CNN+, Investing Platforms, and the Return to Fundamentals — with Leif Abraham

Leif Abraham, the co-CEO of Public.com, joins Scott to discuss the state of play regarding the fintech investment space and Public’s overall business strategy. Scott opens with his thoughts on how the state of the IPO market is a forward-looking indicator of what’s about to happen to the streaming industry. He also shares his thoughts on CNN’s new subscription product, CNN+. Algebra of Happiness: knowing when to deescalate. 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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• 0:57Speaker 02

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• 1:05Speaker 01

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• 1:18Scott Galloway?

  Episode 150. Cinderella first premiered in 1950. Whenever my daughter is acting up, I play Cinderella backwards and say, "This could be how your life turns out." Go, go, go!

• 1:39Scott Galloway?

  Welcome to the 150th episode of the Prop G Pod. Jesus Christ, are you tired? I'm exhausted just reading that. I've done anything 150 times. Seriously. In today's episode, we speak with Life Abraham, the co-CEO of Public.com. We discuss with Life the state of play regarding the fintech investment space and Public's business model. We hear about the meme stock phenomenon, as well as how the company differentiates itself and navigates its competition. Oh my God, what a lot of bullshit words meant to make us feel more MBA-like. And also, disclosure, I'm an investor in Public and still own shares. Okay, what's happening? Between the Oscars airing last Sunday... And the big news, my show dropping on CNN Plus on Tuesday morning and the IPO

• 2:23Scott Galloway?

  market freezing over, we're going to break down how we see the streaming landscape play out in the coming months. Oh my God, what a thrill. It's all coming together for us. So first and most importantly, our show on CNN Plus, No Mercy, No Malice, launched on Tuesday, March 29th. What a thrill. You're welcome. It's not that I'm a narcissist. It's not that I like to see my big mug on screen so I can be shocked at how fucking ugly I've become. No, we're doing this for you because we care. So all kidding aside, most kidding aside, I should say, we are very excited. Go sign up at plus.cnn.com. It's $3 a month if you sign up now for your lifetime.

• 3:07Scott Galloway?

  I love how before a store even opens, they, they discount it. Um, I'm not sure that's a good forward looking indicator. Anyways, plus.cnn.com. We'll touch more on CNN Plus as it relates to the broader streaming landscape in a minute. Anyways, the big news, the Oscars represented a seminal moment for the streaming giants, and that is Apple TV Plus became the first streaming service to win Best Picture. You thought it was going a different way, didn't you? And films produced by streaming services, including Netflix, HBO Max, Disney Plus, and Hulu dominated the nomination list. And it makes sense. It's dominated. Think about the amount of time we spend watching streaming versus going to the movies.

• 3:49Scott Galloway?

  $140 billion this year into original scripted programming with the streamers. That's just out of control. That's greater than the defense budget of Germany. So similar to most things we talk about on this podcast, the pandemic was a key accelerant here, making Oscar wins and nominations possible for these streaming services as the Academy allowed nominated films to skip a theatrical release for the second year in a row. That's right, they didn't need to stop just so that they could qualify for an award. And I think that makes sense. Well, the shift away from going to movie theaters and other communal activities offers plenty of negative externalities. It's important to note that this is generally a great sign of the times. Why? Because we all have much greater innovation in our home in terms of how

• 4:31Scott Galloway?

  that experience has changed. And we're less inclined to go to the movies. And I think that you think about less carbon, you think about, I mean, all these directors in their 50s and 60s wax on about the collective and how we need to go back to movie theaters. I don't buy that any of them go to the fucking movie theater. I think they're all home in their fancy theaters, drinking their high end tequila, or whatever it is they drink, with people rubbing their feet and talking about, oh, wouldn't it be great to get back to the movie theater as they stream everything on their eight foot wide TV that is only a quarter of an inch thick. Global box office revenue reached just $21 billion in 2021. And though that is up significantly compared to 2020, that's down by nearly 50% compared

• 5:10Scott Galloway?

  to 2019's pre pandemic levels. So what's going on here? We can expect these same streamers to capture more attention from traditional studios as their content budgets balloon by the billions, not even the tens of billions, the hundreds of billions. Just as streaming has been motivating people to ditch cable TV for years now. I actually think the defining art form of our age is television. You know, I don't know if you look back at certain great periods of, you know, impressionist art, or sculpture, or poetry, whatever it is. This, we're going to look back on this era. I don't think Damien Hirst is going to be remembered. I think Shonda Rhimes is going to be remembered. I think Breaking

• 5:52Scott Galloway?

  Bad is going to be remembered, not some piece of modern art. A lot of people who offer something creatively are finding or touching streaming because there's so much capital trying to find people and ideas to grab into it. Every journalist that has written about big tech is getting their, their book optioned, whether it's Mike Isaac and Super Pumped, which announced a season two, or We Crap. I mean, just every, every one of us, and this is good for us, I guess, is being contacted by different agents saying, have you ever thought about turning this into some sort of original scripted drama? It's not movie producers saying, I see you in big lights premiering in a, you know, an hour and a half film. They all want to do.

• 6:35Scott Galloway?

  Streaming. Cable still captures the greatest viewing share in the US at about 35%, but by a pretty slim and declining margin. Streaming currently accounts for 29% of all viewing. That's more than broadcast TV at 26%. So it goes broadcast TV last, then streaming, and then still cable. And you're going to see cable drop a second. You're going to see streaming take over the next few years. Here's the thing. Streaming is over-invested, and similarly to cable getting expensive. Streaming services, including Amazon, Netflix, Disney Plus, HBO Max, and Hulu have all raised their subscription prices since their launch. A premium subscription with Netflix, for example, has doubled in

• 7:18Scott Galloway?

  price since 2010 to reach $16 per month. Meanwhile, the average monthly cost of cable and satellite television service in the US has increased 21% between April 2012 and April 21, reaching $478 per month. In sum, cable is getting the shit kicked out of it, and streaming continues to grow. As a result, there's been, I think, an over-investment in streaming, and it's unsustainable. So just as we're seeing growth stocks get the shit kicked out of them because there was an over-investment and mania in everything from Open Door to Robinhood to Rent the Runway, that took these stocks to... Actually, that's not true of Rent the Runway. It was always a shitty business and the stock never really popped. Actually, it did a pop. I think it went to 23 and now it's back to 6 or whatever.

