Less is More

Tim Wu, a professor of law, science and technology at Columbia University, author, and a contributing opinion writer for the New York Times breaks down everything you need to know about antitrust. Tim and Scott discuss the House Judiciary Antitrust Subcommittee’s hearing as well as what history can teach us about powerful corporations. Plus, Scott shares his thoughts on the busy earnings week and why a CEO’s ability to create a strong narrative has overwhelmed any sort of analytics. Looking at you, Elon. Office Hours: what Twitter’s subscription model could look like, understanding your cofounder’s strengths, and certification opportunities. Please take our quick survey to tell us how we can improve The Prof G Show: https://forms.gle/xVRfqCKrrNr9xzor5 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 20, 20/20 vision. A person with 20/20 vision can see what an average individual can see on an eye chart when they are standing 20 feet away. What if you had 25 vision? That would mean you can see things at 20 feet. Most people can't see until they're standing five feet away, or better known as an eagle eye. My father, true story, used to take me golfing with him because I could see unbelievable clarity around that little white ball and find it for him. I would save him money. That is, the only time we got to spend time together is I had the vision of a bird. True story. Let's soar like an eagle. Let's impair our vision and not absorb what is actually going on. Roll the tape. Let's party like it's 1999. Think of me as the podcaster formerly known as Prince. Go, go, go!

• 0:54Scott Galloway?

  In today's episode, we speak with Tim Wu, a professor of law, science, and technology at Columbia University, author and contributing opinion writer for The New York Times. He's also known for coining the term net neutrality and writes about private power, free speech, copyright, and antitrust. Tim will discuss big tech and what we can learn from the House Judiciary Antitrust Subcommittee's hearing. Oh my God, could I be more excited? So there's a bunch going on this week. Let's try to break it down. Big Tech's antitrust hearing falls during a busy earnings week. Alphabet, Apple, AMD, Facebook, Spotify, Shopify, PayPal, Comcast, and Boeing are among the companies releasing their latest quarterly earnings this week. Boeing, who knows what's going on there? Comcast, Peacock? Two Peacock? I think that thing makes no sense.

• 1:38Scott Galloway?

  The Goldilocks strategy, trying to have your cake and eat it too, has resulted in an offering that kind of is very squishy and hard to tell what makes sense. PayPal, I assume, is just going to continue to blow away. And I think contactless payments... You gotta think that that industry is accelerating. Shopify, oh my gosh, most innovative company in North America of the last decade. But wow, they're just going crazy. Their stock has just gone nuts. Spotify, love Spotify. Spotify was my stock pick of the year. I think for 2018, I picked it at 150. A year later, it was at 130, and now it's up about 250 or 260. So finally getting some of the love that Spotify deserves. Facebook, I'm sure they'll continue.

• 2:21Scott Galloway?

  Facebook has what I would argue is the most elastic, resilient advertising base in the history of mankind. AMD, the chip company, I think I know nothing about them. Apple, look for them to, I would argue, again, have very strong earnings, although you could see a hit around. I wonder if people are delaying their purchase cycle. And then Alphabet, Google continues to be, in my opinion, will start to show signs that their business is coming, coming back. What has happened here in general? What is going on here? Tesla is also gonna be recording its second quarter earnings, and it's qualified for inclusion in the S and P 500 index. Why is that a big deal? Well, A, it's sort of a, it's sort of a moniker of success.

• 3:05Scott Galloway?

  You're considered one of the 500 most important companies in the world. To be included in the S and P 500, companies must be US-based, trade on the New York Stock Exchange, NASDAQ, or Chicago Board of Exchange, have a market cap of at least 8.2 billion, and report four consecutive quarters of profit. According to US generally accepted accounting principles, Tesla's market cap is almost 300 billion. It's much different than other disruptors at this point. Both Google, Facebook, and Apple had substantially more earnings profits when they reached this point. So Tesla has kind of set a new benchmark for how a disruptor gets to a third of a trillion in value. The stock was up 9% on Monday, but dropped 3% after Bernstein analysts called Tesla's current valuation

• 3:47Scott Galloway?

  Mind boggling. I've been saying that and every time I say that, the stock goes up. So I'm not going to say that Tesla's overvalued and if they sold every car in the world for the next 10 years, they still couldn't justify this valuation, just not going to say it, just not going to say it. What's going on here? Stock market valuations or your stock prices are kind of a function of the numbers and the narrative. And that is the actual performance, your top line growth, the amount of money you're able to hold on to in terms of profits or EBITDA, the growth, et cetera. And then the narrative and that is what is the vision? What is your reputation? What is the marketplace's emotional reaction to your ability to be, or your potential to be one of these incredible companies over the next 10 or 20 years that reshapes an industry

• 4:31Scott Galloway?

  and maybe develops monopoly power? And what I see happening is that the narrative or that you are a disruptor, a visionary, has overwhelmed any sense of analytics. If you think about what's happening here, and I think it started in 1997 investment ladder. I think Steve Jobs kind of turned it into showmanship. He was sort of, you know, what was it Barnum and Bailey? He was the circus guy who just knew how to entertain people with these product releases. And this has gone just crazy. Now, who does this hurt? It obviously helps someone like Tesla where Elon continues to be seen as a disruptor, a visionary, constantly in the news for both good and bad behavior.

• 5:14Scott Galloway?

  We see Bezos continue to kind of outline this incredible vision. Who does it hurt? I've been thinking a lot about Pinterest. I wonder if Pinterest gets out of COVID alive. And that is, I think their CEO is a thoughtful, smart guy. And I don't think there's any room for him in a 21st century disruption economy. I don't think he's nearly obnoxious enough. And quite frankly, I don't think he's a visionary. And probably the new skillset for a CEO, in addition to operational and financial competence, is your ability to create this sort of compelling P T Barnum like vision that you have to shape this narrative. It's become more about brand and expectation. It's become more about promise. Then performance, if you will, I'm only halfway through the news, but something just popped into my mind, which I think is really important.

