Kara Swisher · 44:06
But I'd love to know... And people had that delusion then, just like you're calling the great startup delusion. Google was part of that too. Everyone was not unclear before they got the advertising business what it was. Amazon was sort of the poster child for that. And Netflix, you know, you could go through each of them one time. And there's... Listen. There's a lot of, like, pioneers along the way that are dead. Like, we forget all the ones that went down, like, Myspace and and etcetera etcetera. There were dozens and dozens of those. What is the great startup delusion today?
Guest · 44:34
So so two things. I mean, I I guess the the sort of the thing that points out one of the issues today is Amazon lost a cumulative something like $3,000,000,000 including the .com bust before it became profitable for a full year. WeWork lost that like last quarter. So and WeWork has, know, besides a blip in 2012, the second year of business, they they haven't been profitable ever. So I mean, just the scale of losses, kind of that that grow and grow is is Uber hasn't been profitable. Lyft hasn't been profitable. I mean, companies are really old now. They're they're over ten years
Kara Swisher · 45:05
old They have for Uber.
Guest · 45:06
So, you know, the the the scale of of profits is, I think number one. And then two is I I think like a thing that we really focused on for the book is is just this notion of of the the cult of the founder and founder control. And so it's one thing to just believe the Steve Jobsian, you know, Jeff Bezos concept of, like, these guys see better than the public markets and and the board of directors. You just gotta trust them and they're gonna do it. And that clearly does work for for some actual visionaries. But then what's happened in in venture capital is they've convinced themselves that that means you have to give the founder full control. Now Mhmm. It's modeled after Bezos and and Jobs. Neither of them had founder control. Bezos just owned 40% of the stock and and Jobs got fired.
Scott Galloway · 45:50
That's right.
Guest · 45:51
Yeah. Right? But so what's happened today is you you giving these these, you know, we say in the book something... It it... It's... When they give it to Adam, it was akin to giving a teenager the keys to the sports car with a tank full of gas. I mean, you're giving them billions of dollars and no ability to to say don't do that. And so that, like, stuff like this is gonna happen. There's gonna be other WeWorks where if it's not tequila and jets, it's gonna be like rum and yachts. And Mhmm. There... There's gonna be really big implosions if you just have this concept where where founders are immortal beings and you give them full control.
Scott Galloway · 46:26
Yeah. It really is peak founder, which takes me to another question. Has, Most importantly, has Rebecca Newman found enlightenment or opened another kindergarten? Are things working out for Rebecca? Because she strikes me as really likable. I'm really hoping things work out for Rebecca Newman.
Kara Swisher · 46:44
Once again, it's not Cheryl's fault as much as Mark's, but let's Yeah,
Scott Galloway · 46:47
I don't know. Adam, he's got great hair,
Guest · 46:50
Karen.
Scott Galloway · 46:50
He just
Kara Swisher · 46:50
loves his hair. Great. He's love with his hair.
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Scott Galloway · 46:52
way, I interviewed him on stage at JP Morgan conference. And after the interview, I thought, wow, that went really well. And Jamie Dimon, who I kind of admire, he's tall and he's dreamy and he's very rich. And he came on stage and he caught... He grabbed my... You know, we met eyes and I thought, oh my god, Jamie Dimon loves me. He practically ran my ass over to get to Adam Neumann. I mean, he literally practically started French kissing Adam Neumann. I just couldn't get over the relationship these two had. So this is my real question here is like, what is going on with them? Are they the Jared and Ivanka of of Amagansett? Like, where are they now? What's their viewpoint? Do their employees hate them? Like, what what is up with the Newmans?
Kara Swisher · 47:33
What what what are they doing? Yes. Besides a reality show soon enough, I'm sure.
Guest · 47:37
But the Newmans are in Amagansett. My... I have a friend who drove by, the other day and just, like, champagne
Scott Galloway · 47:44
with women. Is he down to that? I'm sorry. Go ahead. I'm sorry.
Guest · 47:48
Saw him holding a pizza a lot of kids. That's right. They have a new kid, so they have six kids now.
Kara Swisher · 47:53
Yeah. They moved.
Guest · 47:53
And he just bought a $40,000,000 house in Miami, which, I would note has... If you live there over six months of the year, has has no capital gains tax, and he just has a Maybe no tax. Has a huge capital gains bill.
Scott Galloway · 48:05
There we go. What a surprise.
Guest · 48:07
They sold some of their property. There there... She bought this...
Scott Galloway · 48:10
The white supremacist. Governance. He's had it.
Kara Swisher · 48:14
He's had it. Yeah. Anyway... Alright. So so he's fine. He's doing fine. Yeah.
Guest · 48:20
He's on the picture. Doing fine. I mean, he wants to... He wants a second act. We don't really know what it is. He told people like, oh, I wanna do something in in the future of living. But then that seemed fizzle.
Kara Swisher · 48:28
Oh, no. He'll be fine.
Guest · 48:29
I'm sure he will be that.
