Amazon’s HQ2 was a con, not a contest

26m
Kara and Scott talk about the upshot of the 2018 midterms, Amazon’s surprise HQ2 announcement and how our perception of social media has been permanently changed by bots and trolls.
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Transcript

This is Scott Galloway.

I founded nine businesses and eight of those nine businesses.

A key partner has been QuickBooks, which enables the management team to focus on the levers of really driving value and also provides a dashboard to gain insight into the key operations and finances of the company.

QuickBooks has been a pillar of my entrepreneurial efforts.

Check out quickbooks.com.

Hi, everyone.

This is Pivot from the Vox Media Podcast Network.

I'm Kara Swisher.

And I'm Scott Galloway, future ambassador to Estonia after delivering Southern Florida to President Beto O'Rourke in 2020.

Oh, Beto.

I'm so sad for you, Scott, that you didn't get your Beto as Senator from Texas.

You must be devastated.

Gets 49% in Texas, raises money on a national level.

You know, hello, Mr.

President.

So, Kara, a key question, a few days in, how do you feel or how are you feeling about the election?

All right.

Well, I'm going to say how my son felt.

So, we get in the car and my son,

he wasn't with me.

I was at an election party, and he woke up.

He was reviewing all the things with me.

He's 13 years old.

And he goes, I got to say, eh.

And that's what he said.

He goes, Democrats really can't deliver it, but the Republicans kind of suck too.

And I was like, and seen.

That is exactly what the situation is.

So, eh.

Eh.

Whatever.

So you're not terribly upset.

You're not terribly happy.

You're just sort of meh.

Yeah.

We just can't have nice things, as they say.

We just can't have nice things in this country.

So that's the way it is.

It's fine.

You know what?

Gridlock is good as far as I in this situation.

I'm good with gridlock.

So it's fine.

That's what we got.

That's what we're getting.

I'm going to live that.

Gridlock is good.

So, anyway.

Bring it down to tech.

Do you think this means anything in terms of the tech sector?

No, I think they're not going to get regulated now because the gridlock is good.

You know what I mean?

I think there won't be any moves, any serious moves, unless they can all agree that tech agree on the bipartisanship, the technology companies need to be regulated.

Maybe that will happen.

I think you're going to see a lot of that from the states, like Gavin Newsome in California and some other states.

You're going to see action, action that sort of makes the tech companies come to heal a little bit.

A national level, I'm not so sure.

I'm just going to have to, I'm going to have to find out.

But Pelosi is certainly behind it.

It's just a question of whether she can get the Senate to do the same.

So we'll see.

We'll see if we're going to hit a privacy bill or anything else.

Probably not.

So Gridlock is the name of the game.

So let's talk about big big stories, what are going on.

Obviously, you had a good prediction last week about Amazon being in the Virginia,

the Washington, D.C.

area.

And in fact, there were some leaks that it was looking at Crystal City, Virginia, Dallas, and New York City, actually Long Island City in New York.

Tell me what you think about this.

So I refer to this not as a contest, but a con.

And I think it may have blown up in Amazon's face.

Because we'll see.

Time will tell.

But imagine you're the wealthiest man in the world and you get to pick or you have more options than anyone in the world and you've decided, okay,

so I'll personalize this.

I lease office space all the time for my businesses, and I always tell my real estate agent, we can lease any office in the world as long as I can walk there from where I live.

And that is the exact same instruction that Jeff Bezos gave to this

ridiculous con, this roost.

Because if you look at Amazon is now talking about having three headquarters, Seattle, Crystal City, and Long Island City.

The Bezos also own three homes, and the average distance from those three homes to a headquarters is 6.4 miles.

Okay.

So this was never a contest.

It was a con meant to induce ridiculous terms that they then took to the cities all along that they knew they were going to be in.

Also, the whole HQ 2 and 3 is also a bit of a con in bad faith.

It's like if you've ever been to your kids' charity school auction and there's a frenzy for bidding on dinner with the headmaster and someone bids $9,000, and someone bids $10,000.

