Predictions, COVID-19, and Loving Others

Scott breaks down the streaming wars and shares why he thinks Peacock’s strategy is interesting but difficult — consumers are busy and want a clear value proposition. He also explains what happens in a “too big to fail” market environment. Then, Andy Slavitt joins Scott to discuss the state of play around COVID-19 and where the country goes from here. Andy served as the Acting Administrator of Medicare and Medicaid Services during the last two years of the Obama administration and has remained a critical voice in the battle for healthcare coverage. Office Hours: why Shopify should merge with FedEx, the types of people you should hire at your startup, and how to make online learning more engaging. 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.

• 0:00Scott Galloway?

  Episode 18, 18, the age of majority, the threshold adulthood where you are supposed to take responsibility for your personal actions and decisions. I know a lot of people who are still 17 at the age of 48. When I was 18, I was at UCLA, I was 6'3", 140 pounds with bad skin. I looked like Ichabod Crane with acne. I joined crew, put on 40 pounds of muscle over 24 months. Hello, let's put on 40 pounds of muscle this pod. Go, go, go.

• 0:35Scott Galloway?

  Welcome to the 18th episode of the Prop G Show. In today's episode, we speak with healthcare expert Andy Slavitt, who was the head of healthcare during the last two years of the Obama administration and since leaving government has remained a critical voice in the battle for healthcare coverage. He joins us today to discuss the latest with COVID-19 and where we go from here. But first, but first, let's catch up on the business wars. The streaming wars continue. Supposedly Quibi only converted about 9% of its free trial membership to actual subscriptions. So Quibi is, and I predicted this would be dead on arrival. I also predicted that all of the entrance into the space, specifically

• 1:17Scott Galloway?

  the capital flowing into the streaming video wars. We've had more incremental capital invested in the streaming wars than the defense budgets for Canada and Australia combined. And by the way, both those places have armies. I would not want to meet an Australian on the battlefield, would you? I would like to meet a Canadian. They'd probably say, hey, hey, no problem. Put your gun down, eh? And let's be friends. Anyways, that's probably racist. That's probably racist. Anyways, anyways, I thought all the additional capital flowing into the streaming video arena would compress or hurt the margins of Netflix. And it's not anything but. As a matter of fact, Netflix keeps making new highs. And I believe, and I believe in predictions are dangerous, but they're fun because it doesn't matter whether you're right or wrong. It matters if you catalyze a conversation. So let's catalyze a conversation with a prediction on Netflix.

• 2:02Scott Galloway?

  The 10 ton gorilla in the streaming space. Netflix announces earnings on Thursday. They are going to blow away earnings and the stock is going to go above 600, making its valuation greater than Comcast or Disney. That's right, you heard it here first. We'll see, we'll check back, we'll hold ourselves accountable. This pod comes out on Thursday. So anyways, why do I believe that? This is the mother of all good things for Netflix. What most people understand is with COVID-19, people are at home consuming a lot of the Tiger King. But what they don't realize, what they don't realize they're taking into account is what happens? I'm trying to think of where else this happens. What happens when your business explodes? Supposedly viewership on Netflix is up 38%. It just explodes.

• 2:45Scott Galloway?

  But at the same time, at the same time, your costs plummet. Why have their costs plummet? Because all production has ceased because of COVID-19. So think about this. What if all of a sudden, what if all of a sudden you started selling more cars than you'd ever sold before? But your factories were closed. Your manufacturing expenses went, just plummeted, but you still continued to produce cars? Because the digital library of Netflix and to a lesser extent Disney show up with an advantage? Because it's all about the library you have as opposed to the films or the TV shows in production. So imagine this, can you ever think of a business that has had an explosion? An explosion in the consumption of its product?

• 3:28Scott Galloway?

  Meanwhile, an absolute plummeting in the cost to deliver that? I've not, I, my mind is blown, my mind is blown. You're going to see earnings be frighteningly unsustainably high for Netflix, which has made the transition from growth to margins. They used to use the word growth, nomenclature is important in earnings calls. And you watch, they're going to talk a lot about margins in this call. And we're going to see Netflix over 600 bucks a share. The dog is howling at the moon with another prediction. Okay, okay. The big news in streaming this week. Peacock, NBC Universal's new streaming service will join a very crowded field. Is it too little, too late? They come out of the gates. A little less, I don't know, with a little less howl, if you will, a little less, a little

• 4:11Scott Galloway?

  less boom, a little less Ben Johnson on steroids coming out of the gates, like lightning striking a small boat in the middle of the Atlantic on a breezy, stormy night. Poetic from the dog, poetic from the dog, like one of those dogs that says, can bark, I love you. Anyways, anyways, why are they still getting out of the gates? Because they were supposed to debut with the Summer Olympics from Tokyo, and that's not happening. So it won't be available also on the two largest streaming players in the U.S., Roku and Amazon. This is interesting, this is interesting. Why is that? Well, there's two ways to get distribution on Amazon Prime. One is your own app, where you, in fact, own the data, or one within Amazon Prime Video. I mean, they present

• 4:52Scott Galloway?

  it as an offering of Amazon Prime Video. What's the difference? What's the difference? The latter, Amazon gets to keep all that gorgeous, delicious data and has control of the consumer in terms of recommendations and understanding consumer behavior. If you're a separate app, then you control the experience and get that all-important data. And what does it come right down to? And what's so illuminating here? Disney Plus and Netflix were in a position to negotiate carriage on Amazon Prime Video as a standalone app, because they have the leverage. Whereas HBO Max and so far Peacock have not been able to come to terms with Amazon Prime Video, because Amazon Prime Video and the folks at Amazon who control the rails, who are in 83% of U.S. households,

• 5:33Scott Galloway?

  look at HBO Max, look at Peacock and go, sorry, we need Disney Plus and we need Netflix more than they need us. But guys, HBO Max and Peacock, you need us more than we need you. The distribution, owning the rails, the power dynamics here are illuminating in terms of who really controls power in the streaming video wars. But back to Peacock. Peacock Premium will cost either five bucks a month with ads or 10 bucks without. More than 20,000 hours of content, nearly double what was expected when it was announced in January. The free version offers about half the content.