Kara Swisher · 48:30
Did he talk to you for this
Guest · 48:31
quote? Did he talk to you? We we talked before. We we... Wasn't for lack of trying on our part. But Yeah. He he... We we talked with his PR person some, but not much.
Scott Galloway · 48:40
Yeah. And Tonya, it's a shame because he is very good looking, Elliot. It is really
Guest · 48:45
nice to be reason the hair is so, amazing is because, he had a hairdresser that would follow him around. And as with the surf coach see. As with, like, the family of the surf coach, as with the school teachers that they employed, for WeWork to go then educate their own children, the surf coach's children. So, you know, the hairdresser was in the entourage.
Kara Swisher · 49:05
I'm so glad we all got him. Boy, did that... You know, this reminds me at the end of the whole AOL Time Warner debacle, someone who was at, Time Warner was like, you know, when they shoved them all out, Bob Pittman, Steve Case, everyone else. And they're like, oh, Carol, we got them. I'm like, Steve Case owns half of Hawaii. Everyone that you talk about has hundreds of millions of dollars and your stock is in the toilet. I'm like, nice job getting them. We're gonna be Don't get
Scott Galloway · 49:30
these people. You, we're gonna be at the business school riding. We do courses on negotiation, which is largely for faculty who don't want any accountability. And so they come up with stupid classes that there's no output or measurable output. But anyways, we'll be doing case studies. This individual figured out a way to get a 20% commission on losing $11,000,000,000 That's never been pulled off in history. You could argue that he is the greatest negotiator in history and we can learn a lot from kind of understanding the attributes.
Kara Swisher · 49:57
Oh my god. He's... We shall not.
Guest · 50:00
One of the ironies is when he was CEO using WeWork's money, he did all these acquisitions at these really high valuations that just were sold for peanuts. And so it's like he's kind of the world's worst negotiator. The Wave company.
Kara Swisher · 50:14
Except for...
Scott Galloway · 50:14
The Wave company? That's my favorite. This... The Wave Company.
Kara Swisher · 50:17
There's a whole bunch. I remember when they came to that to me, and I was like, what? Like, what? What? I remember saying what several times. Anyway, Elliot Brown is... Has great hair, and he is the coauthor of The Cult of We, We Work, Adam Neumann, and The Great Startup Delusion. You should read it. It's a great book. Elliot, thank you so much.
Scott Galloway · 50:36
Thank you so much. Very likable.
Kara Swisher · 50:39
Yes, Scott. I think he was. I thought
Scott Galloway · 50:40
he likable. Very likable guy.
Kara Swisher · 50:42
He credited you in the book. That's all you need to know.
Scott Galloway · 50:45
What a thrill. Alright. Thrill.
Kara Swisher · 50:47
One more quick break. We'll be back for wins and fails.
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— Predictions segment begins —
Kara Swisher · 51:45
Okay, Scott. Wins and fails quickly.
Scott Galloway · 51:48
Okay. My win is, the women's water polo team who, could be best described as total badasses. They dominated Japan. They had a physical but great victory against China. And also there is really a lot of inspiration at the Olympics, especially around age. We have a 57 year old table tennis star, Ni Shilan, who is on the team. Also, there is an 11 year old that qualified to serve on the table tennis Republic's team. There's a 57 year old and a 66 year old who qualified for the equestrian teams. And other sports, Jake Gibb, oldest man, an Olympic beach volleyball at 45, also a cancer survivor. Sue Bird, who's going for a fifth women's basketball gold medal
Kara Swisher · 52:43
Megan's at the age of 40
Scott Galloway · 52:46
married? I didn't know that.
Kara Swisher · 52:47
I think they're married.
Scott Galloway · 52:48
And the Evergreen 46 year old gymnast Oksana Chutsabinete, got that one right, will also be at the Olympic Games. So I think anyways, I wanted to give some shout outs to some amazing Thank
Kara Swisher · 52:59
trashing the Olympics.
Scott Galloway · 53:01
And then my loss or my fail is, this is a trivia question. How well do you know Scott? Because you claim we're friends, you tell people we're friends, but you really don't invest don't in our we're
Kara Swisher · 53:09
friends, but okay.
Scott Galloway · 53:09
Yeah, you do. I've heard you do. Anyways. I don't. Anyways, so what do the following organizations all have in common? Okay, the student body at University High School, Stanford, Duke, Kellogg, University of Indiana, University of Texas, Wharton, and now the Soho House. What... Oh, and the Ocean Club in Florida. What do all of these organizations have in common?
Kara Swisher · 53:36
I don't know. Did Scott Payg... Do you go there? I
Scott Galloway · 53:39
don't know. Okay. I applied for membership
Kara Swisher · 53:42
Okay.
Scott Galloway · 53:43
All of these. I either applied to college there or I applied to be a member and I was rejected by all of them.
Kara Swisher · 53:47
Wow. You got you got rejected by the Soho Club?
Scott Galloway · 53:50
Soho House. Oh, I I I applied like six months ago thinking, oh, they're going public, which means they'll let in anybody. I was wrong. I was wrong. I haven't
Kara Swisher · 53:58
gotten get you in?
