April 11, 2020

What Will The New Normal Be Like? | Scott Galloway on The James Altucher Show

Check out The James Altucher Show Episode Page & Show Notes

Key Takeaways

• “If we were to all successfully distance 6 feet for 14 days, you’d likely put a stake through the heart of this thing” – Scott Galloway
  • If you don’t socially distance, you’re not only putting yourself at risk but also others at risk
• Scott’s predictions for the new normal:
  • About 70-80% of retail stores will close
  • Grocery deliveries will grow by 10-15% over the next few years
  • Remote work is going to rise and it will be normal for workers to work from home 2-3 days a week
  • The office space business will decline
  • Healthcare will become more remote and prescriptions will be delivered to your home
• “Every year [universities] raise prices faster than inflation so the jig is up, people realize that’s just not worth it”  – Scott Galloway
  • Universities should be public servants, not luxury brands
    • “We’re about to get wildly disrupted in higher ed”
• Scott doesn’t believe many universities will open again in the fall
  • “I can’t imagine we’re going to make a conscious decision to open again” – Scott Galloway
    • The top universities will be fine but a large number of schools who were dependant on tuition will close up and never reopen
• For a lot of kids, the traditional form of college (living on campus and going to a physical classroom) will become the ultimate luxury item
  • Students don’t pay for an education, they pay for the brand: “The strongest brand in the world is not Apple, the strongest brands in the world are Harvard, MIT, Carnegie Mellon, these brands have been built over centuries” – Scott Galloway

Intro

• Scott Galloway (@profgalloway) is the author of The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google and The Algebra of Happiness
• He hosts 1k: The 1,000 Second Interview Podcast and co-hosts Pivot with Kara Swisher
• He is also is a Professor of Marketing at NYU Stern School of Business
•  Host – James Altucher (@jaltucher)

Thoughts on COVID-19

• Scott is currently sheltering in Florida while James is in NYC
  • “Every bar and restaurant right now in New York City is out of business, even chains” – James Altucher
    • James believes that Small Business Administration (SBA) loans will help bring most of them back, but it’s hard to predict the future
• “If we were to all successfully distance 6 feet for 14 days, you’d likely put a stake through the heart of this thing” – Scott Galloway
  • If you don’t socially distance, you’re not only putting yourself at risk but also others at risk
    • “My sense is the way we go after this thing is just to distance like crazy in a very vigilant and hopefully short time”
      • About 7-9 states still haven’t gone into lockdown
• The U.S. currently has more infections than China, Italy, and Spain combined!
  • However there is some good news: “All the models that predicted enormous hospitalizations in New York City are now about 80-90% off, including the model they used in the White House to figure these things out” – James Altucher 
    • The peak for NYC will be in 6-7 days (around April 15th)
• “So far no one can be accused of overreacting, the only negative attribute I think in response will be that thus far that we, amongst leaders, amongst citizens…is that we underreacted.” – Scott Galloway
  • Scott is worried about the possibility of the virus coming back in the winter
• In war, the guy next to you is your ally, but in a pandemic, the guy next to you is your enemy
  • The US is looking at around 100-250K deaths from COVID-19
• The US considers itself technologically innovative, but when the crisis hit, it couldn’t meet demand for ventilators or protective equipment
  • “I think our response here…hasn’t been what I’d call robust or reflective of…what’s supposed to be the most innovative supply chain an technologically sophisticated economy in the world” –Scott Galloway
    • When we look back at how we handled COVID-19, we’re not going to feel very good about it
• “This is worse for the economy than coming out of war” – Scott Galloway
  • When you come out of war, there’s a shared sense of optimism and unified vision for the future
  • In a pandemic, there’s a lack of optimism: “The reason why people don’t talk about the Spanish flu that killed so many people in America is we’re ashamed of our response”
• “I’m hopeful we come out of this with a generation of leadership that is more emphatic, thinks more long-term…and realizes the key isn’t to create more billionaires but to create more jobs” – Scott Galloway

Scott’s Predictions For The New Normal:

• About 70-80% of retail stores will close
• Grocery deliveries will grow by 10-15% over the next few years
• Remote work is going to rise and it will be normal for workers to work from home 2-3 days a week
  • The office space business will decline
• Healthcare will become more remote and with prescriptions delivered to your home
  • The biggest winner in healthcare will be Amazon
    • There will be a consolidation of healthcare providers and players
• In tough economies, such as the current one, people move from startups to more established and secure companies like the Fortune 500

Education Will Change Forever

• “Every year [universities] raise prices faster than inflation so the jig is up, people realize that’s just not worth it”  – Scott Galloway
  • Universities should be public servants, not luxury brands
    • “We’re about to get wildly disrupted in higher ed”
      • Facebook disrupted media, Amazon disrupted retail, now big tech is coming to disrupt education
• Scott doesn’t believe many universities will open again in the fall
  • “I can’t imagine we’re going to make a conscious decision to open again” – Scott Galloway
    • The top universities will be fine but a large number of schools who were dependant on tuition will close up and never reopen
• If universities shift to online education, many parents won’t pay the $50K tuition price for their child to sit on Zoom calls all day
  • Scott believes some big tech companies will partner with universities to create 2-year college programs (e.g. Google and MIT partner together)
  • The best professors will make 3-10x what they make now because they will be in higher demand
• For a lot of kids, the traditional form of college (living on campus and going to a physical classroom) will become the ultimate luxury item
  • Students don’t pay for an education, they pay for the brand: “The strongest brand in the world is not Apple, the strongest brands in the world are Harvard, MIT, Carnegie Mellon, these brands have been built over centuries” – Scott Galloway
    • Most middle-class Americans won’t be able to afford the traditional college experience and will instead have their kids enroll in online learning programs 
• If online courses become popular, there’s a chance that liberal art degrees will go away–students will only want to study topics that will help them get a job sooner 
• Jobs use college as a filter mostly only for a person’s first job; after that employers care more about your skills than your education

How The Media World Will Change

• The content space is booming, especially in the scripted TV and podcast space
  • However, traditional media will have a hard time competing with big tech–Apple doesn’t need to make a ton of money from their content, they just need to show their content is helping them sell more smartphones
    • “Content is now a feature of a smartphone company” – Scott Galloway 
      • The same goes for Amazon, all they need to show is that having content increases their number of Prime subscribers 
• “It’s going to be a great new age for consumers…for information workers, it’s going to be a great time to own Amazon and Google stock, but we’re going to see the same trends around income inequality” – Scott Galloway
  • Nobody remembers the bad shows a company puts out–Amazon could put out 50 shows and 49 could fail, but Amazon’s brand will stay the same and people will simply watch their one good show
    • Big tech companies have the budget to steal the best executives from media companies and hire the best talent for their shows

Talent Will Be Built, Not Gifted

• The next generation of talent will be determined by the number of followers people have on their platforms
  • The more followers a person has, the easier it becomes to market a book, TV show, podcast, etc.
    • Scott got a deal with Westwood One to start a podcast because of his large social media following
  • Building a brand isn’t easy, it’s a daily grind that takes years to payoff 
    • Each platform requires slightly different content because the audiences aren’t the same
      • Don’t be reliant on a single platform, if it disappears you’re going to be in trouble–create an email list so you have direct contact with your audience
• James estimates that 9 out of 10 people who stop him on the street do so because they’ve heard his podcasts, not because of his blog or books–that’s the power of podcasting 
  • Books are like a college degree, they establish you as a thinker, but podcasts are what get your name out and expose you to the world  
    • Scott says writing a book is probably the hardest thing he’s ever done 

Additional Notes

• If you’re struggling economically or emotionally right now, reach out to people for help