• 6:08Scott Galloway?

  This is interesting because there is a market, as evidenced by the fact that Android has billions of users, there is a market for free in exchange for advertising. A lot of consumers are probably looking at their cable bill and thinking, you know, coming out of COVID or into COVID, I'm going to have less money, I need to cut costs. There is a market for ad-supported media, even though I would go on and say advertising is, the advertising industrial complex is waning, there still is a big market for it. And Peacock is trying to have it both ways. They want to offer a premium version, saying if you love our great content, if you love Friends, if you love The Office, you get our content without ads, or with some ads, or with a lot of ads, kind of like the Goldilocks strategy. I think this is a difficult strategy because I think consumers are so busy, they want

• 6:52Scott Galloway?

  to clear value proposition, and they don't have time to make subtle trade-offs. So Netflix, I know exactly what it is, I know it's a great deal, I know it's no commercials, boom, I understand it. I think Peacock is going to take a little bit of understanding, if you will, and a little bit of consumer learning, the consumer's getting increasingly impatient. So my prediction on Peacock is that it is a player, they have deep pockets, they have great content, but that its launch is not anything like we saw with Disney Plus, which signed up tens of millions of households, mostly because of the content library, and also they had the key, and that is the Mandalorian. Without the Tokyo Summer Olympics, I don't know if the Peacock has that hook. The dog needs a hook. What is also going on? What

• 7:34Scott Galloway?

  is also going on with this crazy world of the markets? The markets keep going up. Now, we also have some very unhealthy things. One, we have a lot of young people taking their stimulus or unemployment checks, and opening Robinhood accounts, doing crazy shit with options, and the importance of brand equity or storytelling has never been greater. If you're a kid in your parents' basement because you can't return to Tulane, and you're a sophomore, and you got 1,600 bucks, what are you going to do? Are you going to buy Amazon, or are you going to buy Colts? So brand equity, your reputation as an innovator, brand equity, your reputation as a leader or a disruptor, someone in 10 years is going to own your category, has become more and more important. In addition, in addition to turning

• 8:17Scott Galloway?

  The markets into a giant casino, we have some additionally really unhealthy things. Specifically, the markets are now bifurcating the winners into basically two groups. And that is the disruptors, big tech, the future forward people who are pulling the future forward, whether it's big tech or whether it's the new innovators, be it Zoom or Lemonade. The second element, which is even unhealthier, is we have a too big to fail environment. And that is, if you were to look at the S and P 500, if you were to take the 10 biggest companies in the S and P 500, what would you have since January 1? You would have companies that are up, on average, get this, 10%. So post pandemic, the 10 biggest companies in the S and P 500 by market capitalization are up 10%.

• 9:01Scott Galloway?

  Now, let's look at the companies right in the middle, right in the middle, the midcaps. They're down as an aggregate 10%. So if you're big, you're up 10%. If you're sort of big or bigish or average size S and P 500, you're down 10%. And get this, if you're one of the smallest 50 companies in the S and P 500, you're off 39%. So why all of a sudden does the market like big? Well, it likes big if you're in big tech, it loves you and you're way up. I own the four and those guys are up about 20% year to date. If you're just big, though, there's a general consensus that the risk is asymmetrically rewarded to the investor. Why is that? Because big companies are too big to fail. And if you're a little tropic Bahamas airlines, you don't get a bailout. But if you're United Airlines, you get a bailout.

• 9:46Scott Galloway?

  If you're a big enough company, you have lobbyists and the risks to the downside are limited because the government will come in and bail you out, but they will get to privatize the gain. So big tech monopoly, specifically Apple, Amazon, Facebook and Google, and companies that are too big to fail, being fueled by a bunch of 22-year-olds who cannot go to Vegas, who are bored spending their stimulus check. Four words, what could go wrong? We'll be right back.

• 10:18Scott Galloway?

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• 11:03Scott Galloway?

  No new tabs, no switching apps, no losing your place. This is AI that works with you, not on top of you, so that you have the time and brain space to solve the problems that matter. Check it out, find out more at superhuman.com.

• 11:28Scott Galloway?

  Welcome back. Here's our conversation with healthcare icon and leader Andy Slavitt. Andy, where does this podcast find you?

• 11:36Speaker 01

  My dining room in, I dine in Minnesota.

• 11:39Scott Galloway?

  Great city, Minneapolis, great music, San Diego food. So let's bust into COVID-19, America, politics, our economy. Give us the state of play. I realize that's a big question.

• 11:52Speaker 01

  Yeah, I mean, the state of play is, first of all, you have to recognize that for all the places we look and want to point fingers and, you know, the angst, the masks, the political society, all that other stuff. Basic level, it's about the virus. We're covering with all kinds of things, but this is a new virus. It's a novel virus that none of us had immunity to and none of us understood how it works. And so, under any circumstances, once we didn't contain the virus, you know, that became the situation. And viruses do what they do. They're going to spread to places where they haven't been. They're generally going to go from larger cities to smaller cities. That's happening.

• 12:35Speaker 01

  This virus happens to spread through the respiratory system, although it turns out it may not be just a respiratory virus. And that means that places where people are forced to spend time indoors or in close quarters, uh, or where people are talking loud are gonna get it. So we're, we're currently going through what I call the wave one, stage two states, which are the states where people have to be indoors because it's 115 degrees outside.

• 13:00Scott Galloway?

  Right.

