Pod Insights The Prof G Pod with Scott Galloway Bonus Episode: Plunging Markets, Crypto Winters, and Elon’s Twitter Deal — with David Yermack About this episode David Yermack, a professor of Finance and Business Transformation at the Stern School of Business, joins Scott for a special reports episode on how to think about the current stock market and crypto volatility. We also learn more about whether Elon can actually back out of his deal to acquire Twitter.
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:09 Scott Galloway? Welcome to a special episode of The Prop G-Pot. Today, Professor David Yermack from the Stern School of Business joins us to discuss the state of the markets, crypto, and the Twitter deal that is for now on hold.
0:21 Speaker 01 It's caused confusion amongst investors and rattled Twitter's stock price.
0:26 Speaker 02 This is the worst environment that I've seen since the dot-com crash, even worse than the great recession of 2008, 2009.
0:33 Speaker 01 Okay, so I don't think there's any debate. We are in the middle of a crypto winter.
0:37 Scott Galloway? So David is a colleague. I wouldn't call us friends. We like each other. We're very collegial. And he's someone who is just a gift. The Finance Department at NYU is arguably, and most academics will agree, one of the best finance departments in the world. And at NYU, they kind of rule the roost because they get just such outstanding faculty. And David has been one of the few people that's been able to kind of tame these lions and bring the management skill required to manage all of these enormously talented and very confident and very large ego professors. Is that fair? Anyways, it's not easy to be a department chair at a university, much less the department
1:21 Scott Galloway? chair of kind of an iconic group as the Finance Department. Anyway, the thing I really appreciate about David is that he is an optimist and even maybe a bull on the crypto space, but he doesn't bring this Taliban absolutist mentality. He's pretty sober about it. He's pretty thoughtful, but he occupies this unique space. I find that crypto is bifurcating into the Charlie Munger Bitcoin is evil, or people just throw up their hands and say, "I don't get it," to the people telling you to mortgage your house and max out everything just to buy Bitcoin and that it's going to change everything and bring about world peace. And David comes at this from not only staggering credibility and insight.
2:04 Scott Galloway? I know firsthand that some of the most influential people in the world of government and economics reach out to David regularly, but he has just a very kind of optimistic but sober view of this asset class. Anyways, here's our conversation with Professor David Yermack. David, where does this podcast find you?
2:22 Speaker 03 I'm at home in Morristown, New Jersey.
2:24 Scott Galloway? All right, let's, let's bust right into it. So I'd love to get, just get your take on the markets, higher interest rates, big R, little r, transitory inflation. What are your thoughts on what's going on out there?
2:39 Speaker 03 Well, the bill for the COVID pandemic stimulus is coming due. You know, you had, over the last two years, the government gave trillions of dollars to people. A lot of it was thrown right into the markets and over the last year, despite the best efforts of the administration, they haven't been able to keep the stimulus coming. And, um, you know, as a result, we have higher consumer prices. There's going to be inflation and higher interest rates, which is always bad for the stock market. And the interesting segment of the market that's really been hit hard are the technology stocks there.
3:16 Scott Galloway? Yeah.
3:16 Speaker 03 You know, Amazon, but, but others as well, that many of those, the so-called fangs were sky high, but they've, they've come down to more realistic levels, you know, implying lower growth rates for the foreseeable future for their customers and profits and so forth.
3:33 Scott Galloway? So on a very basic level, you have companies that probably just in terms of valuation got out over their skis because people having so much money that ended up in the market and everybody likes the cool stuff, the cool kids. We also have growth companies that require financing and their cash flows in the future. So higher interest rates make their growth more expensive and make their future cash flows less valuable. Anything else I'm missing? Uh, is this just a healthy correction or something bigger going on?
4:00 Speaker 03 I'm not sure healthy is the right word, but um, you definitely have lower consumer demand. The stock in the news today is Target, which dropped 25%. You know, it all speaks of less discretionary spending by consumers.
