The Essential Is Invisible

Scott Harrison, Founder and CEO of charity: water, discusses the state of nonprofits, leadership, and gratitude. Scott Galloway also answers listener questions about gap years, Lululemon, and advertising. 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.

• 0:08Speaker 00

  In America, we're capitalists.

• 0:11Scott Galloway?

  Who the fuck are we kidding? We're cronyists.

• 0:25Scott Galloway?

  Today on the Prop G Show, we speak to the CEO and founder of Charity Water, Scott Harrison. Take your questions in office hours and end, as we always do, with an Algebra of Happiness moment. I think all of us are trying to take perspective from this crisis. Perspective is a photographic term. It means as you zoom out, you see the bigger picture. Supposedly, people, when they see the Earth from space, feel more of a comity, more of a humanity, become very spiritual. I also think that a certain amount of perspective happens as you get towards the end, or specifically near death. My father is near death. He's not sick, but he's almost 90 and is probably playing the back nine, if you will. And I do get a great deal of perspective from him. He mostly is just hanging out in his senior's home, abusing Xanax and watching reruns of

• 1:10Scott Galloway?

  Maple Leafs games. So he's an intensely intelligent individual who's fearless and high. In sum, he is my Yoda. You must unlearn what you have learned. The other night, I asked him, as I was screaming, "How are the Leafs gonna do next season?" I said, "Do you have any takeaways on America?" And he said, he said that America is a terrible place to be stupid. Now, what did he mean by that? The reason he came here, and he took a lot of risks to get here, he wanted to be in a place where there were winners and losers. And the cruel truth of capitalism is you can't reward the winners without punishing the losers. And we've had an immigrant gene here in the US, where if you're lucky, work hard, take risks, you get bigger upside.

• 1:52Scott Galloway?

  But also, if you're unlucky, or make, take stupid risks, there's some downside. But however, capitalism is no longer capitalism in the United States. Why? We've decided that our modern-day capitalism, in America at least, that our objective is to flatten the risk curve for people who are already rich by borrowing from future generations with debt-fueled bailouts for companies. We have consciously decided to reduce the downside for the wealthy, thereby limiting the upside for future generations. These rescue packages... I get it. We want to flatten the curve of unemployment. We're hoping this is a trope. We want to save the economy. But should we really be bailing out United Airlines, who has spent 96% of free cash flow, such that they can buy back their stock,

• 2:37Scott Galloway?

  thereby inflating their shares, thereby increasing the compensation of their CEO, who along with the CEOs of Delta and Carnival Cruises have recognized about $150 million in comp. Shouldn't we be rewarding the companies that have a cash hoard? The Berkshire Hathaways, the Bao Posts, that have put away a bunch of money? Shouldn't the companies that wanted to inflate their own stock prices and now got caught without bathing suits, shouldn't they pay the price? Also, CEOs and the shareholder class are trying to conflate equity destruction with job destruction. I know this firsthand is not true. In 1999, my company, Red Envelope, was about to go public. I was looking at jets. By March of 2000, that was no longer the case. By 2008, a longshoreman's strike

• 3:20Scott Galloway?

  left our Christmas merchandise stranded 60 miles off the coast of Long Beach. The credit crisis hit and boom. Seven weeks later, we were Chapter 11. All the equity was wiped out, and yours truly has been flying JetBlue ever since. Never got the jet. But let's be honest, I'm an interesting guy. But had I been able to get that sexy beast, that Challenger 300 with Rockwell Proline 21 avionics, I'd be fucking fascinating. But instead, I'm just interesting, and that's the way capitalism works. The bailout packages should protect people, not businesses. Letting firms fail and share prices fall to their market level also provides younger generations with the same opportunities that we, my generation, Gen X and Boomers were given.

• 4:05Scott Galloway?

  For example, a chance to buy Amazon at 50 versus 100 times earnings. And maybe, who knows? Brooklyn Real Estate at 300 or 500 bucks a square foot versus $1,500 a square foot. Capitalism is now a call sign for protecting the wealthiest generation in history, the shareholder class, better known as baby boomers. The terrible thing about crises is they always happen. The wonderful thing is they always end. As we fight to bring this crisis to an end, let's re-embrace capitalism and foster a future generation of leaders and firms that are soldiers, not hoarders. Yes, America is a terrible place to be stupid. It's going to be a worse place if we replace capitalism with cronyism.

