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Join the 15,000 companies using Vanta to prove trust. Go to vanta.com. Hi, everyone. This is Pivot from the Vox Media Podcast Network.
I'm Cara Swisher. And this is Scott Galloway. Scott, are you still on vacation? Define vacation.
Seriously. Define vacation. You have a beachfront property looking out at the sand. I don't know.
I just saw a lot of your videos, and there seemed to be a beachy kind of feel to them this week. You were going on about various things from somewhere that looked lovely. Yeah, it's been wonderful. More importantly, what did you think of the videos?
Were they insightful and hard-hitting? I was delighted with them. We can't believe I was watching them when I have other things to do, but there I was. There you go.
I like hot takes. I like hot takes. Hot takes. Hot takes.
Hot takes. Are you going back to school? Isn't school starting? My kids are already in orientation or whatever.
My one kid went to a senior orientation, my youngest kid went to a ninth grade. Aren't you in school? Don't you go to a professor of some sort? Supposedly.
Some sort is the operative term there. What are you teaching this semester? What's your next book, in other words? I'm not teaching till the spring.
The key is scarcity. I used to be known as a good professor, and I was teaching five courses a year, and then I said, no, I'm going down to one. Now I'm going to think I'm great because I'm never around. What's the topic?
What is the topic? It's not 101. The big dog 101. What is it?
What is the topic this year? No, I always teach the same course, brand strategy. But going back to school starting, it is a really hopeful and wonderful time. It's like this army of ants descending upon Soho, moving towards the campuses, and it's all these young people.
It's actually a really nice time of the year. I would say other than commencement, it's the most optimistic time of the year. It's like I wake up and I don't hate today as much as I usually hate it, and it's because all the young people seem happy. It's not happening here.
Listen to me. Do you have a theme for the year? Do you have any thematic ideas that you're going to push upon these young, impressionable minds that you will warp them? My theme is get through the fucking year.
What do you mean theme? My theme years? You're not thinking you said that the algebra of happiness came from an idea. Do you have a theme?
Is there a thematic issue for the students of NYU this year? My big thing right now is that I think of it in business terms. I think we're in this monopoly era, and I think it's changed the way people approach business or how business is being, or how you're creating shareholder value. And that is typically my course brand strategy.
You talk about the ultimate algorithm for creating shareholder value is these intangible associations, traditional brand management, and we've really moved to this monopoly era, where it's all about trying to establish yourself as a leader, get access to cheap capital, and then build with that cheap capital, build against those promises, those crazy promises you've made, and hope that you can get there without coming across as a Theranos, when you get too far out over your skis like Theranos or we were, and basically pull away and make the jump to Lightspeed and no one can catch you. That's kind of a strategy now in business. So to a certain extent, in my department, the marketing department, and the marketing department of every top 20 business school, basically the curriculum, quite frankly, is training kids to go get a job at Heinz and be laid off two years later. So I'm trying to move to a curriculum of, all right, what does it mean to establish leadership in an information network economy, establish a great story, a great product, network effects, flywheel effects, modes, get access to cheap capital, and then pull away with modes that are really expensive, whether it's a fulfillment network or incredible engineering.
But things have changed so dramatically, Karen. I think you probably got more than you wanted here. I think it's business goals. I got you to actually think on your long, long, long summer vacation.
What are they paying for you there? I'm soon to be paying at college tuition, so I'd like to know what I'm down for. So I'll tell you what I started at. I'm the first class I taught.
I was an adjunct professor, and I made $12,000 17 years ago, and I make more than that now. No, I want to know what the students pay. I don't care what you make. You are clearly comfortable, my friend.
The student, I'm a million dollars. I think the tuition is somewhere between, let me think, 10, 20, 30, 7 million a year is our tuition now. Now, I think it's about $62,000 or $68,000, but in reality, as an NYU, it's still a great buy, because we decided in our society that the only people who get to innovate or capture shareholder value are monopolies, Amazon, Apple, Facebook, and Google, and the only people who get to go to work from monopolies are people from top 30 schools. And the only people who get to go to top 30 schools are children of rich kids who, there's more from the top 1% of these schools than the bottom 60%.
And the only people who get to go to the top 30 schools are the children of rich people. So basically what we've decided in the United States, that all the schools are reserved for the children of rich kids who get to work. What a surprise you along. So this is a big chakra road to the rest of the United States.
Listen to me. Speaking of which, we have a lot of things. We've got so much news. Sorry, you sent me off there.
I'm sorry to clarify you. You're coming back after Labor Day. I'm clarifying you for the students. I'm improving your ability to speak to them.
