Meta and YouTube Lose in Court, Insider Iran Trades, and Sora Shuts Down

7:18Kara Swisher:You can have more kids like I did.

7:19Scott Galloway:Unless my prostate's going to give birth, I don't think that something is, I don't think that's in the cards.

7:26Kara Swisher:In any case, one of the statistics that I just read was you spend, by the time they go to college.

7:33Scott Galloway:90%.

7:34Kara Swisher:You have spent 90%.

7:36Scott Galloway:Yeah, of all time you're going to spend with them.

7:38Kara Swisher:And that kills me. After I heard that, I was like, last night my kids were crawling all over me. And at first I was trying to eat dinner. And I was like, oh. And then I thought, oh, fine, fine. It's fine.

7:46Scott Galloway:Yeah, my son's doing orientation at his college. And it's a one-day thing. I'm like, let's go for four days. We'll just hang out. Yeah. And it's like, no, I don't want to hang out.

7:56Kara Swisher:Yeah, it's Cats in the Cradle, my friend. Anyway, I love that song. We got to get to news, though. There's so much going on. Oh, that. That. Listen, President Trump plans to install big tech names like Mark Zuckerberg, Larry Ellison, and Jensen Wong to a technology council to weigh in on AI policies and other issues. We were not invited.

8:15Scott Galloway:AI policy. Buy more of my shit. Buy more of my shit. U.S. government. Buy more of my shit. Give me what I need.

8:19Kara Swisher:You know, it's, again, bereft.

8:21Scott Galloway:No regulation and buy more of my shit. That's going to be their recommendation.

8:25Kara Swisher:Bereft of anybody who has a different alternative view, that these are the only experts. I would say our invitation is lost. The dog ate our invitation, but he hates dogs, so Trump ate our invitation. I just don't—this list is nobody who has any doubt about it, nobody who has any good research, no one whose interests are not aligned with it, no regulation with any kind of— And conflicts everywhere. Everywhere. I just. What do you know?

8:49Scott Galloway:Jensen Huang's a big fan of selling, being able to sell his chips into China, despite the fact these are the chips that you do war games with and track our Ohio class submarines.

8:59Kara Swisher:Yeah. And Larry Ellison wants more data centers. And, you know, I just this. Oh, God. These people. Like you think if you were a real president and I think this guy isn't losing it every single day, including the polls, which are just like look out below. But it's really amazing that he doesn't want other inputs that may vary from his rich friends. It's just, I find it, it's just not good policy not to have people who doubt each other and debate it. I just, I don't understand. We're waiting for an invite. Even just you, even you, if he needs the white guys. Even you.

9:35Scott Galloway:Well, you'd be good. I love that. Well, I think you, even you. Well, you're the white guy.

9:39Kara Swisher:They're not going to have me. I'm irritating to all of these people. And so, you know, I'm just saying, I'm just saying.

9:46Scott Galloway:You, speaking of which.

9:49Kara Swisher:Oh, yeah.

9:49Scott Galloway:Someone was, someone said, I don't know, on one of these many, many platforms, which are just so good for your mental health, that care was a total shill for big tech. and I wrote, do you realize I have been on, when you go on a board and they don't want you on the board, they stick you on the nominating and governance committee, which has absolutely no power. And your job is to find new directors and it's literally like put them at the weird kids table. And so I've of course served on a lot of nominating and governance committees. where you're supposed to recruit new board members. If you were in such a pain in the ass to these people, you'd be fucking chairman of SpaceX right now.

10:35Kara Swisher:I would be good.

10:35Scott Galloway:Because over the last 20 years, we have correctly started saying, all right, let's try and broaden the aperture and bring in candidates who potentially don't look, smell, and feel like us and aren't members of the same country club. So a journalist, a gay journalist who's covered tech, Like, you were built in a factory of lesser board members. I'm going to go on a board next year.

10:58Kara Swisher:Well, let's discuss that. You're going to help me. Yeah, I know.

11:00Scott Galloway:But the reason, I mean this sincerely, Cara. They're not going to have me on. The reason you haven't been invited to be on.

11:06Kara Swisher:I was invited to one. I was invited to one.

11:08Scott Galloway:Okay. But the reason you haven't been invited to half a dozen is because you get in their face. And on boards, nobody's going to put, they don't mind someone who has alternative opinions or whatever. But ever since, quite frankly, I'll be blunt, ever since I started becoming more outspoken on Pog, I used to get invited to go on three or four boards a year. It's gone way down.

11:28Kara Swisher:Wow. Interesting.

11:29Scott Galloway:Because the public CEOs are like, okay, let's call him. Let's bring him in. Let's talk to him. But I don't want him in my boardroom.

11:38Kara Swisher:Yeah. Let me address something, though, this week. I gave a thing at Syracuse University. They asked me this amazing tone. The Orange Men. The Orange Men. And, you know, I was talking about things that I've talked about a lot about CNN and the Ellison's owning it and this and that. and where AI is going.

11:54Scott Galloway:Ooh, a little controversy this weekend. Controversy, yeah. A little controversy. I just want to say that I find David Ellison very attractive.

12:01Kara Swisher:I do too.

12:01Scott Galloway:And Larry Ellison is a huge big brain thinker.

12:04Kara Swisher:He's a nice guy. He makes great movies.

12:06Scott Galloway:I would absolutely love to work for them.

12:07Kara Swisher:Yes, okay. All right, listen. This is what happened. I was telling things I've said 109 times before. I don't want to work for a tech mogul. I don't. I just never have. Walt and I didn't take money from someone. As opposed to a media mogul?

12:21Scott Galloway:Yes, actually. You work for media moguls?

12:22Kara Swisher:Yes, yes.

12:23Scott Galloway:Yeah, I'm calling Challenger, so you'd rather work for Rupert Murdoch than Larry Ellison?

12:26Kara Swisher:We left Rupert Murdoch, my friend. But you did work there. You did work there. You cashed his check here. As fast as I could get out, I got out. How long were you there?

12:33Scott Galloway:Hold on, hold on, hold on. How long were you there?

12:35Kara Swisher:No, just like two years before we could get out. You were only there two years? No, I was there a long time, but he didn't buy it for a while. In any case, Scott, we left News Corp because of Rupert Murdoch and that behavior around the taping of that dead girl. Oh, God, that was awful. It was awful. We left very soon after, on purpose. Is this the voicemail thing?

12:53Scott Galloway:Yes. Oh, God. I know.

12:55Kara Swisher:Exactly. So we did that, and we took money. We were offered money from Silicon Valley Venture Capitalists, and we took money from Terry Semel, who had a media fund. Oh, yeah.

13:03Scott Galloway:Yahoo, CBS.

13:05Kara Swisher:Yeah. Anyway, he's a lovely guy, amazing guy, amazing person. He had a media fund, and then we took money from NBC. But we were offered Venture Capital money, and we didn't take it because I was like, these fuckers, they're going to fuck me.

13:17Scott Galloway:There's a word for that, Venture Capitalist. Exactly. But anyways, go ahead.

13:20Kara Swisher:But anyway, we didn't take the money. And then I just don't want to work for tech people. I've said that to you on this podcast a dozen fucking times, right? Haven't I? Yeah. A dozen. So I repeat that again. But what I did was Scott McFarlane, who left CBS and is now with Midas Touch, which is a very fast-growing thing. And they're going into news now instead of just news aggregation, which is a cool thing. And Scott is an astonishing journalist. He did an amazing job around the January 6th in the Justice Department. Astonishing, very handsome man, by the way. You would love his handsomeness. Very tall.

