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Speaker 1: order your first custom shirt today. This is Masters in
Speaker 1: Business with Barry Ridholts on Bloomberg Radio. This week on
Speaker 1: the podcast, we have a repeat visit from one of
Speaker 1: our most popular guests. His name is Professor Scott Galloway.
Speaker 1: He teaches digital brands and marketing at the n y
Speaker 1: U Stern School of Business. I first kind of came
Speaker 1: into contact with Professor Galloway h through a famous video
Speaker 1: he did called the Four Horsemen of the Internet about Facebook, Amazon, Google,
Speaker 1: and Apple. And he is one of those people who
Speaker 1: is just a fast sating study, a person who does
Speaker 1: deep dives into the things we kind of take for
Speaker 1: granted about technology, about marketing, about how we interact with
Speaker 1: some of our favorite products. And he does it in
Speaker 1: a way that's not purely academic. He formed a number
Speaker 1: of companies um L two red envelope profit and and
Speaker 1: sold them for uh tons of money. And and so
Speaker 1: he's more than just a theoretician. He's an actual practitioner.
Speaker 1: He's always fascinating. We always have a delightful conversation every
Speaker 1: time I I have him in the studio. UH. He
Speaker 1: has a new book coming out next year, so we'll
Speaker 1: have an excuse to bring him back when that UH
Speaker 1: comes out. In the meantime, with no further ado, my
Speaker 1: conversation with Scott Galloway. This is Masters in Business with
Speaker 1: Barry Ridholtz on Bloomberg Radio. My special guest today is
Speaker 1: Professor Scott Alloway. He hails to us from n y
Speaker 1: U Stern School of Business. He is the author of
Speaker 1: the Digital i Q Index, a global ranking of prestige
Speaker 1: digital competence. He has been ranked one of the world's
Speaker 1: fifty best business school professors. He founded several companies, red Envelope,
Speaker 1: Profit l two. He has also been recognized by the
Speaker 1: World's Economic Forum as one of the Global Leaders of Tomorrow.
Speaker 1: Professor Scott Galloway, Welcome back to Bloomberg. Thanks very good
Speaker 1: to see you. What brought you to my attention a
Speaker 1: few years ago was a video that you had done.
Speaker 1: It was a conference appearance about the four horsemen and
Speaker 1: they were Amazon, Apple, Facebook, and Google. So so why
Speaker 1: don't we start with those. Let's talk about Google. In
Speaker 1: a recent L two video you did, and you also
Speaker 1: speak every year at the Digital Brands Conference d l
Speaker 1: D I think conference. Um, you talked about Google low
Speaker 1: its price eleven percent and yet it increased its total
Speaker 1: ad revenue. They seem to really be dominating online advertising.
Speaker 1: Can imagine how difficult all those whether you're competing with them,
Speaker 1: your clear channel, outdoor, uh, you're the New York Times,
Speaker 1: your hearst, and you have a company that's able to
Speaker 1: a competitor's able to increase its revenues and lower its
Speaker 1: prices eleven percent, And initially the analysts thought that was
Speaker 1: a sign of weakness because their cost per click was
Speaker 1: going down, but effectively, Google every year gets more and
Speaker 1: more competitive. It's like, how do you know if an
Speaker 1: industry is right to be disrupted? They raised their prices
Speaker 1: faster than inflation when they'll underlying increase in innovation. You
Speaker 1: could argue that media or television is incredibly right to
Speaker 1: be disrupted and increase the prices much faster than inflation
Speaker 1: while viewership has gone down, whereas Google is probably the
Speaker 1: least disruptible business right now in media because every year
Speaker 1: it gets substantially better, and they keep loaning their prices.
Speaker 1: So the other um leader in digital advertising is Facebook.
Speaker 1: Are they ever going to be able to give Google
Speaker 1: a run for their money? Oh? They already are. I
Speaker 1: mean between the two of them, and it really is
Speaker 1: a duopoly if you look at all a digital marketing. Uh,
Speaker 1: Facebook and Google accounted for a hundred and three percent
Speaker 1: of the growth. Now what does that mean. It means
Speaker 1: that if you aren't Facebook or Google and you're in
Speaker 1: digital marketing officially, the industry is in structural decline. So
Speaker 1: if you work for anyone who's attach platform, search engine
Speaker 1: optimization and agency doing media planning online, your business like
Speaker 1: newspapers and magazines is in decline. So let's talk a
Speaker 1: little bit about Facebook. You said their pivot to mobile
Speaker 1: was one of the greatest shifts of a large corporation
Speaker 1: in history, arguably the most agile company in the world.
Speaker 1: Three years ago, zero percent of the revenue from mobile.
Speaker 1: Mark Zuckerberg said he did not believe in kind of
Speaker 1: the app economy, thought it was all gonna be about browsers.
Speaker 1: And he was wrong and pivoted and turned the fire
Speaker 1: hose of great management, great engineering talent, and now I
Speaker 1: think about eighty center the revenue comes from mobile. It's
Speaker 1: it's it's hard to imagine a pivot. We all saw
Speaker 1: mobile coming, but yeah, who wasn't able to get The
Speaker 1: New York Times This is this is the most impressive
Speaker 1: agile pivot I think in the history of business. Now
Speaker 1: you've also previously called them one of the greatest s
Speaker 1: bait and switch set ups of all time. Why is
Speaker 1: that so? The general the general promise from Facebook was
Speaker 1: invest in your Facebook page, Nike, and you're gonna have
Speaker 1: this incredible asset. You're gonna have a captive marketing or
Speaker 1: a captive asset, which will be people who have raised
Speaker 1: their hand and said I have an affinity for Nike,
Speaker 1: and then you'll be able to communicate directly to them
Speaker 1: that you'll have an asset. In order to build this asset,
Speaker 1: you had to advertise, and Nike know the firms spent
Speaker 1: millions of dollars advertising to build their fan community. And
Speaker 1: it was nice because it had this vanity metric of
Speaker 1: how many fans you had. It became a symbol of
Speaker 1: whether a company got it or not based on how
Speaker 1: many how many fans you had on Facebook. And then
Speaker 1: once kind of that, that hundreds of millions of spending
Speaker 1: to build these communities with sort of done. Facebook turned
Speaker 1: around and said, just kidding. If you want to reach
Speaker 1: these people, you've got to advertise and organic reach. That
Speaker 1: is the percentage of Nike's messages that reach their end
Speaker 1: fans went from a down to eight, five or three.
Speaker 1: It's tantamount to you building a house, putting the finishing
Speaker 1: touches on it, putting the lock on the door, and
Speaker 1: then the county shows up and says, chess kidding, you
Speaker 1: don't own the house. We do. I think this was
Speaker 1: one of the greatest bait and switches in corporate history.
Speaker 1: What did that do to the trust factor of corporations
Speaker 1: wanting to advertise on Facebook? I think it was temporary
Speaker 1: because there's so much momentum. It's such an outstanding product.
Speaker 1: They have such power that and h and quite frankly, also,
Speaker 1: I think they've done such a great job managing their
Speaker 1: image because I think their management team is likable, which
Speaker 1: I think is incredibly important. People have largely overlooked it.
Speaker 1: If you want to, if you want to figure out
Speaker 1: a way to like somebody, you figure it out. What
Speaker 1: about a fatigue? Is something that certainly is an issue
Speaker 1: these days. Yes, so the the engagement levels, the percentage
Speaker 1: of people interacting with a piece of content on Facebook
Speaker 1: or of their posts are sponsored, meaning they're basically advertising.
Speaker 1: And he started right into your right into your feed.
Speaker 1: One of six pieces of content is someone's paying to
Speaker 1: get in front of you, interrupting, interruption advertising no different
Speaker 1: than television. However, the interaction or the percentage of people
Speaker 1: are liking, sharing or commenting on that comment on that
Speaker 1: content has declined in the last nine months, so you
Speaker 1: are seeing what you would call ad fatigue glow now.
Speaker 1: Having said that, they have other properties and tons of
Speaker 1: different ways to monetize, but the core platform does does
Speaker 1: seem to be experiencing ad fatigue. And what about Facebook
Speaker 1: Live and Facebook Native Stories? Is that going anywhere or
Speaker 1: what's the outlook on that? So I I personally believe
Speaker 1: that the biggest innovation or the most the thing to
Speaker 1: watch right now is from our one of their properties, Instagram,
Speaker 1: specifically Instagram Stories, because it is squarely going after Snapchat
Speaker 1: and what's interesting and I think the most interesting piece
Speaker 1: of data in the world of media right now is
Speaker 1: to look at snapchats user growth and daily active users
Speaker 1: once Instagram launched Story as a direct competitor, and what
Speaker 1: you've seen a Snapchat's growth has decelerated dramatically since Instagram
Speaker 1: launched Stories. So people think Snapchat is the Facebook of video.
Speaker 1: My thesis is that, in fact, Facebook is the Facebook
Speaker 1: of video, and it's coming after Snapchat. And it's fun
Speaker 1: to speculate, but I think Snapchat goes public, goes crazy
Speaker 1: on first day of trading because people haven't had access
Speaker 1: to a unicorn in a while. But I think it's
Speaker 1: gonna be ground zero for ringing the bell at the
Speaker 1: top and be one of the greatest. I think we're
Speaker 1: setting ourselves up for something that might be the spark
Speaker 1: that torches the market with Snapchat. I'm Mary rid Hilts.
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
Speaker 1: special guest today is Professor Scott Galloway of n y
Speaker 1: U Stern School of Business. He is an expert on
Speaker 1: Internet technology, digital marketing, branding, and let's talk about one
Speaker 1: of the biggest companies in that base. Amazon. Last time
Speaker 1: you were here, we talked about why you thought the
Speaker 1: stock was overvalued, wouldn't go anywhere. You very famously issued
Speaker 1: a mia Kalpa Online said pretty much that marked the
Speaker 1: start of the next major leg up um. What do
Speaker 1: we think of Amazon today? So first off, yeah, I
Speaker 1: was a hundred and ten percent wrong on that. My
Speaker 1: initial thought was that the futures about multi channel retail.
Speaker 1: Their fulfilming costs were escalating, and I thought that they
Speaker 1: were going to need to buy a multi channel retailer.
Speaker 1: The delivery costs also had had hats going up in billions. Yeah,
Speaker 1: it continues to but now now people see it as
Speaker 1: an asset, not a liability, and there's some some merit
Speaker 1: to that. So at the time, I thought, okay, Apple
Speaker 1: would be the first trillion dollar company because somebody's going
Speaker 1: to get there, And what Apples pulled off is exceptional
Speaker 1: lowest price or low cost provider because of their supply
Speaker 1: chain power. But at the same time the margins premium
Speaker 1: price products, so the volumes of Toyota with the margins
Speaker 1: of Ferrari, which makes for the most profitable company in history.
Speaker 1: Now Amazon, Amazon is the most disruptive company and the
Speaker 1: largest economy in the world. And if you look at
Speaker 1: the moats and a number of distinct businesses they would
Speaker 1: have that would probably be greater than a hundred billion
Speaker 1: dollar businesses on their own, they have the most apples
Speaker 1: right up there. But now you have aws, um, you
Speaker 1: have the core platform itself. It looks as if Amazon
Speaker 1: Prime and their media properties are turning into a juggernaut.
