Biden's Bad Polls, Lessons Learned from SBF Trial, and Guest Kashmir Hill

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Speaker 14 Now now you can do that do that with the all new acrobat it's time to do your best work with the all new adobe acrobat studio

Speaker 17 hi everyone this is pivot from new york magazine and the vox media podcast network i'm kara swisher and scott happy belated birthday

Speaker 13 uh thanks very much uh kara you got me a sweater but i would have preferred a moaner or a screamer oh my gosh versus a sweater get it that is another bad bad joke.

Speaker 17 You need to like up the joke game in this, and in your advanced age and stuff.

Speaker 13 People generally find my profanity fine as long as I'm funny. What you're saying is I'm just being profane.

Speaker 17 No, no, I think you just need to be funny. I just think as you're advancing in the years, I think you should up the game on your jokes.
That's all.

Speaker 13 You know what I did for my birthday? Yeah.

Speaker 13 So they said, what do you want to do on your birthday? So I said, I want to have a big breakfast. Yeah.
I want to work out with my boys. And then me and my boys went to the Brentford Everton game.

Speaker 13 We're going to these little or kind of smaller stadiums. We had just a really wonderful day.
They always had a nice birthday.

Speaker 17 That was really sweet. That's a very good birthday.
That's a very, we're going to be with you next year. Just you've already invited me to your party.
Oh, that's right.

Speaker 13 You're coming.

Speaker 17 You're big one. I'm not going to say the year, but it's a big one.
It's a big one.

Speaker 13 Big 50. Big 50.
50.

Speaker 13 Do you know? Just go with it. Sure.

Speaker 13 Adam Altzer, my colleague at NYU, has done all this research. Supposedly the year you make really big decisions, whether it's to change your job, get divorced, commit suicide,

Speaker 13 disproportionately happen in the nines. Something about 29, 39, 49, which I am now.
You're not.

Speaker 13 It's my birthday.

Speaker 17 It's my birthday. Just go with 29.
You're 29.

Speaker 13 Yeah, I don't. Naked, I don't look 29.
If it's dark, I can pull up 49.

Speaker 13 Anyways, he said that all of your big decisions and like life-changing. Yeah, so I'm here comes the big decisions.
Get ready, Karen.

Speaker 17 What are we doing? Wow.

Speaker 17 That's exciting. Did I make a lot of decisions last year? i don't think i did i guess children oh i had more children oh wait that there was that you decided

Speaker 17 you decided to be 105 when your kid goes to college yes that's exactly right well i had a lovely time with my children this weekend too we took a hike in the uh in we took a three-mile hike to ice cream so the kids actually walked three miles it was great through the woods there's very beautiful woods around washington dc and so we did an ice hike and then we took the bus back they had not taken a bus so i took a bus with them anyway it was a lovely week, and we both had lovely family weekends.

Speaker 17 And I'm excited to spend next year's birthday with you, your 49th birthday with you next year.

Speaker 13 I'll bring you Scotland.

Speaker 17 Scotland. I'm going to be there.
I told Amanda, she was, she gave me an hot, you know, when the eye, the eyebrow crocks upwards. Yeah.

Speaker 17 She's like, oh, like, that's all she said is, oh, like that, like that. So she's excited.
I'm excited.

Speaker 13 It doesn't sound that excited.

Speaker 17 No, she was excited. We're very excited.
We love Scotland. We think it's beautiful.
And we'll be there. We will be there.
We shall be there for your birthday.

Speaker 13 Good. Good.

Speaker 17 So, there's a lot to talk about. Also, there's so much going on.
There's so much going on.

Speaker 17 We're going to talk about the new election poll that has Democrats worried: what Sam Bankman-Fried's guilty verdict means for crypto.

Speaker 17 And we'll talk to the New York Times reporter Kashmir Hill about her new book on facial recognition. She's a badass of this area and a lot of crypto stuff.

Speaker 17 So, it's actually a good time to talk to her. But first, the Washington Post has a new CEO, William Lewis.
He's British. He's a former reporter turned executive.

Speaker 17 He previously was CEO of Dow Jones and publisher of The Wall Street Journal.

Speaker 17 Jeff Bezos said in a statement that he was drawn to Lewis's, quote, love of journalism and passion for driving financial success. I spent a lot of time finding out about him from people who know him.

Speaker 17 I missed him. He was brought in to sort of clean things up after the big hacking debacle.
They brought a bunch of different people. He's a reporter.
He's a longtime reporter.

Speaker 17 He's turned executive, essentially. He's got a pretty good rap.
I would say he's right of center, maybe, but people seem to like him.

Speaker 17 Lots of different people I called around to about a half a dozen people who know him.

Speaker 17 What do you think of the choice?

Speaker 13 I think it's unimportant and the media is obsessed with itself. But, anyways,

Speaker 13 the only thing I would come on, who gives a flank fuck who's the new CEO of Washington Post?

Speaker 13 Anyways, the thing that's interesting is that the new heads of the New York Times, Washington Post, and the Wall Street Journal, what do they all have in common? What?

Speaker 17 They're all Brits. So CNN, right? British.

Speaker 17 Not Meredith. Meredith is not.
Meredith Levian is not British.

Speaker 13 I'm sorry. CNN,

Speaker 13 the new head of the Wall Street Journal, and the new head of the Washington Post. All Brits.

Speaker 17 Yes, Emma. Yes, yes.
Well, they were, is he? He's British. Yeah.
Yep. Yep.
Well, she's the new editor. Yes.
That's different. This guy's the CEO.

Speaker 13 I love how you work through stuff real time. This is fun.
Is this how we watch your brain working?

Speaker 17 No, I'm just kidding because they're not exactly on the same level as CEO is

Speaker 17 different.

Speaker 17 He's an American. But yes, there's a lot of Brits.
They like a Brit. They like to bring in a Brit.

Speaker 13 If you have a British accent, you want to go to work for a consulting firm because everyone's under the impression you're 10 IQ points smarter than you actually are. Yes, that is true.

Speaker 13 It's just you sound very smart. Or Northern European, something you can't identify.
I think people are, and see people who are on U.S.

Speaker 13 media, they identify them and they stereotype them as being to one pole or the other, one string or the other.

Speaker 13 So I think people coming in to interview to be the head of media organizations that pride themselves on trying to be balanced or just about the facts.

Speaker 13 I think they hear someone as British and immediately think, oh, this person is a little bit more reasonable.

Speaker 17 I'm sure that's what happened with Jeff. You know, this guy's got a rep for being good at talking to rich guys.
That's another thing he does. I would not say anything negative.

Speaker 17 He's talking about rich guys. You know, he's good at.

Speaker 13 Does that mean he's a prostitute at the Bar of the Four Seasons?

Speaker 17 What is that? No,

Speaker 17 those people are also. But

Speaker 13 it's actually asking for a friend. Isn't it the King Cole bar?

Speaker 17 Isn't it the King Cole Bar?

Speaker 13 From what I've seen. I have been there once, and two mobsters got in a fight when I was there.
I've been at the, oh, but you know who I did see?

Speaker 13 I saw Jared and Ivanka there and they came over and said, hi. Jared was my student.

Speaker 17 Oh, the King Cole Bar. That to me, I have heard that's the prostitute bar in New York, but I don't know.

Speaker 17 Allegedly, allegedly.

Speaker 13 Have I told you I'm hooker blind? I'm totally hooker blind. I don't think I've ever.

Speaker 13 And then someone said to me, gave me like a quick, kind of a quick spotting mechanism. They said, Scott, for you, any woman who returns your eye contact is probably a prostitute.

Speaker 17 Oh, that's true.

Speaker 13 That's That's true. Yeah, but I've never ever actually seen a prostitute.
I'm not good at

Speaker 13 picking him out. I'm hookerblind.

Speaker 17 Interesting. Okay.
All right. Well, I don't know how we devolved that from the British guy.
All right. In any case,

Speaker 17 you know, he's got a good reputation.

Speaker 17 I've heard from some of the people who were involved in the talks, and they were all very worried about the finances and what to do and whether Jeff had the stomach to spend money where he needs, he's got to spend if he really wants to go anywhere with this thing.

Speaker 17 Or else it's just going to bump along. And that's their worry is that's going going to bump along, as you know, as you were noting by saying, who cares?

Speaker 17 Speaking of which, he announced he might have extra money, announced he's leaving Seattle and moving to Miami to be closer to his parents. Plus, Blue Origin operations are shifting to Cape Canaveral.

Speaker 17 He's also from there, by the way. He graduated high school.
This one, I'm not so irritated about. He's there for taxes, I assume, but he is actually from there.
So let us give him a break.

Speaker 13 Okay,

Speaker 13 hold on. Okay.
Give me an actual fucking break. He's moving to Florida to be closer to his father.
He's closer to the market.

Speaker 13 So first off, at some point, these people are going to realize we're not idiots.

