Pod Insights The Prof G Pod with Scott Galloway Prof G Markets: Goldman and Apple Part Ways, Shein and Temu, and Charlie Munger’s Legacy About this episode Scott shares his thoughts on the contradicting narratives around Goldman and Apple’s partnership. He also discusses the fast fashion industry and its externalities. Finally, he takes a look at Charlie Munger’s legacy.
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:07 Scott Galloway? This week's number, 5.9 billion. That's how many packages Amazon is projected to deliver in the US by the end of the year, more than UPS and near double FedEx's volume. I found out recently that there was a porch pirate stealing all of my Amazon packages, so I ordered a butt plug. That way, if it gets stolen, the thief can go fuck himself.
1:38 Scott Galloway? Welcome to Prop G Markets, Ed. Today, we're discussing Goldman and Apple's partnership, the fast fashion industry, and Charlie Munger's legacy. Here with the news is Prop G Media Analyst Ed Elson. Ed, what is the good word? Was that Elon-inspired, that joke? How'd you come up with that one? Okay, so hold on. Before we even get to the headlines, can we just talk about... How literally this guy is coming undone. What, what are your thoughts? Did you see the Dealbook conference?
2:09 Ed Elson? Of course.
2:10 Scott Galloway? What, what? You're young. What do you think of this?
2:13 Ed Elson? Yeah, I think he's lost his mind. I think he's probably really bored. I mean, it feels like everything he does is just to make his life more exciting in some way. I don't know. And Claire made a good point as well, which is like, everyone's freaking out about this, but it's, it really is pseudo news. It's like a guy just went on stage and threw some F bombs around and like
2:31 Scott Galloway? made an ass of himself.
2:32 Ed Elson? Yeah, who cares? Yeah, he's, he's mentally ill.
2:36 Scott Galloway? That's a fair point.
2:37 Ed Elson? What, what did you think?
2:38 Scott Galloway? Well, I have a bias because I don't know if you've picked up on this, but I don't love Elon Musk. But as far as I know, about 499 of the Fortune 500 refused to advertise on this pod. Does that mean they're blackmailing us?
2:50 Ed Elson? Total injustice. I can't believe it.
2:52 Scott Galloway? And the delusions of grandeur and him talking about his terrible childhood. So we decided to save humanity at the age of 13 by developing, making us an interplanetary species. It's like, tell me you do ketamine without telling me you're doing too much ketamine.
3:07 Ed Elson? Yeah.
3:07 Scott Galloway? Jesus Christ, it feels like, it feels like this guy's world is closing in on him. And I think it comes back to not having anyone close in your life. But what's going on? Talk, talk about the markets.
3:19 Ed Elson? Let's start with our monthly review of market vitals.
3:28 Ed Elson? The S and P 500 had its best month in more than a year. The dollar saw one of its sharpest sell offs since the summer. Bitcoin hit an 18 month high and the yield on 10 year treasuries fell below 4.3% for the first time since September. Shifting to the headlines. U S home prices hit an all time high in September. Prices rose 0.7% from the month before, marking the eighth straight monthly increase. Year to date in September, prices were up more than 6%. Binance and its CEO Chang Peng Zhao pled guilty to violating US money laundering laws. Binance will pay a $4.3 billion fine as part of its plea deal. And Zhao stepped down as CEO. He faces up to 18 months in prison.
4:10 Ed Elson? OpenAI finalized Sam Altman's return as CEO. The company also gave Microsoft a non-voting seat on its board. Saudi Arabia's Public Investment Fund is taking a 10% stake in London's Heathrow Airport. And finally, Mark Cuban is selling a majority stake in the Dallas Mavericks. However, Cuban will maintain control over the team's basketball operations. Scott, do you have any thoughts on this?
4:35 Scott Galloway? The American dream of owning a home has become a hallucination for people your age. I bought my first home at 28. It was in Petronio Hill in San Francisco. I'd started a company, but my job offer out of Haas was for about 100,000 a year. And the home we purchased in Petronio Hill was 285,000 or 2.85 times salary. I think average salary now is like 160 or 200 grand coming out of Haas. And these are blessed kids. That's a staggering income for somebody at that young an age. But the average home, I think, is about 2 million. So it's gone from 2.8 times the income of an MBA graduate to 8 times.
5:15 Ed Elson? Average home in that area?