• 8:02Scott Galloway?

  But a ton of these companies, including some great companies, Roku, Moderna, are 70, 80% off their 52-week highs because just too much money poured into the asset class of growth stocks. What happens when too much money pours into any asset class, whether it's Florida real estate or meme stocks? The returns go way down. In other words, look out below. We're going to see the same thing in probably 12 to 24 months in streaming. You just can't figure out the R in the OI. That is a return on investment on $140 billion. There's not enough people with enough credit cards, with enough time, on enough couches to justify that type of investment. So things are expensive or getting more expensive and oversaturated.

• 8:44Scott Galloway?

  And again, this should be reminiscent of what is happening to the stock market right now. And especially the IPO market, which is, which has definitely jumped the shark. Finally, The Wall Street Journal reported that so far in 2022, get this, just 22 companies have gone public in traditional IPOs, raising a combined $2.3 billion. Last year at this time, 79 companies, and here's the mind blowing number, $36 billion was raised from initial public offerings by this time last year. So far this year, 2.3. What is that, a decline of around 95% in the amount of capital raised year to date versus year to date in 2021? That's a total, that's a total meltdown.

• 9:29Scott Galloway?

  The Journal also reported the shares of companies that raised at least 50 million through traditional IPOs in 2021 are on average down by nearly 30% from their IPO prices. The profitable companies at the time of their IPOs are down 11% on average, while the unprofitable ones are down roughly 46%. So the market is moving away, and this always happens. Markets are cyclical. Everyone gets their turn in the woodshed and in the sun. So what are the markets telling us? They want profitable, good, solid companies and all this growth shit where we're, you know, tomorrow never seems to be today is getting hit really hard. Whereas definitely kind of 2019, 20, 2021, we're all about growth, the future.

• 10:14Scott Galloway?

  The IPO market is a great example of overinvestment and it's now being rationalized, if you will. 2021 was a mind boggling year for venture capital. That was the overinvestment. VC backed companies in the US raised a record, get this, $330 billion in 2021. That's a third of a trillion dollars going into these companies in 2021. And all of them are hoping for a 3, 5, 10x return. So. That money that went in is going in under the auspices of rational decision by smart investors and smart limited partners, who are the venture capital partners charged with deploying this capital. There's an expectation in that $330 billion investment that they're going to create

• 10:56Scott Galloway?

  about a trillion dollars in new equity value across those companies they're investing in. Sure, some will lose, some will win, some will just go sideways. But the market is basically saying, we think we can get a trillion dollars in new enterprise value with these venture investments. So what does this have to do with streaming? How are we gonna stitch all of this together? How do we, how do we get our issue up? Macrame Weekly. Sit down, make us a spot of tea. I'm British, so I want some cream and sugar. I'm gonna put on my slippers, get my little alpaca blanket, throw on Murder, She Wrote, and think about, think about how we stream together all of these stories.

• 11:38Scott Galloway?

  Anyway, at some point, every sector needs to return to fundamentals, and it's been a little too much champagne and cocaine for the streaming services over the past few years, and we're seeing the repercussions of that now. Most of the streaming stocks are taking a hit. Because why? The same overinvestment that's plagued the IPO market and growth stocks is now becoming somewhat obvious in streaming. Disney is down 22% in the past six months. Netflix, down 36%. Roku is down 60%. These are great companies. That doesn't mean that they didn't, can't get ahead of their skis, which it appears they have. So now let's stitch it all the way back to our show and do what I do best, and that's

• 12:22Scott Galloway?

  bringing it back to, let me think, me. So our show, No Mercy, No Malice, drops on CNN+. And what does that mean for CNN+? News and politics have long been free to the public. We've never had, really had the opportunity to enjoy the kind of CNN quality like news without commercials and without the clock. The two things that totally, in my opinion, just fuck up television are, one, the clock. Some days, some days the international, or some days the business news should be nine minutes, some days it should be 90 minutes. But instead, you have a clock that says, no, it's gotta go exactly 41 minutes. The other thing that screws it up? Is South Korean car companies, light beer companies,

• 13:05Scott Galloway?

  pharmaceutical companies trying to convince you that you have restless legs? Or should be really thinking about your opioid-induced constipation? Specifically, the advertising ruins it. And that is, the surface of attack for Facebook and Google is everything. And yet, they have the precision guidance missiles or weapons, because of their incredible ad tech, to target everything down to, you know, households in New Jersey where there's a new driver. That is not true of television. Because they have gotten in the way of each other, there's no real data that's fluid. Because it made sense to keep everyone in the dark so that they could charge higher ad rates and ensure that the studios never had direct access to the consumer. So there was no sharing of data, no signal liquidity, no analytics.

• 13:48Scott Galloway?

  So as a result, 98% of the garbage you see in between the programming, i.e. the commercials, is just not relevant to you. So, and again, I'm not a good model here because I pay too much for media. But you would think that if you could get great news in politics, that it'd be worth six bucks, or in this case, three bucks a month, just to avoid the advertising. Now, having said that, I think CNN Plus faces some real headwinds. One, first and foremost, see above, the space is just overinvested. Two, I can't think of an existing network that has been able to launch a paid adjunct that's working. There's Peacock, which is a giant thud. MSNBC has their streaming network. I actually don't know how that's going.

