What Is John Sculley Up to Today?
John, thank you so much for being willing to be on the podcast.
Thank you, Karen.
As everyone knows, John is the former Apple CEO and President of Pepsi. I understand you have a new company now. You’re the co-Founder of Zeta Global, correct?
I am the co-Founder of Zeta Global. We’re the largest independent marketing cloud company. The company is doing exceptionally well. We have about 1,400 employees. We’re very profitable and we’re growing very fast on the top line. Our client list is many of the most recognizable names in the Fortune 500.
It’s exciting to have a new venture at this point. I know that’s one of your ventures. You have another one, don’t you?
I do. I’m the Chairman of the Board and Chief Marketing Officer of RxAdvance. We are the first cloud-based platform for the pharma industry which is called PBM, Pharmacy Benefit Manager. It’s a very exciting industry sector.
I have to ask you because you’ve gone obviously from being chairman and president of very large Fortune 500 companies to doing some startups and smaller companies. Is it different?
Absolutely. In fact, most of my working life has been with smaller companies. I remember Pepsi was very small when I joined it. It was about $173 million in revenue. It’s now about $100 billion company. Apple was a $569-million revenue company when I joined it. It’s now the largest company in the world in terms of market value. After I left Apple, I was part of the founding team of MetroPCS which we built up and sold as one of the first next generation digital platforms for telecommunications. We sold that for $9 billion to T-Mobile, and many other things in financial services, marketing, and so forth. I’ve been involved with entrepreneurial businesses longer than I’ve been involved with giant corporations.
One of the things that we wanted to talk about was the future of the technical landscape. I would assume, especially given what you’ve said about some of the kinds of companies you’re involved in now, that technology is integrally part of those businesses.
Here’s the big insight that a lot of people haven’t wrapped their heads around yet but it’s going to be foundational for every industry. With new innovative technology, they’re growing at exponential rates of change. Most people are familiar with Moore’s Law that has been around for 46 years. It says that the performance of microprocessors essentially doubles every 18 to 24 months, and it’s been consistently correct. Now we have cloud computing, big data analytics, robotics, precision medicine, sensors. We have so many exponentially growing technologies. It means we’re moving from what is linear time – days, weeks, months – the traditional way that people have a context of how the world works to exponential time, which is the power of compounding math. If you go 2, 4, 8, 16, 32, that’s compounding math. The result is that traditional large industries are very vulnerable to innovators who could come in and disrupt using these exponential growing technologies often in combination with each other.
For example, on the one hand, something like artificial intelligence is growing at an incredible rate of change. On the other hand, these technologies commoditize so quickly that if you’re just betting on making money on the technology, you may be missing out on the real disruption, which is how do you apply technology. Those people in my world think that AI is going to be foundational to the world of business as oil and electricity back in the industrial age. How should one think about artificial intelligence or machine learning in the context of disruption of major industry after industry?
What are some of the specific industries that you think are the most right for that kind of disruption?
We’ve got some good examples. One of them is financial services. I’m part of the founding team of a company called Lantern Credit. We have an artificial intelligence deep learning platform which is called Beam AI. I gave one of the keynotes at Money20/20 and we were the only fintech company that was talking about artificial intelligence. A year later, there are over 600 financial service companies that are using different forms of machine learning or artificial intelligence. You see how fast an industry sector can change. If we go back a year, two years ago, the banking industry looked at fintech as an interesting curiosity that was running as a shadow banking system, less regulated in parallel to the traditional banking system. Now every bank in the world realizes that the fintech industry is the banking system of the future, and so you see a lot of big deals that are going on by big consumer banks with fintech, startup companies, many being acquired. It shows you how quickly things can change in a couple of years.
Can you give me an example from the consumer’s point of view of how does something like AI, either now or in the near future, going to impact the way a consumer uses a financial institution?
