WEBVTT - Professor Scott Galloway: Masters in Business (Audio) 0:00:03.240 --> 0:00:08.240 This is Masters in Business with Barry Ridholts on Bloomberg Radio. Hi, 0:00:08.400 --> 0:00:11.640 this is Barry Ridholts. You're listening to the podcast portion 0:00:11.760 --> 0:00:15.239 of Masters in Business on Bloomberg Radio. I have a 0:00:15.280 --> 0:00:19.360 fantastic guest today. And I know you guys are tired 0:00:19.360 --> 0:00:21.560 of hearing me say that each and every week, But 0:00:21.840 --> 0:00:25.160 when you have a guest who is fantastic, you just 0:00:25.200 --> 0:00:29.280 have to say, this guy's fantastic. Scott Galloway, Professor of 0:00:29.800 --> 0:00:33.639 Digital Branding and Marketing at n y U Stern Graduate 0:00:33.640 --> 0:00:37.080 School of Business. I found this. I found some of 0:00:37.080 --> 0:00:41.760 the work of of Scott Professor Galloway on YouTube and 0:00:41.880 --> 0:00:45.640 he's done a number of really interesting videos. He does 0:00:45.680 --> 0:00:49.000 a weekly video. But but the most fascinating thing I 0:00:49.040 --> 0:00:54.560 saw of him was called the Four Horsemen of Technology, Apple, Amazon, Facebook, 0:00:54.560 --> 0:00:58.840 and Google. And he did this presentation at a conference. 0:00:59.560 --> 0:01:02.720 It was thing like nineties slides in fifteen minutes, and 0:01:02.800 --> 0:01:05.679 it was really just a tour to force discussion of 0:01:06.080 --> 0:01:11.039 what's going on in branding, in retail, in technology, and 0:01:11.560 --> 0:01:16.080 it was really just an amazing um conversation. And so 0:01:16.760 --> 0:01:19.920 I saw this, I started doing some research. Uh, he's 0:01:20.000 --> 0:01:21.680 right here in n y U use, you know, ten 0:01:21.680 --> 0:01:26.160 minutes from from the Bloomberg studios, and so I invited 0:01:26.240 --> 0:01:28.479 him to be on the show, and to my great 0:01:28.680 --> 0:01:32.200 uh surprise, he said yes, And so we had this 0:01:32.280 --> 0:01:36.680 conversation and he is one of the most fascinating knowledgeable 0:01:36.720 --> 0:01:39.920 people when it comes to those areas things like luxury 0:01:39.959 --> 0:01:45.080 brands and marketing and the intersection of your your physical 0:01:45.680 --> 0:01:50.240 stores with your online sites, with your social and mobile engagements. 0:01:50.880 --> 0:01:54.680 And it's really quite a fascinating um conversation. We we 0:01:54.800 --> 0:01:58.960 covered so many different things. It's really so interesting and amazing. 0:01:59.000 --> 0:02:02.280 And as you'll hear, at a certain point, it shifts 0:02:02.320 --> 0:02:05.200 from me, you know, doing the radio thing and asking 0:02:05.280 --> 0:02:08.840 questions and having him answer to just a real conversation 0:02:08.880 --> 0:02:14.000 about what is happening in the universe of technology and 0:02:14.080 --> 0:02:17.760 retail and branding and Amazon and Apple and Google and 0:02:17.840 --> 0:02:21.239 Facebook and Twitter and everything else. So I I really 0:02:21.280 --> 0:02:23.519 had a great time sitting and chatting with him. He's 0:02:23.520 --> 0:02:25.079 the sort of guy you would love to pull up 0:02:25.400 --> 0:02:28.080 next to um in a in a bar, sit down 0:02:28.120 --> 0:02:30.320 and have a beer and just talk about what's going on. 0:02:30.680 --> 0:02:33.600 And that's pretty much what we did. A little cappuccino 0:02:33.880 --> 0:02:37.040 and we were off to the races. So without any 0:02:37.080 --> 0:02:41.399 further ado, here is my conversation with Professor Scott Galloway 0:02:41.520 --> 0:02:50.000 of n y U. This is Masters in Business with 0:02:50.080 --> 0:02:55.480 Barry Ridholts on Bloomberg Radio. My guest today is Scott Galloway. 0:02:55.520 --> 0:02:59.720 He's a professor of Digital and Brands at and while 0:02:59.720 --> 0:03:05.480 you learn, is that the correct title professor of Marketing. UM. 0:03:05.560 --> 0:03:09.839 Welcome to Bloomberg. So before we get started, you may 0:03:09.880 --> 0:03:12.839 not be well known to all of our listeners. Let 0:03:12.840 --> 0:03:18.000 me go through your very very significant curriculum. Curriculum VITA 0:03:18.960 --> 0:03:21.240 bachelor's from u c l A and then an NBA 0:03:21.360 --> 0:03:25.239 from Berkeley. Currently Clinical Professor of Marketing, n y U 0:03:25.360 --> 0:03:29.440 Stern School of Business. Author of the Digital i Q Index, 0:03:29.560 --> 0:03:33.120 a global ranking of prestige brands. Will talk about that 0:03:33.200 --> 0:03:36.040 in a little more detail. Named one of the world's 0:03:36.120 --> 0:03:41.160 fifty best business school professors, founder of numerous firms L two, rent, 0:03:41.280 --> 0:03:46.440 Envelope and Profit and named the World Economic Forums Global 0:03:46.560 --> 0:03:51.120 Leaders of Tomorrow, which is a hundred individuals under the 0:03:51.160 --> 0:03:54.840 age of forty whose accomplishments have had an impact on 0:03:54.880 --> 0:03:57.120 the global level. You're also on the board or have 0:03:57.240 --> 0:03:59.840 served on the board of Directors of Eddie Bauer, the 0:04:00.000 --> 0:04:04.200 New York Times, Gateway Computer, and Berkeley's Hot School of Business. 0:04:04.640 --> 0:04:07.840 Did I skip anything or is that No? That's great? Thanks. 0:04:07.880 --> 0:04:10.280 So so let's talk a little bit about your background. 0:04:10.320 --> 0:04:15.000 First of all, why would you leave Sonny, California? For Yeah? 0:04:15.000 --> 0:04:16.680 It makes it makes no sense, right, That's one of 0:04:16.720 --> 0:04:18.359 those things. Every time you're flying back into l a 0:04:18.520 --> 0:04:20.320 X and you look around, you're getting your convertible, you think, 0:04:20.320 --> 0:04:22.800 why did I ever leave? I just always wanted to 0:04:22.839 --> 0:04:24.160 live in New York. You know what it's like. This 0:04:24.240 --> 0:04:26.800 is if you're an energy, it's it's the center of 0:04:26.839 --> 0:04:28.800 the world. Yeah, the helm of the bob sled, the 0:04:28.800 --> 0:04:31.520 tip of the spear of the greatest experiment. The density 0:04:31.560 --> 0:04:34.560 of culture, interesting people. Is a great place to live. 0:04:34.560 --> 0:04:37.000 I love San Francisco, did my graduate workout there. Start 0:04:37.040 --> 0:04:39.159 a bunch internet cominges. But it's a one industry town. 0:04:39.200 --> 0:04:41.840 It's tech l as in one industry town, it's entertainment. 0:04:41.839 --> 0:04:43.680 The thing one of the great things about New York 0:04:43.720 --> 0:04:47.040 is the currencies of power and success here are are multiple. 0:04:47.880 --> 0:04:50.520 There's a lot of different ways to kind of get 0:04:50.520 --> 0:04:52.400 your groove on here and just just love it here. 0:04:52.480 --> 0:04:57.440 Oh sure, business investing, theater, publishing, television, real estate is 0:04:57.480 --> 0:05:00.200 just huge here, although it seems to be huge where 0:05:00.200 --> 0:05:03.040 if we're looking around the country. Yep. So you come 0:05:03.080 --> 0:05:07.600 to n y U as a professor, Um, what was 0:05:08.160 --> 0:05:10.440 tell us a little bit about red envelope and profit 0:05:10.560 --> 0:05:14.200 do very different companies. Sure, So started out of Morgan Stanley, 0:05:14.480 --> 0:05:17.560 only real job I've ever had, and then I actually 0:05:17.560 --> 0:05:19.400 got kind of sick, and when you get sick at 0:05:19.400 --> 0:05:22.520 a young age, you reevaluate your forced maturity is kind 0:05:22.520 --> 0:05:24.360 of forced on you and decided I didn't know what 0:05:24.400 --> 0:05:25.800 I wanted to do, but you I didn't want to 0:05:25.839 --> 0:05:28.320 be an investment banker. So did what anyone who is 0:05:28.480 --> 0:05:30.159 fairly ambitious and doesn't know what they want to do. 0:05:30.200 --> 0:05:32.880 I went back to graduate school and then got very 0:05:32.920 --> 0:05:35.560 inspired by a guy named David Ocker, who was considered 0:05:35.560 --> 0:05:38.479 the father of modern branding UH, and started coming called 0:05:38.480 --> 0:05:41.680 Profit of Brand Strategy Firm, focused on his principles. We 0:05:41.800 --> 0:05:45.000 grew that to about four people, really rewarding, but then 0:05:45.040 --> 0:05:47.400 decided I didn't want to be in a services company. 0:05:47.400 --> 0:05:49.760 I've always decided our thought of services company was really 0:05:49.800 --> 0:05:53.400 a young man's business. You're kind of on your clients schedule, 0:05:53.600 --> 0:05:55.400 and then was fortunate enough to get swept up in 0:05:55.440 --> 0:05:59.839 the Internet era, started red Envelope, multi channel e commerce company, 0:06:00.320 --> 0:06:01.600 and then on the day of the I p O 0:06:01.760 --> 0:06:04.320 said this is great. I have some opportunities and some 0:06:04.360 --> 0:06:06.160 flexibilities with what I want to do with my life 0:06:06.160 --> 0:06:09.360 and decided to pursue there's kind of lifelong passion or 0:06:09.480 --> 0:06:12.120 dream and teach and change my life. Moved to New York, 0:06:12.200 --> 0:06:14.560 join the faculty n y U, and here we are. 0:06:14.880 --> 0:06:17.440 That's that's a huge, huge set of changes in a 0:06:17.560 --> 0:06:20.080 very short period of time. Yeah, it's it's but it's 0:06:20.080 --> 0:06:23.480 been a lot of fun. So so you briefly were 0:06:23.520 --> 0:06:25.720 at Morgan Stanley, so you have some experience in the 0:06:25.720 --> 0:06:27.520 real world. How long have you been an n y 0:06:27.600 --> 0:06:29.760 U F I joined the Faculty n y U and 0:06:29.800 --> 0:06:31.920 two thousand and two, and it's been just it's been 0:06:31.960 --> 0:06:36.000 thirteen great years. Just feel exceptionally, exceptionally fortunate to get 0:06:36.040 --> 0:06:38.880 to teach at such a fantastic university. It's been, it's 0:06:38.960 --> 0:06:40.960 it's just been wonderful. So let's talk a little bit 0:06:41.000 --> 0:06:44.560 about the Digital i Q Index. This is something I 0:06:44.560 --> 0:06:46.960 believe you were involved in creating. Was it two thousand 0:06:47.000 --> 0:06:49.640 and ten. Is that right? Yeah, it's it was really accidental. 0:06:49.680 --> 0:06:52.520 You can't get very far in academia without doing research, 0:06:52.680 --> 0:06:54.799 and my background was in the e commerce. I thought, 0:06:55.279 --> 0:06:58.240 there's there are metrics for return on equity and UH, 0:06:58.480 --> 0:07:01.800 price earnings, carc quality with JD Powers, how many people 0:07:01.839 --> 0:07:05.360 watch a program with Nielsen, But there really isn't a 0:07:05.480 --> 0:07:07.919 measure or a benchmark for how a brand is doing 0:07:07.960 --> 0:07:10.880 across its entire digital footprint. So architect and an algorithm 0:07:10.880 --> 0:07:14.480 of eight hundred and fifty data points across site, digital marketing, 0:07:14.520 --> 0:07:17.200 social and mobile, and then applied it against a hundred 0:07:17.200 --> 0:07:19.400 brands and rank them, thinking it would be a piece 0:07:19.440 --> 0:07:22.880 of academic research. Within about forty eight hours of releasing 0:07:22.880 --> 0:07:24.960 it heard from about forty of the brands saying who 0:07:24.960 --> 0:07:27.400 are you and why are you doing this? And recognized 0:07:27.400 --> 0:07:29.480 there was a commercial opportunity. So I asked the dean 0:07:29.520 --> 0:07:31.120 if we could spin out the I P and start 0:07:31.160 --> 0:07:34.080 a private enterprise called L two, and n y U 0:07:34.200 --> 0:07:36.520 was very generous with us and and said fine, as 0:07:36.520 --> 0:07:39.080 long as your support of M y U and UH. 0:07:39.240 --> 0:07:41.560 And that's it was really the birth of an accidental 0:07:41.600 --> 0:07:43.920 business and now L two works with everyone from PNG 0:07:44.040 --> 0:07:47.400 and Uni Leaver to Coach Tiffany, Nike, Samsung. So it's 0:07:47.400 --> 0:07:49.760 been a lot of fun. So you talk about looking 0:07:49.920 --> 0:07:55.520 at and evaluating a company across site, digital, social, mobile, 0:07:55.960 --> 0:07:59.840 that's a pretty broad yet inclusive set of of data points. 0:08:00.000 --> 0:08:02.840 It's the thinking behind that every place a consumer might 0:08:03.360 --> 0:08:06.120 come into contact with a brand, so all the touchpoints 0:08:06.120 --> 0:08:09.320 so and every brand has different strengths and weaknesses. And 0:08:09.360 --> 0:08:12.559 regardless of how much capital you have, the cruel truth 0:08:12.560 --> 0:08:15.360 of capitalism and investing in digital is you have to 0:08:15.400 --> 0:08:18.000 pick your punches. So even a home depot or a 0:08:18.040 --> 0:08:21.400 Sephora or a Vitan, organizations you would think would have 0:08:21.440 --> 0:08:23.480 a ton of resources, have to pick their punches. And 0:08:23.480 --> 0:08:26.000 the issue is you know what lever you're gonna pull. 0:08:26.040 --> 0:08:28.360 If you're really about increasing your percentage of sales online, 0:08:28.400 --> 0:08:30.320 you're gonna be more focused on side. If you're about 0:08:30.360 --> 0:08:32.839 signaling innovation to a younger consumer, it's probably gonna be 0:08:32.880 --> 0:08:36.040 around more around social. If you're trying to create a 0:08:36.080 --> 0:08:40.160 loyalty program that has tremendous uses digital to connective tissue 0:08:40.160 --> 0:08:41.800 between your store and your site, that's more about a 0:08:41.800 --> 0:08:44.560 loyalty program and a mobile phone in the store, So 0:08:44.600 --> 0:08:47.319 we're trying to create a benchmark sets the brands contract 0:08:47.360 --> 0:08:50.240 their strengths and weaknesses relative of their competitive set and 0:08:50.320 --> 0:08:53.240 help them shape the shape their digital roadmap and allocate 0:08:53.280 --> 0:08:57.439 their human creative financial capital more efficiently. Because everyone agrees 0:08:57.480 --> 0:08:59.720 that a better investment in digital is probably gonna get 0:08:59.720 --> 0:09:01.880 your great to return than did than investments in some 0:09:01.920 --> 0:09:04.040 other areas right now, but they don't know what they 0:09:04.040 --> 0:09:05.640 don't know. They really don't know where to start. So 0:09:05.679 --> 0:09:08.319 the ideas, how do you figure out how your digital 0:09:08.360 --> 0:09:11.120 capital allocation foots your of all corporate strategy and how 0:09:11.120 --> 0:09:13.600 do you drive stakeholder growth. I'm Barry rid Helps. You're 0:09:13.600 --> 0:09:16.480 listening to Masters in Business on Bloomberg Radio. My special 0:09:16.520 --> 0:09:19.600 guest today is Scott Galloway. He is a professor of 0:09:20.160 --> 0:09:23.880 Digital Brands and Marketing at n y U and I 0:09:23.960 --> 0:09:26.760 love your conversations. By the way, the way I found 0:09:26.880 --> 0:09:30.840 out about you was the Four Horsemen video which is 0:09:30.880 --> 0:09:34.600 all over YouTube, and some of the conversations you've had 0:09:34.640 --> 0:09:37.559 about retail and the deep dive you do into that space, 0:09:37.880 --> 0:09:40.960 which I find to be absolutely fascinating. So let's let's 0:09:41.040 --> 0:09:44.040 jump into retail. I love this quote of yours. You 0:09:44.120 --> 0:09:48.439 said retail stores are the new black explained so in 0:09:48.520 --> 0:09:51.240 the turn in the world of e commerce, I believe 0:09:51.280 --> 0:09:54.160 the pure play commerce has no future. That almost every 0:09:54.200 --> 0:09:56.400 pure play commerce company is either going to open stores 0:09:56.480 --> 0:09:58.800 or go out of business. That's a pretty radical position, 0:09:58.880 --> 0:10:01.840 isn't it. Well? I would defend I think it's defensible. 0:10:01.880 --> 0:10:04.560 I would I would challenge anyone to name the pure 0:10:04.559 --> 0:10:07.839 plea e commerce company, and and and and let's talk 0:10:07.880 --> 0:10:11.640 about whether this is a sustainable business or not. And effectively, 0:10:11.640 --> 0:10:14.680 the consumer always gets what she wants. And there's there's 0:10:14.720 --> 0:10:17.520 three doors here. There's a great e commerce site that 0:10:17.640 --> 0:10:20.600 just has an e commerce offering. There's a great retail 0:10:21.080 --> 0:10:23.280 concept with just bricks and mortar or maybe a week 0:10:23.480 --> 0:10:26.120 e commerce site. And then there's door number three, a Saphora, 0:10:26.200 --> 0:10:29.480 william Snowmer and Macy's that have great stores, grat e 0:10:29.559 --> 0:10:32.120 commerce and use digital as a connective tissue for around 0:10:32.160 --> 0:10:35.120 a loyalty program, and the consumer wants door number three. 0:10:35.160 --> 0:10:37.800 I think the future looks more like Macy's and Williams 0:10:37.800 --> 0:10:40.080 Snowman than it looks like Amazon or not a Porte 0:10:40.160 --> 0:10:43.239 or Guilt. And where does eBay fit into that? Ecosystem. 0:10:43.360 --> 0:10:45.960 I wouldn't describe you as a pure play retail. I 0:10:45.960 --> 0:10:48.280 think of them as a marketplace, just to get between 0:10:48.320 --> 0:10:51.839 a berness. They're not taking inventory there, They're they're a marketplace. 0:10:52.160 --> 0:10:55.560 And speaking of inventory, you another quote of yours. We 0:10:55.640 --> 0:11:01.040 have these incredibly flexible, robust warehouses cold stores explain. So 0:11:01.679 --> 0:11:03.840 I've been a big fan of Amazon, and I'm actually 0:11:03.880 --> 0:11:06.000 going a little bit bearish on it because I think 0:11:06.000 --> 0:11:09.440 it's I think what Amazon has missed a little bit 0:11:09.520 --> 0:11:12.880 is that in terms of consumer behavior, consumers value convenience 0:11:12.960 --> 0:11:15.680 over speed, and that is if you were to order, 0:11:16.400 --> 0:11:20.520 say you decided, I'm gonna spend more time outside at 0:11:20.600 --> 0:11:22.560 my home in the North Fork and I need some 0:11:22.559 --> 0:11:25.240 some block, so I'm going to order Laroche Puss, which 0:11:25.240 --> 0:11:28.160 is this fantastic und block. You neither order an Amazon 0:11:28.440 --> 0:11:30.760 and have it delivered to you in a day four hours, 0:11:30.760 --> 0:11:32.640 two hours if they have their way, or you could 0:11:32.679 --> 0:11:35.120 order it at sephora dot com and then bomb down 0:11:35.160 --> 0:11:36.880 the elevator here and pick it up with the Sephora 0:11:36.920 --> 0:11:39.000 two blocks away anytime between the hours of ten and 0:11:39.040 --> 0:11:42.320 a PM. Click and collect or buy online pickup in 0:11:42.400 --> 0:11:45.120 store is probably the biggest phenomenon retail in the last 0:11:45.160 --> 0:11:47.319 couple of years, we didn't see a company it's coming. 0:11:47.360 --> 0:11:50.640 It sounds very base, but it's hugely convenient to order 0:11:50.720 --> 0:11:53.480 online and pick up in store. And these if it's 0:11:53.480 --> 0:11:55.199 in the store, why do I have to order online? 0:11:55.200 --> 0:11:57.320 Why could I just walk two blocks and do that? 0:11:57.440 --> 0:11:59.439 Because people like to get the information, they like to 0:11:59.480 --> 0:12:03.120 do the brow saying. Emotional and intellectual purchasing has moved 0:12:03.160 --> 0:12:07.280 from the store to online. So for traffic to retail 0:12:07.360 --> 0:12:11.319 down and five years by retail has grown two or 0:12:11.400 --> 0:12:13.920 three percent a year. But what happens the following The 0:12:14.040 --> 0:12:17.839 browsing and buying has moved online, The fulfillment, the transaction 0:12:17.880 --> 0:12:20.760 and the pickup is still in the store. Think about cars. 0:12:20.760 --> 0:12:22.080 Think about when you and I were a kid, we 0:12:22.120 --> 0:12:24.120 used to go with our dad to that one area 0:12:24.240 --> 0:12:26.079 town where we look at a car we'd actually kicked 0:12:26.120 --> 0:12:28.040 the tires, take a car and it's test drive, look 0:12:28.080 --> 0:12:31.160 at those brochures and negotiate the transaction. The number of 0:12:31.160 --> 0:12:33.600 people now who have actually skipped the test drive has 0:12:33.679 --> 0:12:36.840 doubled just in the last five years. We can go online. 0:12:37.920 --> 0:12:41.800 Cargoes are prohibited from actually selling online, but effectively we 0:12:41.960 --> 0:12:44.599 buy online. Now we go to a great configurator, we 0:12:44.679 --> 0:12:47.640 start getting served ads by other automobile companies. We can 0:12:47.679 --> 0:12:49.800 go to Audi dot com, build our a six down 0:12:49.840 --> 0:12:51.760 to the leather piping on the seat. We can find 0:12:51.760 --> 0:12:54.080 out how much the dealer paid for it. We can 0:12:54.120 --> 0:12:56.800 get user reviews, and then we go into the dealership 0:12:57.000 --> 0:12:59.440 armed with the exact car. We want the exact price range. 