PivotTrump Cuts CDC Funding. Diarrhea Outbreak Explodes. Scott Galloway: “Connect the Dots” | Pivot
EVERY SPOKEN WORD
55 min read · 10,536 words- 0:00 – 0:31
Intro
- SGScott Galloway
America, you need to appreciate government before you start shitting yourself.
- KSKara Swisher
[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
We've got a lot to get to today, so let's dig in. First, Scott, I'm gonna start testing my co-host's testosterone levels.
- SGScott Galloway
[laughs]
- KSKara Swisher
It's very low.
- SGScott Galloway
Ah.
- KSKara Swisher
It's very low.
- SGScott Galloway
They don't, they don't make metrics that high, baby.
- KSKara Swisher
That low, is what you're saying, is what you meant.
- SGScott Galloway
There you go.
- KSKara Swisher
I feel like I need to do that now. Defense Secretary Pete
- 0:31 – 5:27
Military Testosterone Screenings
- KSKara Swisher
Hegseth says the military will begin annual testosterone screenings for service members aged 30 or older, with voluntary, uh, testing for younger troops. Service members found to have low testosterone will be offered voluntary hormone replacement therapy as part of the new program. I didn't know they did gender-affirming care. I thought they were against that. Um, let's listen to a clip from this bizarre announcement.
- SPSpeaker
This initiative, it's not about artificial enhancement. It's about restoring and optimizing your natural capabilities, protecting your longevity, and ensuring you have the biological foundation required to sustain the fight.
- KSKara Swisher
Well, now we know he's on T. Uh, you know, let, let me let you run with this. You have taken-- You take testosterone. You've talked about it. W- why is he doing this? Explain. Explain. B- make the good case for it, I guess. Or not.
- SGScott Galloway
Well, I mean, i- [laughs] if part of, if part of healthcare coverage is like, uh, uh, I'm on testosterone 'cause I think it's good for my brain and my heart health, and it makes... Quite frankly, it just makes me feel younger. Uh, weird things like I don't have to pee as often. Um, and my doctor said, "We're not gonna take you..." You know, you don't wanna... I'm not using it to be a monster or more aggressive. I'm using it 'cause I wanna, quite frankly, feel 45 again, and hormone replacement therapy is something that I think, you know, under a doctor's supervision for men and women in their 50s-
- KSKara Swisher
Yeah, I take, I take hormone replacement therapy.
- SGScott Galloway
Yeah, I, I think it's, uh, I think it's a, can be a real value add under the supervision of a doctor. But this is just performative st- [sighs] uh, in my opinion, stupidity. I me- young men don't have, or our military and men don't have a testosterone problem. It, uh, the-- We have a loneliness problem. Young men are falling behind because they aren't low te- on testosterone. They're falling behind because they're low on purpose, education, work, and relationships, and we're having trouble finding... Although, actually recruitment is up this year. We're having trouble finding... 70% of people-- Remember how joining the Army used to be the, the option of last resort?
- KSKara Swisher
Yeah.
- SGScott Galloway
70% of men that walk into a recruiting office right now for the armed services don't qualify because of obesity or mental health problems.
- KSKara Swisher
Right.
- SGScott Galloway
So if you, if you want a, if you want a more lethal fighting force, we need to make more investments-
- KSKara Swisher
Yeah
- SGScott Galloway
... in young men, and it's not about pumping them full of testosterone.
- KSKara Swisher
I know. It seems so strange.
- SGScott Galloway
So this, uh, this is his performative stupidity. He conflates this weird notion of masculinity and fitness and optics with, or doing bad pull-ups. Uh, our military is headed towards asymmetric war. You know who's gonna have the best? You're, you're going to have-- The most lethal fighting forces will be the ones that m- master AI, asymmetric drone capabilities, really good management, ability to attract the best and brightest, and have special forces of just out of fucking control, brave and smart and strong people.
- KSKara Swisher
Right.
- SGScott Galloway
But those people are in their 20s, and they are soaked in testosterone. [laughs]
- KSKara Swisher
That's correct. I-- That's the whole thing. I was like, literally Ukraine and, and the, the most recent conflicts have all shown, a- and it, with Iran against the United States, has shown that m- might is not the actual winner here, or largeness or muscularness. It's something very different. And, you know, testosterone can also, if it's taken wrong, fuck you up, like, beyond belief, correct? I mean, uh, you have a doctor's care, but I know a lot of people who do this as off the shelf and problematic and cancer causing and everything else if you don't do it properly.
- SGScott Galloway
The average young person needs the following: nothing. They need relationships. They need a gym.
- KSKara Swisher
Good food.
- SGScott Galloway
They need the money to have decent nutrition, you know, but they don't... Uh, some of the craze around peptides and enhancements, uh, and I realize this is somewhat hypocritical, but as a 61-year-old male desperately clinging to just try and feel 45 again, I do think there's a difference.
- KSKara Swisher
Yeah.
