Latest / The Innovation Show / Classic Enhanced Audio Episode: Scott Galloway on Algorithms, Tech Giants, and the Retail Apocalypse

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Classic Enhanced Audio Episode: Scott Galloway on Algorithms, Tech Giants, and the Retail Apocalypse · The Innovation Show

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I realized I've a few episodes of the Innovation Show some
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people have not heard of because they're from almost a decade ago.
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This is one of them.
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It's an audio only episode.
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It's with Scott Galloway, who's now gone into stratosphere.
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Well known all over the world, and it came to mind during writing
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this week's episode of the Thursday Thought, so I thought I'd share.
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There's some absolute gold in here.
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He talks about the algorithm driven economy receptors and intelligence
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in modern companies, Facebook versus Google subscription models and their
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challenges and so much prophetic stuff here, the retail apocalypse, Amazon's
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dominance, and much, much more, including voice technology in retail.
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It's a pleasure to bring it to you.
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It's with thanks to our friends Kyndryl, who run and reimagine
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the technology systems that drive advantage in the world's.
0:48
Leading businesses with a unique blend of AI powered consulting built on
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unmatched managed service capability.
0:54
Kyndryl helps leaders harness the power of technology for smarter
0:57
decisions, faster innovation, and a lasting competitive edge.
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You can find Kyndryl@Kyndryl.com.
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now on the innovation show, it's a great honor to welcome Scott Galloway, Professor
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with NYU Stern, previous board member.
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Were Urban Outfitters, Eddie Bauer, New York Times Gateway Computers.
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Welcome to the show, Scott.
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Thanks.
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Thanks for having me.
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I'd love to paint the picture of media in the light of the four horsemen
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that you talk about, particularly receptors versus intelligence.
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Sure.
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So if you look at in the US, the s and p 500, that's the 500 stocks
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that the s and p index tracks.
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Only 13 of them have outperformed the s and p index each year
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for the last five years.
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So one that reflects our economy has definitely become a winner take
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all economy where the majority of the gains are being, captured by a
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smaller and smaller number of firms.
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But if you look at those 13 companies, somewhere between eight and 10 of
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them are really driven by algorithms, and that is, whether it is Amazon or
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Netflix, there's primarily, behind the curtain, a series of receptors that
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gather data, calculate the data, and then try and spit back and improve product.
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So we call it algorithmically driven.
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So what are the primary drivers of that algorithm?
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We would say that it's two things.
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It's receptors.
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It's the ability to gather information from a bunch of different users,
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, hopefully at scale, , real time, and then your ability to take that information
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and layer on intelligence, if you will.
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And that is intelligence learns.
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Adapts offers something better, learns if you will.
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Netflix, every time you watch a program, Netflix has very basic intelligence.
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And then it says if you're watching season four, episode eight of
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House of Cards, we think that you might enjoy season four, episode
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nine, and it begins auto playing.
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Episode nine, right after you see the credits for eight.
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So that's basic intelligence, but nonetheless, it's powerful.
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Amazon has obviously hundreds of millions of receptors in the form of
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their interface with their customers, tracking what you're buying, and it
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will customize your homepage to reflect the type of product categories that.
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Interest in previously.
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They also have tremendous receptors being installed in people's
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homes with Amazon Echo that will record your voice preferences.
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It has crawlers that go out and look at what other sites are charging for products
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such that they can ensure they're always offering as similar or lower price.
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So this notion of putting out as many receptors as possible.
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And then absorbing that information real time and then turning it around
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and making the product better.
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So another example might be Waze.
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The moment you turn on Waze, you've made the product better,
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that you've become a receptor.
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Using GPS and algorithms and artificial intelligence, immediately able to update
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traffic patterns and recommendations to every driver based on your usage of it.
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The way to think of this Aidan is Imaginee a car that got more
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valuable as you drove and more, and put more mileage on it.
