Friday, Oct 8, 2021 • 1h, 18min

Pivot Q3 Quarterly Review and Friend of Pivot, Senator Amy Klobuchar

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Pivot is back with its Quarterly Review series, taking a look back at Q3 and predicting what’s to come. Kara and Scott discuss the biggest wins and fails of the past quarter and check their prediction track records. They also get some predictions from from Friends of Pivot, including Preet Bharara, Dr. Abdul El-Sayed, author Sheera Frenkel and Cofounder of Zero100, Kevin O’Marah. Plus, Friend of Pivot Amy Klobuchar joins to discuss the Frances Haugen testimony and what’s next for Facebook. Send us your Listener Mail questions, via Yappa, at nymag.com/pivot. Learn more about your ad choices. Visit podcastchoices.com/adchoices. Learn more about your ad choices. Visit podcastchoices.com/adchoices
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Speakers
(2)
Scott Galloway
Kara Swisher
Transcript
Verified
Break
Kara Swisher
01:13
Hi everyone. This is pivot from
New York Magazine
and the
Vox Media
podcast network.
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01:20
I'm
Kara Swisher
.
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Scott Galloway
01:21
And I'm excited about Halloween. My favorite holiday is fast approaching. Stephanie Rule will remind you 40 times a day on
Instagram
.
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Kara Swisher
01:28
That is your favorite or her favorite.
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Scott Galloway
01:30
Oh well I think it's both of our fair, I love it. I get to put on a wig, same costume and you know what? I go as an emotionally stable person and no one recognizes me.
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01:39
No one
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Kara Swisher
01:40
That would be hard to recognize. I I would agree. What do you, what do you actually go as?
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Scott Galloway
01:45
When I was a kid.
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01:46
Every year I went as
Snoopy
. I had an obsession with
Snoopy
. Put on something. Sweat off, sweat my face off for a fucking box of raisins. Now, I go every year, Every year, the same outfit. Starship Commander
Jean-Luc Picard
huge crowd pleaser.
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Kara Swisher
02:00
I bet you're good shave off your moustache, et cetera.
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Scott Galloway
02:04
I don't have a moustache. A little goatee. It's a little natural.
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Kara Swisher
02:08
Picard does not have that
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Scott Galloway
02:10
Sexy goatee and this year I might go something different. I want you to guess my costume.
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Kara Swisher
02:15
I don't know
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Scott Galloway
02:15
An orange jumpsuit.
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Kara Swisher
02:17
Yeah.
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Scott Galloway
02:17
And a massive amount of sunblock on my face.
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Kara Swisher
02:19
Oh,
Donald Trump
headed to jail.
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Scott Galloway
02:21
Mark Zuckerberg
.
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Kara Swisher
02:23
Oh, nice, nice, nice, nice.
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Scott Galloway
02:25
The Zuck
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Kara Swisher
02:25
Need more hair. He has more hair than you. He's catching up catching up catching up than you. You know what? I'm probably gonna go ask.
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02:31
So the people who I I mentioned on this podcast that my kid watches
Teletubbies
and
Sesame Street
and that's all in the
Teletubbies
, People sent me a box of
Teletubby
thing, including a full adult size
Teletubby
outfit.
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Scott Galloway
02:46
I think that's a conflict for a journalist. I've been, let's be honest, I've been, I've been watching, observing your coverage of
Teletubby
and it's really just hasn't been unbiased
Kara
.
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Kara Swisher
02:56
Okay. I love the
Teletubbies
.
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Scott Galloway
02:58
How is the golden child?
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Kara Swisher
02:59
The golden child Is great and the and the next golden child is progressing nicely.
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03:04
So everything is going rather well.
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Scott Galloway
03:06
So you can check in on that. I don't know any of that works: feel's so alien to me.
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Kara Swisher
03:10
I'm not going to go into this with you.
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Scott Galloway
03:12
No?
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Kara Swisher
03:12
It's a stork and they deliver the baby in the last day. Anyway, this is a special episode. So we have to be feel very smart today because it's our quarterly review.
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03:21
We'll round up our biggest wins and fails for the third quarter and see how well we did with our predictions. We'll also hear from some friends pivot on what's coming up in Q four and beyond. And we'll talk to Senator
Amy Klobuchar
about facebook's rough week and what she thinks will happen next gangster.
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Scott Galloway
03:36
Hello! There's a new sheriff in town and she's from Minnesota.
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Kara Swisher
03:40
Yes, yes. It was a big week for for for facebook in congress and Senator Klobuchar has been on their ass and she will talk about it with us. So let's start by talking about some of the biggest topics and issues for Q. Three so far and declare some wins and fails. All right.
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03:56
First up the past three months have been major for spaceflight the newest international astronauts. The crew of new Shepard. I want to thank every amazon employee and every amazon customer because you guys paid for all this in july Virgin founder
Richard Branson
flew more than 50 miles above the new Mexico desert.
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04:15
His virgin galactic rocket plane. Later that month, Jeff Bezos soared nearly 70 miles above the texas desert in his blue origin shepherd launch vehicle that looks like a penis. Lastly
SpaceX
launched the first all civilian crew into a low earth orbit in september. They were up there for three days.
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04:35
What are your wins and fails here scott?
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Scott Galloway
04:37
Well, okay, so in general, we tie up a tendency to just group space. Uh, space tourism is, in my opinion, a terrible business that is going to slowly go away and the ground zero for that implosion if you will is virgin galactic, which is a mach three train wreck. After what was probably the branding event of the year. I mean, the whole world watched that thing.
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04:58
They built a massive customer list, a waiting list of 600 people. I mean, and also the stock continues to continues to decline. And also any large shareholder, the knows the company really well. It continues to sell stock. I just don't think. I just don't think it works. I think it's literally all, you know, I'll squeeze, no juice.
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05:18
Blue Origin.
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Kara Swisher
05:20
I'll squeeze no juice when you squeeze you get juice.
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Scott Galloway
05:22
Help me out here. I had a few drinks last night. Just go with that.
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Kara Swisher
05:26
Just using something lemons of the vodka.