- SGScott Galloway
But, uh, it worries me, this notion that young men, there's peptide stacks, and I, I think that stuff is, is-
- KSKara Swisher
Dangerous
- SGScott Galloway
... borderline a little bit scary. And your, your 25 or 35-year-old self is pretty fucking awesome on its own as long as you do-
- KSKara Swisher
Yeah
- SGScott Galloway
... some very ba-- good sleep, good nutrition-
- KSKara Swisher
Yeah
- SGScott Galloway
... gym three, four times a week, some, some practice to push your limits. You know, be strong-
- KSKara Swisher
I agree
- SGScott Galloway
... be fast.
- 5:27 – 10:26
Did Elon Break Election Law?
- KSKara Swisher
uh, next one. Elon Musk likely broke Wisconsin law when he promised to hand out those million-dollar checks to voters in 2025 state Supreme Court election, which he lost, according to the Wisconsin Election Commission. The bipartisan panel found probable cause that Elon violated a state law that makes it a crime to offer a person anything of value to get them to vote. Uh, now it's in the hands of Wisconsin DA to decide whether to pursue charges. I'm, I'm doubting they will. Um, but honestly, when he did that, that was kind of so grotesque, is-- He did it several different places across the country. I suspect he'll do it again if he's not stopped, so I don't mind this moving forward in some fashion. Um, but he, you know, he's unchecked. I mean, this, the money he's been... He's put ninety, I think, ninety million dollars into, um, elections right now at this point, just him, um, uh, in the, for the midterms. And K- you know, Ken Griffin and a whole bunch of people are just s- shoveling the money in. And the Supreme Court, the most recent decision just allowed them to shovel it even more. Thoughts?
- SGScott Galloway
Yeah, I think Ken Griffin is probably running for president, by the way. Um-
- KSKara Swisher
Oh, really?
- SGScott Galloway
So-
- KSKara Swisher
Say more, as you like to say
- SGScott Galloway
... well, he's taken a lot of public stands on politics, and if you're a billionaire, the key to happiness is to be anonymous, and he's decided not to be anonymous-
- KSKara Swisher
Yeah
- SGScott Galloway
... which says to me he has political ambitions.
- KSKara Swisher
Oh, interesting.
- SGScott Galloway
Um, also he's a smart guy, a lot of money.
- KSKara Swisher
Yep.
- SGScott Galloway
Um, but you know, he's been very, very vocal. But-
- KSKara Swisher
Oh, so he's going for the Mark Cuban slot, except he's, like, half as nice, [chuckles] like that kind of thing.
- SGScott Galloway
There's a huge lane on the Republican side. Everyone keeps talking about the Democratic. The Democratic primary is gonna be a, is gonna be a-
- KSKara Swisher
A gladiator fight. Yeah
- SGScott Galloway
... uh, because there's a lot-
- KSKara Swisher
Lot of good
- SGScott Galloway
... of good people.
- KSKara Swisher
Handsome Ossoff.
- SGScott Galloway
Meet in the gothic.
- KSKara Swisher
Handsome Ossoff. Handsome.
- SGScott Galloway
I'm having... Uh, did you see him in the Senate hearing?
- KSKara Swisher
So handsome.
- SGScott Galloway
He's amazing.
- KSKara Swisher
He looks like Superman.
- SGScott Galloway
He looks like Kennedy.
- KSKara Swisher
I think he's hot. I can't believe it. I was like-
- SGScott Galloway
Oh, he is hot
- KSKara Swisher
... "God."
- SGScott Galloway
The guy's got total Kennedy vibes.
- 10:26 – 18:05
Trump’s Primetime Address
- KSKara Swisher
ahe- President Trump's working his hardest to in- interfere with the election. Uh, he's going to do a Primetime Address to the Nation where he will discuss, quote, "free and fair elections and other topics. A potpourri," as one advisor put it. Should never use the word potpourri. Uh, allegations about China meddling in the US election will reportedly come up, and some reports suggest he'll once again push claims of election fraud in Georgia. Speaking of Jon Ossoff, let's listen to what, uh, Ossoff had to say during, uh, an appearance on MS Now.
- SPSpeaker
There's talk that he might try to declare me and Raphael Warnock illegitimate senators. Obviously, the president has no power to do that, but he does have the power to try to intimidate people. He's demonstrated his will to abuse power. I expect him to use whatever he puts out there on Thursday as a pretext either for some attempted unconstitutional use of federal power to interfere in the election or to give his proxies and loyalists in state and local jurisdictions some cover for whatever they might attempt or to lay the groundwork for challenging the result.
