Prof G on AI eating itself, social media rage & the end of the CMO

27:51And most of the kids, this is proximity bias. Most of the kids in my class, if I ask them where they expect to be, they expect to be in the top 1 % economically by the time they're 35. and then they use the word balance which cracks me up i'm like i'm like who expects to be making you know all right do you expect that balance in your life yes i'm like your parents rich no okay give up the term balance if you expect to be in the top one percent anyways the tip the pro tip i give the people who are i was just an economic animal i didn't want to save the whales i didn't want to be a good person i wanted to be economically secure full stop that's all i wanted and one of the keys around that in terms of the return on your investment what do you have when you're young you have an abundance of human capital not a lot of financial capital so the key is where do you apply your finite human capital because that's the capital you have and the reality is the less sexy an industry the greater the return on your capital i mean we're just talking about the creative industry you have to be in the top 1%, if not the top 0.1%, you have to be in the top 1%.

29:00There are 180 ,000 SAG-AFTRA union members. That's the union for actors and directors and creatives. Last year, 83 % didn't qualify for health insurance because they didn't make$23 ,000. And by the way, it's not easy to get into SAG-AFTRA. You have to be talented. This means you've done something worthwhile that expresses your creative chops. And basically it has almost an 80 % unemployment rate, right? You want to be in modeling, sports, nightclubs, hospitality, fashion, anything that sounds cool, fine. I don't want to crush your dreams. But if you aren't getting bright, bright green signals that you might be in the top 10, 1.1%, go do something that sounds much less romantic.

29:43Because the worst advice given to people at NYU. At NYU, we invite two types of speakers. One, really impressive credentialed people or billionaires. We've just decided once you have three commas around your net worth, you have insight into life. And they always end the session with the worst advice you can give to a young person. Follow your passion. Anyone telling you to follow your passion is already rich. And the guy telling you to follow your passion made his billions in iron ore smelting. here's what you do when you're young you want to find out what you're good at and what you could be amazing at right and ideally in an industry that has a 90 plus percent employment rate and 95 percent of industries have a 90 plus percent employment rate and if you go into those industries and you're really outstanding and you have the skills and the talent no one no kid dreams of being a tax lawyer the top 10 percent of tax lawyers probably make over a million bucks a year.

30:40The top 1 % fly private and have a much broader selection set of mates than they deserve because they went into something that didn't have an overabundance of human capital such that every tax lawyer is employed. Businesses I invest in, a friend of mine's opening a members-only club. I don't know if you've been to New York. These members clubs are opening every two weeks. We're going very London. He's opening a members club for creatives in the music industry. Sounds so cool. I'm like, I want to be a member. No way I'll invest. Another friend of mine is starting a software company to help health care maintenance workers schedule their shifts.

31:15I want to put a gun in my mouth just talking about it. I'll write him a check. I'll write him a check. The more boring and unappealing a business sounds, the more money there is in it. Most businesses have an infant mortality rate of somewhere between 70 % and 80%, meaning somewhere between three years they're gone. They're out of business. The business in the U.S. that has the highest survival rate is senior care because people don't want to be around old people. Oh, I can't wait to start a business where I'm taking care of people with memory loss and I have to change their catheters and deal with expectant, stressed-out kids and insurance claims.

31:55I mean, it's a tough business. There's nothing romantic about that business. I mean, you could argue giving people the dignity at the end of their life is incredibly rewarding. There is nothing romantic or sexy about that business at all. 93 % survival rate because people don't want to go into it. Now, you've been an entrepreneur many years. What can people in corporate life learn from being an entrepreneur and vice versa? Or do you think they're incompatible? Because I know you talk about entrepreneurs kind of don't make very good corporate execs. Well, first off, we romanticize entrepreneurship.

