How to Think About Stock Options, Healthcare Without Insurance, and Handling Rejection

0:00:02 Support for the show comes from Panerai.
0:00:07 For more than 150 years, Panerai watches have showcased the brand’s rich heritage of Italian
0:00:12 design and Swiss horological expertise, making it the perfect timepiece for modern heroes.
0:00:15 So this is my weakness.
0:00:17 I have several Panerai watches.
0:00:21 It’s the only watch I wear, and trust me, Panerai is the way to go.
0:00:26 Panerai’s new Luminor Marina timepieces honor the brand’s storied legacy and history of pioneering
0:00:30 innovation while enhancing iconic aesthetics, reliability, and functionality.
0:00:35 Visit Panerai.com to discover the world of Panerai and find the boutique nearest you.
0:00:37 That’s P-A-N-E-R-A-I dot com.
0:00:45 Support for this show comes from Odoo.
0:00:50 Running a business is hard enough, so why make it harder with a dozen different apps that
0:00:51 don’t talk to each other?
0:00:53 Introducing Odoo.
0:00:56 It’s the only business software you’ll ever need.
0:01:00 It’s an all-in-one, fully integrated platform that makes your work easier.
0:01:04 CRM, accounting, inventory, e-commerce, and more.
0:01:05 And the best part?
0:01:09 Odoo replaces multiple expensive platforms for a fraction of the cost.
0:01:13 That’s why over thousands of businesses have made the switch.
0:01:14 So why not you?
0:01:17 Try Odoo for free at Odoo.com.
0:01:20 That’s O-D-O-O dot com.
0:01:26 What’s up?
0:01:27 This is your favorite DJ.
0:01:31 Next up, top tracks that aren’t holiday songs, but totally should be.
0:01:33 We love a holiday vibe.
0:01:39 But what you really need to hear is all full-size fragrances and body mists are 20% off at Sephora.
0:01:45 Starting December 15th, save 20% on brands like Sol de Janeiro, Yves Saint Laurent, Valentino,
0:01:46 Fleur, and more.
0:01:48 Only at Sephora and Sephora.ca.
0:01:50 Exclusions in terms of supply.
0:01:56 Welcome to Office Hours with Prop G.
0:01:59 This is the part of the show where we answer your questions about business, big tech, entrepreneurship,
0:02:01 and whatever else is on your mind.
0:02:03 If you’d like to submit a question for next time,
0:02:07 you can send a voice recording to officehours of Prop Gmedia dot com.
0:02:09 Again, that’s officehours of Prop Gmedia dot com.
0:02:13 Or post your question on the Scott Galloway subreddit, and we just might feature it in
0:02:14 our next episode.
0:02:15 First question.
0:02:19 Hey, Scott.
0:02:23 I’m graduating this upcoming May with a mechanical engineering degree.
0:02:28 I have a few job offers lined up, and I feel really fortunate given the current job market
0:02:29 for new college grads.
0:02:34 One opportunity I’m particularly excited about is an aerospace startup, and I’m excited
0:02:38 about it because the company is well-positioned within a rapidly growing sector.
0:02:44 When I reviewed the offer, I noticed that a large and meaningful portion of the total compensation
0:02:47 comes in the form of incentive stock options.
0:02:53 As someone who’s only been paid hourly as an intern, I’m not sure how to value them or
0:02:54 what the tax implications are.
0:02:59 How should early career professionals think about ISOs, and what advice do you have for
0:03:02 young professionals navigating stock options for the first time?
0:03:04 And just a quick thank you.
0:03:08 My dad and I watch markets every day and talk about it whenever we catch up.
0:03:12 I moved far away from college, and the show has been a great way for us to stay connected.
0:03:15 So this is the mother of all good problems.
0:03:16 And first off, thanks.
0:03:20 One of my favorite things is when I hear that people listen to or watch one of the podcasts
0:03:21 with a family member.
0:03:25 That makes me feel wonderful, especially fathers and sons and mothers and sons.
0:03:33 Okay, so current income or your salary, generally speaking, 90% to 98% of us will spend everything
0:03:35 that comes to our hands, especially as a young person.
