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0:02:06 Episode 327. 327 is the area code serving Arkansas. 1927, the first solo nonstop transatlantic
0:02:13 flight was completed from New York to Paris. I love the new British Airways tagline, Breakfast
0:02:30 in London, Dinner in New York, luggage in Tokyo. Welcome to the 327th episode of The
0:02:34 Prop G-Pod. In today’s episode, we speak with Cody Sanchez, a former Wall Street investor
0:02:39 and the founder and CEO of Contrarian Thinking, a digital education company with over seven
0:02:44 million followers. We discuss with Cody her new book, Main Street Millionaire, How to Make
0:02:48 Extraordinary Wealth Buying Ordinary Businesses. We get into how to build wealth by buying
0:02:52 small businesses, including what to look out when buying, ways to finance a purchase and
0:02:56 which sectors have the most potential right now. I really enjoy this conversation. She’s
0:03:02 a unique woman and I love kind of this financial literacy or investing approach and that is
0:03:07 instead of talking about Nvidia or AI all the time, what happens when you buy a dry cleaner
0:03:11 or a carpet cleaning company. And I think there’s a ton of potential and if you think
0:03:16 about, I won’t talk more about this, but in some there’s this tidal wave of retirements
0:03:21 from the boomers who have small businesses and their kids all want to be baristas or
0:03:24 go to work for Google. And so there’s going to be a lot of small businesses up for sale.
0:03:27 It’s just, it’s an interesting overlooked part of the economy, a great way to build
0:03:31 wealth and kind of the millionaire next door probably owns car washes and doesn’t work,
0:03:35 you know, doesn’t work at Salesforce. Or maybe she does. Maybe she does anyways, but I really
0:03:39 enjoyed this conversation. She’s an impressive woman. All right, what’s happening? Some news
0:03:46 about the luxury auto space Jaguar unveiled it’s all electric type 00. Hmm. Concept in
0:03:50 Miami art week, marking the official start of the brand’s new era Miami art week. Does
0:03:53 that mean basil? I used to go to basil. I have no interest in art. By the way, I think
0:03:57 people who order expensive wine or expensive art are basically insecure people trying to
0:04:01 flaunt their wealth. I have done neither about a great, the only piece of art I own is a
0:04:05 Grayson Perry. I think he’s, I love that guy. I think he’s super interesting. He talks,
0:04:09 makes political art, lives half his year as a woman, half as a man, did that before it
0:04:14 was cool. And I just think he’s such an interesting cat. And I love he does cover these politically
0:04:18 charged pieces of art. That’s the only piece of art I own. Someone who means a great deal
0:04:22 to me took me to the exhibition of his in Istanbul, found something I liked and then
0:04:27 bought it for me and it’s, it hangs in my living room. And I just absolutely love it.
0:04:32 Back to Jaguar. They released their type 00. The reveal follows week of controversy after
0:04:37 Jaguar’s rebrand campaign went viral. Critics including Elon Musk. Oh, fuck. I agree with
0:04:43 Elon Musk. All right. So anyways, we’re clicked to kind of slam the avant-garde 32nd and which
0:04:47 featured models and a futuristic landscape but failed to show a single car. Remember,
0:04:52 this happened before. Infinity did this. This was the era of brand in the eighties. Let me
0:04:56 get like kind of a brief history of economic history and brands. Brands didn’t mean a whole
0:04:59 hell of a lot. The strongest brand up until World War II was the Catholic Church. Name
0:05:05 anything that engages in corruption, leveraging or exploiting the masses and just institutionalized
0:05:08 pedophilia and manages to be the most powerful institution in the world. They are the most
0:05:12 powerful brand in the world and they are in fact the best brand builders. They understand
0:05:17 distribution and place-based marketing. Let’s build the most beautiful venues in the world
0:05:21 bringing the most talented artisans in the world because we want to fool people in the
0:05:24 middle of believing that, yeah, there’s a decent job that God hangs out here and then
0:05:30 we’ll have robes and clothes and candles and music and it’s highly orchestrated and ruled.
0:05:35 I mean, these folks, these folks understood the Apple store before Apple understood the
0:05:40 Apple store. Best branders in the world. World War II comes along and then you have American
0:05:46 caterpillars left overseas rebuilding America. So yellow started to mean capitalism and rebuilding.
0:05:52 The US dollar, the strongest currency in history, that green hope, optimism, capitalism, winners,
0:05:59 losers, all of a sudden America caught on to the ability to take a shitty product, inject
0:06:05 it with emotion and get unnatural margins. So the primary algorithm for building shareholder
0:06:11 value in 1945 to 1995 was a mediocre shoe, salty snack or car and then wrapped these
0:06:18 amazing brand codes around it. Individualism, toughness, tough like a rock, European elegance,
0:06:22 30 cents a peanut butter paste gets turned into $3 a peanut butter. Why? Because choosing
0:06:28 mom’s choose Jeff, maternal love, right? So in addition, we could, after developing
0:06:34 these brand codes to inject into peanut butter paste, we could hammer these codes into people’s
0:06:38 brains using the most unbelievably inexpensive cheap, didn’t realize what a great bargain
0:06:43 it was called broadcast advertising where 60, 80% of America every night tuned into one
0:06:48 of three channels and you could raise awareness around a brand in a week. And if you want
0:06:52 to talk about efficiency, the Academy Awards, a 30 second spot costs five times as much as
0:06:55 it did 40 years ago and it reaches 130 the audience. So in some, the ROI has gone down
0:07:01 by 15 fold. You’re literally getting 6% of the ROI you used to get 30 or 40 years ago
0:07:05 on advertising. So that was the way to make money. That was the way to print money. And
0:07:10 then, and then came along the end of the brand era in the 80s and 90s was the introduction
0:07:15 of Google. And that is weapons of mass diligence said, well, you don’t know, you don’t need
0:07:20 to buy a Neralco or Gillette hair clipper to shave your head because we now have blogs
0:07:24 that if you type in best hair clipper in the world or best beard trimmer, they’ll take
0:07:30 you to this blog on shaving your head. And there’s some former factory in East Germany
0:07:34 out of East Germany that makes the best clip from the world. There’s just, oh, okay, four
0:07:37 seasons of Mandarin Oriental. Data used to always defer to those brands and stay there.
0:07:40 Why? One, cause someone else was paying, did a lot of consulting around the world, a lot
0:07:44 of speaking. And two, they were always a seven or an eight. And then I realized, oh, what
0:07:48 do you know? What do you know? The hotel du Cap is the best hotel in France and Greeks
0:07:53 have old European elegance. Oh, what do you know? The Soho House in Berlin has an incredible
0:07:58 gym. Oh, what do you know? Daddy likes to roll at the polo lounge. That’s where all,
0:08:02 that’s where all the celebs are. Daddy likes to hang out with the younger cool people, maybe
0:08:06 have some people over for a $54 Cobb salad at the brand of the Patty, whatever it’s called
0:08:12 next. I no longer need to defer to the brand. A brand is shorthand or due diligence when
0:08:17 you don’t have time, but now it’s very easy to do your own diligence. And the shorthand
0:08:22 or the automatic differential nod to a brand is no longer as obvious, meaning that brand
0:08:28 equity on top of a shitty product is no longer the algorithm to build shareholder value.
0:08:34 It’s brands that are built based on superior innovation, operations, distribution. Amazon
0:08:37 is one of the strongest brands in the world. Google is one of the strongest brands in the
0:08:41 world. What do these things have in common? What does any company have in common that
0:08:46 has added over $100 billion in value in any single year? They spend almost no money on
0:08:51 traditional branding. They spent it all on supply chain and innovation and actual 10x
0:08:56 better product. Instagram is a 10x better product as is or was Google. I’m not sure
0:09:00 it’s a 10x better product anymore. It hasn’t changed in 10 years, but the stuff that breaks
0:09:04 through is in fact either delivered differently through distribution, has better customer
0:09:09 support, has more interesting people talking about the product is scrappier around building
0:09:16 awareness and first and foremost uses digital technologies to unlock some type of innovation.
0:09:21 What are some of the assets you want in a brand? What are some of the things that really provide
0:09:27 sustainable advantage? One of those things is visual metaphors. We have been learning
0:09:31 from images or interpreting images for thousands of years. Thousands of years ago, people decided
0:09:37 to educate their kids by painting stories on cave walls. Don’t go over here. They will
0:09:42 kill you or plant the crops at this time of the year such that as a species, we could leverage
0:09:47 our core confidence as a species or our advantage and that is communication and cooperation until
0:09:52 the next generation helped them learn such that communication and storytelling basically
0:10:00 takes instinct. If you are blessed with a visual metaphor, oh my God, oh my God. Literally
0:10:08 Darth Vader or Goofy or the Matterhorn or Snow White or the Seven Dwarves, that shit,
0:10:14 those are really, really powerful metaphors. Visual metaphors, objects, symbols, the color
0:10:18 brown. If I’m driving and I see a big brown thing next to me, I’m like, oh, it’s UPS.
0:10:21 Oh, they’re nice people. They make good money. They work really hard. They’re handsome, dreamy
0:10:25 men. Sometimes they wear shorts, but they always wear brown and their trucks are always
0:10:30 really, really clean. Boom. I like that. I see a swoosh. I see a swoosh. I think you
0:10:35 didn’t win silver. You lost gold. I think of competitiveness. I think of Michael Jordan.
0:10:40 These things are just so powerful when you own one. What is probably the greatest visual
0:10:49 metaphor in the history of automobiles, at least until a few years ago, was the Jaguar.
0:10:56 I mean, look at this bitch of a … Oh, I mean, he’s out. He’s hunting. He’s graceful.
0:11:00 He’s out there. He’s got his partner, his spouse, and his cubs at home. They’re safe
0:11:04 for a time being, but it’s up to him to go out into the wilderness and he’s so strong.
0:11:10 He’s so sleek. He’s so agile. He kills. He hunts. He brings back the meat. Why? He’s
0:11:17 a jungle cat. That thing is so fucking beautiful. So beautiful on the front of a hood. I mean,
0:11:21 it also helped that they built some of the most beautiful cars in the world, but that
0:11:28 logo, elegant, sleekness, strength, yet a certain feminine agility and gracefulness
0:11:33 to it. Jesus Christ. And what do they do? What do they do? They went to fucking mid-journey
0:11:38 or some generative AI bullshit and said, “Give us a logo that feels like an AI software
0:11:45 company.” Oh my God. I can’t imagine anyone more deserving of being fired right now than
0:11:50 whoever’s in charge of design or marketing at Jaguar or Tata Motors. Oh my God. Come
0:11:56 on. What the fuck are you thinking? And it feels as if every CEO or CMO should do something
0:11:59 or take something that doctors have to take, and that is a Hippocratic oath. And the first
0:12:05 thing I say, and it’s actually, it sounds simple, but it’s really strong, do no harm.
0:12:09 And that is if you go in, if you change your doctors, if you’re having cancer treatment,
0:12:13 it’s sort of tempting for the new oncologists to say, “Well, thank God I’m here. You should
0:12:18 be starting this chemo.” But their commitment is do no harm. And so if you’re on a current
0:12:22 chemo and it seems to be working, they resist the temptation to pretend that they’re here
0:12:27 to save everything, and they say, “Okay, what is the easiest way to do no harm? What do
0:12:31 I do here first off to make sure that I’m not harming the patient?” I think every CEO
0:12:36 and CMO should take that oath. Because what I have found in my experience, consulting
0:12:41 to probably 34 of the 100 biggest companies in the world over the last 20 years, the CEO
0:12:46 of the CMO, is that there’s such a huge temptation when you’re the new guy or gal to change everything.
0:12:50 Thank God I’m here and fire the ad agency or change the strategy or whatever to put
0:12:55 your mark on something and take credit for it. And oftentimes, the guy or gal before
0:12:58 you was doing a pretty admirable job, and there’s a lot of good that you should hold
0:13:04 on to. So why are they doing this? The Type 00 of Man in Jaguar’s 90-year history, Jaguar’s
0:13:07 chief creative officer said in a statement, “You will feel uncomfortable, and that’s
0:13:13 okay. I’ll smell you. You will feel uncomfortable, and that’s okay.” Why the pivot? Jaguar is
0:13:17 betting on a complete brand to survive in the luxury EV market. Beyond that, Jaguar
0:13:21 wants a new identity. According to the company’s managing director, the target market isn’t
0:13:24 the traditional middle-aged banker anymore. It’s a younger, more affluent, urban and independently
0:13:29 minded demographic. Yeah, that’s your target from an aspirational standpoint. The majority
0:13:35 of people still buying luxury cars are primarily old white people. The Type 00 is just a design
0:13:39 vision for Jaguar’s upcoming electric lineup. Does that mean it’s not actually a car? The
0:13:44 first production model will be a four-door Grand Tour with a 478-mile range and a $127,000
0:13:49 price tag. It’s supposed to hit the market in 2026. I’m looking at some pictures. I
0:13:54 think it looks pretty cool, but I still like to see a big fucking jungle cat on the front
0:13:58 of the hood. Anyways, the big question is, will Jaguar succeed in building a luxury
0:14:04 EV brand? Oh God, this is a tough one. This is such a crowded market. And quite frankly,
0:14:08 I think the best-run company in the world right now, automobile companies, Toyota, who
0:14:13 bet big on hybrids. It appears that the charging infrastructure isn’t where it needs to be.
0:14:17 People are still insecure about range, the cost. There’s a bunch of things that have
0:14:21 appeared to be greater headwinds. Growth in the EV market has dramatically slowed. And
0:14:26 what has worked? Hybrids, which give you a little bit of this, a little bit of some
0:14:30 chip and some salsa, right? Some peanut butter and some chocolate. There you go. One plus
0:14:37 one equals three, some nitro and some glycerin. And Toyota’s sales have bumped up pretty well.
0:14:41 Tesla’s seem to be kind of flatlining. Is that fair? Probably still up. But it appears
0:14:47 that a lot of people have overinvested in the EV market and that the more measured Toyota
0:14:53 Smart to bet on hybrid and hybrid sales are booming. So I need to see this car. I’m looking
0:15:00 at it. It looks pretty cool. But I don’t know. How do we turn lemons and turn them into lemonade?
0:15:03 How do we chicken salad this chicken shit? Basically, they should come out and say the
0:15:08 overwhelming affection and pushback we receive from customers, design experts, and academics
0:15:14 and podcasters around the value of the logo has told us that we should not, we were abrupt
0:15:18 in our change. And while we have a fantastic new car, we’re going to maintain this unbelievable
0:15:22 metaphor that you’ve all expressed such incredible affection for. And here it is, and you plant
0:15:29 it on the fucking hood, right? They could turn a loss into a win here, but be clear.
0:15:37 Thus far, this is snatching defeat from the jaws of the jungle cat. We’ll be right back
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0:18:41 Welcome back. Here’s our conversation with Cody Sanchez, a former Wall Street investor
0:18:48 and the founder and CEO of Contrarian Thinking. Cody, where does this podcast find you?
0:18:53 Austin, Texas, actually. Nice. Let’s bust right into it. You have a book coming out
0:18:58 in early December titled Main Street Millionaire, How to Make Extraordinary Wealth Buying Ordinary
0:19:03 Businesses. In your book, you share your journey to building a nine-figure portfolio. So first,
0:19:09 what is your definition of rich? Well, I think mostly rich, I think of as freedom.
0:19:14 So it’s can you push back on the world and live the life you want to live? You know this
0:19:17 all too well, but as you start making money, there’s always a bigger number that sounds
0:19:21 more interesting. But I think the biggest thing is that you kind of get to do what you want
0:19:26 to do to some degree, and life still sucks, and it’s hard in many ways. But it sucks a
0:19:29 lot less when you have a bank account that allows you to kind of work where you want,
0:19:34 live where you want to, and build what you want to. And so I kind of have the words “rich”
0:19:40 and “more free” as synonymous. Yeah, you introduced this something called
0:19:44 the rich method. Can you break it down for us? Yeah. Well, the idea is basically four
0:19:49 segments of the book. So first thing is research. So a lot of people, when they think about
0:19:52 buying a business, they hear the idea, then they go think, “Well, I’ll go buy a business.”
0:19:57 And I’m like, “Eesh, you could actually really lose money buying a business or doing deals
0:20:01 or investing if you do it wrong.” And so the first part is, can you spend a little bit
0:20:04 of time actually breaking down what it takes to buy a business? We think there are like
0:20:09 10 steps to buying a business. So that first rich is a big component of doing your due
0:20:13 diligence and understanding what that even means, to figuring out what a deal might be
0:20:20 good for you, not just a good deal overall. And then next, we like to break into the eye,
0:20:25 which is invest. So now that you kind of understand what you’re doing, how can you start allocating
0:20:31 a little bit of either risk, so like your time, maybe your expertise, or capital, money
0:20:35 in order to do a deal. So I also don’t think you can spell rich without risk in some way,
0:20:41 shape, or form, whether it’s your time or somebody else’s. And then C is for command.
0:20:45 So the idea is that your first deal probably will not be your best deal in the same way
0:20:48 that your first job is hopefully not your last job. You’re going to get better at it.
0:20:52 You’re going to do bigger ones. You’re going to understand what investing is good for you
0:20:56 one way or the other. And then finally, we want to take it to the next level, which is
0:21:01 how can you actually scale in a significant way? Maybe that looks like a holding company.
0:21:05 Maybe that looks like you doing additional deals inside of your main business. I saw
0:21:10 when I was on Wall Street, most of the money made by financial professionals is not actually
0:21:15 coming up with brilliant startup ideas. They’re sold too well. 90% of them fail, but I think
0:21:19 the other part we don’t talk about is that the average income of an entrepreneur that
0:21:25 did a startup is like $47,000 to $67,000 a year, three to four years in. So it’s like
0:21:30 you lose money. You pay for the right to lose money multiple years in a startup. And then
0:21:35 most people don’t really make more than you would if you were in a corporate job, and
0:21:42 the very, very few make an absurd amount of money. But it’s actually quite hard. And so
0:21:47 I kind of obsess on this idea of what if we just focused on profitable businesses instead?
0:21:52 And what if when we had our brilliant business idea, instead of just going out and starting
0:21:56 it, unless we want to start the next Facebook, we can’t sleep for the want of the company
0:22:00 being in the world, then I think instead we should probably start with a nice little
0:22:05 profitable business and then maybe acquire a few others on top of it. And so we can actually
0:22:10 buy other people’s 10,000 hours as opposed to having to slay away for them for decades
0:22:11 ourselves.
0:22:17 Just a lot of it. So I’m that person that started a bunch of businesses because I didn’t
0:22:20 know how to buy a business. So I started a bunch and you’re right. It’s just riskier.
0:22:25 The upside, I think the few times, or the couple of times I got it right, I probably
0:22:31 made more than someone who bought a similar business. But I also just took more risk and
0:22:35 I had some zeros and it’s unlikely I would have gotten, you know, had zeros if I just
0:22:39 come into companies that were already working and bought them. Doesn’t it come down to similar
0:22:44 to the housing market? It’s all about the price you buy at. And that is buying a good
0:22:49 business at a decent price to make money. But if you at some price, if the market gets
0:22:55 crazy and everyone reads your book and starts crawling all over the country for small businesses,
0:23:00 as some private equity firms are doing, that it becomes too expensive, don’t you really
0:23:04 need to kind of figure out, and this is, I guess, part of your art research, what you
0:23:07 should be paying for this type of business?
0:23:12 Yeah. I mean, I had a mentor of mine that told me a line I really liked that I’ve remembered
0:23:16 for years, which is you can have my price in your terms or your terms in my price, but
0:23:22 you can’t have both. And that pros want to actually control the terms, want the price.
0:23:28 And so I think you’re right at the base level, which is it’s really hard to work your way
0:23:33 out of a bad deal done upfront. But more than obsessing on price, I would obsess on the
0:23:38 terms. Like, I could give you a million bucks for a business that only does $10,000 in annual
0:23:43 revenue if I got to pay it over the next 40 years out of future profits, as long as I
0:23:49 got to keep, I don’t know, $5,000 a month. So one of the things I’m hoping that we can
0:23:54 teach people is like, real estate’s funny because it’s been so commoditized now, you
0:23:59 can’t do a lot of term changes to it, right? You’re not like stellar finance me that house.
0:24:02 That’s pretty hard to talk to somebody into. You’re not going to ask them to change the
0:24:07 mortgage terms to go out a crazy different amount. You’re not going to say, well, if
0:24:11 I find X, can I have a little bit of capital I can hold back in case we did the valuation
0:24:15 wrong upfront? You can’t really do any of that real estate anymore. I’m sure eventually
0:24:21 businesses will be able to do less of it. But businesses just have so many levers that
0:24:27 I think the real goal here is can you control the terms so that what you think you’re buying,
0:24:32 like base level, yes, you need to know what a business valuation should be. But I think
0:24:36 the real problem is you get into a business, you’re like, hey, this guy’s been running
0:24:41 it for 30 years. I’m going to buy it for a million bucks. And I think the business makes
0:24:45 enough money in order for it to be worth a million bucks. And you quickly realize you’ve
0:24:49 never run a business before. And so you’re probably not going to do as well as the guy
0:24:54 immediately out the gate, and then you run out of cash. And so my biggest protection
0:24:59 is always how can we even pay a little bit more for something? I’m okay with a premium
0:25:04 as long as it’s over time and we decrease our risk by how we structure the deal.
0:25:07 One of the things we really enjoyed about your book is your focus on investing in what
0:25:11 you call mainstream businesses, industries, including plumbing, construction, cleaning
0:25:16 and electrical services. This is something we talk about a lot on the pod, how the skilled
0:25:21 trades are often overlooked. What makes these unsexy businesses so reliable for wealth
0:25:22 building?
0:25:27 Yeah. Well, that’s when I really like wanted to reach out to you originally was because
0:25:31 you have seen all sides of the trade. You’ve been a public market guy forever. You’ve also
0:25:36 been inside the university system. You know, you’ve also seen inside of even private entities
0:25:39 or some companies, maybe you want to take private from public, you’ve kind of seen the
0:25:43 full gamut of what a company can do. And I’ve been sort of yelling at the internet for the
0:25:51 past four years about the fact that during the 1800s, American ownership was 80%. Most
0:25:58 Americans owned their own business. This time around, we’re happy if 10% of Americans own
0:26:03 their own business. In fact, it’s about 6% of Americans own their own business. And you
0:26:06 know how we know we’re losing is that the Canadians have more ownership than we do.
0:26:13 They have like 7.8% ownership. And so, my theory here is that ownership leads to wealth
0:26:18 most often if that ownership is sustainable. And I think we have this like crisis where
0:26:24 we have a bunch of young people today having 452 LLCs that make no money. And so we have
0:26:29 a lot of like quote unquote company creation, especially since 2020, but they don’t make
0:26:35 any money, you know, 60% of all small businesses listed are single proprietorships with no
0:26:41 properties. And so why I like Main Street businesses are if you’ve been a landscaping
0:26:46 company for 10 years, you’ve been in existence, you never got funding from somebody to run
0:26:51 your business. You never got VC capital. That thing had to make money by itself year after
0:26:56 year in order for you to fund your salary. And so these Main Street businesses never
0:27:01 benefited from this huge glut of capital that came from venture capital and even private
0:27:07 equity firms, they take the company entirely. So if they value a company incorrectly, it
0:27:11 doesn’t hurt like the individual. It hurts their investors. And I think they’ve gotten
0:27:16 a bad rap, but they also are the thing that builds local communities. And I’d way rather
0:27:23 some corner coffee shops and local landscaping than a Starbucks or a PE owned roll up.
0:27:28 On the diary of a CEO, you listed three businesses that you really like right now. Senior care
0:27:33 centers, businesses that are services-based that don’t require a lot of upfront capital,
0:27:37 including window cleaning, pressure washing and painting businesses. And the third being
0:27:41 what you call gateway drug businesses. What did you mean by that?
0:27:46 Yeah. So gateway drug businesses are the business that allows you to get a little taste of what
0:27:51 the addictive game of business is, which is running a PNL, making money, being your own
0:27:56 boss. It’s awful, but it’s also amazing once you’ve done it. And so gateway drug business
0:28:00 would be a thing like what is typically called like a self-serve car wash. So they’re not
0:28:06 super expensive. You don’t have a ton of employees. It’s not a complex business to understand.
0:28:09 And thus you might be able to start with something like that. Mine famously was a laundromat.
0:28:13 That was my idea when I first started buying businesses. I was like, man, I’ve been a
0:28:17 corporate junkie for so long. I don’t know if I could run a business by myself. This
0:28:21 one’s pretty simple. I could probably run this one. It’s like dirty clothes, go into
0:28:25 a machine, get clean. I take a quarter, I make money on it. That makes sense to me. There’s
0:28:30 not that many levers to the business. And so a lot of these are called people light
0:28:36 or capital light businesses. So not that many employees, not that much operating expense.
0:28:40 These are the type of businesses that I think are interesting for people to get their hands
0:28:44 a little bit dirty on the game of business to start. And the only caveat there is we’ve
0:28:49 seen a huge increase in the multiple cost of these business since we’ve started talking
0:28:53 about that, both laundromats and car washes. So keep your eye on the prize that you do pay
0:28:58 the right price in terms. Yeah, that makes sense. And then also, you
0:29:03 talk about, or I think it’s in your book, but we talk a lot about here, about this silver
0:29:08 tsunami in that with so many baby boomers retiring, there’s a huge opportunity for younger
0:29:13 generations to acquire these businesses. What are some signs that a small business is ideal
0:29:19 for acquisition? What are some rules of the road for what feels like a good business in
0:29:22 your view? I have two methodologies. If you’re going
0:29:28 to buy a business, first thing is we buy realities and profits. We don’t buy hopes and dreams.
0:29:31 So I think where you can go really wrong in buying a small business is that you go and
0:29:36 buy a business that’s losing money today and you go, the thing is I can fix it. And I always
0:29:41 compare this to real estate. Like how many times have you redone a house and it’s under
0:29:45 budget and done quicker than you thought it was? The answer is like never. It’s just physics
0:29:49 or something. And so just make sure that you don’t buy turnaround businesses. I think that’s
0:29:53 for pros. If you’re a pro, you could do a turnaround, but you’ve done some of those publicly.
0:29:58 Man, they’re brutal and litigious and so stay away from that. The second thing that makes
0:30:03 a business really interesting to me, I think, is that you have an owner of the business
0:30:08 who’s been around for a long time. It has a managerial layer. So it’s not just a job,
0:30:13 it’s a business. There are other people running varying divisions of the business. It’s profitable.
0:30:18 The business is usually in a recession resistant sector. Like for instance, it doesn’t mean
0:30:22 that it can’t go down, but you might have a plumbing business. You might have a roofing
0:30:27 business. You might have a landscaping business. These aren’t so luxurious of items that you’re
0:30:33 going to die during the recession as opposed to a custom framing business, which maybe
0:30:36 is not the best business to get into with volatility.
0:30:39 And then the last thing that I think is interesting for these small businesses is you really got
0:30:44 to make sure that you don’t get in over your head. I say so simple grandma could do it.
0:30:48 And if grandma doesn’t understand your business model, then maybe that’s not the right business
0:30:49 for you.
0:30:54 People have been talking about this for a while, that there are a lot of mainstream businesses
0:30:58 coming up for sale and there’s a bit of an asymmetric or dislocation. What do I mean
0:31:03 by that? That young people find these businesses not sexy and there’s a lot of baby boomers
0:31:07 whose kids don’t want to inherit the business. If a dad has a carpet cleaning business and
0:31:13 makes good money, he wants to retire and he can’t find anyone. And there’s not a real liquid
0:31:18 market here. Is this market getting more liquid? Have you seen, you reference evaluations
0:31:21 have gone up, but you still feel there’s a lot of opportunity.
0:31:26 Yeah. Well, now we have some unique data on this market. So we bought a website called
0:31:30 BizScout, which is a marketplace for buying and selling small businesses. Now we have
0:31:36 68,000 listings on that website. We’ve connected about 3,000 buyers and sellers over the past
0:31:41 four weeks. And we’re starting to get sort of our first realm of proprietary data, which
0:31:45 is it’s a real bitch to get data in the small business space. You can go to the SBA. They
0:31:48 won’t really release any information from you. There’s a couple of behemoths in the
0:31:50 industry. They don’t really share third party data.
