China's AI Threat, SpaceX's Plunge, and Trump's Truth Social Grift

9:38Scott Galloway:I don't think that was him attention-migranting. I think that was him doddering. I don't think he knew where to go.

9:42Kara Swisher:Yeah, I thought that was... I don't know if you could tell, but that's what was happening. It was weird. It was weird. Of course, he just has to take... I think he was doddering. That's what I felt. Everyone's like, oh, he's taking attention. I'm like, I don't think he knows where to go. Like, because the guy ran after him. Like I often do it when my mom was getting mobile.

9:58Scott Galloway:But Johnny Infantino, like FIFA has a terrible reputation and it's earned every ounce of that terrible reputation. These international sporting organization committees, they kind of operate in another Netherlands, whether it's the ILC. Even the NCAA, I think, has not draped itself in glory because they have just a total lack of regulation. They have immense power. They have cartel power. They have monopoly power. these stadiums weren't even allowed to say, I'm a Gillette Stadium or MetLife. They had to cover it up such that FIFA would have total monopoly power on all monetization of ad revenue.

10:31Scott Galloway:Yeah, it definitely feels as if, and I'm a capitalist, I don't think there's any better way to leverage the most powerful instinct and then a self-preservation than capitalism. And I do think it's just proven over and over that it creates the growth you need for social services.

10:46Kara Swisher:But it does feel like it's just gone too far. Yeah, yeah. I think you've had too much World Cup. But speaking of grifters, I'll tell you something that hasn't gone too far. Andrew Tate and his brother Tristan had been arrested in Miami after British authorities issued 38 new charges against him, including allegations of rape and trafficking. These guys, I mean, there was obviously a big meme about his outfit, which was very strange. It was the strange sort of, you know, lady outfit. It was an odd outfit. But I'm very happy they were arrested. For anyone who wants to read about them, you will understand that these people need to be thrown into jail and never let out again.

11:25Kara Swisher:I'm so happy. I hope Trump doesn't try to stop them from being extradited to England, which is where these latest—they were, of course, jailed in Romania.

11:34Scott Galloway:Do you think he'll do that? I hadn't even thought of that.

11:36Kara Swisher:Yeah, Trump could—he did that. How do you think they got back here from Romania? Trump put the pressure on Romania to let him out.

11:42Scott Galloway:God, I think with all the shit he's under with Epstein, that's the last thing he did.

11:47Kara Swisher:You know, Amanda got this right. This is Epstein in real time. This is Epstein in real time, like with the government letting these people off all the time. That's how they got back here. That's why they were partying the main in their lady outfits. But these two are rapists and sex traffickers and child molesters. This is just the fact that the Trumps are so tight in them with them. J.D. Mance follows them. There's manosphere is one thing. These two are predators and should be thrown into jail. And I'm glad Britain came after them.

12:23Scott Galloway:Yeah, I agree. And I know it's 38 new counts. I'm glad that the justice system is taking over here. But the good news in the lens I look at this through, you know, to a certain extent is that young men have moved on from the Tates. They're no longer a thing. The media has not, and I think it's good that they maintain coverage and that they're brought to justice for what would feel like just so many allegations that they're going to spend, you know, it's probably a pretty safe prediction that they may spend a decent part of the rest of their life in jail. The Crown Prosecution Service has added new charges, rape, human trafficking, and decent images of child and assault.

13:04Kara Swisher:Yeah, this is their thing. This is their thing.

13:05Scott Galloway:And it brings Andrew Tate's total charges to 42. they found additional alleged victims in Bedfordshire and Hertfordshire, bringing the total number of accusers in the UK case to seven. Both of them had dual UK citizenship and are now awaiting extradition. The thing that doesn't get a lot of attention, and I think might be the reason they end up in jail, is people don't talk a lot about the actual business model. And that is, Andrew Tate didn't get famous from kickboxing or Big Brother. He may have gotten famous doing that, but he got rich teaching men to get rich teaching men to get rich. Basically, Hustlers University.

13:48Scott Galloway:And he had this bogus subscription, remind me of like Trump University, this bogus subscription education platform. And at one point, they think he had 100 ,000 people, almost all men, roughly at$50 a month at its peak. So$5 million a month in recurring revenue from basically an affiliate market pyramid scheme where the product was mostly more affiliate marketers. And the pitch was never subtle. Dominance, submission, and this thing called the matrix is a worldview where women are property and violence against them is a lifestyle brand. They've really set young men. The few, and I want to give young men more credit than just believing everyone was a Tate fan.

14:33Scott Galloway:but the scary thing about that part of the manosphere and what was so medacious about it is it would start off okay be fit be action-oriented take control of your economic life and then it just became about dominance and misogyny and crime and a grift rape rape really

14:49Kara Swisher:let's just like just call it what it is i mean they they like sell rape as a product um i just i i think that they they should go to jail and stay there and i would agree that like all kinds of young men have rejected them. My sons years ago had rejected them, had looked at them, looked at their stuff because it was really popular when they were teenagers. And I was sort of disturbed by that because I had been very aware of his messaging and had rejected it. That said, he had enough followers to be able to party on. And among the followers apparently are Baron Trump and others. And it just, it's, you know, in this case, I don't blame Baron Trump.

15:25Kara Swisher:This is grotesque, but it's very attractive in some way. And they are essentially rapists and sex traffickers. and now pedophiles. And the Trump administration better remove itself from any, because it is, it's Epstein in real time.

15:37Scott Galloway:These guys, at the end of the day, I believe they're going to be found guilty of a lot of different crimes and spend a lot of time in jail. The thing I find most interesting is that how were obvious grifters like this and such vile people able to get so much traction?

15:52Kara Swisher:And get so much influence.

15:53Scott Galloway:100 % care.

15:54Kara Swisher:They're very close to the Trump people.

15:56Scott Galloway:And I go back to what Peter Drucker says, that every business success can be reverse engineered to a change in demographics. And so what's the demographic here? What's the market that opened up? And I believe that it's millions. It's a cohort that unfortunately has exploded, and that is a cohort of loneliness and downward mobility young men. And they created demand, and guys like Tate supplied it.

16:20Kara Swisher:Yeah, it must be girls' fault.

16:22Scott Galloway:Wrapped in Bugattis and grievance, this isn't your fault. and the thing that he has kind of in common with Trump was the persecution or grievance complex that they leveraged. The Tate Brothers standard response to every legal action across countries that accuse them of crimes has been the same script. This is a conspiracy against me because I speak the truth.

16:44Kara Swisher:Right, exactly.

16:45Scott Galloway:And does that remind you of anybody? Right. So they take a specific evidence-based allegation and they reframe it as an attack on the truth or on an idea. And it's effective because it's flattering to the audience that if you believe him, you're not defending an accused rapist, you're defending free speech in a movement. So I find, like, how did this happen, to me, will be written about in, you know, sociology books.

17:16Kara Swisher:I agree. I agree. Let me tell you, there's a story which I mentioned a couple weeks ago in June called Andrew Tate's Empire of Abuse by Heidi Blake from The New Yorker. You need to read it. It is just, she interviewed everyone. It's an incredible indictment on a lot of people that facilitated it, but it'll give you a primer into why these people belong in jail and should stay there for the rest of their lives. And I'm glad they got arrested in such an embarrassing way too, you know, in their weird little outfits.

17:45Scott Galloway:Oh, by the way, the silver lining here is Scott Galloway has his Halloween outfit. I know that. Everybody was talking about. Oh, my God.

17:52Kara Swisher:They're just, except they're rapists, Scott. You could do better.

17:55Scott Galloway:Well, I'll take the gay prostitute look. Yeah, gay prostitute. As opposed to the rapist.

17:59Kara Swisher:Although no gay would dress like that. Sorry. He looks like a Midwestern lady paralegal. Anyway, okay, Scott. That's good. Let's go on a quick break. When we come back, SpaceX stock has taken a dive.

