Scott Galloway of the digital innovation think tank L2 and professor at NYU, believes the digital economy is a winner-take-all ecosystem. In this talk he shares his data driven insights into who will come out on top, and who will be left behind in the fields of social networking platforms, retail brands and societal trends.
Scott defines winning organisations as those whose value is going to increase over the next months. Losers’ value is going to go down.
The driving force on the web right now has been the transition from text to visuals. We are very good at interpreting information through images. The web is becoming less text based and more image based. Images speak to the heart and inspire action. This transition has defined the biggest winners right now.
Social Networking Winners
According to Scott, Instagram will be the most powerful social networking platform within 24 months. Instagram is growing faster than any other social platform in the world right now and can boast a 15x greater user engagement rate than Facebook.
WeChat is another big winner. It's the first to come out of China and could be the first global brand to come out of that country.
So who are the social networking losers?
"Pinterest has been run off the road by Instagram."
Twitter is trying to go visual but it has taken too long. Traffic coming out of Twitter is meaningless to the biggest advertisers. LinkedIn has more relationships than Twitter.
Tumblr, although visual, is another loser and was completely absent from Yahoo’s earnings call.
Winners in Retail
Amazon. Consumers want same day delivery. They want things that Amazon has taught them to expect. No company has ever had access to this cheap of capital for this long. Despite being able to keep their costs down and profits up this far, they are about to go underwater in fulfilment. Something that Scott thinks will actually hurt their competitors. Because Amazon are going underwater with a larger oxygen tank. Competitors will be going, too, but with a smaller tank.
"Amazon will become the cable pipe of stuff to your house."
Amazon is also becoming a huge media company, doing a billion dollars worth of sales in media.
And finally, "Amazon has become the Tony Soprano of e-commerce." Pay to play or you get hurt on their platform.
Who gets hurt? Not brick and mortar stores. 93% of all commerce is still physical.
Losers in retail
So who are the losers in retail? Other e-commerce players. They will all be losing to Amazon.
Retailers and brands with week digital will also be losing. Companies like Target, Toys R Us or Prada.
Scott wrapped up his talk speaking about the winners and losers in society.
Winners in Society
The number of abject poor are declining. Their numbers have been cut in half in the last 20 years and this will only accelerate. That has been the biggest victory in our society in the last 50 years.
Other winners are the middle class in emerging markets. Consumers. People who are just getting enough money to begin buying goods beyond what they need for basic survival.
The Losers in Society
The middle class in developed markets. It's frequently been said that a rising tide lifts all boats, but "our tide is made of very choppy waters that raises a set of super yachts while everyone else is struggling to stay afloat."
Jobs are being destroyed at a rate we can't replace them, employment is going down and income inequality is going up. Income inequality is a bad thing. Once the bottom 5th comes out of whack with the top 5th infant mortality goes up, life expectancy goes down.
What is causing this?
Cost of education is becoming the sand in the gears of social mobility. Kids pay 5 times as much for education now.
"It's über wealthy against everybody else's."
Money in politics is adding to this. It's cheaper to put your name on the White House in 2016 than on the columbia business school.
Politics are also helping the transfer of wealth upwards. It's a bipartisan effort.
His view into the future?
The investment market has recognised that luxury goods are the place to be. Luxury goods bought by the heart rather than head. Turning Apple into a luxury goods company will make it the first trillion dollar market capped company.