Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen

Scott and Ed discuss the rally in the Euro and German bonds, Chinese state-backed funds pulling out of U. S. private equity, and Bill Ackman’s investment in Hertz. Then Ryan Petersen, the founder and CEO of Flexport, a leader in global supply chain management, joins the show to unpack the real-world impact of tariffs on American businesses. He breaks down how the levies will drive inflation, shares his outlook on the trade war with China, and explains how supply chains are rapidly reshaping. Subscribe to the Prof G Markets newsletter Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X 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.

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• 1:29Scott Galloway?

  Today's number 70. That's the percentage of people who say they're polite to AI models when interacting with them. Ed, which vegetable has the worst manners? What? The rutabaga. That's terrible.

• 1:52Scott Galloway?

  Got it, the rutabaga? Yeah, got it. Rutabaga. Rutabaga, welcome to Prop G Markets, Ed. Welcome to Prop G Markets. Today, we're speaking with Ryan Peterson, the founder and CEO of Flexport. Now, there's a real name for a real man. First, Ed, it's time for rutabanter.

• 2:15Ed Elson?

  I always sound depressed when you have to intro this podcast, just a little bit. It's like, oh, now I gotta talk to this guy again.

• 2:23Scott Galloway?

  Well, it's only like my 11th fucking Joey Baggett on its podcast today. I don't know where, are you raging? Just, who am I? Well, listen, you openly lesbian. Oh, wait, that's Kara. Never mind. I don't know where I am. What are you up to?

• 2:36Ed Elson?

  I'm not up to much, Scott. I'm in New York. I'm just grinding away, trying to make this podcast the best it can be. But I'm very happy, though, because we won the Webby's People's Voice Award.

• 2:47Scott Galloway?

  That's right. That's right. Say more. What does that mean?

• 2:54Ed Elson?

  Yeah, we, we won the Webby. It's interesting. There are two awards. One is decided on by the judges or the executive committee of the Webby Awards, and we did not win that prestigious prize. But we did win on the popular vote, where the people decide what is the best business podcast. So I think that's honestly a greater honor. The, the elites don't love us, but the people love us. We're, we're the populace.

• 3:19Scott Galloway?

  Fucking communists, Politburo bitches.

• 3:21Ed Elson?

  Exactly. So for that, we have only our audience to thank. So thank you, everyone who voted. We're very, very excited. I'll be getting my first trophy for anything. And we'll be at the Webby Awards in a couple of weeks, and I hope, Scott, maybe you'll join us. Maybe you'll fly in. No.

• 3:42Scott Galloway?

  What's the last award you won? Seriously, what's the last recognition or award you won?

• 3:46Ed Elson?

  I won a prize for my thesis in college.

• 3:50Scott Galloway?

  What was your thesis?

• 3:51Ed Elson?

  If I talk about it, you're gonna start making fun of me and it's gonna bore the hell out of you. But it was on ancient Greek festivals.

• 3:57Scott Galloway?

  Ancient Greek festivals. Wow. All right.

• 4:00Ed Elson?

  As you may know, I was a classics major. Yeah. I won the Keeney Prize for Best Senior Thesis. So that was actually a pretty good prize, and I won some money for it.

• 4:09Scott Galloway?

  That's a pretty big deal, right?

• 4:10Ed Elson?

  What about you? What was, what was the last, maybe, maybe award that, that people wouldn't know about or that I wouldn't know? I know you won like a Webby and you're the New York Times Bestseller and you're the Poets and Quants Best Business Professor of the Year, et cetera, et cetera. But maybe some like interesting.

• 4:26Scott Galloway?

  Did you have a high school poll? You know, like most popular, most handsome?

• 4:30Ed Elson?

  Oh, yeah, yeah.

• 4:30Scott Galloway?

  I won most comical.

• 4:32Ed Elson?

  Oh, really?

• 4:33Scott Galloway?

  That was funny when I was young.

• 4:34Ed Elson?

  So what happened then? How did things change?

• 4:37Scott Galloway?

  The joy got starched from my life. I don't know, sort of the bitter sadness of everyday drudgery just drove all joy from my, from my soul, but no, I'm still, I still got it.

• 4:47Ed Elson?

  Yeah, I think you do.

• 4:48Scott Galloway?

  Enough of the shit, get to the headlines.

• 4:52Scott Galloway?

  Now is the time to buy. I hope you have plenty of the world at all.

• 4:59Ed Elson?

  German bonds and the euro are climbing as investors look to the eurozone as a safe haven. The shift follows Trump's latest attack on the Fed Chair Jerome Powell on Truth Social, where he called him, quote, "a major loser." The post triggered a sharp market reaction. The major indices fell more than 2% and the dollar sank to a three-year low. Chinese state-backed funds are halting investments in US private equity as trade tensions between the two countries intensify. The freeze on allocations is reportedly a direct response to pressure from the Chinese government. And finally, Bill Ackman's Pershing Square has built up a nearly 20% stake in Hertz, citing the company's strong position amid tariffs. In a post on X, Ackman said higher tariffs could drive up used car prices,

• 5:43Ed Elson?

  boosting the value of Hertz's fleet. Scott, let's start with these German bonds. I just want to frame what's happening here because, you know, last week, we talked about what was happening to the US Treasury market and also what was happening to the US dollar, where we saw a sell-off in, in both categories, which is very rare for that to happen simultaneously. And the question we were asking last week was, okay, well, if there's this giant sell-off here, then where is the money going? You know, if you're selling your US stocks and you're selling your US Treasuries and you're selling your US dollars, then what are you buying?

• 6:26Ed Elson?

  What are you converting that capital into? And so what we're seeing here... Is basically an answer to that in the short term. In the short term, what are investors buying? Where is the capital going? Well, one is going to euros and two, it's going to European debt, such as the German Bund here, which is Germany's equivalent of a treasury. So the euro is up 5% in the past month against the dollar. The yield on the two-year German Bund is now 2% lower than the yield on the two-year Treasury in America. And so what we're witnessing right now is this very interesting dynamic where it's perfectly symmetrical to what is happening in the US.

• 7:08Ed Elson?

  So in the US, you have this rare combination of a sell-off in the bond market and in dollars. And then in Europe, you have this very rare combination of a rally in both bonds and in the euro. So I think the answer couldn't be clearer. Right now, the world is selling America. We knew that, but as of this week, the world also appears now to be buying Europe. So Scott, your reactions to what's happening here?

• 7:36Scott Galloway?

  The idea of the German bonds become an alternative to the global dominant system of US treasuries is sort of interesting. It's a tiny market compared to the US treasury market. It's three trillion compared to 30 trillion for US, limiting its replacement potential. And they've also historically suffered from scarcity in sub-zero yields, which is really interesting. You have to pay them to hold on to boons for as a store of value. But increased issuance post-German stimulus is easing those constraints. The question is how permanent or structural these shifts? That even if the markets recover, even if there's a different approach to governments or that, you know, they come out and say, no, the Fed is independent. Slowly but surely over time, big, big institutions have increased their allocation.

