Interview With Scott Galloway: Masters in Business (Audio)

He teaches digital brands and marketing at the n y U Stern School of Business. I first kind of came into contact with Professor Galloway h through a famous video he did called the Four Horsemen of the Internet about Facebook, Amazon, Google, and Apple. And he is one of those people who is just a fast sating study, a person who does deep dives into the things we kind of take for granted about technology, about marketing, about how we interact with some of our favorite products. And he does it in

a way that's not purely academic. He formed a number of companies um L two red envelope profit and and sold them for uh tons of money. And and so he's more than just a theoretician. He's an actual practitioner. He's always fascinating. We always have a delightful conversation every time I I have him in the studio. UH. He has a new book coming out next year, so we'll have an excuse to bring him back when that UH comes out. In the meantime, with no further ado, my

conversation with Scott Galloway. This is Masters in Business with Barry Ridholtz on Bloomberg Radio. My special guest today is Professor Scott Alloway. He hails to us from n y U Stern School of Business. He is the author of the Digital i Q Index, a global ranking of prestige digital competence. He has been ranked one of the world's fifty best business school professors. He founded several companies, red Envelope,

Profit l two. He has also been recognized by the World's Economic Forum as one of the Global Leaders of Tomorrow. Professor Scott Galloway, Welcome back to Bloomberg. Thanks very good to see you. What brought you to my attention a few years ago was a video that you had done. It was a conference appearance about the four horsemen and they were Amazon, Apple, Facebook, and Google. So so why

don't we start with those. Let's talk about Google. In a recent L two video you did, and you also speak every year at the Digital Brands Conference d l D I think conference. Um, you talked about Google low its price eleven percent and yet it increased its total ad revenue. They seem to really be dominating online advertising.

Can imagine how difficult all those whether you're competing with them, your clear channel, outdoor, uh, you're the New York Times, your hearst, and you have a company that's able to a competitor's able to increase its revenues and lower its prices eleven percent, And initially the analysts thought that was a sign of weakness because their cost per click was going down, but effectively, Google every year gets more and more competitive. It's like, how do you know if an

industry is right to be disrupted? They raised their prices faster than inflation when they'll underlying increase in innovation. You could argue that media or television is incredibly right to be disrupted and increase the prices much faster than inflation while viewership has gone down, whereas Google is probably the least disruptible business right now in media because every year it gets substantially better, and they keep loaning their prices.

So the other um leader in digital advertising is Facebook. Are they ever going to be able to give Google a run for their money? Oh? They already are. I mean between the two of them, and it really is a duopoly if you look at all a digital marketing. Uh, Facebook and Google accounted for a hundred and three percent of the growth. Now what does that mean. It means that if you aren't Facebook or Google and you're in

digital marketing officially, the industry is in structural decline. So if you work for anyone who's attach platform, search engine optimization and agency doing media planning online, your business like newspapers and magazines is in decline. So let's talk a little bit about Facebook. You said their pivot to mobile was one of the greatest shifts of a large corporation in history, arguably the most agile company in the world. Three years ago, zero percent of the revenue from mobile.

Mark Zuckerberg said he did not believe in kind of the app economy, thought it was all gonna be about browsers. And he was wrong and pivoted and turned the fire hose of great management, great engineering talent, and now I think about eighty center the revenue comes from mobile. It's it's it's hard to imagine a pivot. We all saw mobile coming, but yeah, who wasn't able to get The New York Times This is this is the most impressive

agile pivot I think in the history of business. Now you've also previously called them one of the greatest s bait and switch set ups of all time. Why is that so? The general the general promise from Facebook was invest in your Facebook page, Nike, and you're gonna have this incredible asset. You're gonna have a captive marketing or a captive asset, which will be people who have raised their hand and said I have an affinity for Nike, and then you'll be able to communicate directly to them

that you'll have an asset. In order to build this asset, you had to advertise, and Nike know the firms spent millions of dollars advertising to build their fan community. And it was nice because it had this vanity metric of how many fans you had. It became a symbol of whether a company got it or not based on how many how many fans you had on Facebook. And then once kind of that, that hundreds of millions of spending to build these communities with sort of done. Facebook turned

around and said, just kidding. If you want to reach these people, you've got to advertise and organic reach. That is the percentage of Nike's messages that reach their end fans went from a down to eight, five or three. It's tantamount to you building a house, putting the finishing touches on it, putting the lock on the door, and then the county shows up and says, chess kidding, you don't own the house. We do. I think this was one of the greatest bait and switches in corporate history.

What did that do to the trust factor of corporations wanting to advertise on Facebook? I think it was temporary because there's so much momentum. It's such an outstanding product. They have such power that and h and quite frankly, also, I think they've done such a great job managing their image because I think their management team is likable, which I think is incredibly important. People have largely overlooked it. If you want to, if you want to figure out

a way to like somebody, you figure it out. What about a fatigue? Is something that certainly is an issue these days. Yes, so the the engagement levels, the percentage of people interacting with a piece of content on Facebook or of their posts are sponsored, meaning they're basically advertising. And he started right into your right into your feed. One of six pieces of content is someone's paying to get in front of you, interrupting, interruption advertising no different

than television. However, the interaction or the percentage of people are liking, sharing or commenting on that comment on that content has declined in the last nine months, so you are seeing what you would call ad fatigue glow now. Having said that, they have other properties and tons of different ways to monetize, but the core platform does does seem to be experiencing ad fatigue. And what about Facebook Live and Facebook Native Stories? Is that going anywhere or

what's the outlook on that? So I I personally believe that the biggest innovation or the most the thing to watch right now is from our one of their properties, Instagram, specifically Instagram Stories, because it is squarely going after Snapchat and what's interesting and I think the most interesting piece of data in the world of media right now is to look at snapchats user growth and daily active users once Instagram launched Story as a direct competitor, and what

you've seen a Snapchat's growth has decelerated dramatically since Instagram launched Stories. So people think Snapchat is the Facebook of video. My thesis is that, in fact, Facebook is the Facebook of video, and it's coming after Snapchat. And it's fun to speculate, but I think Snapchat goes public, goes crazy on first day of trading because people haven't had access to a unicorn in a while. But I think it's gonna be ground zero for ringing the bell at the

top and be one of the greatest. I think we're setting ourselves up for something that might be the spark that torches the market with Snapchat. I'm Mary rid Hilts. You're listening to Masters in Business on Bloomberg Radio. My special guest today is Professor Scott Galloway of n y U Stern School of Business. He is an expert on Internet technology, digital marketing, branding, and let's talk about one

of the biggest companies in that base. Amazon. Last time you were here, we talked about why you thought the stock was overvalued, wouldn't go anywhere. You very famously issued a mia Kalpa Online said pretty much that marked the start of the next major leg up um. What do we think of Amazon today? So first off, yeah, I was a hundred and ten percent wrong on that. My initial thought was that the futures about multi channel retail.

Their fulfilming costs were escalating, and I thought that they were going to need to buy a multi channel retailer. The delivery costs also had had hats going up in billions. Yeah, it continues to but now now people see it as an asset, not a liability, and there's some some merit

to that. So at the time, I thought, okay, Apple would be the first trillion dollar company because somebody's going to get there, And what Apples pulled off is exceptional lowest price or low cost provider because of their supply chain power. But at the same time the margins premium price products, so the volumes of Toyota with the margins of Ferrari, which makes for the most profitable company in history. Now Amazon, Amazon is the most disruptive company and the

largest economy in the world. And if you look at the moats and a number of distinct businesses they would have that would probably be greater than a hundred billion dollar businesses on their own, they have the most apples right up there. But now you have aws, um, you have the core platform itself. It looks as if Amazon Prime and their media properties are turning into a juggernaut. Possibly the brill growth business for them is that they're going into the business of selling picks as opposed to

mining for gold, leasing planes, leasing tractor trailers. Um, they're going after FedEx and UPS twillion in market cap between DHL, FedEx and UPS, and I think Amazon's decided they want most are all of it. I think most of us are who have e commerce companies or brands are going to start using Amazon not only as a as a platform with Amazon Marketplace, but using Amazon to deliver the last mile when you say a ws' referring to the cloud services that they offer. I have a funny Amazon story.

