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Professor Scott Galloway: Masters in Business (Audio) · Masters in Business

• 0:03
  Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio. Hi,
• 0:08
  Speaker 1: this is Barry Ridholts. You're listening to the podcast portion
• 0:11
  Speaker 1: of Masters in Business on Bloomberg Radio. I have a
• 0:15
  Speaker 1: fantastic guest today. And I know you guys are tired
• 0:19
  Speaker 1: of hearing me say that each and every week, But
• 0:21
  Speaker 1: when you have a guest who is fantastic, you just
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  Speaker 1: have to say, this guy's fantastic. Scott Galloway, Professor of
• 0:29
  Speaker 1: Digital Branding and Marketing at n y U Stern Graduate
• 0:33
  Speaker 1: School of Business. I found this. I found some of
• 0:37
  Speaker 1: the work of of Scott Professor Galloway on YouTube and
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  Speaker 1: he's done a number of really interesting videos. He does
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  Speaker 1: a weekly video. But but the most fascinating thing I
• 0:49
  Speaker 1: saw of him was called the Four Horsemen of Technology, Apple, Amazon, Facebook,
• 0:54
  Speaker 1: and Google. And he did this presentation at a conference.
• 0:59
  Speaker 1: It was thing like nineties slides in fifteen minutes, and
• 1:02
  Speaker 1: it was really just a tour to force discussion of
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  Speaker 1: what's going on in branding, in retail, in technology, and
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  Speaker 1: it was really just an amazing um conversation. And so
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  Speaker 1: I saw this, I started doing some research. Uh, he's
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  Speaker 1: right here in n y U use, you know, ten
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  Speaker 1: minutes from from the Bloomberg studios, and so I invited
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  Speaker 1: him to be on the show, and to my great
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  Speaker 1: uh surprise, he said yes, And so we had this
• 1:32
  Speaker 1: conversation and he is one of the most fascinating knowledgeable
• 1:36
  Speaker 1: people when it comes to those areas things like luxury
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  Speaker 1: brands and marketing and the intersection of your your physical
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  Speaker 1: stores with your online sites, with your social and mobile engagements.
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  Speaker 1: And it's really quite a fascinating um conversation. We we
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  Speaker 1: covered so many different things. It's really so interesting and amazing.
• 1:59
  Speaker 1: And as you'll hear, at a certain point, it shifts
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  Speaker 1: from me, you know, doing the radio thing and asking
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  Speaker 1: questions and having him answer to just a real conversation
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  Speaker 1: about what is happening in the universe of technology and
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  Speaker 1: retail and branding and Amazon and Apple and Google and
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  Speaker 1: Facebook and Twitter and everything else. So I I really
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  Speaker 1: had a great time sitting and chatting with him. He's
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  Speaker 1: the sort of guy you would love to pull up
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  Speaker 1: next to um in a in a bar, sit down
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  Speaker 1: and have a beer and just talk about what's going on.
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  Speaker 1: And that's pretty much what we did. A little cappuccino
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  Speaker 1: and we were off to the races. So without any
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  Speaker 1: further ado, here is my conversation with Professor Scott Galloway
• 2:41
  Speaker 1: of n y U. This is Masters in Business with
• 2:50
  Speaker 1: Barry Ridholts on Bloomberg Radio. My guest today is Scott Galloway.
• 2:55
  Speaker 1: He's a professor of Digital and Brands at and while
• 2:59
  Speaker 1: you learn, is that the correct title professor of Marketing. UM.
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  Speaker 1: Welcome to Bloomberg. So before we get started, you may
• 3:09
  Speaker 1: not be well known to all of our listeners. Let
• 3:12
  Speaker 1: me go through your very very significant curriculum. Curriculum VITA
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  Speaker 1: bachelor's from u c l A and then an NBA
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  Speaker 1: from Berkeley. Currently Clinical Professor of Marketing, n y U
• 3:25
  Speaker 1: Stern School of Business. Author of the Digital i Q Index,
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  Speaker 1: a global ranking of prestige brands. Will talk about that
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  Speaker 1: in a little more detail. Named one of the world's
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  Speaker 1: fifty best business school professors, founder of numerous firms L two, rent,
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  Speaker 1: Envelope and Profit and named the World Economic Forums Global
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  Speaker 1: Leaders of Tomorrow, which is a hundred individuals under the
• 3:51
  Speaker 1: age of forty whose accomplishments have had an impact on
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  Speaker 1: the global level. You're also on the board or have
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  Speaker 1: served on the board of Directors of Eddie Bauer, the
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  Speaker 1: New York Times, Gateway Computer, and Berkeley's Hot School of Business.
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  Speaker 1: Did I skip anything or is that No? That's great? Thanks.
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  Speaker 1: So so let's talk a little bit about your background.
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  Speaker 1: First of all, why would you leave Sonny, California? For Yeah?
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  Speaker 1: It makes it makes no sense, right, That's one of
• 4:16
  Speaker 1: those things. Every time you're flying back into l a
• 4:18
  Speaker 1: X and you look around, you're getting your convertible, you think,
• 4:20
  Speaker 1: why did I ever leave? I just always wanted to
• 4:22
  Speaker 1: live in New York. You know what it's like. This
• 4:24
  Speaker 1: is if you're an energy, it's it's the center of
• 4:26
  Speaker 1: the world. Yeah, the helm of the bob sled, the
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  Speaker 1: tip of the spear of the greatest experiment. The density
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  Speaker 1: of culture, interesting people. Is a great place to live.
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  Speaker 1: I love San Francisco, did my graduate workout there. Start
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  Speaker 1: a bunch internet cominges. But it's a one industry town.
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  Speaker 1: It's tech l as in one industry town, it's entertainment.
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  Speaker 1: The thing one of the great things about New York
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  Speaker 1: is the currencies of power and success here are are multiple.
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  Speaker 1: There's a lot of different ways to kind of get
• 4:50
  Speaker 1: your groove on here and just just love it here.
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  Speaker 1: Oh sure, business investing, theater, publishing, television, real estate is
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  Speaker 1: just huge here, although it seems to be huge where
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  Speaker 1: if we're looking around the country. Yep. So you come
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  Speaker 1: to n y U as a professor, Um, what was
• 5:08
  Speaker 1: tell us a little bit about red envelope and profit
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  Speaker 1: do very different companies. Sure, So started out of Morgan Stanley,
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  Speaker 1: only real job I've ever had, and then I actually
• 5:17
  Speaker 1: got kind of sick, and when you get sick at
• 5:19
  Speaker 1: a young age, you reevaluate your forced maturity is kind
• 5:22
  Speaker 1: of forced on you and decided I didn't know what
• 5:24
  Speaker 1: I wanted to do, but you I didn't want to
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  Speaker 1: be an investment banker. So did what anyone who is
• 5:28
  Speaker 1: fairly ambitious and doesn't know what they want to do.
• 5:30
  Speaker 1: I went back to graduate school and then got very
• 5:32
  Speaker 1: inspired by a guy named David Ocker, who was considered
• 5:35
  Speaker 1: the father of modern branding UH, and started coming called
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  Speaker 1: Profit of Brand Strategy Firm, focused on his principles. We
• 5:41
  Speaker 1: grew that to about four people, really rewarding, but then
• 5:45
  Speaker 1: decided I didn't want to be in a services company.
• 5:47
  Speaker 1: I've always decided our thought of services company was really
• 5:49
  Speaker 1: a young man's business. You're kind of on your clients schedule,
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  Speaker 1: and then was fortunate enough to get swept up in
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  Speaker 1: the Internet era, started red Envelope, multi channel e commerce company,
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  Speaker 1: and then on the day of the I p O
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  Speaker 1: said this is great. I have some opportunities and some
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  Speaker 1: flexibilities with what I want to do with my life
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  Speaker 1: and decided to pursue there's kind of lifelong passion or
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  Speaker 1: dream and teach and change my life. Moved to New York,
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  Speaker 1: join the faculty n y U, and here we are.
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  Speaker 1: That's that's a huge, huge set of changes in a
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  Speaker 1: very short period of time. Yeah, it's it's but it's
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  Speaker 1: been a lot of fun. So so you briefly were
• 6:23
  Speaker 1: at Morgan Stanley, so you have some experience in the
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  Speaker 1: real world. How long have you been an n y
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  Speaker 1: U F I joined the Faculty n y U and
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  Speaker 1: two thousand and two, and it's been just it's been
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  Speaker 1: thirteen great years. Just feel exceptionally, exceptionally fortunate to get
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  Speaker 1: to teach at such a fantastic university. It's been, it's
• 6:38
  Speaker 1: it's just been wonderful. So let's talk a little bit
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  Speaker 1: about the Digital i Q Index. This is something I
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  Speaker 1: believe you were involved in creating. Was it two thousand
• 6:47
  Speaker 1: and ten. Is that right? Yeah, it's it was really accidental.
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  Speaker 1: You can't get very far in academia without doing research,
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  Speaker 1: and my background was in the e commerce. I thought,
• 6:55
  Speaker 1: there's there are metrics for return on equity and UH,
• 6:58
  Speaker 1: price earnings, carc quality with JD Powers, how many people
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  Speaker 1: watch a program with Nielsen, But there really isn't a
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  Speaker 1: measure or a benchmark for how a brand is doing
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  Speaker 1: across its entire digital footprint. So architect and an algorithm
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  Speaker 1: of eight hundred and fifty data points across site, digital marketing,
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  Speaker 1: social and mobile, and then applied it against a hundred
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  Speaker 1: brands and rank them, thinking it would be a piece
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  Speaker 1: of academic research. Within about forty eight hours of releasing
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  Speaker 1: it heard from about forty of the brands saying who
• 7:24
  Speaker 1: are you and why are you doing this? And recognized
• 7:27
  Speaker 1: there was a commercial opportunity. So I asked the dean
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  Speaker 1: if we could spin out the I P and start
• 7:31
  Speaker 1: a private enterprise called L two, and n y U
• 7:34
  Speaker 1: was very generous with us and and said fine, as
• 7:36
  Speaker 1: long as your support of M y U and UH.
• 7:39
  Speaker 1: And that's it was really the birth of an accidental
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  Speaker 1: business and now L two works with everyone from PNG
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  Speaker 1: and Uni Leaver to Coach Tiffany, Nike, Samsung. So it's
• 7:47
  Speaker 1: been a lot of fun. So you talk about looking
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  Speaker 1: at and evaluating a company across site, digital, social, mobile,
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  Speaker 1: that's a pretty broad yet inclusive set of of data points.
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  Speaker 1: It's the thinking behind that every place a consumer might
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  Speaker 1: come into contact with a brand, so all the touchpoints
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  Speaker 1: so and every brand has different strengths and weaknesses. And
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  Speaker 1: regardless of how much capital you have, the cruel truth
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  Speaker 1: of capitalism and investing in digital is you have to
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  Speaker 1: pick your punches. So even a home depot or a
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  Speaker 1: Sephora or a Vitan, organizations you would think would have
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  Speaker 1: a ton of resources, have to pick their punches. And
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  Speaker 1: the issue is you know what lever you're gonna pull.
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  Speaker 1: If you're really about increasing your percentage of sales online,
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  Speaker 1: you're gonna be more focused on side. If you're about
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  Speaker 1: signaling innovation to a younger consumer, it's probably gonna be
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  Speaker 1: around more around social. If you're trying to create a
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  Speaker 1: loyalty program that has tremendous uses digital to connective tissue
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  Speaker 1: between your store and your site, that's more about a
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  Speaker 1: loyalty program and a mobile phone in the store, So
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  Speaker 1: we're trying to create a benchmark sets the brands contract
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  Speaker 1: their strengths and weaknesses relative of their competitive set and
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  Speaker 1: help them shape the shape their digital roadmap and allocate
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  Speaker 1: their human creative financial capital more efficiently. Because everyone agrees
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  Speaker 1: that a better investment in digital is probably gonna get
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  Speaker 1: your great to return than did than investments in some
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  Speaker 1: other areas right now, but they don't know what they
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  Speaker 1: don't know. They really don't know where to start. So
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  Speaker 1: the ideas, how do you figure out how your digital
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  Speaker 1: capital allocation foots your of all corporate strategy and how
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  Speaker 1: do you drive stakeholder growth. I'm Barry rid Helps. You're
• 9:13
  Speaker 1: listening to Masters in Business on Bloomberg Radio. My special
• 9:16
  Speaker 1: guest today is Scott Galloway. He is a professor of
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  Speaker 1: Digital Brands and Marketing at n y U and I
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  Speaker 1: love your conversations. By the way, the way I found
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  Speaker 1: out about you was the Four Horsemen video which is
• 9:30
  Speaker 1: all over YouTube, and some of the conversations you've had
• 9:34
  Speaker 1: about retail and the deep dive you do into that space,
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  Speaker 1: which I find to be absolutely fascinating. So let's let's
• 9:41
  Speaker 1: jump into retail. I love this quote of yours. You
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  Speaker 1: said retail stores are the new black explained so in
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  Speaker 1: the turn in the world of e commerce, I believe
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  Speaker 1: the pure play commerce has no future. That almost every
• 9:54
  Speaker 1: pure play commerce company is either going to open stores
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  Speaker 1: or go out of business. That's a pretty radical position,
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  Speaker 1: isn't it. Well? I would defend I think it's defensible.
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  Speaker 1: I would I would challenge anyone to name the pure
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  Speaker 1: plea e commerce company, and and and and let's talk
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  Speaker 1: about whether this is a sustainable business or not. And effectively,
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  Speaker 1: the consumer always gets what she wants. And there's there's
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  Speaker 1: three doors here. There's a great e commerce site that
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  Speaker 1: just has an e commerce offering. There's a great retail
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  Speaker 1: concept with just bricks and mortar or maybe a week
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  Speaker 1: e commerce site. And then there's door number three, a Saphora,
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  Speaker 1: william Snowmer and Macy's that have great stores, grat e
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  Speaker 1: commerce and use digital as a connective tissue for around
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  Speaker 1: a loyalty program, and the consumer wants door number three.
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  Speaker 1: I think the future looks more like Macy's and Williams
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  Speaker 1: Snowman than it looks like Amazon or not a Porte
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  Speaker 1: or Guilt. And where does eBay fit into that? Ecosystem.
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  Speaker 1: I wouldn't describe you as a pure play retail. I
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  Speaker 1: think of them as a marketplace, just to get between
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  Speaker 1: a berness. They're not taking inventory there, They're they're a marketplace.
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  Speaker 1: And speaking of inventory, you another quote of yours. We
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  Speaker 1: have these incredibly flexible, robust warehouses cold stores explain. So
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  Speaker 1: I've been a big fan of Amazon, and I'm actually
• 11:03
  Speaker 1: going a little bit bearish on it because I think
• 11:06
  Speaker 1: it's I think what Amazon has missed a little bit
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  Speaker 1: is that in terms of consumer behavior, consumers value convenience
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  Speaker 1: over speed, and that is if you were to order,
• 11:16
  Speaker 1: say you decided, I'm gonna spend more time outside at
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  Speaker 1: my home in the North Fork and I need some
• 11:22
  Speaker 1: some block, so I'm going to order Laroche Puss, which
• 11:25
  Speaker 1: is this fantastic und block. You neither order an Amazon
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  Speaker 1: and have it delivered to you in a day four hours,
• 11:30
  Speaker 1: two hours if they have their way, or you could
• 11:32
  Speaker 1: order it at sephora dot com and then bomb down
• 11:35
  Speaker 1: the elevator here and pick it up with the Sephora
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  Speaker 1: two blocks away anytime between the hours of ten and
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  Speaker 1: a PM. Click and collect or buy online pickup in
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  Speaker 1: store is probably the biggest phenomenon retail in the last
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  Speaker 1: couple of years, we didn't see a company it's coming.
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  Speaker 1: It sounds very base, but it's hugely convenient to order
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  Speaker 1: online and pick up in store. And these if it's
• 11:53
  Speaker 1: in the store, why do I have to order online?
• 11:55
  Speaker 1: Why could I just walk two blocks and do that?
• 11:57
  Speaker 1: Because people like to get the information, they like to
• 11:59
  Speaker 1: do the brow saying. Emotional and intellectual purchasing has moved
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  Speaker 1: from the store to online. So for traffic to retail
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  Speaker 1: down and five years by retail has grown two or
• 12:11
  Speaker 1: three percent a year. But what happens the following The
• 12:14
  Speaker 1: browsing and buying has moved online, The fulfillment, the transaction
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  Speaker 1: and the pickup is still in the store. Think about cars.
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  Speaker 1: Think about when you and I were a kid, we
• 12:22
  Speaker 1: used to go with our dad to that one area
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  Speaker 1: town where we look at a car we'd actually kicked
• 12:26
  Speaker 1: the tires, take a car and it's test drive, look
• 12:28
  Speaker 1: at those brochures and negotiate the transaction. The number of
• 12:31
  Speaker 1: people now who have actually skipped the test drive has
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  Speaker 1: doubled just in the last five years. We can go online.
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  Speaker 1: Cargoes are prohibited from actually selling online, but effectively we
• 12:41
  Speaker 1: buy online. Now we go to a great configurator, we
• 12:44
  Speaker 1: start getting served ads by other automobile companies. We can
• 12:47
  Speaker 1: go to Audi dot com, build our a six down
• 12:49
  Speaker 1: to the leather piping on the seat. We can find
• 12:51
  Speaker 1: out how much the dealer paid for it. We can
• 12:54
  Speaker 1: get user reviews, and then we go into the dealership
• 12:57
  Speaker 1: armed with the exact car. We want the exact price range.
• 12:59
  Speaker 1: We know we should. So car dealerships are no longer
• 13:01
  Speaker 1: selling cars. They're really just warehouses fulfilling and consummating the transaction.
• 13:06
  Speaker 1: That's a great metaphor for what's happening in retail. Browsing
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  Speaker 1: and decision making have moved online, even if the transaction
• 13:13
  Speaker 1: and the pickup are happening in retail. But bricks and
• 13:15
  Speaker 1: mortar plays a great, you know, really important role. It's
• 13:18
  Speaker 1: a great way to pick up stuff. It's a great
• 13:21
  Speaker 1: place to learn more about the transaction. It's a great
• 13:23
  Speaker 1: place to brand. These are powerful branding vehicles, these these
• 13:28
  Speaker 1: brick and mortar stores. So I think the new black
• 13:31
  Speaker 1: and e commerce is stores. A lot of them are
• 13:32
  Speaker 1: opening bricks and mortar. So you talk about um, the
• 13:35
  Speaker 1: biggest challenger to Amazon is stores like Macy's and I've
• 13:40
  Speaker 1: noticed over the past few years in terms of marketing
• 13:44
  Speaker 1: and displays within the stores. And I know they own
• 13:46
  Speaker 1: a variety of other stores. I think they own Lord
• 13:48
  Speaker 1: and Taylor or Bloomingdale's or some combination of um. But
• 13:53
  Speaker 1: I've I've noticed that they've really gotten very savvy about
• 13:57
  Speaker 1: their online and you show up at store, Hey I
• 14:00
  Speaker 1: have I like this, but you don't have it in black,
• 14:03
  Speaker 1: and you don't have it in a large They're like, oh,
• 14:05
  Speaker 1: we'll ship it to you for free. That's a new
• 14:07
  Speaker 1: thing from them, that thinking like an e commerce company,
• 14:11
  Speaker 1: not like a well we'll get a delivery in six
• 14:13
  Speaker 1: months and you can come check us out. Then. Yeah.
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  Speaker 1: The most inspiring companies in retail for the last five
• 14:17
  Speaker 1: years haven't been Amazon or Netaporte. It's been Macy's in Nordstrom.
