EVERY SPOKEN WORD
55 min read · 10,999 words- 0:00 – 0:26
Intro
- SGScott Galloway
I'm sorry, Pope-- The Pope shouldn't talk about matters of theology? Isn't that exactly who should be discussing it?
- KSKara Swisher
I think he's torpedoing his twenty twenty-eight chances by picking a fight. [upbeat music] Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher.
- SGScott Galloway
And I'm Scott Galloway.
- KSKara Swisher
How's it going, Scott?
- SGScott Galloway
Just so well, Kara.
- KSKara Swisher
Let's do a rundown
- 0:26 – 5:55
Iran Latest
- KSKara Swisher
of the latest with Iran. President Trump says the war is very close to over again. As we tape this, Iranian officials and Pakistan's military chief are set to meet in Tehran to discuss messages exchanged by Iran and the US. Meanwhile, Iran's military has threatened shipping in the Red Sea if the US continues its blockade of Iranian ports.
- SGScott Galloway
Let me just piss off everybody. I think that the US threatening to fully block the Strait of Hormuz is the right move right now.
- KSKara Swisher
Mm-hmm. Many people do.
- SGScott Galloway
Because, uh, freedom of navigation for the last hundred and fifty years has been a key component of the global economy. It's a generally accepted principle that the Strait of Malacca or the Straits of Singapore, if Indonesia, Malaysia, and Singapore decide one day to exert their geopolitical power and get tens of billions of dollars, that they could block the strait. Egypt could block, uh, the Suez Canal. And so if there isn't a multilateral force that keeps this thing open, it just sets a terrible precedent. Now, how we got here, I think a lot of people have very valid arguments around, well, we broke it, now we're asking the world to fix it. But I think it's actually a good strategy to say, "Okay, if you want the straits blocked, we're gonna make them blocked for everyone, including all entry into Iranian ports," which I think is the right move. Um, what is really unusual about all of this, and I know we're gonna get to this, is that the markets are up.
- KSKara Swisher
Yeah, they are.
- SGScott Galloway
Um, which is just, uh, it, it fully seems like-
- KSKara Swisher
Yeah, let me-
- SGScott Galloway
... the markets have totally dislocated.
- KSKara Swisher
Yeah. The, the, the S&P-
- SGScott Galloway
Go ahead. I'm sorry
- KSKara Swisher
... is up two point eight percent at the time of this taping. Just they are going up 'cause they feel that there'll be some, some opening of the Hormuz, correct? I mean, or, or as Scott Bessent call it, the Strait of Vermouth, but go ahead.
- SGScott Galloway
There's a few things happening. One, [sighs] I've, I've said this for a while. I think the NASDAQ and the Dow are the two most damaging metrics in the world-
- KSKara Swisher
As you said, yeah
- SGScott Galloway
... 'cause they give people a false sense of how, of the prosperity and wellbeing in the world. And the reality is America is energy independent, and so there's actually some stocks that are up twenty to forty percent in the oil sector, so it's not a defense risk to us. There is... The markets seem to be saying that the war will at some point be resolved sooner rather than later, and that the oil flow through Hormuz will begin again. You also have this unusual situation where in the last three bi- major conflicts the US was involved in, or three exogenous shocks, the Gulf War, the Iraq War, and COVID, what ended up happening was the markets were way down. And initially, in March, at the outset of the war, the markets declined ten percent. But in each instance, there's been a rip back. In the following year, the stocks are up. So people have been buying the dip, and basically what's happened now is people buy the dip sooner, and the markets recover based on a historical pattern-
- KSKara Swisher
Sure, but-
- SGScott Galloway
... of the market surging after-
- KSKara Swisher
But it's still a mess there, a mess created by Trump that was unnecessary, right? The si- the way he's doing, the way he's conducting it.
- SGScott Galloway
No, that, that's a political statement.
- KSKara Swisher
Yeah.
- SGScott Galloway
And I, I, uh, you can agree or not agree. I'm just talking about with the markets.
- KSKara Swisher
No, uh-
- SGScott Galloway
The markets have totally disassociated there.
- KSKara Swisher
Th-they have. And I think what-
- SGScott Galloway
And-
- KSKara Swisher
You know, Stephanie Ruhle actually had some, a really good take on this, uh, this week, where she was talking about why they're like this. And they just feel... They're just trading, that's what she said, the ups and downs. They don't care about anything else. They just have watched the historical, um, behavior around this.
- SGScott Galloway
But also, look at who, look, look who this is hurting. Uh, gas is up.
- KSKara Swisher
Right.
- SGScott Galloway
Gas prices are, you know, Brent crude is up. You know, the European benchmark's up thirty, uh, two percent. The price of gasoline in America is up thirty-six percent. Brent oil futures are up thirty-one percent. But let's be honest, who does this hurt? It hurts the lower half of Ameri- Oil prices doesn't, don't really impact you or me, Kara.
- KSKara Swisher
Yeah. Well-
- SGScott Galloway
And, and-
- 5:55 – 11:32
Vance vs Pope
- SPSpeaker
about matters of public policy, I think it's very, very important for the Pope to be careful when he talks about matters of theology.
