What's up y'all, I'm Skyler Diggins, seven times WNBA All-Star, Olympic gold medalist, and Mom. And I'm Cassidy Hubbard, a post and reporter for nearly 20 years, covering the biggest names and stories in sports. And Mom. And this is and Mom, a community for athletes, game changers, and moms of all kinds.
Dropping May 14th. Happy and with us. If you're tired of endless scrolling to figure out where to eat, same. I'm Stephanie Wu, editor in chief of Peter.
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Download the Eater app at EaterApp.com. It's free for iOS users. Hi everyone, this is Pivot from New York Magazine in the Vox Media Podcast Network on Cara Swisher. And I'm Scott Galloway.
Hey Scott, have you got my room ready for Miami yet? Well, you know, I'm a super host on Airbnb. And I've kind of figured out the unlock. I show up in a speedo that says, Caronde Eduardo Ilo's Malissas, which of course means they get in the twins.
And the first thing I do is I sit my guests down and I say, okay, shut the fuck up here are my rules. First of all, don't ask me where the bathroom is. It's the room with a piece of wood with a hole and it figure it the fuck out. Oh no.
And then I tell them I'm gonna drop by randomly that I have a key. And what do you know? What do you know? I'm actually, I am not gonna be staying at your place, although I am bringing the clan down at some point during this horrible, horrible, horrible freezing cold winter here.
But I will be down there in a few weeks for our event, our pivot event. And I'm very excited to get out of Ice Prison here in DC. We just got Brian Chesky of Airbnb joining us a guest. He is Airbnb.
And he had just announced that he's gonna live in Airbnb's around the country two weeks at a time. So he'll be in Miami. There's a term for that. It's called being rich.
The wealthiest people in the world spend their summers in Aspen, Centrope, and Montauk. And he's like, oh well, smell you. Well, he's gonna see Airbnb's. We're gonna ask him about it.
And he's gonna be at our pivot, MIA con. He does it all the time. He's testing the product. I've heard it announced that I'm spending a summer in different meander and oriental's around the world.
It's gonna make a real statement. It's gonna be inspiring. It's gonna be inspiring. No, I think it'll be interesting.
There's a lot to talk to him about, right? We've got a lot of amazing guests and more to come. I used to think I wanted to be Andrew Ross Orkin. I think I wanted to be Brian Chesley.
We'll talk about Andrew Ross in a second. But it'll be interesting. There's lots of issues around that, but it'll be nice to be in Miami. It'll be nice.
Lucky's coming. My brother's coming. There's a whole swisher clan headed. I'm sorry.
We're supposed to talk about our guests and you're doing a name check on the family members coming. That's gonna sell a lot of tickets. No, Brian Chesley's coming. The head of Goldman is coming.
Go ahead. You can name Jack. CEOs, we work Airbnb, New York Times. His Smith brothers and their new thing.
We got crypto stuff coming. I think we've got a psychedelics things happening. Oh, CO Goldman Sachs, David Solomon, and also colleagues that's about the motor and Jonathan Hyde or as my students say, the guys who actually know what the hell they're talking about. And actually two students and treat them with respect.
Oh, those guys. Yeah. So anyway, I'm excited to come down there and you better not be wearing a speed. I did say you were gonna serve in the beach.
That's a good one. That's a crime against humanity. I was trying to be respectful of people who don't drink. I was trying to be respectful of people who don't drink.
I was trying to be respectful of people who don't drink. We're gonna have mocktails too and everything else. So it should be really interesting. No mocking of the tales.
To push forward in where things are going to stay nice. Yes, it's a night. We're doing a total march. We start outside with drinks and then we head to the cab array.
The Faiina. And then we end up at that speak easy. The Saxony late at night. So yeah, come.
It's gonna be a lot of Scott drinking. Comfort to CEO, stay for the substance. Yeah, Scott will be the late night. I know, I said I go to bed at like 10 o'clock.
Anyway, we're very excited. We know our vision for this thing. What is it? Our vision for this thing is if Mark Andreessen and Stephen Hawking had a kid, it would be this conference.
That doesn't make any sense. That doesn't make any sense. Anyway, please come please sign up. We're very excited.
It's getting, it's coming soon. And we're very excited about being in Miami. Anyway, today speaking of which some of the issues we're gonna talk about there, the latest in antitrust, including some news from my interview with Lena Kahn. I also got an Elizabeth Warren one up today.
They both talked about the issue. We'll look at the fallout from the Microsoft Activision deal. They're gonna try something new. It's a little game called elevator pitch.
So stick around for that. We're gonna try to have new features on the show. Things like our conference and this. We're always trying to be fresh.
Yeah, we're so innovative. Anyway, first Peloton's uphill battle is getting steeper. The company is brought in McKinsey, which is, I don't know if it's a good sign or not. You would no matter.
Problem solved. To review costs and potentially cut jobs are poorly and it's a peril division. I do wear one of its alley love bras, by the way. This comes amid news that Peloton insiders sold nearly $500 million in stock before the price plummeted in November.
That includes its CEO, John Foley. He sold about 16% of his money. That's a lot excluding options before September. Usually it's a, these things happen normally.
But that's a big one. One Peloton boy told CNBC morale is at an all time low. So, I mean, this was a flying high company that we both like, actually, as a product. But what do you think?
I think it's a prime for sale. That's what it would be my guess, prime for sale. Yeah, you're right. It's hit about $170.
It's at $30 now. Yeah. And it's a bad luck when I think CEOs would have planned sales. I think it's just when a stock gets, you know, it's their right.