One of the most impressive companies with consumer marketing, without question, has been Amazon. We watched Jeff Bezos build Amazon Prime, which is a major consumer differentiation subscription service, which is changing the whole world of retailing and the whole world of online e-commerce. What’s interesting now is the innovation that Amazon brought out less than two years ago, Alexa, which is a voice assistant, started out as an interesting curiosity. Now it’s becoming a major platform. Amazon is now moving into search and advertising and will be a clear competitor to both Google and Facebook. Not only is Amazon able to use Alexa as a voice assistant who can go in and let you do a search and transaction over, let’s say, Amazon Prime and get products that Amazon has in its walled garden ecosystem, but they’re opening Alexa up and they’re saying, “We want it to be a virtual assistant that will let you use a voice search that will tie into any kind of product or service.” They can take the same model that Google has used so successfully, but apply it with voice assistance. These are game changers on an amazing scale.
What you’re talking about is so important, but so many of these examples are big examples of big companies. If you’re an entrepreneur or a small business and you’re listening to this podcast, what are some of the realistic and practical ways that small businesses and entrepreneurs, let’s say, businesses that are doing everything from $1 million a year to $10 million or $20 million a year, that real small entrepreneurial company or individual. What is it that we need to be thinking about in terms of the future of technology and how it’s getting used or even taking advantage of it?
Here’s how I think about. Imagine that you are looking at a river that’s one of the largest rivers in the world. Imagine it’s the Nile River, let’s say, and you’re watching the water flow. The water is flowing and it’s going over thousands of miles. That’s how I think about what’s happening with consumerization and its opportunities in different industries, even for small companies. If you look at that river, in this case it’s a river flowing, everything towards empowering the consumer to be able to be in more control of the products they choose, the choices they have, the information they use to make decisions.
[Tweet “AI is going to be foundational to the world of business as oil and electricity back in the industrial age.”]
More and more it’s not the advertising of giant corporations but it’s the referrals, the comments that other customers have that is having a huge implication. If you see this giant river that’s flowing along, like the Nile, and you’re looking at it and you say that’s the river of consumerization, then you want to get a boat on that river. It doesn’t have to be a big boat to be able to participate in it. If you’re a small company and you’re saying, “How do I build a small company that can take advantage of a major trend? I want to get a boat on that river of consumerization,” the way to do that is you can take advantage of technologies.
Because of the commoditization of technology and because of the exponential growth of the capability of these technologies, it’s incredibly cost-efficient, even for small companies to say, “I’m going to go out and build a consumer service that uses Amazon AWS or uses Microsoft Ashore or uses some other big cloud platform. I can do it on a credit card. I can literally go out with my credit card and be able to pay for it.” If this were ten years ago, you’d have to go out and raise $10 million or $15 million to go in and do those types of things. It’s a wonderful time to be an entrepreneur even if you’re starting out with a very small business.
That’s an important point because part of what all of these technologies bring is democratization where the playing field gets a little bit more level. An entrepreneur can compete against a larger company in a way they never could before.
The other thing that is helping is that marketing has shifted from what I grew up with and helped create with experience marketing, with the Pepsi challenge or launching Apple’s first Macintosh and other products, which is the era of building big brands. It’s now moved to marketing as personalized messaging. At Zeta Global, what we’ve built is a company that has a lot of embedded artificial intelligence in the way that we can enable our clients to be able to do personalized messaging, meaning we can know exactly the most likely people for a product or service that are based on our prediction engine are going to be interested in the messages. We can customize those messages for our clients that are specific to hundreds of different attributes for each of those prospective customers. It’s an incredibly interesting opportunity, particularly for smaller companies because they don’t have to do what I did 30 to 40 years ago and go out and say, “We’ve got to spend a lot of money on giant television budgets.” We know that most of it is wasted, but we don’t know which part of the money is wasted. We don’t have to do that anymore. Now we can do a personalized messaging which is cost effective even for smaller companies.
It’s funny because we’re talking about the disadvantages that small businesses have and how they can take advantage of it. One of the things that I’ve noticed is that a lot of the businesses that I go into as a consultant, as a branding and a marketing strategist, in working with companies is there are a lot of millennials in the workforce now, particularly in high tech companies, especially in entrepreneurial tech space. There are some incredible upsides to that, they have some incredible skills, but there’s some challenges also. I’d love to get your take on what you think millennials need to do to compete in this entrepreneurial tech space.