0:31:56 And so what we found from the 58,000 businesses listed is most of them are highly incomplete.
0:32:01 So we have this marketplace where it’s the opposite of Zillow and Redfin. There’s no
0:32:08 historical listings of pricing. There’s no uploaded QuickBooks or tax documentation to
0:32:14 confirm what the listings have located there. Very little usage of data room. They say that
0:32:20 less than 10% of all small businesses that are listed for sale run through a broker.
0:32:27 So most of the businesses are kind of a carefully concealed series of disasters. And they don’t
0:32:33 have a roadmap for you to actually see what you’re buying. And so because of that, I could
0:32:37 scream about this from the rooftops. But if people don’t actually know how to get inside
0:32:41 of a business, hold the hand of a business owner that’s done paper invoices for seven
0:32:47 years and move them into 21st century tech, they’re probably not going to close that sale.
0:32:53 And so I think we still have a lot of runway to go there. Plus, this is the perfect fragmented
0:32:59 market. I mean, most of these small businesses are probably jobs. But guess who wants a job?
0:33:02 Your 30-year-olds who are making less than their parents were at 30 as you’ve talked
0:33:07 about before, they’d be thrilled with a business where they could raise their prices more than
0:33:10 inflation each year, where they could be their own boss and where they might actually be
0:33:17 able to grow the business overall. And so businesses that are sub $10 million in revenue
0:33:21 are numerous. I mean, that would be businesses sub $10 million, but above $5 million or about
0:33:28 20% of the marketplace. And the rest is below $5 million in annual revenue, which is a very,
0:33:30 very small business.
0:33:35 Talk a little bit about financing. There’s different ways to finance a small business.
0:33:40 I would think a lot of people don’t consider us because I think I’ve got $20, $30,000 to
0:33:45 my name or no capital. What are different means of financing the acquisition of a small
0:33:46 business?
0:33:50 Yeah. Without trying to sound like a used car salesman saying that you could buy a car
0:33:56 with $0 down and no credit, the interesting part about the business landscape is the credit
0:33:59 is not your own. I think a lot of people don’t realize this. When you go to buy a house,
0:34:05 you go, “Okay, I got $200,000 in earned income. They’ll loan me whatever based on my earned
0:34:10 income, and I can’t buy a house that’s more than that. It’s all based on how much I earn.”
0:34:14 You go to buy a small business, the small business is what the loan is on. Now, they
0:34:19 also want to make sure that you are not going to fail and you’re not going to sit as a liability
0:34:22 on their balance sheet because you can’t run the business, but they’re really analyzing
0:34:27 the business. So your earned income is whatever the earned income of the business makes, which
0:34:30 is like a huge mindset for people to have to think about.
0:34:37 Now, we know the SBA will do loans up to 90% of the purchase price of a small business.
0:34:43 So that means you’re on the hook for probably 10% to 20% down for a small business. And
0:34:47 then you want to have float. You want to have enough cash on hand to make sure you can handle
0:34:51 operating costs for the business overall. But there’s three ways that we buy businesses
0:34:56 that people don’t think about. One, Uncle Sam, SBA gives you money to buy the business.
0:35:00 This is just getting expanded. For the first time ever, they’re allowing diversified investors.
0:35:04 So you don’t have to be the only one. You don’t even have to put up the 10 or 20% now.
0:35:08 You can have other people invest alongside you, put up the capital and be on the loan
0:35:10 with you. That’s just enacted this year.
0:35:15 The second way is seller financing or creative financing. I don’t really like to say seller
0:35:18 financing because it kind of sounds weird if you go to the owner of business and say
0:35:24 like, “You sell me your business using your future profits,” which is what it is. I might
0:35:28 say instead creative financing. In the book, we have like a couple of graphs that I think
0:35:33 help make this more reasonable as to why a seller would do this. But 60% of all small
0:35:38 businesses are sold with some component of seller financing, which is a wild number.
0:35:44 Now, not 80%, but 30% at least. And then the third way that we see small businesses getting
0:35:48 sold, and we’re seeing it like crazy in Japan, I think it’s going to start happening more
0:35:53 here in the US, is basically we’re seeing apprenticeship begin again. A small business
0:35:58 owner knows that they want to retire in the next five years. And because they want to
0:36:02 retire in the next five years, they are starting to look for somebody to take over for their
0:36:07 small business for them. And so it just happened with Jade, a member of our community. She
0:36:11 went to her boss, this is a military contracting company, and said, “I want to eventually take
0:36:16 over your business. Would you be open to selling to me?” And instead he said, “Why don’t we
0:36:22 start transitioning from the business from me to you, and I’ll continue to take up glorified
0:36:28 salary, really like a royalty payment on what you make over the next five, 10, or 15 years,
0:36:32 but I don’t even need you to actually buy the business from me.” And so if we don’t
0:36:36 do this, my thought is that a bunch of these businesses go away and they die, and we’ve
0:36:42 seen that happen. And so that is why I’m pushing people to say, “Yes, be careful of risk, but
0:36:47 these businesses are available all around you to purchase, and baby boomers simply will
0:36:51 not live forever. And if we don’t buy them, then those businesses will go away entirely.”
0:36:57 So say you’re sold on this, what’s the best way to try and cast a wide net and identify
0:37:01 these businesses? I wouldn’t even know where to start to try and find these businesses.
0:37:07 Well, I think the first thing you got to do is we call it deal clarity. So you got to
0:37:11 really make sure you know what you want in a business. I think a lot of reasons why people
0:37:14 get overwhelmed in searching is because they’re like, “Okay, I’m going to buy a business. I
0:37:17 guess Cody talked about laundromats, so I’m going to buy a laundromat.” And that’s not
0:37:23 actually right. If we call it a perfect fit business, so imagine three circles of N diagram
0:37:27 in the middle is the business that’s perfect for you. What I usually tell people today
0:37:32 is like, “Everybody listening has some sort of skill set that is unique to them. If you’re
0:37:36 an accountant, yes, you could go buy a landscaping company, and accountants actually are great
0:37:40 for buying businesses because you know how to analyze the P&L, but you might be better
0:37:45 off buying and counting from. You might be better off actually looking at your competitors
0:37:49 and some of the others in your same or similar industry.” So that’s more strategic. I always
0:37:55 think first, what is your satellite acquisition strategy where either you already have a skill,
0:37:59 you’re an employee in that business, you just go buy a business that is similar. Number
0:38:04 two would be what if you are an accountant, but you don’t want to stay an accountant.
0:38:07 You want to do something else. Well, then you might want to run around and look for a
0:38:13 business that necessitates somebody who has a strong financial acumen. And then third,
0:38:17 we kind of go through this, it’s called the deal box, this from investing, but we have
0:38:22 our investment thesis categorized by 15 different components that says how much money do you
0:38:26 want to make? Where does the business located? Do you want to run the business or do you
0:38:31 want to be an investor in the business? Do you want the business in which sectors? And
0:38:37 once you fill out this deal box, I think bumper lanes actually make it easier to hit the pins.
0:38:44 And so then you can start narrowing down your deal search. And we talk about the 100 to
0:38:48 50 to 10 to 1 rule, which is basically you’re going to look at 100 different companies,
0:38:53 just like you’d look at 100 different houses, high level on business sites, high level publicly.
0:38:58 And then you’re probably going to, you know, after you’re perusing your Zillow of business,
0:39:01 you’re going to narrow down to like 50 that you might reach out. Most of them are never
0:39:05 going to get back to you. Then you’re going to go down to 10 that you get kind of serious
0:39:08 with and you might go visit them. You might get to know the owner. Maybe it’s people
0:39:12 you already know you’re going to get into their financials. And then you get down to
0:39:16 one business that you actually buy. And I’m not saying that’s the right way to do it always,
0:39:19 but it’s a good rule of thumb.
0:39:24 We’ll be right back.
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0:42:47 Can I ask what you think about the MBA and college degrees right now?
0:42:52 I’m not the biggest proponent. Here’s what I can say. I have an MBA from Georgetown.
0:42:59 I went all credentials down the way. I started off at ASU, Harvard of the West, and didn’t
0:43:04 apply anywhere else. It was just where I got in for free. But then I was a Goldman in
0:43:09 State Street in Vanguard in first trust. So, I thought that in order to progress you had
0:43:14 to get an MBA. That was my idea. So, I went and I spent whatever $100,000 plus getting
0:43:20 the Georgetown MBA and added on a PhD to it. If I could go back right now and instead
0:43:26 take those two years back from my MBA and that $100,000 and instead buy a couple of
0:43:32 these businesses, I would. And to be perfectly frank, I learned nothing related to running
0:43:38 a business at my Georgetown MBA. I learned a lot about international business, which
0:43:41 is interesting at the time. And I learned a lot about how to make sure the government
0:43:45 doesn’t fuck with your business too much because I ran a pretty big international finance business
0:43:49 at the time. I also am not in touch with anybody that I went to Georgetown with. Like, they
0:43:53 say, “Well, if you don’t go for the knowledge, you go for the network.” I don’t know. I have
0:44:00 a better network from YPO and EO, which cost me like 4K a year and maybe like 10K a year
0:44:06 for YPO. So, I have a little bit of a jaded view about MBAs in particular. I think it’s
0:44:09 awesome when you’re like me, you want to climb a corporate ladder and you want a virtue
0:44:14 signal. Or if you don’t really know what you want out of life yet and so you just want
0:44:18 to see the full spectrum of jobs or opportunities available, then I like it. But if you want
0:44:25 to be a business owner, the best business school is business and it pays you.
0:44:29 You said you’d wish you had that $100,000 back to buy one or two businesses. What kind
0:44:33 of business? Give us an example of a business that you or someone you know has been able
0:44:38 to buy for $100,000. The type of business, the cash flows where it ultimately ends up
0:44:39 in three or five years.
0:44:44 Well, one of the first businesses I bought was a laundromat for $100,000. And it did
0:44:52 about $67,000 a year in “profit,” but that was also the operator’s payment. And that
0:44:56 business was perfect kind of because I had a guy who knew how to run a laundromat. He
0:44:59 was a real estate guy. Real estate guys are interesting to partner on some of these businesses
0:45:04 because they have to fix a lot of stuff. They have a handyman. They usually know like local
0:45:09 geography. And so he knew that this area was pretty good. We also ended up buying the property
0:45:11 that it was in.
0:45:16 So that business didn’t make me much money. Like I was in finance, $67,000 a year plus
0:45:21 split with the guy plus whatever extra expenses we have was basically not very much. But what
0:45:24 we realized from doing that first deal is we could add three or four more to those. And
0:45:29 that business ended up getting pretty healthy, $300,000, $400,000 a year in both of our
0:45:35 pockets, split between the two of us in our pockets. And that’s when I realized, oh, there’s
0:45:41 not that much difference between a smaller deal and a bigger deal, just confidence at
0:45:45 some degree. And then also once we did a couple of those, then we were like, huh, we would
0:45:49 need to add wash and fold to this. So then one of our laundromats, actually one located
0:45:54 here in Texas, ended up doing $3 million a year in total revenue and then more like
0:46:00 a 25% margin on just that one laundromat from a wash and fold add-on. And so even a laundromat
0:46:04 can scale up to a business that does a couple of million dollars a year if you have a few
0:46:08 of them, one individually know, and that’s a laundromat is probably the worst business
0:46:14 from a total return standpoint out there because you cannot scale it very high. And all these
0:46:18 VC companies have died at the altar of trying to spend a bunch of money on laundromats and
0:46:19 scale them up.
0:46:23 But for a new person who didn’t understand much, you know, that’s how I made my first
0:46:26 couple of hundred K outside of my nine to five.
0:46:30 There’s a lot of research showing restaurants where the owner is there just do tangibly
0:46:36 better. I mean, isn’t this about being really on top of your business and if you want to
0:46:40 scale, it’s about finding and retaining really talented managers. What kind of people do
0:46:44 you look for in your business to bring on to manage these different businesses?
0:46:49 Well, one good thing about a lot of these businesses is the word talent is so different
0:46:54 here than it is for a media company. Like the talent at my media company, they’re expensive.
0:47:02 They leave all the time. They don’t want to do all of the work. They have a lot of optionality.
0:47:07 And you know, I’m lucky in that we screen for kind of the right culture fit for us.
0:47:12 But that talent is really hard to manage. VC talent really hard to manage, really hard
0:47:16 to keep, really expensive. When I run these small businesses, I mean, God, Laura, one
0:47:24 of my operators has been with me for years and is incredible, like never asked for anything,
0:47:30 can run a business that does, let’s call it almost just seven figures a year and probably
0:47:36 will do it for decades for me and doesn’t require this really sophisticated product
0:47:42 knowledge or sophisticated talent set. I think, you know, we owned a mobile home park, for
0:47:47 instance. And like, do you know what the operator of a mobile home park makes a year?
0:47:52 It’s funny, my father actually, his fourth wife owned mobile home parks. So I know a
0:47:57 little bit about this. This is 20 years ago, but they made $28,000 plus they had their
0:48:00 rent paid for it. But that was 10 or 20 years ago.
0:48:04 Well, that’s, yeah. So I first learned this, I was shocked. I was like, wait a second, we
0:48:12 paid in my mobile home park, we paid like 300 or maybe 400 bucks a month to this to the
0:48:17 operator of the mobile home park, plus they got their rent for free, plus they got to
0:48:23 screen everybody that came in. So they ended up picking their friends and like family members
0:48:28 in order for them to come in as well. And that was the entire pay. And I remember when
0:48:32 I asked originally to the guy about the mobile home park, I’m like, why would somebody do
0:48:37 this job for so little? And, and he said a couple different reasons. He said, one, give
0:48:42 them the friends and family perk. They really like, they like self-selection their own community.
0:48:47 You know, to upgrade them, do whatever they want to their actual mobile home, like take
0:48:52 care of everything for them. And then, and then three, like, that’s it, just make sure
0:48:56 that they’re sort of taken care of from that perspective. And so, you know, she’s like
0:49:03 in her sixties, loved the job and ran a mobile home park that did, you know, God, I mean,
0:49:09 one and a half, $1.7 million a year. I think we underestimate how much we have to pay people
0:49:12 when we’ve been in these fancy industries. And then, you know, we ended up selling the
0:49:16 mobile home park and then she got a little piece of it, which was kind of cool at the
0:49:17 end.
0:49:21 The thing that always pops out to me about something like this is that return on investment
0:49:27 has inversely correlated to how sexy businesses, these are not sexy businesses. And, but what
0:49:32 is sexy as you get older is being able to take care of your kids and your parents. And
0:49:37 like you said, be rich, do it, do whatever you want. Is there anyone sector right now
0:49:42 that’s propping up that you think represents more opportunity than others?
0:49:47 I think rehab, individual rehab homes right now, we’re analyzing a bunch of them. I mean,
0:49:51 we have an addiction crisis here in the US, the likes of which really no country has ever
0:49:59 seen before. And that’s not going to get better in the near future. And we do not have enough
0:50:04 beds. We do not have enough resources for these individuals. And originally when I looked
0:50:08 at the sector, I thought, well, who has the money to like spend up a $10 million or $50
0:50:13 million rehab center that must be very aggressive. But actually there are all these grants for
0:50:19 you to do it with single family homes. And so there are these small little rehab, I don’t
0:50:23 even know if you would call it centers houses all around the country that are popping up,
0:50:28 but you get subsidized by the federal government. You also get a bunch of tax breaks on top
0:50:34 of it. You get to do something good for individuals. You also get some unique tax consequences
0:50:39 because it’s largely real estate driven. You get a landhold on the real estate overall,
0:50:45 and they’re not cheap to stay in. And so this one is, there’s not very many home services
0:50:50 businesses that I think can have like a real positive impact too besides the clean communities
0:50:54 I think are good for society. But this is one where I think you could make a real impact.
0:50:59 You can make some money, and it’s probably going to expand crazily. And then we’re going
0:51:02 to eventually see a bunch of PE guys buying it out.
0:51:06 Cody Sanchez is a former Wall Street investor and the founder and CEO of Contrarian Thinking,
0:51:12 a digital education company with over 7 million followers. She’s also the founder of Main Street
0:51:16 Holdco, a small business holding company focused on bringing Main Street businesses back to
0:51:20 the limelight and Contrarian Thinking capital, affirm that invest money back into the companies
0:51:25 that support small business growth. Cody, I think what you’re doing is really important.
0:51:29 Not only because it’s growing the economy and you’re creating jobs, but I think there’s
0:51:34 an unfortunate zeitgeist that if a kid doesn’t go to Dartmouth and end up at Google, that
0:51:39 he or she has failed. And there’s other pathways into the middle class and maybe even to the
0:51:43 upper income home. And I think you’re sort of destigmatizing it. I think you’re actually
0:51:48 playing them, not only an economically important role, but kind of an emotionally and psychologically
0:51:54 important role. Really, really appreciate your good work. And, you know, right on sister.
0:51:55 Well done.
0:51:59 Thank you so much. I appreciate it. It’s fun. I wish more people realized garbage men have
0:52:00 good times.
0:52:03 There you go. Sanitation engineers. Thanks, Cody.
0:52:20 I was very happy. My friend Adam gave me a piece of advice that always sort of resonated
0:52:25 with me. He has two boys, you know, both doing well, both wonderful boys, but they’ve had
0:52:30 like every other boy, they’ve had their issues at different times. And he said that the only
0:52:36 thing that worked consistently was time. And that is eventually things worked out or got
0:52:40 better. And it struck me. And even though I don’t act this way, I know it’s right, but
0:52:46 I don’t always act on it. My son is doing really well at school. Kind of, I don’t want
0:52:52 to say all of a sudden he’s always done okay, even good, but all of a sudden he’s just doing
0:52:58 incredibly well. And when I try to reverse engineer it to our environment or what we’ve
0:53:04 done for him, here’s the answer. Here’s what we did. Absolutely nothing. There’s nothing
0:53:10 we did. As a matter of fact, he wanted to take sports science. And our friends who are
0:53:14 all, you know, Ivy League or die in America said, no, don’t do that. And he’d say economics
0:53:19 or businesses, colleges don’t take sports science seriously. And so we had this big
0:53:24 intervention, tried to talk him out of it. And he pushed back on us, which I’m really
0:53:29 proud of him for. And he kept sports science and he’s getting commendations or whatever
0:53:35 they call as the one at the top in his class in it. And it just struck me that so much
0:53:41 of our stress around our kids is such unproductive stress. You know what you need to do? You need
0:53:44 to love them unconditionally. You need to spend a lot of time with them. You need to
0:53:49 try and instill a set of values in them. You need to model, right? You give your kids
0:53:54 the basics. And then you realize that the only thing that’s works over the long term or
0:54:01 doesn’t is time. And you forgive yourself, you do your best, you work out, you learn
0:54:07 about baseball. But once you’ve thrown the pitch, you know, it’s up to the batter, your
0:54:12 kid and God and the humidity in the air and the environment. So yeah, do you want to be
0:54:16 a little bit stressed out? Sure. But at the end of the day, when you look back, you’re
0:54:19 not going to be angry or upset about the bad things that happen to you or your kids. You’re
0:54:24 going to be angry and upset and how much pressure you placed on yourself and then inject it
0:54:30 into the relationship with your kid. The only thing that reliably works out over time, built
0:54:36 on a base of love and support and time is time.
0:54:40 This episode was produced by Jennifer Sanchez and Caroline Shagren. Drew Burroughs is our
0:54:43 technical director. Thank you for listening to the Prop G-Pod from the Box Me at podcast
0:54:48 network. We will catch you on Saturday for No Mercy, No Malice as read by George Hahn.
0:54:52 And please follow our Prop G-Markets Pod wherever you get your pods for new episodes
0:54:54 every Monday and Thursday.
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0:55:44 That’s AWS.com/learnmore.
0:55:48 Support for this show comes from Polestar. Polestar is an electric performance car brand
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0:02:01 – Welcome to the Propgy Pods Office Hours.
0:02:03 This is the part of the show where we answer questions
0:02:05 about business, big tech, entrepreneurship
0:02:06 and whatever else is on your mind.
0:02:07 If you’d like to submit a question,
0:02:09 please email a voice recording
0:02:10 to OfficeHours@PropgyMedia.com.
0:02:12 Again, that’s OfficeHours@PropgyMedia.com.
0:02:13 Just a little bit of background,
0:02:15 a little bit of texture on the dog.
0:02:19 I’m in Brazil, in Sao Paulo.
0:02:20 I took an overnight here.
0:02:21 I couldn’t sleep this morning.
0:02:23 I took a Xanax, which made me sleep very hard
0:02:25 for about three and a half hours.
0:02:28 And I have been podcasting for five and a half hours straight.
0:02:31 I am so cooked right now.
0:02:33 So with that, let’s throw a bunch of meaningful,
0:02:36 deep life lessons at me or questions.
0:02:38 And I don’t know, this is either gonna go very well
0:02:39 or very poorly.
0:02:40 First question.
0:02:43 – Hi, Prof. G.
0:02:45 I’m Sarah from New York.
0:02:47 I run a startup in the retail marketing space
0:02:49 and I’m super curious to hear your thoughts
0:02:52 on Perplexity’s new Buy With Pro feature.
0:02:54 What does this mean for the retail industry?
0:02:56 – Thanks.
0:02:58 – We had to come in hot with a hard question.
0:03:00 Buy With Pro is a way to shop online with AI.
0:03:04 The platform now allows its paid users
0:03:07 to search, compare, and buy products all in one place.
0:03:09 It’s a chat-based assistant that includes visual search,
0:03:10 similar to Google Lens.
0:03:12 So, okay, a couple of things here.
0:03:13 I say this a lot.
0:03:15 The biggest mistake we’ve made in marketing
0:03:17 is that consumers don’t want choice.
0:03:19 They want fewer choices presented,
0:03:22 but want to be more confident in those choices
0:03:23 served up to them.
0:03:24 That’s the whole basis, especially retail.
0:03:26 Not 32 toasters at Walmart, the right two
0:03:28 from William Snow, but from a woman
0:03:31 who has better taste in kitchen electronics than you do.
0:03:33 Perplexity isn’t alone here.
0:03:34 Google, Amazon, eBay, and Klarna
0:03:36 are all getting into the shopping game.
0:03:38 How could this affect the industry?
0:03:40 It’s already challenging traditional affiliate
0:03:41 marketing models.
0:03:42 Platforms, including Perplexity,
0:03:45 are partnering with publishers to share ad revenue,
0:03:47 but it’s unclear how much these relationships
0:03:49 will shift the balance of power.
0:03:52 So, alongside the launch of these tools,
0:03:55 I think Perplexity is rolling out a merchant program,
0:03:58 and that is retailers who enroll have a better chance
0:04:00 of being featured in recommendations
0:04:05 and get free API access to power search on their own sides.
0:04:07 When asked if Perplexity makes any money
0:04:09 from sales through the buy with pro button,
0:04:11 spokesperson there said not at the moment,
0:04:13 but I think if they create enough traffic and attention,
0:04:16 they will be able to monetize it.
0:04:20 Look, I like this, and we’re talking about the balance of power.
0:04:22 The balance of power is just shifting from the analog
0:04:24 or from capital to IP.
0:04:25 What do I mean by that?
0:04:26 You don’t want to manufacture cars.
0:04:29 You want to create a layer of software on top of them
0:04:29 to sell them.
0:04:31 You don’t want to be in the business of fast fashion.
0:04:33 You want to be in the business, that’s Airbnb.
0:04:35 You want to be in the business of having software
0:04:37 that observes the traffic on your site
0:04:39 and then sends out orders to whatever factory
0:04:41 can do this most elegantly,
0:04:44 and then put in place a transportation system.
0:04:45 You don’t want to own any assets,
0:04:48 and this to me feels like, again,
0:04:50 more assets and shareholder value
0:04:53 are transferring from the people who own stores,
0:04:56 the people who insert themselves in between them.
0:04:59 If I could invest in any AI property right now,
0:05:02 hand-to-hand CEO, please call me, I’d like to invest.
0:05:05 It would be perplexity because I like the positioning.
0:05:06 I like perplexity.
0:05:08 This is whether this application works or not,
0:05:10 it’s already worked ’cause we’re talking about it.
0:05:11 It signals innovation.
0:05:14 Yet another person getting in between the consumer
0:05:17 and the retailer, and if they build enough traffic,
0:05:20 this is a model, overspend, no one can compete with you.
0:05:23 Don’t charge anything, start getting big traffic.
0:05:24 And then slowly but surely,
0:05:27 once you have one, 10, 50% of traffic,
0:05:31 start implementing real fees and onerous fees.
0:05:33 Anyway, thanks for the question.
0:05:35 Question number two.
0:05:38 – Hi Scott, this is Noah in Nevada.
0:05:40 As a branding expert and visitor,
0:05:44 do you think any city or product has marketed itself
0:05:49 as effectively as Vegas, turning a hot, gray,
0:05:52 isolated desert crossroads into the global hub
0:05:55 of entertainment, opulence, and networking?
0:05:58 Appears to be a contender for number one masterclass
0:05:59 in branding.
0:06:01 How do you see Las Vegas adapting and faring
0:06:03 over the next decade or so?
0:06:04 Thank you for your consideration
0:06:07 and enjoy your time in the desert.
0:06:09 – Noah, that’s such an interesting point.
0:06:13 Hands down, best managed brand in municipal cities
0:06:17 or in metros or whatever the term is for a city.
0:06:18 Hands down, what is brand?
0:06:20 Brand means differentiation, right?
0:06:21 You got 10 brands of cereal,
0:06:22 which one do you pull off the shelf?
0:06:24 You got 10 super cities.
0:06:26 Actually, two thirds of all economic growth
0:06:27 is gonna take place in about 25 super cities.
0:06:31 I don’t think Las Vegas qualifies as a super city.
0:06:34 But I think LA is a little bit like Sydney.
0:06:37 I think that New York is a little bit like London.
0:06:39 They’re kind of analogs to almost every city.
0:06:42 I would argue that Orange County or Southern California
0:06:43 is a little bit like Cape Town.
0:06:44 Cape Town is on my brain
0:06:45 ’cause I’m going there later in the month.
0:06:48 Reminds me of what I think California was like in the ’60s.
0:06:52 There’s always sort of an analog, except for Vegas.
0:06:54 Vegas is singular.
0:06:55 In addition, the brand positioning
0:06:57 of what happens in Vegas stays in Vegas.
0:06:59 I just think it’s fucking genius.
0:07:00 I know this firsthand.
0:07:03 I was in Vegas 15 hours ago.
0:07:04 And what am I doing in Vegas?
0:07:05 I’m gambling.
0:07:06 I’m yelling when I get blackjack.
0:07:10 I’m getting way too fucked up and it’s okay.
0:07:12 I thought about going to a strip club last night.
0:07:14 I haven’t been to a strip club in 10 years.
0:07:17 That’s just not my vibe.
0:07:18 But it felt natural.
0:07:21 It felt like, oh, wait, we just gambled.
0:07:23 We made some money, we’re fucked up.
0:07:24 Oh, we should definitely go to a strip club.
0:07:25 No, I shouldn’t.
0:07:27 Why on earth would I go to a strip club?
0:07:30 But you have license to just go kind of,
0:07:34 just to just sin a little bit and it’s legal.
0:07:35 But you would never do,
0:07:37 I would never go to a strip club in any city I live in.
0:07:38 By the way, general rules,
0:07:39 general decent rules for life.
0:07:41 Don’t go to strip clubs or eat fast food
0:07:42 in the cities you live in.
0:07:45 I do eat fast food, but only when I’m traveling.
0:07:46 And I’m trying to screen that out of my life
0:07:48 ’cause I’m getting older and that’s just shitty food.
0:07:52 Anyways, the branding around Vegas is singular.
0:07:53 These people are very smart.
0:07:55 And it’s amazing how it survived.
0:07:58 And granted, it’s down a little bit from post COVID
0:08:01 because gambling is so ubiquitous now.
0:08:03 But they have done an amazing job.
0:08:05 So a singular brand, high margin revenue
0:08:07 because it taps into an addiction.
0:08:10 And the result is just an incredible offering.
0:08:13 By the way, let’s talk a little bit about Vegas hotels.
0:08:14 I used to get 40 bucks from ready teller
0:08:16 when I was in college and we get ridiculously stoned
0:08:18 and they go, I know, let’s go to Vegas.
0:08:21 And I get in my friend’s red Jetta.
0:08:22 Of course, he did not drink hand drive.