• 5:59Scott Galloway?

  And that is, I think the NASDAQ is a dangerous metric because it gives us the cold comfort and the illusion that our society is actually doing okay. Or even that the economy is doing okay, and it's not. It's just not. Something like 10 stocks responsible for 99% of the recovery since March lows. But also, I think another word, another word is really damaging and giving us cold comfort and is a bit of a head fake and calling on a comorbidity of ours, and that is our optimism. What is that word? Vaccine. It seems as if we're all waiting around for a vaccine. And so we have decided that our, as Americans, we always like a silver bullet, technology, innovation, solution to everything, that, oh, wait, don't worry, because our silver

• 6:44Scott Galloway?

  bullet is coming in the form of a vaccine. But here's the problem. 50% of Americans say they don't want to take the vaccine. So let's assume we're able to get to a vaccine, which I don't think is a foregone conclusion, and we're able to distribute it, we're able to figure out the supply chain. If 70% of the people are willing to take it, take it. We're at 35% of the US populace, and according to Dr. Fauci, we need somewhere between 70 and 85% to get to herd immunity. And this is what I just think is just so fucked up about our approach to this crisis. And it is a crisis. We need to go on a war footing and stop giving V-Day speeches and start giving D-Day speeches. The way we are behaving, the way we are approaching the enemy right now, would be tantamount to saying in 1944, look, we're in a race to the bomb.

• 7:29Scott Galloway?

  And we were in a race to the bomb. We were trying to figure out who could split the atom first, such that we would have a nuclear device. And we knew whoever got there first was going to win the war. If Hitler got there first, he would have dropped one on London and said, okay, unconditional surrender. Maybe we would have cut a deal with him and said, okay, you get Europe, we hold on to America. Or, you know, who knows what would have happened, but he, he and they, the Axis Powers, would have won. If Tokyo of Japan had gotten to the bomb and they weren't working on it, my understanding is they weren't working on it, they would have won, but we got to it first and we won. But we didn't stop building B24 super, flying super fortresses. We didn't

• 8:08Scott Galloway?

  stop manufacturing Bradley tanks. We didn't stop sacrificing and sending our young men and women into harms way overseas. And it feels as if here, we've decided, all right, it's a race for the vaccine, so we're not going to fight the enemy. We're not going to devote nearly the amount of resources to fighting the enemy, whether it's funding the CDC, or education around distancing, or education around the benefits of a vaccine, or providing people with resources such that they can, such that they can severely distance. It's more about, okay, how do we flatten the curve for rich people? How do we give loans to small businesses? There is some money, according to the new Republican-sponsored

• 8:49Scott Galloway?

  extension of the PPP program that will give people some relief. But it feels as if we're fighting the wrong war. It, it wasn't about a World War II, how do we protect the economic livelihood of small business owners? It was how do we have all hands on deck to fight the enemy, regardless of whether or not we get to the vaccine, i.e. the bomb. So I, I don't, I'm worried that this vaccine, or this notion, our American-like embrace of a silver bullet innovation, science-like, innovation-like solution, is going to solve the problem. This is our enemy. We need a war footing. We need to, in my view, go into what I would call the great distancing, and that is provide every family with the resources necessary to severely distance for 14 days. How would we do that? How would we do that?

• 9:34Scott Galloway?

  I would suggest that the largest corporations adopt all the households that consist of their employees. I would suggest that people in the top 10% of income-earning households who recognize greatness is in the agency of others, want to serve something bigger than themselves, would adopt households that need help. So a single mother that lives in a small place and doesn't have the resources really to distance. Severely for her and her kids that we adopt those households or individuals or corporations adopt those households and you come up with a plan. Your groceries, your Netflix, your online therapy if your kid's struggling. And we have planned walks enforced by local law enforcement where you get to go outside and take walks, but other than that, there's no deliveries. There's no going anywhere.

• 10:19Scott Galloway?

  There's no going into stores. There's no going to church. You are at home severely locked down for 14 days. Why wouldn't we stop believing the enemy is, or the real fear here is that the NASDAQ goes down or rich people are not as rich? Why wouldn't we employ citizenship and sacrifice and devote all of our resources to ensuring households could lock down for 14 days? Why? Because it's NPIs, non-pharmaceutical interventions is how we are going to beat this thing. Relying on a vaccine is dangerous in the same way that believing the NASDAQ's descent in any way reflects health in our economy. And the silver bullet notion that a vaccine is going to save us is cold comfort and could be dangerous.

• 11:05Scott Galloway?

  Support for the show comes from Bilt. Most of us work hard to earn our keep, but usually there's no one around to hand you a cookie when you successfully pay your monthly housing bill. No one except Bilt, that is. Bilt has expanded from their original renter rewards program and they have a lot more going on for members now. For example, members can earn points on mortgage payments too. Every housing payment gets you points that get you a lot more than baked goods, such as flights with top travel partners, including United and Hyatt, Lyft rides, Amazon.com purchases, and much, much more. Here's another benefit of Bilt membership. You also get access to what they call a neighborhood concierge. It can make restaurant reservations, book fitness classes, and find new local spots, all while rewarding you at more than 45,000 merchant partners. It's simple. Being a renter and now owning a home feels a lot better with Bilt.

• 11:50Scott Galloway?

  You can download the Bilt app and join the membership for where you live at joinbilt.com/propg. That's J-O-I-N-B-I-L-T.com/propg. Use our link so they know we sent you.

• 12:13Scott Galloway?

