Office Hours: The Thiel Fellowship’s Pros and Cons, S.A.F.E Agreements, and Rebranding America

Scott takes a question about the Thiel Fellowship and offers his thoughts on whether the government should subsidize business loans like they do for college loans. He then shares his ideas on America needing a rebrand, and explains the benefits of a S. A. F. E Agreement: Simple Agreement For Future Equity. 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?

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• 0:48Speaker 01

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• 1:27Scott Galloway?

  Welcome to the Prop 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]. First question.

• 1:44Speaker 02

  Hi Scott, my name is David. I'm a fellow native Angelino and UCLA grad. I've been a fan of yours since reading The Four in 2017. My question for you is about the Thiel Fellowship that's been in the news lately with the founder of Figma selling for $20 billion and also the founder of Ethereum went through it. Do you think that this should be a mainstream option for 18 and 19 year olds in America where they can start businesses instead of going to college? Is this a scalable program? And if so, should the government be subsidizing these types of business loans the same way that they do for tuition loans? Thank you.

• 2:17Scott Galloway?

  David from Los Angeles, thanks for the question and go Bruins. So I wasn't a big fan of this because I found it somewhat cynical when a guy who went to Stanford undergrad and then I believe got his law degree from Stanford, so undergrad and grad, and now is a billionaire. So it appears that this wasteful thing called college worked out pretty well for Peter Thiel. Having said that, it's hard to argue when you have anyone in a program, much less two people in a program, register such incredible success, you have to take a look at the program. So what does this mean? Should people go to college and should there be programs that perhaps provide seed funding to people who show kind of entrepreneurial skillset or exceptional

• 2:56Scott Galloway?

  skills before they go to college? My answer is yes, all of the above. I still think that college is a great plan B and I think we need to make it more accessible, lower costs, so that more people have that plan B or that opportunity. Most people at 18 don't know what they want to do, especially most young men need more marinating. I'm even a fan of some sort of red shirting where maybe 18 year old men take a year for a gap year, maybe get involved in a startup, similar to what Mr. Thiel is promoting. I'm a big fan of national service. I think the bottom line is a lot of young men aren't ready for college. Now, are they ready for a startup? I don't know. But at the end of the day, I'm just

• 3:36Scott Galloway?

  a fan of any opportunities, a fan of any onramps into a middle-class lifestyle. After the Thiel Fellowship was announced, several years along the way, there was actually a lot of negative press about it and a lot of the fellows didn't feel very good about it. They felt that it was more about PR and kind of corporate virtue signaling on behalf of Mr. Thiel. But again, as you highlight, there's some case studies here or samples you just can't argue with. So what would I like to see? I don't know. I want to see all of it. I want to see young people go back to 19% of GDP in terms of their, their wealth. What I'm referencing is that young people in the age of 40 used to control 19% of GDP in terms of their wealth. Now it's 9%.

• 4:19Scott Galloway?

  So look, if Mr. Teal wants to invest in younger people or back them, I think that's a wonderful thing. This doesn't seem that scalable. This seems like more of a PR stunt. When you have, what was it, 20 to 30 people a year? That's not a lot, right? The freshman class at UCLA is what, 4,000, 6,000 people? So I would argue that you're gonna have, on average, more success when you go to college. If you have the opportunity, you'll make twice the income over the course of your life, less likely to have a heart attack, less likely to be depressed. Having said that, having said that, college isn't for everyone. There's a lot of great entrepreneurs that are either college dropouts or never went to college. The Main Street economy is filled with a lot of successful people that didn't go to college.

• 5:00Scott Galloway?

  So are there opportunities for people coming out of high school? Or should there be more opportunities, including the Teal Fellowship? Yeah, but the Teal Fellowship does not make a generational opportunity. This is tiny. I mean, this is literally a drop, you know, a drop of the drop in the bucket. I think you need to institutionalize opportunity for young people in the form of more opportunities for vocational certification, such that, yeah, it's great. Maybe we can produce a billionaire every once in a while, but what would be better is to produce a couple million additional people that had great middle and upper-middle-class lifestyles, who were good citizens, who could raise kids in economically secure, loving households. Yeah, great. You produced a billionaire. You found a billionaire. Actually, you know what? Who gives a fuck?

