Sadly, sadly, sadly. It's the worst relationship of my life and my finest...
Oh, come on.
Hi everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher.
Oh, nice. Wow, that was really good. And we're recording this episode in front of a live audience here at the AdWeek House at Cannes Lions International Festival of Creativity. Is that what it's called? All right, fine. We're doing that. Welcome everybody.
So, let's just start. Scott, we haven't seen each other at all. Correct.
Yeah. No, it's a great camp. I mean, we love...
Great for both of us, though. We don't have to see each other. I brought my children. We've been having a lovely time. They were just in the Mediterranean this morning. And I've had a lovely time with them except for the heat. But how is your Cannes going? Sorry. Jesus Christ.
I love it here. But I don't know if you saw that crazy drone show.
Yeah, that was... actually the word is, and I can validate this. It's an alien craft. It's an alien species of women who are no joke are abducting guys with enormous dicks. So you're safe. But also, just so you know, the spaceship is incredible.
That took like five seconds to get to a penis joke and a highly complimentary one to yourself, which is inaccurate but nonetheless.
Don't ask me my nickname in a fraternity. Just don't. Just don't.
Tripod is pod. It's like you should take intentions or gestures with the intentions that they're made or that are intended, or you know what I'm saying.
Yeah. Okay. No, I don't. All right. Let me just... How is your Cannes going? How's it going?
It's great. It's the first time I've left my hotel.
Okay. All right. You're saying... when I was their age, I used to have to work here and, you know, meet with Martin Sorrell. I'd have lunch with him and he'd take calls and just go, 'One minute. One minute.' And now it's like MrBeast is the man.
Yeah. I absolutely love it. What do you think are the big takeaways so far?
So, hands down the biggest trend is the creator economy. There's 500 here this year. There were 400 last year. It used to be... It's sort of ironic that this is meant to be a gathering. It's 13,000 people from 90 countries. It's meant to be a gathering to celebrate the industry, but the industry hasn't yet recognized they're no longer the protagonist. And that the industry, if you think of it, the means of production, talent used to command 10 or 15% of the total revenue because in between there were these means of production or moats: an ad agency, distribution, a studio, makeup, unions, a cable going into people's homes. And now people with these few platforms that command a disproportionate margin, they do really well, but you have thousands. It's no longer Madison Avenue, it's a bunch of studios. And the celebrities here are no longer... When I used to come here, Maurice Levy, Martin Sorrell, John Wren, they owned the closet.
Now it's some creator who's talking about food, you know. So it really has... there's a distribution from institutions to individuals. AI last year was, 'What do we do with AI?' Now it's, 'How do we organize our company around AI? How do we get an ROI there?' I think people have come to the conclusion that AI is all chip and no salsa, and that creativity has never been more important. Where social media takes people to the extremes, AI takes everyone to the middle, and it's very moderated. And so creativity has never been more important. Remember, AI was going to produce commercials. There's more designers now at IBM as a percentage of their employment and creatives than there was last year. So creativity appears.
I have noticed the sort of fall off in the AI dementia that was here last year. I mean, it's really... that's everywhere actually, when everyone's sort of coming to the conclusion that they're not really clear what efficacy this stuff has. Instead of having to... I mean, the drone show did do AI, and it was not AI. It wasn't artificial intelligence. It was something else. They had another word. What it was...
Art and intelligence instead of artificial intelligence.
Yeah. And the other big trend is sports.
Yeah. Yeah, there wasn't a sport beach here. Sport really is the cultural religion now. And it's one of the... I mean, the biggest... I think the two biggest stories taking place right now, one's positive and one's negative. And the things we'll be talking about in two weeks, I like to predict what'll be the biggest business stories that are happening. The biggest cultural story would be the coming together that basically the World Cup is doing what the UN was supposed to do. And these wonderful creators and this content that makes us feel better about the world when we really needed it. We needed to feel better about America and Waffle House and how wonderful Norwegians and the Scottish are. Go team Scotland against Brazil. It could happen tomorrow night. That is the best cultural story unfolding right now. The biggest story that's taking place right now. You're going to see that the prediction markets have a scary amount of betting on the World Cup right now, mostly from young men whose prefrontal cortex is very immature and are prone to addiction. I think that's the biggest story playing out right now. You're going to see that one-third to two-thirds of young men in the United States bet on the World Cup, and you're going to see Polymarket and Kalshi basically show the kind of numbers that get Goldman and JP Morgan saying, 'We're ready to go public.' That's the biggest story.
