SCOTT GALLOWAY: Bezos’ Blue Origin trip was an empty-calories honor for an ‘egonaut,’ not an astronaut

Jeff Bezos walks with Lauren Sanchez ahead of Blue Origin spaceflight
Jeff Bezos walks with Lauren Sanchez ahead of Blue Origin spaceflight.

  • Scott Galloway is a bestselling author and professor of marketing at NYU Stern.
  • The following is a recent blog post, republished with permission, that originally ran on his blog, “No Mercy / No Malice.”
  • In it, Galloway shares why he thinks Jeff Bezos’ Blue Origin flight wasn’t the milestone it’s chalked up to be.
  • See more stories on Insider’s business page.

Ever since the first tribe walked out of the Great Rift Valley and crossed the Sinai into Asia, humans have been explorers. We’ve crossed continents, then oceans, and in the 20th century, left Earth itself. There’s glory in our species’ expansive nature, and as the TV show says, space is the final frontier. However, Jeff Bezos is not my astronaut.

I felt more disdain than wonder watching Richard Branson’s joyride and Jeff Bezos’s soulless flight to the Kármán Line.

Everybody gets a “For All Mankind” trophy

There was no ground broken here. In 1903, the Wright Brothers completed the first powered flight. In 1961, Yuri Gagarin was the first human in space. In 1969, Neil Armstrong was the first human on the moon. Those are milestones worthy of celebration. In 2004, Burt Ratan’s Scaled Composites carried the first people into space on a privately built spacecraft – a milestone of sorts.

What was accomplished on July 11 (Branson) and 20 (Bezos)? Well, one of Bezos’ passengers, Wally Funk (great name), became the oldest person ever in space. After the flight, she reminded us that when you’re 82 you have zero fucks to give. She was disappointed in both the view and the length of the flight, and she found the cabin insufficiently spacious for the “rolls and twists and so forth” she wanted to do.

Another of Bezos’ passengers became the youngest person ever in space. This sounds like something, except that he bought his way onto the flight – actually, his father, a private equity billionaire, paid for the recent high school graduate’s estimated $28 million ticket. My youngest has been acting up (if “acting up” is terrorizing all of us – he ​constantly assesses the household for weaknesses and then makes brazen attacks on his older brother and anything resembling domestic harmony). I don’t have any idea how to deal with this, so I bought him a $1,000 iPad. His mother told me I was sending the wrong message. I reminded her that the message could have been 28,000 times worse. So, there’s that.

Blue Origin’s reusable rocket is a real technological achievement, but that was news … back in 2015. None of the July “astronauts” were even the first space tourists. That empty-calories honor belongs to Dennis Tito, who paid $20 million for a ride on a Russian rocket in 2001. And Tito spent a week in space, living on the International Space Station – the equivalent of nearly a thousand 11-minute trips on Blue Origin.

Astronauts, my ass. Apollo 11 and Columbus travelled 240,000 and 3,000 miles to reach the moon and Caribbean, respectively. New Shepard 4 traveled 0.026% of the way to the moon. Put another way, on Tuesday we watched a man plant a flag three feet up from base camp at Mt. Everest and expect to be knighted. This weekend, I’ll be in Montauk. I plan to swim a half-mile from shore (I can do this) and declare I’ve discovered Spain.

It’s his money, and he has the right to spend it on what he wants. But if Mr. Bezos was genuine about doing something more than crashing a canary yellow T-top Corvette into a Bosley for Men franchise, he could raise the minimum wage at his firm to $20/hour.

Egonauts

In addition to vanity projects for billionaires, these pseudo-events were advertisements, promotions for the brands prominently displayed throughout the breathless television coverage.

But advertisements for what? Human exploration is about the future, and space exploration is a long bet on a very distant tomorrow. What kind of future will the billionaire space race promote? One clue: After his flight, Bezos said, “I want to thank every Amazon employee, and every Amazon customer, because you guys paid for all this.”

He’s right. We did pay for it. Eighty-two percent of American households are Prime members, and the company has 1,298,000 employees. We also paid for the Apollo program, of course, only there’s a difference. To put Neil Armstrong on the moon, we paid taxes, and elected representatives to decide how to spend them.

In the 52 years between Armstrong’s July accomplishment and the Branson/Bezos “accomplishments,” the United States has radically restructured its economy. Specifically, we’ve handed it over to billionaires. Now, rather than paying taxes, we pay for our Prime memberships. Instead of NASA, we fund Blue Origin. We’ve elected people who defund NASA so businessmen can lead us to new frontiers instead of test pilots and physics PhDs.

Historically, astronauts were the best and the brightest. The pioneers of the 1960s were war heroes and accomplished pilots who combined physical skill and courage with crisp engineering minds. Neil Armstrong, a legend among test pilots, flew more than 900 different types of planes before leaving the Earth in July 1969. When the Lunar Module’s computer conked out on final approach, he manually piloted the craft to the moon’s surface. Those that followed, in the Space Shuttle and aboard the International Space Station, were scientists and engineers of distinction.

“Astronaut” used to connote something noble, something that cemented the best of what it meant to be American: Men and women of exceptional capabilities and unremarkable origins. Armstrong was the second person in his family to attend college, and his father was a state government bureaucrat. John Glenn’s parents were a plumber and a teacher. Sally Ride, the first American woman in space, was a PhD physicist; her father was a community college professor, and her mother volunteered as a prison counselor. Former NASA Chief Astronaut Peggy Whitson, a PhD biochemist who spent more time in space than any other American (665 days), grew up on a farm in Iowa. (Kudos to the FAA, which, just before Bezos took off, issued a new policy requiring that a space crew member actually contribute to the mission before receiving astronaut “wings.”)

In the Prime Space future, we won’t have astronauts, we’ll have egonauts.

The problems of the Prime Space future go deeper than who gets to ride Jeff’s cocket to the Kámán Line. An ever-expanding array of technological innovations, businesses, and services fall under the rubric of “space.”

One of the earliest and still most important benefits of space exploration was the Global Positioning System. It’s hard to overstate the importance of GPS, which is foundational to our mobile economy. GPS was born of a US Department of Defense project in 1973; it continues to be run by the DoD, which makes it freely available to all users.

Bezos and Elon Musk are launching thousands of satellites over the next several years to enable their Kuiper and Starlink systems. There’s a lot to celebrate about these projects, which promise broadband internet for remote and underserved regions. But do we want Bezos and Musk – or shareholders in their companies – to control that access? With the number of satellites projected to grow from 3,000 to 50,000, space hauling will be an enormous business.

Bezos dreams of moving pollutive manufacturing to space, which seems both insane and amazing. Musk wants to build a colony on Mars, which seems more like space execution than exploration. But as humanity expands to become a space-faring species, who should control who gets to go and what we do up there? To whom do the benefits of all this technological innovation flow?

I know two things about Blue Origin. One, Amazon’s customers and employees paid for it, just like Bezos said. Two, the commonwealth may register progress, but there will be less public spillover from the technology and an increase in private capture. Imagine the tax avoidance that will occur in space, where nobody can hear the IRS scream.

The counterweight to market externalities is democracy. And a democracy that cedes ownership of its future to a winner-take-all market will lose control of that future. Democracy acts through governments (and taxes), whether we like it or not.

The right stuff

While Bezos was high-fiving his employees after his jaunt into space, NASA scientists were working on projects for all mankind. The Perseverance rover on Mars has its own drone, which is sending back amazing pictures. In November, NASA, along with the European and Canadian space agencies, will launch the James Webb Space Telescope, the successor to the Hubble; under development since 1996, it promises to advance human knowledge about the formation of the universe and the origins of life.

It’s unlikely these projects will attract any venture capital money or support a SPAC. Private space projects might be dressed up as achievements for humanity, but their aim is to return capital to shareholders. And when that’s the criteria, the astronauts and their efforts become limited in scope.

Mach-3 train wreck or galactic ATM

Whatever you think of space travel as a human endeavor, space tourism is an awful business. Even assuming all goes well, it makes no sense. These are vanity projects, and the only people that will make money from them will be the early investors … who bail out before impact.

Most businesses are either demand constrained (the market for its product is limited) or supply constrained (it can’t make enough of its product). Virgin manages to be both. To meet its profit targets, it has to sell about 3,100 tickets per year at a whopping $400,000 each, a 60% increase from the current price. After an ad the entire world saw, the product has a waiting list of … 600 people. My Brand Strategy class at Section4 has 1,500 people, and there’s dramatically lower odds you’re going to blow up in your chair.

But even if there were an annual demand from 3,100 people willing to pay that fee, to supply the spaceflights, Virgin would have to make two flights per day, every day, without mishap. So far in all of 2021, it has flown … twice. The true addressable market for space tourism is zero. It’s the mother of all product-market mismatches. By comparison, Google Glass and Cheetos-Flavored Lip Balm (an actual thing) were on point. Virgin Galactic may achieve great things, but the stock (Nasdaq: SPCE) is a Mach 3 train wreck.

The worst-case, and most likely, scenario? Death. Rockets to space are controlled explosions of thousands of gallons of flammable material. Re-entry is a high-speed fall into the searing heat of friction. Virgin Galactic has already lost one pilot, Michael Alsbury, who died when his SpaceShipTwo craft broke apart in the atmosphere. Five hundred and ninety people have headed into space, and 19 have not returned, meaning space travel is more dangerous than base jumping. A space tourism fatality is a question of when, not if. Exploration and innovation are worth risks, even to human life. Floating weightless for 300 seconds is not.