So I have a treadmill in my basement and I have a tele flat panel TV which have plummeted in price smart TVs inches four hundred dollars. I want to hang it. You know. It sits there for a week with the drill for a month. Finally I'm like, I'm gonna go back to the store. I got it and have them hang it. They want more to hang the TV than the TV cost, and so I start looking on let me find a place to look online and I never even heard of Amazon Home Services. What is this?

It's sixty nine dollars that one of the local stores wanted four fifty to hang it. So I set up an appointment. The guy shows up, He hangs the TV for sixty nine bucks. I say, who else do you work with? And he reels off everybody, and I said, those are all wildly disparate price points because I get paid the same. It's the same drill, it's the same stuff. He goes, I've done three houses on a block where the costs are sixty nine dollars, three hundred dollars, and

five hundred dollars. It's me. And then I start looking at the Amazon services that are offered. It pretty much everything for your house. Where are they going to stop growing? Where do they draw the line or are they just completely no market is too far for them. I think when it comes to your low consideration purchases or your high consideration purchases that you don't enjoy auto insurance, I

think Amazon wants all of it. And what's interesting about Amazon and one of the incredibly impressive things the hardware innovation of two thousand and sixteen, even though it came out earlier in that was the Echo. And if you have do you have an Amazon Echo? I do not. So you get one of these things and it literally kind of blows your mind because you get a glimpse into what the future of retail and commerce might be.

You could you put these things around your house and literally at this void, at this volume, you know, you see Alexa and it says yes, and you make a request order an Uber add tied to my shopping basket.

And when you start thinking about the frictionless nature of voice, you start thinking about Amazon's purchase history, the fact they have your credit card one click ordering, the reputation for value they have, the fact that they have a warehouse within twenty miles of the population, which is miss it's misleading because it's really eighty percent of the disposable income of the US. You have what I believe, and by the way, I don't know this. I don't work directly

with Amazon. I believe that they're headed is something called Prime squared or some something similar to that, they'll announce a test area and they'll say, Barry, we know a lot about you. We're gonna install these echoes all over your house. Whenever you need anything, you calibrate up or down. We send you two boxes three times a week, ones with your stuff, the second you put stuff that you don't want back in the box, and we calibrate some more.

And over time, we're gonna take your entire retail ecosystem off the table from everybody else, and of everything you order in your life that you don't enjoy order and you enjoy looking for cars, you want to go, You want to go buy that bmw z A, your wife wants to buy that pair of Christian lebutan's the other cent of stuff you don't enjoy buying. Amazon is going to do for you automatically. They're going to do a test,

most likely in a college town. They're gonna announce the're gonna take prime from dollars a year to eight thousand. The stock is going to be per per user. Perhaps all the stock is gonna become anti gravity and go to a trillion dollars. I think Amazon is the first one. Again, So here's why I haven't gotten the Echo. I have two experiences, three experiences with voice recognition software. One is

Google Voice, which is sort of hilarious garbled thing. The second is Siria, which, if you read the Demnuota correct, is one of the funniest collection of of typos. And we've all experienced really embarrassing things because of the way that works. So I looked at Echo as just another mediocre voice recognition product. You're telling me that's not true. Well, they're trying to Google an Apple trying to it's probably more ambitious. They're trying to do it more around utility.

Find find me an Applebee's, or how do I get here? Or call Barry. Alexa is alright, get me information, use it for search engine. My son does it to test geography skills and capital skills. But they're positioning it around commerce.

And when you think about the easiest place to make decisions around commerce, seamlessly saying Alexa, you know, barbecue eight people Friday night, and it immediately goes into your purchase history, your preferences, your brand preferences, and puts together a package of additional additional ribs imported beer. But I p A because that's what you like and then a selection of stuff, and it begins to calibrate and can get it there

within two hours. Because of their fulfillment network, you at some point to sort of throw in the towel and realize that Amazon is the only retailer that matters, is the only retailer I need in my life. And as we get more, we get busier and busier and suffer

from more and more time poverty. The opportunity for voice artificial intelligence, an incredible investment they've made in fulfillment infrastructure will result in a value proposition where you might decide all the shopping and decisions I make around commerce in my life, except for the ones I love, I am just going to outsource to Amazon. You also have an Amazon. To a certain extent, the game is sort of already over.

I play I Play Texas holding poker every every few weeks with a bunch of guys, and at some point, when one player has most of the chips, he or she's already won because they can muscle everybody out by just going all in until they finally win. Amazon basically is at that point their access to capital is probably they've had access to cheaper capital for longer than probably any company in modern history, and as a result, they're

basically muscling everybody out. I'm Barry Ridholtz. You're listening to Master's in Business on Bloomberg Radio. My special guest today is Scott Galloway. He is a professor of brand strategy and Digital Marketing at the n y U Stern School of Business. He is the author of the Digital i Q Index, named one of the world's fifty best business school professors. He's founded and sold a number of of companies. We were talking about Amazon before and how they had

a clearly defined mission. What is the problem with Apple's mission description? Well, there there isn't one. The others have various succinct and compelling missions that are the the investment the investment community understands and demands. Apple does not. It's not entirely clear what Apple is trying to achieve long term. So as a result, Apple has become a what have

you done for me lately? In the investment market, it's evaluated in the context of every product release, and if that product doesn't revolutionize the world, which many have, the stock gets taken down. So you have you have the other horsemen, Facebook, Amazon, and Google trading it anywhere between kind of twenty and sixty times, and you have Apple trading at seven to ten. So you could argue Apple could be the first trillion dollar company if it just got a story, if it just said this is what

we're about and where we're headed. So I'm a mac head going dating back to my nine classic Mac Classic, and to me, the Apple story was always it just works. When the competition was Compact, HP, IBM, dell Um, they didn't just work windows back in those days. Was it was a nightmare. And we've seen a variety of innovations, starting with the iPod. There was nothing new about that technology. It was all off the shelf stuff. They put it together in a way nobody else did iPod, iPhone, iPad,

I Watch. Have they run out of innovation or or are we still milking the last five major products? So that seems to be the key question. A lot of people would say our air pods really the design breakthrough, the you know, the wireless earpieces. Is the Apple Watch really kind of the legacy of the most creative industrial engineers in the world. So a lot of people would say that. I would say that Apple was theoretically suffering from low te It appears as if it's it's lost

its mojo. Having said that, you know, it just has so. It has such an incredible brand, It has so much credibility around anything, you know, any item, and quite frankly, it's trading it. It's still trades it. You know, it feels you're you're in this business right. It doesn't feel expensive. It feels like, I mean, basically bury It's up in the last couple of months because people just with no

real catalyst. So here's here's the crazy data point we pulled together when we were doing research for for this show. You take the Apple cash hoard, just the cash dollars it has. There are only thirteen companies in the SMP five that their entire worth is greater than Apple's cash ord That that's astonishing data point, which which raises the question what they should do with all that cash. But

let's come back to that. I want to talk about the Apple Watch, which people have called kind of a failure. But when you look at the numbers and you look at what they've done to the Swiss watchmaking group, let's let's talk about it. That is the Apple Watch a successor failure. I notice you're not wearing one. I'm not so the And this goes back to what Apple strength is This thing on my wrist. I haven't wound it