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These companies, if you will, are using algorithms to become sort of
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Benjamin Buttons, and that is the more they're used, the better they become.
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That type of reverse perishability, if you will, seems to be common
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among all the companies that are outperforming the rest of the economy.
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So again, it's this algorithm of receptors, number of touch points where
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we can gather information, and then our ability to create that information or
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turn that information into intelligence.
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Make the product better, , almost organically or automatically.
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Those receptors then transfer into revenue.
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Amazon's an easy one, but laser targeting versus scatter gun targeting
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at scale is where companies like Facebook can really, really win.
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Facebook's power is that when you type in something into Google if someone were
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to list everything that you've typed into Google with your name and your picture
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above it, it would be very uncomfortable.
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We've all typed in some crazy stuff into that search query box.
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So the private nature of the Google search box, if you will, is a
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bit of a disadvantage for them.
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'cause consumers are not that comfortable with you taking individual receptor
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intelligence from your Google search queries and then tailoring ads.
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So if you said you had shingles and you were typing in symptoms and treatment
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of shingles and all of a sudden you were served shingle ads, it might
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make you uncomfortable that Google had registered, that you had this.
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Ailment you might not be comfortable with them knowing that, whereas the
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open nature of Facebook, meaning that anything you put on Facebook by virtue
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of the fact you're putting it on Facebook is being expressed to a larger
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community set means that people are probably more comfortable with Facebook.
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Taking that data on an individual level and then creating intelligence
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on it and serving you specific ads.
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So if you get a specific ad based on.
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What you, you put on Facebook, people aren't quite as freaked out and people are
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okay with Facebook if doing microtargeting at an individual level wheras with Google
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we want them to aggregate us into groups and then serve us based on that group.
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So Facebook has an inherent advantage over Google based on, it's the explicit nature
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of the content we're giving them and our comfort as a result with their targeting.
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If we were to start searching about teenagers on Google and then they start
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serving us ads for products for teenagers, we might find it uncomfortable that
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they had ascertained that, whereas,
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if we're talking about our teenagers and putting photos of our teenagers
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on Facebook, people seem to feel more comfortable as it's been an
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explicit or overt communication to a broader community, thereby making
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it less private, if you will.
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So Facebook has got this peanut butter and chocolate combination of massive
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scale, a billion and a half users, and the ability to target as specifically
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as households and a specific zip code that have teens that have recently
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received their driver's licenses.
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So it's got that targeting and scale combination, the likes of which we
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really haven't seen before in media.
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I love what you said there, it's best foot forward data that we're
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giving them, so it's data that we're totally comfortable with sharing.
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When you look back, there was advantages there for a lot of companies before.
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So Apple, for example, and the information, the receptors they had in
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iTunes, for example, and Amazon with their review model, they had receptors in
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place and they've almost let that slip, that initial advantage that they had.
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Yeah, so think of Apple.
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Apple.
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If you look at music, probably the company that does the best idea of
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this artificial intelligence or agility or whatever the term would be, this
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receptors times intelligence is Spotify.
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That when you follow someone and you update your playlist, the
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algorithms there begin updating your, the people who follow you, their
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playlist, it starts to figure out.
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If you're listening specifically to a lot of specific playlists, it looks
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at who that playlist is liked by and starts sharing lists and figuring
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out and making recommendations that are more in tune or that you're more
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likely or more likely to be correct.
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So Spotify probably more than any music company does the best job of this.
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However, apple is really the one that invented it by just simply stating
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which of their tracks on an album were being downloaded the most.
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And that popularity gave consumers an extraordinary amount of value because
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essentially what it gave you was the 15 or $20 or 90 or 95% of the value of a
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cd, which we were forced to 20 bucks for.
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For two books.
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'cause typically 90% of the value of an album is usually in one or two songs.
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And some people, some purists will say, no, it's the whole album.
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But the majority of us find that we'd rather just listen to a
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couple of the songs rather than have to buy the whole thing.
