Pod Insights The Prof G Pod with Scott Galloway Is Reddit Still a Buy? Democratic Strategy and Rethinking Financial Advisors About this episode Scott Galloway weighs in on Reddit’s valuation and long-term prospects, shares his candid take on Democratic leadership and the road to 2028, and explains why a 1% financial advisor fee can quietly destroy long-term returns.
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Transcript 3,991 words · 10 speakers
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1:35 Scott Galloway? Welcome to Office Hours of Prop G. This is the part of the show where we answer your questions about business, tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question for next time, you can send a voice recording to officehoursofpropgmedia.com. Again, that's officehoursofpropgmedia.com. Or post your question on the Scott Galloway subreddit, and we just might feature it on our next episode. First question. Our first question comes from communication number 3650 on Reddit. They say, "I'm curious what Scott's thoughts are on Reddit as an investment going forward and its price action? Also, its price forecast, and if he's still invested." Yeah, I still own shares in Reddit. I think Reddit is a phenomenon. I think they do a pretty good job. I have mixed feelings on Reddit and Discord. Unfortunately, I think a lot of young men are deciding they don't need to go out and make friends, that they just spend time on Reddit and Discord.
2:19 Scott Galloway? But generally speaking, as a consumer offering, I think Reddit is incredible. They've traded roughly between eighty and two hundred and eighty dollars over the past year, showing, you know, pretty serious volatility for a newer tech social IPO. The current price at the time of recording is a hundred and eighty dollars. This was my big tech stock pick for 2024. I said at thirty-four bucks a share, and granted, most people didn't have access to that. I thought it was the most underpriced IPO of that year, and we got that one right. The stock now trades at a pretty elevated PE, and that is a hundred to a hundred and twenty times earnings, well above the broader market, signaling a lot of growth expectations are priced in. So in some, I'm not a seller here, but I'm not a buyer. And the reason I'm not a seller is because I like the company.
3:02 Scott Galloway? And I've essentially, the way I have always made money, or the way I've made the most money, is not trading, but it's buying stuff and holding on to it for years. I've had big tech stock pick. I, I lost almost all my money in 2008, and I took the, the remaining money I had, and I doubled down on two or three big tech companies. And they're up between twenty and fifty X. By the way, the third company I bought was Netflix. It's up, this is the good news. I bought it twelve bucks a share. The bad news is it's at, I sold it at ten bucks a share to take the tax loss and never bought back in, and I think it's up a hundred and ten X since then. So I'd be doing this podcast live from a Starlink, uh, link on my G six fifty had I held on to my Netflix stock.
3:45 Scott Galloway? But no harm, no foul, other than I would like to invent a time machine, put me in it, go back such that I could murder me and then kill myself. But anyways, little bit of trauma, little bit of trauma. But Reddit right now is what I would call, I don't want to say fully valued, because it's an incredible company and appears to be getting a lot of momentum. And if you compare it to other social media platforms, it doesn't look outrageously priced as a, as a multiple on revenues relative to its growth. Having said that, I have trouble buying into stocks after they're up 500 or 600% since the IPO. So, but again, I'm not a seller, I'm not a buyer here. What do they have? They have hundreds of millions, weekly active users, double-digit revenue growth since post-IPO, improving margins.
4:29 Scott Galloway? The thing that's probably most exciting is that they entered into a licensing agreement, I believe with OpenAI, to sell their data for input into these LLMs, whether that lasts or not, because supposedly LLMs can now synthetically create their own data, which I thought was kind of interesting. But the bull case is that Reddit has hundreds of millions of highly unintentional users and is still under monetized relative to time spent. So its ARPU or average revenue per user is nowhere near the other platforms, which creates, you know, which is bad news, but it's also good news, meaning there's a lot of opportunity. The bear case simply is valuation. The stock trades at a premium multiple versus traditional media and even some social peers, which means
5:12 Scott Galloway? a lot of future growth is already priced in. The consensus average is 250 bucks. The top end of that is 325 and the low forecast are about 150 bucks. Overall rating consensus is a moderate buy, more buys than hold and a few sells in some. Like I said, I'm not a buyer here, but I'm also not a seller and I own shares, which I guess technically means every day you decide to buy it because you could sell it. Whew. Well, mind blown. Question number two. All right. Question number two comes from Radiative Collapse? Radiative Collapse? Wow. Where do these people get these things? Is it like a name generator on Reddit? They say, "Hi Scott, great work you and your team do every week." Thank you, mostly the team.
