Instagram co-founders, "tech bias" and why Amazon will buy Snapchat

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Hi, everyone.

Welcome to Pivot from the Vox Media Podcast Network.

I'm Kara Swisher, founder of Recode Deco.

And I'm joined by my no mercy, no malice co-host, Scott Galloway.

Hey, Scott, how's it going?

Where are you this morning?

I'm in New York, Kara, the Vox Studios downtown.

Where is Kara Swisher?

I'm at the Vox Studios in D.C., in the District of Columbia, in Washington.

So this is our first show.

Everyone's looking forward to it.

They think we're going to do bad things, which is really interesting from the reaction on Twitter.

But

let's hope so.

We're going to do bad things.

And which of the, you know, I polled people to say, what does our photo look like?

And I don't know which one you thought was best, but I thought my favorite one was Cagney and Lacey is really going to be lit this season.

Yeah, but am I the first or the second Lacey?

I was about to weigh in, but I.

You're totally Cagney.

Hello.

Hello.

It's so obvious, right?

I thought we were literally the new sitcom on Bravo, where

you're the tough but lovable cop and to be I'm the wacky neighbor that just discovered meth.

Yes, that sounds good.

That sounds great.

That sounds perfect.

All right, well, let's get into discussions this week.

We've got a lot to talk about.

And we're going to start first with our first segment, which is a big story breakdown.

I think the big story this week is Instagram.

And I've been spending a lot of time talking to people at Facebook about what happened here.

I have a very good sense of what happened.

But I just sort of like your thoughts out of the gate, and then I will give my thoughts on that.

Well, you're the insider here.

My sense is that when founders, so my company was recently acquired 18 months ago by Gartner.

And when a company is acquired, it's not if, but when the founders are going to leave.

I think the clock starts right away.

Control is a very addictive substance, and founders are used to control.

So the fact that they were there six years, I actually think it's pretty impressive.

The question I would throw back to you is, it seems like a lot of these departures are coming at the same time.

Is there something wrong in Mudville?

Well, yes, I think, I think, actually, I don't think it's too long.

I think they wanted to stay.

I don't think they wanted to go.

I think they liked working there.

They were hoping to work there their whole lives.

I think not their whole lives, but a long time, as long as they could be creative and be in charge of things.

But I think what happened is after Cambridge Analytica, after all kinds of stuff, Mark Zuckerberg asserted himself, especially because Instagram was sort of the engine and Facebook was not anymore.

And so I think this was a story, a situation with just let's say what it is: Kevin Systrom and Mike Krieger, who created Instagram, left the company suddenly on Monday without telling, they just did it all of a sudden.

I think they were pushed really hard by a lot of changes in Facebook that they thought ruined their product, essentially.

So I don't think this was a, oh, we'll just go.

I think they didn't want to go and left under duress from my perspective.

The press release kind of validates that because if you read the press release, clearly Facebook did not approve it because it says we're looking forward to exploring your creativity.

Again, it's basically sort of we're going to start something else and we, for whatever reason, we couldn't.

Yeah, we couldn't find it here.

That was not brought to you by Facebook press release.

But what are some of the points of tension?

Do you have any sense for what

they piss them off?

Yeah, everything.

They would tweak things.

For example, a stupid thing, but it was important to these people is the imposition of ads, the way they were going to impose ads.

I think they always resisted.

I think

when they're sharing things to Facebook and back and forth, one of the great drivers of growth was being shared back and forth, essentially, for both sides.

And so when you shared things from Instagram to Facebook, it used to say it was from Instagram, and then there'd be a link back, and it created lots of referrals back to Instagram, but you created on Instagram, and Facebook removed that.

So, it looks like you posted it on Facebook.

It looks like you're using Facebook.

I found that incredibly deceptive.

And I think they did too.

Like, I think they're more,

both Mike and Kevin, whom I know really well, are very much more in the consumer camp than they are in the let's help advertising camp.

And what about the, what was the, what is the general mood at Facebook after?

You know, I described it as,

here are the last three thanksgivings for a Facebook executive.

