The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google

by Scott Galloway

FORTY-FOUR PERCENT OF U.S. HOUSEHOLDS have a gun, and 52 percent have Amazon Prime.

Few industries have created more wealth by tapping into our consuming selves than retail. Of the four hundred wealthiest people in the world (excluding those who inherited wealth or are in finance) more names on the list are in retail than even technology.

Normal business thinking: If we can borrow money at historically low rates, buy back stock, and see the value of management’s options increase, why invest in growth and the jobs that come with it? That’s risky. Amazon business thinking: If we can borrow money at historically low rates, why don’t we invest that money in extraordinarily expensive control delivery systems? That way we secure an impregnable position in retail and asphyxiate our competitors. Then we can get really big, fast.

My experience in traditional firms is that anything new is seen as innovative, and the people assigned to it, like any parent, become irrationally passionate about the project and refuse to acknowledge just how stupid and ugly your little project has become. As a result, traditional companies not only have less capital to invest but fewer swings at the plate.

“Given a 10 percent chance of a hundred times payout, you should take that bet every time.”51

Needless to say, most CEOs don’t think this way. Most won’t even take risks that have less than a 50 percent chance of success—no matter how big the potential payoff.

CEO pay has become so crazy that on a risk-adjusted basis, you’re better off staying out of traffic, logging your six to eight years, and retiring rich.

In 2015, Amazon spent $7 billion on shipping fees, a net shipping loss of $5 billion, and overall profits of $2.4 billion.52

Most uber-wealthy people have one thing in common: failure. They’ve experienced it, usually in spades, as the path to wealth is fraught with risks, and often those risks end up being . . . well, risky.

What’s clear is that we need business leaders who envision, and enact, a future with more jobs—not billionaires who want the government to fund, with taxes they avoid, social programs for people to sit on their couches and watch Netflix all day. Jeff, show some real fucking vision.

The Cupertino firm controls 14.5 percent of the smartphone market, but captures 79 percent of global smartphone profits

Steve Jobs’s decision to transition from a tech to a luxury brand is one of the most consequential—and value-creating—insights in business history. Technology firms can scale, but they are rarely timeless.

teach 120 kids on Tuesday nights in my Brand Strategy course. That’s $720,000, or $60,000 per class, in tuition payments, a lot of it financed with debt. I’m good at what I do, but walking in each night, I remind myself we (NYU) are charging kids $500/minute for me and a projector. This. Is. Fucking. Ridiculous.

A key component would be flipping the business model in education, eliminating tuition, and charging recruiters, as students are broke,

We at NYU brag how it’s become near impossible to gain admission to our school. This, in my view, is like a homeless shelter taking pride in how many people it turns away.

The study found that the depth and meaningfulness of a person’s relationships is the strongest indicator of level of happiness.

Churchill said that WWII was won with British brains, American brawn, and Russian blood. Facebook has all three. If you’re wondering which of the three you are, as the customer, it means you’re the blood.

We absorb imagery sixty thousand times faster than words.24 So, images make a beeline for the heart.

VR will be to Zuck what Gallipoli was to Churchill, a huge failure that shows he can be (very) wrong, but won’t slow his march toward victory.

This is how these algorithms reinforce polarization in our society. We may think of ourselves as rational creatures, but deep in our brain is the impulse for survival, and

What if McDonald’s, after discovering that 80 percent of their beef was fake and making us sick, proclaimed they couldn’t be held responsible, as they aren’t a fast-food restaurant but a fast-food platform? Would we tolerate that?

We are driven by deep subconscious needs for belonging, approval, and safety. Facebook exploits those needs and gets us to spend more time on the platform (its core success metric is time on site) by giving us plenty of Likes.

Tristan Harris, former Google design ethicist and expert in how technology hijacks our psychological vulnerabilities, compares social media notifications to slot machines.39 They both deliver variable rewards: you’re curious, will I have two Likes or two hundred?

I’d partnered with Phil before. When I say “partnered,” I mean his fund provided the capital for us to take a large ownership stake, obtain board seats, and advocate for change.

IN THEIR BESTSELLING BOOKS, Ben Horowitz, Peter Thiel, Eric Schmidt, Salim Ismaiel, and others argue that extraordinary business success requires scaling at low cost, achieved by leveraging cloud computing, virtualization, and network effects to achieve a 10x productivity improvement over the competition.

Before Amazon, ordering from Williams-Sonoma meant you would pay $34.95 to get the product in a week. Now it’s free in two days or less. The most mundane part of the supply chain ended up being the most valuable in the history of business.

If you don’t have a product that is truly differentiated, you have to resort to an increasingly dull, yet expensive, tool called advertising.

All the bullshit, cost, and stress parents endure to get, and keep, their kids on the path to a decent four-year school is still, very much, worth it. College grads make ten times more, over their lifetime, than people with just high school degrees.

So, go to college—you may even learn something. But even if you don’t, a brand-name college on your forehead will be your greatest asset until you have assets, and it will never stop opening doors. HR departments, graduate program admissions committees, and even potential mates are busy people with lots of options. We all need filtering mechanisms and simple rules of thumb to wade through our choices, and it’s just too easy to think “Yale = smart; U. of Nowhere = not as smart.” And in a digital age, smart is sexy.

Winners, first and foremost, have to be competitors. You cannot win without stepping on the field, and it’s only by taking that risk (you may get beaned in the face), exposing yourself to failure, that real accomplishment is achieved.