We did see, of course, Zuckerberg wading into it.
He's going to start a prediction market.
He is, which is called Arena, which I mean, did he ever have an idea he thought of himself that he didn't thieve?
Yeah, but that's the key to shareholder value. The innovator, the first iPod, the first computer, the first social media network. Who's on MySpace? I mean, it's the second mouse that gets the cheese. Apple's...
Well, do you imagine? Because he tried it in a number of ways. They tried to do a dating service. Do you remember the Facebook dating service that didn't go anywhere, or the Facebook this, the Facebook that? Is this a good area? You're just... it's an important area right now, but they're also under enormous scrutiny. Even by US standards, they're under enormous scrutiny in the US. All these markets, they're getting pushback all across the world from a regulatory point of view. And then Mark, whose reputation is just... even this week got even more tarnished. We talked about it on the last episode because Trump essentially called him a sucker. He did. He did essentially, and was accurate. And do you think it's a great time to wade into this area for a company like Facebook, or do you think these are inevitable companies that are happening?
Yeah, I think so. If I were the head of corporate development at Meta, I would take a 2 to 3% dilution and take a 40 to 60 billion dollar flyer on either Kalshi or Polymarket, as opposed to trying to compete with them and go from letter A to F. But we use the term innovation really promiscuously in terms of shareholder value. It's not the innovator. The innovator and the pioneers get mud on their face and arrows on their back. It's the number two. Apple has never invented anything. What they do is they come in and they commercialize it and they do a better job of it. If I were Meta, and I'm not, I would be rushing to get things done before a Democrat takes the White House and actually starts trying to break up companies, which is what we need to bring affordability down as the rents being charged on advertisers and consumers and parents gets higher and higher as we let these companies consolidate with no regulation. But I would be looking at everything, and if I wanted to get into that market, I would pick up one of those two players for 20 to 60 billion, which at this point would be a minor dilution.
Is it a particularly good thing for their corporate image to go into an area that's under... it's clearly going to be under attack in the next two years.
I don't think they give a... I don't think they're worried about their image.
Yeah. I mean, there's, as we sit here, there's a bunch of 14-year-old girls self-cutting because of Sheryl Sandberg's business model.
So I don't... I think they're very willing to endure hits to their image. I don't think that's their first priority. So they will go... this is an area they should go into.
Their image... the only thing that matters is Mark Zuckerberg keeps delivering unbelievable shareholder returns. That's the only image that matters in a capitalist America with no regulation. And we can sit here and talk about purity tests. No one gives a...
All right. Well, in Europe, let me just... they're trying to break up US big tech. Here in France, the budget minister called for the country to break free of American systems. Sort of on trend with the Europeans feeling the American century is over, which I think is very clear. They've stepped up in Ukraine. They've sort of pulled away from the US. You have Giorgia Meloni every day insulting Trump, which is really enjoyable. And the EU just rolled out a new sovereignty package to boost homegrown tech. A very difficult thing to do. Google, Microsoft, and Amazon control 70% of Europe's cloud market, and 80% of European software spend goes to US companies. You know, it also has to deal with these climate goals that they have in data centers. Lobbyists say Europe's power grid isn't ready to fuel advanced AI infrastructure. We'll need to lean on new gas plants to stay competitive, which is a big issue in the United States and actually gaining an enormous amount of traction with voters, 100%. Europe's biggest techs want a say in shaping EU policy. A new group called the European Tech Creators is pushing the EU to cut red tape, loosen merger rules the way the US and China cut back theirs. Is that something you see happening? This is not the direction Europe had gone in and has had much less success. Obviously, all these US companies, whether it's OpenAI or Anthropic, are all US... all the latest basket of them, whether they're going to make it or not, are US companies.
