Cover & Diagrams

The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google Book Summary preview
The Four - Book Cover Chapter preview
The Four - Diagrams Chapter preview
The Four - Diagrams Chapter preview
chevron_right
chevron_left

Download, customize, and translate hundreds of business templates for free

Start for free ⬇️

Go to dashboard to download stunning templates

Download

Synopsis

How do you gain a career edge in a world dominated by Big Tech? "The Four," namely Apple, Google, Facebook and Amazon, are worth over $5 trillion combined. What makes them so incredibly successful?

Scott Galloway, a serial entrepreneur and professor at New York University Stern School of Business, breaks down the winning strategies of "The Four" to offer critical lessons on business, career advancement and value creation in the digital age.

Top 20 insights

  1. Amazon Marketplace was Jeff Bezos's first step to retail dominance. Sellers flocked to the world's largest marketplace with millions of products. This offered Amazon customers a vast selection, while Amazon gained valuable data on customer preferences. When the segment became lucrative, the company launched its own products with perfect market intelligence.
  2. Amazon plans to eliminate friction in the purchase experience. Amazon Go stores use sensors to charge customer accounts directly. Amazon Wardrobe allows them to try on clothes at home before the purchase is made. And Alexa's knowledge of customer desires will soon enable Amazon to send products that their customers need regularly, without a process of actual order.
  3. Amazon's quest for efficiency will result in a massive job loss in the retail sector. The company's pursuit of automation in warehousing has eliminated the need for 3.4 million cashier jobs with Amazon Go.
  4. Amazon's core competence in storytelling brings cheap capital. Amazon has shown impressive progress towards the compelling vision of Earth's Biggest Store, and thus, has trained the market to hold it to a different standard: higher growth but lower profits. Its stock trades at a multiple of profits times forty, unlike other retail stocks that trade at a multiple of eight.
  5. Amazon deploys the cheap capital to make ambitious bets that may deliver 100X returns. As Jeff Bezos said, "Given a 10 percent chance of a hundred times payout, you should take that bet every time." The company plows capital to build moats that competitors cannot match. Amazon lost five billion dollars in shipping charges in 2015 to offer single-day delivery.
  6. Amazon has leveraged its brand to expand into more profitable sectors. Amazon Web Services, the world's largest cloud services provider, accounted for 52% of total operating income in Q3 2015. Amazon Media Group, its advertising arm, made over $10 billion in revenue in 2018.
  7. Apple is primarily a luxury brand which sells technology. Apple's transformation began with the iPod and was complete when the iWatch launched with a 17-page spread in "Vogue" magazine of the rose-gold version, which sells for $12,000.
  8. Scarcity is the key to Apple's luxury marketing. Only the top one percent can own Apple products. The iPhone accounted for only 18.3% of smartphone sales worldwide and garnered 92% of industry profits. However, it was the iconic Apple Store that cemented Apple as a luxury brand by offering an immersive premium experience.
  9. Apple is a phenomenon, as it is both a luxury product and a low-cost producer. Luxury products are usually expensive to produce, while low-cost products are harder to sell at premium prices. Apple has achieved this because it invested early in robotics and created a world-class supply chain.
  10. Facebook taps into the core emotional need for connection and relationships. As a result, people spend 50 minutes a day on Facebook properties, including Instagram and WhatsApp. With years of user-created data and the world's best talent, Facebook dominates the advertising industry. Facebook and Google together account for over 51% of the global mobile ad spend.
  11. Facebook seeds desire and ideas. It creates user intent better than any other promotion or advertising channel. Once a user is interested, Google provides the how and Amazon delivers the product.
  12. While ordinary products become less valuable over time, Facebook becomes more valuable with time because of network effect and personalization based on data. No company has the sheer reach and user data intelligence that Facebook possesses, which offers unparalleled opportunities for advertisers to micro-target users.
  13. Unlike Netflix, which spends billions in original content, Facebook's two billion users generate free content. But Facebook does not want to be called a media company as it brings lower valuations, regulation and substantial editorial responsibility. Facebook can avoid this, as long as it claims itself to be "a platform."
  14. Google earned unparalleled user trust and credibility because advertisers cannot influence search results. The clear separation of search and ads enables Google to enjoy both credibility and ad revenues.
  15. Advertisers love Google because of its auction formula for advertising. In Q3 2016, Google improved its paid clicks by 42% and reduced costs for companies by 11% from the previous year, and still grows its revenues. This ability to push prices down has made it nearly impossible for competitors to keep up with.
  16. Google has a far better profile of readers than any newspaper. Its targeted ads in search generate more revenue than publication ads. As a result, Google is more valuable than the next eight biggest media companies combined.
  17. Product differentiation usually comes from removal, not addition. The value that technology companies bring stems not from what they add but what they remove from customers' lives. Uber, for example, succeeded because it removed the friction associated with booking a taxi and reducing the time the process took.
  18. The market rewards the company with cheap capital to invest in top-notch talent, place risky game-changing bets and build advantages that competitors simply cannot match.
  19. A company's brand equity among potential employees matters even more than its reputation among customers. A company attracts top-notch talent when it is seen as a career accelerant. A company with better talent innovates better, gets cheaper capital and moves ahead of the competition.
  20. A move to a megacity gives a tremendous lift to career growth. Cities generate 80% of global GDP as they enable the concentration of wealth, information, power and opportunities. Out of the 100 largest economies worldwide, 36 were American Cities. These cities contributed to 89% of GDP growth and 92% of jobs created in 2012.

