Pod Insights The Prof G Pod with Scott Galloway Prof G Markets: Fox’s Stock After Tucker Carlson, J&J’s IPO Roadshow, and Google and Meta’s Earnings About this episode This week on Prof G Markets, Scott shares his thoughts on why Fox doesn’t need Tucker Carlson, even if the markets reacted poorly to his departure. He then sheds light on how companies prepare for IPOs, and takes a look at Google and Meta’s first quarter results, which seem promising for digital advertising. Finally, in this week’s Unpack, we take a look at the innovator's dilemma and why it’s punishing the king of search.
Learn more about your ad choices. Visit podcastchoices.com/adchoices
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:01 Scott Galloway? Support for the show comes from Northwest Registered Agent. Your business identity is everything that makes your business legitimate and professional. With Northwest Registered Agent, you don't just form a business, you start a complete foundation built for privacy, credibility, and growth. That includes registered agent service, a business address, operating agreement, domain, website, professional email, phone number, and built-in privacy. In other words, your home address, personal email, and phone number stay private. Don't pay hundreds or thousands of dollars for what you can get from Northwest for free. Visit northwestregisteredagent.com/profgfree and start using free resources to build something amazing. Get more with Northwest Registered Agent at northwestregisteredagent.com/profgfree.
0:48 Speaker 01 Your heart can tell you a lot about your health. Apple Watch Series 12 measures your heart rate every five seconds with the most accurate heart rate sensing in wearable. So your vitals app, now with heart rate variability, can tell you when something is off. And your readiness score can let you know when to rest and when to push. Hear the story in every heartbeat with Apple Watch Series 12. The features described are for wellness purposes only and not for medical use. iPhone 11 or later required. Based on Apple conducted study of heart rate accuracy, August 2026. Visit apple.com/aplewatchseries12.
1:18 Scott Galloway? This week's number, $9 million. That's the record sum of college scholarships a New Orleans high school student received from 125 institutions. The student, who applied to more than 200 schools, has a 4.98 GPA, is fluent in Spanish, holds leadership positions in the National Honor Society, and two years into high school started earning college credits at a nearby university. True story, the hottest girl from my high school came into my work today, and I don't like to brag, but we made out. That's the good news. The bad news, I work at the morgue.
2:03 Scott Galloway? Welcome to Prop G Markets. That's right. That's why you come here. Today, we're discussing cable television, Johnson and Johnson's IPO roadshow, and earnings from Google and Meta. I am cracking myself up. Here with the news is Prop G Media Analyst Ed Elson. Ed, we experimented with AI today, and I thought it did an excellent job of AI-ing you, or I don't know, sounding like you.
2:30 Ed Elson? Really? I thought it did a terrible job. I sounded Australian. How did you find your voice?
2:34 Scott Galloway? I actually thought it was pretty good, although the AI rendering of me just looks so fucking old and ugly. Oh, wait, it wasn't a rendering. For the fans out there, we're trying to figure out how AI might leverage our IP, and we might do some translating to different languages with the pods, et cetera, and came to the conclusion that, well, it has a lot of potential for us right now. We haven't figured out how to deploy it. What was your general thoughts and reactions, Ed?
3:01 Ed Elson? I think the best thing that we saw was the video editing clip AI, which basically you just feed in our content, and then it finds short little clips that you can post to TikTok and Instagram reels, which we'll be talking about in a moment. But I thought that was probably the best implementation. The rest of it feels a little bit gimmicky, I'd say, at the moment.
3:23 Scott Galloway? Yeah, agreed.
3:24 Ed Elson? Does anyone really want to listen to Scott Galloway AI just reading the news? I feel like, I thought Patrick, our video editor, made a good point, which is that I think people come to us for analysis, not just to hear the news. I mean, you can go to any news site for that. And unfortunately, I don't think AI is at a point yet where it can provide substantive analysis. And if it does, It's unlikely you're really going to trust it because it just gets so much wrong.
3:51 Scott Galloway? Yeah, it definitely feels like it's totally void of whenever I'm experimenting with it a lot, it comes back totally void of any creativity or insight. As a matter of fact, I don't know if you saw, but on Wednesdays, Ed and Jason, our editor in chief, send me a draft of our newsletter, or at least key components of it. And I start editing and writing other parts of it. And the biggest insult I could come up with, because I thought it was especially weak this week, was this feels like AI wrote it.
4:17 Ed Elson? It said, yeah, vanilla slash boring slash nothing. This, this sounds like it was written by an AI.
