PivotDemocrats Will Probably Sweep the Midterms, But What Happens After Has Us Worried
EVERY SPOKEN WORD
55 min read · 11,229 words- 0:00 – 0:49
Intro
- SGScott Galloway
I feel like the president feels like he's got two years left to molest the country for as much money as possible.
- KSKara Swisher
[upbeat music] Hi, everyone, this is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher, and I love AI.
- SGScott Galloway
And I'm Scott Galloway.
- KSKara Swisher
You need to say AI because Trump is banning it.
- SGScott Galloway
Yes, but I, I, I just wanna be clear, this in no way is a distraction.
- KSKara Swisher
Uh-huh.
- SGScott Galloway
And also, it's real. I think this is outstanding governance.
- KSKara Swisher
[chuckles] Uh-huh. Uh-huh.
- SGScott Galloway
I think there's some-- I think this just is what he should be focused on.
- KSKara Swisher
Yeah.
- SGScott Galloway
And, uh, no, I think, I think this is a good move. Uh, rebranding his governance, I think this is, uh, this is absolutely the hill to die on for the president.
- KSKara Swisher
Like, I, the reason I was talking about artificial intelligence, AI, uh,
- 0:49 – 2:06
Trump’s “AI” Ban ????
- KSKara Swisher
'cause Trump has, uh, been officially banning the term from government documents. In his words, "Everything else, in short order." In this post, he called out Wall Street Journal for not using his preferred term, superintelligence, or SI, which is Sports Illustrated, calling AI the very bad and inaccurate name. I don't know why that. It's unclear if you don't comply, what'll happen. Anyway, that's what it, that it was. Um, so we will just say AI, AI, AI all the time today, just as m-much as we can. You know, the, the, the letters AI are in a lot of words. Did you know that? Faith. There's-- AI pops up a lot of places.
- SGScott Galloway
Well, that's why people-
- KSKara Swisher
Pain
- SGScott Galloway
... come to the show for that type of blinding insight.
- KSKara Swisher
[chuckles] I'm just saying, it's interesting.
- SGScott Galloway
[laughs]
- KSKara Swisher
Pain, which you are in, obviously, right now.
- SGScott Galloway
Uh, yeah. No, no, I get it.
- KSKara Swisher
Um, what else?
- SGScott Galloway
Yeah, uh.
- KSKara Swisher
I'll think of words over the course of the show. Um, y- y- y- this is ridiculous. Even Matt Walsh called the thing the weirdest political hill to die on. So there you have it. It's just dumb. Do you have any other good names for AI, if you were gonna rename it?
- SGScott Galloway
Mass extinction event? Um.
- KSKara Swisher
Oh, hey, that's good.
- SGScott Galloway
We're rich.
- KSKara Swisher
We're rich. [laughs]
- SGScott Galloway
[laughs] We're rich, we're not. We're rich, nope.
- KSKara Swisher
We're dead.
- SGScott Galloway
Wait, wait, wait.
- KSKara Swisher
Dead.
- SGScott Galloway
Wait, wait, wait, wait, wait.
- KSKara Swisher
[laughs] Okay.
- SGScott Galloway
Um, no. No.
- KSKara Swisher
All right. Let me speak, speaking of which, it's been a busy-- Speaking of, like, pronouncements, it's been a busy week for you. You got called out by Elon
- 2:06 – 5:01
Elon Calls Out Scott
- KSKara Swisher
Musk finally. You've been-
- SGScott Galloway
Finally
- KSKara Swisher
... you've been taking it to him. I've noticed all the po-- You're, like, really going for it. You've been calling him all manner of names. He responded, uh, to a video posted on X of you discussing the potential Tesla-SpaceX merger, where you said Tesla is the patient and SpaceX shareholders are the organ donors, [chuckles] which was very funny. Um, you were making a point in context of Tesla's declining deliveries, uh, and sales, but apparently it didn't sit well with Elon, who has posted, quote, "He never had any clue." Uh, how do you feel? You've been, you've been going at him, not just on that, but I s- I've noticed on your other.
- SGScott Galloway
You, you say something minor about him, he threatens to put you in prison.
- KSKara Swisher
I know, right.
- SGScott Galloway
Let's-
- KSKara Swisher
An accurate
- SGScott Galloway
... let's review. I've called him a menace-
- KSKara Swisher
Menace
- SGScott Galloway
... an addict, and a traitor to the West.
- KSKara Swisher
Yes, a traitor to the West.
- SGScott Galloway
And what-
- KSKara Swisher
I was very intrigued by that
- SGScott Galloway
... and what triggers him is that I say one group of shareholders might be getting taken advantage of. That's-
- KSKara Swisher
Right
- SGScott Galloway
... that's what he decides.
- KSKara Swisher
Yeah.
