Today I want to discuss with you a truly remarkable interview on Business Insider of NYU professor Scott Galloway. Not only does he provide some very insightful entrepreneurial advice, but he puts it perfectly in context of these crazy COVID-19 times.
Hello, everybody, welcome. Hi, this is Wednesday. Hey, sorry, I’m starting a few minutes late. We had some technical glitches with LinkedIn live things that sometimes happened, but it looks like we’re good to go. I hope everything is going through loud and clear. And yes, welcome once more to a soliloquy from a very secluded soapbox, and Wednesdays are usually either about blockchain or about business.
And today we’re going to talk business. And what I’m going to do today is just a day or so ago, I read a really good interview piece. It was with a guy called Scott Galloway. He is a professor at New York University. And I just want to go through and comment on the on the the Analyze sort of the points that he was making and why I thought it was so insightful.
So Once this livestream is over, I will include a link to the Business Insider interview that they did of Scott Galloway. So you can go and check out the original as well. But now I’m just going to walk in and I think it’s a good analysis because you know, these soliloquies have always been about how do we as entrepreneurs come out of this crisis on top? And part of that is thoughtful analysis of where we are, what’s going on and what are the consequences of everything we’re living through. So first of all, who is Scott Galloway? Well, he is a marketing professor at New York University.
He is specializes he’s an expert on the three big four tech companies. So Apple, Google Amazon, and cash box one drop my head right there. I’m not sure if Facebook. Yeah, so he’s is he specializes in that but he is also an entrepreneur. He is this not in preaching. From some ivory tower with no real world experience so, Scott Galloway, he’s been in the trenches, he’s run his own businesses, he’s some of them have prospered some of them have failed, like all great entrepreneurs. And that’s just part of the of the journey as we speak.
And he did this interview on Business Insider, and he started with the core concept. And he said, you know, corporate CEOs have always been about capitalism on the way up and socialism on the way down, okay? And he’s calling them out on being hypocrites is what he’s calling them out because you know, he says that when times are booming and business is going great they’re all about rugged individualism they’re all about self sufficiency they’re all about you know a lot of these quote libertarian ideals you know that based on that suppose meritocracy.
You know, there and while they’ve been doing this, they’ve been massively buying back their stocks instead of provisioning for bad times, and, you know, stock buybacks have a value, they are good for shareholders. And, you know, his his sort of inside joke there is also very good for CEO compensation because the stock price keeps going up and that’s good for their urine bonuses. So, but, you know, the core message is you can’t have your cake and eat it, too.
Okay. So, you know, here’s the deal. If you’re all about businesses, being you know, capitalism, you know, do your best, you know, make the most out of every ounce of resources you have climb the ladder to, you know, succeed and reap the rewards. Then when times get really bad, then you got to be willing to take the pill, right? You can’t then start shouting and saying, oh, come, come. Boom. bail me out, you know, you know, I want stimulus money, I want bailouts.
I mean, I’m too big to fail. I’m, you know, save, you know, you know, save my business and I’ll maybe save some of my workers, some of them while massively you know taking an axe to the, to the to the workforces. And the reason Galloway talks about this is because you know, he’s he’s saying this look, this isn’t if you’re gonna if you’re gonna be a big boy on the way up and you know, take the minute the billions and billions and profit, then if your business if you haven’t provisioned for bad times, and your business goes under more, goodbye Tough luck.
That’s, that’s no big deal. You know, that’s just part of the game. And that all of the stimulus money should be focused on actually helping the people that are suffering the consequences of that and not bailing out businesses that were less than frugal, let’s say. So, You know, I think that is a very interesting point of view. I really liked the metaphor capitalist on the way up and socialist on the way down. Because it we’re seeing that a lot.
