For The Hayters

Transcript

This isn't your average business podcast, and he's not your average host. This is the James Altiger Show on the choose yourself network. Today on the James Altiger Show. I tell my daughter, who's 15, she thinks about college even though I'm not as in favor of college as many people know. But Wait. Hold on. Hold on, dude. To to not talk to your daughter out of college. I I know you teach at NYU. You've run a bunch of companies. You've sold a bunch of companies. You've battled some companies. Yeah. You were on the board of the New York Times, but I just think college has become such a scam. I agree with you, but here's the bottom line. There's very little downside. Are we allowed to curse on this show, by the way? Yeah. Of course. I just don't meet that many really successful people in their thirties or forties who went to a top 20 school and say, you know what? I really f**ked up going to Stanford. I I hear that never. And some people might say college has become too expensive. I get it. College is not for everyone. Hands down, it's not. But if you're in a position to go to a good slash great school as a young person in this economy, by all means, get to college. And if you happen to be Steve Jobs or Bill Gates or Mark Zuckerberg and you are so exceptional that you drop out of Harvard in your 2nd year, fine. But assuming you are Bill Gates is a really bad strategy. I think it's important early on to have a code. So take this back to unimportant stuff, business. What do all Fortune 500 CEOs have in common or I would 450 of them when you meet them and I met a lot of them. They're really likable. Even the ones that are also psychopaths. Psychopathic. Yeah. During the day, these people are Darwin and Darth Vader. Make no mistake about it. They they play full body contact business, and they make very brutal decisions. They dominate markets. They put companies out of business, and they don't put warning labels on your iPad even though your kid has a crack like addiction to the thing. Right? So they're just better at this than anybody else. That's such an important thing. Like, having a vision that is bigger or more interesting than the vision and the people around you, that's a winning path to success. FreshBooks is excited to announce the launch of an all new version of their cloud accounting software to help the self employed. Create and send professional looking invoices in less than 30 seconds. Set up online payments with just a couple of clicks and get paid up to 4 times faster, FreshBooks is offering a 30 day unrestricted free trial at freshbooks.com/james, and enter the James Altucher show in the how did you hear about us section. That's freshbooks.com/james. So excited to have Scott Galloway on the podcast. Scott just wrote the book, The 4, the hidden DNA of Amazon, Apple, Facebook, and Google. And, Scott, welcome to the podcast. Thanks for having me. I'm a I can legitimately say I'm a fan. I tell my kids in my class that, they need to sweat every day to be happy. I think you originally coined that phrase about 10 years ago. Yeah. It's a it's a true phrase. Now I do wanna talk about Amazon, Apple, Facebook, and Google. Yep. They're the the 4 most amazing companies in history, and you start off the book beautifully by saying, here's what's good about each of these companies. But then the book gets darker and darker about them. And so let's let's and then, worthwhile mentioning, you've run a bunch of companies. You've sold a bunch of companies. You failed at some companies. Yeah. You teach at NYU. See, what I what I'm interested in with this is what makes a good company also makes a good person. And I kinda wanted to address that in this book because the audience doesn't necessarily wanna know who's gonna win Apple or Facebook. The audience wants to know what's gonna make them better. When I was reading it, I was thinking about just myself personally. These are what can make anybody good at anything. These are features that are universal. They're not just applicable to Apple or or Amazon or Facebook. So, so those are kind of the things I wanna talk about. So lots of things to talk about. First, what are the good things about Amazon? Oh, just an inspiration. I think Jeff Bezos is arguably the most forward looking visionary in business. And on a very practical tactical level, Amazon is the largest recruiter out of my cla*s. Really? I would not have guessed that Amazon was still, at this day and age, the biggest recruiter out of your cla*s. Oh, yeah. So briefly started a bunch of companies. 1 of them went public in 2002, decided to change my life and pursue a lifelong dream of teaching on the day of the IPO, resigned from the board, come to me with red envelope, and joined the faculty at NYU where I've taught now 6,200 students in 1 of 2 classes, brand strategy and digital marketing, and have been on the faculty there 15 years. 10 years ago, the number one recruiter out of my class was American Express, and it was a tie for number 2 among all the bulge bracket investment banks. Now far and away the number one recruiter out of my class is Amazon. Far and away, what does that mean? Well the number 2 gives offers to half the students at Amazon. Amazon is a hiring machine right now. So I personally feel a lot of gratitude towards Amazon. I think Well, let me address that because Sure. You also mentioned how Amazon is investing, and they're patenting lots of technologies that will eliminate jobs. And and you point out that, a a a a scary photograph would be, because we haven't seen one, a scary photograph would be the inside of an Amazon warehouse because it's all where it's all robots now and not people, which to be fair, who the hell wants to, be stacking packages at an Amazon warehouse? What what's Amazon recruiting your students for? For what I'll call information age jobs, managers, product managers, business development, trying to figure out distribution strategies, marketing strategies. It's a great time to be remarkable, and that is if you go to, I describe NYU Stern as one of the 15 top ten business schools, you know, there's 15 of us who all claim we're top 10, and people believe or companies believe that anyone who can go to a top 10 business school is remarkable, and so there's no shortage of jobs for them. The scary part, and this is not unusual in terms of a cycle of innovation, is that for every kid that gets a great job out of my class at Amazon at $110,000 or $120,000 a year, are there 3 or 4 assistant manager jobs at the Gap or at Tesco or at Kroger's that are going away? So it's a complicated story that Amazon has a lot of amazing features around it. It's created a lot of wealth for a lot of people, but over the long term, can a company this dominant, are markets failing? Are markets failing when one company can take the value of any consumer stock down 10 to 30 percent in 30 days, which I believe Amazon can, just with press releases, or not even press releases, just going on background and say, we're thinking about going into drug stores, and then the 2 largest drugstore companies in America declined 4 to 5%, the opening bell, and by the closing bell, the manufacturers' brands of drug companies have declined 2 to 3%. Well, I'll I'll tell you a story which is not quite mentioned in this book, although it's you you you're Bluetooth in various ways. You really talk about, how Amazon has, and and and, by the way, we're gonna we're gonna veer into the how the qualities of these companies, again, are qualities that everybody, even individually, can aspire to. But you talk about how Amazon has eroded the value of of brands because it's not so important that you have consumer mental space because we've outsourced our mental space to search engines. So and Amazon is, what, the 3rd largest search engine just by itself? I mean, there's, like, Google and YouTube, which is owned by Google, and then there's Amazon. And number 1 for products. Yep. That's right. So so so a company I'm I'm very familiar with, and they just actually raised about a 100,000,000 from from, among others, Google. What they do is they take these 100 year old brands that never developed a digital strategy. Because they were always just selling into Walmart and big box stores, and they never had any problem. They had always the deals. For for 70 years, they had deals with with stores. But and they felt that brand was important. This this friend's company goes to the same manufacturer, says, make me the same product. I'm gonna slap my name on it instead of the these other companies' names, these 100 year old companies' names. And then they figure out all the algorithms, and they dominate Amazon's search engine. I've seen them take a 100 year old brand and completely eliminate it from the front end of from the front page of Amazon search within 48 hours Sure. And then just dominate all the product sales after that. And so so it's fascinating that Amazon is not only kind of subtracting from, you know, all these different workplaces like Kroger's, you know, and and and even the even the stock price of all these places just with a word. But if you can have a sense of how branding works and how the Amazon search works, you can destroy a 100 year old companies within 2 days. So the era of what I would call brand is the the default right strategy to create shareholder value. The sun has passed midday on that. The algorithm for creating 1,000,000,000 of dollars in shareholder value from the end of World War II to the introduction of Google was the following. Take an average product, an average beer, an average soda, an average soap, and wrap it in these incredible associations of patriotism or likable, or European elegance, and then stuff the channel with it, and we would defer to the brand because we didn't have these weapons of mass diligence to find the best hotel in London. We didn't have these weapons of diligence to find farm at table. What's the dual diligence. I like that. We didn't have weapons of mass diligence. We didn't have the ability to find the best local kefir yogurt curdled in Brooklyn, but now amazing products break through because at the end of the day, all of these amazing platforms allow us to share and allow us to discover really easily. So when I was working for Morgan Stanley back in the late 80s, and I was going to London on a business trip, I'd either stay at the Ritz Carlton or the Four Seasons. 