Summary

"The Four Horsemen:" Apple, Google, Amazon and Facebook, are extraordinary companies that in many ways define our lifestyles. They have generated unprecedented wealth, powered cutting-edge innovation and accelerated the digital economy. What were the strategies that fueled their meteoric growth? What do their scale and influence mean to the future of business and the economy? How do we build successful careers in the digital age defined by these four mega-corporations? Read on and find out.

Questions and answers

info icon

The combined level of influence of Google, Apple, Amazon, and Facebook, often referred to as "The Four Horsemen," is significant in terms of global GDP, although exact figures are hard to quantify. These tech giants contribute to the global economy in several ways.

Firstly, they generate enormous revenues. For instance, in 2020, Apple's revenue was $274.5 billion, Amazon's was $386.1 billion, Google's parent company Alphabet reported $182.5 billion, and Facebook had $85.97 billion.

Secondly, they spur innovation and technological advancement, leading to productivity improvements across various sectors.

Thirdly, they create jobs, both directly and indirectly. Not only do they employ hundreds of thousands of people, but they also enable the growth of other businesses, especially in the tech sector.

Lastly, they pay taxes, although this is a contentious issue as there are ongoing debates and legal battles over the amount of tax they should pay.

In summary, while it's challenging to quantify their exact influence on global GDP, it's clear that their impact is substantial and multifaceted.

Yes, there are several companies that have successfully implemented the strategies used by Apple, Google, Amazon, and Facebook. These include Microsoft, which has successfully adopted Apple's strategy of creating a seamless ecosystem of devices and services. Alibaba, the Chinese e-commerce giant, has mirrored Amazon's strategy of expanding into various sectors such as cloud computing and digital entertainment. Similarly, Tencent has emulated Facebook's strategy of acquiring and investing in promising startups to diversify its business. However, it's important to note that while these companies have adopted similar strategies, their success also depends on their unique capabilities and market conditions.

View all questions
stars icon Ask follow up

Amazon

By being virtual, Amazon scales to hundreds of millions of customers across retail segments without having to build hundreds of stores or hiring thousands of employees.

The world's marketplace

Amazon Marketplace is an online network, which enabled sellers to gain access to the world's largest e-commerce platform. Customers got to choose from millions of products without Amazon having to invest in additional inventory. Amazon, tracking the purchase data, could enter and dominate any segment the minute it became lucrative. Traditional retailers did not respond to the Amazon e-commerce threat until it was too late, and in 2016, US retail grew at 4%, while Amazon Prime grew at over 40%. Amazon's growth is inversely correlated with the rest of the sector. This means that Amazon's cost of capital continues to decline while it increases for other retailers.

Questions and answers

info icon

Amazon's growth has a significant impact on the cost of capital for other retailers. As Amazon continues to grow and dominate various market segments, it gains a competitive advantage that allows it to access capital at a lower cost. This is due to its strong market position, robust financial performance, and the confidence it instills in investors. On the other hand, other retailers, especially traditional ones, may find their cost of capital increasing. This is because as Amazon grows, these retailers may lose market share, which can lead to weaker financial performance and a higher perceived risk by investors. Consequently, investors may demand a higher return for their capital, leading to an increased cost of capital for these retailers.