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Scott Galloway
05:29
Anyway, go Ahead and my makers and ginger deep boys today. Anyway, so, uh, blue origin fine. You know, $400,000 top corvette crashes into a hair plugs clinic. Let him do let Jeffy Jeff fine. He's a bright guy. He'll get bright people. It'll do something Hands down, hands down the winner here is
SpaceX
while everyone's taking their, their penises 50 miles into space or, or to the Karman line.
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05:58
He's Orbiting the Earth three times with civilians. Right? And it was flawless. It's kind of the difference between over promising and under delivering space blue origin With all this ridiculous. This is amazing. And
Richard Branson
saying, imagine what you'll do in the future and it's like, no, imagine what we did 50 years ago, boss. It was much more impressive.
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Kara Swisher
06:19
Yes, you're very on this. I mean we talked, I talked with Ellen about this and of course I got him to make several penis jokes. Well, if you are only going doing suborbital than your rocket can be sort of shorter. Yes. My son this morning on the drive to school was like, I can't believe you got him to make all those jokes like that.
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06:38
I can't believe you can't believe that I got him to make all those jokes. Um, but I think you're right. I think Ellen is really a head and shoulders above everybody else in this department. Um, what's interesting is some of it's nice. That wally funk going up.
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06:53
She trained to be an actor on the 60s. That's nice.
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06:56
But she should have been on Milan's ride essentially and Shatner is going up William, Shatner, Captain Kirk, That's it's all very cute but it doesn't make for a business.
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Scott Galloway
07:04
And here's the thing, I mean there's a key component of this business or two key components will be really successful versus space hauling. And the key is again, it's the boring shit that makes all the money.
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07:14
The key is you're at the cost of getting a kilogram out of orbit which has been incredibly expensive, which Ellen talked about the new
SpaceX
falcon booster rocket is bringing the cost down and Ellen has basically put more satellites into space than anybody else.
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07:29
So
SpaceX
is quite frankly,
SpaceX
is just, is just and it is a men among boys who are taking very long showers and anyway, so I won't even go there, but this is just so ridiculous. And then there's a real business and the real business here,
SpaceX
, the other two are just literally just such a fucking midlife crisis. Kind of weird.
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Kara Swisher
07:52
It is weird. Um and also what you know, it might remind you a little bit of all the with all the cities tried to compete with amazon for the warehouse that we're never getting them. The state of New Mexico has invested a lot in Spaceport America for Branson but hasn't seen much in the way of results. You know, we'll see islands had some back and forth with some of the people in texas.
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08:10
It's a business where he's going in the right way to do it.
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08:13
He talked about a moon base, he talked about how you get there, reusable everything, bringing down the cost. That's what you want to hear.
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Scott Galloway
08:20
Well in the business, the winners here from an investor standpoint, one
SpaceX
I believe and I get shit for this. I believe
SpaceX
is going to be worth more than
Tesla
because I think one is going to go up and one is going to come that way down.
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08:32
But also the business of the stocks of the companies who want to look for are the picks and shovels here and that is the company's building infrastructure and materials for all these people are going to spend massive amounts of money to try and do things in space and the test, competitors are actually doing good things, right?
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Kara Swisher
08:47
So it's not like here, they're kind of doing stunts and he's continuing to do is great business and, and in cars, you know, they're all investing heavily into the future.
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Scott Galloway
08:56
So they're all coming for them. I mean, we've been predicting that for a long time.
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Kara Swisher
08:59
Yeah, it's like, it's like it's like streamers and netflix.
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Scott Galloway
09:02
That's exactly the right analogy. Netflix had it to themselves for eight years and then everyone said, okay, we got to get into this. I mean you did a good job, you have the auto market has gone from a kind of low margin Manufacturing-based business worth $100 billion $800 billion dollar business.
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09:20
And that's about to that blood in the water is about to attract one of the biggest sharks in the world and that's
Apple
. I mean I think
Apple's
coming for
Tesla
anyway it's got a little bit off script their spaces. Weird space is a weird thing right now.
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Kara Swisher
09:32
It is all right. Next up the china crackdown this past quarter saw
china
tightened regulations on a number of industries particularly tech Beijing announced a blanket prohibition against all Cryptocurrency transactions and mining the government passed time limits on the amount of time kids can play video games, china also banned ride hailing giant DD from signing up new customers right after the company's I. P. O.
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09:54
And even Ellen said where's Jack Ma who is of course the most prominent entrepreneur that's come out of china from a global perspective in terms of you know, excitement and energy and very well known, I know him very well, I don't know where he is. So what are the wins and fails here scott?
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Scott Galloway
10:09
Well first off I just wanna acknowledge I predicted that Alibaba was a great by three months ago and I think it's off 25 or 30% since then.
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10:16
And I think what's shaping up here, I think this is the most undercovered story in business and that is you have these juggernaut companies and basically I think we should learn from what
china
has obviously learned from us and
china
looks at our society and says okay where does this thing really come off the tracks?
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10:36
And one of the things that obviously clearly registered is that big tech has overrun government and subverted national interests to private interests.
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10:45
So they've gone after one tutoring companies because they found that there Their equivalent of Harvard I think it's called Lingua has got 1% admission straight and increasingly it was being filled with the Children of rich people, because they get, to they get to participate in the tutoring industrial complex.
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11:01
So
China
comes in and literally kneecapped these companies that have like $100 billion in market cap and said sorry you're out of business, did he wasn't sharing their data or wasn't they didn't like what they're doing, They cut them in half, they disappeared.
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11:16
Jack Ma, I mean jesus christ can imagine if all of a sudden we woke up one day and like no one could find Jeff Bezos for two weeks.
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11:22
And so the mother of all macro bets so what have you had this has sent a chill through the markets and you have companies like Alibaba which quite frankly are kind of amazon plus their amazon but they're growing faster and even more dominant and arguably even more innovative and they're trading at a ford P.
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11:39
E. Of 16 or 17 vs. Amazon at 60. So this is either the mother of all fire sales or the beginning of the end for chinese text access to global markets.
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11:49
I personally believe this is an unbelievable opportunity because she Jinping Going to rap the knuckles or is it going to cut off their hands and he still has to bring out 10, 20 million people out of poverty every year. He's got a revolution.
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12:03
I don't think he's gonna totally he's got a lot of challenges.
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Kara Swisher
12:06
Yeah this is it's hard to keep entrepreneurship under wraps I think ultimately. Um But they're trying. Yes. Yeah. Yeah because they'll just move or whatever, they'll go somewhere else. But um and also stopping kids from playing video games creates a lot of unhappiness within the society at the same time.
