Can X CEO Linda Yaccarino Recover?

1. 0:00 – 1:00

   Intro

   1. KSKara Swisher0:00

      Lou Paskalis is the chief strategy officer for Ad Fontes, uh, Media. He knows ex-CEO Linda Rakerino quite well, and in recent weeks, was one of the number of ad executives encouraging her to resign, advising her to do so, uh, before her reputation is damaged, he said. He also wrote a really interesting piece about it. Uh, I've known him for a long time. He's been a big mover and shaker in the ad industry. Uh, we've recently talked quite a lot about how advertisers are not buying into news, which I wanna get to at the end. But first, welcome, Lou.

   2. LPLou Paskalis0:30

      Hey, Kara. It's a thrill to be here with you and Scott. Bucket list event for me.

   3. KSKara Swisher0:34

      I know.

   4. LPLou Paskalis0:34

      Uh, so nice to be working with you.

   5. KSKara Swisher0:35

      Oh, good. You're a nice fan. Um, you've always been really nice about Pivot. Um, so let's talk first about Linda. You've known her for a long time. You were close to her. You even were very, at the time she went to Twitter, when I said, "Oh, no, no, this isn't gonna end well," you said, "Oh, come on, Kara, give her a chance. She'll do a good job." Um, uh, when you texted her about resigning, that was before Elon's DealBook interview.

   6. LPLou Paskalis0:58

      Correct.

   7. KSKara Swisher0:58

      Uh, have, have you been in touch

2. 1:00 – 2:30

   State of Play

   1. KSKara Swisher1:00

      since? And obviously you wrote that piece. Um, what, wh- what's the state of play right now? She's sort of all in, it seems.

   2. LPLou Paskalis1:07

      She is all in, and, uh, I've texted her a number of times without reply, which is, you know, unfortunate because normally we, you know, had a great, you know, exchange very quickly. But I think she's bunkered in. I think she's really focused on staying on the mechanical bull as long as possible.

   3. KSKara Swisher1:26

      (laughs)

   4. LPLou Paskalis1:26

      Um, and, uh, you know, I, I, I think that this is very consistent with her DNA, where quitting equals failing. And unfortunately, that's a sort of short-term outcome in this context, whereas the long-term outcome is she probably has or maybe had the best reputation of any sell-side senior executive in the advertising industry. It was built over a quarter century, always doing the right thing, high integrity. You could rely on her, you know, her word was her bond. And I think she's now cashing those chips in for Elon in a way that I don't think he's capable of reciprocating.

   5. KSKara Swisher2:08

      Yeah. So after the interview, she, as you said, she sent a memo to ex-employees saying Musk, quote, "Shared an unmatched and completely unvarnished perspective and vision for the future." This is after he cursed out advertisers. Uh, she also... which was shocking to me. Uh, she also said in the post about X standing at the unique and amazing intersection of free speech and Main Street, which was possibly one of the worst metaphors I've ever heard. Do you actually think she believes

3. 2:30 – 5:15

   Linda Believes

   1. KSKara Swisher2:30

      this stuff, or is she just determined? What is causing this? I think she believes it now. I think she actually believes it. I... maybe not. I, I, I don't find her to be a particularly cynical person over the time I knew her.

   2. LPLou Paskalis2:43

      I think she wants to believe it, and I think she's searching for arguments to make it believable. And I think it's resonating with a certain audience on X, uh, that, you know, has really consumed the Kool-Aid. You know, every time I, I get interviewed, I get harangued by these people who are, you know, accusing me of hating free speech (laughs) , which I, I find laughable given, you know, uh, my side hustle to save news. So, I think she's slowly building what, um, um, uh, Walter Isaacson would have described as a reality distortion field when... you know, in the book Jobs.

   3. KSKara Swisher3:20

      Mm-hmm.

   4. LPLou Paskalis3:20

      Uh, and, uh, I think she probably sees the counterargument, but she's making the case as best she can because she's tenacious as hell and she's gonna make her argument.

