Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

Scott shares his thoughts on what might have been the final nail in the coffin for the decade-long effort to build an Apple car. He also discusses what it means for Shein to explore an IPO in the UK instead of the U. S., and explains why he’d still like to invest in the company. Finally, he and Ed take a look at a group of stocks in Europe garnering attention for a genius branding play. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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

• 0:00Speaker 00

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• 0:59Scott Galloway?

  This week's number 62. That's the percentage of Americans who do not talk about money. True story, Ed. My man whore Patrick came over and I gave him four crisp hundred dollar bills, but had some of my semen on it. And he said, "Well, now I have to report this income." And I said, "Why?" And he said, "Well, now it's gross income."

• 1:26Scott Galloway?

  Welcome to Prop G Markets. Today, we're discussing the end of the Apple car. Stop laughing.

• 1:33Ed Elson?

  That's your best one. That's, that's number one right there.

• 1:36Scott Galloway?

  Good. Let me, let me get through the headlines so we can just sort of segue out of this. Today, we're discussing the end of the Apple car, Shein's potential IPO in London, and Europe's hottest stocks. Here with the news is Prop G Media Analyst and very low bar for humor, Ed Elson. Ed, we're going to be live. We're going to be together.

• 1:56Ed Elson?

  I know. I can't wait. It's going to be incredible. You know, Vox is telling us that we're the most popular event that they have right now.

• 2:04Scott Galloway?

  Well, we beat out Vergecast or Today Explained or some psychotherapist sticking their thumb up someone's ass and telling them they don't have prostate cancer.

• 2:14Scott Galloway?

  Wow. All right. I'd say Talis. I'd say Talis Midget, but I've been told that that is, uh, that is, I'm not allowed to say that. So we are the fastest tortoise. We are the fastest tortoise. I'm convinced you have like all these, these very young desperate fans.

• 2:32Ed Elson?

  I'm pretty sure that's all your fan base. Yeah.

• 2:34Scott Galloway?

  No, I think it's all you. Here's the thing. Let me just give you a little insight because you're new to this whole game. People hear my voice and they think I'm handsome. I'm the fucking Sean Connery of vocals. People assume I'm going to be really good looking. I have the voice of a good looking man and I'm not exaggerating. Occasionally someone brings me up to someone who's a huge fan of the podcast and they say, hey, this is Scott Galloway. And they go right away, they go, oh, Prop G. And then they kind of look at me and they tilt their head as if to say, I thought you'd be so much better looking. And you have a very handsome voice as well. You sound, you sound like kind of a young, kind of debonair, James Bondy type. Like who's the wimpy one? Who's that guy that they thought was going to be Pierce Brosnan? He was sort of a wimpy one.

• 3:18Scott Galloway?

  And the guy who plays Loki, they thought he was going to be the next James Bond. But I don't, I feel like he doesn't look like he could kick anybody's ass.

• 3:25Ed Elson?

  Yeah. People think that I'm like a 40 year old, um, English guy wearing a bow tie from like the sixties. But what were you going to say about my looks? Because I thought there was going to be a butt or an and then.

• 3:36Scott Galloway?

  No, no, I think you're very handsome. I think it's important to build up the looks of young people who are struggling to find mating opportunities. You go right in there. You're special.

• 3:44Ed Elson?

  Struggling young men.

• 3:45Scott Galloway?

  You know my mom? Another story as we're talking about us, I used to come home, I'm not exaggerating. At the age of 13, my nose literally exploded into a 40 year old man's nose. And the rest of my body did not catch up. It was like, how about a little Scott with that nose? I mean, it was like, it was, I was basically a life support unit for my nose. And, and I came home, I remember complaining to my mom. I used to say, mom, what the fuck is going on here? And she would say, no, no, no, you don't have a big nose. You have a strong nose. And I'd be like, oh God, don't tell me that. Anyway, so you have a, you have a strong, you have a strong mask, you have strong masculine features, Edward Elson.

• 4:28Ed Elson?

  Oh, thank you.

• 4:29Scott Galloway?

  Enough of this shit. Get to the news.

• 4:32Ed Elson?

  Okay. Let's start with our monthly review of market vitals.

• 4:42Ed Elson?

  The S and P 500 climbed towards its best February in nearly a decade. The dollar was stable. Bitcoin breached $60,000 for the first time since 2021. And the yield on 10-year treasuries rose back above 4%. Shifting to the headlines. The FTC sued to block the proposed $25 billion merger between supermarket giants Kroger and Albertsons. That deal represents the largest merger in supermarket history. And the FTC says it will result in higher prices and less competition. Warner Brothers Discovery has reportedly walked away from talks to acquire Paramount. As we discussed a month ago, Skydance Media and Allen Media Group have also made offers for the company.

• 5:23Ed Elson?

  After a standoff with TikTok, Universal Music Group has begun pulling all of its music from the social media platform. Tensions between the companies have escalated this month after UMG and TikTok failed to renew their licensing agreement. Buy now, pay later company Klarna announced that its AI assistant is, quote, "doing the equivalent work of 700 full-time agents." That is about the same number of employees that Klarna laid off in 2022. And finally, Google's market cap dropped $90 billion in a single day after its AI chatbot Gemini stirred racial controversy. Critics said the bot showed bias against white people and called for CEO Sundar Pichai to resign. Google has since paused its chatbot.

• 6:08Ed Elson?

  Scott, where shall we start?

• 6:10Scott Galloway?

  So the FTC suing to block the proposed merger between Kroger and Albertsons. I like this. I haven't looked into the merger itself, but people tend to overlook some of the more mundane companies where there's kind of, like, for example, big chicken. There's a small number of chicken producers and as a result, chicken prices have vastly outpaced inflation. And so I are on the side of we've had way too little antitrust over the last 30 or 40 years. In this instance, I feel as if, I mean, I can understand a Warner Brothers hooking up with a Paramount. We're going to talk about that or what, you know, they were hoping to do because they're trying to fight off.

• 6:50Scott Galloway?

  You know, Netflix and Amazon and Apple and very deep-pocketed players in the streaming space in a consolidating market. The grocery business, I'm not sure they were going to be able to make an argument that their scale would do nothing but potentially add shareholder value, but also in certain markets, I would imagine where there was overlap, that they were going to have pricing power over certain regional markets. So I do think that we need kind of 20 or 30 years of erring on the side of too much antitrust because the last 20 or 30 years, we've erred on the side of too little. Warner Brothers Discovery, I got this wrong. I thought that Paramount was going to come to them because essentially Sherry can, Sherry's sitting on top of a melting ice cube.

• 7:35Scott Galloway?