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22:10Kara Swisher:Scott, we're back. This is an interesting story. Ed is all over this, man. I've been following Ed. He loves this story. SpaceX stock is no longer blasting off. Let's use a rocket term. shares of the company are down almost 23%, wiping out almost a trillion dollars in market value. One could say that it was overvalued and it's not really wiping it out. It's just coming down to where it belongs. As we tape, the market cap for the company is 1.63 trillion. And going down, the short squeeze is quite heavy on here. Let's listen to what you said about the stock in early June.

22:40Scott Galloway:I think SpaceX is about to hit a 10-year high on the minute it goes public, meaning it'll be all downhill from there.

22:47Kara Swisher:Yeah, I think you got this. And so talk about what's happening here and the short squeeze with what's occurring. I think most of the float, which is very small at this moment, is devoted to short sellers. So explain the situation.

23:00Scott Galloway:I think Elon Musk will be remembered as arguably the greatest engineer in a sector, but that sector is not space or EVs. that sector is the financial markets. He has engineered in concert with Goldman and J.P. Morgan a means of creating demand, whether it's just this will be a good trade or it's Elon. Elon always gets his investors back or look at all these pictures of rockets, look at all this flowery WeWork-like language about the world being an interstellar species or an interplanetary species. Constraint supply and then unprecedented valuation. We've never seen anything like this. Call the president or call whoever, get included in the NASDAQ 100, get demand that no IPO has ever been fortunate enough to register.

23:48Scott Galloway:Now, everyone talks about, okay, they've lost a trillion dollars in market value, but it's still worth$1.6 trillion. This isn't -

23:55Kara Swisher:Someone say it's a$35 stock.

23:58Scott Galloway:It's not a broken company. It's a reminder that gravity eventually applies to stocks too. And this is what IPOs have become. And that is, they're no longer an opportunity for retail investors to participate in America's greatest companies. They don't create value. They transfer. They no longer create value, Karat. They transfer value from optimistic public investors to early private investors. because as someone who's on or been on the board of a lot of private companies, there's so much capital available in the private markets that if the people who really know the company and the sector well think, you know what, there's still a lot of growth and value here, they keep it all for themselves and they find their own capital and they invest.

24:41Scott Galloway:And they don't need to access the public. If you wanted to raise a couple hundred million bucks like Google did back when they went public in the 90s, you had to go public. Like VCs and institutional investors didn't have that kind of capital. Now, the only, basically I've said this for a while, the IPOs have now become the last stop on the chump train. And that is, okay, we don't think there's upside anymore here. Basically, it's a means. It's like showing up to an IPO right now. It's like showing up to a poker game after everyone else already knows each other's cards.

25:15Kara Swisher:Ah, and then you're the chump.

25:17Scott Galloway:And it's like that whole thing. If you don't know who the dumbest person in the room is, it's you. Now, having said that, if you can get in on shares at the pricing, like from your investment bank or an institutional investor or whatever it is, these guys engineer a one-day pop. If we had a real SEC chair coming in, I think a really solid review of the IPO process. Of this company. Or even tokenization. Even let's throw a bone at the crypto guys. Maybe they should tokenize private companies, put it on the blockchain and create a level of transparency and disclosure using AI that more people can participate in these companies pre-IPO.

25:58Scott Galloway:But the IPO process itself. Is now a transferable.

26:02Kara Swisher:Well, not only that, it kind of defines the term rigged. Explain what the short sellers are doing here and why this float is. They kept the float tight in order to create the pop, correct?

26:14Scott Galloway:Well, as a percentage, so first off, okay, they waived the rule that was included in the NASDAQ 100. They also waived another rule. Typically, when a company goes public, it has to float a certain amount of the company. With this, although they raised$80 billion on a$2 trillion market cap company, that means only 4 % of the firm's shares were available.

26:33Kara Swisher:Right.

26:34Scott Galloway:And they have all sorts of staggered lockups. They have effectively soft lockups that if you buy through certain platforms, you get banned from the platform. If you sell the stock, which is they don't want to call it a lockup because that would violate certain SEC conditions and create a different class of stock. So they created a workaround that's effectively a lockup. But people basically, this is one of the most shorted stocks in history now because people are betting it's going to go down. And what people do is they borrow stock and say, I'll sell it back to you at the same price for a fee.

27:03Scott Galloway:and they're hoping that it'll go down and they get to sell it back to you at the price when they initially shorted the stock. It's dangerous because any move up creates a short squeeze and it can create velocity on the way up.

27:15Kara Swisher:Which Elon has battled before with Tesla and other things. He and source sellers have been in a lifelong fight over the valuations of his companies.

27:24Scott Galloway:Yeah, this is a company that is, and every time I say this about Musk, I'm wrong. And to be fair, Musk has delivered in spades for his investors. The people who invested in Twitter, it's like they must have thought, I'll write this thing off. And he's like figured out a way to stuff it into SpaceX and talk about rockets. And those people now have a chance to get their money out. But here's the thing. I believe they're going to get their money out. And there's going to be an enormous number of investors who've made a lot of money, to be fair, a lot of private investors. And it will create some economic growth.

27:57Scott Galloway:A friend of mine from one of the investment banks said that there are 12 new billionaires just in Texas. You know, the IPO market and capital formation in the U.S. and SpaceX as part of this is a marvel.

28:10Kara Swisher:Except they may not be stay billionaires, right? Elon's no longer a trillionaire now at this point.

28:16Scott Galloway:Okay, but still, the amount of wealth created here. I get it, I get it, but it's on the backs of dupes, right?

28:23Kara Swisher:Someone's going to be at the short end of the stick and that's going to be the retail.

28:26Scott Galloway:To be fair, okay, I don't think we're out there telling people it's overvalued. I mean, Goldman Sachs and Morgan Stanley putting a price rating on it at 205 and 300, that is an exercise in creative writing. And I wonder if we're headed back to, again, 99. Remember when people were saying, analysts were saying, putting out buy recommendations and then in private emails saying this is a piece of shit. There's just no fucking way. I don't care who that Morgan Stanley analyst is. My guess is he or she is a very bright person. And in exchange for the fees for underwriting this company, in exchange for the opportunity to manage the wealth of the shareholders post the IPO, which is actually a bigger business for these investment banks that people don't talk about.

29:12Scott Galloway:There's a general onus on the analyst not to say this thing's overvalued. It's worth 40 bucks a share. That deals back. Right? And Sarbanes-Oxley, I think, was supposed to cure that. And it has not. The only difference is it used to be if you had a certain type of company, the analyst writing it up was the most important thing. And the analyst used to show up to pitch the IPO. And they're no longer allowed to do that. They're supposedly not talking to each other. But there's no fucking way anyone with half a brain would put a$300 price target on this thing.

29:44Kara Swisher:What would you do here? As an investor? Yeah, just sit quietly.

29:49Scott Galloway:Do you mean a shareholder or just an investor?

29:52Kara Swisher:Yeah, if you're a shareholder now, is it going down? Sell. Sell. Are you kidding? Yeah.

29:57Scott Galloway:The way I look at it is I just look at the asymmetry of potential upsides and the underlying valuation. The asymmetry here is very dramatic that if this stock was at seven, it's much more likely, what is it now, 140 or something? I don't know. It's much more likely this stock's at 70 than 280. So you have asymmetry to the downside, which means sell. Now, you've got to look at tax ramifications if you got into the IPO or whatever. But also, if you're a private market investor, you might be up 10 or 20x on this, which, again, credit SpaceX, credit Elon, credit the markets. for creating that. Oh my gosh.

30:35Scott Galloway:I've had calls. I haven't had a call from anyone at SpaceX. I've had calls from employees at OpenAI and Anthropic that are being pitched to buy their shares in the secondary market. And I would say the same fucking thing, sell at least 50%. And call me, I hope I'm wrong. Lock in most or all of those guys.