4:16 Speaker 03 We still have a very tight labor market. You know, unemployment is down in the threes and wages are rising. But I think we were in a very unusual setting the last two years and reality has set in that there's not going to be any more stimulus from the government. And probably some concerns about the costs of the Ukrainian intervention and defense spending going forward. There may be a permanent shift in American commitments all over the world, you know, in light of the changed foreign policy of the Russians. And this could be expensive the way it was back in the 1960s if it's not reined in and kept to a reasonable level. We'll have to see what that means.
4:59 Scott Galloway? So put this, I don't know if it's technically considered a bear market yet. Put this in a historical context. What does this look like in terms of past recessions or market corrections? And what can that tell us about what's going to happen here? Do you think this is going to be hard landing, soft landing, depression? What do you think's going to happen here?
5:16 Speaker 03 It reminds me of the early 1970s when the economy got overheated as a result of the spending on the Vietnam War. Employment was still strong, but once inflation kept in, crept in, the, um, the value of stocks began to fall. Eventually, there was higher inflation and higher unemployment and a recession. I think the goal of the Federal Reserve is not to have a rerun of the 1970s. I think, you know, there were steps taken by the Nixon administration around 72, 73 that in hindsight, they probably would have reconsidered.
5:52 Scott Galloway? It strikes me that the markets are obviously, you know, there's some, there's some volatility, for lack of a better word. People point to the quote unquote dramatic increase in interest rates, but if I look at inflation relative to interest rates, it looks as if interest rates are going to have to go up a lot more.
6:10 Speaker 03 Much more. I think, you know, the central bank is probably hoping that inflation pops down. But if it stays up in the eights, you know, you would basically take that as the thing that you would add the risk premium to. So the government would be paying perhaps nine percent to borrow money and A rated corporations, you know, paying 10 or 11. Interest rates are nowhere near that level yet. So, you know, one or the other is going to have to give way. Either inflation's going to have to drop or interest rates will have to go up. Probably a little bit of both is what will happen, some combination.
6:46 Scott Galloway? It feels like there's more pain coming. Do you think that's fair?
6:49 Speaker 03 It's hard to see how unemployment can stay down in the threes. That's never been a sustainable level. And certainly with the cost of financing going up, you're not going to see the formation of new businesses, the recruitment of staff and so forth. I think it's an open question whether the great resignation is going to hold. All the people who left the labor market during the COVID years, will they come back looking for work? Or do they really have enough savings set aside to live on now that the market has dropped? But I think you're not going to see the kind of labor market that we're in now indefinitely. And that's going to spell trouble, you know, probably for tens of millions of people.
7:33 Scott Galloway? So let's transition into crypto. Prices are collapsing, but again, it's nuanced. You know, the headline, the headline news is, you know, Bitcoin off 50%. I think when I first talked to you about it two years ago, if I bought crypto then, I'd still be up, if I bought Bitcoin, I'd still be up 40 or 60%. So it's all, it's all a bit relative, but I would love to, let's just start there. What's happening? What's your sense of what's happening in the crypto markets?
8:02 Speaker 03 Well, the markets really have been dropping since November. So you've had a very gradual slide for about six months. And most assets are down more than 50%, sometimes a great deal more. But it's not as severe as other episodes that we've seen. There was the crypto winter in 2018, where there was a much faster, sharper drop. I think Bitcoin dropped as much as 80% peak to trough in the crypto winter. There was another correction in 2014 after the Mt. Gox bankruptcy and shorter, shorter lived ones as well. But it's always been volatile. And if you've been watching crypto for five or 10 years, you've seen
8:46 Speaker 03 this kind of price movement before. I think. Really, there are certain projects and certain corners or nooks of the crypto world where there's probably much more concern, but the big assets of Bitcoin and Ether and so forth are, you know, standing their ground much more than a couple of the stable coins and NFTs as a category. The generative art collections and so forth seem to be very challenged, as you might have expected all along. But I think the basic infrastructure of the crypto community, you know, companies
9:23 Speaker 03 or coins and assets that are tied to smart contracts, to transferring between blockchains. There's still a lot of interesting projects being launched, and in the long run, probably a lot of value to be preserved there. Many of the DeFi coins and tokens are probably going to sustain their value as well.
