Kleptocracy, Inc. — with Anne Applebaum

Anne Applebaum, a Pulitzer Prize–winning historian and staff writer at The Atlantic, joins Scott to discuss the rise of kleptocracy in America, the global playbook of autocrats, and solutions to our democratic slide. Follow Anne, @anneapplebaum. Algebra of Happiness: greatness is in the agency of others. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 0:00Speaker 00

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• 1:27Scott Galloway?

  Episode 347. 347 is the area code serving parts of New York City. In 1947, fruit flies became the first animals to travel to space. True story. I was training to be an astronaut, and during training, I vomited. And I asked the instructor, "Is this normal?" And he said, "Not during the written exam."

• 1:54Scott Galloway?

  Welcome to the 347th episode of the Prop G Pod. What's happening? The dog is in Hamburg, Germany. The most interesting thing that's happening. I'm speaking of something called Online Marketing Rockstars, which gets about 12,000 or 13,000 people. I've been here six years in a row. It's one of my favorite events. Love the city. It's like Karl Lagerfeld exploded into a city. The juxtaposition of cement and industrial, I don't know, stuff and then all these rich people constructing steel and glass condos. It's, remember Wallpaper Magazine? It's like Wallpaper Magazine exploded into a city. I really, really enjoy it here. And one of the really nice things about living in London is everything is close. Took me an hour and 12 minutes to get here last night. Can you get over? Hour and 12 minutes, boom. Like when I lived in LA, it took me an hour and 12 minutes to get to work.

• 2:37Scott Galloway?

  I need to go to work, Figaroa downtown in LA, or now I can go to Hamburg. Incredible. The world is getting smaller. Quick thought, I was on stage today and they asked me, what are the most seminal things happening in the world? I said, one, the reversal of the rivers of capital flowing, human and financial flowing into the US that have reversed flowed and are now flowing back to other parts of the world. And two, if we're going to get serious about our deficit in the United States, we could tax rich people to death, which I think we should do. Let me be clear, but that wouldn't do it. We could cut social security or extend the age. That wouldn't do it. Also, I think we should do that. Counting on the interest rates plummeting to reduce the third largest expenditure, which is our interest on our national debt. That's out of our control.

• 3:21Scott Galloway?

  The military, I believe we need a strong military. Are there inefficiencies? Sure, but I think there's, unlike a lot of people on the far left, I think there's a lot of very resourceful, mean people who would like to kill us. And I think that it's important that we have the biggest military in the world. So where do we go from here? I think all roads lead to the same place. And that is, until we figure out a way to bring the cost of our healthcare system down from $13,000 a person to 6,500, which is what it is in the other six of the G7 nations, despite the fact we have worse outcomes, we live less long, we're more obese, depressed and anxious. None of this is going to get fixed. I think our only opportunity to balance the budget and also... Suppress or obviate a lot of unnecessary or manufactured anxiety is to reduce healthcare

• 4:05Scott Galloway?

  costs. We pay eight times the price for Ozempic or for Humira. Our hospital systems are more expensive. We spend more on pharmaceuticals despite the fact that many of these innovations are actually invented in the US. Why is it that the Gulf states get cheaper oil or cheaper gas? Why? Because they produce a lot of it, right? If you're in a nation that has incredible agricultural output, usually the bananas are less expensive, but not in the US. Why? Because into the middle has slipped lobbyists who have weaponized government with absolutely flooding the zone with a lot of money such that pharmaceutical firms can convince a legislator that it makes sense for Americans to pay eight times more for pharmaceuticals despite the fact they're invented, manufactured, and distributed here in the US. Why? Because

• 4:49Scott Galloway?

  there's money involved and every senator needs to raise 60 to 100 million dollars to be reelected. So I know, let me take money from the pharmaceutical lobby to make sure that seniors and everybody else pays a shit ton way more than they should for healthcare. All roads, and I've been thinking a lot about the deficit, lead to one thing, and that is we need to do all of it, raise taxes, cut spending and entitlements. But the only way we're going to get there is if we figure out a way to dramatically lower our healthcare costs. It's also the ripest place for disruption. That's probably going to have to involve some sort of, I don't know, executive action or laws that get rid of or at least reduce the amount of money in Congress or shaming these companies or these individuals, although that doesn't appear to be working. But anyways, I've been thinking a lot about what are the

• 5:31Scott Galloway?

  kind of, what's the best idea and what's the biggest change in our economy? One, the river of the Amazon has changed flow twice in its history. It's happening right now. Human capital is reversing flow out of the United States, which is not a good forward-looking indicator for the United States. And any serious conversation around our deficit and getting our fiscal house in order leads to a very boring place, and that is how do we figure out a way to bring down or lower the costs of healthcare, which probably means figuring out a way to get money out of politics. Easy, squeezy. Done. We're done. Anyways, in today's episode, we speak with Anne Applebaum, a Pulitzer Prize winning historian and staff writer at The Atlantic. We discuss with Anne the rise of kleptocracy in America, the global playbook of autocrats, and solutions to our democratic slide. I

• 6:16Scott Galloway?

  really enjoyed this conversation. She's definitely having a moment. I'd love it when people who are just in a very narrow area, her kind of specialty is autocracy, she's a historian and writing about it. And when I say narrow, I don't mean it's not important, but she is probably the leading authority in the world on autocracy, and she is having a moment, which is unfortunate. It'd be like if all of a sudden, if someone were to tell you that someone who wrote about famine or urban violence was having a huge moment, that probably is not a good thing. And unfortunately, Anne is having a real moment, not because she isn't incredibly talented, which she is, she's both forcefully yet dignified, but because autocracy, kleptocracy, whatever you want to call it, whatever, I think of it as a kakistocracy, has unfortunately taken root in the United States. Anyways,

• 7:00Scott Galloway?

  with that, here's our conversation with Anne Applebaum.

• 7:14Scott Galloway?

  Anne, where does this podcast find you?

• 7:16Anne Applebaum?

  I am in Washington DC, our nation's capital.

• 7:19Scott Galloway?

  How's the mood there right now?

• 7:21Anne Applebaum?

  I'm a little paranoid, a little stressed. I mean, it depends a little bit on who you are. But, you know, I have a next door neighbor who works for the Department of Education. I know lots of people who work for HHS. I know plenty of people who worked for USAID, and all of them are watching things they've worked on all of their lives be destroyed. So it's a tough moment.

• 7:45Scott Galloway?

  You recently wrote a piece for The Atlantic arguing that under Trump, the US is sliding towards kleptocracy, a system where leaders use political powers for financial gain. Before we get into the specifics... Can you help ground us? What exactly is a kleptocracy? And how is it different from other forms of autocracy or corruption?

• 8:03Anne Applebaum?

