Peloton “sells happiness” and bedbugs take over Twitter

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Hi, everyone.

This is Pivot from the Vox Media Podcast Network.

I'm Kara Swisher.

And this is Scott Galloway.

Scott, are you still on vacation?

Well, defined.

Define vacation.

I'm still in Nantucket with the sharks.

Seriously.

What?

Define.

Define vacation.

A beachfront property looking out at the sand.

I don't know.

I just saw a lot of your videos, and there seemed to be a beachy kind of feel to them this week.

You were going on about various things from somewhere that looked lovely.

Yeah,

it's been wonderful.

More importantly, what did you think of the videos?

Were they insightful and hard hitting?

I was delighted with them.

I can't believe I was watching them when I have other things to do, but there I was.

Look at them.

There you go.

She's watching.

I like your hot takes.

She's stopping.

Hot takes.

Hot takes.

Hot takes.

So

are you going back to school?

Isn't school starting?

My kids are already in orientation or whatever.

My one kid went to a senior orientation.

My youngest kid went to ninth grade.

Aren't you in school?

Aren't you a professor of some sort?

Supposedly.

Some sort is the operative term there.

What are you teaching this semester?

What's your next book, in other words?

Yeah, no,

I'm not teaching until the spring.

The key is scarcity.

I used to be known as a good professor, and I was teaching five courses a year.

And then I said, no, I'm going down to one.

Now everyone thinks I'm great because I'm never around.

What's the topic?

What is the topic?

There you go.

Scott 101, The Big Dog 101.

What is it?

What is the topic this year?

no i always teach i always teach the same uh course brand strategy but it's a going back to school starting it is a really hopeful and wonderful time it's like this ant army of ants descending upon soho moving towards the campuses and it's all these young people and it's really it's actually a really nice time of the year it feels really i would say other than commencement if it's like the most optimistic time of the year it's like i wake up and i think wow i don't hate today as much as i usually hate it and it's because there's all these young people who seem seem happy it's a nice time of year lot of luxury house in Nantucket.

Listen to me.

Do you have a theme for the year?

Do you have any thematic ideas that you're going to push upon these young, impressionable minds that you will warp?

My theme is get through the fucking year.

What do you mean, theme?

My theme.

I don't theme years.

What do you mean?

You said the algebra of happiness came from an idea.

Do you have a theme?

Is there a thematic issue for the students of NYU this year?

No, I mean,

my big theme right now is that I think of it in business terms.

I think we're in this, and it's, I think we're in this monopoly era, And I think it's changed, it's kind of changed the way people approach business or how business is being, or how you're creating shareholder value.

And that is typically my course brand strategy, you talk about the ultimate algorithm for creating shareholder value is these intangible associations, traditional brand management, and we've really moved to this monopoly era, where it's all about trying to establish yourself as a leader, get access to cheap capital, and then build with that cheap capital, build against those promises, those crazy promises you've made and hope that you can get there without coming across as a Theranos when you get too far out over your skis like Theranos or WeWork and basically pull away and make the jump to light speed and no one can catch you.

That's kind of the strategy now in business.

So to a certain extent, in my department, the marketing department, in the marketing department of every top 20 business school, we're basically, the curriculum, quite frankly, is training kids to go get a job at Heinz and be laid off.

two years later.

So I'm trying to move to a curriculum of, all right, what does it mean to establish establish leadership in an information network economy, establish a great story, a great product, network effects, flywheel effects, moats, get access to cheap capital, and then, you know, pull away with moats that are really expensive, whether it's a fulfillment network or incredible engineering.

But

things have changed so dramatically, Kara.

And I think as a, I know that you probably got more than you wanted here.

I think as business schools.

I got you to actually think on your long, long, long summer vacation.

I actually got you to actually clarify.

Which I resent.

What are they paying for you there at NYU?

I'm soon to be paying a college tuition, so I'd like to know what I'm down for.

So I'll tell you what I started at.

The first class I taught, I was an adjunct professor, and I made $12,000 17 years ago, and I make more than that now.

All right, no, no, I want to know what the students pay.

I don't care what you make.

You are clearly comfortable, my friend.

Yeah, the students.

Like a medillion dollars.

I think the tuition is somewhere between, let me think, 10, 20, 30, 7 million a year is our tuition now.

Yeah, 7.1 million.

No, it's about, I think it's about $62,000 or $68,000.

But in the reality is at NYU, it's still a great buy because we've decided in our society that the only people who get to innovate or capture shareholder value are monopolies, Amazon, Apple, Facebook, and Google.

And the only people that get to go to work for monopolies are people from top 30 schools.

And the only people that

get to go to top 30 schools are children of rich kids who, there's more from the top 1% of of these schools than the bottom 60%.

And the only people who get to go to the top 30 schools are the children of rich people.

So basically what we've decided in the United States is that all the spoils are reserved for the children of rich kids who get to work.

What a surprise, Huey Long.

So this is a big shockeroo to the rest of the United States.

Listen to me.

