AI transcript
0:00:01 (upbeat music)
0:00:04 Support for this special series comes from Mint Mobile.
0:00:06 Like anyone who’s out to get ahead,
0:00:08 Scott Galloway knows good advice when he hears it.
0:00:11 That’s why he’s got so many certified experts on the show.
0:00:13 But sometimes, the best advice comes
0:00:15 from the least likely places,
0:00:19 like tips on saving money from a cell phone provider.
0:00:20 Mint Mobile is the expert
0:00:22 in not overspending on your cell phone bill
0:00:25 with premium wireless plans for 15 bucks a month
0:00:27 when you buy a three-month plan.
0:00:31 Head to mintmobile.com/profg to learn more
0:00:32 and stick around for advice
0:00:36 from another unexpected expert later on in the show.
0:00:38 $45 upfront payment required,
0:00:39 equivalent to $15 per month.
0:00:42 New customers on the first three-month plan only.
0:00:45 Speed slower above 40 gigabytes on unlimited plan.
0:00:46 Taxes and fees extra.
0:00:47 See Mint Mobile for details.
0:00:52 – Welcome to the Prop 2 Pod’s office hours.
0:00:55 Today, we’re kicking off a special three-part series,
0:00:57 Lunodos Therese series.
0:00:58 That’s right.
0:01:00 Featuring some of our favorite office hours moments,
0:01:02 best of business, best of career,
0:01:04 and best of parenting.
0:01:06 Not good business or good career or good parenting,
0:01:07 but the best of.
0:01:10 In today’s episode, we start with best of business,
0:01:13 where we’ll answer your questions surrounding the brand era,
0:01:15 big tech companies, and their ethical responsibility,
0:01:17 and when a founder CEO should step down.
0:01:20 So with that, first question.
0:01:21 – Hi, Scott.
0:01:23 Matt here and a big fan of your podcast.
0:01:25 I followed you for a while and one of your enduring takes
0:01:27 has been that advertising and building brand
0:01:30 through paid media is a dying business strategy.
0:01:32 Outside of some companies seeing hyper growth
0:01:34 without big media budgets, mainly in the tech sector,
0:01:36 most major firms continue to increase budgets,
0:01:38 and those tech companies are now some of the biggest
0:01:39 advertisers in the world.
0:01:42 Even Tesla, famously a versed advertising,
0:01:44 is now paying for media to try to differentiate
0:01:46 versus the growing EV market.
0:01:48 As someone who also falls as closely,
0:01:51 there’s been a golden age of advertising effectiveness
0:01:53 research from professors like Byron Sharpe,
0:01:54 showing the value of paid media.
0:01:57 I’d be curious how much of your successful
0:02:00 prof media business, profging media business,
0:02:02 is supported by advertising.
0:02:05 I work in the space, so I’m obviously biased,
0:02:08 but curious if you’ve amended any of your opinions here.
0:02:10 Thank you for all you do, and go Connors.
0:02:12 – Go Connors, I love that.
0:02:14 Look, I make these provocative statements
0:02:17 that if you’re advertising, it means your product sucks.
0:02:20 And I’ve also said, and this is, I think, more true,
0:02:23 if you constantly are having dinner with strangers,
0:02:25 it means you’re selling an undifferentiated product.
0:02:26 So if you’re in the services business,
0:02:29 and your job is to have these full relationships with people,
0:02:31 it means you’re all selling the same damn widget,
0:02:33 and you’re dependent upon relationships.
0:02:34 One of the things I loved about,
0:02:36 I started a brand strategy firm.
0:02:38 And basically, we were good at what we did,
0:02:40 but there were a lot of good firms out there
0:02:42 in a brand doing brand strategy.
0:02:44 And the way we got business is I would develop
0:02:46 sort of these proxy father son relationships
0:02:47 with the CMO or the CEO.
0:02:49 And I found it just fucking exhausting.
0:02:52 They were really interesting, wonderful men,
0:02:53 and they were all men.
0:02:55 This was in the 90s, but I’m an introvert,
0:02:58 and I just found a different, I vacationed with clients.
0:03:01 I mean, it was just so much, but anyways,
0:03:05 I do think advertising is sort of a tell for a company
0:03:07 that doesn’t have a truly differentiated product.
0:03:10 And I would push back that the tech companies,
0:03:11 yeah, they advertise a lot,
0:03:14 but as a percentage of their top line budget, they don’t.
0:03:18 And Netflix uses, I met with Ted Serrano,
0:03:19 the CEO of Netflix, and I said,
0:03:21 “Why wouldn’t you start a TikTok competitor?”
0:03:22 I still, by the way, I think they should partner
0:03:26 with an AI firm and buy a hopefully divested TikTok.
0:03:29 But he said, “No, we use TikTok as free advertising.
0:03:31 It’s amazing, we give them a certain number of clips,
0:03:33 and it’s fantastic marketing for us.”
0:03:34 And they don’t spend a lot of money,
0:03:35 I don’t think on marketing.
0:03:38 And I think the companies that,
0:03:40 the companies that have added the most shareholder value
0:03:43 over the last 10, 20 years have a few things in common.
0:03:45 When they’re typically asset light,
0:03:48 why build a factory when you can just design the chip
0:03:50 and video, why invest in expensive real estate
0:03:52 when you can just create a platform and take fees,
0:03:54 Airbnb, why buy and maintain cars
0:03:56 when you can just create software,
0:03:59 a thick layer of software on top of them, that’s Uber.
0:04:01 They tend to have recurring revenue streams
0:04:06 that are more predictable, like a software company,
0:04:09 but also I have found they tend to be less reliant
0:04:11 on advertising.
0:04:12 And the thing about advertising,
0:04:14 one of the reasons Google killed,
0:04:16 largely killed the traditional ad business,
0:04:17 and I think it has.
0:04:21 Google loses or gains the value of IPG, WPP,
0:04:25 Puberty, and Omnicon every day.
0:04:27 Those guys used to be the big swing index,
0:04:30 and now they basically work and they beg for the crumbs
0:04:33 off of the Google and Meta cookie, if you will,
0:04:36 is that those companies have difficult times
0:04:37 finding attribution or building it.
0:04:41 Basically, all the research that Condonast or IPG does,
0:04:42 all leads to one place.
