Amazon Unbound — with Brad Stone

Brad Stone, the senior executive editor for Global Technology at Bloomberg News, joins to discuss his latest book: Amazon Unbound: Jeff Bezos and the Invention of a Global Empire. We hear how the company has transformed under Jeff Bezos’s leadership and the existential threats coming for its market dominance. Follow Brad on Twitter, @BradStone. Scott opens with his thoughts on “burning benjamins” — AKA what happens when billionaires lose other people’s money. Additional Reading: MeWork Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Scott Galloway?

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• 0:48Speaker 01

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• 1:18Scott Galloway?

  Episode 72, The Atomic Number of Hafnium. 1972, The Godfather, my favorite film of all time. What do I do to celebrate it every day? When I go into Starbucks, I ask for an Al Pacino.

• 1:29Speaker 02

  You know, you might consider taking a course in business administration, just to be on the safe side.

• 1:33Scott Galloway?

  Okay, okay, I need to, I need to do better. I hear that. Go, go, go!

• 1:48Scott Galloway?

  Welcome to the 72nd episode of the Prop G Show. In today's episode, we speak with Brad Stone, the Senior Executive Editor for Global Technology at Bloomberg News and author of four books, including his latest, Amazon Unbound. Jeff Bezos and the Invention of a Global Empire. I'm a big fan of Brad. I think he's a great journalist. I like his books. Seems like a good guy. Just, just like Brad. I like him. I like him. Gusto Bradley! We discuss with Brad everything about Amazon cleaning, how the company has transformed under Jeff Bezos's leadership, and the existential threats coming for its market dominance. What's happening? What's on our mind? Today, we're talking about the MeWork generation, or more specifically, a new class of billionaires who make their fortunes while losing other people's money.

• 2:32Scott Galloway?

  Full disclosure, full disclosure, I might qualify for that. Looking in the mirror, looking in the mirror. Man in the mirror test, the most stressful times in my life, 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 find that it's actually easier to lose my own capital than other people's, because it's a private failure. I think you have to be a bit of a sociopath to be a great investor or a great operator, because you might be losing other people's money, or you might be forced to lay off people, and you need to be able to sleep really well so that you can perform at a high level. And sometimes, I've always thought I'm not a great investor, at least not a great money manager,

• 3:16Scott Galloway?

  because I have a much easier time managing my own money and taking risks with it than I do other people. Anyways, to understand, but thank you, doctor. Thank you. So to understand the MeWork generation and identify this class of billionaires, we've devised two metrics. The daily Benjamin burn rate and the earn-to-burn ratio. The daily Benjamin burn is how much money an executive lit on fire per day during their tenure. While the earn-to-burn ratio is the percentage of those lost Benjamins they siphoned off for themselves. Think of it as a commission on destruction, or destruction commission. And I think that is what is sort of really rankling people, or what's new about our economy. It used to be that people would get outraged when the chairman or the CEO of a company...

• 3:59Scott Galloway?

  Mickey Draxler made over a billion dollars at the Gap. He took a company that was selling records and Levi's and transformed it into a specialty retail juggernaut because of his ability to create voice with product, the merchant prints. And I think most people are fine with Mickey Draxler being a billionaire, because he created tens of billions in shareholder value. What I don't think they're fine with, and what I think... Might indicate an underlying sickness in our economy is that there seem to be people who have figured out a way to make billions of dollars despite destroying shareholder value. So let's go back to our initial Benjamin Byrne. What does that look like? A lot like Quibi. That like them won't mean anything to you unless you're one of the dozens and dozens of people who subscribe to the short-lived short video service.

• 4:41Scott Galloway?

  For context, back in 2018, Jeffrey Katzenberg and Meg Whitman raised around 1.8 billion, launched a bad app with even worse content, only to shut it down six months later. Roku then combed through the rubble and found about $100 million in value. So Jeff and Meg immolated 1.7 billion in 750 days, or a daily Benjamin Byrne rate of approximately $2.2 million. So they lit on fire 2.2 million per day. If you stacked that total $1.7 billion in $100 bills, you'd have a pile, get this, over a mile high. That's about two Burj Khalifas. Am I saying that right? There's something about my brain that's dyed around names and accents. Is it the Ilberaj Khalifa?

• 5:25Scott Galloway?

  Anyways, the world's tallest building. I stayed in the Armani Hotel, rolled into Dubai on my way to Africa, stayed there. It was incredible. I would describe Dubai as a fantastic place to visit. It feels a little bit like Las Vegas minus the charm, but I love Las Vegas. Even a charmless Vegas works for me. Anyway, Jeff and Meg aren't the only ones burning Benjamins. Like I mentioned at the top, I'm a part of this class too, or at least the DBB class. In 2008, or 2008, I raised 600 million from a hedge fund, became the largest shareholder in the New York Times company, ran an activist campaign against the paper, went on the board to unlock value. Their dog's gonna unlock some value.