  Every day she doesn't sell, Paramount becomes worth less. And by the way, with these deals, when they announce they're no longer pursuing it, that doesn't mean a whole hell of a lot. So just a quick lesson here, having bought and sold companies. I don't think I have ever closed on a transaction where at one point, one or both of the parties didn't walk away. Because what you have is a certain level of it's, it's a shark trying to sum up its prey. And before it goes right after it, because sharks are actually cowards and are worried something's going to bite it back, it will bump it to see the reaction, to see if this is predator prey, you know, it'll circle it, really try and examine it and make sure that this thing isn't going to fight back or it's really vulnerable.

• 8:18Scott Galloway?

  In most M and A deals, if at some point you don't have a line, and I say this as someone who's running small companies who were on a regular basis getting inbound offers for acquisition, if at some point you don't say, no, that doesn't work for me, we're walking, they will just keep hammering you, not only in terms of price, but in terms of conditions. Oh, we want you to vest your shares over three years. Actually, we talked to the board and we'd be more comfortable with four years. And if you say no, they're going to come back and ask you for five years. So the fact that quote unquote Warner Brothers Discovery has walked away is not a good looking forward indicator, but it's not. The fat lady hasn't sung yet. And also, I gotta think that their stock decline and their poor earnings where the stock got hammered, it's now, I think, at an all time low, that

• 9:03Scott Galloway?

  didn't help.

• 9:04Ed Elson?

  I've been thinking through the potential reasons why they called it off, but it's interesting you say that this doesn't mean it's over. But I think there are two reasons that come to mind for me. One is, as you mentioned, the stock, it's down 65% since it became Warner Brothers Discovery, which was back in 2022, continues to miss on earnings, continues to miss on its EBITDA guidance. Generally speaking, they're not doing well. So I would assume that that basically means this is just an inappropriate time to go out and be acquisitive. The other side of this is, the one thing that they have been doing very well, perhaps the only thing, is paying down their debt. Because when Zaslav took over, he was taking

• 9:45Ed Elson?

  on $55 billion in debt. He's already cut that down to $40 billion. So the strategic imperative appears to be, we're going to pay down the debt and we're going to do it as quickly as possible, which is sort of why I've never, I never really understood this deal. Because now they're saying, oh, we're going to go out and we're going to acquire a company that's already loaded with $8 billion of its own debt, that is paramount. And that feels like a deviation from the plan.

• 10:10Scott Galloway?

  At a certain price, it made a lot of sense, because the company's market capitalization is around $8 billion. You're saying they have $8 billion in debt, so that's enterprise value of $16 billion. So a quick lesson, because a lot of times, people say things they assume I understand and I don't. So let's define what enterprise value is. Enterprise is the market capitalization, so the number of shares times the share price, plus the debt, minus the cash. So let's use a house as an example. You buy a house for $100,000, and you assume the mortgage of $50,000. So what you're saying is that home is worth $150,000, because you're not only paying $100,000, but you're assuming the mortgage of $50,000. So you're saying the enterprise value of that home is $150. But wait, there's $20,000

• 10:55Scott Galloway?

  in the basement that you knew about. You subtract that out. So $100,000 I'm paying, plus I'm assuming $50,000 in debt, plus there's $20,000 in cash, enterprise value of $130,000. So in this instance, Paramount looks to have about $16 billion in enterprise value. And if they took on, say they took on that debt and did the rest in cash, or I guess they would have to give it stock, they'd probably take on, they could probably get additional debt, do the rest in stock. The markets would be fine with it if he could immediately show it's accretive. What do I mean by that? An accretive acquisition is if Paramount or if Warner Brothers is trading at a price earnings multiple of 10,

• 11:38Scott Galloway?

  meaning that it'll do 2.5 billion in earnings and it has a market cap of 25 billion. If it can buy Paramount, say Paramount is doing 100 million in earnings. If it can buy Paramount for a billion or less, or less than a multiple of 10 on its PE, then it's an accretive acquisition. In other words, it's earnings accretive right away. And the debtors or the markets would like that and say, okay, it's accretive. We'll give you more debt. What this probably signals is a couple of things. One, the board is probably saying, look, boss, stay focused. And two, the number of bidders here probably meant that the price indicated it wasn't going to be an accretive acquisition.

• 12:21Scott Galloway?

  So he probably called Sheri and said, Sheri, if things change and the price gets to a point where it's a no-brainer for me, I'd love to talk again. But until then, as you can imagine, my board has told me to stay focused. Yeah, that makes sense. And Universal Music Group? I love this. I just think it's crazy that these platforms are getting everything and the creators and the other folks and the content makers are getting the crumbs. They're getting the scraps. They're getting, they're getting the leftovers. So I think it's great that these content companies that spend a lot of money on content. Are saying no to the platforms that have used technology to amass huge audiences. And to date, there's been such an asymmetry of power.

• 13:03Ed Elson?

  Yeah, I think it's super interesting that, one, they're taking down all the music of their own artists and they have the biggest artists in the world, Taylor Swift, Ed Sheeran, Drake, Elton John, Rolling Stones, et cetera. All that music is coming down. But they're also taking down any music that was written by someone who is in any way affiliated with Universal. Now, most songs credit several writers. Sometimes it's like 10 or more, which makes things kind of complicated. And Universal has said that if even one of those writers was affiliated with the company, that music's coming down. So, put all that together, factor all that in, estimates are saying that 80% of the

• 13:47Ed Elson?

  music on TikTok is going to be affected. 80%. And then you consider the fact that 86% of all videos on TikTok contain some form of music. That means that of all of the videos in the TikTok ecosystem, 70% are about to be either silenced, the music's going to come down, or maybe even they're going to get taken down. So, I'm surprised this isn't a bigger deal to people. I feel like this is a, this is a very big moment for TikTok. But I also think it's a big moment for the music industry because we're about to find out what users actually like about TikTok as a platform. It could be that they really like the music, they love being able to, you know, play Drake

• 14:32Ed Elson?

  songs and Taylor Swift songs and dance to it. Or it could be that the real value proposition is in the algorithm, it's in the community, it's in the product TikTok itself. I would argue it's probably the latter, but if that's not the case, then we're going to start seeing a huge number of users moving over to other platforms, namely Instagram Reels, maybe even YouTube Shorts, where unlike TikTok, you can post a video dancing to your favorite Taylor Swift song. So I think this is, I think this is a really big deal.

• 15:01Scott Galloway?

  And let me ask you, has YouTube and Instagram or Meta's Reels, have they figured out a licensing agreement that Universal is is down with?

• 15:10Ed Elson?

  Yes.

• 15:11Scott Galloway?

