- Welcome to the Tai Lopez show.
I have one of the more interesting books I've read in 2017.
Scott Galloway, he flew out here
on his way to Vegas to party.
He's a professor at NYU,
he's been ranked as one of the top business professors
and he wrote a book that I think is important.
It's not just interesting but it's important
and some books are interesting but not important,
and some books are important but not interesting,
so this is kinda both.
So I wanna lay the groundwork
and I read the whole book last night, again.
I kinda had read it before,
but I read it from start to finish.
I was up until five in the morning reading this.
- I'm sorry about that.
- No, no, it was worth it.
So the book is about the Big Four
that pretty much dominate more than you realize.
Amazon, Google, Facebook and Apple.
So I've been tweeting about this.
I don't know if you've seen my Twitter
the last three or four days. - I have.
I recognized some of your stats.
- You see it's up? Yeah. - Yeah, yeah, yeah.
- I would put that it's a quote
but it gets a lot more Twitter if it's,
so I kinda reworded 'em.
But I figured you got the stats from somewhere,
so I got that stats from you-- - That's fine.
- So Apple has more profit than Amazon's had,
Apple in one quarter has more
than Amazon's had since inception.
Facebook, you consider the most successful
like growth organism on the planet.
- Most successful that made a thing in history.
- You say Google's god because we used to pray to god
when we didn't know something,
and now we Google it. - Yup.
- And you say Amazon is...
I liked how you put Amazon it's like,
unlimited capital raised.
It's goal is to make it
as hard as possible to compete with it.
So they're like if we can expand billions of dollars.
Did you really say floating warehouses?
- So Amazon has applied for patents on a bunch of things
including a warehouse that floats
and drones that can reassemble from small to bigger drones,
and I think it's a bit of a head fake
just so they can dominate the front page.
So right now we're all obsessed
with their second headquarters.
- Yeah.
- Most companies don't do it,
they just make a decision and they announce it.
But if you look at old media,
it's basically been co-opted into being
the investor relations PR department for big tech.
So how many things have you received via drone?
- I don't think, we get so much, I don't think so.
I think it's coming in a truck.
- I'll take the over-under on none,
but when Amazon announced that they were gonna
start delivering drones five years ago on 60 Minutes,
the press has been writing about it
every week for the last five years.
Uber just announced that in LA,
they're working with NASA
to come up with these flying taxis.
So I don't mean to be cynical,
but I don't think when I'm here in two years visiting you--
- (laughing) I know, I saw that 2020 or something.
- Companies traditionally in the past
like under-promise and over-deliver.
These companies over-promise and under-deliver,
and the press seems to put up with it.
- So you're literally saying,
prior to the world we live in now
almost works for these companies
and that traditional media now is the PR department.
Apple is funded by investors that don't care about profits--
- Amazon. - I'm sorry, Amazon.
And Apple runs pretty much,
sometimes I'll text somebody and they'll go,
it was iMessage, I feel like it's something wrong.
- Different color, sometimes it doesn't go through.
- Yeah, they're green.
They're like, what the hell?
Let me read this, this is interesting.
So I was talking a little earlier before we went live,
about how I can't tell if you love 'em or hate 'em
or maybe it's a little bit of both.
But you said, by the way, good job on the book
to put things like this in visuals.
I can't tell you how many books forget to do this.
So you talk about here,
"Imagine a retailer that refuses to pay sales tax,
"treats it's employees poorly,
"destroys hundreds of thousands of jobs,
"and yet is celebrated as a paragon of business innovation."
I'm assuming you're talking about Amazon?
- Yup.
- Then you say,
"A computer company that withholds information
"about a domestic act of terrorism
"from Federal Investigators
"with the support of a fan following
"that views the firm similar to religion."
Apple? - That's right.
- So you consider Apple almost a religious state?
- As we become more educated and affluent,
church of tenace goes down,
but our questions and anxieties are bigger and bigger,
creates a void for religion.
Apple's our religion, Steve Jobs is our Jesus Christ,
and this is the new cross.
- Wow!
Not controversial at all.
And you say, "A social media firm that analyzes
"thousands of images of your children,
"activates your phone as a listening device,
"and sells the information to Fortune 500 companies."
