Office Hours: On Running, Expanding College Admissions, and How Banks Can Boost Their Brands

Scott answers a question about whether On Running is a good long-term investment after its recent IPO. He then shares his thoughts on how legacy banks can keep up in an increasingly digitized financial system, and why universities with big brands need to let in more students, not fewer. Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Scott Galloway?

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• 0:49Speaker 01

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an Ultra. Because it's not just a superior light beer, it's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser-Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 1:27Scott Galloway?

  Welcome to the Prof G Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please visit officehours.profgmedia.com. Again, that's officehours.profgmedia.com. First question.

• 1:43Speaker 02

  Hey, good morning, Prof G. My name is Perry. I'm a database developer with a major telecom provider in New Jersey. My question for you is regarding On Running's recent IPO. I personally wear the sneakers. I think they're great for performance. They're comfortable, they're stylish, and they have a premium price point. I'm just curious if you think that this is a good investment long-term or if this is a trend that's going to come to pass. Thanks.

• 2:07Scott Galloway?

  Thanks for the question, Perry. I absolutely love On Running. I waited in line 20 minutes outside their store in SoHo to buy another pair of their black On Running tennis shoes. I don't know what they're called.

• 2:19Scott Galloway?

  It just strikes me that this company is absolutely thread the needle between appealing to wealthy people who have disproportionately done well, or people with a lot of disposable income, and feeling like you're a bit of an artisan, that you're in the know. It's one of those brands that's just captured lightning in a bottle. I think they look cool. I think their retail is cool. I think their presentation, a small number of SKUs that are really edited well. I just think these guys have just nailed it on merchandising, distribution, their online, you know, just lightning, capturing lightning in a bottle. Well done. I wouldn't touch the stock at these levels. And that is, every stock at some point is a buy unless you think it's going out of business. And every stock is a sell regardless of how amazing the company is because it becomes overvalued. So, On

• 3:03Scott Galloway?

  Running and their IPO raised about $750 million. And at the time, the Swiss brand had an estimated market value of about $7 billion. One month after the IPO, it now has roughly a $10 billion market cap, according to Bloomberg. The 11-year-old company is still a relatively small player in the shoe market. For context, Nike is worth about a quarter of a trillion, 240 billion, and Adidas is around 50 billion. And I think that's one of the things that people like about On, is that, you know, the problem with self-expressive benefit brands, like a car, your phone, your shoe, your clothes, it says something about you, or we think it says something about us. And the moment everyone's, the moment your mom is wearing Nikes, you decide you don't want to wear Nikes. And that's the problem that

• 3:47Scott Galloway?

  a lot of these brands face, is they become so ubiquitous that it's hard to, they lose some of their self-expressive benefit if you value being seen as different or someone in the know. The company posted, this is On, 614 million in sales for the 12 months ending in June 2021. On's enterprise value is 17 times its sales for that period. So just to give you a sense for that, its enterprise value to sales is 17. Enterprise value to sales on Warby is 12, another great specialty retail. Nike is 5.6, obviously not growing nearly as fast. And Lululemon is 10. And Lululemon is considered literally the gangster of all gangster specialty retailers. The gross margins are 59%. They're the same at Warby.

• 4:29Scott Galloway?

  Nike's lower at 45 and Lululemon's 58. So this company has incredible momentum, incredible sales. The net sales grew at 85% compound annual growth rate from the company's inception through 2020, 80%. Their total sales grew more than 80% from the first half of 2020 to the first half of 2021. Gosh, that's crazy. And gross margin, as we said, is about 60%. And the pandemic accelerated its DTC business with revenue from that segment increasing 141%. Some more facts. On's direct-to-consumer business accounts for 38% of revenue. In my view, if I were advising the company, I would tell them they need a lot more. They need to get to 50%

• 5:10Scott Galloway?

  to 60% direct-to-consumer distribution. I think this company wants to be a luxury brand. It kind of wants to be the Bottega Veneta, the La Roche Posay of shoes, something really special. And they should have a much higher price point, a much higher price point, and take more control of their distribution. They're doing 38% online. They need to get that to somewhere between 50 and 60 by complementing it with great brick-and-mortar distribution. So in sum, absolutely love the company, absolutely love the product. I mean, and I've been wrong on this. I'm a boomer around valuations. It just feels kind of rich. It just feels kind of rich. If you were going to buy it, I'd say you'd want to hold on to it for a long time because it feels with these growth numbers,

• 5:51Scott Galloway?

  it could grow into the valuation and then start growing again. But gosh, I mean, 17 times, enterprise value of 17 times sales? Wow. Look out below. That is very thin air. Anyways, thanks for the question. Love the company and best of luck to you, Perry from New Jersey. Next question.