And then they decide right then, well, we're going to do two dinners.

Thank you for the $19,000.

Because I would bet, Kara, that when they picked two cities and they went to two and three, they didn't say, well, only half our headquarters is going there, so we're going to let you cut the tax subsidies and the incentives in half.

This just has ill will written all over it.

And I think people started to figure out what was going on.

So what did they do?

They're like, oh, the con is up.

They figured out this wasn't a contest and we've abused the Commonwealth and wasted resources and time of municipal officials.

What do we do?

Announce it into the busiest news cycle of the year.

No accident.

They announced it last night.

Right.

Well, here we are.

Here we are.

They, you know, what's really interesting is that, is having a second headquarters.

I don't quite know what that means because I've heard rumors of Apple having a second headquarters, et cetera.

I'm not sure what the point of a second headquarters is.

That's money.

It's a handout.

Stick to your head.

Why?

Why just call it a headquarters and make it an office?

It was an office.

They're just going to call it.

Yeah, but if you call it a headquarters, you get everyone whipped up and every elected official wants to be the person to detonate a prosperity bomb in their Times Square so

they're willing to write big checks.

So it's a new stadium.

It's a new stadium.

Yeah, that's right.

It's the Olympics on steroids.

A lot of high-fives and ribbon cutting, and then 10 years later we realize it was a bad idea.

Aaron Powell, Jr.: Right.

Well, we'll see.

I mean, it'd be interesting.

I mean, I don't think

it does seem to have gotten flat.

The balloon has gotten flat here on this Amazon headquarter thing.

I've always thought it was a ridiculous circus.

You don't think it's going to be a big deal.

You're saying Pac-Connect.

No, I said that.

On CNBC, they were covering it like, oh, breathlessly.

And I said, I hope you're enjoying this circus.

They're like, what do you think?

I'm like, not much.

I don't think much of it at all.

I don't think about it, really.

I don't think it has that big a deal.

I don't think it's that, you know, I don't know.

Analog places just, I just, that whole game is lost on me in every way.

But I can see why the, you know, TV or whatever breathlessly covers it.

It's just kind of silly.

And it doesn't, it doesn't help the, what I really am interested in is how companies that are in the cities, like right now in San Francisco with pro with Prop C, how the businesses help the cities and how they take up their civic responsibility.

Because I think especially tech businesses really haven't

picked up in terms of what they need to, the responsibility of being a civic citizen of any city they're in.

And that's my focus, really.

When are they going to actually behave the way banks did years ago and gave money to the opera or gave money to music or kids, whatever, programs and things like that.

So that's what I'm looking for.

And you don't think on average they're good citizens?

I think Mark Benioff has been, given that, you know what I mean?

But I don't know.

I think they operate in their little Aries and they have lovely kombucha shakes up on the 10th floor and looking down and they don't participate in the city at large and they drive up rents.

And I don't think, I think there's a reason people, for example, San Francisco, come to San Francisco and see where everything is headed if you want to see the future.

You can see haves and have-nots, filthy streets,

not a lot of civic engagement by the tech community, which is the biggest employer in San Francisco.

And so you'll see, you'll see the future as far as I'm concerned.

And we'll see if we can clean it up.

But it's up to now, the city officials, to clean it up and figure out a way.

And most of tech didn't like the idea of propsy for lots of reasons.

Some of them good.

Where does the money go?

But in general, it's not a feeling that they, even if they're of the city, they're not of the city.

So I think companies have to start acting like they belong to a community.

Thank you very much.

And do you think they're going to do that?

I think this action is a comparison for mayor.

What?

I'm sorry.

There you go.

I'm in.

I'm right behind Beto.

So

do you think it's fair or realistic to expect they're going to do it, or we need to elect people that have the backbone to hold it?

We need to make them accountable.

They should do it.

They should do it.

But, you know, whatever.

They don't.

So we have to make them.

That's all.

That's all.

You just have to make them.

Yes, exactly.