4:23 Scott Galloway? Yeah. And it's what's interesting is I think the name generative AI is a bit of a misnomer. I think if it were more honest, you'd call it productivity AI, because if you try and generate something original with AI, I don't think it does a job. But if you give it good content, as you referenced with this video, it can chop it up and disperse it and really elegantly zero in on good stuff. Anyways, enough of that, enough of our sharing our industry secrets here. Break down the news.
4:50 Ed Elson? Let's start with our weekly review of market vitals.
5:00 Ed Elson? The S and P 500 fell through most of the week before rallying on Thursday. The dollar also fell. Bitcoin remained below 30,000 and the yield on 10 year treasuries fell the most since March. Shifting to the headlines, LVMH became the first European company to reach a $500 billion market capitalization, and that's thanks to strong sales in China as well as a strengthening euro. Disney is suing Florida Governor Ron DeSantis for voiding a deal that gives the company control over the design and construction of its theme park properties. Disney is alleging that DeSantis is waging a, quote, targeted campaign of government retaliation for opposing
5:42 Ed Elson? his law that restricts discussions of sexual orientation and gender identity in schools.
5:48 Ed Elson? First Republic earnings showed the bank lost more than $100 billion in deposits last quarter. The company said it's exploring a sale of up to $100 billion in assets to support its balance sheet. And shares hit a record low after the report, down around 95% year to date. And finally, Microsoft beat on earnings with cloud revenue up 16%. Shares popped 7% after the report. A day later, though, the UK antitrust regulator blocked Microsoft's $69 billion acquisition of gaming company Activision Blizzard. That should make it easier for US regulators to do the same. Shares of Activision fell 11% on the news, though Microsoft continued to gain on its strong earnings. Scott, a lot there. Where do you want to start?
6:33 Scott Galloway? Well, let's go in reverse order. So it's interesting that the market doesn't mind that Microsoft's acquisition of Activision is slowly falling apart. And that is because, as what the modern points this out, the professor of finance at NYU Stern, that two thirds of acquisitions don't work. Two thirds of acquisitions end up destroying shareholder value. The temptation to spend a bunch of money and overnight just add water, have a big new business and have it be accretive is so intoxicating that the majority of CEOs talk themselves into acquisitions that usually they overpay for, or the synergies they describe never materialize. And they also have a bias towards doing bad acquisitions because, well, over the long haul, it might take the
7:18 Scott Galloway? stock price down. CEOs are compensated based on a compensation consultant comes to the board and says, based on the size of the company and the type of the company, this is the range of compensation. So the bigger your top line revenue as a company, the bigger your company, the greater your compensation or expectation or recommended compensation. But Microsoft, you could argue, I think, has probably been, maybe with the exception of Apple, the best managed company over the last decade. Satya Nadella has just built this, the ultimate recurring revenue relationship. They continue to be. One of the three most valuable companies in the world. First Republic. It does feel like this is ring fenced a little bit. That this is sort of the last vestige of the bad news. At least it feels that way.
8:01 Scott Galloway? Supposedly, the next wave of bad news is banks that have a lot of commercial real estate loans. But analysts are trying to parse through which commercial real estate is the toxic kind, the office space versus, you know, malls and things like that. Or, you know, there's all kinds of different commercial real estate, whether it's a car wash or what have you. The Disney versus Ron DeSantis, Governor DeSantis thing is this is a bridge too far. This is, this will go down in history, in my opinion, as the beginning of the end of his presidential run. Because effectively, the GOP has always said, we are business friendly. That if a business is allowed to thrive and succeed and the private sector is given, you know, feel to run, that it can generate top line revenues and taxes that pay for your,
8:44 Scott Galloway? you know, you Democrats, social programs and our Navy. And it's just the private sector is where true capitalism lies. So they, they err on the side of being pro-business. And this just feels anti-business. He's going after the largest private employer, kind of one of the premier companies in the world, much less Florida. It also feels mendictive. You're supposed to, when you're elected to office, let bygones be bygones and pass laws that are good for the Commonwealth, but not engage in retribution and take out your political animosity or use the power of the, the office to attack your political adversaries. And this is what this feels like. It just feels as if, okay, I don't like Disney.
