Jumping the SPAC Shark, Greenwashing, and Building Productive Habits with Charles Duhigg

Charles Duhigg, a writer at the New Yorker, and the author of, “The Power of Habit” and “Smarter Faster Better,” joins Scott to discuss his research around productivity and habits, as well as how to stop making unproductive decisions. Follow Charles on Twitter, @cduhigg. Scott opens with why he believes the SPAC bubble appears to be bursting, and how companies that simply aren’t worth their valuations use SPACs to maneuver their way into the public markets. Related Reading: Jumping the SPAC Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Scott Galloway?

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• 1:18Scott Galloway?

  Episode 104, The Atomic Number for Rutherfordium. I'm in Los Angeles. Coming to LA for me is like going to church. A lot of arrogant assholes who are sex offenders. Go, go, go!

• 1:39Scott Galloway?

  Welcome to the 104th episode of the Prop G Pod. By the way, just kidding in the joke, just kidding in the opening, never like to miss a shot, to take a shot at the Catholic Church. Strongest brand in the world, by the way. What other brand could scale and institutionalize pedophilia and still survive? Very impressive. Very impressive, but I love LA. Specifically, I roll into LAX first thing, first and last thing in LA. Hello, In-N-Out Burger. We have ISIS cells supposedly in 15 states, but we only have In-N-Out Burger in four states. Something is wrong with America. Love In-N-Out. Stay at the Beverly Hills Hotel. Put on a pink robe. Order a Cobb salad. Put on a big, big pair of sunglasses. Smoke a cigarette. I don't really smoke, but I light it because I think I look cool with it.

• 2:24Scott Galloway?

  And then wave at people. Hello, hello. Just wave at them like you know them and see if they know you back. So I absolutely love Los Angeles. If I moved back to the West Coast, I'd absolutely move to LA, buy a Porsche, get a cocaine habit, start dating actresses, and then they'd find me dead in a hotel room. It'd be worth it. It'd be worth it. But beyond that, beyond being here in LA in my ultimate demise, I have news, and this is something I'm really excited about. I am going to, or we announced today, that I am going to be launching a show on CNN Plus, the new streaming network brought to you by CNN. I'm super excited about this for a few reasons.

• 3:09Scott Galloway?

  I mean, to be blunt, it's sort of a dream of mine. I've said for a long time that the network I would want to work with or have as a partner would be CNN. And why? Global, I think they have the best talent. My sense is in terms of trust, they actually, you know, platforms usually have a lot of trust, like a New York Times or a BBC, or they have a lot of reach. A Facebook, a TikTok or what have you. And I find there's only really just a very finite number of platforms that have both trust and global reach. And I think CNN is one of those platforms. I love the idea of doing non-ad-supported media.

• 3:50Scott Galloway?

  One of the things I've hated about doing some of the other media and TV. And you're probably saying, but Scott, podcasting is ad-supported. Yeah, but somehow, I don't know about you. I don't think the ads are as offensive here. At least I don't mind the ads as much when I listen to podcasts, but I think ad-supported television and media that's tied to the clock really reduces the power of it. And I love the idea of having a show that if we have 27 minutes of content, we go 27 minutes, and if we have 40 minutes, we go 40 minutes. And it's just the content, nothing but the facts. And then, quite frankly, just love, I've worked with Michael Smirconish, who for me is like brothers from another mother, a raging moderate, and a really, actually a really good guy.

• 4:32Scott Galloway?

  Anderson Cooper is like my man crush, the guy I'm coming back as in my next life. I think, and by the way, Anderson is the most trusted journalist, living journalist in the world. We had him on last week, listened to the episode, it's doing really well. Fareed Zakaria is sort of a professional role model. I just love that he leads with data and truth as opposed to some sort of political bent. Christiane Amanpour, I think is a super impressive journalist. I just, I'm just very excited to be a part of this. And I know that sounds a little passe, but I'm genuine about it. So I'm super excited. A big part of the reason I got this opportunity is because of the impact and the goodwill that this podcast has produced. So I hope that you share in some small way this victory.

• 5:14Scott Galloway?

  So thank you, and please tune in in January for my show. We're thinking about calling it No Mercy, No Malice, or I don't know what we're gonna call it, or The Prof G Show. Anyways, if you have any ideas, please send them to us. But stay tuned, the dog in January, CNN Plus. What's the over/under? What's the over/under that I do or don't fuck up and get canceled before the show airs? Taking bets now, take wager on the dog. Wager on the dog's ability to snatch defeat from the jaws of victory. Okay, some details about the show, and then I'll shut up about this. Q1 2022, it'll focus on the intersection of tech, business, and society. CNN is going all in here, and I think that's what you have to do.

• 5:58Scott Galloway?