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12:24
They're talking about addiction and a lot of the things that whistleblower was talking about, you know that facebook has a problem with crypto regulations had no effect on the price of
Cryptocurrency
. And also interestingly listen to this. My brother, my family has a coal company, you know this right? Um He was saying I just all right, I have nothing to do with it in any case.
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12:46
Um He was telling me all these coal companies are doing great now because of
Cryptocurrency
, which I thought was fascinating electricity because energy electricity generation. And so that was I was like you're kidding, He goes no it's like crazy. Um and he's like, you should write about it. I said no, I shall not because uh, you are in that business.
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13:05
But nonetheless,
Teletubbies
.
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13:08
Teletubbies
.
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13:09
Yes, that is my corruption.
Teletubbies
. So it's really uh, it's a fascinating time is that it gives opportunities across the world to other countries that are not going to do this and it doesn't have any impact on the price of cryptocurrencies.
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Scott Galloway
13:21
Well, that's that's the there's a lot there. That's the really fascinating thing is that if the second largest economy band
Apple
or Band Nike, I think those stocks would be off 3050% and I'm not sure they'd recover for a long time china bans crypto and for a hot minute ca goes down and then it comes back.
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13:40
I mean, crypto is bigger than
china
is what you take from this. Your comments about cole surging and price fly in the face of the crypto Taliban. That likes to say that actually crypto is now the largest consumer of marginal alternative energy. So it's actually financing hydro electric plants.
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Kara Swisher
13:58
And a lot of people have said no, it's bad for the environment whenever you have a new actually, I'm sorry, may I interject it's actually they're using this these clean coal technologies that are really interesting and innovating in them.
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14:11
Just let us know, but there's all these innovations going on there. Listen, we shouldn't be burning coal at all. But as we're doing it, they're doing, it's prompting, he was telling me and innovation innovations in this area of all this stuff, you know, I'm not cold, why don't you do yours?
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14:33
I'm not, no, I'm not. But it's interesting that it creates other industries and of course it's not marginal. It's, it's, and, and it is, hydro electric is doing great.
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14:45
It's just china getting out of it gives opportunities to others to take up the slack.
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Scott Galloway
14:49
It's fascinating and, and typically a lot of people pointed this out whenever china bans anything that's a buy signal, whether its google, whether it was read it, whether it was twitter and now crypto, you go look back a few years later and you like wish we would have bought, it's usually a buy signal when china decides this technology of this company is a threat to our society.
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15:11
That's basically saying this shit is gangster and we can't control it, which from a long term investment standpoint means it has attributes that are attractive.
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Kara Swisher
15:19
Yeah. Anyway, it's interesting. It's fascinating and I don't think that, I think video gamers are gonna do all kinds of cheats, there's already hackers doing that. Um, I think it's very difficult to stop people from playing things they like, and I get the idea of it.
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Scott Galloway
15:33
Um, and it's interesting, but it's just like telling your kid not to smoke pot or something, you know, it just just, it's just hard, you know what I found out where, you know, in our house were very uh, as you can imagine a lot of conversations with social media, My youngest ratted out.
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15:47
His older brother is like, how, like, has a Tiktok account? And I'm like, you're kidding. So immediately go on and look at it expecting to see, I don't know, it's something terrible.
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15:57
And he created these soundtracks, these funny soundtracks of monkeys and he's getting three million views and I'm like, hello, college scholarship. Really tracking down. And I'm like, you have a Tiktok account and the look of fear over his face and I'm like, this is awesome, This is how we're getting you into college.
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16:14
And I'm like, all hot and bothered about? And he's like, oh, I thought I took a break from it. I'm like, you are not taking a break from social media, get your face back into the phone and start producing more common like a social media changing. I think this is I literally, it's like finding out your kids an amazing, they're not going to do what you want.
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Kara Swisher
16:31
F Y I, my, my kid made a beautiful video cooking video on tiktok that was hysterical
Instagram
one of them. And it was wonderful. And I was like, and I sent it to some people, I'm like, is this any good? And they're like, this is really good and who would know and uh, and he won't do another one.
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16:46
I was like, you need to, this is a business for you.
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Scott Galloway
16:48
And of course he's like, you have a dance off you put up louise cooking video. I'll put up my, my son's monkey.
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Kara Swisher
16:54
Okay. I'm sure they're both great. Why can't they don't both be great? It's a competition.
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16:59
No, let's just celebrate their talent. But I'll tell you, he's like, no, I'm not doing it. Not doing. Yeah.
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Scott Galloway
17:06
I like finally we have an edge to get you into college and you don't want to, he's like, no, I enjoyed it. But I want to move on to other things like, yeah, don't be so fucking mature.
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17:15
Get addicted. Get addicted.
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Kara Swisher
17:17
I was like, it's a business millions to be made and only idiots running this place. Anyway, let's stick to the last one. Delta variant scott. It was not the hot back summer. Everyone was hoping for what are the winds and fails here.
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Scott Galloway
17:29
Well, I'm a glass half empty kind of guy. And when you're the second most vaccine hesitant nation in the world and you're looking literally a one of the biggest blessings, the most important product in history.
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17:41
And we have these geniuses who have leveraged their human capital and the infrastructure that is
America
, an incredible supply chains such that we are the home and the producer of the most important product and the greatest, uh, the greatest volume of any nation and we're gonna let tens of millions of doses go to waste and you know, talking about these facebook hearings and we have Senator Klobuchar coming up.
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18:02
You know, there's really two things, I mean two big things plaguing our society and the first is polarization and that gets a lot of attention that it ends up that the zuk and Cheryl have their soft, delicate hands on a dial to turn up and down rage. And they've learned that the more they turn the dial up, the more profitable they are. And that's the problem.
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18:22
And then the second thing that we don't talk a lot about is that the algorithms do something very dangerous and that is they go crazy with our confirmation bias. And that is if we go on facebook and say I'm worried about the vaccine, it immediately serves you content to convince you that the vaccine is dangerous, hasn't been tested as a conspiracy.
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18:42
And all of a sudden we have lost the connective tissue of truth and without truth you can't have a productive society. And as a result we are blessed with incredible innovation.
