Speaker 1: You are listening to Bloomberg Business Week. Well, our next guest,
Speaker 1: rights at the Rise of the Digital Giants, requires a
Speaker 1: different mindset for success, and that understanding those digital giants
Speaker 1: their DNA specifically, will help the next generation of leaders
Speaker 1: prepare for an environment where everybody wants to rule the world.
Speaker 1: That is the title of his new book that is
Speaker 1: just out, Everybody Wants to Rule the World. Surviving and
Speaker 1: thriving in a world of digital Giants. Joining us right
Speaker 1: now is the author R. Ray Wong. He is founder
Speaker 1: of the Silicon Valley based Constellation Research, co host of
Speaker 1: Disrupt TV. It's a weekly webcast and he looks at
Speaker 1: disruptive technologies and new business models. He's an advisor to
Speaker 1: global companies and he joins us on this Thursday on
Speaker 1: the phone in Las Vegas. Ray, nice to have you
Speaker 1: here on Bloomberg Business Week. How are you. I'm doing well.
Speaker 1: Thanks for having me. Well, it's great to have you here.
Speaker 1: What's your last year been like? Last year has been crazy,
Speaker 1: watching companies go from digital channels to digital business models
Speaker 1: to digital monetization and kind of do it all from
Speaker 1: home and trying to do it with like, you know,
Speaker 1: the most interesting you know, work policies, technologies, and of
Speaker 1: course you know shareholders and of course as a pandemic.
Speaker 1: So how's the proced Have you been about the kind
Speaker 1: of the rapidity and how the cycle of going digital
Speaker 1: has just picked up? You know, we talked about we've
Speaker 1: done five years, three years of changes, our adaptations of
Speaker 1: digital strategies in one year because you had to. It's
Speaker 1: it's because a choice. If you didn't do that, you
Speaker 1: would be out of business. At a small store that
Speaker 1: was taking motors by facts, that wasn't going to happen.
Speaker 1: The large companies that didn't know how many employees they
Speaker 1: had or where their supply chains were going to be,
Speaker 1: they fell apart. The companies that couldn't figure out pricing
Speaker 1: because they figured no demand signals, they had no analytics
Speaker 1: or insight, they weren't able to survive. And we saw
Speaker 1: that and the companies that have emerged over the last
Speaker 1: three to four months have come back stronger and and
Speaker 1: that's the most exciting part about this. Well, and you
Speaker 1: your new book that talk looks specifically at these digital giants.
Speaker 1: You know, what do you mean, are you talking about
Speaker 1: the usual suspects specifically or give us some clarification of
Speaker 1: what you wanted to look at and who we need
Speaker 1: to kind of keep a close watch on is the
Speaker 1: great point, right. It's not the usual suspects we're looking at,
Speaker 1: like the Fangs plus Microsoft, But what we're looking at
Speaker 1: is that emergent class of digital giants, the epic games,
Speaker 1: the roadblocks as the Kupangs, the at financials, the Robin
Speaker 1: Hoods of the world, AIRBMB, door dash um. They all
Speaker 1: have distinctive business models that are that are very very
Speaker 1: different than what digital transformation could do on their own.
Speaker 1: For example, there are five things that are important. It's
Speaker 1: really about different to meeting customer control. They take the
Speaker 1: customer relationships, they aggregated, they own it. If you look
Speaker 1: at door Dash versus Domino's Pizza and Dominoes is an
Speaker 1: awesome company. I mean, they're the poster child for digital transformation,
Speaker 1: but you might order a pizza from them once a week.
Speaker 1: Some people order from door Dash three times a day.
Speaker 1: And that aggregation of businesses and customers over time allowed
Speaker 1: them to gather more data, and data is the power
Speaker 1: behind a lot of this. They know that in your
Speaker 1: zip code, Carrol, that people like Tai food more than
Speaker 1: Italian and the other zip code to the like Chinese
Speaker 1: food more than Indian food, and they use that data
Speaker 1: to maybe build a ghost kitchen, maybe get better at targeting,
Speaker 1: and then they start building big networks. Small restaurants could
Speaker 1: probably have a hundred or thousand customers. These companies have
Speaker 1: aggregated millions of customers, sometimes tens of millions of customers,
Speaker 1: in other cases hundreds of millions of customers, and by
Speaker 1: doing that they have that network effect. And then of
Speaker 1: course they understand digital monetization, whether it's ads or search
Speaker 1: or goods or services or memberships or subscriptions. They figured
Speaker 1: out where they want to play and then here's the kicker.
