[This talk contains graphic languageViewer discretion is advised] So, this is the first and the last slide each of my 6, 400 studentsover the last 15 years has seen.
I do not believe you can builda multibillion-dollar organization unless you are clear on which instinctor organ you are targeting.
Our species has a need for a superbeing.
Our competitive advantageas a species is our brain.
Our brain is robust enough to askthese really difficult questions, but, unfortunately, it doesn’t havethe processing power to answer them, which creates a need for a superbeing that we can pray toand look to for answers.
What is prayer? Sending a query into the universe, and hopefully there’s some sortof divine intervention — we don’t need to understandwhat’s going on — from an all-knowing, all-seeing superbeing that gives us authoritythat this is the right answer.
“Will my kid be all right?” You have your planet of stuff, you have your planet of work, you have your planet of friends.
If you have kids, you know that once somethingcomes off the rails with your kids, everything melts, in your universeto the Sun that is your kids.
“Will my kid be all right?” “Symptoms and treatment of croup”in the Google query box.
One in six queries presented to Googlehave never been asked before in the history of mankind.
What priest, teacher, rabbi, scholar, mentor, boss has so much credibility that one in six questionsposed to that person have never been asked before? Google is our modern man’s God.
Imagine your face and your nameabove everything you’ve put into that box, and you’re going to realizeyou trust Google more than any entity in your history.
(Laughter) Let’s move further down the torso.
(Laughter) One of the other wonderful thingsabout our species is we not only need to be loved, but we need to love others.
Children with poor nutritionbut a lot of affection have better outcomes than childrenwith good nutrition and poor affection.
However, the best signalthat you might make it to be part of the number-one fastestgrowing demographic in the world — centenarians, peoplewho live to triple digits — there are three signals.
In reverse order: your genetics –not as important as you’d like to think, so you can continue to treatyour body like shit and think, “Oh, Uncle Joe lived to 95, the die have been cast.
” It’s less important than you think.
Number two is lifestyle.
Don’t smoke, don’t be obese, and prescreen — get rid of about two-thirdsof early cancers and cardiovascular disease.
The number one indicator or signalthat you’ll make it to triple digits: How many people do you love? Caretaking is the security camera — we call the low-resolutionsecurity camera in our brain — deciding whether or notyou are adding value.
Facebook taps into our instinctive neednot only to be loved, but to love others, mostly through picturesthat create empathy, catalyze and reinforce our relationships.
Let’s continue our journey down the torso.
Amazon is our consumptive gut.
The instinct of more is hardwired into us.
The penalty for too littleis starvation and malnutrition.
Open your cupboards, open your closets, you have 10 to 100x times what you need.
Why? Because the penaltyfor too little is much greater than the penalty for too much.
So “more for less” is a business strategythat never goes out of style.
It’s the strategy of China, it’s a the strategy of Walmart, and now it’s the strategy of the mostsuccessful company in the world, Amazon.
You get more for less into your gut; digest, send it to your muscularand skeletal system of consumption.
Moving further, once we know we will survive, the basic instinct, we move to the secondmost powerful instinct, and that is to spread and selectthe strongest, smartest and fastest seed to the four corners of the earth, or pick the best seed.
This is not a timepiece.
I haven’t wound it in five years.
It’s my vain attempt to say to people, “If you mate with me, your children are more likely to survive than if you mate with someonewearing a Swatch watch.
” (Laughter) The key to business is tapping intothe irrational organs.
“Irrational” is Harvard Business School’sand New York Business School’s term for fat profit marginsand shareholder value.
“High-caloric paste for your children.
” No? You love your choosy mom.
Why choosy moms choose Jif:you love your kids more.
The greatest algorithm for shareholdercreation from World War II to the advent of Google was taking an average productand appealing to people’s hearts.
You’re a better a mom, a better person, a better patriot if you buy this average soapversus this average soap.
Now, the number one algorithmfor shareholder value isn’t technology.
Look at the Forbes 400.
