The Prof G Pod with Scott Galloway - Office Hours: The Future of AI in Search, How Scott Became a Professor at NYU, and Finding Balance Between Ambition and Contentment

Episode Date: January 17, 2024

Scott gives his thoughts on how AI will affect the future of search, specifically how selection and choice is a tax on consumers. He then advises a listener who wants to become an adjunct professor and shares the story of how he became a professor at NYU. He wraps up with advice to a teacher wondering how to strike the balance between contentment and wanting more.  Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Welcome to the PropG Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please email a voice recording to officehoursatpropertymedia.com. Again, that's officehours at profgmedia.com. First question. Hi, Prof G. This is Duncan from Fort Wayne, Indiana. I have a question about search and AI.

In the news this week, Perplexity, an AI-based search engine, got an investment from Jeff Bezos. ChatGPT has its own search the web function, and I've read that Google is also returning searches with long text instead of the standard 10 blue links. Going forward, how is AI and this form of search going to impact things from search engine optimization to website traffic? Do you think the old rules of search engine optimization are going to be rewritten, and how should one structure their website and try and get their content out there in order to drive traffic when in the future click-throughs and site visits may not be the end game? I would love to hear your thoughts. Thanks for all your great content.

If I had that answer, I wouldn't have a podcast. I'd have a giant consulting firm that I would sell to Gartner. Actually, I did that. Anyway, a bit of context here. Bezos is backed perplexity, a startup valued at $520 million. It's a challenger essentially to Google. There's been a lot of challenges to Google. I invested in Neva, which was subscription search, thinking, or my thesis was one, the guy running the business was this incredibly talented former head of product for Search at Google, so very smart. And I thought, okay, kind of the original sin of the internet was that it's ad supported. So I have this strategy around I want to invest

in the externalities, how to make things better. So I invested in this company called OpenWeb that manages the comment section of content where things get really ugly usually. So I liked investing in sort of trying to clean up the digital exhaust. And I invested in Neva, the subscription search engine, thinking that if people pay for the returns, the underlying company won't have incentive to just put stuff that gets clicks in front of you, which often tends to be more polarizing and incendiary, et cetera. It never got traction. Google has such an amazing search engine, such amazing IP, and it's free that we were never able to get any real traction. I got my money back

because the team is so talented there that it was essentially an aqua hire and Snowflake acquired the company. And we didn't make any money, but we got our money back, which when you think about it is an incredible venture capital investment. If you can take a big cut at the ball and hope that you hit it out of the park and take on Google, that'd be great if that happens. But if it doesn't and you get your money back, it's kind of like getting a lottery ticket where, OK, maybe you didn't hit the jackpot or you didn't win Super Bowl or whatever it's called. I don't play the lottery. Anyways, back to search. So Bezos has invested in perplexity. Perplexity's founders say the advantage over Google

is that they use AI to give consumers direct answers rather than links, saying that if you can directly answer somebody's question, nobody needs those 10 blue links. How is AI impacting SEO and website traffic? There are AI-powered tools that help businesses target relevant keywords and create customized content that connects business with the intended audience. So I have some thoughts

around search. I'm not sure it directly answers your question, but I'll provide them anyways. One, choice is a tax. It's not a benefit. It's a tax. The reason why TikTok is so iconic, revolutionary, is that rather than having 400 channels and trying to figure out if you want to watch ESPN 8 or A&E 3 or the Crime Channel, whatever it is, or spend 10 minutes a day, which is what the average American household spends deciding what to watch on Netflix, TikTok says, we know you so well, we use AI and signal liquidity to basically put together one channel, but you're going to love this channel. Trust us on it. And they're right. I could watch TikTok for hours. Anyways, the problem with search is that there are too many choices and those choices have been weaponized by an

insatiable dragon called Google shareholders that want more and more growth. Remember back in the good old days when the top two ads were shaded dark blue, so you knew this ad was paid for? Well, they did away with all of those. So now basically in certain searches, the first three, four pages, the first 20, 50, 100 search returns are not the best place to take you. It's a place they can further monetize. And so selection or choice has become a tax for consumers. And what AI, I believe its core, kind of its core value proposition is that rather than giving you 50 answers that might be 0% good or 99% good, but you have to sort through them and do diligence on your own and start clicking on multiple links, we're going to

take a stab at giving you one answer that we think is 70 to 80% right. If you think about it, AI is especially retail, and that is has a merchant called an LLM picking out not the 100 best toasters, but the one best toaster. And it said, we are so confident that we can merchandise across every piece of content that's been produced out there and assemble it in a way such that it gives you the best toaster, and you can have confidence that this is the right answer. I think that is incredibly powerful. What is also interesting here is that overnight Google looked flat-footed. They just, OpenAI came out, basically what felt like skyrocketed to $9 billion of value, and overnight it looked as if Google's management team was flat-footed. Why? Literally,