  So a kleptocracy, maybe it's a fancy word for a profoundly corrupt dictatorship, but it's a, it's a political system in which the leaders of the country not only exercise political power, but they also exercise economic power and probably own a lot of the economy. So Russia is a kleptocracy. You have people who are, have both political and economic power, you know, at the top of the system. And they use, I think maybe this is the key point, they use their political influence to make money for themselves. In other words, the policy of the Russian state, its foreign policy, its domestic policy,

• 8:44Anne Applebaum?

  is not being made for the benefit of Russians, of ordinary Russians. The policy is being made for the benefit of a group of very wealthy people who earn their money out of state decisions. And the US is very rapidly moving in that direction. The question, there are questions now to be asked about some of our foreign policy. Is that, is it being conducted in the interest of Americans? Or is it being conducted in the interest of Trump, maybe his family, maybe, maybe the business community around him? That's where you would have a real change. You know, we've had presidents before who were incompetent or who made mistakes or whose foreign policies failed in various different ways.

• 9:27Anne Applebaum?

  But I don't think we've ever had a president whose foreign policy and whose perhaps domestic policy are not designed for the purposes of making American life better. And I think that's where we're heading.

• 9:39Scott Galloway?

  So just to double click on that, by some estimates, the Trump family has increased their personal net worth approximately $3 billion since the launch, the Friday before inauguration of the Trump coin. Can you think of any other instance in history, anywhere? Where one president, prime minister, dictator, you know, general consul, whatever, has managed to sequester $3 billion from the economy in 100 days?

• 10:06Anne Applebaum?

  Obviously not. You can point to many other instances of corruption around the world. In US history, there have been corrupt presidents in the past or people who were thought to be corrupt, but that usually was, if you look at the details, there were people who perhaps tolerated some corruption around them. I don't know, Ulysses S. Grant supposedly let his wife's family make money off government contracts, that kind of thing. But there is no incidence of a president while in office, while in office, enriching himself like this. I don't think there's any precedent for it, and I don't think we've seen anything like it before.

• 10:43Scott Galloway?

  How do you respond to the notion or the argument that we've been a kleptocracy for a while? When you have Speaker Emerita Pelosi meeting with HHS and getting a sense for they're considering using AI for payment systems, and then she goes and buys call options on Tempest AI? And when it's disclosed, she's purchased those call options, they surge. That, I mean, effectively, isn't Trump doing what everyone's been doing, but he's not doing it for small ball? The Democrats do it for hundreds of thousands, and he's doing it for billions? But isn't, hasn't this been going on for a while?

• 11:19Anne Applebaum?

  You can certainly talk about this slide into corruption, which goes back, as you say, a while. I mean, I don't want to put a date on it, but both the, I think, certainly since the Citizens United Supreme Court decision that made US elections a kind of Las Vegas free for all, where almost any amount of money can be spent. And certainly, the, the, the change in ethics, I think, that, that meant that more and more members of Congress were using insider information to play the stock market, both Democrats and Republicans. And those are, you know, those are pieces of the story and the, and the buildup to where we are. And maybe they explain part of why so many people tolerated Trump.

• 12:00Anne Applebaum?

  Again, I don't think there's an example of any politician using office while in office to become

• 12:10Anne Applebaum?

  A multi-billionaire. And I don't think it's just a matter of numbers. I think it's a completely different attitude. I don't think Nancy Pelosi's entire policy while she was Speaker was designed to make herself personally rich. I don't think that was her goal. I don't think that's... And actually, I don't think there were Republicans, leaders, speakers of the House, whose political philosophy was deliberately designed to make themselves rich or who were doing things solely for that purpose. And I think you can ask whether Trump is doing that. You know, you mentioned his cryptocurrency business,

• 12:51Anne Applebaum?

  which did a deal in the last day or two with the Emirates. It was a major Emirati investment into that company. And this actually, Trump also has a financial relationship with the Saudi government, whose state-owned Saudi companies sponsor his... A golf tournament that took place at his golf course a few weeks ago. And the head of the Saudi Sovereign Wealth Fund was at that tournament and as one of its sponsors. In other words, these are countries with which the US has political relationships and whose leaders are interested in influencing US politics. And the president, meanwhile,

• 13:34Anne Applebaum?

  has an ongoing financial relationship with those governments and with those leaders. That's not anything that Nancy Pelosi did in the past.

• 13:43Scott Galloway?

  I actually see the more damaging part of this. It's not as romantic or interesting is that companies now, I would describe this sort of domino of cowardice in the private sector, where nobody wants to speak out because you do his bidding, he'll make you rich. I believe about 30 people, within a few hours, made $700 million or $800 million on the launch of the Trump coin. And then, over the course of the next few weeks, when it crashed, about 80,000 retail investors lost several billion dollars. So there's upside, but there's also a downside. And that is, if you speak out, he might decide that you don't get an exemption for the tariffs or he might implement some sort of crazy policy that just distracts or hurts your company.

• 14:27Scott Galloway?

  Is that the difference? Is that a slide from kleptocracy to autocracy?

• 14:33Anne Applebaum?

  It certainly makes the state, and in particular Trump himself, an arbiter of the economy in a way that we used to think as Americans, and I think this is even both Democrats and Republicans, was damaging and immoral. It puts the White House in a position of being able to decide who wins and who loses, at least for large companies and at least in some businesses. And that is a, that does make us certainly on the path to becoming a Russian-style political system, yes.

• 15:08Scott Galloway?

  Speaking of going from depressing to really depressing, this isn't like we've uncovered something. It's been not transparent, but it's out in the open. And it appears that despite what is obviously a slow creep or a fast train barreling down the tracks towards a kleptocracy, that if America doesn't want it, it's tolerating it. I just saw a poll saying that if the election were held again today, Trump would still beat Harris. And the Democratic Party is less popular than Trump. Hasn't the failure been, or do you think, the failure kind of rests with us educators,

• 15:51Scott Galloway?

  the media, the lack of civics courses, our inability to communicate to the populace that kleptocracies don't typically serve the citizenship well? Because as far as I can tell, America has decided they'd rather have a kleptocrat than a weak party. Your thoughts?

• 16:11Anne Applebaum?

  I don't know that most people understand yet what's happened. I mean, these stories come very fast. I actually started collecting the kleptocracy stories. Some of them are in that article I wrote for The Atlantic a couple of weeks ago, but I'm also collecting them for future use. And there is something almost every day. Either it's a violation of the emoluments clause of the Constitution, which says that Trump shouldn't, or the president, sorry, shouldn't take Money or any favors from foreign governments or foreign countries. Or it's a merger of a new conflict of interest. Somebody in the administration has clearly conflicted both a business and a political interest in something.

• 16:53Anne Applebaum?

