# AI Infrastructure Shifts and Enterprise Capital Reallocation

**Podcast:** Pivot
**Published:** 2026-07-17

## Transcript

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You need to appreciate government before you start shitting yourself.
Hi, everyone.
This is Pivot from New York Magazine and the Vox Media Podcast Network.
I'm Kara Swisher.
And I'm Scott Galloway.
Hey, Scott, are you recovering from the game?
The game.
Ugh.
Ugh.
Ugh.
God, that was rough.
Was it?
Oh, my God.
Yeah.
I've got, like...
Argentina, I won't say Argentina is the better team, but they play the better game.
It was an amazing game.
Congratulations to Team Argentina.
What I would just say to Team England and the people surrounding that team, me and my boys got so much joy from watching Team England through this tournament.
It was so much fun for us.
It created so much additional connection.
I had such a great time.
So not that anyone's going to hear this, but thank you, Team England.
It was wonderful.
Who's going to win now?
Who's going to win?
Argentina or Spain?
I say Spain.
I think you're right.
I think this kid, Yamal.
And you actually called this.
I did call this.
You said that at the very beginning of the tournament, you thought it was going to be Spain.
I did.
I did an interview with smart people and they said Spain.
I'm going to the game on Sunday.
Oh, you are?
Good.
That'll be fun.
I'm going because this is the one place my total advocacy for drinking has paid off.
You know who's taking me?
Who?
AB InBev.
Oh, my God.
They're like, that's the dude that likes alcohol.
Bring him.
Oh, my God.
How do you get?
Why don't I get invitations?
I pick the winner and then I never get invited to anything.
Okay.
But I have to pay for my boys to go.
I'm buying tickets.
It is crazy expensive to go to the final.
That's money well spent for you, Scott Galloway.
Anyway, Scott, I saw The Odyssey.
Oh, what'd you think?
I loved it.
It was great.
Really?
Yeah, I went with Casey Newton after going.
I was in San Francisco.
I went to my son where my son is working, which is he's working at a restaurant called Boulevard.
He's the Saladier.
And we had dinner there and then we went to see The Odyssey.
I was thinking of you the whole time.
You know, it's interesting because, you know, Elon's against it, right?
Because it's like...
Who gives a shit?
I know that.
What does Kara think of the movie?
I know.
What does Kara...
Here's the thing.
It is an anti-fascist movie.
It's about...
It's an anti-fascist movie disguised as, of course, The Odyssey.
But the way he's done it, he finally reveals himself at the end.
Matt Damon is amazing.
Anne Hathaway off the fucking charts.
There's very little CGI, and so it's real people.
So that's the thing.
That's what's astonishing, because you keep watching, and you think for a minute it's AI or CGI, and it's not.
Charlize Theron's in it for five seconds.
It's Calypso, and it looks like an ad for Lancome, essentially.
It's a perfume ad.
It looks like a perfume.
You'll see what I'm talking about.
Her outfit is fantastic.
There's a lot of sort of stunt casting that I don't know if I want.
preferred because they're not on very much.
It's a distraction.
I find those are sometimes a distraction.
Yeah, it is.
It really is.
My second favorite movie, Oppenheimer.
My other one is Chris Nolan.
I think literally perfect film.
Perfect film.
It feels like that movie.
I know it sounds like it.
Perfect film for me was Dunkirk.
Oh, interesting.
There's elements of all the movies in this movie.
There's a Dunkirk-like scene on the beach.
You'll love it.
You'll love it.
You'll love it.
I'm excited.
It's going to make all the money and it's going to deserve it and it's going to win all the Oscars and it deserves it.
You should dress like Odysseus this Halloween.
That's my feeling.
Really?
Yeah.
Consider it.
Yeah.
I think you'd be good.
As long as I get together.
Wear a wig and show off my muskles.
That's what Halloween is for.
Muskles.
You can show off your muskles.
And speaking of muskles, Scott, I'm going to start testing my co-host's testosterone levels.
I feel like I need to do that now.
Defense Secretary Pete Hegs says the military will begin annual testosterone screenings for service members age 30 or older with voluntary testing for younger troops.
Service members found to have low testosterone will be offered voluntary hormone replacement therapy as part of a new program.
I didn't know they did gender-affirming care.
they were against that.
Let's listen to a clip from this bizarre announcement.
This initiative, it's not about artificial enhancement.
It's about restoring and optimizing your natural capabilities, protecting your longevity, and ensuring you have the biological foundation required to sustain the fight.
Well, now we know he's on tea.
Let me let you run with this.
You take testosterone.
You've talked about it.
Why is he doing this?
Explain.
Make the good case for it, I guess.
Well, I mean, if part of healthcare coverage is like, I'm on testosterone because I think it's good for my brain and my heart health.
And it makes, quite frankly, it just makes me feel younger.
Weird things like I don't have to pee as often.
And my doctor said, we're not going to take you, you know, you don't want to, I'm not using it to be a monster or more aggressive.
I'm using it because I want to.
quite frankly, feel 45 again.
And hormone replacement therapy is something that I think, you know, under a doctor's supervision for men and women in their 50s.
Yeah, I take hormone replacement therapy.
Yeah, I think it can be a real value add under the supervision of a doctor.
But this is just performative, in my opinion, stupidity.
Young men don't have, or our military, and men don't have a testosterone problem.
We have a loneliness problem.
Young men are falling behind because they aren't low on testosterone.
They're falling behind because they're low on purpose, education, work, and relationships.
And we're having trouble finding, although actually recruitment is up this year, we're having trouble finding 70% of people.
Remember how joining the Army used to be the option of last resort?
