The crypto-surge, Bernie Madoff's dark legacy, and a question on Russia slowing Twitter

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Hi, everyone.

This is Pivot from the Vox Media Podcast Network.

I'm Kara Swisher.

And I am the first person in the history of our economy to figure out a way to lose money on crypto.

Okay.

We're going to get into that in a second because we have a whole section on Coinbase, et cetera.

Okay.

Oh, we do.

Yes, we do.

I know.

You're not paying attention.

Just, you're the pretty one.

I've decided to dub you the pretty one.

I'm glad you realized that.

Yeah.

I'm the smart.

Well, you're not that pretty, but you're the pretty one in this pair.

I'm the smart one.

You're the pretty one.

Oh, I'm.

You're like Daphne if it was, uh, if it was Scooby-Doo.

I'll take it.

Yeah.

I'll take it.

That's Daphne.

That's right.

That's Daphne.

You know, we are the new, that new gang with our, with Leah, our great Dan.

Oh, that's right.

With our new gang.

Oh, that's nice.

That's good.

All right.

We got a lot to talk about.

There's a lot of news.

The news keeps it coming.

The news keeps it coming.

It won't stop.

It won't stop.

It will not stop.

But, you know, the thing one this week was the Johnson ⁇ Johnson COVID-19 vaccine being halted by federal health officials as they investigate six U.S.

cases of severe type of blood clot associated with the shot.

I'm not going to have you be Dr.

Galloway here because I think a lot of doctors think it's a good idea.

A lot of others, like Nate Silver, are

punditing about medicine.

I'm not going to do that.

But what do you think this does for vaccine hesitancy and the brand, brand vaccine, Scott?

Well, look, it hurts, but

that's why

any

media is attracted towards movement and violence and differentiation.

And the reality is these vaccines have been such an enormous win so far.

Do you remember all the bullshit amongst,

for lack of a better term, blessed people who are economically secure and who are healthy,

who were saying this kind of this narcissist playbook of, I'm going to wait.

I'm just going to wait a little bit and see what happens and how it all plays out.

I know what I know, but okay, yeah.

Okay.

Of the blessed people.

I heard that a lot.

And that has been suppressed and gone away because,

you know, my sense is

these vaccines are arguably, if you actually believe in data, arguably the most successful vaccines or the safest vaccines in the history of vaccines.

And then we have the

JNJ.

COVID, which is a one-shot and easier to manage.

So it is being targeted at places that have less capacity.

My understanding is it's somewhere between one and a half a million and one in a million that have had this reaction.

Yeah.

And someone pointed out that when a woman takes responsibility for birth control,

which it so is on the woman, there's like a one in 10,000 chance

of a blood clot.

So it's like

we're comfortable with one in 10,000 women getting a blood clot when they take responsibility

about women being

unacceptable, according to Fox News.

You know, what's really interesting is that it's um you're gonna have with any kind of treatment you're gonna have problems that's it that's just the way it's gonna grow and and what's interesting is though i talked about it yesterday on twitter live and it was astonishing to me that so many anti-vaxxers were on my were on my live twitter and i was like you need to shut up because i'm not going to respond to you in any way you awful people i just was sort of like it was any any any tiny little thing in here they they went for so that's my only words because there was also a poll that came out uh that was, again, fascinating: that half of Republicans aren't going to take the vaccine.

Half of them.

Well, I think the Democrats are at 60-some percent taking the vaccine, and Republicans are in 26, 28%.

And half of Republicans are not taking it.

Well, vaccine hesitancy has basically been a function of three groups, and that is young people, people of color, and then hardcore Republicans.

And we've made a lot of progress on the first two.

It's the third that is standing hard.

And look,

life is, any action you take is a series of trade-offs.

Leaving the house involves risks, but the trade-off is you get to go out to Publix or you get to go to Chipotle, right?

Which is wonderful, which is wonderful.

Or like the Turks and Caicos.

But go ahead.

There you go.

You're shoving my white privilege in my face.

You can get a blood clot at Turks and Caicos anyway.

In fact, you can

get a buddy Mary, too.

But go ahead.

Seriously.

From the whatever it is.

I don't even know what the local cuisine is there.

I guess I'll find out.

The local cuisine for the dog in Turks and Caicos is going to be zacapa and edibles.

The local cuisine for the chicken.

That's what's for dinner tonight.

Still, a year and a half later.

That's the breakfast of champions.

The breakfast of champion dogs.

Anyways.

But look, life is a series.

Every decision you make is a trade-off.

And you know what the best trade in the world is?

Getting a fucking vaccine.

Yeah.

If you do anything.

So

you're not worried about these things, this one, you know, this stumble here, which is a stumble, and then these polls showing this.

Because you're not going to get to herd immunity unless these Republicans take the damn thing.

Well, I go into the ocean, even though there's a chance because it's wonderful.

And I try and take my boys into the ocean because my friend Bob Perkowitz.

outlined a study to me that arguably the best thing you can do for kids who are struggling with anxiety or depression, which is happening to supposedly about 40% of Americans now in COVID versus 11%.

It's literally quadrupled.

Supposedly, one of the most fantastic therapies for children, it sounds obvious, but it's a genius.