  I mean, the classic example of that is Elon Musk, who has influence now over government agencies who regulate his own companies and who subsidize his own companies. I mean, that's that's an outrageous conflict of interest of the kind that, you know, we would have thought was illegal. Or it's a legal change. You know, the administration announcing, for example, it won't, it will no longer enforce the Foreign Corrupt Practices Act, which prohibits American companies from bribing, using bribery abroad, or the Corporate Transparency Act, which was supposed to make the world of shell companies and anonymous businesses more transparent. You know, or it's just plain corruption of the kind that we've been discussing, you know, the Trump family just taking money in exchange for in exchange for political favors.

• 17:38Anne Applebaum?

  And there's many, many of those stories every day. And I am not sure how much people are yet able to pay attention to them or to understand them. I mean, there's another problem. There's been a problem for a long time with the world of kleptocracy and the world of money laundering and shell companies and so on, which is that it's very, very complicated. It can be hard to explain. I mean, I've read a lot of books about money laundering. There's been some good ones in recent years. So there's a good book called American Kleptocracy. There's a good book called Kleptopia. And almost all of them are would be hard for laymen to grasp. I mean, it's a story about moving money around the world very quickly. It's about shell companies. It's about manipulation. And I'm not sure that people get it yet.

• 18:21Anne Applebaum?

  You know, what will have to happen is for people to begin to connect these stories to their own personal experience, when they understand that they are poor because the Trump family is rich. And this is something, when you look at anti-corruption campaigns around the world, this is the moment when they succeed. So, I mean, the most famous example of this is Alexei Navalny's campaign in Russia. So this was the great Russian dissident who was died in a Russian prison. Some months ago, and he was the most successful campaigner against Vladimir Putin, and he did so by talking about theft and by talking about corruption and also by talking

• 19:03Anne Applebaum?

  about how bad the roads are in Russia and how bad the hospitals are and how underpaid the doctors are. And he made the case that there was a connection between these things, and people understood him. He made these spectacular, they were documentaries, really, I was going to say videos, but they were long, they were an hour or two hours. And he would sketch out these elaborate schemes that the president was carrying out or the president's entourage, and he would show that, sometimes they were funny, they used video, they used drone footage, but they also showed the connection between that world and the world of ordinary Russians. And that is the link that the Democratic Party will

• 19:44Anne Applebaum?

  have to make, and that I hope journalists who cover this stuff will also begin to make. It's not enough to talk about crypto, or schemes, or fraud. That's something that I don't think people get. But when you explain, as I said, that they are doing this in order to benefit themselves and not you, and that the policy of the United States, whether it's the foreign policy, or the domestic policy, or the economic policy, is being twisted and manipulated to benefit them and not ordinary Americans, then I think you'll begin to get some political leverage from this.

• 20:22Scott Galloway?

  So there's so many ocracies to think about, and the thing that feels even more differentiated with this administration is, okay, there's other kleptocracies, but kakistocracy. And that is, I would argue that Putin and Xi have competent people around them. And I don't think that's the case here. Any thoughts on what could, I think, could be fairly described as a kakistocracy now in the United States? Do you do much thinking or writing about this topic?

• 20:50Anne Applebaum?

  I don't think I've ever used the word kakistocracy in my writing, but maybe I've addressed the idea, which is that it's the rule of the worst people, or of the least competent. I mean, there is something about who Trump attracts to his orbit.

• 21:08Anne Applebaum?

  And what kind of people want to work with him and be around him? And almost anybody who has real character, who has any ideals, who has any commitment to truth telling, to evidence, to even just to reality itself, to the world of real facts, is almost immediately made uncomfortable in the presence of Donald Trump. Because Donald Trump is somebody who's constantly seeking to shape reality to his own benefit, to change the facts, to tell a story or make up a myth, and who's perfectly capable of being totally inconsistent from one day to the next, or even from one hour to the next. I mean, the tariff story, one minute he was justifying the tariffs because it's going

• 21:53Anne Applebaum?

  to bring back manufacturing to America, another minute he was justifying them, a few minutes later, on the grounds that he was going to do great deals with countries. But if you're going to do deals and lift tariffs, then that's not going to bring back manufacturing to America. But he feels no need to be consistent, and he feels no need to be accurate. And so, anybody who does, anyone who cares about telling the truth, or about presenting accurate vision of the world, or who cares about making policy based on reality and not on this fiction that Trump promotes, is uncomfortable. And that means that all the people around him are either they're simply manipulable, and they're willing to just do whatever he says, or they're people who have made a

• 22:36Anne Applebaum?

  big, a kind of moral sacrifice, who are doing something they know to be wrong. And sometimes you can see it on their faces. I think this was the core problem that Mike Walz had, actually. The reason why he didn't fit into Trump's inner circle wasn't just because he put my editor Jeffrey Goldberg on a Signal chat, it was also because he, at least in the past, had had an attachment to a certain ideas about foreign policy, a certain belief of America, what role it should play in the world, and he was just unable to lie convincingly on behalf of Trump when that violated his own You know, his his own morality or his own sense of the world. And and he just couldn't be around Trump any longer. And of course, that happened repeatedly in Trump's first term.

• 23:21Anne Applebaum?

  And in his second term, these are people who are self selected. They're people who know what kind of person Trump is, who want to be there anyway. And so, as we used to say about Polish communists, for for listeners who don't know, I lived part of the time in Poland, either they're liars or they're stupid. I mean, either they go along with it because they don't know better, or they go along with it, but know, you know, but know it to be wrong.

• 23:43Scott Galloway?

  So let's move to potential solutions. And granted, this is a naive take, but my sense is the only way to step back from a kleptocracy is fairly swift punishment that sends a very strong signal that this won't be tolerated. And I don't know if America is capable of that. So, one, do you agree that it's hard to pull back from it without pretty swift punitive action, imprisoning people or worse? But or more generally, how have you seen large economies that claim to be democratic walk back from this type of kleptocracy or autocracy?

• 24:19Anne Applebaum?

  The country that I know best that is trying to move back is actually Poland. Poland had an autocratic populist government in power from 2015 to 2023. And one of the features of that government, like all autocratic populist government, is that it became very corrupt. The scale was different. This is Poland, not the United States. You know, they weren't, they were, they were bound by the rules of the European Union. And so that this, as I said, it wasn't the stunning theft that we're seeing take place inside the United States. Nevertheless, there were, there was a lot of money stolen, in effect, from the state and and put into people's pockets. And we now have, there was, there was then an election, which was unfair, but yet the

• 25:02Anne Applebaum?

  opposition was able to win, partly by putting together a broad coalition, sort of center-right, center-left, liberal coalition. And now they are seeking to prosecute the previous government and hold them to account. And it is indeed very difficult. It's very difficult, partly because the judiciary was changed and manipulated by the previous government, so that's part of the story. It's partly difficult because the president, although this may change in a few weeks, is still from the previous government and he's been blocking a lot. He's able to pardon people, actually, and block a lot of the changes.