70% of men that walk into a recruiting office right now for the armed services don't qualify because of obesity or mental health problems.
So if you want a more lethal fighting force, we need to make more investments in young men.
And it's not about pumping them full of testosterone.
I know.
It seems so strange.
This is his performative stupidity.
He conflates this weird notion of masculinity and fitness and optics.
with or doing bad pull-ups, our military is headed towards asymmetric war.
You know who's going to have the best?
Brains.
You're going to have the most lethal fighting forces will be the ones that master AI, asymmetric drone capabilities, really good management, ability to attract the best and brightest, and have special forces of just out of fucking control, brave and smart and strong people.
But those people are in their 20s and they are soaked in testosterone.
That's correct.
That's the whole thing.
I was like, literally, Ukraine and the most recent conflicts have all shown, and with Iran against the United States, has shown that might is not the actual winner here or largeness or muscularness.
It's something very different.
And testosterone can also, if it's taken wrong, fuck you up, like beyond belief, correct?
I mean, you have a doctor's care, but...
I know a lot of people who do this is off the shelf and problematic and cancer causing and everything else if you don't do it properly.
Yeah.
For the most part, I don't think young people, the average young person needs the following.
Nothing.
They need relationships.
They need a gym.
They need the money to have decent nutrition.
You know, but they don't.
Some of the craze around peptides and enhancements.
And I realize this is somewhat hypocritical, but as a 61-year-old male desperately clinging to just try and feel 45 again, I do think there's a difference.
But it worries me, this notion that young men, these peptide stacks, and I think that stuff is borderline a little bit scary.
And your 25 or 35-year-old self...
It's pretty fucking awesome on its own as long as you do some very good sleep, good nutrition, gym three, four times a week, some practice to push your limits, you know, be strong, be fast.
I agree.
I can't tell you the amount of, like, people tell me they're buying off-the-shelf peptides.
I'm like, oh, my God.
Yeah, I don't do any of that shit.
Are you?
I'm like, it comes from China.
It's not tested.
Yeah, you don't know what's in there.
I hope you like sepsis.
Like, I just am like, oh, my God.
And it's not to say they shouldn't be doing all this research on peptides.
By the way, GLP-1s are a peptide.
But the way people are doing it, and this just sort of brings it out, this idea, let's jack up our, let's steroid up our.
our troops and make them insane.
Like, I don't know, just so unhealthy.
Anyway, typical of Pete Hegseth because he's as dumb as a box of hammers.
Next one, Elon Musk likely broke Wisconsin law when he promised to hand out those million-dollar checks to voters in 2025 state Supreme Court election, which he lost, according to the Wisconsin Election Commission.
The bipartisan panel found probable cause that Elon violated a state law that makes it a crime to offer a person anything of value to get them to vote.
Now it's in the hands of Wisconsin DA to decide whether to pursue charges.
doubting they will.
But honestly, when he did that, that was kind of so grotesque.
He did it several different places across the country.
I suspect he'll do it again if he's not stopped.
So I don't mind this moving forward in some fashion.
But he, you know, he's unchecked.
I mean, the money he's been, he's put 90, I think, 90 million dollars into elections right now at this point, just him for the midterms.
And, you know, Ken Griffin, a whole bunch of people are just shoveling the money in on the Supreme Court.
recent decision just allowed them to shovel it even more.
Yeah, I think Ken Griffin is probably running for president, by the way.
Oh, really?
Say more, as you like to say.
Well, he's taken a lot of public stands on politics.
And if you're a billionaire, the key to happiness is to be anonymous.
And he's decided not to be anonymous, which has to me he has political ambitions.
Oh, interesting.
Also, he's a smart guy, a lot of money.
But, you know, he's been very, very vocal.
But, like, the problem is...
Oh, so he's going for the Mark Cuban slot, except he's, like...
Half is nice.
There's a huge lane on the Republican side.
Everyone keeps talking about the Democratic.
The Democratic primary is going to be a gladiator fight.
Because there's a lot of good people.
Handsome Ossoff.
Handsome Ossoff.
I'm having, do you see him in the Senate hearing?
He's amazing.
He looks like Superman.
I think he's hot.
I can't believe it.
Oh, he is hot.
God.
The guy's got total Kennedy vibes.
Total Kamelot vibes.
I'm having.
I'm name dropping.
I'm having coffee with another potential presidential candidate, Senator Kelly from Arizona, who you meet with the guy.
You want to talk about testosterone.
The guy flew a craft 30,000 miles an hour while also flying combat missions.
He's a solid man.
He's a man.
He has a twin.
And he's like, talk about someone who's been an outstanding husband.
Anyways, he's a great role model for young men.
But look, The problem isn't election interference in Wisconsin.
The problem is we've essentially decided that money can run unfettered.
And so what do we have in society?
Most people would agree the 1% has disproportionately benefited.
It's not even the 1%, it's the 0.01%.
And the 0.01% right now is in a position because of Citizens United and the most recent Supreme Court decision.
I told you my conspiracy theory, which I think is just just self-evident, I believe that this phone call took place.
President Trump, is there any way you can lean on the SEC chair or the NASDAQ to include SpaceX right out of the gates in the NASDAQ 100?
And as a result, you'll get, you know, retail investors will have the opportunity to invest.
I'll have more demand.
And I see my net worth increasing.
Of a small group of stocks and not a lot is out there.
And so it juices the stock.
But go ahead.
It's trillions of dollars that have to all be allocated to one of 100 stocks based on the market cap, which creates unbelievable demand that has never been there for a new issuance in history.
So President Trump, if my net worth goes up $120 billion because of a smart move on your part, I don't see any reason why I wouldn't put $1, $2, $10 billion into the midterms.
