Pod Insights The Prof G Pod with Scott Galloway Prof G Markets: Twitter’s Rebrand to X, Mattel’s IP Playbook, and What’s Next for Snap About this episode This week on Prof G Markets, Scott shares his thoughts on Twitter rebranding as “X,” and takes us through some of the best and worst branding moves in corporate history. He then takes a look at Mattel’s media strategy on the heels of Barbie’s blockbusting performance at the box office. Finally, he makes a prediction about where Snap is headed given continued weakness in the digital ad market.
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:18 Scott Galloway? This week's number, $4,000. That's how much some parents are paying sorority recruitment consultants to help their daughters get into the sorority of their dreams. What grows when you plant a pumpkin spice latte and water it with vodka? A sorority.
1:46 Scott Galloway? Welcome to Prop G Markets. Today, we're discussing Twitter's disastrous rebrand, Mattel's big IP play, and Spotify and Snap earnings. Here with the news is Prop G Markets producer Claire Miller. Claire, what is going on?
2:00 Speaker 02 I'm hanging in there, Scott. I'm here on the mic for the first time in, I think, a year, covering for Ed while he's often "Mikinus," as he would pronounce it. I texted him last night to see if he's had any luck. Pulling any ladies. Haven't heard back yet, so I don't know if that's a good sign or not.
2:19 Scott Galloway? Yeah, good money's on no.
2:21 Speaker 02 Yeah.
2:21 Scott Galloway? Good money's on no.
2:23 Speaker 02 Well, we'll just have to stay tuned till he's back. I know our listeners are on their edge of their seats.
2:28 Scott Galloway? There you go. Talk about the markets.
2:30 Speaker 02 Let's start with our monthly review of market vitals.
2:39 Speaker 02 The S and P 500 gained about 5% in July, bringing it close to a new record high. The dollar fell around 1%. Bitcoin dropped 4% and the yield on 10-year treasuries gained 4% after the Fed's latest rate increase. Shifting to the headlines. Meta posted double-digit revenue growth for the first time since the end of 2021. The company also lowered its capital expenditures forecast for 2023, but noted expenses could grow next year due to investments in data centers and AI. The stock rose 8%. Google beat expectations for revenue and earnings per share. It also posted its second consecutive quarterly profit for its cloud unit
3:23 Speaker 02 and showed strength in its core search business. The stock rose 6% on that report. Meanwhile, Microsoft's stock fell 4% on news that revenue growth in its cloud business slowed quarter-over-quarter by one percentage point. Microsoft also gave weaker-than-expected guidance, signaling it will take time for revenue from its AI investments to materialize. The Federal Reserve raised interest rates by another 25 basis points, bringing the federal funds rate to a 22-year high. It was the 11th rate hike in a bit more than a year. Still, it might not be the last. And finally, UPS and the Teamsters Union reached a tentative agreement for a new contract,
4:06 Speaker 02 narrowly avoiding a strike that was set to derail a significant piece of the economy as early as tomorrow. Notably, existing part-time workers will see their pay raised to a minimum of $21 an hour, up from $1,550. Scott, any thoughts?