- KSKara Swisher
So there it is, you know, and it's really interesting 'cause, you know, especially 'cause his, like, handmaidens to seditions like Senator Cynthia Lummis, rhymes with hummus, dumbass. Um, you know, I don't know if they w- they were properly elected. Like, they're, they are. They go, they follow along. Trump also removed all three sitting members of the bipartisan US Election Assistance Commissioner Group that oversees the testing of voting systems. It's all over the place. This is something Bannon, Steve Bannon has talked about. There's all manner of attempts, uh, possibly using ICE at, uh, all, et cetera, et cetera, et cetera. Uh, thoughts on this besides the handsomeness of Jon Ossoff?
- SGScott Galloway
You can't have a democracy when one of the two parties' acceptance speech is always the following: "We won, or it was rigged." And election interference, the good news is that essentially affordability, which right now the Democrats are seen as better on, is dominating in Gallup polls what people are concerned about. Only 2% of voters believe America's biggest problem is election reform. So, but at the same time, I also read 60% of Republicans think the 2020 [laughs] election was rigged. I mean, this is just so bad for America because when you repeat a lie, th- this is straight out of the GRU. When you repeat a lie over and over, it becomes less outrageous, then it becomes normalized, then it becomes self-evident.
- KSKara Swisher
Correct. Yep. That is correct.
- SGScott Galloway
And our media, they just have a responsibility. I, I, I was just so... I met, I forget his name, the guy interviewing to be the head of our intelligence service.
- KSKara Swisher
Clayton. Jay Clayton.
- SGScott Galloway
Yeah, I met him at, at a conference. I spent a little bit of time with him. Reasonable, smart, impressive man. Can't say that Biden won the 2020 election?
- KSKara Swisher
Yeah, he can't. He actually can't do it.
- SGScott Galloway
And because he then, his nomination will be pulled by Trump.
- KSKara Swisher
Yeah.
- SGScott Galloway
And it's like, okay, at some point, at some point, these men have to be men-
- KSKara Swisher
Mm-hmm
- SGScott Galloway
... and say-
- KSKara Swisher
Speaking of testosterone
- SGScott Galloway
... "My kids are gonna think I'm a coward."
- KSKara Swisher
Yeah.
- SGScott Galloway
I... You don't think that video's gonna be played back over and over and over in your kid's third-grade civics class?
- KSKara Swisher
Rest of his life.
- SGScott Galloway
Rest of your life. It's like, and by the way, maybe the nomination gets pulled, but don't you wanna be that dude? Don't you wanna be the guy that said, "Of course he was elected, yes," and then have Trump, and then have Trump pull your nomination and be a fucking hero?
- KSKara Swisher
I know. You know, of all people, Thomas Massie was like, "Um, we have the House, the Senate, the presidency, and pre- pretty much the Supreme Court, and we're call-- saying the election-"
- SGScott Galloway
Elections were rigged?
- KSKara Swisher
... rigged. Like, wow, keep rigging them. Like, it was... It's ridiculous. I mean, the f- I mean, one of the things, it- it's just ridic... It, it's, it's an astonishing repetition of lies. Th- those two, there was two hearings. It wasn't just him. It was also the, um, attorney general. Can't say it. They can't say it. Biden was certified president. That's all they'll say, which is not the same thing. I mean, that, the fact that they can't say it, and it's happened several times with cabinet members, is really something else. It really is. And, and as... It's as if they live in Putin's Russia, and they do for the Republican Party, where if they say the wrong thing, they, they get, like, thrown out a window essentially, and this is a, not a, not a real throw out a window, but a sort of version of it, a political version of it.
- SGScott Galloway
There has never been a testosterone therapy like a Republican losing an election.
- KSKara Swisher
We'll see. T- I don't know. You think Tom Tillis and John Cor- Cornyn are gonna push back on Blanche?
- SGScott Galloway
Look what truth tellers these guys are once they lose their election and they have only six more months in the Senate or whatever.
- KSKara Swisher
I'm waiting to see if they vote against Todd Blanche.
- SGScott Galloway
You mean his personal lawyer?
- KSKara Swisher
Yeah, his per-
- SGScott Galloway
Or in the future [laughs]
- 18:05 – 27:03
Cyclospora Outbreak
- KSKara Swisher
Uh, now let me pronounce this right. A Cyclospora outbreak has now spread to thirty-four states. It's a parasite that contaminates fresh produce and causes severe watery diarrhea with frequent and sometimes explosive bowel movements, according to the CDC. Officials are still investigating the source. Michigan officials say the evidence points to lettuce or salad greens. Uh, federal and state officials are also looking into whether Taco Bell restaurants played a role. This is, this is so ridiculous, blaming Taco Bell for this. And making things more difficult, the CDC, of course, scaled back the country's comprehensive system for tracking foodborne illness outbreaks last summer. Thank you, uh, RFK. That's your fault. They cut these, these things. States can report cases through other systems, but experts say the cuts created blind spots, making outbreaks harder to track. Um, just ridiculous. These people made the cuts, and this is the result. Everyone's having diarrhea. It's-- The fact that diarrhea is the, is the brand for the Republican Party, like bringing us diarrhea, measles, and possibly polio is, uh, and Ebola, is really quite something. I just... I, I, I don't know. I, I like lettuce, and now I'm like nervous about eating it. It's crazy. Um, the memes are amazing. Let's go through a few of them. Someone on X posted, "I found an explosive diarrhea parasite," with a picture of Stephen Miller. Also, "First Mitch McConnell and now Cyclospora. Big week for evil vegetables." And, "Maybe explosive diarrhea will finally be the thing that brings both sides together." Uh, thoughts on explosive diarrhea?
