Prof G Markets: Reddit Reignites the IPO Market, Microsoft’s AI All-Stars, and Private Equity Perks

Scott breaks down why he bought shares in Reddit’s IPO and what he thinks its first day pop means for the IPO market. He then takes a look at Mustafa Suleyman’s controversial move from Inflection AI to Microsoft. Finally, he explains why Calpers is increasing its investments in private equity — the best performing asset class of the past decade — and questions whether those returns are sustainable or cyclical. Listen to our interview with Mustafa Suleyman from September Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit 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.

• 0:00Speaker 00

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• 0:01Speaker 01

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• 0:20Speaker 01

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• 0:59Scott Galloway?

  This week's number, 300,000. Not so many condoms will be available for athletes at the Olympic Village in Paris this summer. True story, Ed. I had a neighbor and he asked me, out of nowhere, "If you woke up and found a used condom in your ass, would you tell anyone?" And I, of course, said, "No." And he said, "You want to go camping?"

• 1:19Ed Elson?

  That's good.

• 1:20Scott Galloway?

  It's not that good.

• 1:21Ed Elson?

  That's really not that good.

• 1:34Scott Galloway?

  Okay, Ed, today we're discussing Reddit's IPO. That's right, that's right. We're discussing Reddit's IPO, Microsoft's new AI talent, and CalPERS' private investments. Here with the news is avid camper, PropG Media Analyst, Ed Elson. Ed, what is the good word?

• 1:54Ed Elson?

  It was my birthday yesterday, so I'm pretty happy about that.

• 1:57Scott Galloway?

  How was that? What do you do when you're your age, when you turn 14?

• 2:00Ed Elson?

  You know, I just sort of did my favorite thing, which is worked on this company last night.

• 2:06Scott Galloway?

  I bet. No, really, what'd you do?

• 2:08Ed Elson?

  Yeah.

• 2:08Scott Galloway?

  What'd you do?

• 2:09Ed Elson?

  That is, I'm not lying. I'm going to celebrate this weekend, but I was... I was recording TikToks with you.

• 2:16Scott Galloway?

  Yeah.

• 2:16Ed Elson?

  And I did some research for this.

• 2:18Scott Galloway?

  You're so hip and young. But what do you, I'm kind of fascinated. I feel like I'm watching National Geographic. How do young people party?

• 2:26Ed Elson?

  Oh, my God.

• 2:27Scott Galloway?

  What, like, give me, break it down, because people, I'm getting more and more people who are more and more curious about you. Where will you go to dinner and then where will you go out drinking?

• 2:36Ed Elson?

  I'll go to some sushi restaurant where you can apparently book like a private room and play your own music and stuff. So that'll be pretty fun. And then a friend of mine is having a party at some sort of secret location. So I don't really know. I don't really know about that. But I don't know. We go clubbing and we go to house parties. Probably the same shit that you do. Are you gonna get me a birthday present, by the way?

• 2:57Scott Galloway?

  Boss, I get you a present every day. It's called a J O B. It's called a J O B. Am I gonna get you a present? Yeah, that's just so me, isn't it?

• 3:06Ed Elson?

  Well, I thought you would have turned the corner off your cat experience, no?

• 3:08Scott Galloway?

  No, I didn't. I did not see, I saw Nana and I saw my death, but I did not see gifts for my 25 year old employees. That's something, I miss that part of the trip. I miss that part of the trip.

• 3:20Ed Elson?

  Well, as always, next year, I guess.

• 3:22Scott Galloway?

  Yeah, get on with the news.

• 3:23Ed Elson?

  Let's start with our weekly review of market vitals.

• 3:33Ed Elson?

  The S and P 500 hit another record. The dollar rose, Bitcoin dipped, and the yield on 10 year treasuries fell. Shifting to the headlines. The Federal Reserve held interest rates steady and signaled that three rate cuts will come in 2024. Still, Fed Chair Jerome Powell did not indicate when those cuts will begin. The Department of Justice sued Apple, stating the iPhone ecosystem is a monopoly. The suit also identifies anti-competitive practices across Apple's other businesses, including advertising, search and news. Apple shares sank 4% on the news. Unilever is spinning off its ice cream business, which includes Ben and Jerry's. The consumer goods company is also laying off 7,500 employees. That's about 6% of its workforce. Shares rose 6%.

• 4:18Ed Elson?

