Apple is Sex, Google is God, Facebook is Heart, & Amazon is Consumptive Gut, with Scott Galloway (Transcript)

Zack — Zack’s here running the sound, but his brother Andy is convinced, I have one of those Alexa things and he’s like, “I don’t want to be in the room, trust me, it’s listening to us.”

SCOTT GALLOWAY: It spools 45 seconds backwards. So again it creates all sorts of interesting things. Should we train Alexa that when it hears a gunshot, to call the police automatically? Violation of privacy versus crime prevention. There’s just going to be some very interesting things that happen with these new technologies.

TAI LOPEZ: Or if somebody yells our fire or something, loud enough.

SCOTT GALLOWAY: Or I’ve fallen and I can’t get up.

TAI LOPEZ: I’ve fallen and I can’t get up might work. I got a 99 year old grandma. And then lastly, you said, “An ad platform that commands in some markets a 90% share of the most lucrative sector in media yet avoids anti-competitive regulation through aggressive litigation lobbyists.” Assuming that’s Google?

SCOTT GALLOWAY: 90% more share than Mabella the railroads had, of a market that by dollar volume, is bigger than the entire advertising market of any country with the exception of the US.

TAI LOPEZ: When you add Facebook into that, you talk about that later in the book, Google and Facebook, AdWords. So Google controls AdWords, they control YouTube advertising now, and then you have Facebook controlling its own, and of course Instagram ads. And really, when you think online outside of that, there’s not that much more. There’s SnapChat doing a little bit of advertising, Twitter. So are they aggressive in terms of lobbying?

SCOTT GALLOWAY: Oh yeah, they learned from Microsoft’s failure not to lobby. They spend a great deal of money on lobbying. You talked about Facebook, this isn’t a communications vehicle. I doubt you even take calls on this. I don’t trust people that call me on this, only if they text me. 80% of our time on phone is in app, and six of the top 10 apps are owned by one company, Facebook.

And you talked about digital marketing, between Facebook and Google, they commanded last year 103% of the growth in digital marketing. So if you’re in digital marketing, which we think of as being this great growth sector, and you don’t work for Facebook or Google, you now join newspapers or television and you’re working for a business in structural decline.

TAI LOPEZ: Yeah, I mean for sure. Me and my business partner have spent $600 million combined on marketing our companies that we own, and almost all of that is with Facebook. He spent more on Facebook, I’ve spent more on Google. But I mean it’s exactly what you put in the book, 90%.

All right, let me skip ahead. I’ve got various things that I, at five in the morning, I kind of put right here. You already talked about this, kind of the head fake things that they do. Where is this one that I thought was so fascinating?

So let’s talk about driving prices down. So we traditionally think that the reason you don’t want a monopoly — Rockefeller was the richest man in history if you adjust to today’s dollars, about $600 billion he had in today’s dollars, and it’s because he had a monopoly. He ran the thing. Now Google comes in and you’re talking about how their ad revenue’s gone up, but they’ve been able to deliver a lower price to advertising. So is that a good thing? So maybe monopolies are good in this case because they’re offering us cheap? The fact that Amazon is almost a monopoly online, they’re able to buy in bulk and ship. So can monopolies be good or are they evil?

SCOTT GALLOWAY: So the term natural monopolies is that in some sectors they require enormous capital investment, it might make sense to let someone have monopoly-like power. So certain cable companies are offered limited competition and aren’t subject to the same antitrust. What you have with Google and the other technology companies that you referenced, that’s so powerful, is they have a different gestalt. Most consumer companies think, if we have a good year for Chanel or Procter & Gamble, we raise prices with inflation.

Tech comes to things with a different viewpoint. Google, last year, grew its revenues 20% while lowering its prices 21%. So if you’re selling TV ads or print ads, you have to compete with Google that has better products this year and lowered its prices 21%. So every year technology eats more and more of the economy because its viewpoint is, let’s massively improve our product, but let’s also lower the prices. Whereas most consumer companies go, if we’re killin’ it, let’s raise prices.