32:28People think I have some special skill or they have more respect for me than someone who's done as well as me. The only real job I had was out of UCLA. I started at Morgan Stanley. And my stalemate stayed there for the next 30 years. Still there. He's vice chairman. Makes a ridiculous amount of money. I make a ridiculous amount of money. We got together and we compared notes. And it's striking how similar our net worth is. the amount of stress i have in ups and downs i have endured versus him his life his economic life and professional life has just been this i mean there's been some downs there's been some market corrections but i mean i've been i'm rich i'm not rich i'm really rich oh i'm divorced and now i'm really poor oh i'm rich sort of rich i mean i just crazy amount of stress success cycles, dealing with people, dealing with clients, dealing with investors.

33:27It's just being an entrepreneur is so romanticized. And 70 % of entrepreneurs are in entrepreneurship because they have no other choice. And that is the majority of entrepreneurs are immigrants. They can't get a job at Google. Unilever isn't calling them. They don't have a college degree from an elite university and no gaps in their resume and a friend internally recommending them that just always looks really good, right? So if you have access, kids come to my office hours and they never want to talk about strategy. They basically want to talk about their job, their career prospects. And the conversation I get the most goes something like this.

34:04I have an offer from Salesforce, Google, but I'd really like to start my business. Don't be fucking stupid. Go to Google. And they're shocked. They think I'm going to say, go for it. Be an entrepreneur. The most amazing platforms of economic security in history are Western companies, large companies. They'll pay for your mold to get removed. They have incredible platforms. They bribe politicians. They have regulatory capture. They have lawyers to threaten small companies. They have such advantage. Now, there's a tremendous amount of bullshit. You're going to have to endure politics. You're going to have to get emails from people.

34:45regarding decisions that make no sense, inevitably, almost right away, someone much less talented and smart than you will get promoted over you. That's just a given in the corporate world. That's just going to happen almost right away. Oh, this person's an idiot. Did you hear who just got promoted? That is just the corporate, the only thing you can guarantee in the corporate world is a series of small injustices. But if you have the ability, if you have the ability to play well with others, to be patient, the arc of corporate justice does, it's jagged, but it bends up and to the right. And they have tremendous advantage, right?

35:26No S &P 500 company right now is going to go out of business in the next three years. They might leave the S &P 500, but they're not going to go out of business. So if you have the skill, I did not have the skills. I'm not saying that as a humble brag. When I was at Morgan Stanley, any time more than four people went into conference room, I'm like, are they talking about me? I was so insecure, not knowing what was going on. I didn't have the skills. I couldn't read the room. I didn't have the patience. I couldn't handle it when someone who I didn't think was as smart as me was making more. I didn't have the maturity to handle a big corporation.

35:58so if you are in and also if the the real the only real skill in being an entrepreneur that is totally is exceptional is how risk aggressive you are and most people who go to work for a corporation once someone's already out of corporation i'm like you know you're probably not that risk aggressive if things are booming and you meet someone who can raise a lot of money and it takes the risk way down maybe you'll think about it but if you're not a the majority of great entrepreneurs don't come from great schools. They're definitely going to come. If you're at a business school, probably means you're not, I hate to say that, you're probably not an entrepreneur because that's the risk-free route to economic security.

36:37The most talented entrepreneurs, some of them are mostly immigrants, the greatest number of them. The most talented entrepreneurs that make a shit ton of money are generally undergrads. And the ones that are crazy successful usually started undergrad and then left. That's how risk-aggressive they are. And just to go to a broader point about risk aggressiveness, about willingness to take big risks. If you want to create a culture of entrepreneurship in an organization, you're going to have to give people cloud cover to take risks and say, okay, if this doesn't work, we're not going to fire you or demote you.

37:10And also, what big companies aren't good at is killing things because they have money. And that is, if you're a small company and it's not working, you got to pivot right away. If someone's not working out, you've got to fire them right away. You're nimble. You're agile. You're adapting to a warfront mentality. When you're a corporation, someone senior came up with an idea, and you all want to kiss his ass and make him feel good because that's how you get promoted, and it's usually a he, not a he, but usually. And so you pretend that this little ugly monster of a child is beautiful, even when it's not working.