9:44 Scott Galloway? So it does feel as if there's a separation or a cash system emerging in crypto, and that is you have the big two, Bitcoin and Ethereum, that might, that might in a volatile market be down 40 or 50%, and then there's everything else which literally can lose 90%.
10:01 Speaker 03 Yeah, there's more than 18,000 of them out there, and I think the top 20 or 30 probably account for 90, 95% of the value, but you really have to look at what these things are designed to do, and some of them have unique issues, like Ripple, we're still waiting for the conclusion of the litigation that the government's brought against it. I think that's a huge issue, you know, either good or bad, we'll have to see, but the value of Ripple is going to be closely tied to the outcome of that case. And you've had most of the stable coins really locked on the $1 peg with one very notable exception and a couple brief uncouplings that occurred last week.
10:43 Speaker 03 But, you know, they're holding their ground as well, and it really depends on what the coin is trying to do. And if you have a bunch of cartoon characters that you're trying to sell as avatars, they're going to drop in value. You know, they're like collecting comic books, collecting digital art, especially when it's being flooded into the market in large volume, is not necessarily going to pay off for people.
11:10 Scott Galloway? Let's go back to stable coins. I kept reading that it was a big deal that it had, you know, broken the buck. Can you tell us, can you explain to us the value and construct of a stable coin? And why it was such big news? I think we all read about it and knew it was supposed to be a big deal. But most of us, myself included, didn't really understand why it was a big deal. What happened?
11:34 Speaker 03 Stable coins are very similar to money market funds in that if you own a share of a money market fund, it is always worth $1. And it's been very, very rare. There was one money market fund that fell below that in the financial crisis. And because people count on it being worth a dollar, it has all kinds of spillover effects that are very bad for people's ability to meet their commitments and so forth. Now, in stable coins, you have a majority following essentially the same business model as a money market fund in that they will have assets in reserve, hopefully high-quality assets. But for every dollar circulating in the form of a stable coin, there should be a
12:18 Speaker 03 dollar in the bank somewhere. And in principle, you can actually redeem the stable coins and get the dollars back. And so it's the redemption promise that essentially guarantees their value. So there's collateral essentially in escrow somewhere. The smaller group of stable coins, and this includes the one that got into trouble, are based on trading strategies. And they resemble what governments sometimes do when they run currency boards, where they announce that we're going to fix the value, in this case, fix the value of the stable coin at $1. If the value goes up for whatever reason, we'll just issue more into the market, increase the supply, which will push the price back down. And that's easy to do.
13:03 Speaker 03 Where the trouble comes in is in the other directions. If the price drops, you're supposed to buy them back and reduce the supply and push the value back up from... You know, essentially, basic supply and demand. And that will work until you run out of working capital. And in the case of this Terra USD, they had a huge reserve of Bitcoin that had been set aside for emergencies, but they blew through it very, very quickly. And after that, the confidence in the project completely evaporated. So it looked really a lot like Argentina in the late 1990s, which successfully pegged itself to the US dollar for several years.
13:42 Speaker 03 But once you run out of reserves, the capitulation occurs pretty quickly. And we've had some research into stable coins. The ones that follow the reserve model have, in fact, been more stable over time. The ones that follow the algorithmic trading model have been more volatile. And if you had told me one of them would get into trouble, you know, and asked me which group it would come from, it's not a surprise. It was one of the algorithmic ones. And so what's happened? Is it Luna, which was the one that went down 90%? It's called Terra USD, and it had a companion coin called Luna.
14:21 Speaker 03 They often have a coin that is used as part of the rebalancing for trading purposes. So another very big one, which has held its value just fine, is the Dai stablecoin, DAI. And its twin, if you will, is the Maker token. These are connected to the Maker DAO DeFi platform. And what happened with Luna and Terra USD was just a severe imbalance of supply and demand, so that they blew through all their reserves that were set aside for trading protection rather quickly. And it happened in some interesting ways. But once you drop below a dollar with any significant day, like typically,
15:06 Speaker 03 it's very hard to recover. And, you know, there've been a few of these in the past that also ended very abruptly and very badly. I think, you know, it's a very risky model and difficult to implement, no easier in the crypto world than in the real world. Hmm. Tell us about what's happening in the AFT market. There's been a very significant drop in most NFTs. And it's important to confine the discussion to the families of generative art. So the best known are the crypto punks, the bored apes and so forth. But there were a ton of imitators that hit the market after some of these early entrants did very well.
