Office Hours: Peloton’s Acquirers, Working Abroad, and Moving into Management

Scott answers a question about whether Nike should acquire Peloton. He also shares his thoughts on risking it all to move abroad, and offers career advice to someone with an offer to take on a management role. 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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• 1:27Scott Galloway?

  Welcome to the Prop G Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. Share with the dog, share with the duck. Don't share too much, but share. If you'd like to submit a question, please email a voice recording to [email protected]. Again, that's [email protected]. First question.

• 1:49Speaker 02

  Hey Scott, this is Justin from Atlanta. You've talked quite a bit about how you think Peloton is a really good acquisition target for Apple, and I agree with that. But I would love your thoughts on the possibility of Peloton being acquired by Nike. Peloton's market cap, at the time of this recording, is around $32 billion. Nike's around $200 billion. I think synergistically, they could really take each other to the next level, just the strengths that each has. Would love your thoughts on this. Lastly, Your book, The Algebra of Happiness, has been a just a staple in my life and has really, really meant a lot to me. I've recommended the book to so many people. So, thank you so

• 2:32Speaker 02

  much for that. Love those best practices. Keep on keeping on. Thanks, man.

• 2:37Scott Galloway?

  Justin from Atlanta, thanks for, uh, thanks for the comments, or thanks for the nice words on the algebra of happiness. I don't, I actually don't select these questions. My producer does, who I think, and generally thinking, I think, uh, you know, likes me, but doesn't love me, but expressed some love by choosing your question because that, that made me feel very good. So, thank you for that. Okay, so, uh, let's bring this back to me, my favorite topic. Uh, my, when I joined NYU, they said, you, you know, we match your, whatever it is, contribution to some retirement fund. And so I picked two stocks. I picked Oracle. I have no idea why I picked Oracle. And I picked Nike, and Nike's been a great performer, and it's a great company. I've done work with Nike, Adidas, and Under Armour, and, uh, they're

• 3:20Scott Galloway?

  all great companies. Uh, but I think I have a special affinity for Nike. I've just always, I don't know, but I like the European elegance of Adidas, and I like soccer, but Nike, you didn't win silver. You, you know, you didn't, you didn't win silver, you lost gold. I love Nike, too. Um, anyway, I don't know where I was going with that. Uh, so Nike acquiring Peloton, I don't think it happens. Uh, so, you have Peloton at 38 billion, meaning you'd have to show up with a check for 50 billion to take Peloton out. And they have almost about a million digitally subscribers, which is really powerful, but I think that comes down to a million, about $38,000 per, or $50,000 of the premium you'd have to pay per subscriber. So, the question is, how do you justify paying $50,000 per subscriber?

• 4:04Scott Galloway?

  You can't if you're Nike, because Nike's in the business of selling stuff, and they could potentially move into connected fitness, but that would, um, would they be able to justify it? Then they'd have to, if they could get a big enough portion of their revenues to say, we're no longer just athletic apparel, we're subscriptions, similar to what, kind of what Lululemon is trying to do with their acquisition of Mirror. I think that would be just a pretty big bet. That'd be about a 20% dilution to existing shareholders. In other words, I think Nike acquiring Peloton for 15 billion makes all the sense in the world. I think at 50 billion, I think the board's got to get out their pencils and go, I don't know, I think this probably destroys shareholder value unless... And we just execute perfectly against this and become known as a connected fitness recurring

• 4:48Scott Galloway?

  revenue company. Who it does make sense for, quite frankly, is Apple. Why? Because an additional three to five hours a week in front of an operating system for Nike doesn't mean anything. For iOS or Apple, an additional three to five hours of our gross attention in front of iOS is worth a lot, especially the people who are on iOS, because then they can sell them more apps, get 30% commission on all their apps and start saying iOS slowly but surely not only has whatever it is, a 46% share in the US, it has a 70 or 80% share of the time in front of a screen of the wealthiest Americans with the most disposable income, as evidenced by the fact that I think about 80 to 90% of the revenue

• 5:31Scott Galloway?

  from the app economy flows through iOS. In sum, it makes sense theoretically, but what you have to think about when you talk about acquisitions is, is it accretive or dilutive? Or simply put, when you buy this company, the amount of money you pay for it, at some point, no acquisition makes sense. And at some point, every acquisition makes sense, depending upon the price you'd have to pay. And the reality is, I just don't think Nike could monetize Peloton to justify a $50 billion acquisition because they don't get any credit for the additional time in front of the operating system that Apple would get. But a very thoughtful question, I do think Nike, similar to Lululemon, is going to go vertical, but I wonder if they start buying these apps. Like, I've been doing that app with a guy, Thor, Chris Hemsworth,

