The following is a transcript of an interview with Kara Swisher and Scott Galloway, co-hosts of “Pivot” podcast, that aired on “Face the Nation” on Sunday, March 19, 2023.
MARGARET BRENNAN: And we’re back now with the co-hosts of the ‘Pivot’ podcast, Kara Swisher, who joins us from San Francisco, and Scott Galloway, who joins us this morning from Miami. And in the interest of full disclosure, we want to note that Galloway is a marketing professor at NYU, but also directly or indirectly involved with several firms who have had funds at SVB Bank, none are facing liquidity issues due to failure he tells us. Scott, with that I want to start with you here. What is the broader impact to America’s ability to continue innovating in the wake of this failure?
SCOTT GALLOWAY: Good to be with you, Margaret. Yeah, there’s- look, the modern U.S. banking system is a miracle. It takes short-term deposits and turns them into long-term loans so we can grow the economy. The issue is, do we have what Marjorie Taylor Greene asked for, and that is the US splitting in two. And it’s not between red 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 catastrophists who appear to have a vested interest in a weakening of the banking system in the U.S. dollar. There was- there was a letter that went out trying to facilitate a transaction signed by several 100 VCs. What is more interesting is who was not on that list, and it’s people with a large interest in crypto, who have seen crypto go up 20 percent, since there was huge insecurity injected into the system by again, this kind of constant catastrophizing. So do we have two America’s in Silicon Valley? And I think lawmakers and Americans are trying to ask, should we be backstopping Americans or agents of chaos?
MARGARET BRENNAN: Who are you thinking of? Who are these agents of chaos?
GALLOWAY: Well, people who pose for the social media algorithms, and in all caps say that chaos will ensue, that there will be lines around the banks, some will get their money out most will not large venture capital firms who have tens of billions invested in crypto, so do not share- do not share a kind of a collective interest in the health of the banking system and individuals who on the way up, see America as a cross between the Hunger Games and capitalism on the way down believe we should be Denmark. So capitalism on the way up and socialism on the way down is neither, it’s cronyism.
MARGARET BRENNAN: Kara, you know, so many startup firms relied on this Silicon Valley lender to get their business and to get their business going and they can’t necessarily go to bigger banks. Is there a knock-on effect here where 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 used to say there’s not enough rat holes to shove all the money in Silicon Valley down. So I think they’ll get money. It’s just that this bank was particularly attuned to them, including giving them personal mortgages, personal loans, using collateral that was, you know, just the stock or the fact that venture capitalists invested in them. And so they had a harder time with traditional banks and this bank catered to them in that way. And it was sort of a creature of Silicon Valley, and they had advisors from Silicon Valley, and every Silicon Valley startup was in this bank in some fashion. And then they spread it around to events and other things. And so it’s, you know, it’s a bank that’s too niche to one group of people. And then it’s also a group of people that reacts really quickly, which is why the bank run happened when they realized these- they couldn’t sell these treasury bonds.
MARGARET BRENNAN: I want to ask you about what is about to happen here in Washington with this hearing this week, TikTok’s CEO is going to be called in to testify. Kara, CBS has confirmed reports that the Justice Department is investigating that company for spying on U.S. citizens, including American journalists, by looking for their location data. And reportedly some of the people doing this were based in China. The parent company says they’re no longer employed. Does this kind of surveillance happen at other social media firms?
SWISHER: Well, in a different way. They’re selling you advertising, of course, because we have no privacy bill- national privacy bill in this country. And so it’s, you know, whatever these companies want to do, they have a lot of power to do so. To- I call them information thieves, but they’re for-, that’s for a different reason. That’s to sell you advertising. In this case, it feels a little more frightening, in that it’s a state-run government. Now, Tiktok has said these are rogue actors, but the fact that they can do it, right means they can do it, meaning if China wants to do it, they can do it. And so that’s the big worry here, is not not only surveillance, but propaganda. And so when Facebook’s dishing it out or Meta or whatever, they’re doing it for business reasons, not great either. And by the way, a government could come in there and any government could come in there. And so we have to really be very careful about what the- all of these companies get but particularly worried about state actors.