- SGScott Galloway
Yeah, I don't know. I, [sighs] I, I'm-- I was feeling really good. Um, I had the best... [chuckles] You know what's coming. Uh, I had the best bowel movement I've had in years the other night, and then I realized I was still in bed. Um, [chuckles] look, I don't-
- KSKara Swisher
Okay, that was good
- SGScott Galloway
... uh, you know, all of these things, w-whether it's testosterone, uh, yeah, it, it-- Like, the CDC, we need, we need thoughtful people. It, it-- This goes back to the same thing. This is true of Democrats and Republicans. We've taken for granted how many [chuckles] competent people-
- KSKara Swisher
Work for the government
- SGScott Galloway
... work for the government.
- KSKara Swisher
Yep.
- SGScott Galloway
And, uh, that you need a diplomatic corps that can say, "This memo of understanding doesn't mean fucking anything, and we need to do hard work of diplomacy here." We need, we, we need talented medical professionals [chuckles] in the CDC to go, "This is a risk. These are the preventive steps we need to take," who have the support of the White House and aren't, aren't, you know, trying to figure out ways to undermine, you know, vaccines. So for every-- Look, for every one dollar invested in public health preparedness, you get multiple dollars in avoidance-
- KSKara Swisher
You do
- SGScott Galloway
... of healthcare costs and productivity losses.
- KSKara Swisher
Yep.
- SGScott Galloway
Foodborne illnesses already cost the US tens of billions a-annually. You don't notice these things when the CDC is working.
- KSKara Swisher
Right.
- SGScott Galloway
You only notice it when someone-
- KSKara Swisher
Yeah
- SGScott Galloway
... is shitting themselves.
- KSKara Swisher
There's small outbreaks. There's small outbreaks as opposed to these enormous ones.
- SGScott Galloway
Well, okay, but, uh, America, you know, and this is true of Democrats and Republicans, you, you need to appreciate government before you start shitting yourself.
- KSKara Swisher
Yeah.
- SGScott Galloway
[chuckles]
- KSKara Swisher
But in this case, this was the Republicans cutting these programs that have been in place-
- SGScott Galloway
Agreed
- KSKara Swisher
... for a n-
- SGScott Galloway
Elected by an American populace.
- KSKara Swisher
Correct. That's correct. That's absolutely correct. But I don't think we v-voted. I don't think even those people voted for diarrhea.
- SGScott Galloway
We didn't vote for diarrhea.
- KSKara Swisher
Right. Nobody voted for diarrhea. And you would assume that this is the kind of stuff, you know... The fact that they go for this stuff is really interesting to me. I'm like, "That seems like a, like a real..." Like, I don't know. It just... It's so-- It's not just shortsighted. It's just dumb. Like, let's stop the tracking of foodborne illnesses. What, what plus-- Who made that decision? That, like, I wanna be in that room. Like, who said, "Yeah, that's what we're gonna cut 'cause that's something that, you know, isn't important," like salmonella or something like that? I don't know. It's, it's a really-- I think it is all knitted together. And again, back to the reflecting pool, it's like those were no, no-bid contracts. Back to all the no-bid contracts all over, all over the place where you have shoddy work or shoddy this or shoddy that, and then, in this case, it's diarrhea. I just, I-- And, of course, it's-- now it's gonna hit lettuce makers, you know, people who sell lettuce, grocery stores, the, all the implications. Everyone's eating chocolate chip cookies. They get fatter, whatever. Um, let me ask you a question. Uh, as, as a marketing person, how would you sell this as a Democrat i-if you're-- Is it, is it worthwhile to make, m-use this in, in the election?
- SGScott Galloway
Yeah. You know, [sighs] bombs, diarrhea, and inflation. I, I, f- uh, that word is so powerful that I, I would probably couch it in America's health being ignored, which drives up costs. So you, you, you can't afford the treatments to the diseases you shouldn't be getting. I, I mean, uh, yeah, I, I think... I don't know. I think they need to test it. I, I still am all about accountability and affordability or maybe affordability and accountability or renewal. Um, you know, I'm, I'm working on a bunch of messaging around these issues. This is... It needs to be more than a meme. It needs to be broadened to our health is, is been compromised by an, an incompetent set of, um, officials where it comes back to the same thing, and that is opting for fealty over competence will hurt the American public.
- KSKara Swisher
Yeah.
