The Psychology of Money — with Morgan Housel

Morgan Housel, a partner at The Collaborative Fund, and author of “The Psychology of Money,” joins Scott to discuss the behaviors to consider when it comes to building wealth and the importance of earning, saving, and investing. Follow Morgan on Twitter, @morganhousel. Scott opens with his thoughts on Meta’s move to subscription + our society’s problem with ageism and sexism. Algebra of Happiness: know how to de-escalate a situation. 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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• 1:18Scott Galloway?

  Episode 238. 238 is the calling code belonging to Kate Verdi. In 1938, Samsung was founded as a company that sold noodles. When you use an Android phone, aren't you really saying to the world, you know, life just hasn't panned out the way I'd hoped?

• 1:46Scott Galloway?

  Welcome to the 238th episode of the Prop G Pod. In today's episode, we speak with Morgan Housel, a partner at the Collaborative Fund and the author of The Psychology of Money. We discuss with Morgan the soft skills behind financial success and the roles of earning, saving, and investing when it comes to building wealth. Okay, what's happening? Meta continues to lead the charge as the mother of all copycats. The firm is launching a verified tier for $12 or $15 a month to Facebook and Instagram users in New Zealand and Australia. Down under, down under. Talk about brands or countries with great brands. New Zealand and Australia, I think second only to Canada. The super, super nice people, love to travel, easygoing, great allies.

• 2:31Scott Galloway?

  Anyways, the latter, more expensive fee, is for iOS users. See above, your life is, you're a baller. Life is turned out the way you want because you can afford the, the upgraded version of Meta membership or Meta Blue Check or Meta Mendacious Fuck, whatever they're going to call it. Additional countries will gain access to Meta Verified soon, open quote, soon, close quote. The paid tier grants users a blue badge along with a better user experience on the platforms, including in areas of customer support, content amplification, and access to exclusive accoutrements that can be used within the platforms. And some, I think what they're really saying here is we will give you more reach. We will tweak the algorithm such that the paid people get more influence, so to speak.

• 3:16Scott Galloway?

  In China, when youth are surveyed, they say that they want to grow up to be astronauts. In the US, people want to grow up to be influencers. Yeah, the good money's on China. Anyways, the Zuck says, "This new feature is about increasing authenticity and security across our services." Hmm. The Verge noted that to become a verified user, you have to meet certain activity levels, be at least 18 years old, and submit a government ID that matches your name and photo on Facebook and Instagram. So, what does this all mean? For starters, it's not the innovator that makes money. There's a, let's go Meta here. I forget his name, one of the Lotter sons, super impressive guy, was it William Lotter? I forget who it was. Said, "I did a lot of work with Estee Lauder because I'm kind of a big deal."

• 4:01Scott Galloway?

  Anyways, at their, they had this amazing... Kind of annual party in, was it in Berlin or Munich? I think it was in Munich. Anyways, just incredible. They overtook the Opera House and I mean, this is, Estee Lauder is a great company. And that makes sense. The DNA is really strong there. Estee Lauder, the actual entrepreneur is probably one of the more impressive entrepreneurs of the 20th century. I almost said one of the best, most impressive female entrepreneurs. I think she started the company when it was in, when it was in her prime. Oh my God, that's a hate crime. Let's like, let's go down this path a little bit. CNN, specifically Don Lemon, DeLemon, as I call him, said that Nikki Haley was past her prime. And Poppy, Poppy went batshit crazy.

• 4:45Scott Galloway?

  Oh my God, Poppy and Don, morning television drama. That's like when Kelly Ripa decided that she hated everybody she worked with. Don't you get the sense Kelly Ripa is difficult to deal with? I don't think she's adjusting to exiting her prime years, if you will. Anyways, anyways, let's talk about this. By the way, this has nothing to do with our script. Going off script here a little bit, a lot, see above, Android phone. Anyways, on sometime last week, Don Lemon suggested that Nikki Haley, a former governor of South Carolina, ambassador to, I think the EU or EU ambassador to Europe, one of those somewhat meaningless jobs who pretend means something, and announced her run for president. By the way, fantastic announcement gig or fantastic.

• 5:29Scott Galloway?

  She really did a good job setting that stage. People were going crazy. I'm so rabid for Nikki anyway, or Governor Haley or Ambassador Haley. But I think she's a very formidable candidate. If I seem to be going down all sorts of veins of rivers here, like the Amazon, I am because I am in Tulum and I just had Mexican coffee, which is like liquid cocaine, except there's more fentanyl in this coffee than cocaine. By the way, kids, don't do drugs, being very serious here, fentanyl and everything supposedly, Russian roulette. Anyways, where am I? Back to the Amazon River, back to Nikki Haley. That's right. DeLemon said, doesn't have a shot because she's past her prime and Poppy lost her shit.

• 6:07Speaker 02

  Politicians are something that are not in their prime. Nikki Haley isn't in her prime. Sorry. A woman is considered to be in her prime in her twenties and thirties and maybe forties.

• 6:14Speaker 03

  What are you talking, wait?

• 6:15Speaker 02

  That's not according to me.

• 6:16Speaker 03

  Prime for what?

• 6:18Scott Galloway?

  Seriously, Don Lemon fucked up here. And I think it says a few things. I think this is really, oh, by the way, going back to Poppy. I think Poppy, I have kind of these invisible or fake friendships, imaginary friendships. I developed a very close relationship with Anderson Cooper in my own mind. And I've decided that Poppy and I are now good, good friends. Anyways, I like Poppy a lot. I've actually met her a few times. I've met Dawn a few times and liked them both, especially like Poppy. And she has just a nice presence. I think she's a great journalist, super smart. Anyways, what does this all say? What can we take away from this? The first is that a gay man of color, we immediately assume that every person that is from a community that has suffered or that has had, you know,

• 7:00Scott Galloway?

  been discriminated against, we expect them to do better and it's not fair. And it just goes to show that we all have blind spots. We all say really stupid fucking things regardless of our background. And let's be honest, this was a really stupid thing to say. But what does it indicate? There are very basic things about that have been hardwired into us as a species for hundreds of thousands of years. The first is survival. The majority of us will never feel, or maybe feel just once if we have a cancer scare or something, will never feel the joy of survival. If you're in a raging fire and you start catching on fire and you're inhaling smoke and that's it, right? You're done and you manage to get out. Boy, that moment when you run out, that survival moment

• 7:45Scott Galloway?

  or that moment where you recognize you're going to survive, that feels really awesome. That feels really, really good. Number two is propagation, specifically the pursuit of sex and mating opportunities. And see above feels really good. These are very, very strong instincts and we are drawn towards one. Well, we're drawn to a lot of people, but we're drawn towards people who can help us survive. Specifically who could, people who can be, bring resources. Specifically wealthy people are people with power or influence and specifically more so men. Women are attracted to men for three reasons. One, them signaling their ability to garner resources in the future. Two, how smart they are. If you're smart, you're less likely to die. And three, how kind you are.