• 13:01Speaker 01

  So that's the second thing. The third thing is that the virus has a confusing impact on the human body. Uh, we know it travels from host to host, sometimes unknowingly. And it, and it winds up taking root in, um, folks that by virtue of their age, their health, their gender, their race, um, their prolonged exposure because of their job, uh, can do quite a bit of damage, but in a way that we still don't understand. So there's a lot of gaps in our knowledge. And then finally, our response in the U.S. hasn't been great. Uh, I mean, if you compare it to the rest of the world, countries from New Zealand,

• 13:43Speaker 01

  to Greece, to, um, Vietnam, to, uh,

• 13:48Scott Galloway?

  South Korea, Germany.

• 13:49Speaker 01

  South Korea, Germany, they figured out that you can have an adjusted kind of existence as you fight this virus. We haven't for a variety of reasons we can get into if you choose. And then finally, I think we're doing a pretty good job on the science front. So I think, you know, there's reason to be optimistic that there are a batch of therapies, convalescent plasmas, vaccines that will help and credit to some.

• 14:16Scott Galloway?

  So I want to circle back to therapies and, you know, attacking this from the front end on the notion of a vaccine and then on the back end with, uh, with therapies that reduce the harm. But first, so we think of, okay, we think of America. We like to think we're the most innovative country in the world, or at least we like to think that. We spend more on healthcare than anyone in the world. We like to think we're a responsive agile economy. And yet 5% of the world's population, 25% of the infections and deaths have more time to prepare for this. You mentioned the countries that are doing this well. I think it would be hard to argue that we aren't towards the bottom of the list and that we don't come out of this with an entirely new brand association of America, and that is incompetence.

• 15:02Scott Galloway?

  And just, I don't know, that exceptionalism, our exceptionalism is in fact morphed into dangerous arrogance. What, what went wrong here? First off, do you agree with that? And if so, what went wrong?

• 15:17Speaker 01

  So I think there's three principal failures that I think we need to focus on and understand and figure out how to improve. These are three tests we're currently not failing. The first is a test of simply of leadership. You know, we, we need leaders who care, who are willing to look at the news and the data in a pretty analytical way and be very honest. I think the public can handle bad news. The public knows when it's not getting a straight story and we need leadership who's going to be accountable. And I'm not trying to be cute. I'm talking about the president. He needs to be, feel accountable for delivering

• 15:58Speaker 01

  us through this as opposed to feeling like he can dodge his way around it. So that's one place where we failed and probably the most important. The second failure in my mind is our failure to adapt. These things are new and every other country has figured out how to learn from the virus. So something happens in one part of the country and they quickly all adapt. Here, we're not learning the lessons quickly enough. The virus is giving us clues on how to prevent the spread and we're choosing to ignore them. And then third is what I might politely and delicately call a failure of imagination, although you

• 16:40Speaker 01

  might even call it a failure of empathy, which is to say, not only aren't we adapting, but the more we feel safe, either because we're younger or because we're hearing that it hits black and brown communities and you may not be black or brown, or you're not an essential worker and this is really taking a toll on essential workers, or you're not a healthcare worker, a doctor or a nurse. So you, you just are taking less care. And because we can all be carriers, that's a problem. And that's an issue of, I think, societal cohesion as much as anything else. If you spent time in Japan and, and other parts of the world, this failure of imagination doesn't exist to quite the same degree. We value, we have other virtues, right? We value other things.

• 17:26Speaker 01

  That are indeed virtuous, like freedom and independence and consumerism and getting what we want. And those things are great. They're just not great characteristics for dealing with a global pandemic.

• 17:37Scott Galloway?

  Yeah, it feels as if our superpower as a species is cooperation and our superpower as a country is optimism. But in this instance, optimism is a bug, not a feature, that we assume our exceptionalism and our Americanism is going to somehow be an immunity and that the virus didn't get the memo regarding our optimism and exceptionalism. It's also struck me, and tell me if you think this is better or worse than it would have been had this happened 30 or 40 years ago, but it feels like we're living in a disunited States. I'm in Florida, thousands of infections and very few people masking. I go to Montana, 21 infections across the entire state, and I'm out on a hike and every you pass someone and they're in a mask outdoors where they may not see anybody. It just feels as if

• 18:19Scott Galloway?

  there's 50 different responses to this pandemic. Is that a function of a lack of leadership? Or is it that as a nation, we continue to fray?

• 18:29Speaker 01

  It's a bunch of the two things. I mean, one, one is certainly what you say, which is, you know, we're not being experiencing this together. And, you know, we have not as much cohesion. But there's another factor too, which is where we are a big country from a just a geographical standpoint. And if you live in New York, or now Florida, or some other places, you very likely know people who've died from COVID-19. You certainly know people who've been sick from it. But if you live in, you know, Iowa, you may not know anybody who's died from COVID-19, but you may know three people who've lost their jobs or furloughed. You may know somebody who built a restaurant up over 15 years and

• 19:12Speaker 01

  lost it. So that might be COVID-19 to you. And so, to some extent, this is where I think our empathy skills could get better. Is rather than villainizing people who don't share our experience or share our point of view, you know, we have to try a little bit harder, in my view, to understand that this is hitting people differently, that we can be just as empathetic for the person who's lost their job or their business as we can for the person who's been sick or has lost a loved one. We need to try to do a little bit better at telling the common story. I think the media could do a better job of showing scenes inside of hospitals

• 19:52Speaker 01

  so that people understand that this is real. But there's been very little of that imagery. And so there are people in parts of the country who just don't see the virus the way that other people do.

• 20:04Scott Galloway?

  Yeah, it's very, it goes back to this notion that we're more charity and empathy is, to a certain extent, a function of proximity, right? We wouldn't, we wouldn't tolerate, I don't know, I guess we are becoming more tolerant of non-potable drinking water, but that's a huge problem in Africa, but we don't have as much empathy. I mean, empathy is inversely correlated to distance, right? And it just feels as if we are having two pandemics, one brought to you by Fox in red states and another brought to you by the New York Times in blue states. It just seems like it's two totally different pandemics. What, were there two or three moments, looking back, and I realize we're Monday morning quarterbacking

• 20:45Scott Galloway?

  it, but were there two, were there a number of moments where we made just incredibly bad calls that potentially could have changed the course of this thing?

