Pod Insights The Prof G Pod with Scott Galloway Office Hours: The Value of a Storefront, College Enrollment Numbers, and Parenting Advice About this episode Scott takes a question on why opening physical stores can be a powerful branding move — even for a tech company like Amazon. He then shares his thoughts on why universities with big brands need to let in more students, not fewer, and reflects on his dos and don'ts of fatherhood.
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:26 Scott Galloway? Welcome to the Prof G Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. Did I mention I'm taking August off? Why? Because I am running out of fucking time. Literally, the Grim Reaper is like hanging around my house a lot, and I want to enjoy myself. I want to do nothing. By the way, doing nothing is fine as long as it's planned. Anyways, I'm on vacation, so today we're sharing more of our favorite questions from past episodes. If you'd like to submit a question for when we get back, please visit officehours.profgmedia.com. Again, that's officehours.profgmedia.com. First question.
2:02 Speaker 02 Hi, Scott. Tim here from Merced, California, gateway to Yosemite and home to the newest UC campus. As I was out shopping the other day, I came across, of all things, an Amazon bookstore. After I got over my shock and horror that the company that almost single-handedly ruined the independent bookstore industry, I noticed its proximity to an Apple store. Tesla was across the street. Cartier was around the corner. I realized this outlet was simply there to give Amazon a more luxury feel than they have with just their internet presence. Thoughts?
2:40 Scott Galloway? Tim from Merced, thanks for the thoughtful commentary. UC Merced, I think University of California is one of the greatest public institutions in the world. I'm here speaking to you because of the generosity and vision of California taxpayers and the regions in the University of California. And UC Merced is where Michelle Obama decided to give the commencement address, which I thought was such a smart move. Anyways, I'd like to see another half a dozen UC campuses that serve as a place where you finish the last two years through our incredible Cal State system that educates a half a million people every year versus like the 60,000 in the entire Ivy League. What's more important to America? Yeah, that's right, Cal State. Anyway, anyway, love UC.
3:22 Scott Galloway? Okay, so what you are highlighting is a key component of brand and brand strategy and something we review in painful detail in my Brand Strategy Sprint at Section 4, and that is if you think about brand as a series of touchpoints between or interactions between the stakeholder, whether it's a client, a business, or the end consumer, and the core brand or the offering. There's pre-purchase, so think of traditional advertising or public relations or sampling. And then there is purchase, and that is distribution, where you actually go into the dealership to buy the car, go into the store, go into the Gap. And then there's post-purchase, what happens after you've consummated the relationship
4:02 Scott Galloway? and purchased the product, whether it's warranties, whether it's a loyalty program, whether it's customer service. And the question is, looking at all three of these areas, pre-purchase and post-purchase, and saying, where do I get a greater ROI? And where you've seen a lot of brands decide they would get greater ROI is that they shifted resources out of pre-purchase advertising into purchase. Probably one of the most accretive business moves in history was Apple's gangster decision in 2002, when everyone was getting out of stores because e-commerce was going to eat the world supposedly, was Steve Jobs' decision to take $7 billion out of broadcast advertising and allocate it towards 550 leases, temples to the brand called Apple Stores. And I believe that Apple's core asset is its brand, that results in the greatest margins
4:47 Scott Galloway? in history. The iPhone is a car that has production volumes of Toyota with margins of Ferrari. We've never seen that before. But it's because it's wrapped around this brand that says you're storyteller, you're smart, that people should consider mating with you because you have an iPhone and iOS is essentially the billion wealthiest people in the world. And what has been the gangster move around the brand? Yeah, it's been elegant products. Yeah, it's been a fantastic spokesperson, both in Steve Jobs and Tim Cook. But I think more than anything, it's been distribution that really enhances the brand. Think about where you buy your Android phone. It's usually an AT&T or Verizon store with it from a guy named, you know, Jim, that's with bad lighting and bad carpeting. And when you go into an Apple store and you think, God, I'd like to hang out here forever. So, distribution