• 4:56Scott Galloway?

  In 1999, I was exceptionally narcissistic, ego-driven, and sick and fed up of San Francisco and being on this hamster wheel of e-commerce startups and decided to change my life, resigned from the board of Red Envelope, the company I'd started, resigned from the board of Profit, the other company I'd started, told my wife I wanted a divorce, no fault of hers, and moved to New York and joined the faculty at NYU, totally hit the reset button. And I used to go out, I basically just left my loft for food, sex, and occasionally socialization like a dog. I was basically a caveman. And the person or one of the individuals I met, whose specialty was getting

• 5:40Scott Galloway?

  guys like me tables at the hottest nightspots in the world where wealthy people and the women who love them congregate, was a guy named Scott Harrison, who was a club promoter. And I got to know Scott, very nice guy. And a few years later, Scott was in Punta del Este with a bunch of wealthy people, partying on the ocean, and had, for lack of a better term, some sort of spiritual awakening. We thought it was a breakdown as all of a sudden Scott disappeared and he surfaced, taking photographs on a mercy ship off the coast, or off the Ivory Coast, and decided he was going to change his life dramatically, return to his Christian roots, return to the US, slept on a bunch of couches,

• 6:20Scott Galloway?

  and raised $5,000, returned to Africa, built one well, came back, raised $30,000, went back, built six wells. Anyways, a half a billion dollars later, Scott has brought saved potable water to millions of people. There are few people I think that will be remembered in 100 years. I think one of them is Muhammad Ali. I think we'll probably remember, I don't know, the Beatles. I also think we're going to remember Scott Harrison. Today's interview is with Scott Harrison, someone who is an inspiration for me. I'm an atheist, so I find it fascinating when someone has this type of spiritual return to their religious values and uses it as a means of creating so much love, so much empathy, that he literally is saving the planet. In addition, Scott is an incredibly

• 7:05Scott Galloway?

  savvy businessperson, applies technology and progressive business principles. Anyways, take a listen to our interview with the inimitable and incredibly inspiring Scott Harrison. Support for the show comes from Nutraful, the number one dermatologist recommended hair growth supplement brand used by over one and a half million people. With age comes knowledge, patience, and for some, hair loss. Didn't say it was all good things. And for those who want to do something about it, there's Nutraful. Nutraful has formulas built for men at different life stages. They have Nutraful Men for Guys Age 18 to 49, plus the new Nutraful Men 50 and Older. That's the first product of its kind specifically for men over 50. You can now address the key root causes of thinning wherever you are in life.

• 7:49Scott Galloway?

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• 8:19Scott Galloway?

  Scott, where does this pod find you?

• 8:21Speaker 02

  I am sitting outside a public library stealing Wi-Fi, upstate on the New York-Pennsylvania border, sitting in my car.

• 8:31Scott Galloway?

  Sheltering in place, up in the woods.

• 8:33Speaker 02

  We are up in the woods, yeah. We, my wife and I, take care of several 80-year-olds not in great health. And about six weeks ago, we pulled them out of New York City, rented a farmhouse in the middle of nowhere, Pennsylvania, and have been living the country life with all of its challenges. We've got four generations in the same house, which has its moments of positivity. And I talked to a friend the other day who said I'm having a wide range of experiences, which I think would be true for us as well.

• 9:07Scott Galloway?

  So I would imagine a lot of our listeners know you and Charity Water. But give us the headline news. Give us the kind of the elevator speech on Charity Water.

• 9:15Speaker 02

  We are a nonprofit based in New York City. We have been working for 13 years to bring clean and safe drinking water to everybody on the planet. As we speak today, about 10% of the world, 785 million people.

• 9:30Speaker 02

  They don't have clean and safe drinking water. And that's, that's been our mission. We've been able to get about 11 million people across 28 countries clean water over the last 13 years, uh, thanks to, you know, almost half a billion dollars in, in donations from, from very generous people.