Speaking of which, we have a lot of things.

We got so much news.

Besides, I'm clarifying you.

You're coming back after Labor Day.

I'm clarifying you for the students.

I'm improving your ability to speak to them.

I think you're welcome.

It's a pretty little bar.

It's a pretty little bar.

Listen, let's start by talking about Peloton, which Scott has talked a lot about online already.

So tell me about it.

You had some thoughts on this.

Yeah.

I have quit Soul Cycle, as you know, because I have ethics and you do not.

But go ahead, move along.

No shit.

So what, well, let me ask you first.

What are you doing to get

your fix of endorphins now that you're not doing Soul Cycle?

Do you...

I'm walking everywhere.

Well, that's not going to do it.

Do you have a Peloton?

Yes, I do.

That was left to me by the people whose house I bought.

They just didn't want to move it.

And so they just left the Peloton.

My real estate agent got it for me

in the deal.

And

I have not put it together yet.

It's still just dead there sitting there.

But I'm going to now, when I get back to Washington, D.C., that's where it is.

I'm going to

somehow sign up.

I like it.

It looks great.

It looks like it's a great, it looks, people love it who use it.

So basically, you spent $2 million for a Peloton bike and got a house with your purchase.

I

spend that much for a house.

Yes, essentially, yes, yes, I will cop to that.

It's not that much.

But nonetheless, I have one.

I haven't used it.

I've heard people who use it love it.

But of course, it's a thing for rich people, right?

So talk to me about this.

You had a lot of thoughts on the Peloton S1 because, again, they said in John Foley's public letter, he told investors, on a most basic level, Peloton sells.

Delivers happiness.

Yeah, 100%.

So, okay, so what was one thing that was interesting about this is that you and I both received emails and Twitter saying, oh, I can't wait for the takedown of Peloton by Karen Scott.

Everyone was expecting us to come out and do a full, you know, go

gangster on these guys the same way we did on WeWork.

I actually, so I have a Peloton.

That's because of the stupid happiness thing.

That's why.

Yeah, that's why.

But go ahead.

So Peloton, first off, Peloton is not WeWork.

Peloton,

I have a Peloton.

I pay the 20 bucks a month.

I mostly pay the 20 bucks a month to sit and stare at a screen that has a really hot person bouncing up and down yelling at me, which is it's sort of like BDSM of the information age, then I'll pay 20 bucks a month for that.

But

this is not, this is actually a pretty good business.

Now, let's let's talk about here's why break it down, Scott

Galloway, on your Peloton as you peddle away.

Everybody is trying to be a SaaS business because recurring revenues that you can predict is just a better business that gets incorporated to someone's kind of workflow or daily use or becomes addictive.

And Peloton actually does have a lot of the dynamics of a software as a service firm in that it it has, first off, the hardware which constructs about or comprises about 80% of its revenue.

It's a $2,000 piece of equipment and it has 45% margins, which is really impressive when you figure that the highest margin tech hardware company traditionally has been Apple with 30 points of gross margin.

So the fact they're able to get 45 points of gross margin is really impressive in and among itself.

In addition, the subscription side of the business, the 20 to 45 bucks a month you pay, comprises.

For people who don't know it, you get on the bike, there's a screen, and then there's lessons.

Scott had a shorthand version of that, but they have all kinds of lessons with their top

instructors, and you can pick and choose them.

You can do them live, you can do all kinds of things.

You can do them taped, live, things like that.

Different lengths, different intensity.

They evaluate you, rank you.

And that business, that subscription business, which really is similar to a cable company or a software company, is 20% of revenue and it's grown from 15% of revenue.

And then within that 20% of revenue,

about I think somewhere between 10 and 20% of that is the app that's unbundled from the physical bike.

So that's people who want to be on a fitness program and run through the park or ride their own bike.

And if you look at the churn rates on these things, it's really low.

It's 0.7% per month.

That's probably somewhere between 80% and 85% a month.

And the software companies or the SaaS companies that trade at a ridiculous multiple, typically the two key metrics you want to look at at a SaaS company are what's called logo renewal, and that is in this case, what percentage of your members renew every year.

And then dollar renewal.

And And that is of the, say, 80% or 85% of people or companies that renew for the second year, that software program.

What do they spend relative to the year before?

And ideally, you want to see revenue growth of like 110 or 120%.

So if you can get 80 plus and 110 plus, meaning that like AWS, it's got like 90 or 95% renewal.

Right.

And it's got 120 or 130%

dollar renewal.

And people spend more.

Now, I don't know.

I couldn't find the dollar renewal here, but it looks like the logo renewal or the remember renewal has strong SaaS-like metrics.

So, what do you have?

You have really high margins on a tech hardware product.

You have a recurring revenue stream that is growing at a good clip and has SaaS-like renewal rates.

And you have you have a billion dollars, $910 or $920 million in revenues, up 100%.

You have explosive growth.