Speaker 1: Possibly the brill growth business for them is that they're
Speaker 1: going into the business of selling picks as opposed to
Speaker 1: mining for gold, leasing planes, leasing tractor trailers. Um, they're
Speaker 1: going after FedEx and UPS twillion in market cap between DHL,
Speaker 1: FedEx and UPS, and I think Amazon's decided they want
Speaker 1: most are all of it. I think most of us
Speaker 1: are who have e commerce companies or brands are going
Speaker 1: to start using Amazon not only as a as a
Speaker 1: platform with Amazon Marketplace, but using Amazon to deliver the
Speaker 1: last mile when you say a ws' referring to the
Speaker 1: cloud services that they offer. I have a funny Amazon story.
Speaker 1: So I have a treadmill in my basement and I
Speaker 1: have a tele flat panel TV which have plummeted in
Speaker 1: price smart TVs inches four hundred dollars. I want to
Speaker 1: hang it. You know. It sits there for a week
Speaker 1: with the drill for a month. Finally I'm like, I'm
Speaker 1: gonna go back to the store. I got it and
Speaker 1: have them hang it. They want more to hang the
Speaker 1: TV than the TV cost, and so I start looking
Speaker 1: on let me find a place to look online and
Speaker 1: I never even heard of Amazon Home Services. What is this?
Speaker 1: It's sixty nine dollars that one of the local stores
Speaker 1: wanted four fifty to hang it. So I set up
Speaker 1: an appointment. The guy shows up, He hangs the TV
Speaker 1: for sixty nine bucks. I say, who else do you
Speaker 1: work with? And he reels off everybody, and I said,
Speaker 1: those are all wildly disparate price points because I get
Speaker 1: paid the same. It's the same drill, it's the same stuff.
Speaker 1: He goes, I've done three houses on a block where
Speaker 1: the costs are sixty nine dollars, three hundred dollars, and
Speaker 1: five hundred dollars. It's me. And then I start looking
Speaker 1: at the Amazon services that are offered. It pretty much
Speaker 1: everything for your house. Where are they going to stop growing?
Speaker 1: Where do they draw the line or are they just
Speaker 1: completely no market is too far for them. I think
Speaker 1: when it comes to your low consideration purchases or your
Speaker 1: high consideration purchases that you don't enjoy auto insurance, I
Speaker 1: think Amazon wants all of it. And what's interesting about
Speaker 1: Amazon and one of the incredibly impressive things the hardware
Speaker 1: innovation of two thousand and sixteen, even though it came
Speaker 1: out earlier in that was the Echo. And if you
Speaker 1: have do you have an Amazon Echo? I do not.
Speaker 1: So you get one of these things and it literally
Speaker 1: kind of blows your mind because you get a glimpse
Speaker 1: into what the future of retail and commerce might be.
Speaker 1: You could you put these things around your house and
Speaker 1: literally at this void, at this volume, you know, you
Speaker 1: see Alexa and it says yes, and you make a
Speaker 1: request order an Uber add tied to my shopping basket.
Speaker 1: And when you start thinking about the frictionless nature of voice,
Speaker 1: you start thinking about Amazon's purchase history, the fact they
Speaker 1: have your credit card one click ordering, the reputation for
Speaker 1: value they have, the fact that they have a warehouse
Speaker 1: within twenty miles of the population, which is miss it's
Speaker 1: misleading because it's really eighty percent of the disposable income
Speaker 1: of the US. You have what I believe, and by
Speaker 1: the way, I don't know this. I don't work directly
Speaker 1: with Amazon. I believe that they're headed is something called
Speaker 1: Prime squared or some something similar to that, they'll announce
Speaker 1: a test area and they'll say, Barry, we know a
Speaker 1: lot about you. We're gonna install these echoes all over
Speaker 1: your house. Whenever you need anything, you calibrate up or down.
Speaker 1: We send you two boxes three times a week, ones
Speaker 1: with your stuff, the second you put stuff that you
Speaker 1: don't want back in the box, and we calibrate some more.
Speaker 1: And over time, we're gonna take your entire retail ecosystem
Speaker 1: off the table from everybody else, and of everything you
Speaker 1: order in your life that you don't enjoy order and
Speaker 1: you enjoy looking for cars, you want to go, You
Speaker 1: want to go buy that bmw z A, your wife
Speaker 1: wants to buy that pair of Christian lebutan's the other
Speaker 1: cent of stuff you don't enjoy buying. Amazon is going
Speaker 1: to do for you automatically. They're going to do a test,
Speaker 1: most likely in a college town. They're gonna announce the're
Speaker 1: gonna take prime from dollars a year to eight thousand.
Speaker 1: The stock is going to be per per user. Perhaps
Speaker 1: all the stock is gonna become anti gravity and go
Speaker 1: to a trillion dollars. I think Amazon is the first one. Again,
Speaker 1: So here's why I haven't gotten the Echo. I have
Speaker 1: two experiences, three experiences with voice recognition software. One is
Speaker 1: Google Voice, which is sort of hilarious garbled thing. The
Speaker 1: second is Siria, which, if you read the Demnuota correct,
Speaker 1: is one of the funniest collection of of typos. And
Speaker 1: we've all experienced really embarrassing things because of the way
Speaker 1: that works. So I looked at Echo as just another
Speaker 1: mediocre voice recognition product. You're telling me that's not true. Well,
Speaker 1: they're trying to Google an Apple trying to it's probably
Speaker 1: more ambitious. They're trying to do it more around utility.
Speaker 1: Find find me an Applebee's, or how do I get here?
Speaker 1: Or call Barry. Alexa is alright, get me information, use
Speaker 1: it for search engine. My son does it to test
Speaker 1: geography skills and capital skills. But they're positioning it around commerce.
Speaker 1: And when you think about the easiest place to make
Speaker 1: decisions around commerce, seamlessly saying Alexa, you know, barbecue eight
Speaker 1: people Friday night, and it immediately goes into your purchase history,
Speaker 1: your preferences, your brand preferences, and puts together a package
Speaker 1: of additional additional ribs imported beer. But I p A
Speaker 1: because that's what you like and then a selection of stuff,
Speaker 1: and it begins to calibrate and can get it there
Speaker 1: within two hours. Because of their fulfillment network, you at
Speaker 1: some point to sort of throw in the towel and
Speaker 1: realize that Amazon is the only retailer that matters, is
Speaker 1: the only retailer I need in my life. And as
Speaker 1: we get more, we get busier and busier and suffer
Speaker 1: from more and more time poverty. The opportunity for voice
Speaker 1: artificial intelligence, an incredible investment they've made in fulfillment infrastructure
Speaker 1: will result in a value proposition where you might decide
Speaker 1: all the shopping and decisions I make around commerce in
Speaker 1: my life, except for the ones I love, I am
Speaker 1: just going to outsource to Amazon. You also have an Amazon.
Speaker 1: To a certain extent, the game is sort of already over.
Speaker 1: I play I Play Texas holding poker every every few
Speaker 1: weeks with a bunch of guys, and at some point,
Speaker 1: when one player has most of the chips, he or
Speaker 1: she's already won because they can muscle everybody out by
Speaker 1: just going all in until they finally win. Amazon basically
Speaker 1: is at that point their access to capital is probably
Speaker 1: they've had access to cheaper capital for longer than probably
Speaker 1: any company in modern history, and as a result, they're
Speaker 1: basically muscling everybody out. I'm Barry Ridholtz. You're listening to
Speaker 1: Master's in Business on Bloomberg Radio. My special guest today
Speaker 1: is Scott Galloway. He is a professor of brand strategy
Speaker 1: and Digital Marketing at the n y U Stern School
Speaker 1: of Business. He is the author of the Digital i
Speaker 1: Q Index, named one of the world's fifty best business
Speaker 1: school professors. He's founded and sold a number of of companies.
Speaker 1: We were talking about Amazon before and how they had
Speaker 1: a clearly defined mission. What is the problem with Apple's
Speaker 1: mission description? Well, there there isn't one. The others have
Speaker 1: various succinct and compelling missions that are the the investment
Speaker 1: the investment community understands and demands. Apple does not. It's
Speaker 1: not entirely clear what Apple is trying to achieve long term.
Speaker 1: So as a result, Apple has become a what have
Speaker 1: you done for me lately? In the investment market, it's
Speaker 1: evaluated in the context of every product release, and if
Speaker 1: that product doesn't revolutionize the world, which many have, the
Speaker 1: stock gets taken down. So you have you have the
Speaker 1: other horsemen, Facebook, Amazon, and Google trading it anywhere between
Speaker 1: kind of twenty and sixty times, and you have Apple
Speaker 1: trading at seven to ten. So you could argue Apple
Speaker 1: could be the first trillion dollar company if it just
Speaker 1: got a story, if it just said this is what
Speaker 1: we're about and where we're headed. So I'm a mac
Speaker 1: head going dating back to my nine classic Mac Classic,
Speaker 1: and to me, the Apple story was always it just works.
Speaker 1: When the competition was Compact, HP, IBM, dell Um, they
Speaker 1: didn't just work windows back in those days. Was it
Speaker 1: was a nightmare. And we've seen a variety of innovations,
Speaker 1: starting with the iPod. There was nothing new about that technology.
Speaker 1: It was all off the shelf stuff. They put it
Speaker 1: together in a way nobody else did iPod, iPhone, iPad,
Speaker 1: I Watch. Have they run out of innovation or or
Speaker 1: are we still milking the last five major products? So
Speaker 1: that seems to be the key question. A lot of
Speaker 1: people would say our air pods really the design breakthrough,
Speaker 1: the you know, the wireless earpieces. Is the Apple Watch
Speaker 1: really kind of the legacy of the most creative industrial
Speaker 1: engineers in the world. So a lot of people would
Speaker 1: say that. I would say that Apple was theoretically suffering
Speaker 1: from low te It appears as if it's it's lost
Speaker 1: its mojo. Having said that, you know, it just has so.
Speaker 1: It has such an incredible brand, It has so much
Speaker 1: credibility around anything, you know, any item, and quite frankly,
Speaker 1: it's trading it. It's still trades it. You know, it
Speaker 1: feels you're you're in this business right. It doesn't feel expensive.
Speaker 1: It feels like, I mean, basically bury It's up in
Speaker 1: the last couple of months because people just with no
Speaker 1: real catalyst. So here's here's the crazy data point we
Speaker 1: pulled together when we were doing research for for this show.
Speaker 1: You take the Apple cash hoard, just the cash dollars
Speaker 1: it has. There are only thirteen companies in the SMP
Speaker 1: five that their entire worth is greater than Apple's cash
Speaker 1: ord That that's astonishing data point, which which raises the
Speaker 1: question what they should do with all that cash. But
Speaker 1: let's come back to that. I want to talk about
Speaker 1: the Apple Watch, which people have called kind of a failure.