- SGScott Galloway
And the Democrats, if you look at past administrations, sure, you know, politics plays a role, but here are some of the... You know, I would hold up-- I, I would say, "Okay, let's just look at Surgeon General Murthy. Let's look at, let's just look at these people's backgrounds. Let's look at the former-- Let's look at some of the people who ran our in- our intelligence And who's running it now? I just run ads around. All right, let's look at past defense secretaries and Pete Hegseth. Let's just compare-
- 27:03 – 35:06
OpenAI’s First Device
- KSKara Swisher
device is gonna be smart speaker, according to Bloomberg. The device, which is under development, is meant to be human-like AI companion that lives in the home. It will help control smart home appliances, play media, answer questions, and tap into the capabilities of ChatGPT. It sounds like Alexa to me. Uh, OpenAI believes the device is different from anything Apple has on the market, which might come into play with that Apple lawsuit we talked about. Um, obviously, the delay, they're... Anthropic is allegedly gonna go public in the fall sometime. Um, OpenAI probably is not. Um, is this a product that's gonna work, Scott? This seems like a product Scott Galloway does not like, but perhaps he does. I don't know.
- SGScott Galloway
I actually, ooh, I liked it more than I thought it would. I thought it would because y- you keep talking about, and at, at some point, there needs to be a post-smartphone era, right?
- KSKara Swisher
Yes, that's correct.
- SGScott Galloway
And I, I don't think the most valuable product of the next decade or decades won't be the one with the best screen. It'll be the one that knows you really well.
- KSKara Swisher
Right. Absolutely.
- SGScott Galloway
And it won't be who builds the biggest model or best model. It'll be who owns your kitchen, your living room, your car, your earbuds. And Apple won because it owned the interface, not because it had the best technology or model, and OpenAI is trying to own the relationships. Now, granted, Meta tried to do this with their, I forget what it was called, that screen.
- KSKara Swisher
Yeah, they had one. Remember that? Yeah.
- SGScott Galloway
So I, I actually think strategically, going for a speaker and trying to go in-home, I'd heard it was gonna be some weird fucking pin or something. I, I, I... Or a, a, an attempt to be-
- KSKara Swisher
Yeah, the pins, I mean, the pins have been tried, that you carry with you. At some point, you will, l- let me say, you will have a pin on you at all times, or it'll be your AirPods that'll be extra smart, right? Presumably.
- SGScott Galloway
I, I think that's right.
- KSKara Swisher
Right.
- SGScott Galloway
So I, I think that the idea of a better Alexa, the idea... I didn't, I don't think smartphone.ai was gonna work, but the idea of a, a really intelligent speaker, I conceptually, I think this is... Strategically, I think it's correct. The thing that everyone learns and is just littered with dead armadillos is believing that because they're good at software, they'll be good at hardware.
- KSKara Swisher
Right. Yep.
- SGScott Galloway
There are so few companies who have made the leap to hardware. I mean, think about it.
- KSKara Swisher
What hardware in the home do you trust, though? I mean, uh, my son literally took all the Alexas out of our house. Like, he's like, "They're not gonna surveil us." That was one of the issues. The other, they're always listening. Like, people are nervous about this kind... You know, even, even the, the, um, the alarms that people put on the cameras, like, they, they got manipulated from outside, where people were looking inside people's homes. I mean, I think... And then Amazon, remember Amazon was gonna have a drone that followed you around your house and did things? Like a little floaty thing? I mean, eventually, people will have a version of that, presumably. It's just who do you trust to be in your home? 'Cause I wouldn't put any of these things in my home at this point.
- SGScott Galloway
So my first thought when I read this was two things. [clears throat] My first thought was All right. I think this is actually smarter than I thought, at least strategically. Obviously, this is all about execution, because I thought they were gonna try and put out some, you know, the Amazon Fire phone or whatever it is. Um, the second thought I had was I'm gonna buy Sonos stock. I think Sonos is gonna be acquired.
- KSKara Swisher
Oh.
- SGScott Galloway
'Cause I think for-
- KSKara Swisher
Interesting
- SGScott Galloway
... Sonos has a market cap of one point seven billion.
- KSKara Swisher
Yeah.
- SGScott Galloway
That is literally changing their couch for these companies.
- KSKara Swisher
Right.
- SGScott Galloway
And they immediately have an installed base of speakers where they can just upgrade the technology.
- KSKara Swisher
Oh, fair point. Which would never work. Which never work. [laughs]
- SGScott Galloway
Oh, I think Sonos is amazing.
- KSKara Swisher
I love them-- Sonos, but you c- I have to tell you, it's the most difficult to get coordinated. It is always glitching. It's always glitching. I... And I'm smart about these things. I love Sonos.
- SGScott Galloway
But there's so... But you asked, there are so few trusted brands in the home. It's really interesting. Like, like Sub-Zero is such an amazing brand. B- You can buy a four million dollar home, and they will advertise that the, that it has an eight thousand dollar refrigerator called Sub-Zero. That makes no sense to me. You think about how many actual brands... The, the furniture market is totally fragmented.