0:12:59.480 --> 0:13:01.920 We know we should. So car dealerships are no longer 0:13:01.960 --> 0:13:06.320 selling cars. They're really just warehouses fulfilling and consummating the transaction. 0:13:06.800 --> 0:13:09.640 That's a great metaphor for what's happening in retail. Browsing 0:13:09.679 --> 0:13:13.160 and decision making have moved online, even if the transaction 0:13:13.240 --> 0:13:15.920 and the pickup are happening in retail. But bricks and 0:13:15.920 --> 0:13:18.520 mortar plays a great, you know, really important role. It's 0:13:18.559 --> 0:13:21.240 a great way to pick up stuff. It's a great 0:13:21.240 --> 0:13:23.960 place to learn more about the transaction. It's a great 0:13:23.960 --> 0:13:28.480 place to brand. These are powerful branding vehicles, these these 0:13:28.520 --> 0:13:31.120 brick and mortar stores. So I think the new black 0:13:31.120 --> 0:13:32.880 and e commerce is stores. A lot of them are 0:13:32.880 --> 0:13:35.840 opening bricks and mortar. So you talk about um, the 0:13:35.840 --> 0:13:40.720 biggest challenger to Amazon is stores like Macy's and I've 0:13:40.800 --> 0:13:44.079 noticed over the past few years in terms of marketing 0:13:44.120 --> 0:13:46.840 and displays within the stores. And I know they own 0:13:46.880 --> 0:13:48.920 a variety of other stores. I think they own Lord 0:13:48.920 --> 0:13:53.200 and Taylor or Bloomingdale's or some combination of um. But 0:13:53.280 --> 0:13:57.280 I've I've noticed that they've really gotten very savvy about 0:13:57.400 --> 0:14:00.720 their online and you show up at store, Hey I 0:14:00.760 --> 0:14:03.160 have I like this, but you don't have it in black, 0:14:03.200 --> 0:14:05.240 and you don't have it in a large They're like, oh, 0:14:05.240 --> 0:14:07.360 we'll ship it to you for free. That's a new 0:14:07.400 --> 0:14:10.840 thing from them, that thinking like an e commerce company, 0:14:11.080 --> 0:14:13.280 not like a well we'll get a delivery in six 0:14:13.320 --> 0:14:15.200 months and you can come check us out. Then. Yeah. 0:14:15.200 --> 0:14:17.400 The most inspiring companies in retail for the last five 0:14:17.480 --> 0:14:21.240 years haven't been Amazon or Netaporte. It's been Macy's in Nordstrom. 0:14:21.320 --> 0:14:23.880 The crisis is a terrible thing to waste. Five years ago, 0:14:24.360 --> 0:14:27.400 I advise Hedgephones and a large read came to us 0:14:27.840 --> 0:14:29.600 the fund I was advising, and said, we want to 0:14:29.600 --> 0:14:32.640 take a control position and Macy's or a large position, 0:14:32.680 --> 0:14:34.640 and advocate for them to shut it down and sell 0:14:34.680 --> 0:14:36.680 the underlying real estate, which is worth more than the 0:14:36.720 --> 0:14:40.720 stock right now. They saw the future was not where 0:14:40.720 --> 0:14:43.680 they were headed, and they made massive investments and leverage 0:14:43.720 --> 0:14:47.080 their operational competence, their capital to cash flow to build 0:14:47.160 --> 0:14:50.960 unbelievably strong e commerce offerings, connected that to their stores 0:14:51.280 --> 0:14:55.240 and have fantastic multi channel offerings. Macy Stock is outperformed 0:14:55.640 --> 0:14:58.480 Amazon over the last one, three and five years. Nordstrom 0:14:58.520 --> 0:15:01.880 Stock is outperformed and Amazon the last several years. These 0:15:01.880 --> 0:15:05.680 are incredible companies that have embraced the digital future and 0:15:05.720 --> 0:15:08.760 have proven basically everybody wrong the future really is about 0:15:08.840 --> 0:15:12.520 multi channel Macy's and Nordstrom's, I would argue most inspirational 0:15:12.560 --> 0:15:15.680 retailers and have rewarded their shareholders of the last last 0:15:15.680 --> 0:15:18.640 several years. So much for first mover advantage, at least 0:15:18.640 --> 0:15:21.160 when it comes to Amazon. Yeah, Leonard Lottar at est 0:15:21.280 --> 0:15:24.160 lottor another unbelievable company, Uh you know said it the 0:15:24.240 --> 0:15:26.360 second mouse off and gets the cheese if you really 0:15:26.400 --> 0:15:30.080 look at uh. Peter Golder, who's a where's a colleague 0:15:30.080 --> 0:15:31.760 at Stern and now as a call as now as 0:15:31.760 --> 0:15:34.160 a colleague at Dartmouth is probably the best scholar under 0:15:34.160 --> 0:15:35.640 the age of fifty on the world of innovation. We 0:15:35.640 --> 0:15:38.360 talked about Clay Christenson. We talk about but but Peter Golder, 0:15:38.360 --> 0:15:40.160 in my opinion, is the kind of future of innovations 0:15:40.200 --> 0:15:43.040 relates to academia, and the body of his study basically says, 0:15:43.040 --> 0:15:45.720 if you talk about return to stakeholders, it's not the 0:15:45.760 --> 0:15:48.840 first mover, it's the second. The true innovator. The guy 0:15:48.920 --> 0:15:51.280 or the gal that goes first usually doesn't serve shareholders 0:15:51.280 --> 0:15:53.960 that well. It's the person that comes in second. Apple. 0:15:54.560 --> 0:15:56.600 Apple has been second at most stuff. They're not a 0:15:56.600 --> 0:15:59.200 true innovator in the definition of the word. They weren't 0:15:59.240 --> 0:16:01.880 the first into into object are in computing, they weren't 0:16:01.920 --> 0:16:05.240 the first MP three player. They weren't the first mobile phone. 0:16:05.240 --> 0:16:07.760 But they look at something, they improve upon it. They wait, 0:16:07.800 --> 0:16:09.640 and they come in and make it more user friendly. 0:16:10.160 --> 0:16:12.600 The department stores, the best retailers have often been the 0:16:12.840 --> 0:16:16.560 second mover. So let's talk a little bit about brand 0:16:16.720 --> 0:16:20.160 versus products. Because you've discussed this, you know what's easy 0:16:20.240 --> 0:16:22.600 to fix a good product with a bad brand, or 0:16:22.800 --> 0:16:25.760 a bad product with a good brand. I think it's changed. 0:16:25.800 --> 0:16:28.400 I think and and I've devoted my life from a 0:16:28.440 --> 0:16:30.560 majority of my professional life around brand. I've made a 0:16:30.640 --> 0:16:32.240 nice living from it. But I think the sun has 0:16:32.280 --> 0:16:34.760 passed midday on what I call the era brand the 0:16:34.800 --> 0:16:36.840 eighties and nineties, the primary way to drive a lot 0:16:36.840 --> 0:16:39.240 of shareholder value, Barry, was to have an average to 0:16:39.280 --> 0:16:42.360 good product and then hire the best talent around brand 0:16:42.720 --> 0:16:46.400 and create unbelievable intangible associations. Are a great brand, an 0:16:46.440 --> 0:16:49.680 average shoe, an average cup of coffee, and the an 0:16:49.720 --> 0:16:51.640 average beer and the best brand in the world. But 0:16:51.680 --> 0:16:54.760 what do all these technological innovations and platforms allow us 0:16:54.760 --> 0:16:57.520 to do? They allow us to share great ideas that 0:16:57.680 --> 0:17:00.600 this show is generally better than other shows. It's going 0:17:00.640 --> 0:17:04.080 to spread faster than anything before. I'm Barry Ridholds. You're 0:17:04.119 --> 0:17:07.080 listening to Masters in Business on Bloomberg Radio. My special 0:17:07.119 --> 0:17:09.919 guest today is Professor Scott Galloway of n y U 0:17:10.040 --> 0:17:13.720 Stern School and L two Digital. Let's talk a little 0:17:13.720 --> 0:17:17.240 bit about Amazon. Um, what is it that they're doing 0:17:17.680 --> 0:17:21.879 wrong with their last mile strategy? So, first off, incredible 0:17:21.920 --> 0:17:25.600 company and uh, Jeff Bezos arguably the best you have 0:17:25.640 --> 0:17:27.840 the last ten years. I think they're two. Primary advantage 0:17:27.880 --> 0:17:30.560 that has cost some tens of billions of dollars to 0:17:30.560 --> 0:17:33.240 to erect have been this last mile, incredible last mile 0:17:33.240 --> 0:17:36.240 infrastructure such that they can supposedly within twenty four months 0:17:36.280 --> 0:17:39.399 at about fifty percent of American households of everything they 0:17:39.440 --> 0:17:42.560 buy within two or four hours, which is incredible. And 0:17:42.600 --> 0:17:45.520 then one click paying. I think we we overlook what 0:17:45.560 --> 0:17:48.480 an incredible innovation is to be able to just touch 0:17:48.600 --> 0:17:51.240 something and know that it's on its way. However, very 0:17:51.280 --> 0:17:54.720 I would argue that some recent innovations erode those competitive advantages, 0:17:54.720 --> 0:17:57.200 specifically Apple Pay. Some of the things Google is doing 0:17:57.240 --> 0:18:00.560 are going to make want that one click payment advantage 0:18:00.640 --> 0:18:02.920 a road in value. I think other people are catching up. 0:18:02.960 --> 0:18:06.160 I think the most unusual or the thing that none 0:18:06.200 --> 0:18:08.560 of us are expecting and and there's still some time 0:18:08.600 --> 0:18:10.800 to see if it plays out, is actually believe Uber 0:18:11.000 --> 0:18:14.560 is gonna give a lot of retailers the opportunity to 0:18:14.560 --> 0:18:17.560 catch up very fast around the last mile without making 0:18:17.560 --> 0:18:20.040 the same staggering investment Amazon has having to make it. 0:18:20.040 --> 0:18:24.480 I think effectively, Uber has created a vascular system for business. 0:18:24.520 --> 0:18:27.199 And when you have someone a smart person inside their 0:18:27.240 --> 0:18:29.680 own car that they have paid for it without a union, 0:18:29.720 --> 0:18:32.240 without without a uniform, and by by the way, I'm 0:18:32.240 --> 0:18:34.880 not sure that's a good thing without health insurance. You're 0:18:34.880 --> 0:18:37.560 effectively giving every retailer and every business in the world 0:18:37.600 --> 0:18:41.120 that last mile competence that cost Amazon billions of dollars 0:18:41.320 --> 0:18:44.239 for a fraction of the cost. So in some I 0:18:44.240 --> 0:18:48.359 think the Amazon advantages, those two advantages are slowly being 0:18:48.359 --> 0:18:51.720 eroded by other innovations. Let's talk a little bit about 0:18:51.720 --> 0:18:54.320 both those things. I don't really see what the big 0:18:54.359 --> 0:18:56.520 deal about one click is. I'll take the other side 0:18:56.560 --> 0:19:00.639 because I've been on Amazon for well almost twenty years, 0:19:01.880 --> 0:19:06.840 I want to say, and when I go to buy 0:19:06.920 --> 0:19:10.640 something and I'm an Amazon Prime member, I kicking and screaming, 0:19:10.640 --> 0:19:13.520 finally did it, and since then just love it the 0:19:13.520 --> 0:19:15.920 past couple of years. So when I buy something, it's 0:19:16.160 --> 0:19:18.040 which credit card am I paying? Is it the office 0:19:18.119 --> 0:19:20.280 is at home? Which of the home cards is it? 0:19:20.359 --> 0:19:22.159 Is it going to the office, is it going to 0:19:22.200 --> 0:19:24.560 the house. Is it going to a third destination? So 0:19:24.720 --> 0:19:30.520 for me, one click really never because I always and 0:19:30.640 --> 0:19:33.360 what's the big deal? I select one of these four 0:19:33.400 --> 0:19:36.800 credit cards, I select one of these four destinations. It's 0:19:36.880 --> 0:19:40.000 it's not terrible. I love the idea of Uber being 0:19:40.040 --> 0:19:43.360 that last mile. But let's think about that. The closest 0:19:43.840 --> 0:19:46.560 Bloomingdale's to my house is. I live all the way 0:19:46.520 --> 0:19:48.119 in the middle of nowhere on the north shore from 0:19:48.119 --> 0:19:51.239 Long Island, but it's still twenty minutes away. If I 0:19:51.359 --> 0:19:54.400 order something from Amazon and with Prime, it's usually there 0:19:54.440 --> 0:19:56.600 within two days. I don't know if they're gonna get 0:19:56.640 --> 0:20:00.280 it there all that much sooner. But I'm hating, you know, 0:20:01.000 --> 0:20:02.800 I need something here? Does it's here in two days? 0:20:02.960 --> 0:20:06.040 There's nothing I need right now that I can't drive 0:20:06.240 --> 0:20:09.280 ten minutes and get so anything I'm watering, I'll get 0:20:09.280 --> 0:20:12.160 here when it gets here. If I want something from 0:20:12.160 --> 0:20:15.479 Bloomingdale's for them to send an Uber driver to my house. 0:20:15.880 --> 0:20:17.879 If I was going to take an Uber ride to 0:20:18.000 --> 0:20:22.560 my house, um, that would cost you know, thirty bucks 0:20:22.680 --> 0:20:25.960 or so. So is there gonna be that much of 0:20:26.000 --> 0:20:29.720 an infrastructure of deliveries that they're not just dropping off 0:20:29.720 --> 0:20:32.800 one package, that dropping off ten things, and it's essentially 0:20:32.800 --> 0:20:35.119 a rounding era to to a store like that. So 0:20:35.520 --> 0:20:37.480 the short answer is no. But I would argue Barry 0:20:37.520 --> 0:20:39.800 that the war of shareholder value isn't gonna be one 0:20:39.880 --> 0:20:42.240 or lost over you. I think you're the anomaly, and 0:20:42.240 --> 0:20:44.719 that I think the majority of shareholder and wealth creation 0:20:44.800 --> 0:20:47.879 is going to be around serving people in urban areas, because, 0:20:47.880 --> 0:20:50.639 to be blunt, that's where the majority of the wealth 0:20:51.320 --> 0:20:53.439 is moving towards. I think we're creating a set of 0:20:53.480 --> 0:20:57.119 supercities where the density of income and disposable income is 0:20:57.160 --> 0:21:00.440 aggregating around a small set of supercity. So I think 0:21:00.440 --> 0:21:02.320 Amazon still works for you. Quite frankly, I don't think 0:21:02.320 --> 0:21:04.240 it works for Amazon. I think it's gonna be expensive 0:21:04.240 --> 0:21:06.680 for them to deliver to you. They're Amazon's shipping costs 0:21:06.680 --> 0:21:10.320 for six billion last year. They're going up a year. 0:21:10.359 --> 0:21:13.040 They took him three billion in fees. That's not sustainable 0:21:13.119 --> 0:21:15.920 even with Amazon's cost cheap cost of capital. You want 0:21:15.920 --> 0:21:18.399 to see a celebrity deathmatch, wait till this holiday is 0:21:18.440 --> 0:21:21.719 as Walmart has announced a prime light competitor at fifty bucks, 0:21:22.080 --> 0:21:25.320 and they have stores. The thing that epitomizes this battle 0:21:25.320 --> 0:21:28.000 in the advantage Walmart right now will have over Amazon. 0:21:28.040 --> 0:21:30.640 As Amazon. Walmart has this great ad that says free 0:21:30.640 --> 0:21:33.280 delivery if you pick it up in store. And do 0:21:33.280 --> 0:21:35.480 you know a percentage of the population lives within a 0:21:35.560 --> 0:21:39.480 drive of Walmart A lot that's not exactly delivery that's 0:21:39.520 --> 0:21:41.840 going to the store and shopping. Yeah, but if if 0:21:41.840 --> 0:21:44.080 it's waiting for you, it's packaged and you can bomb 0:21:44.160 --> 0:21:46.520 right in and bomb right out. My prediction Amazon is 0:21:46.560 --> 0:21:49.320 going to buy a gas station company. As fossil fuel 0:21:49.320 --> 0:21:51.119 has become less relevant in our life, we're used to 0:21:51.160 --> 0:21:55.480 bombing in left and right. Just what's happened in London. 0:21:55.520 --> 0:21:58.000 They took the ticket kios that where people no longer 0:21:58.000 --> 0:22:00.399 sell tickets. People can order their grosser reas it a 0:22:00.440 --> 0:22:03.000 tube station and have them waiting for them at their 0:22:03.000 --> 0:22:06.359 destination tube station. People don't mind picking up stuff. Was 0:22:06.400 --> 0:22:09.399 it a missed opportunity for Amazon not to have grabbed 0:22:09.480 --> 0:22:11.879 radio Shack with their thousands of stores. I think that 0:22:11.880 --> 0:22:14.720 would have been a really interesting combination. But Amazon is 0:22:14.800 --> 0:22:18.000 so smart, they have such such incredible access to capital. 0:22:18.080 --> 0:22:19.840 I think they're going to do something traumatic. I wouldn't 0:22:19.840 --> 0:22:21.479 be surprised if they buy the post office or take 0:22:21.520 --> 0:22:24.480 a major investment in the post office. That's that's a problem. 0:22:24.560 --> 0:22:28.119 Look what's happening. If you see job growth and job declines, 0:22:28.240 --> 0:22:29.879 most of the A lot of the job declines are 0:22:29.880 --> 0:22:32.199 coming out of municipal governments and government employees who are 0:22:32.240 --> 0:22:35.639 under constant pressure. I wouldn't be surprised that Amazon strikes 0:22:35.640 --> 0:22:37.120 to deal with the government to take over their less 0:22:37.119 --> 0:22:41.000 performing post offices. That would be astonishing. I'm Barry ritt Holts. 0:22:41.040 --> 0:22:43.560 You're listening to Master's in Business on Bloomberg Radio. My 0:22:43.600 --> 0:22:46.480 guest today is Scott Galloway. He is a professor of 0:22:46.600 --> 0:22:50.479 Digital marketing and Brands at n y U Stern. I 0:22:50.520 --> 0:22:53.080 really love the video you did talking about the four 0:22:53.119 --> 0:22:57.800 horsemen of technology, and um, we already discussed Amazon. Let's 0:22:57.880 --> 0:23:02.280 jump right into Facebook. You call um first. You note 0:23:02.280 --> 0:23:06.119 how Facebook has changed the taxonomy of relationships, which is 0:23:06.240 --> 0:23:09.919 very significant for the way people interact socially. But the 0:23:10.000 --> 0:23:13.520 question that I the statement I really liked was Facebook 0:23:13.600 --> 0:23:16.800 has pulled off the greatest bait and switch in history. 0:23:17.119 --> 0:23:20.000 Explain what you mean by that? Oh? Absolutely. Facebook convinced 0:23:20.080 --> 0:23:21.560 some of the biggest brands in the world to spend 0:23:21.560 --> 0:23:24.720 tens of millions of dollars to build these communities, uh, 0:23:24.760 --> 0:23:27.919 you know, likes and fans, and these brands did it 0:23:28.160 --> 0:23:30.160 because the notion was you'll get to own this community 0:23:30.160 --> 0:23:33.640 and they'll be captive. What an unbelievable asset. But Facebook 0:23:33.640 --> 0:23:35.680 then said, just kidding, put a walled garden around it 0:23:35.680 --> 0:23:38.840 and in the organic reach on Facebook, meaning the percentage 0:23:39.000 --> 0:23:41.280 of messages that channelle puts out to their community that 0:23:41.320 --> 0:23:44.920 actually reached the channel community is now six percent, meaning 0:23:44.960 --> 0:23:49.120 only one in sixteen messages reached them unless barry, they 0:23:49.160 --> 0:23:53.160 pay and they advertise. So this was an incredible bait 0:23:53.200 --> 0:23:55.560 and switch. These are not These are not communities owned 0:23:55.600 --> 0:23:58.560 by the brands. They're owned by Facebook. Same things happened, 0:23:58.560 --> 0:24:00.480 It gonna happen on Instagram or right now. It's a 0:24:01.119 --> 0:24:02.919 organic reach. They will figure out a way to put 0:24:02.960 --> 0:24:05.880 a paywall around it. But I'm shocked there isn't more. 0:24:06.320 --> 0:24:09.400 If you will outrage, I admire Facebook for being able 0:24:09.400 --> 0:24:11.520 to pull this off, but I think we forget how 0:24:11.560 --> 0:24:15.199 important it is to be liked or cute as an organization. 0:24:15.200 --> 0:24:17.640 Steve Bomber and Bill Gates were not likable or cute, 0:24:17.800 --> 0:24:20.520 Sir again, Larry more likable, more cute. But the regulators 0:24:20.520 --> 0:24:24.440 are getting angry at them. Facebook lean in the hoodie. 0:24:24.840 --> 0:24:27.600 They have gotten a ton of license from Corporate America 0:24:27.720 --> 0:24:30.159 and regulators. In my view, that has given them a 0:24:30.280 --> 0:24:32.560 lot of leeway. I think what they've done has been 0:24:32.640 --> 0:24:35.120 exceptional in terms of their ability to say one thing 0:24:35.200 --> 0:24:37.399 and then do another for the for the benefit of 0:24:37.400 --> 0:24:39.480 their own shareholders. And by the way, I say that 0:24:39.560 --> 0:24:42.200 as an as an admirer, what they've done has been incredible. 