Speaker 13 I moved to Florida in 2011, and one of the reasons I moved down there, the primary reason I moved down there is because we couldn't get our kids into school. I wasn't making any money at the time.

Speaker 13 But anybody who moves there, especially if it's California or New York to Florida, recognizes that a 13% swing in taxes, if you reinvest it, is enormous.

Speaker 13 And there is something about, I do believe, I used to think that we needed to normalize the tax structure in the United States because it was straight tax avoidance.

Speaker 13 Now, having said that, there is something to competition that if a state like Texas or Florida can manage to run the state on higher property taxes and lower income taxes, that it creates healthy and needed competition such that when state legislatures, in order to curry votes with whoever it is, special interest groups or unions, actually says, okay, if we just tax everyone out of existence, at some point people are going to leave the state and the tax base is going to erode.

Speaker 13 There is a healthy competition. Having said that, the very disturbing part about this is that this is yet another transfer of income from the poor and the middle class to the rich.

Speaker 13 Because the bottom line is of the tens of thousands of people who work for Amazon and Seattle, who have registered capital income gains of $10,000, $100,000, maybe even $1 million,

Speaker 13 very few of them have the luxury and the option to move to Florida.

Speaker 13 Who are the most mobile people in the world who can engage? 100%.

Speaker 13 And that's the problem.

Speaker 13 When France passes an Uber wealthy tax, what do you know? The wealthiest man in the world moves to Belgium.

Speaker 13 So what you have to recognize, what I think they should probably do is what they do with options.

Speaker 13 And that is, if you move to Texas, You get to, and then you sell, as Elon Musk says, you sell all the stock you have.

Speaker 13 The next day, the next year, you no longer are subject to the taxes, despite the fact that you leverage California infrastructure or that Jeff has been leveraging the unbelievable engineering department at the University of Washington.

Speaker 17 Microsoft is there.

Speaker 13 I mean, he's just registered all of this investment, public investment, for middle-class taxpayers, and he's monetizing it and avoiding those taxes by moving to a low-income state.

Speaker 13 He gets to do that on his shares. But in terms of options, when you exercise options, it is based on where you were when those options vested.
Oh, interesting.

Speaker 13 So if he had, if all of his capital gains were from options and some of the capital gains that Musk realized were from options he was awarded, if they were vesting over four years and he moved to Texas three into those that four-year vesting period, he would 75% of the gains from his options would be taxed based on California taxes.

Speaker 13 And I'm wondering, Carol.

Speaker 17 Well, no, not for him, Seattle, because they just put a new wealth tax in Seattle and they're contemplating more in Washington state.

Speaker 13 Yeah, but isn't it held up in the court or anyways? I don't know.

Speaker 13 In any what I think they should move to is some sort of thing that says okay Jeff you're you're gonna start to sell down your 90 billion dollars in Amazon stock yeah our view is that the vast majority of that wealth was accreted in in Washington right and any money accreted from this point forward if you're really living in Florida fine but this sort of tax avoidance where you don't match the taxes to the investments made by your fellow citizens while you were there There's something uncomfortable about that.

Speaker 17 I would agree. I would agree.

Speaker 17 I find it disturbing. In this case,

Speaker 17 let me just say, his parents are there. He did grow up there.
This is not like, he's not going like somewhere weird. It is where he's from.
His Blue Origin operations are going to be in Florida. So

Speaker 17 moving there seems a little more believable in that regard. And I'm sure Lauren is not like loving Seattle.

Speaker 17 She's a Miami gal. You know, I'm sorry.
She just is.

Speaker 17 Look at her Instagram. She's a Miami gal.
I think there are personal things here, but I agree with you that he got most of his wealth from moving his, he and his former wife to Seattle.

Speaker 17 That's who made him. And so he does owe something to that state and that city.
Absolutely. No question.

Speaker 17 Anyway, another thing that you've talked about a lot, and actually you wanted us to talk about, and I agree with you, is major changes in the real estate industry are likely coming following a court ruling.

Speaker 17 Last week, a federal jury found the National Association of Realtors and several other brokerages conspired to artificially inflate commissions paid to real estate agents.

Speaker 17 The association and brokerages were ordered to pay damages of nearly $1.8 billion. The chief executive of the National Association of Realtors resigned two days later.

Speaker 17 It's worth noting he'd also been facing sexual harassment allegations. So, how will this impact buying or selling a house? They were very interested in this.

Speaker 13 I think this is the biggest business story that was the most underreported of last week.

Speaker 13 And that is, it's not very romantic, it's not very interesting, but in terms of impact on the real economy, it's enormous.

Speaker 13 People's largest asset, or 80 or 90 percent of Americans, are largest asset, especially older Americans, is their house.

Speaker 13 And the National Realtors Association has figured out a way to basically hide costs, transaction fees.

Speaker 13 If you want to be on the MLS, the major listing, you have to agree to what's called an offer of compensation. The compensation comes out of the seller's pocket.

Speaker 13 And they have to offer compensation to the buyer's broker. So the buyer doesn't negotiate the fee directly with the broker because what difference does it make?

Speaker 13 So it's all led to an ecosystem where it's less competitive than than most. And as a result, versus the UK, where real estate commissions are kind of 3% to 4%,

Speaker 13 they're 5% to 6% in the U.S.

Speaker 13 And when you're talking about people who are average home, $420,000, people move on average every five years, you're talking about about $2,000 a year in commissions for most homeowners.

Speaker 13 That's real money. It is.
And you can trade stocks for like 0.1% commission.

Speaker 13 The biggest asset in your house, and it's a fairly liquid market, you pay 5% to 6% percent commission on it. There's also a ton of brokers out there.

Speaker 13 So you'd think, well, why on earth, like every other ecosystem, haven't we seen people pop up and say, I'm a new broker, I'll do it for, you know, 50% off because I need to get established.

Speaker 13 Why hasn't competition starched down the costs here? I think this is a big deal. Yeah.

Speaker 17 Yeah. I mean, it's really, it's interesting how we buy and sell homes.
It's so, it's one of these big costs that we pretend isn't a big cost. That's all I always think when I talk to people.

Speaker 17 Exactly right. And we spend more time on like stock, everything else, but it is usually someone's biggest asset when they have an asset like this.
Not everybody does have a house, by the way.

Speaker 17 And the way it's done is so, you know, I did like, I know you make fun of some of the different real estate attempts to try to clean up the real estate selling process, whether it was Compass or whatever, or next door or something like that.

Speaker 17 But I did appreciate,

Speaker 17 why is this process so onerous?

Speaker 13 Arguably, the greatest regulatory capture, other than probably the hospital and the insurance lobby for the medical industrial complex where Americans pay $13,000 a year versus $6,500 in Australia, Canada, or Britain for worse health care, the most regulatory capture that results in kind of an unusual or anomalies in the economy is the real estate industry.

Speaker 13 And that is, and who owns real estate? Rich people. So if I sell a home, I can 1031 it and it gets tax deferred.
I can roll it into another real estate without paying taxable gains.

Speaker 13 Where if I sell shares in a stock, once I sell it, I have to pay the gains on it. I can, if I own an office building, while it's appreciating in value, I can depreciate it 3% a year.

Speaker 13 I can lever it up 5% to 1. I can write off the interest on it.
The real estate lobby has made the real estate industry the most tax advantage. In addition, they're in bed with the insurance industry.

Speaker 13 Do you know if you're in Florida or somewhere else? You can't get a mortgage unless you prove insurance. You know what I've done? I own some property in Florida.

Speaker 13 I'm in a privileged position where I didn't have to take out a mortgage. I have been self-insured on health insurance and on property, wind, fire, because when you do the math.

Speaker 17 Wait, you didn't, self-insurance means you don't have insurance, correct?

Speaker 13 You don't have insurance. That's right.
And again, again, 45 cents on the dollar of all insurance goes to profits and administration, meaning you get 55 cents back.

Speaker 13 So when I did the math on a rental property I own in Delray Beach, unless it burns to the ground every like 14 years, I'm better off self-insuring.

Speaker 13 But you can't self-insure if you're not rich and need to get a mortgage because the mortgage guys are in bed with the insurance guys. Insurance is yet.

Speaker 13 We've talked about this. My health insurance cost me $55,000 a year for me and my family because I'm a narcissist and I want the gold-plated insurance.
I went naked, no health insurance.

Speaker 13 Oh, you're a bad person. You're a bad father.
No, you're not. I have enough money to survive any illness.
Five years, $275,000, that'll buy a lot of health care.

Speaker 13 So again, the insurance industry is nothing but a transfer of wealth from poor and middle-class people who can't absorb these risks to rich people who can't. Right.

Speaker 17 That's true. Do you think Bezos has a mortgage?

Speaker 13 Oh, God.

Speaker 13 No, he pays cash for everything.

Speaker 17 You know, Ivanka was at some party with her, with Lauren. There are a lot of pictures of Kim Kardashian and Lauren and Ivanka Trump with Mark Andreessen's wife hanging out in the background.