• 6:06Scott Galloway?

  They put me on the board where I ranted about the evils of Google, advocated for the divestiture of non-core assets. The New York Times own the seventh largest building in America and 17% of the Boston Red Sox and about.com. Yeah, that made a lot of sense, envisioned sunlit uplands of subscription revenue. And then with my amazing strategy went on to, you guessed it,

• 6:29Scott Galloway?

  Light Benjamins on fire during my 24-month tour of duty, watching the Great Recession kick ad-supported media in the groin over and over. I managed to turn $600 million into $350 million for a daily Benjamin burn of about $350,000 a day, and I literally felt each one of those dollars coming out of my soul. The stack of Benjamins I lost, get this, would have reached only to the top of 30 Rockefeller Plaza. That's right, I burnt enough capital, destroyed enough capital in my two-year adventure at The New York Times, to stack $100 bills that would reach the top of 30 Rock. Jeff, Meg and I, however, made an old-school mistake. We failed to find a greater fool, such as the public markets, gullible board members,

• 7:14Scott Galloway?

  or SoftBank, to secure a mega payout for our bonfire of the Benjamins. I didn't make that much money. I was paid approximately, I think about half a million bucks in board fees and retainer from the fund, and I speculate that Jeff and Meg may have pocketed more, but none of us made millions. That brings us to the earn-to-burn ratio, and I think that's what is pissing people off and signals something more insidious in our economy, and that is the Hall of Fame for broken compensation. In 2012, Yahoo replaced CEO with an executive from Google, Marissa Mayer, but the new CEO made a series of poor decisions, Ms. Mayer, including cancelling the company's telecommuting policy while working from home herself, and paying $1.1 billion for Tumblr, which they sold six years later for $3 million.

• 7:58Scott Galloway?

  By the way, I don't care what anyone says, Tumblr is a porn site, and the moment they decided to close down the porn, the site basically lost about a third of its traffic. When Mayer took over Yahoo, not including the 20% ownership stake in Alibaba, it 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 about $10 billion turned to ash in just four years, or 13.5 Burj Khalifa's for a daily Benjamin burn of $6.8 million. So that's right up there in the DBB, but what's really ugly about it is Mayer's compensation began with a $30 million signing bonus, and went up from there, totaling an estimated $365 million.

• 8:40Scott Galloway?

  That's right, a third of a billion dollars, or a quarter of a million dollars per day commission for destroying $7 million per day of other people's money. That's an earn-to-burn ratio of 3.7%. However, however, and that's shocking, but it's not the gold standard. Adam Newman... 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 of 2017. By the time Newman was fired in September 2019, SoftBank had invested $10.3 billion. A few months later, it wrote off over $9 billion of that. That's a $13.1 million daily Benjamin burn rate

• 9:21Scott Galloway?

  on SoftBank's money alone. Newman's compensation for this value destruction was complicated by his ouster in a subsequent lawsuit, but we estimate he made off with around $1 billion, most of it coming out of SoftBank's deep pockets who wanted to save faces. I think Adam Newman basically threatened to sell it to creditors, and so Masah stepped in and said, "I'll pay you whatever you want." That's $1.5 million per day during those two years, an earned-to-burn ratio of 11%. That's our Hall of Fame here. A guy who basically got a $1 billion commission on losing $10 billion of other people's money. So to be clear, this 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

• 10:05Scott Galloway?

  clash and billions in losses, K-Car S-Class? No, I don't see it. Daimler unloaded 80% of Chrysler to a private equity firm for $7.5 billion, valuing the company at $9.25 billion. That equates to an impressive $7.8 million daily Benjamin burn. All right. In sum, what's the learning here? Why should we be cognizant of the MeWork generation? Whether we're executives, parents, or citizens, I believe, I believe, we need to ask ourselves, have our interests diverged from those of the people who matter most to us in society? It's one thing to make billions when you've created tens of billions for other people. It's one thing to have a wonderful indulgent lifestyle if you're providing that lifestyle. It's one

• 10:46Scott Galloway?

  thing to have a wonderful life when you're improving the lives of other people. But ask ourselves, 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? I go to a childhood story or experience, and that is my father used to get ready for business trips. He would lay over his Ram golf bag, his beautiful Isad sweaters, and then he would meticulously iron the oversized collar on his Pierre Cardin shirts, silk shirts, and then wrap them delicately around a piece of wax paper and place them in his Hartman luggage as if they were newborns.