0:04:45 You should spend more money on our advertising, right?
0:04:47 And it’s kind of bullshit,
0:04:49 and it’s kind of a model where the lack of attribution
0:04:51 was both the sin and the opportunity
0:04:53 in the sense that brand building is difficult
0:04:55 to reverse engineer to specific sales.
0:04:57 So there’s been a dearth of it,
0:04:59 which probably means it’s gonna offer higher ROI,
0:05:01 and direct response advertising,
0:05:04 specifically Meta and Alphabet,
0:05:06 with their unbelievable targeting.
0:05:10 I mean, boy, you only have 70% of your budget
0:05:12 in digital marketing, it should probably be more.
0:05:14 I mean, every year, these companies just take more
0:05:16 and more share of an industry.
0:05:17 Advertising is a weird industry.
0:05:19 It’s always like one and a half percent of GDP.
0:05:22 It doesn’t go below that, it doesn’t go above it.
0:05:24 So this is not a growth industry,
0:05:26 but you have some companies that are going 20
0:05:30 and 25% a year, everyone from Meta and Alphabet to TikTok,
0:05:32 which means they are sucking the oxygen out of the room
0:05:33 for the other folks.
0:05:35 Does that mean traditional based advertising
0:05:36 and brand building is gonna go away?
0:05:39 No, but it’s gonna be a shitty place to work or invest.
0:05:41 If you’re absolutely in love with it,
0:05:44 or you’re scaling and have senior level sponsorship
0:05:47 or you’re rounding third, then by all means, stay there.
0:05:49 But if you’re younger, don’t love it,
0:05:53 I just think it’s gonna get more and more difficult
0:05:57 for the traditional advertisers/brand building complex.
0:05:58 And this is from someone
0:06:00 who made a really good living preaching about brand.
0:06:02 I think things have genuinely changed.
0:06:04 I think we’ve moved from a brand era,
0:06:05 and I don’t wanna call it an innovation era,
0:06:06 to a supply chain era.
0:06:09 Most of the big, big advances in shareholder value,
0:06:12 in addition to being asset-like, recurring revenue,
0:06:14 lack of advertising and been supply chain.
0:06:16 So, you know, my brother, I just,
0:06:18 and I’m a professor of brand strategy.
0:06:23 I think the era of brand, the sun has passed midday,
0:06:27 and Don Trapper has been drawn and quartered.
0:06:28 Thanks for the question.
0:06:30 Question number two.
0:06:33 – Hey, Scott, this is Sean from Seattle.
0:06:34 Love the podcast.
0:06:36 Thank you so much for taking my question.
0:06:39 I recently fielded offers from Amazon and Meta,
0:06:40 and got into a debate with friends
0:06:43 around which was less ethically problematic.
0:06:45 Given the contentious business practices
0:06:48 and societal implications associated with both companies,
0:06:50 do you truly believe there is a distinction
0:06:52 in choosing one over the other for ethical reasons?
0:06:54 Can someone really sleep better at night
0:06:57 choosing to work at one big tech company over another?
0:06:59 We’d love to hear your insight.
0:07:01 – Sean, this is the mother of all good problems.
0:07:03 And so let me be clear.
0:07:07 Both firms from an employee perspective are great firms.
0:07:10 I would say probably a third of my kids,
0:07:14 and when I say my kids, my students would go to work
0:07:17 for big tech, and at 1.20%, we’re going to Amazon.
0:07:19 And the people I know that went to Amazon
0:07:23 described it as intense, unforgiving, and very rewarding.
0:07:25 Meta has a fantastic reputation
0:07:26 in terms of how they treat their employees.
0:07:28 They pay them really well.
0:07:32 A lot of investments in human capital around the ethics.
0:07:36 I think your first priority is to develop
0:07:39 economic security for you and your family.
0:07:41 And I think big tech is good for the world.
0:07:43 I think if we had a button we could press
0:07:47 and make big tech vanish, we would not push that button.
0:07:49 That we are net gainers from big tech.
0:07:51 The problem is with the word net,
0:07:52 and that is we’re net gainers from pesticides,
0:07:55 we’re net gainers from fossil fuels, I still believe,
0:07:58 but we choose to have emission standards in an EPA.
0:08:00 I would argue at this point,
0:08:03 at this point, meta is probably a net negative.
0:08:06 Whether it’s teen suicide, self-harm,
0:08:10 self-cutting among girls, election misinformation.
0:08:13 I mean, these guys really are a mendacious fox.
0:08:15 And Amazon might be a mendacious fox,
0:08:18 but the implications of that are monopoly abuse
0:08:19 and small retailers go out of business,
0:08:21 and bigger retailers or great employers
0:08:23 might have gone out of business faster
0:08:24 than they otherwise would have.
0:08:29 But they’re not spreading conspiracy theory.
0:08:31 They’re not spreading anti-vax information.
0:08:33 And some of it might not be that they’re,
0:08:36 the people are any less or more ethical.
0:08:38 It’s that they’re just in different businesses.
0:08:40 So if you really got to the point
0:08:44 where it came down to who was less bad or more ethical,
0:08:46 I would say you’d probably choose Amazon
0:08:49 just by virtue of the fact that they’re in the business
0:08:53 of e-commerce and cloud versus media.
0:08:55 Having said that, I think most likely
0:08:57 you should probably make the decision
0:08:59 based on what’s best for you personally.
0:09:01 Do you wanna live in Seattle?
0:09:03 Do you wanna live in the Bay Area?
0:09:05 Where do you think you’ll have senior level sponsorship?
0:09:09 Where do you have a better rapport or relationship?
0:09:11 Do you believe currently or the children develop
0:09:13 with who you’ll be reporting into?
0:09:16 What does the career path look like at each organization?
0:09:18 I find with decisions like this,
0:09:20 you don’t wanna listen to a podcast or that is yours truly.
0:09:23 You wanna build a kitchen cabinet of people
0:09:26 and say, okay, these are the offers.
0:09:27 This is the opportunity.
0:09:31 This is the division, what do you think?
0:09:32 And then at the end of the day,
0:09:35 you’ll probably ignore all those decisions
0:09:38 and just go with your gut and make your original decision.
0:09:40 So these are personal decisions.