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And then them registering and then automatically updating what songs were
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being downloaded the most immediately added value to the end consumer.
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So they were really the first ones.
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And they've been blown by, in terms of paid subscribers to Apple Music.
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They've been blown by by a host of people, whether it's amazon Music or
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Spotify or even, I think even Pandora may have more paid users now, but they were
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first and , they've let it slip away.
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And you mentioned subscription there as well, because a lot of people in, Media,
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for example, would see subscription as the great white hope that gives you
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data and that gives you implicit data on your user as well as explicit data.
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But
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subscription as lacking scale, and without that scale, it really can't
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compete with the likes of Facebook, Google, and, and the other horsemen.
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So when you say subscription, subscription is a loaded word.
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So if it's signing up to get eight razors every week from Dollar Shave
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Club or Harry's, I would argue that that model doesn't pay off in the long
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run because it's actually not that intelligent in that it's not adapting.
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Your needs, your skin type, your usage.
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You sign up once and , it records one, one data set what product you want
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and how often, and then that's it.
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Whereas subscription revenue models are absolutely the way to go.
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So charging 9 99 a month for Spotify and then.
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The intelligence, if you will, is updated real time as opposed
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to just the initial purchase.
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When you fill out the form for Glossy Box or Birch Box, which are subscription based
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box programs, I don't think those work.
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So , it's really all about how often are you absorbing.
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Data from the end user and then responding to it and updating
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and making the product better.
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So subscription business model is absolutely the way to go.
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A subscription service that only records or takes in data once at the very
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beginning and then assumes that is the product you want to experience in the
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same cadence for the rest of your life.
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That's not what I'd call a, an intelligent product.
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And I think those.
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I think those those services are short lived.
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I think you're seeing it in the data.
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A lot of people that sign up for subscription services and the
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subscription service doesn't adapt or respond to their lifestyle changes.
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People end up with a bunch of stuff they don't want, or not enough of it.
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They end up canceling.
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There's huge churn in those programs.
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And another thing you mentioned is the lack of that intelligence.
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So you talk about the four horsemen having this recycling
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of intelligence straight back into the product in real time.
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So the product gets better with every time you use it.
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Meanwhile, we see people would go Twitter's irrelevant now, or Twitter's not
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at the races anymore, as well as the likes of Pinterest, and it's because of that
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lack of intelligence behind the product.
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So Twitter there, there's some intelligence, but I would argue that.
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And it might be in their advertising that when I'm on Google and I type in
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a query, I have a lot of confidence that what I'm getting is automatically
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updated by everybody else's queries, and it sends me relevant information.
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And I think Google has more authority around pointing me to
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the correct information than any entity in the history of mankind.
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That people trust Google more than they trust their priest, their
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father, their rabbi, their professor.
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One fifth of all search queries, 20% are questions that have never
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been asked before in the history of mankind, and it's hard to imagine
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anybody that has so much credibility that one out of five questions they
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received have never been asked before.
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So Google is really the original gangster here and it constantly
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updates, searches, and, and moves up the sources of information based on
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what other people have found relevant.
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Twitter, it hard for me immediately to understand how Twitter taking advantage.
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They're getting from other people.
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They do have some stuff what's trending.
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You get to see what's been retweeted, what's been liked.
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But for me, the product feels largely static over the last few years.
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It doesn't, it doesn't feel as if, based on what's happening, I. You're getting a
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ton of additional or incremental value.
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Now, that's not to say Twitter isn't an incredibly relevant product.
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My prediction on Twitter is it's similar to A-A-P-B-S or a Wikipedia.
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Twitter becomes part of our, a valuable part of our everyday life
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and our culture, but it's never able to really monetize or become
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commercially as viable as the other ones.
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I think it's.
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It's fast becoming a hugely relevant part of our society that is, not
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worth as much as it is economically.
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I think they're gonna have a tough time monetizing that relevance.
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If you will.