• 11:31Scott Galloway?

  And I distinctly remember the smell. My dad wore Aqua Velva. And I always thought of my dad as very masculine and elegant. I really looked up to him as a lot of young, as a lot of sons do. And I remember specifically on this one occasion, my mom walked into the room and I looked up at her and I said, "Mom, how come dad is so rich and we're so poor?" And my dad tells this story and just bursts out laughing. But here's the thing, it wasn't funny and nor is it funny now. And that is, when you're in a relationship and you're a dad or you're a mom, are you living a different life than them? Are you living a better life than them? Struggles and success are fine, but they should be in the agency and somewhat in harmony with other people. The thing that when I look back on my childhood

• 12:15Scott Galloway?

  and some of the issues I've had with my dad, it's not that we weren't doing well, it's not that he was a bad person. It's just that there were two Americas, under one household, under one roof. Stay with us, we'll be right back for our conversation with Brad Stone. Support for the show comes from Bilt. Most of us work hard to earn our keep, but usually there's no one around to hand you a cookie when you successfully pay your monthly housing bill. No one except Bilt, that is. Bilt has expanded from their original renter rewards program and they have a lot more going on for members now. For example, members can earn points on mortgage payments too. Every housing payment gets you points that get you a lot more than baked goods, such as flights with top travel partners, including United and Hyatt,

• 13:00Scott Galloway?

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• 13:35Scott Galloway?

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• 14:51Scott Galloway?

  Welcome back. Here's our conversation with Brad Stone, the Senior Executive Editor for Global Technology at Bloomberg News and author of Amazon Unbound: Jeff Bezos and the Invention of a Global Empire. Brad, where does this podcast find you?

• 15:06Speaker 03

  Hi, Scott. I am in my garage in Mill Valley, California. This is where I wrote the book. This is where I quarantined during the pandemic, and then this is where I'm talking to you right now.

• 15:18Scott Galloway?

  Nice. So you are milking this whole Amazon train. So we had the Everything Store, which was, I remember reading that book, and when I wrote my book before, and I had to write a chapter on Amazon, I remember thinking, oh, no, what am I going to say the Brad Stone hasn't already said about Amazon? What, since writing that book and then Amazon Unbound, Django Unchained, what, what has changed in your mind most about Amazon and Jeff Bezos?

• 15:47Speaker 03

  It's been a transformation of both the company and the guy. And, and, and the, the guy has transformed right in front of our eyes, right? He's gotten all jacked. He got divorced. He, he has a very publicly prominent new partner in Lauren Sanchez. He's the owner of the Washington Post and competing with Elon for space domination. And then now he's retiring as CEO of Amazon. But what, what drew me to the story or to the idea of a sequel was simply the evolution of the company. You know, in the everything story, I write about the Kindle. And this was now the Alexa company. The marketplace had gone global. It had gone Hollywood. They had initiated a couple of projects with groceries, hadn't quite gotten it right.

• 16:31Speaker 03

  And then bought Whole Foods, spawned a whole transportation division. So, um, look, I didn't think Scott, that I would be going back to the same terrain, but it was only because the business, the, the business story was so good. And that I really thought it, it deserved a sequel.

• 16:48Scott Galloway?

  So I, I'm not sure I entirely understand went down, what went down with his amateur photography and MBS and the detectives, like, how did that all play out? Who was more involved than we thought, less involved? Did it, did it really involve intrigue from overseas where they were trying to gain leverage against the owner of the Washington Post? What, give us your, your 30,000 foot view of what went down there?

• 17:19Speaker 03

  So if people remember that saga, they probably remember a couple of overlapping truths, right? There was, there are a brother involved, Lauren Sanchez's brother, Michael Sanchez, who sold their, their text messages and photographs to the Inquirer. And then of course, there was an insinuation that the Saudis were involved and maybe MBS had hacked Bezos's phone and was a Trump world. They obviously had a lot of animosity for Bezos because of his ownership of the Washington Post. So they disentangled it. As I, as I talked to everyone I could, as I explored the, the legal documents in the, in the case that the Southern District of New York was considering bringing in the whole episode and the FBI looked into it.

• 18:00Speaker 03

  The the underlying truth and my conclusion was that Michael Sanchez delivered the whole kit and caboodle to the editors of the National Enquirer in late 2018. And that there might have been good reason for Bezos and for his representatives to suggest a more complicated truth involving Trump world or involving the Saudis. Certainly, MBS was no fan of Bezos and the Washington Post, there were Saudi Twitter bot armies that were tweeting against him. And certainly Donald Trump hated Bezos because of the post coverage. But none of that, there's no evidence that any of that had anything to do with the tabloid newspaper's pursuit of Bezos's relationship. That's where I netted out.

