Office Hours: Doing Business With Russia, Competing with Industry Giants, and Choosing the Right Hire

Scott answers a question about Google and Apple’s decision to take down a Russian voting app. He then explains why finding a niche to serve is crucial to competing against industry Goliaths as a small company. Scott also offers advice to an expanding business on whether to hire an employee for a marketing or business development role. Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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

• 0:01Scott Galloway?

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• 0:49Speaker 01

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• 1:27Scott Galloway?

  Welcome back to the Prof G Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, visit officehours.profgmedia.com. Again, that's officehours.profgmedia.com. First question.

• 1:44Speaker 02

  Hey Scott, it's Mark from Albany, Georgia. I was wondering what your opinion was of Apple and Google recently removing an opposition voting app on Friday, September 17th. It could have helped disseminate information to Russian voters. Their media, which is state TV, does not provide an even-handed view of any opposition candidates or ideologies. And of course, their internet would censor the same. These apps were supposed to help voters focus on which opposition candidates might have a chance, but I guess no more. Seems like between supporting information delivery for voters versus supporting a corrupt regime, these companies chose the latter. What about the do no evil of Google and Apple's protection of privacy?

• 2:27Speaker 02

  Is this the new paradigm where shareholder profits are paramount? Anyway, thanks in advance and love the show. By the way, I think I met you back in the day at our fraternity at UCLA. Thanks again.

• 2:40Scott Galloway?

  Wow, I wonder what your last name is, Mark? I wonder. That's interesting. We're fraternity brothers, but you didn't give me your last name. Mark from Albany, Georgia. Trying to think, I'm trying to go back. I don't remember much of that as I was drunk or high most of the time. Not all of the time. It's not easy to get a 2.27 GPA at UCLA because that means you get less than a 2.0 several times and you go on academic probation. And then if you get another sub 2.0 GPA, you go subject to dismissal. So I would just figure out a way to get a couple of Bs that would give me another two or three semesters before I get kicked out again. But and it's all your fault, Mark. You, you were the negative influence on me. Not that I know who you are, but you led me down that path. Good times. Love it. Give money back to UCLA so it's that kids with their shit together.

• 3:24Scott Galloway?

  And a lot of them there can have some of the opportunities afforded to me. Anyway, it's not why I went there. So look, Mark, I think it's easy to be a purist on this stuff. And what happened here, there's just no getting around it. It's upsetting. Apple and Google removed the Navalny app, named after prominent Russian opposition leader Alexei Navalny, on the same day that polls opened for parliamentary elections. According to CNN, the Navalny app offered recommendations for casting strategic votes to unseat incumbents from Putin's party, United Russia. Russian authorities, who claim the app is illegal, prompted the app's removal when they threatened to prosecute Apple and Google employees based in the country. So there's just no getting around it. This is a corrupt country and we have two choices. We either operate in corrupt countries, and there are a lot of them, or we leave because

• 4:09Scott Galloway?

  they will kick us out if we do not comply with their laws and they get to make the laws. So the question is, would we be better off or do we think the world would be better off and our place in the world by not operating in Russia? That's what it comes right down to. And in certain instances, we decided to not do that. Google picked up and took their ball and went home after it was clear that China wanted them to share information and was stealing their IP. I don't know. I think I probably, I kind of land on the side of big tech in that it is very hard to find moral clarity around doing business in nations that are corrupt. And I probably ultimately side with Apple and Google and say that Russia is, I would

• 4:51Scott Galloway?

  even go as far as to say Russia's our enemy. They're like this, this power whose influence is waning. Their economy is, I think, one-twelfth the size of ours. It's basically a kind of a gas station with nuclear weapons. And as a result, they act out. I think they're very smart and very strategic and are using social media platforms, See Above, Facebook, to tear us apart by constantly inciting more coarse discourse on these platforms with millions of bots. Supposedly, two-thirds of the metrics being reported in terms of ad viewership are bots. And I think a lot of those come out of China and Russia, who said, I know we can't compete with the US on economics, on innovation, or on military, so let's atomize the competition. Let's tear them apart internally. Let's have them start

• 5:36Scott Galloway?

  eating their young. Let's have them start hating each other. And I think they've been very effective at it. For the cost of an aircraft carrier, not even the cost of an aircraft carrier, the cost of a small frigate, they can hire tens of thousands of people in troll farms to find people with any influence and antagonize them, or to incent fights on Twitter, or to spread misinformation. I think that's exactly what they're doing. So it's a corrupt nation, but I would like to see us take more and more money out of that nation, whether it's Samsung or their own technology. I think we're sort of playing into their hands if we exit those nations. I would rather see us continue to have the economic engine that we are. Does that say we should do business with every country?

