Why China Dominates the EV Market, How We Operate the Prof G Media Business, and How to “Rich”

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0:01:22 Welcome to the PropG pods office hours. This is the part of the show where we answer your
0:01:26 questions about business, big tech entrepreneurship and whatever else is on your mind.
0:01:27 Hey PropG.
0:01:28 Hey Scott and team.
0:01:29 Hey Scott.
0:01:30 Hi PropG.
0:01:31 Hey PropG.
0:01:32 Hey PropG.
0:01:33 Hi Professor G.
0:01:36 And last week’s office hours, we answer your questions surrounding the defense industry,
0:01:40 why greatness is in the agency of others and how to act if your partner makes more money
0:01:41 than you.
0:01:48 The world is becoming, it feels like increasingly insecure and all of that leads to increased
0:01:51 military spending. I also think you’re going to see Japan and Germany dramatically increase
0:01:52 their military spending.
0:01:59 I’ve always thought my confidence is storytelling, but my superpower is the ability to attract
0:02:03 and retain talented people who bring scale to what we do here.
0:02:09 More women are attending college now than met and two-thirds of jobs now require a college
0:02:13 degree. The highest paying industry generally wants someone with a college degree and you
0:02:17 do acquire certain skills and contacts and college. So women quite frankly deserve to
0:02:20 be making more money than men.
0:02:26 Today we’ll speak about the Chinese EV market and how we run our PropG media business and
0:02:31 how to rich. So with that, first question.
0:02:32 Professor Galloway.
0:02:37 This is Jonathan from Philadelphia, a longtime listener and first-time caller. Thank you
0:02:41 for all your thoughtful and funny insights in the podcast.
0:02:45 I recently visited Shanghai, China for the first time in the last 10 years. One thing
0:02:50 that kind of shocked me is the number of EVs on the road. I see two or three times more
0:02:55 Tesla’s in Shanghai than in Philadelphia or New York City. Furthermore, there are many
0:03:00 domestic EV brands that I never heard of. I talk to the drivers and it seems like EVs
0:03:06 are just much cheaper there. Tesla Model 3 costs maybe $30k and the domestic ones cost
0:03:10 close to $20k. Combined with the high gas price there, it just makes more sense for
0:03:11 people to get EVs.
0:03:16 What are your thoughts on this? Do you think the US will be able to keep the lead in the
0:03:21 EV market without government help? I know we have tariffs against Chinese cars so we
0:03:27 probably will not see any of their cars here. But will that also make our market less competitive
0:03:29 and stagnant?
0:03:31 Looking forward to your answer. Thank you.
0:03:35 That’s a really thoughtful question, Jonathan, from Philadelphia. So first off, just some
0:03:44 data, IEA’s global EV Outlook 2024 report shows that China accounted for 60% of all
0:03:50 EV sales last year. So let’s be honest, China is dominating EV production. EV growth in
0:03:55 China is projected to continue with one in three cars on Chinese roads expected to be
0:04:00 electric by 2030. According to the Center for Strategic and International Studies, China
0:04:07 invested $231 billion in its EV industry from 2009 to 2023. Data from Counterpoint Research
0:04:12 reveals that in Q1 of this year, China continued to leak globally in EV sales growing sales
0:04:19 by 28% year on year, while US sales grew just 2% year on year. Think about that. Our economy
0:04:25 is growing faster than theirs. They’re supposedly in sort of a low growth part of their history
0:04:30 with huge unemployment and they’re growing that industry by 28% versus 2% in the US.
