Office Hours: Does a Board Actually Add Value? Making Recruiting More Equitable, and Work/Life Balance Early in Your Career

Scott takes a question about the value of a board of directors. He then suggests ways to make corporate recruiting less elitist and shares his experience balancing his ambition and personal life. Music: https://www.davidcuttermusic.com / @dcuttermusic 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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• 0:56Scott 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]. First question.

• 1:16Speaker 01

  Hi Scott, I'm Jan from Frankfurt, Germany. I really enjoy your communication style, which is pretty different to the sober German way of talking. Here's my question. I'm wondering about the role of the board of directors and how you can evaluate whether they're doing a good or bad job. There's a number of examples where the board of directors completely failed at monitoring their companies, such as Enron or Blockbuster. Also, Facebook's shift to Meta and the focus on the Meta words seems to be a questionable strategy that was apparently approved by the board. But even in less known companies, I wonder how much value the board actually adds and whether they usually comply with corporate governance standards.

• 1:57Speaker 01

  I can imagine that there's often an incompetence and lack of incentive, but it would be great to hear your thoughts and insights about this topic.

• 2:06Scott Galloway?

  Jan, thanks for the thoughtful questions. And again, I don't hear or see these questions until they're played. You know, the Lippens test or the proxy of the metric that everyone looks to is the share price. And much of that, or even most of that, is out of the control of board of directors because so much of it has to do with the sector you're in, growth dynamics.

• 2:25Scott Galloway?

  The term I use for good boards of directors that I love is fiduciary. And that is, once you have your deal, you're getting options for being on the board and some annual compensation. You are then supposed to represent other people's interests, specifically shareholders, the community, employees, the Commonwealth. You're supposed to represent stakeholders. We used to call it shareholder value, now we call it stakeholder value to make ourselves feel better that we're not just totally focused on the value of the shares, which most boards and CEOs are, because that's how they get compensated. If you want to understand people's behavior, look to their compensation. Now, to be more wonky around corporate governance, technically, board directors are supposed to provide or demonstrate care. I care about the company, serving my stakeholders, I do the right thing, even when it's hard.

• 3:10Scott Galloway?

  I have a duty to review the audit committee notes and make sure that the CEO isn't stealing. So there's a certain level of acting like a fiduciary, but also demonstrating competence and making sure that they are amortizing CapEx correctly, that they are not, that the shareholders aren't going to find some unwelcome surprise, because you on the board are supposed to be reviewing the numbers before they do the earnings release and ensuring that they're not doing stupid things that get the company into much illegal trouble. Now, dual-class shareholder companies are a totally different ball of wax, because if you were honest, you wouldn't even call Meta's board of directors a board of directors. You would call it a board of advisors, because they have absolutely no power. The practical use of a board is really just twofold.

• 3:51Scott Galloway?

  One, they hire and fire the CEO, and two, they get to decide when to raise money or when to sell the company. There's a kind of the two most important things. If you have the right guy or gal in place as the CEO, you can have a mediocre board and still be fine. If you have a bad guy or gal as CEO, it doesn't matter how good the board is. I think a really bad board can screw up a good company, but a really great board can fix a bad company. So it's sort of mostly downside, if you will. But the most important thing they do is coach, support, and then, if needed, hire and fire the CEO. But essentially, it is difficult to evaluate directorships from the outside. And when I've been an activist investor and get a large stake in a company, because I

• 4:34Scott Galloway?

  believe there's value, it will be unlocked, you go in, and the means of influencing a company is through the board of directors. You show up at the annual meeting and you vote onto the board your, your directors. And generally, what I have found, what I have found, when I come into a strange situation, is that I'm not as smart as I thought and they're not as dumb as I'd hoped. They face big issues and big problems. Can you imagine what Adidas just went through? Anyways, care and duty and hiring and firing the CEO and figuring out if and when to sell the company. That's effectively what a board does. Dual class shareholder companies, very difficult, very difficult to assess if a board is doing a good job from the outside. I think we need term limits on board members.

• 5:17Scott Galloway?

  Every board I've been on, there's two or three board members that have been there for 20 or 30 years that should have left a decade ago. That know the founders of the CEO, who's a nice guy and it's almost always a guy and adds a little bit of value, but should just move on. We need more churn. We need more new ideas, people who understand technology, people who understand the labor force, which is getting younger. So I'd like to see term limits on boards, but most boards are trying to do the right thing. Anyways, thank you for the question, Jan. That was really interesting. I love talking about corporate governance. Oh my God, what a thrill. What an interesting guy. He talks about corporate. Let's invite him to our party. Question number two.