Is Facebook literally recording us when we don't know it?
- So if you have the Facebook app open,
there's ambient listening.
Now to be fair, it's just there so it can serve you
more relevant ads.
So if you're at an Adele concert,
you might get served her album.
They're not doing anything insidious with it.
The scary part though is that Facebook has shown us,
they haven't put in place the safeguards
to make sure that it's not weaponized by bad actors.
- Right. - So the scary thing isn't
that Facebook is listening,
it's that an intelligence unit
or the Russian government might be listening.
- Right, so they're hacking in somehow.
Zack...
Zack's here running the sound,
but his brother Andy is convinced,
I have one of the Alexa things and he's like,
"I don't wanna be in the room,
"trust me, it's listening to us."
- It spools 45 seconds backwards.
So again it creates, also, it's interesting things.
Should we train Alexa that when it hears a gunshot,
to call the police automatically?
Violation of privacy versus crime prevention.
There's just gonna be some very interesting things
that happen with these new technologies.
- Or if somebody yells our fire or something, loud enough.
- Or help, of I've fallen and I can't get up.
- I've fallen and I can't get up might work.
I got a 99 year old grandma.
And then lastly, you said,
"An ad platform that commands in some markets
"a 90% share of the most lucrative sector in media
"yet avoids anti-competitive regulation
"through aggressive litigation lobbyists."
Assuming that's Google?
- 90% more share than Mabella the railroads had
of a market that by dollar volume,
is bigger than the entire advertising market
of any country with the exception of the US.
- When you add Facebook into that,
you talk about that later in the book,
Google and Facebook, AdWords.
So Google controls AdWords,
they control YouTube advertising now,
and then you have Facebook controlling it's own,
and of course Instagram ads.
And really, when you think online outside of that,
there's not that much more.
There's SnapChat doing a little bit of advertising,
Twitter.
So are they aggressive in terms of lobbying?
- Oh yeah, they learned from Microsoft's failure
not to lobby.
They spent a great deal of money on lobbying.
You talked about Facebook,
this isn't a communications vehicle.
I doubt you even take calls on this.
I don't trust people that call me on this,
only if they text me.
80% of our time on phone is in app,
and six of the top 10 apps
are owned by one company, Facebook.
And you talked about digital marketing.
Between Facebook and Google,
the commanded last year 103%
of the growth in digital marketing.
So if you're in digital marketing,
which we think of as being this great growth sector,
and you don't work for Facebook or Google,
you now join newspapers or television
and you're working for a business in structural decline.
- Yeah, I mean for sure.
Me and my business partner have spent $600 million combined
on marketing our companies that we own,
and almost all of that is with Facebook.
He spent more on Facebook, I've spent more on Google.
- [Scott] Yup.
- But I mean it's exactly what you put in the book, 90%.
All right, let me skip ahead.
I've got various things that I,
at five in the morning, I kinda put right here.
You already talked about this,
kind of the head fate things that they do.
Where is this one that I thought was so fascinating?
So...
Let's talk about driving prices down.
So we traditionally think
that the reason you don't want a monopoly.
Rockefeller was the richest man in history
if you adjust to today's dollars,
about $600 billion he had in today's dollars,
and it's because he had a monopoly.
He ran the thing.
Now Google comes in and you're talking about
how their ad revenue's gone up,
but they've been able to deliver
a lower price to advertising.
So is that a good thing?
So maybe monopolies are good in this case
because they're offering us cheap?
The fact that Amazon is almost a monopoly online,
they're able to buy in bulk and ship.
So can monopolies be good or are they evil?
- So the term natural monopolies is that
in some sectors they require enormous capital investment,
it might make sense to let someone have monopoly-like power.
So certain cable companies are offered limited competition
and aren't subject to the same antitrust.
What you have with Google and the other technology companies
that you referenced, that's so powerful,
is they have a different gestalt.
Most consumer companies think,
if we have a good year for Chanel or Procter & Gamble,
we raise prices with inflation.
Tech comes to things with a different viewpoint.
Google, last year, grew its revenues 20%
while lowering it's prices 21%.