5:52 Scott Galloway? "In your chats with Jessica Tarlove, you've led on that you're getting more into politics and specifically into supporting candidates that will bring the Democratic Party into sync with what the country actually needs in these fraught times. My question is, in your engagement with political players, do you get a sense of where the Dem Party is on strategy in midterms 2028 and beyond? Thanks again and I look forward to your comments." So I'm incredibly disappointed in Democratic leadership, specifically
6:16 Scott Galloway? Leader Schumer or Senate Minority Leader Schumer. Even more recently around ICE, he said there needs to be restraint and restriction. A bunch of fucking blah, blah. I thought his leadership was epitomized by, I sent a strongly worded letter. Well, that's going to do a lot, Chuck. Thanks for that. I just think he's too old. I think he's too. I don't think he has the weapons at his disposal for change. I think some of the younger Dems, whether it's Talarico or Crockett or AOC. While they're probably a little bit further left than I am, I find that they're stars, unafraid and know how to weapon, know how to kind of weaponize the weapons of choice and are just, quite frankly, clear blue flame thinkers.
6:57 Scott Galloway? And I think, for God's sakes, enough, enough of the golden girls and the walking dead. It's time for a new generation of Dem leadership. I am consistently inspired when I speak to Democratic senators. Senator Murphy, Senator Booker, Senators Kelly. I supported Senator Bennett for president. I think he is incredibly smart, moderate. I just think there's a, I think we have an amazing bench. Some of the governors, Governor Shapiro, feels like he was built in a factory of lesser presidential candidates or parts from lesser presidential candidates. He is very good. I'm an enormous fan of Governor Newsom. I was at Davos and I walked down into the main Congress hall and there was like this
7:41 Scott Galloway? enormous crowd asking what felt like Adele or, or Lady Gaga or Taylor Swift for autographs. And it was this big, tall, handsome guy with gray hair. And I immediately recognized it was the governor. The guy literally walked around Davos as if he was going to be the next president. And he just sort of felt and looked that way. And it was, I compared and contrasted with, I saw Lindsey Graham walking around desperately looking for someone to talk to, and no one gave a shit about him or that he was there. So I think Governor Newsom, and for all the shit he gets about California, the reality is as governor or president of California, he's overtaking Japan as the largest economy in the world. And all these people shitposting him are shitposting him from their computers in their homes in California and the people with the most options decide to live and wait for it in California.
8:26 Scott Galloway? Anyway, I think our bench is really strong. Governor Whitmer, I think would be a decent VP. I think these are, I think there's just, I love Senator Klobuchar. I think she's incredibly smart, understands antitrust, which I think should play a huge role. Anyway, long winded way of saying, I think we have a fantastic. Bench. I think their strategy right now is to, you know, what Sun Tzu said, when your enemy is making mistakes, stay out of their way. I think they're sort of staying out of the way. I think they're doing a good job. Highlighting how outrageous this is. I think the governor of Minnesota has done a good job. The mayor of Minneapolis has done a good job. The frustration is that.
9:07 Scott Galloway? Well, okay, what actual impact are they having? And the answer is little to none, other than raising awareness, which hopefully builds momentum going into 2026, the midterms. And there's already evidence that Dems are beginning to win races. They traditionally haven't won before. And then hopefully that carries over into 2028. But Timothy Snyder, the professor from the University of Toronto and the historian, said something really powerful and he said, "Change never starts with political parties. Change starts with people and then the political parties respond." So I think I keep hoping for some sort of religious Mandela, Jesus-like figure to descend from the hilltop of the Democratic Party and save us all, and I shouldn't hold my breath. But I think their strategy is to highlight affordability, violation of constitutional rights,
9:53 Scott Galloway? and what is feels like really serious overreach of a mass police force, secret police force, going into American cities and trying to convince, okay, the president believes that harsh activity at the border was warranted and a lot of people support him. And I think he's done a good job with the southern border. But now what he's trying to do is bring the border everywhere in the United States to justify violent, harsh reaction as if every citizen is trying to illegally enter the country. And that's just not the case. So their strategy, let them shoot, let them continue to shoot themselves in the foot with what is a lot of people consider depraved behavior, focus on affordability, find good candidates and wait till the election. I don't think that's, I think that's a good strategy for the midterms.
10:38 Scott Galloway? I don't think it's the right strategy for now. I think we need to do more that has a more of a short-term impact because I think unfortunately between now and November, the Trump administration can do a lot of damage. Very much appreciate the question. We'll be right back after a quick break.
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14:36 Scott Galloway? Welcome back onto our final question, which comes from Derek, who emailed us. "Hey, ProfG, I'm a 33-year-old private chef living in the Bay Area. I'm married and own my home. My wife and I make a modest salary, $240,000 combined, and are able to max out our Roth IRAs each year while still being able to put away $10,000 to $15,000 for investing. For my entire time in the markets, I've been using Betterment to manage my portfolio. I'm contemplating hiring a financial advisor. Betterment charges 0.25% of my $170,000 portfolio, whilst an advisor would charge 1%. What do you think about financial advisors and what would they need to do to earn their 1% commission?" God, it's just so strange. It's someone at 33 who's been fortunate enough to find someone to share their life with and makes $240,000.