• 14:21
  Speaker 1: The crisis is a terrible thing to waste. Five years ago,
• 14:24
  Speaker 1: I advise Hedgephones and a large read came to us
• 14:27
  Speaker 1: the fund I was advising, and said, we want to
• 14:29
  Speaker 1: take a control position and Macy's or a large position,
• 14:32
  Speaker 1: and advocate for them to shut it down and sell
• 14:34
  Speaker 1: the underlying real estate, which is worth more than the
• 14:36
  Speaker 1: stock right now. They saw the future was not where
• 14:40
  Speaker 1: they were headed, and they made massive investments and leverage
• 14:43
  Speaker 1: their operational competence, their capital to cash flow to build
• 14:47
  Speaker 1: unbelievably strong e commerce offerings, connected that to their stores
• 14:51
  Speaker 1: and have fantastic multi channel offerings. Macy Stock is outperformed
• 14:55
  Speaker 1: Amazon over the last one, three and five years. Nordstrom
• 14:58
  Speaker 1: Stock is outperformed and Amazon the last several years. These
• 15:01
  Speaker 1: are incredible companies that have embraced the digital future and
• 15:05
  Speaker 1: have proven basically everybody wrong the future really is about
• 15:08
  Speaker 1: multi channel Macy's and Nordstrom's, I would argue most inspirational
• 15:12
  Speaker 1: retailers and have rewarded their shareholders of the last last
• 15:15
  Speaker 1: several years. So much for first mover advantage, at least
• 15:18
  Speaker 1: when it comes to Amazon. Yeah, Leonard Lottar at est
• 15:21
  Speaker 1: lottor another unbelievable company, Uh you know said it the
• 15:24
  Speaker 1: second mouse off and gets the cheese if you really
• 15:26
  Speaker 1: look at uh. Peter Golder, who's a where's a colleague
• 15:30
  Speaker 1: at Stern and now as a call as now as
• 15:31
  Speaker 1: a colleague at Dartmouth is probably the best scholar under
• 15:34
  Speaker 1: the age of fifty on the world of innovation. We
• 15:35
  Speaker 1: talked about Clay Christenson. We talk about but but Peter Golder,
• 15:38
  Speaker 1: in my opinion, is the kind of future of innovations
• 15:40
  Speaker 1: relates to academia, and the body of his study basically says,
• 15:43
  Speaker 1: if you talk about return to stakeholders, it's not the
• 15:45
  Speaker 1: first mover, it's the second. The true innovator. The guy
• 15:48
  Speaker 1: or the gal that goes first usually doesn't serve shareholders
• 15:51
  Speaker 1: that well. It's the person that comes in second. Apple.
• 15:54
  Speaker 1: Apple has been second at most stuff. They're not a
• 15:56
  Speaker 1: true innovator in the definition of the word. They weren't
• 15:59
  Speaker 1: the first into into object are in computing, they weren't
• 16:01
  Speaker 1: the first MP three player. They weren't the first mobile phone.
• 16:05
  Speaker 1: But they look at something, they improve upon it. They wait,
• 16:07
  Speaker 1: and they come in and make it more user friendly.
• 16:10
  Speaker 1: The department stores, the best retailers have often been the
• 16:12
  Speaker 1: second mover. So let's talk a little bit about brand
• 16:16
  Speaker 1: versus products. Because you've discussed this, you know what's easy
• 16:20
  Speaker 1: to fix a good product with a bad brand, or
• 16:22
  Speaker 1: a bad product with a good brand. I think it's changed.
• 16:25
  Speaker 1: I think and and I've devoted my life from a
• 16:28
  Speaker 1: majority of my professional life around brand. I've made a
• 16:30
  Speaker 1: nice living from it. But I think the sun has
• 16:32
  Speaker 1: passed midday on what I call the era brand the
• 16:34
  Speaker 1: eighties and nineties, the primary way to drive a lot
• 16:36
  Speaker 1: of shareholder value, Barry, was to have an average to
• 16:39
  Speaker 1: good product and then hire the best talent around brand
• 16:42
  Speaker 1: and create unbelievable intangible associations. Are a great brand, an
• 16:46
  Speaker 1: average shoe, an average cup of coffee, and the an
• 16:49
  Speaker 1: average beer and the best brand in the world. But
• 16:51
  Speaker 1: what do all these technological innovations and platforms allow us
• 16:54
  Speaker 1: to do? They allow us to share great ideas that
• 16:57
  Speaker 1: this show is generally better than other shows. It's going
• 17:00
  Speaker 1: to spread faster than anything before. I'm Barry Ridholds. You're
• 17:04
  Speaker 1: listening to Masters in Business on Bloomberg Radio. My special
• 17:07
  Speaker 1: guest today is Professor Scott Galloway of n y U
• 17:10
  Speaker 1: Stern School and L two Digital. Let's talk a little
• 17:13
  Speaker 1: bit about Amazon. Um, what is it that they're doing
• 17:17
  Speaker 1: wrong with their last mile strategy? So, first off, incredible
• 17:21
  Speaker 1: company and uh, Jeff Bezos arguably the best you have
• 17:25
  Speaker 1: the last ten years. I think they're two. Primary advantage
• 17:27
  Speaker 1: that has cost some tens of billions of dollars to
• 17:30
  Speaker 1: to erect have been this last mile, incredible last mile
• 17:33
  Speaker 1: infrastructure such that they can supposedly within twenty four months
• 17:36
  Speaker 1: at about fifty percent of American households of everything they
• 17:39
  Speaker 1: buy within two or four hours, which is incredible. And
• 17:42
  Speaker 1: then one click paying. I think we we overlook what
• 17:45
  Speaker 1: an incredible innovation is to be able to just touch
• 17:48
  Speaker 1: something and know that it's on its way. However, very
• 17:51
  Speaker 1: I would argue that some recent innovations erode those competitive advantages,
• 17:54
  Speaker 1: specifically Apple Pay. Some of the things Google is doing
• 17:57
  Speaker 1: are going to make want that one click payment advantage
• 18:00
  Speaker 1: a road in value. I think other people are catching up.
• 18:02
  Speaker 1: I think the most unusual or the thing that none
• 18:06
  Speaker 1: of us are expecting and and there's still some time
• 18:08
  Speaker 1: to see if it plays out, is actually believe Uber
• 18:11
  Speaker 1: is gonna give a lot of retailers the opportunity to
• 18:14
  Speaker 1: catch up very fast around the last mile without making
• 18:17
  Speaker 1: the same staggering investment Amazon has having to make it.
• 18:20
  Speaker 1: I think effectively, Uber has created a vascular system for business.
• 18:24
  Speaker 1: And when you have someone a smart person inside their
• 18:27
  Speaker 1: own car that they have paid for it without a union,
• 18:29
  Speaker 1: without without a uniform, and by by the way, I'm
• 18:32
  Speaker 1: not sure that's a good thing without health insurance. You're
• 18:34
  Speaker 1: effectively giving every retailer and every business in the world
• 18:37
  Speaker 1: that last mile competence that cost Amazon billions of dollars
• 18:41
  Speaker 1: for a fraction of the cost. So in some I
• 18:44
  Speaker 1: think the Amazon advantages, those two advantages are slowly being
• 18:48
  Speaker 1: eroded by other innovations. Let's talk a little bit about
• 18:51
  Speaker 1: both those things. I don't really see what the big
• 18:54
  Speaker 1: deal about one click is. I'll take the other side
• 18:56
  Speaker 1: because I've been on Amazon for well almost twenty years,
• 19:01
  Speaker 1: I want to say, and when I go to buy
• 19:06
  Speaker 1: something and I'm an Amazon Prime member, I kicking and screaming,
• 19:10
  Speaker 1: finally did it, and since then just love it the
• 19:13
  Speaker 1: past couple of years. So when I buy something, it's
• 19:16
  Speaker 1: which credit card am I paying? Is it the office
• 19:18
  Speaker 1: is at home? Which of the home cards is it?
• 19:20
  Speaker 1: Is it going to the office, is it going to
• 19:22
  Speaker 1: the house. Is it going to a third destination? So
• 19:24
  Speaker 1: for me, one click really never because I always and
• 19:30
  Speaker 1: what's the big deal? I select one of these four
• 19:33
  Speaker 1: credit cards, I select one of these four destinations. It's
• 19:36
  Speaker 1: it's not terrible. I love the idea of Uber being
• 19:40
  Speaker 1: that last mile. But let's think about that. The closest
• 19:43
  Speaker 1: Bloomingdale's to my house is. I live all the way
• 19:46
  Speaker 1: in the middle of nowhere on the north shore from
• 19:48
  Speaker 1: Long Island, but it's still twenty minutes away. If I
• 19:51
  Speaker 1: order something from Amazon and with Prime, it's usually there
• 19:54
  Speaker 1: within two days. I don't know if they're gonna get
• 19:56
  Speaker 1: it there all that much sooner. But I'm hating, you know,
• 20:01
  Speaker 1: I need something here? Does it's here in two days?
• 20:02
  Speaker 1: There's nothing I need right now that I can't drive
• 20:06
  Speaker 1: ten minutes and get so anything I'm watering, I'll get
• 20:09
  Speaker 1: here when it gets here. If I want something from
• 20:12
  Speaker 1: Bloomingdale's for them to send an Uber driver to my house.
• 20:15
  Speaker 1: If I was going to take an Uber ride to
• 20:18
  Speaker 1: my house, um, that would cost you know, thirty bucks
• 20:22
  Speaker 1: or so. So is there gonna be that much of
• 20:26
  Speaker 1: an infrastructure of deliveries that they're not just dropping off
• 20:29
  Speaker 1: one package, that dropping off ten things, and it's essentially
• 20:32
  Speaker 1: a rounding era to to a store like that. So
• 20:35
  Speaker 1: the short answer is no. But I would argue Barry
• 20:37
  Speaker 1: that the war of shareholder value isn't gonna be one
• 20:39
  Speaker 1: or lost over you. I think you're the anomaly, and
• 20:42
  Speaker 1: that I think the majority of shareholder and wealth creation
• 20:44
  Speaker 1: is going to be around serving people in urban areas, because,
• 20:47
  Speaker 1: to be blunt, that's where the majority of the wealth
• 20:51
  Speaker 1: is moving towards. I think we're creating a set of
• 20:53
  Speaker 1: supercities where the density of income and disposable income is
• 20:57
  Speaker 1: aggregating around a small set of supercity. So I think
• 21:00
  Speaker 1: Amazon still works for you. Quite frankly, I don't think
• 21:02
  Speaker 1: it works for Amazon. I think it's gonna be expensive
• 21:04
  Speaker 1: for them to deliver to you. They're Amazon's shipping costs
• 21:06
  Speaker 1: for six billion last year. They're going up a year.
• 21:10
  Speaker 1: They took him three billion in fees. That's not sustainable
• 21:13
  Speaker 1: even with Amazon's cost cheap cost of capital. You want
• 21:15
  Speaker 1: to see a celebrity deathmatch, wait till this holiday is
• 21:18
  Speaker 1: as Walmart has announced a prime light competitor at fifty bucks,
• 21:22
  Speaker 1: and they have stores. The thing that epitomizes this battle
• 21:25
  Speaker 1: in the advantage Walmart right now will have over Amazon.
• 21:28
  Speaker 1: As Amazon. Walmart has this great ad that says free
• 21:30
  Speaker 1: delivery if you pick it up in store. And do
• 21:33
  Speaker 1: you know a percentage of the population lives within a
• 21:35
  Speaker 1: drive of Walmart A lot that's not exactly delivery that's
• 21:39
  Speaker 1: going to the store and shopping. Yeah, but if if
• 21:41
  Speaker 1: it's waiting for you, it's packaged and you can bomb
• 21:44
  Speaker 1: right in and bomb right out. My prediction Amazon is
• 21:46
  Speaker 1: going to buy a gas station company. As fossil fuel
• 21:49
  Speaker 1: has become less relevant in our life, we're used to
• 21:51
  Speaker 1: bombing in left and right. Just what's happened in London.
• 21:55
  Speaker 1: They took the ticket kios that where people no longer
• 21:58
  Speaker 1: sell tickets. People can order their grosser reas it a
• 22:00
  Speaker 1: tube station and have them waiting for them at their
• 22:03
  Speaker 1: destination tube station. People don't mind picking up stuff. Was
• 22:06
  Speaker 1: it a missed opportunity for Amazon not to have grabbed
• 22:09
  Speaker 1: radio Shack with their thousands of stores. I think that
• 22:11
  Speaker 1: would have been a really interesting combination. But Amazon is
• 22:14
  Speaker 1: so smart, they have such such incredible access to capital.
• 22:18
  Speaker 1: I think they're going to do something traumatic. I wouldn't
• 22:19
  Speaker 1: be surprised if they buy the post office or take
• 22:21
  Speaker 1: a major investment in the post office. That's that's a problem.
• 22:24
  Speaker 1: Look what's happening. If you see job growth and job declines,
• 22:28
  Speaker 1: most of the A lot of the job declines are
• 22:29
  Speaker 1: coming out of municipal governments and government employees who are
• 22:32
  Speaker 1: under constant pressure. I wouldn't be surprised that Amazon strikes
• 22:35
  Speaker 1: to deal with the government to take over their less
• 22:37
  Speaker 1: performing post offices. That would be astonishing. I'm Barry ritt Holts.
• 22:41
  Speaker 1: You're listening to Master's in Business on Bloomberg Radio. My
• 22:43
  Speaker 1: guest today is Scott Galloway. He is a professor of
• 22:46
  Speaker 1: Digital marketing and Brands at n y U Stern. I
• 22:50
  Speaker 1: really love the video you did talking about the four
• 22:53
  Speaker 1: horsemen of technology, and um, we already discussed Amazon. Let's
• 22:57
  Speaker 1: jump right into Facebook. You call um first. You note
• 23:02
  Speaker 1: how Facebook has changed the taxonomy of relationships, which is
• 23:06
  Speaker 1: very significant for the way people interact socially. But the
• 23:10
  Speaker 1: question that I the statement I really liked was Facebook
• 23:13
  Speaker 1: has pulled off the greatest bait and switch in history.
• 23:17
  Speaker 1: Explain what you mean by that? Oh? Absolutely. Facebook convinced
• 23:20
  Speaker 1: some of the biggest brands in the world to spend
• 23:21
  Speaker 1: tens of millions of dollars to build these communities, uh,
• 23:24
  Speaker 1: you know, likes and fans, and these brands did it
• 23:28
  Speaker 1: because the notion was you'll get to own this community
• 23:30
  Speaker 1: and they'll be captive. What an unbelievable asset. But Facebook
• 23:33
  Speaker 1: then said, just kidding, put a walled garden around it
• 23:35
  Speaker 1: and in the organic reach on Facebook, meaning the percentage
• 23:39
  Speaker 1: of messages that channelle puts out to their community that
• 23:41
  Speaker 1: actually reached the channel community is now six percent, meaning
• 23:44
  Speaker 1: only one in sixteen messages reached them unless barry, they
• 23:49
  Speaker 1: pay and they advertise. So this was an incredible bait
• 23:53
  Speaker 1: and switch. These are not These are not communities owned
• 23:55
  Speaker 1: by the brands. They're owned by Facebook. Same things happened,
• 23:58
  Speaker 1: It gonna happen on Instagram or right now. It's a
• 24:01
  Speaker 1: organic reach. They will figure out a way to put
• 24:02
  Speaker 1: a paywall around it. But I'm shocked there isn't more.
• 24:06
  Speaker 1: If you will outrage, I admire Facebook for being able
• 24:09
  Speaker 1: to pull this off, but I think we forget how
• 24:11
  Speaker 1: important it is to be liked or cute as an organization.
• 24:15
  Speaker 1: Steve Bomber and Bill Gates were not likable or cute,
• 24:17
  Speaker 1: Sir again, Larry more likable, more cute. But the regulators
• 24:20
  Speaker 1: are getting angry at them. Facebook lean in the hoodie.
• 24:24
  Speaker 1: They have gotten a ton of license from Corporate America
• 24:27
  Speaker 1: and regulators. In my view, that has given them a
• 24:30
  Speaker 1: lot of leeway. I think what they've done has been
• 24:32
  Speaker 1: exceptional in terms of their ability to say one thing
• 24:35
  Speaker 1: and then do another for the for the benefit of
• 24:37
  Speaker 1: their own shareholders. And by the way, I say that
• 24:39
  Speaker 1: as an as an admirer, what they've done has been incredible.
• 24:42
  Speaker 1: And yet there's been issues about privacy and issues about
• 24:45
  Speaker 1: people's data. How does that? How do they as a
• 24:47
  Speaker 1: company deal with that or do they just shrug it
• 24:50
  Speaker 1: off and say, hey, man, get used to it. Privacy
• 24:52
  Speaker 1: is a thing of the past. Anyone who's talking about
• 24:54
  Speaker 1: privacy is typically someone like you or me, a guy
• 24:58
  Speaker 1: over the age of fifty. Young people don't seem that
• 25:00
  Speaker 1: concerned with privacy. At the end of the day, the
• 25:02
  Speaker 1: consumer behavior indicates one thing that people like to have
• 25:05
  Speaker 1: their privacy violated as long as there's a coupon or
• 25:07
  Speaker 1: more relevant offering. At the end of it, we want relevance,
• 25:10
  Speaker 1: and part of that relevance is observing our data stream
• 25:13
  Speaker 1: and then and then responding with a more relevant offer. Now,
• 25:17
  Speaker 1: the identity war is the secret war taking place online
• 25:20
  Speaker 1: and Facebook is winning, and that is the ability to
• 25:22
  Speaker 1: attach a specific identity with specific actions that you can
• 25:25
  Speaker 1: serve more relevant ads and charge more for those relevant ads.
• 25:29
  Speaker 1: Google cannot track specific identity on their core platform, the
• 25:33
  Speaker 1: search engine, and it makes sense. Neither you nor I
• 25:36
  Speaker 1: are comfortable with the idea of having our name and
• 25:38
  Speaker 1: our picture above a list of everything we have typed
• 25:40
  Speaker 1: into that query box. Right, all of us have typed
• 25:43
  Speaker 1: some crazy stuff into that box we would rather people
• 25:45
  Speaker 1: not know about. However, we're not as that's what the
• 25:47
  Speaker 1: incognito window. Yeah, that's where you're you know you you
• 25:51
  Speaker 1: you you erase your cookies. But with Facebook, for some reason,
• 25:54
  Speaker 1: we're not as uncomfortable with Facebook attaching our actions to
• 25:58
  Speaker 1: our specific identity on Facebook. So as a result, Facebook
• 26:01
  Speaker 1: is now tracking more identity data than Google and is
• 26:05
  Speaker 1: able to use their platform across the wider reb web
• 26:08
  Speaker 1: to serve more relevant targeted ads. Facebook is winning the
• 26:12
  Speaker 1: identity war now. I find I'll give you a perfect
• 26:15
  Speaker 1: example of something online that I find creepy and I
• 26:18
  Speaker 1: don't know if other people find the same thing. So
• 26:21
  Speaker 1: my wife and I were literally in a um florist
• 26:25
  Speaker 1: nursery um recently, and we see this hanging chair, beautiful
• 26:31
  Speaker 1: hanging chair. It's got cushions, it's really really odd, interesting
• 26:34
  Speaker 1: shape and scene price, and I just make note who
• 26:39
  Speaker 1: makes it? Necessarily let me look at it online? Where
• 26:42
  Speaker 1: it's a third cheaper and so okay. So now I
• 26:45
  Speaker 1: just want to get a sense of what the markup was.
• 26:46
  Speaker 1: I know with this more or less should go for
• 26:49
  Speaker 1: and I forget about it. Now wherever I go ads
• 26:52
  Speaker 1: for that chair of popping up and it's like, no, no,
• 26:55
  Speaker 1: I'm done with that. I'm moving on. Why are you
• 26:58
  Speaker 1: following me around the Internetive it gets annoying. It's contextual retargeting.