0:03:38 My first job was at Morgan Stanley, and I was making more money than all of my friends.
0:03:39 I don’t think I saved it.
0:03:42 I saved enough of it to go to Europe, but I didn’t really save any of it.
0:03:46 Because when you’re young and you have money and you live in a capitalist economy with millions
0:03:51 of AI-driven offers every second, everywhere you look, it’s very hard to hold on to cash.
0:03:55 And you’ll always convince yourself that, oh, an upgrade from economy to economy plus is an
0:03:59 investment in myself, and I’m going on a date, so I shouldn’t spend more money.
0:04:02 It’s just really easy to spend everything.
0:04:06 So an ISO is an incentive stock option.
0:04:11 Now, essentially, a stock option is, say your company, this aerospace company, is worth $100
0:04:20 million, and they give you 0.1% of options or 0.05% of options.
0:04:26 That’s equivalent to options on stock worth approximately $50,000 at that moment, usually
0:04:28 at VES over four years.
0:04:32 So they’re saying, all right, we’re going to pay you 80 or 100 grand in salary, and we’re
0:04:34 going to give you options that have a notional value of $12,500.
0:04:39 Now, if they just gave you the stock right now, it’s a taxable event.
0:04:42 What that means is you’d have to pay tax on that $12,500.
0:04:48 So options are not taxable at the moment they’re granted, meaning they’re saying, okay, we want
0:04:49 you to be motivated.
0:04:50 We want you to act like an owner.
0:04:52 So the company’s worth $100 million now.
0:04:59 We’re going to issue you options, meaning you have the option to buy our stock at a predetermined
0:05:00 price at some point in the future.
0:05:05 Now, the great about common equity, which you’ll be getting, is sometimes it’s valued at a much
0:05:12 lower price than the $100 million that maybe they just took valuation they took capital in.
0:05:18 So say it’s valued at $20 or $30 million because common is less valuable than preferred.
0:05:19 I’ll go into that some other point.
0:05:24 That means at some point, if the company gets sold for $300 million, if you exercise those
0:05:28 options, you have to buy, you have to write a check to exercise those options, but it’s at
0:05:30 a lower price than the notional value.
0:05:36 And then if you hold on to the equity after you’ve bought those options or exercised those
0:05:41 options, if you hold on to it for more than a year, you get long-term capital gains, which
0:05:43 is taxed at a lower rate than your current income.
0:05:47 All of this is a long-winded way of saying that equity is how you get wealthy.
0:05:53 And what I would do is I would go to AI and I would type in the name of the company, the
0:06:00 evaluation of the last funding round, how many options you’ve been given on how many shares
0:06:01 at what strike price.
0:06:04 It’s probably going to ask you what is the total number of outstanding shares.
0:06:07 And then you’re going to say, what are these worth right now?
0:06:09 And it’ll give you a notional value.
0:06:13 The reason I bring this up is one, it’s an absolutely fantastic way to build wealth.
0:06:17 And two, if you’re going to negotiate anything, when people are saying, I’ve got an offer, I
0:06:17 want to negotiate.
0:06:21 If you have a second or third offer, what you may want to say is, love the company, want
0:06:22 to start here.
0:06:28 Can you see your way clear to increasing my options package as I want to be an owner?
0:06:30 I really believe in this company.
0:06:36 That’s what I tell people to negotiate around because your option value grows tax deferred.
0:06:37 What do I mean by that?
0:06:39 Say your options double in value.
0:06:44 Until you exercise them, it doesn’t get clipped.
0:06:47 In other words, you don’t lose 37% of it every year.
0:06:52 Whereas the money you get paid in salary every year, you lose 30 to 40 to 45% of it.
0:06:55 So it doesn’t grow as fast.
0:06:56 It doesn’t compound as quickly.
0:07:04 Whereas equity just continues to grow unimpaired by taxation until you decide to sell it.
0:07:07 It grows tax deferred, if you will, and compounds faster.
0:07:14 So ISOs and options are how, when you meet someone who’s really wealthy and they work for
0:07:20 a company, typically they’ve made their money through options and exercising those options,
0:07:23 getting equity in the company, and then at some point selling it.