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18:53
But at the same time we shouldn't be, we don't have to be here Karen. I mean that's the bottom line.
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Kara Swisher
18:59
But I think these anti black people have exhausted us all. You know what I mean?
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Scott Galloway
19:03
We just have to leave facebook and the media gave them the tools to exhaust us before. There used to be a truth. There used to be a truth. There used to be in the sixties, oh this vaccine for measles rubella. It works. And we've done peer reviewed research and you can trust it and we trusted the truth in science and now we trust facebook and facebook is sending us facebook. Can't be trusted. It's been it's so damaging.
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Kara Swisher
19:29
Well, one thing is business travel hasn't rebounded surgeon case with kids, hospitals overwhelmed.
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19:35
Uh, people aren't uh, you know, people just aren't still not quite out there. Although in little ways there, I've done a couple of business trips now. Very few but a couple but not as many as I used to. For sure. Um, on the other hand, these vaccine mandates by companies now. Almost all the airlines have them.
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19:53
Um, people are getting vaccinated. There's a little less has its now sort of more close down to the crazy crew. You know, at the end they used to hate gay marriage, that kind of stuff. And instead of the people are like, well, um cases are dropping everywhere which everybody expected. They don't know what's going to happen in the, in the winter.
Share
20:10
They're probably expecting another surge if we don't get more vaccines. Um, some states like Tennessee have very low vaccination rates and high ones are doing better. They're just doing better. You can just look at the economic changes where people feel more confident like this is this is an inflammatory statement.
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Scott Galloway
20:28
I think in retrospect when we do the data and do the attribution.
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20:33
I think it will be very difficult to find a trifecta that has resulted in more death, disease and disability than trump fox and facebook.
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20:44
Whether it's to santa's trying to mimic trump and his incredible success among the far right and making really dangerous mandates and creating tons of misinformation across the great state of
florida
and creating creating higher infection rates than many NATO countries.
Share
20:59
Whether it was pretending to give a god good goddamn about the health crisis and continuing to spread misinformation both from fox and then facebook takes it and turns a dumpster fire into a mushroom cloud.
Share
21:11
If you look at the map of infections and deaths, it literally looks like a fox viewership or a trump voting map. I mean it's just it's not hard to connect the dots here and it's just there has to be a truth and I now cases in
florida
are going down there.
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Kara Swisher
21:32
That's true. It's just the cost. It's just the cost that it took to do to be this stubborn is really what it's about.
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Scott Galloway
21:38
I believe we don't need to be here.
Share
21:41
Well we have we have the asset, we had the assets, the innovation, the blessing the science, the distribution to not not not eliminate this but dramatically reduce this and it got politicized misinformation ran amok uh in the
US
we become fat and lazy and selfish and we conflated liberty with selfishness. This is just so incredibly discouraging.
Share
22:05
This is kind of how marks and the G are you predicted the end of american capitalism that we would start eating our young and going after each other and that we would we would be subject to misinformation and it's just, you know, there's some very hopeful things um incredible new business starts innovation. I think health care is going to come out of this more robust.
Share
22:24
We, you know, the spending plan, if it goes through could reduce child poverty by 60%. I think a lot of people are waking up to the notion that if we're going to be the wealthiest country in the world, we should start acting like it. There's just no getting around it. We come out of this, the
America
comes out of this deeply scarred and looking terrible. We don't kind of, we don't deserve to be global leaders at this point.
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Kara Swisher
22:46
Yeah, it's interesting. Uh
florida
has a vaccination and I'm just looking up 50 almost 58% of the state's population.
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Scott Galloway
22:53
Seniors, you don't have the seniors, seniors, seniors have been de Santis deserves credit for getting a lot of seniors vaccinated very early and the seniors in
florida
are typically oftentimes, seniors who have relocated from the Northeast who are educated have decent incomes and guess what?
Share
23:10
They're smart and they're like, give me the goddamn vaccine and it's worked for them and then you have the rest of, you know, these parts of
florida
that have bought into this notion where I don't want my nine year old to wear a mask in school.
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Kara Swisher
23:22
Yeah. And then they punishments to punishment. The state is meeting down for people if they talk about do what they want like that. Of course they, it only has to do with themselves. Um, it's kind of ridiculous that they, they're trying to punish uh, parts of the state they want to do mandates anyway.
Share
23:40
It's hopefully it will rebound. Everybody thinks will go down.
Share
23:44
There's a lot of unnecessary death in places where there, uh, promoting vaccine hesitancy. Um, but hopefully we won't have a resurgence in the winter, although many expected. We'll see, we'll see where this is going anyway. Scott. Let's go on a quick break. When we come back we'll do our self evaluations with a look about how well our predictions held up in Q three. Let's look in the mirror, let's look in the mirror.
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Scott Galloway
24:09
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24:18
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24:25
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24:48
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24:60
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25:23
Uh huh.
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25:27
We know that listeners of this podcast want to better themselves financially.
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25:30
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26:09
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Kara Swisher
26:34
And we're back scott. Let's take a look at some of the predictions we made this past quarter and see how we did. I think I'm gonna start with one that you made a few weeks ago.
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Scott Galloway
26:42
You said my prediction is around facebook. I think that there are building mounting political motivation uh, to criminalize or start criminal investigations.
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Kara Swisher
26:57
Obviously gonna ask Senator Klobuchar about that. But um, I still don't think that's going to be the case. I want you to continue to make your case. Nothing's happened, obviously there's SCC cases happening. Um, I don't know if the sec has a set enough to do it. Uh, what is your thought on this?
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Scott Galloway
27:13
So almost everyone who I've talked to have a lot of respect for, including you disagrees that. And I talked to ask asked, Yeah, I asked point blank to produce a great legal mind and he said it would be really difficult. And most of the people he's talked to said a criminal action would be difficult.
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27:29
My my thesis is that there are so many politicians who will now feel that there's cloud cover to file criminal action against a company or someone at one of these firms that it's just going to be too irresistible. And When I think about or just and we should ask Klobuchar those uh, you know, if Michael Milken was the head of a fintech company today that did what he did, I just don't think he'd be sent to prison for 10 years.
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27:54
And I also think that they've kind of crossed the line and I've been wrong about this before.
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27:58
But anyone who's experienced this slow moving terror of a childhood, an eating disorder to know that this company knew that that was happening and was suggesting additional content that made things worse.