Take out inherited wealth, take out finance.
The number one source of wealth creation: appealing to your reproductive organs.
The Lauders; the numberone wealthiest man in Europe, LVMH.
Numbers two and three: H&M and Inditex.
You want to target the mostirrational organs for shareholder value.
As a result, these four companies –Apple, Amazon, Facebook and Google — have disarticulated who we are.
God, love, consumption, sex.
The proportion in your approachto those things is who you are, and they have reassembled who we arein the form of for-profit companies.
At the end of the Great Recession, the market capitalizationof these companies was equivalent to the GDP of Niger.
Now it is equivalent to the GDP of India, having blown pastRussia and Canada in ’13 and ’14.
There are only five nations that have a GDP greaterthan the combined market capitalization of these four firms.
Something is happening, though.
The conversation just a year agowas, which CEO was more Jesus-like? Who was running for president? Now the worm has turned.
Everything they’re doing is bothering us.
We’re worried they’re tax avoiders.
Walmart, since the Great Recession, has paid 64 billion dollars in corporate income tax; Amazon has paid 1.
How do we pay our firefighters, our soldiers and our social workers if the most successful companiesin the world don’t pay their fair share? Pretty easy.
That means the less successfulcompanies have to pay more than their fair share.
Alexa, is this a good thing? This is despite that fact — (Laughter) This is despite the fact that Amazon has added the entiremarket capitalization of Walmart to its market cap in the last 19 months.
Whose fault is it? It’s our fault.
We’re electing regulatorswho don’t have the backbone to actually go after these companies.
Facebook lies to EU regulators and says, “It would be impossiblefor us to share the data between our core platformand our proposed acquisition of WhatsApp.
Approve the merger.
” They approve the merger and then –spoiler alert! — they figure it out.
And the EU says, “I feel lied to.
We’re fining you 120 [million] dollars, ” about .
6 percent of the acquisition priceof 19 billion dollars.
If Mark Zuckerberg could take outan insurance policy that the acquisition wouldgo through for .
6 percent, wouldn’t he do it? Anticompetitive behavior.
A two-and-a-half-billion-dollar fine, three billion of the cash flow, three percent of the cashon Google’s balance sheet.
We are telling these companies, “The smart thing to do, the shareholder-driven thing to do, is to lie and to cheat.
” We are issuing 25-cent parking tickets on a meter that costs 100 dollars an hour.
The smart thing to do is lie.
Job destruction! Amazon only needs one personfor two at Macy’s.
If they grow their business 20 billiondollars this year, which they will, we will lose 53, 000 cashiers and clerks.
This is nothing unusual; this has happened all through our economy, we’ve just never seencompanies this good at it.
That’s one Yankee Stadium of workers.
It’s even worse in media.
If Facebook and Googlegrow their businesses 22 billion dollars this year, which they will, we’re going to lose approximately150, 000 creative directors, planners and copywriters.
Or we can fill up two-and-a-halfYankee Stadiums and say, “You are out of work, courtesy of Amazon.
” We now get the majority of our newsfrom our social media feeds, and the majority of our newscoming off of social media feeds is .
(Laughter) I am not allowed to be politicalor use curse words, or talk about religion in class, so I can definitely not say, “Zuckerberg has become Putin’s bitch.
” I definitely cannot say that.
(Laughter) Their defense: “Facebook is not a media company;it’s a technology company.
” You create original content, you pay sports leaguesto give you original content, you run advertising against it –boom! — you’re a media company.
Just in the last few days, Sheryl Sandberg has repeated this lie, that “We are not a media company.
” Facebook has openly embracedthe margins of celebrity and the influence of a media company yet seems to be allergicto the responsibilities of a media company.
We find 80 percent of their beef is fake, and it’s giving us encephalitis, and we’re making terrible decisions.
And we say, “McDonald’s, we’re pissed off!” And they say, “Wait, wait — we’re not a fast-food restaurant, we’re a fast-food platform.
