Amazon’s big move into the pharmacy business last week wasn’t a surprise at all, and it’s just part of a larger plan to reinvent a trillion-dollar industry. Coming up from Amazon: health insurance, predicts serial entrepreneur and NYU marketing professor Scott Galloway in his new book, “Post Corona: From Crisis to Opportunity.”
“Amazon knows a great deal about its best customers: what do they eat, do they buy exercise equipment or video games, do they have children, and are they in a relationship,” Galloway writes in the book. “Between Amazon and Whole Foods purchases, the Amazon card, and all the ‘pay with Amazon’ merchants, the company has vastly more individualized data than any insurance actuary.”
That might sound like the makings of an Orwellian future, but it’s just one of the ways the crisis of the past year has rapidly accelerated the inevitable in the economy and society, as Galloway sees it. After going through years of change in a matter a months, he writes, the result will be a very different landscape on the other side. The book looks ahead to the day when we put this pandemic behind us and find that some of the most powerful companies in the world have only become more powerful, for better or worse for the rest of us.
So where does that leave us? Galloway joins us for a conversation about the “Post Corona” world on this episode of the GeekWire Podcast. Listen above, subscribe to GeekWire in any podcast app, and continue reading for edited highlights.
Todd Bishop: You wrote in your first book, “The Four,” that Amazon, Apple, Facebook and Google are effectively in a race to run the operating system of our lives. You revisit this in your new book, “Post Corona.” Who is winning that race now, and has the pandemic given any one of them more of an edge relative to the others?
Scott Galloway: If there’s one that was invented for a pandemic, hands down it’s Amazon. … First off, ecommerce has gone from 18% of retail to 28% in eight weeks. That’s literally a decade of acceleration in eight weeks. Ecommerce was growing 1% a year since 2000. In March, 18%, eight weeks later, 28%. Decade of growth. And one company captures between 30 and 50 cents of it on the dollar, depending on how you categorize it, if you include things like gas or groceries. So boom, done.
Then, everyone’s remote. What does remote mean? You need more processing power, because instead of talking to people in conference rooms, you’re talking to them over Zoom. So this unquenchable thirst for the new oil, if you will, of processing power. Well, who’s there? Who’s the biggest cloud provider of computing power? There’s Amazon. Oh, wait, what are we doing at home? We’re watching a lot of video. Let’s check out Amazon Prime Video. It’s literally as if Jeff Bezos does have a crystal ball and said, I’m going to design a company around a pandemic.
TB: One of the most interesting parts of the book is the discussion of Amazon, healthcare and insurance. Where do you see Amazon going long term in healthcare? And is this a good thing for our economic and personal health?
Galloway: I’ve been saying Amazon was going to be the fastest-growing healthcare company in the world for the last two years. And for me, it’s a pretty basic, or pretty easy prediction. Basically every CEO has to be able to convince investors their stock price has a good chance of doubling in five years. Otherwise, people go buy Zoom or Peloton or someone else. For Amazon to do that, even if they get operational leverage, they’re running into the law of big numbers, which means they probably have to add somewhere between $150 billion or a quarter of a trillion dollars in top-line revenue — add that — in the next five years. That helps us predict what businesses they are going into.
What does Amazon do? They come into an industry and they raise trust and satisfaction. And if you look at the industry where all roads lead to — high margin, huge industry, lack of consumer satisfaction — all roads lead to the same place. And that’s healthcare. Amazon will probably be the first company that takes health care from being on your heels and defensive, let’s react to your problems, and let’s get on to our toes.
TB: So there’s great upside to that, if they’re able to bring new efficiencies to one of the most broken systems in our society. But there’s also a lot of concern about giving them that much more power, with that level of insight. How should people feel about that?
Galloway: Well, typically what happens when Amazon goes into a space, or this is more generally true of big tech, is in the short run consumers win. They come in with cheap capital, they’re great innovators, great at what they do. … Shareholders are the biggest winners because essentially the marketplace values innovation. The healthcare industry feels like it’s been sticking its chin out. And to be blunt, I kind of look forward to seeing the healthcare industry get tagged pretty hard in the chin.
I would argue over the medium- and long-term, it’s bad for consumers, because typically what happens when a company develops the sort of monopoly power they have is we find out, there’s a lot of innovation getting squelched. The question is, over the long run, would the FTC and DOJ be better off returning to America’s proud history of saying, yeah, Amazon’s a fantastic business, AWS is a great business, Amazon Fulfillment is a great business, but should these be separate companies, such that they’re forced to innovate on their own, they’re forced to compete, not cooperate.
TB: You get into many other topics, including education, and you talk about winners and losers in each of these industries, and folks that are surprising you. But at the end, you point out that we’re facing an economic catastrophe. You write, “we’ve already wasted the better part of $3 trillion not fixing it.” You say we need to protect people, not companies. How would you fix it?
Galloway: Take the bottom third of US households [and help them], instead of giving $750 billion to the wealthiest cohort in the world, small business owners. We haven’t given them a bridge to the other side, we’ve given them a pier, and they’re going to go out of business, or we have protected their multimillionaire owners. As we do with everything, PPP (the Paycheck Protection Program) was nothing but an attempt to flatten the curve for rich people, specifically people that own small business
You want to create velocity of capital, you want to get that multiplier? You give 10,000 bucks to a family that’s food insecure. They lost their job, they’re going to spend $10,000, they’re going to flush it into the economy. Right away. You give $10,000 to a small business owner, you know what they do? Maybe they put it in the business. But at the end of the day, it probably ends up on a trading account where they buy Amazon stock. And the story stocks that they talk about on CNBC, the disruptors, are trading at crazy, crazy multiples. What that says to me is that the stimulus, like everything the government does, has done nothing but flatten the curve for rich people. We should be protecting people, not companies. That was a bit of a rant.
TB: I would expect nothing less! Is that the key takeaway that you want people to get from this book?
Galloway: Look, I think we need to double down on capitalism. I worry that the US is not capable of moving from capitalism to socialism. It goes from capitalism to fascism. If you have capitalism on the way up and socialism on the way down, there’s a word for that. It’s cronyism.
We should have a net, we should be more empathetic to our brothers and sisters. We shouldn’t be putting people in harm’s way. But this absolute idolatry of companies and innovators and billionaires has gone full tilt. …So yeah, let’s get our heads out of our asses. Let’s grab hands with each other. Let’s start deciding that who we should be loving are not companies and billionaires, we should be loving each other and Americans that need help. Capitalism can’t survive unless it’s built on a groundswell, an absolute foundation of empathy and respect for each other.
Scott Galloway is professor of marketing at New York University’s Stern School of Business, and the founder of nine companies. You can hear him on the podcast Pivot (with Kara Swisher), and on his own Prof G Show. His new book, Post Corona, Crisis to Opportunity published by Portfolio Penguin, is available now. Follow him on Twitter @profgalloway.
Conclusion: So above is the ‘This firm was invented for the pandemic’ — Scott Galloway on Amazon in a ‘Put up Corona’ world article. Hopefully with this article you can help you in life, always follow and read our good articles on the website: Doshared.com