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28:10
I just think there's going to be mounting pressure and air cover for a criminal action and it could come from you did as pre explain what Preet said we were backstage.
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Kara Swisher
28:19
I have a lovely picture of the two of you by the word.
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Scott Galloway
28:21
Yeah, basically essentially said the problem is they've been very savvy about they really haven't committed a crime because the 230, it's like you can't go after him for defamation. They're technically not liable for the content.
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28:33
So it's probably just as they went after Al Capone by going after his lawyer and getting his account and getting to flip. What do you have here? I think you can federalize the antitrust case. I'm sorry, the cartel pricing case in texas because the remedies for cartel pricing are criminal, I also believe. And I want to ask Senator Klobuchar this.
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28:50
I think that there's now evidence that they lied before
Congress
also think there's evidence that there's certain disclosures they should have made to the sec. When
Mark Zuckerberg
testified in front of
Congress
that I've seen the research and while it's not conclusive, it shows that uh spending time on social media is positive. That was a lie.
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Kara Swisher
29:07
That was a lie.
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29:08
Well, okay. All right, okay.
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Scott Galloway
29:11
I think I don't know whatever goes down for that.
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Kara Swisher
29:13
Look at the trump administration right now. The people that used to be there are like resisting congressional subpoenas.
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Scott Galloway
29:19
It's hardly a it's time for our government to start pretending that they're supposed to be there to protect the long term interests of the american public and prevent a tragedy that comment. And you know, it just goes, just drives me fucking ape shit. And of course I was on Anderson cooper last night to express this view.
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Kara Swisher
29:35
I see that you're always with him.
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29:37
You're cheating on me.
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Scott Galloway
29:38
We keep talking about what will facebook do next.
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29:41
That's not the question.
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29:43
The question is, what the fuck are we gonna do next? We how are we gonna do next? We are letting where we keep hoping and begging that their better angels are going to show up for that.
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29:53
We're going to shame them into something, we need Senator ie Sheriff Klobuchar to come in And if the laws can't put them in prison, we need to change the laws, We put, we put so many people in prison over the last 30 years for so much less than what these executives have done to
America
.
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30:12
It is just so while I agree we are an unfair society. I don't, I don't have the legal background to say whether any of these criminal actions will result in prison time for anything.
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30:23
But I'm telling you
Kara
, someone is going to go some somewhere one hacker way and arresting you people.
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Kara Swisher
30:30
He's going to make a citizen's arrest someone.
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Scott Galloway
30:33
Some egg is going to wake up in the morning, look in the mirror and go, hello madam governor and file a criminal action against one of the companies.
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30:41
It is over. Do it.
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Kara Swisher
30:42
I think you should show up in one hacker way with some handcuffs. You had a prediction about public and private markets. Let's play the tape.
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Scott Galloway
30:50
And I think that in the latter half of this year, despite an increase in GDP, despite incredible new business formation, I think you're going to see the private markets do well, I think the public markets are going to occur incredible volatility and we're going to see some of the most uh, step change downs in the market. I think we're gonna have some of those volatile days in the market in the next six months.
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Kara Swisher
31:12
All right scott. What do you say now because the markets are doing okay still there's so far hasn't been in october surprise. We're not that deep into october um And uh and there's been some public offerings here and there Um actually and this is but I like to think I hold myself pretty accountable.
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Scott Galloway
31:30
I think we actually got this, we're sort of on the right side of this. If you look at September, it was the worst month for the market since early 2020 and it was the worst quarter for the market since early 2020.
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31:39
The SPAC market is all but kind of gone away. There are only two offerings in july.
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31:44
So I do think that I mean there was obviously wasn't a crash and the market is still you know near record high volatility. You didn't say crash, but but there's there's absolutely what feels like been sort of a d throttling or a check back and there's much more insecurity in the market.
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31:58
Um So I would call this like Met, okay. Um I think most people would say, I mean September was the worst month for the market since early 2020.
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Kara Swisher
32:07
Yeah I think I think a lot of people not just you are predicting a real crash very soon but you know the month isn't over. Um And the things people are still waiting on this infrastructure bill, I think every and and everything else and whether the debt ceiling and so I don't think you're gonna see anything until that stuff sorts itself out, everybody's sort of focusing on that.
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Scott Galloway
32:27
Um and and the money running out, you know, we'll see, I think we will see, I think you don't expect it and from a place you don't, yeah, there's some weird, I have Bill silver on property and he's right, whenever we're worried, can you explain who Bill Silver is? I'm sorry, he's kind of a legendary finance professor at NYU and he just retired.
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32:49
Um actually a real professional role model, just like such deep domain expertise talk for 40 years.
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32:55
Um and anyway, so he always say the markets climb a wall of worry and whenever we're really worried about the markets they seem to creep up. It's when you think oh everything's great, it's a new economic model.
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33:06
I mean I don't know that some of the articles here in the late 99 that we've moved to a new a new model of productivity and the markets could go to and then also wham and it started actually with bad numbers out of Japan that infected the B two C.
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33:19
Internet market and then it leads to the B two B and then everything just collapsed and the fear I have is that we haven't let the markets follow their natural level that we bailed out everything and everybody and there's a decent, there's a decent, you know ecological metaphor and that is if you don't have regular controlled burns and the dry brush just continues to accumulate when you do have that lightning strike.
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33:42
I mean, wow, it just feels like we're setting ourselves up for a pretty serious uh super fire in the markets, interesting.
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Kara Swisher
33:49
You're using the wildfire metaphor, interesting. You know, I had a relative, it wasn't interested in stocks and and when I was young, I said, well, what do you think about the stock market and what, what, what advice can you give me as a businessman? He goes, we'll either go up or go down.
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34:04
And I was like, okay, thank you for that. And actually it was, it was an entirely good piece of advice. Um Anyway, we'll see. I think this is a wait and see. I don't think there's an answer yet. I don't think it's an answer yet.
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Scott Galloway
34:15
Nobody knows. That's the gorgeous thing about the market because nobody knows it's Yeah, but I mean this year, I think if it doesn't happen in this year, you're wrong house that it doesn't happen this year, you're on a calendar year.
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34:26
But one, I mean, think about this, there's just a weird complexion or viewpoint forming and that is now the majority of people working at Goldman and alternate investments have never experienced a down market throughout economic history, the history.