It's great to see you.

You're awesome.

It's great to see you.

You're amazing.

It's good to see you.

You're ruining America.

I mean, isn't there a ton of tension right now among senior executives there?

There's executives who are close to Zuckerberg and there are ones that aren't.

You know what I mean?

Like, I think it's, I think they're very, one of the things that I kept getting from a lot of people on the Zuckerberg side here, and it was very clearly Mark Zuckerberg pushing this whole thing,

these changes at Instagram that the founders did not like and the more control he was trying to take.

I think the ones that are inside with him are, I don't want to say culty, but they agree with him.

And they kept saying, you know, Mike and especially Kevin are team players.

And I'm like, you need fewer team players and more people that disagree with you.

You know what I mean?

Like, it was an interesting thing.

So I think there's a tension within the company of people who are in with the current administration and not in with the current administration.

And

there's people on both sides.

And this was the most potent example.

And what I think was worst about it is is it affects product.

Like, you can talk all you want about ruining democracy and the Russians and this and that, but this actually affects product.

And when product starts to get affected, I think that's when companies go downhill.

It's funny you say that.

It's Silicon Valley.

It's through the kind of lens of Silicon Valley, and that is, you know, our democracy and Russians, yeah, that's a concern.

No, of course.

But the product.

No, but that's why they're going to go down.

I'm like, you think they're going to go down over the Russians?

They're not going down over the Russians.

They're going down when their product is shitty.

That's it.

Like, you know what I mean?

Like, that's all I'm saying is, of course, that what they've done is gross mismanagement and use of their platform.

But what's really going to kill them is something much different.

That's just what I'm saying.

And I think it bears out when products go.

That's when companies go.

Yeah, the consumer has the final say here.

And who wins here?

Whenever there's senior-level departures, there's a sucking sound upward.

Who's the new man or woman on Instagram?

A man named Adam Assari, who was brought in.

He's very close to Mark Zuckerberg.

He's a very competent person, but he didn't found the company.

You know what I mean?

Like, he didn't found the company.

And so,

you know, these were two really smart entrepreneurs at their peak.

And I'm not sure.

They weren't like laying around.

They weren't like resting, investing in any way.

And so I think that's always, it's always a mistake to remove creative, interesting founders.

And that's, I think it's a mistake.

I think this is a big mistake.

What happened to you?

It's so interesting because pre-jobs, founders, I've been starting companies since I was 25.

Pre-jobs, we were considered a crazy liability that our shelf life was once the company got a CFO and then VCs brought in gray hair management.

Post-jobs, especially after his successful return to Apple, now we're seen as invaluable to the DNA and should be kept at all costs.

It's literally the pendulum.

If they're helpful, like look at Travis Cowan, look at some others.

I don't know.

All right, next thing.

We are going to talk about these.

Attorney General Jeff Sessions is meeting with state attorney generals about tech industry biases.

Put on your tinfoil hats, everyone.

Attorney General Jeff Sessions is talking about the power of the tech industry with a group of state attorneys general, or is it attorney, whatever, about bias on social media against conservative viewpoints.

Scott, is this real?

What can the state AGs actually do about this?

Or is it just a lot of...

Well, actually, the red state AG play is how sort of tobacco was taken down.

So there is something here, and I've always felt that the war against big tech will be waged out of Brussels or from a red state AG who sees a blue line path from the AG's mansion to the governor's mansion as a populist argument against big tech.

So the AG army is an effective fighting force against big tech.

The problem is that what you're going to see with sessions and the administration continue a pattern of snatching defeat from the jaws of victory.

And that is there is real anti-competitive concern here.

There is these companies have just become too influential, bad for the economy,

a host of reasons, anti-competitive practices, but they're going through the wrong door here.

This notion that there's a bias against conservatives is just so ridiculous.

You know these guys.

Well, I'll tell you what I think.

And I know these people, I don't know them as as well as you.

They don't lean left at work.

They don't lean right.

They lean down.

And anything that gets them more engagement and more Nissan ads is cool with them, regardless of the political standpoint.