You didn't do anything illegal here. It's their, but I think it's a better look if you just have planned sales, where certain of my shares are sold, you know, kind of at predetermined dates. It does look, it makes shareholders angry when they see that the CEO realizes company was overvalued. So, this company is, this company's in a lot of, you know, it's hit a speed month.
A lot of it was just, it was riding so high. But there's going to be what I call a 70% off sale bin. And we've talked about this where companies swoop in and say, we're giving you a chance to shake the edges, get share and move on. And I just got to think that they're going to call some every maker in the world.
I still believe, I used to think it was going to be Apple, and now I think it's going to be Nike. But it's a host of people who could talk themselves in the behind. Well, there are also, the other is mirrors sold itself to Little Lemon. The others got out while the getting was good, I think, in a lot of ways.
And the question was, was this going to be its own thing with the subscription as we talked about? Because that's a really strong thing. It's having a subscription relationship. We've been pro-Palaton.
But at the same time, you know, some of these missteps have been problematic, including the pandemic ending and people wanting other things, probably get over Peloton, right? I guess there's something I have for sure, although I use it. Well, you know, you know, you know, if someone has a Peloton, they tell you, Jesus Christ, it's like they're on it once a week so they can talk about it four times. Yeah, but I think it loses its appeal.
All these things that you were doing, Zoom is down. All these things are down. And it was definitely a pandemic stock. But it's an interesting to see where they move it into, because people, you know, what's going to stay regular and what's not going to stay regular as a practice post pandemic.
Yeah, it's, but it's more than that. There's supply chain issues, morale issues, their growth, actually negative growth. It's, so there's a lot going here. And a lot of it was just the stock.
I mean, it's easy to say these stocks are 70, 80% off. And that's we understand, but they probably should have never reached those heights. They got kind of to a crazy town. Yep, indeed.
Indeed. So now it's just wait and see what happens there and what McKinsey does. You know, you can't be smaller. I'll tell you that.
You got to really move to the next level if they want to become more. I still have mine. I put it in the middle of my living room. It's my favorite piece of artwork other than the Turquoise Marble Peacock keeping the fireplace.
Your garage, your Peloton, a cyber call. It is in the garage. It's there to set. I do.
You like Peloton. I do. Yeah. I like the instructors.
Jesus Christ. I think they're a great product. I love Stenomac. They have me.
Oh, come on. No, no, I shall not go there. They're wonderful people. Oh, wait.
Anyway, another thing Starbucks, it's interesting. All these changes, the pandemic changes, is canceling its planned vaccine or test mandate from police following the Supreme Court's ruling last week. They had sort of happily gone into it and been very aggressive about it. And that ruling found by inspecting mandate couldn't apply businesses since COVID-19 to workplaces.
Starbucks, CO, which on Culver, Cine and Meme of the Basement during the police are fully vaccinated. They probably feel like it's done and that it's not a negative for its business. I definitely, if they had not had the vaccination thing, I probably wouldn't have gone in necessarily or would have been thinking about it. I definitely thought about it with airlines.
Also canceling the mandate, keeping the mandate Goldman Sachs, United Airlines, Tyson, Food, Citigroup, Carhart, some of Carhart's customers are calling for a boycott, a boycott, a boycott, my son wears a car heart a lot. In office, mandate, American Express, Deloitte, Facebook, Google, Lyft, Salesforce, Uber, as we noted, Jimmy Diamond has noted that. But Starbucks has 200,000 employees in the US and 50% American city support vaccine requirements for employers. So it's an interesting moment.
I think people are trying to do the move on from the pandemic thing. What do you think? Well, look, I think it was great that they did the mandate, but it's probably, it's the first of it, NYU, for example, we not only have a vaccine mandate, I just got a message saying I had to upload proof of my booster. So different terms are taking different approaches distinctive what the Supreme Court has said, thinking that by the time that there's a lawsuit filed against them to try and enforce, this really is to a certain extent the company's decision at this point.
And I feel like they're using the laws of backstop for their narrative. And I think at the end of the day, Starbucks workforce is under so much pressure because of what you call the greater reassessment, which I think is the right term. That and every QS, sorry, every restaurant, whether it's Domino's, Starbucks, Panera, Chipotle, they are really struggling with a staff of 12 that are supposed to show up every morning and five don't show. And so the vaccine mandate was just another headache that caused another one or two people not to show up.
So look, at the end of the day, I think Starbucks has made the decision not to comply with the law, if you will, but to say we're at a point where the trade-offs for us from a company standpoint aren't worth the mandate. Also, I think more generally, and you said this, I think that the majority of us are sort of a point where we're vaccinated, it's going endemic. There was an article yesterday, I saw, I think more time saying that at this point, if you're fully vaccinated, COVID is more contagious, but no worse than catching the flu. But at the same time, you talk to your brother and he points out that 50 to 100,000 people are likely still going to die from this.
But I think people are vaccinated, kind of like, look, that's the luck to you, but I'm going on with my life. So I don't think there's going to be much pushback here with your thoughts. I agree, I think post-vaccination, I think that's sort of the attitude of most people. I did a really interesting way, it's coming out Monday with some experts.
They had different opinions, honestly, which is good, and it's okay to have different opinions that they weren't that far off everything else. But the idea is, look, if you're vaccinated and most of, you'll be fine, most likely. They're like, it's not zero, it's not one, it's somewhere in there, you've got to assess your risk, essentially, and it's not that high. And so it's interesting, I'm not saying people shouldn't be careful, by the way.