- SGScott Galloway
You know, I, I f- uh, I, quite frankly, I just feel validated. I feel like my parking has just been validated by, I don't know, by Elon Musk, kind of thing.
- KSKara Swisher
Well, he hasn't threatened you. He just said you don't have a clue. He's calling you stupid, I think.
- SGScott Galloway
Yeah, which, which, you know, there's, there's some truth to that. I'm gonna reflect on it.
- KSKara Swisher
Why did you call him traitor to the West, may I ask? I'm, I, I, I didn't watch that one. I watched the others. I didn't get-- I saw it, uh, pop up.
- SGScott Galloway
Because he is. Because he's undermining the military c- military capability and, and, um, the wishes of the US public to defend against a murderous autocrat and save Europe again from a, from an invasion. I don't... Anyw- I've said this before. If the head of, if the CEO of Boeing, uh, in World War II was, was somehow had the ability to disarm B-17s, which we had, I think, lent as bombers to, to Britain, that person, and then without, without cooperation of the government, the military, without giving Churchill a heads-up, turned off the guidance systems mid, mid bombing run against the Nazis, what would we call that person?
- KSKara Swisher
No, you're absolutely right.
- SGScott Galloway
I don't-
- KSKara Swisher
Yeah.
- SGScott Galloway
Well, the, the-
- KSKara Swisher
Putin praised him this week. You didn't, but-
- SGScott Galloway
Well, there you go
- KSKara Swisher
... yeah. Putin said it was a genius.
- SGScott Galloway
Maybe he can be a character witness at the trial. I, um-
- 5:01 – 8:49
Introducing the Pivot Post
- KSKara Swisher
newsletter, The Pivot Post. Uh, we get fantastic questions from our listeners every week, and this will be a perfect place to answer them, plus more opportunities for the dick jokes from Scott, God help us.
- SGScott Galloway
Mm-hmm.
- KSKara Swisher
And as we travel the country on tour next week, we'll be sending out three special editions filled with photos and behind-the-scenes content. Go to pivotshow.com to sign up. Scott's not a [chuckles] newsletter fan, but I love it. I think it's great. We're gonna have all ki- all manner of things, and we'll see how it goes. We're, we're considering some new features, including more shows, and so it'll be there first. Um, we'll answer questions from listeners. We'll solicit essays from our friends of Pivot. I don't know. We'll do whatever we want. We'll paint, we'll paint whatever picture we want, but I think it's nice for our fans to get more stuff. Um, uh, we're not gonna, uh, you know, weekly p- do a long pontificating thing, uh, or anything else, but I think it's kind of interesting to experiment in different mediums, uh, with all kinds of things.
- SGScott Galloway
I... Hold on, hold on. Am I being-- Am I hungover and sensitive? A long weekly pontifica- are you describing my newsletter?
- KSKara Swisher
No. No, no, no, no.
- SGScott Galloway
Was that passive-aggressive?
- KSKara Swisher
You're being sensitive. No, I was thinking of someone else. No, I like your essays from-
- SGScott Galloway
Oh, yeah. Uh-huh
- KSKara Swisher
... No Mercy, No Malice.
- SGScott Galloway
Uh-huh.
- KSKara Swisher
I think they're quite good.
- SGScott Galloway
Uh-huh.
- KSKara Swisher
I like them. You're a very good writer. You actually are.
- SGScott Galloway
I appreciate that.
- KSKara Swisher
I, I, I, I assume you write it yourself, [chuckles] but, um, you do. You work hard at writing. I don't like writing anymore as much as you do.
- SGScott Galloway
It is... I don't, I... You know, you think about fitness, there's physical fitness. I think the ultimate mental fitness is writing. I think it is hands down the hardest thing I do. Hands down.
- KSKara Swisher
I'm working on a book, and I'm having trouble, like, getting it done.
- SGScott Galloway
Ugh.
- KSKara Swisher
I, I-
- SGScott Galloway
Every time, every time about two chap- I'm writing a book too, two chapters of my latest, into my current book, I'm like, "How on earth did I agree to do this again?"
- KSKara Swisher
Correct.
- SGScott Galloway
I'm, like, shocked.
- KSKara Swisher
Yeah.
- SGScott Galloway
You know, supposedly at, during, or right after childbirth, the hormone comes over the w- the female brain such that you forget how awful it is such that you'll do it again. Uh, uh, for about... Every time you finish a book, I'm, I'm convinced that hormone comes out.
- KSKara Swisher
Yeah.
- SGScott Galloway
'Cause there-- You would never do it again if you remember what it's like-
- KSKara Swisher
I agree
- SGScott Galloway
... in chapter three when you're trying to figure out a way to say something unique about AI.
- KSKara Swisher
Yeah, exactly.