Speaker 17 That was quite a photo. Anyway, should be fun times down in Florida.
Let's go down. Let's go stay at your house.
It'll be fun.

Speaker 13 I love Florida. Oh, God.
You've been to my house.

Speaker 17 I have. Of course.
I stayed there. I stay at all your homes.
Anyway.

Speaker 13 Wait, hold on. More importantly, how many dead hookers does it take to change a light bulb? Oh, no.
Stop with the hookers. Apparently, Kara, not three, because my basement is still dark.

Speaker 17 Oh, my God.

Speaker 13 Did you ever?

Speaker 17 No. Anyway, last wing, over the weekend, Elon Musk launched an AI bot called Grok.
One of my favorite words is Grok, so I'm kind of pissed off he's using it as part of his new venture, XAI.

Speaker 17 Grok apparently has a, quote, rebellious streak, just obnoxious, is what I think it is, and it answers spicy questions. Grok will be available to X Premium Plus users at $16 a month.

Speaker 17 I haven't tried Grok. Not going to buy Grok.

Speaker 13 What do you think of Grok?

Speaker 13 I actually think it's a really good idea.

Speaker 13 The thing that I think is sort of strange about these LLMs is in an attempt to recognize that if you feed media, if you feed in historical data, it's going to have a bias because the history of the world and the history of America is that we have We have biases, we have stereotypes, we have racism built into our books, into our literature.

Speaker 13 And so you can tell these things have been tweaked to try and compensate for that. And when you ask it a question, it'll condition things and it'll say,

Speaker 13 it does come across, the LLMs

Speaker 13 do come across as a bit woke. Yeah.
And so him offering

Speaker 13 an LLM that I bet is going to be a little bit offensive and red pill will have an audience right out of the gates. I actually think from a marketing perspective, it's actually quite smart.

Speaker 17 Do you think people will pay for it?

Speaker 17 Or is it just an entertainment? Like it's going to, it's, you know, I just, it's going to be using Twitter information. It's supposed to rival chat GPT.
Yeah, they're, they're anodyne.

Speaker 17 They're anodyne is what it is, is what you're saying. I don't know if woke is really the word.

Speaker 17 It's just, they don't want to say racist things to someone, which I think is probably a good thing to tweak.

Speaker 13 I'm not saying they're right or wrong doing this. I think, I think, I think their intentions are noble, that we want to,

Speaker 13 you know, we want to recognize that all the data we put in here might end up with things that are not only not true, but are hurtful or discriminatory, whatever it might be, right?

Speaker 13 So they want to be thoughtful about that. They're also covering their ass because immediately everybody, when they get an LLM, I have goes and tries to get it to do a bad thing.
I have profg.ai.

Speaker 13 I built an LLM, input all the transcripts from this podcast, all of my newsletter. Did you ask me?

Speaker 17 No, you didn't, but go ahead.

Speaker 13 That's good. You're being anodyne.
Anyway, so

Speaker 13 I get a lot of emails from people asking questions and I say, I'm sorry, I don't have time. Ask profg.ai.

Speaker 13 And it's interesting, you can tweak it to say, be more irreverent, be more profane, be more politically correct, whatever it might be. And it'll come back with

Speaker 13 a different tone. And I would bet if it's a good LLM,

Speaker 13 I would bet that people do

Speaker 13 the opportunity in LLMs will be like a healthcare LLM or one that's focused on certain types of stocks, niches, and things like that.

Speaker 17 That's a toy.

Speaker 13 I mean, I immediately, I was dying to get on there because I wanted to ask it questions like, should a billionaire be denying people of their severance payments? Which he's doing.

Speaker 13 Is it a good form to accuse a coworker of a sex crime when it's not founded? Did a gay lover actually beat up the speakers? I wanted to ask it those questions and see what it, what it came back with.

Speaker 17 Ah, that's funny. I don't love the use of woke stuff.

Speaker 17 Anodyne is the word you're looking for, bland, inoffensive, innocuous. And that's what you don't like.
I think

Speaker 17 that's what they're trying to do. And he's using woke as a, just like a marketing tool, whatever.
Good luck, Elon. I will not pay for it, but good luck.

Speaker 17 I don't really, I have other things that entertain me more, such as TikTok and other things. So

Speaker 17 anyway, let's get to our first big story.

Speaker 17 Sam Bankman-Fried's trial took about five weeks, but it took a jury less than five hours to find him guilty on seven charges, including wire fraud, securities fraud, and conspiracy to commit money laundering.

Speaker 17 Bankman Fried's charges together carry a maximum sentence of 110 years. Sentencing is set to happen in March.
His lawyer alluded to an appeal in a statement saying, quote, Mr.

Speaker 17 Bankman Fried maintains his innocence innocence and will continue to vigorously fight the charges against him.

Speaker 17 Were you surprised by how it shook out?

Speaker 13 No.

Speaker 13 I mean, quite frankly, he's not only has committed fraud, he has terrible judgment. There's no way his lawyer said you should take the stand.
Yeah.

Speaker 13 I remember being at the Andrew Ross Dorkin's Dielberg conference where he did an interview.

Speaker 13 And I remember thinking, this kid is clearly not listening to anybody because he just added 10 or 20 years to his sentence in this interview. Wow.

Speaker 13 You don't.

Speaker 17 This was post, right? This was post.

Speaker 13 Yeah, this was after he'd been trained.

Speaker 13 And I'm like, this is just the dumbest thing he could have done.

Speaker 13 And

Speaker 13 I feel bad for his parents.

Speaker 13 But look,

Speaker 13 there is a lesson here. And that is

Speaker 13 if you're blessed with success,

Speaker 13 you have to implement everyone around you is going to tell you you're amazing to the point where you're going to start believing that small incremental violations of the law are not violations of the law.

Speaker 13 And then they become big violations of the law.

Speaker 13 And that somehow you could just throw up your shoulders and say, I mean, he built his career based on trying to create this myth or this story that he was a genius.

Speaker 13 And then his defense became a story on how he was an idiot. Well, I didn't know.
And it's like, well, okay, which is it, boss? And,

Speaker 13 you know, he's going to jail for a very, very long time.

Speaker 13 But where I was headed with this is if you're successful, the people who stay successful and stay grounded and, you know, maintain their marriages, maintain their friendships, maintain their success, maintain their economic livelihood, maintain their freedom are people who always implement guardrails.

Speaker 13 I'm going to make sure there are people around me who can tell me like it is. I check with lawyers.
I check with my board. I check with people who push back.
I think kids are really important.

Speaker 13 You know why?

Speaker 13 Kids remind you you're not that fucking cool.

Speaker 13 Kids are just not impressed by it. My sons are so unimpressed by me.

Speaker 13 And to a certain extent, they kind of keep it real. And a good spouse and a good partner will tell you when like, you're full of shit.
That's not true. You're reading your own press.

Speaker 13 A good board will say, no, you can't do that. That is not cool.
It's illegal. He had nothing around him.

Speaker 17 Or he pushed people around. I think he was quite aggressive in terms of pretending he was feckless.
And then everybody did what he said.

Speaker 17 Interesting. The Atlantic had a headline, Silicon Valley May Never Learn.
its lesson. Do you think people keep falling for these characters?

Speaker 17 Attorney General Merrick Garland said in a statement, this case, she sent a clear message to anyone who tries to hide their crimes behind a shiny new thing.

Speaker 17 They claim no one else is smart enough to understand. The Justice Department will hold you accountable.
Interestingly, the VC firm Sequoia is getting dragged after in the aftermath.

Speaker 17 One of the partners, I think it was Alfred Lynn, tweeted about how the company evaluated its due diligence process after FTX collapsed and determined it had been deliberately misled and lied to.

Speaker 17 These people didn't do due diligence. Firms included New Enterprise Associates, SoftBank, Sequoia, BlackRock, Clefty putting $2 billion into FTX.

Speaker 17 So talk to me about that, the due diligence part of it. You get involved in all kinds of companies and it's sort of a lot of people go along to get along kind of thing.

Speaker 13 There's just a different approach. When General Catalyst invested in my last or two companies ago, L2,

Speaker 13 I think conservatively, They called 50 people I had worked with

Speaker 13 and interviewed them about me. I mean, people that I hadn't talked to in 10 years.

Speaker 13 And the amount of diligence they did on the numbers, and they brought in an accounting firm to pour over everything. This firm was calling me and saying, we see this $4,000 charge here.

Speaker 13 I mean, they did a full body cavity search.

Speaker 13 What I also found out from another investor is he was about to put a billion dollars into FTX. Then when they asked for financials, he said, we don't have financials.

Speaker 13 I can send you a text message that summarizes our financials. Wow.
And when you see the gains that the people invested last year made, your standards come down. You're like, okay, this is a new world.