• 18:43Speaker 03

  I think if we were ever to find out otherwise, it would actually contradict most of the evidence that was ultimately gathered by the FBI and entered into into evidence in the Southern District of New York, which really showed the editors and reporters at the Enquirer getting the information from Michael Sanchez.

• 18:59Scott Galloway?

  So was this, in my view, the kind of the ultimate choreography gymnastics in the world of PR, in the history of PR, was a married man with four kids, who's the CEO of arguably one of the most digitally disruptive companies in history. This guy understands technology. He understands that pictures that are pixelated can be forwarded. And he decides to send dick pics to his girlfriend. And then they get discovered and he becomes a hero. Do you think it was manufactured? Or do you think that as part of the narrative and to huge excess? Because what I think about, there was all these implications that it was political

• 19:42Scott Galloway?

  intrigue with Trump and MBS and Bezos would not take this. If he couldn't fight back, who would? He was standing up for all of us. And then it just died. Right? They just let it go. Do you think that this was crafted in a in a public relations round with Bezos saying, how do I come out of this looking better than I went into it?

• 20:03Speaker 03

  I don't know that it was wholly manufactured or totally disingenuous. As I said, I think in February of 2019, that Bezos had good, I mean, this is the absurdity of this whole situation and the absurdity of the four years of Donald Trump. Bezos had good reason to believe that this was Trump world. I mean, AMI had been doing the dirty business for Donald Trump, you know, with Michael Cohen's involvement, as we, as we now know. And, you know, MBS had killed a Washington Post columnist and was trying to seek retribution against the Washington Post. So I don't know that it was wholly disingenuous. I do think it was opportunistic.

• 20:43Speaker 03

  I do think it was handy for Bezos to come out and to say that the National Enquirer is trying to embarrass him because of his, his bold, brave work owning the Washington Post and uncovering, you know, uncovering the Trump administration and uncovering, you know, the murderous record of, of the, of the Saudi Crown Prince. There wasn't much evidence there to support it. Obviously later, they did some forensics on Bezos's phone and this is disputed in cybersecurity circles, but at least a preliminary report showed that it might've been hacked by the Saudis. We've never gotten any proof of that. And then, by the way, Scott, there, there is the fact that, and this really takes us

• 21:25Speaker 03

  down a rabbit hole, but the National Enquirer in its negotiations with Bezos and his representatives really was sort of extorting him and trying to get him and his representatives to drop. The emails were really gross. To drop this insinuation. Now, it turns out that they were in a non-prosecution agreement with the Southern District of New York and it was kind of radioactive for them to even be accused of colluding with the Trump administration. And, and there's all sorts of additional complexities, like you mentioned, a below the belt selfie, which by the way, really didn't exist, which is a little thing that I discovered in my book. What? Mike, yeah, Michael Sanchez. No dick pic? There is no dick pic.

• 22:04Speaker 03

  Michael Sanchez had gone to a pornographic escort website and taken anonymous photographs and given it to the Enquirer and passed it off as Bezos, a Bezos personal pic. And they thought that they had something that incriminating. Now, he had given them other photographs that, which were authentic, but nothing that explicit. I did not know that. Yes. So there are.

• 22:33Scott Galloway?

  So the bottom line is Bezos, his big ed and the twins are not out there in terms of photographs. I thought that they were out there. I thought he had taken pictures and forwarded them. I did not know that.

• 22:42Speaker 03

  Michael Sanchez's duplicity in this regard was multifaceted and the editors of the Inquirer were hounding him to deliver the goods, so to speak. He had given them other photographs, which are, you know, pretty intimate, but nothing explicit. And he brought a screenshot to a meeting with a National Enquirer reporter, but the editors from the Inquirer FaceTiming and he showed them something that was something totally different. And so they thought they had it and Bezos might have thought that they had it as well.

• 23:17Scott Galloway?

  Right. So I want to put forward a thesis that I was fascinated, this guy Corey Doctorow, author, journalist, activist, and his latest book is Attack Surface, kind of a cool name. Anyways, he put out kind of a tweet storm that really got me thinking. And of course, I'm always looking for points of light around how these companies need to be broken up and they're too powerful. But there's a general consensus that Amazon is great for consumers, that it's deflationary, that when you shop at Amazon, it's like getting a promotion, you save money, right? And his viewpoint, and he put it, I said, look, if you want to sell anything online, you got to sell on Amazon. That's one out of

• 23:59Scott Galloway?

  two dollars. If you want to sell on Amazon, it's kind of this deal with the devil where you have to sign up for their fulfillment, you have to sign up for their, if you want to be listed in their search engine, you have to advertise with them and spend money. And slowly but surely, you end up paying 30, 40, 45 cents on the dollar to Amazon. And then here's the kicker, you're not allowed to sell your products for less anywhere else on the web. So if you end up paying this inordinate tax to work with Amazon, which you then have to pass through to the end consumer, and you can never sell your products for less on another platform that say, isn't charging you these exorbitant fees, that in fact, Amazon is bad for the consumer and inflates.