It's a pretty low bar. It's a pretty low bar. Listen, let's start by talking about Peloton, which Scott has talked a lot about online already. So tell me about you had some thoughts on this.
I have a quick soul cycle, as you know, because I have ethics and you do not, but go ahead and move along. No shit. So let me ask you first, what are you doing to get your fix of endorphins now that you're not doing soul cycle? They're talking everywhere.
Well, that's not going to do it. Do you have a Peloton? Yes, I do. That was left to me by the people whose house I bought.
They just didn't want to move it. And so they left the Peloton. I'm very, my real estate didn't go out for me. And in the deal, and I have not put it together.
It's still just dead there sitting there. But I'm going to now, when I get back to Washington DC, that's where it is. I'm going to somehow sign up. I like it.
It looks great. It looks great. It looks like people love it who use it. So basically, you spend $2 million for Peloton, but I can go to a house with your purchase.
And I'm a child. Okay. So essentially, yes, I will cop to that. It's not that much.
But nonetheless, I have one. I haven't used it. I've heard people who use it love it. But of course, it's a thing for rich people, right?
So we talked to me about this. You had a lot of thoughts on Peloton S1 because, again, they said, and John Foley's public letter, he told investors on a most basic level, Peloton sells it. Yeah, 100%. Okay.
So one thing that was interesting about this is that you and I both received emails and Twitter saying, oh, I can't wait for the takedown of Peloton by Karen Scott. Everyone was expecting us to come out and do a full, you know, go gangster on these guys the same way we did on WeWork. I actually, so I have a Peloton. That's because of the stupid happiness thing.
That's why. Yeah. So Peloton Peloton is not WeWork. Peloton, I have a Peloton.
I pay the 20 bucks a month. I mostly pay the 20 bucks a month to sit and stare at a screen that has a really hot person bouncing up and down yelling at me, which is it's sort of like BDSM of the information age. Then I'll pay 20 bucks a month for that. But this is not, this is actually a pretty good business.
Now let's talk about- Here's what. Break it down, Scott. Galloway on your Peloton as you pedal away. Everybody is trying to be a SaaS business because recurring revenues that you can predict is just a better business that gets incorporated as someone's kind of workflow or daily user becomes addictive.
And Peloton actually does have a lot of the dynamics of a software as a service firm in that it has. First off, the hardware which constructs about, comprises about 80% of its revenue. It's a $2,000 piece of equipment and it has 45% margins, which is really impressive when you figure that the highest margin tech hardware company traditionally has been applicable to 30 points of gross margins. So the fact they're able to get 45 points of gross margin is really impressive in and among itself.
In addition, the subscription side of the business, the 20 to 45 bucks a month you pay. For people who don't know what you get on the bike, there's a screen and then there's lessons. Scott has a shorthand version of that, but they have all kinds of lessons with their top instructors. And you can pick and choose them, you can do them live, you can do all kinds of things.
You can do them taped live, things like that. Different lengths, different intensity, they evaluate, you rank you. And that business, that subscription business, which really is similar to a cable company or a software company, is 20% of revenue and it's ground from 15% of revenue. And within that 20% of revenue, I think somewhere between 10% and 20% of that is the app that's unbundled from the physical bike.
So there's people who want to be on a fitness program and run through the park or ride their own bike. And if you look at the churn rates on these things, it's really low. It's 0.7% per month. That's probably somewhere between 80% and 85% a month.
And the software companies or the SaaS companies that trade it are ridiculous multiple. Typically, the two key metrics you want to look at a SaaS company are what's called logo renewal. And that is in this case what percentage of your members are new every year and then dollar renewal. And that is up to say 80% or 85% of people are companies that are new for the second year of that software program.
What do they spend relative to the year before? And ideally you want to see revenue growth of like 110 or 120%. So if you get 80 plus and 110 plus, meaning that AWS has got like 90 or 95% renewal and it's got 120 or 130% dollar renewal. And people spend more.
Now, I don't know. I couldn't find a dollar renewal here, but it looks like a logo renewal. Remember renewal has strong SaaS-like metrics. So what do you have?
You have really high margins on a tech hardware product. You have a recurring revenue stream that is growing at a good clip and has SaaS-like renewal rates. And you have $1 billion, $910 or $920 million in revenues, up 100% you have explosive growth. It's losing somewhere between $200 million and $300 million.
But a lot of that, they got criticized for the margins on their subscription service. It's only about 44 or 45 points, which isn't software like gross margins. But a lot of those costs are things like studios, talent, licensing for the music. And you would think as they get to scale that those margins would go up.
It's interesting. And they're adding adjacent businesses. You know, there's these things like tonal and mirror and all these things which is at-home gyms, which are these things that have little things. It's sort of the old like member of Bowflex and stuff like that.