And I've started doing it with my boys, is get them in nature.

And it sounds obvious, but a lot of us don't do it with video games, with over-programming.

It's easy to find a kid that other than his kind of programmed 58-minute soccer practice isn't spending a ton of time in nature.

And I'm telling you, Kara, I throw my boys, and I realize I'm blessed to be able to do this.

I throw my boys in the ocean and everything changes.

And guess what?

There are sharks where I am.

There is lightning where I am.

And it is a great trade.

And when you take a vaccine,

I'm pretty sure that the odds are somewhere around not getting struck by lightning, not getting struck, not getting eaten by a shark, but getting struck by lightning while you're getting eaten by a shark.

I mean, this is just the best trade, I believe,

in modern medicine.

We got to figure out a way.

We should go on tour to get Republicans to take vaccines, you and I.

Convince them.

Well, you know what you got to do?

You got to, and I'm disappointed.

You got to make it, you got to appeal to their macho

and you got to appeal to their patriotism as opposed to all this bullshit where it's people seen as liberal talking about it.

And well, they're trying.

The government has a whole initiative,

HHS.

What do you think?

As usual, I'm pontificating.

I think it's almost impossible to convince them.

They're so stuck in this situation right now.

I don't know what's going to move them out of this, but anything at all will cause them to say this.

Like, it doesn't matter if it's vaccines or whatever.

And there was just that appalling video of a huge white guy who was in the army apparently yelling at a very, very much less

a small guy, small

African-American man and in a neighborhood in South Carolina that was just astonishing.

And he literally thought he, he, it was just, I was like, hello, not taking the vaccine guy.

You know what I mean?

Like, it was sort of like, and he, this guy was just walking in his neighborhood and he's like, you're in the wrong neighborhood.

Keep moving.

This, it was crazy.

It was this crazy.

I just don't know how you changed their minds.

I honestly don't.

I don't know.

Yeah, but I don't, I think some people, you you know, change their mind.

I think what's required is leadership in the army.

In the army, they should just say you're taking it.

In the armed services, they do that all the time.

We're going into a war theater where there's a threat of gas, gas attacks.

I don't know what to do.

So you were taking a vaccine or not.

But I'm just saying that was the attitude.

That was the attitude.

I don't know what to do to convince these people, except they will, they are hurting other people, and it's the patriotic thing to do.

Calling on their better angels or data does not work for certain cohorts.

working on that.

But here's what's so dangerous about an economy booming for the shareholder class during a crisis like that, this, and that is if Walmart stock had gone down 70%,

if someone walked into Walmart, if their stock had gone down 70% instead of up 70%,

when someone walked into a Walmart

without a mask saying it was their liberty, they would have tased their ass if their stock had dropped 70%.

They'd be like, yeah, you and your fucking liberties, okay, welcome to my taser of liberty.

Yeah.

But because it's, well, our stock is up.

Yeah.

We don't want to offend anybody.

Yeah.

We haven't really paid any price.

Although businesses are putting it out there.

They are on lots of things.

But yeah, you're right.

I think

I want to say this right now.

I run a small business.

I have another small business, and we're going to have vaccination protocols.

If you, for whatever reason, don't want to take a vaccine, No problem.

You can't come into the office.

And if you can't come into the office, quite frankly, you're not going to have the same economic opportunities that the people who can come into the office have.

I respect your decision.

Yeah.

I get to make these decisions for the health and safety of your coworkers.

Yeah, it's going to be interesting.

I've been talking to a lot of CEOs and they're very nervous to say so.

They're very nervous.

It's just, but you're right.

I would do the same thing.

I'd be like, sorry.

Lemonade's done it.

Yep.

I know.

There's a lot of smaller, there's a lot of companies who are signing up.

We should have Lemonade guy on and talk.

He's fantastic.

Last thing, the iconic West Coast theaters, Arclight Cinemas and Pacific Theaters shut down several of their locations last week,

just when things were looking up for movie theaters.

And actually, I was all excited about F9, the F9 trailer, the Fast and Furious 9 came out, which looked fantastic.

You and I are going together.

This is interesting.

These theaters, this is that beautiful Cinodome in Los Angeles and others.

So these are these big, iconic theaters that are going.

It's just continuing, correct?

Is that where we feel?

This is where we are.

Cineramidome, I have a real emotional.

I saw

when my mom and dad got divorced, my dad didn't know what to do with me.

All of a sudden, he's like, okay, I actually have to pay attention to this kid every other weekend.

Oh, I love a good Scott sad divorced kid story.

Go ahead.

You know,

it was rattling at the time, but having a father who was uninvolved in my life, all of a sudden forced to spend every other weekend with me and think, okay, and plan and think, what are we going to do together?

It was wonderful for him, I think.

It was wonderful for our relationship.

And one of the things we used to do is we'd go see movies.

And at the Cinerama Dome, I saw 2001 A Space Odyssey.

I saw Rollerball with James Kahn on a remote.

Do you remember that?

I saw Logan's Run.

We used to go.

Run.

Oh, wait.

And it was this amazing theater.

And it's definitely Death of an Icon.

