Latest / Masters in Business / Scott Galloway Discusses Four World-Conquering Companies

Transcript

Scott Galloway Discusses Four World-Conquering Companies · Masters in Business

• 0:02
  Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio.
• 0:09
  Speaker 1: This week on the podcast, I have an extra special guest,
• 0:12
  Speaker 1: our first three timer, Professor Scott Galloway of n While
• 0:17
  Speaker 1: You Stern. Where do I begin to describe Professor Galloway.
• 0:23
  Speaker 1: I first invited him on the show after I saw
• 0:27
  Speaker 1: a YouTube video of him really describing for his students
• 0:32
  Speaker 1: at n y U Stern School of Business the four
• 0:36
  Speaker 1: Horsemen of the Internet. And he discusses everything from you, Google, Apple, Amazon,
• 0:43
  Speaker 1: and Facebook and the subsequent impact of all these companies
• 0:47
  Speaker 1: and what they have and where they're going, and how
• 0:49
  Speaker 1: they're affecting the rest of the world, of finance, of government,
• 0:54
  Speaker 1: and taxation, of technology, of employment it. There's nobody like him.
• 0:59
  Speaker 1: He just choose the scenery. Everybody loved his previous two conversations.
• 1:05
  Speaker 1: This one is very different. We talked about his new book,
• 1:08
  Speaker 1: The Four which discusses those four companies. Uh. He has
• 1:12
  Speaker 1: done work for most of these companies on a consulting basis,
• 1:17
  Speaker 1: and yet that doesn't stop him from really trashing them
• 1:21
  Speaker 1: when they deserve to be trashed about different things like
• 1:24
  Speaker 1: what they're doing two jobs in America, how they're impacting
• 1:28
  Speaker 1: the tax base of the federal government. And you know
• 1:31
  Speaker 1: he calls on all of these companies, especially Google and
• 1:34
  Speaker 1: Facebook as media companies, to be more responsible for what
• 1:40
  Speaker 1: they do. And uh it, I don't know how else
• 1:42
  Speaker 1: to say it. It's a fascinating conversation. With no further ado,
• 1:46
  Speaker 1: my talk with Professor Scott Galloway. My special guest today
• 1:54
  Speaker 1: is Scott Galloway of n y U Stern School of
• 1:57
  Speaker 1: Business as well as L two Inc. He is the
• 2:00
  Speaker 1: founder of a number of internet startups uh and he
• 2:04
  Speaker 1: specializes in digital branding. I first reached out to Professor
• 2:09
  Speaker 1: Galloway after seeing his four Horsemen of of the Internet
• 2:15
  Speaker 1: video on YouTube a few years ago. We've interviewed him
• 2:19
  Speaker 1: twice before for Masters in Business. He is not only
• 2:23
  Speaker 1: our first three times guest, he's likely to be the
• 2:26
  Speaker 1: only one. Scott Galloway, Welcome back to Bloomberg. Thanks very so.
• 2:31
  Speaker 1: Is this SNL DO. I got a jacket which it's
• 2:34
  Speaker 1: like the Masters. It's like a green jacket and it
• 2:36
  Speaker 1: says might be on the exactly exactly. It's it's all
• 2:40
  Speaker 1: good fun for everybody. Let's talk about your new book,
• 2:43
  Speaker 1: The four The Hidden DNA of Amazon Apple, Facebook, and Google.
• 2:48
  Speaker 1: The first question is why the four and why these four?
• 2:53
  Speaker 1: So I believe as consumer companies, these these companies have
• 2:58
  Speaker 1: tapped into a base against inc in a and have
• 3:01
  Speaker 1: had a bigger role or an outsized role on society
• 3:04
  Speaker 1: who we are as people and uh than almost any
• 3:07
  Speaker 1: organizations in history, much less companies. Also, I think there's
• 3:09
  Speaker 1: a tremendous amount to learn from these companies, and our
• 3:13
  Speaker 1: role as professors of business school, I think is to
• 3:15
  Speaker 1: help people develop the currency and skills so they can
• 3:18
  Speaker 1: create economic security for them and their families. And to
• 3:22
  Speaker 1: really understand these companies. I think it's to understand the
• 3:24
  Speaker 1: intersection between technology, innovation, media, and having have an advantage.
• 3:29
  Speaker 1: I think there's something we can all learn from really
• 3:31
  Speaker 1: understanding these companies. So if I'm a first year business student,
• 3:35
  Speaker 1: it's stern. What takeaway do I do I get from
• 3:38
  Speaker 1: these four? So first year is an interesting way to
• 3:42
  Speaker 1: look at it. I think the first year in business
• 3:44
  Speaker 1: school is one of the highest r o I investments
• 3:46
  Speaker 1: in individual can make. We take a kid who's making
• 3:48
  Speaker 1: seventy thousand tournament to a kid who's making six figures,
• 3:50
  Speaker 1: it's stern. Within fourteen months and the foundations of the
• 3:54
  Speaker 1: first year of management, operations, finance, and strategy. UH. The
• 3:59
  Speaker 1: second year, I think is mostly a waste. It's mostly
• 4:01
  Speaker 1: there so we can charge the kid's double tuition and
• 4:04
  Speaker 1: to satisfy the teaching requirements of tenure faculty that have
• 4:07
  Speaker 1: sort of lost their edge. If we were to stay
• 4:10
  Speaker 1: true to that that effort to increase the r o
• 4:13
  Speaker 1: I at the same velocity as the first year, I
• 4:16
  Speaker 1: think we would teach them about these four companies. So
• 4:18
  Speaker 1: I think there's tremendous, just tremendous advantage and insight to
• 4:23
  Speaker 1: really under understanding these four companies. The thing that you
• 4:26
  Speaker 1: take away your first year about these four firms is
• 4:29
  Speaker 1: that they tap into a very basic instinct, the appealed
• 4:31
  Speaker 1: to specific organ and if you want to be in
• 4:35
  Speaker 1: I think if you want to be relevant in business,
• 4:36
  Speaker 1: you really have to understand how these companies work and
• 4:39
  Speaker 1: how to leverage them. You said a specific organ can
• 4:42
  Speaker 1: you expert a little bit? So I think Google is
• 4:45
  Speaker 1: a modern man's God. Where our advantages as a species
• 4:49
  Speaker 1: is that we have a better brain, a brain that's
• 4:51
  Speaker 1: so robust you can ask incredibly complex, nuanced question. But
• 4:55
  Speaker 1: our brain isn't robust enough to answer these questions. And
• 4:57
  Speaker 1: as the society becomes more affluent and educated, it's dependence
• 5:01
  Speaker 1: upon a super being and church attendance goes down, But
• 5:04
  Speaker 1: our our questions don't get any easier simpler. So there's
• 5:07
  Speaker 1: a void that opens up and a need for a
• 5:09
  Speaker 1: super being. And our species is always needed and adopted
• 5:12
  Speaker 1: super beings. And I believe a modern man's god is Google.
• 5:16
  Speaker 1: Anyone who has kids knows that when something comes off
• 5:18
  Speaker 1: the rails with your kids, you throw up a prayer
• 5:20
  Speaker 1: into the sky, hoping that this all knowing authority will
• 5:23
  Speaker 1: process your query, look at everything out there, and then
• 5:26
  Speaker 1: send you back an answer, will my kid be all right?
• 5:29
  Speaker 1: We've all had that prayer if you have kids. Now
• 5:31
  Speaker 1: it's symptoms and treatment of croup typed into the Google
• 5:33
  Speaker 1: query box. So I think Google appeals to our need
• 5:35
  Speaker 1: for a super being, and it's a very cebral kind
• 5:38
  Speaker 1: of I don't know, attraction to the brain moving down
• 5:41
  Speaker 1: the heart. One of the wonderful things about our species
• 5:44
  Speaker 1: is we not only need to be loved. Kids or
• 5:46
  Speaker 1: babies that have more affection but not great nutrition have
• 5:49
  Speaker 1: better outcomes than kids with decent nutrition and small amounts
• 5:53
  Speaker 1: of affection. We need to love others. The strongest indicator
• 5:56
  Speaker 1: you're gonna make it to a hundred years of age
• 5:58
  Speaker 1: is how many people in your life do you care about?
• 6:00
  Speaker 1: How many people you love? And I think Facebook is
• 6:02
  Speaker 1: tapping into that instinct and letting us love its scale,
• 6:05
  Speaker 1: mostly through pictures that create empathy and greater connection and
• 6:08
  Speaker 1: reinforcing existing relationships. Amazon is our consumptive gut. It is
• 6:13
  Speaker 1: hard wired intoists just the notion of more. There's never
• 6:16
  Speaker 1: anything is too much. There's always a desire for more.
• 6:19
  Speaker 1: The penalty for too level throughout history has been starvation
• 6:22
  Speaker 1: and malnutrition, which is a terrible death. The penalty for
• 6:26
  Speaker 1: too much is lethargy, gluttony, and our age. Maybe it's diabetes,
• 6:29
  Speaker 1: but it has a pretty long lag. So open your cupboards,
• 6:32
  Speaker 1: open your closets. You have tend to a hundred x
• 6:34
  Speaker 1: more than you really need. It's really crazy when you
• 6:36
  Speaker 1: think about it, how much stuff we have. But it's
• 6:39
  Speaker 1: so hard wired into us. And the ultimate business strategy
• 6:42
  Speaker 1: is more for less. It's the business strategy of China, Walmart,
• 6:45
  Speaker 1: and now Amazon, which is our consumptive gut, taking and
• 6:49
  Speaker 1: stuff extracting what we need to survive and sending it
• 6:52
  Speaker 1: to our our vascular and our skeleton and muscular so
• 6:54
  Speaker 1: much how much lower can you go down the tour?
• 6:56
  Speaker 1: So you keep going. So the next place you go
• 6:58
  Speaker 1: is to the reproductive system. And once the strongest instinct
• 7:03
  Speaker 1: is to survive. Once you know you're gonna survive, and
• 7:05
  Speaker 1: most of us wake up in the morning aren't worried
• 7:07
  Speaker 1: about survival. We think we're gonna probably gonna go through
• 7:09
  Speaker 1: the day. So it moves to the second most powerful instinct,
• 7:12
  Speaker 1: and that is procreation. And I think Apple has tapped
• 7:14
  Speaker 1: into our need to be attractive to other people. It
• 7:17
  Speaker 1: used to be watched as it used to be cars.
• 7:19
  Speaker 1: But now among the innovation class, the way you signal
• 7:22
  Speaker 1: how attractive you are and that you have good genes
• 7:24
  Speaker 1: is that you have the disposable income, you have the education,
• 7:27
  Speaker 1: the innovation you think different. The iPhone is the new
• 7:30
  Speaker 1: signal that you are a good mate or a good
• 7:33
  Speaker 1: potential mate, and that you will pass along good genes
• 7:35
  Speaker 1: to anyone who decides to mate with you. Let's talk
• 7:38
  Speaker 1: about Amazon. Some of the statistics you you used to
• 7:42
  Speaker 1: discuss them are quite astonishing. Of us households have a
• 7:49
  Speaker 1: gun of households have Amazon Prime, and I think the
• 7:54
  Speaker 1: numbers gone up since you you wrote that, how did
• 7:57
  Speaker 1: Amazon become this behemoth? Amazon? Yeah, I think the number
• 8:02
  Speaker 1: of households now sixt some more households have a relationship
• 8:06
  Speaker 1: with Prime and have a landline phone or vote in
• 8:08
  Speaker 1: the two thousand sixteen elections ashing And if the trends continue,
• 8:11
  Speaker 1: in three years, more people are going to have a
• 8:13
  Speaker 1: cable pipe of stuff into their house visa the Prime
• 8:16
  Speaker 1: than have cable television. So who would have guessed that
• 8:19
  Speaker 1: that kind of one of the signals are symbols of
• 8:22
  Speaker 1: technology and innovation over the last ten years, would be
• 8:25
  Speaker 1: the more people have Prime than a landline phone. Amazon success.
• 8:29
  Speaker 1: Their core competence, I would argue, is not operations or
• 8:32
  Speaker 1: facility with data. It's storytelling. And if you go all
• 8:34
  Speaker 1: the way back to Bezos investor letter said we're going
• 8:38
  Speaker 1: to massively invest across these truisms, these non perishables of
• 8:42
  Speaker 1: consumer value. I think it was selection, convenience, and value.
• 8:48
  Speaker 1: And he's made these huge investments and stayed true to
• 8:50
  Speaker 1: that philosophy. And it's an intoxicating vision to outline this
• 8:54
  Speaker 1: enormous vision that results and UM and they make progress
• 8:58
  Speaker 1: against it every day. And as a result of this
• 9:00
  Speaker 1: incredible storytelling which has become, in my view, the core
• 9:02
  Speaker 1: competence of the CEO, the ability to tell a story
• 9:05
  Speaker 1: about what the company is trying to accomplish. Give me
• 9:09
  Speaker 1: a magnetic twenty seven year old founder with a great
• 9:13
  Speaker 1: rap and a degree from M I. T. And I'll
• 9:16
  Speaker 1: show you someone who can go raise fifty million dollars
• 9:17
  Speaker 1: right now. It's your ability storytelling. You know, we used
• 9:21
  Speaker 1: to call it salesmanship, but storytelling and the narrative you're
• 9:24
  Speaker 1: able to put together is really powerful. You see Jeff
• 9:27
  Speaker 1: Pezol speaking, want to you just want to buy stock.
• 9:29
  Speaker 1: And as a result, the storytelling has resulted in the
• 9:33
  Speaker 1: access to the cheapest capital I think in the history
• 9:35
  Speaker 1: of modern business. Amazon can access the debt markets for
• 9:38
  Speaker 1: a lower cost of capital than China, regardless of them
• 9:42
  Speaker 1: breaking even which is they've changed the compact with markets.
• 9:46
  Speaker 1: They invest a hundred cents on the dollar back and
• 9:48
  Speaker 1: the consumer experience and their stock continues to go up.
• 9:52
  Speaker 1: And we've never seen that before, so versus Facebook, Apple
• 9:56
  Speaker 1: or Google who have to invest sixties, seventy or only
• 10:00
  Speaker 1: ninety cents on the dollar back and the consumer experience.
