Opinion | ‘Venture Capitalists Are Going to Turn Into Vulture Capitalists,’ and Other Predictions From Andrew Ross Sorkin

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(SINGING) When you walk in the room, do you have sway?

I’m Kara Swisher, and you’re listening to “Sway.” Today’s guest is my esteemed colleague, Andrew Ross Sorkin. He’s the founder and editor-at-large of “DealBook” at The New York Times and co-host of CNBC’s “Squawk Box.” I wanted to talk to him about the economic roller coaster we’re navigating today. Whether it’s the S&P or crypto, it seems like the markets are a mess. Andrew Ross Sorkin, welcome to “Sway.”

Hey, Kara, thanks for having me.

OK, I want to start with the stock market, obviously, something you cover all the time, covered for many years. This month, the S&P has had its worst week since March 2020. How long do you think it’s going to be in free fall? Everyone’s debating whether it’s a recession or not. So start with the stock market, because many people have a lot of their wealth in it.

Well, predicting the stock market, of course, is always a fool’s errand. But I think where we are right now is, obviously, some of the growthier names, stocks, the Amazons and Facebooks of the world have come down materially, in some cases, 40 percent, 50 percent plus, Netflix and the like.

Or more.

Or more. And so the question is, at this point, what do their earnings really look like over the next several quarters? And I think we’re going to start to get a sense of what’s actually really happening in the economy. Have things really started to cool off? Are people no longer subscribing to Netflix, for example? Is that something we’re going to continue to see? So I think there’s — I don’t think we know yet, is the truth about where the stock market is going, except that it seems to be going lower, in large part because the expectation is that more and more people are going to have less and less money. And in fact, that is by design. It’s perverse to say, but the Federal Reserve, by raising interest rates, is trying to slow things down by making everything more expensive. And so far, that’s working.

All right, explain that. Demand had risen rather significantly — I don’t want to say post-pandemic, but as it’s winding down in some fashion.

So the conundrum is that post-pandemic — and I know the pandemic has not ended in full yet. But what we have is a situation where too many people, frankly, have too much money and are spending it too quickly on things that we don’t have enough of, right?

So it’s a supply and demand problem.

That’s a supply and demand problem. The supply is not just microchips and the like. It is people. It’s labor. We don’t have enough people to fill a lot of these jobs. And so the cost of labor has gone up. The cost of all of these items has gone up and has gone up in a much faster and higher fashion than wages technically have. And so that has created inflation. And so what the Federal Reserve is trying to do is by raising interest rates and making the cost of credit, your mortgage, your credit card, a loan from the bank that a company may want to go out and get, by making all of that more expensive, they’re hoping that you are going to spend less. And that is going to effectively create less demand. And therefore, to the extent they can help this supply-demand equation, that that’s how they’re going to solve it.

Typically, the best way to solve this would have been more supply, meaning more labor, more stuff. But we can’t do that because we’ve got folks in China, unfortunately, who have Covid with their lockdowns. They’re not making stuff as fast as they used to. The boats are still stuck at the ports. There’s all sorts of problems that are creating supply constraints. And so we have this blunt tool, we meaning the Federal Reserve has a blunt tool. And its transmission mechanism, effectively, is just to try to make stuff more expensive. And it’s working.

So talk a little about the supply chain. The supply chain from China shows how dependent we are in a single country, which is shutting down rather severely, compared to everywhere else in the world. Elon Musk talked about this with Tesla, just besides losing billions at his different factories. He can’t make enough stuff, it seems. He was talking about things that he needs sitting outside the country. Talk first about the supply side of it.

There’s no question that we have a supply problem. Part of the reason we have the supply problem is because we also have a demand problem. And demand usually is a great thing, but we have so much demand and unexpected demand in terms of how demand has shifted. Originally, when people were stuck at home, the demand was for products, right?

Right.

Everybody needed a computer. Everybody wanted to go on Zoom, on Peloton, this and that. And all of a sudden, there weren’t enough of those. Now things are shifting the opposite way, to services. Everybody wants to go on a trip. They were stuck inside for two years. You look at airfares, you look at hotels — all of those prices are skyrocketing. Food, restaurants — all of it moving upwards.

But in the context of China — and I think this was a lesson that we learned in the context of the pandemic, more broadly about supply chains — is just the problem that when you rely on one country or even multiple countries, but for specific items and there is no backup. Nobody else is doing it, that you’re stuck.