Speaker 1: They can lose hundreds of millions of dollars a year,
Speaker 1: but Song, the growing mind market Shire, their shareholders don't care,
Speaker 1: and that makes it so hard to compete against them.
Speaker 1: If you're traditional business. You were talking about data UH
Speaker 1: and the data domination, and it's not the typical firms
Speaker 1: that we all talk about RAY when it comes to data.
Speaker 1: It's not the big famous saying stock specifically, which are
Speaker 1: now in UH. You know, regulators cross hairs around the world.
Speaker 1: But you talk about the robin hoods the Airbnb is
Speaker 1: the door Dash. These are the ones that are increasingly
Speaker 1: accumulating data. And what do we need to learn from
Speaker 1: What do we need to be wary about? Yeah, what
Speaker 1: we need to know is that they're competing on data.
Speaker 1: And that is the heart of every one of these
Speaker 1: digital companies is the fact that they've got a data
Speaker 1: driven digital network. That's the hundred your platform that anticipates
Speaker 1: what a customer wants. It identifies a trend that hadn't
Speaker 1: been thought about, It mitigates a risk that someone that
Speaker 1: can't anticipate, and and that's their heart. They build that
Speaker 1: information insights over time and soon every company is competing
Speaker 1: on a concept we call decision velocity. You and I make,
Speaker 1: you know, make a decision per second. You could take
Speaker 1: us two weeks, a quarter, even a year to get
Speaker 1: something out of management committee. But machines are making decisions
Speaker 1: at talent times per second, and that asymmetry is called
Speaker 1: causing the decision velocity that was required. Every company is
Speaker 1: going to have to make faster and faster decisions, and
Speaker 1: the decisions that are being brought in are creating competitive
Speaker 1: mode and that information in that business graph. Like social
Speaker 1: networks have social graphs that tell you what people are
Speaker 1: going to do or help with the understanding that business
Speaker 1: graph is powering their AI and the machine learning engines
Speaker 1: which allow them be smarter. Those are the brains of
Speaker 1: the operations over time. And it's interesting you bring that
Speaker 1: up because a great conversation I had with the Raytheon
Speaker 1: CEO Greg Hayes yesterday and I highly recommend everybody go
Speaker 1: to our podcast feed at Bloomberg business Week dot com
Speaker 1: UH and Bloomberg dot com to check it out. But
Speaker 1: he did talk about increasingly to the use of AI
Speaker 1: when it comes to defense and helping to make those decisions.
Speaker 1: And that's kind of where we're moving. Are you basically saying?
Speaker 1: Is the net net the payoff here that those companies
Speaker 1: that are using technology, using their data, using AI, making
Speaker 1: those decisions instantaneously in terms of what is going to
Speaker 1: happen to their consumer base or what their consumer base wants,
Speaker 1: they are going to have uh the advantage going forward
Speaker 1: and and they need to be copied. Basically, you know
Speaker 1: it's true, it's right, pal, but it's not just the
Speaker 1: technics advantage that the hundred advantage because they can move faster,
Speaker 1: they have better information, they can act on that information
Speaker 1: and that gives them an advantage. And if you're smaller business,
Speaker 1: you're going to want to plug into one of those networks.
Speaker 1: But if you're a regulator, you're gonna want to think
Speaker 1: about what you can do to put competition when that
Speaker 1: data aggregation is concentrated by such a few group of individuals.
Speaker 1: And that's where it gets interesting. So I think about
Speaker 1: our audience ray very smart, very locked into the financial market. UM.
Speaker 1: A few months ago, I was sitting down with Cathy
Speaker 1: Wood and I think at that point that week they
Speaker 1: had gotten out of their shares of Apple, and she's like,
Speaker 1: that's maybe not the forward you know, that's not the
Speaker 1: companies that I'm going to be focusing on. I'm looking
Speaker 1: for the innovator's disruptors. That's her strategy. So for our
Speaker 1: investment audience, you know, how should they take the information
Speaker 1: that you're presenting here and run with it. Yeah, it's
Speaker 1: important to find the next group of digital giants. We
Speaker 1: know tech is where the growth is. We've seen the
Speaker 1: ship from value investings back to growth stocks again, we've
Speaker 1: seen the relation trade go back into big tech. But
Speaker 1: not all big tech companies are created the same and
Speaker 1: that's the important thing. You're looking for. Companies that have
Speaker 1: actually figured out how to disintermediate customer account control, companies
Speaker 1: that compete on data, companies that have a long term
Speaker 1: mindset where they can lose money but gaining market share,
Speaker 1: Companies that understand digital monetization, and then companies that understand
Speaker 1: how to build fast networks. Those are going to be
Speaker 1: the next winners in the digital economy. So are you
Speaker 1: saying robin Hood Markets is going to be one of those?
