Scott Galloway: the wolf at Big Tech’s door

How the maverick US academic took on Silicon Valley.

(Photo By Scott Galloway, photographed at his home in Miami for the New Statesman by Mary Beth Koeth, March 2021)

Scott Galloway tells me he runs “the most expensive streaming video service in the world”. Sadly, he only gets 2 per cent of the take. His streamer is a course he teaches on brand strategy at New York University’s Stern School of Business. Pre-Covid there were 160 students because that was the size of the room; post-Covid there are 280 students. Each pays $7,000 for the course.

“That means,” he says, “young people are paying $1.96m to listen to me yammer on for 12 nights over Zoom. Netflix costs 150 bucks a year; I cost two million. Now, granted my agent takes 98 per cent commission…” His agent is the university. Never mind: the students – or rather, their parents – pay up. He’s worth it. He makes them laugh, he makes them cry and he delivers sharp truths which tend to go viral.

“Assume,” he tells them, “you are not Mark Zuckerberg.” “People who tell you to follow your passion are already rich.” You should, instead, follow your talent. “Expect that a certain amount of failure is out of your control, and recognise you may need to endure it or move on.” My own favourite Galloway line is about the moral status claimed by the wealthy: “Privilege looks in the mirror and sees nobility.”

The word “maverick” was waiting for Scott Galloway to come along. On paper he’s just a marketing and advertising academic, an occasional company director and investor. In reality, he’s a fast-talking, hard-thinking prophet of doom but also of salvation. He speaks truth to real power – Silicon Valley – and he consoles the little guy. His blog is called No Mercy/No Malice.

He is also, especially when yammering on his podcasts, very, very funny. There’s a lot to be funny about. His deluxe streaming service story is about the cost of American higher education, which, like the cost of American healthcare, is a joke. Neither shows any improvement but both keep increasing their prices.

The little guy can take consolation from the thought that, in Galloway’s analysis, this makes them vulnerable. “If you’ve been raising prices faster than inflation,” he tells me, “without any underlying increase in innovation, you’re vulnerable. And the most vulnerable industry in the world is healthcare. Costs keep going up and, at least in the US, outcomes don’t get any better.”

It would be cheaper if Amazon ran healthcare and Apple higher education. But Big Tech is the primary target of his anger. The Big Four – Amazon, Apple, Google and Facebook – which formed the subject of his 2017 book The Four, must now, he argues, be broken up.

Galloway was born in 1964 and brought up in Los Angeles by a single mother. “I grew up in an upper-lower-middle-class household,” he writes in The Four, “raised by a superhero (single mother) who worked as a secretary. After college, I spent two years at Morgan Stanley in a misguided attempt to be successful and impress women. Investment banking is an awful job.” Galloway was educated at UCLA, where he met his first wife (they’re “still friends”, he says), and at Berkeley.

***

Galloway is now 56 and hyperactive. His urgency, anxiety and edginess are apparent in our first conversation. It was the strangest Zoom encounter I’ve ever had. He was using his phone and walking around his Florida home. He wasn’t pointing the phone camera at anything in particular so my screen became a cubist portrait of Galloway at home. “If you’re getting seasick I can turn off the camera,” he says. I am getting seasick but I decide this is all part of the Galloway experience and I let him wander on.

To ask a question is to invite a lengthy essay. At first I resist interrupting – they are very good essays – but when I do he stops at once. There’s a nerviness in this, perhaps a flash of embarrassment at his own loquacity, but it’s ultimately a display of sensitivity.

He has two sons aged ten and 13. The Four is dedicated to them. The dedication reveals a softer side to the man: “I look up, see the stars, and have questions. I look down, see my boys, and have answers.” His business career has been spent on the boards of several companies – among them Urban Outfitters and the New York Times – and quite a few start-ups, including L2, a digital intelligence company, brand consultancy Prophet and Red Envelope, one of the first e-commerce sites. He was also once named a “global leader of tomorrow” by the World Economic Forum.

There were some failures but he’s made enough to let Stern take its 98 per cent commission: online net worth figures suggest he has around $40m (he tells me that is “way off”). He has homes in New York and Delray Beach in Florida.

