this episode is brought to you by progressive. What would you do it with an extra $800? Buy a plane ticket, Pay down your student loans. Treat yourself to those shoes you been eyeing with progressive, you could find out drivers who switch and save save an average of $796 on car insurance. Get your quote online at progressive dot com and see how much you could be saving national average annual car insurance savings by new customers surveyed who saved with progressive in 2019. Hi, everyone. This is Pivot from the Box Media Podcast Network. I'm Cara Swisher.

This is Scott

Galloway. Happy Valentine's Day. Scott. Hi de

Hi. I was wondering if I don't. I

was learning. I bought nothing. I want you nothing whatsoever. Although my son did an amazing thing for his girlfriend, I can't talk about right now. He's bringing it to her like my son is the best. How Valentine's Day first girlfriend. But I did not. I was thinking I made no effort for you, but here

we are. Okay, so I've bought you a Valentine's card, and the only problem was, I ran out of space riding on the front in the back, and I had to buy another card letters. That's right. I just ran out of a little right, articulating the ways that I appreciated. Love the jungle cat. That's right. I think this is literally one of the worst holidays in the world. That's all this is, is downside. This is literally just a series of disappointment. It's like No, no,

no, don't do anything. We don't want to do anything. It's not important And then you don't actually don't do anything, Boy, are you in? I

think we're no holiday. I don't know. I don't like the whole thing. I don't think there was a devastating piece in speaking of ah, sort of dating and stuff like that in The New York Times. They did a video about a woman in China and who didn't want to get married. And they're called leftover women. I mean, the whole thing, all the little romance stuff is really disturbing to a lot of people. Um, listen me? You were in New Orleans.

I waas. So I've officially become an old man. I was speaking down there, and I thought, you know, I'm going to take the day and I'm gonna do a self guided tour. The Garden district. Go see the World War Two museum. I'm literally 105 and I had a fantastic time. It's a wonderful place and I've decided that Louis, your son is going to go to tell Elaine and me. James, Carvell and Louis are gonna start the world's worst fraternity and people come over, people come over. Jim will be like it's about private power.

We have a month out. Professor

Galba is gonna mix us all up some mint

juleps. Let's not count a lawyer before would have either of you. They is not. Actually, that would be funny. That would be somewhat funny. Would be good. And so

few people you can mock. Now he's a seven year old white man that went to L S U. So I could like him. I can add.

He's saying some things. He's getting some notice suddenly popped up like a gangster. That guy talked about not honey badger. Don't give us

his analogy. No sense, but they sound so powerful you don't own a hush puppy is at a Waffle House. That makes no sense but he sounds smart. It sounds

Course you know, whatthe decision, but he I liked. He's he's into

Lane, so well, it's a land. Okay? Your son is a wonderful cook. It is into it. I mean, Harlan's great food

sit here. No, it's called Non Arlen's

know Collins knowledge. And then, uh, and then a fantastic Delaine is ah, great baseball team in a great medical school, which is kind of a 12 punch.

Sure, Yeah, yeah, we'll see. We'll see. Let Louise makes his own decisions. I'd like to call him sometime way Louisiana, where Louie Louie. Listen, we have to talk about Amazon is, like, all over the news. I'm gonna give it to your account. A couple things. But first of all, Jeff Bezos bought the most expensive house in Los Angeles, which is Jack Warner's former state that was owned by David Geffen. Is the Warner told Jack Warner State. Secondly, it announced it was finally owes some taxes. It said it would pay $3 federal

income tax rate of point. Oh,

all right. And then thirdly you know, Jeff was all over the Oscars and and it's still making big, obviously, spending gonna be spending a lot of time in Los Angeles. Millions, many properties and then the jet. I decision one of them to stay. Ah, his fight with Trump over the the the Defense Department contract that Amazon lost to Microsoft, which it had one allegedly, um, and Trump put his thumb on the on the thing that's coming down this week. And then it's PR person. Jay Carney wrote a piece in the in the, um in The New York Times op ed page was sort of ah, PR ad for Amazon.

How, what a good set. You should take our goodness and shove it down your throat because we're so good. And then he had a meltdown on Twitter, which was somewhat when we're well, he had said that burning. He started with Bernie Sanders called to thank Jeff Bezos for the $15 I was like, You might want to point out the $15 wage Ah, minimum wage increase and it would be everyone was, except for the fact that they thought that Bernie Sanders pressure had been brought to bear there. And then he was denying it. And then he started insulting reporters for being Brooklyn hipsters. And then it just was it was untoward for a PR person. He should put the put the twitter down. Uh, it was very late at night so much or what was going on, but he just couldn't stop and started really

attacking. But we have experience with Aaron Tweets from reporters 11:30 p.m. You know what

text is? What I do. I didn't have to tweet it. You listen to me. So anyway, let's start with the Hollywood thing. So he's bought this thing. We don't use the charming little houses, but this is This is a big old I'm staying here in L. A. His his his girlfriend is from L. A, um, has a lot of businesses there, you know? Obviously he's moved his operations down there, It seems like,

and this this purchase, which was a massive purchase, we'll talk a little bit about streaming and what he's, you know, What do you think he's doing? Even though his burial businesses is retail up in, uh, up in, uh, up

in Seattle. So this was the Jack Warner estate. The most powerful man in Hollywood. Nine acres, nine acres in Beverly Hills and it's is so metaphorically rich. It's literally, you know, falling off the tree here, and that is the most powerful force now. And the most powerful individual in Hollywood Scene is a place that had someone of a mode from zeros and ones and processing power. Because of the culture of creativity and kind of the unique secret sauce it's enabled a region Los Angeles toe largely have a monopoly over a global industry, unlike any region's ability to master, Monopoly over the world may be the exception of San Francisco and processing power, which the entire world is. But you have now. Jeff Bezos is the most powerful man in Hollywood. And if you look at Amazon Prime video,