• 8:21Scott Galloway?

  They each have sort of a certain percentage that they put into asset classes and they have models such that they can justify higher prices. Whereas my favorite is the person running all the Nevada pension funds is one guy who makes a reasonable living in a bad office, who just invests in ETFs from Vanguard and has outperformed, you know, the 700 people working on Harvard's endowment. But they try to figure out risk models and they have asset allocation. All right, we're going to put X percent in venture, X percent in growth equity. And consistently, I think over the last 20 or 30 years, they've increased their allocation. To private equity because that's been an asset class that has overperformed. And I wonder how many institutions are just going to restructure their allocation in terms of percentage away from the amount of capital they allocate to the US market.

• 9:05Scott Galloway?

  So I think this is structural.

• 9:07Ed Elson?

  Exactly right. And by the way, I mean, our next headline here is about private equity and this turn away from US private equity. But you mentioned, before we just move on to that, you mentioned this idea that institutions are turning away from these assets. And I just saw another headline explaining how Yale is completely unwinding its private equity positions right now. And I think what we're seeing is large funds, large institutions are trying to figure out a way to slowly get out of America and figure out ways to invest in Europe. And I don't think that means that you suddenly convert overnight. You suddenly buy into the biggest PE funds in Europe.

• 9:51Ed Elson?

  But I do think it means that what they're doing is they're shifting to Europe, they're converting into euros in preparation to make these investments. They're converting into the European debt markets. And I think what will happen is that's the preliminary step. That's the first part of the rotation, of the transition out of America. And I would imagine that what will happen downstream of this, once we sort of emerge from the uncertainty, is while they are pouring into these European safe haven assets, i.e. bonds, I think the next step is they're going to start getting into more risky assets. They're going to start getting into the European stock market.

• 10:32Ed Elson?

  Maybe they'll start getting into European alternative assets like European VC, European private equity. Let's just talk about what we're seeing here with China. So China is halting all of its investments in American private equity. And that is significant when you understand the role that China has played historically in the US private equity markets, which is to say, a big role. Some of the biggest funds and the biggest names in private equity have taken in big investments from China, funds like Blackstone.

• 11:07Ed Elson?

  The Chinese Sovereign Wealth Fund was one of their biggest investors in the IPO. Funds like TPG, Carlyle, which continues to co-invest with China to this day. And China has said there's no more investing in private equity in America, which is actually quite a big deal for the private equity industry. And we just saw Blackstone's earnings last week. And Schwartzman, who of course was a Trump supporter, he appeared to be quite rattled by these tariffs. He said, quote, tariffs have dramatically impacted investor sentiment. He said, we believe that false resolution is critical to mitigate risks and keep the economy on the growth path. So this could be a real shakeup to the private equity industry in America.

• 11:52Scott Galloway?

  China's probably said, why on earth are we strengthening relationships with the US who treats us poorly? Let's take some of our capital and use that to strengthen relationships with other nations. Chinese investments in FTSE 100 companies have surged, reaching nearly 90 billion, a 40% jump from 2022. So when we talk about a rerating of American stocks down from a P of 28 to Germany again, 22, Japan 18, China 14. Well, what actually happens there? The mechanics of that are that people sell US stocks and buy stocks in Japan, Germany or China. And I think you're saying that. And that is if China, and they're actually not the largest US investor, but they're a significant enough investor where if they pull money out

• 12:37Scott Galloway?

  and start putting it into other markets, that again, that rerating begins to happen. This has more impact actually on private market valuations. And some people would argue, well, that ultimately impacts public company valuations. But a lot of, when there's less money for these private equity companies, what that means is that entrepreneurs looking to sell their business have fewer bidders and the valuations start to come down. And what's also interesting is I bet they're clearly targeting the eight or 12 people in the economy that have a great deal of influence over Trump. So again, this is just another, another point of light around why we're going to see this rerating. And then, and it's small, but it does it, does it carry a trend?

• 13:20Scott Galloway?

  Because you got to think that like CIC is one of those sovereigns everyone talks about, Mubalaba, PIF, and I think they're.

• 13:27Ed Elson?

  This is the, this is the Chinese Sovereign Wealth Fund.

• 13:30Scott Galloway?

  I think people take their actions very seriously. They're very smart, they're very strategic, they're very long term. So it's more of a branding and a headline, I think, risk than it is actual, the actual capital because relative to other nations, it's less capital than you'd think. But this might be, again, this just sends another signal that the US is no longer the safe haven for capital, that there's a capital flight, which again, creates that rerating down.

• 13:54Ed Elson?

  And you, you, you mentioned that China is a significant investor, but not as significant as other nations, which is true. But I think the question is, well, what if other countries start to follow suit? I mean, we have five and a half trillion dollars of direct foreign investment in the US. More than half a trillion of that comes from Canada, a trillion of that comes from Asia, but probably most concerningly, almost three and a half trillion comes from Europe. And for as long as this country has existed, those numbers have gone up every single year. And so I think the big question is, what happens? I mean, clearly, the China number is going to go down. But what happens if the Canada number, number goes down and the Europe numbers goes down? What if Europe goes from a three and a half trillion dollar

• 14:39Ed Elson?

  position to a two trillion dollar position, a one trillion dollar position, even lower? I think those are the big questions here that we need to pay attention to. So again, yes, China, cutting off the funding to private equity funds is not that big of a deal on a pure dollar value basis. But it's a big deal when you consider what it might do and how the other dominos in the line may fall.

• 15:06Scott Galloway?

  The best strategy for career success is, I think, is relationships because you want to be put in a room of opportunities, even when you're not physically present. I think what Trump has done is that Trump has put America and our markets and our assets in a room full of hostilities. And that is, we just don't know who's going to stab us and where or what they're going to do. But there is some very bright people all over the world with a lot of capital are trying to figure out, quite frankly, how to punch back.

• 15:33Ed Elson?

  Okay, let's talk about Bill Ackman and his new 20% stake in Hertz, which he's been tweeting about. He's talked a lot about how this company is uniquely positioned, especially amid these tariff policies. And he's talking about how these tariffs are going to drive up the price of used cars. And of course, Hertz has this massive fleet of used cars. So Scott, your reactions to Bill Ackman and this kind of creative investment that he says is a response in large part to the tariffs?

• 16:07Scott Galloway?

  I appreciate the art in it. It's like when you see interpretive dance, you think, wow, or modern art, you think, wow, that's really creative. And then kind of 10 minutes in, you're like, this makes no fucking sense.

• 16:18Ed Elson?

  That's really good analogy.

