Post Corona: From Crisis to Opportunity | Scott Galloway on The James Altucher Show

Check out The James Altucher Show Episode Page & Show Notes

Key Takeaways

  • Prepare for a harsh winter: COVID tends to spread fastest when people are stuck indoors so be ready to see a large spike in cases over the next few months
  • People have been so distracted by the election that they haven’t been paying attention to the record levels of infection and hospitalization:
    • “We’re losing more people per day right now than we lost in World War II, the AIDS crisis, the Vietnam conflict, we have never had this velocity of death in any crisis in America”Scott Galloway
  • The 11-year bull economy gave companies the sense that they didn’t need to save money and could use all their free cash flow
    • Scott believes that any company that engaged in share buy-backs shouldn’t get a single dollar in Federal help
      • “When you have capitalism on the way up and socialism on the way down, that’s called cronyism”Scott Galloway
  • There are 2 types of companies you want to invest in: 
    • Unregulated monopolies 
      • Big tech is up 60% year to date
    • Companies too big to fail
      • When things are great, they make a ton of profit. And when things are bad, they get bailed out by the government.
  • Scott believes that businesses in remote healthcare and telemedicine will do phenomenally well over the next few years:
    • “I think that’s going to mint the first trillionaire. I think the startups there are going to be huge.” – Scott Galloway

Intro

Books Mentioned

Scott’s Thoughts on COVID-19

  • The superpower humans have is cooperation. Through cooperation, people have been able to create incredible products and achieve amazing feats. But there’s been a lack of cooperation during the COVID crisis.
    • “The West has done an abysmal job” – Scott Galloway
  • One of America’s superpower is optimism, but during the pandemic it is has been the comorbidity that has led to thousands of deaths
    • “This comorbidity of optimism has absolutely been our Achilles heel” – Scott Galloway
  • Prepare for a harsh winter: COVID tends to spread fastest when people are stuck indoors so be ready to see a large spike in cases over the next few months
  • If you’re blessed with economic security, do your best to follow social distancing rules and CDC guidelines
  • People have been so distracted by the election that they haven’t been paying attention to the record levels of infection and hospitalization:
    • “We’re losing more people per day right now than we lost in World War II, the AIDS crisis, the Vietnam conflict, we have never had this velocity of death in any crisis in America”Scott Galloway
  • The pandemic shifted education online but since many low-income children didn’t have the equipment needed to participate, they’ve fallen behind
    • 50% of low-income students have fallen behind in education compared to their middle- and upper-income peers

Capitalism Has Turned To Cronyism

  • Even before COVID, most restaurants operated on a thin margin and barely had cash saved up for a rainy day event
    • Since the pandemic, restaurants have been forced to open up with limited capacity which has made it even harder to survive
      • Once winter comes, many customers won’t use outdoor seating, and tons of restaurant businesses will go under 
  • Meanwhile, 80% of PPE money went to companies that didn’t need it
    • “I don’t think the stimulus has been well planned” – Scott Galloway
  • The $3 trillion stimulus could have given every American $60,000
    • One in three Americans are 30-days late on their rent
  • The 11-year bull economy gave companies the sense that they didn’t need to save money and could use all their free cash flow
    • Scott believes that any company that engaged in share buy-backs shouldn’t get a single dollar in Federal help
      • “When you have capitalism on the way up and socialism on the way down, that’s called cronyism”Scott Galloway

How Corona Is Changing The World

  • Scott believes demand for commercial real estate will drop by 20-30% and several hundreds of billions of dollars will be reallocated from commercial to residential real estate
    • As a result, more residential buildings will be built and rent prices will decrease
      • A second-order effect: lots of restaurants that are dependant on business from corporate workers will go out of business
  • Before COVID, one in three relationships began at work. Post corona, more people will find love online.
  • A lot of people have discovered that they love working from home and will try to find a way to WFH instead of going back to the office

COVID Is Accelerating Digitalization

  • COVID-19 is more of an accelerant than a change agent: It’s accelerating the transition to a more digitally connected world 
  • The pandemic has been terrible for the mom and pop shops but great for big businesses, especially tech companies
  • There are 2 types of companies you want to invest in: 
    • Unregulated monopolies 
      • Big tech is up 60% year to date
    • Companies too big to fail
      • When things are great, they make a ton of profit. And when things are bad, they get bailed out by the government.

Telemedicine Companies Will Thrive

  • The next year or two will be a wonderful time to start a business. Why?
    • Real estate will be less expensive
    • Hiring quality employees will be less expensive
    • Companies will be open to buying from new businesses
  • One huge industry that is ripe for disruption: health tech
    • The healthcare system is the biggest industry in the US and it’s about to be disrupted 
    • Regulations have shifted completely because of the pandemic and when there’s change, there’s opportunity
      • People can now have virtual doctor appointments, doctors can prescribe medicine online, and medicine can be delivered directly to your house
  • Scott predicts that Amazon will move into the healthcare space  
  • Scott believes that businesses in remote healthcare and telemedicine will do phenomenally well in the next few years:
    • “I think that’s going to mint the first trillionaire. I think the startups there are going to be huge.” – Scott Galloway

Higher Ed Needs To Change

  • Higher education is long overdue for reform:
    • Tuition rates have risen 3x as fast as inflation or 1,400% over the last 30 years
      • A lot of parents are reevaluating the risk-reward of sending their child to college
  • The large amounts of student loans young adults carry from their education has made them risk-averse and decreased the chances of them starting their own businesses
  • The top 20 schools will survive and maintain their status and demand, but the remaining educational schools will need to adapt
    • By adopting new technologies, like online courses, schools could easily increase the number of students they can educate
    • Scott believes schools should be public servants instead of acting like luxury brands by only serving the rich and wealthy

Additional Notes

  • An important lesson Scott is currently learning: Just because you’re good at giving business advice to company executives, it doesn’t mean you’re good at giving life advice to people 
  • About 1,000 people are moving from New York City to Florida every week
    • New York City will have a huge tax loss in the next year or so, but it will survive. The city is filled with young and ambitious people, and many of the world’s biggest companies have office space in NYC. 
  • Scott sees Airbnb as being the next big tech company
  • Media has shifted into a feature for big tech instead of being a standalone industry
    • Amazin uses Prime Video as a feature to get people to sign up for their Prime membership
    • Apple uses AppleTV as a feature to get people to buy Apple products
      • “We have an entire industry that has become a feature of big tech” – Scott Galloway
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Notes By Alex Wiec

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