0:07:25 Find out how much, quote unquote, they’re worth.
0:07:29 Go and type in ISO into AI or into Google and learn about it.
0:07:33 Find the value on it as a percentage of your salary.
0:07:37 And then if you’re going to negotiate, and the best way to negotiate is to be transparent,
0:07:41 I really want to work here, and tell them it sounds like you have three offers.
0:07:42 I’d really like to come here.
0:07:45 Is there any way we can increase the options package?
0:07:51 I have never really saved a lot of money with current income, and I am wealthy because of
0:07:53 the equity I have owned in companies.
0:07:56 But let me just circle back to the beginning.
0:08:01 So it’s on you to learn what options are, the tax advantages, figure out what they’re worth,
0:08:05 and then if you can, negotiate a little bit more.
0:08:09 And also, employers are really receptive to the notion that I don’t want more current income,
0:08:12 I want more options because I want to be an owner here, a bigger owner here.
0:08:15 But this is the mother of all good opportunities.
0:08:18 You should feel really good about yourself.
0:08:19 You’ve studied hard.
0:08:20 It sounds like you’ve got great certification.
0:08:27 And you’ve got a good job offer, and this is absolutely, everybody wants to be you, young man.
0:08:29 So congratulations and well done.
0:08:33 Question number two comes from a listener who emailed us.
0:08:34 Hi, Scott.
0:08:34 Love the pod.
0:08:39 In the past, you’ve mentioned that you forego medical insurance for your family and pay out-of-pocket.
0:08:40 How does that work?
0:08:41 Do you negotiate every office visit or procedure?
0:08:44 What has your experience been like asking for a friend?
0:08:45 Thanks.
0:08:51 First off, I am not suggesting or endorsing going naked without health insurance.
0:08:56 We have, in the U.S., decided to monetize health care.
0:08:58 Health care isn’t about making Americans healthier.
0:09:03 It’s about making the owners of the stock of that health care company wealthier.
0:09:08 And if you’re in the top 10%, you get the best health care in the world.
0:09:12 If you’re in the bottom 90%, I would argue you’re probably somewhere around fifth or sixth
0:09:14 in terms of G7 in terms of care.
0:09:19 Now, I think insurance is one of the biggest scams in history.
0:09:21 If I had it to do over again, I think I just would have bought rental real estate, but a
0:09:24 close second would have been I would have gone into the insurance industry.
0:09:29 If you meet somebody who’s got high EQ and fairly mediocre IQ and they make a shit ton
0:09:32 of money, there’s a one in three chance they’re in insurance.
0:09:41 For every $100 you give to insurance, life insurance, fire, auto, medical insurance, 45% goes
0:09:47 to profits and administration, meaning if you pay Aetna or Cigna or, you know, the insurance
0:09:53 company, a hundred bucks, that you are going to get about $55 back in reimbursements.
0:09:55 Now, what they play on is fear.
0:10:02 And that is people will take up for a guaranteed series of small losses in order to avoid an
0:10:04 extraordinary loss, right?
0:10:09 I know my health insurance will be $20,000 or $30,000 a year for my family and I’ll pay
0:10:15 that in case my wife gets lung cancer and it costs a half a million dollars, which we don’t
0:10:23 have, which can be, I think one of the reasons I’m so motivated is because of healthcare costs
0:10:26 and how fucked up our system is, how rapacious and vile it is.
0:10:31 And that is when my mom got cancer, she was discharged early from the hospital.
0:10:36 I came home to a situation that was traumatizing and it got me very motivated because at that
0:10:40 moment I couldn’t take care of my mom at the level I wanted to or felt like I was obligated
0:10:40 to.
0:10:42 I can go naked without insurance.
0:10:45 I found that I was paying $40,000 or $50,000 a year for my insurance.
0:10:53 And what I found is even after paying $30,000 or $40,000 or $50,000 a year, I was going
0:10:58 out of network, arguing, or someone in my family was arguing with how to get reimbursed.
0:11:00 I’m like, fuck this shit.