And in particular, we have this with Taiwan when it comes to microchips. Apple is seeing this issue when it comes to — I don’t want to say all, but most of the items that they produce all come out of China. Batteries, a lot of battery production comes out of China. And so if you can’t get that stuff —

You can’t make the stuff to sell this stuff.

Everything comes to a halt. You can’t make the stuff to sell the stuff. And so the stuff that does exist when you do have it, you get to charge a lot more for. And some people call that gouging. Other people call that inflation.

Right, right. So when you think about the market — for example, tech stocks are really off, and they were sort of leading the market in general — what do you think is driving the market downfall, this perception that tech stocks are not strong or SPACs? Or is there one thing that you think is really to blame here?

There are two broad things going on, which is people are looking at earnings, saying the earnings are not going to grow as fast as they thought they were, and that the stock market is really always trying to project out what does the world look like 12 to 18 months from now. Not what does it look like today, what’s it look like then. And then they, separately, put multiples on those earnings. Do they decide those earnings are worth five times, 10 times, 20 times, 30 times?

For the past four or five years, a lot of the tech stocks not only looked like they had earnings that were going to the moon, but people were putting multiples on top of those earnings, because they thought they were going to the moon.

Right, right. Well, it’s really 13 years. It’s not three.

Right.

It’s a long time.

But — and now with an economy that, in truth, is slowing, there’s a rethink about all of this. And companies, specifically companies that never made money during this whole period, companies that were losing money, a lot of startups, and even companies that even really weren’t startups, companies that had been around for a decade, Uber, which is still not made $1, oddly enough.

Right, not oddly. As I like to say, from one of the TikTok stars, the math ain’t mathing. But go ahead.

No, but those companies, all of a sudden, people are saying to themselves, OK, they’re not making money. We can’t actually apply a multiple to companies that don’t have earnings. And if the economy gets worse, it’s only going to get worse for them because they’re going to need to get more capital, or they’re going to go out of business. And that capital, by the way, is now going to be more expensive. That’s where we are.

So what does it mean for nascent, say, tech companies, which were the hot ones, as the IPO market comes crashing down, which had already been uneven, the I.P.O. market, in general. SPACs sort of have come crashing down, too.

Well, I think the answer is very clear, which is that those companies are going to struggle. Some of them may survive, but venture capitalists are going to turn into vulture capitalists. And they’re going to come in and try to buy them on the cheap. A lot of these companies need to raise more money to keep going. They’ve been running at operating losses for years and years and years. And so then the question is, where do they get that money? If they were to go to a bank and try to get a loan, that loan now costs more than it did. And so, that’s why this gets complicated very quickly. And as Warren Buffett always likes to say, when the tide goes out, you get to see who’s swimming naked. And here we are. And I think we’re going to start to see who’s swimming naked.

It’s so funny that —

You’re in Cannes, by the way. There’s a lot of people swimming naked in Cannes.

There are a lot of people swimming naked, in lots of ways. Warren Buffett was made fun of by people like Peter Thiel just a few months ago. The crypto bros were making fun of him because he was like, I don’t get this, essentially. And they were sort of doing the, “oh, old man doesn’t get this,” kind of stuff.

Worse, they were calling him a sociopath grandpa, if I remember was the phrase.

Grandpa, that’s right. That’s correct. So talk about how crypto fits into all this because the total market value of all cryptocurrencies is down nearly two-thirds, about $2 trillion, since November. Is this slump the 2008 moment or the dot com bubble bursting or not so much? It’s not a huge part of the finance market yet, but it’s big.

So, first of all, it isn’t a huge part yet. The question is, is this the end of that dream? Or is this just a crypto winter? Now there have been these periods where crypto has fallen 50, 70, 80 percent in the past. They’ve called it a crypto winter. And then invariably, there’s a crypto summer, where it comes back. Now I will admit that I’ve always been crypto curious, but probably a bit of a crypto skeptic.

Sounds like a bar in San Francisco, but go ahead. Go ahead.

I’ve always been a bit of a crypto skeptic in that maybe like Warren Buffett, I’m not sure I’ve totally understood it. And I’ve always thought that investments that you don’t totally understand are probably not great investments. Having said that, I think it’s still unclear. All of the folks who bought crypto, let’s say Bitcoin, at $30,000, $40,000, $50,000, $60,000, $65,000 — and now Bitcoin’s sitting at 20 some odd thousand dollars. At one point, it was under 18. Do those investors — and a lot of those were younger people on Robinhood and Coinbase. Do those investors decide, I’m done? I’m done with the whole thing.