0:09:42 I would say the quote unquote ethical stuff, if you will,
0:09:45 is a tiebreaker unless it’s something
0:09:46 that really weighs on you.
0:09:49 Corporate America, these are platforms for making profits
0:09:52 and folks in the media and people such as myself,
0:09:55 I think play a role in holding them accountable
0:09:58 and trying to urge our elected officials
0:10:00 to put in place the regulations
0:10:03 such that there’s guardrails around these companies.
0:10:04 But at the end of the day,
0:10:06 they are going to do whatever increases their profits,
0:10:08 full stop, that’s just what they do.
0:10:11 But anyways, like I said, let me end where I began.
0:10:12 This is a great problem.
0:10:17 Congratulations to you, offers from Amazon and Metta.
0:10:21 Jesus, Jesus man, good luck to you, that’s fantastic.
0:10:24 We have one quick break before our final questions.
0:10:25 Stay with us.
0:10:31 This is advertiser content from Mint Mobile.
0:10:36 When I told my parents I was declaring a major in philosophy,
0:10:39 my dad was a little worried about my financial prospects.
0:10:42 See, he’s got an MBA and he loves to corner us
0:10:45 at the dinner table with all kinds of business talk.
0:10:50 Diverse of high, IRA, 401K, liquidity.
0:10:51 And that’s all great.
0:10:53 But if he’s such an expert,
0:10:56 then why is he still spending so much on his cell phone plan?
0:10:58 Here’s a philosophical question for you.
0:10:59 Why pay more for cell coverage
0:11:01 when you can pay 15 bucks a month
0:11:04 when you buy a new three month plan from Mint Mobile?
0:11:05 Anyone can be an expert,
0:11:07 even the people you least expect.
0:11:08 Wait, how much?
0:11:12 At Mint Mobile, we’re experts in affordable phone plans
0:11:13 with great coverage.
0:11:16 Get unlimited premium wireless for $15 a month
0:11:18 when you buy a three month plan.
0:11:21 Head to mintmobile.com/profg
0:11:24 to cut your wireless bill to 15 bucks a month.
0:11:26 Trust us, we’re experts.
0:11:30 $45 upfront payment required equivalent to $15 per month.
0:11:32 New customers on first three month plan only.
0:11:35 Speed slower above 40 gigabytes on unlimited plan.
0:11:36 Taxes and fees extra.
0:11:38 See Mint Mobile for details.
0:11:42 This is advertiser content from Mint Mobile.
0:11:47 When I told my parents I was declaring a major in philosophy,
0:11:50 my dad was a little worried about my financial prospects.
0:11:53 See, he’s got an MBA and he loves to corner us
0:11:56 at the dinner table with all kinds of business talk.
0:12:01 Diverse of high, IRA, 401K, liquidity.
0:12:02 And that’s all great.
0:12:03 But if he’s such an expert,
0:12:07 then why is he still spending so much on his cell phone plan?
0:12:09 Here’s a philosophical question for you.
0:12:10 Why pay more for cell coverage
0:12:12 when you can pay 15 bucks a month
0:12:15 when you buy a new three month plan from Mint Mobile?
0:12:16 Anyone can be an expert,
0:12:18 even the people you least expect.
0:12:19 Wait, how much?
0:12:23 At Mint Mobile, we’re experts in affordable phone plans
0:12:24 with great coverage.
0:12:27 Get unlimited premium wireless for $15 a month
0:12:29 when you buy a three month plan.
0:12:32 Head to mintmobile.com/profg
0:12:35 to cut your wireless bill to 15 bucks a month.
0:12:37 Trust us, we’re experts.
0:12:39 $45 upfront payment required.
0:12:41 Equivalent to $15 per month.
0:12:43 New customers on first three month plan only.
0:12:46 Speed slower above 40 gigabytes on unlimited plan.
0:12:47 Taxes and fees extra.
0:12:49 See Mint Mobile for details.
0:12:52 (air horn)
0:12:55 – Welcome back, question number three.
0:12:56 – Hi, Scott.
0:12:59 My name is Melissa in Chapel Hill, North Carolina.
0:13:02 I’m a four time CMO in B2B SAS
0:13:05 with 30 years of experience and many startups.
0:13:08 I saw your recent post about the probability
0:13:12 a startup will be successful by the number of attempts.
0:13:15 I’ve been part of startups that have been very successful
0:13:18 and some that have been total flops.
0:13:21 One thing I’ve noticed that is critical to success
0:13:24 is the founder CEO.
0:13:28 Many founder CEOs are not always strong business operators.
0:13:31 They can be great ideators and innovators,
0:13:34 but many don’t seem self aware of their shortcomings
0:13:36 as operators.
0:13:38 What are your thoughts about when a founder CEO
0:13:42 needs to step aside to bring in an experienced team
0:13:44 of business operators to drive the company’s
0:13:46 next level of growth?
0:13:48 Thank you for considering my question.
0:13:50 Love you and love the show.
0:13:53 – Well, Melissa from North Carolina, I love you.
0:13:55 That’s some really nice thing to say.
0:13:58 This is a tough one because you’re exactly right.
0:14:00 Entrepreneurs have role models as they should
0:14:03 and they look at Steve Jobs and Bill Gates
0:14:04 who are unicorns.
0:14:06 They’re a rare species and that is,
0:14:09 if you think of a company as an idea, is letter A.
0:14:12 And then the startup, getting the initial seed funding,
0:14:14 hiring and firing a group of people,
0:14:17 like hand to hand combat for the first 20, 30 people.
0:14:19 And that’s what you have to do with the first 20 or 30 people
0:14:22 and working around the clock and sharing a vision
0:14:24 and being just sort of irrationally passionate
0:14:26 and a little bit crazy, if you will.
0:14:27 That’s kind of A to D or E.
0:14:31 And then the company leans in or discovers something
0:14:33 that is differentiated and is a real product
0:14:36 that’s generating more gross income
0:14:39 or has positive gross margins.
0:14:40 You don’t need to be profitable,
0:14:42 but when you sell a widget for a buck,
0:14:44 it should be at least on a marginal basis
0:14:47 and that is the cost to deliver that incremental
0:14:51 consulting engagement or that incremental piece of software
0:14:52 or that incremental whatever it is,
0:14:55 widget that you have positive gross margin.
