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Feeding Frenzy

Scott Galloway@profgalloway

Published on November 12, 2021

Three weeks ago, “someone” floated the idea of PayPal buying Pinterest. PYPL plunged 5% the next day (shedding the value of Under Armour) and the company then denied the rumors. Our thesis: PayPal’s management leaked the story as a trial balloon, and let it float away when the market threw up on the notion of PinPal (couldn’t resist).

PayPal should have had the courage of its convictions. Pinterest is a great product with a shitty business model, as evidenced by what feels like a desperate attempt to monetize with ads that pollute the platform. The asset here is not the business model or cash flow, but the 444 million people (nearly the population of the U.S. and Russia combined) who log on to Pinterest every month. The fat lady likely hasn’t sung: The asset is now 10% cheaper than it was pre-balloon.

In an attention economy, scaling users solves most economic problems. And problems are solved faster when you have a business model than can monetize each user at a healthy rate. Fintech is good/great at this, and the market cap per user of these two firms reflects this.

The lesson here is that advertising is a shitty business. It’s (much) less shitty for companies that have the populations of the Western hemisphere and can construct a digital corpus based on data they capture. But they still don’t command the premium of fintech. Social platforms must find more products to spray across their user base, while fintech companies need more users. This is the reason we’ll see a flurry of acquisitions of media/content firms whose audiences can be better monetized across a payment platform. Amazon Prime Video and AppleTV+ are validation that media is worth more as part of a non-media company than it is as a standalone business. In sum, media has become featurized.

Eyeball Acquisition

Firms in every sector are realizing that the best way to reduce their CAC (customer acquisition cost) is to produce proprietary content that keeps customers engaged and increases word of mouth. Media companies cultivate engaged communities that take years, if not decades, to build. While a Gulfstream 500, at $45 million, seems impossible to rationalize economically, it can be justified if you have more money than time (i.e., if you’re an old rich person). Fintech firms are about to embark on the mother of all midlife crises and pay huge sums for private jets posing as media firms.

It’s already started. Hubspot acquired The Hustle, a media company that produces a newsletter and a podcast. JPMorgan acquired The Infatuation, a publisher that provides restaurant recommendations and produces live food events. Square acquired Tidal, a music streaming service. Robinhood acquired MarketSnacks, a financial news company that offers bitesize business updates. Many others are purchasing audiences instead of products.

But not all eyeballs are equal. Eyeball value is a function of several factors:

  • Affluence
  • Engagement
  • Loyalty

The eyeball market is hierarchical. Big Tech floats atop the food chain. Legacy media whales swim just below. Crawling on the seabed are thousands of microcommunities — newsletters, messaging channels, recommendation sites, influencer followings — that present unique monetization opportunities for the predators above.

Match Game

If you’re not buying eyeballs/audiences, you’re buying features/products. Big Tech has been bolting on capabilities this way for decades. The iPhone is a Frankenstein of acquired tech, from the touchscreen (FingerWorks, 2005), to the SoC (P.A. Semi, 2008), to Siri (Siri, 2010). Amazon bought robotics (Kiva, 2012), grocery stores (Whole Foods, 2017), and smart doorbells (Ring, 2018). Microsoft launched its empire on a product acquisition (DOS, which it bought way back in 1981).

Then there’s the unlikely peanut-butter-and-chocolate idea, somewhat out there, best considered when shareholders are under the influence of an edible or a frothy market. In 2005 the founders of a small mobile startup were pitching VCs for financing when they took a meeting with two guys named Larry and Sergey who owned a search company. They wanted to buy the mobile startup, they said, and give the product away for free. Google’s decision to acquire Android is obvious in hindsight, but was strategic genius at the time.

The hard truth is that most high-profile acquisitions don’t pay off. But the ones that do pay off bigly. These are some of the largest bets on the table. An exercise I often do when asked to speak to boards of directors: Imagine it’s three years from now and your market cap has trebled. What likely happened to get you there? I find that framing gives board members, who spend a lot of their time being skeptical, worrying about downside, license to think big. And typically, some of the ideas this exercise generates are acquisitions that seem crazy at the time but may prove to be crazy genius.

Let’s Go Crazy

Tesla could buy truck stop company Pilot Flying J. Tesla’s been building superchargers at the company’s locations for several years, but bringing the entire operation in house would let it upgrade the user experience and extend Tesla’s brand and value proposition — think Apple Store. Vertical integration is in Tesla’s DNA — it makes more of its own components than traditional auto manufacturers do, and Elon has said that “building the machine that makes the machine” is a critical success factor. The company owns its own sales and service network already. An integrated Tesla experience at the charging station would make its passenger cars more valuable today and a true long-haul variant of the Tesla Semi more viable tomorrow. It might look like a step backward for the EV king to start selling gasoline, but what better way to put itself in front of potential electric vehicle customers? Many long haul truckers own their own rigs. Elon will have to pry Pilot Flying J away from Warren Buffett, but a few billion in Tesla stock should break it loose. Maybe a Twitter poll?