And, you know, the the flip side of that is maybe on the problem isn’t so much now that I think that we should be helping, you know, preserving helping to keep you know, solid businesses afloat is a good idea, the administration that is leaving a lot to be, you know, to be desired. But the truth is, if we’re going to take that route, then we ought to take the other route on the way up, which is, you know, why is it that we don’t have decent health care fi isn’t that we’re there, you know, allowing people to work in jobs that won’t keep them above the poverty line. You know, maybe if we’re going to be socialists on the way down, we ought to be a little bit more caring on the way up.
Anyway, that being said, he goes on and the interview is much longer than that, but that was it. Starting point and then he says, you know, one thing that we can’t we shouldn’t do is think that just because we applaud at 8pm, every afternoon, the frontline workers, the healthcare workers, the nurses, the doctors, the supermarket workers that we have, you know, we’ve we’ve done our bit, that’s it, we’ve given them a pat on the back, we clap for them every evening.
And, you know, that’s it, you know, well, they’re not heroes if with them $9 an hour. Okay. We should be really thinking about, you know, that some of these jobs that we thought were not so critical, and now they’re suddenly essential, well, maybe they deserve to be compensated and such. And maybe, you know, that would be better for society in general. than what we’ve done is building a model that is, you know, so top heavy, and so bottom, flimsy that you know, you Many of our essential services are struggling just to keep providing right now.
So, you know, they aren’t heroes if we just pay him eight bucks an hour, nine bucks an hour. Okay, but now he gets in, then it goes on and he starts doing an analysis with the with the interviewer about, you know, the fundamentals of what this crisis is showing us about our economy and about the way that our businesses are working. And and he makes an argument that this COVID-19 crisis isn’t really just a change event. And it’s more of an accelerant, what it is diamonds it is pushed forward trends that were already, you know, well on their way.
Okay. And, you know, and he doesn’t talk about this as much but you know, one of those could definitely be the trend towards automation and the trend towards, you know, the loss of a lot of, you know, frontline working jobs to automate And we’re going to see that I’ll put that in there as well as a shout out to our buddy Andrew Yang. That that is definitely a trend that has been accelerated. Okay. And in some industries, it’s been accelerated right off the cliff. Okay. But Scott Galloway in the interview talks, he starts off talking about healthcare.
And he says, He posits that big tech companies are going to be entering the healthcare market very soon and in a big way, and it does any any expenses from an economic standpoint that basically, you know, Amazon, apple, Facebook, you know, they aren’t going to over the next 10 years, you know, double or triple their, their revenue or you know, they’re they’re just by selling a few more Alibaba articles at a better price. Okay, that’s not going to give the kind of structural You know, growth that these companies need to justify still being, you know, leaders in the tech industry and, you know, maintaining even more weight in the market. And so the big four are going to look for opportunities and they are.
And he starts off saying that healthcare, which is one of the infamously poorly managed industries, which by the way, one could argue is why is it even an industry and not a service just, but that’s, that’s for another day is ripe for destruction. And there’s so much room for improvement, that tech companies like Amazon, like apple, like Facebook or Google are definitely eyeing that as a massive revenue stream for the future for the end starting very soon. Be it with new models, be it with telemedicine Be it with, you know, more efficient, you know, medical delivery services, you know, fulfillment services, you know, maybe it’s a new take on, you know, just the fundamental way that healthcare is provided in the US.
Scott talks about moving away from centralized in physical locations, densely physical locations, like hospitals and spreading it out healthcare out so that it is more easily delivered in a distributed way. Okay, so that was the first industry we talked to them. The second industry he really crashes into is education. And he says that, you know, as an accelerant, we’re seeing now, massively illustrated, how, you know, some of the most prestigious, higher institutions of higher learning are being exposed that, you know, a handful of zoom classes isn’t worth $68,000 a year.
Okay. And, you know, when you look at, you know, universities around the world, the US is, like healthcare very peculiar. Okay. And while it’s true, and he goes into that, that that some of the most important names in education, you know, the biggest brands, the Yale’s the Harvard, the Stanford, you know, these, these are immensely powerful brands, and that they’re going to winter weather this storm. Okay. He talks and we’ll talk a little bit about how he says they’re going to transition to a different model.