- SGScott Galloway
You know? [chuckles] That, that'll last-
- 8:49 – 19:05
Final Countdown to the Midterms
- KSKara Swisher
from the midterms. Let's get into one of the more bizarre midterm battles. Alaska's Republican governor, Mike Dunleavy, has ordered an investigation into reports that Democratic operatives recruited a candidate with the same name as incumbent Republican Senator Dan Sullivan. The New York Times investigation found the effort was reportedly aimed at splitting Sullivan's vote to help Democrat Mary Peltola win the Senate race. Trump has called for Peltola to be prosecuted, while his Justice Department has sued to block the certification of the results if the second Sullivan costs the incumbent the election. Trump is making a last-minute push to win over voters with promises of cash payments, including a one million dollar reward for tips about voter fraud that can lead to an arrest and conviction, which is just nonsense. Recent polling shows Democrats leading Republicans fifty-three to forty-four percent among likely voters. Uh, I, I did a very long, um, uh, show with Hillary this week about that, and she had some predictions of various things, but I'd like to hear yours, uh, where this is going, um, and if anything really stands out, besides Obama is really, has a really tight, a tight 10, as they say. Uh, you know, he's just really funny. Um, I'm not sure if it'll matter, but I have to say it's quite enjoyable to watch him stumping for various candidates. And, and him and Ossoff together was, like, amazing charisma tsunami-
- SGScott Galloway
Mm-hmm
- KSKara Swisher
... essentially. Um, yeah.
- SGScott Galloway
Yeah, felt like the 90210 of politics. Um-
- KSKara Swisher
Yeah, exactly. Yeah. So he's still got it.
- SGScott Galloway
Yeah, like-
- KSKara Swisher
I gotta say, he's still got it.
- SGScott Galloway
I, I can't figure out their strategy. Like, the, uh, as... You know, let's make our final case to the voters and tell them that anyone who says artificial intelligence is the enemy. I don't, I don't get the strategy here. They're having defend, to defend places, you know, like Kansas you never would've thought. And then, you know, bounties for voter fraud. Uh, um, and then bounties for voter fraud, uh, gas at $4.40 a gallon, and then a favorable, you know, D... When Democrats had their big win in 2018, they were D plus seven. This time, they're D plus nine. Now, I do think in certain places, you're probably gonna see the Republican poll better than we think. The, the one that always does is Susan Collins. Like, the polls-
- KSKara Swisher
You never know with her
- SGScott Galloway
... for some reason, they may never seem to get that right.
- KSKara Swisher
Right.
- SGScott Galloway
But this is, um... I mean, I'm, I'm nervous 'cause I'm really, I'm really hopeful.
- KSKara Swisher
Mm-hmm. Don't be hopeful.
- SGScott Galloway
And obviously, everyone's gonna have their eyes on the Senate.
- KSKara Swisher
Right.
- SGScott Galloway
What are your thoughts?
- KSKara Swisher
Um, I d- You know, I, I, I'm not an expert. I, H-Hillary had some very interesting thoughts about it, but I, I think probably the Democrats will win both. Uh, it just seems like that. It seems a momentum, but again, you're right. It's always a mirage, right? It's this close. I will say the candidates are s- on the Democratic side are terrific. Like-
- SGScott Galloway
Really strong. Like, yeah
- KSKara Swisher
... really strong.
- SGScott Galloway
Great kind of quality. I agree.
- KSKara Swisher
And not, not fake strong. You know, when some people are, like-
- SGScott Galloway
No
- KSKara Swisher
... flashy strong. Um, I think, I just think they're all, like, everywhere you go, and they're all different. Amy Acton is in Ohio against Vivek, which I think should be a slam dunk given his behavior. And by the way, she's been backed by yet another step, uh, sibling about what happened to her. Um, I mean, she shouldn't have to be, but this is what, what, where we are. Um, I, I saw a really interesting... AOC's out stumping for people a lot, which is really interesting. She had a great-- I gotta tell you, they're so, they're so good. She said, you know, they're pushing back on this communism thing 'cause these are the arguments of the Republican communism, trans, and call it SI. That's their... Like, I'm like, "Do these have anything to do with people's lives? I don't think so." But one of the things she pushed back, and I thought it was well done, was common sense, not communism. And I thought, you know, in a short word, in the way she delivered it, it was smart. It was, like, super smart. Um- I think every one of them is different and interesting. I just, I, that's my takeaway, and they're very appealing. Now, the question is, w- are there these ghost Republicans who don't do polls, and they're suddenly gonna-
- SGScott Galloway
Right. Right
- KSKara Swisher
... uh, uh, in my experience with people I know who are pro-Trump, they're very disillusioned, I would say. And, um, and so I, uh, they feel very disillusioned. The question, will they just pull that lever for Trump again if it's, one, he's not on the ballot, which he isn't, and two, when they feel so, uh, taken advantage of? Like, the Joe Rogans have switched. All those guys have switched in, in that regard, and quite, uh, vocally. So I don't know. I don't know. I just, I, I'm just gonna-- I'm glad we're in Toronto. [laughs] That's all I have to say.
