Video Of The Week: Scott Galloway on Facebook, Amazon, Apple & Google


Comments (Archived):

  1. falicon

    “advertising is becoming a tax only poor people pay” <- Killer insight.

    1. Shalabh

      Poor or most people outside of the first world countries. The growth exists outside these countries, so it would be foolish to think that advertising is a thing of the past. According to me, it will fuel the future for at least the next decade. Nature of advertising sure will need to adapt

      1. falicon

        agree that advertising isn’t going away…just thought it was good insight that the wealthy can mostly opt out of it…

    2. aminTorres

      Is it a killer insight though?He is basically saying that rich people pay for the content to avoid watching the ads.Two implications:1 – are poor people keeping the ad market alive?2 – are rich people killing the ad market?Not really but sure, lets subscribe to that notion for a second, then I would like for him to explain the following:1 – if poor people are too poor and put up with the ads and don’t pay for the content, aren’t they also too poor to buy whatever is being advertised to them?2 – Because you can afford to avoid the ads, do you really believed you aren’t being advertised to and capitalized on?

      1. Matt Zagaja

        I think the first point is an important one. Maybe a reason for the death spiral in the ad industry.

      2. falicon

        I took it as being all about time…ads are a time tax more than anything…if you have the means you save more of your casual time.I generally dont mind ads myself, but I did upgrade to the ad-free hulu and I find it so much better to be able to watch a 30 min show in 21 minutes and without distraction…it’s a nice to have that I’m willing to waste a few bucks on (because i can)…so the idea he mentioned just sort of resonated with me based on that personal exp.

        1. aminTorres

          hehe. So are you paying for the content or are you paying for the ads -free experience? Because if you are paying for the ads-free experience then ads are a tax on the rich, not the poor.

          1. falicon

            Guess it depends on the system…but ultimately you’re generally paying for the access, convenience, and content.In my case of Hulu it’s almost all stuff that’s on reg. cable — that I also pay for — so really I’m just paying for the access and convenience to watch when, where, and on whatever device I want.So I guess it’s a financial tax on those with the means…for those without the means, it’s a time, data, & potentially privacy tax.Depending on your situation, you value one thing more than the other and make decisions accordingly.

          2. aminTorres

            Yep both money and time are the same thing. The so called tax he is implying affects both rich and poor alike.

          3. falicon

            Time is set, equal, and finite (for each of us), money is not…

          4. PhilipSugar


          5. SubstrateUndertow

            Both are ultimately paying for the content !Content producers need to be paid one way or the other.You can get a third party advertiser to pay for the content you watch via watching their ads.ORYou can pay the content producer directly for the content you watch.The ad free experience may motivate the direct payer but it is not a “tax” on either the rich or poor it is simply an optional payment method for covering mandatory production costs.

      3. David Semeria

        Not so. Even poor people buy goods, just not expensive ones.

        1. aminTorres

          my point.Ads are not a tax on the poor, they are a tax on everyone.(Assuming you subscribe to the notion that ads are a tax)

    3. Matt Zagaja

      Interesting thought (I only just started watching). Not sure how much I agree though. It’s true that I can opt out of a lot of the traditional advertising, but when Microsoft and Chipotle generously sponsor a hackathon I attend with free burritos and Azure server space that’s still advertising too. I think one of the more fascinating phenomena is when I head to Kendall Square the ads in the T station and around the area are less trying to sell you on a product and more about trying to convince you to apply/work for some tech company (Amazon, Twitter, etc.).

      1. falicon

        Def. don’t think you can 100% opt-out of getting hit with advertising, but I do think that you can buy your way out of a-lot of it if you’re so inclined (and have the means).You can pay for private access to teachers, mentors, and services (thereby skipping the ad-supported hack-a-thons) and you can pay for a private car service (thereby skipping all the ads in the T station)…etc. etc. etc.Not saying this is a specific intent that ‘wealthy’ people are doing…just thought it was an interesting way to think about the current landscape of “push advertising”…those without the means to avoid it, have no choice but to be bombarded with it (taxed by it)…those with the means can at least control or limit it to some extent (though obviously not 100%)

    4. jason wright

      it’s all a tax on my time

    5. Salt Shaker

      If adv was such a significant pain point as people allege it to be you’d see far more consumers opting for ad free paid subscription alternatives. That certainly isn’t the case w/ streaming music services. Not sure rich/poor is the right way to look at it vs. cost/benefit. Simplistic, though accurate.

      1. Matt Zagaja

        I think it’s a pain point but the opportunity cost for different groups is quite different. I might be willing to skip a latte to watch a movie ad free on iTunes, but someone less wealthy probably is not willing to skip dinner or their prescription pills.

        1. Salt Shaker

          Agreed. But in the hierarchy of consumer needs if ad free was so important relative to other investments we’d see freemium models flourish on the pay side. The value prop isn’t there and most are willing to accept and live w/ modest pain. Also, ad blocking concerns to date have mostly been overblown.

          1. Salt Shaker

            That’s a great read, thanks for sharing! I think freemium models look good on paper but are crazy hard to execute for the reasons cited in that piece. It still blows my mind how ignorant the music industry (e.g., labels, publishers) were with respect to Napster, Kazaa, etc. Instead of embracing they fought tooth and nail to their own detriment. The music biz today is so fragmented, and likely can’t sustain all the players, which ultimately will lead to more failures (Rdio, Songza, Grooveshark) and consolidation.

      2. falicon

        The challenge here is that listening to music is often a secondary activity…something you do passively while engaged in something else…so the ads aren’t quite as distracting to the experience as perhaps they are in other media experiences.That being said, I do agree that ads probably aren’t as significant a pain point as people often make out…though in many ways that just makes the case even more that it’s only those with the means (rich) who bother to opt-out of them at all…and again, I think they vast majority are opt-ing out because of the time, data collection, and privacy factors more so than the content or message of the ads themselves (but that’s 100% just my personal theory)

    6. PhilipSugar

      To me it means if you are Facebook and you add more users are they worth anything?