  Well, OK, so this probably gets solved then. I I don't know. So the bottom line is there is a there there. And that is if they've figured out a way to come to a deal, they have benchmarks and reference points for what the economics of this deal should look like, because they've done two deals with other adjacent slash similar platforms. So I think there's a chance this deal gets worked out. Now, there might be some unintended winners and losers here. If if a lot of great songs are no longer available, the creators will go, wow, this video isn't as cool. TikTok would still be fine. It just wouldn't. It's like losing, if you no longer have the best, I don't know, leather seats, or you no longer carry Harman Kardon speaker. I mean, it's probably more than that. It's sort of,

• 15:54Scott Galloway?

  you lose a really wonderful feature. The unintended winners here would be independent music artists who would probably get more play and would bubble up. In some ways, this might be great for the long tail, because the music industry, unfortunately, like every other market, has been supercharged and the top 10 artists continue to make more and more or take more and more of the total pie. But I would bet within the next, I don't know. I think TikTok is gonna is gonna pony up. Again, it goes back to the shark bumping. I I think that Universal has said, no, we're nowhere close. We're out. I said, shut off Google at the New York Times. I I said it. But you know what? Arthur Sulzberger wanted to have cocktails with fucking Steve Jobs. They were so.

• 16:37Ed Elson?

  That guy lives rent free in New York.

• 16:39Scott Galloway?

  They were so impressed with these people. They thought they were. They they so desperately wanted to go to Allen and Company and hang out with them and announce that they were doing a deal with Google. It's not. It's not Google or the New York Times. It's Google and the New York Times. And I sat there and I'm like, Jesus Christ, how can you be this fucking stupid? Anyways, I'm gonna move on here. Let's talk about. Let's talk about buy now, pay later company Klarna, who announced that its AI assistant is doing the work at 700 employees. What what was our post last week, which, by the way, you guys did an amazing job on?

• 17:13Ed Elson?

  Well, I think you got to thank Jason for that. I barely had a hand in it. But it said, in the next several quarters, I believe CEOs will come out in earnings calls and put it bluntly. They'll say, we're going to be a smaller company that does more business thanks to AI. And the idea was that you think that, you know, companies are laying off people because of AI, but they're not admitting it. And your prediction is that they're going to start admitting it because there's going to be more honor in doing so. I feel like that's probably the right summation of the post.

• 17:44Scott Galloway?

  Well, in sum, this was the first, this was like the late eighties or early nineties. And this is the first of your friends to say, I'm here, I'm queer, get over it. Like this guy is the first one who's come out of the closet as a CEO and said, I'm using this technology such that I can fire people. And by the way, it's great for earnings and it's great for shareholders. The problem is, immediately when he said that, his HR person said, you realize that 12 people have quit. You realize that, that of the 30 outstanding job offers we've had, almost all of them have called and said they're not coming here because you're talking about how you're going to fire people with AI. It is not an aspirational all hands meeting to say, team, we've got great news.

• 18:26Scott Galloway?

  Our earnings are going up because of our deft use of technology. And I've got better news. I'm going to need 20% fewer of you over the next 12 months. Look to your left, look to your right, decent chance one of you is not going to be here. I mean, you can't say that. You have to, these guys just aren't being straight because they can't be. I mean, you have to be, it's really strange. As a CEO, you have to be a bit of a sociopath. You have to be willing to stand up in front of 800 people at an all hands and say, we're doing great. We value the team. And then at midnight, send out an email from HR to 80 or 100 of those employees saying, your phone, your security card have all been shut off, please contact HR.

• 19:09Scott Galloway?

  Up until that moment, you got to pretend that everything is great. You have to, otherwise, I mean, the problem is when you announce that you're about to do a layoff, this is what happens. The people you don't want to lay off leave because they're the ones with the most opportunity. The additional advice I give to CEOs when they're doing a layoff, go deeper than you want because you don't want to do it again. It's like surgery. If you're in there, get all the cancer out because every time you put the patient under anesthesia, anytime you cut somebody open, it takes a toll on the corpus. Something that kills a company is if every six to nine months, they start expecting layoffs. The most interesting one, I think so far this week that you referenced

• 19:53Scott Galloway?

  was Google's market cap dropping by 90 billion in a single day. I thought this was fucking hilarious. You type in Nazi and you get, you get a guy that looks like Chris Rock. I mean, it was just hilarious. I, I, yeah. And all the bullshit around DEI, you know, the woke mind virus, that's all a sideshow. If a bunch of right wing podcasters want to make a big deal about it, fine. They'll accuse Sunder of being way too woke and that the corporate tech executives there have the woke mind virus. And, and here's the truth. I know these guys. I know their cultures. They do not lean red. They do not lean blue. They lean green. They are not interested

• 20:38Scott Galloway?

  in politics, or if they are, they want to do it on evenings and weekends. They do not, for the most part, bring their political agenda unless it's cost free. My favorite was when Google did walkouts. Oh, that'll show them. You're walking out and taking a two hour lunch instead of a one hour. Oh, that'll scare them. So everybody there can virtue signal and posture about saving the whales or whatever it is their issue of the day is, and they can create controversy if they want it. It makes them feel good. But the senior management there is totally focused on the bottom line. And my guess is somebody, you know, they fucked up here. Somebody said, okay, we need to be careful. We don't want to get scrutiny. We don't want to type in, you know, type in heroes of the

• 21:20Scott Galloway?

  20th century and get Adolf Hitler. So they said, dial up the, dial up the filters around anything politically incorrect. And they got this back. The problem is, this shows this thing wasn't QA'd. And it's yet another fumble from Alphabet that keeps fumbling the goddamn ball. And this is a company that literally invented AI, or was at least at the The epicenter, they are kind of what they are to AI, what Xerox was to object oriented computing. And that is, they invented it, they left their garage door open and someone else is taking their AI. So they can't seem to shoot straight. It's our big tech stock pick for 2024 because I think they will recover. This is more spectacle than it is significant because they

• 22:04Scott Galloway?

  will figure it out. They will throw a couple hundred, if not a couple thousand engineers at this. The stock going down, in my view, is a buying opportunity because this company has so many incredible assets. What are your thoughts?

• 22:16Ed Elson?

  I thought his, the email that he wrote, that Sundar Pichai wrote to the, to the company was interesting. Specifically, I thought it was terrible. So first he says, I want to address the recent issues, blah, blah, blah. And then here was, here was the second sentence. Some of Gemini's responses have offended our users and shown bias. To be clear, that's completely unacceptable and we got it wrong. Now, to me, that is a complete misdiagnosis of the problem. The problem isn't that they're offending users. In fact, it's because of Google's fear of offending users that this even happened in the first place. The problem is that you have a gen AI that is

• 22:56Ed Elson?

  delivering factually inaccurate information in the form of black and brown founding fathers. And that's the problem that they have to fix, not fixing people's feelings and how people feel about the product. So they haven't really learned their lesson or they haven't really proven that they've learned it. What they should be learning here is, actually, it isn't our job to offend the least amount of people. We are a tech company. It's our job to make great tech products and provide exceptional value to customers. But somehow they've taken this and they've figured out a way to learn the opposite. So you always say, a crisis is a terrible thing to waste. This feels like a crisis that they, that Google has decided to waste entirely here.