in five years. If I'm honest with myself, it's my attempt to signal masculinity and success to the opposite success opposite sucks. I think men who wear expensive watches are basically trying to communicate two women. If you mate with me, your kids are more likely to survive than if they mate with someone wearing a swatch. So this is a door winnie or feathers period to feathers, they have no very little utility, and Apple's genius has been figuring out

a way to make a tech item feathers. Apple has effectively decided they want out of the technology hardware business, which trades at a multiple of EBITA, and they want to be in the luxury business, which trades at a multiple of revenues. It's a far superior business. The only way they can sustain their margins is by having what we would refer to a self expressive benefit. Apple has become the ultimate display of wealth. If you do a heat map by operating system Android versus iOS. It is

a heat map of wealth. Manhattan lights up iOS, You're going to the suburbs. It's Android, the new feather. If you have an iPhone, it means you're more likely to be successful, educated, and have a random sexual experience. This is this is the reason that they have the highest margins in that industry. And the iPhone is the first technology product whose margins have not eroded. Is the product is matured because they've figured out it's a luxury brand,

it's not a technology brand. So one of your presentations you talk about the mobile phone as the defining technology of our age. Apple captures the profits Samsung captures, which includes some overlap because they're a big supplier to Apple. The rest of the industry or negative fights the losses.

And Apple versus Samsung is illuminating because they've taken different approach to Samsung, invest two to three times the amount of their top line revenues and traditional advertising and digital marketing. So what does Apple do with all that excess capital they have open stores. Most people would say that Apple's genius has been the iPhone. I would argue that Apple's genius move over the last thirteen years was building four and fifty temples to the brand in eighteen markets called stores.

I'm Barry Ridhults. You're listening to Master's in Business on Bloomberg Radio. My guest today is Scott Galloway. He is a professor of Digital brands and Marketing at n y U Stern School of Business. Last time we had you on, you caused a little bit of UM controversy with your infamous letter about millennials. We talked about it, So let me ask you the question, do you love or hate millennials?

Oh gosh, you know it's easy to hate millennials, but I would for all the complaints the business owners UM put forward. At the end of the day, there's two sides of the transaction. And the reason why we put up with millennials and they are more expectant, more difficult to manage, is because they're more talented than we were at their age. The access to technology, the increase in education, more kids are graduating from college is exceptional. They they

are the most talented generation. There's a price to it, though. They want to talk about their careers. When I got my first job at Morgan Stanley at u c l A, we had a career talk once a year in the form of a bonus and it lasted about fifteen minutes and that was about it. It was so the notion of going into my boss's office and saying, I want to have a career talk, you know, six weeks after I started, and I can't I can't even fathom the response,

but I would have received. But at l two, the most inspiring people that I think, the thing I enjoy the most is um is the kids that we have, some twenty two to twenty eight year olds, and I would describe them, and this is a sexist statement, and mostly women. High school paledictorians are now women, mostly athletes, the competitive grit in their background and and it's kind of pasted it to say it that I'm not not

not necessarily think it's a good thing. But went to outstanding universities, they have real academic, strong academic training from the best institutions. These people are, you know, they feel as if they could be the junior senator from Pennsylvania.

These twenty six year olds, they are so inspiring. At the same time, they're used to feedback, they're used to recognition, they're used to clarity around roles and compensation, and these are all things when you think about it, we demand as we get older and we have more currency in

the marketplace. They've just figured it out earlier. The ones that aren't good it seems to have, you know, they don't maybe don't have the skills, but they seem to hold on to some of the negative attributes, and those the ones to get all the all the press. But on the whole, millennials have built L two for us and I'm I'm I'm a fan. The fascinating thing is for guys who are our age and we're not that four apart in years, technology is something we've learned for them.

It's a native language, it's something they grew up with as infants. You start playing with an iPad, right, it's just there. Um, all right, So let's let's talk about some of the other things that for For those of you listening, you should definitely check out Professor Galloway's videos on YouTube. They're incredibly informative and often entertaining. A line you said not too long ago I thought was fascinating is advertising is a tax on the poor? Explain so

effectively technology is allowing us to opt out advertising. Um. I love modern family. I don't know if you watch Modern shortly, but I now downloaded from my tunes for even though I could download it as quickly from ABC dot com, because ABC dot com makes me watch nine minutes of commercials. I think just as we become numb to mass shootings in the US, we become numb to advertising. I think advertising is so ubiquitous but at the same time so terrible. We were talking about age. I'm gonna

I've worked out my whole life. I'm at an age where I can no longer to impact sports when I'm swimming, and swimming is typically the first few minutes are shocked your system, no fun. I'm not gonna be able to do this very long. Then you get into a rhythm and you get gone. I think great storytelling on television is like that, where it takes a while, sometimes two or three episodes into the season to really get into it. I find I'm just finally starting to get into season six.

I think it is of Homeland. I equate advertising to your first eleven minutes in the pool and then someone takes an enormous dump in the pool and they it's shocking, it's out of character, it's it's disturbing. You have to stop swimming and listen to and clean it up for two minutes. That is advertising. So technology is allowing us to opt out. You're gonna have the New York Times dot com without advertising soon. And the reality is they don't get that much money from you. It is such

a game of scale. The New York Times only gets two dollars and seventy cents a year for littering that that gorgeous journalism with all sorts of ads. Modern Family only gets fifty five cents an episode per viewer. Business Insider Barry only get sixty five cents a year from making you endure all those irrelevant, obsolete and obtuse ads that slow the load time. Advertising is becoming attacks the

poor and the technologically illiterate pay. So does that mean to companies like Google and Facebook if we're just becoming oblivious to these ads, Well, Google, you're sort of asking for the ads. I mean, Google has the most relevant ads in the world because you're the one saying I'm interested in auto insurance. And then it says, all right, these are the organic listings about insurance companies or articles on auto insurance that have credibility of that people search for.

But along the right rail, we're gonna let auto insurance companies advertised. So it's almost like you're asking for the advertising. Facebook is still interruption advertising. I think they're gonna have to get into different businesses because I do think there is at at some point every media company is going to have to offer a non ad supported product. But these these companies are content is so compelling. Most probably most successful media company in the world, uh Google, because

you've wanted the ads. I would say, the second most successful media company in the world last thirty years, Bloomberg. And guess what it's not outsupported, it's subscription base. A survivability index for all media companies globally is very easy. Take the percent into the revenues they're getting from subscription versus advertising. The part of this house that makes a ton of money. It's a sub subscription. So the more advertising, the weaker the longevity. You'd rather be HBO than ESPN

right now. You reference not too long ago, The Winner Take All Society, which was a book in the mid nineties by Robert Frank, a prior guest on masters and business, and essentially says, no matter where you look. You can look in sports, you can look at actors, you can look at music, you can look in companies. There's a winner in a given space, and then everybody else comes in third. What does this mean for technology? What does this mean for content? It's dramatic, and you you do

this for a living. There are of the SMP five hundred, there are only thirteen companies that beat the index five years in a row. It's unbelievable. So every you know, it's it's never been better to be a winner. And unfortunately we have this lottery economy because those companies get a tremendous amount of heat in advertising and publicity. We assume there are more winners than there are now. The

winners are enormous. You hit it, hit it big. It's never it's never been a better time to remark, be remarkable. Access to global markets, the ability to scale your intellectual property, the ability for good products and good people to get it out there on whether it's linked In or Facebook or just consumer discovery. There's never been a worse time to be good. You know, It's the way I think of it is. When I got out of business school, we all made eighty five thousand dollars and some made

seventy and some made a hundred. But now in my class, I teach two classes a hundred twenty kids, I can tell you there's gonna be a billionaire in one of my classes tonight. One of the things you said was that it's never been easier. I'm gonna just keep throwing your own clues. It's never been easier to be a billionaire in this society, and it's never been harder to become a millionaire. The compact is breaking down. You go to undergrad you study hard, you got a good job.