- KSKara Swisher
Yeah, peace is a really big... thing in Catholicism
- SGScott Galloway
I'm sorry, Pope, the Pope shouldn't talk about matters of theology?
- KSKara Swisher
He has to be careful.
- SGScott Galloway
Isn't that exactly who should be discussing it?
- KSKara Swisher
He should be careful, even though he's a very well-regarded theologian. But J.D. Vance has some words for him. He's-- I think he's torpedoing his 2028 chances by picking a fight.
- SGScott Galloway
That's-
- KSKara Swisher
I just don't understand
- SGScott Galloway
... Uh, he is trading off. He's decided still that he needs to have such, to be such an acolyte. This is a politically stupid move for him.
- KSKara Swisher
It really is
- SGScott Galloway
Because evangelicals are actually swing voters. They were sort of a toss-up with Biden, and then they, they went hard for Trump. If he doesn't get eva- evangelicals, he's not gonna be the nominee. And he's clearly decided that it makes more sense... I mean, quite fr- I, I don't get this at all because if he were to come out and say, "Those comments, while I respect what Trump said, I feel like the Pope's comments were ill-timed. I still have an issue, and I will not be critical," or i- if he came out slightly against Trump, Trump might be furious at him. Trump's not gonna dump his VP at this point, and J.D. Vance needs evangelicals. I mean, this was just a really stupid thing. And also, uh, uh, just because I think it's important to be as offensive as possible and convince people that I am not, in fact, running for president-
- KSKara Swisher
[laughs] Oh, no
- SGScott Galloway
... you know how a little boy saved a priest's life?
- KSKara Swisher
Oh, no, no, no. We're not doing, no, we're not doing, we're not-
- SGScott Galloway
Okay, never mind. I'm sorry. I won't do it. I respect you. I got a picture of you behind me.
- KSKara Swisher
Yeah, okay. [laughs] Okay.
- SGScott Galloway
Never mind. Let's move on.
- KSKara Swisher
Um [laughs]
- SGScott Galloway
He found a lump on his scrotum.
- KSKara Swisher
Oh, no, no. [laughs]
- SGScott Galloway
He found a lump on his scrotum. Cop pulls over two priests and says, "We're looking for two child molesters," and the priests look at each other and then look to the cop and say, "We'll do it."
- KSKara Swisher
Oh my God. Okay. We're not insulting the Catholic Church-
- SGScott Galloway
It's terrible
- KSKara Swisher
... right now because Trump is doing so... You know, I know it's a joke about Pete Hegseth quoting from "Pulp Fiction." He probably did an AI search and thought it was that, right? That's my guess. That's, that's probably what happened, and one of his dumb minions added it in.
- SGScott Galloway
But, but, but go on.
- KSKara Swisher
It's a fake Bible-
- SGScott Galloway
I, I'm-
- KSKara Swisher
... but these people are so-
- SGScott Galloway
Sorry. Go ahead
- KSKara Swisher
... performatively religious is the, my issue. Like, they don't even, they don't even read the Bible. They just quote from "Pulp Fiction" 'cause they don't know the difference. And if you were actually someone who's really, uh, religious, you do know the difference. A- and with the vice president, he just l- literally... Let me just take one more point. Uh, the Pope is an American citizen. He should be able to say what he wants, by the way. He, I, I don't... He, he remains an Amer- I assume he remains an American citizen, um, des-
- 11:32 – 16:31
Trump Threatens to Fire Powell
- KSKara Swisher
the DOJ probe of Po- Powell and the Fed should continue. Powell's Fed chair term officially ends on May 15th. His term as Fed governor is up in 2028. Usually, they leave when they, when they finish their chair, but he doesn't have to, and he plans to stay on as acting chair until his successor, Kevin Warsh, is confirmed. Powell says that's what the law calls for. Warsh's confirmation hearing is scheduled for next week, but Senator Thom Tillis, who I interviewed, as said, confirmed again, he won't confirm him until the DOJ probe is resolved. All this from the prosecutors from the U.S. Attorney Jenine Pirro's office showed up at the Fed this week trying to get a tour of the building's renovations, got turned away. She's trying hard to become attorney general, FYI. Um, uh, he can't... If he fires Trump, uh, Powell, he's in big trouble. He's gonna taco this one, right?
- SGScott Galloway
It's three people in a roomWith, with, with Claude and ChatGPT, and every time the temperature in association with Epstein gets a bunch between-- the link between Trump and Epstein and its presence in the media gets above a certain temperature, they say, "Throw something out and distract everybody."
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
And this is just another one, because I don't even think he legally has the right-
- KSKara Swisher
Yeah
- SGScott Galloway
... to remove Powell from the Board of Governors.
- KSKara Swisher
Yeah.
