Valuing Tech's Titans

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I love Scott Galloway!

👍︎︎ 1 👤︎︎ u/[deleted] 📅︎︎ Jul 31 2017 🗫︎ replies

Huh, these guys get it. Subscribed.

👍︎︎ 1 👤︎︎ u/_Xantamn 📅︎︎ Jul 30 2017 🗫︎ replies
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So we're here with Aswath Damodaran, Professor of Finance at the Stern School On almost every list globally for the top ten professors or teachers in graduate education and at the Stern School where there are 190 faculty, has been named "Best Professor" by the students nine years in a row and is the leading scholar on the topic of valuation. Aswath, let's kick right into it. You've been doing a lot of research around the value of a subscriber or how you build up as opposed to bottoms down the value of a company based on subscribers, users, etc Say more. While I'd love to say I've done a lot of research I've just started exploring it and there's so much more left to do because I think if you look at the traditional ways we value companies, we value them from the top down, we project our total revenues, we subtract our total expenses, we come up with income and cash flows, and we value the company. The reality is we've shifted to a world where companies are focused on users, subscribers, members, because it seems like that's the way they think about value and perhaps it's time for us to start thinking about valuation from the bottom up from thinking about users, the value of a user, and building up to the value of a company, because I don't think we're asking the right questions when we look at these companies that are user or subscriber based. What are those questions? Well one of those questions is, you know, you've got lots of users and how intense are these users? Are they on your, you know, are they with you an hour a day, 20 minutes a day Engagement measures how loyal are these users, right? To the extent that they stay on with you, they're worth more. How likely is it that you can sell these users more things? So in a sense I need to know more about your users to decide whether users are worth nothing or whether they're worth $100 or $1,000 a user. So give me an example of a very valuable user or member versus not so valuable and attach it to their company. Okay, let's start with Netflix, right, a Netflix subscriber is valuable for two reasons: one is they're locked in, they have a subscription agreement. We know from studies of psychology that when somebody opts into something, they are more likely to stay on if they don't, if to get out of it they have to opt out. So Netflix has subscribers who provide them with revenues that are, in a sense, you can count on. It's valuable to the extent that those revenues are, you know exactly what you know already They must have 95 plus renewal rates. And so from that perspective, a Netflix subscriber is worth a lot and Amazon Prime subscribers what a lot for a different reason. It's not the 99 dollars a year that makes them valuable. I mean, even though it's 70 million members, $99 still works out a lot of money. It's a fact that they buy four hundred, five hundred, six hundred dollars worth of merchandise, and that keeps going up, because the more they buy, there's a networking benefit that Amazon gets, which is the more people buy on Amazon Prime, the more likely it is that they'll buy more stuff in Amazon Prime. That ecosystem gets richer over time, so an Amazon Prime subscriber's worth a lot simply because you can count on growth for a longer time. We measure our business looking at those two things: renewal, so what percentage of those consumers renew? And then there's dollar renewal and that is of the people who are your members the year before the next year of that hundred dollars is it eighty is one hundred is a hundred and forty and I look Netflix must have a near-perfect renewal rate but I imagine the dollar renewal isn't that much greater or it's Amazon every year figures out a way to increase it give me some members that don't look like they're valuable and the companies take a company that I've lost money on Twitter put there's lots of users but the reality is those users don't seem to be either intense or locked int they don't they might not opt out a bleep Twitter but even when they're on Twitter they're not on enough of the time that Twitter can do much with them so that's a classic example of a company with lots of users that can't figure out a way to get a high value per user because the users don't see it and it might not be Twitter's for I mean they've had management issues there's their platform might not lend itself that well to users staying on so when people are building platforms for users they have to think about platforms that are rich enough that users want to stay on the platform it's something that Facebook has done incredibly well is make their ecosystem richer and richer so that it's not that the Facebook posts you're going for it Instagram its whatsapp it's part of an ecosystem we're trying to keep people locked in to you so I think that that is something we have increasingly paid attention to is how locked in our users into your ecosystem because that's the only way you can sell them more stuff Amazon it appeared would appear to me based on intensity renewal rates ability for dollar renewal to increase that they basically saying pay us ninety-nine bucks a year so we can sell you more and more stuff and it just and by the way these relationships are with the most the wealthiest households in the world it what feels like they could go from whatever three hundred dollar Amazon users to seven hundred which is a prime user it's conceivable they could take the seven thousand I mean it's just I don't see anything that has a more valuable user base in the Amazon and and I think that that's absolutely true