It's losing somewhere between $200 and $300 million, but a lot of that,

they got criticized for the margins on their subscription service is only about 44, 45 points, which isn't software-like gross margins, but a lot of those costs are things like studios, talent, licensing for the music.

And you would think as they get to scale that those margins would go up.

And they're adding adjacent businesses.

That's what, you know, there's these things like tonal and mirror and all these things, which is at-home gyms, which are these things that have little things.

It's sort of the old, like, remember Boflex and stuff like that, but it's like a fancier version of Jupiter.

Chuck Norris.

Chuck Norris and Chrissy Brinkley.

Yeah.

Yeah.

And so these things you put I'm going to try one because I'm trying all different things in the wake of my soul cycle debacle.

And it's interesting because they are also moving not just Peloton is not just bicycle, it's all kinds of exercise things.

And so it's an interesting question.

It's interesting what it does to exercise places like the equinoxes of the world.

People don't want to go to them.

So it's definitely, there are definitely innovative ways to exercise now that are very different, that don't require, sort of like having a trainer without having a trainer.

And at the same time, there's all these businesses like Rumble,

Orange Theory, all kinds.

There's all kinds of those things that are happening, which are soul cycle-like.

So

I agree.

I think it's an interesting business.

We talked to them years ago because it's a question of whether they can make it broader than just a bunch of rich people.

I mean, the funniest,

I retweeted this whole thing on...

Peloton.

It was a joke.

It was a Twitter meme that was hysterical about placing your Pelotons different places.

And it was, you know, because making fun of their marketing, which is all about aspirational rich people.

And it was really funny.

It was like, I have this down in the basement with my nanny who I make do this while she's doing the laundry.

And it was super funny.

So that's the question.

Do lots of people use these things.

Yeah, it's, but it's gotten to that point.

When you were talking about class earlier, one of the things, the first slide in each of my classes, I don't think you can build a company that can be worth tens of billions of dollars without specifically knowing which instinct you're tapping into.

And in some, God love consumption, consumption, procreation, Google, Facebook, Amazon, and Apple respectively.

And I think Peloton really does tap into this instinct that as a species, we're happiest when we are in motion and surrounded by others.

And that is, you know, when you and I are in our 80s, supposedly the things we'll remember most is when we are walking around roam with our kids or when we were playing, you know, playing a sport or when you're in the company of others and enduring some sort of physical exertion, that is supposedly when we're happiest because it goes back to the days of hunting and gathering, et cetera.

But this kind of artisanal, if you will, sweating, where you're in a community of like-minded people.

Well, think about it.

On my block,

we have a soul cycle.

We have an orange theory.

We have a CrossFit.

We have a yoga studio.

I think there's a rumble opening up.

All these things are 30 to 40 bucks per session, which is ridiculous when you think about it.

But it's people saying, okay, I'm going to spend less money on stuff and I want to go be around other people and be in motion with them and it's going to make me happy.

So it's definitely a huge industry.

The fact that this notion, this connected fitness with software like metrics, now their last round valuation, let's talk, all of this has to be said against valuation.

Their last round private valuation, four and a half, I think four and a half billion dollars.

So it's already trading at five times revenues, which for my mind is pretty rich.

They're talking about going out at an eight or nine billion dollar

valuation, so ten times revenues.

So this guy,

Josh, got, I think I'm blanking on his last name,

downtown Josh Brown, who is his

Twitter name, and I think he's fantastic.

He's on CNBC and

he works with Barry Ritholtz.

But this guy is such a clear blue flame thinker around stocks.

He basically said in response to my hot take on Peloton that it's a great company.

I'm just not sure it's a great stock.

And I think he's exactly right.

If you were to look at this thing, you would say, great company, great SaaS like metrics.

Is it worth $9 billion?

Probably not.

But it'll probably be one of the taller midgets of the unicorn class when it gets out.

And that it is, it'll probably go sideways, maybe go down a bit, but it won't collapse like what I think we have in store for us with Lyft and Uber and if WeWork ever gets out.

Yeah, exactly.

But so we're surprising people.

I think it's an interesting business.

We think it's just a question of valuation, but it's definitely an interesting business and it's the leader in that area.

So, and others have tried to catch it and have, you know, there's a lot of competitors in the space, but they've certainly got a, they've got a great name and a great product.

So we'll see.

We'll see about that.

So let's move on to Facebook and Casey Newton's really interesting story about what it's doing to compete again with Snapchat.

The Instagram is making an app called Threads.

And of course, guess what?

It's like what things that you do on Snapchat.

It's meant to promote constant intimate sharing between users and their closest friends.

It invite users to automatically share their location speed and battery life with friends.

It's typical, everything else.

It's essentially Snapchat.

It's essentially like the private Snapchat.

And so during our prediction show last December, we talked about what we thought would come up in 2019.

One of my predictions was that social media becomes more about interacting with close friends than sharing publicly.

Yeah, so we've talked about this, that Snap is, you know, Facebook has an R ⁇ D department.

It's called Snap.

And now it's TikTok.