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And that's a nice segue for traditional media because.
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With the scale and use and as you say, the recycling of data back
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into the product to improve it.
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So many traditional players, if there the four horsemen, they're the stable
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boy actually changing the horse's dung and cleaning out the stable
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because they're just not at the races with their horses at all because.
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They are, haven't even got data programs, they haven't even got personalization.
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Correct.
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And I know some of the newspapers, for example, are far ahead of others,
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but how do you see that panning out?
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Because you say about Twitter becoming like a PBS for example, do you see
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that happening with a lot of media?
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Because it has a place in the world but it doesn't have a monetization place.
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Yeah, cleaning dung, I like that.
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Newspapers and magazines are an example of they have decent reach.
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Millions of people, but not usually hundreds of thousands,
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actually not even millions.
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And the intelligence is pretty weak there.
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There's some that do a great job.
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The New York Times is, I think one of the more innovative companies on online.
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Washington Post does a good job, but they haven't figured out an
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elegant way to serve up or to make content better based on readership.
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There are, there is some stuff.
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A basic thing is articles read most read articles is a huge value add.
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That's what I. When I'm on the New York Times homepage, immediately at the
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right, and I see what's been read the most, that is, that is a basic form of
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intelligence and receptors that adds a lot of value and makes the product better.
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And as example of how the New York times.com is more valuable in some
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ways than the end consumer, than the New York Times in its print edition.
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They haven't been able to take that usage, if you will, and immediately translate
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it into a value ad for their advertisers.
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Similar the way that Facebook's been able to offer better targeting,
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or Google's been able to run.
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One of the biggest mistakes in the history of business, allowing Google
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to crawl their data and slice it up and then serve it to the highest bidder.
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And that's not to say the New York Times shouldn't have been in the
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business' search, but I think the New York Times, the Washington Post, the
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Wall Street Journal, all should have bound together, turned off Google.
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And then licensed their content to the highest bidder and made
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the other content platform a sewer of cap picks and fake news.
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And instead they let them come in, slice and dice their contents,
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put it next to other content.
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Some of it credible, some of it not thereby debasing their own content
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similar to Rolex or to start distributing through a low-end Army Navy store.
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If you had Rolexes next to Casio watches, it bases the Rolex brand.
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I think these brands have such incredible.
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Artisanal, almost journalism that they shouldn't be seen next to some of the
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stuff you find on Google and Facebook.
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In addition, they've let, essentially, they've traded kind of dollars for
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dimes, and that is , the implicit agreement was you give us your
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content, we'll send you traffic.
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Google can take that content and run it against a search ad or a Google ad
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word, which they can get 10 times the revenue that the times gets for running
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a banner across an article that someone may go to and you think okay, fine.
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That's the agreement, but it shouldn't be the agreement.
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The bottom line is Google has the mechanism to monetize it, so New York
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Times should be charging Google to crawl their content and instead into this, this.
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kind of B.S. notion that information wants to be free
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and started giving them their content.
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It'd be tantamount to, I'm trying to use a European refer.
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If the Premier League let you know sky or whoever, canal, whoever
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the big cable networks over there, crawl their content and show.
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Arsenal versus Totenham, and cut that content up and then
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serve it however they want.
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They don't let them do that.
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They charge them for the content, recognizing that content has value.
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For some reason, a lot of media, specifically print media companies
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have decided their content doesn't have as much value.
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And aren't charging these platforms for access to their content.
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So I've been a big evangelist for all of the major media publications that
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have made an enormous investment in content with its great journalism or
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foreign bureaus should shut off Google should shut off Facebook, they should
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all bind together and then license their content to the highest bidder.
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I think it's.
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It's literally they stuck a gun in their mouth when they
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let Google crawl their content.
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Then they took the gun out of their mouth and shot themselves in the foot
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when they participated in Facebook instant articles, Facebook and Google
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are these guys frenemy minus the friend part, and they need to shut them off.