The big advantage millennials have is that they understand the culture and the wants and needs of millennials, other people like themselves. That’s a huge advantage. That’s something which I’ll never understand as well as they do because I can only relate to my own life experiences. They can relate to their life experience. The context of it is where the massive change in growth is going to take on. The millennials are not only the workers in these companies and often the founders, but they are also the role model of the customers. Millennials are in an advantageous position to be able to create the next generation of disruptive businesses.
Do you think there’s anything particular that they need to take on to compete in that space? Is there anything that they need to develop that’s unique to that group?
What is not unique to that group but is unique to anybody who wants to be an entrepreneur is it always starts with curiosity. It always starts with the willingness to take chances, to take risks. Steve Jobs and I used to sit around and we say, “There has to be a better way.” You’re constantly looking at why do things have to be the way they are? Why can’t it be thought of and created in a very different way? Never has there been more opportunity to do things in a relatively short period of time. Exponential time means that what used to take six months can now be done in six weeks. It means that not only can you do things less expensively in terms of the investment to build a small company, because you’ve been outsourced to large platforms, but it also means that the expectation of how long it will take to do things is significantly reduced from anything that people with my generation experience. Millennials take that for granted. They don’t know the world was any other way than exponential times. They start from a different position.
I was over at WeWork visiting Adam Neumann who’s the Founder of WeWork. Just walking around their offices in New York and looking at the cultural context of how they think about work is so dramatically different than anything we’ve ever seen before. There were services out there which rented offices like Regus Offices who’ve been around for years and it was very successful. Along comes WeWork who says, “It’s not just about renting cubes and giving people access to computers. There has to be more to it in terms of the cultural context of the place where people work, and how they want to work and also spend time that’s casual time and network with each other, or maybe be online and work virtually with other people.” WeWork has literally reinvented the experience of work. It’s all about the experience economy. No one understands the experience economy better than millennials.
It’s interesting though because WeWork to me is an extension of what people were doing at Starbucks. I think someone at WeWork looked at people sitting around at Starbucks one day and went, “We could do this as a model for where people come and work.”
The people sitting around Starbucks in many cases were millennials sitting there for a couple of hours a day with their computers. There’s a perfect example of somebody observed, “Look at all these people showing up at Starbucks and they’re spending hours a day here and they’re getting work done. They’re sitting on a computer or they’re talking on an iPhone. Why not institutionalize that and turn that into a business?” WeWork now is valued at $20 billion.
One end of the spectrum is millennials. Let’s talk about the other end of the spectrum, which is the mature workforce, let’s say people in their 50s. Every day I hear a different point of view. Some people say, “In ten years, people in their 50s will be retired and they won’t be working.” Other people say, “No, they’ll be more important than ever.” What do you think the role is of a more mature workforce as we go into some of these big technical innovations and changes in the future?
We have two parallel trends going on, both are right. One trend is that artificial intelligence is going to enable the replacement of a lot of skill jobs that are going to affect people. Radiologists, pathologists, many lawyers, many accountants can be replaced by artificial intelligence, and that scares people. The estimates are that could be maybe 5 million jobs. Skill jobs are lost between now and the mid-2020s just in the US. On the more optimistic side, it means that we have a way with artificial intelligence to not necessarily replace everybody but a way to augment the intelligence of people and get people a fast track.
Think exponential time again, a fast track to be able to have a tool that will help them do their job. Think of a virtual assistant that is there, much like a spreadsheet was there to help us 35 years ago. That was an innovation back in the early 1980s. Now virtual assistants are getting smarter and smarter and they’re able to do more and more tasks using machine learning. I believe that it’s going to enable people in their 50s to be able to gear up a new skill much faster and maybe even in a skill they never could’ve gotten there any other way. We’re going to be able to have the support of virtual assistants which will be a tool for them much like a spreadsheet was a tool for different generations.
It’s hard for me to imagine a day when a spreadsheet was an innovation.
