The Future of Entrepreneurship Part 1: What Makes a Good Entrepreneur? How Do I Raise Capital? Is Balance Ever Possible?

In today’s episode, we kick off our special 3-part series answering your questions surrounding The Future of Entrepreneurship. Today is all about work-life balance, how to raise capital for your business, and what makes a good vs. bad entrepreneur. We first hear from a college student who is about to graduate and wondering whether he’s cut out for entrepreneurship. Then, Scott shares the trials and tribulations of getting funding for his businesses. Finally, we hear why Scott is so against the idea of balance. Music: https://www.davidcuttermusic.com / @dcuttermusic Subscribe to No Mercy / No Malice Buy "The Algebra of Wealth," out now. Follow the podcast across socials @profgpod: Instagram Threads X Reddit 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.

• 0:01Scott Galloway?

  Support for the show comes from Northwest Registered Agent. Your business identity is everything that makes your business legitimate and professional. With Northwest Registered Agent, you don't just form a business, you start a complete foundation built for privacy, credibility, and growth. That includes registered agent service, a business address, operating agreement, domain, website, professional email, phone number, and built-in privacy. In other words, your home address, personal email, and phone number stay private. Don't pay hundreds or thousands of dollars for what you can get from Northwest for free. Visit northwestregisteredagent.com/profgfree and start using free resources to build something amazing. Get more with Northwest Registered Agent at northwestregisteredagent.com/profgfree.

• 0:57Scott Galloway?

  Welcome to the Prof G Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please email a voice recording to [email protected]. Again, that's [email protected]. Today, we're kicking off a special three-part series answering your questions surrounding the future of entrepreneurship, something routinely covered on this show. And that's what it means to be an entrepreneur. It means working all the goddamn time, and when you're not working, thinking about the business. I think being an entrepreneur is sort of a young man or a young woman's game. When I speak to people, say, "I'm going to go to work here for a while, get the credentials, and then maybe be an entrepreneur," I'm like, "No, entrepreneurs are kind of born, they're not made." I don't think startups think much about marketing, nor do I think they should.

• 1:42Scott Galloway?

  I think what you should think about in a startup is building an amazing product that 10x... your goal should be a 10x better product that will get its own discovery. That is what it means to be an entrepreneur. It is stomach churning. It is upsetting. It is stressful. It is absolutely nerve wracking and you're going to wake up sometimes in a cold sweat and think that you're letting your family down. Welcome to the romantic world of entrepreneurship. The upside is that if it works, there is no limit on the upside. Here's the problem a lot of entrepreneurs fall into is that they think expenses make a business. No, expenses don't make a business. Revenues do. It's fun to lease a nice office space, fix it up, hire a bunch of people, start marketing, have glossy brochures, a cool website. Those are just expenses.

• 2:27Scott Galloway?

  Expenses put a business out of business. When you work for someone else, unless there's a specific carried interest, they're always going to sort of decide, oh, you're a young guy. We're going to pay you really well, but your compensation does have a ceiling on it. So the upside is enormous in entrepreneurship and that gets a lot of publicity. The downside gets less coverage and that it is very stomach churning. It is a very nervous precarious place to be.

• 2:54Scott Galloway?

  So with that, first question.

• 2:57Speaker 01

  Hi, Scott. My name is Ben. I'm a big fan of the show. I'm about to graduate from undergrad. I have some friends that have gotten recruited at big companies. I have some other friends that are trying to start their own thing and I'm kind of caught in between. I'm still figuring out what I want to do and sometimes I kind of feel like I really have that entrepreneurial drive, but other times I wonder if I'm not cut out for that kind of grind. And I'm wondering what you think makes a good entrepreneur and then conversely, what makes a bad entrepreneur? And when did you know that you were one? Thanks again. Really love the show.

• 3:34Scott Galloway?