You got to graduate school. You're a good citizen. You work hard, you get the credentials, you you you get a partner that's also, you know, a contributor to Economically, it's not unreasonable to think you could save a million bucks over twenty thirty four years and retire a millionaire. That's getting harder and harder to do. But at the same time, everyone has an outside shot at becoming part

of something unbelievable in becoming a billionaire. The other kids in my class, I think there's gonna be a decent, non zero percentage of my class that's going to end up getting unlucky, getting getting having some dents in their career background, which, by the way, they won't be able to gloss over because LinkedIn creates MLISS transparency and will be excluded from quote unquote the information economy, and will end up living with their parents until they're fifty or sixty.

We are we are entering an economy where it's winner take all, and we don't have you know, we don't believe an income distribution. We liked because there's some very well advertised success stories. People would rather everybody if people play the lottery because it's statistically as bad for us. We know it's not good, but hey, baby, my numbers

are gonna win. My wife teaches fashion illustration and designed to high school students, and in the high school they actually when they're doing career canceling with these kids, warn them you anything you put on Facebook, anything you put on Instagram, anything you put on Twitter is part of your permanent record, and you're affecting your career chances ten, twenty, thirty years down the road. This stuff never goes away. It's a new credit score. It's unbelievable. Um let's talk.

Since I mentioned Twitter, let's talk about Twitter another quote of yours. A good board cannot save a bad company, but a bad board can ruin a good company. What what's the problem with Twitter? A negligent board? Unforgivable the fact that they've decided that, whatever it is, two thousand employees, a great product should be subject or should be led by a part time employee needing the ceo CEO and I don't know him. Uh my, he sounds like a

product fishionary. But to say that a company is complicated and environment as competitive, where as many people, uh the way they have as many investors, where they have as many people trying to make a living from the fortunes or misfortune of Twitter, to decide that a part time CEO is the right guy, how do you say to the rest of the management team, by the way, almost all of whom have left. This thing is like rats

off a ship right now. How do you say to them, this guy at twenty five hours a week is better than you at fifty hours a week, and it's such a great platform, and it's a fantastic product. You you literally have negligence on behalf of the board to put up with this. It's part of our idolatry of innovators.

A young guy who's very impressive shows up in a black turtle knock neck and they think we've reincarnated Steve Jobs and and they it is very very dangerous strategy to compare anyone to Steve Jobs and assuming it's gonna happen again, so we end up, like in an abusive relationship, we end up taking abuse that we shouldn't. It's it's ridiculous. He's gonna go down. He's gonna go down as one of the worst CEOs in tech. And it's not his fault.

It's his board's fault. Boards have a fiduciare responsibility. The board of Twitter is negligent. We have been speaking with Professor Scott Galloway of n y U Stern. If you enjoy this conversation, be sure and check out our podcast extras, where we keep the tape rolling and continue chatting about all things digital. We love your comment, feedback and suggestions. Please write to us at m IB podcast at Bloomberg dot net. Check out my daily column on Bloomberg View

dot com. Follow me on Twitter at rit Halts. I'm Barry Hults. You're listening to Masters in Business on Bloomberg Radio. Hey guys, let me ask you a question. Do you have trouble finding dress shirts that fit well? Thanks to proper Cloth, ordering custom shirts has never been easier. At proper cloth dot com, you can literally order a high quality,

perfect fitting custom shirt in less than five minutes. Create your custom size by answering just tens and book questions, no need for measuring tape or trips to the tailor. Perfect fit is guaranteed. Remakes are completely free, and expert staff are standing by to help. For premium quality, perfect fitting shirts. Visit proper cloth dot com Custom shirts made smarter. Welcome to the podcast, Professor Gallie, Thank you so much for being Scott. I don't know what the hell'll call you.

Scott's good. During the break, we were talking about what happened to comments in general, and I said, when I was writing Bail Out Nation, I would put a post up online do five hundred to seven hundred words. People would give me comments, suggestions, ideas, sources. I was writing that in real time relative to the crisis. I mean the was due August two tho eight, and then that weekends was do all hell broke loose? And so it got extended to December thirty first, but I'm writing it

in real time. My readers are really my co authors. They did a tremendous amount of work. You publish a ton, especially on YouTube. What's going on with some of the comments on on YouTube? What is that? Like? Them are really supportive, interesting dialogue. The comments when they don't agree with you are generally respectful, but that two or three percent can be pretty rattling. And everybody I like to put up this persona that, Oh, I don't care, I

can take it, I don't care what other people think. Yeah, and it rattles me some of you when people really say these incredibly person and what's weird? Does some of them seem to research you and try and find something that's gonna gonna upset you or even even frighten you.

So there's an element of it that's really disturbing. What's interesting, though, is that if you think about that, the notion of identity and that is Facebook forces you to say who you are in some feature and it's created, I think,

a more civil platform. And even when you think about the power of identity or around Uber, you wouldn't get in the back seat of a driver that hadn't been seeing his or her face makes me feel more comfortable, and they wouldn't likely let a stranger get in the back seat that they couldn't track down with their credit

card number or their identity. So this notion of identity as it relates to Facebook, Uber and even Airbnb, I would argue that the identity technology is really what's made air and b Airbnb a twenty five or thirty billion dollar company or value company is a really powerful notion in the Internet age. But I think it's good that people that platforms decide to force people to say this is who I am, and it creates a more civil environment because all of a sudden people turned very mean online.

Your colleague and n y U are run Sunda. His book on the sharing economy, goes over how originally the eBay rating system companies like Airbnb and you Uber, and I thank you. I should have referenced him my whole song I just busted into around identity. I was was ip theft from Professor cinder Rog and I got it from a roun so to friends. I absolutely was ripped off his comments there. I use n y U as

a as my research bench. I think I've had six different professors from n y U, and if you had in Columbia, I think we're up to ten the academic intellectual capital in New York with Wharton an hour that way and Yale an hour that way. Is just it's an astonishing amount of and we have to get you out to one of the the dinners we have with various Nobel Prize people. UM. So, the other thing I wanted to ask you about, relevant to UM, relevant to the to the comments situation is what does that have

to with Facebook? Since they're making you identify who you are instead of having really vociferous comments, you end up with fake news that gets passed along repeatedly. That seems to be the Facebook equivalent of the the angry egg on Twitter, UM or just the insane comments on YouTube. Well, the scandal of we talked about Echo being the product of two thousand and sixteen. The scandal of two thousand and sixteen, and we just don't know it yet was

fake news. It's going to get It's going to get bigger and bigger in terms of the damage we we perceived or that has actually happened to society. Of our news is now digested and absorbed from social media. Eight percent of the news coming out of social media the week running up to the election was fake news. And one of the issues I personally have a Google and Facebook is this notion that if you look at their vocabulary and words matter, they're trying to avoid the word

media to describe their companies are saying their platforms. And the analogy I would use Barry is that if McDonald said, alright, eight percent of the beef we're serving you is fake and giving you encephalitis, and as a result, you're making bad decisions. We're not responsible for it because we're not a fast food restaurant. We're a fast food plot form. And I think these companies trying to absolve themselves of the responsibility and the damage they've done by calling themselves

platforms and not media companies. By the way their media companies, they create content, they sell advertising against that content. Boom, you're a media company. But they need to do a quarter of the fact checking and the resource investment that the New York Times and Bloomberg making ensuring that what we are digesting is not fake and making us sick. This is the scandal of two thousand and sixteen, hugely

damaging to our society. There was just an article in the New York Times this weekend about you know, there's all sorts of of ransomware. Um, not so much where they're taking over your computer, but there are people who have figured out how to game Google search algorithms, and so they dig up You want to talk about digging up stuff? They dig up from people because it's public. We've moved all this stuff from the from the government

sphere to the public sphere. Uh, mug shots. Someone's arrested forty years ago, thirty years ago for driving under the influence. That mug shot is there. It shows up in the first page of Google searches and Google and so it's not It says it's there for information purposes. They will take the mug shot down for a fee and that sort of um, blackmail shouldn't be. Google has a responsibility

for that. Well, I do think that is different because you canna make a bomb threat with the phone and I don't think the phone company is liable, but when when the search algorithm. But but I do think it's different. When Facebook is is got eighty percent of the content flowing through its platform is fake news? Is it that much? Is pily The week leading up to the election about the news coming out on the candidates was quote unquote fake news. The respective parties turned up turned up the volume.