5:17 Scott Galloway? Yeah, in San Francisco.
5:19 Ed Elson? Okay.
5:19 Scott Galloway? But homes in the US have gone from an average price of 290,000 to something like 420,000. And then you couple that with interest rates coming from 3% to 7%. And it's just, I think the monthly or the yearly income you need to qualify for the average home in the US has come from 70,000 to 120,000, meaning that I would imagine, I don't know, something like a half of people in their age of 40 qualified. Now it's probably less than a quarter. And all of that, there's, I mean, there's just going to be unintended consequences of accelerating interest rates 500 bips in whatever it was, 12 or 14 months. And one of those unintended consequences was we all thought that if interest rates went up 500%. No one was expecting that would result in an increase in housing prices. Everyone thought, okay, that's going to massively increase the cost of owning a home,
6:04 Scott Galloway? which will take down the price such that people can buy homes. And what it ended up doing was locking in or basically ossifying the market because anyone with a mortgage that's longer than three, five, 10, 30 years has a below market mortgage, and that's now an asset that's worth a great deal of money. So they're trapped, they can't move. So there's a dearth of supply.
6:25 Ed Elson? I think it's important to highlight how this is like a supply demand problem because the strange phenomenon here is that demand is decreasing because mortgage rates are higher. So people are less interested in buying a home. And despite that, prices are going up, and you kind of highlighted that. But what this is really showing is just how low the supply really is. And we've been talking a lot recently about solutions to this stuff. I think less discussed, though, which we should acknowledge, is the extent to which the Biden administration is actually addressing this. So last year, the White House launched this Housing Supply Action Plan. They're basically rewarding areas that are reforming their zoning policies.
7:07 Ed Elson? They're trying to expand access to federal financing for housing development. And then last month, they announced this plan, which I thought was a great idea, which is that they're going to try to help convert commercial offices, which, as we know, are increasingly empty, and convert them into residential properties. You know, having said that, we need to see results. Like, we don't, the results aren't there, the housing prices are rising. But I do think it's worth recognizing that the government, in this case, the Biden administration, is recognizing this problem. They are taking steps to address it, and I just like acknowledging every now and then when the government is actually doing its job.
7:43 Scott Galloway? I love that you said that. I'm encouraged and heartened when people your age recognize the power and the scale and the, you know, the benign nature of the US government. And I didn't know about any of those things, so that's great. So thank you. Finance, I think you called this.
8:01 Ed Elson? Binance is next because the thesis here is very simple. If your business is predicated on existing outside of the law, and generally that means existing outside of the US, which is probably the strongest regulatory environment in the world. If that's the first pillar of your business and second, your sector is in structural decline, there's just no way that you can win this game.
8:21 Scott Galloway? What do you know? Here we are. You can kind of guess how this played out. And that is the DOJ showed up and said, with evidence from the SEC, hey, Xiao, you're you're in hot water. And he probably said, fuck you, I'm a billionaire. Talk to the hand, talk to my 200 lawyers. And you guys aren't innovators, you don't get it. And then my guess is he saw, you know, what went down with Sam and then realized, okay, Sam's going to jail for the rest of his life and his lawyers called him and said, uh, we don't want this to go to trial. Because if this goes to trial, there's now a precedent that every other juror has seen where they sent this guy up the river. And to think that you're not going to have a similar outcome is just, you're smoking something.
9:05 Scott Galloway? So let's call the DOJ back and see if we can cut a deal toot sweet. And I think that's what they did. And I think this is important. And arguably, we've been talking a lot about ESG. That's what we're riding on this week in immersion of malice. I think this is the most important ESG investment of the past year, and that is investing in the SEC and the DOJ that say to individuals who come up with innovative reasons to wallpaper over the fact that they are engaging in money laundering, transferring assets to terrorists, helping people engage in human trafficking. The incentives in America are as present and burn brighter than they ever have. There's a lot of reason to take risks. You can attract capital, work your ass off.
9:50 Scott Galloway? The incentives are in place. What's missing is the other side, and that is the disincentives. So I like when we see the government move in. Obviously, they follow the letter of the law here and show that, okay, it doesn't matter, you know, how many models or quarterbacks you hang out with or how many billions of dollars you have. If you engage in criminal activity that harms the Commonwealth, we're coming for you. I just, I just want to highlight the prediction itself. It was seven months ago, I said,
10:17 Ed Elson? 12 months from now, Binance is probably not a company anymore.