      1. falicon

        Facebook is a *really* interesting one in this context though…because they can filter down to very specific audiences (and charge more as they do it)…I don’t think they have a “pay to opt-out” option yet, but it makes me wonder if it’s on it’s way.Until then, I think every user they ad does have an “advertising value”…which will really just set the proper baseline for knowing what the proper “pay to opt-out” price should be for those with the means…

        1. PhilipSugar

          I’m not talking opting out. I am saying how valuable is a Facebook user that makes less than a certain amount of money, and is therefore poor.I don’t think they will let rich people opt out. Maybe there is an opportunity there.

          1. falicon

            Good point – perhaps in aggregate there is value to some advertisers?The other thing that needs to be considered with each user though is their reach…they may not be buying stuff often themselves, but they do seem to share and spread the word about the things they want or are interested in getting someday…even the poor have some level of influence throughout their extended network (and the world)

    7. Yinka!

      I didn’t find that insightful; misleading at best. Per my other comment, if anything, advertising is increasingly more of a tax that less tech savvy pay, on a sliding scale. I.e. more web-only entertainment users + more ad-free web sources + anti-ad utility users (e.g. Adblock) = more avoiding advertising, based on their tech savviness (which has very low threshhold in this context).

      1. falicon

        I wonder what the relation between “tech savvy” and “wealthy” is though – my guess is that there actually is quite a bit of overlap.Also – I *think* most ad-free web sources are subscription based (i.e. for those with means). Meanwhile, ad-blocking is a really interesting phenomenon to monitor right now…too early to tell, but it does seem like it’s heading in the direction of those with the means though (i.e. & related efforts).At the end of the day, content producers need some form of revenue to fund a steady flow of content production (and eat & pay the bills themselves)…that revenue has to come from something (subscription, ads, patreons, etc.)…

        1. Yinka!

          In a basic entertainment context, I think the overlap in relation between tech savviness and wealth is small and shrinking. The threshold for tech savviness is exceedingly low, i.e. just knowing of and using utilities like AdBlock and sites offering TV shows is not really dependent on wealth. If anything, a significant # of web-only entertainment consumers (from NetFlix to alternatives) are arguably also motivated by elimination of high cable TV bills. The ever cheaper cost to own a PC and get online also helps reduce this overlap.There are a number of the more ad-free web sources are freemium, with subscription offers for supposedly faster download speeds and and higher quality video. Inevitably, most of their users go for free because the basic quality and speeds are high – the sites can’t afford to offer less due to much competition and can’t really control quality if dealing with peer-uploads. Many of these sites have some ads, which technically disappear with subscriptions but that’s a non-issue for AdBlock users because they’ve banished ads anyway. Interesting experiment going on with Brave; it will be interesting to see its progress.The need to have good revenue is valid and there are alternatives to the typical ads model but many (especially traditional) outlets seem unwilling to explore those.

    8. vruz

      Advertising is anti-ethical to attention, and a zero-sum game.It’s a dead end.

      1. falicon

        push advertising – maybe, though it still works at enough of a scale that much of our economy remains fueled by it.pull advertising – brings an insane amount of value to people though (think Google searches as a primary example)

  2. jason wright

    i remember starting to watch this a couple of weeks ago. i stuck it out for the first few minutes, but his machine gun style is too much for me.

    1. William Mougayar

      yup, we get the message in the first 2 minutes, then it’s repeated with more numbers that say the same thing.

  3. Shalabh

    Fred, any idea when can we see the video of your interview from Upfront Summit?

  4. William Mougayar

    = “Economic value of Canada spread across the population of the lower East side of Manhattan.” I’m having a tough time understanding the significance of that linkage. So what?I find it condescending to compare US companies market caps to countries GDP’s. It is arrogant and trivializes value creation.

    1. JLM

      .We are an arrogant country, haven’t you been listening to Comrade Barack?JLMwww.themusingsofthebigredca…

      1. mikenolan99

        Happy Birthday Jeff!

      2. William Mougayar

        Hmm…you could have fooled me on that one. I thought Trump was the arrogant one. Obama is sleek, even with his energy bill idea. Who wants to be dependent on oil forever?Don’t drag me into US politics 🙂 even on your birthday! Happy many many more Duke! I’m giving you a break because we are born in the same month.

      3. LE

        Isn’t it a strange phenomena when you start to think that Hillary, her sire, and her former master actually sound ok when compared to the “progressive” rabbi calling for revolution? [1][1] And make no mistake that guy is a dead ringer for every older rabbi that I ever saw anywhere anytime on a pulpit.

        1. JLM

          .You want strange?Hillary is vying for a seat, an office, a job whereat her husband used to cheat on her. Where Monica used to blow him.”Bill, can you show me exactly where Monica used to blow you, dear?””Of course, Hillary. Right here.”Now, that’s strange.The pride that Chelsea must feel, no?JLMwww.themusingsofthebigredca…

          1. LE

            The sex I can accept. What I can’t accept is someone (and this is typical I guess for politicians) that is thought of as being otherwise intelligent (after all nobody gets to that point being dumb) that not only has so little self control, but doesn’t even think that a girl might tell someone what is going on in her life. This is the difference between someone who has to learn from history (ie remembering after the fact that there might be a Linda Tripp) and someone who just knows that because it’s common sense.You know I have been watching that Madoff ABC tv special. And the question comes up as to whether the wife knew what he was doing. I said to my wife “no way she knew I mean maybe in a small way she might have suspected, or maybe in his early years he told her how he did this or that, but once he was full bore no way.” The reason is nobody with any common sense doing that type of cheating would trust that info to their wife for fear that she might let it slip or tell someone. Once you are no longer (my saying btw) ‘the owner of the information’ you no longer control it. If Bernie was not so disciplined he wouldn’t have been able to keep it going for so many years.Chelsea’s machatunim are gonoff’s.Father in law:…Beginning in the early 1990s, Mezvinsky was duped by a wide variety of 419 scams. According to a federal prosecutor, Mezvinsky was conned using “just about every different kind of African-based scam we’ve ever seen.” The scams promise that the victim will receive large profits, but first a small down payment is required. To raise the funds needed to front the money for the fraudulent investment schemes he was being offered, Mezvinsky tapped his network of former political contacts and dropping the name of the Clinton family to convince unwitting marks to give him money

    2. pointsnfigures

      I agree-that’s a who cares statistic. I can correlate the increase in the size of monkey poop with a decrease in the price of oil and it might be dramatic but means nothing.