0:24:42.480 --> 0:24:45.440 And yet there's been issues about privacy and issues about 0:24:45.440 --> 0:24:47.840 people's data. How does that? How do they as a 0:24:47.880 --> 0:24:50.000 company deal with that or do they just shrug it 0:24:50.000 --> 0:24:52.360 off and say, hey, man, get used to it. Privacy 0:24:52.400 --> 0:24:54.840 is a thing of the past. Anyone who's talking about 0:24:54.840 --> 0:24:58.040 privacy is typically someone like you or me, a guy 0:24:58.200 --> 0:25:00.480 over the age of fifty. Young people don't seem that 0:25:00.520 --> 0:25:02.480 concerned with privacy. At the end of the day, the 0:25:02.480 --> 0:25:05.159 consumer behavior indicates one thing that people like to have 0:25:05.200 --> 0:25:07.560 their privacy violated as long as there's a coupon or 0:25:07.600 --> 0:25:10.760 more relevant offering. At the end of it, we want relevance, 0:25:10.800 --> 0:25:13.119 and part of that relevance is observing our data stream 0:25:13.240 --> 0:25:16.760 and then and then responding with a more relevant offer. Now, 0:25:17.119 --> 0:25:20.360 the identity war is the secret war taking place online 0:25:20.400 --> 0:25:22.440 and Facebook is winning, and that is the ability to 0:25:22.520 --> 0:25:25.879 attach a specific identity with specific actions that you can 0:25:25.880 --> 0:25:28.840 serve more relevant ads and charge more for those relevant ads. 0:25:29.119 --> 0:25:33.320 Google cannot track specific identity on their core platform, the 0:25:33.359 --> 0:25:36.040 search engine, and it makes sense. Neither you nor I 0:25:36.160 --> 0:25:38.199 are comfortable with the idea of having our name and 0:25:38.240 --> 0:25:40.560 our picture above a list of everything we have typed 0:25:40.600 --> 0:25:43.160 into that query box. Right, all of us have typed 0:25:43.200 --> 0:25:45.280 some crazy stuff into that box we would rather people 0:25:45.280 --> 0:25:47.359 not know about. However, we're not as that's what the 0:25:47.480 --> 0:25:51.280 incognito window. Yeah, that's where you're you know you you 0:25:51.080 --> 0:25:54.800 you you erase your cookies. But with Facebook, for some reason, 0:25:54.840 --> 0:25:58.240 we're not as uncomfortable with Facebook attaching our actions to 0:25:58.280 --> 0:26:01.720 our specific identity on Facebook. So as a result, Facebook 0:26:01.760 --> 0:26:05.119 is now tracking more identity data than Google and is 0:26:05.160 --> 0:26:08.679 able to use their platform across the wider reb web 0:26:08.720 --> 0:26:12.439 to serve more relevant targeted ads. Facebook is winning the 0:26:12.520 --> 0:26:15.280 identity war now. I find I'll give you a perfect 0:26:15.320 --> 0:26:18.680 example of something online that I find creepy and I 0:26:18.720 --> 0:26:21.560 don't know if other people find the same thing. So 0:26:21.840 --> 0:26:25.840 my wife and I were literally in a um florist 0:26:25.960 --> 0:26:31.000 nursery um recently, and we see this hanging chair, beautiful 0:26:31.040 --> 0:26:34.560 hanging chair. It's got cushions, it's really really odd, interesting 0:26:34.600 --> 0:26:39.040 shape and scene price, and I just make note who 0:26:39.080 --> 0:26:42.119 makes it? Necessarily let me look at it online? Where 0:26:42.160 --> 0:26:45.080 it's a third cheaper and so okay. So now I 0:26:45.119 --> 0:26:46.879 just want to get a sense of what the markup was. 0:26:46.920 --> 0:26:48.960 I know with this more or less should go for 0:26:49.040 --> 0:26:52.600 and I forget about it. Now wherever I go ads 0:26:52.640 --> 0:26:54.840 for that chair of popping up and it's like, no, no, 0:26:55.080 --> 0:26:58.280 I'm done with that. I'm moving on. Why are you 0:26:58.359 --> 0:27:02.040 following me around the Internetive it gets annoying. It's contextual retargeting. 0:27:02.040 --> 0:27:03.880 If you go to an Audie site, you're gonna start 0:27:03.880 --> 0:27:06.200 getting served ads by Alexis and Mercedes because it looks 0:27:06.200 --> 0:27:07.960 as if you're in the market for a car. Most 0:27:07.960 --> 0:27:10.840 consumers actually like it. Most consumers rather have a relevant 0:27:10.840 --> 0:27:13.400 ad on the right rail or their top. That's exactly 0:27:13.440 --> 0:27:18.000 where most people. Most people actually like that. Embrace it. 0:27:18.080 --> 0:27:20.000 The thing you talked about. The The other point is 0:27:20.520 --> 0:27:22.400 show rooming. That is going in and trying to find 0:27:22.440 --> 0:27:24.480 a different price. And there's been a lot of popular 0:27:24.520 --> 0:27:26.960 press that this is bad for retailers. The majority of 0:27:26.960 --> 0:27:28.840 the research shows when people pull out their phone and 0:27:28.880 --> 0:27:31.240 price compare, they not only end up buying, they often 0:27:31.320 --> 0:27:33.879 end up buying more because typically what they find, except 0:27:33.920 --> 0:27:36.200 for the retailer you were in, they typically find they're 0:27:36.200 --> 0:27:38.560 getting it around the best price for a good price, 0:27:38.600 --> 0:27:41.600 and then they start reading news reviews, finding more products. Actually, 0:27:41.920 --> 0:27:44.919 web rooming, being in a store and using your phone 0:27:45.080 --> 0:27:48.520 is a creative to the host retailer. Really, that's fascinating. 0:27:48.720 --> 0:27:50.520 I know that at one point in time best Buy 0:27:50.680 --> 0:27:53.440 was a little discouraging them. Yeah, I think they've since 0:27:53.520 --> 0:27:56.360 changed their tune. They have and only look at best Buy. 0:27:56.440 --> 0:27:58.840 That's a great example of the war of how stores 0:27:58.840 --> 0:28:01.000 are new black. If you order a flat screen TV, 0:28:01.680 --> 0:28:03.919 it's gonna be it's gonna get to you faster if 0:28:03.920 --> 0:28:05.760 you order from best Buy, because they're going to fulfill 0:28:05.760 --> 0:28:07.439 it out of their store in East Hampton or some 0:28:07.600 --> 0:28:10.240 some some store out there. Then Amazon will get it 0:28:10.280 --> 0:28:13.560 to you because they're using these unbelievably robust, flexible warehouses 0:28:13.600 --> 0:28:16.080 called stores. That that's amazing. So now let's talk a 0:28:16.119 --> 0:28:19.320 little bit about Google, and I love you quote about Google. 0:28:19.680 --> 0:28:22.320 It's the closest thing to God. You ask a question 0:28:22.320 --> 0:28:26.360 and you get an answer. So how is Google losing 0:28:26.800 --> 0:28:30.359 if we consider them God like? Sure? So when I 0:28:30.400 --> 0:28:32.800 say God, you know, when what do you do? When 0:28:32.840 --> 0:28:35.040 you pray? You send up information or a question hoping 0:28:35.080 --> 0:28:37.000 that a higher source that's smarter than you will send 0:28:37.040 --> 0:28:39.000 it back an answer. Right, is my kid going to 0:28:39.080 --> 0:28:42.640 be Okay? Now you go onto Google and say symptoms 0:28:42.640 --> 0:28:44.680 and treatment of croup, right, and it gives you back 0:28:44.680 --> 0:28:47.280 what's going on? So I think it is somewhat godlike. Now, 0:28:47.680 --> 0:28:50.440 having said that, I think that Google is going to 0:28:50.520 --> 0:28:53.160 decline in value and influence. Why because there are one 0:28:53.200 --> 0:28:57.040 dimensional company that hasn't had any success branching out much 0:28:57.080 --> 0:29:01.640 beyond Android or Gmail nine percent of the revenues of 0:29:01.640 --> 0:29:04.680 the profit from the search platform. Also, at the end 0:29:04.680 --> 0:29:06.400 of the day, Bury the way it summarized it is 0:29:06.440 --> 0:29:09.240 that this rapid change to a mobile world is not 0:29:09.440 --> 0:29:12.600 good for Google. On a mobile phone, of our time 0:29:12.640 --> 0:29:15.440 done in app, were less likely to search when we're 0:29:15.440 --> 0:29:17.800 in app, which is not good for Google. A lot 0:29:17.840 --> 0:29:20.160 of competitors popping up a billion queries a day on 0:29:20.200 --> 0:29:23.760 Facebook of all products, searches now start on Amazon. So 0:29:23.840 --> 0:29:27.760 that's so there were dominant, their dominant market share starting 0:29:27.800 --> 0:29:30.200 to show some signs of weakness and cost per click 0:29:30.320 --> 0:29:32.680 is going down and as a result, profits and revenues 0:29:33.120 --> 0:29:36.560 have their profit and revenue growth. If you will have 0:29:36.560 --> 0:29:40.440 have stalled, this is a one dimensional company, an unbelievable 0:29:40.440 --> 0:29:43.240 revolutionary product. But I think my prediction is you're gonna 0:29:43.240 --> 0:29:45.520 see a couple more minute earnings misses, and all of 0:29:45.560 --> 0:29:47.560 a sudden, that company is going to find focus again. 0:29:47.800 --> 0:29:51.160 The self driving cars, the broadband blimps, the wearables are 0:29:51.160 --> 0:29:54.080 going to go away. What about this new app cold Now, 0:29:54.360 --> 0:29:56.800 I don't know how familiar are with that that essentially 0:29:56.880 --> 0:30:00.560 hovers over the whole operating system, and even within apps 0:30:01.200 --> 0:30:04.640 brings up that exact sort of search behavior you would 0:30:04.640 --> 0:30:09.120 discuss them. So you could never count Google out. They're 0:30:09.160 --> 0:30:13.280 just they human capital, the people, the culture, just a 0:30:13.360 --> 0:30:16.680 remarkably innovative company. But based on where they are now 0:30:16.720 --> 0:30:19.000 relative their valuation in the marketplace, I think they have 0:30:19.080 --> 0:30:23.000 some substantial competitive threats. And the thing about Google versus 0:30:23.000 --> 0:30:26.320 an Apple or a traditional retailer is your one click 0:30:26.360 --> 0:30:28.960 away from going to a competitor. So I think Google, 0:30:28.960 --> 0:30:32.360 on a risk adjusted basis, has greater risk than some 0:30:32.400 --> 0:30:34.000 of the other guys. And I think they're gonna leak 0:30:34.040 --> 0:30:36.640 market share to Facebook. We didn't talk about YouTube everybody. 0:30:36.760 --> 0:30:39.200 I just circled that question. Everybody talks about our YouTube 0:30:39.240 --> 0:30:41.680 is gonna disrupt TV. I think Facebook is going to 0:30:41.760 --> 0:30:44.000 disrupt YouTube for the first time ever. There are now 0:30:44.040 --> 0:30:47.200 more native videos uploaded to the Facebook platform than links 0:30:47.200 --> 0:30:49.760 to YouTube. I think you're gonna see Facebook start to 0:30:49.800 --> 0:30:52.200 garner more and more share of our time in terms 0:30:52.240 --> 0:30:54.280 of how how we watch video. I think it's moving 0:30:54.280 --> 0:30:58.320 to Facebook. That's interesting since since you mentioned Apple as 0:30:58.360 --> 0:31:01.440 the fourth enforceman, let stalk a little bit about Apple, 0:31:01.800 --> 0:31:04.600 which you call a luxury brand, not so much a 0:31:04.600 --> 0:31:07.440 technology dent. It's been the worst, it's been the worst 0:31:07.880 --> 0:31:09.719 or the best house in the worst neighborhood for a 0:31:09.720 --> 0:31:12.360 long time. And that's a tech hardware. That's just a 0:31:12.360 --> 0:31:15.160 bad business, low margin. And they decided very Dell. Who 0:31:15.200 --> 0:31:17.520 else is in that space. I was on the board 0:31:17.520 --> 0:31:21.200 of Gateway Computer. I mean, it's just a difficult Our margins. 0:31:21.200 --> 0:31:23.880 Our margins of Gateway were six percent. Try and operate 0:31:23.880 --> 0:31:26.600 a business on six percent margins. It's just computer hardware. 0:31:26.600 --> 0:31:29.520 It's just really difficult. They have effectively moved down the tour. 0:31:29.640 --> 0:31:32.480 So we only do three things in business. We very 0:31:32.520 --> 0:31:36.760 we appeal to the brain, rational decisions, low margin, transportation, food, 0:31:36.760 --> 0:31:39.520 basic shelter. We appeal to the heart choosing moms choose 0:31:39.560 --> 0:31:41.960 Jeff P. And G figured out that we're social animals. 0:31:42.160 --> 0:31:45.080 The biggest predictor of life expectancy is how many people 0:31:45.120 --> 0:31:46.880 in our life we love. It's not how fat or 0:31:46.880 --> 0:31:48.880 how skinn you are. We how much we smoke. You take. 0:31:49.240 --> 0:31:51.320 If you're new a new mother, you're gonna live. If 0:31:51.320 --> 0:31:53.640 you're taking care of your parents, you're more likely to live. 0:31:53.920 --> 0:31:56.200 P ANDNG figured that out post Worttle or two and said, 0:31:56.400 --> 0:31:59.360 if you wash your kids in clothes and tied detergent, 0:31:59.400 --> 0:32:02.160 you love them more. We have a need to love, 0:32:02.320 --> 0:32:05.080 and and CpG firms tapped into that and then just 0:32:05.240 --> 0:32:06.520 move down to the tour. So you go to the 0:32:06.560 --> 0:32:09.000 second most powerful instinct in the world, and that's reproduction, 0:32:09.080 --> 0:32:12.640 the self expressive benefit. The watch I'm wearing costs eight 0:32:12.720 --> 0:32:14.960 hundred bucks. I paid a lot more to wear it 0:32:15.000 --> 0:32:17.880 because I'm trying, in a vain attempt to intimate Italian 0:32:17.920 --> 0:32:19.560 masculinity to the rest of the world, and on a 0:32:19.760 --> 0:32:22.160 very base level, and I don't like to admit this. 0:32:22.520 --> 0:32:24.880 I think I'm trying to signal to the opposite sex 0:32:24.880 --> 0:32:26.480 that if you mate with me, your kids are more 0:32:26.520 --> 0:32:28.600 likely to survive than if you mate with someone who's 0:32:28.640 --> 0:32:30.560 wearing a Swatch watch, and I don't think in the 0:32:30.600 --> 0:32:33.360 business world we're very honest or open about how strong 0:32:33.440 --> 0:32:36.560 self expressive benefit is. Tesla is not an environmental car, 0:32:36.600 --> 0:32:38.600 as an attempt to signal to the opposite sex. And 0:32:38.640 --> 0:32:42.760 you can afford a hundred dollar car. Women were ergonomically 0:32:42.760 --> 0:32:45.440 impossible six d dollar shoes because they're trying to solicit 0:32:45.440 --> 0:32:48.160 inbound offers from those same men. I realize how base 0:32:48.160 --> 0:32:50.719 and how awful that sounds, but it's the core of evolution, 0:32:51.080 --> 0:32:53.840 and it's what has driven the best sector in the world. 0:32:53.920 --> 0:32:58.160 Barry the luxury sector, Eschmont, larger market Captain, Deutsche Telecom 0:32:58.360 --> 0:33:01.840 Este Lot or larger market capped w p P. Apple 0:33:01.960 --> 0:33:04.920 is decided we want to be in that business, and 0:33:04.960 --> 0:33:07.000 they have. They are the only company in history that 0:33:07.080 --> 0:33:12.080 is successfully migrated down the torso a better computer, rational decisions, 0:33:12.080 --> 0:33:15.080 saying to our heart emotionally with songs, and now they 0:33:15.080 --> 0:33:18.240 are the ultimate self expressive benefit. You no longer signal 0:33:18.280 --> 0:33:21.000 with your watch or your hoodie. You signal with your iOS. 0:33:21.120 --> 0:33:23.040 If you own an Apple phone, you were saying to 0:33:23.080 --> 0:33:25.480 the world, I am smarter, better educated, and have more 0:33:25.480 --> 0:33:28.160 options in terms of who I mate with. The transaction 0:33:28.200 --> 0:33:30.880 is complete to the Apple Watch. Apple is now the 0:33:31.000 --> 0:33:33.480 ultimate luxury brand. It defines what it means to be 0:33:33.520 --> 0:33:34.960 a luxury brand, and they're going to be the first 0:33:35.000 --> 0:33:37.920 trillion dollar market cap company on the back of their 0:33:37.920 --> 0:33:42.200 successful transition down the Torso and it become a luxury brand. Scott, 0:33:42.200 --> 0:33:44.600 where can people find your work? What's the best way 0:33:44.600 --> 0:33:47.960 for them? I know you have a YouTube channel for 0:33:48.200 --> 0:33:50.520 L two. How do people find that? Other than thanks? 0:33:50.600 --> 0:33:53.240 Plunching in Scott Galloway into YouTube. Thanks for asking L 0:33:53.280 --> 0:33:55.760 two Inc dot com. Almost all our videos are there, 0:33:55.760 --> 0:33:58.440 all right? That's great? And um be sure and check 0:33:58.480 --> 0:34:01.400 out my daily column. I'm on Bloomberg View dot com. 0:34:01.720 --> 0:34:04.320 Follow me on Twitter at rid Holt Scott. Your Twitter 0:34:04.400 --> 0:34:09.320 handle is proft Galloway proft Galloway at Twitter. I'm Barry Ridhult. 0:34:09.360 --> 0:34:13.680 You're listening to Masters in Business. I'm Bloomberg Radio. Welcome 0:34:13.719 --> 0:34:16.319 to the podcast portion of our show where I take 0:34:16.400 --> 0:34:19.560 my ear piece out and don't worry about time. Although 0:34:19.560 --> 0:34:22.399 I'm getting better at kind of pacing that I used 0:34:22.400 --> 0:34:24.720 to be so awful with that, you have no idea 0:34:24.800 --> 0:34:28.600 how thinking about how much time do we have? It's 0:34:28.600 --> 0:34:32.320 really a distraction and a and a disruption. So anyway, Scott, 0:34:32.320 --> 0:34:35.399 thank you so much for doing this. I'm really I've 0:34:35.480 --> 0:34:39.000 I've fallen in love with your videos. My wife is 0:34:39.000 --> 0:34:41.080 a teacher and there's one thing I wanted to ask 0:34:41.120 --> 0:34:43.600 you about. So I first I showed her some of 0:34:43.600 --> 0:34:45.719 your video. She really she was like, Oh, that's kind 0:34:45.719 --> 0:34:49.719 of interesting, like passing interest in her husband's life. But 0:34:49.840 --> 0:34:53.759 then the letter, the email from the students, and she's like, 0:34:53.800 --> 0:34:56.600 who is this guy? This is awesome. She's a teacher 0:34:56.680 --> 0:34:59.080 and she has all sorts of headaches with kids like 0:34:59.520 --> 0:35:04.360 everybody else does. Um tell us the derivation of the 0:35:04.480 --> 0:35:08.040 get your s Together letter, which we can't curse over 0:35:08.040 --> 0:35:11.719 the air waves. Um, how did that come about? You 0:35:11.800 --> 0:35:14.879 just never know when you're fifteen minutes are gonna gonna hit. 0:35:15.080 --> 0:35:16.759 And this was an email I got from a student 0:35:16.800 --> 0:35:18.919 who walked into my class late, and then I kicked 0:35:19.000 --> 0:35:22.600 him out of class. I kicked as per your class. 0:35:23.320 --> 0:35:25.640 Also thing in general and gradgety school with coddle students 0:35:25.640 --> 0:35:28.160 too much. And as a clinical professor, are you know 0:35:28.200 --> 0:35:30.560 our mission is to try and prepare kids for the workforce, 0:35:30.600 --> 0:35:31.920 and I think part of that is giving them a 0:35:31.960 --> 0:35:34.040 sense of what the workforce is actually gonna be like 0:35:34.480 --> 0:35:36.880 and trying to impost some standards on them. And one 0:35:36.920 --> 0:35:38.239 of those is if you're late to my class, I 0:35:38.239 --> 0:35:40.319 don't allow you in. And I didn't have late. Can 0:35:40.360 --> 0:35:42.359 you show up two minutes late, five minutes or either 0:35:42.480 --> 0:35:44.479 on time or you're not allowed in. It's hard, hard 0:35:44.520 --> 0:35:47.560 military stuff. I have a theater seating for the kids 0:35:47.560 --> 0:35:49.879 who work part time because I realized sometimes I can't 0:35:49.880 --> 0:35:52.120 get downtown of time. At six fifteen, we let people 0:35:52.120 --> 0:35:56.160 in for a theater seating, meaning meaning outskirts of the class. Yeah, 0:35:56.280 --> 0:35:59.080 I know. At exactly six fifteen, we let in latecomers 0:35:59.200 --> 0:36:02.360 for the part time Okay, after the first after the 0:36:02.400 --> 0:36:04.560 first part of the first act, but this kid came in. 0:36:04.600 --> 0:36:06.440 I kicked him out, and then he wrote a long, 0:36:06.480 --> 0:36:08.680 snarky email to me about how we checked out three 0:36:08.680 --> 0:36:11.920 other classes. Anyways, I got equally snarky back, and then 0:36:11.960 --> 0:36:14.680 it got forwarded, and then Within and then dead Spin, 0:36:14.760 --> 0:36:16.799 the sports blogging places picked it up. But it got 0:36:16.800 --> 0:36:18.360 about half a million beaus, and at one point I 0:36:18.360 --> 0:36:20.040 think the dean of the school was getting an email 0:36:20.120 --> 0:36:22.960 either wildly in favor or wildly against what I had 0:36:22.960 --> 0:36:25.640 done about every seven or eight seconds when it just 0:36:25.719 --> 0:36:27.959 kind of blew up and it tapped into a vein 0:36:28.000 --> 0:36:30.640 because one a lot of people feel as if, Okay, 0:36:30.640 --> 0:36:33.520 this millennial generation is entitled, and we're very supportive of 0:36:33.560 --> 0:36:35.600 my response. At the same time, a lot of people 0:36:35.600 --> 0:36:38.080 were said, look, these kids are paying six thousand bucks 0:36:38.080 --> 0:36:40.200 to take your class. If they show up a few 0:36:40.200 --> 0:36:42.560 minutes late, you just need to suck it up and 0:36:42.600 --> 0:36:45.560 deal with it. So it, like anything that goes viral, 0:36:45.640 --> 0:36:48.239 I think it tapped into a bit of a controversy 0:36:48.239 --> 0:36:50.279 of the time. It was about five or six years ago, 0:36:50.320 --> 0:36:52.160 and every two years it gets fired up again. But 0:36:52.239 --> 0:36:54.560 that that is not what I had hoped or expected. 0:36:55.160 --> 0:36:57.800 What you know is the piece of literary work that 0:36:57.840 --> 0:37:00.759 I would be known for. Well, you know, the generation 0:37:01.040 --> 0:37:04.160 and the offspring of the baby boomers, who you and 0:37:04.200 --> 0:37:06.200 I are really just on the other edge of that 0:37:06.280 --> 0:37:09.440 where would be TwixT and between Gen X and and boomers. 