Galloway Says Twitter Should Consider Subscription Model

Business Week on iTunes, SoundCloud, o Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio every weekday, or watch us on YouTube by searching Bloomberg Global News. You're listening to Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. Bomberg Business Week, Yeah, Friday, wrapping up the week, close to it. What do you make it this week? Um man? I think there's a lot more about kind of getting

back to work and getting back to normal. I still think the city is going to be tricky for us, but I think, you know, we hit it off with a really smart medical conversation. I think it's in our weekend show. But it just you know, Manhattan versus the rest of the world. So we know Manhattan's trickier just because of the amount of people and just the structure of how we work in a very dense city. But I do feel up more optimism, and we certainly saw

it play out in the markets. I mean, the Dow up three point seven this week, the S and P Jason up more than three percent, and the Now's up two percent, so there definitely was some enthusiasm in the markets. I do worry though about some of these other tensions, but I don't know how much is because it's an election year, or how much is some real tensions that might complicate the economy bouncing back. Yeah, I worry about those tensions too. I mean I worry about the tensions

that are geopolitical. I worry about the tensions that are domestic, you know. I mean, I think we all have watched with you know, horror, everything that went on uh in Minnesota, and then you know, you sort of factor in the social media aspect of this, and you know, Twitter has been at the four of all of that. And man, do we have the perfect person to talk about that. I have to say our next guest, I was gonna

energize when we talk with him. He's New York Times bestseller his book The Four The Hidden DNA of Amazon, Apple, Facebook, and Google. He also wrote The Algebra of Happiness, which if you have not read you should. You should also check out his video that's online. Uh. He's professor at n y use Stern School of Business. Delighted to have back with us, Scott Galloway, professor as we said, at the school. And he's on the phone in Delray Beach, Florida. Scott,

So nice to have you here with us. How are you doing? Has your family, has your team? Everybody? I hope? Okay, um, well, thanks very much, Carl. Good to be with you. That's a generous question. Yeah, we're all. We're all doing really well. I think this is if you're blessed to have a job, if you can work from home, if you're healthy, and if you're and I check all those boxes, you're doing great. Well.

Go ahead, Jason, Well, I was just going to say, I mean, we were getting ready for this show today, Scott. And as a veteran broadcaster podcaster, first of all, as an aside, your voice has been in my head all week because I've been listening to a phenomenal podcast that you contributed to called We Crashed about we Work, And

maybe we'll talk a little bit about that later. But as we were getting ready for the show and watching everything that's going on with Twitter this week, both Carol and I were saying, we got to get your take on this. What's the thing that you're taking away from all this sturm and dragging between the President and Twitter. Well, so I think I think Twitter's real crime is it

a share price didn't go up. I think Facebook if if Twitter is a dumpster fire of damage to the commonwealth and a rage machine, Facebook is a mushroom cloud. But Facebook appears who have entered into sort of this unholy deal with the President, so it appears that the

President isn't going after Facebook. I think the opportunity here the most elegant regulation his regulation that addresses the externality, which is an underlying business model that creates division and says hey and team depression and the likes, and at the same time unlock shareholder value. I think this is an opportunity for Twitter to consider a subscription model. I think a large population of us out there who are somewhat addicted to Twitter, and organizations to count on it

to disseminate information would pay money for it. And if you look at the three most successful media companies of the last ten years, it's Facebook, Google and Netflix. And Netflix is not doing damage to our teams or to the commonwealth because one is subscription and one is ad driven. So I think that's this time to address the underlying cancer here and not just the symptoms. And that is an ad driven model as opposed to a subscription model.

And I hope the Twitter board shows some leadership here and decides to move to a subscription model because the thing that is causing all the problems there is an ad base model that encourages rage. Yeah. Well, you know, it's interesting. I was thinking about this, Scott, you know, the role of social media generally and Twitter in particular.

You know, is it is it more social you know, which means we kind of just let it, let it do its thing, or is it more news media you know when and that and with that comes responsibilities and accountabilities. I mean, I have to say I love that Twitter. I feel like funally has a little bit of a spine here in terms of saying, there's a lot of information out there, but how do you see it? How

would you teach it to your students? Well, it is a media company that osman media companies and media companies have a responsibility and they they do try and be They said, we don't want to be the arbit of truth. And I think most people want our our media firms and companies sitting at the helm of the Bob's let of information for the population to at least try to be the arbiters of truth. And that in fact, truth is a thing. And people immediately go to this notion

of First Amendment. And what you have on Twitter and Facebook is that the more incendiary or damaging a statement, the more engagement it creates, and thereby more nissan ads, more older values. So you have um antivactors, white supremacists, conspiracy theorists who who are getting more than their fair share of oxygen because of drive shareholder value. And this

is kind of the mother of all externalities. And if you look at the rise of white white supremacy, if you look at extreme nationalism, if you look at the demonization of immigrants and incidences around hate crimes, if you give those that data set and the rise of social media. To a statistician here, she will tell you that the

two are correlated. And so we have an existential threat from the largest platforms ever constructed by man that are driven based on an algorithm that tears its social social fabric. So the key is how do you maintain the great paste that's all the shareholder value. There are some wonderful things about these networks, but get rid of the calories and that as the rage. And again I think it's

moving to a subscription model. But I think if you know, Jack Dorsey doesn't have an own hot Hooly alliance with with Um the president, if his stock had been up tenfold, he would have shark repellent in our capitalist society. To damage our society is bad, but to not have your shares go up as worse. So Twitter is in a difficult spot. Well, let's continue our conversation with Scott Galloway, Professor of Marketing at n y U s Sturing School

of Business, New York Times best selling author. His most recent book, which he joined our show to talk about when it came out, was The Algebrow Happiness Notes in the Pursuit of success, love and meaning and Scott, I gotta ask you. You know, we talked a lot about Twitter and what could be done there, and Facebook and what's happening. We've had a lot of conversations with folks in Silicon Valley who say Silicon Valley will be forever changed by this pandemic, maybe in a good way, maybe not.