” (Laughter) These companies and CEOs wrap themselves in a neon-blue pink rainbowand blue blanket to create an illusionist trickfrom their behavior each day, which is more indicativeof the spawn of Darth Vader and Ayn Rand.
Why? Because we as progressivesare seen as nice but weak.
If Sheryl Sandberg had writtena book on gun rights or on the pro-life movement, would they be flying Sheryl to Cannes? No.
And I’m not doubtingtheir progressive values, but it foots to shareholder value, because we as progressivesare seen as weak.
They’re so nice — remember Microsoft? They didn’t seem as nice, and regulators stepped in much earlierthan the regulators now, who would never step inon those nice, nice people.
I’m about to get on a plane tonight, and I’m going to have a guynamed Roy from TSA molest me.
If I am suspected of a DUIon the way home, I can have blood taken from my person.
But wait! Don’t tap into the iPhone — it’s sacred.
This is our new cross.
It shouldn’t be the iPhone X, it should be called the “iPhone Cross.
” We have our religion; it’s Apple.
Our Jesus Christ is Steve Jobs, and we’ve decided this is holierthan our person, our house or our computer.
We have become totally out of control with the gross idolatryof innovation and of youth.
We no longer worshipat the altar of character, of kindness, but of innovation and peoplewho create shareholder value.
Amazon has become so powerfulin the marketplace, it can conduct Jedi mind tricks.
It can begin damaging other industriesjust by looking at them.
Nike announces they’re distributingon Amazon, their stock goes up, every other footwear stock goes down.
When Amazon stock goes up, the rest of retail stocks go down, because they assume what’s goodfor Amazon is bad for everybody else.
They cut the cost on salmon 33 percentwhen they acquired Whole Foods.
In between the time they announcedthe acquisition of Whole Foods and when it closed, Kroger, the largestpure-play grocer in America, shed a third of its value, because Amazon purchased a grocerone-eleventh the size of Kroger.
I got very lucky.
I predicted the acquisitionof Whole Foods by Amazon the week before it happened.
This is me boasting; I saidthis publicly in the media.
This was the largestacquisition in their history, they’d never madean acquisition over a billion, and people asked, “How did you know this?” So I’m letting this very impressiveaudience in on the secret.
How did I know this? I’m going to tell you how I knew.
I bark at Alexa all day long and try to figure out what’s going on.
(Scott Galloway) Alexa, buy whole milk.
(Alexa) I couldn’t findanything for whole milk, so I’ve added whole milkto your shopping list.
SG: Then I asked, (SG) Alexa, buy organic foods.
(Alexa) The top search resultfor organic food is Plum Organics baby food, banana and pumpkin, 12-pack of four ounces each.
It’s 15 dollars total.
Would you like to buy it? SG: And then, as often happens at my age, I got confused.
(SG) Alexa, buy whole foods.
(Alexa) I have purchased the outstandingstock of Whole Foods Incorporated at 42 dollars per share.
I have charged 13.
7 billionto your American Express card.
(Laughter) SG: I thought that’d be funnier.
(Laughter) We’ve personified these companies, and just as when you’re really angryover every little thing someone does in your life and relationships, you’ve got to ask yourself, “What’s going on here?Why are we so disappointed in technology?” I believe it’s because the ratioof one-percent pursuit of shareholder value and 99 percent the betterment of humanity that technology used to play has been flipped, and now we’re totally focusedon shareholder value instead of humanity.
One hundred thousand people came togetherfor the Manhattan Project and literally saved the world.
Technology saved the world.
My mother was a four-year-old Jewliving in London at the outset of the war.
If we had not won the footracetowards splitting the atom, would she have survived? It’s unlikely.
Twenty-five years later, the most impressive accomplishment, arguably, ever in all of humankind: put a man on the moon.
Four hundred thirty thousand Canadians, British and Americans came together, again, with very basic technology, and put a man on the moon.
Now we have the 700, 000best and brightest, and these are the best and brightestfrom the four corners of the earth.