though the biggest cause that Amazon is faced with its Prime members is a shipping cost it core I mean if you look at the day I think I lasted seven and a half million dollars on shipping cost just for Prime members yeah and in a sense it gives you an opening as to why Whole Foods might have been a good buy for them it's got nothing to do with being in the grocery business which is a horrible business to be and given its margins it's a fact that you now have distribution centers and some of the wealthiest zip codes in the country where you can deliver stuff without having to send things three thousand five thousand eight thousand months just the distribution system for Amazon with its Prime membership is worth a lot there's a site issue to it Amazon which is it's not just that people are buying more in Amazon it's the destruction you're creating the rest of the space the one way I describe Amazon is I don't know whether Amazon will succeed in the business is there an but one thing we know the businesses they go through they would destroy everybody else in the space the benefit they get from that is as you destroy your competition where else a your Prime members going to go but to come back to you well to your point there they didn't buy it they didn't spend $13 thirty million dollars for a happen for a five hundred million operating income company they spent thirteen billion dollars for greater intensity across their fifty eight percent of households that have this ongoing relationship with so let's talk about Amazon and I had chills go down my spine yesterday when you said you thought you had a difficult time seeing how Amazon would run from here that it was sort of price to perfection I've been saying that for seven years so in a sense let me start off by admitting over the last seven years I've looked at em and I don't see how Amazon can pull this off and each time the market keeps pushing the price higher there are times when you got to a stop and ask am I missing something in the company the question I keep asking myself is there something the market sees here that I'm not seeing and there is this this small opening where you can get to the value and that small opening requires almost a conspiratorial view of the world where Amazon essentially becomes the only game in town the Hopi anti tries it everal so across several sectors and if that happens you could argue them worth what they are but the question is what's the rest of the world doing while this is happening are the antitrust people letting this go through so I think that that pathway to get to the value seems to be so low probability that I'm not willing to bet on it but I'm not going to bet against it either the nature of this game and I tell any time I talk about companies like Amazon I want people don't get too caught up in your conviction about the company because your conviction is going to be stomped by what the market sentiment is the market sentiment of the Amazon is so powerful yeah if you try to bet against it you're going to be bankrupt before you're right because ultimately and this is dangerous talk because ultimately it seems like with almost every stock or company in history there is a reckoning with the traditional metrics that you understand are applied that doesn't seem to have happened with Amazon it seems that the core competence and I think this is increasingly true of much a lot of equities of storytelling and their ability to exert strategic power across not just online retail but now offline retail media digital marketing streaming video grocery now my sense is it beats us to Ma said we see overnight delivery is a huge opportunity the 150 billion dollars in market cap with DHL FedEx and UPS would begin leaking to Amazon just on a Jedi mind trick of I'm focused on this right now is there a chance that it could go to a trillion dollars just based on the sentiment the general sentiment that Amazon is about to become the most dominant player and the largest highest EBIT to consumer businesses in the world and continue this anti-gravity bucket we're just totally decouples from the metrics talking about it I think Amazon is the perfect illustration of the power of telling the same story consistently over time and acting consistently with that story because every company tries to tell a story but most companies don't stay true to a story their story keeps changing depending on whatever's hard Jeff Bezos has said the same story since now i-i've stood that letter from 1997 that everybody I'm sure is read about what he said I'm is that letter still captures how the company's very convenience price will interact across ways we care about revenues we'll let the profits come I call it a Field of Dreams company long time ago because their view is if we build it they will come and they be consistent with that notion I think the problem though is the success of amazon has created a lot of amazon wannabes when you say wannabe you mean people who are smelling losing a ton of money in this field of dream strategy exactly because I think in a sense what Amazon is pulled off is he is unique I don't think other companies so when you see Wilbur in a sense try to be an act to pull out the Amazon I'm not sure that car service lends itself as easily to what Amazon did so I think a lot of companies look at Amazon said only we could do what Amazon does we're going to be as successful I think they're going down a very dangerous path with Amazon the question is what that reckoning what form that reckoning will take you saw a little bit of it last year when you started to see the stories shift a little bit where Amazon started to focus on profits finally they did a couple of things like lay off people with them they're not done before but you saw growth taper off a little bit I mean it's still pretty high