13:52Kara Swisher:He went to Syracuse. And so he was the emcee. And as a joke, he was like, you know, he was talking about going independent. Oh, no, because he looks like an ad for an anchor, a typical TV anchor. And he was, you know, he's like, oh, goodness, I'm taking a big leap. And I was like, oh, it's going to be great. And I said to him, I said, you made the right decision. And I was looking directly at him and joking. I'm like, you don't want to work for the Ellisons. I mean, he's a terrible person. I was just like laying it on as a joke. The whole crowd laughed. I was not, I don't think Larry Ellison's a terrible person.

14:25Kara Swisher:He's got, he's actually very funny. I don't agree with him on a lot of things. He's an amazing entrepreneur. He has great aesthetic taste, by the way. And his ship, his boats are fantastic. Like I was joking to Scott McFarlane directly. And somehow these reporters were like, Kara Swisher thinks Larry Ellison is a terrible person. And it was crazy. And it's also all the things I've said before many times. Like, it's kind of weird. And then it became a thing. Whatever. By the way, let me just be clear. I like David Ellison. He's a nice guy. Larry Ellison is a tough dude. I'm sorry. He really is.

15:01Kara Swisher:And people can dislike him because he's been a tough cowboy over the many years. That said, I do think he's very innovative and has done astonishing things. And so, but I don't want to work. I don't want to work for tech people. I don't. And that's perfectly, you know, legitimate. And frankly, the decisions they've made have been terrible around stuff that concerns me. And that worries me of them taking over CNN. So what? Big deal.

15:28Scott Galloway:I think you're being bigoted against wealthy white men. You know, I don't, you know, you wouldn't have to worry about this if you weren't living forever.

15:38Kara Swisher:I know. I'm sure the CNN people are like, it's premiering soon and she insults the new owners. I mean, honestly.

15:45Scott Galloway:I'm being very serious. I'm speaking at one of these events tonight. Anyways, but I get a huge amount of power from my atheism because I find it very comforting to know at some point everyone I'm worried about is going to be dead and so am I. I find it actually quite liberating to realize, okay, squeeze all the juice you can out of this lemon called life. because we're going to be dead soon and take risks. And if you fuck up, it really doesn't matter.

16:13Kara Swisher:We are on the same wavelength.

16:14Scott Galloway:No, in 100 years, no one's going to remember us or anybody we care about.

16:18Kara Swisher:Anyway, moving on, the Pentagon, this is troubling to me, is sending roughly 2 ,000 troops from the 82nd Airborne Division to the Middle East. As of this recording, there's been no decision to put, I hate this expression, boots on the ground, but that's what it is. Trump is talking a lot of talk this week, saying the war has effectively been won, Iran wants to make a deal and negotiations are happening right now, even as Iran disputes that. And I hate to say it, but I believe Iran and I don't like the people who are running Iran. And he said he got a gift from Iran, calling it a very big present worth a tremendous amount of money and tied to oil and gas.

16:53Kara Swisher:I think he's just making shit up now. He's also sent Iran a 15 point plan to end the war, demands including dismantling nuclear sites, ending enrichment and reopening the Strait of Hormuz. We certainly had some of those things in place before. and as potential talks may or may not be taking shape, there are reports that Iran would prefer to deal with Vice President J.D. Vance over Jared Kushner and Steve Witkoff. Wow, that's a choice. That's a choice. But I would agree with the Iranians on that. And Vance has been the person who, you know, is going to be running for president and could possibly be president and also has been opposed to the war quietly.

17:32Kara Swisher:that he certainly ran on the idea of no more wars. And he's also a veteran. I don't know. What do you think about that?

17:40Scott Galloway:It's all, I mean, I go to the markets, you know, so there was an unusual amount of futures that changed hands at 650. Please talk about this. Well, I believe that in a digital world where forensics and AI and investigative journalists, one of the wonderful things about America is that people see incentive in finding out what actually went down. And I think that's one of the wonderful things about our society. I think you're going to see President Trump four or five years post his presidency sitting in front of a camera and a jury pretending to be too old and he just doesn't remember him telling his buddies, his friends, his family members.

18:26Scott Galloway:To bye, bye, bye. That, oh, I think I'm going to announce that the talks are going really well, even though according to the Islamic Republic, there are no talks, which will send the markets skyrocketing. And then when it comes out 24, 48 hours later, then in fact, there are no talks. And then the markets oil surges again and the markets go down. This is an insider traders.

18:51Kara Swisher:It's right from the White House. It's right from the White House.

18:54Scott Galloway:Ivan Boski could not have dreamt of this situation. The ability to trade on near certainty, the president knows that if he just, A, he believes he can say anything he fucking wants. It doesn't matter. I can lie. I can be full of shit. Just put out press releases. It doesn't matter. Kind of the funding secured over and over.

19:17Kara Swisher:Yeah, exactly.

19:19Scott Galloway:And I know that the markets will respond swiftly to my comments. There is now zero-day options where you can buy options that expire by the end of the day. And I'm going to go out on a limb here and say that sometimes the president doesn't have that much fidelity to rule of law or conflicts of interest.

19:39Kara Swisher:I find it like this has happened over and over again. He must just say things while in the toilet and people then trade or whatever. And, you know, interestingly, let me note, lawmakers are introducing bipartisan bills to ban prediction markets from listing. There's a lot of action on this now from listing sports bets and to prohibit members of Congress from trading in certain markets. Facing the heat, Calci plans to block athletes, coaches and officials from betting on their sports and political candidates from trading on their campaigns. And Polymarket announced finally enhanced market integrity rules, including banning trading on stolen confidential information.

20:14Kara Swisher:I mean, this has happened rather quickly and quite it's quite important that this happen. You know, it's really it's it's just grift. It's just out and out grift that these numbers and, you know, the Democrats are prepared. This is like so deep in the heart of easy to prove. Right. This kind of stuff and who's doing it. And so I think they better, you know, they better hope they get those pardons from Trump and he pardons himself because this is just really it's let me break it down for regular people. They're making money at your expense and cheating while doing it. Like, I don't know what else to say.

20:57Scott Galloway:Look, the Democrats engage in what I'll call small cap corruption. And that is, it's not illegal to trade stocks right now, if you're a U.S. Congress person.

21:08Kara Swisher:I think it should be.

21:09Scott Galloway:And even though there are regulations and guidelines against it, the fines is a slap on the wrist. So the incentives are if I'm sitting in a, you know, the Senate, if I'm on the defense committee or the intelligence committee, and we're talking about a$30 billion contract to Northrop Grumman, and it looks like it's going to go through. and my guess is Northrop Grumman will put out a press release in 72 hours. Hey, honey. Hey, Paul Pelosi. I really like Northrop and I just want to be even handed here. I think what Trump is.

21:47Kara Swisher:Scott, you do this every time. This is like massive corruption and a different.

21:51Scott Galloway:It's just corruption on a different scale, but it's still corruption.

21:54Kara Swisher:It is, but you tend to go right to Nancy Pelosi who's leaving Congress. We know we should have passed these bills.

