The Prof G Pod with Scott Galloway - Office Hours: The Tesla Phone, Apple’s Enterprise Play, and Degrees vs. Bootcamps
Episode Date: April 4, 2022Scott answers a question on whether Elon Musk could capture a competitive share of the smartphone market with a Tesla phone. He then shares his thoughts on why Apple is moving into the B2B space, and ...offers advice to someone deciding between pursuing a traditional college degree or a bootcamp certification. Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices
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Welcome to the PropGPod'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. Whatever else is in there, you weirdo, you weirdo. By the way,
by the way, if you think you're having strange thoughts, get this. So is everyone else. I hope
that makes you feel better. If you'd like to submit a question, please visit officehours.profgmedia.com.
Again, that's officehours.profgmedia.com. Question number one. Hi, Scott.
This is Warren, an English guy calling you
from the South of the Netherlands.
I recently completed and enjoyed your brand sprint.
Thank you.
And it got me thinking about Tesla.
You often remark that if Tim Cook
was pulling a silk sheet off an Apple car,
it would immediately add billions to the Apple share price.
And it makes sense.
I think I would join the waiting list.
I think having an Apple brand would be a mark of quality,
would say good things about me.
I get it.
But I also wondered what would happen the other way around.
Do we say that it would have a big impact on Tesla?
But what if Elon Musk was to announce a Tesla handset?
We know he's a visionary.
We know he's a brilliant engineer.
We know he gets technology.
We know he knows hardware and software.
So if Elon were to do this,
do you think that this would make Tesla a major competitor to Apple? Warren from the south of the Netherlands, you sound like the kind of guy I need
to hang out with. You sound very balanced and very happy and just sort of mellow. I just feel like
everything is going to be all right listening to you speak. In the south of the Netherlands,
that sounds like one of those places where everyone is really happy, except in the winter, except in the winter. So there's been some speculation about a Tesla phone
called the Model Pi, I think, with suggestions that it could potentially operate as a car key
and then back into sort of a communication device. And they could also mine crypto and
charge itself with solar power. Tesla, if you think about it, has sort of that Apple innovation design, California, I don't know, elegant feel to it.
Tesla and Apple are arguably, I think they're sort of seen as not siblings, but cousins of that same type of brand power.
And again, I would argue no company has added the brand equity over the last
decade of Tesla. The concept is not out of the realm of possibility, as Musk's other projects
could lend themselves to a phone, specifically high-speed satellite internet capabilities
and infrastructure for a phone. Musk tweeted in January that his company, SpaceX,
had roughly 1,500 active Starlink satellites in Earth's orbit.
So that would be, if you will, another big theme of ours,
and that is going vertical, controlling the pipes,
or in this case, controlling the satellites.
According to Business Insider,
Musk wants to send 30,000 more satellites into space,
a move NASA has raised objections to.
By the way, if you're going to invest in space, don't invest in any front consumer-facing objects.
Invest in the picks and the shovels, the people selling the O-rings or the
launch vehicles or the composites or what have you, or the launch pads. You get what I'm saying.
As far as competition with Apple goes, the Tesla phone would have a lot of ground to make up. And
this is why I don't think it's going to happen. According to Gartner, Apple represented 17% of global smartphone sales last year,
and it sold around a quarter of a billion units in 2021. Also, there's just no getting around it.
A smartphone has been the object of so much innovation and IP and patents. I think that Android, as an operating system
supported by the unparalleled investment in hardware of Samsung
and name the other top 50 handset makers that operate in Android,
and then you look at the amount of creativity and investment
that's gone into iPhone,
which is the most profitable product in history,
it feels to me to be almost, I don't
want to say insurmountable, because the moment you think that, something comes in with an elegant
solution. I can see almost like a dumb appliance, maybe, something that does just a couple things
really well, and it's really cheap. And maybe you get it as a function of owning a Tesla,
and they become a tradable asset, or they start with, I don't know, something to do with crypto.