And TikTok, what would be interesting is can TikTok do to Facebook

what Facebook did, has done to everybody else?

And TikTok.

That's a really good point.

And now we have, I don't know but Facebook has also responded and launched a kind of a copycat product called lasso I think is what it's called

but that looks very tick-tock-ish so it'll be interesting to see if the giant you know if the elephant is able to dance and continue to innovate or copy others people other people's products now what Facebook has been able to do that most big companies aren't able to do is they're willing to cannibalize themselves and that is they'll say I don't care if it cannibalizes our legacy business if this is where the puck is headed this is what we're going to do and we're going to go we're going to go hard at it but to to snap's credit and you predicted this and I didn't snap has carved out a nice niche for themselves they have and has been able to kind of has been able has been able to hold on yeah I might go see Evan Spagel this next week in Los the Herring event in Los Angeles it's kind of interesting but it's true he's I mean I always feel like if you have a creative product if you it works you know what I mean you can't just get by on copying everybody's stuff people are on to you and again I have to say even though my teens the teens complain about snapchat he's cons they're consistently using it, which is interesting.

To me, it's really interesting.

I don't think he's going to stop using it when he goes to college either.

So it's an interesting,

we'll see.

I think creativity does win out.

Last thing is, which it feels like 100 years ago, and maybe you've been on

this island that you've been on, but Trump claiming that he could use emergency powers to force private companies to relocate out of China.

He said he has no current plans to do so, but he hereby orders people if he needs to.

This is obviously ridiculous.

But I'm just curious how you think.

You know, Apple has this event coming up and

they're going to be, you know, who's going to pay for the terrorists?

Tim Cook went and met with President Trump, had dinner with him.

Where do you see this playing out, this sort of after the G7,

where it's going to go, this tariff war?

China's just said it doesn't want escalation.

It seems to change every week.

So I heard, and I've done some investigative journalism here, I heard in that meeting between Tim Cook and Donald Trump that based on the recent run-up in Apple's stock, that Tim Cook has decided to, he has offered to buy America from the Russians to Trump.

He said, we'll take back America from the Russians.

Anyways, that's my bad geopolitical joke.

So look, look,

the Chinese have already won.

They've won.

They think in 2030.

So explain for the people.

Well, look,

this was absolutely for the right reasons.

This is one of the few things, in my opinion, the president has got right, and that is the IP theft, the currency manipulation.

There's been all sorts of

the trade between the U.S.

and China has been disproportionately or asymmetrically advantaged to the Chinese versus Americans.

And we have done, a lot of it's our own fault.

We've decided, okay, there's winners and losers, and the winners tend to be people, information age workers, and the winners in every category.

And we didn't take the time to say, well, how do we reinvest some of those proceeds in the struggling middle class?

So some of it's our fault.

But they do benefit more from this than us.

A trade war was absolutely overdue.

But instead of going at this war with a full heft of our partners, it's like the analogy I would use: we went to war with Saddam Hussein when he went into Kuwait, but we went in with

a ton of nations and allies and intelligence.

But we've gone into this economic war.

The two biggest powers in the world, 40% of the global economy is China and the U.S.

So, but we went into this war sloppily.

We went in without allies.

We went in with no strategy.

We went in.

I don't think he can even tell you.

The administration hasn't even really been able to articulate what exactly it is that we want.

So we're angry, and we can highlight why.

I think he's just saying unfair.

That's really good.

Okay, but what exactly do you want?

And then

again, we think in election cycles, and he's constantly backpedaling.

The stock market goes down.

Someone tells him that if you go into a recession before the election, you're going to lose the election.

So then he goes, well, I'm second,

I'm having second thoughts about it.

Or maybe, or me and she, they reached out and we're going to get a deal done.

And then the Chinese go, well, actually, no, we didn't reach out.

I mean, they have one.

They have figured out we have this guy.

The election is coming up.

She gets elected every 30 or 40 years until he dies.

You know, it's sort of like, you know, it's a crime.

And Trump could be gone.

And Trump could be gone.

This is the first time I've thought Trump really could be gone by these.

Like, I know everyone's like those anyway.

I'm like, is he?

Like, the levels on women, the levels on, it's hard.

Everyone's tired of the show, and this is a show.

Yeah, the Dear Leader Show.

And I think the Chinese have already won.

They've said, you know what?

We can easily go.

We can easily go in another 18 months.

And just

at this point, it's like the Chinese are like, you know, you started this.

Let's play it out, boss.

Let's play it out.

I think you're 100% right.

It still will have impact on companies like Apple and others, who's going to eat the tariffs.

It could cost, there are some reports today that it could cost from, you know, 500 million to 5 billion to their...

They have this money, but will they eat the costs and not raise the prices?

We'll see.

We'll see how long it goes.

But you're right.

Everyone's playing the waiting game with Trump.

And I think it's the same thing with the media.

He attacked, attacked, he's been crazy attacking this week.

It's like even more so around

nuking hurricanes, around every story he's questioned, even though it seems like they're really good stories.