And these elections are won or lost by two or three percentage points.
You're telling me a billion dollars can't get you another couple of points in Maine?
I mean, or wherever it is.
Maybe.
He didn't win in Wisconsin.
He spent $25 million there.
Well, that's the silver lining here is that money seems to have some effect.
The ROI on money is going down.
It used to be that 95% plus of the people who raised the most money won because it was largely based on incumbency.
And television buys and this and that.
But Tom Steyer spent a quarter of a billion dollars to come in fourth or something in California.
So that's the good news.
But still, it goes back to the same thing.
The problem isn't people with billions of dollars.
The problem is if you can directly connect it to undermining our democracy.
You have unelected people deciding who's going to be president.
So anyways, I think we need one case isn't going to move the needle.
I like that they're doing it, though, because that was at the time I was like, can anyone stop this?
This is insane.
You're buying votes.
I just it's it's so buying votes.
It was like, you know, it just seemed like ridiculous that that it was so explicitly bad.
I hope I hope they pursue it.
But speaking of election interference, which they're going to be a lot, we're recording President Trump's working his hardest to interfere with the election.
He's going to do a primetime address to the nation where he will discuss, quote, free and fair elections and other topics of potpourri, as one advisor put it.
Should never use the word potpourri.
Allegations about China meddling in the U.S.
election will probably come up.
And some reports suggest he'll once again push claims of election fraud in Georgia.
Speaking of John Ossoff.
Let's listen to what Ossoff had to say during an appearance on MS Now.
There's talk that he might try to declare.
me and Raphael Warnock, illegitimate senators.
Obviously, the president has no power to do that, but he does have the power to try to intimidate people.
He's demonstrated his will to abuse power.
I expect him to use whatever he puts out there on Thursday as a pretext either for some attempted unconstitutional use of federal power to interfere in the election or to give his proxies and loyalists in state and local jurisdictions some cover for whatever they might attempt or to lay the groundwork for challenging the result.
So there it is, you know, and it's really interesting because, you know, especially because his like handmaidens to seditions like Senator Cynthia Lummis rhymes with hummus.
dumbest.
You know, I don't know if they were properly elected.
Like, they are.
They follow along.
And Trump also removed all three sitting members of the bipartisan U.S.
Election Assistance Commission, a group that oversees the testing of voting systems.
It's all over the place.
This is something Bannon, Steve Bannon has talked about.
There's all manner of attempts, possibly using ICE, et cetera, et cetera, et cetera.
Thoughts on this, besides the handsomeness of John Osso?
You can't have a democracy when one of the two parties acceptance speech is always the following.
We won or it was rigged.
And election interference, the good news is that essentially affordability, which right now the Democrats are seen as better on, is dominating in Gallup polls what people are concerned about.
Only 2% of voters believe America's biggest problem is election reform.
So, but at the same time, I also read 60% of Republicans think the 2020 election was rigged.
I mean, this is just so bad for America because when you repeat a lie, this is straight out of the GRU.
When you repeat a lie over and over, it becomes less outrageous.
Then it becomes normalized.
Then it becomes self-evident.
Correct.
Yeah, that is correct.
And our media, they just have a responsibility.
I was just so, I met, I forget his name, the guy interviewing to be the head of our intelligence service.
I met him.
Clayton, Jay Clayton.
Yeah, I met him at a conference.
I spent a little bit of time with him.
Reasonable, smart, impressive man.
Can't say that Biden won the 2020 election?
Yeah, he can't.
He actually can't do it.
And because then his nomination will be pulled by Trump.
And it's like, okay, at some point, at some point, these men have to be men and say, my kids are going to think I'm a coward.
I just, it's like, you don't think that video is going to be playback over and over and over in your kid's third grade civics class?
Rest of his life.
Rest of your life.
It's like, and by the way, maybe the nomination gets pulled, but don't you want to be that dude?
Don't you want to be the guy that said, of course he was elected, yes, and then have Trump pull your nomination and be a fucking hero?
I know.
You know, of all people, Thomas Massey was like, we have the House, the Senate, the presidency, and pay pretty much to the Supreme Court, and we're saying the elections.
Elections were rigged?
Rigged.
Like, wow, keep rigging them.
Like, it's ridiculous.
I mean, one of the things, it's just ridiculous.
It's an astonishing.
repetition of lies.
Those two, there was two hearings.
It wasn't just him.
It was also the attorney general.
Can't say it.
They can't say it.
Biden was certified president.
That's all they'll say, which is not the same thing.
I mean, the fact that they can't say it, and that's happened several times with cabinet members, is really something else.
It really is.
And it's as if they live in Putin's Russia, and they do for the Republican Party, where if they say the wrong thing, they get...
Like thrown out a window, essentially.
And this is not a real throw out a window, but a sort of version of it, a political version of it.
There has never been a testosterone therapy like a Republican losing an election.
Well, we'll see.
We'll see.
I don't know.
You think Tom Tillis and John Cornyn are going to?
pushback on Blanche.
Look what truth tellers these guys are once they lose their election and they have only six more months in the Senate or whatever.
I'm waiting to see if they vote against Todd Blanche.
I don't think they will.
You mean his personal lawyer running the DOJ?
Yeah, his first time his lawyer.
I'm his lawyer.
I mean, I was his lawyer.
I mean, I don't know what I mean.
You know, I don't think they're going to, I think they're going to vote for, and they're going to let it out of committee.
I just don't, I don't think they, they still can't sack up.
Too late, Tom.
Sack up, Tom.
Sack up, Tom.
Take some testosterone if you need to.
Take some bar of HECSA.
There you go.
He can't stand.
He can't stand HECSA.
The whole thing.
You're right.