5:30 Scott Galloway? is hugely important. Luxury was the first one to really go all in on distribution. LVMH decided to kind of exit Nordstrom, exit Saks, exit Neiman Marcus, and spend billions to open 750 of their own vertical stores. Richemont, another luxury player, said, no, we're not going to distribute our watches to other high-end mom-and-pop jewelry stores. We're going to open Panerai stores. We're going to open Van Cleef and Arpelle stores. Because the distribution is where there was an under-investment, an opportunity to go vertical. What is the biggest gangster move of Nike over the last 10 years? Simple. They've gone from about 5% or 10% direct to consumer to 30% or 40% because they realized being in a store with a guy dressed up as a referee, holding one Adidas shoe and one Nike shoe,
6:13 Scott Galloway? is not great for the Nike brand. Whereas you go into a Nike store and you think, wow, this is an incredible branded experience. In sum, Tim from Merced, you're talking about brand building pre-purchase and post-purchase. You're talking about distribution. It's been a fantastic form of investment for some of the biggest players. Yes, Tesla does not spend any money on advertising. They do spend money on stores, taking stores into malls where they get foot traffic. It's like a giant 3D billboard. Apple has taught us all that distribution is a key component of driving brand value, led by the original invaders, the original gangsters in distribution, and that is luxury. And we're going to see more of it. There's going to be fewer stores. There are going to be fewer self-supporting stores, but there'll be more aspirational
6:56 Scott Galloway? brands doing revenue, share of revenue deals with the top malls in America. Interesting viewpoint. Thank you, Tim from Merced. Next question.
7:07 Speaker 03 Hey, Professor Galloway. My name is Jonathan from Redmond, Washington, and I have a question about college brand recognition. You recently talked a lot about the power of brand recognition that colleges have and how NYU, UC Berkeley, and your alma mater, UCLA, have gained greater recognition by increasing selectivity while accepting more Pell Grant applicants. As an undergraduate student at UC Davis, whose school just broke into the top 20 universities rated by Forbes, while accepting a student class that is made up of 32% of students receiving federal scholarships, what else should a school like UC Davis do to increase their brand recognition without drastically decreasing selectivity? Thank you for your time, and I want to say your podcast and the one you share with Kara
7:49 Speaker 03 Swisher has educated me and kept me hopeful this last year and a half. Thank you.
7:56 Scott Galloway? Jonathan, that is so nice, and thank you for the nice words. If you DM me on Twitter and give me your address, I'll send you some signed books. I'm just, thank you for saying that. That makes me feel nice. The downside, you know, I get pissed off when people say mean things about me. I'd like to think it just rolls right off of me, but the upside to that is it does, it is meaningful when people say nice things about me. So DM me and I'll send you some signed books. So, look, what you're referring to is there's a tectonic shift, I think, underway in the world of graduate education as it relates to brand equity. And simply put, the primary pulse, the primary signal, it's like, take the Academy Awards times 10, take the Pro Bowl list, take the MVP, whatever award or third-party accreditation
8:41 Scott Galloway? or third-party certification that different leagues give people or different organizations give people. If you're a journalist and you've won three Pulitzer's, you can pretty much get a job anywhere because you've been certified by a third-party. Take any of these times 10, and now you're talking about the business school rankings, kind of pioneered by Businessweek. And they've ended up being terrible for graduate education. Why? Because they included in their rankings an input around exclusivity. And that is the way to get up in the rankings, and everybody studies to the test. Now, why does everybody study to the test? Why are these rankings so powerful? Because young people are very brand-sensitive. To ask a 17-year-old to decide between Michigan, the University of Wisconsin, and Georgia Tech,
9:24 Scott Galloway? and Boston College, he or she doesn't know what the fuck they want. So, people defer to the prestige of the ranking, and unfortunately, so do corporations. We always say that the student is the consumer. No, they're not. The students are the products of higher ed. Our consumer are corporations. And when corporations show up to an increasingly elite, tighter band of universities based on their brand equity, because they think that's the way to select, they only recruit... Someone brought up UCLA or Morgan Stanley. I was the first analyst, and the only analyst in my class at Morgan Stanley from UCLA. Solomon Brothers recruited at UCLA, but when I got into Morgan Stanley, they were only recruiting at Stanford and Berkeley.
