PivotAmerica’s Credit Rating Dropped and You’re Going to Pay for It | Pivot
EVERY SPOKEN WORD
115 min read · 23,089 words- 0:00 – 6:52
Intro
- SGScott Galloway
... everything just got a little bit more expensive for every American. Every American is gonna have to pay more on their student loans, their credit cards, on their mortgages. This is a big deal. (instrumental music)
- KSKara Swisher
Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher.
- SGScott Galloway
So, I'm an adolescent. When I wake up in the morning, I immediately grab my phone, and the first thing I did this morning is I opened the New York Times app.
- KSKara Swisher
Uh-huh.
- SGScott Galloway
And what do I see? I see this big, colorful picture...
- KSKara Swisher
Yeah.
- SGScott Galloway
... of a seven-year-old boy...
- KSKara Swisher
Uh-huh.
- SGScott Galloway
... on a climbing wall.
- KSKara Swisher
Uh-huh.
- SGScott Galloway
And I look at it, and granted I'm a little, you know, misty-eyed, the edibles just trying to, you know, no coffee yet, pre-coffee, post-edibles.
- KSKara Swisher
Uh-huh.
- SGScott Galloway
And I'm like, "I recognize that climbing wall."
- KSKara Swisher
Uh-huh.
- SGScott Galloway
And then I look and I'm like, "That's my climbing wall."
- KSKara Swisher
That's your climbing wall.
- SGScott Galloway
In my place in Soho, and that's my seven-year-old, specifically my co-host. That's my seven-year-old boy.
- KSKara Swisher
(laughs)
- SGScott Galloway
Specifically my co-host. And then the next... I didn't even read the article. I went down to the next picture. The next picture is you looking very professional in my studio.
- KSKara Swisher
That's correct. (laughs)
- SGScott Galloway
Like, are you gonna start banging my wife? Are you literally assuming my identity?
- KSKara Swisher
Oh, interesting.
- SGScott Galloway
Seriously.
- KSKara Swisher
Huh.
- SGScott Galloway
What's going on here?
- KSKara Swisher
Well, someone was bi- blibbity-blabbity with the New York Times or someone, because all this news got out, so they moved the story forward. I was supposed to have a picture taken in my studio...
- SGScott Galloway
Blibbity-blabbity. (laughs)
- KSKara Swisher
... here, uh, and they, and I said, "Oh, we were doing it at Scott's." That's the way, 'cause that's where I was last week.
- SGScott Galloway
Oh, God.
- KSKara Swisher
And so it turned out well. It m- it mashed, meshed with the headline.
- 6:52 – 16:27
Biden’s Cancer Diagnosis
- KSKara Swisher
President Joe Biden has been diagnosed with an aggressive form of prostate cancer that has spread to his bones. Biden and his family are reviewing treatment options with doctors. A statement from his office notes, "The cancer appears to be hormone-sensitive, which allows for effective management." Uh, messages of support have come in from across the political spectrum, including from President Trump, though Don Jr. and other MAGA-adjacent folks are already spreading theories about cover-ups and conspiracies. Uh, all this as a new book and audio recordings are raising questions about his mental fitness over the last few years. Um, any reaction to this news except sort of sad, sad?
- SGScott Galloway
Why don't you go first on this one, Kara?
- KSKara Swisher
I, I, I'm sad for him. I, I don't feel like... You know, there's been a lot of people like, "You should talk more about this Biden book." Look, it's in the rearview mirror. They o- he obviously shouldn't have run. Scott, in particular, and then I jumped on the same wagon as him, uh, thought he should've stepped down much earlier. We talked about it a lot. We got a lot of attacks for saying that. Uh, I don't wanna say we were right. We just felt we needed... It wasn't so much that he... It was that he was older, but that we needed a fresh start and someone who, who was up to the task of the presidency, incl- And by the way, we said the same thing about Donald Trump. He's too old. He's just simply too old and is not headed in the right direction mentally, uh, or physically. So, uh, so I feel, uh... But I do feel badly. This guy has, has devoted himself to service. I think o- on the whole he will be judged well by history. I think he's done a lot of, um, uh, important things, uh, as a, as a, uh, at, at an interesting evolution. Uh, I think the last couple years of his life didn't- have not gone well for him. Um, and this is a bad, this is bad news. As for Don Jr. and other MAGA people doing this, go fuck yourselves. It's really grotesque. Um, I, I... They... You don't... He wasn't hiding cancer. He may have had it. Maybe he didn't get checked. I don't know. Um, but given that the MAGA people are already push- who had- were pushing the Epstein suicide conspiracy theories, and now Don- Dan Bongino, who did that, the m- one of the people who did it, is now saying it was suicide, is just... These people, all they wanna do is spread theories to create a mess, and it's sad that they're doing it on the- in the fact that this guy probably, uh, is in a little more, uh... It's probably not a very good prom- prognosis for Joe Biden would be my guess. I'm not a doctor, but it sounds like it.