   5. KSKara Swisher3:29

      Okay, last question, then I'll, Scott will have a question. When I predicted, uh... when I wrote that Linda was gonna be the CEO, um, you responded to me on Twitter saying, "She would be my first choice and my only choice to save the platform from the hands of its owner." You also noted, "I still cannot understand why she'd subject herself to Elon Musk, however." Um, y- y- y- d- you did think it could work, correct? Correct?

   6. LPLou Paskalis3:50

      At the beginning I did because I thought it was rather self-effacing of Elon to recognize that he was never gonna be able to change his behavior in such a way as to appeal to advertisers. And there were all these incidents that happened before.

   7. KSKara Swisher4:03

      Uh-huh.

   8. LPLou Paskalis4:03

      The last influence council, which was a legacy of Twitter, which was a shocking meeting where he basically said advertisers were going to have to create a distance between how he himself acted and buying the platform, uh, which is not a possibility when you work in corporate America. How the CEO speaks is, you know, is representative of the platform's values. But I thought she could influence him. I thought it was a moment where Elon said, "Okay, for me to be successful, I'm gonna have to learn from others, and I'm gonna go and buy the best person I can." But he didn't empower her. It was very evident when the name change was effected that she was not part of the comms plan, which I found shocking having grown up in corporate America. She was basically behind the parade, uh, cleaning up the elephant poop and saying, "Ra ra, this is great." But it didn't feel like she had a meaningful role in it, and it, it, it seems like she's not being allowed to exert the kind of influence that he paid to get and that would have helped him. And, and now that's affecting her ability to help him, even if he were to change his behavior.

   9. KSKara Swisher5:12

      Scott?

   10. SGScott Galloway5:12

       Good to see you, Lou. Um...

   11. LPLou Paskalis5:14

       Likewise,

4. 5:15 – 7:30

   Twitter Advertising

   1. LPLou Paskalis5:15

      Scott.

   2. SGScott Galloway5:15

      So, it, it's not that they've registered a 50% or a 60% decline in advertising revenue that's surprising, it's that they still have 40% or 50%. So, make the bull case for advertising on Twitter. What do you think her pitch is? You're, you're in this business. Give us the pitch. You're NBC, NBC Universal, or NBCUI, whatever it's called, her old employer that's actually stopped advertising. What's the pitch to come back on the platform right now?

   3. LPLou Paskalis5:46

      Scott, I really struggle with that because, you know, I think as you know, in its heyday I was an enormous supporter of Twitter and I was a huge advertiser on Twitter. News broke on Twitter, culture broke on Twitter, sports is better with Twitter.

   4. SGScott Galloway6:00

      (laughs)

   5. LPLou Paskalis6:00

      The only use case I personally have anymore is during Formula 1 races, which is a very international community and I'm a huge Formula 1 fan, is I connect with the people that I'll never meet all over the world and we watch in real time and we snark in real time.I think it's different if you're activating in sports, if you've got a league sponsorship, there are immediate plays to extend that.

   6. KSKara Swisher6:24

      Mm-hmm.

   7. LPLou Paskalis6:24

      You know, keep your eye on the NFL deal. Will the NFL continue to endure being associated with Twitter in, in coming years? Um, I think that's one. Um, they don't have a good, uh, performance product. They never did. It's always been their weakness, their Achilles' heel, so that limits their ability to appeal to DTC, and you know, they're pivoting now to small and medium-sized businesses. You're gonna need an awful lot of those to make up for the companies that walked away.

   8. KSKara Swisher6:54

      Yeah. Yeah.

   9. LPLou Paskalis6:54

      And so, uh, uh, as she walks into corporate America, I, I th- I don't really know what argument that she has other than to say, "Activate your sponsorship." And I just read an article this morning that, uh, you know, people are moving their Super Bowl sponsorships, was, which was always the biggest week on Twitter from a revenue standpoint.

   10. KSKara Swisher7:11

       On Twitter, yeah.