• 20:53Speaker 01

  I think the first big leverage point opportunity was whether you're playing containment or whether you're chasing a community spread outbreak. And, you know, we've gotten lucky or good or some combination in that every time there's been an infectious disease in the last number of years, at least here in the US, we've been able to contain it. And by contain it, it means you can literally count the number of people who've had it, you can count all the people that they've connected with, you can isolate them until the disease goes away. We had that chance when the boat came into dock, perhaps. We had that chance in January and February when, when we knew what was going on in China, and we did know what was going on. And what would have required of us was to have the

• 21:36Speaker 01

  ability to immediately test people who were getting the virus so that we could prevent them from exposing other people. You know, we instead are in a spot today where we have, the president says we're testing too much. And so we have unlimited number of people without symptoms who are out spreading the virus because they don't know they had it and that they're not getting tested, they're not able to test it. So that's the first one. You know, second, second is if we had, if we missed that opportunity, and look, there are countries around the world that missed that opportunity to contain it. Once we had an opportunity to put it back in the box, instead of doing what I think countries would call a, and countries in Europe did,

• 22:21Speaker 01

  which is a more severe but shorter shutdown. And we did all kinds of things to self-optimize the shutdown. We decided that we absolutely needed, you know, have our meat plants open. We decided we absolutely needed to have people delivering us food. We decided that 20% of people, it was essential for them to serve us. And so our inability to take short-term pain for long-term gain, which I think is a feature of, of our society today, uniquely, perhaps not, not the only ones, but maybe more so than most countries, if we had taken a short-term pain, and we could have taken it a number of different ways, by the way.

• 23:04Speaker 01

  We could have taken it by all wearing masks for three weeks. We could have taken it by shutting down with much fewer exceptions for three weeks. We could have taken it by investing in the testing and contact tracing infrastructure we needed. We could have done it a number of ways because there, there's, there hasn't been one formula to successfully deal with the virus. We just chose not to do it at all.

• 23:29Scott Galloway?

  Yeah, it's, it's, I would, I think you're being generous. My sense of America where we are now is that we have absolutely no tolerance for any type of short, medium, or long-term pain, that we'd rather pull prosperity forward from our children and grandchildren with massive debt-fueled bailout packages that largely benefit or flatten the curve for rich people. I was watching. Last night, I don't know if you've seen it on Apple TV, Greyhound, which is the story of

• 23:54Speaker 01

  Yeah, I did.

• 23:55Scott Galloway?

  An armada heading across the North Atlantic. Tom Hanks, who I think is 62, playing a Navy captain, which is unrealistic.

• 24:01Speaker 01

  My wife made the same point.

• 24:03Scott Galloway?

  Yeah, they were 38. They were kids on these boats. Anyways, it strikes me that in World War II, immediately, your life was a lot less nice economically, and you dug into your pocket to buy war bonds, and we spent the majority of money on weapons to fight the enemy. And then if you think, if the analogy now is we're in a war against an enemy, this virus, that the majority of the money isn't on tools to fight the enemy itself. It's not on funding the CDC, or enlisting a half a million freshmen who aren't returning to campus to become contact tracers. It's not around putting 14 days of food in every household

• 24:44Scott Galloway?

  and saying, everybody, you are going to severely distance for 14 days, and we are going to stop this here and now. We're going to coddle this thing. But we spend the majority of our resources on ensuring that people aren't hit hard economically. And it's like, if we went into World War II, instead of building destroyers and B-24 flying super fortresses, we said, okay, we're going to just give everyone money such that the economic hardship of war doesn't impact you economically. It feels like we have just become so fucking selfish in the short run. Anyways, thoughts?

• 25:18Speaker 01

  We needed to do both. I mean, because if we're going to shut down bars and restaurants and small businesses, we need to, and people are going to go without income, we need to tell people, we need to tell people not to worry. We got your back.

• 25:29Scott Galloway?

  Yep.

• 25:29Speaker 01

  Through all this. So I don't think it, I don't think it was a choice. I think, I mean, literally, I've had, I mean, I've had dozens, if not hundreds of conversations with congressmen and senators and my senators, and my general point is, there it's like, Andy, should we protect people from getting evicted? Should we, should we give money to contact tracers? Should we, you know, invest in unemployment insurance? Should we make sure the healthcare system doesn't break? And my answer is, do it fucking all.

• 25:54Scott Galloway?

  Yeah.

• 25:54Speaker 01

  Do it all. The consequences of doing the nine things and not the 10th. That doesn't get us back is catastrophic. And you are picking between things that are, you know, A, they're fundamental commitments, I believe, we have as a country to get people through tough times.

• 26:14Scott Galloway?

  Yeah.

• 26:15Speaker 01

  And B, their investments, we have so much deferred maintenance, as you point out, that we're going to rush to spend 10 times more in an emergency and spend it with a 10th the efficiency. But now we have to do it. And as soon as it's done, we're going to hear calls to say, we need to now pay that down. And therefore, we can't, we can't invest. So we don't invest in things that don't have near term benefit. The, the climate scientists are having the time of their lives because they're sitting here saying, what you epidemiologists are going through is exactly what we've been living through. You're getting, you're being discredited. You're talking about things that you have an even nearer term benefit than we do.

• 26:58Speaker 01

  And no, you know, nobody will, nobody will possibly, you know, sacrifice for us. We're, we're fear mongers. So we get angry and people are getting angry because they can't have what they want. And I think we've conditioned ourselves to that. We haven't conditioned ourselves to any amount of sacrifice.

• 27:16Scott Galloway?

  So let's, let's talk a little bit about how we might, you know, beat is even the wrong word, but contain or let's ignore how we got here. Let's just say we're here, other than what we can learn. Talk a little bit about attacking it from one end, where the state of play around a potential vaccine, and then from the other end, therapies.