TAI LOPEZ: So in a way it can be good, but maybe it’s one of those monsters that can get out of control conceivably. And eventually, if Google just started doing things that we didn’t like, we wouldn’t have much control because we’re, like me, I’m running all my ads. And you see it with Facebook. If Facebook doesn’t like a product you’re trying to advertise, for those of you entrepreneurs listening in, you almost have to switch businesses. I know people that sell supplements, let’s say, Facebook doesn’t really like supplements. And so I know people that get out of that whole business once they realize Facebook won’t approve their ads.

SCOTT GALLOWAY: So for example, with Google, there’s a lot of concerns. One, there’s now something called Google Answers where people are now asking Google because they trust it more than their priest, their rabbi, their scholar questions and Google is answering them for us. And the question is, do we want to outsource truth? My kid no longer looks to me for answers, he asks Alexa. So are we comfortable with a new source of information? And are we comfortable with this company controlling 90% share? You kind of toned in on the crux of the issue and that is, we’re going to wrestle with, is what is always good for the consumer, always good for society?

Because it’d be hard to deny these companies aren’t good for the consumer, but if Amazon is putting every retailer out of business, Facebook and Google will grow their business $22 billion this year. They need an additional 12,000 employees to handle that additional revenue.  Traditional media companies, ad agencies, TV stations, need 150,000 people.

TAI LOPEZ: So a 12th, roughly?

SCOTT GALLOWAY: So basically you’re going to have two and a half Yankee stadiums of copywriters, creatives, showrunners, production teams get their pink slips every January 1 because of Google and Facebook’s growth and efficiency. So we’ve had that in the past—

TAI LOPEZ: We’re going to be replaced by robots.

SCOTT GALLOWAY: We’ve had job destruction, we’ve just never had companies this good at it.

TAI LOPEZ: Yeah I mean, there’s all these books now about living wages and automatic, what do they call it? Universal income which is basically saying, there ain’t going to be enough jobs, we’re going to save so much money with efficiencies with technology, that we’re going to literally just pay people for not working. You already see that in Scandinavia. I mean in Scandinavia, if you lose a job, they pay you for two years almost your full salary.

So one interesting thing, let’s switch subjects for a second here. Really good part — for those of you chiming in late, we’re with The Four, The Hidden DNA of Amazon, Apple, Facebook and Google, Professor Scott Galloway flew out here, was kind enough to come out. You’ve got great people recommending you read the book, good ole’ Seth Godin, Jonah Berger, I know a Jonah, he wrote a great book Contagious.

But you’re a professor, you teach at NYU Business School Stern. This was interesting because I was like, is he an active professor saying this? But you kind of criticize the structure about electives and people going to two year business school. And it sounded almost like, I don’t want to put words in your mouth. Are you saying that one whole year, you think the structures almost waste people time and it makes money for the colleges, but doesn’t serve them best?

SCOTT GALLOWAY: Yeah, I think if you look at the cost of education, it’s outpaced healthcare, its outpaced cable TV, it has become a social ill. I think our university system has effectively become a caste system, where your future’s largely and unfortunately dictated by the college you go to or the level of education and education has become unattainable. It’s become so expensive for kids like me who was raised by a single mother who was a secretary just three miles down the road here.

The thing driving the cost is this union called tenure. We have social services, food stamps and welfare for the undereducated. We have welfare for the overeducated called tenure. And in business school the way it manifests itself is we have a second year, we really only need one year. The first year of management operations, marketing and finance, takes the kid making $60K a year, turns him into a kid making $110K a year, which is the average salary coming out of NYU. Great return on capital, right?

The second year is largely a waste so we can charge $120,000 in tuition instead of $60,000 and fulfill the teaching requirements of a bunch of tenure faculty that should have been put on an ice flow 30 years ago. We could do an MBA in one year –

TAI LOPEZ: Are you popular at NYU?

SCOTT GALLOWAY: Yeah, as you can imagine –

TAI LOPEZ: With the professors?

SCOTT GALLOWAY: I don’t get invited to lunch a lot with my colleagues.