9:27 Scott Galloway? They didn't support one of my narratives, political narratives, so I'm going to go after them. And he fucked with the wrong cowboy, specifically the mouse. And that is Bob Iger is much more disciplined. I think Disney will be in Florida a lot longer than Governor DeSantis. And Nikki Haley, who's also a candidate for president or for the GOP nomination, kind of summarized it and said that we welcome Disney to South Carolina. And while we are not woke, we are not sanctimonious. And so I am thrilled to see this guy stick his head up his ass. I think it's, it's just good for Florida, good for America, and good for the planet. Let's move on to LVMH. First European company to reach 500 billion. The
10:07 Scott Galloway? master of self-expressive benefit and perceived value is LVMH. They take $300 worth of leather and artisanship and turn it into a $5,000 bag. And when you create artisanship and give people the impression that no, you can't have that Birkin bag, you have to order, there's just too few of those $12,000 bags for you to actually go into a store and buy one, we become obsessed with them. And so to create the illusion of scarcity, it's such an incredible skill that you can create a monstrously profitable company. And there's a lesson here. There's a lesson here. And that is the sexiest word in the English language is no. And the way I would apply that to our business is, and we try to be transparent
10:50 Scott Galloway? here at Prop G, one of the ways we monetize all the work we do is through speaking engagements, mostly where the national cotton growers, or I was at Adobe last week. The reason why I get such batshit crazy fees is because I say no to 90% of them. And I position myself as a luxury brand. And I have two prices, either zero or out of control batshit crazy price. Zero's for the nonprofits or people I know. And the out of control crazy price is meant to effectively say no to 90, 95% of the people who inquire about our speaking. And it creates this illusion of scarcity and drives up the margin and perceived value
11:30 Scott Galloway? of an angry professor with ED spitting expectorates and platitudes in between a speaker talking about, you know, how they climbed Mount Everest and found God or some bullshit. Anyways, scarcity is really something you want to understand. Because if you can create scarcity in your personal life, your professional life, you always want to leave a party a little bit early. You don't ever want to be the person that sticks around too long. You want to create a certain level of scarcity for yourself around your professional and personal brand. And I know that sounds a little bit obnoxious, but you want to be the person that leaves a little bit early. So, yeah, a lot of news, but most importantly, most importantly, when you're talking about Ron DeSantis and Bob Iger, one person would be a fantastic president.
12:15 Scott Galloway? The other is Governor DeSantis.
12:17 Speaker 03 That was good. No generative AI, Prop G is going to come up with insight like that.
12:23 Ed Elson? We'll be right back after the break with a look at what Tucker Carlson's departure from Fox News means for the cable TV market. Stay with us.
12:41 Scott Galloway? Support for the show comes from Nutraful, the number one dermatologist recommended hair growth supplement brand used by over one and a half million people. With age comes knowledge, patience, and for some, hair loss. Didn't say it was all good things. And for those who want to do something about it, there's Nutraful. Nutraful has formulas built for men at different life stages. They have Nutraful Men for Guys Age 18 to 49, plus the new Nutraful Men 50 and Older. That's the first product of its kind specifically for men over 50. You can now address the key root causes of thinning wherever you are in life. Grow visibly thicker, fuller hair in just three to six months. Start Nutraful today and make the hat optional. Visit nutraful.com and enter promo code PROP G for $10 off your first month's subscription and free shipping.
13:26 Scott Galloway? Find out why Nutraful is the best-selling hair growth supplement brand at nutraful.com, spelled N-U-T-R-A-F-O-L dot com, promo code PROP G. That's nutraful.com promo code PROP G. Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch up when audit season comes around again. Vanta works differently. The regentic trust platform is built to scale with you, not slow you down.
14:10 Scott Galloway? With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof? Over 16,000 fast-growing companies like Ramp, Ryder, and Harvey save time and resources while scaling fast with Vanta. Learn more at vanta.com/profg and get $1,000 off. That's spelled V-A-N-T-A dot com slash profg for $1,000 off.
14:55 Ed Elson? We're back with Prof G Markets. Last week marked a historic moment for cable news. Don Lemon was fired from CNN. A few hours before that, Fox News announced Tucker Carlson was out. That came just a week after Fox News agreed to pay $787 million defamation settlement to Dominion Voting Systems after it falsely accused the company of rigging the presidential election. Meanwhile, NBC Universal fired their CEO Jeff Shell after a harassment complaint, and ABC News fired Nate Silver, the founder of 538. Scott, that's just a lot of stuff going on in cable. What is your macro take here?