• 24:42Scott Galloway?

  Do you buy into that that line of reasoning?

• 24:45Speaker 03

  I mean, this is actually the substance of Carl Racine's lawsuit, the Attorney General of Washington DC, which he filed in in May. The European Union has looked into this. These are the so-called most favored nation clauses that most retailers have. Certainly Walmart and Target are going to have them stipulating that a seller, you know, can't list for less elsewhere. And the difference online is that all these companies have their their pricing bots trained on each other. So they know exactly when the price is is lower elsewhere and then Amazon will just rip you out of search results. I agree with everything. I think that that's probably a productive line of inquiry for for regulators and lawmakers.

• 25:29Speaker 03

  Except for one thing, which is that you have to sell on Amazon. And Scott, as we know, right, the internet on the internet competition is always a click away. You know, it's maybe an exaggeration to say that there are any platforms that are anywhere near as powerful as Amazons. But over the past five years, the greatest story in tech and in business has been Shopify. Walmart and Target have made some promising inroads in terms of creating other marketplaces. So I think that's that's where the regulators are going to have a challenge, showing that, you know, this most favored nation clause, which is pretty common in retail, is improper when Amazon does it because Amazon is a monopoly.

• 26:10Speaker 03

  Well, Amazon has great market share, maybe 50% of all e-commerce, but it would be a misnomer to say that there are no alternatives. I think there are.

• 26:19Scott Galloway?

  So let's talk a little bit about that threat. If you look at the biggest retailers, I remember when they looked at the advertisers from when Tom Brady was first in the Super Bowl, the advertisers were AOL and Sears. I mean, it's just amazing how much things have changed. And I think I read somewhere nine of the 10 biggest retailers. Or eight of the 10 biggest retailers have changed over in the last 20 or 30 years. I think it's still Walmart and I think Target's still on it, or maybe Home Depot. But the rest have just swapped out, J.C. Penney's and Sears. So generally speaking, everything everywhere ends. What are the existential threats to Amazon? You talked about Shopify. Is that number one?

• 26:59Speaker 03

  No, no. I mean, because Shopify has had tremendous success, but the Amazon juggernaut has not slowed.

• 27:06Scott Galloway?

  Yeah, yeah, yeah.

• 27:09Speaker 03

  I do think maybe we could generalize it a little bit and say, Amazon serves so many constituencies now that it can't possibly please them all. And there are likely to be ways for upstarts to make inroads. And Shopify is a great illustration. But there's a regulatory challenge for sure and just the distraction that'll come with all that regulatory attention. I think a stagnating stock price is going to be a big concern to Amazon because, you know, this is a $1.7 trillion company right now. And hiring technologists and artificial intelligence scientists is all, you know, compensate, the compensation is so stock heavy at Amazon.

• 27:52Speaker 03

  So continuing to attract people if that or and retain executives if that stock price starts to slow down, I think could be a big challenge. And without Bezos there at the helm, Jassy might be, you know, a little less inspirational in terms of keeping that 10-year talent at Amazon that knows how that crazy place operates. I would say that's kind of number two. And then number three is the prospect of organized labor and unionization of the workforce. And Amazon employees, you know, over a million people right now in it overall, hundreds of thousands in its fulfillment centers. We saw organized labor with a, I'm not going to say a near miss because they got kind of trounced, but in Bessemer, Alabama.

• 28:33Speaker 03

  And if we, if we start to see the organized labor movement in the U.S. kind of pick up momentum, that would hit Amazon in a way that it doesn't hit the other big tech companies.

• 28:43Scott Galloway?

  Yeah, my sense is that like everything, well, my sense is unions have been the best thing you can have is to have a weak incompetent enemy. I don't think unions have been fantastic for corporate America. I think I think they've done a terrible job. But anyways, what so let's Amazon is the largest recruiter of my kids out of my class. When I say kids, I mean, the 28 year olds deciding what they're going to do with their life. And they all come to my office hours and pretending I got off from Amazon and off from a small company. I don't know what to do. I'm like, stop fucking wasting my time. You're going to you're going to grunge and bad coffee. You're going to Seattle. They all pretend like they all put themselves through this drama and then they pick the best brand. But anyway, if you think about Amazon's market capitalization

• 29:23Scott Galloway?

  now, do you think that there's is their biggest big new thing? Do you think it's going to be healthcare? Do you think it's going to be more around media? What do you think is the next kind of quote unquote, big, big thing for Amazon?