  I think some of these, some of these kind of adjunct streaming or OTT platforms from existing legacy players feel like a bit of an afterthought. But CNN is going all in, they're hiring 450 people, roughly 200 of those. Jobs or production and editorial jobs for journalists and they're going to have about 250 engineers, product planners, marketing folks, et cetera. That doesn't guarantee success, but they are quote unquote "coming to play." And they're taking risks. See above, da dog. See above. Okay. In today's episode, we speak with Charles Duhigg. Charles is a Pulitzer Prize winning reporter and the author of two books, The Power of Habit and Smarter Faster Better. None of those things.

• 6:40Scott Galloway?

  He is currently a writer at The New Yorker and was previously with The New York Times, the NYT. Yeah, smell him. Smell him. Productivity, New York Times. Here we go. We discuss his research around productivity and habits, as well as how to stop making unproductive decisions. Jesus, I'm going to tune into that. Okay, what's happening? There's a stench in the air and it's coming from the SPAC market. It's beginning to smell like teen spirit. If teen spirit smells like bullshit in an overvalued market, we saw a boom in the number of SPAC IPOs at the beginning of the year, but the bubble appears to be bursting, or at least probably unwinding. I don't think you could call it a bubble bursting. According to research by Goldman Sachs strategists, an average of 21 SPACs raising $6 billion

• 7:23Scott Galloway?

  in capital entered the market each week during the first quarter. Fast forward to today, an average of just six SPAC IPOs have raised around $1 billion in total capital each week. Think about this, the market is basically shut. Not only are fewer SPACs entering the market, they consistently underperform the S and P 500 and data from Renaissance Capital reveals that 58% of the SPACs that have completed mergers this year trade below their original offer price. When we say merger, what we mean is they have de-SPAC. So a SPAC essentially is an operating group, a group of people who get together and say, "The operating committee at Goldman that takes companies public is no better than us. We're going to get together a group of operators, finance people. We're going to go public and say, 'Hey, public markets, give us $300 million and we'll go

• 8:08Scott Galloway?

  use that $300 million to buy a company.'" And overnight, because we'll have done a lot of the advanced work, a lot of the bureaucracy, a lot of the filings, that company will be public. We'll make it easier for them to go public. And we know just as well what companies should be public as Morgan Stanley or Goldman Sachs. And typically, typically, they only have a two-year. Time horizon to put that money to work or they have to return it to investors minus, minus the money that they put in as sponsors, which they're forced to do. So that's a bit of a gun to their head. Anyways, so the question is, have we jumped the SPAC shark? I think we may have. And despite what CNBC, Bill Ackman and the space industry or the budding space industry keep trying to tell us otherwise, companies that simply aren't worth their valuations

• 8:49Scott Galloway?

  use SPACs to maneuver their way into the public markets to try and you gotta, you gotta, you know, when the ducks are quacking, you feed them. And I don't resent these companies for doing that. There's been a lot of people who've promoted SPACs and then sold the majority or all their stakes. Good for them. They made basically enormous fees. They've become part-time investment bankers, but much better compensated investment bankers. There will be some companies that endure and do really well, but typically SPACs have underperformed the marketplace. In 2021, they overperformed, but I think we're going to see a regression to the mean. I think it's already regressing, if you will. Because if you think about it, Goldman and I'm on the board of some of these companies, most companies choose to go the traditional route because Goldman and Morgan Stanley are basically sort of halo brands.

• 9:34Scott Galloway?

  It's like saying I graduated from Tucker, MIT. There's just a certain credibility there. And the best companies typically choose to go, still go the traditional route. Having said that, there are some outstanding SPACs where the real let me test is you think, okay, if you raise $300 million, and that's what most SPACs raise initially, give me $300, I'm going to go find a company. The company they acquire, they usually strike a deal for much more than that. Say a billion, billion and a half, $2 billion. The key is they have to go raise debt to support that valuation and get the transaction done and then the stock starts trading. So sort of the adult in the room, if you will, has been the pipe market, which stands for public investment and private equity. But effectively, this is a piece of debt that's bolted on to the 300 million.

• 10:16Scott Galloway?