Speaker 13 Let's get super aggressive. Everyone's making money but us.
We have access to something special. This is a tale as old as time, and it's not going to stop.

Speaker 17 That's what I said.

Speaker 13 Whether it's Adam Newman, there'll be Elizabeth Holmes. They'll be a new character that comes across as very honest.
comes across as an innovator.

Speaker 13 And the opportunity, the sense, you know, the illusion of scarcity to get in erodes your ability to get it.

Speaker 17 And look at those guys are in it. Those guys are in it.
Those guys are in it. You know, that's what happens.
Oh, Sequoia is in it. You know, oh, Andreessen's in it.
Oh, that

Speaker 17 carries along a lot of these firms.

Speaker 17 There's so many dozens of firms that this has happened. Even sort of minor ones like Juicero, when they came, we're like, we don't get this, right? We were just sitting there going, nice people, but.

Speaker 17 this seems stupid.

Speaker 17 And no, they just pile the money in. I don't know why.

Speaker 17 I never understood the mentality. I've been asked to be a venture capitalist many times and I've turned it down because I never understood.

Speaker 13 Well, you can empathize with the fact that if you invested in some of these firms in 19,

Speaker 13 some of them got seven, 10X returns in 12 months, at least in paper.

Speaker 13 So it's like, okay, all of my buddies at the firm down the road, Soundhill Road, have literally clocked $100 million in limited partner carried interest by moving. And what happened was the following.

Speaker 13 There was this tidal wave of capital into these companies that they needed to deploy.

Speaker 13 Now, in order to deploy it, it became a war around how to get into a finite number of hot firms that seemed to be just going to the moon. And FTX is one of them.

Speaker 13 And so they could only compete on a few things. They could compete on relationships.
That's how you got introduced to Sam Bankman-Fried. You could compete on valuation.

Speaker 13 And it was like, well, okay, these valuations are crazy. So Masuyoshi-san

Speaker 13 competed.

Speaker 13 Everyone was willing to pay these crazy valuations. So a new form of competition, a new form of differentiation and winning the deal was the following.

Speaker 13 And it happened across CO2, Tiger, SoftBank, and it was the following. They said, Sam, we can move fast.
We can do this round in 48 hours. Right.
And so

Speaker 13 all of a sudden, now, what does that mean? Granted, it won these guys a lot of deals. We can move fast.

Speaker 13 It also meant that you can't put 10 pounds of diligence in a one-pound box and conduct anything resembling resembling diligence. And you can be sure that Sequoia said to Sam Bankman Freed.

Speaker 17 Oh, they did. They wrote an essay about it, how adorable it was.

Speaker 13 We can move fast. Oh, you need 500 million at an $8 billion,

Speaker 13 no problem. And guess what? We have so much capital under management.
We have such incredible relationships with our investors. We can sign the term sheet in 48 hours.
We can fund in seven days.

Speaker 13 And they were all doing it, Kara, or not all of them.

Speaker 13 But if you wanted to deploy capital and have fun at Studio 54 of this incredible wealth generation, you had to kind of go along and pay not only these outrageous valuations, but be ready to fund in no time flat.

Speaker 17 Right. Right.
No, I agree. It's really, I mean,

Speaker 17 there was an essay that Sequoia did about it that was that

Speaker 17 was just embarrassing. I don't know what else to do.

Speaker 13 I mean, the blowjob on a piece of paper. Yeah.
The blowjob is crazy. Oh, my God.

Speaker 17 This is the now, they have it. People have it there here.
They archived it because it was so bad.

Speaker 17 This is the now removed Sequoia profile of SBF and FTX that they put up, and it was called Sam Bankman Fried has a Saviour Complex, and maybe you should too.

Speaker 17 And it just is, it's so embarrassing.

Speaker 13 They were saying that as if it's a good thing.

Speaker 17 Yeah, it's just an embarrassing profile.

Speaker 13 It's really no, if you want really embarrassing, again, I have a bit of a bias against Sequoia, but go to Sequoia's website and look at the quotes from the partners.

Speaker 13 There's one young partner who shall remain nameless.

Speaker 13 This is like literally an exact quote. He's like,

Speaker 13 when I meet with the founder CEO, I don't want to know just about the company. I want to know about how he's doing.

Speaker 13 And I thought to myself, I'm going to reach out to this guy and say, no joke, I'm a 3X Times-backed, Sequoia-backed CEO. I have prostatitis, erectile dysfunction.
Can we get together?

Speaker 13 Because I'd really like to hear from a 29-year-old who learned on the mean streets of Groton and Dartmouth, you know, how I'm doing. I mean, the quotes from these partners

Speaker 13 are just so like, they're comical.

Speaker 17 This piece, you should read it. It's in the Wayback Machine.

Speaker 17 Let me just read this one thing. With SPF doing the hard work of interviewing himself, I'm free to think.

Speaker 17 And finally, just as the clock is running out on my allotted hour, by the way, hour, I ask what might be the first non-stupid question of the entire interview.

Speaker 17 So I summarize, you are young and vital and peaking at precisely the moment when the world is at, and as you see it, peak crisis. SPF nods in agreement, deep in another round of storybook brawl.

Speaker 17 He's playing a video game during this. Does that strike you as a lucky coincidence? Does it strike you as perhaps a signal that your thinking is flawed and you have a savior complex?

Speaker 17 That's an interesting question, he says, is stalling. I double down.
Ooh, journalism.

Speaker 17 You happen to be alive at the most important time in the history of the future race. Is it the existential point, really? SBF hedges.
It certainly would not be ones prior, at least, not naively.

Speaker 17 It just goes on. Literally, and then I literally am like, this guy is a horse's ass, and this is nonsense.
And it just is beyond belief. Anyway, good luck.
Good luck, Sam Bankman-Freed.

Speaker 17 This is the end of crypto.

Speaker 13 Bitcoin is up. I mean, Bitcoin has doubled this year.

Speaker 13 Look, I think that they will, the crypto universe will, and maybe correctly, try and say, this is, we've bottomed out here. We've starched out the bad players.

Speaker 13 There's real value here. And it's time for, you know, the kind of adults in the room, whether it's a Mike Novogratz or, you know, the people that...

Speaker 13 might be seen as aggressive, but are seen as honest, ethical players making a market in the space. There is some technology here, but it's going where it should be.

Speaker 13 It's a small niche market where there's some probably some real innovation.

Speaker 13 If you're in an emerging market that has an unstable currency, there is value to getting your Argentinian pesos converted to something more stable.

Speaker 13 But I mean, you want to talk about, by the way, I'm listening to the best Spotify music channel, Bengals Radio, which is all this kind of 80s music.

Speaker 13 And one of the greatest songs from the Bengals, of which there aren't a ton, but there are a few. The hero takes a fall.
Yeah. I'm doing my predictions deck.

Speaker 13 So many heroes have taken Elizabeth Holmes, Adam Newman, Cheryl Sandberg, Sam Bankman Freed. I mean, what do you think has happened to Elon Musk's brand in the last 12 months? Right, yeah.

Speaker 13 I would bet 90%

Speaker 13 of the world had positive views on Elon Musk's brand. Yeah, my son did.

Speaker 17 My son did. Remember, I told you my son was like, I liked him.
Now he's such a douche.

Speaker 17 Really, pretty much. I shouldn't use that word, but that's what the word he used.

Speaker 13 But it'll happen again. There'll be someone next year.

Speaker 17 Yeah, someone. Not us, though.
Anyway, let's go on a quick break. Good luck, Sam.
Godspeed. We come back.
What to make of a new poll about the 2024 election?

Speaker 17 And we'll speak with friend of Pivot, Kashmir Hill, about her new book on facial recognition.

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Speaker 17 Scott, we're back. The 2024 election is now under a year away, incredibly.

Speaker 17 The President Biden is currently losing to Donald Trump in five major battleground states, according to a new poll by the New York Times and Siena College released over the weekend.

Speaker 17 Age is one of the biggest issues voters have with Biden, as you've noted, with 71% saying he's too old to be an effective president. Opinion shared across all demographic and geographic groups polled.

Speaker 17 Now, Obama was way down at this point before he won re-election, but I'll posit that.

Speaker 17 But if the results of the poll were the same next November, Trump would easily win the election, more than 300 electoral college votes.

Speaker 17 David Axelrod, who was an advisor to Obama, pointed out on Twitter, Biden needs to decide whether running for president is in his best interests or the country's.

Speaker 17 What do you think?

Speaker 17 I think it's a little too early. That's my feeling.

Speaker 17 And a lot of people I respect think that, like Mike Madrid and others.

Speaker 13 When you say too early, what do you mean?

Speaker 17 I think we don't know. I think people are not like, this is just off the top of their head.
I think, first of all,

Speaker 17 we don't know if Trump gets convicted. I think that'll change a lot of people's minds.
I don't think they suddenly like him more after he gets convicted.

Speaker 17 And I think convictions is different than just being accused of a crime. So there's those.