But it's really, and I can't stand sort of the gloaters like CCC, they're broken clock is right twice a day, essentially. It was very dangerous for a long time to have that attitude. And so anyway, so I think it makes sense. I was thinking what I'd go into Starbucks or not, I think they've gotten most of their employees vaccinated.
So I think that they sort of feel like it's safe to come up. They reported that, right? They give a number? Yes, it was high, it was very high.
It was super high, it was 80, 90, something like that. And I think that that's one of the things, it's like they can come out and not antagonize the people that they need to work there. And again, they're a restaurant business, let's not forget that. Anyway, we'll see what happens, but Americans do support the vaccine requirements and certain things.
And I do think individual companies should be making these decisions now. And then they just deal with the workplace, however they feel like it. We're doing it, you don't have to come in, whatever you want, you know what I mean, that kind of thing. And then we'll see, the ones that we're just doing it for virtue signaling will probably dump it pretty quickly.
But we'll see, we'll see, I think they'll decide based on the reaction from their employees. Well, hopefully it does look like infections, at least in Florida, and I believe in New Yorkers starting to come down, deaths are up because there's a lag. But it looks like, you know, and we've been here before, but hopefully it looks like we're headed in the right direction. Yeah, mostly.
So anyway, and then hopefully kids can get vaccinated. Although some of the people when I was talking to, they're sort of like, Carrie, you know, the one I'm worried about is the Golden Child, because she can't get vaccinated, but they said one, it's coming sooner than you think. And two, you're more at risk era for getting really sick than your unvaccinated child. They were showing statistics and I was like, oh, okay.
But still, no matter what it is, it's an emotional thing to be worried about your children. And people that give parents a hard time about this, hush themselves, I think, in lots of ways. Hush, please, hush, talk to me, it's emotional. Anyway, time for our big story.
I had a really long interview with Lena Kahn yesterday, me and Andrew Roth, Sorkin, you're... Give us the cliff notes. I will give you, essentially. Please don't tell me that it's a really interesting podcast.
I should just do it. It was actually on, it was in the studio, I had makeup. And as was Mr. Sorkin, your favorite Canadian.
You, Andrew and Lena? Yeah, yeah, yeah, we did it on CNBC. Yeah, that's how we did it on the live one on CNBC. And then it was, I think, your first really long, long per TV interview and the first very long one.
And so, we talked about a lot of things, like it wasn't just one or two things. It was in the wake of two things. One is the Microsoft Activision deal, which of course they didn't know about or nobody knew about. And then her and John Cantor, who's the assistant attorney general for Antitrust, had just started to release, trying to get up with new guidelines for mergers, which are related to Antitrust, which haven't been updated in a long time.
And so they're looking beyond price increases to determine if the customers are being harmed, including labor, the effect on labor. They're looking specifically at digital things, because I think these networks are different than other companies in consolidation. And looking at things like harms to privacy and quality degradation as a word con kept talking about as they evaluate mergers. They're gonna get comments and then they're gonna, they're gonna see what they're gonna do about those, but they're coming soon.
One of the things that she talked about a lot, and I think she's correct is how severely under-resourced. They are, she really articulated it. Even though they're trying to enforce the law, and said there might be retroactive enforcement of deals that went through without proper scrutiny, that's two things she's specifically talking about Facebook. I think one of the things she talked about was how little money they have.
And of course, Congress still hasn't, that one of the bills that was supposed to give them $500 million more, both those agencies, got, you know, got turf because of the, the bought one of the Biden social spending bills. And then I was in there. And then the other one, which has passed the Senate by Senator Klobuchar and Senator Grassley, to raise merger fees is still sitting in the house. So they don't have more money.
And they're being, you know, on a real basis, they have less people dealing with more mergers, which have doubled their 4,000 this year or something. And people are just shoving them through the pipeline because they know they can, you know, they can run through the gate without having to pay their ticket. Well, in the US, year on year, M&A transactions are about 140%. And in the last four years, the FTC staff has been cut in half.
There were twice as many people working, the FTC in 1980. Yeah, that's what you know. And mergers have gotten much bigger, much more complicated. Did anybody use my favorite term, hipster, antitrust?
Yes, they did. Yes, they did. Andrew did. He quoted Larry Summers, who I'm gonna say, I've got some interest.
Larry Summers, but Brandeisian. Brandeisian. We asked her how to pronounce it because she's the only lawyer among us. And she said, she's scoffed.
That's like, you could hear. Yeah, but here's. You could talk a little bit about her head, which was Larry Summers. Well, just, but it is the key distinction.
And that is four years ago or so, we decided to adopt kind of the antitrust, I don't know, Bible, if you will, was from Borac, Chicago that said that there was one test, and you could distill it down one test, and it was the consumer pricing test. And that is as long as it did increase prices, and there was no consumer harm, you were fine. But the problem is that just isn't an appropriate metric for a free service like Google or Facebook, and I would also argue that the cost we incur from the monopolies that are Google and Facebook are non-economic harms. And that's getting one of the teen girls about those non-economic harms.
But the hipster, the hipster, Andy Truss, viewpoint, or Brandeisian, is says, okay, let's look at income inequality. Let's look at wage growth. Labor. Let's look at competitiveness.
Let's look at labor markets. Yeah, so, and that's just a more thoughtful prism to look at the harm here. And we need to go back to that. And I think she's absolutely from that.
Yes, she started it. She was the one who wrote that thing in paper on Amazon, and one of the things that was interesting to me, I think she was sort of lowering expectations saying, look, we're working hard, we're trying to enforce, we're trying to do deterrence, but these giants are coming at us, and we will continue to fight, I think that's what she was, you know, I think it was very deft on her part. And the same time, it's true, right? And she literally kept saying over and over again, this idea of these qualities, the degradation of quality is the word she kept using, which is an interesting bunch of words.