But he says that the way that it you know, they, they’ve been over the last 3040 years, they’ve just been turning themselves into luxury brands, you know, that require instead of trying to leverage their their teaching capacity and their capacity to empower human beings for a better future, on a broad scale, they focus it down To a minute little scale of the, you know, basically the wealthiest of the wealthiest and they position themselves as the Louise returns or the Chanel. So the you know, the, the, you know the dumpy own champagne of education, and they’ve completely, you know, ignored the rest of the market.
And what’s happening now is that we’re saying that oh, well, you know, if you take away the or reduce the mystique of being on campus and being in a, you know, in a very elite setting, you know, with the the stone buildings and the and, you know, all of the experience of, you know, these institutions, and you sort of take that varnish off, and you look at just the cold truth of what the students are receiving, which is education, and now that’s being packaged in classes, it doesn’t stand, the value proposition doesn’t stand up, it’s not worth it.
And you know what that does, as he says in 10 years, MIT, instead of bringing in 3000 freshmen in year like they do now, which is very elite and very smart, we’re going to be bringing in 30,000. And they’re going to be doing that on a massively decentralized scale, so that you won’t necessarily need to go to MIT to do it. The same with Harvard, these big brands are going to leverage their ability to open the doors to much broader audiences without sacrificing the quality of the education.
And what that’s going to do is it’s going to kill off an enormous level of the second tier educational institutions, the ones that are just as almost almost just as expensive but don’t have that power of branding. And he, he says in the interview, that many schools are just not going to open Again, in the fall, not in the fall ever, many of the, you know, universities right now are just not going to come back. They’re going to be gone. Now it’s at the center of state, you know, state universities.
And I’m not saying that I don’t think he was saying that 80% of you know, universities are going to disappear. But a big swaths of the middle tier, that second tier is going to suffer mightily, because they don’t have the brand strength to weather the storm like that. But they also you know, they’re under the same microscope. Is it worth it to pay that kind of money for, you know, to sit at home and listen to a professor lecture you over zoom? Maybe, you know, maybe that’s a big question this so he really jumps into education into the into the interview. Then he talks about retail.
And another case, this is accelerating a trend. Retail was already suffering. Okay. There was no doubt I mean, you know, Macy’s was cutting stores, you know, some retail is is is is doing okay very specialty sort of things like the TJ Maxx, and Ross and you know some of those brands are doing all right. But this COVID crisis when it’s done is it’s just push that for whatever we’re going to see. And he just comes right out. And this was before j crew announced the bankruptcy and he actually mentioned in the interview beforehand that that was something that was going to happen.
And obviously, there had been rumors. There are going to be a lot of big brands that aren’t going to make it I mean, we’re talking about hurts going bankrupt. Now doesn’t necessarily mean that the brands are going to go away forever, but they but they’re going to hurt and they’re going to go through and definitely it’s going to wipe out a lot of shareholder value. So you know, and then he makes a really interesting comment.
He says, you know, this is almost the perfect scenario for Amazon and Walmart. If they hadn’t sat down and written a letter to Santa Claus, and said, Santa Claus, could you give me? Could you close all my competitors? physical stores? Could you? You know, could you make supply chains, you know, less efficient supply chains crash, if you just start writing down the things that are happening, this has been an immensely positive thing for, for Amazon for Walmart because this acceleration has just put the wind in their back from that, okay? And it’s kind of like the big brands of education, they’re going to whether this they’re going to come out on top.
And this is sort of why I was telling you, I’ve been talking so much about over these live streams is that you want to be positioned to be coming out on top, and you don’t have to be an Amazon or a Walmart to do that but you do need to be avidly looking at it. questioning your strategy avidly measuring the wind from where it’s coming and how it’s going to affect your business and your industry in your market.