Richard Branson understands these risks. Last May he sold $500 million of his Virgin Galactic stock, and this April he sold another $150 million, trimming his holding to less than 25% of the company. He was able to make both sales because he took the company public in 2019 via a SPAC controlled by former Facebook employee Chamath Palihapitiya. Who also shed his entire personal stake in the company back in March. Billionaires vote with their wallets, and the two largest shareholders believe their capital will achieve greater returns elsewhere.

Sally Ride

One of 35 people selected from 8,000 applications, after receiving a PhD in Physics, Ms. Ride spent 843 hours in space aboard the Space Shuttle Challenger, where she was charged with operating the robotics arm (“Canadarm”). I wonder if, when peering down at Earth 300 miles below, she registered satisfaction from her hard work, or the reward of pursuing greatness in the agency of others. Was it freeing to be in space, on a craft judged only by her skills and character? I don’t know. What I am certain of is that Mission Specialist Sally Kristen Ride is a United States Astronaut and went to space for all mankind.

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Bloomberg canceled Prof Scott Galloway’s TV show after he joked about his sex life in a video, topless, in a hard hat

A screenshot of Prof. Galloway's promotional video for Bloomberg, in which he stands topless and with a miner's hat and pickax
A screenshot of Prof. Galloway’s promotional video for Bloomberg

  • Professor Scott Galloway will no longer make a show with Bloomberg, The Daily Beast reported.
  • The cancellation comes a couple of weeks after a strange, lewd promo video was posted and deleted.
  • The NYU professor is known for his sharp takes on the world of business and tech.
  • See more stories on Insider’s business page.

Bloomberg TV decided not shelve a planned show with popular academic Professor Scott Galloway after he posted a lewd video online, according to the Daily Beast.

Galloway, who is professor of marketing at NYU Stern, is known for his outspoken takes on business, many of which he has published on Insider.

In April, Bloomberg announced he would have a primetime streaming show with the Bloomberg’s Quicktake service, according to The Hollywood Reporter.

Bloomberg confirmed to the Beast that the show had been axed, describing the move as a “mutual decision.” Galloway declined to comment to the Beast, and neither he nor Bloomberg immediately responded to Insider’s inquiries.

On July 2, Galloway appeared in a promotional video that was quickly deleted, but was spotted by New York Times media reporter Katie Robertson, who posted it quizzically. “This deleted video gives some … insight into what to expect?”

In the video, Galloway strides out topless to the tune of Lee Dorsey’s 1966 hit “Working in the Coal Mine,” and proceeds to make some sexually-charged jokes.

“The man of your dreams is here, if your dreams included the Village People meets a 47-year-old Jewish academic with erectile dysfunction who’s on testosterone,” he said.

Next he noted that he’s “in construction in addition to academia” as an apparent segue into construction jokes.

“I like to bring construction into my sex life. I’m a big fan of one-night stands. I call it the ‘nut and bolt.’ Anyway, bitcoin, b—–s. Here we go!” he said.

The words “CUE OUR INTRO” appear on screen at the end, suggesting this was not a finished product.

Robertson, the media reporter, said in a second tweet: “I’m reliably told people all over the Bloomberg office are playing this video right now.”

Galloway, who also hosts the “Pivot” podcast with tech journalist Kara Swisher, has something of rock-star status as a business commentator. Last year, GQ framed him as a “business guru for people who aren’t interested in business.”

His most recently skewered Jeff Bezos and Richard Branson’s forays into space in commentary on MSNBC.

Bezos and Branson’s billionaire’s space race “reflects something a little weird, quite frankly, a little unhealthy about our society,” he said.

Read the original article on Business Insider

SCOTT GALLOWAY: Colonizing Mars will not happen in our lifetime and the billionaire obsession with space makes absolutely no sense

Elon Musk space axel springer award
SpaceX owner and Tesla CEO Elon Musk poses after arriving on the red carpet for the Axel Springer award, in Berlin, Germany, December 1, 2020.

  • Scott Galloway is a bestselling author and professor of marketing at NYU Stern.
  • The following is a recent blog post, republished with permission, that originally ran on his blog, “No Mercy / No Malice.”
  • In it, Galloway questions the point of the billionaire obsession with exploring outer space.
  • See more stories on Insider’s business page.

People worried about starving or being eaten don’t have time to ponder the finite nature of life. But once we know we’re going to survive in the short-term, immortality begins to loom larger than mortality. Affairs, Teslas, and Ayahuasca are the accessories of a life with more money than time. Now the billionaire class has taken mid-life crises to a new level.

In the past month, French billionaires alone have cut ribbons on: a $194 million art museum in Paris; a $175 million Frank Gehry-designed “creative campus” in Arles; and a nearly $900 million, 16-year renovation of La Samaritaine department store, complete with hotel, spa, and wavy glass facade.

We do things bigger here in Texas, though.

Last month, Jeff Bezos announced he would be aboard Blue Origin’s first manned space flight, scheduled for July 20. A recently divorced billionaire on human growth hormone transported into space in a giant dildo powered by an oxygen-rich rocket engine that produces 490 kilonewtons of thrust is ground zero for everything that is right and wrong with society. Mostly the latter. But I digress.

Not to be outdone in the big bank/little d–k department, Richard Branson is rumored to be seeking to beat Bezos into space. He might get suborbital before Bezos, but he’s hardly breaking new ground. At least 570 people have sojourned in space since Yuri Gagarin made the first trip in 1961. Branson wouldn’t even be the oldest person to do it: John Glenn left the planet at 77 years old (his second trip). You do you, Rick and Jeff.

Read more: I was an early PayPal employee who joined the company even before Elon Musk. I missed out on becoming a millionaire because I sold my stock too soon after I left.

The final frontier

The desire to bravely go where no one has gone before is deeply rooted in the human spirit. Discovery must be a feeling of great wonder. At that moment, you are here for a reason. You are immortal.

Scott Galloway

Exploration can be hugely beneficial for those who follow, who get to cross Donner Pass on pavement. Yet nearly 50 years since the Apollo astronauts last walked on the moon, we’ve … not been back. Space is not the Sierra Nevadas.

Space is exponentially more expensive and dangerous. Nineteen of the 570 people who’ve ventured into space haven’t returned, yielding a mortality rate of 3.3%, versus 1.3% for climbing Everest and .04% for base jumping. Worse, by American standards, space travel is going to be a shitty business.

Even with our advanced technology, and a fawning CNBC engaging in a consensual hallucination that these billion-dollar hair plugs are for all mankind, the ROI is suspect. That last sentence is my way of saying “makes no fucking sense whatsoever.” There is 100x the return investing in technologies and systems of cooperation on a planet already perfect for human life, a mere 38.6 million miles from Mars. The billionaire obsession with space fantasy (and our willingness to go along with it) isn’t just disappointing, it’s nihilistic. Our idolatry of innovators is morphing into phantasmagoria.

More space

There are four reasons to put a rocket into space. In order of near-to-medium-term relevance (i.e. having any purpose this century), they are:

  1. Hauling stuff
  2. Scientific exploration
  3. Tourism
  4. Colonization

Hauling

There’s a real business in hauling stuff – mostly communications satellites – into orbit. Indeed, this is where both Bezos and Musk have placed their bets. Blue Origin and SpaceX are serious space-hauling companies. Apparently, it’s also a profitable business. Said Blue Origin CEO Bob Smith: “We make money on every flight.”

Scientific exploration

Scientific exploration is worthwhile, but it’s not a business. It feeds businesses (hauling, materials, communications), but this is deep science, better pursued by our commonly owned enterprise, the government.

In fact, contracting is becoming a competence for NASA. In 2010 commercial launches represented about 30% of all US launches. Last year, they accounted for 80%. Private enterprise is eliminating NASA’s need to design, build, and launch. That’s a good thing: It means they have more time to focus on exploring. Let capitalism handle the picks and shovels. NASA will handle the science.

Tourism

After that, we venture into ego and fantasy. Space tourism is a bad business that could end in a flash … literally. What’s the market for people willing to spend $250,000 to be weightless for a few minutes? What’s the repeat market? And what will be left of that market after the first tourist rocket explodes on the launch pad, killing Bob from accounting? Because the nature of rockets is … they explode. About 90% of US rocket launches were successful last year. That might sound OK until you start putting humans in them.

In human transport, superior shareholder returns will be a function of fast versus far. In my view, the most under- and overhyped transportation firms are Boom Technologies and Virgin Galactic, respectively. The market for people willing to pay $25,000 to get from NYC to London in 3.5 hours is (at a minimum) 1000x the market for people willing to pay $250,000 for a 90-minute suborbital ride to the Kármán line. Six hundred people have paid $250,000 to reserve a seat on Virgin Galactic. Six hundred people land on a private jet at Teterboro every six hours.

Colonization

As for colonization of Mars … really? The only interesting question is whether Elon actually believes any of this – whether anyone at SpaceX believes any of this – or whether it’s purely a PR stunt. Colonizing the Red Planet will not happen in my, or my kid’s, lifetime. Intense solar radiation, combined with the lack of atmosphere and low gravity, would require living (dying) quarters buried deep under the planet’s surface for any hope of survival. As astronomer Caleb Scharf told us on Pivot, “there’s a lot of stuff [on Mars] that wants to kill you.” The worst place on Earth is better than the best place on Mars.

The SPAC(e) race

The biggest trend in space over my lifetime has been the rise of the private space hauler. Who’s best positioned to win in this new market? In general, there are three ways to maximize profits: reduce costs, do more (in this case, more flights), and diversify your business.