15:33 Scott Galloway? Well, on the cable side, I think it's really interesting. And that is, everyone zeroes in on why Don Lemon and Tucker Carlson were fired. And I think it... I wonder if it's an accident that the most partisan of these partisan networks was fired the same day. And that is, Don Lemon is very partisan, and Tucker Carlson defines the term partisan. And it just so happens that the most extreme anchor on both networks was fired within 48 hours. Now, there wasn't any coordination here. The firms and their executives hate each other. But also, this is really about structural decline in the ad-supported market. While Fox grew, it didn't grow a lot. And CNN is actually in decline. Bad behavior or something they don't agree with, and good times, they overlook it.
16:17 Scott Galloway? When things are not good, people are looking for reasons to fire you, especially when you're probably making a shit ton of money. And also... The real lesson here is that people will always inflate the ratio of their importance to the platforms. Shelley Long decided she was too big for Cheers, as did McLean Stevens for MASH. They decided they were going to be big movie stars, right? Money Pit, True Beverly Hills, right? That's, that's what Shelley Long went on to. And this happens every day in the corporate world, and that is someone is killing it at Goldman or at McKinsey or KKR, and they think, wow, I'm gonna bust out and I'm gonna be huge. And what they realize is they underestimate how powerful the platform was.
16:56 Scott Galloway? Now, query me this, what former anchor at Fox has gone on to do anything? Is it Glenn Beck? Is it Megyn Kelly? Is it Bill O'Reilly? I mean, who is it? Who's got it? Lou Dobbs? Anyone hear from Lou? So these platforms are incredibly powerful, and the Murdochs, Rupert Ann Loughlin, know this, and they just decided, we're sick of this guy's shit, I think, and we don't need to put up with it.
17:23 Ed Elson? Here's an interesting thing that happened to the, to Fox Corporation's stock. So when the Dominion lawsuit was announced, or when the settlement was announced, the stock barely moved. After Tucker left, Fox lost around $700 million in market value. It's since stabilized, but it's down around 4% since that announcement. So in other words, the market believes that Tucker is worth around $700 million to this company. My question to you is, is he that valuable?
17:54 Scott Galloway? Well, what's interesting is how the market perceives bad news, and that is, they see some bad news is different than other bad news, and that is, a settlement of $800 million, they don't mind as much, because while it's a lot of money, it's the known. All right, we, we have the cash, we have three or four billion, so 20% of our cash out the door, and then it's done. We're over. We've absorbed it. The market knows what happened there. We're back in action. Losing your, your premier host, the 8 p.m. hour, creates insecurity. The market doesn't know if they're going to be able to replicate this sort of, I'm a racist but 8 p.m. hour with Tucker Carlson. And that is, that was good. That was good. You're gonna get that in a few minutes. I got it.
18:37 Scott Galloway? That's good. Anyways, but the market has a difficult, a more difficult time processing that. There's more unknown. The market hates unknowns. And so it would rather pay out 800 million and have it be done and we're back in business than not know whether or not Fox is going to be able to bring the same type of success at APM. Our editor in chief, Jason Stavers, pointed out something really interesting, and that is, he doesn't think it's going to be as big an economic drain as some people might think because Tucker was so controversial, i.e. disliked by so many corporations and people, that a lot of advertisers would not advertise on his show. So Jason's thesis is that it won't be as big a revenue hit. I'm saying that I think that APM time slot on that platform is more important than Tucker,
19:22 Scott Galloway? and they're going to be able to build somebody's brand. Maybe they won't be as successful as Tucker, but it's about the APM slot and it's about the platform Fox more than it is about the individual. So I think they're going to be just fine, and I can bet that everybody is putting on their best dress and saying, hey, wouldn't I, wouldn't I look good in that APM hour slot?
19:43 Ed Elson? And just a final piece of data here, on, we're talking about Fox's advertisers. In 2021, the biggest advertisers that were not owned by Fox Corporation on Fox News were Balance of Nature, which is a supplement brand I've never heard of.
19:58 Scott Galloway? Does it keep you regular? Because maybe I should look into that. Seriously, you get to my age, you know, you just, you really look forward to the sit down. I'm sorry, continue with your data about Fox.
20:09 Scott Galloway? Go ahead.
20:11 Ed Elson? A veteran mortgage lender, and finally, MyPillow, which is a pillow company. So that's your advertising quality.
20:20 Scott Galloway? Yeah, there you go.
20:30 Ed Elson? Johnson & Johnson is preparing to spin off its consumer unit in what could be the biggest IPO this year. J&J is looking to raise more than $3.5 billion in the public markets at an almost $40 billion valuation. The new company will be called Kenview and will offer well-known brands such as Tylenol, Band-Aids, and Johnson's Baby Powder. Those products accounted for 16% of J&J's sales last year. The Kenview Roadshow kicked off last week. So Scott, we've talked about spinoffs before. As you've explained, the thinking behind a spin is that the assets being spun would get a higher multiple as a standalone company versus being bundled together and priced with the rest of the larger corporation. But I want to talk about what it means to go on a roadshow.