Yeah. So, America used to be the uncle who showed up who was obnoxious. He showed up to the European picnic. Obnoxious, but nice. Paid for your kids' tuition. Generally, heart was in the right place. Now, the uncle's showing up. He's on meth and he's doing his karate moves and he's hitting on underage girls at the park. I mean, we have become so unreliable and quite frankly just gross that the EU has finally come to the realization we can't count on this guy any longer. And it can go one of two ways. The good way is that they figure out a way. Germany, I think, 30 to 40% debt to GDP. Netherlands, they need to probably go into some deficit spending, ramp up their technology investment, in their own military, support their own companies. Mistral, Vertical Aerospace. Daniel Ek is a big investor in a European defense company. I think that would be good. If they use this as yet another excuse to slow down their thoroughbreds with overregulation, which is what Europe does, you'll be righteous, worried about the environment, and we'll kick your ass from a shareholder standpoint. And that's the story of Europe. Thoughtful regulation that gets in the way of every company killing it. And America makes the mistake of underregulating. Europe makes the mistake of overregulating, and you'd rather be the former because then you have the capital and the strength to fund a navy when you do get a good leader in place. Economic growth, I mean, it's kind of everything. You have to have... The UK has its heart in the right place, super smart, and they can't do any of the... because the economy is not growing. So there's a medium. If they use it as an excuse to force companies to purchase their own models, support European-born native internet, e-commerce, AI companies, defense companies, great. If they use it as yet another excuse to increase regulation where talented entrepreneurs and capital just shrug their arms...
Is it even possible at this point? Because these companies are sort of barreling to IPOs despite the fact that, for example, SpaceX has really taken yet another fall. We talked on Monday about this, but it took a decent fall again.
It's still up from the IPO. It's trading at 120 times revenues. We'd kill for their problems.
Yeah, I get that. But do you see... is there a way to catch up in any way for other parts of the world to do so? Or are these the companies that will...
Well, Europe has some great companies, and I'm actually... in my prediction I'm going to talk about, I think the hottest IPO of this month is actually going to be a European company, and I'll talk about that on predictions. Look, they have some great companies. I do think there's going to be a lot of talent. The team with the best players wins, and I think you're going to see a trend where the most talented people in Europe used to have one goal: get out. It's like my homeland, or my father's homeland, Scotland. My dad used to joke, 'What do the most talented people in Scotland have in common? They left.' And I do think that the flow of human capital benefits Europe right now. I think there's a lot of people thinking, you know what, maybe I'll put off going to the Bay Area. Maybe I'll put off going to the Gulf. Moving the youngest, talented, most aggressive, ambitious people used to get to the biggest city in their nation, then to London, then to San Francisco or New York. I think a lot of human capital and financial capital is going to come back to Europe because of lifestyle. And two, because Europe has been left for dead, the valuations are really low.
So they're low. So you can take advantage of this, but they've got to have a government that gets out of the way in some fashion. Although not to the extent that ours does, presumably.