• 27:02
  Speaker 1: If you go to an Audie site, you're gonna start
• 27:03
  Speaker 1: getting served ads by Alexis and Mercedes because it looks
• 27:06
  Speaker 1: as if you're in the market for a car. Most
• 27:07
  Speaker 1: consumers actually like it. Most consumers rather have a relevant
• 27:10
  Speaker 1: ad on the right rail or their top. That's exactly
• 27:13
  Speaker 1: where most people. Most people actually like that. Embrace it.
• 27:18
  Speaker 1: The thing you talked about. The The other point is
• 27:20
  Speaker 1: show rooming. That is going in and trying to find
• 27:22
  Speaker 1: a different price. And there's been a lot of popular
• 27:24
  Speaker 1: press that this is bad for retailers. The majority of
• 27:26
  Speaker 1: the research shows when people pull out their phone and
• 27:28
  Speaker 1: price compare, they not only end up buying, they often
• 27:31
  Speaker 1: end up buying more because typically what they find, except
• 27:33
  Speaker 1: for the retailer you were in, they typically find they're
• 27:36
  Speaker 1: getting it around the best price for a good price,
• 27:38
  Speaker 1: and then they start reading news reviews, finding more products. Actually,
• 27:41
  Speaker 1: web rooming, being in a store and using your phone
• 27:45
  Speaker 1: is a creative to the host retailer. Really, that's fascinating.
• 27:48
  Speaker 1: I know that at one point in time best Buy
• 27:50
  Speaker 1: was a little discouraging them. Yeah, I think they've since
• 27:53
  Speaker 1: changed their tune. They have and only look at best Buy.
• 27:56
  Speaker 1: That's a great example of the war of how stores
• 27:58
  Speaker 1: are new black. If you order a flat screen TV,
• 28:01
  Speaker 1: it's gonna be it's gonna get to you faster if
• 28:03
  Speaker 1: you order from best Buy, because they're going to fulfill
• 28:05
  Speaker 1: it out of their store in East Hampton or some
• 28:07
  Speaker 1: some some store out there. Then Amazon will get it
• 28:10
  Speaker 1: to you because they're using these unbelievably robust, flexible warehouses
• 28:13
  Speaker 1: called stores. That that's amazing. So now let's talk a
• 28:16
  Speaker 1: little bit about Google, and I love you quote about Google.
• 28:19
  Speaker 1: It's the closest thing to God. You ask a question
• 28:22
  Speaker 1: and you get an answer. So how is Google losing
• 28:26
  Speaker 1: if we consider them God like? Sure? So when I
• 28:30
  Speaker 1: say God, you know, when what do you do? When
• 28:32
  Speaker 1: you pray? You send up information or a question hoping
• 28:35
  Speaker 1: that a higher source that's smarter than you will send
• 28:37
  Speaker 1: it back an answer. Right, is my kid going to
• 28:39
  Speaker 1: be Okay? Now you go onto Google and say symptoms
• 28:42
  Speaker 1: and treatment of croup, right, and it gives you back
• 28:44
  Speaker 1: what's going on? So I think it is somewhat godlike. Now,
• 28:47
  Speaker 1: having said that, I think that Google is going to
• 28:50
  Speaker 1: decline in value and influence. Why because there are one
• 28:53
  Speaker 1: dimensional company that hasn't had any success branching out much
• 28:57
  Speaker 1: beyond Android or Gmail nine percent of the revenues of
• 29:01
  Speaker 1: the profit from the search platform. Also, at the end
• 29:04
  Speaker 1: of the day, Bury the way it summarized it is
• 29:06
  Speaker 1: that this rapid change to a mobile world is not
• 29:09
  Speaker 1: good for Google. On a mobile phone, of our time
• 29:12
  Speaker 1: done in app, were less likely to search when we're
• 29:15
  Speaker 1: in app, which is not good for Google. A lot
• 29:17
  Speaker 1: of competitors popping up a billion queries a day on
• 29:20
  Speaker 1: Facebook of all products, searches now start on Amazon. So
• 29:23
  Speaker 1: that's so there were dominant, their dominant market share starting
• 29:27
  Speaker 1: to show some signs of weakness and cost per click
• 29:30
  Speaker 1: is going down and as a result, profits and revenues
• 29:33
  Speaker 1: have their profit and revenue growth. If you will have
• 29:36
  Speaker 1: have stalled, this is a one dimensional company, an unbelievable
• 29:40
  Speaker 1: revolutionary product. But I think my prediction is you're gonna
• 29:43
  Speaker 1: see a couple more minute earnings misses, and all of
• 29:45
  Speaker 1: a sudden, that company is going to find focus again.
• 29:47
  Speaker 1: The self driving cars, the broadband blimps, the wearables are
• 29:51
  Speaker 1: going to go away. What about this new app cold Now,
• 29:54
  Speaker 1: I don't know how familiar are with that that essentially
• 29:56
  Speaker 1: hovers over the whole operating system, and even within apps
• 30:01
  Speaker 1: brings up that exact sort of search behavior you would
• 30:04
  Speaker 1: discuss them. So you could never count Google out. They're
• 30:09
  Speaker 1: just they human capital, the people, the culture, just a
• 30:13
  Speaker 1: remarkably innovative company. But based on where they are now
• 30:16
  Speaker 1: relative their valuation in the marketplace, I think they have
• 30:19
  Speaker 1: some substantial competitive threats. And the thing about Google versus
• 30:23
  Speaker 1: an Apple or a traditional retailer is your one click
• 30:26
  Speaker 1: away from going to a competitor. So I think Google,
• 30:28
  Speaker 1: on a risk adjusted basis, has greater risk than some
• 30:32
  Speaker 1: of the other guys. And I think they're gonna leak
• 30:34
  Speaker 1: market share to Facebook. We didn't talk about YouTube everybody.
• 30:36
  Speaker 1: I just circled that question. Everybody talks about our YouTube
• 30:39
  Speaker 1: is gonna disrupt TV. I think Facebook is going to
• 30:41
  Speaker 1: disrupt YouTube for the first time ever. There are now
• 30:44
  Speaker 1: more native videos uploaded to the Facebook platform than links
• 30:47
  Speaker 1: to YouTube. I think you're gonna see Facebook start to
• 30:49
  Speaker 1: garner more and more share of our time in terms
• 30:52
  Speaker 1: of how how we watch video. I think it's moving
• 30:54
  Speaker 1: to Facebook. That's interesting since since you mentioned Apple as
• 30:58
  Speaker 1: the fourth enforceman, let stalk a little bit about Apple,
• 31:01
  Speaker 1: which you call a luxury brand, not so much a
• 31:04
  Speaker 1: technology dent. It's been the worst, it's been the worst
• 31:07
  Speaker 1: or the best house in the worst neighborhood for a
• 31:09
  Speaker 1: long time. And that's a tech hardware. That's just a
• 31:12
  Speaker 1: bad business, low margin. And they decided very Dell. Who
• 31:15
  Speaker 1: else is in that space. I was on the board
• 31:17
  Speaker 1: of Gateway Computer. I mean, it's just a difficult Our margins.
• 31:21
  Speaker 1: Our margins of Gateway were six percent. Try and operate
• 31:23
  Speaker 1: a business on six percent margins. It's just computer hardware.
• 31:26
  Speaker 1: It's just really difficult. They have effectively moved down the tour.
• 31:29
  Speaker 1: So we only do three things in business. We very
• 31:32
  Speaker 1: we appeal to the brain, rational decisions, low margin, transportation, food,
• 31:36
  Speaker 1: basic shelter. We appeal to the heart choosing moms choose
• 31:39
  Speaker 1: Jeff P. And G figured out that we're social animals.
• 31:42
  Speaker 1: The biggest predictor of life expectancy is how many people
• 31:45
  Speaker 1: in our life we love. It's not how fat or
• 31:46
  Speaker 1: how skinn you are. We how much we smoke. You take.
• 31:49
  Speaker 1: If you're new a new mother, you're gonna live. If
• 31:51
  Speaker 1: you're taking care of your parents, you're more likely to live.
• 31:53
  Speaker 1: P ANDNG figured that out post Worttle or two and said,
• 31:56
  Speaker 1: if you wash your kids in clothes and tied detergent,
• 31:59
  Speaker 1: you love them more. We have a need to love,
• 32:02
  Speaker 1: and and CpG firms tapped into that and then just
• 32:05
  Speaker 1: move down to the tour. So you go to the
• 32:06
  Speaker 1: second most powerful instinct in the world, and that's reproduction,
• 32:09
  Speaker 1: the self expressive benefit. The watch I'm wearing costs eight
• 32:12
  Speaker 1: hundred bucks. I paid a lot more to wear it
• 32:15
  Speaker 1: because I'm trying, in a vain attempt to intimate Italian
• 32:17
  Speaker 1: masculinity to the rest of the world, and on a
• 32:19
  Speaker 1: very base level, and I don't like to admit this.
• 32:22
  Speaker 1: I think I'm trying to signal to the opposite sex
• 32:24
  Speaker 1: that if you mate with me, your kids are more
• 32:26
  Speaker 1: likely to survive than if you mate with someone who's
• 32:28
  Speaker 1: wearing a Swatch watch, and I don't think in the
• 32:30
  Speaker 1: business world we're very honest or open about how strong
• 32:33
  Speaker 1: self expressive benefit is. Tesla is not an environmental car,
• 32:36
  Speaker 1: as an attempt to signal to the opposite sex. And
• 32:38
  Speaker 1: you can afford a hundred dollar car. Women were ergonomically
• 32:42
  Speaker 1: impossible six d dollar shoes because they're trying to solicit
• 32:45
  Speaker 1: inbound offers from those same men. I realize how base
• 32:48
  Speaker 1: and how awful that sounds, but it's the core of evolution,
• 32:51
  Speaker 1: and it's what has driven the best sector in the world.
• 32:53
  Speaker 1: Barry the luxury sector, Eschmont, larger market Captain, Deutsche Telecom
• 32:58
  Speaker 1: Este Lot or larger market capped w p P. Apple
• 33:01
  Speaker 1: is decided we want to be in that business, and
• 33:04
  Speaker 1: they have. They are the only company in history that
• 33:07
  Speaker 1: is successfully migrated down the torso a better computer, rational decisions,
• 33:12
  Speaker 1: saying to our heart emotionally with songs, and now they
• 33:15
  Speaker 1: are the ultimate self expressive benefit. You no longer signal
• 33:18
  Speaker 1: with your watch or your hoodie. You signal with your iOS.
• 33:21
  Speaker 1: If you own an Apple phone, you were saying to
• 33:23
  Speaker 1: the world, I am smarter, better educated, and have more
• 33:25
  Speaker 1: options in terms of who I mate with. The transaction
• 33:28
  Speaker 1: is complete to the Apple Watch. Apple is now the
• 33:31
  Speaker 1: ultimate luxury brand. It defines what it means to be
• 33:33
  Speaker 1: a luxury brand, and they're going to be the first
• 33:35
  Speaker 1: trillion dollar market cap company on the back of their
• 33:37
  Speaker 1: successful transition down the Torso and it become a luxury brand. Scott,
• 33:42
  Speaker 1: where can people find your work? What's the best way
• 33:44
  Speaker 1: for them? I know you have a YouTube channel for
• 33:48
  Speaker 1: L two. How do people find that? Other than thanks?
• 33:50
  Speaker 1: Plunching in Scott Galloway into YouTube. Thanks for asking L
• 33:53
  Speaker 1: two Inc dot com. Almost all our videos are there,
• 33:55
  Speaker 1: all right? That's great? And um be sure and check
• 33:58
  Speaker 1: out my daily column. I'm on Bloomberg View dot com.
• 34:01
  Speaker 1: Follow me on Twitter at rid Holt Scott. Your Twitter
• 34:04
  Speaker 1: handle is proft Galloway proft Galloway at Twitter. I'm Barry Ridhult.
• 34:09
  Speaker 1: You're listening to Masters in Business. I'm Bloomberg Radio. Welcome
• 34:13
  Speaker 1: to the podcast portion of our show where I take
• 34:16
  Speaker 1: my ear piece out and don't worry about time. Although
• 34:19
  Speaker 1: I'm getting better at kind of pacing that I used
• 34:22
  Speaker 1: to be so awful with that, you have no idea
• 34:24
  Speaker 1: how thinking about how much time do we have? It's
• 34:28
  Speaker 1: really a distraction and a and a disruption. So anyway, Scott,
• 34:32
  Speaker 1: thank you so much for doing this. I'm really I've
• 34:35
  Speaker 1: I've fallen in love with your videos. My wife is
• 34:39
  Speaker 1: a teacher and there's one thing I wanted to ask
• 34:41
  Speaker 1: you about. So I first I showed her some of
• 34:43
  Speaker 1: your video. She really she was like, Oh, that's kind
• 34:45
  Speaker 1: of interesting, like passing interest in her husband's life. But
• 34:49
  Speaker 1: then the letter, the email from the students, and she's like,
• 34:53
  Speaker 1: who is this guy? This is awesome. She's a teacher
• 34:56
  Speaker 1: and she has all sorts of headaches with kids like
• 34:59
  Speaker 1: everybody else does. Um tell us the derivation of the
• 35:04
  Speaker 1: get your s Together letter, which we can't curse over
• 35:08
  Speaker 1: the air waves. Um, how did that come about? You
• 35:11
  Speaker 1: just never know when you're fifteen minutes are gonna gonna hit.
• 35:15
  Speaker 1: And this was an email I got from a student
• 35:16
  Speaker 1: who walked into my class late, and then I kicked
• 35:19
  Speaker 1: him out of class. I kicked as per your class.
• 35:23
  Speaker 1: Also thing in general and gradgety school with coddle students
• 35:25
  Speaker 1: too much. And as a clinical professor, are you know
• 35:28
  Speaker 1: our mission is to try and prepare kids for the workforce,
• 35:30
  Speaker 1: and I think part of that is giving them a
• 35:31
  Speaker 1: sense of what the workforce is actually gonna be like
• 35:34
  Speaker 1: and trying to impost some standards on them. And one
• 35:36
  Speaker 1: of those is if you're late to my class, I
• 35:38
  Speaker 1: don't allow you in. And I didn't have late. Can
• 35:40
  Speaker 1: you show up two minutes late, five minutes or either
• 35:42
  Speaker 1: on time or you're not allowed in. It's hard, hard
• 35:44
  Speaker 1: military stuff. I have a theater seating for the kids
• 35:47
  Speaker 1: who work part time because I realized sometimes I can't
• 35:49
  Speaker 1: get downtown of time. At six fifteen, we let people
• 35:52
  Speaker 1: in for a theater seating, meaning meaning outskirts of the class. Yeah,
• 35:56
  Speaker 1: I know. At exactly six fifteen, we let in latecomers
• 35:59
  Speaker 1: for the part time Okay, after the first after the
• 36:02
  Speaker 1: first part of the first act, but this kid came in.
• 36:04
  Speaker 1: I kicked him out, and then he wrote a long,
• 36:06
  Speaker 1: snarky email to me about how we checked out three
• 36:08
  Speaker 1: other classes. Anyways, I got equally snarky back, and then
• 36:11
  Speaker 1: it got forwarded, and then Within and then dead Spin,
• 36:14
  Speaker 1: the sports blogging places picked it up. But it got
• 36:16
  Speaker 1: about half a million beaus, and at one point I
• 36:18
  Speaker 1: think the dean of the school was getting an email
• 36:20
  Speaker 1: either wildly in favor or wildly against what I had
• 36:22
  Speaker 1: done about every seven or eight seconds when it just
• 36:25
  Speaker 1: kind of blew up and it tapped into a vein
• 36:28
  Speaker 1: because one a lot of people feel as if, Okay,
• 36:30
  Speaker 1: this millennial generation is entitled, and we're very supportive of
• 36:33
  Speaker 1: my response. At the same time, a lot of people
• 36:35
  Speaker 1: were said, look, these kids are paying six thousand bucks
• 36:38
  Speaker 1: to take your class. If they show up a few
• 36:40
  Speaker 1: minutes late, you just need to suck it up and
• 36:42
  Speaker 1: deal with it. So it, like anything that goes viral,
• 36:45
  Speaker 1: I think it tapped into a bit of a controversy
• 36:48
  Speaker 1: of the time. It was about five or six years ago,
• 36:50
  Speaker 1: and every two years it gets fired up again. But
• 36:52
  Speaker 1: that that is not what I had hoped or expected.
• 36:55
  Speaker 1: What you know is the piece of literary work that
• 36:57
  Speaker 1: I would be known for. Well, you know, the generation
• 37:01
  Speaker 1: and the offspring of the baby boomers, who you and
• 37:04
  Speaker 1: I are really just on the other edge of that
• 37:06
  Speaker 1: where would be TwixT and between Gen X and and boomers.
• 37:09
  Speaker 1: But um, you know, they get participation awards for showing up,
• 37:13
  Speaker 1: and I think my wife tells me that they come
• 37:16
  Speaker 1: to school with that attitude, Hey I'm here, where's my trophy? No,
• 37:20
  Speaker 1: you gotta do something to earn a trophy. It's it's
• 37:23
  Speaker 1: a double edged sword. So about eighty people at LT
• 37:26
  Speaker 1: right now, I'd say the average ages around twenty six.
• 37:28
  Speaker 1: So work a lot with millennials. And the downside is
• 37:30
  Speaker 1: they are more entitled. Remember when we went to work,
• 37:32
  Speaker 1: If you can you imagine whyking your boss or your
• 37:34
  Speaker 1: first job and so I want to have a career talk.
• 37:36
  Speaker 1: I mean they would have said, okay, work your work,
• 37:38
  Speaker 1: your ass off, career talk over and get back to work.
• 37:40
  Speaker 1: And now these kids are very focused on their lifestyle balance,
• 37:45
  Speaker 1: things that we just wouldn't have had the guts to
• 37:47
  Speaker 1: bring up, having said, at least not till ten twenty years,
• 37:51
  Speaker 1: until we had some currency, tho, some divorces, something something right,
• 37:55
  Speaker 1: all of those things. But the flip side is there's
• 37:58
  Speaker 1: a lot of media tention on the net millennials, but
• 38:00
  Speaker 1: the reality is the more talented than you and I
• 38:02
  Speaker 1: were at the village. Oh yeah, the tools they've grown
• 38:05
  Speaker 1: up with, the skills they have garnered, just some of
• 38:08
  Speaker 1: these kids are exceptional. We wouldn't put up with this
• 38:11
  Speaker 1: otherwise these kids would have trouble getting job. The reason
• 38:14
  Speaker 1: they're can demand more of a balance in their life,
• 38:16
  Speaker 1: the reason they can demand more talks around their career.
• 38:19
  Speaker 1: The reason they can demand, uh, you know, wanting to
• 38:22
  Speaker 1: know what is the larger role that their job plays
• 38:24
  Speaker 1: in the world is because a lot of these kids
• 38:27
  Speaker 1: are outstanding that some of the some of the skills
• 38:30
  Speaker 1: they bring, the our ability to pull together information. Uh,
• 38:34
  Speaker 1: you can't force maturity, So that's still the same, you know.