• 27:37Speaker 01

  Yeah, so it is clear we're going to need an arsenal of answers to win. We are not going to, there's that, I wish I could say otherwise, but it's very unlikely that we're going to have a vaccine or a therapy that says, up, all over, game over. And so for all of us who have kind of thoughts in our head that. Sentences that begin with, well, we're gonna have to do X and Y and Z until there's a vaccine. Or we will be able to do this once there's a vaccine. It's not gonna be as clean and as simple as that. I had, I had just an episode on our In the Bubble podcast Monday,

• 28:20Speaker 01

  where we had two of the experts on vaccines. And the good news is, every scientist I know is incredibly optimistic about the progress we've made towards a vaccine and towards getting vaccines early. The problem is the definition of a vaccine. Because, you know, there are influenza vaccines. They work on forty to fifty percent of the public and need to be boosted frequently and adopted frequently. And then there are things like the MMR vaccine or the tetanus shot when you're a kid, which lasts for a long, long time and works on ninety-seven percent of the people. We're much more likely to have a vaccine that works like the influenza vaccine.

• 29:01Speaker 01

  But we're also going to need to keep making vaccines until we get better and better and better ones. And that's gonna take some amount of time. We're likely to have some very good therapies over time. Therapies are easier to develop. They're easier to run trials on. And so I think, you know, we're chasing something that's growing exponential. The only thing that can catch up to something growing exponential is science. Now, in the meantime, we have a whole bunch of things that people classify. If people have heard the expression, NPIs, which stands for non-pharmaceutical intervention, which is a fancy way of saying it's just our own human behavior. And it turns out that the world, until such time as we have science,

• 29:46Speaker 01

  has one tool that is actually, can be quite effective. And that's our own behaviors. It's these non-pharmaceutical interventions. It's what people call social distancing. It's staying out of big crowds. It's wearing masks indoors. It's not, and unfortunately, it means that there are a set of activities that, under almost no conditions, are safe, like going to a bar. Or church, or a sporting event attended by a lot of people. Those are not going to be safe activities for quite a while. If we kind of get in our minds that there are just a small number of things we won't be able to do. Let's not think about this as deprivation, because it's harder. But a small number of things we won't be able to do. Most things we will be able to do. Some of them in a modified form.

• 30:30Speaker 01

  But that we are going to have to to use these interventions until such time as the science makes two things happen. One, and it's a combination of one or the other or both. One is it makes it less contagious.

• 30:43Scott Galloway?

  Mm hmm.

• 30:44Speaker 01

  And two is it makes it less deadly. Because it's quite possible that we end up with therapies where COVID-19 is just as contagious. But the consequences of getting it are much, much, much lower. And so we are going to be having a race between science, human behavior, and political leadership to see how we can put forward a combination that beats this virus.

• 31:09Scott Galloway?

  What's your prediction around this? Do you think we are getting a handle on this? Or do you think we end up? You know, we're halfway to the number of lost souls that we lost in World War II. We're approaching World War I. More lost souls than Korea and Vietnam combined. Is this thing a forest fire that is going to just get, you know, worse? Or do you feel as if America is waking up to the threat and taking it more seriously across the board here? What? Give us your, give us the over under on where you think this, where we go from here.

• 31:42Speaker 01

  Well, I think the first question is, how many times do you have to touch the hot stove before you stop touching it?

• 31:47Scott Galloway?

  Mm hmm.

• 31:48Speaker 01

  And so in our own minds, if we go away and nothing changes, the virus is still spreading. And we look at the stove again, will we understand that it's hot? And and that is dependent upon another factor, which I talk about this way. And I don't know if this analogy is going to work for you. But it's whether or not this epidemic ends up feeling like the crack epidemic of the 90s. Or the opiate epidemic of the 20 teens and 2020s. All I mean by that, it's not a perfect analogy, but I mean something very specific. The crack epidemic was a drug epidemic that happened to other people. And our policy response reflected that it happened to other people.

• 32:29Speaker 01

  It was largely criminalization, no empathy, no fear or concern, other than to keep those people away from everybody else. And it's a it's along racial lines. I mean, if I if I'm just to be direct. The opiate epidemic is the one that felt like it was happening to us, to all of us. Politicians, children, nieces, nephews, uncles, fathers, people in rural areas, people in urban areas, poor people, middle class people, wealthy people. And so our policy response had been drug treatment plans and programs and empathy and understanding and a little more funding. Now, look, I'm not going to tell you that we did a good job with the opioid response because we've not.

• 33:11Speaker 01

  But I will tell you that the character of the of the response, the people who care, the amount of airtime it gets on the floor, the the enlightenment has been totally different. And so my answer to the question is, in large part, will we all know somebody, your point about proximity? We all know somebody close to us who this hit and therefore, oh, this is our problem and we have to solve it. Or will it be there are people in nursing homes and in black communities and in jails and in distant meat factories or expanded communities that are living, you know, three generations to an apartment. Those people are getting infected infected.

• 33:55Speaker 01

  And my strategy is guarded gate.

• 34:00Scott Galloway?

  Just to wrap up, Andy, any message, a message to young people? What is your message around their behaviors and kind of this MPI non non pharmaceutical intervention with respect to COVID-19?