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We see it in so many industries.
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Scott, it reminds me of what happened in telcos where you have a Verizon or
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a Telefonica doing a deal with Apple in the early days to go, yeah, we've got
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exclusive for six months while we hand our whole, our whole customer base over
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to you and you become the operator.
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You have WhatsApp, you have your own Apple communication direct messenger,
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and it takes me outta the game.
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And all that's left is where the sim becomes software and.
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Outsourced their audience to a third party, and it's just a cycle
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We've seen time to time again.
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And to your point about being the evangelist of bringing together all
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the media, they all need to do this because it's again, happening, say for
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radio where you have TuneIn and these aggregators and they're actually putting
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the Rolex beside, as you said, the cheap Cassio watch and the direct audience
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relationships with the aggregator.
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Rather than with the brand, what can happen because the guys just don't seem
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to be coming together or seeing this and don't want to make the first move
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of joining together, joining forces.
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There's some, they're worried about legal restrictions,
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they're worried about antitrust.
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And also there's everybody, there's a cool kid effect.
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Everybody wants to be seen as getting it.
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So they all wanna put out press releases saying they're working with
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Facebook and Google, that they're embracing the future and their
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traffic would decline substantially.
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So these are companies that are built on this eyeball model where more
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eyeballs means more viewership means see.
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And when your model is, your rate card is cost per thousand views.
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It's anathema or heresy to do anything that cuts the traffic.
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But where I think these guys have screwed up is they pursued a mass model instead
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of a scarcity and premium pricing model.
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And I think similar to the way Hermes doesn't distribute birken bags to Walmart,
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they should be focused on scarcity and making their, they're making their content
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rare and hard to find, and as a result, commanding a price premium around it.
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Now I've, I've pitched this to a bunch of 'em.
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They've all said no.
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I think if I think some people acknowledge maybe that, that the time
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to do that might have been 10 years ago, but now it's too late that none of
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us have enough power to put a dent in people's affinity for Facebook or Google.
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But I don't think that's true.
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I think if they all got together and said, okay, we're gonna
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license all of our content.
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Either Facebook, Google, Twitter Alibaba, whatever it is, and one only.
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And we're gonna do it on a say every three years we're gonna renew
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the contract with the highest bid.
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Or similar to what FIFA does, or similar to what the
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Olympics does with TV networks.
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I think they get, I think they garner huge bids because these.
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If there was only one platform where you could get content from Vogue, the
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New York Times, the Financial Times and Der Spiegel, I think people slowly
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would, surely would decide, would have a preference for the platform that is the
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only one that has access to that content.
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So I don't think it's too late.
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I think there's still an opportunity I think they have to get together.
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I think they've all seen.
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Ronald Reagan used to say if Aliens landed Russia and the US would
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figure out a way to get along.
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I think aliens have landed and in retail it's Amazon and
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media it's Facebook and Google.
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Google.
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And these guys do need to start fighting back and some of the way they're gonna
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fight back is by creating alliances.
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But
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Should it have happened 10 years ago?
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Yeah.
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But I still don't think it's too late.
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And even though the platform is actually on fire and there's been
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petrol poured on it every day, there doesn't seem to be an urgency from
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a lot of media outlets to do this.
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And it's a plain obvious play.
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And it also probably get you around things like ad blocking if you
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actually join forces on that as well.
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What do you see as an impetus for the, these media companies
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to get their act together?
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Near death experiences, I think a burning platform where they're they
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realize that, they, they all every one or two years there's some sort of
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sign of life, whether it's digital or they, they have a year on year increase
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and their digital, digital revenues increase more than their print declines.
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But year on year, what you're finding is these companies are just
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becoming a shadow themselves model.
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Yeah, they, they have to acknowledge what has gotten them here today isn't
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gonna get them where they need to be.
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And so they're gonna have to rethink their business model.