    3. Matt Zagaja

      The value is the sense of the scale. When numbers get really big it becomes difficult to internalize the qualitative nature of them. Just ask any 18 year old who if lucky has had maybe $2000 in his bank account what the impact of $30K in student loans for this years college tuition is, and what the difference between that and somehow figuring out how to take out $25K is.[1] I know when I was that young I honestly could not differentiate that.[1] Note that this difference is also really different depending on expected income. For my friends who got jobs at big firms starting at $140K a year, the $100K+ in law school debt is worth it no matter how you slice it. For my friends who are at small firms making $40K a year that debt really rips into their lifestyle.

      1. William Mougayar

        I get it, but it wasn’t a lightning obvious analogy.

    4. PhilipSugar

      I think what he is saying is that there are that many employees at those companies and think how huge these four companies are.

      1. William Mougayar

        Right, but the employees are minor beneficiaries of the market cap value increase.

        1. PhilipSugar

          See my comment about technologists thinking they are liberal dogooders.The Lower East side is a great analogy of the last huge disruption in the first decades of the last century.

      2. LE

        He is not saying anything. He is trying to be entertaining and is not in a position (as b school professors typically are) to be challenged on points. And even if challenged he will be able to run circles around most people by throwing words at them similar to how politicians operate.Many times this comes from growing up in a family where nothing that you say is challenged by your parents. As such you believe that all people are stupid enough to believe everything that you are saying.

        1. PhilipSugar

          I don’t know if he makes me think that is good. But I agree.I was at a talk where a professor said that crime started going down in 1990 due to computers, video games, and phones.… People could entertain themselves and not commit crime. He wrote a whole book about it. Look at that beautiful graph.I said really, well I don’t think so, Let’s take a look at the incarerated population in the U.S.…My, my perfect correlation. A more logical conclusion is you put people who commit crimes in prison and they can’t commit them.It was in front of a big crowd where he was paid to speak. He said no, no I was mistaken. I was showing everybody that graph on my smartphone.

          1. LE

            Yep. Then there is the theory that crime decrease relates to roe v. wade. (73 to 90 is 17 years old).…I think the important thing to realize is that there are many factors that lead to success or failure. It’s hard to tease out the causes and in fact it doesn’t really matter (because it’s only one variable).Essentially same reason Marissa Mayer failed at Yahoo. Nobody factored in the other reasons she was previously a success, the opportunity, who she worked with, who helped her, and so on. Or Ron Johnson (Apple store success, failure at JC Penny). Bottom line: details matter but details don’t make an interesting story or an interesting lecture to much for big picture thinkers or people who want “magic pills” to digest.One day someone will take credit for that mall in DE and fail to mention the tax free advantage that it has.

    5. Yinka!

      Agreed – spurious comparisons don’t provide any value and take up space that could be filled with more tangible info in a discussion.

    6. LE

      Exactly. Read my point above which I wrote before I read this comment.

  5. JimHirshfield

    Entertaining. Definitely thought provoking.

  6. sigmaalgebra

    He talks fast!Some amazing observations.But with his view from 100,000 feet up, ain’t seen nutten yet!Biggies:(1) People are interested in people.(2) The core value in the economy now is information.(3) The main goal in the economy is to automate everything in sight, and the key to doing that is (2).For (2), so far the economy has yet hardly even touched on the powerful tools long on the shelves of the research libraries. Mine that resource well and will see that ain’t seen nutten yet.E.g., athttp://www.businessinsider….is an article on the best 14 people in Google’s AI group.Sorry, Google, none of your 14 have even the basic prerequisites to mine the really good stuff.E.g., at Stanford, f’get about the computer science department. Instead, seek out David Luenberger, Kai Lai Chung, and Persi Diaconis.Computing and computer science are to the future of (1)-(3) like iron ore is to the auto industry, beach sand is to the microprocessor industry, rebar is to the office building industry, etc.

    1. Michael Elling

      Yup. Still need a couple layers (ecosystems) in the stack.

  7. Tom Labus

    Drooling politicians!!!

    1. pointsnfigures

      Probably should be changed to drooling bureaucrats

  8. Matt Zagaja

    I think the secession part was an important point, but I also think his analysis there was a bit wrong. The benefit packages the big tech companies (or even where I am) are extensive not because the companies are trying to replace government but because government used to use the tax code as a tool to get companies to provide these benefits. Many of those forms of compensation are tax free or mostly tax free. Other than how the accounting is done there is no functional difference between receiving a tax break on the meal you eat at work and Obama taking you out for brunch.

  9. William Mougayar

    This talk doesn’t mention what’s happening in China where the numbers are staggering, and dwarf some US numbers. E.g. AliPay has 350 million users, more than the US population, and does $500B in payment volume, twice as much as PayPalFrom a market cap perspective, Alibaba ($63B), Tencent ($143B), Xiaomi ($50B), Baidu ($145B) are the big ones. I don’t have time to get the latest numbers, but the usage numbers in the top Chinese companies are also huge. Some companies that come to mind: Alibaba, Baidu, Taobao, Renren, Tencent (WeChat), YouKu, Sina Weibo, JD.

    1. awaldstein

      he mentioned alibaba.

      1. William Mougayar

        But as a whole, China has staggering numbers.