• 14:31Scott Galloway?

  There's Fox and Friends, or as I like to call them, Fox and Fascists. I don't think that's going very well. Because the only way you make this thing work is if you go all in. And that is, you spend a lot of time and energy and money creating something that is really compelling. Consumers are used to getting a billion dollars in original programming for every dollar a month they spend. Or actually, two billion, see above Netflix. Now, CNN does have a leg up here. Why, I do think CNN Plus would work. And obviously, I think it's going to work, or else I wouldn't do this. So let's get back to me, why did I do this? One, I'm a narcissist and love seeing myself on screen. I've figured out books, figured out newsletters, figured out podcasts. Whether you agree with that or not, I think we figured it out. Figured out speaking gigs. By the way, a lot of people ask what our business model is

• 15:16Scott Galloway?

  because we don't have a lot of advertising. We have some on the pod, but we don't do it in the newsletter, the books, whatever. We get the majority of our revenue, and I'm saying "we", I mean, Prop G Media, from speaking gigs. It's crazy how much the national cotton growers will pay you to show up and entertain and surprise and delight their audience at their convention in Savannah, Georgia. I also enjoy that, enjoy traveling, enjoy meeting new people, I enjoy presenting. Anyway, enough about me. Wait, let's get back to me. So that's how we make the majority of our revenue, but we don't do a ton of advertising. So why would I go all in and make this big investment in television? Haven't figured it out, want to, and I think you need to be multi-channel and it's fun. Two, I mean this sincerely, and I've said this before, I love CNN. I think they do a fantastic job. I think they're an important voice.

• 16:01Scott Galloway?

  The reason I got involved in the New York Times in the aughts was I love the New York Times. I think they're a great evangelist for Western values and I feel the same way about CNN. I love Fareed Zakaria, I love Anderson Cooper, Christiana Mappour. I think they just do a fantastic job. And I always wanted to be involved with the organization and was much more excited and had opportunities on the, on the kind of parent or the core network, but wanted to get away from advertising and wanted to get into streaming where I think the puck is headed. So will people pay for news? And more importantly, in the form of video? What could they do or what should they have done in my view? I think they probably should have just taken their best programming and slowly but surely put it behind a wall.

• 16:45Scott Galloway?

  At the end of Anderson Cooper 360, they should just say, okay, if you want to see this without commercials, it only costs us six bucks, go here. Because I think they have a ton of great programming that people would pay six bucks a month for to avoid all the crap. I would pay, you know, some money to watch Fareed Zakaria in 41 minutes instead of 60 minutes. See above, restless legs. That's what I would do and maybe that's ultimately where it will go. Now, what's interesting here, what's interesting here is that quality of the content, it getting traction, how usable the app is, the amount of money they invest, all of these things. Are shockingly somewhat secondary to things that are out of our control. When I say our, I mean the good folks trying to pull together great content for you and yours.

• 17:30Scott Galloway?

  And that is corporate governance and ownership structure. Specifically, AT&T still owns 71% of what will be the newly launched Discovery Plus. It includes a bunch of Time Warner assets, including CNN Plus. So a lot of things could go down that would entirely change the structure in the future of CNN Plus. What if all of a sudden AT&T's stock drops 40%? And it's clear that their equity value is so far below their debt value that they just have to reduce debt. What if people start getting twitchy? When I say people, the credit markets about interest rates for what and its impact on what is the most indebted company in the world? What is the most indebted company in the world? AT&T.

• 18:13Scott Galloway?

  What happens if AT&T needs to take down or reduce their debt and becomes a forced seller? And a private equity group shows up and says, hey, we'll take this massively profitable cash bigot called CNN. And they take it and then they say, well, there's this future stuff that's super expensive called CNN Plus. We're going to just close that down. Or what if they say, okay, we'll take that, but we're going to take the best three, four A programs off of CNN Plus and shove it into HBO Max? I mean, there's just, there's a lot that could happen here that is totally distinct to what people think is going to be the ultimate arbiter or litmus test for success here. And that is corporate governance and ownership. I think it's always a good idea to look at who owns the shares in the stock

• 18:55Scott Galloway?

  and look at the characters on the board because sometimes ego and other things get in the way of the content, if you will. So if someone were to say that CNN Plus was doing fine and was exactly in the same form and adjunct to CNN, I would say, I think that's really unlikely. I think what you're going to see in 12 to 24 months is that the Discovery, the parent company, is going to offer all of the calories of streaming. That is incredible cost. With none of the great taste, and that is it won't be able to replicate the growth numbers of Disney Plus or Netflix. The market will throw up, hammer Discovery's stock. And the other key issue here that people don't consider is that Discovery will be the only media company of its size in the world that I know of with this stable of assets.

• 19:40Scott Galloway?

  I mean, for God's sakes, HBO, TNT, CNN, that will be in play. What do I mean by that? It's not dual-class shareholders. When I bought 17% of the New York Times in 2008 and went on the board, all I could do was yell at them and they could just ignore me because they had dual-class shareholder structure. If you wanted to take over News Corp., if you wanted to talk to anyone at Viacom, if you want to talk to anyone at Google or Facebook, you gotta talk to the people who figured out a way to get the dual-class super voting shares. Not true of Discovery. Why? Because Stanki wanted that takeover premium built into the stock. He just wants to get as much money as possible or recover as much money as possible from

• 20:24Scott Galloway?

  what is probably the second worst acquisition in the history of AT&T, the one, the number one being DirecTV, which has probably been marked down by, Christ, I don't know, 50 or 60%, whereas Time Warner still could salvage just being a bad acquisition, not a disastrous one, because they overpaid for it. So someone could come in and just say, okay, the stock's been hammered. I want to take this thing out and go to Stanki and say, how would you like to reduce your debt by $40 or $50 billion or $8 billion? What would, think about this, what would Apple or Amazon pay for HBO? I mean, if Apple TV Plus announced tomorrow, hey, guess what? Everything from Euphoria to Game of Thrones to every other HBO program, The Sopranos