  So there's a couple of answers here. What makes a good entrepreneur, but specifically advice to you. First off, this is a good problem to have, Ben, and if you don't know what you should be doing, that is called youth. I think a lot of people never figure out exactly what they're calling as what they should be doing. I would say I would let the market decide and that is I would run down every opportunity around a small business or a startup and also interview with big platforms and see where you get offers and then call people, assemble a kitchen cabinet and get Their thoughts and then make a decision. But what I don't like is spending any calories on decisions you don't have. And that is people call me and say, well, should I go to business school? Should I go to Wharton or Harvard? I'm like, have you been admitted? And they're like, no.

• 4:15Scott Galloway?

  I'm like, well, okay, take the GMAT, get in, apply, get in, and then come back and we'll have this conversation. So I personally think right out of college, starting a business is overrated or joining a small company and going to a big company is underrated. Why am I saying that? Big companies are more of a caste system. And that is they usually want people on a certain path. They want you to go to an elite college. They want to see other big companies on the resume. And it's a bit of a one way door. Like if you leave Google, it's usually pretty difficult to get back in. And it's also a great place to kind of workshop what you might want to do because you get exposed to a bunch of different competences and jobs. You could even, you know, if you go to work for Salesforce and you decide I want to live abroad, you can transfer to an office. Well, I want to be in HR.

• 4:58Scott Galloway?

  Well, you can transfer probably in HR if you're good at what you do and they like you. They invest in human capital and as you're workshopping kind of what you should do, which is find your talent, not so your passion, but find your talent. Sometimes big corporations can be great at that. I went to work for Morgan Stanley. I hated it. I wasn't very good at it. They hated me and that was a great learning and it was a great platform to launch or get me into business school. And I learned a lot there. I worked very hard. It taught me attention to detail, taught me how to get along with assholes. Anyways, get the job, then worry about where you should go to work. Now, what makes a good entrepreneur? First and foremost, entrepreneurs are just built differently because they're much more risk aggressive. And I'll use options as an example.

• 5:42Scott Galloway?

  At L2, we were at a point where we were likely going to be sold in the next year or two. We had a bunch of companies sniffing around us, almost everyone. I always tried to be very transparent with the entire company about what's going on in the company, when the business is not going well, when it's going well. Because I think a real learning you can give to young people is to give them a sense of how decisions are being made and what is actually going on with the business. And the thing I hated about working with big companies was who the fuck made this decision? Or what are they thinking? Or I don't know why this is happening. Or could someone tell us what's going on? And I think it's great learning. Anyways, point is, the majority of the company knew there was a very high likelihood we were going to be acquired. As a general practice, I've always given equity to every employee.

• 6:25Scott Galloway?

  If you want people to act like owners, you gotta make them owners. And I like that Silicon Valley sort of gestalt of make everyone an owner. And I like that sort of upward draft in wealth creation. I don't like these companies that are, three people have all the equity and then they outsource everything. It's like, well, okay, how is anyone gonna make any real money? Anyways, the way you give people equity that's tax-friendly is you give them options. Because if you give them actual equity, it's a taxable event, meaning they have to write a check at the end of the year, and there's a chance the company never gets sold, and they're just out money. And when it was clear we were likely going to be purchased, the bad thing about options is when you convert, because the company to equity, because the company gets acquired, if you convert them to the equity and you write the check to buy the shares based on

• 7:09Scott Galloway?

  the underlying strike price, you immediately have a taxable event, right? So you have to, you have to write a check. But if you hold on to the equity for a year or longer, you then qualify for long-term capital gains. And it takes the tax rate down from, the federal tax rate down from 37 to 22.8. So even knowing that this firm was likely going to be acquired, what is the number of people who decided to write a check and exercise their options, knowing that they'd get much more favorable tax treatment and end up, on a net basis, way ahead? Almost zero. A few people on the board exercise their options because they're long-term thinkers and they know how wealth is created.

• 7:50Scott Galloway?