1, because someone else was paying for it, and 2, they were always a solid 7 or 8, But now using TripAdvisor, using my social graph, using Google, I can find a smaller hotel that hits me perfectly at a 9 or 10. People no longer say, what's the best restaurant in New York? They say, what's the hot new restaurant? And they can find it in about point 0 0 5 seconds on Google. So this seems like a very a very good thing because branding, at the heart of it, I will accuse brands of basically lying. It's like you're saying, you're taking an average cup of soda Yep. And you're and you're spending $1,000,000,000, and now it's Coca Cola. Yep. And this is not offensive to Coca Cola. I'm just using an example. But, I think the same thing is happening with personal branding. You can no longer and we see this now with kind of the daily news reports about different people. You can no longer hide. Like, you are who you are. What you see is what you get. And there's lots of tools for figuring that out. And so a new approach to building yourself up or building a brand up or building a company up has has to happen. I mean, that's you you do this on a daily basis when you advise companies. Well, if you look at the companies adding, the consumer products companies adding 1,000,000,000 of dollars in value, they're A, taking share from the big guys who have rest on the fact that the majority of the world needed to defer to the shorthand of brand. So the sea of the unknown that we use brand to get across, that sea has narrowed, and we can see the other side with these bridges of due diligence. We can find the best product. So. And by bridges of due diligence, Google. Amazon reviews. I shave my head. I used to always defer to the brands of Norelco or Braun or Wahl, but now I can go on Google and certain blogs for focused on people who shave their heads and find a retooled panzer tank factory in East Germany and find an amazing hair clipper, and have the confidence to buy it. Before, we didn't have the confidence to do this, because unless it was in our channels of comfort, unless it had a brand giving us some sort of safety, we just wouldn't do it. So we no longer have to defer as quickly to the brand. Brands are built differently now. Now it's more of an algorithm where R and D is the lead, as opposed to marketing. So what do the biggest brands in the world, or the biggest advertisers in the world have in common now? They're all losing share to companies that typically have a few things in common. 1, a better product, better ingredients, a focus on a specific indication. 2, they're fantastic at Instagram. Instagram kind of is the new broadcast media. And 3, to your point, they optimize light capital distribution, Amazon. If you find me a consumer brand that's growing 3 or 400 percent a year, they usually have those features in common. So interesting. I wouldn't have said Instagram. I would have said Facebook, and Instagram is owned by Facebook. I find that whenever I'm involved in a company that is trying to figure out where to advertise Yep. You know, they they do first, they kind of, like, try everything. But then, ultimately, everyone now is down on Facebook ads. I think it's right now and that'll cycle. That's one of those things that will cycle. Like, it'll eventually be Google again, or it'll be Amazon. But right now, Facebook seems to be by far the best, place to advertise. So I'm speaking more specifically of kind of CPG traditional yogurt and interesting beauty products, something like that. But I agree with you. I think Facebook scale and targeting is just unrivaled right now. Because Facebook know Google knows a lot, about you. We're probably I mean, I don't know about the inner technology. But Facebook, it's it's not just figuring out using AI from how you, search for things. Facebook, you actually raise your hand and say, I like this, this, this, and this. Yeah. And then from there, Facebook can use AI. Whereas Google is making lots of smart guesses. They're probably the best company in the world for AI. But Facebook doesn't have to be as smart because you're already saying all the things you like, and then Facebook builds these, you know, look alike lists to see all the people who look like you, and and that's that's extremely good for targeting. They both have amazing franchises. I mean, Facebook's more top of the funnel. You've raised your hand, and in a public way said, I have teenagers at home that are thinking about driving, and I'm trying to figure out where to buy auto insurance, and Facebook likes to target households with teens who just got their driver's licenses. At the same time, Google perhaps knows before you know I'm thinking about a new car, or before you've even become cognizant of it. You start searching for new cars, you start searching a lot around Tesla, so they both have unbelievable franchises. So so this this brings up to the the very interesting thing that I I that, you know, is is almost a conclusion of the book is that we're sort of 80% there to where Amazon, Apple, Facebook, and Google are sort of the same company competing against each other even though they started from very different routes. Amazon started selling books. Apple started selling computers. Facebook was essentially this combination between or it's Facebook, let's just say, was a was like a a social the first social network with verified identity, and Google was a search engine. But now they're all they all have stacks where, you know, somewhere in the Amazon stack is a great search engine. Somewhere in the Google stack is a cloud, just like Apple and, and Amazon. Somewhere in the Facebook stack is, you know, a search engine and, you know, I don't know. Facebook's probably the one that's the most different from from these guys. They buy they make so many smart acquisitions. You know, they have WhatsApp. They have you know so they start competing with Apple Phones in a weird way as communicators. I don't know if they're really in the commerce space. But, again, for advertising, they're competing with Google, they're competing with Amazon, and so on. Facebook's probably the most different of these 4. Yeah, but Facebook competes with Google and now Amazon for digital marketing dollars, but the interesting thing around this is so from a consumer standpoint or an antitrust standpoint, there's safety and hatred. They've all run out of befuddled prey in their own sectors, and they're bumping. What do you mean befuddled prey? Well, okay. Television advertising. Google has already eaten a lunch of print advertising. Google has literally decimated newspapers in the United States. Most newspapers now shutting down and just being digital. The majority of them are gone or a shadow of themselves. So And by the way, I just wanna mention, you were on the the board of the New York Times. This is something you're intimately familiar with. Yeah. The most reputable paper in in the country, you know, depending on, you know, your personal, some people would arguably disagree, but, but it was a very influential paper. We'll talk about that later because I think that was an interesting attempt by you to battle this trend, but but, yes. So they now are going after each other because they're just getting into each other's swim lines. They used to be on each other's boards. Eric Schmidt was on Apple's board. Until the phone, they, until they both came up with the same phone. Same idea, but here's the, I think the interesting thing about this is wherever the Venn diagram overlaps, and they're competing with each other, one company is always winning. Who would you say that company is? Well, originally, I would before I read this book, I would have said Google, but now that I've read this book, I have to agree with you on Amazon. Everywhere Amazon is bumping up against these guys, whether it's hardware, they're bumping up against Apple and voice, they're winning. Siri owned voice, Amazon is kicking Siri's a*s in full view of everyone right now. We're at bump Alexa. Well, Alexa, 70% share of home now, which is gonna be the new battlefront for reallocation of 1,000,000,000,000 of dollars in value. It's gonna be the home and voice, where it has been it has been the mobile phone and mobile ISs. Well, and this is why I mentioned this, that they were coming almost the same company, is because you were talking about Google. Google you you you you said specifically, 2 minutes ago, Google almost knows what you want before you know what you want. Yep. But that made me think of what you say in the book about Amazon. Because of what you're asking, Alexa all the time with Amazon, Amazon also is starting to know what you want before you want it. And Amazon can actually make money on knowing that because they can start ordering things for you. They can monetize it in ways. But so we started with computer hardware. Let's talk about streaming video, right? You think of Netflix. Amazon was number 7 in 2015 in percentage of prime time viewing via streaming video. 2016, it's number 3, and it's now the number 2 spender at 4 a half 1000000000 of original TV content. Yeah, I think this year they're passing Netflix on what they're going to spend on original content. They're $2,000,000,000 behind Netflix only because Netflix increased their budget 2,000,000,000 when they heard Amazon's footsteps behind them, but Amazon is now spending more than NBC, ABC, HBO, it's the number 2 spender. Where they're bumping up against Facebook and Google in digital marketing, Amazon Media Group is a 1,000,000,000 and a half dollars growing faster than Google, and will probably grow faster than Facebook next year. What do you mean, well, I don't know Amazon Media Group, what's? If you're Procter and Gamble, Amazon Media Group shows up and says, hey, would you like to know when someone puts Huggies, a competitor to Pampers, in their cart, and you can advertise Pampers? That's pretty awesome banner advertising. So Amazon now has ad representatives, no different than Google or Facebook, showing up to the largest advertisers saying, you should advertise on Amazon, and by the way, we can give you what almost nobody else can give you. We can tell you what every ad attributes to in terms of actual sales. When you run an ad on Amazon, we can tell you exactly if we sold more of your product, or if we sold more of a competitor's. So it's an incredibly strong value proposition. I mean, that's valuable data, but Amazon, of course, keeps the most valuable data of all, which is the most valuable asset a company can have Mhmm. In today's day and age, I think, is the actual list of your customers. Mhmm. And Amazon has that list. Nobody else has that list. Any behavior. I mean, small companies have that list. Like like, if you were selling a a a book out of your own blog, you have the list of people who bought your book. But Amazon really has the the the billion person list and everything they bought. Facebook's right up there too because by the sheer nature of Facebook, it's an overt it's an overt you're raising your hand and saying, this is who I am. So there's more identities attached to data on Facebook than there is on Google, because Oh, no. He's arguably what data is. Data could be you're the sum of everything you bought. Now that's not I mean, identity could be the the sum of everything you bought. Now that's not true in a personal sense, but in terms of a, translating data to money sense Yep. That could be true. But we were talking about Amazon competing against the others. So where Amazon bumps up against Google in product search, Amazon had 44% in 2015. By 'sixteen, it had 55% of product search. Everywhere Amazon is, computer hardware, what's the most innovative hardware product of 'fifteen and 'sixteen? The Apple Watch? The Apple Pods? No, it's Amazon's Echo. Everywhere Amazon is bumping