So if you're selling t.v. ads or print ads,
you have to compete with Google
that has better products this year
and lowered its prices 21%.
So every year technology eats more and more of the economy
because it's viewpoint is,
let's massively improve our product,
but let's also lower the prices.
Whereas most consumer companies go,
if we're killin' it, let's raise prices.
- So in a way it can be good,
but maybe it's one of those monsters
that can get out of control conceivably.
And eventually,
if Google just started doing things that we didn't like,
we wouldn't have much control 'cause we're,
like me, I'm running all my ads.
And you see it with Facebook.
If Facebook doesn't like a product
you're trying to advertise,
for those of you entrepreneurs listening in,
you almost have to switch business.
I know people that sell supplements, let's say.
Facebook doesn't really like supplements.
And so I know people that get out of that whole business
once they realize Facebook won't approve their ads.
- So for example with Google, there's a lot of concerns.
One, there's now something called Google Answers
where people are now asking Google
because they trust it more
than their priest, their rabbi, their scholar questions
and Google is answering them for us.
And the question is, do we want to outsource truth?
My kid no longer looks to me for answers, he asks Alexa.
So are we comfortable with a new source of information?
And are we comfortable with this company
controlling 90% share?
You kinda toned in on the crux of the issue and that is,
we're gonna wrestle with,
is what is always good for the consumer,
always good for society? - Right.
- 'Cause it'd be hard to deny
these companies aren't good for the consumer,
but if Amazon is putting every retailer out of business,
Facebook and Google will grow their business
$22 billion this year.
They need an additional 12,000 employees
to handle that additional revenue.
Traditional media companies, ad agencies, t.v. stations,
need 150,000 people. - So a 12th, roughly?
- So basically you're gonna have
two and a half Yankee stadiums
of copywriters, creatives, showrunners, production teams
get their pink slips every January 1
because of Google and Facebook's growth and efficiency.
So we've had that in the past--
- [Tai] We're gonna be replaced by robots.
- We've had job destruction,
we've just never had companies this good at it.
- Yeah.
I mean, there's all these books now about living wages
and automatic, what do they call it?
- [Both] Universal income.
- Which is basically saying,
there ain't gonna be enough jobs,
we're gonna save so much money
with efficiencies with technology,
that we're gonna have to just pay people for not working.
You already see that in Scandinavia.
I mean in Scandinavia, if you lose a job,
they pay you for two years almost your full salary.
So one interesting thing,
let's switch subjects for a second here.
Really good part.
For those of you chiming in late, we're with The Four,
The Hidden DNA of Amazon, Apple, Facebook and Google.
Professor Scott Galloway flew out here,
was kind enough to come out.
You've got great people recommending you read the book,
good ole' Seth Godin, Jonah Berger,
I know a Jonah, he wrote a great book Contagious.
But you're a professor,
you teach at NYU Business School Stern.
This was interesting 'cause I was like,
is he an active professor saying this?
But you kinda criticize the structure about electives
and people going to two year business school.
And it sounded almost like,
I don't wanna put words in your mouth.
Are you saying that one whole year,
you think the structures almost waste people time
and it makes money for the colleges,
but doesn't serve them best?
- Yeah, I think if you look at the cost of education,
it outpaced healthcare, its outpaced cable t.v,
it has become a social ill.
I think our university system
has effectively become a caste system,
where your future's largely and unfortunately
dictated by the collage you go to or the level of education
and education has become unattainable.
It's become so expensive for kids like me
who was raised by a single mother who was a secretary
just three miles down the road here.
The thing driving the cost is this union called tenure.
We have social services, food stamps and welfare
for the undereducated.
We have welfare for the overeducated called tenure.
And in business school the way it manifests itself
is we have a second year, we really only need one year.
The first year of management operations,
marketing and finance,
takes the kid making $60 K a year,
turns him into a kid making $110 K a year,
which is the average salary coming out of NYU.
Great return on capital, right?
The second year is largely a waste
so we can change $120,000 in tuition instead of $60
and fulfill the teaching requirements
of a bunch of tenure faculty that should have been
put on an ice flow 30 years ago.