0:37:09.960 --> 0:37:13.440 But um, you know, they get participation awards for showing up, 0:37:13.480 --> 0:37:16.640 and I think my wife tells me that they come 0:37:16.719 --> 0:37:20.680 to school with that attitude, Hey I'm here, where's my trophy? No, 0:37:20.719 --> 0:37:23.520 you gotta do something to earn a trophy. It's it's 0:37:23.520 --> 0:37:26.279 a double edged sword. So about eighty people at LT 0:37:26.480 --> 0:37:28.439 right now, I'd say the average ages around twenty six. 0:37:28.440 --> 0:37:30.640 So work a lot with millennials. And the downside is 0:37:30.640 --> 0:37:32.719 they are more entitled. Remember when we went to work, 0:37:32.760 --> 0:37:34.400 If you can you imagine whyking your boss or your 0:37:34.400 --> 0:37:36.000 first job and so I want to have a career talk. 0:37:36.440 --> 0:37:38.319 I mean they would have said, okay, work your work, 0:37:38.360 --> 0:37:40.359 your ass off, career talk over and get back to work. 0:37:40.480 --> 0:37:45.160 And now these kids are very focused on their lifestyle balance, 0:37:45.280 --> 0:37:47.440 things that we just wouldn't have had the guts to 0:37:47.480 --> 0:37:50.960 bring up, having said, at least not till ten twenty years, 0:37:51.120 --> 0:37:55.440 until we had some currency, tho, some divorces, something something right, 0:37:55.600 --> 0:37:58.759 all of those things. But the flip side is there's 0:37:58.800 --> 0:38:00.880 a lot of media tention on the net millennials, but 0:38:00.920 --> 0:38:02.920 the reality is the more talented than you and I 0:38:02.960 --> 0:38:05.719 were at the village. Oh yeah, the tools they've grown 0:38:05.800 --> 0:38:08.799 up with, the skills they have garnered, just some of 0:38:08.800 --> 0:38:10.920 these kids are exceptional. We wouldn't put up with this 0:38:11.000 --> 0:38:14.439 otherwise these kids would have trouble getting job. The reason 0:38:14.480 --> 0:38:16.640 they're can demand more of a balance in their life, 0:38:16.640 --> 0:38:19.120 the reason they can demand more talks around their career. 0:38:19.520 --> 0:38:22.040 The reason they can demand, uh, you know, wanting to 0:38:22.040 --> 0:38:24.360 know what is the larger role that their job plays 0:38:24.400 --> 0:38:27.000 in the world is because a lot of these kids 0:38:27.080 --> 0:38:30.600 are outstanding that some of the some of the skills 0:38:30.680 --> 0:38:34.160 they bring, the our ability to pull together information. Uh, 0:38:34.760 --> 0:38:37.640 you can't force maturity, So that's still the same, you know. 0:38:37.840 --> 0:38:41.879 But millennials are the most talented generation I have ever 0:38:41.880 --> 0:38:45.759 worked with. Hands down. It's going to be it's gonna 0:38:45.760 --> 0:38:47.799 be inspiring to see what they're able to build over 0:38:47.800 --> 0:38:49.760 the next ten or fifteen years. You know. The debate 0:38:49.920 --> 0:38:54.000 that that has been circulating about technology and robotics and 0:38:54.000 --> 0:38:57.640 what it's costing in terms of jobs. I speak at 0:38:57.640 --> 0:38:59.360 a lot of schools, I give a lot of speeches 0:38:59.400 --> 0:39:01.600 around and one of things I'll never forget We went 0:39:01.640 --> 0:39:05.000 to a wedding of my wife's cousin in Virginia and 0:39:05.040 --> 0:39:08.640 we meet not only so I know the groom who 0:39:08.760 --> 0:39:11.200 from he's this toll to now he's getting married, and 0:39:11.239 --> 0:39:14.239 we meet some of his friends and the groomsmen. One 0:39:14.239 --> 0:39:18.760 of the groomsmen created this perfect for college and Apple 0:39:19.080 --> 0:39:23.319 iPhone case, the dumbest thing in the world. He has 0:39:23.320 --> 0:39:25.560 built into the back of it a bottle opener, so 0:39:25.600 --> 0:39:28.600 you could pop a beer you always have, right, Like 0:39:28.719 --> 0:39:31.400 so obvious, And I'm like, oh, that's interesting. How are 0:39:31.400 --> 0:39:33.640 you gonna manufacture this? He's like, oh, we have a 0:39:33.640 --> 0:39:35.600 company in China. They drop ship. It was sound about 0:39:35.640 --> 0:39:39.640 forty units a month. There's a kid who's twenty in college, Like, 0:39:40.600 --> 0:39:43.160 and every time I go to a conference with young 0:39:43.239 --> 0:39:49.080 kids with college students, that's sort of insane experience. They 0:39:49.160 --> 0:39:53.040 understand forget roy and loyalty, forget company loyalty. The company 0:39:53.040 --> 0:39:55.240 ain't gonna be loyal to you. They have no loyalty 0:39:55.280 --> 0:40:00.919 back and they know that they're essentially um their independence. 0:40:00.960 --> 0:40:04.640 They're they're you know, contract players, and they're aware of it. Yeah, 0:40:04.719 --> 0:40:07.000 it's we we get We get angry at them because 0:40:07.040 --> 0:40:09.080 most of us now are in principal positions where we 0:40:09.120 --> 0:40:12.400 want to talk about loyalty because it serves our advantage. 0:40:12.920 --> 0:40:14.319 But at the end of the day, I wonder if 0:40:14.360 --> 0:40:16.759 they've figured it out. And you've talked about this, your 0:40:16.760 --> 0:40:18.879 blogged the Big Picture, and we've talked about this a lot. 0:40:19.200 --> 0:40:21.480 There are a lot of well publicized cases of these 0:40:21.560 --> 0:40:24.200 kids who can tap into global markets and have extreme 0:40:24.719 --> 0:40:28.799 wealth or success really quickly. There's a dark side of that, though, 0:40:28.840 --> 0:40:30.719 and that is I think it's getting harder and harder 0:40:30.760 --> 0:40:33.160 for these kids just to be solid citizens. Say they're 0:40:33.160 --> 0:40:35.440 not geniuses, say they don't get lucky. I think it's 0:40:35.440 --> 0:40:38.040 getting harder and harder just to punch out an average living. 0:40:38.200 --> 0:40:40.560 And and you know, it gets into income inequality. And 0:40:40.960 --> 0:40:42.600 I like a lot of the work that you've done 0:40:42.640 --> 0:40:44.200 on this, and a lot of the work that your 0:40:44.239 --> 0:40:46.719 past guest, Henry Blodge has done on this, but I 0:40:46.800 --> 0:40:49.480 would when I look at my class versus fourteen years ago, 0:40:49.480 --> 0:40:51.440 I got a hundred forty kids on every Monday night. 0:40:51.560 --> 0:40:53.320 I think it's never been easier to be a billionaire. 0:40:53.360 --> 0:40:54.960 I think someone in my class will be a billionaire 0:40:55.040 --> 0:40:57.920 either through alternative investments, are starting a tech company. At 0:40:57.960 --> 0:40:59.759 the same time, it's never been harder to be a 0:40:59.760 --> 0:41:01.200 mill in there. And what I mean is to be 0:41:01.400 --> 0:41:03.960 aggregate a million dollars, just be a middle class guy 0:41:04.000 --> 0:41:06.279 or gal that aggregates some semblance of a living over 0:41:06.280 --> 0:41:09.560 ten or twenty thirty years. The top, the most talented 0:41:09.600 --> 0:41:11.680 people are going to aggregate wealth faster and in the 0:41:11.760 --> 0:41:14.680 velocity we've never seen before. But the rest it's going 0:41:14.719 --> 0:41:16.560 to be harder and harder just to be a solid 0:41:16.600 --> 0:41:19.120 citizen when you when you look at the state of 0:41:19.120 --> 0:41:21.880 the recovery as to what's been going on. You know, 0:41:22.080 --> 0:41:24.520 I love the William Gibson quote the future is here. 0:41:24.520 --> 0:41:27.799 It's just not evenly distributed. The same is true for 0:41:27.840 --> 0:41:30.880 the recovery. And it depends on what industry you're in, 0:41:31.000 --> 0:41:34.080 where you live in the country. You mentioned superurban centers, 0:41:34.400 --> 0:41:37.319 so we travel around the country and visit clients. D 0:41:37.400 --> 0:41:40.120 C is a house of fire. You go to Boston 0:41:40.600 --> 0:41:44.160 and that's in New York. Obviously that's this ghast. Seattle 0:41:44.600 --> 0:41:47.080 people tell me the recovery is terrible. Have you been 0:41:47.120 --> 0:41:50.799 to Seattle? Seattle? Austin is a little smaller. I think 0:41:50.800 --> 0:41:53.560 Austin is the fastest growing city in the country, but 0:41:53.680 --> 0:41:55.719 Seattle is number two, and it's a big city with 0:41:55.800 --> 0:41:59.799 a lot of industry and a lot of track. It's 0:42:00.000 --> 0:42:04.560 most amazing. They're still actually fairly reasonable, at least compared 0:42:04.600 --> 0:42:08.640 to San Francisco and Silicon Valley and and NAPA. That 0:42:08.640 --> 0:42:11.399 that whole run of an hour north and an hour 0:42:11.520 --> 0:42:15.280 south of the city of San Francisco is utterly insane, 0:42:15.320 --> 0:42:17.960 it's lost its mind. We're creating a small a small 0:42:18.040 --> 0:42:21.360 number of elysium like environments where the life is just 0:42:21.440 --> 0:42:24.080 incredible there if you can afford access in the opportunities, 0:42:24.120 --> 0:42:26.760 but most people can't afford it. In Europe it's London, 0:42:27.200 --> 0:42:29.879 you can't. It's London in the seven Dwarves. If you're 0:42:29.880 --> 0:42:34.480 an unbelievable systems application developers, saying Baconi Italy er in Marinello, 0:42:34.560 --> 0:42:36.319 you end up in Milam within twelve months, and you're 0:42:36.320 --> 0:42:39.719 in London within thirty six months. There is Look at 0:42:39.719 --> 0:42:41.360 how and you've talked a lot about this. You know, 0:42:41.400 --> 0:42:45.239 the top top one percent aggregating, but this isn't a 0:42:45.280 --> 0:42:51.160 one percent thing. This is really like of the professionals technology, 0:42:51.640 --> 0:42:55.920 there's a whole separate that the middle class has really 0:42:56.200 --> 0:43:00.440 shrunk and the top one person. What's so differ today 0:43:00.480 --> 0:43:03.840 is the top one percent, in the top one percent 0:43:04.360 --> 0:43:08.399 are so far ahead of anything we've seen previously. If 0:43:08.440 --> 0:43:11.319 you if you hold that aside, put put aside the 0:43:11.360 --> 0:43:15.840 g fives and the hundred million dollar properties, just normal 0:43:16.120 --> 0:43:22.160 insane wealth, hundred millionaires, that sort of top one percent, 0:43:22.280 --> 0:43:27.000 top ten percent, top this recovery. I actually left out. 0:43:27.080 --> 0:43:30.560 The most significant factor if you have a graduate degree, 0:43:30.640 --> 0:43:34.800 if you have a any specific technical skill and degree 0:43:34.840 --> 0:43:39.399 that goes with it. This recovery has been very, very tropic, right, 0:43:39.600 --> 0:43:42.400 really good if you come out of college with an 0:43:42.400 --> 0:43:45.399 English literature degree and you don't have a skill set 0:43:45.440 --> 0:43:48.560 that you can take to one of those urban supercenters, 0:43:48.600 --> 0:43:51.399 this has been a really terrible recovery. We were talking 0:43:51.400 --> 0:43:54.840 about Facebook. Look at the innovative companies of the past. 0:43:54.880 --> 0:43:57.239 You know, a Leaver a hundred and fifty billion dollar 0:43:57.280 --> 0:43:59.480 market cap, has about a hundred and twenty five thousand 0:43:59.560 --> 0:44:03.239 family being supported by Unilever, Intel more efficient, about a 0:44:03.320 --> 0:44:05.799 hundred thousand people. A hundred fifty billion dollar market cap. 0:44:05.960 --> 0:44:10.520 Facebook two billion dollar market cap, nine thousand people. That's amazing. 0:44:10.680 --> 0:44:14.200 So you have more and more spoils going to fewer 0:44:14.239 --> 0:44:16.560 and fewer people. And Facebook is a good company. It's 0:44:16.560 --> 0:44:18.480 great if you're on the Ferrari dealership and pala Alto. 0:44:18.520 --> 0:44:20.360 It's great if you own real estate in San Francisco. 0:44:20.440 --> 0:44:23.960 It's great if you're serving the ecosystem of Facebook. But 0:44:24.000 --> 0:44:27.280 I think these companies have so dramatically outpaced wealth creation. 0:44:27.320 --> 0:44:30.600 These companies, the four horsemen, Apple, Amazon, Facebook and Google 0:44:30.640 --> 0:44:34.640 have the population of Lexington, Kentucky or Corpus Christi, Corpus Christie, 0:44:34.800 --> 0:44:37.759 and they have the GDP right the value of the 0:44:37.800 --> 0:44:41.560 GDP of Spain or Australia. When you talk about and 0:44:41.640 --> 0:44:46.840 they've effectively, I think, legislatively and and operationally done to 0:44:46.920 --> 0:44:49.319 the US with the South canow militarily, I think they're 0:44:49.360 --> 0:44:52.640 seceding from the nation barrier. They're ultimate, they're incredible tax avoiders. 0:44:52.640 --> 0:44:55.560 It's all legal, but they're licensing their IP overseas and 0:44:55.600 --> 0:44:58.160 avoiding taxes. They're telling women will pay for them to 0:44:58.200 --> 0:45:00.279 freeze their eggs. They're telling people that they'll do better 0:45:00.360 --> 0:45:03.359 DNA testing. They're giving them their own municipal transportation back 0:45:03.360 --> 0:45:06.120 and forth and work. They've effectively succeeded from the nation. 0:45:06.120 --> 0:45:08.640 They've said, we're smarter, we're better, we can create more wealth. 0:45:08.880 --> 0:45:11.560 We're going to create a society outside of the normal 0:45:11.600 --> 0:45:14.600 boundaries of the of the sovereign in the US, and 0:45:14.600 --> 0:45:16.359 we're gonna operate in the Netherlands. I think they were 0:45:16.360 --> 0:45:19.040 effectively seceding from the US and well, when we look 0:45:19.080 --> 0:45:22.440 at Google as example, in San Francisco, a lot of 0:45:22.480 --> 0:45:25.520 the complaints about the Google bus. You would think, who 0:45:25.560 --> 0:45:27.399 cares they have a bus? Is that much more room 0:45:27.480 --> 0:45:30.840 on on public transportation? But that's not the attitude in 0:45:30.840 --> 0:45:34.200 San Francisco, is it. It's you have a lot of frustration. 0:45:34.239 --> 0:45:36.120 I think a lot of the civil unrest has taken 0:45:36.160 --> 0:45:39.200 place is a lot about the individual acts of violence, 0:45:39.239 --> 0:45:42.360 but it's about frustration that there's just if you're in 0:45:42.400 --> 0:45:45.439 this uber class, you have the right skills, the right 0:45:45.440 --> 0:45:48.879 work ethic, it's never been a better time. But if 0:45:48.920 --> 0:45:53.200 you're the ninety eighty percent below that, it's just harder 0:45:53.239 --> 0:45:55.720 and harder to be at the average Joe. The heirs 0:45:55.719 --> 0:45:57.680 to the Walmart portion the wall in the airs were 0:45:57.680 --> 0:46:02.160 probably very decent. People have more wealth in the of America. 0:46:02.239 --> 0:46:04.120 If there's gonna be a revolution in this country, it's 0:46:04.120 --> 0:46:06.879 probably gonna start an aisle five of the Walmart. I mean, 0:46:06.880 --> 0:46:10.279 it's just that if you have the right skills, it's 0:46:10.400 --> 0:46:13.480 never been a better time. But that that quote unquote 0:46:13.520 --> 0:46:16.600 population of people the right skills is getting smaller and smaller, 0:46:16.640 --> 0:46:19.319 and more and more fruits have have act created to 0:46:19.320 --> 0:46:22.120 those people. The good slash bad news is whenever this 0:46:22.200 --> 0:46:24.319 has happened in history, it usually self corrects in the 0:46:24.360 --> 0:46:27.960 form of war, revolution, or famine. That's the self correction. 0:46:27.960 --> 0:46:30.839 Well that's not very encouraged. That isn't encouraging. So and 0:46:30.880 --> 0:46:33.359 the funny thing is, you know, post War War two, 0:46:34.239 --> 0:46:37.520 you could raise a family on a job as a 0:46:37.680 --> 0:46:42.000 postman or a fireman, or or even a teacher or Hey, 0:46:42.040 --> 0:46:44.440 if you were an accountant or a lawyer, you were 0:46:44.440 --> 0:46:47.520 in the uppercross. You were doing really well. Now that 0:46:47.600 --> 0:46:52.799 whole um low skilled jobs have have slid to the 0:46:52.800 --> 0:46:55.120 bottom of the middle class and what used to be 0:46:55.160 --> 0:46:58.839 considered high skilled jobs lawyers are accountants. Maybe accountants are 0:46:58.840 --> 0:47:00.560 doing better in the lawyers. I think we cranked out 0:47:00.560 --> 0:47:04.279 too many lawyers so sometime ago. But it seems like 0:47:04.360 --> 0:47:08.239 the alignment and the strata has really changed. And it 0:47:08.280 --> 0:47:10.960 comes back to the educational attainment. If you have the 0:47:11.040 --> 0:47:15.160 right degree, in the right focus, the right the right sector. Hey, 0:47:15.200 --> 0:47:18.280 these are great times. Everybody else is having having a challenge, 0:47:18.360 --> 0:47:20.880 But those fruits were increasingly only being able to be 0:47:20.920 --> 0:47:23.520 picked by people who were either exceptional or come from 0:47:23.520 --> 0:47:27.040 wealthy families. The bottom death style of households eight percent 0:47:27.040 --> 0:47:28.920 of the kids will go to college, the top decile 0:47:29.040 --> 0:47:31.200 eight percent. And this is This is a real point 0:47:31.200 --> 0:47:32.920 of personal passion for me. I was raised by a 0:47:32.960 --> 0:47:35.040 single mother who lived and died a secretary. We didn't 0:47:35.040 --> 0:47:36.959 have a lot of money, but we had a nice 0:47:37.000 --> 0:47:38.920 life and I was able to go to public schools 0:47:38.920 --> 0:47:42.120 all the way through undergrad US graduate school at Berkeley. 0:47:42.320 --> 0:47:45.360 You know, if I didn't have the big handed government 0:47:45.600 --> 0:47:48.960 and in very generous forward looking visionaries in the form 0:47:49.000 --> 0:47:51.319 of the founders of the University of California, I just 0:47:51.320 --> 0:47:53.719 wouldn't be here with you right now. That's the bottom line. 0:47:53.840 --> 0:47:56.920 And those that same access. You know what my tuition 0:47:56.960 --> 0:47:59.440 was UCLA in Berkeley was twelve hundred bucks a year. 0:48:00.040 --> 0:48:02.520 And I'll beat you at I went to sunny stony Brook. 0:48:02.840 --> 0:48:05.080 You know. The joke was the Berkeley is the stony 0:48:05.080 --> 0:48:08.160 Brook of the West, and my tuition was four fIF semester. 0:48:08.280 --> 0:48:10.200 And look and look at what it is now. It 0:48:10.320 --> 0:48:13.080 is a it is a lot more and kids are 0:48:13.080 --> 0:48:15.960 taking on student debt, more student debt than than than 0:48:16.040 --> 0:48:18.839 credit cards. It's it's hurting the housing crisis. It's giving 0:48:18.880 --> 0:48:22.080 them a huge, a huge head wind before they get out. 0:48:22.120 --> 0:48:24.600 And I'm worried that, you know, kids just aren't going 0:48:24.640 --> 0:48:28.760 to have the same unbelievable opportunities that I had, because 0:48:29.120 --> 0:48:31.880 it doesn't seem as if the bottom of education is 0:48:31.880 --> 0:48:35.000 the lubricant of upward mobility. My class and I this 0:48:35.080 --> 0:48:36.879 is a man in the mirror test barrier. We charge 0:48:36.960 --> 0:48:39.239 kids six thousand dollars to take my class. Have a 0:48:39.280 --> 0:48:42.239 hundred twenty kids or hundred forty kids on a Monday night, 0:48:42.239 --> 0:48:44.960 every time I walk into class. We're charging kids sixty 0:48:45.120 --> 0:48:48.400 thousand dollars that night for one class, and the majority 0:48:48.440 --> 0:48:51.960 of it is being paid for in debt. Something is 0:48:52.080 --> 0:48:54.800 wrong here. We have to figure out a way and 0:48:54.840 --> 0:48:57.120 now I'm really on my soapbox. We have to figure 0:48:57.120 --> 0:48:59.720 out a way to give middle class kids with single 0:48:59.760 --> 0:49:02.000 mother is the same opportunity to be in this chair. 0:49:02.160 --> 0:49:05.120 And you know, I U in public about this. I 0:49:05.160 --> 0:49:07.960 gave ten percent of my holdings in in my company 0:49:08.000 --> 0:49:11.279 to the University of California, Berkeley, Los Angeles and n 0:49:11.360 --> 0:49:13.960 y U because they've been so incredibly supportive. But I 0:49:14.120 --> 0:49:17.720 really worry that our economy is under a huge threat 0:49:17.840 --> 0:49:20.200 that the same number of people aren't gonna have access 0:49:20.239 --> 0:49:22.960 to the unbelievable education that you and I had at 0:49:22.960 --> 0:49:25.200 the same price, and the amazing thing is a lot 0:49:25.239 --> 0:49:28.960 of these schools have enormous endowments. And it's not just 0:49:29.040 --> 0:49:32.399 the I vys. You look at Harvard, Gale, Stanford. That's 0:49:32.440 --> 0:49:35.480 a hundred billion dollars in endowment just amongst those three. 0:49:35.719 --> 0:49:39.359 That's astonishing. So if they do nothing else, they're throwing 0:49:39.400 --> 0:49:42.319 off somewhere between five and ten billion dollars a year 0:49:42.480 --> 0:49:46.560 in revenue. That's insane, and how do they manage to 0:49:46.640 --> 0:49:49.280 charge But the same thing is happening there, So winner 0:49:49.320 --> 0:49:51.920 take all economy. It's the same things happening in education. 