- SGScott Galloway
Uh, yeah. The, my f- I mean, I had a bunch of thoughts about it. My first thought was, "How did the president of the United States..." Uh, I get scanned all the time now.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
And it was shocking to me that-
- KSKara Swisher
Yeah.
- SGScott Galloway
... his first kind of quote unquote diagnosis that we know of had a Gleason test of nine.
- KSKara Swisher
Yeah. Very high.
- SGScott Galloway
I mean, and it spread to his bones. Typically-
- KSKara Swisher
Yeah.
- SGScott Galloway
... I would have thought that he'd be getting scans all the time and getting-
- KSKara Swisher
But he isn't.
- SGScott Galloway
... PSA tests all the time, and that...
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
It... Uh, I was shocked that it went so f- The kind of the first... What sounds like the first recognition of it was that it was this advanced. He's already seven years past the life expectancy of the average American man. He's, he's had a wonderful life of service. It's a tragedy for him and his family. Uh, not nearly the tragedy that he has endured losing children, but, you know, his, he's had an incredible life. I, and, um, you know, best wishes to him. But it does bring up some really big issues. And, and-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... what... First off, the cover-up. Yeah, it was a cover-up. And guess what? Anyone with aging parents, we all are co-conspirators in this cover-up. Because your parents, their, their brain shrinks and they don't realize no- They, they think it's insane that you take their driver's license from them.
- KSKara Swisher
Yep.
- SGScott Galloway
Were you kidding? I beat Trump. I'm pushing back on Russia. I passed the Infrastructure Act.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
Of course I can be president for another four years.
- KSKara Swisher
Right.
- SGScott Galloway
I mean, that was a less crazy statement than a lot of the shit my dad said at 70.
- KSKara Swisher
Mm-hmm. Yeah.
- SGScott Galloway
I mean, you're going through the same thing.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
So... And not only that, the people around you have tremendous goodwill and affection for you, and they get co-opted into believing, "Uh, oh, maybe he can go another four years." So-
- KSKara Swisher
Right. Yeah.
- SGScott Galloway
... there wasn't anything sinister here. There's what happens a lot. And for me, this all goes to the same place.
- 16:27 – 24:08
U.S. Credit Rating Downgrade
- KSKara Swisher
speaking of something that's not doing so well, Moody's has officially downgraded the US credit rating. You wrote me right away about this. Stripping the country of its last AAA rating, of the last o- o- of the three major agencies. Moody's blamed the downgrade on successive administrations and Congress failing to reverse the trend of large annual fiscal def- deficits and growing interest costs. The credit downgrade comes as Republicans try to pass Trump's big beautiful bill. I'm sure you would not call it that. Um, a sweeping tax and spending package estimated to increase the deficit by about four trillion dollars. The bill cleared the House Budget Committee late Sunday night after initially getting blocked by some GOP deficit hawks. They never hold on, these hawks. It sucks. In terms of the market reaction as of this recording, stocks are down and the 30-year Treasury yield just hit its highest level in a year and a half. Uh, you texted me, "This is big," when the Moody's news broke. Um, explain to people why this downgrade is more than a symbolic move. Um, Scott Bessent was all over, uh, the, the TVs on the weekend calling it, uh, the, calling dismissed Moodys, calling it a lagging indicator on Meet the Press. He also said it's no big deal that consumers have to pay tariff money. Of cour- he- he admitted they will have to and it won't be China that's paying. And by the way, there's a new acronym for people ditching American investments, which you've talked about a lot. ABUSA, Anywhere But The USA. So talk a little bit about this, 'cause you wro- this is, you don't, you do not respond to a lot of stuff when we text you or I text you. Um, this one, you did.