0:08:24 We’d go to Vegas for the night.
0:08:27 Golden Nugget, Steven Wynn, 999 best buffet.
0:08:28 So we’d have 30 bucks.
0:08:31 I’d play blackjack at a $1 table.
0:08:33 Boom, I remember because I used to wear
0:08:34 my mom’s boyfriend’s cardigan
0:08:36 ’cause he was rich and had good taste.
0:08:38 And he gave me a cardigan that I always used to wear.
0:08:41 And then I upgraded to the Tropicana
0:08:44 with the toucans with those birds, 19 bucks a night.
0:08:46 And then I got really fucking crazy
0:08:48 and started going to the, oh my God,
0:08:50 what was the one with the tigers?
0:08:51 Treasure Island?
0:08:52 No, wait, I don’t know where.
0:08:55 And then when I started to make some money, hello ladies.
0:08:57 And I started going to the Rio.
0:08:58 Do you remember the Rio hotel?
0:09:01 The hook, I love a cab driver.
0:09:02 So I would say I’m going to the Rio and then go.
0:09:05 The Rio where it’s hooker friendly.
0:09:06 Anyways, love the Rio for a while.
0:09:08 Then I was at the palms for like a hot minute.
0:09:09 And then when I started making some money,
0:09:11 I started staying at the Cosmo.
0:09:13 Say to the Bellagio, too high end for me.
0:09:15 Felt like I was in a Frank Sinatra film.
0:09:17 I was waiting for the ass cancer from all the meat.
0:09:19 I’m partying with Angie Dickinson later tonight.
0:09:21 By the way, did I tell you I did Xanax last night anyway?
0:09:23 So then when I started making real money,
0:09:26 I went to the Cosmo with your older and have some money
0:09:28 and you want to hang out with younger people.
0:09:29 Really interesting concept.
0:09:32 Take the coolest brands, Beauty and Essex, Milosh,
0:09:34 license it, bring in there.
0:09:37 Then I went to the Aria, newer, higher end,
0:09:40 kind of like a Lexus sort of feel, more modern,
0:09:41 was a fucking disaster for the developers,
0:09:42 but they finished it.
0:09:43 It was nice.
0:09:46 And now, now I stay at the win because even though it’s
0:09:49 a bunch of rich people from Texas and not my vibe,
0:09:51 I just like good service and they do the best job.
0:09:54 The win in the encore and my impression are hands down.
0:09:55 The best casino.
0:09:56 There you go.
0:09:57 There’s a story of my hotels in Vegas,
0:10:02 but see above a singular city resulting in unearned margin.
0:10:03 Thanks for the question.
0:10:06 We have one quick break before our final question.
0:10:07 Stay with us.
0:10:15 Support for the show comes from Betterment.
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0:11:00 Investing involves risk.
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0:12:15 Support for this show comes from Seven Rooms.
0:12:16 What’s the recipe for taking your restaurant
0:12:18 to the next level?
0:12:20 Well, restaurant operators know a key part of it
0:12:23 is making more money and making sure it keeps coming in.
0:12:26 That’s why you want to bring Seven Rooms to the table.
0:12:29 Seven Rooms is an all-in-one CRM marketing
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0:12:40 coming back for more.
0:12:43 You can wow diners with a host of tools
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0:12:57 Seven Rooms helps you grow your brand and your covers
0:12:59 and not your workload.
0:13:02 Learn more at SevenRooms.com.
0:13:05 Seven Rooms, make magic, make money.
0:13:09 Welcome back, question number three.
0:13:10 Hi, Prof. G.
0:13:12 I’d appreciate some parenting advice.
0:13:14 I have an ambitious high school senior
0:13:17 who has been accepted to a high-status university,
0:13:21 Michigan, and a lower-status university, Montana State.
0:13:25 He plans to double major in mathematics and computer science.
0:13:27 My son fell in love with the lower-status campus
0:13:31 and its outdoor recreation, skiing, fishing, mountain biking,
0:13:33 all of which he loves.
0:13:36 My instinct screams take the higher-status option,
0:13:39 but compelling him away from his first choice
0:13:43 runs the risk of resentment, burnout, or dropout.
0:13:45 Look, I hate this bullshit of,
0:13:47 just where he’s gonna go where he’s gonna be happy.
0:13:48 This is a bottom line.
0:13:50 College is just fucking amazing, all right?
0:13:53 He’s gonna have four amazing years.
0:13:56 And there’s just no getting around it.
0:13:58 We tell ourselves this myth
0:13:59 that it doesn’t matter where you go to school,
0:14:01 as long as you get a good education.
0:14:02 It’s not true.
0:14:05 We have a caste system in our society.
0:14:06 In Europe, it’s your family name.
0:14:08 In the US, it’s the college you went to.
0:14:10 And then the first few firms you work for,
0:14:12 your economic trajectory in your 20s
0:14:14 largely sets the economic trajectory for the rest of your life.
0:14:17 And the thing that sets your economic trajectory right out
0:14:19 at 22 is the university you went to.
0:14:22 The big name brand state school you’re talking about
0:14:24 is just gonna offer more opportunity.
0:14:26 There’s very few brands that stick with you
0:14:29 the rest of your life and say something about you.
0:14:32 And unfortunately, that’s your university.
0:14:35 My son, I had a similar situation with my son.
0:14:39 My son applied to a bunch of boarding schools in the UK.
0:14:40 One was lesser prestigious.
0:14:42 He got in and he got into another one
0:14:44 that was kind of like iconic.
0:14:47 And I think he was a bit intimidated by the iconic one.
0:14:49 And we said, “Look, you have agency here.
0:14:50 “What do you want to do?”
0:14:53 And he said, “I wanna go to the kind of the second tier,
0:14:54 “but good one.”
0:14:55 And I took him on a long walk
0:14:56 and this is what I said to him.
0:14:59 I said, “You know I’m smart, right?”
0:15:01 I literally said that and he’s like, “Yeah.”
0:15:03 And I said, “And you know I love you, right?
0:15:04 “Yeah.”
0:15:06 I wanna make really good,
0:15:08 I wanna help you make really good decisions.
0:15:11 And I want you to trust me on this one.
0:15:13 I think you’d be better off here.
0:15:14 I think this will set you up
0:15:17 for a better education and more opportunities.
0:15:19 And I was really lucky.
0:15:21 He was silent for a second and he said, “Okay.”
0:15:24 And I don’t know if you have that kind of relationship
0:15:26 with your son, but I wanna be clear.
0:15:29 I think you’re more doors.
0:15:32 I just talked to a kid who got into a mediocre university
0:15:33 where he could play basketball.
0:15:36 And to MIT where he wasn’t gonna play basketball.
0:15:38 And he chose the mediocre school.
0:15:40 And my advice was dude,
0:15:43 go to MIT and buy a fucking basketball team in 20 years.
0:15:45 Would you like to own a basketball team someday?
0:15:47 I mean, you’re not going to be an NBA player.
0:15:48 There’s just no getting around it.
0:15:51 Your son would be better in terms of prospects.
0:15:52 I mean, if he hates it
0:15:54 and he’s gonna be depressed, fine.
0:15:56 But the school you’re talking about
0:15:58 is an amazing school.
0:16:01 He’s got a great time for turning sororities, football games.
0:16:03 So I hate to say this,
0:16:05 but I would just happen and say,
0:16:08 “Look boss, I love you, I’m smart.
0:16:10 “Can you defer to me on this?
0:16:11 “Can you trust me on this?
0:16:12 “And if you don’t like it,
0:16:16 “you can easily transfer from this school to this one.
0:16:18 “You know, on this one, can I cash in some chips?
0:16:20 “Let me finish with the following.
0:16:23 “You and your partner have clearly done a great job.
0:16:24 “This is what you call a great problem.
0:16:26 “If your son is into both these schools,
0:16:31 “it means you have raised a thoughtful, disciplined young man.
0:16:33 “And at the end of the day, that’s the headline news.
0:16:34 “Well done.”
0:16:37 That’s all for this episode.
0:16:38 If you’d like to submit a question,
0:16:39 please email a voice recording
0:16:41 to officehours@proppgmedia.com.
0:16:44 Again, that’s officehours@proppgmedia.com.
0:16:46 (upbeat music)
0:16:53 (upbeat music)
0:16:55 – This episode was produced by Jennifer Sanchez
0:16:56 and Caroline Shagren.
0:16:58 Drew Burroughs is our technical director.
0:16:59 Thank you for listening to the Prop G Pod
0:17:01 from the Box Media Podcast Network.
0:17:04 We will catch you on Saturday for No Mercenial Mellis,
0:17:05 as read by George Hawn.
0:17:07 And please follow our Prop G Markets Pod
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0:17:11 every Monday and Thursday.
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0:01:37 Welcome to Raging Moderates. I’m Scott Galloway.
0:01:39 And I’m Jessica Tarleff.
0:01:40 Jessica, it’s time for banter.
0:01:42 Don’t do it.
0:01:44 It’s time for banter.
0:01:46 What were you worried I was going to do so I can do it?
0:01:48 I was going to say, where do I find you today?
0:01:50 And then I would say, in the same place, I always am.
0:01:52 But where are you?
0:01:54 I do not recognize this room.
0:01:56 I’m at home in London and we’re moving.
0:01:59 So I’ve been charged with, I am so good at purging.
0:02:02 I won’t even show it, but I’m literally throwing out like 200 pounds of clothing
0:02:05 and all sorts of stuff.
0:02:06 But I’m back in London.
0:02:07 I’ve been here two days.
0:02:10 Already can’t wait to get out.
0:02:14 The weather, I don’t know if you’ve heard the weather here is awful, Jess.
0:02:15 The weather here is awful.
0:02:16 I lived there six years.
0:02:20 I actually started using happy bulbs after like three.
0:02:23 I gave in and said, oh, this is legit depressing.
0:02:25 I need a lift at home.
0:02:26 So people don’t know this.
0:02:27 I don’t think people know.
0:02:29 You got a PhD at the London School of Economics.
0:02:30 Is that right?
0:02:31 It is right.
0:02:33 And what did you get your PhD in?
0:02:34 It was in the government department.
0:02:38 I guess it was like technically political economy, but yeah.
0:02:39 So impressive.
0:02:41 And did you enjoy living here?
0:02:42 Would you ever move back?
0:02:43 Yeah, we would love to do.
0:02:46 I mean, we never lived there together, me and my husband,
0:02:49 but he has an office there, which is appealing.
0:02:51 But I, as of now, couldn’t work there.
0:02:54 But once all of this pans out for us,
0:02:56 I’m sure I’ll be able to work anywhere in the world.
0:02:57 There you go.
0:02:59 So all right, our producer’s getting angry at me.
0:03:00 Let’s move on.
0:03:04 In today’s show, we’re discussing Biden’s pardon for a sunhunter,
0:03:08 Trump’s tariff proposals, and appointment of cash Patel,
0:03:11 and why companies are rolling back DEI initiatives.
0:03:12 All right, let’s do it.
0:03:16 On Sunday night, President Biden pardoned his sunhunter,
0:03:18 wiping out convictions for gun and tax crimes
0:03:22 and covering potential federal offenses from 2014 to 2024,
0:03:25 including his barisma dealings.
0:03:29 This reverses Biden’s earlier promise not to pardon hunter.
0:03:31 The clemency council sentencing emblocks
0:03:33 any future prosecution with courts expected
0:03:35 to dismiss all charges.
0:03:37 Reactions, as you might have guessed, have been mixed,
0:03:38 even among Democrats.
0:03:40 With Colorado’s governor, Jared Polis, tweeting,
0:03:43 while as a father, I certainly understand President Joe Biden’s
0:03:45 natural desire to help his son by pardoning him,
0:03:48 I am disappointed that he put his family ahead of the country.
0:03:52 Trump posted on Truth Social, does the pardon given by Joe
0:03:55 to Hunter, including the January 6th hostages who have now
0:03:57 been in prison for years, such an abuse
0:03:59 and miscarriage of justice?
0:04:02 J6’s referring to January 6th insurrection.
0:04:06 Jess, did you see this coming, and what are your thoughts here?
0:04:08 I guess I always thought it was feasible,
0:04:10 though we talked about it on air, and I said,
0:04:11 he said he’s not going to do it.
0:04:14 And you have to take him at his word.
0:04:16 I think that he thought he was going to win the election,
0:04:19 or that Kamala Harris was going to win the election,
0:04:21 and then maybe things were going to be different.
0:04:24 But back against the wall, the sentencing, I think,
0:04:26 is coming up this week.
0:04:30 And apparently, at NBC, I think, is reporting
0:04:35 that they decided in June to say that he was never
0:04:38 going to pardon Hunter, even though it was still on the table,
0:04:39 which feels definitely deceitful.
0:04:40 So there’s a lie, right?
0:04:43 There is a lie in this, in him saying that.
0:04:47 But I think with the timing that he saw Trump make
0:04:50 Charles Kushner, who–
0:04:54 Jared Kushner’s dad, who did one of the more insane things.
0:04:57 You know this story about how his brother-in-law was
0:04:59 cooperating with the feds against him,
0:05:01 so he sent a prostitute to seduce him,
0:05:04 and then sent the tape of it to his sister.
0:05:08 He exposed that her husband was cheating with a prostitute,
0:05:11 because he was cooperating on other crimes
0:05:13 that he actually didn’t end up being convicted of.
0:05:15 So I think he saw that Charles Kushner is going
0:05:17 to be the ambassador to France.
0:05:19 Trump’s pardoned everyone and their mother.
0:05:25 And he’s also appointing people to his cabinet,
0:05:31 who openly want to put Hunter away to avenge enemies
0:05:33 from the press, people who went after him
0:05:37 for the “Russia hoax,” “Russia collusion hoax.”
0:05:40 And so I think he just said, like, eff it.
0:05:44 Like, I have a few more months with power,
0:05:46 and I’m going to protect my kid.
0:05:48 I think you nailed it.
0:05:53 You know, on the downside here, we are kind of devolving
0:05:55 into that place, right?
0:05:58 I remember when Speaker McCarthy got so upset
0:06:02 about some of the holdouts, he kind of stormed up
0:06:05 the aisle of the rotunda, and it felt like we might
0:06:07 become that nation or South Korea that every 18 months,
0:06:11 the Congress breaks into fisticuffs.
0:06:13 And I feel like we become that nation.
0:06:18 And that is we now have people in power abusing their power.
0:06:20 This is an abuse of power.
0:06:22 And I don’t believe– I believe if Harris had won,
0:06:24 he wouldn’t have done it.
0:06:28 I think the expectations now have become so low,
0:06:33 and you get so little reward for trying to live up
0:06:36 to the expectations and acquit yourself
0:06:37 as past presidents have.
0:06:39 You actually get dinged for it.
0:06:41 It’s not even like no reward.
0:06:45 I feel like you’re penalized for being ethical.
0:06:47 Well, that’s a fair point.
0:06:50 And I just want to be clear.
0:06:53 If I were President Biden, I would do the exact same thing.
0:06:56 If I’m– I mean, the guy’s not going to be around,
0:07:00 I doubt, much longer, or he’s definitely on the back nine.
0:07:03 And my sense of his son, pure speculation,
0:07:06 struggled with addiction, loves his dad immensely,
0:07:09 trying to get his life together, I think.
0:07:10 A total fuck-up.
0:07:14 You know, one of his kids killed in an auto accident.
0:07:17 His other son died of a brain tumor.
0:07:20 His one son loves him immensely.
0:07:23 And then he sees, as you said, OK, let me get this.
0:07:27 The president’s son-in-law’s dad gets pardoned
0:07:30 and then becomes the ambassador to France.
0:07:31 Fuck it.
0:07:33 I mean, that’s exactly right.
0:07:35 I would have done the exact same thing.
0:07:39 And the problem is it’s become a race to the bottom
0:07:43 where no behavior now seems off limits or shocking.
0:07:47 So this is a weird analogy, but I’m aggressive on my taxes.
0:07:49 I don’t do anything illegal.
0:07:52 And for a long time, I’m like, no, it’s good to pay taxes.
0:07:55 And I thought, why am I disarming unilaterally?
0:07:58 You know, no one’s going to say at your funeral
0:08:00 that he was great, he paid more taxes
0:08:02 than he really needed to.
0:08:04 And it’s the same thing here.
0:08:05 It’s like, let me get this.
0:08:08 These guys, this guy’s going to pardon
0:08:11 the Duck Dynasty insurrectionists.
0:08:13 I’m going to potentially pardon people
0:08:15 who have been campaign donors.
0:08:16 You mentioned the Kushner.
0:08:18 By the way, that’s got to be–
0:08:22 I would love a Thanksgiving with the Kushners.
0:08:28 I know the kid, Jared, I like him, he was my student.
0:08:31 His brother seems like a total baller.
0:08:33 His brother’s also married to a supermodel.
0:08:35 I’ve always liked Ivanka, I’ve met her once or twice.
0:08:37 She’s always been nice to me.
0:08:44 But I definitely want the father, his wife, the prostitute.
0:08:46 I just think it would make for such an interesting Thanksgiving.
0:08:48 I got to think their Thanksgiving
0:08:50 is one of the more interesting Thanksgiving.
0:08:52 And we should do it at the US Ambassador’s Ship in Paris,
0:08:56 which, by the way, is literally the coolest
0:08:58 Ambassador residence in the world.
0:09:00 But back to our central theme here.
0:09:03 This is the problem with an administration
0:09:06 that is descended into essentially a kleptocracy
0:09:09 that has absolutely no moral standards.
0:09:13 Is the other side goes, well, why the fuck are we
0:09:17 trying to pretend to be ethical when there’s no payoff?
0:09:20 When the market and the public doesn’t seem to mind?
0:09:24 If I’m an 82-year-old father, yeah, I’m pardoning my son.
0:09:26 I would have done the exact same thing.
0:09:29 Yeah, that seems to be the overwhelming response,
0:09:32 putting aside Governor Polis, who also
0:09:35 had quite the hot take on RFK Jr.
0:09:39 that he got destroyed over when that nomination came out.
0:09:42 But generally speaking, hardcore Dems
0:09:44 seemed to be like, yeah, OK.
0:09:46 And it was also time to have some backbone.
0:09:50 And one of the main complaints that I feel like rank and file
0:09:53 Dems have is that we have no Mitch McConnells amongst us,
0:09:58 no one who’s ruthless enough to not give Garland a hearing.
0:10:03 And that they’re mad at Merrick Garland once he became AG,
0:10:06 that he took two years to appoint Jack Smith to look
0:10:10 into all of these crimes that Trump has alleged–
0:10:12 we’re supposed to say alleged, though everything’s
0:10:13 been dismissed now–
0:10:14 committed.
0:10:16 We just sat around for too long.
0:10:17 And now all of it is gone.
0:10:18 Poof.
0:10:20 The Republicans never would have done that.
0:10:22 They take every swing.
0:10:24 And if they miss, so what?
0:10:25 I’ll put someone in.
0:10:26 You swing with Matt Gaetz.
0:10:27 Guess what?
0:10:31 You got Pam Bondi, who’s kind of like Matt Gaetz in a dress
0:10:34 and a bit more confident, which I guess is a good thing.
0:10:36 We’ll see how that bears out.
0:10:40 But one point that Dave Weigel, friend of the pod,
0:10:41 if we can say that–
0:10:42 I always like that term–
0:10:48 made was that if you read the text of what Biden said,
0:10:51 his point was that he still believes in the rule of law,
0:10:55 but that this was an abuse of the law for political reasons.
0:10:59 And Weigel harkened back to the defense that Bill Clinton gave
0:11:01 in the ’90s, why he was pardoning people,
0:11:03 and he thought that all of it was just junk.
0:11:05 He’s like, this is all just politically motivated.
0:11:07 If you get me on something that’s actually a crime,
0:11:10 and he perjured himself, and that is bad,
0:11:11 and you shouldn’t have done that.
0:11:16 But the point is, no one cares about who I’m having sex with,
0:11:20 except for Ken Starr and rabid Republicans.
0:11:21 And so this doesn’t actually have anything
0:11:23 to do with my competency.
0:11:26 It doesn’t have anything to do with how I do my job.
0:11:29 And so I’m not going to treat this as the real world,
0:11:31 and I’m going to pardon people that are associated with it,
0:11:34 and I’m going to move on with my life, and frankly,
0:11:36 think pretty highly of myself still.
0:11:39 And that’s clearly the tack that Joe Biden was taking.
0:11:42 I thought that was a really interesting and smart take on this.
0:11:44 I don’t know if you have a ’90s reflection, but–
0:11:47 But don’t you think Republicans could claim the same thing
0:11:51 that the New York case, the Albenberg case against Donald
0:11:55 Trump, again, it was about sex, that that was also purely
0:12:01 politically motivated, and if so, should warrant a pardon?
0:12:03 Well, yeah, I don’t know.
0:12:07 I shouldn’t– that, yeah, sounded too enthusiastic for me.
0:12:14 I was always the weakest case, and I think part of living
0:12:17 in the conservative media world that I do because of work
0:12:22 is that I can see that it’s glaring at me, because I’m like,
0:12:24 OK, this is one that they can so easily take apart,
0:12:27 but they struggle more with the Mar-a-Lago documents, right?
0:12:29 Or I guess you could kind of tit for tat
0:12:31 wasn’t an insurrection or not, but there’s
0:12:34 so much testimony surrounding January 6
0:12:37 and how this was planned, that Trump was like,
0:12:38 this is how we’re going to do it.
0:12:40 We’re just going to overturn the elections.
0:12:42 We’re going to fan the lawyers out all the swing states,
0:12:43 et cetera.
0:12:45 So yeah, you could make that argument.
0:12:47 And Tish James hasn’t helped anyone
0:12:50 by giving 50 press conferences where she just says,
0:12:54 I will stop at nothing, right, until Donald Trump is behind bars.
0:12:57 So you could totally make that argument.
0:12:59 But I don’t know, there’s so much other stuff
0:13:04 that he was indicted on, and that juries found him guilty of,
0:13:06 that I think he goes beyond it.
0:13:09 But the Stormy Daniels case was always the weakest,
0:13:12 and it was annoying, frankly, that it happened,
0:13:13 and that it went first.
0:13:16 You brought up a really interesting point,
0:13:19 and that is we suffer from a lack of mendacious fucks.
0:13:23 And that is McConnell was always playing us,
0:13:27 and everyone was just so disgusted and disappointed.
0:13:29 I’m like, well, where are our Senator McConnells?
0:13:32 Is it Representative Nadler?
0:13:35 Quite frankly, and I hope this election does it.
0:13:37 I hope they just clean house the Democratic leadership.
0:13:39 I want to see Jeremy Raskin.
0:13:43 I think Speaker Pelosi has a touch of Machiavelli to her.
0:13:45 I think she’s outstanding.
0:13:48 Senator Schumer, I think is incredibly weak.
0:13:49 I think he’s weak.
0:13:51 I don’t think he has nearly the strategy or the sack
0:13:53 that McConnell has demonstrated.
0:13:57 And we need just some ruthless motherfuckers in there.
0:14:01 And it’ll be interesting to see if Representative Jeffries
0:14:04 brings that kind of Machiavellian strategy.
0:14:07 Everything against Hunter Biden was a function
0:14:10 of who they were or who they are, not of the crimes.
0:14:13 No one, had it not been Donald Trump,
0:14:16 if he paid off a mistress, a porn star,
0:14:18 I just don’t think that would have ended up in court.
0:14:22 I think that that is a misuse of prosecutorial resources.
0:14:24 Hunter Biden, that was bullshit.
0:14:26 He would have gotten some charges fine.
0:14:28 He would have been on probation.
0:14:30 This is the idea I like,
0:14:32 and I think you’re gonna like this.
0:14:34 All right, gun charge.
0:14:35 He’s handsome.
0:14:36 He’s made porn films.
0:14:37 He’s been pardoned.
0:14:39 I think he’s our answer.
0:14:40 I think he has,
0:14:41 I think he’s now the number three
0:14:43 or number four most likely Democratic nominee
0:14:45 for president in 2028.
0:14:48 I think Hunter Biden is the Democrat we need right now,
0:14:49 Jess.
0:14:50 What do you think?
0:14:51 I mean, I’m not against it.
0:14:54 Think of all the bumper stickers we have that we can use.
0:14:56 Biden, Biden for president, yeah.
0:15:00 Yeah, I mean, we have weirder things happen.
0:15:02 Maybe Donald Trump, yeah.
0:15:04 Right, all right, we need to move on.
0:15:07 All right, last week, Elon Musk celebrated Thanksgiving
0:15:08 with Trump at Mar-a-Lago,
0:15:11 as he gears up for his new dojo role
0:15:13 and meets with House Republicans this week.
0:15:15 Just before the holiday, President-elect Trump proposed
0:15:17 25% tariffs on goods from Mexico and Canada,
0:15:21 raising serious concerns among business and world leaders.
0:15:22 Mexico has warned that such a move
0:15:24 could cost nearly half a million U.S. jobs
0:15:27 while a company spirit will drive up prices for consumers.
0:15:29 President Biden is urging Trump to reconsider,
0:15:31 warning that tariffs could strain relationships
0:15:34 with key allies, have inflationary effects at home,
0:15:36 and result in higher prices across the board.
0:15:38 Jess, what do you think is gonna happen here?
0:15:40 Do you think it’ll fall through on this?
0:15:43 To some degree, I don’t think it’ll be a 25% tariff,
0:15:46 but I’m sure that he’ll sprinkle them around
0:15:49 and Scott Besen, who will be the Treasury Secretary,
0:15:52 is naturally not a tariff guy.
0:15:55 I think that was one of the kind of final sticking points
0:15:57 to make sure that he was gonna be on board
0:16:02 with this approach of using it as a way to cultivate results.
0:16:04 And I don’t think that that’s insane.
0:16:06 And we should, you gotta be honest about the fact
0:16:08 that Biden kept nearly all of the tariffs
0:16:10 that Trump had put on China.
0:16:13 He’s done things, I think a little bit smarter.
0:16:16 Like he put tariffs on things that we don’t get as much of,
0:16:18 like EVs, for instance.
0:16:20 We don’t get a ton of them from China.
0:16:22 So like it makes sense to kind of hike that up
0:16:25 so it doesn’t really hurt the American consumer base.
0:16:29 But tariffs aren’t unilaterally a stupid idea.
0:16:31 It’s stupid to say I’m gonna put 100% tariff on this
0:16:33 or I’m gonna put 25% on Canada and Mexico.
0:16:36 He doesn’t talk about, what is it like something insane?
0:16:39 Like 60% of our vegetables come from Mexico.
0:16:42 Our construction supplies that come from Canada.
0:16:45 But what I think is the interesting corollary
0:16:48 to Trump doing all this bluster
0:16:51 is what will the world leaders’ responses be?
0:16:53 Because we have two different prototypes now.
0:16:56 So Claudia Scheinbaum, the president of Mexico
0:16:57 had a very different response
0:16:59 than Justin Trudeau from Canada.
0:17:00 So Justin Trudeau is like,
0:17:02 “Hey, Donald, I’m coming to Mar-a-Lago for dinner.
0:17:04 “Let’s do the photo op, I’ll meet your people.
0:17:05 “This’ll be great.”
0:17:08 And Claudia Scheinbaum released a pretty scathing statement
0:17:09 that essentially said, like,
0:17:11 “You don’t know what you’re talking about.”
0:17:14 Because Trump said, “I’m gonna put this tariff on
0:17:17 “if you don’t stop sending migrants and drugs here.”
0:17:19 And she first of all said, “By the way,
0:17:22 “all of the guns that are here are from your country.”
0:17:23 So maybe you could figure that out.
0:17:26 And second of all, we have been stopping the migrants.
0:17:29 And according to your own CPV numbers,
0:17:32 it’s down, crossings are down 75% in the last year
0:17:35 because of a program that we put in.
0:17:38 Now, is anyone paying attention to the fact
0:17:39 that that’s what she said?
0:17:41 No, because Trump went and said,
0:17:44 “See, presto chango, it happened right away, right?
0:17:46 “Like I said jump and she said how high
0:17:48 “and now everything’s fine.”
0:17:50 As if he stopped migrants from crossing the border,
0:17:52 it happened under Biden.
0:17:54 But those are the two different models.
0:17:57 And I’m curious to see where other world leaders fall on that.
0:17:59 Like who will be going to kiss the ring
0:18:01 and who will be issuing sassy statements?