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And the notion that digital would somehow, in its current form, would replace the
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loss in print revenues is just a delusion.
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And the way they're responding is by cutting costs and cutting
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journalists and cutting overhead.
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And there's only so much cutting that can go on before they have to
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figure out a way to grow revenues.
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And there's one place, there's only really, in my opinion, all
21:46
pass, lead to the same place.
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And that is, unless they can figure out a way to tap in and extract
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advertising revenues from the bigger platforms, they're gonna slowly but
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surely become shadows of themselves.
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The good and the average ones will go outta business and the great ones
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will just be smaller companies that eventually will be some vanity or
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trophy buy for a billionaire who has an affection for the brand and
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rather than effectively Republicans and alpha males by billionaires,
22:15
buy football teams and soccer teams.
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Democrats and the, the, the guys that were on the chess club and the
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guys that didn't play sports who become billionaires by newspapers.
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And so we're, we're either gonna, we're either gonna have an environment
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where every newspaper company or kind of media company has to be
22:34
purchased by a billionaire that made his or her money somewhere else,
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which I don't think is a good thing.
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I think that's a profit motive and profitable media companies
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are the healthier ones.
22:44
They're gonna have to figure out a way to tap into search and social revenue.
22:47
And right now they have not.
22:48
And they're miles, they're miles away from it.
22:51
And another, another question on that, Scott, is a lot of people
22:54
ask, should I set up, I'm thinking of starting a blog, or I'm still
22:58
starting this magazine style website.
23:00
My advice is always don't do it because their, their only chance is
23:04
really to be bought by a newspaper group, but the newspaper groups
23:07
now don't have revenues to do that.
23:09
That was maybe five years ago when newspapers or media outlets were grappling
23:13
for some type of digital outlet or digital audience based on Facebook reach.
23:18
What's your advice to somebody like that?
23:20
So it's the same advice I would give someone who's thinking
23:22
about becoming a doctor.
23:23
I think being a doctor, at least in.
23:26
A less, it is become a difficult job.
23:29
It's a ton of education, a ton of debt you have to take on to pay for that education.
23:33
And then it's a job that's not nearly as high paying as it used to be.
23:37
But some people just have to be doctors.
23:39
The ones that were taking your temperature when they were eight years old, and
23:42
they've always dreamed of being a doctor.
23:44
And for those people, it's not about economics, it's
23:47
about pursuing their dream.
23:48
There are some people that just are dying to write and don't wanna work through a
23:53
traditional outlet and have a vision for something and put together a blog, and you
23:58
know you're not gonna stop those people.
24:00
And having said that, just recognize that you better get a lot of emotional
24:04
reward out of it because it is a terrible business every year.
24:07
The prices, the CPMs or what you're able to get for advertising
24:11
revenue on a blog get cu in half.
24:14
The amount of scale you need to have a viable self-sustaining blog.
24:21
It's just enormous.
24:23
Yeah.
24:24
We're talking tens of millions of, of views a month just to get to break even.
24:29
So I would say it's a passion play.
24:31
It's something that do it if you wanna try it, but.
24:35
Do not quit your day job.
24:37
This is a near impossible way to make a living
24:40
retail.
24:41
Scott, last question for you.
24:42
We see so many retailers in a debt spiral and they're just spinning outta control
24:48
and grasping at straws, while Amazon just goes from strength to strength
24:52
with that reinvestment of customization and implicit and explicit input.
24:56
What's your advice for retailers?
24:58
So retail's tough and a lot of it some of it is Amazon, but a lot of it is just
25:03
basic structural factors such as there's too much in the US I think there's six
25:07
or seven square feet of retail space for every one there is in Britain.
25:10
So the US is just over stored and with or without Amazon stores are gonna struggle.
25:15
A lot of people say department stores are dying in the hand of Amazon.
25:19
What's happened to department stores?
25:20
Every department has been bested by a specialty retailer
25:25
that offers a better offering.