• 5:45Scott Galloway?

  Question number two.

• 5:46Speaker 03

  Hey Scott, John here from Houston, Texas. I'm a big fan of your podcast and I really enjoyed your appearances on Real Time. I'm also a Section 4 Beta member and I've used that content in my business to drive growth and improve performance. In your speeches, in your new book, you express a common sense and patriotic view of America and some of the problems we face. It seems like polarization is really one of our biggest issues. We've lost a common understanding of what America means and what is America's purpose.

• 6:21Speaker 03

  I know you're someone who cares about our future and you're a branding genius. So here's the question. If America was your client, what advice would you give it on its brand strategy? How would you advise America to bring us back together as a people? Thanks, Scott.

• 6:39Scott Galloway?

  Wow, that's a thoughtful question and I think you're giving me too much credit. I think you're being generous. Leading up to the 2020 election, Pew found that roughly nine out of 10 supporters of both Joe Biden and Donald Trump were convinced that a win by their opponent would cause lasting harm to the United States. And it's just, it's just very strange. I think the thing that ails us after writing this book Adrift, American 100 Charts, available on Amazon, I found that one, there really isn't anything, any one of the biggest problems ailing us, whether it's income inequality or failing young men or teen depression. All of this can be fixed. It's all of our own making, so we can unmake it all.

• 7:20Scott Galloway?

  But I found the issue that doesn't get the attention and is probably the biggest malady we experience in America is that we're turning on each other and that if we were a horror movie or our problems were a horror movie, the call would be coming from inside the house. And that is we have some of our most prosperous companies, some of our most technically sophisticated companies whose profit incentive involves pitting us against one another. And then we have bad actors, including the Chinese and the Russians, and there's evidence of this, who weigh in and pour fuel on those flames of polarization. So as a result, we're focusing our anger, we're being heavy handed with the wrong people. 54% of Democrats are worried the kid is going to marry a Republican. So how would you fix the American brand? Well, there's nothing wrong with America that can't be fixed with what's right with it.

• 8:05Scott Galloway?

  I would do a better job of promoting American interests abroad in terms of social service. I think we should have mandatory social service for young people that involves travel overseas and that connects. More people to the greatest American tissue in history, and that is Americans. I think that the Peace Corps has sort of done this, but I would not only do this outside of the United States, I would send kids into different, different areas of the nation and let them smell, touch, and feel other Americans from different income classes, from different backgrounds, from different ethnicities, from different sexual orientations, and realize that the one thing Americans have in common is generally speaking, they love their country, they're good people, they want to be successful, they want to have kids. You know, we kind of all share these same interests.

• 8:49Scott Galloway?

  We're big fans of liberty, we're big fans of success, we're big fans of capitalism, we're big fans of making sacrifices to push back fascism and tyranny around the world. So 50% of philanthropy around the world originates with a US institution. There's a lot of wonderful things about our brand that we and the media should do a better job of highlighting. Do we have serious problems? Yeah, we do. And one of the problems around income inequality is a lot of people in the middle class have left the middle class because they've become upper income. We've made tremendous strides with people of color. We've made tremendous strides with women, for God's sakes. It used to be 40, 60 women to men in terms of college enrollment. Now it's 60, 40. That's something that should be celebrated. It comes with its own problems, but that should be celebrated.

• 9:34Scott Galloway?

  What can we do to create that connective tissue we so desperately need? Similar to in the 60s and 70s when most of our elected leaders had served in uniform, meaning they saw themselves as Americans, not as red or blue. We need mandatory national service. We need better regulations around social media to stop dividing us, and we need some sort of election reform such that we don't have gerrymandering, maybe ranked choice voting, such that we no longer have minority rule, and we bring back where most people are, where most Americans are, somewhere around left or right of center. We have one quick break before our final question. Stay with us.