• 9:47Scott Galloway?

  Wow, half a billion. Yeah, it's wonderful. So what's happened to you guys in the last 60 days?

• 9:53Speaker 02

  Yeah, we saw, uh, I guess a crater would be, would be a good way to, to describe it. We're seeing a lot of people just no longer afford to give. You know, Charity Water has a very unique business model where 135 high net worth families pay for all of the overhead. And then we have over a million donors who are giving in grassroots ways from around the world. This has affected both of those sets of donors. Uh, many of the people that are giving Charity Water $10 every single month are no longer to give $10 a month anymore as they've lost their jobs. So we've seen, you know, a huge spike in churn in the subscription program.

• 10:33Scott Galloway?

  One of the things that I've loved about Charity Water is you've sort of embraced these information age, modern progressive business principles. And I remember, gosh, it must've been seven or nine years ago, you moved to a recurring revenue business model and you referenced at the beginning that you've asked people to pay for the overheads such that any donation goes directly to water. And you have this recurring revenue, uh, stream. The wonderful thing about that is I imagine you're not as, as hit as hard as some other charities that are just, just opening envelopes every day, hoping that money comes in that you do have commitments, you do have almost like a SaaS-like business model. What have you had to do at Charity Water to respond to the decline in people's ability to give?

• 11:15Scott Galloway?

  How, how, how have you as an organization adapted such that you can keep the lights on?

• 11:20Speaker 02

  We cut costs immediately. We cut our OpEx, uh, by 24% a few weeks ago. So we were really quick out of the gate. Um, I, it was my belief that this would not be short-term, that we weren't just going to bounce back in Q3 and Q4 and, and giving would continue as, as normal. So I Really, the exec team and I took a very, very bearish view on giving. We look at this as an eighteen to twenty-four month cycle, at least. And we need to make sure we have the cash to get through that. So we cut marketing, we cut events, we cut travel, we cut some benefits, 401K.

• 12:02Speaker 02

  Match, we cut the Metro cards that we give all one hundred and seven employees. And then we cut mine and exec salaries by twenty percent. That was kind of the first wave. We're now in scenario planning for more severe cuts. Just based on some of the data that we're seeing. And, you know, we did, we, we, we did get one point six million dollars from, from the CARES Act. So we were one of the very first applications that HSBC put in. We were approved on Easter Sunday, which is, which is great news. And, you know, a great program for nonprofits to be able to tap into some of that. But, you know, this is, we believe this is going to be a systemic downturn in charitable giving.

• 12:44Speaker 02

  And especially because so many of our donors are micro givers. You know, it is a lot of the ten, twenty, thirty dollars a month. Many of those people are just simply unemployed right now. And so I think one of the, here's, you know, anybody else that sits on the board of a nonprofit listening, or maybe another nonprofit founder. I think often nonprofit leaders are way too optimistic about things like this. I mean, you, you don't get into this sector unless you have this irrational, exuberant sense of optimism, right? We're going to bring clean and safe drinking water to the whole world. We're going to end world hunger, right? We're going to end HIV AIDS or end malaria.

• 13:28Speaker 02

  And what I'm afraid of is that people won't make the cuts fast enough. And that there's going to be tens of thousands, if not hundreds of thousands of nonprofits that will run out of cash. They will not exist to see through the other side because they're going to be too slow to cutting those expenses and their, their optimism is just going to be always there. Oh, things are going to be fine. We're all going to get back to work. People are going to be giving again. And, and I, I've really been trying to warn as many people as possible to, to prepare for a much longer and much more difficult time when it comes to charitable donations than, than they've ever experienced before.

• 14:07Scott Galloway?

  You know, Scott, I think in addition to being, you know, an inspiration, you're an outstanding business person. What I've been telling all the people, all the entrepreneurs and the CEOs of the boards I'm on, is that like there's a saying in retail that your first markdown is your best markdown. And that is, whatever cuts they're planning, double them. And that people are under the impression that the crisis is terrible, but it's a crisis for everyone else. And somehow that they're going to be magically spared or not feel the full impact. What are other advice would you have for any other nonprofit trying to navigate through this? Is it over communicate with your stakeholders? How do you keep the troops? How do you keep their morale high, given that obviously

• 14:50Scott Galloway?

  it's a tough time? What, any other advice in terms of just leadership?

