Post Corona: From Crisis to Opportunity

by Scott Galloway

Ecommerce began taking root in 2000. Since then, ecommerce’s share of retail has grown approximately 1% every year. At the beginning of 2020, approximately 16% of retail was transacted via digital channels. Eight weeks after the pandemic reached the U.S. (March to mid-April), that number leapt to 27% . . . and it’s not going back. We registered a decade of ecommerce growth in eight weeks.

It took Apple 42 years to reach $1 trillion in value, and 20 weeks to accelerate from $1 trillion to $2 trillion (March to August 2020). In those same weeks, Tesla became not only the most valuable car company in the world, but more valuable than Toyota, Volkswagen, Daimler, and Honda . . . combined.

The pandemic has a silver lining that could rival the size of the cloud. America overnight has a greater savings rate and fewer emissions. Three of the largest, and most important, consumer categories in the U.S. (healthcare, education, and grocery) are in a state of unprecedented disruption and, possibly, progress.

Dr. Mike Ryan, who leads the World Health Organization’s Health Emergencies Programme, put it well, a lesson that applies to all emergencies: “If you need to be right before you move, you will never win. Perfection is the enemy of the good when it comes to emergency management. Speed trumps perfection. And the problem we have in society is that everyone is afraid of making a mistake.”

The Great Dispersion Covid-19 is accelerating dispersion across many economic sectors. Amazon, of course, took the store and dispersed it to our front door. Netflix took the movie theater and put it in our living room. We’re going to see this dispersion across other industries, including healthcare. Most people who survived Covid-19 never set foot in a doctor’s office. During the pandemic, people with psychological conditions saw their therapists and had medications adjusted without leaving home. This was enabled by changes to insurance rules, which had largely frowned on telemedicine and remote prescribing. Those changes are not likely to be undone, and a flood of innovation and capital will pour into the opportunity well they have drilled. The high-def camera on your mobile phone is a decent diagnostic tool already, but it’s a small step to consumer-friendly diagnostic tools arriving on our doorsteps, used, and shipped back. Specialists will be consulted across town, across the country. Teladoc Health, the largest independent U.S. telemedicine service, is adding thousands of doctors to its network.6 The transition to electronic health records was a major thrust for Obamacare and may be the program’s most lasting and important legacy, as electronic records enable a dispersal of an industry ripe for disruption.

As we move into a tech-based economy, however, that second business model becomes both more lucrative and more troubling. In the old days of advertising, we only had to give up some of our time and attention to get the free stuff the advertising paid for. But when our relationships are online, the companies giving us this supposedly free stuff suddenly have all this data about us—what we read, where we shop, who we talk to, what we eat, where we live. And they are using that data to make more money off of us. We used to trade time for value. Now we trade our privacy for value.

The pandemic in a business nutshell: Stuck at home Netflix Hate my spouse Starting to hate my children Jeff Bezos gets his divorce paid for in 30 days Mr. Bezos increased his wealth by approximately $35 billion in 30 days. In 2018, the tech and business press was aflutter with the question of who would be the first trillion-dollar company, Apple or Amazon. Apple won that race by a nose, and reached $2 trillion in August 2020. But there shouldn’t be any doubt about who will be the first $3 trillion company. Everyone is going to throw in the towel, investors, the government, consumers, and go all in on Amazon. Amazon—first $3 trillion company by the end of 2023.

The charismatic founder speaks in a characteristic dialect: yogababble. That’s our term for abstract or spiritual-sounding language in IPO’s S-1s, a company’s formal disclosure before going public. Besides listing the required financial disclosures, the company amplifies the yogababble with the power of the corporate communications executive. This is an affliction at real companies (according to LinkedIn, there are more corporate comms personnel working for Bezos at Amazon (969) than journalists working for Bezos at The Washington Post (798)), but it becomes a core competency at the charismatic-founder, capital-driven growth company. When firms are still searching for a viable business model, the temptation to go full yogababble gets stronger, as the truth (numbers, business model, EBITDA) needs concealer. When I show up at MSNBC, they put some crazy foundation syrup in a plastic bottle attached to a hose, ask everyone to stand back, and (no joke) spray my face and head as if the makeup artist were the last line of defense against the reactor 4 at Chernobyl. And I look awesome . . . for a while. But similar to yogababble, the concealer wears off.