which came out, I think in 2011 and until then Netflix had had it all to themselves. It's it's really paying off of them because it looks on the face of it, like a $7 billion a year kind of a rational purchase. They haven't had a lot of Emmys. A lot of people have sort of mock the service. But there's such genius in this move care because the MPs, scores of the loyalty to people feel for e commerce companies or Internet service is its negative, with Internet service is its marginal with e commerce companies. But the MPs scores on streaming video service is is really huge because there's storytelling, it's emotional. And you think, Well, I love homeland, so I like showtime. Will I love game of Thrones. So I like HBO. And since they have launched Amazon Prime video, the renewal rates or the retention rates on their sass like prime program has gone from 70 to 92%. So look

very e do it more for delivery. You know it's a good deal. It's a good deal in terms of what you're whatever you're doing. What was interesting about this is besides, that is, there was We'll get to the taxes in a minute. But there was a great piece about actual Hominy taxes they actually pay. But one of things that was most interesting in it was the um, the retail business is not very good, and they're not very good Compared to other retail businesses, they're fine. They're like in the same margins, but they're AWS, and some of the entertainment stuff is much more possibility of being a bigger margin business. And, you know, it was It was fascinating that,

you know, this is where they moved when actually, their core businesses. One was very tight margins with very tight margins and and difficult, which they try to help out with technology. But it's still not. There aren't hanging the moon quite as much as people thought. So this is this move is critically important.

I think for them well, they're not my colleague. It anyway, you asked what the motor and is arguably the most impressive teacher in the world right now, has always said that Amazon is an e commerce companies on a cloud company. It's a disruption platform, and that is too great execution, unparalleled access to capital and very visionary, you know, discipline, strategy. They find categories ripe for disruption, and they use their flywheel effect to spend into that category. And if you look at it, if you look at video, if they could get an incremental 14% renewal rate on the 70 million households that have, um,

that translates to another couple just about $3 billion a year in incremental revenue with a sass like multiple, that's 10 or $15 billion in market capitalization. And then, if you look at the fact that prime users spend an average of $800 Maur and you look 12 12 12 million times 800 bucks, that's an incremental 10 billion. You sign a lower multiple toe that to the three. You're looking at 40 to $50 billion in a creation before you take into effect the flywheel of Amazon Media Group and Maur vendors on the platform. So it's just amazing this notion. I just can't I just can't wrap my head around. The notion that this entire industry of Hollywood and media and content literally the pride and joy in the kind of running commercial in an unbelievable juggernaut of an industry hundreds of billions of value cultural influence, like no other industry in the world, is being featuring Eyes is an accessory to sell incense and toilet paper. It's just, Yeah, I mean, just

my

mind is blown care

of. My mom is I told you about. My conversation will solve about this. I'm like you're selling toilet paper just FYI. It's like the old days when they were three. Beginning of TV was that, though, right? The sponsors were these toilet paper or whatever, whatever they were selling Pall Mall over. Whatever. What's interesting about this is Jeff's being in Hollywood. He seems to be enjoying it personally. I mean, there's there is fatal, fatal attraction to Hollywood, you know?

I mean, Sony and others, So could that be a problematic like as he starts to like, This house is very metaphorical, but boy, you sort of worry a little bit for him because so many other big companies have gone there and gotten there. You know,

where there was the Japanese in the eighties buying Columbia pictures and losing 75 cents on the dollar. Whether it was half my single buddies on some of them recently divorced in the nineties who got lucky it a well and thought they were geniuses and said, I know I'm gonna move to L. A. BioPort should be a movie producer and trying to sleep with actresses who then realized it lost half their net worth in like five years and then left. L. A. L. A is the land of broken dreams. For the most part, you know,

it's just not so What about this. He's well,

he's got. He's got the money to break a lot of dreams. I mean, have you? Basically, when you're a movie producer, it means one of two things. You're Jeff Bezos or your father is Larry Ellison. It's now become the playground for people who are willing to lose a ton of money because other than the real pros at this Disney, you know there are several presidents. It's a very difficult business. It is overinvested. It's like night clubs or restaurants or any other passion business. There's too much capital, which drives down returns. So all the all the good stuff is soaked up by a few players.

Speaking of money, Amazon has also caught in a war with the Trump administration when it lost their Jet I contract, which was a big giant contract with the Defense Department for Advanced Technologies, it was awarded to Microsoft. But Amazon is disputing that decision. Amazon has many other contracts with the federal government, but this was a big one. There was one with the CIA. Aws does, um So what What is this like? This will be they will decide whether they're going to stay. The deployment by Microsoft. Which one? The warden. But this think he's got a real up this week when Trump meddled in the Justice Department is that their whole narrative is trump medals, you know, as we meddled in Ukraine.

And now he meddled with with the with the Roger Stone case with his with his henchman Igor. I mean, Bill Bar, Um, and so you know, he's got a good narrative here of meddlesome, and the government is trying to say it's because of national security. They've got a rush when in fact it was the government, especially Trump, who slowed down the whole process. So it's an interesting thing. I think he's being super aggressive with this lawsuit. It's linked to the Washington Post and everything else. So it's It's really money for Amazon if it starts to lose some of these contracts under Trump, um, as opposed to what's going on here and then these taxes things so talk a little bit of the taxes.

They made a block post that we we played. We pay Texas, and Jay Carney's piece was presumably we provide jobs. Don't be mean to us. You know we're a better corporate citizen than you think that was what that piece essentially said? And this is talking about a $1,000,000,000 in federal income tax, more than $2.4 billion other federal taxes include payroll taxes and custom news, which they have to pay is too bad everybody gets to pay them on more than $1.6 billion in state and local taxes, including payroll taxes, property, Texas state income taxes and grows tax receipts. Tell me what you think about

what they're doing here. I bet Target and I'm almost positive this on this a bit target Fat Axe, Williams Sonoma, a smaller retailer and most definitely Walmart Wal Mart, a state paid. I know WalMart has paid over $70 billion in federal income tax and last 10 years, and I bet Amazon has paid somewhere between one and three. I mean, and this is despite the fact that Amazon will add the value are is out of the value of the entire value of any of those retailers I just mentioned in a three month period in a specific three month period. Over the last five years, Amazon and Big Tak has overrun um Washington. The I r s is overrun and their tax lawyers are smarter than our tax authorities. And we now have small and medium sized business paying a disproportionate share of taxes to fund our navy in our parks. Such said, Amazon, Apple, Facebook and Google don't have to pay taxes.