21:15 Ed Elson? There's no official listing date yet, but Kenview has set the target price. They've found their underwriters in Goldman Sachs and JP Morgan. Take us through what things look like from here until the official IPO.
21:27 Scott Galloway? I've only been involved in one roadshow, and that was when a company I founded called Red Envelope went public. But I've sat in a lot of presentations. A roadshow is essentially the bankers and senior management put together a deck and a presentation and go meet with institutional investors, try and drum up interest such that the night before the IPO, when it's pricing, they come out with a price and then the institutional investors call and say, "We want 10 million shares." And ideally, you want the offering to be oversubscribed such that there's a small bump and everybody makes money. Now, you don't want it to double, right? When Airbnb went public, it priced at 68. It came out, I think, at 150 bucks, which meant that the bankers, Goldman and Morgan Stanley, left a lot of money on the
22:07 Scott Galloway? table. And that is Airbnb sold 10% or 20% of its shares for 0.5x of what they could have captured had it been priced to where the market was. You want a little bit of a bump, but not too much of a bump. Even worse is if the stock's first trade, where it's priced, it's priced at 20 bucks and it closes the first day at 15 or 18. I think Coinbase was a broken IPO. It's called a broken IPO. It creates a stench around the company that, oh, the market and the company, or the company and its investors fooled some initial institutions into buying this thing and it went down. And it creates sort of a stench around it. So it's not only a fundraising event.
22:48 Scott Galloway? It's a branding event, but the roadshow is essentially their storytelling where they go around the nation. I've actually helped a lot of CEOs on this initial kind of pitch, if you will, on the roadshow. And they're basically trying to say, this is the background of the company. This is the basic concept. This is the total addressable market. These are barriers of entry. This is why we're so unique. Here are the numbers. Look at how this all adds up to an incredible business. It's high margin, high growth. And they want to get everyone's greed glands going. Create the illusion of scarcity. We're not selling that many shares and hopefully get a really robust book such that they can strong arm the bankers into setting a high offering price. And there's always a kind of a bit of an arm wrestling over the company wants a higher offering price. The bankers want
23:31 Scott Galloway? a lower offering price to ensure they sell out and they make some money.
23:35 Ed Elson? Why, why, why does that? Yeah. Could you take us through why the bankers would want a lower price? Why does it matter that the shares sell out when they, when they go public?
23:42 Scott Galloway? Well, there's a couple of things. One, for a brief moment, I believe the investment banks actually are underwriting or holding on to the stock so they can get caught in a bad place if the stock goes way down. They have something called a green shoe where they actually have the right to sell more shares and make fees on it. If the stock goes up, everyone's happy. They then get a lot of follow on business in terms of wealth management or asset management. They get about between four and seven percent of the proceeds or a discount of four to seven percent on the stock when they take a public. So there's just fees everywhere and money everywhere if the stock goes up. And so they want to price it below market. But keep in mind, there's, that's what the existing shareholders, the management team and the private investors, the folks who invested when it was a private company, that's what they're selling the stock for. They're giving up the stock at
24:27 Scott Galloway? the price at whatever the investment bank price is at. It's the people who buy the stock who recognize the upside and also the existing shareholders. So it's a bit of a dance. The only learning here is that someone asked me at a conference, what skill would you want your kids to have? Do you want them to take Mandarin or computer science? And I said, neither of those. If I wanted to impart one skill on my sons that I think is enduring, it's storytelling. When Jeff Bezos went on his roadshow, I can tell you that within about three minutes, every person in the room wanted to buy stock in Amazon regardless of what the price was. Because you just listen to this guy and he has such a vision and he's so kind of calm. You just think this guy's going to make me a lot of money.
25:11 Scott Galloway? This guy's going to build an unbelievable company. In this instance, what might be interesting about this IPO is whether or not it will kind of summon the dead from what has been a literally winter, a long winter in the IPO market. The IPO market is effectively shut. This is more of a defensive stock. It's more enduring. It's not tech. People are going to want to own this name. Now, why are they doing it? When you have a conglomerate, which is what J&J is right now, and that is they have different types of businesses all wrapped into one stock. And I believe J&J is one of the most valuable companies in the world. The market doesn't like it. It doesn't want to take the time to try and evaluate every business. And it finds the shittiest business, the lowest growth business, and it assigns that multiple to the entire business.