When do they stand up on stuff like this?
And it's like what Adam Schiff said to Todd Blanche.
What happened to you?
You used to be a person of quality.
And it's really interesting.
Anyway, we'll see what happens.
And I'm not.
Are you watching the speech tonight?
Oh, I could care less.
I don't care less.
You know what?
I will watch it.
I'll just watch it on.
one of three social media platforms that'll give me the two or three clips.
Kalshi is now saying there's a 45% chance that Democrats take both the Senate and House at the midterms.
Yeah, both.
Anyway, that's still 45.
Let me just say, I'm going to go back because this is the same thing, this repeating of the lie that you just said, the reflecting pool.
This is the kind of thing, the lie, the lie, the lie, the lie, the lie.
And then everyone, and by the way, the media repeated it.
We should have like just now the reporting is in and I got to commend CNN.
It's a very tough report on it.
Just like stop repeating his lies.
And tonight, if you all repeat his lies, you're as...
complicit in what's happening here.
You have to say, this is not true.
This is not true.
And not even entertain it in some level.
You can report on it, but you don't have to entertain it the way they, as if it's an equal thing.
I just, that to me is really, what really drives me crazy.
Anyway, let's go on a quick break.
When we come back, things are going to get explosive and not in a good way.
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Scott, we're back.
And never has diarrhea been so political.
Now, let me pronounce this right.
A cyclospora outbreak has now spread to 34 states.
It's a parasite that contaminates fresh produce and causes severe watery diarrhea with frequent and sometimes explosive bowel movements, according to the CDC.
Officials are still investigating the source.
Michigan officials say the evidence points to lettuce or salad greens.
Federal and state officials are also looking into whether Taco Bell restaurants played a role.
This is so ridiculous.
Blaming Taco Bell for this.
And making things more difficult, the CDC, of course, scaled back the country's comprehensive system for tracking foodborne illness outbreaks last summer.
Thank you, RFK.
That's your fault.
They cut these things.
States can report cases through other systems, but experts say the cuts created blind spots, making outbreaks harder to track.
Just ridiculous.
These people made the cuts and this is the result.
Everyone's having diarrhea.
It's the fact that diarrhea is the brand for the Republican Party, like bringing us diarrhea, measles, and possibly polio is...
And Ebola is really quite something.
I just, I don't know.
I like lettuce and now I'm like nervous about eating it.
It's crazy.
The memes are amazing.
Let's go through a few of them.
Someone on X posted, I found an explosive diarrhea parasite with a picture of Stephen Miller.
Also first Mitch McConnell and now cyclospora, big week for evil vegetables.
And maybe explosive diarrhea will finally be the thing that brings both sides together.
Thoughts on explosive diarrhea?
Yeah, I don't know.
I was feeling really good.
I had the best.
You know what's coming.
I had the best bowel movement I've had in years the other night, and then I realized I was still in bed.
Look, I don't, you know, all of these things.
Okay, that was good.
Whether it's testosterone.
Yeah.
Look, the CDC, we need thoughtful people.
This goes back to the same thing.
This is true of Democrats and Republicans.
We've taken for granted how many competent people work for the government.
And that you need a diplomatic corps that can say this memo of understanding doesn't mean fucking anything.
And we need to do hard work of diplomacy here.
We need talented medical professionals in the CDC to go, this is a risk.
These are the preventive steps we need to take who have the support of the White House and are trying to figure out ways to undermine.
you know, vaccines.
So for every, look, for every $1 invested in public health preparedness, you get multiple dollars in avoidance of healthcare costs and productivity losses.
Foodborne illnesses already cost the U.S.
tens of billions annually.
You don't notice these things when the CDC is working.
You only notice it when someone is shitting themselves.
There's small outbreaks.
There's small outbreaks as opposed to these enormous...
Well, okay, but America, you know, and this is true of Democrats and Republicans, you need to appreciate government before you start shitting yourself.
But in this case, this was the Republicans cutting these programs that have been in place.
Agreed.
Elected by an American populace.
Correct.
That's correct.
That's absolutely correct.
But I don't think we voted.
I don't think even those people voted for diarrhea.
We didn't vote for diarrhea.
Right.
Nobody voted for diarrhea.
And you would assume that this is the kind of stuff, you know, the fact that they go for this stuff is really interesting to me.
I'm like, that seems like a real, like, I don't know.
It's just, it's so, it's not just short-sighted.
It's just dumb.
Like, let's stop the tracking of foodborne illnesses.
What, what?
Plus, who made that decision?
Like, I want to be in that room.
Like, who said, yeah, that's what we're going to cut?
Because that's something that, you know, isn't important, like salmonella or something like that.
I don't know.
It's a really, I think it is all knitted together.
And again.
Back to the reflecting pool.
It's like those were no bid contracts.
Back to all the no bid contracts all over the place where you have shoddy work or shoddy this or shoddy that.
And then in this case, it's diarrhea.
And of course, now it's going to hit lettuce makers, people who sell lettuce, grocery stores, all the implications.
Everyone's eating chocolate chip cookies.
They get fatter, whatever.
Let me ask you a question.
As a marketing person, how would you sell this as a Democrat?
Is it worthwhile to use this in the election?
Yeah, you know, bombs, diarrhea, and inflation.
That word is so powerful that I would probably couch it in America's health being ignored, which drives up costs.
So you can't afford the treatments to the diseases you shouldn't be getting.
I mean, yeah, I think.
I don't know.
I think they need to test it.
I still am all about accountability and affordability or maybe affordability and accountability or renewal.
I'm working on a bunch of messaging around these issues.
It needs to be more than a meme.
