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

by Scott Galloway

In 2013, Jeff Bezos bought the Washington Post. That had the salutary effect of eliminating the quarterly freak-outs, when the paper would unveil sinking numbers to investors, soon followed by the inevitable bloodletting in the newsroom. More than providing financial ballast, Bezos turned the Post toward the web with a vengeance. Its online traffic doubled in three years, leapfrogging the Times. And the Post developed a content management system that it’s now leasing to other news outlets. According to the Columbia Journalism Review, this CMS could generate $100 million a year.

Here’s the rub: as it was handling those searches, Google also was learning—better than the Times itself—exactly what the paper’s readers wanted and were likely to want in the future. And that meant Google could target those Times readers with far greater precision and make more money from each ad. As much as ten times more. That meant we were exchanging dollars for dimes. We should be running our own ads on our sites. What idiots we were.

Theft has been the strategy of business leaders and nations for centuries. Leveraging other people’s ideas to inspire new inventions and stronger iterations is at the foundation of many successful firms. Apple wasn’t the first to create a smartphone. Google wasn’t the first to build a search engine. They just figured out a way to do it better—a lot better.

The point is not that young companies just “steal” things to become great, but they see value where others don’t, or are able to extract value where others can’t. And they do so by whatever means necessary.

Hundreds of brands invested hundreds of millions on Facebook to aggregate enormous branded communities hosted by Facebook. And by urging consumers to “like” their brands, they gave Facebook an inordinate amount of free advertising. After brands built this expensive house, and were ready to move in, Facebook barked, “Just kidding, those fans aren’t really yours; you need to rent them.” The organic reach of a brand’s content—percentage of posts from a brand received in a fan’s feed—fell from 100 percent to single digits. Now, if a brand wants to reach its community, it must advertise on—that is, pay—Facebook.

From the perspective of evolutionary psychology, all successful businesses appeal to one of three areas of the body—the brain, the heart, or the genitals.

The poster children for competing in the battle for the brain are Walmart, Amazon, and even China (they compete on price). Most companies are not, and can never be, the low-cost leader. It’s a select club that demands scale for long-term success.

For a marketer, each string tugging at the consumer’s heart translates to margin. There’s (among others) beauty, patriotism, friendship, masculinity, devotion, and above all, love. These are values you can’t put a price on—but marketers do.

The digital age, with its transparency and innovation, has declared war on the heart. Search engines and user reviews are adding a level of transparency that’s starching much of the emotion from purchase decisions.

These decisions, if you can call them that, cast the consumer and provider into a symbiotic relationship. The consumer spends more because the act of spending itself communicates taste, wealth and privilege, and desire. The company, naturally, is dedicated to the same proposition, but in reverse, by providing consumers with the tools of that communication. It knows that if its products work as mating brands—the market equivalent of peacock feathers—then higher margins and profits will follow, frustrating the brain and making the heart jealous.

There is no reason to believe that these strategies—insurgency, false humility, security, and simplicity plus discounting—won’t work again one day against the horsemen. Giant companies face their own challenges: they lose their best talent to more rewarding start-ups; their physical plant grows old; their empires grow so big they can no longer coordinate all their pieces; they get distracted by investigations by envious or nervous governments. The processes put in place to scale begin slowing the firm down, as managers begin believing that adhering to the guidelines is more important than making good decisions.

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

don’t be trapped into thinking that product differentiation is about the widget you’re selling. Differentiation can occur where consumers discover the product, how they buy it, the product itself, how it’s delivered, and so on.

A worthwhile exercise is to map out the value chain of your product or service from the origin of the materials through its manufacture, retail, usage, and disposal . . . and identify where technology can add value, or remove pain, from the process/experience.

while it may seem that the value explosion brought by the technology revolution comes from the addition of new features and capabilities, its greater contribution comes from removing obstacles and time killers from our daily lives.

The ROI of investing in the pre-purchase process (advertising) has declined. That’s why successful brands are forward integrating—owning their own stores or shopper marketing.

The new marketing is behavioral targeting. And it works: nothing can predict your future purchases like your current activities.

The power of big data and AI is that it signals the end of sampling and statistics—now you can just track the shopping pattern of every customer in every one of your stores around the world—and then respond almost instantly with discounts, changes in inventory, store layouts, etc. . . . and do so 24/7/365.

The war for tech-enabled talent has reached a fever pitch. A horseman’s ability to attract and retain the best employees is the number one issue for all four firms. Their ability to manage their reputations, not only among young consumers, but also among their potential workforce, is critical to success. Indeed, one could argue that their brand equity among current and potential employees is more important than their consumer equity. Why? The team with the best players attracts cheap capital, innovates, and can spark the upward spiral that pulls away from the competition.

Tesla’s most revolutionary change to the auto industry is not its electric engine—everyone is building those—but its proximity to the customer. From Musk’s livestreamed product announcements, to their owned dealerships, to the regular, over-the-air product updates, Tesla understands that a $50,000–$100,000 purchase is the start of a multiyear relationship with Tesla, not John Elway’s Claremont Chrysler Dodge Jeep Ram.