And the notion that conservatives have somehow, their voices have been squelched.

I mean, Lester Holt is not giving a platform to Alex Jones.

Trump has a direct pipeline to 54 million users, despite violating the terms of use every goddamn day on Twitter.

So the notion that this has been anything but amazing for the far left and the far right is just ridiculous.

I agree.

I think they really are.

You know, I sit there, I'm like, that's not what you should, you should be focusing over here.

Like over here, they're actually doing bad things.

Here, they're not.

And

it's one of these things where it's gotten politicized, obviously, as everything has.

And then it's a waste of time.

And this is an opportunity missed to do actual focus on things that matter, such as

anti-competitive, you know, anti-competition, all kinds of things that are really of concern and the growing power of these different companies on our country.

And instead, they're sitting around here saying that, you know, diamond and silk can't talk.

They can talk.

They never stop talking.

And it's really interesting that they fixate on this.

It's like, it reminds me a lot of when conservatives fixated on gay rights, if you remember.

They just went on and on and on.

And I think they lost so much ground on that one because they were never going to win that one.

They were never, you know, it was just,

I don't know.

It's interesting.

You just had a great line in one of your articles that said that the people who complained about being silenced are the ones who never shut up.

Yeah, yeah, that's right.

They don't.

And there's plenty of places to talk online here.

You just can't talk on some of these platforms.

And I just don't know what could they actually do?

What could these state attorneys actually do?

Force them into what?

I mean, it's a legal quagmire of loss.

Like, you cannot, I don't think you could enforce any of these things.

They're just blowing it because this could have been a bipartisan issue.

You have the far left and the far right concerned about these companies' growing influence, but instead they're going to turn it into you're bad for conservatives, which means they're going to lose the far left in terms of

any attempt to sort of rein these guys in.

It's just,

it's reminiscent of the Amazon Washington Post, the ham-handed attack from Trump, where he basically undercut legitimate concerns about Amazon.

Yeah.

And so why do they do it?

What's the ⁇ is it just

⁇ you know,

I have such a terrible time predicting this administration.

I don't understand 95% of what they do.

So it feels just very political.

And it's, unfortunately, there's real harm here.

This could have been a bipartisan effort.

And what's going to happen is big tech is going to respond thoughtfully in a measured way with data.

Big tech, one of them, big tech's going to act presidential.

The other is president.

And you're going to see, you're going to see, it's like, I don't know what the analogy is.

It's like complaining, you know, complaining about minimum wage because

you want

young people to smoke more.

It's just, okay, we should raise minimum wage, but that's not why.

And you end up contaminating the whole argument.

Anyway,

I think they're going to slip right out of it.

I think they're going to slip right out of it.

And by the way, they should slip right out of this.

This is insane.

This is just a waste of time.

And, you know, again, focusing on things.

And then we'll get like 60 tweets from Trump about the silliest of things when we should be focusing on bigger things.

Okay, we're going to take a quick break and then we're going to pivot to Snapchat and Amazon.

Every week on Pivot, we take a sharp, unfiltered look at the technology and media industries and highlight examples of winning leadership.

When it comes to leading a successful business, time and again, entrepreneurs and executives from across industries share this incredibly simple secret: turn to the experts for help.

That's why small and medium-sized businesses rely on TriNet for human resource solutions.

No matter what industry you're in, TriNet tailors strategies for your organization to grow with confidence.

Learn more about how TriNet's industry tailored HR can work with your business at TriNet.com.

That's T-R-I-N-E-T.com.

Incredible starts here.

TriNet.

We're back and we're going to talk about Snap and Amazon.

Explain for the people the situation.

So Amazon at Snapchat announced a partnership earlier in the week where you'll be able to use Snapchat to

zero in on a product and it'll be recognized, kind of visual search, and you'll be cued or prompted with that product page on Amazon.

So the link between social and commerce.

It's a, you know, it caused a lot.

It got a rightfully, it got a lot of interest because one, Snap needs something.

I mean, this is a company care.

I believe this company is going out of business.

I do not believe it'll be a prediction.