But it's like a fancier version. Chuck Norris. Chuck Norris and Christopher. Yeah.
Yeah. And so these things you put, I'm going to try one because I'm trying all different things in the wake of my soul cycle debacle. And it's interesting because they are also moving not just Peloton, it's not just bicycle, it's all kinds of exercise things. And so it's an interesting question.
It's interesting what it does to exercise places like the equinoxes of the world. People don't want to go to them. So it's definitely, there are definitely innovative ways to exercise now that are very different. They don't, sort of like having a trainer without having a trainer.
And at the same time, there's all these businesses like Rumble, Orange Theory, all kinds. There's all kinds of those things that are happening which are soul cycle-like. So I agree. I think it's an interesting business.
We talked to them a years ago because it's a question of whether they can make it broader than just a bunch of rich people. I mean, the funniest, I retweeted this whole thing on Peloton. It was a joke. It was a Twitter meme that was hysterical about placing your Peloton's different places.
You know, because making fun of their marketing, which is all about aspirational rich people. And it was really funny. It was like, I have this down in the basement with my nanny, who I make do this while she's doing the laundry. And it was super funny.
So that's a question. Do lots of people use these things? Yeah, but it's got to that point. When you were talking about class earlier, one of the things, the first slide in each of my classes, I don't think you can build a company that can be worth tens of billions of dollars without specifically knowing which instinct you're tapping into.
And in some, God, love, consumption, preparation, Google, Facebook, Amazon, and Apple, respectively. And I think Peloton really does tap into this instinct that as a species, we're happiest when we are in motion and surrounded by others. And that is, you know, when you and I are in our 80s, supposedly the things we'll remember most is when we are walking around, roam with our kids, or when we were playing, you know, playing a sport, or when you're in the company of others and doing some sort of physical exertion, that is supposed to be when we're happiest because it goes back to the days of hunting and gathering, et cetera. But this kind of artisanal, if you will, sweating, where you're in a community of like-minded theater.
Well, think about it. On my block, we have a, we have a SoulCycle, we have an Orange Theory, we have a CrossFit, we have a Yoga Studio. I think there's a Rumble opening up. All these things are 30 to 40 bucks per session, which is ridiculous when you think about it.
There's people saying, okay, I'm going to spend less money on stuff, and I want to go be around other people and be in motion with them, and it's going to make me happy. So it's definitely a huge industry. The fact that there's no such connected fitness with software like metrics. Now, the last round valuation, let's talk, all of this has to be set against valuation.
The last round private valuation, $4.5 billion, so it's already trading at five times revenues, which for my mind is pretty rich. They're talking about going out at an $8 or $9 billion valuation, so 10 times revenues. So this guy, Josh, I think I'm blanking on his last time, downtown Josh Brown, who's, is this Twitter name, and I think he's fantastic. He's on CNBC, and he works with very rich holds.
But this guy has such a clear blue flame thinker around stocks. He basically said in response to my hot-take on Peloton that it's a great company. I'm just not sure it's a great stock. I think he's exactly right.
If you were to look at this thing, you would say, great company, great stocks like metrics, is it worth $9 billion? Probably not. But it'll probably be one of the taller midgets of the unicorn class when it gets out, and that it will probably go sideways, maybe go down a bit, but it won't collapse like what I think we have in store for us with Lyft and Uber and if we work ever gets out. Yeah, exactly.
We're surprising people. I think it's an interesting business. We think it's just a question evaluation, but it's definitely an interesting business and it's the leader in that area. Others have tried to catch it, and there's a lot of competitors in space, but they've certainly got a great name and a great product.
So we'll see about that. Let's move on to Facebook, and Casey Newton's really interesting story about what it's doing to compete again with Snapchat. The Instagram is making an app called Threads, and of course, guess what? It's like what things that you do on Snapchat.
It's meant to promote constant intimate sharing between users and their closest random invite users to automatically share their location speed and better life with friends. It's essentially Snapchat. It's essentially like the private Snapchat. During our prediction show, last December, we talked about what we thought would come up in 2019.
One of my predictions was that social media becomes more about interacting with close friends than sharing publicly. Yeah, so we've talked about this. Facebook has an R&D department. It's called Snap, and now it's TikTok.
What would be interesting is TikTok due to Facebook has done to everybody else. That's a really good point. Now we have, I don't know if Facebook has also responded and launched a copycat product called Lasso, I think it's what it's called, but it looks very TikTok-ish. So it'll be interesting to see if the elephant is able to dance and continue to innovate or copy other people's products.