The next will be Man's Groom and Chinese Theater, but they rent that out for events.

But look, movie theaters, their time has come and gone.

And

there'll still be some of them, but it's just,

I got to think we're going to lose.

It'd be interesting to look at movie theaters versus malls it feels kind of very same

feels same you're right it does feel like malls you know i covered malls for years and they were they had a they had a moment they malls had a moment and then they didn't they just didn't and now i can't even go into one if you've ever and god the pandemic must have just played i worked at a movie theater in high school i worked at the united artists theater in westwood yeah that's it and that particular one the arc light there are beautiful beautiful theaters i've had i have had great dates there i've had great times at those theaters it's really interesting but i i again haven't gone in 100 years and i didn't before the pandemic.

And I certainly would wait.

Although F9 got me thinking, I got to get back in the theater because I want to see F9 in the theater.

They've done nine of those?

They've done nine.

They're so good, every one of them.

Really?

Thank you.

Yes.

Say nothing against Vin Diesel unless you want to have a fist fight right now.

I've got absolutely no impression of Vin.

I don't know him at all.

He's the best.

Yeah.

Okay.

Let's just not, let's not just, this is an area of hope.

Bring him on the show.

I will.

I will.

I got to get.

You know, Vin Diesel is one of the top.

I remember years ago at Facebook, they said Vin Diesel was their most popular person, which was fascinating.

Anyway, all right, let's get into the big story breakdown.

This is an area that you are completely wanting to talk about.

I know.

It's Coinbase's IPO, the startup that allows people to buy and sell cryptocurrencies.

It's been around a long time.

I remember meeting them 109 years ago.

Its shares began trading at $381 each.

That's up 52% from a reference price of $250.

It settled back.

It It went up to above $400, then settled back in the 320s.

I don't know where it is right now, but it gives the company a valuation of $99.6 billion based on all outstanding shares, made a billionaire of a couple people, including one guy who came from Google just 18 months ago.

That rivals the size of Airbnb and Facebook.

Meanwhile, Bitcoin continued to climb to a record $64,000 a piece.

Ether traded as high as

2,000.

And Dogecoin, let me just add, cryptocurrency created as a joke was up more than 40

although coinbase does not trade it there was a lot of doge action in the twitter yesterday

uh so like i said i think i i i called my broker and i said all right i'm interested in a direct listing i don't really understand them but i want to see if there's a pop here and i think coinbase has a lot of heat around it so i said let's buy some on the open

And we bought some at $381.

It popped for a hot minute or $383, I think.

It popped for a hot minute to $410, like right out of the gates.

And then over the course of the rest of the trading day, it literally just waddled down to like 310, and then it closed at 3:30.

And I got out, I just thought, Jesus, this looks like a cliff.

As usual, I don't understand what I'm doing.

And I sold, and I think I'm the first person in the history, at least the first person to admit it in history that has lost money on cryptocurrency.

It's my first crypto investment.

I'm a no-coiner.

So you're in and out, essentially.

And that's pretty much.

You know, I like to buy high and sell low.

But look,

beyond my poor investing,

the learning here, the interesting thing here is a direct listing versus a traditional IPO.

And it's all about the story.

And what is total bullshit is the number that you just pointed out at $250.

That is a meaningless number.

What?

For reference price, what they wanted to do, and it said this on Yahoo, and I still go to Yahoo Finance because I'm still on AOL and I still have an oyster phone.

Clam phone.

A clam phone.

Oh, sorry.

I don't even get it right.

Yeah.

I need to go on CompuServe and figure out if I can get a better deal.

All right.

Anyways, anyways,

they come out with this bullshit number that's meaningless.

So

they can say the IPO is up 50%.

No, it wasn't, Kira.

This is a broken IPO.

The first trade,

the reference price, what the fuck does that mean?

No one got to buy it at $250.

It wasn't.

Yesterday, Coinbase, you're a broken IPO.

Because the first trade, the first time anyone,

institutions or any retail investor, it closed down, I don't know, what is that?

15 or 20%, it closed down 15 or 20%.

This is a broken IPO.

And this bullshit PR spin, let's say the reference price was too, who got to buy it at $2.50 yesterday?

No one.

So even with a traditional IPO, where all the venture capitalists whine that they aren't getting the POP,

you could argue that the institutional clients that do get the POP represent retail investors.

Because if Ottawa teachers, the biggest fund of funds in Canada, buys stock in an IPO and it goes up 40%,

a third-grade teacher sees her net worth go up because she is part of that institutional.

This is basically.

The price was 381.

The price was 381.

Very right.

And now it's down to 334.

The venture capitalists got to create heat and got to throw this thing on the market.

They got to fling unicorn feces at tourists to the unicorn zoo and then pretend that this this was a successful IPO.

It was successful for the private market investors, but the public market investors, this is a broken IPO.

And to a certain extent, you can say, all right, they shouldn't have to give away free money to the clients at Goldman, but you could argue the clients at Goldman are more retail investors did well on the Airbnb IPO.

Direct listings basically garner more and more of

the gains to the private market investors, whereas the traditional IPO.

because they're not rich enough.

That's right.