  So a SPAC operating committee or SPAC operating group can go buy a company for a billion or a billion and a half dollars. And that's where things get tricky is the pipe market looks at the company and says, are we going to get this money back? Okay, great that you think this electric vehicle. Motor company out of Alberta, Canada. It's great that you think it's worth $2 billion. And it's great that you're showing up with 300 million, but you're asking us to loan you 1.7 billion. We need to do some work and see if there's any chance this might not get paid back. And a lot of SPACs are fumbling, or SPAC operating groups are fumbling, trying to get the pipe done. So a company I am involved with, Better.com or Better Mortgage, which by the way, by the way, has hired 7,000 people since,

• 11:01Scott Galloway?

  since the beginning of the pandemic, which tries to take or tries to implement technology to take the mortgage process and disrupt it and make it much more elegant, much faster, such that, one, we can give people a lower rate. And two, we can pay our mortgage counselors more, which creates more retention. It's an industry that has enormous turnover. This company will now do over $8 billion in revenue this year. Key for us, we are de-SPAC-ing or SPAC-ing with SoftBank, kind of the big or the 10-ton gorilla in the space. But key to the whole thing is that they showed up with a commitment to the pipe or that the pipe's going to get done. And that's sort of the new litmus test here for when a SPAC shows up. It's like, great, you're willing to give us your equity, but how are we going to get this pipe done? And so the new kind of, the new bar is if a SPAC can get

• 11:46Scott Galloway?

  or SPAC operating group can get the pipe financing done to ensure this thing actually gets out. But this is beginning to look like kind of the beginning, if you will, of an unwind. Now, is it just an asset class that has reached too far into the barrel? Or is this the beginning of something worse? Only time will tell. One example, one example of reaching too far into the barrel? Aspiration, a finance firm that claims its products can, open quote, "change climate change," end quote. In August, the company announced it was going public via SPAC at a $2.3 billion valuation. Change climate change. That would be awesome, except there's a catch. This is a fucking debit card.

• 12:29Scott Galloway?

  So, hold on, buckle up, rest in, pull your covers up. Let's tell a story here. Aspiration was launched in 2015 by a former Clinton White House aide and Elizabeth Warren protege. Its initial, and still primary consumer product, was a debit card with a few green features. That's nice. The company claims money deposited in its debit accounts won't fund fossil fuel exploration or production. Okay. It plants a tree every time a customer chooses to round up a purchase and it offers 3% to 5% cash back on purchases from mission-focused merchants. That all sounds fine, that's all nice. The company also offers an ESG-focused investment fund, Redwood, and has plans to launch a credit card.

• 13:12Scott Galloway?

  So you make deposits and if you want, you can ask them to invest your funds in an ESG-focused alternative investments fund. The company's marketing focuses on a "pay what is fair" model, which permits investors to choose an annual fee between 0% and 2%, depending on what they believe is, again, "fair." And that sounds fine and good, but then you read the fine print, as you should do. You find a base fee of 0.5%. So you're not getting to decide. This is your tip, if you will, is on top of the base fee of 0.5%, which compares unfavorably with fees of higher-performing passive ESG funds. So in sum, the innovation here is that they hide the fee, or it's not entirely evident,

• 13:56Scott Galloway?

  or at least it wasn't a me, that you're already paying a fee, but you get to pay more if you want. Thanks for that. Aspiration claims the Redwood fund is 100% fossil fuel-free. However, however, almost 3% of its holdings are in Southwest Airlines, a company that burns 2 billion gallons of fuel per annum. I think Southwest is a great company. I think that fuel burn... With airlines, given the amount of passengers they transport and at that speed, I would argue that that is a decent use of fossil fuels, that that might be worth the juice, there might be worth the squeeze. I'm not criticizing air travel. I'm criticizing Redwood, or the Redwood Fund that claims it is 100% fossil fuel free, but is investing

• 14:41Scott Galloway?

  or has invested their clients' capital in an airline that burns 2 billion gallons? That just feels, I don't know, a little inconsistent. Another portfolio company is Lindy, an industrial gas company that touts its experienced team of oil and gas specialists and boasts that it's been supporting the industry for decades. Now, what does that have, what does Lindy do? What is that particular expertise? Fracking. I'm sorry, wait, this is an ESG fund? Sustainable energy is Redwood's smallest investment sector, accounting for only 2.3% of total assets. The fund's investment in Southwest alone surpasses that. So, an ESG fund that is investing more in Southwest Airlines than in actual ESG investments,

• 15:26Scott Galloway?

  the bulk of the portfolio consists of stocks that are prevalent in every portfolio. In other words, this is not a difficult portfolio to assemble. The stocks include Microsoft and Starbucks. Do you really need to pay 0.5% plus a tip to buy Microsoft and Starbucks? So, let's now talk about the actual business, specifically its top line revenue. In 2020, five years after debuting its debit card, Aspiration managed to expand revenue to just $15 million. So, five years in business, revenue of $15 million. By the way, most of my companies that I've started are doing more than that. Are they? Yeah, most are doing more than that within five years. Maybe I should stack for 2.1 billion and just call

• 16:05Scott Galloway?