The Big Three – Blue Origin, SpaceX, and Virgin Galactic – are all making headway on No. 1. All have invested in reusable rockets, which have reduced launch costs by 70%. On No. 2, we have a clear leader: SpaceX has launched almost three-quarters of this year’s US flights.

As for No. 3, Virgin Galactic is the clear loser, as Richard Branson is focused on space tourism. Jeff and Elon, by contrast, are investing heavily in orbital infrastructure. Between them, SpaceX’s Starlink project and Amazon’s Project Kuiper plan to launch nearly 14,000 satellites, providing continuous, high-speed Internet access globally. That should keep the space haulers busy for some time.

Scott Galloway

In sum, there’s real money to be made in hauling stuff – but satellites, not tourists. The past decade has seen more than $125 billion of investment poured into positioning, navigation, and timing (PNT), a sector that relies on good satellite constellations to feed Uber, Maps, DoorDash, and nearly every other app on your phone. This is why launch vehicles and satellites are hogging all the space infrastructure investment.

Scott Galloway

With 1,480 unique space companies competing for a place in the stars, the space economy is very thirsty. But a rocket needs more fuel than a Ford F150 – about 12,300x more. What do you do when you need fuel (capital) in exuberant excess? You either 1. find a billionaire or 2. access the public markets.

SpaceX, Blue Origin, and Virgin Galactic all have a massive head start because they were birthed by billionaires. Bezos, Musk, and Branson will pay their kids’ expenses no matter how dysfunctional or explosive. But the sector is attracting new sources of capital.

Take Rocket Lab, a 500-employee startup that also launches rockets. How will it get the capital it needs to keep up with the 9,500-employee behemoth that is SpaceX? Via SPAC. In March, Rocket Lab merged with Vector Acquisition Corp. and raised $750 million at a $4.1 billion valuation. The company has already had two successful launches this year.

A dozen other space startups have also gone (or are going) public via SPAC. Astra, a small satellite-launching company, raised $500 million at a $2.1 billion valuation. Spire Global, a satellite-data company, raised $475 million at a $1.6 billion valuation. There are hundreds of other space startups thirsty for an injection of public cash. The 2021 SPAC boom is yielding tremendous opportunity and risk for astronauts and investors.

Near versus deep space

My observation is that men are more focused on deep space, and women near space. Men are more ego driven and obsess about frontiers in business and the solar system. Women are (cue the Twitter hate) more concerned with exploring things near them, finding less reward in being the first person on Ganymede. My advice to young men, especially those with kids, is to be more focused on near space. As you get to the end of your time on the third rock from the sun, you won’t be desperate to spend more time with strangers, but the people closest to you. I spent the first 40 years of my life obsessed with getting affirmation from people I didn’t know. It came at a cost to relationships with my family, friends, and ex-wife.

Tonight the family ate at a sushi restaurant, and my 10-year-old ordered kakigori, Japan’s quintessential summer treat: shaved or crushed ice drizzled with flavored syrup or condensed milk. It’s awesome. Nobody, despite my son’s urging, would try it. I agreed and demonstrated a rare expression of joy (see above: It is awesome). My son, at that moment, felt so close to me he pushed the kakigori in front of me and sat on my lap so we could enjoy the dessert together. It felt as if I was discovering something nobody had ever felt/seen before, and all of mankind would benefit.

I am strong, here for a reason … immortal. Going where (this) man has never gone before.

Life is so rich,

Scott

Read the original article on Business Insider

The Hall of Fame of ‘Benjamin burners’: Meet the CEOs most famous for tanking their companies and losing millions – of other people’s money

Adam Neumann
WeWork cofounder Adam Neumann.

  • Scott Galloway is a bestselling author and professor of marketing at NYU Stern.
  • The following is a recent blog post, republished with permission, that originally ran on his blog, “No Mercy / No Malice.”
  • In it, Galloway talks about famous CEOs, from Yahoo’s Marissa Mayer to WeWork’s Adam Neumann, who cost their companies millions.
  • See more stories on Insider’s business page.

I’ve lost a lot of other people’s money. The most stressful times in my life have been when people believed in me and invested tens (if not hundreds) of millions in my company or idea, only to see their capital go up in smoke. I’ve also made a lot of people a lot of money – but only in America would someone with my (lack of) pedigree be given this many swings at the plate.

To be a truly great investor or operator/CEO, you need to be a bit of a sociopath: You have to be able to sleep at night even as you lose other people’s hard-earned money or lay people off. Working with OPM (i.e., Other People’s Money) is often phrased as a positive, but the real luxury is to be in a position to lose your own capital. If things go wrong, it’s a private failure.

The willingness to risk capital on a captain and harpoons (the 19th century whaling sector was proto-venture capital) has always been a key ingredient in the secret sauce of the US economy. But the secret is out. While the US still produces the most unicorns, and the most mega-corporations, China is gaining … fast. Interestingly, despite the rhetoric re: China challenging US hegemony, it’s European innovation that has drowned in the rising red tide. But that’s another post.

Scott Galloway  https://www.profgalloway.com/

We should celebrate billion-dollar successes, so long as they come at the risk of failure – the whaling captain and the entrepreneur earn their wealth in part thanks to their willingness to come home empty-handed, or not at all. However, there’s a new class of billionaire in America. Meet the MeWork generation, which makes their fortunes despite returning to harbor with less than they embarked with.

To help identify members of the MeWork generation (they can be any age), we’ve devised two metrics: the Daily Benjamin Burn™ (DBB) and the Earn-to-Burn Ratio™ (EBR). The first is how much money an executive lit on fire per day during their tenure. The second is the percentage of those lost Benjamins they siphoned off for themselves – think of it as a commission on destruction. In an efficient and fair (dangerous word) market, the EBR ratio would be zero. If we can measure someone’s burn in daily stacks of 100-dollar bills, they’ve created no value and should get no compensation. Spoiler: That’s not what happens.

Daily Benjamin Burn™

What does the DBB look like in practice? A lot like Quibi. That likely won’t mean anything to you, unless you’re one of the dozens and dozens of people who subscribed to the short-lived short video service. In 2018, Jeffrey Katzenberg and Meg Whitman raised $1.75 billion, launched a bad app with worse content, and shut it down six months later. Roku combed through the rubble and found $100 million, so Jeff and Meg immolated $1.65 billion in 750 days, or $2.2 million per day. If you stacked that $1.65 billion in 100-dollar bills, you’d have a pile over a mile high, about two Burj Khalifas, the world’s tallest building.

Eating my own Benjamins

In 2008, I raised $600 million from a hedge fund, became the largest shareholder in the New York Times Company, and ran an activist campaign against the Gray Lady. They put me on the Board, where I ranted about the evils of Google, advocated for the divestiture of non-core assets, envisioned sunlit uplands of subscription revenue and … lit Benjamins on fire. During my 24-month tour of duty watching the Great Recession kick ad-supported media in the groin, I managed to turn $600 million into $350 million, for a DBB of about $350,000. The stack of Benjamins I lost would have reached only to the top of 30 Rockefeller Plaza. Only. Jesus …

I. Want. To. Throw. Up.

Scott Galloway  https://www.profgalloway.com/

Earn-to-Burn Ratio™

Jeff, Meg, and I all made an old-school mistake. We failed to find a greater fool (e.g., the public markets, gullible board members, Softbank) to secure a mega payout for our Bonfires of the Benjamins. I was paid approximately $500,000 in board fees and a retainer from the fund; I speculate that Jeff and Meg pocketed more (their compensation remains private). But none of us took home millions.

That brings us to the Earn-to-Burn Ratio™ and the hall of fame for broken compensation.

EBR hall of fame

In 2012, Yahoo replaced its CEO with an executive from Google: Marissa Mayer. But the new CEO made a series of poor decisions, including canceling the company’s telecommuting policy while working from home herself and paying $1.1 billion for a porn site, Tumblr. (Note: Six years later, Yahoo sold Tumblr for $3 million.)

When Mayer took over, Yahoo (not including a 20% ownership stake in Alibaba) was valued at $14.4 billion. In July 2016 the company sold itself to Verizon for $4.5 billion, and Mayer was gone. That’s $9.9 billion turned to ash in four years (or 13.5 Burj Khalifas), for a DBB of $6.8 million. Mayer’s compensation began with a $30 million signing bonus and went up from there, totaling an estimated $365 million, giving her a $250,000-per-day commission for destroying $7 million per day of other people’s money. That’s an EBR of 3.7%. Shocking, sure, but not the gold standard.

Adam Neumann founded WeWork in 2010, but he didn’t start burning Benjamins at epic scale until Softbank began shoveling billions into the WeWork furnace in August 2017. By the time Neumann was fired in September 2019, Softbank had invested $10.3 billion; a few months later it wrote off $9.2 billion of that. That’s a $13.1 million DBB on Softbank’s money alone, or like flying a decade-old Gulfstream G450 (I browse planes at night – pathetic) into a mountain … every day. Impressive, but only half the story. Neumann’s compensation for this value destruction was complicated by his ouster and a subsequent lawsuit, but we estimate he made off with around $1.02 billion, most of it coming out of Softbank’s deep pockets. That’s $1.5 million per day during those two years: an EBR of 11.1%.

Scott Galloway  https://www.profgalloway.com/

Joining Mayer and Neumann on the podium is Randall Stephenson, who ran AT&T from 2007 to 2020, when his chief lieutenant, John Stankey, took over. If you owned AT&T stock in 2007, you’ve collected $26 per share in dividends since, but you’ve also watched the share price drop from $39 to $29, for an aggregate annual return of 2.5%. This was a period when S&P 500 companies as a whole returned 9.8% a year – much of it on the back of AT&T’s own mobile and data networks – and AT&T’s competitor Verizon returned 7.9% to its shareholders.