I think at that point when they're when they're their their media channels, their platform have literally become totally toxic and totally misleading, I think they have a responsibility to make a statement. And what they've done so far is they're so remiss to alienate anyone on the far left or the far right, because, as Michael Jordan's said, Republicans buy shoes to everybody watches ads, so we don't care how crazy you are. We want We don't want to

alien anybody, and we want the entire market. We want everyone watching on on our platform. And it's sort of enough is enough. They're gonna have to come up with some standards, kick some people off, squelt some content, be acute, and they'll be accused of censorship. But they're gonna have to acting the same way a lot of these media companies, including Bloomberg, Herst kind of out there's gonna have to be something resembling editorial standards. You need to lose the

ten percent that's toxic. And otherwise they're from a business perspective, they're putting the at risk the people they're monetizing it. Once people come to realize, hey, this platform is a disaster. I think that's been Twitter's big mistake, and they're just now taking steps to not so much kick people off

the platform. The latest thing I've been reading about is if you're identified as a troll or someone who is harassing people because they're gay or black, or Jewish or what have you or Muslim um, they're basically not gonna let you put names in tweets, so you'll be able to harass people without identifying them. And it's it's just lost in the breeze and no one will see it or hear it. But and this is this is you know,

this gets me to trouble. But effectively, most of the leadership of these companies wrap themselves in a progressive blanket to a certain extent because a I think they have personally those viewpoints. But also it's awfully convenient because as a whole, progressives are perceived as being really nice but weak, and conservatives are seen as being smart but mean. And if a smart but mean person was running the most powerful company in the world Google, Facebook, Amazon, or Apple.

Regulators would step in early, so it's convenient for them to be seen as kind of nice and cuddly Granola. But the reality is, I don't think you can really claim to be a progressive if the company that you have a lot of power up has become weaponized by the far right. So I see hypocrisy everywhere everywhere here. These companies, these these individuals prostitute the progressive values in order to soften the image of their companies such that

they avoid regulatory scrutiny. At the same time they have allowed their companies to be weaponized by the far right. I find it. I find contradiction in it everywhere I use um. I've done a lot of work and a lot of writing on minimum wage, and I've been talking about we have this grand experiment going on in Seattle, in San Francisco and other cities that have been aggressively raising the minimum wage. Google what is the minimum wage for Seattle and it comes up twenty dollars an hour,

which isn't true. That's in five years. It's twenty dollars an hour. If you're this large, if you're this it's fourteen or twelve or fifteen, depending on which city you're you're talking about. And yet you know Google tries to do the first slot is the answer to your question as opposed to sources with the answer, And what's taken place is that it's actually shows up as twenty dollars an hour, which is wrong. Today the minimum wage in Seattle is fifteen an hour. So people have figured out

how to game Google for ideological reasons. There's you know, you can't organize the earth information if the information you're providing is inaccurate, so they need to get on top of that. Well that that's the exact point you're talking about, the paid versus organic listings, and organic listings do have some sort of credibility or or check. And again someone has someone has game that, and Google would rather not do anything, nor Facebook to suppress anybody from any viewpoint

around either giving them eyeballs or money. And they're going to have to step in and say we have some standards. It'll cost the money, but in the long run I think they'll be better off. Well, the alternative is enough people coming around and saying I can't trust Google anymore. By the way, the reason Google became Google is I can trust Google because of their crowdsourced algorithm. Their page

rank worked better than everybody else. Once it becomes clear that too often that no longer works and you're getting a gained answer that's inaccurate their business model. You know, they don't have a moat. Their motive is essentially they're better than everybody else. Once that folds away, they're in trouble. So they should really they should protect that like the crown jewels, and they don't. I I think you're absolutely

right there. I would argue that Google so far has more credibility than any than any objectively evaluated entity in the world. And we've talked about the last time I was there. I think Google is a modern man's God that as we become more educated and wealthier are the number of people who attend church or or think of religion is playing a large part of their lives decreases. But modern day anxieties around sickness, why do bad things happen?

What happens after we die? Um, those anxieties either stay flat or increase, So the decline in the belief or or the ability to get comfort from religion and concert with increasing anxiety, has created this void, and I think Google is has filled that void. One out of five queries to Google have never been asked before in the history of mankind. Think about a friend or rabbi, a priest that one out of the questions they get have never been asked before. Because I have so much credibility Google,

Google is a modern man's god. You used to be looked to the skies pray will my son be all right? Now it's Google query symptoms and treatment of croup. So now here's the problem with that? And this goes back to them protecting the crown jewels. I've had doctors. My favorite quote from a friend who is a doctor, what he says all the time is, of course, your Google searches the equivalent of seven years of medical school. It's

the same thing. So whether it's um any of the online medical things, if if you put any if you put any symptoms into Google, you will come up with a list of things. And if you're a hypochondriac, Google certainly is your your best friend. But the problem is, I don't know how trustworthy, especially in the age not only of of vaxer's But let's use the phrase agnetology, culturally constructed ignorance, whether it's global warming or vaccines or work. You way down the list of things that you know.

Nine eleven was an inside job and it's just a run of insanity. That sort of stuff has found more and more fertile ground to grow in in the Internet era. There was some advantage to when there was only three broadcast stations because that sort of junk never made it past the gatekeepers. So did a lot of positive things

never made it past the gatekeepers. So now we have to a fire hose, and it's becoming increasingly challenging for people to identify what is accurate and what is false, yeah, and and what's interesting in the face of those problems, so Google still is the most trusted I believe it's the most trusted entity in the world. Really, what if you you were talking about hospital right here, right now, all of a sudden, you get very worried about a

health do you what do you do for immediately? Well, you you do both because you need it takes two weeks to see the doctor unless you're you're bleeding out. And second, the next thing you do is look for hospitals with a specialty of what have you suspect? Well, not even looking for a hospital, but you start trying to self diagnose and understand more about it. I do believe the Google has right now more authority than any

entity likely in history of mankind. That's astonishing. I only have you for uh so many minutes left, so I wanted to get to my favorite questions. God, I have runs and runs of stuff that we're not going to get to before I forget. The biggest winner of Netflix, Netflix operating system for joy in our lives. Um you look at in some I think that the economy is

bi for Kate. There's only two sets of winners, and it's a small number of companies what I refer to as Benjamin Button companies that companies at aging reverse when you turn on ways and you use it, it gets better. The majority of products from the economic titans of yesterday, General Motors and Unilever. They age when I when I used a car, when I use toothpaste, that declined and value.

The companies that are garnering the disproportionate spoils of our modern day economy are Benjamin about the age and reverse. Every time you do a Google search, it gets one three billionth better the product. Every time you turn on ways, it gets better for everybody company, right, That's right, Facebook, every time you use it, the product gets better for everybody else. That's one set of winners. The other set of winners are the companies that help other companies reduce costs,

accenture most successful services company in the world. It's effectively helping big companies cut costs, outsourcing companies helping companies cut costs so effectively our economy. The winners are barfecating in the companies that age in reverse or companies that take care of the aged. You're either you're either Benjamin Button or you're dying, or you're you're caring for the sick. Those are the two companies that are working right now.