4:23 Scott Galloway? Well, let's take these in reverse order. I love the fact that the Teamsters have been able to do what the federal government should be doing, and that is get people a living wage. I don't think it should be $21 an hour. I'd like to see federal minimum wage with some exceptions in rural areas where the cost of living is much lower, at $25 an hour. If minimum wage had just kept pace with GDP growth or productivity, it'd be about $23 an hour, and I think it's $7.25 right now. I think it's core to the American experience. Specifically, we're a generous, innovative, freedom-loving people, but we're also about work, and I think we need to bring dignity back to work. So, as I always like to do, I always like to contrast it with the leadership of the WGA and SAG and ASHTRA, who despite
5:08 Scott Galloway? being famous and likeable, have their heads up their asses. And that is, the Teamsters realize they had leverage. Contrast that with the studios, specifically Netflix, that just announced, because of the writers' strike, they have $5 billion in cash on hand now because of this multilateral pause on spending that the strike has created, which is very good for Netflix, and they're going to start doing share buybacks. So, one group of people, the Teamsters, had real leverage. The WGA has absolutely no leverage, I would argue, negative leverage. And get this, get this, the demands of the writers include limits on the use of AI by the studios and a certain number of writers in every writer room. This is what the Teamsters asked for and got: an increase to $21 an hour. I think that's
5:51 Scott Galloway? reasonable. And two, get this, they demanded and got air conditioning in the trucks. Okay, that seems reasonable. What is the WGA asking for? A pause of AI and minimum number of writers. That would be the equivalent if the Teamsters had asked UPS... Four, a pause on any development around autonomous driving, which they knew they wouldn't get. They didn't even ask for it. And two, if they demanded two drivers on every UPS truck. That is how, in my view, ridiculous the riders are being, much less not recognizing that they have no leverage. Anyways, anyways, I'll stop ranting. The Federal Reserve, it feels to me like we have the Goldilocks economy right now. Other than the Kingdom of Saudi Arabia,
6:35 Scott Galloway? our economy is the strongest in the world. Our GDP growth has been consistent, if not remarkable. Inflation, as we predicted, has come down as quickly as it went up. He got a ton of shit from people on the right, who were second guessing everything under a Democratic administration, hoping for hyperinflation such that they could get their guy or guys back in office. And let's be honest, on the Republican side, it is all guys. And then on the far left, we have Senator Warren, you know, screaming and yelling that this increase, this irrational increase in interest rates, was making it hard on working families, who all of a sudden had to pay higher credit card bills. Yeah, you're right, Senator Warren. You know, it's even harder on families. Hyperinflation, that's one way to really ruin an economy.
7:20 Scott Galloway? And Chairman Powell was steadfast, kept raising rates. And we have a historic low unemployment. Real estate prices seem resilient. And for the first time, over half of economists are now saying that we're going to have a soft landing and no recession. So Chairman Powell has put on a masterclass, in my view, in not only a broader understanding of the economy, but having the backbone and demonstrating the leadership to just screen out all the people second guessing him from the right and the left. Microsoft, okay, their stock's maybe down 4%, but it's up since what is the greatest corporate venture investment in OpenAI. They have started announcing that they're going to bundle AI into their Microsoft Office. Franchise, which is the strongest corporate recurring revenue business in the world.
8:03 Scott Galloway? I bet 95 or 97% of companies that do over 10 million a year in revenue have a recurring revenue relationship with Microsoft, is a V office. You look, Microsoft is one of those stocks you just probably want to have in your portfolio and ignore it for 20 or 30 years. Google on fire, cloud unit showing strength. Its cloud unit went profitable for the first time and it's never going to look back at unprofitability. Something like 70% of all generative AI unicorns are powered by the Google Cloud. Meta, big tech company of the year from a stock perspective. One of our stock picks in late 2022 was Meta. Overly punished, was trading at like 80 bucks. What is it now, 300 or 400? I mean, it's just, you know, the peanut butter and chocolate of maintaining growth as you
8:48 Scott Galloway? cut costs, that means champagne and cocaine for earnings. My top line revenues continue to grow while I cut costs? Oh my God, Claire, that is seriously, that is seriously crazy. So Meta is the stock of the year. I think it's increased more than any, I think it's up three or four X in the last 12 months off of lows from the end of 2022. So they're doing really well. And also, the market is giving them a greater multiple because they believe now that Mark Zuckerberg has wakened up from this fever dream of the metaverse and is going to start reducing expenses around what will be kind of probably the greatest or the worst investment in corporate history. And that is this investment in the metaverse where he's still burning, I think at $1.2 billion a month.
9:32 Scott Galloway? But here's the thing, when you sit on this cash volcano called Facebook and Instagram, they can spend that kind of money and still be fine.
9:39 Speaker 02 I just want to check in on the S and P 500. It was a big week for earnings across the board. Obviously, we're focusing on big tech, but is big tech the only one seeing a bull market? Or is this a broader rally?