It needs to be broadened to our health has been compromised by an incompetent set of officials where It comes back to the same thing, and that is opting for fealty over competence will hurt the American public.
Yeah.
And the Democrats, if you look at past administrations, sure, you know, politics plays a role.
But here are some of the, you know, I would hold up, I would say, okay, let's just look at Surgeon General Murthy.
Let's look at, let's just look at these people's backgrounds.
Let's look at the former.
Let's look at some of the people who ran our intelligence and who's running it now.
I just run ads around.
All right, let's look at past defense secretaries and Pete Hexeth.
Let's just compare.
Compare and contrast.
Yeah, and contrast.
And unfortunately, that doesn't fit on a...
bumper sticker.
There's probably something very clever around this they can come up with.
There is a grift kind of thing that's really, I think, is actually very strong.
Like, just this week, the FCC, under the moron Brandon Carr, a signal that will vote to repeal the cap on ownership of TV stations, a limit that keeps owners from controlling the stations over 39% of the markets.
They're trying to get Nexstar and whatever that company is, Nexstar, Intel, whatever the heck it is.
They're trying to merge companies, and they've been blocked by various lawsuits.
And, you know, Americans...
confidence in technology companies has fallen, like, drastically.
I just think you put out an idea of the grifters are here and you're getting diarrhea.
The rich grifter, they're getting rich and you're getting diarrhea.
Well, like, what can we do about it?
I'm always thinking, other than just barking into a mic, I'm putting out a bunch of threads and a bunch of posts.
I initially thought this could be the Democrats making light of a bad situation and placing blame where they shouldn't.
And then I did just a touch of research.
On July 1st, 2025, the CDC's foodborne surveillance network called FoodNet, cool name, dropped a number of pathogens that require states to track from eight to two.
Only salmonella and E.
coli remain mandatory.
Cyclospora, Listeria.
Campylobacter, Shigella, Vibrio, and Yersinia all became optional.
Cyclospora has been tracked continuously since 1997, meaning 28 years of monitoring ended the summer before the biggest outbreak on record.
Folks, connect the dots.
Since early 2025, the administration has kept more than 3,000 positions from the CDC, roughly a quarter of the workforce.
And what do you know?
We're having a cyclospora outbreak.
I mean...
Right, exactly.
It's, this is math.
This isn't politics.
Connect the dots.
Connect the dots.
They can't run, they can't govern is what you want, really.
They cannot, they don't govern.
And when they govern, they steal.
I mean, I think that's.
The administration dissolved the CDC's division of parasitic diseases and malaria.
Yeah.
And they keep saying, oh, it's bloated bureaucracy.
We'll talk about, okay, bloated is a key word here.
And wasteful.
I mean, these words are taking on new meaning right now.
And the pattern isn't limited to one parasite.
A second one, a flesh-eating New World screwworm, showed up in U.S.
livestock in June for the first time in nearly 60 years.
60 years, yeah.
And so these, talk about growths, these larvae burrow into the flesh of living animals, and the USDA is fighting it by releasing millions of sterile flies in Texas.
Mexico and Canada have both restricted U.S.
cattle imports over the spread.
This neutering of our government agencies and replacing them with loyalists incompetence.
Incompetence.
Folks, the chickens are coming home to roost, except the chickens have diarrhea or will give you salmonella or whatever.
You can't paint a pool.
But again, I come back to the same place.
Our government is stacked or was stacked with talented people.
Talented people.
I agree.
I agree.
Anyway, on a much different note, OpenAI's much-anticipated first device is going to be smart speaker, according to Bloomberg.
The device, which is under development, is meant to be human-like AI companion that lives in the home.
It will help control smart home appliances, play media, answer questions, and tap into the capabilities of chat GPT.
It sounds like Alexa to me.
OpenAI believes the device is different from anything Apple has on the market, which might come into play with an Apple lawsuit we talked about.
Obviously, the delay, Anthropic is allegedly going to...
go public in the fall sometime.
OpenA probably is not.
Is this a product that's going to work, Scott?
This seems like a product Scott Galloway does not like, but perhaps he does.
I don't know.
I actually, I liked it more than I thought it would.
I thought it would because you keep talking about, at some point there needs to be a post-smartphone era, right?
Yes, that's correct.
And I don't think the most valuable product of the next decade or decades won't be the one with the best screen.
It'll be the one that knows you really well.
Right, absolutely.
And the inside, it won't be who builds the biggest model or best model.
It'll be who owns your kitchen, your living room, your car, your earbuds.
And Apple won because it owned the interface, not because it had the best technology or model.
And OpenAI is trying to own the relationships.
Now, granted, Meta tried to do this with their, I forget what it was called, that screen.
Yeah, they had one of them.
Remember that?
Yeah.
So I actually think strategically going for a speaker and trying to go in home, I'd heard it was going to be some weird fucking pin or something.
Yeah.
Or an attempt to be.
Yeah, the pins have been tried that you carry with you.
At some point you will, let me say, you will have a pin on you at all times or it'll be your AirPods that'll be extra smart, right?
I think that's right.
So I think that the idea of a better Alexa, the idea, I don't think smartphone.ai was going to work, but the idea of a really intelligent speaker, conceptually, I think this is strategically, I think it's correct.
The thing that everyone learns, and is just littered with dead armadillos, is believing that because they're good at software, they'll be good at hardware.
There are so few companies who have made the leap to hardware.
What hardware in the home do you trust, though?
I mean, my son literally took all the Alexas out of our house.
Like, he's like, they're not going to surveil us.
That was one of the issues.
The other, they're always listening.
Like, people are nervous about this kind of, you know, even the alarms that people put on the cameras, like.
They got manipulated from outside where people were looking inside people's homes.