• 10:03
  Speaker 1: Amazon invests all hundred cents on the dollar back in
• 10:05
  Speaker 1: the consumer experience, which means that they quite frankly, just
• 10:08
  Speaker 1: offer a better value to the consumer and are sort
• 10:11
  Speaker 1: of playing unfair, if you will. So let's talk a
• 10:14
  Speaker 1: little bit about playing unfair. Another quote of yours, I
• 10:17
  Speaker 1: really like the wealthiest man in the twentieth century mastered
• 10:21
  Speaker 1: the art of minimum wage employees selling you stuff. The
• 10:25
  Speaker 1: wealthiest man of the twenty first century is mastering the
• 10:29
  Speaker 1: science of zero wage robots selling you stuff. Is it
• 10:33
  Speaker 1: really that simple? Is it? Robotics and automation is a
• 10:37
  Speaker 1: defining advantage of Amazon. So to be fair, Amazon is
• 10:42
  Speaker 1: hiring a lot of people uh such that they can
• 10:44
  Speaker 1: take they can take more share of retail and other sectors,
• 10:49
  Speaker 1: and they'll be more efficient at it. And by the way,
• 10:51
  Speaker 1: we've seen this throughout economic history, that innovators figure out
• 10:54
  Speaker 1: a way to take a bunch of medium paying jobs
• 10:57
  Speaker 1: and turn them into fewer, higher paying jobs. We've just
• 10:59
  Speaker 1: never seeing people that's good at it before. So the
• 11:02
  Speaker 1: scale is on the speed. It's very hard to to
• 11:05
  Speaker 1: replace these these jobs that are going away as quickly.
• 11:08
  Speaker 1: So Amazon needs one person for every two that Macy's
• 11:12
  Speaker 1: or nors for need to service the same amount of business.
• 11:14
  Speaker 1: So if Amazon growth this business twenty billion dollars this year,
• 11:17
  Speaker 1: which they will, we're gonna lose about fifty thou people.
• 11:20
  Speaker 1: And what is kind of a flat growth, zero growth
• 11:22
  Speaker 1: retail economy, meaning um, the Yankee stadium. Fill it up
• 11:26
  Speaker 1: with cashier's, merchants and security guards and you're kind of
• 11:29
  Speaker 1: out of business. Now, they're not doing anything wrong, but
• 11:32
  Speaker 1: it's happening at a scale we haven't we haven't seen before.
• 11:35
  Speaker 1: Amazon really is trying to take humans out of the
• 11:38
  Speaker 1: equation with technology. And that's why it's so this notion
• 11:42
  Speaker 1: of apologize and getting pull up the notion of a
• 11:45
  Speaker 1: wall unless you're gonna build a wall to keep out robots,
• 11:48
  Speaker 1: you know, it doesn't it's not going to help much. Right.
• 11:50
  Speaker 1: It's automation that's destroying jobs, not not not not other label.
• 11:54
  Speaker 1: Let's talk about cashiers and technology. Yeah, Amazon sets up
• 11:59
  Speaker 1: their cash cheerless stores. You go in, you just shop,
• 12:02
  Speaker 1: and you leave. The store knows what you bought and
• 12:05
  Speaker 1: Ormaic automatically bills you. This is just a small, little
• 12:09
  Speaker 1: test run. What how did that ripple out across the
• 12:13
  Speaker 1: entire retail universe. When Amazon teeth this up, there are
• 12:17
  Speaker 1: more cashiers in the US and teachers, and probably a
• 12:21
  Speaker 1: third of them lost their job when that one Amazon
• 12:23
  Speaker 1: go store open. Because every retail boardroom now, and I
• 12:27
  Speaker 1: mean a lot of them, is talking about store optimization,
• 12:30
  Speaker 1: which is Latin for fire cashiers and what's interesting barriers.
• 12:34
  Speaker 1: If you look at the retailers that are surviving in
• 12:37
  Speaker 1: the age of Amazon, they're the ones making incremental investments
• 12:40
  Speaker 1: and what I would call not artificial intelligence board organic intelligence,
• 12:44
  Speaker 1: investing in the golden aprons at home Depot, the castles
• 12:47
  Speaker 1: of for the the blue shirts at Best Buy. People
• 12:50
  Speaker 1: no longer go to stores for people for products. They
• 12:53
  Speaker 1: go for people. If you're gonna walk into a store,
• 12:55
  Speaker 1: you want expertise. You want someone to get you the
• 12:57
  Speaker 1: right product and get you out of there as quickly
• 12:58
  Speaker 1: as possible. You want someone to make a connection with you,
• 13:01
  Speaker 1: because you can get the product online, probably for less.
• 13:04
  Speaker 1: I have no doubt about that. My experience has been
• 13:07
  Speaker 1: with home Depot, that they went through a period of
• 13:10
  Speaker 1: cutting head count and then Lowe's comes along and suddenly
• 13:15
  Speaker 1: Home Depot is starting to hire people again. And you
• 13:17
  Speaker 1: can find someone in the aisles, and I think the
• 13:20
  Speaker 1: competition force that are we gonna see that same move
• 13:24
  Speaker 1: towards expertise in other retailers or is it just these
• 13:29
  Speaker 1: narrow specialty retailers that requires an expertise? I think the
• 13:35
  Speaker 1: answers Yes, so William Snelma, you're gonna find someone's passionate
• 13:37
  Speaker 1: about cooking. But home Depot does a fantastic job. They're
• 13:40
  Speaker 1: very well trained. And again I would argue that the
• 13:44
  Speaker 1: opportunity is to zague Amazon zigging and make these big
• 13:48
  Speaker 1: investments and incremental human capital. The original gangster here is Starbucks.
• 13:52
  Speaker 1: They spend more money on employee benefits and they spent
• 13:54
  Speaker 1: on coffee beans. I use the app. It's fantastic. I
• 13:58
  Speaker 1: come out of the subway. I owe to break this.
• 14:00
  Speaker 1: By the time I walked the three blocks to my office,
• 14:02
  Speaker 1: it's waiting for me. Nobody else does that. Yes, So now,
• 14:05
  Speaker 1: based on the amount of money stored in on the
• 14:08
  Speaker 1: Starbucks loyal through program, I think they're one of the
• 14:10
  Speaker 1: ten largest banks in the US right now. It's a
• 14:12
  Speaker 1: It's probably the best use of an app of a
• 14:14
  Speaker 1: retailer out there. But what doesn't get as much press
• 14:18
  Speaker 1: because we're you know, we're all obsessed with innovation as
• 14:20
  Speaker 1: a relationist technology is this crazy rational investment they made
• 14:24
  Speaker 1: in Baristas. And when you walk in, not only does
• 14:27
  Speaker 1: the smell good, but I think there's a nice light
• 14:30
  Speaker 1: feeling because I think the people working there just don't,
• 14:33
  Speaker 1: you know, don't hate their jobs. They may be going,
• 14:35
  Speaker 1: they may be getting a degree in Arizona State. They
• 14:38
  Speaker 1: have health care and they can afford to get They
• 14:41
  Speaker 1: attract the best people, and I think that creates a
• 14:44
  Speaker 1: different environment. And look what they do. They make you
• 14:47
  Speaker 1: especialty coffee, and they get you in and out of
• 14:49
  Speaker 1: their really fast. And the people seem pretty friendly and
• 14:53
  Speaker 1: pretty nice. So I'm a big fan of believing in
• 14:55
  Speaker 1: and this is a big issue. I think what we
• 14:57
  Speaker 1: need is I don't want to say we need left
• 15:00
  Speaker 1: less Jeff Bezos, but we definitely needs more Henry Fords.
• 15:03
  Speaker 1: And that is people who say I could pay my
• 15:05
  Speaker 1: employees two bucks an hour, but I'm gonna pay him
• 15:07
  Speaker 1: five because I think it's important we build a middle class.
• 15:10
  Speaker 1: What I was really disappointed. I spoke at a big
• 15:13
  Speaker 1: investor conference right after Jeff Bezos and he said that
• 15:16
  Speaker 1: he was a big supporter of universal guaranteed income. And
• 15:19
  Speaker 1: originally I thought, what a great guy, progressive values, and
• 15:22
  Speaker 1: then I increasingly got disappointed that the arguably the best
• 15:26
  Speaker 1: mind in business, the person who probably has more insight
• 15:28
  Speaker 1: into the future of business, has kind of given up
• 15:31
  Speaker 1: on what I believe is a key component of American identity,
• 15:34
  Speaker 1: something that is key to our relevance. And I think
• 15:36
  Speaker 1: and and happiness as we get older, and that is
• 15:39
  Speaker 1: a job. And I'd like to see all of the
• 15:41
  Speaker 1: CEOs and tex say, our objective here is not only
• 15:45
  Speaker 1: to increase your older value. Our objective is to massively
• 15:48
  Speaker 1: increase this wonderful thing that serves as a key component
• 15:52
  Speaker 1: of our self esteem and our identity as a nation.
• 15:55
  Speaker 1: And that his work and a job. In the Amazon chapter,
• 15:58
  Speaker 1: you push back a little bid on on Bezos, saying,
• 16:02
  Speaker 1: if you're concerned about universal income, well, then why don't
• 16:05
  Speaker 1: you pay your taxes? So they're not doing anything wrong.
• 16:08
  Speaker 1: But just as an example, since the Great Recession, Walmart
• 16:13
  Speaker 1: has paid sixty four billion dollars in corporate income tax
• 16:16
  Speaker 1: and Amazon has paid one point four That's a huge,
• 16:19
  Speaker 1: huge disadvantage for Walmart because Amazon has mastered this new
• 16:23
  Speaker 1: compact with the marketplace with storytelling. Where run your business
• 16:26
  Speaker 1: a break even and you have no leakage to um
• 16:30
  Speaker 1: the government, and there's nothing wrong with that. It's it's
• 16:33
  Speaker 1: a brilliant strategy and the markets have put up with it,
• 16:36
  Speaker 1: but there is a social cost to them. Well, the
• 16:38
  Speaker 1: question is the following. If if the most successful company
• 16:41
  Speaker 1: in the world, which a lot of people would argue
• 16:43
  Speaker 1: Amazon is right now, pays no corporate income tax, how
• 16:46
  Speaker 1: do we pay Our soldiers are firefighters and our social workers,
• 16:49
  Speaker 1: and taxes are to a certain centers real some game.
• 16:52
  Speaker 1: The answer is, well, the less successful company has got
• 16:54
  Speaker 1: to pay more. And then people say, okay, But any
• 16:58
  Speaker 1: company could adopt a strategy go to or break even.
• 17:00
  Speaker 1: But what we have in the marketplace right now is
• 17:02
  Speaker 1: once you go profitable, there really is no going back.
• 17:05
  Speaker 1: If if a company, if any sort of old economic
• 17:08
  Speaker 1: companies said we're gonna make massive investments in technology and
• 17:10
  Speaker 1: go to break even, be punished by the market, and
• 17:14
  Speaker 1: they might they might inside or catalyze or ignite a
• 17:17
  Speaker 1: downward spiral, that bit would be inextorable. So it's an
• 17:20
  Speaker 1: unusual situation. Good for Amazon, they figured it out. But
• 17:23
  Speaker 1: I wonder if at some point, if this keeps happening
• 17:26
  Speaker 1: where all the companies that get the majority soak up
• 17:28
  Speaker 1: the majority of the cheap capital in the marketplace are
• 17:32
  Speaker 1: running a break even if we might end up in
• 17:34
  Speaker 1: a system like and I'm not saying this is the
• 17:37
  Speaker 1: right economic model, but in Brazil they have a taxation system,
• 17:39
  Speaker 1: or once you get to a certain point, you pay
• 17:42
  Speaker 1: a certain a mt on top line revenues. But should
• 17:46
  Speaker 1: should a company be able to get to a half
• 17:47
  Speaker 1: a trillion dollars in value and not pay any meaningful
• 17:51
  Speaker 1: amount of taxes? That's I don't know the answer to that,
• 17:53
  Speaker 1: but I think it's a question worth asking. So to
• 17:56
  Speaker 1: brick and mortar questions, I have to ask. One is
• 18:00
  Speaker 1: Walmart paid something like three point three billion dollars for
• 18:04
  Speaker 1: jet dot Com and you describe that as the most
• 18:08
  Speaker 1: expensive set of hair plugs for a corporate midlife crisis.
• 18:12
  Speaker 1: Was that a bad purchase, were they able to make
• 18:14
  Speaker 1: any hay of it, or was that simply a Amazon's
• 18:18
  Speaker 1: eating on launch. We have to compete. So I said
• 18:20
  Speaker 1: at the time that I thought it was going to
• 18:21
  Speaker 1: be the biggest write down in retail, and it was
• 18:23
  Speaker 1: a bad acquisition. And the bottom line is I was wrong,
• 18:26
  Speaker 1: because if you look at a year later, what's happened.
• 18:30
  Speaker 1: Walmart has been able to announce year on year e
• 18:33
  Speaker 1: commerce sales worth of sixty plus percent because it was
• 18:36
  Speaker 1: in a jet and being able to get their mojo
• 18:38
  Speaker 1: back and kind of get off their heels. For a
• 18:40
  Speaker 1: company that's got a three billion dollar market cap or
• 18:43
  Speaker 1: to seventy whatever it is now is worth three billions.
• 18:45
  Speaker 1: So was the company? Was Jet dot Com worth three billion?
• 18:48
  Speaker 1: I don't think so. Was it worth three billion to Walmart?
• 18:51
  Speaker 1: It looks like it was. I was wrong. So let's
• 18:53
  Speaker 1: talk about another giant acquisition, only this time it's the
• 18:57
  Speaker 1: opposite um uh an Internet play buying a brick and
• 19:01
  Speaker 1: mortar routine, which is Amazon buying Whole Foods. What does
• 19:06
  Speaker 1: Whole Foods do for Amazon? I think it's transformative. I
• 19:10
  Speaker 1: think the acquisition of Whole Foods will be to Amazon
• 19:13
  Speaker 1: what Facebook was, excuse me, what Instagram was to Facebook.
• 19:16
  Speaker 1: I think it's going to be the best acquisition of
• 19:18
  Speaker 1: the last since Facebook acquired Instagram. When you think about this,
• 19:22
  Speaker 1: very Amazon strategy is to create a relationship with you
• 19:25
  Speaker 1: that's so intense across prime that you begin to buy everything,
• 19:28
  Speaker 1: and they're going to move to artificial intelligence and zero
• 19:30
  Speaker 1: click ordering, zero click ordering, zerio click order. Explain that
• 19:34
  Speaker 1: this is the two box theory. Is that right, exactly right?
• 19:37
  Speaker 1: Pretty soon, they're gonna say, Barry, we know you, we
• 19:38
  Speaker 1: love you, you you love us. We have your credit card history,
• 19:41
  Speaker 1: we have we know where you live, we have a
• 19:42
  Speaker 1: warehouse within twenty miles of you. We're gonna we're gonna
• 19:46
  Speaker 1: start sending you stuff before you know you want it,
• 19:47
  Speaker 1: because we think we know, and we'll get right send
• 19:51
  Speaker 1: the stuff you don't want back and manicure using Alexa.