9:53 Scott Galloway? Yeah, the bull market is being kind of driven by a small number of bulls. And that is the vast majority of the gains in the S and P and the NASDAQ are represented by a small number of companies. Those gains or that champagne and cocaine party, you know, the majority of the S and P 500 has not been invited to that party. And again, it's more evidence that more and more prosperity and shareholder gains are being crowded into a small number of companies. So everyone has sort of participated in this, but it's really a small number of companies that have been driving the gains.
10:24 Speaker 02 We'll be right back after the break with a look at Twitter's rebrand.
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12:47 Speaker 02 We're back with Prof G Markets. Elon Musk changed the name of Twitter to X. That's it, the letter X. He got rid of the iconic bird logo, replacing it with a black and white X. And he's trying to do away with all words and verbs associated with the brand as we know it, such as tweet. According to analysts, this rebrand wiped out somewhere between $4 billion and $20 billion in value. Scott, there are all kinds of obvious problems with this new name, from trademark violations to its association with porn. Where do you want to start?
13:23 Scott Galloway? So, believe it or not, I'm considered a professor of brand strategy. I started a brand strategy firm.
13:28 Speaker 02 Oh, I've heard, yeah.
13:29 Scott Galloway? Yeah, so I supposedly know a little bit about this. This is just, this is, this is like so stupid, it's not even crazy, it's just stupid. I've never, either Elon Musk is going to rewrite the, the basic principles of brand equity, or we're going to look back on this as one of the most obviously visibly stupid decisions in corporate history. You know, probably 95, maybe 98% of all purchases are across brands you've heard of. You don't go out and buy a car, order a beer, or buy a shoe of a brand that you haven't heard. It's unlikely, if you've heard, if you get an email from somebody and you know them, or you've heard of them, you don't even have to know them, but you've heard of them, you're exponentially more likely to respond.
14:12 Scott Galloway? So, awareness is an incredible asset, and it's also really expensive to build. And Elon Musk, to his credit, has been a master at creating awareness, mostly through the use of Twitter and these reckless, sometimes brilliant moves. He's in the news every 24 or 48 hours and recognizes that if I maintain awareness across my brands, I won't have to spend money on marketing and my margins will be at the highest in the industry, specifically Tesla, which saves a billion dollars a year spending on traditional advertising, which is what GM has to do. So, he's been a master brand builder, and then this is a masterclass in what not to do. Twitter has global awareness. Almost everybody knows what Twitter is. In addition,
14:55 Scott Galloway? The bird logo is arguably one of the strongest visual metaphors in the world. It has been at the bottom of every TV news show. That Twitter logo has had trillions of impressions. And it's a nice logo and it connotes a new economy, a microblogging app, news, information, innovation, all of these wonderful associations. And to take that awareness and those associations and that asset in the form of a visual metaphor and just burn it in the street for a brand that has been banned already in Indonesia because they're worried it violates porn rules, for a brand that other companies are already saying, we have rights to that trademark, for a brand that sounds like the strip club,
15:40 Scott Galloway? a bunch of people go during a crypto convention. I mean, this just makes no sense at all. I just don't, if I, Claire, if I said to you, here's $10 billion in 10 years and I need you to build a brand that has global recognition and positive associations, you probably wouldn't be able to do it.
16:00 Speaker 02 Right.
16:01 Scott Galloway? I think the larger learning here is that success makes you stupid. I think you start believing your own press. You start making decisions out of gut and instinct because everyone around you is telling you that your gut and your instinct are infallible. And this guy is like the king of fallibility right now in terms of some of the decisions and some of his behavior. And this is just the latest example. The other thing, I wonder if there's just too few people with too much money. When you can spend $45 billion and basically start spreading conspiracy theory and make, you know, there's a wisdom of crowds. If he had a board, anything resembling a credible board,
16:34 Speaker 02 Right.
16:35 Scott Galloway? that had anything resembling any domain expertise around basic marketing, someone would have stopped him from this and said, boss, you really need to rethink this. But because he can buy the company for cash or near all cash, 13 billion in debt, I think 33 billion in equity, and have no board, no oversight, no one on his shoulder to tell him what to do, or everyone around him is just telling him is awesome, or he doesn't listen to anybody else. This is just such an interesting lesson in how power corrupts your thinking. And hubris really does kind of contaminate your logic and your reasoning. So Elon Musk will go down as one of the greatest brand builders in history, who has made arguably one of the worst brand decisions in history.