• 29:40Speaker 03

  Right. Interesting. There's a couple to choose from. You selected two of them. I would put supermarkets and the opportunity of physical retail into that.

• 29:49Scott Galloway?

  Supermarkets?

• 29:50Speaker 03

  Yeah, they're stamping out these Amazon Fresh supermarkets, a brand independent from Whole Foods. So wide selection, no, no organic, you know, sub selection. And then they're using the go store technology to, you know, the cameras in the ceiling and the weights in the shelves to to allow people to walk out without waiting in line. And whether you think that's a differentiator or not, I expect that we're going to start seeing Amazon supermarkets inside every major shopping retail center.

• 30:21Scott Galloway?

  Do you think they'll get their acquisition or they'll just build their own?

• 30:23Speaker 03

  Well, they made an acquisition with Whole Foods and they're growing alongside it in much the same way that they did with with Zappos and diapers.com. You know, they buy some of these franchises. They learn from them. They allow their entrepreneur founders to run them independently. And then Amazon just goes and does what it's going to going to do. So in terms of the sheer, well, they're so, I mean, they're selecting very big markets, right? Healthcare is multiple trillions of dollars, satellite internet access with their, their, their constellation of satellites to compete with SpaceX's Starlink. It's still on the drawing board, but could be a big opportunity if they ever are able to launch those. And then, and then the opportunity of physical retail, I

• 31:06Speaker 03

  would put as probably the big three with supermarkets, maybe being the nearest and most realistic one.

• 31:13Scott Galloway?

  And do you think that they go into, I mean, you see, what do you think is the likelihood? I've been talking this for a while and every year I get it wrong. What do you think is the likelihood that they'll prophylactically spin a unit to try and stave off antitrust?

• 31:27Speaker 03

  I remember, I remember those predictions. I don't, I don't.

• 31:31Scott Galloway?

  At some point, I'll be right back. At some point, 2085, I told you.

• 31:36Speaker 03

  I don't see them doing that in the same way that I don't see Amazon, you know, giving it, giving a dividend or buying back stock. They don't, Bezos doesn't seem to go in for that kind of financial engineering and he gets a lot of benefit, I think, some very subtle benefits from having the companies conjoined. So, Amazon Retail pays wholesale rates for AWS. AWS has a first beta customer and that for every new AWS service that it introduces that brings that service immediately up to scale, which is of course, Amazon Retail.

• 32:17Speaker 03

  Alexa is basically a consumer facing application that sits on AWS servers. There's lots of ways in which those, those companies nourish each other and, you know, they draw from the same talent pool, they have the same cultural norms. And, and look, and there's probably a personal reason too, which is Bezos' empire building and gets, and probably, you know, draws, draws a lot of satisfaction from having all those units conjoined, for having the relationships between them kind of obscured and for drawing a lot of small connections between, between the businesses.

• 32:58Scott Galloway?

  We'll be right back.

• 33:06Scott Galloway?

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• 33:51Scott Galloway?

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• 34:13Speaker 04

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• 34:50Scott Galloway?

  Let's talk about the MGM UA, or I guess it's just MGM acquisition. So $8.5 billion. It strikes me that there was one midlife guy going through a midlife crisis who overpaid for it 10 years ago and managed to find another midlife crisis guy to pay more for it. Do you think that was a good purchase, or did they overpay?

• 35:14Speaker 03

  Well, it seems like the market thinks Amazon overpaid, but Amazon has the resources.

• 35:23Scott Galloway?

  Can't overpay, right?

• 35:24Speaker 03

  Right, can't overpay. But here's, what I'll say is that I think Amazon, as usual, has a lot of ways to win, a lot of ways to monetize those assets. So, the biggest reason that they made the acquisition, the stated reason, was to acquire the intellectual property, the James Bond franchise, the Rocky franchise, Legally Blonde, Robocop, et cetera, which they can spin in a million different directions. But Amazon also has IMDB TV and a growing advertising business, and they can dump 17,000 hours of MGM TV programming into these streaming services and advertise against it as they're going out to buy NFL programming and Premier League soccer and Major League Baseball. And so there's a growing ad business there.

• 36:08Speaker 03

  And increasingly, there's Prime, which started as a two-day shipping service and now has gradually moved into this package of content benefits, where people pay $119 a year for what they don't know, but it turns them into big Amazon customers. So, they have a lot of ways to monetize the asset, and there will be more as MGM kind of gets back some of the rights to that content over the years. And from Amazon's perspective, probably well worth the investment.