- SGScott Galloway
Well, but let, let's l- but let's look at the data. R- uh, RealClearPolling's generic ballot average has Democrats up 8.3 points. Decision Desk HQ, 79% chance Democrat- Democrats take the House, 238 seats. For scale, Democrats won the 2018 House popular vote by 8.6 points and picked up 40 seats. And according to Kalshi, it put the odds of a Democratic blue tsunami at 57%, up from 45% just two weeks ago, so that's real momentum. Now, what does a tsunami mean? There's actual technical definitions here. Tsunami means Democrats win at least 235 House seats and 51 Senate seats. A blue wave, 218 House seats, but Republicans maintain control of Senate. Kalshi has it 82%. And then a, quote-unquote, "new category", mega tsunami, 240 House seats, 54 Senate, 25%. So the momentum is just... It, it, it usually tightens at the end, right?
- KSKara Swisher
Yeah, it does.
- SGScott Galloway
And, but it a- appears that the momentum is with them. My favorite is what he's offering Republican voters, or what Trump is offering, a $5,000 Trump dividend to every adult citizen if Republicans hold both chambers, eight billion in direct payments to farmers, up to $30,000 for government fraud tips, and selling the remaining Camp Lejeune, or settling the remaining Camp Lejeune water contamination claims. That's my favorite one. Only [chuckles] if Republicans win, I'll settle the Camp Lejeune water contamination claims [laughs] if we win the House and the Senate. That's kind of an odd one.
- KSKara Swisher
Yeah. Yeah. The, the, the crowds-- I never go by the crowds, but it's really interesting to watch in Texas, the huge cr-- I mean, Ted Cruz keeps having to get bigger and bigger, uh, venues, and Ken Paxton's in these sad little old people places like that. But old people vote, so, you know, I don't know. Like, will people actually vote? That's the thing. I think it is, you know, it is get out the vote. The other thing that I, I think people are not paying enough attention to is Trump's, uh, outbursts, these weird, you know, Jade or ugh. Like, he does some, can't pronounce Ken Paxton's name. He-- there is something going on with him because he keeps doing it.
- SGScott Galloway
That's just what happens to old men. We just start making noises on involuntarily. [laughs] It just-
- 19:05 – 33:04
Microsoft and Alphabet Earnings
- KSKara Swisher
some actual tech earnings. Microsoft beat Wall Street quarterly expectations with revenue up 19%. Its Azure cloud business grew 48%. That's, which is a lot. The capital spending came in below expectations at $45.2 billion. Shares rose nearly 4% in, uh, pre-market traders. Looks like they got a hold of their spending. Microsoft is offering voluntary buyouts to about 60,000 employees. It looks to reduce costs while continuing to invest in AI. Uh, shares for Alphabet, though, are down 13% at the time of the taping, putting the company on course for its biggest ever post-earnings drop. The Google parent company missed Wall Street quarterly earnings expectations for the first time in nearly four years, despite revenue growing 25%. The company reported negative free cash flow of $9 billion, while long-term debt jumped to near- nearly 480% to $125 billion. Cloud revenue more than doubled to $30.7 billion, but search advertising revenue missed expectations, growing 12%. Google's Gemini app now has reached one billion users. I will note the company is facing questions about its AI search tool, including from me, which wouldn't give a straight answer when asked who won the 2020 election. The company responded to my Threads post about the issue, saying they're fixing it, and there was a technical gap in the 2020 election information. Very sus, because Claude and all, I ch- I checked all the others were just fine, and the only one they wouldn't answer was b- the Biden, uh, election, and they answered the Trump ones very clearly. Give us a thought on these, on these earnings, um, because they're, there's sort of, uh, two different ones, and I, I do think I, I find myself in search using Claude much more, uh, uh, that happens to be my choice-
- SGScott Galloway
Mm-hmm
- KSKara Swisher
... um, than I do Google, although I still use Google search. Um, I don't, a- and Gemini, that, that's, uh, w- that's on the Google search page. Um, uh, and Microsoft, I think l- showed a little more discipline, but your thoughts?
- SGScott Galloway
Well, one, just with respect to market expectations, one beat them and one prob- you know, probably missed them. Microsoft, Microsoft did nearly the impossible here, and that is they thread the needle between what is, you know, is a reasonable amount of CapEx while maintaining incredible top-line growth. They had a beat on revenue, they're up 19%, and Azure was up 48%, while CapEx came in below expectations. So this, again, this is the earnings report that was able to kind of thread the needle that the market wanted, and that is growth without some of the runaway spending that marks the age, right? And that, and then as a result, shares popped 4%, while Alphabet actually cratered in the wrong direction. The more interesting part of the story, I think, is that a 60,000-person or employee, um, buyout offering sitting next to accelerating AI CapEx is the clear, like, our K-shaped economy, or two workforces, if you will, is, is really the market for tech, and that is humans get buyout packages and GPUs get huge blank checks and bonuses.