• 8:29Scott Galloway?

  It doesn't matter what a baller you are or how smart you are. If you're an asshole over the long term, people don't want to mate with you. Anyways. And then men are attracted to women on a much more one dimensional level, and that is how fertile they appear to be. The signals they give off in terms of qualities of femininity, fertility, kindness, you know, all that good stuff. And we have a tendency to overvalue people who are wealthy, and specifically, women who appear to be fertile or young women. And that is, rich men and young women live in a different reality. And that is, everybody is just drawn to both of those things. And the world is sort of optimized for those two parties. It is totally unfair, it is gross, and it is 100% true.

• 9:12Scott Galloway?

  The problem is, we've started conflating it with other character attributes, right? You're a tech billionaire, you've invented a photo sharing app. That must mean that you're a genius. So you can, you can land two rockets concurrently on barges. And when you accuse people of sex crimes or commit securities fraud, it's just you being you, you're an innovator, right? And, and we have decided that the attributes of a young woman are so important that once she leaves that era of her life, her value diminishes dramatically, which is total bullshit. Probably the most important leader of the last, I would argue, 30 or 40 years in terms of a steady hand, is Angela Merkel. That would be my vote. She's not the most disruptive, she's not invading other countries. But essentially, Germany was the engine of Europe. Europe's been pretty stable.

• 9:58Scott Galloway?

  And Angela was that unique breed of competent, thoughtful, and yet somewhat humble leader. Anyways, I'm a huge fan, former Chancellor Merkel. And she was elected to office when she was 50 or 51. But our natural instincts, if we don't modulate or we don't get our heads out of our asses, is that women lose value. They lose value when they leave their kind of childbearing years. You see this everywhere. You see this everywhere, this conflation of a lack of fertility with a lack of worth. And it's not just Don Lemon saying something stupid on live television. It's in our society, it's permeated our society. What do I mean by that? The workforce, or the labor market, is very biased against women.

• 10:40Scott Galloway?

  It is hard to raise kids and maintain upward trajectory. There's ageism across the workplace. I think that's the biggest ism in the workplace. I think it's even bigger, I would argue, than sexism. And so you combine sexism with ageism, and you just end up with a corporate environment where they're just, women are just, have decided, I don't need this shit. And I think that was effectively Don's gaffe sort of reflected that very basic and incorrect instinct. What I would also offer, and this will be my last statement on this, is that Don Lemon fucked up. Don Lemon then apologized. Next. I think it's a good learning moment for all of us. I think we all have these biases and stereotypes.

• 11:23Scott Galloway?

  And what can we take away from this? Even a gay man of color can be exceptionally tone deaf around things. Two, one of the great things about our species is that we can apologize. Another great thing about our species is that we can accept people's apologies. I think we should accept Don's. When CNN makes a tone deaf offensive statement like that, that's called a weekday at News Corp, specifically at Fox. And what I can't stand about us on the left is that we disarm unilaterally. We've decided that we're the enforcers, that we're the guardians of what offends people. We're interested in being the unappointed police force for social issues. No, that's not what we should do. We should be figuring out how to lower prescription prices, figure out how to give more responsibility, ask

• 12:05Scott Galloway?

  more of young men, make them more economically and emotionally viable, figure out a way to get more money into the hands of lower middle income households, such that there's less opioid addiction, there's less obesity, there's less deaths of despair. That's what the fucking Democrats should be doing, not calling each other out and eating our young. I was disappointed CNN's president came out with this big like mea culpa. You know what? You fucked up. You apologized. Next.

• 12:32Scott Galloway?

  Okay, that was, that was a river the size of the Nile in terms of a digression. Let's get back to meta. Let's get back to meta verified or whatever it's called. I think this says something very interesting. See above, second mouse gets the cheese. But also even more interesting, a move to subscription, a move to subscription.

• 12:51Scott Galloway?

  Whenever you take one substance and you transform it, or you morph it, or you refine it into another substance that creates economic value, you have emissions. The obvious one is oil to petroleum. It creates huge carbon emissions, right? Whenever we take any sort of grain and feed it to a cow in hopes of getting calories back, it takes 100 calories of grain to get one calorie of beef, and we get methane and all sorts of deforestation and terrible externalities. However, however, what is the most noxious emission? It isn't carbon, in my view. It is the emissions that have resulted from us transitioning attention to money, specifically attention to advertising to money.

• 13:33Scott Galloway?

  The original sin of the internet is that it's ad-supported. That's how we have paid for and financed the internet. And because these companies make money and add shareholder value by capturing our attention, their algorithms have figured out ways to capture our attention. And unfortunately, they're really unfortunate means. Enrage you, divide you, pit you against others, get you arguing, put you in a bubble, confirmation bias, whatever it might be. Conspiracy theories, novelty and lies are much more interesting than boring fact-checked truths. See above the Situation Room, or every day, the constant gaslighting on Fox. This has divided us, it has depressed our teens, it has made us feel shittier and shittier about America, despite the fact that begrudgingly, you have to admit,

• 14:18Scott Galloway?

  most things, most things have gotten better. Still got big problems, but most things have gotten better. The emission that is really choking us, we're going to reduce 40% of carbon emissions by 2030. Think about that. I don't think we could reduce enragement and polarization and teen depression by 40% within seven years. I think the cat is out of the bag. That's not to say we shouldn't address it. That's not to say we shouldn't force ourselves to do better. But I'm not sure we could actually pass legislation that would reduce it by 40%. In seven years, this is the ultimate noxious emission in history. The emissions that have come from transforming attention into shareholder value. So what can we do about it?

• 14:58Scott Galloway?

  We can hope that the burgeoning world of AI, AI for me is the technology I'm most excited about since voice. I think it's actually going to be one of the few technologies where the performance lives up to the promise, unlike 3D printing, the metaverse, wearables, you know, VR, you know, name it the segue. This has real potential. What we hope is that it continues to be subscription based. And sure, people will bitch and moan that, oh, that creates two classes where people, you know, the only, the poor people don't get good information, rich people do. These aren't expensive services. This isn't going to be sequestered to the 1%. If ChatGPT charges you 5, 10, 20 bucks a month, whatever it might be.

• 15:38Scott Galloway?

  Anyways, if it goes to subscription, you have fewer and fewer emissions. Netflix has not been weaponized by the GRU. LinkedIn is not depressing our teen girls because the majority or all of their revenues come from subscription, not from capturing more attention and turning us into a digital body bag of information meant to feed advertisers, their end consumer. So what we can hope is that it all goes subscription. In addition, an immunity is kicking in and that is the ad ecosystem is running out of money. Advertising is always between 1.3 and 1.6% of GDP. It is not a growth market, meaning if TikTok shows up and takes an incremental $10 billion out of the ad ecosystem, it's coming out of someone else's hide. And now you have new players showing up and pitching the same advertisers.