        1. David Semeria

          Yes, but China has staggering numbers in China alone.If Chinese companies can replicate this success in other markets, then the Valley is in trouble. For now, as far as I can see, China is just a Samwer-Brothers-like localization play, though I could be wrong…

          1. William Mougayar

            Good point.

  10. JLM

    .The comparison of Amazon to other “retailers” is a little silly. Amazon is a platform for retailers.They chased a pickup and caught it. It was a 20 year run and what Fred preaches came to be true — platform, network.As long as retailers can access sales on that platform, they will continue to go there to peddle their products. Why not?Who is the actual retailer here?Amazon continues to struggle with its own identity. Not a struggle of failure but a struggle of basic identity. It is AWS as much as it is AMZN.Old wine. New bottles.Bezos, interestingly enough, has now unmasked what he intends to do with the Washington Post and it is really exactly what he has done with Amazon.It is getting to be a long, long time since anyone decided how Amazon is going to actually deliver a profit. AWS can’t hide it forever.A day of reckoning awaits them.JLMwww.themusingsofthebigredca…

    1. William Mougayar

      It seems that more people care about Amazon delivering their products than delivering profits. It’s an incredible cash flow machine, though.

        1. William Mougayar

          They are creative in financial engineering. Because they can.

          1. PhilipSugar

            Until they can’t. That is the problem with financial engineering. It only works until all of a sudden it doesn’t

    2. PhilipSugar

      In my mind there are different ways of buying things:1. Supplying: This is where you buy something that you regularly use: gas, groceries. You aren’t going to buy any more or it’s discretionary, but brand preference is. This is dominated by Walmart, Target, Costco. Really high fixed cost, low margin, no matter what people say if the consumer is the delivery and warehouse person it is cheapest and that is what people care about.Walmart has five times overall sales than Amazon total. Costco, Target, and Kroger sales each equal Amazon. Add in a couple of others and figure that about 10% of Amazon sales and Amazon share is about 1% which is right. The 1% will buy from Amazon.2. Buying: This is where you want to buy something specific: I want a new camera, kitchen item. Amazon kills it here. High fixed cost, low margin, but convenience is key.3. Shopping: This is going to a mall and seeing what you want not need. Believe it or not this is still alive. The mall near me is always full. Mid fixed cost, mid marginOther transactions are more experiences Entertaining: Restaurant, TravelI think what makes Amazon less profitable is being in the supplying space. I also know from a Fedex executive, that they also lose a ton of money on each of those shipments. Eventually I predict the cost of those will go up so that only those that value convenience much more than price will buy and he will turn profitable.I am not sure what he is doing with the Washington Post

      1. LE

        Well as much as I will bash Amazon they are well situated if they are close to the last one standing in that they can increase their prices and not lose customers. For example I thought I was buying from them because I didn’t have to pay sales tax (which saves me 7%). But when they started charging sales tax in my state I (as many others did) stayed with them and didn’t go elsewhere. Because there is no easy ‘elsewhere’ to go as everyone knows. Plus I am used to their interface something like “” doesn’t feel right to me and natural.So they will easily be able to raise prices and increase profitability even in the sense that they don’t have to do it on everything but only on certain things. Plus they have the ability to play with pricing in a way to figure out exactly who they can charge more to or what products they can do this with.Then there is the ability to essentially offer (through Amazon basics) a wide variety of “store brand” products and make money that way.They are also moving into the business market b to b (even though they do that now). They sent me an application that they’d give me 20% off ($100) a $500 order if I setup a business account. The want companies to be able to have the convenience of using amazon. (Good luck with the accounts receivables on that one of course..)

        1. PhilipSugar

          I agree. When I look at their main value is in the supply category. They outsource the buying. I just don’t see it. If you think you can beat Walmart Logistics you are kidding yourself.Moving heavy bulky stuff and delivering is very expensive. Now I am sure there are people willing to pay for it. But if I had to guess it’s better to get the “sharing economy” people to do it. Get people that need the money to go to Walmart or Amazon pick it up and deliver it.

          1. LE

            Get people that need the money to go to Walmart or Amazon pick it up and deliver it.And that, in a nutshell, is a tax on under-employed people.What this does is merely keep people afloat with a hand to mouth future. It gives them enough money that they don’t hit rock bottom and therefore don’t have to put any effort into a better opportunity. In that sense it’s damaging to them, not as everyone believes helpful.You know there is a really cute personable girl who waits on me at Starbucks a barrista. She is graduated from a noname local college with a (near useless) degree in ‘communications’. So she wants to be in PR but I am almost sure she puts in no effort into getting a better job than at Starbucks because it keeps her working and afloat. So the Starbucks job actually will keep her from achieving her goals. [1] She should work 24×7 finding a real job at a real company. They are out there. Even working at a small local company gaining skills in her field is better than serving up drinks at Starbucks or working at Whole Foods. I am tempted to help her in this I might just try to give her some advice and see if she bites on it.[1] Just like being a single woman with a pet (or a single man) might satisfy your lonliness enough to prevent you from actually finding love. (Big theory of mine you see it in NYC as well with the distractions of the city making people not need a partner as much as in the lonely sububurbs..)

          2. PhilipSugar

            I agree that is why I put the sharing economy in quotes.Really successful technologists sometimes like to delude themselves that they are liberal do gooders.In fact many have just found a different way to exploit the working class like Rockefeller, Carnegie, and Morgan did at the beginning of the last century. Just in a very different way.They will become philanthropists just like them.What do they say??? History rhymes.

          3. LE

            Really successful technologists sometimes like to delude themselves that they are liberal do gooders.I could not have said it better.What would be fascinating is to compare the income and employment distribution at a “hated” enterprise like Koch Industries (and what people earn in terms of gross payroll and pay per worker) vs. some of the successful tech companies that everyone salivates over. I don’t know the answer but somehow I suspect that there are a bunch of middle class people actually earning a living at Koch vs. in some other places (if you strip out the high paid talent). And ditto for any other traditional “grown up” company (ie one w/o ping pong tables and Friday beer blasts or whatever is in vogue now). One that doesn’t cater to millenials with unlimited non takable vacation time. Wild guess on my part.