• 5:52Speaker 03

  Hey Scott, this is Fergus. I'm a small town Canadian living in London. Go Canucks from just outside Vancouver. I'm an ex consultant who now works in PE and the thesis I want to put forward to you is on recruiting. I think that corporate recruiting is a broken system. Two of the top reasons for me are elite schools are often picked first. And if you're not elite school, then you will be auto scanned out. And I think that some of those elite schools, what makes them elite doesn't actually translate to great education or to produce great candidates. Note Clemens Ray King scandal from last month. I think there is a greater emphasis on who your parents know as opposed to who you know and how strong your resume is.

• 6:36Speaker 03

  So my question for you is, how can we make this better? Is there a role in technology or in changing how we consider talent that needs to be made?

• 6:44Scott Galloway?

  Fergus from Canada, thanks so much for the thoughtful question. I think about this a lot. I've been writing, it's that time of the year where I've been writing. I've written several letters of rec for friends and/or for the children of friends. And I'm conflicted about it because. I know I have some influence at some institutions. I both teach at an elite university and I give a lot of money to other elite, or what's a lot of money for me to elite universities. So I know that these letters matter. And so every time there's like a little, a little nudge, a little push of so and so knows this board member, or we have a friend who gave some money. The bottom line is the rich, kids from the top 1% income earning households are 77 times more likely to get into an elite university. So what can be done here?

• 7:27Scott Galloway?

  First off, there's a lot of research that shows the top decile performing students at a mediocre college do just as well as the top decile at an elite university. And this is what needs to be done and can be done. Stop doing what I did. When I started Profit, my first consulting firm, I fetishized elite universities. I was super excited to recruit people from Harvard and from Wharton and from UVA and Berkeley and UCLA and Stanford. And I wore it kind of as a badge of honor that I had started a company and that we had, you know, a dozen people from Ivy League schools working for us. You know what? That is bullshit. That is not helping. It's actually hurting.

• 8:07Scott Galloway?

  And that is people have influence over hiring need to de-fetishize not only elite universities, but also de-fetishize the traditional liberal arts BA. Why? When you decide you're going to only hire people who have a bachelor's of administration from an elite university, you've decided you're not going to hire single mothers. In some ways, you've decided you're not going to hire black men, right? There's just certain groups that don't have the opportunity to get to an elite university, no matter how talented they are. We need to ensure that we are recruiting from a wide variety of schools, right? If you're, if you're in Los Angeles, recruit from Cal State Los Angeles. If you're in New York, recruit from Pace. You know who's doing their job?

• 8:51Scott Galloway?

  Is it a Colombian NYU? Maybe, but you know who's definitely doing their job? Pace, where more kids transition up from the lowest quintile of income-earning households to the top quintile. That's the whole point. That's the whole shooting match of higher ed. So I think every person, every organization, corporation that has influence over hiring says, not only are we going to hire from quote-unquote "non-elite universities," the kids at elite universities are fine. The majority of them didn't even need an elite university education because they're so fucking talented or so rich. Where you can add value as a corporation is hiring from quote-unquote "the non-prestige universities" and also, also carving out a significant percentage, 10, 20, 40% of

• 9:34Scott Galloway?

  your entry-level jobs for people that have non-traditional backgrounds. Maybe went into the armed services for a few years, did a couple of years at a junior college, but didn't get a traditional college degree. A woman who dropped out of college because she became pregnant and had to take responsibility for her family and didn't pursue a traditional degree. Someone who, for whatever reason, didn't get a college or whatever it is. There are outstanding people in the labor force there. That's where we start, and that's to stop fetishizing elite universities and to think and act with our feet and with our wallets and hire good kids and good adults from non-prestigious universities and also ensure that we're creating on-ramps to the middle class for some people

• 10:16Scott Galloway?

  that don't have a traditional liberal arts college education and hire based on skills, skills assessment as opposed to certification. Let me say that again. We need more hiring based on a skills assessment and an EQ, an interpersonal assessment, and less on a certification assessment. Thanks so much for the question. Go, Canada. We have one quick break before our final question. Stay with us.

• 10:42Scott Galloway?

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• 11:27Scott Galloway?

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• 11:46Scott Galloway?

  Welcome back. Question number three.