How did Stephenson manage this? Among other mistakes, AT&T spent $67 billion to buy DirecTV (a pending massive write-off), blew $4 billion when it failed to acquire T-Mobile, and spent another $108 billion to buy WarnerMedia, which Stankey just sold to Discovery. To his (partial) credit, Stankey may have managed to net out the Warner deal as a wash.

Scott Galloway

So while Stephenson didn’t destroy capital outright, he was a poor steward. Had AT&T eked out even a 4% return from 2007 to today, it would have made an additional $50 billion for shareholders. That’s an implied DBB of $10 million. How did the Board respond to Stephenson’s 13-year-long sideways run at the iconic firm? His total comp was at least $250 million, including a $64 million pension as a parting gift. That’s an EBR of “only” 0.5%, but still a huge payout in the face of mediocre performance.

Honorable mention

In April 2014, toward the end of Steve Ballmer’s controversial run as CEO, Microsoft closed the $7.2 billion purchase of 1999’s leading mobile handset maker, Nokia. Just 15 months later, Ballmer was gone, and the company wrote off $10 billion for the failed acquisition – the deal was so bad it ended up costing Microsoft more than it paid, mostly due to severance for laid-off Nokia employees. That’s an incredible $22.2 million per day, the highest DBB we could find. (Ballmer only made $1.65 million his last year at the company, so a minimal EBR.)

Burning Benjamins doesn’t just happen in the US. In 1998, Daimler-Benz acquired Chrysler for $35 billion in the largest industrial merger ever at the time. After nine years of culture clash and billions in losses, Daimler unloaded 80% of Chrysler to a private equity firm for $7.4 billion, valuing the company at $9.25 billion. That equates to an impressive $7.8 million DBB.

How do these corporate money losers compare to the largest and longest-running Ponzi scheme in history? Bernie Madoff ran his fake fund for nearly 30 years, costing investors an estimated $19 billion. The date his fraud began is disputed, but assuming it was 1980, that’s a DBB of just under $2 million per day. A massive, decadelong legal project has repaid most of these losses through fines and settlements, and Madoff died in prison, but only after a multi-decade run paid for by the destruction of thousands of people’s economic security.

https://www.profgalloway.com/ Scott Galloway

MeWork

Growing up, I loved to watch my dad pack for business trips. He smelled of Aqua Velva and draped his Izod sweaters over a Ram Golf bag. He’d iron the mammoth collar of his Pierre Cardin shirts, fold them around a piece of wax paper, and lay them into his Hartmann luggage like newborns. It was ceremonial, just as when he’d wear his kilt. Elegant yet masculine. During one of these pre-business-trip ceremonies, when I was about eight, my mom walked in. I looked at my dad’s stuff and asked, “How come dad is so rich, and we’re so poor?”

My dad loves this story and laughs out loud when he tells it. But it wasn’t funny. He’s been married – and divorced – four times. There was some financial stress, there was incompatibility. But the real fissure was that there were two Americas … under one roof.

https://www.profgalloway.com/ Scott Galloway

Whether we’re executives, parents, or citizens, we need to ask ourselves: Have our interests diverged from those of the people who matter most to us and society? Do our spouses, children, neighbors, employees, and countrymen win and lose in reasonable harmony? Are we part of a family, part of a nation? Or have we become the MeWork generation?

Life is so rich,

Scott

Read the original article on Business Insider

SCOTT GALLOWAY: Elon Musk is now the most influential person in the world – whether or not that’s a good thing remains to be seen

Elon Musk
Elon Musk.

  • Scott Galloway is a bestselling author and professor of marketing at NYU Stern.
  • The following is a recent blog post, republished with permission, that originally ran on his blog, “No Mercy / No Malice.”
  • In it, Galloway discusses the impact Elon Musk has on cryptocurrency, the auto industry, and the free market.
  • See more stories on Insider’s business page.

I often write about platforms (iOS, Amazon Marketplace, etc.) as they are a source of value creation and power. The platform of unprecedented wealth creation is the free market of capitalism. The global adoption of markets has corresponded with the greatest expansion of prosperity in human history. But similar to tech platforms, free markets are neither naturally occurring nor immune to collapse. The “free” market can fail.

Scott Galloway

Live from New York

This Saturday at 11:29 p.m. ET, we’ll witness the latest manifestation of market failure. A new king will seize the Iron Throne from Mark Zuckerberg, whose empire has been disarticulated. (He just doesn’t know it yet.) I wonder if Professor Tim Wu or Senator Amy Klobuchar visits the Night King in his dreams? Or maybe depressed teens, the GRU, or the ghosts of people dragged out of their cars in India and hanged because of falsehoods spread on WhatsApp. OK … that escalated quickly.

Anyway, the social network’s CEO has ceded the Iron Throne to the Launcher of Dragons, Borer of Tunnels, and Father of X Æ A-Xii. The coronation will take place before a live studio audience, with Tesla long bots and adoring CNBC personalities shaming anybody who doesn’t surrender to the narrative. Elon Musk is now the most influential individual in the world – so influential, he can distort the modern world’s premier platform, our free market system.

Is Mr. Musk a net positive for society? 100% yes. It’s the word “net” that is the problem. We do basic math on a person/firm, issue a thumbs up/down, and decide (if thumbs up) to ignore the externalities. This is tantamount to deciding pesticides are a net good (they are), so we should disband the EPA.

Read more: Elon Musk personally recruited me to work at SpaceX when it was starting up. He was a relentless problem solver and taught me valuable lessons I use even to this day.

Naked examples of Musk’s influence/externality: the tweeted endorsements of his favored assets. Bitcoin is a trillion-dollar cryptocurrency that could reshape the world economic order … and Musk can manipulate it with (many) fewer than 280 characters.

Researcher Lennart Ante found “significantly abnormal returns of up to 18.99%” after Musk tweeted about bitcoin. “I believe that cryptocurrency traders are looking for role models and validation,” Ante told us when we asked him about his research. But, “we are facing a moral dilemma” he pointed out, between free speech and the protection of investors. When Musk changed the bio of his Twitter account to “#bitcoin” on January 29, the cryptocurrency rose from $32,000 to more than $38,000. Is it free speech? Yes. Does that mean it won’t destabilize the markets and end badly?

I. Don’t. Know.

Mr. Musk can even move markets accidentally. When he tweeted “Use Signal,” referring to the encrypted messaging app, shares in Signal Advance, a Texas medical device maker, increased 5,100% in three trading days.

The musk of Musk’s influence gets stronger this week. He’s established an informal alliance with Dogecoin, a functioning cryptocurrency that’s also an extended practical joke. In the week leading up to Musk’s “SNL” appearance, and following his tweet claiming to be The Dogefather, Dogecoin briefly reached $85 billion in market cap, more than Moderna or Airbus. By midweek it had registered an astounding $45 billion in transaction volume in 24 hours. Click here for a detailed, scientific video rendering of what this level of trading actually looks like.

Reality distortion field

The theory of relativity dictates that massive objects distort the space-time continuum, and light and matter slide toward it. Musk has become a similar celestial force in our markets – but in this case, the graviton particles are genius, attention, ID, and capital.

Scott Galloway

In a healthy market, resources flow where they’ll generate the best return: Workers move to cities with strong job markets, capital flows to companies with robust growth prospects. But in Musk’s case, the power of celebrity in a social media age, a rising class of retail investors with stimulus funds, and our idolatry of innovators have combined to create a vacuum that may cauterize other naturally forming celestial objects. I’m especially proud of the last sentence.

Show me the money

None of this is by accident. Despite being one of the wealthiest people in history (on paper), Musk constantly needs more cash. He recently acknowledged that SpaceX will need “to pass through a deep chasm of negative cash flow” just to launch its satellite internet service. The company has already raised more than $1 billion this year, and $7.5 billion over the course of its history, while continuing to burn billions in revenue. Musk’s other projects, including Neuralink and The Boring Company, have raised another half-billion dollars with little revenue so far.

Tesla posts an accounting profit, but in its most recent quarter, it was emissions credits (a regulatory program that rewards auto companies for making electric rather than gas vehicles) and – wait for it – $101 million in bitcoin trading profits that morphed earnings from a miss to a beat. What Tesla did not do last quarter was produce a single one of its two premium cars, the Model S or the Model X. Promised redesigns have apparently snarled production. On this topic, Musk has been uncharacteristically CEO-like (that is, discrete).

Scott Galloway

Cash burn isn’t the only challenge facing Musk’s companies. Tesla, his flagship business, now has a market cap larger than the auto and airline industries. The company achieved that value, in part, because for a decade it operated without a serious competitor. There’s never been a car like the Tesla Model S, and if you want a high-performance, luxury EV, your choice is easy … and singular. Value creation via disruption is as much a function of the incumbents as the disruptor. Imagine a world in which the only phones were flip phones and the iPhone 12. That’s the auto industry since the Model S arrived in 2012.

Scott Galloway

Or that was the auto industry. Because the Germans are coming. And the Swedes. And the Japanese. On May 2, we got a glimpse into a post-Tesla future when the New York Times ran an article titled: “Mercedes EQS Electric Sedan: The S Stands for Stunning.” The innovation gap is closing. And it’s not just car companies coming for Tesla’s fat margins. The industry’s shape-shift from a $100 billion low-margin manufacturing business to an $800 billion high(er)-margin software business has attracted some enormous sharks. The first overnight $100 billion-plus transfer of shareholder value will occur in 2022, when Tim Cook stands onstage in front of an automobile bearing an Apple logo.