- KSKara Swisher
It is, yeah.
- SGScott Galloway
Sonos is a decent brand.
- 35:06 – 41:05
IBM Stock Tumble
- KSKara Swisher
stock is down twenty-six percent in the last five days after issuing a rare profit warning, noting the shift in customer spending from software to AI hardware and chips ahead of the quarterly earnings. The sell-off erased sixty-nine billion dollars in market cap, and the initial tumble marked the company's worst day since at least 1968. The S&P software industry index is down over thirteen percent for the year. You've talked a lot about the software companies. By the way, SpaceX has really taken a digger. Oracle is way down. Um, you know, and just related, I think New York has become the first state to ban the construction of new data centers. The pause applies to new data centers requiring fifty megawatts or more power for up to a year while state regulators develop new environmental and energy standards. Governor Kathy Hochul noted that New Yorkers have seen their energy, uh, electric bills surge sixty-eight percent since 2019. And a June poll reveal, or, uh, revealed that forty-six percent of New York voters believe one-year moratorium on large data centers would be good, with just twenty-one percent saying it was bad. So this is all related to each other, this idea of this growth. Talk a little bit about IBM and then, you know, the links to Oracle, SpaceX, everything else. They're really trending downward in a really significant way, and people are nervous. There's so much more, um, discussion about a possible collapse, um, by lots of different people. J- uh, Noble, the, the investor, George Noble, uh, Bill Cohen did a great interview with him. He's nervous. Thoughts?
- SGScott Galloway
I, I was caught off guard by that. I mean, this is... They came in at seventeen point two billion versus seventeen point nine, and the stock had its worst day, I, I think maybe ever or in fifty years, and it erased a quarter of IBM's value over a six hundred and sixty million dollar revenue miss. That's about a hundred dollars in market cap for every one dollar of missed revenue. The reason why is IBM's customers are rating their own IT budgets. In the, in the, in the last few weeks, clients pulled spending from software and mainframe deals and used it to panic buy server storage and memory before prices rose further, so... And the, the sell-off infected the entire enterprise software market. The, the fear is that they're the canary in the coal mine here, and that is the, the real loser is anyone who buys memory instead of selling it. So data centers are forecast to consume seventy percent of all memory chips produced in 2026, up from twenty to thirty percent. And three companies make up roughly ninety percent of the world's DRAM market, and all three have shifted production towards AI chips. So their costs are going up, and meanwhile their revenues are flat or down. So you have margin compression and meanwhile and top line going down. So the losers are everywhere else. Uh, PC makers who consume a lot of memory or buy it, that was fifteen to eighteen percent of PC materials cost, is now heading towards forty percent.
- KSKara Swisher
Wow.
- SGScott Galloway
So in a competitive margin, in a competitive commodity market, your, your costs are going up ways, uh-
- KSKara Swisher
And so prices have to go up.
- SGScott Galloway
Think about it. Apple has already had to raise its prices, but they have the margin power to do it.
- KSKara Swisher
Yeah.
- SGScott Galloway
Xbox has raised prices by consoles as much as a hundred and fifty bucks. Smartphone shipments are projected to fall thirteen percent on memory price surge. And software and services, corporate IT budgets are being redirected to panic buying chips. So the AI, the AI trade has gone parabolic, but the losers have suffered tremendously. Accenture's down forty-seven percent year to date. I think as a lot of those back office jobs, people think AI will re- will, will supplant. IBM's down twenty-eight percent, Microsoft down sixteen, ServiceNow down twenty-nine, Salesforce down thirty-four. I actually spoke at Salesforce yesterday. Um, so I... This is... The, the market is reshaping around, you know, big winners and big losers, and IBM is perceived as being on the wrong side of the trade because now it's competing, it's competing with- to buy the memory against companies that have a better business model or, or better prospects.
- KSKara Swisher
Right. Right. But what, what about the overall trend? Because there's so much noise now. I mean, I was really struck by this George Noble interview that Bill Cohen did. The... You know, there... He's just like, "This is..." He essentially was like, "This is bananas what's happening right now with, with the spending." And you do see, you know, SpaceX, despite the index thing, is drifting down, drifting down, drifting down more and more. Ed, Ed Elson, by the way, is enjoying the entire drift. There's... He does a, he does a thread every five seconds about it. Um, talk... What is the... Are you very worried? Because a lot of people, I just have been hearing so much more noise around that, and it seems very interrelated to these data center slowdowns and that the business isn't quite there, and OpenAI is not gonna go public this year. Maybe Anthropic will get through. Um, a-a-are, how, are-- You still remain worried or are you paying attention to that? Because I think they're all related to each other.