• 25:40Anne Applebaum?

  But even mobilizing the prosecutors, mobilizing the state to go after in a fair and systematic and legal way is pretty difficult. I think, actually, Poland is a lesson of how, once you destroy things and once you destroy, particularly the ethos of government, you know, once you've kicked out of government all the people who are there for idealistic reasons, you know, who don't mind working for less money because they think they're doing something on behalf of Americans, and once you've replaced a lot of those civil servants with loyalists, it's very hard to find new ones. And that's a related piece of the story I'm worried about in the US, that once you have

• 26:20Anne Applebaum?

  kicked out everyone who works for the American government because they love America, and instead have people who work for the American government because they think they might make money doing it corruptly, or because they're loyal not to America but to Donald Trump, you'll find in later years that the government lacks capacity to do things, that the people who should be there to fix problems or to manage risks aren't there anymore. It's a long walk backwards. I mean, in our case, there are really three ways in which this could be stopped. Actually, the simplest way would be for, I don't know what it is, three or four Republican

• 27:00Anne Applebaum?

  senators and a handful, six or seven, members of the House to decide they want to stop it, to join with the Democrats, to elect, you know, an independent or a bipartisan speaker and a bipartisan leader of the Senate, and begin to, certainly, they could end this fake emergency decree that Trump is using to impose these tariffs.

• 27:25Anne Applebaum?

  They could certainly begin to conduct investigations into what's going on. I mean, it's Congress that has the investigative power to do this. But right now, we don't have, you know, we don't have a majority in Congress that's able to do that. So that would be, that's actually the fastest thing that could happen. The second way it could happen is that voters decide at the next election, which is, you know, still many months from now. But they could decide to to hand Congress to the opposition political party to enable them to conduct this and enable them to do it. But that would require a really decisive vote from a lot of people, including in red states, because the moving the Senate is is not so easy. And then, you know, finally, we would need

• 28:10Anne Applebaum?

  the courts to begin to respond. Perhaps this would have to probably happen via lawsuits to begin to demand some kind of change. I mean, the, of course, the tragedy is that the real, the bodies in our system who are supposed to investigate federal corruption are the Department of Justice and the FBI. And those are controlled by Trump. So they're not available to us right now as as tools to do that. But maybe it would, we would now have to wait for a future president, unless, of course, this president was impeached.

• 28:43Scott Galloway?

  We'll be right back after the break.

• 28:51Scott Galloway?

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• 29:37Scott Galloway?

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• 29:51Scott Galloway?

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• 30:36Scott Galloway?

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• 30:58Scott Galloway?

  Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. The Regentic Trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?

• 31:43Scott Galloway?

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• 32:06Scott Galloway?

  My understanding is that in leading up to World War II, that the private sector in Germany basically did sort of a deal, or several deals with Hitler that said, you bust our trade unions, you financially favor us and we'll support you. And then it kind of spun out of control, so to speak. And it got to a point where they were powerless to do anything about it. Do you see any parallels in terms of the private sector in Germany enabling Hitler with what's happening here? Specifically, I've just been shocked that all of these independent thinkers who think of themselves as leaders have been so quiet and have just sort of gone along, whether it's paying 30 or 40 million dollars for some documentary on the first lady,

• 32:49Scott Galloway?

  or deciding that, no, just kidding, I'm not going to put tariffs on the home pay, on the pricing page, or just not saying anything when you know, you know that they're very much against some of these policies. What's your observation around the private sector in America right now as it relates to this? And any historical references?

• 33:11Anne Applebaum?

  So I'm always reluctant to compare America to Nazi Germany because then all anybody can think about is how Nazi Germany ended. And I don't feel like there's going to be a Holocaust here very soon. So it's, you know, it always creates the wrong image. It also creates an image of dictatorship that's wrong. You know, when people think of Nazis, they think of storm troopers and people goose stepping through the streets and that that's what authoritarianism looks like. And of course, in the modern world, that's often not what it looks like. You know, the democracies end nowadays usually because they are, a democratic elected leader slowly takes over the institutions of the state or quickly. And it can take some time and it can be very smooth

• 33:56Anne Applebaum?

  and it doesn't necessarily involve violence. And so that's the way democracies fail. If you look at Hungary, if you look at Turkey, if you look at Venezuela, if you look at what almost happened in Poland, but wasn't completed, you know, that's not a, there isn't mass violence or street violence of the kind we see. So that's why I don't like the comparison. However, having said that, you are right that there are multiple instances of Company heads, business people, you know, in Nazi Germany, in other autocracies, thinking that they can do a deal, or they can benefit from the system, and that they won't eventually suffer. And there are also multiple instances of them ultimately suffering.

• 34:38Anne Applebaum?

  I mean, of course, the German economy, you know, the stock market went up and up and up, I think until Stalingrad, or at some, you know, some turning point of the war. And then it collapsed, never to recover. And, and, you know, many businesses were destroyed, and people's lives were ruined. I mean, that's, that's an extreme example. But even in, even if you look at Hungary, you know, lots of business people who thought at first, you know, Orban was talking, you know, you know, talking the talk of free markets, and, and he was somebody who was going to be friendly to them. I mean, they too slowly lost control of their companies, as the Hungarian state played a bigger and bigger role, somewhat like Trump wants to do, in deciding essentially who got rich and who didn't, in making the

• 35:21Anne Applebaum?

  rules of the system so that they would benefit a particular group of companies who are close to him. In his case, it's his son-in-law who became very rich, rather than his sons, and, and a couple of his childhood friends. And eventually, I mean, I know a Hungarian businessman who wound up leaving the country. I mean, he eventually sold his businesses in the country. He moved away. He was very, he had some, still had relatives there, so he's been rather quiet. But he understood finally that he couldn't operate anymore in a system unless he was going to have a kind of corrupt relationship with the ruling party. And I'm afraid that American businessmen, I mean, especially the big businesses, are making a huge mistake by imagining that it's going to be good for them in the long run

• 36:05Anne Applebaum?

  to go along with this. Because if they cede that kind of power to the White House, you know, if they let the White House make arbitrary decisions, whimsical decisions about Who can do this deal and who can, who's allowed to escape the tariffs and who can't? Then, first of all, it's bad for the economy in the long term and, you know, the, just the insecurity and the volatility will be bad for everybody's business. But also, at some point, they could very well end up on the wrong side of that deal as, as the whim moves in the other direction and as others, others become favored. And, you know, there's, you know, in almost every case that I've mentioned, the, sooner or later, the economic decline catches up.

• 36:50Anne Applebaum?

