Post Corona: From Crisis to Opportunity Scott Galloway 2020
Our world has been changing rapidly for decades now, but 2020 may have been a catalyst for an even faster progression of changes in the decade ahead. The worlds of shopping, office work, education, and medicine have been turned upside down, and it remains to be seen what the new normal will look like after Corona fades away. What will our world look like in 2030, and what did the Covid-19 pandemic do to accelerate that change?
Scott Galloway is a professor at New York University, but he came from humble beginnings to both found and sell a multi-million dollar company. He hosts a podcast, the Prof G Show, and some of this material has been covered on the podcast. He calls Covid-19 the Great Acceleration, a singular event that will create momentous changes and large disruptions in the entire economy.
One of the great mysteries of 2020 was how the stock market managed to rise during a worldwide pandemic- but that's not the whole story. One segment of the stock market- big tech- produced most of the gains of 2020, and for good reason. Amazon became the grocery store of choice, Zoom became the home of business and family gatherings, and Netflix became the diversion of choice with sport and concert venues closed. The losers of 2020 were what he calls BEACH stocks- Booking, entertainment, airlines, cruises and casinos, and hotels. Some of those may never recover, while some may. In between there are plenty of wounded and dying companies that struggled to get through 2020, and their fates may already be decided.
Covid produced what Galloway calls the Great Dispersion. Central facilities like offices, shopping malls, schools, medical facilities, and entertainment venues were ghost towns while people shopped, watched movies, and talked to teachers and doctors online from their homes. There are three industries that he sees as prime for disruption- meaning that they are older, more expensive, and relatively unchanging for the past several decades. These three will see the most change in the coming years- Healthcare, Retail, and Education.
Healthcare is a notoriously bloated enterprise where costs are out of control in the US. The pandemic has made telemedicine and telecounseling more accepted, and could open the door for big technology companies like Amazon to get involved as the middleman to cut costs and improve service. America's expensive healthcare system needs a total overhaul, and it would be great if a more health conscious nation was combined with more efficient ways of delivering care. We shall see.
Retail has already seen a huge switch to ecommerce, and the pandemic has accelerated that switch. The one area of retail that has resisted online shopping, grocery shopping, is ripe for changes just like the shopping malls have had to absorb. Galloway points out the problems with abusive warehouse employers like Amazon, but when a company is in 82% of homes like Amazon is, its power and network of services make it unstoppable unless the government steps in at some point. The powers of scale allow larger online retailers like Amazon to crush competition as it arises.
Galloway devotes an entire chapter to higher education, which is his current field, and bemoans the fact that tuition costs have risen 1400% in 40 years, more than three times the rate of inflation. During this time the value of the product- classes- has barely improved. While state and federal funding of higher education have dropped, students have compensated by borrowing obscene amounts to get the experience that college sells, with the resulting average graduating debt of over $30,000. The author predicts that by the end of the 20's colleges and universities will be hit by a crunch that will cause 25 to 50 percent of them to close permanently. Students during Covid-19 have been relegated to poorly designed online classes, and this could change the way that higher education is presented in the future. Elite schools will still be around, but many of the smaller ones will have a hard time finding students. He recommends things like national service, gap years, and more 2-year degrees to fill in the gap.
Some of his discussion is very technical and geared only towards business majors, and he devotes one chapter to analyses of various big tech companies and where they are headed. This chapter would be fascinating to financial types, but goes into jargon that some might not appreciate. Companies to watch in the coming years that could be among the disruptors:
-Airbnb
-Peloton
-Carnival
-Lemonade
-Netflix
-One Medical
-Shopify
-Spotify
-Tesla
-Tiktok
and the group he calls The Four- tech firms that dominate everything:
-Amazon
-Apple
If you've been paying attention the past few years, you've noticed a lot of the trends that this book covers. It's nice to see such a readable, smart summary that makes sense. I knew that advertising was changing rapidly, and now I realize it's because ads are migrating from big media to Facebook and Google, who suck up 61% of all ad spending now. This will transform television, newspapers, radio, magazines, and anything else that still relies on traditional advertising. Brand advertising, or the building of brand identities that make us like something like Coke or McDonalds, is being replace by the Product Age, where crowdsourcing and online ratings drive sales much more than cute commercials. People turn to online ratings through things like Google, Yelp, or Trip Advisor to find places to spend their money more often than they look to known, advertised brands.
The final chapter is a plea for government involvement akin to socialism that will be a hard prescription to fill. Galloway despises the capitalist caste system that has made it harder and harder for people at the bottom to get education and move up. Income inequality is at unhealthy levels now, and he sees a role for government to both regulate and redistribute. The incentives for the economy are all wrong- we prop up big companies that are inefficient losers, but fail to support and nurture smaller, innovative companies that promise to add value. His recommendations include long overdue things like antitrust actions, more regulation, and funneling of money to innovators rather than the big companies who keep getting bigger.
The Covid epidemic has exposed some ugly tendencies in America- our mistrust of science, willingness to politicize basic things like public health, and individualistic tendency to blame people who get sick, raped, or poor for their own misfortune. The rich have gotten richer, while the virus has hurt the poor and minorities disproportionately, mainly because they are the ones that don't have the ability to work from home.
I always try to look for a silver lining in any bad thing that happens, and maybe one will turn up after Covid-19 is behind us. Post-Corona is one of many books now hitting bookstores that look at what the pandemic has done to us, and how we can use what we have learned during it. Hopefully we can use all this pain and suffering to learn some new and overdue lessons.
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