  But younger people and people who go to work for other people tend to be risk averse. And the bottom line is, what makes an entrepreneur first and foremost? They are willing to sign the front of checks, not just the back of checks. I am shocked how many people would never think of investing their own money in a company. I constantly call people in my organizations co-founders because titles are cheap. Sure, call yourself a co-founder, but here's the bottom line. The founder is the one that went home to their spouse and said, "Yeah, work was really hard this month. It really sucked. I'm working my ass off. I realize I can't see you or the kids that much. And in exchange for working my ass off, we get to pay the company $100,000 this month because we need to invest to keep the company alive."

• 8:35Scott Galloway?

  That is called a founder. And most people are not willing to do that. Two. So, one, more risk aggressive. Two, they're willing to sell. I mean, really willing to sell. Entrepreneur is a synonym for salesperson. What do entrepreneurs do all fucking day? They sell. Join my company. Join my shitty little company despite the fact you have offers from better firms. Hey, client, spend money on my company. Be a client with me despite the fact there are more credible firms pitching you every goddamn day. Hey, investors, invest in my company despite the fact this is a small company and highly risky. I will get your money. You are selling all the goddamn time. So if you do not have the ability and more importantly, the willingness to sell,

• 9:20Scott Galloway?

  which is the willingness to endure rejection, you are not cut out to be an entrepreneur. If you're a genius tech person, okay, maybe you can be one of the co-founders, but you immediately have to partner with someone who is comfortable calling people and selling. And what does it mean to sell? It means calling people that don't want to hear from you. And when they say, I don't want to hear from you again, you're going to say, well, I think you're saying maybe, and you're going to call them back again at some later date. And then finally, and this has been my superpower as an entrepreneur, is I have always been able to attract and retain talented people. That's the key. One person is a practice. It's not a business. If you want to build a business, you have to attract talented, good people,

• 10:02Scott Galloway?

  high-character people, and then you have to have the leadership skills and the self-awareness to compensate them really well. When small companies don't scale, it's usually because the founders have decided that they're the secret sauce and they don't want to give away equity, or they don't want to compensate their employees, or they say bullshit things like, oh, they're young, they don't need a lot of money. I mean, there's so many reasons why small businesses can fail, but I have found the number one reason a successful small firm doesn't scale is because the founders don't want to make the junior people in the company owners, or they don't want to pay them a fraction of what they're making. That's what ruins small companies. Your ability, one, to endure risk, two, to sell, and three, and three,

• 10:43Scott Galloway?

  your ability to attract and retain outstanding people by making them owners, being generous in terms of compensation and equity. A question number two.

• 10:53Speaker 02

  Hey, Prof G, looking for a little guidance, and I think you're the perfect person to help out. So I'm from Chicago and I am trying to start a software company. And I'm finding it a little harder than I thought to raise capital. There is no blueprint that I know of to pick up the phone and get millions of dollars from investors because you know you have a great idea. In your opinion, what is the best way to get in front of someone that has money that wants to invest? You hear about it all the time on your podcast. You hear about all these companies raising all this capital and it seems so easy, but in my opinion, it's the hardest thing to possibly do. Now, I'm not someone with a ton of connections. I didn't

• 11:34Speaker 02

  go to, I don't know, let's say a fancy school like NYU. I'm not a Harvard guy or Yale, but I do have the perfect idea that can really help my industry. Love to hear your thoughts. Thank you for everything you do. Love listening to the podcast.

• 11:48Scott Galloway?

  Thanks for the question. I get this question a lot. And let me just say, I have raised a shit ton of money. I've raised over a billion dollars for my companies and special purpose vehicles. And I think I'm really good at it. And I've always found it really, really hard. I've just got to kiss a lot of frogs, make a ton of contacts, call people, meeting after meeting, to find out, oh, they loved it, but they're not going to invest for the five. I just always, I've always found fundraising really, really difficult. And I think I'm in the probably the 0.1% in terms of the amount of capital I've raised. So let's be clear, no one, no one finds it easy. According to a 2023 survey by Forbes Advisor, business

• 12:31Scott Galloway?