30:56Kara Swisher:Lock it in. All right. Well, speaking of which, in that topic, China is once again staking its claim in the AI race. This is a really interesting the story, something we've talked about a lot. Chinese startup Moonshot AI just unveiled a new open source model called Kimi K3, which the company says can match top models from OpenA and Anthropic on important benchmarks. Moonshot has priced the model at$15 per million output tokens. That's cheaper than Anthropic's Fable 5, which costs$50 for the same level of output. AI and semiconductor shocks dropped on this news, similar to what we saw with DeepSeq last year.

31:29Kara Swisher:Scott, before we discuss this, I want to play a prediction you made last December about China, AI, and Trump. Let's listen.

31:36Scott Galloway:I think China's about to go for the jugular here, and I think that they're going to massively engage in what I'll refer to as AI dumping. And that is these open weight models, including QN3 Max. These models are just much cheaper, lower power consumption, and everyone from Airbnb to other Fortune 500 firms are starting to recognize that these things are lower cost. And I think essentially China's going to say, OK, the fastest way to kick this guy in the nuts is that he's made a giant bet on AI, including the S &P and his entire economy on AI. And we're just going to start dumping AI into the U.S.

32:16Scott Galloway:market.

32:17Kara Swisher:So great prediction. I want to talk about how concerned you are U.S. companies. They're, of course, calling it AI communism, one of them, one of the top people about what China's doing.

32:28Scott Galloway:Does that mean centrally planned AI?

32:30Kara Swisher:Well, no, they're giving it away for free, everybody, and benefiting society.

32:34Scott Galloway:It's called dumping. Yeah, exactly. There's nothing more capitalist than trying to consolidate markets. Than what they're doing here.

32:40Kara Swisher:So Trump's former AIser, David Sachs, called this a new model concerning and argued U.S. is setting itself back with regulation, saying this is how you lose the AI race. There is no regulation, David. So I don't know what you're talking about.

32:51Scott Galloway:Well, I think he's talking about the data center moratorium in New York. Oh, the data.

32:54Kara Swisher:Whatever. It doesn't matter. This is not the problem, David. No, I agree. these costs. So, Scott, go for it because you really did. This has stayed with me when you started talking about it last year. And I remember thinking he's dead right about what China's going to do. And you're right. It's not AI communism. It's AI capitalism is what's happening.

33:14Scott Galloway:This, Kara, this is the biggest story that's got it. This is the business business. Kimmy. The biggest business story that is getting the least coverage. And that is everyone thought the AI race would be won by the company with the smartest model. And increasingly, it's looking like it'll be won by whoever can drive margins to zero the fastest. China isn't going to beat open AI in a frontier model, a premium AI. That's not what they're trying to do here. They're trying to make premium AI economically irrelevant. That is exactly correct. Moonshot pricing AI at roughly 70 % below comparable frontier models.

33:54Scott Galloway:It's impossible. It's not competition. It's...

33:57Kara Swisher:Dumping.

33:57Scott Galloway:Get used to the word. Exactly. It's AI dumping, folks.

34:01Kara Swisher:Yeah, dumping.

34:01Scott Galloway:And this is what China has done. This is just like, for God's sakes, if we had a secretary of commerce who didn't have his head up as us, God, for God's sakes, just spend an hour with Gina Riomundo. For God's sakes, just... I just did. Get Justin Wolfers in there and just listen to the people. They'll tell you what is going on and what you can do about it. This is what China did to solar panels, steel, EVs, and batteries. First, they match Western quality, or they don't even match it, 80, 90%. Close.

34:35Kara Swisher:Actually, they match it. With cars, they've matched it, but go ahead.

34:38Scott Galloway:Then they cut the price by two thirds. Then they own the market. Investors should stop asking who has the best model. The salient key question is the following. Who still has pricing power in 24 months?

34:55Kara Swisher:Yes. So Trump will try to keep them out of here the way they did with EVs, but it doesn't matter because across the globe, China will own the markets everywhere like they do with EVs. If you go anywhere except the United States, their EVs are everywhere, everywhere. So what happens here? Because they're going to try to keep, they'll keep it out of this. These companies are freaking and they either want to be bailed out or they want to be protected, which is, of course, typical of them because they're going to be protected. communists. So what does the Trump administration do? Since, as you noted, they're banking, as you completely presently noticed, they're banking on this.

35:37Kara Swisher:They've staked their entire market upon this. I think that's exactly, that's what you said, his entire company on AI, and we're going to start dumping AI onto the US market. So what did the Trump administration do, especially because they're in there, especially after the mid-turns, they don't have a lot of moves to make here.

35:55Scott Galloway:When you make unilateral non-market decisions that are caked in bad judgment, you end up in a quagmire. You end up in a corner with no good options. Sounds like Iran. That's exactly right. Whether it's going into Iran without consulting Congress, your allies, having a plan around the state of Hormuz, you end up with no good options. By deciding to, no regulation, making a huge bet on AI infrastructure or making an enormous bet. The market has just gone so crazy, so concentrated around small number of companies. And what you have here is he's going to be in a real quagmire because you think, well, okay, he's just going to regulate it and tell these companies they can't use, tell American companies they can't use Chinese models.

36:43Scott Galloway:But the most frightening graph for the American economy and the global economy is one of those mountain graphs. And it shows that in the last 90 days, token usage of Chinese models has gone from like single digits to 53%. The majority of AI consumption now in the U.S. appears to be coming from Chinese open weight models. And here's the problem. Whether it's David Sachs or whoever it is that has an enormous investment, or just the economy has an enormous investment and is dependent upon the growth of OpenAI and Anthropic and NVIDIA and all these companies, the chip guys, the infrastructure guys won't be hit as hard.

37:23Scott Galloway:But the front end models, if they get hit hard, the whole thing, those dominoes are already starting to tip. But the problem is every VC and all the other people that he caters to are going to call him and say, I can't afford to build this new insurance AI company if you all of a sudden overnight decide I can't use Chinese open AI models. So he's surrounded by a lot of donors who are making a lot of money arbing down the application layer to a cheaper LLM layer. And then there's the cyber security exposure. I mean, it just goes on. And he doesn't surround himself. He surrounds himself with people who want to make money in the short term, but don't think about the long term ecosystem here.

38:05Scott Galloway:So this is, I call this, okay, two things, AI dumping and next quagmire. He's going to be in a box here. He's going to be in a corner here.

38:16Kara Swisher:He doesn't even know. He doesn't even know.

38:18Scott Galloway:I don't think he understands AI. I don't think he cares.

38:21Kara Swisher:I don't think he cares. I think he's on his way out and he's trying to grab for whatever he can. Remember those things where they gave you a cart and you ran around a supermarket and you had 10 minutes to take everything? That's what it feels like. Like he's running around. Not that he could run around.

38:36Scott Galloway:I forgot about those.

38:37Kara Swisher:Remember those get to the meat.

38:39Scott Galloway:This is, so I was a macro and microeconomics graduate fellow in business school. This is literally going to be the most exciting, fun period to look at just how people, it's like smooth holly all over. We used to just talk about how stupid tariffs were and there was different historic events, the oil shock of the 70s where we talk about how stupid they were in the 20s during the Great Depression to actually constrain and tighten fiscal supply. This era is just replete with head-up-your-ass decisions that illuminate economics and markets.

39:13Kara Swisher:And then they blame like some housewife in Utah who doesn't want a data center. I think you're absolutely right. The focus on data centers is probably too much. But at the same time, it's not enough because the ones that they stick right in front of people or right in the midst of people, they couldn't have done it well. They had to like do it in the most aggressive. Really tone-deaf. Tone-deaf way. I've been talking to a lot of people who are building these things and they're like, we can show that we make money from it. I'm like, oh, my God, they hate you. Like, you really have lost the narrative here so badly that you need to recalibrate what you're doing.