22:00Scott Galloway:Okay. Because in order to be taken seriously, we have to be critical thinkers and apply it to both sides of the aisle.

22:05Kara Swisher:I understand. This is, okay.

22:07Scott Galloway:So, but let's look at the data. Over the last, what is it, 20 years, the S &P has tripled and the Pelosi portfolio is up sevenfold. And nothing she has done is illegal. This is a certain type of corruption. What Trump has done is said, okay, that's small ball. You're corrupt for millions. I'm going to be corrupt for billions. because what he's done, I'm not sure it's illegal, but we've been dependent upon, and Barry Goldwater predicted this 50 years ago, we have been too dependent upon a series of norms as opposed to laws and have slowly but surely ceded power.

22:47Kara Swisher:You're absolutely right.

22:47Scott Galloway:So Trump says, oh, everyone's doing it. Marjorie Taylor Greene was doing it. Everyone, not everyone, a significant number of people in Congress have been trading stocks and beating the market.

22:59Kara Swisher:Mark Wayne Mullen was one of them.

23:01Scott Galloway:They can't. And also, in my solution, I think they should make, I think people in Congress, I think representatives should make a million dollars a year and senators should make two million dollars a year. I agree. They make, I think,$168 ,000 or$178 ,000 a year.

23:16Kara Swisher:It's small.

23:17Scott Galloway:If you have two homes and you're living in D.C. and you weren't rich before running for Congress.

23:22Kara Swisher:We should pay for their apartments.

23:24Scott Galloway:You can't afford to live there.

23:26Kara Swisher:They have these nice apartments for them that are actually secure, so make them more secure.

23:30Scott Galloway:The Singapore model, probably the best-run nation in the world, the Singapore model, they pay their elected officials a lot of money and they have zero tolerance. You cannot go to work for a lobbying firm or a PAC company. There has to be a sunlight period or whatever they call it, a sunshine period. You cannot in any way have any inside domain benefit in any way. hey, we find out you've called your cousin in the Philippines and he or she is trading stocks. You're probably going to get lashed. That's literally what it's like. And what do you know? There's no corruption. Anyways, he has taken it to an absolutely new level.

24:06Scott Galloway:But just circling back where I started, we're going to find out that the greatest levels, volume of insider trading in history are happening and originating out of Pennsylvania Avenue.

24:18Kara Swisher:Absolutely. 100%. I think there are people talking about whether it's treasonous or not to release these things because these are boots on the ground that could get hurt and everything else. So there's a whole level of complexity here because they're betting on possible deaths of Americans and others. Sending J.D. Vance, where do you imagine this Iran thing? Because it is going back and forth and back and forth. The market is trying to grok it and it feels very whipsaw. So far, they've given, it hasn't suffered that badly. You had talked about a real decline in the market. Is this the thing that will pull it off

24:53Scott Galloway:The thing that, you mean sending Jady Vance, Vice President Vance? Yeah. But sending Vice President Vance is a signal. There's a few signals here. One, the scariest signal is we have amphibious ships and combat Marines being deployed to the region. This is either you could argue he's just playing poker or, in fact, he's planning to put in the terminal, like boots on the ground and CARG and maybe do a swap where I'll let the oil flow through CARG if you ensure the Straits of Hormuzer are of safe passage. There's all sorts of game theory going on here. He has a tendency to lie. And then before a quote unquote surprise attack, which I think is bad for our brand long term, America has to be seen as doing what they say and meaning what they say and saying what they mean.

25:34Scott Galloway:But anyways, sending Vance is a signal because -

25:38Kara Swisher:Well, no, they're not sending Vance. The Iranians want Vance. Well, but the Iranians want Vance.

25:44Scott Galloway:And this is, quite frankly, this is a signal that for the people who want this to end, because Vance is on the record as saying for a long time that these types of misadventures overseas were a bad idea.

25:58Kara Swisher:He's been really quiet.

25:59Scott Galloway:Well, he hasn't. He's like, I think I won't. Let Scott Bessent do that. The last thing he wants to do is get on with Kirsten Welker and have her bring up about five million tapes and where he said, under no surprise, World War III under Biden, we should never get into these quagmires overseas. There's just.

26:22Kara Swisher:He's trying his best to justify it.

26:24Scott Galloway:He is literally just doing everything he can to stay out of the way of mics and cameras.

26:29Kara Swisher:He's literally hiding behind the curtain. He's like, don't ask me. He's done a few like real pretzel moves that are really problematic.

26:36Scott Galloway:But the IRGC probably believes correctly. He's more likely to be empathetic, to want to deescalate. So this is a good side. The fact that the Trump administration is entertaining this, both sides, I think he is probably the guy. they can find common ground here.

26:56Kara Swisher:Not Rubio? Well, we'll see.

26:57Scott Galloway:But Rubio is perceived as a bit of a hawk. A lot of people think he's the shadow president right now, what has been the most militarily adventurous administration in a long time.

27:05Kara Swisher:Incredible. And they're planning Cuba next, which is like, oh, God.

27:09Scott Galloway:I mean...

27:10Kara Swisher:Let them die themselves. They're already on their last legs. Just let them fall, and then we'll move in the hotels.

27:15Scott Galloway:I'm sorry, under the auspices of having an opinion about shit I have no domain expertise in. And let me just say that the smartest thing we could do geopolitically as it relates to Cuba would be to be sending humanitarian aid to them right now. If you want the people to rise up and think, you know, the Americans aren't that bad. Maybe we should normalize relations. At some point, the Castro family will die out. It would be starching our hat white and sending power, fuel and food to Cuba right now.

27:43Kara Swisher:It worked out so well for the Kennedy administration. But what's really interesting is this is all having an effect. Democrats pulled off a surprising win in Florida, actually a pair of them, but one that was particularly surprising, flipping two legislative seats, including the district that covers Mar-a-Lago. Like, he now has a Democratic representative. Emily Gregory, a first-time candidate with a background in public health, won by a little over two points. Astonishing. This was a big Trump district. Trump has taken a social media to support her opponent, obviously, and President Trump, who's called voting by mail cheating, voted by mail in the election.

28:17Kara Swisher:I mean, these, the The list of things Democrats have won recently is really something else to see them winning in all sorts of districts. And from people I know down there, they're just furious at him. They really are. These are all his fans, like are people who voted for him. And it's really it's I'm not sure. I think people I think they're going to try to steal the election. I don't think it's going to be possible, given the overwhelming numbers that are going to happen. And another thing that's affecting him, and these are two topics as we record negotiations to end the five-week DHS shutdown or standstill with Congress scheduled to go into recess any minute.

28:53Kara Swisher:The Republicans have brought a number of possibilities to Trump, but he's turned them all down and the Democrats are sticking. The sticking points are still ICE funding and enforcement reforms. Very simple things. Don't wear masks. Bring in judicial warrants and cameras. TSA officers will miss on their paycheck this Friday if the deal hasn't reached. On Tuesday morning, Delta Airlines suspended specialty services for members of Congress. They're going to have to wait in line like everybody else, which I think is great, all of them. You said in our last show that grounding private planes might move the needle.

29:29Kara Swisher:And I love that Delta and others are pushing back. The TSA is pushing back against ICE.

29:34Scott Galloway:Great move by Delta. Great, great brand enhancing, brilliant fucking move by Delta.