There are always interesting anecdotal stories. Back in 1978, I was giving a talk at Harvard Business School to the class that was studying the Pepsi Challenge case. A student came up to me afterwards and said, “John, I want to show you something I created for you coming to talk to us about the Pepsi Challenge.” I said, “What is it?” He said, “It’s in another building.” He took me over, we walked in, and I saw my first personal computer. It was an Apple 2. Steve Wozniak had not invented yet the floppy disk drive so it had a tape recorder. Steve Wozniak hadn’t invented the color display so it had a little TV set connected to it. He booted it up. I see a bunch of rows and columns on the screen and say, “What is it?” He said, “I call it an electronic spreadsheet.” His name was Dan Bricklin and he had a partner from MIT, Bob Frankston, and they started a company called VisiCorp when they graduated and that was called VisiCalc. That was the first spreadsheet. I got to see it back when they were just prototyping.
I was talking with someone about computers the other day and I said, “I remember when the first Apple computer came out and it sat on the desk. It was like that box and it had a floppy disk and you had that green blinking light. I thought cutting and pasting was the most amazing thing I’ve ever seen in my life.”
I’ll tell you another story. It was about 1986, a young entrepreneur named Rob Campbell comes in to see me at Apple. He said, “John, I got something cool I want to show you.” I said, “Great.” He boots it up on a Mac and I look at it and said, “What do you call it?” He said, “I call it PowerPoint.” We invested in it at $11 million valuation. We bought 27% of the company. About a year later, the Apple board said, “Why are we wasting our time investing in these little startups? We make personal computers. Go sell that investment.” We sold that investment for $21 million to a company called Microsoft. PowerPoint ended up being $100 billion business. That’s just the anecdotal stories of what it’s like to be in the high tech level.
The point is there are things now that are starting that we go, “That’s so amazing,” and we have no idea five years, ten years, twenty years from now what that thing will be.
Think about Instagram. When Mark Zuckerberg bought Instagram, it was a year old and had fifteen employees. He paid $1 billion for it. Instagram today, if it were a stand-alone company, would probably be worth $70 billion to $80 billion.
[Tweet “Artificial intelligence is going to enable the replacement of a lot of skill jobs that are going to affect people.”]
One of the things I talk about on this podcast is the joy of missing out. We have the fear of missing out, and a lot of times people are driven by a fear of missing out, whether it’s personally or professionally. I always like to ask my guest what is it that people fear missing out on, in your opinion, that they shouldn’t, particularly in this area of technology and technological change? What’s something that we fear missing out on but we shouldn’t, we should have a joy of missing out on that thing, in your opinion?
Bill Gates had an interesting perspective that I remember he talked about back in the ‘80s. He said, “We always overestimate the importance of innovation in the near term, and we always underestimate the importance of that same innovation in the long-term.” When we think about something like deep learning, machine learning, artificial intelligence people say, “I missed it.” You didn’t miss it. While it looks like there are people who are building companies and they’re successful and they’re making a lot of money, the reality is that it’s still very early in the game. AI will be as foundational going forward as oil and electricity were in a different era. Long-term, something like AI is not missing out anything, if you haven’t even started to do something with it. Not to take it seriously long-term, something as foundational as artificial intelligence.
What’s cool about AI? In my generation, it was all about writing code to tell the computers what to do, instruction sets. Today we’re thinking about computers don’t need to be told what to do. They can learn on their own, talking to each other, talking to sensors, talking over networks. This era where the computer learns without someone having to write specific instruction code is such a radically different way of thinking about computing. That’s a long-term impact, that’s not a short-term thing that you missed because you weren’t part of the first generation products or companies.
Something else that’s similar to that, and it’s been all over the news lately, is about Blockchain and Bitcoin. Just to be clear, Bitcoin is only a very small part of Blockchain. That’s not even by far the largest part of Blockchain. That’s something that people are also having that fear of missing out on. In terms of the whole future of Blockchain, what is your feeling about that as a technology?
I’ve been around a long time and I know the people who built the first commercial internet. I’ve seen the story of what happens and where the internet came from. Nobody had any idea that the internet would end up requiring security at the level we need it today, that it would be basically a wireless experience, that it would have now have to adapt to a world of sensors and artificial intelligence. Blockchain is going to become so foundational to the entire internet. It isn’t something that you will see just in one company does Blockchain or another company does Blockchain in a particular industry. Blockchain has become foundational to the future of the internet. What Blockchain is instead of only being able to send a notional proxy of a transaction to someone over the internet because of the limitation of the power of computing and connectivity in the past, Blockchain says, “We can take the entire ledger, the entire documentation of every transaction and we can send that, which means that we’re going to be far more reliable and accurate as to what is real and what is fake.”