I mean, I really are our taxes, but you could argue taxes are too high. You could argue they're too low. I think there was a solid argument for why corporate tax rate should be brought down. Such that we didn't have these inversions or corporations were leaving us. I think there's a solid argument there. But when they said that corporations were paying 35% no, they were big. Tech was paying 21% and now the average tax rate on big tech is 12%.

So So what were they doing this? They're trying to get pushed back these narratives of being a bad employer and being a bad taxpayer

essential because it's the same people to defend it. Bill Clinton, A guy the other guy that was defending Bill Clinton's working for Goldman Sachs. So you go to Washington, you are under attack, you develop unbelievable skill, set it, taking incoming and then returning fire, and you go to work for the organizations that that need need the most. Kevlar because they're the most aggressive, other, the most hated. So the entire administration ends up at Facebook, Google or Goldman Sachs to tell me it's a show me where Sarah Huckabee Sanders ends up and I'll show you a company That's probably bad for the world because that's who needs them for what they dio

probably the statehouse in her state.

Oh, it's you that stretches. Running for governor is everything possibly. But you talked about a couple things you talked about Jet. And then I'm gonna go back. Just touch on the media and I don't I don't like as you know, I'm not. I'm a pretty big critic of Amazon, and I think Microsoft is is it's become a little bit more cuddly, unfair, and I don't know if that's fair to say they're more fair and cuddly, but because they're effectively monopoly, too. But Amazon really like gets me going. If I actually hope Amazon, the courts decide this because of the court stone in some way decide this basically, Donald Trump and Bill Bar have co opted the law of the land. And if that's how we're

that's just winced,

I mean, eventually, essentially kind of what America is about and why we elect people and go through this process. The whole reason we go through this process is so like people are supposed to make laws and if they make laws and then they're not willing to enforce them. E I mean, this is really it's kind of a most underreported story right now is no one's talking about Bill bar meddling and with Roger Stone. But this is another example. If

I'm gonna, I'll be writing a column on it in The New York Times. This is This is where I am right on this 100 because and, you know, I can't believe I'm backing this billionaire who I have lots of issues with. But this is in this case, it feels like cooked, but it it it is interesting. It's an interesting face off that Amazon is sort of trying to navigate right now in that we pay taxes were not a bad person, don't attack us, and at the same time they are getting unfairly attacked by the Trump administration what it seems like, so it's kind of in a It's interesting. It's an interesting face off between him and Trump and an interesting face off between Bezos and sort of the media in terms of and not just the media but everybody in terms of their corporate hegemony. Essentially, so it is a fascinating. It's a fascinating moment for this company,

for sure, but just certainly back a little bit. Put a bow on the media side just to give you, I mean, just tow. I love that saying It's It's surprising how long things taken that shocking out fast that happened in the streaming video awards the last 24 months. We've been with shocking phase, and if you think about just if you think about how much the landscape has changed just on last 24 months. 24 months ago, as it was, not only Netflix, but there was this new entrant that everyone was excited about, and they came to south by Southwest, and it was Meg Whitman, probably the one of the most accomplished talented tech executives in history. Jeffrey Katzenberg, the iconic storyteller and they raised get this a staggering $1 billion Whitman Katzenberg a 1,000,000,000 short form video disruptive.

This thing is dead on arrival because in the two years they've been trying to figure it out and explain the non strategy strategy they have, Yeah, everyone is common and said, Oh, well, that's cute. But we're spending a 1,000,000,000 we're pre loading it on your phone. Oh, that's nice, but we're in the business of content and we just started Apple TV plus and oh, you can go to Galaxy's edge. I mean, Quimby is literally dead before it's stillborn. It's literally dead on arrival,

and I never thought much of it. I'll be honest with you. I didn't know why these two knew a lot about young people. I'm sorry. I just was always

like you got

a lot of attention, but I was like, I was always like,

Not so it is literally gonna fly hitting the windshield of apple. Amazon and Disney, who are able to have the distribution, are able to monetize my little

gotta move fast in this world, Scott. Speaking of which, I think we have a couple more things very quickly. I want very quick reactions this very quick reactions to each of these quick ones. Then we got to get to some other stuff. One is something. You lost a lot of money off the vision fund, but it had a big multi $1,000,000,000 quarter lost because of it. That had a huge win this week after Sprint has approved the merger with T Mobile, Soft Make made about $12 billion this week, courtesy of Sprint's surging stock price. So very quickly enough short answers here. What do you think? Is this a big deal for them Because they're losing everywhere else like that? You know, there was a devastating story about,

um, one of its investors that piff in Saudi Arabia, The Wall Street Journal about what an idiot investor is essentially especially, get sort of getting played by Masson in the vision fund. But, you know, having lots of trouble there. So what do you think?

Well, that touches on a few things when, when the FTC into DOJ have decided to finally look at smaller acquisitions because the consolidation that I constantly harp on across big tech is happening across every industry, whether it's anti plagiarizing software or food, it is happening or syndicated research. You see consolidation of power that is bad for private business, the economy and job creation. And again we have now four telcos going to three. So that's one externality of what's happening here is relates to Softbank. I would argue Softbank is, Ah, pretty good investment right now if you're looking for something with more kind of modest upside, I'm not talking that kind of games that we expect from venture backed companies. But if you're looking at a 10 to 30% Gaynor over the next 12 to 24 months, with limited downside, Softbank is actually a pretty good stock to own because the headline news there, the headline risk is so dramatic because Vision One fund is just such a spectacle.