25:56 Scott Galloway? So this new spun unit, Canview, might be higher growth, might be in a sector that the markets are more excited about. And as a pure play of the consumer unit, might trade at a higher multiple. Or, or the core business, the non-consumer business of J&J, might be getting weighed down by the consumer unit that's not growing as fast. This is what people call the good bank, bad bank. And that is separate assets, so there's a cleaner story. And when there's cleaner stories, the good assets will trade at a higher multiple, the bad assets will trade at a lower multiple, but when you mix the two, it all trades at a bad multiple.
26:36 Scott Galloway? So the disarticulation of assets, a cleaner story, is accretive to shareholders.
26:42 Ed Elson? Okay, we'll be right back after a quick break with a look at earnings from Big Tech.
27:00 Scott Galloway? Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. Their regentic trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?
27:45 Scott Galloway? Over 16,000 fast-growing companies like Ramp, Ryder, and Harvey save time and resources while scaling fast with Vanta. Learn more at vanta.com/profg and get $1,000 off. That's spelled V-A-N-T-A dot com slash profg for $1,000 off.
28:08 Speaker 04 This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an Ultra. Because it's not just a superior-like beer, it's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser-Busch InBev Michelob Ultra Beer, St. Louis, Missouri.
28:42 Ed Elson? We're back with Prof G Markets. Google and Meta both delivered strong earnings reports, beating expectations and reigniting some hope for the digital advertising industry. Google's search ad revenue returned to growth after slipping in the previous quarter. Total revenue came in at $69.8 billion versus $68.9 billion expected. And Meta's revenue, which had Decline for three straight quarters is also growing again. It's up three percent year over year. Google and Meta shares rose five percent and get this 15% respectively. So Scott, just a few months ago, the digital ad industry was in extremely rough shape. It's something we wrote about. This seems like a dramatic and unanimous turnaround here.
29:27 Ed Elson? What do you think has changed in digital advertising?
29:30 Scott Galloway? This is really interesting. So, you know, the growth is okay here. It's nothing dramatic. I think Google is looking for a story here because I would imagine there's a pretty big overhang from sort of their. All of a sudden, they seem to be behind in AI. But nonetheless, what's more striking is Meta's earnings. And effectively Meta has doubled in the last six months, but it's not back to where it was 12 months ago. And what you have is a couple of things. One, they have embraced the business strategy of 2023, and that's layoffs or efficiencies. They've now laid off a significant number of their staff and no one misses them so far.
30:07 Scott Galloway? And two, the market now believes that the zuck is waking up from his big gulp grande vente ayahuasca hallucination of the metaverse. And that all of that will flow to the bottom line. They think that there's probably a more sober Mark Zuckerberg in store for the company. And then finally, I think that all of the tumult or distraction at TikTok is really helping reels. The thing that was super impressive was just how on fire their short form video reels is. And I find even just, and this is anecdotal evidence, but it was confirmed in the earnings report. I'm watching a lot more reels just because the interface, they control so much interface because people are on Instagram so much.
30:50 Scott Galloway? The biggest winner from a hamstrung or a punished TikTok hands down will be Meta.
30:56 Ed Elson? You mentioned reels. Apparently Instagram usage is up 24% and that's all thanks to reels, according to Meta.
31:05 Ed Elson? We were talking a while back about how the Apple privacy changes have basically killed Meta and that how TikTok is competing and people aren't spending enough time on Meta. Something has happened in the past few months. One, Reels is working, but the fact that Facebook Ads are now working again. I was talking to a friend who runs an e-commerce business and he was telling me that after the Apple privacy change, the whole thing just got crushed. Customer acquisition costs went up, nothing was working. And then he said in the past, basically two or three months, his CAC is way down and suddenly Facebook Ads are working again. And apparently this is unanimous across e-commerce businesses. Facebook said that,
31:48 Ed Elson? you know, they're using AI to improve their ads. I don't fully understand what that means, but something has happened here. Facebook has cracked this.