Another valuable acquisition target is NFT marketplace OpenSea, which lets users trade tokenized digital assets — usually art — on the blockchain. With a 97% market share, it’s already made a name for itself as the premier operating system for NFT trading. Last week it crossed $10 billion in all-time sales volumes. Payment processors including PayPal should be drooling over this firm. It provides immediate entry to a herd of young, highly engaged crypto enthusiasts and could help modernize PayPal’s retail footprint. PayPal can alternatively build up its own crypto-trading platform — it’s working on this with Venmo — but there’s a big difference here between jumping on the bandwagon and owning it. If PayPal had processed the more than $5 billion worth of sales on OpenSea in the last two months, it would have raked in almost $200 million at current rates.

But the low-hanging fintech-media buy is for Dorsey’s taking. Square has established a strong foothold in payments and acquired a number of other interesting features in the process, such as Tidal (music streaming), Caviar (food delivery), and Afterpay (lending). The most obvious, the purchase that could identify Square as the overnight leader in the race to SuperApp, is social. Fortunately for Square, its cousin twice-removed is a social media giant. Dorsey could unite Square and Twitter and initiate its march toward becoming the next WeChat. He’d also have the luxury of running two mega corporations from the same office.


My annual Predictions are coming up in a few weeks. Some likely M&A-related predictions for 2022:

  • The regulatory big chill around big tech and acquisitions thaws: either the DOJ proves flaccid, or it breaks up companies and oxygenates the marketplace. Both outcomes give clarity, and these companies will begin acquiring again.
  • 2022 is the biggest year in M&A in recent history, as the “Race to the SuperApp” inspires leviathans to couple with other leviathans.
  • Fintech and legacy banks go shopping for media and content.
  • Twitter cleans up the fake accounts suppressing its revenue, the stock drops below $40, and Jack unites his sisterwives (Square acquires Twitter).
  • Peloton gets bought. Its likely acquirers? Nike or Apple.
  • An NYU professor acquires the Rangers International Football Club, PLC.

Re the last one, the best way to predict the future is to create it.

Life is so rich,

P.S. Registration closes Thursday for my final Brand Strategy Sprint of 2021 with Section4. Among previous students, 94% said the course positively impacted their career trajectory. Join us.



  1. Kent Comfort says:

    I just heard you comment on your podcast session with Kat Cole that you are on the board of Panera. Wow, is your work cut out for you! My experience and patronage with that company goes back to St Louis Bread Company. In their early history, the were a wonderful bakery, with a cornucopia of delicious items. They are no longer that, to my great disappointment. My last few visits to one of my local stores have been a downward spiral of frustration that they are finding creative ways to continuously lower the bar of quality and options. They do not seem to know what kind of business they are. The quality of the product is crashing, and the number of menu options are shrinking. The customer service was never stellar, but now it is embarrasingly poor. As a board member, you probably have no clue about any of this. I don’t have any idea what they are like in Florida, but in the midwest they are really sad.

  2. Peter Winter says:

    Uncharacteristically half-baked, this one. Suggest you change edible brands. Spraying ad messages around is so 1950s. The value of advertising increases exponentially with relevance, which drives engagement, which is why targeting and measurement are so important…

  3. James McKeon says:

    Big Peloton fan and agree they are prime acquisition target. You insist Apple is the most logical acquirer but let me point out Peloton operates ez

    • James McKeon says:

      (Continued) operates its hardware exclusively on Android OS not Apple. Huge unfortunate obstacle. Otherwise, all for it.
      (Apologies for truncated initial message … clumsy thumbs to blame).

  4. Meredith Foley says:

    META PLATFORMS INC. buys Roblox, Roblox own the Metaverse and Meta wants it ~ badly!

  5. Lind says:

    Paypal is a dead whale… it will be the MySpace of the Fintech space. Its surprisingly that you dont have Klarna on your radar Prof G.

  6. Simon says:

    Facebook buys TripAdvisor

  7. Mark says:

    Great article. Insightful. Love Abe Lincoln’s quote at the end re the future.

  8. Ditlev says:

    Adidas bits Peloton to take on Nike in USA

  9. barry thomas thomas says:

    Put the new retail giants in this slide – RETAILERS…,, MCD, YUM, etc….

    PS Enjoyed the Viral Growth course:)

  10. Julian Pepper says:

    New Discovery/Warner should buy Gannett and merge it with CNN.

  11. Charles says:

    What about company breakups? gE recently for example? Mergers may be less appealing in this market. Who should be spinning off what?

  12. jeff says:

    Therefore… Pinterest’s stock price is currently dramatically underpriced. Right?