• 16:22Scott Galloway?

  Meta is running out of growth, so they gotta go to subscription. Say they get 10% of those 2 billion active users, that's 200 million at an average of 10 bucks, that's 2 billion, that's $24 billion a year at what must be 80 or 90% of, I mean, hello champagne and cocaine. The stock could double on this if this thing shows any signs of a pulse in New Zealand or Australia. And also they're going to roll it out in a less head up your ass rekindle way as Twitter. They're going to figure out they'll do, in my opinion, they should do, absolutely do age verification. The other thing I love about this is 18. Why on earth are we not educating social media? The young people can't handle social media. They can't modulate these algorithms and make them feel shittier and shittier about themselves. And 15 year olds should not be presented with their full selves 24 by 7.

• 17:07Scott Galloway?

  They should have a chance to leave the goddamn high school cafeteria every once in a while. So where are we headed? We're headed towards hopefully, hopefully, subscription-based social media and better age-gating. I'm very hopeful about this. I think it's the right business strategy. And also, as a general rule, the world would be a much better place, a much better place if it wasn't ad-supported. It was subscription-based. Why? Because one of the most damaging characters of the 20th century, Don Draper.

• 17:40Scott Galloway?

  We'll be right back for our conversation with Morgan Housel.

• 17:45Scott Galloway?

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• 18:45Scott Galloway?

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• 20:02Scott Galloway?

  Welcome back. Here's our conversation with Morgan Housel, the author of The Psychology of Money.

• 20:10Scott Galloway?

  Morgan, where does this podcast find you?

• 20:12Morgan Housel?

  I'm in Seattle.

• 20:13Scott Galloway?

  Seattle?

• 20:14Morgan Housel?

  My, my wife grew up here. That's what brought us here. I grew up in California. You're, you're in London now, is that right?

• 20:20Scott Galloway?

  I live in London. I'm actually in Tulum right now.

• 20:23Morgan Housel?

  Great.

• 20:24Scott Galloway?

  Yeah.

• 20:24Morgan Housel?

  Is, is London going to be permanent? Or is this just a little, a little jaunt?

• 20:28Scott Galloway?

  I would, somewhere in between. We wanted, we've always wanted to live abroad. We wanted our kids to experience something different. And my partner, who knows, I have no calibration of time. Five years ago, said, we're moving to Europe. And then it actually happened. So the bottom line is it makes no fucking sense, Morgan. Let's talk about money. Let's talk about money. What's, I'm going to start with one of the most quoted parts from your book, The Psychology of Money, which by the way, I really found interesting. I'm writing a book on economic security and I'm going to have to reference you a lot because I'm parroting a lot of your. A lot of your views. You write, "Financial success is not a hard science. It's a soft skill, where how you behave is more important than what you know."

• 21:12Scott Galloway?

  Can you walk us through the most important behaviors people should exhibit when it comes to honing the soft skill?

• 21:18Morgan Housel?

  Well, I would first say that most of finance, particularly at the academic level, not by everybody, but it tends to be taught like it's math. Like if we just have the right data and the right formula, it'll spit out the right answer and then we're all set. Like physics works. And I just think there's so much evidence, particularly between 2008 and COVID, and like during the moments of upheaval, that finance is not, it's not math. Math plays a role, but it's really just behavior. It's how people think about greed, fear, risk, uncertainty, social aspirations, keeping up with the Joneses. That's what really makes the biggest difference. You will never find the uneducated country bumpkin that can perform open-heart surgery better than a Harvard-trained doctor. But if you compare someone who dollar-cost averages into index funds to a lot of hedge fund managers that blow up,

• 22:01Morgan Housel?

  like there's not, there's not a lot of other fields that are actually like that. And I think because we are taught like it's a math-based field, but it's actually just can you keep your head on straight? Can you control your sense of greed and fear and risk? And do you have a proper philosophy around uncertainty? If you have those things, you don't need much more to do better with money. And if you lack those things, no amount of education is going to save you.

• 22:26Scott Galloway?

  So I'm literally steeped in this topic right now. And I'd love to throw some theses at you and just have you respond to them. And that is, there's these opposing forces around trying to earn money and make a good living and trying to save and invest such you become economically secure. And the former is a lot about what I call a growth mindset or an optimism. Believing that you're going to improve, taking risks, believing that things will work out, having a growth mindset, be willing to take risks. And at the same time, in order to save money and be disciplined, I think you need a decent amount of fear that things can turn out poorly. That you need to invest, you need to live below your means.

• 23:11Scott Galloway?

  And these two are constantly in conflict with each other. Your thoughts?

• 23:16Morgan Housel?

  Yeah, to me, it's this idea of the two skills of getting rich and staying rich are not only are they different, they're opposing. On one hand, you need optimism. On the other hand, you need conservatism. There's this great quote that I love from Admiral James Stockdale, who was taken prisoner during Vietnam. He was the highest ranking prisoner during Vietnam. And he gave this interview a couple of years ago of what it was like to be a POW in Vietnam. And he said, the reason that he never lost faith when he was there. He said, he actually was not that depressed when he was there because he never lost faith that he would get out of there. But then he said, you know who did worst? You know who the most miserable prisoner were? And he said, it was the optimists. It was the people who kept saying, we're going to be out by Christmas.

• 23:59Morgan Housel?

  Those people were chronically depressed because another Christmas would come and go, and their hopes and dreams would be shattered. So he said, in order to do well in a situation like that, you needed, on one hand, relentless optimism that, yes, we're going to get out of here. But you needed to embrace the reality of, we're not getting out of here by this Christmas. And you needed both of those in equal parts. And the financial version of that is getting rich versus staying rich. And to me, another way to phrase it is saving like a pessimist and investing like an optimist, which is, on one hand, in your work, in your data, like the percentage of your money that you save, you need to be a pessimist with the idea that there's a measurable chance that in the next 10 years, you're going to get laid off, you're going to have a medical emergency, you're going to get divorced, going down the list of the terrible things that happened to virtually everybody at some point. So that's the pessimism.

• 24:44Morgan Housel?

  On the other hand, you need to invest with this idea that if you can stick around and endure the economic volatility over the next 10, 20, 30, 40 years, then the returns, the added productivity that will accrue to you as an investor can be enormous. And I think most people are one of the other. They're either optimists or pessimists. It's black or white. And in that situation, you either have like these YOLO people that do well for a while and then blow up, or you have these people who will never invest and have all of their money in a bank account. And are just kind of scarred and will never grow their money. It's the delicate balance between the two that is rare, but it's necessary.