up against the other guys, it's winning. So, if I were going to write a sequel to this book, it would be called The 1, because the more research I did here, I by the way, it's not a mutually exclusive game. Each of these companies has amazing franchises, and I believe it's possible for all of them to blow through a $1,000,000,000,000 in market cap, but the one company here that is firing on all 12,000 cylinders and is beating up anybody who gets near it is Amazon. Well, you know, I've I've visited Amazon quite a bit. I've I've I've been in Seattle. I've talked to many Amazon executives, and and this is over the years. They basically realize that these and only these 4 companies have the total stack, which is, you know, they have all your data. They have the cloud. They have, you know, they're all kind of competing and and jockeying in the same places. You know, you mentioned a few other companies that can get there toward towards the end, but Amazon's always been aware of these 3 other companies. And and I'm sure these 3 companies are aware of them. Amazon just happens to be the company I know the best. But Amazon has definitely taken the view that they're after these companies. But Amazon has I don't know who caught part of the stack. Amazon has something, a couple of things neither of these companies have. 1, it has a fulfillment network, which is an analog mode that's put warehouses within 20 miles of 45 percent of the U. S. Population, and by the way, that's misleading because it's probably 75% of discretionary income in the U. S. So they can get you a box within 47 minutes or delivery in Manhattan, and then if you don't like it, come get it. None of the other 3 have that. So they've built this multi $1,000,000,000 moat in the form of a fulfillment network. What if Google were to buy, I'm just making this up, what if Google were to buy Walmart? So Walmart has an incredible fulfillment center as well, because they have, you know, a solid That would be a formidable that would be a formidable competitor. And, by the way, did you see Google and Walmart are working together? I didn't see that. So the most impressive company of the nineties, Walmart, is working with the most impressive company of the odds, Google, to take on the most impressive company of today, Amazon, and they're coming together to perform a voice and shopping based partnership between Google and Walmart because they realize Amazon is running away with it. This is where we're headed, James, and this is why Amazon's going to be the 1st $1,000,000,000,000 market cap company. Amazon is going to run something called Prime Squared, a test, and this is pure conjecture, and they'll run it in a college town and they're going to say, James, we have your purchase history, we have your credit card, we have a fulfillment network that can get you products to you and from you really seamlessly, and we have this butler following you around your house where you make decisions, maybe even when your phone's not near you, called Alexa. We're gonna send you 2 boxes, 3 times a week. One box is gonna have everything in it we think you want, and the second box is just empty, put it in, or the same box, and send it back and we'll pick it up. And you'll be able to manicure everything using this unbelievable technology called Alexa. So you might say, Alexa, I'm going out of town for 2 weeks. Alexa, I want Stella Artois, not Heineken. Alexa, I'm having a dinner party for 8 people on Friday night. Alexa, send me 6 quotes for auto insurance for a Toyota Camry 2014 via email. And they'll run this test called 0 click ordering, and they're going to show that the households in this test go from $1300 a year, which is the average annual purchase volume of a Prime household, to 6 or 7,000, and we're going to realize that for 70 or 80 percent of our purchases, which are low consideration and tedious, Amazon's gonna take it all. And the stock's gonna become anti gravity, blow through a $1,000,000,000,000, we're gonna freak out and break them up. That's interesting. So you would break them up, I guess, through retail, cloud, perhaps AI slash Alexa, maybe Kindle, you know, self, you know, publishing. The cleanest would just be to spin AWS. I think prophylact my prediction is prophylactically, and I because I think Bezos and the folks are so smart that they're gonna as as they become more and more dominant and scary, I think they're prophylactically gonna spin the AWS, but I think the AWS business, I think they'll break themselves up before the blunt instrument of regulation knocks at the door. The you know, this is where we could disagree a little bit. I just I actually think these companies have already surpassed the power of any institution to break them up. They're more powerful than the government. Yes. Yeah. We were talking about this before. Yeah. You and I disagree. And I think I think I might be naive. You're sort of taking the view like, oh, the world is what it is. I think the world is what we make of it, and I think we shouldn't give up on our elected officials to restore fair markets. I agree that the world is what we make of it, so we elected officials that already gave the power to them behind closed doors. Fair point. So we don't know. Fair point. Where I think it's gonna happen is not where we expect it. I agree with you, it's not gonna come out of Washington. They don't have the will, and I don't think they have the domain expertise to go after these guys. I think you're right, these guys are more powerful than Washington. Where you could see it is where you don't expect it, in a red state that's had nothing but bad things from Google. The consumers get to search, but their newspapers are gone, their wages are down. Walmart employees are all fired. So they, the Missouri AG who just filed an investigation or just announced an investigation against Google has a little downside. The other place I think you're really going to see it is where all the other major conflicts of the 20th century have broken out, the war against big tech, and I think it's going to be a war, is going to be in continental Europe, because we register a lot of upside in the U. S. From these companies. We get a lot of benefits. A lot of downsides that we're having a serious discussion now for the first time in a while, but Europe registers all of the downside, job destruction, privacy concerns, weaponization by foreign governments, privacy, but they get a fraction of the upside. There aren't that many hospital buildings or university buildings named after Facebook or Amazon employees in Europe. So Marjorie Vestager is the 1st regulator, the 1st person, government person in the world, who I would argue, whose testicles have descended, and is gonna go gangster on these guys. You're gonna see your first $10,000,000,000 plus fine come out of Europe against 1 or more of these firms. But the good thing is, I mean, not good or bad, they could pay it. But that's a great point, because, so Google is found to be conducting an anti competitive practices, sending stuff to their own properties, which they said they wouldn't do. They get fined $2,700,000,000. 3% of their cash on hand, stock goes up the day they announce it. Right. It reminds me of, in Freakonomics. I forget if it was it was the first Freakonomics book, written by Steven Levitt and Steven Dubner who've been on the podcast. They showed that when you chart like, one school got upset that parents were dropping off their kids late, so they put it in a fine. So okay. People felt permission to do it. Yes. And now more peep more more kids were late, and their parents just paid the fine. Yeah. Clay Shirkey writes about that as well. So this is what we're doing. We've elected people that are basically issuing 25¢ parking tickets for a meter that costs $100 an hour. So what we have said, and who's at fault here? The man in the mirror. We've elected officials and implicitly told them to tell, to communicate to these companies with your fines, that the smart shareholder thing to do is to lie and break the law. The best example is Facebook, who claimed, who told EU regulators when they were trying to get the acquisition of WhatsApp approved in Europe that it would be impossible for the core platform Facebook to share data with WhatsApp, because justifiably, Europeans are very sensitive about lists of people with data attached to it, and they said it would be impossible for us to share the data, so acquisition approved, and then boom, spoiler alert, 90 days post acquisition, they figure it out, and they start sharing data between the 2. And the EU says, we feel lied to Facebook, we're gonna find you. What was the benefit? I'm sorry, what was the benefit of sharing data with WhatsApp? Because I just used that to make phone calls internationally. Well, knowing where you are and who you're contacting. You just have more data on everybody now. WhatsApp is just, I mean, huge penetration, and just more data, where you are, who you're calling, etcetera, just more complete stack on that consumer list. Facebook gets fined $112,000,000 which is 0.6 percent of the acquisition price of WhatsApp. So if you're a CEO and you have a choice of being totally forthright with EU regulators, or maybe kinda holding some data back, and knowing you might be fine 0.6% if they find that you, that information you were holding back was in fact a lie, what's the smart thing to do? So we're And my guess is, by the way, that didn't even, affect the, cash holdings of Facebook because, in general, on an acquisition like a $20,000,000,000 acquisition, they're gonna withhold a 1,000,000,000 or 2 anyway for exactly these things. It was it was a flea hitting the windshield on a Mack truck. They barely felt it. I mean, what I, the question I would ask us and regulators is wasn't the responsible thing to do for e regulators to say you lied to us when you were seeking approval of this company, so we're gonna undo the acquisition. As far as we're concerned, you're no longer on WhatsApp. I mean, at some point, somebody is gonna get these guys out. Oh, that means no. Like, how do you undo an acquisition? Like It's a fair point. I don't know. I'm not a lawyer, but, oh, okay. Instead of finding them 116,000,000, fine them 12,000,000,000. I mean, we're going to see a fine come out of Europe, that when it's announced, the stock doesn't go up. We're going to see a fine that is really going to hurt. Okay, but then, okay, so I'm Google, I'm Larry Page, And Europe's threatening a $1,000,000,000,000 fine. Yep. I'm just gonna do what I did with China and say, okay. Google is no longer available in Europe. And Oh, that'd be tough. Which threat is stronger? That'd be tough because here's the bottom line. Let's use that as an example. China led Google in long enough to steal their IP and then propped up a local competitor and captured all the value domestically, and maybe Chinese citizens don't have access to the best search engine. Italy and Baidu. Yeah, Baidu. Italy and Europe has led Google in, and they have a better search engine, and they've they've engaged in this full body content capitalism, free