but the company seems to be saying look you know we're going to look at margins a lot more than we used to I think you're going to see a lot more of that in the coming decade where you're going to see Amazon take actions where they put margins ahead of revenue growth in some sectors but the thing about Amazon is while they do it in some sectors and other sectors they're reclaiming that old strategy so you're going to see a mix of strategies and different business in an Amazon I would be surprised to be started to see the profit margin start to improve at least in some of the sectors they've been around for fifteen or twenty years so you think this is an overt strategy I've always thought that perhaps at Amazon we got into businesses specifically the cloud where they couldn't help but be profitable and that they actually every quarter they announced of profit Jesus calls management into a room and says you screwed up green light every expensive thing you believe that it is an overt strategy start getting more profit I think so and I think that in a sense it when you get to be a half of trillion dollar company Sigma you at some point in time you have to start thinking about profits simply because you have so many ambitions you had fun with those guys flows you can't keep running at this in a low profit margin strategy so I think you're going to start to see margin start to improve it at so companies everybody follows the leader I see this in the private market echo system where VCS encourage all of us including us we were a VC back company to grow and be special and ignore profits or losses so let's talk about some companies snap four hundred million in revenues five hundred million in losses how do you value a company like that yesterday you said at some point you thought it would be undervalued what right now what is it fifteen sixteen billion dollar market cap talk to us about now I think what the snaps pathway to profitability is a fairly straightforward they can pull it off which is they've got 160 to 200 million in fairly intense users they're not quite alike that close they're halfway between Twitter and Facebook in terms of intensity that's the strongest point the weaker link is these are 20 to 30 year olds historically they do you think that's weak because the advertisers love it it's weak simply because we know I I have a 27 year old or 23 best cycle where I today it's nap god only knows what will be tomorrow yeah if Instagram is cooler than snap for some reason there going to be an Instagram so that's a weaker leg is we don't know whether they be as loyal as 40 to 50 or controlled customers there's a pathway I think for snap to become a successful company but they've got to stay focused so we're in terms of where it is now wildly overvalued about the same waiting see it's not widely over value because I've added 11 it's at 14 something I think it's getting pretty close to being interesting it's one bad earnings report away from being implied for me yeah because all these points back yeah but if you have one bad earnings report where the user numbers start to taper off because that's all people seem to focus on those two seven or eight I'll buy snap I'm in snap at seven or eight to me is a is a pretty good investment because I'm getting a hundred and sixty million users who are checking the snap 25 30 times a day and it's snap can then figure out a way to start to deliver and that's that's EF I think that's worth at least an $11 per share so the right price I would buy snap I think they have a tough path ahead of them simply because they're in a space where two giant suck up all the oxygen Google and face Facebook but I think they have a pathway if they can find a niche in that market that they can case and one of those giants facebook seems literally obsessed with putting them out of those yeah exactly so uber six billion in revenues three billion and losses I think those in the know great yeah give me your sense of value on uber I think ubers basic business model has a problem what allowed them to grow so fast is getting in the way of them making money what allowed them to grow so fast is they created a no or low capital intensity model you don't own the cars you don't hire the drivers all it over needs to do to grow in a city it's hard I put them in a motel room sig sign up and up drivers let's get started that's what allowed them to grow from nothing to a seventy billion dollar at least pricing for the company in a five to six year period but that's turning out to be the weakness because in a business with no capital intensity there are no barriers to entry there's a lot of liquidity you and I could start up drive sharing market and essentially what overs original strategy was we spend the competition into the ground would drive them out of business in 2013 and 14 it look like there's a shock because it was so much bigger than everybody else but then you started to see the other players over so everybody's throwing cash into business nobody's making money it's essentially almost like everybody is you know it's going to price themselves down I mean I look at what I pay for an uber uber ride and say there's no way yeah anybody in this game is making money no but not the driver yeah it's great for customers yeah but this is not a business that's sustainable in the long yeah 50 bucks to get to the airport you know accost uber 75 economically irresponsible not to take uber everywhere show wouldn't add that so that Barry Hoover has liquidity in every market and you can with 30 50 million bucks start an uber competitor does not lend itself well than to a company like Airbnb where you need global liquidity where even if you have rental listings in Houston you have to have global awareness from everybody coming into Houston doesn't that make doesn't the same