But the core businesses Softbank is actually pretty strong. And even if they lose all $60 billion that they've invested in Excuse Me all $40 billion that they've invested in Vision Fund one, they're still fine. It's such a big company. It has so much they still own a large portion of Ali Baba. They own a big portion of Sprint, which is now the third largest telco. So if you're looking for a company

that they qualify for thinking you're a counter thinker. All right, let me give you another crown or think very quick. Brand less folded. This was a company direct to consumer goods label. Its products. A lot of people who use the products in them are very good. That was one issue. But, you know, most of these branded products are just made in the same factory. Essentially. So what does it tell us about this? What you think about brand Lis itself? Just closing. It just doesn't work. People don't want to buy that way.

Well, s o some of the kind of some of those underrated companies and world I've worked very closely with P and G, and you deliver these air extraordinarily innovative companies. I mean, people don't people understand how difficult it is to manufacture a good razor, a good diaper or a tide pods and their ability to balance capital allocation across media packaging, retailer relationships. I mean, this is this shit is hard and they do a fantastic job, and they're all so amazing at retaining or attracting and retaining some of the best human capital in the world. They just get they get very talented people. And the notion that was kind of a cute idea where we don't need a brand will focus on the product. But you're right. It's like, Okay, we have a marginal product, but a mediocre brand that just doesn't cut it right. And then

you have No, it wasn't. It wasn't so much better one like, Oh, my God, these chips are so good. Yeah, I think that way. You're right. I agree. And by the way, let me just add an experience without with Nabisco, a division of Bon Delays, which they have a leg up. Ah, 14 stuff Oreo that my son and I bought. And then there was a great tick tack on it.

But these Orioles had, like so much stuff inside, like whatever that white stuff is. Um and I have to say, I was like, This is so innovative, why we had to buy it and we had to eat it. And then we had to regret it. It was fascinating. It was a fascinating

Most guys, the CPD guys are striking the innovative. They just don't attract cheap capital. And obviously it's a difficult business toe you can only scale that business 68% but P and G is actually been a pretty good performer of the past 24 months.

Agreed. I think it's harder than you think in this, but I thought it was a cute idea but wasn't gonna go anywhere. Thio So last one another. Exit Google Eileen. Not in the long time head of Google's A Charts used to work a Time magazine by the Time Inc. Stepped down this week. She was a key figure. The company during Google walkouts and other internal strife company been there a long time. She was in advertising. I met her along 1,000,000 years ago. She's 1/4 big player to exit Google in the last few months. Larry and Sergey left Alphabet in December. Ah, the founders. David Drummond, the legal officer,

left in January. I had talked about some of these exits in a recent episode. A pivot about this clean up, Let's roll take. You know, I think what's happening is soon DARPA Try who's has been the one to move in and clean some of this up. You could see his sort of invisible hand everywhere what he's trying to do is clean it up quietly because he's a good guy and he's actually, you know, and move it away and move Google into the next year. All

right, So what? Wait. Hold on, hold. But we're now playing old clips of Pivot on Pivot.

Yes, we do that all the time.

We will do. We do. Oh, my God. Talk about shavings of shit on a shit, Sal.

Oh, my, Don't get jealous. I'm a brilliant e.

A few things you got right.

How are you going? There you go in. There you go. That's how desperate

we become for affirmation.

No, we have not. Oh, my God. Move on. So I said this

smart thing two years ago let's play

that. It wasn't two years ago. That was recently. Anyway, Could you please comment on this? Don't be trying a terrible way. We're talking about Google. What's going on there? The executives that these were

like, you know, you're gonna forget more about this and I'm ever going to know I don't know these people. I don't know what it means. I don't know who she is. What are your thoughts on it? I

think it's fascinating these air major figures that have been moved out of goodwill. The old Google is going is going, and so it's interesting to see who he puts in place. And I was gonna run. They face a lot of challenges, you know they have this penalty. Google's in the EU for three day hearing. They're finding a penalty. They've got, they've got, They've got all kinds of issues that they need to about the same time they've been doing a really ancient job on marketing and trying to sort of as opposed to Facebook, which is coming at things really hard. They're coming at things in a softer way, which is interesting. Um, then they face these antitrust issues the FTC ordering these special orders for these companies, um,

for Google, Amazon, Apple and Facebook and Microsoft, would you refer to, which is looking at the small mergers. So I think they really need a better team there to face what's what are some real big problems coming

up? Well, it goes back to what we just referenced, and that is the Kennedy. The algorithm in D. C. Is go there, work your ass off and try ah, and leave with your reputation somewhat intact and they go monetized the influence in context you have, and I don't It's not. It sounds gross. That's the way the game is played. And I don't I don't resent their bill. Everyone deserves to make a living that worked really hard. I'm I think it's a good thing they go on to make it now. Should it be a revolving door until obvious? Probably not.

But anyways, that's the algorithm there. The algorithm in Big Tak, quite frankly, is now just trying to save your reputation and get out with your money, right, Because they make a ton of money while they're there. I mean, as an example, what would David Drum and give? Would he give up $50 million to have left 24 months ago? I mean, most of these guys they were doing the math there, like Okay, I'm starting to take heat an incoming and some of it is warranted. I'm just gonna get out of Dodge because there are a ton of tech executives who think you know what I wished I'd left 12 or 24 months ago,

before The New York Times, someone started deciding I know Pulitzer Slash ruin this person's life slashed, dig deeper, and I keep finding more ugly shit. So I think you're gonna see a lot of these guys. You know, I have 30 50 $80 million. Peace the fuck out. The algorithm, the algorithm for happiness. Keira is to be anonymous and rich.

That's why saying this is your new thing. Anything. And now we will. Now Scott will be leaving pee quietly spending his money in the word job to Mike

after dog is leaving the building.

This is your thematic thing. I This is your thematic thing.

There's a dignity to leaving the stage when people are clapping.

