Back in May, NYU business school professor Scott Galloway gave a presentation at a conference in New York called DLD.
It was called “Zero or One: Winners & Losers in a Digital Age.”
A senior industry source who saw the presentation told us we absolutely had to track it down and share it with readers.
It turns out we weren’t the only ones hot after “Zero or One.”
On the phone yesterday, Galloway told us that of all the presentations and reports he’s ever put together for his consulting firm L2 (“Business Intelligence for Digital”), “Zero to One” has by far gotten the most attention.
People like the report because it’s blunt. It calls out stinkers.
Galloway told us he’s heard from about 50 hedge fund managers who wanted a copy. A few of them wanted to see which companies Galloway believes will be “winners” in the “digital age,” so they could go long on them in trading.
More of the hedge fund managers wanted to see which companies Galloway thinks are “losers” — so they could go short and bet against them.
Galloway also heard from all of the “losers” he mentions in the report; each wanted to update him on their progress.
It’s probably best to just dive into the presentation, but Galloway’s basic premise is this: Everyone thinks the “digital age” is a rising tide that will lift all boats. But really, it’s a shift in tides that favours a few super yachts and will leave everyone else stuck in the sand or worse.
With this perspective, he examines the players in three arenas: Social media, retail, and the world economy.
Galloway believes the media focuses too much on winners of the digital age. There are also losers. His presentation first examines each in online.
Galloway says that online, winners are image-oriented. People interpret imagery 50X faster than text.
Instagram is a winner because its image-oriented and mobile-friendly. So are Line, WeChat, and WhatsApp.
Galloway believes Pinterest is an over-hyped 'loser.' 'They were the leader in the visual web, but they've been blown away by Instagram,' he says.
Earlier this year, Pinterest announced a high-end customisable ad business and a self-serve ad business within 12 weeks. Galloway's says the confusion 'reflects business immaturity.'
Galloway says Twitter is a loser. It has tiny 'conversion to purchase,' he says. It's a $US10 billion company, not a $US30 billion company, he believes.
Galloway believes Tumblr was the worst acquisition of the past five years, and that it will cost Marissa Mayer her job. He notes Yahoo didn't even mention it during its last earnings call.
Galloway believes Amazon is a winner because it is investing in the most expensive way possible for it to differentiate itself: giving customers exactly what they want. Startups can't compete.
Because of the investment, Amazon will be able to deliver '50% of everything in your life within 4 hours.'
Smart B&M stores are using assets Amazon doesn't to do things Amazon can't, like 'click and collect.'
He's bearish on pure play ecommerce companies that will never be able to compete with Amazon's fulfillment advantage and offline brands that have weak digital presences.
New giant companies, like Facebook, only employ a fraction of the number of people old giant companies, like Unilever, employ.
A dwindling middle class will lead to real problems in developed countries. Infant mortality is worse in unequal countries.
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