case study number one in next year's first year business strategy class of the innovators dilemma. What is that? And that is a company makes so much money in their core business that they purposely ignore innovations because they don't want to get rid of the iPod, which was making a shit ton of money for Apple. But guess what? Apple read the memo and probably took Clay Christensen's class and said, we're not going to, we need to cannibalize our own business. And so they turned the iPod into an icon, an app on your iPhone, and they cannibalized themselves, realizing if they didn't do it to themselves, someone else would do it. Google search is the biggest tollbooth in history, $150 billion tollbooth, unbelievable margins. And despite the fact that they had invented much of the original IP around AI,

they didn't have an AI product to speak of. And someone else came in and said, we don't mind disrupting ourselves because there's nothing to disrupt. And they build something that is disruptive to the search community. Now, having said that, one of my stock picks for 2024 is, wait for it, Alphabet. Because it strikes me that the technologies, the LLMs here, are going to be very challenged to maintain any sort of tangible differentiation. Why? Because an AI will go into an LLM and say, what's different here, and be able to reverse engineer it fairly quickly. If I sound like I don't really know what I'm talking about, trust your instincts,

but it makes sense to me and I'm going to go with it. So what does that mean? What is the point of differentiation between anthropic, between open AI? Sure, it's technology. Sure, it's the amount of capital they raise, but also very much so, maybe even rising to the top like foam, if foam is content, is content. And that is whoever has access or proprietary access to content that is more valuable to crawl and can pull together that one better toaster, if you will, the best materials, if you will, for the toaster, I think will win or establish some form of differentiation. So what does that mean? I would argue that the company with the best content as it relates to generative AI is, in fact, Alphabet. Specifically, they have your Gmail, they have your calendar, they have your YouTube search preferences. I think that they will be able to elegantly figure out a way to make your content more efficient and more entertaining. Why? Okay. On my calendar, it says I am planning to go to TED. I've been asked to speak at TED because I'm kind of a big deal in Vancouver. Shouldn't the AI in Gmail be reaching out to Google Travel and figuring out the best, looking at my preferences, looking at the dates I want to go, and then the AI speaks to British Airways and says, this is his travel pattern, his history, what seat he likes,

and send me an update via Gmail, which they already own, saying, here's an alert, or maybe send it to my Android phone or my iPhone that says, okay, we see you're going to TED. Here are three options. This is the airline, the class of service. And also, we've also, here's three great hotel options. Or, Scott, every time you are in, we've looked at your calendar, and the AI has figured out within about a millionth of a second that every time you are in Florida over the holidays, you like to get your teeth cleaned at Spodak Dental. Okay, okay. Our AI is going to reach out to theirs. We've talked about this before. Alphabet has, in my view, the richest content for informing their generative AI. And as a result,

one of my stock picks for 2024 is, in fact, Alphabet. Why? If the first stage of the AI wars was Star Wars, I think this year is going to be the Empire Strikes Back. And I think the Empire is Alphabet. Thanks for the question. Question number two. Hello, Prof G. Thanks for taking my question. I'm a big fan and play your podcasts during long road trips with my sons as I drive them back to their colleges. We all learned together from your insights, so thank you for that. So here's my question. I'm in my early 50s, and I've been fortunate to have a rewarding marketing career working for companies like Procter & Gamble, Twitter, and Snapchat. As I reflect during my middle age, I've been thinking of the next step in actually teaching marketing. This has often been stoked with friends and family saying you'd make a great

marketing instructor. So I've dipped my toes in the water as guest speakers to various colleges and universities, and I've enjoyed this experience and have received positive feedback from profs and students. So in this latter stage of my career, I've been thinking of being an adjunct professor, but have lots of questions. Well, who better to ask than Prof G himself? So I would appreciate your thoughts on careers as adjunct professors. What are the positives? What are the drawbacks? Is it worth it? This wouldn't be to get rich, but more for the experience to give back to the next generation while making a little bit of money.

Thanks, Prof G. What a great question from Anonymous, and congratulations on your career. You made the jump to Lightspeed going from a CPG company, which is an amazing company, Procter & Gamble. I love P&G. They're very paternal. They're good people. They're innovative. But a lot of people wanted to make the jump to kind of the Pepsi generation of our economy and that it was these new economy platforms.