And I do, the same thing I feel with the media.

We're just going to wait him out, like just keep banging away, which is really, it'll be an interesting to see who I think he'll end up losing this particular fight because even Fox has started to turn on him a little bit.

Anyway, it'll be interesting.

But we're going to take a quick break when we get back.

We have wins and fails, predictions, and now we have listener mail.

We got a ton of listener mail.

People love us.

And of course, we're going to talk about bed bugs when we get back.

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We're here with Scott Galloway and Kara Switcher Scott.

What are your wins and fails?

Well, my fail is I just think this probably the most poorly orchestrated war, economic war, in the history of the U.S.

that could potentially take the global economy, I don't want to say take the global economy down, but if you think about what we were just talking about, companies, the U.S.

can hurt China pretty badly.

And now it's ego, and he's talking about raising the tariffs.

They can endure that, but as they become less confident, they'll purchase less machinery or manufacturing equipment from Germany.

Germany, in turn, will feel less confident.

They will invest less.

I mean, you just see this ripple effect.

We are in a global economy, but you're talking about a poorly orchestrated war with no benefit to us where everyone's going to lose.

This is just a bad war, and it's been poorly executed.

And what's interesting is it could have been a good war in the sense that the Europeans were ready to line up behind us on this one.

They agreed.

They kind of quietly nodded their head that this war was overdue.

It's just been so

poorly executed.

So my lose is what could have been, I don't want to call it a righteous war, but the right war with good outcomes

Had we realized that strength and power is in the agency of others, and instead we have just botched this.

I mean, we've just botched it.

I think the Chinese have already won.

So that's my lose.

What's your lose?

That's your lose.

There's a couple of them.

There's a wide range of things this week.

I do think

this thing, I work for the, listen, I work for the New York Times.

I write a column for them.

But a lot of these letters people are writing, angry, you know,

two people at the Times wrote letters

to people over fights on Twitter.

And one was Brett Stevens, the other was an editor, a political editor.

I'm totally blanking on his name.

And I think it's really important during this time of real attacks on the press not to act like jerks, like to readers, that call us names.

In one case,

this professor, who's a very clever professor, he wrote a great piece in Esquire actually, at George Washington University, tweeted a joke, and it got no retweets.

It got very small lights.

And Brett Stevens, who works in the same section, I do, the opinion section,

he's an employee of the Times.

I'm not,

emailed his boss to complain in him and didn't want to be called a bed bug.

And I just, I just, I just cringe when reporters do stuff like this.

Like, right?

I get called names all the time.

I don't know if you do.

I don't care.

Like, fine.

Like, in fact, someone didn't like an interview I did with Huawei, which I, and I agreed with him in some place.

I didn't think it was really as successful as it could have been.

And I just, like, engaged and agreed.

Like, I didn't, like, write a letter because he was kind of strafing me it was he just i deserved it and it was just it's just it's really important for the press right now to like do their job and do a great job at journalism or and have any opinion you want but when you have an opinion or write something that people you know that are this controversial expect to be called names and don't like

just

It's just, we have to take it.

We have to, unfortunately, especially because the president is doing this.

And it's offensive and damaging what the president is doing against fake news almost constantly.

And we just can't play into it by

just take it.

Like if someone calls you a bed bug, just live with it.

Like live with the friggin' bed bugs.

Yeah, I thought I thought of you when I saw this because I like Brett Stevens.

I think some of the more thoughtful people at the New York Times, one of the reasons I love the New York Times and it separates them

from I don't know news corps is they actually try to bring on thoughtful people from to provide the other side.

I don't know if you've ever seen whenever like when the view decides to bring on a conservative, it brings on Megan McCain.

And I don't, they're like just just to kind of make their point.

And whenever Fox brings on a liberal, they bring on the most unattractive, unlikable liberal in the world to, again, make their point.

Right, that's you, right?

That's me.

Bingo, we have a bingo.

The big dog is in the house.

Anyways, so anything.

Hello.

I'm here to get beaten.

I'm here to head Handy on the back of the camera.

I'm making their point.

I am literally making their point.

Anyways, but

they do a good job of bringing on these thoughtful conservatives.

And Brett is very good.

And I thought of you, because occasionally people get in your face.

And what you do is you clap back and and you get in their face and you do get into these kind of these little, what I'll call these little Twitter skirmish border skirmishes.

But what he did, and this has happened to me, and this really pissed me off.

Oh, someone read a letter about you to your provost?

Oh, I think that was.

Do you know how many times

the dean has had headaches over me?

Think about this.

I bet.

And every time, and I'm just

brett, let me tell you what happens.

It's a pain for the dean or the provost.

They don't like it.

And you know what they do?

They say, this is about academic freedom and we're behind you.

And I can't imagine that the provost of George Washington or wherever this professor is didn't have the exact same response.

So just

he invited him to like a moderate, to moderate a panel between the professor and I'd be happy to moderate the thing.

I'd love to do that one in Georgetown, George Washington.