0:11:05 And so not having had health insurance or the traditional health insurance I was paying for
0:11:09 for eight or nine years now is like somewhere between $300,000 and $400,000 in savings, which
0:11:10 will buy a lot of healthcare.
0:11:14 I’m in a position to do this because I’m bulletproof.
0:11:15 What do I mean by that?
0:11:19 Anything could happen to me from a health perspective and I can afford it to me and my family.
0:11:20 I can get the best healthcare.
0:11:25 So again, it’s another transfer of wealth from people who can’t afford that economic
0:11:26 shock to the people who can.
0:11:29 I use one of these douchebag concierge medical services now.
0:11:35 I pay $60,000 a year to have a doctor basically send my, if I need a drug to my house, I have
0:11:37 this portable kit with everything I need.
0:11:40 I go in and they scan the shit out of me.
0:11:43 If I text my doctor, he texts me back within two minutes.
0:11:45 I am getting an absolute different level of care.
0:11:46 Most people cannot afford that.
0:11:55 But what I would suggest is if you’re already worth several million dollars, I would suggest
0:11:57 that you think long and hard about going naked.
0:12:02 And if your employer isn’t paying it for you, because health insurance, just keep in mind,
0:12:04 you’re getting 55 cents on the dollar.
0:12:09 But I do think we are going to face this.
0:12:13 If we look at our deficit, which is $2 trillion a year, there are 350 million Americans.
0:12:16 We pay on average $13,000 a year for our healthcare.
0:12:18 The rest of the G7 pays $6,500.
0:12:22 If you do the math, it actually adds up to $2 trillion in incremental healthcare expenditures
0:12:27 for which we receive lower life expectancy, more obesity, more anxiety.
0:12:31 In other words, we pay more for a shittier product, unless, again, see above, you’re in
0:12:32 the top 10%.
0:12:37 So I think all roads around economic responsibility and deficit reduction lead to one place, and
0:12:41 that is reduction and attacking the healthcare industrial complex.
0:12:47 And the way I would go about it is take Medicare eligibility down two years, every year for 10
0:12:52 years until it got to 45, at which point basically three quarters of medicine in the United States
0:12:54 by expenditure level is socialized.
0:12:55 And I would just keep going.
0:12:56 It is time.
0:13:00 And if people want to call me a communist or socialist, fine, fine.
0:13:07 Yeah, those nations, when your wife is diagnosed in London with lung cancer, it doesn’t mean
0:13:11 you’re also going to go bankrupt, which is kind of the second thought you have after the horrific
0:13:13 news, like, okay, we’re going to go bankrupt in America.
0:13:18 And obviously, if your employer offers it and you’re fortunate enough to get insurance through
0:13:19 your employer, great, go for it.
0:13:21 Healthcare is a basic human right.
0:13:23 You know, Bernie Sanders whole thing.
0:13:24 Okay, whatever.
0:13:30 It should be happiness is not only a function of what you have, it’s absence from things
0:13:31 being taken from you.
0:13:36 And too many Americans are having their dignity taken from them because of the monetization
0:13:37 of our healthcare system.
0:13:39 Thanks for the question.
0:13:42 We’ll be right back after a quick break.
0:13:50 Support for this show comes from LinkedIn.
0:13:54 If you’ve ever hired for your small business, you know how important it is to find the right
0:13:54 person.
0:13:58 That’s why LinkedIn Jobs is stepping things up with their new AI assistant.
0:14:02 So you can feel confident you’re finding top talent that you can’t find anywhere else.
0:14:05 And those great candidates you’re looking for are already on LinkedIn.
0:14:09 In fact, according to their data, employees hired through LinkedIn are 30% more likely
0:14:13 to stick around for at least a year compared to those hired through the leading competitor.
0:14:15 That’s a big deal when every hire counts.
0:14:19 With LinkedIn Jobs’ AI assistant, you can skip confusing steps in recruiting jargon.
0:14:24 It filters through applicants based on criteria you’ve set for your role and surfaces only the
0:14:27 best matches so you’re not stuck sorting through a mountain of resumes.
0:14:32 LinkedIn Jobs’ AI assistant can even suggest 25 great fit candidates daily so you can invite
0:14:34 them to apply and keep things moving.