Several factors contributed to the rapid growth of Amazon Prime in 2016. One of the key factors was the Amazon Marketplace, an online network that enabled sellers to gain access to the world's largest e-commerce platform. This allowed customers to choose from millions of products without Amazon having to invest in additional inventory. Amazon's ability to track purchase data also allowed it to enter and dominate any segment the minute it became lucrative. Traditional retailers' late response to the Amazon e-commerce threat also played a role. In 2016, while US retail grew at 4%, Amazon Prime grew at over 40%. Amazon's growth is inversely correlated with the rest of the sector, meaning that as Amazon's cost of capital continues to decline, it increases for other retailers.

View all questions
stars icon Ask follow up

Zero click ordering

Leveraging technology and unrivaled user information, Amazon will soon deliver products without even the need for a customer to place an order. Amazon Go, a cashless convenience store, allows customers to buy without a checkout line. Sensors scan the items as a customer walks out and automatically charges their Amazon account. This move put over three million cashier jobs at risk in the U.S. With Amazon Echo and Alexa, the company now has unparalleled access to the private conversations of millions of people worldwide. It will leverage these insights to deliver products without the need to order. Mom-and-pop shops and malls simply cannot compete.

Questions and answers

info icon

Amazon Go is a concept store developed by Amazon that leverages advanced technology to provide a seamless shopping experience. It's a cashless convenience store where customers can buy items without going through a checkout line. Sensors and algorithms identify the items that customers pick up, which are then automatically charged to their Amazon account as they leave the store. This concept has significant implications for the retail industry. It not only enhances customer convenience but also threatens traditional retail jobs, with over three million cashier jobs at risk in the U.S. alone. Furthermore, it intensifies the competition for small businesses and malls that cannot match this level of technological innovation.

Small businesses can adapt to compete with Amazon's innovative strategies by focusing on their unique strengths and leveraging them. They can provide personalized customer service, build strong relationships with their customers, and offer unique products or services that Amazon cannot. They can also use technology to improve their operations and customer experience. For example, they can use data analytics to understand their customers better and tailor their offerings accordingly. They can also explore partnerships with other businesses to expand their reach and capabilities. Lastly, they can focus on sustainability and social responsibility, which are increasingly important to consumers.

View all questions
stars icon Ask follow up

The power of a story

Amazon has had access to cheap capital for a longer time than any other business in recent times. This is because of its prowess in storytelling. Amazon's story is that it's building Earth's biggest store. By making progress toward this vision, Amazon has trained the market to hold it to a different standard – higher growth, lower profits and no dividends.

Questions and answers

info icon

Amazon's business model has significantly influenced corporate strategies in the digital age. It has demonstrated the power of storytelling and vision in securing capital and market trust. By focusing on growth and expansion rather than immediate profits, Amazon has set a new standard for success in the digital age. This approach has been adopted by many other companies, shifting the corporate focus from short-term gains to long-term growth and market dominance.

Startups can learn several lessons from Amazon's approach to growth and profit. Firstly, Amazon's story of building the Earth's biggest store has shown the power of having a clear, compelling vision. This vision has allowed Amazon to access cheap capital for a longer time than any other recent business. Secondly, Amazon has trained the market to hold it to a different standard – higher growth, lower profits, and no dividends. This shows the importance of setting and managing market expectations. Lastly, Amazon's approach shows the value of prioritizing growth over immediate profitability.

View all questions
stars icon Ask follow up

Cheap capital fuels moonshots

Amazon leverages the cheap capital to run small, ambitious experiments that offer the possibility of disproportionate returns. As Jeff Bezos famously wrote in Amazon's first annual letter, "Given a 10 percent chance of a hundred times payout, you should take that bet every time." The company also invests its cheap capital of building advantages that other retailers with more expensive capital cannot match. In 2015, Amazon was willing to lose $5 billion in shipping fees to ensure single day delivery, a proposition that Walmart and Macy's are unable to match.