• 19:55
  Speaker 1: Say Alex, I'm leaving for two weeks. Alexa, send me
• 19:57
  Speaker 1: six quotes for auto insurance via email. Alexa, I like
• 20:01
  Speaker 1: stell our toy, I don't like lagunitas I p A
• 20:03
  Speaker 1: and you'll manicure it. And you're just gonna give all
• 20:06
  Speaker 1: your low consideration tedious purchases, which are kind of our purchases,
• 20:10
  Speaker 1: the junk stuff that we all have toilet paper. And
• 20:14
  Speaker 1: this is what if you know, I don't know that
• 20:16
  Speaker 1: if they're doing this, but if I was running Amazon strategy,
• 20:18
  Speaker 1: this is I'd be focused on a pilot test in
• 20:20
  Speaker 1: a college area called Prime Squared or zero click ordering.
• 20:23
  Speaker 1: They'll they'll do it, they'll announce it. There'll be some kinks,
• 20:26
  Speaker 1: people will love it. It'll go take prime household. Some
• 20:30
  Speaker 1: of your average men to seven thousand of stock will
• 20:32
  Speaker 1: become anti gravity. The entire world's gonna freak out, and
• 20:34
  Speaker 1: we're gonna break them up. Let's discuss the cult quote
• 20:38
  Speaker 1: unquote of Apple. How did that ever develop? So we
• 20:42
  Speaker 1: have our religion. We Steve Jobs is our Jesus Christ.
• 20:47
  Speaker 1: This is we no longer worship at the altar of
• 20:49
  Speaker 1: kindness or character. We worship at the altar of innovation
• 20:52
  Speaker 1: and shareholder value. And this is the individual whose vision
• 20:56
  Speaker 1: and genius created more shareholder value than any company in history,
• 20:59
  Speaker 1: which is effectively how we decide in a capitalist society,
• 21:03
  Speaker 1: who are Jesus Christ is? And the iPhone has become
• 21:07
  Speaker 1: the new object of dentification. It's the new cross. They
• 21:10
  Speaker 1: shouldn't call it the iPhone X, they should call it
• 21:11
  Speaker 1: the iPhone cross. It has a special place in our lives.
• 21:15
  Speaker 1: We we deem it holier than any other object in
• 21:19
  Speaker 1: the in the world, I would argue at this point,
• 21:21
  Speaker 1: and this is a company that decided we no longer
• 21:25
  Speaker 1: want to be the best house and the worst neighborhood
• 21:27
  Speaker 1: computer hardware which appeals to a rational organ the brain,
• 21:30
  Speaker 1: when the brain is a terrible competitor, starts out all
• 21:32
  Speaker 1: the margin. We want to appeal to the reproductive organs,
• 21:36
  Speaker 1: which are a rational decision making organs. And as a result,
• 21:39
  Speaker 1: people will decide they want to look cool, they want
• 21:41
  Speaker 1: to communicate success and innovation, and that they have good
• 21:44
  Speaker 1: genes to mates. And you end up with the margins.
• 21:47
  Speaker 1: And and this Apple has the operating margins somewhere between
• 21:49
  Speaker 1: our mes and Ferrari. So let's let's talk about that
• 21:53
  Speaker 1: a little bit. Because the iPhone accounts for less than
• 21:56
  Speaker 1: twenty of all of the smartphones shift globally, but it
• 22:01
  Speaker 1: accounts for the industry's profits. How can you dominate both
• 22:08
  Speaker 1: sales volume and margin. They've pulled off the impossible in
• 22:12
  Speaker 1: business through a focus on appeal to our desire to
• 22:18
  Speaker 1: be more attractive to others and becoming a luxury brand.
• 22:20
  Speaker 1: First tech company to become a luxury brand that is
• 22:23
  Speaker 1: both the low cost producer the most popular phone in
• 22:25
  Speaker 1: the world, outstanding supply chains. They secure the components at
• 22:29
  Speaker 1: the lowest price at the same time that the premium
• 22:32
  Speaker 1: price product. No company has ever pulled us off in history,
• 22:34
  Speaker 1: the auto equivalent would be um an auto company with
• 22:38
  Speaker 1: the margins of Ferrari in the production volumes of Toyota.
• 22:41
  Speaker 1: So as a result, Apple this quarter will do double
• 22:43
  Speaker 1: the profits Amazon has done in its entire history. Apple
• 22:46
  Speaker 1: will do more than the profits of the other three combined.
• 22:49
  Speaker 1: And you need to get Toyota, Daimler, Bend's, Unilever, and
• 22:52
  Speaker 1: PNG wrapped up to begin to talk about the profits
• 22:56
  Speaker 1: of Apple. We don't We really don't have a sense
• 22:58
  Speaker 1: for the scale of just an unbelievable profit machine Apple is.
• 23:03
  Speaker 1: So your big bold insight some time ago was that
• 23:09
  Speaker 1: Apple wasn't a tech company, but it was a luxury brands,
• 23:13
  Speaker 1: which is very counterintuitive and not especially obvious. How did
• 23:17
  Speaker 1: you work your way towards that that conclusion? The components
• 23:21
  Speaker 1: of our luxury brand, I mean, it's literally play for play.
• 23:25
  Speaker 1: They sat down in some room at some point and said,
• 23:27
  Speaker 1: we are a luxury brand. What do luxury brands have
• 23:30
  Speaker 1: in common? They have an iconic founder, right, so we
• 23:33
  Speaker 1: have that they have a focus on artisanship and design
• 23:37
  Speaker 1: and art. We have that they have a focus on
• 23:40
  Speaker 1: vertical retail. So Apple is much more like a Vetan
• 23:43
  Speaker 1: store than it is a best Buy, and that was
• 23:46
  Speaker 1: really the genius move that the crazy irrational decision afford
• 23:50
  Speaker 1: integrated into stores. I think it's the one decision that
• 23:52
  Speaker 1: created more shareholder value than any decision in the history
• 23:54
  Speaker 1: of business. Can you imagine Steve Jobs and only he
• 23:57
  Speaker 1: could have pulled us off going into his board in
• 23:58
  Speaker 1: the early two thousands said you know what, I have
• 24:00
  Speaker 1: an idea. We're doing okay, not great, but I have
• 24:03
  Speaker 1: an idea stores. This was when stores were literally starting
• 24:07
  Speaker 1: to begin their march downward and now they have between
• 24:10
  Speaker 1: five and six billion dollars and leases on stores. The
• 24:13
  Speaker 1: reason why Samsung is not is always behind Apple in
• 24:17
  Speaker 1: terms of brand equity and hasn't generated as much share
• 24:19
  Speaker 1: older value. It's not because of technology. They have more
• 24:22
  Speaker 1: software engineers and Microsoft. I would argue that the Samsung
• 24:25
  Speaker 1: Galaxy is a better phone. It's because they don't have
• 24:28
  Speaker 1: vertical distribution. Apple's decided, in order to control the experience
• 24:32
  Speaker 1: and be a luxury brand like a Batan of Bouteko Vanetta,
• 24:34
  Speaker 1: a Gucci, you gotta control the moment of contact with distribution,
• 24:38
  Speaker 1: and they made this crazy rational decision Afford integrate so
• 24:41
  Speaker 1: they have vertical retail, they put models on stage, they
• 24:44
  Speaker 1: put Christie Turlington. It's not a it's not a product launch,
• 24:47
  Speaker 1: it's a fashion show. They buy pages in Vogue magazine.
• 24:50
  Speaker 1: This is literally they have literally stolen the luxury playbook
• 24:55
  Speaker 1: and it has been the most enormously value of creating
• 24:58
  Speaker 1: decision in history. Low cost producer, premium price product. No
• 25:03
  Speaker 1: other business in the history business has been able to
• 25:05
  Speaker 1: pull this off. So somebody else you push back on
• 25:08
  Speaker 1: in the book is Steve Jobs, And you wrote you
• 25:12
  Speaker 1: would be amazed at how many people still believe, against
• 25:15
  Speaker 1: all evidence, that Steve Jobs actually invented all of Apple's
• 25:20
  Speaker 1: great products. So why the no warm fuzzies? Uh for
• 25:25
  Speaker 1: for the founder of of Apple. So I admitted least
• 25:30
  Speaker 1: Steve Jobs a genius, um, tremendous, tremendous wealth creation and
• 25:34
  Speaker 1: innovator and icon for a business. I think it's an
• 25:37
  Speaker 1: example of again that we worship at the altar of
• 25:40
  Speaker 1: innovation as opposed to kindness and character. There's some personal
• 25:43
  Speaker 1: attributes and behavior here that you wouldn't describe as being,
• 25:46
  Speaker 1: you know, making him a quote unquote wonderful man, but
• 25:49
  Speaker 1: he has largely seen I would argue as kind of
• 25:51
  Speaker 1: the hero of a capitalist society. So I don't I
• 25:55
  Speaker 1: think it's an indicator that that, you know, our heroes
• 25:59
  Speaker 1: are friend I don't know. I think the four we've
• 26:03
  Speaker 1: we've started to believe personify these companies and think of
• 26:06
  Speaker 1: them as heroes, and we need to be honest that
• 26:08
  Speaker 1: these companies aren't going to take care of us when
• 26:10
  Speaker 1: we get older. They aren't concerned with the condition of
• 26:12
  Speaker 1: our soul. They're they're for profit companies and they're doing
• 26:15
  Speaker 1: what they should be doing, and that's maximizing profits. But
• 26:18
  Speaker 1: I wonder sometime because we personify them, we have so
• 26:21
  Speaker 1: much admiration for this person, and we think with us
• 26:23
  Speaker 1: as being in a relationship, that we grant them the
• 26:25
  Speaker 1: mother of all hall passes and they are not subject
• 26:28
  Speaker 1: to the same scrutiny as the rest of business. Let's
• 26:31
  Speaker 1: talk a little bit about Facebook. You note they own
• 26:34
  Speaker 1: three of the five platforms that got to a hundred
• 26:38
  Speaker 1: million users the fastest, Facebook, WhatsApp, and Instagram. People I
• 26:44
  Speaker 1: recall laughed at the Instagram purchase. Oh look at this kid.
• 26:48
  Speaker 1: Doesn't know what the hell he's doing. He's wasting this money.
• 26:51
  Speaker 1: How did Instagram work out as a purchase. Yeah, you
• 26:55
  Speaker 1: know the answer, A billion dollars. Everyone's second guessed it.
• 26:58
  Speaker 1: It's probably worth similar between sixty billion now by most
• 27:01
  Speaker 1: traditional metrics. Probably the best acquisition and tech of the
• 27:05
  Speaker 1: last twenty years and a big bold bet. Just incredibly
• 27:10
  Speaker 1: smart visuals kept the growth going, maintain passion among millennials.
• 27:16
  Speaker 1: It's just a it's been a it's been a fantastic acquisition.
• 27:19
  Speaker 1: You were talking about apps. If the phone is the
• 27:21
  Speaker 1: most important screen in our lives and the most important
• 27:24
  Speaker 1: technology device of time spent on a phone is in
• 27:27
  Speaker 1: app and six of the top ten apps are owned
• 27:30
  Speaker 1: by Facebook. So the phone, the phone isn't a piece
• 27:34
  Speaker 1: of technology, it's basically the utility for Facebook Inc. It's
• 27:38
  Speaker 1: an app delivery vehicle or Facebook Wow. And I spend
• 27:42
  Speaker 1: as little time on Facebook as I humanly can. But
• 27:45
  Speaker 1: I'm not their prime demographic. Yeah, we're no longer the market, right.
• 27:49
  Speaker 1: It's millennials now having more disposed mile income than boomers,
• 27:52
  Speaker 1: and that's they're the most influential. And if you look
• 27:55
  Speaker 1: at what a lot of consumer brands now have in
• 27:57
  Speaker 1: common that are dramatically growing, they're sure holder value is
• 28:02
  Speaker 1: as a competence a core competence is Instagram. That's interesting.
• 28:06
  Speaker 1: So you're talking the book about the creepy factor. Um,
• 28:09
  Speaker 1: one of the reasons I spend so little time on
• 28:11
  Speaker 1: Facebook is that I've learned. If I'm logged in on
• 28:15
  Speaker 1: any device on Facebook and I'm looking at an AD
• 28:18
  Speaker 1: because I'm looking for some information. If I go to
• 28:20
  Speaker 1: a website, that damn ad follows me around the Internet
• 28:24
  Speaker 1: for the next four weeks, and I despise it. I
• 28:27
  Speaker 1: just I'm not looking to buy a corvette. I just
• 28:30
  Speaker 1: was curious as to some information on it. So the
• 28:33
  Speaker 1: only way to avoid that is to never be logged
• 28:35
  Speaker 1: into Facebook except for the moment you're using Facebook. I
• 28:39
  Speaker 1: find that creepy. The millennials don't really seem to find
• 28:43
  Speaker 1: that creepy at all. So that that's that's, you know,
• 28:47
  Speaker 1: triple a ball. That's not even the major leaders of creepiness.
• 28:49
  Speaker 1: Where you're talking about is retargeting, and that happens on
• 28:51
  Speaker 1: any website. They drop a cookie, it follows you around
• 28:54
  Speaker 1: the way. But the things you could do, you could
• 28:55
  Speaker 1: set up ad blockers, you could set up do you
• 28:57
  Speaker 1: know that you could retake some of your privacy Facebook?
• 29:02
  Speaker 1: You really are at the mercy of of Well, you'll
• 29:05
  Speaker 1: have scared creepier moments in this You'll be at I
• 29:08
  Speaker 1: I don't know. For some reason, I think you would
• 29:09
  Speaker 1: like Springston, or you at a Springsteen concert and your
• 29:13
  Speaker 1: Facebook app is open, which means it has a mic
• 29:15
  Speaker 1: and they use it to target ads, and you'll get
• 29:17
  Speaker 1: an ad for Springston's latest album. Where at the concert?