• 14:55Speaker 02

  Yeah, I mean, we, we, we really, Charity Water, you know, transparency is one of our core values. And I know a lot of people say that, but we, when we made these cuts, and again, this is weeks ago now, you know, two or three weeks ago, we rolled them out to all 107 people in a 71 page deck. And it was a two hour town hall meeting. We told them what we cut. We told them why we cut it. We told them that, you know, just a little more context, we are coming off of three years of 35% growth. So we had $107 million annual budget this year. Three years ago, we were a $40 million organization. So all we've known is growth and hiring. We hired 41 people last year. 7,000 people

• 15:37Speaker 02

  applied for those 41 jobs. So we were in hyper growth mode. All the rules have changed. Everything has turned off. And we believe we need cash. I mean, I believe we need cash for 24 months at a minimum. You know, I would have said we probably needed nine to 12 months of cash previously in a different cycle. So we rolled that out to everybody. And, you know, the feedback we got was, I mean, so much of our workforce, Scott, they weren't in the workforce. 75% of the people that work at Charity Water were not in the workforce during the 2008, 2009 downturn.

• 16:12Scott Galloway?

  Yeah, they're kids. They've never, they've never known this. They've never known this.

• 16:15Speaker 02

  Yeah, they might've been in university, right? So we, we spent a bunch, I mean, we put up tons of charts and graphs, really teaching our team, here's what happened in 2008, 2009, and here's how long it took for these things to recover. We closed the office, I think, six or seven weeks ago. When there were only a few cases in New York City. And we said, look, we'd rather be wrong and just go back to work two weeks later than, you know, be wrong in the most hyper conservative way and have people laugh. I mean, people were laughing at us. They're like, what are you guys doing? You know, this isn't even a thing yet. So I really believe that decisive action and then communicating that is, they're going

• 16:58Speaker 02

  to be the tools that nonprofits need to get through this. And again, moving from this optimism, which serves you so well 95% of the time, but I believe that optimism will be the death of people. The same superpower that has worked so well for them could actually create their organization to go extinct. It could be the extinction factor of the organization in a period like this.

• 17:24Scott Galloway?

  There's so many lessons to draw from that. I think our optimism has turned a little bit into narcissism in the US, thinking that for some reason, we wouldn't get this. That this was a Chinese disease and oh, the Europeans weren't prepared. If we, if this came to America, we'd be able to handle it so much better because we're such innovators and what are we seeing that we have handled this worse probably than any nation in the world. But in terms of key lessons you've outlined for entrepreneurs, one, decisive and pragmatic. And that's Latin for cut soon and cut early. Your job is to survive. And then two, transparency, something that I don't think we're seeing or we're seeing from some leaders and not others, is treating people like adults. We're going to be making cuts.

• 18:07Scott Galloway?

  And then transparency and then over communicating to your investors. I think there's a lot of wonderful lessons. I think generosity, if you think of yourself as a generous person, and a lot of us out there do, generosity is a function of giving to organizations like Charity Water when things just, quite frankly, when they just fucking suck as opposed to when you're 401K and everything else is booming. That's generosity too, but it's a lot easier to be generous in good times. And I would encourage all of us, and I'm going to do this as well, to be generous when it hurts. And let's be honest, it hurts right now. Scott, if somebody wants to reach out and help, what is the easiest way to reach out and how can they help?

• 18:43Speaker 02

  Sure. Just charitywater.org. They can email me, [email protected]. I'm spending a lot more time on my computer these days, just, you know, talking to donors and responding to people.

• 18:54Scott Galloway?

  You, you know, one of the many things I admire about you is that you had sort of a return to your Christian roots. And are a very spiritual person, you know, do you have any advice for us just as people struggling, as people dealing with something like this? Do you have anything you want to share with us?

