In 2015, the S&P 500 (a broad measure of large, US stock market performance) was essentially flat. A handful of stocks missed the memo. Facebook stock returned 34%, Amazon 117%, Netflix 134%, and Google 46%. Apple had just come off 37% in 2014. Collectively called the FAANG stocks, after such staggering returns many thought these innovators may had gotten too expensive.
This though turned out misguided.
After decent returns in 2016, take a look at what these stocks did in 2017:
Facebook gained another 53%
Apple gained another 46%
Amazon gained another 56%
Netflix gained another 55%
Google gained another 33%
Some of these companies didn’t exist twenty years ago. Now they have become household names, begun to dominate their industries, and made their owners rich.
NYU Professor Scott Galloway provides a thorough and entertaining analysis of what he calls, “The Four” – Amazon, Apple, Facebook, and Google.
Describing how Facebook connects to our heart, Amazon to our brains, Google also to our brains (but I’d say he shows how they relate more to religion), and Apple to our genitals, Professor Galloway explains how these companies masterfully manipulate us – and why we knowingly continue to allow this to take place.
Galloway suggests Amazon tapped into our inner Neanderthal’s need to obtain goods. The more a Neanderthal had, the more likely they were to survive. This need to hoard is wired into our DNA, and who makes it easier to get “stuff” than Amazon? Apple’s successful shift to a luxury brand, allowed them to convince us owning their products defines success. We are more desirable mates when perceived as successful. And Galloway declares we all want to be desirable mates. Google provides information that we used to think only God possessed, at the tip of our fingers. Facebook allows any viewpoint a platform and megaphone all in the name of creating one big happy community. Through all of this, The Four have captured our minds and crushed competitors.
How will other companies survive? How can people stand out?
A quote from my favorite chapter, Ten “The Four and You” sums up the book:
“It’s never been a better time to be exceptional, or a worse time to be average.” (pg 230)
Galloway writes about the benefits of niches and the role humans, of all things, will play in combating The Four. As much as we hear about computers taking over, Galloway uses examples of how the human service experience will be the lifeline of any company looking to stay relevant. For example, the expertise provided by a knowledgable Home Depot representative can make them the destination of choice over an online retailer. There is value to having access to the expertise in person – as an admittedly clueless handyman, this is certainly something I can attest to.
Of course, this left me asking – why can’t Amazon just hire niche experts and allow prime members to video conference with the experts to trounce the competition once again… But I think this is the point of the whole book. In a market environment as dynamic and fast paced as we find ourselves, you can never stop asking questions and improving your business.
A warning to the company resting on its laurels of current success, The Four may be coming.