This professor is really funny, too.

And so I just, I agree.

It's like, don't write letters.

Like, you can clap back on Twitter.

You can, you know, especially when you're an opinion columnist, but being perpetually pressed, being perpetually offended when actually real people have problems on Twitter, like are really attacked, like it just,

New York Times columnists or people of privilege should not be,

they can complain, but honestly, it just does, it's just not a good look.

Yeah, but the bottom line is if you don't, if you don't upset people, if occasionally people don't go back in your face as a journalist or an academic, you know what?

You're not doing, you're not saying anything.

So expect a little bit of it.

And there's two ways to go.

I've actually, I used to get back in people's face and you were sort of a role model for me.

And now I I decide that when I get back in their face, I start thinking about it too much, and it weighs on me, and it upsets and impresses me.

Now I just ignore it, I just don't respond.

Do you know I end up being pals with most of those people?

Because I actually am not that mean.

I'm funny, or I sometimes like, it's funny.

I end up like, you know, like my whole Scaramucci thing.

I went after him for a long time.

And then he's not my pal, but you know what I mean?

Like, it was, I tend to use humor a lot more in the thing.

I just think you should expect to be attacked.

Welcome to the kitchen.

Welcome to the kitchen.

Yeah, exactly.

Yeah.

I think no more letter writing, New York Times people, or any reporter, no more letter writing to their bosses.

That's just 100%.

So when, let me talk about it, when it's along the same vein.

Josh, I think his name is Josh Holly, a reporter at the Wall Street Journal, wrote a fantastic article about how the big tech used to be innovators.

Now their primary form of innovation is to exploit people.

And it was really powerful that now the way they're adding shareholder value is, okay, how do we figure out a way to pay 4 million driver partners less than minimum wage and delay and obfuscate obfuscate the actual analysis of their pay.

And some great articles have come out recently saying that now they are actually making less than minimum wage or to have more and more contractors or what have you.

But the new era of innovation is exploitation.

And it's really, it's not only sad, but it's an important, it's an important

point, you know, it's an important topic that needs more discussion and more examination.

You know, I think about, see me thinking about AB MBEV.

There was so much innovation in the drinks category in the 70s and 80s, and and then ABMBEV came in and said, all right, our primary source of innovation is to cut costs.

And now they've kind of cut down to the bone and they need to start innovating again.

And they're coming out with all these great little kind of malt brews and different things.

But we're in this really unfortunate stage with big tech where the primary source of innovation is exploitation.

And it goes back to another key theme, and that is without more journalists.

I'm jumping all over the place.

I apologize.

But I thought one of the biggest stories this week, and it just made me really sad reading about it, was Oklahoma's decision to find Johnson Johnson,

I think it was $550 million, and the fact that Purdue may, in fact, be bankrupted or take themselves into bankruptcy and then come out as an upcorp, and all the proceeds and profits go to the victims of opioids.

And I really wonder if there had been as many journalists in this nation doing long-form journalism as there were 30 years ago,

would we not have recognized the devastation, misery, and just general tragedy, the opioid crisis sooner.

Well, that is what we're doing with the social media, Scott.

I feel like we are ringing the alarms and stuff like that.

I think it's a similar thing.

Or it's not, no, not, it's not as devastating as the opioid crisis, but I'm saying I think journalists did write a lot about it.

I think the question is, people were okay with it.

And it takes a while for people to finally act on these things.

I just, I don't know how.

It seems like every kind of crisis like this, whether it's a water crisis or pollution or whatever,

someone goes too far, just like Trump removing the methane rules today, you know, and then there's going to be cancer and deaths and everything else, and the press will write about it, and then there'll be lawsuits.

It seems like the American way.

Well, it goes to the notion that Americans, because we're in love with the macho, right?

We're Clint Eastwood and General Mattis, who I'm actually interviewing next week, and I do think he's an agreement.

Oh, ask him.

Get him to say Trump's name.

People who don't do allies are bad.

Like, which people?

Which one?

Like, did you notice that book?

He never says Trump's name.

Yeah.

Well,

I don't think I think he's, I think that's the way he, I think that's his punishment.

I think Trump would rather use his name in a negative sense than not use it.

But anyways, there's this macho where we've decided, okay, regulation is wimpy and European.

And the reality is some of the tragedy of the comments has been because we haven't had enough regulation.

That's right.

We haven't had enough scrutiny.

We haven't had enough thoughtful people, elected officials, saying, well, what happens when people become addicted to opioids and who's responsible for that?

And, you know, even weird things, like I was thinking about it, George Michael, Tom Petty,

Prince, we think that they died of heart attacks or overdoses, but weren't those really opioid deaths?

I mean, how come it's just strange we haven't

connected Elvis.

We haven't connected the dots.

Don't sing your Elvis.

I love Elvis.

Thank you.

I don't know how you brought up Elvis.

Anyways, I think Elvis was.

Because

he died on the toilet and

drug abuse.

Oh, I thought he died of ice cream.