• 19:11Speaker 02

  I've just been trying to practice gratitude above all else. I mean, it is hard, right? We're stuck in houses. We are, I mean, gosh, it's just a hard period of time. And I've really been trying to just wake up in the morning, sit with my kids. You know, we play a game where we try to list 50 things that we're grateful for. And it could be spring, it could be a lawnmower, it could be, you know, a machete that my son got to hold.

• 19:39Scott Galloway?

  A machete, that's huge.

• 19:41Speaker 02

  We were grateful for thorns the other day. This attitude of, of, as I say with the kids, it's like the attitude of gratitude. When we are done with that, we are transformed as we just think about all of the blessings that we've really been given. And that's not the natural position. I wake up grumpy. You know, I wake up because the kids, you know, both crawled in my bed and I got a crappy night's sleep and, you know, the internet isn't working properly, right? That's not kind of the default position and we've really tried to exercise gratitude. I think the other thing is just trying to exercise that muscle of generosity. I've always believed that the more you give, the more you give. It's just like this muscle and, you know, I was at a Walmart the other day up in the middle of nowhere.

• 20:26Speaker 02

  And, you know, I'm, I'm the obnoxious New Yorker shopping for seven people. And I've got a $70 Lego there, you know, Star Wars Lego. I've got a huge amount of food. I'm shopping for a week for seven people. And there's this local couple who's behind me and they're just watching kind of the excess of the New Yorker. And I just start talking to them. I'm apologizing that it's taking so long. And it turns out the woman just lost her job. She worked in the used car

• 20:55Speaker 02

  business and, you know, she has no idea when that's going to bounce back. And they've got milk, they've got some sneakers, they've just got some, some stuff on the cart behind, on the conveyor belt behind me. And I just remember feeling so. Uh, grateful. I had a job, you know, I've taken a pay cut, but I still have a job. I have healthcare. And I remember trying to tip the Walmart, uh, the, the woman who had checked me out and she said, oh, we're not allowed to take tips here. And then I wound up just waiting five minutes and asking if I could run my credit card for the couple behind me. And it was a hundred and $4. And this woman starts weeping in the Walmart. And, you know, what's your name? Like, how can I thank you? I'm like, you, you know,

• 21:36Speaker 02

  my name's Scott, but it doesn't matter. I have a job and you don't right now. And, you know, it's, it's not a, I'm not telling that. So anybody thinks it's great. I mean, a lot of us have a hundred and $4 and we could do that. But just, it's looking for that opportunity. I wanted to do it for more people. I literally wanted to walk down the aisles of Walmart and see, could I do $42 here, $65 there. So I think it's looking for those opportunities. And the more you exercise that muscle of how can I be a blessing to others? How can I be generous? How can I be grateful? The more you become a grateful, generous person, especially in times like this.

• 22:12Scott Galloway?

  Agreed, agreed. So I'm gonna, just to sign off here, we're, we're off to a great start with the Prop G Show. We're grateful. Being generous is, is giving when things, when it, quite frankly, it hurts. Uh, when I get off or when I finish here, I'm gonna, I'm gonna talk to Scott and I'm gonna do something. And I hope that you all join me and that we lift, we lift up our heads from our own situation right now and continue to think about people around the world that Scott has done for the last 15 years. Scott Harrison, founder and CEO of Charity Water. Thanks for your good work, boss. And we're thinking about you and stay safe.

• 22:44Speaker 02

  Thanks for having me, Scott.

• 22:54Scott Galloway?

  Okay, office hours where I comment on subjects I have absolutely no domain expertise in. Hit it, Griffin.

• 23:00Speaker 03

  Hi Scott, this is Elena Dunn. I have a question for you regarding college admissions. I'm the proud mother of a high school senior named Jackson. Say hi, Jackson.

• 23:14Speaker 03

  And he's in the middle of deciding which college to go to in the fall, or even if he should go to college in the fall. Maybe deferment might be the best choice for him. Any of your thoughts would be greatly appreciated. Thanks.

• 23:31Scott Galloway?