Now what Facebook has been able to do that most big companies aren't able to do is they're willing to cannibalize themselves. And that is they'll say, I don't care if it cannibalizes our legacy business. If this is where the puck has had it, this is what we're going to do and we're going to go hard at it. But to Snap's credit, and you predicted this, and I didn't, Snap has carved out a nice niche for themselves.
They have. And it's been able to kind of, has been able to hold on. Yeah, I might go see Evan's able this next week, unless the hearing event in Los Angeles is kind of interesting. But it's true.
I always feel like if you have a creative product, it works. You know what I mean? You can't just get by on copying everybody's stuff. People are on to you.
And again, I have to say, even though my team's complaining about Snapchat, they're consistently using it, which is interesting to me, it's really. I don't think he's going to stop using my goes to college either. So it's an interesting, well, I think creativity does win out. The last thing is, which feels like 100 years ago, and maybe you've been on this island that you've been on, but Trump claiming that he could use emergency powers to force private companies to relocate out of China.
He said he has no current plans to do so, but he hereby orders people if he needs to. This is obviously ridiculous. But I'm just curious how you think, you know, Apple has this event coming up, and they're going to be, you know, who's going to pay for the terrorist? Tim Cook went and met with President Trump, had dinner with him.
Where do you see this playing out, this sort of after the G7, where it's going to go, this tariff war. The Chinese just said it doesn't want escalation. It seems to change every week. So I heard, and I've done some investigative journalism here.
I heard in that meeting between Tim Cook and Donald Trump, but based on the recent run-up in Apple's stock that Tim Cook has decided to, he has offered to buy America from the Russians to Trump. He said, we'll take back America from the Russians. Anyways, that's my bad geopolitical job. So look, the Chinese have already won.
They've won. They think in 2013. So explain for the people. Look, this is, this was absolutely for the right reasons.
This is one of the few things in my opinion the President has got right, and that is the IP theft, the currency manipulation. There's been all sorts of, the trade between the US and China has been disproportionately or asymmetrically advantaged to the Chinese versus Americans. And we have done a lot of it around fall. We've decided, okay, there's winners and losers, and the winners tend to be information-age workers in every category.
And we didn't take the time to say, well, how do we reinvest some of those proceeds in the struggling middle class? So some of it's our fault. But they do benefit more from this than us. A trade war was absolutely overdue, but instead of going at this war with a full heft of our partners.
It's like the analogies. We went to war with Saddam Hussein when he went into Kuwait, but we went in with a ton of nations and allies and intelligence. But we've gone into this economic war. The two biggest powers in the world, 40% of the global economy, is China and the US.
But we went into this war sloppily. We went in without allies. We went in with no strategy. I don't think he can even tell you.
The administration hasn't even really been able to articulate what exactly it is that we want. So we're angry, and we can highlight why we're angry. You're just saying unfair. That's really interesting.
Yeah, but what exactly do you want? And then again, we think in election cycles, and he's constantly back paddling. The stock market goes down. Someone tells them that if you go into a recession before the election, you're going to lose the election.
So then he goes, well, I'm having second thoughts about it, or maybe, or me and she, they reached out and we're going to get a deal done. We didn't reach out. They have one. We have this guy, the election is coming up.
She gets elected every 30 or 40 years until he dies. And Trump could be gone. This is the first time I thought Trump really could be gone by these. I know everyone's like, is he?
The level's on women, the level's on. Everyone's tired of the show, and this is a show. And I think the Chinese have already said, we can easily go. We can easily go another 18 months.
And just at this point, it's like the Chinese are like, you know, you started this. Let's play it out, boss. Let's play it out. It still will have impact on companies like Apple and others who are going to eat the tariffs.
It could cost, there's some reports today that it could cost from $500 million to $5 billion to there. And they have this money, but will they eat the costs and not raise the prices? And we'll see how long it goes. But you're right.
Everyone's playing the waiting game with Trump. And I think it's the same thing with the media. He attacked it. He's been crazy attacking this week.
It's like even more so around nuking hurricanes around every story. He's questioned even though it seems like they're really good stories. And the same thing I feel with the media, we're just going to wait them out. Just keep banging away, which is really, it'll be interesting to see who, I think he'll end up losing.
This particular fight, because even Fox has started to turn on him a little bit. Anyway, it'll be interesting, but we're going to take a quick break when we get back. We have wins and fails, predictions, and now we have listener mail. We've got a ton of listener mail.
People love us. And of course, we're going to talk about bed bugs when we get back. You know, how did you want? No.
The Devil Wears Prodigy. He's a movie event 20 years in the making. I was like, can I help with the secrets anymore? So I think we should tell it.
Will you two please spit it out already? Um, never. Despite that, be the first to experience it only in theaters. In light of the recent scandal, I'm trying to restore your credibility.