  Welcome back. This is super exciting for me, which gives you sort of insight into how lame my life is. But this guy is a hero of mine. Professor Tim Wu is a professor of law, science and technology at Columbia University, author and contributing opinion writer for The New York Times. He and Tristan Harris were asked to testify in front of a congressional committee on commerce. I was actually asked to testify along next to them, and I couldn't do it because I had a previous commitment on the West Coast. But I remember thinking that I had two kind of my emotions where I was really proud that I was in the same company as them, or invited to be in the same company as them. And I was exceptionally intimidated because Tristan has just done incredible work around the

• 12:56Scott Galloway?

  biological features or addictive qualities of big tech. And Professor Wu, in my opinion, is sort of the clearest blue flame thinker around antitrust. He wrote a book called The Curse of Bigness. This is the kind of book that I think you, even if you have no interest in it, and you read it, it's a very short read, and it just makes all kinds of sense and gives you insight into business and what happens when businesses become too big and our need to oxygenate the marketplace and how regulation coordinates with antitrust. Anyways, here is our conversation with a role model of mine, Professor Tim Wu. Professor Wu, where does this podcast find you?

• 13:33Speaker 02

  Ann Arbor, Michigan.

• 13:35Scott Galloway?

  Ann Arbor? What's the deal? Wait, that's Michigan, not Columbia. What's going on?

• 13:39Speaker 02

  My wife's family's here. Nothing scandalous.

• 13:45Scott Galloway?

  Nothing that interesting? All right, state of play. The hearings are supposedly where it's, what is it? It's about 4:37 on Wednesday. Give us the state of play. What have been the surprises for you around today's testimony?

• 13:59Speaker 02

  I don't know if I'm surprised. I think Bezos is getting a beat down of, I think he's the one that's surprised. It was sort of expected, I think, that Zuckerberg would get some heat. I think it was expected that you'd have the censor conservative movement going. But I think Amazon is just getting lashing, you know, and Bezos not liking it. That's the big takeaway I have here. The second thing I'll say is, I also feel that Zuckerberg has caught some heavy blows on his acquisitions of Instagram in particular. Obviously, they have a lot of docs that not everyone else has seen and I haven't seen. And in terms

• 14:40Speaker 02

  of strengthening the legal case, I'd say that the Facebook interrogation has done the most.

• 14:48Scott Galloway?

  Yeah, didn't he basically acknowledge that he, one of the reasons he purchased Instagram was to cauterize a competitor?

• 14:54Speaker 02

  Yeah, that was a Jerry Nadler line of questioning. And, you know, I think some people say, okay, so he spotted this, you know, promising company and bought them, in fact, a bunch of them. What's the big deal? But the antitrust laws since time Standard Oil suggested buying your competitors is illegal. Now, Instagram, the argument goes, wasn't a direct competitor at the time, but they were certainly a nascent competitor. So I think that spells trouble and, you know, made me wonder why the FTC hasn't filed its complaint already.

• 15:28Scott Galloway?

  And what about the other moment I thought was sort of telling or could come back to haunt the respective individual and company was Bezos acknowledging that Alexa products are sometimes sold below cost. Do you see that as an issue?

• 15:42Speaker 02

  Yeah, that is trouble for them. Selling below cost is always a red flag for predatory pricing. Yeah, I really think Amazon caught it quite a few times. Another thing they got caught on last year, I was actually testifying last year and sitting in the second row when they asked Amazon's lawyer, you know, do you treat your own products any differently than third-party products? And, you know, do you ever rely on information that you have? And he said, no, absolutely not. We treat them exactly the same under oath. The Wall Street Journal published a series of investigations suggesting that wasn't true.

• 16:24Speaker 02

  And when Bezos caught those questions, all he could say is, well, we are investigating it. And I thought that came off as pretty bad. It's not necessarily an antitrust violation, but it is lying in front of Congress. And I just say, I think the big question that comes out of this, policy question comes out of this, um, a hearing is like, well, what do we do when the monopolist starts eating up all of their competitors on their platform? What happens when they run the platform, but then have you invite you over for lunch and then have you for dinner? That's the big question as I see it.

• 17:00Scott Galloway?

  Give us the state of play around antitrust. Let's back up. So there's, we're in sort of that consumer harm phase of antitrust. Does antitrust need to change to address the monopoly power and the abuses taking place right now?

• 17:15Speaker 02

  I think the answer is it depends on the company. So I think in my view, um, Facebook and Google are in the biggest trouble in terms of establishing antitrust law. Facebook, uh, through its internal program of eliminating all its most dangerous competitors through acquisitions, cloning and denying access. And, uh, Google, due to activities that didn't really come up much in this hearing, but, uh, the case surrounding its domination of online advertising. Those cases can proceed under traditional antitrust and I expect for sure the Google case complaint to be filed this year. Facebook may depend on who wins the election.

• 18:00Speaker 02

  But to answer your question more fully, the stuff that people are complaining about with Amazon, essentially, you know, the, the big guy undercutting its competitors, cloning its competitors, that stuff is not clearly illegal under the current antitrust laws.

• 18:19Speaker 02

  Uh, in fact, there, there is a law, you know, if you're willing to go in the weeds, the Robinson-Patman Act, which is supposed to protect smaller retails against larger ones. It has been basically disemboweled, unenforced for decades. So there's a whole bunch of questions around retail, around platform retail, which you would need to either amend the antitrust laws or start enforcing this old 1930s law in a different way to do something about it. I know it's a bit complex, but that is the fuller answer.

• 18:48Scott Galloway?

  Yeah, everyone talks about Brandeisian. Is that where we need to go back to, that it's more about, well, you're going to forget more about this, so I'm going to explain the difference between sort of Bork and Brandeisian and consumer harm versus channel power?

• 19:01Speaker 02

  Yeah, I mean, there's sort of two views of what the antitrust law is about. Uh, one, I think, an older view, associated with Louis Brandeis, associated with the progressive era, even associated with Woodrow Wilson at some stages, uh, suggests that the antitrust laws were a reaction to power, private power, uh, the domination of industries by large monopoly players. And the, the point of it, uh, was basically to keep a check on private power, both for the reasons of helping consumers against such big companies, but also smaller sellers, also to protect the political system, to protect democracy.