      2. JLM

        .I agree more with you than you do with yourself.There is a “new” retail experience.One finds some bauble on the Internet. You go to a brick and mortar retailed to see, hold, try it. You return to Amazon to buy it.Maybe, the brick and mortar retailer matches the best Internet price. Best Buy is now doing just this. I bought a Samsung S2 tablet on this basis in the last two weeks. I almost felt sorry for Best Buy.Then, Amazon has a better fulfillment and warranty and return policy op. Returning stuff to Amazon is a snap while returning something to Best Buy is like being waterboarded.JLMwww.themusingsofthebigredca…

        1. PhilipSugar

          I have had really subpar results returning to Amazon. Delivery?? No issue ever.If Best Buy is smart they charge the manufacturer 2X the difference they gave you for somebody not selling at MAP or they don’t stock the item. I’m actually pretty sure they do.The refund policy is unfortunately to deal with the lowest common denominator. I was on the board of Return Central. The problem is you will literally have people buy TV’s today to return them on Monday so they can have a Superbowl party.

    3. Richard

      Amazon being a platform doesn’t change the analysis. Walmart is a platform as well. The difference is that Amazon doesn’t pay for its inventory, brilliant!

      1. JLM

        .Sure it does.WalMart started as a traditional brick and mortar retailer and continues in that role to this day. They came to the Internet late — some would argue they’re still half baked.They are a geographical expander like any traditional retailer.Amazon started out as a line of code and is purely a phenomenon of the Internet. They are a conduit seller and their growth is the product of expanding their Internet footprint and reach.Rumor has it they are going to be laying some bricks joined by mortar shortly. We shall see.JLMwww.themusingsofthebigredca…

        1. LE

          Walmart model is based (as many businesses are but they are the expert at this) on getting you to buy things that you don’t really need while you head to the back to pickup the milk (in supermarkets the milk is always in the back). In particular lower class people with little self control. As such that is certainly one reason it is not easy for them on the Internet it’s not baked into the culture of the company as retail is. No end caps. No shelf positions. No cash register takeaways (or whatever candy and eye glass fixing things are called at the register).Walmart also conquered small towns when most retailers ignored them. The internet is not a small town.I have purchased things at Walmart and I have to say the few times I did it was a decent experience.What they could do is also operate the ecommerce part under a new and different brand with a completely cool UI that would give them an edge on what Amazon is doing and give people a reason to buy from them. Or just a new brand not

          1. JLM

            .Elitists in America have a tendency to look down their noses at WalMart — too declasse.My personal experience with WalMart’s pharmacy department is superb. They make CVS, et al, look like caves.They operate on a hands on personal basis.JLMwww.themusingsofthebigredca…

          2. LE

            No USAA mail order pharmacy?

          3. JLM

            .Tom’w I become eligible for Medicare. How did that ever happen?No USAA mail order pharmacy but I do use a joint in Canada sometimes.JLMwww.themusingsofthebigredca…

          4. PhilipSugar

            They have that pharmacy to bring you in, I know that for a fact here was my fellow outside board member at Return Central…..see who started that concept:…I was much younger and never actually thought he knew my name, he would only call me Wharton Boy in a Southern Drawl. I saw him last year and he knew my name, I was tickled.

          5. LE

            Same reason Wawa is so big with cigarettes or obviously the lottery.Get rid of the cigarettes and they would have to raise prices on the other items. The the entire (to use a 90’s phrase) value proposition then changes.

          6. PhilipSugar

            You wanted to talk about taxes on the poor, there are tons of them. How about my Citibank 2% cash back credit card. I have that on autopay with approval. I pay for everything with that.

          7. LE

            What’s in my wallet? Capital one just sent me yet another 2% back card where if I spend $4k in 3 months I get a check for $500 in addition to the 2%. This is the second time they did that. I already, with the first card, got $500 maybe 2 years ago.So I don’t even use any of the other credit cards I have anymore since I got the capital one card everything goes on there (and obv. gets paid every month). Only thing I use another card for typically is things my wife is paying 1/2 for (2nd wife thing).What I don’t understand is why I get so many cc apps when I pay in full (even before the due date) and always have done that. . I am not a good customer to cc companies the person who pays them interest is.

          8. PhilipSugar

            Don’t know your travel, but that is what I get. I don’t have the time, airlines forget it, but I think if I got a hotel card and only used it at that it might have more than 2% value. Problem is I can’t decide between them, although now I only have two choices Hilton or Marriott (never loved Starwood) But for me a hotel is just a room with a bed and bathroom.

        2. PhilipSugar

          They have lockers at the 7-11s on campus where I live.

    4. george

      Couldn’t agree more, but than I had to ask myself, how do you define retail today? Most large retailers don’t operate the same way nor do they truly own their own store brands anymore. In part, most are subleasing space (shop-in-shop model) to hedge inventory risk and subsidize profits.There is a reason why Amazon is eating up share, they have already made this transition and full commitment into the new economy – platform/network/physically borderless.

      1. JLM

        .I agree more with you than you do with yourself.Amongst the genus “retail” there is a constant development of the species with a certain Darwinian reference which is all about how the products are being marketed, delivered, processed, and whose reputation is being managed.It is about the Internet shopping experience as much as it once was about the physical shopping experience.The world, it is evolving.It is almost no longer about the product mix — the driver of using limited physical space to present a space limited set of offerings — it is about everything that surrounds the experience.That is the genius and beauty of the Internet.JLMwww.themusingsofthebigredca…

        1. Lawrence Brass

          Brilliant. And this is why brute force ad feeding us is not right, it spoils the experience and without having any evidence I guess that it is even getting ineffective. Why would you buy something that is presented to you in such a cheap and unfriendly way?Consumers are evolving and are expecting better buying experiences and better ‘product reputation’.