37:44And the thing that I see really kills entrepreneurship at small companies is they let shit go on too long. It's clearly not working. And the best companies say, okay, we wanted to have a phone. Facebook, it isn't working. We wanted to be in auctions. Amazon launched an eBay commit. It's not working. They pull the plug on it, right? Apple is quietly pulling the plug on their headset, which never made any sense, but they're pulling the plug on it. They'll pretend that they'll say they're updating it. But no, they've decided this isn't working, folks. Pull the plug on it. The best big companies protect people and say you can take a risk and also have a willingness to perform infanticide on their ideas.

38:23And also, entrepreneurship is vastly romanticized. The best way to get rich or the most certain way to get rich is with a U.S. or European corporation, and you get rich slowly. They'll have forced savings plans, 401ks, stock options, maternity leave. I mean the maternity leave at my startups has been like okay you know what do you need two three days what do you need right anyways um okay the room the room is mainly full of CMOs I'll just mention that before I say this next question um you said recently that the CMOs days are numbered what were you thinking and what should CMOs do so I've got a lot of pushback on this I the exact exact quote that went viral was CMOs are like second lieutenant in Vietnam.

39:11You're going to be dead within probably two or three weeks. And that got an interesting reception. Look, the CMOs I worked with, and I haven't been in your ecosystem in a while. I got out. I got sick of selling needless shit to people. It's just not what I want to do for the rest of my life and playing on their insecurities or the need to feel younger or whatever. And so I'm not in your ecosystem as much as I used to be. But generally speaking, the CMOs I dealt with were primarily in charge of broadcast advertising and branding and design. And their job was to hire an agency that would take 8 % to 12 % of media and collect awards based on how much money they spent.

39:56I realize that is not the CMO of today, and it can't be. And I would argue that the best CMOs to survival, The notion of spending a lot of money on broadcast media and hoping that's going to work. Think about broadcast media from 1945 to, again, 1995. All of America was watching one of three channels five hours a day. I mean, you could capture everybody. And there was no such thing as Netflix. Everything was ad-supported. So you could reach the entire nation in, like, three evenings. and a 30-second spot on the Academy Awards was, I think,$800 ,000 and reached three times as many people. Now I think it's$5 million and reaches a third.

40:37So the ROI has gone down like 96%. We didn't realize how incredibly inexpensive broadcast media was. It's now the market has realized there's too many competitors that came in for that unearned margin with technology and just disrupted the entire industry. What does a CMO do? I think this is CMO. You've got to think of yourself as sort of the chief internal services organization. Are we going to establish advantage with supply chain? If you're the chief marketing officer at Amazon, the way they've developed the brand is through incredible supply chain. What can I find inside the company that is literally going to do the best job of innovation and cementing us as a quote-unquote great brand?

41:18And I've got to be honest, it's probably not going to be broadcast advertising or thinking about the logo or hiring and firing an agency. And I realize that most of you don't think you do that. But most CMOs I dealt with came out of an environment where they were trying to think of a great breakthrough campaign that would change sales. And if you look at every company that's billed more than$100 billion in market cap within a three-year period in the last 20 years, they all have one thing in common. They spend almost no money on traditional advertising. So who's the, let me ask you this. Who's the best, if you were to pick one company that is arguably the best at advertising over the last 20 or 30 years, who would you pick?

42:04McDonald's. That's interesting. That's funny. So I would have picked Nike. I think Nike is the best advertising. Nike is at a 10-year low, their stock. Find me a company that has built their brand and sees their core competency as advertising. I'm going to show you a stock that's underperformed the market. So the world has changed so dramatically that I think, you know, Don Draper has been drawn and quartered. So what I think of is if you're the CMO, I think of you as almost you're the chief internal strategy officer or you're the chief internal consultant. And you're there to say, OK, how do we get the most margin?