Speaker 1: But when you look at the numbers and you look
Speaker 1: at what they've done to the Swiss watchmaking group, let's
Speaker 1: let's talk about it. That is the Apple Watch a
Speaker 1: successor failure. I notice you're not wearing one. I'm not
Speaker 1: so the And this goes back to what Apple strength
Speaker 1: is This thing on my wrist. I haven't wound it
Speaker 1: in five years. If I'm honest with myself, it's my
Speaker 1: attempt to signal masculinity and success to the opposite success
Speaker 1: opposite sucks. I think men who wear expensive watches are
Speaker 1: basically trying to communicate two women. If you mate with me,
Speaker 1: your kids are more likely to survive than if they
Speaker 1: mate with someone wearing a swatch. So this is a
Speaker 1: door winnie or feathers period to feathers, they have no
Speaker 1: very little utility, and Apple's genius has been figuring out
Speaker 1: a way to make a tech item feathers. Apple has
Speaker 1: effectively decided they want out of the technology hardware business,
Speaker 1: which trades at a multiple of EBITA, and they want
Speaker 1: to be in the luxury business, which trades at a
Speaker 1: multiple of revenues. It's a far superior business. The only
Speaker 1: way they can sustain their margins is by having what
Speaker 1: we would refer to a self expressive benefit. Apple has
Speaker 1: become the ultimate display of wealth. If you do a
Speaker 1: heat map by operating system Android versus iOS. It is
Speaker 1: a heat map of wealth. Manhattan lights up iOS, You're
Speaker 1: going to the suburbs. It's Android, the new feather. If
Speaker 1: you have an iPhone, it means you're more likely to
Speaker 1: be successful, educated, and have a random sexual experience. This
Speaker 1: is this is the reason that they have the highest
Speaker 1: margins in that industry. And the iPhone is the first
Speaker 1: technology product whose margins have not eroded. Is the product
Speaker 1: is matured because they've figured out it's a luxury brand,
Speaker 1: it's not a technology brand. So one of your presentations
Speaker 1: you talk about the mobile phone as the defining technology
Speaker 1: of our age. Apple captures the profits Samsung captures, which
Speaker 1: includes some overlap because they're a big supplier to Apple.
Speaker 1: The rest of the industry or negative fights the losses.
Speaker 1: And Apple versus Samsung is illuminating because they've taken different
Speaker 1: approach to Samsung, invest two to three times the amount
Speaker 1: of their top line revenues and traditional advertising and digital marketing.
Speaker 1: So what does Apple do with all that excess capital
Speaker 1: they have open stores. Most people would say that Apple's
Speaker 1: genius has been the iPhone. I would argue that Apple's
Speaker 1: genius move over the last thirteen years was building four
Speaker 1: and fifty temples to the brand in eighteen markets called stores.
Speaker 1: I'm Barry Ridhults. You're listening to Master's in Business on
Speaker 1: Bloomberg Radio. My guest today is Scott Galloway. He is
Speaker 1: a professor of Digital brands and Marketing at n y
Speaker 1: U Stern School of Business. Last time we had you on,
Speaker 1: you caused a little bit of UM controversy with your
Speaker 1: infamous letter about millennials. We talked about it, So let
Speaker 1: me ask you the question, do you love or hate millennials?
Speaker 1: Oh gosh, you know it's easy to hate millennials, but
Speaker 1: I would for all the complaints the business owners UM
Speaker 1: put forward. At the end of the day, there's two
Speaker 1: sides of the transaction. And the reason why we put
Speaker 1: up with millennials and they are more expectant, more difficult
Speaker 1: to manage, is because they're more talented than we were
Speaker 1: at their age. The access to technology, the increase in education,
Speaker 1: more kids are graduating from college is exceptional. They they
Speaker 1: are the most talented generation. There's a price to it, though.
Speaker 1: They want to talk about their careers. When I got
Speaker 1: my first job at Morgan Stanley at u c l A,
Speaker 1: we had a career talk once a year in the
Speaker 1: form of a bonus and it lasted about fifteen minutes
Speaker 1: and that was about it. It was so the notion
Speaker 1: of going into my boss's office and saying, I want
Speaker 1: to have a career talk, you know, six weeks after
Speaker 1: I started, and I can't I can't even fathom the response,
Speaker 1: but I would have received. But at l two, the
Speaker 1: most inspiring people that I think, the thing I enjoy
Speaker 1: the most is um is the kids that we have,
Speaker 1: some twenty two to twenty eight year olds, and I
Speaker 1: would describe them, and this is a sexist statement, and
Speaker 1: mostly women. High school paledictorians are now women, mostly athletes,
Speaker 1: the competitive grit in their background and and it's kind
Speaker 1: of pasted it to say it that I'm not not
Speaker 1: not necessarily think it's a good thing. But went to
Speaker 1: outstanding universities, they have real academic, strong academic training from
Speaker 1: the best institutions. These people are, you know, they feel
Speaker 1: as if they could be the junior senator from Pennsylvania.
Speaker 1: These twenty six year olds, they are so inspiring. At
Speaker 1: the same time, they're used to feedback, they're used to recognition,
Speaker 1: they're used to clarity around roles and compensation, and these
Speaker 1: are all things when you think about it, we demand
Speaker 1: as we get older and we have more currency in
Speaker 1: the marketplace. They've just figured it out earlier. The ones
Speaker 1: that aren't good it seems to have, you know, they
Speaker 1: don't maybe don't have the skills, but they seem to
Speaker 1: hold on to some of the negative attributes, and those
Speaker 1: the ones to get all the all the press. But
Speaker 1: on the whole, millennials have built L two for us
Speaker 1: and I'm I'm I'm a fan. The fascinating thing is
Speaker 1: for guys who are our age and we're not that
Speaker 1: four apart in years, technology is something we've learned for them.
Speaker 1: It's a native language, it's something they grew up with
Speaker 1: as infants. You start playing with an iPad, right, it's
Speaker 1: just there. Um, all right, So let's let's talk about
Speaker 1: some of the other things that for For those of
Speaker 1: you listening, you should definitely check out Professor Galloway's videos
Speaker 1: on YouTube. They're incredibly informative and often entertaining. A line
Speaker 1: you said not too long ago I thought was fascinating
Speaker 1: is advertising is a tax on the poor? Explain so
Speaker 1: effectively technology is allowing us to opt out advertising. Um.
Speaker 1: I love modern family. I don't know if you watch
Speaker 1: Modern shortly, but I now downloaded from my tunes for
Speaker 1: even though I could download it as quickly from ABC
Speaker 1: dot com, because ABC dot com makes me watch nine
Speaker 1: minutes of commercials. I think just as we become numb
Speaker 1: to mass shootings in the US, we become numb to advertising.
Speaker 1: I think advertising is so ubiquitous but at the same
Speaker 1: time so terrible. We were talking about age. I'm gonna
Speaker 1: I've worked out my whole life. I'm at an age
Speaker 1: where I can no longer to impact sports when I'm swimming,
Speaker 1: and swimming is typically the first few minutes are shocked
Speaker 1: your system, no fun. I'm not gonna be able to
Speaker 1: do this very long. Then you get into a rhythm
Speaker 1: and you get gone. I think great storytelling on television
Speaker 1: is like that, where it takes a while, sometimes two
Speaker 1: or three episodes into the season to really get into it.
Speaker 1: I find I'm just finally starting to get into season six.
Speaker 1: I think it is of Homeland. I equate advertising to
Speaker 1: your first eleven minutes in the pool and then someone
Speaker 1: takes an enormous dump in the pool and they it's shocking,
Speaker 1: it's out of character, it's it's disturbing. You have to
Speaker 1: stop swimming and listen to and clean it up for
Speaker 1: two minutes. That is advertising. So technology is allowing us
Speaker 1: to opt out. You're gonna have the New York Times
Speaker 1: dot com without advertising soon. And the reality is they
Speaker 1: don't get that much money from you. It is such
Speaker 1: a game of scale. The New York Times only gets
Speaker 1: two dollars and seventy cents a year for littering that
Speaker 1: that gorgeous journalism with all sorts of ads. Modern Family
Speaker 1: only gets fifty five cents an episode per viewer. Business
Speaker 1: Insider Barry only get sixty five cents a year from
Speaker 1: making you endure all those irrelevant, obsolete and obtuse ads
Speaker 1: that slow the load time. Advertising is becoming attacks the
Speaker 1: poor and the technologically illiterate pay. So does that mean
Speaker 1: to companies like Google and Facebook if we're just becoming
Speaker 1: oblivious to these ads, Well, Google, you're sort of asking
Speaker 1: for the ads. I mean, Google has the most relevant
Speaker 1: ads in the world because you're the one saying I'm
Speaker 1: interested in auto insurance. And then it says, all right,
Speaker 1: these are the organic listings about insurance companies or articles
Speaker 1: on auto insurance that have credibility of that people search for.
Speaker 1: But along the right rail, we're gonna let auto insurance
Speaker 1: companies advertised. So it's almost like you're asking for the advertising.
Speaker 1: Facebook is still interruption advertising. I think they're gonna have
Speaker 1: to get into different businesses because I do think there
Speaker 1: is at at some point every media company is going
Speaker 1: to have to offer a non ad supported product. But
Speaker 1: these these companies are content is so compelling. Most probably
Speaker 1: most successful media company in the world, uh Google, because
Speaker 1: you've wanted the ads. I would say, the second most
Speaker 1: successful media company in the world last thirty years, Bloomberg.
Speaker 1: And guess what it's not outsupported, it's subscription base. A
Speaker 1: survivability index for all media companies globally is very easy.
Speaker 1: Take the percent into the revenues they're getting from subscription
Speaker 1: versus advertising. The part of this house that makes a
Speaker 1: ton of money. It's a sub subscription. So the more advertising,
Speaker 1: the weaker the longevity. You'd rather be HBO than ESPN
Speaker 1: right now. You reference not too long ago, The Winner
Speaker 1: Take All Society, which was a book in the mid
Speaker 1: nineties by Robert Frank, a prior guest on masters and business,
Speaker 1: and essentially says, no matter where you look. You can
Speaker 1: look in sports, you can look at actors, you can
Speaker 1: look at music, you can look in companies. There's a
Speaker 1: winner in a given space, and then everybody else comes
Speaker 1: in third. What does this mean for technology? What does
Speaker 1: this mean for content? It's dramatic, and you you do
Speaker 1: this for a living. There are of the SMP five hundred,
Speaker 1: there are only thirteen companies that beat the index five
Speaker 1: years in a row. It's unbelievable. So every you know,
Speaker 1: it's it's never been better to be a winner. And
Speaker 1: unfortunately we have this lottery economy because those companies get
Speaker 1: a tremendous amount of heat in advertising and publicity. We
Speaker 1: assume there are more winners than there are now. The
Speaker 1: winners are enormous. You hit it, hit it big. It's
Speaker 1: never it's never been a better time to remark, be remarkable.