I mean, I think, and then Amazon, remember Amazon was going to have a drone that followed you around your house and did things?
Like a little floaty thing?
I mean, eventually people will have a version of that, presumably.
It's just who do you trust to be in your home?
Because I wouldn't put any of these things in my home at this point.
Yeah, but there's...
So my first thought when I read this was two things.
I think this is actually smarter than I thought, at least strategically.
Obviously, this is all about execution because I thought they were going to try and put out some, you know, the Amazon Fire Phone or whatever it is.
The second thought I had was I'm going to buy Sonos stock.
I think Sonos is going to be acquired.
Oh.
Because I think for Sonos has a market cap of 1.7 billion.
That is literally changing their couch for these companies.
And they immediately have an installed base of speakers where they can just upgrade the technology.
Oh, fair point.
Which you can never work.
I think Sonos is amazing.
I love Sonos, but I have to tell you, it's the most difficult to get coordinated.
It is always glitching.
It's always glitching.
And I'm smart about these things.
And I love Sonos.
But you asked, there's so few trusted brands in the home.
It's really interesting, like Sub-Zero.
is such an amazing brand.
You can buy a $4 million home and they will advertise that it has an $8,000 refrigerator called Sub-Zero.
That makes no sense to me.
You think about how many actual brands The furniture market is totally fragmented.
It is.
Sonos is a decent brand.
No, I agree.
And they have an install base.
You're right.
I let Sonos in the home.
And by the way, the stock is off 56% in the last five years.
That company is screaming to be acquired.
I have a lot of Sonos in the home, but I don't have Alexis.
It's a really interesting thing.
Remember when Amazon bought Eero, I guess?
I was like, oh, fuck.
You know what I mean?
Because I love the Eero guys.
They were really interesting.
And this is basically a repeater for your internet, essentially.
And then when Google bought Nest, I was like, oh, damn.
You know, like, oh, they're here.
And now I do keep a Nest in my home and I do keep a Sonos.
But I don't know if I want chat chibi team around my house.
I don't think I do.
I think I do not.
I think you're, I've always bought the.
People talk a big game about privacy, and if they can see their Uber QX60s getting a little bit closer on the screen, they'll give up all of their data.
I think people opt for utility over privacy, and then they talk a big game about privacy.
Yeah, kind of, although you shovel a lot more stuff into chat GPT than I do.
I won't.
I still don't, and I don't.
It's just because I don't want this particular company.
It doesn't mean I wouldn't allow Apple in the home a lot more readily, but they never come up with anything.
Their device was terrible.
I have one of those.
It's in a box somewhere.
I still have yet to integrate these into the home in a way that is useful in what they're talking about here.
So you're right.
We'll see.
Someone's going to get it right.
Anyway, let's go on a quick break.
When we come back, we'll talk about a tumble for IBM shares and what it means for the market at large.
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Scott, we're back with more news.
IBM stock is down 26% in the last five days after issuing a rare profit warning, noting the shift in customer spending from software to AI hardware and chips ahead of the quarterly earnings.
The sell-off raised $69 billion in market cap, and the initial tumble marked the company's worst day since at least 1968.
The S&P Software Industry Index is down over 13% for the year.
You've talked a lot about the software companies.
By the way, SpaceX is really taking a digger.
Oracle is way down.
And just related, I think New York has become the first state to ban the construction of new data centers.
The pause applies to new data centers requiring 50 megawatts or more power for up to a year, while state regulators develop new environmental and energy standards.
Governor Kathy Hochul noted the New Yorkers have seen their energy electric bill surge 68% since 2019.
And a June poll revealed that 46% of New York voters believe one-year moratorium on large data centers would be good, with just 21% saying it was bad.
So this is all related to each other, this idea of this growth.
Talk a little bit about IBM and then...
you know, the links to Oracle, SpaceX, everything else, they're really trending downward in a really significant way.
And people are nervous.
There's so much more discussion about a possible collapse by lots of different people.
Noble, the investor, George Noble, Bill Cohen did a great interview with him.
He's nervous.
Thoughts?
Yeah, it felt like I was caught off guard by that.
I mean, they came in at $17.2 billion versus $17.9.
And the stock had its worst day, I think maybe ever, or in 50 years.
And it raised a quarter of IBM's value over a $660 million revenue miss.
That's about $100 in market cap for every $1 of missed revenue.
The reason why is IBM's customers are raiding their own IT budgets.
In the last few weeks, clients pulled spending from software and mainframe deals and used it to panic buy server storage and memory before prices rose further.
And the sell-off infected the entire enterprise software market.
The fear is that they're the canary in the coal mine here, and that is the real loser is anyone who buys memory instead of selling it.
So data centers are forecast to consume 70% of all memory chips produced in 2026, up from 20% to 30%.
And three companies make up roughly 90% of the world's DRAM market, and all three have shifted production towards AI chips.
their costs are going up and meanwhile their revenues are flat or down.
So you have margin compression and meanwhile in top line going down.
So the losers are everywhere else.
PC makers who consume a lot of memory or buy it, that was 15 to 18% of PC materials costs is now heading towards 40%.
So in a competitive margin, in a competitive commodity market, your costs are going up ways.
And so prices have to go up.
Think about it.
Apple has already had to raise its prices, but they have the margin power to do it.
Xbox has raised prices by consoles as much as $150.
Smartphone shipments are projected to fall 13% on memory price surge.
And software and services, corporate IT budgets, are being redirected to panic buying chips.
So the AI trade has gone parabolic, but the losers have suffered tremendously.
Accenture is down 47% year to date.
I think as a lot of those back office jobs, People think AI will supplant.
IBM's down 28%.
Microsoft down 16%.
