Office Hours: Weed Winners, Apple’s Rundle, Movie Theaters, and Deciding to Be an Entrepreneur

Scott shares his thoughts on who the winners of the cannabis industry will be, and why he still enjoys a little THC from time to time. Scott also answers questions on where the movie theater industry is headed after a catastrophic 2020, whether Apple should expand its rundle with its own social media network, and how to decide between pursuing entrepreneurship or a career at a global company. 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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• 0:48Speaker 01

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• 1:16Scott Galloway?

  Welcome to the Prop G'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 email a voice recording to [email protected]. Again, that's [email protected]. By the way, by the way, little insight, little inside baseball, I do not read these questions before I answer them because I want to be authentic. I want to be authentic. So if I sound like I don't know really what I'm saying, trust your instincts, I might be wrong, but my heart's in the right place. These are my unfiltered first impressions. First question!

• 1:52Speaker 02

  Good morning, Scott. With the budding and blossoming cannabis industry in the United States, please comment how you see the winners distinguishing themselves in an industry with varied competition. Enticing enhanced products are creating opportunities.

• 2:09Speaker 02

  Thank you kindly, Dr. Scott.

• 2:12Scott Galloway?

  Wow, that dude sounded like he was enjoying his own product. I want to smoke whatever that guy's smoking. Anyways, so I'm an avid consumer of THC. Truth be told, anyone who jokes as much as I do about erectile dysfunction and marijuana doesn't use both as much as they joke about. I do edibles about once a week. It helps me relax, but I don't smoke as much as I used to. I smoked a lot. And by the way, in case you haven't noticed, these questions are really just an excuse for me to discuss my favorite topic: me. In college, I smoked a shit ton of marijuana. I wish I'd smoked less and studied more. True story. And then I gave it up because I was working my ass off. I was scared. I never wanted to get... I have a pretty healthy fear of the law.

• 2:57Scott Galloway?

  But when I got older and it became sort of semi-legal, I sort of rediscovered marijuana and enjoyed it a great deal. But I try and do it no more than maybe once or twice a week because, I don't know, I want to be clean. I want to be clean. The dog wants to exercise and be a baller and have a lot of relevance and influence. I think it's a decent idea, at any point in your life, to look at the role that external substances play in your life. And I am not a puritan. I like to drink. I like to smoke pot. But would you be less shitty if you smoked less, ate less trans fats, didn't spend as much time online in terms of porn, didn't spend as much time fetishizing over e-commerce? Like, what in your life? What vice? I'm not saying eliminate it or go cold turkey, but what...

• 3:41Scott Galloway?

  How could you and your performance be a little less shitty if you reduce some of these things? Anyways, that has absolutely nothing to do with the question. What are the opportunities? I'm a big fan. I don't understand the cannabis industry, and it's one of those things where I should understand it better because I get so many questions on it. I would venture that the opportunities, on a risk-adjusted basis, are in the picks and the shovels. Bloomberg reported last year that Grow Generation, a hydroponic gardening center chain, meaning it sells equipment used to grow pot, was the best-performing cannabis stock of 2020. At the time, it was up eightfold from the beginning of the year, and it had a market cap of 1.6 billion. Now, it's got a market cap of 2.5 billion. Data from Research and Markets indicates the global hydroponic

• 4:23Scott Galloway?

  systems market was estimated to be nine and a half billion in 2020 and is projected to reach 18 billion by 2026. In sum, I think it's very hard to pick winners here around product, around retailers. It's so regulated, you're subject to so many exogenous variables. Also, the thing I don't like, the thing I don't like about the cannabis industry is literally every billionaire baby boomer I know is investing in marijuana. Now, is that a self fulfilling prophecy where it'll create a lot of innovation and like tech result in attracting more capital, more innovation and sort of an upward spiral? Maybe, but I worry that the space is just massively over invested and I have trouble discerning the winners from the losers. So where I would go here is I would go to

• 5:07Scott Galloway?

  infrastructure, similar to crypto. I look at marijuana the same way I look at crypto and that is the way I would want to play marijuana is how I am playing crypto. I am a no coiner. I've never bought a coin, but I'm contemplating an investment in a company called Ledger, which is a cold storage hardware device. I see that as kind of the picks and shovels or whatever you want to call it, the transportation of the mining or the storage and distribution of the gold or I don't know what the right metaphor would be. Anyways, going to mining metaphors a lot here. I want to own Levi's, not the mine. I want to own the guy or gal making the picks, the train taking, taking the aluminum or the coal because I just think there's so many things that I don't understand that might have an impact on the winners and losers. Anyways, picks and shovels, my brother,

• 5:51Scott Galloway?

  picks and shovels and put the blunt down, Scott from Pleasanton. I'm starting to sound like you're, call your mother, call your mother. Question number two.