• 23:40Scott Galloway?

  So crisis management, this is one of my classes at, at Stern in my brand strategy course. And I basically figured out a way to take 30 seconds of content and try and stretch it into three hours, which is kind of the trick of every professor.

• 23:52Ed Elson?

  Which is what we do every week here, too. Yeah.

• 23:55Scott Galloway?

  But no, there's more content here. But there are only three things you have to remember, right? Acknowledge the issue, have the top guy or gal take responsibility, and third, overcorrect. And it sounds easy, it's not. And everyone comes up with rationalizations for not doing all three or doing them half-assed. The issue here, the top guy's taking responsibility, sooner or later, immediately kind of addressed the issue, if you will. I'm sure they'll fix it. They don't need to overcorrect, they'll fix it. What you're saying is they didn't really acknowledge the correct issue. And I hadn't thought about it, because when I read it, I thought it was pretty straightforward. But what you're saying is, and I think you're right, our Gemini rollout was a failure and in return, inaccurate results. He didn't need to use the word bias or offended, right? Because what he's doing is kind of playing into the hands of the people who say, you're

• 24:40Scott Galloway?

  a technology company and you're way too worried about offending people. The problem is, there's about 14 $800 an hour comms consultants gang banging every sentence. And they're just, you end up oftentimes with this amorphous shit. And I always say to CEOs, go through it, put it in your own voice. If something sounds mealy mouthy, just get rid of it. Just, just less is, less is more. My other observation, Ed, and I've been meaning to ask you this, I think you're a closeted Republican.

• 25:12Scott Galloway?

  I'm pretty sure you're gonna vote for Trump.

• 25:13Ed Elson?

  I'm...

• 25:14Scott Galloway?

  Are you a citizen? Are you, are you a citizen?

• 25:16Ed Elson?

  Yeah, I am a citizen. I'm not a closeted Republican. But I, I like that you think that. I mean, it means you don't know where I stand, which I, which is good.

• 25:26Scott Galloway?

  I think you're, I think you, I think when you're naked, you have like a Nixon tattoo on your ball sack or something. Because you're freaky. You're both freaky. And I think you're a freaky, I think you're one of those young Republicans, and those are the scariest ones.

• 25:40Ed Elson?

  I'm a radicalized young man, yeah.

• 25:42Scott Galloway?

  Those are the scary ones.

• 25:44Ed Elson?

  Why, why, why do you think I'm Republican? Because you agree with me.

• 25:47Scott Galloway?

  You always take kind of the conservative, not the conservative side of this, I shouldn't say that.

• 25:51Ed Elson?

  Well, I'm trying to make this a balanced podcast.

• 25:53Scott Galloway?

  I appreciate it. I think I'm center-left, I think you're center-right, which is maybe why this works or doesn't work anyways. And you have a very handsome voice. All right, let's move on.

• 26:02Ed Elson?

  We'll be right back after the break with a look at the Apple call.

• 26:14Scott Galloway?

  Support for the show comes from Superhuman. The pace of modern work can be relentless. You're getting a constant influx of messages from a ton of different apps. You haven't closed all your browser tabs in a year. Everything seems urgent and staying on top of it all feels like an impossible task. Superhuman Go is an AI chat that's always there when you need it, already aware of what you're doing and doesn't ask you to start from zero. Superhuman Go, from the makers of Grammarly, help you be the best version of yourself at work. It handles the repetitive stuff so you can focus on the work that only you can do. Whether you need to summarize an endless email thread or prep for a meeting that's happening in five minutes, Superhuman Go works inside the tools and sites you already use: your browser, inbox, docs, and your project tools. And its AI chat is available on the side of your browser and it's always ready.

• 26:59Scott Galloway?

  No new tabs, no switching apps, no losing your place. This is AI that works with you, not on top of you, so that you have the time and brain space to solve the problems that matter. Check it out, find out more at superhuman.com. 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. Their agentic trust platform is built to scale with you, not slow you down.

• 27:43Scott Galloway?

  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? Over 16,000 fast-growing companies like Ramp, Ryder, and Harvey save time and resources while scaling fast with Vanta. Learn more at vanta.com/provg and get $1,000 off. That's spelled V-A-N-T-A dot com slash profg for $1,000 off.

• 28:23Scott 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. Their 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?

• 29:08Scott Galloway?

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• 29:35Ed Elson?

  We're back with Prof G Markets. Apple is pulling the plug on its effort to build an electric car. The car's development has been the subject of rumors and anticipation for about a decade, but now the company has told its team of 2,000 employees working on the project that it's time to wind down. Many of those employees will be moved over to a different division, which has become a higher priority for Apple: artificial intelligence. Scott, you've been bullish on the Apple car for a long time now. You also said that you would buy it in a heartbeat as soon as it got released. How do you feel about this news?

• 30:09Scott Galloway?

  This is a really interesting story, and I think it's an important lesson in corporate strategy and how to be a good CEO, and that is... And let me be clear, two years ago, I said, I can't wait for the Apple car. It's coming. The auto industry is one of the few industries that's big enough that could move the needle for what was then a $2 trillion market cap company, Apple. Like, Apple can't own niches. They have to go after, they have to go big game hunting, right? To move the needle. And I said, they wrap steel around four tires. It's going to be the most valuable waiting list in the world, including it'll have my name on it. I thought this just made a ton of sense. And I made a lot of predictions that the moment Apple launched or pulled some dolphin-friendly

• 30:54Scott Galloway?

  mesh tuna thing environmentally hand-woven by Native Americans cloth off the, off the car, that you were going to have, you know, 50,000 douchebags like myself get on that waitlist and can't wait for the Apple car. So I thought it was, I thought it was a great idea. And the reputation for design, the self-expressive benefit of the brand and just the size of the auto market. And I said, they're going to announce this thing and overnight, a quarter of a trillion dollars is going to go from Tesla to Apple. Now, here's the thing. That was the right strategy. It was the right vision. But strategy and vision are meant to be unifying. They're meant to be guideposts, right? They're meant to illuminate a path. They're not a suicide pact.

• 31:38Scott Galloway?

  And when the data changes, you can't be afraid to change your strategy. And the data and the atmospherics have changed dramatically this year. One, the market vastly overestimated the demand and how quickly the transition to EVs would be. Prices on used EVs have plummeted. Tesla, kind of the leader in the space, is coming under huge margin pressure. Toyota is now being seen as the visionary because they invested in hybrids. They didn't go all in, like GM making these big statements that they were going to be all-electric. And those companies have scaled back. They've said, just kidding. In addition, in addition, there's another enormous competitor, which is the biggest

• 32:22Scott Galloway?

  company that no one's ever heard of called BYD, that has figured out a way to make a really outstanding electric car at a much lower price point. So Apple is sitting here looking at, okay, the market is slowing down. This, generally speaking, is a capital-intensive, low-margin shitty business called auto. We have Tesla that still has a $600 billion market cap, but is facing headwinds for the first time, and we have this other leviathan coming into the market. They thought, you know what? This market has gotten, or the prospects for this market have gotten a lot worse. And there's this new market that we may be as well or better suited to attack, specifically generative AI.