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Kara Swisher
34:40
They do that story all the time. Yeah.
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Scott Galloway
34:42
So they don't know what it's like to get their cut off Since the beginning of the Dow one out of every five years, it checks back 20% or more? 20% drop right now would be about 7000 points. That happens every five years in the market has not been down in 13 years.
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34:59
So. And how does the market even respond if the market checks back 7000 points? I mean how does how does our society respond? How do all these Robin Hood traders who come to believe that they just lever up on margin with money they don't have and all of a sudden they wake up and they're like, okay, I'm down 80%. Like what what happens? What? I think it's going to be very interesting.
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Kara Swisher
35:23
Yeah. You know what I do? You don't mind us?
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35:25
I think I just I just ignore it. I totally ignore it.
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Scott Galloway
35:29
And by the way, that's that's one of the reasons you're wealthy.
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35:32
A great strategy is to buy good companies and never think about him again.
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Kara Swisher
35:36
I never do, I never look at it. In fact, my the woman who's does my, I have uh an all lady team, a lawyer, accountant etcetera, finance. And uh I literally, they cannot get a meeting with me triggered.
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Scott Galloway
35:49
And I notice.
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Kara Swisher
35:50
But somehow, high speaking of uh adding a woman to this situation here is I did a prediction.
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35:55
It's about the infrastructure bill.
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35:58
Listen, I think he's right at the same time. I don't think the child care policy is going to pass, What do you think?
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Scott Galloway
36:05
I don't think it's going to be right now.
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Kara Swisher
36:11
It's one of the items on the chopping block and guess who's the holdout mansion and cinema?
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Scott Galloway
36:17
Well, if someone had come to you just think that if the government came to, if the government was a person and came to every one of us and said, I'm not going to tell you how, but it's going to be expensive But it won't bankrupt us and we'll spend a lot more money on other things. But we have a means of taking child poverty down 62%.
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36:39
I mean, how can you say? No. I'm not sure. And Senator Senator Bennett, uh, summarized it perfectly for me said one of the terrible things about our country is that kids can't vote and so we spend trillions of dollars upgrading nana from carnival to Crystal Cruz as well with all sorts of benefits for seniors.
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36:60
And I think Social Security has been a successful program, but we ignore the people who don't vote in the Iowa caucus and those Children.
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37:07
And so for God's sakes, there's a lot of things you could strip out of that bill, but, but we're not going to reduce childhood poverty.
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37:15
I mean christ, we're again, we're the wealthiest nation in the world. We need to start fucking acting like it. I this is so discouraging.
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Kara Swisher
37:24
Yeah, they don't vote. That's exactly, that's, that's all she wrote that's all she wrote. They don't vote and as Senator Manchin incident should be ashamed of themselves on this one, ashamed of themselves.
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Scott Galloway
37:33
I used to be from the camp that you know, they're doing their job, their moderates, they're trying to negotiate now. I just think they're just jonesing for the camera there drunk with their power being holdouts because some of the stuff they're claiming that they're not for.
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Kara Swisher
37:44
I just don't how can you not, you know, public support is high for this child care subsidies, universal pre K a two year of free, universal community college and extension of current expanded channel.
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37:56
It's the same thing with gun violence, gun control. Most americans want some sort of gun control on some level, not taking away your guns just if anyone wants to write in, but actually having background checks and things like that, go get him Senator Klobuchar. Yes, exactly, exactly. Let's bring in our friend of pivot senator
Amy Klobuchar
who was present for the facebook whistleblower.
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Speaker 3
38:17
We're hearing with Francis Hogan, I think the time has come for action and I think you are the catalyst for that action. Um, you have said privacy legislation is not enough. I completely agree with you.
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Kara Swisher
38:33
Welcome Senator Klobuchar.
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Speaker 3
38:35
Well thank you so much. Karen Hi scott.
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Kara Swisher
38:38
It's great to be on again. Great. So let's get right into it. The facebook misbehavior is back in the spotlight, something we seem to always be discussing. Um, so what are the next steps here and I'd love your overview of the hearings and what you think the impact was.
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Speaker 3
38:52
Uh, it was a bombshell after working in this area for years and years, taking on everything from political ads to Russian interference in the election to app stores, you name it, this broke through and uh Francis Hogan, I believe will be a catalyst to action.
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39:13
Maybe it's because finally with my colleagues who have talked a lot, but then never seem to be willing to push these bills through. You know, maybe when you find out that content is being pushed out two teenage girls to glorify eating disorders with accounts like eternally starving and I need to be perfect. Uh maybe that's kind of the, the jumping the shark, so to say and uh that that's it.
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39:42
And that's what I'm hoping happened. She was so calm, she was so methodical in going through what happened. And she also had some solutions and open people's minds in a way that I hadn't seen before.
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39:55
I think, you know, there's been bipartisan support for moving forward in this area that actually is not new, but it's galvanizing people for action instead of just hearing after hearing after hearing, what does that mean galvanizing. So what are the next, that means actually moving on in? I put it in a few major areas the first just privacy we can talk about that as you know, gigantic industry of pet comes in a lot.
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40:21
Good lot bad, whatever, no changes to federal privacy law that has to happen states having to fill the gap but a patchwork of action and there should be changes to federal privacy law, there should be some updates to the Children's Online privacy protection act, something my colleague center marquis has been pushing um there should be antitrust overhauls, I think we all know that this consolidation has led to a lot of these problems that is not as intuitive, but I do think the senators get this when you limit innovation when you allow a bully on the block to make all the decisions.
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40:56
Uh this happens. Um so finally algorithms um and um how you handle that with liability and the like those are the four areas, all of them mentioned at the hearing. People starting to be aware that maybe the Children's online bill is different than privacy, there's new information in people's heads now and I think they're starting to sorted out.
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41:18
Um and again we already had movement, you know, carol, we passed the more money for the agency's out of the U. S. Senate, the center Grassley and I the merger update feed, we got a venue bill that allowed the state A. G. S to take on tech as they want to through the committee.
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41:35
We have got the app store bill introduced um we are center Gracie and I are very close to a bill that we've been working on for months now. So there is a lot of things happening pharma bills starting to go through big ag bills gaining support that we've never seen this momentum and then finally this Francis Hogan comes forward and says, why are you waiting?