0:18:02 It will be the Jewish woman
0:18:04 that is issuing the sassy statement.
0:18:07 The Jewish climate scientist, that’s right.
0:18:09 Yeah, I love, it tickles my sensors
0:18:12 to see her saying this and she’s right.
0:18:13 Trudeau’s probably smarter.
0:18:16 My understanding is among world leaders
0:18:19 is just go kiss this guy’s ass, pull a Tim Cook.
0:18:23 Tim Cook goes there, shows him the new iPhone,
0:18:25 it tells him he’s handsome, complements him.
0:18:26 Love your playlist.
0:18:27 Love your playlist.
0:18:28 And what do you know?
0:18:30 Somehow the tariffs on China,
0:18:33 Apple manages to sequester the majority
0:18:36 of their components from those tariffs.
0:18:41 This sycophantry, this obvious pandering, it works.
0:18:43 And to be fair, some of the tariffs
0:18:47 that Trump increased on China, Biden kept in place.
0:18:49 While China is no longer our biggest trading partner,
0:18:53 it’s now a tossup between Mexico and Canada.
0:18:55 There’s just so many wrinkles here.
0:18:59 Most US cars have parts from Mexico or Canada.
0:19:02 And the way this all ends, in my view,
0:19:05 is he implements anything resembling these tariffs,
0:19:07 which any of these,
0:19:09 one of the most heartening things about these appointments
0:19:12 is it almost seems like I’m gonna fuck
0:19:14 with the American people, I’m just gonna reward loyalists.
0:19:16 I don’t care about the DOJ,
0:19:18 I don’t care about the education.
0:19:20 But when it comes to the economy,
0:19:23 it feels like he becomes remarkably adult.
0:19:26 And he wants adults in the room around the key,
0:19:27 key appointments around the economy.
0:19:29 I think the majority of those candidates
0:19:31 all seem like adults, all seem qualified.
0:19:33 I don’t think many of them are gonna go
0:19:34 for this tariff thing, at least nothing.
0:19:36 I think they’ll throw them a bone and say,
0:19:38 okay, we’ll increase tariffs here, here and here.
0:19:41 But the first quarter, or even the first month,
0:19:44 where it looks like there’s a spike,
0:19:47 a re-spike in inflation, or a reigniting of inflation,
0:19:50 and it’s reverse engineered to tariffs,
0:19:52 oh, there’s trouble in Mudville.
0:19:56 Because the thing that brings down nations
0:19:58 is not usually that they get invaded,
0:20:01 it’s they either go broke or there’s inflation.
0:20:03 Because you wanna talk about rage,
0:20:06 when you have to go from meat to chicken, chicken to rice,
0:20:08 and then you can’t pay for your kid’s summer camp,
0:20:10 you don’t care who’s in office.
0:20:11 When they realize 88% of gifts
0:20:14 under the Christmas tree are from China,
0:20:17 and that their prices might go up 10, 20, 50%,
0:20:19 and that to a certain extent,
0:20:23 Trump becomes a lame duck president sooner rather than later,
0:20:26 I think they find their backbone and say,
0:20:29 no, I am not down with these tariffs at all.
0:20:33 And the moment, the moment inflation starts to spike back,
0:20:36 which we’re already seeing some evidence of,
0:20:39 in someone reverse engineers it to tariffs, boom,
0:20:40 that dog won’t hunt.
0:20:43 I think this is much more,
0:20:45 much more hat than cattle, what’s the term?
0:20:47 That’s a Brian Williams term, hat and cattle.
0:20:49 All hat, no cattle.
0:20:50 All chip, no salsa.
0:20:51 – Sounds very Yellowstone.
0:20:53 – There you go.
0:20:54 By the way, I could never get into Yellowstone.
0:20:55 Did you like it?
0:20:56 – Really?
0:20:57 I did the first couple of years,
0:20:59 and then I just thought it was ridiculous, but.
0:21:01 – I just didn’t buy it, I just didn’t buy it.
0:21:04 I thought it was succession for Republicans.
0:21:05 I didn’t buy it.
0:21:07 – Well, they deserve to have joy too.
0:21:09 – Yeah, I don’t know, I don’t get it.
0:21:10 – Just to add to that,
0:21:13 it was interesting to see when Scott Besant
0:21:17 was the treasury pick, the market bumped up.
0:21:19 Was very excited with the news.
0:21:22 The next day, this was after his truth social post
0:21:24 about the tariffs coming, market goes down, right?
0:21:26 It was the same thing with RFK Junior, right?
0:21:30 Then all of the pharmaceutical stocks tanked.
0:21:33 So Trump is going to have to figure out
0:21:36 where his levers are, like how much he can push things,
0:21:41 how much he can pull things in order to keep us making 30%,
0:21:44 or whatever crazy amount the market has been going up,
0:21:47 because that is the only thing
0:21:49 that people are grading these administrations on.
0:21:51 It’s crazy, because all this other stuff
0:21:53 that went on during the Trump administration,
0:21:54 no one remembers it.
0:21:56 They only remember this feeling of,
0:21:59 this is what my gas costs, this is how much toilet paper was,
0:22:01 this is how before COVID came,
0:22:03 when obviously everything became terrible
0:22:03 and super expensive,
0:22:05 and people didn’t even blame him for that,
0:22:07 which is very annoying to me as a partisan,
0:22:11 but he just wants to leave with a good economic record
0:22:14 and probably put away some enemies if he can,
0:22:17 Hunter Biden included, definitely was gonna be on the list.
0:22:21 So I think he’ll just be watching those numbers closely.
0:22:23 And I remember when we first started
0:22:24 talking about the potential picks,
0:22:28 and you said, why not bring back Steve Mnuchin?
0:22:31 And Steve Mnuchin left completely unscathed, right?
0:22:33 His wife was this incredible viral meme
0:22:35 that I enjoyed all the time.
0:22:37 And it seems like he did a pretty good job,
0:22:39 and I imagine Scott Bassant will be similar.
0:22:41 Yeah. – He’s an adult.
0:22:43 And by the way, just you were right,
0:22:45 Mexico is now our biggest trading partner.
0:22:46 In the last seven years,
0:22:50 China’s gone from 22% of US imports,
0:22:53 it’s dropped to 14, that’s a dramatic decrease.
0:22:56 And Mexico has gone up from approximately 13
0:22:58 to now close to 16,
0:23:03 and Canada has gone from about 12 and a half to about 14.
0:23:08 So Mexico and Canada, it’s so interesting.
0:23:11 Trade is still largely a function of proximity.
0:23:14 Almost every country’s biggest trading partners usually,
0:23:15 they usually share a border with.
0:23:17 Anyways, some more fascinating insight
0:23:19 from the Northwestern School of Business.
0:23:22 All right, Jess, let’s take a quick break, stay with us.
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0:26:49 – Welcome back on Saturday.
0:26:51 Trump shook things up.
0:26:52 That’s another statement.
0:26:55 By picking Cash Patel, a controversial maga loyalist
0:26:58 and deep state conspiracy theorist to lead the FBI.
0:27:00 This is an unusual move because FBI directors
0:27:03 typically serve 10-year terms to stay above politics.
0:27:06 This all comes as Trump considers firing Christopher Wray,
0:27:08 his own appointee with three years left on his term,
0:27:10 all while doubling down on promises
0:27:12 to prosecute political opponents.
0:27:14 What’s your take on this, Josh?
0:27:16 – Same as every week.
0:27:17 This is bad, no bueno.
0:27:18 This is very bad.
0:27:20 I mean, there’s so much to go through
0:27:23 in the craziness of Cash Patel.
0:27:26 But something that does stick out to me
0:27:31 is that other Trump loyalists have a worldview
0:27:34 that they come to the table with.
0:27:36 Like Steve Bannon wasn’t born the day
0:27:38 that Trump came down the golden staircase, right?
0:27:42 And Stephen Miller has had his views for a very long time.
0:27:46 Cash Patel is like a blank slate
0:27:49 that was created in Trump’s ideological likeness.
0:27:53 Like he has nothing seemingly that he believes in
0:27:56 that existed before Donald Trump.
0:28:00 And that’s what makes him uniquely frightening to me
0:28:03 because he just lives to please this guy.
0:28:06 I mean, he even wrote a children’s book about him.
0:28:09 Like he mimics everything he has.
0:28:14 He like hawks clothes.
0:28:15 He has a clothing line.
0:28:18 He works his business.
0:28:19 I think it’s the Cash Foundation,
0:28:21 which gives to people affected
0:28:24 by the terrible atrocities of January 6th,
0:28:27 like families of January 6thers, J6ers,
0:28:29 I think we’re supposed to call them.
0:28:31 He produced Justice for All,
0:28:32 which is a version of the national anthem
0:28:35 that the January 6th defendants
0:28:36 that Trump played at his first campaign rally.
0:28:40 Like he is so enmeshed in this world.
0:28:45 He feels like a Trump child more than the others do.
0:28:46 To me.
0:28:48 – Yeah, this guy is a little bit,
0:28:51 during his time where I believe he was,
0:28:52 what did he do?
0:28:54 He was a prosecutor.
0:28:54 – Yeah, he was a prosecutor.
0:28:56 He worked for Devin Nunes.
0:28:58 You remember him, who was crazy.
0:28:59 – Okay.
0:29:01 – And he did have some high level intel jobs.
0:29:04 He was the deputy to acting DNI, Rick Grinnell.
0:29:07 – He supposedly also fed Trump back channel information
0:29:09 on Ukraine that contributed to Trump’s plot
0:29:11 to push that nation to help him smear
0:29:14 his political opponents during his time.
0:29:17 Patel also authored a memo arguing that it was disloyal
0:29:19 for then defense secretary, Mark Esper,
0:29:20 who I’ve met and strikes me
0:29:22 as a world-class high character person,
0:29:25 to oppose a request by Trump to deploy military troops
0:29:26 against American citizens,
0:29:30 protesting police violence against black people.
0:29:32 After Trump lost to President Biden in 2020,
0:29:35 Patel pushed lies about the election being stolen
0:29:37 and argued that reporters debunking Trump’s election lies
0:29:39 should be targeted by the government.
0:29:42 He said, open quote, yes,
0:29:44 we’re going to come after the people in the media
0:29:46 who lied about American citizens
0:29:48 who helped Joe Biden rig presidential elections.
0:29:52 We’re going to come after you, close quote.
0:29:53 I mean, I don’t know.
0:29:56 And he’s also authored three children’s books
0:29:58 that are pro-Trump fan fiction.
0:30:01 So going after your political enemies
0:30:03 and finding time to write children’s books,
0:30:04 you gotta give it to the guy.
0:30:06 He’s at least a little,
0:30:08 he’s sort of a Renaissance man in hell, so to speak.
0:30:13 He’s just sort of this, he’s a bit of an odd duck.
0:30:14 And also I’ve always found that,
0:30:19 I thought Christopher Wray, it’s exactly what you want
0:30:22 as an appointee because when he sat in front of Congress,
0:30:24 I couldn’t tell if he was a Democrat or a Republican.
0:30:26 I just thought he was, you know,
0:30:29 like Joe Friday from “Dragonate”, just a fax, ma’am.
0:30:32 And he was, I just thought he was so good
0:30:33 and landed so much credibility
0:30:35 to the Trump administration that, okay,
0:30:37 in these important roles,
0:30:40 you have someone like this, you see above partisanship,
0:30:42 but, you know, the same way,
0:30:46 I do think he’s acting that way on the economics appointments.
0:30:47 And he used to act that way,
0:30:49 at least a little bit on security appointments
0:30:50 and defense appointments.
0:30:53 He seems to have totally lost that now.
0:30:57 And it’s so, just culturally,
0:30:59 it’s gotta be so demoralizing.
0:31:01 There are FBI agents.
0:31:04 I mean, first off, Tulsi Gabbard to me is by far,
0:31:06 other than gets as the most outrageous,
0:31:10 I actually think the most dangerous
0:31:11 is Representative Gabbard,
0:31:15 ’cause there are people that spend their entire lives,
0:31:16 the majority of their professional lives,
0:31:18 putting themselves in harm’s way,
0:31:19 knowing that if they caught,
0:31:20 they’re not just gonna be killed,
0:31:22 they’re gonna be tortured and killed,
0:31:24 implanting themselves in high-level positions
0:31:27 with a lot of access within our adversaries.
0:31:30 And there are only two people who know who they are.
0:31:34 There are Case Handler and the head of, you know,
0:31:37 the CIA or the head of the security services.
0:31:40 And I just gotta think, if I’m that person,
0:31:43 I do not want Representative Gabbard knowing who I am.
0:31:45 This is someone who met with Assad,
0:31:47 who’s been an apologist for the Kremlin.
0:31:49 There’s no evidence he’s an actual asset,
0:31:51 but I can see here, like,
0:31:55 if I’m an undercover agent or officer with the CIA,
0:31:57 and I think this individual might decide
0:32:01 it’s good for America to out all undercover assets
0:32:03 in the Kremlin, I’m out.
0:32:07 I’m not risking my life in limb and staying away
0:32:11 from my family when this person who doesn’t seem,
0:32:14 who seems to be more fond of Putin than of Democrats,
0:32:15 I’m out.
0:32:18 And the one thing that the majority of, I think,
0:32:21 our presidents and our directors of national security
0:32:23 and the heads of CIA have had,
0:32:26 I think George Bush was the head of the CIA and president.
0:32:27 I believe most case officers of the CIA
0:32:29 probably thought George Bush would die for me.
0:32:32 This is someone who would die for his country.
0:32:34 And I think these people are like,
0:32:37 no, they would let me die under some fucked up notion
0:32:41 of what they think is some sort of conspiracy theory.
0:32:43 This is, she is a dangerous appointment
0:32:46 and having this guy as head of the FBI,
0:32:51 I just gotta think that is so incredibly damaging
0:32:53 to morale ’cause I’ve always thought of the FBI
0:32:57 is there’s just a few places where they really,
0:32:59 they put country above politics.
0:33:02 They say, presidents are gonna come and go,
0:33:05 political parties are gonna come and go,
0:33:07 I am about our country, fidelity to the country
0:33:10 and finding bad guys.
0:33:14 And now this place has been weaponized politically
0:33:17 and I don’t know if I can trust these people.
0:33:18 – But there are millions of people who think
0:33:21 that it was the Democrats that weaponized the FBI
0:33:24 who look at Andy McCabe and his text messages
0:33:28 with Lisa Page, they go back to Jim Comey.
0:33:31 I mean, listen, the firing of Jim Comey,
0:33:34 I will never understand since I think he was
0:33:37 the key ingredient in Trump being able to win,
0:33:39 actually him coming out 11 days before the election
0:33:43 and saying, we looked at Anthony Wiener’s laptop again,
0:33:44 like no biggie though.
0:33:46 And then everyone thought that,
0:33:49 she had done something unbelievably evil.
0:33:54 But this is, Cash Patel is part of the wrecking ball approach
0:33:56 to all of these institutions.
0:34:01 And I don’t think that he would be able to get confirmed,
0:34:05 but it seems like that’s not even necessarily the approach
0:34:07 that Trump feels like he needs to go.
0:34:10 So Christopher Wray has a 10 year term,
0:34:11 so he’s three years left on his term,
0:34:12 but he can be fired.
0:34:16 So let’s say that happens January 21st, right, 2025.
0:34:19 And then using the federal vacancies reform act,
0:34:23 Patel can be there, I think 210 days without being confirmed.
0:34:28 So we might just again have a cabinet full of acting ex job.
0:34:32 And that’s how he’ll be able to do it.
0:34:36 The standard of luminaries within our party,
0:34:38 you know, lifelong Republicans,
0:34:40 people who have served, you know,
0:34:44 great Republican presidents like the Bill Bars of the world,
0:34:47 they just, it doesn’t matter anymore.
0:34:51 The general populace doesn’t believe in these institutions.
0:34:52 I mean, these quotes are crazy.
0:34:54 Like from Bill Bars book,
0:34:56 he said that Patel would be the deputy director
0:34:58 of the FBI over my dead body.
0:35:02 You have Mark Milley, who told him life looks really shitty
0:35:04 from behind bars.
0:35:06 Gina Haspel, who was the head of the CIA,
0:35:09 threatened to resign when Trump was gonna make him
0:35:11 the deputy director of the CIA.
0:35:13 Like these are all people that you,
0:35:15 you know, whether you like their politics or not,
0:35:18 and I certainly don’t like Bill Bars politics,
0:35:22 but I never felt like he couldn’t do the job.
0:35:24 I thought he, what he did around the Mueller report,
0:35:27 writing that little four page summary
0:35:29 was extremely deceptive,
0:35:33 but I never thought that he couldn’t do it.
0:35:34 You know what I mean?
0:35:35 Like I didn’t like that decision,
0:35:39 but it wasn’t someone that I would fear like a Cache Patel
0:35:42 who’s just there honestly to pay no reverence
0:35:45 to the institution at all.
0:35:46 He’s just there to break it
0:35:48 and that he will destroy, like you said,
0:35:51 the morale of the rank and file agents
0:35:54 who are what make it great and that our allies
0:35:58 and our enemies just will laugh at us for four years
0:36:00 and our allies won’t be sharing with us,
0:36:03 which is the big Tulsi Gabbard problem there for sure,
0:36:05 that everyone will just go about their business
0:36:07 and kind of cut us out.
0:36:10 Patel is concerning on a whole host of issues,
0:36:12 but that’s really it.
0:36:13 I just, I don’t want to,
0:36:15 I understand the argument for America first.
0:36:18 I understand how that resonated with voters
0:36:23 who didn’t feel like American lives were being prioritized,
0:36:27 whether it comes to the economy, national security, immigration,
0:36:30 but to me, this just doesn’t feel like the answer,
0:36:32 that you can find competent people
0:36:36 that have a little bit of your emphasis
0:36:38 on rooting out corruption within institutions
0:36:42 without having Cache Patel as the head of the FBI.
0:36:43 – What you mentioned,
0:36:44 which I think is really one of the,
0:36:47 probably the key drawback is that no one nation
0:36:49 is big enough or strong enough
0:36:51 to effectively monitor the world
0:36:53 or secure itself from all threats.
0:36:55 And one of the most powerful things we have
0:36:59 and with NATO and some of these alliances is that,
0:37:04 MI6, the Mossad, the CIA, our security services,
0:37:08 their security services, we share information.
0:37:11 And whether it’s Israel coordinating with Jordan
0:37:12 and the kingdom of South America
0:37:14 around incoming missile barrage, Moran,
0:37:18 the whole is greater than some of its parts,
0:37:20 and around intelligence and information,
0:37:23 identifying threats, whether it’s terrorist activity
0:37:26 or IP theft of key chip technology,
0:37:30 if all of a sudden our allies are much more remiss
0:37:33 to share information with us because they don’t trust us
0:37:35 and they think this guy has no business
0:37:37 and they don’t wanna compromise their own assets
0:37:39 or their own intelligence,
0:37:42 then we lose what is supposed to be,
0:37:44 largely what has kept the peace
0:37:47 is that in general democracies have said, all right,
0:37:48 we’re gonna create something,
0:37:52 we’re gonna create a unified military structure called NATO,
0:37:54 and we’re gonna cooperate with each other,
0:37:57 not only economically but around intelligence and militarily
0:38:00 because if we do in fact present a united front
0:38:01 and cooperate with each other,
0:38:03 we’re just much harder to fuck with.
0:38:07 And that has largely created unprecedented peace
0:38:10 and prosperity over the last since World War II,
0:38:13 over the last, what is that now, 80 years.
0:38:15 And if that goes away under this notion of America first
0:38:17 and some arrogance, I really do think we suffer
0:38:20 from too much prosperity and this delusion
0:38:23 that we can go it alone, we can’t.
0:38:26 There, you know, the European economy is as big
0:38:29 as the US economy, which largely indicates
0:38:32 their security services and their access to information
0:38:35 and their intelligence units are just as valuable
0:38:37 and have a diversity of thought,
0:38:40 a diversity of information, a diversity of sources.
0:38:42 And when we share information with each other,
0:38:44 you can bet there are a lot of bad things
0:38:46 that never happened that we can’t be grateful for
0:38:49 because they didn’t happen.
0:38:50 And this notion that our allies
0:38:52 might no longer share information with us
0:38:55 and we might no longer share information with them
0:38:58 is how you defeat an enemy and that as you atomize them,
0:39:00 you get them fighting with each other
0:39:01 and that is happening here.
0:39:04 – Okay, we have one more quick break, stay with us.
0:39:12 – Support for this show comes from Amazon Prime.
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0:41:12 – Welcome back.
0:41:15 Walmart announced its scaling back its diversity, equity,
0:41:17 and inclusion DEI efforts.
0:41:19 This includes ending racial equity training for employees,
0:41:22 reevaluating programs supporting minority-owned suppliers,
0:41:25 and winding down its center for racial equity and nonprofit
0:41:28 it created to address systemic racism.
0:41:29 Walmart isn’t alone.
0:41:33 Other major companies, including Lowe’s, Ford, Harley-Davidson,
0:41:36 and John Deere are also pulling back on DEI initiatives
0:41:38 as well as reducing their support for Pride marches
0:41:40 and LGBTQ events.
0:41:42 Many had embraced DEI programs in response
0:41:44 to the 2020 Black Lives Matter protests
0:41:47 and the murder of George Floyd.
0:41:49 Jess, do you think these changes are happening
0:41:51 because Trump won the election?
0:41:53 What do you think is inspiring
0:41:55 this kind of pullback or rollback?
0:41:58 – Well, it’s been going on for a while
0:41:59 for the last couple of years.
0:42:02 I think that it’s getting more intense
0:42:06 because of what life will be like under a Trump presidency
0:42:09 and the kind of folks that he’s associated with,
0:42:12 but also who are just kind of in the ecosystem,
0:42:15 like activists like Christopher Rufo,
0:42:19 who was the principal kind of attack hound
0:42:22 over Claudine Gay, the president of Harvard,
0:42:25 who was pushed out for a multitude of reasons,
0:42:28 including the response to the anti-Semitism issues
0:42:30 on campus, but also the plagiarism scandal
0:42:34 which came from Chris Rufo originally.
0:42:38 But the numbers on the DEI roles going down
0:42:40 are pretty astronomical.
0:42:43 So there was a 29% uptick after George Floyd was murdered
0:42:47 between November, 2020 and November, 2021.
0:42:50 Then there was a 23% decline in the amount of jobs posting
0:42:55 with DEI in the title between November, 2022 and 2023.
0:42:58 And it’s down as much as 43% as of this summer.
0:43:02 So that’s obviously the trend line and where we’re going.
0:43:04 And that’s in part, I think that a lot of these roles
0:43:08 were invented for self-soothing to make people feel better
0:43:12 about it, also to communicate to consumers
0:43:14 and internal stakeholders.
0:43:16 We really care about these issues
0:43:18 without having a thoughtful plan of how to do it
0:43:20 or what you actually need.
0:43:23 Like, do you need there to be 100 roles like this?
0:43:25 Or do you need 10 really good people
0:43:28 that are gonna come in and make important changes
0:43:31 and help you reflect your values?
0:43:34 Which is what you hear over and over from organizations
0:43:36 that they need help being able to communicate
0:43:38 what their values are to internal
0:43:40 and external stakeholders.
0:43:42 So I think it’s the combination of everything coupled
0:43:45 with as well the affirmative action decision
0:43:49 from the Supreme Court, which has changed the way
0:43:52 a lot of people think about admissions to college
0:43:56 and beyond meritocracy in terms of getting your jobs.
0:44:00 And I know the UC system doesn’t do race-based admissions,
0:44:00 right?
0:44:03 – I think this is what often happens
0:44:07 with democratic initiatives or an orthodoxy
0:44:10 and that is it’s a good idea and then the world chains
0:44:12 they don’t change with it or it goes too far.
0:44:17 I still think there’s a need to focus on diversity
0:44:21 or ensuring that if you have a company
0:44:23 where the majority of your consumers
0:44:26 and endorsed athletes are non-white, i.e. Nike,
0:44:28 and pretty much your entire board is white dude
0:44:31 so you have a problem and you should be called out for it.
0:44:34 So there’s still work to be done here.
0:44:37 I have generally found that any company
0:44:41 or any university with a DEI officer or department
0:44:43 is already one of the most diverse
0:44:45 and inclusive places on the planet.
0:44:50 And what I have generally found at universities
0:44:54 is DEI is filled with a lot of virtue signaling
0:44:56 and they become impervious.
0:44:58 These jobs are impossible to do away with
0:45:01 because you’re kind of called implicitly
0:45:02 although what’s happening now are racist
0:45:05 if you’re in any way question them.
0:45:07 And they’re generally very expensive.
0:45:08 They never go away.
0:45:10 It’s resulted this among other things
0:45:12 whether it’s ethics or leadership, that’s my favorite.
0:45:13 We teach ethics at Stern.
0:45:15 Give me a fucking break.
0:45:18 I can’t give my 14 year old to make us bed
0:45:21 and I’m gonna teach a 28 year old to be more ethical.
0:45:22 These departments never go away.
0:45:25 We bring in formerly important people.
0:45:26 We pay them a lot of money
0:45:28 so they can talk about war stories,
0:45:30 teach them leadership or anything
0:45:32 with the term studies on it means that
0:45:34 if you take this course you might get four stars
0:45:37 instead of three as an Uber driver or barista.
0:45:40 We have totally lost the mission in my opinion in the script.
0:45:43 There are now 16 employees at MIT
0:45:46 for everyone who actually teaches.
0:45:48 And we invent these departments.
0:45:52 Sustainability, leadership, ethics, DEI
0:45:56 and all of this translates to student debt.
0:45:58 And where we’ve lost the script around DEI
0:46:02 is we’ve decided okay, essentially the easiest way
0:46:06 to identify or put forward an orthodoxy around DEI
0:46:10 is it oppressors over here, oppressed over here.
0:46:13 Oh and by the way, if you’re white and wealthy
0:46:14 you’re probably an oppressor
0:46:19 and whose ground zero for white and wealthy, Jews.
0:46:22 And what you have seen on campus is a level of bigotry
0:46:23 that I don’t think you’ve seen
0:46:26 in other American institutions in a long time.
0:46:29 And a lot of it started and was inspired
0:46:31 by this weird virtue signaling
0:46:33 and everyone barking up the same tree,
0:46:38 largely inspired or somewhat inspired by these DEI initiatives.
0:46:40 I can’t wait to see these things go on campus.
0:46:44 We, the whole DEI initiative on campus
0:46:46 has been nothing but a misdirect.
0:46:50 And that is Harvard obsesses over quote unquote diversity.
0:46:52 Meanwhile, they sit on an endowment
0:46:55 that’s the GDP of Costa Rica, $54 billion
0:46:58 and they refuse to expand their freshman class.
0:47:00 They’ve grown their endowment 4,000%.
0:47:03 They’ve grown their freshman class in 40 years, 4%.
0:47:07 So they create a misdirect around who gets in.
0:47:09 The conversation shouldn’t be around who gets in.
0:47:11 It should be around how many get in.
0:47:14 Let in more trans kids, let in more black kids,
0:47:17 let in more gay kids, let in more white kids
0:47:19 from rural states.
0:47:20 The question shouldn’t be who gets in.
0:47:21 It should be how many.
0:47:24 You know who doesn’t have a DEI problem?
0:47:26 Junior colleges.
0:47:28 Because they say if you show up and you want to better yourself
0:47:31 and you can pay a couple hundred bucks per credit, you’re in.
0:47:33 And the reason all this bullshit agita,
0:47:37 it also ends up creating more racism than it solves on campus
0:47:40 because the kid next to you who might not be non-white,
0:47:42 you wonder if he or she deserves to be there.
0:47:44 And it creates all of this resentment
0:47:47 among good kids who don’t get into school
0:47:48 because they don’t have a story of adversity.
0:47:50 And you brought up the University of California,
0:47:54 one of the great gifts to American society.
0:47:57 In 1990, was either four or seven, they said,
0:48:00 we’re no longer about race-based affirmative action.
0:48:03 We’re about an adversity score.
0:48:05 And I’m a beneficiary of affirmative action
0:48:07 because my household income was less than $40,000.
0:48:10 I got free Pell Grants or I got Pell Grants
0:48:12 or aren’t even loans.
0:48:13 So the DEI apparatus,
0:48:17 I hope it is disassembled immediately across campuses.