And the attacks on her, we talked about the recusal efforts, which they have lost so far in court, the judges have been like, of course they picked her, but Apple and Google, for example, are still going on the offensive and a letter to lawmakers, Apple said that planned antitrust bills, which are, we also talked about Congress and what it needs to do to change antitrust bills, we'd make iPhone users vulnerable to malware attacks in a blog post-Google's chief legal office that the new rules would include spammy services and its search results among other risks. So they're like, if we're not allowed to do what we want to do, we're all hell is gonna break loose. We're keeping the streets clean essentially, is what they're saying. And the industry pushback doesn't even address the new bill from Democrats that would block digital advertisers from targeting ads to users.
So, you know, it's a real face off, and we'll see if Apple and Google and all the others are in a better position because they're rich and powerful and shoving these mergers right through. One executive said to me, like, look, they'll give us a hard time, they'll shake us down a little while and they'll say yes, whatever, like it's a dance, it's still a dance. And so she's got to win, she can't like mount like sort of Don Quixote-like efforts without some kind of win, but the ability to move forward was Facebook was a win when they refiled the case against Facebook, which the judge had pushed back on the FTC. So we'll see, she was very impressive, very impressive, I think.
Yeah, and this argument that I believe Meta and Google are both saying, look, or Apple, I think, is it Apple and Google that are stating that it all hell will break loose and we keep the clean. It's exactly the same argument that the mob makes when you get protection money. I say, look, we ensure that the streets are safe and that the violence is kept to a minimum and you pay us protection money. This is the exact same argument, okay, it's illegal, you're paying us rent, you shouldn't have to pay, but we keep, you know, we keep things from getting too out of control.
Well, you know, we'll take our chances, get the hell out of here and stop extorting us. I think these arguments, I think these arguments are going to work. I think they can't get away from these numbers in terms. You know, they will also do the China, we talked a little bit about the China thing and she was like, okay, but it doesn't, fine, sure, China's a threat.
And they're making, of course, that argument that China has more cameras, et cetera, pointed out as anywhere else with TikTok or whatever services they're using. They're allowed to buy gaming companies. We'll talk about taxes. Yeah.
You know what the greatest tax on creativity ever, I've ever. Ever. It's the App Store. If you're a really thoughtful person who's blessed with the skills and the certification to understand the intersection between creativity and technology, the manifestation of that is something called an app.
And if you want your app to ever see the sunlight, you gotta pay 20 to 30% to one firm and cappertino. So the most prosperous, creative minds in the world outside of art in business, if you will, are all paying a 20 to 30% tax on one firm that is charging the greatest tax on creativity as the App Store. We need more points of distribution and more options, such that the new generation of creatives can get some light to things without 20 to 30%. The average company, if you're really lucky, has 50 some cases, but go ahead.
Well, in some, or small businesses, to be fair, small businesses, like 0.2, don't pay anything. But if you think about margins on a company, the margins you get, you're hoping for 50 to 60 points of margin, maybe more if you're in a digital space, so you're giving half your profits to the gatekeeper. I mean, it's just, yeah, they have the argument to be made about safety, they haven't argued, but you know, we can be the only ones who can protect you is probably not true. It's just not true.
There's other options, you know, other search options. Google could be labeling any non-Google results as spammy. Like only us can do it is the kind of, only I can save you. I can save you.
So, you know, I think people are sort of onto this, and at some point they have knowledge, 90 some percent of this, you know, 80% of an ad market is just problematic. Now, there's two more besides China, will be, there's lots of competition, TikTok, and by the way, China for Facebook, or hey, in the gaming industry, and there is, there's, you know, guess what, China owns, through Tencent owns lots of big things, like Supercell and Riot Games, and Big chunk of Epic, which is an American company, and they don't get regularly. Why do we get anywhere? We'll talk about that in a minute, but you know, that's the idea, is like look what happened with competition for all of us.
We'll be gotten by competition. And again, that's fine, but it's not, there's no regulation. I think she's got a real uphill battle, that's clear. And, but a really smart regulator, I think, you know, there's been some controversy because she's opened up meetings, she's very urgent, and I think maybe some of the FTC haven't been as urgent over the past few years.
You know, and of course she has to deal, which I didn't talk about, which is her imagery, right? She's a young woman of color who is just a, like clearly like a prodigy, kind of legal prodigy kind of person. And I think, and not experienced it running anything, obviously, but so smart, and she did work on David Sisley and his committee, and they did a great job. So I think probably her coming at them is probably like, what's this, you know, that kind of thing.
And they have, they can play on that. They haven't explicitly done it, but they've implicitly sort of been like, who is this person who dains to question us? So I think she's a tough one. So.
As always, they're conflating issues. They have a real legitimate argument or concern around, if we can't access Chinese markets, how can they, how can we, or why would they expect to be able to access our markets in an unfettered fashion? That's an honest conversation. And I think if in retrospect, we look at one thing that both, we'll be grudgingly admit that Trump got right was China.
And say, look, this seems to be more of a one way relationship where the relationship here or the benefits are asymmetric. But the question isn't whether they have competition because I've always thought Google and Facebook love having Twitter and Pinterest, because it's like, they can look at these weak competitors and say, whose brand and awareness is not as big as Google or Meta, but it's in kind of a, they can say, oh, there's different social media networks. Meanwhile, they do about one, they do about three to five percent of the revenue of Google. They're really not competitors.