  I mean, Hungary is a great example. It's a, it's a, it's a country that was the, you know, the early 1990s, which is when I first started going there, it was the kind of gem of Central Europe. They started privatization early in the, in the 1980s. By the time communism fell, they were ready for it. There were a lot of good investment opportunities, a lot of foreign companies moved into Budapest. It's an attractive city, food was good, and, you know, and it, and it felt like it was, it was moving upwards. If, you know, but since Orban has taken over, you saw the boom continue for a while, and in recent years, you're now beginning to see this very distinct decline, so much so that Hungary, depending on which measurement you use, is either the poorest country in

• 37:34Anne Applebaum?

  the European Union or the second or third poorest. But it's, you know, it's, and it's behind in all kinds of measures of productivity, of governance, has a very poor healthcare system, poor education, it's sliding downwards. And the slide downwards is directly connected to the authoritarian system that Orban built, and of course, which many people around Trump admire. You know, it, it enabled corruption, it gave too much power to the state, it gave too much power to the people around Orban to just, again, to decide to make rules and laws that benefited them and their friends. And, and ultimately, it was bad for everybody else. It also encouraged a lot of educated Hungarians to leave the country. I mean, they have, they have an immigration problem, and despite all this kind of pro-family

• 38:19Anne Applebaum?

  rhetoric that Orban uses, people don't seem to want to have children there. And they often leave if they can. And so that's a, it's a, it's a, it's a good indicator. I mean, almost every one of these countries, I mean, and there are more extreme examples like Venezuela, you know, countries that are, that are, that lose out where, where too much power goes to one person, where institutions decline, where the independent judiciary declines, where the rule of law declines. Sooner or later, there's an economic impact and it's negative. And, you know, Jeff Bezos should know that. And, um, uh, you know, everybody who runs a large company or a bank in this country should be aware of that. I mean, there, and they, and they have some other options. I mean, I understand that nobody wants their company to be picked out or attacked on Truth

• 39:03Anne Applebaum?

  Social, but there are ways in which they could work together, you know, which universities could work together, law firms could work together and companies could work together too and begin to speak collectively. And I think that might make a difference.

• 39:16Scott Galloway?

  Just for the purposes of some discussion here, just some pushback. I find that I get a lot of pushback whenever I compare the US right now to 1930's Germany. You know, he's not a genocidal maniac. Say what you will about him. Okay, granted. But I see a nation that was arguably over the last 200 years, the most progressive enlightened nation in the world, and it wasn't the US, it was Germany. They descended into this darkness for 11 years. And what did they have? They started demonizing immigrants, they had an economic shock. They started, I mean, what do we have in the US? We're essentially in some form, it's a new form, but we are rounding up people, innocents, and sending them to the equivalent, I won't call them concentration sites, but black sites.

• 40:00Scott Galloway?

  We have someone with extreme nationalist rhetoric who sees the world as a zero sum game. All of our problems are because of the gains of other nations. And also what I think is the most dangerous component, that's similar to 30's Germany, we have a huge group of, a population that tends to be more risk aggressive and more prone to violence, specifically young men who are really struggling. And what I would offer a question and ask you to respond is, is the US that much less likely to get to that very dark place in four years than Germany was in 1935?

• 40:35Anne Applebaum?

  So again, the only reason I hesitate with the Germany comparison, as I say, is because of how it ended and because we know the end of the story. But you are right that if you look at Germany in 1933, which was the beginning of the story, you can find some parallels. And you're also right that, you know, one of the important comparisons to make is the speed with which a country can transform itself. You know, that we have, we all have this image in our head of the United States as being on some kind of even keel. You know, everything has been the same for so long and it will go on being the same. But countries do experience rapid declines. You know, they do experience rapid change.

• 41:20Anne Applebaum?

  And we had it once before in our history during the Civil War. I mean, you know, we, our country plunged into violence and thousands of people killed thousands of other people. I mean, I don't foresee that happening now, but you can have moments of profound change. And you are right that people who are too complacent and who believe it could never happen here because of our history, because of who we are, because we're exceptional, whatever story they're telling themselves, are missing the frequency with which this can happen. So, so I, you know, I agree. You know, it's also useful because you're also right that what happened in the early 30s is a pattern that you see in other places.

• 42:02Anne Applebaum?

  So again, it's a leader who is legitimately elected or chosen, as Hitler was initially, you know, then deciding to take over the institutions of the state. In other words, take over the civil service, politicize that, take over the judges, politicize them, attack the media. Actually, Hitler had this phrase, "lungen presse," which means lying presser, which is something like fake news. The same institutions that he was attacking, and these are of course also the institutions that Orban attacked or that Chavez and Venezuela attacked. By the way, this doesn't have to be a right wing, doesn't have to be a right wing leader who does it. You can also have a left wing version as well.

• 42:43Anne Applebaum?

  You know, all these moments when you see a rapid period of decline, it's the same institutions being attacked and undermined, and that is happening here. And in that sense, your comparison is correct.

• 42:55Scott Galloway?

  Some of your writing and the writing of others is really is illuminated. And let's be honest, I'm a glass half empty kind of guy. I'm always thinking about the end of America, how it might happen. And some of the stuff I've read is, to your point, made me believe that it happens not with a bang, but with just a thud or a whimper. And an example or a scenario, and I want you to respond. 2028, four major states refuse to certify the election and say, we don't, we don't recognize this president. And California, basically fifth largest economy in the world, starts doing trade with the Asia Pacific Rim. It's a technology based economy, develops its own leadership, its own currency.

• 43:38Scott Galloway?

  Texas, oil and gas economy starts its own currency, different set of values. Maybe Florida in the South and maybe the Northeast is more about finance with strong relationship with Europe. But basically, we become four nations the size of, I don't know, France and the UK, lose all of our scale, lose a lot of our power, infighting, don't like each other, start putting up fences and borders. And America just slowly kind of fades, not to black, but fades to a much less powerful, inspiring form of black and white. Your thoughts on that scenario? And could it happen? And if it could, what, I mean, I'll start there. Do you think that is in any way a reasonable scenario?

• 44:23Anne Applebaum?

  So I would, I would like Americans to be open to the idea of thinking and imagining scenarios like that because precisely because of how you ended your question, because it will help us think about how and why we might want to prevent it. You know, I don't know if it's reasonable to imagine California breaking off or whether Texas having its own currency is possible. I can imagine very easily, actually, since we almost had it in 2020. I can imagine a challenged election in which

• 44:58Anne Applebaum?