0:14:56 You say, okay, if I hire enough people here,
0:14:59 I can start to scale and I can build an enterprise
0:15:01 and maintain some culture and show
0:15:03 that this is more than just a practice.
0:15:07 So the ones that succeed oftentimes never get to scale
0:15:08 and that is their practice.
0:15:11 Typically, a small group of people in the services industry
0:15:13 are great at PR or great investment banking
0:15:16 or great at a specific product or service.
0:15:18 And the people who started the company are selfish
0:15:20 and think that they’re the real innovators
0:15:22 and they don’t want to share in the upside
0:15:24 of people to scale the company.
0:15:26 And so whenever I meet with people
0:15:28 that have a great company, 20, 30, 50 people
0:15:29 and they’re wondering why they can’t scale my kids,
0:15:32 usually because you are too fucking selfish
0:15:34 and don’t realize that people want to have a nice life
0:15:36 like you and you need to give away large chunks.
0:15:38 So the company, if you want people to act like owners,
0:15:40 which is the key early in a company,
0:15:42 you have to make them owners.
0:15:43 Anyways, back to your question.
0:15:46 Most CEOs think they’re Steve Jobs or Bill Gates
0:15:48 and they can go A to Z.
0:15:51 And key part of self-actualization and also success
0:15:55 is recognizing, as I did fairly early, quite frankly,
0:15:58 as a CEO, that about the time we get a CFO,
0:16:00 about the time we have someone in HR,
0:16:02 it is time for me to step down as CEO
0:16:04 and become kind of the thought leader,
0:16:08 the person that is responsible for driving new business.
0:16:11 I really enjoy that, play a big role in strategy,
0:16:14 but somebody needs to be Mr. or Mrs. inside
0:16:16 and basically run the company.
0:16:19 And I was always a fan of giving them the CEO title.
0:16:20 Why as a founder?
0:16:22 My objective was always to build shareholder value
0:16:24 and get economic security for me and my family,
0:16:26 which is Latin, forget rich.
0:16:27 And titles are inexpensive.
0:16:30 So I was always up for giving away the CEO title.
0:16:32 I’ve never been the CEO of a company when I’ve left.
0:16:35 Typically within three to five years,
0:16:37 I find someone that is outstanding,
0:16:40 that I want to retain and I give them five, seven, 10,
0:16:43 15% of the company and say congratulations,
0:16:44 you’re now the CEO.
0:16:46 And this is kind of what I’m responsible for
0:16:48 and this is what you’re responsible for.
0:16:52 A lot of founders never come to that conclusion.
0:16:53 Now the question is,
0:16:55 how do you nudge them to that realization?
0:16:57 That’s a tough one, a board.
0:17:01 I don’t know how you tell someone
0:17:02 to be more self-actualized
0:17:03 and that they have limits on their capabilities
0:17:06 and we’d all be better off if you brought in someone
0:17:08 to run this organization that isn’t you.
0:17:09 It’s a difficult one.
0:17:13 Typically that’s the kind of conversation
0:17:15 a board should have with the founder CEO
0:17:18 that used to be very common in the 90s.
0:17:21 Essentially we thought there are absolutely no founders
0:17:22 that are good enough to be CEOs.
0:17:24 So what happened was a guy like Steve Jobs
0:17:25 was immediately assumed to be crazy
0:17:28 and we need to bring in the gray hair old guy from Pepsi,
0:17:30 John Scully and let him or her run it.
0:17:32 Things have changed so dramatically.
0:17:35 The pendulum has swung so far to the other side
0:17:37 because of the return of Steve Jobs
0:17:40 and people like Mark Benioff and Bill Gates
0:17:41 that are able to build a company
0:17:43 from A to Z and be outstanding CEOs.
0:17:47 You should assume if you’re the CEO, you are not Bill Gates.
0:17:49 You should assume you are not Steve Jobs.
0:17:51 I apologize, I don’t have a direct answer
0:17:54 for how to convince possibly your CEO to step down
0:17:56 but the fact you’re thinking that way
0:17:58 means you’re gonna be or you’re probably successful
0:18:02 and can kind of gauge whether or not this company
0:18:04 has the right stuff to get to the next level.
0:18:08 Against CEOs out there, you know, search your feelings.
0:18:11 Are you really the person to get to the letter M?
0:18:14 Cash in, cash in, recognize how awesome you are
0:18:16 and if you have the ability to bring in somebody
0:18:17 who will be outstanding and compliment your skills
0:18:19 by all means, hit that bit.
0:18:20 Thanks for the question.
0:18:23 That’s all for this episode.
0:18:25 If you’d like to submit a question,
0:18:26 please email a voice recording
0:18:28 to officehours@proptingmedia.com again.
0:18:31 That’s officehours@proptingmedia.com.
0:18:34 (waves crashing)
0:18:44 Support for this special series comes from Mint Mobile.
0:18:46 Thanks to Scott for inviting us.
0:18:48 He experts in premium affordable wireless plans
0:18:49 onto the show.
0:18:51 You might not expect a wireless company
0:18:53 to be the pros in saving you money
0:18:56 but where else can you find premium wireless plans
0:18:59 for 15 bucks a month when you purchase a three month plan?
0:19:00 All our plans come with high speed data
0:19:02 and unlimited talk and text
0:19:05 delivered on the nation’s largest 5G network.
0:19:07 Use your own phone with any Mint Mobile plan
0:19:09 and bring your phone number with you.
0:19:11 Plus all your contacts.
0:19:13 It pays to trust the experts.
0:19:16 Go to mintmobile.com/profg
0:19:18 to get your new three month premium wireless plan
0:19:20 for just 15 bucks a month.
0:19:24 That’s mintmobile.com/profg.
0:19:28 $45 upfront payment required equivalent to $15 per month.
0:19:30 New customers on the first three month plan only.
0:19:33 Speed slower above 40 gigabytes on unlimited plan.
0:19:34 Texas and fees extra.
0:19:36 See Mint Mobile for details.
0:19:38 you
0:00:04 Support for this special series comes from Mint Mobile.
0:00:06 Like anyone who’s out to get ahead,
0:00:08 Scott Galloway knows good advice when he hears it.
0:00:11 That’s why he’s got so many certified experts on the show.
