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?