thing like Airbnb more valuable whereas it makes super or less valuable potentially you know Airbnb has a potential for global networking benefit lubbers local networking benefits which means they dominate a city they want to get to a tipping point where they become so I think Peru but the key is to change the business model they've got to find a way to make this more capital intense more how would they do that by owning the cars that's why they tried wait and try to get into electric cars and in a sense but the progress now they're competing not against lyft and didi they're competing against Google and the reality is Google and Apple have enough cash in their checking accounts yeah to spend you onto the ground so they're entering a space with a competitive advantage in a much more minimal but I think Airbnb does have that advantage of having a potential for global networking right so Airbnb I think at a most recent round of about 25 billionaire boots err beatboxing uber at seventy billion you would argue Airbnb probably overvalued I'm sorry uber overvalued Airbnb where would you put it I think Airbnb I mean I think at twenty five billion is closer to its fair value I think Airbnb has more of an issue now with regulators because that's coming now uber has already gone through the brunt of that process so they're working out some probable pleas to compromise where they can live with ride-sharing companies because the reality is many cities without ride-sharing you can't get from point A to point B taxi cabs can't do it anymore Airbnb is I think getting to the point where the regulators are going to wake up and start being more assertive about what they need to do and that is it with a lot of these these young disruptive companies live off regulatory arbitrage initially at least which is you see it in fin tech you saw it with Hoover initially the regulations that govern the status quo often meaningless you know the legacy regulations and what these startups do is they essentially become are able to succeed because they don't have to deal with those regulations Airbnb increasingly will have to deal with the regulation that hotel company's about to deal with historic yeah the innovation class plays by different sorry and what's like once you get to a certain size the regulator's wake up but then we're going to pay attention to you I want you to pay taxes and have minimum wage and all those restrictions on where you can put your I mean you're going to see the zoning restrictions come in and where you can do this I think that position better than uber because they don't have to deal with in with the equivalent of a DD focusing or a lift in this business while they're building up so I think I've been B as a potential to actually and we talked about uber at 70 billion seventy billion in the private markets isn't seventy million in the public markets right because the company that looks dumb or the guys that invest at seventy billion they get a liquidity preference right so it's not really they're investing at seven eight all right that's part of the promit extrapolating from VC transactions to embracing the entire company because unless you know the exact specifics how the VC transaction is set up with all the option ality built in I mean I actually played a game where I took a four hundred million dollar company and I sold a stake and I wanted to make it look like I was a billion dollar company and essentially what I did in the game as I said what kind of options would I need to get reacts for credit in forever and I could could make a board so with especially with the zeal for unicorns out there I sure how companies have started playing this game with VCS where both sides kind of do the dance of let's make it look like you're a billion dollar company because that attracts more VC investors so you're right it's a very dangerous extrapolation we're doing so but the test will be when they do go public what that number will look like you know whether you can keep that illusion going and it seems like many of these companies can do it at least through that initial offering day and it seems like people don't wake up to six months one year one and a half years later to what the actual values are color Forest ok Facebook Facebook to me is a company that is constantly surprised me on the upside because when they first came out I wasn't sure to think I described them as a Google wannabe which is not a bad place to be because you're trying to be like one of the most successful companies of the last decade Facebook has surprised me to the point where I'm willing to argue that going forward if you look at this big fight between between Google and Facebook I think Facebook is going to win that fight in to put the advertising dollars because I think that they constantly keep when you think about stories they find ways to make this story richer and bigger each time I look at them by bringing in things in the ecosystem so when they bought whatsapp I was actually the few people in investing who defended them saying you know because most people is why would you paid 19 billion or query for a company that doesn't make money and I said you're missing the point what they're buying is richness the ecosystem the messenger service that takes them into the parts of the world where they're weakest Asia in Latin America Asia especially well what's up is you was ubiquitous when they bought it they essentially bought the messaging service that the third of the people in India use so I think they to fit when I look at every action that Facebook takes it seems to be an action that is designed to make you stay in their equals the intensity exactly 20 billion on a four hundred fifty billion dollar market cap for again increased intensity fields and it's like a whole thing I I don't use the word