• 11:48Speaker 04

  Hey Professor G, this is Jack from New York. I'm currently a first year law student and a former college athlete. I wanted to ask if you could share some insight on your entrepreneurial ambition and how you managed to balance that with everyday life. As a first year law student, obviously the workload is tremendous. And on top of that, trying to start my own business has been a lot. I was wondering if you could just share some tips on how you balanced everything and kind of what kept you going throughout the whole process. Thank you again and keep doing what you're doing.

• 12:16Scott Galloway?

  Hey Jack from New York, thanks for the question. So the first thing I did was I got rid of the term and even the hope or the illusion that I could maintain balance and be successful. There are some people who have great relationships, are physically fit, donate time to the ASPCA and have a food blog and also are marvelously successful professionally. Assume you are not one of those people. I figured out early I was not. I'm just not talented enough to be economically successful without working my ass off. And by the way, I'm not saying that's the right way. I'm just saying it's my way. And the majority of people I know expect to be in the top or aspire to be in the top decile. The kids I'm around a lot at NYU expect to be in the top 1% in terms of income earning.

• 12:59Scott Galloway?

  By the time they're in their 30s, and I don't know anybody that wasn't smart enough to inherit money, that didn't pretty much just work for a good solid 20 years and not much else. You'll always find time, if you're a young person, you'll always find time to go get drinks with your buddies. You'll always find time to get to Coachella. But for the most part, I was just working all of the time. And so what I did to try and maintain some health or balance was I always tried to maintain a certain level of physical fitness. I think exercise actually gives you time back, and that is if you take four hours, six hours a week for physical fitness, you get those hours back because you're more, you have more energy, you're more healthy mentally, you're more, you're able to work

• 13:43Scott Galloway?

  harder. I, one thing I was sort of known for at Morgan Stanley was, you're an athlete. I was an athlete, and I use that term loosely. I was literally probably the worst athlete at UCLA. I barely made the crew team my sophomore year at UCLA. But I developed incredible grit or perseverance. The gift that crew gives people, the gift that rowing gives people, is at some point during a 2,000 meter race, you can't feel your legs, the air going down your esophagus feels like it's on fire, and you start having to focus on not passing out because you're suffering from such exceptional exhaustion. That's at about 800 meters of a 2,000 meter race. And guess what? You finish the 2,000 meters, and what you realize,

• 14:24Scott Galloway?

  what you realize, and this is a gift, this is a gift, that just when you think you can't take anymore, you're emotionally so frail, so exhausted, when you're physically at your limit, guess what? You're about a third of the way to your actual limit. You are so much stronger and more resilient than you might think. And that provides tremendous comfort and confidence. So what I used to do is I used to go, and I'm not suggesting people do this. I was 22, 23, an analyst at Morgan Stanley. Every Tuesday morning, I went into work, and I wouldn't leave till Wednesday at 5. I would work through the night. I was physically fit. I had no problem enduring the sleep deprivation. I didn't have kids, dogs, or a girlfriend or a spouse waiting for me at home. I was living with

• 15:06Scott Galloway?

  my mother. I had no life. I tried to maintain a good relationship. I always was very close to my mother, and I invested a lot in her, especially, it was just me and her, especially when she got sick. And I had a good time. And also, the thing I would also suggest as a young man,

• 15:23Scott Galloway?

  Try and accept as many invitations as possible and opportunities to meet potential friends and potential mates. The most important decision you'll make isn't how, where you go to work, or the industry you go into, or where you live, it's who you decide to partner with the rest of your life, specifically who you decide to have kids with. So as a young person, when you're in sort of those mating years, really even when you want to stay at home and just watch Netflix and hang out with your dog, or Chinese food, or whatever it is, try and get out there and touch as many different new people, because I find most great relationships are a function of serendipity. You end up in a situation, you establish contact, you express interest. And by the way, I don't think there's anything wrong with expressing interest. I think a lot of people have told men not to express interest in women, bullshit. I think more women

• 16:04Scott Galloway?

  want more men expressing more interest. Anyways, different talk show. What did you ask about? Oh, you asked about balance? There is no balance, boss. You can have it all, you just can't have it all at once. Thanks for the question. That's all for this episode. Again, if you'd like to submit a question, please email a voice recording to [email protected].

• 16:33Scott Galloway?

  Our producers are Caroline Shager and Drew Burrows. Sammy Resnick is our associate producer. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you next week.

• 16:47Speaker 05

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