In his book, ‘The Four’, Scott Galloway deconstructs the strategies of the Four that lurk beneath their shiny veneers. He shows how they manipulate the fundamental emotional needs that have driven us since our ancestors lived in caves, at a speed and scope others can’t match.
Here’s an excerpt from the book.
Over the last twenty years, four technology giants have inspired more joy, connections, prosperity, and discovery than any entity in history. Along the way, Apple, Amazon, Facebook, and Google have created hundreds of thousands of high-paying jobs. The Four are responsible for an array of products and services that are entwined into the daily lives of billions of people. They’ve put a supercomputer in your pocket, are bringing the internet into developing countries, and are mapping the Earth’s land mass and oceans. The Four have generated unprecedented wealth ($2.3 trillion) that, via stock ownership, has helped millions of families across the planet build economic security. In sum, they make the world a better place. The above is true, and this narrative is espoused, repeatedly, across thousands of media outlets and gatherings of the innovation class (universities, conferences, congressional hearings, boardrooms). However, consider another view.
Show Me the Trillions
While billions of people derive significant value from these firms and their products, disturbingly few reap the economic benefits. General Motors created economic value of approximately $231,000 per employee (market cap/workforce).20 This sounds impressive until you realize that Facebook has created an enterprise worth $20.5 million per employee… or almost a hundred times the value per employee of the organizational icon of the last century.21,22 Imagine the economic output of a G-10 economy, generated by the population of Manhattan’s Lower East Side.
The economic value accretion seems to be defying the law of big numbers and accelerating. In the last four years, April 1, 2013–April 1, 2017, the Four increased in value by approximately $1.3 trillion (GDP of Russia). Other tech companies, old and new, big and bigger, are losing relevance. Aging behemoths, including HP and IBM, barely warrant the attention of the Four. Thousands of start-ups fly by like gnats hardly worth swatting at. Any firm that begins to show the potential to bother the Four is acquired—at prices lesser companies can’t imagine. (Facebook paid nearly $20 billion for five-year-old, fifty employee instant messaging company WhatsApp.) Ultimately, the only competitors the Four face are . . . each other. Safety in Hatred Governments, laws, and smaller firms appear helpless to stop the march, regardless of the Four’s impact on business, society, or the planet. However, there’s safety in hatred. Specifically, the Four hate each other. They are now competing directly, as their respective sectors are running out of easy prey.
Google signaled the end of the brand era as consumers, armed with search, no longer need to defer to the brand, hurting Apple, who also finds itself competing with Amazon in music and film. Amazon is Google’s largest customer, but it’s also threatening Google in search—55 percent of people searching for a product start on Amazon (vs. 28 percent on search engines such as Google).25 Apple and Amazon are running, full speed, into each other in front of us, on our TV screens and phones, as Google fights Apple to be the operating system of the product that defines our age, the smartphone. Meanwhile, both Siri (Apple) and Alexa (Amazon) have entered the thunderdome, where two voices enter, and only one will leave. Among online advertisers, Facebook is now taking share from Google as it completes the great pivot from desktop to mobile. And the technology likely creating more wealth over the next decade, the cloud—a delivery of hosted services over the internet—features the Ali vs. Frazier battle of the tech age as Amazon and Google go head-to-head with their respective cloud offerings. The Four are engaged in an epic race to become the operating system for our lives. The prize? A trillion-dollar-plus valuation, and power and influence greater than any entity in history.
So What?
To grasp the choices that ushered in the Four is to understand business and value creation in the digital age. In the first half of this book we’ll examine each horseman and deconstruct their strategies and the lessons business leaders can draw from them. In the second part of the book, we’ll identify and set aside the mythology the Four allowed to flourish around the origins of their competitive advantage. Then we’ll explore a new model for understanding how these companies exploit our basest instincts for growth and profitability, and show how the Four defend their markets with analog moats: real-world infrastructure designed to blunt attacks from potential competitors. What are the horsemen’s sins? How do they manipulate governments and competitors to steal IP? That’s in chapter 8. Could there ever be a Fifth Horseman? In chapter 9, we’ll evaluate the possible candidates, from Netflix to China’s retail giant Alibaba, which dwarfs Amazon on many metrics. Do any of them have what it takes to develop a more dominant platform?
Tag: Apple
How Tata Tea and Apple Came To Be — An Excerpt
Steve Jobs created Apple, one of the most successful brands on this planet. Apple is remarkable because it has married design and technology marvelously, time and again, generating sensuous products that millions of human beings across the world lust for. Jobs himself attributes a good part of this Apple magic to his curiosity.
In his famous commencement speech delivered at Stanford University in 2005, he gave an example of how, during his student days, he decided to take a calligraphy class at Reed College out of sheer curiosity. He said he learnt about serif and sans serif typefaces in this class, about varying the space between different letter combinations, about what makes great typography truly great. He called this learning experience beautiful, historical and artistically subtle in a way that science cannot quite capture.
He went on to say, ‘None of this had even a hope of any practical application in my life. But ten years later, when we were designing the first Apple Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, it’s likely that no personal computer would have them.’ He added, ‘Much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on.’ The sheer beauty of Apple products, which is a huge contributor to the brand’s success, owes something to its creator’s curiosity.
Just like Apple, so many great brands have their roots in the curiosity of marketers. Consider Tata Tea, the leading brand of tea in India today. This brand was born out of the curiosity of Darbari Seth, who was chairman of several Tata companies in the mid-1980s. He wondered why tea could not be packaged in an airtight polythene pillow pack (polypack), rather than in the cardboard cartons that were the norm at that time. His visits to various Indian towns had shown that consumers were very happy with these flat pillow packs for another commonly used kitchen product: salt. Seth had, a few years earlier, already launched the popular Tata Salt brand.
In addition, his own explorations into two very different spaces gave rise to some thoughts that he could toss around. From his numerous informal conversations with traders during the early days of Tata Salt, he had learnt that the strong smell of spices permeates all Indian kirana stores, which, in turn, taints various products stocked in these stores, including tea. Seth’s explorations into the world of science—he spent many decades working as a chemical engineer—had left in his mind the clear impression that polypacks made from a laminate of polythene and polyester would be significantly better than cardboard cartons, ensuring tea leaves were safe from these strong spice smells. So, driven by these curiosity inspired reflections, he went ahead and launched Tata Tea in laminate polypacks in 1987. This kept the plantation-packed tea fresh and untainted, and the brand went on to become a huge success.
I had the good fortune of working as a junior member of Seth’s team in Tata Tea during those years, and have seen at close quarters how curious he was by nature. I would accompany him on his visits to London, and I was often dumbfounded by the sheer number of questions he would ask me on just about everything. He inspired the creation of two of India’s strongest consumer brands—Tata Salt and Tata Tea. Interestingly, quite similar to how Microsoft copied the amazing typography of the Apple Macintosh, hundreds of other Indian tea brands have copied Tata Tea’s winning polypack. You will find them available across the country today.