Now that's true. That's a fair point. Well, who I wonder who's gonna be out next. Google? It's interesting. I think you're gonna see you're absolutely You are going to see a lot of departures at some of these companies. Think maybe, maybe not. I don't know. Maybe not as much at Amazon. And, uh, it was just as a Facebook is gonna be less leaving cause look, Jeff, have those executives in there for 17 20 years. Whatever.

They don't leave those top executives and and Facebook has an unusual amount of people who were there from the early days except for the companies they bought. And so you know, it'll be interesting and apple, apple, the same executives. So

there's a difference, because because, ah, Amazon and Tia simplex an apple, they don't appear tohave the kind of fraternity culture they had a Google which is rearing its ugly head they don't have. They're not, you know, Prime is and depressing teens, um, Apple Apple has not been weaponized by the g r u. I mean, it's just an entirely different level of scandal waiting to blow up in your face at Google and Facebook and also the value of creation. There has been so dramatic that a lot of these guys like, Okay, I'm I'm the VP of communications for Facebook and I've made 20 million bucks, and people are starting to recognize that me roaming the world, saying we want to give voice to the unheard when there's absolutely nothing in my background that would in any way indicate I get about flying fuck about the First Amendment and I'm using This is cloud cover such that we continue to have technology where Indians are pulled out of their cars and hanged because of a rumor spread on WhatsApp in our responses to refuse to hand over information,

we're just gonna run some newspaper ads. You know, there might be some bad press on May and I have a bunch of money I like. I like it when I drop off my kids at school. And people don't point at me and refuse to have dinner with May. I'd like to keep it that way. So these people are smart. They're getting

at their piecing out there. You know what? They're gonna do them. They're gonna take their money, go to Hollywood and have it stolen from them. 100%. We're gonna take CC. I brought that around. See what brilliant person

I am. Let's play it again on the next pivot.

You know what? You take so many freaking laps around around the dome. That's like the scratching. The dog doesn't even begin to dignify your dodges

like to put his leg back and lick himself.

No. One morning our laundry with my two sons are gonna put up with it from you know? No, I already handled the Swisher Boys this morning you are gonna be handled anyway. We're gonna have a quick break. We right back with listener, male and winds and fails and predictions.

So this is a dog talking about clear. I am a huge fan of Clear and I have done the math, and that is I have another 30 years on this planet and clear for about $4000 over the next 30 years is going to give me between three and four weeks of my life. Back with my family. Sign up is easy and can be done online and finish up with a clear ambassador at the airport. You don't need unemployment. It takes about five minutes, and once you're done, you can use clear right away at 65 airports, stadiums and other venues across the country. And they have family plans. Were kids under 18 contact along with any member. Because kids and airports are awful, get them through and get them out for all of us. Right now, you can get your 1st 2 months of clear four free go to clear me dot com slash pivot and used. That's clear me dot com slash pivot code pivot for your 1st 2 months free at clear, clear the least expensive time machine you will ever own.

Big tech has made all of our lives easier, but why should we sacrifice privacy for convenience? Sure, you trust the biggest technology companies, deliver your toilet paper and stream 18 straight hours of a bad sitcom. But should you really trust big tech to keep your private information safe? No, you should not take back your digital independence and stop having to remember passwords and other personal information with Dash Lane. Dash Lane makes everything you do online easier attracts all your passwords and protects your data in a single app that works on all your devices. Dash Lane Auto fills every form for you, including addresses and credit card payment information. You control what you share. Keep yourself safe with VPN and dark Web monitoring and share passwords securely with friends and family. Start dashing through the Internet by visiting dash lean dot com slash pivot to start your 30 day free trial of Dash Lane. No credit card required if you like. It used the code pivot at checkout to save 25% off on a premium subscription. Make the Internet better with Dash Lane way.

We need to see a therapist together. A couples therapist. Listen to me. Listen. Her mail. Let's dig into the listener mail bag. Go ahead. Tape. You've got You've got Keep police. You've got mail. Hey, Keira and Scott, this is us, me from New York City. I'm a part time yoga teacher and have firsthand knowledge of yoga studio economics. Last month,

class pass at the $1 billion valuation mark, making it the first unicorn of the new decade. I've heard studio owners complained that class pass doesn't pay enough per student, which they don't understand. Since it's a $1,000,000,000 company, this class pass have a sustainable business model. Do you think the bubble is ready to burst? And what does this tell us about the fitness industry? Disruptors in general. Thanks. So, Scott, what do you think about this? Is I've heard a lot about that. I've got a lot of emails about class Pass. This is This reminds me a bit of group on and some others like what?

What? What? The valuation people are getting out of it. But there is a lot of disruption. The fitness industry. There's you know, not just class pass, but palate on mirror rumble. Orange theory. Um, what do you think about this whole? The whole fitness space? Well, first and so he's been individualized before.

Class fast is really interesting. I wouldn't have bet on class pass, But if you look at the dynamics of the industry, there's Aton of suppliers that are very fragmented and are so desperate for new customers that if you can create a middleman platform, if you can, could become the APP store. If you can become the search engine that basically influences where people go, you're just gonna have a lot of power. Now. I don't know what sustainable about class pass. I don't understand the business that well, but a $1,000,000,000 market pat cap for class pass. And also I think I need to disclose. I think it's backed by my backers. General Catalyst. I think that's one of the winners. Um, so I bet it seems like an industry where someone could insert their themselves and take advantage of the fragmentation. What I'll loosely call the artisanal sweating industry, where there's a lot of individual players that are probably not great at using technology to acquire customers. What are your thoughts?

Yeah, there was. There was a really good piece and vice this last week by, um, Maxwell, I think stretch in, said the headline Is class passes squeezing studios to the point of death? The 1st $1,000,000,000 unicorn of the decade says Saving the fitness industry, some of its own studio partners insist, is doing the exact opposite. So I think you're gonna get a push pull here because you write these these air, usually individual operators. And there have now there's now a lot of more chains. There always were chains, but with rumble orange theory. Soulcycle, etcetera.