- SGScott Galloway
I mean, a-a-and granted, I get this shit wrong all the time. Um, I think we're, I think we're literally late stage ninety-nine. [laughs] I mean... And I think, I think it's un- I think it's unfurling remarkably similar. First it was B2C, the Amazons, the eToys, the, you know, the, the, the, the Pets.coms of the world imploded because they didn't create the demand to justify their valuations. Okay. So what's under, what's under a huge chart right now? The ultimate consumer AI play, which is OpenAI. And then everyone, "But wait, it's about B2B." So everyone shuffled into Anthropic thinking it was the enterprise market. I think that's the next one to come from a trillion down to a hundred billion. By the way, a hundred billion dollars is what Starbucks is worth. That's not-
- KSKara Swisher
Yeah
- SGScott Galloway
... that's still a lot of money.
- KSKara Swisher
No. Yeah.
- SGScott Galloway
And then the next, the next shoe to drop will be similar to what happened. Everybody got out of B2C, got out of B2B, and then they went into Global Crossing and Cisco because it's still in the ground. And then I think the next shoe to drop, we're, I think we're gonna start to see weakness in the infrastructure players, specifically NVIDIA, in later half, later part of this year, beginning of next year. This whole... I, I feel as if we are literally in the, the, the beginning of the unwind.
- KSKara Swisher
Yeah.
- 41:05 – 47:24
Data Centers Ban
- KSKara Swisher
And these data center bans or construction of them, I, I think it's a good idea. Voters want this. Of c- I think it's actually good government to say, like, "Let's take..." It's not saying no data centers. It says, "Let's take a year. Let's figure it out. Let's do it so that consumers don't have to pay." It's a great political message, and it's not anti-innovation. It's slow the fuck, slow your roll, dudes. Like, this is ridiculous what you're doing to our, to our environment and our costs. And, uh, you know, they try to blame things like Hochul and others. I think it's actually good governance. That's my feeling.
- SGScott Galloway
Look, I... It, it's become politicized. I think data centers have become the vessel for outrage around-
- KSKara Swisher
Yes
- SGScott Galloway
... income inequality, and I think some of the concerns around them are i-inflated. The, the notion that they're gonna soak up all the water. They're noisy. Well, they're not, they're not... Many, most of them aren't near... I, I, I feel that essentially this has become the new The new kind of, uh, whatever it is, squeeze toy or, or anger mannequin for income inequality. And then, uh, in what is the biggest brain-dead brand move of the century, they decided to make the spokesperson for data centers Kevin O'Leary.
- KSKara Swisher
Yeah. [laughs]
- SGScott Galloway
So, but i- if I were a civic official... First off, these people aren't s- the people approving these data centers aren't stupid, because these companies, data centers don't call the fire department or the police department, and they pay property taxes. These people aren't stupid approving the data centers. What I would do if I were a local civic official is the following. I would say, "We will cram through your approval. We want 10 years guaranteed property taxes, no matter what happens to your company," 'cause I think a third to half of these things aren't gonna get built, but I still want those revenues.
- KSKara Swisher
Yeah, and also, maybe some... You've gotta talk to voters about the electric bills and everything else. You know, and 'cause it, they, the, the, the, I think the people who are opposing them have made very, have done a very good job of linking them with billionaires. And like, you're right, Kevin O'Leary looks like a fucking idiot.
- SGScott Galloway
But that's math. That-
- KSKara Swisher
Yeah
- SGScott Galloway
... a civic official should be able to say, "We have economists and power people estimating what the increase in electricity costs will be. If the, those are in fact true, we need to, at a minimum, compensate consumers with the property taxes or fees you're gonna pay." And also, I would say, I, y- a friend of mine owns a shipping company, and shipping container ships went to, like, from $30 a container to $150 because of Hormuz, and I'm like, "Is there any," I'm like, "Is there any way you can buy futures or sell futures and lock in that price for the next 10 years?" And he's like, "I'm trying." If I were a civic official, I'd be trying to lock in the revenues and the property taxes these things are gonna pay for the n- or are supposed to pay for the next 10 years, 'cause Kara, what I find generally in life and in business is the shit you are most worried about doesn't come to fruition.
- KSKara Swisher
Oh, interesting.
- SGScott Galloway
Because you start planning against it subconsciously. The, the shit we're re- remember Y2K?
- KSKara Swisher
Yeah. I-
- SGScott Galloway
How worried we were?
- KSKara Swisher
You... Do you know where I was? May I tell you a short story? I was sent by the Wall Street Journal on the best night of the, of, of a New Year's for that 2000. I had to be at Yahoo and E-Trade. That was my life right then as a young reporter. I had to s- hang there, and nothing happened. Go ahead.