• 10:13Scott Galloway?

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• 10:57Scott Galloway?

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• 11:30Scott Galloway?

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• 12:15Scott Galloway?

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• 12:37Scott Galloway?

  Welcome back. Question number three.

• 12:40Speaker 04

  Hi Scott, it's Renit Weinberg from Many Moons Ago. Hope you're well and enjoying the UK.

• 12:48Speaker 04

  I was motivated to start my own business after taking your Brand Strategy Sprint course a few months ago. I'm in the process of raising some capital and I was wondering what your thoughts are on a SAFE agreement, a simple agreement for future equity, something the Y Combinator created to increase the speed in which startups can take on early-stage funding while keeping the legal costs lower. My website is launching in November as well as a store and I think by March of 2023,

• 13:25Speaker 04

  I will start doing a raise. Thank you and I love all your shows and I'm still the biggest fan. Thanks again.

• 13:35Scott Galloway?

  Renit, so nice to hear from you. It's always that, whatever that Dope A Hit or that Synapse Fire is when you hear from one you're not expecting to, it's a nice, it's a nice feeling. I hope, I genuinely hope you are doing well and it sounds like you're thriving. So, a SAFE agreement stands for a simple agreement for future equity and it was first coined by Y Combinator in 2013. It's great for startups, especially early-stage ones, because one, it can be used as soon as an investor and founder are ready to sign and it doesn't have a ton of terms to negotiate. It saves money in legal fees and saves time that would be spent negotiating. The benefits are that it's easier and faster to access early-stage investors and it's got flexibility for the founder.

• 14:18Scott Galloway?

  What are the downsides? It could take a while to convert the SAFE into equity. It won't earn interest, equity can be diluted, some possible investors might be turned off and not all safes are the same. Do your research. But essentially, it's an agreement that we're going to fund this company. And the terms are sort of TBD based on what you're able to raise money at. But it's, it's basically a way of saying the entrepreneur has some surety around capital to get the business off the ground and investors have some surety that they're going to have access to this investment. So safes are increasingly... Um, popular effectively what it is is we're putting some money in a safe. We don't know the exact terms yet, but we know we're you're going to have you know, you're going to have some capital and we know we're going to have access to investing in this company.

• 15:03Scott Galloway?

  So I'm, I'm a, I'm a fan of it, but as with any question like this, one, you should get a securities lawyer to really understand the upside and the downside. And there's always terms around a safe. Every safe is different. So look at the terms and two, the answer lies in what are your options? If someone is willing to invest $5 million at a pre-money of 15 million and give you $5 million for 25% of the equity for a concept just getting off the ground, then negotiate those terms, dot the i's, cross the t's and do an actual equity round. Uh, but my guess is you don't have that option. So a safe is probably your best option. So you want to just negotiate the best terms possible for the safe. And the terms are usually a little more vanilla and get back to starting your business and focus on what adds value.

• 15:48Scott Galloway?

  I think there is something to be said for an entrepreneur, leaving some money on the table, uh, giving up some additional equity, uh, and just getting back to building the business. Because the actual act of fundraising doesn't add any value to the business. Your consumer doesn't feel it. I mean, they feel the capital. But if a founder is spending all of their time negotiating and raising money, you don't have a lot of time to build the business. At the end of the day, terms for your next round will be dictated by how successful the business. And in the success of the business is based on how much time you, Ronit, have to devote to building that business. Congratulations on your success. I think you should do the safe unless you have a better option. And it was really nice to hear from you.

• 16:29Scott Galloway?

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

• 16:45Scott Galloway?

  Our producers are Caroline Shager and Claire Miller and Drew Burrows. Sammy Resnick is our associate producer. Our team is growing, which means our expenses are going up and you'll see a dramatic increase in quality. Won't you, team? Anyways, if you liked what you heard, please follow, download and subscribe. Thank you for listening to the Prof G Pod from the Vox Media Podcast Network. We will catch you next week.

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