• 34:16Speaker 01

  Okay, all right. So, young people, here's my message for you. I know we screwed up. I know it. We screwed up, and you got every right to be mad at us. They screwed up the environment for you. Uh, now we're making you change your lifestyle for us. Get it. Get it. But you're gonna be running this place someday. And you're gonna have to do a better job than we did. And unfortunately, you're gonna have to be adults earlier than you want to be. And being an adult unfortunately means doing stuff that isn't benefiting you directly. It's benefiting society as a whole. And the bars need to be closed. They just do. The bars need to be closed because if they're open,

• 35:00Speaker 01

  you know, people are gonna think they can go there. It's not forever. It's short-term pain. And if in return for it, the bars closed, your younger siblings or your younger kids can go to school because we can reduce community spread. I think that's a good trade. And I'll go back to something we were saying earlier. No one promised us something for nothing. No one promised us we can have everything we want. Only thing we're promised is an opportunity if we can work together on this thing to beat it. And so it feels unfair, but I would say one thing. That there's a difference between these kinds of disappointments and

• 35:41Speaker 01

  what the people who are getting up every day, checking the scent at the ER, checking on our relatives in the ICU, and dealing with all this crap are going through. Uh, it's a whole other level. We don't get to see it. Most of us won't have to experience it. Uh, but for their sake, because they don't have any choice, for their sake, we need to have our shit together. Uh, because we, we can control making the problem worse for them. Thank you, young people.

• 36:10Scott Galloway?

  Thank you. Thanks, young people. Since the outbreak of COVID-19, Andy Slavitt has been on the front lines working to acquire healthcare supplies for medical workers, helping to popularize hashtag stay home. He's the co-host of the podcast with his 18-year-old son in the bubble and joins us from Minneapolis. Andy, stay safe.

• 36:29Speaker 01

  Hey, thanks. Will you come on in the bubble?

• 36:32Scott Galloway?

  Are you kidding? I'm a media whore. I'm super easy. I'm super easy. Do you have more than a dozen people that listen to it? It's about a dozen. Okay, I'm in. You had me at podcast. You had me at exposure. Anyways, thanks again, Andy. Thanks for your good work. Love to have you on. We'll be right back.

• 36:50Scott Galloway?

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• 37:33Scott Galloway?

  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 prof G for $1,000 off.

• 38:04Scott Galloway?

  We're back. What a thrill. It's time for Office Hours. We're here to answer your questions on trends, big tech, career advice, and more. If you'd like to submit a question, please email a voice recording to [email protected]. First question, Rolodre.

• 38:20Speaker 02

  Hey, Scott. This is Alex from Edmonton, Canada. You said previously that Shopify should acquire Macy's, or more broadly, a retailer. In my opinion, Shopify has no need to own a physical location nor retailer. What I think they need is to expand their customer base, which Pinterest and perhaps Etsy can do. Etsy and Shopify offer storefront for every Pinterest project and search, and a way to purchase what people are looking for. Put all three in a blender, and you have a challenger to not only Amazon, but also Google. Any thoughts?

• 38:48Scott Galloway?

  Alex from Edmonton, what is it with Canada? The Canadians love the dog. Why? Because the dog loves the Canadians. By the way, there is a personal anecdote in here. The easiest way to get someone to like you, the easiest way to get someone to like you is to like them. So if you feel good about someone, if you feel a sense of goodwill towards someone, let them know and they're going to like you back. There's nothing more rewarding. There's nothing more reaffirming than an impressive, good person who likes you and that makes you like them back. And I like Canada and I talk a lot about how much I like the people, the economy, the country, the brand, the leadership, Montreal during Formula One,

• 39:30Scott Galloway?

  Toronto for business, Vancouver with my dad when we were younger and he was thinking about retiring there. I just think Canada is the best neighbor any country could ask for, whereas they probably look at us and feel like they're an apartment above a meth lab. But anyways, and I've used that joke before, but it never gets old. It never gets old. Back to your question, Alex. I don't think I ever said Shopify should acquire Macy's, but if I did, I don't think that's a great idea. I think Shopify should merge with Federal Express. And that is if you think about the real core advantage and what has become increasingly profound, and it sounds obvious now, but it wasn't, is fulfillment and delivery. Williams Sonoma used to make tens of millions of dollars on fulfillment.

• 40:13Scott Galloway?

  You would spend $300 on Calphalon pans and then spend another 90 to have it delivered to you in two weeks and they would make money. And then all of a sudden, Amazon said, well, the key, the delta between the in-store experience and the online experience is fulfillment, the immediacy, gratification. And so they created an unparalleled opportunity or value proposition with Amazon Prime, free delivery within 48 hours, and started shrinking that window or that delta between ordering and the gratification to sometimes 47 minutes with Amazon now in certain urban centers. And all of a sudden fulfillment became the core competence, the point of differentiation in the world of retail. So what does Shopify do now that they have

• 40:57Scott Galloway?

  tens of thousands of merchants on their platform who want to maintain their own brand identity, maintain their own data, maintain their own packaging and truly have a partner as opposed to a relationship that's more parasitic, i.e. being on Amazon's. Third-party marketplace. Anyway, anyway, what should they do? I think Shopify, hold your horses, should merge with Federal Express. Federal Express is infrastructure, delivery capabilities, logistics, data, combined with Shopify's front end and relationships with tens of thousands of small merchants who don't, who don't want to have a relationship with Amazon and who are going to be booming in an era of COVID where e-commerce has accelerated 10 years.

• 41:38Scott Galloway?

  Let's talk about logistics. Shopify has over, get this, $100 billion market cap right now. I mean, that's just crazy, right? 110 to be exact. That's inflated. They should be thinking about acquisitions. And FedEx has a $42 billion market cap. So get this, Shopify is worth almost three times as much as Federal Express. My mind blown again. My mind is blown again. It's been blown twice this AM. Anyways, this would be a great move for Shopify. I think their stock is inflated. I think FedEx, I don't want to say it's deflated, but people see one as the new economy pulling the future four, 10 years overinflated. And they look at FedEx and think, okay, FedEx, all we know is you're not Amazon. You don't have a front end, so you're not vertical. And they've been punishing the stock relative to its performance.

• 42:22Scott Galloway?