And not roll over for them and give them these perks and things like that.

It's just a ridiculous game.

It's a ridiculous game.

It's a privilege to live in San Francisco.

It should be a privilege for these companies to be in San Francisco, not a

tax company.

It's the most beautiful city, most beautiful city in the Union.

I spent 10 years there, but I don't go back a lot.

Don't go back.

When I go there, the impression I get and the way I would sort of describe my experience there is I went to go meet with an individual who runs one of these

tech companies who's early 30s, a billionaire.

And going into the office, the thing I noticed was the number of severely mentally ill homeless people on the street below that building.

And I thought, we really have become a dystopia.

I mean, it is just a contrast.

It's really,

it's changed a lot in the past.

It's rattling.

I mean, it is rattling.

It's rattling.

It's rattling.

And so we have to do something about it.

And companies are part of the civic fabric of a society.

And they have to move in, and they should do it on their own.

But, you know, we'll make them.

We'll have to make them.

That's all.

Let me finish this other big story, the divided Congress.

What do you think the divided Congress means?

So I think there's this fissure on a bigger level, and I think of it

how it translates to business, and that is we now have about 70% of the Senate is elected by about 30% of the populace.

A lot of these red states don't have big populations.

They have a lost population or they just get two senators regardless of the fact that Wyoming has a population that's smaller than most congressional districts.

But at the same time, over the last 10 years, if you look at who's accreted the majority of the income gains, they tend to be people in the cities with college educations, which is Latin for progressives.

So you have the economic power or the people capturing the income games are progressives, and yet you have the political power going to the red state.

So what I think you're going to see, Kara, over the next several years is kind of this woke is a business strategy, similar to what Nike did with Colin Kaepernick or Dix getting rid of assault rifles.

I think that a lot of companies are going to decide to try and be overtly political and appeal to progressives who don't feel represented politically, but quite frankly, have all the money.

So you're going to see increasing political

viewpoints.

Yeah, like Nike, Patagonia,

Starbucks.

Companies are going to come out and say, hey, progressives, we're your company, and it might be a principle.

It might be generally how they feel, but it's also a shareholder-driven view.

Yeah, that's interesting because you have the money.

That's interesting.

What Landa Lakes did with that awful person, Stavis, say his name.

He won.

I can't believe it.

That I can't believe.

You're going to see a lot of that.

Whatever.

We're going to, oh, God.

I'm glad Landa Lykes did that.

All right.

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Now back to our show.

All right, Scott, what's up?

What's next?

So let's try something out.

The midterms are over, but can we come up with an assessment of how fake news, how did social media do?

Were we influenced?

What happened here?

What's your view?

Well, it's interesting.

I was just talking about this with, I was just talking to WNYC in New York about this.

I think that they're starting to clean it up, obviously.

They keep announcing how many, like I took off 30 accounts, whatever.

This is a cockroach problem, right?

This is going to be an ongoing problem.

It's not going to be something they've just cleaned up.

And so I think what we've got to do is as the stories die down, like the Russia story or whatever, we've got to really hold these companies' feet to the fire on persistently making it a cleaner and cleaner place.

And sort of, it reminds me, I was trying to think of an analogy, but it's like they're chemical companies that are dumping stuff into the river.

They've got got to clean it up now.

And they've got to figure out a way.

Now, look, there's been some damage.

There's been some poisonings, but they've got to clean it up now and figure out a way to do what they do and grow how they want to grow without

continually doing this.

So every time they make an announcement, they call me, I don't care.

I was like, this should be your job.

It's like saying the New York Times should spell the word and write.

I just, I feel like we've got to make it their jobs and make sure they realize that that's what they need to do.

So let's move to the how.

And I want to propose an idea and you tell me why it would or wouldn't work.

So I'm fascinated with this concept of identity.

And I'm in Los Angeles right now and everyone is just so friendly in the Starbucks line.

And then the moment there's a little bit of anonymity and you're in your car, there's road rage everywhere.