Oh, because we're a team now. That's a nice story. Devil Wears Prodigy in theaters Friday. I'm Estelle Herndon, and this is America, actually.
We're all talking to each other to see what did we do wrong? What did we not see? I'm in Washington, D.C. this week to interview Ruben Gaiago.
He's a Democratic senator from Arizona, and he's been thinking openly about running for higher office. But he's recently run into some hot water because of his connection to Congressman Eric Swallow. I have to learn from this, and I will learn from this. But, you know, for me, it's not a 20-28 question.
It's about what it means to be a better first boss in my office and also a better senator to my constituents. This week on America, actually, we asked Gaiago about predatory behavior in Washington. His plans for immigration reform and more. We're here with Scott Galloway and Karis Richard Scott.
What are your wins and fails? Well, my fail is, I just think this is probably the most poorly orchestrated war economic war in the history of the U.S. They could potentially take the global economy. I don't want to take the global economy down, but if you think about what we were just talking about, companies, U.S.
can hurt China pretty badly. Now it's ego, and he's talking about raising the tariffs. They can endure that, but as they become less confident, they'll purchase less machinery or manufacturing equipment from Germany. Germany, Germany, in turn, will feel less confident.
They will invest less. I mean, you just see this ripple effect. We are in a global economy, but you're talking about a poorly orchestrated war with no benefit to us where everyone's going to lose. This is just a bad war, and it's been poorly executed.
And what's interesting is it could have been a good war in the sense that the Europeans were ready to line up behind us on this one. They agreed. They kind of quietly nodded ahead that this war was overdue. It's just been so poorly executed.
So my lose is what could have been, I don't want to call it a righteous war, but the right war with good outcomes. Had we realized it's strength and powers in the agency of others, and instead we have just botched this. I think the Chinese have already won. So that's my lose.
What's your lose? That's your lose. There's a wide range of things this week. I do think this thing, I work for the New York Times, I read a column for them, but a lot of these letters, people are writing angry, you know, two people at the Times wrote letters to people over fights on Twitter, and one was read Stevens, the other was an editor, a political editor, I'm totally blanking on his name.
And I think it's really important during this time of real attacks on the press, not to act like jerks, like to readers that call us names. In one case, this professor, who's a very clever professor, wrote a great piece in that square, actually, and George Washington University tweeted a joke, and it got no retweets, it got no weak, very small lights, and Brett Stevens, who works in the same section, I do the opinion section, he's an employee of the Times, I'm not. He mailed his boss to complain in him and didn't want to be called a bad bug, and I just cringe when reporters do stuff like this, like right? I get called names all the time, I don't know if you do, I don't care, like fine.
In fact, someone didn't like an interview I did with Huawei, which I agreed with him in someplace, I didn't think it was a successful success, it could have been. And I just engaged and agreed, like I didn't write a letter because he was kind of strafing me, he deserved it, and it's really important for the press right now to do their job and do a great job at journalism, or have any opinion you want, but when you have an opinion or write something that people, you know, there's controversial expect to be called names, and don't like, just, it's just, we have to take it. We have, unfortunately, especially because the president is doing this, and it's offensive and damaging what the president is doing against fake news almost constantly, and we just can't play into it by just taking, like, if someone calls you a bad bug, just live with it, like live with them friggin' bad bugs. I decided when I saw this, because I like Brett Stevens, I think some of the more thoughtful people at the New York Times, one of the reasons I love the New York Times, and it separates them from, I don't know, news score, is they actually try to bring on thoughtful people from, to provide the other side.
I don't know if you've ever seen, whenever, like, when the view decides to bring on a conservative, it brings on Meghan McCain, and I don't, they're like, just to kind of make their point, and whenever Fox brings on a liberal, they bring on the most unattractive, unlikeable liberal in the world to, again, make their point. That's you, right? That's me. We have a bingo.
The big dog is in the house. Anyway, so, anything. Hello, I'm here to get the internet candidate. I'm making her point.
I am literally making her point. Anyways, but they do a good job at bringing on these thoughtful conservatives, and Brett is very good, in your face, and what you do is you clap back, and you get in their face, and you do get into these kind of these little, little, little Twitter, scurm, border skirmishes, but what he did, and this has happened to me, and this really pissed me off. Oh, someone read a letter about you to your Provost? I think that's me.
Oh, my God. Do you know how many times the Dean has, the Dean has had headaches over me. I think about this. I bet.
And every time, and I'm just, just, just Brett, let me tell you what happens. It's a pain for the Dean, or the Provost. They don't like it, and you know what they do? They say, this is about academic freedom, and we're behind you, and I can't imagine that the Provost of George Washington, and all over this professor, didn't have the exact same response.