• 6:21Scott Galloway?

  No. But be clear, that void of technology will be filled by other players, probably Chinese players, should we decide to exit. So difficult to find moral clarity. I probably come down, I think it's easy to be a purist, but I think what's probably best for America is to hold our noses and recognize that if we want to operate in these countries, we have got to comply with their laws, even if their laws are corrupt. So I'm like, cash their rubles and then reinvest in a great democracy, reinvest in regulation that cleans up the shit off of Facebook where Russia is fucking with us every day.

• 6:54Scott Galloway?

  Tough one, tough one. Trying to think of who you are. Will we pledge brothers? Anyways, definitely one of the many reasons I can no longer run for governor of Florida is because of my years in the fraternity. That shit's definitely gonna come back to haunt me. Worth it, worth it. Question number two.

• 7:13Speaker 03

  Hi, Professor Scott. My name is Nikhil and I am based in Melbourne, Australia. I will be joining a tech firm called Super Micro very soon over here as a sales manager, and I am up against giant firms like HPE, Dell, and Lenovo, who have captured a large chunk of the server market. Knowing our team is very small when compared to theirs, what sort of a sales strategy do you think is effective in going against Goliaths, knowing I am David? Thank you very much.

• 7:44Scott Galloway?

  Nikhil, you sound so refined. You sound like someone who's the sort of the ultimate, I don't know, concierge or chief of staff for some billionaire nemesis. Anyways, so the global server market is now worth more than 23 billion. HPE and Dell are tied for leadership in the industry. Together, they account for about a third of the total market revenue. So it's not a, it's, it's not a concentrated industry. The two biggest players account for 31%, whereas the two biggest players in digital marketing are 80%, Google and Facebook. Or the two largest e-commerce companies, just one, is 50% of all online revenue, i.e. Amazon. Or there are two companies, Apple and Google, iOS and Android respectively, that are probably 90% of the global operating systems for handhelds.

• 8:29Scott Galloway?

  Anyways, what is the strategy? It's pretty simple. The specific crowds out the general. When you're smaller, you gotta go very, very focused, very niche. You know, servers for the biotech industry, or servers for a certain type of company, or servers that are more green, whatever it might be, the specific crowds out the general. And you need to basically go to places where you can be so laser focused that for that specific niche or need, you're gonna be the superior offering. Because the big guys, quite frankly, don't look at small markets. They look at niches as sort of like, is that worth our time? In order to move the needle, if we're... If we're 15% of a $23 billion market, we're a $5 billion market. We don't go after $10 million niches. So you've got to go very niche and very specific.

• 9:14Scott Galloway?

  I don't see any other way to compete in any industry against large companies. But guess what? The great thing about large companies is they're large and they become very bureaucratic. They become very slow. They have a lot of advantages, but small companies have advantages too. And I generally find that a lot of companies like to deal with small players. You can be better at relationship management, better at customer services. I started Red Envelope going up against big players in e-commerce. I started Profit Brand Strategy going up against very big consulting firms. And I started L2 going up against very big analytics companies. And now I'm starting Section 4 going up against huge multi-billion dollar organizations called the universities. And in every instance, if you find a niche and you can do a better job through focus,

• 9:58Scott Galloway?

  intense focus, and quite frankly, just out fucking hustling them, you can carve that niche. And then what you want to do with a small company? What is your objective with a small company? It's to find a half a dozen, a dozen, two dozen clients that will be your evangelist, to over-serve them, even if it means late nights and losing some money initially. You need to create a core of evangelists who say, I'm going to this company. I'm going to take you with me, or I'm going to give you the email or refer you to a buddy of mine at this company. That is what it's all about. Your product strategy, all studies to the following test. How do I create a small chorus of intense evangelists for my offering? And the way you're going to do it, my brother, is through focus. The specific crowds out the general.

