Here is the full transcript of professor of marketing Scott Galloway’s TED Talk: How Amazon, Apple, Facebook and Google Manipulate Our Emotions….
Scott Galloway – Founder, L2; Professor of Marketing, NYU
So, this is the first and the last slide each of my 6,400 students over the last 15 years has seen. I do not believe you can build a multibillion-dollar organization unless you are clear on which instinct or organ you are targeting.
Our species has a need for a superbeing. Our competitive advantage as a species is our brain. Our brain is robust enough to ask these really difficult questions, but, unfortunately, it doesn’t have the processing power to answer them, which creates a need for a superbeing that we can pray to and look to for answers.
What is prayer? Sending a query into the universe, and hopefully there’s some sort of divine intervention — we don’t need to understand what’s going on — from an all-knowing, all-seeing superbeing that gives us authority that this is the right answer: “Will my kid be all right?” You have your planet of stuff, you have your planet of work, you have your planet of friends.
If you have kids, you know that once something comes off the rails with your kids, everything melts, in your universe to the Sun that is your kids “Will my kid be all right?” “Symptoms and treatment of croup” in the Google query box. One in six queries presented to Google have never been asked before in the history of mankind. What priest, teacher, rabbi, scholar, mentor, boss has so much credibility that one in six questions posed to that person have never been asked before? Google is our modern man’s God.
Imagine your face and your name above everything you’ve put into that box, and you’re going to realize you trust Google more than any entity in your history.
Let’s move further down the torso. One of the other wonderful things about our species is we not only need to be loved, but we need to love others. Children with poor nutrition but a lot of affection have better outcomes than children with good nutrition and poor affection. However, the best signal that you might make it to be part of the number-one fastest growing demographic in the world — centenarians, people who live to triple digits — there are three signals. In reverse order: your genetics — not as important as you’d like to think, so you can continue to treat your body like shit and think, “Oh, Uncle Joe lived to 95, the die have been cast.” It’s less important than you think.
Number two is lifestyle. Don’t smoke, don’t be obese, and prescreen — get rid of about two-thirds of early cancers and cardiovascular disease. The number one indicator or signal that you’ll make it to triple digits: How many people do you love? Caretaking is the security camera — we call the low-resolution security camera in our brain — deciding whether or not you are adding value. Facebook taps into our instinctive need not only to be loved, but to love others, mostly through pictures that create empathy, catalyze and reinforce our relationships.
Let’s continue our journey down the torso. Amazon is our consumptive gut. The instinct of more is hardwired into us. The penalty for too little is starvation and malnutrition. Open your cupboards, open your closets, you have 10 to 100x times what you need. Why? Because the penalty for too little is much greater than the penalty for too much. So “more for less” is a business strategy that never goes out of style. It’s the strategy of China, it’s the strategy of Walmart, and now it’s the strategy of the most successful company in the world, Amazon. You get more for less into your gut; digest, send it to your muscular and skeletal system of consumption.
Moving further, once we know we will survive, the basic instinct, we move to the second most powerful instinct, and that is to spread and select the strongest, smartest and fastest seed to the four corners of the earth, or pick the best seed. This is not a timepiece. I haven’t wound it in five years. It’s my vain attempt to say to people, “If you mate with me, your children are more likely to survive than if you mate with someone wearing a Swatch watch.”
The key to business is tapping into the irrational organs: “Irrational” is Harvard Business School’s and New York Business School’s term for fat profit margins and shareholder value. “High-caloric paste for your children” No? You love your choosy mom. Why choosy moms choose Jif: you love your kids more. The greatest algorithm for shareholder creation from World War II to the advent of Google was taking an average product and appealing to people’s hearts. You’re a better a mom, a better person, a better patriot if you buy this average soap versus this average soap.
Now, the number one algorithm for shareholder value isn’t technology. Look at the Forbes 400. Take out inherited wealth, take out finance. The number one source of wealth creation: appealing to your reproductive organs. The Lauders; the number one wealthiest man in Europe, LVMH. Numbers two and three: H&M and Inditex. You want to target the most irrational organs for shareholder value. As a result, these four companies — Apple, Amazon, Facebook and Google — have disarticulated who we are: God, love, consumption, sex. The proportion in your approach to those things is who you are, and they have reassembled who we are in the form of for-profit companies.
At the end of the Great Recession, the market capitalization of these companies was equivalent to the GDP of Niger. Now it is equivalent to the GDP of India, having blown past Russia and Canada in ’13 and ’14. There are only five nations that have a GDP greater than the combined market capitalization of these four firms. Something is happening, though.
The conversation just a year ago was, which CEO was more Jesus-like? Who was running for president? Now the worm has turned. Everything they’re doing is bothering us. We’re worried they’re tax avoiders. Walmart, since the Great Recession, has paid $64 billion in corporate income tax; Amazon has paid $14 billion.