    5. sigmaalgebra

      Looks to me like Amazon started out being determined to run one heck of a Web site. They did. It was a lot of work. As a special case of that, they needed to run one heck of a server farm or collection of them and did.Early on in this work, it was totally clear to Bezos (smart cookie, Princeton CS major, maybe?) how darned difficult and expensive that work — Web site and server farms — was, that Amazon was essentially the only company in the world doing it (at that scale, that well, both important), and that Amazon, then, could get great revenue letting other companies make use of what Amazon built. So, some retailers could just use the Amazon Web site to sell their products, i.e., handle nearly all the work of actual retailing to actual end user customers. And some companies with server farms, for whatever reason, could use Amazon’s.Next, Amazon saw that shipping time and costs were a severe bottleneck on their growth. So, Amazon got into the logistics business — ships, planes, trucks, and warehouses, likely all supported by Amazon software on the Amazon server farms.Next, Bezos took especially seriously the fact that early on Amazon was selling books and came up with Kindle. So, in this way, Amazon got into making their own products, in this case, basically a special purpose tablet computer. More? Yes, now they have moved on from selling movies on DVDs to making their own movies to sell on DVDs. So, Amazon is doing classic vertical integration, say, like Ford making their own steel. Now, can an author user Amazon as their publisher? I suspect so! And, with a great server farm, Amazon is streaming entertainment, say, in competition with Netfilix (who is using what server farm?).So, now, for retailing, Amazon has a fantastic Web site that lets people shop via Web browsers and has warehouses that help make the deliveries faster and cheaper. And Amazon has some of their own products sold via that Web site. For computing more generally, Amazon has their AWS cloud service.Other big retailers, Wal-Mart, Costco, Sears, JC Penny, were caught with a sleepy Web site.FedEx had an idea, have companies that ship via FedEx use trucks to bring their products to a warehouse at the FedEx sort center so that when an order comes in, FedEx can pick the product from that warehouse and deliver it via the FedEx small package airfreight system. So, from an order from a customer to delivery to that customer, save ballpark half the shipping time and cost.That warehouse combined with the FedEx airfreight, thus, put Fedex one good step into being able to do what Amazon is doing; but FedEx didn’t do it; they had that ball in their hands but just didn’t run with it. That is, FedEx just needed to grow their Web site capabilities to be not just for shipping but also for consumer shopping, ordering, and shipping.And, Wal-Mart? They have to up their game on Web site and server farm operation and, then, take advantage of their retail stores, warehouses, and logistics network. On the crucial point of having retail goods both in stock and close to the customer, Wal-Mart is likely still ahead of Amazon.The yellow mustard: Sure, one of the standard items in my kitchen is French’s yellow mustard. Can buy that in various little glass/plastic bottles. But they also have a jug of about a half gallon — that’s the one I like since it reduces cost per ounce and time for shopping for “More yellow mustard, Ma!”. E.g., start with a 5 pound bag of potatoes, make them into potato salad, get about 4 1/2 quarts, and use, say, 1 cup of yellow mustard, 2 cups of mayo, etc. — I don’t want a special grocery shopping trip just for that salad. Similarly for sweet pickle relish and sauerkraut. Well, Wal-Mart and Sam’s Club apparently really, really like selling the little bottles and not the big ones. The Sam’s Club Web site lists the big bottles, but nearly none of the stores carry them. And, there’s no way to have a delivery to a store. But Amazon lists and will sell and deliver the big bottles, all three, the yellow mustard, the sweet pickle relish, and the sauerkraut. Similarly for some cans of Campbell’s soup I like: Amazon will ship me a case, but for Wall-Mart I have to sit on the floor, reach to the backs of their shelves and slowly collect all they have of what I want, say, a half dozen cans. Bummer. Just get a case from Amazon. Net, for me, Amazon is ready to move the goods, and Wal-Mart and Sam’s are still playing silly games with silly, tiny bottles and, per ounce, too much from me in shopping time and cost. Of course, those items are all full of vinegar or canned and, thus, have shelf life measured in years, maybe decades. But for other items, too, it’s too easy for me just to buy out Wal-Mart — mogul base light bulbs (Amazon shipped me a box of 6, 100/200/300 W), 150 W and 200 W light bulbs, etc. Net, Amazon is ahead in ease of ordering, cost, and selection. I suspect that Bezos knew that.

      1. PhilipSugar

        Walmart customers do not have enough money to buy quantities you are talking about, that is why the Dollar stores now sell foods.

        1. JLM

          .The stratification of the poor is a real phenomenon. You have keenly spotted it and expertly noted it.Well played. Thank you.JLMwww.themusingsofthebigredca…

      2. JLM

        .A brilliant analysis cleverly spun and clearly drawn.Bravo!Well played.JLMwww.themusingsofthebigredca…

  11. Salt Shaker

    Not sure I get the overall point of his “lecture.” Category/Sector dominance has existed for ages. At various points in time one can make similar conclusions w/ respect to market cap for GE, Coca-Cola, Exxon Mobil, Intel, Cisco, Microsoft, Apple. Perhaps the Gang of Four are more dominant today but I’m not sure how truly revelatory this all is.

    1. LE

      It’s not. It’s entertaining and sounds right as long as you don’t question any of comparisons that he is making. Not that there aren’t valid points in there (ie ‘huge sucking sound’) but even saying that Amazon is larger then the next “x” ignores the fact that the long tail is very long and often difficult to measure.I mean take the restaurant business. Compare whatever the largest restaurant chains are (or combine a few) in the country and then go down the list of the top 10. Then forget to mention the hundreds of thousands of single location restaurants that make up the restaurant industry. That thrive and provide value everday.

    2. Yinka!

      Perhaps that’s the crux of it: It is entertainment (if you enjoy the given style of delivery), with some data but not necessarily information (new insight). The discordance occurs when it is presented as mainly information to a group like this, and members set about to extract such but find it lacking in that.

