Saturday, February 10, 2018

Anatomy of the tech giants: an entrepreneur's take on FAGA

The Four: The Hidden DNA of Amazon, Apple, Facebook, and GoogleThe Four: The Hidden DNA of Amazon, Apple, Facebook, and Google by Scott Galloway

Scott Galloway is a serial entrepreneur, now running a company that advises businesses on how to succeed against the subjects of his book - four seemingly unstoppable tech giants. He also teaches, and it's easy to imagine much of the book being loosely adapted either from slick presentations to his business customers or lecture notes to his students.

That said, I had a better impression of the book by the end than I feared at the start. Galloway has an offputting 'down with the kids' style, throwing in the odd obscenity for emphasis every few pages - like he's trying to make me relate to him as a chum rather than an expert or teacher.

There's a certain amount of familiar stuff about just how successful Google and co actually are: "Amazon is building the most robust logistics infrastructure in history"; "If size matters (it does), Facebook may be the most successful thing in the history of humankind"; Apple enjoys "gargantuan profit and luxury margins at the scale of a low-cost producer".

When you've got through that, Galloway sets out his stall with some neat, Powerpointy characterisations of each of his four companies: Google is a religion (it's omniscient, like God); Apple sells luxury; Facebook offers human connection (it 'appeals to the heart'); and Amazon satisfies our hunter-gatherer instinct. It's provocative and you're challenged to think how it can't really be as simple as that.

I was more interested in Galloway's ideas about what the four have in common. For instance, he says all great companies needs a story that people can believe in. And "the best storyteller of our age, sans maybe Steven Spielberg" is Jeff Bezos. He's persuaded investors that Amazon doesn't need to make profits and that it should spend their money on crazy-sounding projects ("including a flying warehouse or systems that protect drones from bow and arrow. They’ve filed patents for both"). Amazon shareholders "love these stories; it makes them feel like they’re part of an exciting adventure".

More broadly, story-telling shades into image-building, where being a company that everyone likes (starting with Google's child-like logo) is important both commercially and politically, the latter even more so as these giants become increasingly entangled with regulators. Galloway characterises a formula within the companies that acts as a kind of shield against images of what they really are: "foster a progressive brand among leadership, embrace multi-culturalism, run the whole place on renewable energy - but, meanwhile, pursue a Darwinian, rapacious path to profits and ignore the job destruction taking place at your hands every day".

Then there's vertical integration: that means being able to control every aspect of your customers' dealings with you. It explains Apple's opening of retail stores, against the grain for tech companies which otherwise saw 'bricks and mortar' as old-fashioned and inefficient. Amazon, similarly, controls the whole experience, even inviting third party sellers to keep their products in Amazon warehouses and pay Amazon to pack and deliver them.

Galloway has an interesting take on 'the death of the brand': on Amazon, you're just looking at prices, a picture or two and customer reviews. Heavy spending on ads to build an image is increasingly ineffective, and as Amazon evolves, that trend will be accentuated: "death, for brands, has a name … Alexa."

The final part of the book is odd: it's advice to young people about how to manage their careers in the world he's just described. At least, that's the justification for some home truths such as "it’s never been a better time to be exceptional, or a worse time to be average" and "don’t follow your passion, follow your talent. Determine what you are good at (early), and commit to becoming great at it."

I had a suspicion that the word count wasn't quite up to what was needed and that Galloway turned to some of his teaching notes to fill in. It's all interesting stuff, but perhaps not quite what was on the tin.

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