We can also use Blockchain to be part of an entirely different conceptualization of what is security. How do you secure something? Blockchain is going to become one of the most foundational technologies, just like artificial intelligence, in the next generation of the internet. The question that I often think about is, is the internet going to evolve and will keep adapting and adding these things to it, or we will someday say, “We’ve got to build something in parallel to today’s internet that has much higher security, that introduces Blockchain as foundational from the start and introduces the ability to read sensors and the ability to use artificial intelligence, so that it’s conceptually even more advanced than trying to build it on to the existing internet?” Realistically, we’ll probably adapt the current internet to include these things. You could also envision where someone might say, “We ought to go out and build it right at this time.”
The other thing I’d like to talk about on this podcast is something I call living beyond the script. There are often common wisdoms and scripts out there about the way we’re supposed to do things, being an entrepreneur and the way we’re supposed to build businesses, the way we’re supposed to do marketing, the typical script that we all get. I always like to ask my guests from their perspective, what’s their answer to how you live beyond the script? What’s your answer to the common wisdom about technology in today’s world that you think people ought to be breaking out of?
One of the greatest television commercials that I’ve ever seen was scripted by Steve Jobs when he came back to Apple. It was called We Are the Crazy Ones. He used examples of people from innovators like Tesla and Einstein, to big-named creative people, artists, musicians. He said, “It’s always the crazy ones, the ones who have ideas that seemed so completely orthogonal, completely different from where everybody else is, who end up being the ones who create what becomes obvious to everybody else in a period of time.” You have to, even if you’re not going to be the big risk taker, even if you don’t have the talent to be a Steve Jobs or Bill Gates, you have to be on the lookout that there are going to be people like this. It isn’t just Mark Zuckerberg, Larry Page, Jeff Bezos, and Elon Musk. There’s going to be a whole new generation of people even younger than them who are going to come out and be just as important, just as innovative, and they’ll do things that are even more impressive. They’re going to be curious. They’re going to be risk-takers. They’re going to be the crazy ones.
It sounds like, and you’ve mentioned this several times, the key, the most important quality that all entrepreneurs need to have as they move into the future is curiosity.
In my own case, while I ended up being CEO of two giant corporations, Pepsi and Apple, I never set out to be the CEO of two giant corporations. It just happened that they grew and became giant corporations. They weren’t giant corporations when I joined them. I’ve always been curious. I’ve always been interested in ideas and how you can think about ideas in a different context to say, “There has to be a better way.” That’s something I’ve found is a consistent characteristic of successful entrepreneurs. They are curious. They are risk takers. They know when they make mistakes. Their first instinct is, “What did I learn?” They pick themselves back up. They’re comfortable with the reality that they’re going to be humbled from time to time because you do make mistakes. It’s embarrassing when you make big giant mistakes in front of the public, but all of us who have been there have. There are some people who feel comfortable in that culture, and there are other people who would say, “I don’t want to be anywhere near it.” I happen to be one of those people who love it. I thrive in it. Curiosity is the well-spring of great invention.
One of the best ways to prepare yourself for the future, if you’re an entrepreneur or small business person or someone who works, is to ask yourself, “What is a better way to do this?”
It’s such a basic question. I remember Steve Jobs used to say, “Never start with the technology. Always start with the customer. Then you can work back to the technology.” The best innovation takes advantage of new technology. You don’t have to own the technology or invent the technology. You have to be able to think about what’s the derivative effect of that technology? Even more important, what’s the second order derivative effect? Let’s take the iPhone. With the iPhone, we said, “If we take an iPod and put a radio chip in it and we take advantage of the world shifting from 2G, which was text, to 3G, which was photos, over wireless, we can create an entirely new experience.” That’s the first order derivative.