- KSKara Swisher
Oh, that's an interesting observation.
- SGScott Galloway
This is, this is, uh, what marks AI age. Uh, we beat, we beat on earnings, and we're asking 60,000 people to leave?
- KSKara Swisher
Yeah, there, there was a great post. Someone said, um, "To all software engineers, 19," I don't know, "83 to 2026, you had a good run," or something like that. It was-
- SGScott Galloway
But, but the, the headlines, and this is where the monetization and the idolatry of the dollar and shareholder value over trumping everything in a, in a, in a, the age that is America right now. I think the headline a couple decades ago, and definitely 40 or 50 years ago, would've been, you know, Microsoft laying off 60,000 people. Instead, the headline is, "Top and bottom beat from Microsoft." It's just w- whatever, you know, the god we pray to now is shareholders. And then Alphabet, um, was, was actually a bigger story, and this is, this was Alphabet's first top and bottom miss in nearly four years, and the stock shed nine, 10% after hours. That's the worst post-earnings reaction on record, despite revenue actually growing 25% and beating some estimates. That's the e- how, that's how crazy the expe- expectations have become.
- KSKara Swisher
Yeah, but the long-term debt thing, I think, is what freaked them out, the long-term debt jumping, the, the negative cash flow, um, even though things did, did grow, right? The, the... And it seems like Search is, something's happening with Search, or it's shifting. Let's just say it's shifting.
- SGScott Galloway
Well, free cash flow went negative to $9 billion, and second straight negative quarter. CapEx hit, get this, $51.4 billion in a single quarter. That's more than Google's Cloud's entire quarterly revenue. And long-term debt is up 6X year over year from $21 billion.
- KSKara Swisher
So what does that, what does Wall Street do when they see that? They're, they're... Is it lack of discipline or, or things are shifting for this company in terms of its revenue profile?
- SGScott Galloway
Well, no, lack of ROI, and that is Microsoft was able to say, "Okay, our CapEx is actually less and our earnings are more than expected," whereas, uh, uh, the fears are on all these guys that the return's just not gonna catch up. The R is not gonna catch up to the O and the I. And that the CapEx has just become, they're like someone who can't stop eating, and it's become an arms race. And, and like the Soviet Union, it's gonna collapse on itself trying to keep up with, with the one or two players. Right now, I would say Meta and Microsoft are, are probably... Is this accurate? Probably showing the most visible signs of return on a massive CapEx.
- KSKara Swisher
Still massive. Still hasn't, but showing signs of it, right? By the way, it's technically R and IN. O is just on. Just-
- SGScott Galloway
Thank you
- KSKara Swisher
... you know.
- SGScott Galloway
Yeah, no, that's good. Again, more blinding insight.
- KSKara Swisher
[laughs]
- SGScott Galloway
And also, it's just that the 2020 glitch, that it can't answer who won 2020, this kind of technical gap is just really bad timing for, for an AI search tool. Won't state a settled fact, and that, and that kind of undercuts the very AI narrative the company needs, needs to, you know, to justify the CapEx. So-
- KSKara Swisher
The thing is, either you're not good at it or you're sus. It... There's no good answer here, right, in terms of how they couldn't do it a- after all this time.
- SGScott Galloway
Yeah, so look, um, Microsoft thread the needle, and it looks like Alphabet from the market perspective is on the wrong, wrong side of the needle. But again, I think the number here that is the most important number is 60,000. 60,000 people? I mean, that's enormous.
- KSKara Swisher
So I wonder what they'll do if they don't get 60,000. What do they ex- when you, when you do a lay- I've never done a massive layoff, obviously, but you're aware of the... You've had more experience.
- SGScott Galloway
Oh, yeah.
- KSKara Swisher
When you offer 60,000, how many do you expect? And then what do you do if you... There's gotta be a number they are going for, not 60,000, right? Presumably.
- SGScott Galloway
Yeah. It all, uh, so they calibrate it, probably using AI, and say, "If we offer this much..." What, but what you also do is you have a hammer, and that is, basically buyouts come with sort of a Sophie's Choice, and that is, "Take it now. Maybe you don't want it, but by the way, if you don't accept it-
- KSKara Swisher
"We'll, we'll lay you off"
- SGScott Galloway
... there's a chance you'll be laid off with a much less generous severance package."
- KSKara Swisher
Yeah, yeah.