  myself ESG, ES Dog. Yet, the company, the company being Aspiration, claims that in 2021, its consumer business will triple. Okay, to 43 million. Let's give them that. And its recently launched corporate consulting business will generate 55 million. Corporate consulting, 55 million. The consumer business is 15, going to 43. So we're looking at what appears to be, if we assume they're going to be able to execute against this and we believe them, we got $100 million business here. From what we can discern, the sustainability as a service, that's my favorite. Remember WeWork, space as a service? Sustainability as a service business is quasi consulting that helps firms assess their

• 16:46Scott Galloway?

  carbon footprint, then brokers, the carbon offsets necessary to make up for this or to account for it and then put in place the offsets. By the way, I think that's a valuable service, similar to the classic advertising agency model where they do the work for free and make money on the media buyer, in this case, buying the offsets. So let's pause on Aspiration's consulting business for a moment. The only member, or what's supposed to be a consulting business, the only member of Aspiration's management team listed with any experience working at a consulting firm is the CTO, who worked at Accenture for 16 months and left in 2008. Nor does the company have any job postings on LinkedIn for consultants.

• 17:29Scott Galloway?

  So it feels like they're, they have some sort of index around assessing your carbon footprint. They go out and buy a certain amount of offsets, they sell it to at a markup and it's creating. But are they charging? Are they including in that top line number the actual purchase price of the offsets and only taking 2, 3, 10 points of margin? I don't know what it is, but this doesn't feel like what I would call traditional consulting is someone who has rented his brain to other people most of my life and called it consulting. All right. Moving on to how the company is smearing more Vaseline on the lens of the actual business fundamentals here. And there's a lot of Vaseline here. I'm ready for my close up. Aspiration leans heavily.

• 18:10Scott Galloway?

  On a profitability measure, get this, called EBITDAM. EBITDA is the familiar earnings before interest rate, taxes, depreciation and amortization. And it's a largely accepted industry standard that's supposed to say, all right, how profitable is a company's core operations before the vagaries of capital structure, tax strategy and accounting charges? It's meant to say, okay, how healthy is the core business? How profitable? EBITDAM, so EBITDA plus an M, excludes all those things and then also excludes marketing spend. And when you think about a company whose primary means of customer acquisition is going to be getting debit cards, that means their real business expense, their cost, is going to be marketing.

• 18:54Scott Galloway?

  That'd be like saying, I don't know, EBITDA before equal pay for women, or EBITDA before everything, EBITDA before all our... I mean, it's just, it's just so fucking ridiculous that we tolerate that, or that people even have the gumption to put forward these metrics. So you could argue, wait, wait, hold on, in small doses, maybe this isn't crazy. Debit card customers tend to be loyal. Aspiration claims it has more than 90% customer retention. So the idea is that marketing is mainly for acquiring new customers. And if you want to see how the business performs on its existing customer base, you should exclude those costs. Okay, fair enough. But Aspiration attempts to elevate EBITDAM far beyond its station.

• 19:37Scott Galloway?

  Over here in Reality Town, the company's operations burnt $34 million in 2020, and they're projected to burn $133 million in 2021. So they are scaling losses like no tomorrow. And to be clear, sometimes you need to make forward-leaning investments. In the rest of its investor's deck, Aspiration refers to its EBITDAM profitability this quarter and then uses EBITDAM throughout its financial analysis, which is really rich for a company whose entire projected profit model is dependent on explosive customer acquisition, which to date has been really, really expensive. So we're just going to pretend that this expense doesn't exist, even though it's our primary expense and even though it's getting more and more expensive. The company spent $22 million on marketing in 2020.

• 20:22Scott Galloway?

  That's roughly 50% more than the revenue it generated that year. This year, get this, it plans on spending $149 million on marketing, 52% more than expected revenue. And that's supposed to be worth $2.3 billion? Oh, come on, guys. So what's going on here? When the markets get this hot, you're going to have tremendous amounts of capital chasing worse and worse prospects. And we'll all enter into this consensual hallucination because there will be some SPACs that emerge from the ashes and are enduring. We have sort of a cycle, right? We have an economic boom, we have innovation, we have incredible valuation increases, we have mania, we have mania, and I think that's where we are now.

• 21:06Scott Galloway?