He makes podcasts, writes books and articles, lectures and runs businesses. “I produce a piece of content every day. I like to work and I like output,” he says, and then adds unexpectedly, “I think atheism is a real driver for me.” Atheism in the sense of mortality?

“Yes, I believe at some point I’m going to look into my sons’ eyes and know that our relationship is coming to an end, so I feel like I’m in a hurry. I feel like this is it. I think once we’re gone that’s it. I remember being 25 like it was yesterday. A lot has happened. And studies show that the pace of time from your own perception accelerates. So that was 32 years ago and it’s been a blink of an eye. In less than half a blink I’m going to be pushing 90. I feel myself accelerating not even into the unknown, but to the end. It’s not macabre, it’s not depressing, it’s actually very motivating for me.”

Many people react to mortality by shrugging – what’s the point? Galloway sees it as a challenge to his competence. He is in a hurry to do the best and the most he can. What he wants to have most of all is relevance.

“My whole life,” he writes, “has been a quest to gain relevance and fear of never achieving it.” “I am,” he says to me, “desperate for other people’s affirmation. And in some ways it’s been very healthy. It motivates me. I want my book to be in bright lights and a bestseller on the New York Times” – it was – “not only because I want other people to read it, but I want the affirmation of a third party saying that I’m good at what I do. I need that. It’s much more important to me than I’d like to admit.”

Politically, he describes himself as “right of centre left” – a joke about all such crude binary classifications. His true political affiliation is to the “raging moderates”: “It’s easier to process information in zeros and ones. You know, I’m left or I’m right. What is needed is thoughtful conversation around solutions – most people aren’t entirely signed up for one ideology or the other. And I also think there’s a huge danger in the US now, as is happening in Britain, because of gerrymandering with hardened left or right districts. I think there’s an enormous need for more raging moderates.”

He is for big, smart government and pro-capitalism. From this springs his belief that the four tech giants must be broken up. Among other things, they are propagating an illusion that anti-trust – anti-monopoly – law is somehow anti-capitalist.

“Anti-trust is absolutely a key component of capitalism. The most oxygenating thing we could do for the economy is to go into a firm that is killing innovation and break them up. If you think about all the stakeholders in a break-up – there’s job creation, that goes up. There’s shareholder value – that goes up.

“Employees do well because all of a sudden there’s several bidders for their human capital. The tax base does well, the economy does well – job growth. The only stakeholder that loses over the medium and long term in a break-up is the CEO.”

***

Galloway compares “the Four” to the baby Burmese pythons that people in Florida buy as pets. They don’t stay babies for long. They become enormous and ravage the ecosystem of the Everglades. Floridians now organise snake hunts where they invite people to kill snakes or capture them for a bounty. Small tech start-ups were once baby pythons; now they are destroying business and politics.

“You now have seven companies that are responsible for 51 per cent of the market valuation of the S&P [stock market index]. These companies have effectively overrun government. When we have market manipulation, when we have an insurrection in the government, we don’t turn to the FBI or the SEC, or senators, we turn to Reddit, Facebook, Twitter. We turn to 30- and 40-something tech overlords. No one was talking about the great work the FBI did tracking down a mob that overran the Capitol. It was more press about how Airbnb decided to shut down their platform for people wanting to rent apartments during the Capitol [riot].”

He thinks our pathetic gratitude to Jack Dorsey and Mark Zuckerberg when they closed down Donald Trump’s Twitter and Facebook is misplaced. “They did not kick Trump off. Stacey Abrams did.” Abrams is the activist in Georgia whose campaigning helped to turn the state blue, allowing the Democrats to take the Senate. “Dorsey and Zuckerberg now realise their companies are going to be regulated by Senate and Congressional Committees that are run by Democrats. If they thought Trump was going to win re-election, if they thought the Senate was going to stay red, they would have continued to delay and obfuscate to leave him on the platform with all his bullshit.”

Galloway scorns the free speech defence put up by social media companies when people point to the toxic content on their sites. “The question is: should a for-profit company be in the business of taking the most controversial and damaging content and giving it ten, 50 and a thousand times the amount of oxygen it would get on its own? What we have is these algorithms of amplification that tend to amplify content that is controversial, and controversial content tends to be false or damaging.”