• 36:36Scott Galloway?

  So, I want to switch to Brad Stone. I want to get to know the real Brad Stone. So, my sense is you have a really interesting career. You're a reporter at Bloomberg, you write books that do well, and I've always said that writing a book was the worst-paying thing I ever did and the most important thing I ever did professionally. That it was really, it kind of changed the trajectory and, if you will, my brand. And I get the sense it kind of did the same thing for you. You are a well-respected business or tech reporter, but the everything store kind of,

• 37:21Scott Galloway?

  and I felt like it just took you to another level. And I don't mean to put words in your mouth. Do you think that's a, I'm trying to get to, I think journalists, if they're serious about getting to the next level, I think you got to write a book. Your thoughts?

• 37:32Speaker 03

  That there are different models and to some it's a calling card for larger opportunities in the world of public speaking. And I did a little bit of that and never found it, you know, for sort of my forte. There was probably a moment there where I was at the, you know, the Hotel Marriott in Toronto, getting ready to speak to the Canadian Association of Hardware Makers about Amazon.

• 37:53Scott Galloway?

  I think I went after you.

• 37:54Speaker 03

  Exactly. I'm making that up. But it was something like that. And then I thought, you know, what am I, what am I doing? And then, you know, eventually wrote a book about Uber and Airbnb and now, and now the Amazon book. So I'm grateful for the opportunity, but that's kind of what I love. And I think there's a, yeah, the sort of another kind of school of thought. And look, this is probably the more unprofitable path, but it's the book writing for the sake of book writing. And, you know, with all the accoutrements of it, the public speaking and et cetera is being, as being more of an obligation than a financial opportunity. But, um, yeah, I mean, I'm writing the books because I get, I get weirdly enraptured

• 38:36Speaker 03

  with a subject and I like to go down the rabbit hole. And when I don't have that, that's when my existential dread kind of creeps in. I like having a project.

• 38:45Scott Galloway?

  And if you were gonna write, well, what is your next book? If you've written two on Amazon, what is kind of, what is next?

• 38:51Speaker 03

  I'm in recovery now. I just need to take some time and, and, well, I'm still talking about this book quite a bit. And then, and then figure out what, what's out there that inspires me, you know, the reason I did this was because there was a, there was this whole new chapter, a story of transformation of Amazon, of Bezos. So, you know, if I can find something that's half as interesting. What, what generally interests, interests me are changes in transportation and new transportation technologies. And then any climate. I mean, I know that that's a, obviously a lot, a lot has been written and there are many great books about climate change and climate technologies. But that seems to me

• 39:30Speaker 03

  like an interesting avenue. If you could find something really special. Bezos told me at a, at a press conference and I asked him if he was really sanguine about, about climate change and our ability to get out of it. And he, he waxed poetically for, for a minute or so about how he thought that we can invent our way out of any box. And I would like to see that. I would like to see the invention that helps to address the problem of climate change, if it exists.

• 39:58Scott Galloway?

  All right, lightning round. First thing, first things that pop in your head. Best pieces of media you've consumed recently?

• 40:07Speaker 03

  This is not, I've already paused too long for the best thing that has popped into my head. This, I get a ton of pleasure from reading the Sunday New York Times.

• 40:17Scott Galloway?

  The Sunday New York Times?

• 40:18Speaker 03

  I just sit there with a cup of coffee as the kids are asleep. Hard copy, get it every week and just read it cover to cover and it all, it just feels like a really nourishing weekly ritual.

• 40:29Scott Galloway?

  How old are your kids, Brad?

• 40:30Speaker 03

  I have three teenage daughters, so they're, they're sleeping in.

• 40:34Scott Galloway?

  Advice to dads of teenage daughters?

• 40:39Speaker 03

  Enjoy the early years, have fun, and don't take the eye rolls too seriously.

• 40:45Scott Galloway?

  Advice on being a good husband?

• 40:50Scott Galloway?

  Did I ask the wrong guy?

• 40:52Speaker 03

  No, not at all. Advice on being a good husband.

• 40:58Speaker 03

  Leave your, leave your work in, in the office and enjoy your time together.

• 41:03Scott Galloway?

  Best piece of advice or a piece of advice that you've held on to that stood the test of time?

• 41:10Speaker 03

  Stephen Levy, the, the tech journalist told me when I was writing my first book, find the straight line. And what he, what he meant was, real world business stories are messy. Things have over, events overlap, characters come in, they leave. The facts are messy. Find the straight line, find the narrative that runs throughout and, and tell the story in the way that your readers will want to consume it. And I feel like I've had that top of mind in every book project I've embarked on and it's helped me quite a bit.