- SGScott Galloway
Everything just got a little bit more expensive for every American. We, we were talking about corporate boards and companies. We spend a lot of time assessing the marketplace and trying to figure out, when we go out and borrow money for growth, how we ensure we get the highest rating possible from the a- these agencies whose job is to do the diligence that most investors don't have the time to do. And then based on the rating they give you, saying what is the likelihood-... of default? What is the likelihood or the risk that these, this entity won't be able to pay back the money? And based on the rating, it's the interest rate you have to pay to people in order for them to take the risk and loan you money. And if you get a good rating and you say, "You know what? Let's not borrow as much money. Let's borrow less such that our multiple, our debt to," call it EBITDA ratio, "is a little bit lower, and we get a better credit rating, and we can borrow money at a lower cost, meaning that the interest on that debt is not as big, so we can make more investments in forward-leaning growth-related investments." And oftentimes, if you get to a point where you keep borrowing more and more money, and then start borrowing money to pay the debt, which we are doing now, it causes a downward spiral, where at some point, you begin to look like a Donald Trump enterprise where he's done the following. "I'll borrow money from anyone who's stupid enough to loan me money for my casino, and if it works out and all the projections hit, I can pay it back and make a lot of money. And if it doesn't work out, I'll just declare default." Okay, declaring default in the United States would be really bad for all of us. I mean, people... I can't even imagine what might happen. You might see ATMs stop working. And so essentially, what has happened here is f- is the third and final agency of the Big Three has said, "Our ability to pay back our debt based on the reckless fiscal policy, our reckless spending and inability to raise taxes or raise revenues, means that we are now a larger risk than we were just last year. And as a result, every American is gonna have to pay more on their student loans, their credit cards, on their mortgages. And companies will likely have to pay more, meaning we will have less money to invest and grow." This is a big deal.
- KSKara Swisher
Along with the tariffs, which we're... Which Besen was admitting finally.
- SGScott Galloway
But the deficits here, they're talking about adding $4.5 trillion to the deficits. And again, see above, catering to old people in America, they're not cutting Social Security, they're not cutting Medicare for old people, 'cause even old rich people like their Medicare. They're cutting Medicaid. Supposedly about eight million people are gonna lose their Medicaid.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
So, young people-
- KSKara Swisher
So, a sicker populous. Sicker populous.
- SGScott Galloway
Young... We'll have a sicker populous. They're cutting SNAP payments, which by the way show a 2% to 7% return on investment as little kids don't grow up to have diabetes and need hip repla- replacements and kidney dialysis. So, let's cut... It's as if... We're literally in a movie here, and America is Nicolas Cage in Leaving Las Vegas, and he's thought, "I'm just so fucking rabidly addicted to alcohol, as American old people are too addicted to spending above their means, that I'm just gonna ig- ignore the future and I'm just gonna drink myself to death, because all of my debts and all of my relationships don't matter because I'm gonna be dead soon." This is literally how we're behaving in the United States right now, because we are borrowing, according to this tax plan, $5 trillion from our kids, and we'll... It- it- i- i- i- the chickens won't come to roost while we're s- while we're still, still alive, but they will come to roost, and our kids are gonna have to pay this shit back.
- KSKara Swisher
Right, or do it, pay it forward again, which is what, you know, what happens, and it, at some point, it does spin out of control. Th- the fact that, it, it... What people don't understand, Donald Trump is the one that has increased the deficit more than any other president in the history of the presidency.
- SGScott Galloway
George Washington to George Bush, $7 trillion. Donald Trump, $8 trillion. And by the way, uh, Biden continued it with $5 trillion, and now everyone... It's like that, that number, I think, of negative 40. Negative 40 is where Celsius and Fahrenheit meet. That is a really un- inhospitable, bad environment.
- KSKara Swisher
It is.
- SGScott Galloway
And whenever the far left and the far right meet, that means it's an inhospitable, bad idea. The far left and the far right meet on anti-vaccine craziness, they meet on antisemitism, and they meet on reckless spending and tax cuts such that we can explode the deficit.
- KSKara Swisher
Yeah.
- SGScott Galloway
This is negative 40.
- KSKara Swisher
Why don't these GOP deficit hawks ever stick? I mean, seriously, they never stick. I'm like waiting. Chip Roy, get yourself a fucking backbone. You're, you- you say it out loud, and you say, "I'm not gonna do this," and then every time, you get Mike Johnson. I don't know what he's doing to you, but it, it's like, like the... You're the only people that can stop this, and you won't. So, really what you're saying is crap, really, I have to say. I'm always-
- SGScott Galloway
And so, uh, I mean, I- I hate the moral argument I'm gonna make. It's so cruel because no, they're not talking about... I- I could sort of at least theoretically get on board with the following. We have to make really painful cuts.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
I would make them around Social Security. I'd make them probably around some of our military spending. You know, w- I'm sympathetic to the argument of we- we are fiscally irresponsible, we are robbing from future generations, so we have to make really ugly, painful cuts. It's terrible-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... but it sucks to be an adult. But we're gonna match every dollar cut one-to-one or two-to-one with an increase in revenues by increasing the taxes on corporations, and we're gonna have an alternative minimum tax on anyone saying, m- making more than $1 million. I could hold my nose and get on board with that. But all these, quote-unquote, "fiscal hawks"-
- KSKara Swisher
Yeah.
- SGScott Galloway
... aren't saying, "We need to talk about the other side of the ledger and raise revenues." What they're saying is, "These Medicare cuts... I'm sorry, these Medicaid cuts don't go deep enough."
- KSKara Swisher
Right.