  Nvidia held its annual GPU Technology Conference, where CEO Jensen Huang introduced the company's next generation AI chips called Blackwell. The company also unveiled new robotics offerings and a software to help companies develop their own LLMs. And finally, shares of Asteria Labs, the data center chip company that we discussed last week, soared 72% above its IPO price on its first day of trading. It was the fourth largest listing in the US this year, and it set a high bar for Reddit's IPO, which came the next day. More on that later. Scott, where do you want to start?

• 4:52Scott Galloway?

  The Apple thing is kind of interesting. It appears that Apple, who has definitely sort of avoided or stayed out of the crosshairs of the DOJ, it feels like people are no longer buying nice guy Tim Cook. Apple is just here to protect your privacy. It feels as if, my understanding of the case, and our editor in chief, Jason Stavris, came on off mic to help me understand it, is that essentially Apple is debilitating or making it more difficult for super apps to emerge. And we've always said this, we've always said that the competitors to Android and iOS are these super apps that can do everything, are sort of your, are your iOS to the digital world. They can do music, order food, order transportation. You know, we think of, is it Tencent?

• 5:37Ed Elson?

  WeChat, owned by Tencent, yeah.

• 5:39Scott Galloway?

  Yeah, WeChat. And that is sort of a, iOS and Android have gotten very used to, they're sort of in a détente, and that is iOS says, all right, you can have 90% of the world, or you can have 85% of the world Android, we're going to have the 15% of the world that matters. And that is, we're going to have the billion wealthiest people, you're going to have the six and a half billion less wealthy people. And they've sort of get along. And it's a much different approach. Apple is about subscription, they claim, you know, much more privacy, it's about signaling aspirational value. And Android is just this incredibly util piece of software that you can get for free. And not only that, if you use Android, you can get the phone that hosts the Android operating system basically for free.

• 6:24Scott Galloway?

  And they live in sort of, I don't know, they coexist, if you will. But Apple doesn't want to let anyone come in and start offering super app-like capability, because that, to a certain extent, that diminishes the value of iOS in their App Store. And these folks have said, They are unfairly making it difficult for them to operate within the iOS environment, charging them more, making certain kind of payment features difficult. And they've sort of said, fine, we're taking it to court.

• 6:51Ed Elson?

  One accusation I found kind of interesting, they said, quote, "Apple protects its smartphone monopoly by degrading cross-platform messaging apps." And the example being, when you text someone on an Android, it kind of sucks. Like, the messages are green, you can't use the thumbs up reactions or the heart reactions and all those other small functions. One exchange that they highlighted is actually something that we saw live at Code. And it was this interaction between Tim Cook and one of the attendees. I don't know if you remember this, but there was this guy during the Q and A who was saying that texting his mom on his Android sucks and that he doesn't like that the messages turn up green.

• 7:30Speaker 05

  Not to make it personal, but I can't send my mom certain videos or she can't send me certain videos. And so we leave. Buy your mom an iPhone.

• 7:38Ed Elson?

  And the DOJ saw that quote as evidence that this is a monopoly and that they're forcing consumers into a monopoly. I saw it as evidence that Tim Cook is funny and smart and also that Apple is just great at establishing moats. So I'm wondering if you think, just as an example, that green messaging function, which, other than looking ugly, in my view, isn't really a big deal. Do you think that that is reasonable grounds for antitrust enforcement?

• 8:04Scott Galloway?

  Like, a green text message or a differentiated box, other than it sort of says, "This individual isn't wealthy, you should not meet with this person." I mean, that's, at the end of the day, when you go out and you go to your cool thing where you play music and eat sushi and then you head out, I don't know. By the way, just a little life lesson here.

• 8:25Ed Elson?

  Here we go.

• 8:26Scott Galloway?

  Just a little life lesson, like, I can't afford condoms because I've got 14 kids to feed. So.

• 8:34Scott Galloway?

  I was excited to work that in. No, but when you go out, you're, this is what happens in mating. You start immediately, you'll be like, oh yeah, I work at Prof G. I'm kind of a big deal.

• 8:46Ed Elson?

  Yeah, everyone knows what Prof G is.

• 8:49Scott Galloway?

  Yeah. Oh, no, that's a, that is literally what you call the weak. That's like the weakest flex in the world.

• 8:54Ed Elson?

  You know, if they know it, if they know you, it's a, it's a big flex. But yeah.

• 8:59Scott Galloway?