0:48:20 I still think there’s work to be done in corporations
0:48:22 as someone who serves on boards,
0:48:24 who knows a lot of senior management.
0:48:27 There’s still too many people with outdoor plumbing
0:48:28 running these companies.
0:48:30 And I don’t think it’s ever gonna be 50/50
0:48:31 ’cause I think more women will decide
0:48:34 to exit the workforce for a variety of reasons.
0:48:36 Anyways, that was my TED Talk.
0:48:37 Any thoughts?
0:48:38 – I think I actually have heard that
0:48:39 as one of your TED Talks.
0:48:41 And I enjoyed it then and I enjoyed it this time as well.
0:48:42 – Oh!
0:48:45 – No, I generally agree with it.
0:48:48 And I also, I thought that Harvard’s response
0:48:51 after the Supreme Court decision made a lot of sense
0:48:53 where they said, okay, well, we’re going to find a way
0:48:55 to ensure that we have a diverse class
0:48:57 no matter how you say we need to do it.
0:49:00 And there are other things that you can look at
0:49:02 in terms of an application or a background of a student
0:49:06 to make sure that you have the widest swath
0:49:09 of students represented.
0:49:11 And increasingly, this is a conversation
0:49:12 that I’m having with my friends
0:49:14 even down to the preschool level
0:49:15 where people aren’t as concerned anymore
0:49:18 about racial diversity because knock on wood,
0:49:22 thank God we have generally become less racist, right?
0:49:25 Like the Cheerios commercial with the biracial couple
0:49:27 that kind of broke all testing standards
0:49:29 where little kids, they showed it to a five-year-old
0:49:32 and to their parents and all the parents noticed
0:49:35 that it was a biracial couple and none of the kids did
0:49:38 because that’s life for them now, that they see mixed race,
0:49:41 everything is getting more of a melting pot
0:49:42 and that is a good thing.
0:49:46 But what is not happening is we are just hanging out
0:49:48 with people from our same socioeconomic background.
0:49:51 And that’s really what people are hunting
0:49:52 in terms of diversity.
0:49:53 Like I think about that all the time.
0:49:56 Will Cleo, my daughter have friends
0:49:59 who don’t have every toy that they want, right?
0:50:00 Will she go to someone’s house
0:50:03 who doesn’t have a playroom in the building?
0:50:07 You know, those kinds of things are much more top of mind
0:50:10 for us than worrying about whether she’s going to think
0:50:14 that a kid who is black or brown is less than.
0:50:16 And it was so important, I think for the evolution
0:50:19 of this discussion, that it was Asian Americans
0:50:22 that brought that lawsuit about being discriminated against
0:50:24 versus making it, we always think of it
0:50:27 as a black, brown issue or a person of color issue.
0:50:31 And we don’t tend to lump in Asians in that bucket,
0:50:33 which is something that they’ve had to be up against.
0:50:35 And I’ve had a lot of difficulty with that.
0:50:38 And it made me think about the change in New York City
0:50:39 as I’ve grown up.
0:50:43 So when I went and took the test to get into Stuyvesant,
0:50:46 which is a premier public school here in New York,
0:50:48 one of the main filters to Harvard,
0:50:51 it was predominantly white kids that were getting in.
0:50:53 And now, and I live in the neighborhood,
0:50:55 I rarely see a kid coming out of Stuyvesant
0:50:57 who is an Asian, right?
0:50:59 It is totally meritocratic.
0:51:02 However, you do on the test is whether you get in or not.
0:51:06 And the fact that they were then going on to be discriminated
0:51:09 against in terms of getting into these top universities,
0:51:10 which we should note as well as something
0:51:12 that happened to Jewish students at a certain point,
0:51:13 like a couple of decades ago,
0:51:15 then it started being pushed back against Jews,
0:51:17 there were too many of them getting in
0:51:19 as a proportion of the population,
0:51:20 then it moved on to Asians.
0:51:22 And I think that it allowed us
0:51:25 to actually have a more honest conversation
0:51:28 about these admission systems and how society is structured
0:51:31 because it wasn’t a black versus white issue
0:51:33 because everyone just tunes out then and just says,
0:51:37 well, of course I’m for equal opportunity.
0:51:40 And the reframing has led to more discussions like this,
0:51:43 which I think are important for people to have
0:51:45 and then to also integrate into it
0:51:47 the socioeconomic aspect of it,
0:51:50 which is the real dividing line in all of this.
0:51:54 Like there aren’t enough opportunities for poor white kids
0:51:56 to be able to get on the ladder,
0:51:57 whether it’s about going to school
0:51:59 or getting the jobs that they want,
0:52:01 the same way that we would have discussions
0:52:05 about poor black kids or poor Latino kids.
0:52:06 Anyway, that was my TED talk.
0:52:08 I don’t know if I would have gotten it though.
0:52:09 It was good, all right.
0:52:11 – In the United States today,
0:52:16 you would rather be born non-white or gay than poor.
0:52:20 54% of gay men will get a college degree,
0:52:22 it’s 34% for straight men,
0:52:25 and that goes into a variety of issues.
0:52:27 But affirmative action is a wonderful thing.
0:52:28 We should lift people up.
0:52:29 There’s just some people,
0:52:31 and I even think a majority of Republicans feel that,
0:52:34 okay, there’s some people with so much wind in their face,
0:52:37 let’s widen their aperture, let’s widen the perspective,
0:52:38 let’s give some people a hand up.
0:52:39 I just think,
0:52:41 I gotta think most people believe that, that okay,
0:52:42 it’s easy to talk about.
0:52:44 – And they’ve been beneficiaries of it to some degree,
0:52:46 however it has manifested.
0:52:47 Yeah.
0:52:50 – Case in point, Pell Grants for a straight white male,
0:52:52 but it should be based on color.
0:52:55 And that color is the following, green.
0:52:57 We should help poor kids.
0:52:58 They’re the ones,
0:52:59 they’re the ones,
0:53:01 the biggest forward-looking indicator of your success,
0:53:03 unfortunately in our nation,
0:53:05 has become how rich your parents are.
0:53:07 Basically your zip code and your parents’ income.
0:53:10 And we need something that helps kids
0:53:11 brought up in low-income neighborhoods,
0:53:13 regardless of the color of their skin,
0:53:15 regardless of their sexual orientation,
0:53:18 regardless of their gender.
0:53:20 All right, you have grown up
0:53:21 in what is in a capitalist society,
0:53:23 the biggest headwind in your face,
0:53:25 and that is you don’t have money.
0:53:29 And I think it would solve so many problems
0:53:31 and move away from this identity politics
0:53:34 where unfortunately the Democratic Party
0:53:36 has become totally obsessed.
0:53:39 So we’re gonna save the easy stuff for the end here, Jess.
0:53:41 – Can I say before we do the end?
0:53:41 – Of course.
0:53:45 – But in the dissent and the SCOTUS opinion,
0:53:49 Justice Jackson essentially accuses Clarence Thomas
0:53:51 of turning his back on the system
0:53:53 that got Clarence Thomas where he was going.
0:53:56 And I don’t know if I’m ready to fully throw the baby out
0:53:59 with the bathwater and say that there should be no,
0:54:01 race should not be considered at all.
0:54:03 Because I think there are systemic challenges
0:54:06 that face people of color that are different
0:54:09 than the socioeconomic challenges that are out there.
0:54:13 I just, I’m like 75% there.
0:54:18 And I thought that there was some compelling arguments
0:54:21 made by the liberal justices to maintain it.
0:54:22 – But wouldn’t most of that,
0:54:24 so the reason, one of the reasons I love economic based
0:54:27 affirmative action is that it would actually
0:54:30 impact 70% of the same people.
0:54:32 ‘Cause we do still have, you could argue,
0:54:34 an economic apartheid in the United States.
0:54:37 If you’re the daughter of a private equity billionaire
0:54:39 from Taiwan, that’s not diversity.
0:54:41 You don’t need our help, right?
0:54:46 And a lot of kids or a lot of non-whites, like I said,
0:54:50 if you have money, most of those problems
0:54:52 can be addressed and handled.
0:54:54 Anyways, point taken.
0:54:56 This week is a big moment for transgender rights
0:54:59 as the Supreme Court takes on its biggest case yet.
0:55:02 The issue at hand is a Tennessee law banning puberty blockers
0:55:05 and hormone treatments for transgender minors
0:55:07 with over two dozen states having similar laws.
0:55:10 The case is sparking tensions among conservatives
0:55:12 even challenging their usual stance on parental rights.
0:55:16 Jess, what do you think might happen here?
0:55:17 – I mean, it’s a conservative court.
0:55:22 So I imagine it’ll go as many things have now
0:55:23 and they’ll go six, three.
0:55:27 But 26 states now have laws restricting treatments
0:55:28 like puberty blocking drugs.
0:55:30 And what’s interesting about this case,
0:55:32 and it’ll be used as the model.
0:55:36 So it’s the ACLU plus the Biden administration, the DOJ,
0:55:38 I should say, not the Biden administration bringing this.
0:55:41 The problem or what they’re identifying or using
0:55:43 is the Equal Protection Clause of the 14th Amendment
0:55:46 that essentially these drugs are being authorized
0:55:48 for non-transgender youths.
0:55:51 So all of the kids that are bringing this case
0:55:53 have been diagnosed with gender dysphoria.
0:55:56 So there are doctors that have said you have this
0:55:58 and they are not getting access to these medications
0:56:02 that kids who do not have gender dysphoria have access to.
0:56:04 So they’re saying it’s discrimination on the basis
0:56:07 of Equal Protection because they’re transgender.
0:56:10 Again, I imagine it’ll get shot down by the court.
0:56:12 I like that they’re taking it at least
0:56:14 and so that we can have this discussion.
0:56:16 It’s when you think that this is going on in 206 states
0:56:18 and even how prominent of a role it played
0:56:22 in our election, conversations around trans issues
0:56:25 and people believing that kids go to school
0:56:27 and come home a different gender.
0:56:29 It’s obviously top of mind for people,
0:56:32 but I’m not optimistic that they’re going to rule
0:56:35 in favor of as one transgender girl
0:56:38 and two transgender boys that have brought the case.
0:56:40 – Yeah, I thought that was great
0:56:42 and I’m gonna plead the fifth on this.
0:56:45 This is something we talk a lot about on Pivot
0:56:47 and I finally come to the conclusion
0:56:49 that I have no fucking idea what I’m talking about
0:56:54 and this issue is so sensitive, so complicated
0:56:59 that I can just see all sides of this issue
0:57:01 or not all sides.
0:57:04 I empathize with so many different viewpoints
0:57:07 and I think this is really another instance
0:57:10 of where government should kind of be out of people’s lives
0:57:15 and let the family and the doctor and the right professionals
0:57:17 and the American Pediatric Association
0:57:19 decide the best solution here.
0:57:21 I think it’s government outreach.
0:57:23 I think the Democratic party has become too obsessed
0:57:26 with this issue and it’s cost us dearly.
0:57:29 At the same time, I’m just absolutely horrified
0:57:31 by the demonization of this group.
0:57:34 At this one, I really do think this is government.
0:57:39 I understand cases that get elevated to the Supreme Court.
0:57:41 This does feel, it’s just so weird.
0:57:44 I feel like Republicans talk such a big game
0:57:46 about staying out of people’s lives and small government
0:57:51 and on the most sensitive, complex, nuanced decisions
0:57:56 they wanna weigh in and it just feels like law enforcement,
0:58:01 the courts should not be in the business of this.
0:58:03 – To that point, the Dobs decision is referenced
0:58:08 over 10 times in this suit for that exact reason.
0:58:13 So small government no more when it comes to sex,
0:58:18 reproduction, trans issues, yeah.
0:58:20 – Yeah, when the left and the right agree on something
0:58:22 it’s usually reckless spending.
0:58:24 All right, that’s all for this episode.
0:58:26 Thank you for listening to Raging Moderates.
0:58:28 Our producers are Caroline Shagren and David Toledo.
0:58:30 Our technical director is Drew Burroughs.
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0:58:50 – Yeah.
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0:01:35 Today’s number, $91 million.
0:01:40 That’s how much King Charles III coronation cost British taxpayers last year.
0:01:44 Ed, what does Burger King and Vaginos have in common?
0:01:45 What’s that?
0:01:49 It’s generally considered bad form to eat them in the middle of a McDonald’s.
0:02:00 ♪ Have it your way, have it your way, have it your way at Burger King. ♪
0:02:06 ♪ 1977, no me diga no, no lo crecia. ♪
0:02:11 ♪ Todo lo que cambia lo hará diferente en el año que nace la CPH. ♪
0:02:18 That wasn’t easy to bring Burger King and the King into something this profane had.
0:02:22 You’re pretending not to laugh for fear that you’ll be named in a lawsuit.
0:02:23 I don’t get you can laugh out loud.
0:02:24 That’s right.
0:02:26 Even Claire is laughing.
0:02:29 Claire is literally the general consulate of Locustan.
0:02:32 I always laugh at your pussy jokes. Come on.
0:02:35 She does. Claire is down with me.
0:02:38 We’re both looking for the same thing, if you know what I mean.
0:02:39 That’s right. That’s right.
0:02:42 We’re both on the same team.
0:02:44 We both point out the same akushama.
0:02:46 We’re looking at the same.
0:02:49 We’re seeing the same sights together on the road.
0:02:50 All right, I need to get out of this.
0:02:53 Ed, what are we talking about today?
0:02:55 We’re talking about what are we doing today?
0:02:56 We’re doing something different today.
0:02:58 Here, you take this.
0:03:01 Gladly. We’ve got a special episode today, Scott.
0:03:04 We are diving into one of our favorite topics.
0:03:07 We’re not going to be talking about saving money or even investing money.
0:03:10 We’re going to be talking about spending money.
0:03:14 We’re going to be answering questions like what are the best ways to spend money?
0:03:16 How should we think about spending?
0:03:19 And most importantly, how do you spend your money?
0:03:24 So I’ll walk us through a series of questions about spending.
0:03:26 You’ll give me your honest answers, I hope.
0:03:29 And then hopefully we’ll learn something along the way.
0:03:32 This doesn’t fit my opening joke.
0:03:33 I think we might have to re-record.
0:03:35 This sounds very thoughtful and responsible.
0:03:38 Anyways, but yes, please continue.
0:03:39 It is going to be very doable.
0:03:42 It’s practically going to be a therapy session.
0:03:44 Nah. I’m in. I’m in.
0:03:47 Alright, well, we’ll start with a pretty easy question.
0:03:50 And that is, what is the worst purchase you have ever made?
0:03:57 Oh, when I was, I grew up in California and I grew up in this era that you don’t relate to.
0:04:01 It was kind of California dreamin’, American graffiti.
0:04:07 The only thing you had to express any sort of coolness or wealth or aspiration or macho was your car.
0:04:10 In addition, living in Los Angeles,
0:04:14 you had literally no aspect of a social life unless you had a car.
0:04:16 There was no public transportation.
0:04:18 There was the RTD, but it wasn’t really efficient.
0:04:20 So if you wanted to go on a Friday night,
0:04:25 go and crash a party that someone was having you were invited to see above Scott Galloway,
0:04:27 you needed a car.
0:04:32 And so from the age of about 13, I saved pretty much everything for a car.
0:04:38 And I got, my dad gave me an old Volkswagen Rabbit from his old home in Phoenix.
0:04:42 On the way back from Arizona with a friend, the tire blew out and there was no spare tire.
0:04:49 Gives you a bit of a sense for the protective instincts my father did not have but a Renault car.
0:04:55 And finally, I think the Renault got towed my freshman year in the fraternity and I didn’t even go get it.
0:04:56 I think I just let it be sold for scrap.
0:05:02 So buying a car, my first cars were the worst purchases hands down I ever made.
0:05:05 They literally took all of my disposable income and more.
0:05:12 It was like $2,500 to buy insurance when you were 16, which on a inflation-adjusted basis probably meant $10,000 a year.
0:05:15 I did not have that kind of money and yet I found it.
0:05:18 So hands down the worst purchase I ever made was a car.
0:05:24 What about the BMW you got after you got your bonus from Morgan Stanley?
0:05:27 I’m always kind of blown away by the fact that that’s how you spent your bonus.
0:05:30 I respect it to be clear, but…
0:05:30 Oh yeah.
0:05:36 And now that I think I told you, I bought a 325i Navy Blue and bought it out of the recycler.
0:05:39 I think I spent, I don’t know what it was, my first bonus was like $25,000.
0:05:42 I spent $28,000 on a car.
0:05:48 But I think of that, I mean, this sounds dumb, but a bad car that you don’t need in college and high school,
0:05:51 I kind of needed it, but I just couldn’t afford it.
0:05:52 You know, that’s a dumb purchase.
0:05:58 I would argue that when you’re 23 working a Morgan Stanley and you’re in your mating years,
0:06:02 that buying a BMW and hanging swim goggles from the rearview mirror, it makes a lot of sense.
0:06:07 You’re trying to say, you’re trying to signal to women that if you have kids with me,
0:06:14 your kids are more likely to survive than if you date someone who is driving a Hyundai and does, you know, does water aerobics.
0:06:19 So I sort of, I empathize with what I’ll call smart signaling purchases.
0:06:24 I think it’s difficult to lecture someone your age on to not occasionally buy cool shit and do cool things.
0:06:28 Your 20s come and go, you want to signal attractiveness.
0:06:30 I get sort of the irrational purchases.
0:06:32 To me, the BMW kind of made sense.
0:06:36 And also I sold it and it paid for my European trip, so it was worth it.
0:06:38 And I don’t think I lost that much value on it.
0:06:45 Yeah, my follow-up was going to be, was there ever an item that you splurged on that seemed pretty irresponsible at the time?
0:06:48 But ultimately, as you reflect, turned out to be completely worth it.
0:06:51 Perhaps the BMW, perhaps something else.
0:06:59 No, and I’ll turn this back to you, but I wish I’d learned earlier, and I did learn it accidentally, but it was more organic than anything I read.
0:07:01 You remember experiences, you don’t remember stuff.
0:07:07 People overestimate the joy they’re going to get from things and they underestimate the joy they’re going to get from experiences.
0:07:16 When I left Morgan Stanley, I initially, towards the end of Morgan Stanley, I thought about trying to do a third year and maybe making the jump to associate or interviewing with another firm.
0:07:22 Because everyone had convinced me that if you have your foot in the door in investment banking, you never want to leave because you’ll never get a job that good.
0:07:25 Even despite the fact I hated it and they hated me, I wasn’t very good at it.
0:07:28 I was trying to figure out a way to maybe stand it.
0:07:34 And then the only time I’ve ever been in the hospital was I got an arrhythmia towards the end of my second year.
0:07:35 In a what?
0:07:35 An arrhythmia.
0:07:39 It’s something called ventricular tachycardia, which is an irregular heartbeat.
0:07:40 Okay.
0:07:47 And the timing was really unfortunate because the week before this guy named, was it Hank Gathers?
0:08:00 The best high school or the best college basketball player got a rebound, went down for a monster jam in front of a national audience and then turned back to run up the court and drop dead on the court.
0:08:08 And he was diagnosed with VTAC and an enlarged heart, which is quite regular for people who your heart is a muscle.
0:08:16 And if you work out a lot, which I was doing in crew, your heart actually can get too big for your chest cavity and it can create an electrical imbalance.
0:08:17 I was overinsured.
0:08:22 I was having this irregular heartbeat Hank Gathers the week before they stuck me in the hospital.
0:08:27 So while I was in the hospital, this woman, I was at St. John’s, I think it was.
0:08:33 And she said, why are you, she’s looked at me and I’m 23 said, you’re in the ICU unit of the cardiology unit.
0:08:36 She’s just looked at me, not a doctor and said, you shouldn’t be here.
0:08:38 What’s going on with your life?
0:08:39 And it hit me so hard.
0:08:46 I was, I was, I became very emotional because I’d obviously tried to push down all these emotions about a fucking freaked out.
0:08:51 I was that I was in the, the, you know, ICU unit of the cardiology unit, St. John’s.
0:08:57 And basically net net that afternoon, I decided I was going to leave investment banking and do something different.
0:09:04 I moved back in with my mom and I sold my car and I went to Europe with that money and with my friendly Lotus.
0:09:10 And we got a backpack, a URail pass and that still remains as evidenced by anyone who watches this podcast.
0:09:12 I do amazing travel.
0:09:14 I travel to the best places.
0:09:17 I have an extraordinary life with respect to travel.
0:09:29 The best trip I’ve ever taken was when I was 24, right out of Morgan Stanley with the URail pass, sleeping in hostels with my good friends, Lee Lotus and then David Kingsdale joined us.
0:09:36 And I connected with a woman I was dating at the time and to being, you know, making us on no money, but with someone you were into.
0:09:39 That was just the best expenditure I’ve ever made.
0:09:46 And I, I spent everything and more, I think I had to call my mom and ask her to wire me some money, but it was hands down the best expenditure I’ve ever made.
0:09:47 So I’ll put it back to you.
0:09:55 The dumbest and best purchases you’ve made today, other than like a big wheel and that glass dildo I saw you had on your shelf.
0:09:58 Turn off the camera, Jesus Christ.
0:09:59 I’m sorry, go ahead.
0:10:01 Now that almost worth it.
0:10:03 Yeah, I think it’s experiences for me too.
0:10:08 It’s, it’s funny, I, I, the first thing that comes to mind for me is also Mekanos.
0:10:16 There was one night in Mekanos, I went last summer with a bunch of friends and there was one night was probably the most amount I’ve ever spent in a
0:10:17 single night and it was ridiculous.
0:10:24 We decided that, you know, we had picked out what the best club on the island was and that club is Alamogu.
0:10:30 And we decided, okay, me and my boys got to, okay, we’re going to pay for this whole thing.
0:10:33 We’re going to, we’re going to get all the girls and they’re not going to pay a penny.
0:10:38 And we’re going to just spend like crazy on this one night.
0:10:40 On Thursday night, we’re going really, really hard.
0:10:43 And so we got the best table at the club.
0:10:48 We got one of the biggest bottles that they have on offer.
0:10:52 And we kind of just decided like, this is, this is our big night.
0:10:55 And, you know, I turned, we’re having a great time.
0:11:10 I turned to my left and we’re in the VIP section sitting next to the table that is occupied by Paul George, Carl Anthony Towns and basically just all of the biggest NBA stars in the world right now.
0:11:16 And that was a moment where it’s like, okay, this is, this is an amount of money that I don’t have clearly.
0:11:19 But I’ve made a very intentional choice and an intentional decision.
0:11:22 Like this is something that I know I’m going to enjoy.
0:11:23 I know it’s going to be special.
0:11:25 We had, we stayed up till sunrise.
0:11:27 It was like the greatest night ever.
0:11:33 And that to me is like a moment where it was very irresponsible when you think about it numerically.
0:11:40 But in terms of like the intention and the purpose behind it, where I was like, I know that I’m spending a lot right now.
0:11:45 And I’m going to be very, you know, responsible when I get home to New York.
0:11:47 That was probably my number one.
0:11:51 It’s funny, it reminds me of my dad occasionally would say something that, you know, was close to insight.
0:11:54 And he was said to me, doing nothing is fine as long as it’s planned.
0:11:59 And I remember another saying that anger is anger is actually productive emotion as long as it’s planned.
0:12:04 And I think what you’re saying is you made a responsible decision to be irresponsible.
0:12:06 And I think that’s okay.
0:12:08 You know, occasionally it’s fun to splurge.
0:12:17 And, you know, I would argue the splurges when you’re young are, I think you remember them more, especially if they’re around experiences.
0:12:24 Anyways, I, my advice to young people, you know, Andrew Huberman and Peter Atia will say, you know, don’t drink alcohol.
0:12:25 I don’t see drunkenness.
0:12:33 I see togetherness and I just love the image of you and your, your homies and Mick and us doing your thing.
0:12:39 And then at late at night, getting shut down by every woman in the club still was worth it.
0:12:41 That was definitely worth it.
0:12:45 Okay, what about the best purchase you’ve ever made?
0:12:51 Probably the best purchases, both financially and emotionally for me were homes.
0:12:53 And that is right out of business school.
0:13:01 I was very much in love and we bought a home together and it just represented like a commitment to each other.
0:13:18 And we got a dog and it just, at the age of 27, it just felt really nice to, to have some of that, like, feeling that, that domestic bliss to be committed to someone, to be making a mortgage payment and owning a home.
0:13:22 And, and the home was just a vehicle, I think, for kind of that commitment to each other.
0:13:25 And it felt really, it was emotionally very rewarding.
0:13:33 And then going back to the, probably the last house purchase I made, when I sold L2, I had, you know, a big windfall.
0:13:38 And my partner said, we should buy this, you know, beautiful home, I mean, it is a beautiful home on the beach.
0:13:44 And one of my flaws, many flaws as investors, I think nothing is ever cheap enough.
0:13:46 And the home was, they were asking 15 million.
0:13:48 She said, trust me, we can get it for a lot less.
0:13:51 And I’m like, she offered, ended up getting it for nine and a half.
0:13:52 And I’m like, I didn’t want to buy it.
0:13:54 I’m like, no, it’ll be worth six and two years.
0:13:55 We’re going into recession.
0:14:00 This is 2019, I’m sorry, 2017.
0:14:04 And it took three years to renovate, shit ton of money.
0:14:09 And then COVID comes and we have, you know, a really nice home on the beach.
0:14:12 And then again, above, see above better to be lucky than good.
0:14:16 This mass migration of people to Florida from COVID.
0:14:21 All these masters in the universe who all want to live in the same, same area and be on the sand.
0:14:25 And that home has probably doubled or tripled in value and more important than that.
0:14:32 In an environment where people had to sequester and isolate with their families.
0:14:38 I was in a beautiful home, more time with Netflix, more time with my boys and my stocks were skyrocketing.
0:14:50 And COVID was, in my opinion, the most unfair, pornographic, gross transfer of wealth and health
0:14:57 from the already wealthy and the incumbents from people who were unhealthy or poor.
0:14:59 And I was, I was on the right side of that.
0:15:06 And it just strikes me, it just feels so uncomfortable to say COVID was the best two years of my life.
0:15:10 But this is a long-winded way of saying the best purchases I have made.
0:15:14 And I’m not suggesting that it’s right for everybody because a lot of it is timing.
0:15:19 But emotionally and financially, the best purchases I have made were my first in my last home.
0:15:28 Are there any categories of spending that you kind of refuse to skimp on or that you pretty consistently go all out on?
0:15:35 Something where you look at the price tag and you say, doesn’t matter, I’m going to buy this, no matter what.
0:15:39 I’m sitting in a room that costs $5,000 a night.
0:15:44 I mean, enough said, I don’t own a car.
0:15:46 I don’t spend a lot of money on clothes.
0:15:49 I spend a crazy amount of money on travel.
0:15:53 The next door in the next room is my friend Augusto.
0:15:57 And Augusto is like this greatest guy, easygoing, super nice.
0:16:03 And when I’m doing a lot of traveling and I’m lonely and my partner can’t come with me or my kids can’t be with me,
0:16:06 I call one of many friends and I say, come join me.
0:16:12 And if it’s not easy for them, logistically or financially, I make it easy for them.
0:16:14 And we go out and we go to the best place.
0:16:16 I mean, and I feel self-conscious.
0:16:17 It’s so funny.
0:16:22 I’ve always, I’ve had this weird shame around money up until the age of 30 or 35.
0:16:25 I was ashamed that I didn’t have more money.
0:16:27 I was always, I was broke because I was in school.
0:16:28 I had student loans.
0:16:36 I was really self-conscious about how much, how little money my mom and I had made me feel very insecure.
0:16:42 And then student loans, starting businesses, never had enough money, even when my friends were starting to make money.
0:16:43 So I didn’t have enough money.
0:16:45 I was embarrassed by that.
0:16:49 I think from about the age of 30 to kind of 45, I had just the right amount of money.
0:16:52 I had enough money to do nice things, but I wasn’t self-conscious.
0:16:54 Then I got exceptionally lucky.
0:16:56 And by the way, I’m not humble.
0:16:57 I think I’m a fucking monster.
0:17:00 I think I’m exceptionally talented, but I also got really lucky.
0:17:03 There are a lot of exceptionally talented people out there.
0:17:08 And now I’m not embarrassed, but a little self-conscious by how much money I do have.
0:17:09 And you’re not supposed to talk about it.