What is the shark repellant for these circling great whites? Musk must keep capital and talent flowing into these enterprises while distracting us from anything regarding fundamental analysis (P/E ratios) or sobriety (it’s a car company). The embrace of crypto serves both needs: It’s consistent with his techno-utopian vibe, and it directs the conversation away from the Mercedes EQS or Apple car while providing a shock absorber for earnings misses. The “SNL” appearance, Dogecoin tweets, Elvish-letter-named kids, tickling of our senses with 420 references and suggestive emojis: It’s David Copperfield, plus 60 IQ points. To be fair, landing two rockets on barges concurrently is genius and inspires awe. But does it warrant consensual hallucination?

Carbon costs

Pumping bitcoin might buttress Tesla’s earnings, but it blows open a bigger hole in Tesla’s narrative. The narrative police demand we link Tesla’s valuation to solving the climate crisis, to reducing carbon emissions by replacing gasoline cars with electric ones. And it does that. According to the EPA, the average 22 mpg gasoline car spews out 4.6 tons of carbon every year. Powered by the US grid, an EV is the equivalent of a 68 mpg car, generating about 1.6 tons of carbon per year. (In other words, each Tesla on the road saves three tons of carbon every year.)

But bitcoin mining generates a lot of carbon, too: Current estimates put it at around 53 million tons of carbon production per year. (Yes, miners use a lot of renewable sources and may catalyze greater renewables investment – but does that compensate for incremental electricity demand rivaling that of Argentina?) Here’s some back-of-the-envelope math that’s definitely going to raise the army of the undead (i.e., TSLA longs and bitcoin bots):

In the short term, bitcoin’s carbon emissions are a function of its price – the higher the price, the more miners are willing to spend on electricity to mine. Assuming a linear relationship (a convenient if aggressive assumption), for every $1 that Musk’s pump has increased the price of bitcoin for one year, miners expel another 1,000 tons of carbon. That wipes out the annual carbon savings of 300-plus Teslas. If Musk’s bitcoin evangelism increases the price by $4,500, that effectively eliminates the ongoing carbon savings of every Tesla on the road today.

The deeper problem? Our elevation of Musk as a capitalist idol has distorted the flow of capital and talent. Healthy markets don’t take cues from the tweets of one man.

Man in the mirror

As “SNL’s” Lorne Michaels likes to say, “Here’s the thing.” Musk is going to keep tweeting, appearing on “SNL,” and ensuring he has a bigger rocket than other masters of the universe … because it works. While we’re watching the fireworks, he’s building cars and rocket ships. Is he the best person to build those things? Is the most efficient amount of capital flowing to his factories, versus those in Ingolstadt or Toyota or Detroit? A healthy market is supposed to answer that. It’s the allocation platform. It’s also hard to deny that Elon has inspired an extraordinary flow of capital into EVs and innovation in transportation.

But our idolatry of innovators and the algorithmic media ecosystem have distorted the allocation platform. In the spectacle economy, it’s about the show, the now, the short-term hit. We’re the richest country in the history of humanity, and we can’t garner the political will to fix our bridges, let alone reach for the stars.

This all raises the question: What do we expect? You only have to drive a Tesla around the block to know that Musk is not a grifter. He is a genius (see above: rocket ships landing on a pad floating in the ocean). Maybe a world-saving, visionary genius should deploy any weapon at his disposal to garner the resources, fend off the challengers, and most importantly, buy the time to achieve his vision. Maybe.

We say we want straight shooters. We say we want wealth to be fairly distributed. But 53 million of us follow Musk’s Twitter feed, and tens of millions of us are going to watch him on Saturday night, and the Elon show will go on.

If there is a glitch in the matrix, it’s us. One in five US households with children is food insecure, and we have a man telling his 53 million acolytes to purchase a digital currency so he can sell it at a profit to pad the earnings of a company that’s worth more than automakers producing 60 times the vehicles. And why wouldn’t he? When you tell an innovator he’s Jesus Christ, he’s inclined to believe you. Once we idolized astronauts and civil rights leaders who inspired hope and empathy. Now we worship tech innovators that create billions and move financial markets. We get the heroes we deserve.

Live from New York, it’s …

Life is so rich,

Scott

Read the original article on Business Insider

SCOTT GALLOWAY: WeWork may be in a unique position to rise from the post-pandemic real estate fallout

Clive Wilkinson Architects
Over a year of having to adapt to remote services has changed to way people think about work.

  • Scott Galloway is a bestselling author and professor of marketing at NYU Stern.
  • The following is a recent blog post, republished with permission, that originally ran on his blog, “No Mercy / No Malice.
  • In it, Galloway says commercial vacancy rates will continue to rise long after the pandemic ends.
  • See more stories on Insider’s business page.

Real estate is an awesome gig.

For starters, the supply of fertile land (urban centers) is finite, but the source of demand keeps growing (more people/capital moving to cities). On top of that, we’ve granted real estate development such favorable tax treatment that it is nearly immune from taxation. Even Donald Trump, arguably the worst business person in US history, made money in real estate development, despite the serial failure of the underlying business. As one tax law expert put it, the real estate industry “thinks of the tax code as a basket of goodies to feast on rather than a financial obligation of doing business.” Imagine buying stock and being able to depreciate it as it increased in value.

Thanks to ever-growing demand and favorable tax treatment, real estate once minted more billionaires than tech. In 2019, 223 people on the Forbes billionaire list owed their wealth to real estate, compared to 214 from tech.

Then … COVID.

The third great conveyance of the modern economy (the first two being globalization and digitization) is in full swing: Dispersion, the process of value leapfrogging traditional points of distribution. Three sectors stand to register the greatest reallocation of stakeholder value (i.e., shit-kicking): healthcare, commercial real estate, and education as consumers leapfrog hospitals, HQ, and campuses.

Dispersion is enabled by both globalization and digitization. High-bandwidth communications link billions of people, and robust mobile devices render that network continuous. Now, blockchain technology is enabling the network to store value (bitcoin) and act on it (etherium). This will bring further disruption to industries low on IQ and heavy on EQ, such as insurance/asset management/central banking (wrapping my head around this is my biggest challenge for 2021).

The point is, the pandemic has accelerated all of these trends. A year-plus of forced acceptance of remote services in every sector has carved permanent change into our behavior. And, few sectors have seen a more radical transformation than office work.

Valuation

Any discussion of valuation must be set against the backdrop of a firm’s valuation. Gannett Co., Inc. faces structural challenges, but at a $2.5 billion enterprise value (0.7x revenue), Gannett is undervalued. Tesla is a great product and company, but at $637 billion (20x revenue), it is overvalued (send in the clowns/trolls). Disclosure: I am a shareholder in Gannett and consistently wrong re: Tesla.

Anyway, the office real estate in the US alone is a $2.5 trillion asset class, and it is going to leak the GDP of Switzerland to residential over the next decade. However, it’s not as easy as going short all office firms and long all residential. The fire that will rage within the office sector will raise seeds of dormancy – and create unexpected winners. One pyrophile plant that emerges from the fire may be WeWork. I’m especially proud of that last sentence.

Why We (might) Work

The wholesale abandonment of office space has been among the most striking fallouts of the pandemic, and it will have profound effects on the way we live and work, long after the virus has been tamed. In New York, new office space is coming on the market 59% leased, down from 74% pre-COVID. San Francisco went from its lowest-ever office vacancy rate to its highest in the same year, and office rents are set to decline by 15%. The worst may be yet to come. Analysts predict that commercial vacancy rates will rise from 17.1% in 2020 to 19.4% in 2021, besting the previous high of 17.6% in 2010. And, as $430 billion in commercial and multifamily real estate debt matures in 2021, lenders will be forced to reconcile the effect of the pandemic on their investments.

Scott Galloway.
Scott Galloway

These changes will endure. Twitter, Facebook, and Slack have all announced the move to a predominantly remote workforce. Pinterest recently paid $90 million to terminate its HQ lease in San Francisco. REI sold its new headquarters before even moving in, and CVS plans to cut 30% of its office space. At my New York-based education startup, Section4, we asked employees if they wanted to come back to work after the pandemic; overwhelmingly, they wanted to stay home. We paid $1 million to terminate our SoHo office lease. After decades of promise, the telecommuting revolution is here.

Scott Galloway

Back in 2017, I predicted WeWork, then worth $16 billion, would lose 75% of its value and become the “poster child of unicorn mania.” Two and a half years later, that prediction was wrong, very wrong – WeWork was preparing to go public on the heels of a $1 billion investment from Softbank that valued the company at $47 billion.

But it just didn’t pencil out. After deploying my unique domain expertise (math) I concluded: “Any equity analyst who endorses this stock above a $10 billion valuation is lying, stupid, or both.”

The ensuing meltdown was cinematic – literally. Tonight, WeWork gets its closeup, in a documentary on Hulu, “The Making and Breaking of a $47 Billion Unicorn.” I’m in it. I have not seen it, but it is awesome.

(BTW, the production company wanted me to come to a studio in New Jersey for filming. I told them I had a two hour window and that they needed to come to my place in SoHo or find another angry professor to make terse comments. They shuttled a dozen people to my place and set up a studio in my kids room, next to the climbing wall. At that moment, I realized that people tolerating you being an asshole doesn’t make you … any less of an asshole.)