trade in the West we love, but who who's the stupid one? Is China the stupid one? I'm not talking about ethics. I'm talking about sheer economic value, so I think not only is that threat not scary for Europe, I think there's a decent chance you're going to see a small European nation kick one of these guys out. They're going to look at China. They're going to look at, say, Italy, and say, what happened to the media business in Italy with Google? What happened to the job base? What happened to the tax base? And then what happened in China, who basically stole the IP and created their own competitors in search? Who's the stupid one here? You know, there's a small story about this, which is that, who who's the founder of Baidu again? What's his name? I I forget. Oh, gosh. Something hip. Anyway, he he and Larry Page both took the same patent and modified it to create, a search engine that depends on Oh, it's the Xerox PARC of Apple and Right. Right. Yeah. Yeah. So well well, I'll just tell you that in a second. They both took the same pattern, which was, how you rank, articles based on what articles the value of the articles that link to it. And that's what made Yeah. Both search engines have the same underlying IP as opposed to the search engines that came before it, like Lycos, Excite, and, you know, all these things. Probably. The original patent, which they never used, was owned by Dow Jones. So that's kind of interesting that, basically, the newspaper industry did have patent and technology, but they never used it. That'd be a different world. And so and so so the guy from Baidu, whose name I now forget, he quit Dow Jones because he wanted to make this search engine for Dow Jones. Mhmm. He quit and moved to China and started Baidu, and Larry Page licensed, essentially, and started Google. Interesting. Yeah. So so, you know, I used to think Apple was gonna be the 1st $1,000,000,000,000 company. Am I? It's close. It's close. Right. And and the reason I thought it was because it was purely based on Wall Street metrics, which is that they trade for I don't know. If you if you look at, like, next year's estimated cash flows, which are fairly easy to predict with Apple, not totally easy but fairly easy, that they're only gonna trade, like, 5 times capitalization. Crazy expensive stock. Right. Right. Like, it's a like, people say, oh my god. A trillion. But it's actually cheap relative to every other tech stock out there on Wall Street metrics. But you in this book convinced me why Amazon, which is barely profitable compared with these other 3 companies, and and kind of exists on sort of, well well, I'll get into it. But I believe you on Amazon because they have converted their vision into capital as opposed to just having capital, whereas Apple now is seen as essentially visionless. Not totally visionless, but partially visionless. Well, it's the iPhone in the 7 doors right now. And what Amazon has done that's so incredible is using their core competence, which I would argue is storytelling. They've condensed they've reshaped the compact between the markets and companies, and that is they have replaced profits with vision and growth. Let's stop to take a quick break. We'll be right back. 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Let's say you're an employee at Amazon Mhmm. And you wanna get an idea approved all the way up through Jeff Bezos or whatever. Do you know what the there's one specific task every employee has to do if they wanna get an idea approved to move forward. And, the task is you have to write the press release as if it's already finished. And, and then it has to be an impressive press release. Mhmm. So in that kind of I never thought about it until your book, but that link that idea that you actually have to force people to to do that, which means you have to basically explain something very simply that the masses can understand, and it has to fit what the vision. What you you you what you do in this book is express the importance of storytelling and vision and how that converts into money and cheap capital and to more opportunities. And I think what I take from that is that works for human brands as well. So if you have a vision you so so let let let's just you wanted to combat the the digital emergence of how we use Google and these other things as news. You you approached the hedge fund 10 years ago and said, let's take over the New York Times. We can fight this battle, the the storytelling battle. We we can keep print media alive. And, like, why did you do that? Why did you think you can compete with these guys? So, this so you're talking about in 2007, I was advising hedge funds on we're undervalued assets saying, let's take large positions, go on the board, and try and unlock value, mostly coaching them around digital. And I did a sum of the parts analysis in 2007 in the New York Times, where if you took out the value of the 7th tallest building in America, which they owned, if you took out the 17% stake of the Boston Red Sox, which they owned What building do they own? They own the New York Times headquarters right here on the site. That's the 7th tallest building in the world? 7th tallest building in America. Oh, in America, I didn't know that. So basically they had a $1,000,000,000 asset, they were a REIT posing as a newspaper, they owned 17% of the Boston Red Sox, which never made any sense to me. They owned, do you remember about.com? Which I thought was worth about a 1,000,000,000 at the time, if they'd sold it it would have been a 1,000,000,000. So basically you were picking up the New York Times for almost free on the analysis I did, and I approached a hedge fund and said let's become the largest shareholder and go on the board, let's have them sell their non core assets and double down on digital because I still believe then and now that the New York Times is the most robust evangelist of Western values in the world, and I think that counts for something, and I think there's tremendous economic value there in addition to being a civic good, and I thought there was a huge opportunity to 1, shut off Google and then be the leader around premier content that we don't let these search engines Google us, if you will, and create our own, license our own content around the web, and give it to the highest bidder. I thought there was huge opportunity to monetize our content online across niche offerings. I thought deal books should be sold at $1,000 a year, that we should make it like a Birkin bag of financial information, and that we should cancel the dividend and double down and reinvest in digital. And it all made a lot of sense, I thought, and then the crisis came and it was like all bets were off, and the stock went from I think 18 to 3 in a matter of 14 months, But I still believe that, and to their credit, I think under the leadership of the management team and Martin Nissenholtz back then who was running digital, I think they've done a great job around digital. But at the same time though, where do you get your news? You open up Google in the morning. Well, the stupidest thing, the stupidest thing we ever did, and I'll say we in print media, was buy into this enormous bulls**t lie that information wants to be free, and let Google crawl our data, and then sell it using a business model that's much more lucrative than ours. We should have never, we effectively let them pull up to our bank vault with a dump truck and take money out every day. CBS or ESPN never said, oh, information wants to be free, and let YouTube crawl them. Bloomberg has never bought into this notion that information wants to be free. It's so interesting because you look back to the beginnings of the web, so that's all search engines do is go to other sites and scrape all the information off and then catalog it into databases. It's like it's like all these companies, mill a 1000000 companies sell their information to customers, but let these search engines just get it for free. And they get a dollar, we get 10ths. The the the relationship was okay, but they'll drive traffic. But we were monetizing that traffic at 1 tenth of what they were managing monetizing our content for. And we decided that that was a good deal because there was this what I call hot girl effect, and that is everybody wants to hang out with a hot girl. Everyone wants to hang out with a quarterback. So to say you're doing a deal with Google made you feel younger and more interesting, and information wants to be free. In the 2nd board meeting, I propose 1, that we sell 20% of the company to Eric Schmidt and make him CEO, and 2, that we shut off all search engines and lead a consortium of the Murdoch's, the new houses, the people who own Feet, and basically pull all of that content off of every digital platform, create one beautiful source of content, whether it's Vogue, the Feet, the New York Times, and license it to the highest bidder. And instead, we decided to let these guys continue molesting our information and debasing the content. And Eric Schmidt I mean, I don't even I don't have an opinion whether he was the the I we don't really know between Eric Schmidt, Larry Page, and Sergey Brin who who was making the decisions over at Google. You know, is probably off some combination of all 3. But just Eric Schmidt being the CEO of the New York Times would have been a big signal to the digital world that we're still in play. I thought it was yeah. I loved it. He had just been kicked up to chairman, which is usually not the CEO's idea, so I thought this is our opportunity. Tell him. What's he accepting? You never say whether he would have accepted or not. Oh I, you know, so to be, I feel like there's enough, 10 years has passed, so I feel like the Freedom of Information Act, I think boards need to be more transparent, but the bottom line is when I proposed it, I was pretty much laughed out of the room. Right? Well we're not going to shut up Google, Google's the future, and Eric Schmidt would never take a job here, and I thought absolutely it would, and we should start commanding the space we occupy. You don't see Birkin Bags distributed to Walmart. Why are we letting our content show up on Google next to Breitbart or Joey Bag O' Donuts daily news? This the basics That's my website. That's yours? You own that? The basics of brand management, the basics of distribution, we fell into this ridiculous lie. We took a gun and shot ourselves in the feet, and then reloaded and put the gun in our mouth. But but would Eric Schmidt have accepted the job? I don't know. Okay. So you never reached out to him? Never, I reached out to several I reached out to several players, about some of these ideas, and had some very interesting conversations, and I'll wait till like 20 years have passed, because basically every billionaire Democrat, every billionaire Republican in America wants wants to own a football team. What I found is every billionaire Democrat in America wants to own The New York Times. So there were a lot of interesting conversations with different people, and by the way, let me add, I think the Sulzberger's family have been great owners. I