- SGScott Galloway
So-
- KSKara Swisher
That's what they're doing at Paramount. They're doing di- in different parts of the company, voluntary.
- SGScott Galloway
And, and folks, you know, who always over-indexes on these lists, just FYI, young people, people who are working remotely. It, it, it's just much easier to lay off people you don't know, and you're dramatically... The odds of you being laid off are dramatically higher when you work, uh, remotely. But w- what you do are, typically in a layoff, and I've been through a bunch of these, um, you go to the people who... I mean, you don't like to say this out loud, and, but I believe this. 10% of the employees add 120% of the value, and the other 90% are negative 20. That's not that you don't need them, but they take a lot of management time. They're good, not great. Uh, obviously, just statistically, half the workforce is gonna be at average or below average. Typically, what you do in a layoff is you go to the really key people and you say, "This is what we're doing tomorrow. Uh, we're actually gonna increase," or, "This is why y- you are so important here," and then you do the layoff. And, uh, they've already calibrated of those 60,000 people how many they want, they want to leave, leave. They've already, they've already, uh, you know... If, if it's a generous buyout pack- package with a hammer on the back end, they might be expecting 40,000 or 50,000.
- 33:04 – 39:58
Nvidia and Meta's Circular AI Deal
- KSKara Swisher
Nvidia and Meta are teaming up for the latest circular AI deal, which I've called the cir-circle jerk, uh, with Nvidia investing, uh, $3 billion in Meta, part of an expanded partnership focused on the AI agent Muse. This is tied to Meta's new plan to raise nearly $100 billion through stock offerings to fund its ambitions. Chip maker AMD is also getting in on the action, investing $1 billion in Meta's equity offering. Nvidia is really spreading the money around at this point, with stakes in SpaceX, OpenAI, Anthropic, and several other companies. Feels Cisco-y. Uh, this is sort of the kingmaker in these deals. It's worth noting Nvidia is reportedly being investigated by the DOJ over its acquisition of AI open source platform Hugging Face and how it might deal, uh, deal might impact competitors. This feels so Cisco to me. I don't know. It feels something. Um, I mean, it, it's probably what one would do here, but it feels something, something not good. Also, this incredible story came out a little while ago. US intelligence agencies believe Nvidia CEO Jensen Huang was targeted by a Chinese spy who did business with him, according to a report in The New York Times. Trump was briefed about these findings about a year ago and chose not to do anything with the information. Your thoughts?
- SGScott Galloway
Okay, so just, just to review, Nvidia is investing in Meta-
- KSKara Swisher
Mm-hmm
- SGScott Galloway
... who is raising money, in part to buy-
- KSKara Swisher
Chips
- SGScott Galloway
... Nvidia chips.
- KSKara Swisher
Right.
- SGScott Galloway
While AMD also invests in Meta's equity raise. This is, it's the te- This is literally the textbook definition of a circular financing structure. The same dollar is, is round-tripping through the, through a chip maker, a cloud customer, and cap table in one closed loop. And when you have Nvidia, uh, owning and investing, uh, owning stakes via investment in SpaceX, OpenAI, and Anthropic simultaneously, e- essentially, the question is the following: Is Nvidia's demand signal organic or self-funded? So-
- KSKara Swisher
Very good way to put it
- SGScott Galloway
... the, the metaphor is this is a company that's, that's selling shovels, it's investing in the miners, and it also owns a stake in the bank lending money to the miners to buy the shovels.
- KSKara Swisher
Right. Right.
- SGScott Galloway
At some point, if picks and shovels stops being the safe AI trade and starts being the whole mine, and the market looks at these deals and goes, "Okay, these circular deals work until they don't," and then they-
- KSKara Swisher
Right
- SGScott Galloway
... unwind really fast.
- KSKara Swisher
Yeah.
- SGScott Galloway
I was guilty of this. Back in the-
- KSKara Swisher
Oh, AOL. Do you re- that was AOL's whole game.
- SGScott Galloway
Oh, yeah, but even small, it happens everywhere. Even in the '90s, when I was raising a ton of money for my companies, I knew all these entrepreneurs, and I'd be like, "Oh, you're selling this software? Okay, I'll invest 50 grand, and I'll buy your software package for my small shitty business being funded by Sequoia." We were all kind of buying each other's products.
- KSKara Swisher
Well, they would call it a virtuous circle then, and I used to call it a circle jerk at that time. Like, I was like, "Okay, it's a circle, but not the kind you're thinking of." And maybe a circle jerk is virtuous for the people getting jerked. Um, but it does feel funny, and it's interesting that, that DOJ might be investigating them, uh, because he has done everything possible to suck up to Trump, uh, Jensen Huang. Uh, he-
- SGScott Galloway
Jensen, oh, he's smart.
- KSKara Swisher
I, I know.