42:39How do we get unfair advantage? And that might be through really boring shit. It might be through, I think the best thing we could do is to figure out a way to leverage AI to have much more robust, forward-leaning, accessible customer service. I think that's the best thing we could do for our quote-unquote brand right now. And I don't know if this is still the case, but the majority of the CMOs I worked with came out of an advertising background, and we're still looking for the next breakthrough campaign that would somehow lift sales all of a sudden. I think those people, I think their days are numbered.

43:10and whether it's, you know, we just see someone, I just met an impressive person from TikTok. TikTok meta and Alphabet will grow their revenues this year by, I don't know, 20 to 30 billion. The market's not growing that fast, so that means it's getting taken out of other forms of branding, specifically ad-supported media. If you're in your 40s or 50s and in the ad-supported media ecosystem and doing well and you have senior-level sponsorship, ride it out. But if you're in your 20s, what I tell people is be very careful if you're in an ad-supported medium. Be very careful because, you know, the number of people actually, I mean, let me just piss off everybody.

43:52Advertising is the tax that the poor and the technologically illiterate pay. How do you know you're rich? You're not subjected to advertising. I've figured out a way. I never want to see an ad for an opioid-induced constipation medication. I avoid them all. Everything I watch is subscription. I'm not interested in ads. If you're in a wealthy city, in Paris there's a regulator that goes to every park and says you are not allowed to see an ad from a green space in Paris because it's a wealthy city. Go to a poor nation, there's branding everywhere being pelted at you. So I think that if you're in the ad-supported ecosystem, you want to be thinking about, okay, those dollars are going to leak to one of a small number of direct players and to other means of building those associations with consumers.

44:37I mean, Apple sort of kicked this off. They took$6.5 billion out of broadcast advertising and put it into 550 leases of temples to the brands called the Apple stores. I'd like to live in one of those places. Those are the coolest gathering places, I think, of the last 20 years. But that was a visionary move. We're going to take money out of broadcast, and the best thing we could do for the brand is have a distribution channel that it would be really hard to replicate. Where do you buy an Android phone that is really cool? Seriously, where do you buy an Android phone that isn't depressing? Right?

45:11Where? It's a telco company with a guy with a name tag and bad lighting and bad carpeting. And then you go into an Apple store and you think, these are the people I want to hang out with. Anyways, long-winded way of saying, I think the CMO that survives is a chief strategy officer, chief supply chain officer. But the era of cheap broadcast advertising, that sword that built Nike, that built Estee Lauder, that built Unilever, that built P &G. By the way, every one of them clients of mine at my last firm, that sort of is getting duller and duller. And show me a company that's become reliant on traditional branding to build shareholder value.

45:45I'm going to show you a company whose stock has underperformed the market the last 10 years. Talking about Apple, I bought an iPhone 16 the other day. And the guy in the store, like the store you described, said, look, basically, it's the same as the 15, the 14, the 13, and the 12. And there hasn't been much progress as there in kind of the hardware but i was at adobe conference last week and what i saw in ai in the last six months is just mind-blowing yeah so it seems like that's where the big step changes are going so what from an ai point of view what should marketers be where's the action going to be and what should we be thinking about i'm an ai optimist uh so let me back up so i think ai is a different type of technology i every year i do a bunch of predictions about the economy, stocks, and my prediction around AI is that if you think about jet transportation technology, my parents immigrated from Glasgow and London, respectively, in the late 50s, early 60s.

46:41They crawled across the ocean, terribly seasick, nine days to get to the U.S., and it was expensive. Now, if you book ahead, you can get from London, New York, in seven and a half hours for about 400 pounds. That technology has changed the world economically. economically you can you can look at GDP and the number of jets in the air and they're somewhat correlated the number of jets coming into a nation largely indicate how robust its economy is that technology on Saturday I'm going to see seven colleges with my son we're going on a college tour in five days because of jet transportation technology it's an unbelievable unlock right as of now the entire industry if you take all of the profits and all of the losses and the entire airline and aircraft manufacturing industry, it's just a break even.