I work with a lot of people who spend a lot of money in these platforms. You don't ever hear them talk about Twitter or Pinterest when they pull out their checkbooks. They just own, I mean, the big money is reserved for two platforms. The question is, not whether they have competition.
The question is, if you went in and broke them up, would the ecosystem get healthier? Would there be more tax revenue, more jobs, more competition, more startups? What would happen to the ecosystem if you broke up? Because technically, every monopoly, infeasibly, Netflix says, my competition is time.
My competition. So the term competition, in my opinion, ends up creating somewhat of a side conversation. It's simple. If we broke up Facebook, would we in fact have more child safety, likely more innovation, likely a company that had to adhere to or attempted to say to platforms, look, advertise on us and we want weaponized.
These platforms with extremist content, would every advertiser, every company in the world, perhaps get some margin back because we lower the rents and the answer, all these things is yes, yes, yes, yes. Okay. So just because you point to Pinterest and say we have competition, it doesn't matter. Yeah, I think one of the interesting other of these ideas was Elizabeth Warren, who was talking more about taxes, you know, Elon Musk and of course, we addressed the being called Senator Karen by him and she sort of dismissed him for that.
And one of the things she talked about was paying their fair share, that kind of thing, which she always says, I did make the point to her, like, well, then change the freaking law, I sort of channeled you. Like it's your fault, you know, if the tax structure is the way, not you in particular Senator Warren, but you in general, you know, if there's a tax structure, why shouldn't he avail himself to it? And secondly, he's paying taxes when he needs to, but you know, you can't expect people to just line up and want to pay taxes necessarily or shame them into it. It was interesting.
They definitely, all these people who, and the personal attacks on her are ridiculous, stupid, and you know, I don't know why they do that. I really don't, I can't even begin to understand that kind of mentality. But I think they've got to change this tax structure at this point if that's the problem, instead of saying how greedy they are. I don't think it really plays as well as they think it does, because I think people admire.
And you can look at Musk and say, look, he did these cutting costs in NASA, he's doing that. And that's where he should be arguing, right? Like I'm doing good things too, so if you want to change the law is changing, but them indulging in the insults of her seems ridiculous in some level. Well, you said something, and this is my favorite part of the program where I get to virtue signal, but I did zoom with a bunch of young men, the kind of that affiliated with my brother's keeper group, where it's a wonderful organization, and someone used the term Karen, and I said, be clear, Karen is the new bitch.
And that is when men are angry and want to make a misogynistic comment or a sexist comment about some behavior that they have no honest or thoughtful response to, they call the woman a Karen. I'm like, what is the male equivalent of Karen? There is none. It's a sexist, we should strike the term Karen from our vocabulary.
And anyone who says it is trying to find a more elegant way to call a woman a bitch when they have no evidence and argument to push back on her behavior. It's just, again, these individuals, as brilliant as they are, have to let their inner child develop an outer man. Calling someone a Karen is basically saying, you give up, or you want to make a sexist comment about somebody. It should be struck from the vocabulary, and I'm not someone who thinks we should, certain words are dangerous or whatever, fine.
It's a word it's an over-cavit, but be clear, you're just calling someone, you're just calling always a woman a bitch when you hear the term Karen. That's what it's usually- It's interesting that both these people pressing and the third being Amy Klobuchar, women, it's really. I mean, there are men of all, there's grassy and worn-ar and this and that, but some of the loudest voices are women, it's very easy to insult them using sexist- He's not calling Bernie O'Karen. He called him something.
Yeah, he said, no, he said, I forgot you were a lot. He basically made an ages comment, right? Yeah, yeah, yeah, yeah, yeah. So let's go to the Trump Playbook.
Let's go to a sexist or an ages comment. You have a real argument. And she was like, I'm happy to have a discussion about taxes, please, let's do that instead of calling me a fucking Karen bitch. And then she's like, I'm going to slay you.
She gives as good as she gets. Anyway, too good. But did you ask her though? Did you press on her?
It's like, well, how come you've been in a fact of the passive-tax legislation? Well, Republicans. They're probably saying. I mean, it's what a dysfunctional system that all these people can take advantage of.
Anyway, let's go on a quick break. When we come back, we'll talk about Microsoft Activision's deal in tax on Sony and others, and take a listener-mail question. Hey, I'm AppiShel, comedian, writer, and floating head. You may or may not have seen on your 4U page.
And I'm starting a brand new podcast. Wait, wait, don't swipe away. It's called That Sounds Like A Lot, as in, that feeling when you check your phone in the morning, you read three headlines and immediately think, oh, that sounds like a lot. I'm gonna get into it every Friday.
I'll break down whatever chaos is happening in the world, then I'll sit down with a comedian. You can be progressive and not be, like, fucking annoying. Maybe an actor. They've got communism in zone too far.
You go, why? I'm telling the Sadie Hawkins day. Is that happening? Maybe a filmmaker.
Since leaving that show, I'm challenged sparingly. I just got to hang out and try to do stuff. You're the one with the charm line. It could be a politician.
Basically, anyone who responds to my cold deans. We're recording the whole thing in a beautiful studio, so yes, you can watch it on YouTube, or you can listen wherever you get your podcast. This is not the place to get the news, but it is the place to feel better about it. I'm Maria Sharapova, and I'm hosting a new podcast called Pretty Tough.
Every week, I'm sitting down with trailblazing women at the top of their game to discuss ambition, work ethic, and the ups and downs that come in the path to achieving greatness. We'll dive into their stories and get valuable insights from top executives, actors, entrepreneurs, and other individuals who have inspired me so much in my own journey. Follow Pretty Tough wherever you get your podcasts. Scott, we're back with our second big story.