- SGScott Galloway
So, uh, uh, uh, Pa- his term doesn't end till January twenty twenty-eight.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
So i-i-i- this is just, again, I believe he knows, and his people have said... I mean, there's two things that are going on. Either Grandpa just says shit as he's, as he's thinking it, and maybe that's true, or if you give him more credit than that, it's another attempt to distract from, from Epstein. I don't want to say I feel bad for Kevin Warsh, but all-- his entire hearing is gonna be about Jerome Powell-
- KSKara Swisher
Mm-hmm. Correct. Yeah
- SGScott Galloway
... not about Kevin Warsh. And what I've said before [chuckles] is that as long as Powell is on the Board of Governors, he's the de facto chair, because anything he says, eleven of the twelve governors are gonna nod their heads.
- KSKara Swisher
Which is why Trump wants him gone.
- SGScott Galloway
The chair-
- KSKara Swisher
Which is why Trump wants him removed. Yeah.
- SGScott Galloway
That's exactly right, but he does not have the power-
- KSKara Swisher
Yeah
- SGScott Galloway
... to do this. And you're going to have several Republican senators find their testicles and come out in favor of Chairman Powell remaining on the Board of Governors. It's, uh, uh, it-- But I think Trump, I think Trump knows that and just today said, "I need something to keep Epstein out of the news."
- KSKara Swisher
Right, or the war, or-
- SGScott Galloway
"I'll go after Powell again today."
- KSKara Swisher
Yeah, or, or fiction, yeah.
- SGScott Galloway
Yeah, my favorite is, my favorite is they're gonna start talk about, talking about Epstein to distract from Iran. [laughs]
- KSKara Swisher
They're not gonna fire Powell. They're not. They're just not. Okay, Scott, let's go on a quick break, and when we come back, Amazon makes a big acquisition. [soft music] Support for this show comes from Quince. If you're participating in a time-honored tradition of cleaning out your closet this spring, you might wanna consider replacing some of those old clothes with high-quality pieces from Quince. Quince makes stylish everyday clothing using premium materials like a hundred percent European linen, organic cotton, and super soft denim, with styles starting around fifty dollars. Their spring pieces are lightweight, breathable, and effortless, the kind you can throw on and instantly look put together. And they work directly with top factories, cutting out the cost of the middleman, so you're not paying for a brand markup, just quality clothing. I have just gotten a bunch of new Quince pieces. I usually get soft pants and comfortable things, but I just got a cardigan, I got a pair of jeans, and they're incredible. They're incredibly soft and, uh, look great and actually look ex- more expensive than they cost me. They also have a lot of seasonal colors and prints for spring that'll make getting dressed a breeze. Refresh your wardrobe with Quince. Right now, go to quince.com/pivot for free shipping and three hundred and sixty-five-day returns, now available in Canada too. Go to Q-U-I-N-C-E.com/pivot for free shipping and three hundred and sixty-five-day returns, quince.com/pivot. [soft music] Support for this show comes from Mint Mobile. We all like to have money. It's what pays for the bills, lets us do fun things, and feeds our families. Unfortunately, big wireless companies also like to have our money, so much so that they come up with all kinds of bogus fees and free perks that actually cost more in the long term. But Mint Mobile says they're a different kind of wireless provider. Mint Mobile offers a premium wireless phone plan for just fifteen dollars a month, and all of their plans come with high-speed 5G data and unlimited talk and text. You don't need to bother getting a new phone or number or enter into some long-term contract. Just activate online in minutes and start saving immediately. That means no more expensive monthly phone bill riddled with unexpected fees. Get three months of premium wireless service from Mint Mobile for just fifteen bucks a month. If you like money, Mint Mobile is for you. Shop plans at mintmobile.com/pivot. That's mintmobile.com/pivot. Upfront payment of forty-five dollars for three months, five gigabyte plan required, equivalent to fifteen dollars a month. New customer offer for first three months only, then full price plan options available. Taxes and fees extra. See Mint Mobile for details.
- 16:31 – 21:55
Amazon Acquiring Globalstar
- KSKara Swisher
[soft music] Amazon is acquiring a satellite operator, Globalstar, in a deal worth around eleven point five billion as it tries to catch up to SpaceX Starlink. Under the agreement, Amazon gets Globalstar's existing satellites and infrastructure, which will operate alongside Amazon's own, uh, network, now called Leo, as-- after the Pope, I guess. Uh, Amazon says the deal will enable it to build direct-to-device satellite system with a rollout expected in twenty twenty-eight. FCC Chairman Brendan Carr says his agency is very open-minded to the deal, and the FCC is taking all gas, no brakes approach to expanding the US space economy. He kinda has to. Talk about this, because obviously Amazon isn't going away, um, with-- and they're trying to solidify this network for themselves to be the, at least the number two player here.
- SGScott Galloway
My big stock pick for twenty twenty-five was Alphabet. We got that one right. My big tech spo- stock pick for '26 is Amazon. This is what I think Amazon is going to do. They are going to build a viable competitor to Starlink using Kuiper as a platform, and this is another-
- KSKara Swisher
It's called Leo now
- SGScott Galloway
... step in that.
- KSKara Swisher
It's called Leo.