Speaker 1: Access to global markets, the ability to scale your intellectual property,
Speaker 1: the ability for good products and good people to get
Speaker 1: it out there on whether it's linked In or Facebook
Speaker 1: or just consumer discovery. There's never been a worse time
Speaker 1: to be good. You know, It's the way I think
Speaker 1: of it is. When I got out of business school,
Speaker 1: we all made eighty five thousand dollars and some made
Speaker 1: seventy and some made a hundred. But now in my class,
Speaker 1: I teach two classes a hundred twenty kids, I can
Speaker 1: tell you there's gonna be a billionaire in one of
Speaker 1: my classes tonight. One of the things you said was
Speaker 1: that it's never been easier. I'm gonna just keep throwing
Speaker 1: your own clues. It's never been easier to be a
Speaker 1: billionaire in this society, and it's never been harder to
Speaker 1: become a millionaire. The compact is breaking down. You go
Speaker 1: to undergrad you study hard, you got a good job.
Speaker 1: You got to graduate school. You're a good citizen. You
Speaker 1: work hard, you get the credentials, you you you get
Speaker 1: a partner that's also, you know, a contributor to Economically,
Speaker 1: it's not unreasonable to think you could save a million
Speaker 1: bucks over twenty thirty four years and retire a millionaire.
Speaker 1: That's getting harder and harder to do. But at the
Speaker 1: same time, everyone has an outside shot at becoming part
Speaker 1: of something unbelievable in becoming a billionaire. The other kids
Speaker 1: in my class, I think there's gonna be a decent,
Speaker 1: non zero percentage of my class that's going to end
Speaker 1: up getting unlucky, getting getting having some dents in their
Speaker 1: career background, which, by the way, they won't be able
Speaker 1: to gloss over because LinkedIn creates MLISS transparency and will
Speaker 1: be excluded from quote unquote the information economy, and will
Speaker 1: end up living with their parents until they're fifty or sixty.
Speaker 1: We are we are entering an economy where it's winner
Speaker 1: take all, and we don't have you know, we don't
Speaker 1: believe an income distribution. We liked because there's some very
Speaker 1: well advertised success stories. People would rather everybody if people
Speaker 1: play the lottery because it's statistically as bad for us.
Speaker 1: We know it's not good, but hey, baby, my numbers
Speaker 1: are gonna win. My wife teaches fashion illustration and designed
Speaker 1: to high school students, and in the high school they
Speaker 1: actually when they're doing career canceling with these kids, warn
Speaker 1: them you anything you put on Facebook, anything you put
Speaker 1: on Instagram, anything you put on Twitter is part of
Speaker 1: your permanent record, and you're affecting your career chances ten, twenty,
Speaker 1: thirty years down the road. This stuff never goes away.
Speaker 1: It's a new credit score. It's unbelievable. Um let's talk.
Speaker 1: Since I mentioned Twitter, let's talk about Twitter another quote
Speaker 1: of yours. A good board cannot save a bad company,
Speaker 1: but a bad board can ruin a good company. What
Speaker 1: what's the problem with Twitter? A negligent board? Unforgivable the
Speaker 1: fact that they've decided that, whatever it is, two thousand employees,
Speaker 1: a great product should be subject or should be led
Speaker 1: by a part time employee needing the ceo CEO and
Speaker 1: I don't know him. Uh my, he sounds like a
Speaker 1: product fishionary. But to say that a company is complicated
Speaker 1: and environment as competitive, where as many people, uh the
Speaker 1: way they have as many investors, where they have as
Speaker 1: many people trying to make a living from the fortunes
Speaker 1: or misfortune of Twitter, to decide that a part time
Speaker 1: CEO is the right guy, how do you say to
Speaker 1: the rest of the management team, by the way, almost
Speaker 1: all of whom have left. This thing is like rats
Speaker 1: off a ship right now. How do you say to them,
Speaker 1: this guy at twenty five hours a week is better
Speaker 1: than you at fifty hours a week, and it's such
Speaker 1: a great platform, and it's a fantastic product. You you
Speaker 1: literally have negligence on behalf of the board to put
Speaker 1: up with this. It's part of our idolatry of innovators.
Speaker 1: A young guy who's very impressive shows up in a
Speaker 1: black turtle knock neck and they think we've reincarnated Steve
Speaker 1: Jobs and and they it is very very dangerous strategy
Speaker 1: to compare anyone to Steve Jobs and assuming it's gonna
Speaker 1: happen again, so we end up, like in an abusive relationship,
Speaker 1: we end up taking abuse that we shouldn't. It's it's ridiculous.
Speaker 1: He's gonna go down. He's gonna go down as one
Speaker 1: of the worst CEOs in tech. And it's not his fault.
Speaker 1: It's his board's fault. Boards have a fiduciare responsibility. The
Speaker 1: board of Twitter is negligent. We have been speaking with
Speaker 1: Professor Scott Galloway of n y U Stern. If you
Speaker 1: enjoy this conversation, be sure and check out our podcast extras,
Speaker 1: where we keep the tape rolling and continue chatting about
Speaker 1: all things digital. We love your comment, feedback and suggestions.
Speaker 1: Please write to us at m IB podcast at Bloomberg
Speaker 1: dot net. Check out my daily column on Bloomberg View
Speaker 1: dot com. Follow me on Twitter at rit Halts. I'm
Speaker 1: Barry Hults. You're listening to Masters in Business on Bloomberg Radio.
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Speaker 1: Welcome to the podcast, Professor Gallie, Thank you so much
Speaker 1: for being Scott. I don't know what the hell'll call you.
Speaker 1: Scott's good. During the break, we were talking about what
Speaker 1: happened to comments in general, and I said, when I
Speaker 1: was writing Bail Out Nation, I would put a post
Speaker 1: up online do five hundred to seven hundred words. People
Speaker 1: would give me comments, suggestions, ideas, sources. I was writing
Speaker 1: that in real time relative to the crisis. I mean
Speaker 1: the was due August two tho eight, and then that
Speaker 1: weekends was do all hell broke loose? And so it
Speaker 1: got extended to December thirty first, but I'm writing it
Speaker 1: in real time. My readers are really my co authors.
Speaker 1: They did a tremendous amount of work. You publish a ton,
Speaker 1: especially on YouTube. What's going on with some of the
Speaker 1: comments on on YouTube? What is that? Like? Them are
Speaker 1: really supportive, interesting dialogue. The comments when they don't agree
Speaker 1: with you are generally respectful, but that two or three
Speaker 1: percent can be pretty rattling. And everybody I like to
Speaker 1: put up this persona that, Oh, I don't care, I
Speaker 1: can take it, I don't care what other people think. Yeah,
Speaker 1: and it rattles me some of you when people really
Speaker 1: say these incredibly person and what's weird? Does some of
Speaker 1: them seem to research you and try and find something
Speaker 1: that's gonna gonna upset you or even even frighten you.
Speaker 1: So there's an element of it that's really disturbing. What's interesting, though,
Speaker 1: is that if you think about that, the notion of
Speaker 1: identity and that is Facebook forces you to say who
Speaker 1: you are in some feature and it's created, I think,
Speaker 1: a more civil platform. And even when you think about
Speaker 1: the power of identity or around Uber, you wouldn't get
Speaker 1: in the back seat of a driver that hadn't been
Speaker 1: seeing his or her face makes me feel more comfortable,
Speaker 1: and they wouldn't likely let a stranger get in the
Speaker 1: back seat that they couldn't track down with their credit
Speaker 1: card number or their identity. So this notion of identity
Speaker 1: as it relates to Facebook, Uber and even Airbnb, I
Speaker 1: would argue that the identity technology is really what's made
Speaker 1: air and b Airbnb a twenty five or thirty billion
Speaker 1: dollar company or value company is a really powerful notion
Speaker 1: in the Internet age. But I think it's good that
Speaker 1: people that platforms decide to force people to say this
Speaker 1: is who I am, and it creates a more civil
Speaker 1: environment because all of a sudden people turned very mean online.
Speaker 1: Your colleague and n y U are run Sunda. His
Speaker 1: book on the sharing economy, goes over how originally the
Speaker 1: eBay rating system companies like Airbnb and you Uber, and
Speaker 1: I thank you. I should have referenced him my whole
Speaker 1: song I just busted into around identity. I was was
Speaker 1: ip theft from Professor cinder Rog and I got it
Speaker 1: from a roun so to friends. I absolutely was ripped
Speaker 1: off his comments there. I use n y U as
Speaker 1: a as my research bench. I think I've had six
Speaker 1: different professors from n y U, and if you had
Speaker 1: in Columbia, I think we're up to ten the academic
Speaker 1: intellectual capital in New York with Wharton an hour that
Speaker 1: way and Yale an hour that way. Is just it's
Speaker 1: an astonishing amount of and we have to get you
Speaker 1: out to one of the the dinners we have with
Speaker 1: various Nobel Prize people. UM. So, the other thing I
Speaker 1: wanted to ask you about, relevant to UM, relevant to
Speaker 1: the to the comments situation is what does that have
Speaker 1: to with Facebook? Since they're making you identify who you
Speaker 1: are instead of having really vociferous comments, you end up
Speaker 1: with fake news that gets passed along repeatedly. That seems
Speaker 1: to be the Facebook equivalent of the the angry egg
Speaker 1: on Twitter, UM or just the insane comments on YouTube. Well,
Speaker 1: the scandal of we talked about Echo being the product
Speaker 1: of two thousand and sixteen. The scandal of two thousand
Speaker 1: and sixteen, and we just don't know it yet was
Speaker 1: fake news. It's going to get It's going to get
Speaker 1: bigger and bigger in terms of the damage we we
Speaker 1: perceived or that has actually happened to society. Of our
Speaker 1: news is now digested and absorbed from social media. Eight
Speaker 1: percent of the news coming out of social media the
Speaker 1: week running up to the election was fake news. And
Speaker 1: one of the issues I personally have a Google and
Speaker 1: Facebook is this notion that if you look at their
Speaker 1: vocabulary and words matter, they're trying to avoid the word
Speaker 1: media to describe their companies are saying their platforms. And
Speaker 1: the analogy I would use Barry is that if McDonald said, alright,
Speaker 1: eight percent of the beef we're serving you is fake
Speaker 1: and giving you encephalitis, and as a result, you're making
Speaker 1: bad decisions. We're not responsible for it because we're not
Speaker 1: a fast food restaurant. We're a fast food plot form.
Speaker 1: And I think these companies trying to absolve themselves of
Speaker 1: the responsibility and the damage they've done by calling themselves
Speaker 1: platforms and not media companies. By the way their media companies,
Speaker 1: they create content, they sell advertising against that content. Boom,
Speaker 1: you're a media company. But they need to do a
Speaker 1: quarter of the fact checking and the resource investment that
Speaker 1: the New York Times and Bloomberg making ensuring that what
Speaker 1: we are digesting is not fake and making us sick.
Speaker 1: This is the scandal of two thousand and sixteen, hugely
Speaker 1: damaging to our society. There was just an article in
Speaker 1: the New York Times this weekend about you know, there's
Speaker 1: all sorts of of ransomware. Um, not so much where
Speaker 1: they're taking over your computer, but there are people who
Speaker 1: have figured out how to game Google search algorithms, and
Speaker 1: so they dig up You want to talk about digging
Speaker 1: up stuff? They dig up from people because it's public.
Speaker 1: We've moved all this stuff from the from the government
Speaker 1: sphere to the public sphere. Uh, mug shots. Someone's arrested
Speaker 1: forty years ago, thirty years ago for driving under the influence.