No.

Anyways.

Well, among the other things, but it was drug abuse.

But look,

I wonder if we're going to about to acknowledge that regulation isn't necessarily a bad thing.

It doesn't mean we're wimps if we ask our elected officials to be more thought or have greater scrutiny and also hopefully armed by the greatest police force in the history that doesn't carry a gun or badge.

What?

Real women regulate.

Real women regulate?

Get ready for Elizabeth Warren, President Elizabeth Warren.

So are you all in on Elizabeth?

Do you think is she?

You know, now that they've, I'll tell you, my win for the week is now there's just 10 of them on that stage, which you can see them all together.

Shella Brown out, picking Looper out.

Yeah.

Yeah.

And predictions.

Do you have a prediction?

No, bro, I guess.

I do not have a prediction.

But first, we're going to, we have the listener email and voice email.

So before we get to predictions, let's hear from some listeners.

Shall we?

Go for it.

Hey, Kara and Scott.

This is Dan Alasso.

I'm a history professor professor in Bemidji, Minnesota, and a big fan of Pivot.

Super sympathetic to your approach, Scott, to inequality and class.

But I got to ask: what's the beef with Tesla?

EVs are not as dirty as ICE cars, and Tesla is unlikely to increase the number of cars purchased, especially if autonomy ultimately works.

It's more likely to shift cars off of petroleum while we're waiting for overall volume of vehicles to decrease, which could make all the difference to the carbon tipping point.

And VW, give me a break.

Dieselgate 2 with a new defeat device that apparently turns off the cleaners above 90 degrees Fahrenheit and below 50.

I don't think it's inconceivable that Tesla would ever sell, but I can't see Elon with 22% of the stock and super majority voting rights to sell to VW.

And I really don't see where you're coming from with the idea that the wheels are about to come off.

If you guys really wanted to go after Elon, the question to ask would be, who's going to rule in space?

Are we really going to hand the moon or Mars or the asteroid belt or even low Earth orbit over to billionaires to try to create some type of Robert Heinlein Millennium just because they're the guys that can get there?

Thanks for listening.

Wow.

The Bemidji people are smarter than you are, Scott.

I want him as my new host.

God, I hate it when thoughtful people call me out.

So what do you say?

Answer.

So first off, you know.

Word to your mother.

That was really impressive.

And I think a lot of your points are really accurate.

And he said a lot there.

And I'll go in kind of reverse order.

Where do we agree?

I don't like it when wealthy people become the new arbiters of giant social projects.

I don't think that we continue to allocate more and more of our government, our government expenditures on the interest on debt, which is now greater than our expenditures on military, such that it crowds out all discretionary spending.

And all discretionary spending around how we move forward humanity is left up to rich people.

I call it the Pablo Escobar building parks phenomena.

I don't like rich people getting to decide how we allocate big leaps in our society.

So I agree.

I think it should be NASA, not this sword fighting with your dick competition between Musk and Bezos in space.

I just don't, I don't, I don't like it.

I think it's

an externality of this incredible income inequality where we have people worth the GDP of Norway.

As it goes to Tesla, I think there's a fair point, and that is I've basically said, I've said, bullshit, Tesla, it's not good for the environment.

And a lot of smart, thoughtful people get back in my space and say, you know, on the whole, it is good for the environment.

And I think I have to acknowledge that some of my own personal bias comes into this because I do not like Elon Musk.

I think an individual who feels that he's

beyond or above corporate governance and above what I call just general standards of behavior, calling strangers he's never met pedophiles.

I have found that personally, I want Tesla to lose.

So there is some personal bias creeping into my

viewpoint, which is quite frankly incorrect and inappropriate.

So he's right.

I do think on the whole, Tesla is probably going to be a good for mankind.

Now, on valuation, I disagree.

This thing is absolutely going to crash.

This is, and it's not a function of it, whether it's a good company or a bad company.

I just think the structural economics of the automobile industry make it almost near impossible for an independent automobile manufacturer to survive long term.

Now, whether VW or Toyota or Daimler could buy it, that's a fair point.

They may not have the balance sheet, but be clear, boss, Elon Musk is going to decide that rather than have the embarrassment of taking his company into Chapter 11, he is going to sell this thing.

And every day he waits to sell it means he sells it at a lower price because this company is an auto company.

It should trade at a multiple like an auto company, which means it's barely worth the obligations,

the repair warranties, and the debt they have on it.

So I agree with him.

I acknowledge his point.

By the way, that was a really thoughtful point.

And thank you for taking the time to actually do that.

All you, everybody, please call in and do these.

We like answering them, especially when you argue with us, especially Scott.

Really, I'm always correct.

There you go.

But he's absolutely right.

There's a really tough article on Elon Musk this week in Vanity Fair about Solar City.

And I think one of the things that I came away from is there's some really troubling things in the story, but these are big ideas, and ahead of their skis is a very good way to put it.

Some of them, like stuff, what's going on at SpaceX or Tesla or Solar City are great.