0:04:36 Now, if we branch out a bit, the EU plans to impose tariffs on Chinese EV imports due
0:04:42 to subsidies while Biden announced a 100% tariff on Chinese EV imports. What about the
0:04:47 US? Currently, the US is pumping up support for EVs through government regulations, including
0:04:53 the Inflation Reduction Act, which will offer certain EV car buyers $7,500 credit. For comparison,
0:05:00 China offered a $4,600 credit per EV purchase in 2023. Why does China have an advantage
0:05:04 in the EV race? Simply put, the same reason they have an advantage across anything else
0:05:11 caused the IEA report that we previously referenced estimates that more than 60% of electric cars
0:05:16 sold in 2023 were already cheaper than their average combustion engine equivalent when
0:05:20 compared to Europe and the US. As a consequence, Chinese consumers are largely inclined to
0:05:27 purchase a domestic model, as you mentioned. Where does this go? China, when you’re talking
0:05:33 about bringing together products and then assembling them and creating a complex supply
0:05:42 chain that sources materials, brings together competent labor at a reasonable price, no
0:05:48 one does China like China. I got to think that they’re going to dominate the low and
0:05:53 mid-range EV market globally unless we put up even more tariffs, which I just think is
0:05:57 a bad idea, which is nothing but a tax on consumers, especially EVs, young people I
0:06:02 think need EVs. And the BYD EV, that’s supposedly a pretty good car that could sell for $12,000
0:06:07 if it didn’t have tariffs on it. I say no tariffs. I say let the Chinese come in and
0:06:16 compete on EVs. Now, what will probably happen is that the American EV market, specifically
0:06:22 Tesla will continue to do well while I think its stock is vastly overvalued. I think that’s
0:06:29 an enduring company because of one thing, and that is America still has the best brands
0:06:38 in the world. Name a global brand, an aspirational global brand that’s come out of China. I’m
0:06:44 still waiting. For whatever reason, the American culture, European culture still produces
0:06:50 the best brands in the world. And when you start paying $40,000, $50,000 for a car, you’re
0:06:55 not buying steel wrapped around four tires with a battery. You’re buying something that
0:06:59 says something about you. You want people to know that you’re wealthy and care about
0:07:02 the environment, which means you should have sex with me. That’s effectively what you’re
0:07:06 saying when you buy a Tesla, and that’s why so many guys in midlife crises were sort of
0:07:10 the first owners of Tesla. When you buy the first electric Ferrari, you’re going to say,
0:07:15 “I have a very small penis and a lot of money.” Anyway, it’s just sort of kidding. But at
0:07:20 the high end, you have self-expressive benefit aspirational brands, and the reality is the
0:07:28 US and Europe pretty much have a monopoly on everything from Bottega Veneta to Nike.
0:07:33 We’re just better at it. But there’s no doubt about it. When it comes to really hardcore
0:07:38 deep manufacturing, supply chain driven manufacturing, it’s China under seven dwarfs, and that’s
0:07:42 including in the EV market. Thanks for the question. Question number two.
0:07:47 Hey, Scott. It’s Ed from Hampshire in the UK. I’ve been following your content since
0:07:52 the early days of YouTube back in 2017. At that stage, I was leaving the Army, and I
0:07:56 found the work that you were producing really helpful at educating me on the world of business
0:07:57 that I was moving into.
0:08:01 Definitely the question, which is about the prof g show as a business itself. I’d be
0:08:07 fascinated to understand a bit more about how you operate the business. How do you select
0:08:11 the content you’re going to be talking about? How do you pick the advertisers that you’re
0:08:15 going to work with? What role does Vox Media play in things? And why, for instance, have
0:08:21 you not moved to a freemium model or even a subscription based, given your well-known
0:08:26 views on the ad, the supported economy? Again, thank you for all of your work. I’m really
0:08:30 flattered as a Brit that you’ve been willing to endure the mediocre food and even more
0:08:35 mediocre weather that London has to offer. All the best to you and yours, Ed.
0:08:40 Thanks so much for the kind words. I disagree. I think actually London has finally world
0:08:43 class food. I think anytime you have this level or this concentration of wealth, you’re
0:08:47 going to attract good food. I do agree with you at wherever on the weather. Go team England.
0:08:50 Let’s start there. Go team England.
0:08:58 Okay. So, Prop G Media. I sold L2 to Gartner in 2017, and I kind of hit my number and I
0:09:04 sat down and I was planning to raise a private equity fund. And I thought I’d really like
0:09:10 to be wealthier, maybe even someday aspire to be a billionaire. And then I thought, why
0:09:15 the fuck do I want to be or aspire to be a billionaire? It involves another 20, 30 years
0:09:21 of really hard work putting at risk the capital I have because you have to take tremendous
0:09:27 risk to have to register that kind of wealth appreciation because I am far from being a
0:09:33 billionaire. But I was about to just ramp up and get off the hamster wheel long enough
0:09:37 to take some performing enhancing drugs and get back on the hamster wheel. And I made
0:09:40 a conscious decision that I was going to slow down. I still have a lot of tread left
0:09:46 on my tires, but I thought, I want to spend the rest of my life, at least professionally,
0:09:52 having more of a positive influence on issues I’m really passionate about, or that’s the
0:09:55 wrong word, that I think I bring some talent to and that I think are overlooked specifically
0:10:01 struggling young men, teen depression, some of the externalities around big tech. And
0:10:04 at the same time, I want to make good money. I want to work with a group of people that
0:10:09 I really enjoy. And I wish I had figured out earlier that my core competence is storytelling.