Speaker 17 You know, there's all these, the wars,

Speaker 17 what's happening in Ukraine, in Israel. There's all kinds of that.
We have the economy still TBD. Things could change.
So I think there's just a lot to come. That's all.
That's all.

Speaker 17 I think it's early.

Speaker 13 To your point, a poll at this point is kind of meaningless. I mean,

Speaker 13 you just don't know. And although there's just no getting around it, the fact that the president, after

Speaker 13 what are,

Speaker 13 by any reasonable metric, kind of historic accomplishments,

Speaker 13 lowest inflation among the G7, fastest growing economy, more jobs created in two and three-quarter years than any president has done in four years.

Speaker 17 I mean, he's not getting credit.

Speaker 13 He's got,

Speaker 13 if there is a peace to be kept, the reason why so far the conflict in the Middle East hasn't become a regional conflict is because he immediately sent two carrier strike forces over there.

Speaker 13 And people believe that he will use them. If the Iranians get too involved here,

Speaker 13 I think the guy has literally put on a masterclass in presidency. And at the same time, two-thirds of his party doesn't want him to run.
Yeah. And here's the thing.

Speaker 13 People recognize that the mortality rate across our species is still 100%.

Speaker 13 And not only that, it's not death they're worried about. It's the two or three years leading up to death they're worried about.

Speaker 17 Fair point.

Speaker 13 I mean, he's been running for president since I was in elementary school.

Speaker 13 And I like the president, but like any person whoever agrees to put up with the bullshit to become president, he's a bit of a narcissist.

Speaker 13 And this narcissism that has infected everyone from Ruth Bader Ginsburg to Senator Feinstein. I mean, if he announced today,

Speaker 13 I wanted to step in, I saw an opportunity to,

Speaker 13 I think this country really needed me. And now I think it's time for a new generation.
I think he'd go down as one of the greatest presidents in history.

Speaker 17 Yeah, he's been a great president. He has.
He's been a great president.

Speaker 13 But I would love to see, I'm interviewing the congressman from Minnesota tomorrow. Phillips.
Yeah, Phillips.

Speaker 17 Let me talk about him very briefly. Going back to the age issue, Congressman Dean Phillips is challenging Biden, trying to make the case the Democrats need a younger candidate.

Speaker 17 Phillips is 54, a third-term congressman. He's not very long.
He's an heir to his Caesar Rich guy, a distilling empire, and co-owner of a gelato company.

Speaker 17 I feel like perhaps not the most qualified to be president. Nonetheless, he's running.
One House Democrat called Phillips' campaign an exercise in futility.

Speaker 17 The New York Times polling does have an unnamed generic Democrat doing better than Biden. Obviously, RFK Jr.
is doing rather well against both Trump and Biden.

Speaker 17 He's trying to make this case.

Speaker 17 Phillips was on Bill Maher on Friday. Let's listen to what he said about more candidates joining the field.

Speaker 19 The more the merrier. It's still not too late to jump into this race.
I wish we had more competition instead of a coronation. This is not that difficult.

Speaker 19 And I don't understand why people are so hesitant to do what the country needs so desperately.

Speaker 17 So tell me what your thoughts are here.

Speaker 13 Well, I've been saying this for a while. I think that so much pressure is building up.
And I don't know if he's kind of the finger out of the dike, if you will, or that he breaks the seal.

Speaker 13 But I just, when you see Governor Newsom headed to Israel

Speaker 13 and debating Ron DeSantis, and when you see Governor Whitmer, there's just a lot of people kind of waiting and saying, put me in, coach. There's a lot.

Speaker 13 I think the Democratic bench is really strong. I think it's like when Steve Young, this is deep as my sports metaphor goes, the greatest quarterback in history was, or one of them was Joe Montana.

Speaker 13 The second greatest was Steve Young on the bench. We have a really strong bench.
And right now, as I've said, we're playing not to lose.

Speaker 13 And Congressman Phillips, while I don't think he will win, I think he might have a very profound impact.

Speaker 13 And that is, I think he's going to poll in the high single or double digits with no name recognition. And I think the pressure is going to build.

Speaker 13 And somebody who's more credible is going to say, I'm in.

Speaker 17 Philip the middle. Interesting.
RFK Jr., speaking of which,

Speaker 17 there's a new poll showing he has a good amount of support and is in a position to be a serious threat to both parties. I think to both parties, and Trump people are worried too.

Speaker 13 That is just a radical narcissism that shows you don't give a flying fuck about America, whether it's Ralph Nader or Ross Perot.

Speaker 13 All you're doing is handing the presidency to someone else. Right.

Speaker 13 And an exercise of narcissism. And this guy...

Speaker 17 But Phillips is not in doing that, or no, it's just within the Democratic Party.

Speaker 13 He's not a spoiler. He's running to get the nomination

Speaker 13 of the Democratic Party.

Speaker 13 It's the independents that bastardize and create unintended consequences or outcomes.

Speaker 17 Aaron Powell, what does Biden do to pull himself out of this poll? There's a problematic, you know, the Israel-Hamas war for Biden's re-election. I think it's early for that, too.

Speaker 17 There's increased infighting within the Democratic Party, obviously, over Biden's support of Israel, although Blinken has been visiting all over the place.

Speaker 17 I think it's early on that one, but how does he pull himself out of the hole by not running? That's what you're saying.

Speaker 13 I just think biology is the most unforgiving friend in the world, arbiter in the world. There's just nothing.
Think about how hard all of us are fighting biology.

Speaker 13 And there's just, there's literally almost nothing. He's done everything he can.
The guy is remarkable. He's remarkable.

Speaker 13 I mean, when I, we took my father's driver's license away when he was five years younger than President Biden.

Speaker 13 But there's no time waits for no man.

Speaker 13 The biology here, and this is also true of Trump, although I got to give it to Trump. He just comes across as more robust.

Speaker 17 Well,

Speaker 17 he's crazier. That's why.
Yeah. But you're right.

Speaker 13 He's got the spray tan, whatever it is. But this is at some point your,

Speaker 13 I mean, I go to one scene. Kara,

Speaker 13 and I've asked you to answer me honestly here. It's the first presidential debate.
Ladies and gentlemen, please welcome the Republican nominee, President Donald Trump.

Speaker 13 And ladies and gentlemen, please welcome the Democratic nominee for president. And now scan your emotions when you say Joe Biden or when you say Governor Newsom or Governor Whitmer.

Speaker 17 I'd rather have them.

Speaker 13 I think the majority of Democrats, the majority of moderates who will decide this election go, I'm looking forward to seeing the contrast here.

Speaker 13 And if it's Joe Biden, they're like, oh, God, I hope he doesn't like, fuck. Oh, I think we're, I think we are a nerve, I think you and I are a nervous wreck at that debate with Joe Biden on stage.

Speaker 17 Yep, that is true. That is 100% true.
That said, I think he's done, he's always done a very good job handling Trump compared to everybody else.

Speaker 17 I, you know, I was a big supporter of him earlier than anybody last year, a couple of years ago, as you remember, and you made fun of me. But I thought he was the right answer for the time.

Speaker 17 And the others were sort of flash in the pans. But in this case, I'm sort of mixed.
I think he can handle it. But I also do think that

Speaker 17 I think it's early. I think we'll, yep, Trump is going to be convinced.

Speaker 13 Okay, hold on. I'm sorry.

Speaker 13 Think about Lucky. Think about your mom six years ago versus today.
Yep, I'd agree. Six years ago versus today.
Let me guess. She was driving, living on her own.

Speaker 17 Yeah, remember she drove, but we didn't want her to remember her.

Speaker 13 Oh, my God. That was one of the scariest things I've ever seen.
Exactly. Looking at her like it couldn't find the door out.
And then I see her in a car behind the driving wheel.

Speaker 13 And I'm like, you headed that way, right? And immediately she makes a left. So I'm like, that's it.
It's going to end up in Cuba.

Speaker 13 oh my god you remember that I do remember that and your aunt I'm like she's not only gonna kill herself she's gonna kill her aunt or your aunt yeah but here's the thing and this is this is the opportunity for the guy yeah it is think about what a service of the country would say it's time to let a new generation I'd love to see I don't know if it's gonna be Trump either I think he's gonna I think Christie and Haza Hutcherson are right this guy's

Speaker 13 evicted

Speaker 13 the candidate in my view who's gonna gain momentum there and it's by far 100%

Speaker 13 Haley. Because if you look at the top things.

Speaker 13 If you look at the top things, it's inflation, conflicts around the world, and who can unite America. That's Haley, Haley, and Haley.
I mean,

Speaker 13 she has a real shot. And my biggest fear is that Trump picks her as his Veep.
But if Biden said, I'm opening this up to this incredible bench, I'd love to see Mayor Pete run. Or Secretary Pete,

Speaker 13 I'd love to see Secretary Blinken on the debate stage.

Speaker 13 I think he's fantastic.