• 25:23Morgan Housel?

  And when you see someone like Bill Gates is one example of insane optimist and huge pessimist at the same time in equal parts. And like, that's why he's done well over the last 50 years. Like, it's pretty rare, but when you see it happen, it becomes obvious why it's happening.

• 25:41Scott Galloway?

  Yeah, and it's even, but you'd mentioned Bill Gates. What I find is that I work with a lot of very successful entrepreneurs. And whenever we do a round of financing, I always say, take some money off the table. And what you have with young people with this growth mindset is the wealthiest people in the world. And the ones that get the most publicity are the ones that had incredible concentration of their wealth. You know, all of their money in Microsoft or Amazon stock. Steve Ballmer, there's a famous meeting with him and Goldman. Goldman said, you need to diversify. And he said, what is the maximum amount of money I can borrow against my Microsoft holdings? And they told him, and he said, I want to buy more Microsoft stock. And then it went on to be, you know, he went on to be one of the wealthiest men in the world, men in the world.

• 26:24Scott Galloway?

  And the reality is that's not sound financial advice. And so the media is talking about if you want to get wealthy, the ones we talk about are ones who took huge risks, had huge concentration risks. But the reality is, as soon as my sense is, and tell me if you agree with this, as soon as you reach a certain level, or very soon, you want to start diversifying as quickly as possible. And I just want to cement something you said about volatility and hanging in there. I think there was a study showing that if you invested in any five S and P 500 stocks since the beginning of the S and P and held on, held those stocks for at least 10 years, no one has ever lost money.

• 27:02Morgan Housel?

  Right.

• 27:03Scott Galloway?

  Your thoughts on that?

• 27:04Morgan Housel?

  I mean, it's, it's true that if you look at the extreme successes, Bill Gates, Ballmer, Bezos, Musk, et cetera, it's always concentration. There's no diversification in there, any, in, in any, in any sense. My, my response to that is not only average median people, but probably people like you and I and, and, and, and a lot of people listening to this don't aspire to be the Richest person in the world per se, or even to have enormous wealth. What I want is a comfortable life for my family. And for the huge majority of people, you can afford to not be the greatest entrepreneur or the greatest investor in the world. You cannot afford to be the worst investor in the world, to be a terrible investor. You can't afford that.

• 27:46Morgan Housel?

  So if you look at the risk reward trade off, not, and again, I'm not talking about the median family, even like if you look at 95% of people, you can't afford to underperform the S and P 500, you're not going to be able to retire at time. If you match the S and P 500, it's you're off to the races. You will achieve every dream that you have and then some. So, but I think it's dangerous when particularly a lot of young people, I mean, a lot of young men, look at the Musk and the Bezos and the Gates and whatnot, and they say that's, that's my goal. And on one hand, it's beautiful and it's great. And that's what sparks entrepreneurship and we should celebrate it. But I think it's, it gets dangerous when people view that as like, that's what winning looks like. Whereas I think for 95, 99% of people, winning looks like you have some amount of savings

• 28:29Morgan Housel?

  and stability and financial security and independence to have a great, happy family. That's winning, full stop.

• 28:36Scott Galloway?

  Yeah, I always tell people, you should assume you're not Elon Musk.

• 28:40Scott Galloway?

  So stack rank in terms of importance to achieving wealth, earning, saving and investing.

• 28:46Morgan Housel?

  I think you have to put it at different phases of your life. Early on in your life, it's earning, you're just trying to build a base of, of capital. So it's like earning and savings. Later on in your life, in the middle of your life, I think it's, it's investing. It's like, it's like, do you have it in there properly? Later on in your life, it's some sense of security. It's like, can you not screw up? And can you not just make a chronic mistake when you didn't need to? So it's different at different times of your life. One, one concept that I think is really important is all of compounding is just returns to the power of time. And if you understand math and statistics, the exponent, the is, it does all the heavy lifting. That's where all of the value comes in. So if you're to think about a young person who doesn't have much money or maybe any money,

• 29:28Morgan Housel?

  their financial net worth may be zero or a hundred dollars or whatever, but they are time millionaires, they're time billionaires, every single one of them, but they don't even know it. Like that, it's not just a little like cute philosophy here. It's like all, all compounding comes from time and the young people have the most time in front of them. When they, when they view it through that lens, then it's like any money that you can get invested and save is, is, is gonna be like by far the biggest return. I use the example in my book of, of Warren Buffett's hundred billion dollar net worth. Ninety-nine percent of it came after his sixtieth birthday, when he was, you know, damn near qualified for social security. That's when ninety-nine percent of his net worth was accumulated. So you can look at net Warren Buffett and say, and take all these lessons about how did he invest?

• 30:12Morgan Housel?

  How does he think about moats and business models and management teams? Literally ninety-nine percent of the answer to the question, how did he become successful? Is that he started investing when he's eleven and he's still going full blast at age ninety-two. That's not part of it. That's all of it. And I think that's, that's just over the look, like the, the importance of time. Cause and, and back to like stack ranking it and the, the difference in age. It's, so it's like early on, it's, it's, it's all, it's savings, earning savings and investing. Later on, and I would say later on would be like even past age forty or so, for a lot of people, it's just not screwing up. It's not the great moves that you're gonna make. It's just like, hey, like hopefully you've accumulated something by now and the biggest

• 30:52Morgan Housel?

  risk is that you're gonna fall victim to FOMO and salesmen and your own greed and fear and lose what you already have. That's the biggest risk by far.

• 31:01Scott Galloway?

  Yeah. The objective is not to get rich, it's to not get poor. It's, again, it goes back to, I feel as if it's trying so hard to fight very powerful instincts and what is it? Ninety-nine percent of our species' existence, we didn't live past thirty-five. I love the term you just coined, time billionaire. But young people, you know, that youth is wasted on the young, they don't realize it because the majority of young people, it's almost unfathomable for them to imagine themselves at sixty.

• 31:33Morgan Housel?

  Yeah.

• 31:34Scott Galloway?

  And I remember saying to my friend right out of UCLA, I was working at Morgan Stanley. I was making a lot of money and my friend was a financial advisor, Great Western Financial, an old bank in LA. And I remember he was making half what I was making, but every year he religiously maxed out his IRA and his Roth and his employee match and it was like three or four grand. And couldn't, you know, couldn't come to, I remember one weekend, a bunch of us are going to Palm Springs. Like, no, I got, I got four weeks left to get this money in my employer match fund. And I remember saying to him, if $2,000 now makes a difference in my life later on, shoot me. And the bottom line is someone should shoot me because I have made so much more money than my friend.

• 32:19Scott Galloway?