15:51 Speaker 03 And essentially, the market just got over flooded. It looked to me a lot like the comic books bubble that we saw 30 years ago, where Marvel just started turning on the printing press and issuing new comic book titles to feed the market. But after a while, the supply swamps the demand. And the real value of NFTs is not for generative art, for bored apes and so forth. It's to fix ownership of assets that can be as diverse as real estate or old master paintings or anything where the providence and the documentation of the property right has been challenged through history. There's all kinds of ways that society has kept track of who owns what.
16:36 Speaker 03 And using a blockchain with a digital token seems to be a much more rigorous and robust way to record property ownership. So I think in the long run, you're going to see NFTs replacing things like automobile titles and real estate titles. It's not going to be about digital art collections so much as real property where the government registries have never been as foolproof and as trustworthy as you might wish.
17:04 Scott Galloway? That's super interesting. So you're saying that that effectively this is sort of the innovation or the digital innovation around kind of the deed space. That instead of having something notarized and locked away in a safe deposit box saying, you own this property, that there'll be a more robust, accessible, secure.
17:25 Scott Galloway? Transparent deed to put online using NFT technology.
17:29 Speaker 03 This was exactly why the blockchain was created back in the early 1990s. They were looking for a way to record digital property. But it doesn't have to be just digital. You know that when you buy a car, there is a paper deed issued by the Division of Motor Vehicles. And then if you sell the car to someone else, you're supposed to sign it on the back. There's a lot of forgery and corruption in the recording of automobile ownership. And for that matter, real estate ownership. The titles to paintings are the subject of, you know, feature films and all kinds of books, you know,
18:09 Speaker 03 in wartime and in, you know, tough economic times, art sometimes just disappears. And then it reappears centuries later and there's no paper trail. NFTs offer a permanent way to record ownership of just about any asset you want. And if you think of the systems that are in place in society right now, many of them are very vulnerable to corruption, to simply fires in the courthouse destroying the records. You know, in medieval times, the peasants would sack the castle and they would burn the book of obligations and land ownership, you know, as a way of getting back at the landed gentry. And essentially, the NFT technology would allow you to tokenize just about any asset.
18:53 Speaker 03 And it was developed because there was a clear need for registering digital assets. But I think it was quickly recognized that things like real property and, you know, aircraft, anything valuable where you can have identifying information. And that includes stocks and bonds, for instance, will probably be turned into an NFT and traded over these decentralized networks.
19:20 Scott Galloway? So I'm trying to pretend I'm a music artist or a celebrity and I heard about an investor group buying Chelsea FC. My kids are huge Chelsea fans, so I ends up, I know some people involved, called them and said, I want to put in, I want to own .0001% of this Chelsea FC and I want to be part of the ownership group. And my value add, and no one said yes to me, by the way, my value add is that I believe that sport teams or sports franchises could develop really substantial incremental, high-margin forms of cash flow by thoughtfully creating NFTs from each specific game. You know, the three MVP, the two goals, who gets the NFT of the 10-second video of that goal?
20:05 Scott Galloway? And I think not only is there emotional reward, but there might be some speculation, it might be a store of value. Do you see the same potential for these iconic sports teams and even media companies that produce kind of these moments, if you will?
20:18 Speaker 03 There certainly are people trying to create this. The big success has been the NBA Top Shot, which essentially took the concept of baseball cards and turned it into digital tokens where you would take highlights of LeBron or even go back in history, highlights of Jerry West hitting the half-court shot 50 years ago, and then having very limited edition collectibles that would be, again, displayed for purposes of bragging and prestige. You've also had a lot of the European football clubs begin to issue NFTs as a way of essentially bonding fans to the team, creating loyalty like a frequent flyer mile.