   11. LPLou Paskalis7:12

       And they're moving them to TikTok, they're moving them elsewhere, where it's much harder to activate, but they just don't wanna take that risk, and that's where the margins are, is those big brandy plays, not those, you know, direct to consumer, small, uh, direct response plays. I, I, I wouldn't know how to begin

5. 7:30 – 10:00

   Advertising

   1. LPLou Paskalis7:30

      to sell that platform to any well-governed company.

   2. KSKara Swisher7:31

      Wow, not anything? You're an ad guy. (laughs) And you a been, and you've been, you've heard every ad guy trying to get you to spend money.

   3. LPLou Paskalis7:39

      Yeah, and, and, and-

   4. KSKara Swisher7:40

      And woman g- ad person.

   5. LPLou Paskalis7:42

      Absolutely. And, you know, uh, it's, it's really hard for me to say this, I loved the platform before Elon bought it, I'm a huge fan of Lindy Accarino, I don't see a path forward with advertisers, and I think that's why Elon made the statement he did at DealBook. I think he went there wanting to deliver a message like he did. I think he knew that after his, you know, post-October 7th unfortunate retweet that the path forward with advertising was dead to him because, you know, antisemitism is the third rail, and I don't think there was recovery, and so I think his approach was very much like Cortés when he landed in the New World in 1519, the first thing he did was burn the boats so nobody was going back. I think he burned the boats to advertising. Lindy's gonna keep trying, but he's moved onto another revenue model that he has in his head that I am not smart enough to understand, but the man's a genius and, you know, we'll wait and see if he's got something up his sleeve that the rest of us aren't seeing.

   6. KSKara Swisher8:40

      But just to, just to follow up on that, if you think he's moving to a non-advertising-based revenue model, what does she bring? Does she survive as CEO?

   7. LPLou Paskalis8:48

      (laughs)

   8. KSKara Swisher8:48

      She doesn't have any background in AI, doesn't have any background in payments. She's an ad salesperson.

   9. LPLou Paskalis8:53

      I think it's a fair question. I think that, you know, maybe what he's learning, although (laughs) I would say in a b- in a, in a not so, you know, predictive way is that before you jump to the new thing, you need to still continue to nurture the old thing, right? Uh, he doesn't have a good track record of doing that. Um, I, you know, I, what I do know is that, you know, there, there's few people that are better than Linda at figuring it out, at being able to, to pivot, to adapt, whatever, and, you know, she does have relationships bel- above the CMO level, where some of these new revenue models that he's thinking about, some of these new businesses that he's bolting on-

   10. KSKara Swisher9:32

       Content, content deals.

   11. LPLou Paskalis9:33

       Yeah, content deals. You know, she's kind of hinting at sponsorship, uh, which, you know, again, it's got the same set of issues, I think, uh, but, you know, I, I, I think she'll be around for a while. I think in the relative scheme of things, she's not that expensive considering what he's trying to do, and she can still knock on doors and get in rooms even if she's not getting ad money as a result.

   12. KSKara Swisher9:55

       Um, what do you, what, uh, so w- when the advertising community, are they gonna come back? Is there a,

6. 10:00 – 12:40

   Risk Mitigation

   1. KSKara Swisher10:00

      uh, uh, it never worked before. I, I, it never worked for us, it never, you know, w- why would they, are they gonna come back or is this just a, is it a pause, or it's like, "That's enough of this"?

   2. LPLou Paskalis10:09

      I think this is the first-

   3. KSKara Swisher10:10

      ... because there's better places to put their money, correct?