  Yeah. It's like when I tell people, you know, I was on the board of Gateway Computer and people like, oh, well, good for you. Anyways, you'll go out, but I'm, I'm half kidding here. I think the power of Apple is it's the strongest. You, you will meet people, you'll talk about where you work, you'll talk about, oh, I went to Princeton, which means my parents are rich. And you'll start dropping what I call mating is essentially your age, a series of controlled boasts. And the most subtle boast is quite frankly, is a, is an iPhone. It just says, because if you don't have an iPhone, it's sort of like, oh, it's unlikely this guy has a home in Montauk and can take me to St. Bart's. I mean, that's what having an Android phone sort of says. And this is incredibly powerful.

• 9:44Scott Galloway?

  The brand is incredibly strong. The question is whether or not this qualifies as anti-competitive behavior, where they basically make it impossible for anyone to compete, that if somebody, if because they control the rails and they have the dominant operating system among the wealthy, and you know, they control the underlying operating system, do they go into certain verticals and make it impossible for anyone to compete with them? That's anti-competitive behavior. And I think that's what these guys are saying. The Fed held interest rates steady and but signaled three rate cuts will come. I don't know how interest rates responded to that. It feels like interest rates are coming down, not as aggressively or not as fast as I had predicted, but they're still, they're still signaling that they're gonna, you know, three rate cuts is nothing to laugh at. And typically the market tries to be a predictions machine and says, okay,

• 10:29Scott Galloway?

  we're going to bring interest rates down ahead of those rate cuts. My favorite here is Unilever spinning off its ice cream business. I mean, granted, I'm a narcissist. I actually think we had something to do with this. I had. A few people who work at Unilever reached out and asked about our stories on GLP-1 drugs. And I think they have done the math. I think they've said, okay, there's a small group of people who just gorge on ice cream and are disproportionate number or represent a disproportionate share of their sales. And I would imagine an economist and someone very smart there has said, these are the people that are going to be on GLP-1 drugs first. And ice cream, or specifically our best customer who gorges on ice cream, is going to stop, you know, there's a non-zero

• 11:12Scott Galloway?

  probability in the next 24 months, they're going to get a prescription and stop gorging, which won't take our sales down. You know, it's not 2% of the public on GLP-1 drugs. It won't take our sales down 2%. They'll take them down 20 or 30%. In addition, their ice cream group was, I guess, was growing around 2% a year and their core business is growing 6 to 8. Really good CEOs are always thinking about the disposition of assets, of actually shrinking. What do I mean by that? Jeff Bukas, the guy who ran Time Warner, he sold the magazine group. He saw the magazines were going into decline and he said, but they still generate a lot of cash flow. I'm going to sell them. He saw when cable businesses were trading at crazy multiples, he said, cable companies are going to have a tough road and they're trading at good value. Let's

• 11:57Scott Galloway?

  spin it off. Let's sell it. Now, having said that, they do get compensated if the share price goes up, but that takes a certain type of maturity. Now, in this instance, if you have a company that's growing at 8% and you have one division that's growing at 2%, the disposition of that division will take your growth to 9 or 10%, which should naturally increase the multiple on your earnings. So the money you get from the sale, hopefully you get a good price, plus an expansion in your PE multiple, because now you're growing 10% instead of 8%, because you shed the group that was only growing 2%, that is accretive to shareholders. That's a good thing for shareholders. And most CEOs just naturally don't think this way. Just on the Ozempic point.

• 12:43Ed Elson?

  The relevant statistic here, I think, is that according to Morgan Stanley, the number one food that Ozempic users cut back on as measured by average spend is ice cream. So, yeah, I don't think this is a coincidence that the worst performing business for Unilever last year was the ice cream business. You mentioned, sales rose 2%, prices rose 10% for ice cream. So, I mean, this was a terrible year and it's a great example of those Ozempic downstream effects in business, which we've been predicting and have been discussing for almost a year now. The second story I find really interesting here is energy consumption, which we discussed last week. And this is coming at a time when Unilever is trying to reduce its carbon footprint.

• 13:27Ed Elson?

  It's trying to shift to renewable energy. And apparently, cooling the ice cream accounts for 10% of the entire company's carbon emissions, which is just crazy to me. It's one of the biggest energy consumers for the whole company. So if there's anything I've learned from this week and last week, where we discussed keeping data centers cold, it's that cooling stuff, whether it's ice cream or a data center, is just a huge pain for a business. And it feels like, you know, with these sequential stories, this is probably going to become a theme now, where investors, management are going to spend a lot more time trying to figure out, okay, which parts of our business are consuming more energy than they need to?