And you were able to do that. And I bet a lot of your colleagues were jealous that you got to Twitter and Snapchat. Mostly the latter, mostly Snapchat. But anyways, it sounds like you're a talented executive who's been able to kind of reinvent yourself or at least update your skills. Okay, adjunct. So I'll give you my, as always, I really enjoy talking about me, but I think there's some learning here. In 1999, I decided I wanted to change my life. I was married, living in San Francisco, working in tech, and I didn't like any of those things. So what did I do? I got divorced.

I moved to New York. I quit my job or I sold my company or put it on a track. It was a firm called Profit Brand Strategy to be sold. Moved to New York and joined the faculty. I always wanted to be in New York. Couldn't stand San Francisco. Like during the day, dealing with venture capitalists who, in my opinion, were the most rapacious small people I'd ever met in my life. And then at night, they'd all pretend to be saving the whales. I just found the whole thing so disingenuous. Whereas New York, Nueva York, was much more honest. We're here to party and we're here to make money. And I just like the honesty and the rawness of Manhattan. I thought, these are my people, plus bars are open till 4 a.m. Got back to New York and I thought, okay, what am I going to do? I, like you, wanted to teach. I was younger than you. I think I was about, when I moved there, I was about 33, 34. And I called my marketing professor, who is now the department chair at NYU, Russ Weiner, who is one of the better professors at the Haas School. And I said, I would really like to teach. And he said, okay, we'll come in and lecture a couple of times, which I did. And they let me be an adjunct. And I taught brand strategy. I taught the course that David Ocker taught me

that inspired me to go on and teach brand strategy. My first year, I made $12,000. I got paid $12,000 to teach brand strategy in whatever it was, 2000. And the students rank you or score you on a scale of zero to seven. And I got a 4.9, which is really piss poor. And Russ called me and said, you're right on the cusp here. And unless you get your score up next semester, we can't have you back. And so I really poured over the comments, tried to learn from them, and slowly but surely worked my way up over the course of 22 or 23 years to a position where my course is one of the most popular courses at Stern. I've taught about 5,500 students, and slowly but surely was in a position to demand greater compensation in several formats.

One, becoming a full-time faculty, which gave you greater benefits. I got housing. I got basically a free three-bedroom in Soho, which is probably, when you do the math, like a $200,000 benefit. And by the time I left, or at least I stepped down because I started returning all my compensation to NYU Stern once I made some money, C above virtue signaling, I was making about 200 grand a year. Now, so what you want to do is you want to, you've done it already. You want to do some guest speaking, and then you want to pitch some universities local to you on you being an adjunct.

How do you do that? You come up with a syllabus and an outline, and then you really focus on it. You really try and do really well your first couple of classes. You either have it or you don't. You can learn. You can iterate to a certain amount, but some people are just naturally good at it. Some people aren't. Once you get good at it, it's all about, it's a business,

butts in seats. If you have strong enrollments, you'll have leverage with your, you'll have leverage with the host institution and be able to demand more compensation. And the way I demanded that was every three or five years, I would do a market check. I would reach out to the head of marketing at Wharton or at Columbia, and I would say, I'm exploring opportunities. I taught for one semester at Cornell's tech campus, and they would give me a sense for what I was worth in the eyes of strangers. And unfortunately, in corporate America and in academia, you are more attractive to strangers. And that is in order to seduce you, if they think you're worth seducing, they will give you a step change up in compensation. And then what I would do, and I don't think there's anything wrong with

this, I would go back to NYU, the powers of NYU, and I'd say, I really like it here. I don't want to leave. This is my market value. Can you match it? And pretty much every time they would match it. And so that was a means of sort of getting the compensation of switching without actually switching. money in academia was I used it as a platform for writing books, starting an analytics company or business intelligence company called L2, and to develop a very lucrative sideline business in media, specifically speaking, and I mentioned newsletters and podcasts. So it was an incredible

platform. And what a university is, in my view, it's a good living for tenured professors. It can be a great living if you use it as a platform. The top 10 or 15 professors at any business school are making seven figures plus, but they're making it because they use the university as a platform. They either start advising hedge funds or they start their own hedge fund or they start a small consulting firm or they start writing books. So long-winded way of saying for me, it has been outstanding. It is the worst paying job in the world for the first five years, but if you leverage the platform, it can be the best paying job in terms of return on time, in terms of your ability to do something you're really interested in, and also the psychic return

you get. I think it's wonderful that you decided to get involved in academia. It has been hugely rewarding for me. I think you're on the right track now. Just put together a syllabus and go get assigned a class at a university. Thanks very much. We have one quick break before our final question. Stay with us. Welcome back. Question number three. I almost left teaching. I was in a position that I did not have excitement for anymore. I was bored. I felt unchallenged. I was ready for something new. Now, thankfully, something opened up at our high school, and I now teach high school business, and I really do like it. It's given me a renewed focus on education. I do feel I'm making an impact all over again, but I can't shake the feeling that this too shall pass, and I'll be ready to move on in a few years. You started many businesses throughout your life, one after another, and I ask, how do you balance seeking more and

embracing contentment? I have a good job. It pays well compared to a lot of teacher salaries across the country. I have about nine weeks off in the summer, good benefits, a pension, but I'm still thinking, what's next for me? Is there more for me or do I stay here? Do I stay in this position? How do you balance pursuing more and or being content with what you have? Thanks again for everything you do.