  So a combined company, think about this, Shopify would own somewhere between 60, between two-thirds and three-quarters of a combined Shopify-FedEx. And you would have an absolute e-commerce juggernaut. You heard it here, Alex. You heard it here. And I made a prediction about a year ago that FedEx would do a deal or be acquired, or their stock would get severely hammered. COVID has pushed the stock. I think it's, actually, it's been leveled. But anyways, I think Shopify should acquire a backend fulfillment logistics company. The other really interesting thing would be as if they got in bed with what is probably the most well-run REIT in America, and that is Prologis, that builds the warehouses and does the backend logistics and distribution centers, run by one of the smartest people in the field of business,

• 43:05Scott Galloway?

  if not, if not at least, real estate, a gentleman named Hamid Mogadom, who's actually also a very decent man. Anyways, more than you wanted, Alex, but thanks. Love Canada, which means you love me back. You love me back, don't you, Alex? Next question.

• 43:19Speaker 03

  Hi, Professor Galloway. My name is John Bartel and I'm calling from Henderson, Nevada. I recently read the book "That Will Never Work" by Mark Randolph, who is the co-founder of Netflix and the company's first CEO. The book reviews the founding of Netflix and goes into details on the beginning of the organization as a startup.

• 43:42Speaker 03

  In the book, the author states that it is common for startups to initially hire a small group of generalist employees who can work across departments and across roles to get the company up and running. Then, once the organization has been successful and growing for a year or two, specialists are hired from outside the organization to focus on specific roles. In the process, the initial hires are frequently laid off or passed over as the specialists are brought into the organization. I wanted to get your thoughts on this and see if this is as common in the startup culture as the author states. If so, would you recommend someone to work at a startup if they don't have an equity stake in the company?

• 44:27Speaker 03

  I'd love to hear your thoughts. I'm a big fan of your podcasts and books and newsletters and your Twitter feed as well. Thank you. Bye.

• 44:34Scott Galloway?

  Henderson, Nevada. Whenever I think of Nevada, I think of my mom. I'm a 55-year-old. It's still not over, the passing of his mother. She lived in Summerlin, Nevada, at the Dell Web Senior Active Community. And whenever I think of Nevada, I first think of my mom, and then I think of Vegas. But that is neither here nor there. All right, so let's talk about the evolution of a company and the type of human capital that fit best to the stage of that company. In a startup, I don't know if it's as much around generalists and then it goes to specific people or people who have specific domain expertise. I think of the beginning of a company is you need to find five to seven people that

• 45:13Scott Galloway?

  are what I would call just incredibly invested and engaged in the company's success. They have to be great, but it's more important... Well, that's not true. They have to be good. What's more important is they act like owners. And the only way to get people to act like owners is to give them big stakes in the company. We have this hallmark vision of startups where it's about bring your dogs to work and coffee and take eight weeks' paternity leave because we're a progressive company. Startups are fucking Vietnam, and that is every person that walks into the company. When I start up a company, they have two bubbles above their head. One is how much I'm paying them, and the other bubble is how much value they're added. And the moment the first bubble gets out of whack or bigger than the second bubble,

• 45:57Scott Galloway?

  I fire them and replace them. I don't do that when a company hits 50 or 60 people because you need to scale. And quite frankly, you start a company with A players and you scale with B plus. And no one likes to think of themselves as a B plus. But the key to a successful business, or one of them start, at least with startups, is you have a core group of people who love this business more than the kids they don't have yet, because it's usually young people, and as a result, have not collected kids and dogs and work 24 by 7. When I started L2, I used to go in most of the day on Saturday, and I would stop by on Sunday just to lift the spirits of the people who were in there on Sunday. And half the firm, no joke, no joke, when we were 12 or 15 people, there'd be half

• 46:42Scott Galloway?

  a dozen people in there on Sunday, and their big treat on Sunday was they were only going to work four hours because we were all incredibly invested in the startup. Now, once the company hit about 50 people, that's not sustainable. You're never going to have all A players. You bring in people that are good managers, that work 50 hours a week versus 80. They don't have as big an equity stake because they didn't take the risk. And that's how you scale, and you bring in what I call managers, as opposed to these, what I call kind of this insane, irrationally passionate about an inanimate thing called a business. So in sum, I think in the beginning, it's getting to a group of six or eight A players who are rationally passionate about the business. That's not fun. It involves probably cycling through 20 or 30 people.

• 47:27Scott Galloway?

  It was a lot of hiring and firing the first couple of years at L2, and people don't like to talk about the ugly and the dark side of that, and there is an ugly and dark side of that. But once you get to your core base of irrationally passionate owners, then you can scale with people who are what I would call B plus or A minus, not meaning they're not good at what they do. They look at the company as more of a job, which is probably a more rational way to look at it. Thanks for your question. Next question.

• 47:50Speaker 04

  Hi, Professor Galloway. This is Javier from Madrid. I have been following you for quite some time, and I find your insights very, very useful. I am also a professor, and I teach corporate evaluation. My background is research and institutional sales. My question is, I completely understand the opportunity of online education, but I find one big limitation: human interaction. Now, I have had to reteach via Microsoft Teams, and I miss seeing the real-time reaction of my students, their body language, etc. Plus, my students also miss the camaraderie of being together, hanging out between classes. How would you bridge that gap? Thanks for taking my question.

• 48:27Scott Galloway?