  Elena and Jackson, first off, Elena, the best strategy for getting your son to do whatever it is you want him to do is to advocate for the exact opposite. I love that you called in together. It made me think or gave me sort of a jolt of emotion. I miss my mom. My mom is the reason I went to college. She helped proof my essays, you know, light of my life, convinced me to go to college. My father, not what I would call a sophisticated man, tried to talk me out of college and told me that I should be installing shelving where I can make 18 bucks an hour. Anyways, there's my dad. But look, should you go to college or should Jackson go to college? I think a leap year is a wonderful thing and I err on the side of a leap year for a young man because I find that a lot of young men at 18 are still boys and could,

• 24:14Scott Galloway?

  could use or benefit from a year of seasoning in the real world, whether that's work, nonprofit work, or some travel, or spending time helping others and just getting a sense of grounding, if you will. And people who take a leap year are shown to, first off, 90% of them do in fact return to college. And they're more likely to graduate. When I got to UCLA, I was 17, I was immature. I almost flunked out. I was abusing substances and I think I would have benefited from a leap year. And I think a lot of young men would. Probably the kicker that makes it a really good idea, from a good idea to a really good idea, is the COVID-19 is going to create a lot of shitty first year academic experiences.

• 24:55Scott Galloway?

  And that is, we're all coming to grips with the fact that a $40,000, $60,000 tuition does not get you a great education and that bad Zoom classes, and they will get better, but right now they're bad, is not worth the tuition. So in some, in some, Elena, I think, yes, absolutely. It's a great idea to think about a leap year or a gap year for your son. And by the way, absolutely push him hard to go to college in the fall such that he'll be inclined to take that gap year. Next question.

• 25:26Speaker 04

  Scott, Ted from Natick, Massachusetts, fellow Vesla owner, lover of Delray Beach. I know you're in Gulfstream, but technically you're in Delray Beach. Love that area.

• 25:40Speaker 04

  First thing I want to say to you is you're welcome. Why do I say that? Well, I remember it was September 13th of 2017 and I was at a Code Recode Conference in SoHo and Kara Swisher was the lunch line. I walked up to her and I said, hey, I just listened to your interview of Scott Galloway where he made the prediction about Amazon taking over Whole Foods. And I said, I gotta just tell you, you two have a shtick. I don't know what it is, but you gotta have him on your show more often. And all of a sudden Pivot shows up and I love that. I listen to you guys all the time. So, love that. But, you're welcome. Hey, I was listening to Pivot the other day and Kara was asking you, I think Kara or someone was

• 26:24Speaker 04

  asking you about retail innovation. And I heard something the other day that I just love. Lululemon, one of my favorite retailers in all the world, they actually opened their closed stores to be able to fulfill digital orders. And I love that idea during this time of COVID-19. Instead of having fulfillment centers with lots of people in one space getting close to each other, you've got social spacing, you've got local deliveries, you're rehiring a lot of people in these stores to fulfill all those orders. I mean, it's just, it's omnichannel on steroids and I love that.

• 27:08Speaker 04

  So, I'd just love to get your feedback on that. All right, man? Talk to you soon. See ya.

• 27:12Scott Galloway?

  So, Tad, Pivot is your fault and Brothers in Arms, the Vishla, Delray Beach, and thank you for advocating or singing my praises to Kara Swisher. So, Lululemon, the idea of turning your stores or pivoting your stores from a liability to an asset is not a new idea in the form of distribution or a warehouse. Best Buy saw this early on. Best Buy was basically left for dead and decided that they would start fulfilling out of their 500 stores. And if you order a flat screen television... In Delray Beach from Best Buy, it'll get there faster than if you order it from Amazon as they will fulfill that flat screen TV out of their Boca Raton store. So this isn't anything new, probably the greatest unlock in retail over the last 10

• 27:54Scott Galloway?

  years is Walmart's click and collect where they say, okay, let's turn our 5,500 stores into warehouses that are well-staffed and well-lit. So it's not a new idea. What is exceptional about Lululemon is their passion for product innovation, that great products break through again. If you think loosely about big transitions in capital or shareholder value, the companies that have built the most shareholder value have actually opted out of marketing or opted away from traditional advertising and reinvested that capital in product development. Lululemon is exceptional, 27 or $26 billion market cap. That means you could take Nordstrom, Macy's, Restoration Hardware, Williams-Sonoma, and maybe even still buy Tiffany leftover. So shareholders have been rewarded handsomely, as a matter of fact, they're really not that