29:42Kara Swisher:And no one likes ICE there. Like the TSA has said it's useless. The airlines think it's useless. There was a pilot that got on social media where he's like, this fucking sucks people. And I have to say, this is all at Donald Trump's door because he's refusing to deal because of the SAVE Act and letting people wait in line. I love that Congress people have to wait in line. I love it. And so talk about this win in Mar-a-Lago and what's happening with TSA, because besides Iran, this is yet another series of things that are indicators, leading indicators.

30:14Scott Galloway:District 87, Palm Beach County, as you noticed, includes, you know, White House, Florida, and a really impressive young woman. I love this. I do too. Emily Gregory. Fantastic. 40-year-old small business owner and military spouse running for office for the first time defeated Republican John Maples, who had Trump's complete and total endorsement. She won with 51.2 percent, with turnout roughly at 29 percent. Trump carried the district by 11 points in 2024. Yeah, that's a lot. The previous Republican incumbent won by 20 points. I mean, this is, and then let's go up, let's go up the, you know, let's go up the coast of the great state of Florida.

30:58Scott Galloway:Democrat Brian Nathan, a Navy veteran and union organizer, upset Republican Josie Tomcow by just 408 votes, a margin of 0.5%, which could trigger a machine recount. But Tom Cow outspent Nathan more than three to one. And it looks like Nathan won and received over 400 ,000 in-kind contributions from the Florida Republican Senatorial Campaign Committee. The previous Republican incumbent, Jay Collins, won the seat by 10 points in 2022. And this all bubbles up to the most shocking, exciting, and somewhat. I'm almost worried we're peaking too early right now. No. The prediction markets, Calcius saying for the first time that it's more likely than not that Democrats take the Senate.

31:49Scott Galloway:When have we heard that? Well, yes, it's moving in on that. Everyone, the narrative so far from, quote unquote, all the experts is it's likely, very likely Democrats will get control of the House. But the map is really difficult for Senate. Really difficult. Like looking at the people and now people, more people are betting their money on Democrats taking the Senate. This is it's wild.

32:14Kara Swisher:I think the Democrats are fielding much better candidates. This woman seems I love her. I was like, I love you. She was focusing on maternal health and affordability issues. You know, you have Abby Spanberger in Virginia. You've got Mickey Sherrill. You've got all even good candidates. Calarico.

32:31Scott Galloway:Yeah. Calarico.

32:32Kara Swisher:and not just centrist ones, just really good everywhere. Young people, fresh ideas. Yeah, fresh ideas, tough.

32:40Scott Galloway:Regular-sized prostate, still childbearing, actually think about kids, actually have kids at home.

32:45Kara Swisher:Yeah.

32:46Scott Galloway:Yeah, I love it.

32:47Kara Swisher:I feel really good about the candidates, and the Trump ones look like a bunch of cult members or acolytes that really hate him secretly. And by the way, let me stress to everybody, if you hang around Republicans, off the record, they eviscerate Trump. On the record, they suck up to, it makes them so awful. Like, like at least the Democrats fight in public, I guess, and they do. But it's really, it's really something to see what's happening here. That was, I think there's, the Mar-a-Lago one is particularly notable, obviously, but across the country in places where Democrats have never won, Georgia, Kansas, all these places, they're knocking up wins.

33:27Kara Swisher:And so that creates a real opportunity of Democrats walk into it. And I think so far on the local level like this, the candidates have been speaking what they're listening to voters and they're, they're, they're not, I don't think they're just mouthing things. Like I think they actually are concerned with what, what do voters want? This is our customers and we're going to give them what they want. Anyway, Delta, let's give Delta a big old clap.

33:50Scott Galloway:I'm, I met the CEO there and a good friend of mine's on the board. The whoever, whoever came up with this idea, except that is one of the most brand enhancing, thoughtful, egalitarian American thing. This was such an amazing corporate move. And it directly, and again, it flies in the face, or not flies in the face. It supports what I believe is the greatest commercial opportunity. I just had a phone call with, I think, one of the most thoughtful business leaders in America who runs an iconic investment bank. And I said to him, the greatest commercial opportunity in a long time has been presented, and that is in a thoughtful, non-ad hominem, non-personal attack, discussing values of America and how they have been so incredibly important to our capital markets, to do Adario and Modi, and now to a certain extent what Delta Airlines is saying, and to say no.

34:44Scott Galloway:This isn't a direct affront on the Trump administration. No, it's all Congress people.

34:48Kara Swisher:And for people who don't know, Congress people can sail through security. Yeah, but what

34:51Scott Galloway:What this is saying is -

34:52Kara Swisher:People don't know that.

34:53Scott Galloway:The people blame Trump and the Republicans mostly for this shutdown. So by them saying this is unacceptable, by Delta saying this is unacceptable, and our leadership who has fucked this up by, quite frankly, demanding that the SAVE Act be a part of this or ICE funding, we are no longer going to engage in facilitating this.

35:13Kara Swisher:Get in line. Get in the back of the line. Back of the line, which is great. All right. We think it's great. Get back in the line. Lines suck, by the way. And it's terrible for the TSA people who deserve to be paid. And ICE people are being paid, and they're doing nothing but buying coffee and irritating people. They handed out water in the line through security. How stupid can you be? Anyway. Okay, Scott, let's go on a quick break. When we come back, Meta and YouTube are found liable in the first of the social media addiction lawsuits.

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38:51Kara Swisher:Scott, we're back with more news. Meta and YouTube have been found liable of harming a young user with features that were addictive to her mental health. A California jury found Meta must pay$4.2 million and YouTube$1.8 million. It's not very much money. She asked for a billion. The case focused on features like infinite scroll and algorithmic recommendations. As a reminder, both TikTok and Snap settled before the trial began. Meta has also been found liable for failing to protect young people from online dangers in a New Mexico case. There, Meta must pay$375 million, a little more, but still a parking ticket for this company.

39:28Kara Swisher:The company made 160 times that in revenue last quarter. These verdicts are the first in social media addiction trials, social media impact trials. As the New York Post cover said, meta culpa, which we love. We love. Scott, what do you think? Here we go. We're over the edge with juries involved. Juries are tired of social media.

39:48Scott Galloway:I generally want to get your viewpoint on it, but my initial instinct is that this is actually a big deal. It is. And it's not about, as you said, it's not about the parking tickets that have been issued. It's that there's now legal precedent for what the activities these firms engage in makes them civilly at least liable. And the other piece of information I got that I found fascinating is their insurance companies are trying to reject the claim saying that they intentionally, they knew they were intentionally doing this. And so they're not covered by insurance. And my sense is it's not about this case.

40:22Scott Galloway:It's that the other several hundred or several thousand cases against these firms just got a lot stronger because of this decision.

40:30Kara Swisher:Yeah, there's a real back up. You know, this has been something you and I have been talking about. I went back to film. Yes.

40:36Scott Galloway:I thought I wrote a book on this about 10 years ago. You did.

40:39Kara Swisher:I was just saying you wrote a book on this. And I wrote a book on this and talking about these problems and how liable they were, lack of accountability, lack of regulatory scrutiny of anybody except some in other countries. in fact rolling over for them, both by Obama and Trump, of course, because he takes money from them. You know, I think their high watermark was standing with Trump at the inaugural. I think this was starting to be in place when people realized after January 6th, I think, that social media has a real impact. And it's been a slow burn, that's for sure. And our regulators have done nothing, let me just say, not in states, in our federal regulators.