It's still this Microsoft Activision deal. It hasn't gone through, but it's already causing trouble for gaming rivals. Cheers to everyone. It's a great story.
It's a great story. It's a great story. It's a great story. It's a great story.
It has gone through. It's causing trouble for gaming rivals. Shares of Sony, which is, I think, number two, fell more than 12% on Wednesday, wiping $20,000,000 off its valuation. Investors can soon turn that Microsoft can keep the best Activision titles in its Xbox subscription program and lockdown.
Sony's PlayStation console. The donate? Meanwhile, shares are better. I don't think they would do that, but we'll see.
That would be a real shot across the government's bow. Meanwhile, shares are up for smaller game publishers like Capcom, whose title is subject to a bit more. Epic's involved in it. There are sort of all kinds of companies that could be for sale.
What was interesting was, Canon didn't address it, couldn't address it, because there's nowhere to go, I'm sure they're looking at it as they are, the Amazon MGM deal, et cetera. But it's one of the things that's interesting about the Microsoft people and the Activision people is off the record. They're, I can say the words, I'm not going to say who said it, but they're like, Distant Third is their favorite expression and China. Distant Third China was like said to, I was like, okay.
And in fact, they are by revenue behind China's Tencent and then Sony. So there's plenty of room here to argue this competitive market. And at the same time, say, oh boy, if one company or two companies get a hold of this that have the AI and infrastructure to be building the next version of the metaverse, because that's the other argument they make. If you want the metaverse people, you need to do this.
It's going to be interesting. It's a really interesting moment in terms of this purchase, which is enormous at Microsoft's biggest. So what do you think? What I found interesting from a market standpoint is that Sony shareholders believe the acquisition is going through and took the stock, as you said, down $20 billion, whereas Activision shareholders aren't quite as certain it's going to go through.
And there's an entire industry around merger where when a merger's announced, it usually if it's announced at $100, occasionally it goes above because I think it's going to solicit other bidders at a higher price. It usually trades at a discount to the announced price until the transaction is closed and then the merger, our guys come in and they make a living saying they assess the likelihood the merger will go through. And if they think it's probably going to go through, they go in and about the stock for a 5, 10, 15% discount and just wait for three to six months and boom, what they feel is fairly risk-free or a great risk-adjusted return. And what's interesting here is that the discount from the announced price is much greater than it usually is, which means that Activision shareholders don't believe or think there's a real risk this thing gets blocked.
But at the same time, Sony, it's clear the market in general just feels like maybe things have gotten too rich for everybody because they're looking for any excuse to take a discount off the stock. Well, we'll see. It's interesting. I think this is going to go through.
I said less than it was and maybe they have to do something, but they've got bigger fish to fry here and they don't have enough. There is too much competition. They'll shake them down a little bit and demand this and that. That's exactly right.
I would bet 70% likelihood that it goes through but they say, but you have to divest these assets or these titles. They'll say, we're mean to do this, but we're standing watch and you've got to spin X, Y, and Z or you've got to get rid of this game or something. And you can't bar games from other platforms. You've got to sell the Cartoon Network or something.
I like what the Time Warner acquisitions say. Yeah. You've got that's it. We can't let this go through so you've got to divest adults.
There is art you will believe a lot of competition here. At the same time, you can see the coalescing happening in real time, right? That it's Microsoft. And I think one of the things, of course, everyone goes metaverse because metaverse is why they need to do these things and they need to have to.
But there are only a few companies. If you're in the gaming business, I think most gaming people, I talked to were like, we need some real technology now, right? We need some really heavy duty AI and cloud, et cetera, et cetera, machine learning, et cetera. And they all say they don't, I'm not capable of having it doing it.
It's expensive and difficult to where games are going. And so there's only a few Microsoft, Amazon, Facebook, I'm surprised Facebook hasn't moved in here more significantly. I think they're probably the most wary of doing any acquisitions. It would be Google, Microsoft, Amazon, Facebook have the capabilities, right?
So of the American companies, and then of course there's Tencent, which owns so much more gaming than you realize it's crazy what they own. And including very significant amounts of US companies, one of the executives said to me, which I have no basis in fact, I'm saying it, but they're like, I don't know why we're fine with China pointing all these cameras and microphones at us at the US and not regulating that and then they're worried about us. And I'm like, I'm worried about all of you. I don't know what to say.
But I think that's, they'll definitely raise that, you know, boogie man, the China boogie man. So it's going to be an interesting time, but there is, this is a global industry and it's going to be really hard for it not to consolidate more and more for time. So we'll see. We'll see.
So before we get to our listener question, we want to try something new. We're going to pick a startup and talk about it's funding. This is elevator pitch. In our inaugural round, we're going to look at a company that I like a lot.
I use it a lot of years, one password I pay them every year. I find them incredibly useful. They just close a $620 million series funding round that brings evaluation and nearly $7 billion, which seems small to me. One password has more than 100,000 paying customers.
Like I said, meeting one of them over 500 employees. You know, this is an interesting thing. These things also seem like they should get bought up by different companies, but maybe not. Maybe they should separate.
What do you think of this company? I'm thinking this is probably inexpensive. I had never heard this about this company until just now, but I'm immediately drawn to it because there's three things I hate most in my life. And they are shoelaces, keys and passwords.
I don't think I've ever remembered a password. I just all day long I sit there getting new emails to re-verify or get an email. I'm not sure if you're in your password. But anyways, it sounds like the only question I would have here, I bet it's a great business.