• 28:36Scott Galloway?

  far off their highs for being super innovative around product, being totally vertical, drafting off of the incredible growth that has been fostered by Nike and Adidas, who continue to distribute 60, 70, 80% of their product through other parties, third-party retail, such that Lululemon can come in with a higher-end product, tapping into the wealthy 1, 10% who have captured all the gains and build a better brand on top of a better product as they control their distribution as opposed to selling it through shitty retail with a guy in a referee's suit. So Lululemon, vertical product innovation, using their stores as warehouses, gangster, gangster, gangster. Thank you, Ted. Thank you on several levels. Thank you for the question and being an advocate. And also, you're welcome, owning a Vishla.

• 29:21Scott Galloway?

  They are loving, sweet animals. And maybe I'll see you on the beach with our Vishlas. Next question, Griffin.

• 29:27Speaker 00

  Hiya, Prof G. Max Hoppy here from Manchester in the UK. Slightly out of breath because I've just done my daily run. I'm allowed one a day in our country at the moment, and I've just listened to your latest episode of The Prof G Show. So my question, I run an advertising agency in Manchester and all of my clients have been impacted by CV19 and a lot of them have decided to turn advertising off. And it's interesting to see Coca-Cola or part of Coca-Cola's business decide to turn off commercial advertising for the time being. So my question is, what advice have you got to managers of brands that are having to make the decision on whether to continue to advertise?

• 30:10Speaker 00

  And if you do decide to continue to advertise, do you have any pointers on how you can be sensitive at this difficult time when the world really needs kindness and help and not opportunistic advertisers? Thanks very much. Keep doing the show. We really love it, this side of the Atlantic. God bless.

• 30:30Scott Galloway?

  Max from Manchester, thanks so much for the question. I'm a man, you a guy. My son is Man City. So we can, we can argue about that later. So advertising, I just don't think there's any getting around it. I think ad agencies are ground zero for this disruption. And just as in 2008, I worked with the Four Seasons and they did a ton of print advertising. And when the recession hit, they had no choice. When their occupancy went from 94% to 40 or 60% overnight, which is, seems almost quaint compared to probably what their occupancy is right now. They stopped doing print advertising and a weird thing happened. When their business came back, they noticed it wasn't any different, that their print advertising wasn't, wasn't adding a lot of value. And you saw this huge first tectonic shift to digital. You're about to see another tectonic shift.

• 31:14Scott Galloway?

  You're going to see a lot of this, these ad dollars just not come back and people aren't going to miss them that much. Radio advertising was about a $17 billion market in the US last year. I bet it drops to five to 10 this year. It's just going to get absolutely crushed. In terms of how to advertise, I think you have to be very careful about not coming across as too schmaltzy or trying to, it's just a fine line to try and be moving and emotional. I think you talk about what you're doing. I think you talk about how you're helping. It is a decent time to do online advertising because the prices for clicks and ads on Facebook are supposedly down anywhere between 40 and 60%. So, direct response advertising is actually a place to over invest right now for companies

• 31:57Scott Galloway?

  that still have the supply chain to fulfill products direct to consumer. In your business, you're going to have to pivot to more data-driven analysis and insight around strategies. The CMO, basically an ad agency, it used to feed off of being, the way they made their money was taking 8 to 12% of a marketer's budget. Now, they're there to basically coach and advise the CMO, and that can be around allocating capital towards going vertical, how to better spend their ad marketing dollars on more digitally-driven, more measurable means, and then being thoughtful about brand identity and how that is expressed and cemented across different touchpoints. But I think it's a difficult time for advertisers. I think you have to be very careful not to come across as opportunistic, and I would

• 32:39Scott Galloway?

  argue that a lot of traditional broadcast advertising is never coming back and is moving to digital channels. I think it is your job to be the advisor to the CMO, help them through that transition adroitly, and help them understand how they rethink their CapEx around product or verticalization. Max from Manchester, what a nice call in. Best of luck to you and God bless you as well. We love your questions. Please submit them to [email protected]. Again, that's [email protected]. Support for the show comes from Upwork. Trying to scale your business? At some point, you're probably going to hit a point where you need some help. Sometimes, the best way to break through that is bringing in the right talent at the right time. Upwork can help.