Snap will not be an independent company by the end of 2019.

Independent?

You mean Seattle?

Oh, it'll get sold.

It'll get 100%.

Who?

Who?

I'm going to go.

That's the correct question.

So, first off, 10,000 to 100,000 kids every week say, hey, have you tried this new version of Snap called Instagram Stories?

And they switch.

And so the metrics.

They might have caught a break here with Gavin and Mike gone, by the way, at Instagram.

We'll see.

I think the bench is probably deep enough to be fine.

But anyways, you have a situation where I think there are a limited number of buyers.

So Snap, even though people talk about how its stock has gotten crushed, it's still got a market cap of $13 billion.

So I believe the stock gets cut in half again, but any acquisition is sort of an eight or a $10 billion check.

And there's a limited number of companies that can buy a company that's not making a lot of money for $8 to $10 billion.

So the universe gets very, very narrow fast.

So come on.

It's either Google or Amazon.

And you said to me, and I had not thought about this a month ago, that the only guy that Evan Spiegel would want to work for is Bezos.

I mean, I know who it won't be.

It won't be Facebook.

Or Apple or Apple.

He'd work for Tim Cook.

But Apple is not that acquisitive.

Oh, they're not getting near it.

Are you kidding?

They're not that acquisitive.

And I think Bezos says, all right, you have a core constituency that buys stuff and buys stuff irrationally, high margin coffee, flying knit tennis shoes.

You know,

they're crazy, right?

We love teenagers because they're stupid because they spend all their money.

I bought high margin coffee yesterday.

Yeezys, did you get your kids a pair of those?

Anyways,

I don't want to show you my shoes anyway.

Go ahead.

So

the other real, I think, interesting piece of information here is the former VP of finance from Amazon is now the CFO.

of

Snap.

And basically, the CEO and his top finance people become like twins that can communicate nonverbally because it's very important.

The CFO and the VP of finance are what I call the CEO's source of truth.

So I can see this guy, the CFO, calling Jeff and saying, look, this is a deal with our company.

This is why it makes sense for you.

And them literally short-circuiting an acquisition.

Yeah, that makes sense.

And this might be.

And what about Google?

Make the Google.

I don't think I have a good argument for Google.

I don't know.

They've tried to be in social.

It hasn't worked.

I don't know if they need to be.

I just.

They don't need to be.

I just don't.

And they're robots.

They just can't even.

like, remember when they were doing Google Plus or whatever the hell it was.

I was like, oh, stop.

It's painful to watch.

Yeah, that was rough.

And they had like one of the original ones with Orchid, if you remember.

I do not remember Orchid.

Back when Orchid was this little guy named Orchid that worked there, and he created one of the earliest social networks right on par with Facebook and others.

And it got very popular in like Brazil and some other countries, some strange countries.

Remember?

Social network in Brazil.

That's what I remember.

Brazil and a few other small countries.

And I remember a Google executive saying, you know, we're really big in Brazil.

And I go, way to lose it.

Like Brazil as compared to the United States, like Facebook was killing it in the United States and else in bigger markets.

And it was just, he was a great guy.

He still is around, but

I think they killed the thing off.

But they just can't do social.

They can't.

They just shouldn't.

It's, it's painful to watch.

So who did that lose?

No traditional media company can afford that check

and losing money.

But Amazon,

if they think they can pick this thing up for 10 billion, which would be a 1% dilution on a trillion-dollar market cap and capture a core constituency that gets them traction among high-margin products, maybe gives them another entry point, gets more people on their app.

Maybe they stream stuff from Amazon Prime Video.

There might be a pony in there somewhere.

I like that.

I like it.

I like it.

I'm going with it.

I agree with you on this one.

I don't think there's any other buyers, except for an Asian company, one of the big guys.

And then Jeff Sessions says it's a security risk, right?

Yes.

Oh, yeah.

Because what goes on on Snapchat is high security.

They're going to weaponize our youth, Kara.

They're coming for us.

They are going to weaponize us.

The robot army of our 15-year-old boys is coming for us.

Yeah.

Yeah.