  Then we typically have a correction that, by the way, corrects usually too far the other way. And then we have what I call enduring. Some enduring companies emerge. People don't remember, people thought Amazon was going out of business after the dot bomb implosion. And a lot of those companies emerged and have done really well. And there's no doubt some SPACs will survive and go on to be fantastic companies. But we are definitely in the mania stage, and we are reaching really far into the barrel. What does that mean from an investment standpoint? Does it mean you avoid SPACs? No, there's probably some opportunities, and will be more, because the markets are bipolar. They either love things too much, they're either manic or they're depressive. And when we go too depressive, and I think we will, I think a lot of good companies that

• 21:49Scott Galloway?

  went public via SPAC will be unfairly punished, and there'll be some big opportunities. However, you're going to want to basket. You're going to want to find two or three companies with genuine financial metrics that actually make sense. Find a company that doesn't use the yoga babble. Find a company that actually has a decent business, whose gross margins are positive, that looks like it has a path to profitability, and doesn't fill, or doesn't try and create an illusionist trick and say, hey, look over here at ESG. Hey, let's just call whatever business we're in and tack on as a service. You got to do the homework, you got to diversify. There will be opportunities, there will be enduring companies here, but be careful, be careful. We got our leather jacket on, we took a trip to California with the Cunninghams, and guess what?

• 22:34Scott Galloway?

  Guess what? We have jumped this back shark.

• 22:45Scott Galloway?

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• 23:30Scott Galloway?

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• 23:47Scott Galloway?

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• 25:04Scott Galloway?

  Welcome back. Here's our conversation with Charles Duhigg, a Pulitzer Prize winning reporter and the author of two books, The Power of Habit and Smarter Faster Better. Charles, where does this podcast find you?

• 25:16Speaker 03

  I'm in Santa Cruz, California.

• 25:18Scott Galloway?

  Nice. So let's bust right into it. Your second book, or your most recent book, you talk a lot about productivity. What were sort of the surprises about, or that you found about habits and productivity?

• 25:33Speaker 03

  Yeah, so the first book I wrote was called The Power of Habit. And it was about the science of habit formation, how habits exist within our brain. And the second book, Smarter Faster Better, was about basically the science of productivity. Why are some people and some companies and some nations more productive than others? And I think the biggest surprise for me was I had a preconception that productivity was about essentially learning how to work harder, right? How to optimize things. And what I came back to is the same thing that Peter Drucker discovered 30 years ago, which is there is nothing more wasteful on this planet than optimizing something which should have never been done in the first place. Throughout history, the killer productivity app has been figuring out habits to force yourself to think more deeply

• 26:17Speaker 03

  about the choices you are making. And so, for instance, you look at Jeff Bezos and you look at Amazon. What is the innovation that Amazon came up with? The innovation really was a way of thinking about business, of thinking about creating self-sustaining flywheels, of creating Amazon as a company that creates many Amazons. So he didn't invent anything new. He didn't see some market that no one else saw. He saw a way of managing, of thinking about choices that made Amazon, Amazon. By the way, the same thing happened 70 or 80 years ago with the invention of General Motors, right? Ford is the leading motor car company. GM comes along and Alfred Sloan says, "Look, instead of thinking about cars, I'm going to think about managing people,

• 27:01Speaker 03

  about creating these decentralized management systems that allow people to become the CEOs of their own particular little divisions." And that propels GM beyond Ford into the most powerful car company for 30 years. In fact, not just the most powerful car company, they made everything. They made refrigerators, they made air conditioning units. Throughout history, when we've looked at productivity, what we've found is that it's not someone who finds a new way necessarily of making a widget. It's somebody who trains themselves to think more deeply about which widgets ought to be made. And it turns out there's a whole series of habits that allow us to think more deeply, particularly when thinking is hardest, right? Particularly when we're in a panicked moment, when we're under pressure, when it seems

• 27:46Speaker 03

  like the obvious answer is right in front of us. How do we stop and train ourselves to think more deeply so that we find not just the answer, but the right answer, perhaps to the question that hasn't even been asked yet?

• 27:59Scott Galloway?

  So you would argue, if we think of this as an asset class, and we have our capital as our mental bandwidth, you would argue there's greater return from thinking, continuing to think about how to innovate, how to do things differently, as opposed to taking the same processes and just trying to optimize for that process?

• 28:17Speaker 03

  Oh, there's certainly, like, look, I'm not saying that ringing inefficiencies out of a system isn't going to yield you some profits, right? We know that. We know that, like, what, one of the things that the Toyota production system did is it made production, manufacturing more efficient by, for instance, doing just-in-time delivery of inventory. And so as a result, you took inefficiencies out of the system. What I'm saying is, the greatest gains in productivity don't stop there. The reason why the Toyota production system actually transformed manufacturing is not just because they wrung out inefficiencies, it's because they turned the model of manufacturing on its head and said, the person closest to the problem has to be the tip of the spirit solving that problem.

• 28:59Speaker 03

  That the person on the floor shop has to be the one who has the most clout to be able to stop the production line and make a change at that exact moment. That was the real breakthrough in manufacturing and the plant that changed the world. And so I'm saying, oftentimes, we look at a system and we have this engineering approach where we say, look, if we engineer out all of the problems, we're going to make more money, we're going to make it better. And then oftentimes, the engineers get trumped by, I don't know, what do you call them? The dreamers who come along and say, you know what, instead of like just re-engineering this place, let's figure out what a brand-new plant would look like.