10:19 Scott Galloway? So.
10:21 Ed Elson? Five months left. Hopefully we get this one right. But yeah, it's just as you said, the reasoning behind the prediction is very simple. It's like the writing's been on the wall for Binance for such a long time. Like, the first clues were, one, that it was registered in the Cayman Islands. That's weird. And two, that it just generally refused to comply with basically any federal regulation, and that extends beyond the US. I think the learning for me here is like, generally speaking, companies are usually a little shadier than they appear, because every company has an incentive to present itself in its best light. So with Binance, you take a look at a company, and if your instincts tell you, this kind of looks like a well-branded, organized crime group, I would argue it's not a bad idea
11:06 Ed Elson? in general to trust your instincts there.
11:08 Scott Galloway? Generally speaking, especially, I don't want to be two ages here, but with older CEOs, you know, above 25 or whatever, they have a pretty healthy fear of jail. And they have a pretty strong, I have found, distinctive, the examples we talk about in big tech, I have found that most CEOs and leaders of organizations have a pretty strong moral compass. And while they'll engage in activity that might not, you know, they'll sell tobacco, or they'll sell big gulps, or they'll, you know, engage in supply chain that might not be as charitable as it should be, but they will absolutely comply with the law. If for
11:47 Scott Galloway? any reason, or any other reason, is that my generation knows they can go to jail. And I feel like your generation has been given role models that I can do and say anything, and as long as I'm wealthy, I'm somewhat immune from the law. And I think they have a lot of data points that that support that view. And it's, it feels like the chickens are coming home to roost. Sam Bankman-Fried, Elizabeth Holmes. Let's move on to the kingdom. I love this. Saudi Arabia investing in London's Heathrow. What's interesting is that we have normalized, for better or worse, money coming out of the Gulf. And I would describe the last year, if there was a theme, it would be the capital wins. You know, oh, no, they're buying our sport, the PGA. Well, okay. Yeah, you're right.
12:31 Scott Galloway? And capital wins. And whatever your fears around infrastructure or owning these iconic assets, capital wins. And it's actually, I think it's a good thing. I think the kingdom and the West should embrace each other. They have a lot of cheap capital. We have innovation and IP. As an asset class, I think infrastructure is fantastic. I was at Heathrow this morning. You cannot snap up an airport in two, three, even 10 years. These things, I mean, first off, there's no land left. So there, these things have incredible barriers of entry. Thing about airports is not only are there landing fees and, you know, restaurant revenues, all that sort of stuff, but the amount of luxury retail that comes through airports
13:14 Scott Galloway? is extraordinary. I used to do work with Estee Lauder and LVMH, and some of the most successful distribution by far was airport retail, because a lot of time wealthy people travel. They get trapped in airports for long extended stretches of time. And hey, maybe I'll go buy a but take a banana bag.
13:31 Ed Elson? I didn't even realize when I, I read this, that airports are privately owned, but, and that's generally they're not in the US. But at the moment, I think it's around a fifth of airports in the world have at least partial private ownership. And then when we were discussing this, you mentioned that you once considered investing in airports yourself. Could you take us through that experience?
13:51 Scott Galloway? Friend of mine, Orlando Machado, was a Tiger Cub and was the number two at Gracie Capital, a great investor.
13:58 Ed Elson? Tiger Cub meaning?
13:59 Scott Galloway? Julian Robertson, who started Tiger, seeded a bunch of his favorite managers. He'd give them a hundred million and then they would go raise their own money. And Orlando is this sort of special sits guy, mostly focused on Latin America, but the world is sort of his thing. He doesn't, he won't buy Apple. That's not what he does. He finds these really unusual, strange, small and mid-cap companies that he just thinks are dramatically underpriced. He'll follow a small number of companies, get to know them really well, talk to management regularly, and then wait till he thinks that they're so inexpensive that there's just dramatic upside to the downside. So he only does kind of one or two of these a year. And one of the ones he was looking at, I don't think we did it. I'm an investor in his fund. It's one of my biggest investments was in airports in Latin
14:44 Scott Galloway? America. So this one company owns a bunch of airports and I think it's El Salvador, Chile, and maybe Bolivia. And they're good businesses. You know, they're kind of consistent, stable revenues. You obviously have, if you're the, if you're the airport in Ascension, you kind of have a lock on it. So the idea of privatizing it and giving it, handing over the keys to someone who has a profit motive, I guess there's some downside to that too. But it's a business. I don't think we made the investment. But yeah, there are privately owned airports all over the world.