• 29:20
  Speaker 1: So it gets report that's right out of it, getting
• 29:23
  Speaker 1: right there. But here's the thing. Our generation is a
• 29:25
  Speaker 1: little bit freaked out about that stuff. The Europeans are
• 29:29
  Speaker 1: much more concerned with it. But millennial Americans, who are
• 29:34
  Speaker 1: kind of setting the tone for shareholder value creation, they're
• 29:37
  Speaker 1: very comfortable with with an invasion of privacy as long
• 29:40
  Speaker 1: as there's utility in it. So the number of people
• 29:43
  Speaker 1: clear their cookies is really small. The fact that Google
• 29:47
  Speaker 1: Maps is amazing, but Google knows where you are, and
• 29:50
  Speaker 1: could I find a creepy when Uber sends me a
• 29:54
  Speaker 1: receipts showing me what the path was I took to
• 29:56
  Speaker 1: get home and where I was the difference between the
• 29:59
  Speaker 1: two is my life experience with Google is I'm okay
• 30:04
  Speaker 1: with them having that that information because they don't creep
• 30:07
  Speaker 1: me out with it, but Facebook does. There's also a
• 30:10
  Speaker 1: different in complexion. When you listen to Eric Schmidt speak,
• 30:14
  Speaker 1: he goes out of his way to say that whenever
• 30:17
  Speaker 1: we release data, we anonymize. We get to go to
• 30:20
  Speaker 1: a lot of lengths not to connect specific identity with
• 30:23
  Speaker 1: your searches. Because if you really want to talk about
• 30:25
  Speaker 1: social chaos and the hack, it would be the worst
• 30:29
  Speaker 1: hack in the history of mankind. Is if someone hacked
• 30:32
  Speaker 1: into Google and could put post your name, your face
• 30:37
  Speaker 1: above everything you've put into a Google search query box.
• 30:40
  Speaker 1: I mean, you really think about everything you've put in
• 30:42
  Speaker 1: that search querry box, and you're going to get terrified fast.
• 30:46
  Speaker 1: Not only that's what incognito browsers are for, if you're
• 30:49
  Speaker 1: really doing something and no one doesn't temptable really well,
• 30:53
  Speaker 1: as far as I know, and I'm old school, I guess, well,
• 30:55
  Speaker 1: you're my senses, you're in the one percent I don't think.
• 30:58
  Speaker 1: I think most people do, and they have absolutely no
• 31:02
  Speaker 1: We trust Google with questions and information about ourselves, not
• 31:08
  Speaker 1: only what ailments but we have but we're worried about
• 31:10
  Speaker 1: getting not only what if we're getting divorce? Are we
• 31:13
  Speaker 1: thinking about divorce? There would be social chaos if Google
• 31:18
  Speaker 1: got hacked, now, that's the scariest thing that could happen.
• 31:21
  Speaker 1: But Eric Schmidt and Google are smart to put forward this,
• 31:25
  Speaker 1: at least the impression they understand how scary it might be. Facebook,
• 31:30
  Speaker 1: since Beacon concerns the age and the youth of the company.
• 31:35
  Speaker 1: The average age of Cleveland Cavalier's basketball players twenty nine,
• 31:39
  Speaker 1: the average age of a Facebook employees twenty eight. And
• 31:42
  Speaker 1: I believe that that youth means that they are not
• 31:44
  Speaker 1: quite as concerned about some of the stuff. Uh. It
• 31:48
  Speaker 1: feels as if while Google has the potential to be
• 31:52
  Speaker 1: the king of creepy, where it might happen is Facebook
• 31:56
  Speaker 1: because they seem less concerned. So let's talk about Zuckerberg
• 31:59
  Speaker 1: and Schmidt. These are two really fascinating ceo s. Let's
• 32:05
  Speaker 1: grade him. What do you Zuckerberg is? What is that?
• 32:08
  Speaker 1: Is that? His age? How has he done as a CEO? As?
• 32:12
  Speaker 1: Is he an upside surprise? Yeah? I think you've I
• 32:15
  Speaker 1: think you've you've, you've you've put him in a time machine.
• 32:18
  Speaker 1: I think he's really thirties now, like he's a he's
• 32:20
  Speaker 1: an extraordinarily talented young man. Best acquisitions in business history,
• 32:26
  Speaker 1: most successful thing in the history of mankind is probably
• 32:29
  Speaker 1: the Facebook feed. Over two billion people have a meaningful
• 32:32
  Speaker 1: relationship with Facebook. That's more than capitalism, communism. You know.
• 32:37
  Speaker 1: The only thing I could think that has more meaningful
• 32:39
  Speaker 1: relationships might be soccer. So there's just no getting around it.
• 32:42
  Speaker 1: He's He's an incredible you know, gonna first time Hall
• 32:46
  Speaker 1: of Fame CEO. I think it's fantastic. Mark Andreeson described
• 32:50
  Speaker 1: him as a learning machine, which is really fascinating because
• 32:54
  Speaker 1: that helps to explain why some of these acquisitions have
• 32:57
  Speaker 1: been so insightful. So ahead of the carb what about
• 33:00
  Speaker 1: what about Eric Schmidt? How do you rank him as
• 33:03
  Speaker 1: a Texis? All of these guys are incredible guys and gals.
• 33:08
  Speaker 1: They're all, I mean, just just incredible people managers who've
• 33:14
  Speaker 1: created a tremenishire holder value. I don't I don't think
• 33:16
  Speaker 1: there's any getting around it. I think Mark Zuckerberg has
• 33:19
  Speaker 1: had a very interesting fork in the road. I think
• 33:21
  Speaker 1: he has the ability right now to to really um
• 33:26
  Speaker 1: mess up Facebook and his reputation. I think we're on
• 33:29
  Speaker 1: the precipice of a seminal tobacco industry moment with this
• 33:34
  Speaker 1: potentially congressional hearings when remember in the eighties when tobacco
• 33:37
  Speaker 1: executives stood up in front of Congress and there was
• 33:40
  Speaker 1: a bunch of sixties something white guys and they all
• 33:42
  Speaker 1: lied Tobacco's addictive. We may have another, We may have
• 33:48
  Speaker 1: another one of those moments when a bunch of thirty
• 33:51
  Speaker 1: and fourty year old men and women stand in front
• 33:53
  Speaker 1: of Commress and say, we're not a media company. So
• 33:56
  Speaker 1: let's talk a little bit about that. Facebook and Google
• 33:59
  Speaker 1: are they meet your companies? There's no doubt in your mind. Okay,
• 34:05
  Speaker 1: Facebook spending a billion dollars in original content, spending money
• 34:08
  Speaker 1: on sports leagues for them to produce original content. Campbell
• 34:10
  Speaker 1: Brown gets hired to oversee news of Americans get six
• 34:16
  Speaker 1: of their news from Facebook, and you run content. I'm sorry,
• 34:20
  Speaker 1: you run advertising against this content? Sounds like media to
• 34:24
  Speaker 1: make I mean, I don't they define what it is
• 34:26
  Speaker 1: to be a media company. And then they come up
• 34:28
  Speaker 1: with these excuses, Well, we have more technologists than journalists.
• 34:32
  Speaker 1: The NBA has more people working in technology than players.
• 34:35
  Speaker 1: Are they a tech company or a sports league? There
• 34:37
  Speaker 1: are sports league the leverages technology. So your business model
• 34:41
  Speaker 1: that kind of defines who you are. They are. Facebook
• 34:45
  Speaker 1: has warmly embraced the celebrity, the margins and the influence
• 34:49
  Speaker 1: of a media company and has decided that they're allergic
• 34:52
  Speaker 1: to the responsibilities. It is totally unacceptable. So what can
• 34:57
  Speaker 1: we do to get companies like Facebook and Google to
• 35:01
  Speaker 1: accept their role as responsible media companies. It's a fair question.
• 35:06
  Speaker 1: Um so you saw it looks like the UK is
• 35:08
  Speaker 1: going to regulate them as media companies. I'm not entirely
• 35:11
  Speaker 1: sure what that means. Um you could. There's different ways
• 35:15
  Speaker 1: advertisers can boycott, consumers have to decide what what they
• 35:19
  Speaker 1: should do. But I think what's going to happen is
• 35:22
  Speaker 1: you're going to see the mother of all fines but
• 35:26
  Speaker 1: against one or more of these companies. But it's not
• 35:28
  Speaker 1: going to come from where we think it's going to
• 35:30
  Speaker 1: come from. It's going to come out of Europe. The
• 35:32
  Speaker 1: big war brewing UH is gonna start where a lot
• 35:37
  Speaker 1: of the major conflicts have started. It's going to start
• 35:39
  Speaker 1: in continental Europe, and you're gonna see them go after
• 35:42
  Speaker 1: um one or all of these companies. But the weaponization
• 35:46
  Speaker 1: of these platforms by an intelligence arm of Russia, in
• 35:50
  Speaker 1: my opinion, is the tipping point where people are just
• 35:53
  Speaker 1: fed up with these guys, So what is that going
• 35:56
  Speaker 1: to mean for their actual business? You know, if you
• 35:58
  Speaker 1: want to boycott somebody who's CEO said something really stupid
• 36:04
  Speaker 1: and not by their twinkies or whatever it is, you
• 36:06
  Speaker 1: can do that. Were you gonna go for search, where
• 36:08
  Speaker 1: you're gonna go for social media that really are in
• 36:10
  Speaker 1: competitors to either of these companies. I think you're right.
• 36:14
  Speaker 1: I don't think it actually impacts there, but I think
• 36:17
  Speaker 1: their earnings are going to be really strong in the
• 36:19
  Speaker 1: midst of all of this. Where I think it does
• 36:20
  Speaker 1: impact them is I think Washington, but most likely Brussels
• 36:25
  Speaker 1: is going to step in and regulate and or leving
• 36:27
  Speaker 1: the mother of all finds against them. You also, there's
• 36:30
  Speaker 1: a non zero probability here, Barry, that one or more
• 36:33
  Speaker 1: of these companies is banned from a European country. If
• 36:36
  Speaker 1: you're if you're Australia right now, and Amazons showing up
• 36:39
  Speaker 1: to Australia, I've been kind of calls from all the
• 36:41
  Speaker 1: big media outlets and stress saying, okay, Amazon showing up
• 36:45
  Speaker 1: if Amazon, if Australia looks at or any European country
• 36:48
  Speaker 1: looks at the countries that have let these guys in
• 36:51
  Speaker 1: and then looks at China. China let them in for
• 36:54
  Speaker 1: just long enough to steal their IP and back to
• 36:56
  Speaker 1: local entrepreneur, and then captured all the value themselves, so
• 36:58
  Speaker 1: basically knockoffs and rip offs, and then kicked him out.
• 37:01
  Speaker 1: Now that's not free trade, it's not our Western values.
• 37:06
  Speaker 1: Who who was smarter? Who was was? Is the Chinese
• 37:10
  Speaker 1: model the wrong model. If you're Italy and you had
• 37:13
  Speaker 1: you had the chance to do this again, letting Google, Facebook,
• 37:16
  Speaker 1: Amazon or Apple or support a local entrepreneur steal the
• 37:20
  Speaker 1: I P and do it yourself. Who's done better Italy
• 37:23
  Speaker 1: or China? No doubt about it. It's China. So we
• 37:27
  Speaker 1: may see one of these guys. I just wouldn't be surprised.
• 37:29
  Speaker 1: So you know what, Facebook, Google, you're out fascinating. Can
• 37:34
  Speaker 1: you stick around a little bit. We have been speaking
• 37:37
  Speaker 1: with Professor Scott Galloway of n y U Stern discussing
• 37:41
  Speaker 1: his new book The Four Uh. If you enjoy this conversation,
• 37:45
  Speaker 1: be sure and check out our podcast extras. Will we
• 37:47
  Speaker 1: keep the tape rolling and continue to discuss all things technology.
• 37:52
  Speaker 1: You can find that wherever Finer podcasts are sold. We
• 37:56
  Speaker 1: love your comments feedback and suggestions right to us at
• 38:01
  Speaker 1: m IB podcast at Bloomberg dot net. Check out my
• 38:05
  Speaker 1: daily column on Bloomberg View dot com. Follow me on
• 38:08
  Speaker 1: Twitter at rit Holts. I'm Barry rit Holts. You're listening
• 38:12
  Speaker 1: to Masters and Business on Bloomberg Radio. Welcome to the podcast.
• 38:30
  Speaker 1: Thank you Scott for doing this. This is I always
• 38:33
  Speaker 1: find it fascinating to speak with you about this. You
• 38:36
  Speaker 1: you are interested in many of the same things I'm
• 38:40
  Speaker 1: interested in, but from a very different context, perspective, UM viewpoint,
• 38:47
  Speaker 1: and I find it tremendously elucidating and interesting on subjects
• 38:53
  Speaker 1: that that I'm just completely enamored with. Before we get
• 38:58
  Speaker 1: to our usual stand podcast questions, there are some other
• 39:02
  Speaker 1: questions we didn't get to that I have to I
• 39:05
  Speaker 1: have to jump in on. Of course, I find your
• 39:09
  Speaker 1: responses and your your perspectives really very refreshing. UM. I'm
• 39:17
  Speaker 1: just wrestling rustling papers as I worked through this. UM.
• 39:20
  Speaker 1: One of the questions that I didn't get to on
• 39:23
  Speaker 1: Facebook was the concept that they pulled off the greatest
• 39:28
  Speaker 1: bait and switch in business history. Tell us about that?
• 39:32
  Speaker 1: So Facebook early on said you have these fan pages
• 39:36
  Speaker 1: and wouldn't be nice if someone could self identify as
• 39:38
  Speaker 1: a fan of the brand, raise their hand and follow
• 39:40
  Speaker 1: or like your page, your brand page. So it's set
• 39:44
  Speaker 1: off an arms race because it became a vanity metric
• 39:47
  Speaker 1: for whether the brand got it or not. In any
• 39:49
  Speaker 1: brand in any category that was number one in terms
• 39:51
  Speaker 1: of Facebook likes or fans, they started ranking them and
• 39:55
  Speaker 1: it was an It was an indicator and a proxy
• 39:58
  Speaker 1: for how innovative the company was. The way you built
• 40:00
  Speaker 1: this fan base was with advertising on Facebook, and companies
• 40:04
  Speaker 1: spent hundreds of millions of dollars building their fan bases
• 40:08
  Speaker 1: and their Facebook followings. And then Facebook said, you know what,
• 40:12
  Speaker 1: just kidding, we own these people. And the organic reach
• 40:16
  Speaker 1: went from a hundred percent, meaning all the content these
• 40:19
  Speaker 1: brands put out reached their fans, and it's now basically zero.