• 29:39Scott Galloway?

  So what advice would you have to people, to people to try and avoid, to not be their own worst enemy, to avoid making unproductive decisions?

• 29:50Speaker 03

  So one of the things that we know is that there's this cognitive need for closure, right? Psychologists have documented this, that we want to feel productive. We want to feel like we've gotten something done. So let's say to do list is a great example as a way to answer your question. If you look at research on to do lists, most people write to do lists the same way. They fill up a sheet of paper with a list of things that they want to get done, anywhere from 10 to 20 things. And that makes sense, right? Because we have trouble remembering that many items. And so they basically come up with a memory list and they use their memory list as a to do list. And very often, in about 15% of people, what you'll find is they write down something they have already finished because it feels so good

• 30:31Speaker 03

  to cross it off of their list. So they'll actually write down the tasks they just completed because they want to give themselves a cognitive need for closure, that reward of crossing it off. That's exactly the wrong way to do a to do list. It's a great way to come up with a memory list. Everyone should do it. But the right way to do it, to write a to do list, is to look at that memory list, those 10 to 15 things or 20 things, and ask yourself, what is the most important thing I could do today? Write that on your to do list and then stop writing. Force yourself into a habit, which psychologists refer to as cognitive routines that allow you, that force you to think about what you ought to do today, rather than what feels easiest to do, or feels most rewarding to do,

• 31:13Speaker 03

  or feels like you're going to be able to celebrate crossing it off your to do list. Because you can spend your entire day answering emails. You can spend your entire day being busy and get nothing important done. And so the question is, how do you build habits that force you to do the important thing, rather than the thing that just feels good?

• 31:33Scott Galloway?

  I remember, this is such a flashback, I remember my mom coming home in the 70s when I was... You know, really young and saying she'd taken this productivity class at the temple we went to and that you create a list and we did this exercise, like, what are the things we need to do tomorrow or today? And then rank them, one, two, and three. One being gotta do this, two sort of important, three, not as important, but need to do it. And then go back and force yourself to get rid of all the twos, either bucket them as ones or threes, and then drop the threes and just focus on the ones. I mean, are you really saying that to-do lists are basically the beginning of ranking and prioritizing?

• 32:18Scott Galloway?

  And that you should then to create a very fine filter and just take the top, you know, one, two, or three a day?

• 32:23Speaker 03

  That's exactly what I'm saying. And I love that she did it at temple, right? Because what is at the core of Judaism, right? Like Judaism being like one of the greatest production productivity systems on earth? It's a ranking of commandments. It's not that all commandments are equal. There's a first commandment and there's a second commandment. God is actually telling you that some good acts are better than other good acts and some bad acts are worse than other bad acts. You don't just get a list of how to behave. You get a list that forces you to figure out in conflict, when two things come into conflict, which one is more important? That's the hard work that God did for you, is he ranked things. And there's a lesson there.

• 33:07Speaker 03

  But let me ask you, I mean, you did this with your mom. I imagine you have positive memories of it. How often do you, or I for that matter, wake up in the morning, look at our to-do lists, the things we gotta do today, look at our calendar and rank them? And how often do we just go on to autopilot and just start doing whatever's at the top or whatever comes first?

• 33:24Scott Galloway?

  Yeah, I don't have to-do lists. What I would, what I take from you with the application or how it translates to some of the things I try to practice is that, and I tell this to management teams and myself, is that success is just as much a function, not only what you do, but what you don't do. And that is, you have the cruel truth of capitalism in life is we have a finite amount of financial and human capital. It just doesn't matter who you are. Nobody has infinite amounts of money. And nobody, the mortality rate is 100%. Your time here is finite. So thinking about what you're not going to do, right? Like what relationships are you not going to invest in? Where you're not, I'll give you an example.

• 34:07Scott Galloway?

  And this is sort of, I don't know, it's kind of a total white guy example. I get invited to play golf a lot. And I decided when I moved back from the West Coast that I was going to give up golf. I loved golf. It's one of, I found it addictive, a great way to spend time with friends. I was getting pretty good at it and just really loved it. And then I just looked at it and said, okay, it's six hours a week. To play once a week is six hours. And I'm like, I would rather reallocate that six hours into working out. And I told my, you know, by the way, the, the public excuse was now that I have kids, I want to spend more time with my kids. But what I really did with that capital was I said, okay, I'm going to devote that six hours a week to working out. Six hours a week, working out, you can be in good to great shape.

• 34:50Scott Galloway?