There's got to be a sweet spot. We've gone too far to free markets. The EU is way too over... I mean, the European Union, it's not a union. It's a disunion where nobody has control but everyone has veto authority, right? And it creates just... it supposedly takes about... there's a measure of how long it takes to start a company, to get all the filings, the permits, hire people. It takes six weeks in the US. Supposedly it takes 16 months in France. I mean, that's just a problem, right? So I think there's a sweet spot. Although I do think in the US there is pushback coming, whether it's, you know, Elon Musk threatening Ro Khanna over normal statements about USAID to what happened in New York, Mamdani. There's a real push against a lot of this billionaire power, unfettered capitalism that's coming, I think, hard and fast. And they're starting to win elections. They're starting to have a say. And, you know, you wouldn't normally see a politician like Ro Khanna push back against Elon Musk at this point, given... well, he's... maybe he's not a trillionaire right now. He came down to 996 billion dollars. Which I feel bad for the guy. But one of the things that I do see coming is a massive amount of payback to these guys. I just see it. I see it everywhere you go. And I think they're not going to be able to attack Trump in the same way they might like to, but this is going to be their vehicle of attack, is these guys. And these companies are going to be in a world of hurt. And you're seeing pushback from Disney to the Trump administration. You're seeing pushback from politicians like Ro. You're seeing pushback all over the place by average citizens across... and you're seeing winning by Democratic socialists around this billionaire issue that I think is really growing in a way that is significant. And when the Democrats come back, if they sort of shove the old Democratic establishment to the side, there's, you know, a lot of the Republicans or a lot of the tech people don't think there's going to be payback, but I do feel like there probably is.
I hope so. I think since the 80s, America has been obsessed with how to create wealth.
I think the next 10 years, the dominant conversation is going to be, what do you do with wealth? And what are the expectations of wealth? And tax policy. I mean, we talk about rich versus poor. I don't think that's right. I've talked a lot about young versus old. I'm not sure that's right. I think the conversation is going to be around entrants versus incumbents. If you already own assets, if you already have a company that's weaponized regulation, if you already own a home, if you already have a college degree, there's been this unhealthy zeitgeist among the incumbents to create scarcity such that entrants can't get a house, can't get a college degree, can't get out of the crib and get customers because the incumbents have weaponized government to basically make it impossible for entrants.
And the entrants, who typically are younger, middle class, are just fed up. Although it was interesting, there's an interesting story in the New York Times this week. It was a column that I thought was great talking about, let me be more educated than you are, Socrates. And what was happening in...
He's playing tonight at Spotify now.
You love me.
I do. You love the... sadly, sadly, sadly, it's the worst relationship of my life and my finest.
No, it's true. It's true. I do. I have weird affection. Someone literally came up to me... I'm so your bottom. This is what's happened to me here. Everyone laughs and I go, 'Wait, am I supposed to laugh? You need to stop objectifying me, Scott.' Okay. Someone came up to me last night and literally just went like this, 'Scott, how do you do it?' And I was like, I like him. Like, so do I. That woman said, so do I. It was weird, but...
Was it Emily Ratajkowski? You can be honest.
She's been asking about me, right?
Never in your life will that ever happen.
She's playing that game, right?
I'm going to do something about her.
She's playing that game, right?
No, she's probably called security on you at this point. Anyway, in any case, the point I was making was that they had these issues back in ancient times where the oligarchs and the regular people, the equality got out of control in a way that was really significant. And that's exactly when you had pushbacks and pushbacks and pushback from both sides. And I think we are absolutely at that time. And I don't think it's particularly helpful to say, you know, 'eat the rich,' but there is a real movement in our country that is significant. You again, New York elections are New York elections, but it says something when there's pushback. So we'll see what happens. I'm not worried for them, but they're going to have to armor-plate their Teslas at some point if it starts to get ugly. And there is going to be an ugly moment, unfortunately, for them. And I think it's just inevitable if they continue to sort of take everything and damage everything in the thing.
Look, that's a nice story. I hope it comes true. I hope we see the manifestation of that at the ballot box. But the reality is, I think Donald Trump is going to sleep well and die at Mar-a-Lago, and I think Bezos and all these guys are going to have really nice lives. And I think we've just got to decide what we want moving forward. But the notion that they're going to pay a price for this... money buys you a lot of protection.
Well, it does. We'll have to see what happens. But I'm really interested in US elections coming up. All right, let's take a quick break. When we come back, we'll talk about Hollywood's record-breaking year.
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Scott, we're back. We're live at AdWeek House at Cannes Lions. We're officially in the summer movie season and Hollywood is hitting new heights, which is really interesting. Toy Story 5 just opened to $312 million globally. Total domestic box office year is estimated at $4.46 billion, the highest since 2019. It's recovered. It is not.