Whereas the Goldman, the traditional IPO gets the pop goes to institutional investors, which you could argue is still the same old white guys, but there is some, they do represent, if you will,

some retail investors through pension funds, what have you.

So look, this is a full story.

Yeah, that 250 thing was, I was like, I thought it's whatever it is on direct listings.

I thought it's whatever it is.

We need to do better.

We're proud of the progress we've made.

It's something that was invented by the Coinbase PR people, whom I guess came from Facebook.

That is a lie.

There is no $250 number.

All right, but let's get to the point of it.

It's still worth $66.4 million.

I agree with you.

I agree with you.

It was a, it was kind of a

IPO.

Now, that doesn't mean it won't zoom up and down again, but

it's right now at 338.

It's sort of sticking there.

It's up a little bit today, but not.

It keeps going down and up and down and up.

It's one of these people don't know what to do stocks.

Yeah, it's 337, which is down from 381, which is, that's that.

That's the way it is.

And so Bitcoin's surging, and Dogecoin, for whatever reason, is surging.

Maybe Elon went Doge or something like that.

So, where do we go?

What do we do from here?

Because, because obviously, this is a very important feature.

It kind of reminds me a lot of all the heat around Substack and

Clubhouse.

There's something there, but what is the reaction of the banks?

What do they do here?

And what's next?

There's just no getting around it.

When When you have a company that is worth

as much as traditional banks that started just a few years ago, I think they have to pay attention.

And

the reason why I am, I think, a little bit bearish on Coinbase is that if you think about

one, I'm angry.

Two, but you know what?

I played with my doc for five minutes and I'm over it.

I'm over it.

All right.

But if you think about the whole point of crypto is could be kind of distilled down to one word, and that's dispersion or decentralization, and then there's a certain amount of efficiency.

The trading fees on Coinbase are a multiple higher than in a place like, I think it's Uniswap.

There's other more efficient ways to trade crypto.

It's kind of what I'll call the retail AOL on-ramp to the internet of crypto.

It has been around a while.

I remember meeting with them a long time ago, but go ahead.

But I think the analogy is that they're right now the AOL.

They're the on-ramp into crypto.

They're retail-friendly.

They have a nice interface.

The question is:

will eventually the decentralization where you're trying to cut out middlemen and trying to decentralize just going to go to more efficient means of trading?

So, like

the BNB coin, or there's just other trading platforms that are more, what I'll call more efficient and don't charge nearly the fees.

So, is this sustainable?

But there's just no getting around it.

When you have a company come out at the value of, you know, Wells Fargo,

This is an enormously successful company.

Ratio of 204.8 right now.

Well, at least they have E, right?

Most, a lot of companies, for the first time since, guess what, 1999, about two-thirds of the companies going public don't have an E.

They don't have earnings.

So the fact that it even has a multiple of earnings is testament to the management team in the business.

The question is,

is this something that's going to turn into, I don't know, the ultimate exchange that just pulls away a network effects?

Or is this AOL where it's just kind of a...

That is a fair point.

Yeah.

What do you think?

What are your thoughts on Coinbase?

I, you know, I think it's a feature.

For some reason, I have a feeling everyone's going to copy it and it has no moats here.

I don't see the moat.

I don't think it's like...

Robin Hood seems to have like a fan base.

I don't think this does.

You know what I mean?

Like I would just take whatever one's the cheapest, like, and the most secure.

I guess those are the two things that would be.

And the one I could figure out how to trade it into real money.

i know everybody thinks it's real money you know what i mean trade it back and forth and then that's easiest to use it was the only one around for a while so being early the pioneers is always great and at the same time the planes are covered with the bodies of pioneers that's what i say anyway we'll see what happens i'm sorry you lost money scott but you know you know that's okay short-term tax ride okay you know yeah yeah as you know i still can't find my bitcoin but i will someday and then i'm going to take you out to where that's right we're going to fast and furious nine

that's right we're going to buy vin Diesel.

We're going to buy Vin Diesel.

Anyway, all right, Scott, there's time for a quick break.

We'll be right back and look back on the late Bernie Madoff and a listener mail question.

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Okay, Scott, we're back.

Bertie Madoff, the Ponzi schemer behind the massive financial fraud scam, died in prison this week.

As a reminder, Madoff admitted to swindling thousands of clients out of billions of dollars at investments over decades, and many movies ensued.

More than $13 billion of an estimated $17.7 billion has been recovered from investors, which is a lot put into Madoff's business at the time Madoff's arrest.

Fake account statements were telling clients they had holdings worth $60 billion.

It was really quite something.

It was one of those great.

Wall Street moments, a terrible Wall Street moment, not a great one, but famous one.

Let's take a look back on this story and dissect what it means for today's financial environment.

Guess who we got to do it?

Kicking it off, we have Ultra MVP friend of Pivot, Andrew Ross-Sorkin, who interviewed Madoff in 2016.

Hey, Karen Scott, it's Andrew Ross-Sorkin here.

You know, back in 2016, I went down to North Carolina and visited Bernie Madoff in prison.

I did it twice, and I spoke to him for probably more than six hours collectively.

At the time, I was trying to persuade him to allow me to do the first televised interview with him in prison.