What's your take? It's an interesting question. I think. I think there's several dimensions there. I think on a a shareholder level, I believe that big tech is going to consolidate or further consolidate the market, take advantage of the stress and the ecosystem, make some great acquisitions of companies that are going to be on sale, and will Facebook and Google will emerge from this pandemic Instead of controlling sixty cents on the dollar, there control seventy cents on

the dollar. And I think the market senses this. And if you owned a hundred dollars with of Amazon, Apple, Facebook, and Google on January one, you know, I think are out fourteen or seventeen percent of a year. So the pandemic is a calling of the herd, and people are betting that the elephants that survive will have more foliage posts the calling when the rains return, and the big

tech will be big winners here. Amazon is about to announce the first sort of fully vaccinated supply chain through a massive investment in distancing protocols, additional compensation, and they'll really be the only firm in the world that can offer kind of end to end near COVID free products services vendors, which when you think about it, is just a staggering opportunity, not like what Disney is trying to do with professional sports bringing sports back to sort of

a COVID free environment in Orlando. So I think on a shareholder level, they win. In terms of San Francisco, I think there's been a reversal of this incredible trend over the last thirty years where human and financial capital has flown have fled into cities. As of January, that was estimated the two thirds of all economic growth would

happen in twenty supercities. That has probably been reversed. And it's not that San Francisco and New York won't be great places to live, are great places to do work. It's just they're likely going to see some cost pressure and housing prices come down But the places that get crushed are the people who had to commute in UH and have no reason to be in paying a thousand dollars of foot for a home in Grantwich, Connecticut or

Short Hills. But I can pay three hundred dollars of foot in any one of a hundred different suburbs around the nation. I think those areas get just crushed. So that stays with us, right, We've seen it, you know, Scott already from the Big Banks talking about you know, not bringing work back to the city and creating shops outside, you know, in the suburbs of the same thing as you said, you know, Silicon Valley, Twitter saying hey, you want to work from home permanently, that's okay. So that

is a significant shift going forward. It is, although it's sort of there's a lot of celebration among big tech companies employees about work from home and the worrior the fear I see is that if Mark Zuckerberg can move your job to Denver, he's likely going to move it

to Bengalore, India. And that is the ability to put on a suit, put on you know, UH, to look good, get ready, manage the interpersonal relationships navigate and motivated team in person, FaceTime politics, whatever you want to call it at headquarters is of skill. And to think that people are going to get to work from home and go to a low cost environment for free is naive. This is going to be an opportunity for big tech to

substantially reduce they're human costs. And what we're gonna end up with is the most valuable companies in the world with an even smaller full time employee base. Keep in mind, the largest work from home company in the world right now is Uber. Is that a good thing. Seven million of their driver partners technically work from home, and as a result, Uber has been able to to skirt minimum wage and health insurance regulations. So I think work from

home is a double edged sword. Yeah, we definitely saw the wholes come out because of the virus. I do we just got a couple of minutes or so left here, Scott. I do want to ask about um your piece in the Washington Post where you talked about creating US Corona Court, you know, akin to the Peace Corps and some other issues missions that are out there. Tell us about that. I think it's really provocative and could be something that

really could make a difference. Well, I think there's a huge opportunity here, Carol, if you think about our economy is dependent upon pretty much or our society to a certain extent, is dependent upon the apex of the relapse and the fall are hopefully the lack thereof and the flattening the curve, if you will, is simply a function

of testing, tracing and then isolation. And I would argue the weak link is tracing where we only have tracers in the United States, mostly focused on food born illnesses and STDs, and it's estimated we need between two hundred thousand and four hundred thousand. We also have about a third of the four million kids who were supposed to show up for a freshman fall classes saying they're thinking

about a gap here. So I wonder if there's an opportunity similar to the Peace Corps, similar commission the Latter Day Saints, where we arm this kind of army of super soldiers who are largely I don't want to say immune, but more resilient to COVID nineteen, train them in handheld technologies, and create an army of tracers similar to what South Korea did to suppress the curve, and not only would we ideally suppress the curve, but maybe award them tuition remission,

give them more opportunities for college. And as importantly, the reason we were able to pass such incredible brown, groundbreaking legislation in the fifties, sixties, and seventies is over somewhere we're going to happen. Two thirds of our leaders elected leaders have served in uniform together where they put country in front of politics, and I think we need that sort of reunification, if you will, and recognition that greatness

is in the agency of others. And I think it's time to have a core of young people who serve their country. Yeah, there's been a tremendous disconnect um with that, UM, Scott, thank you so much. Truthfully, Jason and I were still looking forward to getting some time with you, and I really appreciate it, UM, and I wish we had kind of another hour to talk with Scott. Take care of Scott, be well, uh and stay safe. Scott Galloway, Professor of n y U Stern School of Business, on the phone

in Delway Beach, Florida. His books the best seller The for the Hidden DNA of Amazon, Apple, Facebook, and Google, and do check out the algebra of Happiness, pursuit of success, love and what it all means. As I mentioned, there's a great video to out there online. Thanks so much

for listening to Bloomberg Business Week. Download the podcast on iTunes, South Cloud, Fluoberg dot com, but wherever you get your podcasts and of whereas, you can always listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube by searching Bloomberg Global News m