- SGScott Galloway
And I mean, this shit is really scary-
- KSKara Swisher
Correct.
- SGScott Galloway
... for some people, and it's not only immoral, it's, it's uneconomic.
- KSKara Swisher
Stupid. It's economically stupid. That's... If you appeal to their greed, you're gonna have a sick, fat-... a struggling, angry population under you, who can't earn and have no economic opportunities. You know where that's gonna go. Anyway, uh, let's go on a quick break. Uh, when we come back, Trump, uh, gets pissy with Walmart and Apple.
- 24:08 – 30:24
Trump Bullies Walmart and Apple
- KSKara Swisher
Scott, we're back. President Trump spent the weekend bullying Walmart after the company's CEO said some of the prices could rise within weeks because of the tariffs, obviously. In a post on Truth Social, Trump told Walmart to eat the tariffs and warned, "I'll be watching and so will your customers." Scott Besson said that he's spoken with Walmart's CEO and that the company will absorb some of the tariffs and some may get passed on to consumers. About one-third of Walmart's products come from outside the US, with a large share coming from China and Mexico. And it's not just Walmart. Trump's taking aim at Apple too. He says that he had a little problem with T- CEO Tim Cook after hearing the company plans to ramp up iPhone production in India. Apple's trying to cut its reliance on China and aiming to make the most- I- m- make most of the iPhones sold in the US at factories in India by the end of 2026. Apple announced that $500 billion investment in the US back in February, but apparently that's not enough for Trump. Um, let's listen as Trump recount his conversation with Tim Cook.
- DTDonald Trump
Tim, I said, "Tim, look. We've treated you really good. We put up with all the plants that you built in China for years. Now you gotta build us ... We're not interested in you building in India. India can take care of themselves, they're doing very well, y- we want you to build here."
- KSKara Swisher
So, uh, two things. Very meddlesome with the companies in terms of how they should price it and, and putting reality, tariffs cost money and they're gonna pass them onto consumers. Uh, what d- what is this I'll be watching strategy and telling people where to build, and ... Thoughts?
- SGScott Galloway
Well, we've talked about this before. We've seen a separation between church and state-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... but that separation began to erode. And just as important from an economic standpoint is the separation between, uh, business and state. And that is, uh, Obama shouldn't have been picking winners. Uh, y- y- I, I agree with that. And the- and he shouldn't be deciding based on his blood sugar level or who he likes or doesn't like. He shouldn't be singling out companies because that, that is a form of corruption, because everyone lines up to just kiss his ass. And not only that, he's a terrible business person. Do you realize that since the iPhone was launched, Apple has trained over 28 million Chinese workers on high-tech manufacturing? And also, they make about 500 bucks a month, or at least an entry-level, uh, assembler in Chi- we're n- we're not bringing those jobs back to the US. It- they've also invested about fi- they invest about $55 billion a year into the Chinese economy, which you could argue is the wrong investment or stupid. That's- I mean, they've made these extraordinary investments and if you were to bring back, which y- well, you feasibly just can't do it, but let's just say for shits and giggles we brought back manufacturing the iPhone to the US. That's a $3,500 iPhone.
- KSKara Swisher
Yeah. Well, you j- you said i- i- there's a, there's a statistic, would need to spend $30 billion over three years to move 10, just 10% of its supply chain to the US, according to one estimate, and you had noted that, that the tariff was gonna help India. Like, I, I just ... It's not gonna happen. It's just simply not gonna happen. But talk more about this I'll be watching. Does it, does it, does it ... At some point do they not, they just ignore him or what?
- SGScott Galloway
I think what they say is, "We're going, you know, the president is right, we need to build more manufacturing in the US. We're announcing ..." And just say, "Okay, the supply chain here is the most complex supply chain in history. We're gonna start to build stuff. I know what it's like to get zoning and NIMBY. It's gonna take a year, da, da, da," and just wait til he's about, until he's out of office. Because to bring the supply chain of ... to produce Apple at 50% of the capacity they would need in the US, I mean, A, would probably crush their market by 50, or their market share by 50 or 60 points, and probably take the most-held stock in the world down 40 or 60% within a year if they ever really said they were gonna try and do that. People, uh, people can afford a 30- I mean, uh, uh, the market for a $1,000 iPhone is probably 5 or 8X what the market is for a $3,500 iPhone.
- KSKara Swisher
Yeah.
- SGScott Galloway
I mean, that's-
- KSKara Swisher
I'd even be like, "Mm-mm."
- SGScott Galloway
That, that's a lot of money. And then they-
- KSKara Swisher
It is.
- SGScott Galloway
Well, all, all the stories would be, "Oh, you just ... That's a huge gift to the Korean company, Samsung."