• 38:37
  Speaker 1: But millennials are the most talented generation I have ever
• 38:41
  Speaker 1: worked with. Hands down. It's going to be it's gonna
• 38:45
  Speaker 1: be inspiring to see what they're able to build over
• 38:47
  Speaker 1: the next ten or fifteen years. You know. The debate
• 38:49
  Speaker 1: that that has been circulating about technology and robotics and
• 38:54
  Speaker 1: what it's costing in terms of jobs. I speak at
• 38:57
  Speaker 1: a lot of schools, I give a lot of speeches
• 38:59
  Speaker 1: around and one of things I'll never forget We went
• 39:01
  Speaker 1: to a wedding of my wife's cousin in Virginia and
• 39:05
  Speaker 1: we meet not only so I know the groom who
• 39:08
  Speaker 1: from he's this toll to now he's getting married, and
• 39:11
  Speaker 1: we meet some of his friends and the groomsmen. One
• 39:14
  Speaker 1: of the groomsmen created this perfect for college and Apple
• 39:19
  Speaker 1: iPhone case, the dumbest thing in the world. He has
• 39:23
  Speaker 1: built into the back of it a bottle opener, so
• 39:25
  Speaker 1: you could pop a beer you always have, right, Like
• 39:28
  Speaker 1: so obvious, And I'm like, oh, that's interesting. How are
• 39:31
  Speaker 1: you gonna manufacture this? He's like, oh, we have a
• 39:33
  Speaker 1: company in China. They drop ship. It was sound about
• 39:35
  Speaker 1: forty units a month. There's a kid who's twenty in college, Like,
• 39:40
  Speaker 1: and every time I go to a conference with young
• 39:43
  Speaker 1: kids with college students, that's sort of insane experience. They
• 39:49
  Speaker 1: understand forget roy and loyalty, forget company loyalty. The company
• 39:53
  Speaker 1: ain't gonna be loyal to you. They have no loyalty
• 39:55
  Speaker 1: back and they know that they're essentially um their independence.
• 40:00
  Speaker 1: They're they're you know, contract players, and they're aware of it. Yeah,
• 40:04
  Speaker 1: it's we we get We get angry at them because
• 40:07
  Speaker 1: most of us now are in principal positions where we
• 40:09
  Speaker 1: want to talk about loyalty because it serves our advantage.
• 40:12
  Speaker 1: But at the end of the day, I wonder if
• 40:14
  Speaker 1: they've figured it out. And you've talked about this, your
• 40:16
  Speaker 1: blogged the Big Picture, and we've talked about this a lot.
• 40:19
  Speaker 1: There are a lot of well publicized cases of these
• 40:21
  Speaker 1: kids who can tap into global markets and have extreme
• 40:24
  Speaker 1: wealth or success really quickly. There's a dark side of that, though,
• 40:28
  Speaker 1: and that is I think it's getting harder and harder
• 40:30
  Speaker 1: for these kids just to be solid citizens. Say they're
• 40:33
  Speaker 1: not geniuses, say they don't get lucky. I think it's
• 40:35
  Speaker 1: getting harder and harder just to punch out an average living.
• 40:38
  Speaker 1: And and you know, it gets into income inequality. And
• 40:40
  Speaker 1: I like a lot of the work that you've done
• 40:42
  Speaker 1: on this, and a lot of the work that your
• 40:44
  Speaker 1: past guest, Henry Blodge has done on this, but I
• 40:46
  Speaker 1: would when I look at my class versus fourteen years ago,
• 40:49
  Speaker 1: I got a hundred forty kids on every Monday night.
• 40:51
  Speaker 1: I think it's never been easier to be a billionaire.
• 40:53
  Speaker 1: I think someone in my class will be a billionaire
• 40:55
  Speaker 1: either through alternative investments, are starting a tech company. At
• 40:57
  Speaker 1: the same time, it's never been harder to be a
• 40:59
  Speaker 1: mill in there. And what I mean is to be
• 41:01
  Speaker 1: aggregate a million dollars, just be a middle class guy
• 41:04
  Speaker 1: or gal that aggregates some semblance of a living over
• 41:06
  Speaker 1: ten or twenty thirty years. The top, the most talented
• 41:09
  Speaker 1: people are going to aggregate wealth faster and in the
• 41:11
  Speaker 1: velocity we've never seen before. But the rest it's going
• 41:14
  Speaker 1: to be harder and harder just to be a solid
• 41:16
  Speaker 1: citizen when you when you look at the state of
• 41:19
  Speaker 1: the recovery as to what's been going on. You know,
• 41:22
  Speaker 1: I love the William Gibson quote the future is here.
• 41:24
  Speaker 1: It's just not evenly distributed. The same is true for
• 41:27
  Speaker 1: the recovery. And it depends on what industry you're in,
• 41:31
  Speaker 1: where you live in the country. You mentioned superurban centers,
• 41:34
  Speaker 1: so we travel around the country and visit clients. D
• 41:37
  Speaker 1: C is a house of fire. You go to Boston
• 41:40
  Speaker 1: and that's in New York. Obviously that's this ghast. Seattle
• 41:44
  Speaker 1: people tell me the recovery is terrible. Have you been
• 41:47
  Speaker 1: to Seattle? Seattle? Austin is a little smaller. I think
• 41:50
  Speaker 1: Austin is the fastest growing city in the country, but
• 41:53
  Speaker 1: Seattle is number two, and it's a big city with
• 41:55
  Speaker 1: a lot of industry and a lot of track. It's
• 42:00
  Speaker 1: most amazing. They're still actually fairly reasonable, at least compared
• 42:04
  Speaker 1: to San Francisco and Silicon Valley and and NAPA. That
• 42:08
  Speaker 1: that whole run of an hour north and an hour
• 42:11
  Speaker 1: south of the city of San Francisco is utterly insane,
• 42:15
  Speaker 1: it's lost its mind. We're creating a small a small
• 42:18
  Speaker 1: number of elysium like environments where the life is just
• 42:21
  Speaker 1: incredible there if you can afford access in the opportunities,
• 42:24
  Speaker 1: but most people can't afford it. In Europe it's London,
• 42:27
  Speaker 1: you can't. It's London in the seven Dwarves. If you're
• 42:29
  Speaker 1: an unbelievable systems application developers, saying Baconi Italy er in Marinello,
• 42:34
  Speaker 1: you end up in Milam within twelve months, and you're
• 42:36
  Speaker 1: in London within thirty six months. There is Look at
• 42:39
  Speaker 1: how and you've talked a lot about this. You know,
• 42:41
  Speaker 1: the top top one percent aggregating, but this isn't a
• 42:45
  Speaker 1: one percent thing. This is really like of the professionals technology,
• 42:51
  Speaker 1: there's a whole separate that the middle class has really
• 42:56
  Speaker 1: shrunk and the top one person. What's so differ today
• 43:00
  Speaker 1: is the top one percent, in the top one percent
• 43:04
  Speaker 1: are so far ahead of anything we've seen previously. If
• 43:08
  Speaker 1: you if you hold that aside, put put aside the
• 43:11
  Speaker 1: g fives and the hundred million dollar properties, just normal
• 43:16
  Speaker 1: insane wealth, hundred millionaires, that sort of top one percent,
• 43:22
  Speaker 1: top ten percent, top this recovery. I actually left out.
• 43:27
  Speaker 1: The most significant factor if you have a graduate degree,
• 43:30
  Speaker 1: if you have a any specific technical skill and degree
• 43:34
  Speaker 1: that goes with it. This recovery has been very, very tropic, right,
• 43:39
  Speaker 1: really good if you come out of college with an
• 43:42
  Speaker 1: English literature degree and you don't have a skill set
• 43:45
  Speaker 1: that you can take to one of those urban supercenters,
• 43:48
  Speaker 1: this has been a really terrible recovery. We were talking
• 43:51
  Speaker 1: about Facebook. Look at the innovative companies of the past.
• 43:54
  Speaker 1: You know, a Leaver a hundred and fifty billion dollar
• 43:57
  Speaker 1: market cap, has about a hundred and twenty five thousand
• 43:59
  Speaker 1: family being supported by Unilever, Intel more efficient, about a
• 44:03
  Speaker 1: hundred thousand people. A hundred fifty billion dollar market cap.
• 44:05
  Speaker 1: Facebook two billion dollar market cap, nine thousand people. That's amazing.
• 44:10
  Speaker 1: So you have more and more spoils going to fewer
• 44:14
  Speaker 1: and fewer people. And Facebook is a good company. It's
• 44:16
  Speaker 1: great if you're on the Ferrari dealership and pala Alto.
• 44:18
  Speaker 1: It's great if you own real estate in San Francisco.
• 44:20
  Speaker 1: It's great if you're serving the ecosystem of Facebook. But
• 44:24
  Speaker 1: I think these companies have so dramatically outpaced wealth creation.
• 44:27
  Speaker 1: These companies, the four horsemen, Apple, Amazon, Facebook and Google
• 44:30
  Speaker 1: have the population of Lexington, Kentucky or Corpus Christi, Corpus Christie,
• 44:34
  Speaker 1: and they have the GDP right the value of the
• 44:37
  Speaker 1: GDP of Spain or Australia. When you talk about and
• 44:41
  Speaker 1: they've effectively, I think, legislatively and and operationally done to
• 44:46
  Speaker 1: the US with the South canow militarily, I think they're
• 44:49
  Speaker 1: seceding from the nation barrier. They're ultimate, they're incredible tax avoiders.
• 44:52
  Speaker 1: It's all legal, but they're licensing their IP overseas and
• 44:55
  Speaker 1: avoiding taxes. They're telling women will pay for them to
• 44:58
  Speaker 1: freeze their eggs. They're telling people that they'll do better
• 45:00
  Speaker 1: DNA testing. They're giving them their own municipal transportation back
• 45:03
  Speaker 1: and forth and work. They've effectively succeeded from the nation.
• 45:06
  Speaker 1: They've said, we're smarter, we're better, we can create more wealth.
• 45:08
  Speaker 1: We're going to create a society outside of the normal
• 45:11
  Speaker 1: boundaries of the of the sovereign in the US, and
• 45:14
  Speaker 1: we're gonna operate in the Netherlands. I think they were
• 45:16
  Speaker 1: effectively seceding from the US and well, when we look
• 45:19
  Speaker 1: at Google as example, in San Francisco, a lot of
• 45:22
  Speaker 1: the complaints about the Google bus. You would think, who
• 45:25
  Speaker 1: cares they have a bus? Is that much more room
• 45:27
  Speaker 1: on on public transportation? But that's not the attitude in
• 45:30
  Speaker 1: San Francisco, is it. It's you have a lot of frustration.
• 45:34
  Speaker 1: I think a lot of the civil unrest has taken
• 45:36
  Speaker 1: place is a lot about the individual acts of violence,
• 45:39
  Speaker 1: but it's about frustration that there's just if you're in
• 45:42
  Speaker 1: this uber class, you have the right skills, the right
• 45:45
  Speaker 1: work ethic, it's never been a better time. But if
• 45:48
  Speaker 1: you're the ninety eighty percent below that, it's just harder
• 45:53
  Speaker 1: and harder to be at the average Joe. The heirs
• 45:55
  Speaker 1: to the Walmart portion the wall in the airs were
• 45:57
  Speaker 1: probably very decent. People have more wealth in the of America.
• 46:02
  Speaker 1: If there's gonna be a revolution in this country, it's
• 46:04
  Speaker 1: probably gonna start an aisle five of the Walmart. I mean,
• 46:06
  Speaker 1: it's just that if you have the right skills, it's
• 46:10
  Speaker 1: never been a better time. But that that quote unquote
• 46:13
  Speaker 1: population of people the right skills is getting smaller and smaller,
• 46:16
  Speaker 1: and more and more fruits have have act created to
• 46:19
  Speaker 1: those people. The good slash bad news is whenever this
• 46:22
  Speaker 1: has happened in history, it usually self corrects in the
• 46:24
  Speaker 1: form of war, revolution, or famine. That's the self correction.
• 46:27
  Speaker 1: Well that's not very encouraged. That isn't encouraging. So and
• 46:30
  Speaker 1: the funny thing is, you know, post War War two,
• 46:34
  Speaker 1: you could raise a family on a job as a
• 46:37
  Speaker 1: postman or a fireman, or or even a teacher or Hey,
• 46:42
  Speaker 1: if you were an accountant or a lawyer, you were
• 46:44
  Speaker 1: in the uppercross. You were doing really well. Now that
• 46:47
  Speaker 1: whole um low skilled jobs have have slid to the
• 46:52
  Speaker 1: bottom of the middle class and what used to be
• 46:55
  Speaker 1: considered high skilled jobs lawyers are accountants. Maybe accountants are
• 46:58
  Speaker 1: doing better in the lawyers. I think we cranked out
• 47:00
  Speaker 1: too many lawyers so sometime ago. But it seems like
• 47:04
  Speaker 1: the alignment and the strata has really changed. And it
• 47:08
  Speaker 1: comes back to the educational attainment. If you have the
• 47:11
  Speaker 1: right degree, in the right focus, the right the right sector. Hey,
• 47:15
  Speaker 1: these are great times. Everybody else is having having a challenge,
• 47:18
  Speaker 1: But those fruits were increasingly only being able to be
• 47:20
  Speaker 1: picked by people who were either exceptional or come from
• 47:23
  Speaker 1: wealthy families. The bottom death style of households eight percent
• 47:27
  Speaker 1: of the kids will go to college, the top decile
• 47:29
  Speaker 1: eight percent. And this is This is a real point
• 47:31
  Speaker 1: of personal passion for me. I was raised by a
• 47:32
  Speaker 1: single mother who lived and died a secretary. We didn't
• 47:35
  Speaker 1: have a lot of money, but we had a nice
• 47:37
  Speaker 1: life and I was able to go to public schools
• 47:38
  Speaker 1: all the way through undergrad US graduate school at Berkeley.
• 47:42
  Speaker 1: You know, if I didn't have the big handed government
• 47:45
  Speaker 1: and in very generous forward looking visionaries in the form
• 47:49
  Speaker 1: of the founders of the University of California, I just
• 47:51
  Speaker 1: wouldn't be here with you right now. That's the bottom line.
• 47:53
  Speaker 1: And those that same access. You know what my tuition
• 47:56
  Speaker 1: was UCLA in Berkeley was twelve hundred bucks a year.
• 48:00
  Speaker 1: And I'll beat you at I went to sunny stony Brook.
• 48:02
  Speaker 1: You know. The joke was the Berkeley is the stony
• 48:05
  Speaker 1: Brook of the West, and my tuition was four fIF semester.
• 48:08
  Speaker 1: And look and look at what it is now. It
• 48:10
  Speaker 1: is a it is a lot more and kids are
• 48:13
  Speaker 1: taking on student debt, more student debt than than than
• 48:16
  Speaker 1: credit cards. It's it's hurting the housing crisis. It's giving
• 48:18
  Speaker 1: them a huge, a huge head wind before they get out.
• 48:22
  Speaker 1: And I'm worried that, you know, kids just aren't going
• 48:24
  Speaker 1: to have the same unbelievable opportunities that I had, because
• 48:29
  Speaker 1: it doesn't seem as if the bottom of education is
• 48:31
  Speaker 1: the lubricant of upward mobility. My class and I this
• 48:35
  Speaker 1: is a man in the mirror test barrier. We charge
• 48:36
  Speaker 1: kids six thousand dollars to take my class. Have a
• 48:39
  Speaker 1: hundred twenty kids or hundred forty kids on a Monday night,
• 48:42
  Speaker 1: every time I walk into class. We're charging kids sixty
• 48:45
  Speaker 1: thousand dollars that night for one class, and the majority
• 48:48
  Speaker 1: of it is being paid for in debt. Something is
• 48:52
  Speaker 1: wrong here. We have to figure out a way and
• 48:54
  Speaker 1: now I'm really on my soapbox. We have to figure
• 48:57
  Speaker 1: out a way to give middle class kids with single
• 48:59
  Speaker 1: mother is the same opportunity to be in this chair.
• 49:02
  Speaker 1: And you know, I U in public about this. I
• 49:05
  Speaker 1: gave ten percent of my holdings in in my company
• 49:08
  Speaker 1: to the University of California, Berkeley, Los Angeles and n
• 49:11
  Speaker 1: y U because they've been so incredibly supportive. But I
• 49:14
  Speaker 1: really worry that our economy is under a huge threat
• 49:17
  Speaker 1: that the same number of people aren't gonna have access
• 49:20
  Speaker 1: to the unbelievable education that you and I had at
• 49:22
  Speaker 1: the same price, and the amazing thing is a lot
• 49:25
  Speaker 1: of these schools have enormous endowments. And it's not just
• 49:29
  Speaker 1: the I vys. You look at Harvard, Gale, Stanford. That's
• 49:32
  Speaker 1: a hundred billion dollars in endowment just amongst those three.
• 49:35
  Speaker 1: That's astonishing. So if they do nothing else, they're throwing
• 49:39
  Speaker 1: off somewhere between five and ten billion dollars a year
• 49:42
  Speaker 1: in revenue. That's insane, and how do they manage to
• 49:46
  Speaker 1: charge But the same thing is happening there, So winner
• 49:49
  Speaker 1: take all economy. It's the same things happening in education.
• 49:51
  Speaker 1: And used the operative term there was a hundred billion
• 49:53
  Speaker 1: dollar endowments and three schools. The schools the top five
• 49:57
  Speaker 1: or seven endowments are growing at a much fast rate
• 50:00
  Speaker 1: than everybody else. In education, we're ripe to be disrupted.
• 50:03
  Speaker 1: We've tripled our tuition in the last fifteen years. Inflation
• 50:06
  Speaker 1: is kind of two or three percent yere. We are
• 50:07
  Speaker 1: so ripe to be disrupted. So people are looking for
• 50:10
  Speaker 1: a tech player to disrupt us. You know it's going
• 50:11
  Speaker 1: to disrupt education. Harvard, Harvard and m I T did
• 50:15
  Speaker 1: the open open course uh the years. It's the same
• 50:19
  Speaker 1: effect that's taking place across the economy. The top, the top,
• 50:23
  Speaker 1: top guys are gonna create more power than anyone has.
• 50:26
  Speaker 1: Harvarder said they could double their incoming freshman class without
• 50:28
  Speaker 1: sacrificing inequality. They're gonna take some of that endowment. They're
• 50:32
  Speaker 1: gonna say, take some technology, and I'm predicting they're gonna
• 50:35
  Speaker 1: say Harvard, m I T, Stanford, and Berkeley. At some point,
• 50:38
  Speaker 1: the top schools are gonna say here's here's the deal,
• 50:40
  Speaker 1: free and we're gonna triple quadruple, quintuple. And then what
• 50:44
  Speaker 1: does Indiana do? What does what does Fordham do? What
• 50:47
  Speaker 1: does the university in Miami do? What do they do
• 50:50
  Speaker 1: when the best ten or twenty percent of the population
• 50:53
  Speaker 1: has access to the best schools for free and every
• 50:56
  Speaker 1: every company worth its salt only recruits at those few schools.
• 50:59
  Speaker 1: So how does Harvard, with this much physical space triple
• 51:03
  Speaker 1: they're entering freshman classes it online only or people literally?
• 51:07
  Speaker 1: Are they tripling the number of students in Cambridge? I
• 51:09
  Speaker 1: think it's going to be a hybrid. I think they're
• 51:11
  Speaker 1: going to be able to double the size of their
• 51:13
  Speaker 1: class in the next five years and triple it over
• 51:15
  Speaker 1: the next ten to twenty years because they'll make people
• 51:17
  Speaker 1: more efficient. Let them take a lot of their lectures. Right.
• 51:20
  Speaker 1: We talked about a flip classroom that actual teaching takes
• 51:22
  Speaker 1: place online and we come together to discuss. Every university,
• 51:26
  Speaker 1: including ours, is now building satellite campuses for all to
• 51:29
  Speaker 1: talk about online. We just opened a campus and now Abudhabi.