We could do an MBA in one year--
- [Tai] Are you popular at NYU?
- Yeah, as you can imagine-- - With the professors?
- I don't get invited to lunch a lot with my colleagues.
- (laughing) You're like you, iceberg time.
You're pissing me off.
- Having said that, I want to be serious,
NYU loves free thought and free thinking,
even if you offend people.
The second year should have four pillars two.
And the four pillars should be
Amazon, Apple, Facebook and Google.
To understand these companies,
how they create value,
the instinct they tap into,
how they've been able to aggregate the GDP of India
across the population of the lower east side of Manhattan,
is to understand the intersection between
technology, innovation and media,
and information services and retail.
So the four pillars of business in my view,
post management operations, finance and marketing,
are these four companies.
- So for those of you listening that are entrepreneurs
or considering to be entrepreneurs,
what you're really saying is,
what you talk about in this book
is the ultimate case study.
If you dissect, reverse engineer these four companies,
you almost have a micro-model
for anything that you wanna do.
You're gonna need to know these skills.
You're gonna need to know
the design and creativity, and marketing abilities.
This is how I think about it, correct me if I'm wrong.
To me, when I think of Apple,
it embodies the ability to have sleek designs,
urgency marketing, scarcity marketing.
It's kind of beautiful.
When I think of Google like you said,
I think of a lot of, it's information technology.
Ultimately they have PhDs in library science.
If you get a PhD in library science,
you're probably gonna go work at somewhere like Google.
When I think of Amazon I think of aggressive business.
I was just at a talk here in LA, Jet Bezos stopped in,
and the man was aggressively...
Taking Diapers.com was a company,
and he went to the owner of Diapers.com and he said,
"Listen to me, sell me your company."
And the guys said no, and he said,
"You better sell me your company
"or I'll just make my own Diapers version,
"I'll drop the price and put you out of business,"
and he dropped the price.
And one of his executives said to Jeff,
if we lower the price of diapers this much,
we'll lose $100 million a quarter.
And he goes, "I don't care."
And so when I think about those of you watching,
the need to be somewhat aggressive and competitive,
that's what I think about with Amazon.
And then Facebook, what I think about Facebook is,
really tapping into almost Internet 2.0.
You know Internet 1.0 was kind of just selling things online
and Internet 2.0 was connecting people
and using that information to sell to them.
Is that kind of a fair?
- So I'll take a swack at that as well.
So Google I think is a modern man's god.
We used to turn to a super being for answers,
now as we're more educated and more affluent,
we don't depend as much on a super being,
but we still have modern day anxieties and questions.
Will my kid be all right?
A prayer is, you send a query into the universe,
hoping there's divine intervention,
it sends you back an answer.
Now it's symptoms and treatment of croup
into the Google dialogue box.
Google is our modern man's god.
All of these tap into a specific instinct.
Facebook taps into our need to love.
One of the wonderful things about our species is,
we not only need to be loved,
kids with poor nutrition but high levels of affection
have greater outcomes than kids with good nutrition
and poor levels of affection,
but we need to love others.
The number one indicator,
a signal of you making it to 100 years or not,
is how many people in your life do you love?
I met your cousin working here,
that's a signal that you're a caretaker.
People who let their parents move in with them
and decide to take care of them,
the life expectancy goes up two to three years.
New mothers do not die.
It's an instinct to wanna take care of others
and the physical and mental nuance of taking care of others
releases a hormone that clears out the bad cholesterol,
then you get to stick around on this earth
a little bit longer.
Facebook taps into our need to love others
and is creating first and second degree relationships,
catalyzing and reinforcing them,
mostly through images that create a lot of empathy
and kind of second order love.
Moving further down the gut,
our instincts since we emerged from caves is always more.
We always want more 'cause the penalty for too little
is the worst death in the word, starvation.
So open your cupboards, open your closets,
look at this fat pad and you think, I don't need any more.
And then the moment after you think that you think,
I'd like a bigger pad or I'd like a penthouse in Manhattan,
or I would like more clothes.
So the more for less business strategy is usually
the company that's the most valuable in the world.