• 5:59Speaker 03

  Hi, Prof G. This is David from Moldova, probably one of your only listeners in this quiet little country in Eastern Europe. I wanted to ask you a question today about movie theaters. Specifically, you've talked about how movie theater experience is both expensive and bad and that this entire marketplace is going to be severely affected coming out of the pandemic and isn't likely to recover. But you have also talked about how you like Alamo Draft House and some other experiences around movies. I wonder if there isn't an opportunity for Netflix or the other streaming platforms to create a different type of Rundle, if you will, where they license their films and

• 6:42Speaker 03

  content to movie theaters so that they can be played in the movie theater for a much, say, cheaper price than you would with a normal new movie release?

• 6:51Scott Galloway?

  Thanks for that, David from Moldova. Moldova, that is a nation I know very little about. I think it's got two or three million people. I actually met someone from Moldova and they named the capital and it's, I couldn't, I don't even remember what the capital was. Anyways, my Moldavian domain expertise is lacking. So global box office reached a record 42 billion in 2019 and then it dropped understandably 72% in 2020. And by the way, I don't think it's coming back. I don't think it's going back there. 2019 was the year Avengers Endgame brought in about 3 billion and had a budget of 356 million. Good to be them. God, I hate those fucking superhero movies. I mean, I literally hate them. Even with the record sales of the box office in 2019, data from Statista in June that

• 7:34Scott Galloway?

  year showed that almost half of American adults went to the movie theater just once a year or not at all. Let me think about this. Think about your home viewing experience now versus 30 years ago. You're talking flat screen TVs, you're talking unbelievable content, you're talking ability to search for programming, watch it on demand, better sound systems, Sonos. I mean, it's just incredible, the innovation. 30 years ago, I had, my cable box was connected to a cord. I had a TV that came five feet out because it had so much shit in the back and it cost about three months' salary. I mean, it's just, and then I had to rush home and put a weird videocassette in this

• 8:17Scott Galloway?

  weird monstrosity of a machine to try and record Cheers. So anyways, it's, it's just, the innovation has been remarkable. And I, I kid you not, I think 90% of the theaters in America, if you go in, the food's the same. You know, shitty Mike and Ikes or popcorn or the same Diet Coke, the same seat, the same sticky floors. I mean, literally, what's been the biggest innovation in movie theaters in the last 30 years? THX? No, that was 35 years ago. But what's changed is the prices have gone way up. So it's bad. It's bad, but more expensive. And people talk about Alamo or iPic. By the way, both out of business. It doesn't appear that those businesses scale.

• 9:01Scott Galloway?

  And I love iPic. I love iPic because, because I can take my kids to the movies. The only time I really ever go to the movies now is to take my kids. And I watched some terrible, um, the Emoji Movie. Jesus Christ. So now I just go, I take my AirPod Maxes. I listen to music or Tom Petty and I get in my Lazy Boy at iPic and I just roll back and let the kids watch the movie and just endure it. But this leads me to where I think there's opportunity around verticalization and your idea of a Rundle. And that is, I think Disney Plus should be in the business of movie theaters and go vertical. Disney's Achilles heel is they are not vertical, so they don't have as much control over the

• 9:45Scott Galloway?

  distribution of their content, like an Apple or an Amazon that own a lot more of the distribution. And I think Disney Plus has the best content and needs to start thinking about acquisitions, whether it's handsets, a video game company, something that gives them more control over the distribution of their product. I thought they should acquire AMC. And then this fucking weirdo movement that I wasn't expecting, the meme stock movement, take AMC to irrational economic valuation, which basically is bad long-term for AMC. Why? Because no one's going to acquire the thing. That's what needed to happen to AMC. AMC needed to be acquired either through a prepackaged bankruptcy or for a low price such that a deeper-pocketed parent company that had a better way to monetize those theaters,

• 10:28Scott Galloway?

  specifically, specifically a recurring revenue stream called Disney Plus. And then, and then turn those theaters into something resembling almost like a combination between the Disney Stores, remember that, and Disneyland, and a delightful place to take your family to go see someone, you know, on steroids with a cape or go see, you know, Incredible Animation or Toy Story or Pixar or Star Wars, Lucasfilm, or the Marvel franchise. They could have made these things, upgrade the food, make the food less shitty, make it more family-friendly, have a store where you could buy. Thor memorabilia or a Star Wars stormtrooper mask and turn these fantastic little satellites

• 11:09Scott Galloway?

  of Disney where you also could see a movie and include it, include it in the Disney Plus bundle. Oh my God, I'm impressing even me right now, even me. In sum, in sum, theaters are no longer a viable standalone business. What they are, what they are is the distribution arm of the Disney Plus rundle. They give you the question.