25:27
Beauty was the last department to have a real stronghold in department stores in
25:31
the US and now you have Sephora and Ulta who do a better job than any of the beauty
25:35
departments in any department stores.
25:37
So Amazon has gone after these guys.
25:41
A perfect storm of bad things, ready to hurt retail that were
25:44
waiting regardless of Amazon.
25:47
You have consumer shifting more money into things like food and travel, buying less
25:52
stuff or, or reallocating that capital.
25:54
You have a weak kind of low growth economy, so you have the mother of
25:58
all of storms waiting for retail, and then Amazon just, just adds insult to.
26:05
There are some that are working.
26:07
Traditionally, the ones, especially retailers that have, they have sort of
26:10
an experience, if you will, and that is they're going for some sort of consumer
26:14
discovery at an Urban Outfitters or to speak to an expert, whether it's
26:19
at Home Depot or Best Buy or Sephora.
26:23
So there are examples of.
26:25
Retailers that are breaking through and still winning or offering
26:29
just a superior value proposition.
26:30
Warby Parker, $99 for glasses in an environment where you could easily
26:35
spend five or 600 bucks by the time you walked out with the pair you wanted.
26:38
So there are winners.
26:40
However, there has been, there's just an absolute bloodbath over here,
26:44
and I think it's starting to happen.
26:46
Retailers that don't have a really strong point of differentiation
26:50
against Amazon or other players.
26:53
So what advice do you have for retailers?
26:56
A, it's from technology standpoint, it has to be a multi-channel offering.
26:59
People don't live in isolation of any one medium.
27:02
You have to be able to offer proprietary merchandise or at a
27:05
minimum a proprietary experience.
27:07
'cause at the end of the day, if I can get it on Amazon, I'm probably
27:09
gonna order it there 'cause I can get it fast and for less money.
27:12
And you're gonna have to in my opinion, Zig the other way is Amazon is trying to
27:17
pull people out of the equation, invest in robots to make things faster and cheaper.
27:21
I think you have to invest in human capital.
27:23
Have that, those cast members of the Sephora, those blue shirts
27:27
at a Best Buy, or there's gold aprons at a Home Depot that make
27:32
the in-store experience superior.
27:34
I do think there's still a huge opportunity Carrefour makes a pretty
27:38
big investment in its personnel and retraining sets that if you're looking
27:42
for the right tomato, there's someone there who actually understands produce,
27:50
retail is, retail is not going away by any stretch of the imagination, but we have
27:54
what you would call a reckoning right now where you could see somewhere between 10
27:58
and 30% of the retail brands that are out there right now aren't around in 10 years.
28:03
It's just a difficult place to operate.
28:06
It's been a long time coming.
28:08
Amazon is just one factor.
28:09
Amazon gets blamed for everything.
28:11
What's unusual about Amazon right now is that when retail goes down
28:14
as a composite, as a index of all their stock go down, Amazon goes up.
28:18
'cause whereas most stocks in the same sector trade in sympathy or
28:22
lockstep with one another, Amazon is actually inversely correlated.
28:25
People are now assuming that what's good for Amazon is bad for the rest of retail.
28:29
The assumption is it's a zero sum game, and then when Amazon's winning,
28:32
other retailers are losing So.
28:34
It's an extraordinarily interesting time for retail, which means
28:38
it's great for Amazon and bad for everybody else and a few other
28:41
players that are breaking through.
28:43
But there's no silver bullet.
28:44
Retail is a difficult environment right now, similar to your advice to people
28:48
thinking about the blog business.
28:50
Don't go into retail unless you have no choice.
28:52
Some people are born and they just have to be in it, but I would, it's a environment
28:58
Scott?
29:01
The human capital.
29:02
So in a world shifting towards AI and Screenless world where you have
29:07
assistance like Alexa for Amazon, where do you see that playing out?
29:11
Because it seems like Amazon, again, have a distinct advantage in that world.