• 16:19Scott Galloway?

  This is interpretive dance. To decide that, okay, so he has an asset base that's gone up in value, or Hertz has an asset base that's gone up in value. But in order to maintain that asset base, his costs will go up because for every car they sell, they're going to have to replace it with a higher priced car. I guess the notion is that because cars are more expensive, more people will rent than own, or I don't. And I think the countervailing force of a massive decline in tourism, which I would imagine makes up a large portion of their rental market, I think that negative force will be greater

• 16:59Scott Galloway?

  than the increase in the value of their current fleet. So I don't, to me, I think this is really creative. And Bill has such a strong brand in the industry that when he puts out a tweet, the stock literally doubled in value. But this company-

• 17:17Ed Elson?

  It did double, literally. The shares rose 100%. Yeah.

• 17:21Scott Galloway?

  But the company has $6 billion in debt with a market cap of around $3 billion, including a half a billion in junk bonds. They lost $3 billion last year. In some, I think Hertz is just a shitty, in a shitty business.

• 17:35Ed Elson?

  I think what this is, is just sort of a simple distressed asset activist play. I mean, you have this company that has fallen around 90% in the past four years. And I think this is sort of no different from any other activist investment. He sees opportunities, he's looked at the debt and he sees, you know, he sees upside, given how Hertz has been beaten down over the last few years. What's interesting to me is the way he is positioning this as a tariff play. And I, I feel that this is probably going to become a theme now where everyone's going to figure out a way to sort of retroactively justify their investment theses as a response to tariffs.

• 18:18Ed Elson?

  And that's sort of what he said. I mean, his, his argument, I can just quote him directly. He said, "Hertz is uniquely well positioned in the current tariff environment where auto tariffs are likely to cause used car prices to rise. Hertz owns a fleet of over 500,000 vehicles valued at approximately $12 billion. A 10% increase in used car prices would equate to a $1.2 billion gain on its auto assets." So he's basically saying, you know, we saw what was happening in tariff world and we decided to, to go, to go in and buy Hertz. But what's, he's not really acknowledging is the fact that they actually started building this position last year, you know, before any of these tariff changes came about.

• 19:02Ed Elson?

  Yes, it was after Trump won, but I don't think he could have known that the tariff environment would be this crazy and that it would be this targeted against cars. And in fact, you see his reaction to Liberation Day where he was all up in arms on Twitter and he was massively disapproving of it. I think to me, that is an indication that Bill Ackman did not expect the tariff policy to play out the way it did. So I think this is sort of him trying to retrofit this 40 chess tariff move as a way to explain what is essentially just kind of a regular activist investment.

• 19:41Scott Galloway?

  It reminds me, there's been an activist play about 10 times at a company called Macy's and the play was always the same. And that is the underlying real estate is worth more than the company. And they did the analysis and they were right in that the stock was trading at a market cap or an enterprise value of 2 billion and they own 3 billion in real estate. So, okay, the company is undervalued. The problem is, it's like telling someone, all right, your heart and your lungs are worth millions of dollars. And it's like, well, okay, I'm kind of fond of my heart and lungs. And that was

• 20:11Ed Elson?

  Right.

• 20:11Scott Galloway?

  No CEO was willing to harvest the organs of Macy's. They weren't willing to shut down Macy's and sell the real estate. So, okay, great. Your cars just went up in value 10%. What, what does that mean for, how do you monetize? How do you harvest that organ?

• 20:29Ed Elson?

  Great point.

• 20:29Scott Galloway?

  Because Hertz isn't going to just sell its fleet tomorrow. They, they like to believe they're in the business of running cars. It's just, and, and what you're going to find here, and the thing that's going to drive the stock price over the medium and the long term, the short term, it's Bill Ackman's brand and in this interpretive dance. But over the medium term, and even the kind of extended short term, the thing that's going to dictate this company's stock price, unless it becomes a meme stock, which is possible, but I don't think it will, is the growth or decline of the business. And the revenues fell 3% last year, and they're probably going to fall more than that this year. It's a highly levered business in a shitty business that's in structural decline

• 21:10Scott Galloway?

  because of ride hailing and then has the one, two punch of a cyclical kick in the nuts or an exogenous kick in the nuts from a decline in tourism. So, interesting to look at, you know, fun, like, who the fuck is the rich parent that put their kids through modern dance and let them do this with their life? Anyways.

• 21:29Ed Elson?

  It almost doesn't matter though, because the markets like Bill Ackman. And he, he made a clearly convinced the markets that, you know, maybe it's a meme stock. I mean, it went 100% in a day. That's probably what it is. But for now, he's, he's winning interpretive dance or not.

• 21:48Scott Galloway?

  Agreed. He's got a standing ovation because everyone's looking at each other going, wait, that was great, right? I'm cool if I clap for whatever I just saw on stage, right? This is unique and different.

• 21:58Ed Elson?

  It's art. Yes. Perfect analogy. I love it. We'll be right back after the break for our conversation with Ryan Peterson. If you're enjoying the show so far, be sure to give the Prof G Markets fee a follow wherever you get your podcasts.

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• 23:40Ed Elson?

  Welcome back. Here is our conversation with Ryan Peterson, the founder and CEO of Flexport, a leader in global supply chain management and one of the largest customs brokers in the United States. Ryan, good to see you again.

• 23:52Ryan Petersen?

  Nice to see you. Thanks for having me on.

• 23:56Ed Elson?

  You operate one of the largest supply chain management and logistics companies in the world. I feel that you are kind of in the eye of the storm when it comes to tariffs. So just very basic question. I mean, just give us the rundown. What are tariffs doing to businesses on the ground that you're experiencing? And how is this all affecting supply chains around the world?

• 24:20Ryan Petersen?

  Well, the eye of the storm is supposed to be really calm. I don't feel like we're there right now or right in the middle of it. It's creating... In a word, I would say paralysis, especially hurting small business. Bigger companies tend to have factories in multiple locations. They kind of load balance. They shift production to Vietnam. Even for the same item, they'll have multiple factories. Small business doesn't have that luxury and a lot of small businesses are buying from China. It's very hard. Like they're kind of the back of the line. If you want to go to a new country and say, hey, I need you to produce this good. And they go, sure. How many you need? You go, I need 500 of them. They, they tell you to pound sand. They're, they've got a long backlog from kind of the, the Fortune 500 that's setting up mega factories and, and they don't really care about taking these small batch production orders out of small business.

• 25:04Ryan Petersen?