• 11:35Scott Galloway?

  We have one quick break before our final two questions. Stay with us.

• 11:41Scott Galloway?

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• 12:41Scott Galloway?

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• 13:26Scott Galloway?

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• 13:49Speaker 04

  Welcome back. Question number three. Hey there, Scott. This is Ray Reed from Parker, Texas. You're in the age cohort that will understand when I tell you our claim to fame is we are the home of the world famous South Fork Ranch. My question for you is if you think Apple would be well-served to create its own walled garden social network and include it as part of its Apple Plus Rundle. You have spoken and written eloquently regarding the cult of Apple, even though the use of the word cult is mine, not yours. The promise to customers is Apple will not use their data for the nefarious purposes for which Facebook uses customer data. It seems to me this would be another point of Apple's "your data is safe with us" strategy,

• 14:33Speaker 04

  as well as adding value to the Rundle. In addition, it would not need to be specific to OS or iOS any more than iTunes was when it was introduced to the market.

• 14:44Scott Galloway?

  Ray from Texas, that's what you call an awesome Texan draw. Is that what they call it? That guy just sounds like he has a pickup truck and will soon be doing the voiceover for Chevy commercials. Sounds like a good guy to go grab a beer with. Anyway. Apple's revenues increased 54% to $90 billion during the most recent quarter. Jesus Christ, really? 54% to $90 billion? Cabbage on cabbage with an apple on top. Anyway, several factors, including a bull market, monopoly abuse, and renewed growth are the most profitable product in history, the iPhone, have reported this incredible acceleration in their stock price. Bloomberg reported that Apple is developing iMessage to act as more of a social network and to compete with Facebook's WhatsApp app.

• 15:28Scott Galloway?

  I think that's more messaging than it is social. iMessage is what Zuckerberg claims is Apple's key linchpin. Currently, there are more than 113 million iPhone users in the US. That's about 47% of all smartphone users in the country. And probably more importantly, that 47% probably accounts for 70, 80% of all mobile commerce. Because the bottom line is, people who are iOS just have a lot more disposable income. But your question was about Apple starting a social network. I think both Apple and Disney are going to avoid social. Why? Because the emissions of social is really toxic. And that is, the only way you make money is by keeping people engaged in an ad model.

• 16:09Scott Galloway?

  Because you need a lot of people, so subscription makes it difficult if you charge people in. The bottom line is, they just want nothing to do with this shit. They look at Twitter, they look at the toxicity, they look at the trolls, they look at the enforcement, the white supremacy, the anti-vax, all just the really gross shit. And the business model of social so far is to engage you by enraging you. And that's just so contrary to both the Apple and Disney brands. I think they just look at social media and they think, you know, we might as well get into fossil fuels if we're going to get into social media, because the emissions are just so noxious. So I don't see Apple going into social media.

• 16:50Scott Galloway?

  I do see Peloton getting into dating, but I think Apple wants to control their brand so meticulously that they don't want to bring in this very messy thing called people. And that is, I always thought Disney, the thing that Disney World or the person running Disney hated most was the actual tourists, that they loved this manicured environment, but they didn't actually want people there. I just don't think this, either company, Disney or Apple, wants to be in the very ugly business, or what has become a very ugly business. Of social media. Having said that, Pinterest and Snap have done a better job, less toxic. Actually, the stocks have outperformed Facebook and Google, so maybe there's opportunity there. There hasn't been a social media company of any real

• 17:33Scott Galloway?

  size started since in the US, started since 2011, and that was Pinterest. And now Pinterest and Snap are really too expensive to acquire because both Apple and Disney have shareholders that expect kind of are value things at a multiple of EBITDA. Anyways, I don't see it happening. Thanks for the question and go Texas.

• 17:52Speaker 05

  Question number four. Hi, Scott. Here Rodrigo from Mexico and Germany. I'm a huge fan of yours since your first appearance at DLD. One common theme in your show is the importance of joining global platforms. It is better to join Google or McKinsey than to start a company on a risk-adjusted basis. However, you have doubled down on your startup and raised a significant amount instead of becoming an executive at YouTube. Your audience is highly talented and qualified. They can build great companies or forge a successful career in big tech. What will you suggest as a framework to decide between pursuing entrepreneurship or the career ladder?

• 18:33Scott Galloway?