0:49:51.960 --> 0:49:53.839 And used the operative term there was a hundred billion 0:49:53.840 --> 0:49:57.640 dollar endowments and three schools. The schools the top five 0:49:57.719 --> 0:50:00.200 or seven endowments are growing at a much fast rate 0:50:00.200 --> 0:50:02.960 than everybody else. In education, we're ripe to be disrupted. 0:50:03.000 --> 0:50:06.200 We've tripled our tuition in the last fifteen years. Inflation 0:50:06.280 --> 0:50:07.719 is kind of two or three percent yere. We are 0:50:07.800 --> 0:50:10.000 so ripe to be disrupted. So people are looking for 0:50:10.040 --> 0:50:11.600 a tech player to disrupt us. You know it's going 0:50:11.680 --> 0:50:15.879 to disrupt education. Harvard, Harvard and m I T did 0:50:15.920 --> 0:50:19.480 the open open course uh the years. It's the same 0:50:19.520 --> 0:50:23.160 effect that's taking place across the economy. The top, the top, 0:50:23.200 --> 0:50:26.480 top guys are gonna create more power than anyone has. 0:50:26.520 --> 0:50:28.959 Harvarder said they could double their incoming freshman class without 0:50:28.960 --> 0:50:32.279 sacrificing inequality. They're gonna take some of that endowment. They're 0:50:32.280 --> 0:50:35.160 gonna say, take some technology, and I'm predicting they're gonna 0:50:35.160 --> 0:50:38.080 say Harvard, m I T, Stanford, and Berkeley. At some point, 0:50:38.120 --> 0:50:40.120 the top schools are gonna say here's here's the deal, 0:50:40.520 --> 0:50:43.960 free and we're gonna triple quadruple, quintuple. And then what 0:50:44.000 --> 0:50:47.520 does Indiana do? What does what does Fordham do? What 0:50:47.640 --> 0:50:49.960 does the university in Miami do? What do they do 0:50:50.480 --> 0:50:53.000 when the best ten or twenty percent of the population 0:50:53.040 --> 0:50:56.200 has access to the best schools for free and every 0:50:56.239 --> 0:50:59.200 every company worth its salt only recruits at those few schools. 0:50:59.360 --> 0:51:03.200 So how does Harvard, with this much physical space triple 0:51:03.280 --> 0:51:07.200 they're entering freshman classes it online only or people literally? 0:51:07.239 --> 0:51:09.680 Are they tripling the number of students in Cambridge? I 0:51:09.719 --> 0:51:11.480 think it's going to be a hybrid. I think they're 0:51:11.480 --> 0:51:13.000 going to be able to double the size of their 0:51:13.000 --> 0:51:15.000 class in the next five years and triple it over 0:51:15.040 --> 0:51:17.720 the next ten to twenty years because they'll make people 0:51:17.719 --> 0:51:20.279 more efficient. Let them take a lot of their lectures. Right. 0:51:20.320 --> 0:51:22.759 We talked about a flip classroom that actual teaching takes 0:51:22.760 --> 0:51:26.000 place online and we come together to discuss. Every university, 0:51:26.040 --> 0:51:29.640 including ours, is now building satellite campuses for all to 0:51:29.640 --> 0:51:32.160 talk about online. We just opened a campus and now Abudhabi. 0:51:32.200 --> 0:51:35.880 We opened a campus in Shanghai. Wharton's opening in Singapore, 0:51:36.000 --> 0:51:38.719 so we're opening all over the world. But it's like 0:51:38.840 --> 0:51:41.560 every other category. Where there used to be fifty players 0:51:41.600 --> 0:51:43.840 eating out a good living, there's gonna be two or 0:51:43.880 --> 0:51:48.920 three capturing of the profits. Unbelievable. That's interesting. Let's talk 0:51:48.960 --> 0:51:53.240 about some other sectors of the economy. Um, that that's 0:51:53.360 --> 0:51:59.200 right for disruption. Um. And I know we mentioned television earlier. Um, 0:51:59.480 --> 0:52:02.680 do you watch a Silicon Valley on HP love such 0:52:02.719 --> 0:52:07.800 a hilarious it's just it's just, you know, Mike Judge 0:52:08.480 --> 0:52:11.640 has done some interesting odd bowl stuff in the past. 0:52:12.080 --> 0:52:14.360 This seems to be the first thing I'm trying to remember. 0:52:14.400 --> 0:52:17.520 The future the name of the future show where everybody 0:52:17.800 --> 0:52:21.080 the movie he did, uh Idiocracy was a name of 0:52:21.080 --> 0:52:23.480 where everybody's just a blob sitting around TV wat sitting 0:52:23.480 --> 0:52:26.400 around a couch watching TV. And it was really sophomoric 0:52:26.440 --> 0:52:29.120 and goofy, And when I first saw the previews for this, 0:52:29.200 --> 0:52:31.840 I'm thinking, Hey, is this guy grown up enough that 0:52:31.920 --> 0:52:34.400 this is really going to be a serious and he 0:52:34.480 --> 0:52:38.239 seems to be has the tone perfect. I mean, it's 0:52:38.280 --> 0:52:42.120 just every time I speak to anybody on the venture side, 0:52:42.120 --> 0:52:47.080 on the private equity, totally totally dead on. And it's 0:52:47.080 --> 0:52:49.080 amazing to think that there's a whole part of the 0:52:49.120 --> 0:52:52.200 country where, for a hundred miles up the coast, that's 0:52:52.440 --> 0:52:55.640 half of what's going on. Yeah, it's just I mean, 0:52:55.640 --> 0:52:59.440 obviously it's an exaggeration, but I love Barely. Though it's barely, 0:52:59.480 --> 0:53:02.960 it's everything's good and root and reality. It's an exaggeration, 0:53:03.000 --> 0:53:05.840 but it's not like a gross parity. It's a slight exaggeration. 0:53:06.040 --> 0:53:08.600 You see some crazy stuff. But the the other show 0:53:08.760 --> 0:53:10.800 I always love to watch. I love Silicon Valley and 0:53:10.840 --> 0:53:12.520 I watched Girls, and I love Silicon Valley because I 0:53:12.560 --> 0:53:14.960 can relate to it so much, and I love Girls 0:53:14.960 --> 0:53:17.280 because I can't relate to it anyway. And I'm constantly 0:53:17.520 --> 0:53:19.239 is this what young people are really like? And I 0:53:19.239 --> 0:53:22.279 find it so fascinating because I don't know if you've 0:53:22.280 --> 0:53:25.200 ever watched Girls, but I've tried desperately and I just can't. 0:53:25.560 --> 0:53:28.560 It's it's literally wow, is this what kids are like? 0:53:28.640 --> 0:53:30.480 And the honest answers? I think it is, and so 0:53:30.520 --> 0:53:34.080 it's fascinating. It's almost like being a Vorior but Silicon Valley. 0:53:34.480 --> 0:53:36.839 You know. It really shows how some of the sausages made. 0:53:36.880 --> 0:53:40.239 And there's a series of well publicized entrepreneurs. But what 0:53:40.360 --> 0:53:43.600 people don't do is they don't realize we have a 0:53:43.600 --> 0:53:46.319 tendency to romanticize entrepreneurship. Kids come to me because I'm 0:53:46.320 --> 0:53:48.040 an entrepreneur and say I want to start a business, 0:53:48.080 --> 0:53:50.120 And I would say, if you have the skill set 0:53:50.560 --> 0:53:53.440 to go to a platform like a Bloomberg, like a Facebook, 0:53:53.480 --> 0:53:56.759 like a Google and navigate the politics there, be be 0:53:56.920 --> 0:53:59.880 effective as opposed to just being right. Something I've struggled 0:53:59.920 --> 0:54:01.759 with my whole career is a difference between being right 0:54:01.800 --> 0:54:04.759 and being effective than on a risk adjusted basis, you're 0:54:04.760 --> 0:54:07.680 better off going to work for a platform. Entrepreneurs are 0:54:07.680 --> 0:54:09.440 people who have no choice. It's like some being a 0:54:09.440 --> 0:54:11.520 doctor is a terrible job now, but some people have 0:54:11.560 --> 0:54:13.359 no choice. They just have to be doctors. Right. They 0:54:13.400 --> 0:54:15.840 were taking temperature since the age of six some people 0:54:15.920 --> 0:54:18.520 have to be in fashion. Entrepreneurship is the same way. 0:54:18.560 --> 0:54:23.560 And I think that show gets across just how difficult, scary, insecure, 0:54:24.120 --> 0:54:27.759 and sometimes you could kill yourself for seven or eight 0:54:27.840 --> 0:54:29.560 years or ten years or longer and end up with 0:54:29.680 --> 0:54:32.400 not only nothing, but less than nothing, you know, oh 0:54:32.480 --> 0:54:36.359 in your parents, your family, everything. And we don't talk 0:54:36.400 --> 0:54:39.799 a lot about that, but it happens more than it 0:54:39.880 --> 0:54:43.120 doesn't happen. Well, that's the reality is that the vast 0:54:43.200 --> 0:54:46.640 majority of startups, the vast majority of of new restaurants, 0:54:46.640 --> 0:54:49.680 of new retail stores from new businesses, hey, two years out, 0:54:49.880 --> 0:54:52.640 most of them are gone. That's just the simple numbers 0:54:52.680 --> 0:54:56.399 of it. And I'm glad the show isn't glorifying. Hey, 0:54:56.760 --> 0:54:59.040 hang out a shingle and and everybody get I p 0:54:59.160 --> 0:55:01.359 O s at a billion dollars ours. They're really making 0:55:01.400 --> 0:55:04.279 it clear that you could lose this company with one 0:55:04.280 --> 0:55:08.400 wrong decision anywhere along the way. They the litigation was 0:55:08.480 --> 0:55:12.280 really an insightful plot device, because you know that happens 0:55:12.320 --> 0:55:14.680 all the time. Yeah, and just the kind of full 0:55:14.800 --> 0:55:17.440 full body contact hardball that takes place. I worked with 0:55:17.480 --> 0:55:20.160 a lot of vcs who are very some are outstanding. 0:55:20.239 --> 0:55:23.080 Some are super aggressive to some of the stuff you see. 0:55:23.080 --> 0:55:26.440 It was really really rapacious. It's a it's a it's 0:55:26.480 --> 0:55:28.960 a full body contact sport in terms of a startup, 0:55:29.000 --> 0:55:32.239 specially a venture back startup. So so they there's one 0:55:32.280 --> 0:55:36.440 episode where they're doing their second round and suddenly they 0:55:36.480 --> 0:55:40.800 start getting they become more obnoxious to the vcs thinking 0:55:41.080 --> 0:55:43.560 making it look like they already have funded and everybody 0:55:43.560 --> 0:55:46.480 starts throwing money at them, and that leads to an 0:55:46.520 --> 0:55:49.600 interesting plot point, but it raises a question, what do 0:55:49.640 --> 0:55:53.400 you think about the valuations amongst startup these days? Is 0:55:53.400 --> 0:55:56.239 that something you look at? And here we are in 0:55:56.320 --> 0:55:59.560 the market where people have been talking about valuations being 0:55:59.600 --> 0:56:03.200 too it for two years and the market just well, 0:56:03.400 --> 0:56:06.800 the economists called the dot com crash perfectly. They just 0:56:06.840 --> 0:56:10.920 called and I'm on the board of several startups, and 0:56:10.960 --> 0:56:13.480 what I'm telling them is raise raise money right now. 0:56:13.680 --> 0:56:15.400 But you can't. Yeah, I don't know if it's I 0:56:15.400 --> 0:56:17.880 don't know if this is the best time to raise money, 0:56:17.880 --> 0:56:20.360 but I am pretty confident it's not a bad time. 0:56:20.520 --> 0:56:23.160 And in general, I think acid prices across the board 0:56:23.160 --> 0:56:25.000 because of low interest rates and things. You understand A 0:56:25.000 --> 0:56:28.600 lot better than I do are really high. And my 0:56:28.719 --> 0:56:30.560 senses you raise money when you don't need it, because 0:56:30.560 --> 0:56:32.400 when you really need it, it's typically pretty hard to 0:56:32.480 --> 0:56:37.080 raise money. So everybody, anybody who owns something, I'm saying, 0:56:37.080 --> 0:56:38.719 if you're in a position or for whatever reason, need 0:56:38.760 --> 0:56:41.200 to sell, then sell. But because I think it's a 0:56:41.239 --> 0:56:43.120 great time to sell almost anything. And if you're in 0:56:43.120 --> 0:56:44.719 a position to raise money or you think you might 0:56:44.760 --> 0:56:47.239 need to raise money, I'm a l two is a 0:56:47.320 --> 0:56:50.759 venture back company. We have fantastic nature cavalists firm called 0:56:50.760 --> 0:56:53.880 General Catalyst. But we're even thinking we don't need the capital. 0:56:53.920 --> 0:56:56.520 But it's just not a bad time to put another five, ten, 0:56:56.600 --> 0:56:58.600 twenty million bucks in the tank right now because you 0:56:58.640 --> 0:57:01.880 can get really solid evaluation, to say the least. Then 0:57:01.920 --> 0:57:05.239 and I'll tell you what my theory is. What's driving it. 0:57:05.239 --> 0:57:06.960 It has nothing to do with interest rates, it has 0:57:07.000 --> 0:57:10.439 nothing to do with the fed. Um. I'm a car guy. 0:57:10.520 --> 0:57:12.480 I've been a car first word I ever said was car. 0:57:12.480 --> 0:57:16.800 I'm a car buff and my whole adult working life 0:57:16.800 --> 0:57:19.480 there are a series of cars I would like to own, 0:57:20.240 --> 0:57:23.040 and they're now starting to creep up as I oh 0:57:23.080 --> 0:57:27.120 I can afford to buy a two thousand five for 0:57:27.360 --> 0:57:30.800 g T or a two thousand two BMW Z eight 0:57:31.240 --> 0:57:34.520 because when they were seventy five dollars and I was 0:57:34.640 --> 0:57:38.080 making sixty, I couldn't afford that. But the problem is 0:57:38.200 --> 0:57:41.320 that the Z eight is up to one seventy five, 0:57:41.400 --> 0:57:44.040 the GT is up to three hundred. As my income 0:57:44.080 --> 0:57:47.080 goes up, these cars go up. And the reason for this, 0:57:47.200 --> 0:57:50.560 to bring it back to start up valuations, there are 0:57:50.600 --> 0:57:53.640 only so many of them, and as we discussed before 0:57:53.640 --> 0:57:57.360 with the top one to there are so many people 0:57:57.440 --> 0:58:00.880 with so much money who desire those things that they 0:58:00.920 --> 0:58:03.080 don't care. They'll bid one fifty for a car that's 0:58:03.120 --> 0:58:06.720 really worth a hundred thousand dollars, or they'll bid fifty 0:58:06.760 --> 0:58:09.720 billion for Uber because they have to show Uber in 0:58:09.800 --> 0:58:12.680 their funds in order to make their limited partners happy. 0:58:13.040 --> 0:58:16.200 And so there's a limited number of of these goods, 0:58:16.560 --> 0:58:19.880 a limited number of these companies that at least appear 0:58:19.960 --> 0:58:22.520 to have some shot at at being a home run, 0:58:22.880 --> 0:58:25.920 and so everybody piles into the same. Look, look at 0:58:25.960 --> 0:58:29.280 the Ferrari market has gone insane. Like I've always thought, 0:58:29.280 --> 0:58:32.240 the Ferrari to seventy five was a gorgeous car, from 0:58:33.200 --> 0:58:36.080 one and later in the sixties the Dino. You could 0:58:36.080 --> 0:58:38.720 have picked up a Dino fifteen years ago for fifty thousand, 0:58:39.720 --> 0:58:43.160 fifty thousand dollars. They're half a million dollars. Now why 0:58:43.200 --> 0:58:45.480 because there aren't ten million of them. They made a 0:58:45.480 --> 0:58:48.120 few thousand. Half of them were wrecked on the track 0:58:48.480 --> 0:58:50.600 and the other half have been lovely restored and they've 0:58:50.640 --> 0:58:55.160 just completely But it's I see the same people buying 0:58:55.200 --> 0:58:58.280 those two seventy fives going to the art market and 0:58:58.360 --> 0:59:02.400 picking up the Jack Meddi sculptures or a bran cusio 0:59:02.600 --> 0:59:05.760 or whatever happens to float your boat, and piling into 0:59:05.840 --> 0:59:09.120 these private equities the best returns, the best industry in 0:59:09.120 --> 0:59:11.160 the world the last five ten years is this market 0:59:11.200 --> 0:59:15.120 surges has been the vanity economy. The vanity economy. Ferrari 0:59:15.200 --> 0:59:17.080 is anything that makes you more attractive or makes you 0:59:17.120 --> 0:59:20.560 feel more signaling to the opposite sex. Yeah, even even 0:59:20.680 --> 0:59:22.640 and a lot of people say, well, Scott, that's not true. 0:59:22.800 --> 0:59:25.280 I'm happily married. I just really like this ferrari and 0:59:25.280 --> 0:59:26.600 I bought it and I kept in my garage. And 0:59:26.640 --> 0:59:28.320 the questions, well, why does that make you feel good? 0:59:28.800 --> 0:59:30.320 Or people will so women will say, you know, I 0:59:30.360 --> 0:59:32.880 wear laprola under my work clothes and no one's ever 0:59:32.880 --> 0:59:35.160 going to see it. I'm happy. I'm in a monogous relationship. 0:59:35.200 --> 0:59:37.400 I'm not trying to attract anybody. The question is, well, 0:59:37.400 --> 0:59:38.880 why do you feel so good? It's because for the 0:59:39.000 --> 0:59:41.920 last ten million years, it's been pounded into us that 0:59:41.960 --> 0:59:43.840 we have this job to be more attractive to the 0:59:43.840 --> 0:59:46.120 other sex, such that we can find someone stronger, smarter, 0:59:46.200 --> 0:59:48.320 and faster than us to mate with. Such of the 0:59:48.360 --> 0:59:52.360 next generation is smarter, stronger, and faster. And this vanity 0:59:52.400 --> 0:59:55.880 economy the most successful people. There's a limited number of 0:59:55.920 --> 0:59:58.840 these objects because scarcity is what are scarcity values? What 0:59:58.880 --> 1:00:00.640 gives us the sense that it's sick? Those were really 1:00:00.680 --> 1:00:03.280 successful when you can only only so many people can 1:00:03.280 --> 1:00:06.600 buy and then long and ZN watch this unbelievably German 1:00:06.920 --> 1:00:09.919 watch Makeground by Richemont, and the prices have just gone 1:00:10.200 --> 1:00:13.120 just gone nuts, and it's totally irrational. And that's where 1:00:13.120 --> 1:00:14.360 you want to be in business. You want to be 1:00:14.360 --> 1:00:17.360 in an irrational part of the ecosystem because that irrational 1:00:17.480 --> 1:00:19.800 translates into great margins. I love the work you do 1:00:19.840 --> 1:00:22.360 on the signaling and the value of these different things. 1:00:22.480 --> 1:00:27.720 My my biology, my favorite biology discussion of what beauty 1:00:27.880 --> 1:00:34.160 is my favorite rationalization is or description maybe not rationalization is, well, 1:00:34.200 --> 1:00:36.320 beauty is a function of symmetry, and symmetry is a 1:00:36.320 --> 1:00:39.120 function of health, and that means that they'll be better 1:00:39.200 --> 1:00:42.120 able to reproduce the bare children. And so you're attracted 1:00:42.160 --> 1:00:45.920 to these supermodels not because they're so special, but because 1:00:46.360 --> 1:00:52.480 they meet all of the subconscious, instinctual inditia of health 1:00:52.480 --> 1:00:55.160 and the ability to procreate. And I don't know how 1:00:55.200 --> 1:00:57.800 solid the science is behind that, but I just love 1:00:57.880 --> 1:01:01.520 that rationalization. It makes so much sense along the signaling 1:01:01.560 --> 1:01:04.000 of the watches and all that other stuff. It really, 1:01:04.320 --> 1:01:08.000 when you put things in terms of evolutionary biology, suddenly 1:01:08.040 --> 1:01:12.160 a lot of irrational behavior starts to look less irrational. Yeah, 1:01:12.200 --> 1:01:14.600 it becomes highly irrational when you think about how important 1:01:14.640 --> 1:01:17.560 it is um that the next generation be better. That's, 1:01:17.800 --> 1:01:20.880 you know, Darwin, whatever you call it, the looks, what 1:01:20.880 --> 1:01:23.120 we're attracting this looks. I do think it bifurcates, though 1:01:23.120 --> 1:01:26.240 I think there's basics. Certain types of looks are more 1:01:26.280 --> 1:01:29.400 associated with infection or disease, and we have veered away 1:01:29.400 --> 1:01:32.240 from people who have those common characteristics, and I'm always 1:01:32.240 --> 1:01:34.680 worried I'm gonna I'm gonna say something off color here, 1:01:34.680 --> 1:01:36.120 and that's the quick end of my career, so I 1:01:36.160 --> 1:01:38.880 won't say what those things typically are. The second thing, though, 1:01:38.880 --> 1:01:40.640 I do think, is man made, and that I think 1:01:40.760 --> 1:01:43.560 clothes look better on people who are built like hangers, 1:01:43.560 --> 1:01:47.920 who are unutually thin, and because great organizations like Vogue 1:01:47.960 --> 1:01:50.760 have consistently wanted to make clothes look fantastic, I think 1:01:50.800 --> 1:01:54.200 there has been a man made, a man made training 1:01:54.240 --> 1:01:57.439 towards some unnatural body types. It's not like the days 1:01:57.520 --> 1:02:01.720 of of the Rubenesque window, which when Rubenesque women, which 1:02:01.720 --> 1:02:04.280 were a signal of wealth that you can actually you 1:02:04.320 --> 1:02:07.800 could be a little overweights, which signaled hey I have more. 1:02:09.040 --> 1:02:11.120 You know, I'm a cross fitter. I don't know if 1:02:11.080 --> 1:02:14.160 I've become one of these cross flash Yeah, there you go. Actually, 1:02:14.160 --> 1:02:15.520 my knees are killing me, but I think that's more 1:02:15.560 --> 1:02:18.080 function my age. But anyways, I think they tapped in. 1:02:18.200 --> 1:02:20.800 I think they tapped into this underserved marketplace, and that 1:02:20.840 --> 1:02:23.480 as women who don't necessarily want to be thin. If 1:02:23.480 --> 1:02:26.760 you look at the the the the workout industrial complex, 1:02:26.800 --> 1:02:28.840 it says to guys be ripped and be big, and 1:02:28.960 --> 1:02:30.960 I don't think that's always healthy, but I think there's 1:02:31.000 --> 1:02:32.800 benefits to being strong. But I think what it says 1:02:32.840 --> 1:02:36.120 to women is being naturally thin, and I think that's unhealthy. 