We began by referencing the four horsemen. It's always the next natural question is who's the fifth? So I went off in at Tangent there with my whole Benjamin Button wrap. But I effectively think Netflix does take information around your viewership. It's very simple, but it's very powerful. Last night, I'm watching House of Cards season four, episode eight, and Netflix is smart enough to go if Scott like season four episode eight, we think he's gonna like season four, episode nine,

and they start auto playing it. And it sounds basic, but it is the notion of of of an artificial intelligence figuring out what you want. And if you look at my home scream on Netflix, it has a bunch of stuff I want to watch. There are now more people, more millennials. More millennials watch Netflix or have Netflix than have cable TV. So arguably Netflix should be worth more

then all of TV. If you think that millennials are the generation, they have the most disposed b income, they're the ones that are going to go into the primary earning now. I think they do. I think also they do a fantastic job. The iOS is our mobile system for what i'll call the utility in our life. Amazon is our operating system for commerce. Facebook I think it's a little bit our operating system for loving relationships. And I think Netflix is becoming our operating system for joy.

I think it's got an opportunity to be a two or three D billion dollar market cap company. And Amazon Video actually will immediately start playing the next episode and to tell it until you tell it to stop, it'll it'll just check right into that, all right. So let's go into our favorite. We didn't do Biggest Losers though biggest loser snapchats. Now we said that earlier Snapchat. You think the I p O is going to be the

mark the high price of of Snapchat. I think I think it'd be better for our economy if it did well, because we need a third player in the ecosystem outside of Google and Facebook. But I think ap chat is gonna get public go crazy because of pent up demand from retail investors who have been excluded from Uber and Airbnb, um, and then I think it's gonna and then it's going to be sort of a slow, slow moving train wreck. Here's who I have down for your losers theme from

seventeen traditional advertisers. We talked about them. Twitter, we talked about them, Yahoo, we talked about them. Here's when we didn't talk about Pinterest. Why is Pinterest a loser? Fantastic, fantastic product, not a great business. Uh, immature management team that thinks it's in the business of art, not in the art of business. Again, another failure on the part of the board. And one of the things about venture capital is if you manage to get you have an

obligation to get the highest valuation possible. But the problem is when you raise money and I think at twelve or thirteen billion dollar market a little rich, Well, then you've got all these prefs um the companies should have been bought for five billion and everybody would have done really well. But now they convinced people invest in twelve or thirteen, it's effectively only three or four buyers of pinterest of all the brands we track at L two,

we don't know any actually buying advertising on Pintra. So I think again, this is a failure of a board. There's very few CEOs that can go from A to Z. I think they have a genius CEO in terms of product, he's not the guy to take it to the next level. And the board has failed to make the hard decisions around that management turnover. There has been an absolute uh. The word I would want to use debacle. I was gonna I was gonna use another term, but I was

gonna say cluster something, but cluster debacle. Cluster debacle. So yeah, I think it's a I think it's a fantastic company. I think it's wildly overvalued. Twitter overvalued, most overvalued company in the world right now. We Work seventeen billion dollars. We looked at a we Work space and it was fantastic if I was forty years younger and in the world of tech, these tiny little scrape great company, great concept,

might even be worth a billion dollars. But right now, if you look at WE Work, it's trading at four thousand dollars per customer. A little if their valuation stiff. If you take the majority of that WE Work buildings there in and you take the floor they've leased and put in a cool coffee bar, a great market, great concept, great business model, and it is a great business and a great business model. But that floor is now worth more than the entire building they're leasing that floor. So

is it a great company, yes, is it a great idea? Yes? Is it worth ten to twenty of what it's worth now, yes, most overvalued company in the world. You know, it's the same thing as a Regius or there's a handful of companies that do the office shares. They just made it younger, hipper. There's a bar and a and a coffee lobby, coffee lounge in the ground floor. The one on Brian Park is funky and hip. They do a fantastic. Look. Twitter

is an amazing company. I think it's worth a billion two billion dollars, which puts it at about se worth less than it is now. All of these companies are amazing. I'm not taking anything away from them. The problem is when you layer in their valuation, they make no sense. So let's talk about a couple of other things on

your loser list. Jet dot Com recently purchased by Walmart three and a half billion dollar, hair plugs, trying to make it, trying to make Walmart going through a midlife crisis, trying to hang with the cool kids, not recognizing it's a mature company that should be slowing down its campex and reduced, you know, in spending a ton of cash back to Shriff says, we we have a culture problem.

The most expensive aqua higher and history three three and a half billion dollars, or about six and a half million dollars per employee, will be the biggest write down in the history of retail. And what about Dollar Shave Club. You you've said another another great company, Dollar Shave Club billion dollars I think about I think about three and a half million dollars per employee, losing money supposedly had discovered a new model for acquiring customers online. To Lette

spent fifty million dollars on TV advertising last year. Dollar Shave Club spent fifty five million dollars on TV advertising. The biggest winner in the Dollar Shave Club acquisition was Procter and Gamble, who at a competitor taken out of the market place on Unilever's balance sheet. That's fantastic. All right, so let's get to my favorite questions before we run out of time. We've talked about your background, although I have to ask your at U C, l A and Berkeley,

right schools all the way through, just like you. That's right. I went to sunny stony Brook. We the joke was Berkeley the stony Brook of the West, but last week it was twenty degrees. Do you do you feel like you miss a little bit of California when New York weather gets like anybody is from California. When you come into l A. And you get in your car and you got in an outburg, which is my my pattern, you sort of wonder what was I thinking ever leaving here?

But then you're there for a week and you're like, oh, now I remember I don't know, it's pretty nice out there. It's fantastic if you and are a New York guy so born and Bread were born in Bread. To me, California would be fantastic if you could follow the neutron bomb and start over my second I love California, But every time I'm there, I'm like, oh, now I remember what my second life midlife crisis. I'm moving alley, running a port, losing money in movies, and and and and

and dying under suspect circumstances. I'm looking forward to it. Well, affair, I'll tell you my favorite San Francisco story that's like, oh, that's I love this place. But I consider myself, you know, socially progressive, left of center New York liberal. And I go out there and I'm Mattil of the Hunt. They think they think I am like Genghis Khan. They're just oh, so you're really an extreme right wing or I'm like, no,

you people are crazy. I'm pretty center center left. You're just astonishing um And I repeat this over and over. I love California. I have family in Lahoya. We spend time out there. One of the most beautiful place Newport beach spectacular. San Francisco is a world class city. Beautiful city in America. I can't imagine. And every time when you look, you travel a lot. Every country I go to, every city I go to, I'm like, this place is fat.

Like we were in Copenhagen not too long ago. I'm like, Wow, this is a great city. I'm not sure I could live here, but it's a fantastic city. San Francisco. Every time I'm there, I'm like, I could live here, And then by the end of the trip it's like, you know, I can. I don't know. They would not put up with my New York stick there for very long. I get away with it here, I can't get away with it.

There is there goods all right, So let's talk um, I'll do the abbreviated version of our favorite list early mentors. Who are some of the people that influenced the way you think about business and digital So probably my first business manner was a guy named David Anker who inspired me in my second year of business school, and I decided that's what I wanted to do with the rest of my life. He's a professor considered the father of

modern management. I had some really nice, uh kind of older brother father figure like people who are mentors for me right out of business school. UM, I got Impat Connolly, who just retired as CMO of Williams Nooma, has been a kind of a mentor for me as an adult adult person. UM, as an adult Warren Hellman invested in everything I did, the venture, the buyout guy out there. Uh, it's some great some of my clients said. Profit I got named Gorge Shank, who was the CMO of Levi's Canada,

was very generous with me. There was just some nice, very nice, you know, decent people who took an interest in me and we're very good to me. I feel very blessed that way. I was raising a single parent household. My dad was around, but we I didn't live with him, and uh, I was very fortunate at a very young age. A lot of you know, older mostly men, took an interest in me professionally and we're very generous with me.