0:10:14 So this all sort of bubbled up to media company, but I didn’t want to take outside capital
0:10:18 because I didn’t want to have the pressure of trying to get a return on other people’s
0:10:24 capital. So I started PropG Media. PropG Media is a small niche media company. We have several
0:10:29 lines of business. For me, it begins with writing. That’s home base for me. I think writing
0:10:34 is really, really hard, but I think it creates a certain halo, a certain heft of intellectual
0:10:39 rigor and intellectual capital. So for me, it starts with the newsletter we put out every
0:10:42 Friday, No Mercy, No Mouse, which is free. It goes to half a million people. I think
0:10:48 of the Fortune 190 of the Fortune 100 have at least 100 subscribers. That is sort of
0:10:53 a Petri dish for chapters and themes and a narrative arc around the books. I try and
0:10:58 write a book every 18 months. I make money there. I average between one and a one and
0:11:02 a half million dollars per book. That is the hardest thing I do writing books. It’s also
0:11:07 probably the most rewarding. And then that feeds into some very profitable businesses,
0:11:14 specifically speaking. I do between two and a half and $5 million a year in speaking fees.
0:11:21 So that’s an incredibly lucrative business. I enjoy it. It is perfect example of greatness
0:11:24 is in the agency of others. And that is people think that I just get up there and talk for
0:11:29 an hour. I don’t have a great team of analysts that will assemble 100, 120, 140 slides. We
0:11:35 spent a ton of time thinking about narrative arc and humor and visuals and had the pace
0:11:41 and the flow. I see it as almost like a one man, 57 minute Broadway show. And I try to
0:11:45 bring the level of production value to it because no one’s going to pay that kind of
0:11:48 money just to show up and talk about how fucking awesome you are, which is what I see the majority
0:11:55 of speakers doing this day who just left an office or a job in Hollywood or in the corporate
0:11:58 world and think they can just get up there and tell war stories about how awesome they
0:12:04 are. And then the core business from a revenue standpoint is the podcast. And I kind of fell
0:12:08 into this. I have a face for podcasting. I had five TV shows that are all canceled.
0:12:15 The podcasting just took off. And been doing that about seven years. These podcasts combined
0:12:20 will produce somewhere between three and a half and five million a year. So call this
0:12:27 about a $10 million business, 12 or 11 or 12 full time people, three or four contractors.
0:12:32 That’s exceptionally high revenue per employee for a media company. I purposely want to keep
0:12:36 it small. I love the people that I work with. It’s a group of kind of island of misfit
0:12:41 toys of people I’ve worked with in the past. Kind of my rock or my anchor as a woman in
0:12:44 Katharine Dillon, who I’ve worked with for the better part of 15 years and brings real
0:12:49 creative depth and really great management skills. So I can just focus on what I’m okay
0:12:54 at, which is storytelling. And these things are all a flywheel, right? You sell more books.
0:12:59 You get more speaking gigs, more speaking gigs, more podcast revenue, more podcast revenue,
0:13:04 or more people listening to the podcast, more newsletter downloads. And so the wheel spins
0:13:10 if you will. Now Vox is essentially our content and distribution partner. They’re more a distribution
0:13:14 partner for me because we produce everything at ProfG. There are employees at Pivot that
0:13:20 produce it, but for the most part, it’s pretty much the ProfG show. We do all the production
0:13:27 and we throw the podcast over to Vox and then we pay them a fee to sell the ads and work
0:13:30 on audience development. Although I’ve never quite figured out exactly what that means
0:13:34 other than we’re supposed to be great at what we do and create word of mouth, but they’re
0:13:38 a good partner. They have a great ad sales team. The reason why we didn’t go behind a
0:13:43 wall, and this is a conversation we have seriously about every 24 months, is that money is meaningful
0:13:48 to me, but it’s not profound. What’s profound for me is I want to have reach and impact
0:13:54 specifically on young men. I want people to, especially men to feel more in touch with
0:14:01 their emotions. I want to educate people about business. And to go behind a wall, if you’re
0:14:08 really successful, you get four to 8% of your listener base to go subscription, meaning
0:14:14 that I would immediately lose a minimum of 90 to 95% of my reach. Also, I kind of like
0:14:18 the ads. I don’t mind the host readovers. I meet advertisers. I like them. It doesn’t
0:14:22 really bother me. And if you want to press skip, you can get through the ads, but this
0:14:28 is the most fun I have ever had professionally, but it’s a niche media company, the specific
0:14:32 crowds out the general, and finally figured out a flywheel, and I’m doing something I
0:14:37 absolutely love and making good money at it. So thanks for the opportunity and the excuse
0:14:43 to talk about my favorite subject, me. Thanks for the question. We have one quick break
0:14:49 before our final question. Stay with us.
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0:16:54 not productive writing, annoying writing, clarifying writing, just following up writing.
0:16:58 And we all know how that happens. One confusing email turns into 12 confused replies and a
0:17:03 meeting to get a line. That’s where Grammarly comes in. Grammarly is a trusted AI writing
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0:17:49 Welcome back. Question number three.