  12. pointsnfigures

    This was interesting. Watched it yesterday because I saw the stats on the 100 top CPG brands and how they have lost credibility in the market place. Shows in their sales. I also thought his insight on Tim Cook at Apple was spot on. Cook cannot tell a story in a compelling way.

  13. kenberger

    I was there, this was 1 of the best speeches, despite what I (and most people) initially saw as a super boring title.Immediately was reminded of Ben Evans re speech speed. Best part is when he leaned over, gasped and said “I need 10 seconds!”His main point is just how much power these 4 have been gaining– easy to underestimate this.

    1. LE

      I was there, this was 1 of the best speeches, despite what I (and most people) initially saw as a super boring title.I am sure that it was a great and very interesting speech sitting in the audience as long as you don’t question what the actual facts that he is presenting are and the comparisons that he is making. I stopped at the 6 minute mark couldn’t take anymore of it. The gross point(s) may very well be correct in some way. It’s like a political rally speech for the faithful. I can see why people would want to sit in his b school lectures.

      1. kenberger

        excellent point, LE. I’m a militant skeptic by nature, and always think about that angle.In fact, I’ve been thinking about a killer app that I wish could be built now: some sort of real-time fact checker. Have it listen to a candidate’s speech, or a presentation like this one, or the “Stories” that you see in your FB feed.Against this input, the app pulls in info from the ‘net universe, uses a bunch of AI, and returns statistics as to probabilities of each piece being true, allowing you to click through for further analysis.

        1. LE

          I keep Facebook around (with a nominal group of friends) just to see the stupid shit that people post, believe, and pass along.I want to know what Twain thinks of your idea and whether it work!

  14. Michael Elling

    Dave Winer raises the “too-big-to-fail” challenge these techno-nation-companies present over on medium: I penned thoughts there, but in summary these companies would all be undone and a much more equitable and progressive system would develop if the policy were interconnection out to the edge and mandated settlements between the actors that were monitored and enforced by a knowledgeable regulator. Regulators should not set rates, which can only be arrived at ex ante through the trial and error of competitive markets. The outcome of the settlement-free IP stack is a winner takes all model, which is simply not sustainable or progressive for society.

  15. Yinka!

    Seemed a listing of a few interesting stats interspersed with many spurious comparisons.Some of his interpretations were a bit misleading, like his stating that advertising is becoming a tax only on poor people. If anything, advertising is increasingly more of a tax that less tech savvy pay, on a sliding scale. E.g. a growing minority of people have no cable TV and use Netflix and/or other online entertainment services, which is significantly cheaper than cable TV packages. Many are also content to stream current TV shows from alternative sites that have the shows uploaded without any commercial breaks in between, with availability as soon as same day of airing. A lot of people also use utilities like AdBlock Plus, which means no ads whatsoever when they’re on the web. These 3 groups overlap heavily, meaning an growing number of people watch TV without any advertising and for less money. And tech savviness rises as we go down (younger) the age line. So, media units targeted at younger demographics are obviously more affected.Also didn’t finish watching as I didn’t find the list-reading/rattling-of-stats style punctuated with slide plus somewhat monotone delivery engaging.

  16. LE

    Amazon growth irrelevant to compare to the brands that he is comparing them to. Amazon loses money it made a small amount of money this year but typically makes close to nothing given what it sells. [0] It’s easy to add sales if you can and will continue to lose money. Apple on the other hand is highly profitable but they are not what I would call (and I am a big Apple user and supporter) a “stable” product company. Literally the other end of “cash cow” ie Microsoft. Only as good (with respect to those sales increases) as their last hit product. Hence putting Apple and Amazon on one side of a chart and Daimler, Kroger, Nike, Ikea, BMW, Walmart, Toyota (and a few others) on the other side of a chart is great when you are teaching b school students who haven’t been around the block and are highly accepting and impressionable [1] but in reality it’s an argument made to entertain and persuade in a dishonest way.[0]…[1] Let’s call this the “feel the bern effect”. Sounds good at a naive level.

    1. SubstrateUndertow

      Your of the “Apple keeps getting lucky” persuasion ?How many more time do they need to keep get lucky before you entertain the idea that they may just be operating a recurring strategy of innovative/integrative disruption that is not clearly visualized/appreciated by the wider investment community?

  17. LE

    Using market cap (beginning of video) as far as showing value, while often done, [0] is really based on the fantasy that the stock market or Wall Street value is the “value” of a company. What it really is though is essentially gambling being done on what the companies future is, and more importantly what the greater fool will pay later for the same asset. The future which can’t be predicted. And by that efficient market hypothesis you’ve already lost on that unless you have inside information. Market cap is based on what people will pay for the stock because of what they think will happen. Those people are generally not customers or at least they don’t buy anywhere near as much of the product as they invest in the stock.Saying that because the four horseman (Apple Amazon Facebook Google) have a market cap of 1.3 trillion and the GDP of Spain is 1.3 Trillion we now have a valid comparison to prove a point? We don’t, that is meaningless. [1] We already know that 1.3 trillion is a big number. So what does the economic activity of a country or a region (which is an entirely different metric) have to do with what a bunch of fools will pay for stock? A better and more valid comparison (which of course wouldn’t work) would be sales for a company.[0] Because it’s easy to digest and simplistically makes sense and is accepted and passed along like ‘8 glasses of water per day'[1] It puts things into perspective and is entertaining. Like when things are compared to the size of football fields or the height of the Empire State Building. In other words “this big” like you’d tell a 3 year old because they can’t grasp the real concepts.

  18. Amar

    This group is fascinating 🙂 We have a hard time just taking things in (even for a little while) without picking it apart and debating the nuances – which is almost always a strength .. almost always. Note: He is a, nay THE clinical professor of Marketing at NYU. This video then to me, shows a professor of marketing at the top of his game. I agree with most of feedback here (specifically the thoughts from JLM, William and Philip) but I mean c’mon he is a master story teller .. weaving together current events against historical context to posit a thesis for the zeitgeist capturing the moment. You got to give the man his kudos, no?