think that this is in their blood. I think they protected the newsroom at all costs. So I think on the whole, while I did not get along on a day to day basis around business strategy with, their representatives on the board, I think that the family has done a tremendous service to to Western values, and been a really robust evangelist for their newsroom. But, again, things cycle. Just like Walmart was run by an amazing innovator in retail, Sam Walton Yep. And the Washington Post was run by an amazing, newspaper family, the Grahams. Things cycle. It's not always about, you know The best thing that could happen in the New York Times, and this isn't a disparaging statement on the Sulzbergers, is a benign hugely deep pocketed person shows up and takes And Carlos Slim. Well, Carlos Slim, I'm not sure Carlos Slim had the domain expertise, but look, if anything, Jeff Bezos, his acquisition of The Washington Post has shown one thing, ownership matters, and if you have owners with domain expertise and capital, you can make huge advance. I think what the Washington Post has done the last I think the Washington Post has made more gains over the last 24 months than any media company in the world, including Facebook and Google. Well, I mean, Jeff Bezos, and now now we're kinda getting into the weeds of this, but, Jeff Bezos did his game plan with Washington Post, which is not only kind of, play with the value of their brand and and so on, but also take the infrastructure that creates The Washington Post and start licensing that infrastructure out the same way he did with AWS. He take he took the cloud that the the cloud services that they built in house to to to handle Amazon. They started selling that cloud service to every other corporation. That was a huge part of their business. He did the same thing at the Washington Post, which was sort of an an unbelievable insight to me. Like, I I was very creative. Yeah. But even just the CRM and email. Amazon's great with email, figuring out what emails you want, what you own or won't unsubscribe to, and figuring out a way to tease you into giving their email address. Washington Post is showing up in my inbox. Yeah. I never read The Washington Post even 2 or 3 years ago, and now I find myself reading it all the time. So I think what what the current management with the assistance of domain expertise and capital from Jeff has been has been remarkable. But, you know, so so so, let me see. I just want I I have a bunch of notes, but I do wanna, you have so many great statistics too. Like, it's amazing to read, oh, this is what the top companies were 10 years ago. Here's what the top top companies are now. It's like you said, the biggest, what do you call it? The the guys who the biggest employer who would, retain your students after they graduate was American Express 10 years ago. Now it's Amazon now. Mhmm. You have a whole bunch of those statistics, like, comparing Sears 10 years ago to where Sears is now is all great stuff. But I'm really intrigued by all these kind of, things that, you mentioned are the the sort of, things that make these 4 separate from every other company in the world. And but before we get into those things, because I because I think those you you call it the t algorithm. I think the t algorithm is directly applicable to in individual success as well. Though these companies are successful because they apply these things, but individuals can do them as well. And I I thought that was interesting to to think about. But I wanted to ask you, like, okay. Every 10 years, there's a new set of 10 companies that we think can never be unseated. Right. Who could ever unseat Chrysler? Who could ever unseat Yeah. Walmart? But now it does seem and maybe, it's wrong to think this way. It really does seem that that unless there's huge regulatory hurdles, nothing can really unseat Amazon, Apple, Facebook, and Global anymore. So Maybe Uber, but that's it. So I agree with you, and but let's acknowledge when guys like you and me say that, it usually signals we're about to go into structural decline. So That only be could be okay. Apple could be in structural decline because the obvious. When they enhance their next computer or their next phone, I no longer need any enhancements. Yeah. I the only reason I would get a new phone now two reasons. Is if the phone fails, so they can program the phone to fail every couple years, which they probably do, or if they extend battery life. Battery life is the only thing useful to me, but battery life hasn't really extended that much in the past 40 years. So Yep. You know, so Apple, I could see, structurally, there's there's things that are happening there. But the other ones, I can't see it. Like, who's gonna sell more, than Amazon? So I agree with you, but I'm just acknowledging about the time people start freaking out about our company's dominance is usually when the bell is rung and they start going to structural decline, whether it's IBM, whether it's Walmart being hauled in front of Congress, whether it's Microsoft, but having said that, I agree with you. Now, where I where I used to think the potential 5th horseman was going to be Uber, I no longer think it's Uber. I think the potential 5th horseman that has is in striking distance of being a formidable competitor to these guys is actually Netflix, because at the end of the day, these companies are all operating systems for our lives, operating systems for retail, for information, for media, and Netflix is now the operating system for the second most important screen in our households, which is television, and television has taken on a more meaningful role in our lives cause if you look at where capital's being reallocated, it's being reallocated out of theaters, the best talent, the best capital used to go to film, now it's going to television. TV's having a renaissance, so woah. So you might have a screen that millennials watch more Netflix than the rest of cable television combined. So Netflix is in a situation, is in a position to do what the other guys have done, and that is use their access or custody of the consumer to start building other businesses. The celebrity death match, the Ollie Frazier that's coming our way, people talk about Google versus Facebook, or Amazon versus Walmart. The really fun Thunderdome match that's gonna happen not next year, but in 2019, is gonna be Amazon running head into Netflix. I guess that's interesting. So so there's there's 2 things I wanna unpack out of that. First off, I could do an entire one hour with you, I'm sure, about Netflix and television. Yeah. Because I I agree. All of the talent from like, if if you write a a a Pulitzer Prize selling novel Mhmm. You'll sell 2,000 copies Mhmm. Before you win the prize. Then you'll sell a few more because you won the prize. If you have, like, the worst show on Netflix, probably a 1000000 people will have watched it at some point. Yeah. So there's a huge difference in numbers. All the I mean, you look at everybody from, Woody Allen I mean, every major TV show is is now written either written, directed by, or starring movie stars. So all the movie talent is moving towards Good. Netflix. Yeah. But I do think there's a granularity to television, which as you see now, Disney's pulling out of Netflix. I mean, I think I think content is is king still. Mhmm. And this is a really different topic than who will combat these for. But I think content will always be king, and distribution is a little more of a commodity. So Netflix, to your point Mhmm. Has to figure out how to get out of the commodity business, which is distribution, and expand their businesses like Amazon has. Yep. Like, selling a product online was a commodity that Amazon figured out quickly how to dominate and then move into other businesses before they got Yep. Taken over by someone else. But Netflix has to do the same, to your point. Hopefully, they can or not hopefully, but they should figure that out. And the the gangster acquisition that would have been transformative that they must be kicking themselves about is Netflix was worth $5,000,000,000 just about 6 years ago. If Disney bought Netflix, and you could still see the 2 merging feasibly, although it's probably Apple buying Netflix, Disney and Netflix would have been really interesting. Disney's one of the few companies that if they had the cojones to pull in Adobe and take prices way down, and withdraw from every other channel, the real gangster move for Iger, and he probably is one of the few old economy CEOs that has the credibility to do this, would be to pull his content off of every distribution channel except his own prime like offering, and then include the theme parks, include, the cruises, and so you have to become a member of Disney Prime to have access to Star Wars, Marvel, the parks, everything, and we're gonna charge you 19.95 a month, and turn a business of nonrecurring revenue that's evaluated on an EBITDA basis to recurring revenue, which gets valued at a multiple of revenues. The stock would go way down, but it could come back much, much stronger, and basically said there's a new there's a new sheriff in town, and it's called Disney Prime, and if you want access to anything we do, you gotta have a monthly relationship with Disney. I mean, maybe that's why they're pulling out of Netflix. Maybe they're beginning to think that way. They are beginning to think that way. The problem is it'll be incremental, because what they don't wanna do is take Star Wars off of Netflix because they still got a lot of money. They still don't wanna not let people into Disneyland, even if they're not Disney Prime members. Disney is in a position to take their revenues down 1 or 2 years dramatically and come back with the mother of all recurring revenue businesses that takes offline and online. That's the gangster move that might take Disney to 3 or 400,000,000,000 in market cap. It it's so interesting because I mean, and now we're almost getting into the weeds on on stock prices, which which I don't like to do. But, I do think Bob Iger is one of the best CEOs of history. Fantastic. Like, just the acquisitions of Pixar, Lucasfilm, Marvel, these things Stole Star Wars. Stole Star Wars. I I don't even understand. Other than maybe George Lucas just said, I just need $2,000,000,000, whatever. I'm getting divorced, or I want a new Winnebago, or I don't yeah. I can't I thought that was one of the great we don't talk about that, but people talk about Tim Cook filling the shoes of Steve Jobs. My gosh, Iger took over from Eisner, who was a very big personality, and he's done an amazing job, and he brings some really nice qualities to a CEO position. He seems humble, he seems thoughtful, and he has done a fantastic job with the company. So I put in the book, I talk about which company could be the 5th horseman, and I talk about Disney. And I think Disney is one of the few few, quote, unquote, old media companies that could in fact start punching at this weight cla*s. And I used to think you were you mentioned Uber, and and I used and I I remember when I'm reading when I was reading the chapter