0:00:13 But sometimes, the best advice comes
0:00:15 from the least likely places,
0:00:19 like tips on saving money from a cell phone provider.
0:00:20 Mint Mobile is the expert
0:00:22 in not overspending on your cell phone bill
0:00:25 with premium wireless plans for 15 bucks a month
0:00:27 when you buy a three-month plan.
0:00:31 Head to mintmobile.com/profg to learn more
0:00:32 and stick around for advice
0:00:36 from another unexpected expert later on in the show.
0:00:38 $45 upfront payment required,
0:00:39 equivalent to $15 per month.
0:00:42 New customers on the first three-month plan only.
0:00:45 Speed slower above 40 gigabytes on unlimited plan.
0:00:46 Taxes and fees extra.
0:00:47 See Mint Mobile for details.
0:00:52 – Welcome to the Prop 2 Pod’s office hours.
0:00:55 Today, we’re kicking off a special three-part series,
0:00:57 Lunodos Therese series.
0:00:58 That’s right.
0:01:00 Featuring some of our favorite office hours moments,
0:01:02 best of business, best of career,
0:01:04 and best of parenting.
0:01:06 Not good business or good career or good parenting,
0:01:07 but the best of.
0:01:10 In today’s episode, we start with best of business,
0:01:13 where we’ll answer your questions surrounding the brand era,
0:01:15 big tech companies, and their ethical responsibility,
0:01:17 and when a founder CEO should step down.
0:01:20 So with that, first question.
0:01:21 – Hi, Scott.
0:01:23 Matt here and a big fan of your podcast.
0:01:25 I followed you for a while and one of your enduring takes
0:01:27 has been that advertising and building brand
0:01:30 through paid media is a dying business strategy.
0:01:32 Outside of some companies seeing hyper growth
0:01:34 without big media budgets, mainly in the tech sector,
0:01:36 most major firms continue to increase budgets,
0:01:38 and those tech companies are now some of the biggest
0:01:39 advertisers in the world.
0:01:42 Even Tesla, famously a versed advertising,
0:01:44 is now paying for media to try to differentiate
0:01:46 versus the growing EV market.
0:01:48 As someone who also falls as closely,
0:01:51 there’s been a golden age of advertising effectiveness
0:01:53 research from professors like Byron Sharpe,
0:01:54 showing the value of paid media.
0:01:57 I’d be curious how much of your successful
0:02:00 prof media business, profging media business,
0:02:02 is supported by advertising.
0:02:05 I work in the space, so I’m obviously biased,
0:02:08 but curious if you’ve amended any of your opinions here.
0:02:10 Thank you for all you do, and go Connors.
0:02:12 – Go Connors, I love that.
0:02:14 Look, I make these provocative statements
0:02:17 that if you’re advertising, it means your product sucks.
0:02:20 And I’ve also said, and this is, I think, more true,
0:02:23 if you constantly are having dinner with strangers,
0:02:25 it means you’re selling an undifferentiated product.
0:02:26 So if you’re in the services business,
0:02:29 and your job is to have these full relationships with people,
0:02:31 it means you’re all selling the same damn widget,
0:02:33 and you’re dependent upon relationships.
0:02:34 One of the things I loved about,
0:02:36 I started a brand strategy firm.
0:02:38 And basically, we were good at what we did,
0:02:40 but there were a lot of good firms out there
0:02:42 in a brand doing brand strategy.
0:02:44 And the way we got business is I would develop
0:02:46 sort of these proxy father son relationships
0:02:47 with the CMO or the CEO.
0:02:49 And I found it just fucking exhausting.
0:02:52 They were really interesting, wonderful men,
0:02:53 and they were all men.
0:02:55 This was in the 90s, but I’m an introvert,
0:02:58 and I just found a different, I vacationed with clients.
0:03:01 I mean, it was just so much, but anyways,
0:03:05 I do think advertising is sort of a tell for a company
0:03:07 that doesn’t have a truly differentiated product.
0:03:10 And I would push back that the tech companies,
0:03:11 yeah, they advertise a lot,
0:03:14 but as a percentage of their top line budget, they don’t.
0:03:18 And Netflix uses, I met with Ted Serrano,
0:03:19 the CEO of Netflix, and I said,
0:03:21 “Why wouldn’t you start a TikTok competitor?”
0:03:22 I still, by the way, I think they should partner
0:03:26 with an AI firm and buy a hopefully divested TikTok.
0:03:29 But he said, “No, we use TikTok as free advertising.
0:03:31 It’s amazing, we give them a certain number of clips,
0:03:33 and it’s fantastic marketing for us.”
0:03:34 And they don’t spend a lot of money,
0:03:35 I don’t think on marketing.
0:03:38 And I think the companies that,
0:03:40 the companies that have added the most shareholder value
0:03:43 over the last 10, 20 years have a few things in common.
0:03:45 When they’re typically asset light,
0:03:48 why build a factory when you can just design the chip
0:03:50 and video, why invest in expensive real estate
0:03:52 when you can just create a platform and take fees,
0:03:54 Airbnb, why buy and maintain cars
0:03:56 when you can just create software,
0:03:59 a thick layer of software on top of them, that’s Uber.
0:04:01 They tend to have recurring revenue streams
0:04:06 that are more predictable, like a software company,
0:04:09 but also I have found they tend to be less reliant
0:04:11 on advertising.
0:04:12 And the thing about advertising,
0:04:14 one of the reasons Google killed,
0:04:16 largely killed the traditional ad business,
0:04:17 and I think it has.
0:04:21 Google loses or gains the value of IPG, WPP,
0:04:25 Puberty, and Omnicon every day.
0:04:27 Those guys used to be the big swing index,
0:04:30 and now they basically work and they beg for the crumbs
0:04:33 off of the Google and Meta cookie, if you will,
0:04:36 is that those companies have difficult times
0:04:37 finding attribution or building it.
0:04:41 Basically, all the research that Condonast or IPG does,
0:04:42 all leads to one place.
0:04:45 You should spend more money on our advertising, right?
0:04:47 And it’s kind of bullshit,
0:04:49 and it’s kind of a model where the lack of attribution
0:04:51 was both the sin and the opportunity
0:04:53 in the sense that brand building is difficult
0:04:55 to reverse engineer to specific sales.