0:17:52 Hey, Scott. First of all, I love the pod, of course. But more importantly, I love how
0:17:57 transparent you are about your finances, both practically and let’s say psychologically.
0:18:04 So here’s the question. How do you rich? And what I mean by that is what would you do if
0:18:07 you had a sudden influx of wealth or what advice would you give to someone who has a
0:18:12 sudden influx of wealth? And I want you to break that down based on how old that person
0:18:17 might be and how much money they might have gotten in that sudden influx. So, you know,
0:18:22 between someone in their 20s to 30s, someone in their 30s to 40s, someone over 40 or something
0:18:26 with whether they got $5 million, $10 million, $50 million, $100 million, whatever numbers
0:18:29 you think are most interesting for how you would break that down with different advice
0:18:33 for different people, different age groups, different amounts of money. Thank you. Thank
0:18:35 you. Keep up the fun work.
0:18:38 It’s a really thoughtful question. I’m not sure I’m going to have time to go through
0:18:43 all those segments, but let’s assume you’re in your 20s, 30s, or even, so 20s or 30s and
0:18:48 you come across $5 or $10 million. So for example, one of 10,000 invidio employees that
0:18:53 have woken up in the last 12 months and realized that a 31-year-old product manager now has
0:18:58 $13 million in stock. This is an easy one. Maybe you buy a house, maybe you take a nice
0:19:04 vacation, but for the most part, you immediately take a lot, if not all of that off the table,
0:19:09 pay your taxes and invest in low-cost index funds such that when you’re my age, you’re
0:19:13 just done and you can always have that peace of mind.
0:19:16 Look at your debt. What debt do you have? And I’m not saying eliminate all debt. If you
0:19:20 have good debt, you have student loan debt at 3% or you were smart enough to get a mortgage
0:19:25 when rates were really low, so you don’t pay that off. But any debt that is, say, higher
0:19:30 than 6% or 8% or what you could get in the market, I want you to go and pay off that
0:19:36 debt. You just don’t want this haunting you and following you around. And then you are
0:19:39 not going to buy anything. I mean, maybe go out for a nice dinner, maybe take a vacation,
0:19:45 fine. If you’re going with striking distance of a home and you need that for a down payment,
0:19:49 okay, but be thoughtful about what is the monthly payment going to be. But what I really
0:19:54 want you to do with that is I want you to put it into a low-cost index fund because
0:19:59 even $150,000 to $200,000 if you’re in your 20s or 30s, that is literally, if you’re smart
0:20:05 enough and disciplined enough to put it away, diversify it in an index or an ETF and never
0:20:10 look at it again until you are my age, you’re going to be fine. You’re going to really be
0:20:13 happy that you demonstrated that kind of character and the kind of disciplined maturity
0:20:15 that I didn’t have.
0:20:19 If you get real money, I mean, if you get really lucky and I got really lucky later
0:20:26 in life in my kind of late 40s, say 50, 70, 100 million, I think you do two things. One,
0:20:30 I think you spend like a fucking 50s gangster that’s just been diagnosed with ASK cancer.
0:20:36 You spend a shit ton of money. Mostly, I think, and most of the research shows that the greatest
0:20:41 happiness of return you’re going to get is spending it on experiences. And then anything
0:20:45 above that, I think you just give it away. I think it’s really important that we maintain
0:20:52 this wonderful American brand of generosity. Money is a transfer of time and work and there’s
0:20:57 so many people that would just a little transfer of your time and work to them in the form
0:21:02 of money. Just make some so much happier. There’s so many wonderful causes that need,
0:21:07 that can do just incredible good with a little bit of resources. So this is what you call
0:21:13 a great problem. When you’re younger, put aside capital, stop. Don’t fall into the delusion
0:21:17 that you making that money meant you’re really talented. Yeah, maybe that means that, but
0:21:21 more than anything, you’re really talented and really lucky. Take some luck off the table,
0:21:26 concentrate, put it into low-cost index funds. And if you’re my age and you come with the
0:21:32 money and you have more money than you need, then brother, spend it all or give it away.
0:21:35 That’s all for this episode. If you’d like to submit a question, please email a voice
0:21:41 recording to officehours@propertymedia.com. Again, that’s officehours@propertymedia.com.
0:21:57 This episode was produced by Caroline Shagren. Jennifer Sanchez is our associate producer
0:22:01 and Drew Burroughs is our technical director. Thank you for listening to the PropG pod from
0:22:06 the Vox Media Podcast Network. We will catch you on Saturday for No Mercino Malice, as
0:22:11 was read by George Hawn. And please follow our PropG Markets pod wherever you get your
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