Speaker 1: Robin Hood Markets could be one of them. Starlink is
Speaker 1: going to be one if they do go public. If
Speaker 1: you see what happens you know with the go Jet
Speaker 1: go to like uh companies in Indonesia, those are one
Speaker 1: of those as well. What they're building out reliance and
Speaker 1: India is going to be one of those. Robots is
Speaker 1: a great example that at the Games has that capability
Speaker 1: as well. So a lot of opportunities coming up well,
Speaker 1: and it's interesting, you know you mentioned a lot of
Speaker 1: overseas companies. I do think we talk a lot about
Speaker 1: the emerging markets, and that's where you see increasingly companies
Speaker 1: um that are started their innovators, their disruptors, because those
Speaker 1: are markets that really need something an urgent need, and
Speaker 1: we've seen that and certainly in fintech play out when
Speaker 1: it comes to some of those emerging markets. Is that
Speaker 1: where you really look for the innovators in the space.
Speaker 1: Is it going to be a geographical difference, because that's
Speaker 1: at a necessity or not necessarily, the geographical markets are
Speaker 1: going to play a role, but at some point um
Speaker 1: the regulators in each country are going to ensure that
Speaker 1: you know, another country is you know, big tech giant
Speaker 1: is not going to invade their country, and I think
Speaker 1: we're starting to see that happen around the world. You're
Speaker 1: also seeing governments regulate the big tech companies a little
Speaker 1: bit more for fear of that kind of dominance and power,
Speaker 1: and so you'll see, you know, companies that emerge for
Speaker 1: regional winners. For example, Aazon is going to have a
Speaker 1: tough time getting into South America or getting into Asia,
Speaker 1: be very hard for them to battle there. But they
Speaker 1: might have a shot in India, but even that looks
Speaker 1: very limited. And so there are geographical constraints and a
Speaker 1: lot of these types of companies, So is that regulations.
Speaker 1: Is Amazon a company that gets crushed because you are
Speaker 1: looking at the companies that you think will ultimately thrive
Speaker 1: in this environment. You've mentioned a couple of them. Um,
Speaker 1: who gets crushed? Is it an Amazon? Going forward? They're
Speaker 1: huge now, no doubt about it. You know, here we are,
Speaker 1: you know, getting ready to watch Jeff Bezos go into space.
Speaker 1: Uh and you know has created incredible amounts of wealth,
Speaker 1: certainly for his company and for himself. And it's a
Speaker 1: stock that's just been off the charts. But is that
Speaker 1: a company that ultimately gets crushed in your view? No,
Speaker 1: I actually think Amazon is one of the winners. It's
Speaker 1: because the ethos and the culture the organization, there's a
Speaker 1: fear factor of always failing. They always start thinking about
Speaker 1: working backwards and trying to innovate into new markets. The
Speaker 1: only thing that will stop Amazon is really regulators UM
Speaker 1: and other industry obvious who do not want Amazon in
Speaker 1: their industry. And that's where we're starting to see some
Speaker 1: of these anti drug bills play a role. Hey what
Speaker 1: about something like you know, I think I've talked a
Speaker 1: lot about the food chain or we should we be
Speaker 1: looking at companies that are playing into that particularly, or
Speaker 1: gathering data and tapping into the strains and stresses on
Speaker 1: our our food supply chains as being some of the
Speaker 1: future winners, and just got about thirty seconds short answers. Yes,
Speaker 1: and that's why you're seeing a battle for Morrison's. That's
Speaker 1: why retail is a great place. That's why that's why
Speaker 1: i'm the B two B side the trading networks and
Speaker 1: the trade for commodities is another great space for those
Speaker 1: demand signals. You've got it, Carol, That's exactly the point. Alright,
Speaker 1: great stuff and fun to talk with you. Thank you
Speaker 1: so much. Good luck with the book very long. He
Speaker 1: is founder of the Silicon Valley based Constellation Research. His
Speaker 1: new book out, Everybody Wants to Rule the World, Surviving
Speaker 1: and thriving in a world of digital giants.