  Do you really get, and being in good to great shape is a fucking amazing thing. It's an amazing thing. And do I get something amazing by playing golf once a week? I like it. I got a lot of enjoyment out of it, but being in great shape is life changing. Anyway, it's, I think it's the tough part. And what I like about what I read from your work is, okay, make your list and then start performing infanticide on the list.

• 35:18Speaker 03

  Yeah.

• 35:18Scott Galloway?

  Start going after it.

• 35:20Speaker 03

  That's exactly right.

• 35:21Scott Galloway?

  Anything, anything coming out of COVID that you think has changed our productivity or our bad habits or how to eliminate bad habits?

• 35:27Speaker 03

  Absolutely. I mean, the thing that, so a little primer on habits. The way that habits work is that every habit has three components. There's a cue, a routine and a reward. And it's that cue and that reward that's really important in deciding if that habit is going to take root in our brain. One of the things that's happened with the pandemic is that all of our cues have been displaced because our daily routines have been thrown out of whack. And we've been introduced to new rewards that maybe we sort of theoretically saw as rewards previously, but didn't actually believe were rewards, like having dinner with our kids or not having to get on airplanes and being able to spend the weekend relaxing. That introduction to those new cues and those new rewards

• 36:11Speaker 03

  has been tremendous in helping people understand what new habits can infiltrate their lives. When we talk about the fact that, you know, business travel hasn't returned and then we chalk it up to all these structural reasons. People are afraid of X and Y and Z. The pricing isn't clear yet. I think a huge part of it is that people have had a mass psychological change. They've now learned that the lives that they had previously were not inevitable. They did not have to live that way. They have proven to themselves that alternative lives are actually more rewarding. And so even once everything gets back to normal, if Delta recedes, if everyone gets vaccinated, we are not going to see the same society that we saw previously. And you wrote a book about this, right? You know this.

• 36:55Speaker 03

  And it's not just because of structural changes in our world. It is because of changes in our minds. We have learned about new ways to live and that will stay with us for the rest of our lives.

• 37:08Scott Galloway?

  Coming up after the break.

• 37:10Speaker 03

  The hard conversations with yourself and with others that feel like work and feel unsatisfying, that is the thing, the habit, that leads us to happiness or joy or satisfaction.

• 37:23Scott Galloway?

  Stay with us.

• 37:30Scott Galloway?

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• 38:15Scott Galloway?

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• 38:37Speaker 04

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• 39:07Scott Galloway?

  Yeah, it's a simple but a profound observation. I hadn't really, I mean, it's obvious hearing you articulate it, but I spent 120 to 180 days a year on the road. And now in the last year and a half, it's been 10 to 20. I mean, it's just, it's just my life. Oh, gosh, Charles, I'm, I'm, you know, it's, it's a weird feeling to have too much time with your family.

• 39:34Speaker 03

  Yeah.

• 39:35Scott Galloway?

  I have never experienced that. I have never experienced being at home on a Wednesday and my kids roll in and they barely look up and I have to track them down and play basketball with them or go boogie boarding with them or something. Yeah, it really is.

• 39:48Speaker 03

  Let me ask you the other question. Let's say, okay, let's go back two years before the pandemic. Let's say I said to you, Scott, I promise you that if you just travel 20 days over the next year, you will not, you will be happier.

• 40:04Scott Galloway?

  I wouldn't have done it.

• 40:04Speaker 03

  Would you ever believe me? Would you ever believe it's even possible?

• 40:08Scott Galloway?

  Yeah, well, but see, there's, there's two sides to the trade here. And that is the business ecosystem was forced to make it possible for me before that to do to, I could have done that, but it would have meant cutting my income by 70% if not more and giving up a lot of opportunity. What changed is the world came to guys like you and me. Our lives can largely be digitized. You can write articles. You can probably do almost everything you were doing before from Santa Cruz. I can now do teaching, consulting, go on MSNBC from my guest house. That just wasn't possible for me before. I could, my company at Section 4, my ed tech company is now dispersed. There's 1,500 people willing to take my class online. That just didn't happen.

• 40:54Scott Galloway?

  You know, before when the CEO of Samsung wanted to me to do an executive session meeting for him, it was like come to Seoul or San Francisco. It wasn't like you can do it remotely. So the world has kind of come to us, if you will. Is there any like one thing in terms of being happier? Is there, what is kind of the starting place? If you think, all right, I'm interested in eliminating bad habits. I'm interested in making better decisions. I'm interested in being more productive. What is the one thing you'd start with?

• 41:27Speaker 03

  The one thing I would start with is just finding some way to force yourself to think about it regularly.

• 41:35Scott Galloway?

  Mm hmm.