• 6:09Speaker 04

  Hi, Prof G. My name is Rene. I'm calling in from Denver, Colorado. When are you going to drop your first NFT? Because I am going to buy it. Here's my actual question. I just accepted a job with one of your former employers, Morgan Stanley. I'm going to be a VP of Product over there. And I also just completed your brand strategy class with section four. My question to you is, it seems to me that a lot of established players in the financial services industry and in wealth management are really struggling to reinvigorate their brand.

• 6:47Speaker 04

  And it seems that the way to bolster your brand these days is to eliminate other brands. Schwab acquiring TD Ameritrade and Morgan Stanley, you know, acquiring E-Trade. So in your opinion, if you look ahead, you know, five or 10 years, what is going to be the brand attribute or the quality cue, if you will, that will set a winning, you know, brand apart in financial services, you know, investment banking, wealth management, you know, whichever vertical. I'm curious to hear your thoughts, whether that is going to be more likely an incumbent or a startup or a disruptor. Love everything that you do.

• 7:32Speaker 04

  Keep it up. Thank you so much.

• 7:34Scott Galloway?

  Thanks, Renee from Denver, and you'll be the first to know if I have an NFT. I'm still, I still cannot wrap my head around NFTs other than knowing they're signaling. But you'll be the first to know if I do an NFT. I can't imagine the shit I would get. It might, I might have to pay people to buy it. Anyway, I want to talk a little bit about Morgan Stanley. It was my first job and I use this as an excuse to talk about my favorite subject, me. I graduated from UCLA. I got a job at Morgan Stanley. God knows how I got that. And I was in fixed income and it was a fantastic training for me. And that is, it taught me a lot of the discipline and rigor that I didn't pick up at UCLA because I was smoking pot and watching Planet of the Apes, kind of four to five days a

• 8:15Scott Galloway?

  week, and then on weekends playing sports and drinking. And Morgan Stanley was just a great boot camp. It was a mildly abusive culture, but I didn't mind the abuse. I was sort of, I didn't mind the abuse. I guess it wasn't abusive, you didn't mind it. But I needed to get my ass kicked. I needed to work 18 hours a day or 16 hours a day and have a kind of these demands of perfection. I remember like, You know, investment banking, jobs are usually one of two things. They're usually very rewarding, but a lot of pressure, or they're boring with no pressure. And investment banking was this unique combination of incredibly dry, boring material with a ton of pressure placed on it. I remember being at the printer, we used to print prospectuses

• 8:57Scott Galloway?

  for IPOs at the printer, and my job was to go through the prospectus and read it forwards and backwards. And if I got an apostrophe out of place, that was literally cause for dismissal. Everything had to be perfect, and I really benefited from that rigor. It was sort of my boot camp, Marines, whatever you want to say about it. And I think these firms have great cultures. I think they're smart. In terms of your question around how could they signal more kind of aspirational brand equity, I kind of think it comes all down to their app and their presence on your phone. And that is, I also bank with Northern Trust. I have an advisor there who I love, who is a neighbor. She's super thoughtful,

• 9:40Scott Galloway?

  but their online offering is literally, like, it's not even AOL, it's CompuServe. And every time I'm on it, I think, Jesus Christ, these people just don't get it. Or if I want to do a wire, I have to call, they have to get two people on the phone to get a verbal confirmation. Whereas Goldman sends me a notification, pushes me a notification on the app, I pull up the app, and it's pretty elegant, it's got UI UX, and then I go on some of these, I've seen some of the, you know, the design of, I mean, look at Airbnb. Airbnb has basically said, let's push all our investment, let's push all our capital into the online design and the interface between our core constituent, our consumer,

• 10:23Scott Galloway?

  and their phone. I don't even think it's their computer. And when you think about Goldman Sachs and Wells Fargo and Morgan Stanley, they're still pushing the majority of their innovation and compensation through wealth advisors, or brokers, or bank branches. So Goldman is making a real effort with Marcus. I don't know how the Morgan Stanley app is, but I think these companies, if I were them, I would try and get some momentum around... Online investing, maybe acquire Robin Hood's too expensive, but maybe acquire one of the smaller ones. Disclosure, I'm an investor in public. But I would try and get out ahead of the curve and find, start acquiring these online banks. Double down on digital. I think a lot of them are doing that. Bank of America describes itself as a tech company with a backend that's financial services.