0:04:57 So there’s been a dearth of it,
0:04:59 which probably means it’s gonna offer higher ROI,
0:05:01 and direct response advertising,
0:05:04 specifically Meta and Alphabet,
0:05:06 with their unbelievable targeting.
0:05:10 I mean, boy, you only have 70% of your budget
0:05:12 in digital marketing, it should probably be more.
0:05:14 I mean, every year, these companies just take more
0:05:16 and more share of an industry.
0:05:17 Advertising is a weird industry.
0:05:19 It’s always like one and a half percent of GDP.
0:05:22 It doesn’t go below that, it doesn’t go above it.
0:05:24 So this is not a growth industry,
0:05:26 but you have some companies that are going 20
0:05:30 and 25% a year, everyone from Meta and Alphabet to TikTok,
0:05:32 which means they are sucking the oxygen out of the room
0:05:33 for the other folks.
0:05:35 Does that mean traditional based advertising
0:05:36 and brand building is gonna go away?
0:05:39 No, but it’s gonna be a shitty place to work or invest.
0:05:41 If you’re absolutely in love with it,
0:05:44 or you’re scaling and have senior level sponsorship
0:05:47 or you’re rounding third, then by all means, stay there.
0:05:49 But if you’re younger, don’t love it,
0:05:53 I just think it’s gonna get more and more difficult
0:05:57 for the traditional advertisers/brand building complex.
0:05:58 And this is from someone
0:06:00 who made a really good living preaching about brand.
0:06:02 I think things have genuinely changed.
0:06:04 I think we’ve moved from a brand era,
0:06:05 and I don’t wanna call it an innovation era,
0:06:06 to a supply chain era.
0:06:09 Most of the big, big advances in shareholder value,
0:06:12 in addition to being asset-like, recurring revenue,
0:06:14 lack of advertising and been supply chain.
0:06:16 So, you know, my brother, I just,
0:06:18 and I’m a professor of brand strategy.
0:06:23 I think the era of brand, the sun has passed midday,
0:06:27 and Don Trapper has been drawn and quartered.
0:06:28 Thanks for the question.
0:06:30 Question number two.
0:06:33 – Hey, Scott, this is Sean from Seattle.
0:06:34 Love the podcast.
0:06:36 Thank you so much for taking my question.
0:06:39 I recently fielded offers from Amazon and Meta,
0:06:40 and got into a debate with friends
0:06:43 around which was less ethically problematic.
0:06:45 Given the contentious business practices
0:06:48 and societal implications associated with both companies,
0:06:50 do you truly believe there is a distinction
0:06:52 in choosing one over the other for ethical reasons?
0:06:54 Can someone really sleep better at night
0:06:57 choosing to work at one big tech company over another?
0:06:59 We’d love to hear your insight.
0:07:01 – Sean, this is the mother of all good problems.
0:07:03 And so let me be clear.
0:07:07 Both firms from an employee perspective are great firms.
0:07:10 I would say probably a third of my kids,
0:07:14 and when I say my kids, my students would go to work
0:07:17 for big tech, and at 1.20%, we’re going to Amazon.
0:07:19 And the people I know that went to Amazon
0:07:23 described it as intense, unforgiving, and very rewarding.
0:07:25 Meta has a fantastic reputation
0:07:26 in terms of how they treat their employees.
0:07:28 They pay them really well.
0:07:32 A lot of investments in human capital around the ethics.
0:07:36 I think your first priority is to develop
0:07:39 economic security for you and your family.
0:07:41 And I think big tech is good for the world.
0:07:43 I think if we had a button we could press
0:07:47 and make big tech vanish, we would not push that button.
0:07:49 That we are net gainers from big tech.
0:07:51 The problem is with the word net,
0:07:52 and that is we’re net gainers from pesticides,
0:07:55 we’re net gainers from fossil fuels, I still believe,
0:07:58 but we choose to have emission standards in an EPA.
0:08:00 I would argue at this point,
0:08:03 at this point, meta is probably a net negative.
0:08:06 Whether it’s teen suicide, self-harm,
0:08:10 self-cutting among girls, election misinformation.
0:08:13 I mean, these guys really are a mendacious fox.
0:08:15 And Amazon might be a mendacious fox,
0:08:18 but the implications of that are monopoly abuse
0:08:19 and small retailers go out of business,
0:08:21 and bigger retailers or great employers
0:08:23 might have gone out of business faster
0:08:24 than they otherwise would have.
0:08:29 But they’re not spreading conspiracy theory.
0:08:31 They’re not spreading anti-vax information.
0:08:33 And some of it might not be that they’re,
0:08:36 the people are any less or more ethical.
0:08:38 It’s that they’re just in different businesses.
0:08:40 So if you really got to the point
0:08:44 where it came down to who was less bad or more ethical,
0:08:46 I would say you’d probably choose Amazon
0:08:49 just by virtue of the fact that they’re in the business
0:08:53 of e-commerce and cloud versus media.
0:08:55 Having said that, I think most likely
0:08:57 you should probably make the decision
0:08:59 based on what’s best for you personally.
0:09:01 Do you wanna live in Seattle?
0:09:03 Do you wanna live in the Bay Area?
0:09:05 Where do you think you’ll have senior level sponsorship?
0:09:09 Where do you have a better rapport or relationship?
0:09:11 Do you believe currently or the children develop
0:09:13 with who you’ll be reporting into?
0:09:16 What does the career path look like at each organization?
0:09:18 I find with decisions like this,
0:09:20 you don’t wanna listen to a podcast or that is yours truly.
0:09:23 You wanna build a kitchen cabinet of people
0:09:26 and say, okay, these are the offers.
0:09:27 This is the opportunity.
0:09:31 This is the division, what do you think?
0:09:32 And then at the end of the day,
0:09:35 you’ll probably ignore all those decisions
0:09:38 and just go with your gut and make your original decision.
0:09:40 So these are personal decisions.
0:09:42 I would say the quote unquote ethical stuff, if you will,
0:09:45 is a tiebreaker unless it’s something
0:09:46 that really weighs on you.
0:09:49 Corporate America, these are platforms for making profits
0:09:52 and folks in the media and people such as myself,
0:09:55 I think play a role in holding them accountable
0:09:58 and trying to urge our elected officials
0:10:00 to put in place the regulations
0:10:03 such that there’s guardrails around these companies.