41:18Kara Swisher:And I don't mean to say Amy Klobuchar and others have not tried. I just think they have not been successful because of the pushback. And in this case, I think you're going to see furious pushback by these companies, even for this small amount, right, this tiny amount of money. Because they don't want any accountability for what they're doing. They want to skate out of responsibility. And they can't because now it's in front of juries. And every person knows addiction is an issue, sloppy management is an issue, and threats to kids are an issue.

41:51Scott Galloway:I saw you on Anderson Cooper last night. And I mean, and you had it, I thought was exactly the right point. And we've been talking about this. And that is the nation is actually pretty good at recognizing externalities and harm. It just doesn't act crisply. It took about 30 years with tobacco, 20 years with opiates. Social went on mobile in 2012. It feels like that timing's about right, that about 2032, unfortunately, and I'm personally aggrieved, quite frankly, my kids got fucked up on these things. You know, your kids, your first generation, your older kids, Alex and Louie, had to endure this.

42:31Scott Galloway:And my sense is they've come through a pretty unscathed.

42:34Kara Swisher:They had less of it. They had less of it. It wasn't quite, you know, they were, your kids are the zero, ground zero, I think. My kids were near a blast zone, but not the same quite thing. I think they like YouTube. They were a little bit on Snapchat, you know what I mean? But it wasn't as intense and hateful as it became.

42:53Scott Galloway:But as big tech always does, this preys on the poor. Because if I'd had these devices and a mother who was gone before I got up in the morning and got home after, sometimes after I was asleep because she was working and I was totally unsupervised and I had YouTube and Snap and YouPorn and Meta and Facebook, I think I just would have been on these things all damn day long. Yeah, they're bankers. And as I was going through puberty, my brain would have been wired for constant squeezing of a dopant bag, which I believe could have very easily taken me away. I used to leave my house to go hang out with my friends because I was so bored.

43:39Scott Galloway:I'm not sure I would have left my house.

43:41Kara Swisher:You wouldn't. Why would you? Why would you? I mean, one of the things that they've done, and I think as these cases come to fruition, the discovery is going to be brutal. I mean, I think they know it. There's all kinds of evidence that they know it. In this case, a lot of stuff came out that they want to attract tweens because they're lifelong customers, right? It's like cigarette. It's literally like Joe Camel when you read this stuff, if you put cigarette in there. And what's incredible here is I actually believe the cigarette manufacturers knew exactly the problem of nicotine. I think these guys think that they're not.

44:13Kara Swisher:It's not their fault. It's never their fault. And then they hide behind the First Amendment. Hey, it's just people talking. And there was a great story in The Washington Post today about Republicans worried about young Republicans being so anti-Semitic, Nazi-focused, sort of hateful. And where do you think this comes from? And again, I don't blame them fully. I don't. I don't. I don't think it's fully, but they've created addictive and necessary features without any kind of guardrails in place or any kind of it's not like they're like, hey, let everything go. And I think that's it's sort of like they're evil babysitters.

44:48Kara Swisher:Right. In some fashion. And at some point, the babysitter has to get dinged in in some way. They consider themselves it's not their fault if people eat their shitty food. You know what I mean? Like our tainted meat, it's okay. And, of course, everyone else gets regulated but them.

45:05Scott Galloway:Yeah, I think their argument would be we don't get any credit for all the good we – Yeah. All the good we – Why aren't there parades? Right. That people do learn. People do – it helps them with their homework. They do make connections. You know, parents of kids with childhood, rare childhood diseases. Social media does add a lot of value. it creates tremendous economic growth, a lot of high paying jobs. They would argue we're a net good. And I would argue that's actually true. The problem is with the word net. And that is we're net beneficiaries from fossil fuels and pesticides, but we still have a Clean Air Act.

45:41Scott Galloway:We still have an EPA. We still have an FDA. And this is fossil fuels and pesticides with absolutely no emission standards. No, when I lived in LA, I was talking, I went on vacation with a buddy of mine. We grew up in LA together. There were days where by the end of the school day, you couldn't breathe in and they cleaned it up.

46:04Kara Swisher:They cleaned it up. And unfortunately, that's what's happening here.

46:07Scott Galloway:And unfortunately, I thought of it yesterday. I was trying to think I was asked to go on and talk about this. And instead, I decided to go out and drink. But I was thinking, okay, is this the beginning of the end? It's not. You know what this is? This is the end of the beginning. This industry is not going anywhere. But the era of, you know, we need to do better from Sheryl Sandberg or Mark Zuckerberg weaponizing thousands of lawyers and lobbyists to delay and obfuscate and gloss over the internal research that showed one out of 12 teens in the UK was cited Instagram for their suicidal ideation.

46:46Scott Galloway:I do think that era is coming to a close. And my favorite part of the case is that there was an undercover operation, I think from the attorney general in New Mexico, where they posed, they created accounts posing as an 11-year-old girl, which was almost immediately inundated with images and targeted solicitations from, Wait for it. Yeah. Child abusers. That's right. So it took the attorney general about 48 hours to figure this shit out. And we're supposed to believe that Mehta wasn't aware of it.

47:23Kara Swisher:Yeah, we don't believe them. And neither did the jury, by the way. We're going to move on a second. But I got to say, I did quote you last night on Anderson, where you say, you know, we're bound by the law, but not protected by it. And they're protected by the law, not bound by it. Now they're bound by it. And they are going to fight their asses off. You know what, Mark? Just pay the money and fix it. Like, just stop. Like, stop. Because the more they resist, the more a growing group of people, bipartisan across the country, recognizes the damage these companies. And then, of course, the same day Donald Trump names all of these people to a committee on AI with not nary a critic on it, right?

48:03Kara Swisher:Everybody with self-interest is on that advisory committee and nobody who's going to talk about the possibilities of problem, only up and to the right. And once again, they're going to try to do it. And let me tell you, folks, we need to stop them now because the damage they will do, they have shown no ability to control themselves.

48:23Scott Galloway:We need to age gate. No one under the age of 18 needs to be on any of these platforms. And we hate to say that.

48:28Kara Swisher:I have to say I hate to say that, but this is where we are. Okay, Scott, moving on. I want to start our next story by playing a prediction you made just last week.

48:37Scott Galloway:My prediction is OpenAI Sora social media app will be shut down soon. Oh, Sora.

48:44Kara Swisher:What do you know? You know something.

48:46Scott Galloway:No, I don't. I've done no original reporting, trust me.

48:49Kara Swisher:Okay, all right.

48:50Scott Galloway:Upon its release, Sora came out at number one in the App Store and actually got more downloads out of the gates than ChatGPT did. However, the parties ended. Downloads fell 32 % month over month in December and another 45 % in January. And some Sora is the little engine that didn't. and also users continue to drop like flies.

49:15Kara Swisher:You were right. I still think you had inside information. OpenAI announced this week that it's discontinuing the Soar app. This is the video app they're doing just months after launching it. This reportedly one of several steps the company is taking to refocus the business ahead of its potential IPO. Sam Altman says the Soar team will now shift to prioritizing longer term bets like robotics. As for the Disney deal they did at the time, if you remember, Scott and I talked about it, a$1 billion investment in OpenAI, which we thought they weren't really going to give them that, and it was just a little experiment that included licensing characters for.