in the book, oh, when's he gonna mention Uber? Because Uber is for cars like Amazon was for books. That was just a starting point, and then you actually mentioned that exact analogy. Because Uber really is kind of almost the Amazon of logistics in a weird way. Like, they can do logistics on anything that requires GPS and pick up and drop off and so on. But now so can Amazon. So I thought Uber had a shock because I thought Uber was going to be the last mile fulfillment for a lot of different companies, and be a threat to Amazon's back end fulfillment. I no longer think that's true. I'm more bearish. This is what Uber needs to be. Uber needs to be the operating system of all travel, So it's that I'm going to LA tomorrow morning, when I pull up Uber it's to get to Newark, I need to get to a position where Uber acquires Expedia or some other players, and I type in the address in Beverly Hills where I'm going tomorrow, and it tells me the most efficient way, and all the options for getting there. Airlines, hotels, Uber, all of it, and they start owning all of my travel, just the way Amazon now owns all of my retail, the same way that Apple now owns all of my media at home through Apple TV. That's the only way Uber's gonna get to several $100,000,000,000 in value. My prediction is that actually Airbnb surpasses Uber in market cap and value, because Airbnb has a moat that Uber doesn't, and that is you and I could start a ride hailing firm in New York with about $50,000,000 because what you need is supply, you need drivers, and then you need demand, people who want to take rides, and you can create both of those things locally. With Airbnb, you need to create supply, people who will rent out their houses, but you need to create demand on a global level, because the people who want Airbnbs in New York are coming from everywhere in the world. So the moats that Airbnb has built are actually bigger than Uber, and that's why you're saying Uber has local competitors propping up everywhere, whereas name a competitor to Airbnb. Exactly. Like one fine stay. Yeah. That's a niche product at the high end. They're probably they're probably Uber they're probably Airbnb will buy. I my prediction is Airbnb passes the value of Uber in the next 24 months unless Dara purchases Expedia, which I think they might. It could be. I mean, the problems that Airbnb and Uber both have and I see this very particularly with Airbnb. So for the past, I would say, 3 years, I've only lived in Airbnb's until just recently. Yeah. I didn't rent or I didn't own. But now what I'm seeing married with kids? I have kids, not married. Got it. And your kids come visit you at your Airbnbs? They come they come visit to my Airbnb wherever I'm Airbnb ing. Indeed. Wow. So you you you live in Airbnb? Oh, I I I just recently changed, but for a reason. And the reason I had to change is because, I started seeing, and maybe not everyone sees this, there's a the and this is where the you're 4 avoided. Yep. There's huge regulatory backlash against Airbnb. So for instance, the the Department of Justice, or somebody at that level Yeah. Is subpoenaing every record that Airbnb has. They're trying to and, locally, laws are being made in every city Yeah. Against, people who are just, owning for, investment purposes to Airbnb. Paris has limited the number of nights. New New York has limited you can't you have to own the place for Airbnb. If you own 2 places, you can't Airbnb in both both places. Now Yeah. Now everybody in New York's breaking that law Yeah. And everybody's doing side deals also. I've seen so much stuff within the Airbnb infrastructure. Yeah. But what I'm most interested in is the fact that I'm also seeing people I know get subpoenaed, meaning nothing bad to them, personally. So I don't know what the target is. It's just we're going to take all your Airbnb records whether you like it or not. And that that can't happen on Google. No one's subpoenaing Right. Go you're you're no one's sending you an email saying, we just subpoenaed all your Google search records, but I I've seen that subpoena. We're looking at every place that you've stayed at Airbnb. So the question is whether the hotel lobby is stronger than the taxi lobby, which Uber was basically able to roll over in, Right. New York. I think Airbnb's value proposition has so many fans. I think they're gonna come to an accommodation. I think they're gonna start paying taxes like the hotels do. I think they're gonna start being better citizens in terms of, I mean it's come out that Uber opened in Argentina and never applied for a business license. They just started operating. They didn't even bother applying for the whatever, the $49 business license in Buenos Aires. They just set up an office and started telling people to turn on their smartphones and offer rides. So I think all of these companies are subject to some sort of regulatory threat. It may be greater for Airbnb, it sounds like you know more about it, but what Airbnb has been able to do, creating global demand and regional supply, is really powerful. So, anyways, we'll see. I agree with that. So I wanted to get into this t the the t algorithm, what you say are the, components of of success of of these 4 companies. Because I think, again, I think it's interesting for me just personally, how this applies to personal and individual success. Because I think these companies are so unique. There's lessons to to learn from them. One is the first product differentiation. Just thinking about that on an individual level, I mean, you know, given that everybody's being replaced by every commodity human is being replaced by robots. You can't stack at a warehouse anymore because a robot's gonna replace that. You really human capital now has to differentiate itself to be to be successful. You have to be and that's why content is king versus distribution. You have to offer something creative and and individual to to succeed. I don't know if you see that direct translation. A 100%. And you yeah. I I feel as if you could teach my class because I try and apply these principles to personal and professional success, and I think that so a lot of people tell our kids over lunch when they come speak to them follow your passion, and I find that people who tell you to follow your passion are generally already rich, and I think young people need to focus on find something you're great at, and then become the best in the world at it. Don't don't even strive to be the best at it, strive to be the only one that can do what it is you're doing at that firm, and establish real differentiation. And then just circling back to the passion part, if you become really great at something, the psychological and financial accoutrements of being great at it will be so rewarding, you'll start to become passionate about it. I think that's true. And and, Mark Cuban sort of says the same thing. He says, you're gonna become passionate at what you're good at versus the other way around. And it's funny. I I tell my daughter, who's 15, and she thinks about college even though I'm not as in favor of college, as as many people know. But, she told me her she Hold on. Hold on, dude. To to not talk your daughter out of college. I I know. You you write about this in the book. Your daughter out of college. But but I've never once hired based on college degree, and I know the goal of anomaly, and there's a lot more people that do. Yeah. I I agree. I agree. But I just think college has become such a scam, by the way. I agree with you. The financials are gonna say that. But here's the bottom line. You're successful, you have the economic wherewithal. I'm gonna guess that your 15 year old daughter is pretty good at school, and she's gonna have an opportunity to get into the right side of a caste system, and it's awful that it's a caste system, but it is, because the kids who go to college end up making, on average, 3x with the kids who don't go to college. Now, I'm not suggesting everyone go to a mediocre college and take on 100 of 1,000 in debt, but I'm going to assume your kid has opportunities to go to a good school. And trust me on this, a decent college is a great plan b for a young person. Maybe it might be we might have to have you back on the podcast. This really could be, like, a 5 hour discussion. But given I'm always about supporting them and giving them strategies to to succeed at what they wanna do. Yep. So you're right. She has I she told me her GPA the other day, and she was sort of it was like a a little bit of a brag about it. She said she has a 4.1 GPA, which wasn't even possible when we were kids. Yeah. I remember that. But there was so much extra credit now That's right. That, they high schools want their kids to get into all schools, but everybody's got a 4.1 GPA now. Yeah. And I said, you why don't you find some area of life where there aren't a lot of women and become really good at it? And and and I say for her, she's she's a a girl, so there's lots of areas that are male dominated that women aren't as much successful in where that's how you could differentiate yourself. Sure. So for instance, if she entered 50 poker tournaments and and won 1 or 2 with the 4.1 GPA, then she can get into any college. Right? So that because then she has product differentiation. Yeah. Well, at 4.1 so I I think we're thinking along the same lines, but my advice to her if I was her uncle or godfather would be differentiate yourself by going to MIT with your 4.1 GPA, and then going to venture capital, who's gonna have to hire 100 of female partners because there are none now in venture capital. But getting into MIT's hard, like Well, sure, it's all hard, but my guess is if she applied to several places with a 4.1 GPA, she'd get into a great school. It might not be MIT, it might be WashU. There's a lot of great schools out there, but if she has a successful dad, she has an economic wherewithal, she has a 4.1 GPA, which means she understands how to play with others, she understands how to make deadlines, she understands the act, she would be, in my view, there's very little downside. I don't meet that many people. Are we allowed to curse on this show, by the way? Yeah, of course. It's the Wild West. I just don't meet that many really successful people in their 30s or 40s who went to a top 20 school and say, You know what? I really f**ked up going to Stanford. I hear that never. And some people might say college has become too expensive. I get it. College is not for everyone. Hands down, it's not, but if you're in a position to go to a good slash great school as a young person in this economy, by all means, get to college, and if you happen to be Steve Jobs or Bill Gates or Mark Zuckerberg, and you are so exceptional that you drop out of Harvard in your 2nd year, fine, but assuming you are Bill Gates is a really bad strategy. Go to the Plan B, and if you're fortunate enough to have the wherewithal and the opportunities to go to a good slash great school, oh, hit the bid and go. And not only that, football college football is a lot of fun. College is a lot of fun. There's then your next one after, product