Right.

Or do they actually believe? And it was interesting because you covered the dot com bust. There was a whole period after 2001 where the retail investor disappeared. They said, we’ve had enough of this. This whole thing’s crazy. We don’t want to be involved in this. By the way, same thing happened after 2008.

That’s right.

People do come back. Memories ultimately are short. The question is, how short?

Anti-crypto people are now sort of in ascendance. There’s a lot of them who are just like, again, the math ain’t mathing. And so they find that a lot of the stablecoins, even, are not — they say they’re linked to a dollar, but there’s no assets that are safe within them. So it’s been sort of a casino. A lot of people are trying it like it’s a casino in that it doesn’t have any — well, the idea of decentralized finance and decentralized banking and people having more control is a very appealing one. It’s all sort of smoke and mirrors.

Look, as I said, I’m a skeptic of it because I look at Bitcoin, and I say, what does it do for you? It doesn’t produce anything. It only produces more money if you think there’s somebody else on the other side who wants to pay more money for it. That’s all it is.

A lot of people say, well, it costs a certain amount of money, a lot of energy, power consumption to make it. Well, you know, I could dig a hole in the ground that could cost me — I could spend money digging my hole in the ground. If nobody wants the hole in the ground I’ve dug, it doesn’t matter how much it costs me. And so I think there’s a question there.

I mean, it’s interesting because a lot of the people that are pushing it were the same people who were pushing the early internet, you know? And of course, they were talking about — my favorite part is the people that are — let’s beat the man or all the man.

Well, and I give — Marc Andreessen, for example, early venture capitalist, obviously, was behind Netscape early on. And he was somebody early on Bitcoin. And so I think a lot of people look at a Bitcoin and they say, I want to get in on that. He’s saying this is the beginning. I want to be at the beginning. And I think the same thing when it comes to NFTs and everything else.

By the way, there are elements of this that probably are going to work. If you’ve ever spent any time in the, quote unquote, metaverse, if you put on an Oculus, it’s a little kludgy now, but you can see what 10 years from now —

Yes, I would agree.

— could be. You and I are on a Zoom right now. I think, actually, we could be in the same room together, and it would be pretty cool. And you can start to see why people might buy some digital version of Air Jordans that are exclusive to them and maybe some kind of piece of art that’s going to be in their office behind them to look cool. I get that. It’s still, I think, a ways away.

Yeah, I agree. I think the NFTs and the collectibles are really interesting, and contracts are interesting. But back to the overall economy, are we headed for a mega recession? You just recently interviewed Janet Yellen, who kind of missed it. Fed Chairman Jerome Powell says it’s a possibility, but not likely. What’s your take on how each of them are handling things right now?

Well, let’s be honest. They’ve gotten it wrong. They’ve gotten it wrong. They’ve said they’ve gotten it wrong. I think why they got it wrong is probably more interesting. You know, if you’re Janet Yellen, she’s in a political job, and they wanted to run that economy a little hot. They said that. They felt they needed that. And that was a mistake. Jay Powell, I’m not sure wanted to run the economy hot per se, but there was a period of time where he had an opportunity to try to put the brakes on. And he didn’t, in part because he was up to be reappointed.

By the president, yeah.

By the president. And had he put the brakes on prior to that, which is when, I think, he would have wanted to, it’s unclear whether he’d still have the job. So all of these things to me are a little political. The other piece of this — and sometimes people forget this — we all sort of revere Paul Volcker today within the economic circles. He, of course, was the head of the Federal Reserve in the late ‘70s and early ‘80s. And he was somebody who put the brakes on and put them on hard.

But the truth is, he was a firefighter, but he was also an arsonist. He was a firefighter who put out the fire he created. And so it’s still possible. And I think if you’re playing for legacy, if you’re Jay Powell, you might be sitting around, saying, you know what? Yes, I did let the fire go. But if I can put it out, maybe I can get credit for that, too. That’s different than the political dynamic and calculus that the administration and President Biden and Janet Yellen have to make, which is that they have very few tools to fix the problem that’s been created.

Right, right. It was interesting. At your conference, she said there’s not going to be a recession. I was sort of surprised. I was like, hush, Janet. At some point, I was like, don’t be so definitive. It was an interesting moment, I thought.