It's the strategy of Walmart,
it's the strategy of China as a society
to offer the world more for less,
and now the big winner there is Amazon.
Moving further down the torso,
your strongest instinct is survival.
Most of us get up in the morning,
we know we've checked that box.
You were not worried about making it
to the end of the day today.
You were confident you were gonna survive.
So you go to your second instinct which is procreation.
This is the new signal that you have good genes.
This means having an Apple IOS means
that you are educated, affluent,
appreciate artisanship, have disposable income,
and that you have good genes.
This is saying, I am a good mate.
- It's the peacocking a little bit.
- This is the feathers, the new luxury item,
and as a result,
has been able to pull off the impossible.
The low cost provider, meaning,
Apple can go into it's supply chain
and secure components for the lowest price
but it charges the premium price.
So that's the equivalent and I saw these fat cars out there.
Imagine the margins of a Lamborghini or a Ferrari
with the production volumes of a Toyota,
that's what Apple has done and as a result,
is the most profitable company in history.
More profitable that IMB, Oracle, Unilever,
Walmart and PNG combined.
We have never seen a profit generator
because it taps into a very irrational organ
and that's our reproductive organs.
You wanna as a company, figure out,
what instinct you tap into and ideally,
you wanna tap into the irrational ones.
Love, right?
- You said there's three in the book.
You said there's the rational,
the emotional, and the genitals, I like that.
It's like something sexy.
Not to interrupt you-- - No it's all right.
- One of the parts later in the book, by the way,
I highly recommend you guys grab this book The Four,
by here Professor Galloway.
You talked about how these companies,
you're talking about wealth on the Forbes 400,
when you subtract people who have inherited their money,
and what a large percentage of 'em
were either in retail or luxury goods.
- Yeah.
- And that's that procreation side of where we have luxury,
we're signaling to the world,
if you study classic evolutionary theory,
that was one of the things that Darwin struggled with.
Why does a male peacock have all these extra feathers
because they take energy and they seem to serve no purpose.
But the purpose was to show that I have so much energy
that I don't care.
So when a man buys, I have a lot of cars.
Charles Darwin will be like,
you're trying to signal to women
that not only could I have one Lamborghini,
but I forgot that I have,
like that kind of mentality.
So you're saying Apple, 'cause that's an interesting take,
that's what you think Apple's core--
- You're Ferrari and IOS signal the same thing,
it says that you're stronger,
smarter and faster than the other guy,
and that if a woman mates with you,
her kids are more likely to survive
than if she mates with someone who drives a Hyundai
and has Android.
At the end of the day, that's what you're signaling.
And you will pay a lot of money to feel,
I'm wearing a cashmere sweater that cost about
10 times more than I need to stay warm.
- Right.
- But I'm trying to communicate to people
that I have an Italian sense of design and sensibility
and that I'm an attractive mate.
And even if you're in a monogamous relationship
and not looking to procreate actively,
these things have been pounded into you
for millions of years,
so you still want that
canary yellow Ferrari in your garage,
even if you're happily married.
Even if you love your husband and have no plans
of procreating with anybody else,
you will still buy $600 ergonomically impossible shoes.
- [Tai] Right.
- So you wanna tap into the irrational margins
because irrational in the consumer world
is Latin for huge margins.
Wealthiest man in Europe, Bernard Arnault,
Vuitton and Hublot, signaling.
Wealthiest family in New York Este Lauder,
making your cheekbones look higher, you're a better mate.
The axiom of DNA trying to get everywhere
and then trying to select
the smartest, fastest and strongest DNA,
is the algorithm of creating more shareholder value
that last 30 years of any category.
More than tech, almost as much as finance,
depending on when you look at it--
- Yeah finance is a big one, but yeah.
- Take out inherited wealth and finance,
more people on the Forbes 400 list,
from retail and fashion more than any other category--
- Yeah, Zara, Guy-- - Number two, exactly.
And number three is H&M. - Yeah.
- So you either wanna appeal there.
The number one source of wealth creation
in consumer companies,
up until the introduction of Google,
from World War II was appealing to the heart.
Here's a high caloric paste for your kids,
that's appealing to the brain,
that'll keep 'em alive, it's nutritious.
