SAO PAULO – “We are on the threshold of the third great change in the modern economy, and this is dispersion”. The phrase is from Scott Galloway, writer and professor of marketing at New York University’s Stern School of Business (NYU). This Tuesday (24), he participated in the panel “2022 Forecasts: learning after Coronavirus”, at the 11th edition of Expert XP. Held every year by XP, the event is considered one of the largest investment festivals in the world.
He explains the “dispersion” is the sequel to globalization and digitization. The concept represents the disruption of the means of distributing products and services, with the burning of stages in the supply chain. In this model, the supplier increases its margin and the user receives what he bought with less interference or a lower price.
As examples, Galloway cites the growth in the use of streaming services, replacing traditional cinemas and media, and the holding of videoconferences instead of face-to-face meetings.
For the professor, the sector that should be most influenced by this change in the near future is health. He points out that people went to the doctor less during the pandemic. “Online consultations have exploded,” he said. The advance of telemedicine, according to Galloway, was observed not only in the United States, but in Brazil as well – and it is here to stay.
Another segment that should be greatly affected is education, with the expansion of options for distance learning courses on the internet. Galloway cites as an example of big business an online course he teaches at NYU, which costs $7,000 per student. “There are US$ 1.9 million in total”, he stated, adding that the rate of return reaches 98%.
The writer informs that such a rate of return is only equivalent to that obtained from sales of a drug for the genetic treatment of a very rare and deadly disease, called Zolgensma, which costs US$ 2.1 million to treat.
Commenting on a question by Artur Wichmann, a partner at XP Inc. and XP’s Private CIO, Galloway said that today there is a focus on higher education in the US. There are fewer and fewer places available at universities and, at the same time, more expensive.
The current objective of the industry, in his view, is no longer to create relevant opportunities for normal people, but to pinch a minority to transform into billionaires. “We (professors) are no longer public servants, but luxury items,” he declared.
In the area of media, he commented on the dispersion caused by platforms such as YouTube and TikTok, but pointed out that only two segments in this area have made significant progress: streaming and video games.
He also highlights the advance of fintechs, another trend that should remain. “The market loves these disruptions,” he noted. Galloway recalls that in a short time, payment platforms like PayPal occupied much of the space that used to belong to traditional financial institutions.
Also in the financial sector, the professor cites the advance of cryptocurrencies and greater inclusion brought about by digital financial tools. He says the number of blacks in the US financial market is now similar to that of whites because of these innovations.
At the same time, Galloway warns that dispersion can increase segregation, as physical separation tends to generate less contact with different people, reduce empathy with others and, in theory, increase resentment.
Risk of concentration in “big techs”
The professor also expresses concern about the concentration of the market in the hands of four American “big techs”: Apple, Amazon, Google and Facebook. He points out that these companies are bigger than the economies of many countries. Apple alone, for example, is bigger than the UK’s top 100 companies.
For Galloway, the concentration could stifle possible competition, especially from smaller companies, resulting in reduced financing for small and medium businesses, less innovation, less job creation and reduced tax collection.
The professor adds that these companies are able to make strong progress in sectors with great business potential in the new economy. He claims that Amazon, for example, has the structure to head into the health area, with products and services. “They know everything about you,” he commented.
In the case of Apple, the writer believes that the company could enter the automotive sector and would not be surprised if in the coming months there is an advertisement involving a car with the company’s logo.
On Google and Facebook, Galloway points out that the two companies have the cash to buy giants like Boeing and Airbus, if they want, and at the same time they are preferred channels for recruiting extremists.
Responding to a question from Fernando Ferreira, chief strategist at XP, Galloway said he believed that eventually big techs will be dismembered in the US by regulatory agencies, and added that this type of intervention is not necessarily negative.
Galloway again cited the example of PayPal, which was once part of Ebay, and is now an even more valuable company. In his opinion, the dismemberment could oxygenate the business.
The professor points out another worrying trend, which he calls “virgin homicides”, or “virgin homicides”, in which exclusion mechanisms result in a contingent of young men without education, without work, without money and without affective relationships – the type of most dangerous person”. This creates the potential for violence and uprisings. The same logic does not apply to women.
Better or worse?
He says it’s hard to know whether the post-pandemic scenario will be positive or negative – it could be either “the best” or “the worst” in a long time. On the one hand, Covid-19 exacerbated problems such as the denial of science and lack of empathy. On the other hand, history shows that crises can be followed by periods of frank development, as occurred in Europe after World War II. “There are seeds that only germinate after a fire”, he compared.
The professor cited some negative trends in progress, such as greater concentration of wealth and widening wage differentials within companies. “Capital is kicking the ass of work,” he observed. He highlights the good performance of the capital market in contrast to stagnant wages.
In the current picture, Galloway still speaks of “profound opportunity” using as a metaphor a car race, in which whoever stays on the track beats whoever is stopped in the pits. In this sense, companies that are operating in a well-oiled and well-positioned manner are able to take advantage of several opportunities while others are at a standstill.
The professor also tried to demystify guidance given by management and career gurus so that people “follow their passions” to succeed, by answering a question from Rachel Sá, chief economist at Rico. “Whoever says that is already rich,” he said. “Find your talent, not your passion.”
He joked saying that no one grows in love with Tax Law, but someone can become a great professional in this area. The passions, in his opinion, can be left for the weekends.
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