They're not small ideas.

And so it's a complex, it's complex is what it is.

That's what it is.

Anyway, thank you, Dan.

From Bemidji, we really appreciate it.

So, Scott, we're going to do predictions, but here's a question that came into our inbox: is how you come up with your predictions, Scott.

What is the formula?

Is it a magic eight ball?

Do you have chicken entrails?

What is your methodology around your predictions?

Or you just, I don't know, sit and stare at a wall.

What is your manner?

Sativa.

Okay.

I spend all day.

I work with a group of really talented people, and we spend all day kind of marinating in data, looking at trends and data, and some stuff just kind of bubbles up to the top that seems fairly obvious.

And one of the keys, so the,

if you will, the steel in the ground or the pillars of predictions are data, and you will see trend lines start to appear around data.

So there's some fascinating things coming out of retail right now.

We're going to see the resale market, second-hand clothing, be bigger than fast fashion in 2028.

That's like that's incredible data.

So I'm thinking about a lot of predictions off of that, what that means for retail.

And then the key around making predictions, that's the underpinnings, that's the steal.

But the key is to be fearless.

And that's to say, all right, take your gut, take the data, and then think of something.

And regardless of how stupid that sounds, regardless of the actual likelihood of that at the current time, make the prediction.

Because the thing about predicting is that people, as long as you're predicting to learn, you're not predicting to be right, people respect you for it, and it catalyzes a dialogue.

That's the key.

So I am absolutely fascinated with predictions, but the way you reach the promised land of predictions is to say, I'm going to use predictions as a means of learning and catalyzing a conversation and not trying to be right.

Because if you're trying to be right, you're never going to have the confidence or the cojones to make predictions because eventually you're going to be wrong.

Yep, that's a very good.

Thank you for that cogent.

I see we've gotten you very serious, Scott.

I'm liking that I'm focusing you on the year to come.

And next week, do you know what next week is?

Our 50th episode.

Our 50th.

Wow.

And we have lots to talk about because

next week is right after Labor Day, but the week after that, Apple

has an event.

It's just sent out the invitations this morning.

I don't know if you got one.

To its

September 10th event where they're expected to announce the iPhone 11, which will be interesting.

There's all kinds of things coming up.

A lot of people think there's going to be first triple camera system on the rear of the device, all kinds of things, a little bigger display,

all kinds of stuff.

So we have lots to talk about, but this is our 50th episode.

What should we do?

We're going to do more live events, obviously, but what should we do for our 50th episode?

Well, first off, it's nice that you've noticed that we're going into year two of our relationship, which I would loosely describe as a triumph of hope over experience.

But yeah, we're a year into this.

You know what?

You know what?

The first podcast I ever listened to?

What?

Was the podcast on Recode where you interviewed me.

I had never listened to a podcast.

Of course, I'm a narcissist, the first podcast I ever listened to.

And it spawned all of this, Kara.

All of this.

All of this.

Yeah, you're too.

So what should we do?

Bring you more.

What should we do?

In a word, in a word, Toronto.

We're going to Toronto.

We're going to do a lot of things.

Did you see all those tweets?

Every city, we're like Amazon, which we ask for.

We should ask for things.

Us and Amazon.

We had Minnesota asking us.

We had all these weird cities.

All I want is a helipad.

I don't have a helicopter, but I'd like a helipad.

I want a goat.

I want one city to offer us a goat of some sort or something interesting or a big dog, for example.

What city will actually offer us?

Toronto.

Have you seen how many tweets we've gotten from Toronto?

Toronto.

It's huge in Toronto.

Going to Toronto with Canadians.

So I'd like to announce here,

because of all the online heat we've been getting and people saying, come to Toronto, we're going to figure two, our anniversary, you and I are going to Toronto.

All right.

Fantastic.

That sounds great.

And other cities, please,

we are bribable.

We are absolutely.

100%.

100%.

Especially Scott.

Anyway, I'm really excited, Scott.

I've had

a lot of time.

Here's the bad news is I'm a whore, but the good news is I'm a cheap whore.

So just send me a little bit of merch and the big dogs coming to your park.

It can be an old tennis ball, it can be a pig's ear,

it can be a promiscuous poodle, anything you want.

Just bring it and I'll be there.

So it ends not with a bang, but a poodle.

But a whimper.

Anyway, Scott, thank you.

I'll talk to you next week, and I will see you soon in New York.

Anyway, finish your vacation, please.

It would be really nice if you came back from vacation.

Anyway, today's show was produced by Rebecca Sinanis.

Eric Anderson is Pivot's executive producer.

Thanks also to Rebecca Castro, Drew Burroughs, Eric Johnson, and Nishat Kirwa.

Special thanks to Gautam Shrikashin for engineering this episode.

Make sure you're subscribed to the show on Apple Podcasts.

And if you like this week's episode, leave us a review.

Also, we got so many emails.

So shoot us more emails at pivot at boxmedia.com.

Thanks for listening to Pivot from from Vox Media.

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