Anyway, that wasn’t the end of the story of WeWork. Despite losing $60 million per week of Softbank’s money in 2020, WeWork didn’t go out of business. Instead, to the board’s credit, the company fired the Jesus of reclaimed wood and smoked glass, Adam Neumann, and brought in an experienced manager. Sandeep Mathrani shed 100 of the company’s worst performing properties along with the self-dealing arrangements foisted on the company by Neumann, and laid off 8,000 employees. A crisis is a terrible thing to waste, and if WeWork turns the corner to profitability in Q4 of this year, as it has promised investors, it will be the case study in fire intensity and germination.

Sandeep Mathrani
Sandeep Mathrani of WeWork.

The new WeWork is a stronger company than the 2017 model. It’s still not worth $50 billion, but it might be worth $9B (or more). The new WeWork will benefit from the massive investments in space and brand equity (i.e., global awareness); additionally, people underestimate the difficulty of scaling “vibe,” where WeWork has a proven talent.

Most companies aren’t going 100% remote. But when we return to the office, we will want less space that is more flexible, and more appealing to the premier asset of any firm: its ability to attract skilled, young human capital. Pre-corona, Section4 had a long term lease on 8,000 feet at $70 per square foot. Post-corona, it will probably be closer to 2,000 at $100, and on a year-to-year lease. Further out, I could see us opening offices in Miami or Austin, where great talent is migrating.

Imagine: a commercial real estate play, with properties around the world, configured as flexible office space, rentable by the hour, the day, or the month, with great community spaces, aspirational design, and strong tech. In sum, We might Work.

Pass the pipe (here we go … again)

However, Softbank has not run out of real estate opium quite yet. Now it is trying to pass the pipe to Compass investors, hoping the markets enter into consensual hallucination that a rollup of residential real estate brokerages is (wait for it) a tech company. Yesterday, Compass went public at a valuation of approximately 3x revenue. Realogy, the closest competitor, trades at 0.29x revenue. From the Compass site:

“Compass is building the first modern real estate platform, pairing the industry’s top talent with technology to make the search and sell experience intelligent and seamless.”

The firm even describes itself as “a tech company reinventing the space,” despite the fact that it spent 78% of expenses on commissions to brokers, instead of technology or algorithms. This makes sense as Compass is … a real estate brokerage.

Scott Galloway

Just before the IPO, the underwriters cut the pricing range and halved the number of shares offered. Despite a massive haircut in supply, the first day pop was an anemic 12%. I’ve worked at an investment bank taking companies public, founded companies that have gone public, and been on boards of companies going public. Dramatically reduced supply (shares) at a lower price, coupled with Goldman’s unparalleled institutional base of buyers, and Compass barely got out. In sum, the corners of this trade are beginning to collapse and could lead to a broken IPO within days. WeWork may be rising from the ashes as Compass begins to smolder.

Life is so rich,

Scott

Read the original article on Business Insider

SCOTT GALLOWAY: Now’s the best time to start a business in over a decade. Here are the 4 industries I predict will soon explode.

Nazaré, Portugal by Getty
A surfer riding a wave in Nazaré, Portugal.

  • Scott Galloway is a bestselling author and professor of marketing at NYU Stern.
  • The following is a recent blog post, republished with permission, that originally ran on his blog, “No Mercy / No Malice.”
  • In it, Galloway explains how the post-pandemic economy will birth a new generation of leaders.
  • See more stories on Insider’s business page.

Post-crisis periods are among history’s most productive eras. London rebuilt after the Great Fire with grand new architecture, and Europe after the worst of its plagues underwent a commercial revolution. The Marshall Plan turned enemies into allies, fomenting peace and prosperity for over half a century. Leaders also emerge from crises. Ulysses S. Grant was a washed-up soldier without prospects until war broke out, but that war created the opportunity for Grant to save the Union and advance the cause of freedom. This is all to say: In the next 36 months, I believe our economy will birth a new generation of web 3.0 firms and leaders. Why?

I’ve started nine businesses. The best predictive signal for their success has turned out to be the phase of the economic cycle in which they were started. Put simply, the best time to start a business is on the heels of a recession. And while pandemic economics haven’t resulted in a garden-variety recession – in either its duration (short) or its recovery (K-shaped) – there are factors that make this the best time to start a business in over a decade. Specifically:

  • Unprecedented stimulus and savings resulting in a Nazaré-like wave of consumer spending.
  • A gestalt among consumers and enterprises to question the status quo, and be open to new products and services.
  • The emergence of new fields and the capital to disrupt traditional industries as immunities kick in and monopoles are broken up.

Nazaré

The massive waves of Portugal are a function of the Nazaré Canyon, a submarine valley 5,000 meters deep and 2,300 kilometers long that functions as a ripple polarizer. Ocean swells build up over thousands of miles and flow through this geological fault with a minimal dissipation of energy. I just read the last sentence and am wondering about the medium-term effects of edibles. Anyway, the greatest surfer in the world is just a freakishly strong swimmer with a fiberglass board – until the right wave comes along. The Nazaré Canyon generates the biggest waves, and therefore, the most potential for greatness.

Monster waves birth in the open ocean, but tectonic business waves begin with consumer spending. The combination of historic savings, government stimulus, and record asset appreciation is shaping a wave of consumer spending unlike anything we’ve seen since baby boomers decided consumerism was a virtue.

Scott Galloway

Similar to ocean swells barreling towards the Portuguese coast, the commercial opportunities powered by consumer spending will be shaped by business dynamics. And, as with Nazaré, there is a deep canyon that will convert this energy into the waves of change. That canyon is Dispersion, a fancy way of saying the supply chain, or route through which a product or service travels, is changing. Today, there are three big waves forming in the Dispersion Canyon.

HQ

Remote work will fuel massive opportunities. Over the next decade, we are going to see the most radical transformation of the American landscape since the freeway created the suburbs. This set will have two waves.

First, we will see a significant investment in residential real estate and communities. Commercial real estate is a $16 trillion asset class. If gross demand for office space declines by a third, we could see the GDP of Japan ($5.1 trillion) reallocated from office to residential real estate. Sonos, Sub-Zero, Restoration Hardware, and Slack – along with everything else that enables or enhances work from home – should benefit.

In addition, we will see a great repurposing of office real estate. Many offices will remain, but no company will need the square footage they previously did, and companies will look for increased flexibility. In New York City, the amount of vacant office space available for sublet has doubled since 2019 and, as of December, the commercial vacancy rate in the city was the highest it’s been since the Great Recession. In 2020, San Francisco went from the lowest office vacancy rate in the city’s history to the highest.

Some office towers will be remade as residential, while others will be flexed for multiple tenants (coming soon: Airbnb Office). Cities aren’t going away – young people and inherently collaborative activities will still want/need to congregate in person. But cities will be cheaper, younger, and more diverse, all of which are inputs for startups. At $47 billion, WeWork was overvalued; going public via SPAC at $9 billion, it might be a buy. Prediction: Look for WeWork to rise from the ashes of COVID.

Higher education

The world’s most powerful lubricant of upward mobility (US higher ed) has morphed into a corrupt enforcer of the caste system. It has enjoyed 30 years of tuition increases matched only by the arrogance and self-aggrandizement of its leadership. COVID is the fist of stone coming for this chin. The pandemic moved 1.6 billion people into online education, and many will stay there. India’s largest edtech firm, Byju, is reportedly closing a $600 million investment, valuing the company at $15 billion, and Coursera is expected to go public at a $5 billion valuation.

Healthtech

The largest consumer industry in history is US healthcare. It’s also the most ripe for disruption. Imagine: Walking into a Best Buy to ask for help buying a flatscreen TV, only for the salesperson to hand you paperwork, for the 11th time, and ask you to wait 20 minutes before someone will help you. Only, you don’t have to imagine it, just think about the last time you went to a doctor’s office. At the doctor, you have to put up with this BS, because your health literally depends on it. Similar to higher ed, the healthcare industries have been sticking out their chin for years, raising prices while delivering worse outcomes. Healthtech startups raised $15.3 billion in 2020, up from $10.6 billion in 2019, according to Silicon Valley Bank.

Crypto

This is a $1.7 trillion asset class that could be $130 trillion (the size of the bond market), disperse trust (eliminate the need for inefficient intermediaries), and reduce human bias in the financial supply chain. Every generation gets its gold rush (social media followed the web, which followed the personal computer). Young people have the edge when it comes to transformational opportunities, as their brains still have the plasticity needed to comprehend new models. In my fifties, it feels like the part of my brain that I need to understand this sector is dying – along with the part that can mimic my father’s Glaswegian accent. Strange, right? But that’s another post. For now, I’m taking fish oils and speaking to experts. This week on the pod, we spoke with crypto investor Raoul Pal, and a few months ago, Michael Saylor lobbied me to buy bitcoin despite its recent rise to $19,000. Note: I didn’t buy.

How can I help?

A year ago, it would have been harder to be optimistic about entrepreneurs addressing these opportunities, as Big Tech was likely to move in and dominate every open space. But at the tail end of the last administration, we registered serious movement on antitrust enforcement. And now, the Biden administration has signalled that it will double down, bringing two of the most compelling voices for enforcement, Tim Wu and Lina Kahn, into the administration. The breakup of Big Tech – and the limits on its offensive efforts – will birth new lanes the size of the 405 (yes, I’m in LA today). Thursday’s Congressional hearings confirmed what many of us have been saying for years: Big Tech is bad for society, these firms lied to us, and they need to be broken up.