• 51:32
  Speaker 1: We opened a campus in Shanghai. Wharton's opening in Singapore,
• 51:36
  Speaker 1: so we're opening all over the world. But it's like
• 51:38
  Speaker 1: every other category. Where there used to be fifty players
• 51:41
  Speaker 1: eating out a good living, there's gonna be two or
• 51:43
  Speaker 1: three capturing of the profits. Unbelievable. That's interesting. Let's talk
• 51:48
  Speaker 1: about some other sectors of the economy. Um, that that's
• 51:53
  Speaker 1: right for disruption. Um. And I know we mentioned television earlier. Um,
• 51:59
  Speaker 1: do you watch a Silicon Valley on HP love such
• 52:02
  Speaker 1: a hilarious it's just it's just, you know, Mike Judge
• 52:08
  Speaker 1: has done some interesting odd bowl stuff in the past.
• 52:12
  Speaker 1: This seems to be the first thing I'm trying to remember.
• 52:14
  Speaker 1: The future the name of the future show where everybody
• 52:17
  Speaker 1: the movie he did, uh Idiocracy was a name of
• 52:21
  Speaker 1: where everybody's just a blob sitting around TV wat sitting
• 52:23
  Speaker 1: around a couch watching TV. And it was really sophomoric
• 52:26
  Speaker 1: and goofy, And when I first saw the previews for this,
• 52:29
  Speaker 1: I'm thinking, Hey, is this guy grown up enough that
• 52:31
  Speaker 1: this is really going to be a serious and he
• 52:34
  Speaker 1: seems to be has the tone perfect. I mean, it's
• 52:38
  Speaker 1: just every time I speak to anybody on the venture side,
• 52:42
  Speaker 1: on the private equity, totally totally dead on. And it's
• 52:47
  Speaker 1: amazing to think that there's a whole part of the
• 52:49
  Speaker 1: country where, for a hundred miles up the coast, that's
• 52:52
  Speaker 1: half of what's going on. Yeah, it's just I mean,
• 52:55
  Speaker 1: obviously it's an exaggeration, but I love Barely. Though it's barely,
• 52:59
  Speaker 1: it's everything's good and root and reality. It's an exaggeration,
• 53:03
  Speaker 1: but it's not like a gross parity. It's a slight exaggeration.
• 53:06
  Speaker 1: You see some crazy stuff. But the the other show
• 53:08
  Speaker 1: I always love to watch. I love Silicon Valley and
• 53:10
  Speaker 1: I watched Girls, and I love Silicon Valley because I
• 53:12
  Speaker 1: can relate to it so much, and I love Girls
• 53:14
  Speaker 1: because I can't relate to it anyway. And I'm constantly
• 53:17
  Speaker 1: is this what young people are really like? And I
• 53:19
  Speaker 1: find it so fascinating because I don't know if you've
• 53:22
  Speaker 1: ever watched Girls, but I've tried desperately and I just can't.
• 53:25
  Speaker 1: It's it's literally wow, is this what kids are like?
• 53:28
  Speaker 1: And the honest answers? I think it is, and so
• 53:30
  Speaker 1: it's fascinating. It's almost like being a Vorior but Silicon Valley.
• 53:34
  Speaker 1: You know. It really shows how some of the sausages made.
• 53:36
  Speaker 1: And there's a series of well publicized entrepreneurs. But what
• 53:40
  Speaker 1: people don't do is they don't realize we have a
• 53:43
  Speaker 1: tendency to romanticize entrepreneurship. Kids come to me because I'm
• 53:46
  Speaker 1: an entrepreneur and say I want to start a business,
• 53:48
  Speaker 1: And I would say, if you have the skill set
• 53:50
  Speaker 1: to go to a platform like a Bloomberg, like a Facebook,
• 53:53
  Speaker 1: like a Google and navigate the politics there, be be
• 53:56
  Speaker 1: effective as opposed to just being right. Something I've struggled
• 53:59
  Speaker 1: with my whole career is a difference between being right
• 54:01
  Speaker 1: and being effective than on a risk adjusted basis, you're
• 54:04
  Speaker 1: better off going to work for a platform. Entrepreneurs are
• 54:07
  Speaker 1: people who have no choice. It's like some being a
• 54:09
  Speaker 1: doctor is a terrible job now, but some people have
• 54:11
  Speaker 1: no choice. They just have to be doctors. Right. They
• 54:13
  Speaker 1: were taking temperature since the age of six some people
• 54:15
  Speaker 1: have to be in fashion. Entrepreneurship is the same way.
• 54:18
  Speaker 1: And I think that show gets across just how difficult, scary, insecure,
• 54:24
  Speaker 1: and sometimes you could kill yourself for seven or eight
• 54:27
  Speaker 1: years or ten years or longer and end up with
• 54:29
  Speaker 1: not only nothing, but less than nothing, you know, oh
• 54:32
  Speaker 1: in your parents, your family, everything. And we don't talk
• 54:36
  Speaker 1: a lot about that, but it happens more than it
• 54:39
  Speaker 1: doesn't happen. Well, that's the reality is that the vast
• 54:43
  Speaker 1: majority of startups, the vast majority of of new restaurants,
• 54:46
  Speaker 1: of new retail stores from new businesses, hey, two years out,
• 54:49
  Speaker 1: most of them are gone. That's just the simple numbers
• 54:52
  Speaker 1: of it. And I'm glad the show isn't glorifying. Hey,
• 54:56
  Speaker 1: hang out a shingle and and everybody get I p
• 54:59
  Speaker 1: O s at a billion dollars ours. They're really making
• 55:01
  Speaker 1: it clear that you could lose this company with one
• 55:04
  Speaker 1: wrong decision anywhere along the way. They the litigation was
• 55:08
  Speaker 1: really an insightful plot device, because you know that happens
• 55:12
  Speaker 1: all the time. Yeah, and just the kind of full
• 55:14
  Speaker 1: full body contact hardball that takes place. I worked with
• 55:17
  Speaker 1: a lot of vcs who are very some are outstanding.
• 55:20
  Speaker 1: Some are super aggressive to some of the stuff you see.
• 55:23
  Speaker 1: It was really really rapacious. It's a it's a it's
• 55:26
  Speaker 1: a full body contact sport in terms of a startup,
• 55:29
  Speaker 1: specially a venture back startup. So so they there's one
• 55:32
  Speaker 1: episode where they're doing their second round and suddenly they
• 55:36
  Speaker 1: start getting they become more obnoxious to the vcs thinking
• 55:41
  Speaker 1: making it look like they already have funded and everybody
• 55:43
  Speaker 1: starts throwing money at them, and that leads to an
• 55:46
  Speaker 1: interesting plot point, but it raises a question, what do
• 55:49
  Speaker 1: you think about the valuations amongst startup these days? Is
• 55:53
  Speaker 1: that something you look at? And here we are in
• 55:56
  Speaker 1: the market where people have been talking about valuations being
• 55:59
  Speaker 1: too it for two years and the market just well,
• 56:03
  Speaker 1: the economists called the dot com crash perfectly. They just
• 56:06
  Speaker 1: called and I'm on the board of several startups, and
• 56:10
  Speaker 1: what I'm telling them is raise raise money right now.
• 56:13
  Speaker 1: But you can't. Yeah, I don't know if it's I
• 56:15
  Speaker 1: don't know if this is the best time to raise money,
• 56:17
  Speaker 1: but I am pretty confident it's not a bad time.
• 56:20
  Speaker 1: And in general, I think acid prices across the board
• 56:23
  Speaker 1: because of low interest rates and things. You understand A
• 56:25
  Speaker 1: lot better than I do are really high. And my
• 56:28
  Speaker 1: senses you raise money when you don't need it, because
• 56:30
  Speaker 1: when you really need it, it's typically pretty hard to
• 56:32
  Speaker 1: raise money. So everybody, anybody who owns something, I'm saying,
• 56:37
  Speaker 1: if you're in a position or for whatever reason, need
• 56:38
  Speaker 1: to sell, then sell. But because I think it's a
• 56:41
  Speaker 1: great time to sell almost anything. And if you're in
• 56:43
  Speaker 1: a position to raise money or you think you might
• 56:44
  Speaker 1: need to raise money, I'm a l two is a
• 56:47
  Speaker 1: venture back company. We have fantastic nature cavalists firm called
• 56:50
  Speaker 1: General Catalyst. But we're even thinking we don't need the capital.
• 56:53
  Speaker 1: But it's just not a bad time to put another five, ten,
• 56:56
  Speaker 1: twenty million bucks in the tank right now because you
• 56:58
  Speaker 1: can get really solid evaluation, to say the least. Then
• 57:01
  Speaker 1: and I'll tell you what my theory is. What's driving it.
• 57:05
  Speaker 1: It has nothing to do with interest rates, it has
• 57:07
  Speaker 1: nothing to do with the fed. Um. I'm a car guy.
• 57:10
  Speaker 1: I've been a car first word I ever said was car.
• 57:12
  Speaker 1: I'm a car buff and my whole adult working life
• 57:16
  Speaker 1: there are a series of cars I would like to own,
• 57:20
  Speaker 1: and they're now starting to creep up as I oh
• 57:23
  Speaker 1: I can afford to buy a two thousand five for
• 57:27
  Speaker 1: g T or a two thousand two BMW Z eight
• 57:31
  Speaker 1: because when they were seventy five dollars and I was
• 57:34
  Speaker 1: making sixty, I couldn't afford that. But the problem is
• 57:38
  Speaker 1: that the Z eight is up to one seventy five,
• 57:41
  Speaker 1: the GT is up to three hundred. As my income
• 57:44
  Speaker 1: goes up, these cars go up. And the reason for this,
• 57:47
  Speaker 1: to bring it back to start up valuations, there are
• 57:50
  Speaker 1: only so many of them, and as we discussed before
• 57:53
  Speaker 1: with the top one to there are so many people
• 57:57
  Speaker 1: with so much money who desire those things that they
• 58:00
  Speaker 1: don't care. They'll bid one fifty for a car that's
• 58:03
  Speaker 1: really worth a hundred thousand dollars, or they'll bid fifty
• 58:06
  Speaker 1: billion for Uber because they have to show Uber in
• 58:09
  Speaker 1: their funds in order to make their limited partners happy.
• 58:13
  Speaker 1: And so there's a limited number of of these goods,
• 58:16
  Speaker 1: a limited number of these companies that at least appear
• 58:19
  Speaker 1: to have some shot at at being a home run,
• 58:22
  Speaker 1: and so everybody piles into the same. Look, look at
• 58:25
  Speaker 1: the Ferrari market has gone insane. Like I've always thought,
• 58:29
  Speaker 1: the Ferrari to seventy five was a gorgeous car, from
• 58:33
  Speaker 1: one and later in the sixties the Dino. You could
• 58:36
  Speaker 1: have picked up a Dino fifteen years ago for fifty thousand,
• 58:39
  Speaker 1: fifty thousand dollars. They're half a million dollars. Now why
• 58:43
  Speaker 1: because there aren't ten million of them. They made a
• 58:45
  Speaker 1: few thousand. Half of them were wrecked on the track
• 58:48
  Speaker 1: and the other half have been lovely restored and they've
• 58:50
  Speaker 1: just completely But it's I see the same people buying
• 58:55
  Speaker 1: those two seventy fives going to the art market and
• 58:58
  Speaker 1: picking up the Jack Meddi sculptures or a bran cusio
• 59:02
  Speaker 1: or whatever happens to float your boat, and piling into
• 59:05
  Speaker 1: these private equities the best returns, the best industry in
• 59:09
  Speaker 1: the world the last five ten years is this market
• 59:11
  Speaker 1: surges has been the vanity economy. The vanity economy. Ferrari
• 59:15
  Speaker 1: is anything that makes you more attractive or makes you
• 59:17
  Speaker 1: feel more signaling to the opposite sex. Yeah, even even
• 59:20
  Speaker 1: and a lot of people say, well, Scott, that's not true.
• 59:22
  Speaker 1: I'm happily married. I just really like this ferrari and
• 59:25
  Speaker 1: I bought it and I kept in my garage. And
• 59:26
  Speaker 1: the questions, well, why does that make you feel good?
• 59:28
  Speaker 1: Or people will so women will say, you know, I
• 59:30
  Speaker 1: wear laprola under my work clothes and no one's ever
• 59:32
  Speaker 1: going to see it. I'm happy. I'm in a monogous relationship.
• 59:35
  Speaker 1: I'm not trying to attract anybody. The question is, well,
• 59:37
  Speaker 1: why do you feel so good? It's because for the
• 59:39
  Speaker 1: last ten million years, it's been pounded into us that
• 59:41
  Speaker 1: we have this job to be more attractive to the
• 59:43
  Speaker 1: other sex, such that we can find someone stronger, smarter,
• 59:46
  Speaker 1: and faster than us to mate with. Such of the
• 59:48
  Speaker 1: next generation is smarter, stronger, and faster. And this vanity
• 59:52
  Speaker 1: economy the most successful people. There's a limited number of
• 59:55
  Speaker 1: these objects because scarcity is what are scarcity values? What
• 59:58
  Speaker 1: gives us the sense that it's sick? Those were really
• 1:00:00
  Speaker 1: successful when you can only only so many people can
• 1:00:03
  Speaker 1: buy and then long and ZN watch this unbelievably German
• 1:00:06
  Speaker 1: watch Makeground by Richemont, and the prices have just gone
• 1:00:10
  Speaker 1: just gone nuts, and it's totally irrational. And that's where
• 1:00:13
  Speaker 1: you want to be in business. You want to be
• 1:00:14
  Speaker 1: in an irrational part of the ecosystem because that irrational
• 1:00:17
  Speaker 1: translates into great margins. I love the work you do
• 1:00:19
  Speaker 1: on the signaling and the value of these different things.
• 1:00:22
  Speaker 1: My my biology, my favorite biology discussion of what beauty
• 1:00:27
  Speaker 1: is my favorite rationalization is or description maybe not rationalization is, well,
• 1:00:34
  Speaker 1: beauty is a function of symmetry, and symmetry is a
• 1:00:36
  Speaker 1: function of health, and that means that they'll be better
• 1:00:39
  Speaker 1: able to reproduce the bare children. And so you're attracted
• 1:00:42
  Speaker 1: to these supermodels not because they're so special, but because
• 1:00:46
  Speaker 1: they meet all of the subconscious, instinctual inditia of health
• 1:00:52
  Speaker 1: and the ability to procreate. And I don't know how
• 1:00:55
  Speaker 1: solid the science is behind that, but I just love
• 1:00:57
  Speaker 1: that rationalization. It makes so much sense along the signaling
• 1:01:01
  Speaker 1: of the watches and all that other stuff. It really,
• 1:01:04
  Speaker 1: when you put things in terms of evolutionary biology, suddenly
• 1:01:08
  Speaker 1: a lot of irrational behavior starts to look less irrational. Yeah,
• 1:01:12
  Speaker 1: it becomes highly irrational when you think about how important
• 1:01:14
  Speaker 1: it is um that the next generation be better. That's,
• 1:01:17
  Speaker 1: you know, Darwin, whatever you call it, the looks, what
• 1:01:20
  Speaker 1: we're attracting this looks. I do think it bifurcates, though
• 1:01:23
  Speaker 1: I think there's basics. Certain types of looks are more
• 1:01:26
  Speaker 1: associated with infection or disease, and we have veered away
• 1:01:29
  Speaker 1: from people who have those common characteristics, and I'm always
• 1:01:32
  Speaker 1: worried I'm gonna I'm gonna say something off color here,
• 1:01:34
  Speaker 1: and that's the quick end of my career, so I
• 1:01:36
  Speaker 1: won't say what those things typically are. The second thing, though,
• 1:01:38
  Speaker 1: I do think, is man made, and that I think
• 1:01:40
  Speaker 1: clothes look better on people who are built like hangers,
• 1:01:43
  Speaker 1: who are unutually thin, and because great organizations like Vogue
• 1:01:47
  Speaker 1: have consistently wanted to make clothes look fantastic, I think
• 1:01:50
  Speaker 1: there has been a man made, a man made training
• 1:01:54
  Speaker 1: towards some unnatural body types. It's not like the days
• 1:01:57
  Speaker 1: of of the Rubenesque window, which when Rubenesque women, which
• 1:02:01
  Speaker 1: were a signal of wealth that you can actually you
• 1:02:04
  Speaker 1: could be a little overweights, which signaled hey I have more.
• 1:02:09
  Speaker 1: You know, I'm a cross fitter. I don't know if
• 1:02:11
  Speaker 1: I've become one of these cross flash Yeah, there you go. Actually,
• 1:02:14
  Speaker 1: my knees are killing me, but I think that's more
• 1:02:15
  Speaker 1: function my age. But anyways, I think they tapped in.
• 1:02:18
  Speaker 1: I think they tapped into this underserved marketplace, and that
• 1:02:20
  Speaker 1: as women who don't necessarily want to be thin. If
• 1:02:23
  Speaker 1: you look at the the the the workout industrial complex,
• 1:02:26
  Speaker 1: it says to guys be ripped and be big, and
• 1:02:28
  Speaker 1: I don't think that's always healthy, but I think there's
• 1:02:31
  Speaker 1: benefits to being strong. But I think what it says
• 1:02:32
  Speaker 1: to women is being naturally thin, and I think that's unhealthy.
• 1:02:36
  Speaker 1: Won't cross fit, by the way six cross fitters or
• 1:02:38
  Speaker 1: women has said to women is be strong and being
• 1:02:41
  Speaker 1: strong as women can mean that you can be five
• 1:02:43
  Speaker 1: five fifty pounds and you can still be really strong,
• 1:02:46
  Speaker 1: and it's celebrated that and it has tapped into this
• 1:02:49
  Speaker 1: wildly underserved population of women who are normal and strong.
• 1:02:54
  Speaker 1: Did you see the Times article about the new um
• 1:02:58
  Speaker 1: brands of cross fit? Close was so women who do
• 1:03:02
  Speaker 1: cross fit they can't wear off the rack clothes if
• 1:03:05
  Speaker 1: you're doing it strong enough, So you have these big
• 1:03:07
  Speaker 1: muscular thighs and you're a little ripped on the shoulders
• 1:03:11
  Speaker 1: and arms. Traditional women's clothes don't fit. I think it
• 1:03:14
  Speaker 1: was the New York Times, but Wolf Jennal, I want
• 1:03:16
  Speaker 1: to say Times about this whole new run of clothes
• 1:03:20
  Speaker 1: that are designed for the CrossFit female body and women.
• 1:03:24
  Speaker 1: It was invented by a woman who was a cross
• 1:03:26
  Speaker 1: fit enthusiast, and it's become wildly successful. A real solid
• 1:03:31
  Speaker 1: cross fitter female goes to the regular department store. Well,
• 1:03:37
  Speaker 1: you're starting to talk about one that one of the
• 1:03:39
  Speaker 1: best returns in retail have been plus size clothing. But
• 1:03:41
  Speaker 1: you're also starting to uh segueing into something that's a
• 1:03:45
  Speaker 1: tectonic shift in the world of retail. And one of
• 1:03:47
  Speaker 1: the reasons why I think Nike is just gonna boom,
• 1:03:51
  Speaker 1: Oh my gosh, what is athletic apparel? Or We've had
• 1:03:55
  Speaker 1: a tectonic shift in the third largest consumer market in
• 1:03:58
  Speaker 1: the world, and that US. For the first time ever
• 1:04:00
  Speaker 1: in two thousand and fourteen, people are spending more money
• 1:04:02
  Speaker 1: on sweatpants than on denim. You now see the denim
• 1:04:06
  Speaker 1: the denim generation. But year olds in my office are
• 1:04:10
  Speaker 1: not wearing Rachel Strugrats, the technology reporter for w w D,
• 1:04:13
  Speaker 1: very fashionable woman. You know what she wears every day?