He agreed, but unfortunately, I couldn't get the prison to allow me to bring cameras inside.

And I'll always regret that the public never had an opportunity to see him answer for his conduct.

Not because the answers were revelatory unto themselves, but because the public would have seen what deception looks like.

And hopefully, by seeing that deception,

maybe more skeptical about the people who oversee their finances and make people more frankly attentive about the way they manage their own money.

Bernie Manoff could be remarkably convincing.

And he told lots of stories.

But, you know, every time I left that prison and stood in the parking lot, I would second-guess it all.

And even to this day, I'm not sure which parts were truth and which parts were fiction.

Oh, Sorkin.

Thanks, Sorkin, for that little insight.

Him and Bernie Madoff, can you imagine that?

Don't you want to French kiss Andrew Ross Sorkin right now?

Could he be any sexier?

Jeez, can you kiss a voice?

Can you kiss a voice?

My God, you don't want to French kiss Andrew Ross Soros.

You know, he recorded that like seven times.

He's like, how can I be sexier?

How can I be sexy?

In any case, let's get to the content of what he's saying.

It's Canadian.

That guy's the sexiest Canadian since Wayne Gretzky, Janet Gretzky.

Is that her name?

Janet Ganzier.

Wayne's wife.

Janet Jones.

That's not Canadian.

But any case.

Oh, my God.

Let me just, okay, when you're done comparing him to Janet Gretzky.

What's her name?

Janet Gretzky?

Yes, she was an actress for a short time.

She was in The Flamingo Kid, probably one of Matt Dillon's best films.

It is.

It's a great film.

It's actually a great film.

It's a really cool film.

Listen, it's a cute film.

Listen, adorable film.

I bet you felt like him at the time working

at the club.

Yeah, minus the good looks and talent.

Exactly.

That's my life.

All right, listen to me.

Anyways, get, that wasn't Matt Damon.

That was, what's his name?

Matt Dylan?

No, Matt Dylan.

Matt Dylan.

Matt Dylan was Matt Damon.

Anyway.

All right.

I want you to talk about the content of Bernie Madoff.

You worked on Wall Street.

You understand this kind of thing.

What is the legacy of Bernie Madoff and what do you think of what

your McDreamy said?

Look, the thing that I read about Bernie Madoff, and it,

you know, it takes me to a different place, not about Wall Street, but what about, you know, what it means to be a man and a father and failing as a person.

And that is...

That's right, his son comes.

I think you incrementally make rationalizations.

First off, the storytelling was amazing here.

He said, he didn't say, I can get you great returns.

He said, I can get you modest returns, but they're safer with this thing called a paired trade.

And that was, if you're looking for 20 or 30%, go to those venture capitalists.

I just do 4% to 6% a year.

It sounded very adult and very measured.

And the sexiest word in the English language was leveraged by Bernie Madoff.

And that word is no.

When anyone called him to invest, he would say, sorry, I don't have the capacity.

And that would make them totally horny to get in.

And then the next time he called and said, I have a small allocation, they would want to put in two or three X.

And here's the thing: incrementally, incrementally, he led not only him,

but I think a lot about masculinity and manhood and what it means to be a man.

I think what it means to be a man is to demonstrate strength and skills and intellect and kindness such that you can gather enough resources to provide economic security to protect others, specifically protect your children.

And this is where Bernie Madoff ended up.

He ended up waking up in a cold cell, putting his feet on a cold ground, on the the cold ground after, after one of his sons had killed himself because of his lies, and the second son died of cancer.

I mean, this guy, this guy, for the people who lost money from him and damned him to hell, they got their wish.

This guy went to hell.

And his wife is now living in Palm Beach, broke after having lost her two sons.

I mean,

this is a failure and a lesson on a cosmic level.

It really is.

There's been several movies done on the whole thing, which have been quite good, actually.

But what do you, from a Wall Street point of view, you know, why, what does it say?

And what does it say now?

This could happen again and again, I would assume.

This is a conversation.

This is going to happen again and again.

Yeah.

I'm not sure it isn't happening now.

I don't, I mean, the weird thing is, the really weird thing here is

Bernie Madoff, in terms of talking it up and then paying off your investors, granted, it's illegal, but I always think about, I was thinking about Elizabeth Holmes.

What if Elizabeth Holmes had raised another billion dollars and they found that Edison machine, whatever it was called, started working?

Would she still be on the cover of Forbes?

I do think when in frothy times, the line between vision and fraud get increasingly narrow

because we'll put up, you know, the kind of, I don't even call it fake it till you make it.

It's like fraud it till you'll make it.

Yeah.

And you can see

a lot of these things.

And my, my fraternity brother, a kid named Brad Ruderman, nice kid, started a family office, hedge fund, got in over his head, didn't want to disclose his losses because he knew the moment he disclosed the losses, he would, the AU, AUM would go to zero.

So you know what he did?

He started playing poker.

And he actually ended up blowing up Molly's game.

He ended up, he's like, okay, I'm going to go start playing high-stakes poker and, so I can lie about my returns.

And that ended up blowing up that whole thing.