  Some states either don't certify or some don't accept the result. And you could imagine in many different versions of how that could work out. And there is a president who's not recognized by some state governors. And as I said, we came very close to that in 2020. And there are still, I don't know what the percentages are now, but it was at one point between 20 and 30% of Americans thought the 2020 election was stolen. What if that number was 60% or 70%? You know, what if most people thought that the president was illegitimate and had good grounds for thinking that? Then all kinds of, then you have all kinds of federal institutions losing credibility

• 45:42Anne Applebaum?

  and people asking whether they still need to obey the law. You know, what happens to the FBI in those circumstances? Or the Department of Justice? Or the instruments that the president has to use? So a kind of radical weakening of the presidency following this period of kind of hyperpower being given to the presidency is something I can easily imagine. And the fact that Donald Trump introduced into our system this profound doubt about elections means that you can now hear it on both sides, actually. I mean, you can hear, you know, I don't know how much time you spend on social media, probably not so much, but you can see there's a piece of the left who believed the 2024 election

• 46:26Anne Applebaum?

  was stolen by Elon Musk, you know, or by Trump. And that uncertainty about results and that doubt about the system, you know, what if that grows to a level that makes people question the legitimacy of the whole system? And that's the version that I think we're, we could be quite close to. So, yeah, and I think people, it's useful to imagine it. It's useful to think through scenarios because that reminds people, I think, of what's at stake.

• 46:56Scott Galloway?

  And one of the things I find so frustrating is gearing up for the House races in 2026. I mean, I think I'm like a lot of Democrats frustrated that we haven't had a more robust response, if you will. Do you have any thoughts, I'm sure you can ask for your advice, on what, based on what you've seen historically, what if people do in fact think this is dangerous and bad for America, what is sort of a playbook for a more greater viscosity, more tensile strength response than what is happening now?

• 47:32Anne Applebaum?

  First of all, in every, every, every time you see the rise of an authoritarian in any country, one of the first thing that happens is that the opposition splinters. Because the rules of politics are, have changed, sometimes in ways that people don't initially understand. And the, whatever was the previous opposition, doesn't understand the new rules. And they fight with each other, and they split into different parties. You know, look, a country like Iran, the political opposition, you know, had dozens of parties who fought with each other and, you know, for years. Russia, same story. Venezuela, until recently,

• 48:13Anne Applebaum?

  also the same story. You know, Hungary, the same story. That, you know, you had the rise of Orban, and in response, you know, you had the left and the, and the, and the Greens and others, you know, fighting one another, you know, rather than, rather than unifying or finding a way to, to, to push back against, against the damage that he was doing. So, so this is, this is, this is normal. And so some of that, some of what we're seeing is the same. I mean, I heard this kind of frustration in Poland in 2016 and 17, the same thing, you know, the opposition is powerless, they can't fight back, and so on. One of the things that needs to happen is for people to understand the rules are different, that the things that divided us before can't divide us now. You know, the, this, there was a

• 48:55Anne Applebaum?

  scene, just, was it yesterday or the day before, of, you know, Palestinian activists attacking AOC at one of her events. I mean, this is a kind of... Own goal, allies turning on allies. And that's kind of, you know, that's something that has to be avoided. But also, I think the Democrats need to look for, what are the stories? What are the narratives? What are the, what are they going to find that unifies not only them and not only brings together different kinds of Democrats, but also reaches people who voted for Trump or people who stayed home, you know, people, people in the rest of the country. And actually, one of the things that might eventually work, once people, once it begins

• 49:38Anne Applebaum?

  to sink in, is the, is the idea that I spoke about before, this idea of corruption and it's linked to your well-being, you know? And you hear, you're already hearing some of it, you know, when, when AOC and Bernie Sanders talk about oligarchy. When, I think it's Elizabeth Warren who keeps saying, you know, they're getting rich and you're not, you know, and you're, you're losing your, you're going to lose your healthcare. Beginning to make those links between what people are seeing and hearing, you know, even if vaguely, about Trump and the people around him and how it affects people. I mean, the same is true, actually, for, for the decline in the justice system, is that, you know, when you talk to people about judicial independence, that can be a little bit too theoretical.

• 50:20Anne Applebaum?

  When you begin to say, you know, look, these are, you know, you, you've had these illegal deportations of people who are in this country legally, you've had, you know, even US citizens being detained at the border, they're, you know, this, this is a new, you know, a new system, and eventually it could be coming for you. And when you, when you link together people's personal experiences and the, and the, and the political, you know, mess that they see around them, I mean, I think then you begin to get powerful narratives that move people. I mean, I, there's a, you know, there are probably, you know, names and tactics I could, I could, I could, you know, that, that might work here that you've seen in other countries. But I think the most important thing is for, not just Democrats, but for Democrats and

• 51:05Anne Applebaum?

  for company bosses and for heads of law firms and for, you know, you know, disappointed and distressed Republicans, to begin to coalesce on a definition of what's wrong that, that can be made clear to people and to begin to offer an alternative. We'll be right back after the break.

• 51:32Speaker 00

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• 52:03Speaker 01

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• 52:32Scott Galloway?

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• 53:44Scott Galloway?

  We're back with more from Anne Applebaum. I just want to move to the business of Anne Applebaum. My sense is you're having this extraordinary moment. And I imagine it's been a lot of successes. I love the statement, "After working my ass off for 30 years, I'm an overnight success." I see you everywhere. And by the way, I think it's wonderful. How are you, I don't want to say taking advantage of, but how do you think about this moment for you? And how do you try and get your message out there? Are you trying to write more, get better at social media, trying to hire people to manage your social media? Tell me about Anne Applebaum, Inc.

• 54:28Scott Galloway?

  How do you manage to scale your message such that it can have as much impact as it can, given this, I think of this moment in time where your work has real resonance?

• 54:42Anne Applebaum?

  So I'm not sure that I think about myself as a business that needs to be managed. For better, for worse. I mean, I think it's fair to say that I have changed some of what I do. So I did spend, I don't know, the 90s and 2000s and into the 2010s, a lot of what I was doing was writing history books. I wrote histories of the Soviet Gulag, the Ukrainian famine, and so on. And it was really, for me, that there was a big turning point in 2015, when first in Poland and in Hungary, and then in the UK and the US, I saw, I suddenly realized that I was watching a very big change.

• 55:24Anne Applebaum?

  There was an intellectual shift going on around me, particularly among, because I was kind of part of a, I was an anti-communist, and I knew a lot of conservatives, and a lot of my friends were in the conservative world. And I saw this conservative world begin to split and part of it begin to radicalize. And then I Wrote a book about that and then I I I wrote another short book. And and and you are right that I do now think more about how to find ways of telling the stories that I studied and telling the, you know, describing the bad ends that I know from history and and warning Americans not to go down those roads.

• 56:05Anne Applebaum?

  And I don't know, I I I'm not sure that I do it systematically or well, but I do it through. I I talk a lot more than I used to. I mean, I do podcasts. I I didn't use to do any television, partly because I didn't want to. And now I do it if you ask me, if I if I have time. You know, I understand that there are different ways to reach people, that not everybody's going to read my 500-page history, The Gulag. And so if I if I have to talk about what a concentration camp is, which, by the way, they those concentration camps in Guatemala, I mean, in El Salvador are, that's what they are.