  And he's in about the same place as me economically. Because he, he listened, you know, he read your mind before you wrote this book. How do you, are there tricks that you teach people in terms of behaviors, tracking your spending, gamifying it? What could you say to someone in their twenties that would help them just start almost, I don't want to say accidentally, but start investing really early?

• 32:44Morgan Housel?

  I heard this quote from Charlie Munger just last week. And I, I, I don't want to believe this is true, but I think it's, I think there's at least a grain of truth to this. He said, when teaching financial matters to young people, they either get it instantly or never. And I think, I think, I think there's at least a grain of truth to that, that there are, there are some people for whom like they exit the womb, understanding compound interest, it's just completely natural, you don't need to teach it to them, they just intuitively get it. And then there's another set of society that's always going to be compulsive gamblers, no matter what you tell them, no matter what they do. That's never going to be part, I don't know what percentage of each, maybe it's like 10% of society is on either end. And then the core of it is like people who want and need good advice.

• 33:27Morgan Housel?

  What would I tell those people? The other thing that I thought a lot about too is for young people, it's easy for adults to look back and say, don't blow your money on a fancy car or fancy clothes like you want to save. But it's easy for somebody who is married and settled down and secure to say you don't need to, to flaunt your peacock feathers. For someone who's 19 and looking for a mate, looking for a potential spouse, it makes perfect sense. It might make a lot of sense to buy the fancy car, to show the world, particularly when you don't have a resume to show off. The only thing that you can really show off when you're 19 is like how you dress and you're attracted, like that's like, so there's part of me that like, I totally get why a young person would want to show off more than someone who's married and secure in their life. Of course it makes sense. So this gets back to like the different phases of your life.

• 34:12Morgan Housel?

  I think between those two things, between, hey, it actually, especially if you frame it as the most important decision anyone will ever make is, is. Uh, whether when and whom to marry. And if when

• 34:24Scott Galloway?

  Hundred percent.

• 34:25Morgan Housel?

  And so if when you are in your early twenties, you are trying to show potential spouses that you have these qualities. You're attractive. You have a nice car. You have, you have this. If, if, if that's going to help you make the most important decision in your life. Now, it could easily backfire if you're, if you're flomming the wrong stuff. But if that's going to help that decision, then actually the ROI on that is like immeasurable. And it's too easy for older people to criticize that in hindsight, when it actually makes perfect sense. I, I did it. You probably did it. It makes a lot of sense. So I, I think between that and just whether it's the 10% of people who either totally understand it or never get it. I think that's a big part of like why financial literacy is hard to teach the youth, like the values of adults that are correct

• 35:10Morgan Housel?

  and the good values oftentimes are in one ear, out the other for young people. Because it's hard for an adult to remember or contextualize the state of mind a young person might be in.

• 35:20Scott Galloway?

  Yeah, the bottom line is a BMW and Grey Goose, a bottle of Grey Goose, the club are much more likely to result in a random sexual encounter than your 401K.

• 35:28Morgan Housel?

  That's it.

• 35:29Scott Galloway?

  I mean, it's just, you're just fighting instinct. The other instinct is for, again, for the majority of our species, if we had the opportunity to get food, stuffs or items, we just took it because scarcity killed most people. And now we have this fiat currency or credit cards. We have all sorts of ways, buy now, pay later. We have all sorts of ways to get, get stuff, which we instinctively believes increases our likelihood, not only finding a mate, but of surviving. So this consumer culture is just everywhere. There's opportunities everywhere. How do you modulate? Is there a discipline practice? I, I, I, it's funny what you said about Charlie Munger. I agree. It's probably more true than I'd like to think,

• 36:14Scott Galloway?

  but I'd like to think we can real, we can teach young people or at least take the moderates in the middle and lean them more towards saving. What are there specific? Behavioral modifications, try and help people become more disciplined and resist the instinctive urge to consume and buy more shit, which by the way, our economy is amazing at presenting opportunities everywhere to spend more money.

• 36:36Morgan Housel?

  Oh yeah, absolutely. It's like the modern economy does two things very well. It generates wealth and it generates envy and it's very good at those two things. I'll tell you one like behavior modification that worked for me, might not work for everybody, but when I was in college, I was a valet at a, at a five-star hotel in Los Angeles. And so I was, I was exposed at that.

• 36:53Scott Galloway?

  Which one? I parked cars, I parked cars at the Beverly Hills Hotel.

• 36:56Morgan Housel?

  It was actually, it was actually the Balboa Bay Club in Newport Beach. I always say LA because people know what that is, but in Newport Beach. And so I always, it was a lot of exposure to Ferraris and Lamborghinis and like very wealthy people that I had not been exposed to up until that point in my life. And I realized one day that if somebody drove in, in, in a Lambo, never once did 19-year-old Morgan look at him and say, wow, that guy is cool. That guy is successful. What I did is I imagined myself driving the Lambo and I thought if I was a driver, people would think I was cool. People would think I was successful. And it was like, wait, like one day I finally saw the disconnect. It was like, nobody cares about the driver, but they want to be the driver because they think other people will therefore, will then care, care about them. And it was this disconnect of like, I think the takeaway from that is nobody's thinking

• 37:41Morgan Housel?

  about you as much as you are. You think that everyone's looking at you, but even when people are noticing you, they're imagining themselves being noticed by other people. And it's true for cars, it's true for houses, that nobody is thinking about you as much as you are. Nobody cares about your stuff as much as you do. Once I realized like that game, it was like, okay, now I see what the game is. And therefore my aspirations for nice stuff went way down, not to zero, but they went down because you don't get the kind of social credit that you think you do. It's easy to underestimate, to overestimate how much social credit you're going to get from nice stuff. Once I realized that, it was like, okay, then that was a big mindset shift for me.

• 38:21Scott Galloway?

  I love that. And that is happiness is not a function of what other people think of you. It's absence from a fear of, you know, having your house taken away or the pride you feel in being able to do nice things for your, take care of your parents, take care of your kids, go on nice vacations. And coming to that recognition.

• 38:42Scott Galloway?

  Especially with men, I don't think happens very early. I think that's, that's really powerful. What do you, so investment advice, and I struggle with this. I get a lot of questions around, should I put a little bit of money into Bitcoin or something? And I'm like, look, a small amount of money in something that might offer asymmetric upside, or that gives you some sort of psychological return, fine, but ring fence it. And low-cost ETFs and index funds are just kind of where the bulk of your money should go. Do you get into, for someone in their twenties, just general thoughts around portfolio strategy? Like, what and how much should they be investing with the money they do set?

• 39:20Morgan Housel?