How do we pay our firefighters, our soldiers and our social workers if the most successful companies in the world don’t pay their fair share? Pretty easy. That means the less successful companies have to pay more than their fair share. Alexa, is this a good thing? This is despite that fact — This is despite the fact that Amazon has added the entire market capitalization of Walmart to its market cap in the last 19 months. Whose fault is it? It’s our fault. We’re electing regulators who don’t have the backbone to actually go after these companies.
Facebook lies to EU regulators and says, “It would be impossible for us to share the data between our core platform and our proposed acquisition of WhatsApp. Approve the merger.” They approve the merger and then — spoiler alert! — they figure it out. And the EU says, “I feel lied to. We’re fining you $120 billion,” about 6% of the acquisition price of $19 billion.
If Mark Zuckerberg could take out an insurance policy that the acquisition would go through for $6, wouldn’t he do it? Anticompetitive behavior. A $2.5 billion fine, $3 billion of the cash flow, 3% of the cash on Google’s balance sheet. We are telling these companies, “The smart thing to do, the shareholder-driven thing to do, is to lie and to cheat.” We are issuing $0.25 parking tickets on a meter that costs $100 an hour.
The smart thing to do is lie. Job destruction! Amazon only needs one person for two at Macy’s. If they grow their business $20 billion this year, which they will, we will lose 53,000 cashiers and clerks. This is nothing unusual; this has happened all through our economy, we’ve just never seen companies this good at it. That’s one.
Yankee Stadium of workers. It’s even worse in media. If Facebook and Google grow their businesses $22 billion this year, which they will, we’re going to lose approximately 150,000 creative directors, planners and copywriters. Or we can fill up two-and-a-half Yankee Stadiums and say, “You are out of work, courtesy of Amazon.”
We now get the majority of our news from our social media feeds, and the majority of our news coming off of social media feeds is fake news. I am not allowed to be political or use curse words, or talk about religion in class, so I can definitely not say, “Zuckerberg has become Putin’s bitch.” I definitely cannot say that.
Their defense: “Facebook is not a media company; it’s a technology company.” You create original content, you pay sports leagues to give you original content, you run advertising against it — boom! — you’re a media company. Just in the last few days, Sheryl Sandberg has repeated this lie, that “We are not a media company.” Facebook has openly embraced the margins of celebrity and the influence of a media company yet seems to be allergic to the responsibilities of a media company.
Imagine McDonald’s. We find 80% of their beef is fake, and it’s giving us encephalitis, and we’re making terrible decisions. And we say, “McDonald’s, we’re pissed off!” And they say, “Wait, wait — we’re not a fast-food restaurant, we’re a fast-food platform.” These companies and CEOs wrap themselves in a neon-blue pink rainbow and blue blanket to create an illusionist trick from their behavior each day, which is more indicative of the spawn of Darth Vader and Ayn Rand. Why? Because we as progressives are seen as nice but weak.
If Sheryl Sandberg had written a book on gun rights or on the pro-life movement, would they be flying Sheryl to Cannes? No. And I’m not doubting their progressive values, but it foots to shareholder value, because we as progressives are seen as weak. They’re so nice — remember Microsoft? They didn’t seem as nice, and regulators stepped in much earlier than the regulators now, who would never step in on those nice, nice people I’m about to get on a plane tonight, and I’m going to have a guy named Roy from TSA molest me. If I am suspected of a DUI on the way home, I can have blood taken from my person.
But wait! Don’t tap into the iPhone — it’s sacred. This is our new cross. It shouldn’t be the iPhone X, it should be called the “iPhone Cross”. We have our religion; it’s Apple. Our Jesus Christ is Steve Jobs, and we’ve decided this is holier than our person, our house or our computer. We have become totally out of control with the gross idolatry of innovation and of youth. We no longer worship at the altar of character, of kindness, but of innovation and people who create shareholder value.
Amazon has become so powerful in the marketplace, it can conduct Jedi mind tricks. It can begin damaging other industries just by looking at them. Nike announces they’re distributing on Amazon, their stock goes up, every other footwear stock goes down. When Amazon stock goes up, the rest of retail stocks go down, because they assume what’s good for Amazon is bad for everybody else. They cut the cost on salmon 33% when they acquired Whole Foods.
In between the time they announced the acquisition of Whole Foods and when it closed, Kroger, the largest pure-play grocer in America, shed a third of its value, because Amazon purchased a grocer one-eleventh the size of Kroger. I got very lucky. I predicted the acquisition of Whole Foods by Amazon the week before it happened. This is me boasting; I said this publicly in the media. This was the largest acquisition in their history, they’d never made an acquisition over a billion, and people asked, “How did you know this?” So I’m letting this very impressive audience in on the secret.
How did I know this? I’m going to tell you how I knew. I bark at Alexa all day long and try to figure out what’s going on.
Alexa, buy whole milk.
(Alexa) I couldn’t find anything for whole milk, so I’ve added whole milk to your shopping list.
Then I asked, Alexa, buy organic foods.
The top search result for organic food is Plum Organics baby food, banana and pumpkin, 12-pack of four ounces each. It’s $15 total. Would you like to buy it?