  loans are the most popular funding method for business. 27% of entrepreneurs surveyed said business loans were used as their primary financing source. 20% of entrepreneurs surveyed reported their primary method of funding was borrowing from family, friends. Okay, so the reality is, you had said something, I don't want to call that a red flag, but just something I want you to be mindful of. You have a great idea. It really doesn't matter. That's about 10%. Your ability to execute and show that you're executing is what attracts capital. So first, the reality is initially, with just an idea, it's probably going to have to be your money or friends and family money. I have never raised money from friends and family. I should say, is that true? I've raised money from wealthy friends, but never from family. I just couldn't handle the idea of losing like my in-laws'

• 13:13Scott Galloway?

  money. It would just cause too much mental health. I've invested my own money. My girlfriend invested my first company in the sense that she got a job out of business school. I did not, and she paid our rent and our living expenses. Paid off, by the way. We ended up getting married and divorced, and she got 50% of everything. So I would say that was a great investment. And by the way, she deserves or deserved every penny. Hold me back to me, so, or back to you. So, look, it's probably going to be friends and family or your own capital to get the thing off the ground. And then the key is to throw nickels around like they're manhole covers and take sort of a ready, fire, aim approach and either get clients or get a product launch as soon as possible and show something.

• 13:55Scott Galloway?

  They might, unless you're an entrepreneur, and I don't care if you have a Harvard or Yale degree, that's not going to get you capital. It'll get you meetings because a lot of those people, 40% of venture capitalists come from Harvard or Stanford, probably 80% of the capital. And we wonder why the industry isn't that diverse. Anyways, yeah, that helps you get meetings, but it's not going to help you really close a deal or get capital. What they want to see is a product, or revenues, or clients. And so if it's a great idea, you need to build the company or build a prototype and ideally, ideally show that it sells, that someone wants it, that someone downloads it, that this is, unless you're a technical genius and the VCs bring in a partner that goes, this guy's incredible, or you've started other companies, you're going to have to have a product, or clients, or revenues.

• 14:37Scott Galloway?

  So you need to figure out what is the minimum viable product and the minimal amount of capital you need to bust a move to getting to a product. Thanks for the question. We have one quick break before our final question. Stay with us. Support for the show comes from Nutraful, the number one dermatologist recommended hair growth supplement brand used by over one and a half million people. With age comes knowledge, patience, and for some, hair loss. Didn't say it was all good things. And for those who want to do something about it, there's Nutraful. Nutraful has formulas built for men at different life stages. They have Nutraful Men for guys age 18 to 49, plus the new Nutraful Men 50 and older.

• 15:19Scott Galloway?

  That's the first product of its kind specifically for men over 50. You can now address the key root causes of thinning wherever you are in life. Grow visibly thicker, fuller hair in just three to six months. Start Nutraful today and make the hat optional. There's a nutraful.com and enter promo code PROP G for $10 off your first month's subscription and free shipping. Find out why Nutraful is the best-selling hair growth supplement brand at nutraful.com, spelled N-U-T-R-A-F-O-L dot com, promo code PROP G. That's nutraful.com promo code PROP G.

• 15:59Scott Galloway?

  Welcome back. Question number three.

• 16:01Speaker 03

  Hello Prof G. My name is Andrea and I'm a former brand strategy student of yours. I've been a fan ever since I took your class in 2011. Thank you for all your insight. I took the entrepreneurship route after business school and fast forward to 2019 and I had a successful exit after 11 years of grueling work. I'm very thankful to have reached economic security for my family, but there was also a big sense of loss in personal identity. I'm still young and I have a lot of energy to build something new, but I also started a family with a one-year-old and another on the way. I'm struggling to balance my desire to build with being there for my family going forward. I can no longer spend 10 to 12 hours a day of working like I did in the past,

• 16:44Speaker 03

  but I also know that building something great will require that kind of effort. I recognize that I have to significantly adjust the way I work going forward and the projects I get involved in. How did you think about reinventing yourself after every exit failure in your companies? Since you've done it successfully so many times in the past, any insight you would provide would be greatly appreciated. Thank you for your time and all you do.

• 17:11Scott Galloway?