Questions and answers

info icon

Amazon's strategy reflects the business models of "The Four" in several ways. Firstly, Amazon, like the other companies, leverages its resources to run small, ambitious experiments that offer the possibility of disproportionate returns. This is evident in Amazon's willingness to lose money in the short term for long-term gains, such as when it lost $5 billion in shipping fees to ensure single day delivery. Secondly, Amazon, like "The Four", invests in building advantages that other competitors cannot match. This is seen in how Amazon uses its cheap capital to build advantages that other retailers with more expensive capital cannot match.

Amazon's decision to lose $5 billion in shipping fees had a significant impact on its competitors. It allowed Amazon to offer single day delivery, a service that competitors like Walmart and Macy's were unable to match. This gave Amazon a competitive edge in the market, as it could provide faster delivery times to its customers. This strategy, while costly, helped Amazon to further solidify its position as a leading online retailer.

View all questions
stars icon Ask follow up

While the world sees Amazon as an e-commerce giant, it has quietly become a cloud company. Amazon Web Services contributed 52% of Amazon's total operating income in Q3 2015. Amazon Media Group made over $10 billion in revenue in 2018, making it the third-largest digital media property after Google and Facebook.

Questions and answers

info icon

Amazon's diversification into different sectors teaches us the importance of innovation and adaptability. It shows that a company should not limit itself to one sector but explore other profitable avenues. Amazon started as an e-commerce platform but expanded into cloud services with Amazon Web Services, which contributed significantly to its operating income. It also ventured into digital media, becoming a major player in the industry. This diversification not only increased its revenue streams but also reduced its dependence on a single sector, thereby reducing business risks.

Amazon's Media Group made over $10 billion in revenue in 2018, making it the third-largest digital media property after Google and Facebook. However, the exact figures for Google and Facebook's revenues are not provided in the content. It's important to note that these figures can vary year by year based on various factors such as market trends, user base, and advertising strategies.

View all questions
stars icon Ask follow up

Apple

Luxury is irrational and sexual as it taps into the combined human need for transcendence and being more attractive to potential mates. While Apple has always exemplified great design, its transformation into a luxury brand began with the iPod, a branded carryable product. Scarcity is the key to Apple's success. Apple ensures that only the top one percent of the world can afford their products. In 2015, the iPhone was luxury marketing at its best, becoming a way for people to show membership in the top percentile. The iPhone accounted for only 18.3 % of smartphone sales but garnered a stunning 92% of industry profits.

Questions and answers

info icon

Yes, several companies have successfully implemented a scarcity strategy similar to Apple's. For instance, luxury brands like Louis Vuitton and Gucci often limit the availability of their products to maintain a sense of exclusivity and luxury. In the tech industry, gaming console manufacturers like Sony and Nintendo have also used scarcity strategies during product launches to create hype and increase demand.

Apple's transformation into a luxury brand has challenged existing business paradigms by redefining the concept of scarcity in the tech industry. Traditionally, tech companies aimed to make their products accessible to as many people as possible. However, Apple has ensured that only the top one percent of the world can afford their products, creating a sense of exclusivity and luxury. This strategy has been incredibly successful, with the iPhone accounting for only 18.3% of smartphone sales but garnering a stunning 92% of industry profits. This approach has challenged the conventional wisdom in the tech industry and set a new precedent for marketing and product positioning.

View all questions
stars icon Ask follow up

Five key attributes of luxury

Five key attributes that make Apple a luxury brand:

  1. An Iconic Founder: Luxury brands are usually personified in an iconic founder, whose life story is compelling. They have no choice but to make beautiful things despite hardships. Steve Jobs was an icon of innovation, and his passing away made his persona transition from stardom to sainthood.
  2. Artisanship: For people with discretionary income, the experience of living with luxury products is irreplaceable. Apple's stunning design simplicity results in a sleek appearance and a delightful user experience, which increases customer loyalty.
  3. Vertical Integration: Apple Retail stores are spaces in the way where a customer steps into a brand and fully experiences it through sight, touch and smell. Jobs realized this and launched the iconic Apple Store, which positioned Apple as a luxury brand, driving up the margins. Apple stores make over $5000 in sales per square foot.
  4. Global: The global elite has more homogenous tastes than other cohorts, making it easier for a luxury brand to permeate geographic boundaries. Apple products are iconic in every market. Further, Apple leverages global supply chains and circuitous tax routes to enjoy luxury margins, low production costs and very little taxes.
  5. Price Premium: High prices signal quality, status and exclusivity. Jobs was committed to making the best products, charging premium prices, and making use of the elegance markers.