• 21:08Scott Galloway?

  is only available and is going to be available on Apple TV Plus. It's now HBO, Apple TV Plus, and then it just goes out. Overnight, Apple TV Plus is number one. I don't care. They're superior to Netflix with that type of original programming. I would bet. What would happen to Amazon Prime Video, which is now number two to Netflix, if all of a sudden it cut? I mean, this is such a crown jewel. Would it be worth a 1% dilution to Apple? By the way, a 1% dilution to Apple is $30 billion. It's about 18 or 20 billion for Amazon. These are huge numbers. That Stanky would have no choice but to say, sure, I'll pay down my debt by that outrageous amount. Yeah, this company's not worth it.

• 21:53Scott Galloway?

  These companies don't produce those types of cash flows, but they're worth it to Apple or Amazon, which kind of brings us to a whole other host of issues around antitrust when certain companies can buy things that no one else can, or they can buy them based on other dynamics around the channel. Anyways, my prediction, as it relates to CNN Plus's success, I can make the bull of the bear case. As it relates to what it will look like in a year, the only thing I'm fairly certain of is that it will not look like what it looks like today. What I am certain of is that I've really enjoyed this. It's been fun to produce a television show. TV is insecure. It is finite. I have absolutely no idea if it's going to last three months, or three years, or 10 years, but I'm enjoying

• 22:35Scott Galloway?

  it a great deal. And it's been a really interesting experience. In sum, streaming and the dog.

• 22:46Scott Galloway?

  Stay with us. We'll be right back for a conversation with Life Abraham, the CEO of Public.

• 22:55Scott Galloway?

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• 23:40Scott Galloway?

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• 23:58Scott Galloway?

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• 25:20Scott Galloway?

  Welcome back. Here's our conversation with Life Abraham, the co-CEO of Public.com.

• 25:27Scott Galloway?

  Life, where does this podcast find you?

• 25:29Speaker 03

  In New York.

• 25:31Scott Galloway?

  In New York. And today's a big day. You're launching crypto in New York. Is that right?

• 25:36Speaker 03

  That's correct. Finally. It took some time. New York has this crazy thing called a bid license, and only, I think, three companies so far have had it. So we're finally able to offer crypto also to New Yorkers. So it was nice.

• 25:50Scott Galloway?

  This is probably as good a time as any to just a disclosure. I'm an investor in public. I first found life in public because I was, I don't know if the right term is upset or concerned about some of the online trading apps that I felt were using gamification to encourage mostly young men to engage in what I saw was gambling, not anything resembling investing or learning. I found public, which does not sell its order flow such that its incentives are aligned or more aligned with the investor or the customer, if you will. Anyways, I ended up investing. So let's start there. The fintech space is obviously very crowded. Can you walk us through what public does and how you differentiate?

• 26:35Speaker 03

  Sure. So public, again, we're an investing app. One thing that public does is also we're also a community, right? So you can see other people on the app. You can see what people invest in, not dollar amounts, but you can actually follow people. And therefore, like this one barrier we always talked about is that the one barrier to the markets always has been this psychological thing in your head of feeling that the stock market is not for you. And I think that has been pretty heavily been driven by this kind of like more trader culture, right? And so if you think of, you know, stock trading, you will think of Wall Street Bets, you will think of Stock Twits, you will think of, you know, a daily day trader on Twitter and things like that. And, you know, if you truly want to democratize the stock market, like I thought I was doing,

• 27:19Speaker 03

  we felt you also have to change its culture, right? And so with that community angle, what we've done from the beginning is to basically bring more people into the markets that you would normally not necessarily expect to be there. And, you know, that led basically to things like 40% women on the app, 45% of people of color and so on. And therefore, you know, we are kind of more sitting in the camp of really trying to kind of open up that market much more to more people. And that's kind of one big thing with the focus on.

• 27:47Scott Galloway?

  And if the business model isn't selling order flow, what is the business model?

• 27:52Speaker 03

  I think first off, if you look at the market, and I think what just happened with some of our competitors in the space that have relied so heavily on payment for order flow is that there's this perception that the only way to make money in this space is to sell your order flow, and which is just simply not true. Right? And I think a big piece of that is also just in terms of how you diversify your business model. And the more you focus on, you know, things like order flow, the more you focus also on a model that where you're kind of putting yourself into a corner to have certain incentives, right? And so what we basically do is that we focus on building something that is more diversified. And so, you know, there is fees on crypto, there is fees on things like instant transfers.

• 28:36Speaker 03

  We are launching a subscription offering soon, et cetera, et cetera. And by that, have the ability to also align our incentives more with basically our members and stuff. We can talk about that more in a second, but yeah.

• 28:48Scott Galloway?

  What do you see in the crypto markets? Have you seen a shift into or consolidation around kind of what I think of as the big two Bitcoin or Ethereum? What, again, seeing this, seeing this data and seeing what people are trading in and out of, how would you compare and contrast people who are trading in crypto versus those that are just in equities? And what observations do you have around the crypto market?

• 29:08Speaker 03

  I would say that crypto has been definitely one of the components that made just generally, that was genuinely an unlock for the markets. Because it's also one of the only asset classes that has been born fractional. And I think there's one of the things that has really opened the markets is the, it's the sense of fractional investing. And crypto was the first asset class that was truly born fractional. And so I think that fractionalization has been a big unlock. I do think though, with, with many crypto coins you're seeing out there, there is a lot of speculative behavior around it, right? There's a lot of these meme coins where it's where they're applicable, where the technological applicability, so to say, that's this behind it is just non-existent.