21:02 Speaker 03 So you put them out in limited supply, the fans compete with them, and they don't get ownership of the team, but they do get to vote on the color of the jersey, they get probably preferred access to new merchandise that comes online. There's all kinds of ways that you can use this to create loyalty and keep fans interested in the offseason and so forth. So I think this will require fairly deft marketing skills, but given the number of teams that are out there experimenting with this, we'll probably see some best practices that will be taught in business school marketing classes and widely imitated.
21:44 Scott Galloway? We'll be right back.
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24:01 Scott Galloway? Okay, let's, um, let's talk about Elon. I've never seen anything like this. I think it's actually a, a really interesting moment. What's your take on Elon and him trying to back out? What, give us your
24:14 Speaker 03 When you say this, you're referring to Twitter because
24:18 Scott Galloway? Yeah.
24:18 Speaker 03 There's any number of things that
24:20 Scott Galloway? That's what I'm talking about. Yeah. In this instant, that's what this is. Yeah.
24:24 Speaker 03 To me, the deal looked very unusual from the start because a company of that size being taken private by one person is just no precedent for it. It would be very risky for him individually to pull off and, you know, to continue to own something, you know, in his own right worth $40 billion. And it would be very hard to get the financing, I would think. And it's, you know, you, you look at the whole transaction, you see, I've never seen a transaction that looks at all like this, so I'm a little bit skeptical that it's going to go the distance and close. When you add to that, some of the regulatory concerns about him not declaring his 5%
25:08 Speaker 03 ownership in a timely way and being on the list of, um, bad people that the SEC keeps track of and so forth, you wonder if, um, you know, there won't be interventions of a regulatory nature that could also sidetrack the deal.
25:27 Scott Galloway? So it strikes me, okay, that Tesla's stock off 30%, the peer group's off 30%. So when he started acquiring shares, it was 32, which means it's natural level right now, it'd probably be in the low 20s. And he's signed an agreement saying he's going to show up with 54 bucks a share. And he just did the math and said, this is a stupid idea and I'm going to just try and come up with any excuse whatsoever to walk. And the people who I said, I called bastards, the SEC, I'm now asking them to investigate bots, which, of which 72% of my followers are bots. I mean, I, I'm, I'm going to put forward a thesis and you tell me if I'm just, if this is just projection and me hoping hopeful.
26:11 Scott Galloway? I think the worm has turned on this guy and that is he has pissed off so many people and the SEC is really looking for a means of taking an underfunded agency and sending a strong signal. The Delaware courts, I think are going to have to say a signal that if you start Putting out offers on big corporations and having them accepted, you can't just start walking away. I mean, it's some does what hap- if he's allowed to just walk away without a serious exit wound here, doesn't this threaten all of corporate M and A where say Facebook could get in the way of Apple acquiring Netflix and say they're acquiring it, knowing that they could just walk in six months when the market has changed somehow? Isn't this a-
26:55 Scott Galloway? it strikes me this is a big moment for a lot of different players and the Commonwealth and the markets on a lot of different levels.