The second order derivative was even more interesting when someone says, “It’s not just that you can send photos from one wireless device to another wireless device is that you can create service businesses doing this.” Think of Snap, think of Facebook. These were businesses that wouldn’t have been possible without the first order derivative effect of you can take a thing called an iPhone or an Android phone and you can send photos wireless to other people. Then people said, “Therefore, let’s look at the second order derivative,” which is, “We can build services that use photos that people send to each other.” That became social media.
That’s an important point because often we think it’s all or nothing. As you’re saying, you don’t have to own the technology. You just have to be able to take advantage, even if you’re taking advantage of one teeny tiny little slice or aspect of the technology.
Look at how different Silicon Valley is today versus when I was in Silicon Valley. When I was in Silicon Valley, I was the first outside non-computer engineer and marketing person who was hired to a technology company in Silicon Valley. That was 1983. Now look at Silicon Valley. You see that many of the innovators don’t have a technical background at all. They are people who are very creative, but they come from entirely different field. It’s an example of you don’t have to be thinking about Silicon Valley in my era. We were tool makers. We were making tools like spreadsheets and PowerPoint presentations, tools that would enable people to write code to personal computer platforms. Now it’s not the engineers who are creating all those things that are the game changers. Now it’s the people who say, “It’s like an Erector Set,” or, “It’s like a Lego set,” in a more current generation where you can put these pieces together and create something. You don’t necessarily have to be the toolmaker.
What are you most excited about in 2018?
My big focus is on healthcare. When I first showed up at Apple, I’ve been there about three months and I’m hanging out with Bill Gates and Steve Jobs with the Macintosh engineering lab. It was late at night and Bill and Steve were talking about their noble cause. They’re going to change the world one person at a time. They’re going to do it with tools for the mind. I’m sitting there and saying, “Noble cause?” I never heard about that in the Cold Wars, so that stuck with me. One of my very close friends was Bob Metcalfe who invented Ethernet which is the technology behind the internet. He has a camp every summer and he invites a group of his friends off to his island and me. He said about ten years ago, “John, people like you and me need to reinvent ourselves about every ten years.” I said, “That makes sense.” I want to find a noble cause I could reinvent myself around. I chose healthcare. Then he said, “Here is this incredibly big challenging problem which is not getting addressed in any innovative way. It’s very detailed and granular with a lot of complexity largely caused by special interests and regulators.” I said, “I want to go into healthcare and see if I can bring innovation a better way into healthcare.” That’s what I’ve been doing for the last ten years.
[Tweet “Curiosity is the well-spring of great invention.”]
I love that idea of every ten years reinventing yourself around a noble cause. That’s a great idea, a great way to think about it.
I’m one of the last of my generation in high tech and in marketing that is still around and active. Most of my contemporaries are either retired or dead.
We’re glad you’re neither, John.
I don’t want to retire and I don’t want to be dead. The only way to do it is you got to hang out with younger people who are doing interesting things. They don’t have time for some old guy who just wants to sit and listen. You have to be able to make your contribution, otherwise, you don’t get a seat at the table. I’m a mentor and an investor with a handful of incredibly talented entrepreneurs. I’m just so impressed with the talent I get to work with, and they’re doing amazing things. I have a much more fun as a mentor in the context of noble causes than I ever did when I was a CEO of a company.
My guest has been John Sculley. He’s the former Apple CEO and Pepsi President. He is co-Founder of Zeta Global. John, thank you so much for your time and your wisdom.
Thank you, Karen.
About John Sculley
John Sculley is the former CEO of Apple and President of Pepsi. Following his departure from Apple, Sculley briefly served as CEO of Spectrum Technologies Inc. before taking on a consulting role with Eastman Kodak Co. In 1995, he teamed with siblings Arthur and David to form the venture capitalist firm Sculley Brothers LLC. Today, he is the co-founder of Zeta Global, an independent marketing cloud company.
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Karen Leland is President of Sterling Marketing Group, a branding and marketing strategy and implementation firm. She works with individuals, businesses and teams to enhance their business and personal brands. Her clients include LinkedIn, American Express, Apple, Marriott Hotels and others. Her ninth book, The Brand Mapping Strategy: Design, Build and Accelerate Your Brand, (Entrepreneur Press, 2016) is available online at Amazon.com, Barnes and Noble.com, and in bookstores now.