- SGScott Galloway
But you know what it feels like? Remember, did you ever see that chart of every crypto company that, uh-
- KSKara Swisher
I know what you're talking about
- SGScott Galloway
... that Sam Bankman-Fried invested in?
- KSKara Swisher
Yeah, yeah.
- SGScott Galloway
That FTX. He was, he, it felt like he owned, it felt like he was financing the entire sector-
- KSKara Swisher
Yeah, exactly
- SGScott Galloway
... to keep the music on.
- KSKara Swisher
So what happened? How does it go wrong, or how does it go right? Let's be fair.
- SGScott Galloway
Well, how it goes right is that Anthropic keeps, wh- which was a Its revenues were up 14X in the first half. And to be fair, despite all the critics you're gonna hear on Prof G Markets of the AI trade, if they can keep anything, they, even if that h- that growth gets cut in half, they are, they are, they do a- look to be recognizing scale relative to CapEx. You know, this could be a company that's doing 200 billion in annual revenue by '28, call it.
- 39:58 – 46:14
Marissa Mayer Faces AI Backlash
- KSKara Swisher
Marissa Mayer is facing backlash after revealing she used her new AI assistant Dazzle to come up with three things that make her 10-year-old daughter special. Mayer later said she was not, um, relying on AI to explain her child, but rather testing the app's abilities. Dazzle, it's a, it was a really bad quote. Dazzle uses a person's camera roll to learn about their life and preferences. I have a long history with Marissa. Uh, I was, I was pretty tough on her as CEO of Yahoo, which she did a terrible job at, I'll say. She was a former Google executive. Um, and she's sort of trying to, you know, h- make her differentiation in this AI race. She's tried a bunch of companies that haven't really worked out since leaving Yahoo. But, um, uh, I just wanna know if, uh, you are an AI chatbot, what, what would you say the three most special things about me are? [laughs] You can't think of any. You can't... Oh, God, just call Claude. [laughs]
- SGScott Galloway
Uh, yeah. The three most spe- I, no, I would just leave it at you're just special.
- KSKara Swisher
You're just special.
- SGScott Galloway
Let's leave it there.
- KSKara Swisher
Special needs.
- SGScott Galloway
You're just spe- you're our little special podcast child.
- KSKara Swisher
Podcast child.
- SGScott Galloway
You're very special.
- KSKara Swisher
Uh, this was, it was really a, uh-
- SGScott Galloway
Yeah
- KSKara Swisher
... she should not have said the things she said, honestly. Sometimes she's very not self-aware. I'm not so sure this was so fair. Um, I, I'm not a fan of Marissa's, but I have to say, I think if you know her, she's, she has an, sometimes awkwardly communicates, I would say, and this was a real, this is a corker of bad communications in a, in a piece pr- she probably thought was gonna be positive about her efforts.
- SGScott Galloway
Like, I don't... Marissa was in over her head as CEO of Yahoo. It was the total pump and dump coming back.
- KSKara Swisher
Of Dan.
- SGScott Galloway
Dan Loeb took a big stake.
- KSKara Swisher
Dan Loeb.
- SGScott Galloway
Managed to get a guy fired for saying he minored in computer science when he didn't, which I thought was ridiculous, and then, and then managed to position her-
- KSKara Swisher
He lied about, let me be clear, I wrote some of those stories. He, he lied about a lot of stuff. He, he was un-
- SGScott Galloway
But wasn't the reason he was fired 'cause he claimed-
- KSKara Swisher
He, he, there was a, he just, he just constantly wasn't telling the truth on a number of things.
- SGScott Galloway
Oh, is that right? The-
- KSKara Swisher
Yeah
- SGScott Galloway
... I forget his name. I thought-
- KSKara Swisher
Scott something. Scott. [laughs]
- SGScott Galloway
There we go.
- KSKara Swisher
Scott, I feel like Scott was his name.
- SGScott Galloway
Um, and, and then she was painted as some like sort of heroic-
- KSKara Swisher
Yeah, which-
- SGScott Galloway
You know
- KSKara Swisher
... anyone who knew her would know-
- SGScott Galloway
A superhero
- 46:14 – 54:19
Predictions
- KSKara Swisher
hear a prediction.
- SGScott Galloway
I think in one story we didn't talk about that we probably should have, Instagram, uh, or Meta announced a new program called Features, which will now allow creators to upload, uh, up to, uh, 90-minute long videos to their platform. This is obviously, they look at, they look at the success and shareholder value that YouTube is driving, and Mark's like, "You know, I want some of that." And they want to challenge their long form dominance online. And I think what they sense is that one that was challenging their dominance, Netflix, has its own problems, and so I think they see an opportunity. And also, they have three billion daily active users. And talking about AI, I would argue that the best use of AI right now is Meta and video. I just find it frighteningly addictive. Um, so...