• 41:35Speaker 03

  Right? And it should feel like you're forcing yourself. It should feel like work. So if you go and you look, there's lots of studies out there that tell you if you have more friends, you're going to be happier than if you have more money, if you spend more time with your family, X, Y, and Z. And the thing to remember about these psychological studies is that in aggregate, they are true. That doesn't necessarily mean that they're true for specific individuals, that what the science tells you is going to be true for you. And so the thing is, because like, for instance, like, for some people, happiness is overrated. I like being satisfied more than I like being happy. But if you read all the research, it's just going to tell me how to be happy. And it's not going to create a distinction there between satisfaction and happiness, about feeling a sense of meaningfulness

• 42:17Speaker 03

  versus feeling a sense of joy. And so what's really important is to have a cognitive routine, have a deliberate practice where I sit down and say, here's what I did last week. Does that actually give me as much joy as alternatives? And it's hard to do that because what people will tell you is, oh, I go and I take walks. I like have like these nice trolls. That's not the hard work of thinking about what you actually want. That's relaxing. The hard work of thinking about what you want is about sitting down with a therapist or a diary or with your spouse and having bored and frustrating conversations or writing

• 42:59Speaker 03

  things until your hand cramped and you don't really know what you're trying to say. And the only way you can figure it out is to write it over and over and over again, or to ask yourself hard questions, or to come up with a list of questions six months ago and force yourself to answer them today, even though you don't want to, or to think about how much you're doing because you hate your dad, or because your mom sacrificed so much for you. The hard conversations with yourself and with others that feel like work and feel unsatisfying, that is the thing, the habit, that leads us to happiness, or joy, or satisfaction.

• 43:33Scott Galloway?

  Charles Duhigg is a Pulitzer Prize winning reporter and the author of two books, The Power of Habit and Smarter, Faster, Better. He's currently a writer at The New Yorker and was previously with The New York Times. He joins us from his home in Santa Cruz. Charles, thanks for your insights and stay safe.

• 43:49Speaker 03

  Thanks for having me, Scott.

• 44:01Scott Galloway?

  I was a river of happiness. So, nothing is ever as good or as bad as it seems. I had originally signed with Bloomberg to do a show, did some promos, it offended some folks in the newsroom. Bloomberg was incredibly gracious and tried to work it out. We could not work it out and come to some sort of agreement around a way to move forward. And we all collectively, and this always sounds like a press release, but it was true in this instance, decided to part company. And I was bummed, mostly because I fucked up. Right or wrong, when you're working with good people and, you know, the deal ends before it even starts, the show never got aired, you have to take responsibility for it. But then, kind of no sooner than I'm feeling sorry for myself and thinking, okay, I'm never going to get a shot at TV, I get a call from CNN. And so, you just never know.

• 44:46Scott Galloway?

  This reminds me back when I was kicked off the board of Red Envelope. Imagine being kicked out of the band you started. I started this company, worked really hard at it, essentially got into sort of a fight with a board member where I felt he was using the company as a dumping ground for the failed products of his portfolio companies and pointed that out in a board meeting. And on the way to the airport, they told me they were kicking me off the board. And I was just so bummed. And it ended up not right away, but a year or two years later, some activist funds called me and said, you know, you're crazy, but you are kind of crazy. Would you be interested in getting involved in some of our deals, activist deals where we try and unlock value? And you just never know what's going to come of things. And so, again, I go back to the study showing by Adam Alter about end of

• 45:27Scott Galloway?

  life. The number one regret people have, well, a few regrets, right? They wish they'd invested more in relationships. They wish they lived the life they wanted, but they wish they hadn't been so hard on themselves. And so when something bad happens to you and you're, you know, you're, you're, you're beating yourself up and you're sitting there in bed and you're all bummed out, keep in mind, there's a couple of things at work. One, there's a principle, an unfortunate reaction that is human nature, and that is you tend to magnify or have a greater emotional reaction to your screw ups than your successes. And you also got to realize, just as a lot of your success isn't your fault, and you should be humble and feel gracious when good things happen to you and try and pay it forward, you should also recognize that when you screw up or something bad happens,

• 46:12Scott Galloway?

  it's not entirely your fault either, and you don't know what's going to come from that. If I ended up doing a show with Bloomberg, I wouldn't have ended up doing a show with CNN. So take things in stride. At the end of life, you're not going to look back on the things that happened to you. You're going to look back on how you reacted to the things that happened to you. Nothing's ever as good or as bad as it seems.

• 46:33Scott Galloway?

  Our producers are Caroline Chagrin and Drew Burrows. Claire Miller is our assistant producer. If you like what you heard, please follow, download and subscribe. Thank you for listening to the Prof G Pod from the Vox Media Podcast Network. We will catch you next week on Monday and Thursday.

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