15:15 Ed Elson? Cuban, any thoughts?
15:16 Scott Galloway? The thing that struck me about it was what's effectively has happened here, and I haven't seen this in sports before, is a dual class shareholder company. And that is despite selling most of his economic interests in de-risking, he's still maintaining control. And the Adelsons probably said, okay, that's not ideal for us, but there's so few teams that come up for sale. You seem like a reasonable guy. And I think Mark Cuban is a reasonable guy. True story, my neighbor Ed, who basically held up the construction of my house for a good six months and I could never figure out why, bought the Houston Rockets in like 1990 for $120 million and sold them for $2 billion, I think, three or five years ago to the Fertitta brothers. Yeah. And now he has like, he can't be that bad a guy though.
15:59 Scott Galloway? He has all these dogs. Anyways, he's a dog lover, but I'll tell you this, he hates people. He hates people. Anyways, that's my, that's my, that's my brush with NBA greatness.
16:10 Ed Elson? Are you gonna buy the Rangers?
16:12 Scott Galloway? First, I don't have, I don't have the money. I kept thinking, well, if I have another big year in the markets.
16:16 Ed Elson? Yeah, that's a problem.
16:17 Scott Galloway? So there's that. I don't have the money. But even if I did, I see how Chelsea fans treat Todd Bowley, who strikes me as a nice man, who's doing his level best, invested a ton of money. You're a Chelsea fan, right?
16:29 Ed Elson? Yes.
16:31 Scott Galloway? They give the guy so much shit. I just.
16:33 Ed Elson? Rightly so.
16:34 Scott Galloway? Well, okay.
16:35 Ed Elson? The guy, the guy went to the manager in his first week. He said, I've got a new idea. I've got a new game plan. I think we should play a 4-4-3 formation. He thought that there were 12 players on a football pitch.
16:49 Scott Galloway? I don't know. I think for, I think when you show up and spend $5 billion, you get to pretend that you understand the business. Anyways, not, not buying a football team anytime soon.
16:58 Ed Elson? We'll be right back after the break with a look at Goldman Sachs and Apple.
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19:35 Ed Elson? We're back with Prof you Markets. Apple's partnership with Goldman Sachs may be coming to an end. For the past four years, the two companies have worked together to launch an Apple credit card and consumer savings account. Last week, however, Apple handed Goldman a term sheet that would allow them to end their contract in the next 12 months. That term sheet will only go into effect if Apple is able to find an alternative provider. In other words, Apple's on the hunt for a new finance partner. Scott, Goldman's been struggling with consumer banking for a long time now. We've discussed those struggles before. What do you make of this new development?
20:08 Scott Galloway? So one, there were smoke signals around this. Goldman has said they're just getting out of the consumer finance business. So this isn't a surprise. What is interesting here is nomenclature. And that is whoever runs comms at Goldman should be justifiably getting a lot of shit from David Solomon, the CEO, because it positioned it as Apple is on top and it's, I think the exact term in the Wall Street Journal was severing ties with Goldman.
20:35 Ed Elson? Pulls plug.
20:36 Scott Galloway? Pulls plug, right? And that makes it sound like Apple's disappointed in Goldman or there was a falling out. It makes it sound like, you know, Apple is the, is, is in charge here, didn't like Goldman and fired them. That's not good for the Goldman brand, when the reality is, I think that it was essentially a mutual decision to part company. Goldman's exiting, exiting the business. And it just struck me how the framing of a story has such an impact on people's perception of the company.
21:07 Ed Elson? I mean, so some of the headlines, Wall Street Journal, Apple pulls plug on Goldman credit card partnership, Business Insider, Apple to cut ties with Goldman, Axios, Apple breaks up with Goldman. And you mentioned, you know, it was more mutual. A direct quote from the Wall Street Journal, quote, "By early this year, Goldman had told Apple that it would be looking to offload the partnership." In other words, this was Goldman's idea. Like, it's something they wanted to do, but that's exactly right. Like, the way that the media has unanimously characterized this is that it was Goldman who was sitting on their hands and then Apple came over and, quote, "pulled the plug." So I, that's strange. And I guess my question to you would be.