29:15
And maybe Apple, I'm not so sure about Siri, but maybe Apple and that
29:19
takes out stuff like, for example, there's a lot of commentators
29:22
that would say, that takes out.
29:23
Advertising, so digital advertising, and it takes out Google's model if you
29:27
have Alexa being the, being the, the search engine of choice, if you will.
29:33
It's gonna be very, I think, I think the two technologies
29:36
I'm always being critical of technologies being overhyped.
29:40
I think virtual reality is overhyped, internet of things
29:43
is overhyped, wearables.
29:44
The technologies I think that are quote unquote under hyped are texting.
29:48
I think the majority, a lot of our life and commerce is gonna be done via texting.
29:52
And then, so messaging and then two, I think voice is huge
29:56
and anyone who's in marketing.
29:59
An Amazon Echo just to see, because you start to see the potential of it.
30:04
And the strange thing about ordering, I have no doubt that people are gonna
30:07
start ordering replenishable and basics and then they'll go to more
30:10
sophisticated consumer purchases just using their voice in their own home.
30:16
What you start to think about in terms of how it would change the ecosystem,
30:20
is that when you go into a Tesco or a Walmart or Kroger, packaging, you
30:25
see a price, shelf placement, you see the other products around it.
30:29
When you order something via voice, you oftentimes order by category.
30:33
You might say more IPA beer, or more paper towels.
30:37
It's unlikely you're gonna list a brand.
30:40
So Amazon's now gonna have the authority to pick your brands for you trade
30:44
brands off against one another, or substitute their own private label brand.
30:48
You're also not seeing price, so you're gonna probably end up with the voice that
30:54
you think has such tremendous credibility to give you the right price because you're
30:58
not gonna be there to actually see and compare prices when you do it by voice
31:02
and the brand that has that credibility.
31:05
Is, is Amazon, Walmart has it, but they don't have credibility around fulfillment
31:10
or around technology right now.
31:12
But you could see an enormous transfer and power from organizations that have brands
31:19
that have been amazing at packaging, getting on the right, getting an eye level
31:24
in terms of shelving placement, getting the right circular in front of you.
31:28
Making sure that they were priced competitively.
31:30
Whereas if you just say more detergent, all the investment, Proctor and Gamble
31:34
is made in the Tide brand and the packaging and the innovation it becomes,
31:38
it becomes less important when you're just ordering by voice and by category.
31:42
So I think Amazon Echo has incredible potential to disrupt
31:48
traditional purchase patterns.
31:50
That disruption will largely benefit Amazon, and it goes back
31:54
to this receptors and intelligence.
31:56
Amazon is putting receptors in our house.
31:58
That's it.
31:58
All we need to do is say, Alexa a barbecue this week, or more beer, or Send
32:05
me, you could see it someday going, send me three quotes for auto insurance for my.
32:12
For my Mercedes C Class two 80 or whatever it is, you can see getting so
32:16
frictionless and so easy to buy things.
32:19
And the majority of the purchases when we make are low consideration
32:22
purchases that are seen as a nuisance when you go buy a car, when you go buy
32:26
a pair of Christian Lu Boutin shoes.
32:28
Those are joyful and fun and you want to be involved.
32:31
But most purchases we want less involvement and voice
32:33
is almost frictionless.
32:34
So I think voice is
32:38
potentially.
32:39
Reorganize the entire kind of consumer brand retail ecosystem.
32:44
And if I were any retailer or if I were a kid coming out of out of college
32:48
right now, I'd want to be the guy or gal that really understands the
32:52
technology, the applications of voice.
32:56
I think voice could be quote unquote, the next.
32:59
Big wave.
33:01
scott Galloway, Clinical Professor of Marketing at NYU Stern Business School.
33:04
Thanks for joining us.
33:06
Thank you Aidan, best of luck.
33:07
Thanks, Scott.
33:08
Thanks man.
33:08
Appreciate it.
33:09
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