- SGScott Galloway
They get... I'm sorry, Project Leo. They bought, basically they bought twenty-four satellites here, and it's never been pro-profitable, but g- Amazon closed up three percent, and this is what I think Amazon's strategy is. Amazon's gonna launch a phone, and then they're gonna offer Amazon Prime Plus, which will offer you a phone and lightning-fast connectivity into your home. They're going after AT&T, Verizon, and Comcast, and basically gonna offer you connectivity with Amazon Prime, and they need the satellites to do this. So why would they buy a non-profitable satellite company? Again, see above, twenty-four satellites. They get spectrum. They get radio waves. The wireless signals, uh, including Wi-Fi, travel on. The government owns these and issues specific licenses for them, but spectrum is auctioned off by the FCC and extremely expensive, so they get thatThey could do for B2C, again, Amazon price, they could sell Wi-Fi to Prime subscribers. B2B, they could sell private wireless networks to serve its warehouses, delivery hubs, robots, drones. Robots and drones need this connectivity to communicate wirelessly constantly, and it's much easier if it's cost-efficient if Amazon has its own network.
- KSKara Swisher
Yeah, so it's a strong number two.
- SGScott Galloway
This is essentially an extension-
- KSKara Swisher
It's to create a strong number two.
- SGScott Galloway
This is-
- KSKara Swisher
Presumably
- SGScott Galloway
... this is essentially what Amazon is. It's the strongest infrastructure company in the world. It's an extension of their investment in their logistics network. And right now, Project Leo has two hundred and forty operational satellites. It plans to ramp up its network by deploying thirty-two hundred in Earth's low orbit by twenty twenty-nine. Starlink has over ten thousand. This is definitely catch-up, but Amazon has a hundred and fifteen million homes to offer this service to overnight.
- KSKara Swisher
Right, a relationship with consumers, right? So you have to go out and buy Starlink, and people do love it, I have to say. You know, oddly enough, José Andrés, who has had beef-- has a huge beef with, with Musk-
- SGScott Galloway
Great product
- KSKara Swisher
... over, uh, USAID saying he's killing... essentially saying he's-
- SGScott Galloway
Great product
- KSKara Swisher
... killing people. Um, he said we used... Starlink is critical to our World Central Kitchen operations, and I think he would like an alternative, but he definitely said it's really a shame. I wish that Elon was around and not this other one, um, which is, you know, hugely damaging to their efforts across the world, feeding people. Um, but between that fertilizer and that, like the cuts at USAID, they're facing, you know, a huge uphill battle against hunger across the world. But one of the things that's happening here is you get an alt... This is what's happened with Tesla. This is what happened. There's going to be number twos. Now, will it have an impact on the SpaceX IPO? I doubt it. I think it's gonna be like... It's gonna run. Oddly enough, interestingly enough, Google is a big owner of it, um, of, of the SpaceX IPO. They're gonna make like many commas of money, um, from this deal. So that should, that would, that, that'll be an interesting thing because many years ago, Yahoo owned a big piece of Google, I don't know if you remember in the beginning, and that's what saved them for a while, like having that investment in, in Google that they made. Um, and now in this case, Google's gonna make a lot of money from these SpaceX, but I don't think the SpaceX IPO will be damaged in any way, correct, from your perspective?
- SGScott Galloway
No, it's, it's arguably one of the strongest brands in the world right now, and people are excited about it. It, it'll go out wildly overpriced. I think it'll get a slight bump. It'll be the biggest IPO of, of, um, '26. The best IPO of '26 will be Anthropic, which will get out ahead of OpenAI because it has more momentum. But it's going to be... Again, if you look at SpaceX, um, what do I think, eighteen billion in revenue, six billion in profits, so when, um... It's gonna, it's going out at a hundred times revenue. It's growing twenty-four percent a year. When Google went public, it was growing two hundred and forty percent-
- KSKara Swisher
Yeah. Yeah
- SGScott Galloway
... a year and trading at ten times revenues. So SpaceX, incredible company, the most overvalued IPO in history? Uh, the answer is yes.
- KSKara Swisher
Yes, yes. And I think it's great that-
- SGScott Galloway
It's, it's just insane the valuation we're talking about
- KSKara Swisher
... there's another, there's more satellite efforts like this. There has to be at least two or three. I mean, there's not gonna be more than that, by the way, because the costs are so huge, but it's good for having them run for their money. Speaking of OpenAI and Anthropic, O-OpenAI is
- 21:55 – 37:33
OpenAI Disses Microsoft
- KSKara Swisher
distancing itself from Microsoft and cozying up to Amazon, which is interesting. In a memo sent to staff, OpenAI's revenue chief, Denise Dresser, said that Microsoft partnership has limited the company's ability to meet enterprises where they are. No, no shit. On the other hand, Dresser said the company's Amazon deal has generated frankly staggering demand. Dresser also used the memo to go after Anthropic, accusing the rival of building its strategy on, quote, "Fear, restriction, and the idea that a small group of elites should control AI," which is interesting to say. Obviously, they're throwing... They're trying to hurt Anthropic in the race to an IPO. They're throwing Microsoft under the bus. Speaking of Anthropic news, the company has recently received multiple offers from VCs to invest at valuations as high as eight hundred billion dollars, and Anthropic has briefed the Trump administration about its new Mythos model, which is not being released to the public due, as we talked about last week, due to its alleged cybersecurity capabilities. Um, interestingly, Amazon, an Amazon-- Bezos-owned Washington Post said that efforts by the Pentagon to thwart, to thwart Anthropic are stupid, which was interesting this week. They're fighting it out in court. I suspect the Trump administration is gonna start dropping that soon enough.