17:14 Speaker 02 Yeah, this X logo.
17:17 Speaker 02 To me, it literally looks like a wrapper for a condom that's gonna break. Like, it looks just dangerous and gross. And like, I see it and I don't even wanna click on it. Like, my girlfriend keeps sending me X posts, I guess. And it, I don't wanna even open them because it just-
17:36 Scott Galloway? X's?
17:37 Speaker 02 Yeah, X's. Like, and he's, he's trashed like, the, the words, the language that we use to talk about how we navigate this space. Like, we can't even call it a tweet anymore. But let's, let's pivot a little bit. Let's go through some of the best and worst rebrands.
17:54 Scott Galloway? Well, there's been a lot. First off, I just wanna acknowledge a condom that's about to break. That's good. That's good, Claire.
17:59 Speaker 02 Thank you.
17:59 Scott Galloway? Oftentimes, changes are just for simplification or for, or for M and A reasons. So, Apple Computer has just gone to Apple. That makes sense, right? PricewaterhouseCoopers, P W C. Dunkin' Donuts, all right, we wanna be known for more than donuts, Dunkin'. Some of the brand changes that didn't work. Dotson becomes Nissan. Dotson was a great brand in the US, but because of ego, the folks in Japan wanted a global brand. And they convinced themselves they should change the name to the, you know, the brand that was everywhere else but the US. And they changed it to Nissan, which created confusion. And it literally took Nissan probably a decade to recover from that. Facebook to Meta, I mean, that's sort of a minor fail, but they kept the consumer equity. They didn't change the name of Instagram.
18:42 Scott Galloway? Google to Alphabet, that was primarily a means of creating more CEO roles. I saw that as a retention vehicle. You could have, Sundar B. the CEO of Alphabet, but also have CEOs of Google, YouTube, et cetera. And that, even if it was the wrong idea, it wasn't gonna have that much of an impact 'cause the corporate brand is for investors and employees. And so, there's not as much risk there. It's when you start munking with consumer equity that it really makes no sense. This'll go down as one of the, kinda the biggest failures of a company of this size. It just makes absolutely no sense.
19:15 Speaker 02 So, you've gone through rebrands at your own businesses. Most recently, Section. You've got Profit, L2, Red Envelope, which I learned yesterday was originally called 911 Gifts. Walk us through the best and worst of Scott Galloway's rebrands.
19:32 Scott Galloway? Yeah, so, starting a brand strategy firm or being a professor of brand strategy doesn't exclude you from really stupid brand decisions. And I've made a bunch of them. Section four, our online learning platform where we're trying to offer 60, 80% of an elite MBA course at 10% of the cost, simply put, section wasn't available and now it is. We went out and bought it. So we changed the name from section four to section. So that was just pure simplification. I think that makes a lot of sense. I don't think there's a lot of confusion there. Going way back, Profit Brand Strategy. It was initially called Profit Brand Strategy. And then we started doing a lot of internet strategy. We got hired by Levi's and Williams-Sonoma to build their first ecommerce website. So we just said, let's just call it Profit. The real brand clusterfuck that I
20:15 Scott Galloway? was responsible for was I started in 1995. I went and saw John Doerr, the founder and senior partner at Kleiner Perkins, speak at Berkeley. And he said that the internet is all about saving time and it's all men. So I thought, okay, what do men need to save time around? And I thought, buying gifts. So I'm going to create a database-driven website where you type in the name, the person, the type of person, their interests, your price range, and it uses a database to spit back gift ideas, right? And I called it 911 Gifts. And the tagline was the right gift, right away. And the idea was it would save you time and you could be a great gift giver in a short amount of time.