• 10:43Scott Galloway?

  We'll be right back.

• 10:47Scott Galloway?

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• 11:32Scott Galloway?

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• 11:50Scott Galloway?

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• 12:34Scott Galloway?

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• 12:57Scott Galloway?

  Welcome back. Question number three.

• 13:00Speaker 04

  Hi, Prof G. Congrats on your CNN gig. Hopefully, you are not too cool for school to answer another question. Thank you for all you do. We are a small business out in California, ready to make the next move, which is a new hire. Do we hire a biz dev person or a marketing person? These are two completely different roles, I understand. Ideally, the person can do both, but where should their focus be? Getting new business or getting the word out there? Thank you again. Hope to hear from you.

• 13:32Scott Galloway?

  Thank you, Son. Son from California. I'm gonna go out on a limb here and assume that your parents were hippies. And I like that you think daddy is cool, but let's be honest, I make a room cooler by leaving it. But thank you anyways. So there are about 3/4 of a million open business development positions in the US on LinkedIn and about 620,000 open marketing positions. So the key is just to find, I'm a big believer in hiring great athletes, that even if somebody doesn't have the perfect background for the job description, you kind of have your list of what you want in a person. And then, my grandmother used to say this, and she was talking about mating, or boyfriends and girlfriends, and that is you have your list, and then you fall in love and you tear up your list. I think you do the same when hiring, and that is when you meet someone good,

• 14:15Scott Galloway?

  and when you meet a great athlete that just feels like they'd be good at whatever they did, you hire that person. Especially in a small business, you need a series of great athletes. You need a team of decathletes that can kind of play a lot of different sports. I don't know the specific situation in your company to answer biz dev versus marketing. My bias, my bias is towards biz dev. Traditional marketing, as I think you've identified here, is it's a very difficult way to measure customer acquisition, spending money on PR and general advertising. But if you're B2B, and I don't know what your business is, at the end of the day, the best thing you can do for your brand is to sell your product to people, get revenues in the door, and have people love it.

• 15:00Scott Galloway?

  And so a BD person that helps find customers, especially if it's B2B, is where my kind of bias would be. Again, I know nothing about your business, so this is a difficult one. At L2, one thing I would sort of say more generally is, I've always been more of a product person, and that is, we had a creative team of eight people and animators trying to make the product come alive at L2, our analytics company, to make beautiful content and beautiful reports and research, before we had a salesperson. And that is, I think that in an era of social media and kind of this networked economy, they truly break through products, break through and get a decent amount of oxygen

• 15:42Scott Galloway?

  on their own. So I think marketing to a certain extent in B2B has given way to true 10x better products. Like you gotta just be product obsessed. And if the product really sings, people will find it. And again, you want to create those evangelists. So not knowing your business, I mean, small companies have a difficult time spending any real money, getting any real heft in terms of marketing. And all your marketing should be very data-driven, customer acquisition, online, I hate to say Google and Facebook are probably kind of the only games in town. Maybe a little bit of PR if you can get it. But more than anything, in a small company, you want to hire someone fantastic. And my bias here, again, can, you know, big asterisk, big footnote, I don't know your business, is around someone

• 16:23Scott Galloway?

  who's going to go out and grab revenue. The focus has got to be, how do we make a much better product? Once you have a better product, the marketing and the biz dev and everything else kind of falls into place. Anyway, son, sorry I can't be more specific. Son from California, son from sunny California. I was in Beverly Hills last weekend, pink robe, Beverly Hills Hotel, big sunglasses, Cobb salad, iced tea, hello, magic. Hello, Southern California magic.

• 16:51Scott Galloway?

  That's all for this episode. Again, if you'd like to submit a question, please visit officehours.profgmedia.com. Again, that's officehours.profgmedia.com.

• 17:09Scott Galloway?

  Our producers are Caroline Shager and Drew Burrows. Claire Miller is our assistant producer. If you like what you heard, please follow, download and subscribe. Thank you for listening to the Prof G Pod from Vox Media Podcast Network. We will catch you on...

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