100,000 paying. What do they pay? What do you pay each year? I think I, it's not small.
I feel like $50. I don't know. Okay, so let's say it's 100,000. That would be only $5 million a year on a $7 billion evaluation.
This sounds to me like a really interesting business, but here's the fear. The fear is that it become a feature that another player just turns on. Well, Apple has it. Apple has it.
It tries to provide you with passwords. You know, those long things. Do that? Yeah.
Yep. They want to double their size. They want to double their size in the password management system. I'm like, FYI.
It's Canadian. Canadian. Oh, well, we hope they win. Go ahead.
Invest. Everyone should invest. Yeah. You know, look, the only advice I would have, I was speaking to a friend yesterday who has an interesting business.
It's kind of a restaurant lounge slash membership kind of stuff, that's kind of thing. And we were talking about raising money. My advice to the entrepreneurs here would just simply be, if you're going to raise money at $7 billion on what is either a five, it sounds like I don't know, $100,000 at $50. I mean, that's fine.
I mean, they're trading anytime you're raising money at like a massive multiple of revenues, unless you're already independently wealthy and this is the less entrepreneurs. So, you know, you're going to have to pay money at the table. If there's access to the round, which you'll probably will be here because it sounds like a company puts some money in your pocket. So I can't speak to the valuation.
Can't even speak to the business. All I can say to the entrepreneurs is take some money off the table. That way it's a win no matter what happens because to me, based on what you said in this valuation, this feels vulnerable to me. One of the things is it was a consumer password company like for people like me.
But now it's really focused on businesses. You know, it's a hundred thousand companies including Slack and IBM use it. And so that's where it's really, it's going to be doing that. And the CEO, Jeff Shiner, said humans are not built for security.
You make it simple for people to stay safe online. Obviously, again, if you have an iPhone, it has a password system, but I don't even understand. This is the one area that, you know, he's talking about this, the simplification of making it easier for get the complexity of security really to me as a huge opportunity. I just, I sit there.
It's the one place where I, even one password which I think is one of the easier ones. I'm still confused by it. I just am like, you know, and what's interesting is that their investors are really sort of top level iconic was one of them. It just came into the C-round Lightsby Ventures, Tiger Global and Accel, which was a previous investor also for these are sort of top level venture capitalists in here.
So, this is supposed to come in around $150 million and businesses now account for 60% of its revenue, which is interesting. So, $150 million, it's an enterprise business. So it's trading at about 40 to 50 times revenue. Does this have the growth?
No, they did not. Here's interesting things from a CNBC story. firms are charged from 79M per user per month. Well, one password is customer custody, $2.99 a month.
There is a monthly one and a yearly one. It's not that much, actually not that much. I thought it was more than $2.99. But it's one of the biggest security fundings, you know, which is interesting.
And I think I still think it's enormous opportunity. There's a bunch of others like LastPass, I've tried all of them. But I do think it's either an acquisition target or something else. Or that this is an area that should be separate.
But security solutions are only going to be more and more important. They have, there should be biometric stuff. And that's not as secure. It's not as secure as complex passwords.
And obviously, as you know, from talking to any security person, these are broken instantly. So I don't know. I think it's both an opportunity and also how can it grow when there's these giants sort of running the show? There you go.
Look, what I clearly got wrong was I was assuming there's an all consumer business. It was 100,000 paying consumers. Obviously, what this is, 100,000 customers, including places like Home Depot, right? It's enterprise 60%.
And this is, whenever I talk to people, whenever I hear about multi-billion dollar evaluations, 30 to 50 times a revenue, someone's like, sell. This is because I'm always a half-glass empty. But the thing you said that strikes me is when I think about biometrics, I think about clear, I would like an invasion of privacy, as long as a regulation on top of it, that ensures they're not doing anything weird with the data. I would like to go back to where we were in the 70s, where I could walk my dad literally to the plane at Orange County, John Wayne Airport.
And there was no security, no boarding pass. And they basically just scanned your eyes and say, okay, this is your seat. And maybe they communicate to you through your air pods. And whether it's vaccination status, reservations at a restaurant, I'm all down, walking, going in, grabbing a pair of on-tentaschutes and leaving the store and your automatic adult, because it scans your irises.
And then it says into your air pods, a pair of on-shoes, $129, or you leave a restaurant, and they said, what would you like to tip? I think it was an enormous opportunity for convenience around biometrics. I'd like clear to be distributed everywhere. I think it's really powerful.
You go to a Premier League soccer game or a sporting event, and it just takes so long to get the right to bring the stuff up on your phone, get the tickets. And it's also, it's stressful. Anyways, I think biometrics and security and simplification are enormous opportunities. But gentlemen, at Passwords, sell the dogs that sell.
Anyway, all right, well, that's where we're going to go. Next week, you know what we're going to do? Tom Brady's new NFT startup autograph, which got $170 million from people like Andreessen Horowitz and others. We'll talk about that.
It's got some Andreessen Horowitz that's trying to decentralize the world so they can further centralize power and wealth. Yes, exactly. We're here at FTX's Sam Bagman Freed, and the weekend is involved in this one. Weekend is so talented.
That guy is so talented. That's going to be our next week's autograph. Tom Brady's so dreamy. He's dreaming.
Don't be investing in someone's dreamy. That, nobody listens to Scott's. That counts for a lot. That counts for a lot.
Dreamy does not count for a lot. Anyway, they're more likely to be successful. Hey, to say it, you heard it here. Okay.
All right, Scott. We're going to pivot to a listener question. You've got to keep the least. I'm going to be a mailman.
You've got mail. This one came in the emails. I'm going to read it. Hi, Karen Scott.