I was fascinated that she was as definitive. And maybe she — look, everybody has a view. She’s taken it. And I also think you’re in a position where you have to follow what the president is saying. If the president says, I need you to be out there saying there’s no recession coming, that’s what you say. And the truth is — and Janet Yellen would not like me saying this.

There was a report about a book that’s coming out, where, apparently, Janet Yellen internally was saying maybe we shouldn’t be going for so much stimulus money. This is about a year and a half ago. And I actually thought the book, if true, made her look pretty good and smart. But then the second the excerpts of the book came out, she was out there putting out press releases, saying, no, no, I didn’t do that. I wasn’t that smart. I wasn’t doing any of those things. Why? She has to do that, because politically, again, she’s in this box.

She may lose her job. There’s rumors that the Gina Raimondo might take over her job. There’s all kinds of rumors in Washington right now.

People have talked about Gina Raimondo. People have talked about Gary Gensler, the head of the S.E.C. and others.

Yeah, he’s got other things to do. He should be busy doing other things. But what should the Fed have done differently, from your perspective? And what should — she is sort of in a political bind. She has to do what the president wants. But what should the Fed have done differently? And what should the Biden administration overall have done differently?

Well, if you could rewind the tape, there’s probably three things you would have done differently. The first is you would have put the brakes on probably six to eight months early. And that would have been the most important thing that could have been done.

Right, controversial.

The second, which is probably even more controversial than the first, would have been dialing back the stimulus program, at least some of the money that was being sought, once the Biden administration came into power, post-Trump. Trump’s administration had put a lot of money into the system already. And frankly, the Democrats wanted to put even more money than they were able to. In some ways, you could thank Senator Manchin for stopping some of that.

And the third thing, which also would have been controversial and very hard, I think, for this administration and the Democratic Party to pull off, would have been, frankly, to be more friendly to the oil industry, to the gas business, which he effectively campaigned against and said that he was going to — that he campaigned on a climate pledge. And so it would have made it very hard for him to turn around and say, drill, baby, drill. That was not something —

Right, which he finds himself stuck in the drill maybe, though.

And if you’ve done all three of those things, would we be in this place? No, I think we’d be a little bit of a different place. But I still think things would have probably been hot because you would have had enormous demand. And again, we haven’t really talked about Ukraine, but the Ukraine-Russia situation clearly makes things harder and did also make the price of oil —

Around food prices and price of oil. So the Biden administration now is trying, with their climate pledges, I think they’re backing off a little bit, visiting Saudi Arabia, making nice with that guy, trying to keep this from going off the cliff with things like his proposed gas tax holiday, which probably won’t pass, correct? This idea of bringing yet — because gas has been the center of it, like the price of gas, which everybody sees every day wherever they go.

The gas price holiday is more of a gimmick than anything else. Having said that —

Yeah, gas tax.

— it’s a gimmick that I don’t know if the president wants it to pass or not, but what, I think, he’s hoping for is come the midterms and come 2024, he will be able to turn around and say, look, I tried to do this. I tried to do this thing over here. Look, look, look. I wasn’t able to, but I wanted to.

Mm-hmm. And so he can’t do that.

Would that be persuasive?

Yeah, is oil the most important thing right now?

I think oil is a significant piece of this. The other one, again, perverse, is the issue of wages. How do you actually prevent wages from going up when, if you’re the president, you want wages to go up. I mean, you have a president who’s out there campaigning for labor, for unions. He’s out there against the Amazons of the world, against the Starbucks of the world. He’s encouraging labor, which means he wants wages to go up. And yet, wages going up, obviously, cascades in terms of the cost of everything else.

So Paul Krugman told me in April, we might see good news on inflation before the midterms. I don’t think he’s correct. I’m not an economist like he is. Is that likely?

I think it’s going to be tough, but I think it’s possible. Maybe not by the midterms, but come end of November, December, January, now we’re into ‘23, you should see the inflationary impact come down. There’s no question. And look, you’re already starting to see this. People are pulling back. People are looking at $1,000 round trip airfare tickets domestically in the United States, saying, I’m just not going on the trip. So that cascades throughout the economy.

Target, overspend — you’re going to see a lot of this, I think. You’re going to see a lot of stores who effectively over ordered for outdoor furniture. All of a sudden, that stuff’s going to go on sale. That will have a deflationary effect of sorts. So I think there are things that will happen over time —

And solving the labor crisis, the labor supply crisis, too, where people are going back to work and wanting to do things.