• 40:23
  Speaker 1: So this was the equivalent of you build a house,
• 40:25
  Speaker 1: you pay the county to pay your taxes, you're about
• 40:27
  Speaker 1: to move in, and the county shows up, puts new
• 40:29
  Speaker 1: locks on the door, and so it's just kidding, we
• 40:31
  Speaker 1: own it and you gotta rent it from us. I
• 40:33
  Speaker 1: think this was the greatest bait and switch in media
• 40:35
  Speaker 1: history in a in a in a long time, and
• 40:38
  Speaker 1: it speaks to Facebook's power because they were able to
• 40:40
  Speaker 1: get away with it, and then the new one. I
• 40:42
  Speaker 1: mean all these companies, any a company growing greater than
• 40:45
  Speaker 1: five or six percent of year in GDP, the core
• 40:47
  Speaker 1: competence is theft. It was a core competence of the
• 40:50
  Speaker 1: US in the nineteenth century, stealing textile and manufacturing technology
• 40:53
  Speaker 1: out of Ireland. In the UK. It's China's core competence
• 40:56
  Speaker 1: now over the last twenty years. And Facebook, Google, all
• 41:00
  Speaker 1: of them when at the end of day, what you
• 41:01
  Speaker 1: look at them. They're great at theft. They're great at
• 41:03
  Speaker 1: taking other people's content, slicing it up and charging for
• 41:07
  Speaker 1: it and convincing old media that this is the new
• 41:09
  Speaker 1: way of the world. The stupidest thing we could have
• 41:11
  Speaker 1: done at the New York Times was to buy onto
• 41:14
  Speaker 1: the slide that information wanted to be free and have
• 41:16
  Speaker 1: Google come into our servers, chop up our data and
• 41:19
  Speaker 1: then monetize it at ten x what we could monetize
• 41:21
  Speaker 1: it for because we didn't know how to we didn't
• 41:24
  Speaker 1: know how to do search. Let's let's talk about that
• 41:26
  Speaker 1: a little bit, because in the book, that's a very
• 41:29
  Speaker 1: famous quote. Information wants to be free, but that's really
• 41:32
  Speaker 1: only half the quote, isn't it. What what is the
• 41:35
  Speaker 1: other half of the quote? The no it you mean
• 41:41
  Speaker 1: the original quote, the original quote, well, the original it
• 41:43
  Speaker 1: was taken out of context, wasn't it. It's the person
• 41:46
  Speaker 1: who initially said it. Yeah, yeah, I said basically was
• 41:51
  Speaker 1: making the opposite point. But then Marissa Mare in front
• 41:54
  Speaker 1: of converse that information wants to be free, and it
• 41:56
  Speaker 1: all goes back to biology. Every old economy company wants
• 41:59
  Speaker 1: to be seen hanging out with the quarterback and the
• 42:01
  Speaker 1: prom coeen and announced a deal with Apple, Amazon, Facebook
• 42:05
  Speaker 1: or Google. By the way, anytime you're a can, anytime
• 42:07
  Speaker 1: your CS, you see all these old economy companies issuing
• 42:10
  Speaker 1: press releases talking about their quote unquote partnership with Google,
• 42:13
  Speaker 1: the partnership with Amazon. Usually these companies partner with old
• 42:17
  Speaker 1: economy companies the way of virus partners with a host.
• 42:19
  Speaker 1: What you never see is a press release from an
• 42:22
  Speaker 1: old economy companies saying our partnership with Facebook has resulted
• 42:25
  Speaker 1: in us beating earnings. Those are the press releases you
• 42:28
  Speaker 1: never see. Then Facebook had instant articles. Again, these old
• 42:31
  Speaker 1: media companies just don't learn and go on this thing
• 42:36
  Speaker 1: and recognize that all they're doing is making these guys
• 42:39
  Speaker 1: a new operating system instead of their own media companies.
• 42:41
  Speaker 1: It so these companies, all of us, and again I'm
• 42:46
  Speaker 1: going back to all of us, have been in a
• 42:48
  Speaker 1: relationship with someone much better looking than us and take
• 42:50
  Speaker 1: more abuse than we should. This is the equivalent of
• 42:54
  Speaker 1: entering into a relationship where you subject yourself to a
• 42:57
  Speaker 1: ton of abuse because these are the hottest guy, our
• 43:00
  Speaker 1: girl in the class. And it's happening across all of industry.
• 43:03
  Speaker 1: Everyone is deciding is trying to position themselves as the
• 43:07
  Speaker 1: leader or as the innovator, as cool and I get it,
• 43:09
  Speaker 1: and doing deals with these guys when the best thing
• 43:12
  Speaker 1: that the companies and sectors could do economically is buying
• 43:15
  Speaker 1: together and basically shut these guys off. In print media,
• 43:19
  Speaker 1: we should have shut Google off. We should have, and
• 43:22
  Speaker 1: I proposed this in a board meeting the New York
• 43:24
  Speaker 1: Times was basically lapped out of the room. The stupidest
• 43:27
  Speaker 1: thing we've ever did in print media was we let
• 43:30
  Speaker 1: Google crawl our data. Bloomberg doesn't let Google crawl their
• 43:33
  Speaker 1: data on their terminals. Why because they've gotten pretty used
• 43:36
  Speaker 1: that twenty dollar your feet fee. Because they realized information
• 43:39
  Speaker 1: doesn't want to be free. Information like the rest of us,
• 43:42
  Speaker 1: wants to be scarce and expensive. So we talk about
• 43:46
  Speaker 1: the coolest guys in the room, coolest girls in the room.
• 43:50
  Speaker 1: You talk about the four who are possible contenders for
• 43:54
  Speaker 1: number five. We haven't discussed Uber, we haven't discussed Airbnb.
• 43:58
  Speaker 1: Who do you have down is your fifth? If you
• 44:01
  Speaker 1: were going to bump someone out, who would move into
• 44:03
  Speaker 1: the fourth slot? So in the book, I have a
• 44:06
  Speaker 1: chapter on something I called the Tea algorithm, and I
• 44:08
  Speaker 1: try to set out six or eight factors that I
• 44:09
  Speaker 1: think are the underpinnings of all of these companies to
• 44:12
  Speaker 1: try and identify who could next reach a half a
• 44:13
  Speaker 1: trillion dollars in value. And I would have said a
• 44:16
  Speaker 1: year eighteen months ago it was Uber, because I thought
• 44:18
  Speaker 1: Uber could threaten Amazon and the last mile and me
• 44:21
  Speaker 1: sort of the last mile circulatory system for this incredible
• 44:24
  Speaker 1: last mile infrastructure that a bunch of people are going
• 44:26
  Speaker 1: to need, maybe self driving cars. I think they're no
• 44:29
  Speaker 1: longer in the running because because a it's clear that
• 44:32
  Speaker 1: they can't unlike Amazon, they can't spend their competition into
• 44:36
  Speaker 1: the ground. So I don't think it's gonna be Uber.
• 44:38
  Speaker 1: If you were to pick a fifth, my money right
• 44:41
  Speaker 1: now would be on In terms of the consumer business,
• 44:44
  Speaker 1: you might argue Microsoft's already the fifth horseman, But in
• 44:47
  Speaker 1: terms of the new unicorns, my money would be on
• 44:49
  Speaker 1: Netflix because at the end of the day, these four
• 44:51
  Speaker 1: operating systems or operating systems for media shopping information are connections.
• 44:57
  Speaker 1: Netflix has become an operating system for the second most
• 45:00
  Speaker 1: important screen in the house, and that's our television. The
• 45:03
  Speaker 1: best way to know who you are would be to
• 45:04
  Speaker 1: get your Google Search history. The second best way I
• 45:07
  Speaker 1: think to get a snapshot of someone who of who
• 45:09
  Speaker 1: they are is to look at their Netflix home screen.
• 45:12
  Speaker 1: Millennials spend more time watching Netflix and the rest of
• 45:14
  Speaker 1: cable television combined. So even if it's hundred and fifty
• 45:18
  Speaker 1: plus billion dollar market cap, Netflix should technically be trading
• 45:22
  Speaker 1: for more than the rest of cable television, all of
• 45:24
  Speaker 1: them combined. And I don't know if it is yet.
• 45:26
  Speaker 1: The mother of all battles everyone obsesses over Google versus Facebook,
• 45:30
  Speaker 1: or Walmart versus Amazon. The mother of all battles is
• 45:33
  Speaker 1: coming in two thousand and nineteen, and it's going to
• 45:36
  Speaker 1: be Amazon versus Netflix. So isn't the solution here because
• 45:41
  Speaker 1: Amazon and Apple are now competing on content, Why has
• 45:45
  Speaker 1: an Apple stepped up and brought Netflix. It makes perfect
• 45:48
  Speaker 1: sense and integrates well, and it allows them to really
• 45:51
  Speaker 1: prevents Amazon from running away via Prime. It's a super
• 45:56
  Speaker 1: interesting idea, Barry. And you know what everyone used to say, Well,
• 45:59
  Speaker 1: Disney could have worked acquired Netflix. Disney can't afford Netflix
• 46:02
  Speaker 1: any longer. Apple can do it with cash, which is
• 46:05
  Speaker 1: it's really interesting. That would be That would be really,
• 46:08
  Speaker 1: that would be earth earth shaking. I would like to
• 46:11
  Speaker 1: say I've been thinking about that for months, but literally,
• 46:14
  Speaker 1: as you were describing and it's like, oh, that's a
• 46:15
  Speaker 1: perfect I hadn't thought of that. I really hadn't thought that.
• 46:18
  Speaker 1: That's Apple is one of the few, maybe one of
• 46:20
  Speaker 1: two companies right now in the world that could pull
• 46:23
  Speaker 1: that off easily. And it makes sense. You know, the
• 46:27
  Speaker 1: Beats acquisition took a while to integrate. Night don't know
• 46:30
  Speaker 1: how successful is it has been on the programming side.
• 46:33
  Speaker 1: It has been successful on the hardware side. But Apple,
• 46:38
  Speaker 1: in my opinion, and I say this as a fanboy
• 46:41
  Speaker 1: Mac Classic, I find Apple software isn't as sharp as
• 46:48
  Speaker 1: it once was, and I have a running list of
• 46:50
  Speaker 1: complaints about so Richard Taylor keeps a list of plates
• 46:55
  Speaker 1: complaints about human cognitive eras, and that ultimately led to
• 47:00
  Speaker 1: his whole philosophy. I've been doing that with software, and
• 47:03
  Speaker 1: my beef about software isn't that it's eating the world.
• 47:07
  Speaker 1: It's that it's eating the world too slowly. We should
• 47:09
  Speaker 1: already be in the future and we're not. And I
• 47:12
  Speaker 1: could I have dozens of examples of why is this
• 47:16
  Speaker 1: so old school when it should know what I want?
• 47:19
  Speaker 1: By the way, Google comes closest to actually delivering what
• 47:23
  Speaker 1: I want, UM, but Apple Netflix, It just it'll solve
• 47:28
  Speaker 1: a lot of problems for both companies, including that deep,
• 47:32
  Speaker 1: deep pocket that Apple has for funding acquisitions, funding um
• 47:38
  Speaker 1: new content from Netflix. I think it's a super a
• 47:41
  Speaker 1: super interesting idea. You're gonna I mean Apple right now
• 47:45
  Speaker 1: is so interesting because if Apple so, I think Amazon
• 47:48
  Speaker 1: is going to get to a trillion dollars before Apple,
• 47:50
  Speaker 1: despite the fact Apples at about seven fifty, Amazons at
• 47:53
  Speaker 1: four fifty or five d And I think the seminal
• 47:56
  Speaker 1: moment that people will look back and say, how did
• 47:59
  Speaker 1: Amazon pass Apple? It'll be quite frankly Alexa beating up Siri,
• 48:04
  Speaker 1: which is one of my big beefs that they had
• 48:06
  Speaker 1: a five year head start over and they blew it.
• 48:09
  Speaker 1: They absolutely owned it three years ago, even just thirty
• 48:12
  Speaker 1: six months ago. If you said voice, you said Siri.
• 48:15
  Speaker 1: And now alexis market share in the home. Uh. You know,
• 48:19
  Speaker 1: you have one of those moments where you think, Wow,
• 48:21
  Speaker 1: this is the future my kids are now using. I
• 48:24
  Speaker 1: think it's called the Amazon show we have and it's
• 48:26
  Speaker 1: like remember the future from two thousand one Space Odyssey
• 48:29
  Speaker 1: where someone brings up a TV and starts talking to people.
• 48:32
  Speaker 1: It's finally happened my kids. My seven year old is
• 48:34
  Speaker 1: calling me on my phone and the quality is pretty clear,
• 48:36
  Speaker 1: it's very good. And then and then he says, by Dad,
• 48:39
  Speaker 1: he says, he says Amazon, hangout, Alexa hang up, just
• 48:43
  Speaker 1: like that, and it's just it is natural. So you
• 48:45
  Speaker 1: have an entire generation of kids getting used to having
• 48:50
  Speaker 1: a relationship with Alexa, who will be the arbiter of
• 48:54
  Speaker 1: the media and the things they buy. Amazon. I I
• 49:00
  Speaker 1: don't I don't like to make stock recommendations, but I
• 49:02
  Speaker 1: can't help myself Amazon. You know it's a double from
• 49:07
  Speaker 1: here recording. I think it's I think I think it's
• 49:09
  Speaker 1: a double and then we're going to freak out and
• 49:10
  Speaker 1: break them up. So Alexa. Alexa has this huge advantage
• 49:14
  Speaker 1: over Siri in that Alexa is jacked into your WiFi,
• 49:18
  Speaker 1: so it always has access to a huge database. And
• 49:21
  Speaker 1: perhaps I'm too harsh on Siri because it's dependent on
• 49:26
  Speaker 1: the cell connection, which I'm right here in midtown Manhattan.
• 49:29
  Speaker 1: In half the time calls drop, the data drops. It's
• 49:32
  Speaker 1: so last year, I'm in Rome and I discovered the
• 49:36
  Speaker 1: square Roman Pizza. It's it's not Sicilian pizza. It's something
• 49:40
  Speaker 1: totally different and it's delicious. We're gonna have an Alexa phone,
• 49:44
  Speaker 1: two prime members. The fire phone crashed and burns. Well,
• 49:49
  Speaker 1: we'll see what happens. My series story is one of
• 49:53
  Speaker 1: the guys in my office says, Roman Pizza just opens
• 49:56
  Speaker 1: up three blocks. We go over there, we eat it.
• 49:59
  Speaker 1: It's a meaning amazing money in pasta is the name
• 50:02
  Speaker 1: of it. I take a picture of the pizza. I'm
• 50:05
  Speaker 1: take a picture of the with my iPhone. I take
• 50:09
  Speaker 1: a picture of the store. It says Roman Pizza, and
• 50:12
  Speaker 1: I go to it's raining. I'm holding an umbrella. I
• 50:15
  Speaker 1: speak into the phone through Siri and I say authentic
• 50:18
  Speaker 1: Roman Pizza now in New York City, and you know
• 50:23
  Speaker 1: it's raining all my glasses on them. One handing it,
• 50:26
  Speaker 1: I hit send and when the tweet goes out, it
• 50:30
  Speaker 1: comes back authentic woman Pizza now in New York City.