And then take that times 10 when you can invent a fake identity or 100 of them on Twitter or YouTube.

And there's not only a lack of civility, there's people willing to engage in things that are unthinkable and damaging to the fabric of our society.

Why wouldn't we demand or legislate that when people go online

on formats that have shown themselves to be very powerful, influence elections, suppress voter turnout, that you have to have an identity and be who you say you are.

Yeah.

Yeah, I think that's critical.

I think being anonymous makes sense in some cases.

In some countries, that's the problem.

And being able to protect yourself in countries that are autocratic.

And so I think it's a big question, but in other countries, it's not the case.

And I always always think that being anonymous, and these bots, I just, it drives me crazy that they haven't been able to handle these bots, because these bots gin up trouble and then humans get involved with them.

And so to me, the bottom, the lowest bar is going to be have to get rid of bots and to make a lot of this advertising transparent.

And it starts with that and then get rid of fake accounts, get rid of fake accounts, and make sure everybody who has an account is a person.

Whether it's a good person or not, that's going to be harder to decide.

But make sure they are actually a person.

And I think think that's the, I've always thought anonymous was always a problem anywhere you go because people act badly.

So the people, I've heard smart internet analysts say that if that was, if any sort of identity mandate was actually put in place, that Twitter would basically go out of business.

That you have something between a third and two-thirds of all Twitter traffic that they advertise to justify their

entire ad business or their ad model would literally just go away.

That two-thirds of it is bot-driven and noise.

Yep, yep, that's the problem.

They don't want to show exactly how unpopular they actually are.

You know what I mean?

I think that's with a lot of things.

And, you know, again, these companies would be better off creating a better service.

I don't get why they want to have a shitty experience for people.

I don't, you know, that's the problem because some of it's so wonderful.

I mean, I've had such a nice, interesting time on Twitter with this election, reading people, having opinions.

It has a goodness to it that always gets superseded by the badness.

And so it's really,

to me, it's really, it should be a business problem that they should recognize that.

So I don't know.

Yeah, it's so I'm going to put my tinfoil hat and come across as a conspiracy theorist, but I write a lot about

I write a lot about politics and I haven't, you know, I've been very critical in certain instances about the GRU and Russia.

And whenever I'm critical about Russian activity, I immediately get comments saying, Scott,

love your stuff, but you got to get off the Russia bandwagon.

And I started noticing that same sentence structure, same theme across different areas where I post my content from different sources and different identities.

And now I genuinely believe that if I were an economy 1 15th the size of the U.S.

and I wanted to wreak havoc or promote my agenda, I would identify 1,000 people of influence, or in my case, you know, a million people of influence and set these troll farms loose on them.

And I now believe that there are bots and or bad actors going after almost anyone and responding and putting up content, and they're not who they say they are.

Does that sound, am I paranoid?

Which doesn't necessarily mean I'm wrong.

But do you think this is happening?

No, I think, yes.

I mean, broadly, yes.

These are well-orchestrated campaigns by different people.

And the thing that you have to realize is they don't care what side they're on, right?

That's the thing.

They'll go after Samantha Bee.

They'll go after Roseanne Barr.

They'll go after

what I think is going to happen is when they start going after, and they are starting to do this, companies and affecting like Disney, or it's happened already to Nvidia.

It has happened, like when they start to really, especially with video manipulation and things like that, you know, you ain't seen nothing yet.

It's not going to be a tweet.

It's going to be serious manipulation of video, of other kinds of things.

And I think we're just at the beginning of that, for sure.

But, you know, it's going to be a great future for us, Scott.

That's where it's going.

I'm going to down moot today on the internet because I think they're going to be able to do it.

I was wondering how you were doing.

I was trying to think of something to cheer you up, and I couldn't think of anything.

