The following is a transcript of an interview with Kara Swisher and Scott Galloway, co-hosts of the “Pivot” podcast, which aired on “Face the Nation” on Sunday, March 19, 2023.
MARGARET BRENNAN: And now we’re back with the co-hosts of the ‘Pivot’ podcast, Kara Swisher, joining us from San Francisco, and Scott Galloway, joining us this morning from Miami. And in the interest of full disclosure, we’d like to note that Galloway is a professor of marketing at NYU, but also directly or indirectly connected to several firms that have had funds in SVB Bank, none of which are facing liquidity problems due to the failure, he tells us. Scott, that’s what I want to start with you. What is the broader impact on America’s ability to continue to innovate after this setback?
SCOTT GALLOWAY: Nice to be with you, Margaret. Yes, here – look, the modern American banking system is a miracle. It takes short-term deposits and turns them into long-term loans so we can grow the economy. The question is whether we have what Marjorie Taylor Greene asked for, which is the division of the USA into two parts. And it’s not between red states and blue states, it’s between what I would call venture capitalists in Silicon Valley, who are trying to find a constructive solution, and venture capitalists who seem to have a vested interest in weakening the US dollar banking system. There was a letter that went out trying to facilitate the transaction that was signed by several 100 VCs. It’s more interesting who wasn’t on that list, and that’s people with a lot of interest in cryptocurrencies, who saw crypto go up 20 percent, because once again a huge uncertainty was introduced into the system, this kind of constant catastrophizing. So do we have two Americas in Silicon Valley? And I think the lawmakers and the Americans are trying to ask themselves, should we be supporting the Americans or the agents of chaos?
MARGARET BRENNAN: Who do you mean? Who are these agents of chaos?
GALLOWAY: Well, people who pose with social network algorithms and capital letters say that there will be chaos, that there will be queues around the banks, some will withdraw their money, the most big venture capital firms that have tens of billions invested in cryptocurrencies, so don’t share – don’t share some sort of collective interest in the health of the banking system and individuals who see America on the rise as a cross between the Hunger Games and capitalism on the way down believe it should be Denmark. So capitalism on the rise and socialism on the way down are neither, it’s cronyism.
MARGARET BRENNAN: Kara, you know, so many startups have relied on this Silicon Valley lender to get their business off the ground and to get their business off the ground, and they don’t necessarily have to go to the bigger banks. Is there a knock-on effect here when we see this huge part of our economy crippled?
KARA SWISHER: Well, no, there’s money for them, there’s always money for them. They- there- they said there weren’t enough rat holes to push all the money down in Silicon Valley. So I think they will get the money. It’s just that this bank was particularly favorable to them, including giving personal mortgages, personal loans, using collateral that was, you know, just stocks or the fact that venture capitalists invested in them. And so it was more difficult for them with traditional banks and this bank satisfied them in that way. And it was kind of a Silicon Valley creature, and they had Silicon Valley advisors, and every startup in Silicon Valley was in this bank in some way. And then they spread it to events and other things. And so, you know, it’s a bank that’s too niche for one group of people. And then there’s a group of people who react very quickly, which is why there was a bank rush when they realized they couldn’t sell those Treasury bonds.
MARGARET BRENNAN: I want to ask you about what’s going to happen here in Washington at this hearing this week, the CEO of TikTok is going to be called to testify. Kara, CBS has confirmed reports that the Department of Justice is investigating the company for spying on American citizens, including American journalists, seeking information about their location. And allegedly some of the people who did it were based in China. The parent company says they are no longer employed. Does this kind of monitoring happen in other social media companies?
SWISHER: Well, in a different way. They’re selling you advertising, of course, because we don’t have a privacy law in this country – a national privacy law. And so, you know, whatever these companies want to do, they have a lot of power to do it. I call them information thieves, but they are for-, it’s for a different reason. It’s to sell you advertising. In this case, it’s a little scarier, because it’s the state government. Now, Tiktok said that these are rogue actors, but the fact that they can do it, right means they can, which means if China wants to do it, it can do it. And that’s the big concern here, it’s not just surveillance, it’s propaganda. And so when Facebook releases it or Meta or whatever, they’re doing it for business reasons, and they’re not great either. And by the way, the government could go in there and any government could go in there. And that’s why we have to be very careful about what all these companies get, but we’re especially worried about state actors.
