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Scott Galloway@profgalloway

Published on August 25, 2017

Why Drive a Camry

Amazon received FTC clearance to proceed with the acquisition of Whole Foods and immediately announced they would be cutting prices at the grocer. Grocery has been a sea of sameness and depression that’s about to become … awesome. A significant portion of the 60% of US households that subscribe to Prime are, within the year, going to be Whole Foods customers, as why drive a fucking Camry when you can roll in an S-Class? The entire grocery market is about to wake up to a Seattle firm donning a hockey mask and chainsaw.

Walmart also announced a partnership with Google Express to offer seamless ordering from Walmart across Google Home and, one assumes, most Android devices. The most dominant firm of the nineties, Walmart, needs to team up with the most dominant firm of the aughts, Google, to counter the most dominant firm of this decade, Amazon. Walmart’s grocery has off-the-charts NPS scores and will drive the offering. (More on the Walmart-Amazon war in my upcoming book.)

The Walmart / Google offering is Android to Amazon’s iOS, which serves affluent households. Amazon / WFM will dominate high-income households, Walmart / Google middle- and lower-income households. Kroger will be in no man’s land and finds itself the teenage camp counselor looking for her friend in the forest about to greet an unwelcome surprise — Amazon / WFM / Jason.

Half right
WPP announced disappointing earnings and shed 11% of its value in an overdue recognition that advertising sucks, and has become a tax on the poor. WPP CEO Martin Sorrell professed that the pullback in spending from CPG firms, scared shitless by the notion of a Brazilian firm taking them over, had overreacted with cost cutting, and that this spending would return.

He’s half right. Similar to the hundreds of thousands of vice presidents who lost their jobs in the eighties, under the auspices of reengineering, nobody is going to miss them … nor the advertising. Even if the spending does return, it will be spread across new channels, like Facebook and Google, or to establish direct channels as brands recognize they need to forward-integrate into retail. What do the largest advertisers have in common? Simple: they’re all losing share. Advertising has become a way of communicating your brand values and your business position: “We don’t get it, and are out of ideas.”

Consumer firms cite brand safety and measurement concerns for pressing pause on advertising spend. However, when YouTube and Facebook experience brand safety and “miscalculated metrics” issues, their businesses barely felt it. Brands are the girlfriends getting interest from more attractive partners, who will find reasons to break up with their lame ad / media agency boyfriend, who listens to ad-supported Pandora and pays for dinner with his Discover Card.

The agency conglomerates are well managed, and stocked with high-EQ leadership that has put off the inevitable for a decade. Now the inevitable is here, and all big four communications conglomerates (WPP, IPG, Omnicom, Publicis) will see their market cap halved in three years or less. It’s also likely a couple of them will execute a good-bank / bad-bank strategy and split their growing digital-centric firms from their old-world agencies.

In the last three years Google and Facebook have added $433 billion in market cap and $39 billion in revenue in an inflation-adjusted flat media market. In addition, consumers with options (disposable income) are opting out of the broadcast-ad ecosystem. The perfect storm that hit land in retail in 2016 is about to hit agencies in 2018. The surprise this week wasn’t WPP’s miss and 11% decline, but that it took so long. The news marked one thing: the beginning of the end.

A tightly wound spring about to explode
Easy, in a frothy market, to be bold about who is on the wrong end of disruption, or is overvalued. However, where is there value in this marketplace? The sector whose shares will outperform tech for the rest of the year? Old-economy retail. The narrative around retail has been deafening and consistent: they are going out of business at the hands of Amazon. Yes, some will, most won’t. The US is overstored; consumer behavior is changing. All true, all winding the spring tighter to EV/EBITDA levels of 2–5x (uber-cheap). However, the spring is wound too tight — oversold — and several retail firms will explode higher in the next quarter. Just as it’s difficult for a pendulum to remain at its beginning, the markets are not known for balance. A basket of big-box and specialty retailers (e.g., ANF, KSS, WSM, JWN, M, ASNA) will demonstrate they are not going out of business and return to midlife-crisis multiples vs. deathbed turns on EBITDA.

For the remainder of the year, retail will be a tabloid story of a Minnesota mom pronounced dead, who jumps off the slab in the morgue … and scares the crap out of everyone.


In relationships, I’ve gotten so much wrong, with so many people, for so long. With romantic partners, I focused on managing the person, vs. being honest and open, creating an uneasy calm interrupted by shock and disappointment. Professionally, I’ve expected employees to be loyal as, well … I’m just so fucking awesome — instead of investing in understanding their objectives and calibrating my efforts to address our mutual aspirations.

One place I’ve gotten it right with the people most important to me: affection. I rub my boys’ ears, their backs, brush their hair, and roughhouse with them so as to demonstrate my strength, for about a second, and then collapse on them and begin kissing and tickling them. I’ve recorded several minutes of us wrestling, specifically the sound my boys make when they burst into joyous, uncontrollable laughter. This will be the last thing I hear on this planet — have prepared for this. At work, I’m less affectionate than Darth Vader. I work with people on average 20 years younger than me, and the thought of creeping somebody out with an unwelcome hug or hand on their shoulder, in a professional situation, is horrific to me. As a result, I don’t even like to shake hands.

Affection Exchange Theory, introduced by Professor Kory Floyd, postulates that affection strengthens bonds, provides access to resources, and communicates your potential as a parent, increasing your pool of potential mates. I think it goes even deeper. I know a lot of people who, despite their good fortune, are wandering. Few meaningful relationships, an inability to find reward in their professional lives, too hard on themselves, etc. It’s as if they’re not grounded, never convinced of their worth … wandering.

When I look at my own success, it boils mostly down to two things: being born an American and having someone irrationally passionate about my success (my mom). Though she was raised in a household where there was little affection, my mom couldn’t control herself with her son. For me, affection was the difference between hoping someone thought I was wonderful / worthy, and knowing it.

Every Wednesday night after Boy Scouts, my mom and I would go to dinner at Junior’s Deli on Sepulveda Boulevard in Culver City. I would have the brisket dip, she the lox, eggs, and onions. We talked about our week — we didn’t see each other much in-between weekends — only to be interrupted by different waitresses, who would comment on how much I had grown. On the way out, we’d stop at the bakery and buy a quarter pound of halvah. As we stood in the parking lot waiting for the valet to retrieve our lime-green Opel Manta, my mom would grab my hand and, in an exaggerated fashion, swing it back and forth. She’d look at me, and I would return her gaze with an eye roll, at which point she would burst out in joyous, uncontrollable laughter. She loved me so much…

Having a good person express how wonderful you are hundreds of times changes everything. College, professional success, an impressive mate — these were aspirations, not givens for a remarkably unremarkable kid in an upper-lower-middle-class household. My mom was 43, single and making $15K/year as a secretary. She was also a good person who gave me the confidence, while waiting for our Opel, to feel connected, and that I had value — capable and deserving of all these things. Holding hands and laughing, I was tethered.

Life is so rich,



  1. Matt says:

    Scott, always appreciate how you wrap life-meaning into these newsletters. Thank you.

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