0:17:18 And I think that is nothing but a bullshit construct to keep poor people poor because when you speak a different language, rich people talk to other rich people about money all the time.
0:17:22 They talk about taxes, they talk about investments, and they get more literate.
0:17:39 And then we’re told not to talk about money in case you decide to share your salary with someone else or you figure out how much money I have and decide to fucking, you know, show up with a guillotine or actually vote for people who have a progressive tax structure or maybe demand more compensation.
0:17:45 Because you realize the person down the desk from you is making 30% more because they’ve been there 10 years or they’re different sexual orientation.
0:17:57 I mean, basically the asymmetry of information and this inclination that you’re not supposed to talk about money keeps the financially illiterate illiterate and also keeps rich people richer.
0:18:12 So other than bragging, it is, I think, important to talk about money, even when you have it, but hands down where I go ape shit with money now that I have it and spend more than I should is on travel.
0:18:16 I’m going to Africa, I’m taking my sister and her family, and they didn’t want to go.
0:18:17 They have responsibilities.
0:18:22 They’re kids in choir, they’re working hard, and I’m called or I’m like, you’re going to be dead soon.
0:18:25 When are you next going to Africa like you’re going to go with me?
0:18:27 When are you going to roll into Africa like you’re going to roll with me?
0:18:29 What the fuck are you thinking?
0:18:33 And that was the right lecture for me to get my sister.
0:18:39 These experiences, if there’s anything the research shows you around spending money, it’s the following.
0:18:42 Drive a Hyundai and take your husband to Africa.
0:18:44 I don’t really buy a lot of things.
0:18:45 I’m just not into that.
0:18:47 I don’t buy stuff.
0:18:50 Do you look at the price tag much when you buy things?
0:18:55 So if you walk into a nice clothing store, are you thinking about how much it costs?
0:18:58 I do because I can’t get out of that habit.
0:19:02 I was in, I forget where I was, but there was just an insane price on something.
0:19:04 And I’m just like, this is offensive.
0:19:09 I can’t bring myself to spend money on this thing.
0:19:14 It’s just ridiculous that you would even try and charge this amount of money.
0:19:14 I can’t buy it.
0:19:15 I really need it.
0:19:17 I really like it.
0:19:20 It doesn’t make any difference to me, but there’s that part of you.
0:19:21 You just can’t do it.
0:19:27 You just, you remember back when you didn’t have enough money and you established a value system and you’re like, I just can’t do it.
0:19:32 I can’t, you know, I can’t spend this kind of money.
0:19:33 What do you think is the difference then?
0:19:38 What do you think make justifies like a good purchase versus a bad purchase?
0:19:43 Like this is the majority of people, 99.9% of the planet doesn’t have these problems.
0:19:50 They, they have a much bigger problem and that is they’re constantly trading off needs versus wants.
0:19:52 And that is the majority of our planet.
0:19:55 I think only about one third of the planet are consumers.
0:19:55 What does that mean?
0:20:01 It means that they have enough money to buy things beyond basic food, shelter and education.
0:20:04 So only a third of us even get to make these decisions.
0:20:10 So do I want a scarf or do I want to go to Mykonos or do I want to take my spouse out for a nice dinner?
0:20:14 Yeah, it’s, I think you’re in a unique position because you have experienced
0:20:20 pretty much every economic class there is to experience in a way.
0:20:25 I mean, you haven’t experienced real poverty, but you did not grow up wealthy and now
0:20:26 you’re extremely wealthy.
0:20:30 And the way I kind of think about like, and you talked about there are certain people that,
0:20:33 that can’t make those trade-offs that we’re describing.
0:20:35 It feels like there’s a progression when it comes to spending.
0:20:41 It’s like in a certain economic weight class, you can’t make trade-offs because
0:20:43 you have to survive and you have to get by.
0:20:49 And then you, there’s another class, which is you start being able to make trade-offs.
0:20:53 And then there’s another one where I feel like you are, where it’s like,
0:20:57 you don’t even really need to be making trade-offs that much.
0:21:03 I mean, it sounds like you can generally speaking have your cake and eat it too.
0:21:05 In most situations, I would say.
0:21:12 So what I would be interested to know is like, how has the psychology of spending money
0:21:19 changed for you as you have breached each of those economic weight classes?
0:21:28 Like, did spending money take on a different gravitas to you as you got richer or as you got poorer?
0:21:32 So I think it’s important that everyone have a certain code or values that they want on their
0:21:36 tombstone and then try and live their life across those two or three values.
0:21:40 And one of my values is I pride myself on being generous.
0:21:42 And I’m generous with everything but my time.
0:21:43 I like spending money.
0:21:44 I like treating people.
0:21:47 I like buying things for people.
0:21:49 I know that’s virtue signaling, but anyone who knows me knows that is true.
0:21:54 And the reason why is not because I’m, I have this inner nobility.
0:21:57 It was because I was deeply traumatized by my father’s relationship with money.
0:22:03 My father was born and raised in Depression era Scotland where you could literally starve
0:22:04 if you didn’t have enough money.
0:22:07 And so he was painfully cheap.
0:22:12 He was the guy when my parents were divorced and he came and took me
0:22:15 and my friend best friend Adam to see “Grease.”
0:22:17 Amazing movie in 1976.
0:22:22 After the movie, he collected two bucks from my friend Adam because he had bought the tickets.
0:22:25 And I had to sit there and watch this go down.
0:22:30 I went to Hawaii once with him on a big golf vacation or he was the crown circled
0:22:32 ITT salesman of the year.
0:22:34 And he got to go on this golf trip and take his family.
0:22:37 And we went to Baskin and Robbins.
0:22:38 They got ice cream.
0:22:39 I ordered a shake.
0:22:42 And then for two days, my dad didn’t speak to me.
0:22:46 And you’re 13 years old and you’re a guy and you’re looking up to your father and you’re like,
0:22:48 why is my dad not speaking to me?
0:22:49 Like just ignoring me.
0:22:53 And finally I asked Linda, his third wife, my stepmother, wonderful woman.
0:22:54 I’m like, what’s going on?
0:22:55 Why is dad mad at me?
0:22:58 It’s like, he’s upset you ordered a shake at Baskin and Robbins.
0:23:00 They cost $3 and you didn’t ask him.
0:23:02 My dad didn’t speak to me for two days.
0:23:07 And so when my parents got divorced, he immediately went to the upper middle class.
0:23:09 We immediately went to the lower middle class.
0:23:11 He was so awful to us financially.
0:23:13 He could have made our lives so much easier.
0:23:15 We’re just a little bit of money.
0:23:18 I really struggled in college and I’m like, oh, Bill grit, bullshit.
0:23:23 It was really fucking stressful not knowing if you were going back to college every summer.
0:23:26 And he could have made my life so much easier.
0:23:32 And so I remember just explicitly and implicitly deciding, if I ever have money,
0:23:34 I am not going to be this guy.
0:23:37 I mean, and I can’t stand it now.
0:23:42 I can’t stand, I have friends who are really wealthy who always find reasons not to pick
0:23:44 up the bill or what.
0:23:47 And I just find it’s such a grotesque attribute.
0:23:50 And some of it is, they’re just responsible.
0:23:51 They would just raise that way.
0:23:57 I find being cheap one of the grossest attributes, especially for men.
0:23:58 I’m sexist this way.
0:24:01 I can’t even be around these people.
0:24:06 If every one of my friends isn’t fighting over the bill, we’re not friends.
0:24:12 But my spending right now in large part or some of it is, I’m just,
0:24:15 God, I just don’t want to be my dad.
0:24:17 He was awful with money, just awful.
0:24:20 And I always thought, if I ever have money, I’m not only going to enjoy it,
0:24:22 I’m going to share it.
0:24:28 Yeah, I feel like people don’t seem to understand how good it feels to be generous.
0:24:36 I think I started, only started to realize this recently, that it does actually feel
0:24:41 really, really good to get the check and give someone a nice experience.
0:24:46 I mean, I did that recently with my dad for the first time.
0:24:53 And it was kind of like a, it felt like this sort of exciting, important moment where it’s like,
0:24:57 no, I can get this, like I can give to you.
0:25:04 And yeah, I mean, it sounds so trite when you say it, but the reality is just as you say it’s like,
0:25:06 it actually just makes you feel really good.
0:25:09 And it’s almost the same as getting something for yourself.
0:25:13 It’s all, as you say, it’s all, it’s selfishly motivated.
0:25:14 It makes you feel good.
0:25:21 But it seems like I’ve just found, I’m surprised by how many people don’t realize that, that like,
0:25:26 it’s really enhances your life and your own personal experience to be generous.
0:25:33 There’s all sorts of different ways to garner emotional reward for money if you handle it well.
0:25:37 You know, money is, money is nothing but the transfer of time and work.
0:25:42 And there’s few things you can do that are more generous than give someone time and work.
0:25:46 I was a services, I was, I used to park cars.
0:25:47 I was a waiter.
0:25:52 I remember I was a waiter in the Montana hotel and this lovely old lady was a character actress.
0:25:53 I forget her name.
0:25:57 Every time she was there, every time I would walk by,
0:25:59 she’d put five or 10 bucks in my pocket.
0:26:00 Like literally every time I walked by her table,
0:26:03 she’d come over and she’d like slip five or 10 bucks in my pocket.
0:26:07 And you’re going to UCLA and you can barely afford your books.
0:26:09 It like changes your fucking day.
0:26:11 It’s like nice old lady gives you 30 or 40 bucks.
0:26:17 I mean, it’s the difference between being able to go on a date or buy lecture notes or whatever it is.
0:26:22 It is wealthy people who do not tip big.
0:26:24 That makes just apps of fucking literally no sense.
0:26:30 It is so easy to give in a liquid economy time and work to people by giving them money.
0:26:34 And it has nothing to do with nobility or ethics.
0:26:37 It just like you said, it just feels really good.
0:26:41 The other thing that you inspired is that I think even more,
0:26:42 I love spending money.
0:26:44 I am really good at it.
0:26:45 It’s one of my core competence.
0:26:47 I’m outstanding at spending money.
0:26:51 I always say I’m spending money like a gangster in the 50s just diagnosed with ass cancer.
0:26:56 I am just going large and I’m loving every minute of it.
0:26:59 I’m really good at it and it creates a lot of joy and happiness for people
0:27:02 near me and around me and for me myself.
0:27:08 I do think though that even more rewarding than spending it or having it was making it.
0:27:14 Specifically, making it with someone else, both professional and personal partners.
0:27:18 My ex-wife and I, we were working so hard.
0:27:20 We were trying so hard.
0:27:21 We were making good money.
0:27:24 We had setbacks and then I had businesses fail.
0:27:25 I had businesses work.
0:27:26 She got promoted.
0:27:27 She didn’t get promoted.
0:27:32 But we were saving money and we bought a house together and we started saving money together.
0:27:35 And we really built economic security together.
0:27:39 And it was just so rewarding to do it with someone.
0:27:44 And then where you also get a lot of that reward is let me be clear.
0:27:49 The businesses I’ve started and sold, my first obligation was for me to make the most money.
0:27:49 And I always have.
0:27:54 That felt better than anything, but it also just felt fucking awesome to bring in really
0:27:58 good people who’d worked really hard with you alongside of you and go,
0:28:04 “Hey, I know you’re 27, but you’re going to make $550,000 next week when this
0:28:05 transaction closes.”
0:28:08 And them just looking at you like they couldn’t believe it.
0:28:11 You know, like I get huge reward out of underpaying you.
0:28:16 No, but look, no one ever feels overcompensated.
0:28:19 But for the last 10 or 15 years of my life since I’ve gotten wealthy,
0:28:23 I’ve made an objective to say, “Okay, what is this person’s market rate?
0:28:27 And how do I pay them 20, 30, 50% more than market?”
0:28:29 And it just feels good.
0:28:33 So spending it is great, but I found actually the making it,
0:28:37 specifically the making it with other people was actually the most rewarding part.
0:28:40 Yeah. Wow. I 100% agree with that.
0:28:44 I think that’s one of the things that makes relationships so fun is that you’re building
0:28:49 something together. It’s just so much more exciting than doing it on your own.
0:28:54 Well, by the way, it just dawned on me that it’s no accident that you’ve asked me to do all this
0:29:00 virtue signaling around generosity right before bonus season. It’s clear that everyone has figured
0:29:05 this out. And there’s like eight people on this line taking notes that, yeah, reviews are about to
0:29:13 come out. You know, I find it’s all about grit and helping people realize their inner child
0:29:16 and save by not by underpaying them. That’s how you build character.
0:29:18 I’m planning to build everyone’s character here.
0:29:21 We’ve got more after the break. And by the way,
0:29:25 we’ll be recording and ask me anything episode very soon. So please send in your questions
0:29:31 for me and Scott to officeours@profgmedia.com or leave a comment on our YouTube channel.
0:29:32 We’ll be right back.
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0:33:01 We’re back with ProfG Markets. I’m going to go through some
0:33:06 individual situations where spending is very important and I just want to get your reaction
0:33:12 on how you would deal with these little situations I’ve come up with. So the first one is restaurants.
0:33:18 You’re out to dinner with friends and let’s imagine you’re not as wealthy as you are right now for
0:33:25 these. One of your friends orders a really expensive bottle of wine. They order like a bunch of plates
0:33:30 for the table and then when the check arrives, it’s way more expensive than you thought. It’s
0:33:34 one of those checks where you see it and you start to feel kind of anxious and uncomfortable. You
0:33:40 don’t really know what to do. So what would you do? Would you still offer to get the check? Would you
0:33:45 split it equally? How would you handle that? Is this a group of guys or just friends?
0:33:49 Group of guys, friends. I mean, I roll with a different crew. I just don’t, we were, I never
0:33:53 had friends that were into fancy wine until I got rich and now I have friends who are trying to like
0:33:59 inject class or some air of prestige into their life by ordering stupidly expensive
0:34:03 bottles of wine and buying art. If you want to talk about, you know, if you want to signal for
0:34:08 someone with a little dick, find someone who’s all of a sudden really into art and or, you know,
0:34:13 orders, orders, anything above a hundred bucks a bottle of bottle of wine, unless you’re really,
0:34:16 I mean, if you’re really into art and you’re really into wine, fine. My friend Adam is really
0:34:21 into cars. He buys expensive cars because he’s always been really into cars. Fine. Fine, I get it.
0:34:24 But if someone ordered an expensive bottle of wine and I was with a group of guys and we didn’t
0:34:31 have a lot of money, I mean, okay, if he’s a baller and he’s paying for it, general form is the
0:34:36 following. In general, like manners, if you order an expensive bottle of wine, it means you’re paying
0:34:42 for dinner. You’re basically signaling, I am going to pay for dinner. You can’t be generous with
0:34:48 other people’s money. And then when the check comes, if it’s a group of guys, your age, you’re all
0:34:53 friends, you all split the bill unless someone went crazy in. What about if you’re in your 30s?
0:35:00 Like it’s not as absurd to be in your late 30s. Everyone’s making good money. Maybe everyone’s
0:35:07 with their partners. Like, what do you do in that situation? I personally feel like with friends,
0:35:13 I mean, young people split the check or whatever they send me or send me a request. I get it,
0:35:17 right? I think if you’re in your 30s and you’re blessed with some reasonable economic security,
0:35:23 general format should be the following. We get this one. Oh, the next one, they get it. And if
0:35:29 people aren’t, if things aren’t kind of evening out over time, you have to decide whether you want
0:35:35 to stay friends with these people because generally what I have found is that you’re out with couples,
0:35:40 I can’t stand splitting the check. I’m at a point now where people say, “Oh, you did this.” I’m like,
0:35:44 boss, either pay for it or I’m paying for it. We’re not splitting the check. We’re fucking grown men.
0:35:50 And I’ll get this one. You get the next one, whatever it is. And especially when you’re out
0:35:56 with couples, I think you’re mindful of each other. But for the most part, I think one couple gets
0:36:03 the check and then the other couple gets the next one. I think the moment, I think it’s always that
0:36:08 strange moment when the bill comes. I think it’s awkward. It’s very awkward. But it should all come
0:36:11 out on the wash. If you have good friends, they’re not going to be stupid in terms of
0:36:17 overordering and you’ll realize that you trade off two or three couples, two or friends. And if
0:36:22 they, if their turn never seems to come around, you call them out on their bullshit and be like,
0:36:28 “Hey, how come you never see, how come you always seem to find a way not to pay?”
0:36:32 Okay, this one’s particularly relevant right now. Christmas is around the corner.
0:36:39 Let’s say, again, you’re in your late 30s, you’ve got two children, a partner, two parents,
0:36:45 you’ve got aunts, you’ve got uncles, you’ve got friends, godchildren, etc. Who gets presents
0:36:51 and how much do you think you should be spending on those presents? And do you spend more on one
0:36:57 person? Do you spend less on another person? How do you think about presents and Christmas
0:37:00 as it relates to spending? I think about Hanukkah, you anti-semite.
0:37:05 Hanukkah, sorry. Okay. Actually, the holidays. That’s not true. I think about Christmas. I don’t
0:37:10 know what the, I don’t know what Hanukkah is. This is personal, how you approach the
0:37:13 spending on the holidays. When the kids were little, it was fun to just buy them a ton of
0:37:19 shit and have this consumer orgy that morning with a wrapping shit and then playing with it
0:37:25 for two minutes. And that was fun. As we’ve gotten older, what I do with my boys is they
0:37:30 make a list of stuff. We try and connect it to George or something or something and we pull
0:37:34 stuff off their list and maybe we wrap one or two gifts. We just don’t, I don’t want that kind of
0:37:40 consumer lolapalooza in the morning. And then with my partner, I ask her to, you know,
0:37:46 occasionally, we don’t buy each other stuff around the holidays or for birthdays. I buy her stuff
0:37:53 randomly because I think it’s just more fun that I think she’ll love and she drops hints
0:37:58 every once in a while. That she wants something? Oh yeah. I was saying, I’ve been looking at this
0:38:04 or it’s like, you haven’t given me a present in a while. No, she’ll send me a photo of a
0:38:09 Birkenbeck with the exact color and be like, “Hey, what do you think of this?” I’m like,
0:38:13 “Okay, message received.” And what I try and do is wait just long enough
0:38:18 such that she forgets about it and it’s a surprise. But yeah, I’m not a big gift giver.
0:38:23 I don’t want gifts. The gifts I like, you know, for me, I want meaningful gifts. I want,
0:38:28 you know, my sons will write me a note or they’ll get me a book that was meaningful to me. All
0:38:32 that gets a picture of us framed. That’s the shit I want. I can buy anything I want personally and
0:38:37 I’m not into stuff. You know, the gifts that, I mean, it sounds like a Hallmark commercial,
0:38:42 but I don’t want stuff. I don’t want an automatic tie rack or a cream shave heater.
0:38:48 That’s what we got my dad. Ooh, is he thrilled? Back in the ’70s, you put shaving cream in a heater.
0:38:53 I love that. And you’d have the delight and the supple feeling of warm lather on your beard.
0:38:55 That’s a great idea. I’m probably going to get that.
0:39:00 Or a rotating tie rack. I have so many ties and I need to see them electronically whiz by me.
0:39:04 I love that too. Yeah, we’re not big gifters.
0:39:10 So who gets presents then? This is a question I’ve been thinking about. I can’t tell,
0:39:14 or it’s not totally clear to me who I’m supposed to be getting presents for
0:39:18 during the holidays and also how much we’re supposed to be spending.
0:39:19 First and foremost, your boss.
0:39:24 Okay. Because I will say, by the way, you get presents for us at the end of the holidays.
0:39:28 I don’t know if you know what you’re getting us, but we have received Christmas gifts from you
0:39:34 and I would assume that that’s sort of part of, you know, you build that into the budget.
0:39:38 Okay. Over the holidays, I need to put aside this amount of money
0:39:40 to get my employees some gifts and to get these people gifts.
0:39:45 Like, I feel like it’s an important part of the income statement, if you will.
0:39:50 But it’s strategic and it’s selfish. So employee gifts and it’s the following.
0:39:53 First off, I don’t buy anything. I don’t know what it’s going to be in that fucking bag.
0:39:55 MJ, who has much better taste than me.
0:39:55 She does a great job.
0:40:00 She’ll say, I’m going to spend 500 or 1,000 bucks on employee gifts per person, like fine.
0:40:05 And she’ll figure out the latest cool thing and she’ll do a great job and merchandise it.
0:40:07 And I just give her my credit card number.
0:40:12 And the reason it’s strategic is that if I spend $1,000 on a gift or gifts for employees,
0:40:17 it’s worth more than $1,000. If I gave them $1,000 in compensation,
0:40:20 one, they’d have to pay 30, 34% taxes on it.
0:40:23 Whereas if I give you $1,000 or whatever, AirPods and a scarf or something,
0:40:28 it’s pre-tax income. And also it’s more meaningful.
0:40:34 The psychological benefit is greater than if I’d just given you $1,000 cash.
0:40:36 My first business partner said, would always be like, he was totally gruff and like,
0:40:40 just give them cash. And I’m like, no, they like gifts. The kids like gifts.
0:40:44 You know, for me, the holidays, I don’t, I can’t stay on the holidays.
0:40:48 They were not an enjoyable time for me growing up. So I literally loathed them.
0:40:53 It’s so personal though. You might find, I mean, so for example,
0:40:57 I think gifts are more important for women. Cocaine, jewelry.
0:40:59 Cocaine and jewelry, women have a special relationship with Ed.
0:41:05 And maybe you don’t like cocaine. Maybe you don’t like jewelry.
0:41:12 But if you don’t, in your 20s, offer that to women and in your 30s and 40s offer jewelry to women,
0:41:18 you are not a good person. And mostly the jewelry.
0:41:22 Like I can’t ever imagine spending, oh, I guess I buy watches now.
0:41:26 I never used to buy watches, but I can’t imagine people spending this money on jewelry.
0:41:31 But you’ve got to determine what’s important to the people in your life.
0:41:34 That’s what it means to be generous is you’re doing something for someone else
0:41:37 you wouldn’t do for yourself. It makes no sense to you, but it makes,
0:41:39 but it’s important to them. So you do it for them.
0:41:43 Do you think that people don’t value gifts enough?
0:41:49 What I have found is that, and I wish I’d figured this out earlier,
0:41:55 writing somebody and complimenting them and recognizing them or telling them you were
0:42:03 thinking about them or telling them how impressive you are with them or taking the time to say,
0:42:08 you know, you handled the situation so well, or congratulations, this is just such a,
0:42:10 this is such a nice achievement for you.
0:42:17 Or taking the time just to recognize their achievement in a very thoughtful, explicit way,
0:42:21 especially men to men. I think that’s the best gift you can give another man.
0:42:30 My best friend, Lee, on a regular basis, he will text me when he, I get choked up thinking about it.
0:42:41 He’ll literally text me. He’ll say, me and my parents saw you on Bill Maher,
0:42:42 and we’re just so proud of you.
0:42:44 Yeah, that is so nice.
0:42:51 Those are the gifts. Like, and everyone’s different, maybe people like stuff.
0:42:56 Like, that’s this, you know, that’s the shit I remember. And wouldn’t you know,
0:43:00 my friend Lee is gay. And I think gay men have an easier time expressing their emotions and straight
0:43:06 men. And, and, and just registering how important and meaningful that stuff has been for me
0:43:14 has helped, helped me be much more generous with my emotions. But that, in my opinion, that’s true
0:43:23 giving. We’ll be right back after the break. If you’re enjoying the show so far, hit follow,
0:43:27 and leave us a review on Prodigy Markets, wherever you get your podcasts.
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0:45:59 We’re back with Prof. G. Markets. I want to move on to some things around what is essential
0:46:05 to spending, what kind of things in your life you find essential. I mean, we talk a lot about
0:46:14 like discretionary versus non-discretionary, and the technical definition of non-discretionary is
0:46:20 like the stuff you can’t live without. So, you know, food and housing costs and health insurance,
0:46:29 et cetera. But I could imagine that as you get richer, that category sort of starts to expand.
0:46:33 Like, you know, I sort of feel like I can’t live without an iPhone at this point. Like,
0:46:39 that’s sort of the way I think about it. So, I guess my question for you is like, what stuff
0:46:45 can you not live without at this point? What do you have to spend on? And what is your approach
0:46:52 to spending on those items? This is going to sound under the title of infinite douchebag.
0:46:57 It would be really hard to lose my plane. I’ve gotten very used to having a plane. So,
0:47:03 I mean, there’s something around ramping your spending behind making sure you’re spending
0:47:10 lags, your economics, because it’s the joy you get from having something isn’t as great as a
0:47:15 disappointment if you lose it and can no longer do it. You get used to this shit really fast.
0:47:21 So, when I bought a plane seven years ago, the best piece of advice I got
0:47:27 was a friend of mine who said, “Just make sure you have way more money than you need for this,
0:47:32 because you do not want to give it back.” He’s like, “Don’t buy it until you know you can keep it.”
0:47:40 And that was what’s been so rattling about being rich and then poor and then 2000,
0:47:45 being rich and then poor again in 2007 and 2008, because to kind of step backwards,
0:47:50 and I didn’t really actually, I didn’t step back materially, because I’d never,
0:47:56 I always live below my means, but you step back from an emotional security standpoint,
0:48:00 that is really frightening. Yeah, I was going to ask like, have you ever
0:48:04 sort of downsized your lifestyle because you just couldn’t afford it anymore?
0:48:11 Yeah, I did. After the great financial recession hit in 2008, I had a loft in New York. I had to
0:48:17 sell that. I just didn’t have any money. I wasn’t making any money and all of a sudden I was had
0:48:20 negative net worth, so I had to sell my loft. That was very disappointing. I loved,
0:48:26 it was kind of just humiliating to be whatever I was 43 and have to sell my house to pay my bills.
0:48:30 I was never in debt. Were you with a partner at that point?
0:48:33 No, I was single at that point, but I still felt really fucking humiliating.
0:48:39 So, yeah, I’ve had to step back, and I think most people have to step back at some point.
0:48:44 Maybe, I mean, if you’re really responsible, hopefully not, but I got crushed.
0:48:51 Yeah, I feel like that’s a really, that’s a big one for me, just the prospect of downsizing it.
0:48:58 The way I have it in my head right now is like, you know, I have, I’m doing forced saving,
0:49:00 so I’m good. I’m being responsible.
0:49:02 How are you doing that? How are you doing forced savings?
0:49:07 I have the automatic 5% that goes into the 401k, and then you match that,
0:49:11 and then I’m also just immediately, when I get at the beginning of the year,
0:49:15 I just take a chunk of cash and just put it in the IRA, and that’s the end of it.
0:49:19 I just want to say you’re like light years ahead of where I was when I was 25.
0:49:21 I just, I wasn’t even thinking that way.
0:49:28 And part of the reason I do that is like, I want to spend a lot, and this might sound dumb,
0:49:35 but I like nice things, and I like nice restaurants, and I like going out to cool places,
0:49:38 and I spend a lot of money on all of those experiences.
0:49:46 And part of it for me is that I want to kind of surround myself in that world and get myself
0:49:51 deep in that position, such that I have no choice but to go on and make a lot of money.
0:50:00 And I think the scary thing for me is the idea that at some point, this podcast stops
0:50:04 being successful, and I sort of find myself at a crossroads, and suddenly I can’t do all of
0:50:13 this anymore. I can’t live this cool life in New York. And that’s the thing that I’m gambling with.
0:50:19 I need to make sure that I’m working so hard that I can keep up, and I can sort of see how
0:50:25 this is going to be a potential slippery slope in the future when it gets bigger and bigger,
0:50:29 when you start dealing with kids. And I’m going to start thinking, oh, they need to go to the
0:50:35 best school, and I need to have a house in this area where all the cool people are,
0:50:41 and I can feel that sort of like treadmill feeling. But I almost don’t want to get off,
0:50:48 because I don’t want to give myself permission to stop working really hard in a way.
0:50:52 I wouldn’t look at it that way. You go to the playbook you played. When I was your age,
0:50:56 I didn’t appreciate nor had access to nice things or nice restaurants. I just didn’t.
0:51:02 You know, you’re at a point, Ed, where you shouldn’t be saving 5%. You should be saving 10%,
0:51:09 and then the 5%, 15%, because if you just do the math, it’s like what Brian Chesky from Airbnb says.