39:46Scott Galloway:So I never, you know, miss a chance to intellectually virtue signal. I think being a critical thinker means that on a regular basis, if you do what we do, you inflame the people who think they know you and trust you and like you. And you say something because you think it's the truth and knowing that people are going to get angry. I do this like every couple of weeks. I say something that people think is stupid or wrong. And they like let me know via email and social. And that's fine. I think that probably means, one, I get it wrong. And two, I'm doing something right. And the latest one, people are in flame that I said the data center pushback was populist bullshit.

40:26Kara Swisher:No, you said some of it was. Well, let me be clear.

40:30Scott Galloway:Whether it's a chicken processing plant, a nuclear power plant, or the Ford factory, generally speaking, in every economic, economic progress involves just very understandable nimbyism. It's like, no, I don't want the chicken processing plant next to me. I don't want Three Mile Island a mile from my house. The charge of local government is to weigh the externalities versus the upside and make a thoughtful decision representing their community. And if you just go item by item here, some are very real concerns. I think that probably the -

41:03Kara Swisher:Memphis would Elon do.

41:04Scott Galloway:Probably the most significant is the idea that it would strain the grid and send up electricity costs on middle-class households such that Sam Altman could get richer. That is a very legitimate concern that should be screened for. But what gets missed is that many, if not the majority of these plants will be off-grid and powered by natural gas.

41:20Kara Swisher:No, that is perfectly fine. I just think you have an Elon in Memphis, like poisoning people of color, poor people of color. You've got a Kevin O 'Leary in Utah, like accusing people of being charged.

41:32Scott Galloway:Poisoning people of color is a pretty charged statement. Why do you say that?

41:35Kara Swisher:Because there's lawsuits right now. Methane, because he has a methane, there's a lawsuit. This is a, well, there's a lawsuit happening where he opened the thing, where he's releasing all levels of methane and it's causing pollution and poisoning. That's what, that's the lawsuit.

41:50Scott Galloway:Yeah, look, whether it's— Listen, it'll be in court.

41:54Kara Swisher:This will happen in court. And I'm just saying this is what it looks like, is that they cannot help themselves. Or you have Kevin O 'Leary accusing people of being Chinese communists in Utah. They could not have picked a worse spokesperson. They couldn't have picked a worse. Or putting them even close. But when people are paying more for electricity and it looks like, you know, it looks like local officials are on the take or, you know, there's a lot of controversy about the Louisiana plant. I don't know. You know, that should be litigated, essentially. This is my fear.

42:28Scott Galloway:My fear is that because people are, quite frankly, this is the newest vessel for understandable anger around income inequality, that blue states are going to pass these moratoriums rather than saying, how could we make this so lucrative for the citizens of Minnesota in terms of property taxes and an entity that does in the short run. Granted, in the long term, not a lot of jobs in the short run creates some vocational jobs. And we get property taxes from an entity, reliable property taxes from an entity that doesn't tax our social services almost at all. They have closed loop water systems and uses their own energy that's off grid and pays a lot of property taxes.

43:07Scott Galloway:And if I were these guys, I've told you my idea, I would try and get those payments locked in because I don't think as many of these things are going to be built.

43:13Kara Swisher:No, I get that. I think that more dreams aren't forever. They are, let's have a figure out, get this to do this in a right way.

43:18Scott Galloway:But that's what hearings and public hearings and our legislative officials are supposed to do without a governor weighing in and just doing a blanket moratorium.

43:25Kara Swisher:Right, but a lot of these tech companies are jamming these things through. I mean, this is the issue, is that they want to take a minute so they can do things like that. And just, you know, I think it's actually an interesting business because Meta's in talks to lease computing power from its data centers to Anthropic. That could be worth$10 billion over two years, similar to a deal Anthropic just made with SpaceX for computing power, but only a third of the size. You know, Meta wants to use this compute, these infrastructure computes, to get in the cloud computing business, to offset the costs of AI CapEx.

43:59Kara Swisher:You know, there's all manner of things working out here, and certainly government should be part of it. I think it's just the manner in which several of the most high-profile properties are going in that creates this hatred, essentially.

44:13Scott Galloway:This is techno-narcissism, income inequality. I don't give a flying fuck about you. I say tone deaf things. I think that humans require too much power. I think there's a genocide against white Afrikan. This is there's. Oh, and by the way, I have a tendency, the people I cohort with have a tendency to go to islands where there's underage girls. There has never been an easier target right now. than the Tech brothers. And some of it is well-earned. At the same time, a public official's job is to balance it. Here's what I fear. Blue states will feel political pressure to make long speeches and put on moratoriums on data centers.

44:56Scott Galloway:The Republican Southern states will say, come one, come all. And they're not stupid. They're not going to let them just like soak up all the water. I I think they're smarter than that. And what I worry about, Kara, is that while Democrats in blue states will feel righteous, we won't have as much tax revenue to pay for SNAP benefits and pay our high school teachers.

45:16Kara Swisher:I get that. But the actual backlash is happening in Tennessee, right? Let me read this from Reuters.

45:21Scott Galloway:That's a good point. That's a good point. Is that Colossus? Is that where Colossus is?

45:25Kara Swisher:Elon Musk's ex-AI has installed far more gas turbines without federal permits at its Colossus II data center project in Tennessee than it publicly acknowledged that pollution is hitting predominantly black neighborhoods the hardest, Reuters analysis found. Like, this is just like a layup for any reporter. And this potential emissions from the turbines are far beyond the threshold that require a federal permit and would release in near predominantly black communities already estimated to be suffering disproportionately high rates of lung disease, according to Reuters. I mean, poisoning.

45:58Scott Galloway:Yeah, and that has a consistent and rough history that corporate America tends to go into areas. Exactly.

46:04Kara Swisher:And if they had done it in the right way and saying, like, we're going to help the community, we're going to give out. You're absolutely, but they couldn't help themselves. And they, of course, I personally, I think Elon does more damage to these people than anything else, like in terms of the way he behaves. And then you have, you know, the, you know, the moron Kevin O 'Leary coming up the side, calling people Chinese communists because they object. Like every single thing that gets built gets objected to. But the way they handle the objection is anyway, I would agree. I think you were absolutely right.

46:33Kara Swisher:And I don't think you're wrong. I just think the way they did it in high profile places. creates this. And it is an opportunity. It's just a question of how much an opportunity, how much a state or a local area should get. Anyway, it's a really interesting story, but you're right. You got this 100%, right? Along with the Chinese dumping, to me, is one of your greatest calls. That was a long time ago.

46:56Scott Galloway:Go on! That's the way I want to start the week.

46:59Kara Swisher:People are going to just use these Chinese models. And there's all manner of cyber issues around that, security issues too. Not that I trust these American companies much either. All right, let's go on a quick break. When we come back, why Netflix's latest earnings have investors concerned?

47:32Scott Galloway:is talking about it. It's been a minute stands for your right to be curious, one big question at a time. Four days a week, host Brittany Luce breaks down the ideas, trends, and conversation shaping the culture. She goes beyond the obvious takes, talking with creators, critics, and cultural voices who help you see things differently. You'll hear dialogues with both up-and-comers and cultural icons. I love NPR. I've been listening to it for my entire life. They do a great job. You know, try to hit it straight down the middle. Fantastic production values. It's been a minute. knows cultural trends don't happen by accident.

48:04Scott Galloway:It's not just what's trending, it's why it's trending and what that says about us. Brittany and her guests dig into the latest memes to unpack how they got into your feed in the first place and why they're stealing our attention. These are the conversations you want to have and the ones you'll be bringing up later. Follow NPR's It's Been a Minute podcast and indulge your cultural curiosity.