So there's more of this changing where people it's almost like the McDonald's method of fitness. You're gonna see that happening, and then this at home stuff that's going on with palate on Mirror and others and then these, these most of these studios. I've noticed a lot of the bike studios. They've closed, you know, I bought a pair of shoes off of a bike studio. It was closing in New York at one point because you know, you can't you can't attract enough. You can't do enough marketing to get people to come. And so people, if they can rely on a soul cycle or ah, what orange theory? Whatever. They kind of do it right.

And so you do have this idea of this this class size is going to save me by helping with marketing or getting me customers regularly. But then they're gonna get disclose it, no matter how you you know what I mean. Like, that's the problem is that there's There's bigger things happening here in the industry where there's consolidation among people wanting to get in 35 minutes and that's it, right? You know what I mean? I want to do my 35

minute warning when they wanted.

When they want to do in the past and also go into these classes, which are super organized, I find them like orange there I go to now. It's like easy and it it's regular and it makes sense, and I don't I could probably do it. I mean, I have been going to the Y two, but it's really it's a real problematic

for all these companies. I think that it's entering. You've got orange Syrian. I like war in Syria to because I find cross. It's too intense for me. So I've downgraded to like the non carbonated CrossFit, which is orange theory. But the metaphor here is movie theaters, and that is the home experience. So they did some innovation, but the majority of Jim's really haven't changed that much. New York Sports Club or L a fitness or whatever you wanna call the majority of workout establishments have not really innovated. Meanwhile, the home the home fitness industry has innovated dramatically similar to the way your TV viewing experience has just exploded and value. But movie theaters really have an innovative and, as result, fewer people are going to the movies and more people are watching game of Thrones at home.

And the sad part about it is it. Slowly but surely, all the places we went and occasionally saw someone from a different income level or a different ethnicity or a different age. We're slowly but surely, casting segmenting and segregating ourselves out of community places like movie theater, right, like a team, and it creates a lot a lack of empathy. It creates fear to be around people who don't have the same background as you, and it's an unhealthy

writing about this. There was a great places we shouldn't get our avocados delivered to us. Another. Yeah, go to the store. This was there's this a big theme. I think it could be your next book. Scott Galloway. I know our algorithms have anything. Just focusing on this community aspect of of that and you know, David works was I'm not always the hugest fan of whom did write a very good during the Atlantic about. I think it's probably his next book about, um, people that the nuclear family, the loneliness, essentially, the nuclear family and how it's falling apart.

Same themes, but in terms of class, pass story in in advice, which I urge you to read it. One of the owners of a yoga student Pilates studio in San Francisco called the PAD said Class Pat continues, tries to take more and more control of our business with their latest generation is now crystal clear is no longer financially viable for us to continue the partnership. Um, so they pulled themselves and so I think that's what this thing, as they sent this coziness of it is really hard for these partner studios. Um because, you know, Class Pass wants to get these discounts, and at the same time, these businesses need state business and the rates the rates don't work. And so you ruin you. Take away the relationship with the customer that these small studios have,

um, and hand it over to someone like plus Buzz. But it is inevitable what's happened. Class passes whether you go to orange here, rumble. I think people find it much easier, and it's the way they want to work out. Um, so that unfortunately for these small studios, I think there's no winning in in general,

it's a very difficult industry where we let the bigger players have access to cheaper capital, figure out a way to pay lower taxes. And there's a new creation to scale such that the little guys who traditionally been the biggest job you know, job creators have just a tough time. It used to be 15% of all businesses were less than a year old with the yoga studio across from me. Why seven, Which is this wonderful little little studio? They have three locations. What happens when class pass raises 30 40 50 million box and starts finding all the yoga enthusiasts and slowly but surely starches all the margin in exchange for a short term sugar high of sending some people to your four o'clock class. It's no different than Google getting in between manufacturers brand. I mean, it's fine if there's a bunch of them such that there's competition on all sides. A place that hasn't worked is the tag. Guys tried to roll up and Softbank try to roll a food delivery right, and there's so many players in there and there's so few there's so there's so feud. Ah, Berries of entry that the suppliers,

the end suppliers, have all the power. And so they are not only see, not seen marching depression, they've seen margin expansion. Does uber shows up for some of them? Show up, Actually, not uber, but a couple of them showed up and said, Will pay you. We'll give you more to deliver your $11 burrito in an attempt to steal market share. So the dynamics it's all about I mean, it's kind of it takes me back to Christina Romer when I was a graduate student instructor for her class in business school, around economics by the way. I just dropped out to try and signal that I have.

I'm smarter than I am. Yeah. Oh, you know, You know, I am about

to go off on a tangent,

finish your point. So clear I had a chance. Ah, to me with a hero Mine Chancellor Carol Krist, who is a warrior for lower income households where she will graduate more kids from lower income households an entire Ivy Lee combined in to meet with the Chancellor And she does exactly what she's supposed to do. You're so inspired by her substance and her commitment to young people that you want to get involved and look back and nod to the University of California taxpayers. But I'm just inspired by the chancellor, and it just feels, feels a fortunate Any graduate university. California feels so, so fortunate to have a warrior like that looking out for the interests of future, our future unity California graduate. So that was a real thrill for

May. I should have hard to code. I mean by her, because

she is such a gangster. Such an impressive woman. We are so fortunate. All of us to the interest of California generally

class path. Anyway,

you're saying chancer Crist back to class Bus

will see. So I think I'll didn't think their secular trends and how people like to work out they didn't like you're going to gyms and wandering around is not what people like. And so a lot of those businesses fell apart. You paid your $40. Now,

if you go under attack, run on the people that are so ridiculously

hot, I'm like, Oh, my God, but money. People just want to get in, get out. And that's why those other companies and so it's very difficult for these visits small businesses to keep competing and hold on to the relation with a customer. Anyway, Winston fails. Would you like to go

first? You go first,

I would say, um, I was gonna say Jay Carney's meltdown on Twitter was that. But I do think the win for the FTC, Um, in terms of doing these, i e. Have a column coming on the times about this, but in terms of I don't know if they can pull it off. But in studying the small companies where you don't know about what they're doing, I think is critical what they're doing. This sort of block and tackle, Ah, investigation is they're calling it a study in a review into these small companies. And I like that. That was 0 to 5. I mean,