Scott Galloway · 53:59
I have to call. I declined. My friends, I'll say that. I don't want any friend I
Kara Swisher · 54:03
know to be office. They couldn't believe it once
Scott Galloway · 54:05
I know. Everybody wants care of blah blah blah.
Kara Swisher · 54:07
Anyways did, and I said no, and I I wouldn't use it. But why why don't you why don't you call Brooke Hammerling and get in the San Vicente one, the one in LA?
Scott Galloway · 54:14
That's I'm fine. Get... I I wear it like a badge of honor. I am fine being
Kara Swisher · 54:18
rejected by places. What what what... Stanford? I was also rejected by Stanford. What else?
Scott Galloway · 54:22
Stanford, Wharton, University of Indiana. That hurts.
Kara Swisher · 54:24
I didn't apply to either
Scott Galloway · 54:25
of them. University of Texas, Wharton, Kellogg, Duke. Oh, got rejected by Duke. Forgot about that. I ran for five different student body offices in high school and lost them all. Sophomore, junior, senior class president, then the Soho House. That one kind of hurts. Wow. Anyways, but my loss.
Kara Swisher · 54:41
They do let everyone in. They
Scott Galloway · 54:43
do let everyone in. My loss. What
Kara Swisher · 54:45
did do?
Scott Galloway · 54:46
It's what I didn't do. I don't know, 56 year old boring straight white guy. It's not like I'm everyone's list for who we need more of.
Kara Swisher · 54:52
I'm gonna find out what the situation is.
Scott Galloway · 54:54
Erectile dysfunction is not a protected ailment yet. Anyway. So, okay. The company that owns SOHOUS went public. My loss is they're trading at about a $2,500,000,000 valuation. I got 2,000,000,000 in debt, 30 properties. So as far as I can tell, they're valuing every which is essentially kind of a really nice restaurant and it's a good business model. And I think they do a great job. I go a lot and I love it there. I go to the one in Miami. I obviously have to go with a guest because I'm a member because I'm not a member. I think they do a great job. But this is an example of a frothy market. This company should not be a public company. And their record, there's only one year they were profitable. I think
Kara Swisher · 55:32
it's like IHOP for rich people, but go ahead.
Scott Galloway · 55:35
No, IHOP's an amazing business.
Kara Swisher · 55:36
That's true.
Scott Galloway · 55:37
It's an amazing business. SoHaus, its record profitability was in 2018, they did 15,000,000 in EBITDA. This thing has somewhere between 3 and 5,000,000,000 enterprise value. This thing is just so ridiculously overvalued. It's perfect example, I think, of froth in the market.
Kara Swisher · 55:53
And it's not the rejection speaking, right? Let's stress Oh,
Scott Galloway · 55:56
a little bit. A bit. But I'm used to that. How much
Kara Swisher · 56:00
it cost to get in?
Scott Galloway · 56:01
I think it's like $3,000 or $3,500 a year, something like that. Anyways, high relative debt, lack of near term profitability, historical lack of profitability. This thing just makes no sense as a public company. And right now it's trading at a valuation of a fairly decent hotel chain. So anyways, my loss is not even that all of these organizations have rejected the dog. That's just common sense. I get that. I empathize with that. But as a public stock, and this is really more of a prediction, this thing is not gonna hold its value. It just makes no sense.
Kara Swisher · 56:35
Think I would tend to agree with you, although they should let you in. You know what I mean?
Scott Galloway · 56:38
Right. I typic, I'm a better version of me drunk. They haven't seen me drunk. Me just
Kara Swisher · 56:43
tell you, there's a lot of people in there that are...
Scott Galloway · 56:45
Even less impressive than the dogs.
Kara Swisher · 56:47
Yes. Yes. That's how I would put it. No, they've
Scott Galloway · 56:50
rejected me. Haven't gotten in. Haven't gotten in.
Kara Swisher · 56:52
Goodness sake. All right. Well, anyway, I'm going to do a very quick win and fail. Same thing. Sarah Huckabee Sanders, did an op ed in the in the Arkansas paper. She's a gubernatorial candidate there. She said she had been vaccinated against coronavirus and urged others to do the same. At the same time, she, of course, had to call it about the Trump vaccine and she had to then say, you should do what you want, which I didn't love. So whatever. Like, it's... It was a twisted piece, I have to say. But nonetheless, if it's... As as George Conway says, if it saves lives, then I'm happy about it. That's fine. Okay, Scott. That's the show. We'll be back on Friday for more. Go to nymag.com/pivot to submit your questions for the pivot podcast. The link is also in our show notes. Read us out, Scott.
— Predictions segment ends —
Scott Galloway · 57:35
Today's show is produced by Lara Naaman and Evan Engel. Ernie Androtot engineered this episode. Thanks also to 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 later this week for another breakdown of all things tech and business. I can't think of anything more Jesus like or more American than letting people love who they wanna love. We need to reject this bullshit where we go after people and shame them for loving who they wanna love.
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Scott Galloway · 59:05
tomorrow
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