So what’s the recipe of disruption? First, the industry you are entering is the crucial context. Sectors that have raised prices faster than inflation, without an equivalent increase in innovation, are the sectors where disruption is more likely. The DNA of a disruptor can be mapped via the disarticulation of key attributes of firms that have added hundreds of billions in stakeholder value in years vs. decades. The T Algorithm, which I developed in The Four, and have refined since, defines some of these key qualities. The T stands for “trillion”—these are the traits that give a company a chance at a trillion-dollar valuation. The eight elements of the T Algorithm are as follows: Appealing to human instinct Accelerant Balancing growth and margins Rundle Vertical integration Benjamin Button products Visionary storytelling Likability

Public is taking a different approach to commission free, user-friendly, fractional-share trading apps. (Disclosure: I’m an investor.) But Public views itself as a social network that provides stock trading, and emphasizes communication among users in public forums and private chats. At sufficient scale, a network of connected users becomes an asset, and one that—at a certain scale—competitors will struggle to match.

Shopify. Shopify is the most impressive tech company of the last decade, and perhaps the most courageous. The Canadian firm recognized the huge white space to become the anti-Amazon Amazon. Similar to Amazon’s Pay and FBA (Fulfillment by Amazon) products, Shopify provides payment and fulfillment for third-party retailers. Unlike Amazon, however, Shopify’s CEO could honestly tell Congress it doesn’t use the data it collects from third-party retailers to inform its own competitive product sales. Shopify disrupts Amazon by offering customers the service and value of Amazon without the data and branding exploitation. The result? A $131 billion market cap, up 6 times since the beginning of 2019. Shopify has outperformed Amazon stock YTD (+250% vs. +72%).

The disruptability index for higher education is off the charts. In the past 40 years, college tuition has increased 1,400%. In the 1980s and early ’90s, I attended five years of undergrad at UCLA and two years of business school at UC Berkeley for a grand total of $10,000 in tuition—all seven years. Fast forward to present day, that won’t cover two classes at NYU Stern ($14,000). Compared to this, even healthcare seems like a bargain. Healthcare spending has “only” increased 600% in the same period.1 What has the education industry done with this extraordinary transfer of wealth? Not much. We rightly complain about healthcare costs increasing, but if you go to a hospital today, the technology, procedures, and medications are substantially different than in 1980. Our nearly $4-trillion-a-year healthcare industry provides cutting-edge training and technology. Have outcomes kept pace with price increases? No. But there has been substantial innovation.

The excess demand feeds into the cartel of higher ed. Hundreds of private, liberal arts colleges that offer a facsimile of the Harvard aesthetic have drafted off the price increases of the elites (and the 95% of families rejected), giving millions of middle-class families the opportunity to purchase a Hyundai for the price of a Mercedes. Much of this is financed with easy-to-obtain credit, exploiting a uniquely held American belief that has morphed into scripture: You’ve sinned as a parent unless you get your kid through college . . . at any cost.

All these price increases have been enabled by the heroin of federally subsidized student loans. Student loan debt now totals $1.6 trillion, far more than credit-card debt or auto loans. The average graduate will carry nearly $30,000 in debt away from their virtual graduation.

Demographics are destiny, and higher education’s demographic picture is ugly. Beginning in 2026, the number of graduating high school seniors is projected to decline by 9%.11 Change is coming. In 2013, renowned Harvard Business School professor Clayton Christensen predicted that online education would disrupt traditional higher education just as steam power had put sailing ships out of business. Over the next ten to fifteen years, he wrote, 25% of colleges and universities would go out of business.12 By 2018, he’d upped his prediction to 50%.13 And that was before anyone had heard of Covid-19.

There are some simple things that I’ve learned are essential. Without the power of physical presence, you have to be much more animated, waving your arms and raising your voice, changing your tone and pace. You have to be in the students’ faces, requiring they keep their cameras on. Constantly call on them and seize the opportunity to get better guest speakers, as it’s a much easier lift (Zoom vs. commute). Breaking up the monotony of a talking head is essential—learn how to use the screen-sharing function and prepare charts and illustrations that express information in new ways and keep students engaged. A good role model is Rep. Katie Porter’s use of small white boards in her congressional hearings.