MARGARET BRENNAN: It seems that news development really throws some sand in the gears of progress on what ByteDance and TikTok were proposing as a way around the issue, which was something they called Project Texas. They don’t want a ban. They don’t want to be forced to be sold. How Scott, does this end up getting resolved?
GALLOWAY: Well, America is waking up to the fact that there’s a neural jack plugged into the heads of America’s youth, who spend more time on TikTok than every other media- streaming media platform. And we’re understandably wary of the CCP, who would be stupid not to put their thumb on the scale of anti-American content and raise the next generation of American civic, nonprofit, business, and military leaders, that just everyday feel incrementally worse about America. How it gets solved is very straightforward. The CCP was hoping that we wouldn’t be able to get out of our own way, and there’s a lot of evidence they might have been right. But they would like to maintain the world’s premier propaganda tool and hundreds of billions of dollars in shareholder value. And on the eve of the ban, they will decide if they can’t hold on to both they’ll hold on to the hundreds of billions of dollars and they will agree to a spin.
MARGARET BRENNAN: Kara, what do you see here? I mean, it was amazing, The Washington Post had huge ads TikTok placed here in the local papers. 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 is the political element here. How does this play out if it’s on the devices of 200 million Americans?
SWISHER: Well, there is that- there’s that issue of people using it, and it’s very popular. I think there’s been some advances made by other services now, so it’s a little less of a grip on teenagers. But I don’t think there’s gonna be some giant protests by teens. I think the issue you have to think about is what happens if they ban, what happens to the money? Because there’s a lot of US investors in this company, let’s be clear. And then there’s a lot of U.S. investors very interested in the decline of TikTok. So that’s going on behind the scenes at the same time, but it’s very popular for politicians to use this as an anti-China, which they do. And some, it’s bipartisan, by the way. It’s also Mark Warner, even as it’s Josh Hawley. And so, you know, three years ago, four years ago, I wrote a piece saying, I love TikTok, great product, I’m using it on a burner phone, because I don’t trust the Communist Party. And so that’s the issue. This is a- this is a tool of propaganda. And the question is, what do we do about it? And why aren’t U.S. companies allowed in China? And so it’s very complex. I’m not sure, I’m not way down with the ban with Scott, who’s been calling for a while. I do think there are ways to protect people, but it’s very difficult if it’s not an utterly U.S.-owned company or somewhere else. And that’s going to be difficult for this company, now, at this juncture, given–
MARGARET BRENNAN: I just want to underscore what you said, which is for years you have said you don’t feel safe using this device- this on a device that you carry with you. You use a phone that you don’t take anywhere with you because of the risk level here. I mean this is in the pockets of millions of Americans, hundreds of millions.
SWISHER: Yeah. Yeah, I don’t use Facebook either. So that’s me. I don’t trust any of them, but I really don’t trust the Communist Party of China, more than I guess Mark Zuckerberg, so low bar, low bar.
MARGARET BRENNAN: Just- wow. Quickly, Scott, you know, we are looking at the potential indictment of the 45th President of the United States, who is back on social media platforms, have there been any measures put in place that would limit the ability to use this as an organizing tool or in a dangerous way, as he calls for protests?
GALLOWAY: Not that I know of, I find it kind of borderline comical this kind of hollow debate around First Amendment or speech or pretending these organizations pretending it was a really difficult decision. It’s pretty straightforward. I mean, an organization or an individual adds shareholder value to these companies one or two ways. They create a lot of engagement through engagement or awe, or they spend a lot of money on the platform. And about the time that President Trump was about to become much less enraging or have much less content, about a few days before Biden’s inauguration Meta found their backbone and kicked him off. And about the time he’s about to spend another billion or a billion and a half on media. They’ve all of a sudden decided he should come back on the platform. But my understanding is the President- President Trump has called for protests, and the last time he called for protests, we had an insurrection. So if they’ve ever wanted an excuse not to put him back on the platforms, but they have it. But at the end of the day, this is all about what drives shareholder value, not any sense of what connects us or any fidelity to the commonwealth.
MARGARET BRENNAN: Well, on that cynical note, we will leave it there, Scott. Kara, always good to talk to you. We’ll be back in a moment.