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
So that's just not gonna happen. So what I bet they do is, a couple press releases about how we're- he's right, we're gonna invest more in American manufacturing. You know, if, if ... The real opportunity here, I think, going to solutions in my view, is to kiss and make up with China and to convince them to use some of their manufacturing pro- prowess to build factories in the US, similar to the way Japanese automobile companies have built Japanese car brand plants in the US. But even then, it would have to be super high-end manufacturing because ... to justify the cost of our labor. Um, anyways, this is, this is a distraction. Um, uh, Walmart gets about, I think, about a third of its products are imported. Um, they will just ... And Walmart, if he wants to take on Walmart and Apple, I think that is, you know, that's crazy. And then this ridiculous notion that Scott Basena saying, "Well, Walmart is gonna eat the tariffs," Walmart operates ... Walmart's whole value proposition-
- KSKara Swisher
It's tight.
- SGScott Galloway
... is it, it passes on cost savings to the consumer. They operate at a business of scale with very low margins-
- KSKara Swisher
Low margins.
- SGScott Galloway
But it's got more scale than any company in the world. I think it's the biggest top-line company-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... in the world. So the notion that they can absorb these costs and not pass them on to consumers-
- KSKara Swisher
That's ridiculous.
- SGScott Galloway
It's just not... I mean, okay, say they decided to do that for the benefit of consumers. That takes their earnings down, which takes their share price down, which means-
- KSKara Swisher
Which takes their hiring down, which takes their ...
- SGScott Galloway
Which means the wealth of American households go down, which means they make fewer investments, fewer hires-
- KSKara Swisher
Right. Right.
- SGScott Galloway
Less money for bonuses. I mean, okay, that's a cost. You might argue, well, that hurts shareholders. Fine, you can make that argument. But folks, they've got a business to run and they will figure out a way to optimize their margins-
- KSKara Swisher
Correct.
- SGScott Galloway
And it'll, it'll di-
- 30:24 – 37:18
Meta Delays AI Model
- KSKara Swisher
is delaying the release of its Behemoth, its largest LLaMA 4 AI model. Behemoth was originally scheduled to be released in April, but the company is now aiming for fall. Um, you know, these, uh, th- this is, this is something that seemed expected, that these, these me- these, th- these AI models would run into, um, problems as they move forward. Um, uh, another problem Meta's facing though is fraud. According to documents reviewed by the Wall Street Journal, Meta's the leader in the pack when it comes to internet scams. The tech giant claimed nearly half of all reported scams on Zelle between, uh, 2023 and '24. Regulators in the UK and Australia found that 70% of the new advertisers on the platform were promoting scams or low-quality products. Of course they'll take their business. However, employees have reported a reluctance to limit advertisers reporting, allowing up to 32 automated strikes before f- uh, financial fraud, uh, for financial fraud before banning accounts. I mean, seriously. Uh, seriously. And meanwhile, over at places like Microsoft, they're laying off 3% of its staff. Over 40% of layoffs were in engineering. The cuts come after Satya Nadella announced up to 30% of the company's code is now written by AI. He himself is now listening to podcasts by AI, and he, they, they synopsize them so he doesn't have to listen to the whole thing. Um, which was a weird little fact that was in one of the stories. Um, so w- what's going on here? Let's talk first about l- the difficulties that, that AI is running into, and then the difficulties that tech companies are running into.
- SGScott Galloway
It's, uh... So I'm involved in a company called Section, which is, um, upskilling, uh, AI for the enterprise, right? Trying to help companies figure out how to leverage AI. And the CEO of the company, my friend, Greg Shove... I, you know, my whole rap has always been that AI's not gonna take your job. Someone who understands AI's gonna take your job. And he said, "Well, some of that's true, but AI is in fact taking jobs," and there's been a real kind of gag from a lot of employees if you... They're very suspicious of AI at the enterprise. Like, "Okay, a- are you asking me to cooperate in my own execution here?" Um, th- this will be great for Microsoft's bottom line. I mean, uh, you know, that is, that is absolutely the nitroglycerin about an explosion in earnings, is when you can reduce, you know, these costs, and they claim that it's more about efficiency and not, not cost-cutting. On a personal level, I've been... I don't wanna call myself a, uh, not a victim, but I started getting text messages of a video, and it... And s- and a few people say, that I didn't know that. "Well, should I do this?" And I click on it, and it's a video that was running on Instagram, and it was me saying, uh, I'm... Uh, each week get my three best stock tips. Uh, right now on the, the WhatsApp, I have a WhatsApp group, and it was, and it was... It looked pretty good on a phone. On a computer, you could tell it was AI, but it looked pretty good. And people were sending it to me saying, "Are you aware of this? Should I do this?" So someone, a scammer, had figured out a way to create an AI representation of me trying to get bill people and they're spending money to join a WhatsApp group where I would make, quote unquote, "stock picks". We complained vociferously early and often to Meta. You can still find it, Kara.