You invited him to, like, moderate it, to moderate a panel between the professor, and I'd be happy to moderate the thing. I'd love to do that one in Georgetown, George Washington. This professor's really funny, too. And so I just, I agree.
It's like, don't write letters. Like, you can clap back on Twitter, or you can, you know, especially when you're in your opinion calling this, but being perpetually pressed, being perpetually offended, when actually real people have problems on Twitter, like, are really attacked. Like, it's just, New York Times calling this, or people of privilege should not be, I think, in complaining, but honestly, it's just not a good luck. Yeah, but the bottom line is, if you don't, if you don't upset people, occasionally people don't go back in your face as a journalist or an academic.
You know what? You're not doing, you're not saying anything. So, expect a little bit of it, and there's two ways to go. I've actually, I used to get back in people's face, and you were sort of a role model for me.
And now I decide when I get back in their face, I start thinking about it too much, and it weighs on me, and it upsets and impresses me. Now I just ignore it. I just don't respond. You know, I end up being pals with most of those people, because I actually, I'm not that mean.
I'm funny, or I sometimes, like, it's funny. I end up, like, you know, like, my whole scare mooji thing. I went after him for a long time. And then we, you know what I mean?
I tend to use humor a lot more in the thing. I just think you should expect to be a tack. Welcome to the kitchen. Yeah, exactly.
I think no more letter writing, New York Times people, or any reporter, no more letter writing to their bosses. So, let me talk about it when it's the longest thing. Josh, I think it's Josh Holly, a reporter at the Wall Street Journal, wrote a fantastic article about how the big tack used to be innovators. Now the primary form of innovation is to exploit people, and it was really powerful.
And now the way they're adding shareholder value is, okay, how do we figure out a way to pay 4 million driver partners less than minimum wage and delay and obfuscate the actual analysis and delay and some great articles have come out recently saying that now they are actually making less minimum wage, or to have more and more contractors, or what have you. But the new era of innovation is exploitation. And it's really, it's not only sad, but it's an important topic that needs more discussion and more examination. I think about, I seem to think about ABMBEB.
There was so much innovation in the drinks category in the 70s and 80s, and then ABMBEB came in and said, all right, our primary source of innovation is to cut costs and now they kind of cut down to the bone and then start innovating again and coming out with all these great little kind of mall brews and different things. But we're in this really unfortunate stage with the primary source of innovation is exploitation. And it goes back to another key theme, and that is without more journalists. Yeah, I'm jumping all over the place.
I apologize. But I thought the biggest, one of the biggest stories this week, and it just made me really sad reading about it, was Oklahoma's decision to find Johnson & Johnson 500, I think it was $550 million, and the fact that Purdue may in fact be bankrupted or take themselves into bankruptcy and then come out as an up-court and all the proceeds and profits go to the victims of opioids. And I really wonder if there had been as many journalists in this nation doing long-term journalism as it were 30 years ago, would we not have recognized the devastation, misery, and just general tragedy the opioid crisis sooner? Well, that is what we're doing with the social media, Scott.
I feel like we're ringing the alarms and stuff like that. I think it's a similar thing. It's not devastating as the opioid crisis, but I'm saying I think journalists did write a lot about it. I think the question is people were okay with it, and it takes a while for people to finally act on these things.
I don't know how. It seems like every kind of crisis like this, whether it's a water crisis or pollution or whatever, someone goes too far just like Trump removing the methane rules today, you know, and then there's going to be cancer and deaths and everything else and the press will write about there will be lawsuits. It seems like the American way. Well, it goes to the notion that Americans, because you know, we're in love with the macho, right?
We're Clint Eastwood and General Mattis, so I'm actually interviewing next week, and I do think it's an example. Ask him, say Trump's name? Yeah. People who don't do allies are bad.
Like, which people? Which one? Like, did you notice that book? He never says Trump's name?
Yeah. Well, I don't think he's, I think that's the way he, I think that's his punishment. I think Trump would rather use his name in a negative sense and not use it. But anyways, there's macho where we've decided, okay, regulation is wimpy in European, and the tragedy of the comments has been because we haven't had enough regulation.
That's right. We haven't had enough scrutiny. We haven't had enough thoughtful people elected officials saying, well, what happens when people become addicted to opioids? And who's responsible for that?
And, you know, even weird things. I was thinking about it. George Michael, Tom Petty, Prince, we think that they died of heart attacks, overdoses, but weren't those really opioid deaths? I mean, how come it's a strange we haven't, we haven't connected, you know, we haven't connected the dots.
Don't go around this. I love Elvis. Thank you. I don't know how you brought up Elvis.