  Thanks for the thoughtful question, Andrea. Good to hear from you. I think I have something like 5,300 alum of my courses at NYU and that's so rewarding because a statistician once told me, "If I'm ever in a room with more than 300 people, there's a 40% chance, anywhere in the world, in a room with more than 300 people, and I'm in a lot of those rooms,

• 17:31Scott Galloway?

  there's a 40% chance or almost a coin flip that one of my students is in the room or one of my former students." And it happens everywhere. If I'm speaking in front of a large crowd, people are really nice. They come up to me after the talk and inevitably one of them is like, "Oh, I'm brand strategy 2014." And it's just incredibly rewarding. It's these...

• 17:49Scott Galloway?

  A, they're really impressive kids and B, it's just really interesting to hear what they're up to and they show me pictures of their kids. And anyway, so first off, congratulations on your success. You are not only very good, you're very lucky. And I've always thought, okay, one in seven businesses works. I've started nine businesses. I've had two successes and kind of three mediocre outcomes and then four, you know, flaming bags of shit that fly into a mountain and explode. And so I'm doing better probably than most. And all you need is one exit. Just a couple of thoughts. One, be careful. You're never more prone to a big mistake than after a big win. You've had a big win.

• 18:29Scott Galloway?

  If you've had a successful exit, that's a big win. I would not be tempted to take anything more than a small amount of your capital and start another business. You're in a fantastic position where you may have developed what is mostly are a great start to economic security and you want to solidify that. You want to diversify like crazy, low cost index funds and just know that for the rest of your life, you can kind of sigh or have a huge sort of exhale for the next 40 years. You don't have the financial stress of taking care economically or have a kind of baseline level of economic security for you and your family. Do not put it at risk again. Now, with respect to wanting to get

• 19:09Scott Galloway?

  back into the game, but wanting to have balance, I'm not here with a message, I hope, my brother. I started my last company or two companies ago with two babies at home and it was really difficult and it was hard on, it wasn't hard on my relationship. It was stressful with their mother because she was working at Goldman Sachs, but we were on board with, with getting ahead or getting more ahead and knew about the sacrifice. If you want to. Have a more sane job and balance than I think you're going to have to take a job and that with someone who where you don't make as much money or have as much upside, but it's more manageable. If you want to start your own business again, you're either

• 19:51Scott Galloway?

  110% in or it's probably not going to work. Also, I don't, this is going to sound a bit harsh, but I wasn't around a lot when my kids were very young. Yeah, it's a sacrifice, but guess what? I'm around a lot now, and I think this is more important. I think before the ages of three and four, you want to get home, you want to have bath time, you want to be affectionate with your kids. But I don't know, do they really, and this is going to sound weird, all the research says they need their dad at a young age for brain development. I quite frankly, think it's bullshit. But anyways, there's no free lunch here, boss. If you want balance with a young family, then get a job that has balance and recognize that one have nearly the upside. If you think hard, I'm an entrepreneur and I want to start another business and have an open and honest conversation with your partner about the

• 20:36Scott Galloway?

  trade offs and then the two of you have to make a decision. But everything's a trade off here, but I want to circle back to where I started. If you're fortunate to have some semblance of a nest egg or economic security at a young age, don't do what I did. I fucked it up. I had decent money all along the way, and I kept doubling down on more businesses and using my own capital. And a couple of times, not once, but twice during the dot bomb implosion and the great financial recession, I woke up and had a lot less money because I did not diversify when I had money. And it really was an enormous strain on my mental health and my well being. Bank that money, low cost, low cost diversified ETFs and index funds, and then have an honest and sober conversation with your partner about your needs, your wants, your aspirations. Thanks for the question and congratulations on your

• 21:21Scott Galloway?

  success. That's all for this episode. If you'd like to submit a question, please email a voice recording to [email protected]. Again, that's [email protected].

• 21:40Scott Galloway?

  This episode is produced by Caroline Shager and Jennifer Sanchez is our associate producer. Andrew Burrows is our technical director. Thank you for listening to the Prodigy Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly market show.

• 21:58Speaker 04

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