- KSKara Swisher
Yep.
- SGScott Galloway
They don't care.
- KSKara Swisher
Yeah.
- SGScott Galloway
It's like, "Oh, people are clicking on it?" (laughs)
- KSKara Swisher
Yeah.
- SGScott Galloway
So these scams are-
- KSKara Swisher
I was just wondering.
- SGScott Galloway
And what I don't get is... And they could absolutely use AI themselves to figure out this shit and take shit down.
- KSKara Swisher
Yeah, they want more advertisers. Do you remember when Amazon was doing books of mine that weren't books of mine? It's the same thing. I mean, the- but these companies don't want to fix this stuff. Otherwise, they would clean it up. Like, it was... They want more advertisers. They, they, they leave con- It's the consistent record of this company to screw consumers before themselves, like before fixing the problem or, or taking the costs, uh, that it would take to do this, because they, they just wanna g-... I mean, can you imagine that many knocks before you get thrown off? Like, do you need that many knocks before you... 32 automated strikes f- for financial fraud before banning accounts. Like, it's just... Why isn't it two or five, or why don't we investigate after five and then dump after 10 or something? It just is... It's, it's a company that doesn't care about that, because, um, they're just... You know, uh, and these companies will cut... Let me just say, software engineers, they will cut you tomorrow if... The minute they can have AI write this code. They are in love with it. They- they're in love with the savings, as Scott said, and they will do it, because that's what they do. They are very good at becoming more efficient. And, and of course, people are hardly their concern. That's my... That's always been my impression.
- SGScott Galloway
Yeah, and I, and, and, and to be fair, I think that's what they should do, but-
- KSKara Swisher
Yeah. I agree.
- SGScott Galloway
... they should use technology to become more efficient and reinvest the capital in, in higher growth areas.
- KSKara Swisher
Make sense.
- SGScott Galloway
The, the thing that struck me, uh, just talking about the difference between new media, Meta, and old media-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... the New York Times, there's clear AI financial fraud-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... trying to misrepresent people and scam people. Doesn't get taken down.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
Do you know how many times that reporter from the New York Times doing the story on you called me to fact check shit?
- KSKara Swisher
53. Right, yeah.
- SGScott Galloway
Oh my God.
- KSKara Swisher
Yeah.
- SGScott Galloway
"Where did you get that? You told us this number. Where'd you get it?" And I'd have to walk him through the math and go-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... "Okay, are you sure?"
- KSKara Swisher
Yeah.
- SGScott Galloway
Yeah, and then he'd call me back and say, "But define the term profits and top-" The guy spent three or four days going line by line such that he could look anyone in the face and say, "What we wrote here was-"
- 37:18 – 44:27
Novo Nordisk CEO Pushed Out
- KSKara Swisher
we're back. Ozempic maker Novo Nordisk has pushed out its CEO as it loses ground in the anti-obesity drug market. Lars Jorgensen, who has run the company for eight years, will step down following the stock price dives and impatience from, uh, the nonprofit that controls the company. In recent years, the company has struggled with supply shortages in the production of Wegovy and the steep competition from Eli Lilly's Mounjaro and Zepbound, to say nothing of the, of the knockoffs that are happening, which they're trying to rein in, but it's not... They're not being as successful. They're trying. Novo Nordisk shares have fallen over 50% since 2024 and had a huge upsurge when this became popular. And while we're on the topic, Weight Watchers filed for bankruptcy, which was another prediction win for you, Scott, by the way. Um, talk about what's happening here, because, you know, we had talked about these industries going to the moon. It's sort of like Nvidia going to the moon because of people interested in it. But it turns out even if you have a successful thing, watch out if you're not running it strongly or you don't... You c- you have to keep in competi- once the competition shows. Same thing, see Tesla, see all these things.
- SGScott Galloway
Yeah, but this was... Asphalt to Motoran basically said that Novo Nordisk is a good company, but it's not an exceptionally innovative company. And they kind of slipped and fell on a diabetes drug that also had use across o- GLP-1 obesity. But it wasn't, it wasn't kind of this great innovation. And they wrote it up. And your job, when you're blessed with that sort of extraordinary luck and additional capital, is to create moats. And that either through distribution or branding or preference at the doctor level. And then in the US, I forget what it's called, there, the... A bunch of drugs were given clearance sort of off-label because of the shortages. And I imagine the board has just said, "Look, you had a moment to really take advantage of what is probably a once-in-a-career-lifetime moment and create some barriers or brand equity or lock up distribution to maintain." And my guess is their margins are just getting hammered by all of these competitors. I honestly, quite frankly, I think his loss is probably the world's gain, meaning that there's competition and they're not able to sustain their kind of u- illustrious margins. I would... I think one of the biggest unlocks for healthcare would be if GLP-1 drugs went down to 10 bucks a month instead of 1,000 a month because this is... If you look at... You know, if you look at the delta between $6,500 a year per capita health spend and $13,000, a lot of it is insurance, um, a lot of it is complexity of billing, and a lot of it is obesity. And so I'd love to see... I, I was happy to see this, quite frankly, 'cause I don't want to see... If Novo Nordisk had gone... It's been cut in half, but if it had quadrupled in the last year, that just would have meant probably additional penetration, but also that they were able to figure out ways to monopolize a market where they were charging people $1,000 a month to stay on this.