TAI LOPEZ: You’re like you, iceberg time. You’re pissing me off.

SCOTT GALLOWAY: Having said that, I want to be serious, NYU loves free thought and free thinking, even if you offend people. The second year should have four pillars too. And the four pillars should be Amazon, Apple, Facebook and Google. To understand these companies, how they create value, the instinct they tap into, how they’ve been able to aggregate the GDP of India across the population of the lower east side of Manhattan, is to understand the intersection between technology, innovation and media, and information services and retail. So the four pillars of business in my view, post management operations, finance and marketing, are these four companies.

TAI LOPEZ: So for those of you listening that are entrepreneurs or considering to be entrepreneurs, what you’re really saying is, what you talk about in this book is the ultimate case study. If you dissect, reverse engineer these four companies, you almost have a micro-model for anything that you want to do. You’re going to need to know these skills. You’re going to need to know the design and creativity, and marketing abilities. This is how I think about it, correct me if I’m wrong.

To me, when I think of Apple, it embodies the ability to have sleek designs, urgency marketing, scarcity marketing. It’s kind of beautiful. When I think of Google like you said, I think of a lot of, it’s information technology. Ultimately they have PhDs in library science. If you get a PhD in library science, you’re probably going to go work at somewhere like Google.

When I think of Amazon I think of aggressive business. I was just at a talk here in LA, Jet Bezos stopped in, and the man was aggressively taking — Diapers.com was a company, and he went to the owner of Diapers.com and he said, “Listen to me, sell me your company.” And the guys said no, and he said, “You better sell me your company or I’ll just make my own Diapers version, I’ll drop the price and put you out of business”, and he dropped the price. And one of his executives said to Jeff, if we lower the price of diapers this much, we’ll lose $100 million a quarter. And he goes, “I don’t care.” And so when I think about those of you watching, the need to be somewhat aggressive and competitive, that’s what I think about with Amazon.

And then Facebook, what I think about Facebook is, really tapping into almost Internet 2.0. You know Internet 1.0 was kind of just selling things online and Internet 2.0 was connecting people and using that information to sell to them. Is that kind of a fair?

SCOTT GALLOWAY: So I’ll take a swack at that as well. So Google I think is a modern man’s god. We used to turn to a super being for answers, now as we’re more educated and more affluent, we don’t depend as much on a super being, but we still have modern day anxieties and questions. Will my kid be all right? A prayer is, you send a query into the universe, hoping there’s divine intervention, it sends you back an answer. Now it’s symptoms and treatment of croup into the Google dialogue box. Google is our modern man’s god. All of these tap into a specific instinct.

Facebook taps into our need to love. One of the wonderful things about our species is, we not only need to be loved, kids with poor nutrition but high levels of affection have greater outcomes than kids with good nutrition and poor levels of affection, but we need to love others. The number one indicator, a signal of you making it to 100 years or not, is how many people in your life do you love? I met your cousin working here, that’s a signal that you’re a caretaker. People who let their parents move in with them and decide to take care of them, the life expectancy goes up two to three years.

New mothers do not die. It’s an instinct to want to take care of others and the physical and mental nuance of taking care of others releases a hormone that clears out the bad cholesterol, then you get to stick around on this earth a little bit longer. Facebook taps into our need to love others and is creating first and second degree relationships, catalyzing them and reinforcing them, mostly through images that create a lot of empathy and kind of second order love.

Moving further down the gut, our instincts since we emerged from caves is always more. We always want more because the penalty for too little is the worst death in the world: starvation. So open your cupboards, open your closets, look at this fat pad and you think, I don’t need any more. And then the moment after you think that you think, I’d like a bigger pad or I’d like a penthouse in Manhattan, or I would like more clothes. So the more for less business strategy is usually the company that’s the most valuable in the world. It’s the strategy of Walmart, it’s the strategy of China as a society to offer the world more for less, and now the big winner there is Amazon.

Moving further down the torso, your strongest instinct is survival. Most of us get up in the morning, we know we’ve checked that box. You were not worried about making it to the end of the day today. You were confident you were going to survive.