21:51 Ed Elson? Why is that happening? Like, why are media outlets, either intentionally or unintentionally, reporting on this kind of small story with this strange pro-Apple bias?
22:03 Scott Galloway? I think anything Apple does, people just give them the benefit of the doubt, or at least the media, they do an outstanding job managing the media. They're very, very manicured, they're very careful about it, they're very measured. Everything they do publicly is highly curated. And quite frankly, the comms people at Goldman didn't do their job here. The media's always loved to hate Goldman, it really does. It finds it as like the, you know, what was that term? The giant face sucking squid on the economy? And I think people are jealous of their success. I would have been fucking furious if I were the board or Solomon at the comms group that they let this be portrayed this way. Because comms matters. When you're a public company, you trade within a range.
22:45 Scott Galloway? Investment banks trade within, call it, a range of eight to 12 times EBITDA. And I don't know what the range is. And that delta is based on a few things, their growth and management, or the perception of management, their strategic positioning. But it's also very much based on how effective they are at communications. And again, I've said that the core competence now of every CEO has to be storytelling, and that is the ability to shape a vision that's compelling, be likeable, such that you can attract investor attention and get cheaper capital that you can invest at a greater clip than your competition, such that you can begin to pull away.
23:20 Ed Elson? Well, one thing to keep in mind is that when you read the news, it usually isn't the journalist who writes the headline, usually it's the editor. But we wanted to try a little thought experiment. So we fed that Wall Street Journal article into ChatGPT. And we gave ChatGPT two different prompts. First, we asked it to write a headline designed to generate clicks. And then we asked it to write a headline designed to accurately encapsulate the content. So here were some of the clickbait headlines. Apple's shocking breakup with Goldman Sachs. Goldman faces major setback as Apple plans to exit partnership. Apple to drop Goldman Sachs amid growing challenges. So very similar to the real headlines and all puts, you know, Goldman on the defensive.
24:04 Ed Elson? Now here are the headlines optimized for accuracy. Goldman discusses handing over Apple Card program. Apple and Goldman Sachs part ways on credit card venture, marking a strategic shift for both companies. So it's so interesting how, one, this reveals a bias in the headline writing, when we literally just gave it the article itself. But two, it shows that with the right prompting, AI could potentially do a better job of summarizing the news for us. So the question I'd ask you is, do you think there's a case to be made that we should actually start using AI in journalism? And maybe it would be to our advantage.
24:39 Scott Galloway? Yes, but young Padawan, you're so cute. What you've just shown is that, in fact, they are using AI. And they're using it to do exactly what you just outlined. They're using it to get as many clicks as possible.
24:51 Ed Elson? Wall Street Journal?
24:52 Scott Galloway? Oh, what, you think they're immune?
24:56 Ed Elson? I don't know. Yeah.
24:56 Scott Galloway? They're in the business of making money. So I would be shocked if they aren't using AI to generate headlines. And they're not saying, they're not saying, they're not instructing the LLM to say, we want a thoughtful and measured summary of the substance of the article. That's not what they're tasking it with. They're like, get me clicks, baby. Get me mad fucking clicks, bitch. That's the prompt they're getting.
25:30 Ed Elson? Shares of Chinese commerce giant PDD soared almost 20% last week after the company reported its revenue had doubled. PDD controls several companies, but the engine behind this quarter's growth is an online shopping app called Temu. Based in Boston, Temu offers heavily discounted products, all of which are shipped directly from China. And in this quarter alone, the platform processed more than $4 billion in transactions. It's also highly popular in the US. Temu's monthly US sales are now twice as high as fast fashion retailer Shein. Scott, a few weeks ago, we discussed Shein's $90 billion target valuation. It's since officially filed confidentially for an IPO. What do you make of this new competitor, Temu?
26:15 Scott Galloway? I think Shein and Temu represent the next wave in specialty retail for apparel, and that is.