Big Tech isn’t the only segment of society that has benefitted from the pandemic. If you’re in the top 10%, much less the top 1%, the dirty secret of COVID is that many of us have been living our best lives. The deadliest crisis in American history has meant more time with family and Netflix, coupled with an explosion in wealth. The top decile of Americans works with zeroes and ones, and this work has only been levered by remote technologies. Furthermore, the representatives of the shareholder class in government (435 in the House, and 100 in the Senate) have used the cloud cover of the pandemic to funnel trillions of dollars into the market, juicing asset prices.

One thing the shareholder class can do is to invest in early-stage (i.e., seed) startups. I don’t enjoy seed investing. Almost every business idea I hear, I think, “This makes no sense, and will never work” – I also find early-stage CEOs and firms, similar to infants, needy and impossible to predict. Regardless, I have made (in the last week) two seed stage investments: Measured, a platform for weight loss, and ScholarSite, a Substack for academics.

Scott Galloway

Capital

Despite the broader economic slowdown, we are awash in capital, at every level. Wealthy individuals have by and large done incredibly well over the past year, thanks to the stock market run-up, and are looking for opportunities to invest. Tech-focused investors have done particularly well, and crypto has generated new bitcoin billionaires. Tech companies are important venture investors, and have more capital than they can use for core operations. The result? A record 225 US companies became unicorns in 2020. January 2021 saw the greatest total in venture investments in history, with $40 billion invested, and since the beginning of the year, over 60 additional private companies have achieved “unicorn” status. Meanwhile, the public markets are desperate for quality companies to sate the voracious appetite of SPACs.

Scott Galloway

Los Angeles & dispersion

I’m currently in Los Angeles and I’m channeling Michael Jordan. Hear me out: Just as MJ loved baseball, but wasn’t great at it; there is nowhere I enjoy more, and am less successful, than Los Angeles. I meet with agents, producers, and box office superstars who show me their sneaker collection and, over lunch at their house(s), tell me, “You are a genius, we must work together.” And then … nothing. I know this trip to the City of Angels will yield the same business (non)results. But that’s not why I’m here.

My closest friend’s mom, who cooked several hundred meals for me as a child, pre-teen, and teen, is struggling with dementia. I had lunch with her and her husband, who I have written about, today. During lunch, I’d grab her hand, and she’d look at me with surprise and then just smile. I’m not sure if in these moments she knew who I was, but I am confident she knew I loved her, and that was enough. I’ve let so much bullshit get in the way of expressing how I feel for people – some fucked up sense of masculinity or insecurity that to this day diminishes my ability to express true emotions.

There is a meaningful opportunity in the dispersion of HQ, education, and healthcare. There is a profound opportunity to register the finite nature of life and rebel against anything that gets in the way of letting people know that you love them, and how much they’ve impacted your life. I am a professional failure in my hometown of Los Angeles. However, there are people here who were generous with me, and whom I love. I need to get to LA more.

Life is so rich,

Scott

P.S. Section4, my EdTech startup, aims to to make elite business education more accessible with 2-3 week intensive “Sprints.” Our upcoming Sprint, Product Strategy, is taught by my NYU Stern colleague Adam Alter.

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Gen Z is paying double what boomers paid for college – and the gap will only widen in the future

college students
Gen Z is staring down a pricey college experience.

  • College costs are more than double what they were in the 1970s, according to a GoBankingRates report.
  • Boomers paid $39,780 in today’s dollars for a four-year public university. Gen Z is paying $90,875.
  • It’s a bad sign for Gen Z, as college costs are expected to continue to climb.
  • See more stories on Insider’s business page.

While US politicians continue to debate student-loan forgiveness, college tuition continues to soar.

Overall college costs are twice what they were in the 1970s, according to a recent GoBankingRates report that assessed generational differences among college expenses. It signals a rough road ahead for Gen Z, the first of whom just began to graduate college in 2019.

The report looked at the College Board’s estimates for average annual costs of tuition, fees, and room and board. It assumed that students attended a four-year institution between ages 18 and 22 for baby boomers, Gen X, millennials, and Gen Z, adjusting estimates for inflation.

The chart below shows just how much college costs have climbed.

From fall 1973 to spring 1977, boomers paid around $39,780 in today’s dollars for four years of public college. That’s a little more than half the cost for millennials attending public college from fall 2006 to spring 2010: $70,000. And what Gen Z is paying today is more than double that: $90,875.

The numbers are even starker for private tuition, which cost around $80,000 in inflation-adjusted dollars for boomers, compared to $165,000 for millennials and a whopping $210,000 for Gen Z.

Gen X experienced the beginning of this uphill battle, as tuition costs rose at a compounded annual growth rate of more than 7% a year from fall 1973 through the fall 1990 in real dollars. From fall 1990 to spring 1994, they would have paid $43,857 at a four-year public university and $115,000 for a private college, adjusted for inflation.

College has become so expensive, some question its value

College is expensive for many reasons, including an increase in financial aid, a lack of state funding, a need for more faculty members and money to pay them, and ballooning student services.

A surge in demand is also driving the price hike, Richard Vedder, an author and distinguished professor emeritus of economics at Ohio University, previously told Insider: “The rewards for college have expanded and grown from 1985 to a little after 2000 and sort of leveled off in the past decade.”

The “advantage of a degree today is less than it was 10 years ago, because of the rising cost,” he added. “The return on investment has fallen.”

Just ask the 49% of indebted millennials still paying off their student loans who said in an Insider and Morning Consult survey that college wasn’t worth the cost.

The pandemic scrambled this equation somewhat, with remote learning leading some to question the value proposition. Insider’s Bradley Saacks and Shana Lebowitz reported in summer 2020 that at least some colleges faced the prospect of students not returning for the upcoming school year, with potentially huge hits to revenue.

Harvard projected last spring that it would lose out on hundreds of millions of dollars during the current school year due to fewer students and no room-and-board revenue. NYU professor Scott Galloway said at a December Insider event that academia is ripe for disruption and likened Harvard to a “$50,000 streaming platform.” But even Galloway said tuition costs haven’t started coming down yet, and don’t seem likely to.

The overall increase in students attending college now compared with previous years indicates that the advantages college offers still outweigh its increasing costs for many, which will fuel costs further. And getting a degree has become increasingly important, according to Joel Anderson, author of the report.

As he wrote of Gen Z, “Not only will they need more money – comparably – than any previous generation, but the shift toward a service economy also means that a career without that pricey education is harder than ever.”

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SCOTT GALLOWAY: Losing my beloved pet, Zoe, during the pandemic reminded me that time marches on. Here’s what else it’s teaching me.

Scott Galloway
Many of Scott’s blog posts have been written with Zoe’s head resting on his stomach.

  • Scott Galloway is a bestselling author and professor of marketing at NYU Stern.
  • The following is a recent blog post, republished with permission, that originally ran on his blog, “No Mercy / No Malice.”
  • In it, Galloway talks about how the grief of losing a loved one reminds us that time marches on with or without us.
  • Visit the Business section of Insider for more stories.

We put down our dog, Zoe, on Tuesday. We’re grieving. Three months ago our vet told us Zoe had growths on her liver, to take her home and enjoy our remaining time with her. Tuesday morning I woke to distressed calls – “Dad … DAD!” – coming from downstairs. Zoe had collapsed a few feet from her bed, had lost control of her bowels, and her breathing was labored.  

We shuffled her onto a beach towel and carried her to the back of our car. At the vet, we learned her organs were failing and that she was bleeding internally. The clinic had an outdoor annex, where we laid Zoe down on a wicker table and gathered around to say goodbye. Like every urbanized landmass in Florida, there was a gas station and a strip mall abutting the clinic. A car alarm was ringing. We had a remote control to notify the clinic when we were ready for them to administer pentobarbital, a seizure medication that would stop Zoe’s heart.   

Zoe’s death has rocked our household. The other dog won’t come out of his crate, the nanny won’t stop crying, my oldest doesn’t want to come out of his room, and (most disturbingly) his 10-year-old brother is doing what we ask him to. We’ve been a bit self-conscious about our grief as we recognize that 500,000+ US households haven’t lost a pet, but a dad, aunt, or other loved one in the last 12 months. But our grief persists.

Scott Galloway

At first, I was fine playing the role of the stoic dad: “She lived a great life,” “This is what’s best for her,” etc. Then yesterday, on a livestream with Verizon and 60 of its communications agency partners, I started sobbing while describing the harm Facebook is doing to society. Despite all the macho and strength I aspire to project, there I was, 56 years old and a chocolate mess on a Zoom call with dozens of people who want confirmation that they should serve ads on Yahoo.  

It’s not the worst thing for someone in my line of work to have Verizon’s agency partners believe I am emotionally invested in holding social media platforms accountable. However, I’ve been crying every six hours since. I cried watching WandaVision last night, when eating oatmeal this morning, and again doing pull-ups.  

Failed birth control

Two decades ago, I moved to New York, where I applied tremendous skill and resources to building a life of arrested adolescence. The SoHo loft, a wintertime apartment in South Beach, a summer home in Watermill (complete with sand volleyball court, despite the fact that I … do not play volleyball), and a metallic blue Maserati. Jesus, what a douche. 

I embarked on a series of obsessive relationships – with people, business ventures, and material goods (the more scarce, the better). Inevitably, the rapture would fade, and my heart would sink. A weak heart breaks more easily. I wasn’t grieving over the lost person or the failed deal so much as I was grieving the lost possibility to escape to a better life – a life of meaning, vs. the IMAX version of The Narcissist’s Playbook. 