27:02 Speaker 03 So, the area that you're getting into has to do with things like breakup fees that are very common in large transactions in this day and age. So typically, when two people negotiate a deal, you know, in this case, the board of Twitter and Elon Musk, there will be often mutual breakup fees. If one side or the other backs out, there's a penalty that in this case, I think is a billion dollars. Now, you can't just walk away. You have to have a reason. And the reason typically falls under the heading of material adverse change, that you essentially learned something or an event took place that made the deal look very different. And we've actually seen this
27:45 Speaker 03 before. There was a very interesting period when the global financial crisis hit, where many leveraged buyouts had been proposed and agreed to back in 2007 and 2008. And then when the market dropped very sharply, a lot of people wanted to back out, but there really was no material adverse change. So, some people just walked away and said, sue me. You know, I'll see you in court. And the legal testing of this has never really been satisfactorily settled. You know, that these, these cases always end in compromises. There was one with Huntsman Chemical where it looked like Mr. Huntsman really wanted to, to take the
28:28 Speaker 03 buyer to the cleaners, but he compromised and settled at the 11th hour. So, it's an area where the Delaware courts have not provided nearly enough clarity to, to say what is and what is not possible. Now, we are again in a falling market. It's certainly not falling as sharply as it did in, you know, the Lehman Brothers days. But I do think that just the basic assumptions that Elon Musk was making about interest rates and the cost of capital, they look different today than they did three or four weeks ago. And if the deal was marginal then, it's probably tipped into being unattractive. And, you know, can he really use the presence of bots on Twitter as a material adverse change
29:13 Speaker 03 and claim not to have known about them and so forth? That's, that's ultimately a question to be litigated. But it does, you know, have, you know, an air of being far fetched because I think you and I knew that there were robots on social media and that well over 5%, you know, and not just Twitter, but, but many of the platforms are populated by all sorts of nefarious bots and software agents and so forth that are doing things that the platforms weren't originally intended for. So who knows? I think, you know, all of this should be seen in the context of a negotiation that is very much still active and maybe he's just trying to get a lower price. Maybe he's looking for other financing. It's hard to know.
29:58 Scott Galloway? The price that this would make any sense for him personally and economically is so far south of the number that he quote unquote signed an airtight purchase agreement around. I think the board would look incredibly stupid. It'd be like, well, what's the guarantee is going to show up this time? I, I just don't see how they, they engage in future conversations with the guy. And what I'm curious about is, say the Delaware court says, all right, you, you knew about bots. You've even said you're going to clean up the bots as part of your proposal. And now you've decided that you don't like the bots or that, that you're shocked, shocked, you're just shocked by what's going on here.
30:41 Scott Galloway? And I think the Delaware court could reasonably say, all right, let's be honest, Mr. Musk, you're full of shit and you're looking to back out of this agreement. What could they do? Do you think there's, could they, I mean, I don't see how you force someone. Just practically to show up with forty five billion dollars.
30:58 Speaker 03 Oh, yeah. That's the remedy, which is specific performance.
31:02 Scott Galloway? And, you know, that's why people were willing to back out of deals in the two thousand eight,
31:07 Speaker 03 two thousand nine period. Because if you ordered them to pay sixteen billion or, you know, twenty billion, there it was simply not possible to raise that money and to close on the deal. So the court can direct that you close the deal. But if you don't have the forty billion or whatever, it's not really clear.
31:25 Scott Galloway? But could they force him? Could they say, as of today, your stock is worth a hundred and twenty billion dollars in Tesla? You're ordered to raise forty five billion dollars and show up in thirty days. Could they do that?
31:37 Speaker 03 I don't think they can force him to liquidate other assets. And, you know, you, you can, you can issue an order. And then I guess if this played out, he would ultimately be found in contempt if he didn't apply. And you could get a judgment against him as the, you know, Twitter could, you know, get damages and whether he chose to actually pay those damages. There's, there's a huge field of finance called strategic default where, you know, you owe someone money and decide you're better off not paying because the cost of them going after you and the odds of them recovering seems, you know, rather remote relative to the possibility of negotiating some sort of compromise.
32:22 Speaker 03 And, you know, I don't see that he would ever sell Tesla just to deliver forty billion to the board of Twitter. And, you know, there's the chance for years of litigation, but almost always these things settle in some type of con, you know, compromise and so forth. I think, you know, that's far down the road. We're nowhere near the point where people are starting to sue each other. And I think there's some hope on both sides of keeping the deal alive, hopefully with the markets going back up. But if the markets continue to drop, it could start to get ugly.
32:59 Scott Galloway? So let's broaden the lens again, or zoom out. How do you protect yourself, or can you, in this type of market? Assume that inflation, you know, what, I think there's a lot of investors out there that, okay, do I have an emotional reaction and sell while I'm still a little bit up? I can't stand this pain. Any thoughts around how your investment strategy shifts, or maybe it doesn't, given what looks to be a recessionary inflationary environment?