• 1:04:15
  Speaker 1: Head to tell Nike. Really, people are spending more and
• 1:04:18
  Speaker 1: more money that most the most the most popular brand
• 1:04:21
  Speaker 1: among young wealthy millennials is Nike in apparel. People are
• 1:04:25
  Speaker 1: showing up to work. The fabrics. It doesn't it's not
• 1:04:28
  Speaker 1: just a bad pair of sweatpants. It says juicy on them,
• 1:04:30
  Speaker 1: but these are interesting fabrics that look good. You're going
• 1:04:34
  Speaker 1: to see athletic wear boom under armor Nike, they are
• 1:04:41
  Speaker 1: gonna They're gonna boom the next ten years. And it's
• 1:04:43
  Speaker 1: gonna be and and God help Leavi Strauss and Company,
• 1:04:46
  Speaker 1: diesel Um any denim based company is going to be
• 1:04:50
  Speaker 1: is going to be pushing a rock uphill the next time. Well,
• 1:04:53
  Speaker 1: there's clearly far too many denim companies before this happened.
• 1:04:57
  Speaker 1: Now that this is gonna happen, it will be interesting
• 1:04:58
  Speaker 1: to see what sort of what sort of consolidation there is.
• 1:05:02
  Speaker 1: So so let's talk about another UM signal out there, Twitter,
• 1:05:07
  Speaker 1: Twitter followers, etcetera. You know, I may be a little
• 1:05:10
  Speaker 1: ovo weight, but I got seventy Twitter followers, so I
• 1:05:13
  Speaker 1: think that's worth thirty pounds or so. I could lose
• 1:05:15
  Speaker 1: thirty pounds or um. But you've talked about how far
• 1:05:20
  Speaker 1: Twitter is behind Facebook, and again for you and I
• 1:05:24
  Speaker 1: I would bet you're much more of a Twitter user
• 1:05:27
  Speaker 1: than you are a Facebook. Yeah, you and I were
• 1:05:28
  Speaker 1: talking about this. Uh, you and I don't get Facebook.
• 1:05:31
  Speaker 1: I would like to put a banner across my Facebook
• 1:05:33
  Speaker 1: page that says there's a reason we haven't stayed in touch.
• 1:05:36
  Speaker 1: I just don't like it. I don't get it. But
• 1:05:39
  Speaker 1: as you don't care about your baby's doesn't interest done.
• 1:05:43
  Speaker 1: It's but as Yoda said, you have to forget what
• 1:05:45
  Speaker 1: you know. If you look at the numbers, Facebook's the
• 1:05:47
  Speaker 1: most successful product in the history mankind. That's lessful than God,
• 1:05:50
  Speaker 1: all a, Coca Cola, communism, whatever you want to call it,
• 1:05:53
  Speaker 1: as relationships, meaningful relationships with two point four billion people
• 1:05:57
  Speaker 1: across Instagram? What's happened Facebook? Anyways? Twitter? My basic rap
• 1:06:01
  Speaker 1: is on Twitter, and I love Twitter, no doubt. It's
• 1:06:03
  Speaker 1: a great company, no doubt. I think they've got a
• 1:06:06
  Speaker 1: great management team. The question is are they worth worth
• 1:06:08
  Speaker 1: more than coach Tiffany and and you know, throwing Abercrombie
• 1:06:12
  Speaker 1: or Clorox combined. I just think it's wildly overvalued. And
• 1:06:14
  Speaker 1: if you look at the user base, it appears to
• 1:06:16
  Speaker 1: a flatline. And I would argue that their product innovation
• 1:06:19
  Speaker 1: hasn't been nearly as robust as facebooks or even seen
• 1:06:23
  Speaker 1: a way about. We tend to, as Americans, think of
• 1:06:26
  Speaker 1: ourselves as being the home of innovation. Actually, if you
• 1:06:28
  Speaker 1: look at the product roadmap of a lot of the
• 1:06:30
  Speaker 1: social media platforms in Asia, we chat seen a way
• 1:06:32
  Speaker 1: about Cow Cow talk line in um UH, South Korea
• 1:06:38
  Speaker 1: and Japan, respectively, their product roadmap is actually more innovative
• 1:06:41
  Speaker 1: than what we're seeing here. But I don't think Twitter,
• 1:06:43
  Speaker 1: quite frankly, is innovated. And and if you look about
• 1:06:47
  Speaker 1: we'll see that's exciting. Um I'm hedging because quite frankly,
• 1:06:52
  Speaker 1: I don't know a lot about it. I think it's exciting.
• 1:06:54
  Speaker 1: Real time partner loves it, uses it all the time.
• 1:06:57
  Speaker 1: He's on the air a couple of a couple of
• 1:06:59
  Speaker 1: days a week, and he'll pull up periscope. I have
• 1:07:01
  Speaker 1: it on my phone. I have yet to set it up.
• 1:07:03
  Speaker 1: He'll pull up periscope and say, all right, we're about
• 1:07:05
  Speaker 1: to go on the air. He'll do a quick once
• 1:07:07
  Speaker 1: around the studio and then bang, that's it and he
• 1:07:10
  Speaker 1: gets real time back and forth. Another one you just mentioned.
• 1:07:13
  Speaker 1: We're sitting here in Bloomberg and we're seeing all these screens,
• 1:07:15
  Speaker 1: these these headlines come across these big beautiful screens, and
• 1:07:18
  Speaker 1: we just saw the Pinterest announces you can now purchase
• 1:07:20
  Speaker 1: directly from pins. I think that if Instagram tomorrow releases
• 1:07:26
  Speaker 1: Instagram uh and says look curated pages of specific topics
• 1:07:34
  Speaker 1: that you can pin your images too. I think Pinterest
• 1:07:37
  Speaker 1: is going to decline in value. I think Pinterest product
• 1:07:39
  Speaker 1: development has been almost zero the last twenty four months
• 1:07:42
  Speaker 1: and is wildly overvalued. Granted I said that they were
• 1:07:45
  Speaker 1: at five billion. I think you have essentially social media
• 1:07:49
  Speaker 1: is basically Facebook in the seven doors right now. I
• 1:07:51
  Speaker 1: think you're gonna see Facebook. And we said this during
• 1:07:52
  Speaker 1: the brig. I think Facebook is gonna be the most
• 1:07:54
  Speaker 1: valuable company in the world within five years. Granted I
• 1:07:57
  Speaker 1: said that five years ago. I was gonna say, I'd
• 1:07:58
  Speaker 1: say ten years. It might take longer. I said it
• 1:08:01
  Speaker 1: five years ago. The Facebook was going to become the
• 1:08:03
  Speaker 1: Internet of all time. Online is spent on Facebook. It
• 1:08:06
  Speaker 1: goes to fifty one, and the Internet just the underlying technology,
• 1:08:08
  Speaker 1: and Facebook is the Internet. But when you look at
• 1:08:11
  Speaker 1: two and a half billion people, meaningful relationships dominating the
• 1:08:14
  Speaker 1: funnel up and down, I just think they're an unbelievable
• 1:08:17
  Speaker 1: jargonaut and they're gonna start to take share from Google
• 1:08:19
  Speaker 1: and every other social media platform including Twitter. See that's
• 1:08:22
  Speaker 1: really fascinating. Some of their advertising stuff. It's going to
• 1:08:26
  Speaker 1: be interesting to see how they integrated because they have
• 1:08:29
  Speaker 1: the ability to do wondrous things. They're a b testing
• 1:08:34
  Speaker 1: and I don't know if we'll get to that. Will
• 1:08:35
  Speaker 1: will circle back later about that. But some of the
• 1:08:38
  Speaker 1: things I've been seeing that they do and hearing about
• 1:08:41
  Speaker 1: that they do are astonishing. And I don't know how
• 1:08:45
  Speaker 1: other marketers slash advotarser is going to be able to
• 1:08:48
  Speaker 1: match the infrastructure because they have more you. You alluded
• 1:08:52
  Speaker 1: to this earlier. They have so much information about you,
• 1:08:56
  Speaker 1: who you are, what you do, you know. I love
• 1:08:58
  Speaker 1: the story and this is way maybe there's some competition
• 1:09:01
  Speaker 1: with Facebook. I love the story about target marketing to
• 1:09:06
  Speaker 1: the pregnant d and dad goes into the store and
• 1:09:09
  Speaker 1: yells at the manager and how dare you? You know,
• 1:09:11
  Speaker 1: grows the paper, how dare you do this? And then
• 1:09:13
  Speaker 1: a month later shows up to apologize, Hey, guys, we're right.
• 1:09:17
  Speaker 1: Based on what her purchase history is through her credit card,
• 1:09:20
  Speaker 1: they can track her. If other retailers can do that,
• 1:09:23
  Speaker 1: do they stand a chance against Facebook? Or is it
• 1:09:27
  Speaker 1: going to be Facebook and everybody else? So I think
• 1:09:29
  Speaker 1: that's I think it's apples and oranges. I don't think
• 1:09:31
  Speaker 1: facebooks in the retail business. As a matter of fact,
• 1:09:33
  Speaker 1: social commerce has been one of the biggest head fix
• 1:09:36
  Speaker 1: in business the last five years. There were what do
• 1:09:38
  Speaker 1: you mean by that, well, a bunch of retailers in
• 1:09:40
  Speaker 1: two thousand and twelve about seventeen retailers that whe track
• 1:09:44
  Speaker 1: open stores. On Facebook you could buy something. There were
• 1:09:49
  Speaker 1: three Social When you're at a bar, you don't want
• 1:09:52
  Speaker 1: to buy. When you're looking taking your friends, you don't
• 1:09:54
  Speaker 1: want to buy. But it doesn't matter it even if,
• 1:09:57
  Speaker 1: even if these aren't platforms. Retail advertise is a huge market,
• 1:10:01
  Speaker 1: and Facebook is going to start to take share and
• 1:10:03
  Speaker 1: market cap from every other media vehicle in the world.
• 1:10:06
  Speaker 1: They're gonna take it from ESPN, They're going to take
• 1:10:09
  Speaker 1: it from w PP, They're gonna take it from pinterest.
• 1:10:12
  Speaker 1: This is back to the notion of a winner take
• 1:10:13
  Speaker 1: all economy. But you have top of the funnel with Instagram,
• 1:10:17
  Speaker 1: would you could argue is already the most powerful platform
• 1:10:19
  Speaker 1: in the world if you look at the community size
• 1:10:20
  Speaker 1: times the level of engagement that it inspires top of
• 1:10:23
  Speaker 1: the funnel, brand based, image based awareness. Then with Facebook
• 1:10:27
  Speaker 1: you have unbelievable targeting in the mid funnel at scale,
• 1:10:30
  Speaker 1: and then at the bottom you have What's app, which
• 1:10:32
  Speaker 1: by the way, is strong in every market that Facebook
• 1:10:34
  Speaker 1: wasn't strong and right, it was very, very um complementary acquisition.
• 1:10:38
  Speaker 1: They're jumping the silos. They're starting to figure out what
• 1:10:41
  Speaker 1: images you're looking at on Instagram and then and then
• 1:10:43
  Speaker 1: target you on Facebook with more relevant ads, and at
• 1:10:45
  Speaker 1: some point they're gonna be able to target you locally
• 1:10:47
  Speaker 1: based on where you are on What's app. We have
• 1:10:50
  Speaker 1: never seen, we have never seen anything like this. Very
• 1:10:54
  Speaker 1: this is this is the most successful product in the
• 1:10:56
  Speaker 1: history of mankind. It's nothing. It's a scene for a
• 1:11:00
  Speaker 1: Minority report where where Tom Cruise walks into the store,
• 1:11:04
  Speaker 1: they know who he is, they know what he's shopped at,
• 1:11:06
  Speaker 1: the ads pop up specifically for him. Facebook is approaching
• 1:11:11
  Speaker 1: that way. And look how smart they've been. Remember all
• 1:11:13
  Speaker 1: the grief that everybody gave Mark Zuckerberg for buying Instagram
• 1:11:16
  Speaker 1: nineteen people for a billion bucks. Now they say it's
• 1:11:18
  Speaker 1: where billion dollars fantastic acquisition. Meanwhile, yeah, who goes and
• 1:11:22
  Speaker 1: buy his tumber from one point one billion? And they
• 1:11:23
  Speaker 1: never mentioned in earnings calls again, right, best acquisition in
• 1:11:26
  Speaker 1: tech the last five years, Instagram, worst acquisition in tech
• 1:11:29
  Speaker 1: the last five years, Tumbler, and then What's App perfectly
• 1:11:33
  Speaker 1: complimentary every market they weren't strong, and this has been
• 1:11:37
  Speaker 1: This has been the most nimble company in the world.
• 1:11:39
  Speaker 1: Zero zero revenues from mobile thirty months ago, now two
• 1:11:41
  Speaker 1: thirds of the revenue. And that's the huge shift once
• 1:11:45
  Speaker 1: they cracked mobile, because I was skeptical about Facebook's valuation
• 1:11:49
  Speaker 1: pre mobile, I did a reversal once they basically said, Hey,
• 1:11:53
  Speaker 1: here's how much we're seeing and that was a huge,
• 1:11:56
  Speaker 1: huge game change. Unbelievably nimble. Who's made better acquisition than Facebook,
• 1:12:00
  Speaker 1: who's being able to retain talent better. They've also got
• 1:12:03
  Speaker 1: the benefit of being seen as benign, so regulators aren't
• 1:12:07
  Speaker 1: yet coming after them. Uh yeah, I think they made
• 1:12:10
  Speaker 1: the most uh most valuable company in the world. That
• 1:12:13
  Speaker 1: that's that's incredible. That's ah. We'll see if they can
• 1:12:17
  Speaker 1: actually bypass Apple, And which raises the question how dependent
• 1:12:22
  Speaker 1: is Apple on their next hit? I know that we've
• 1:12:25
  Speaker 1: had a long run of really successful products. Are they
• 1:12:29
  Speaker 1: a hit driven company or can they afford the watch
• 1:12:33
  Speaker 1: the eye watch to be a little uh maybe not
• 1:12:37
  Speaker 1: on iPhone or even an iPod for that matter. Yeah,
• 1:12:40
  Speaker 1: I think they have their next hit product, and I
• 1:12:42
  Speaker 1: don't think it's the watch. I think it's the iPhone
• 1:12:44
  Speaker 1: sex Really, I don't know if you're an iPhone guy,
• 1:12:47
  Speaker 1: But which one do you have? I got the six,
• 1:12:50
  Speaker 1: My wife has the big one. The big one is
• 1:12:53
  Speaker 1: too big to put in my pocket. She looked. Now,
• 1:12:56
  Speaker 1: by the way, not a tech person like getting her
• 1:12:59
  Speaker 1: to return voicemails like she texts. She she so totally
• 1:13:04
  Speaker 1: loves this phone. It's easy to read, it does everything.
• 1:13:07
  Speaker 1: It's the pictures, so she teaches a photography class. The
• 1:13:10
  Speaker 1: pictures that you do on that phone are just just astonishing. Yeah,
• 1:13:15
  Speaker 1: it does the Apple Watch. Is the Apple Watch successful?
• 1:13:18
  Speaker 1: I think it is, but quite feely. I don't think
• 1:13:20
  Speaker 1: it matters. I think the iPhone six is such an
• 1:13:22
  Speaker 1: incredible product. And by the way, who loses Samsung? Oh
• 1:13:26
  Speaker 1: my gosh, it's a Samsung killer. And you want to
• 1:13:28
  Speaker 1: talk about Android. There were more Apple Watches sold on
• 1:13:32
  Speaker 1: the first day of the Apple Watch and every Android
• 1:13:34
  Speaker 1: device combined for the previous year. Really, Oh my gosh,
• 1:13:38
  Speaker 1: that's unbelievable. Realized that Apple store on Fifth Avenue with
• 1:13:41
  Speaker 1: the one below the General Motors building is going to
• 1:13:43
  Speaker 1: do more sales in a year just that store than
• 1:13:44
  Speaker 1: the entire wearables market. By the way, everybody thinks that
• 1:13:47
  Speaker 1: the Apple watches evidence that the wearable's market is thriving.
• 1:13:50
  Speaker 1: The wearables market is dead except for the Apple Watch.
• 1:13:54
  Speaker 1: And the Apple Watch isn't a wearable. It's a second
• 1:13:56
  Speaker 1: screen for your phone that's going to take all the
• 1:13:58
  Speaker 1: discretionary income out of the wearable's market. Fit bit job
• 1:14:02
  Speaker 1: on never going public, No way, the wearable's market is done. Aska.
• 1:14:07
  Speaker 1: Anytime you're with a hundred people or more in an audience,
• 1:14:09
  Speaker 1: how many people about a wearable? They all raise their hand.
• 1:14:12
  Speaker 1: How many people are wearing a wearable? You got? What
• 1:14:15
  Speaker 1: are you wearing? Which one you have? Um, it's okay.
• 1:14:19
  Speaker 1: I don't love how poorly it sinks with the phone.
• 1:14:22
  Speaker 1: Sometimes it does, sometimes it does in the battery last
• 1:14:25
  Speaker 1: three days. I don't like the way this closes. If
• 1:14:27
  Speaker 1: I have a better, if I I have zero brand loyalty,
• 1:14:30
  Speaker 1: I've been using it because truth be told, I'm at
• 1:14:33
  Speaker 1: nine thousand steps. Hey, I'm gonna make it to ten.
• 1:14:36
  Speaker 1: And there are days when I'm doing fifteen and eighteen.
• 1:14:38
  Speaker 1: And you know the only reason I'm not three hundred
• 1:14:40
  Speaker 1: pounds is because I'm so I'm running around constantly what right.
• 1:14:44
  Speaker 1: If it wasn't for that, I'd be a Macy's float
• 1:14:47
  Speaker 1: um for Thanksgiving. But but, but I will tell you
• 1:14:52
  Speaker 1: the fascinating thing about Apple and the phones is, you know,
• 1:14:56
  Speaker 1: you see the Android market chair and how much Samsons
• 1:14:59
  Speaker 1: Apple's capture about the profits in the phone space. For
• 1:15:04
  Speaker 1: the first time in the history of South Korea or
• 1:15:06
  Speaker 1: as long as it's been mobile phones, you're gonna have
• 1:15:08
  Speaker 1: a mobile phone from a non domestic carry I have
• 1:15:10
  Speaker 1: the number one market share, and that's the iPhone China
• 1:15:13
  Speaker 1: never having before. It's Westman Samsung, which by the way,
• 1:15:15
  Speaker 1: is a great company, and you can't count them out.
• 1:15:17
  Speaker 1: I just think they're I mean, they're appliance as they
• 1:15:19
  Speaker 1: do an amazing job. So diplomatic I work with all
• 1:15:22
  Speaker 1: these guys anyway, So uh, but you look at the iPhone.
• 1:15:26
  Speaker 1: There's gonna be more iPhone sold in China this year
• 1:15:28
  Speaker 1: than in the US. And then just coming up in
• 1:15:30
  Speaker 1: the elevator here, I realized the upgrade cycle has such
• 1:15:33
  Speaker 1: traumatic potential because everyone has an iPhone, but they still
• 1:15:35
  Speaker 1: have the five. So two things the iPhone, the successful
• 1:15:40
  Speaker 1: migration to a luxury brand. Apple is going to be
• 1:15:42
  Speaker 1: a trillion dollar market cab company. It you have never
• 1:15:46
  Speaker 1: realized one of the core the core pieces of I
• 1:15:49
  Speaker 1: P in the world of academia, Academias per Halla out
• 1:15:51
  Speaker 1: of Chicago, this notion of core competents. Find one thing
• 1:15:54
  Speaker 1: you're really good at, then do everything an industry standard.