1:02:36.160 --> 1:02:38.920 Won't cross fit, by the way six cross fitters or 1:02:38.960 --> 1:02:41.800 women has said to women is be strong and being 1:02:41.840 --> 1:02:43.640 strong as women can mean that you can be five 1:02:43.680 --> 1:02:46.160 five fifty pounds and you can still be really strong, 1:02:46.200 --> 1:02:49.240 and it's celebrated that and it has tapped into this 1:02:49.480 --> 1:02:53.840 wildly underserved population of women who are normal and strong. 1:02:54.120 --> 1:02:58.200 Did you see the Times article about the new um 1:02:58.400 --> 1:03:01.920 brands of cross fit? Close was so women who do 1:03:02.120 --> 1:03:05.160 cross fit they can't wear off the rack clothes if 1:03:05.160 --> 1:03:07.680 you're doing it strong enough, So you have these big 1:03:07.760 --> 1:03:11.040 muscular thighs and you're a little ripped on the shoulders 1:03:11.040 --> 1:03:14.360 and arms. Traditional women's clothes don't fit. I think it 1:03:14.440 --> 1:03:16.760 was the New York Times, but Wolf Jennal, I want 1:03:16.760 --> 1:03:20.320 to say Times about this whole new run of clothes 1:03:20.800 --> 1:03:24.640 that are designed for the CrossFit female body and women. 1:03:24.680 --> 1:03:26.720 It was invented by a woman who was a cross 1:03:26.720 --> 1:03:31.680 fit enthusiast, and it's become wildly successful. A real solid 1:03:31.760 --> 1:03:37.200 cross fitter female goes to the regular department store. Well, 1:03:37.200 --> 1:03:39.240 you're starting to talk about one that one of the 1:03:39.240 --> 1:03:41.480 best returns in retail have been plus size clothing. But 1:03:41.520 --> 1:03:45.080 you're also starting to uh segueing into something that's a 1:03:45.160 --> 1:03:47.720 tectonic shift in the world of retail. And one of 1:03:47.720 --> 1:03:50.480 the reasons why I think Nike is just gonna boom, 1:03:51.560 --> 1:03:55.560 Oh my gosh, what is athletic apparel? Or We've had 1:03:55.560 --> 1:03:58.040 a tectonic shift in the third largest consumer market in 1:03:58.080 --> 1:03:59.600 the world, and that US. For the first time ever 1:04:00.000 --> 1:04:02.080 in two thousand and fourteen, people are spending more money 1:04:02.080 --> 1:04:06.400 on sweatpants than on denim. You now see the denim 1:04:06.920 --> 1:04:10.080 the denim generation. But year olds in my office are 1:04:10.120 --> 1:04:13.160 not wearing Rachel Strugrats, the technology reporter for w w D, 1:04:13.360 --> 1:04:15.280 very fashionable woman. You know what she wears every day? 1:04:15.320 --> 1:04:18.160 Head to tell Nike. Really, people are spending more and 1:04:18.200 --> 1:04:21.440 more money that most the most the most popular brand 1:04:21.520 --> 1:04:25.680 among young wealthy millennials is Nike in apparel. People are 1:04:25.680 --> 1:04:28.400 showing up to work. The fabrics. It doesn't it's not 1:04:28.440 --> 1:04:30.640 just a bad pair of sweatpants. It says juicy on them, 1:04:30.640 --> 1:04:34.320 but these are interesting fabrics that look good. You're going 1:04:34.400 --> 1:04:41.040 to see athletic wear boom under armor Nike, they are 1:04:41.040 --> 1:04:43.760 gonna They're gonna boom the next ten years. And it's 1:04:43.800 --> 1:04:46.520 gonna be and and God help Leavi Strauss and Company, 1:04:46.640 --> 1:04:50.800 diesel Um any denim based company is going to be 1:04:50.960 --> 1:04:53.000 is going to be pushing a rock uphill the next time. Well, 1:04:53.000 --> 1:04:56.720 there's clearly far too many denim companies before this happened. 1:04:57.080 --> 1:04:58.680 Now that this is gonna happen, it will be interesting 1:04:58.720 --> 1:05:02.720 to see what sort of what sort of consolidation there is. 1:05:02.960 --> 1:05:07.480 So so let's talk about another UM signal out there, Twitter, 1:05:07.760 --> 1:05:10.520 Twitter followers, etcetera. You know, I may be a little 1:05:10.520 --> 1:05:13.080 ovo weight, but I got seventy Twitter followers, so I 1:05:13.160 --> 1:05:15.720 think that's worth thirty pounds or so. I could lose 1:05:15.720 --> 1:05:20.400 thirty pounds or um. But you've talked about how far 1:05:20.640 --> 1:05:24.880 Twitter is behind Facebook, and again for you and I 1:05:24.880 --> 1:05:26.959 I would bet you're much more of a Twitter user 1:05:27.000 --> 1:05:28.640 than you are a Facebook. Yeah, you and I were 1:05:28.640 --> 1:05:31.160 talking about this. Uh, you and I don't get Facebook. 1:05:31.160 --> 1:05:33.760 I would like to put a banner across my Facebook 1:05:33.760 --> 1:05:36.400 page that says there's a reason we haven't stayed in touch. 1:05:36.640 --> 1:05:39.080 I just don't like it. I don't get it. But 1:05:39.120 --> 1:05:43.040 as you don't care about your baby's doesn't interest done. 1:05:43.320 --> 1:05:45.280 It's but as Yoda said, you have to forget what 1:05:45.400 --> 1:05:47.520 you know. If you look at the numbers, Facebook's the 1:05:47.520 --> 1:05:50.800 most successful product in the history mankind. That's lessful than God, 1:05:50.920 --> 1:05:53.760 all a, Coca Cola, communism, whatever you want to call it, 1:05:53.760 --> 1:05:57.360 as relationships, meaningful relationships with two point four billion people 1:05:57.400 --> 1:06:01.040 across Instagram? What's happened Facebook? Anyways? Twitter? My basic rap 1:06:01.160 --> 1:06:03.800 is on Twitter, and I love Twitter, no doubt. It's 1:06:03.800 --> 1:06:06.240 a great company, no doubt. I think they've got a 1:06:06.240 --> 1:06:08.600 great management team. The question is are they worth worth 1:06:08.640 --> 1:06:12.040 more than coach Tiffany and and you know, throwing Abercrombie 1:06:12.120 --> 1:06:14.800 or Clorox combined. I just think it's wildly overvalued. And 1:06:14.840 --> 1:06:16.400 if you look at the user base, it appears to 1:06:16.440 --> 1:06:19.640 a flatline. And I would argue that their product innovation 1:06:19.880 --> 1:06:23.560 hasn't been nearly as robust as facebooks or even seen 1:06:23.560 --> 1:06:26.160 a way about. We tend to, as Americans, think of 1:06:26.200 --> 1:06:28.360 ourselves as being the home of innovation. Actually, if you 1:06:28.360 --> 1:06:30.040 look at the product roadmap of a lot of the 1:06:30.080 --> 1:06:32.600 social media platforms in Asia, we chat seen a way 1:06:32.600 --> 1:06:38.200 about Cow Cow talk line in um UH, South Korea 1:06:38.200 --> 1:06:41.360 and Japan, respectively, their product roadmap is actually more innovative 1:06:41.400 --> 1:06:43.600 than what we're seeing here. But I don't think Twitter, 1:06:43.640 --> 1:06:45.680 quite frankly, is innovated. And and if you look about 1:06:47.880 --> 1:06:52.280 we'll see that's exciting. Um I'm hedging because quite frankly, 1:06:52.360 --> 1:06:54.440 I don't know a lot about it. I think it's exciting. 1:06:54.480 --> 1:06:56.840 Real time partner loves it, uses it all the time. 1:06:57.440 --> 1:06:59.080 He's on the air a couple of a couple of 1:06:59.120 --> 1:07:01.880 days a week, and he'll pull up periscope. I have 1:07:01.920 --> 1:07:03.520 it on my phone. I have yet to set it up. 1:07:03.800 --> 1:07:05.600 He'll pull up periscope and say, all right, we're about 1:07:05.640 --> 1:07:07.560 to go on the air. He'll do a quick once 1:07:07.600 --> 1:07:10.880 around the studio and then bang, that's it and he 1:07:10.920 --> 1:07:13.640 gets real time back and forth. Another one you just mentioned. 1:07:13.640 --> 1:07:15.720 We're sitting here in Bloomberg and we're seeing all these screens, 1:07:15.720 --> 1:07:18.040 these these headlines come across these big beautiful screens, and 1:07:18.040 --> 1:07:20.200 we just saw the Pinterest announces you can now purchase 1:07:20.240 --> 1:07:25.120 directly from pins. I think that if Instagram tomorrow releases 1:07:26.000 --> 1:07:34.280 Instagram uh and says look curated pages of specific topics 1:07:34.320 --> 1:07:37.040 that you can pin your images too. I think Pinterest 1:07:37.120 --> 1:07:39.600 is going to decline in value. I think Pinterest product 1:07:39.640 --> 1:07:42.640 development has been almost zero the last twenty four months 1:07:42.680 --> 1:07:45.240 and is wildly overvalued. Granted I said that they were 1:07:45.280 --> 1:07:48.800 at five billion. I think you have essentially social media 1:07:49.040 --> 1:07:51.120 is basically Facebook in the seven doors right now. I 1:07:51.160 --> 1:07:52.920 think you're gonna see Facebook. And we said this during 1:07:52.960 --> 1:07:54.520 the brig. I think Facebook is gonna be the most 1:07:54.600 --> 1:07:57.160 valuable company in the world within five years. Granted I 1:07:57.240 --> 1:07:58.800 said that five years ago. I was gonna say, I'd 1:07:58.800 --> 1:08:01.680 say ten years. It might take longer. I said it 1:08:01.760 --> 1:08:03.640 five years ago. The Facebook was going to become the 1:08:03.640 --> 1:08:06.440 Internet of all time. Online is spent on Facebook. It 1:08:06.480 --> 1:08:08.920 goes to fifty one, and the Internet just the underlying technology, 1:08:08.920 --> 1:08:11.440 and Facebook is the Internet. But when you look at 1:08:11.520 --> 1:08:14.520 two and a half billion people, meaningful relationships dominating the 1:08:14.520 --> 1:08:17.040 funnel up and down, I just think they're an unbelievable 1:08:17.080 --> 1:08:19.080 jargonaut and they're gonna start to take share from Google 1:08:19.120 --> 1:08:22.840 and every other social media platform including Twitter. See that's 1:08:22.880 --> 1:08:26.000 really fascinating. Some of their advertising stuff. It's going to 1:08:26.080 --> 1:08:29.439 be interesting to see how they integrated because they have 1:08:29.560 --> 1:08:33.960 the ability to do wondrous things. They're a b testing 1:08:34.040 --> 1:08:35.720 and I don't know if we'll get to that. Will 1:08:35.760 --> 1:08:38.240 will circle back later about that. But some of the 1:08:38.280 --> 1:08:41.719 things I've been seeing that they do and hearing about 1:08:41.760 --> 1:08:45.000 that they do are astonishing. And I don't know how 1:08:45.120 --> 1:08:48.360 other marketers slash advotarser is going to be able to 1:08:48.439 --> 1:08:52.280 match the infrastructure because they have more you. You alluded 1:08:52.320 --> 1:08:56.000 to this earlier. They have so much information about you, 1:08:56.320 --> 1:08:58.479 who you are, what you do, you know. I love 1:08:58.520 --> 1:09:01.440 the story and this is way maybe there's some competition 1:09:01.479 --> 1:09:06.160 with Facebook. I love the story about target marketing to 1:09:06.320 --> 1:09:09.160 the pregnant d and dad goes into the store and 1:09:09.240 --> 1:09:11.080 yells at the manager and how dare you? You know, 1:09:11.720 --> 1:09:13.599 grows the paper, how dare you do this? And then 1:09:13.640 --> 1:09:17.480 a month later shows up to apologize, Hey, guys, we're right. 1:09:17.760 --> 1:09:20.120 Based on what her purchase history is through her credit card, 1:09:20.120 --> 1:09:23.479 they can track her. If other retailers can do that, 1:09:23.920 --> 1:09:27.280 do they stand a chance against Facebook? Or is it 1:09:27.320 --> 1:09:29.840 going to be Facebook and everybody else? So I think 1:09:29.880 --> 1:09:31.640 that's I think it's apples and oranges. I don't think 1:09:31.640 --> 1:09:33.639 facebooks in the retail business. As a matter of fact, 1:09:33.680 --> 1:09:36.680 social commerce has been one of the biggest head fix 1:09:36.760 --> 1:09:38.840 in business the last five years. There were what do 1:09:38.840 --> 1:09:40.920 you mean by that, well, a bunch of retailers in 1:09:40.960 --> 1:09:44.000 two thousand and twelve about seventeen retailers that whe track 1:09:44.120 --> 1:09:49.559 open stores. On Facebook you could buy something. There were 1:09:49.600 --> 1:09:52.400 three Social When you're at a bar, you don't want 1:09:52.400 --> 1:09:54.240 to buy. When you're looking taking your friends, you don't 1:09:54.240 --> 1:09:57.040 want to buy. But it doesn't matter it even if, 1:09:57.040 --> 1:10:01.479 even if these aren't platforms. Retail advertise is a huge market, 1:10:01.680 --> 1:10:03.640 and Facebook is going to start to take share and 1:10:03.720 --> 1:10:06.880 market cap from every other media vehicle in the world. 1:10:06.920 --> 1:10:09.080 They're gonna take it from ESPN, They're going to take 1:10:09.120 --> 1:10:11.639 it from w PP, They're gonna take it from pinterest. 1:10:12.240 --> 1:10:13.920 This is back to the notion of a winner take 1:10:13.960 --> 1:10:17.040 all economy. But you have top of the funnel with Instagram, 1:10:17.240 --> 1:10:19.280 would you could argue is already the most powerful platform 1:10:19.280 --> 1:10:20.760 in the world if you look at the community size 1:10:20.800 --> 1:10:23.519 times the level of engagement that it inspires top of 1:10:23.520 --> 1:10:27.040 the funnel, brand based, image based awareness. Then with Facebook 1:10:27.080 --> 1:10:29.880 you have unbelievable targeting in the mid funnel at scale, 1:10:30.000 --> 1:10:32.160 and then at the bottom you have What's app, which 1:10:32.200 --> 1:10:34.280 by the way, is strong in every market that Facebook 1:10:34.439 --> 1:10:38.320 wasn't strong and right, it was very, very um complementary acquisition. 1:10:38.439 --> 1:10:41.120 They're jumping the silos. They're starting to figure out what 1:10:41.200 --> 1:10:43.559 images you're looking at on Instagram and then and then 1:10:43.600 --> 1:10:45.840 target you on Facebook with more relevant ads, and at 1:10:45.880 --> 1:10:47.759 some point they're gonna be able to target you locally 1:10:47.760 --> 1:10:49.920 based on where you are on What's app. We have 1:10:50.080 --> 1:10:53.960 never seen, we have never seen anything like this. Very 1:10:54.040 --> 1:10:56.840 this is this is the most successful product in the 1:10:56.960 --> 1:11:00.080 history of mankind. It's nothing. It's a scene for a 1:11:00.160 --> 1:11:04.719 Minority report where where Tom Cruise walks into the store, 1:11:04.760 --> 1:11:06.639 they know who he is, they know what he's shopped at, 1:11:06.680 --> 1:11:11.200 the ads pop up specifically for him. Facebook is approaching 1:11:11.200 --> 1:11:13.360 that way. And look how smart they've been. Remember all 1:11:13.400 --> 1:11:16.400 the grief that everybody gave Mark Zuckerberg for buying Instagram 1:11:16.479 --> 1:11:18.559 nineteen people for a billion bucks. Now they say it's 1:11:18.560 --> 1:11:22.360 where billion dollars fantastic acquisition. Meanwhile, yeah, who goes and 1:11:22.360 --> 1:11:23.880 buy his tumber from one point one billion? And they 1:11:23.880 --> 1:11:26.320 never mentioned in earnings calls again, right, best acquisition in 1:11:26.439 --> 1:11:28.960 tech the last five years, Instagram, worst acquisition in tech 1:11:29.040 --> 1:11:33.240 the last five years, Tumbler, and then What's App perfectly 1:11:33.280 --> 1:11:36.200 complimentary every market they weren't strong, and this has been 1:11:37.040 --> 1:11:39.040 This has been the most nimble company in the world. 1:11:39.160 --> 1:11:41.720 Zero zero revenues from mobile thirty months ago, now two 1:11:41.760 --> 1:11:45.240 thirds of the revenue. And that's the huge shift once 1:11:45.240 --> 1:11:49.280 they cracked mobile, because I was skeptical about Facebook's valuation 1:11:49.800 --> 1:11:53.920 pre mobile, I did a reversal once they basically said, Hey, 1:11:53.960 --> 1:11:56.320 here's how much we're seeing and that was a huge, 1:11:56.360 --> 1:12:00.720 huge game change. Unbelievably nimble. Who's made better acquisition than Facebook, 1:12:00.800 --> 1:12:03.679 who's being able to retain talent better. They've also got 1:12:03.720 --> 1:12:07.200 the benefit of being seen as benign, so regulators aren't 1:12:07.240 --> 1:12:10.479 yet coming after them. Uh yeah, I think they made 1:12:10.479 --> 1:12:13.880 the most uh most valuable company in the world. That 1:12:13.880 --> 1:12:17.040 that's that's incredible. That's ah. We'll see if they can 1:12:17.120 --> 1:12:22.080 actually bypass Apple, And which raises the question how dependent 1:12:22.360 --> 1:12:25.320 is Apple on their next hit? I know that we've 1:12:25.320 --> 1:12:29.479 had a long run of really successful products. Are they 1:12:29.560 --> 1:12:32.920 a hit driven company or can they afford the watch 1:12:33.200 --> 1:12:36.880 the eye watch to be a little uh maybe not 1:12:37.640 --> 1:12:40.200 on iPhone or even an iPod for that matter. Yeah, 1:12:40.720 --> 1:12:42.680 I think they have their next hit product, and I 1:12:42.720 --> 1:12:44.479 don't think it's the watch. I think it's the iPhone 1:12:44.479 --> 1:12:47.360 sex Really, I don't know if you're an iPhone guy, 1:12:47.400 --> 1:12:49.800 But which one do you have? I got the six, 1:12:50.400 --> 1:12:53.559 My wife has the big one. The big one is 1:12:53.560 --> 1:12:56.200 too big to put in my pocket. She looked. Now, 1:12:56.280 --> 1:12:59.200 by the way, not a tech person like getting her 1:12:59.240 --> 1:13:04.120 to return voicemails like she texts. She she so totally 1:13:04.400 --> 1:13:07.679 loves this phone. It's easy to read, it does everything. 1:13:07.720 --> 1:13:10.720 It's the pictures, so she teaches a photography class. The 1:13:10.800 --> 1:13:15.360 pictures that you do on that phone are just just astonishing. Yeah, 1:13:15.840 --> 1:13:18.520 it does the Apple Watch. Is the Apple Watch successful? 1:13:18.560 --> 1:13:19.960 I think it is, but quite feely. I don't think 1:13:20.000 --> 1:13:22.800 it matters. I think the iPhone six is such an 1:13:22.800 --> 1:13:26.400 incredible product. And by the way, who loses Samsung? Oh 1:13:26.439 --> 1:13:28.960 my gosh, it's a Samsung killer. And you want to 1:13:28.960 --> 1:13:32.920 talk about Android. There were more Apple Watches sold on 1:13:32.960 --> 1:13:34.960 the first day of the Apple Watch and every Android 1:13:34.960 --> 1:13:38.240 device combined for the previous year. Really, Oh my gosh, 1:13:38.360 --> 1:13:41.240 that's unbelievable. Realized that Apple store on Fifth Avenue with 1:13:41.280 --> 1:13:42.920 the one below the General Motors building is going to 1:13:43.000 --> 1:13:44.840 do more sales in a year just that store than 1:13:44.880 --> 1:13:47.360 the entire wearables market. By the way, everybody thinks that 1:13:47.400 --> 1:13:50.200 the Apple watches evidence that the wearable's market is thriving. 1:13:50.280 --> 1:13:54.360 The wearables market is dead except for the Apple Watch. 1:13:54.400 --> 1:13:56.719 And the Apple Watch isn't a wearable. It's a second 1:13:56.760 --> 1:13:58.720 screen for your phone that's going to take all the 1:13:58.760 --> 1:14:02.639 discretionary income out of the wearable's market. Fit bit job 1:14:02.760 --> 1:14:07.400 on never going public, No way, the wearable's market is done. Aska. 1:14:07.479 --> 1:14:09.839 Anytime you're with a hundred people or more in an audience, 1:14:09.960 --> 1:14:12.080 how many people about a wearable? They all raise their hand. 1:14:12.120 --> 1:14:15.360 How many people are wearing a wearable? You got? What 1:14:15.400 --> 1:14:19.360 are you wearing? Which one you have? Um, it's okay. 1:14:19.840 --> 1:14:22.360 I don't love how poorly it sinks with the phone. 1:14:22.400 --> 1:14:24.960 Sometimes it does, sometimes it does in the battery last 1:14:25.000 --> 1:14:27.920 three days. I don't like the way this closes. If 1:14:27.960 --> 1:14:30.879 I have a better, if I I have zero brand loyalty, 1:14:30.880 --> 1:14:33.559 I've been using it because truth be told, I'm at 1:14:33.640 --> 1:14:35.840 nine thousand steps. Hey, I'm gonna make it to ten. 1:14:36.200 --> 1:14:38.200 And there are days when I'm doing fifteen and eighteen. 1:14:38.240 --> 1:14:40.439 And you know the only reason I'm not three hundred 1:14:40.479 --> 1:14:44.880 pounds is because I'm so I'm running around constantly what right. 