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Scott Galloway
41:57
It's okay, uh senator. Uh so the regulation and antitrust all super important. You've been a leader around those issues but they tend to be a pretty slow process and facebook with all their lobbyists in their capital are pretty good at typically historically slowing it down and watering it down.
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42:15
I'll put forward a thesis and I want you to agree or disagree.
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42:19
I don't believe any of this really stops until there's a perp walk one. Do you agree with that? And to do you think this new information that comes to light will inspire any sort of criminal actions at a state or federal level?
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Speaker 3
42:32
Okay, well as a former prosecutor, I'm cautious about throwing around the words about criminal actions because I think you have to the evidence. I've always been like this and then you go forward and you allow people to look at that so that I will leave for the state prosecutors or the Justice Department.
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42:51
But when you talk about a perp walk, I was thinking of those words, you know, there's many ways to do that. Some is a hearing, right? That's been happening before. Sometimes I feel it's just like people throwing popcorn at the screen.
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43:03
Um but then there is also um major accountability from the public and by the way, the images of
Mark Zuckerberg
sailing while this was going on and the anger that people felt about that you can have all kinds of versions of perp walks and what I want to see is action. Not just anger.
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43:23
I want these anger translated into action might be a better way of putting it. And there are some really straightforward things we can do here. Uh, Senator marquees work to make the Children's Online privacy protection act apply to older Children.
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43:41
Uh, the work that we can do when it comes to privacy and we know from what happened with
Apple
when they gave their customers the option to opt in 75% did not opt in. Well, what if you did that with the other platforms, you require that these are some of the things that Senator Cantwell and I and others are working on with a privacy bill and I think they'll finally be, you are correct.
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44:04
Every corner you walk around, there's another lobbyists, They have stopped this stuff from going forward. Um and I've already talked to our leaders about this in the Senate. I've talked to multiple republicans in the last few days.
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44:18
I've seen increased interest in the actual bills.
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44:21
I'm saying things like um so we just had this hearing and then we're going to do nothing. Come on here, look at this, this is months of work we've done on various bills that we've been that have been in the works on antitrust.
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44:34
I think the committee, when you look at the bills we have taken on an inordinate number of them have involved competition policy so far, not just in tech in pharma, um, inordinate number of hearings that were just as bipartisan as the hearing. I took part in that Senator Blumenthal in Blackburn headed up. So I just see the time on multiple fronts.
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44:56
You cannot just say one front, right. You can't just say this is all about Children and facebook. It's also going to be and I trust because it's got to apply to other platforms. It also the algorithm piece of it I think is the most interesting because how do you do that while still protecting speech?
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45:15
Um, you could look at what has been suggested, do remove the immunity when there's amplification. Um, and they're making profits off the amplification. You know, answer is well what happens to your the recipes that we want to amplify in the cookbook? Oh guess what? You're not going to be sued for that. So those kinds of things have to be part of the discussion.
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45:36
I've already put forward a bill to allow for the lifting of the immunity when it comes to vaccine misinformation when it is in the middle of a public health crisis, Senator Warner narrow. No, and I did want about discriminatory conduct. So that is another way and finally letting the researchers in. We can easily do that uh and allowing for more transparency on algorithms.
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Kara Swisher
45:59
So one of the things that facebook did this time was, and I wrote a column about it is they very aggressive? They attacked her as and nobody know nothing. She wasn't in the room. And my my response was, if you work in a sausage factory and anyone knows the sausages bad who works there and understands what happened, you don't have to be in the C suite making bad decisions about sausage.
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46:20
So what did you think of the reaction? Because it was quite aggressive at her and you know, I just saw Monica bicker who I thought was really quite sly but terrible. Um she said of whatever she's ahead of their um and and it's been a very aggressive movement. I was sort of surprised. What did you think of that?
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Speaker 3
46:41
I was actually surprised, but I guess when you track back um and come out publicly, I mean, he made it very clear, no apologies, right? They're not going to apologize. And that's the that's what you saw in action.
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46:54
You saw the tweets from people um that work there, the kind of things they were saying. And I actually asked Francis how again I said you um they attacked the research when she noted that facebook was known as putting together, They boasted about it, right?
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47:11
Um this huge research team and anyone that's read the ugly truth knows that you know the story of how they put together these research teams and what happened and then uh they undermine them and they basically throw them under the bus.
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47:26
Well we know at the same time they were cutting up the access for N. Y. U. And some of the other places. So I thought that was aggressive. Um I think it's always you know I've been through this common attack on um on from tech is oh you don't know anything about it.
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47:43
You're you're mistaken. Your you don't have the kind of knowledge we do. You know they do it to anyone that takes them on. But I was kind of surprised they did it to her.
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Kara Swisher
47:53
And what did you what was the reaction from Capitol Hill with that?
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Speaker 3
47:56
Um I think anyone could listen to her for a few hours. She had this amazing ability to take subjects and explain them. Which actually takes more smart sometimes than just knowing the complex subjects. Uh And I think that no one believed that her calm manner, her actual her actual embracing, you know she likes people that work, she likes saying things about the company.
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48:22
She wasn't all just thought you know the company should be destroyed and demolished. That wasn't her tone, her tone was I want to make this better which is what everyone should believe whether they're in the company or leading the company and that's what I thought was so appealing about her as a witness. She also wasn't partisan, she was respectful. Um, and um, I think it made, I just think we've been waiting for this moment.
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48:49
Um, and I've loved our hearings, we've had on big data and on home devices and all these, they've been really good and they've been important because we collect the actual information and the senators involved. But this thing broke through.
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Scott Galloway
49:02
Um, not just to the senators working on tech, it broke through to everyone in
Congress
and to the public, Well in the 80s, one out of two fatalities on the road involving youth involved alcohol and then mother's bound together and um, you know, put tremendous pressure on
Washington
to pass laws that resulted in a raising of the age to, to drink alcohol.
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49:25
This does feel different because it feels like parents are really incensed around this one. Does it feel different from you for you because you hear from your constituents? It does feel like this has taken it to a new level of, of, I don't know, mistrust malevolence, mendacious nous, whatever you want to call it, why wouldn't we just consider age gating?