ServiceNow down 29%.
Salesforce down 34%.
I actually spoke at Salesforce yesterday.
So the market is reshaping around big winners and big losers, and IBM is perceived as being on the wrong side of the trade because now it's competing to buy the memory against companies that have a better business model or better prospects.
Right.
Right.
But what about the overall trend?
Because there's so much noise now.
I mean, I was really struck by this George Noble interview that Bill Cohen did.
You know, he's just like, this is, he essentially was like, this is bananas what's happening right now with the spending.
And you do see, you know, SpaceX, despite the index thing, is...
Drifting down, drifting down, drifting down more and more.
Ed Elson, by the way, is enjoying the entire drift.
He does a thread every five seconds about it.
Are you very worried?
Because a lot of people, I just have been hearing so much more noise around that.
And it seems very interrelated to these data center slowdowns and that the business isn't quite there and OpenAA is not going to go public this year.
Maybe Anthropic will get through.
Are you still remain worried or are you paying attention to that?
Because I think they're all related to each other.
I mean, and granted, I get this shit wrong all the time.
I think we're literally late stage 99.
Yeah, yeah, what you said.
And I think it's unfurling remarkably similar.
First, it was B2C, the Amazons, the E-Toys, the, you know, the...
The Pets.coms of the world's imploded because they didn't create the demand to justify their valuations.
Okay, so what's under a huge chart right now?
The ultimate consumer AI play, which is open AI.
And then everyone, but wait, it's about B2B.
So everyone shuffled into Anthropic thinking it was the enterprise market.
I think that's the next one to come from a trillion down to a hundred billion.
By the way, a hundred billion dollars is what Starbucks is worth.
That's not, that's still a lot of money.
And then the next.
The next year to drop will be similar to what happened.
Everybody got out of B2C, got out of B2B, and then they went into Global Crossing and Cisco because it's still in the ground.
And then I think the next year to drop, I think we're going to start to see weakness in the infrastructure players, specifically NVIDIA, in later part of this year, beginning of next year.
I feel as if we are literally in the...
the beginning of the unwind.
Yeah.
And these data center bans or construction of them, I think it's a good idea.
Voters want this.
I think it's actually good government to say, like, let's take, it's not saying no data centers.
It says, let's take a year.
Let's figure it out.
Let's do it so that consumers don't have to pay.
It's a great political message and it's not anti-innovation.
It's slow the fuck, slow your roll, dudes.
Like, this is ridiculous what you're doing to our...
to our environment and our costs.
And, you know, they try to blame things like COCL and others.
I think it's actually good governance.
That's my favorite.
Look, it's become politicized.
I think data centers have become the vessel for outrage around income inequality.
And I think some of the concerns around them are inflated.
The notion that they're going to soak up all the water.
They're noisy.
Well, they're not, most of them aren't near.
I feel that essentially this has become the new kind of...
whatever it is, squeeze toy or anger mannequin for income inequality.
And then in what is the biggest brain dead brand move of that century, they decided to make the spokesperson for data centers, Kevin O'Leary.
Yeah.
So, but if I were a civic official, first off, these people aren't, the people approving these data centers aren't stupid because these companies, data centers don't call the fire department or the police department and they pay property taxes.
These people aren't stupid approving the data centers.
What I would do if I were a local civic official is the following.
I would say we will cram through your approval.
We want 10 years guaranteed property taxes no matter what happens to your company.
Because I think a third to half of these things aren't going to get built, but I still want those revenues.
Yeah.
And also maybe some, you've got to talk to voters about the electric bills and everything else, you know, and because I think the people who are opposing them have made very, have done a very good job of linking them with billionaires.
And like, you're right, Kevin O'Leary looks like a fucking idiot.
But that's math.
A civic official should be able to say.
We have economists and power people estimating what the increase in electricity costs will be.
If those are in fact true, we need to at a minimum compensate consumers with the property taxes or fees you're going to pay.
And also, I would say a friend of mine that owns a shipping company and shipping container ships went to like from $30 a container to $150 because of Hormuz.
And I'm like, is there any way you can buy futures or sell futures and lock in that price for the next 10 years?
And he's like, I'm trying.
If I were a civic official, I'd be trying to lock in the revenues and the property taxes these things are going to pay for the next 10 years.
Because, Kara, what I find generally in life and in business is the shit you are most worried about doesn't come to fruition.
Because you start planning against it subconsciously.
The shit where, remember Y2K, how worried we were?
Do you know where I was?
May I tell you a short story?
I was sent by the Wall Street Journal on the best night of the New Year's for that 2000.
I had to be at Yahoo and E-Trade.
That was my life right then as a young reporter.
I had to hang there and nothing happened.
Go ahead.
Well, or remember, I used to go on Bloomberg when I was going on TV there.
And for fucking 12 months, we talked about.
the collapse of Greece and how it was going to affect the EU.
The moment you start worrying about everything, it doesn't happen.
No one was worrying about planes slamming into the World Trade Center.
We weren't that worried about a virus jumping the lab and infecting, I mean, Bill Gates was.
We are so worried about data centers.
That my view is and my thesis is that all of a sudden we've had this incredible flippening from a supply crisis to actually a demand crisis.
Everyone that was supposedly going to create all the demand for data centers is now selling their data center capacity and storage to the two companies creating demand, OpenAI and Anthropic.
So if I'm a civic official, I'm like, bank that money now, get their commitments.
And also all the innovation is going to go into chips and inference.
and compute that requires less energy.
And oh my, the most fucking ridiculous thing.
Have you ever been to one of these things?
The idea that we can put any semblance of one of these into space.
I know.
Makes the Reboven look practical.
I know, Reboven.