differentiation, I actually think is your most important one, which is Visionary Capital. So essentially what you say earlier about Amazon, which is that their even though their earnings are low and and such traditionally such a a sort of a bad sign on Wall Street Mhmm. They're able to monetize their vision and, basically, say their vision has value. That's such an important thing. Like, having a vision for everything you're doing that is sort of bigger or more interesting than the vision of the people around you, that's a winning path to success. Mhmm. I mean, there's lots of ways to to talk about that and directions to have that vision, how to have that vision, and so on. But I think that's that's such an important, personal philosophy to have is really to think about what you value and and what your vision is for the future, which involves also learning a lot so you have a vision. I think it's important early on to have a code. So take this back to unimportant stuff, business. Jeff Bezos' 1997 letter saying we're gonna massively invest across these tru truisms of consumer value, value selection and convenience, have basically set this company apart forever, because everyone just keeps storing cheap capital at them. So your ability as a young person, and most people aren't this thoughtful to say what is my code for how I live my life? What is something I really want to develop into an outstanding personal attribute? Do I want to be do I am I naturally an empathetic person? So maybe I have an opportunity to be the most empathetic person you know that really is, am I a welcoming person? Am I a warm person? Am I quote unquote strategic? Do I work harder than anybody else? Take something that you say is an attribute and really go crazy with it, and identify your code early on about how you interact with the professional world, how you interact with your friends, with your romantic relationships, and try and consistently reinforce that code. Because people are drawn to people, not because they necessarily agree with their beliefs, but based on the conviction of those beliefs and consistency. I think that's really true. And, again, with Amazon, we see it directly with, you know, the fact that they con people get constantly throw cheap capital at Jeff Bezos despite the earnings proof, which is normally what requires you you know, which you need to have to get capital. People love his vision and his consistency and so on. With Steve Jobs, I would say it was more a personal vision that he always had, but that was enough to translate into the visionary capital for, Apple, then Pixar, then back to Apple, which drove cheap capital to them. And and and and NeXT as well. Yeah. Why would Apple buy NeXT? Not be not because of their computers. It's because Steve Jobs' vision. Yeah. So it's such an important thing. I would I think that's that's the most important thing. I'm gonna skip to number 4 on your list, which is also incredibly important, and nobody ever really thinks about this ever, but it's likability. I think these 4 companies have mastered it. Regulators moved in on Microsoft when it was, in my opinion, less powerful than any of these companies right now. But we don't move in on these companies because they're really likable. Yeah. Like, no like like like you you point out, Larry Page is likable, and Steve Ballmer whether he's likable or not, I don't know him personally, but just Larry Page in the news is more likable than Steve Ballmer was then. Zuckerberg and Sandberg versus Ballmer and Gates, who do you wanna see an attorney general go after, and maybe you'll make them governor because they're going after these mean people who are unattractive and come across as very Darwinian? I mean, hey everybody, lean in. Sheryl Sandberg's inspiring. Yeah. Tim Cook is impossible not to like, and what I would go one step further than this. I think these companies purposely wrap themselves in a neon blue, rainbow, or pink blanket because we stereotype progressives, and I'm a proud member of that community, but people stereotype us as nice, but weak. We're Alan Aldo, we're not a threat to anybody, whereas conservatives are largely stereotyped as smart, but mean. So the perfect foil, if you're Darth Vader and Ayn Rand during the day, is to talk about universal guaranteed income, which is what Jeff Bezos is talking about. It's to talk about the important debate around trying to balance family and work and be successful, which is what But if Sheryl Sandberg was a big believer in gun rights, or if she was really pro life, would Facebook be flying her around the world to speak to large audiences? So, the perfect illusionist trick is to come across as wildly progressive, because we're literally seeing this is literally putting a wolf in sheep's clothing every day. And I think it's total bulls**t. While I believe these people are generally progressive, I don't think, I think these people believe it. I think it's you're not going to see a company in the tech community put a senior manager on stage to talk about gun rights or conservative values, because those scare people. Yeah. But these companies are wildly powerful, more powerful than Microsoft, but they're so likable. They're visionary. They're concerned with the world. They're putting men on Mars. They're curing death for us, Right? Right. So we're we're much less inclined to promote or vote for someone who's gonna go after them. They have mastered the art of likability. Well, and I think, again, you see this on an individual level. No one's gonna hire someone they dislike versus someone they like. They don't even know the person. Right? Because they only they haven't hired them yet. They haven't worked with them. But no one's gonna hire so they there's the standard expression. Who do I wanna ride? Who wanna who do I wanna sit next to on a plane across the country? This person or this person? I'll hire the person that I wanna ride cross country with, you know, on a plane. So likability at every level is is important. You have to like an actor to like the movie they're in. Yeah. And now there's all the with all these news reports about different actors and celebrities, it doesn't affect their acting ability, but but the actors that are no longer likable are not gonna get hired for anything ever again. And I think likability is something that I I feel is not taught. You know, it's a skill. And like you said, we don't know what these people are actually like. I don't know any of them personally, but and maybe you do. But we don't know whether they're actually likable or not in a room, but they work really hard at, having that the presence of likability. And I think that needs to be taught or thought about by young people. It needs to be considered, at least. Yeah. So, I mean, it's complicated. Right? The right playing with the right toys or the or the wrong toys, but there's just no getting around it. These people manage their brands and their public perceptions very carefully, and they're they've done a fantastic job. And then we're not saying, like, they anybody should lie. Sometimes people have inner strengths they don't bring out because they don't realize how important it is to likability. These are, I don't know them, but everything I know about them, I think these are very decent, likable, good people. But they're very good at managing certain communication and attributes that make them seem very soft and cuddly. When during the day, these people are Darwin and Darth Vader, make no mistake about it, they play full body contact business and they make very brutal decisions, they dominate markets, they put companies out of business, and they don't put warning labels on your iPad even though your kid has a crack like addiction to the thing, right? So it's not, they're smart, they're just better at this than anybody else. What do all Fortune 500 CEOs have in common, or I would say 450 of them when you meet them, and I met a lot of them? They're really likable. You don't you wanna like them. Even the ones that are also psychopaths, because there's a whole a huge relationship supposedly between Between, yeah. CEOs and And, yeah, being psychopathic. Yeah. And and yet, part of being a psychopath is is knowing how to play the long game because they don't have any kind of short term cares about what people think about them. So, like, they realize likability is an important way to play the long game. Now I'm not suggesting students and young people think in that way, but I think, you know, like, Sheryl Sandberg has vulnerabilities, and she's not afraid to express them, and that makes someone likable. And She's an inspiring person. I think she I think she's impossible not to like. Yeah. She's an inspiring and inspiring woman. A lot of the stuff that used to be thought of as personal, and that you don't talk about in a business context, if it's likable enough, they say, let's get it out there, because it'll it'll make us more likable and less likely, but it'll stave off, it'll it'll make the point at which regulators come in, it'll delay it being likable. And and again, I think on a on a personal level for for success, that's that's hugely important. And I think, and, you know, number 5 is very interesting. You call it, vertical integration, but I think the idea that, you know, you should focus on one thing and be great at it is sort of almost like an 18 hundreds type of idea. Out of the water. Because it's okay. If you wanna be good at being on the assembly line, get really good at it. But that's over. So now you need to be good at many things. What you call vertical integration for these companies, I think young people and middle aged everybody needs to be good at many things. Not not a 100 things, but, like, let's say, 5 things. You need to have, you know, a set of abilities. Maybe you need to be good at persuasion, humor, reading, and and maybe a few other things to succeed. You have to and then integrate them all. So what what I was trying to get out with verticals, I believe the most value creating decision in the history of business, most people would say it was Apple's decision to launch a phone, I would say that they got the brand right but the decision wrong. I believe it was Apple's decision to reallocate 1,000,000,000 of dollars out of advertising and go into this dying medium called stores. And when you think about how crazy genius this decision went, was 2,002, e commerce taking off, stores declining, and Jeff Bezos walks into his board and says, I've got it, stores. But he saw the pre purchase broadcast as an ability to build brands that valerium steel was dulling every day, but the actual consummation of a relationship between a brand and a consumer still has to happen in the purchase experience, and the opportunity to bring people in and give them an experience in an Apple store versus the experience they have when they're connecting a Samsung phone in an AT and T or Verizon or Best Buy store is an opportunity for us to create a relationship that has such tremendous halo and brand power, that we're gonna be able to create operating margins of a Ferrari and have the