• 19:42Speaker 02

  The newer tradition, um, the Borkian, uh, Chicago School tradition, 60s and 70s onward, says that there's just one point of antitrust law, keep prices low. It's like the price chopper law. And as long as prices are not raised in an obvious way, the antitrust law doesn't give a damn. You know, that law cares that if two competitors agree to fix their prices, uh, you know, at a hundred dollars a hamburger, but basically anything else, that doesn't care about. That latter tradition has been dominant, basically, since the George W. Bush administration. Um, the Obama administration didn't do too much about it, and that's where we are. So, you know, underlying this is this big historic struggle between Bork and Brandeis, as you alluded to.

• 20:27Scott Galloway?

  Doesn't a lot of it come down to how you define price, if you will, or the externalities, the costs we pay from this sort of monopoly power?

• 20:33Speaker 02

  Yeah, I mean, that, you know, we live in an age where everyone wants everything to be quantified. A hundred years ago, they just get up there and say, uh, you know, look, Standard Oil's a- A monopoly, look what they did to their competitors, look like bribe congressmen. You know, we passed this law to eliminate monopoly, break them up. So that was sort of more of a hundred years ago. I think we live in a culture and a time where people want things to be quantified, less lawyerly, more economic. But I think, as you suggested, you can do it. You just have to care about something more than the price paid by a home consumer. I mean, just to stay on this

• 21:14Speaker 02

  for a second, you know, the fact that Facebook has a monopoly on social network advertising actually does raise prices for advertisers. And if you can measure other stuff, you know, it may be like, you know, decreased privacy protections. Maybe those should be considered harms too. I mean, the basic point is this laser focus on one thing. Are you paying a cent more for a product because of this merger, whatever? That approach has failed.

• 21:40Scott Galloway?

  So I'll put a thesis out there. We've, one of the key steps to tyranny is when private power overruns the government and it feels as if we've been overrun through a mix of the FTC and the DOJ are outgunned, more than a hundred full-time lobbyists from Amazon, and most elected officials, and maybe today we saw some of that, the worm is beginning to turn, are infected with what I'd call this gross idolatry of innovators. But haven't these monopolies, unlike monopolies of the past, where it feels like we have sort of a proud legacy of antitrust, haven't they kind of lost the script around your domain?

• 22:13Speaker 02

  I'd say, you know, the antitrust enforcers are very focused on technocratic cases, trying to get things right. I think, my view is that an antitrust law and democracy have always been pretty closely linked. If you look at the 50s, and that was a time of the most serious antitrust enforcement. In Europe and the passage of new laws in Europe, a lot of it was a reaction to the rise of fascism in the 30s. And they said, look, I mean, the real danger here is when you have this alliance between government and monopoly. I mean, there is a real unstoppable power. And yeah, that is the thing I'm most worried about.

• 22:56Speaker 02

  You know, I, okay, I care about prices. I care about little companies, but I really care about concentrated power and what it means particularly when you see, start to see partnerships between government and monopoly. In that direction clearly lies authoritarianism and further on from that, full on fascism.

• 23:15Scott Galloway?

  So part of my talk track was literally parroted, plagiarized, stolen from you. And that is that a key step to tyranny, and I got this from your book, The Curse of Bigness, is when government no longer is a countervailing force to private power, but a co-conspirator. Can you speak more specifically about what happened in the 30s and if and what echoes we're hearing now?

• 23:37Speaker 02

  Sure. You know, I've actually done more research on this topic and other people are too. If I can just mention this, the international version of The Curse of Bigness is much more focused on the Japanese and German stories. And I think we really need to relearn the lessons of Japan and Germany and what they let happen. You know, they were pretty much okay with the idea of big companies running government in collaboration with the, well, not elected, but the government officials. That was cool. In Japan, in the 1920s and 30s, the major conglomerates even had their own political parties and they sort of took times being in, turned being in power.

• 24:21Speaker 02

  There was no lines between government and private power. And Germany, they had this extraordinary confidence that they had solved things in a way better than Americans by promoting cooperation and cartels and everyone's going to be friends and we'll put this all together. And, you know, both those ended pretty disastrously. I don't think we need to explain why.

• 24:45Scott Galloway?

  But what's the link? What happens? How does it play out? How do you go from, from corporations being too involved in government to this outright fascism and the ugly places? Walk us through some like step C, D and E. What happens?

• 24:59Speaker 02

  Yeah, it's a good question because I do think there is a difference just between having a bunch of private companies and obviously tipping over into full fascism. So if you look at the German example, there is this key moment that I'll focus on in German history where Adolf Hitler had been elected, at least with a, he didn't have a majority, but a plurality of support, but he was starting to weaken and there is every chance he could have been one of these sort of one-term wonders. And in his hour of greatest need, the concentrated German economy, the heavy industry decided,

• 25:41Speaker 02

  made a joint decision that actually they were done with democracy and they needed a strong leader like Hitler, who was going to bring Germany back to greatness. So when you have corporations powerful enough that they can influence and support and save a figure and promote a strong man to power, often one who ironically Hitler ran against, you know, monopoly and said, you know, I'm here for the common man and these companies are too powerful, but at the same time made it clear that with him in charge, it would be a good environment for the profitability, for the future prospects, for the global expansion of German monopoly.

• 26:24Speaker 02

  That is the key moment is when they decide that they're on that side. You have something similar and it often frankly follows an economic shock, like a terrible economic shock, like the Great Depression. People are upset, they want something, they're desperate, you know, there's economic misery everywhere. That's when people turn to these strong solutions and when you have powerful companies taking the side. Of the authoritarian leader. That's the moment it all switches. And there is, I, we're not there in the United States. There are other countries that might be closer to that point. But I think it is a ever-present danger for every country that calls itself a democracy,

• 27:03Speaker 02

  or even just calls itself a country, to watch a switch of allegiance from, of the major corporations to the autocrat.

• 27:12Scott Galloway?

  It feels to me as if there's this unholy alliance between Trump and Facebook. It, it feels as if it's, basically, they've said, you can weaponize my platform and you'll keep your kind of DOJ and FTC hands off of Facebook. You know, I might be paranoid. Does that mean I'm wrong? Do you see the same thing?