• 41:40Scott Galloway?

  Brad Stone is the Senior Executive Editor for Global Technology at Bloomberg News and the author of four books, including his latest, Amazon Unbound: Jeff Bezos and the Invention of a Global Empire. Over the last 10 years, as a writer for Bloomberg Businessweek, he's authored over two dozen cover stories on companies, including Apple, Google, Amazon, SoftBank, Twitter, Facebook, and the Chinese internet juggernauts Didi, Tencent, and Baidu. He's a regular contributor to Bloomberg's technology newsletter, Fully Charged, and to the daily Bloomberg TV news program, Bloomberg Technology, and joins us from his home in the Bay Area. Brad, thanks for your time and stay safe.

• 42:16Speaker 03

  Thank you, Scott.

• 42:27Scott Galloway?

  So I watched the final episode, as many of you did, of Mayor of Easttown, and I was just so moved by it. And a couple of things struck me. One is that HBO, there's something in the water. There's something really powerful about the culture of HBO. We look at, talk about companies from the outside, and we talk about their investments, or the capital structure, the leadership, the CEO, but it's difficult to ascertain what is going on with the culture and also how powerful it is. And that is HBO has clearly maintained a culture where they are able to produce superior product on less money. If you look at the content budget for HBO and the amount of Emmys they win, it's approximately $70 million per Emmy. Or put another way, they basically invest $70 million bucks per Emmy. Amazon takes about $300 or $350 million,

• 43:11Scott Galloway?

  which means the culture at HBO is consistently able to produce better content for less. They are punching above their weight class. Can that last forever? I don't know, but it's still there. And I think this was a great example. But more than that, more than that, I think this was really a story about what is the most enduring and powerful relationship. And that is the bond between mother and child. In this instance, specifically between mother and son. If you think about the really enduring relationships in your life, the singular relationship, most people will say it's the relationship they have with their mother because of the little investments she made every day. The key to success, the key to success for people is a lot of things.

• 43:53Scott Galloway?

  It's a soup and a chemistry and amalgam of where they're born, their education, how much income their family has, their grit, their opportunities, their hard work, their character. But it's all couched, it's all set against the context of one thing. And that one thing is, do you have someone in your life that is irrationally passionate about your well-being? The distinction of what a jerk you are as a 15-year-old, distinction of being an obnoxious eight-year-old, distinction of letting them down at the age of 22, or not reciprocating a fraction of the love or the affection they have demonstrated for you, they continue to be irrationally passionate about your well-being.

• 44:36Scott Galloway?

  That is the secret sauce in success. The secret sauce, in my view, of being a man, of being a man, is one, figuring out a way to provide the resources and the love and the empathy. To show effective irrational passion for your family's well-being. And then, in my view, what it means to be a real man or a real woman is when you get to a point in your life where you can show that same irrational passion for the well-being of a child that isn't yours. When I think about my mom, you know, I think about, okay, instinctively, she had no choice. She was just irrationally passionate about my well-being. From the moment I was born, she had no choice.

• 45:20Scott Galloway?

  But I also think about my dad's third wife, my stepmom, Linda, and I think about the fact that she became irrationally passionate around my well-being. I think that's what it means to be a wonderful man or a wonderful woman, and that is you can garner the resources and you collide those resources with the sheer character, the sheer love, the sheer empathy to show an irrational passion for someone else's well-being. That's what it means to be a man. That's what it means to be a woman. Are you in a position to, after you're the people closest to you are taking care of you, are you in a position to show or really demonstrate concern for the well-being of someone outside of your family? Our producers are Caroline Shager and Drew Burrows. Claire Miller is our assistant producer. If you like what you heard, please follow, download, and subscribe.

• 46:04Scott Galloway?

  By the way, we are on the heels of my other podcast pivot. We're coming for your bitch ass pivot. Anyways, muchas gracias. Thank you for listening to the Prop G Show from the Vox Media Podcast Network. We will catch you next week on Monday and Thursday.

• 46:29Scott Galloway?

  Well, I feel, I want to apologize to Jeff Bezos. I've been saying, I can't believe this guy would be that stupid. It doesn't sound like he was. So I need to correct the record. I did not realize that they're in fact weren't dick pics.

• 46:43Speaker 03

  Well, and let's be clear, they might have been exchanging such intimate photos. We don't know, but that is not what Michael Sanchez delivered to the National Enquirer, which is just one of the little, tiny, little, too-good-to-be-true tidbits in this whole sordid saga.

• 47:02Speaker 05

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