• 1:15:56
  Speaker 1: That's how the majority of great companies operated. What does
• 1:15:59
  Speaker 1: an Apple's core comp prounced the best retailer in the
• 1:16:01
  Speaker 1: world to the best retailer in the world, best store,
• 1:16:04
  Speaker 1: the numbers on a square foot basis, there's nothing even
• 1:16:07
  Speaker 1: close to it. There number one in retail in the
• 1:16:09
  Speaker 1: world on a per square foot basis and five dollars
• 1:16:11
  Speaker 1: per square foot. The number two is sifty at three thousand.
• 1:16:14
  Speaker 1: There's a new number two warby Parker at about granted,
• 1:16:18
  Speaker 1: small base, but what do they sells? But anyways, and
• 1:16:23
  Speaker 1: then design, who's a better you know hardware? I mean
• 1:16:26
  Speaker 1: this is a company with five or six core competence
• 1:16:29
  Speaker 1: is it's blown out the traditional notions of a go
• 1:16:33
  Speaker 1: to market strategy around business that we've ever had. We've
• 1:16:35
  Speaker 1: never seen a company like this. Google has one public
• 1:16:38
  Speaker 1: company search, Search and search right, nothing else could be
• 1:16:42
  Speaker 1: taken public at Google. You probably have four to six
• 1:16:46
  Speaker 1: fifty billion dollar plus companies within Apple that are distinct
• 1:16:51
  Speaker 1: of each other. You know, iTunes could go public, the
• 1:16:54
  Speaker 1: hardware company could go public. The iPhone you have so
• 1:16:59
  Speaker 1: many company is operating on twelve cylinders in that company.
• 1:17:03
  Speaker 1: We've never seen anything like that. It's amazing. So so
• 1:17:06
  Speaker 1: let's there was a question I had for you about
• 1:17:09
  Speaker 1: Apple earlier. How do you how do you compare Tim
• 1:17:13
  Speaker 1: Cook to Steve Jobs? How good is Tim Cooked? He
• 1:17:16
  Speaker 1: may be one of the most underrated CEOs in the country.
• 1:17:19
  Speaker 1: I think he's I think it's fantastic. And you've run
• 1:17:22
  Speaker 1: a company. I've run a company. You just see how
• 1:17:24
  Speaker 1: damn hard it is to create value, and how and
• 1:17:28
  Speaker 1: and and what both Steve Jobs, who has deservedly, you know,
• 1:17:33
  Speaker 1: kind of attained icon status. Tim Cook, Oh my god,
• 1:17:37
  Speaker 1: what unbelievably big shoes to fill. And he's slipped right
• 1:17:40
  Speaker 1: into him. So every year one Buffett walkhings off for lunch.
• 1:17:44
  Speaker 1: It goes for three or four million dollars. Tim Cook
• 1:17:47
  Speaker 1: does one each year, and I was like, I would
• 1:17:50
  Speaker 1: love to do that. I can't. I can't pass away
• 1:17:52
  Speaker 1: two million dollars on lunch. You need that Ferrari, Right, Ferrari,
• 1:17:56
  Speaker 1: it's two hundred thousand dollars. You can have lunch with
• 1:17:58
  Speaker 1: Tim Cook to raise money for charity. How is that
• 1:18:02
  Speaker 1: pop talk? That's what I mean by that's the most
• 1:18:05
  Speaker 1: underrated CEO running the biggest company in the world. How
• 1:18:09
  Speaker 1: is that not a million dollar lunch? Crazy? I'm gonna
• 1:18:12
  Speaker 1: have lunch twice with them, crazy, great failure. That that's
• 1:18:15
  Speaker 1: exactly right. Um. So we talked about design, design and
• 1:18:18
  Speaker 1: brand with Apple, So what else do they need to
• 1:18:21
  Speaker 1: do to move the needle? Or is there installed platform?
• 1:18:25
  Speaker 1: Is there installed base so big that just that that
• 1:18:29
  Speaker 1: upgrade cycle is enough to keep them going for a
• 1:18:31
  Speaker 1: few years until the next hit comes along. My sense
• 1:18:34
  Speaker 1: is between the watch, which is really a second screen
• 1:18:37
  Speaker 1: for the phone, and anything you could do with the phone,
• 1:18:39
  Speaker 1: whether it be you know, continue to approach on media.
• 1:18:43
  Speaker 1: They announced their streaming service today. We'll see what happens
• 1:18:46
  Speaker 1: with that. But there's so much opportunity there are there
• 1:18:49
  Speaker 1: every every one of these companies and moving towards one place.
• 1:18:51
  Speaker 1: They all want to be your global operating system hub
• 1:18:54
  Speaker 1: I called gosh. They all want to control more time
• 1:18:57
  Speaker 1: of your screen, time of your eyeballs, and your attention
• 1:18:59
  Speaker 1: than any other firm, and Apples and probably the best
• 1:19:02
  Speaker 1: position to do that among the people that matter most,
• 1:19:04
  Speaker 1: and that's effectively higher income households. If you did a
• 1:19:07
  Speaker 1: heat map of the iOS mobile system, it's basically a
• 1:19:11
  Speaker 1: wealth map. If you're in Manhattan, you own uh, you
• 1:19:14
  Speaker 1: own an iPhone and an iPad. If you're in on
• 1:19:18
  Speaker 1: the island and some of the lower income areas, you're
• 1:19:20
  Speaker 1: out of Jersey and some of them income areas, your
• 1:19:22
  Speaker 1: Android and your PC. So Apple is effectively said and
• 1:19:26
  Speaker 1: Apples tapping into this. They're getting in front of this wave.
• 1:19:30
  Speaker 1: When we talk about unfortunately the wealthier aggregating more and
• 1:19:33
  Speaker 1: more income. Apple only has what of a fifteen or
• 1:19:36
  Speaker 1: tent market share, but they have share of mobile commerce
• 1:19:39
  Speaker 1: because only wealthy people right now are shopping on their
• 1:19:41
  Speaker 1: mobile phones. Wealthy people have iPhones. So who owns an iPhone?
• 1:19:45
  Speaker 1: Everyone that matters. And when I say everyone that matters,
• 1:19:48
  Speaker 1: I mean everyone that has a lot of disposing income
• 1:19:50
  Speaker 1: and it is comfortable buying online and comfortable buying high
• 1:19:52
  Speaker 1: margin products online. So I don't think I think all
• 1:19:55
  Speaker 1: they need to do is keep improving the ecosystem for
• 1:19:58
  Speaker 1: the iPhone and they're gonna add hundreds of billions of
• 1:20:00
  Speaker 1: dollars in market cap. That's amazing. You know, in one
• 1:20:03
  Speaker 1: of your videos, you show the heat map of operating
• 1:20:06
  Speaker 1: system and exactly what you described, so you could see
• 1:20:11
  Speaker 1: in Manhattan, Proper and Park Slope and and Morristown, in
• 1:20:15
  Speaker 1: parts of Nasca County it's iPhone and all in the
• 1:20:18
  Speaker 1: lower or or even middle income spaces, it was um
• 1:20:23
  Speaker 1: the Android system. You also mentioned the purple areas that
• 1:20:27
  Speaker 1: are Jurassic Park. Let's talk about that. Yeah, we infectionately
• 1:20:30
  Speaker 1: called Midtown, which is purple lights up purple Jurassic Park.
• 1:20:33
  Speaker 1: While with where all the dinosaurs with their blackberries are.
• 1:20:36
  Speaker 1: And I don't know about you, but I missed my BlackBerry.
• 1:20:39
  Speaker 1: I absolutely salivate when you didn't love the black hated it,
• 1:20:42
  Speaker 1: hated it. And I'll tell you why, because my first
• 1:20:46
  Speaker 1: the iPhone comes out and it was a T and
• 1:20:48
  Speaker 1: T only, and I went and I got the iPhone
• 1:20:51
  Speaker 1: and the first iPhone one was this beautiful, useless glass brick.
• 1:20:56
  Speaker 1: It was just it was great unless you wanted to
• 1:20:59
  Speaker 1: make up phone call. And back then, I supposedly a
• 1:21:02
  Speaker 1: teen T is much better today, but back then it
• 1:21:05
  Speaker 1: was utterly worthless in this part of area, a part
• 1:21:08
  Speaker 1: of you know, New York and Essel County. You couldn't
• 1:21:10
  Speaker 1: make a call within New York. State allows you thirty
• 1:21:13
  Speaker 1: days to return a cellular country. So so the iPhone
• 1:21:17
  Speaker 1: went back and I swapped it for a black beer.
• 1:21:20
  Speaker 1: And for two or three years I used the BlackBerry,
• 1:21:22
  Speaker 1: and I had the worst I'm a Mac guy since
• 1:21:25
  Speaker 1: my classic, so I've been I've been a fanboy for
• 1:21:29
  Speaker 1: a long time and I had the worst iPhone lust.
• 1:21:34
  Speaker 1: But it was unusable for me, and I the whing
• 1:21:38
  Speaker 1: m call it um. The basic concept of G, I
• 1:21:45
  Speaker 1: really want this iPhone if only it would work for
• 1:21:49
  Speaker 1: me was really really you know, frustrating. And then when
• 1:21:52
  Speaker 1: finally it showed up on Verizon, that was it. It
• 1:21:56
  Speaker 1: was get rid of the BlackBerry. Every time I used
• 1:21:59
  Speaker 1: the BlackBerry was just reminded that it wasn't an iPhone.
• 1:22:03
  Speaker 1: It was very, very frustrating. Yeah, it's it's it's been.
• 1:22:07
  Speaker 1: I'm still I'm still envious of people who have their
• 1:22:09
  Speaker 1: black but I missed the tactile keys. But talk about
• 1:22:12
  Speaker 1: what's interesting is basically, in a two percent global growth economy,
• 1:22:16
  Speaker 1: when a company's increasing market cap, the way Apple, it's
• 1:22:19
  Speaker 1: increasing market cap. The question is, well, who's on the
• 1:22:21
  Speaker 1: losing end of that? And we know they basically sucked
• 1:22:23
  Speaker 1: all the all the all the life in the blood
• 1:22:25
  Speaker 1: out of Rim. They're doing the same thing to HP.
• 1:22:28
  Speaker 1: They're about to do the same thing to Samsung. The
• 1:22:30
  Speaker 1: question is who's next. I think Apple is going to
• 1:22:33
  Speaker 1: start to suck market cap out of the LVMH and
• 1:22:35
  Speaker 1: carrying to the world in the j cruise of the
• 1:22:38
  Speaker 1: world because there's only so much disposable income in the
• 1:22:41
  Speaker 1: ecosystem to go to products that costs between three hundred
• 1:22:43
  Speaker 1: and a thousand dollars and teen retailers who have been
• 1:22:46
  Speaker 1: wrecked the last five years from a stock market perspective,
• 1:22:49
  Speaker 1: staring at the navel is the product problems with the
• 1:22:51
  Speaker 1: brand problems of a brand problems prodctblem, it's neither. It's
• 1:22:54
  Speaker 1: an Apple problem. And that kids are now expressing their
• 1:22:57
  Speaker 1: identity through their phone specifically there Apple phone, specifically there
• 1:23:01
  Speaker 1: I found versus a hoodie. The hoodie, So the Abercromis
• 1:23:04
  Speaker 1: of the world are no longer it. So let me
• 1:23:06
  Speaker 1: show you why I don't really care about the BlackBerry
• 1:23:09
  Speaker 1: anymore so. The speech to text feature which was awful
• 1:23:15
  Speaker 1: in the first year and then was pretty good in
• 1:23:19
  Speaker 1: the second year. Take a read of what I just did.
• 1:23:24
  Speaker 1: It's picture perfect. It's letter for perfect. I hardly type
• 1:23:28
  Speaker 1: anymore unless I'm on the subway, so it requires connectivity
• 1:23:33
  Speaker 1: because it's basically checking. It takes what I say, it
• 1:23:36
  Speaker 1: converts it to a formula to math, essentially sends it
• 1:23:39
  Speaker 1: up to the cloud, brings it back down, compares it
• 1:23:42
  Speaker 1: against a bajillion versions of this, finds out exactly what
• 1:23:47
  Speaker 1: I'm saying, and the quality is it's so much better,
• 1:23:53
  Speaker 1: um than it was. It's pretty usable. Typing on glass
• 1:23:58
  Speaker 1: not my favorite thing, isn't it's it's I will say
• 1:24:01
  Speaker 1: that the android, this thing where you can just sort
• 1:24:04
  Speaker 1: of drag your fingers around. I think it is superior
• 1:24:07
  Speaker 1: than the individual. But the the text dictation is now
• 1:24:12
  Speaker 1: so accurate. The only problem is it's a different part
• 1:24:15
  Speaker 1: of your brain to speak than to write. I find
• 1:24:17
  Speaker 1: what I write is much better than what I say
• 1:24:19
  Speaker 1: because it's a different lobe. Yeah, that's well. Look at
• 1:24:22
  Speaker 1: the stories of different wornucks area, broke as area, the
• 1:24:25
  Speaker 1: different aphasias. People who lose the ability to speak but
• 1:24:28
  Speaker 1: can sing or can't read but can write. They just
• 1:24:31
  Speaker 1: can't read back what they wrote. That sort of stuff
• 1:24:34
  Speaker 1: is really fascinating to me. And look, when I wrote
• 1:24:38
  Speaker 1: my first book, I thought, I'll just dictate, it'll take
• 1:24:40
  Speaker 1: no time at all, and suddenly I discover, oh no,
• 1:24:43
  Speaker 1: that's a very different part of it's a very different
• 1:24:46
  Speaker 1: part of the brain, and it doesn't work nearly as well.
• 1:24:48
  Speaker 1: If I write something out and then integrate it into
• 1:24:51
  Speaker 1: my speaking process, it sounds much better than when I'm
• 1:24:55
  Speaker 1: just what does that quote? If I'd had more time,
• 1:24:58
  Speaker 1: I would have That's the thing about writing. I do
• 1:25:01
  Speaker 1: think you try harder and you're more thoughtful about what
• 1:25:03
  Speaker 1: you're actually communicating. So we never got to talk about
• 1:25:06
  Speaker 1: the fifth Horsemen. Let's let's talk about that a little bit.
• 1:25:09
  Speaker 1: So what we attempted to do is look at what
• 1:25:11
  Speaker 1: are the common the underpinnings of the four horsemen that's
• 1:25:14
  Speaker 1: enabled them to build these multi hundred billion dollar market
• 1:25:16
  Speaker 1: cap companies. And we found several things. One a truly
• 1:25:19
  Speaker 1: differentiated product, I mean something that's surrounded by IP that
• 1:25:22
  Speaker 1: you couldn't replicate easily. You couldn't replicate Google Search Engine easily.
• 1:25:26
  Speaker 1: You cannot replicate the phone, iPhone easily. You can replicate
• 1:25:29
  Speaker 1: Facebook's primary platform's I mean these are protected really unbelievably
• 1:25:35
  Speaker 1: differentiated products. Then visionary capital and that as someone with
• 1:25:38
  Speaker 1: a big vision of Jeff Bezos has said We're going
• 1:25:41
  Speaker 1: to be the world's biggest retailer. And then some progress
• 1:25:43
  Speaker 1: against that vision that allows them to access capital at
• 1:25:46
  Speaker 1: such a low cost that they can launch a phone,
• 1:25:49
  Speaker 1: spend a couple of billion bucks on it, have to
• 1:25:50
  Speaker 1: be a dud, and it doesn't really matter. They can
• 1:25:53
  Speaker 1: have so much capital to go play in traffic and innovate.
• 1:25:56
  Speaker 1: I think control of the end user experience vertical than
• 1:26:00
  Speaker 1: luxury products are now sold through control channels. Your ability
• 1:26:03
  Speaker 1: to control the end used product and have your brand
• 1:26:06
  Speaker 1: be in front of the consumer is really powerful vanity
• 1:26:09
  Speaker 1: uh self expressive benefit of brand that people want to
• 1:26:12
  Speaker 1: associate with. So there's all these different factors. Maternal the
• 1:26:16
  Speaker 1: companies have outed the most market cap, treat their employees
• 1:26:18
  Speaker 1: really well, they're great places to work. So if you
• 1:26:20
  Speaker 1: dook all those things and applied them to a bunch
• 1:26:23
  Speaker 1: of great companies, who comes up as potentially could be
• 1:26:26
  Speaker 1: the next big big thing. And some of the companies
• 1:26:29
  Speaker 1: we came up with that have some potential. We talked
• 1:26:32
  Speaker 1: about a couple of them. Nike has a lot of potential.
• 1:26:35
  Speaker 1: I think Ali Baba when you look at six of
• 1:26:37
  Speaker 1: all packages being shipped through China are coming from Ali Baba.
• 1:26:41
  Speaker 1: When you get the product roadmap, you have a company
• 1:26:43
  Speaker 1: that you know, is that kind of the best digital
• 1:26:46
  Speaker 1: company in the fastest screen market in the world. That's
• 1:26:48
  Speaker 1: a pretty good combination. A company that most people might
• 1:26:51
  Speaker 1: not think of as potentially being in that same breath,
• 1:26:53
  Speaker 1: but I think it's an amazing company. Is Starbucks? What
• 1:26:56
  Speaker 1: are the twenties something thousand stores now? Two stores opened
• 1:26:59
  Speaker 1: every day for the last seven years. Also, I would
• 1:27:02
  Speaker 1: argue a technology company that serves hor beverages, the largest
• 1:27:06
  Speaker 1: mobile payments company in the world. You have that. You
• 1:27:09
  Speaker 1: have a Starbucks app one five One in five dollars
• 1:27:12
  Speaker 1: go through the mobile app. Now, that's unbelievable, more successful
• 1:27:16
  Speaker 1: than I've been using it for god knows how long.
• 1:27:18
  Speaker 1: It's flawless, more than any other company in the world
• 1:27:23
  Speaker 1: right now, and also incredibly maternal. They spend more money
• 1:27:26
  Speaker 1: on employee benefits and they spend on coffee beings fantastic
• 1:27:31
  Speaker 1: and not nine dollars and twenty three cents average order value.
• 1:27:35
  Speaker 1: If they can figure out a way to get into
• 1:27:36
  Speaker 1: food or into other things and get to twenty or
• 1:27:38
  Speaker 1: thirty bucks transaction, you're probably looking at a company that's
• 1:27:42
  Speaker 1: three to five billion dollar market cat. Starbucks is an
• 1:27:45
  Speaker 1: unbelievable company that has had, in my opinion, just made
• 1:27:50
  Speaker 1: we haveventimes sit with comes and say, well, we're not
• 1:27:52
  Speaker 1: a tech company. Were apparent we're never going to be
• 1:27:54
  Speaker 1: a tech I'm saying, if Starbucks can be a tech company,
• 1:27:57
  Speaker 1: or can use technology to drive tens of billions of
• 1:27:59
  Speaker 1: dollars in market appitalization, what's your excuse? No one would
• 1:28:02
  Speaker 1: say of Starbucks as a tech company. Yeah, they are.
• 1:28:04
  Speaker 1: That's how they've had it, tens of billions of dollars
• 1:28:07
  Speaker 1: in market cap, the number one company or the company
• 1:28:10
  Speaker 1: based on what i'll call the subjective algorithm we've applied
• 1:28:12
  Speaker 1: against it. In my view, if I was to say, okay,
• 1:28:15
  Speaker 1: what company now is trading at less than a hundred
• 1:28:17
  Speaker 1: billion dollars but could be worth three to five d
• 1:28:19
  Speaker 1: billon dollars in five to ten years, I would pick Uber.
• 1:28:21
  Speaker 1: I think it's become the vascular system for business. We've
• 1:28:24
  Speaker 1: never seen anything like that. It's it's adopted this strategy.