Jobs' decision to position Apple as a luxury brand is one of the most consequential in business history. Beyond market dominance and premium margins, it has extended the life of the Apple brand. The iPhone may not be the best phone forever. But Apple's positioning as a luxury brand and its 500 plus retail stores in premium locations across 18 countries presents a formidable moat to competitors.

Questions and answers

info icon

Apple might face several challenges in maintaining its brand positioning in the future. One of the main challenges could be the rapid technological advancements and innovation in the tech industry. Competitors might come up with superior products that could potentially threaten Apple's position as a luxury brand. Another challenge could be changing consumer preferences. If consumers start prioritizing cost over brand, Apple's premium pricing strategy might not work in its favor. Additionally, economic factors such as recessions or economic downturns could also pose a challenge as consumers might cut back on luxury purchases.

Other businesses can learn several lessons from Apple's approach to brand positioning and retail strategy. Firstly, positioning a brand as a luxury can lead to market dominance and premium margins. It can also extend the life of the brand, as seen with Apple. Secondly, having a strong retail presence in premium locations across multiple countries can create a formidable barrier to competitors. This strategy not only provides a unique shopping experience that reinforces the brand's luxury status but also makes it difficult for competitors to gain market share.

View all questions
stars icon Ask follow up
The Four - Diagrams

Facebook

No media firm in history has had Facebook's scale and ability to target users. Over two billion users have created profiles with years of personal content. People spend 50 minutes a day on Facebook properties, including Instagram and WhatsApp. This is because Facebook taps into our core desire for relationships and connection.

stars icon Ask follow up

Dominating advertising

Unlike physical products that degrade with time, the more people use Facebook, the more valuable the service becomes because of network effects and personalization based on data. Firms like Facebook and Google have incredibly detailed profiles of their users, offering unparalleled opportunities for advertisers to micro-target users. Facebook also has access to the world's best ad and tech talent. Over 2000 former employees of WPP, the world's largest advertising firm, have migrated to Facebook or Google. Google and Facebook control over 51% of the global mobile ad spend.

Questions and answers

info icon

The practices of Facebook, as discussed in the book, are highly relevant in the context of contemporary debates on data privacy. Facebook's extensive data collection methods, including tracking users across millions of websites, recording browsing history, and using phone audio, have raised significant privacy concerns. Even after deleting Facebook, the user's detailed data profile remains, allowing advertisers to target former users across the web using Pixel, as well as through Instagram and WhatsApp usage. These practices highlight the ongoing challenges and concerns related to data privacy in the digital age.

Facebook's data collection approach challenges existing paradigms of user privacy in several ways. Firstly, it collects a vast amount of data from users, including phone audio, browsing history, and tracking users across millions of websites. This extensive data collection is beyond what many users may expect or be comfortable with. Secondly, even if a user deletes their Facebook account, the company retains a detailed data profile that it uses for advertising purposes. This means that users cannot fully control or erase their data, challenging the traditional notion of privacy where individuals have control over their personal information.

View all questions
stars icon Ask follow up

This advertiser's paradise is a privacy nightmare. Facebook uses phone audio and records browsing history, and tracks users across millions of websites, apart from the reams of data users willingly share. Deleting Facebook does not protect privacy. The site has already created a detailed data profile that it uses to allow advertisers to target former users across the web using Pixel, apart from Instagram and WhatsApp usage.

stars icon Ask follow up

World's largest media company?

Facebook is likely to become the world's largest media company, but with a twist. Unlike Netflix, which spends billions of dollars on original content, Facebook has two billion users toiling to create free content. With its global reach, vast capital and data capabilities, Facebook will conquer analog and digital media.

Questions and answers

info icon

The Facebook News Feed algorithm challenges traditional journalistic ethics practices by optimizing for clicks rather than adhering to the principles of editorial objectivity, fact-checking, and journalistic ethics. Unlike traditional media companies, Facebook labels itself as a platform, not a publisher, thereby abdicating the responsibilities that come with being a media company. This approach can lead to the dissemination of misinformation, as the algorithm prioritizes content that generates user engagement, regardless of its veracity.