48:28Scott Galloway:Support for the show comes from CoreWeave. AI isn't just a new tool, it encompasses so much more. It's spurring a revolution across all industries and reshaping itself to become a big part of our future together. CoreWeave is at the center, powering some of the biggest names in AI. As the essential cloud for AI, CoreWeave provides an AI platform that combines next-generation infrastructure, intelligent tools, and expert support. It's powering the world's most complex AI workloads faster and more efficiently. From medical research and diagnosis to education, from complex visual effects from movies to breakthroughs in science and technology.

49:00Scott Galloway:If it's AI, CoreWeave is uniquely ready to power it with purpose-built tech. The big ideas, the wild visions, and what-ifs and why-nots. CoreWeave is working to build what's never been built before. CoreWeave is the essential cloud for AI. Ready for anything, ready for AI. To learn more about how CoreWeave powers the world's best AI, go to coreweave.com slash ready for anything.

49:28Scott Galloway:Support for the show comes from Anthropic. Producing a show like this one requires a lot of research, and it's not always obvious which thread you need to pull to unravel a story. But that's the kind of complex question that Claude was built to solve. Claude is the AI for minds that don't stop at good enough. It's a collaborator that actually understands your entire workflow and thinks with you. Whether you're debugging code at midnight or strategizing your next business move, Claude extends your thinking to tackle the problems that matter. Deep research is one of the areas where Claude excels.

49:56Scott Galloway:Think comprehensive, reliable analysis with proper citations, turning hours of research into minutes. It can suggest connections across sources and suggest unexpected avenues to explore. Plus, you can connect Claude to your professional tools and it can help streamline your administrative tasks so that you have more time for the important stuff. Companies including Stripe, Shopify, and Pfizer trust Anthropic with the rollout of AI in their businesses. For problems worth solving, get started with Claude at claude.ai.pivot. That's claude.ai.pivot. And check out Claude Pro, which includes access to all of the features mentioned in today's episode.

50:28Scott Galloway:cloud.ai slash pivot. This is not in the script, but I use Cloud. I use Cloud Cowork, and I have enabled or activated my email such that it can go through my emails and answer questions. And I found that to be one of the biggest unlocks in terms of productivity and utility in my professional life.

50:54Kara Swisher:Scott, we're back. Netflix shares just hit a 52-week low after the company's latest earnings report, revenue and income were roughly in line with expectations, but investors were spooked by a third quarter revenue forecast that raises concerns about growth, another red flag, engagement. This has been really the talk of lots of people. Ted Sarandos hit back at those sophomore slump viewership drop-off reports saying it's very common in the industry in season two fall if it's actually improved this year. Netflix also says subscribers watched 97 billion hours in the first half of the year, up 2 % from last year.

51:25Kara Swisher:Not 2%, it's not that great. But the company is cutting back on what we watch reports now releasing data only once a year instead of twice. They're obviously thinking about live TV channels. They got podcasts on there. They're doing short form stuff. Subscription bundles they're thinking about, which they never thought they would do. They're looking like TV to me, like, or whatever. They're looking like YouTube is what they're trying to do. So talk about what's happened here, because they were sort of on a high, Like they could do no wrong. And now people are sort of slapping at them pretty hard.

51:58Scott Galloway:I didn't see this coming. It's a big, big story. I thought their stock, I thought the company was going to be well-positioned benefit from not spending$118 billion such that they could, you know, have Scott Pelle like get angry or maybe they would. I mean, I think they dodged a ball. Well, they wouldn't have ever had, well, no.

52:14Kara Swisher:They wouldn't have handled it that way. They wouldn't have gotten CBS. Yeah, that was Paramount.

52:18Scott Galloway:Right. That was Skydance. You see what I'm saying though? Like I, And there's just no way you could have pulled off a big acquisition. I think they showed real, the board and Ted showed real discipline walking away. I don't, I got to a point where it's like, okay, we're going to be house poor here. We're going to be trying to figure out ways for 10 years to figure out a way to show return on this. To a certain extent, they become, if you look at the earnings call, they become victims of their own success. Wall Street's no longer asking, can they win? They ask, can they keep winning forever? And you talked about this, 97 billion hours watched, and that's unbelievable, but it's up 2%.

52:54Scott Galloway:And people are used to double-digit growth from Netflix. And the problem is it's not a startup anymore. It's becoming cable with a much better interface. And every media company eventually realizes the same thing, and that is attention is finite. And the next story growth isn't adding subscribers. It's owning more hours of your day. But they've made more progress against that than they get credit for. They're going into live sports. They're going to have NFL games. They're actually bidding, which I care about, on the 2030 World Cup. I just did that Brian Williams thing that you did. Yeah, yeah.

53:30Scott Galloway:You know, we started talking about when we're going to hang up our cleats. And he's like, you know, when the fastball is no longer fast. And I'm like, oh, Brian.

53:37Kara Swisher:Oh, Brian.

53:38Scott Galloway:You know.

53:39Kara Swisher:Let's put those horses away wet and tired. Yeah, he's got this.

53:43Scott Galloway:He's like, well, that's like having a moose in a convertible. And you're like, I don't even know what that means, but it sounds very down home. He does. Yeah, he's a very, anyways, very likable. He's an affable, handsome fellow. Yeah, just a nice, handsome guy. But look, the bottom line, this company, Netflix, has almost been cut in half. And I like a bottoms of valuation. It's trading at its lowest P.E. in a while. Well, I think the company is a buy here solely because - Yeah, I would agree. Well, two reasons. One, it's the operating system for non-work hours. And every time, and this happened to Netflix three or four years ago, the stock was way down.

54:27Scott Galloway:And right now, the fear is the clip economy. YouTube.

54:30Kara Swisher:Yeah, YouTube is the fear.

54:32Scott Galloway:We have a new generation of people that don't want to go longer than two or three minutes. and that YouTube and that clips on Insta and Reels are going to begin to soak all the time away. Their ad tier has actually done really well and is responsible for a lot of their new startups, which, by the way, I thought was a bad idea. And the reality is Ted and his – God, what's the co-CEO's name? I don't give him enough credit. Greg, yeah, co-CEO of Netflix. The bottom line is every time people talk about this company is overvalued and the stock gets hit, Greg Peters, it ends up being a buying opportunity.

55:10Kara Swisher:Yeah, I would agree. Although they do have risks from, I worry about some of them being a little jumpy with the podcast. They're just sort of trying everything and maybe they may need to be a tiny bit more.

55:23Scott Galloway:Yeah, but they're very analytical. They are, that's correct. They know what they're doing. They're using AI and analytics to look at what should be on the home screen, what shouldn't.

55:32Kara Swisher:Yeah, I agree. I think of any media company.

55:36Scott Galloway:You don't want to bet against Ted and Greg. I really don't. I'm actually looking at the stock for the first time. I told you my Netflix stock story. I bought it at 12. That's the good news. On a risk-adjusted basis or split-adjusted basis, it's now at 700. The bad news is I sold it three months later at 10 to take a stock loss. I want to find a time machine so I can go back in time and kill me and then kill myself. Seriously, I wouldn't be doing this Joey Bag of Donuts podcast.

56:01Kara Swisher:Well, you know, it's a question of what you do. And I think they were smart not to get that, as you said. And speaking of which, we got Eric Gardner from Puck. The other story is, of course, the Paramount-Warner deal and the AGs, which have sort of stopped it in its tracks for now. But let's listen to Eric Gardner from Puck about what's happening at Paramount, because this also slows down a competitor of theirs. Let's hear his summary of that. For the first time, Paramount's people are starting to talk about the Supreme Court. So what's going on there? Well, yeah, of course, the Supreme Court could eventually factor maybe if an injunction is issued and Paramount appeals it up.