• 56:38Scott Galloway?

  And and the definition is a site that's not subject to the laws of the the country sending people to that site? Is that the right definition?

• 56:46Anne Applebaum?

  A concentration camp is a camp where people are sent who are neither prisoners of war nor necessarily convicted criminals, it's somehow outside the law. It's people who are being sentenced not for necessarily what they've done, but for who they are. And that's certainly that defines some of the people who have been sent there. So so, yeah, I feel obligated to to to to talk and speak more, but I don't know, may if there were if there were something that I could do to get the message through more effectively and to more people, I would do it. I, you know, I I don't come from a show business world or a or a or really a television world. You know, I I'm I'm somebody who writes books and articles, figuring out how to make what

• 57:31Anne Applebaum?

  I studied and what I do, how to how to make it clear and simple and to transmit it in a way that people understand. I mean, that I do spend time thinking about how to do that. I guess that's the best way to put it.

• 57:44Scott Galloway?

  So we entered college the exact same year. You at Yale, me at UCLA. You're now, I think, a senior fellow at Johns Hopkins. Is that right?

• 57:55Anne Applebaum?

  Yeah, there's something called the Agora Institute there, and I'm fellow there.

• 57:59Scott Galloway?

  I'm curious, well, I'll put forward a thesis, that at universities, our inclinations are Democrats, almost like most Democrats, our inclinations are correct, our hearts in the right place, we take things too far, and we invite an overcorrection.

• 58:14Scott Galloway?

  How would you, what role, if any, do you think universities have played in inspiring an overcorrection, if you believe that's true? And two, what role do you think university leadership has to play in an attempt to push back on this autocracy?

• 58:29Anne Applebaum?

  So when you're talking about universities, it's actually a really fraught subject because the truth about what actually happens at universities and what was written about universities and what people think about universities can sometimes be quite separate. And this was true both during the cancel culture moment of a few years ago, and it was very true of the Gaza protests, for example, last spring. I'll just give you an example of what I mean. I did a lecture at Northwestern University last year, and it was right at the height of the protest movement, and there were a lot of protest movements there.

• 59:09Anne Applebaum?

  And I talked to a group of journalists, student journalists, who were, it was a class I spoke to before the lecture. And I asked them to tell me about how many people on the campus, which is about 20,000 people or 22,000 people at Northwestern, how many people actually cared about these protests? What number did they guess? And they said, well, there's probably about 1,000 people who care, who know about it, who follow it. Okay, how many people have actually been to a protest? Maybe 500. How many people go regularly, live in tents, care about it intimately?

• 59:46Anne Applebaum?

  That was certainly no more than 50 and sometimes it was just a couple dozen. So out of 22,000 people, there were a few dozen who were making the news. Then we started talking about the slogans that were used at the protest. And these were kids, I mean, they were sort of in their early twenties, they'd never done journalism before, they were editors and they worked on the student newspaper. And one of them said to me, you know, the thing that had been most shocking for him was to learn that every time, whatever was the most extreme slogan, whether it was anti-Semitic or anti-Muslim, you know, whatever was the most extreme thing, if someone took a picture of that on a given day, that slogan was the one that would be in the Chicago Tribune the next morning.

• 1:00:30Anne Applebaum?

  And so, you know, you had, I don't know, 21,500 students on this campus who were not involved in this, you know, you had 22, 25 kids who were very angry, you know, one of them made a poster and that was the news story. And so, there were stereotypes and exaggerations about what students were up to and what they did that I think became very unfair. So I think, and you know, it's also become the case that because of the nature of social media and the way that news spreads, you know, one incident, you know, one crazy person at Yale or at UCLA or at wherever, you know, University of Colorado can do something crazy

• 1:01:14Anne Applebaum?

  or make a statement or disrupt a lecture or post a blog or do something that suddenly will make him or her the focus of a kind of frenzy, you know, of one kind or another. And I don't think that was ever very representative of everybody's life on a university campus. And I've had kids who've been through university since then and I know, I teach a little bit, so I know kids that age, and I mostly found them You know, they were wary of this kind of extreme politics, you know, on both sides. They were mostly pretty moderate. You know, most of them were, you know, did their homework

• 1:01:56Anne Applebaum?

  and, you know, went to their, you know, lacrosse matches and weren't engaged in the kind of bitter campus wars that you read about in the newspaper. And so I think the, I think a lot of, you know, and then, of course, the campus wars became important to conservatives and to some on the left as a, as a way of fighting about other things. And so I think, I think the campuses were really, you know, it was, bad service was done to them. And having said that, there are plenty of university professors and, in particular, but also university presidents who weren't clear enough about the basic, what should have been the basic rules for any university, you know, we, you know, free speech, tolerance of views, you

• 1:02:41Anne Applebaum?

  know, due process for people accused of things, whether they were accused of political crimes or, or sexual assault. You know, the, the, the presidents and the faculty also became caught up in these various frenzies and in some cases became afraid of, you know, they, these institutions also became afraid of becoming the subject of attack. And so, you know, we had, we had, we had a long and ugly moment that actually I think we were beginning to recover from until, you know, until the Trump administration came, came to office and decided that what it really wanted to do was destroy the universities altogether, which I do believe is their goal. I mean, I think they, I think their goal is, and is

• 1:03:23Anne Applebaum?

  not just about correcting some kind of lefty excesses on campus. I think they want to, they, they see universities, much as, again, Orban did, or, or indeed, almost any authoritarian did, the Chinese apparently are very interested in what's going on in the US because they see echoes in their own history, the Cultural Revolution. You know, they see them as places where, you know, people exchange ideas, where they, they seek for truth. They try to establish facts, whether those are scientific facts or historical facts. And, and, and those are the kinds of people who've been taught critical thinking and who've been taught to ask questions that are a problem for a president who wants people to accept his lies. You know, he, this is a president who lies every day, several times a day. He lies

• 1:04:06Anne Applebaum?

  about the price of gas. He lies about... You know, his tariff policy, he lies about everything. And he doesn't want people to question him. And they, they want to be their, their, you know, their movement to be accepted and not questioned. And they see universities as the source of a kind of, it's not even a political opposition. It's the source of intellectual and moral opposition. And I think that's why they want to destroy them. So, so although there was a case for university presidents to be braver, for university faculty to, to, to become, to be less political, and by the way, you know, keeping in mind that it was always a small percentage on any given campus, and certainly when looked at, at the thousands of universities across the country, there was a certainty that you could make that case.

• 1:04:51Anne Applebaum?

  But it seems to me that what's happening now isn't even an overcorrection. It's a, it's a, it's a different project. It's a much more extreme project.