- SGScott Galloway
Well, or remem- you, you pro- I used to go on Bloomberg when I was r- going on TV there, and for fucking 12 months, we talked about the collapse of Greece and how it was gonna affect the EU. The moment you start worrying about everything, it doesn't happen. No one was worrying about planes slamming into the World Trade Center. We weren't that worried about a virus jumping the lab, and in fact, I mean, Bill Gates was. We are so worried about data centers that my view is, and my thesis is, that all of a sudden we've had this incredible flippening from a supply crisis to actually a demand crisis. Everyone, everyone that was supposedly gonna create all the demand for data centers is now selling their data center capacity and storage to the f- to the two companies creating demand, OpenAI and Anthropic. So if I'm a civic official, I'm like, "Bank that money now. Get their commitments," 'cause I... And also, all the innovation is gonna go into chips and inference and compute that requires less energy, and oh my, the most fucking ridiculous thing. Have you ever been to one of these things? The idea that we can put any semblance of one of these into space-
- KSKara Swisher
I know. I know
- SGScott Galloway
... makes the Reboven look practical.
- KSKara Swisher
I know. [laughs] Reboven. I, you know who my favorite person, everyone should follow him, Jan LeCun, on the data space centers, da- data sp- space centers, makes me laugh. I love that he says it, though. There's part of me that I gotta say, "You know what? Good one. Good one." Space centers, data centers in space. Like, I'm like, "What a load of crap, but I love you for trying it." It's like having the o- you know, we were supposed to have 50,000 Optimus Primes in our home this year. Do you have one yet?
- SGScott Galloway
Oh, no, I mean, but, uh, hold on, let me ask my robot.
- KSKara Swisher
Yeah, yeah, [laughs] exactly.
- SGScott Galloway
Um.
- KSKara Swisher
I think we will. By the way, I think we will eventually.
- SGScott Galloway
You think we're gonna have, you think it's gonna be Jetsons? You think we're gonna have robots?
- KSKara Swisher
Eventually, but n- we'll be dead. It doesn't really matter, but yes, I do. I think there-
- SGScott Galloway
I just-
- KSKara Swisher
I think there's-
- SGScott Galloway
My Filipino nurse, Manny, is cheaper than a robot-
- KSKara Swisher
I get it. I get it
- SGScott Galloway
... and he has softer, gentler hands.
- 47:24 – 52:39
Predictions
- KSKara Swisher
prediction. Let, what, what is your prediction? Besides, I'm gonna make a prediction. "Odyssey" is gonna, like, blow-
- SGScott Galloway
Yeah
- KSKara Swisher
... the-
- SGScott Galloway
That's a pretty safe one
- KSKara Swisher
I gotta tell you. No, but I think, like, way more than people think.
- SGScott Galloway
Yeah.
- KSKara Swisher
It is really that good, and I think people are, again, just like they were with smaller movies like "Obsession" and "Backrooms," they love getting in the theater when something's worth it. This one is worth it. I think it's gonna blow out well beyond what people think the blowout's gonna be.
- SGScott Galloway
I like it. I'm gonna see it. I'm excited that you liked it. Uh, so my prediction is that OpenAI is gonna buy Sierra and make-
- KSKara Swisher
Oh
- SGScott Galloway
... install Brett Taylor as CEO.
- KSKara Swisher
Oh, great idea. I, I... Did I say this to you? Who said this to me? Someone asked me who I thought was, should be CEO of-
- SGScott Galloway
You, you-
- KSKara Swisher
I said Brett
- SGScott Galloway
... you planted the seed.
- KSKara Swisher
Yeah.
- SGScott Galloway
You said Brett Taylor.
- KSKara Swisher
Yeah. Okay.
- SGScott Galloway
Um, look, the, the, the most-
- KSKara Swisher
Interesting
- SGScott Galloway
... successful companies don't stop at the platform, they own the application layer. Like Apple didn't stop at iOS, it created the App Store.
- KSKara Swisher
Explain what Sierra is for people who don't know. It's his new startup.
- SGScott Galloway
So it, it's essentially, they're in the application layer for AI. Well, they're one of the best enterprise AI products. Um, and they're, they're, essentially they, they are, have a valuation of 4 to 5 billion. OpenAI supposedly worth 800, call it 500. So for 1% of the company, they get a CEO. And right now, Brett Taylor is probably... They need to bring in an adult that calms the markets, and OpenAI does, you c- if OpenAI does in fact have the best model, Sierra has one of the best enterprise AI products, and Break- and Brett Taylor is arguably the, the best enterprise software operator of his generation right now. And these, as these foundation models get cheaper, intelligence will commoditize, so the scare asset won't be IQ, it'll be customer relationships, workflow integration, and enterprise trust, and that's essentially what Sierra's offering, so-
- KSKara Swisher
Can I also say, he can go toe-to-toe with Elon. He's the one who got Elon. Remember? Elon tried to pull out of the deal. He was r-
- SGScott Galloway
No, he, he-
- KSKara Swisher
He was the chairman-
- SGScott Galloway
Yeah
- KSKara Swisher
... of Twitter at the time
- SGScott Galloway
He forced him to close.
- KSKara Swisher
Forced him to close. He-
- SGScott Galloway
He said, "This company's worth three, you wanna pay 44, sign here, here, here, and here."
Episode duration: 52:40
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