56:34Kara Swisher:But I think there's more going on here. I think it has to do with bargaining positions. I think that the state AGs know that if they can drag this case on, it will cost the Ellisons a lot of money,$1.2 billion if it's, you know, delayed a few months. And, you know, so what are Paramount's people doing in response? Well, they're talking about the consequences of pursuing this fight on and on and on. They're talking about how the Supreme Court has conservative justices who might change antitrust standards, who might make it tougher for future mergers to be blocked. And so they're pointing out the cost that way as well.

57:11Kara Swisher:An injunction ruling will come soon. And after that, both sides will assess their options. Maybe look into a room and start negotiating what a deal could be. And so they'll have these kind of future considerations in mind. So another interesting media question. Like, I personally would be on Netflix side on this kind of stuff in terms of figuring out how to get back, you know, how to get back and what they're doing. I guess they eventually will solve the problem and then have to deal with the next problem, which is the debt that they have, which is enormous. Away from all the other noise about that merger, the debt is the biggest story there.

57:47Scott Galloway:Yeah, I don't. I was against the consolidation here. And then I spent some time with two economists that I really respect. at NYU and at Chicago. And they both convinced me just in very sober way that this does not, even the combined Warner Brothers Discovery doesn't qualify, or excuse me, Paramount doesn't qualify as a monopoly. And the industry needs to consolidate and you don't get to pick the political leanings of the consolidator. That's not reason for blocking a merger. Now, if I were the unions, if I were SAG-AFTRA in California, I'd be going apeshit crazy and using whatever leverage I could because I do think these guys are going to be more of a threat to employment at this price and with their backgrounds in AI than another acquirer would have been.

58:39Scott Galloway:But again, that's not a reason legally to block a merger either. We like consolidation. We like efficiency. That's part of capitalism. I think this is mostly political, and I understand that, okay, if you're going to weaponize attorney generals and AGs and the DOJ, we're going to do the same thing against your donors. I get it. I like hitting back. At the end of the day, maybe California gets some consolation or they have to spin something, but this goes through. This goes through.

59:09Kara Swisher:This goes through.

59:09Scott Galloway:But again, these guys might be the dog that caught the car. That's correct. Then what?

59:15Kara Swisher:That is correct.

59:16Scott Galloway:Then what? But look at the debt here. And Oracle, daddy's piggy bank is off 44 % because everyone realizes there's no fucking way OpenAI can buy a trillion dollars in Oracle. It is really something. Or 100 billion in Oracle compute.

59:31Kara Swisher:Yeah, to me, Netflix is the one I would focus. I still would be bullish on Netflix compared to this. No matter how this turns out for Paramount, it's not good going forward because they're going to have endless things to deal with along with the political stuff. like along with it. It just goes, it's much more trouble. I think what Netflix is doing to try to figure out what works is actually a great idea. Like even if I think half the things won't work, I kind of like that. They're actually out making things and that's what Paramount needs to focus on is what can they do to reinvigorate their businesses and they're not going to, they're stymied by the AGs, they're going to be stymied by the politics, they're going to be stymied very much so by the debt which is what everybody should be focused on.

1:00:16Kara Swisher:So in this case, Netflix to me is the one that's doing the most interesting, I think, per se.

1:00:21Scott Galloway:Yeah, you know, stocks off 50%, I don't think you want to bet against this management team. I think, let me put it this way. I think there's more, again, going back to asymmetry, if the stock doubled and just went back to where it was, I think people would say, yeah, that kind of makes sense. If it got cut in half here, that would be exceptional. So again, asymmetry versus to the upside versus asymmetry to the downside in terms of like -

1:00:42Kara Swisher:Is our word for the day.

1:00:43Scott Galloway:Well, oh, my God, you want to talk about the new Defense Department asymmetry over and over. But anyways, I like I think this is actually an opportunity.

1:00:53Kara Swisher:Yeah. Yeah. Anyway, it's an interesting time in media anyway. All right, Scott, one more quick break. We'll be back for wins and fails.

1:01:04Kara Swisher:Megan Rapinoe here. I have some exciting news. I'm doing a live taping of my new show, Why Are You Like This, in Chicago on July 24th as part of Vox Media's The Lineup, and I want to see you there. Your tickets get you all-day access to food, drinks, and the energy of one of the W's biggest weekends. I'll also be sitting down with a special guest, and you won't want to miss it. And here's a bonus. If you also grab tickets to a live taping of And Mom with Skylar Diggins and Cassidy Hubbert, you can bundle both events and save 30 % with code AFTERNOON30. Get your tickets for Why Are You Like This with Megan Rapinoe at boxmedia.com slash lineup and use code AFTERNOON30 for an amazing celebration of this league.

1:01:48Kara Swisher:That's boxmedia.com slash lineup.

1:01:57Scott Galloway:There's a civil war happening in the Democratic Party. And if there's one place that that's playing out most clearly, it's in Michigan.

1:02:03Kara Swisher:A crucial Senate primary battle in Michigan that could determine control of Congress in November.

1:02:09Scott Galloway:Congresswoman Haley Stevens and Abdul El-Sayed. A progressive Democrat and a moderate Democrat. In the end, it all comes down to the dreaded E-word, electability. But in Michigan, one candidate is trying to turn the electability concept on its head. If we think that voters walk around asking, where do I sit on some theoretical left-right spectrum? Then in theory, the bulk of the voters are somewhere in the middle. The problem, though, is that that model hasn't really accurately predicted our politics for a very long time. If Michiganders wanted moderate, why would they have elected Donald Trump twice?

1:02:43Scott Galloway:Dr. Abdul El-Sayed is making the progressive case for America first. And he's trying to settle the Democrats' ideological battle in the process. This is about the money versus the money. I'm Estet Herndon, and this is America Actually. Catch us every Saturday on YouTube or wherever you get your podcasts.

1:03:04Kara Swisher:okay Scott we're gonna do wins and fails I shall I don't know I have two I'm gonna have two well no

1:03:10Scott Galloway:actually um your show your show lady you do you I do me Kathy Griffin put out this great thread showing that a picture with her and this 23 year old and she said internet have at it and I'm like and I wrote back Kathy have at it yeah you're consenting adults enough men are doing the same thing. Enjoy yourself. Enjoy your money. You're going to be dead soon. Do what dudes do. How about it?

1:03:35Kara Swisher:Anyway, as I predicted, speaking of good predictions, the Odyssey did a crazy numbers at the box office and sort of knocked off the anti-woke people who thought. Oh, my kids went

1:03:45Scott Galloway:and saw it.

1:03:45Kara Swisher:Yeah. Pulling in 124 million for opening in the U.S., 250 million across the Yeah, huge. Of the globe. Huge numbers. People were just nonstop talking about it, which was interesting. Huge sales of the Odyssey itself, the Emily Wilson edition, which is considered a much better translation, which he based it on. Just all over the place, just doing really well. And I appreciate it. It's a great film, and it deserves it. And it shows that if you make really great blockbusters that are interesting and challenging and a great movie, people will go to them and gets people back in the theaters, which is great economically, speaking of all the knock-on effects.

1:04:26Kara Swisher:And I love that they just, nobody cared about the stupid woke stuff that they thought might hurt it. And neither did Chris Nolan. I think they thought Chris Nolan was conservative. I don't think he's anything. I think he just likes to make good movies. I thought that was great. I thought that was great. It was a fail on behalf of the anti-woke people, which was great for my thing. I think I'm going to do a fail win kind of thing. Mark Warner, who was at, I interviewed Gina Raimondo at Johns Hopkins this week, which was a great interview. It'll go up soon. And Mark Warner came to the dinner, Senator Warner, and then he had to leave because he had to go on TV to talk about Trump's crazy speech, which we're not discussing at all because it was insane, which I think was a big, turned out to be a big nothing burger, his election security.

1:05:10Kara Swisher:It's his attempts to slow the election, the midterms down, the inevitable.

1:05:13Scott Galloway:There is election interference. It just was from POTUS when he tried to get votes out of Georgia illegally. It's called January 6th.