20:59 Scott Galloway? The sales escalated really quickly. And then I was at, it was the late 90s, and I went one of these stupid engagement parties where we all pretend that we're interested in watching people open gifts because they're getting married. And someone opened a gift and it said 911 Gifts. And I'm like, oh my God, what a nice moment for me. Someone got them a gift from 911 Gifts. And it was this beautiful NAMBY forged metal bowl. NAMBY is this great brand. And the bride, or the bride-to-be, said, oh, this is lovely. And said, where did you get it? And she turned it over and it said 911 Gifts. And she looked up and jokingly said, you thought about me last minute? Question mark. And occasionally, Claire, in life,
21:37 Speaker 02 Yeah.
21:37 Scott Galloway? you have a blue flame moment. You register people's emotions and you're like, oh, you know. You know, she likes him, or, oh, this person is insecure about this, or, oh, this person is lying, or, oh, we should absolutely do this. You have a blue flame moment where you just feel like you know the truth.
21:55 Speaker 02 Right.
21:56 Scott Galloway? And at that moment, I had a blue flame moment, and that moment was, I'm fucked. I have started a gift company where the brand has negative recipient associations. And so we changed the name to Red Envelope. We were still pretty early in the company's history. It was easy to raise capital. We had just raised, I think, $20 million from Sequoia Capital, so we could do the name change. And Red Envelope is actually one of the brands I'm most proud of. But name changes are generally a bad idea, and you really want to be thoughtful at the beginning. You want to opt for something people can spell, ideally has some positive associations or associations congruent with the category, and give you a lot of latitude, because you don't know what products or what industries you're going to go after. And then don't change it.
22:41 Speaker 02 Is there a world where you would rebrand us, Prof G Media?
22:44 Scott Galloway? Probably. Yeah, I mean, at some point, that feels very tied up into a guy with anger and ED issues. You know, I don't know. I'm not sure I ever see us as a large consumer company. And I think that vessel around Prof and G, you know, it's associated with me, but I think we could take it other places. But yeah, at some point, it might become PG Media, but that means parental guidance suggested. I don't know. I don't know. Sounds like I fucked up again.
23:09 Speaker 02 No, I don't know.
23:09 Scott Galloway? I'm changing it to X. I'm changing it to X.
23:12 Speaker 02 There you go. We'll be right back after the break with a look at Mattel's earnings.
23:29 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. The 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?
24:14 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.
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25:24 Speaker 02 We're back with Prof G Markets. Barbie and Oppenheimer, together known as Barbenheimer, hauled in $244 million at the box office in their first three days. That was the best opening weekend for the domestic box office since 2019, when Avengers Endgame premiered. But perhaps the biggest winner here will be the toy company behind Barbie, Mattel. The Barbie movie hype cycle sent the stock up 18% year-to-date. And for the past month, while we were distracted by Nvidia, Microsoft, and Meta, Mattel actually outperformed all of them.
26:01 Speaker 02 Now, the toymaker doesn't expect to see significant sales growth for Barbie toys until the second half of the year. In fact, Barbie sales actually dropped 7% in the second quarter, which ended weeks before the movie's release. But Mattel's CEO said that this quarter, and crucially, the Barbie movie, established the company's media strategy going forward. He said, quote, "This moment will be remembered as a key milestone in our company's history." So Scott, let's talk about that strategy of basically repackaging and reselling old IP. Mattel seems to think it'll work. How far do you think IP can actually take a company like this?
26:43 Scott Galloway? I mean, this was a genius move. Barbie is sort of an anachronism, and that is a lot of the associations of Barbie. You know, and a doll that says, kind of communicates to the world, be anorexic and then go get a boob job. That's not exactly like a modern statement on feminism. But to their credit, I mean, this movie, it could have easily been so bad and so panned. And the execution around it, I haven't seen it, but everyone I know that's seen it, they've managed to thread this needle where it just seems like everybody likes it except Ben Shapiro and Matt Gaetz, which is a plus, right?
27:15 Speaker 02 Yeah, exactly. That's a win.
27:17 Scott Galloway? And it's just raised a ton of awareness. And you've highlighted that the stock is up. It's going to cut a lot of revenue for them. It might be a franchise. My guess is there's going to be a Barbie 2, 3, 4, 5, and 6. Oh, God, that depresses me just thinking about it. But it is so hard to have a profitable movie. It is so hard to have a profitable toy.