49:45Kara Swisher:So Disney is out. Disney's out. It was more of a press release than anything yet. So talk about this prediction. I'll also note OpenA is closing in on a deal to raise about$10 billion from investors, bringing its latest funding round haul to more than$120 billion. Jeez, of the fucking wheeze. Talk about this. I mean, they've had to shift very quickly. I don't know what they're doing in robotics, but they should just focus on their core business, seems to me. But thoughts on this? Did you know? Come on, tell me the truth.

50:15Scott Galloway:Cara, Cara, Cara, I don't enjoy talking about myself or taking credit for what is arguably one of the most prescient predictions of the year in tech now.

50:24Kara Swisher:Oh, my God. It was so good. Cara. I got to say. I was like, he was right.

50:29Scott Galloway:Damn it. My nipples are hard. Touchdown, Jesus.

50:32Kara Swisher:I approve these hard nipples.

50:34Scott Galloway:I am fucking John Travolta when he was thin and could dance.

50:36Kara Swisher:Yeah.

50:36Scott Galloway:This is, ladies, for the people tuning in on the YouTube channel, watch your shoulders. Watch your shoulders. Hello. To resist his feudal. Okay. The weirdest thing, that was literally the easiest prediction ever. By the way, it wasn't me. Why?

50:51Kara Swisher:Why did that, when you said it, I was like, why is he talking about that? Like, I get it, but what prompted you?

50:57Scott Galloway:To be honest, this goes on a deeper level. This goes to the notion greatness is in the agency of others. I have a data and research team that feeds me with every good idea I ever had. And this young man named Dan Shallon, I said, I need a prediction for Pivot today. And he wrote, Sora's going to be closed down. And he gave me a bunch of data. So I can't take credit for this. As usual, I'd take credit for it, but it was my team that came up with that prediction.

51:20Kara Swisher:He just saw the downloads. Because a lot of apps go up and down, right? And it took forever for Meta to really kill off the metaphors.

51:29Scott Galloway:Okay. OpenAI didn't shut down Sora. Anthropic did.

51:33Kara Swisher:Yeah.

51:34Scott Galloway:That of all the incremental or new dollars being won by AI companies in the enterprise market, it used to be 60 % of new dollars being spent on AI from the enterprise were going to open AI. It's dropped to 30 cents on the dollar and Anthropic has screamed to 70 cents on the incremental dollar being spent by the enterprise on AI. Why? Because see above, biggest commercial opportunity in history, say no to the Trump administration. And also, to be fair, Anthropix's new products are just outstanding. They are. They have gotten so much. I have to say. They have more momentum right now than any company in the world.

52:12Kara Swisher:They're better. They're better. It's like when you were using browsers. I remember using Explorer and then Netscape and then Explorer was better. But then, you know, it was like that. You're like, oh, that's like Google. There was a lot of search engine. And then it was like, oh, this is better. This is better.

52:26Scott Galloway:And to OpenAI's credit and Sam's credit and the board's credit, they've said, okay, The best business strategy when you're starting to wobble, quite frankly, is focus.

52:37Kara Swisher:Move fast, I would agree.

52:39Scott Galloway:Focus. Okay, folks. And by the way, it doesn't end with Sora, folks, in terms of shit that's about to be closed down. And that's going to be my prediction at the end of the show. But you knew they were going to have to focus. You knew this product wasn't working. It was hemorrhaging money. The whole visual space around AI just hasn't panned out the way people had hoped. I agree.

53:01Kara Swisher:It's slop.

53:02Scott Galloway:Yeah, it's just not. It's so interesting. The one. A couple of things. Just as what's one of the most interesting things about Amazon is it started in books. And books has probably been the least disrupted industry it's gone into. The book publishing industry, although it's been consolidated, is actually still pretty strong. Big advances. Agents are still making money. Independent booksellers are actually making a bit of a comeback. Anyways, but what's so interesting I find about if you'd said what's going to happen to designers 24 months ago, you would have said, oh, like customer service and mediocre lawyers, they're just going to get cleared out by Sora and I forget Google's one.

53:40Scott Galloway:And what's interesting is as a percentage of the employee base, the number of designers has actually gone up at tech companies because it's the coding that is being commoditized. But the front end human faced UI design really compelling is now the point of differentiation. But because these things, this AI, I've played with this stuff. It's just not very good.

54:07Kara Swisher:It's not good. You know, the only thing I like is when they show, they like do all these, like they have celebrities. Brad Pitt fighting concrete. Like they did a Game of Thrones in high school. Some of it's fun, but it's like, it's sort of like for a minute and then you're like, okay, now I want to look at something real. I think the human eye can see it. It's the metaverse.

54:22Scott Galloway:It exhausts you. It is.

54:23Kara Swisher:The human eye is like, hmm, not so much. I don't think you get used to it either. Everyone's like, oh, kids will get used to it. I'm like.

54:29Scott Galloway:It's ruined animal videos.

54:30Kara Swisher:I don't think so. Yeah, animal videos are pretty good.

54:32Scott Galloway:Remember how amazing animal videos were? Yeah. Animal videos were amazing because. Now they have them do stupid things. When you saw a beluga whale retrieving a Nerf football from adventurers or scientists in the Antarctic or wherever the fuck that was, you're like, this is an incredible moment. And now I see it and go, is it fucking AI?

54:52Kara Swisher:Yeah, exactly. Because if it is AI, I don't care.

54:54Scott Galloway:It's not real. Yeah, I know.

54:56Kara Swisher:They make weird. I agree. I agree. And it's not satisfying in a way that real is. I have to say. And I do think the human eye. It's just years ago when I was at the MIT Media Lab, when they were having problems with robotics that talk to you, you know, on a screen. And it was always the eyes. There's something wrong with the eyes. And humans perceive it immediately. And the lips and the voice.

55:17Scott Galloway:I'm telling you, though, if AI starts producing cute, cute pictures of babies seeing or hearing for the first time, I'm out. I'm logging off of every platform. I would agree. Anyway. That has to be real. Those things change my day. Those things are my mood lifter.

55:31Kara Swisher:Amazing prediction. Once again, you have triumphed anyway. All right, Scott, let's go on a quick break. When we come back, we'll talk about the return of the Amazon phone.

55:44Scott Galloway:For the last 10 years, everything in American politics has basically revolved around one man. And as a political journalist who came of age during Donald Trump's rise in 2016, I've had a front row seat.

55:57Kara Swisher:I am officially running for president of the United States. It's going to be only America first. America first. Thousands of supporters of President Trump stormed the U.S.

56:12Scott Galloway:Capitol building. But is it possible to talk about politics without talking about Donald Trump? That's the question I'm going to ask in our new show from Vox.

56:22Kara Swisher:The idea of like a post-Trump or not exactly Trump-focused show can exist because he's not really driving any agenda items. It really does feel like so reactive.

56:29Scott Galloway:You know, I think this Iran thing is also going to cause a big split in the GOP. So far, it doesn't among like people who say they're MAGA voters are still with Trump. But like for the first time, you see on a major issue, open opposition from the start of this war. I'm Estet Herndon and welcome to America Actually.

56:50Scott Galloway:Hi, I'm Brene Brown. And I'm Adam Grant. And we're here to invite you to the Curiosity Shop. A podcast that's a place for listening, wondering, thinking, feeling, and questioning. It's going to be fun. We rarely agree. But we almost never disagree, and we're always learning. That's true. You can subscribe to the Curiosity Shop on YouTube or follow in your favorite podcast app to automatically receive new episodes every Thursday.