• 29:51Speaker 03

  And it is really a little bit, you know, more, more speculative. And again, I feel what that comes from is that there is a lot of community drive behind it. Because obviously in those communities, everyone has an interest in promoting whatever they have invested in, right? And, and I think that creates this, this, this notion of People just feeling part of a community. And I think that is something that in a broader public can be very powerful as well as dangerous. And so therefore, there's always the question of, you know, where does that momentum kind of gets pushed into?

• 30:25Scott Galloway?

  Yeah, because when I think about, I've spent time on all the major apps. And I think that Publix's point of differentiation, or what I describe as a point of differentiation, is first and foremost, the business model, not selling order flow, putting on the side of the investor. But I think of Publix as having a stronger social component. That it's kind of, I almost think of it as a social media platform that has investing on top of it. How do you stop the kind of this pump and dump? How do you stop? You know, you see what happened with Melania and the NFTs. And you see, I see it on Twitter, where it's clearly someone has a thousand or a hundred thousand accounts trying to pump a stock, usually Tesla or usually a specific crypto.

• 31:09Scott Galloway?

  How do you create veracity in terms of the content on your, on your social media platform, if you will?

• 31:17Speaker 03

  So there's a few aspects here, right? So first off, I think there's a sense of what kind of culture of community are you building? And I know that sounds very fluffy when you say it like that. But I truly believe there's a big impact in terms of, and like early on, we obviously said like you become who you acquire. And so very early on, we had a focus on, on building a culture of community where it's very much about people educating each other. And if you open the app and you scroll through the feed, you will see a lot of that. You will see a lot of people sharing their experiences. And when you see a drop of the market, people explaining why that drop is happening and so on. And really like building that context around what's happening at the markets.

• 32:01Speaker 03

  And, and so I think a big piece of that is really culture of community. Another piece, I think, falls into verification. We often talk about how public is like the most verified social network in the history of social networks because every single person wants to full KYC. Right? Because they're attached to brokerage accounts. And so their social security number is being verified. There's people's addresses being verified. And so it's not some anonymous community where you just are, you know, a cat profile picture and a username. But uh, but but people are fully verified. And I think that lifts the baseline um, quality of the community dramatically because people are just start off to be on their best behavior. And so it's the combination of the culture of the community and the verification mechanism, so to say, that really creates that quality of community in the end.

• 32:47Scott Galloway?

  So what is a, I know you have B to B plans. What does a B to B uh offering look like for public?

• 32:53Speaker 03

  Yeah, so um, what you've seen with that rise in retail activity, right? Again, the from five to seven percent of twenty five plus is that a lot of public companies are struggling to what to do with that. And how to even engage with retail investors and so on. If you're a public company, you have an obligation to deliver the same information to all your investors. And um, it's really hard to get that to to regular retail investors, right? And so, and so that's an issue we've seen a lot, right? And so what we've basically built is different ways for public companies to engage with our investors. Like one big thing that you've seen is this is town halls, right? So it's a Q and A format for public company executives to

• 33:37Speaker 03

  literally answer questions of of retail investors because they don't have a chance to like go on an earnings call and so on.

• 33:43Scott Galloway?

  And you're also considering a subscription product. How would that work?

• 33:47Speaker 03

  Yeah, so we acquired this this small company called HyperCharts, which is basically, it's this duo of like entrepreneurs, so to say, that's they're one of them is like a famous YouTuber who is doing a big channel on a on on Tesla. And what they've done is they've basically created a system that scrapes SEC filings of public companies. And then turns the company KPIs into structured data. And so think about it as like Subscriber growth of Netflix or rider growth of Uber and so on. Like how many cars has Tesla delivered and like more of these like more specific company KPIs. And so that is one thing that we're rolling into the subscription product now, including a few other data points and so on to basically, you know, help people to just learn more

• 34:32Speaker 03

  about these companies that they're investing in, like getting more specific insights on, you know, on what the actual company KPIs are, not just the market thing. What we're seeing with our type of investors is that they care about the companies much more than they care about market data because they're also much more long-term investors. And so it's much more about understanding and like learning business strategies than pure, you know, market data and information.

• 34:59Scott Galloway?

  We'll be right back.

• 35:03Scott Galloway?

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• 35:48Scott Galloway?

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• 36:09Speaker 01

  Flowing ad budget on metrics that look great till the CFO sees them? That's bull spend and marketers are calling it out in Dashboard Confessions.

• 36:19Speaker 02

  I remember telling my boss, "It'll be good for the brand," when leads were slow. Yeah, it wasn't.

• 36:26Speaker 01

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• 36:41Scott Galloway?

  So there has just been a ton of media talking about some of the bad actors in the space. Jon Stewart did an entire segment on it. HBO did a big thing on it. So word is out that this has got some bad players or bad actors. And then similar to social media, there's some externalities that maybe we hadn't thought of. Does that help public? Because you're obviously trying to differentiate yourself as the folks with the white hats. But does it hurt the whole space? When Jon Stewart does an expose on one of the players in the space that basically says, "This is not, there's something wrong here." Do your accounts go up? Or does the whole space get hurt?

• 37:26Speaker 03

  I personally think education around how the markets operate. And with that, the structures of things like payment flow. Generally, I think it's a good thing. It's a good thing, not just for us as a business, but I think it's also a good thing for people to understand the incentives in the markets. Right? In the end, incentives dictate outcomes, especially as a business. Like whatever you say, whatever your personal intentions might be, the way you make money will ultimately define. What actions you will take as a company? You will end up there, right? And so when we went of payment flow, you know, the one conversation we had internally was also the thing of that.