• 14:12Ed Elson?

  Is there any way that we can shed those and offload those businesses? And in this case, it turns out that the highest energy consuming business is ice cream.

• 14:19Scott Galloway?

  Yeah, it just, it feels like the moons are lining up against ice cream. I think this is a really smart move. Do you eat a lot of ice cream?

• 14:26Ed Elson?

  Not really. I've been eating really healthy recently.

• 14:29Scott Galloway?

  Yeah, by the way, did, have I told you that since my ketamine therapy, I haven't had alcohol?

• 14:35Ed Elson?

  I was actually going to ask you that because you sounded really hungover on our Monday morning.

• 14:39Scott Galloway?

  No, that's how I sound when I don't drink the night before. I'm not exaggerating. I've had, I don't, I don't think my body, I think my body became so used to alcohol on a regular basis that I'm having headaches and withdrawals. It's like, where's the, where's the devil water daddy?

• 14:56Ed Elson?

  That's, that's cold.

• 14:58Scott Galloway?

  I think that's called being an alcoholic, but yeah. Withdraw? Yeah. I don't want it. I think this is gonna be enormous. We keep talking about this, but. What is? Well, GLP one. GLP one, yeah. I thought you were saying ketamine is gonna be enormous. Yeah, maybe that too. During the trip, it's the only thing, and it seems to be the only thing in the universe, but I believe Unilever is selling their ice cream unit, multi-billion dollar unit because of GLP one drugs. They wish they'd sold it a year ago, but they're like, every day, we're gonna get a lower and lower price because they're, they see the writing on the wall. Can we talk about Nvidia? Let's.

• 15:34Scott Galloway?

  10,000 people attended in person at the San Jose Sharks, 10,000 people for Nvidia and around 100,000 tuned in virtually. I mean, one of the reasons this company, obviously being an AI, excellent execution, explosive growth, but Jensen Huang is a great storyteller. And he's got the visual metaphor with the jacket. You know, he's, he's handsome. He, you know, I just think he's, he's, he's great at it. He's the real deal. This isn't an overnight thing. He's not a child. He's not sending pictures of nooses and, and pills to 14 year old girls. You know, he's easy to like. The thing that I found so interesting was the Nvidia inference microservice. And it's a subscription software that will help companies deploy their own L L Ms.

• 16:20Scott Galloway?

  It'll cost about $4,500 per GPU per year. So they'll say, all right, we're, it's like, we're moving to a software model. And this answers the question that they're trying to wrestle with every day. How on earth are we, Nvidia, gonna grow into our valuation? And there's two ways to do it. One is the explosive growth of top line and bottom line, right? You know, their top line growth in there, which should translate to growth in their bottom line. But also the business we're in such that our multiple on those earnings goes up and the market loves subscription. A dollar in profit from a transactional business, nonrecurring, just selling the chips gets X valuation.

• 16:59Scott Galloway?

  The dollar you get from subscription services gets one and a half to two X. So their attitude is all right. If we're gonna grow our top line by X, if 20 or 30% of that top line growth can be subscription. It's going to expand our natural PE and we can start to grow into this valuation. It's one of the, you know, we have this thing called the T algorithm where we look at the components of a trillion dollar company. And typically, the companies that are moving towards a trillion or a blown by it have some sort of subscription element. And I would say the first thing you should do, or one of the first things you should do in a company is to try and figure out how you build a recurring revenue bundle or subscription plan into your business. And even if it's a small part of your business, as long as it's growing faster than the core

• 17:43Scott Galloway?

  part of the business, the transactional part, the market smells it and starts to expand your multiple on earnings. In addition, internally, you start thinking differently. You start thinking about the customer relationship. Instead of thinking, how do I get someone into my store to buy a bicycle? And then, once they've bought a truck bike, okay, how do I sell another one? If Trek says, we're going to have a subscription service and we're going to charge people, hardcore bikers, I don't know, 50 bucks a month for a great bike, tune-ups, access to a community, that taps into a flaw in our species in that as time goes much faster than the human brain perceived it. So the example I use is Equinox. I think, okay, Equinox, I think it's about 250 bucks, I go to the Equinox in Soho.

• 18:26Scott Galloway?