   4. LPLou Paskalis10:12

      ... that I, I... This one is really clear to me, and, you know, I put myself in the context of having run ad buying operations for major brands for three and a half decades. There is no scenario that's gonna cause me to go to the management team and say, "You know what? We've looked at what X has to offer from an advertising perspective and we're gonna go back up on the platform and you're just gonna have to ignore the risks of Elon Musk, his current and future antics." I don't know if the management team would laugh me out of the room or have me escorted out of the room, but I know I'd be out of a job in 24 hours because part of the job is risk mitigation. A big part of the job when you're a Fortune 500 company is saying, "Do the risks offset the rewards?" And the risks are usually, "Will we reach the right audience? Does the platform have enough scale? Does our creative resonate against this audience?" This is, "Will our customers boycott us if we go up on, uh, on Twitter? Will the board call the CEO's judgment into question? Could I get my CEO fired?" These are risks that have no offset whatsoever from an advertising value, and so I would never make that recommendation. I can't imagine people wanting to come back from that, and my bigger concern isn't the "GFY" comment that he said to, um, uh, Andrew Ross Sorkin.

   5. KSKara Swisher11:31

      You can say it all, Mike. You can say it.

   6. LPLou Paskalis11:32

      I don't wanna, I, I, listen, I leave that to you guys.

   7. KSKara Swisher11:34

      Fine.

   8. LPLou Paskalis11:34

      Uh, I leave that to you guys.

   9. KSKara Swisher11:35

      No, it's fine. It was, "Go fuck yourself," okay? Seven times.

   10. LPLou Paskalis11:37

       Okay. Well, he said, when he said, "Go fuck yourself," twice to advertisers there, he got me to do it. Um, I'm actually less concerned about that than what he did immediately afterward. "Hi, Bob." This is what corporate communication functions fear most of all. And I have to tell you guys, and it's a topic for another day, marketing has s- been suborned in most major companies to corporate communications. These are risk-averse people who are really there to promote the CEO and his talk track, right? And the minute that he singled out Bob Iger, every one of them said, "That's it. I'm not going near that," because God forbid we go on the platform-

   11. KSKara Swisher12:14

       That's right.

   12. LPLou Paskalis12:14

       ... and then choose to come off again at a later date, we might get singled out, and I'm not getting my CEO singled out and neither is the media guy.So, I think he slammed the watertight door. He's dogged it down and he has moved on, and advertisers on the other side of it are not pushing on that door at all. I- I think it's a parting of the ways, and I really doubt you're gonna see major well-governed companies come back.

   13. KSKara Swisher12:36

       Wow. Well, there it is. Uh, let me ask you. Um, I wanna ask you one more question about this. So, and

7. 12:40 – 14:10

   Can Linda Recover

   1. KSKara Swisher12:40

      you think she's staying no matter what? She doesn't-

   2. LPLou Paskalis12:42

      She's staying no matter what.

   3. KSKara Swisher12:43

      Where could she g- has she ruined her career or can she recover if she leaves?

   4. LPLou Paskalis12:47

      No. The, you know, I still look at this as the biggest virtual intervention in history. The entire ad community, people who do what I do-

   5. KSKara Swisher12:57

      Mm-hmm.

   6. LPLou Paskalis12:57

      ... uh, all of whom, you know, we know each other. It's a Yenta Fest. We all, yeah, (laughs) we go to the same events, we have the same conversations. We were just... We're trying to run an intervention for her to get her out. There's a million things she could go do. She could run Amazon's ad platform. She could, you know, uh, she can recover from this. The only thing that, you know, you have to give her a mulligan on is the Vox interview, which was a whole nother thing that you guys have talked about before, which was just on her best day. But she's so well-respected in the industry, everybody will be like, "Well, she tried. We kinda thought it wasn't gonna work because of him. It didn't. It's not her fault, and now she's gonna end up somewhere else."

   7. KSKara Swisher13:35

      She's now doubled down.

   8. LPLou Paskalis13:35

      So I think she's got runway.

   9. KSKara Swisher13:37

      Yeah, but she's doubled down.

   10. LPLou Paskalis13:38

       Yeah. I, I know, I know.

   11. KSKara Swisher13:40

       Like, she's really doubled down. Ugh.

   12. LPLou Paskalis13:41

       She's doubled down, but she's doubled down against climbing Mount Everest, where a lot of people fail, and, you know, I said on an interview last week, you know, that hill went from steep to vertical now because of his behavior.

   13. KSKara Swisher13:52

       Right.