  So those are the ones who are kind of still stuck producing in China right now and struggling to find options. And then the reason I use the word paralysis is it'd also be sort of crazy to shift your manufacturing when we know there's this looming new information that's going to come out in two and a half months or so. When they tell us what the new duty rates are, we have a 90 day pause, but in the meantime, you're either too late or too early to move your manufacturing. Too late, you should have done it by now and too early, might as well wait two more months and see what the duty rates land at. So, but people are freaking out. I mean, 145% duty, you're going to see a lot of businesses fail. A lot of shortages, frankly. Ocean freight bookings out of China, China to US trade lane are down 50% just in the weeks since the tariffs hit.

• 25:49Ryan Petersen?

  So that's going to lead to shortages, mass inflation, business failures, unemployment, all sorts of second order effects that we can't even predict.

• 25:58Ed Elson?

  It sounds like small businesses are being hurt more so than larger businesses. And the reason they're being hurt is because small businesses are more reliant on China than anyone else. Would that be the right characterization?

• 26:09Ryan Petersen?

  There's that. They also didn't have the great lobbyists that Apple and Nvidia and others, other guys had to keep their products non, you know, they, they got exemptions for smartphones for a lot of other categories. So. That's those aren't small businesses don't produce smartphones, right? They're producing furniture and apparel and home goods and these types of things that are hit with these crazy duties.

• 26:30Ed Elson?

  Could you take us through what these tariffs actually are at this point? Because it's it's just so difficult to track and they go up, they go down, they're canceled, they're uncanceled. What are the actual tariff rates in America today? Not what they're supposed to be in a week or whatever, but what are you actually paying if you're shipping something into the US today?

• 26:53Ryan Petersen?

  As of April 22nd, so the first container ships arrived yesterday that are subject to the new duties out of China. They left, if it left after midnight on April 9th, it's getting hit with with 125% duty on top of whatever pre-existing duty existed before. So that's from China. It's 10% for rest of world on top of whatever existed before. So and those for it takes a while to cross the ocean, right? So the first ships arrived last night and then so going forward, presumably all the ships are now subject to this 125% duty rate. And then, yeah, a lot of a lot of products already had a 25% duty. The maximum, I think it was syringes for whatever reason are at 100 at 245%, but that's pretty rare.

• 27:37Ryan Petersen?

  It's usually most goods are around 150% furniture, like a couch is 179%. Now, what consumers need to think about, that's the price of the that's applied to the cost of the goods. That doesn't mean prices are going up that much. That's the cost to the company you buy from goes up by, call it 125%. Typically, these companies, if they have a good business, they probably are marking stuff up three times because they got to pay for a lot of overhead. They got to pay for their whole team, their marketing, everything else. So, you know, like if they're marking it up 3X and they're 100% duty, just a simple math, your your price is going up 30%, somewhere around there. So, yeah, it's definitely going to lead to price hikes. Now, the real inflation, like all the inflation modeling that I've seen people talk about

• 28:22Ryan Petersen?

  is doing that simple math, which I'm not that good at math in my head. So somewhere around what I just said, but the real inflation spikes are going to come when there's shortages, like. Ocean freight is down 50%. There's going to be a lot less stuff. Whoever has stuff has cornered the market and can charge whatever they want. And that's where you see kind of like real and kind of crazy hyperinflation. I don't know if hyperinflation is a technical term. I don't know if we get there, but, but where you see really high inflation is, hey, you're the only guy that got your furniture in before the tariffs. You charge a lot. The other people didn't bother importing. You know, you can charge whatever price you want if you're that guy.

• 28:59Ed Elson?

  That tariff, the 125%, who actually pays that? You know, who in, who in the transaction is paying? Is it just, you know, you, you buy a sofa from Ikea, whatever they ship it in? Is Ikea paying the tariff or is it split among people?

• 29:15Ryan Petersen?

  Yeah, so this depends on the terms of trade. Most trade is done where the importer pays the tariff. Importer pays the duties. U S is, it's actually a really interesting thing to cover that I don't, I think hasn't gotten enough attention. The United States is one of the few countries, U S, Canada, and, and a lot of Western Europe. So it seems to be like a product of Western civilization in some way. But these countries allow foreign companies to import goods without registering an entity. It's kind of a weird thing. Like if you want to import something into China, you got to go set up a Chinese entity. And then you can, you know, that entity can import goods into China. In the U S, Chinese companies and, and any company in the world can just import stuff into our country without creating a local entity.

• 29:57Ryan Petersen?

  Now, this creates real problems for enforcement because there's now huge incentives to lie about the value of your goods, right? You save 100, if you, if you say you import a hundred thousand dollars worth of furniture, tell the government it was 10,000, you just cut your duty bill by 90%. And so there's a lot of this fraud now happening. It's escalating like crazy where people just lie. And then if they get caught, like Customs and Border Protection does not have agents in China to go chase you down. Like you're not, uh, those people kind of disappear, create a new shell company, keep going. And I know Scott will love this, those merchants get to keep their Amazon account. With all of its product listings and reviews and they just, you know, now a new shell

• 30:38Ryan Petersen?

  company keeps importing the goods, keeps selling. So Amazon merchants, 60% of them are these Chinese companies where they import. There is no American company at all. Chinese company imports, sells online on Amazon, gets busted for tariffs, spins up a new shell company, no, no, you know, just keeps going. So that's something I'm surprised that they haven't addressed in all of this. They've kind of taken this 40,000 foot macro view of the tariffs with crazy kind of general assumptions that, you know, we've heard about Penguin Island and everything, but they miss like the micro, like here's the real fraud that's happening. Like fix that.

• 31:11Scott Galloway?

  What do you hear from trying to describe the vibe you're getting from these big, medium and small retailers? I mean, Walmart and Target, this affects all the way down to the little guys. Do you think a few of them go out of business? Or is this really kind of a meteor that could take thousands of these guys off the table, if you will?

• 31:31Ryan Petersen?

  If they don't change anything in this 145% duty sticks on China, it'll, it'll take out like mass bankruptcies. We're talking like 80% of small business that buys from China will just die. And millions of employees will go, you know, we'll be unemployed. I mean, it's sort of why I'm like, they obviously have to back off the trade. Like that can't be that they just do that. I don't believe that they're that crazy.

• 31:57Scott Galloway?

  But aren't you also saying China will likely not back down because they probably have done the math?

• 32:01Ryan Petersen?

  I just think the US backs down and China doesn't.

• 32:04Ed Elson?

  You think 80% of companies that get shipments from China will just disappear and millions of employees laid off?

• 32:12Ryan Petersen?

  I think so, yeah. There's 145% duty and people, you know, don't have to buy those things. A lot of what we buy from China is kind of discretionary spend. You don't have to buy it. When the price goes way up, you shift your spend to something else. You know, we have a customers that ship, that buy pizza ovens in China for your, like for your backyard. They're really cool products. When the price goes up 50% or more. You might just go out and buy pizza from Domino's or something, right? Like it's literally, there's a substitute there that is made in America that's not taxed. And you know, you can see shift, spend shift out of these categories really quickly.