No it's not, here's a high caloric paste
that signals that you love your kids more
than your neighbors, why?
'Cause choosy mom's choose Jiff.
So we took all these powders, these solvents, these soaps,
and we placed American, patriotic, European elegance,
maternal feelings of love around these things
and we turned $0.30 or $0.50 of powder
into something worth three to five bucks,
and PNG and Lever created
hundreds of billions of dollars in value.
You want to appeal to the irrational instincts.
- Yeah, I always say yesterday on the show,
I had Jordan Belfort, Wolf of Wall Street,
and he's a great salesmen, obviously, and he said,
"Ultimately 90% of it's emotional sales."
Humans struggle, I mean even if you look at our brain.
One of my business partners is a molecular neuroscientist,
and he basically says,
"The part of your brain that's rational,"
like your neocortex, your media prefrontal, all this.
He said, "It first goes through
"your brain stem and your medulla,
"all this primitive stuff,
"and then maybe your thoughts get up here."
You know, we can sense beauty,
a man or a woman can tell if somebody's beautiful
from almost any angle from 50 paces away.
If Angelina Jolie walked in here...
You would be able to know she's beautiful
even if she wasn't standing in front,
you could see from far.
And same with, you know whatever?
Hannah, what guy do you like?
- [Hannah] Matthew McConaughey.
- She likes Matthew McConaughey, okay.
- All right, all right, all right.
- All right, all right.
I was talking about the Wolf of Wall Street.
You know the chest thumping part?
- Yeah, yeah, yeah that's a great movie.
- That's only Matt McConaughey, they added that in.
He's like, I never did that.
All right, let's keep going through the book.
Few more things that I wanted to talk about.
So let's talk about,
so we talk about the four massive companies, okay?
Let's talk about the fifth potential horsemen.
So we had potential for Alibaba, Uber,
I think you mentioned, what was the other one?
- [Both] Tesla.
- And now, you made a good prediction.
You said, "He's gonna expand out of cars."
Yesterday Elon Musk announces semi-trucks.
Boring companies, like its. - Yeah.
- So if you had to bet who was gonna be the fifth big one,
you talk about the problems with Alibaba.
I thought it was interested what you said constrains Tesla
is they're not as international,
even though they are big in Europe, Scandinavia,
but that's a small market.
You talked about the constraints on Alibaba was capital,
I thought that was interesting, compared to Amazon.
- They don't have access to cheap capital.
Also Alibaba suffers a little bit
from what Tesla suffers from,
and the Chinese companies, traditionally,
haven't been good at going global.
There aren't that many global Chinese brands.
- And China hasn't been good at going global.
I think it was a Jared Diamonds book, Gun, Germs and Steel,
talks about how China's never traditionally been
a conquering country.
So if you had to wager right now,
knowing you could be wrong,
who is gonna be, is it Uber?
Who's gonna be the fifth horsemen?
- So two years ago I would have bet on Uber
because I thought Uber was not a ride hailing service
but a backend fulfillment infrastructure to rival Amazon.
- [Tai] So like UberEats was the beginning of it?
- That's right, I was wrong.
The fifth right now, the good money in my view,
is the operating system of the second
most important screen in our lives, this is number one.
Number twos t.v. and that's Netflix.
Millennials spend more time watching Netflix
than the rest of cable television combined.
- Yes.
- If they continue to command that sort of custody
of the wealthiest consumers in the world,
you can see them getting into
all sorts of different businesses.
- Where would you go?
So if your Reed Hastings, you're running Netflix,
where do you go next?
- Oh I would probably introduce voice.
- What about music?
Why not take out Spotify?
- Spotify, yeah that's a fair point.
There's a lot of different ways they could go.
- If you controlled Netflix. - What about education?
- No, don't do that, that's the industry I'm interested in.
Erase this from the, no I'm just joking.
I think that they have,
if you think about the best money
people probably say they spend, dollar for dollar,
the average person under 40, I bet you it's Netflix.
10 bucks and you can sit there
and people binge watch.
What's the most, you guys,
anybody here's ever watched on Amazon in one day?
I mean in Netflix in one day?