1:05:18Kara Swisher:Yeah, and AftPros. So anyway, so Mark is very much, I have to say, I give him great credit. And he pilloried CBS for running the Trump speech for, I don't know, 17 minutes without any comment, especially given Trump's record. By the way, MSNBC did it for 10 or so. And I have to give credit to CNN, which I thought did the best job of handling this because they had a lot of the digital stuff to do so. They did not run the speech live because of Trump's record on lying about election interference, like very clear record. But they did keep feeding Caitlin Collins, I thought she did a great job, clips.

1:06:01Kara Swisher:And then they would comment on them and fact check them in real time as they were happening. And at the same time, they did avail themselves. They did put the speech on the streamer live, but next to it were reporters commenting and fact-checking in real time next to the stream, which was great. They used digital means to do this, which was great.

1:06:24Scott Galloway:They should do that at debates. It was so well done. We had this idea two years ago. Right. Have a chyron with a bipartisan committee doing pants on fire or truth or mostly true.

1:06:36Kara Swisher:Right. This is what they did. But they allowed people to watch it, which is like on the streaming where it belonged, but they didn't do it on broadcast television. And they had reporters. And then they had reporters reading the documents and commenting on them in real time. I thought I got to say, apparently, from what I talked to people at CNN, Mark Thompson was behind that. It's exactly how you handle that. And I think Mark Warner was absolutely correct to pillory CBS for just putting it out there without any kind of fact checking for as long as they did. I think MS should not have done it either.

1:07:09Kara Swisher:So I'm going to be equal time there. But I thought Mark was great. And he was he's very concerned about what Trump is trying to do. And it was a real fail on behalf of several news organizations and a win for CNN to be doing it that way. Others did not. I think ABC didn't run it. NBC didn't. But I thought they did the best job because it did provide the speech in real time, but put around the guardrails that reporters are supposed to do. So I was really kind of pleased to see that done so well in the CNN as it currently runs. And so kudos to them and Mark Thompson for doing it and Mark Warner for warning about it.

1:07:50Kara Swisher:Go ahead.

1:07:50Scott Galloway:Yeah, you know, there's very few people you meet and you think this guy would be a great president right now. I think Senator Warner would be an outstanding centrist president. Absolutely.

1:08:01Kara Swisher:He just had the tragic death of one of his kids, but he keeps going, and I really appreciate his public service.

1:08:10Scott Galloway:Yeah. Well, there were a lot of calls from the Democratic Party for him to run. People saw him as very electable, but he's had a lot of struggles with it, or he's had real tragedy, and he's always, as one should, opted for his family. Anyway, okay, so my loss is, again, and we have to point this stuff out. And I always promise myself I'm going to be more focused on business and tech and less part of the rage cycle. But I do think it's important we continue to point this stuff out. Trump media is building a paid subscription product out of insider trading. And that's not hyperbola. That's the actual SKU here.

1:08:52Scott Galloway:The offer is the following. For a fee, Wall Street firms or investors get Trump's true social post delivered in milliseconds ahead of the public feed. I know.

1:09:03Kara Swisher:It's insider trading.

1:09:05Scott Galloway:It's front-running insider trading. The launch is August 1st. Clients are already signed up, and Trump owns 41 % of the company, and he's selling. or, you know, so like, let's strip the euphemism. This isn't a data feed. It's a front running service and the product being sold isn't information. It's the ability to trade on insider information before the country reads the same sentence. And so why, why does this matter? And April Trump posted that Iran had fully reopened the of Hormuz, it was false. Oil moved anyways. The post was the event. The truth was optional. So he can move markets if and when he decides it's beneficial for him or the people paying for his insider trading API.

1:09:53Scott Galloway:Trump has used true social to move markets on tariffs, Fed personnel, military strikes. Every one of those posts is now a product with a millisecond paid tier. And every rule in modern securities law, RegFT, blackout windows, insider trading statutes exist to prevent one thing, someone getting to trade on material information before everyone else does. And the reason we do that is the reason capital formation is unparalleled in our society and companies get access to cheaper and cheaper capital, which means crazier and crazier ideas deeper in the barrel get funded. and occasionally those deep in the barrel batshit crazy ideas end up being alphabet and we end up having more tax revenue and more jobs for our kids is because the 99 % of investors who don't have access to inside information or the 99.99 still feel like they have a fighting shot.

1:10:57Scott Galloway:Russia has absolutely no stock market, despite being a real economy and having a lot of firms that create a lot of cash flow value, because the populace believes and knows the game is rigged against them. And so they don't invest in it. And if you continue to have a small group of people who can engage in insider, it's getting to the point now where everything's gambling and And someone else is the house because you don't have inside information.

1:11:29Kara Swisher:No, it's just so blatant. It's so crazy blatant. It's nuts.

1:11:32Scott Galloway:Well, it's the logical endpoint of a pattern that's existed for a while. $2.2 billion in Trump's disclosed income during his time in office,$1.4 billion of it crypto, more than any public crypto company made last year.

1:11:44Kara Swisher:Also, his stock trades also.

1:11:46Scott Galloway:22 ,000 of them in 2025. Biden made 13 in his whole presidency. NVIDIA shares bought a week before Commerce approved NVIDIA chip sales to China. Palantir bought nine times before he publicly praised its warfighting capabilities. Meanwhile, SEC enforcement actions against public companies, 80 a year under Biden.

1:12:09Kara Swisher:Yeah.

1:12:10Scott Galloway:Four in the last year.

1:12:12Kara Swisher:Enforcement is down at FDA. Well, that's why we have suddenly Legionnaire's diseases back, why we have the dirty, the poopy lettuce. This is, he just was, he's trying to take out scientific things on judges today. Like every day it's a different thing. This is like a removal of all government regulation in order to help people make money.

1:12:33Scott Galloway:Markets, functioning markets of which we have the best in the world. And again, people don't, people take for granted how incredible it is for small companies. I was able to raise hundreds of millions of dollars in my thirties for batshit crazy ideas and some worked and some didn't. Where else can you do that? Yeah, I agree. Where else do the most talented people in the world want to come to business school here and then head to the valley so they can start these crazy fucking ideas and they can find capital to do it? The difference between us and Europe or one of the biggest differences comes down to risk.

1:13:05Scott Galloway:People who are willing to bet their human capital on something and capital willing to risk their own money on those crazy risk takers. And if the game is rigged, that capital starts to go somewhere else. Markets run on one assumption. Price reflects information available to everyone at roughly the same time. That's the whole shooting match. And Truth APA doesn't cheat on that assumption. It sells tickets to that cheating. And once Wall Street has a fiduciary reason to keep him posting, you haven't just corrupted a president, you've made corruption a cash flow positive business model. This is putting in place structurally corruption and seeds of doubt around the markets.

1:13:50Scott Galloway:Yep.

1:13:50Kara Swisher:And why wouldn't Wall Street buy it? I mean, it's a chance to make money. You make money.

1:13:54Scott Galloway:I'm tempted to buy it, Cara.

1:13:56Kara Swisher:Right. I know.

1:13:56Scott Galloway:I thought, okay, it's a hundred grand. I'll trade on it. If I make money, I'll donate to Democratic candidates. And then I thought, okay, is that a good or a bad idea? I don't.

1:14:05Kara Swisher:Yeah. Yep.

1:14:06Scott Galloway:He doesn't care about people. Maybe it doesn't amount to anything. And also, I don't have the infrastructure to trade on milliseconds. Literally.

1:14:13Kara Swisher:They are going to be selling the silverware from the White House before they go. They're going to put it on eBay. They're going to put on plates on eBay.

1:14:20Scott Galloway:But this feels like it was tailor-made, and I have no evidence of this, but Citadel is some of the brightest minds in the world. They spent millions building just a wire to their headquarters where they would get information a millisecond faster, and then they have the technology to trade on it. And by the way, it's perfectly legal. This feels like a quant or an elect, a quantum trading, whatever the term is, went to him and said, we have an idea.