He died on the toilet of drug abuse. I thought he died of ice cream. No. Well, among the other things, but it was drug abuse.
But, look, I wonder if we're going to about to acknowledge that regulation isn't necessarily a bad thing. It doesn't mean we're wimps if we ask our elected officials to be more thought or have greater scrutiny, and also hopefully armed by the greatest police force in the history that doesn't care again about journalists. Guess what? Real women regulate.
Real women regulate. Get ready for Elizabeth Warren. President Elizabeth Warren. Are you all in all of us?
Are you all in all of us? I'll tell you. I'll tell you. My win for the week is now there's just ten of them on that stage, which we can see them all together.
Yeah. In predictions. Do you have a prediction? I do not have a prediction.
But first, we're going to be having listener email and voice email. So before we get to predictions, let's hear from some listeners, shall we go for it? Hey, Cara and Scott. This is the Anna Lasso.
I'm a history professor in Bemidji, Minnesota, and a big fan of Pivot. Super sympathetic to your approach, Scott, to inequality and class. But I got to ask, what's the beef with Tesla? EVs are not as dirty as ice cars, and Tesla is unlikely to increase the number of cars purchased, especially if autonomy ultimately works.
If more likely to shift cars off of petroleum while we're waiting for overall volume of vehicles to decrease, which could make all the difference to the carbon tipping point. And VW, give me a break. Dieselgate II with a new defeat device that apparently turns off the cleaners above 90 degrees Fahrenheit and below 50. I don't think it's inconceivable that Tesla would ever sell.
But I can't see Elon with 22% of the stock and super majority voting rights to sell to VW. And I really don't see where you're coming from with the idea that the wheels are about to come off. If you guys really want to go after Elon, the question to ask would be, who's going to rule in space? Are we really going to hand the moon or Mars or the asteroid belt or even low Earth orbit over to billionaires to try to create some type of Robert Heinlein millennium just because they're the guys that can get there?
Thanks for listening. Wow. The Bemidji people are smarter than you are, Scott. I want him as my new host.
God, I hate it when thoughtful people call me out. So what do you say? Answer. So first off, you know, word to your mother, that was really impressive.
And I think a lot of your points are really accurate. And he said a lot there. And I'll go in reverse order. Where do we agree?
I can't, I don't like it when wealthy people become the new arbiters of giant social projects. I don't think that we continue to allocate more and more of our government, our government expenditures on the interest on debt, which is now greater than our expenditures on military, such that it crowds out all discretionary spending and all discretionary spending around how we move forward. Humanity is left up to rich people. I call it the Pablo Escobar Building Parks Phenomena.
I don't like rich people getting to decide how we allocate big leaps in our society. So I agree. I think it should be NASA, not this sort of fighting with your debt competition between Musk and Bezos in space. I just don't, I don't, I don't like it.
I think it's an, an externality of this incredible income inequality where we have people worth the GDP of Norway. As a, as a, as a, as it goes to Tesla, I think there's a fair point. And that is, I basically said, I've said, both to Tesla, it's not good for the environment. A lot of smart, thoughtful people get back in my spaces and you know, on the whole, it is good for the environment.
And I think I have to acknowledge that some of my own personal bias comes into this because I do not like Elon Musk. I think an individual who feels that he's be of beyond or above corporate governance and above what I call just general standards of behavior, calling strangers, he's never met pedophiles. I have found that personally I want Tesla to lose. So there are some personal bias creeping into my, my, my viewpoint, which is quite frankly incorrect and inappropriate.
So he's right. I do think on the whole Tesla is probably going to be a good for mankind. Now, on valuation, I disagree. This thing is absolutely going to crash.
This is, and it's not a function of a whether it's a good company or a bad company. I just think the structural economics of the automobile industry make it almost near impossible for an independent automobile manufacturer to survive long term. Now, whether VW or Toyota or Damoc could buy it, that's a fair point. They may not have the balance sheet, but be clear boss.
Elon Musk is going to decide that rather than have the embarrassment of taking his company into chapter 11, he is going to sell this thing. And every day he waits to sell it means he sells it at a lower price because this company is an auto company. It should trade it a multiple like an auto company, which means it's barely worth the obligations, the repair warranties, and the debt they have on it. So I agree with them.
I acknowledge this point. By the way, that was a really thoughtful point. And thank you for taking the time to actually do that. All you, everybody, please call in and do these we like answering them, especially when you argue with us, especially Scott, really I'm always correct.
So there you go. But he's absolutely right. There's a really tough article on Elon Musk this week in Vanity Fair about Solar City. And I think one of the things that I came away from is there's some really troubling things in the story, but that these are big ideas and ahead of their skis is a very good way to put it.
