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

by Scott Galloway

The question is not if, but when, and ...

Among the Four, these eight factors are prevalent: product differentiation, visionary capital, global reach, likability, vertical integration, AI, accelerant, and geography.

These factors provide an algorithm, rules for what it takes to become a trillion-dollar company.

we are again back to an era of product, as new technologies and platforms—be it Facebook or Amazon user reviews—let consumers conduct diligence across a broad array of products in a fraction of the time it used to take to shop.

The ability to conduct diligence has never been easier, which reduces the need to default to brand or reputation.

Now, the best product has a better chance of breaking through...

Nearly every product in the world, even products and services that appear to have been commoditized, have forged new dimensions and consumer value, enabled by cheap sensors, chip sets, the internet, networks, displays, search, social, and so on.

Today, almost every link of the supply, manufacturing, and distribution chains has a new means of differentiation.

All of a sudden, products driven by technology and defensib...

However, don’t be trapped into thinking that product differentiation is about th...

Differentiation can occur where consumers discover the product, how they buy it, the product itself, ...

identify where technology can add value, or remove pain, from the process/experience.

You’ll find that this value can affect every step—and

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.

I’d argue that the majority of stakeholder value created over the last decade has been a function of removal.

I would argue Amazon could charge as much for its products as do its brick-and-mortar competitors . . . and would still dominate the marketplace.

Why? Because it’s still infinitely easier to hit a couple keys on your computer to buy a book or a piece of furniture than it is to drive down to the local mall, find a parking place, walk a half mile, be overwhelmed by tons of irrelevant merchandise, and then lug your shit back to your car for the drive home.

Amazon has removed all that friction and brings your purchases to your door for less than the c...

its greater contribution comes from removing obstacles and time killers from our daily lives.

Friction is everywhere.

there is a ton of friction in transportation. That’s why Uber saw an opportunity, via GPS, texting, and online payment, and removed t...

Each of the Four has a superior product.

It sounds old school, but Google really does have a superior search engine. The Apple iPhone is a better smartphone.

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

The second competitive factor among the Four is the ability to attract cheap capital by articulating a bold vision that is easy to understand.

One in six people start their search for products using Google,3 making it the equivalent of the second biggest (first is Amazon) retail store window in the world.

Fifty-five percent start on Amazon.

Anyone can purchase a place in that window and land at the top of a Google search.

Amazon regularly buys that number one spot, because it has the money to do so.

The strength of visionary capital begets competitive strength. Why? Because you can more patiently nurture assets (invest) and place more bets on more pockets of innovation

if you’re able to make the jump to light speed, and the market crowns you the innovator, the reward is an inflated valuation . . . and the self-fulfilling prophecy (“we’re #1”) that comes from cheap capital.

The third factor in the T Algorithm is the ability to go global. To be a truly large, meaningful company, you need a product that leaps geographic boundaries and appeals to people on a global scale.

It is not just the bigger marketplace, but the diversity—not least the prospect of countercyclical markets that can ride out a downturn elsewhere in the world—that

the first dollar earned outside the United States increased the value of the firm by billions.

If you want to be a horseman, your product needs to get a passport—that is, go global—before the kid starts kindergarten (five years old or less).

Very interesting...explains why Lemonade went to Germany before expanding to all US states

Apple today defines what it means to be global: the brand has largely been accepted in every sovereign nation. Google has also done a good job—it’s

Facebook has 83 percent of its users outside the United States

The world of commerce is regulated. Government, independent watchdog groups, and the media play a large role in a company’s growth.

If you are perceived as a good actor, a good citizen, caring about the country, its citizens, your workers, the people in your supply chain that get you the product, you have created a barrier against bad publicity.

“When the news is negative, you want to be perceived as a good company to which a...

Image matters, a lot. Perception is a com...

The less likeable a company, the sooner the regulatory intervention—antitrust, antiprivacy—as questions about its supply chain or any manner of rational concerns are irrationally selected and applied.

We are under the general illusion this process is more thoughtfully examined and based on some sort of equity or the law. Not true: the law decides the outcome, but the rush, or lack thereof, to drag companies into court is subjective.

And that opinion is largely based on how nice or chastened the compan...

Fascinating - this is where Galloway's bluntness shines through. He gives clarity to a murky topic - regulation.

Apple is the largest tax avoider in the history of U.S. business,10 but Apple is hip, and everyone wants to be friends with the cool kid. Same with Amazon, because e-commerce is hip and cool vs. lame and old, traditional retail.

the ability to control the consumer experience, at purchase, through vertical integration.

All of the Four control their distribution. If they don’t produce the product, they source it, they merchandise it, they retail it, and they support it.

The ROI of investing in the pre-purchase process (advertising) has declined.

A company has to be vertical to reach half a trillion dollars in market valuation.

That’s easier said than done, and most brands leverage other companies’ distribution,