• 38:08Speaker 03

  If you would bank on that as a revenue stream, it's just a matter of time until you have that bot call. Where you basically say that, cool, when are you going to launch options trading? When are we going to push as many people into options trading? And that was one of the say, the business that we were set out to build. Also because we think it's a bad business to build, to be quite honest, because it has high churn. You know, and your most profitable users are the ones that churn the most. You will basically end up, you know, having a, you know, scheme like kind of, kind of structure. Where you just have to continuously acquire more customers because you burn through the best ones. And, and that's just not what we want to build, right? And so again, incentives dictate outcomes. And so the more people understand incentive structures in the, in the markets, I think the better.

• 38:51Scott Galloway?

  So you recently acquired a firm called Otis, a platform that lets people buy fractional shares in things, including NFTs. Give it, so are you trying to be a place where you invest across all sorts of different asset classes? Are you trying to, you know, make a bigger mark in web three? What is generally, generally speaking, what's the strategy here?

• 39:12Speaker 03

  If you think about what a modern portfolio looks like, right? And that, then we look at, like in the old world, you had your stocks and your commodities and maybe some currencies, you know, some bonds and so on. And that's kind of how you're, how you will construct your portfolio. Maybe if you're a crazy rich person, you would have some art in there and some real estate as well and so on. But that was like really out of reach for most people.

• 39:37Speaker 03

  What happened was a few years back, the, this, this regulatory framework was introduced called Reg A plus. Reg A plus basically lets you create actual investable securities, which is with the SEC and everything for pretty much any asset. And that's when you started to see companies like Otis appear, right? And so it's a very new space, but it suddenly makes it possible to fractionalize pretty much any asset. First to secure the rights on the asset, but then also to fractionalize it. But also a fully regulated wrapper, right? And again, we are a fully, you know, SEC, regulated brokerage, right? In that sense. And so with that also comes how you operate, comes, you know, your internal compliance, all these things.

• 40:20Speaker 03

  Um, you know, insured cash balances, all that kind of stuff. And so when we look at like, what does a modern portfolio look like? We see that all these asset classes can be part of someone's portfolio. But now it can be part of someone's portfolio, even if you only have a thousand dollars in your portfolio. And that creates a whole new set of investing strategies that people can execute on, right? So suddenly, even when you start off investing, you can already think about it of like, how much you want to have in real estate, how much you want to put in art? How much do I want to put in, you know, collectibles potentially even in stocks and crypto and so on? And if you're starting investing, I think you're often will start off from the things that you understand.

• 41:01Speaker 03

  And if you're a young person, you might understand the value of sneakers more than you understand the value of a certain public traded company, for example. And all of these things, I think, are, are, you know, like, just like having the understanding behind these assets also just helps that you just start or just, just, just to keep going because, because it is like a, a certain, um, like way to just like have some confidence as you, as you start investing, right?

• 41:27Scott Galloway?

  So it appears a bunch of companies, the COVID bump or the pandemic bump has gone away, whether it's Peloton or Zoom. The people, as they were kind of resumed their normal lives, a lot of the industries or companies have benefited from this sort of unnatural wind in their sails of people spending so much time at home and even more time online. Have you seen a dip in investing or activity on the app as hopefully the pandemic or the virus goes endemic?

• 41:54Speaker 03

  Yeah, no, we have not, we have not. But we know from obviously other players in the space who are a little bit more tied to market conditions. So normally in trading apps, you always see this kind of spike up and down, right? Whenever, however, the, the markets move, your monthly active users will move with it to a certain extent. We have not really seen that. And I think that is because we run a little bit of different model, right? So we always say that buying a stock is kind of a commodity, right? If you buy your stock in your Schwab account or, you know, it's some other trading app or public, it's the same stock in the end. But what is different is the experience that is unlocked from that ownership. And so we had very big focus on like, if you own something, then what is the content that

• 42:38Speaker 03

  you get served around that ownership? And that is contextual information around why that stock is moving. Um, we have these live shows on the app, literally three, four times a day, kind of like a clubhouse style, you know, audio shows you can follow, et cetera, et cetera, et cetera. And that type of content, um, I think what creates just this like more recurring behavior of people open public, not just to trade, but they open public to, you know, see what's going on in the world through the lens of the markets. Um, and I think that's just inherently different behavior. And so we have never seen our mouse actually drop, um, uh, throughout the time, but only basically been going up, um, despite, you know, volatility in the markets.

• 43:20Scott Galloway?

  And you're one of these companies that has two CEOs. You're the co-CEO. I'm, I'm involved with another company that has two CEOs. Can you share any thoughts on best practices for having sort of a productive partnership? So many companies are taking off track because there's a blow up among the founders. Uh, what are your sort of best practices around maintaining a good marriage, if you will, with your co-CEO?

• 43:44Speaker 03

  Um, we have this one concept internally of DRIs, of directly responsible individuals. And so basically where everyone is very clear DRIs and that even falls between Yannick and myself. And so we divide the company basically between product engineering and growth and everything else. I do growth and everything else, you know, product engineering, we overlap on some product growth stuff, of course. And then, you know, larger strategy decisions are being made between us and, you know, a few other people on the, on the, on the, on the leadership team, so to say. Um, but I think that's where it starts, of having very clear responsibilities so that also if the, if we ever end up not agreeing on something that we very clearly know if it sits in a certain area, then it's basically disagreeing commits and someone can just go. And I think that is one of the important ones.

• 44:29Speaker 03

  The one big thing I think that we've seen with this co-CEO structure that has been phenomenal is that, um, some of these CEO duties we can split and therefore we can be deeper in the work, right? And so we're still very deep in the product, we're still very deep in growth and marketing. And that wouldn't be possible if you wouldn't have the structure. And I think the other thing is also that it's a little bit better, more balanced decision making because.