1:14:44.920 --> 1:14:47.000 If it wasn't for that, I'd be a Macy's float 1:14:47.560 --> 1:14:51.679 um for Thanksgiving. But but, but I will tell you 1:14:52.040 --> 1:14:56.240 the fascinating thing about Apple and the phones is, you know, 1:14:56.280 --> 1:14:58.840 you see the Android market chair and how much Samsons 1:14:59.160 --> 1:15:04.240 Apple's capture about the profits in the phone space. For 1:15:04.280 --> 1:15:06.439 the first time in the history of South Korea or 1:15:06.479 --> 1:15:08.280 as long as it's been mobile phones, you're gonna have 1:15:08.320 --> 1:15:10.519 a mobile phone from a non domestic carry I have 1:15:10.520 --> 1:15:13.519 the number one market share, and that's the iPhone China 1:15:13.640 --> 1:15:15.479 never having before. It's Westman Samsung, which by the way, 1:15:15.520 --> 1:15:17.000 is a great company, and you can't count them out. 1:15:17.040 --> 1:15:19.040 I just think they're I mean, they're appliance as they 1:15:19.120 --> 1:15:22.479 do an amazing job. So diplomatic I work with all 1:15:22.520 --> 1:15:26.320 these guys anyway, So uh, but you look at the iPhone. 1:15:26.320 --> 1:15:28.519 There's gonna be more iPhone sold in China this year 1:15:28.920 --> 1:15:30.680 than in the US. And then just coming up in 1:15:30.720 --> 1:15:33.360 the elevator here, I realized the upgrade cycle has such 1:15:33.360 --> 1:15:35.840 traumatic potential because everyone has an iPhone, but they still 1:15:35.880 --> 1:15:40.880 have the five. So two things the iPhone, the successful 1:15:40.920 --> 1:15:42.920 migration to a luxury brand. Apple is going to be 1:15:42.960 --> 1:15:46.040 a trillion dollar market cab company. It you have never 1:15:46.120 --> 1:15:49.400 realized one of the core the core pieces of I 1:15:49.479 --> 1:15:51.840 P in the world of academia, Academias per Halla out 1:15:51.840 --> 1:15:54.519 of Chicago, this notion of core competents. Find one thing 1:15:54.560 --> 1:15:56.679 you're really good at, then do everything an industry standard. 1:15:56.680 --> 1:15:59.120 That's how the majority of great companies operated. What does 1:15:59.120 --> 1:16:01.240 an Apple's core comp prounced the best retailer in the 1:16:01.280 --> 1:16:04.200 world to the best retailer in the world, best store, 1:16:04.320 --> 1:16:07.320 the numbers on a square foot basis, there's nothing even 1:16:07.360 --> 1:16:09.120 close to it. There number one in retail in the 1:16:09.160 --> 1:16:11.599 world on a per square foot basis and five dollars 1:16:11.640 --> 1:16:14.080 per square foot. The number two is sifty at three thousand. 1:16:14.200 --> 1:16:18.479 There's a new number two warby Parker at about granted, 1:16:18.520 --> 1:16:23.479 small base, but what do they sells? But anyways, and 1:16:23.479 --> 1:16:26.639 then design, who's a better you know hardware? I mean 1:16:26.800 --> 1:16:29.599 this is a company with five or six core competence 1:16:29.680 --> 1:16:33.000 is it's blown out the traditional notions of a go 1:16:33.120 --> 1:16:35.800 to market strategy around business that we've ever had. We've 1:16:35.800 --> 1:16:38.799 never seen a company like this. Google has one public 1:16:38.800 --> 1:16:42.120 company search, Search and search right, nothing else could be 1:16:42.160 --> 1:16:45.960 taken public at Google. You probably have four to six 1:16:46.600 --> 1:16:51.479 fifty billion dollar plus companies within Apple that are distinct 1:16:51.520 --> 1:16:54.320 of each other. You know, iTunes could go public, the 1:16:54.439 --> 1:16:59.120 hardware company could go public. The iPhone you have so 1:16:59.160 --> 1:17:03.280 many company is operating on twelve cylinders in that company. 1:17:03.320 --> 1:17:06.599 We've never seen anything like that. It's amazing. So so 1:17:06.680 --> 1:17:09.280 let's there was a question I had for you about 1:17:09.320 --> 1:17:13.160 Apple earlier. How do you how do you compare Tim 1:17:13.240 --> 1:17:16.720 Cook to Steve Jobs? How good is Tim Cooked? He 1:17:16.840 --> 1:17:19.479 may be one of the most underrated CEOs in the country. 1:17:19.600 --> 1:17:22.080 I think he's I think it's fantastic. And you've run 1:17:22.080 --> 1:17:24.320 a company. I've run a company. You just see how 1:17:24.400 --> 1:17:28.360 damn hard it is to create value, and how and 1:17:28.640 --> 1:17:33.040 and and what both Steve Jobs, who has deservedly, you know, 1:17:33.120 --> 1:17:37.679 kind of attained icon status. Tim Cook, Oh my god, 1:17:37.720 --> 1:17:40.400 what unbelievably big shoes to fill. And he's slipped right 1:17:40.400 --> 1:17:43.960 into him. So every year one Buffett walkhings off for lunch. 1:17:44.080 --> 1:17:47.880 It goes for three or four million dollars. Tim Cook 1:17:47.960 --> 1:17:50.080 does one each year, and I was like, I would 1:17:50.120 --> 1:17:52.240 love to do that. I can't. I can't pass away 1:17:52.280 --> 1:17:55.719 two million dollars on lunch. You need that Ferrari, Right, Ferrari, 1:17:56.240 --> 1:17:58.320 it's two hundred thousand dollars. You can have lunch with 1:17:58.360 --> 1:18:02.280 Tim Cook to raise money for charity. How is that 1:18:02.360 --> 1:18:05.120 pop talk? That's what I mean by that's the most 1:18:05.240 --> 1:18:09.320 underrated CEO running the biggest company in the world. How 1:18:09.400 --> 1:18:12.639 is that not a million dollar lunch? Crazy? I'm gonna 1:18:12.640 --> 1:18:15.599 have lunch twice with them, crazy, great failure. That that's 1:18:15.600 --> 1:18:18.840 exactly right. Um. So we talked about design, design and 1:18:18.880 --> 1:18:21.640 brand with Apple, So what else do they need to 1:18:21.640 --> 1:18:25.720 do to move the needle? Or is there installed platform? 1:18:25.800 --> 1:18:28.920 Is there installed base so big that just that that 1:18:29.080 --> 1:18:31.120 upgrade cycle is enough to keep them going for a 1:18:31.160 --> 1:18:34.559 few years until the next hit comes along. My sense 1:18:34.640 --> 1:18:37.479 is between the watch, which is really a second screen 1:18:37.520 --> 1:18:39.280 for the phone, and anything you could do with the phone, 1:18:39.320 --> 1:18:43.000 whether it be you know, continue to approach on media. 1:18:43.040 --> 1:18:46.000 They announced their streaming service today. We'll see what happens 1:18:46.000 --> 1:18:49.120 with that. But there's so much opportunity there are there 1:18:49.160 --> 1:18:51.559 every every one of these companies and moving towards one place. 1:18:51.600 --> 1:18:54.080 They all want to be your global operating system hub 1:18:54.120 --> 1:18:57.120 I called gosh. They all want to control more time 1:18:57.320 --> 1:18:59.479 of your screen, time of your eyeballs, and your attention 1:18:59.520 --> 1:19:02.320 than any other firm, and Apples and probably the best 1:19:02.360 --> 1:19:04.760 position to do that among the people that matter most, 1:19:04.840 --> 1:19:07.439 and that's effectively higher income households. If you did a 1:19:07.520 --> 1:19:11.120 heat map of the iOS mobile system, it's basically a 1:19:11.120 --> 1:19:14.559 wealth map. If you're in Manhattan, you own uh, you 1:19:14.600 --> 1:19:18.680 own an iPhone and an iPad. If you're in on 1:19:18.720 --> 1:19:20.519 the island and some of the lower income areas, you're 1:19:20.560 --> 1:19:22.280 out of Jersey and some of them income areas, your 1:19:22.360 --> 1:19:26.640 Android and your PC. So Apple is effectively said and 1:19:26.720 --> 1:19:30.240 Apples tapping into this. They're getting in front of this wave. 1:19:30.280 --> 1:19:33.000 When we talk about unfortunately the wealthier aggregating more and 1:19:33.040 --> 1:19:36.080 more income. Apple only has what of a fifteen or 1:19:36.080 --> 1:19:39.200 tent market share, but they have share of mobile commerce 1:19:39.200 --> 1:19:41.160 because only wealthy people right now are shopping on their 1:19:41.200 --> 1:19:45.439 mobile phones. Wealthy people have iPhones. So who owns an iPhone? 1:19:45.880 --> 1:19:48.200 Everyone that matters. And when I say everyone that matters, 1:19:48.240 --> 1:19:50.280 I mean everyone that has a lot of disposing income 1:19:50.320 --> 1:19:52.639 and it is comfortable buying online and comfortable buying high 1:19:52.680 --> 1:19:55.760 margin products online. So I don't think I think all 1:19:55.800 --> 1:19:58.439 they need to do is keep improving the ecosystem for 1:19:58.479 --> 1:20:00.840 the iPhone and they're gonna add hundreds of billions of 1:20:00.880 --> 1:20:03.120 dollars in market cap. That's amazing. You know, in one 1:20:03.160 --> 1:20:06.240 of your videos, you show the heat map of operating 1:20:06.240 --> 1:20:10.000 system and exactly what you described, so you could see 1:20:11.479 --> 1:20:15.000 in Manhattan, Proper and Park Slope and and Morristown, in 1:20:15.040 --> 1:20:18.040 parts of Nasca County it's iPhone and all in the 1:20:18.080 --> 1:20:22.800 lower or or even middle income spaces, it was um 1:20:23.840 --> 1:20:26.960 the Android system. You also mentioned the purple areas that 1:20:27.000 --> 1:20:30.360 are Jurassic Park. Let's talk about that. Yeah, we infectionately 1:20:30.360 --> 1:20:33.880 called Midtown, which is purple lights up purple Jurassic Park. 1:20:33.920 --> 1:20:36.439 While with where all the dinosaurs with their blackberries are. 1:20:36.560 --> 1:20:39.080 And I don't know about you, but I missed my BlackBerry. 1:20:39.200 --> 1:20:42.800 I absolutely salivate when you didn't love the black hated it, 1:20:42.880 --> 1:20:46.160 hated it. And I'll tell you why, because my first 1:20:46.439 --> 1:20:48.760 the iPhone comes out and it was a T and 1:20:48.800 --> 1:20:51.000 T only, and I went and I got the iPhone 1:20:51.080 --> 1:20:55.960 and the first iPhone one was this beautiful, useless glass brick. 1:20:56.320 --> 1:20:59.479 It was just it was great unless you wanted to 1:20:59.520 --> 1:21:02.519 make up phone call. And back then, I supposedly a 1:21:02.560 --> 1:21:05.000 teen T is much better today, but back then it 1:21:05.040 --> 1:21:08.160 was utterly worthless in this part of area, a part 1:21:08.200 --> 1:21:10.839 of you know, New York and Essel County. You couldn't 1:21:10.840 --> 1:21:13.200 make a call within New York. State allows you thirty 1:21:13.280 --> 1:21:17.679 days to return a cellular country. So so the iPhone 1:21:17.680 --> 1:21:19.479 went back and I swapped it for a black beer. 1:21:20.240 --> 1:21:22.680 And for two or three years I used the BlackBerry, 1:21:22.960 --> 1:21:25.360 and I had the worst I'm a Mac guy since 1:21:25.400 --> 1:21:29.880 my classic, so I've been I've been a fanboy for 1:21:29.920 --> 1:21:33.920 a long time and I had the worst iPhone lust. 1:21:34.240 --> 1:21:37.920 But it was unusable for me, and I the whing 1:21:38.000 --> 1:21:45.720 m call it um. The basic concept of G, I 1:21:45.840 --> 1:21:49.479 really want this iPhone if only it would work for 1:21:49.520 --> 1:21:52.720 me was really really you know, frustrating. And then when 1:21:52.840 --> 1:21:56.080 finally it showed up on Verizon, that was it. It 1:21:56.120 --> 1:21:59.439 was get rid of the BlackBerry. Every time I used 1:21:59.439 --> 1:22:02.920 the BlackBerry was just reminded that it wasn't an iPhone. 1:22:03.040 --> 1:22:06.000 It was very, very frustrating. Yeah, it's it's it's been. 1:22:07.200 --> 1:22:09.439 I'm still I'm still envious of people who have their 1:22:09.439 --> 1:22:12.360 black but I missed the tactile keys. But talk about 1:22:12.439 --> 1:22:16.519 what's interesting is basically, in a two percent global growth economy, 1:22:16.560 --> 1:22:19.080 when a company's increasing market cap, the way Apple, it's 1:22:19.120 --> 1:22:21.120 increasing market cap. The question is, well, who's on the 1:22:21.160 --> 1:22:23.120 losing end of that? And we know they basically sucked 1:22:23.160 --> 1:22:25.799 all the all the all the life in the blood 1:22:25.840 --> 1:22:27.840 out of Rim. They're doing the same thing to HP. 1:22:28.000 --> 1:22:30.200 They're about to do the same thing to Samsung. The 1:22:30.320 --> 1:22:33.240 question is who's next. I think Apple is going to 1:22:33.280 --> 1:22:35.479 start to suck market cap out of the LVMH and 1:22:35.520 --> 1:22:38.280 carrying to the world in the j cruise of the 1:22:38.280 --> 1:22:41.240 world because there's only so much disposable income in the 1:22:41.280 --> 1:22:43.679 ecosystem to go to products that costs between three hundred 1:22:43.720 --> 1:22:46.640 and a thousand dollars and teen retailers who have been 1:22:46.720 --> 1:22:49.800 wrecked the last five years from a stock market perspective, 1:22:49.920 --> 1:22:51.840 staring at the navel is the product problems with the 1:22:51.880 --> 1:22:54.519 brand problems of a brand problems prodctblem, it's neither. It's 1:22:54.520 --> 1:22:57.120 an Apple problem. And that kids are now expressing their 1:22:57.160 --> 1:23:01.479 identity through their phone specifically there Apple phone, specifically there 1:23:01.479 --> 1:23:04.960 I found versus a hoodie. The hoodie, So the Abercromis 1:23:04.960 --> 1:23:06.880 of the world are no longer it. So let me 1:23:06.880 --> 1:23:09.280 show you why I don't really care about the BlackBerry 1:23:09.320 --> 1:23:15.240 anymore so. The speech to text feature which was awful 1:23:15.840 --> 1:23:19.720 in the first year and then was pretty good in 1:23:19.760 --> 1:23:23.840 the second year. Take a read of what I just did. 1:23:24.400 --> 1:23:28.240 It's picture perfect. It's letter for perfect. I hardly type 1:23:28.240 --> 1:23:33.000 anymore unless I'm on the subway, so it requires connectivity 1:23:33.000 --> 1:23:36.040 because it's basically checking. It takes what I say, it 1:23:36.080 --> 1:23:39.800 converts it to a formula to math, essentially sends it 1:23:39.880 --> 1:23:42.640 up to the cloud, brings it back down, compares it 1:23:42.640 --> 1:23:47.080 against a bajillion versions of this, finds out exactly what 1:23:47.439 --> 1:23:52.320 I'm saying, and the quality is it's so much better, 1:23:53.120 --> 1:23:58.000 um than it was. It's pretty usable. Typing on glass 1:23:58.040 --> 1:24:01.599 not my favorite thing, isn't it's it's I will say 1:24:01.640 --> 1:24:04.400 that the android, this thing where you can just sort 1:24:04.400 --> 1:24:07.120 of drag your fingers around. I think it is superior 1:24:07.160 --> 1:24:12.320 than the individual. But the the text dictation is now 1:24:12.439 --> 1:24:15.000 so accurate. The only problem is it's a different part 1:24:15.040 --> 1:24:17.360 of your brain to speak than to write. I find 1:24:17.400 --> 1:24:19.360 what I write is much better than what I say 1:24:19.960 --> 1:24:22.800 because it's a different lobe. Yeah, that's well. Look at 1:24:22.800 --> 1:24:25.560 the stories of different wornucks area, broke as area, the 1:24:25.560 --> 1:24:28.840 different aphasias. People who lose the ability to speak but 1:24:28.960 --> 1:24:31.880 can sing or can't read but can write. They just 1:24:31.920 --> 1:24:34.839 can't read back what they wrote. That sort of stuff 1:24:34.880 --> 1:24:38.320 is really fascinating to me. And look, when I wrote 1:24:38.360 --> 1:24:40.519 my first book, I thought, I'll just dictate, it'll take 1:24:40.560 --> 1:24:43.080 no time at all, and suddenly I discover, oh no, 1:24:43.200 --> 1:24:46.320 that's a very different part of it's a very different 1:24:46.360 --> 1:24:48.439 part of the brain, and it doesn't work nearly as well. 1:24:48.680 --> 1:24:51.120 If I write something out and then integrate it into 1:24:51.160 --> 1:24:55.360 my speaking process, it sounds much better than when I'm 1:24:55.400 --> 1:24:58.400 just what does that quote? If I'd had more time, 1:24:58.439 --> 1:25:01.439 I would have That's the thing about writing. I do 1:25:01.520 --> 1:25:03.479 think you try harder and you're more thoughtful about what 1:25:03.520 --> 1:25:06.080 you're actually communicating. So we never got to talk about 1:25:06.080 --> 1:25:09.200 the fifth Horsemen. Let's let's talk about that a little bit. 1:25:09.560 --> 1:25:11.240 So what we attempted to do is look at what 1:25:11.280 --> 1:25:14.240 are the common the underpinnings of the four horsemen that's 1:25:14.320 --> 1:25:16.760 enabled them to build these multi hundred billion dollar market 1:25:16.800 --> 1:25:19.599 cap companies. And we found several things. One a truly 1:25:19.600 --> 1:25:22.920 differentiated product, I mean something that's surrounded by IP that 1:25:22.960 --> 1:25:26.120 you couldn't replicate easily. You couldn't replicate Google Search Engine easily. 1:25:26.120 --> 1:25:29.720 You cannot replicate the phone, iPhone easily. You can replicate 1:25:29.760 --> 1:25:35.240 Facebook's primary platform's I mean these are protected really unbelievably 1:25:35.280 --> 1:25:38.880 differentiated products. Then visionary capital and that as someone with 1:25:38.920 --> 1:25:41.040 a big vision of Jeff Bezos has said We're going 1:25:41.080 --> 1:25:43.160 to be the world's biggest retailer. And then some progress 1:25:43.160 --> 1:25:45.840 against that vision that allows them to access capital at 1:25:46.000 --> 1:25:49.080 such a low cost that they can launch a phone, 1:25:49.200 --> 1:25:50.880 spend a couple of billion bucks on it, have to 1:25:50.960 --> 1:25:53.720 be a dud, and it doesn't really matter. They can 1:25:53.760 --> 1:25:56.400 have so much capital to go play in traffic and innovate. 1:25:56.840 --> 1:26:00.200 I think control of the end user experience vertical than 1:26:00.840 --> 1:26:03.759 luxury products are now sold through control channels. Your ability 1:26:03.800 --> 1:26:06.280 to control the end used product and have your brand 1:26:06.280 --> 1:26:09.200 be in front of the consumer is really powerful vanity 1:26:09.560 --> 1:26:12.439 uh self expressive benefit of brand that people want to 1:26:12.479 --> 1:26:16.000 associate with. So there's all these different factors. Maternal the 1:26:16.320 --> 1:26:18.839 companies have outed the most market cap, treat their employees 1:26:18.920 --> 1:26:20.760 really well, they're great places to work. So if you 1:26:20.840 --> 1:26:23.519 dook all those things and applied them to a bunch 1:26:23.520 --> 1:26:26.479 of great companies, who comes up as potentially could be 1:26:26.880 --> 1:26:29.519 the next big big thing. And some of the companies 1:26:29.600 --> 1:26:32.000 we came up with that have some potential. We talked 1:26:32.000 --> 1:26:34.799 about a couple of them. Nike has a lot of potential. 1:26:35.360 --> 1:26:37.680 I think Ali Baba when you look at six of 1:26:37.760 --> 1:26:41.040 all packages being shipped through China are coming from Ali Baba. 1:26:41.040 --> 1:26:43.839 When you get the product roadmap, you have a company 1:26:43.880 --> 1:26:46.320 that you know, is that kind of the best digital 1:26:46.400 --> 1:26:48.280 company in the fastest screen market in the world. That's 1:26:48.280 --> 1:26:51.120 a pretty good combination. A company that most people might 1:26:51.160 --> 1:26:53.439 not think of as potentially being in that same breath, 1:26:53.439 --> 1:26:56.200 but I think it's an amazing company. Is Starbucks? What 1:26:56.280 --> 1:26:59.240 are the twenties something thousand stores now? Two stores opened 1:26:59.240 --> 1:27:02.719 every day for the last seven years. Also, I would 1:27:02.800 --> 1:27:06.040 argue a technology company that serves hor beverages, the largest 1:27:06.040 --> 1:27:09.160 mobile payments company in the world. You have that. You 1:27:09.200 --> 1:27:12.439 have a Starbucks app one five One in five dollars 1:27:12.560 --> 1:27:16.080 go through the mobile app. Now, that's unbelievable, more successful 1:27:16.120 --> 1:27:18.200 than I've been using it for god knows how long. 1:27:18.920 --> 1:27:23.000 It's flawless, more than any other company in the world 1:27:23.080 --> 1:27:26.760 right now, and also incredibly maternal. They spend more money 1:27:26.800 --> 1:27:31.120 on employee benefits and they spend on coffee beings fantastic 1:27:31.520 --> 1:27:35.240 and not nine dollars and twenty three cents average order value. 