   14. LPLou Paskalis13:52

       She's, she's not gonna let go of it, but the advertising community will give her a break. The question is, you know, will people who don't know her but who seem to have formed opinions of her in the last couple of months also give her that break? And that is, you know, unknown.

   15. KSKara Swisher14:06

       All right. Scott, last question, and then I have just one more about a different topic. Go ahead.

   16. SGScott Galloway14:09

       So, Lew, you sit

8. 14:10 – 18:30

   Advertising Revenue

   1. SGScott Galloway14:10

      at sort of the helm of the bobsled looking at flows of advertising revenue. Just more broadly speaking, um... And by the way, uh, just a quick comment. As someone who didn't know or anything about Linda before, I think this has been a total disaster for her. Uh, it sh- to me, she just looks... Not, not knowing how impressive a person she is, and I trust your judgment and, and Kara s- has said very complementary things of her. Coming into this with a clean slate, she strikes me as the worst CEO of the year, hands down. If Time had said Worst CEO of the Year, it would've been this individual who's just being mocked and made a fool of, and every day just looks worse and worse. But anyway, um, the... You, you sit at the, you, you get, you have a bird's eye view into capital and advertising flows across the major platforms and major mediums. I'd just love your sort of CliffsNotes on which platforms are doing better than people think, not as well as people think. Like, what are you seeing out there in the ecosystem?

   2. LPLou Paskalis15:10

      You know, I think there's really a search for quality engagement, and the places that you get the kind of quality engagement have bifurcated based on the audience that you're going after. Uh, you're seeing certainly, um, one social platform emerge as the, you know, the sort of killer app, and that's TikTok. Marketers have to work really hard to get quality engagement there. But when they get it right, they really get it right. So, there's a lot more effort being put in there. There is this symbiotic ecosystem between what are called retail media networks. These are the Walmart, the Walgreens, the Albertsons, uh, the Krogers of the world that are now in the ad business who have great first-party data, Scott, but they don't have the kind of scale that they really need. And so they're forging alliances with CTV.

   3. SGScott Galloway15:59

      Mm-hmm.

   4. LPLou Paskalis15:59

      CTV is also login, that's the Netflix of the world, the ad-supported sides of Hulu, et cetera, et cetera. Um, and they're trying to build an ecosystem where there's rich first-party data, there's quality engagement, there's up and down funnel. Uh, and I do think in a broader context, uh, we're seeing some really interesting green shoots. We just did some research at Ad Fontes Media with Civic Science, which showed that young people are now turning back to quality news platforms-

   5. SGScott Galloway16:28

      Mm-hmm.

   6. LPLou Paskalis16:29

      ... um, for their news and away from social media because they feel like they were duped in 2020.

   7. SGScott Galloway16:34

      Mm-hmm. Many of them had. Mm-hmm.

   8. LPLou Paskalis16:34

      So Gen Z... Yeah, Gen Z and Millennials, they're now saying, "We're not gonna get duped." And I mean, i- i- it's a sign of hopefulness. It's a sign that people are kind of taking the reins back in. So I think accountability, transparency, and trust are kind of coming back in, and that quality publishing in general will do well. But, you know, there are not... It's not without headwinds, as you know.

   9. SGScott Galloway16:57

      But then, ma- a more pointed question. What's the easiest platform to sell for you right now, to an advertiser?

   10. LPLou Paskalis17:04

       Look, if I'm... If, if I'm an advertiser, where I'm gonna start, where I get the best targetability, the best addressability, the best scale of addressability, and that is pretty much any ad-supported CTV platform, and then I would augment it with linear, and then I would go into addressable digital. Um, so what's old is new again. Uh, there's so much headwind, Scott, on programmatic right way, right now that ANA just dropped their full study the other day, uh, uh, which full disclosure I worked on, which just said that one in five do- one in every $5 that's being spent in the $88 billion programmatic industry globally, uh, is going to bad actors, either made for advertising sites that deliver a terrible experience or these, uh, really low-quality publishers that say, you know, "If you have these three symptoms, you might be dying of fungus," which have no basis in reality. And so I think we're seeing a flight to quality. A lot of that quality is from established companies. I think you're gonna actually see a little bit of a bump, uh, in really old school stuff, like, I'm not kidding, terrestrial radio-

   11. SGScott Galloway18:11

       Mm-hmm.