Oh, Ken, I mean, first of all, a lot of teaching questions. Ken, my brother, the balance between seeking things and taking risks and contentment, I mean, this is sort of, you know, this is kind of Marcus Aurelius stoicism. I mean, there's a lot here. And my favorite philosopher, Sheryl Crow, said, it's not getting what you want, but wanting what you got. Okay, so it sounds to me like you have a pretty rewarding career and you've been able to find additional challenges and reward in the same

organization by just switching content. And I don't see why you wouldn't be able to consistently evolve. What I would say though, is that I think it's always good to kind of say in five years, what would I like to be doing? Where would I like to be? And then reverse engineer back what steps are required to get there. Right. So in five years, where would I like to be professionally, economically, physically, from a relationship standpoint, and then kind of reverse engineer back to now around, all right, what are the steps? Where do I need to start? And it sounds to me like if you are doing well there, what I don't think you want to do, I wouldn't leave that job until you definitely have something better that you're really excited about. Why? You have the opportunity to conduct due diligence on another sector or another job. With nine weeks off in the summer, you may decide to have, and I don't like side hustles. I think people shouldn't have side hustles. I think they should focus on their main hustle and take that time they were spending on a side hustle and double down and give 110% to their main hustle. But anyways, having said that,

if you decide I'm really interested in entrepreneurship and I want to buy a carpet cleaning company, there's a ton of boomers who are retiring, who have small businesses, I'm making this all up. But if you decide, oh, I want to be a writer, I want to write movies, or I'd like to be on Broadway, you have enough time in the summer at least to conduct some diligence around something. And I would imagine your schedule is flexible enough that you can try before you buy, that you can date before you marry another career. Because the thing about education is that typically it's not a meritocracy. And that's bad in the sense that really talented young teachers

don't make as much as older teachers who may not be as talented. Now, having said that, they reward tenure. And school districts are having such a tough time holding onto teachers that you're starting to see time-based bonuses. And it sounds like you may be in one of those districts that rewards tenure. And typically the benefits are pretty good. There's usually a good retirement package at the end of the rainbow, if you will. And also, if you enjoy what you're doing, that means, you know, that counts for a lot. So what I would say is the following. I don't have any blinding insight here, but if you have been able to find to stay hungry at your school and you're doing well, then what I would suggest is there may be no reason why you won't continue to stay hungry there. And before you

leave, do a little bit of try before you buy and spend those summer weeks doing something else before you give up what sounds like a great career. In terms of the larger existential question around contentment, oh my gosh, part of the reason we've evolved as a species is that we're very competitive and quite frankly, never satisfied. You know, people don't, Einstein didn't decide, okay, I'm satisfied. I've invented, I've provided enough insight.

I don't have any more expectations on myself. I never thought I'd be this economically secure. And every day I wake up financially insecure and I want more. I never thought I'd, you know, have an opportunity to teach. And now I'm bragging, but I'm still incredibly, I don't know, the word isn't unsatisfied, but it's like vampires. Supposedly vampires, when they have sex, can never actually climax. I feel like smart, ambitious people never can actually find true contentment. That's the point, is that we stay hungry. I'd like to think that we find that contentment at some point in relationships and later on in life, but I think that's a matter of perspective and wisdom, which, quite frankly, in your 30s, you probably don't have. Anyways, a lot here. Let me just wrap up.

Let me just put a bow on it, Ken from Undisclosed. It sounds like you have a great job. It sounds like you're good at it, and you're in an industry that rewards tenure. So assume you're going to be able to progress there. Imagine maybe being an administration or a vice principal or a principal. Think if, in fact, you can use your flexibility for a side hustle. And I would not leave that job until you're pretty certain you have something that's a fantastic opportunity. Thanks for the good work you do, Ken.

We need thoughtful, talented people like you shaping tomorrow's youth. That's all for this episode. Again, if you'd like to submit a question, please email a voice recording to officehours at propgmedia.com. This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer, and Drew Burrows is our technical director. Thank you for listening to the PropGpod from the Vox Media Podcast Network.

We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly market show, 2024, bitches!