- SGScott Galloway
Anthropic has more momentum than any company in the world right now. It's gone... I mean, it's gone, at the end of twenty twenty-five, which wasn't that long ago, its ARR was nine billion. It's now thirty billion. It's more than tripled its annual recurring revenue in four months. And by the way, uh, OpenAI's is twenty-five billion, so the little engine that was, you know, kind of an afterthought to OpenAI just twelve, eighteen months ago is now a bigger business than OpenAI. And this is the first time that Anthropic has led on revenue, and it's growing faster. It's... And not only that, it's a better business because that growth is almost exclusively enterprise-driven, which is a better business.
- KSKara Swisher
So what is OpenAI doing here by release-- They released the memo. Let's not pretend that this is what they were doing. What, what's the messaging?
- SGScott Galloway
This has become Coke versus Pepsi.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
And yeah, I f- I think it feels desperate.
- KSKara Swisher
I do too.
- SGScott Galloway
I don't, I don't... They're trying to, they're trying to weaponize the government against them. They're trying to shit post them. These guys hate each other. It's, it's the Hatfields versus, uh, the McCoys. And Anthropic has one thousand customers paying over one million dollars a year. That's up from just five hundred in February. The number of customers spending over a million dollars a year has doubled in the last-
- KSKara Swisher
So they don't seem to care about the Pentagon thing at all. You had thought they might, but it looks like they don't. Looks like they don't.
- SGScott Galloway
The, the numbers here, let me give you some more data. Eighty percent of Anthropic's revenues come from business clients who are, quite frankly, are just more reliable and more, and less margin sensitive than consumers.Yeah, versus 40% at OpenAI. 70% of every incremental dollar spent on AI coming from the enterprise is going to Anthropic. They raised thirty billion in their Series G at a three hundred and eighty billion dollar valuation, which is ridiculously low compared to the eight hundred and fifty billion dollar valuation that OpenAI did, guaranteeing a 17% return, which could crush previous investors if they don't, if they have to go out lower than that. They, they also said, I, I mean, the, both companies are exploring an IPO this year, and Anthropic projects, uh, positive free cash flow by 2027. OpenAI has said they're gonna break even in 2030. But the bottom line is, Dario Amodei is just showing himself to be a much more competent CEO-
- KSKara Swisher
Right. Let me ask you a question
- SGScott Galloway
... than Sam Altman.
- KSKara Swisher
This focus on consumer.
- SGScott Galloway
Yeah.
- KSKara Swisher
Here's what I see. OpenAI definitely focused on consumer and being like Kleenex or Google, right? That was what they were going for, the, the one that everyone thinks of. ChatGPT is AI, right, for everybody, essentially. Not Claude. ChatGPT is Kleenex, right, or Cla- or Google or whatever, the, the, the representative of everything.
- SGScott Galloway
Mm-hmm.
- KSKara Swisher
So they relied on the consumers. Then they have a really g- they start, Sam Altman starts to get a very bad consumer reputation, so he g- that, like... And up and, up to and including people attacking his home, right, which is heinous. They have relied on-
- SGScott Galloway
Mm-hmm
- KSKara Swisher
... consumer relationships, which are very easy to break, right? Suddenly you become the bad guy, and I think that, that's one of the things. But h- bear hugging Amazon and pushing away Microsoft, what is that? If you're in the room, what do you think the strategy is?
- SGScott Galloway
The honest truth is, I don't know. My guess is there's some ego involved here and some dynamics behind the scenes that I just don't understand. But let me be clear. It, it, it's not easy to build a consumer brand. It can be very powerful. I'm not suggesting... I'm biased 'cause all my businesses have always been B2B, and the b- and the one business I did B2C, Red Envelope, was just so much fucking harder, uh, that I found, than doing, building a B2B business. Now, what I think the dynamic here is the following. The reason why Anthropic is gonna be worth more and get to the IPO starting line faster than OpenAI, as an enterprise-dominant business as opposed to a consumer business of OpenAI, is not necessarily that one is much better than the other, but here's the difference in terms of competitive dynamics. You can get, as a consumer, a really outstanding LLM and AI for free. If you're a company, if you're Clorox looking for a three million dollar enterprise-wide LLM, uh, AI offering, there's no free alternative. So, uh, in sum, the substitutes on the consumer level are just much greater than the substitutes at an enterprise level, which says to me, whoever dominates enterprise has a, just a much better business. Also, these, with just, with just a duopoly, if one is perceived as better, which right now Anthropic is perceived, um, as better in the enterprise, enterprises are much less consumer sensitive, 'cause if they're gonna implement technical debt, they don't care if it's 30% more expensive.