Although I have to say, I have two kids.

They still use Snapchat.

And you said they love it.

They use it as a communications tool.

That's what they use it as, 100%.

Instagram stories.

Have they tried it or don't know about it?

They, you know, they do, but I think it actually goes along gender lines.

I think more girls use Instagram stories.

It's interesting.

They use it sometimes, but just the other day, I was like, How are you liking Instagram?

And one of my sons goes, oh, the museum.

And I was like, what?

And I go, they go, you put up pretty pictures there.

That's all.

It was not fun or useful or utilitarian.

It was just a museum.

That's what he called.

I thought it was very smart, actually.

Goat, greatest of all time this week.

What inspired you?

I think Craig Newmark for funding the markup.

It's being done by Julie Angwin, who I actually went to school with, and some others who are getting together to look at big tech, to look at issues around big tech.

And I think that Greg has, I did a great podcast with Craig Newmark.

He started Craig's list, obviously.

And he's been giving a lot of money to journalism efforts.

He gave one to a school recently, a big school, $20 million, $20 million increments, essentially.

Made a lot of money from tech, and he's using it to support journalism.

I think it's a great thing.

He's an unusual and

sort of an odd character in Silicon Valley.

And I think

he's really enjoying his media mogulhood in this way.

And it's a very different way from others like Mark Benioff, what time and and uh lorraine powell jobs and jeff bezos it's it's really trying to really support traditional journalists into doing what they do well done correct he wins it well done correct nice and so i had a moment of inspiration uh carrie yesterday i met one of my heroes legitimately one of my heroes who uh you commissioner margaret marguerite vestier vestier yes she's great marguerite i'm on the train back from a sella and i see this woman um outlining

an analyst report and i stalked her on the train an analyst report and she what you know what she she was doing?

Oh, she was highlighting this report.

She was knitting.

How awesome.

Oh, yeah, she knits.

She said, I got off the train.

I introduced myself, took a picture with her.

But

this is a woman who is fearless, fighting for the EU middle class, and is fiercely intelligent.

Just amazing.

They did a whole series about her.

Yeah, she's incredible.

Marguerite Vestiger is the EU commissioner who has been sort of making every tech company's life a living hell.

And it's great to watch.

I've interviewed Seth twice, and I think she's really quite something.

She's like a superhero.

And they hate her in tech.

They're polite about it, but they really.

I would argue she's the only public official in the world right now whose testicles have descended when it comes to dealing with big tech.

You don't need testicles.

You don't need testicles, Scott.

Do you understand it?

No, I don't.

I'm not using testicles.

No, we're not using the testing.

We're not taking back the inappropriate for the left.

We're not using testicles.

We're not going to be using man up.

We're taking the irreverent

for the left, Tara.

Why does the right get to own the inappropriate?

You and I are taking it back.

No, that's not words I like using.

We'll come up with new metaphors.

All right.

I'm not trying to be politically correct, but there are other metaphors we can use.

All right.

Absurd quote of the week.

Anything comes through?

Back to you.

I'm sure you have some.

So much.

It's so absurd.

I think

the

stuff around Instagram,

the fact that Facebook had no response to this because they were obviously taken unawares.

These guys just came in and they had been dropping bombs all over these guys for months and doing different things and messing with the thing.

And even though they did sell it, I get that.

They still had given them enormous autonomy and then just changed the rules of the game.

And so these guys just left.

I like, I dropped the mic and left.

I thought that was kind of fun.

And by the way, from a seller's standpoint, worst trade in history, best trade on the buyer's side.

Yes, it is.

Although they did get a lot of stocks.

Oh, they did just well.

And I think they're going to walk away with hundreds of millions of dollars.

Yes, a lot of people.

Boy, my worst quote, and I'm piling on here, but your favorite person said, she said she was drunk.

oh right oh okay

okay

then then all bets are off she was drunk anyways you know what's interesting about trump he doesn't drink at all like myself he doesn't drink at all so he has he has he has an issue with no i don't really carry it every now and again that's wonderful no i do it every now and again every time i'm trust members as winston churchill said i've gotten more out of alcohol than it's gotten out of me trust me

more tv more alcohol boom i imagine i like television all right thank you all right so last segment uh are predictions because because you have to make a prediction prediction every week now, just so you know, and it has to be right.