26:21 Scott Galloway? So sort of a brief history of casual apparel. The most valuable private company in the world up until I think the late eighties or the nineties was Levi Strauss and Company. And they would pile Levi's high in a JCPenney's, a Sears, or a Gap. And the Gap sold Levi's and albums. Don Fisher started a store, I think in the eight in the sixties. And then this genius merchant came along and said, I know, we control the branding just as television advertising is beginning to lose its effectiveness. If we control the interface through these retail establishments called the Gap, we can merchandise our own khakis and our own pocket tees. And we control the branding and the interface. And that was the birth of the Gap. And the Gap became one of the most iconic retailers in history and was one of the best
27:05 Scott Galloway? performing stocks in consumer history. And then they said, let's go further down the supply chain, go 80% of Gap for 50% of the price, targeting single mothers, Old Navy. That was the fastest zero to billion retailer in history. And then, not to be outdone, Zara, H and M, Uniqlo, some other folks came in and said, we can figure out a way to shrink or collapse the supply chain, go to runway shows in Paris, send the images to China and get a reasonable knockoff at 30 or 40% of the quality for 10% of the price. Do limited batches and runs, tons of SKUs, not your basics, very fashion forward stuff, not very well made, but it doesn't matter because when you think about how many times
27:49 Scott Galloway? you actually wear a piece of clothing, it's less than you think. And the people who owned Zara became the wealthiest family for a brief time in Europe. And I see this as, again, the supply chain keeps getting collapsed, more agile and more innovative. And both Temu and Shein have figured out unbelievable supply chain out of China and Asia with a front end in the US and a demographic, specifically people your age that don't have as much money as I did when I was your age, but still want to feel good about themselves, still on their mating years, still want to have sort of a fashion forward feel. And these companies have developed such incredible supply chains that they're this rare breed
28:32 Scott Galloway? of company that is exploding its top line, but has managed to maintain profitability. And it has the same hair on it that every other. Especially retailer or consumer apparel company has had, whether it's Nike or LVMH or The Gap, and that is as technology gets more robust, it also becomes somewhat more transparent and there's real issues around getting you a T-shirt for $3 to your door. So they're going to face the same scrutiny, warranted scrutiny that the other folks have faced, but generally speaking, consumers vote with their wallet and they want the best product for the lowest cost. And these companies are the next generation in that. It's incredible what these firms have been able to pull off.
29:14 Ed Elson? Well, speaking of that scrutiny, Temu, you talk about they're doing this at such a low cost. A lot of people think that Temu is relying on forced labor. It's been accused of selling products that were produced in Xinjiang, which is where these forced education camps are for Uighurs. Congress has said it repeatedly fails to fall in line with compliance programs. And then another thing I saw is that it's consistently abused tax loopholes. For example, there's this law in the US known as the de minimis rule, which basically says that if a product is cheap enough, then you don't have to pay taxes because it's basically too small to fuss with. And it was designed to allow us, Americans, to go on vacation
29:55 Ed Elson? and buy souvenirs duty-free and bring them back. Now, in the past 10 years, Chinese companies have realized they could exploit this. And the total value of de minimis shipments into the US went from $40 million to $40 billion. And it's estimated that today, Temu and Shein alone account for a third of those shipments, which is all to say, you know, the way Temu and Shein make money is by evading taxes with freakishly low prices. And the way they get freakishly low prices is most likely not confirmed through exploitative and possibly forced labor. So that's obviously morally bad if it's true, but from a purely economic perspective. Isn't that just highly risky?
30:39 Ed Elson? I mean, wouldn't it take just one piece of solid US regulation to basically wipe these companies off the map?
30:45 Scott Galloway? In terms of supply chain transparency, I think that's a real issue. I think it's a real issue across a bunch of companies. The reason why I don't think it's going to get in the way of Shein's IPO or Temu is that what I see is that the US and China are kissing and making up. And I think part of that is these companies, while they're, they've tried to diversify their corporate headquarters. I think Shein's now in Singapore. I guess, is Temu actually their headquarters? Are their headquarters actually in Boston?
31:13 Ed Elson? Yeah, the headquarters are in Boston for Temu, but the, the, the holding company, PDD, is in Ireland, I believe.
31:22 Scott Galloway? Speaking of tax avoidance, yeah. So, so here's the bottom line. I, I think these issues are real, but I don't think it's gonna, I, I think the risk you're alluding to is actually not as great as, as feared, because I think the US and China are in a hurry to thaw relations and a function of that or a derivative of that will be both, both nations will be somewhat remiss to impose new sanctions or new regulations on US and Chinese companies importing or exporting products in and out of those nations right now.