Speaker 13 Our bench is so deep here of candidates who, in contrast to President Trump, would be like, oh, I'm definitely going with that guy or a gal.

Speaker 17 I don't know. So far, that's not what I picked up.
We'll see. We'll see.
Anyway, we've got to move on. We'll see what happens.
But that was a very good discussion about this. You were very good.

Speaker 17 You weren't just making old jokes.

Speaker 17 Anyway, let's bring in our friend of Pivot.

Speaker 17 Kashmir Hill is a technology and privacy reporter at the New York Times and author of Your Face Belongs to Us, a secret of startup's quest to end privacy as we know it. Welcome, Kashmir.

Speaker 17 How are you doing?

Speaker 13 I'm good. Thanks for having me on.

Speaker 17 Good. As you know, I think you're a fantastic reporter.
And this came out of an investigation into facial recognition startup Clearview AI.

Speaker 17 I'd love you to sort of give us a background on what made you start digging.

Speaker 17 Obviously, facial recognition has been a topic I've talked about for a long time, but what made you start digging into this company?

Speaker 17 And I want to specifically, you write that what Clearview has done was not a scientific breakthrough. It was ethical arbitrage.
Why don't you start from there?

Speaker 20 Yeah, yeah. I mean, you're actually in the book, Kara, asking about facial recognition a decade ago.

Speaker 20 I initially started digging into Clearview AI because I heard about them through a tipster who had come across the company in a public records request.

Speaker 20 And they claimed to have done something pretty extraordinary, that they had scraped billions of photos from the public web, including social media sites, to build this facial recognition app where you take a picture of somebody, upload it to their app, and it shows you everywhere else.

Speaker 20 They appear on the internet. And they claim that it worked with 98.6% accuracy.
And I hadn't heard of a facial recognition technology.

Speaker 20 you know, product that worked that well, that searched at that scale. And so it was very striking to me knowing kind of what I did at that point.

Speaker 20 And at that point, I thought facial recognition technology honestly didn't work that well. I'd heard it was very clunky, that police didn't consider it a very powerful tool, really.

Speaker 20 And I hadn't seen another company do something like that. It seemed like something I would hear about Facebook or Google doing, not a little startup that was very secretive.

Speaker 20 Nothing was known about them. And so that's why I initially started digging into them.
And it was pretty extraordinary what they built. But what was extraordinary about it was, as you said,

Speaker 20 they were willing to do what others hadn't. The building blocks were there.

Speaker 17 Yeah, the reference you were making, the other companies have been working on similar technology in the book.

Speaker 17 You mentioned an interview that Walt Mossberg and I did with Google's then chairman, Eric Schmidt. He told us Google had built facial recognition technology.

Speaker 17 We were very intent on finding out about it, but that had withheld it, largely for, I think, ethical reasons, right? In terms of not understanding the power of it. Every time I was at Google,

Speaker 17 you could tell they could do it, right?

Speaker 20 They had, you know, whether it was looking not just faces, but things like uh pair in paris the eiffel tower this and that they they had they they were way down that road much further than people realized yeah and the technology got better like with much like chat gbt and these other you know products the neural net technology and large-scale learning models really made the technology more powerful but yeah both google and facebook got to this point where they said yeah we you know you can take a stranger's picture and figure out who they are you know organize photos you have of them by face.

Speaker 20 But they both said, they both looked at facial recognition technology.

Speaker 20 And I thought this was striking because these aren't companies known for being particularly conservative in terms of new data usage.

Speaker 20 But they said, yeah, the downsides are too large here. I think specifically Eric Schmidt said, you know, imagine what an evil dictator could do with this.

Speaker 20 And there's positive uses, but we're too worried about the harmful uses. And so, yeah, they sat on the technology.
But they could do it.

Speaker 17 Same thing with

Speaker 17 generative AI. They could do it.

Speaker 13 They could do it.

Speaker 20 I actually watched this video of Facebook engineers a few years back. They're sitting in a conference room in Menlo Park with a smartphone strapped to the brim of a hat.

Speaker 20 It's still a very janky version of the future kind of augmented reality glasses where they looked around the room. And when the camera saw a face, it would call out the person's name.

Speaker 20 So they both had it. They sat on it.
And it took this kind of startup with nothing to lose to go ahead and put this out there and see what they could gain through it.

Speaker 17 Which is always the danger, whether it's CRISPR or anything else. The cloning was done by someone in China,

Speaker 17 as opposed to the more famous scientists who were able to do it. Scott?

Speaker 13 Nice to meet you, Kashmir.

Speaker 13 My sense of these technologies is that the utility, if the utility is strong, it'll run away from the privacy concerns. That people talk a big game about privacy and then they want it adopted.

Speaker 13 In the last week, I've had facial recognition expedite

Speaker 13 my journey at airports and through TSA. Is your sense that the utility is going to get so far out ahead of privacy concerns that a lot of externalities will emerge?

Speaker 13 What, if anything, are you most worried about with this technology?

Speaker 20 Yeah, I mean, I hear a lot from activists who say facial recognition technology is too dangerous. You know, it's like nuclear weapons.

Speaker 20 The downsides are so large that we need to ban it.

Speaker 20 You know, I don't see that happening. I think there's a lot of beneficial uses, but it's this spectrum, right?

Speaker 20 And the version of it that I wouldn't want to see, hey, it's great, yes, for getting into a country. It's great for opening your smartphone,

Speaker 20 even solving crimes.

Speaker 20 I've talked to officers who've been able to solve

Speaker 20 very horrible crimes using this technology.

Speaker 20 But the idea of it becoming ubiquitous, if you have facial recognition algorithms running on all the surveillance cameras all the time where the government can track anybody, if every company, you know, business has this running so that they identify you as you walk through the front door.

Speaker 20 I think that's really alarming. And we've already seen that happen with Madison Square Garden, right? This is my favorite example.

Speaker 20 They installed facial recognition algorithms a few years ago for security reasons. And then in the last year, decided, well, we've got this infrastructure in place.

Speaker 20 Why don't we use this to keep out the people we don't like, such as lawyers who have sued us, right?

Speaker 20 And so you get that surveillance creep, that function creep.

Speaker 20 And so I really think that there should be guardrails so that we don't see the kind of like worst applications of this start to be embraced.

Speaker 17 Which we first saw with police, we'll talk about that in a second. I was in the Whole Foods the other day and they wanted to do palm recognition and, you know, through Amazon One.

Speaker 17 Have you seen this in the stores now? You put your palm up and then it recognizes your palm and then you can pay by your palm, which I said, no, I was like, it's a palm too far, Jeff Bezos.

Speaker 17 It's not happening. with Keras Puss.

Speaker 20 I saw this at a Whole Foods in San Francisco, of course. And I asked the attendant there, I'm like, how many people actually sign up and give their palm?

Speaker 20 And he, you know, not very scientific, but his estimate was, you know, 2% or 3% of customers. And it was funny to me because a company like this, it was called Pay By Touch in the early 2000s.

Speaker 20 They were collecting people's fingerprints, have them pay for groceries.

Speaker 20 And they're actually the reason why this law, the one law that's super relevant to facial recognition technology in the United States, the Biometric Information Privacy Act, or BIPA, it's why it exists because an ACLU lawyer was there.

Speaker 20 The clerk was trying to collect his fingerprint and he's like, what is this company?

Speaker 20 And when he looked into them, he was very disturbed by who was running it and that they were, you know, asking for people's biometrics instead of a credit card just to pay for groceries.

Speaker 20 It seemed ridiculous to him. And his research led to this super strong law that's been one of the main kind of hurdles for companies that want to do facial recognition technology.

Speaker 17 But what is the future? Because, you know, there was the pushback with police with cams on them or in Britain using so much excessive facial recognition in the streets and the mistakes that are made.

Speaker 17 Obviously, racial bias is a major issue. I remember interviewing Andy Jassy about the issues around their facial recognition technology, which was called recognition with a K.

Speaker 17 Talk a little bit where is the future because they definitely get slammed up against these issues pretty quickly.

Speaker 20 It does seem like the dream for technology companies is to create a world in which we don't need to carry any bags around with us, that they keep trying to sell us on this, right?

Speaker 20 Amazon's like, pay with your palm, and then that means you're free to wander the world carrying nothing.

Speaker 20 You know, amusement parks and gyms and you know, other places like that really like the idea of biometrics to prevent kind of ticket fraud or membership abuse so they can make sure the person that buys that ticket and walks in is the same person that tries to get in later.

Speaker 20 So, there's certainly a push for it from a lot of different companies.

Speaker 20 And I do think the use of facial recognition technology in situations situations that benefit us, you know, that society will probably embrace that.

Speaker 20 I mean, even for the book, I went to London to do research into how the UK police are using facial recognition technology.