I can see, you know, they've done flamethrowers, they've with, I don't know, something to do with crypto. I can see,
you know, they've done flamethrowers, they've done tequila, and everyone, this brand has such a fanatical following that it gets a decent amount of adoption. But putting together a
flamethrower or brewing tequila or distilling tequila, I would argue, is infinitely less
complicated than trying to put together a communications or a handset. I would argue
the handset is probably, I mean, it's been a little bit reminiscent of the space race
between the Soviets and the U.S. And that is, it has been all hands on deck. The prize is just so
huge that you've just seen so much capital gone. And the moats feel so broad to me that I don't
think it's likely that Tesla could go toe-to-toe. He's threatening to
start a social media network saying that Twitter is engaged in censorship, which I don't get.
It's like exactly what does Elon Musk want to do that he can't do on Twitter? He can commit
blatant market manipulation. He can call an innocent man a pedophile. What is it that he
can't do on Twitter
that he wants to do somewhere else?
I don't get that at all.
So in sum, anything that has a Tesla logo on it
gets a decent amount of adoption.
But I would argue there's probably other places
they want to go first before they go into
what is the most competitive IP robust product
in history, maybe.
And that is our handsets.
Thanks for the question.
South of the Netherlands.
Good for you.
Next question.
Hey, Prof G.
Josh calling from Salt Lake City, Utah.
And I know it's hard for you to believe,
but there are some cool non-Mormon people here.
But to my question,
I work in B2B SaaS,
and I noticed that Apple recently announced
that they are looking to move into the B2B space. It appears they're looking to compete against Google and their
G Suite offering as well as Microsoft and the whole Office suite there via their own competing
product. And I know you've been really complimentary in the past of Microsoft Office and what that kind
of B2B offering means to the business value of Microsoft.
So I'd be really curious to hear your perspective on how you think Apple is going to capture market share,
what percentage they might even get, and how this is going to kind of affect the B2B space by having a really interesting new player like Apple coming onto the scene.
Thanks, Prof G.
Thank you. Good for you living in Salt Lake.
I think Salt Lake is one of those cities that is, I don't want to say it's underrated, but I think it's one of the nicest
qualities of life of any city in America, especially if you enjoy winter sports. And by the
way, I did know that there were cool non-Mormons in Salt Lake. There are also a ton of cool Mormons.
I fucking love Mormons. I grew up with Mormons. My mom is Jewish. I was raised, not really anything,
but if I had any sort of affinity, I was Jewish. True story, I went to Hebrew school and was kicked
out in the second week for buying bubble yum, sneaking out of the Hebrew school to buy bubble
yum. And then I sold it for, I bought it for 10 cents and then I sold each piece for 5 cents,
pocketing a handy 10 cent profit, including one it for 10 cents, and then I sold each piece for five cents, pocketing a handy 10
cent profit, including one piece for the dog. That is entrepreneurship. Anyways, was never
bar mitzvahed. I don't know where I'm going with this. My religious roots. Oh, here I am. Where was
I? Here I am. I hung out with my best friend in junior high and high school was a Mormon kid named Brett Jarvis. And his family
just couldn't have been more wonderful to me. I used to have dinner over there probably two or
three nights a week. They would invite me to their Monday nights, which I think they loosely call
family night, but Monday night is just, you are with your family. And I think part of the reason
maybe I didn't engage or get in a lot of trouble in high school was because you rise or fall to the level of your peer group.
I think your peer group is more important than your parents, maybe not as important as your economic circumstance, but it's very important for a teenager.
And my peer group was a kid who was into sports, into family, didn't curse, didn't drink, didn't smoke pot,
was a really nice kid, and ended up going to Stanford. And that's just a decent person to
have as your peer group. And I have a huge amount of affection, and I think that there's a cartoon
made of Latter-day Saints. I realize this is not what you asked, but I just found them to be
wonderful, accepting, loving people, and I feel a great deal of affection for the church.