0:10:04 But at the end of the day,
0:10:06 they are going to do whatever increases their profits,
0:10:08 full stop, that’s just what they do.
0:10:11 But anyways, like I said, let me end where I began.
0:10:12 This is a great problem.
0:10:17 Congratulations to you, offers from Amazon and Metta.
0:10:21 Jesus, Jesus man, good luck to you, that’s fantastic.
0:10:24 We have one quick break before our final questions.
0:10:25 Stay with us.
0:10:31 This is advertiser content from Mint Mobile.
0:10:36 When I told my parents I was declaring a major in philosophy,
0:10:39 my dad was a little worried about my financial prospects.
0:10:42 See, he’s got an MBA and he loves to corner us
0:10:45 at the dinner table with all kinds of business talk.
0:10:50 Diverse of high, IRA, 401K, liquidity.
0:10:51 And that’s all great.
0:10:53 But if he’s such an expert,
0:10:56 then why is he still spending so much on his cell phone plan?
0:10:58 Here’s a philosophical question for you.
0:10:59 Why pay more for cell coverage
0:11:01 when you can pay 15 bucks a month
0:11:04 when you buy a new three month plan from Mint Mobile?
0:11:05 Anyone can be an expert,
0:11:07 even the people you least expect.
0:11:08 Wait, how much?
0:11:12 At Mint Mobile, we’re experts in affordable phone plans
0:11:13 with great coverage.
0:11:16 Get unlimited premium wireless for $15 a month
0:11:18 when you buy a three month plan.
0:11:21 Head to mintmobile.com/profg
0:11:24 to cut your wireless bill to 15 bucks a month.
0:11:26 Trust us, we’re experts.
0:11:30 $45 upfront payment required equivalent to $15 per month.
0:11:32 New customers on first three month plan only.
0:11:35 Speed slower above 40 gigabytes on unlimited plan.
0:11:36 Taxes and fees extra.
0:11:38 See Mint Mobile for details.
0:11:42 This is advertiser content from Mint Mobile.
0:11:47 When I told my parents I was declaring a major in philosophy,
0:11:50 my dad was a little worried about my financial prospects.
0:11:53 See, he’s got an MBA and he loves to corner us
0:11:56 at the dinner table with all kinds of business talk.
0:12:01 Diverse of high, IRA, 401K, liquidity.
0:12:02 And that’s all great.
0:12:03 But if he’s such an expert,
0:12:07 then why is he still spending so much on his cell phone plan?
0:12:09 Here’s a philosophical question for you.
0:12:10 Why pay more for cell coverage
0:12:12 when you can pay 15 bucks a month
0:12:15 when you buy a new three month plan from Mint Mobile?
0:12:16 Anyone can be an expert,
0:12:18 even the people you least expect.
0:12:19 Wait, how much?
0:12:23 At Mint Mobile, we’re experts in affordable phone plans
0:12:24 with great coverage.
0:12:27 Get unlimited premium wireless for $15 a month
0:12:29 when you buy a three month plan.
0:12:32 Head to mintmobile.com/profg
0:12:35 to cut your wireless bill to 15 bucks a month.
0:12:37 Trust us, we’re experts.
0:12:39 $45 upfront payment required.
0:12:41 Equivalent to $15 per month.
0:12:43 New customers on first three month plan only.
0:12:46 Speed slower above 40 gigabytes on unlimited plan.
0:12:47 Taxes and fees extra.
0:12:49 See Mint Mobile for details.
0:12:52 (air horn)
0:12:55 – Welcome back, question number three.
0:12:56 – Hi, Scott.
0:12:59 My name is Melissa in Chapel Hill, North Carolina.
0:13:02 I’m a four time CMO in B2B SAS
0:13:05 with 30 years of experience and many startups.
0:13:08 I saw your recent post about the probability
0:13:12 a startup will be successful by the number of attempts.
0:13:15 I’ve been part of startups that have been very successful
0:13:18 and some that have been total flops.
0:13:21 One thing I’ve noticed that is critical to success
0:13:24 is the founder CEO.
0:13:28 Many founder CEOs are not always strong business operators.
0:13:31 They can be great ideators and innovators,
0:13:34 but many don’t seem self aware of their shortcomings
0:13:36 as operators.
0:13:38 What are your thoughts about when a founder CEO
0:13:42 needs to step aside to bring in an experienced team
0:13:44 of business operators to drive the company’s
0:13:46 next level of growth?
0:13:48 Thank you for considering my question.
0:13:50 Love you and love the show.
0:13:53 – Well, Melissa from North Carolina, I love you.
0:13:55 That’s some really nice thing to say.
0:13:58 This is a tough one because you’re exactly right.
0:14:00 Entrepreneurs have role models as they should
0:14:03 and they look at Steve Jobs and Bill Gates
0:14:04 who are unicorns.
0:14:06 They’re a rare species and that is,
0:14:09 if you think of a company as an idea, is letter A.
0:14:12 And then the startup, getting the initial seed funding,
0:14:14 hiring and firing a group of people,
0:14:17 like hand to hand combat for the first 20, 30 people.
0:14:19 And that’s what you have to do with the first 20 or 30 people
0:14:22 and working around the clock and sharing a vision
0:14:24 and being just sort of irrationally passionate
0:14:26 and a little bit crazy, if you will.
0:14:27 That’s kind of A to D or E.
0:14:31 And then the company leans in or discovers something
0:14:33 that is differentiated and is a real product
0:14:36 that’s generating more gross income
0:14:39 or has positive gross margins.
0:14:40 You don’t need to be profitable,
0:14:42 but when you sell a widget for a buck,
0:14:44 it should be at least on a marginal basis
0:14:47 and that is the cost to deliver that incremental
0:14:51 consulting engagement or that incremental piece of software
0:14:52 or that incremental whatever it is,
0:14:55 widget that you have positive gross margin.
0:14:56 You say, okay, if I hire enough people here,
0:14:59 I can start to scale and I can build an enterprise
0:15:01 and maintain some culture and show
0:15:03 that this is more than just a practice.
0:15:07 So the ones that succeed oftentimes never get to scale
0:15:08 and that is their practice.