31:56 Ed Elson? Just to end on this point, some great data that Mia found on Shein. Zara moves clothes from the drawing board to shelves in two weeks. Shein does it within a few days. Zara adds around 2,000 new styles each month. Shein adds between 2,000 and 10,000 new styles each day. And then the final kicker, Shein is the number one most visited apparel website in the world, ahead of Nike, ahead of H and M, number one. So this is, this is a juggernaut.
32:29 Ed Elson? We'll be right back after the break with a look at Charlie Munger's legacy.
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34:38 Ed Elson? We're back with Prof G Markets. Last week legendary investor Charlie Munger passed away at the age of 99. Charlie served as Vice Chairman of Berkshire Hathaway and alongside Warren Buffett, he built Berkshire into this $780 billion company that it is today. Charlie was revered in the industry for his investment philosophy. He was a fierce advocate of value investing, stripping companies down to their fundamentals and evaluating them on that basis. And he was also known for his iconic one-liners.
35:08 Speaker 04 Warren, if people weren't so often wrong, we wouldn't be so rich. Yeah, I think you would understand any presentation using the word EBITDA if every time you saw that word, you just substituted the phrase bullshit earnings. The safest way to try and get what you want is to try and deserve what you want. It's such a simple idea. It's the golden rule, so to speak. You want to deliver to the world what you would buy if you were on the other end.
35:37 Ed Elson? Scott, what has Charlie Munger taught you, if anything, about investing and about life in general?
35:43 Scott Galloway? I think it's sort of, it kind of marks an era and I wonder if it marks the end of an era. Berkshire Hathaway, I always thought it was a bit of a misdirect or a bit of jazz hands. My understanding is Berkshire Hathaway is mostly an insurance company posing as a hedge fund. But what I liked about these guys was they kind of spoke with no filter. They seemed like good guys, family guys, talked a lot about life, talked about the importance of marrying the right person. When they were asked about the most important decision you can make, they would say marrying the right person. I really appreciate that Charlie Munger was unafraid to basically say Bitcoin and crypto was rat poison and
36:23 Scott Galloway? that he had just sort of a basic set of truisms. Be kind, have common sense, treat people well, find the right partner. They're sort of just basics, right? He was also a World War II veteran, served his country. And if you invested $1,000 in Berkshire Hathaway when Charlie Munger joined the firm, you'd have $400,000 now. And while it sounds crass, it's important in that is these individuals created a lot of economic security for a lot of people. And that's a wonderful thing. The thing that always struck me about their investment philosophy was that it's better to buy great companies at a fair price than fair companies at a great price. And my temptation as an investor has always been to find kind of shitty companies or marginal
37:08 Scott Galloway? B minus companies that are trading at ridiculously low prices. And their investment philosophy has always been, you know, buy Apple, buy Coca-Cola, buy great companies. And they've always said, when a great company meets mediocre management, management wins. And so they were always, you know, just about buy and hold, don't trade stocks. And these guys, I mean, it helps when you live to be 180 years old, but these guys got very, very wealthy, not so slowly, right? I think they compounded at about 19% a year.
37:42 Ed Elson? But, you know, in comparison to these other guys, and I think Warren Buffett became a billionaire past the age of 50, I'm pretty sure that's right.
37:50 Scott Galloway? Later in life. Still time, Ed, still time. When daddy shows up with his Gulfstream 500 and all the ladies want to know him and all the guys want to have sex with him. Wait, it's the other way around. Never mind. That's when you know the daddy's hit the big time. I would be so much more interesting with a Gulfstream. I'm ready. Bring it on.
38:10 Ed Elson? What about some of his criticisms of corporate bullshit? So one of the things he said in one of those clips was that he thinks EBITDA is basically Latin for bullshit earnings. But it sort of reminds me of like, I mean, you've had fierce criticism of community adjusted EBITDA, for example. I wonder if community adjusted EBITDA is to you what regular EBITDA is to him.
38:35 Scott Galloway? Maybe, but I would argue EBITDA is a speeding ticket and community-based EBITDA is double murder. I just, the two aren't even in the same universe. I still look at EBITDA, but it's so generally accepted. That as long as a standard is applied to every company, you can get some sort of benchmark or reference. But if it's no accident, the person that's supposed to take over Berkshire Hathaway, I think his name's Greg something, is a former accountant. That's just right up their kind of their power alley. And I always thought that the most important class I took in business school was accounting. By the way, true story, I got an A in that class. I got a 2.27 GPA undergrad and I was so intimidated when I got into business school and I thought, who am I kidding? I'm going to fail out.