0:51:13 You can have it all. You just can’t have it all at once. And the reason why I have so much balance
0:51:17 in my life and so much opulence was because I had a lack of it when I was your age.
0:51:22 And that is I was very disciplined. I worked a lot. I didn’t spend a lot of money.
0:51:28 Occasionally went out to dinner or whatever, went to Club Med in Mexico. That was my big
0:51:35 vacation when I was your age. But you just got to recognize that some of that indulgence now,
0:51:40 and I’m not going to tell you not to do it, it’s just a trade-off. If you can find a way,
0:51:48 I mean, my out-of-control opulence now is a function of the fact that I didn’t have it
0:51:53 when I was young. I could have had more of it, but I wouldn’t have been able to, you know,
0:51:58 for the most part, I was constantly investing, reinvesting in startups, reinvesting in the
0:52:03 stock market. And then sometimes I’d lose it all, which hurt. But I was always putting myself in
0:52:07 a position that if the winds kicked up and my sales were up, I was going to make a lot of money
0:52:12 because I was constantly reinvesting and my own company’s constantly reinvesting in the markets
0:52:17 and not consuming a lot. I think it is very difficult when you’re a guy your age, especially,
0:52:21 I know you have a girlfriend, but you guys don’t live together, right?
0:52:21 We do.
0:52:25 You do live together. Jesus Christ. Okay, so you’re on your way.
0:52:30 By the way, that’s been a big, that’s helpful in terms of just creating a more responsible
0:52:31 lifestyle for sure. Yeah.
0:52:35 You know, we always say greatness in the age of others. Wealth is in the age of others. One,
0:52:39 your ability to attract and retain really talented people, especially if you’re an
0:52:43 entrepreneur or just find them, go to a place where you’re working with other talented people.
0:52:48 You want to be able to where you, if you look left and right and think these people are talented,
0:52:49 you’re going to make more money.
0:52:55 That’s sort of what I mean, right? Like I kind of, I feel like I need to spend to be there,
0:53:01 you know? I need to go out with my friends and go to these social events. Like one of the questions
0:53:08 I had on this list here of like situations. I’m not going to be specific about who this
0:53:13 is, but you know, here’s the situation. Your friend is getting married and has planned a
0:53:17 very big bachelor party and you look at the agenda and you realize you’re going to have
0:53:22 to spend a lot of money on flights, a lot of money on meals, on alcohol, on going out,
0:53:25 and it’s all beginning to get a very, a lot, pretty uncomfortable.
0:53:31 But this is a really good friend and you don’t want to just not show up and let them down.
0:53:38 So in a way, it’s sort of like you need to, you need to be spending in order to maintain
0:53:44 relationships at a certain point in life, I feel like. So I guess how do you think about that?
0:53:48 If he’s a really close friend, you should be able to say to him, “Poss, this is a strain for us.
0:53:51 I make really good money and it’s a strain for me. I can’t imagine what it’s like for some of the
0:53:55 other guys.” And quite frankly, you’re being a little bit selfish here. You’re putting us
0:54:00 in a difficult position because nobody wants to say no. Is there any way you can ratchet this back
0:54:04 a bit? So I don’t think that’s unreasonable. You’re at that age where you’re just going to spend a
0:54:09 disproportionate amount of money on the wedding industrial complex. That’s just going to happen.
0:54:13 And it’s going to be worse for your partner because she’s going to have to buy bridesmaid
0:54:19 dresses and- Way worse for women, for sure. And then go to hotels that are overpriced because,
0:54:23 you know, unless they bought out the hotel. But yeah, that’s just part of, that’s just a tax
0:54:28 that you paid at William Sonoma. The William Sonoma tax. I love that. That’s right.
0:54:33 It’s just part of it. Yeah. I guess it’s just, I bring it up because I find it interesting how
0:54:45 as you age, it’s like just the financial burdens just accumulate in ways that you didn’t really
0:54:52 expect. Like the wedding tax that you just described is a very real tax and planning for those things.
0:54:57 I’d like to do it as best I can, but I think it is very difficult because costs just sort of
0:55:03 come up out of nowhere. And the one I’m going to bring up now, which is probably the biggest one,
0:55:12 is children. Like children are a huge cost. So my question for you is, were you surprised
0:55:21 by how much kids cost? And two, do you, to what extent do you sort of budget in the cost of your
0:55:27 children? Like, how do you think of your kids as that line item on your income statement?
0:55:31 Well, this is not financial advice, but my experience with kids was that when I had them later
0:55:36 in life, so I was a little bit more economically secure. You know, I had my son when I was 40,
0:55:46 41, 42. And for me, it was actually, I think part of the reason I’m as wealthy as I am now is because
0:55:50 I had kids. And the reason why is because I had just scared the shit out of me and got me very
0:55:55 focused. I think having kids when you’re younger, if you don’t have dual income would be really
0:56:02 financially stressful. Also, something I did once I had kids was, and what I would recommend is
0:56:07 ask yourself, can you make a lifestyle arbitrage? And this was my partner’s idea. She said, let’s
0:56:13 move to Florida. We’re going to be able to cut our rent in half, if not by 60%. We’re going to cut our
0:56:21 private school tuition for our two boys by 2/3. Grace Church wanted $58,000 a year. And for me
0:56:25 to bring that lady muffins. And then they asked you, are you philanthropic? Like, are you going to
0:56:33 give us more money? Anyways, so we immediately cut our burn. And that was her idea. And she was
0:56:37 smart. She’s like, no, we’re going to love Florida. It’s nice. Stop being such a snob. I’m like,
0:56:41 I’m not going to Florida. They’re all yehas down there driving F-150s and shooting at each other
0:56:44 with their guns and everything. And she’s like, don’t be an idiot. You love that stuff anyway.
0:56:48 Yeah, all those better things life. But what I did do was smart. I took all of the money that we
0:56:54 saved and I put it into the market. And so immediately, I think combined, we were probably
0:56:59 making, you know, I was probably making between, I don’t know, 400,000 and 700,000 a year between
0:57:04 the two of us. And then we took that 14% swing and savings and all the other savings. We took about
0:57:12 150,200 grand a year. And we put it into stocks for 10 years from 2010 to 2020.
0:57:20 Yeah. I mean, the thing that really shocks me is that, I mean, just how crazy it’s gone. 400 to
0:57:27 $700,000 a year and you got priced out of New York. Like, it’s unbelievable. That’s the part that I
0:57:32 can’t really wrap my head around in especially living in New York. And that’s sort of what this
0:57:39 treadmill feeling is. It’s like, in order to just get some basics done in New York, you need crazy
0:57:44 amounts. There’s a reason why people are moving into Texas. And there’s a reason why the South is
0:57:49 economically booming. A lifestyle arbitrage is you should always be thinking about a lifestyle
0:57:53 arbitrage, especially in a world of remote work. Where could I move? Don’t be a snob. A lot of
0:58:01 people are really happy in Atlanta. And economic security is an enormous ointment for stress and
0:58:06 anxiety. And if you are blessed with mobility, you want to take advantage of it.
0:58:12 Just going to start wrapping us up here. I know you’ve gotten a lot into philanthropy recently.
0:58:19 We were talking about what is essential in life. Is philanthropy essential to you at this point?
0:58:26 Is it something that you budget for? And are you trying to make more room for giving?
0:58:34 You know, I’ve always said that one of my biggest onlocks is my atheism, because I really think
0:58:39 having a strong sense of the finite nature of life creates a lot of courage and a lot of boldness to
0:58:45 share your emotions, to take risks, to tell people you care about them, to seize the moment, to embrace
0:58:53 now. And one of the things I decided, when I sold my company in 2017, I sold it for 160 million bucks.
0:58:58 I was worth somewhere between 50 and 100 million, depending on how you would calculate my private
0:59:03 investments. And I thought, all right, I’m going to put in 25 million dollars. I’m going to go raise
0:59:07 another 250 or 300, start a private equity fund, because I thought I need to be a billionaire
0:59:12 by the time I’m 65. That was my goal. And I thought the only way I’m going to do that is through a
0:59:16 private equity fund. I have the credibility, the contacts. I’m going to raise the fund. I got the
0:59:20 first, I think I got about 50 million dollars in commitments just from three calls. I was going to
0:59:26 start a consumer private equity fund right after I sold L2. And then I thought a friend of mine got
0:59:32 sick, passed away, and I thought, okay, this is going really fast. I have enough money to live
0:59:35 really well. I didn’t have enough money for a plane, but I had enough money for everything else at that
0:59:41 point. I thought, okay, why do I need to be a billionaire? Well, all right, would I have more
0:59:44 influence? Maybe not much more. Would I be able to do anything else? No, I can pretty much do
0:59:50 anything I want right now. So I made a conscious decision that would change my approach to money.
0:59:55 And it was the following. Once I hit my number, which I was about to, anything above that,
0:59:59 I would do one or two things. I would either spend it or I would give it away. I love spending
1:00:05 money. I’m selfish. I like nice things, nice experiences. But every year I look at my net worth
1:00:15 and if it’s up $7 million and I’ve spent four, I’ll give three away. I do not need to increase
1:00:20 my net worth. Hoarding is a disease that infects a lot of Americans. There’s just no reason.
1:00:25 I don’t begrudge billionaires. I don’t think they’re as happy as me. I don’t think there’s
1:00:31 any reason to hoard money, spend it in a capitalist society. There’s so many amazing things to spend
1:00:37 it on. And then if you still have more money than what you need to spend to have an amazing life,
1:00:43 for God’s sakes, why wouldn’t you find if you believe young men are struggling and it freaks
1:00:48 you out that four and five people in a morgue have died from suicide or men, why wouldn’t you
1:00:55 give money to an amazing charity with really talented people focusing on mental health?
1:01:00 The Jet Foundation, why wouldn’t you, if you are constantly lecturing at people about
1:01:05 the misgivings or the moral corruption of the university system and how we need more
1:01:08 vocational training, well, if you have the money to start a vocational problem, why the
1:01:12 fuck wouldn’t you? And you know what? It feels really good. It makes me feel strong. It makes
1:01:17 me feel nice. I don’t, it’s not, it’s not even an ethical thing. It makes me feel like a baller.
1:01:22 And also just some of it is an overdue nod to California taxpayers. I give a lot of money
1:01:27 back to UCLA and Berkeley because they spent so much money on me despite the fact I was such a fuck
1:01:34 up. You know, California taxpayers kept giving me another chance. So this is a great position to
1:01:41 be in. But once you hit your number, why on earth would you not do one or two things, spend it or
1:01:51 give it away? Well, this has been great. Final thought for me. So I feel like spending is kind
1:01:56 of like the truest, most accurate reflection of ourselves. Like, you know, we tell ourselves
1:02:00 these stories, but oh, this is who I am. And this is what I like. And then we take these
1:02:06 personality tests to sort of like figure out, oh yeah, I’m kind of like a EQZ or whatever
1:02:14 the fuck that test is. But it’s like, if you just look at how you spend, it’s like this data set
1:02:19 testimony that says with no biases, like this is who you are. This is what you care about. This is
1:02:23 what you want to achieve. And these are the people who you want to impress. Like, I feel like if you
1:02:29 want to understand who you are, you just look at, look at your bank statement. So we’ve been talking
1:02:34 about your spending. We’ve been discussing it on this podcast. So I’m wondering, what do you think
1:02:42 your spending says about who you are as a person? I’m an atheist. I’m generous. And I’m a father.
1:02:48 I recognize the finite nature of life. I’m spending a lot of money on experiences.
1:02:55 I think I’m a generous person. I give away a lot of money. I’m generous with my friends.
1:03:04 And I’m very focused on being a really generous provider for my kids and my partner. Those are
1:03:11 the things I aspire to. It also says, quite frankly, I’m indulgent. I’m selfish. I spend a
1:03:19 lot of money on my own comfort and my own joy and my own, you know, I do frivolous things that make
1:03:23 me feel important and good. I spend money on things, you know, I spend money on dumb shit
1:03:27 because I’m a bit of a narcissist. I mean, that’s an interesting way to look at things.
1:03:32 So there’s some very good things about my spending. There’s some things I’m also probably not that
1:03:36 proud of in terms of how I spend too much money on nightlife and alcohol.
1:03:45 That’s not good at my age. I have nice things, quite frankly, to probably impress other people
1:03:51 that I shouldn’t need to impress. How do you know I’m building a house in Aspen? I tell you.
1:03:57 That’s sort of fucking pathetic, isn’t it? So you’re right. It does say a lot of things about
1:04:01 me. It says a lot of good things, a lot of bad things, you know, I’m human.
1:04:08 This episode was produced by Claire Miller and engineered by Benjamin Spencer.
1:04:13 Our associate producer is Allison Weiss. Mia Silverio is our research lead. Jessica Lang is
1:04:18 our research associate. Drew Burroughs is our technical director. And Katherine Dillon is our
1:04:23 executive producer. Thank you for listening to ProfG Markets from the Vox Media podcast network.
1:04:29 Join us on Thursday for our conversation with Michael Saylor only on the ProfG Markets feed.
1:04:34 “Lifetimes”
1:04:50 “You help me in kind reunion”
1:04:59 “As the waters and the dark flies”
1:05:05 “And I love you”
1:05:15 What you’re saying is you were irresponsible, but it was planned. You made a conscious decision to
1:05:21 be responsible. That’s my room service. Speaking of irresponsible, I just ordered a shit ton of
1:05:35 beef. It probably cost a little $1,000,000. You can leave it there because I’m on a podcast,
1:05:44 so you can leave it in there. I’ll bring it out. Thank you, sir. So what you’re saying is you made
1:05:49 a responsible decision to be irresponsible. And I think that’s okay. You know, occasionally it’s
1:05:57 fun to splurge. I would argue the splurges when you’re young are, I think you remember them more.
1:06:09 It is clearly bonus time. You guys plan this. You guys so plan this. Scott, do you think it’s
1:06:13 important to be generous with your employees who don’t have as much money as you? Where does that
1:06:18 rank in your priorities? Scott, how do you think your employees get by? And what could you do to
1:06:29 make their lives easier? Yeah, something to think on. Support for this episode comes from AWS.
1:06:35 AWS Generative AI gives you the tools to power your business forward with the security and speed
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0:01:53 – Scott, imagine you’d built one of the most successful
0:01:54 companies in American history.
0:01:57 What would retirement look like?
0:01:58 – Checks.
0:02:06 – What would it look like?
0:02:08 It’d look like my life right now, Ed.
0:02:12 You don’t need to build one of the most successful companies
0:02:15 to have a wonderful back nine.
0:02:19 I’m doing exactly what I wanna be doing.
0:02:21 I hang out with impressive, intelligent young people,
0:02:23 such as yourself.
0:02:25 We make good money.
0:02:27 We have purpose.
0:02:31 And I get to do amazing things with my friends and family
0:02:34 that make me feel closer to them.
0:02:36 I can’t imagine doing anything differently.
0:02:40 And the only lesson in this humble brag,
0:02:41 or not so humble brag,
0:02:45 is once you get to a certain level of economic security,
0:02:47 you wanna use money as a means to an ends.
0:02:49 And that ends as great experiences
0:02:53 that make you feel closer to your friends and family
0:02:58 and recognize that you have an increasingly
0:03:00 finite amount of time here.
0:03:03 (upbeat music)
0:03:07 – Welcome to First Time Founders.
0:03:11 27 years ago, watching movies on demand
0:03:13 meant making a trip to the rental store.
0:03:16 But after a frustrating experience with a lost DVD
0:03:18 and a hefty late fee,
0:03:21 my next guest saw an opportunity for change.
0:03:23 He envisioned a world where people could enjoy movies
0:03:25 from the comfort of their homes
0:03:27 without the hassle of late fees
0:03:29 and without making a trip to the store.
0:03:31 So in 1997,
0:03:33 he launched a company with a groundbreaking idea,
0:03:36 flat rate movie rentals delivered by mail.
0:03:39 That single innovation,
0:03:40 followed by many more,
0:03:42 laid the foundation for what would become
0:03:46 the world’s leading movie and television streaming service.
0:03:49 With nearly 283 million subscribers
0:03:52 and over $28 billion in revenue this year,
0:03:55 this founder’s vision has forever changed
0:03:57 the way we consume entertainment.
0:04:00 This is my conversation with Reed Hastings,
0:04:03 co-founder and executive chairman of Netflix.
0:04:08 Welcome Reed, thank you so much for joining me.
0:04:09 – And what a treat.
0:04:12 So excited to be called a first time founder.
0:04:15 It’s like young again or something.
0:04:16 – Exactly.
0:04:18 I’m just looking at the background behind you.
0:04:19 I know that we were in talks about
0:04:21 maybe doing this in person
0:04:25 and I’m already just feeling huge amounts of regret.
0:04:27 The background looks beautiful.
0:04:28 – It’d be lovely to have you out here.
0:04:29 You gotta come see it.
0:04:32 I mean, the fall colors right now are incredible.
0:04:35 But of course we’re just waiting for the big snows to hit.
0:04:37 – So our listeners know where are you exactly?
0:04:40 – Powder Mountain Eden, Utah,
0:04:42 about an hour from Salt Lake City Airport.
0:04:45 – And that is something that we will be getting into
0:04:48 in this interview that is sort of your newest project.
0:04:51 But the title of this program is First Time Founders.
0:04:54 You are not a first time founder right now
0:04:55 but you were at one point.
0:04:57 So we’re gonna start with that.
0:04:59 We’re gonna start back in the 90s
0:05:02 right after you had served in the Peace Corps
0:05:04 and then you got your CS degree from Stanford
0:05:06 and you decided to start a company
0:05:08 but it wasn’t Netflix.
0:05:10 It was actually a company called Pure Software.
0:05:11 So let’s start there.
0:05:13 Could you tell us the story of Pure Software?
0:05:17 What led you to that venture and how it all came about?
0:05:20 – You know, I would say that starting a company
0:05:24 is like jumping out of an airplane without a parachute
0:05:27 and you just assume a bird is gonna fly by.
0:05:30 And so the people who start companies
0:05:34 are unrealistically positive and optimistic.
0:05:38 And then occasionally some of the times it works,
0:05:40 the bird flies by.
0:05:42 And if I think about my own experience,
0:05:45 I was excited about a particular product.
0:05:49 It found errors in a class of C and C++ software
0:05:52 that no one had been able to find before these memory errors.
0:05:55 And I was just hellbound on creating the product
0:05:59 and I had to do a company to see the product come to light.
0:06:02 – Was this something that you always knew you wanted to do?
0:06:04 Did you think that you were gonna be an entrepreneur?
0:06:08 – No, I did take one sort of business school-like class
0:06:12 and I had to learn how to use a spreadsheet to do that.
0:06:15 But that was like my little tiny bit.
0:06:20 And when I was a grad student, so mid-90s,
0:06:23 I got super excited about the foot mouse.
0:06:26 And you know, I was often with old hand mouse
0:06:29 and the terminal, you know,
0:06:31 it’s just slow back and forth to the keyboard.
0:06:33 And so, you know, of course,
0:06:35 I thought of the obvious solution,
0:06:36 which is you control the mouse with your foot.
0:06:38 – This is the first I’m hearing of the foot mouse.
0:06:39 I love it.
0:06:42 – Yeah, well, yeah, the foot mouse was a great idea,
0:06:46 I thought, which just shows I’m not very good
0:06:47 in the judgment category.
0:06:50 I’m good in the passion category, okay?
0:06:51 So anyway, I spent six months.
0:06:54 Luckily, I didn’t drop out of Stanford to do it.
0:06:55 And it turns out two things.
0:06:58 One is it’s a very dirty environment.
0:07:01 And so after a day or two, the foot mouse was pretty gross.
0:07:04 And then two, your leg cramps.
0:07:08 So it’s just not used to that fine dexterity control.
0:07:10 And those are both hard problems to solve,
0:07:13 which is why there’s still no foot mouse 30 years later.
0:07:17 But so I would say I’ve always had the product bug
0:07:20 or the passion product bug.
0:07:22 And then the first time I really did it,
0:07:24 which was pure, it actually worked.
0:07:27 So I spent a year at home writing the software.
0:07:29 And then I had to figure out a company to, you know,
0:07:32 figure out how to make it mainstream and distribute it.
0:07:36 The company from ’91 to ’95 doubled every year.
0:07:39 Morgan Stanley took us public in 1995.
0:07:44 And so in many ways, it was a great success of that era.
0:07:48 But I was pretty miserable for a lot of it
0:07:50 because I didn’t know how to do anything
0:07:51 in running a company.
0:07:54 And so it was just chaos and that felt bad.
0:07:56 – Yeah, so this is what’s so interesting to me
0:07:58 is that you’re not known for pure software,
0:08:01 but it was a smashing success.
0:08:03 I mean, it was your first company.
0:08:05 As you said, you took it public in ’95.
0:08:07 Later, you merged it with Atria.
0:08:11 And then in ’97, it was acquired for nearly a billion dollars.
0:08:14 And that’s roughly two billion in today’s dollars.
0:08:18 So this was like a hit hit success.
0:08:22 And it’s just so funny that you view it as kind of a,
0:08:24 one, that it’s sort of a footnote on your resume.
0:08:27 Two, that you view it as sort of a miserable time.
0:08:28 And so I’d love to just,
0:08:30 as you reflect on pure software,
0:08:33 you were a new entrepreneur as your first company.
0:08:34 It was successful.
0:08:37 What do you think you were getting right at that time?
0:08:38 – A product passion.
0:08:41 Think of one extreme, which is Elon Musk,
0:08:45 which is like all passion and vision.
0:08:49 And, you know, he manages quite successfully
0:08:52 through inspiration purely, right?
0:08:55 And then the day-to-day management of things
0:08:58 is pretty chaotic and he’s got tons of turnover.
0:09:00 And yet he still accomplishes amazing things.
0:09:03 So call that one end of the spectrum.
0:09:06 Another end of the spectrum is the really well-run,
0:09:09 you know, retail, something, I don’t know,
0:09:13 that, you know, not that inspiring, but very disciplined.
0:09:16 And so you can achieve excellence through that,
0:09:18 or you can achieve excellence at the other end.
0:09:22 And my first end was more in the Elon style.
0:09:26 It was all about a passion of, you know,
0:09:29 software quality and what that can mean for the world
0:09:31 and the problems of software errors.
0:09:35 But the day-to-day management was pretty poor on my part.
0:09:40 But we succeeded through kind of energy and passion,
0:09:43 because then people forgive you a lot of things
0:09:46 or you just make mistakes, but you, you know, you charge ahead.
0:09:49 – So we’ll fast forward to 1997.
0:09:52 You’ve just kind of scored pretty big on pure software.
0:09:54 You sold the company.
0:09:58 And I think for a lot of people at that point,
0:10:01 you start thinking about maybe early retirement,
0:10:03 maybe you moved to St. Barthes,
0:10:06 you do live a life of arrested adolescents,
0:10:10 as Scott likes to say, that’s not what you did.
0:10:12 You decided you wanted to start another company,
0:10:16 and this idea was for movie rental delivery.
0:10:19 Tell us what was going on in your head at that time,
0:10:24 and why did DVDs by mail seem like such a good idea to you?
0:10:25 – You know, it was the time when Amazon
0:10:26 was just going public.
0:10:29 E-commerce was clearly gonna be a big area.
0:10:33 And there were a lot of foolish companies just saying,
0:10:36 okay, I’m gonna sell computers or I’m gonna sell lamps,
0:10:40 and clearly Amazon was gonna crush them eventually.
0:10:43 And DVD rental, or rental generally,
0:10:46 has those two-way logistics, you had to send them back.
0:10:50 So it was very unique city-specific logistics
0:10:52 that we figured Amazon wouldn’t bother with.
0:10:55 It was too small a market, didn’t leverage all their core.
0:10:58 There weren’t five other things for them to rent.
0:11:02 So that would give us, we could ride the E-commerce explosion
0:11:04 and not have competition from Amazon,
0:11:07 only have it from the incumbents being blockbuster
0:11:09 and Hollywood video.
0:11:11 And then if we succeeded, we said, okay,
0:11:15 then we’ve got the pole position for converting to streaming.
0:11:19 Thus, we named the company Netflix and not DVD by mail.com,
0:11:21 ’cause that was always the ambition.
0:11:25 So you mentioned that Netflix was partly inspired
0:11:28 by Amazon, perhaps totally inspired by Amazon.
0:11:31 I didn’t realize this, but at one point,
0:11:35 Jeff Bezos actually offered to buy Netflix
0:11:36 and you declined it.
0:11:38 Could you take us through what happened there?
0:11:39 – Let’s think about the dates.
0:11:43 Late ’90s, and we went and talked to them.
0:11:45 It never got to like a formal offer.
0:11:48 It was sort of exploratory.
0:11:52 And they were properly interested in all businesses
0:11:54 that could show a profit.
0:11:55 And here’s the shocker, we said no,
0:11:58 and then we worked our ass off for 20 years.
0:12:01 Okay, and then if you compare the stock return,
0:12:05 if we had sold and then just ridden the Amazon stock up,
0:12:07 then the second outcome, 20 years of work.
0:12:10 And of course I’m happy to create Netflix
0:12:11 and that kind of thing.
0:12:12 – Yeah, absolutely.
0:12:17 And my favorite detail along those lines,
0:12:19 so Netflix is growing, it’s doing super well,
0:12:22 it’s on pace to go public.
0:12:23 And then the dot-com crash hits
0:12:25 and it brings down all these companies
0:12:28 and that includes Netflix.
0:12:31 And you actually tried to sell the company
0:12:36 to Blockbuster for $50 million and they rejected you.
0:12:39 So I’d love to hear the story of how that went down.
0:12:43 – Yeah, I mean, that one was more avoiding a big fight
0:12:44 with Blockbuster.
0:12:46 We realized that if we’re gonna grow really big,
0:12:48 we’re gonna have a big fight with them
0:12:50 and how about if we just give them 50%
0:12:52 and then help them profit
0:12:55 and not have that big fight with them.
0:12:57 And so we were open to that,
0:13:01 but they’re like a big, serious corporation.
0:13:04 We were a bunch of scrappy Silicon Valley kids
0:13:07 and they were like, when we wanna do online,
0:13:08 we’ll just do it.
0:13:12 And so they didn’t see any need or interest in buying us.
0:13:16 And then they did compete with us like heck
0:13:20 and luckily that didn’t start until 2004.
0:13:23 So they waited an awfully long time
0:13:25 ’cause they weren’t sure the market size,
0:13:27 but then they got quite serious
0:13:32 and it was a huge price battle in 2005 and 2006.
0:13:36 And then they ultimately bankrupted themselves
0:13:37 by 2007 or eight.
0:13:42 – I feel like in the history of video,
0:13:44 the way that Blockbuster is remembered
0:13:46 is they sort of dropped the ball.
0:13:48 They want focus,
0:13:51 they want managing themselves correctly
0:13:53 and that you came in and ate their lunch.
0:13:56 Do you think of their strategy that way?
0:13:59 Do you think that they sort of slacked off
0:14:02 and that’s where you and you’ve basically picked up the slack?
0:14:06 How do you view your takeover of Blockbuster in that story?
0:14:09 – High respect for their leadership,
0:14:11 very smart, thoughtful people.
0:14:13 They rolled up the business,
0:14:15 beat all their direct competitors
0:14:18 through kind of careful and good execution
0:14:20 of store-based video rental
0:14:22 and negotiated great deals with the studios.
0:14:26 When it came to looking forward,
0:14:27 they were very forward-looking
0:14:31 and they did a deal with a broadband company in 2000,
0:14:33 long before we were streaming, okay?
0:14:37 We didn’t start streaming till 2007, okay?
0:14:40 So in 2000, they do a deal with a broadband company
0:14:42 to be on the leading edge.
0:14:44 Unfortunately for them,
0:14:47 the name of that company was Enron, okay?
0:14:49 And it turned out to be this, you know,
0:14:51 billion-dollar loss that was a scam.
0:14:54 So they kind of learned, you know,
0:14:59 internet is a bunch of scam artists, you know?
0:15:01 And so they were more scared off.
0:15:05 So then we came in with DVD by mail
0:15:06 and it seems like, you know,
0:15:08 an interesting little business,
0:15:13 but again, they were looking for how to go direct to consumer
0:15:16 and they didn’t want to do this intermediate step.
0:15:19 It’s hard when you’ve got one business model
0:15:22 you’ve done in their case for 25, 30 years
0:15:27 and then once in a generation change, i.e. the internet,
0:15:30 you know, like Netflix hasn’t, yeah, I guess streaming.