1:14:52Kara Swisher:Yeah, of course. No, he's done this over and over again. Selling access. Selling access is what it is. This is what he does.

1:14:59Scott Galloway:This is.

1:15:00Kara Swisher:Coin operated presidency.

1:15:02Scott Galloway:This is not only corrupt. It is going to cost entrepreneurs in the markets. It's and it's going to it threatens this unbelievable thing that is unparalleled, not as capital formation. All right. My win is what I'll loosely call Gen Z's band of brothers. And that is military recruiting or the military recruiting crisis, at least in the short term, appears to be over. And Gen Z has ended it. The Navy, Army, Air Force and the Space Force have all hit their 2026 recruiting goals nine months ahead of schedule. That's the strongest recruiting class in 15 years.

1:15:35Kara Swisher:It's a testosterone, isn't it?

1:15:37Scott Galloway:Oh, God. Three years ago, the services fell short to their goals by as much as 25%. ROTC is surging. Dartmouth's program grew from eight cadets to 35 in three years. And this is happening despite a very unpopular conflict in the Middle East amongst a generation skeptical of America's role in the world. And everyone, of course, is claiming credit. Secretary Hex says the military stopped being woke. Recruiters point to prep courses and modernized outreach. But the best reporting on this has been from the Wall Street Journal, and they talked to the recruits themselves. And it's a much simpler story.

1:16:12Scott Galloway:Well, the military is selling what the rest of the economy stopped providing, and that is purpose and belonging. One sailor, and I thought this was very moving, said he joined because he wanted to find my place somewhere. That's what young people want. They just want to find their place. economics are playing a role here. Full tuition ROTC scholarships is college cost or plus health care and education benefits, rights. They're offering this just as the entry-level job market appears to be softening. Also, I think it comes down to one word and that is trust. Institutional confidence is collapsing everywhere, yet the military ranks as America's second most trusted an institution behind only small business.

1:16:51Scott Galloway:So I've also said, I think the armed services are, I think there's a lot of young people, especially young men who are really untethered, wandering and lost. And I believe that the service is, it's obviously not for everybody, but I think for a lot of people, it's a fantastic means of marinating, feeling a sense a purpose, meeting other people. I would agree.

1:17:18Kara Swisher:You know, I wanted to go in the military as you know. And my dad, let me just say, my dad went into the military right after college. He was a doctor, right? Yes. He sent him to college. He'd sent him to medical school and he served for 10 years and then he died right when he got out. But this is how he did it. You know, he was from a family of more limited means. And this is how he got, you know, he got out of West Virginia, essentially. And one of the only problems that I have right now, well, besides Hexeth is a moron, is withholding promotions from women and people of color.

1:17:55Scott Galloway:Gotcha. Or scrubbing the name of gay veterans off of ships.

1:18:00Kara Swisher:Like unfairly not promoting women. Like he has a thing out for women and people of color in the top ranks and that's grotesque. Like that's supposed to be the fairest place in the world.

1:18:09Scott Galloway:And the fact that he's withholding this is not they didn't get their promotions because it's woke.

1:18:14Kara Swisher:It's just gross what he's doing at the top in terms of withholding those things. And that's not what the military is about. But I do think it's a great alternate. And the question is, are they really screening people? That's the thing. Look at what happened at ICE. This guy who just murdered someone, I think, was was never vetted. Like the vetting has to happen because this one guy who shot turns out he has very severe mental illness. I think when they go through the ICE vetting, when this is all cleaned up, it's going to be pretty repulsive, the kind of people they let handed a gun and told to get out there and chase immigrants.

1:18:46Scott Galloway:Our military branches are clearly doing something right. And that is, if you look at leadership, if you look at elected officials, if you look at successful business people, if you look at some of the most successful people in business school, we have a wonderful program at NYU Stern where we bring in veterans. The bottom line is at my company, and it's not, I mean, it's a little bit of patriotism, but we always interview veterans. They're very impressive people. And as a matter of fact, until this year, 70 % of the men showing up to a recruiter's office didn't qualify because of obesity or they were unable to pass a mental health test.

1:19:22Kara Swisher:Or education, too.

1:19:24Scott Galloway:So Gen Z signing up not only reflects more patriotism on their part and different things, some good, some bad in the economy. It reflects the young people. It reflects well on young people. Yeah. And also there's nothing. There's no greater leveler in the United States so far than the military. Because nothing like being in a foxhole or counting on someone for your life or the life of others puts race, how rich their father is, their sexual orientation in a fucking backseat where it belongs. It's like, can I trust this woman with my life? And I don't care who your daddy is.

1:20:03Kara Swisher:Wait, you didn't want to go in the military, right? You didn't have an interest in it?

1:20:06Scott Galloway:Oh, no. My dad took me to Annapolis. He was in the Royal Navy. and it was one of those moments, Kara, we went and we toured Annapolis where it was clear my parents lacked the sophistication to know what was going on because we toured Annapolis and my dad wanted me to go and we were pretending that I was going to apply. I didn't have the grades. I didn't have the SAT scores. And then they said, you have to get a letter of recommendation from one of your senators. And like, we're fairly like lower middle class. Like, we didn't even know how to go about that. It just, the tour cry, frankly, was one of those moments where you realize like, you're unremarkable and you have no business being there.

1:20:53Scott Galloway:And it was just sort of, I just remember the trip with my father, quite frankly, being quite depressing. Like, I'm not, I'm not of this ilk. And my parents don't even realize, they're so unsophisticated. They did no homework on what's required to get into Annapolis.

1:21:07Kara Swisher:Oh, no, no, no. I feel bad for young Scott. Oh, now I feel pain for young Scott. I would have been an ad. Oh, yeah.

1:21:14Scott Galloway:So instead I went to like crazy fucking fraternity parties and made out with hot women at UCLA games. You did fine.

1:21:20Kara Swisher:You did fine. I did.

1:21:21Scott Galloway:Things worked out, Kara.

1:21:23Kara Swisher:Anyway, we want to hear from you. Send us your questions about business tech or whatever's on your mind. Go to nymag.com slash pivot to submit a question for the show or call 855-51-PIVOT. But elsewhere in the Kara and Scott universe this week on On, I'm talking about the rise of insurgent progressives with a panel of political experts. One of them is Amanda Littman, co-founder and president of Run for Something, a great group attracting young people of all kinds to public office. Let's listen to a clip. If you don't like DSA, it is possible for the establishment wings of the party or the old guard, such as it is, to offer a different vision.

1:22:00Kara Swisher:Like, they could avail themselves of selling something that would solve the problems and speaking to the anger people feel. The fact that they have instead chosen to punch left or to, you know, blame the young people who want these wild and crazy things. Like, make an argument. I think she makes a good point. Make an argument. I think it's great. It's a really interesting organization. Okay, that's the show. Thanks for listening to Pivot. And be sure to like and subscribe to our YouTube channel. We'll be back on Friday.

1:22:28Scott Galloway:Today's show is produced by Lara Neyman, Zoe Marcus, Taylor Griffin, and Todd Wiseman. Ernie and Todd engineered the episode. Thanks also to Dubros, Miss Rivera, and Dan Chalon. The Shakur as Vox Media's executive producer podcast. Make sure to follow Pivot on your favorite podcast platform. Thanks for listening to Pivot from Vox Media. We'll be back later in the week for another breakdown of all things tech and business. Congratulations to Team Spain beating Argentina 1-0. In Extra Time, Golden Ball. Best player, Rodri from Spain. Golden Booth, Kylian Mbappe. God, incredible. 10 goals, edging Messi's 8.

1:23:02Scott Galloway:A wonderful career from Messi. This is his last World Cup. The Golden Glove, best goalkeeper. What a wonderful tournament. Thanks to everyone who came, and well done, America.