• 27:31Speaker 02

  No, I don't. I, I think it's transparent what Facebook is pursuing. In fact, I have it on good authority that Mark Zuckerberg, I don't like to, but he was interested in another one of my books, The Master Switch. And fascinated by the way in which AT&T, the telephone monopoly, managed to insulate itself against antitrust, which was they agreed and asked to be regulated and promised the government they'd be good and decided to cooperate and therefore ensure a sort of 70-year-long monopoly while everybody else was getting broken up. And I think there's no question that Zuckerberg sees cooperation with government as the key

• 28:14Speaker 02

  to the long-term survival of Facebook, whatever that means. And there's also no question to me that Zuckerberg will do almost anything to ensure his long-term survival.

• 28:25Scott Galloway?

  And if you look into your crystal ball, given, given what happened today, and you had to try and play out, or guess what the roadmap might be, how this might all unfold, who do you think gets their turn at the woodshed first? Does anything happen pre-election? Who's most likely to get antitrust action? What, what do you see happening?

• 28:45Speaker 02

  Sure. So here's what I think. I think you will see a complaint filed against Google this year before the election, probably in September, maybe in October, by the Trump Justice Department alleging monopolization. Also, the Texas AG playing a major role in that one. Facebook, I think that... The FTC has built a case. I think they're sitting around trying to decide what to do. And the agency has been conservative. So I think they're going to leave this for the election to decide. If Biden wins, depending on who's appointed, I wouldn't be surprised you see a complaint filed in that case.

• 29:28Speaker 02

  Amazon, I think that there will be legislation. I don't know if anyone has a handle on what it would be trying to prevent or change how Amazon treats its third-party sellers. I don't know if that'll go anywhere. On the other hand, there are a lot of people who really hate the way Amazon is treating people and want something done. Finally, Apple, you know, it's got a lot of private lawsuits coming at it, but they, among them, you know, they're actually the most valuable by market cap. They seem to be ducking stuff pretty well. So that's how I see this playing out over the next nine months or so.

• 30:06Scott Galloway?

  In the case of Apple, doesn't elegant antitrust not only encourage competition, but at the same time, it ideally unlocks value within that company, right? You break up AT&T and the seven baby bells end up being worth more. And I've never fully understood how you would apply antitrust. Isn't Apple more about regulation than antitrust?

• 30:28Speaker 02

  Yeah, I mean, the big, what does the big breakup look like for Apple?

• 30:33Speaker 02

  A little less clear. What market do they dominate? It's usually defined as an Apple market, i.e. people who won't buy anything but Apple. So if you break up Apple, it's because you care about size, period. You just don't think we should have big companies, even if people like them. Yeah, I actually don't, even though Brandeis sort of came close to that view, I don't share that view without more conduct. Yeah, I don't see the value. On the other hand, some of these other guys like Facebook, you know, Facebook, maybe you were going to ask this next, they're pretty much the most obvious target for a breakup. It's not hard to see how you would do it. And Google's an interesting case, too, you know, whether you choose regulation, okay, don't

• 31:18Speaker 02

  treat people better in advertising, or whether you say, listen, we want you to just be search and not mess with everything else and eat the whole ecosystem. You know, there is an idea, this is slightly different than antitrust tradition that says, you gotta have a couple of essential services, maybe search is one of them. But don't let those people own everything or control everything. I mean, that's the approach we took with telephones. We're like, all right, you get to have the telephone system. But that doesn't mean you get to like build your own radio network on top of the telephone system or have your own broadcasting system. AT&T had its own broadcasting system. I don't know if you knew that, not well-known fact. But that's a very different approach and maybe the right one for a company like Google.

• 32:01Scott Galloway?

  So, one of the things I love about your writing is that you not only talk about the law, but you provide the context, you set it in the context or you taxonomize it in history. When you look at the intersection between effective or ineffective antitrust and good or bad things taking place in a society, which firm, if you wanted to think about, you know, good for the Commonwealth, which firm do you think poses the greatest threat? Rank them.

• 32:28Speaker 02

  That's a good question in terms of historic tendencies. I hate to beat on a dead horse, but I think Facebook has been the most dangerous of the companies. They're just so close to the influence over politics and electoral outcomes that it's undeniable. Second, Amazon I don't see as a political danger. But I do see them as a danger, it's less of an antitrust issue, but to essentially the structure of American business. You know, can we really have one company selling everything in the whole country? What does that mean for local economies? What does that mean even for physical economies?

• 33:12Speaker 02

  They're the second most dangerous just for the idea of a way of life that has deconcentrated power. And then, you know, Google and Apple, I guess, are third and fourth. You know, there's things about Apple which I don't like, but I guess I've mellowed on them. I think they have a product that, they do have a product a lot of people like. And, you know, if you don't want to pay that much for them, they're sort of like a... The world's biggest version of BMW or Mercedes Benz, maybe I've softened too much on them. Google has this bad expansionist tendency, you know, having exhausted all the revenue in search advertising, they kind of go around trying to colonize stuff, which I

• 33:57Speaker 02

  think is bad for the internet ecosystem, bad for entrepreneurs. But that's a little bit different than for the state of the republic.

• 34:05Scott Galloway?

  Tim Wu is a professor of law, science and technology at Columbia University, is also an author and a contributing opinion writer for the New York Times. He is known for coining the term net neutrality and also writes about private power, free speech, copyright and antitrust. He joins us from Ann Arbor. Professor Wu, stay well, keep rocking the real world. You are a gangster and a role model.

• 34:28Speaker 02

  Well, it's been a pleasure to finally talk with you. I don't know why we didn't talk earlier.

• 34:33Scott Galloway?

  Oh, wow.

• 34:34Speaker 02

  But, you know, these things happen.

• 34:36Scott Galloway?

  We'll be right back.

• 34:40Scott Galloway?