• 33:06Scott Galloway?

  So the term I would use is that a step back from the wrong direction is a step in the right direction. So was exploring and working on an Apple car the right move? Yeah, it was. And was cancelling it the right move? Yeah, it was.

• 33:21Ed Elson?

  You bring up BYD, which came up in the news last week because it announced its first luxury supercar, which is going to cost $233,000, 0 to 60 in 2.3 seconds, top speed of 190 miles per hour. Awesome car, but it's all window dressing on the main point, which is that BYD is now, as of Q4, the number one EV company in the world, as measured by vehicles sold. It sold 530,000 cars in Q4. Tesla sold 480,000. So it's number one now. In addition, it's probably worth talking about the valuation. This is a $76 billion market cap company, trading at around 18x earnings.

• 34:05Ed Elson?

  Compare that to Tesla. $650 billion market cap, 47x earnings. BYD did $80 billion in sales in the past 12 months. Tesla did 97, but that basically means that its revenue is trailing by around 15%, but its multiple is trailing by 60%. So we should be clear, this is a Chinese company, and as we've discussed, there's risk there. But as Aswath Damodaran told us, you know, his advice is pick a couple of companies where, you know, the company is established, it has a clear business model, you understand the business, you understand how it makes money. Surely BYD is the China buy right now.

• 34:48Scott Galloway?

  Like, one or two things is going on here, based on the metrics you just outlined. Either Tesla is dramatically overvalued, or BYD is dramatically undervalued. I mean, this company, you know, let me get this. It's growing faster, has similar margins and trades at about, what's a sixth of the market cap? And it just Tesla trades at seven times sales, BYD trades at point nine. So, you know, this is a tough one. I mean, it's so hard to bet against Tesla. But this company, I mean, think about this company's producing more EVs than Tesla? And no one's ever heard of it. You know, it's dangerous to to talk about what's going to happen to either of those stocks. What's fairly certain is you're going to hear BYD a lot more moving forward.

• 35:32Scott Galloway?

  And again, this is, the automobile industry is just a manufacturing intensive business. And China is really good at that. They are really good at that. They have the most sophisticated supply chain in the world. I wonder if this was kind of the last nail in the, I think they were calling it Project Titan. If this was the last nail in the Titan coffin where they said, wait, we not only have to compete with Tesla, we have to compete with BYD. And then the other thing that was probably, you know, the second to last nail was Rivian. I mean, the stats you guys, you guys presented last week were striking. So I'm getting my Rivian, right? I'm trying to convince everyone I live with to move back to America.

• 36:18Scott Galloway?

  So I bought a home in Aspen. If this sounds like the story of entitlement and prestige and a total douchebag, trust your instincts.

• 36:24Ed Elson?

  When did, when did you buy a home? Sorry, when did you buy a home in Aspen?

• 36:27Scott Galloway?

  About six months ago.

• 36:28Ed Elson?

  Oh, you sort of kept that kind of quiet now? Are you embarrassed by that or?

• 36:33Scott Galloway?

  No, I'm very transparent. My strategy is to take all my money and put them in beautiful homes where I can sit in the backyard and just wait for the ass cancer. That is, that is my entire focus right now. Not lose all my money again, which I have done two times now in my life. Hold on to what I have, buy really nice homes, and then I'm gonna speak every year at the Aspen Ideas Festival, although they've never invited me to speak, I envision myself speaking at that. I'm gonna roll down in my Rivian with my Great Dane to Cash Cash and Casa Tua, and I'm just gonna live a life of privilege and just be literally, all caps, douchebag in Aspen. I love that. Stop by. I'd love to, yeah. And when you invite me, I'd love to come.

• 37:16Scott Galloway?

  The Rivian, I'm supposed to configure this thing, and I got, said, okay, I want ocean foam green or whatever it is. I'm gonna get, I don't think, I think I'm gonna get the pickup because occasionally or once a year I'll ski when my kids are in town. I don't understand. You've already ordered this thing and Yeah, I've ordered it. I just haven't configured it. I got on the waiting list and they keep calling me saying configure it, but I haven't convinced. The problem is my family has opinions. If, if it were up to me, I'd be in Aspen right now. I'd love it there. Anyways, but back to the Rivian. I think they have executed almost perfectly. And then you guys found this data for every Rivian that sold. I think I paid, you know, I bought the fancy one or whatever. I think I paid 70 or 80 grand for it. It's costing them 122 grand to produce

• 38:01Scott Galloway?

  the thing. They lose $42,000 on every car they sell. So I gotta think, Apple looks at that and says, wow, they've done pretty well. It's a beautiful car. It works well. It gets great reviews and they're losing $42,000 a car. Now, Gene Munster, the analyst who's kind of the Apple Yoda, he had a really interesting idea. He said that Apple should buy Rivian. Because Rivian, I think, only now has like an eight or $12 billion market cap or something. But does Apple really want to buy a company that's hemorrhaging that kind of money? But it kind of makes sense, right? I can see Apple buying Rivian. The only thing is culturally, Apple doesn't like to make acquisitions. By the way, quick story

• 38:43Scott Galloway?

  about the dog. So, you know, I used to get invited to go on CNBC every Wednesday. I'd haul my ass down to the NYSE and I'd be on there with all the really smart guys. I really liked the people there. And then I did that for two years and then one Wednesday they stopped inviting me. Never called me, never said, hey, thanks, but we don't like you or whatever. But I was on with Gene Munster probably six or seven times. Whenever they'd talk about Apple, they'd invite me on and they'd invite Gene on. And I was literally like, let me, let me talk more about me. When I was on Bill Maher the last time, I was on with this woman, Jess Harloff.

• 39:15Ed Elson?

  I'm trying to track what story we're talking about.

• 39:17Scott Galloway?

  I was so bummed out. I was so bummed out because she was so much better than me. I was like, god damn it. She, every time she said something, I'm like, oh, that was a better take. I got used to that with Gene Munster. Every time they'd ask a question, I'd give some song and dance about Apple and self expressive benefit and, you know, it's the ultimate tool for mating. And then Gene would actually show up with data. And I'd literally think, oh, my God, can anyone see what a fucking idiot I feel like right now? Anyway, that guy, that guy understands Apple. And I think it's a really-

• 39:48Ed Elson?

  But you don't feel that way on this podcast, it sounds like.

• 39:51Scott Galloway?