- [Man] I've watched Stranger Things like three hours a day.
- That's nothing, three hours?
- Adrian's a newbie, he was only watching three hours a day.
- Three hours, that means you clearly don't vape
if you're only at three hours with Stranger Things.
- Well I remember when they were still delivering DVDs,
Zack here got me into the Sopranos,
and I almost lost my mind.
I had to switch to that package where you get like 12 DVDs.
I was like, I became.
- But that's one of the greatest pivots in business history.
Think about it, a mail order DVD company,
takes huge risk, extraordinary capital, stock dove,
and went into streaming t.v.
I mean one of the greatest.
Reed Hastings is arguably one of the most
underrated CO in the world. - You think so?
- Well he's not mentioned
in the same bracket as Bezos and Cook,
and he's right up there.
- Yeah, not the revenue levels.
I mean right now they just passed 100 million customers.
I'd say paying roughly (mumbles)
so they're doing a billion a month in revenue.
Certainly not at the level,
I mean I think Amazon if I'm correct, I did the math,
they're grossing like $300 million a day or something.
- That sounds about right.
I think they're about $100-$120 billion.
But what Amazon and Netflix have been able to do
is that they've taken a stopping and starting business,
like retail where on January 1,
you have to reinvent the business
and get new customers every day,
and that's exhausting.
That's like playing basketball.
And in the 90s,
Software came up with this amazing business model,
and said we're gonna cut the price,
but we're gonna integrate it into your daily workflow,
and you're gonna pay us every year,
and we're gonna show the market
that you renew recurring revenue,
like a gym versus a personal trainer.
And the market's value recurring revenue companies,
the multiple of revenues versus the multiple of profits.
So another gangster pivot was when Amazon took
a nonrecurring revenue business, retail,
and took it to recurring revenue business with Prime,
which is now in 62% of households.
More households have a recurring revenue relationship
with Amazon called Prime,
than voted in the 2016 presidential election,
or have a landline phone.
- There's a lot of interesting stats in this book.
I like the one that Apple has more cash
than the economy of Denmark.
You know you got a lot of money, Zack,
when you're like, oh that country?
I have more money than that country.
Not that region, not that state, that country.
- That nation. - Yeah, that nation.
So as we wrap up here,
I wanted to talk about,
especially for people listening that are launching business,
let's talk about the losers.
Because I had dinner with Steve Ballmer this year,
fascinating guy, very smart.
$32 billion, owns the Clippers.
But Microsoft has definitely been a loser in the game.
What do you think they did wrong that a lot?
Because arguably they could have been in The Big Four now.
Had they gone earlier in the foray,
into the internet and all these things.
So what's the lesson,
the cautionary tale for everybody listening,
that no matter how good you think you are,
there's somebody ready to take you out?
And what do you have to watch for?
- So that's a complicated question but just first off,
Microsoft has actually had an incredible renaissance
in the last two years.
They're the third most valuable company
in the wold right now.
So arguably, they are the fifth horsemen,
but I didn't write about them 'cause they're B2B.
You know, I think having the courage to reinvest
and constantly reinvent yourself, staying hungry,
always being paranoid as Andrew Grove said.
Figuring out a way.
There's some things changing, so for example,
moving to an urban center now,
being within a bike ride.
I can't think of a company that's created
more than $10 billion in value in any given year,
that is now not a bike ride
from a world class engineering university.
Technology really is eating the world.
You need to be perceived as an accelerant
for people's careers as they show up.
You have to show extraordinary financial success
because I believe, and some people think this is crass,
but people for the most part go to work
to provide economic security for them and their families,
and will always be drawn to the economic winner.
You have to be seen as a good citizen,
you have to be seen as going global.
So there's a lot of features.
You see companies moving away from these
suburban campuses into urban centers.
There's all kind of.
I go through something called the T Algorithm,
where I think there's eight features of companies
that have a shot of getting to a trillion dollars
that all these companies mostly have.
They're vertical, they control the experience.
Apple controls the experience with their stores.
So I work with Nike, Samsung, Rolex, PNG,
I think they're all gonna need to open stores
to maintain their irrational margins if they wanna be--
- Microsoft tried, they didn't do so well.