You know, my favorite person, everyone should follow him, Jan McCoon on the Data Space Centers makes me laugh.
There's part of me that I got to say, Elon, good one, good one.
Space centers, data centers in space.
Like, I'm like, what a load of crap, but I love you for trying it.
It's like having the, you know, we were supposed to have 50,000 Optimist primes in our home this year.
Do you have one yet?
Oh, no, I mean, but hold on, let me ask my robot.
Yeah, yeah, exactly.
I think we will, by the way.
I think we will eventually.
You think it's going to be Jetsons?
Do you think we're going to have robots?
Eventually, but we'll be dead.
It doesn't really matter.
But yes, I do.
My Filipino nurse, Manny, is cheaper than a robot and has softer, gentler hands.
All right.
Okay.
But someday, you may be taken care of by a robot.
Anyway, but I like the fact that they just lie through their teeth about something and lie is very creative.
Anyway, one more quick break.
We'll be back for predictions.
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Okay, Scott, let's hear a prediction.
What is your prediction?
Besides, I'm going to make a prediction.
Odyssey is going to like blow.
Yeah, that's a pretty safe one.
I got to tell you.
No, but I think like way more than people think.
It is really that good.
And I think people are, again, just like they were with smaller movies like Obsession and Backrooms.
They love getting in the theater when something's worth it.
This one is worth it.
I think it's going to blow out well beyond what people think the blowout's going to be.
I like it.
I'm going to see it.
I'm excited that you liked it.
Yeah.
So my prediction is that OpenAI is going to buy Sierra and install Brett Taylor as CEO.
Oh, great idea.
Did I say this to you?
Who said this to me?
Someone asked me who I thought should be CEO of.
You planted the seed.
You said Brett Taylor.
Yeah.
Okay.
Look, the most successful companies don't stop at the platform.
They own the application layer.
Apple didn't stop at iOS.
It created the App Store.
Explain what Sierra is for people who don't know.
It's his new startup.
So it's essentially, they're in the application layer for AI.
They're one of the best enterprise AI products.
And essentially, they have a valuation of $4 to $5 billion.
OpenAI is supposedly worth 800, call it 500.
So for 1% of the company, they get a CEO.
And right now, Brett Taylor is probably, they need to bring in an adult that calms the markets.
And if OpenAI does, in fact, have the best model, Sierra has one of the best enterprise AI products.
That's a great idea.
And Brett Taylor is arguably the best enterprise software operator of his generation right now.
And as these foundation models get cheaper, intelligence will commoditize.
So the scare asset won't be IQ.
It'll be customer relationships, workflow integration, and enterprise trust.
And that's essentially what Sierra's offering.
Can I also say, he can go toe-to-toe with Elon.
He's the one who got Elon.
Remember, Elon tried to pull out of the deal.
He was the chairman.
Yeah, he forced him to close.
Forced him to close.
He said, this company's worth three.
You want to pay 44?
Sign here, here, here, and here.
And remember me, you're the guy that signed these documents.
You're closing.
Right.
He can go total Elon.
And actually, it's very well-liked in Silicon Valley.
Very well-liked.
Like, unusually well-liked.
Essentially, Sierra is the sales force of AI.
And if OpenAI wants to be more than the NVIDIA of AI, it needs to own the sales force of AI.
Do you think Sam Altman will give up the CEO show?
I'm not so sure.
Well, this is what typically happens.
Mm-hmm.
The CEO is taking so much shit and has seen the valuation go down.
That has got to be fucking Vietnam minus the charm right now.
I mean, I can't even imagine what it's like to be Sam.
He likes being liked.
I'll say that.
I can't even imagine what it's like to be Sam Allman.
So he probably has agreed.
This is typically what happens when the CEO is 10 years like this and a founder.
They agree to bring in a president.
And then we all interview the president.
And the person we really like says the following, I'm not going to be your fucking president.
Make me CEO.
And then we all agreed to make him or her CEO.
Brett Taylor isn't going to take a president job.
Right.
And everyone that meets him.
He did at Salesforce, remember?
Yeah, that was as a younger man joining Mark Benioff, one of the greatest entrepreneurs in software, right?
Yeah.
He's his own CEO now.
And so this solves so many problems.
It gives the market a sense of calm, and then an adult shows up.
It's a chance for them to turn over a different leaf.
It's a chance to create cloud cover to dramatically decrease the ridiculous capex.
It's a chance for Sam to save face and be the chairman and the visionary and prepare and pretend that it was his idea.
And they also get a company in the application layer for 1% dilution.
This makes so much.
In sum, the three most acquirable companies right now, Sonos and Sierra.
But this just makes so much industrial logic.
I'm surprised.
We may even be in the midst of it right now, but Sonos should be picked up by one of these guys looking to get into the home for scrap.
But the real one here is Sierra.
And it's an aqua hire.
It makes industrial logic, but what they really need, if they announce Brett Taylor as CEO.
Yeah, big deal.
The valuation of the company goes up $100 billion.
They get 20x on the acquisition price.
Say they pay $10 billion for it.
They get 10x just by, with two words, Brett and Taylor.
Yeah.
OpenAI is worth more than $100 billion.
Am I your muse?
I think I'm your muse.
Do you know that?
I think I'm your muse.
Well, you're my inspiration on a lot of levels, Cara.
I am.
I have to say.
Yeah.
There you go.
Anyways.
I love it.
Brett, call us.
Sierra is going to be acquired and Brett Taylor by OpenAI and Brett Taylor is going to be installed as CEO.
I like it.
I love it.
Anyway.
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Today's show is produced by Lara Neyman, Zoe Marcus, Taylor Griffin, and Todd Wiseman.
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