  So in terms of portfolio allocation, to me, it's less about like, how much should you be investing in stocks? What percentage? And it's more just like, let's, let's first describe what kind of stocks you should own. And it's true that if you just tell people, put it all in the Vanguard Total Stock Market Index, which is probably the right answer, the huge majority of young people who are new to investing, who are fighting the intuition to day trade penny stocks, are going to look at that and say, hell, no. Or they're going to do it for a month, and then they're going to watch their, their dorm roommate get rich, and they're going to say, that's what I want to do. I should be day trading stocks. I think for young people, it's totally fine, if not even ideal, to say, hey, can we put half of your money in an index fund? And then the other half, you can go bananas with. You can go into Robin Hood and go nuts with it.

• 40:02Morgan Housel?

  Do whatever you want. I think it's great for people to learn about the downsides of risk management when they're 19, instead of 47 and putting their kids through college. So if you can learn those lessons and burn your fingers early on, I think that's great. So that's the first thing I would say to young people. The other thing is like, especially when you're young, the idea is that the odds that you are gonna change careers, change jobs, change cities, get married, get divorced are, are enormous. They round to 100%. And it's easy for young people to underestimate how much cash they're going to need in some type of emergency fund. And I've seen so many young people, so, so many, they're, they have, they finally have a thousand dollars in savings. And they're like, great, I saved a thousand dollars. I'm gonna put all of it in the stock market.

• 40:45Morgan Housel?

  Because, because I'm young and I got all the time in front of me, so I'm gonna put my thousand dollar net worth in the stock market. Three months later, they need to cash it all out because they need a car repair, whatever it might be. So easy to underestimate how much emergency fund you're gonna need at that age.

• 40:59Scott Galloway?

  Yeah, so my advice, I always tell people that in their twenties and thirties, work your ass off before you have spouses and dogs and try and establish currency in the marketplace and start saving money. I'm curious on your thoughts on the notion of work-life balance in your twenties and thirties.

• 41:16Morgan Housel?

  I mean, I think a lot of people, including you, will probably resonate with this. Like, obviously, everything changed when my first child was born. And I realized, like, my desire to work my ass off fell 67% the day my son was born. And that's pretty common. So I totally agree of, like, work your ass off in your twenties. And to me, it's less about building up savings, although that's part of it, but it's more like, build your career, figure out what you want to do for your career, build up your connections in your career that are going to have an ROI that is, like, incalculably high in your thirties and forties and fifties. I worked extremely hard in my twenties. And going out to clubs and even going on, like, crazy vacations appealed less to me than

• 41:58Morgan Housel?

  it did my peers. I still did plenty of travel and I had plenty of fun in my twenties, but it was like, work, work, work, work. And I don't regret that in the slightest. I don't work as hard today as I did back then, but I think I'm able to do that today because of what I did in my twenties. And so it's like, it was such a great payoff. And I think a lot of the people who were doing the YOLO life in their twenties, it's not that it was wrong, it's just very different, because now in their thirties and forties, they realize, like, they have a lot less career momentum and savings and wealth than other people who went the other direction. There's always a saying of, like, travel in your twenties before, because when you're, when you're, when you have kids, or when you're in your seventies and eighties, you won't be able to do it anymore. And I think

• 42:41Morgan Housel?

  by and large, it's not necessarily true. You can do, you can still do a lot of travel when you have kids. It's fun to travel with kids. It's very different than traveling in your twenties, but I love it. It's different for everybody and every career, but for me, my, like, my life framework, I think, and this is so vague, I don't view this as like, as like, a strict playbook, but it's like, in your twenties, you learn a skill. In your thirties, you kind of put that skill to use, you start building that skill. And then in your forties and fifties, it's like, you're really just, like, kind of cashing in on that skill. I think it's a rough framework that's, that's by and large true for most careers.

• 43:18Scott Galloway?

  We'll be right back.

• 43:22Scott Galloway?

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• 44:29Speaker 02

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• 44:59Scott Galloway?

  What two or three pieces of advice you're sitting, someone's in front of you and said, "I'm serious, I want to get serious about my financial security," and you only got 30 seconds with them. What are the two or three things they need to start doing immediately or the approaches they need to adopt?

• 45:12Morgan Housel?

  I would, I would adopt the philosophy that I got from you, and I quote you in my book of saying this, which is that nothing, nothing too good or too bad lasts indefinitely. I think, I think I butchered that, but I got that from you and I thought it was great. That it's true for most people. If you are someone is in their twenties who is very well off financially. You probably, not 100%, but you probably got lucky in some regard. Not 100%, but probably. And it is so easy, particularly at that age, to assume that that level of success is going to continue indefinitely. And I think the opposite is true, too, that if you are someone who graduated college in 2008, in the teeth of the Great Recession, and the job market was awful,

• 45:54Morgan Housel?

  and you couldn't find a job, nobody was hiring you, that too will probably not last. Most, like, all economic movement is cyclical. And every boom is planted in the bust, and every bust is planted in the boom, every single one. And there's no such thing as average economic growth or average stock market growth. It's always just a swing from one extreme to the next. It's true at the macro level, and it's true at the individual level, too. And I know, Scott, you've talked a lot about this, too, of like, the success that you had in the late 90s and early 2000s, and what that did to your view of the future, and what happened when at least part of that unraveled. And so I think that embrace of volatility, and a lot of that is just like adding humility to your own view of your own future,

• 46:39Morgan Housel?

  is really important and really overlooked.

• 46:41Scott Galloway?

  God, I wish I read your book about 30 years ago. It's funny, when you're killing it, you think that's the natural order of the world, and it's all a function of your character and your grit, when you should realize, as you said, a lot of it's luck. I find luck, over the long term, is perfectly symmetrical.

• 46:57Morgan Housel?

  Yeah.

• 46:58Scott Galloway?

  And people can understand that concept, but when they're killing it and everything's lucky, they don't see it as luck, they see it as skills. And then when the market's way down, they see it, they then say it's bad luck. But it's just, it just strikes me that the inability to, you're never more prone to a really big fuck-up is after a big win. You start believing it's you, you start believing your own press. What's really helped me, and I'm curious, what are your thoughts on Stoicism as it relates to financial security?

• 47:30Morgan Housel?

  I'm not, I'm not an expert on the Stoics by any means. I've read the Ryan Holiday books, but I'm not, you know, I haven't gone too deep into it. I think the philosophy of the Stoics of going out of your way to visualize loss, they would visualize death and what it would feel like to die, would it be like to die, so that they were always prepared to die, so that when it actually came, they weren't, they weren't that scared of it. That's my understanding at least. I think doing some equivalent of that with financial loss is really important, especially if you are a long-term investor, the odds that you are going to lose at some point 20, 30, 50% of your money, if you're investing for the next 30 years, the odds that that happens are 100%. There are 100% odds that that's going to happen to you at some point. And so, just like the Stoics, the Stoics deal with this,

• 48:14Morgan Housel?

  the odds that you're going to die someday are 100%, so let's at least try to prepare for it. And so I think that's, that's a big point of it too. And then when you go through the inevitable financial decline, and your portfolio falls 30%, you don't enjoy it, it's not fun, but like you've prepared for this moment. It's not a complete shock when it happens. So I think that, that sense of it is, is really important. I think that, I think the, the core philosophies of Stoics too is also just a lot of humility about what you are, you are and are not able to control in the world, which is huge in investing too. Cause as you said, when you make a fortune during a boom, you view it as I did this. This was my skill. This was my intelligence. And the truth is like, it probably wasn't. You would probably, it was probably for most people, it was right place at the right time.