27:36 Speaker 02 Yeah.
27:36 Scott Galloway? So what Disney's been great at, and now it looks like Mattel, is taking IP and leveraging it across different sectors and different mediums, specifically taking, you know, Barbie to the movies. And then what Disney has been great at doing is creating movies and taking that to the toy store. The execution here, it sounds like it was just flawless. It sounds like this movie took a topic and an item that could have easily been panned and just thread the needle. My co-host, Kara Swisher-Pivot, won't stop talking.
28:06 Scott Galloway? About Barbie, literally, she's just-
28:08 Speaker 02 I won't either.
28:09 Scott Galloway? You, you loved it.
28:10 Speaker 02 Yeah, I loved it. I did the Barbenheimer double feature.
28:13 Scott Galloway? That's a lot. That's five hours of movies.
28:16 Speaker 02 Yeah, no kidding.
28:17 Scott Galloway? That's a lot.
28:17 Speaker 02 But it was worth it. I experienced a sense of camaraderie. I, I think it was a huge win. And I think the reason that people went to the movie and it wasn't panned is basically Greta Gerwig. I mean, she's one of the most, I think, visionary directors we have right now. And then she, that's this brand marriage between her and Barbie. You were talking about the value of a brand with Twitter. Barbie has 99% brand awareness worldwide. She's the perfect leading lady because like almost everyone in the world immediately knows who she is.
28:53 Scott Galloway? Yeah. So look, it was something you said is, is really powerful about this and I felt the same way. People often say it's a shame that box office people aren't going to movies anymore because in person, because there's a certain collective, there's a certain feeling of comedy, of sharing that experience with a group of strangers. And one of the things that was most inspiring, and I didn't see the movie. I took my son, we visited LA and I took my two sons to the Century City Mall. And everyone was roaming around in pink, both women and men. And that was really nice to see something that brings people together. And my son said, it's amazing, isn't it? People, I didn't know there were so many Messi fans in LA. He thought they were all wearing Inter Miami kits and jerseys. I'm like, no, this is, this is because of the Barbie movie. So I agree with you. I think it's, it's really nice.
29:38 Scott Galloway? We need more reasons to come together. It's also, Mattel really needed it. The Barbie brand earned 1.5 billion, a decline from 1.7 billion in 2021. So they need, they needed something and they have found this. And they want to create something called the Mattel Cinematic Universe. And my guess is similar to Marvel or DC, they've now convinced a lot of studios and capital that they have a bunch of assets they can turn into movies. They have some iconic franchises, Hot Wheels, Fisher Price, American Girl, Thomas and Friends. So this is, you know, good for Mattel, good for the stars of Barbie, good for the planet.
30:15 Speaker 02 And good for me. I bought the stock in April.
30:18 Scott Galloway? You did. That's right.
30:19 Speaker 02 Last question, Scott, are you going to see Barbie and what are you going to wear?
30:24 Scott Galloway? I am going to see Barbie. It's going to involve edibles and I may just throw on a wig to pretend I'm Ken.
30:38 Speaker 02 Spotify reported record audience growth for the second quarter, but its stock fell 14% on news that its podcast division is still suffering from weakness in the digital ad market. Results were even worse at Snap, which posted its second consecutive decline in quarterly sales and also saw its stock decline 14%. That's in contrast with Google and Meta, which posted advertising revenues that topped analyst estimates. Scott, why are these results so mixed?