The key lessons from "The Four" that can be applied for career advancement include understanding the business models and strategies of these tech giants. Amazon excels in customer-centricity, Apple in product design and premium branding, Facebook in harnessing the power of social networks and Google in mastering information organization. Emulating these strategies in your career, such as focusing on customer needs, prioritizing quality, leveraging networks, and organizing information efficiently, can help you advance.

View all questions
stars icon Ask follow up

Billions of users turn to Facebook and Google for news, and yet they don't want to be seen as media companies. One reason is that media companies get much lower valuations than technology companies. A more substantial reason is being a media company comes with significant responsibility, including editorial objectivity, fact-checking and journalistic ethics, instead of allowing the News Feed algorithm to optimize for clicks. Facebook abdicates this responsibility by labeling itself as a platform and not a publisher.

stars icon Ask follow up

Google

Three and a half billion times a day, people turn to Google to answer their most intimate questions. No company has the credibility and user trust that Google has. Google's defining features have been the elegantly simple homepage that reassures users of the site's legitimacy and the fact that advertisers could not influence organic search results. By separating organic results from paid ads, Google enjoys having both credibility and ad revenues.

stars icon Ask follow up

The click economy

Google's knowledge of our queries, emails, photos and other data helps it create intimately detailed user intelligence that powers its advertising. Its auction formula for advertising, where customers set prices, has earned the trust of corporate customers. In Q3 2016, Google had a 42% increase in paid clicks and grew its revenue by 23%, and yet, its revenue captured per click declined 11%. Google effectively improved its product by 42%, while making it cheaper for companies by 11% from the previous year and still growing revenues. Google's unparalleled efficiency in pushing prices down makes it hard for its competitors like Facebook to keep up.

Questions and answers

info icon

Google's success is closely tied to its ability to collect and analyze user data for targeted advertising. This has sparked debates about data privacy as Google has access to vast amounts of personal information. Critics argue that this infringes on user privacy. However, others point out that targeted advertising, which is a significant source of Google's revenue, provides users with more relevant ads. This debate is part of a larger discussion on the balance between personal privacy and the benefits of data analysis for business purposes.

Google's dominance in the digital advertising market has several broader implications. Firstly, it allows Google to extract more value from content creators, as it can serve targeted ads based on user profiles. This can potentially lead to a shift in revenue from content creators to Google. Secondly, it can lead to a lack of competition in the digital advertising market, as Google's dominance can make it difficult for other companies to compete. Lastly, it can raise privacy concerns, as Google's ability to create detailed user profiles can lead to issues related to data privacy and security.

View all questions
stars icon Ask follow up

Google's market cap is equal to the next eight biggest media companies combined. The closest equivalent to Google in the old economy was the "New York Times." However, Google extracts more value from the "Times" journalists than the "Times" itself. In handling search, Google can get a far better profile of the "Times" readers than the "Times" and, therefore, serve targeted ads.

stars icon Ask follow up

The knowledge moat

The fun name, simple homepage, organic search results and charismatic founders made Google attractive to users and seemingly unthreatening to competitors until it was too late. Behind the curtain, Google organized all of the world's information, every byte of productive info, on the web. Google's control over knowledge is unsurpassed and barriers to entry formidable. While Apple pursues immortality by becoming a luxury brand, Google has done the opposite by becoming a public utility, ubiquitous and invisible. This, by the way, puts it in the perpetual risk of antitrust suits and regulation.

stars icon Ask follow up

It's just biology

According to evolutionary psychology, brands target either the customer's brain, heart or genitals. The organ targeted determines strategy and outcomes.