5 to 0. Excuse me was unanimous by the commission, and they do understand they're starting to understand the insidious nature of these big companies buying up all these small companies that you don't know about for feature setting things like that. And sort of I talk about this so called killer acquisition, which is they do it sometimes for talent. They do it sometimes because they need to feature helping a lot of cases. They do it so they don't have a competitors. And so I like that the F B, I think, is a win for the FTC. I don't think they're well funded. They just have $330 million they have 1100 people fighting all these people, including the other things they have to cover. Um, so I was I was very much Ah ah. I was happy that they did this.

And then a a fail, I think is, um is Bill Bill bar again once again already low standards for an attorney general, and he's managed to go below them. Um, and this is problematic and has repercussions. And I know everyone says they never have repercussions, but I think the karma is just building here. Um, with every ball of them, they're just overreaching in every single way, including I'm sorry. Rush Limbaugh has the cancer, but I'm not sorry. He's still a fucking asshole. He attacked Pete Buddha Judge in a really repulsive, homophobic way. And you know him getting the Medal of freedom at the same week when he's just making these just horrible comments I haven't heard since the 19 eighties.

Hear those? Can you repeat those

recon? Shane? I don't want todo that he can. He's the man. Donald Trump will take care of him. The gay, Essentially, it was just gross, and he calls him Boot booty. Booty de jersey. It's just he's gross is gross, man, and his legacy is grossness. And again, sorry, his cancer. But man, is he just an awful human being just an awful human being. So

So it along along the lines of your win, I couldn't you know, we're worried, my sister, because if we wanted the best investment we could make in our economy over the next 10 to 30 years, I mean, did you get gets staggering? Return on investment would be to take the FTC in the DOJ and triple their budget and say, Your job is to go across the most productive parts of our economy. And I'm not just talking about big tech. I'm talking about hundreds, hundreds of salad and and go in there and oxygenated and go in there and say What? What companies have flown under the radar, whether it's in tax styles, whether it's rolling up, rolling up rubber placemats and say What industries have used a series of AA size scale and what's called killer acquisitions, where you acquire a company and if it does great on its own,

fine. But if it goes out of business, you cauterize that that competitors a. You make all the executives who the most talented upstart risk taking ah, human capital. That sector signed onerous non competes non solicits, thereby not only not only ensuring that company won't survive, but basically you take all the players out of that industry. It's like if if the NFL if a team said okay if you leave us, um, you can't play for anybody else and one team would just emerged and soak up everything. So the most oxygenating, longest term job creation thing we could do right now would be to over fund the FTC doj and then literally let them go unchanged. Anyway, my win is India and the United Kingdom, respectively,

have looks like they're gonna pass legislation where India is going to demand that Facebook, um, cooperate with the government, which is means that they're saying you can't encrypt your backbone and I recognize there's a downside and there's some risks here, but and unfortunately, we're not playing this clip. But remember when I predicted several months ago that Facebook would be banned from a country? I think Facebook is going to be banned from India because I think Facebook is going to say, Look, our primary were gangster. Mark Zuckerberg has struck a very brazen posture. WhatsApp is huge over there but doesn't produce every revenue. He's just not gonna make an exception and start handing over information such that when those 11 men were pulled out of cars and hanged because of false rumors that had gone like wildfire on WhatsApp. Facebook refused to hand over the identities of the sources of those rumors. They refused to cooperate. Instead ransom newspaper ads saying, Don't pee, pull people out of cars and hang them, which I'm sure solved the problem. But anyway

that his is the person against him. OD is really an autocrat. Come on, he's and he's pulling all kinds of racial problems in India but pushing them up for his own political gain. So it's a complicated

situation, no doubt. And I think there's I think there's real downside. But I think I'm just saying I think India's had I think India and the U. K. And the U. K. Has announced now that the senior level executives for Facebook argue, like of any other company going to start to be liable for the damage they cause. In

other words, England is more interesting, I find, cause I think they're They've been very thoughtful, I think in Europe, and much more so, though Facebook. But I think the brazen word you just used is upset you. I just, um I'm about to interview Steven Levy was written. He had inside inside access to Facebook. They cooperated him on his book called Inside Facebook or Our Facebook. The Inside Story. Um, it's an interesting read. I think it's slightly too kind. Quite a lot too kind.

But they what does come through, whether it's Steven means it or not, is this brazenness throughout his career throughout his career since the beginning. And it wasn't that he was young and arrogant is it is a hallmark of I had for gotten so much about the early history of Facebook. Um, but the brazen is exactly the right word. I think you've chosen

well. I think there's a reason he and Trump get along. I think they both respect each other's autocrats and people who never give up and, quite frankly, have this kind of want to call it psycho associate path Calumet. But they really don't care what other people think of them. They don't care about their place in the world. They don't. They look outside the window and they see themselves. And

it was there was a scene in this book which can I don't think it's even meant to show this through. But he was walking across the street and this guy, Joe Greene, who was one of his roommates or is whatever his house and at Harvard. And he was walking up the street and he just walked even if he got hit and someone was like, he feels confident. Even then his confidence shield will protect him, like you know what I mean. Like he didn't. It was a small little moment. I was like, Oh, yes, I've seen that and it's really it's Ah, nothing, not I think people should be confident. But it was really the entire book so far is all about folk.

You like. It's all about fuck you. And so I grew through. It's really he's really it's gonna brazen it out. It works for a lot of people.