31:08 Scott Galloway? Well, it's just really good to be in unregulated monopoly. And that is, look at, look at the company that dominates search. Look at the company that dominates social. Look at the company that dominates software. And all of those companies had huge quarters. And then look at the company that's super innovative, great product, great management team, great founder, but they're subscale and their oxygen is being sucked out of the room. So Snap is one of those companies. Snap is sort of, in my opinion, exhibit one for why we need to break big tech up. It's a great company and it just can't compete with these monopolies. Because what you have is people who are in charge of digital spend just say, all right, we're just going to give it to Google and to Meta
31:51 Scott Galloway? because they control everything and they have the money to invest in better ad tech. And the smaller guys just can't compete. So Snap fell 14% after reporting Q2 earnings as investors reacted to weaker than expected guidance. The revenues declined 4%. Their net losses narrowed to 377 million. It's still very dependent upon digital marketing spend, which has declined over the past year. The US advertising market is expected to grow 6% in 2023, lower than the 9% growth seen in 2022, although digital marketing is just being... When you're growing your revenues top line by 12%, such as many of the big tech in in media, and the market's growing 6%, that means that someone is is declining in revenues,
32:35 Scott Galloway? and Snap is one of those folks. There are some real bright spots here. Daily active users at Snap reached 400 million, up 14% from a year earlier, and over 150 million users sent more than 10 billion messages to Snap's AI bot. So in sum, and this is kind of the prediction here, something's going to happen, I think, with Snap over the next 12 or 24 months. Now, the reason why this prediction is less certain is that it's one of these dual-class shareholder companies, and one person, Evan Spiegel, controls that decision. It would be the right decision. This is a great product, a great company with a subscale platform. It should absolutely be tied up with a bigger platform. But he gets to make the decision. And unfortunately, founders are often already billionaires
33:20 Scott Galloway? of these companies. So if it's a question between being worth, you know, 2 billion and 4 billion, you know, he'll probably opt for the 2 billion and maintaining control. Control is an addictive substance. But this feels to me like a company that should be part of a bigger company.
33:36 Speaker 02 Who comes in and buys it, do you think?
33:37 Scott Galloway? Well, I think the logical one would be Disney, whose market cap is around 160 billion, and Snap's market cap is 17. And you can imagine that Disney says, all right, our traditional channels of distribution, movie theaters and broadcast cable, are in structural decline. What if we could directly communicate with 400 million younger users who advertisers love and start pushing through snippets and IP and movies and series to Snap? I think that could be really, you know, really intoxicating and also market all of our properties across those 400 million users. The brands feel good to me. After Bob gets done cutting costs, he's going to have to come up with a growth story. And at $17 billion,
34:19 Scott Galloway? keep in mind, stock's at 10 bucks. It was at 85 at some point in 2022. That was obviously wildly overvalued. But it's at 17 billion, so it would be about a 10% or 15% dilution to Disney. It feels very brand on. They get 400 million younger users that are very much congruent with their products and they would get a new channel of distribution for their IP and their content. The other outside shot would be Apple. The brands line up perfectly. I think Evan would be very successful at Apple. They could obviously blow this thing up by featuring it on the front screen of every iOS product. The thing is, Apple is not acquisitive. They think they're so correctly precious about their culture. They don't like to make large acquisitions.
35:04 Scott Galloway? But the thing about it is, when you're talking about a company with a $3 trillion market cap, they could pay a 50% premium for the company and it would be a 1% dilution. They would have to issue less than 1% of their shares to pay for this acquisition, even at a 50% premium. And if the thing didn't work, if the thing was a total disaster and a write-off after two, three, five years, I mean, the real cost would be the diversion of focus, but it would mean nothing. I mean, they could acquire Snap and pay for it with just, you know, change they find in their couch. Or there might be an unusual deal. Iger said he wants to get rid of FX and I think it was ABC. Maybe he spins it to Snap and Snap becomes kind of a interesting media play for young people and starts running the content of those companies
35:48 Scott Galloway? through their Snap platform. But my prediction in some, Claire, is that something happens with and around Snap over the next 12 months. It's just subscale and something needs to be done here.
36:03 Scott Galloway? This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our executive producers are Jason Stavers and Catherine Dillon. Mia Silario is our research lead and Drew Burrows is our technical director. Thank you for listening to Prophecy 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. Claire, thanks for stepping in and being the co-host.
36:25 Speaker 02 You got it.
37:10 Scott Galloway? True story, Claire, before we bust into it, let's talk about me. I was the president of the Interfraternity Council at UCLA. I was the king of the jarheads, the douchiest douchebag in Doucheville. That's right.
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