Yes, I did. Lots of movies brought in the big bucks. Project Hail Mary, Michael, The Devil Wears Prada, which I am starring in. Plus, low-budget horror movies, Backrooms and Obsession, and they're becoming blockbusters. But it's the first movie since ET where the box office has moved up. And I noted my son went to see both these movies, and he's not gone to the movies since I took him to Toy Story 3, I think, at that point. Talk about this trend because these theaters, these movies, it's actual movie theater experience. It's a range of movies. It's not these big blockbusters. It's not an Avengers movie, though there's one of those coming. It's a lot of, I would say, smaller movies in a lot of ways, and they seem to have been really spurring people not just to go to the movies. And of course, Toy Story 5 is the fifth one, and it's apparently why it's the fifth...
The fifth. Yes. Toy Story 5. Yes.
Anyway, what do you make of this, and how right was I about this situation?
You called this. You went like this. That's ridiculous.
Well, the question is, is it a trend or is it a dead cat bounce? So, look, the movie industry, to be fair, some of the best-performing stocks in media are actually theater stocks. Cinemark and IMAX are up, theaters at 40 and 45% respectively in the last 12 months. The theater business is becoming like airlines. There's Southwest and JetBlue, which is streaming. That's Netflix, serves you content for 30 cents an hour. That's an incredible deal. And then there's Emirates and Qatar Airways and Singapore. That's IMAX. That's an incredible experience. The guys in the middle like AMC or Delta, United are getting crushed. So people are willing to spend 20 or 30 or 40 bucks to go to IMAX or have a really... like I love IPIC, although that just went bankrupt, but they want an experience, or they just want 30 cents an hour and reasonably good content. But I mean, the other biggest trend culturally right now is IRL, coming out of COVID. People probably lost somebody. People do have disposable income. The economy has been fairly strong, and people want to get out and touch grass. And I think they're just having a really healthy gag reflex over isolation.
Yeah, I do think there's a gag reflex over social media and everything else. All the... it's really interesting. Gary Vaynerchuk here now says analog is in, versus... which I was like, no shit, Sherlock. It's really... but the idea that this pushing away... I have long thought that social media is going to decline rather precipitously, especially among young people, and become more of a... you know, because you're starting to see tech companies like Google just invested in A24, which I thought was... everyone lost their minds in Hollywood. They thought they were going to pull their data. I think they're using it to try to figure out how to do better storyboarding, how to use AI, and how to figure out how to change the movie-making process, which isn't such a bad idea to use those tools. Although Hollywood does have a gag reflex to all of these things in favor of these in-real-life cinema experiences.
Yeah, I think both can be true because if you look at... I don't understand... people go on Instagram to find out about a yogurt store they'll spend 40 minutes in line for. So that's a combination of the two things. The downside to the IRL trend is the following, and that is... I mean, there's a couple things. You're about to see tables in Mykonos and Ibiza increase 40 to 50% in price this summer because there's about to be 12,000 new millionaires in the Bay Area through Anthropic, SpaceX, and OpenAI. And if you're a 36-year-old who got a CS degree from Carnegie Mellon, quite frankly, you weren't... didn't have the most social capital in high school, quite frankly. And you wake up and you've been broke and you've been paying your student loans, and you wake up after the IPO and you're worth $11 million. You're not going to Disneyland. You're going to Ibiza and you're seeing Black Coffee. The flush of douchebag money about to roll over Europe this summer is going to be just frightening. And the other thing that's really kind of sad about this is the reason why these concerts and these music festivals can charge two, three, five grand for VIP tickets is because 20- and 30-somethings, when I was 20- and 30-something, you know what I was doing with all my money? I was saving for a house. And I worry that 20- and 30-somethings have just stopped saving for a house. They've just given up. They're like, 'Okay, we're not going to save 200 grand for a house. Houses are $2 million. Homes are $2 million. I'm going to Coachella.'
Yeah, the smaller houses are a million.