So you go to your second instinct which is procreation. This is the new signal that you have good genes. This means having an Apple iOS means that you are educated, affluent, appreciate artisanship, have disposable income, and that you have good genes. This is saying, I am a good mate –

TAI LOPEZ: It’s the peacocking a little bit.

SCOTT GALLOWAY: This is the feathers, the new luxury item, and as a result, has been able to pull off the impossible. The low cost provider, meaning, Apple can go into its supply chain and secure components for the lowest price but it charges the premium price. So that’s the equivalent and I saw these fat cars out there.

Imagine the margins of a Lamborghini or a Ferrari with the production volumes of a Toyota, that’s what Apple has done and as a result, is the most profitable company in history. More profitable than IBM, Oracle, Unilever, Walmart and P&G combined. We have never seen a profit generator because it taps into a very irrational organ and that’s our reproductive organs. You want to as a company, figure out, what instinct you tap into and ideally, you want to tap into the irrational ones. Love, right?

TAI LOPEZ: You said there’s three in the book. You said there’s the rational, the emotional, and the genitals, I like that. It’s like something sexy. Not to interrupt you –

SCOTT GALLOWAY: No it’s all right.

TAI LOPEZ: One of the parts later in the book, by the way, I highly recommend you guys grab this book: The Four, by here Professor Galloway. You talked about how these companies, you’re talking about wealth on the Forbes 400, when you subtract people who have inherited their money, and what a large percentage of them were either in retail or luxury goods. And that’s that procreation side of where we have luxury, we’re signaling to the world, if you study classic evolutionary theory, that was one of the things that Darwin struggled with. Why does a male peacock have all these extra feathers because they take energy and they seem to serve no purpose. But the purpose was to show that I have so much energy that I don’t care.

So when a man buys, I have a lot of cars. Charles Darwin will be like, you’re trying to signal to women that not only could I have one Lamborghini, but I forgot that I have, like that kind of mentality. So you’re saying Apple, because that’s an interesting take, that’s what you think Apple’s core –

SCOTT GALLOWAY: You’re Ferrari and iOS signal the same thing, it says that you’re stronger, smarter and faster than the other guy. And that if a woman mates with you, her kids are more likely to survive than if she mates with someone who drives a Hyundai and has Android. At the end of the day, that’s what you’re signaling. And you will pay a lot of money to feel, I’m wearing a cashmere sweater that costs about 10 times more than I need to stay warm. But I’m trying to communicate to people that I have an Italian sense of design and sensibility and that I’m an attractive mate.

And even if you’re in a monogamous relationship and not looking to procreate actively, these things have been pounded into you for millions of years, so you still want that canary yellow Ferrari in your garage, even if you’re happily married. Even if you love your husband and have no plans of procreating with anybody else, you will still buy $600 ergonomically impossible shoes. So you want to tap into these irrational margins because irrational in the consumer world is Latin for huge margins.

Wealthiest man in Europe, Bernard Arnault, Vuitton and Hublot, signaling. Wealthiest family in New York Este Lauder, making your cheekbones look higher, you’re a better mate. The axiom of DNA trying to get everywhere and then trying to select the smartest, fastest and strongest DNA, is the algorithm of creating more shareholder value the last 30 years of any category. More than tech, almost as much as finance, depending on when you look at it.

TAI LOPEZ: Yeah. finance is a big one, but yeah.

SCOTT GALLOWAY: Take out inherited wealth and finance, more people on the Forbes 400 list, from retail and fashion more than any other category.

TAI LOPEZ: Yeah, Zara, Guy –

SCOTT GALLOWAY: Number two. And number three is H&M. So you either want to appeal there. The number one source of wealth creation in consumer companies, up until the introduction of Google, from World War II was appealing to the heart. Here’s a high caloric paste for your kids, that’s appealing to the brain, that’ll keep them alive, it’s nutritious. No it’s not, here’s a high caloric paste that signals that you love your kids more than your neighbors, why? Because choosy moms choose Jiff.