• 11:08Scott Galloway?

  I double down on payments. I'd make some acquisitions. And more than anything, I would try and lean into content marketing and start distributing a lot of great content around financial literacy on emerging platforms, specifically TikTok. You always get, you always get a bigger, popular brand equity than you deserve if you can lean into and really show skill and deftness and agility around an emerging platform. A lot of luxury brands were kind of built on the backs of an emergent Instagram. You're going to see, I think, a lot of information-based companies, specifically consulting firms, whether it's McKinsey or financial services firms such as Morgan Stanley and Goldman. One of them is really going to lean into financial literacy content on TikTok and get a huge return on investment in terms of brand equity.

• 11:53Scott Galloway?

  These guys have to show everyone they're not their father's bank. I've already graduated from Northern Trust into Goldman. Goldman has me for the next few years because I think they're outstanding at what they do. But who's next? Is it Goldman or is it the new, new thing? But I think it all comes down to the app, design, digital, some acquisitions leaning into emerging mediums. Thank you for the question and congratulations, Renee, on your job at Morgan Stanley. It was a great experience for me. I hated it at the time. It was like being in the Marines. You're glad you did it. Past tense. Good luck, Renee. We'll be right back.

• 12:31Scott Galloway?

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• 13:15Scott Galloway?

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• 13:47Scott Galloway?

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• 14:32Scott Galloway?

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• 14:56Scott Galloway?

  Welcome back. Question number three.

• 14:58Speaker 05

  Hey, Professor Galloway. My name is Jonathan from Redmond, Washington, and I have a question about college brand recognition. You recently talked a lot about the power of brand recognition that colleges have, and how NYU, UC Berkeley, and your alma mater, UCLA, have gained greater recognition by increasing selectivity, while accepting more Pell Grant applicants. As an undergraduate student at UC Davis, whose school just broke into the top 20 universities rated by Forbes, while accepting a student class that is made up of 32% of students receiving federal scholarships, what else should a school like UC Davis do to increase their brand recognition without drastically decreasing selectivity? Thank you for your time, and I want to say your podcast and the one you share with Kara Swisher

• 15:41Speaker 05

  has educated me and kept me hopeful this last year and a half. Thank you.

• 15:47Scott Galloway?

  Jonathan, that is so nice, and thank you for the nice words. If you DM me on Twitter and give me your address, I'll send you some signed books. I'm just, thank you for saying that. That makes me feel nice. The downside, you know, I get pissed off when people say mean things about me. I'd like to think it just rolls right off of me. But the upside to that is it does, it is meaningful when people say nice things about me. So DM me and I'll send you some signed books. So, look, what you're referring to is there's a tectonic shift, I think, underway in the world of graduate education as it relates to brand equity. And simply put, the primary pulse, the primary signal, it's like, take the Academy Awards times 10, take the Pro Bowl list, take the MVP, whatever award or third-party accreditation

• 16:32Scott Galloway?

  or third-party certification that different leagues give people or different organizations give people. If you're a journalist and you've won three Pulitzer's, you can pretty much get a job anywhere because you've been certified by a third party. Take any of these times 10, and now you're talking about the business school rankings, kind of pioneered by Businessweek. And they've ended up being terrible for graduate education. Why? Because they included in their rankings an input around exclusivity. And that is the way to get up in the rankings, and everybody Studies to the test. Now, why does everybody study to the test? Why are these rankings so powerful? Because young people are very brand sensitive. To ask a 17-year-old to decide between Michigan, the University of Wisconsin, and Georgia Tech,

• 17:16Scott Galloway?

  and Boston College, he or she doesn't know what the fuck they want. So, people defer to the prestige of the ranking. And unfortunately, so do corporations. We always say that the student is the consumer. No, they're not. The students are the products of higher ed. Our consumer are corporations. And when corporations show up to an increasingly elite, tighter band of universities based on their brand equity, because they think that's the way to select. They only recruit... Someone brought up UCLA or Morgan Stanley. I was the first analyst, and the only analyst in my class at Morgan Stanley from UCLA. Solomon Brothers recruited at UCLA. But when I got into Morgan Stanley, they were only recruiting at Stanford and Berkeley.