real auction casually because people use it almost as an excuse for paying a premium but this is a case where the optionality you get because your users are so attached in your ecosystem so long but in Facebook I don't even know what they can do with these users going forward but you're 1.9 billion users on your system all the time you find ways to make money on Google Google the thing about that's always surprised me what Google is how they remain an advertising company right they try all this other stuff on the side you get a lot of they get a lot of public relations out of ever know the way Marwin but at the end of every quarter I actually check what percent of revenues comes from old-time advertising and it's 95 percent now I call it the sugar daddy company because the company where the search engine provides so much revenue so much earning so much cash flow and its predictable earnings and cash flow the day can experiment doing all kinds of panda and I'm exactly and I'm not sure that's good for a start-up to have cash you can count on no matter what and part of the reason Google might not have been as successful in the other Devers is I'm not sure you can behave like a start-up if you know you can go back to the parent company for another billion dollars and things don't go right so I am amazed by the cash cow in the advertising business but I'm also made that they haven't found a way to make the rest of their ecosystem at least start on the I don't even see the starting of a pathway to profitability and most of their other businesses so undervalued overvalued relative to the other guy it's actually that it's close to fair I mean I Google to me has always been within 10-15 percent of valuable Colorado the earning on cash flows are so immense that you know I the way I describe it is I know when I when I looked at Google and Apple about eight months ago is Google is the better business because applets recreate itself every two years because it's smart phone company you're only as good as your next iPhone and Google has this business that in the long term will keep generating earnings and cash flows but I thought Apple is a better investment than Google at that point in time but Google wasn't significantly over that it was been eight to ten percent of its value so Apple huge run up lately do you think Apple I think it is it is about where I would and with Apple whenever I get to that point I sell the shares because you're now playing the next iPhone game if the iPhone eight comes out it does so I don't want to play the smartphone game as to what the iPhone I'll wait for the iPhone eight to come out and here's what I'm looking for if it doesn't do well it's almost predictable given the last ten years of Apple what's going to happen people are going to sell the shares drive it down to 80 or 90 and I'm going to do way you think using Apple is going to come half well the way investors in Apple behave yeah that's how it always wine iPhone surprise away this is a company where the story goes from this is the end they're dead to this is a company that's reformed its growth neither which is true this is the greatest cash machine in history it's been the greatest cash machine in history for the last seven years but it's a mature company you're not going to get 20% growth enough you're going to get three to four percent growth and that's in a sense you you're more likely scenario but the market keeps going from believing it's found a 15% growth trajectory to one that says it's going to be dropping about 15% a year so it's I've actually bought and sold Apple three three times in the last ten years simply because of this up-and-down movement in the shares we talked about netbooks earlier up huge I think 70 or 80 percent just in the last six months Netflix I think Netflix the modulus shakes right at do you I mean I think well one thing that always used to scare me about Netflix is how much they were dependent on other entertainment companies for the basic content and my fear was that they would be held up for because once they got big there were the entertainment companies would come to my said we want three times more five times more and given that you promised you uses the movie axis you're going to pay that what Netflix has done pretty well is changed its focus towards original content in different businesses they're entering a dangerous business because we know how the entertainment business works in goes drive budgets and then budgets get out of control but they've actually managed to create enough of a content business that there are some users who watch Netflix just for their original content I thought that I never thought that would happen now and I think it's going to be interesting to see how they build up original content outside the US because it's very clear that their ambitions now are to build up their user base outside and if you think about outside US and you think about numbers you think about India and China and Marco Polo was a badly focused exercise and trying to get Chinese users to sign up but I think that that's where I'll see I seen that's occurring more global more original content and it's a company that that at its current price is I think a little overvalued I wouldn't buy it but it's a company which stays on my radar because I like it as a company it's one of the few companies where amazon has tried to enter the space and not being able to try to move Netflix away from its subscription model and that's that's kind of tough to do but so original content they're saying six and a half billion here amazon spending for half so just to circle back to amazon on original content Amazon is now spending two-thirds or 70% of what Netflix is so at some point they're going to you you think they might be kind of a viable competitor Apple and hardware the