So we took all these powders, these solvents, these soaps, and we placed American, patriotic, European elegance, maternal feelings of love around these things and we turned $0.30 or $0.50 of powder into something worth three to five bucks, and P&G and Lever created hundreds of billions of dollars in value. You want to appeal to the irrational instincts.

TAI LOPEZ: Yeah, I always say yesterday on the show, I had Jordan Belfort, Wolf of Wall Street, and he’s a great salesmen, obviously, and he said, “Ultimately 90% of it’s emotional sales.” Humans struggle, I mean even if you look at our brain. One of my business partners is a molecular neuroscientist, and he basically says, “The part of your brain that’s rational,” like your neocortex, your media prefrontal, all this. He said, “It first goes through your brain stem and your medulla, all this primitive stuff, and then maybe your thoughts get up here.” You know, we can sense beauty, a man or a woman can tell if somebody’s beautiful from almost any angle from 50 paces away.

If Angelina Jolie walked in here. You would be able to know she’s beautiful even if she wasn’t standing in front, you could see from far. And same with, you know whatever? Hannah, what guy do you like? She likes Matthew McConaughey, okay. I was talking about the Wolf of Wall Street. You know the chest thumping part?

SCOTT GALLOWAY: Yeah, yeah, yeah that’s a great movie.

TAI LOPEZ: That’s only Matt McConaughey, they added that in. He’s like, I never did that. All right, let’s keep going through the book. Few more things that I wanted to talk about. So let’s talk about, so we talk about the four massive companies, okay? Let’s talk about the fifth potential horseman.

So we had potential for Alibaba, Uber, I think you mentioned, what was the other one? Tesla. And now, you made a good prediction. You said, “He’s going to expand out of cars.” Yesterday Elon Musk announces semi-trucks. Boring companies, like. So if you had to bet who was going to be the fifth big one, you talk about the problems with Alibaba. I thought it was interesting what you said constrains Tesla is they’re not as international, even though they are big in Europe, Scandinavia, but that’s a small market. You talked about the constraints on Alibaba was capital, I thought that was interesting, compared to Amazon.

SCOTT GALLOWAY: They don’t have access to cheap capital. Also Alibaba suffers a little bit from what Tesla suffers from, and the Chinese companies, traditionally, haven’t been good at going global. There aren’t that many global Chinese brands.

TAI LOPEZ: And China hasn’t been good at going global. I think it was a Jared Diamonds book, Gun, Germs and Steel, talks about how China’s never traditionally been a conquering country. So if you had to wager right now, knowing you could be wrong, who is going to be, is it Uber? Who’s going to be the fifth horseman? So two years ago I would have bet on Uber because I thought Uber was not a ride hailing service but a backend fulfillment infrastructure to rival Amazon.

TAI LOPEZ: So like UberEats was the beginning of it?

SCOTT GALLOWAY: That’s right, I was wrong. The fifth right now, the good money in my view, is the operating system of the second most important screen in our lives, this is number one. Number twos TV and that’s Netflix. Millennials spend more time watching Netflix than the rest of cable television combined. If they continue to command that sort of custody of the wealthiest consumers in the world, you can see them getting into all sorts of different businesses.

TAI LOPEZ: Where would you go? So if you’re Reed Hastings, you’re running Netflix, where do you go next?

SCOTT GALLOWAY: Oh I would probably introduce voice.

TAI LOPEZ: What about music? Why not take out Spotify?

SCOTT GALLOWAY: Spotify, yeah that’s a fair point. There’s a lot of different ways they could go.

TAI LOPEZ: If you controlled Netflix.

SCOTT GALLOWAY: What about education?

TAI LOPEZ: No, don’t do that, that’s the industry I’m interested in. Erase this from the — no I’m just joking I think that they have, if you think about the best money people probably say they spend, dollar for dollar, the average person under 40, I bet you it’s Netflix. 10 bucks and you can sit there and people binge watch. What’s the most, you guys, anybody here’s ever watched on Amazon in one day? I mean in Netflix in one day? Adrian’s a newbie, he was only watching three hours a day. Three hours, that means you clearly don’t vape if you’re only at three hours with Stranger Things.