• 32:49Ryan Petersen?

  So yeah, I think, I think you're looking at something pretty catastrophic to the, to the point where I don't actually believe that they can hold the line, you know, the classic game of chicken. You got two guys driving right at each other in their cars and first one to swerve loses and the other guy gets the girl, right? And like this, in this scenario, you can kind of game theory this out like, okay, we're, we're two cars headed straight at each other, China and the US. Now there is a scenario where we're both parties, neither party swerves and they both die. Like that's a possibility, but, but now evaluate it from both sides, point of view. China, the Chinese people, the Chinese leadership looks at it and go, hey, this is being done to us by this foreign imperialist power.

• 33:29Ryan Petersen?

  They'll use whatever language they use, but it's being done to them by a, by the other, by the other party. On the US side, all of us look at it and go, this is being done to us by our own leadership. Like, you know, we don't have the same resolve for, you know, because of like just that dynamic. Second, we have way more feedbacks back to our government to put pressure on those both through elections, through markets, the bond market, there's all kinds of things. Um, American people are way softer. The Chinese have suffered much worse. They can, they can bear this grin and bear it, they'll be fine. They've gone through worse, uh, in their history and their recent history even. And so I just like, if you just look at those two dynamics, one of these sides is going to budge. And if, if neither side budges, I think it's catastrophic for both economies and, and ultimately for the people of both countries.

• 34:13Ryan Petersen?

  But if one side's going to be a buzz, it seems like it has to be the United States. As iron will, as Donald Trump may be and may want everyone to think he is, I just think the forces are really strong here.

• 34:22Ed Elson?

  And just on that point, I just saw a headline coming into this recording, which is Besen sees de-escalation with China. Situation unsustainable. So I, it certainly is pointing in that direction based on what you say. It could be that by the time this episode airs, they, they have budged.

• 34:39Ryan Petersen?

  Yeah. Now the question is, does Trump listen to Besen or somebody else? Who knows, you know, I mean, Besen seems like a rational guy who's got a lot of experience in the markets and understands what it means when equities go down and bonds go down at the same time. Like this isn't normal.

• 34:50Scott Galloway?

  You're sort of the helm of the bob sledd in terms of visibility into the supply chain. It seems like a lot of just the perception of us as a reliable partner is is being eroded. How do you see the supply chain reconfiguring? What, once wherever the tariffs level out, and I realize that that's a big, you know, a big open-ended question, but how do you see? How do you see, generally speaking, the worlds, the way the world gets sources, manufacturers, and distributes products? When you, you obviously have to allocate capital as a CEO. Like, what is Flexport? Where do you see opportunities? And how are you reallocating capital around which countries, which supply routes you're

• 35:34Scott Galloway?

  going to overinvest in and divest from?

• 35:36Ryan Petersen?

  US consumer is still king, but that also revolves around the US dollar being strong. It's come down a lot. I think it's down from, down about 6% or so in, in the last few weeks since all this started. That degrades our consumer purchasing power and therefore, you know, companies will look for customers in other markets. But, you know, when it comes to supply chain, yeah, there, there will be a reconfiguration out of China. That's an ongoing trend, by the way, for over a decade as the labor costs in China's just gotten higher and higher. Yeah, I remember 10 years ago at a shipping conference, a guy saying that they were shipping thousands of containers a year of used manufacturing equipment from China to Vietnam to like, like basically lift and ship factories down there because labor cost is so much cheaper.

• 36:21Ryan Petersen?

  We're definitely, we're doing a few things. We, I created this program, we call it the Marco Polo program, but it's basically to take flex porters from around the company and move them into these new emerging markets. We have about 400 employees in China. We got 50 in Vietnam and then a lot of the other Southeast Asian countries, we only have a handful of folks trying to serve that giant market. So we're shifting, trying to move talent, create incentives for people to leadership program to go down there and, and help us grow in those regions. We're getting a lot more focus on intra-Asia moves. One of the interesting things that's not intuitive at all here is that trade might actually increase from this. The market finds a way. And so if you put heavy duties on Chinese products, you now created this incentive to move components from China down to Southeast Asia.

• 37:08Ryan Petersen?

  Assemble them, do what's called a substantial transformation. You have to do enough value-added work and add other components that this can now be, say, made in Vietnam, and then you ship it to the US. Well, now you've got two logistics moves. Your trade has gone up, even though you've, you know, the system is far less efficient. So we're doing a lot of stuff like that, like help people with tariff engineering, help people understand the advisory role of things, like what is, what qualifies as substantial transformation, that stuff. And then the biggest thing you see behind me, I have this model airplane. We, Flexport has three 747s dedicated that we fly a lot of Chinese e-commerce goods. And that, we're modeling that business to go down between forty, go down 60% to 95%.

• 37:51Ryan Petersen?

  We're, we don't know, but it's going to drop dramatically. So we're, we're reconfiguring our network on that. They've been flying South China to US. We're, um, we've got one of them going to redeploy from South China to Europe. We got one that's going to go Vietnam, stop in Korea. We got one that's just going, I mean, we're making deals right now, trying to figure out, hey, how do we keep these planes full? We try not, we try to be asset light, but we made those deals during COVID when there were no capacity of passenger airplanes. 50% of the world's air freight flies in the belly of passenger planes. So when there was no capacity, we went out and signed these long-term deals. So we're sort of, I wouldn't say stuck with it because I would do that deal again 10 times out of 10, it's made a lot of money over its lifetime.

• 38:34Ryan Petersen?

  But at the moment, we have some assets that are, it's the asset owning logistics companies that are going to feel the pain here. If you don't have any assets, you kind of flow with the, uh, with the tide. But if you have assets, you know, you could be underwater.

• 38:45Ed Elson?

  Is there any indication from what you've seen, Ryan, that, that these trade partnerships are building among the world and trade is increasing for everyone except for America? This idea that, you know, if, if we're going to build this, this wall around us in the form of tariffs, the world's going to keep on chugging along. People are going to keep, continue to trade goods. It's just that they won't trade with the US. Is that a trend that you think is actually? Viable, is that something that you think we would see?

• 39:15Ryan Petersen?