31:57 Scott Galloway? It does appear that Meta has figured out a workaround. Its impressions increased 26% and its ad prices declined 17%, which means that from a advertiser standpoint, Meta is now a better deal, right? The management at Meta, they're mendacious fucks. They're bad for the world, but they are very smart mendacious fucks. And they're good managers and really good business people. It appears as if they are lowering costs while increasing revenues and they are getting Reels working. TikTok might become the new Snap and that is the R and D lab for Meta for the last 10 years has been Snap. Snap would innovate. Meta would say, okay, we'll take that and then monetize it across a broader customer set. And I wonder,
32:42 Scott Galloway? I would imagine that there's a lot of people poring over everything about TikTok's product and trying to incorporate it into Reels and it appears it's working, but there's just no doubt about it. This is a really well-run company that continues to levy damage on the world. Anyways.
32:59 Ed Elson? So Meta and Google delivered strong earnings, but it seems their duopoly over the digital ad space might actually be weakening. They're expected to bring in less than half of all US digital advertising this year for the first time since 2014. But this isn't the only fight happening in tech. The newest fight is in AI, specifically AI's threat to Google Search. The classic model of how disruptive technologies take down incumbents is The Innovator's Dilemma, based on a book by Harvard Business School professor Clay Christensen. This week on The Unpack, our editor in chief Jason Stavas takes a look at The Innovator's Dilemma and how it might affect Google.
33:43 Speaker 03 Business school professors are constantly putting out models and frameworks, and most of them fade pretty quickly. But The Innovator's Dilemma was published in 1997, and it's pretty much a permanent part of our intellectual landscape. Christensen's main insight was that dominant companies don't stumble because they make a mistake or do something wrong. They lose their dominant position because they do everything right. So if you look at Google, Google is the dominant search company. They have 90% market share. But what's happening right now is ChatGPT and Bing Chat and startups like Neva are using AI to challenge Google's supremacy. And what everyone's trying to understand is will the dominant company be taken down?
34:28 Speaker 03 What Christensen pointed out about market share dominant companies is that they tend to focus on their largest customers, their largest deals, and try to deliver the highest quality product that they can. And it works for quite a long time. And it's not that dominant companies aren't innovative, right? So if you look at Google, we are a long way from the 10 Blue Links era that Google rose to prominence with in the early 2000s. And a lot of that, incidentally, is driven by artificial intelligence, right? So what Google has done is what smart, big companies do. They've poured a bunch of money into R and D, and they've incrementally improved their core product over the years with what Christensen called sustaining innovations. So Christensen drew a distinction between sustaining innovations,
35:13 Speaker 03 which take an existing product and make it better, largely for its existing customers, or in this case, users, and a disruptive innovation. And a disruptive innovation comes into the market typically at the bottom of the market. It's something that literally is not as good as the dominant paradigm, but has some reason that some portion of the market finds it attractive. Often, it's just cheaper. One of the classic examples is Kodak and digital photography. Kodak literally invented a lot of the technologies that underlie digital photography. But they were in the film business and the quality of a photograph that you could get using Kodak film was exceptional. Right? The quality of a photo that you got with early digital cameras was terrible.
35:56 Speaker 03 But for hobbyists and people with some very specific technical needs, there was a lot of value in being able to collect a lot of photographs and being able to store them digitally, that sort of thing. And so very slowly, a small market will percolate around this potentially disruptive innovation. But it's not one that's of any real profit or interest to the dominant company. And AI kind of looks like that, right? Right now, if you ask ChatGPT when the next showing of Avatar Way of Water is, who knows what you're gonna get, right? These systems, they make things up, they get things wrong. But that's okay if you're Bing, because nobody's expectations for Bing are frankly all that high. Google, on the other hand, has to work, right?
36:41 Speaker 03 We come to Google, we expect good links, good answers to our questions. So when they demoed Bard and Bard had all these problems and mistakes, everybody freaked out and was like, oh, Google can't do that. Outsider companies who don't have a vested interest in an existing search business, they can mess around with AI for months or years, slowly improving it, figuring out how to deploy it. And eventually, it may take off to become a much more useful way to get information on the internet. By the time that happens, the risk is that Google has not put in the time because they have good business reasons not to do that, and it's too late to catch up.
37:19 Scott Galloway? So we've been playing around with generative AI. And the thing that strikes me is one, that Google offers you, you know, 5,500 results in 0.0003 seconds that are somewhere between 0 and 98% correct. And the thing I've noticed about generative AI is it says, here's one answer that we think is kind of 70 or 80% correct. And it comes down to this notion that consumers don't want more choice. They want to be more confident in the choices presented. And I find it just easier and more comforting that I don't have to sort through all the crap, all the ad-supported stuff, and I can decide if I like it or not, or do another query. The other thing is, is it's a switch in business model.