• 50:35
  Speaker 1: And of course the responses on Twitter are hilarious. But
• 50:38
  Speaker 1: I'm right there saying, wait a second, I just took
• 50:41
  Speaker 1: a photo of pizza. I'm standing in front of something
• 50:44
  Speaker 1: that says authentic Roman Pizza. How did you mess this up?
• 50:50
  Speaker 1: What is woman pizza? Check a database? There's no such thing.
• 50:54
  Speaker 1: Roman pizza is a thing. And that sort of how
• 50:58
  Speaker 1: did Siri blow? That? Makes me wonder they really that
• 51:03
  Speaker 1: You're right? They absolutely blew it. Really and voice the
• 51:07
  Speaker 1: next battleground for trillions of dollars or hundreds of billions
• 51:11
  Speaker 1: of dollars in chreation and shareholder value, it's been the
• 51:14
  Speaker 1: phone screen for the last ten fifteen years. The next
• 51:18
  Speaker 1: major battleground is the home and its voice. That is
• 51:22
  Speaker 1: going to be the place that fortunes are made and lost.
• 51:25
  Speaker 1: Because when you think about where you make most of
• 51:27
  Speaker 1: your decisions, where there's a ton of influence around purchase,
• 51:31
  Speaker 1: around media, it's happening in the home, and you're not
• 51:34
  Speaker 1: necessarily attached your phone like you are when you're outside
• 51:38
  Speaker 1: of the home. And I'll tell you start to see
• 51:40
  Speaker 1: with your kids how frictionless and easy it is to
• 51:43
  Speaker 1: start barking commands into the sky. Just say it. Just
• 51:47
  Speaker 1: All you literally have to do is say Alexa, you know,
• 51:50
  Speaker 1: order me this, or Alexa, what time? Or Alexa, pull
• 51:54
  Speaker 1: up Scotland versus sloven you know, Slovenia World Cup Final
• 51:58
  Speaker 1: in your TV. We're going to have alexas in a
• 52:03
  Speaker 1: position to be our shepherd to the consumer world and
• 52:06
  Speaker 1: we'll get to be the arbiter of what we buy
• 52:08
  Speaker 1: and what we see. And whoever owns that voice is
• 52:12
  Speaker 1: going to be hugely powerful. You know, if I had
• 52:15
  Speaker 1: a guess five years ago, who would own voice? Google
• 52:19
  Speaker 1: is the company that has the technology to do that best.
• 52:23
  Speaker 1: We forget how spectacular YouTube is and Google maps. By
• 52:28
  Speaker 1: the way, YouTube another two or three billion dollar purchase
• 52:32
  Speaker 1: that on the day of announcement, the rising Google stock
• 52:35
  Speaker 1: price essentially paid for it. So YouTube was free and
• 52:39
  Speaker 1: and YouTube is always my pushback to oh, Google is
• 52:43
  Speaker 1: just a search company that is an immense repository of
• 52:47
  Speaker 1: video that is catalog structured searchable, so there is an
• 52:52
  Speaker 1: element of search, but it's some ungodly amount of a
• 52:55
  Speaker 1: billion hours a week or some crazy number of video
• 53:00
  Speaker 1: gets uploaded to YouTube every week, and then Google Maps
• 53:05
  Speaker 1: and street for you. The entire world is available to
• 53:08
  Speaker 1: you from your computer in a way that was barely
• 53:11
  Speaker 1: imaginable ten years ago. Yeah, Google is arguably the greatest
• 53:16
  Speaker 1: concentration of i Q in the history of mankind. It
• 53:19
  Speaker 1: probably dwarfs the Manhattan Project NASA. They do have, I think,
• 53:24
  Speaker 1: the smartest people in a great culture and focus on
• 53:27
  Speaker 1: engineering and and innovation, and you just can't count them out. It.
• 53:31
  Speaker 1: But they're playing catch up in the home right now
• 53:32
  Speaker 1: a little bit. They well, nest was supposed to jump
• 53:35
  Speaker 1: start them to the whole consumer side of things, the
• 53:38
  Speaker 1: self driving car. That's another bit of technological um wizardry.
• 53:44
  Speaker 1: Their way ahead of everybody else. Not that they're not
• 53:46
  Speaker 1: going to catch up, but you gotta You can never
• 53:49
  Speaker 1: count them out because they are so smart at what
• 53:52
  Speaker 1: they do, great, great at what they do, and have
• 53:54
  Speaker 1: share of a marketplace search that is now a bigger
• 53:58
  Speaker 1: by dollar volume market than the entire advertising market of
• 54:02
  Speaker 1: every nation, with the exception of the US. From a
• 54:06
  Speaker 1: pure traditional antitrust standpoint, they're the most vulnerable from regulation
• 54:10
  Speaker 1: because they have ninety plus points of share. I actually
• 54:13
  Speaker 1: don't think they're the ones that are gonna be broken up, though.
• 54:15
  Speaker 1: I think it's going to become more political and more
• 54:18
  Speaker 1: sort of fear based, and I think it's going to
• 54:20
  Speaker 1: be um either Facebook or Amazon, because I think people
• 54:24
  Speaker 1: are gonna start getting angry. That's that's really interesting. So
• 54:28
  Speaker 1: there are some questions I didn't get to. I asked
• 54:31
  Speaker 1: who the fifth Horsemen was? Um? Your last comment makes
• 54:35
  Speaker 1: me ask want to ask the other question of the
• 54:38
  Speaker 1: four where history teaches us that every company is um mortal,
• 54:45
  Speaker 1: which of these four companies is the first to die?
• 54:48
  Speaker 1: So we even time about every every place you look
• 54:51
  Speaker 1: at where Amazon is competing against the other three, it's
• 54:54
  Speaker 1: winning and media Amazon Media groups growing faster than Facebook
• 54:57
  Speaker 1: or Google Cloud. It's number one. And streaming video. They've
• 55:01
  Speaker 1: gone from number seven share of primetime viewing, the number
• 55:04
  Speaker 1: three computer hardware Amazon Echo is probably the most innovative
• 55:08
  Speaker 1: hardware part of the last of years. The company that
• 55:10
  Speaker 1: feels the most vulnerable right now, I would argue, is
• 55:14
  Speaker 1: Facebook is Facebook. I think is in the midst of
• 55:17
  Speaker 1: this unfolding case study and how not to handle a crisis.
• 55:22
  Speaker 1: The damage a crisis influx on a company isn't a
• 55:25
  Speaker 1: crisis itself, it's how it's handled. Thailand all came out
• 55:29
  Speaker 1: of their crisis um stronger than ever because they overread
• 55:32
  Speaker 1: the key is overreacting and in a positive way. They
• 55:36
  Speaker 1: cleared every bottle of Thailand all from every shelf in America,
• 55:39
  Speaker 1: even though that was absolutely not necessary. They knew exactly
• 55:42
  Speaker 1: what they could have said in these four things, we
• 55:47
  Speaker 1: can remove isolated incident data. DA don't worry about it, right,
• 55:51
  Speaker 1: Exxon said, this isn't a big deal. I couldn't find
• 55:53
  Speaker 1: the CEO. What we're seeing from Facebook is textbook how
• 55:58
  Speaker 1: not to handle a crisis, a series of half measures.
• 56:02
  Speaker 1: Two and fifty people. Okay, you're really angry about that.
• 56:05
  Speaker 1: A thousand oh and by the way, it's impossible. We
• 56:07
  Speaker 1: don't want to be arbiters of truth. Well, you sure,
• 56:09
  Speaker 1: Cell can try Facebook, We're not a media company. Oh
• 56:13
  Speaker 1: my gosh, we're about to have the tobacco testifying a
• 56:16
  Speaker 1: Congress moment. If Sheryl Sandberg or Mark Zuckerberg stand in
• 56:20
  Speaker 1: front of Congress and say We're not a media company
• 56:24
  Speaker 1: that's going to be played for the next thirty years
• 56:25
  Speaker 1: and say, see how this individual lied to us, and
• 56:29
  Speaker 1: it's going to be embarrassing for them. They are a
• 56:32
  Speaker 1: hundred percent of media company. They know it, they know it,
• 56:36
  Speaker 1: and they're lying and trying to minimize. America loves to
• 56:39
  Speaker 1: forgive what we hate is half measures. Martha Stewarton and
• 56:44
  Speaker 1: go to jail for insider trading. She went to jail
• 56:46
  Speaker 1: for obstruction of justice. That this is where they will
• 56:50
  Speaker 1: end up because they will be forced to is Mark Zuckerberg,
• 56:53
  Speaker 1: and he should skip to this point right now. This
• 56:57
  Speaker 1: is what happened is unacceptable, regard ardless of the cost.
• 57:01
  Speaker 1: I'm going to make sure this never happens again. And
• 57:04
  Speaker 1: by the way, we're a media company and we accept
• 57:07
  Speaker 1: our special role as being part of the fourth of State.
• 57:10
  Speaker 1: He needs to show, in my view that he's not
• 57:13
  Speaker 1: only a global citizen, but an American citizen. Our Facebook
• 57:18
  Speaker 1: was weaponized by an intelligence unit of the Russian government.
• 57:22
  Speaker 1: Bloomberg hasn't been weaponized by Russia. New York Times managed
• 57:26
  Speaker 1: to keep us safe with ninety million dollars in free
• 57:28
  Speaker 1: cash flow, yet Facebook can't do it with twelve billion
• 57:31
  Speaker 1: and free cash flow. This isn't about the realm of
• 57:33
  Speaker 1: the possible. It's about the realm of the profitable. Among
• 57:35
  Speaker 1: Google and Facebook stand in front of Congress and say
• 57:38
  Speaker 1: it's not possible. What they're really saying is it's not
• 57:41
  Speaker 1: it's not possible for us to do this while maintaining
• 57:44
  Speaker 1: our profitability, which in their eyes is the impossible. So
• 57:47
  Speaker 1: are you asking too much of a thirty year old
• 57:51
  Speaker 1: CEO who really doesn't have the breath of life experience
• 57:55
  Speaker 1: and the understanding of history to recognize his role in it.
• 57:59
  Speaker 1: I'm not using non behavior um or non action. I'm saying, hey,
• 58:04
  Speaker 1: this is I don't care if he's the smartest guy
• 58:07
  Speaker 1: in the room and the greatest learning machine ever, he's
• 58:11
  Speaker 1: thirty one or thirty two years old. This is twenty
• 58:14
  Speaker 1: years past his seasoning. Yeah, but that's the role of
• 58:17
  Speaker 1: the board. The board is supposed to look at the
• 58:19
  Speaker 1: CEO and service Producieri's not only for shareholders but all stakeholders.
• 58:23
  Speaker 1: And when they see, Okay, we have this incredible company
• 58:26
  Speaker 1: that's stown incredible returns to shareholders, but it's also threatening
• 58:29
  Speaker 1: our democracy, then we as a board have to ensure
• 58:33
  Speaker 1: that we are representing our stakeholders with the right of
• 58:35
  Speaker 1: the wrong CEO and coaching this guy. But this to
• 58:38
  Speaker 1: me seems pretty basic. This can't happen again. I'm going
• 58:43
  Speaker 1: to make sure it doesn't. Keep in mind, with twelve
• 58:45
  Speaker 1: billion dollars in pre cashual, they could hire fifty thousand
• 58:48
  Speaker 1: people to screen identify controversial content or advertisers. They could
• 58:52
  Speaker 1: spend a half a billion dollars a year on artificial
• 58:55
  Speaker 1: intelligence technology to help these these ten thousand screeners I identify, sort,
• 59:00
  Speaker 1: and distill controversial content, and it would reduce their free
• 59:04
  Speaker 1: cash flow by ten percent. But to them that qualifies
• 59:09
  Speaker 1: as impossible. It's just absolutely not true that they couldn't
• 59:15
  Speaker 1: do away with all. Do you realize the defense we're
• 59:17
  Speaker 1: talking about it was these ads were bought with a
• 59:19
  Speaker 1: credit card and paid in rubles. This was literally and
• 59:23
  Speaker 1: figuratively a red flag. It's not that hard to stop.
• 59:26
  Speaker 1: So we haven't talked about Twitter, which isn't on your
• 59:29
  Speaker 1: list or in the book other than mentioned in passing um.
• 59:33
  Speaker 1: I know you have thoughts along social media about Twitter.
• 59:36
  Speaker 1: What do you think? I don't know about you, but
• 59:38
  Speaker 1: I've I used to be a Twitter hater, and I
• 59:39
  Speaker 1: think it's because I'm a little bit jealous of Jack Dorsey,
• 59:42
  Speaker 1: and it pisces me off that he gets to live
• 59:44
  Speaker 1: as large as he lives while being a co CEO
• 59:46
  Speaker 1: and as a board member of public companies and someone
• 59:49
  Speaker 1: who thinks of themselves as a student corporate governance. I
• 59:51
  Speaker 1: think it's just insane that, again, this gross idolatry of
• 59:55
  Speaker 1: youth would let a board to allow an into a
• 1:00:00
  Speaker 1: jewel in his thirties. I think he's forty now to
• 1:00:03
  Speaker 1: be a co CEO of a company. What do you
• 1:00:05
  Speaker 1: say to the rest of people working there fifty hours
• 1:00:07
  Speaker 1: a week, this guy is better than you at twenty
• 1:00:10
  Speaker 1: five hours a week eighty nine or of his net
• 1:00:12
  Speaker 1: worth is that the other firms square that he works
• 1:00:15
  Speaker 1: out of the afternoon. So what do you know? That
• 1:00:17
  Speaker 1: stock has gone up? Twitter's is not so. And if
• 1:00:21
  Speaker 1: you look at if you look at who works there,
• 1:00:23
  Speaker 1: it's almost no one. Almost everybody has left a lot
• 1:00:26
  Speaker 1: of people, a lot of big names have departed Twitter. Um, well,
• 1:00:30
  Speaker 1: Steve Jobs did it. He did with Apple and Pixar.
• 1:00:32
  Speaker 1: Why can't Jack Dorsey. I think it's a dangerous business
• 1:00:35
  Speaker 1: strategy to assume you're Steve Jobs. I just don't think
• 1:00:38
  Speaker 1: that's a good board strategy. Maybe he's but that's exactly
• 1:00:41
  Speaker 1: what's happened. He's young, he wears a turtleneck, he has
• 1:00:44
  Speaker 1: a lot of facial hair. You know, he's definitely a
• 1:00:47
  Speaker 1: bright guy. Everyone's saying, oh, it's the reincarnation of Steve Jobs.