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49:46
We age gate alcohol, tobacco pornographic content. Why wouldn't we just age gate algorithmic lee driven content, especially across some of these platforms. And does it feel different this time.
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Speaker 3
49:57
Yes, that is one approach that I think is worth looking at. And it's certainly supposed to be happening and they're not, they're allowing younger kids of course on
Instagram
, we now know like 40% of these kids are on it. So that is, that is a piece of it, even though they're not supposed to and you look at the wealth of these companies and they should find a way to do this.
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50:20
Um, but beyond that, I think you're bigger question, which I loved is given that, you know, I keep, I wrote in my book about how in the old days it was, you know, farmers with their pitchforks and union organizers that really got this thing going to a pitch scream.
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50:37
So that
Washington
finally acted and some of it was states acting in their own ways. And that pushed the action in
Washington
, by the way. You already seen this privacy.
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50:46
The moms and dads, they have been through hell with this pandemic already, right? So everyone's much more aware. They've been hanging out with the kids at home balancing their toddlers on their knees and their laptops on their desk teaching their first graders how to use the mute button and guess what? They've realized how their kids are looking at these devices all the time.
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51:07
The kind of sites are looking at and I think what Francis Huggins stirred up. It wasn't all as much as the eating disorders for me as someone who's led a bill passed bill in this area and how knowing it's the number one mortality rate for people with mental illness, how viscerally bad that was, I think a lot of parents heard all this and they thought, wait a minute.
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51:28
Yeah, I'm so mad that these things are targeting my kids and these ads of whatever kind it is and I think that today parents trying to raise their kids in a really hard world and realizing they're up against this big facebook and all these platforms that are making it harder for them.
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51:46
I think that's going to be the demand for action by the way, I saw that happen with EpiPen, I took that on and that was, we were not making much progress on some of these issues and the moms basically all taking it on made a difference for some rebates and other things that brought the price down and that was my own experience, my daughter has an EpiPen, so I was able to see that and was in the front line of getting that done.
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52:13
Um, but I think certain things involving parents are about as personal as it gets and in a moment where you don't have as much connected groups working on things and it's much harder to do it, especially in the pandemic. You have to rely on this kind of broader anger and I think that's tapped in with parents.
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Kara Swisher
52:32
It's interesting. My dentist was mad at facebook and he never has spoken of it.
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Speaker 3
52:37
Like those assholes did that affect?
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Kara Swisher
52:40
No, it was good that the crown is excellent, but I've never heard him say anything, he definitely had opinions, which was fascinating.
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52:47
Now last thing Haugen is not on board for breaking up facebook, although she did suggest some sort of ministry or data privacy agency makes me nervous. I have to say that one made me nervous. I'm like, no, the government should not be in the business of content whatsoever.
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53:03
I don't let me just ask. So one is, what do you think about that solution she had and then the one she didn't watch, which was, and this is your area of expertise, antitrust. A lot of the courts are overturning things because of current antitrust law.
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53:16
They have to, even if it's not that they're conservative, it's just, that's the law is written. So, and that's how facebook is getting out of certain things and making it difficult. Do you think there needs to be a change in the antitrust? You said this?
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53:28
But breaking up facebook, this isn't not probably going to happen.
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53:31
Um, so I'd love to get your thoughts on those two things.
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Speaker 3
53:34
Yeah, I'm so glad you're clarifying this because I did note some of my Republican colleagues like go to the end degree and by the way, that's probably not about facebook, it's about them, certain people with other interests with businesses.
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53:47
Um, the answer what I, how I handled it after she'd said that is I actually asked her about the stuff we're working on in the antitrust base, she literally gave a thumbs up from the witness stand, which is about discriminatory conduct, self preference ng exclusionary conduct, where because you're the big guy on the block, you're the big platform, you make it harder for others to compete because you own all the data because you put your search preferences for your own products up at the top and you know, all of this conduct going on.
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54:23
So she was way into doing something on that. I think she um and I'm going to talk to her in the near future here. I think she gets that, that actually limits innovation when you have that ability, that is all antitrust, it doesn't sound like antitrust, but that is the area of competitive policy.
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54:41
So, you know, she, what she's basically saying is I don't want to demolish the company, that's how I read it, I don't want to get rid of it.
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54:48
But part of what you do with antitrust as, you know, Kyra is when a merger comes before you, they look to see does this hurt competition in some way existing laws have allowed the doJ and the FTC, they're using them right now to go for those cases against google and facebook, it's not easy, It has allowed them to take on some major mergers even as we know now, either before or after.
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55:14
Um but I think we need to upgrade the laws to make it easier. My guest, given how she answered the questions when I asked about some of that stuff, she would agree with this. It's just when people just say, should we break up all these big companies, you know, people are going to go, well, no, that's not quite the answer.
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55:31
I get that, but it doesn't mean that you don't, when you start going under the hood, this is about stopping mergers that are anti competitive.
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55:38
This is about possibly divesting some assets but not destroying a company. Uh, this is about consent orders where you tell to merge companies. The Justice Department says you can do this, but you're not going to be able to do that because then there'll be no competition in an area and it's about updating our laws.
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55:56
So there are sophisticated as the companies that are participating in our economy when we have done nothing because everyone is listening to all these people that have been paid by the tech companies literally millions of dollars throwing him around at fundraisers, throwing him around everywhere.
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56:12
And that's what I said at the hearing. Let's, let's be honest, that's who you're listening to when you go around the corner and you better be listening to Francis hogan.
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Kara Swisher
56:20
All right, Senator Klobuchar, Good luck.
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Speaker 3
56:24
I can't wait to still, as you can see I'm energized.
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56:27
Got this on the front page, we've got people are actually, we have to galvanize votes on this moment or there's going to be the next thing and then everyone true. That's what the tech companies will want. They wanted to go away.
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Kara Swisher
56:40
They do keep fighting, appreciate it. Thanks for coming on.
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56:45
All right, scott. That was fantastic. We love Senator Klobuchar, don't we? We really are fans her as we think she's rock and she should be president.
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Scott Galloway
56:53
Smart, hardworking, no nonsense, very honest, high integrity behind her for president.
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56:59
I'm on team Klobuchar. I agree with you. I think she's fantastic.
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Kara Swisher
57:02
Told you my encounter with her, but I called, I said hello Madam President and she goes, oh Cara and I go, I