• 48:58Morgan Housel?

  And therefore like being able to identify what you can and cannot control is also a critical aspect of it.

• 49:03Scott Galloway?

  I want to give you an algorithm for building wealth and tell me where we've got this right and where we've got it wrong. The first is focus. Find something you're good at, invest massively in it, be disciplined, try and become in the top 10% or the top 1%. And if you're in the top 10 or 1% of anything, you should be able to at least make a decent living and get other people to pay you real money for that, that expertise. Two, Stoicism, try and live below your means. Try and recognize that when you're doing well, you're lucky. Try and realize when you're not doing well, that you're not an idiot. Try and, you know, focus on the things you can control, not control, but be disciplined. Try not to give in to these urges. We talked about before peacocking or consuming all the time.

• 49:49Scott Galloway?

  Three, diversification. Don't be a hero. Diversify as soon as possible. The market, the natural trajectory of the market goes up. If you're diversified, you know, that's your Kevlar. Any disappointment hurts, but it's not a fatal wound because you have Kevlar. And then what you were talking about earlier, time. Appreciate the time is going to go a lot faster than you think. And invest with sort of a 20, 30, 40 year time set. So focus, time stoicism, time diversification, time time. Where do we have that right? What did I miss?

• 50:19Morgan Housel?

  I think it's, I think it's right. But no one should pretend that that is a 100% flawless. Formula, because what we're missing out is just the variability and dumb luck. Particularly of where and when you were born. That's going to have a massive impact on life. So that formula that you just laid out is probably a very good formula. For someone who was born in America in the latter half of the 20th century. To parents who could send them to college or at least could find their way to college like, like, like you did. If you're, if you're born in Somalia. Or if you were born in China in the 1700s, like, like, take any other equation than.

• 50:57Scott Galloway?

  Germany in 1920.

• 50:58Morgan Housel?

  Exactly.

• 50:59Scott Galloway?

  Then you were going to die in Russia.

• 51:00Morgan Housel?

  Completely, completely different. And I think it's, it's really easy to overlook. That I, I've had, you know, some criticism of my book as well, too. It's like, I, I, I basically say, not directly, but I basically say like, oh, invest in index funds. Hold them for 30 years and you'll get rich. And then, and then someone from Germany will email me and say, ha, ha. You want to see how that worked out for my parents? And so like, yeah, like fair enough. And this gets back to everyone sees the world through the unique lens of their own experiences. And I think why, you can correct me if I'm wrong, Scott, but I think why that algorithm is appealing to you. Is because it kind of mirrors your own life. At least to some extent, is that true?

• 51:36Scott Galloway?

  Well, but see, here's the thing. I mean, I'm not, I'm blowing smoke a little bit, but not a lot. I, I just. At twenty-two, every twenty-two year old should read your book. I didn't. And you had a different experience with kids. You're in a better place than I was at your age. I woke up at forty-two and when my first kid came marching out of my partner, I had made so much money and I was always waiting for the big one. I always thought I was exceptional. My company was about to go public. I was gonna make thirty million dollars. So I wanted to live like a baller. I flew to St. Bart's, occasionally chartered a private plane. Why? Because I'm a baller and I'm always, always close to hitting it big. And if I had just taken ten, fifty, a hundred grand a year, which would not have been hard for me,

• 52:21Scott Galloway?

  and put it aside, I would have been in such a different place than when my kid came marching along. And because of the Great Financial Recession, because of the Dodd-bomb implosion in two thousand, and because of a divorce, I ended up staring at a newborn baby with almost no money. And like the amount of humiliation and just sheer fucking terror was overwhelming. Yeah. And it would have just been, and the thing that was so disastrous about it was that it wouldn't have been that hard to just have a few, maybe even several million dollars. My, my first job out of UCLA at twenty-two, I was making sixty K a year at Morgan Stanley. Then I was making six figures in no time.

• 53:05Scott Galloway?

  So just to save some money and to think about that twenty years of compounding, I would have been staring at this kid thinking about, oh my gosh, little league. Oh my gosh, I'm gonna take him, you know, to, to, to football game. I mean, instead it was like, all I could think about was, how did I fuck up this badly? How did I fuck up this badly? And you're way ahead of the game. And I think about a lot about young people, especially young men, who, I'm not talking, you know, I'm not talking about cutting up your credit cards, but I'm talking about, don't make the mistakes I did and assume you're exceptional. You don't need to be exceptional. You need to be disciplined. And to think that you're always on the verge of a big one, sometimes it doesn't come along. Yeah.

• 53:49Morgan Housel?

  There's part of me that like fiercely agrees with that and thinks like, yes, it's right. Like if you had saved, you would be in a better spot. Of course, that makes sense. There's another part of me that probably thinks that the reason that you are financially secure today is because you were scarred from that lesson.

• 54:03Scott Galloway?

  Hundred percent.

• 54:04Morgan Housel?

  And you would not be in this position today unless you were so scared by what happened back then, which gets back to my thing about like the Robinhood generation. Like, yeah, it's crazy and they're investing the worst way possible, but at least they're going to learn. And no lesson is more persuasive than what you've experienced firsthand. And so I think that's, that's a big part of this too. And maybe my, my message there is like, we, we, we shouldn't be so hard on young people who are making terrible financial decisions. We should try to show them the right way and give them the information and the knowledge and the philosophies for them to improve, but also at the same time empathize and understand that a lot of the financial decisions that they make are actually following their intuition. And there was so much pressure today, exponentially more than you and I had it when we were young

• 54:47Morgan Housel?

  because of social media, to make terrible financial decisions. Imagine if you had Instagram and TikTok in the late 90s when you were chartering jets to St. Bart's. It would have been, it would have been two to five X worse than what you actually did.

• 54:58Scott Galloway?

  Yeah, no, I'd be in Solana and, you know, just, yeah, it's, you really have to fight, you know, the industrial media complex wants you to be obese. It wants you to be broke. It wants you to be envious. You know, it wants you to be diabetic. I think young people have to demonstrate way more discipline than I did, or even you did today. So any, you're, you're a new father. Any thoughts just on the role that money plays in your relationship with your partner and your role as a spouse and a dad?

• 55:35Morgan Housel?