  Rodrigo from Mexico and Germany, thanks for the question and the kind words. And I can't wait to get back to DLD. DLD is a conference in Munich that is just wonderful, hosted by some really warm people. I love Germany. And anyways, I genuinely want to say I hope to see you in person there soon. So, look, my advice, I think people romanticize entrepreneurship and that on a risk-adjusted basis, you're probably better off going to work for a big platform. If you are fortunate enough to have the credentials, the skills, and the contacts to get a job at one of these, what I'll call, elite platforms, and elite platform can be Stanford or MIT or Google or Facebook or McKinsey, those are elite platforms that have an acceptance

• 19:16Scott Galloway?

  rate. I think Google has an acceptance rate of 1%. In other words, for every 100 resumes they get, maybe 1% ends up with an interview, much less a job. So if you're fortunate enough to get into one of those platforms, And I tell my kids this, when I say my kids, my students who come to me in office hours and say, I have an offer from Amazon, but I'm thinking about starting a business. My general response, and they're waiting for me as an entrepreneur to go, start a company. My general response is, don't be a fucking idiot. Go to work for Amazon. My stallmate, or whatever you call the person I started at Morgan Stanley, both of us took different paths. I think both of us ended up at about the same economic place. He stayed and became a very senior executive at Morgan Stanley over the course of the next 20 years. And quite frankly, just had less stress than me and had to take a lot less risks than

• 20:01Scott Galloway?

  I did. I think entrepreneurship is a difficult way to make a living. And there's a lot of very well-publicized winners. But the reality is, the reason I am an entrepreneur, and I think the reason most people are entrepreneurs, is not because we possess these incredible skills that other people don't have. It's because we lack the skills to be successful in a big company. When I was at Morgan Stanley, every time someone entered a conference room, I thought they were talking about me. I was deeply insecure. I was deeply resentful of people senior to me that I thought made more money but weren't as smart or as hard working as me. I was constantly worried about the wrong things. Do they know how hard I'm working? Do they appreciate me? You know, I just wasn't cut out. I don't

• 20:43Scott Galloway?

  think I was very politically adept. There's a lot of bullshit and a lot of politics and a lot of navigation you have to become an expert at to navigate a corporation and to be good at it. And if you have those skills, if you can play well with others, if you're patient, if you can take short-term hits of injustice, which is guaranteed in the corporate world, someone less deserving will get promoted over you. There'll be years where you don't get paid as much as you should. But most good companies, the arc bends towards justice, and it's a fantastic way to get rich slowly. But you can absolutely aggregate wealth. You get great skills, and they bring together a lot of talented people, and they provide tremendous infrastructure. We're talking Biden-like infrastructure

• 21:25Scott Galloway?

  to make you more productive. And it shocks me how shocked some people are when they leave Goldman Sachs, and they leave McKinsey, and they leave Google, and they find things are much harder. That people don't call them back as quickly as they thought they were going to, that the opportunities that they garnered at those firms don't come as fast and as furious. These platforms are very powerful. Some of us are just cursed to be entrepreneurs because the majority of small businesses are started by immigrants that have absolutely no access to those types of corporations. Now, having said that, if you're dying to start a business and you have good partners and you think you've discovered something and it's likely in technology, because let's be honest, that's what's garnering all the

• 22:10Scott Galloway?

  big valuations and what I'll call asymmetric upside, then yeah, by all means, go for it. But boss, don't kid yourself. Going to work for a big company, a great platform, an elite platform, if you are blessed with the opportunity to do that, I think that is a hard gig to turn down. And I just raised $30 million for Section 4, my online education startup that's trying to democratize elite business education. It's really fucking hard. I have no idea if it's going to work, and this is the most successful startup I've had, and it's still a tremendous amount of stress and still really hard. And probably the easiest way for me to make a lot of money right now would just be to go advise big hedge funds or big VCs on a risk-adjusted basis. But I have that bug. It's like being a doctor.

• 22:54Scott Galloway?

  I think being a doctor is a shitty business right now, but you know those kids who start pretending they're putting a stethoscope on your heart? They're just sort of born to be doctors. They can't help themselves. I think that's a little bit like entrepreneurship. The people who go to work somewhere else and say, "I'm going to start a company later," they're not entrepreneurs. Entrepreneurs have to be because they can't be successful in a big corporation. The moment you start getting momentum in a big corporation, you probably shouldn't leave. Long-winded way of saying we fetishize entrepreneurship. If you have access to a great platform, be it an elite institution, academically or professionally, on a risk-adjusted basis, hit the bid and go to Seattle or go to Cupertino. Thanks for the question, Rodrigo.

• 23:37Scott Galloway?

  Thanks for your questions. That's all for this episode. Again, if you'd like to submit a question, please email a voice recording to [email protected].

• 23:50Scott Galloway?

  Our producers are Caroline Shageran and Drew Burrows. Claire Miller is our assistant producer. Again, growing the enterprise, growing the enterprise. If you like what you heard, please follow, download and subscribe. Thank you for listening to The Prof G Show from the Vox Media Podcast Network. We'll catch you on Thursday.

• 24:07Speaker 06

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