• 1:00:50
  Speaker 1: That is a bad strategy from the board. Having said this,
• 1:00:54
  Speaker 1: Twitter is relevant. Twitter is hugely relevant. I use the
• 1:00:58
  Speaker 1: service of all the social media I think it's and
• 1:01:00
  Speaker 1: when I enjoy the most, maybe exception of YouTube. You're
• 1:01:02
  Speaker 1: on it. You have how many followers do you have? No?
• 1:01:04
  Speaker 1: Very Okay, so you can communicate with the Rose Bowl.
• 1:01:08
  Speaker 1: My partner has is coming up on a million. It's
• 1:01:11
  Speaker 1: it's it's incredible. This is downtown Josh Brown, and he's
• 1:01:14
  Speaker 1: got great voice on Twitter. But he gives great Twitter
• 1:01:16
  Speaker 1: certainly does. He gives great tweets. But here's their challenge.
• 1:01:22
  Speaker 1: The New York Times is super relevant, PBS is super relevant,
• 1:01:25
  Speaker 1: BBC is super relevant, and they haven't created a ton
• 1:01:27
  Speaker 1: of shareholder value. Is Twitter shaping up to be the
• 1:01:31
  Speaker 1: New York Times? And then the sense that it's relevance
• 1:01:34
  Speaker 1: far outweighs it's return to shareholders I don't think it's poor.
• 1:01:37
  Speaker 1: I don't think it's well managed. I don't think it's
• 1:01:39
  Speaker 1: been that innovative in terms of the product, and they
• 1:01:41
  Speaker 1: haven't figured out a killer app to really start growing
• 1:01:44
  Speaker 1: the ters. That's the killer app? Right are you? Has
• 1:01:48
  Speaker 1: had changed anything for you? I I just haven't started.
• 1:01:50
  Speaker 1: It's only a handful of people have access to it,
• 1:01:53
  Speaker 1: and it's just a test run. But the whole beauty
• 1:01:57
  Speaker 1: of the services here what you have to say. You've
• 1:02:00
  Speaker 1: got a hundred forty characters, and if it's too long,
• 1:02:03
  Speaker 1: do a tweet storm, reply to yourself, but allow the
• 1:02:07
  Speaker 1: consumer to decide if they want to read more than that.
• 1:02:09
  Speaker 1: But Twitter right now is like Snap and that it's
• 1:02:11
  Speaker 1: it seems to have hit a floor in that well.
• 1:02:15
  Speaker 1: I think I think the floor there. I believe Snap
• 1:02:19
  Speaker 1: is going to go below bus, below tin Bucks, and
• 1:02:21
  Speaker 1: then be acquired by Google. I think Facebook's hatred and
• 1:02:24
  Speaker 1: it is hatred for Evan speakl is basically pushing Evan
• 1:02:28
  Speaker 1: into the arms of Google and Facebook. If it were
• 1:02:32
  Speaker 1: to ever get below tin Bucks to share would also
• 1:02:34
  Speaker 1: probably be acquired Because Twitter, Twitter, excuse me, because they're
• 1:02:38
  Speaker 1: so thank you. There's so few platforms that have any
• 1:02:40
  Speaker 1: sort of following like that on social media, and you
• 1:02:43
  Speaker 1: have big players including Apple and Google that it just
• 1:02:46
  Speaker 1: haven't been able to figure out social Yeah. Google Plus,
• 1:02:50
  Speaker 1: is that still around? I don't know if I don't
• 1:02:52
  Speaker 1: think that it hasn't gotten shut down yet. Yeah, I don't.
• 1:02:55
  Speaker 1: Occasionally you click on a link and you see someone's
• 1:02:57
  Speaker 1: Google Plus profile, and yet and yet Google Hangouts and
• 1:03:00
  Speaker 1: some of the other technologies are great. They're great to
• 1:03:03
  Speaker 1: do video conferencing and other things. It's it's I give
• 1:03:08
  Speaker 1: Google credit for throwing money and stuff and if it
• 1:03:10
  Speaker 1: doesn't work, you have to move on. Who's better at
• 1:03:12
  Speaker 1: that than Jeff Bezos. Yeah, we're not failing enough. Keep
• 1:03:15
  Speaker 1: drying stuff. Yeah, and they're getting into social with Twitch.
• 1:03:18
  Speaker 1: Yeah that's I mean, technically that's the only place that
• 1:03:21
  Speaker 1: am Well, there's a few, but Amazon is now I
• 1:03:25
  Speaker 1: keep going with Amazon capable of doing these Jedi mind tricks.
• 1:03:29
  Speaker 1: So the value of Kroger's declines by a third between
• 1:03:32
  Speaker 1: the time Amazon announces the acquisition of Whole Foods and closes.
• 1:03:35
  Speaker 1: And this is a grocer that's one eleventh the size
• 1:03:37
  Speaker 1: of Kroger. So I believe Amazon could take down the
• 1:03:41
  Speaker 1: value of any consumer company that's publicly traded by a
• 1:03:44
  Speaker 1: third within ninety days, just with press releases, it can
• 1:03:47
  Speaker 1: look at someone and perform this Jedi like mind trick
• 1:03:50
  Speaker 1: and begin inflicting pain without even touching the industry. On Friday,
• 1:03:54
  Speaker 1: when they announced they were thinking about getting into drug
• 1:03:56
  Speaker 1: store CBS and Walgreen's declient four and five percent or
• 1:04:00
  Speaker 1: bactively even further down the food chain, the drug manufacturers
• 1:04:03
  Speaker 1: declined because everyone is so scared of Amazon. So if
• 1:04:06
  Speaker 1: Amazon put out a press release every day saying, you
• 1:04:09
  Speaker 1: know what, we're going into overnight delivery, this is the
• 1:04:11
  Speaker 1: seventh here's a picture of the seven fifty seven's we've leased.
• 1:04:14
  Speaker 1: Here's a map of all the of all the locations
• 1:04:17
  Speaker 1: that make this incredible fulfilment network, you would see I
• 1:04:21
  Speaker 1: think FED, X, D, H, L and UPS lose ten
• 1:04:23
  Speaker 1: to forty billion dollars in marketing within thirty days. So
• 1:04:27
  Speaker 1: I can't imagine Amazon is happy with the three percent
• 1:04:30
  Speaker 1: fee they have to pay credit card companies. Why hasn't
• 1:04:34
  Speaker 1: Amazon ruled out a bank. I know they've ruled out
• 1:04:37
  Speaker 1: their own credit card to capture some of that three
• 1:04:39
  Speaker 1: percent back, but why not come up with a and
• 1:04:44
  Speaker 1: by the way PayPal has now become tremendous in its size,
• 1:04:49
  Speaker 1: why not come up with a direct way to do
• 1:04:52
  Speaker 1: banking so that they can cut out Master, Corde, Visa,
• 1:04:55
  Speaker 1: and m X and capture some of that three percent
• 1:04:58
  Speaker 1: for themselves. So I'll give you my answer. Then I
• 1:05:01
  Speaker 1: want to hear your answer, because I think you're going
• 1:05:02
  Speaker 1: to forget more about the financial industry that I'm ever
• 1:05:05
  Speaker 1: gonna know. I don't think it's if. I think it's when. Really, Yeah,
• 1:05:09
  Speaker 1: I think they're gonna go head on prime, credit card,
• 1:05:12
  Speaker 1: prime payment, why not prime mortgages Alexa? Send me four
• 1:05:18
  Speaker 1: quotes from mortgage Alexa, ride a check right a check
• 1:05:22
  Speaker 1: to you know Comcast for pay you know pay And
• 1:05:27
  Speaker 1: they're going to go into the business. The only friction
• 1:05:30
  Speaker 1: right now is they can hire smart people fast enough
• 1:05:33
  Speaker 1: and bandwidth her attention. I think that with Amazon, it's
• 1:05:36
  Speaker 1: not a consumer sector that will be in here's the criteria.
• 1:05:38
  Speaker 1: Is it more than ten billion dollars? Is it profitable? Yeah,
• 1:05:43
  Speaker 1: then it probably. The question is what will they do?
• 1:05:45
  Speaker 1: The question is what won't they do. They're going to
• 1:05:48
  Speaker 1: go after the biggest consumer sectors in the world, and
• 1:05:51
  Speaker 1: banking has stuck its chin out banking really to me,
• 1:05:54
  Speaker 1: seems very right for disruption. So the only reason I
• 1:05:57
  Speaker 1: would say they wouldn't do that. As far I know,
• 1:06:00
  Speaker 1: Walmart has been trying to build a bank for forever
• 1:06:03
  Speaker 1: and it hasn't worked. There's a regulatory set of hurdles
• 1:06:06
  Speaker 1: that doesn't allow it to take place. There are rules
• 1:06:09
  Speaker 1: that prevents some form of a retailer from owning them.
• 1:06:13
  Speaker 1: I don't know the specifics of it, but Walmart has
• 1:06:16
  Speaker 1: never been able to do it, which is why if
• 1:06:18
  Speaker 1: you walk into a b J's, a Costco, a target
• 1:06:21
  Speaker 1: of Walmart, it's not Walmart Savings alone. It's some local
• 1:06:25
  Speaker 1: bank that has a desk there, and you could get
• 1:06:28
  Speaker 1: a credit card, a Walmart credit card, but it's an
• 1:06:31
  Speaker 1: affiliate card. It's not really Walmart running the show. And
• 1:06:34
  Speaker 1: I'm assuming something similar is taking place with Amazon. I
• 1:06:38
  Speaker 1: honestly don't know. But the strange thing, from an academic standpoint,
• 1:06:42
  Speaker 1: one of the pillars of academic thought or in business
• 1:06:44
  Speaker 1: school is Professor Pallas notion. I think it was Michigan
• 1:06:49
  Speaker 1: on core competence, and that is basically saying focus, find
• 1:06:52
  Speaker 1: what you're good at the average that everything else, and
• 1:06:54
  Speaker 1: stay focused. Amazon has totally blown that out of the water.
• 1:06:57
  Speaker 1: If Nike had said we are going going to start
• 1:07:00
  Speaker 1: filing patents to build warehouses in the sky and say
• 1:07:03
  Speaker 1: that's ridiculous. If Starbucks said we're gonna spend four and
• 1:07:07
  Speaker 1: a half billion dollars on original TV content, you say
• 1:07:10
  Speaker 1: that's insane. None of those things are insane for Amazon,
• 1:07:13
  Speaker 1: their businesses are no closer to those businesses than Starbucks
• 1:07:16
  Speaker 1: are Nike. But can you could argue the streaming video
• 1:07:21
  Speaker 1: Prime and Amazon Music services, Hey, you're buying books and
• 1:07:25
  Speaker 1: DVDs and c d s from them in the first place. Okay,
• 1:07:28
  Speaker 1: we're gonna move to digital. No nothing, you know, it's
• 1:07:32
  Speaker 1: just home voice. These guys are filing their filing patents
• 1:07:39
  Speaker 1: for small drones that can reassemble as larger drones to
• 1:07:42
  Speaker 1: take bigger packages. They're talking about getting into drugs. They're
• 1:07:45
  Speaker 1: talking about managing the being the prescription benefit manager for companies.
• 1:07:50
  Speaker 1: It's totally blown the notion of core competence out of
• 1:07:53
  Speaker 1: the water and everywhere they seem to go. Because in
• 1:07:57
  Speaker 1: the analogy I would use as a or analogy, at
• 1:08:01
  Speaker 1: the end of World War Two, the Germans had better morale,
• 1:08:03
  Speaker 1: better equipment, better trained officers. But the Allies had thirty
• 1:08:07
  Speaker 1: a gallons of gasoline for everyone. The Germans had because
• 1:08:09
  Speaker 1: we cut off their supply routes. Amazon's the company that
• 1:08:12
  Speaker 1: shows up at thirty a gallons of gasoline. They can
• 1:08:14
  Speaker 1: overwhelm any sector which cheap capital and expertise in great execution.
• 1:08:20
  Speaker 1: But even if it doesn't work, even if they're unprofitable.
• 1:08:22
  Speaker 1: It's like, you know, will Amazon, Will Amazon be successful
• 1:08:27
  Speaker 1: in banking Berry? I don't know, but I know they'll
• 1:08:29
  Speaker 1: create a ton of chaos, trop a ton of napalm
• 1:08:31
  Speaker 1: and burn a lot of villages finding out. I mean,
• 1:08:34
  Speaker 1: they're going to absolutely wreak havoc in any industry before
• 1:08:38
  Speaker 1: they even go there. They just you, you sang credibly
• 1:08:43
  Speaker 1: because of your position in your dred ten thousand followers,
• 1:08:46
  Speaker 1: and Amazon is clearly going into banking. If they just
• 1:08:50
  Speaker 1: just sort of nodded with a press release and said
• 1:08:52
  Speaker 1: we're looking at it, you'd see the banking industry shed
• 1:08:56
  Speaker 1: the whole set and twenty thirty billion in market cap
• 1:08:59
  Speaker 1: in for trading hours and access to capital as a
• 1:09:03
  Speaker 1: key component of survival. So if you can begin squelching
• 1:09:07
  Speaker 1: the oxygen of a company taking the oxygen out of
• 1:09:10
  Speaker 1: the room before you're even in the room. So so
• 1:09:12
  Speaker 1: when you show up with your oxygen mask and start
• 1:09:15
  Speaker 1: fighting these people, wow, it's you know, let's starve them.
• 1:09:19
  Speaker 1: Let's let's suck the oxygen out of the room before
• 1:09:22
  Speaker 1: we show up. That's what Amazon is now capable of doing.
• 1:09:25
  Speaker 1: So last question before I get to some of my
• 1:09:28
  Speaker 1: standard questions, and we don't have to do all of
• 1:09:30
  Speaker 1: them because you've done them before. You have a command
• 1:09:35
  Speaker 1: over the topic, over the subject matter that few people do.
• 1:09:42
  Speaker 1: How do you take that that academic lessons? How do
• 1:09:47
  Speaker 1: you take your your course planner for the year and
• 1:09:50
  Speaker 1: turn that into a book? Because really the book itself
• 1:09:55
  Speaker 1: is an education about technology, about business strategies, about what
• 1:09:59
  Speaker 1: the asked ten or twenty years, We're like, what is
• 1:10:03
  Speaker 1: that process like to convert everything that's in your head
• 1:10:07
  Speaker 1: into three You've written a book? Yeah, you know what
• 1:10:12
  Speaker 1: it's like. It's it's miserable. It's like being in the Marines.
