Prof G Markets: Why is Silicon Valley Backing Trump? + A Glasses Company Acquires Supreme

Market Dominance

Luxottica's dominance in the eyewear market has long been a subject of discussion, particularly due to its pricing strategies. Scott Galloway highlights how the company has consistently raised prices faster than inflation, creating opportunities for new entrants like Warby Parker. Warby Parker disrupted the market by offering glasses at a fraction of the cost, providing 80% of the quality for just 12% of the price 1. This disruption underscores the potential for innovation in markets dominated by monopolies.

Luxottica has always been. I always thought Luxottica was an example of a monopoly that kind of flew under the radar.

--- Scott Galloway

The conversation also touches on Luxottica's recent acquisition of Supreme, a move seen as an attempt to expand its customer base 2.

   

Strategic Moves

The acquisition of Supreme by Luxottica has sparked significant market reactions, with many questioning the strategic rationale behind the move. Ed Mylett notes that the deal, valued at $1.5 billion, is nearly 30% lower than Supreme's last sale price, indicating a potential mismatch between the brands 2. Scott Galloway suggests that VF Corporation, Supreme's previous owner, was eager to offload the brand due to a lack of synergy with its portfolio.

This is a pretty big stub toe, if you will. I've never understood the brand, to be honest. I'm just not in this category, but I've never quite understood it.

--- Scott Galloway

The discussion further explores Supreme's history and its fluctuating market value, highlighting the Carlyle Group's strategic timing in acquiring and selling the brand 3.