So I consider myself very fortunate around mentors. And anyone who doesn't have mentors, it's gonna be tough to be successful because you need people on your shoulder who can give you advice even when they're not around, because you get to know him and you get to kind of channel how they would handle a given situation. So those are mentors. What about business people or other professionals who influenced the way you approach business? You run one very

successful business currently. A few of your prior businesses, profit and and red Envelope both were very successful. Who who were the big influences from a business perspective? You know? So my dad gave me a bunch of Peter Jarker books when I was younger, and I read those and I tried, you know that that was sort of the basis I think for how I approach business. But I wouldn't say like any one person, our individual stands out.

I don't. I don't model myself. You know. The only thing you guys to get older, you have a code. And I'm openly critical of a lot of managers. And every person I admire in history has one thing in common. They've given powerful people a hard time. And I think it's okay to be critical of people as long as they're more powerful than me. So that gives me a very broad target set. Punch up as opposed to punching down.

It's if you're being critical of people who have the same or less influencer power than you do, that's not being it of color. Starting at cattle, you're just bowling. So the people I admire most in in journalism and uh, you know, I wouldn't say in business, but have never been afraid as long as you're not being means spirited call out other business people. But I wouldn't say I have, like you know, there's so many incredible people you can look to now in business and Lincoln learn so much

about them. But I'm more about, you know, historical figures. I'm I'm a big fan of Winston Churchill and um, you know, folks like that. But I wouldn't I wouldn't say there's any kind of dominant I'm not a religious person. I'm not. I don't have what I call a course set of a course set of people I looked to for first off. So so let me digress a bit, because you just referenced something interesting. Um, the CEO of under Armour came out and said, uh, some positive things

about President Trump. He's asset to the business community. Their single biggest endorser, Stephen Curry and the Golden State Warriors came out and said, well, he's right that he's an asset if you drop the E T. And then that that got a little viral, and then the question became they had the CEO of under Romer and Curry had a conversation apparently all is well there what happens with the consumer society where we just saw what happened with

Nordstrom dropping the Avanca line. Is this going to be a litmus test amongst consumers and or their high profile spokespeople. So in the movie Broadcast News, William Hurst asked Albert Brooks, what do you do if your real life outpaces are as better than your dreams? And Albert Brooks turns him and says, keep it to yourself. And that's so Kevin

playing handled it poorly. I can almost guarantee you that when you're the sea of a consumer company and you come out for or against anybody half it's just so I'm not faulting him for less than half this time. I'm not faulting him for being positive. It's it would have been the same stupid move if you've been critic of the president. Nords From handled it correctly. They basically said, look, her stuff's not selling. They even said, we like her, she's nice, we like her and her team, but the

stuff is not selling. This is a business decision. In some political views from the CEO are are best kept to yourself. And when when Trump draws you in, I think you have a writer or an obligation to respond in a soufful a way as possible. But actually a lot of the CEOs of handled really well. I think the CEO Ford has handled it really well. I think I think Nords from handled it very well. What about the delete uber campaign which which basically forced him, the

CEO of Uber, off of Trump's business advisory board. Yeah, consumers are getting very savvy around how quickly they can rally around an issue, and then they're smart to hit people in their pocketbook. That's when that's when you really see action. Right. Boycott used to be more or less meaningless.

Every now and then one would have an effect. But between Facebook and others, Twitter and other social media, it seems that Boycott's can be organized and put into place much more quickly and much more effectively than than Withdrew in the past. Yeah, it's an exciting time from that end because you can rally people do a good cause. Travis being forced off of Trump's Business Advisory Council was a,

you know, a pretty pretty interesting thing. But the politics, the politicial politicization, if you're a politicalization of every company's now has become relard. You know. I don't mean I find I love politics, and I'm exhausted by it all. It's every day just you know, I just want to watch I just want to watch Modern Family and once a while and not have politics, you know, have I

can't even watch MSNBC and Rachel Matto. And I wonder if this is kind of officially another leg down to television, because I think TV and medium and politics have literally just exhausted us and we're ready for about a thirty year break. Except I just saw this headline the other day for the first time. Colbert Beach Jimmy Fallon, Falons, considered a sort of nice guy inoffensive, has had Trump on.

Colbert has been hammering Trump. So has um who follows Fallon. Yeah, they and their voice has been to push back against the president. It's good for it's not even good politics, it's good. Did you see SNL on Saturday? No, of course, the god the opening is hilarious. But it's not just the opening. I don't know if you saw the last one, it was literally the entire show, this segment with Kelly and Conway. Yeah, Jack Taper's uh yeah, that was just that was six minutes of and you know the White

House is watching watching it, seething, fuming. Yeah, it's it's just so, I mean, it's just so we're like, we're just totally in uncharted territory. And I personally, I mean, I have fantasies about this. I've done some activists investing if Twitter goes, but oh, ten, I want to signal

it now. I don't think. I don't think I have to follow thirteen D here, but I'd like to buy some between one and two percent of the company former group, renominate everyone but Jack Dorsey, and shut down the potus and the real Donald Trump's account based on really, I think he's violated their code of conduct well, harassed people, hate speech. I think they have. They have been inconsistent in their application of their standards around I think we're all afraid, but I think we got to turn that

thing off. My hope for the election was when November fourth came and went that's it, We're done no more and that if anything, it just became louder in one side. But what do you you're a markets guy, Barry, markets have gone up? What do you think? What's gone on here? Why are the markets you know? Yeah, well, first the narrative about about what was going on. I think what misunderstood it. Markets are looking at a trillion dollar infrastructure spends.

That's stimulative. Big tax cuts may create deficits down the road. Nobody was a bigger deficit spender than Reagan. It was fantastic for the stock market. So you you rejigger the corporate tax code, you repatriate two trillion dollars of Apple and everybody else's staships overseas, it comes back. You're looking at you know this is there could be. Most people look at the markets as they time it from the bottom in March O nine and say left the market

seven years old. That's the long definition of a secular bull market. We broke out to the new highs, and which means this market is three or four years old as a new bull market, and you've had a number of twenty resets. People tend to forget that. So if this market is three or four years old. Hey, the last correction which we had January of last year. Remember the whole conversation people were saying that as January goes,

so goes the market. H that was our seven. We could be a dozen years left from two thousand and this could really run. Plus, you look at the rest of the world. If you want to invest cheaply, emerging markets are really cheaply. If you want to invest aggressively, you look at the worst place in the world, a combination of Japan and Europe, and you invest there. But the United States is expensive because we we weren't the

multiple that Apple and Google and Facebook do. Everything is as bad as people feel, as much as the middle class is getting squeezed, as much as the popularist uprising call it Trump, called it Brexit, call it Leapan and France. Overall, we're the ones who came through the financial debaccle which we essentially caused. We came through with the best We We ripped the band aid off first. We didn't do what we should have, but we did something we We

basically bailed out a bunch of banks. We propped up a bunch of financial system that was ready to collapse. I would have done it differently. I would have sent everybody to bankruptcy court if I was benevolent dictator, and you would have been much It would have been more painful, but you'd be much healthier that much sooner. But here we are, seven years later. We have a functioning economy,

essentially under five percent unemployment. So we're the you know, we're we're the cleanest shirt in the in the hamper, so to speak. And so that's why the economy and the market continues to go higher. How are you interviewing me? You're listening to Masters in Business with Scott Galloway. I'm here with my guest, Barry Ritholtz. So so let's go back to our questions. You mentioned Drucker. What are some of your favorite books? By the way, all you need to do is pull my string. I said, I'm gone

that I've watched you. I've watched you. I was awake through most of that was pretty good. Favorite books? What are some of your favorite books? You sent it every time. So there are a few things I'm embarrassed about because I like to think of myself as educated. I don't speak a second language, and the red and The reality is I read a ton. I don't read a lot of books. The books that changed my life for the Peter Darker works, which one is give me the titles?