Speaker 1: That mug shot is there. It shows up in the
Speaker 1: first page of Google searches and Google and so it's
Speaker 1: not It says it's there for information purposes. They will
Speaker 1: take the mug shot down for a fee and that
Speaker 1: sort of um, blackmail shouldn't be. Google has a responsibility
Speaker 1: for that. Well, I do think that is different because
Speaker 1: you canna make a bomb threat with the phone and
Speaker 1: I don't think the phone company is liable, but when
Speaker 1: when the search algorithm. But but I do think it's different.
Speaker 1: When Facebook is is got eighty percent of the content
Speaker 1: flowing through its platform is fake news? Is it that much?
Speaker 1: Is pily The week leading up to the election about
Speaker 1: the news coming out on the candidates was quote unquote
Speaker 1: fake news. The respective parties turned up turned up the volume.
Speaker 1: I think at that point when they're when they're their
Speaker 1: their media channels, their platform have literally become totally toxic
Speaker 1: and totally misleading, I think they have a responsibility to
Speaker 1: make a statement. And what they've done so far is
Speaker 1: they're so remiss to alienate anyone on the far left
Speaker 1: or the far right, because, as Michael Jordan's said, Republicans
Speaker 1: buy shoes to everybody watches ads, so we don't care
Speaker 1: how crazy you are. We want We don't want to
Speaker 1: alien anybody, and we want the entire market. We want
Speaker 1: everyone watching on on our platform. And it's sort of
Speaker 1: enough is enough. They're gonna have to come up with
Speaker 1: some standards, kick some people off, squelt some content, be acute,
Speaker 1: and they'll be accused of censorship. But they're gonna have
Speaker 1: to acting the same way a lot of these media companies,
Speaker 1: including Bloomberg, Herst kind of out there's gonna have to
Speaker 1: be something resembling editorial standards. You need to lose the
Speaker 1: ten percent that's toxic. And otherwise they're from a business perspective,
Speaker 1: they're putting the at risk the people they're monetizing it.
Speaker 1: Once people come to realize, hey, this platform is a disaster.
Speaker 1: I think that's been Twitter's big mistake, and they're just
Speaker 1: now taking steps to not so much kick people off
Speaker 1: the platform. The latest thing I've been reading about is
Speaker 1: if you're identified as a troll or someone who is
Speaker 1: harassing people because they're gay or black, or Jewish or
Speaker 1: what have you or Muslim um, they're basically not gonna
Speaker 1: let you put names in tweets, so you'll be able
Speaker 1: to harass people without identifying them. And it's it's just
Speaker 1: lost in the breeze and no one will see it
Speaker 1: or hear it. But and this is this is you know,
Speaker 1: this gets me to trouble. But effectively, most of the
Speaker 1: leadership of these companies wrap themselves in a progressive blanket
Speaker 1: to a certain extent because a I think they have
Speaker 1: personally those viewpoints. But also it's awfully convenient because as
Speaker 1: a whole, progressives are perceived as being really nice but weak,
Speaker 1: and conservatives are seen as being smart but mean. And
Speaker 1: if a smart but mean person was running the most
Speaker 1: powerful company in the world Google, Facebook, Amazon, or Apple.
Speaker 1: Regulators would step in early, so it's convenient for them
Speaker 1: to be seen as kind of nice and cuddly Granola.
Speaker 1: But the reality is, I don't think you can really
Speaker 1: claim to be a progressive if the company that you
Speaker 1: have a lot of power up has become weaponized by
Speaker 1: the far right. So I see hypocrisy everywhere everywhere here.
Speaker 1: These companies, these these individuals prostitute the progressive values in
Speaker 1: order to soften the image of their companies such that
Speaker 1: they avoid regulatory scrutiny. At the same time they have
Speaker 1: allowed their companies to be weaponized by the far right.
Speaker 1: I find it. I find contradiction in it everywhere I
Speaker 1: use um. I've done a lot of work and a
Speaker 1: lot of writing on minimum wage, and I've been talking
Speaker 1: about we have this grand experiment going on in Seattle,
Speaker 1: in San Francisco and other cities that have been aggressively
Speaker 1: raising the minimum wage. Google what is the minimum wage
Speaker 1: for Seattle and it comes up twenty dollars an hour,
Speaker 1: which isn't true. That's in five years. It's twenty dollars
Speaker 1: an hour. If you're this large, if you're this it's
Speaker 1: fourteen or twelve or fifteen, depending on which city you're
Speaker 1: you're talking about. And yet you know Google tries to
Speaker 1: do the first slot is the answer to your question
Speaker 1: as opposed to sources with the answer, And what's taken
Speaker 1: place is that it's actually shows up as twenty dollars
Speaker 1: an hour, which is wrong. Today the minimum wage in
Speaker 1: Seattle is fifteen an hour. So people have figured out
Speaker 1: how to game Google for ideological reasons. There's you know,
Speaker 1: you can't organize the earth information if the information you're
Speaker 1: providing is inaccurate, so they need to get on top
Speaker 1: of that. Well that that's the exact point you're talking about,
Speaker 1: the paid versus organic listings, and organic listings do have
Speaker 1: some sort of credibility or or check. And again someone
Speaker 1: has someone has game that, and Google would rather not
Speaker 1: do anything, nor Facebook to suppress anybody from any viewpoint
Speaker 1: around either giving them eyeballs or money. And they're going
Speaker 1: to have to step in and say we have some standards.
Speaker 1: It'll cost the money, but in the long run I
Speaker 1: think they'll be better off. Well, the alternative is enough
Speaker 1: people coming around and saying I can't trust Google anymore.
Speaker 1: By the way, the reason Google became Google is I
Speaker 1: can trust Google because of their crowdsourced algorithm. Their page
Speaker 1: rank worked better than everybody else. Once it becomes clear
Speaker 1: that too often that no longer works and you're getting
Speaker 1: a gained answer that's inaccurate their business model. You know,
Speaker 1: they don't have a moat. Their motive is essentially they're
Speaker 1: better than everybody else. Once that folds away, they're in trouble.
Speaker 1: So they should really they should protect that like the
Speaker 1: crown jewels, and they don't. I I think you're absolutely
Speaker 1: right there. I would argue that Google so far has
Speaker 1: more credibility than any than any objectively evaluated entity in
Speaker 1: the world. And we've talked about the last time I
Speaker 1: was there. I think Google is a modern man's God
Speaker 1: that as we become more educated and wealthier are the
Speaker 1: number of people who attend church or or think of
Speaker 1: religion is playing a large part of their lives decreases.
Speaker 1: But modern day anxieties around sickness, why do bad things happen?
Speaker 1: What happens after we die? Um, those anxieties either stay
Speaker 1: flat or increase, So the decline in the belief or
Speaker 1: or the ability to get comfort from religion and concert
Speaker 1: with increasing anxiety, has created this void, and I think
Speaker 1: Google is has filled that void. One out of five
Speaker 1: queries to Google have never been asked before in the
Speaker 1: history of mankind. Think about a friend or rabbi, a
Speaker 1: priest that one out of the questions they get have
Speaker 1: never been asked before. Because I have so much credibility Google,
Speaker 1: Google is a modern man's god. You used to be
Speaker 1: looked to the skies pray will my son be all right?
Speaker 1: Now it's Google query symptoms and treatment of croup. So
Speaker 1: now here's the problem with that? And this goes back
Speaker 1: to them protecting the crown jewels. I've had doctors. My
Speaker 1: favorite quote from a friend who is a doctor, what
Speaker 1: he says all the time is, of course, your Google
Speaker 1: searches the equivalent of seven years of medical school. It's
Speaker 1: the same thing. So whether it's um any of the
Speaker 1: online medical things, if if you put any if you
Speaker 1: put any symptoms into Google, you will come up with
Speaker 1: a list of things. And if you're a hypochondriac, Google
Speaker 1: certainly is your your best friend. But the problem is,
Speaker 1: I don't know how trustworthy, especially in the age not
Speaker 1: only of of vaxer's But let's use the phrase agnetology,
Speaker 1: culturally constructed ignorance, whether it's global warming or vaccines or work.
Speaker 1: You way down the list of things that you know.
Speaker 1: Nine eleven was an inside job and it's just a
Speaker 1: run of insanity. That sort of stuff has found more
Speaker 1: and more fertile ground to grow in in the Internet era.
Speaker 1: There was some advantage to when there was only three
Speaker 1: broadcast stations because that sort of junk never made it
Speaker 1: past the gatekeepers. So did a lot of positive things
Speaker 1: never made it past the gatekeepers. So now we have
Speaker 1: to a fire hose, and it's becoming increasingly challenging for
Speaker 1: people to identify what is accurate and what is false, yeah,
Speaker 1: and and what's interesting in the face of those problems,
Speaker 1: so Google still is the most trusted I believe it's
Speaker 1: the most trusted entity in the world. Really, what if
Speaker 1: you you were talking about hospital right here, right now,
Speaker 1: all of a sudden, you get very worried about a
Speaker 1: health do you what do you do for immediately? Well,
Speaker 1: you you do both because you need it takes two
Speaker 1: weeks to see the doctor unless you're you're bleeding out.
Speaker 1: And second, the next thing you do is look for
Speaker 1: hospitals with a specialty of what have you suspect? Well,
Speaker 1: not even looking for a hospital, but you start trying
Speaker 1: to self diagnose and understand more about it. I do
Speaker 1: believe the Google has right now more authority than any
Speaker 1: entity likely in history of mankind. That's astonishing. I only
Speaker 1: have you for uh so many minutes left, so I
Speaker 1: wanted to get to my favorite questions. God, I have
Speaker 1: runs and runs of stuff that we're not going to
Speaker 1: get to before I forget. The biggest winner of Netflix,
Speaker 1: Netflix operating system for joy in our lives. Um you
Speaker 1: look at in some I think that the economy is
Speaker 1: bi for Kate. There's only two sets of winners, and
Speaker 1: it's a small number of companies what I refer to
Speaker 1: as Benjamin Button companies that companies at aging reverse when
Speaker 1: you turn on ways and you use it, it gets better.
Speaker 1: The majority of products from the economic titans of yesterday,
Speaker 1: General Motors and Unilever. They age when I when I
Speaker 1: used a car, when I use toothpaste, that declined and value.
Speaker 1: The companies that are garnering the disproportionate spoils of our
Speaker 1: modern day economy are Benjamin about the age and reverse.
Speaker 1: Every time you do a Google search, it gets one
Speaker 1: three billionth better the product. Every time you turn on ways,
Speaker 1: it gets better for everybody company, right, That's right, Facebook,
Speaker 1: every time you use it, the product gets better for
Speaker 1: everybody else. That's one set of winners. The other set
Speaker 1: of winners are the companies that help other companies reduce costs,
Speaker 1: accenture most successful services company in the world. It's effectively
Speaker 1: helping big companies cut costs, outsourcing companies helping companies cut
Speaker 1: costs so effectively our economy. The winners are barfecating in
Speaker 1: the companies that age in reverse or companies that take
Speaker 1: care of the aged. You're either you're either Benjamin Button
Speaker 1: or you're dying, or you're you're caring for the sick.
Speaker 1: Those are the two companies that are working right now.
