Office Hours: Investing in the Private Markets, Going Vertical, Pursuing a Phd, and Building a Network

Vertical Integration

Scott Galloway explores the concept of vertical integration in B2B companies, using Microsoft and Bloomberg as examples. He explains how Microsoft has ventured into hardware with products like Surface tablets and Xbox, aiming to control more of the consumer experience 1. Bloomberg's strategy of developing proprietary terminals and security protocols is highlighted as a successful vertical move. Scott suggests that companies like Goldman Sachs could benefit from similar strategies, potentially by acquiring platforms like Public to enhance their vertical integration.

I think Microsoft's a good example. You bring up an interesting point though. A company like Salesforce, with whatever it is, 60 or $80 billion market capitalization, do they need to think about some sort of appliance?

--- Scott Galloway

He emphasizes the importance of building proprietary technology rather than relying on third-party applications 1.

   

SaaS Strategies

Scott discusses the potential for SaaS companies, like Salesforce, to adopt vertical strategies. He argues that as these companies grow, they should consider controlling more of the user interface and experience, similar to Bloomberg's approach 1. This involves developing their own engineering teams and intellectual property rather than depending on external applications. Scott believes this shift is crucial for SaaS companies aiming to reach significant market capitalizations.

You can only do so much just using duct tape and glue to string together other people's engineering and software development.

--- Scott Galloway

He suggests that such strategies could help SaaS companies like Salesforce enhance their market position and value 1.