  Maybe, but like, you know, a lot of these analyses forget that trade is not zero sum, it's positive sum. By definition, both parties are better off when they do trade. That's why they do it. And so, I mean, if the US backs off here, it's going to lead to recession all over the place. There'll be less consumer demand in other markets. It's like these, these very complex systems with second or even the second order effects are hard to model, much less third, fourth order. So this, it's, it will not be like a graceful transition and the, oh, now I'll just sell it to someone else. I mean, you would have sold to them already if they, if you could have, right? So it's going to be kind of ugly. And then the, the big thing that people are missing here is let's say they go do a deal right now. Well, 50% of bookings

• 39:56Ryan Petersen?

  for the last two weeks, the ocean freight market has gone down by 50%. Some of Scott's buddies, right? They've canceled their orders. Well, when, if, if a deal gets done, all of that stuff's going to flow at once. And you won't have enough space on ships. And meantime, the ocean carriers have already started canceling services, moving ships to Southeast Asia, moving containers down there. And you're going to wake up, though every week that goes on, this problem's going to compound. But you'll wake up and go, oh, my goodness, like, trade is back, maybe not to where it was, maybe it's, you know, down a little bit, but it comes back a lot more than 50% down where it is now. But the ships aren't here, the containers aren't here. And you're going to get back to these bottleneck situations that we had in COVID where the price of freight goes

• 40:39Ryan Petersen?

  crazy. So like, we're sitting here modeling these scenarios. We're like, all right, either it all goes to hell, and you're down 100, you know, the duties stay at 145%, volumes are way down, we got to make all these contingency plans for that world, or the opposite, where the price of freight goes crazy, and I can't get anything loaded, and we're scrambling. It's like, super, like, long tail effects in both directions. And it's very hard to make decisions as a logistics operator right now.

• 41:07Ed Elson?

  We'll be right back. If you're enjoying the show so far, hit follow and leave us a review on the prof G markets feed.

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• 42:56Ed Elson?

  We're back with Prof G Markets. You mentioned that if he makes a deal, and Trump has said, you know, more than 70 countries have called him to make a deal. Do you have any insight into what the deal is or is supposed to be? Just at like a very basic level, what is your sense of the goal of these tariffs? And if we're going to swerve out the way, what is the deal?

• 43:25Ryan Petersen?

  First off, on the short term, I don't think they can make a deal with China in the short term. I think the deal is, hey... We'll pause this and give ourselves all some time to sit down and have a nice negotiation, and that might take a year or two. I mean, it's very difficult for Trump particularly to deal with China because his style is man at the top, head honcho, sit down in the room, yell at each other, say some things, make a deal. He wants to negotiate that deal himself personally, probably. Chinese will never allow that. In the Chinese system, they can't risk the leader looking bad and losing face. So the deal has to be worked out at the lower levels, and then it's a formality when President Xi and President Trump come and shake hands. So I just think there's a mismatch there. They'll get over

• 44:10Ryan Petersen?

  that, but like not on a three-week timeframe. And I think the nuance, there's so much complexity in the China deal, that by the time they actually sat down and got on the same page, it would be too late for the types of businesses we're talking about failing. So I would say, but what would the deal look like over time? And what does the deal look like with these other countries? I have a rule in life, like, don't argue with someone unless you think you can make their argument better than they can. I got that from Charlie Munger. It's like a good, healthy rule to make sure you're doing a good job in your debate. And so if you're taking their side, saying kind of steel manning it, what are they looking for here? What are their points? They have a few that I think are valid, and they might be after in some form or another. One might just be, hey, this is negotiating tactic,

• 44:53Ryan Petersen?

  and actually, these guys are actually free traders all along, and really just want to lower tariffs and trade barriers, and it's, you know, that's what they're after. Doesn't really jive with the rhetoric about bringing jobs home. If free trade is bad, then it's bad, right? So not sure that's the case. But maybe there's some, they will get better terms out of people than they were before, sounds like. Two is, we have a major fiscal problem in this country. Two trillion-dollar deficit, no end in sight. You gotta do something to generate more revenue. So tariffs are one way to do that. Not 145%, probably net lowers the amount of trade and the amount of duties collected, but some amount of duties maybe is a reasonable place to, you gotta get the revenue somehow for the government.

• 45:33Ryan Petersen?

  So that's fine. That's reasonable. Third is, it is a valid point around US not having manufacturing capacity in a national security time of war, like your car factories become your tank factories. This is why auto is such an important strategic sector, for example. And then fourth, and I think where they really, will you see them hammer? I think they have a valid point is on the industrial policies of these countries. Both currency, you know, look at Vietnam, the Vietnamese dong has gone down in valuation the last three years, maybe not the last three weeks, but the last few years. At the moment that their manufacturing sector is absolutely booming. And if this was a normal market, their currency would appreciate as so much, so many more dollars

• 46:18Ryan Petersen?

  flowed in. So there's some, some probably terms for a deal around currency, uh, setting the reserve currency, setting the US currency exchange rates at a level that we think is healthier. Uh, subsidies, these countries provide a lot of subsidies for manufacturing, free land, free buildings, cheap credit, there's all kinds of things that they do smartly from their own perspective, I think, but, but that do, um, don't make the level playing field. Um, environmental regulations that we have that are way higher than theirs, organized labor repression, I mean, Korea for many, many years had like a mandatory six day work week. You know, I mean, that would never fly here. China has a six day work week, I don't think it's mandatory, it's just like culturally, they just work harder than us.

• 47:02Ryan Petersen?

  Um, I don't know if there's something, but there's, there's, these are all like fair grounds for going, hey, like, you know, it's not a balanced playing field for us. Uh, and so maybe there's some deal on one, one or more of those grounds to get them to change some policy or something, but the duty rates itself is one small piece of it, like how much they charge us in duty versus what we charge them. It's the, and they've been pretty clear about this, that the administration cares much more about these non tariff barriers, they would call them.

• 47:31Scott Galloway?

  Mandatory self mandatory six day work week. Okay.

• 47:34Ryan Petersen?

  It'd be good for us.

• 47:39Scott Galloway?

  You, so let's take tariffs off the table, pre tariff. If you look at countries as stocks or asset classes and you get to see who's doing a great job in terms of partnerships and manufacturing. Prowess, who, what countries would you go long and what countries would you go short?

• 47:57Ryan Petersen?

  Definitely Vietnam long. That's incredible what they're doing. They have some real geographic benefits to their river network. Eighty percent of their containers flowing out of Vietnam actually go on a barge floating down the river to the port instead of having to use trucks. That's let them kind of go much faster in scaling because their roads can't really keep up with the demand, the amount of manufacturing boom that's happened there. They've had, I think it's eight percent GDP growth last few years in a row. I mean, that, you know, you only have to do that for so long before you get, um, before you double. So Vietnam, a lot of the Southeast Asian countries are, are just benefiting from like lower cost of labor and reasonably good. Policies around industrial stimulus. Who am I short?

• 48:42Ryan Petersen?

  India still remains a mess. I guess they're probably doing well, but it's just like very complicated to do business there. Let's just, they don't benefit from logistics network. They don't have inland river network. So it's more expensive to move stuff. Lot of complexity from a logistics standpoint that falls out of that.

• 49:02Ryan Petersen?

  Their infrastructure is lagging, but, uh, but then again, you know, it's a billion people that are relatively low cost. So maybe, I don't know if I'd short it, but we have not seen as much dynamism there as you have in Southeast Asia.