I'm in LA.

scott walker lost i'm good with that i feel good about that it would have been nice to see technology

lost yeah oh yeah but i wait did did that devin nunes go or is he still there to drive us crazy nunes i don't think so i think he's in a district i think he uh

i think he represents his district pretty well actually all right well

good he's not head of the committee anymore goodbye devin you dumb i like he's the worst he's the person who uses tech for bad there's someone i could would really like to to maybe i'll interview him and let's see how that goes Anyway, last thing, we have predictions, but we're going to contextualize it too.

So we always end the show on a prediction

and

give us a prediction.

Let's just do a prediction.

You have one, correct?

You have one to bring to us?

Because you were good on the headquarters.

You've been good on a couple of predictions.

Casper has still not been sold, but otherwise you've been pretty good on them.

Oh, that hurts.

Casper absolutely

sold on.

I think you're right.

Okay, so this is more macro, but I think the consumer world is going to distill to a small number of what I call recurring revenue bundles.

And similar to what Amazon has done with Prime, you're going to see some kind of mega brands, a Nike or a Walmart, decide, okay, I'm in charge of all of your...

not only your shoes, but your fitness and maybe even your health care.

You can get a knee replacement from a Nike-endorsed orthopedic surgeon.

You could stay at a hotel that figures out a way to get you breakfast.

It's not terribly unhealthy for you, that has a gym that is Nike approved.

How did you come up with this scheme?

Is this your next move?

This is what I do.

This is how I fake making a living.

I just call it a scheme.

That wasn't really nice, but it is a scheme.

Yeah.

No, but I think recurring revenue bundles are going to be the next big thing.

If you look at a company that makes more than $10 or $20 billion or creates more than $10 or $20 billion

in market value over a 12-month period, you're going to,

it's going to be an equivalent or a mimic of what Primus to Amazon is.

You're an Apple person or you're a this person.

100%.

But it might go places you might not think.

Apple might say, we have a watch picking up on your health patterns.

Kara, you would love

Lululemon and we're going to do a relationship with Lululemon.

And you're going to let us know where you are.

We're going to deliver stuff to you and make your life easier around you.

I'm not going to say no to it.

I'm going to give you a big fat no on this.

I don't think they're going to get in this.

You don't buy it.

They don't buy it.

I don't buy it anyway.

I don't think Apple has any, I don't think they have any expertise to do this, and I don't think they have any interest in doing it.

So I don't think they will.

I think they're going to sell you a phone.

That's what they're going to do.

And people are going to stick to their knitting, as I like to do.

They've all got to get into recurring.

And by the way, the phone is going to be.

You may want them to, but they're not going to do that.

Apple's not going to get me Lululemon.

By the way, my son wears Lululemon, FYI.

He likes their shorts.

Every company, this is the key.

Every company has to enter into monogamous relationships.

Right now they're dating, which is expensive and hard.

They have to enter into monogamy.

Really, they can't be promiscuous.

That's 100%.

Think about what's happened with airlines where it's all distilled down to a small number of networks.

I'm flying Air France.

It's an inferior airline, but I am in this monogamous relationship with SkyTeam because I've fallen in love with Delta because

I fly Delta a lot.

So now I do this stupid, I'm in this relationship with SkyTeam that I can't get out of.

And that's what's going to happen.

It's going to be a series of four or five small networks, one for your media, one for your apparel, one for your travel, one for your health.

And it's going to be a race to see what brand can be that

green.

Redonculous, Scott.

I think it'll just be

Amazon is just a story.

You're torn out with your teenage voice too much.

Redonculous.

Nod, he's very smart.

That's a good one.

So my prediction, a bold prediction around recurring revenue.

Redonous.

I think Amazon is it.

Your prediction is I'm wrong.

Because Google could have done it.

That's ridiculous.

Google could have done it.

Any of these companies could, I don't want a relationship with Google when I'm getting my lunch or Nike.

I want shoes from Nike.

I don't want my lunch from Nike.

Ah, my Nike lunch has arrived.

It's delicious.

It involves.

You wouldn't want Emirates to plan all your travel?

No, I wouldn't want Emirates.

Because you know what?

Since I've been insulting the Saudis and everybody else over there so much with their dirty money, I think I would not want to fly on their airlines because I think I would have to get away from that.