• 44:59Speaker 03

  You know, we're all humans. We're all gonna have a bad Tuesday one day. So I think you're protecting yourself a little bit of some emotional decisions. Um, because, uh, you know, just the chance of two people having a bad day on the same day is a little bit lower, even though you might experience the same things equally. And, um, and so I think you just end up having more balanced decision making in the end throughout the company. Um, which I think is good.

• 45:24Scott Galloway?

  And so you've taken one company, you've started one company that got acquired. This one's doing, you know, knock on wood well. What advice do you think that will want? Do you think it's a good time to start a business? And also what advice would you have for younger entrepreneurs or to your younger self?

• 45:41Speaker 03

  I would argue it's always a good time to start a business and it doesn't really matter when you truly do it. Um, I think markets wise, um, I think the, the early stage markets, I think are always the least affected by these, by these swings. And so right now you obviously see that, you know, the markets are a little rocky and that's also obviously trickles the private markets as well and stuff. But I think that trickles very little into early stage and so on. So I wouldn't put too much pressure on like things like market conditions on, on like when you start your company. I think it's much more about yourself and do you have the right idea? And do you feel like the timing is right for the idea you have much more than, you know, much more than, you know, is the timing right in the market?

• 46:23Speaker 03

  And then I think the other thing is just get started because I think it's easy to just always talk about ideas and nothing happens.

• 46:30Scott Galloway?

  And life, uh, on the important stuff, you're a new dad, is that right? Do I have that right?

• 46:35Speaker 03

  Two, eight year old and two year old.

• 46:38Scott Galloway?

  Eight, you have an eight year old?

• 46:39Speaker 03

  An eight year old. I know, I know.

• 46:41Scott Galloway?

  I did not know that. What's it like? So any advice to entrepreneurs who obviously, you know, this isn't. I'm gonna, I'm gonna speculate that you and your co-CEO and a lot of people at Public spend a lot of time at work and thinking about work. Any advice to husbands and fathers around how to try and balance those things?

• 47:05Speaker 03

  I think it's super hard and I struggle on it myself, to be honest. And I just had a chat earlier with someone where there's a little triangle of like, you know, work, friends, family, pick two. And, and I think it's, it's just incredibly hard. Like, I know that, you know, also having run a company before this and now this one and so on, that, that, like, I know there's a lot of kind of like friend relationships that I'm definitely not spending enough time on. Like, I, it's, it's a, it's a pure fact, a thousand percent. And, and I think the other thing is also that, that, I think especially as a founder, you are very emotionally kind of connected to what you're building and making. And so I think

• 47:48Speaker 03

  it's incredibly hard not to take that home. And I recognize myself that I'm, that I'm, that I'm not as present at home as I should be most times. And I'm most time, like many times, you know, also with like, especially with the young kids and whatnot. And so I think it's incredibly hard. And so this might, you know, so like, I, so I, I wouldn't say I'm the best person to give advice there, to be honest. And if anyone else has advice to me for that, I would, I would totally take it. So how's it for you? Tell me, tell, tell, tell me how it should be better.

• 48:17Scott Galloway?

  It's a little bit easier for me because, well, my kids are 11 and 14. And while I'm running, I'm involved in the startup, I'm not the CEO. And I purposely decided I didn't want to be the CEO of another startup because, you know, I'm kind of willing to work 50 hours a week, but I'm not willing to work 80 hours a week again. And, you know, startups are a young man's business. In life, you're doing exactly what you should be doing. You're trying to build something, establish economic security for you and your family. But I've always felt there's this cliche Hallmark Channel vision of startups where you can have balance. I've found that's not the case. And then I tell young people, they can't have everything. They just can't have it all at once. And there's just,

• 48:59Scott Galloway?

  when I was in your shoes, starting my company or a company with young kids, I didn't see a lot of them. And I missed out on a lot. But, you know, I'm now in a position, because some of those hours I logged down, to spend more time with them now. So, you know, there is, there isn't balance, there's just, there's just trade offs. Finally, what are your thoughts? Again, I'll just return real quickly back to the market. Any predictions for the market in 2022? What, any observations? And it can be across Web three or stocks or the market in general, but you're kind of, you're kind of knee deep in the markets every day. Any predictions?

• 49:38Speaker 03

  Yeah, I mean, obviously I'm not allowed to give any financial advice. So, you know, no financial advice, no financial advice. Hey, right now I think it's, you know, tough to predict because obviously of all the things that are happening in the world, right? That's a clear one. I could see, especially with interest rates going up now, that you're actually going to see a little bit less volatility towards the end of the year. And then I think what you're going to see on a lot of the NFT projects and so on, I think you're going to see a bunch of shit go bust. And, and that there's going to be a few kind of blue chip things ending up standing that will continue to, to, to have traction and do well and have a story to tell, if I'm not wrong.

• 50:20Speaker 03

  So I'm curious to see things like trading volume and OpenSea and so on to continue to, you know, to have the volume standing right now and so on. But yeah, but I think those are the, those are the kind of, kind of core things that I would, that I would think.

• 50:33Scott Galloway?

  Life Abraham is the co-CEO of public.com, an investment platform where members can build a portfolio with any fractional assets. Prior to public, he was a co-founder and CEO of ANDCO, which became the largest freelancing software firm in the world, also acquired by Fiverr. He also co-founded Pay with a Tweet, a first of its kind social payment system that was acquired by Hans Ventures in 2012. And Life joins us from his home in New York. Thanks for your time and thanks for what you're building, Life.

• 51:08Speaker 03

  Cool. Thanks, man.

• 51:19Scott Galloway?

  Algebra of Happiness. I was rattled by the events at the Oscars. I mean, had a really visceral reaction. And it's always a good idea, or I think it's a good idea, that when something really pulls at your emotions, you have, it moves you, or it makes you angry, or it makes you feel just something, really makes you feel something. I think it's important to slow down and say, why am I feeling this? Oftentimes, with certain types of criticism or ribbing, I find I get angry and I think, well, is that an appropriate response? When the reality is, the reason I'm angry, or the reason I got upset, is that criticism cuts to the bone because there's some truth to that criticism. And it's not the person's fault, but I'm especially sensitive about that.