57:20Kara Swisher:Scott, we're back with more news. Amazon is reportedly getting back into the phone business, working on a new device internally known as, oh my good God, the transformer, according to Reuters. That's what a bunch of idiots they are. This would potentially be an AI-driven phone that syncs with Alexa and could eliminate the need for traditional apps. Oh, sure, why not? Details are slim. There's no clear timeline or pricing, and sources say the project could be scrap. Cap priorities or finances change. That's a lot of maybes. But let's not forget Amazon's last phone foray. I have not forgotten it since I wrote about its creation and decline, the Fire Phone, which launched in 2014 and quickly flopped, leading to$170 million write-down.

58:00Kara Swisher:And I remember getting sent it. I was like, it's like the home, the Facebook home. I kept getting sent these things. I'm like, what is this? And, like, I'm calling Steve Jobs immediately because I need to talk to someone who knows how to make these things. Why would Amazon have a phone? I want you to give me the argument why it's a good idea despite their—and I think people fail at things and they come back, but I don't feel like Amazon is my device place. I think they got knocked over in the audible space. I think they got knocked over in the reader space. I mean, it's still a business, but it's not on fire.

58:36Kara Swisher:It got knocked out by the iPad in a lot of ways. Any thoughts on the phone from Amazon and why? Give me the argument.

58:42Scott Galloway:Well, the argument could be that it becomes a new piece of the flywheel around Amazon Prime. And that is, if you're an Amazon Prime Plus member, you get a very competent phone that perhaps has even better bandwidth because Project Kuiper starts to pay off and they have satellite-based connectivity. So, what this is is potentially, I would imagine, in the conference rooms where Amazon Strategy Group, where some incredibly bright people are saying…

59:12Kara Swisher:Yeah, they need a thing.

59:13Scott Galloway:Well, what if, why don't we go after Android? And that is, we can offer people.

59:16Kara Swisher:Oh, okay.

59:17Scott Galloway:We can offer people an unbelievable phone for free as part of their Amazon Prime membership. And then say, and get off of AT &T, and we'll wrap it all into the greatest loyalty program in history, which is Amazon Prime. It is indeed. So, I think there's a really solid argument. The problem is this all works on a whiteboard and then people hold these phones, the Facebook phone, the Amazon Fire, and they go, I don't like it.

59:44Kara Swisher:And the Microsoft phones.

59:45Scott Galloway:Yeah, all the handhelds. All of them. And by the way, just a shout out, a colleague of mine who teaches brand strategy at another university called me and said, saying that Apple shouldn't go into a lower price computer is all wrong. And he said, my views on it were all fucked up and I just want to give him his props. he said that look at all the luxury car brands. They were all shitposted for going into lower-end models, and it's expanded their share. And I thought that was a really good point.

1:00:12Kara Swisher:If they're going to give people a really good version of it, and then you have to buy the shitty Dell version, yeah.

1:00:19Scott Galloway:Well, all the Porsche purists said they should never launch an SUV. They did. It sells more than any other car in the Porsche lineup. And also Mercedes has an A-class in Europe. They have, what is it, not the E, the C-class. That's a good argument.

1:00:30Kara Swisher:Well, if they don't do it too much, right? You can't do it too much. You have to do it just right. I need to do it just right.

1:00:35Scott Galloway:PMW has the three, the two, the one. Anyways, I just want to acknowledge the point because when he called me and told me this, I'm like, okay. So this is good.

1:00:41Kara Swisher:Android, now I see. Thank you for that. Android,

1:00:44Scott Galloway:this could be, in my opinion, the biggest increase in shareholder value that's fallow is a function of the friction between silos of different companies. The new CEO at Disney should have something called Disney++. And you get Disney Plus videos. you get free merchandise, you get the princess experience. And most importantly, when you come to the parks, it's on only Disney Plus members days where there are no lines. And it would be the ultimate loyalty program. And Amazon, if they keep, if they added telco and a device into Amazon Prime, I think theoretically, it's worth, you know, it's worth a couple billion dollars to investigate.

1:01:26Kara Swisher:They don't do that. They don't do that often. You're right. They just like, here you go free here's it's like a it's like a club and you would do that with amazon because they do deliver really well they think they're talking about autonomous like the core stuff they do they

1:01:39Scott Galloway:do really well so pre-loaded free amazon music free amazon zooks or whatever their their their autonomous is those are cool zooks is cool and just say okay folks we're going to take care of you amazon is arguably the most trusted brand in the world right now yeah kuiper they could offer And they say, all right, you don't need to trust us when you're in front of the TV screen or the computer screen. You should trust us as much when you're in front of the phone screen.

1:02:05Kara Swisher:The CEO, the one person running a division, I'm supposed to meet with him. Anyway, one more quick break. We'll be back for Predictions.

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1:02:50Kara Swisher:Okay, Scott, let's hear a prediction. I'm going to say very quickly, just so you know, at the time of this taping, SpaceX is aiming to file its IPO within a week. And I predict I will not be asked on the board, as you noted at the beginning. I predict that. People literally don't.

1:03:05Scott Galloway:If I was your financial, your wealth advisor, and I kind of have been for the last few years. Yeah, you have. But if I got on a hold of you 10 or 15 years ago, I would have been like, tone down the anti-Musk, anti-big tech thing. And we're going to make hundreds of millions of dollars on boards.

1:03:19Kara Swisher:I know, I know. I can't do it. I just said as a joke, Larry isn't a terrible person. I can't help myself. That was a joke.

1:03:26Scott Galloway:You know when you text me mean things at 2 in the morning, it's not a good idea. And you can't help yourself. I can't help. You literally can't. Not mean.

1:03:32Kara Swisher:Some of them are very good.

1:03:33Scott Galloway:You can't help yourself. I get it. I can't.

1:03:36Kara Swisher:I can't. I know I shouldn't drink as much as I do. Speaking of I was right about these people, I was right. Anyway, your prediction, please.

1:03:44Scott Galloway:Okay. So what do we have here? OpenAI is in a five-car alarm right now. In the last six months, they have – oh, and by the way, have you seen the deals of this financing? To top off the round with, I think it's TPG, they are guaranteeing a 17.5 % return. What? Yeah, they're guaranteeing to top up the round in private equity. The deal is along the lines of the following. It kind of makes industrial sense, but it's more of these circular related party deals. They're saying to these private equity firms, if you invest and top up my round, I'll guarantee you a 17.5 % return. Now, the idea is it makes kind of industrial logic because all of these firms have a massive portfolio company of firms, which likely means they're going to encourage these firms to adopt at an enterprise level open AI products.

1:04:45Scott Galloway:So OpenAI goes immediately, we get -

1:04:48Kara Swisher:Eat the dog food is what you're saying.

1:04:50Scott Galloway:Yeah, we get industrial scale here. And because we're going public and Sam's bankers have probably said, distinct of the problems, you're going to get X valuation, hundreds of billions or even possibly trillion dollar plus valuation. So he said to the private equity guys, I guarantee you a 17.5 % return on your money. The problem is a guarantee at the top of the capital stack means that the people underneath them, the investors, might get squeezed out if a decent amount of returns has to go to the top. But it is more of this kind of what I'll call shell game. And as long as things keep increasing, it's fine.