MARGARET BRENNAN: The news development seems to really throw sand in the gears of progress on what ByteDance and TikTok have been proposing as a way to solve the problem, which is something they’ve called Project Texas. They don’t want a ban. They don’t want to be forced to be sold. How Scott, does this get resolved in the end?
GALLOWAY: Well, America is waking up to the fact that there’s a neural plug plugged into the heads of America’s youth, who spend more time on TikTok than any other streaming media platform. And we are understandably wary of the CCP, which would be foolish not to put its finger on the scale of anti-American content and raise up the next generation of American civic, nonprofit, business, and military leaders who feel worse about America every day. The way to solve it is very simple. The CCP hoped we wouldn’t be able to get out of the way, and there’s plenty of evidence that they may have been right. But they would like to keep the world’s number one propaganda tool and hundreds of billions of dollars in shareholder value. And on the eve of the ban, they’ll decide if they can’t keep both, they’ll keep hundreds of billions of dollars and agree to a spin.
MARGARET BRENNAN: Kara, what do you see here? I mean, it was amazing, the Washington Post had huge TikTok ads placed here in the local paper. And you know, the commerce secretary was asked about a possible ban. And Gina Raimondo said, quote, ‘the politician in me thinks you’re literally going to lose every voter under 35 forever,’ that’s the political element here. How does this work if 200 million Americans are on their devices?
SWISHER: Well, there’s that – there’s a problem of people using it, and it’s very popular. I think other services have made some progress now, so it’s a little less appealing to teenagers. But I don’t think there will be any huge protests from teenagers. I think the question you have to think about is what happens if they ban, what happens to the money? Because there are many American investors in this company, let’s be clear. And then there are a lot of American investors who are very interested in the decline of TikTok. So it’s happening behind the scenes at the same time, but it’s very popular for politicians to use this as anti-China, which they do. And some, by the way, are bipartisan. It’s also Mark Warner, as is Josh Hawley. And so, you know, three years ago, four years ago, I wrote an article where I said, I love TikTok, great product, I use it on my phone burner, because I don’t trust the Communist Party. And that’s the problem. This is – this is a propaganda tool. And the question is what should we do about it? And why are American companies not allowed in China? And so it’s very complex. I’m not sure, I wasn’t really wrong with banning Scott, who has been calling me for a while. I think there are ways to protect people, but it’s very difficult if it’s not a wholly owned company in the US or elsewhere. And that’s going to be difficult for this company, now, at this point, given the…
MARGARET BRENNAN: I just want to underline what you said, which is that you’ve said for years that you don’t feel safe using this device – this on a device that you carry with you. Use a phone that you don’t carry with you anywhere because of the level of risk. I mean, this is in the pockets of millions of Americans, hundreds of millions.
SWISHER: Yes. Yeah, I don’t use Facebook either. It’s me. I don’t trust any of them, but I really don’t trust the Chinese Communist Party, any more than I guess Mark Zuckerberg, so low, low.
MARGARET BRENNAN: Just- wow. Quick, Scott, you know, we’re looking at the potential indictment of the 45th president of the United States, who’s back on social media platforms, are there any measures in place to limit the ability to use this as an organizing tool or in a dangerous way, because it calls for protests?
GALLOWAY: Not that I know of, I find it kind of borderline comical to have this sort of hollow debate over the First Amendment or talk or pretend that these organizations are pretending that it’s a really tough decision. It’s pretty simple. I mean, an organization or an individual adds shareholder value to these companies in one or two ways. They generate a lot of engagement through engagement or awe, or they spend a lot of money on the platform. And just about the time President Trump should have gotten a lot less furious or a lot less pleased, about a few days before Biden’s inauguration the Meta found their backbone and kicked him out. And about the time when they will spend another billion or one and a half billion on the media. Suddenly they decided to return to the platform. But as I understand it, President-President Trump has called for protests, and the last time he called for protests, we had a riot. So if they ever wanted an excuse not to put it back on the platforms, here they are. But at the end of the day, this is all about what drives shareholder value, not about any sense of what binds us together or any allegiance to the Commonwealth.
MARGARET BRENNAN: Well, on that cynical note, we’ll leave it there, Scott. Kara, always a pleasure to talk to you. We’ll be back in a moment.