And how do you get people back to work? And but again, back to crypto, I know young people who effectively stopped working. They were basically trading crypto. And they were so successful at it and made so much money over the last two years that they didn’t have a day job. And I actually just ran into a guy two weeks ago, who was saying, oh, yeah, I have my job application out now. And I said, what happened? He said, I owned a lot of Bitcoin. And I think you’re going to start to see that. The wealth effect is going to come down.

It was like that with E-Trade. Remember the E-Trade days, Andrew? You remember.

100 percent, 100 percent. And so, all of that could have a deflationary effect on the economy, which, oddly enough, again, I say, is what Jay Powell and President Biden wants. It’s just very hard to campaign on that.

But they also don’t want to have the R word come out, the recession word Elizabeth Warren brought up. You have a prediction here on whether it moves into recession. What would tip it over into recession?

Oh, I think that the bigger — what would tip it over into a recession is just that we have a sort of stagflation, which we’re in now. That’s the idea, effectively, that —

Stagnation and inflation.

The growth is stagnated and costs continue to go up. That’s almost the worst place to be.

It is.

I actually argue —

It was the ‘70s.

— that’s even worse than a recession. And that’s where we are already, arguably. Are we tipping into a recession? We haven’t really seen the housing market completely move against people. And I think if you had a situation where housing became a lot more expensive and people couldn’t pay their mortgage, there were a lot of folks who did still take these flexible mortgages that, after five and seven years, all of a sudden, ratchet up and the costs get higher. I think if that were to start to happen, that would have a much bigger impact. And we haven’t gotten there yet.

But the truth also is that households, for the most part, have much stronger balance sheets to the degree people think about their family balance sheets. They’re much stronger than they were in 2008. So I think it would take a lot more for that to happen.

They’ve been sitting. A lot, a lot of not spending, although, I have to say, from here in Cannes, it’s like they’re partying like it’s 1999. There’s also a pent-up demand, which is interesting. It sort of plays into it, in a lot of ways.

I haven’t been there in a couple of years. But it feels like every time I was there, it always felt like 1999.

Well, and now it does. Back again, there was a lot of dancing on tables and drinking of rosé. [MUSIC]

We’ll be back in a minute. If you like this interview and want to hear others, follow us on your favorite podcast app. You’ll be able to catch up on “Sway” episodes you may have missed, like my conversation with Chris Dixon, and you’ll get new ones delivered directly to you. More with Andrew Ross Sorkin after the break.

I want to talk about corporate America, just a few of your takes on some companies. Let’s do a quick lightning round. One company that I’ve been tough on, Robinhood. I think they have been predatory, in many ways. What do you think?

I have to say — and I’m going to maybe lose points for this. I don’t know if I’m sympathetic to Robinhood. I like the idea of a company that actually democratized trading. What I didn’t like about that was that they did it without enough education, that they did it without guardrails. That, to me, was the bigger issue. But I was — I am enamored, even, with the idea of democratizing trading and allowing people to trade and be involved in the markets.

My problem is, I just want investors to be smart about the markets. And I worry all too often that between social media and so many other components of our society today, we have people out there that really are treating all of this like a grand lottery ticket. And the truth is, they’re going to lose if they haven’t already.

And a game. So that brings us to Coinbase, you know, much more regulatory compliant compared to the Binances of the world. But there still, it’s hurtling downward. This was a very center exchange for a lot of people.

Look, I admire the creation of Coinbase. I think what Brian Armstrong has tried to create is fascinating. What I have never understood is why Coinbase?

Middleman.

Coinbase to me is going to be like an E-Trade. And why is E-Trade not going to be doing what they’re doing? And why are the other guys not doing? So to the degree you believe that crypto is here 10 years from now, you would think that every brokerage and every bank in the world would be involved in trading this stuff.

OK, Disney, Disney, Bob Chapek stepping in it with “Don’t Say Gay.”

Oh, goodness.

Managed to piss off all sides. Talk a little bit about that. Where does that go? It’s obviously got the strong streaming position. It’s doing very well with lots of different things. Its parks have been doing very well recently. But —

Look, the assets of Disney are extraordinary. The brands of Disney are extraordinary. Of all of the companies in America, you could look at Disney as one of the most iconic, no question. The question, though, is, what do you do with all of that? And how do you monetize all of that? And there was a chase. Everybody was chasing Netflix. And Disney decided they were going to chase as well. The question is, what happens to those costs as they spend a lot more money on content?