  My wife and I, I think, got very lucky. That's the right word. It's just like there was no effort put into this. So we've always been on the exact same page financially. And in the 17 years we've been together, there's never been any meaningful financial disagreement in terms of spending, like little things, but nothing. But that's like, that's pure luck. I would love to say-

• 55:51Scott Galloway?

  Number one source of divorce.

• 55:53Morgan Housel?

  Absolutely. And I would love to say, here's how we did it. Here was, here was the strategy. There's no strategy. It's just, it was just luck that we met each other and we're on the same page. In terms of kids, I think, I love the Warren Buffett quote, and obviously he's in a very different financial situation, but I love the philosophy of leave your kids enough money so that they can do anything, but not so much that they can, that they can do nothing. That's really important. And I think a lot of parents of even modest means underestimate how little it takes for your kids to do nothing. And you see this with the number of kids who end up living with their parents into their 30s, not to diminish the situation that those kids might be in. But by and large, whenever you have a situation like that, it's like there is, there is the safety net that the parents are providing is, is too thick. It's too high. And so I, I think about that with my kids, like the balance between how

• 56:38Morgan Housel?

  can I use our financial resources to give them a good life? But how can I also make sure that at least to some extent, they trip and scrape their knees a little bit financially and learn the hard lessons that are so valuable? That's a really difficult thing to do that. My, my wife and I talk a lot about, our kids are three and seven, so we're, we're hopefully years away from needing to think about those lessons. The other thing I think about a lot, too, that anyone with, with kids, I think can relate to this, I'm, I'm the youngest of three, and myself, my brother and my sister, we are so different, could not be more dissimilar financially, career wise, like everything, we're so different from each other. And I can see that in my kids at three and seven, they're already so different personality wise. So when you think of money as like, it's not math, it's psychology, how can you teach a universal lesson to a child that you know is going to end up so different

• 57:23Morgan Housel?

  from the other child? And maybe my daughter wants to be a partner at Goldman Sachs, maybe she wants to work for Greenpeace, I have no idea. And the lessons that I want to instill in her are probably going to be different depending on which direction there she wants to go.

• 57:35Scott Galloway?

  Yeah, if, if you want to, if you want to believe in nature versus nurture, just have two kids, you just don't treat them that differently. And they're just, they're like a different species. Like, I, I mean this sincerely, I think your book should be required reading for every senior in high school. In a capitalist society, unfortunately, money plays a disproportionate role in how happy you're going to be. I mean, it's, it's, it's not, I think it's unfair, but it's true. And you break it down. And I just thought that your lessons are just so important and so timeless here. Anyways, Morgan Housel is a partner at the Collaborative Fund, a network of fund managers investing across asset classes. His book, The Psychology of Money, has sold over 2 million copies and

• 58:20Scott Galloway?

  has been translated into 52 languages. He joins us from his home in Seattle. Morgan, again, thanks for your good and important work.

• 58:26Morgan Housel?

  Thanks so much, Scott.

• 58:37Scott Galloway?

  Algebra of happiness. I have two friends that I know professionally. I wouldn't describe them as good friends, but we're friends. And they're both essentially the same person. They both have small businesses that are thriving. They make really good money. I imagine each of them makes, you know, seven figures a year. And one of them, regularly, they're kind of on opposite sides of the same industry. One of them named the other by, called out the other person by name at a conference. I wouldn't say attacked them, but said that this company was doing shitty work. You know, attacked the company, attacked him, was trying to be provocative. And then the other person immediately called them out and kind of went on more of an attack using, using a video. And no one really saw it. Two guys, you know, midlife crisis, pissing on each other. No one really cares.

• 59:22Scott Galloway?

  But this was deeply upsetting to both of them. And I know both of these guys, they're both good people. And I thought, how did this shit come off the rails? And that is one. When you say things about people at a conference, even though you don't know them personally, they become sort of, it's like, I forget what that, that psychological term is, but babies think that anything they can't see doesn't exist. And I think it's easy for us to forget that just because someone's famous or just because someone speaks at conferences, that they aren't people with emotions and they aren't fragile and they don't have big egos. They do. And also, both of them have violated what I think is a cardinal rule around personal attacks. And you have to have a code around personal attacks.

• 1:00:01Scott Galloway?

  First off, personally, I have found in general, a decent rule is to never speak ill of anybody. If you're being honest and say, well, sometimes this person can be verbose or I think this person reflected poor judgment here. But talking shit about people behind their back only gives that person the sense that A, you are insecure and need to feel better about yourself, but B, you're probably talking shit about them. This is a general rule, never say anything bad about anybody unless it's in the context of evaluating a specific situation. That's personally. Professionally, I make personal attacks.

• 1:00:34Scott Galloway?

  I think Mark Zuckerberg is a sociopath. I think he weaponized, I think his lipstick on the pig of teen depression with Sheryl Sandberg, who weaponized the important discussion around gender and also weaponized her own personal loss. These are terrible things to say about somebody, and I believe them. I think Elon Musk is a strange, in many ways depraved male that is lonely and unhappy and has terrible judgment. That is a personal attack. I only make personal attacks on people that are much more powerful than me. When you personally attack people who are the same power as you or less powerful than you, that's not an attack, that is bullying. And when you have two men who are in the same

• 1:01:17Scott Galloway?

  kind of adjacent power set, when they go after each other, that's just fucking stupid. They both look bad. They both look bad. My point is, you need a code around personal attacks. And also, to take the temperature down, I talked to both of these people, someone has to be the bigger person. And it hurts. You have to swallow your pride and say, you know what, this is wrong. I shouldn't have done this. I apologize. And that is very hard to do. But what is your code around negative comments about someone in your life? What is your code around when you call out people and firms? The only way you de-escalate, the only way you take the temperature down, the only way you demonstrate what I would call real maturity, or in this instance, real manhood, real masculinity, is to be

• 1:02:00Scott Galloway?

  the bigger person, to be the bigger man, and apologize and de-escalate the situation. This episode was produced by Carolyn Shageran. Jennifer Sanchez is our associate producer, and Drew Burrows is our technical director. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prof G Pod from the Vox Media Podcast Network. We will catch you on Saturday with No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly market show.

• 1:02:37Scott Galloway?

  Poppy's the kind of friend, she might call me and say, "Hey, what are you doing?" And I'd be like, "Poppy, what's going on? What do you want?" Just get to the point. She said, "Scott, I'm headed to PPI. I've already decided she lives in Delray, in the same community as me, and our kids play together." And she's like, "I'm flying up to New York to do a quick hit, and I need a ride to the airport, and I could take an Uber, but I thought it would be a chance for us to catch up." And I'd be the kind of friend that'd say, "Sure, I'll pick you up in a minute," right? And we'd roll to the airport together.

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