The U.S. needs a Marshall Plan to partner with states to dramatically increase the number of seats at state schools while decreasing cost for four-year universities and junior colleges. Only a third of the U.S. population has college degrees, and less than 10% have graduate degrees. Tax private K–12 schools

We need national service programs. I talk more about this in chapter 5, but in brief, we should start with the Corona Corps and expand from there. National service programs of all kinds, from military to education, provide exceptional returns on investment for both the nation and those who serve.27

Expanding the variety and efficiency of certification programs can not only retrain workers in dying industries, but can position a young person for a rewarding entrepreneurial career. We need a nationwide vocational training system in the U.S., similar to programs in Germany, where four times more people per capita have vocational training than in the U.S. With a shifting economic and labor landscape, vocational programs could provide a changing workforce with options and purpose. Our declining life expectancy is mostly due to deaths of despair (drugs, alcohol, suicide). Many of them could be prevented if people are given dignified work options through affordable, focused training.28

One thing we should not do? Free college. That’s a populist slogan and a bad idea.

The pandemic has laid bare a generation’s worth of poor choices and accelerated the consequences. The song remains the same: the rich get richer. The cost of a few garnering most of the gains is not just economic, it attacks the ballast of the U.S., our middle class. For forty years, we have engaged in a gross idolatry of private enterprise and the wealth it creates, while hollowing out government institutions and denigrating public servants. When the virus hit our shores, it found a society optimized for spread. Relative to our wealth and power, America’s handling of the challenge of this generation has been the worst in the world. In truth, we were sick already, riddled with comorbidities. Government agencies were weakened and science discredited. Individualism had become prized above all, resulting in a false conflation of freedom with a lack of civic duty and a refusal to bear minor inconvenience. Our muscles of collective sacrifice had atrophied so as to become feeble. The prescription for the pandemic is the same as the prescription for our broader illness—a wholesale renewal of our sense of community. We must wrest our government from the hands of the shareholder class, which has co-opted it, and end the cronyism they have instituted to protect their wealth. We must set aside our idolatry of innovators and look unflinchingly at the exploitation it promotes. In short, we need to take government seriously—as a respectable, necessary, and noble institution—so that we c...

Capitalism leverages our species’ superpower: cooperation. In Sapiens, Yuval Noah Harari explains that unlike other species who can also cooperate (bees, apes, wolves), homo sapiens can cooperate at scale, “in extremely flexible ways with countless numbers of strangers. That’s why sapiens rule the world.”1 Though our motivations may be selfish, the bounties of capitalism are the product of coordinated effort across time and space by thousands, even millions of people. In early capitalist societies, machines and factories allowed dozens, then hundreds of people to combine their efforts into one unified force. Wealth creation accelerated to rates unknown in human history.

Should you reach the heights of wealth (or more likely, be born into them), circumstances change. Despite our rhetoric about personal responsibility and freedom, we’ve embraced socialism—at the top and on the way down. We don’t tolerate failure here in our socialist paradise. Rather than let companies fail—a defining and essential feature of capitalism—we have bailouts. But bailouts are hate crimes against future generations, sticking our children and grandchildren with the resulting debt.

In 2018, 106 million Americans lived below twice the federal poverty line, which is not as nice as it sounds. Twice the poverty level for a family of four is a household income of $51,583.13 That population has increased at twice the rate of the population as a whole since 2000. Most of them spend more than one third of their income on rent. A third do not have health insurance, despite being disproportionately sick or disabled.14 Many carry the burden of unmanageable debt, which can lead to deaths of despair. People who take their own life are eight times more likely than average to be in debt.15 For every 100 points your credit score increases, your risk of dying in the next three months declines by 4.4%.16 In the U.S., money is literally life.

Study after study has found that in today’s America, the biggest determinant of an individual’s economic success is not talent, it’s not hard work, and it’s not even luck. It’s how much money their parents have. The expected family income of children raised in families at the 90th income percentile is three times that of children raised at the 10th.18 Economic mobility in the United States, on a range of measures, is worse, in many cases much worse, than in Europe and elsewhere.19 Want to live the American dream? Move to Denmark.20 This isn’t just a story about the poor or billionaires. At every level, it’s getting harder and harder to move up. My first house in the Potrero Hill neighborhood of San Francisco was $280,000. Divide that by the $100,000 average starting salary out of business school in 1992 and you end up with a ratio of 2.8 for the price of housing compared to average salary. Now the average salary is $140,000. That’s a lot of money. But the average home in the Bay Area now costs $1.4 million. So, we’ve gone from a ratio of 2.8 to a ratio of 10. This is for the nominal winners, the people who thought they were joining the elite. It’s harder now. The result is a society in which there is tremendous prosperity, but little progress. The Declaration of Independence promises us “life, liberty, and the pursuit of happiness.” Yet study after study finds that Americans live shorter lives,21 are less free,22 and less successful in our pursuit of happiness23 than our E...