Well I remember when they were still delivering DVDs, Zack here got me into the Sopranos, and I almost lost my mind. I had to switch to that package where you get like 12 DVDs. I was like, I became.

SCOTT GALLOWAY: But that’s one of the greatest pivots in business history. Think about it, a mail order DVD company, takes huge risk, extraordinary capital, stock dove, and went into streaming TV. I mean one of the greatest Reed Hastings is arguably one of the most underrated CO in the world. Well he’s not mentioned in the same bracket as Bezos and Cook, and he’s right up there.

TAI LOPEZ: Yeah, not the revenue levels. I mean right now they just passed 100 million customers I’d say paying roughly — so they’re doing a billion a month in revenue. Certainly not at the level, I mean I think Amazon if I’m correct, I did the math, they’re grossing like $300 million a day or something.

SCOTT GALLOWAY: That sounds about right I think they’re about $100 billion to $120 billion. But what Amazon and Netflix have been able to do is that they’ve taken a stopping and starting business, like retail where on January 1, you have to reinvent the business and get new customers every day, and that’s exhausting. That’s like playing basketball. And in the 90s, software came up with this amazing business model, and said we’re going to cut the price, but we’re going to integrate it into your daily workflow, and you’re going to pay us every year, and we’re going to show the market that you renew recurring revenue, like a gym versus a personal trainer. And the market’s value recurring revenue companies, the multiple of revenues versus the multiple of profits.

So another gangster pivot was when Amazon took a nonrecurring revenue business, retail, and took it to recurring revenue business with Prime, which is now in 62% of households. More households have a recurring revenue relationship with Amazon called Prime, than voted in the 2016 presidential election, or have a landline phone.

TAI LOPEZ: There’s a lot of interesting stats in this book. I like the one that Apple has more cash than the economy of Denmark. You know you got a lot of money, Zack, when you’re like, oh that country? I have more money than that country. Not that region, not that state, that country. That nation.

So as we wrap up here, I wanted to talk about, especially for people listening that are launching business, let’s talk about the losers. Because I had dinner with Steve Ballmer this year, fascinating guy, very smart $32 billion, owns the Clippers. But Microsoft has definitely been a loser in the game. What do you think they did wrong that a lot? Because arguably they could have been in The Big Four now. Had they gone earlier in the foray, into the internet and all these things. So what’s the lesson, the cautionary tale for everybody listening, that no matter how good you think you are, there’s somebody ready to take you out? And what do you have to watch for?

SCOTT GALLOWAY: So that’s a complicated question but just first off, Microsoft has actually had an incredible renaissance in the last two years. They’re the third most valuable company in the world right now. So arguably, they are the fifth horseman, but I didn’t write about them because they’re B2B.

You know, I think having the courage to reinvest and constantly reinvent yourself, staying hungry, always being paranoid as Andrew Grove said, figuring out a way. There’s some things changing, so for example, moving to an urban center now, being within a bike ride I can’t think of a company that’s created more than $10 billion in value in any given year, that is now not a bike ride from a world class engineering university.

Technology really is eating the world. You need to be perceived as an accelerant for people’s careers as they show up. You have to show extraordinary financial success because I believe, and some people think this is crass, but people for the most part go to work to provide economic security for them and their families, and will always be drawn to the economic winner. You have to be seen as a good citizen, you have to be seen as going global. So there’s a lot of features. You see companies moving away from these suburban campuses into urban centers.

There’s all kind of I go through something called the T Algorithm, where I think there’s eight features of companies that have a shot of getting to a trillion dollars that all these companies mostly have. They’re vertical, they control the experience. Apple controls the experience with their stores. So I work with Nike, Samsung, Rolex, P&G, I think they’re all going to need to open stores to maintain their irrational margins if they want to be –

TAI LOPEZ: Microsoft tried, they didn’t do so well.

SCOTT GALLOWAY: Execution means everything. I was going to board a Gateway computer. We tried and it didn’t work. But Samsung’s not catching Apple with those gorgeous temples to the brand called Apple Stores.