In a streaming world, can you actually create the sort of branded characters that then you can go out and use in the parks and everything else? I don’t think we’ve seen whether that flywheel is going to work yet. And that, to me, is the ultimate question. Whether Bob Chapek is the guy or not who is going to run that company, I think, also remains an open question. But I have to admit, I think he’s probably going to be there for a while longer. I know his contract —

Yeah, he has a contract coming up. I do. I agree.

His contract up in February. I think it would be very difficult for them to cut them off at the knees right now.

Yeah, I think it’s interesting because I think they’re going to give him a contract. They can’t. And he comes off a legendary C.E.O, Bob Iger. I call him Bob one and Bob two. So that’s always difficult. He seems to be very thick-headed when it comes to talent. But the way he’s going, he’s got to sort of calm things down. He has big shoes to fill.

But the truth is that all of Hollywood — and this is a culture issue — all of Hollywood is shifting. It’s shifting away from this sort of talent-happy, let’s spend the money —

Billboards on Santa Monica —

Billboards.

— on Sunset.

We’re throwing parties constantly. All this stuff is happening in Cannes. That’s going away in Hollywood. And I think you’re seeing that culture — there’s a culture war happening in Hollywood as a result of that. And you see the actors and the agents on one side. And you see the executives, who everybody looks at now as bean counters on the other. That is probably what the future looks like.

Yeah, it’s interesting, which brings us to Netflix, perfectly. I just interviewed Ted Sarandos today. We talked about a lot of things. And he talked about them moving into the ad business and didn’t think that’s a problem. I would agree with him on that. They’re trying — their stock has fallen off rather significantly. They have subscriber issues, so advertising makes sense at this moment in time. What do you think of what’s happened there? Because they had run most Hollywood companies around the track over and over and over.

I think like any company that has enormous success and has it quickly, they grew too fast. And then, culturally, I think there was a moment where they took their eye off the mark when it comes to what content works. And they just became a content machine. They were creating anything and everything. And how often have you gone onto Netflix as a subscriber and looked through this endless scroll of stuff and said, ah, there’s nothing here I really want to see. Or you start something and you say, you know, this is kind of junky. And —

I did that last night. I was finishing watching “Bridgerton.” It moved me to this lesbian vampire called “First Kill,” which I didn’t think was particularly good. But then it led me to something else I liked. And it was interesting. And I didn’t dislike it for that, necessarily. It was very entertaining in the end. I didn’t think it was a bad thing, necessarily, like you do. I think it’s fine for that to happen. If you have endless choice, it’s actually kind of OK.

But I think that what they’re going to try to do over time is rather than be the Walmart of TV, they’re going to refocus on quality. When Netflix became hot, it was because they had hot, high quality shows.

Right, whether it’s “Stranger Things” or —

“House of Cards.” You could go back to “Orange is the New Black.”

Right, original content, which they started a long time ago.

Which they started a long, long time ago. So I think there’s going to be a refocus on that. And then the truth is, you know, you can saturate a market. They have a huge amount of viewers in the United States already. They need to actually do better in Europe and abroad, clearly. But at the same time, the reason they have to focus on advertising is because otherwise, you just can’t grow. At some point, you do take over a market. Their problems are problems of success.

Right, that’s a really good way of putting it. But one of the things — talk very briefly about this, the activism, the employee activism. They had a memo saying basically, if you can’t work on a program you disagree with, maybe you don’t work at Netflix. Ted said today he could have been better in the way he talked to employees and things like that.

But effectively, he’s saying, we’re going to offer lots of things and that’s just the way it’s going to be here. I don’t think he was as obnoxious as the guy who’s at Kraken, who really seems like a giant jerk. It was a story in The New York Times. But I think he was saying, we’re going to err on the side of the Dave Chappelles of the world, and then also people who don’t agree with the Dave Chappelles of the world.

So I think we’re seeing the pendulum swinging in various directions. two and a half, three years ago, we saw the pendulum swing, especially during the Trump era, employees telling their bosses, you need to be speaking out on all sorts of different social issues. There’s a void of leadership in Washington. We need you to be our voice.

And companies, especially in the aftermath of the murder of George Floyd, the murder of Khashoggi and others, you saw companies speak out on these issues in a very big way. And then I think employees decided, well, we’re going to keep pushing this, and almost expecting it.