- KSKara Swisher
Is, you mean on Instagram or on throughout the service?
- SGScott Galloway
I find Instagram Reels-
- KSKara Swisher
Yeah
- SGScott Galloway
... uh-
- KSKara Swisher
I know you love them
- SGScott Galloway
... uh, I feel like it's turning my brain inside out.
- KSKara Swisher
Right. Yeah.
- SGScott Galloway
That it absolutely-
- KSKara Swisher
They're good
- SGScott Galloway
... it's, it's frightening to me-
- KSKara Swisher
Yeah
- SGScott Galloway
... how on point the next video's gonna be. [laughs]
- KSKara Swisher
Yeah. I agree. I agree. I think you're right.
- SGScott Galloway
And, uh, I don't think people realize just how many millions of data points and human psychology and behavioral psychology they are measuring a billion times a second to try and keep you on that screen for just a second longer every day. So currently, and I think what you're gonna highlight, so my prediction is boring. By the end of next year, Nielsen will be reporting streaming data on Meta. And just in the past couple of months, Meta has begun rolling out its, uh, Instagram app for the smart TV, which will begin short form reels and now long form features in the living room. In sum, Instagram's coming for the TV and for streaming media. What's interesting is they're not paying people. I think YouTube pays about 50% of its revenue out to creators. So the question is, and I tasked my team with figuring this out, I'm like, "Is this a top of the funnel vehicle?" Because for the next 90 to 180 days, the, it, if you wanna get into Features, you should do it now because the al- they'll juice the algorithm.
- KSKara Swisher
Can I, you know, they're in a bit of a beef with publishers. They're trying to ch- they tried to put these terms where everything that you put in there, they have rights to scrape. There's, there's a big fight going on, and, uh, they've, they've slowed down their rollout of these things. So just keep in mind, they're always looking to steal your shit, everybody, that you're putting in there. And so they're in the midst of a big fight with people. And again, they were gonna put these rules in place for what you uploaded, and there was a lot of pushback from all manner of content creators, uh, especially professional ones, of taking your stuff and using it.
- SGScott Galloway
Th- there's just no getting around it. This puts more pressure- On the streamers, including Netflix. Uh, they, and streamers now won't just be competing with YouTube over the television, they're gonna be competing with Meta.
- KSKara Swisher
But y- but content creators do not love... Like, if you put it on Netflix, you don't expect them to steal your shit. Expect Facebook to steal your shit in some way that will help them. That's, it's a, it's a different relationship, so it should make you pause.
- SGScott Galloway
Uh, that's always been true of Meta, and every day more and more people decide to upload their content. [laughs]
- KSKara Swisher
Right, I get it, but that, th- they're in the midst of that controversy too. But so you think they're gonna keep up? I'll tell you one thing about YouTube, and I just love your observation, is I agree. You, Reels, you go from thing to thing, and it's really addictive in a good way, like in a weird good way. I find, uh, YouTube, as popular as it is, and I get why it's popular, and once you figure out, grok the way it works, it's great for you, but it's rather confusing still. It's never, and I've talked this about the, the, to the CEOs of, of YouTube over the many years. I just, it's hard to g- like, it's hard to organize it. It doesn't seem-
- SGScott Galloway
Hmm
- KSKara Swisher
... organized. It seems random as shit, and I don't get as much, um... It's not as f- Meta does a great job at organizing. I don't know how else to put it, like programming or something, whatever you might call it.
- SGScott Galloway
I just wanna look at, but just, it'll be interesting to revisit the following chart in a year when Meta, you know, what is one of the best operating companies in the world with a ton of content, and they always figure out a way to get creators to give them their content for free. But right now, if you look at the share of video or TV, streaming is now half. Cable is 19%, broadcast is 18%, others 14%. And now let's look at the streaming market. The big switch here is that Netflix was near double digits and YouTube was low double digits. Now YouTube is 16% and Netflix is eight. YouTube has twice the watch time of Netflix. Then after Netflix at 8%, it drops down to five at Disney, four for, uh, Amazon Prime. This is interesting, 3% from Roku, which was just acquired by News Corp, correct, or Fox?
- KSKara Swisher
News Corp.
- SGScott Galloway
2.3%.
- KSKara Swisher
Well, so far it's, it's under investigation.
- SGScott Galloway
Under review. 2.3% for Paramount+. The one I wasn't expecting to see 2% from Tubi. By the way, Tubi has greater share of streaming than Peacock at 1.6%.
- KSKara Swisher
Yeah, that's News Corp.
- SGScott Galloway
Much lower than I had thought.
Episode duration: 54:19
Install uListen for AI-powered chat & search across the full episode — Get Full Transcript
Transcript of episode EMztRBSQHIo