Speaker 20 I landed at Heathrow, instead of waiting, you know, hours and hours to be processed to cross the border, you know, I walked up to a little kiosk, put my passport down, look into a facial recognition camera, and it makes sure that my face matches the biometric chip and my passport.

Speaker 20 And I walked in and I was in the country, you know,

Speaker 20 20 minutes after the plane landed. It's incredibly convenient.
And I think we'll see more of that. But this idea of

Speaker 20 there's two different versions, right? That's like making sure that you're you.

Speaker 20 And this other version, what Clearview AI is selling is the kind of finding you in a huge database of persons and tracking you and kind of using facial recognition in a way that doesn't benefit you, that may harm you.

Speaker 20 And I think that's what we're going to see the pushback against. But I I think they'll come for more biometrics, right? It's going to be your palm print.
It's going to be your voice print.

Speaker 20 I'm sure there's going to be a company that comes along that does what Clearview AI did, but for voice, where you upload, you know, somebody talking and then it finds everywhere else on the internet where they're in a video or where they're talking.

Speaker 20 That is, unless we put some kind of guardrails around it that say you can't just use people's information this way, you know, without their consent.

Speaker 17 So how does that happen, right? Because, you know, especially with, you know, advances in AI and everything else, this makes it very easy to do this. So what are companies working to address that?

Speaker 17 And then legislation on a national level, you mentioned one piece of legislation, but it is something where cities tend to act, states tend to go into line, especially around racial bias, which is evident in a lot of these police cams, for example, which some...

Speaker 17 some which is good because we found out what they're actually doing versus what they say they're doing right as you said there's pluses and minuses but what what are the companies doing to address it or will will we always be plagued by a Clearview AI kind of company that doesn't care?

Speaker 17 Right? We're just lucky because we're relying on the kindness of Google not to track us everywhere.

Speaker 20 Right.

Speaker 20 I mean, I think that is something that I wanted the book to get at: is that with these new technological tools and the fact that they're open source and that these models are increasingly kind of accessible to anyone with technical savvy, is that it is going to be, you know, the most radical actors, small actors like Clearview AI.

Speaker 20 I mean, it's just this ragtag crew of founders that they're able to basically kind of cross the lines that have existed.

Speaker 20 And I think we're going to see this in other spheres beyond just facial recognition technology, other kinds of AI.

Speaker 20 In terms of what companies can do, I mean, we saw Google and Facebook decide to sit on this and hold it back.

Speaker 20 I see companies like Signal, the private messaging app, creating face blurring tools so that when you are taking a photo of a crowd, for example, you can blur out their faces before you put it online.

Speaker 20 Basically, like limiting the supply of faces, right?

Speaker 20 Because that's what's been so surprising to me every time Clearview, I've had a Clearview search done on me.

Speaker 20 It's not just finding kind of the photos I've put out there, it's me at a concert, you know, in the background of someone else's photo.

Speaker 20 It's kind of tracking where I've been as other people have taken photos of it. So, I guess that's one way they're addressing it, right? The supply of faces.
I do think that the

Speaker 20 most effective route is going to be regulations, a policy framework. And Europe is, as they often are, on privacy laws, they are ahead of us.

Speaker 20 They said that what Clearview AI did was illegal, that you can't collect this sensitive information about people, put them in a database like this without their consent.

Speaker 20 They essentially kicked Clearview out of their country. In the U.S., we have that law I was talking about earlier, BIPA in Illinois.

Speaker 20 It says that you can't use people's face prints or voice prints or fingerprints without their consent or face a very hefty fine.

Speaker 20 And because of that law, Madison Square Garden, which is keeping lawyers out of their New York venues like MSG and Beacon Theater and Radio City Music Hall,

Speaker 20 they have a theater in Chicago and they are not using facial recognition technology to keep lawyers out there because it would violate this law. So these laws can work.

Speaker 20 We've regulated technology in the past that we found kind of frightening or taboo, and I think we can do it again.

Speaker 17 Scott?

Speaker 13 So there's obvious applications here at travel, hospitality, retail.

Speaker 13 What other industries do you think are going to be able to substantially lower their costs or add, you know, reduce consumer friction here?

Speaker 13 What do you think is the next industry to adopt facial recognition?

Speaker 20 Well, we're seeing it adopted a lot in kind of amusement settings.

Speaker 20 So I'm seeing a lot of sports stadiums that are starting to use facial recognition technology sometimes for kind of picking up your food.

Speaker 20 Like you can order it on an app and then you just show up and it scanned your face and you get it.

Speaker 20 So I think that that is something that we'll see a lot. I think real estate buildings are interested in this as like, you know, an access tool.

Speaker 20 My kind of fear with this is that we see the kind of tracking we already have online, right?

Speaker 20 Like every time you go to a website, they're trying to figure out who you are, you know, what you've bought in the past, how much you have to spend.

Speaker 20 There's kind of all of this background tracking tracking that's happening all the time as we move through the internet.

Speaker 20 And what facial recognition technology could mean is taking all that and moving it into the real world, that you walk into a store and they have these cookies that are attached to your face.

Speaker 20 You know, knowing what your leanings are, what your purchase history is, how much you have to spend. And I think that kind of idea of everything knowable about

Speaker 20 us on the internet kind of

Speaker 20 trailing us in the real world,

Speaker 20 I think it would be pretty chilling.

Speaker 20 And if it's just, I mean, I know you guys are thinking about the company uses of it, but I always think about how people will use this, the kind of little brother aspect of this.

Speaker 20 And if everyone has a Clearview AI type app on their phone, what that means for day-to-day privacy and the kind of trolling that happens online, just seeing that all of a sudden leap into the real world where they see you buy something sensitive at the pharmacy and take your picture and they're like, look who just bought, you know, hemorrhoid cream and they're tweeting it out.

Speaker 20 Or you're having a sensitive conversation over dinner, assuming that you're anonymous, that the people around you don't know who you are, won't understand the context of your conversation.

Speaker 20 And then they take a photo of you and now they know.

Speaker 20 Just all these ways in which we kind of assume that we're anonymous as we move through the world, that kind of everyday comfort we have could just disappear.

Speaker 17 Remember that it was the Sun Microsystems. There is no privacy, get used to it.
Remember that was Scott McNeely, right? Something like that. Yeah.

Speaker 17 What advice do you have for people trying to protect their own privacy? What can they do?

Speaker 20 Yeah. I mean, with facial recognition technologies specifically,

Speaker 20 the vendors have made sure that this works even with mask on. I mean, you can wear a ski mask.
That would be a very effective way of making sure you weren't tracked this way.

Speaker 17 Great. Then you get arrested, but go ahead.

Speaker 20 I think, you know, thinking more deliberatively about

Speaker 20 your image on the public internet, there are more and more benefits, I think, to posting privately and restricting,

Speaker 20 yeah, just your image being available.

Speaker 20 So, thinking about that, I've asked a couple of law firms, you know, knowing what you know now of what MSG did, this kind of retaliation against lawyers, are you thinking about taking your photos off your websites so that they can't make this kind of list?

Speaker 20 Because that's how MSG made it. They scraped the law firm websites' bio pages.
So, yeah, so just thinking about what you're putting out there.

Speaker 20 If you are so lucky to live in a state that has privacy laws that that allow you to access what a company has on you and delete it, you can actually go to, if you live in California or Colorado or Connecticut or Virginia, they have laws right now that say that you can get yourself deleted from companies' databases.

Speaker 20 So if you don't like this, you can go to Clearview AI or to

Speaker 20 some of the other public face search engines that are out there and say, delete me from your database.

Speaker 17 But hard to do. You have to be proactive, in other words.

Speaker 20 You have to be proactive. And California actually requires companies to say how many of these requests they get.

Speaker 20 And I looked at Clearview AI's website, and over the last two years, they've had something like 800 requests for deletions in California. California's population is what, 34 million people.

Speaker 17 Something like that. Yeah.
So not many people just are getting, it's convenience. What you have to do is not have a face, is really what I think people know.
Scott, last question.

Speaker 13 What would you tell parents to do regarding pictures of their kids posted on social? Don't do it.

Speaker 20 I mean, I think unless there is some real benefit to posting publicly, you should be doing it privately. You should have a private account, you know, limited to family and friends.

Speaker 20 I did kind of get, I went to PimEyes, which is one of these public face search engines, and I asked about this, the kind of search of kids' faces, and they've actually decided to block.

Speaker 20 results for minors' faces. So that was a company kind of making a proactive move.
But yeah, generally I say don't do it.

Speaker 20 And when you get those waivers, you know, from the school or the daycare that says, is it okay if we post your kid online? Say no. Feel free to say no.

Speaker 20 I really don't see the benefits in that kind of public posting in the world that we're in today.

Speaker 17 Yep. They can, and they can get them anyway.
As you say, from other places, if they're walking down the street, unfortunately, they can see them everywhere you go.

Speaker 17 Yeah, we are in a, this is going to change, and especially as the technology becomes better and better. And it has gotten better and better.