39:19 Scott Galloway? I don't have the skills to survive the rigor of business school. And my first semester, Brett Truman, this outstanding accounting professor is now, I think, at the Anderson School, UCLA. I thought, I like this guy. This is important. This is my test that I can actually get my shit together. And I studied and I got an A. I got an A in accounting and that was one of my kind of first big accomplishments academically. Okay, do you have any predictions or is it up to me again? Am I supposed to save this, this thing called a fucking cruise line to hell?
39:52 Ed Elson? It's not even time for predictions yet. You gotta let, you know, my job is to tell you what the week ahead is.
39:57 Scott Galloway? Okay, go ahead. Sorry, go ahead.
39:58 Ed Elson? Let's take a look at the week ahead.
40:00 Scott Galloway? Well done, Ed. What a pro. What a pro.
40:04 Ed Elson? Oh, I'm going to get better at that, too. We'll see the unemployment rate for November and we'll also see earnings from a few more retailers, including Rent the Runway, speaking of non-GAAP, and Lululemon. Do you have any predictions for us? Cause I don't.
40:21 Scott Galloway? Okay, so my prediction is non-business related, which always gets us into trouble because everyone tells me to stay in my lane, but I don't know if you saw this, the Koch brothers have swung their support to Governor Haley or Ambassador Haley. And essentially Nikki Haley is ending up or is becoming what everyone hoped that DeSantis would be, and that is a credible alternative to Trump. And I think in the next two to three weeks, you're going to see Governor Haley absolutely surge in the polls. I think the field is going to get winnowed down to two or three candidates. It'll be her, DeSantis and Trump, maybe outside shot of Christie, although I think he's losing some momentum. And I think she stands in stark contrast to the rest of them. I think she's performed
41:04 Scott Galloway? really well on the debate stage. She's palatable to moderates, and I think the Republican Party is getting so sick of losing that they essentially the Koch brothers, who unlike the tech bros in San Francisco who talk a big game and like to pretend they're players and then sign checks for like 5,000 bucks, the Koch brothers show up with literally, literally dump trucks of cash and an organization and, and field operatives and people on the ground. That's going to give serious typhoon like wind in her sails. So anyways, my prediction is in the next two to three weeks, it's Nikki Haley that begins to fill the shoes of what was supposed to be a viable alternative to Trump.
41:42 Ed Elson? I just remembered, I do have a prediction.
41:45 Scott Galloway? Okay.
41:45 Ed Elson? Following that Elon video at Dilberg, I think Lynda Yaccarino resigns within the next 12 months. I mean, the way that he treated her when Andrew R. Sorkin was like, we have Lynda Yaccarino right here and she has to sell advertising. And then he just says, well, if there's an advertising boycott, the company dies. Human nature prediction. I think that she's going to be out, out pretty soon.
42:07 Scott Galloway? So predicting that someone who works for Elon Musk in a business that is collapsing will not be there in 12 months. I, I used to make predictions like that, Ed, and then my testicles descended. By the way, I made the same prediction.
42:22 Ed Elson? Oh, you did?
42:23 Scott Galloway? Exact same prediction the day she was hired.
42:25 Ed Elson? Oh, that's terrible.
42:26 Scott Galloway? I said that she wouldn't be there a year. So anyways, we'll see. We'll see if we're both right. Anyways, this episode was produced by Claire Miller and engineered by Benjamin Spencer. Our executive producers are Jason Stavers and Catherine Dillon. Mia Silvareo is our research lead and Drew Burrows is our technical director. Thank you for listening to Property Markets from the Vox Media Podcast Network. Join us on Wednesday for office hours and we'll be back with a fresh take on markets every Monday.
43:36 Scott Galloway? Claire. Claire turns chicken shit into chicken salad. That's right. It's the ladies saving the men. I like the way this is shaping up. Guys get all the glory. Oh, who's, who gets all the fame? The white guys. That's right. What do you call two white guys? A podcast.
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Previous First Time Founders with Ed Elson – ft. Ryan Petersen of Flexport Next Office Hours: Advice to a First-Time Home Buyer, Why did The Prof G Pod Leave Spotify in 2022?, and Putting Yourself out there After a Breakup Page updated October 26, 2026 · transcript and summary are machine-generated