  Wine Access. I don't drink wine. I don't drink wine. Why? Because you can take the boy out of the trailer park, but you can't take the trailer park out of the boy. However, I love champagne. I love the sparkling wine. That's why I love Wine Access. Whether you're a savvy collector or don't know where to start, you'll have trusted experts at your fingertips guiding you to the right bottles. The wine or the champagne, in my case, arrives right at your door. I tried the 2012 Pierre Jimonier Filet Grand Terra de Chardonnay Special Club champagne, which in English means daddy likes his bubbles. Daddy likes his bubbles. I also did the Envy Champagne and Bourgogne Selection Brew, which in French means give me another glass of that shit because the dog, the dog feels some rhythm.

• 35:22Scott Galloway?

  You know who thinks I'm an absolute fantastic dancer? Champagne. That's right. The dog has rhythm. You can have rhythm too. Order more champagne. You can become a Wine Access Wine Club member where every season you'll get six premium bottles of wine at a great deal. Or you can shop their online store at any time, no subscription needed, and find amazing prices. We know you'll love Wine Access just as much as the dog, so we've arranged this exclusive, limited time offer for Prof G listeners. Get $20 off your first purchase of 50 bucks or more. That's a good deal. That's a dog deal. That's an incredible savings on these outstanding wines or champagnes that are already of great value. To get $20 off, go to our special URL, wineaccess.com/prof. That's wineaccess.com/prof.

• 36:07Scott Galloway?

  The dog loves his bubbles.

• 36:11Scott Galloway?

  Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. Their regentic trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?

• 36:56Scott 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.

• 37:26Scott Galloway?

  Welcome back. It's time for Office Hours, the part of the show where I answer your questions about the business world trends, career advice, and more. If you'd like to submit a question, please email a voice recording to [email protected]. First question.

• 37:40Speaker 03

  Hi, Scott. This is Rory here in Dublin. First of all, I want to know if you're still dining out on your Twitter prediction. And my question really is around Twitter and the subscription idea. How do you think it would work? Who would pay? What would they pay? And what would they see? Thanks a million.

• 37:54Scott Galloway?

  Rory from Dublin, you sound like the guy who liked to kind of split or grab a Guinness with, right? My guess is Guinness, if you're in Ireland, is not considered a great beer the same way. Ireland is not considered a great beer the same way that Budweiser, if you're from the US, is not considered a great beer. Interesting thing.

• 38:11Scott Galloway?

  We have, we are genetically predisposed to mixing the gene pool. It's not a good idea to mix your gene pool with people who are close to you, i.e. family. So some interesting studies about kibbutzes in Israel, big kibbutz, 1,500 kids, almost none of them got married to each other, but the kibbutz, a couple of miles down the road, a lot of marriages, a lot of back and forth, because we have this natural, very healthy predisposition to mixing the gene pool. That extends to the romance products, so things like alcohol, food, cars, that if they're foreign, if they're from outside, if they're that sexy stranger, we are attracted to it. We want to interact with it. We want to mate with it, if you will. So as a result, Budweiser is considered a premium beer in Europe.

• 38:56Scott Galloway?

  Heineken is considered shitty beer in the Netherlands, and, but we'll wait, it's that foreign, strange, European blonde dude over here, and we're very drawn to it. The foreign notion kind of comes through, the desire to mix the gene pool. Anyways, Rory, I don't know how I got there. Okay, so let's talk about Twitter. So their user base rose 12%. Their usage was up something like 34%, but revenue was down 19%, which means, which means, when you think about this, and this is, okay, a couple of words, first word in mind, second word blown, it means monetization per user for Twitter is off something like 40%. They're getting 40% less monetization per user. What does that mean? It means their business model is broken.

• 39:41Scott Galloway?

  It doesn't work. So how would subscription, how would the move to subscription work? One, it doesn't have to be the biggest part of their business. If it just gets to 1% of the revenue, but it's growing faster than the core business, the markets will respond. Why? See above, narrative versus numbers, Rory. And that is if we move to a subscription model, it's the fastest growing part of our business, the narrative can change, and we can start to attract that cheap capital such that we can pull the future forward. Oh, la future! Me llamo Scott! Anyways, Jack Dorsey said in his earnings call last week that he was considering subscription models. Why? Because they've been listening to the dog. That's right. That's right. More to come on that, more to come on that. But anyways, how do they do it? I think it's pretty basic. And it kind of takes two complexions.

• 40:27Scott Galloway?

  The first is anyone less than 10,000 followers, it's free. 10 to call it 50,000, 10 bucks a month. 50,000 to 500,000, 50 to 100 bucks a month. I'm in that category. I have approximately a quarter of a million followers. It's taken me a long time to get there and I'm disappointed. I would have thought that the dog's genius would get me, I don't know, something like David Hasselhoff like territory at two or three million followers. But that's neither here nor there. I should pay 100 bucks a month. And then, and then if you get the Kanye or Elon, or I'm trying to think of famous people right now that have huge followings, or Kendall Jenner, and you have tens of millions of followers, I think you pay 10,000 bucks a month. And by the way, I think it's worth it.

• 41:11Scott Galloway?

  I still can't figure out how Twitter makes money. I never see any ads. This is a tremendous platform, both in terms of your influence that you garner and your ability to monetize that influence. I would happily pay, and so would most people. So you just move to a user-based driven revenue model. And then I think you could have niches. I think you could curate some of the most influential people in things like politics or finance, and then create distinct or discrete revenue or discrete streams, news streams that are highly curated, and then charge people for access to those streams. There's probably another dozen ideas that they should pilot, and then they pick two or three. And as long as they get to 1% of revenue,

• 41:54Scott Galloway?

  which would be about $7 million a quarter, and that business is growing faster than their core business, boom. I think you see Twitter at $100 a share, and that's why I own Twitter. I purchased it at about 30 bucks, wrote the board a mean letter. It popped to 39. They didn't respond to me, so I sold, went back down. Started advising a hedge fund that bought $2 billion worth of stocks. I bought some stock at about 33. It immediately went down to 28 and I thought, oh God, I hate this business and I hate myself. But I think that all the time. That has nothing to do with Twitter stock. And now it's back to about 36 or 37. But trust me on this one. Twitter just gets to $10 million a quarter in subscription revenue.