• 33:21Scott Galloway?

  Upwork is a one-stop platform where you can find, hire, and pay expert freelancers across more than 125 categories. Whether you need specialized skills for a single project or extra support to keep up with demand, it's easy to connect with experienced professionals, review their work, and find the right fit. You can move faster without taking on the commitment of full-time hires. And for businesses that need the very best talent, Upwork Business Plus provides access to the top 1% of freelancers on the platform. AI-powered matching connects you with qualified candidates in under six hours, cutting down the time spent searching. Upwork also takes care of contracts, payments, and other administrative tasks, so you can spend less time managing logistics and more time focused on what's next. Visit upwork.com/profg right now and post your job for free.

• 34:05Scott Galloway?

  That's upwork.com/profg to connect with top talent ready to help your business grow. That's U P W O R K dot com slash prof G. Upwork.com slash prof G. So like a lot of parents with way too much time on their hands with their kids. By the way, my kids are mostly awful. They occasionally have their moments of wonder where I understand why I've decided not to eat them and keep them alive, but for the most part, they're like Iraqi insurgents that have taken over the household. And one of the things we do to maintain our sanity is, and this has been a lot of fun,

• 34:47Scott Galloway?

  is we are watching movies, a lot of movies, but I get to pick movies that I watched when I was their age. And it's been tremendously rewarding. And one of the movies we watched earlier this week is adapted from a wonderful book called The Little Prince. And there's a wonderful opening line, and that is, "What is essential is invisible to the eye." And I'm struggling with this whole thing, as I imagine a lot of people are, and I feel embarrassed saying that because I'm in a comfortable house, I have money, I'm not worried about my mortgage, everyone is healthy, I don't know anyone who has died from COVID-19, but I still find this incredibly scary and stressful. It's putting a real strain on a lot of my relationships. And something that helps me is late at night, when I'm alone, I'm a night person, the first

• 35:32Scott Galloway?

  thing is I drink, and I know you're not supposed to say that, but I find drinking helps. I don't get totally fucked up out of my head, but I do have a couple of drinks and I kind of wind down. And I'm purposely trying to go through exercises around gratitude. I'm thinking about all the wonderful relationships I've had. I think about the wonderful, the fact that I get to do something I enjoy and I love. And I think about my kids and I find the thing that is most comforting for me, that is most essential for me, is knowing my kids are healthy and asleep in the other room and that they feel safe around me. We can literally go at it during the day. I scream at my kids. I'm not a screamer, but lately I find I'm screaming and I'm embarrassed by that, but I haven't been screaming at them. But when we get towards bedtime, I put them down and we have a ceremony.

• 36:17Scott Galloway?

  And as mad as I am at them, or as mad as they are at me, I stretch them, I adjust their back, I crack their back and I rub their heads. And then I sometimes just lay on top of them. And we have this game called I Love You More. And we talk about I love you more than pizza. I love you more than Babsha, who's their grandma. And they know that that is the time when, distinct of what has happened that day, we reconnect. And that sets me off into my nighttime kind of moment of gratitude where, sitting in another room, I recognize all my blessings, but more than anything, that comfort of having the most important things in my life, my children, safe and sound and knowing that

• 36:58Scott Galloway?

  they're sleeping, knowing that they feel secure, knowing that they don't, as far as I know, have some of the fear and some of the heartache that so many of us or so many people are experiencing, gives me tremendous comfort and ease. And it's not something you can touch, it's not something you can feel, but it is essential. What is essential is invisible to the eye.

• 37:24Scott Galloway?

  Our producers are Griffin Carlberg and Drew Burrows. If you like what you heard, please follow, download and subscribe. Hit the subscribe button. Hit the subscribe button. Come to daddy, hit the subscribe button. Thank you for listening. We'll catch you next week for another episode of The Prof G Show from Section 4 and the Westwood One Podcast Network.