0:15:33 I mean, we were born to do streaming
0:15:34 and thought about streaming all the time.
0:15:39 So it wasn’t hard for us to let DVD go.
0:15:42 But I think if DVD had been the vision,
0:15:44 you know, it would have been a lot harder.
0:15:45 – It was a long time
0:15:47 before you actually started streaming.
0:15:50 Were you constantly telling the team, you know,
0:15:52 ultimately this is the goal,
0:15:53 ultimately we’re gonna get into streaming.
0:15:55 This is just phase one.
0:15:56 – Yeah, for sure.
0:16:01 I mean, we launched in ’97, ’98 and 2007,
0:16:04 a decade later was our very first streaming.
0:16:07 And that was just a Windows PCs with crappy content.
0:16:13 Okay, so it wasn’t until 2009, 2010
0:16:15 that we had the Xbox deal.
0:16:17 So you could watch Netflix on your TV
0:16:18 if you had an Xbox.
0:16:20 And we had the stars online content,
0:16:22 which is like a baby HBO.
0:16:27 And so then it was like real content and on the television.
0:16:29 And then it was like another five years
0:16:33 before we were integrated into most televisions, you know,
0:16:35 and then we got our button on the remote,
0:16:36 the Netflix button.
0:16:37 And then we started, you know,
0:16:40 we did our original content first in 2012.
0:16:43 So that was house of cards.
0:16:46 So yeah, there was a lot of steps in there
0:16:48 that took to put together.
0:16:51 So, you know, it’s an unusual entry strategy
0:16:54 to build a business to be the segue, you know,
0:16:57 that is where we’re gonna build DVD rental
0:17:00 and then be in position for internet streaming.
0:17:03 But we were differentially confident
0:17:07 that DVD by mail was the best solution for a decade.
0:17:09 And then when it came in with streaming,
0:17:11 you know, we were super hungry for it.
0:17:14 And then of course, with that, we could expand globally.
0:17:18 – We’ll be right back.
0:17:20 (upbeat music)
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0:20:51 – We’re back with First Time Founders.
0:20:55 Was it difficult to convince your team of all of this?
0:20:57 I mean, it sounds obvious now.
0:20:59 Yeah, of course, people will be streaming,
0:21:02 but I feel like back then, you’re sort of making a,
0:21:05 you’re making a gamble, you’re making a bet.
0:21:07 I’m just interested, you say, you know,
0:21:08 we were confident of all of this.
0:21:10 Was it all of you or was it just you?
0:21:14 How did you convince everyone this was the right way to go?
0:21:17 – It was pretty broad that,
0:21:20 so YouTube started in 2005.
0:21:22 We could start to use streaming.
0:21:26 That was the first low quality but high scale streaming.
0:21:30 So, you know, there’s like little things like should we,
0:21:32 how much should we invest?
0:21:36 Should we invest, you know, 30 million or 300 million
0:21:38 in streaming in a given year?
0:21:42 So, you know, but I’ll call those technocratic decisions.
0:21:44 It wasn’t, nobody thought we shouldn’t invest.
0:21:49 It was just how fast, how early, those kinds of things.
0:21:53 – I feel like one of the things that makes Netflix so unique
0:21:56 is that it’s basically been on the forefront
0:22:01 of pretty much every major secular shift that we’ve seen
0:22:02 over the past several decades.
0:22:05 And it’s, you know, probably been on more of those
0:22:07 than any other company in this generation.
0:22:08 I can just go through the list.
0:22:11 I think it’s worth just listing for people.
0:22:14 You know, you had the VHS to DVD shift,
0:22:17 you had brick and mortar to delivery,
0:22:22 one time purchase to subscription based, DVDs to streaming,
0:22:25 and then more recently licensing to original content
0:22:28 and then even more recently domestic content
0:22:29 to international content.
0:22:31 – Crazy, crazy, isn’t it?
0:22:35 So it’s basically front running every single major shift
0:22:36 in the industry.
0:22:41 And that to me has been the differentiator with Netflix
0:22:42 and the trend.
0:22:44 What do you think you have done as a leader
0:22:49 that has enabled that level of innovation
0:22:51 over such a long time?
0:22:52 I mean, a lot of people innovate,
0:22:54 a lot of people do new things,
0:22:57 but you’ve been consistent in every single one.
0:23:00 What do you think you’ve gotten right?
0:23:03 – You know, I try to think through from first principles
0:23:08 why certain companies grow and thrive
0:23:11 and, you know, when they get left behind or when not.
0:23:14 So I’ve always been a fan of kind of studying,
0:23:16 you know, when I was growing up,
0:23:18 it was in the computer business,
0:23:22 it was son and, you know, microsystems and it was HP
0:23:24 and they were, and digital equipment.
0:23:27 These companies were dying right and left
0:23:31 and they were major companies initial for a while.
0:23:36 And so I early on got a very close study
0:23:40 of major companies shift with the ground,
0:23:42 shifted out from under them
0:23:47 and how unusual it was to be Microsoft or others
0:23:52 that, you know, continued to pivot with the new landscape.
0:23:56 And so I think I’ve always been a fan of that
0:24:01 strategy thinking learned mostly by watching other companies
0:24:03 ’cause if you learn it on your own companies,
0:24:04 that’s expensive.
0:24:08 So it’s better to look and see when you see a company
0:24:13 do big pivots like Microsoft has, you know, over 40 years
0:24:15 and they miss some too, right?
0:24:17 They’re not, they’re not perfect in it.
0:24:18 – One of the pivots that you may,
0:24:21 I mean, so from DVDs to streaming,
0:24:25 I was just looking back through the, through the time machine
0:24:31 you decided to rebrand the DVD business to Quickster.
0:24:34 And the streaming service was gonna remain Netflix.
0:24:38 And I just pulled some headlines from that year.
0:24:40 Quickster is dead.
0:24:41 Quickster goes quickly.
0:24:43 And here’s my favorite from the Atlantic.
0:24:47 Five reasons why Quickster is now dead star.
0:24:51 That to me is sort of like an example of where, you know,
0:24:53 a pivot could kind of go wrong,
0:24:55 but ultimately it was successful.
0:24:57 I’d love to just get your reflections
0:25:02 on pivoting to streaming, an initial failure it seemed,
0:25:05 and then it worked out big time.
0:25:08 – So we, in studying other companies,
0:25:10 we realized they’re run by good people
0:25:13 and they still miss the transition.
0:25:17 So the average smart and careful leadership team
0:25:18 is too slow.
0:25:21 And so we thought, okay, we’ve gotta go faster
0:25:23 than we’re comfortable, okay?
0:25:25 And the phrase internally was,
0:25:29 we got to be so aggressive, you know,
0:25:31 that the hair in the back of our neck, you know,
0:25:34 is raised up, you know, it’s really scary.
0:25:37 And that allowed us to say, okay,
0:25:40 let’s take all of the DVD rental business
0:25:43 and shove it to the side into Quickster.
0:25:44 And the only thing remaining,
0:25:46 and we knew it would be streaming.
0:25:50 And but at that time, 2012 streaming was still not very good
0:25:52 and still not very broad.
0:25:55 And so we were very aggressive
0:25:57 and it was too aggressive for the customers, okay?
0:25:59 We didn’t, you know, they care about the hair.
0:26:01 I mean, I’m paying you 20 bucks a month.
0:26:05 I want, you know, what I want.
0:26:08 And so we were ahead of the customers.
0:26:10 And then that cost us a lot, you know,
0:26:14 the stock shrank by a lot, customers quit us,
0:26:15 the press thought we were idiots.
0:26:18 And so it was too fast in hindsight, okay?
0:26:21 But think of it as the aggressive spirit
0:26:23 that allowed us to do all those transitions
0:26:25 you referred to a few minutes ago,
0:26:27 was the same aggressive spirit
0:26:31 that makes us go a little too fast with Quickster, okay?
0:26:33 And then ultimately, you’re right.
0:26:36 It became dvd.com and we did the thing and, you know,
0:26:39 and separated it in a more low key way.
0:26:42 And then, you know, it was just last year,
0:26:44 we finally closed dvd.com.
0:26:48 So, you know, it’s the right idea too soon.
0:26:50 But if you think about it,
0:26:51 these things are uncertain.
0:26:56 And so if you make five decisions a little bit late
0:26:58 and one a little bit early, you know,
0:27:00 you’re sort of in the same ring.
0:27:02 So we didn’t beat ourselves up too much on it
0:27:05 because we were like, look, you got to be aggressive.
0:27:08 You got to be able to recover if it’s been too fast,
0:27:11 but you can’t be afraid of moving too fast.
0:27:12 – Why is that exactly?
0:27:15 Why do you think that it’s so important to be aggressive?
0:27:18 I think that, I mean, I agree in hindsight.
0:27:21 I mean, I’m glad that you were aggressive,
0:27:24 but I feel like it’s very easy in business and in life
0:27:27 to think, well, you know, things are going well
0:27:29 and we don’t want to disappoint our shareholders
0:27:31 and we don’t want to disappoint the customers.
0:27:32 And it’s just so interesting to me
0:27:35 that you were very, very sure that no, no, no,
0:27:38 we have to move extremely quickly.
0:27:40 Why was that so important to you?
0:27:42 – So some people are tall or short.
0:27:47 Some people are risk sensitive or risk loving.
0:27:52 Okay, honestly, I think it’s built into people’s biology.
0:27:55 And I’ve always loved the fear and excitement
0:27:57 of the going fast.
0:28:00 I do think it’s helpful if you take smart risks.
0:28:04 Obviously, if four or five of the big decisions we made
0:28:06 were as bad as quickster, then there’s a problem.
0:28:09 You know, you’ve tipped into being reckless.
0:28:13 Okay, but if mostly you get it right
0:28:16 and if you can recover when you’ve been too fast,
0:28:18 then that’s just aggressive and not reckless.
0:28:22 And so then, you know, you can get great returns
0:28:23 like Netflix has been.
0:28:26 – Cultural principles and company culture
0:28:29 has been such an important part of what you built
0:28:33 at Netflix and now many companies around the world
0:28:35 have borrowed a lot of your principles.
0:28:37 I’d love to just go over a couple of them
0:28:40 and hear from you what they mean and why they’re important.
0:28:43 First one I’ve got here is farming for descent.
0:28:47 – Yeah, that’s one actually we brought in after quickster.
0:28:50 It means that descent in a management team
0:28:54 is not easy or natural, especially if the leader
0:28:57 has a strong view and has often been right.
0:29:00 And so it’s important to farm for descent
0:29:05 and to stimulate mechanisms by which contrary views
0:29:09 can be evaluated and heard.
0:29:12 We’re not trying to manufacture a consent.
0:29:16 Okay, we’re trying to stimulate descent, you know,
0:29:18 up to a point and then you make a decision
0:29:19 and then you want everybody on board
0:29:21 to execute it like heck.
0:29:23 – What is that point?
0:29:26 You said up to a point, where do you cut it off?
0:29:30 – So for big decisions, it’s a somewhat formalized process
0:29:33 where we’ll have a meeting and then everyone enters
0:29:36 their view in a Google spreadsheet, you know,
0:29:39 that’s visible to everybody and you vote on things,
0:29:43 negative 10 is like, it’s going to be a disaster.
0:29:45 To zero is like, I’m not really sure.
0:29:48 To 10 is this is the best thing we can possibly do.
0:29:50 I’m very confident.
0:29:54 And then whoever’s making the decision then writes up,
0:29:56 think of it like a Supreme Court decision.
0:29:58 I mean, it’s not as well written or formal and stuff,
0:30:01 but you know, it’s here, what I heard,
0:30:03 here are the different views.
0:30:06 And ultimately, I think the balance of risk is this.
0:30:08 And I think we should do why.
0:30:10 And then that’s the decision and then we move forward.
0:30:13 – The other one I have here is extraordinary candor.
0:30:14 What does that mean?
0:30:17 – Well, human beings, as we’ve lived in denser
0:30:20 and denser groups, have learned to be more
0:30:22 and more polite and indirect.
0:30:26 So, you know, in China or in Japan where it’s very crowded,
0:30:31 people are super polite and you know, it’s an art form.
0:30:34 The challenge in that in business is we come
0:30:37 from a lot of different cultures and we’re moving fast.
0:30:41 And so it’s better to enable people to be rude
0:30:45 by conventional standards and to be very direct,
0:30:49 at least about the workplace, not about your clothing
0:30:52 or you know, that you’re attracted to someone
0:30:54 or I don’t know, you know, but again,
0:30:57 on the work dimensions, we want high candor
0:31:02 to get people to have more clear, effective
0:31:04 and honest discussions about, you know,
0:31:08 should we cut price in France or should we do this show
0:31:11 or should we do this product feature?
0:31:13 – Just gonna move through one more cultural principle here,
0:31:15 which is the keeper test.
0:31:16 What is that?
0:31:19 – The keeper test is if someone was going to quit,
0:31:23 would you work hard to keep them, to change their mind?
0:31:28 And so it’s using that as the firing criteria
0:31:30 rather than the traditional, have they screwed up
0:31:33 so egregiously that we should fire them, okay?
0:31:36 That’s kind of the default model.
0:31:39 And we would say, no, we’d like to have a whole bunch
0:31:41 of people that you would fight hard to keep.
0:31:45 And you’re responsible to all of your direct reports
0:31:47 are people that you would fight hard to keep.
0:31:48 We’ll be right back.
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0:34:37 – We’re back with First Time Founders.
0:34:40 I’m gonna move on to Leaving Netflix.
0:34:44 In January, 2023, you stepped down as the CEO.
0:34:47 Your co-CEO Ted Serandos stuck around.
0:34:49 He remained at the helm.
0:34:51 Greg Peters was promoted.
0:34:53 And when I look at what happened here,
0:34:56 to me, this is kind of one of the greatest
0:35:00 succession stories of this decade.
0:35:05 Because I look at what happens to Disney,
0:35:07 what’s happening right now at Nike,
0:35:09 what’s been happening at Starbucks.
0:35:13 I even look at what’s happened in our government.
0:35:16 And what I’m finding is that the transition of power
0:35:18 is extremely difficult.
0:35:20 But if you look at what’s happened with Netflix,
0:35:21 Netflix has crushed it.
0:35:25 The stock has, I think, roughly doubled since you left,
0:35:27 which is actually a testament to your ability
0:35:29 to formulate a plan.
0:35:32 What makes a good succession plan?
0:35:35 How does a leader, such as yourself,
0:35:39 peacefully and successfully remove themselves from the helm?
0:35:42 – You know, it’s something that we always have concentrated on,
0:35:45 which is developing Ben Strength and Greg and Ted,
0:35:48 you know, been with me for 19 years or something.
0:35:51 So it’s like they were very ready.
0:35:54 And very excited to have the shot, you know, to lead.
0:35:57 But again, I think that’s, you know,
0:36:02 again, similar to the Andy Jassy, you know, following Bezos.
0:36:04 So I bring that up just to say, you know,
0:36:06 there are other proof points of, I mean,
0:36:09 Jassy’s been at Amazon for 20 years, you know,
0:36:10 and he’s different than Bezos,
0:36:12 but you know, he’s doing it his way.
0:36:15 And you know, there are those companies that struggle,
0:36:20 you know, where the board and the CEO either didn’t pick right,
0:36:24 or it took a long time, or, you know, a range of tricky issues.
0:36:27 – And was it hard to let go of Netflix?
0:36:31 – Yeah, you know, I’d done it for 25 years every day,
0:36:34 jump up early to check the metrics and be in charge.
0:36:39 And it, you know, was a big shock at first.
0:36:42 But, you know, I knew that this was a great time
0:36:43 for them to take over,
0:36:45 ’cause we had a great recovery path
0:36:48 that they architected, you know, for the company.
0:36:50 But on a personal basis, I missed it.
0:36:53 I missed being the center, I missed the, you know,
0:36:54 the influence, I missed the intensity,
0:36:56 missed the global travel.
0:36:58 But, you know, three months later,
0:37:01 it took over Powder Mountain,
0:37:03 and you know, that’s been an incredible adventure.
0:37:06 And then, you know, do a bunch of philanthropy
0:37:08 and, you know, more active on that side.
0:37:11 So I’ve been, you know, really blessed
0:37:13 to continue to feel very invigorated.
0:37:15 – It’s so interesting to me,
0:37:19 because who would’ve thought that the entertainment,
0:37:24 internet, software entrepreneur would decide,
0:37:28 you know what, I’m gonna go start a ski resort.
0:37:30 – My wife and I had a home here, a powder already.
0:37:32 So it’s not like I searched 50 mountains
0:37:36 and found the right one in some great strategic play.
0:37:38 We had a house here.
0:37:40 We could see the mountain was struggling.
0:37:44 The opportunity to buy out the existing owners came up.
0:37:46 – And really, most ski mountains
0:37:48 are real estate development projects.
0:37:51 So that’s the, you know, skiing itself
0:37:54 is, you know, a very tough business like restaurants,
0:37:55 that kind of thing.
0:38:00 And then it’s creating the real estate play
0:38:01 that’s been so exciting.
0:38:04 – I’d love to know if there are any similarities
0:38:09 between operating a ski resort versus a streaming service.
0:38:13 What are sort of the main differences in the experience?
0:38:15 But more importantly, what are the main similarities?
0:38:16 What’s sort of carried over?
0:38:21 – Yeah, the similarity is really the subscription orientation,
0:38:23 which is you’ve got a set of customers
0:38:26 and your job, you know, is to keep them excited.
0:38:30 And so you’re not trying to get new customers all the time,
0:38:32 like a transactional business.
0:38:35 So it’s really focused on, you know,
0:38:38 those that own real estate or have season passes.
0:38:41 And so that’s probably the biggest similarity
0:38:43 in business model.
0:38:46 Then there’s a lot of similarities in culture now,
0:38:48 where we’re, you know, building up powder mountain
0:38:52 to do keeper test and high compensation.
0:38:56 And, you know, all of the things that we’ve learned before.
0:38:57 And then we’ve shaken up the models.
0:39:00 So, you know, we’ve split the mountain in half,
0:39:02 half for private, half for public.
0:39:03 No one had done that before.
0:39:06 We did a thing a couple of days ago
0:39:09 where we said on February weekends,
0:39:11 which are the busiest times,
0:39:13 it’s a season pass only days, you know,
0:39:17 we’re continuing to find ways to innovate.
0:39:19 But I would say in the ski industry,
0:39:23 the great popularizers have been the epic and icon passes.
0:39:26 They’re the ones that roll up, you know, 50 resorts.
0:39:30 Think of them as the Costco or Amazon Prime.
0:39:32 Okay, that’s like a super high scale.
0:39:34 I mean, I would have loved to invent that business,
0:39:38 but I didn’t, you know, it’s been going on for 10 years.
0:39:42 And now we’re competing now in the irony of ironies,
0:39:44 you know, on the niche provider competing
0:39:48 with the dominant firm and trying to come up as we have
0:39:50 with something that’s counter positioned.
0:39:54 And epic and icon have made skiing more affordable,
0:39:56 but they’ve made it really crowded.
0:39:59 And so then where the counter to that were more expensive,
0:40:03 but were like beautifully pristine and open
0:40:06 and it’s, you know, more like a hella skiing.
0:40:07 It sounds absolutely incredible.
0:40:11 I mean, the real difference here is this is really
0:40:15 about bringing yourself joy, it seems.
0:40:17 You know, this is about spreading happiness
0:40:19 and having a great time.
0:40:21 It makes families happy.
0:40:22 It makes you happy.
0:40:25 And I think that’s significant that that is what you’ve decided
0:40:29 to zero in on and make a whole operation out of.
0:40:34 So I’d love to get sort of your thoughts on joy,
0:40:38 on happiness and the extent to which that’s played a role
0:40:41 in your career and the decisions you’ve made throughout it.
0:40:45 – You know, I would say finding new angles
0:40:47 on existing businesses, you know,
0:40:51 whether that’s rental or, you know, software error detection
0:40:55 or this one, you know, skiing is the exciting thing.
0:40:59 Coming up with new business models that, you know,
0:41:03 work really well in our case to have 600 families
0:41:07 have the private skiing and then use that
0:41:09 to anchor the mountain and the public side
0:41:11 with, you know, thousands of season passes.
0:41:15 And it’s got all the joy for me of Netflix,
0:41:17 even though it’s a fraction of the scale,
0:41:19 a fraction of the profitability,
0:41:23 a fraction of, you know, things that are important in many ways,
0:41:27 but it’s a fun problem to be engaged with.
0:41:30 And yes, to create, again, but the joy we create
0:41:32 for our members is it’s very visceral.
0:41:34 And, you know, we get to know them.
0:41:37 And that’s, you know, deeper than just, you know,
0:41:40 someone writing you of how important this show was
0:41:43 to see them, but that was fun too.
0:41:47 – As you look back at this very wide range in career,
0:41:50 which parts were the most rewarding in your view?
0:41:54 – I’d have to say right now, I feel most rewarding
0:41:58 because again, it’s my neighbors that are, you know,
0:42:01 that we’re saving the resort for and expanding and growing
0:42:05 and putting in, like this year, we’re putting in four new lifts.
0:42:08 And like nobody goes that aggressive all at once,
0:42:12 it’s crazy in a way, and yet we’re pulling it off.
0:42:14 Even though if I’m objective,
0:42:18 it’s not as much good in the world, you know, as say, Netflix,
0:42:21 it feels very intense because I know the people.
0:42:23 – As a community aspect, yeah.
0:42:27 – Yeah, I would say the personal satisfaction is highest now,
0:42:31 you know, probably in terms of world impact, you know,
0:42:33 that Netflix would be the highest.
0:42:35 – And what about your philanthropy
0:42:37 and your ventures and education?
0:42:40 What has that brought you on a personal level?
0:42:43 – What I found, like the year I did the politics,
0:42:46 is, you know, it’s good for the world
0:42:51 and, but I wouldn’t jump out of bed to do it, you know?
0:42:55 I jump even today with a philanthropy, I like it.
0:42:57 It’s important in doing a bunch on charter schools,
0:42:59 a bunch on AI learning,
0:43:02 a bunch on lower cost mobile phone access in Africa,
0:43:07 home solar, so I recognize it as important,
0:43:09 but like if I have an hour,
0:43:11 I jump into Powder Mountain stuff, you know,
0:43:15 ’cause it’s just, it’s such a great group of people,
0:43:18 both, you know, on the staff and then in the membership.
0:43:20 – It’s funny hearing you talk about this because
0:43:26 it’s so clear to me that you get hyper-hyper obsessive
0:43:30 and focused on very specific things.
0:43:32 And right now, you know, it’s the ski resort.
0:43:34 This is what’s dominating.
0:43:36 It feels like that sort of gives insight
0:43:38 into why you’ve been so successful in all of your ventures,
0:43:42 is that you pick a thing and that’s your thing.
0:43:44 I guess the other word for this is focus.
0:43:47 How has that played into your career
0:43:49 and do you think that’s something that other people
0:43:53 who want to be successful should be embracing more of?
0:43:55 – Well, what I realized is there’s other ways
0:43:56 to be successful, like my friends
0:43:59 who are venture capitalists, they’re the opposite.
0:44:03 You know, they’ve got 30 deals, contemplated,
0:44:05 five deals they’re in and, you know,
0:44:07 and they’re incredible at multitasking
0:44:11 and, you know, the ones who are very good at it.
0:44:15 And I realize it’s just not my personality, you know?
0:44:18 And so I think a lot of it probably
0:44:20 for the young entrepreneurs figuring out
0:44:24 what really are they differentially good at.
0:44:25 So yes, I’m a focused person,
0:44:28 but I wouldn’t say that’s the only way to be.
0:44:30 You know, I would say in the investor class,
0:44:32 they can’t jump in and try to solve
0:44:34 the problems of the company.
0:44:36 There’s different ways to contribute
0:44:38 in different parts of the ecosystem.
0:44:43 – There are a lot of young men who listen to this podcast.
0:44:46 As a businessman, as a family man,
0:44:49 and as a philanthropy man,
0:44:51 what would be your number one piece of advice
0:44:55 to a young man who’s just getting started in his career?
0:44:58 – There’s no one path to imitate.
0:45:01 And sometimes people fall on the trap
0:45:05 of like finding their role model and, you know,
0:45:08 and I would say it’s staying loose and flexible
0:45:11 in learning and trying things.
0:45:15 And it’s always challenging yourself.
0:45:18 If you’re growing in your skill set,
0:45:20 then you’re gonna have lots of opportunity,
0:45:22 but there’s no predictable path.
0:45:27 So it’s more of an emphasis on growth
0:45:32 and growth mindset than on preparation and having a plan.
0:45:33 – It’s interesting.
0:45:35 Do you feel that you embodied that
0:45:36 through your career as well?
0:45:40 – Yeah, no, it was being flexible and adaptable.
0:45:45 And it was a very, very unpredictable angles
0:45:46 and where things veered.
0:45:51 And then I was fortunate to latch into some big problems,
0:45:53 whether that’s software quality
0:45:58 and or whether that’s, you know, streaming entertainment
0:46:00 or now powder real estate.
0:46:02 – And if there’s one piece of advice
0:46:05 that you could have given yourself
0:46:07 when you were a young, young entrepreneur,
0:46:09 before you started pure software,
0:46:12 is there something that you would have told yourself
0:46:15 that you’d like to tell him now?
0:46:19 – I didn’t understand how to forgive myself
0:46:21 when I made mistakes.
0:46:25 So, you know, I was always going fast,
0:46:27 taking chances, doing things.
0:46:30 But, and now I’m able to see some mistakes
0:46:35 as part and parcel of, you know, being aggressive.
0:46:38 But at the time, anytime I made a mistake,
0:46:43 I would berate myself endlessly and unproductively.
0:46:47 So I didn’t know how to forgive myself.
0:46:50 – I mean, you said unproductively berating yourself.
0:46:53 Is there a way to think of self criticism
0:46:55 in a more productive way
0:46:58 that is actually helps you move forward?
0:47:01 – My hunch is it just comes with age
0:47:03 and that there isn’t really a shortcut.
0:47:07 So, I mean, you can understand the intellectual theory,
0:47:09 but in terms of the emotional release,
0:47:11 and, you know, when you’re younger,
0:47:14 all those emotions are so intense,
0:47:15 you know, about success and failure
0:47:18 and esteem and humiliation.
0:47:21 And, you know, our systems are keyed up for that
0:47:24 in ways that makes people very hungry.
0:47:27 But I would say as you get experience,
0:47:29 learning how to forgive yourself
0:47:31 would be the little bit
0:47:34 that I might be able to add to your audience.
0:47:37 ‘Cause I’m sure they’re quite good risk takers
0:47:38 and they’re quite aggressive
0:47:39 and they’re good about learning and growth
0:47:40 and lots of things.
0:47:41 – Absolutely.
0:47:42 I love that.
0:47:45 And I will take that moving forward for myself as well.
0:47:47 – Ed, when are we gonna get you up skiing?
0:47:49 – Oh my God, I’ll come tomorrow.
0:47:51 (laughing)
0:47:53 As soon as the ski season starts, I wanna do it.
0:47:55 – Great to get you up this winter
0:47:59 and we should do a little event maybe with you
0:48:01 and Tim Ferriss who’s local to his Park City.
0:48:04 – I would absolutely love that and I love Tim Ferriss.
0:48:06 Reed Hastings is the co-founder
0:48:07 and executive chairman of Netflix.
0:48:10 He is also a majority owner in Powder Mountain
0:48:14 and I hopefully will be skiing with him soon enough.
0:48:14 – Awesome.
0:48:16 – Reed, thank you so much for joining me on the podcast.
0:48:17 – Thanks so much, Ed.
0:48:24 – Our producer is Claire Miller,
0:48:25 our associate producer is Alison Weiss
0:48:28 and our engineer is Benjamin Spencer.
0:48:29 Thank you for listening to First Time Founders
0:48:31 from the Vox Media Podcast Network.
0:48:33 Tune in tomorrow for Proficy Markets.
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0:48:53 who wanna create more regulars on the regular,
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0:49:00 and operations platform that helps you make more money
0:49:03 and more magic for your guests.
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0:49:07 that keeps your guests coming back for more,
0:49:10 from direct reservations to smart table management,
0:49:13 to targeted text and email marketing.
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