Some of them are like, what's going on at SpaceX or Tesla or Solar City are great. They're not small ideas. And so it's complex. It's complex is what it is.
It's what it is. Anyway, thank you, Dan. Thank you. You really appreciate it.
So Scott, we're going to do predictions. But here's a question that came into our inbox is how you come up with your prediction, Scott. What is the formula? Eight ball.
Do you have chicken and trails? What is your methodology around your predictions? Are you just, I don't know, sitting and staring at a wall? What is your what is your manner?
So Tiva. Okay. No, I look. I spend all day.
I spend all day. I spend all day. I work with a group of really talented people and we spend all day kind of marinating and data. Looking at trends and data and some stuff just kind of bubbles up to the top that seems fairly obvious.
And one of the keys. So if you will, the steel in the ground or the pillars of predictions are data and you will see trend line and start to appear around data. So there's some fascinating things coming out of retail right now. We're going to see the resale market second on clothing.
That's incredible data. So I'm thinking about a lot of predictions off of that with that means retail and then the key around making predictions, that's the underpinnings, that's the steel, but the key is to be fearless and that's to say, all right, take your gut, take the data and then think of something and regardless of how stupid that sounds, regardless of the actual likelihood of that at the current time, make the prediction because the thing about predicting is that people as long as you're predicting to learn, you're not predicting to be right, people respecting for it and it catalyzes a dialogue. That's the key. So I am absolutely fascinated with predictions, but the way you reach the promise land of predictions is to say I'm going to use predictions as a means of learning and catalyzing a conversation and not trying to be right.
You're trying to be right. You're never going to have the confidence or the co-host to make predictions because eventually you're going to be wrong. Yep. That's a very good.
Thank you for that cogent. I see. We got you very serious, Scott. I'm liking I'm focusing you on the year.
Next week is our 50th episode or 50th and we have lots to talk about because in like next week is right up to Labor Day, but the week after that, Apple has an event. It's just sent out the invitation this morning. I don't know if you got one to its September 10th event where they're expected to announce the iPhone 11, which will be interesting. There's all kinds of things coming up.
A lot of people think it's going to be first triple camera system on the rear of the device, all kinds of things, a little bigger display, all kinds of stuff. We have lots to talk about with this. Our 50th episode. What should we do?
We're going to do more live events, obviously. What should we do for our 50th? First off, it's nice that you've noticed that we're going into a year two of our relationship, which I would loosely describe as a triumph of hope over experience. Okay.
Yeah. You're into this. You know what? The first podcast I ever listened to was the podcast on recode where you interviewed me.
I had never listened to a podcast. Of course, I'm a narcissist. The first podcast I ever listened to. It spawned all of this, Cara.
It's very new. All of this. You're too. I like it.
In a word. In a word. Toronto. We're going to Toronto.
We're going to do it a lot. Did you see all those tweets? Every city we're like Amazon, which we ask for. We should ask for things.
I hope we have Minnesota asking us. We have all these weird things. I don't have a helicopter, but I'd like a helipad. I want a goat.
I want one city to offer as a goat of some sort or something interesting or a big dog, for example. What city will actually offer us? Toronto. Have you seen how many tweets we've gotten from Toronto?
Toronto. We are huge in Toronto. We're going to Toronto with Canadians. I'd like to announce here because of all the online heat we've been getting and people saying come to Toronto.
We're going to fit year two. We're going to Toronto. All right, fantastic. That sounds great.
Other cities, please. We are welcome. We are bribable. We are absolutely 100.
100. Especially Scott. Anyway, I'm really excited. I've had this a lot of time.
Well, here's the bad news. I'm a whore, but the good news, I'm a cheap whore. So just send me a little bit of merch and a big dog's comb in your park. It can be an old tennis ball.
It can be a pig's ear. It can be a promiscuous poodle. Anything you want. Just bring it and I'll be there.
This is an end. It's not with a bang, but a poodle. Anyway, Scott, thank you. I'll talk to you next week.
And I will see you soon in New York. Anyway, finish your vacation, please. It would be really nice if you came back from vacation. Anyway, today's show was produced by Rebecca Sinanis.
Eric Anderson is pivots executive producer. Thanks also to Rebecca Castro, Drew Burroughs, Eric Johnson, and Nishat Kerwa. Special thanks to Gautam Srikashin for engineering this episode. Make sure you're subscribed to the show on Apple Podcasts.
And if you like this week's episode, leave us a review. Also, we got so many emails. So shoot us more emails at pivot at VoxMedia.com. Thanks for listening to Pivot from VoxMedia.
We'll be back next week for another breakdown of all things tech and business.