0:15:11 Typically, a small group of people in the services industry
0:15:13 are great at PR or great investment banking
0:15:16 or great at a specific product or service.
0:15:18 And the people who started the company are selfish
0:15:20 and think that they’re the real innovators
0:15:22 and they don’t want to share in the upside
0:15:24 of people to scale the company.
0:15:26 And so whenever I meet with people
0:15:28 that have a great company, 20, 30, 50 people
0:15:29 and they’re wondering why they can’t scale my kids,
0:15:32 usually because you are too fucking selfish
0:15:34 and don’t realize that people want to have a nice life
0:15:36 like you and you need to give away large chunks.
0:15:38 So the company, if you want people to act like owners,
0:15:40 which is the key early in a company,
0:15:42 you have to make them owners.
0:15:43 Anyways, back to your question.
0:15:46 Most CEOs think they’re Steve Jobs or Bill Gates
0:15:48 and they can go A to Z.
0:15:51 And key part of self-actualization and also success
0:15:55 is recognizing, as I did fairly early, quite frankly,
0:15:58 as a CEO, that about the time we get a CFO,
0:16:00 about the time we have someone in HR,
0:16:02 it is time for me to step down as CEO
0:16:04 and become kind of the thought leader,
0:16:08 the person that is responsible for driving new business.
0:16:11 I really enjoy that, play a big role in strategy,
0:16:14 but somebody needs to be Mr. or Mrs. inside
0:16:16 and basically run the company.
0:16:19 And I was always a fan of giving them the CEO title.
0:16:20 Why as a founder?
0:16:22 My objective was always to build shareholder value
0:16:24 and get economic security for me and my family,
0:16:26 which is Latin, forget rich.
0:16:27 And titles are inexpensive.
0:16:30 So I was always up for giving away the CEO title.
0:16:32 I’ve never been the CEO of a company when I’ve left.
0:16:35 Typically within three to five years,
0:16:37 I find someone that is outstanding,
0:16:40 that I want to retain and I give them five, seven, 10,
0:16:43 15% of the company and say congratulations,
0:16:44 you’re now the CEO.
0:16:46 And this is kind of what I’m responsible for
0:16:48 and this is what you’re responsible for.
0:16:52 A lot of founders never come to that conclusion.
0:16:53 Now the question is,
0:16:55 how do you nudge them to that realization?
0:16:57 That’s a tough one, a board.
0:17:01 I don’t know how you tell someone
0:17:02 to be more self-actualized
0:17:03 and that they have limits on their capabilities
0:17:06 and we’d all be better off if you brought in someone
0:17:08 to run this organization that isn’t you.
0:17:09 It’s a difficult one.
0:17:13 Typically that’s the kind of conversation
0:17:15 a board should have with the founder CEO
0:17:18 that used to be very common in the 90s.
0:17:21 Essentially we thought there are absolutely no founders
0:17:22 that are good enough to be CEOs.
0:17:24 So what happened was a guy like Steve Jobs
0:17:25 was immediately assumed to be crazy
0:17:28 and we need to bring in the gray hair old guy from Pepsi,
0:17:30 John Scully and let him or her run it.
0:17:32 Things have changed so dramatically.
0:17:35 The pendulum has swung so far to the other side
0:17:37 because of the return of Steve Jobs
0:17:40 and people like Mark Benioff and Bill Gates
0:17:41 that are able to build a company
0:17:43 from A to Z and be outstanding CEOs.
0:17:47 You should assume if you’re the CEO, you are not Bill Gates.
0:17:49 You should assume you are not Steve Jobs.
0:17:51 I apologize, I don’t have a direct answer
0:17:54 for how to convince possibly your CEO to step down
0:17:56 but the fact you’re thinking that way
0:17:58 means you’re gonna be or you’re probably successful
0:18:02 and can kind of gauge whether or not this company
0:18:04 has the right stuff to get to the next level.
0:18:08 Against CEOs out there, you know, search your feelings.
0:18:11 Are you really the person to get to the letter M?
0:18:14 Cash in, cash in, recognize how awesome you are
0:18:16 and if you have the ability to bring in somebody
0:18:17 who will be outstanding and compliment your skills
0:18:19 by all means, hit that bit.
0:18:20 Thanks for the question.
0:18:23 That’s all for this episode.
0:18:25 If you’d like to submit a question,
0:18:26 please email a voice recording
0:18:28 to officehours@proptingmedia.com again.
0:18:31 That’s officehours@proptingmedia.com.
0:18:34 (waves crashing)
0:18:44 Support for this special series comes from Mint Mobile.
0:18:46 Thanks to Scott for inviting us.
0:18:48 He experts in premium affordable wireless plans
0:18:49 onto the show.
0:18:51 You might not expect a wireless company
0:18:53 to be the pros in saving you money
0:18:56 but where else can you find premium wireless plans
0:18:59 for 15 bucks a month when you purchase a three month plan?
0:19:00 All our plans come with high speed data
0:19:02 and unlimited talk and text
0:19:05 delivered on the nation’s largest 5G network.
0:19:07 Use your own phone with any Mint Mobile plan
0:19:09 and bring your phone number with you.
0:19:11 Plus all your contacts.
0:19:13 It pays to trust the experts.
0:19:16 Go to mintmobile.com/profg
0:19:18 to get your new three month premium wireless plan
0:19:20 for just 15 bucks a month.
0:19:24 That’s mintmobile.com/profg.
0:19:28 $45 upfront payment required equivalent to $15 per month.
0:19:30 New customers on the first three month plan only.
0:19:33 Speed slower above 40 gigabytes on unlimited plan.
0:19:34 Texas and fees extra.
0:19:36 See Mint Mobile for details.
0:19:38 you
Today, we’re kicking off a special three-part series, featuring some of our favorite Office Hours moments: Best of Business, Best of Career, and Best of Parenting.
In today’s episode, we start with Best of Business, where Scott answers your questions surrounding the brand era, big tech companies and their ethical responsibility, and when a founder CEO should step down.
Music: https://www.davidcuttermusic.com / @dcuttermusic
Subscribe to No Mercy / No Malice
Buy “The Algebra of Wealth,” out now.
Follow the podcast across socials @profgpod:
Learn more about your ad choices. Visit podcastchoices.com/adchoices