Brain

The brain calculates and analyses trade-offs within milliseconds leading to rational purchases and lower margins. Amazon targets the brain by offering more for less. It runs an extremely efficient supply chain, brings down supplier prices and offers customers great deals. Revenue emerges from economies of scale in a winner-takes-all market that allows only one giant player. Google infinitely amplifies our analytical capabilities and memory to dominate the knowledge industry. It is the sole winner in the low-margin, winner-takes-all knowledge economy.

stars icon Ask follow up

Heart

The heart is driven by the need to love, nurture and care for others. Connecting to the heart gives margins and brand loyalty. However, Google and Amazon have signaled the end of the brand era, offering reviews and ratings that push customers to make rational choices. Facebook appeals to our hearts by connecting us to friends and loved ones to gain behavioral insights and ad revenue.

stars icon Ask follow up

Genitals

Sex and mating rituals overwhelm the brain's rational choices, making people irrational and, often, more generous. Luxury brands understand this and tie their business to their primal needs. A customer spends more because the act of spending is related to taste, privilege and desire. LVMH commands more value than Goldman Sachs. Apple appeals to our sexual instincts to extract irrational margins. Apple's brand message screams that owning an Apple product will make the user look more elegant, intelligent, rich and sexually attractive.

stars icon Ask follow up

The next trillion dollar company

What does it take to become the "fifth horseman?" Here are the eight factors that matter:

  1. Product Differentiation:
  2. Emerging giants need a differentiated product. Product differentiation can occur anywhere across the value chain from the origin of materials to the distribution channel. While it may look like the value of technology companies comes from the addition of features, it actually comes from removing friction and reducing the time taken to complete the tasks.

  3. Visionary Capital:
  4. Google captures the market's imagination with its compelling vision to "organize the world's information." This gives the company access to cheap capital, which can be invested in hiring world-class talent, pursuing moonshots and building structural advantages that competitors simply cannot match.

  5. Global Reach:
  6. Building a product that appeals to people across borders is a key component of a digital giant. Investors reward proof of global reach with cheap capital.

  7. Likability:
  8. Perception is a company's reality. The less likable the company, the sooner it'll face unsavory attention from media, watchdog groups and regulators. But companies perceived as good actors, like Google or Apple, enjoy longer immunity.

  9. Vertical Integration:
  10. All four companies from Galloway's book control their distribution, which allows them to tailor the entire user experience. Apple's signature move was not the iPhone, but expanding into retail with Apple Stores.

  11. AI:
  12. The most valuable companies over the last decade are experts in data collection, processing and use. This results in an unprecedented level of granular customer understanding leading to better revenues.

  13. Career Accelerant:
  14. A company's ability to attract top-notch talent depends on its ability to be seen as a career accelerant. Managing brand equity among employees is even more critical than managing customer reputation. The company with a better team gets access to cheaper capital and innovations and pulls away from the competition.

  15. Geography:
  16. All of "the four" are headquartered in cities with at least one world-class engineering university. Furthermore, 75% of large firms are located in global supercities.

The Four - Diagrams

Careers in the digital age

There has never been a better time to be exceptional or a worse time to be average. The global job market powered by LinkedIn searches means that a 10% difference in skill can lead to 10 times the rewards. Here are Galloway's insights to succeeding in the digital economy:

  • Get a College Degree and Work in a City: College graduates make 10 times more over a lifetime than people with a high school degree. 80% of global GDP is generated in cities as they enable the concentration of wealth, information, power and opportunities. 66 of the 100 largest economies worldwide were American cities. They contributed to 92% of jobs created and 89% of GDP growth.
  • The Accomplishment Habit: Accomplishment is a habit that can be cultivated and repeated. People who achieve goals in one area achieve them in all areas.
  • Improve Your Positioning: Doing work that is not credited to you is a sure path to under-compensation. Achievements do not speak for themselves. It is essential to find channels to reach a few thousand people about your work and skills. Everyone from employers to coworkers is looking you up on the internet. Ensure that they see the best version of you.
  • Serial Loyalty: External hires are paid 20% more than company veterans for the same role. The strategy is to work with an employer who offers kill development and growth opportunities for three to five years before being open to opportunities outside. Be transparent about the offers received by your organization as it makes you more valuable.
  • The Myth of Balance: Work-life balance is a myth when you are establishing your career. The rate of growth of one's career is set in the first five years post-graduation. This is more a function of endurance and speed than skill.

At the end of the day, the "Four Horsemen" are not just businesses; they have transformed the world through reshaping how we communicate, where we spend our money and what we expect from technology in the 21st century. Understanding the strategies of the "Four" is critical to value creation and careers in the forthcoming decade.

stars icon Ask follow up

Download, customize, and translate hundreds of business templates for free

Start for free ⬇️

Go to dashboard to download stunning templates

Download