So look, it's it's a really, it's a great lesson

for young people, especially, and again, I know I'm sounding sexist here.

I think men are more prone to these incremental bad decisions that put other people at risk.

I think.

I don't know if it's because they feel more pressure to be economic.

There's lots of studies of that.

We have governments and, you know, the Iceland situation.

That was one of the things they looked at.

So was the dudes, the whales that put J.P.

Morgan at risk with a $2 billion trade.

It's never a woman on the distress credit desk.

Yeah.

It's a strange.

And I don't know if it's because women have been precluded from operating.

One of the things about Bernie Maynoff, it was an amazing story.

Like, right, look, it was this sort of like long con that this guy put on forever.

It was someone who was so well regarded and had so many people sort of saying trust in Bernie.

And it was, it was this idea,

you know, the sort of high-level people who thought they were safe, that were not safe.

And the kind of devastation he wrought on people's lives was just, you know, it went on and on.

I remember a story at the time, you know, the newspapers are covering it rather heavily, and it was story after story after story.

And then his own personal story of his kids was even, you know, it just was sort of the icing on a fetid cake.

It was, it was devastating.

The whole thing was devastating.

And I think that

I would have loved to have seen an interview with him, with, with, with, uh, with Andrew, because you want to see what it looks like.

Who would do that?

Who would do that?

Like, and keep doing it and, and, and be, you know, so consistent about that that's what i i think would be like i i just when people do things like this i'm always like what wasn't there a moment and it didn't seem like it was with madoff during the trial or things like that and i just would love to have seen that interview i'm sorry uh andrew rostorkin didn't get to uh to tape it um but uh but another one of these one of these stories we always say oh it'll never happen again i think it does happen all the time and i think it is amazing that we may still have situations in place where lots of companies can do stuff like this continuing with hedge funds and other things.

Aaron Ross Powell, Jr.: The story that's, if there's a silver lining here, I forget who is the administrator charged with collecting funds, but he did a great job.

And that is he went back to all the people who had taken out profits and said, you registered these profits under the auspices of fraud.

You need to give every penny back.

And he actually, I believe he ended up recovering most or all

of the funds.

Yeah.

Yeah.

Yeah.

And of this, you know, my sense is, my sense is, obviously, you got to figure out how did the virus of Bernie Madoff ever happen, but the immunities that kicked in, I think

the algebra of deterrence is the most powerful cop in history.

And that is nobody is going to send money to the sailing coach at Stanford in exchange for getting their son in right now.

Because Anne Becky doing a purpock and Bernie Madoff dying knowing that his two sons are...

He's 82.

He's not very old either.

He's not very old.

You know, that is fantastic.

That is fantastic algebra of deterrence.

Well, he deserved every bit of pain as far as I can tell.

I'm not afraid of that.

Losing your two sons, I don't know.

That's that's I think what he did was wrong.

I think he should have died in prison, but I think he paid.

He did it to himself.

He made every choice he made.

Every choice he made.

I agree.

He endured what no parent,

that's your worst nightmare for every parent.

Well, I agree, but I think he did it.

So we're going to have different opinions about that.

I would never do such a thing to my children.

Anyway, I said she said before she does something terrible.

Anyway,

all right.

Buy Dogecoin.

Buy Dogecoin.

Anyway, Anyway, let's move on to listener mail.

Let's roll the tape.

You've got, you've got.

I can't believe I'm going to be a mailman.

You, do you, you've got mail.

Hey, Karen Scott.

My name is Claire.

I'm 22 years old from San Francisco.

My question today is about Russia's decision to slow down Twitter for the next month.

They've said it's because of the platform's issues regarding drug use and child pornography, but I'm wondering why they wouldn't just ban the platform altogether.

Just slowing it down members of my generation effectively won't use it because our attention spans are too short?

And do we buy that they're actually doing it because of the platform's content issues or because so many people are posting pro-Navalny anti-Putin messages?

Would love to hear your opinion about this.

Thanks both.

Huge fans of the show.

Oh, that's a fascinating question from Claire.

Claire, thank you so much.

You know, they're slowing it down because of Navalny.

That's it.

You know, I don't think they care about their people or how they're doing child pornography, et cetera, or they'd shut it down.

You're right.

That's what they would do.

And I don't think it's particularly effective to do so.

It is an interesting idea to slow it down, but I think more we have to get to the cause, the root causes of the problem.

I doubt the U.S.

would ever do something similar with Twitter at all.

I don't know, Scott, you're a shareholder.

What do you think?

Well, I'm going to go out on a limb here and posit that perhaps the Russian government isn't being totally forthcoming.

And if I had to guess what's going on here, it's that they're scientists and they have very smart.

They have a very smart intelligence unit, the GRU, has figured out a way to garner information and is basically engaging in espionage.

And

part of that ability to hack into people's user profiles or anticipate actions on Twitter and

inform their security apparatus is to slow down.

They're getting access.

My guess is they're getting access to what information they're trying to garner on Twitter.

But before the public has a chance to trade or the media in that information, they get to slow it down, alter it, or have some sort of intelligence edge.

But the notion that they're doing this for, I mean, that's just ridiculous.