• 49:16Ryan Petersen?

  Europe seems hard to go long. Europe right now, they're just over regulating everything. And, but then again, flex for it. Actually, Europe is one of my favorite case studies internally. Cause Europe has been our fastest growing market for the last three years in a row.

• 49:32Ryan Petersen?

  And we've been way outgrown the scale of the market hasn't really grown, but we've been growing like 30% annually there. And it allows me any other, anytime any other team at flex board points to market dynamics, I just point to Europe and go markets don't matter. It's all about how you guys execute. So within, within our company, I, we kind of ignore the macro trends and it's all about just having good people that can go. Fine. The market's so big from our perspective that like it barely matters if it goes up or down.

• 49:57Scott Galloway?

  So just on the topic of people, Toby Lutke from Shopify made headlines when he said, you can't have a job higher unless you can prove that AI can do it. Curious is the CEO of a logistics and supply chain company. What is, what role is, does AI play in your mind and how, how, what type of level of investment? How do you think it impacts your current hiring or kind of human capital strategy?

• 50:24Ryan Petersen?

  So Shopify owns 20% of Flexport, so I follow everything Toby says very closely. He's kind of my, my boss on some level. They got a board seat. The, and I actually took his AI memo and put it into ChatGPT and said rewrite this and pretend the CEO of Flexport wrote it. So I could send it to my employees. I have a hit send on that.

• 50:41Scott Galloway?

  You do, you do that too.

• 50:44Ryan Petersen?

  Might send that one out soon. So if you take like, let's take normal conditions, which we haven't seen in 10 years or something in logistics. But take normal, long run average for the last 30 years is like, costs you about $2,000 to ship a container from Asia to the US. So let's just say we go back to that world. The, the cost of the freight forwarders keep 20%. And 80% gets paid to the people that own the ships and the trucks and the, you know, own the assets. They deserve that, at least that. So, okay, of the 20%, of the $400 the freight forwarders keeping on this, half of that is going to labor costs of coordinating the shipment, what I call freight email forwarding, pushing, to pushing docs, making phone calls, not the blue collar guys driving forklifts.

• 51:27Ryan Petersen?

  Like this is the service jobs, desk jobs. We believe we can take about 80% of that cost out in the next two, three years, largely because of AI. And if you ask me that three years ago, I'd be like, eh, stuff's pretty hard to automate. You know, it turns out there's a million edge cases that you can't put into rules engines. And you need people that are smart that can do it. Now we're finding about 1% weekly, the ability to automate about 1% of that work every week. It's kind of crazy.

• 51:59Ryan Petersen?

  And so we think 80% in the next few years is totally possible. That means you reduce, in a state, steady state world without craziness, you're reducing the cost of shipping anything by about 8%. So that would be huge for consumers. Now, we might decide to keep all that for my margin and be the highest margin freight forwarder in the world. Our view is much more give it back to the customer, drive more scale. But yes, it's probably some, the correct answer is probably some choice in there. So that's one. Number one, the thing that people would care about is price, to lower the cost. Two, a lot of these supply chains are about data, data to make good decisions. How many units should I order? When should I order them? Where should I position them? How should I engineer them from a tariff standpoint? These types of things.

• 52:41Ryan Petersen?

  All of that, we're finding huge opportunity to just use AI to like ask questions in natural language, generate reports on the fly, like stuff that you used to take, you'd have some analysts on your team, it would take them three days to generate the report, you get it in an instant.

• 52:56Scott Galloway?

  Last question from me. Timu and Xian, these incredible supply chain monsters. Curious what you think about those two companies and how this shakes out and what you think the prospects for those two firms are.

• 53:10Ryan Petersen?

  Obviously, May 2nd is the key for them, that their business model as it stands right now gets turned upside down. So they have to start paying duties, May 2nd, or ship their manufacturing. I think you'll see a bit of both. They're gonna, they're gonna pay duties, they're gonna see what consumers are willing to do. They can still import the goods. By the way, they still have a cost of goods sold advantage over you and your buddies because they're just built in China, made to source things cheaper, like they have some big advantages there.

• 53:38Scott Galloway?

  Doesn't the cost advantage broaden because they're selling a garment in for 10 bucks versus 60 from Ralph Lauren? Okay, they go to 24, but Ralph Lauren goes to 150.

• 53:49Ryan Petersen?

  Exactly. Their cost is lower already, so exactly. So the cost advantage is still there. They're, they're paying for air freight where Ralph Lauren's probably paying for ocean freight. So there's a, you know, that's much cheaper, but they're not paying for US warehousing, which is much more expensive. Their, their, their final mile cost is lower, they have less working capital of just like products sitting on the warehouse and sitting on the water for months at a time. It's much more just in time production. So I think net, net, like the tariffs will cost, having to pay duties will cost, you know, hurt them versus their current model, but I think they still have a big advantage over other kind of companies that they would compete with. So probably their sales go down, but.

• 54:33Ryan Petersen?

  But they might, their market share might go up. Um, no, it's hard to say. I think that I don't think there's going to be the death of Timu and Sheen. I think you're going to see that they, unless there's some other like very possible Trump administration puts in some kind of company specific regulation to kill these guys. It's, you know, nothing's outside the range of possibility, but um, I think you're still, I think they'll still be okay, probably.

• 54:56Ed Elson?

  Final question from me, Ryan. This has been massively informative. Thank you. Um,

• 55:03Ed Elson?

  we've been talking about the public response from business leaders to the tariffs and to what, what Trump is doing. Um, what we have found or our view is that the response has been quite muted from CEOs. People are not complaining as much as you'd think. Um, and you know, I just think about the stats that you mentioned or your predictions that this would wipe out 80% of businesses that rely on China. It's massively affecting small businesses. You can see millions of jobs lost as a result of this change. And then I also would reference a tweet you put out. You said, quote, "Thousands and then millions of American small businesses, including many iconic

• 55:46Ed Elson?

  brands, will go bankrupt this year if the tariff policies on China don't change." And you, I believe, are one of the few CEOs, granted you have a, a real horse in this race, but you're one of the few CEOs that is speaking out about this and saying just plain and simple, this is a bad idea. I'm wondering if you think based on your, uh, the people you speak with and the businesses and the clients you service, do you feel that we are about to see a change in sentiment from our business leaders? Do you think that we're about to see business leaders come out and say, "This is a horrible idea and this is stupid and we don't support this?"

• 56:30Ryan Petersen?