You also have my our attendance that you have my loss. I don't understand how I just understand how people work so hard, make so many personal sacrifices, including, oftentimes their own kind of integrity, such they can get elected to office. And what what do these people do in elected office? For the most part? If they're if they go to D. C, they're there to make laws. And so if you have one branch of government. The executive branch has decided these laws are just convenient when they work for them or they don't work for them and they're starting to interfere in sentencing. Then why? Why the fact that we have senators? And so I don't understand the tautology of a Republican center of the thought process. Who's gonna put up with that? I would I would have thought this would be the Red line. Nothing. Well, not

not Democrats. Not

the Democrats, but not a single Republican. They've all said there's the same three or four people who have moderate voters who are

so horny disappointed

in him. Yeah, they want to get credit. They won't actually do anything. They want to be seen as thoughtful and say, Oh, I think he's learned from his impeachment. Yes, Senator Collins. He's definitely learned he's a changed man. Yeah, Anyways, I that that is I think that is really ah, Attorney General Bar, deciding that he is no longer attorney general. Republican senators deciding that the laws they made are not really laws. It's very it's really chilling

and we keep saying that its culpability, I mean in everyone and you know Look, Larry else is about to throw a big fundraiser for Trump,

and that's okay. You and I disagree with that. What is that? E

Get it? I just I'm just telling you, people just move along. They just literally I got mine. I'm talking about a larger thing, and they give lip service to this, uh, everyone's great, but then I'm It's very disappointing. Leaders don't actually say leadership things. They just really

just, by the way, you know, number three in the latest Quinnipiac poll is out now at 15%.

Amy Klobuchar?

Uh, no, my

man. Oh, Bloomberg! Bloomberg. Oh, your man. Yeah, he's moving up. And by the way, let's just finish. But he did an excellent job on the means thing. Another great digital move by them. They're very, you know, that the whole top in first thing was not great with what happened Him try to explain it. And you know, he's he's quite conservative in many ways.

Um, and that that was the stop. And frisk was he's got to answer better. He just has to, um but and they're they're inadequate answers. But you're right, he's this money is working and he's spending, and it's it seems to be having an impact. And as a CZ, the party's by far Kate, in terms of left and and center. Essentially, um, it's gonna be somethingto watch something. He might come right up the middle. Sir,

I'm telling you that I mean, we talked about this. This thing about predictions is when you get them right, they don't seem that impressive because a series of events between the prediction and what how it plays out make it more and more obvious. But it is all falling into place for him because Bernie is way ahead in the Democratic in the poll, if in. And Democrats are gonna realize that if we're to end up being Sanders, this is Trump effectively. The entire election would be cast by the Republicans. Effectively, a socialism versus capitalism and capitalism would win. And and then you have Chlo. Bishara's probably She's got the most momentum right now, and Biden and Elizabeth Warren have the most negative momentum and you're going to see Elizabeth Warren radically go on the attack against Trump personally, which is her raising her hand and debate the vice president, the attack dog for

President just impeachment. You're right. You're absolutely.

She is now running for vice president. But the vice president's role is to be the attack dog. And she isn't out standing, standing, standing

except for you. Scott Galloway is nice. You couldn't have made this week. When you make a good prediction, you should give me a pat on the head. And I'm gonna fight you because I'm a

cat. Are you Are you upset?

I'm here for you. I am here for you. I need my ears rubbed. I feel like I need my years

that got so much play that kind. So much. Play the whole bank off. Coming over geography questions even think off. Texted me like this. So few of us are our emotions. Care like you and me. So few of

us. Yeah, I will be temporarily hurt. And then I was plot revenge. That's really how I work. Anyway, Scott, we're not for anyone not producing a bi weekly news part because it's a three day weekend. What you doing this weekend? And by the way, we will be back Monday. So you just forget it for you. What are you doing? What?

I'm excited. I have this this wonderful Argentinean friend and he's celebrating. Ah, they're wonderful story. They're immigrants came from Argentina and they were wonderful people with wonderful kids. And he has an entire he's built, and this is what Argentineans do. I guess He bought a house and immediately set about building, not a garage, but basically what is a meat cave where he makes meat and he bites people over to make it to eat is incredible. Argentinean cave. I'm doing that tonight. You're going to be I'm going to be cake tonight. I

need a photo from the Beef

Cave. Oh my gosh, it's Zod. Argentinean be cave! And then I have unfortunately have a soccer tournament. It's really terrible. My son is up ticked in his athletic ability. It's just the worst thing. Yeah, Palm

Beach season starts, friend. The cross season starts. It is my literally, and I'm not allowed to look at my phone during the entire process, and it's just agonizing. It's wrong. Anyway, um, I will be doing my Children's laundry all weekend anyway. Codes coming to get a lot of things, A lot of stuff. You're gonna be a big part of it. Scott Galloway.

Are you saying you're just using me when

you say big how big you are? I have some of their names coming. More good names. I cannot say. Well, I'm talking to, but there's some ones that you will like quite a bit. Besides, the ones I already got that were quite like it. All right, look, it's gonna be good. I actually like that. I don't got the woman. If I have another space, I don't have space. But the woman from Berkeley's a great idea that's accredited. Anyway, Thank you so much.

Good. Thank you. Care. Have

a great weekend. All right. Remember, we love your questions. If you have question about a story you're hearing the news emails that pivot at box mediacom to be featured on the show. Scott, please read the credits.

Today's episode was produced by Rebecca Synonymous. Our executive producer is Erica Anderson and special thanks to True Burrows and Rebecca Castro. If you like what you heard, please download our podcast where every listener podcast please subscribe. Please recommend it to a friend and join us early next week for a breakdown of all things tech and business.

This episode was brought to you by progressive. What would you do with an extra $800? Buy a plane ticket, Pay down your student loan. Treat yourself to those shoes you've been eyeing with progressive. You confined out drivers who switch and save. Save an average of $796 on car insurance. Get your quote online at progressive dot com and see how much you could be saving national average annual car insurance savings by new customers surveyed who saved with progressive in 2019.