1:05:29Scott Galloway:But this is the kind of thing that could absolutely crush or trickle.

1:05:33Kara Swisher:I can't make people like you, Scott. That's like a let me pay you to be my friend.

1:05:38Scott Galloway:Well, this is. I don't like it. It's a really, that's the most interesting component of the deal is a, you never offer, I have never seen, it's a preferred return that aggregates. Would you invest then? I would want, for OpenAI, I feel that what I would want to do is the following of just being purely capitalist. I'd want allocation in the IPO because Sam is smart and Sam and his bankers will say, okay, the first trade of this is likely going to be 80 bucks. So let's price it at 50 so we can say we're the best performing IPO of the year.

1:06:12Kara Swisher:Yeah, they'll do those tricks. That's nothing new.

1:06:14Scott Galloway:It's a once-in-a-lifetime branding event, the IPO. So the investment banks have an incentive because they get to buy shares at a discount. They get to give shares to their buddies and institutions at a discount. And the firm, for a modest dilution, 3 % to 5 % dilution, gets a branding event that they're in the news for the rest of the year as the best performing IPO of the year or a great performing IPO of the year. So they leave, quite frankly.

1:06:37Kara Swisher:I think SpaceX is going to leave them.

1:06:38Scott Galloway:They leave money on the table, and it's yet another transfer of wealth from the lower and middle class who don't have access to pre-IPO or to the IPO.

1:06:46Kara Swisher:Don't you think SpaceX will leave them in the dust?

1:06:49Scott Galloway:SpaceX? In terms of an IPO?

1:06:51Kara Swisher:Yeah.

1:06:51Scott Galloway:That'll all be about valuation, because while SpaceX has the biggest moats in the history of business, as far as I can tell, they're talking about a$1.5 trillion valuation on$13 billion or$14 billion. I mean, that's 100 times revenue. So it's all about pricing. But anyway, so where I was headed is the following. It is a five-car alarm, and Sam and his board are smart. They are focusing. First area of focus, Sora, we barely knew you. You're gone. The next area of focus, it won't be a headline item. It'll be euthanized slowly. It is IO. and that is the$6.5 billion acquisition of Johnny Ives' company to build hardware.

1:07:41Scott Galloway:This is the metaverse on a smaller level. Mark Zuckerberg's consensual hallucination costs meta shareholders$70 billion. This is going to cost$6.5 billion to open AI. It was an all-stock transaction, but there is no way if I am on the board and I am Sam Altman and I'm like, okay, playtime's order. I am losing my core business now, Anthropic. We need to focus that they're going to decide to not play in the traffic of hardware. So there's been delays, technical difficulty, unclear product definition, high cost.

1:08:20Kara Swisher:I think I'd buy the Amazon phone first. So that's a bad sign because I wouldn't buy the Amazon.

1:08:24Scott Galloway:Brutal category. And then if you look at what's going on here, persistent technical problems, All right.

1:08:31Kara Swisher:Of course.

1:08:31Scott Galloway:Compute constraints, always on AI reliability, privacy concerns, interaction without screens. Basically, this isn't right now, IO or the division of, quote unquote, open AI is hardware products. It's not just about execution risk. It's unsolved product physics.

1:08:48Kara Swisher:I love it.

1:08:49Scott Galloway:And the timeline, the timeline keeps slipping. I've been tracking this. You know what, Scott?

1:08:54Kara Swisher:Let me give you a piece of advice that I heard a long time ago. What's that? Hardware is hard.

1:08:58Scott Galloway:Well, it was originally, get this, Kara. It was originally expected around 2026, and now they're saying it's not shipping before 2027. Guess what? It's never going to ship.

1:09:07Kara Swisher:Oh, all right. There's a prediction right there. All right. We'll see what happens. Anyway, great job on your prediction. I like this new one. And by the way, next week, I just want people to know, speaking of predictions, Jeffrey Epstein's lawyer and accountant just told Congress they were never interviewed as part of a formal federal investigation. We're going to talk about this next week because we're not going to let Epstein out of the news either. Trump is making all sorts of hand-waving in order to pay it. But this, to me, was a malpractice on the part of federal investigators, that they were not interviewed as part of a forum.

1:09:36Kara Swisher:I mean, you might talk to the lawyer and accountant, seems to me. They might know a few things. In any case, we'll see where that goes. We're going to talk about it next week, so I want to get that back in the news.

1:09:47Scott Galloway:So can I just have one addendum, the cloud and the silver lining of these Democratic wins?

1:09:51Kara Swisher:What?

1:09:51Scott Galloway:And we need a Nancy, a Speaker Pelosi-like figure who understands how to tell the children what, okay, the grownup is here, this is what you need to do. as good as things are for Democrats on a Senate and on a congressional election level, we are about to snatch defeat from the jaws of victory. And while no one was looking, we're about to elect a president of the fourth largest economy who's going to be a Republican. Because of the jungle voting construct in California, we'll talk about that Monday. We are probably going to elect a Republican unless Democrats get their heads out of their asses

1:10:32Kara Swisher:I'm going to do a little reporting. And start dropping out. I'll do a little. I've been contacted by every one of those Democratic candidates. And also Steve Hilton, who I know well. I haven't heard from Chad, the sheriff.

1:10:42Scott Galloway:Gavin Newsom and Chuck Schumer. You need to start promising these Democrats something and getting them out of the race.

1:10:48Kara Swisher:I literally almost texted.

1:10:50Scott Galloway:Getting them out of the race.

1:10:51Kara Swisher:They also had to cancel a thing. The whole thing is a fucking mess. And it's suicidal. It's suicidal. It's really weird.

1:10:58Scott Galloway:And by the way, Governor Newsom, who I am a huge fan of, if you don't show some backroom dealing here and make sure that the next that your heir apparent isn't a Democrat, it's really going to hurt your chances of getting the nomination.

1:11:11Kara Swisher:It is. Okay, before we go, I just want to say my brother Jeff, who is a friend of our pivot, had emergency surgery this week, heart surgery. He had a blocked, I don't know what I'm going to say it wrong, but he had to have a stent put in. And it was because he was on Kaiser or something like that. And he went on Medicare and the internist said to him, you should check your calcium levels. Turned out he had 80 to 90 % blockage. It's called the widow maker, the issue. And he got it all cleaned out and he's doing great. But one of the things he said for me to tell you is make sure you all check things like that and get a checkup.

1:11:47Kara Swisher:I just thank goodness that this didn't happen because he would have died of this very suddenly. So I wanted to give him a shout out in any case. That's the show. But thanks for listening to Pivot. Be sure to like and subscribe to our YouTube channel. We'll be back next week.

1:12:03Scott Galloway:Today's show was produced by Lara Neiman, Zoe Marcus, Taylor Griffin, and Brad Sylvester. Ernie Intertot engineered this episode, Manolo Moreno edited the video. Thanks also to Drew Brothers, Misevera, and Dan Chalon. Nishat Crowe as Vox Media's executive producer podcast. Make sure to follow Pivot on your favorite podcast platform. Thank you for listening to Pivot from New York Magazine and Vox Media. You can subscribe to the magazine at nymag.com slash pod. We'll be back next week for another breakdown of all things tech and business. Kara, have a great rest of the week. Thank you.