production volumes of a Toyota, which has created a company that'll do double the profits this quarter than Amazon has done in its entire history as a company. So all of these companies have done one thing, they control the consumer experience, they've gone vertical, and I think the only way you can be a 4 or $500,000,000,000 company, as Tesla has done, they're not doing franchise dealerships. They're owning the experience, they're going vertical. So I believe the opportunity here for manufacturers' brands, and what I'm trying to convince, I work with 28 of the 100 largest consumer brands in the world. If you're P and G, Rolex, Nike, Samsung, I don't care who you are, and I work with all of them, you need to get into stores. You I wanted to get P&G and Unilever together to make a counterfeit for Whole Foods. And they said, well, why would we do that? I said, well, one, you'd have access to these incredible purchase experience that would buttress the irrational margins you have on your brands, you'd have access to all these long tail brands, which is where all the growth is, and they said, but Amazon would just outbid us. I'm like okay, fine. Start pissing on more fire hydrants, put Amazon on their heels, shoot a flare across their bow, and make them pay more. But I think what you're going to see with Nike cannot support its irrational margins unless it goes from 10% to 30 or 40% of controlled distribution, because the relationship, the physical contact you have in a relationship, when you, that first handshake, that first kiss with an individual, if it goes really well, you're gonna find their neurosis cute. You're gonna find a way to get along with their parents. If it doesn't go well, everything they do is gonna start to bother you, and you're gonna start thinking about kissing another brand. I need to remember this about all my relationships, basically, going forward. But, that's so interesting. Like, I was really, I I was really surprised at first when Amazon bought Whole Foods. Like, it seemed like such an unusual decision. Now, of course, with their Amazon Go stores where you could sort of it's amazing technology where you can walk in, pick out some books, walk out, and it sort of automatically, you know, charges your Amazon account. It's brilliant. I I think every store is gonna work like that. I think Amazon ultimately will probably dominate the whole retail and even mall space. But, something bothered me about the Whole Foods purchase just because it seemed so, like, out there. Like, why Whole Foods? But, like, it was great how now they're doing their classic Amazon thing, which is they're they're cutting prices, which is Whole Foods is always you know, there was always the joke Whole Foods is whole check because they're so expensive. So they're cutting the prices to get rid of the stigma of Whole Foods, and and then they're just gonna start collecting data on all these people. And, eventually, they'll turn it into, an Amazon Go type of experience and dominate groceries. And you point out how what a big percentage groceries are for for retail. It's just an intelligent move. So I was I was I was hoping you were giving me props on this. You know, the week before the acquisition, I predicted it on Recoat. Oh, I did not know that. Yeah. That's my claim to fame, is I got lucky, and I predicted the acquisition for the whole business. How did you predict that? Oh gosh, this makes so much sense. This is obvious. This will be to That's so funny because I think that because obvious. Yeah, this will be to Facebook, what Instagram was. First off, you could shut the stores down and just use them as distribution centers and it would have justified the 2.5% dilution Amazon made. They now have warehouses and supply chain relationships with all the long tail brands, and it's centered within 2 to 3 miles of probably 40 to 60 percent of every wealthy household in America. They basically just bought 10 years of time. They just fast forwarded their strategy to own your refrigerator by 10 years. It would have taken them 10 years to build out these warehouses. So with all of this, do you think in general, you know, the value of commercial real estate is gonna go way down in in general? Because you're basically, valuable value per square foot is going way down across all commercial real estate. You know, offices are getting decentralized. Situations like the, you know, distribution centers, like if Whole Foods were becoming all that's being highly, gonna be highly more efficient. It makes me think that commercial value of commercial real estate, which will then bleed into residential real estate Mhmm. Is just gonna go not crash, but just slide down forever. So I can answer that question. All I need is the ZIP code. Show me a ZIP code in an affluent neighborhood, and I'm gonna show you commercial rents that outpace inflation for the next 30 to 50 years. Show me a zip code that's middle cla*s. Look, stores, the rumor of the death of stores is greatly exaggerated. It's not that stores are dying, it's the middle class that's dying. So go into a middle class neighborhood where household income hasn't grown in 30 years, and I'll show you stores being boarded up. Show me Manhattan, Costa Mesa, San Francisco, I'll show you retail rents that have outpaced inflation for the last 20 or 30 years, even one degree outside, Redhook, the real estate is booming because what are they doing? They're building warehouses for Amazon out there. So retail, you're going to see, we're going through a natural rationalization of square footage in retail. The percentage of mall space grew double the rate of population growth from 1970 to 2015. We have triple the per square feet per capita in the U. S. As we do in Britain, and 50% more in Canada, so we're going through a cyclical rationalization of the number of square feet, but what we're going to see is more money per square foot. So if you own, if you own, commercial real estate in the Inland Empire, in, 40 miles outside of Los Angeles, yeah, that's rough. But if you own, commercial real estate in Santa Monica, you're fine. You should make a real estate hedge fund or something. Well, I'll, you know, General Growth Properties and Simon, who own all the high end malls, they've lost a third of their value. They're gonna be fine. So because they've been, you know, selling off their properties in lower income areas? They own if you look at the where their malls are, they're in the most affluent neighborhoods in America. And those people are fine, more disposable income, and still doing 88% of their transactions through a store. I like how, in the book, you mentioned you still can't figure out why Short Hills, New Jersey is so proud of the fact that they have, like, this high end mall. High school football team. Yeah. You meet anyone from By the way, I used to shop there as a kid all the time. Anyone from Short Hills go it says to Don't Know, I said, we have a mall. Have you been to our mall? I mean, it really is a source of regional pride there. Which which a which, let's say, 50 years ago or 30 years ago, it it would have showed the the decline of kind of the, Main Street. You know? Main Street America is dead because it's replaced by mall America, which is the shame that, you know, a town is proud of its mall. But it was just kinda funny that you point that out in the in the book. So, Scott Callaway, thanks so much for coming on the podcast. I really recommend your book, The 4, and the subtitle is the hidden DNA of Amazon, Apple, Facebook, and Google for a lot of reasons. Not only to understand kind of the the corporate history of these 4 companies at a very kind of high level, but also sort of the dangers and things to look out for and and the predictive, ability of what that means when you understand these companies. But, also, I found it very interesting from a personal level how there's lessons of success in looking at the histories of these companies. I'll tell you, I'll tell you one joke. When I when Amazon bought Whole Foods Yeah. The very first thing I was worried about was that they would combine immediately in this AI way their recommendation engine Mhmm. Inside Whole Foods. So I'll, like, shop for kale, and I'll put kale in my thing. And then suddenly, a little window will pop up. People who buy kale tend to go to aisle 3 to kill themselves. So that's what I was worried about. That's your joke? That was my joke. Yeah. Wow. Okay. By the way, that joke's never worked when I've used it, so it's never what it's worth. I like it. So one quick fact on Amazon. The value of Kroger's, largest pure play grocer in America, declined 30% in between the time that Amazon announced the acquisition of Whole Foods and closed on it. Whole Foods is 1 11th the size of Kroger, and subsequently Amazon cut the price of salmon 30%, so salmon and the value of Kroger have each gone down 30% since the acquisition of Whole Foods by Amazon. That that you're you're that's more interesting than my joke. It's not that funny, though. Right? Well, you can make a punch line on it somehow. Alright. Well, thanks again, Scott Galloway, author of the 4. I really appreciate it. Yeah. Thanks for your time. Thank you. That was fun. We good? Is that what you're looking for? Yeah. Yeah. You enjoy it? Yeah. You take a much more humanistic view of these things. I like that. I I think we dived into a lot of the corporate issues because I know the companies very well. I've I've I've I'm speaking at Google in a month. I've I've I've been involved in every single one of these companies. So what's your gig now? Like, how do you make a living? What what are you doing? I mean, I have because I think of you as sort of the stock analyst that I used to read about your financial analysis. That could be the goal you can write about. Next time on The James Altiger Show. Seven and a half years ago, I got thyroid cancer, and the average life expectancy of somebody in my situation was 14 months. So let's look at, like, a best case scenario. You're looking at a maximum of 3 years. That's about right. Yeah. When you first realized the full depth of what was happening, what was your first reaction? Immediately, everybody became very important to me. Immediately, time became super important to me. The desire to connect with the meaning overwhelmed the time I had for the meaningless. You know, life is just way too short to get paid to hang out with people you don't like. Can they ever make, like, I don't know, robots the size of cells that just go through and find find all the cells and patch them up. I mean, that's the science fiction, you know, the nanotech stuff. I don't know that they're we're close to doing something like that. One thing that people always say to me is, you know, I can't imagine what it would be like to go through what you're going through. And what I always say to them, neither can I? Like, my brain can't fathom it any more than your brain can. It's just this fact that is unimaginable. I now have 3 interviews coming out each week. Make sure not to miss even one by subscribing now on Apple Podcasts or wherever you get your podcasts.