You've got to go vertical to improve things like... You mean pivot with Karis, Richard, and Scott Galloway? You know that's not off about it. You've talked about...
Not that I noticed that. Not that I noticed that. Startups that need to go vertical to improve things like shareholder value, cost efficiency, and competitiveness. You've also talked about companies like Amazon or Google, or Too Big, and Stifle Innovation by buying smart companies.
How do you determine the threshold between a company that's too big and one that needs more vertical integration? Is that something that needs to be regulated? Love the show? Neil from Alberta, Canada.
That's a Scott question. Go for it, Scott. The two moves that have created more shareholder value than any business or strategy moves in history are one, the recurring revenue bundle where it's Amazon Prime or Apple Arcade or whatever, a move to recurring revenue is what Adobe did. It massively takes your company from a transactional business to a relationship-driven business.
The second is verticalization, whether you've been talking a lot about this. I always say to companies, the moment you feel you're in a moment of capital power, and this is a good lesson for every company right now, map out your entire supply chain from where you get the resources and the products and materials to where it's manufactured, to where it's assembled, to how it's distributed, to how it's sent to the DC, to where it's retailed, to how it's supported, how it's returned. Ask yourself where you are in that supply chain, and if you should be thinking about forward or backward integrating. In the 80s, the most creative move in retail was going into private label.
Walmart said, you know what, we can come up with a cola that's 90% as good as Coca-Cola for 40% of the price. And JCPenney said we can come up with a denim brand called Arizona that's 80% as good as Levi's for 50% of the price, and then built a billion dollar denim franchise. And then you look at Apple forward integrating into retail. I mean, verticalization, if you, and the next I like to do with companies is like, I was on a phone yesterday, I'm speaking at a school, I think, I was on a phone yesterday with Canada Goose, which is a brand I love.
And I'm like, okay, if Canada Goose has a four billion dollar market cap right now. Right? Yeah, it's a cupcake. I have one.
But then I've decided to wear my Zara one because it's more comfortable. But go ahead. It's cheaper. I've seen you in that Canada Goose.
It's like, how about some Cara with your jacket? It's a little head. It's a little poof of hair. I like the Zara one better than Canada Goose.
But go ahead. Keep going. You're offending me. Anyways, they're good people.
And they're Canadian. They're headquartered in Toronto. They're good people. So Canada Goose, go through the exercise of saying, all right, what if you had a crystal ball and said, Canada Goose, you're worth 15 billion now in three to five years.
Your market cap had quadrupled. And then you had to guess what had happened, what series of actions took place that quadrupled our market cap. And then the growth was super charged. I'm like, man, that might double your stock, but it wouldn't quadruple it.
Well, all of a sudden, out of where it became hot, really hot. And I'm like, yeah, that again, quadrupled. The only way you have these massive increases of shareholder value is when you take a transactional company and move to recurring revenue, or you take a company that for it integrates into retailer versus integrates into producing their own products, verticalization. And recurring revenue bundles are the only way you can kind of three, five X your company.
So I think it's something every company should constantly be doing. When is it too big? How does it stifle innovation? When they buy these models?
Well, that's more than lean of conquest. Yes. That's a different question. They're on the same page.
They say about vertical, vertical mergers. Yeah. How should we vertically integrate Scott? Well, I don't know.
We could have an event in Miami. Hello. Hello, we're in events. We're in events.
We should make our own hands up. That's what we should do. Anyway, really? No, no, that's a tough business.
I know that. That's a tough business. I know that's vertically integrated. I know that's vertically integrated.
That should be a pickup line at a bar. Would you like to vertically integrate? I guess it would be horizontally integrate anyway. Sorry.
The way we would verticalize, we'd be more horizontal. And that is we'd go to adjacent products and content, for example, we could start a newsletter. Probably the more obvious one is the one we're doing. That is for integrate into events.
The other thing we could do is reverse integrate and be a platform for other podcasters. But it's something, whenever you get to a point where you have additional capital and braille momentum, you absolutely want to be thinking about verticalization. Because the only way you maintain the margins that we all want for outside valuation is to control more and more experience. That is fair.
But I think it's something that every company, small, medium, big, should be thinking about every year. Let's map out our supply chain. And now I got that supply chain. If you really think about COVID-19, the real impact of COVID-19 is that every company and supplier has totally rethought their supply chain because all of a sudden you wake up and you can't get stuff out of Shenzhen or it's stuck on a ship or you're obviously...
You're never going to have a pandemic every hundred years, right? But a crisis is a terrible thing to waste. This is a normal opportunity. You can also over prepare.
Or even thinking about your own supply chain. There's a lot of fun with this. What is your supply chain for renting your human capital to the organization? How do you get there?
What do you do to prepare to get there? What's the certification? How you interact? How do you deliver that product?
And now look at how it's changed with remote work, with unbundled education, with competition, with new ways to rent your human labor and say, how should I be thinking about the supply chain as it relates to my own human capital and my own happiness? I'm not going to be thinking about my supply chain. I am. I also have a lot of toilet paper.
Anyway, that's a great question, Neil, from Alberta Canada. My supply chain is excellent there. Send us more. If you've got a question you're curious about, go to nymag.com.com.pivot and submit it for the show.
All right, Scott, one more quick break. We'll be back for predictions. So we are 250 years into this American experiment. And I'm saying it's going okay.
I give us like a C plus. There is no perfect past, but there is also no exclusively negative past because humans are going to human. That's what we do. I think the story of America is the struggle of people who have not been included in the promise of America to expand those principles to include more people.