• 52:04Scott Galloway?

  It's important to slow your thinking down and understand why you're having an emotional response to something. And I thought, well, why am I having such an emotional response to what I saw as Pure and Simple Assault by Will Smith? What upset me so much about that? And I think it's a few things. One, I really don't want to be that nation. You see that nation in Asia where there are democracy, and then on a regular basis, they get together in their Congress, and they break into a fistfight. I don't want to be that nation where you just can't really expect to go as a tourist and have to be confined to a certain area because it's so violent.

• 52:46Scott Galloway?

  I don't want to be that nation where women aren't given driver's licenses. I don't want to be that nation where we can't get together without an expectation of violence. I just, I thought, Jesus Christ, this is us now. This is us. We have an insurrection on our Capitol that some media outlets call a righteous protest, where a Capitol officer is bludgeoned with a fire extinguisher, whether a woman who thought she was doing the right thing because she was fed this diet of bullshit misinformation, gets shot and killed by a... By a security guard trying to do his job and protect our elected representatives.

• 53:26Scott Galloway?

  When I see our elected representatives, and that's us, they represent us. We vote for them. That's us cowering in the raptor scared. I don't want to be that nation. And when you see the Academy Awards, which I grew up with, engage in that sort of random violence, I think, Jesus Christ, now that's us. That just shouldn't happen in America. I also think that we are normalizing violence, and it's really a bad idea. And all this bullshit that came out the next day around, well, it wasn't that big a deal. Yeah, it is a big deal. It really is a big deal. And then this notion that he was protecting his woman. First off, that's very tribal.

• 54:11Scott Galloway?

  It takes all agency away from women and positions them as victims. And if you want to decrease violence against women, you decrease violence, full stop. I thought this was just terrible for America. Obviously terrible for the Academy Awards, terrible for Hollywood. I mean, I think they should just literally shit can all of these awards after this thing. If they can't, if they create the kind of culture where people are comfortable doing that, and then the guy gets a standing ovation and he's parting at the Vanity Fair party afterwards? And this kind of marks America. I think it's interesting. There's certain things that kind of mark the age. For me, the thing that marks the age recently was that container ship full of luxury cars that caught on fire was adrift for about a week and then sank to the bottom of the ocean with a billion dollars in Benleys and Porsches. I think that sort of marks the age.

• 54:56Scott Galloway?

  I think, I think Pete Davidson branding himself, Kim Kardashian's name into his person. I think that marks the age. And I think that Will Smith assaulting Chris Rock, that the world's leading action hero assaulting because he took offense to something. By the way, if I took offense to every joke or ribbing about my hair, I'd be in a fucking super max cell right now. There was nothing wrong with that joke. This is a fiercely beautiful woman. And hey, get used to it when you're in Hollywood. My God, what happens at open mic night at comedy clubs now? What happens when someone rushes the stage the next time David Chappelle gives a performance? What's the lesson here?

• 55:42Scott Galloway?

  We cannot normalize violence.

• 55:45Scott Galloway?

  The academy fucked up so hugely here. He should have been escorted from the theater. I initially had a very emotional response and said he should be arrested. I think when it's two guys that know each other in a private event, they should work it out without the blunt force trauma of getting the law or police involved. I don't think that's the answer to everything. But I think there's a lesson here for young men. I realize I'm going on a while here, but I remember I had a friend in the fraternity at UCLA, a guy named Martin. And Martin was a wonderful guy and he was on ROTC scholarship, was in, I believe he was in the army. And Martin, wonderful, gentle, lovely guy, problem with alcohol. He'd get fucked up and then he'd get belligerent and sometimes violent.

• 56:29Scott Galloway?

  And we went to a party. I hung out with a lot of athletes and one of my friends was a football player. And we went to a party with a bunch of football players. And Martin gets, as he does, really fucked up and starts getting really aggressive and belligerent. And starts picking fights with, no joke, linemen from the UCLA Bruins who are like six foot eight, 300 pounds. I am barely exaggerating. And he is being such an asshole. And I think, okay, you do it that guy thing. You're supposed to help your buddy out. I come over to him and I try and calm him down and there's no calming him down because he's so fucked up. And I think this guy is literally about to get killed. He is giving them every legitimate excuse

• 57:15Scott Galloway?

  to assault him and put him in the hospital. And you know what these guys did? They were gracious. They made light of it. They were funny. They tried to joke. They tried to get him and them out of the situation. They tried to navigate. What did they do? They tried to de-escalate the situation. And I think that's what it means to be a man. Real masculinity is de-escalating the situation. It's not some bullshit tribal notion of you need to respond to every slight, real or not. It's trying to avoid violence. It's trying to make our society less violent. That's how you reduce this toxicity and this bullshit.

• 57:56Scott Galloway?

  There were two people, there were two men involved in this altercation. One showed tremendous grace and masculinity. The other is Will Smith.

• 58:08Scott Galloway?

  Our producers are Caroline Chagrin and Drew Burrows. Claire Miller 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 on Monday and Thursday.

• 58:31Scott Galloway?

  The bottom line is, I went to the CNN Plus party last night, the launch party, where it was, you know, a chance to hang out with media execs and Wolf Blitzer. Although Wolf wasn't there. He was actually a guy I was looking forward to meeting. But I met with some of the other anchors and took my whole team because that's the kind of guy I am. There's no I in team. Actually, there's an I in this team. And he has shaved head and erectile dysfunction. But anyways, we went to this launch party, the whole team, which was lovely. We had a very nice time. It was lovely.

• 58:58Speaker 04

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• 59:13Speaker 05

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