  Oh, no, no, I'm still Sensei here. I'm still Sensei.

• 39:54Ed Elson?

  One day, one day I'll be the Gene Munster to your Scott Galloway.

• 39:58Scott Galloway?

  No, occasionally you leave, you leave awful village and you kind of, kind of threaten to come into mediocre land. But no, I'm not, I'm not, I'm not that threatened yet.

• 40:09Ed Elson?

  Yeah, okay, good.

• 40:19Ed Elson?

  Fast fashion company Shein is exploring an IPO in London to avoid potential SEC scrutiny with a US listing. As we discussed back in December, the Chinese company has faced criticism for its lack of sustainability and alleged forced labor practices. While Shein is still working on its application to list on the New York Stock Exchange, it appears the company is losing confidence that it will be approved.

• 40:43Ed Elson?

  Scott, we'll get to what this would mean for the UK stock market in a moment. But first, what do you think this news says about Shein?

• 40:50Scott Galloway?

  First off, I just need to disclose, I'm doing everything I can to try and find a way to invest in this company. You described it as a Chinese company. It's actually based in Singapore. I would argue, I would argue that Apple is more a Chinese company right now than Shein. So what percentage of business does Shein do in China?

• 41:09Ed Elson?

  Tell me.

• 41:10Scott Galloway?

  Zero. They do no business in China. Ninety percent of their supply chain is in China, similar to Apple. Apple does 20% of its revenues in China. Shein does zero. In addition, the fact that they are contemplating, and I read this like you did, doing a London Stock Exchange. What I've seen is a bunch of fairly right wing congressmen come on and say, Shein, we can't have the Chinese come here, and they haven't done their homework. They're about to lose the biggest IPO of 2024. And let me talk a little bit about, about Shein. First off, they've, they've had some legitimate complaints about labor practices and sustainability. And I want to be clear, the entire apparel industry needs to be thoughtful about sustainability and ESG.

• 41:55Scott Galloway?

  The bottom line is, it's just there's too much waste. There's a lot of opportunity for exploitive labor. Shein is working with a bunch of people around fair labor practices and went through their supply chain and went and closed down or stopped working with 300 suppliers and factories in China. In addition, let's just talk about the company and the reason why I'm trying to find a way to invest. I think they did about 30 or the data I found about 30 or 35 billion last year. They're going to do 45 billion this year. They're growing 30 to 40%. And if they continue to grow this way, they're going to be the biggest apparel company in the world. And a couple of other things about them, their business model. It's this asset light business model we love. They don't own any stores.

• 42:40Scott Galloway?

  They don't own any planes. They use software and AI machine learning to do something called on demand fashion. There was regular fashion, then there was fast fashion. Now, they they've embraced this notion of on demand fashion. And that is if Ed Ellison goes onto the Shein site, it tracks you very closely. And it starts to merchandise around you and tried to build a brand of one and anticipate your needs. And they have literally no waste or no leakage. In other words, everything, everything they produce has either been ordered or they have near 99.9 certainty. It's going to be ordered right away. So their turns are huge. In other words, they don't have any inventory. I think it's going to be a monster.

• 43:21Scott Galloway?

  Not only is it growing 30 or 40% a year, it's profitable. It's actually got decent EBITDA margins. So I can't imagine how every exchange in the world has rolled out the red carpet for these guys. It's like, what's the biggest IPO of 2024? It's going to be Shein. You gotta bet the London Stock Exchange, where seven of the 10 IPOs, seven of 10 IPOs that have gone public in the last 10 years are below their offering price, where Apple is bigger than the entire exchange is like, oh, we would love to have you. We would love to have you. So it's interesting. I think the big losers here, if in fact it ends up going public on a non-American exchange, are the NYSE and NASDAQ.

• 44:02Ed Elson?

  I'm just going to play devil's advocate for a second. So you mentioned the Republicans who are pushing against this thing listing, which is true. And I read Marco Rubio's opinion, who's kind of spearheading this movement. He believes that this is a Chinese company in disguise. He says, quote, Shein presents itself as a global company to hide its considerable ties to the PRC. Why does he think that? As you mentioned, basically, the entire supply chain is based in China. It was founded by a Chinese national who's the current CEO. It employs thousands of people in China, sources, manufacturers, ships, all of its apparel, or at least almost all of its apparel from Chinese factories.

• 44:43Ed Elson?

  And the other thing that he's worried about that happened recently is that Shein approached the CCP. I think it was last month or a couple of months ago. They approached Beijing to get clearance to list their stock overseas. And If they were truly a global company, as they say they are, then you'd think that they wouldn't actually need to. So they kind of just did this out of courtesy. So I think that's one that would be the Rubio argument for no, actually, this is a Chinese company. The other side of this is the line on human rights, because there is pretty decent evidence to suggest that Shein is relying on forced labor for its supply chain. Specifically,

• 45:28Ed Elson?

  they did these lab tests on the clothes and it showed that the cotton that Shein was using came from Xinjiang. And according to most experts, anything that comes from Xinjiang, you can pretty much assume forced labor was involved. Now, to be fair, that's a low amount. And as you've said, they are eliminating products, those products from their inventory. But I think the main thing here is that what Rubio and the SEC have asked is greater disclosures. That's what all Rubio is asking for. He's saying, you must demand greater additional disclosures from Shein about how they make their products. And if they fail to do that, then we're not going to let them list. We have yet to see hard, forceful evidence

• 46:12Ed Elson?

  from Shein to show that they do not and will not engage with any Xinjiang-based supply chains. And in addition, I think the fact that they've been so quick and so willing to go to London as soon as they started asking these questions, to me, that says that they're scared of a full cavity search from the SEC because they're afraid of what they might uncover when they start digging. And I think what they probably would uncover, but again, this is speculation and I'm being paranoid, but I think that you'd uncover some what we call unfair labor practices, which is a very nice way of saying slave labor, which is what's going on in Xinjiang. And when I look at the price of these clothes, it's honestly kind of hard to believe that they don't rely on that.

• 46:57Scott Galloway?