Then I met someone nicer, more impressive, and much more attractive than me – who was also kind. However, she wanted children. I told her I was not interested in getting married again. She called my bluff with a José Aldo roundhouse: “We don’t need to get married to have a kid.”  

Looking for an alternative means of birth control, I drove to Pennsylvania to pick up an 11 week-old Vizsla. The breeders were some of the most down to earth, normal dog breeders I had ever encountered … and they were exceptionally strange. But that’s another post. We named our puppy Zoe and talk of a baby subsided. However, similar to most extemporaneous methods of male birth control, my tactic was not effective, and 38 weeks later my oldest son came rotating out of my girlfriend.  

Zoe soon became my oldest son’s dog. He had a connection with her only matched by the contempt he has for his younger brother. Zoe forged the connection by sitting in front of his crib each morning; they stared at each other through the wood slats while my son spoke a language deployed across species. They would be transfixed like this for 20 to 30 minutes (no joke). It was as if they were planning a jailbreak.

Scott Galloway

And why I think I’ve been crying.

I will miss Zoe, as she was a meaningful part of our family’s life. But the truth is, once we had boys, most of that emotion transferred to the kids. Plus, I’m not one of those guys who finds peace away from the family in the company of dogs. So yes, I am grieving Zoe, but as with happiness, real grief is internal.

Zoe’s death has rocked me because it is a marker. A reminder that time is the most relentless force in the universe: that no matter what we do, its thievery marches on. For the rest of my life, I’ll have sons. But I no longer have the baby who sat on a blanket with us in the backyard, the toddler who had an alliance with his dog to disappear his vegetables, or the 8-year-old who rang out a particular laugh only the dog could inspire. Zoe’s death is a loss on several levels.

Scott Galloway

Love persevering

Dogs are not allowed on the couch in our household. Ever. The thing is, both dogs and humans are mammals, and are happiest when surrounded by (read: when touching) others. So, Zoe and I had an agreement: After everyone was asleep, she could come on the couch, rest her head on me, and dream. It was a pact of secrecy, and not once in her 14 years did she betray this trust – Vizslas are rugged hunting dogs, and also discrete. She would lie on me, dream and, according to her paws, run for miles. Many of these posts have been written with Zoe’s head resting on my stomach as she dreamt of running through a Hungarian forest.

All Zoe wanted was affection – which is to say, love. Lying on a wicker table, next to a gas station, death came for Zoe. When her heart stopped, our other dog was licking Zoe’s ears, and our entire family had hands on her. Our wonderful dog left this earth with everything she had ever wanted. And we are grieving because our love perseveres.

Life is so rich,

Scott

 

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SCOTT GALLOWAY: I predict the New York Times will outlive both Facebook and Google – here’s why

Nighttime view of the New York Times Building
When The New York Times renewed its emphasis on subscriptions, it became one of the most durable brands in media.

“The task is … not so much to see what no one has yet seen; but to think what nobody has yet thought, about that which everybody sees.” ― Erwin Schrödinger

Just as life is not about what happens to you, but about how you respond to what happens to you, insight is not a function of data, but of how you perceive the data. Plotting data in different ways is illuminating, even fun, and it can lead one to discover stories. And while “stories” often connotes fiction, stories can also be true, and can even create truth. 

The best way to predict the future is to make it. And, just as history is the stories we (i.e., the victors) tell ourselves, stories can shape the future by giving people a path, an inspiration, or a goal. One inspiration for those stories is data … and different ways of looking at the data.

Just read the last paragraph and it’s clear I’m insecure re: my intellect, or have an edible hangover. The answer is yes.

Anyway, I love 2×2 matrices, and how their quadrants inspire stories. Identifying two factors that define four groups can provide insight into industry dynamics and illuminate pressures and opportunities. Often, the points on a matrix are a function of quantitative analysis; however, the real value is in the sorting, not the calibration. 

In that spirit, I’ve been thinking a lot about how tech is battling for our attention. Screens have infested our lives and we’ve become re-attached to an Orwellian umbilical cord. From fitness to dating to news to travel to investing to cooking, every slice of our day is a battleground among tech players for our monetize-able attention. Two factors drive strategy in this battle: the value of the attention that firms command, and the means to monetize that attention. Hence, our A2 matrix.

Scott Galloway

So what are the stories we see when we organize the data along these axes? And can these stories pull the future forward? Let’s start with the upper right “luxury” quadrant.  

Scott Galloway

This category includes brands that target consumers willing to pay a premium for products, and for the privacy and status-signalling that comes with premium pricing – primarily user-derived revenue. 

This is a great space, but it takes relentless innovation to maintain premium positioning. The strategic imperative for these companies is first to maintain, and then to grow by expanding the attention they capture. Apple, the valedictorian of this space, has been steadily working out from its base in computers to mobile, television, voice, and wearables. The story coming into focus on the page is a move into fitness, and to acquire Peloton. 

Scott Galloway

Is Peloton worth $36 billion? As an independent company, in my view, it’s hard to justify. But is an additional two to four hours of attention per week from the most influential people on the planet worth $36 billion to Apple? Yes, in a heartbeat.

Scott Galloway

Companies in the Mass Market quadrant also depend primarily on user-derived revenue, but serve a broader consumer base. This is a tough category, because these companies typically lack the insulation provided by an aspirational brand, and therefore face the threat of price competition. This competition can come from another mass market company with greater economies of scale or more efficient technology, or from the quadrant to the left, the Menaces, who don’t need to charge users much (or anything) because they have an alternate revenue stream. 

The strategic imperatives, then, are to build scale, increase switching costs, and improve the value proposition. Fortunately, there’s one strategy that addresses all three: the rundle. A recurring revenue bundle should be the backbone of all these companies.

Most of these businesses already offer subscriptions, and are buttressing their offerings as they hear the footsteps of the Menaces whose attention may supersede the regulatory hurdles or infrastructure the mass has put in place. Think of WhatsApp challenging Vodafone. Spotify is moving aggressively beyond music into podcasts, and probably beyond. Verizon is incorporating content into its wireless plans, offering Disney+ as an option.

Scott Galloway

Companies in the Menaces quadrant give away their service for free in order to accumulate massive scale and monetize the attention of their users. Typically, these companies scale with breakthrough product innovation, but once they secure market power, they direct their innovative energy into protecting their turf and exploiting users for the benefit of their true customers: the advertisers or brokers who pay for order flow.

Once scale is achieved, these businesses are incredibly profitable and can make the jump to lightspeed, where network effects stave off competitive pressure. Their only real threat: government regulation. So, the strategic imperative becomes to overwhelm Washington with lobbyists and public relations professionals that in turn overwhelm DC and the media. There are several-fold more people working in PR at Facebook, smearing lipstick on cancer, than there are journalists (globally) covering tech.

Scott Galloway
Scott Galloway

This is a business of scale, and of sociopathy. Regulators would be wise to hire economists, antitrust experts, and behavioral scientists to understand this quadrant better. Similar to climate change, it’s an emergent problem of long-ignored externalities, and those who benefit from our blindness have politicized expressions of concern and positioned them as hysterical, socialist, and (worse) European.

Scott Galloway

The last quadrant contains the Underachievers. These firms are doing something right – they capture a great deal of time from affluent users – but leave surplus value on the table. In sum, they are not commanding the space they occupy. It’s hard to maintain a premium position when you are exploiting your users. It’s like jumping Double Dutch while studying English. CNN offers a great product and enjoys affluent/influential viewers … but so did the “Tiffany” network (CBS), until HBO and Netflix came along and offered viewers the chance to pay with money rather than time spent discovering that they likely had opioid-induced constipation. (Sidenote: Rush Limbaugh 1951-2021.) The challenge for these companies is to rally the leadership and capital needed to traverse quadrants into the Luxury space.

It can be done, and The New York Times is proof. As an ad-driven business, clinging to the wrong stakeholder (advertisers) in a declining industry, the share price plunged from $50 to $3 in five years. When it moved into the Luxury quadrant, via a renewed emphasis on subscriptions, it became one of the most durable brands in media. Prediction: The gray lady will outlive Facebook and Google. The firm’s stock price has increased 8x since 2012.

Scott Galloway

Clubhouse is attempting to traverse quadrants with a move to a subscription model, which is smart. I have never been on the Clubhouse app. However, if we introduced a “Douchebag” axis to our model, the voice-conversation app would occupy its own quadrant.

The hard thing

It can be illuminating to take a step back and consider an industry along a few key dimensions. We leverage data to construct a lens that informs our decision making. However, this is just the first step. Implementing change is harder … and why the potential returns are so great. Management teams that use these insights and embrace the difficult – and dangerous – work of traversing the crevasses between quadrants require a CEO who does not give into the temptation to just ride it out, collect his/her $30-50 million, and move to West Palm Beach. The future belongs to the bold: the storytellers who can act on their stories and pull the future forward.

Speaking of stories, I’ve been telling one about Twitter for some time now. The company needs to move into the Luxury quadrant with a (partial) subscription model, premium features, and proprietary content. Over the past few months, Twitter has publicly adopted this strategy, and registered a 100% increase in share price. But now comes the hard part: moving from lip-synching this blog to product development … we’ll see. 

Here’s another story we see: Goldman Sachs is the most undervalued brand in business and will attract an activist investor who will push for a rundle and verticalization. I begin to tell that story on today’s episode of Pivot, stay tuned, my brothers and sisters: Like a mastiff, I’m hungry for a lion. I’m not sure what the last sentence means, but it makes me feel 40 again. And that’s enough.  

Life is so rich,

Scott

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