• 42:36Scott Galloway?

  Shows any kind of mojo for this and boom, shama lam. Let's, let's pull out the good stuff. It's champagne and cocaine for El Perro. This thing goes to 100 bucks a share. Rory from Dublin, let's connect over a beer or something else. The next time you are in New York or I am in Dublin, I am dying to go to Dublin. Anyways, thanks for the question. Next question.

• 42:58Speaker 04

  Hey Poggi, my name is Hamid from Nigeria. I fell in love with you after reading before. Great work and I really love your podcast. So I have a question. I'm involved with a startup with my co-founder, but the challenge is that my co-founder has been unable to make any of the financial commitments. There are a lot of costs and a lot of things we have to do and pay for. But perhaps because he's from a fairly disadvantaged background, he can't contribute in any way to all of those. Is this a red flag? He started feeling bad and he's thinking maybe he should leave since he's unable to make the commitments.

• 43:38Speaker 04

  But I think there's long-term value that he will bring to the table for that now. But because it's early stages, we are really unable to assess all that right now. What do you think we should do? Thank you.

• 43:52Scott Galloway?

  Thanks, Hamid. Thanks for the question and thanks for your kind words. So I've always had, until recently, I've always had co-founders. And most successful companies, although one person usually gets the credit, they have co-founders, whether it's Paul Allen and Bill Gates, you know, Steve Jobs and Wozniak. And usually it's a marketer and kind of the face of the company who gets a disproportionate amount of the credit. And then an operations person, a programmer, or somebody who kind of knows the nuts and bolts of the company. And there really is a whole that's greater than some of its parts. And your ability to recognize your partner's strengths speaks well to your business maturity.

• 44:33Scott Galloway?

  Now, as it relates to the notion, if one founder doesn't have the capital that the other founder has, that doesn't mean it's the end of the partnership. The way I would look at it is there's common stock and there's preferred stock. Common stock is what is given to the employees in exchange for their commitment of their time. And you both should split that. You put aside a pool for other employees, but whatever's there for the founders, if you will, the founding employees, you guys split that. However, however, the company is going to need some capital as a startup to get going. And if you contribute the majority of that, you come up with maybe some sort of valuation for the company and maybe ask some outsiders what realistically would be sort of a valuation range for a small company just getting started in Nigeria.

• 45:17Scott Galloway?

  And they might say, okay, realistically, this company is worth, I don't know, a quarter of a million dollars. I'm pulling that out of the air. I don't know what kind of company it is. And if you come up with the first 25,000 or 50,000 dollars to get the company going, then you get 10% of the company of preferred stock. Preferred stock means you get your money back first. It has advantages, sometimes better voting rights. But you get that, quite frankly, you're the investor. And so I think there's absolutely a way around this. Also, the key to any partnership, and I think this is true in business, and I think it's true in marriage, is one, being generous, because you will have a tendency, a natural tendency, to overestimate and inflate your own contributions and minimize theirs.

• 45:58Scott Galloway?

  So the best partnerships are ones where you not only appreciate each other, but you have transparency on a regular basis. You sit down and you air your grievances, but you always try to come to that partnership with a spirit of generosity. Congratulations, best of luck to you. Keep us abreast of your progress, and I hope you and your partner figure things out. Next question.

• 46:21Speaker 05

  Hey, Prof. This is Michael from Tempe, Arizona. Longtime listener, first time caller. You've been speaking a lot about how the pandemic is a catalyst for much-needed disruption within the education space. One of the more interesting topics you discuss is micro-certification. As an IT professional, I've had to take various COMTIA or AWS certifications to level up in my career. It's easy to envision a future where marketing or sales positions require a more granular certification than a wide-ranging bachelor's degree. My question, what are your thoughts on the boot camp industry? Startups like App Academy and Lambda School are offering technical training programs, and the publicly traded 2U has been partnering with universities directly to run similar programs.

• 47:04Speaker 05

  Do you think this model of nano-specialization is the next big thing? Also, what are your thoughts on an independent education program like Lambda School compared to 2U's university partnership model? Thanks in advance.

• 47:17Scott Galloway?

  Thanks for that, Michael, from Tempe. Okay, so micro certification, you touched on a few things there. The primary benefit or the primary value add of a university diploma or the education, whatever you call it, there's the education, right? You actually do learn stuff, there's the networking, there's the experience. And then, but more than anything, more than anything, it's the certification. And that is the majority of the return on investment of $380,000, which will cost you to go to Yale for four years, is received when you are admitted. And that is, for the rest of your life, having that certification that you graduated from

• 47:59Scott Galloway?

  Yale, and even more importantly, even more importantly, they got to end at Yale, will yield millions of dollars in benefits. Now, because education has figured out a way to have a cartel, because university administration has figured out a way to raise their compensation much faster than inflation, thereby passing on extraordinary tuition costs, playing on the hopes and dreams of middle-class America, tuition has exploded, and a lot of those Tier Two brand certifications are no longer worth the money, and we're coming to that realization in COVID-19. It is really the certification. So if you can build these kind of micro brands, that any due diligence shows that if this person took this class in coding or CompTIA, by the way, I'd never heard the word CompTIA, and I'm sure everyone else has, and I just didn't know what it means.

• 48:44Scott Galloway?

  But that kind of micro certification, I think there's a big field in it. What's interesting, what's interesting here is I wonder if we move to...

• 48:53Scott Galloway?

  A system where your certification is going to be a function of where you get in. And that is, can you see kids getting into Harvard, Yale, Stanford, MIT, some of the best schools, and then not going? And just putting on their resume that they were admitted to Harvard, but they didn't go? Because it feels as if the new kind of idols are the profile of the true disruptors in our society, or someone who goes to Harvard decides that it's not worth their time. But anyways, I wonder if we end up with some sort of certification or all kinds of testing to say, this individual, regardless of the formal education, is certified in X, Y, and Z. I think that's probably where we're moving. So let's talk a little bit about Bootcamp.