0:14:36 Hire right the first time.
0:14:38 Post your job for free at LinkedIn.com slash prof.
0:14:43 Then promote it to use LinkedIn Jobs’ new AI assistant, making it easier and faster to
0:14:44 find top candidates.
0:14:47 That’s LinkedIn.com slash prof to post your job for free.
0:14:49 Terms and conditions apply.
0:14:57 Support for the show comes from Upwork.
0:15:01 You know things are getting bad when your inbox hits double digits before 9 a.m.
0:15:04 You start the day buried in tasks and end it wondering where the time went.
0:15:07 Well, doing it all yourself felt scrappy at first.
0:15:09 Now, it’s just slowing you down.
0:15:13 Upwork Business Plus helps you bring in top quality freelancers fast.
0:15:18 It gives you instant access to the top 1% of talent on Upwork across fields such as marketing,
0:15:19 design, AI, and more.
0:15:23 And all of them are ready to jump in and take work off of your plate.
0:15:25 Upwork Business Plus takes the hassle out of hiring.
0:15:30 Instead of spending weeks sorting through random resumes, Upwork Business Plus sources and
0:15:30 vets candidates.
0:15:36 Then they drop a curated shortlist of proven expert talent in your inbox so you can delegate
0:15:36 with confidence.
0:15:42 Right now, when you spend $1,000 on Upwork Business Plus, you’ll get $500 in credit.
0:15:47 Go to Upwork.com slash save now and claim the offer before December 31st, 2025.
0:15:52 Again, that’s Upwork.com slash S-A-V-E.
0:15:55 Scale smarter with top talent and $500 in credit.
0:15:56 Terms and conditions apply.
0:16:04 Okay, only 10 more presents to wrap.
0:16:06 You’re almost at the finish line.
0:16:07 But first…
0:16:15 There, the last one.
0:16:19 Enjoy a Coca-Cola for a pause that refreshes.
0:16:24 Welcome back.
0:16:27 Our final question is from BobRick8899 on Reddit.
0:16:30 Is that like Ricky Bobby from Talladega Nights?
0:16:31 They say,
0:16:32 Hi, Scott.
0:16:35 Regarding overcoming failure and rejection, you said mourn and get back up.
0:16:37 What are some effective ways to mourn?
0:16:40 And what are some mindset and techniques that can help us get back up?
0:16:41 Thanks so much.
0:16:42 That’s an interesting question.
0:16:48 I’ve always said the key to my success is rejection or the ability to endure it.
0:16:49 Rejection from schools.
0:16:51 Applied to nine business schools.
0:16:55 Got rejected from eight of them.
0:16:57 And then UCLA let me in.
0:16:58 Can you believe that?
0:17:01 California taxpayers and the regents of UC let me in to UCLA.
0:17:05 And then my girlfriend, who I was madly in love with, got into Haas.
0:17:07 And I called Haas, who had rejected me and said,
0:17:08 Look, I’d really like to go there.
0:17:10 Is there any way I could go there?
0:17:12 Otherwise, both of us are going to UCLA and they let me in.
0:17:18 And started to inspire this upward spiral of prosperity for me.
0:17:25 But anyway, I’ve always been able to absorb rejection from employers, universities, women,
0:17:30 and still managed to find a way to feel good about myself and step back up to the plate.
0:17:31 I’ve probably pitched.
0:17:35 Yeah, I’ve raised several hundred million dollars for my companies,
0:17:37 but I’ve probably pitched two or three hundred.
0:17:40 And I think I’ve gotten, say I’ve pitched three hundred.
0:17:43 I think I’ve gotten 294 no’s.
0:17:47 So your ability, the only thing that people you admire,
0:17:50 unless they were smart enough to be born rich, have in common,
0:17:53 is they’ve endured a shit ton of no’s to get to great yeses.
0:17:55 So how do you endure those no’s?
0:17:56 Get used to them.
0:18:01 A lot of approaches, send a lot of emails, try and get a lot of meetings, ask a lot.
0:18:04 And when you get the no, realize you’re going to be fine.