This is some very smart people in the GRU who said, we can anticipate actions, we can anticipate media stories, we can spin shit before it gets spun for us on Twitter, and we'll pretend to be open, we'll pretend to be engaged in Western commerce, and we have this, the bottom line is the GRU, the Mossad, the Chinese security apparatus,

could in any of their wildest dreams invented a espionage vehicle called Twitter and Facebook.

And this is the GRU trying to figure out a way to better leverage

that security apparatus internally or domestically.

And the balances stuff.

I think they're doing it.

I think that's right.

It's just a way to do it without doing it.

I haven't thought of that.

I think that's

so is it going to affect Twitter?

Do you think this will happen with countries if it works all over the world, presumably?

They already do.

Mostly people turn it off.

Most countries block it or turn it off in some way instead of something like this, the slowdown.

I don't think I can't imagine.

I would bet they're getting less than 1% of their revenue out of Russia.

So I don't think

it's interesting just theoretically and what happens to the service and

how they're

exploiting social media.

And social media executives have not shown a concern for how their platforms are exploited by bad actors to the detriment of the government and the nation that's given them so much that they don't you know they don't really appreciate in my opinion um

anyway so i don't i don't think this is a i don't i don't think this is a big deal uh twitter's bigger issue is that square continues to innovate like a like a bat out of innovation hell did you just see cash app is like on fire and yet yep twitter continues to put push out stuff at about one ninth the velocity of square which is exactly correlated to the fact that jack dorsey's wealth is 9x at Square versus it.

Literally, the product development and innovation at Twitter is one-ninth what it is at Square.

They threw a little bit of a jump there.

You think they're still like slow as Molasses?

Well,

it's gone from awful to bad, so I'll give them that.

But look, seriously, look at the product innovation at the place where all of Dorsey's wealth is.

It's staggering.

The Cash App, they've come in and

they've kicked Venmo's ass.

Yeah.

And they're doing Cash app for business.

They're doing, they're trading now in crypto.

Yeah.

Anyways,

I got a point here, but I don't, I think back to Russia and Twitter.

This is a GRU move.

And,

you know, what we do is...

Information-based, information-need-based is that they're doing it.

Claire, they're not doing it to help people.

Let's just be clear.

Russia does nothing to help people.

We love to do things to hurt people.

In any case, it's a really interesting story.

And thank you for the great question.

All right, Scott, one more quick break.

We'll be back for predictions.

Charlie Sheen is an icon of decadence.

I lit the fuse and my life turns into everything it wasn't supposed to be.

He's going the distance.

He was the highest paid TV star of all time.

When it started to change, it was quick.

He kept saying, no, no, no, I'm in the hospital now, but next week I'll be ready for the show.

Now, Charlie's sober.

He's going to tell you the truth.

How do I present this with any class?

I think we're past that, Charlie.

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Okay, Scott, you had some great predictions last week about LG handset.

I really like that.

What's next?

What's your next prediction?

Well, I talked about this earlier in the week.

I think the best value, there's so few stocks I like.

I think everything's overvalued.

We made this.

I think

Alibaba is a fantastic stock right now.

Now that the overhang of this mount, so I think it's trading like 220 or 240.

I think it's 300 by the end of the year.

I think on a risk-adjusted basis, it's a fantastic,

a fantastic stock to own.

Compass, we predicted this.

Compass is now a broken IPO, and I think it's in the single digits.

Explain that.

Explain that.

Well, Compass is a broken IPO.

Well, it's sort of,

you know, it's like your.

your bar, Yabab Mitzvah.

Everybody remembers you reading from the Torah and how you did.

And I don't know how I got there with this.

But an IPO is basically a moment.

week, but go ahead.

Yeah, but

you only go public once.

And basically, it's a moment where the whole world establishes your momentum.

And they say, okay,

that's why the pop is so important because it's like, oh, clearly there's something here.

Clearly, this is a stock that keeps going up.

And everybody says, and the direction feeds on itself.

And that's what I just find so disingenuous about this notion that

Coinbase wasn't a broken IPO.

Compass is now a broken IPO.

It's below its offer price.

And this is after.

The thing about Compass, this is after they cut the valuation by a third and the number of shares available by 50%.

So I think this thing has all the makings of a trade where the corners are collapsing.

And I think it's about $18.

$18.

Yep.

At $20, it's at $18.

I think it's single digits.

And I think on a risk-adjusted basis, the best internet or the best stock buy in the world right now

is

Alibaba.

Yeah.

Yeah.

It started, Compass started at 20, I guess, 20.

That's right.

And now it's at 18.

And that was, what did you say?

Well, I have another prediction.

Can I make it all right?

Go ahead, Get.

Go for it.

So I had a conversation.

I'm so blessed.

I have these

really smart dudes and a few women, including yourself in my life, that call me and say, you're all fucked up.

You don't know what you're talking about.

No problem.

I get very upset.

And then I learned from it and I realized I'm blessed.

I have these people in my life.

And one of those people is Roger McName.

And I did a post on crypto and he called me and he said, you're missing the bigger threat here.

And I said, what do you mean?

He decided like this, Scott.

Scott, you're missing.

He talks slow.