most innovative hardware products the last couple years wasn't wasn't the Apple watch wasn't pods it was Alexa yeah Facebook and Google digital marketing Amazon media group no one ever talks about it it's a billion half dollar company probably growing fast in the Facebook or Google it feels like the for might be melding to the one and all the Venn diagram overlaps of Amazon versus everybody else Amazon is winning it Amazon is now taking on the other the other three and winning it's your sense I mean as your sense that Amazon really is a viable threat to the other three it could be that's part of what might explain that high valuation we were talking about for Amazon is its its wit and that's why the Amazon Prime membership is such a rich base to build off because you've got 85 million people who keep coming back to you and you want to sell them entertainment there right there you don't have to reach out to where do I go find these people so right now I get Amazon Prime faloona with Amazon Prime I get no access to most of Amazon media for free it's an incredible bonus that I'm getting I know I'm this can't last there's going to be a point in time where this media is going to cost me money and I actually find Amazon media to be richer than Netflix in terms of the offerings I can find so you're right I think Amazon is going to be a competitor to almost every one of the players in this market it doesn't want the advertising stuff but everything else it's going to be it's going to be up there so it's less of a threat I think to Google and Facebook than it is to Apple and Netflix so Tesla Tesla is Elon Musk I mean let's face it no it's impossible to invest in Tesla we don't believe in Elon Musk so if you're a believer in Elon Musk if you think he is the visionary to end all visionaries I think you by Tesla simply because you're buying a person and it's true but the problem is buying a person rather than a company is people come with weaknesses and I think Elan must strengthen his vision his weaknesses is inattention to detail and you see this showing up in Tesla quarter after quarter they're great on the vision but they can't deliver cars the way they promised they're always under delivering they're always behind schedule so to me the moment of reckoning is going to be in 2000 as you look at the Tesla 3 rollout is whether they can actually deliver if they can deliver I think they deserve to have a higher market gap in Ford and GM and Volkswagen I mean maybe not Volkswagen but essentially companies that have legacy cars that still do business the old way we just saw old worn out saying that they were going to face out there gas cars alone so I think the world is shifting and Tesla might be in a better position to to operate in backwards and many of the legacy companies so everyone we've mentioned so far is either fairly fairly valued or what feels like kind of overvaluing do you look at anything out there right now I think it's undervalued it's tough in this market and undervalued I mean we're in a market it's not that comfortable people blame tech companies within the overall market is richly priced a richly priced you know given history it's perhaps reasonably priced if you factor in low interest rates I mean that's your only way you get it you know I'm ok with this market is my opportunity cost is if I don't invest in stock market where am I going to go and the key bonds are still delivering towards you so in a sense you're stuck with this be good but that's a dangerous way to rationalize the market thing I've no other place to go therefore this is your sign cash is a viable I think cash is a viable option I think you know and I advise people I say look you know don't stay out of the market entirely because the history of people staying out of the market is that they tend to lose over the long term but phase in your investments the market you have cash to invest don't put it all at one go and do it over or staggered over period especially be young and you can take you know three minus six months before you do the investments because I think cash is a viable choice well so just as the the innovation class gets us what feels like have unreasonable rich valuation is there an investment thesis or opportunity around look look at Amazon Amazon announces they're buying Whole Foods and basically or anytime Amazon announces anything good which is a lot the rest of retail gets hammered so you know an Abercrombie & Fitch a Macy's and Nordstrom Abercrombie and Fitch is global brand billions and revenues six or eight hundred million a market cap with 200 million in cash it feels like it could be sold for scrapping that there might be or a Macy's trading of what five times cash flow right now are these guys is there an opportunity with the with the dogs or the that are basically the victims or the perceived victims of Amazon what have you a pill retailer I wouldn't touch you know so Macy's I will walk to the Macy's yesterday walked out right away it's a depressing place to shop it's the president that's their tagline but I think that's true for a lot of all-time Sears Macy's JCPenney go in and you don't feel like it Felix then uh merchandise is thrown all over there's no rhyme or reason to what they do and I have a comment which is interesting because you're not just buying you're buying a brand name as well j.crew alright I think you have to separate the retail space into those who are pure retailers so basically you know just and those who might have a brand name that could be valued with vertically integrated camera yeah so I think that's going to be the dividing line because old-time retail is in this watching lights like watching the Bataan Death March yeah there's no real optimistic end to this game you know everything you see is more and more negative over time because I