• 6:16Scott Galloway?

  is that his name? Just so I can feel bad about myself. Jesus Christ, is that guy a tall drink of lemonade. Oh, my God. Oh, my God. I can't believe they actually make humans like that. That is just so discouraging. We should tax that shit. You look that good, you get the shit taxed out of you. Alternative minimum hunk tax. Anyways, where was I going with that? The apps, I think fitness apps, we're going to see a resurgence in them. There was a mini blip. Under Armour bought one that made no sense, they overpaid for it, but I think there will be. I think these guys got to go vertical and start maintaining a relationship with the consumer. Nike is probably the one to do it. They have the greatest marketing capitalization, they have the currency, they also have the brain power.

• 6:59Scott Galloway?

  One of my early co-founders at L2, a woman named Maureen Mullin, is a senior exec in their direct-to-consumer department. And that woman has got it going on. That's like some serious fucking fire in between those ears. So I would not want to be Adidas or Under Armour with Maureen Mullin figuring out how to sell more shit online with a swoosh on it. Anyways, great question. Thank you, Justin, and thank you for the, thank you for the nice comments about the algebra of happiness. And again, do as I say, not as I do. I struggle, I'm pissed off and angry all the fucking time, but I have made some observations around how to not be me. Don't be the dog. Next question.

• 7:35Speaker 04

  Hey, Prof G. First off, I've been a huge fan of yours ever since I picked up a copy of The Four years ago. My name is Marcus. I'm in my late twenties from Vancouver, Canada. I currently work for a medium-sized, publicly traded tech company. And like you always say, it's a solid platform for really growing my career. So what my question is, should I be willing to quote-unquote "risk it all" and scratch my itch of living and working in another country? I'm thinking perhaps Singapore, Shanghai, Shenzhen, or somewhere in Asia where there's a booming tech industry. What I would be giving up here is my family and my loved ones, and my solid social network here in Vancouver, my job stability, and

• 8:18Speaker 04

  obviously my comfort. What I think I would be getting in return is massive personal growth from putting myself in truly uncomfortable situations, both professionally and personally. I guess being a Canadian-born local who has never really lived anywhere else long-term, I've grown bored of my home city and all the comforts it provides. And I really admire those who've taken the jump to do truly challenging things in their lives. I can't imagine myself growing old and losing that chance to work in another country. I'd love to hear your thoughts. Thanks, Prof G.

• 8:50Scott Galloway?

  Marcus from Vancouver. Thanks for the question. So yeah, 100% get out of Vancouver. And by the way, I would argue Vancouver is probably one of the nicest cities in the world. You don't want to, you're not going to do better, but what you want to do and should do as a young man is you should do different. Until literally 50 years ago, all but a small sliver of global population even had the opportunity to go explore different cultures, meet different people, eat different food, try and establish the skillset around being a globally empathetic business person. It's just, um, I grew up in LA, went to graduate school in the Bay Area, lived in San Francisco for about a decade, moved to New York, then moved to Miami, and I'm likely going to move to London in a year or two years.

• 9:35Scott Galloway?

  Just because I feel as if you have the opportunity, if you're blessed with the opportunity to move. Um, and that's a function of not only your resources, but hopefully you don't have. Having family in Vancouver is a reason to stay, but it's not the reason to stay. The reason I think you stay in a city is if you have very aging parents or someone you need to take care of. But for God's sakes, by all means, get the fuck out of Dodge. And when I say Dodge, I mean that crystal clear sky Vancouveran climate and beautiful, beautiful city that it is. But yeah, absolutely get out of there. The only wrinkle I would add though, boss, is I would try and find the job first. And also if you work for a tech company, see if they'll transfer you because where you want to be in Singapore

• 10:18Scott Galloway?

  or Hong Kong or London is you want to be an expat. Specifically, you want a department at a company trying to figure out all the brain damage and cost of moving you to another world-class city. Cause the thing about world-class cities is they've figured out the world-class and they're really fucking expensive. And so the best way, the best way to move abroad is under the auspices of a sponsorship from a company. So by all means, get to another city, get to another city. It's just, just, oh my God, no brainer, do it. But get a job first. I would, I would say try, going there without a job, I think creates a certain amount of X factor. Cause you might find the job you get's in Hong Kong, but if you just take off for Singapore,

• 11:01Scott Galloway?

  I think that limits your options and likely you end up with fewer options and a less better job, if you will. And also just the anxiety of moving somewhere and then a month goes by and two months goes by and you don't have a job. So yeah, by all means, get the hell out of Dodge, but get the job first and then go where the job takes you. We'll be right back.