The problem with breaking up the big pythons is that they give away so much free stuff. Or, in the case of Apple, they sell what is effectively a high-style glamour brand to the grateful masses. Deep down, don’t the public love these guys?

“The general zeitgeist has really turned in the US. People now realise they’ll still have Instagram… They’re still gonna have an iPhone if these companies get broken up.

“I think there’s a general view that these firms are part of what I would call ‘the menace economy’, and that is they will say or do anything to further enrich themselves, even if it’s damaging for the commonwealth.”

***

The vastly inflated valuations of Big Tech have also, Galloway says, made it easier to become a billionaire than a millionaire. The obsession with not just money, but with enormous sums of it, has distorted the economy by squeezing out middle-class aspirants and wealth creators in favour of market manipulators and socially dysfunctional coders (that last bit is me, not Galloway). “The data’s overwhelming – in the last 30 years the top 1 per cent have increased their share of wealth by a third. And people under the age of 40 in the lower 50 per cent have seen their share of wealth cut in half.”

During our first conversation, he had a feeling Amazon would break itself up: “Jeff Bezos is smarter than the rest of us. He’ll sense that the wolves of anti-trust are at the door and, rather than have a regulator telling him how to break up his company, he’ll do it prophylactically.” Galloway is known as something of an Amazon whisperer ever since he predicted the company would take over the retail chain Whole Foods. “I got lucky,” he says, but it was a shrewd insight into the reality that giant virtual companies also need big real things. Apple was the first to see this and, as a result, constructed its luxo-modernist chain of high street stores.

The first time we spoke Galloway predicted that “the most valuable company in the world in 2025 will be a recently spun-off AWS” – Amazon Web Services – its mighty cloud computing company (Amazon is effectively a web service company with a small retail operation attached). Almost everything anybody does online will soon be stored in remote servers operated by companies like AWS. But by our next conversation Bezos had stepped down as Amazon CEO and handed over to Andy Jassy, head of AWS. He doesn’t think Jassy will do the break-up because “he’s no longer the king of the north, but sits on the iron throne of Westeros in all seven realms.” He is fond of Game of Thrones imagery.

Galloway fears for the future of an America judged by the standards of the super-rich. Some of these fears coalesce around his sons. We spoke as the GameStop story was unfolding – kids had been using a trading site to buy shares in the videogames retailer, forcing up the price and wrecking the plans of hedge funders who had shorted the stocks. The idea that kids may get hooked on such high-risk gambles worries him.

“This is one of those silent sources of huge depression. There’s going to be a lot of depressed males in six months… a lot of silent shaming and depression or self-hate, when a guy . . . wants to be a hero and impressive to his peers and his parents and himself, and goes in and spends all his money [set aside] for his junior college and loses 60 per cent in 24 hours.”

***

In his latest book, Post Corona: From Crisis to Opportunity, published in November 2020, Galloway argues that the pandemic is an “accelerant”, bringing forward changes that would have happened anyway – notably the decline of high street retail. This is mainstream business analysis; more interesting to me was the second half of the book – a personal testament about his sons, the future and the way he thinks the world should be. “I write at night after my kids are asleep. I was really trying to wrap my head around what the implications of the novel coronavirus would be. I didn’t understand it and when I don’t understand something I try to write a book about it, because of course I needed to understand it.”

Galloway is an American hybrid – a social justice warrior, a capitalist believer and a practical thinker. This is not an intrinsically strange combination, but it seems so because we have accepted the madness of The Hunger Games world, in which the rich grow grotesquely rich and the rest of us compete for what little is left. Having attained their lives of privilege, the super-rich look in the mirror and see nobility.

But there is none. As Covid has shown, communal sacrifice for the common good is no longer on the table. Instead of being collectively at war with the virus, we’ve become nations of spivs, trying to profit from it. “Relative to our wealth and power,” Galloway writes in Post Corona, “America’s handling of the challenge of this generation has been the worst in the world. In truth, we were sick already, riddled with co-morbidities. 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.”

American thinkers are often doers. That’s Galloway. He puts his money where his mouth is and chews vigorously. “It’s easier to fool people than to convince them they’ve been fooled,” he once wrote. Unfool yourself, read Scott Galloway.

Bryan Appleyard writes for the Sunday Times