TAI LOPEZ: Yeah, I like that you called them temples to the brand.

As we wrap up let me just read this, or go through this last, last part. There was one more thing. The book’s interesting because at the very end, you have this chapter called The Four and You, which it’s almost like a template for success based off, and we don’t have time to go through all of this but, these are the personal success factors that you need. And a couple of them caught my eye. Get to a city. You were talking about important it is. We’re here in Los Angeles, you’re in New York. Talk about pimping your career. You talk about serial monogamy in the context of get a job, you’re probably not going to stay there forever, but when you’re there focus on it. Don’t be like Tinder dating and thinking, oh there’s always a better job, and stay there as long as it makes sense.

SCOTT GALLOWAY: Be exceptionally loyal until you learn. And then going back to a city, two thirds of economic growth over the next 20 years are going to take place in cities. When you’re in a city, if you’ve ever played tennis and rallied with someone who’s better than you and your game immediately goes up. When you’re in a city, you’re on the court with a bunch of players that are better than you, and you’re just going to raise your game.

TAI LOPEZ: I would argue cities make you less happy but they make you more money.

SCOTT GALLOWAY: That’s actually a decent analogy.

TAI LOPEZ: I have a couple farms I bought in Virginia, so what I do is try to rotate around. So if you can pull it off, have a house in the mountains, a house at the beach. And then I go back to LA, it’s almost like going back to war.

SCOTT GALLOWAY: Yup, back into the Thunderdum.

TAI LOPEZ: So, yeah I like this Professor Galloway career advice. This is a sexy job factor.

SCOTT GALLOWAY: Can we just talk about it for one second, it’s important. You want to open a restaurant, you want to produce movies, you want to go work for Vogue, you better get a lot of psychic income, because on a risk it adjust basis, your return’s going to be awful. You want to start a software as a SaaS platform, for healthcare and maintenance workers, something that sounds like you want to put a gun in your mouth. I smell money.

The more boring the industry the higher the ROI because the sexy industries are like over invested and they’re like any asset class, when everyone’s buying Florida real estate, watch out, there’s a crash. And then when no one wanted to buy Florida real estate in 2009, go in and buy. Find industries that other people find boring. If you can’t help it and you have to work for Vogue, okay then go do it. But if you’re looking to do something in terms of just sheer ROI on your human and financial capital, boring is sexy.

TAI LOPEZ: It’s interesting because, two things. If you’re starting a business, you may want to start a sexy one, going off the Zara and the retail, amount of billionaires is great. If you’re an employee you’re saying, those jobs that are like, everybody wants to work for us, interns here to get us donuts and that’s it. So Wayne Huizenga was a billionaire, unfortunately started Blockbuster, but he was already wealthy and before that, he had Waste Management which is a trash business.

And I actually had an older mentor of mine, him and a buddy had invested, I can’t remember if it was Waste Management, one of these. And they got paid a million dollars a month as a dividend for investing in it years ago. I mean trash generated, made them $50 million or something, as a small investor in it, so that goes to your point.

Well this has been amazing. For those of you listening, go to tailopez.com/thefour, just the words. T-H-E Four. I want to put a special page up for this book Tailopez.com/thefour. I’ll put links to Professor Galloway’s stuff. He’s got a TED Talk he just did. He’s got some great consulting companies for those of you listening who have enterprise needs. And so thanks for, don’t party too hard in Vegas. We need to do a second interview.

SCOTT GALLOWAY: I could slip and break a hip if I’m not careful.

TAI LOPEZ: No. I don’t want it to be like one of those Hangover things where two days later they find you on the roof.

SCOTT GALLOWAY: It would pimp the video views. The last video I did, right?

TAI LOPEZ: The last interview, the forgotten Tupac Professor Galloway, well thank you for being here.

SCOTT GALLOWAY: Thanks for having me. Congratulations on all your success.

TAI LOPEZ: No, on yours, this is a great book. Check out the book. Don’t get left behind by The Four.

 

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