think they I think in a sense you know dug their own graves because the way they reacted to Amazon over the last twenty years is they try to cut cause through promotions you can't blame them for doing that but the way they cut costs is they essentially took away the only reason you'd go into a physical store which is to get help to get no service and big car merchandising so Day in a sense I made it so unpleasant to actually shop in a in a physical retail store that I'm going to go on my Amazon Prime account and will order the same stuff for 20% less and probably get better service by asking an email question than I would in an actual store what about the victims of Facebook and Google of I comms the Disney is the WPP is the IP jeez is there opportunity there because they've been beaten up see arrogant it's the same thing right in Disney for instance it's you could take away that there the distribution mechanisms and entertainment and they're still what the lot because somebody still has to deliver the content so the companies that have rich content that cannot be taken away from them will still have value intact so they'll have to find Rick recreate themselves I mean Disney is an amazing company but they have to think about how entertainment is changing and how they have changed with the space to survive and I think every entertainment company right now has to be looking inward saying what do we need to do to adapt to the world we're in which is a word where Amazon and Netflix might be the gatekeepers through which we end up delivering our content and I think that that's so the company entertainment companies that truly can own take on him that's why Marvel and Disney Animation are such critical parts of Disney as the companies because those are the things that deliver the content at everybody means so the broader market Jamie Dimon when asked what a financial crisis is he said something that happens every seven years and I love that quote and for those of us were old enough to have seen actual cycles we always said we'll be smarter the next time this to me feels very frothy a lot of the soft soft signals you know marginal talent demanding a lot of money craze and rents for office space difficult to get reservations and marginal restaurants it does feel like we could have a 20-30 percent correction and then wake up a double course we have your sense on the general state of market it's a great a long long really good run and every time you have a long really good run there is a correction coming so we can say that sexy there will be a correction we don't know whether it'll be three months or six months a question is what do we do are you think it's bugs not years it could I mean it could be weeks it could be tomorrow I mean Corrections happen for we could find a trigger that causes Corrections we could make a lot of money the reality is look at the history of Corrections small things it's almost like you know you don't know what's going on you don't we don't know where it's coming from so I know that a correction coming the question have to ask myself is what do I do about it so a few years ago I asked a question which is assumed that we're in you know that do you think the markets in a bubble what's the best strategy we have obvious answers just sell your shares so as what is the probability that the correction has to happen and how soon does it have to happen for it to be a better strategy to sell your shares and wait then it is just stayed through the arket and my tipping points were 70% and a year which means I have to have a 70% probability of a correction happening within a year for it to make more sense for me to sell my shares and sit on cash then it's just right through take the 15% hit when it comes and keep going are we at about 70% not for me not yet and that's because interest rates are still at 2% if interest rates went to 4% and markets continued to rise or be a viable competitor to equity exactly you know at 2% I'm not quite at the 70 percent property yet so to me the where are we 50 60 kind of I would say lower that that simply because at a 2% rate there is really no other place left me to go that was great so online certificate for the first time available to anybody who wants or online course and valuation where do people go to check that out well if they want it for free they can go to my website if they want it want to pay NYU prices they should go to the stone website and I'm sure certain loads you saying that and what's your website Adamo join calm demote earn calm and you have a do you have a book coming out on user growth or our subscribers I'm starting grad to look up sabbatical that's that's one of my big projects of my sabbatical Astoria is to think about user growth a valuable user and then apply it to Amazon and Netflix and Facebook and Google essentially to look at what the value of user is in different companies and why they vary across companies as well thanks very much professor a SWOT the motor and more information at de motoring comm is that correct okay we'll see you next week you
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Channel: Gartner for Marketers
Views: 333,916
Rating: 4.9469991 out of 5
Keywords: Scott Galloway, L2inc, Winners & losers, Digital marketing, Social media, Ecommerce, Mobile marketing, Marketing news, Business news, Internet news, Tech news, Social Media news, Digital research, Business intelligence, Digital trend, Market trend, Brand strategy, nyu stern, business school, facebook, google, amazon, company valuation, user valuation, user engagement, user loyalty, netflix subscribers, amazon prime subscribers, twitter users, instagram, whatsapp
Id: 4CLEuPfwVBo
Channel Id: undefined
Length: 37min 28sec (2248 seconds)
Published: Thu Jul 27 2017
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