• 49:34Scott Galloway?

  And to Businessware reported the global coding bootcamp market size is expected to grow by almost half a billion dollars in the next four years. Why? Because they're cost effective. The typical cost of coding bootcamp ranges between 5,000 bucks and 20,000. At Prof G, my online education startup, where we're doing basically two-week sprints, where we're trying to offer 70% of an elite MBA elective at 10% of the price. And by the way, I'm a capitalist. It's a for-profit company. But anyone that's interested in taking this, one of these classes can apply for a scholarship. And just to give you some insight, it's unlikely you won't get it. We don't turn anyone away for not being able to afford taking a class.

• 50:14Scott Galloway?

  But anyways, back to To You, App Academy, Lambda School, all offer kind of Fifty Shades of Grey. What they have done is they've taken advantage of the fact that there is the innovator's dilemma in universities, and that is, we are paid not to innovate. And that is, the people who have the power are mostly tenured professors that, as they reach the most unproductive years, are awarded lifetime employment and make hundreds of thousands of dollars a year, plus expenses for increasingly little productivity. And in order to justify that, we've created a cartel, we've raised prices faster. They want to use every weapon of mass entrenchment not to disrupt themselves. So what's happening this fall? I have 400 students. Why do I have 400 students?

• 50:58Scott Galloway?

  I typically have 160. Why do I have 160? Because the room, 260, at the Coffin Management Center, only holds 160 kids. But since I am teaching all online, as I have told them I am not stepping back on campus until there's a vaccine, I now have 400 students. So whereas before universities had a 30-80 rule, that 30% of the instructors were teaching 80% of the students, it's about to go to 10-90, meaning that the vast majority of faculty are no longer going to be, really add any value around teaching. They're going to be relegated to their research. The majority of tenured professors get by with this sort of peanut butter and chocolate cocktail of being B-plus lecturers and B-plus researchers. But when they immediately go to F teachers, because everyone can take the professor they want

• 51:41Scott Galloway?

  and they're not limited by the actual physical space, which will create a flight to quality, then there'll be a lot of pressure on tenured professors to actually produce research that is relevant. And they don't like that kind of accountability. They don't like that kind of pressure. So for the last decade, you have seen incredible resistance to technology, incredible resistance to anything that upends the status quo. And I think that is about to be flipped on its head. Look for the mother of all disruption in one of the largest industries in the world to take place in the next few weeks as we realize that people are not returning to campus or they shouldn't return to campus. We're going all remote and it makes no sense to pay $58,000 for what is effectively a streaming video service

• 52:24Scott Galloway?

  that costs 5,800 times what Netflix costs. Think of it, at the end of the day, these streaming video platforms are nothing but organizations that spend billions of dollars on intellectual property and content that are distributed over broadband for anywhere from $5 if you're Apple TV to $12 if you're Netflix. Well, Harvard effectively is a streaming video platform charging $58,000 a year. Now granted, you get a much better certification. It's worth it. But what if you're a second tier school? What if that certification doesn't mean a lot? Would you pay $48,000 for that streaming video platform? I don't think so. So some of these micro certifications, there's unbelievable opportunity in certification. So whether we call micro certification or something else, but that is kind of where the

• 53:08Scott Galloway?

  real return is. And I think you're going to see a boom, a boom in that industry. Michael from Tempe, Arizona. ASU, a real innovator in this space, a real innovator. Arizona, just an innovative place in general. I'm not sure why I'm going with that. So I'll end with, thank you for the question, Michael. We love your questions. Please email us a voice recording at [email protected].

• 53:41Scott Galloway?

  Algebra of happiness. What role do substances or addiction or activities play in your life? Or activities that are somewhat addictive? The general litmus test for people around whether or not they have a problem is if they're living under a bridge or they feel physically addicted to something. And that is the wrong litmus test. The majority of alcoholics, something like eight or nine in 10 alcoholics are functioning alcoholics. And that is they're not living under bridges. They're still able to make a living. They're still able to put on a facade that things are going just fine. But they are struggling or that is their life is not as good as it could be. And again, the litmus test isn't that you have a shitty life. The litmus test is could your life be better? And something I encourage my kids to do, when I say kids, I mean my students, is

• 54:26Scott Galloway?

  look at all the things you ingest, whether it's shopping, e-commerce, Fortnite, video games, marijuana, alcohol, X, whatever it might be. What are the things where you get some sort of titillation or numb you? And what role do they play in your life? And by the way, I am absolutely not a teetotaler. I love to drink. I think I'm a better version of me with alcohol. But I like to think that I take decent or conduct a decent audit of everything I do and decide when it's time to dial it down. When I moved to New York to become an investment banker for Morgan Stanley, every night I would go downtown and get shitty drunk with what felt like other very successful people.

• 55:10Scott Galloway?

  And I realized after about a year of that nonsense that I would generally be just less shitty at a bunch of things, whether it was my workouts, or maintaining relationships, or just being better at work, if I didn't drink as much. I didn't stop drinking, but I decided I would drink less. By the way, since then, I've gradually toggled my way back to drinking a lot. But that's neither here nor there. Take stock, do an audit of all the things in your life that you ingest, and decide, would you generally just be a little less shitty at some things if you smoked a little bit less pot? And try and allocate some of that time, energy, money, whatever it might be, to something that you think, if I did a little bit more of this, I'd be a little bit better.

• 55:54Scott Galloway?

  But take stock of the role substances play in your life, and recognize that addiction, addiction isn't the litmus test. The litmus test is, what can you do? What can you do less of, such that you can have more? Specifically, more of life, more of relationships, more of physical activity, and more of self.

• 56:17Scott Galloway?

  Our producers are Caroline Shager and Drew Burrows. If you like what you heard, please follow, download, and subscribe. Thanks for listening. We'll catch you next week with another episode of The Prop G Show from Section 4 and the Westwood One Podcast Network.