Uber may be a glimpse into what the future looks like in a digital economy: incredible apps providing a remarkable consumer experience subsidized by swooning investors—but also millions of low-paying jobs and a small segment of society splitting a herculean windfall. Thousands of lords, millions of serfs.

the key to establishing advantage is finding points of differentiation where there is large, real or perceived, variance.

it’s never been a better time to be exceptional, or a worse time to be average.

The difference between good and great can be 10 percent or less, but the delta in rewards is closer to 10 times.

Young people who have a strong sense of their own identity, remain poised under stress, and learn and apply what they’ve learned, do better than peers who are more easily flustered, get hung up on petty issues, and let their emotions drive their responses to stimuli. People who are comfortable taking direction and giving it, and who understand their role in a group, do better than their peers when lines of authority get murky and organizational structures are fluid.

Curiosity is crucial to success. What worked yesterday is out-of-date today and forgotten tomorrow—replaced by a new tool or technique we haven’t yet heard of.

Successful people in the digital age are those who go to work every day, not dreading the next change, but asking, “What if we did it this way?” Adherence to process, or how we’ve always done it, is the Achilles’ heel of big firms and sepsis for careers.

Play offense: for every four things you’re asked to do, offer one deliverable or idea that was not asked for.

Another standout skill is ownership. Be more obsessed with the details than anybody on your team and what needs to get done, if, when, and how. Assume nothing will happen unless you are all over everybody and everything, as it likely won’t. Be an owner, in every sense of the word—your task, your project, your business. You own it.

There are precious few places in the world and times in our life when we are put in the simultaneous presence of eager and bright young minds, brilliant thinkers, and the luxury of time to mature and generally ponder the opportunities set forth by the universe.

People who achieve goals in one area achieve them in all areas.

accomplishment is a habit that can be cultivated and repeated.

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.

You need a medium to spread your awesomeness, as the path to under-compensation is doing good work that never gets explicitly pimped or attached to you.

Try to get equity as part of compensation (if you don’t think equity in your employer is going to be valuable, find a new employer). Increase that ratio (ideally) to 10 percent of your compensation in your thirties and 20 percent or more in your forties.

The path to rich(es) is a path of living below your means and investing in income-producing assets. Rich is more a function of discipline than how much you make.

Good leaders know they are only as good as the team standing behind them—and once they have forged a bond of trust with someone, will do whatever it takes to keep that person happy and on their team. If your boss isn’t fighting for you, you either have a bad boss or you are a bad employee.

People who tell you to follow your passion are already rich. Don’t follow your passion, follow your talent. Determine what you are good at (early), and commit to becoming great at it. You don’t have to love it, just don’t hate it.

Expect that a large portion of the people you help will not reciprocate, and you won’t be disappointed. However, plant enough seeds helping others, and a few will pay off hugely where you least expect it. It also just feels good.

Serial entrepreneurs share three qualities: a higher tolerance for risk can sell too stupid to know they are going to fail

“Entrepreneur” is a synonym for “salesperson.” Selling people to join your firm, selling them to stay at your firm, selling investors, and (oh yeah) selling customers.

If, on the other hand, you don’t play well with others, have an inability to trust your fate to others, and are almost clinically obsessed with your vision for a new product or service, you may be an entrepreneur.

smart devices and social media exploit our psychology—our need for approval, belonging, and affirmation.1 We touch our phones over 2,600 times a day.2 Merely having your smartphone on your desk causes impairment of cognitive capacity.3

By appealing to something loftier than mere profit, the Four are able to satisfy a growing demand among employees for so-called purpose-driven firms. Big tech’s tinkerer-in-the-garage mythology taps into an old American reverence for science and engineering, one that dates back to the Manhattan Project and the Apollo program. Best of all, the companies’ vague, high-minded pronouncements—“Think Different,” “Don’t Be Evil”—provide the ultimate illusion. Political progressives are generally viewed as well-meaning but weak, an image that offered the perfect cover for companies that were becoming hugely powerful.

we’ve seen job destruction before. But we’ve never seen companies quite this good at it. Uber set a new (low) bar with $68 billion44 spread across only twelve thousand employees, or $5.7 million per employee.

Big tech’s job destruction makes an even stronger case for getting these firms to pay their fair share of taxes, so that the government can soften the blow with retraining and social services.

Job replacement and productivity improvements—from farmers to factory workers, and factory workers to service workers, and service workers to tech workers—are part of the story of American innovation. It’s important to let our freaks of success fly their flag.

If you’re a country club with a beach or a pool, it’s more profitable, in the short run, not to have lifeguards. There are risks to that business model, as there are to Facebook’s dependence on mainly algorithmic moderation, but it saves a lot of money. The notion that we can expect big tech to allocate the requisite resources, of the companies’ own will, for the social good is similar to the idea that Exxon will take a leadership position on global warming. It’s not going to happen.

The variable rewards of social media keep us checking our notifications as though they were slot machines,50 and research has shown that children and teens are particularly sensitive to the dopamine cravings these platforms foster.

Since the turn of the millennium, firms and investors have fallen in love with companies whose ability to replace humans with technology has enabled rapid growth and outsize profit margins. Those huge profits attract cheap capital and render the rest of the sector flaccid.