- KSKara Swisher
But is, was it a mistake? Is it a mistake to then say, "M- we, we didn't get in the enterprise fast enough due to Microsoft," which may in fact be the case, "and now we're gonna hug Amazon?"
- SGScott Galloway
That makes no fucking sense.
- KSKara Swisher
Right. Why do it?
- SGScott Galloway
You're gonna piss off-
- KSKara Swisher
Why are they doing it?
- SGScott Galloway
Well, you're gonna piss, you're gonna piss off one of the most important, measured, thoughtful people in tech, Satya Nadella.
- KSKara Swisher
Who backed you.
- SGScott Galloway
That just makes no sense.
- KSKara Swisher
Who backed you-
- SGScott Galloway
That's not-
- 37:33 – 42:33
United + American Merger?
- KSKara Swisher
Scott, we're back with more headlines. The CEO of United Airlines reportedly pitched a merger with American Airlines directly to Donald Trump. Of course, the two companies combined would account for about forty percent of the US domestic flying capacity. Industry experts and lawmakers are already pushing back, flagging major antitrust concerns. I mean, even I know that. As one analyst puts it, the Justice Department doesn't object to that. They... What would they object to? Trump is staying quiet for now, with the press secretary, Karoline Leavitt, saying he has no opinion on a potential merger. I mean, I don't mind, uh, this guy trying it, but w-why not? It's the last days of N-Nero's empire here, so why not? But this seems like something that would be dead on arrival. I just don't, I don't see it.
- SGScott Galloway
Yeah, but you just, you summarized it perfectly, and that is the last days of Nero, and that is you're gonna see, in the next two years, you're gonna see so many mergers, um, proposed because everyone's gonna go, "There's no fucking way [chuckles] an FTC or a DOJ that is not in a deep coma would allow this." So if we're, you know, if we're, what are the, you know, two most dominant play-- If you're just gonna see mergers like crazy because they're gonna go, "This is our last chance," because this absolutely makes no sense, uh, from a concentration and monopoly standpoint. This should not be allowed to happen. It would create the largest airline on Earth, thirty to forty percent of US domestic capacity, and air-- I don't know if anyone's noticed, airline tickets are skyrocketing.
- KSKara Swisher
Skyrocketing. Oh, I have. I just bought some.
- SGScott Galloway
Um, I was looking at a one-way from Miami to London business class, and it was eleven grand.
- KSKara Swisher
I know. It's crazy. They're crazy.
- SGScott Galloway
Um, Kirby's argument to the administration, a combined airline would be a stronger competitor internationally. Okay, yeah. He noted two-thirds of long-haul a- seats from, two from US are on foreign carriers, but sixty percent of passengers are American, framing it as a trade deficit issue. And also American, I love airlines. I love aviation. Uh, Delta does the best job domestically. JetBlue's Mint is the best product, but American has been, America is, is, i- uh, has the best, uh, has the worst product. They're the weakest of the big three. A hundred and eleven million in net income last year on fifty-four billion in sales, basically break even. It carries twenty-five billion in long-term debt, more than its rivals. On the other hand, United, which is a better run company, did three point four billion on fifty-nine billion, and American Airlines stock jumped nearly ten percent on the news.
- KSKara Swisher
So what does that say?
- SGScott Galloway
But the antitrust-
- KSKara Swisher
That it could happen? This can't happen.
- SGScott Galloway
Well, people-
- KSKara Swisher
This will not. No way.
- SGScott Galloway
Well, the market thinks it might because, again, see above, the guy-- It's just fucking ridiculous that CEOs go kiss the ass of the president to try and get a merger through. He should have nothing to do with this. But the, the antitrust problems here are striking. There are two hundred and eighty-nine routes where the two carriers overlap, and combining them would leave only one or two airlines serving that route. S-see above, increase in prices.
- KSKara Swisher
They will fuck consumers so hard.
- SGScott Galloway
Fortress hubs which overlap.
- KSKara Swisher
Right.
- SGScott Galloway
Some of the routes that overlap are Chicago, Los Angeles, New, New York, Newark, Phoenix, Charlotte could require divesting entire hub operations in some cities. Uh, and the DOJ previously blocked the JetBlue Spirit deal-
- KSKara Swisher
Right
- SGScott Galloway
... which was a fraction of this size.
- KSKara Swisher
Right.
- SGScott Galloway
So this is exactly the kind of deal that shouldn't even be considered if there was a DOJ or an FTC that was independent and looked at consumer prices. And these consumer mergers and the lack of regulation does two things. It transfers capital from labor and from consumers to shareholders, full stop. And this, it, it, it's been a one-way flow of capital and power for the last thirty years, and the DOJ and FTC have almost no reviews anymore.
- KSKara Swisher
They can't. They absolutely-
- SGScott Galloway
I mean, it's like if you wanna save money, get rid of the DOJ and the FTC
- KSKara Swisher
... cannot do this.
- SGScott Galloway
What the fuck are they doing now?