Anyway, anyway, not your question.
Apple, they're definitely going into the enterprise market.
And why?
Because the law of big numbers is catching up to Apple, and that is to maintain their
stock's trajectory, which is no easy task when it trades at 35 times earnings when it
traditionally trades at 15.
They got to find new
markets. And I think that new market is probably going to be a car. But as you said, enterprise
seems more obvious. And they have decided, or they are going into it, Apple is in fact entering the
enterprise market, which will bring its hardware, software, services, and subscriptions to the
workplace. This spring, it's planning to launch something called Business Essentials,
a subscription-based device management system catered towards small business.
And I think that's the place to go to them.
Small businesses tend to be more creative in the arts,
and those are the people who are willing to pay a really big premium.
I've had nine small businesses.
I think conservatively I've spent $5 or $8 million on Apple products
because as a small business, you like to think of yourself as creative.
So the value proposition of the Business Essentials program is it's supposed to streamline the onboarding process and manage pre-installed apps and security settings for organizations.
Love it.
If small businesses implement this system during high growth periods, Apple could effectively capture them within its
walled garden, right?
And give those businesses more reason to continue buying products and services as they expand.
Apple made a huge investment in education.
If they get people hooked on the crack of iOS, it would help.
So look, enterprise is an obvious next place for them.
I still think they're going into cars.
And most recently, and I thought one of the more exciting things that we've been predicting for a long time is they've announced they're going to full subscription with their core hardware products, which we've been talking about forever.
Biggest mistake we make in marketing is assuming the consumers want more choice.
No, they don't.
They want to be more confident in the choices presented.
Specifically, they want a great brand like Apple not to go to one-click ordering, but to go to zero-click ordering.
And that is figure out who I am, figure out what I'm into. I'm fairly price insensitive. I absolutely love my iPhone. I love my AirPods. I have kids. Okay, ship me to learn about different messaging apps or programming in the Apple Store and the Boca Mall,
invite my kid to come to a computer building.
My father-in-law is actually building a computer with my 11-year-old, and I am so excited, and I wish it's the kind of thing I could do, but I don't have those skills.
But if Apple had days that it said, hey, premium subscription customers come
and we'll build a simple computer with your son. I don't know what made me think of that.
Keep in mind, their pool right now is the billion wealthiest people on the planet. That's what iOS
is. iOS is the signal, the identifier, the blue check for the billion wealthiest people on the
planet. So going into enterprise is a great move.
I think the way they're going to maintain their stock trajectory is by going from zero to 24%
of the revenue via subscription, which they've done.
And I think they're going to move it to closer to 40
with this new announcement of their hardware
being incorporated into their subscription plan.
Anyways, thank you for the question.
You non-Mormon cool guy in Salt Lake City.
Love the Mormons, love the church,
the Latter-day Saints, they're not so latter.
We have one quick break before our final question.
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Welcome back. Question number three.
Hi, Professor Galloway. My name is Abby, and I'm a high school English teacher in Roanoke, Virginia.
I'm considering a career change thanks to the ever-increasing pressure from administration
and COVID concerns in education and the seeming lack of sustainability.
I've been looking at data science and wondered what your opinion was on the ROI of a boot
camp-style program versus a degree from a state university versus a degree from a more
recognized program such as NYU, Rice, or UVA.
Obviously, the cost of the latter is much higher
from a purely cash outflow perspective,
but I wondered if you felt the benefit
in job accessibility or job choice in the end
would be worth that expense.
Thanks for any advice you might have.
Abby from Roanoke, Virginia, who's an English teacher.