    1. LE

      Well like Rolling Stone magazine articles by Matt Taibbi it’s easy to keep people engaged if you are willing to stray far from the facts and make wild outrageous comparisons (ie Market Cap vs. GDP).

      1. Amar

        Truth! I found a Rolling Stone that had been left behind on my flight out of FL yesterday. I was reading the article by Sean Penn covering his meeting with El Chapo. It was a lot like eating potato chips – goes down fast and leaves you feeling queasy and regretful for all the junk ingested.I think his goal was engagement. He did pitch his course towards the end. I am just enjoying the trade craft aspect of it, not disagreeing with the inaccuracies you observed. I think even with the “creative liberties”, it takes work, focus and talent to do what he did. Or maybe my bar has been lowered with what i typically observe in corporate product marketing. 😉

        1. LE

          I am just enjoying the trade craft aspect of itOh agree and the “inside baseball” aspect of things is always interesting to me as well. The problem is once you get into the habit of saying things and not triangulating what you are saying and when you are in a position to not be questioned (because of your audience and people’s general tack to avoid conflict) it can grow out of control where you believe you can say anything. So you get lazy. [1]Of course it takes talent. But it also takes more talent to do the same thing and use valid examples not the low hanging fruit.[1] One of the reasons I am backing off of saying shit to my wife about things she doesn’t know about. She can’t challenge me and I don’t like the lack of effort that it takes. (Vs. my Dad who wouldn’t let anything slip by that I said without giving me a hard time which was great training).

  19. Stephen Palmer

    He has been fundamentally wrong about Amazon bc he (still) believes that omnichannel is the future of retail. The biggest reason to buy online is that you don’t have to go to the store. Jeff Bezos’ secret wasn’t storytelling, it was convenience and service. I expect greater profits to come the more they integrate the Kiva robots in the warehouses and as they raise fulfillment fees on their third party sellers this year.

  20. george

    My vote for top video! Now that’s how you make approximately 15 minutes really count! What I love most, his views were supported by real data.Bravo!!!

  21. David Semeria

    Wow, Talk about information density. I couldn’t process the facts at anywhere near the rate he was firing them. Is this good? No, no really. When at the end I tried to sum up in my mind what he said, all I could think of is that these four companies are seriously big and growing fast.

    1. William Mougayar

      I kept wondering how he was breathing between speaking. He didn’t stop for a second.

      1. SubstrateUndertow

        He was noticeably out of breath at the end.

      2. PhilipSugar

        I thought he was speaking slowly.

        1. William Mougayar

          ;). Average conversational speed is 100-130 words/min. I think he was closer to 200/min probably.

    2. SubstrateUndertow

      My take away:Despite all the wonderful/meaningful progressthe unintended social/economic consequence of the network-effect ageto this point as exemplified by Facebook, Amazon, Apple & Googlehas been “a winner takes all” economic cup-de-sac social-imbalance.”There is nothing equitable about equity in a digital age””as you get older you have kids you find that the profound is accessto healthcare education and housing for a reasonable rateor safe harbour from violencethis is what is profound””in terms of technology and innovation’s marchwe are making huge progress against the meaningfulbut on the profoundwe come up wanting”Repeating my comment form 3 days ago:The omnipotent ubiquitous social/economic synchronizations spinning out from the network-effect are in substance our contemporary new hidden-ground(platform) for cultural/economic transformation into a higher level organismic-structural-dynamic with all the known attributable expectations and organizing-dynamics that attend to this well studied organic “behavioural class”.The “medium is the message” and the message of empowerment embedded in the “network-effect as medium” is its synchronizing potential to elevate human organizational prowess into the realm of self-organizing, adaptive, integrative, living-system dynamics.We are like fish swimming in the empowerment of a ubiquitous network-effect synchronization-dynamic that offers us actionable, reusable, generalized morphogenic tools but we chose to myopically focus only on the hierarchical profit-power of isolated, low hanging fruit, network-effect phenomena.I get that all the bottom up hard work still needs to be done one hard competitive step at a time but surely some attempt at a proactive collaborative top down regulatory social-stability framing is in order.Or maybe we should shun collective historical introspection and simply repeat such social framing as an industrial-revolution rear-guard-action analogue.

  22. William Mougayar

    The Adele gig is pretty good though!

  23. Mark Essel

    Scott puts on a helluva show, he’s worth the $162k per performance.

  24. David Greydanus

    All of the insights here revolve around the idea that power becomes more and more centralized over time.- Ads payed for by poor people- The Big Four’s collective market cap is equivalent to the GDP of Canada- The Big Four + Alibaba are as valuable as Russia- Small number of Yachts over middle class homesThe number of people that run the world gets smaller by the day.

  25. David Semeria

    I think a steward’s enquiry is in order over his assertion that 92% of the profits of the mobile (I assume he means hardware) market accrue to Apple. Yes, they have high margins, but their global market share is under 30%. That just doesn’t sound right.

      1. David Semeria

        That link is behind a paywall (at least for Europeans).Here is an equivalent link: http://uk.businessinsider.c…Still not convinced.

        1. PhilipSugar

          Well, he didn’t pull it out of you know where, but quoting WSJ is defensible. I agree it’s not mobile, it’s SmartPhones, and it doesn’t include the Chinese one’s. I’d say in the U.S. I’d believe. Other places??? Don’t know.

  26. Pete Griffiths

    This guy has balls of steel.Maybe it’s me but after getting Amazon so staggeringly awe inspiringly flabbergastingly wrong last year you would imagine that he would have a little humility. But no! A quick rhetorical party trick to get out from under the stench of this last faux pas and he’s off – forecasting like a monster without a hint of qualification. Surely an ego to rival the Donald.

  27. Tom Labus

    4a. MSFT. Not that far off from these cos.

  28. Guy Lepage

    Great presentation!