- KSKara Swisher
I mean, w-- You know, it's interesting because on Monday they're, you're seeing the significant pushback to Paramount now. A lot of Hollywood is now, like, got the pitchforks out essentially. I don't know if they can do anything about it at this point, but y-you see them, like, really organizing. On the, the Cinem- at CineCom, all these places, there's all this pushback. And again, um, David Ellison wouldn't show up for, uh, a hearing, uh, uh, in, in Congress about this, uh, just, uh, for personal reasons. But, um, but there, there's just a lot of pushback there, and you sort of see it beginning to coalesce, these ideas of, "No, I don't think so," which is interesting. You'll see if this happens. Like, I, I, I feel like people are, are quite in the mood to stop these things now, and that's gonna be... They're gonna overreach on the other side probably. Um, but it's, feels like this is like, I can't even believe this guy did this. Like, [chuckles] I'm just like, "Well, okay."
- SGScott Galloway
By the way, I, I feel bad saying I need to correct the record. The DOJ and the FTC do serve a purpose. They did, they did decide that Live Nation was a monopoly-
- KSKara Swisher
Yes. Mm-hmm
- SGScott Galloway
... which was the right-
- KSKara Swisher
They did
- SGScott Galloway
... which was the right decision.
- 42:33 – 50:04
Trump Accounts
- KSKara Swisher
that's interesting, about 5 million kids have signed up for Trump accounts. Um, uh, 1.2 million eligible for a thousand dollar Treasury seed deposits. The accounts were created through Trump's big beautiful bill and are set to officially launch July 4th. The Bank of New York Mellon will manage the accounts, and Robinhood will build a Trump accounts app. Um, what do you think about Robinhood, known for getting [chuckles] people into risky trades involved in this? Obviously, another suck-up to Trump in some fashion. But, um, I have, uh, several friends who are just doing it. It's like thousand free dollars. Like, why not? Like, just why not? It, it seems like let's take the money and, and use it to save for college or whatever you wanna save for for kids. Any thoughts on this?
- SGScott Galloway
I love this concept. I remember meeting with a guy named Alex von Furstenberg a couple years ago, and he was pitching me on the idea of baby bonds, and he was very passionate about it, and he's been very involved in it. I, I love the concept of at the very outset giving, you know, for every infant born, giving them some money and letting compound, you know, the most powerful force in the universe. I would've gone much deeper than this. For $40 billion a year, you could give $7,000 to every baby, and then I would totally infantilize them and not let them touch it till they're 65. You give... You spend $40 billion a year, and then in 20 or 30 years, you announce in another 20 or 30 years we're no longer gonna need Social Security-
- KSKara Swisher
Yeah
- SGScott Galloway
... 'cause everyone's gonna have a million bucks at 65.
- KSKara Swisher
Yeah.
- SGScott Galloway
Interest rates dive, and it pays for itself.
- KSKara Swisher
Yeah.
- SGScott Galloway
But our Congress doesn't wanna think past their than their fucking two-inch dicks. So-
- KSKara Swisher
Is there danger here of riskiness-
- SGScott Galloway
This is-
- KSKara Swisher
... for people's like... I mean, this is free money. That's what I c- I, you know, someone sheepish just said, "Oh, I took a Trump account." I'm like, "Are you kidding? Grab it." Like, absolutely take a Trump account.
- SGScott Galloway
Oh, why wouldn't you?
- KSKara Swisher
Yeah, if you're eligible.
- SGScott Galloway
So just to, just to give you a sense of compound interest, you know, my kid's going to college next year. When he was born in 2000 and, um... When was my kid born? 2000, 2007. I put $10,000 in, I think it's called a five twenty nine-
- KSKara Swisher
Yeah, I did too
- SGScott Galloway
... New York account.
- KSKara Swisher
I did too.
- SGScott Galloway
And I'm like, I'm worried about college. I don't... I was a clinical professor making 160 grand a year living in faculty housing, and so I thought, "Okay, I'll scrape together 10 grand." And I didn't do it again. I was stupid. I didn't do it again. I just looked it up online 'cause I'm like, "Oh, what about that five twenty nine I did?" Now, granted, the markets have ripped. Do you know what that $10,000 is worth right now?
- KSKara Swisher
Couple hundred thousand dollars.
- SGScott Galloway
No, 85.
- KSKara Swisher
Oh, okay. Yeah.
- SGScott Galloway
But still, in 18 years, it went from 10-
- KSKara Swisher
Oh, I put more in. I did them for both boys
- SGScott Galloway
... to 85.
- KSKara Swisher
Mm-hmm. I paid for all of college with Louie and Alex. And people have controversies around five twenty-ones. You could've done better in the market, but I just put it away and forgot about it, and I kept... I added the maximum amount to it at the time.
- SGScott Galloway
Yeah, but it's tax-
- KSKara Swisher
That's tax-free
- SGScott Galloway
... it's tax-free.