Speaker 17 It is not just face, although your book is called that. It's face, voice, palm, everything, your signature, how you walk, right?

Speaker 17 There's all kinds of things being, you know, your gait can be different than someone else's, which is interesting.

Speaker 20 Yeah, this is what's so hard about privacy is that we kind of put this information out there or share information about ourselves in one context and it gets used in a way we don't expect. And with

Speaker 20 the technology getting better all the time, it's hard to predict how the information you make available could come back to haunt you.

Speaker 20 And I just don't think that most of us who are putting our face online you know over the last two decades on the internet anticipated that something like this would come along that would reorganize the internet and make it searchable by face it's just hard to i don't know i think they knew cash you think well you knew care you're you're not

Speaker 17 no i have a section in my book where i i they get mad at me the google founders because i said they couldn't control all of search and i said well i'm worried about a dangerous person running it right i call them thugs i said they're ultimately they're thugs and i said i'm not worried about you.

Speaker 17 I'm worried about someone else. Like, but they weren't even thinking of it.
You're right. They were never thinking of it.

Speaker 17 It was really, it's a real, it's a real blind spot, so to speak, on this particular pot book. Anyway, it's a really important book.

Speaker 17 Cash is an amazing reporter, does some of the top stuff around these issues. And again, the book is called Your Face Belongs to Us: A Secretive Startup's Quest to End Privacy.

Speaker 17 As we know it, they will probably be successful. In any case, thank you so much, Cash.

Speaker 20 Thank you, Kara. Thank you, Scott.

Speaker 13 Thank you.

Speaker 17 One more quick break. We'll be back for wins and fails.

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Speaker 17 Okay, Scott, wins and fails. May I go first? May I go first? Something I wish was going to be a win, but I suspect it's not going to be.
The Marvels is opening up.

Speaker 17 A lot of the MCU movies are showing signs of fatigue.

Speaker 17 And this one, of course, is women, and so they'll probably have even more fatigue. It's with Brie Larson, who I adore.
As you know, I loved her in Lessons in Chemistry. I think she's great.

Speaker 17 But it's pacing, it's not pacing well in terms of sales. Another theory, far more likely, is no one really asked for Captain Marvel's sequel.

Speaker 17 While the film grossed over a billion dollars when it released in 2019, it has almost no cultural footprint and passionate goodwill in 2023.

Speaker 17 It served his purpose of connecting one Avengers movie to another and set up Larson's superhero as an effective, if dull, a hero who takes out the best villain Marvel has yet produced, Thanos, but none of the many trailers who convinced audiences.

Speaker 17 I'm sorry, I'm going to go see it, but

Speaker 17 it's both a win for me because I love Brie Larson and the whole gang that's doing it, but probably a fail at the box office.

Speaker 17 The superhero movies look like maybe they've got the stuffing knocked out on them a little bit.

Speaker 13 All right. Any fails?

Speaker 17 That is a fail. I wish it wasn't.
I wish it wasn't because I bet it's a great movie. I'm excited to see it.

Speaker 17 You know, Fail is continuing the creepiness of Mike Johnson. It continues.
He had an app to monitor his porn use with his son. The anti-gay stuff is getting more and more clear what he was doing.

Speaker 17 The bank account.

Speaker 17 Just a strange man. Just a strange fella.
Anyway.

Speaker 13 Got it.

Speaker 13 Okay, so my win is Kayla Williams. He's the quarterback for the USC Trojans, who I hate as a Bruin, but

Speaker 13 he's probably going to be number one one draft pick. And most recently this weekend, it made news everywhere.

Speaker 13 He kind of lost the game and he ran over. It was sort of inconsolable and jumped into the fans where he embraced his mother and began to sob like while he was still in uniform.

Speaker 13 And I thought that was such a seminal moment in what needs to happen among young men who unfortunately let masculinity get in the way of expressing their emotions. 77% of suicides now are men.

Speaker 13 It used to be three to one. It's now going edging towards four to one.

Speaker 13 And a big problem is that men have this vision of masculinity, meaning that when you are struggling, you keep it to yourself.

Speaker 13 And so, for example, of all the addictions, the one that has the greatest

Speaker 13 incidence of suicide is actually gambling. Because if you have an addiction to alcohol or opiates or meth or whatever it might be, people notice it and they move in.

Speaker 13 And with gambling, you can get in really deep and no one even knows and people feel as if there's no way out.

Speaker 13 And the reason I bring that up is the key to getting better is a practice of expressing your emotions.

Speaker 13 And this kid, this kid is really like, he said to the entire world, I'm going to be the Heisman Trophy winner. I'm an amazing fucking athlete.
I define masculinity.

Speaker 13 And when I am really sad, I go and embrace my mother and I don't give a flying fuck who is watching.

Speaker 13 And I think that, I think that that one moment, that unscripted moment, literally advanced masculinity and mental health among young men like light years.

Speaker 13 Because it's a huge problem among men that they don't want to express their hurt and their emotions for fear that they'll be seen as being less manly. I just thought

Speaker 13 this was such a powerful moment. In addition to it being a very raw and moving moment,

Speaker 13 I think it'll have a real positive impact. I like that.

Speaker 13 Anyway, so my win is Caleb Williams.

Speaker 13 My fail is I think at some point the university leadership across America's universities is going to realize that there's a difference between free speech and hate speech and start kicking out students.

Speaker 13 I almost got kicked out of UCLA several times, mostly because I would get below a 2.0 GPA more than two quarters in a row.

Speaker 13 There was a window called...

Speaker 17 I'm not surprised, but go ahead.

Speaker 13 There was a window called the emergency loan window. With your student ID, you could get 50 bucks, no questions asked, but you had to pay it back within seven days.

Speaker 13 I went past seven days once and I got a notice saying you've been kicked out of UCLA. So we

Speaker 13 kick people out of UCLA all the time. We kick people out of universities all the time.
But when people show up to

Speaker 13 a university and say things, there's free speech. If you want to march with a flag, if you want to say down with Israel, if you want to be a professor that says that

Speaker 13 she was affirmed by certain actions of the Palestinians, I actually think that's, I don't say that's fine. I disagree with it.

Speaker 13 But if I went to a, if I went to the campus at NYU and said burn the gays or gas or lynch the blacks, I would be out the next day, and I should be out the next day.

Speaker 13 And everybody goes to this bullshit First Amendment, and we have a second amendment, but if you show up with an AR-15 to campus, you are kicked out of school.

Speaker 13 And there's one thing to have free speech. There's another thing to be saying things like gas the Jews, burn the Jews.

Speaker 13 And then I get an email from my department head saying microaggressions will not be tolerated.

Speaker 13 And my attitude is: where between micro and aggression is students actually engaging in this type of hateful speech? And there is a difference between free speech and a difference between hate speech.

Speaker 13 And it is time for our university leadership to step up and say, if you say burn anybody, if you say do anything that invokes violence against any group, we are kicking your ass out of school.

Speaker 13 It is time.

Speaker 13 Yeah,

Speaker 17 you know, Bill Ackman also had a very, I usually think he sometimes goes off, but he had a very good letter to Harvard about this. Yeah, it's, it's,

Speaker 17 you know, it's interesting because a lot of the people who are sort of like let everybody say what they want crowd is now on the other side of that, which is interesting because it's complex, as you know.

Speaker 17 I do tend to agree with you here. It really has gone too far.
Some of it is just casual cruelty, such as pulling down the hostage pictures. I find that I don't even understand what child does that.

Speaker 17 If a child of mine did that with a disrespect for other people's opinions or putting up their stuff, I would be furious.

Speaker 17 So, and this stuff is, it's gone past the point of

Speaker 17 tolerance. I would agree with you.

Speaker 13 I would agree.

Speaker 17 I would agree. Anyway, it's a sad time.
Hopefully, people will get back to a more central place where they treat each other with respect that everybody deserves.

Speaker 17 But who knows, probably not right now, the way we're headed in this country sometimes.

Speaker 17 That's how a lot of people feel. Anyway, we want to hear from you.
Send us your questions about business tech or whatever's on your mind.

Speaker 17 Go to nymag.com slash pivot to submit a question for the show or call 855-51PIVOT. And please feel free to disagree with us.
I suspect a lot of people will disagree with us on this issue for sure.

Speaker 17 Anyway, Scott, that's the show. We'll be back on Friday for more.
Can you read us out?

Speaker 13 Today's show was produced by Lara Naiman, Zoe Marcus, and Travis Larchuk. Ernie Undertott engineered this episode.
Thanks also to Drew Burroughs, Mil Severo, and Gattie McMahon.

Speaker 13 Make sure you subscribe to the show wherever you listen to podcasts. Thank you for listening to Pivot from New York Magazine and Vox Media.

Speaker 13 We'll be back later this week for another breakdown of all things tech and business. Young men, displaying your emotions is a feature, not a bug.
That is part of what it means to be a man.

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