38:02 Scott Galloway? It's from ad-supported to subscription, which I think is just naturally healthier and focuses more on the the end consumer as opposed to the advertiser. What do you think Google should do? How should they respond? And do you think that it's going to be the Empire Strikes Back here? Or are they going to continue to quote unquote disrupt Google?
38:23 Speaker 03 I think the primary thing Google has to do is diversify, which they're doing. I think they need to continue to expand their offering with things like Gmail and Docs and cloud services, so that if the 10-blue link and beyond era of search goes away, they've still got a lot of value to the customer and a lot of relationships with those customers. I think it would be a mistake for them to just throw the existing search structure out and go all in on Bard. I'm sure Google has, within the halls of Google, sufficient AI technology to be doing any number of amazing things right now. The challenge is that you have to do that in a way that makes a product for somebody that somebody's going to pay for.
39:06 Speaker 03 And Google's primary product is advertising space, right? It is bringing users to the internet and getting their attention and then reselling that attention to advertisers. And they can do that because they have the most compelling way to kind of on-ramp you to the internet. You have a question, you have something you're trying to find out, you're looking for interesting content, you go to Google and they take you there. And along the way, they have your attention. So somebody else has to figure out how to do that in a way that's significantly better than Google and do it in a way that makes money. But the key is that if you're Microsoft, you don't have to make very much money with Bing, because you can just give away Bing the same way that Google gives away Docs,
39:50 Speaker 03 which is a product that Microsoft charges for. Because it's a way to protect their core business. Or if you're a startup company that's getting into AI search, you're starting from zero. If you can build a $10 billion business that's got 50% margins, that's incredible and you'll make all your investors a ton of money. If Google goes from its current model to a $10 billion business, then everybody there gets fired. So it's unfairly tilted in a way towards companies that aren't Google, because frankly, they have a lot less to lose.
40:21 Ed Elson? Thanks, Jason. Scott, let's take a look at the week ahead. We'll be watching for the Fed's latest rate hike decision. And we'll also see earnings from Apple, Shopify, CVS, Warner Brothers Discovery, AMC, Uber and Lyft. Do you have any predictions for us?
40:38 Scott Galloway? Yeah, my prediction is around Tucker Carlson and Twitter. I think they're going to do something together. I think he's pissed off. And my impression of Twitter and Elon Musk is it's gone totally red pill. And Musk needs something. You know, first it was like, okay, it's going to use, he's going to incorporate AI or he's going to do payments. And it doesn't look like either of those have gotten any traction. Then it was blue check and the whole blue check fiasco is see above a fiasco. So I wonder if he called Tucker and said, hey, Tucky, do you want 2% of Twitter or $400 million or whatever it is? And you can come be just totally crazy. And we'll start a video product and you can do your show on Twitter. And it'll be a chance to stick up the middle finger to the Murdochs.
41:23 Scott Galloway? That type of polarization or polarizing content works on Twitter. And they now have less to lose because their revenues have gone from $5 billion to $2 billion. So it just feels like an arranged marriage that's going to turn out really well.
41:39 Ed Elson? Any shot of him running for office?
41:42 Scott Galloway? I don't know if he's going to run, but I think he'll start polling in the double digits right away. DeSantis will continue to fall. And I think a lot of people in the Republican Party are looking for a viable alternative to Trump, even if it's just for fun. Because if a failed casino owner and reality television star can be president, then why the hell couldn't Tucker Carlson?
42:04 Ed Elson? And by the way, why couldn't you?
42:05 Scott Galloway? That's right. Go on. A chicken in every pot, a Cialis in every medicine cabinet. Got away 2024. Go dog.
42:18 Scott Galloway? This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our executive producers are Jason Stavers and Catherine Dillon. Mia Silvero is our research lead and Drew Burrows is our technical director. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Wednesday for office hours and we'll be back with a fresh take on markets every Monday.
43:44 Speaker 05 We just moved into our new house and I didn't realize just how close we were to the neighbors. That's when my friend told me about blinds.com.
43:52 Speaker 06 Blinds.com isn't a medication, but it can improve how you feel about your home. Customers who shop at blinds.com experience excellent customer service from consultation to installation. Side effects include increased privacy and better sleep. Talk to your partner today and see if blinds.com is right for you. Visit blinds.com to order your free samples.
Previous No Mercy / No Malice: The Mother of All Pivots Next Office Hours: Why AI Is Not Taking Your Job, How to Create Opportunities for Others, And Advice on Taking Care of a Sick Parent Page updated September 30, 2026 · transcript and summary are machine-generated