Okay. So, yeah, he talks also about small business and he says, you know, right now is a terrible time to have a small business and if you’re, you know, we I did a whole I’ve done a couple of these about business resilience, you know, I have a business resilience checklist if you want it feel free to leave a comment below and I will get you the link to it. It is a tough time it is a terrible time to be a small business owner right now. I mean, it’s uncertainty. It’s it’s, it’s early, okay.
And we all are I mean, I’m not gonna sit here and tell you that things are peachy peachy goo department, but they’re, you know, we’re fortunately in a in a decent situation. But we have clients in the business that hasn’t really, I mean, slowed down next stop now but But he does go on further to say is that in six to 12 months, it is probably going to be an amazing time to start a new business, because of the fact that starting businesses in the recession is actually a really good factor for success. Why? Because talent costs are more or lower, you can get good people for less money, real estate costs are lower, raw material costs are lower.
And it also just starts the company with a mentality of being scrappy Google, you know, down in the trenches, and that culture which is required in a you know, in a market like you know, in a down market, and if you’re starting in that down market, you already have that mentality, then that that is a very healthy way to start a business and get it to grow. Okay. So I thought that was really interesting that he says, you know, okay, we’re suffering now. But if you can make it for the next 612 months, you know, things are gonna be great for smaller businesses.
And then the last part of the interview is about, you know, what strategy should people be considering right now? And how do you how as individuals who think about, you know, our own, our own needs and positioning ourselves in the market? You know, he starts off by saying, take a strategic point of view, which is something we’ve been doing on these live streams from the very beginning and I’ve been talking to you take a strategic point of view, really think through the consequences and the realities and don’t let yourself fall into the trap of thinking that things are going back to where they were, because they’re not and everything that was before it will not be in the future, it will be to be different.
Okay. He goes on to say if you’re in the middle of doing an MBA or doing a degree program or you know you’re in the middle of law school, or By all means, finish, okay? You know, your that certification will be a value and you’ve already invested, there’s no reason to not finish it. So that that is one piece of advice he gives. But he says, if you’re considering starting, he would say, hold off, don’t do it. Because so maybe now isn’t a great time to start doing a, you know, an MBA or to make a big career switch. No, it’s going to require a big investment. You know, it’s not a good time, since high school seniors take a gap year.
So great, you know, it’s been proven that that is sometimes very healthy for, for young people to do anyway. And right now, you know, me, you might be immensely surprised at how the landscape is different a year from now. So, you know, he actually comes he’s university professor, I mean, it’s not in his best interest to tell people not to go to university, right? But he said, Hey, this is a this is time to actually be an should be encouraging kids to consider taking a gap year.
But not to just waste the time and sit on your fingers or go, you know, drink beers at, you know, at the lake, which, you know, it’s okay to do every once in a while as well but, but instead use this this time to do some online learning to do some reflecting to do some preparation that doesn’t necessarily require, you know, outline a lot of money, a lot of resources, but can provide immense value on the back end.
Okay. So, you know, think about where the puck is going, not where it is right now, but where it’s going and really skate to where it’s gonna be. Okay, I think that’s a hockey metaphor. I have no idea about hockey. I am a complete ignoramus regarding hockey, but I get the metaphor. You don’t skate to where the puck is you skate to where it’s going to be when you get there. So I thought that was really great advice. Anyway, I thought the interview was a really good piece of content.
I will. Once this is I’ll go in and put the link into the comments so you can you can check out the original as well. There’s a video of it as well on Business Insider piece. Anyway, I hope you’ve enjoyed this. If you’ve got any questions for me, leave them in the comments below if you think I said anything that was absolutely crazy. Well, you can you can shout at me below or you could also go talk to Scott Galloway. It’s up to you. Anyway, thank you very much for listening in. I appreciate it very much. Take care, stay safe and talk to you tomorrow.