So

what is your prediction?

Despite, well, one, we've already made one, and that is by the end of 19, SNAP is no longer an independent company.

All right.

That's a good one.

Okay.

Do you have any others?

I think Facebook, and I'm talking about book here because I own all of big tech, but I think Facebook is

I think the stock is remarkably undervalued.

And to be clear, bad for America, bad for the planet.

But I just think the stock is going to scream when people realize that probably they're going to get through this and they're going to start posting just enormous numbers.

It's going to turn into Apple three years ago where it just looks just incredibly cheap.

All right.

And Mark Zuckerberg's still at the helm.

Oh, yeah.

Well, why do you say that?

How could he not be at the helm?

What do you think?

Do you think this is the same thing?

He clings to power like he makes an African dictator look charming.

How on earth does Mark Zuckerberg

leave?

Two classes of stock.

How can he leave?

I just think this one was bad.

This was not a good look.

I'm sorry.

I just, I can't.

The Russia thing.

When you start to, no, the Russia thing, of course, the Russia thing, but I think he flew out of that one.

I think this one, he's not going to fly out of the Kevin Systrom and Mark Zuckerberg.

Do you think that's how Mark Zuckerberg is going to be doing this?

I'm just telling you.

You just trust me.

Oh, my God.

You just trust me.

It's like Al Capone in taxes.

I'm just telling you.

It does not leave him beloved.

They're like Trotsky being erased from photos.

Well, just, you know, Brian Acton, who was one of the founders of WhatsApp, just gave a long interview about how Facebook.

He just, that stuff starts.

That stuff starts as this is a sucky place to work, and then you get hated.

And then, I don't know.

It's just,

I just, it's not, it's, it's got bad juju all around it.

That's all I'm saying.

Good stuff.

It's stuff.

Anyway.

All right, Scott, we have to get out of here.

You have to get out of here, Tara.

I am embarrassingly available.

No, are you?

I have to get out of here.

I'm going to New York for a New York Times conference that I've agreed to appear at.

I'm talking to some lovely top women executives about how Silicon Valley is doing.

And then I'm doing an interview with Samantha B about all kinds of things, including an app she's doing, which I helped her with a lot.

I'm so curious what she is like in person.

She's lovely.

She's shy.

She's lovely.

She's Canadian, right?

So she, yeah, she's Canadian that says it all.

I think she's Canadian.

By the way, that's back to an appropriate thing.

That is technically...

a racist stereotype, but I'm going out.

How do you get 100?

How do you get 100 drunk for turning you guys out of your pool in Canada?

Oh, my God.

Hey, Hey, guys, could you please get out of the pool?

We're taking back the inappropriate character.

No, you're not.

Canadians is as far as I go on that.

Okay, good by that.

And I love Canada, by the way.

I love Canada.

I love Canada so much.

I'm going to Canada.

Wait tonight.

I'm going to Toronto.

Wait.

Oh, all right.

Well, enjoy yourself.

Why don't you tell that joke there and see how it goes over there?

There you go.

All right.

Anyway, thank you for joining, Scott.

Looking forward to talking every week.

Thanks for listening to Pivot from Vox Media on our first show.

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

If you like what you heard, please subscribe on Apple Podcasts or wherever you're listening.

Every week on Pivot, we take a sharp, unfiltered look at the technology and media industries and highlight examples of winning leadership.

And when it comes to leading a successful business, time and time again, entrepreneurs and executives from across industries share this incredibly simple secret.

Turn to the experts for help.

That's why small and medium-sized businesses rely on TriNet for human resource solutions.

No matter what industry you're in, TriNet tailors strategies for your organization to grow with confidence.

Learn more about TriNet's industry-tailored HR and how they can work with your business at TriNet.com.

At TriNet.com.

That's T-R-I-N-E-T.com.

Incredible starts here.