The greater our differences economically, the more we come to believe we are different in more fundamental ways. Altruistic behavior decreases in times of greater income inequality. The rich are more generous in times of lesser inequality and less generous when inequality grows more extreme. Michael Lewis writes, “The problem is caused by the inequality itself: it triggers a chemical reaction in the privileged few. It tilts their brains. It causes them to be less likely to care about anyone but themselves or to experience the moral sentiments needed to be a decent citizen.”28 Privilege looks in the mirror and sees nobility. Financially successful people come to believe that someone who is delivering groceries at $14 an hour or cleaning the subway car deserves their economic fate. They’re not as smart, they’re not as good, they’re not as worthy as the rest of us. Worse, those not blessed by circumstance and luck hear the message loud and clear. Lack of economic success is their fault. This is the land of opportunity, where anyone can make it big, right? So what does that say about those who don’t? When we put the 0.1% on a pedestal, we crowd out teachers, social workers, bus drivers, and farmworkers from the respect that is due to them. We tell them they are less, that they have failed. That any economic disadvantages they face are their fault, their birthright even. That’s not capitalism, that’s a caste system—and the inevitable result of cronyism, which requires these myt...

When you give money to poor and working-class people, you see an immediate multiplier effect in the economy—because they spend it. They buy food, they pay rent, they buy new shoes and fix their broken refrigerator. And consumers are the best arbiters of which companies should survive the crisis, not the government. If you believe in the power of markets, we should be putting money into the hands of consumers, not companies. The $1,200 checks the government sent out at the onset of the pandemic were a baby step in the right direction, but we are way past baby steps.

CALLING THE CORONA CORPS And we need to take the fight to the virus. Lockdowns are the nuclear option—social distancing and masking are necessary protections against an enemy on the march. Epidemics either burn themselves out (and this one would likely kill millions if we let it do that) or are defeated through aggressive containment measures. South Korea has even published a playbook.45 The proven formula for flattening the curve without putting the economy back in an induced coma is simple: testing, tracing, and isolation. That is, we need widespread testing followed by the swift identification and temporary isolation of everyone who has come in contact with infected people. In a country as large as ours, with the virus as widespread as it is, it would take an army to do that now. Estimates range, but we need something close to 180,000 contact tracers. Fortunately, we have an army waiting in the wings.

Beyond the benefits that would accrue to those who serve, and the role they would play in defeating the virus, I believe the country would reap a larger dividend. A service program like this could help bridge partisan divides. Consider that between 1965 and 1975, more than two thirds of the members of Congress had served their country in uniform. The important legislative achievements of those years were shaped by leaders who shared that bond, larger than politics or party. Today, fewer than 20 percent have that bond. The Corps, and future national service programs, could reanimate our superpower, cooperation.

A Corona Corps would not be cheap: 180,000 members at, I estimate, $60,000 each for compensation, training, and support would cost nearly $11 billion. The government could no doubt find a way to make it cost twice that. Yet that’s a rounding error on the sums allocated for stimulus and unemployment to date. Consider it a warranty against needing another multitrillion-dollar rescue package.

Moreover, the Corona Corps could be the nucleus of a permanent national service organization. An opportunity to mature a generation of Americans who might sit or stand shoulder to shoulder and see each other, first and foremost, as Americans instead of Democrats or Republicans. We need our young people grounded, again, in America.

Currently, there’s no incentive to do anything but create algorithms that inspire more clicks and more addiction, not giving a damn about the commonwealth. So, we break them up—not because they’re evil, not because they don’t pay their taxes, not because they destroy jobs—but because we’re capitalists, and we believe in competition and innovation. It’s not punishment, it’s overdue oxygenation of the marketplace that will unleash billions, maybe trillions, in shareholder value.

Where is that shared purpose today? We are fighting an enemy three times as lethal to our population as the Axis powers, yet Americans don’t want to wear masks and expect the government to send them more money. Resistance to sacrifice and dismissal of community is framed as “liberty.”

A step backward, after making a wrong turn, is a step in the right direction. —Kurt Vonnegut