Speaker 1: We began by referencing the four horsemen. It's always the
Speaker 1: next natural question is who's the fifth? So I went
Speaker 1: off in at Tangent there with my whole Benjamin Button wrap.
Speaker 1: But I effectively think Netflix does take information around your viewership.
Speaker 1: It's very simple, but it's very powerful. Last night, I'm
Speaker 1: watching House of Cards season four, episode eight, and Netflix
Speaker 1: is smart enough to go if Scott like season four
Speaker 1: episode eight, we think he's gonna like season four, episode nine,
Speaker 1: and they start auto playing it. And it sounds basic,
Speaker 1: but it is the notion of of of an artificial
Speaker 1: intelligence figuring out what you want. And if you look
Speaker 1: at my home scream on Netflix, it has a bunch
Speaker 1: of stuff I want to watch. There are now more people,
Speaker 1: more millennials. More millennials watch Netflix or have Netflix than
Speaker 1: have cable TV. So arguably Netflix should be worth more
Speaker 1: then all of TV. If you think that millennials are
Speaker 1: the generation, they have the most disposed b income, they're
Speaker 1: the ones that are going to go into the primary
Speaker 1: earning now. I think they do. I think also they
Speaker 1: do a fantastic job. The iOS is our mobile system
Speaker 1: for what i'll call the utility in our life. Amazon
Speaker 1: is our operating system for commerce. Facebook I think it's
Speaker 1: a little bit our operating system for loving relationships. And
Speaker 1: I think Netflix is becoming our operating system for joy.
Speaker 1: I think it's got an opportunity to be a two
Speaker 1: or three D billion dollar market cap company. And Amazon
Speaker 1: Video actually will immediately start playing the next episode and
Speaker 1: to tell it until you tell it to stop, it'll
Speaker 1: it'll just check right into that, all right. So let's
Speaker 1: go into our favorite. We didn't do Biggest Losers though
Speaker 1: biggest loser snapchats. Now we said that earlier Snapchat. You
Speaker 1: think the I p O is going to be the
Speaker 1: mark the high price of of Snapchat. I think I
Speaker 1: think it'd be better for our economy if it did well,
Speaker 1: because we need a third player in the ecosystem outside
Speaker 1: of Google and Facebook. But I think ap chat is
Speaker 1: gonna get public go crazy because of pent up demand
Speaker 1: from retail investors who have been excluded from Uber and Airbnb, um,
Speaker 1: and then I think it's gonna and then it's going
Speaker 1: to be sort of a slow, slow moving train wreck.
Speaker 1: Here's who I have down for your losers theme from
Speaker 1: seventeen traditional advertisers. We talked about them. Twitter, we talked
Speaker 1: about them, Yahoo, we talked about them. Here's when we
Speaker 1: didn't talk about Pinterest. Why is Pinterest a loser? Fantastic,
Speaker 1: fantastic product, not a great business. Uh, immature management team
Speaker 1: that thinks it's in the business of art, not in
Speaker 1: the art of business. Again, another failure on the part
Speaker 1: of the board. And one of the things about venture
Speaker 1: capital is if you manage to get you have an
Speaker 1: obligation to get the highest valuation possible. But the problem
Speaker 1: is when you raise money and I think at twelve
Speaker 1: or thirteen billion dollar market a little rich, Well, then
Speaker 1: you've got all these prefs um the companies should have
Speaker 1: been bought for five billion and everybody would have done
Speaker 1: really well. But now they convinced people invest in twelve
Speaker 1: or thirteen, it's effectively only three or four buyers of
Speaker 1: pinterest of all the brands we track at L two,
Speaker 1: we don't know any actually buying advertising on Pintra. So
Speaker 1: I think again, this is a failure of a board.
Speaker 1: There's very few CEOs that can go from A to Z.
Speaker 1: I think they have a genius CEO in terms of product,
Speaker 1: he's not the guy to take it to the next level.
Speaker 1: And the board has failed to make the hard decisions
Speaker 1: around that management turnover. There has been an absolute uh.
Speaker 1: The word I would want to use debacle. I was
Speaker 1: gonna I was gonna use another term, but I was
Speaker 1: gonna say cluster something, but cluster debacle. Cluster debacle. So yeah,
Speaker 1: I think it's a I think it's a fantastic company.
Speaker 1: I think it's wildly overvalued. Twitter overvalued, most overvalued company
Speaker 1: in the world right now. We Work seventeen billion dollars.
Speaker 1: We looked at a we Work space and it was
Speaker 1: fantastic if I was forty years younger and in the
Speaker 1: world of tech, these tiny little scrape great company, great concept,
Speaker 1: might even be worth a billion dollars. But right now,
Speaker 1: if you look at WE Work, it's trading at four
Speaker 1: thousand dollars per customer. A little if their valuation stiff.
Speaker 1: If you take the majority of that WE Work buildings
Speaker 1: there in and you take the floor they've leased and
Speaker 1: put in a cool coffee bar, a great market, great concept,
Speaker 1: great business model, and it is a great business and
Speaker 1: a great business model. But that floor is now worth
Speaker 1: more than the entire building they're leasing that floor. So
Speaker 1: is it a great company, yes, is it a great idea? Yes?
Speaker 1: Is it worth ten to twenty of what it's worth now, yes,
Speaker 1: most overvalued company in the world. You know, it's the
Speaker 1: same thing as a Regius or there's a handful of
Speaker 1: companies that do the office shares. They just made it younger, hipper.
Speaker 1: There's a bar and a and a coffee lobby, coffee
Speaker 1: lounge in the ground floor. The one on Brian Park
Speaker 1: is funky and hip. They do a fantastic. Look. Twitter
Speaker 1: is an amazing company. I think it's worth a billion
Speaker 1: two billion dollars, which puts it at about se worth
Speaker 1: less than it is now. All of these companies are amazing.
Speaker 1: I'm not taking anything away from them. The problem is
Speaker 1: when you layer in their valuation, they make no sense.
Speaker 1: So let's talk about a couple of other things on
Speaker 1: your loser list. Jet dot Com recently purchased by Walmart
Speaker 1: three and a half billion dollar, hair plugs, trying to
Speaker 1: make it, trying to make Walmart going through a midlife crisis,
Speaker 1: trying to hang with the cool kids, not recognizing it's
Speaker 1: a mature company that should be slowing down its campex
Speaker 1: and reduced, you know, in spending a ton of cash
Speaker 1: back to Shriff says, we we have a culture problem.
Speaker 1: The most expensive aqua higher and history three three and
Speaker 1: a half billion dollars, or about six and a half
Speaker 1: million dollars per employee, will be the biggest write down
Speaker 1: in the history of retail. And what about Dollar Shave Club.
Speaker 1: You you've said another another great company, Dollar Shave Club
Speaker 1: billion dollars I think about I think about three and
Speaker 1: a half million dollars per employee, losing money supposedly had
Speaker 1: discovered a new model for acquiring customers online. To Lette
Speaker 1: spent fifty million dollars on TV advertising last year. Dollar
Speaker 1: Shave Club spent fifty five million dollars on TV advertising.
Speaker 1: The biggest winner in the Dollar Shave Club acquisition was
Speaker 1: Procter and Gamble, who at a competitor taken out of
Speaker 1: the market place on Unilever's balance sheet. That's fantastic. All right,
Speaker 1: so let's get to my favorite questions before we run
Speaker 1: out of time. We've talked about your background, although I
Speaker 1: have to ask your at U C, l A and Berkeley,
Speaker 1: right schools all the way through, just like you. That's right.
Speaker 1: I went to sunny stony Brook. We the joke was
Speaker 1: Berkeley the stony Brook of the West, but last week
Speaker 1: it was twenty degrees. Do you do you feel like
Speaker 1: you miss a little bit of California when New York
Speaker 1: weather gets like anybody is from California. When you come
Speaker 1: into l A. And you get in your car and
Speaker 1: you got in an outburg, which is my my pattern,
Speaker 1: you sort of wonder what was I thinking ever leaving here?
Speaker 1: But then you're there for a week and you're like, oh,
Speaker 1: now I remember I don't know, it's pretty nice out there.
Speaker 1: It's fantastic if you and are a New York guy
Speaker 1: so born and Bread were born in Bread. To me,
Speaker 1: California would be fantastic if you could follow the neutron
Speaker 1: bomb and start over my second I love California, But
Speaker 1: every time I'm there, I'm like, oh, now I remember
Speaker 1: what my second life midlife crisis. I'm moving alley, running
Speaker 1: a port, losing money in movies, and and and and
Speaker 1: and dying under suspect circumstances. I'm looking forward to it. Well, affair,
Speaker 1: I'll tell you my favorite San Francisco story that's like, oh,
Speaker 1: that's I love this place. But I consider myself, you know,
Speaker 1: socially progressive, left of center New York liberal. And I
Speaker 1: go out there and I'm Mattil of the Hunt. They
Speaker 1: think they think I am like Genghis Khan. They're just oh,
Speaker 1: so you're really an extreme right wing or I'm like, no,
Speaker 1: you people are crazy. I'm pretty center center left. You're
Speaker 1: just astonishing um And I repeat this over and over.
Speaker 1: I love California. I have family in Lahoya. We spend
Speaker 1: time out there. One of the most beautiful place Newport
Speaker 1: beach spectacular. San Francisco is a world class city. Beautiful
Speaker 1: city in America. I can't imagine. And every time when
Speaker 1: you look, you travel a lot. Every country I go to,
Speaker 1: every city I go to, I'm like, this place is fat.
Speaker 1: Like we were in Copenhagen not too long ago. I'm like, Wow,
Speaker 1: this is a great city. I'm not sure I could
Speaker 1: live here, but it's a fantastic city. San Francisco. Every
Speaker 1: time I'm there, I'm like, I could live here, And
Speaker 1: then by the end of the trip it's like, you know,
Speaker 1: I can. I don't know. They would not put up
Speaker 1: with my New York stick there for very long. I
Speaker 1: get away with it here, I can't get away with it.
Speaker 1: There is there goods all right, So let's talk um,
Speaker 1: I'll do the abbreviated version of our favorite list early mentors.
Speaker 1: Who are some of the people that influenced the way
Speaker 1: you think about business and digital So probably my first
Speaker 1: business manner was a guy named David Anker who inspired
Speaker 1: me in my second year of business school, and I
Speaker 1: decided that's what I wanted to do with the rest
Speaker 1: of my life. He's a professor considered the father of
Speaker 1: modern management. I had some really nice, uh kind of
Speaker 1: older brother father figure like people who are mentors for
Speaker 1: me right out of business school. UM, I got Impat Connolly,
Speaker 1: who just retired as CMO of Williams Nooma, has been
Speaker 1: a kind of a mentor for me as an adult
Speaker 1: adult person. UM, as an adult Warren Hellman invested in
Speaker 1: everything I did, the venture, the buyout guy out there. Uh,
Speaker 1: it's some great some of my clients said. Profit I
Speaker 1: got named Gorge Shank, who was the CMO of Levi's Canada,
Speaker 1: was very generous with me. There was just some nice,
Speaker 1: very nice, you know, decent people who took an interest
Speaker 1: in me and we're very good to me. I feel
Speaker 1: very blessed that way. I was raising a single parent household.