47:30It still hasn't made money. Remember Eastern and Laker Airlines? And I mean, remember all these airlines? There's so many of them have come and gone. And Boeing and Airbus have been massively subsidized, right? Air France has bailed out every few years. I mean, these companies, it's just a shitty business. Now, how did that happen? They were not able to establish competitive differentiation, regulatory capture, distribution capture, and the huge beneficiaries have been stakeholders, not shareholders. And there are certain technologies that come along where the winners are us. And there aren't a small number of companies able to ring-fest the technology and make trillions of dollars in market value.

48:11The PC industry. We were able to put$30 million worth of computing on your desk in 1970 and 1990 for less than$3 ,000. All of us have PCs now. Think about how, think about the unlock of PCs economically. In 2006, I raised$70 million and I bought 10 % of Gateway Computer. I don't know if any of you know Gateway. I realize that's like the weakest flex in the world. And then I went in and said, we need to sell the company. I did my activist thing, went on the board. We ended up selling it for$900 million. We were the second biggest computer manufacturer in the world behind Asus. We made three times as many PCs as Apple.

48:51Second largest company in what is a tectonic technology shift, and we sold for$900 million. Tomorrow, Meta or Alphabet will lose or make$900 million in five minutes in trading days because no one was able to capture that value. I now believe, after the introduction of DeepSeek, that no one small set of companies is going to be able to capture trillions of dollars with AI. because I think AI is going to reverse engineer AI and not let any one company get ahead of it. When you ask DeepSeek, what LLM are you? For two weeks it said, I'm ChatGPT. And I just love the fact that the first job that AI destroyed was AI.

49:31I think there's something deliciously ironic about that. And we have come to believe that every time there's a big shift in technology that some group of people, a small group of companies, is going to be able to make trillions of dollars. I think this might be one of those technologies where society wins. I think there's enormous opportunity for companies to leverage this overfunded technology that you will win if you understand. And that is I started a company called Section that does AI upskilling for the enterprise. So L 'Oreal will come to us, L 'Oreal or Unilever, and say we have 300 or 400 media planners.

50:05Just make them 10 % better. How do they use AI to become 10 % better? So trying to create a culture that says, all right, we have this new thing on our desk called PCs. you need to learn how to use them and create incentives. Because I don't think AI is going to take your job. I think someone who understands AI is going to take your job. And so what I try and do, because as I get older, I have a tougher time with new technologies. I hang out with my son, and I have a second screen. And anything I'm doing, I try to ask AI, mid-journey,

50:38Claude, obviously ChatGPT, and I'm trying to just get better at everything I do using AI. I initially thought my next book would be written by AI, and I learned really fast. It sounds like a computer wrote it. It's not good for writing, original writing, I don't find. It's really great for finding good data. And I have to ask it twice because the first time it gets it wrong. It's so frustrating. I'm like, that doesn't sound right. It says, oh, I'm sorry, I'm wrong. I'm like, could you check your own work, for God's sakes? Anyways, but I think there's tremendous opportunity in marketing to get much more efficient, come up with new ideas, brainstorm for new things.

51:08It's all in the prompt. Think of it as a thought partner. Think of it as a coach. give it massive amounts of information, upload stuff. I'm at that age where I'm obsessed with my health. So I get tests on every bodily fluid and substance on my body, and then I get a report from some German startup, and I upload it to AI, and it all comes back and says drink less. But basically it can tell me just unbelievable things, and I start thinking about businesses. Well, is there a way I could help people, mothers whose child has diabetes, A mother whose kid has diabetes spends five months of her year managing that child's diabetes between referral specialists, arguing with the insurance company.

51:49This is obviously in the U.S. Mike, what if you just went really niche with AI and said, all right, a small business for mothers with kids with diabetes,$100,$200 a month, use this AI. And this LLM is customized to help. And we claim we'll give you one to two months of your year back by streamlining, telling you how's the best way to make claims for this. What are the best prescription drugs? How do we talk to an AI-enabled pharmacy to get you the prescriptions you need more easily? How do we set up automatic insurance claims using AI and say, okay, if you invest a little bit with us and you give us$100 a month, we'll give you a month.