  I think those are all really valid points and points that are, should raise concerns and should be investigated. The reason why they went and asked for that approval is that if they don't get that approval overnight, and this is, in my opinion, why China's economy is under so much stress right now, because the rule of law and the rule of fair play is so important. If the CCP decides to shut down Shein, and this is an investment risk, they can. They can go, they can basically shut down, they can just call, they can call the factories and say, hi, this is your local Communist Party leader, stop producing. Why? We don't need to tell you why. Stop producing. So I think they're trying to play nice. I think

• 47:37Scott Galloway?

  they're trying to thread the needle. My impression, based on the research I've done around the sustainability practices, is I think those are important questions. But what I would push back on is, apply the same standards to Nike or the Gap, or any one of a number of people, or Apple, who produce products in China. My impression is that they have decided, or at least what they've, they've said, and it might be, it might be jazz hands, but I don't think it is, is that they've said, it's good business, and we will get a higher multiple if we are seen as a good actor. And what I would argue is that Senator Rubio, in his never-ending quest to be president, says China bad, and this can get me on TikTok,

• 48:22Scott Galloway?

  which makes, there's some irony there. And so decides to go after any Chinese company trying to list. But I think if the NYSE and the SEC said, we're going to apply the same standards to you, and same disclosure requirements, as a Nike, or, you know, Zara, or Inditex, I think they're ready for it. Because they're, I mean, let me put it this way, they're either posturing a lot, or they are in fact, doing as well or better as any other company. Them becoming a public company will, on a Western exchange, will create more visibility. And also, it'll be easier to put pressure on them to, in fact, you know, make sure they have fair labor practices.

• 49:06Ed Elson?

  Just a very quick question on London, and then we should move on. But, you know, London's super happy about this. They've said, well, here's exactly what they said, we aren't pushing them, but of course, we would welcome an IPO. And it reminds me of the ARM IPO last year, where ARM is a UK company, but they decided that they're going to list in New York instead of London. And so now London is... Initiating all of this deregulation to try to attract companies to come enlist on the London Stock Exchange versus in New York on the NYSE or on the NASDAQ. Potentially a dumb question, what is so great about having a company list on your country's exchange? What does London actually stand to gain if Shein chooses London over New York?

• 49:51Scott Galloway?

  Well, they get fees. These exchanges get a small fee for every stock that changes hands and as more liquid, bigger market cap companies that attract capital from around the world, more people pay attention. And if Shein goes public and it goes well and they raise a couple billion dollars in the stock, I mean, this thing should be huge, right? Temu is a publicly traded company or PDD Holdings, Temu's parent company, has a market cap of 166 billion and trades at seven times sales. If Shein does 45 billion this year, 40 billion, that would connote, you know, a 200 to 300 billion dollar market cap. That would make it overnight, one of the biggest companies listed in the UK in

• 50:32Scott Galloway?

  history. That creates more liquidity, more fees. I mean, there's all sorts of stuff, right? All of a sudden, all these people from Shein are in London more often and they need banking services. They would most likely, I gotta believe, they'd open an office here, an investor relations office. And finally, the prime minister gets to say, you know, our exchange is relevant, right? So, and not only that, it's sort of like, do you remember when the prime minister here put out a press release and made a big deal out of, over Andreessen Horowitz, like hiring nine people to be in London?

• 51:04Ed Elson?

  Yeah.

• 51:05Scott Galloway?

  I mean, this is going to generate a lot of attention. It'll be an enormous feather in the cap of the exchange that takes this thing public and there'll be a lot of downstream fees. I think this is going to be really interesting to watch.

• 51:19Ed Elson?

  We'll be right back after the break with a look at Europe's hottest stocks.

• 51:36Speaker 04

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• 52:36Scott Galloway?

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• 53:48Ed Elson?

  We're back with Prof G Markets. If you're a regular listener, it's safe to say you're well acquainted with the term the magnificent seven. Those are the seven US companies that have carried the stock market in the past year. Well, we've got a new term for you to learn. The granolas. The granolas represent the 11 largest European stocks, which as of last week have pushed the European stock market to a record high. Companies on that list include Novo Nordisk, L'Oréal and LVMH. And in the past year, they have accounted for 60% of the gains in the overall European stock market. Scott, it feels like there's a new acronym every year. We've had Fang, Fangam, Gafam, Mamma, now this.

• 54:33Ed Elson?

  What do you make of this new term, the granolas?

• 54:36Scott Galloway?

  I just think it's genius branding. I mean, I gotta think that the amount of attention, remember the BRICS? What was it, Brazil, Russia, India, China? That's great branding because it immediately connoted these are the growth markets. And if you want to invest in, I gotta imagine ETFs and hedge funds started around the BRICS. And then the seven Samurai or the magnificent seven, you gotta bet that a lot of kids or a lot of investors, it's like, okay, I'm giving little Rachel a gift for her bat mitzvah. I'll give her one share in each of these seven companies. Or I'm just going to, I'm an investor and I like tech. I'm just going to buy these seven companies. So this type of branding, I think is really powerful. In addition, Europe is the largest economy in the world.

• 55:21Scott Galloway?

  And while they haven't had the same sort of explosive growth as some of these tech platforms, they're really good companies. And some, I think this is sort of what I'd call mild genius. And that is they, they said, hey, what about us? I know, let's brand it. My guess is there's a company in there that didn't, you know, that like Danone should have been in there, but they didn't want to call it Grandola or something, or, you know, they said they tried to find a name, but this is powerful, right?

• 55:47Ed Elson?

  In the Press and in a lot of analyst notes, there's just been a lot of comparison to the magnificent seven between the granolas. And what people are saying is, oh, these baskets are very similar. Specifically, they're similar in the way that they're carrying the rest of the market. So as I mentioned, they accounted for 60% of European stock market gains in the past year, kind of for half of all European M and A activity for the past five years. And those companies in the granolas are trading at an average of 31 times earnings, 31 times forward earnings. And that's about double the European average. The same dynamic is happening between the magnificent

• 56:28Ed Elson?

  seven and the rest of the US stock market. Now, where they differ, the granolas had a good year. They gained around 18% in the past 12 months. Stocks Europe 600 is up around 7%. Magnificent sevens 12 month returns, 91%. Other place they differ, scale. If you combine the market cap of these companies, they're worth $3 trillion. The combined market cap of the mag seven, $13 trillion. So I look at this and to me, these are two very different beasts. Do you think it makes sense for analysts and the media to be comparing them? Are they even remotely comparable?

• 57:12Scott Galloway?

  Well, it's a group of, it's a basket of amazing companies in the US and a basket of amazing companies in Europe. One is more tech focused, one is more consumer and pharma focused. The thing, the piece of data you left out is that the granolas are two times less volatile than the magnificent seven. In other words, if in 2025, if you could, if you had a crystal ball and it said either the granolas or the magnificent seven are down 70%, you would know that it was a magnificent seven. It's just unlikely that these companies, these consumer companies that trade more on EBITDA and more on performance than promise are going to decline 70%. They don't have probably the same upside potential because they don't have the scale and the network

• 57:52Scott Galloway?

  effects of technology and the hype of AI. But this is, it's great branding. I think it's, you Companies are probably going to go up in market cap just because there's a tension now to the granolas. Well, who's the R, right? Everybody wants to know. It's Roche, right? Who are these folks and why are they performing so well? There's, there's actually, I mean, people don't spend, if you want to be a great investor, I think you have to understand the markets, but I think you also understand biology and you understand psychology. And then I would actually say branding is pretty important. But the notion of fluency is a psychological concept and it dictates that people tend to prefer easily processed information. Here are these 11 companies that make up the granolas, and now I'm going to do research on the 11. And it's sort of a halo of credibility.