Speaker 1: My dad was around, but we I didn't live with him,
Speaker 1: and uh, I was very fortunate at a very young age.
Speaker 1: A lot of you know, older mostly men, took an
Speaker 1: interest in me professionally and we're very generous with me.
Speaker 1: So I consider myself very fortunate around mentors. And anyone
Speaker 1: who doesn't have mentors, it's gonna be tough to be
Speaker 1: successful because you need people on your shoulder who can
Speaker 1: give you advice even when they're not around, because you
Speaker 1: get to know him and you get to kind of
Speaker 1: channel how they would handle a given situation. So those
Speaker 1: are mentors. What about business people or other professionals who
Speaker 1: influenced the way you approach business? You run one very
Speaker 1: successful business currently. A few of your prior businesses, profit
Speaker 1: and and red Envelope both were very successful. Who who
Speaker 1: were the big influences from a business perspective? You know?
Speaker 1: So my dad gave me a bunch of Peter Jarker
Speaker 1: books when I was younger, and I read those and
Speaker 1: I tried, you know that that was sort of the
Speaker 1: basis I think for how I approach business. But I
Speaker 1: wouldn't say like any one person, our individual stands out.
Speaker 1: I don't. I don't model myself. You know. The only
Speaker 1: thing you guys to get older, you have a code.
Speaker 1: And I'm openly critical of a lot of managers. And
Speaker 1: every person I admire in history has one thing in common.
Speaker 1: They've given powerful people a hard time. And I think
Speaker 1: it's okay to be critical of people as long as
Speaker 1: they're more powerful than me. So that gives me a
Speaker 1: very broad target set. Punch up as opposed to punching down.
Speaker 1: It's if you're being critical of people who have the
Speaker 1: same or less influencer power than you do, that's not
Speaker 1: being it of color. Starting at cattle, you're just bowling.
Speaker 1: So the people I admire most in in journalism and uh,
Speaker 1: you know, I wouldn't say in business, but have never
Speaker 1: been afraid as long as you're not being means spirited
Speaker 1: call out other business people. But I wouldn't say I have,
Speaker 1: like you know, there's so many incredible people you can
Speaker 1: look to now in business and Lincoln learn so much
Speaker 1: about them. But I'm more about, you know, historical figures.
Speaker 1: I'm I'm a big fan of Winston Churchill and um,
Speaker 1: you know, folks like that. But I wouldn't I wouldn't
Speaker 1: say there's any kind of dominant I'm not a religious person.
Speaker 1: I'm not. I don't have what I call a course
Speaker 1: set of a course set of people I looked to
Speaker 1: for first off. So so let me digress a bit,
Speaker 1: because you just referenced something interesting. Um, the CEO of
Speaker 1: under Armour came out and said, uh, some positive things
Speaker 1: about President Trump. He's asset to the business community. Their
Speaker 1: single biggest endorser, Stephen Curry and the Golden State Warriors
Speaker 1: came out and said, well, he's right that he's an
Speaker 1: asset if you drop the E T. And then that
Speaker 1: that got a little viral, and then the question became
Speaker 1: they had the CEO of under Romer and Curry had
Speaker 1: a conversation apparently all is well there what happens with
Speaker 1: the consumer society where we just saw what happened with
Speaker 1: Nordstrom dropping the Avanca line. Is this going to be
Speaker 1: a litmus test amongst consumers and or their high profile spokespeople.
Speaker 1: So in the movie Broadcast News, William Hurst asked Albert Brooks,
Speaker 1: what do you do if your real life outpaces are
Speaker 1: as better than your dreams? And Albert Brooks turns him
Speaker 1: and says, keep it to yourself. And that's so Kevin
Speaker 1: playing handled it poorly. I can almost guarantee you that
Speaker 1: when you're the sea of a consumer company and you
Speaker 1: come out for or against anybody half it's just so
Speaker 1: I'm not faulting him for less than half this time.
Speaker 1: I'm not faulting him for being positive. It's it would
Speaker 1: have been the same stupid move if you've been critic
Speaker 1: of the president. Nords From handled it correctly. They basically said, look,
Speaker 1: her stuff's not selling. They even said, we like her,
Speaker 1: she's nice, we like her and her team, but the
Speaker 1: stuff is not selling. This is a business decision. In
Speaker 1: some political views from the CEO are are best kept
Speaker 1: to yourself. And when when Trump draws you in, I
Speaker 1: think you have a writer or an obligation to respond
Speaker 1: in a soufful a way as possible. But actually a
Speaker 1: lot of the CEOs of handled really well. I think
Speaker 1: the CEO Ford has handled it really well. I think
Speaker 1: I think Nords from handled it very well. What about
Speaker 1: the delete uber campaign which which basically forced him, the
Speaker 1: CEO of Uber, off of Trump's business advisory board. Yeah,
Speaker 1: consumers are getting very savvy around how quickly they can
Speaker 1: rally around an issue, and then they're smart to hit
Speaker 1: people in their pocketbook. That's when that's when you really
Speaker 1: see action. Right. Boycott used to be more or less meaningless.
Speaker 1: Every now and then one would have an effect. But
Speaker 1: between Facebook and others, Twitter and other social media, it
Speaker 1: seems that Boycott's can be organized and put into place
Speaker 1: much more quickly and much more effectively than than Withdrew
Speaker 1: in the past. Yeah, it's an exciting time from that
Speaker 1: end because you can rally people do a good cause.
Speaker 1: Travis being forced off of Trump's Business Advisory Council was a,
Speaker 1: you know, a pretty pretty interesting thing. But the politics,
Speaker 1: the politicial politicization, if you're a politicalization of every company's
Speaker 1: now has become relard. You know. I don't mean I
Speaker 1: find I love politics, and I'm exhausted by it all.
Speaker 1: It's every day just you know, I just want to
Speaker 1: watch I just want to watch Modern Family and once
Speaker 1: a while and not have politics, you know, have I
Speaker 1: can't even watch MSNBC and Rachel Matto. And I wonder
Speaker 1: if this is kind of officially another leg down to television,
Speaker 1: because I think TV and medium and politics have literally
Speaker 1: just exhausted us and we're ready for about a thirty
Speaker 1: year break. Except I just saw this headline the other
Speaker 1: day for the first time. Colbert Beach Jimmy Fallon, Falons,
Speaker 1: considered a sort of nice guy inoffensive, has had Trump on.
Speaker 1: Colbert has been hammering Trump. So has um who follows Fallon. Yeah,
Speaker 1: they and their voice has been to push back against
Speaker 1: the president. It's good for it's not even good politics,
Speaker 1: it's good. Did you see SNL on Saturday? No, of course,
Speaker 1: the god the opening is hilarious. But it's not just
Speaker 1: the opening. I don't know if you saw the last one,
Speaker 1: it was literally the entire show, this segment with Kelly
Speaker 1: and Conway. Yeah, Jack Taper's uh yeah, that was just
Speaker 1: that was six minutes of and you know the White
Speaker 1: House is watching watching it, seething, fuming. Yeah, it's it's
Speaker 1: just so, I mean, it's just so we're like, we're
Speaker 1: just totally in uncharted territory. And I personally, I mean,
Speaker 1: I have fantasies about this. I've done some activists investing
Speaker 1: if Twitter goes, but oh, ten, I want to signal
Speaker 1: it now. I don't think. I don't think I have
Speaker 1: to follow thirteen D here, but I'd like to buy
Speaker 1: some between one and two percent of the company former group,
Speaker 1: renominate everyone but Jack Dorsey, and shut down the potus
Speaker 1: and the real Donald Trump's account based on really, I
Speaker 1: think he's violated their code of conduct well, harassed people,
Speaker 1: hate speech. I think they have. They have been inconsistent
Speaker 1: in their application of their standards around I think we're
Speaker 1: all afraid, but I think we got to turn that
Speaker 1: thing off. My hope for the election was when November
Speaker 1: fourth came and went that's it, We're done no more
Speaker 1: and that if anything, it just became louder in one side.
Speaker 1: But what do you you're a markets guy, Barry, markets
Speaker 1: have gone up? What do you think? What's gone on here?
Speaker 1: Why are the markets you know? Yeah, well, first the
Speaker 1: narrative about about what was going on. I think what
Speaker 1: misunderstood it. Markets are looking at a trillion dollar infrastructure spends.
Speaker 1: That's stimulative. Big tax cuts may create deficits down the road.
Speaker 1: Nobody was a bigger deficit spender than Reagan. It was
Speaker 1: fantastic for the stock market. So you you rejigger the
Speaker 1: corporate tax code, you repatriate two trillion dollars of Apple
Speaker 1: and everybody else's staships overseas, it comes back. You're looking
Speaker 1: at you know this is there could be. Most people
Speaker 1: look at the markets as they time it from the
Speaker 1: bottom in March O nine and say left the market
Speaker 1: seven years old. That's the long definition of a secular
Speaker 1: bull market. We broke out to the new highs, and
Speaker 1: which means this market is three or four years old
Speaker 1: as a new bull market, and you've had a number
Speaker 1: of twenty resets. People tend to forget that. So if
Speaker 1: this market is three or four years old. Hey, the
Speaker 1: last correction which we had January of last year. Remember
Speaker 1: the whole conversation people were saying that as January goes,
Speaker 1: so goes the market. H that was our seven. We
Speaker 1: could be a dozen years left from two thousand and
Speaker 1: this could really run. Plus, you look at the rest
Speaker 1: of the world. If you want to invest cheaply, emerging
Speaker 1: markets are really cheaply. If you want to invest aggressively,
Speaker 1: you look at the worst place in the world, a
Speaker 1: combination of Japan and Europe, and you invest there. But
Speaker 1: the United States is expensive because we we weren't the
Speaker 1: multiple that Apple and Google and Facebook do. Everything is
Speaker 1: as bad as people feel, as much as the middle
Speaker 1: class is getting squeezed, as much as the popularist uprising
Speaker 1: call it Trump, called it Brexit, call it Leapan and France. Overall,
Speaker 1: we're the ones who came through the financial debaccle which
Speaker 1: we essentially caused. We came through with the best We
Speaker 1: We ripped the band aid off first. We didn't do
Speaker 1: what we should have, but we did something we We
Speaker 1: basically bailed out a bunch of banks. We propped up
Speaker 1: a bunch of financial system that was ready to collapse.
Speaker 1: I would have done it differently. I would have sent
Speaker 1: everybody to bankruptcy court if I was benevolent dictator, and
Speaker 1: you would have been much It would have been more painful,
Speaker 1: but you'd be much healthier that much sooner. But here
Speaker 1: we are, seven years later. We have a functioning economy,
Speaker 1: essentially under five percent unemployment. So we're the you know,
Speaker 1: we're we're the cleanest shirt in the in the hamper,
Speaker 1: so to speak. And so that's why the economy and
Speaker 1: the market continues to go higher. How are you interviewing me?