• 1:28:28
  Speaker 1: When you look at the other things companies have had
• 1:28:30
  Speaker 1: in common that have added hundreds of billions of dollars
• 1:28:32
  Speaker 1: in market capit last few years, it is their parasites,
• 1:28:34
  Speaker 1: and that is they're they're feeding off another organism. Someone
• 1:28:37
  Speaker 1: else is creating the content. You create the content for Facebook,
• 1:28:40
  Speaker 1: we create the content for Google. Uber is basically fed
• 1:28:45
  Speaker 1: x ups without unions, without cap X. They buy their
• 1:28:50
  Speaker 1: own car, without a uniform, without the right to strike,
• 1:28:53
  Speaker 1: flexible labor meaning cheap labor. It's sort of a it's
• 1:28:58
  Speaker 1: an a ran Darwinian dream from a shareholder standpoint. Uh,
• 1:29:02
  Speaker 1: and they could potentially get into all sorts of businesses.
• 1:29:05
  Speaker 1: I don't think Uber is a private drive, a private
• 1:29:07
  Speaker 1: car company. I think Uber is effectively a last mass
• 1:29:11
  Speaker 1: solution for millions of businesses that all are struggling with
• 1:29:15
  Speaker 1: last mile That's fascinating. Way do you put Netflix into
• 1:29:19
  Speaker 1: that ecosystem? Unbelievable company, I mean, but it's already it's
• 1:29:22
  Speaker 1: already almost there. Right. What will be interesting is it's
• 1:29:27
  Speaker 1: a great lesson and it's something that my industry we
• 1:29:30
  Speaker 1: failed to learn that If you want to understand how
• 1:29:32
  Speaker 1: likely you are to be disrupted. It's pretty easy. You
• 1:29:35
  Speaker 1: just look at what is our prices relative to inflation,
• 1:29:38
  Speaker 1: you know, and if our prices have gone way more
• 1:29:40
  Speaker 1: inflation and there's no underlying innovation, Cable massive price increases,
• 1:29:44
  Speaker 1: no innovation, everybody gets into it. Netflix, Uh, my senses
• 1:29:49
  Speaker 1: could be one of those company. The thing that's scary
• 1:29:51
  Speaker 1: about Netflix is the dumb pipe of cable riders. They
• 1:29:54
  Speaker 1: still have a lot of power, and so even with
• 1:29:57
  Speaker 1: net neutrality more or less passing, but there new FCC rules,
• 1:30:01
  Speaker 1: but they still own the pipe. Yeah, they still own
• 1:30:03
  Speaker 1: the pipe, right, so they can raise prices, I know.
• 1:30:08
  Speaker 1: So I wonder if Netflix, Netflix, in my opinion, has
• 1:30:12
  Speaker 1: one big hurdle that the other guys, the four Horsemen,
• 1:30:14
  Speaker 1: don't happen to. That is they are not totally vertical.
• 1:30:17
  Speaker 1: They don't control their distribution. They still have to go
• 1:30:20
  Speaker 1: through someone else's pipe. By the way, how familiar are
• 1:30:22
  Speaker 1: you with the history of of the Apple stores, since
• 1:30:25
  Speaker 1: you're talking about controlling the vertical you you just made
• 1:30:28
  Speaker 1: me think of something from back in the when it
• 1:30:33
  Speaker 1: looked like Apple wasn't gonna survive. Are you are you
• 1:30:36
  Speaker 1: plugged into the best buy Apple story? I'm not so.
• 1:30:39
  Speaker 1: The first Apple stores were this ghetto in the corner
• 1:30:43
  Speaker 1: of the PC section of Best Buy, because um, Apple
• 1:30:48
  Speaker 1: had a real hard time getting people to pay more
• 1:30:52
  Speaker 1: money for computers that the staff wasn't really all that
• 1:30:56
  Speaker 1: familiar with. Everybody knew how to sell a Windows machine,
• 1:30:59
  Speaker 1: everybody know how to sell a Compact or an HP,
• 1:31:02
  Speaker 1: and so Apple cut a deal with best Buy. They
• 1:31:04
  Speaker 1: set up these little I called them the Apple Ghetto
• 1:31:08
  Speaker 1: the Mac Ghetto, and so it was four or five machines,
• 1:31:10
  Speaker 1: some of which works, some of which were hooked up
• 1:31:12
  Speaker 1: in properly, they were dusty, It was just ignored. And
• 1:31:16
  Speaker 1: my thesis is that Steve Jobs walked into one of
• 1:31:19
  Speaker 1: these places and said, you know what, making a gesture
• 1:31:24
  Speaker 1: that we can't discuss here, and said, I'm gonna do
• 1:31:27
  Speaker 1: it myself, and I'm tired of being dependent on these,
• 1:31:31
  Speaker 1: you know, retail bumbs who don't want to sell my product.
• 1:31:34
  Speaker 1: But what you're describing as the evolutional luxury in general,
• 1:31:37
  Speaker 1: because effectively you had Rolex or you had Vitan. As
• 1:31:40
  Speaker 1: a better example, Toner Gucci going into Bullocks or Macy's
• 1:31:44
  Speaker 1: and saying, you know, they do a good job and
• 1:31:46
  Speaker 1: not a great job. So I'm gonna start opening my
• 1:31:48
  Speaker 1: own stores. So when did the Coach stores open up?
• 1:31:50
  Speaker 1: When did the Louis Vuitton stores open up? Well, Coach
• 1:31:53
  Speaker 1: has been has had more control their distribution, although sort
• 1:31:55
  Speaker 1: of the dirty secret of Coaches at the majority of
• 1:31:57
  Speaker 1: the retail sales come to their outlets, the majority of
• 1:32:00
  Speaker 1: their profits. But and their outlets isn't the same stuff
• 1:32:04
  Speaker 1: that's in the I believe it's custom product at a
• 1:32:06
  Speaker 1: lower price point. And there's a lot of brands that
• 1:32:08
  Speaker 1: do that. It's just trying to bandage that balance. But
• 1:32:10
  Speaker 1: with luxury where you have last years for the first
• 1:32:12
  Speaker 1: time more luxury goods are controlled, are sold through controlled
• 1:32:15
  Speaker 1: vertical channels. If the way to summarize it as a
• 1:32:17
  Speaker 1: brand building has moved from broadcast in other words, pre
• 1:32:20
  Speaker 1: purchased advertising, PARNT trade shows. It's moved from there in
• 1:32:24
  Speaker 1: terms of effectiveness to the store. And the guy that
• 1:32:26
  Speaker 1: discovered that and created tens of billions of dollars in
• 1:32:28
  Speaker 1: value for shareholders is Mickey Drag Slour absolutely largest apparel
• 1:32:33
  Speaker 1: company in the world by Stouston Company at seven billion.
• 1:32:37
  Speaker 1: Basic model was best advertising the world. Then stuff Army
• 1:32:40
  Speaker 1: Navy stores with pile highs of five oh ones and
• 1:32:44
  Speaker 1: they had the best outs of the world. And Mickey
• 1:32:46
  Speaker 1: Jackson said, we can't afford to go tote toe, so
• 1:32:48
  Speaker 1: we're gonna put all of that money and branding into
• 1:32:50
  Speaker 1: the store. Bleachmond would more intelligent, attractive sales associates, bigger,
• 1:32:53
  Speaker 1: bigger dressing room, scented stores, better real estate. The branding,
• 1:32:57
  Speaker 1: he said, is moving to the store. Leave Strasson company
• 1:33:00
  Speaker 1: exploded from seven billion of four billion in that time period.
• 1:33:03
  Speaker 1: The gap went from something like two billion to eight billion.
• 1:33:06
  Speaker 1: It's a huge shift. We don't give enough credit to
• 1:33:08
  Speaker 1: him for. But branding is me from pre purchase into
• 1:33:10
  Speaker 1: the store. Starbucks took advantage of that, and Luxury has
• 1:33:13
  Speaker 1: seen that. You see Richmont making these staggering investments in stores,
• 1:33:18
  Speaker 1: so high end distribution. The Achilles feal for Nike becoming
• 1:33:21
  Speaker 1: up one of the four four horsemen. They have to
• 1:33:24
  Speaker 1: control more of their distributions. They have a decent amount
• 1:33:26
  Speaker 1: of stores, but it seems like there's one store per city.
• 1:33:29
  Speaker 1: One in Seattle, there is one in in San Francisco.
• 1:33:32
  Speaker 1: I think there's I know there's one here. Every now
• 1:33:35
  Speaker 1: and then we see one pop up. But it's not
• 1:33:38
  Speaker 1: like a giant chain. Yeah, it's I believe they only
• 1:33:41
  Speaker 1: control about ten to fift of their distribution, so it's um,
• 1:33:45
  Speaker 1: they're going if you. The one thing you see in
• 1:33:47
  Speaker 1: common among these four horsemen is that they control the
• 1:33:50
  Speaker 1: end experience. Whether it's Google, Apple, Facebook, and Amazon, they
• 1:33:54
  Speaker 1: have vertical control. And that's that's because that, in my view,
• 1:33:57
  Speaker 1: that's a prerequisite to become quote unquote part of the
• 1:34:00
  Speaker 1: trillion dollar possible club. That's quite fascinating. All right, I
• 1:34:05
  Speaker 1: know I only have you for so many minutes left,
• 1:34:07
  Speaker 1: so let me get right to my favorite three questions
• 1:34:10
  Speaker 1: or four questions, and I asked all my guests, and
• 1:34:13
  Speaker 1: we'll get you out of here at a reasonable time. First,
• 1:34:16
  Speaker 1: we have yet you talked about some of your mentors.
• 1:34:19
  Speaker 1: We have not talked about any of your favorite books.
• 1:34:22
  Speaker 1: What what sort of books do you really uh? Do
• 1:34:24
  Speaker 1: you really enjoy? God, I'm just I'm embarrassed to say this.
• 1:34:28
  Speaker 1: I don't read as much as as as I would
• 1:34:30
  Speaker 1: like or as I should as an academic, because I'm
• 1:34:31
  Speaker 1: reading all day, but I'm reading blogs like yours and
• 1:34:33
  Speaker 1: other people's. Um, some of the books that have had Yeah, yeah,
• 1:34:37
  Speaker 1: the basics like the Alchemist had an impact on me.
• 1:34:40
  Speaker 1: I love now I'm sending like I'm seven year eighty,
• 1:34:43
  Speaker 1: but I love reading books about military history. I find
• 1:34:45
  Speaker 1: them fascinating, you know, guns, the early light or Herman Wooks,
• 1:34:48
  Speaker 1: the wins of war. And then in terms of business,
• 1:34:51
  Speaker 1: my father introduced me to Peter Drucker, a young observations
• 1:34:54
  Speaker 1: of a bystander. Um, I find that stuff, uh really
• 1:34:58
  Speaker 1: interesting still time least irrelevant today? Oh gosh, I think so.
• 1:35:02
  Speaker 1: I think it is the father modern management. Is stuff
• 1:35:04
  Speaker 1: is more relevant than is today. Also love some of
• 1:35:07
  Speaker 1: the stuff from John Irving, you knowld according to guard
• 1:35:12
  Speaker 1: I think it's I think it's just a lot of
• 1:35:13
  Speaker 1: fun and just so strange. It's kind of I find
• 1:35:16
  Speaker 1: it really really um So say next question, So you
• 1:35:20
  Speaker 1: deal with a lot of millennials, you deal with a
• 1:35:22
  Speaker 1: lot of people at the start of their career. What
• 1:35:25
  Speaker 1: sort of advice do you give to somebody starting out
• 1:35:28
  Speaker 1: in your space today? Find find a great platform, find
• 1:35:32
  Speaker 1: a place you're gonna learn and it's not aspirational, but
• 1:35:35
  Speaker 1: find some of your good at and work really really
• 1:35:37
  Speaker 1: hard at it. Um and um. If you don't find
• 1:35:40
  Speaker 1: yourself on a path, yeah, you're not if you're not
• 1:35:43
  Speaker 1: fortunateough to find yourself on a path where it's something
• 1:35:45
  Speaker 1: you love or you like. People say, find something you love,
• 1:35:48
  Speaker 1: find something you like. I was the way I would
• 1:35:50
  Speaker 1: say that, because if you like it, you're gonna be
• 1:35:51
  Speaker 1: good at it. Um, think about graduate school. For all
• 1:35:54
  Speaker 1: the for all the noise about and all the publicity
• 1:35:57
  Speaker 1: about people dropping out of college, I still think school
• 1:36:00
  Speaker 1: is a good plan. B. The Peter Field thing, you're
• 1:36:02
  Speaker 1: not a fan, I think that is so frightening and
• 1:36:04
  Speaker 1: so scary. I just you know, I'd love to pick
• 1:36:09
  Speaker 1: ten kids at great public universities to match up against
• 1:36:12
  Speaker 1: the ten heat. Look, if you're Steve, if you're Steve
• 1:36:16
  Speaker 1: Jobs or Bill Gates, granted they're exceptional and and God
• 1:36:20
  Speaker 1: love you if you're one of those one of those
• 1:36:22
  Speaker 1: rare people that can, you know, take a calligraphy class
• 1:36:24
  Speaker 1: and then drop out and start the start the MAC.
• 1:36:27
  Speaker 1: But for the rest of us, you know, college is
• 1:36:30
  Speaker 1: a pretty good plan. B. So, as we've seen in
• 1:36:33
  Speaker 1: this recovery, to say the least, get get a great
• 1:36:36
  Speaker 1: find a great platform, find something you think you like
• 1:36:39
  Speaker 1: or you're good at, work your ass off, and if
• 1:36:41
  Speaker 1: it's not working out in your mid twenties, think about
• 1:36:43
  Speaker 1: graduate school and you know good karma. The really successful
• 1:36:48
  Speaker 1: people what you find in the trade is they do
• 1:36:50
  Speaker 1: spend a lot of time thinking about how can I
• 1:36:52
  Speaker 1: help other people? Because it will come full circle. People
• 1:36:54
  Speaker 1: do remember that. Um, what do you've seen that have
• 1:36:57
  Speaker 1: changed in your industry and branding, him marketing, What are
• 1:37:01
  Speaker 1: the big shifts over the past decade. Oh gosh, I
• 1:37:04
  Speaker 1: don't want to say the death of creativity, but it's
• 1:37:07
  Speaker 1: definitely revenge of the pocket pen protectors. And we've talked
• 1:37:09
  Speaker 1: about Don Draper's dad. Created activity is not not a commodity,
• 1:37:13
  Speaker 1: but you've had, You've had. It's more important to understand
• 1:37:17
  Speaker 1: how to operate sales source and a database and CRM
• 1:37:19
  Speaker 1: than to necessarily come up with the right copy or
• 1:37:22
  Speaker 1: the most beautiful, inspiring creative ads. So it's moving more,
• 1:37:26
  Speaker 1: much more towards zeros and ones than it is from tech.
• 1:37:28
  Speaker 1: It's the guys who are cool and we're black are
• 1:37:33
  Speaker 1: making less money, and it's it's it's the math and
• 1:37:36
  Speaker 1: the chess club. And now at the same time, we
• 1:37:39
  Speaker 1: have to produce people who understand have the maturity and
• 1:37:41
  Speaker 1: management skills and the EQ and played with the right
• 1:37:43
  Speaker 1: toys to manage those people, and it's hard to find
• 1:37:46
  Speaker 1: them in the same body. But it's definitely headed towards technology.
• 1:37:48
  Speaker 1: In the world of marketing and branding, we talked about
• 1:37:51
  Speaker 1: brandings moved from pre purchased to purchase. Now it's moving
• 1:37:53
  Speaker 1: to post purchase CRM, contextual retargeting, taking behavioral data. Um.
• 1:37:58
  Speaker 1: But it definitely seems like tech is just eating eating
• 1:38:02
  Speaker 1: the world. So I'm not a technologist, but I'd like
• 1:38:05
  Speaker 1: to think I know enough about it to be dangerous.
• 1:38:06
  Speaker 1: And I try and stay on top of stuff. So
• 1:38:08
  Speaker 1: if you're you know, if you're starting your career, are
• 1:38:11
  Speaker 1: guys like us, right, we're trying to stay relevant. You
• 1:38:14
  Speaker 1: gotta be on Facebook, you gotta figure it out. You
• 1:38:16
  Speaker 1: gotta go on Pinterest and start pinning stuff so you
• 1:38:18
  Speaker 1: at least get it, or at least get it enough
• 1:38:20
  Speaker 1: to hate it. Right, And because most people just they
• 1:38:23
  Speaker 1: dismiss it. And when they dismissed, when they're dismissive something,
• 1:38:27
  Speaker 1: or when guys our age are dismissive of stuff, it's
• 1:38:29
  Speaker 1: basically their way of saying I don't get it, and
• 1:38:31
  Speaker 1: scares the hell out of it. The comment I always
• 1:38:33
  Speaker 1: get is like, I don't understand what do you do
• 1:38:34
  Speaker 1: with Twitter? And my answer is always, hey, here's here's
• 1:38:37
  Speaker 1: what you do. Find five hundred of the smartest people
• 1:38:40
  Speaker 1: in areas that you're really interested in. I don't care
• 1:38:44
  Speaker 1: if it's beer burgers in baseball, but follow those people
• 1:38:48
  Speaker 1: and you will know more about stuff that you like
• 1:38:50
  Speaker 1: and have access to more interesting stuff. It's like hiring
• 1:38:54
  Speaker 1: a full time men's a research team. What could be
• 1:38:57
  Speaker 1: bad about that? And the final question, My final question,
• 1:39:01
  Speaker 1: I asked all my guests, what do you know about
• 1:39:04
  Speaker 1: your field that you wished today that you wish you
• 1:39:07
  Speaker 1: knew when you were starting out? What do I know
• 1:39:10
  Speaker 1: about my field today that I wish to know I
• 1:39:12
  Speaker 1: started out, Um, I would have focused more on how
• 1:39:14
  Speaker 1: to learn how to build stuff. I would to learn
• 1:39:16
  Speaker 1: how to code. I would have learned more about industrial
• 1:39:19
  Speaker 1: engineering and design. I think the world the future belongs
• 1:39:22
  Speaker 1: to the builders, not the browners. The people who know
• 1:39:25
  Speaker 1: how to actually make stuff. That can be making a website,
• 1:39:28
  Speaker 1: that can be figuring out how to edit radio show,
• 1:39:31
  Speaker 1: but the people who build things. As opposed to my
• 1:39:34
  Speaker 1: focus was always on the intangible associations and creating the theory.
• 1:39:37
  Speaker 1: I wish I'd learned more about how to build things.
• 1:39:40
  Speaker 1: So we've been speaking with Scott Galloway, professor at n
• 1:39:43
  Speaker 1: y U Stern and founder of L two Digital. UM.
• 1:39:47
  Speaker 1: Let's once again tell people where they can find you
• 1:39:49
  Speaker 1: on Twitter, proft Galloway, proft Galloway and your website dot
• 1:39:54
  Speaker 1: com L two ink dot com. Scott, thank you so
• 1:39:56
  Speaker 1: much than this was. This was really fascinating. I think
• 1:40:00
  Speaker 1: people really can enjoy this. If you enjoyed this conversation,
• 1:40:04
  Speaker 1: and I can't imagine anybody did not look an inch
• 1:40:08
  Speaker 1: upward or down on iTunes and you'll see the other
• 1:40:11
  Speaker 1: forty seven or so uh such um conversations. Be sure
• 1:40:16
  Speaker 1: and check out my daily column on Bloomberg View dot
• 1:40:18
  Speaker 1: com and on Twitter follow me at Hults. I'm Barry Rihults.
• 1:40:23
  Speaker 1: You're listening to Masters in Business on Bloomberg Radio.