- Actually, it means everything.
I was gonna board a Gateway computer.
We tried and it didn't work.
But Samsung's not catching Apple
with those gorgeous temples to the brand
called Apple Stores.
- Yeah, I like that you called them temples to the brand.
Yeah, that's, yeah.
As we wrap up let me just read this,
or go through this last, last part.
There was one more thing.
The book's interesting because at the very end,
you have this chapter called The Four and You,
which it's almost like a template for success based off,
and we don't have time to go through all of this but,
these are the personal success factors that you need.
And a couple of them caught my eye.
Get to a city. - Hands down.
- You were talking about important it is.
We're here in Los Angeles, you're in New York.
Talk about pimping your career.
You talked about serial monogamy
in the context of get a job,
you're probably not gonna stay there forever,
but when you're there focus on it.
Don't be like Tinder dating and thinking,
oh there's always a better job,
and stay there as long as it makes sense.
- Be exceptionally loyal until you learn.
- Yeah.
- And then going back to a city,
two thirds of economic growth over the next 20 years
are gonna take place in cities.
When you're in a city,
if you've ever played tennis
and rallied with someone who's better than you
and your game immediately goes up--
- [Tai] Right.
- When you're in a city,
you're on the court with a bunch of players
that are better than you,
and you're just gonna raise your game.
- I would argue cities make you less happy
but they make you more money--
- That's actually a decent analogy.
- I have a couple farms I bought in Virginia,
so what I do is try to rotate around.
- Yup.
- So if you can pull it off,
have a house in the mountains, a house at the beach.
And then I go back to LA,
it's almost like going back to war.
- Yup, back into the thunderdum.
- So, yeah I like this.
Professor Galloway career advice.
This is a sexy job factor.
- Can we just talk about it for one second, it's important.
- You wanna open a restaurant,
you wanna produce movies,
you want to go work for Vogue,
you better get a lot of psychic income,
because on a risk it adjust basis,
you're return's gonna be awful.
You wanna start a software as a platform,
for healthcare and maintenance workers,
something that sounds like
you wanna put a gun in your mouth--
- Boring. - I smell money.
The more boring the industry the higher the ROI
because the sexy industries are like over invested
and they're like any asset class,
when everyone's buying.
Florida real estate, watch out, there's a crash.
And then when no one wanted to buy
Florida real estate in 2009, go in and buy.
Find industries that other people find boring.
If you can't help it and you have to work for Vogue,
okay then go do it.
But if you're looking to do something
in terms of just sheer ROI
on your human and financial capital, boring is sexy.
- It's interesting because, two things.
If you're starting a business,
you may want to start a sexy one,
going off the Zara and the retail,
amount of billionaires is great.
If you're an employee you're saying,
those jobs that are like,
everybody wants to work for us,
interns here to get us donuts and that's it.
So Wayne Huizenga was a billionaire,
unfortunately started Blockbuster,
but he was already wealthy and before that,
he had Waste Management which is a trash business.
And I actually had an older mentor of mine,
him and a buddy had invested,
I can't remember if it was Waste Management, one of these.
And they got paid a million dollars a month
as a dividend for investing in it years ago.
I mean trash generated, made them $50 million or something,
as a small investor in it,
so that goes to your point.
Well this has been amazing.
For those of you listening, go to tailopez.com/thefour,
just the words T-H-E Four.
I wanna put a special page up for this book.
Tailopez.com/thefour.
I'll put links to Professor Galloway's stuff.
He's got a Ted Talk he just did.
He's got some great consulting companies
for those of you listening who have enterprise needs.
And so thanks for, don't party too hard in Vegas--
- Not me.
- We need to do a second interview.
- I could slip and break a hip if I'm not careful.
- No I don't want it to be like one of those Hangover things
where two days later they find you on the roof.
- It would pimp the video views.
The last video I did, right?
- The last interview, the forgotten Tupac.
Professor Galloway, well thank you for being here.
- Thanks for having me.
Congratulations on all your success.
- No, on yours, this is a great book.
Check out the book.
Don't get left behind by The Four.
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