No Mercy / No Malice: Hubris

As read by George Hahn. Follow George on Twitter, @georgehahn. https://www.profgalloway.com/hubris/ Scott clip credit: Hulu's documentary, "WeWork: Or the Making and Breaking of a $47 Billion Unicorn" 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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• 1:19Scott Galloway?

  I'm Scott Galloway and this is No Mercy, No Malice. People with wealth and power have obvious advantages over everyone else. And so it's no surprise that they mostly get wealthier and more powerful over the short and medium term. However, it doesn't last. From ancient Rome to today's tech titans, the mighty always fall. Everything, everywhere, ends. Hubris, as read by George Hahn.

• 1:53George Hahn?

  The rich get richer. Data supports it. In the past three decades, the share of US wealth held by the top 1% has gone from 24% to 32%. Like most cliches, "the rich get richer" became a cliche because it's true of money and power. The powerful tend to aggregate more power. Incumbents get re-elected 90% of the time. It makes sense. Money buys you power and influence, which begets more money, which buys more power and influence. This is the basis of capital accumulation and wealth creation, a virtuous upward cycle. It's also the reason we should have progressive taxes and regulation

• 2:38George Hahn?

  to prevent the natural order of economics from doing its thing, making rich people richer and poor people poorer. What makes less sense? Why does one person or firm not have all the power? Why don't a few families control all the wealth? One or two governments control the globe? Why isn't there a president of Earth? As much as it seems that power and wealth are centralized, the world's richest man owns just 0.04% of the world's net worth. Throughout history, nobody has come close to amassing total control. The mightiest empires were still minority owners of Planet Earth. Before her death in 1901,

• 3:21George Hahn?

  Queen Victoria oversaw a kingdom that spanned roughly a quarter of the globe's land surface and ruled just 23% of the world's population. At its peak in 1300, the Mongol Empire controlled about 18% of the Earth. The Roman Empire was even smaller, at 4%.

• 3:40Speaker 04

  Look, Simba. Everything the light touches is our kingdom.

• 3:47George Hahn?

  As they gained territory and resources, each empire continued to expand. Brits in 1910 had witnessed six decades of growth. With each land grab came greater stores of resources, more coffee and molasses to import to their island. This created new markets and business opportunities to fund more land grabs, and the wheel turned. However, from the British Empire to the King Dynasty to the Ottomans, they all have one thing in common: they all fall.

• 4:24George Hahn?

  A celestial pillar of the universe is that it abhors absolute control. No individual or institution has ever achieved it. Apex predators cannot eliminate their prey without starving themselves. If there are too many wolves eating too many deer, the wolf population declines as they run out of deer to feed on. Balance is fundamental to ecological systems, and the same is true over the long term in our human-made world. A powerful entity or person collapsing under the weight of their own success is not a novel concept. The ancient Greeks had a word for it: hubris, an excessive confidence in defiance of the gods.

• 5:08Scott Galloway?

  You tell a thirty-something male he's Jesus Christ, he's inclined to believe you.

• 5:13George Hahn?

  For us, it means excessive confidence preceding downfall, which more or less equates to the same thing, because for the Greeks, defying the gods almost always led to death. A more recent version of this ancient story that fits our tech-obsessed moment is Frankenstein. Inebriated on his own brilliance, Dr. Frankenstein tries to defy the natural order and create life. In doing so, he makes something too hideous to contain, and that's his doom. His last words in the novel are an instruction to, quote, "avoid ambition," end quote.

• 5:58George Hahn?

  Corporate hubris takes various forms. Research shows overconfident CEOs are prone to distorting their investment decisions. They overinvest when cash flows are strong and cut too far back when they need external financing. Case in point is Meta, where we're witnessing hubris play out in dramatic form. The unconstrained boy king is betting his company, his shareholders' company, really, on a fever dream in which he is God in a world littered with Nissan and Nespresso billboards: a metaverse. More recently, FTX founder Sam Bankman-Fried believed he could defy the laws of economics

• 6:41George Hahn?

  and borrow against large sums of a fake currency he made up. Essentially, Bankman-Fried constructed the Burj Khalifa on a foundation of quicksand. And now comes the fall. A desire to keep things as they are can also initiate a slow burn to the ground. The innovator's dilemma is not a function of arrogance, but limits, the limits power imposes. A colleague of mine at NYU, Aswath Damodaran, has done important research on the life cycle of successful corporations. Vibrance and innovation fuel their ascent, but the comforts of cash flows and the desire to keep them flowing make them slow and afraid.

• 7:25George Hahn?

  The best companies build moats so they can protect their earnings and extend their lifespan. The next best firms recognize they are maturing and age gracefully. They return money to shareholders, distribute dividends, and pay debt down. Also, few CEOs invest the GDP of Costa Rica into a megalomaniacal yet lame attempt to replicate our world without legs: a digital Frankenstein, if you will. Success can be our undoing when we're promoted beyond our true capabilities. The Peter Principle holds that because people get promoted on the basis of prior performance,

• 8:07George Hahn?

  they will inevitably rise to the level of their incompetence. Our brains make it easy for our ambition to exceed our ability. The Dunning-Kruger effect describes a demonstrated cognitive weakness, that the less we know about something, the more we overestimate our knowledge. That's why stupid people, and people who make great cars and buy media companies, are so dangerous.

• 8:35George Hahn?

  This has been a banner week for the powerful coming undone. In no particular order, the largest social network company in history, Meta, which has lost more than two-thirds of its value over the past year, announced it was laying off 11,000 people.

• 8:52George Hahn?

  The most prominent crypto billionaire lost nearly his entire fortune after he overindulged his empire to keep it expanding. And the richest man in the world impregnated a bathroom sink before putting on a masterclass on how power corrupts.

• 9:10George Hahn?

  Elon's comical first few weeks at Twitter have gone worse than expected, and most people expected a train wreck. As I write this, the most recent news is that Twitter's senior infosec and privacy executives quit. They haven't disclosed the details, but it seems likely they were asked to do something they believe to be illegal or unethical.

• 9:34George Hahn?

  That's in the midst of an ongoing collapse of verification on the platform, a new policy that comedy is allowed unless you're making fun of Elon, and a steady flow out the door of the engineers who know how Twitter's service actually works. The inevitable collapse of the powerful is a good thing, and I'm glad we live in a universe that embraces this as a governing principle. Absolute power and wealth concentration are incompatible with the innovation that characterizes humanity's upward movement. The crashing to Earth can cause collateral damage, but it's a creative destruction.

• 10:11George Hahn?

  What is the lesson? What can be learned? Every day, no matter how successful we become, we need to earn our success. We need to be kind and appreciative. We need to surround ourselves with people who will push back on us and question our beliefs and actions. We need to demonstrate humility. You are never more susceptible to a huge mistake than right after a big win, when you begin to believe the falsehood that your success is all your fault. Yes, you're brilliant and hardworking, but greatness is in the agency of others, and timing and other features of luck is everything.

• 10:55George Hahn?

  The flip side is less discussed, but more important. When you fucked up, when things are going poorly, a relationship ends, you have professional disappointment, or you're in financial stress, forgive yourself. Mourn, then move on. And moving on means finding the people and activities that give you the strength and confidence to believe you have value, that you are the solution to your firm's problem, and that you could make someone else's life wonderful. I have known many really successful people, but there's a distinction between success and happiness. The delta boils down to registering one truth

• 11:38George Hahn?

  and surviving the accompanying emotions. Much of your failure and your success is not your fault. Life is so rich.

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