where that goes. We're gonna talk about it next week, so I wanna get that
— Predictions segment ends —
Scott Galloway · 1:09:55
back to So can I just have one addendum, the cloud and the silver lining of these Democratic wins?
Kara Swisher · 1:10:00
What?
Scott Galloway · 1:10:01
We need a Nancy... A speaker Pelosi like figure who understands how to tell the children what... Okay. The grown up is here. This is what you need to do. As good as things are for Democrats on a a senate and and on a congressional election level, We are about to snatch defeat from the jaws of victory. And while no one was looking, we're about to elect a president of the fourth largest economy who's gonna be a Republican. Because of the jungle voting construct in California.
Kara Swisher · 1:10:34
We'll talk about that Monday. Let's
Scott Galloway · 1:10:35
do that. Probably going to elect a Republican unless Democrats get their heads out of their asses.
Kara Swisher · 1:10:40
I'm I'm gonna start dropping
Scott Galloway · 1:10:42
it out.
Kara Swisher · 1:10:43
I'll do a little... I've been contacted by every one of those Democratic candidates and also Steve Hilton, who I know well. I haven't heard from Chad, the sheriff.
Scott Galloway · 1:10:50
Gavin Newsom and Chuck Schumer, you need to start promising these Democrats something and getting them out of the race.
Kara Swisher · 1:10:57
I literally Yeah. Of
Scott Galloway · 1:10:59
the race.
Kara Swisher · 1:11:00
They they also had to cancel a thing. They're... The whole thing is a fucking mess, and and it's suicidal. It's suicidal. It's really weird. And
Scott Galloway · 1:11:07
And by the way, governor Newsom, who I am a huge fan of, if you don't show some backroom dealing here and make sure that the next that your heir apparent isn't a Democrat, it's really gonna hurt your chances of getting the nomination.
Kara Swisher · 1:11:19
It is. Okay. Before we go, I just wanna say my brother Jeff, who is a friend of our pivot, had emergency surgery this week, heart surgery. He had a blocked... I don't know what. I'm gonna say it wrong, but he had to put... Have a stent put in, and it was because he he was on Kaiser or something like that, and he went on Medicare. And the internist said to him, you should check your calcium levels. Turned out he had 80 to 90% blockage. It's it's called the widow maker, the the the the issue. And he got it all cleaned out, and he's doing great. But one of the things he said for me to tell you is make sure you all check things like that and get a checkup. I just thank goodness that this didn't happen because he would have died of this very suddenly. So I wanted to give him a shout out in any case. That's the show. But thanks for listening to Pivot. Be sure to like and subscribe to our YouTube channel. We'll be back next week.
Scott Galloway · 1:12:11
Today's show is produced by Lara Nayman, Zoe Marcus, Taylor Griffin, and Brad Sylvester. Ernie or Todd engineered this episode. Manolo Moreno edited the video. Thanks also to Drew Bros, Musevedre, and Enceelon. Nishat Kurow has Vox Media's executive producer podcast. Make sure to follow Pivot on your favorite podcast platform. Thank you 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. Kara, have a great rest of the week.
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