52:24For$1 ,200, we'll give you a month of your time back a year. I just think your greed glands start going like, wow, think of all the things I could do here. So I would just think of AI as a tool. And you're a samurai. And if you don't learn how, and guns have come along. And if you don't learn how to use muskets, you're going to lose. Or a better analogy is when the tanks, panzer tanks, rolled into Poland, the Polish army fought them on horseback. And the battle didn't last long. So there are now other companies with panzer tanks. And you better get good at driving tanks, right, this new technology.

53:03But I think it's really exciting. And I think all the catastrophizing is BS that it's going to destroy all these jobs. I might be wrong here. Every technology destroys jobs in the short term, and then it creates more jobs. We thought automation was going to put 60 % of auto workers out of business. And some jobs on the shop floor did go away. But we didn't envision heated seats or car stereos. And now the global auto industry employs more people than it did pre-automation. So I think we'll see some short-term job destruction. But I think a lot of you are going to get your greed glands going around different things you can do using AI.

53:34I think there's going to be a ton of startups. And I think the net job creation will actually be positive. The downside to AI is not weapons. I don't think it's ever going sentient. I'm not a philosopher, but there's always a kill switch somewhere. I think we can manage it. We manage nuclear weapons, bioweapons. I'd like to think we could manage AI. The real threat of AI that I see is loneliness. And that is the number of men and now a smaller group of women doing searches for AI girlfriend and having relationships. it's the movie Her is gone parabolic. And I worry that we're developing or evolving a new species of asocial, asexual male that ends up very lonely and very depressed and very dangerous, mostly to himself.

54:21But I think AI is expediting that new species of asocial man. Right, that's a nice thought, isn't it? Going back to where we started out. I asked LinkedIn for some questions for this conversation. We got 180 or so of them. The one that got voted the most, which I thought was fascinating, is what one thing have you been profoundly wrong about and why? What one thing? What one thing, yeah, if you had to pick one. Or the most profound thing. Well, the one I get, when Tesla was at$30, I said it was going to get cut in half, and it went to$400. You're right, just a bit early. I thought Twitter would, I thought the creditors would take claim to Twitter because he would decide not to make his payments.

55:05I was wrong about that. I've been wrong a lot of stuff. What have I been most wrong about? We're going to need a bigger boat. I've been wrong about a lot of stuff. And I make a series of predictions every year. It's my most popular YouTube usually each year. And I think the thing about predicting is it's a shitty business because if you get it right, the events leading up to the prediction make it seem less visionary or bold, make it seem obvious when it happens but if you get it wrong yeah twitter and people just remind you that you got it wrong but the whole point of a prediction and why i think scenario planning is so interesting it's not to be right it's to foment a conversation that makes you kind of better at developing a series of actions across multiple scenarios i love scenario planning for organizations the key isn't to guess the right scenario the key is to predict a number of scenarios and then develop strategies that play best against the most of them, right?

56:00I think that's the real trick or the benefit of scenario planning. But oh my gosh, I've been wrong about so much. I thought that AI valuations were going to peak last year. They didn't. They went up. I thought Disney and Warner Brothers stocks would recover last year. They didn't. Yeah, I get a good, I don't know, a third or half of my prediction is wrong and some things I get terribly wrong. Yeah, so a lot. Thank you very much for listening or watching Uncensored CMO. I hope you enjoyed that. If you did, please do hit the subscribe button wherever you get your podcasts. If you're watching, hit subscribe there as well.

56:42I'd also love to get a review. Reviews make a big difference on other people discovering the show. So please do leave a review wherever you get your podcasts. If you want to contact me, you can do. I'm over on X at Uncensored CMO or on LinkedIn where I'm under my own name, John Evans. Thanks for listening and watching. I'll see you next time.