- KSKara Swisher
I just was like-
- SGScott Galloway
You can take it out if you-
- 50:04 – 54:34
Predictions
- KSKara Swisher
Okay, Scott, let's hear up predictions. Is it about Allbirds now that it's an AI business? No, just move along. [laughs]
- SGScott Galloway
No, I had two, and one of them was Allbirds.
- KSKara Swisher
Okay, go for it.
- SGScott Galloway
Okay, so I'll, I'll go to that one 'cause, uh, you're, you prompted me. My, my prediction was gonna be Anthropic IPOs before OpenAI, but that's boring, and I've already talked about Anthropic, so I'll go to the one you suggested. Uh, the Allbirds pivot to AI will inspire a bunch of copycats. You're gonna see Chegg, GameStop, Rent the Runway all decide they're AI companies. All... So, uh, this is what's happened. Allbirds, the once hyped sneaker brand, they just sold its IP for thirty-nine million two weeks ago, down from a four billion dollar peak valuation.
- KSKara Swisher
Uncomfortable sneaker business.
- SGScott Galloway
Is rebranding as-
- KSKara Swisher
But go ahead
- SGScott Galloway
... is rebranding as New Bird AI and pivoting to leasing AI chips, GPUs. The company is buying fifty million dollars, or secured fifty million in financing to buy GPUs and lease them to customers, and shares spiked nearly nine hundred percent-
- KSKara Swisher
It's so stupid [laughs]
- SGScott Galloway
... at intraday highs on the announcement. Uh, so what is this gonna do? Just like remember when Bitcoin treasury companies-
- KSKara Swisher
Yeah, yeah
- SGScott Galloway
... went crazy, and all these different companies decided they were now Bitcoin treasury companies? So we've seen this movie before, and it doesn't end well. Long Island Iced Tea Corp. rebranded as Long Blockchain in 2017 to ride the crypto wave, and its shares were eventually delisted, and the SEC brought insider trading charges. New Bird, if you will, what I call New Bird, will soon, soon be No Bird. So the prediction is the following. Allbird and this ridiculous fucking jazz hands pivot to AI that resulted in a massive one-day spike, ton of competit- ton of copycats, and it doesn't end well.
- KSKara Swisher
Oh. What, what does it end? How does it end?
- SGScott Galloway
These companies have short-term pops. The insiders who get the shares before they announce it dump the bag, and then the people who think this is anything resembling an, a company with enterprise value end up losing a shit ton of money. Similar to all the blockchain tr- all the Bitcoin treasury companies, uh, when you try and... It's like, remember in the early 2000s when... I remember being in a meeting, a board meeting at Williams Sonoma, where we seriously contemplated changing the name of the company to williamssonoma.com 'cause we thought that would add shareholder value. And Howard Lester, who was one of, like, the clearest blue flame thinkers in retail, was like, "That's just fucking stupid. We're not doing that." Uh, anyways, w-w-w-when you're just trying to create the illusion you're in a hot area with absolutely no domain expertise, IP, or advantage, sure, call it AI, a pop. If you're in Allbirds right now, just take it from me, sell, but you're gonna see-
- KSKara Swisher
Ugh
- SGScott Galloway
... a dozen of these things announced in the next ninety days.
- KSKara Swisher
Sounds stupid. People did mock it, which is good. All right, um, I, I have no predictions today. I predict that Scott Galloway will be a star of my show this weekend. Everybody watch it, 'cause Scott is very funny and actually has a lot of s- serious and significant things to say about healthcare and longevity, and it's re- he's really good.
- SGScott Galloway
I don't remember that part. I remember falling asleep. I don't remember saying anything substantive.
- KSKara Swisher
You did, and you sound great. You sound really good. You actually say a lot of substantive things.
- SGScott Galloway
Ah, okay.
- KSKara Swisher
Anyway, he looks great, and he's... and you get to see him sleep. Anyway, we wanna hear from you. Send us your questions about business, tech, or whatever's on your mind. Go to nytmag.com/pivot to submit a question for the show, or call 855-51-PIVOT. Elsewhere in the Kara and Scott universe this week on Prof G Markets, Scott spoke with Catherine Anne Edwards, PhD economist and Bloomberg News columnist, on why AI is only one factor behind the challenges young workers are facing. Let's listen to a clip.
- SPSpeaker
It's not as if the only thing standing between young workers and a job is what private employers are doing or say they are doing or will do with AI. We have a weak economy and a weak labor market with terrible social supports and almost no investment in people that don't have a job. There are solutions that don't have to come from just knowing more about AI, but have to come from holding our policymakers accountable for economic mismanagement. AI is today's story, but there will be another one. Weakness is weakness in the labor market. We don't have great infrastructure for helping people who don't have a job.
- KSKara Swisher
That's 100% right. It's so true. Anyway, she's super smart.
- SGScott Galloway
She's super smart.
- KSKara Swisher
Yeah.
- SGScott Galloway
You like her.
- KSKara Swisher
Anyway, that's the show. Thanks for listening to Pivot. Be sure to like and subscribe to our YouTube channel. We'll have lots to talk about next week. There's so many topics happening, and we'll be back next week to do so. [upbeat music]
Episode duration: 54:34
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