He's so good.

He goes, he goes, first off, I read your post and it's brilliant.

Only you

can bring these points down to, he always starts with like a real, like a wonderful combo.

He's a very charming guy.

Yeah.

Anyways, and he said, look, and he really kind of blew my mind with this.

He said, we need to have a talk about the security threat or the threat to our sovereignty that is cryptocurrencies.

And that is maybe we want weaker sovereigns.

But if you think about a nation, and I've been thinking about this a lot, it's really two things.

It's the ability to tax and it's the ability to impose violence or specifically take aircraft carrier forces and

deploy force in favor of your interests, which has led to a nation that has 5% of the population and 30% of our resources.

Our contracts are enforced.

People are scared to try and interrupt our supply chains.

Our ability to leverage or deploy violence is an enormous asset for us, and it's funded by our ability to tax our citizens.

And if you don't pay your taxes, again, more violence, a man with a gun shows up and puts you in a cage.

And without the ability to do those two things,

you really don't have a nation.

You have a protocol or a platform to use a crypto term.

And crypto is probably the greatest threat to those two sovereign assets.

Yes.

Because if you look at ransomware, if you look at the ability to launder money, if you look at the ability to perhaps engage in tax evasion, if you look at the potential risk to the markets with extreme volatility or something that ends up being the mother, like something that makes Bernie Madoff look kind of cute and cuddly,

you know, it all kind of roads lead to crypto.

And the problem is, just as 92% of our elected representatives who are supposed to regulate big tech don't have a background in technology or engineering, I've always said my thought here is I understand crypto better than 99% of the population, and I do not understand crypto.

So I can't even imagine how few of our elected representatives and our regulators actually understand

the risks to be addressed.

Janet Yellen's got to get on this.

So that's my prediction.

My prediction is: I think that there's not, not only is there a new sheriff in town with Biden, there's about, there's a new sheriff that has 40 additional IQ points, and that is the people that Biden is surrounding himself with, just in general,

are just much smarter.

And I think that Janet Yellen and some of the people in the administration are going to recognize that this is an existential threat.

And we're going to see some

decisions here because what you have with China, what you have with India, especially China, especially with Russia,

they have a vested interest in ensuring or seeing if cryptocurrency can unseat the dollar as a default currency.

Peter Thiel, he said it the other night, you remember in the Nixon speech?

There's some truth to it.

But anyways, we're about to see, you know, everyone's talking about, oh, the SEC says we're going to look at SPACs.

Jesus Christ, look at crypto, for God's sake.

And by the way, they might decide this is a healthy, robust component of capitalism.

We're going to let a thousand flowers bloom.

But I want, I'd like to see really smart people.

Indeed.

It's really

regulation.

But maybe at the speed that they regulated techs, which is tech, which is to say never, which is kind of interesting.

We'll see where they get.

You know, oddly enough, Roger McMeet literally just texted me and said, oh my God, the umbrellas, you and Claire are a continuing source of joy to me.

I posted a picture of me and Claire with these umbrellas.

He's so good, isn't he?

I know.

He just was, it just was funny.

Roger McClure.

And you know what you got with Roger?

He might be wrong, but his heart's in the right place.

He's just literally doing all of this.

He's attacked a lot by the Silicon Valley people because they see him as a, they try to make fun of him.

Yeah.

They do.

But they try to make him look like a boob and stuff like that.

It's not fair.

Yeah, but

he's as close to an academic or the spirit of academia, which is to pursue the truth regardless of who it offends.

He's not doing this for money.

He's not talking his book.

He's doing it because he thinks this is an existential threat to our.

He's found Jesus, as they say.

Yeah.

I'm a big fan of Roger.

Anyway, Roger,

he's a big fan of yours.

He agrees with you.

Anyway, all right, Scott, that's all the time we have.

Don't forget, if you have a story in the news, if you want to hear our opinion or submit your questions at do it at nymag.com slash pivot.

Scott, can you read us out and then take off on your fabulous vacation?

Today's show was produced by Rebecca Sinanis and Andrew Todd Engineer.

This episode, thanks also to Hannah Rosen and Drew Burroughs.

Make sure you subscribe to the show on Apple Podcasts.

Or if you're an Android user, check us out on Spotify or wherever you listen to podcasts.

If you like the show, please recommend it to a friend.

Thanks for listening to Pivot from Vox Media.

We'll be back next week for another breakdown of all things tech and business.

The Swisher family invades the beach of Galloway.

Next week, I'm coming down.

Come on down.

I'm coming down.

That's right.

You better lock up your

liquor, as I like to say.

I'm going to look through all your things.

There better not be a weird room.

Someone actually said that to me.

They said, I wonder if Scott has a weird room at his

weird room, it is called my house.

I know, but they said, like, a special room, like a panic room.

I know, I think it was more like a dungeon.

It's fairly boring at the Galloway episode.

I feel like it was a dungeon.

I was like, I don't think he has a dungeon.

I literally wasn't someone that is a credible person asked me this.

I will be looking for that dungeon, John.

A lot of WandaVision and playing with a puppy.

That's all right.

Okay, we're very excited to come.

We'll see you next week.

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