• 17:59Scott Galloway?

  They hadn't started recruiting at UCLA yet because they saw UCLA is outside of like the top 10 or top 20 universities. Anyways, the brand equity is so important and powerful because brand is a shorthand for diligence. And when you don't have the skills to do the diligence, i.e. you're 18 or your parents, you just defer to what is the most prestigious brand. And you know that the chances of you getting more job opportunities because more and more firms, the better firms recruit at the top-tier schools. You think, great. And then the ranking is so important. And then unfortunately, the ranking in large part is dependent upon exclusivity, a long-winded way of saying, "We lost the script and we turned into luxury brands." And the thing I don't agree about the premise in your question is the way UC Davis and the way that Regents of the University of California

• 18:42Scott Galloway?

  can dramatically improve is to dramatically expand their admissions rates. So, when I went to school, UC Davis was still a great school. But I bet its admissions rate was 50, 60%. Now, I bet it's closer to 10 or 15. UC Davis is impossible to get into. It is, you have to be freakishly remarkable to get into UC Davis right now. I don't think that's a good thing. I don't think being freakishly remarkable is a forward-looking indicator of your citizenship or your success at the age of 17. Yeah, you have to be good. There is a correlation between how impressive you are as a young man or woman. But in terms of a forward-looking indicator, it begins to flatten. It's like happiness and money.

• 19:27Scott Galloway?

  There is a correlation. Middle-class people are happier than lower-income people. Wealthy people are happier than middle-class people. But once you get above a certain amount of money, there's no correlation. I think the same is true of young people. People in the top half, top-third of their high school class that have demonstrated excellence, rigor, discipline, they are more likely to be successful in life, professionally and personally. But the difference between the person that's in the 80th percentile in your school at that point, and the person who's in the 98th, based on the metrics we've established for 17-year-olds, there isn't a lot of correlation there between people who go on to be successful, very successful, and not successful. So, we need to move back to letting in a lot more kids.

• 20:11Scott Galloway?

  It just disappoints me that when I go to these conferences, we celebrate companies that are able to scale at 40% or 60% a year, and yet, we haven't been able to scale UC Davis 2% a year. So, only the freakishly remarkable get in. So, we want better brands, better society, better opportunities, more on-ramps to great lifestyles. We want to be able to fill these amazing jobs with amazing applicants, for which there are a shortage of employees, or a shortage of applicants. We need to dramatically expand the admissions rate and the capacity. And this is exciting. The University of California has decided to do this. They've committed to adding 20,000 freshman seats over the next 10 years, which is like, I believe, adding another UC Davis.

• 20:55Scott Galloway?

  But my brother, your brand is fine. UC Davis and the University of California, the fact that you got into UC Davis, quite frankly, Jonathan, means you're an impressive young man. There's just full stop, you're an impressive young man. We need to let in more impressive young men and women, and maybe people who are in the 90th percentile in their class, not the 99th. That's okay. The difference between 90 and 99, we don't know which of those two is going to go on to be a senator, or build wells in Africa, or come up with the next patent for a vaccine. We don't know that. Anyways, your brand is on fire. We need to transition some of that incredible aspirational brand equity into not only prosperity, but progress from a societal viewpoint, and let in more kids. Long-winded answer.

• 21:38Scott Galloway?

  So, we've had people from Redmond, from Denver, and from Sydney. Is it only people that value quality of life that call into the Prof G Show? Where are the people from San Francisco, living in that overpriced hellscape? Where are the people from... I'm worried about insulting a city, so I'm not going to say anything. I'm not going to say anything. Anyways, thanks for the question, Jonathan from Wedman, Washington, and congratulations on being at Davis. Good to be Jonathan. Good to be Jonathan. Davis, Davis. That's all for this episode. Again, if you'd like to submit a question, please visit officehours.prophgmedia.com.

• 22:25Scott Galloway?

  Our producers are Caroline Shager and Drew Burrows. Claire Miller is our assistant 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 on Thursday.

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