Speaker 1: You're listening to Masters in Business with Scott Galloway. I'm
Speaker 1: here with my guest, Barry Ritholtz. So so let's go
Speaker 1: back to our questions. You mentioned Drucker. What are some
Speaker 1: of your favorite books? By the way, all you need
Speaker 1: to do is pull my string. I said, I'm gone
Speaker 1: that I've watched you. I've watched you. I was awake
Speaker 1: through most of that was pretty good. Favorite books? What
Speaker 1: are some of your favorite books? You sent it every time.
Speaker 1: So there are a few things I'm embarrassed about because
Speaker 1: I like to think of myself as educated. I don't
Speaker 1: speak a second language, and the red and The reality
Speaker 1: is I read a ton. I don't read a lot
Speaker 1: of books. The books that changed my life for the
Speaker 1: Peter Darker works, which one is give me the titles?
Speaker 1: What is it the Twenty Minute Matter or The Modern
Speaker 1: Manager or his his early one about the Austrian economy. Um,
Speaker 1: this is really obtuse to my dad sent me, But
Speaker 1: I forget the titles. And then and then influence on
Speaker 1: me is I'm kind of a war buff. I read
Speaker 1: when I was in high school. I read all the
Speaker 1: Herman Wok books, Warren Remembrance, the Winds Shore Um. And
Speaker 1: I also just loved John Irving books. I think he's
Speaker 1: just so strange. John Irving. Did you like that movie?
Speaker 1: Probably Robin Williams's best film? Really? Yeah, I would. I
Speaker 1: would challenge that. I'm gonna have to come up with
Speaker 1: a list. What would you like that better? Uh? Dead
Speaker 1: Poets Society? Yeah, um, good morning. But he's a he's
Speaker 1: a minor character in in good Will hunting Dead Poets Society.
Speaker 1: He's I would really have to And on the comedies,
Speaker 1: you know, some of his comedies were Mrs Doubtfire is
Speaker 1: a hilarious and he's wonderful and another one he's bringing.
Speaker 1: I think it's called twenty four our photo. He's actually
Speaker 1: better at playing a psychopath than a comedian. I haven't
Speaker 1: seen that. I heard good things about that. So so
Speaker 1: herman woke Peter Drucker and yeah, that's what I'm That's
Speaker 1: what I'm sticking with. There's a scene in the Reason
Speaker 1: I have an issue with Garp. There's a scene where
Speaker 1: he's in the driveway. We won't go into the details,
Speaker 1: but he's got the woman with him when he's be ended.
Speaker 1: I think that scene ruined the book for me. Low budget,
Speaker 1: low budget gender transition. Yes, exactly. It was before Tranny
Speaker 1: was a that's a good that's a good scene. It's horrific.
Speaker 1: In the plays his mother, she's outstanding in that as well.
Speaker 1: There's some she must have been excited to get a
Speaker 1: casting called to be Robin Williams mother. It's like than
Speaker 1: Sally Field was cast as Tom Hanks's mother and Forrest
Speaker 1: Camp and I think she was six years older than him,
Speaker 1: all right, I isn't wasn't Robin Williams older than her?
Speaker 1: I don't know. I don't remember. It could have been that,
Speaker 1: all right. I know. I only have a fine amount
Speaker 1: of time, let's talk about, um, what you do to
Speaker 1: keep mentally and physically fit outside of work. You mentioned
Speaker 1: you swim, Yeah, I'm I'm I'm actually pretty into physical fitness.
Speaker 1: I trying to cross fit three or four times a week.
Speaker 1: It's how your niece, I've been really blessed without stuff,
Speaker 1: I think. I think physical fitness is a gift from God.
Speaker 1: It's my anti depressant. It keeps me sort of even
Speaker 1: keel sort of. I struggle with anger, I get piste
Speaker 1: off and stuff I shouldn't. But working out for me
Speaker 1: has just been a real Like I said, I'm just
Speaker 1: a gift from God. And I tell my kids in
Speaker 1: my class that if you are in good shape, you're
Speaker 1: gonna make more money, You're gonna be happier, You're gonna
Speaker 1: have more sex, You're gonna have more options in terms
Speaker 1: of who you mate with. You're gonna feel more confident,
Speaker 1: You're gonna be a better person to your friends, your pets, um,
Speaker 1: your neighbors. That it is absolutely one of the most
Speaker 1: one of the things you find that's consistent across the
Speaker 1: most successful people in business. It's not that they went
Speaker 1: to great schools, it's not that there you know, it's
Speaker 1: not that they're religious. The thing you find among almost
Speaker 1: all of them is they exercise every day. So I'm
Speaker 1: gonna do a really brief digression the anger issue referenced.
Speaker 1: That's a hot amber, hot coal that's in the core
Speaker 1: of your being. And you know how if you're ever
Speaker 1: working with a fire, you can you can blow on
Speaker 1: that and and get that amber going again. In all
Speaker 1: of your presentations, that's a very channeled focused anger with
Speaker 1: all of the virtual removed. It's and I share your
Speaker 1: that issue, but my wife says to me, where the
Speaker 1: hell does all this anger coming? Um, I don't know
Speaker 1: what it is, but it's it's a it's a fuel
Speaker 1: source that you can tap and redirect. And when I
Speaker 1: watch you take a part um a particular segment, and
Speaker 1: and again I'm gonna repeat for people, if you are
Speaker 1: not going on YouTube and seeing Galoway's videos on a
Speaker 1: clear basis as well as the d l D presentation,
Speaker 1: would you always make entertaining and you always you're fearless
Speaker 1: to embarrass yourself, So you do George Michael and and
Speaker 1: they're always entertaining, but they're filled with data, filled with information.
Speaker 1: But I could see that there is a driving something
Speaker 1: that you want people to get to the correct answer,
Speaker 1: and it's frustrating that the role looking in the wrong
Speaker 1: place and all coming to the wrong decision. So maybe
Speaker 1: anger and frustration or two sides of the same coin,
Speaker 1: but that's pop psychology for one. That's what I see
Speaker 1: driving you as getting people to the right place. I
Speaker 1: think you're being generous. I just think I have some
Speaker 1: chemistry that's all screwed up and anchor off of negative.
Speaker 1: Given how fortunate I am, I don't think there's anything
Speaker 1: I can blame it on. In my childhood. There's there's
Speaker 1: no one I can blame it on, single single parents,
Speaker 1: there's that could be it. I had a great mom, though,
Speaker 1: and I had a nice upbringing. You know, this isn't
Speaker 1: a sob story. We had a nice life, So it's chemical,
Speaker 1: you know. She and I got to take vacations and
Speaker 1: we had a nice relationship, and I went to nice
Speaker 1: schools and had nice friends. But I'm definitely gonna be
Speaker 1: on something. I think as the the side effects of
Speaker 1: the antidepressant's lesson and my anger increases, those lines are
Speaker 1: going to cross and I'm ready. Our last two questions, Um,
Speaker 1: so you work with a lot of students and millennials.
Speaker 1: What sort of advice do you give someone who says,
Speaker 1: I want to go into filling the blank technology digital content.
Speaker 1: I think about this lot a couple of things. One,
Speaker 1: don't follow your passion. Most people will tell you to
Speaker 1: follow your passion. Unfortunately it's every speaker at lunchtime and
Speaker 1: stern is already rich. Figure out what you're good at,
Speaker 1: and then try and really expand and and being great
Speaker 1: at something. We'll give you the currency and the economic
Speaker 1: reward and the psychological words such that you'll start to
Speaker 1: love it. So your job as a young person is
Speaker 1: to figure out something you're good at, not not your passions.
Speaker 1: I was I was meant to be quarterback of the Jets.
Speaker 1: I have a good plan of vision, a decent arm
Speaker 1: I would have been loved it, but I wasn't. I
Speaker 1: was mediocre at it as an athlete growing up. Uh
Speaker 1: what I ended up being semi grade at? With starting
Speaker 1: starting companies and analytics. Find out what you're good at.
Speaker 1: Get to a business that has recurring revenue. Recurring revenue
Speaker 1: companies are valued at a multiple of revenues versus a
Speaker 1: multiple of ibada. You want to be in a recurring
Speaker 1: revenue company you want to be, in my opinion, getting
Speaker 1: more tactical the two technologies the next three to five
Speaker 1: years our voice and messaging. I'd want to find companies
Speaker 1: in the ecosystem of voice and messaging. Get to a
Speaker 1: city two thirds of the economic development is going to
Speaker 1: be in within a bike ride of a major world
Speaker 1: class engineering university. Make sure you live near one of
Speaker 1: those and get into that ecosystem. You pointed out that
Speaker 1: most of the major successful companies in the SMP fire
Speaker 1: are all right near a major university of renowned university.
Speaker 1: How can you tell if a kid successful, how long
Speaker 1: does it take him or her to get to the
Speaker 1: biggest city in their country? And then how long does
Speaker 1: it take them get to London in Europe, Shanghai, Shanghai, Beijing,
Speaker 1: or Hong Kong or Singapore in Asia, or San Francisco,
Speaker 1: New York in the US. Our most talented human capital
Speaker 1: is flocking to these barter town, full full body contact
Speaker 1: business centers, and your your ability to get the skill set,
Speaker 1: the competitive nature, the grit, and the opportunities is very geographically.
Speaker 1: Sense of the intellectual capital is there. And our final question,
Speaker 1: what is it that you know about technology, digital brands,
Speaker 1: marketing startups today that you wish you knew twenty plus
Speaker 1: years ago when you began. It sounds very um pasting.
Speaker 1: It's not that, not that romantic, but um. In the
Speaker 1: one of my venture capital Larry Bonds, has successes in
Speaker 1: the agency of others, trying to find good people and
Speaker 1: then overcompensate, show empathy for them, really trying to figure
Speaker 1: out what it is they want and make your success.
Speaker 1: Is there such that they're loyal to you? UM. I
Speaker 1: think I was a little bit more Darwinian as as
Speaker 1: as a younger person. And also just get to a
Speaker 1: business with um recurring revenue. I know that sounds ridiculous,
Speaker 1: but the business of software is it's a better business.
Speaker 1: The business of owning a gym versus part private training
Speaker 1: is a bet. Being the insurance company that gets the
Speaker 1: bills everybody every year as opposed to the doctor, the
Speaker 1: healthcare provider. Recurring revenue I think sorts at and get
Speaker 1: towards something that is one or two degrees separated from
Speaker 1: the plumbing price and processing power or something around technology
Speaker 1: technologies eating the world. We have been speaking with Professor
Speaker 1: Scott Galloway of n Y u Stern School of Business.
Speaker 1: If you want to learn more, go to his YouTube channel.
Speaker 1: Just search for Scott Galloway at L two. Or we
Speaker 1: didn't talk about your book. You have a book coming
Speaker 1: out in September. We'll revisit that when that book comes out.
Speaker 1: Winners and Losers. Who's publishing that portfolio? Penguin, Random, Random House,
Speaker 1: not self published. You should be just barely. If you
Speaker 1: enjoy this conversation, be sure and look up an inch,
Speaker 1: down an inch on Apple iTunes. You can see any
Speaker 1: of the other hundred and thirty such conversations. I would
Speaker 1: be miss if I did not think my booker, Taylor Riggs,
Speaker 1: my recording engineer Medina, or Michael Batnick, my head of research.
Speaker 1: I'm Barry Retults. You're listening to Masters in Business on
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