  I see a fair number. Certainly all of our customers are up in arms and tweeting about it, posting about it. And all these small brands, they may just not have enough of a voice. Uh, I don't know, man. I think big companies, there's a lot of failure of leadership in general. Like a lot of big companies are, well, they're found a long time ago. The founders have retired. You got middle managers who got promoted up to be the CEO. There's a lot of risk here. You know, you go criticize the president and he attacks you publicly. If I get fired, there's like a lot of downside to criticizing, uh, I'm hard to fire. So, and you know, I'm on some level, I'm not, I'm not the best voice for the administration to listen to because I am selling my own book. It is bad for my business, bad for my customers. Like, so, you know, are they going to listen to me on tariffs?

• 57:12Ryan Petersen?

  Probably not. Like I, I, I'm, I'm, I'm a little too self-interested for you to take me that seriously. But, uh, I think you'll see more and more. Some JP Morgan put out a statement. I haven't seen Jamie Dimon say anything, but like their chief strategist, whatever that job is, said that this was really, really bad. I think you'll see more. The banks probably weigh in. I don't know that it matters. I think, I feel like the Trump administration knows that this is bad for businesses importing from China. Maybe that you want that. So it's like not clear that this isn't by design.

• 57:44Ed Elson?

  Sounds like your view is founder CEOs will speak out and the middle managers won't, which I actually think is a pretty good thesis.

• 57:53Ryan Petersen?

  I, well, it's also my thesis for why Fliexport could beat other logistics companies. These companies, we're the only one founded in the last 40 years. So, uh, in the big, in the big global companies. So the, the founders are mostly retired, uh, pretty much all retired. And these companies aren't managed by, uh, by people with enough skin in the game. Or, or frankly, like, yeah, they could get fired really easily if they, they're also a little too rational. Logistics is a very rational market. You know, it's all math at the end of the day.

• 58:22Ryan Petersen?

  And some of this stuff is you don't have that much math to go by. You gotta go off your instinct and just be like, oh, this is. Let me speak up here. I don't need to listen to my committee of managers like this is really bad for my customers. So just do it.

• 58:35Ed Elson?

  I love that. Well, we, we support you. I'm certainly feeling long Flexport after this interview. Ryan Peterson is the founder and CEO of Flexport, a leading technology platform for global logistics. Prior to starting Flexport, Ryan was the founder and CEO of Import Genius, a premier provider of transaction data for the global trade industry. He earned a BA in economics from UC Berkeley.

• 58:54Scott Galloway?

  Go Bears. I didn't know that.

• 58:55Ryan Petersen?

  Oh, yeah.

• 58:56Scott Galloway?

  Go Bears. Nice. And California, enough, enough of your bullshit, Ed. Did you, were you raised in California?

• 59:01Ryan Petersen?

  No, I'm from Bethesda, Maryland, but I was lucky enough to get in as an out of state student undergrad.

• 59:06Scott Galloway?

  And did you stick in the Bay Area?

• 59:07Ryan Petersen?

  Yeah, I'm here in San Francisco.

• 59:08Scott Galloway?

  Oh, that's great. Love to hear that. Sorry. Can, please continue it.

• 59:11Ed Elson?

  I'm done. That's the outro. Thank you for joining us, Ryan.

• 59:15Scott Galloway?

  Ryan, you're, you're, you've got this great, I think you actually should command the space you occupy. You have this kind of firebrand, I don't know, reputation as this sort of maverick entrepreneur who's kind of shoots first and asks questions later. I think you're just the voice that small business needs.

• 59:32Ryan Petersen?

  I'm trying. I mean, my customers certainly appreciate it. That's why I'm doing more and more. I want them to see that we got their back.

• 59:37Scott Galloway?

  Yeah, well, I think you do. Keep on keeping on, my brother. I love seeing stuff from you and I think you're, I don't know, I think you're bold. And I love what you said that founders aren't as worried about being fired.

• 59:49Ed Elson?

  It's sort of this silver bullet to the, the questions we've been asking.

• 59:52Scott Galloway?

  Fly your freak flag. I love that.

• 59:55Ryan Petersen?

  Can't get rid of me, so.

• 59:57Scott Galloway?

  Thanks very much for your time.

• 59:58Ed Elson?

  Thanks, Ryan.

• 59:58Ryan Petersen?

  All right. Take care, guys.

• 1:00:09Ed Elson?

  Algebra of Wealth. Scott, Ryan painted kind of a dark picture for small and medium sized business owners in America in that interview. And I believe him. I mean, he has the, probably the greatest and the, the, the most. Colorful understanding of what is actually happening in our supply chains. For any small business owners or even employees at these small businesses who rely on trade and maybe on trade with China, what would be your advice to them? And what would be perhaps a message of optimism or sanity to deal with what Ryan just told us?

• 1:00:51Scott Galloway?

  What I would say is that, well, one, you can only control what you can control. And that is, all right, go to the bank, see if you can get an increase in credit, slow down the shipments, you know, think about how you save money, you know, does it involve layoffs to try and extend your runway? There's some just very hard decisions you have to make. You know, your business better than me, but you can control only what you can control. The other thing I would keep in mind that has always played out for me, not only in businessmen in life, is that nothing's ever as good or as bad as it seems. And then generally speaking, you look back on situations like this and go, okay, it wasn't as bad as I thought. Because it could, I do think what Ryan was saying, that they're going to blink and the

• 1:01:35Scott Galloway?

  tariffs could be, the tariffs could be off. And also even imagining the worst case scenario. I remember when a variety of things, moons lined up in a very negative way, when I was, had done a proxy fight, taken control of the border, red envelope, came back in like the, you know, like MacArthur returning to the Philippines. And then we had the great financial recession, our credit line got pulled and we had a software glitch and sent out 10,000 gifts to the wrong address. And we went from a stock of $7 to Chapter 11 in like two weeks. And I was just devastated. I lost everything. And it's just such an emotional investment. I'd been in the company 10 years.

• 1:02:15Scott Galloway?

  And I ended up strangely, a year later, or six months later, some hedge funds called me and said, we've been watching the proxy fight at red envelope and you're crazy. I'm like, well, thanks for that. And but they said, but you're are kind of crazy. Would you be interested in us? We have some stock in some companies that we think are underperforming. Would you be interested if we had bought some more stock? Would you be interested in co-investing and in getting involved in an activist play with us? I would have never thought that Red Envelope going out of business after I had waged this public war against the board would result in opportunities for me. I just would have, in a million years, I could have never thought that. So, one, control what you can control.

• 1:02:56Scott Galloway?

  Two, recognize that whatever you're feeling right now, if it's bad, it's probably not as bad as what you're feeling. And also, sometimes when things are really good, it's probably the situation isn't as good as you think it is. And also, you just don't know what kind of opportunities might open up, even if the worst thing possible happens. You just don't know. And but again, nothing's ever as good or as bad as it seems.

• 1:03:20Ed Elson?

  This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Allison Weiss. Miss Oliverio is our research lead. Isabella Kinsel is our research associate. Dan Shalane is our intern. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Profty Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.

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