And now you’re seeing politicians push back — DeSantis is an example of that in Florida. We saw it in Georgia with voting rights. We are now seeing it in Texas. And you’re seeing this — sort of the situation in Netflix is a microcosm of all of it.

And I think you’re starting to see companies, though, modulate how far they’re willing to go, meaning, I think, that there was a view they were going to be a bit more progressive, frankly, a year or two ago. And now they’re saying, we’re starting to see what the costs of that really are because it wasn’t just about the economic cost for customers, which is a piece of it. But now there can be political retribution that can actually have an economic impact to the bottom line.

Right, which Disney is seeing it in Florida or Texas or wherever in different states. I think politicians are now pushing it too hard with their economic retribution. I think they’re not going to win at all, eventually, against these companies.

All right, so last two questions — Elon. You know, he talked about the Twitter takeover. He’s given a lot of interviews lately, of which he seems rather reasonable, compared to his — and he actually made a joke of it on Twitter that on Twitter, he’s the Hulk. And in real life, he’s Bruce Banner, which doesn’t really make me feel comforted in some fashion. But —

You know what? I thought — it’s funny you said that because when I saw his tweet where he said, I’m the Hulk on Twitter, and I’m this other person elsewhere, I thought, that’s a problem. Because the truth is that you’re disclosing information constantly on Twitter about your companies. And this should matter. And this is how people understand you. So if they think you’re the Hulk, that’s one thing. If they think you’re something else, it’s another.

Look, I think he’s done remarkable things with Tesla, obviously, SpaceX. I mean, I think Jason Calacanis said it many years ago — betting against Elon is like betting against humanity. I actually do think the guy is trying to do these unbelievable things. At the same time, he’s an opportunist. And he’s been one of the great opportunists of our time, in addition to being a great entrepreneur.

How this all plays out with Twitter ultimately, I don’t know. I imagine he gets control of it at this point. I think he’s going to have to take control of it. I don’t think he can get out of it. I’ve always thought that. It’s just a matter of how much he pays for it.

He’s trying to. He’s sneaking out in some way with price or something else. But Twitter is holding firm.

But I’ve always thought he’s stuck. I think that contract is so tight, that he’s stuck, and that what he’s going to do, at best, in his case, is to say, look, guys, I’m going to take you to court. And if you want to suffer for 12, 24 months — by the way, I might lose in court, but that 24 months is going to cost you. And so a board might sit around and go, OK, you know what?

Lower the price.

I don’t need $44 billion. Maybe I can take 35. Maybe I can take 32.

But then there’s lawsuits on that side from shareholders. I mean, it’s still —

And there’s lawsuits on that side, too. But the truth is, the boards, all of these boards have insurance.

Yeah, that’s right. Insurance.

There’s lawsuits.

The quiet word, insurance. Insurance.

And they’ll have insurance.

I think it hurts Twitter. I think he’s going —

Everyone’s always saying that, going, oh, they don’t want to be sued —

I think by the end, he’s going to own something. Not that he’s not going to want to have owned and pay that much for, but we’ll see.

And that’s right. And to me, I’m with you. In the end, I think he’s going to buy the thing. He’s going to try to fix it, but he’s not going to be happy he did it.

Yeah, the congratulations you know in MySpace. Anyway, so last question, prediction. Give me a prediction on something Elon, Twitter deal, the midterms, whether — Trump — I don’t care.

Elon Musk buys Twitter for more than $30 billion, but less than $40 billion.

OK, that’s a good one.

How about that?

That’s a good one. All right, I’ll see. I will see on that. Anyway, on that note, Andrew, thank you so much. I really appreciate it.

Thank you.

And people can find Andrew everywhere. He’s ubiquitous and does a fantastic job. And I really appreciate it myself as a colleague.

Thank you, my friend. [MUSIC]

“Sway” is a production of New York Times Opinion. It’s produced by Nayeema Raza, Blakeney Schick, Caitlin O’Keefe and Wyatt Orme; with original music by Isaac Jones; mixing by Sonia Herrero and Carole Sabouraud; and fact-checking by Kate Sinclair, Michelle Harris and Mary Marge Locker. Special thanks to Shannon Busta, Kristin Lin and Kristina Samulewski. The senior editor of “Sway” is Nayeema Raza. And the executive producer of New York Times Opinion Audio is Irene Noguchi.

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