  Javier from Madrid. I taught at Instituto Empresas for a semester in Madrid. Spain is a wonderful country. It's sort of a grittier Italy. What would the right analogy be? I don't think they'd probably appreciate being compared to Italy, but I think Spain would be a fantastic place if you were just coming out of college to go spend several years. Anyways, having said that, I don't think you can bridge the gap between the electricity, the interaction, the camaraderie of in-person instruction, but I think you can narrow the gap. I'm teaching 400 kids all online in the fall because of COVID-19 versus in-person, and there's certain tricks of the trade. You call on them more. You try and use technology such that you can see their reaction

• 49:11Scott Galloway?

  using big screens and big boards, kind of immersive learning, and demanding they turn their camera on. Quite frankly, overanimation, one of the tricks of the trade I find that I coach instructors regarding the transition online is pretend you're reading a book to an eight-year-old. And that is, you have to massively differentiate your inflection. I mean, you are really trying to keep these kids awake. You want to take advantage of the medium and elegantly incorporate video and cool sounds and special effects. I also believe you need to have a weapons officer, and that is, you get to focus on teaching. And my weapons officer is a guy named Drew, and obviously, our producer Caroline, that helped me focus on the content

• 49:54Scott Galloway?

  so they can fire missiles at, not the enemy, but the consumer base or student, and keep them sharp and on their toes. But do you ever replace the in-person? No, just as Zoom doesn't replace in-person meetings, but if you can do... Five meetings instead of one, instead of flying to Houston to look across the desk, 80% of that meeting done five times in a day versus one, you get to see where the value is. And when you can teach 400 kids as I am versus 160, because the room only holds 160, even if I only get to 80%, over time, you'd like to think that we'd be able to reduce costs and the benefits of online learning would compensate for the drawbacks. Having said that, and I did a call with Chancellor Gene Block, who's kind of a hero

• 50:38Scott Galloway?

  of mine, who is the chancellor of the university that receives the most applications of any university in the world. Who is that? That's right, University of California, Los Angeles. I've been talking to Chancellor Block about how we could use technology for a hybrid model, and this is where I think it goes. I don't think we'll ever move to fully online learning with campuses, or at least degrees or credentialed programs, undergrad four-year programs. But if we were to go to 50% for the learning that didn't acquire much, didn't require much interaction, wouldn't overnight, you double the resource, double the supply, double the capacity of what has been the constraining factor of freshman seats at world-class universities, and that is the size of the campus. So UCLA could go from

• 51:19Scott Galloway?

  30,000 students to 60 by just taking 50% of the most appropriate learning online. I think it's a huge opportunity. Congratulations on your good judgment to live in Spain. Thank you for the question, Javier. Keep sending in your questions. Again, if you'd like to submit a question, please email us a voice recording at [email protected].

• 51:50Scott Galloway?

  Algebra of happiness. So I am the opposite, or we are the opposite, of storm chasers right now. And that is, I am, I don't want to say freaked out by COVID-19, but sort of sleepwalking through this in 95, 98% of the time. I'm aware of my blessings because I make a good living, because I'm in the business of information, I'm able to work from home. And while I'm self-conscious saying this out loud, the reality is my life is on many levels, better than it was pre-pandemic. Specifically, everyone has come to accept that you should work or can, if you can work from home. They're more forgiving. And so I'm not on planes. That was the only thing that really wasn't ideal in

• 52:30Scott Galloway?

  my professional life was I spent two days a week traveling and the food or the bad food, the alcohol, I drink a lot when I'm on the road because I'm bored, the bad sleep, everything about it, being away from my boys just took a toll. And so not having to travel has been just such, so incredibly rewarding. And my career, quite frankly, hasn't slowed down. And I realize how privileged I am. But about 2% or 3% of the time, the gravity of what's taking place in the world and the notion that something that's 1/400th the width of a human hair could damage your health and that you could potentially pass it to someone in your life who's vulnerable,

• 53:08Scott Galloway?

  to me is terrifying. And I have those moments of terror, if you will. So one of the things I've been doing to try and avoid that terror is, and I'm fortunate enough to do this, is I've been planning logistically, how to move my family around the nation. And I want to be clear, I realize I'm in a position to do this and most aren't, but I am in a position to do it. So I've been doing it. I'm the opposite of a storm chaser right now. And that is wherever there's a storm of COVID-19 infections, I leave. I left New York, March 6, as it started spiking in Florida, got out of Florida, went to the Rockies, now back in New York, where you effectively have

• 53:48Scott Galloway?

  fewer infections and people are masking, which I think is actually quite inspiring. Anyways, when I was in Colorado, I invited my friend Lee, my closest friend from, from college. We've stayed together, been close friends for about, gosh, I guess about 30 years right now. His husband is the godfather to my oldest son. By the way, he's, his husband Tim is a shitty godfather, but I forgive him because he's a nice guy and he makes my best friend very happy. And that's enough. So Lee had, has had a big impact on my life on a lot of levels. He's a very thoughtful, funny guy who doesn't, you know, doesn't get, has just great perspective and has really influenced me as a person.

• 54:31Scott Galloway?

  One of the more tangible ways he's really impacted me, though, is I remember Lee's father showing up when we were in college to visit Lee. And Lee's father is this sort of Burt Reynolds look-alike, this handsome guy with a mustache who owned a furniture store, kind of a man's man. And they're an Italian family. And when Lee Senior would show up, he would kiss Lee on the lips. And I remember it was shocking. I remember thinking, wow, that's strange. And as I got older, I remembered that. And I thought, I would like my sons to kiss me as long as they're willing. And so, one of the nicest things in my life is I bend over naturally when I'm leaving to go on a trip, or when my

• 55:11Scott Galloway?

  kids get up from the dinner table, and just naturally, instinctively, they kiss me. And when we were together in Colorado this weekend, one of my boys got up from the dinner table to go to the bathroom, and instinctively just leaned over and kissed me. And Lee just lit up and said, oh, my gosh, they kiss you. And I said, yeah, you realize that was, I got that from you and your father. And it struck me later on, that the people who are most important to you, what you want to show them about your life is a life where other people love you. But more than anything, more than anything, the way you reflect that your life has worked out, the way you demonstrate that you are leading a life worth

• 55:54Scott Galloway?

  living, isn't that you built a life where others love you, but that you've built a life where you love others. That is the key here, to build a life where you have the security, where you have the generosity, where you have the good fortune to have a lot of people in your life that you love. Our producers are Caroline Shageran and Drew Burrows. If you like what you heard, please follow, download, and subscribe. Thank you for listening. We'll catch you next week with another episode of The Prof G Show from Section 4 and the Westwood One Podcast Network.