What is it the Twenty Minute Matter or The Modern Manager or his his early one about the Austrian economy. Um, this is really obtuse to my dad sent me, But I forget the titles. And then and then influence on me is I'm kind of a war buff. I read when I was in high school. I read all the Herman Wok books, Warren Remembrance, the Winds Shore Um. And I also just loved John Irving books. I think he's just so strange. John Irving. Did you like that movie?

Probably Robin Williams's best film? Really? Yeah, I would. I would challenge that. I'm gonna have to come up with a list. What would you like that better? Uh? Dead Poets Society? Yeah, um, good morning. But he's a he's a minor character in in good Will hunting Dead Poets Society. He's I would really have to And on the comedies, you know, some of his comedies were Mrs Doubtfire is a hilarious and he's wonderful and another one he's bringing.

I think it's called twenty four our photo. He's actually better at playing a psychopath than a comedian. I haven't seen that. I heard good things about that. So so herman woke Peter Drucker and yeah, that's what I'm That's what I'm sticking with. There's a scene in the Reason I have an issue with Garp. There's a scene where he's in the driveway. We won't go into the details, but he's got the woman with him when he's be ended. I think that scene ruined the book for me. Low budget,

low budget gender transition. Yes, exactly. It was before Tranny was a that's a good that's a good scene. It's horrific. In the plays his mother, she's outstanding in that as well. There's some she must have been excited to get a casting called to be Robin Williams mother. It's like than Sally Field was cast as Tom Hanks's mother and Forrest Camp and I think she was six years older than him, all right, I isn't wasn't Robin Williams older than her?

I don't know. I don't remember. It could have been that, all right. I know. I only have a fine amount of time, let's talk about, um, what you do to keep mentally and physically fit outside of work. You mentioned you swim, Yeah, I'm I'm I'm actually pretty into physical fitness. I trying to cross fit three or four times a week. It's how your niece, I've been really blessed without stuff, I think. I think physical fitness is a gift from God. It's my anti depressant. It keeps me sort of even

keel sort of. I struggle with anger, I get piste off and stuff I shouldn't. But working out for me has just been a real Like I said, I'm just a gift from God. And I tell my kids in my class that if you are in good shape, you're gonna make more money, You're gonna be happier, You're gonna have more sex, You're gonna have more options in terms of who you mate with. You're gonna feel more confident, You're gonna be a better person to your friends, your pets, um,

your neighbors. That it is absolutely one of the most one of the things you find that's consistent across the most successful people in business. It's not that they went to great schools, it's not that there you know, it's not that they're religious. The thing you find among almost all of them is they exercise every day. So I'm gonna do a really brief digression the anger issue referenced. That's a hot amber, hot coal that's in the core

of your being. And you know how if you're ever working with a fire, you can you can blow on that and and get that amber going again. In all of your presentations, that's a very channeled focused anger with all of the virtual removed. It's and I share your that issue, but my wife says to me, where the hell does all this anger coming? Um, I don't know what it is, but it's it's a it's a fuel

source that you can tap and redirect. And when I watch you take a part um a particular segment, and and again I'm gonna repeat for people, if you are not going on YouTube and seeing Galoway's videos on a clear basis as well as the d l D presentation, would you always make entertaining and you always you're fearless to embarrass yourself, So you do George Michael and and they're always entertaining, but they're filled with data, filled with information.

But I could see that there is a driving something that you want people to get to the correct answer, and it's frustrating that the role looking in the wrong place and all coming to the wrong decision. So maybe anger and frustration or two sides of the same coin, but that's pop psychology for one. That's what I see driving you as getting people to the right place. I think you're being generous. I just think I have some chemistry that's all screwed up and anchor off of negative.

Given how fortunate I am, I don't think there's anything I can blame it on. In my childhood. There's there's no one I can blame it on, single single parents, there's that could be it. I had a great mom, though, and I had a nice upbringing. You know, this isn't a sob story. We had a nice life, So it's chemical, you know. She and I got to take vacations and we had a nice relationship, and I went to nice schools and had nice friends. But I'm definitely gonna be

on something. I think as the the side effects of the antidepressant's lesson and my anger increases, those lines are going to cross and I'm ready. Our last two questions, Um, so you work with a lot of students and millennials. What sort of advice do you give someone who says, I want to go into filling the blank technology digital content. I think about this lot a couple of things. One, don't follow your passion. Most people will tell you to

follow your passion. Unfortunately it's every speaker at lunchtime and stern is already rich. Figure out what you're good at, and then try and really expand and and being great at something. We'll give you the currency and the economic reward and the psychological words such that you'll start to love it. So your job as a young person is to figure out something you're good at, not not your passions. I was I was meant to be quarterback of the Jets. I have a good plan of vision, a decent arm

I would have been loved it, but I wasn't. I was mediocre at it as an athlete growing up. Uh what I ended up being semi grade at? With starting starting companies and analytics. Find out what you're good at. Get to a business that has recurring revenue. Recurring revenue companies are valued at a multiple of revenues versus a multiple of ibada. You want to be in a recurring revenue company you want to be, in my opinion, getting more tactical the two technologies the next three to five

years our voice and messaging. I'd want to find companies in the ecosystem of voice and messaging. Get to a city two thirds of the economic development is going to be in within a bike ride of a major world class engineering university. Make sure you live near one of those and get into that ecosystem. You pointed out that most of the major successful companies in the SMP fire are all right near a major university of renowned university.

How can you tell if a kid successful, how long does it take him or her to get to the biggest city in their country? And then how long does it take them get to London in Europe, Shanghai, Shanghai, Beijing, or Hong Kong or Singapore in Asia, or San Francisco,

New York in the US. Our most talented human capital is flocking to these barter town, full full body contact business centers, and your your ability to get the skill set, the competitive nature, the grit, and the opportunities is very geographically. Sense of the intellectual capital is there. And our final question, what is it that you know about technology, digital brands, marketing startups today that you wish you knew twenty plus years ago when you began. It sounds very um pasting.

It's not that, not that romantic, but um. In the one of my venture capital Larry Bonds, has successes in the agency of others, trying to find good people and then overcompensate, show empathy for them, really trying to figure out what it is they want and make your success. Is there such that they're loyal to you? UM. I think I was a little bit more Darwinian as as as a younger person. And also just get to a

business with um recurring revenue. I know that sounds ridiculous, but the business of software is it's a better business. The business of owning a gym versus part private training is a bet. Being the insurance company that gets the bills everybody every year as opposed to the doctor, the healthcare provider. Recurring revenue I think sorts at and get towards something that is one or two degrees separated from the plumbing price and processing power or something around technology

technologies eating the world. We have been speaking with Professor Scott Galloway of n Y u Stern School of Business. If you want to learn more, go to his YouTube channel. Just search for Scott Galloway at L two. Or we didn't talk about your book. You have a book coming out in September. We'll revisit that when that book comes out. Winners and Losers. Who's publishing that portfolio? Penguin, Random, Random House,

not self published. You should be just barely. If you enjoy this conversation, be sure and look up an inch, down an inch on Apple iTunes. You can see any of the other hundred and thirty such conversations. I would be miss if I did not think my booker, Taylor Riggs, my recording engineer Medina, or Michael Batnick, my head of research. I'm Barry Retults. You're listening to Masters in Business on

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