And then, as often happens at my age, I got confused. Alexa, buy whole foods.
(Alexa) I have purchased the outstanding stock of Whole Foods Incorporated at $42 per share. I have charged $137 billion to your American Express card.
I thought that’d be funnier. We’ve personified these companies, and just as when you’re really angry over every little thing someone does in your life and relationships, you’ve got to ask yourself, “What’s going on here? Why are we so disappointed in technology?” I believe it’s because the ratio of one-percent pursuit of shareholder value and 99% the betterment of humanity that technology used to play has been flipped, and now we’re totally focused on shareholder value instead of humanity. One hundred thousand people came together for the Manhattan Project and literally saved the world.
Technology saved the world. My mother was a four-year-old Jew living in London at the outset of the war. If we had not won the footrace towards splitting the atom, would she have survived? It’s unlikely. Twenty-five years later, the most impressive accomplishment, arguably, ever in all of humankind: put a man on the moon. Four hundred thirty thousand Canadians, British and Americans came together, again, with very basic technology, and put a man on the moon.
Now we have the 700,000 best and brightest, and these are the best and brightest from the four corners of the earth. They are literally playing with lasers relative to slingshots, relative to the squirt gun. They have the GDP of India to work at. And after studying these companies for 10 years, I know what their mission is: Is it to organize the world’s information? Is it to connect us? Is it to create greater comity of man? It isn’t.
I know why we have brought together — I know that the greatest collection of IQ capital and creativity, that their sole mission is: to sell another fucking Nissan.
My name is Scott Galloway, I teach at NYU, and I appreciate your time.
CHRIS ANDERSON: Not planned, but you prompted some questions in me, Scott. That was a spectacular rant.
SCOTT GALLOWAY: Is this like Letterman? When you do well, he calls you onto the couch?
CHRIS ANDERSON: No, no, you’re going to the heart of the conversation right now. Everyone’s aware that after years of worshipping Silicon Valley, suddenly the worm has turned and in such a big way. To some people here, it will just feel like you’re piling on, you’re kicking the kids who’ve already been kicked to pieces anyway. Don’t you feel any empathy for them at all?
SCOTT GALLOWAY: None whatsoever. Look, this is the issue: it’s not their fault, it’s our fault. They’re for-profit companies. They’re not concerned with the condition of our souls. They’re not going to take care of us when we get older. We have set up a society that values shareholder value over everything, and they’re doing what they’re supposed to be doing. But we need to elect people, and we need to force ourselves to force them to be subject to the same scrutiny that the rest of business endures, full stop.
CHRIS ANDERSON: There’s another narrative that is arguably equally consistent with the facts, which is that there actually is good intent in much of the leadership — I won’t say everyone, necessarily — many of the employees. We all know people who work in those companies, and they still are pretty convincing that their mission is to — so, the alternative narrative is that there have been unintended consequences here, that the technologies that we’re unleashing, the algorithms, that we’re attempting to personalize the internet, for example, have A, resulted in weird effects like filter bubbles that we weren’t expecting; and B, made themselves vulnerable to weird things like — oh, I don’t know, Russian hackers creating accounts and doing things that we didn’t expect. Isn’t the unintended consequence a possibility here?
SCOTT GALLOWAY: I don’t think — I’m pretty sure, statistically, they’re no less or better people than any other organization that has 100,000 or more people. I don’t think they’re bad people. As a matter of fact, I would argue that there’s a lot of very civic-minded, decent leadership. But this is the issue: when you control 90% points of share in a market, search, that is now bigger than the entire advertising market of any nation, and you’re primarily compensated and trying to develop economic security for you and the families of your employees, to increase that market share, you can’t help but leverage all the power at your disposal. And that is the basis for regulation, and it’s the basis for the truism throughout history that power corrupts. They’re not bad people; we’ve just let them get out of control.
CHRIS ANDERSON: So maybe the case is slightly overstated? I know at least a bit — Larry Page, for example, Jeff Bezos — I don’t actually believe they wake up thinking, “I’ve got to sell a fucking Nissan.” I don’t think they think that. I think they are trying to build something cool, and are probably, in moments of reflection, as horrified that some of the things that have happened as we might be. So is there a different way of framing this, to say that when your model is advertising, that there are dangers there that you have to take on more explicitly?
SCOTT GALLOWAY: I think it’s very difficult to set an organization up as we do, to pursue shareholder value above all else. They’re not non-profits. The reason people go to work there is they want to create economic security for them and their families, mostly first and foremost. And when you get to a point where you control so much economic power, you use all the weapons at your disposal. I don’t think they’re bad people, but I think the role of government and the role of us as consumers and people who elect our officials is to ensure that there are some checks here. And we have given them the mother of all hall passes because we find them just so fascinating.
CHRIS ANDERSON: Scott, eloquently put, spectacularly put, Mark Zuckerberg, Jeff Bezos, Larry Page, Tim Cook, if you’re watching, you’re welcome to come and make the counterargument as well. Scott, thank you so much.
SCOTT GALLOWAY: Thanks very much.