15:19 Scott Galloway? Describes that as a modest salary. I would bet 240K puts you in the top decile. So at the age of 33, you're already in the top decile of income earning households. Now, the problem is in the Bay Area, that feels very middle class. I lived in Potrero Hill, then Innoy Valley. True story, first house I bought in 1994 was in Potrero Hill, 285,000. I then bought a house in Innoy Valley. I came out of the gates strong. I peaked early. I was invited to the office in 99 and just got invited back 27 years. What have I done the last 27 years? Let me see. Dot bomb implosion, a bunch of failed businesses, a divorce. Yeah, yeah, that's what I've done. No wonder they didn't buy me back. Anyways, I then bought a house on Delores and 21st for 760K.
16:03 Scott Galloway? That ended up being the house next to where Mark Zuckerberg ultimately. I think it's worth like 10 or 11 million. I sold it a couple of years later and moved to New York for 950,000 and thought I was a fucking real estate genius. Jesus Christ, see above, want to find a time machine, go back and kill myself. Okay, back to your question. So I would not hire a financial advisor at 1%. 1% doesn't sound that bad, but 1% compounding, compounding literally takes away a third of your returns. And when I say returns, I mean inflation adjusted. You should be able to get 9% in the market over the long term and paying out 1% a year, even in down years. It just wrecks your portfolio.
16:43 Scott Galloway? And with AI and investment allocators or bots and even good, there's really good financial information. I think you could spend a lot of time developing a really long prompt, being very honest about your risk tolerance, what you're hoping to achieve, use different LLMs. After February, of course, because you're unsubscribing in February. And then invest in low cost diversified index and ETFs. That's, I just think at the age of 33, you're going to wake up, you're going to be, you know, my age, 53, 61, and you're going to realize how fast time went.
17:27 Scott Galloway? And if you just diversify across not only asset classes, but geographies, you're going to be just fine. So especially if you're able to put away, say you're able to put away an average of 20K a year.
17:43 Scott Galloway? Okay, let's do the math here. So I'm about to blow your mind, Eric. The difference, okay, so I'm gonna assume, and I know this right, you have a quarter of a million dollars already. You're gonna be able to save, on average, $20,000 a year, and it sounds like you'll probably be able to save more as your income goes up. If you're 33 and for the next 30 years, and I'm gonna assume you already have a quarter of a million dollars, maybe that's right or wrong. If you get 9%, which you should be able to get over the long term, that's what the markets have returned since inception. In 30 years, you're gonna have $6.1 million. Now, assume you pay 1% a year in advisory fees. In 30 years, investing and saving the exact same amount, you're gonna have 4.5 million.
18:26 Scott Galloway? Think about that. You're going to have 33% more in 30 years, avoiding that 1%. So what I find advisors are really helpful for is, quite frankly, tax optimization, which is a long-winded way of saying, or fancy way of saying, tax evasion. And if your taxes ever get complicated, I think it's worthwhile to hire a tax advisor. But paying 1% of a year to a financial advisor, who if they're smart, is just gonna put you in low-cost index funds, and then sometimes puts you in their own funds, which have their own fees, which are hidden to you. Uh-uh. This is what you're gonna do. So you're gonna wanna put that money on low-cost funds, either with Vanguard, Fidelity, Schwab,
19:06 Scott Galloway? GQG funds, low-cost diversification, that's it. And my fear is the financial advisor not only takes that 6.1 and turns it into 4.5, but takes it down even lower by picking their own vertical, you know, private label funds that charge you additional fees. So yeah, this is some work. Upload everything, your W2s, your income, how much you're saving, your current portfolio, and start asking these LLMs, what are the lowest-cost funds that can give me diversification across asset classes and geographies?
19:42 Scott Galloway? And go into those and pay yourself that 1% because keep in mind that money adds up. It's the difference between 6.1 million when you're my age and 4.5. So boss, no, no to the 1%, held to the no of the 1%, low cost diversified funds. And do your, do your own work here and pay yourself. It's worth it. Oh, and also never, ever work with anyone who offers to take you to a basketball game, a Broadway show, or sends you expensive gifts because that means that that trip to the basketball game is costing you tens of thousands of dollars. Vanguard doesn't take anyone to basketball games. GQG doesn't take anyone to the theater.
20:26 Scott Galloway? All right, 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] . Or if you prefer to ask on Reddit, just post your question on the Scott Dalway subreddit and we just might feature it in an upcoming episode. This episode was produced by Jennifer Sanchez and Laura Janer. Kami Reek is our social producer. Brad Williams is our video editor and Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from Prop G Media.
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