They are literally playing with lasersrelative to slingshots, relative to the squirt gun.
They have the GDP of India to work at.
And after studyingthese companies for 10 years, I know what their mission is.
Is it to organize the world’s information? Is it to connect us? Is it to create greater comity of man? It isn’t.
I know why we have brought together — I know that the greatest collectionof IQ capital and creativity, that their sole mission is: to sell another fucking Nissan.
My name is Scott Galloway, I teach at NYU, and I appreciate your time.
(Applause) Chris Anderson: Not planned, but you promptedsome questions in me, Scott.
(Laughter) That was a spectacular rant.
SG: Is this like Letterman? When you do well, he calls you onto the couch? CA: No, no, you’re going to the heartof the conversation right now.
Everyone’s aware that after yearsof worshipping Silicon Valley, suddenly the worm has turned and in such a big way.
To some people here, it will just feellike you’re piling on, you’re kicking the kids who’ve alreadybeen kicked to pieces anyway.
Don’t you feel any empathyfor them at all? SG: None whatsoever.
Look, this is the issue: it’s not their fault, it’s our fault.
They’re for-profit companies.
They’re not concernedwith the condition of our souls.
They’re not going to take care of uswhen we get older.
We have set up a society that valuesshareholder value over everything, and they’re doing whatthey’re supposed to be doing.
But we need to elect people, and we need to forceourselves to force them to be subject to the same scrutiny that the rest of businessendures, full stop.
CA: There’s another narrative that is arguably equallyconsistent with the facts, which is that there actually is goodintent in much of the leadership — I won’t say everyone, necessarily — many of the employees.
We all know people who workin those companies, and they still are pretty convincingthat their mission is to — so, the alternative narrativeis that there have been unintended consequences here, that the technologiesthat we’re unleashing, the algorithms, that we’re attemptingto personalize the internet, for example, have A, resulted in weird effectslike filter bubbles that we weren’t expecting; and B, made themselves vulnerableto weird things like — oh, I don’t know, Russianhackers creating accounts and doing things that we didn’t expect.
Isn’t the unintended consequencea possibility here? SG: I don’t think — I’m pretty sure, statistically, they’re no less or better peoplethan any other organization that has 100, 000 or more people.
I don’t think they’re bad people.
As a matter of fact, I would argue that there’s a lot of verycivic-minded, decent leadership.
But this is the issue: when you control 90 percentpoints of share in a market, search, that is now bigger than the entireadvertising market of any nation, and you’re primarily compensatedand trying to develop economic security for you and the familiesof your employees, to increase that market share, you can’t help but leverageall the power at your disposal.
And that is the basis for regulation, and it’s the basis for the truismthroughout history that power corrupts.
They’re not bad people; we’ve just let them get out of control.
CA: So maybe the caseis slightly overstated? I know at least a bit — Larry Page, for example, Jeff Bezos — I don’t actually believethey wake up thinking, “I’ve got to sell a fucking Nissan.
” I don’t think they think that.
I think they are trying to buildsomething cool, and are probably, in moments of reflection, as horrified that some of the thingsthat have happened as we might be.
So is there a different wayof framing this, to say that when your modelis advertising, that there are dangers therethat you have to take on more explicitly? SG: I think it’s very difficultto set an organization up as we do, to pursue shareholder valueabove all else.
They’re not non-profits.
The reason people go to work thereis they want to create economic security for them and their families, mostly first and foremost.
And when you get to a point whereyou control so much economic power, you use all the weapons at your disposal.
I don’t think they’re bad people, but I think the role of governmentand the role of us as consumers and people who elect our officials is to ensure that thereare some checks here.
And we have giventhem the mother of all hall passes because we find them just so fascinating.
CA: Scott, eloquently put, spectacularly put.
Mark Zuckerberg, Jeff Bezos, Larry Page, Tim Cook, if you’re watching, you’re welcome to come and makethe counterargument as well.
Scott, thank you so much.
SG: Thanks very much.