1:27:35.240 --> 1:27:36.800 If they can figure out a way to get into 1:27:36.840 --> 1:27:38.760 food or into other things and get to twenty or 1:27:38.760 --> 1:27:42.080 thirty bucks transaction, you're probably looking at a company that's 1:27:42.080 --> 1:27:44.920 three to five billion dollar market cat. Starbucks is an 1:27:45.080 --> 1:27:50.160 unbelievable company that has had, in my opinion, just made 1:27:50.680 --> 1:27:52.680 we haveventimes sit with comes and say, well, we're not 1:27:52.760 --> 1:27:54.479 a tech company. Were apparent we're never going to be 1:27:54.479 --> 1:27:57.000 a tech I'm saying, if Starbucks can be a tech company, 1:27:57.080 --> 1:27:59.240 or can use technology to drive tens of billions of 1:27:59.240 --> 1:28:02.639 dollars in market appitalization, what's your excuse? No one would 1:28:02.640 --> 1:28:04.599 say of Starbucks as a tech company. Yeah, they are. 1:28:04.760 --> 1:28:07.600 That's how they've had it, tens of billions of dollars 1:28:07.600 --> 1:28:10.040 in market cap, the number one company or the company 1:28:10.080 --> 1:28:12.719 based on what i'll call the subjective algorithm we've applied 1:28:12.760 --> 1:28:15.280 against it. In my view, if I was to say, okay, 1:28:15.280 --> 1:28:17.200 what company now is trading at less than a hundred 1:28:17.240 --> 1:28:19.200 billion dollars but could be worth three to five d 1:28:19.240 --> 1:28:21.240 billon dollars in five to ten years, I would pick Uber. 1:28:21.960 --> 1:28:24.639 I think it's become the vascular system for business. We've 1:28:24.640 --> 1:28:28.480 never seen anything like that. It's it's adopted this strategy. 1:28:28.520 --> 1:28:30.280 When you look at the other things companies have had 1:28:30.280 --> 1:28:32.320 in common that have added hundreds of billions of dollars 1:28:32.360 --> 1:28:34.280 in market capit last few years, it is their parasites, 1:28:34.360 --> 1:28:37.559 and that is they're they're feeding off another organism. Someone 1:28:37.640 --> 1:28:40.440 else is creating the content. You create the content for Facebook, 1:28:40.640 --> 1:28:45.400 we create the content for Google. Uber is basically fed 1:28:45.640 --> 1:28:50.040 x ups without unions, without cap X. They buy their 1:28:50.080 --> 1:28:53.240 own car, without a uniform, without the right to strike, 1:28:53.760 --> 1:28:58.000 flexible labor meaning cheap labor. It's sort of a it's 1:28:58.040 --> 1:29:02.400 an a ran Darwinian dream from a shareholder standpoint. Uh, 1:29:02.439 --> 1:29:04.919 and they could potentially get into all sorts of businesses. 1:29:05.000 --> 1:29:07.799 I don't think Uber is a private drive, a private 1:29:07.800 --> 1:29:11.080 car company. I think Uber is effectively a last mass 1:29:11.160 --> 1:29:15.040 solution for millions of businesses that all are struggling with 1:29:15.120 --> 1:29:19.559 last mile That's fascinating. Way do you put Netflix into 1:29:19.600 --> 1:29:22.360 that ecosystem? Unbelievable company, I mean, but it's already it's 1:29:22.360 --> 1:29:27.680 already almost there. Right. What will be interesting is it's 1:29:27.720 --> 1:29:30.160 a great lesson and it's something that my industry we 1:29:30.240 --> 1:29:32.439 failed to learn that If you want to understand how 1:29:32.479 --> 1:29:35.240 likely you are to be disrupted. It's pretty easy. You 1:29:35.320 --> 1:29:37.960 just look at what is our prices relative to inflation, 1:29:38.280 --> 1:29:40.120 you know, and if our prices have gone way more 1:29:40.120 --> 1:29:44.679 inflation and there's no underlying innovation, Cable massive price increases, 1:29:44.680 --> 1:29:48.639 no innovation, everybody gets into it. Netflix, Uh, my senses 1:29:49.160 --> 1:29:51.000 could be one of those company. The thing that's scary 1:29:51.000 --> 1:29:54.120 about Netflix is the dumb pipe of cable riders. They 1:29:54.160 --> 1:29:57.120 still have a lot of power, and so even with 1:29:57.160 --> 1:30:01.080 net neutrality more or less passing, but there new FCC rules, 1:30:01.120 --> 1:30:03.840 but they still own the pipe. Yeah, they still own 1:30:03.840 --> 1:30:07.880 the pipe, right, so they can raise prices, I know. 1:30:08.560 --> 1:30:12.080 So I wonder if Netflix, Netflix, in my opinion, has 1:30:12.160 --> 1:30:14.759 one big hurdle that the other guys, the four Horsemen, 1:30:14.760 --> 1:30:17.080 don't happen to. That is they are not totally vertical. 1:30:17.120 --> 1:30:20.040 They don't control their distribution. They still have to go 1:30:20.080 --> 1:30:22.920 through someone else's pipe. By the way, how familiar are 1:30:22.920 --> 1:30:25.519 you with the history of of the Apple stores, since 1:30:25.560 --> 1:30:28.800 you're talking about controlling the vertical you you just made 1:30:28.800 --> 1:30:33.280 me think of something from back in the when it 1:30:33.320 --> 1:30:36.040 looked like Apple wasn't gonna survive. Are you are you 1:30:36.080 --> 1:30:39.639 plugged into the best buy Apple story? I'm not so. 1:30:39.760 --> 1:30:43.799 The first Apple stores were this ghetto in the corner 1:30:43.800 --> 1:30:48.799 of the PC section of Best Buy, because um, Apple 1:30:48.880 --> 1:30:52.599 had a real hard time getting people to pay more 1:30:52.640 --> 1:30:56.160 money for computers that the staff wasn't really all that 1:30:56.280 --> 1:30:59.320 familiar with. Everybody knew how to sell a Windows machine, 1:30:59.360 --> 1:31:02.240 everybody know how to sell a Compact or an HP, 1:31:02.800 --> 1:31:04.680 and so Apple cut a deal with best Buy. They 1:31:04.720 --> 1:31:08.080 set up these little I called them the Apple Ghetto 1:31:08.160 --> 1:31:10.639 the Mac Ghetto, and so it was four or five machines, 1:31:10.680 --> 1:31:12.760 some of which works, some of which were hooked up 1:31:12.760 --> 1:31:16.479 in properly, they were dusty, It was just ignored. And 1:31:16.560 --> 1:31:19.439 my thesis is that Steve Jobs walked into one of 1:31:19.479 --> 1:31:24.200 these places and said, you know what, making a gesture 1:31:24.280 --> 1:31:26.920 that we can't discuss here, and said, I'm gonna do 1:31:27.000 --> 1:31:31.320 it myself, and I'm tired of being dependent on these, 1:31:31.360 --> 1:31:34.559 you know, retail bumbs who don't want to sell my product. 1:31:34.600 --> 1:31:37.280 But what you're describing as the evolutional luxury in general, 1:31:37.360 --> 1:31:40.120 because effectively you had Rolex or you had Vitan. As 1:31:40.120 --> 1:31:44.640 a better example, Toner Gucci going into Bullocks or Macy's 1:31:44.680 --> 1:31:46.240 and saying, you know, they do a good job and 1:31:46.280 --> 1:31:47.960 not a great job. So I'm gonna start opening my 1:31:48.000 --> 1:31:50.800 own stores. So when did the Coach stores open up? 1:31:50.800 --> 1:31:53.120 When did the Louis Vuitton stores open up? Well, Coach 1:31:53.160 --> 1:31:55.880 has been has had more control their distribution, although sort 1:31:55.880 --> 1:31:57.720 of the dirty secret of Coaches at the majority of 1:31:57.720 --> 1:32:00.439 the retail sales come to their outlets, the majority of 1:32:00.479 --> 1:32:04.280 their profits. But and their outlets isn't the same stuff 1:32:04.320 --> 1:32:06.559 that's in the I believe it's custom product at a 1:32:06.560 --> 1:32:08.240 lower price point. And there's a lot of brands that 1:32:08.280 --> 1:32:10.519 do that. It's just trying to bandage that balance. But 1:32:10.600 --> 1:32:12.519 with luxury where you have last years for the first 1:32:12.560 --> 1:32:15.080 time more luxury goods are controlled, are sold through controlled 1:32:15.200 --> 1:32:17.680 vertical channels. If the way to summarize it as a 1:32:17.760 --> 1:32:20.680 brand building has moved from broadcast in other words, pre 1:32:20.840 --> 1:32:24.120 purchased advertising, PARNT trade shows. It's moved from there in 1:32:24.200 --> 1:32:26.439 terms of effectiveness to the store. And the guy that 1:32:26.520 --> 1:32:28.680 discovered that and created tens of billions of dollars in 1:32:28.760 --> 1:32:33.920 value for shareholders is Mickey Drag Slour absolutely largest apparel 1:32:33.960 --> 1:32:37.120 company in the world by Stouston Company at seven billion. 1:32:37.160 --> 1:32:40.639 Basic model was best advertising the world. Then stuff Army 1:32:40.720 --> 1:32:44.840 Navy stores with pile highs of five oh ones and 1:32:44.880 --> 1:32:46.360 they had the best outs of the world. And Mickey 1:32:46.439 --> 1:32:48.240 Jackson said, we can't afford to go tote toe, so 1:32:48.240 --> 1:32:50.200 we're gonna put all of that money and branding into 1:32:50.240 --> 1:32:53.639 the store. Bleachmond would more intelligent, attractive sales associates, bigger, 1:32:53.880 --> 1:32:57.519 bigger dressing room, scented stores, better real estate. The branding, 1:32:57.640 --> 1:33:00.679 he said, is moving to the store. Leave Strasson company 1:33:00.680 --> 1:33:03.479 exploded from seven billion of four billion in that time period. 1:33:03.640 --> 1:33:05.920 The gap went from something like two billion to eight billion. 1:33:06.520 --> 1:33:08.439 It's a huge shift. We don't give enough credit to 1:33:08.520 --> 1:33:10.960 him for. But branding is me from pre purchase into 1:33:10.960 --> 1:33:13.920 the store. Starbucks took advantage of that, and Luxury has 1:33:13.960 --> 1:33:17.839 seen that. You see Richmont making these staggering investments in stores, 1:33:18.400 --> 1:33:21.439 so high end distribution. The Achilles feal for Nike becoming 1:33:21.479 --> 1:33:24.200 up one of the four four horsemen. They have to 1:33:24.240 --> 1:33:26.519 control more of their distributions. They have a decent amount 1:33:26.560 --> 1:33:29.560 of stores, but it seems like there's one store per city. 1:33:29.360 --> 1:33:32.400 One in Seattle, there is one in in San Francisco. 1:33:32.800 --> 1:33:35.519 I think there's I know there's one here. Every now 1:33:35.560 --> 1:33:38.240 and then we see one pop up. But it's not 1:33:38.360 --> 1:33:41.599 like a giant chain. Yeah, it's I believe they only 1:33:41.600 --> 1:33:45.560 control about ten to fift of their distribution, so it's um, 1:33:45.880 --> 1:33:47.720 they're going if you. The one thing you see in 1:33:47.720 --> 1:33:50.320 common among these four horsemen is that they control the 1:33:50.479 --> 1:33:54.880 end experience. Whether it's Google, Apple, Facebook, and Amazon, they 1:33:54.880 --> 1:33:57.679 have vertical control. And that's that's because that, in my view, 1:33:57.680 --> 1:34:00.720 that's a prerequisite to become quote unquote part of the 1:34:00.800 --> 1:34:05.160 trillion dollar possible club. That's quite fascinating. All right, I 1:34:05.200 --> 1:34:07.479 know I only have you for so many minutes left, 1:34:07.840 --> 1:34:10.679 so let me get right to my favorite three questions 1:34:10.720 --> 1:34:13.040 or four questions, and I asked all my guests, and 1:34:13.040 --> 1:34:15.960 we'll get you out of here at a reasonable time. First, 1:34:16.320 --> 1:34:18.760 we have yet you talked about some of your mentors. 1:34:19.160 --> 1:34:21.799 We have not talked about any of your favorite books. 1:34:22.800 --> 1:34:24.960 What what sort of books do you really uh? Do 1:34:24.960 --> 1:34:28.280 you really enjoy? God, I'm just I'm embarrassed to say this. 1:34:28.360 --> 1:34:30.120 I don't read as much as as as I would 1:34:30.160 --> 1:34:31.760 like or as I should as an academic, because I'm 1:34:31.760 --> 1:34:33.479 reading all day, but I'm reading blogs like yours and 1:34:33.520 --> 1:34:37.439 other people's. Um, some of the books that have had Yeah, yeah, 1:34:37.840 --> 1:34:40.200 the basics like the Alchemist had an impact on me. 1:34:40.360 --> 1:34:43.240 I love now I'm sending like I'm seven year eighty, 1:34:43.240 --> 1:34:45.519 but I love reading books about military history. I find 1:34:45.520 --> 1:34:48.839 them fascinating, you know, guns, the early light or Herman Wooks, 1:34:48.960 --> 1:34:51.519 the wins of war. And then in terms of business, 1:34:51.560 --> 1:34:54.760 my father introduced me to Peter Drucker, a young observations 1:34:54.760 --> 1:34:58.679 of a bystander. Um, I find that stuff, uh really 1:34:58.720 --> 1:35:02.160 interesting still time least irrelevant today? Oh gosh, I think so. 1:35:02.240 --> 1:35:04.479 I think it is the father modern management. Is stuff 1:35:04.520 --> 1:35:07.559 is more relevant than is today. Also love some of 1:35:07.600 --> 1:35:12.040 the stuff from John Irving, you knowld according to guard 1:35:12.680 --> 1:35:13.920 I think it's I think it's just a lot of 1:35:13.960 --> 1:35:16.040 fun and just so strange. It's kind of I find 1:35:16.040 --> 1:35:20.559 it really really um So say next question, So you 1:35:20.600 --> 1:35:22.320 deal with a lot of millennials, you deal with a 1:35:22.360 --> 1:35:25.400 lot of people at the start of their career. What 1:35:25.479 --> 1:35:27.920 sort of advice do you give to somebody starting out 1:35:28.320 --> 1:35:32.559 in your space today? Find find a great platform, find 1:35:32.560 --> 1:35:35.400 a place you're gonna learn and it's not aspirational, but 1:35:35.560 --> 1:35:37.679 find some of your good at and work really really 1:35:37.680 --> 1:35:40.840 hard at it. Um and um. If you don't find 1:35:40.880 --> 1:35:43.800 yourself on a path, yeah, you're not if you're not 1:35:43.840 --> 1:35:45.800 fortunateough to find yourself on a path where it's something 1:35:45.840 --> 1:35:48.400 you love or you like. People say, find something you love, 1:35:48.439 --> 1:35:50.280 find something you like. I was the way I would 1:35:50.280 --> 1:35:51.640 say that, because if you like it, you're gonna be 1:35:51.640 --> 1:35:54.360 good at it. Um, think about graduate school. For all 1:35:54.400 --> 1:35:57.080 the for all the noise about and all the publicity 1:35:57.080 --> 1:36:00.000 about people dropping out of college, I still think school 1:36:00.040 --> 1:36:02.439 is a good plan. B. The Peter Field thing, you're 1:36:02.479 --> 1:36:04.920 not a fan, I think that is so frightening and 1:36:04.960 --> 1:36:09.160 so scary. I just you know, I'd love to pick 1:36:09.200 --> 1:36:12.080 ten kids at great public universities to match up against 1:36:12.439 --> 1:36:16.240 the ten heat. Look, if you're Steve, if you're Steve 1:36:16.320 --> 1:36:20.519 Jobs or Bill Gates, granted they're exceptional and and God 1:36:20.560 --> 1:36:22.280 love you if you're one of those one of those 1:36:22.400 --> 1:36:24.880 rare people that can, you know, take a calligraphy class 1:36:24.880 --> 1:36:27.040 and then drop out and start the start the MAC. 1:36:27.439 --> 1:36:30.120 But for the rest of us, you know, college is 1:36:30.160 --> 1:36:33.960 a pretty good plan. B. So, as we've seen in 1:36:33.960 --> 1:36:36.479 this recovery, to say the least, get get a great 1:36:36.600 --> 1:36:39.519 find a great platform, find something you think you like 1:36:39.760 --> 1:36:41.519 or you're good at, work your ass off, and if 1:36:41.520 --> 1:36:43.800 it's not working out in your mid twenties, think about 1:36:43.840 --> 1:36:48.800 graduate school and you know good karma. The really successful 1:36:48.840 --> 1:36:50.360 people what you find in the trade is they do 1:36:50.439 --> 1:36:52.120 spend a lot of time thinking about how can I 1:36:52.160 --> 1:36:54.439 help other people? Because it will come full circle. People 1:36:54.439 --> 1:36:57.400 do remember that. Um, what do you've seen that have 1:36:57.720 --> 1:37:00.960 changed in your industry and branding, him marketing, What are 1:37:01.000 --> 1:37:04.960 the big shifts over the past decade. Oh gosh, I 1:37:04.960 --> 1:37:07.040 don't want to say the death of creativity, but it's 1:37:07.040 --> 1:37:09.680 definitely revenge of the pocket pen protectors. And we've talked 1:37:09.720 --> 1:37:13.480 about Don Draper's dad. Created activity is not not a commodity, 1:37:13.560 --> 1:37:16.959 but you've had, You've had. It's more important to understand 1:37:17.040 --> 1:37:19.600 how to operate sales source and a database and CRM 1:37:19.680 --> 1:37:22.000 than to necessarily come up with the right copy or 1:37:22.040 --> 1:37:26.000 the most beautiful, inspiring creative ads. So it's moving more, 1:37:26.160 --> 1:37:28.760 much more towards zeros and ones than it is from tech. 1:37:28.800 --> 1:37:33.000 It's the guys who are cool and we're black are 1:37:33.040 --> 1:37:36.560 making less money, and it's it's it's the math and 1:37:36.600 --> 1:37:39.160 the chess club. And now at the same time, we 1:37:39.200 --> 1:37:41.559 have to produce people who understand have the maturity and 1:37:41.600 --> 1:37:43.640 management skills and the EQ and played with the right 1:37:43.680 --> 1:37:46.280 toys to manage those people, and it's hard to find 1:37:46.280 --> 1:37:48.920 them in the same body. But it's definitely headed towards technology. 1:37:48.920 --> 1:37:51.280 In the world of marketing and branding, we talked about 1:37:51.320 --> 1:37:53.880 brandings moved from pre purchased to purchase. Now it's moving 1:37:53.880 --> 1:37:58.720 to post purchase CRM, contextual retargeting, taking behavioral data. Um. 1:37:58.760 --> 1:38:02.519 But it definitely seems like tech is just eating eating 1:38:02.520 --> 1:38:05.000 the world. So I'm not a technologist, but I'd like 1:38:05.040 --> 1:38:06.679 to think I know enough about it to be dangerous. 1:38:06.680 --> 1:38:08.840 And I try and stay on top of stuff. So 1:38:08.880 --> 1:38:11.479 if you're you know, if you're starting your career, are 1:38:11.560 --> 1:38:13.920 guys like us, right, we're trying to stay relevant. You 1:38:14.000 --> 1:38:15.960 gotta be on Facebook, you gotta figure it out. You 1:38:16.040 --> 1:38:18.360 gotta go on Pinterest and start pinning stuff so you 1:38:18.360 --> 1:38:20.080 at least get it, or at least get it enough 1:38:20.120 --> 1:38:23.639 to hate it. Right, And because most people just they 1:38:23.760 --> 1:38:27.080 dismiss it. And when they dismissed, when they're dismissive something, 1:38:27.160 --> 1:38:29.320 or when guys our age are dismissive of stuff, it's 1:38:29.360 --> 1:38:31.120 basically their way of saying I don't get it, and 1:38:31.160 --> 1:38:33.000 scares the hell out of it. The comment I always 1:38:33.120 --> 1:38:34.760 get is like, I don't understand what do you do 1:38:34.840 --> 1:38:37.840 with Twitter? And my answer is always, hey, here's here's 1:38:37.840 --> 1:38:41.160 what you do. Find five hundred of the smartest people 1:38:40.840 --> 1:38:44.720 in areas that you're really interested in. I don't care 1:38:44.720 --> 1:38:48.040 if it's beer burgers in baseball, but follow those people 1:38:48.120 --> 1:38:50.320 and you will know more about stuff that you like 1:38:50.800 --> 1:38:54.160 and have access to more interesting stuff. It's like hiring 1:38:54.360 --> 1:38:57.599 a full time men's a research team. What could be 1:38:57.600 --> 1:39:01.400 bad about that? And the final question, My final question, 1:39:01.439 --> 1:39:04.040 I asked all my guests, what do you know about 1:39:04.080 --> 1:39:07.000 your field that you wished today that you wish you 1:39:07.040 --> 1:39:10.640 knew when you were starting out? What do I know 1:39:10.680 --> 1:39:12.120 about my field today that I wish to know I 1:39:12.240 --> 1:39:14.599 started out, Um, I would have focused more on how 1:39:14.640 --> 1:39:16.439 to learn how to build stuff. I would to learn 1:39:16.479 --> 1:39:19.280 how to code. I would have learned more about industrial 1:39:19.680 --> 1:39:22.639 engineering and design. I think the world the future belongs 1:39:22.680 --> 1:39:25.160 to the builders, not the browners. The people who know 1:39:25.200 --> 1:39:27.600 how to actually make stuff. That can be making a website, 1:39:28.200 --> 1:39:30.840 that can be figuring out how to edit radio show, 1:39:31.360 --> 1:39:33.880 but the people who build things. As opposed to my 1:39:34.000 --> 1:39:37.200 focus was always on the intangible associations and creating the theory. 1:39:37.280 --> 1:39:39.960 I wish I'd learned more about how to build things. 1:39:40.000 --> 1:39:43.280 So we've been speaking with Scott Galloway, professor at n 1:39:43.400 --> 1:39:46.960 y U Stern and founder of L two Digital. UM. 1:39:47.200 --> 1:39:49.360 Let's once again tell people where they can find you 1:39:49.400 --> 1:39:54.040 on Twitter, proft Galloway, proft Galloway and your website dot 1:39:54.040 --> 1:39:56.320 com L two ink dot com. Scott, thank you so 1:39:56.439 --> 1:40:00.760 much than this was. This was really fascinating. I think 1:40:00.760 --> 1:40:04.640 people really can enjoy this. If you enjoyed this conversation, 1:40:04.680 --> 1:40:07.880 and I can't imagine anybody did not look an inch 1:40:08.040 --> 1:40:11.320 upward or down on iTunes and you'll see the other 1:40:11.439 --> 1:40:16.120 forty seven or so uh such um conversations. Be sure 1:40:16.120 --> 1:40:18.559 and check out my daily column on Bloomberg View dot 1:40:18.560 --> 1:40:23.120 com and on Twitter follow me at Hults. I'm Barry Rihults. 1:40:23.160 --> 1:40:26.040 You're listening to Masters in Business on Bloomberg Radio.