10:07 Scott Galloway? They hadn't started recruiting at UCLA yet because they saw UCLA as outside of like the top 10 or top 20 universities. Anyways, the brand equity is so important and powerful because brand is a shorthand for diligence. And when you don't have the skills to do the diligence, i.e. you're 18 or your parents... You just defer to what is the most prestigious brand. And you know that the chances of you getting more job opportunities because more and more firms, the better firms recruit at the top-tier schools. You think, great. And then the ranking is so important. And then unfortunately, the ranking in large part is dependent upon exclusivity. A long-winded way of saying, we lost the script and we turned into luxury brands. And the thing I don't agree about the premise in your question is the way UC Davis and the way
10:49 Scott Galloway? that Regents of the University of California can dramatically improve is to dramatically expand their admissions rates. So when I went to school, UC Davis was still a great school, but I bet its admissions rate was 50, 60%. Now I bet it's closer to 10 or 15. UC Davis is impossible to get into. It is, you have to be freakishly remarkable to get into UC Davis right now. I don't think that's a good thing. I don't think being freakishly remarkable is a forward-looking indicator of your citizenship or your success at the age of 17. Yeah, you have to be good. There is a correlation between how impressive you are as a young man or woman. But in terms of a forward-looking indicator, it begins to flatten.
11:33 Scott Galloway? It's like happiness and money. There is a correlation. Middle-class people are happier than lower-income people. Wealthy people are happier than middle-class people. But once you get above a certain amount of money, there's no correlation. I think the same is true of young people. People in the top half, top third of their high school class that have demonstrated excellence, rigor, discipline, they are more likely to be successful in life, professionally and personally. But the difference between the person that's in the 80th percentile in your school at that point and the person who's in the 98th, based on the metrics we've established for 17-year-olds, there isn't a lot of correlation there between people who go on to be successful, very successful and not successful.
12:15 Scott Galloway? So we need to move back to letting in a lot more kids. It just disappoints me that when I go to these conferences, we celebrate companies that are able to scale at 40 or 60% a year, and yet we haven't been able to scale UC Davis 2% a year. So only the freakishly remarkable get in. So we want better brands, better society, better opportunities, more on ramps to great, great lifestyles. We want to be able to fill these amazing jobs with amazing applicants for which there are a shortage of employees or a shortage of applicants. We need to dramatically expand the admissions rate and the capacity. And this is exciting. The University of California has decided to do this. They've committed to adding 20,000 freshman seats over the next 10 years, which is like,
13:00 Scott Galloway? I believe, adding another UC Davis. But my brother, your brand is fine. UC Davis and the University of California, the fact that you got into UC Davis, quite frankly, Jonathan, means you're an impressive young man. There's just full stop, you're an impressive young man. We need to let in more impressive young men and women and maybe people who are in the 90th percentile in their class, not the 99th. That's okay. The difference between 90 and 99, we don't know which of those two is going to go on to be a senator or build wells in Africa or come up with the next patent for a vaccine. We don't know that. Anyways, your brand is on fire. We need to transition some of that incredible aspirational brand equity into not only prosperity, but progress from a societal viewpoint and let in more kids.
13:45 Scott Galloway? Anyways, thanks for the question, Jonathan from Wedman, Washington, and congratulations on being at Davis. Good to be Jonathan. Good to be Jonathan. Davis, Davis. We have one quick break before our final question. Stay with us.
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16:13 Scott Galloway? Welcome back. Question number three.
16:15 Speaker 04 Hi, Prof G. My name is Ben from Oakland, California, right across the bay from your favorite city, San Francisco. My question focuses on something that you talk very honestly about, and that is fatherhood. My wife and I are expecting our first child next month. We're both very excited and slightly terrified, and we're looking forward to our new titles of parents. My question is, if you could do it all over again, from the beginning, what would you do differently in regards to raising children? And what would you double down on? Thank you for taking the question and most importantly, go Bears.