• 1:04:59Scott Galloway?

  So, last question. I've been shocked, whenever I meet an actor, one of the, and I'm talking about kids, they almost universally say, I just would not want my kids to go into this industry. Would you encourage your kids to be authors or write for a magazine or be a historian? Do you think your industry is a good industry for young people to enter?

• 1:05:22Anne Applebaum?

  So, I don't think, I, I have two kids and neither of them is interested. So we're, you know, I don't have to, I don't have to worry about it all those. Look, I, I still know a lot of really great journalists. I know people who are dedicated to investigating important stories, who write about crises around the world. I was just corresponding this morning with a photographer who I'm working with, who's in Sudan and who's witnessing a horrific moment in that war. There are refugees escaping into Chad. She happens to be there. She's taking pictures. I'm going to write something short. I was, I was there a few weeks ago and I'm going to write something short to go with her photographs. And, you know, I see that people who are

• 1:06:08Anne Applebaum?

  You know, who believe in this kind of work and who want to do good work are are still there and they have interesting careers and great lives. I mean, you don't become super wealthy and you don't necessarily become super famous. It depends on, you know, maybe you get lucky or maybe you don't. But but I but it's a I see that the people in the industry feel they're doing something good. And so, yeah, I would recommend that people do it. For the moment, we still have there are still places to write for some big places, some small ones. If you're if you're interested in doing investigative journalism, if you're interested in reporting, if you like writing, if you want to convey ideas, if you care about ideas, if you want to be engaged in in political debate, there's there is space to do it.

• 1:06:51Anne Applebaum?

  I mean, there is a lot of junk out there and a lot of really bad journalism and a lot of video clips that, you know, we don't all need to see. But but there but there's a there's a there's a real world and and I hope younger people join it.

• 1:07:08Scott Galloway?

  There's still space to do it. Anne Applebaum is a Pulitzer Prize winning historian and staff writer at The Atlantic. She is also a senior fellow at Johns Hopkins. Her books include Gulag: A History, Red Famine, Stalin's War on Ukraine, and her latest Autocracy, Inc. She joins us from her home or office or home office in Washington, DC. Anne, I just love seeing people such as yourself who have gone a million miles deep on a not a fairly narrow topic, but you you you literally are the autocracy person. And it's just very rewarding to see the kind of recognition and influence you're having. You're forceful, you're dignified, and you're one of the few people that, and this is

• 1:07:53Scott Galloway?

  one of my many flaws, I fall in love with my own ideas and look for reasons to validate them. But whenever you say something, it isn't congruent with my current thinking. I stop and I question my own beliefs. And I think that's really important. So really appreciate your good work.

• 1:08:08Anne Applebaum?

  That is a really kind thing to say. Thank you very much. You know, I'm a listener and a follower, and I look forward to hearing what you have to say in the future, too.

• 1:08:17Scott Galloway?

  Thanks, Anne.

• 1:08:31Scott Galloway?

  Osmo of Happiness, this notion of autocracy, kleptocracy, and I brought up the notion of kakastocracy with Anne. And what I would argue, the difference between, you know, a lot of individuals who are really talented make good livings. But the reason they don't make exceptional livings, and maybe that's not their goal. Maybe they just want to do their thing and make a good living. There's nothing wrong with that. But I would argue if you want to make a great living, obviously you have to be talented. And I can't figure out if raw talent is 51 or 49% of the whole package of making a really exceptional living. I have managed to make an exceptional living. I think I'm talented. I'm not humble. But hands down, the secret sauce of my success is two things. One, an ability to endure rejection and never get afraid

• 1:09:14Scott Galloway?

  to ask investors to invest in me, ask talented people to come to work for me, ask clients to be my client. It was never, you know, no never held me back. I've gotten a lot more no's than yeses. And that's the key to yes, is a lot of no's and the willingness to endure it. But two, I have always understood from a very young age that greatness is in the agency of others. I've always invested a lot in people and constantly I am thinking about. I think more about, what do I think more about than clients or expenses or the product, whatever it is I'm offering at the companies I've been running? I think about who is really good and how do I make sure they stay? Because the cost of replacing someone really good is just generally going to be a lot more than the cost of trying to keep someone.

• 1:09:59Scott Galloway?

  And the way you keep them is one, first and foremost, you pay them well. I want to make it really difficult for anyone to leave, especially anyone who's really good. And that comes down to compensation strategy. And you don't like to say this at all hands, but I generally believe there's a small group of people that drive the majority of the value at medium and big firms. At a small firm, you can be kind of a SEAL team. You can pick mostly or have mostly really outstanding performers. Your ratio of A performers to B performers can be like 50/50. It's never going to be 90/10 because the really best performers, no matter how profitable you are, it is very hard to pay everyone really, really well. But most big firms, it's usually 1090. And that is 10% of the people drive 120% of the value and the other 90% are negative 20.

• 1:10:44Scott Galloway?

  And you have to have B players to scale a business because A players want a lot of compensation and equity, or they want to go start their own businesses. And you have to convince them better than doing your own thing or going to Salesforce or Google, you're going to do really well here. So you have to give them a lot of equity, a lot of compensation. But I've now gotten to the point where I get a lot of joy and I'm rounding third. I'm monetizing a lot of the brand equity and work that I've invested over the first four decades of my career, or the last four decades, hopefully, and trying to overcompensate people, not only financially, but I've got a good manager in place. I think about kids, I send them on vacations, I try to invite them to cool stuff, try to give them a little bit of, I don't know, some of that riz or fame in terms of speaking gigs or whatever it is.

• 1:11:28Scott Galloway?

  But loyalty is a function of appreciation and loyalty is absolutely a function of shareholder value, or shareholder value is a function of loyalty. So then how do you get to loyalty? It's appreciation. You pay them well. I try to overcompensate them and you try to make their job rewarding or somewhat cool. Also, what do you do? You hold people accountable and that is on a regular basis, you let people go. And that's not what you hear at all hands meetings, but it's important because everybody at a firm needs to be able to look left and right and say, maybe I don't love this person, but I get why they're here. And if they are looking at someone who's not very good or not working very hard or not as committed, it reduces their commitment or they start thinking, maybe I should go somewhere else where I'm compensated for my additional commitment. In sum, if you have a lot of talent, you'll make a good living.

• 1:12:13Scott Galloway?

  But if you want to make a great living, you have to understand how to build an organization and recognizing that greatness is in the agency of others is paramount. It's the difference between a practice and an enterprise. It's the difference between making a good living and making a great living. It's the difference between having a voice and having an enormous impact. This episode was produced by Jennifer Sanchez. Our intern is Dan Shalon. Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow our Prop G Markets Pod wherever you get your pods for new episodes every Monday and Thursday.