• 58:37Scott Galloway?

  Researchers at Princeton actually found that companies with easier to pronounce names or ticker symbols perform better immediately after the IPO than companies with harder to pronounce names, even after controlling for other variables. So simplicity, nomenclature, whatever, you know, the, the design language, whatever you want to call this, is really important. For example, if you started with a thousand dollars and invested in companies with the 10 most fluent names, you would have earned $333 more than you would have had you invested in the 10 with the least fluent. When I ran Profit, a brand strategy firm, and people would task us with naming and finding a website, I'm like, the most important thing is that it's easy to

• 59:19Scott Galloway?

  spell and easy to remember. I mean, I remember, do you remember that newspaper company that rebranded itself Tronk? I love that Tronk. This stuff's important and it sounds really simple and sort of superfluous. It's really powerful.

• 59:34Ed Elson?

  You also mentioned volatility, which I feel like we, we rarely talk about on this podcast. Is that something that you like to look at when you're evaluating a stock? Is that something you take seriously?

• 59:45Scott Galloway?

  Yeah, it is, especially at my stage because, well, one, I don't want to, I mean, as I've told you, I've been wealthy before and then not wealthy, and then got wealthy again, and then got now wealthy again, and now I'm wealthy again, and I don't want a round trip again. I want to stay in this part of town now. And part of that is ensuring or looking at sharp ratios and volatility across your portfolio. My mistake was that, and sometimes I didn't have any choice, but I was always so concentrated in tech and specifically private tech or a couple of public tech companies. That when the market for tech got hit, I just, I just got killed. And also tech is just very volatile.

• 1:00:27Scott Galloway?

  So I'm in a lot of, one of the reasons I like investing in private companies is I love that they don't get marked every day. I find that very stressful. I hate having a scorecard every day. I like investing in private companies that are good companies and knowing that or believing that over two or three years, they'll be worth more. That doesn't know what's happened. I'm going to have a couple of zeros this year, which is really disappointing, but on the whole, it pans out. I find public stocks stressful because every day they go up and they go down. In addition, tech stocks, I mean, Nvidia literally could go down 50% in the next three months. And the majority of smart analysts would go, well, of course it did. Of course it did. Look at the thing, right? And if you're one of those people now that has FOMO and you want to get in and you just

• 1:01:12Scott Galloway?

  hold your nose and you go in and you lose half your capital, that's just rough, right? That's just rough. So yeah, I do look at volatility. If I were going to go into, you know, these companies, and again, this lends itself to index investing, I'd want to buy a basket because you get to a point where one, as you get older, you don't want to take those sorts of risks. And two, you don't need to take those sorts of risks because on the whole, the market's trajectory is naturally up over the medium and the long term. And a way to play in these stocks sort of or dip your toe in is to buy an index fund because you automatically have to play because they're, they have such a big weighting now in the index. But the way I reduce volatility is through diversification.

• 1:01:54Scott Galloway?

  And that is my individual investments can be quite volatile. But if I invest in enough of them and never have more than say three or 4% of my net worth in any one thing, and I put it in different sectors and different companies and different asset classes, that smooths out the volatility of the portfolio as a whole.

• 1:02:16Ed Elson?

  All right, let's take a look at the week ahead. We'll see earnings from Target, Costco and Kroger. We'll also see the unemployment rate for February and Fed Chair Jerome Powell will be testifying before Congress on the state of US monetary policy. Scott, any predictions before our event on Friday?

• 1:02:34Scott Galloway?

  I just think we're gonna have a great time. I don't have a prediction, so I'm going all pretending to be a good boss, but what my advice to other entrepreneurs that have a small firm is take the money you would spend on an office, and we do this, and do fun stuff. And, and I don't do it because I like you or I want you guys to be happy. That's, that's, you know, that's nice, but that's not why I do it. The number one source of retention, the number one source of retention, do you know what it is, Ed? What is the one thing I could do to make it less likely that you leave and go do something else?

• 1:03:07Ed Elson?

  I would say pay me a lot, but I have a feeling you're gonna say something else. What would you say?

• 1:03:12Scott Galloway?

  Well, I do that. If paying you more than you're worth is paying you a lot, I do that, so check. But that's not even, that's like number two or three, compensation. Number one is if you have a friend at work. People are much less likely to leave their job if they have a friend. And the way you facilitate relationships and friendships is you try to hire nice people that seem like they're enjoyable to be around. But also, if you don't have an office, and I do this with you guys, you take them on fun trips and let them do fun things. By the way, everybody, we're all going to South by Southwest, the whole team will be there. And it's nice. My, my sense is at least you're fooling me. You guys all genuinely look forward to seeing each other and you have a lot of fun and you like each other.

• 1:03:53Ed Elson?

  Yeah, for sure.

• 1:03:54Scott Galloway?

  And I think that makes it a lot less likely that I'm gonna have to hire some other graduate of Princeton to do this podcast with. So anyways, my prediction-

• 1:04:03Ed Elson?

  So what are we gonna do? What are we gonna do for fun?

• 1:04:05Scott Galloway?

  Well, who is we, white man? I don't know what you guys, I know what you guys are doing for fun. You're gonna spend my money. I'm gonna go to the Soho House and sit at the bar and drink bourbon.

• 1:04:14Ed Elson?

  Okay.

• 1:04:15Scott Galloway?

  Yeah, but alone. I like to drink alone.

• 1:04:18Ed Elson?

  Alone.

• 1:04:19Scott Galloway?

  Yeah, alone. Now, we're gonna go out, aren't we going out Thursday night? We're going out Thursday night, right?

• 1:04:22Speaker 06

  We're actually going to Soho House.

• 1:04:24Scott Galloway?

  Oh, there you go. There you go. It's gonna be great. Yeah, I'm really looking forward to seeing everybody. It's gonna be nice.

• 1:04:30Ed Elson?

  So sorry, I interrupted your prediction. It's that we're gonna have a good time.

• 1:04:33Scott Galloway?

  My prediction, because I don't have one, is just advice to entrepreneurs. Take the money you spend on office space and use it for events and helping people create social connections. That retention is the key to growing a firm because the most expensive form of friction and complexity you can have is a lot of turnover. Unless, of course, you're using AI to fire everybody. But I don't know. I'm trying to, I'm, I'm trying to save this prediction here. Anyways, I'm looking forward to seeing everybody in Austin, Ed.

• 1:05:04Ed Elson?

  This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our executive producers are Jason Stavas and Catherine Dillon. Mia Silverio is our research lead and Drew Burrows is our technical director. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Wednesday for office hours and we'll be back with a fresh take on markets every Monday.

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