  13. Weimar says:

    Hyperinflation was initially deemed non-existent, then transitory, and now good for you. The peasants will own nothing and be happy under 6uild 6ack 6etter while the rich get richer. Hope your sportsball team and CNN show will keep them entertained so they don’t realize they’ve been played.

  14. Allen N. Blum says:

    I think Scott is smart, relevant and engaged in the topics he discusses. More importantly he is thoughtful, direct and not afraid to speak the truth. Hope you get a shot at the team….what’s the plan…. because hope is not a strategy.

  15. Richard Dade says:

    Well, Rangers just got cheaper.

  16. robert M HEANEY says:

    i don t know if i follow your logic here , Scott, but i sure as hell am going to re-read your cooment—–maybe i was thrown off by your comments & laughing my a– off !!……cool !!….a cynical avid follower…..s, Sigmund F.

  17. Scott F says:

    Big fan of your work from a lot of podcasts Scott. Welcome to the Rangers family too!

  18. VVS says:

    There are my two predictions for 2022: Merck’s molnupiravir/Lagevrio crashes once the patient mutagenesis data starts coming in + a few lawsuits over damages, broad approval and conditional billions of purchases may not even realize full volume, Pfizer’s Paxlovid captures the market share for that and for Gilead’s remdesivir/Veklury (in the cross hairs between minuscule clinical benefits and growing appreciation of its side effects). On the double strength of the vaccine and oral anti-viral Pfizer pushes off vs Moderna, Merck, and Gilead, as the Covid-19 market matures.

  19. Robert Ryan says:

    Scott, love all that you do. Very fascinating for me the stories/views that you share including your shared love of the Rangers. My dad was born and raised in Glasgow moved to Canada in the 1950s as a teen, also among the greatest Rangers Fans. Keep up the great work. I have been to Ibrox once with my dad – for his 70th birthday. It was very special.

  20. Harvey Cotton says:

    Man, congratulations are in order for Aswath Damodaran. I didn’t even know he was a soccer fan, but he has all that extra Tesla money to spend and this market is expensive.

  21. Julie Guyard says:

    As a new food media company with a culinary platform I’m waiting for those calls! but jokes (no joke) aside, embracing media as a business and acquisition tool is a no-brainer – and our chosen ‘bite-sized’ format the perfect, easy-to-consume vehicle for content.
    After all – storytelling always was, and always will be, the ulitmate sales tool 😉

    Night Picker gathers restaurants, city food scenes, food-media and food-lovers over bit-sized videos and a culinary marketplace – placing a commercial canopy over the fragmented world of food and food tourism to promote local trade – everywhere.

  22. Rachel Roberts says:

    Re: the penultimate prediction. Reckon you’re spot on. Could it be a Nike AND Apple acquisition?

    Re Glasgow Rangers. Fighting talk!

    • Balmeri says:

      To think i took financial influence from this man, and he turns out to be a Rangers fan. Oh the irony.

  23. feargall says:

    Peleton needs an effective outdoor workout companion before it is really valuable. Their outdoor run-along guidance sucks because it has no ties to the the context of the environment or the route. Strava has that especially if you have run/biked it before. I have to think that the combination of Strava and Peleton needs to happen first. Then they have something – All non-gym workouts indoors and outdoors. Right now Strava captures Peloton but not the other way around. I also see Peleton instructors as music curators. wouldnt mind that for my indoor/outdoor bike rides too……..So maybe Spotify acquires both of them. Then the really really have something….

    BTW Rangers. Really?V Sectarian choice! You just lost half your Glasgow audience and most of your Republic of Ireland Audience. 😉

    • Dave Smith says:

      Rangers a sectarian choice ???
      I think he will be more than happy to lose half of his Glasgow audience and most of the Republic of Irelands audience if that’s what they think.
      Only in the small minds of people that have a warped agenda will it make any difference, which i doubt very much covers half of Glasgow and most of the Republic of Ireland.
      With more than half the first teams players Catholics, it certainly isn’t down to sectarianism.

    • John Smith says:

      Thanks Feargall,

      Anything remotely Rangers related, we can always guarantee that an enabler if the largest paedophile conspiracy in world sport (not to mention the creators of sectarianism in Scotland) will jump on it and spout the usual crazy nonsense.

      • Stephen Taylor says:

        “Creators of sectarianism” hahaha. You people really are beyond help. I don’t remember a protestant embargo at Celtic. A catholic ban at Rangers however… But times have changed. You tolerate the “bead rattlers” and the “papists” now, eh? We appreciate your very generous accomodation.

        • Stephen Taylor says:

          Oh and I would never forgive myself if I didn’t draw attention to you talking about “an enabler of the largest paedophile ring in world sport” and “spouting crazy nonsense” in the same – embarrassingly written – sentence. I know it’s too much to ask to try to get you to analyse the hatred inside you and see if that might have something to do with grotesque paedophile claim, but hey, why not try.

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