• 1:10:14
  Speaker 1: You're glad you did it, but you know you probably
• 1:10:16
  Speaker 1: would want to do it again. So you say that now,
• 1:10:18
  Speaker 1: but wait ten years and will start coming back. That's right.
• 1:10:21
  Speaker 1: It takes about a decade. That's right, it will come back.
• 1:10:24
  Speaker 1: Look the key and I think a lot about right,
• 1:10:27
  Speaker 1: because this is my first book. The key is deadlines.
• 1:10:29
  Speaker 1: I do believe you can force creativity. And I write Wednesday,
• 1:10:32
  Speaker 1: Thursday and Sunday nights and my kids and wife for asleep.
• 1:10:36
  Speaker 1: And I find just forcing yourself to write for three
• 1:10:38
  Speaker 1: or four hours is a very it's worth and most
• 1:10:40
  Speaker 1: people right in the morning. But what I did here
• 1:10:42
  Speaker 1: is I went through each of the companies. Then I
• 1:10:44
  Speaker 1: talked about UM, what I thought are the key components
• 1:10:48
  Speaker 1: of their success, how you would identify the fifth company,
• 1:10:51
  Speaker 1: what can be learned? And then I talk a little
• 1:10:53
  Speaker 1: bit about what a career advice for people in an
• 1:10:57
  Speaker 1: in an era of the four and just how my
• 1:11:00
  Speaker 1: goal you know, as an academic, UM, I have two goals.
• 1:11:04
  Speaker 1: The first is to help others create economic security for
• 1:11:06
  Speaker 1: them and their families, and the second is to be
• 1:11:08
  Speaker 1: the most influential thought leader in the history of business.
• 1:11:11
  Speaker 1: We'll see how the second goes. I hope you have
• 1:11:14
  Speaker 1: a huge listenership, Barry, I need some help on the
• 1:11:16
  Speaker 1: second one. Well, well, last time you were on I
• 1:11:19
  Speaker 1: got emails for I can't tell for weeks after your
• 1:11:22
  Speaker 1: your appearance so there was some resonance. It's not the show,
• 1:11:26
  Speaker 1: it's not necessarily me. It's how does the guests present
• 1:11:30
  Speaker 1: themselves in a way that other people well, but other
• 1:11:34
  Speaker 1: people look, this is a shared That's the beauty of
• 1:11:37
  Speaker 1: social is it's shared. People said, Hey, you're into tech.
• 1:11:41
  Speaker 1: You have to listen to Galloway on Riddults show. He
• 1:11:44
  Speaker 1: just choose the scenery. It's fifty percent lock, it's fifty
• 1:11:47
  Speaker 1: timing and the rest of his talent. That I've been
• 1:11:50
  Speaker 1: super lucky because I chose to study and think a
• 1:11:52
  Speaker 1: lot about these four companies and they've become part of that.
• 1:11:55
  Speaker 1: We've captured something with the zeitgeist here, and you know,
• 1:11:58
  Speaker 1: it's just much better to be lucky than it is
• 1:11:59
  Speaker 1: to be By the way, congratulations York Times bestseller. All right,
• 1:12:06
  Speaker 1: so let's jump to some of our favorite questions. Tell
• 1:12:09
  Speaker 1: me something people don't know about your background. Wow, I
• 1:12:12
  Speaker 1: graduated with a two point to seven g p A
• 1:12:15
  Speaker 1: out of U c l A. How did you ever
• 1:12:18
  Speaker 1: get into grad school? Uh? They took a chance on me.
• 1:12:22
  Speaker 1: I owe the university. I owe California taxpayers and the
• 1:12:26
  Speaker 1: regents of the University of California because of their generosity
• 1:12:30
  Speaker 1: and irrational, you know, confidence in in me a lot
• 1:12:35
  Speaker 1: I was, so I got very lucky. Fran Hill, the
• 1:12:39
  Speaker 1: director of Admissions of Hose School of Business, let me
• 1:12:41
  Speaker 1: with a two point two seven g p A and um,
• 1:12:44
  Speaker 1: I'm just I was born at the right time, in
• 1:12:46
  Speaker 1: the right place, California, getting to go to the great
• 1:12:49
  Speaker 1: in my opinion, one of the greatest upper lubricants in
• 1:12:51
  Speaker 1: the history of of economy, you know, of society is
• 1:12:56
  Speaker 1: the University of California. And you went to public school.
• 1:12:58
  Speaker 1: I went to Sunni stone Brook with grades I would
• 1:13:01
  Speaker 1: never be able to get into today. And I went
• 1:13:03
  Speaker 1: to Benjamin Cardosa School of Law, part of you streaming university.
• 1:13:07
  Speaker 1: My grades, they would laugh at me if I applied
• 1:13:09
  Speaker 1: today with those. So it was lucky being at a
• 1:13:12
  Speaker 1: different part of the demographic boom So you're in a
• 1:13:16
  Speaker 1: in a valley, six board and sixty one not quite
• 1:13:19
  Speaker 1: a boom er, not quite a gen X and lower
• 1:13:23
  Speaker 1: application numbers. Yeah, So terrible grade, terrible grades is a
• 1:13:27
  Speaker 1: is an undergrad I was a decent test taker, so
• 1:13:29
  Speaker 1: I kind of skated by. I had bad grades, but
• 1:13:32
  Speaker 1: I tested poorly, so that worked out well. Let's talk
• 1:13:36
  Speaker 1: about books. Since we referenced your book, tell us about
• 1:13:39
  Speaker 1: some of your favorite books. By the way, this is
• 1:13:41
  Speaker 1: the most popular question that people. Sapiens is a wonderful book. Harari. Yeah,
• 1:13:49
  Speaker 1: have you read the follow up book? I have, I haven't.
• 1:13:53
  Speaker 1: I heard it's not as good. I think it's a
• 1:13:54
  Speaker 1: little darker. Oh really, yeah, it's probably like it maybe.
• 1:13:58
  Speaker 1: Um So some of my colleagues have written some great
• 1:14:01
  Speaker 1: picks at Stern. Adam Alter wrote a book called Irresistible
• 1:14:04
  Speaker 1: about how tech companies and consumer companies make their products addictive.
• 1:14:08
  Speaker 1: And I think it's really instructive, and also with a
• 1:14:11
  Speaker 1: couple of chapters on what you do with with your
• 1:14:12
  Speaker 1: kids and building some bounds around your life. Um uh.
• 1:14:16
  Speaker 1: A Nindo ghost a movie book called Tap. We've had
• 1:14:20
  Speaker 1: him on. It's fascinating about the mobile technology and how
• 1:14:24
  Speaker 1: it's changing everything. Good stuff there and a ruin fondaraj
• 1:14:27
  Speaker 1: and the share economy. Uh so those are all kind
• 1:14:30
  Speaker 1: of that's those are the most recent ones. Also a
• 1:14:34
  Speaker 1: guest on the show. So you've done the full n
• 1:14:36
  Speaker 1: y U Stern? Anything? Um, you ever read fiction anything
• 1:14:40
  Speaker 1: not nonfiction? You know, I'm embarrassed to say it. I
• 1:14:43
  Speaker 1: read so much for business. I don't have a lot
• 1:14:45
  Speaker 1: of I don't read a lot for leisure. It's not
• 1:14:48
  Speaker 1: something I have the same issue. By the way, you
• 1:14:50
  Speaker 1: know this sounds terrible. I love television. I watch a
• 1:14:53
  Speaker 1: ton of TV, and it's not something I'm proud of.
• 1:14:55
  Speaker 1: But but television is great today. It's not when we
• 1:14:57
  Speaker 1: were junk. Yeah, a talent capital best. This is a
• 1:15:02
  Speaker 1: golden age. It's an embarrassment of riches. So much stuff.
• 1:15:06
  Speaker 1: Watch Taboo, taboo. Haven't seen that fantastic? Um, what do
• 1:15:11
  Speaker 1: you watch on Amazon Prime anything in particular? Or Netflix?
• 1:15:15
  Speaker 1: What are your you know, I'm the I'm the same
• 1:15:17
  Speaker 1: as I'm the same as. I've been watching Odd Mom,
• 1:15:19
  Speaker 1: Odd mo Mount, which I find it hilarious. I'm a
• 1:15:22
  Speaker 1: huge Game of Thrones fan. I mean, there's just so
• 1:15:25
  Speaker 1: much good TV on all the time. I think the
• 1:15:28
  Speaker 1: key to being a happier person is exercise and more television.
• 1:15:31
  Speaker 1: Exercise and what television usually ual? It's exercising, more sleep.
• 1:15:34
  Speaker 1: But but that'll work. And let me get to my
• 1:15:37
  Speaker 1: last two questions, which um, I think are the most
• 1:15:40
  Speaker 1: interesting questions. Are you watching the Vietnam document dvring It?
• 1:15:44
  Speaker 1: And I had like nineties you know, I have so
• 1:15:47
  Speaker 1: much stuff on the DVR that it's just really better
• 1:15:51
  Speaker 1: than Civil War because some people really Uh, it's that's
• 1:15:55
  Speaker 1: I will get to it eventually. I'm still only halfway through. Um.
• 1:16:01
  Speaker 1: The four parts series are on music with UM, I'm
• 1:16:06
  Speaker 1: drawn a blank on his name. Um it was. It's
• 1:16:09
  Speaker 1: really fascinating from the I'll edit in the name of
• 1:16:14
  Speaker 1: I'll figure it out. Um. You deal with a lot
• 1:16:17
  Speaker 1: of students with millennials. What sort of advice would you
• 1:16:20
  Speaker 1: give someone who comes to you and says, Hey, I'm
• 1:16:22
  Speaker 1: thinking about a career in technology your business. What would
• 1:16:25
  Speaker 1: you advise them? Uh, find a company of the recurring revenue,
• 1:16:31
  Speaker 1: finding a find a place that it's like getting a
• 1:16:33
  Speaker 1: second m b A within a couple of years. You know,
• 1:16:37
  Speaker 1: don't give up on the myth of balance in this economy.
• 1:16:41
  Speaker 1: It's so competitive. You may know someone who has a
• 1:16:43
  Speaker 1: food blog, volunteers at the s p c A, stays
• 1:16:47
  Speaker 1: in great ship. Assume you're not that person to vote
• 1:16:49
  Speaker 1: five to ten years to doing nothing but working your
• 1:16:51
  Speaker 1: ass off. And I realized that's not aspirational. But I
• 1:16:53
  Speaker 1: don't know anyone who's successful who hasn't worked their ass off.
• 1:16:55
  Speaker 1: For tender. I mean literally work NonStop for ten or
• 1:16:58
  Speaker 1: twenty years. So prepare yourself for that. Try and stay
• 1:17:02
  Speaker 1: in decent shape. I think it's the key to be
• 1:17:03
  Speaker 1: physically fit and for confidence and strong whare you're in school,
• 1:17:07
  Speaker 1: and as soon as you can, try and get executive
• 1:17:09
  Speaker 1: level sponsorship. And if you don't have executive level sponsorship,
• 1:17:12
  Speaker 1: someone who takes in a rational passion your well being,
• 1:17:15
  Speaker 1: in your progress at work, switch companies. The key is
• 1:17:18
  Speaker 1: finding someone who's gonna who's gonna help you and mention
• 1:17:23
  Speaker 1: and provide, provide cloud cover and and your job in
• 1:17:26
  Speaker 1: your twenties is to find something you're good at, not
• 1:17:28
  Speaker 1: find something you're passionate about, because if you're good at at,
• 1:17:31
  Speaker 1: the accouterments of success will make you passionate about it.
• 1:17:34
  Speaker 1: And then finally, what do you know about technology, digital strategies,
• 1:17:39
  Speaker 1: business ideas today that you wish you knew twenty or
• 1:17:43
  Speaker 1: so years ago? By Amazon? Um, you know, I don't
• 1:17:47
  Speaker 1: think of myself as a technologist. I think a lot
• 1:17:49
  Speaker 1: of these technologies are huge head fix I saw someone
• 1:17:52
  Speaker 1: on bloomber TV when I was talking about VR. I
• 1:17:55
  Speaker 1: think virtual reality is a head fake. I think Internet
• 1:17:57
  Speaker 1: of Things is a big head fake. I think, uh,
• 1:18:00
  Speaker 1: three D printing. I mean, there's there's so many heathics.
• 1:18:02
  Speaker 1: The two technologies that I think are really exciting where
• 1:18:05
  Speaker 1: I was gonna what I would invest over invest would
• 1:18:07
  Speaker 1: be voice and messaging. I think those two and then
• 1:18:12
  Speaker 1: not virtuality but augmented reality. Microsoft is big on that
• 1:18:16
  Speaker 1: these days. By the and by the way, we're gonna
• 1:18:18
  Speaker 1: talk about them, they're the fifth Horseman, probably one of
• 1:18:20
  Speaker 1: the best performing company's, best managed companies the last twenty
• 1:18:22
  Speaker 1: four months. But anyways, um I would I would be
• 1:18:26
  Speaker 1: very focused on trying to find in areas in and
• 1:18:29
  Speaker 1: around of voice and how to take businesses to messaging.
• 1:18:33
  Speaker 1: We have been speaking with Professor Scott Galloway of n
• 1:18:37
  Speaker 1: y U Stern School of Business, author of the four
• 1:18:40
  Speaker 1: The Hindiana of Amazon, Apple, Facebook, and Google. If you
• 1:18:46
  Speaker 1: enjoy this conversation, be sure and look up an inch
• 1:18:48
  Speaker 1: with down an inch on iTunes, SoundCloud, overcast, Bloomberg dot com,
• 1:18:54
  Speaker 1: well wherever finer podcasts are sold, and you can see
• 1:18:56
  Speaker 1: any of the other hundred and sixty or so such
• 1:19:00
  Speaker 1: podcast we've had previously. I would be remiss if I
• 1:19:03
  Speaker 1: did not thank the Crack staff that helps to put
• 1:19:07
  Speaker 1: this podcast together. Medina Parwana is my audio producer and engineer.
• 1:19:13
  Speaker 1: Taylor Riggs is our booker. Michael Batnick is head of research.
• 1:19:18
  Speaker 1: We love your comments, feedback and suggestions right to us
• 1:19:22
  Speaker 1: at m IB podcast at Bloomberg dot net. I'm Barry Ridholts.
• 1:19:27
  Speaker 1: You've been listening to Masters in Business on Bloomberg Radio