Would you want Amazon to give you and your family your health insurance?

No.

No.

But I'll tell you, here's where I do like, here's where, here's where your redonculous idea does work.

Say your Airbnb.

I do trust them on experiences.

They can do adjacent things, hotels and airlines.

I could see that relationship becoming a little more serious.

I would trust them because I trust them on their Airbnb homes.

So I could see that if it's adjacent.

If it's adjacent, Scott, I would do it.

Otherwise, no thank you.

Yeah, so Airbnb is absolutely one of them.

Airbnb could move into all sorts of travel and just kind of take it out.

If Airbnb suddenly wants to buy me shoes, no, thank you.

That's all I'm saying.

Yeah, but think about how many places they could go.

Airbnb, it's either going to be Airbnb or Expedia or another.

The Four Seasons is another kind of brand that could probably come up with a recurring revenue bundle.

Four seasons.

Is that where you say, Scott?

Is that where you stay?

It's four seasons.

Do you know Four Seasons?

That's an interesting point.

Oh, you said that.

The Four Seasons of Ritz Carlton, I used to always stay at those two brands.

One, because they do a decent job, and two, whenever I travel, someone else is paying usually.

Interesting.

But I've i've stopped staying at these brands and it represents kind of the end of the brand era because i no longer need to defer to the shorthand of the brand and i can go on my social graph or these weapons of diligence trip advisor google and i can find out that the waldorf an aging brand that i would never associate with in la is actually the cool new hotel and that's where i'm that's where i'll stay so you're seeing at least in in travel kind of new and innov innovative is

the bomb and brand is declining importance so kind of the sun has passed midday on brand interesting interesting you know what four Seasons is?

Holiday Inn for rich people.

Anyway, because they're all the same.

Hit me, where you go.

Thank you.

That is my thought.

Actually, I don't know.

There's huge variance in the holiday inn in Austin or Chicago, pretty weak.

I'm sorry.

The Four Seasons in Austin or Chicago, pretty weak.

The Four Seasons in Toronto.

All right, Scott.

I'm enjoying your hotel recommendations right now.

Speaking of what's the problem with

San Francisco, there's strikes going on because of robots delivering food, and one of the reasons.

Anyway, although, speaking of robots, I just rented a car from Hertz, and I'm rethinking that, in fact, Uber may be worth $120 billion, and we should replace every individual with robots.

Have you rented a car recently?

Yes, I do it all the time, Scott.

I think it's an awful experience.

It is an awful experience at Hertz.

You're right.

You're right.

It's an awful experience.

It is.

But

you're right.

That's a very good thing that needs to be reflected.

But we're going to discuss that another week because I have things to do.

I have things to do.

You do.

I've got to go watch the channel.

The children are on the slate for Kara.

What's the most interesting thing you're doing this week?

This week?

Oh, I'm going to be interviewing Mark Benioff, but I can't tell you for who or why.

It's a big interview.

It's going to be on TV.

So, Mark Benioff.

And you're a big fan of Mark's.

Yes, I am.

And it's going to be at the top of Salesforce Tower.

That's all I'm going to say.

I'm going to try to helicopter in and then jump from the helicopter, take a rope down the building, and then crash through the window and then start the interview.

What do you think?

Better yet, I think he should build like a terrace and you should have like a Mussolini speech.

Yeah, that's something like that.

Something like, something like that.

Address the entire city.

Address the entire city.

Anything for audience.

Anyway, Scott, I've got things to do.

Good stuff, Kara.

All right, thanks.

Looking forward to talking next week.

By the way, if you have any questions for us or stuff you'd like to hear or cover on this podcast, shoot us an email, pivot at Voxmedia.com.

Our show is produced by Rebecca Sinanis.

Nishat Kurwa is Vox Media's executive producer of audio.

Thanks also to Eric Johnson.

And thanks for listening to Pivot from Vox Media.

Join us next week for more breakdown on all things tech and business.

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