0:18:06 I don’t know what the practice is.
0:18:08 I don’t know if I played with the right toys or the wrong toys.
0:18:12 I’ve always had the best salespeople either have very high self-esteem or very low self-esteem.
0:18:15 I don’t know the psychology around your ability to mourn and move on.
0:18:21 But I do believe that if you never develop calluses, you can’t lift heavy weights.
0:18:26 I would also suggest the one thing I got stuck around.
0:18:31 I’ve had a lot of failure professionally, a decent amount romantically, but I was able to get past it.
0:18:39 The only thing that I had trouble getting past was after my mom died, for about two, three years, I just didn’t do much of anything.
0:18:40 I just didn’t feel much.
0:18:42 I had trouble engaging in relationships and work.
0:18:46 And finally, I just started.
0:18:46 You know what helped me?
0:18:48 It was talking about it.
0:18:50 I didn’t do therapy, but I talked to a lot of people about grief.
0:18:55 And I became very open about it, and that helped.
0:18:58 I still talk about it, you know.
0:19:03 I’m a 51-year-old man, 61, who’s still not over the death of his mother, and that’s okay.
0:19:04 And I talk about it, and it helps.
0:19:07 But I would say give yourself a statute of limitations.
0:19:09 All right, you lose your job.
0:19:13 Give yourself a week to mourn and be upset and angry and talk about what assholes they are.
0:19:19 And then week two, you’re back on LinkedIn, you’re sending out emails, you’re having coffees, you’re meeting with people.
0:19:22 I know a lot of very successful people who got stuck.
0:19:23 They started a hedge fund.
0:19:29 It didn’t work out the way they’d hoped, and they kind of just go sideways for five or ten years because their life has been up and to the right.
0:19:32 And the first time they get beamed in the face, they have trouble getting up off the ground.
0:19:36 So give yourself time to mourn.
0:19:41 If someone dies, I don’t know, mourn for a month, two months, I get it.
0:19:45 And talk to people, be very open about it.
0:19:48 I find fitness and eating well are really important.
0:19:56 But then if you aren’t getting past it, maybe seek help, whether it’s therapy or just being very open to people about how you’re struggling with it and want.
0:19:59 I mean, everybody loses somebody.
0:20:00 Everybody gets fired.
0:20:03 I think I’ve been fired from almost every job I’ve ever had.
0:20:10 So you’ve got to learn how to, you know, there’s a lot of people who can help, whether it’s friends who’ve been through the same thing,
0:20:15 or also I love the notion of action absorbs anxiety.
0:20:24 If you lose your job and you’re upset about your career, start immediately trying to get coffees with people and start applying for and to a ton of other jobs.
0:20:27 I just think every day you’re going to feel better about yourself.
0:20:28 You won’t be in bed paralyzed.
0:20:34 You’re not going to be able to make money again if every day you’re sending out emails and updating your CV and trying to get coffees with people.
0:20:37 Also being very social, I think, helps get a job.
0:20:42 I love the stat that when Google puts out a job wreck, they get 200 CVs.
0:20:44 They shut it down within like 10 minutes.
0:20:50 They bring in the 20 most qualified, but 70% of the time, the person who ultimately gets the offer is someone who has an internal advocate.
0:20:53 So being social is really, really important.
0:20:54 But be aggressive.
0:20:55 Get off your heels and onto your toes.
0:21:01 Long-winded way of saying, I’m not a licensed therapist and I don’t know that that’s what’s worked for me.
0:21:02 Thanks for the question.
0:21:04 That’s all for this episode.
0:21:08 If you’d like to submit a question, please email a voice recording to officehoursofpropgmedia.com.
0:21:11 Again, that’s officehoursofpropgmedia.com.
0:21:18 Or if you prefer to ask on Reddit, just post your question on the Scott Galloway subreddit and we just might feature it in an upcoming episode.
0:21:22 This episode was produced by Jennifer Sanchez.
0:21:24 Our assistant producer is Laura Janair.
0:21:25 Drew Burrows is our technical director.
0:21:28 Thank you for listening to the Prop G pod from Prop G Media.
0:22:01 Thank you.