   12. LPLou Paskalis18:12

       ... linear TV, things that have measurability to them that give you scale, and then addressable that's accountable. And I think that's what you're gonna see, and I think there's gonna be a whole lot of skepticism about programmatic moving forward, which is a huge part of the digital ecosystem now.

   13. KSKara Swisher18:29

       Um,

9. 18:30 – 21:12

   The War on Truth

   1. KSKara Swisher18:30

      I have, oh, sorry. I have a, oh, sorry. I have a last question, Lew. Um, y- you have been pushing for this, for, for people to buy into news advertisers, which they don't want to do, even though they willingly go into more controversial platforms like X. Um, can you d- very briefly, because we only have a little bit of time, why is this important? You and I had a great talk about this at, uh, in, in France at Cannes, Lew.

   2. LPLou Paskalis18:54

      So we're living through an era where there's a war on truth, and I mentioned this to you when we talked, you know, I, it was eight years ago when Kellyanne Conway was standing on the lawn of the White House and answering a reporter's question by saying that the report- that the president was using alternative facts. And I naively Googled that. I thought that was a thing. Well, now it is a thing, and the only people who are defending the truth in the war on truth are journalists. It's allowing for all sorts of zoning and school board issues that lead to the burning of books, which, you know, sounds like Germany in the mid-1930s to me, uh, because you don't have local reporters there calling it out. And marketers are uniquely called out in the, uh, uh, First, um, Amendment of the Bill of Rights, um, in their, their role to support journalism to keep politicians on track. And we've got to do more there. And, and Kara, it's not just an eat-your-vegetables message about it's your civic responsibility to support journalism. It delivers enormous return on advertising spend. It delivers enormous unduplicated reach. These are the things that advertisers crave, and they're ignoring that because of unfounded fears about getting caught up in the culture wars, which again, are being driven by corporate communications and have no basis in fact.

   3. KSKara Swisher20:09

      Mm-hmm. Yep. So people should advertise (laughs) with news organizations.

   4. LPLou Paskalis20:12

      In news, yeah.

   5. KSKara Swisher20:13

      It's so much more dangerous elsewhere. It's so funny that they just, they probably want to keep up with the young people.

   6. LPLou Paskalis20:18

      I know we're-

   7. KSKara Swisher20:19

      Um, in any case.

   8. LPLou Paskalis20:20

      Go ahead.

   9. KSKara Swisher20:20

      Go ahead. Sorry.

   10. LPLou Paskalis20:20

       I was gonna say, I know we're out of time, but what they're doing is ironically, they're moving their money, unbeknownst, into MFAs, these bad m- made for advertising sites which are engineered to appeal to that money and appear to be brand-safe, when in fact, they're not, and they're actually taking the money away from journalism. And that $10 billion slice of pie that's going to MFAs, if that went back into journalism in the United States, you would see robust newsrooms and robust local reporting.

   11. KSKara Swisher20:47

       We're the real deal, Lew. That's right. So are you. I really appreciate it. Thank you so much. So insightful, um, and fair, I have to say.

   12. LPLou Paskalis20:55

       Mm-hmm.

   13. KSKara Swisher20:55

       I know you like Linda, and I know you were very close to her, and it's, I, I hope she listens to you, because you're-

   14. LPLou Paskalis21:01

       Thank you, guys. I, I-

   15. KSKara Swisher21:02

       ... you're, you're a better friend than she realizes, I think.

   16. LPLou Paskalis21:04

       Oh, I appreciate you saying that. It's an honor to be on with both of you.

   17. KSKara Swisher21:07

       Thanks.

   18. SGScott Galloway21:07

       Thanks, Lew.

Episode duration: 21:12