33:27 Speaker 03 We have very clear research on this in the university, which is that you should diversify and never trade. You know, you just, you want to do the most boring, put your money in very steadily over the course of your career. Don't pay attention to the ups and downs. And if you try to time the market with, you know, getting out at the top or rebalancing, it's a coin flip. You know, you're going to pay taxes and transaction costs, but you have only a 50/50 chance of being correct. These variables that we're tracking, they all follow random walks, which means that they are unforecastable.
34:07 Speaker 03 And if you look at the portfolios of finance professors, we all own index funds and we don't think very much about them. You know, we're thinking about the very long-term return and not trying to do anything in the short term to react to transitory news.
34:24 Scott Galloway? Do you feel the same way about crypto? Or would you avoid the non, what I'll call the non-iconic coins?
34:32 Speaker 03 I've always thought that crypto looked a lot like technology stocks in the early to mid 90s. And we know that there were hundreds and hundreds of IPOs, 99% of them disappeared. But the ones that got through, you're talking about firms like Amazon and Google and so forth, they became the most important companies in the world. I think crypto will have a similar set of outcomes. You know, the 18,000 assets that are out there, probably 99% of them will go to zero in pretty short order. But it's very hard to tell which ones will pop out and do well. And it's not necessarily the big, well-known ones. There's going to be...
35:17 Speaker 03 You know, a few that break out of the pack, but given the difficulty of figuring it out, again, diversification is the one and only strategy that is time-tested and has been shown to work.
35:29 Scott Galloway? And what, any other advice, do you think is a good company? What, I don't know about you, but my office hours, no one comes to me to talk about my domain expertise, they don't want to talk about brand or strategy, they want to talk about careers. What, assume you're coming out of undergrad or business school, you're blessed with some opportunity, the right certification. Are there specific industries or specific skills you think, all right, that's a great place to position your human capital at a young age?
35:59 Speaker 03 Well, I think studying cryptography and probability and statistics is the value-added skill for the next generation.
36:07 Scott Galloway? Cryptography?
36:08 Speaker 03 I've had all my kids, as they've gone through high school, take AP Statistics, and once you get to the university level, you want to study cryptography, wherever it's taught. It's often, in fact, in the engineering faculty. And the making and breaking of codes is really, you know, how property rights are being traded in the new economy, and there's a real shortage of people who understand what makes this work, you know, the engine that's behind it, the analytics, the mathematics that secures the assets on blockchains and so forth. So, learning to code and understanding probability and statistics and cryptography are skills
36:51 Speaker 03 that I think will be extraordinarily valuable for decades to come.
36:55 Scott Galloway? David Uremack is a professor of finance and business transformation at the Stern School of Business, where he's taught since 1994. David also serves as the chairman of the finance department, which, by the way, let's be honest, at Stern, it's finance and the seven dwarves. It's...
37:09 Speaker 03 I didn't say that.
37:11 Scott Galloway? I said it, as someone in the marketing department, I can confirm it. And, oh, I'm sorry, I'm in the middle of your bio readout. I just read that the average salary for NYU Stern graduates this year is going to be $212,000. Is that accurate?
37:27 Speaker 03 I think we're very near, in fact, maybe at the very top of the rankings for starting salaries. The, you know, in my time at Stern, the school has really come up. And one of the indicators of this is the placement of students in attractive jobs. And we're doing better than we ever have. And the numbers are very much indicating that we're a major league school. And the New York location is obviously a part of this. But that's, that's an asset that most other schools don't have. And we try to take advantage of it. And we have a lot of access to good potential opportunities for our students, you know, through the career office.
38:05 Scott Galloway? Yeah, that, that number just blew me away. Professor, your max research areas include boards of directors, executive compensation and corporate finance. David is also faculty research associate of the National Bureau of Economic Research and has been a visiting scholar at the U.S. Federal Reserve Bank. He joins us from his home in New Jersey. David, as always, a sober, yet interesting look at the markets. We appreciate your time.
38:29 Speaker 03 Thank you very much, Scott.
Previous Office Hours: Should I Work for Meta? + Why Unions are Failing, and Engaging an Audience Next How Money Laundering Took Over London — with Oliver Bullough Page updated October 26, 2026 · transcript and summary are machine-generated