- KSKara Swisher
Too much, yeah. Yeah. So, what about the Weight Watchers one? This is a prediction you made. Um, obviously they were trying to get into this market. They have been with the CEO. I've interviewed her. They were trying to shift. They've been trying to... They keep shift-... I have had so many interviews with so many CEOs of Weight Watchers, and the shifting has been really hard. And I think at its heart is their business model doesn't work anymore in the new environment. Um, but they tried to go to these drugs, and they tried this, and they tried that. They tried to call it WW. They tried to do a different thing all the time. Why did you predict that, and what do you think of what's happened?
- SGScott Galloway
At the end of '23, and I heard from all of these companies, I said, "You do not want to be an investor in alcohol stocks, in the food industrial complex around sugary, shitty food, or in, uh, weight loss that doesn't involve GLP-1." And I had logos-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... including the logos of Weight Watchers. And I'm like, "I don't..." I, I typically make stock bets going long, and in November of '23, I made a huge... Uh, my big recommendation was to go short all of these companies. Uh, m- my technology of t- the year of 2024 wasn't AI. I said that in '23. It was GLP-1. I, I think it's more revolutionary than AI, quite frankly. And, uh, while everyone's focused on AI, they're not looking at what, what America's economy is run on is addiction. And this is the biggest thing. This is scaffolding on our primitive instincts that haven't been updated to industrial production. And Weight Watchers was just, quite frankly, shitty technology, uh, you know, that, that just shouldn't be in business. I love this. This is capitalism at work. I don't-
- KSKara Swisher
Yeah. So what are you... What, what are you... Where is this gonna go? This is something you've talked... You talked about this very early. Where do you imagine these bi-... It's just more competition, just the way EVs are doing that and lots of people are, are... You know, at, at the same time, EV is, is still a very rocky business, and, um, people aren't... The uptake is still not there for consumers. It's, it's growing, but not in the way people thought it would.
- SGScott Galloway
This has such extraordinary potential.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
You know-
- KSKara Swisher
Who's the winner here?
- SGScott Galloway
Well, I don't... Uh, so, so this is what I'm hoping.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
I'm hoping there's a lot of companies that make billions, but I'm hoping there aren't that many that make hundreds of billions.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
Because one of the biggest...... detriments to society is that there aren't more industries like the airline industry or jet manufacturing or PCs where no small number of companies are able to develop monopoly power through regulatory capture-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... and the cost to get from Paris to New York is only $400, which is an incredible unlock for the economy and for consumers.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
And I think an incredible unlock for the health of the world, and ultimately lower taxation because we end up paying for obesity in the form of Medicare, Medicaid, or depression. Do you realize that people who are good-looking on average make 8% more per year in compensation?
- KSKara Swisher
Yes, I do.
- SGScott Galloway
(laughs) And (laughs) you get nine, right?
- KSKara Swisher
(laughs)
- SGScott Galloway
Especially if they can climb.
- KSKara Swisher
As you read in the New York Times, go ahead.
- SGScott Galloway
Especially if they can climb. As she scales her empire even bigger.
- KSKara Swisher
(laughs)
- SGScott Galloway
Um, and you know what? Uh, overweight people? The industrial food complex decided it would be politically correct to tell people who are now finding diabetes they're finding their truth-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... and that it's okay to be obese. Do you need empathy for them? Yeah. But also, rec- recognize they're more likely to be depressed and get laid off-
- 44:27 – 55:58
Wins and Fails
- KSKara Swisher
Okay, Scott, let's do wins and fails. I shall start today.
- SGScott Galloway
Please.
- KSKara Swisher
Unless you want to. Would you like to start?
- SGScott Galloway
No, no, go ahead.