• 11:23Scott Galloway?

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• 12:09Scott Galloway?

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• 12:27Scott Galloway?

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• 13:10Scott Galloway?

  Upwork also takes care of contracts, payments, and other administrative tasks, so you can spend less time managing logistics and more time focused on what's next. Visit upwork.com/propg right now and post your job for free. That's upwork.com/propg to connect with top talent ready to help your business grow. That's U-P-W-O-R-K dot com slash propg. Upwork.com/propg.

• 13:38Scott Galloway?

  Welcome back. Next question.

• 13:40Speaker 05

  Hey Prof G, Lauren here. Huge fan of you and the show. I'm in need of some professional advice. I work at a mid-sized consulting firm in New York City. I've worked here since I graduated from college about six years ago, and I am proud to have worked my way up the ranks. We're an account-based company with an entrepreneurial culture that values bringing in and retaining clients. This year, however, I've been asked to take on an operations role, manager of one of the company's largest offices. My time is now equally divided between managing a team of 20-plus people as well as account work. So my question is, do I lean into an operations role? Is there value to growing into this side of the business, knowing that account work is what drives my company's growth?

• 14:20Speaker 05

  Is this a valuable professional growth opportunity, or is this just going to sidetrack me? Thanks a lot.

• 14:26Scott Galloway?

  Wow, it's good to be you, Lauren. This is, this can definitely be categorized as a good problem. So I thought you were going to ask if you should get out of consulting. I've started two consulting firms. My first firm, Profit, I started in my second year of business school. I started a brand strategy firm at the age of 26, which is me trying to impress you, right? Fucking Pierre Palo-Barbieri, starting a fintech company at 30. I started a consulting firm at 26. Anyways, services firm, strategy firm, great in terms of skills, makes you a great athlete, fantastic training, doesn't take capital, but you never get really rich, or is what I found is you don't make the big, big bucks. And it's also very taxing on relationships. Not what you asked. You asked if you should get into an operations role,

• 15:12Scott Galloway?

  understanding that like the people who make all the money at Goldman are generally the ones kind of ringing the register and then manage or on the front lines, creating revenue, you know, getting investment banking clients, trading. I would argue, I think there's very little downside to establishing credibility as someone who knows how to run the firm. And while the people who run the firm oftentimes aren't the highest paid or the operations people, their, their income is what I'd call less volatile. And also you can, it's not, it's not a death sentence. You can decide after two or three years of running an office, that you could go back to more of the client work or the client side, if you will. And I just think having credibility around the revenue generation side of the business or client engagements,

• 15:56Scott Galloway?

  but at the same time, understanding how to run. That business puts you in a position to transfer your skills if and when you want out of consulting. I think everyone should be out of consulting by the age of 40 unless they just fucking love it because I think it's very hard on relationships. I just got sick of being someone else's bitch all the time. I got sick of the CMO of Samsung calling me and saying, hey, can you be in San Francisco to meet with our CEO and me having to say yes all the time? Or I feel as if I was constantly renting my brain to older people. I just found it fucking exhausting. Relationship driven, playing golf with people. I didn't really like, not that I didn't like them, but I didn't really like them and I don't like golf. Anyway, anyway, I think that if you have the opportunity, if they

• 16:41Scott Galloway?

  see you as someone who has the ability to take on an operational role, oh my gosh, by all means, by all means, why wouldn't you? I think this is a fantastic opportunity. According to a 2020 McKinsey report, women hold just 38% of management level roles in corporate America. As someone who sits on a lot of public company boards, we are, I don't say desperate for women, but much more, be much more thoughtful about ensuring that the board looks, smells and feels like our customer base or at a minimum, our company. And that usually means bringing on more women and more people of color. So it sounds to me like you're setting yourself up well for things like board roles or taking on a senior level operational role on the client side. You are going to want to get to the client

• 17:23Scott Galloway?

  side. Not that I don't know you, which I don't, but I think consulting is a fantastic training and then you want to jump to the client side and have a more balanced life, a more balanced life, a little balance, son balancio, which there is none. There are only trade offs. Anyways, congrats on the rocket ship that is your career. Move to Vancouver.

• 17:46Scott Galloway?

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

• 18:01Scott Galloway?

  Our producers are Caroline Shager and Drew Burrows. Claire Miller is our assistant producer. If you like what you heard, please follow, download and subscribe. Thank you for listening to the Prop G Show from the Vox Media Podcast Network. We will catch you on Thursday.

• 18:14Speaker 06

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