16:47 Scott Galloway? That's right, go Bears. Oakland, California. I live in Rockridge, a wonderful place in Oakland. First off, congratulations. One thing I would not do is ever be in the delivery room again. I found it so disturbing. They were much more worried about me. I had to sit down. I was so nauseous. I don't, I don't buy this notion that men should be in the delivery room. And I know that sounds very 60s, but whatever. Sue me. Look, a couple of things you're gonna feel, or things I felt. I was totally freaked out with my first kid. I was worried I didn't have enough money. I had not been especially good at relationships and I was worried that, you know,
17:28 Scott Galloway? yeah, now if I fuck up this relationship with this partner, it's gonna have more impact. The whole thing kind of freaked me out. I think that was somewhat natural. I was also very excited. I did not love this thing when it came out. People talk about you're just instantly in love with it. I fell in love with my boys over time, but I, it just looked like a science experiment to me. So I think, and maybe, I don't know, maybe I'm just weird or fucked up in the head, but if you feel those things, know that other people feel them as well. Fear, anxiety.
17:59 Scott Galloway? I would say initially, what I would do, that I, well, I did do, and I think was smart. I think you're there to be very supportive of your wife. I think you have responsibility for the economics of the household because I think generally speaking, women, at least early in the child's life, are more important to the kid. You're mostly useless and we pretend that it's a ton of fun the first year. It's not. And the dad doesn't play a huge role. I think your role is to be supportive of your, of your wife and do the night feedings, make sure that your wife gets some sleep. And recognize that having kids is really hard and stressful, especially initially.
18:40 Scott Galloway? It sounds, it's easy to say for me, but if you have the flexibility and the economics, I would have a second one sooner rather than later. I find having two is three or four times better than one. I think just having one, it creates too much pressure or tension on that one child. I was an only child. And I think that person most likely grows up a little bit more selfish. I think the negotiation and the arguments and the tension and the joy that two kids bring to a household is really wonderful. So I'm really glad I did two. But you know, just recognize there is an arc to happiness and across almost every socioeconomic group and every culture and every geographic boundary, happiness looks like a smile and
19:22 Scott Galloway? that is up until this point, your life was mostly about Star Wars and football games and getting drunk with buddies. And then you get dramatically less happy because kids and your career are stressful. You realize that you're not going to be senator or have a fragrance named after you. And generally speaking, people are the least happy from kind of ages of 25 to 45. So if you feel stressed out and a little bit unhappy, that's okay. That's part of it. But look, it's impossible to explain until it happens, but you do fall in love with this thing. I am, the only thing in my life that's more important to me than me, because I'm a very selfish person, are my kids. And it's also hands down the most
20:07 Scott Galloway? rewarding thing. It's also wonderful that you're having kids. I think it's great that people, having a kid is kind of the ultimate expression of optimism and a commitment to your partner. Because whether you like it or not, you're in each other's lives for 18 years. And the, you know, and there's some truth to the fact that the best, the best thing you can do for your kids is to be a very generous, loving person to your partner. Because they'll see that and it creates a harmonious lifestyle. Ben from Oakland, congratulations to you and your partner. That's all for this episode. Again, if you'd like to submit a question, please submit a voice recording by visiting officehours.progmedia.com.
20:53 Scott Galloway? Our producers are Caroline Shager and Drew Burrows. Claire Miller is our associate producer. If you like what you heard, please follow, download and subscribe. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you on Thursday. A quick reminder before we sign off, my new book, Adrift: America and 100 Charts, is now available for preorder on Amazon. Please preorder it. Preordering is super important in terms of building momentum. The team, we put a ton of work into this. I think you'll enjoy it. It's an attempt to sort of distill down. The macro and microeconomic trends, societal trends that make up the fabric that is America, including some suggestions on how we become more moored to each other,
21:36 Scott Galloway? connected, and how this great American experiment continues to be the best experiment in the history of mankind. Anyways, Daddy Wants a Bestseller, preorder now.
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