- KSKara Swisher
All right. So the fail is so obviously Amazon announcing that it will work with Humane, the AI company launched by Mohammed bin Salman to build, uh, an AI zone in Saudi Arabia. For people that know, uh, a lot of the Arab states are trying very hard to become the data center. There's all kinds of privacy issues, et cetera, but they're trying really hard to do that. The only issue with something like Amazon is that in 2018, Jamal Khashoggi, a writer for the Bezos-owned Washington Post was killed and dismembered with the approval of the Saudi Crown Prince. Um, I just ... I'm ... I just, like, this guy doesn't have any... Like, he- he- he- he was just appearing at his funeral saying how terrible it was, and then a year or two years later or whatever, "Hey, no problem." And it's fine. For other people, I guess they're all gonna show up there for this guy. Um, but it just was particularly vexing if you're, if you're a Washington Post person. And I know you don't feel bad for the Washington Post people, but, uh, dismembering and, and vivisecting a columnist is not something you should do business with. Um, I would say President Trump attacking Taylor Swift, Bruce Springsteen, and now apparently Beyonce, uh, Oprah. That he wants to sue them all and investigate them for singing for Kamala Harris is stupid, but I don't really care. It's just ridiculousness. Um, and for my win, well, obviously, it's gonna be, um, uh, Tom Cruise for this week, for this movie. Um, for final reckoning, I'm gonna go by myself. I'll probably see it multiple times. I don't care what you think of me, but, uh, that is, that is what I, that is ... I am so excited about it. It's a win that it's here and that Kara can finally be happy, uh, 'cause I've been waiting for it for a while. I love Mission Impossibles. I love them, love them, love them. So that's it.
- SGScott Galloway
Nice.
- KSKara Swisher
Yeah.
- SGScott Galloway
Um, so my win is, uh, experts, and specifically I'm obsessed with this woman. I'm getting ... I hate to admit, I'm getting so much reward (laughs) out of Instagram, uh, Reels-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... and TikTok, and I found this wonderful doctor-
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
... uh, who has a PhD in nutrition named ... I, and I apologize if I get her name wrong. Dr. Jessica Knurek, I think is how you say her s- name.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
And I was one of these people that really fell into this notion that kind of the government had always chosen the least expensive option and was spraying our crops with just terrible pesticides, and that the food supply had been infected in America. And then I fell further into the trap because food does rot much quick- much more quickly here in the, in the UK, and I thought, "Okay, that means they're not being sprayed with pesticides." And then into that void slipped a lot of quacks pushing supplements, saying, "Okay, you can find this chemical that they're spraying on this stuff at Home Depot, and that's why you should buy my supplement." Or this basic thing, "You can't trust experts. You can't trust the CDC. You can't trust the NIH." And they were using this as a vehicle to create distrust amongst institutions and also for them that's quote-unquote "lifehack" or wellness experts to sell their shit despite the fact they have absolutely no, um, credentials. And this woman, um, is basically ... She is so good and science-based, and basically debunks all of this bullshit, and she acknowledges where they have some valid points and where they don't. And I just think she's fantastic. And, um, and she talks about ... She goes into public policies that actually, uh, work. You know, expert-led campaigns at the CDC and the World Health Organization are actually ... You know, they're responsible for multiple public health victories. Um, the World Health Organization reports an 8% decrease in tobacco usage globally since 2000. The CDC's push for measles vaccinations-... has presented 57 million deaths worldwide since just 2000. And, you know, it, her, her view, I'm so in line with her. If politicians wanna create policy that is more effective and more trusted by the American public, they should s, um, step aside and let scientists and health professionals-
- KSKara Swisher
100 fucking percent.
- SGScott Galloway
... lead the charge. And I love, uh, she has a constant theme which I have parroted, and that is if these folks were really serious about health, they would address income inequality. (laughs)
- KSKara Swisher
That's correct.
- SGScott Galloway
And, uh, so anyways, I'm, I'm fascinated and I just love, I love when someone is making experts cool again, 'cause she's an expert and she's so good and so facts-based and so reasoned. And then what is my, what is-
- KSKara Swisher
Fail.
- SGScott Galloway
... my loss here, Kara? Oh, um, uh, thanks to RFK Jr., vaccine misinformation is back in full throttle.
- KSKara Swisher
Ugh.
- SGScott Galloway
Clips of Trump's pick for surgeon general, Casey Means, discussing the link between autism and vaccines have surfaced. Uh, in addition, her claims of leaving medical residency because of disillusionment with the medical system, again, that you can't trust the deep state, well, someone did some research and found out that's total bullshit. She left because she couldn't handle the stress.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
Not... She just couldn't ma- And by the way, I've dated someone who was in her residency, and I saw how, uh, kind of out of control.
- KSKara Swisher
Yep.
- SGScott Galloway
I do think it's too stressful.
- KSKara Swisher
Jeff Swisher. Jeff Swisher.
- SGScott Galloway
Well, it's sort of, it, it, it, there's a certain amount of what I call hazing involved.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
She used to have to do 36-hour straight shifts. And I'm like-
Episode duration: 55:58
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