I mean, could you be any more likable? Abby from Roanoke, Virginia, who's an English teacher. I mean, could you be any more likable? Abby from Roanoke, Virginia, who's an English teacher. You sound like a Hallmark Channel movie. Anyways, Abby, it's situational. These are really important decisions. And what you want to do is you want to get a kitchen cabinet of two or three people who understand schools, understand you, who are smart, who have really good judgment, who have gone to
school or are in jobs similar to the ones that you might be pursuing and get them to coach you
and counsel you based on your opportunity set. And that is, if you get into Wharton,
it's worth the money. If you have a real aptitude for data and analytics, you can go to a boot camp
for three or six months and already
have kind of three or four interviews lined up, and it's only going to cost four or six grand,
yeah, hit the bid there. I say let the market decide. And that is, it sounds to me like you're
early in the process. So what I would suggest is one, take the GMAT, two, apply to some top
20 business schools. I do think that the value kind of gets somewhat suspect
or the return on investment
gets suspect once you go outside
of the top 20.
I don't think you should get a MBA
or spend that kind of money
for a program that's number 80.
I think business school
is very much about the certification
as much as it is
about the actual education.
So there's just no getting around it.
The brand really matters in the quality of the instruction, the quality of the networking,
the quality of the job opportunities. So take the GMAT, apply to some top 20 schools, see if you get
in. I mean, you're at a central casting. They're going to love your background. Don't think that
being an English teacher from Roanoke, Virginia is going to hurt you. No, it's going to help you.
They love that. So if you do well in the GMAT and you get into a top 20 school, then that makes a more interesting
decision. And then at the same time, track down and find out about some of these boot camp programs
and specifically start to look for a job where you think that boot camp would come in handy.
And in terms of a state university, that's just a function of get into the best schools you can and then play them off each other in terms of price. So you're in Virginia,
say you get into UVA, say you get into Darden, which is an incredible, probably a top 10,
if not a top 15 school, arguably also, in my opinion, the most beautiful campus in America,
at least from an architectural viewpoint. If you get into UVA, I mean, that's hard to turn down,
especially if you're younger. And I mean, that's hard to turn down, especially if you're younger.
And I mean, that would just be an amazing two years for you. And then what you want to do is
ideally get into more than one program so you can say, well, I got this financial aid package from
this group. That's one thing kids don't do enough of, is once you're in, they want you. First off,
getting into one school is infinitely better than getting into zero. But getting into two starts to
give you some leverage to call, say, Duke, which has probably the second most beautiful campus in the nation, and say to
Fuqua, I got into UVA. By the way, they hate each other. They see each other as their primary
competition. And for a while, Darden was giving massive scholarships to anyone who also got into
Duke because they saw that as their primary competitor and they wanted to increase their
yield against people who also got accepted to Duke. Anyways, it's very
difficult to say, here's the algorithm. It's situational based on how much money you have,
your age, your previous work experience. What would you be leaving? Are you killing it somewhere
at a job right now? What kind of access to what kind of boot camps do you have? Do you have
certain financial considerations? Do you have certain things holding you in Roanoke? Do you have a sick parent you couldn't leave if you want to?
And you'd have to do an online program, which I'm not a big fan of, if you're going to spend a ton of money.
Unless it's Section 4, which is only $1,000 for the same equivalent program as many of these executive education programs that charge you $30,000.
Yeah, that's going to last.
Jesus Christ, that is so obnoxious how much money they charge for these, you know, chief digital officer intensive training hypermodule programs.
That is literally pigs at a trough arbitraging their business school brands.
Anyways, let's look at your opportunities.
You don't have a decision to make until you have specific offers or specific programs you have in mind.
But I do extend the offer to you to send me an email.
And once you have more visibility,
and maybe you already have that visibility
into your options,
we can have a more thoughtful conversation.
An English teacher in Roanoke, Virginia,
you deserve good things.
Thank you for your great work.
And I'll look forward to hearing from you.
That's all for
this episode. Again, if you'd like to submit a question, please submit a voice recording by
visiting officehours.proptumedia.com. Our producers are Caroline Chaverin and Drew Burrows.
Claire Miller is our associate producer.
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