  Some of the best looking gay guys in the world, Jesus Christ, I mean, really good looking men. That's neither here nor there. And for 250 bucks, I get to go to this great gym and I think, well, okay, I work out three or four times a week, that's 12 times a month, that's 20 bucks. No, I don't. Between traveling and also living in London, which puts a little bit of a crimp in my Soho Equinox visit. You know, I'm at Soho Equinox twice a month, which means technically, I'm paying 120 bucks. And if they said to me, oh, great to see you, Scott, it's 120 bucks to work out today, I'd be like, well, I think I'm just going to go home and do some sit-ups. But because they've convinced me to move into a subscription model because I do the wrong math, because humans can't perceive or calibrate time.

• 19:11Scott Galloway?

  It's a great business. You always want to be in the subscription business. So I thought that was super, super interesting. Any thoughts on Nvidia?

• 19:19Ed Elson?

  So the takeaway for me is just at a very basic level, just how culturally significant this company has become in basically a matter of months. I mean, if you had told us that Jensen Huang would be selling out the SAP Center a year ago, we just wouldn't have believed you. And if you just measured the audience size, this was even bigger than the iPhone launch. So, you know, technology aside, I think you just got to hand it to Jensen Huang. He is riding this AI wave for all it's worth, and it's working really well.

• 19:53Scott Galloway?

  The thing that strikes me is it's so uniquely American. This would just never happen in London. You would never have the O2 Center sold out for the CEO of Unilever or it just, America is so obsessed. We have, we have financialized everything. It's all about money all the time. I think of the CEO of Novo Nordis said, I'm taking over Copenhagen or where are they? Where the fuck is Novo Nordis? Denmark?

• 20:21Ed Elson?

  Yeah, Denmark.

• 20:22Scott Galloway?

  I don't think they'd sell out a stadium. I think they'd be like, okay, good for you. Now pay your 90% taxes and shut the fuck up.

• 20:28Ed Elson?

  Yeah.

• 20:28Scott Galloway?

  So this is a, it really is an amazing thing. But again, it's the move to subscription and they're trying to figure out how to grow into their market capitalization. Oh, wait, shares of Astera Labs?

• 20:39Ed Elson?

  Oh, yeah.

• 20:40Scott Galloway?

  That's a big one. I mean, that, that thing was up 72%. And I looked at this thing and it went from 80 million to, I think, or 85 million to 120 million. So it has good growth, 40, 40% growth. But that's not like Nvidia like growth. But it, after it's pop yesterday, it's got about a nine and a half billion dollar market cap. This thing's trading at its 70 times revenues? I mean,

• 21:06Scott Galloway?

  Come on, that is striking. So be clear, I don't know for a peek at AI, but I mean, we are in the Himalayas here around AI in terms of valuation. This is a small company and it's growing, but it's not explosive growth. And it gets a $9.5 billion market capitalization. I thought this was extraordinary and even more so, and this will go into our, our next story, I think it kind of turned on the landing lights for the IPO market. And up 72% on the, I think it was the first trade or when it closed on its first day of trading, that's extraordinary and that is a really good signal for the IPO markets, specifically the investment banks that make a lot of money and have a whole ecosystem around IPOs.

• 21:51Ed Elson?

  Yeah, I mean, we should just shout out Mia Silverio, who is our research lead. She did the analysis on this stock. She's the one who brought it to our attention last week. I like what you said last night. She needs to open up a hedge fund and you and I can just run the media on.

• 22:04Scott Galloway?

  Yeah, we'll just be in marketing.

• 22:06Ed Elson?

  Yeah, we'll be like the podcasters in residence or something. She can do all the real work.

• 22:09Scott Galloway?

  She's our chief investment officer, but yes, she's brought, she's now brought to our attention, two companies she thought were going to see an acceleration in the stock price. One was a downstream manufacturer for Ozempic and this one was a, you know, these guys make chips that help you figure out manufacturing of AI or something like that.

• 22:27Ed Elson?

  You nailed it.

• 22:28Scott Galloway?

  Yeah, AI, AI, whatever.

• 22:31Ed Elson?

  Yeah, 70%.

• 22:33Scott Galloway?

  Yeah. So Mia, please find one more and I'm gonna absolutely double down on this.

• 22:40Ed Elson?

  We'll be right back after the break with a look at Reddit's IPO.

• 22:54Scott Galloway?

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• 23:39Scott Galloway?

  Find out why Nutraful is the best-selling hair growth supplement brand at nutraful.com, spelled N-U-T-R-A-F-O-L dot com, promo code PROP G. That's nutraful.com promo code PROP G.

• 23:57Scott Galloway?

  Support for the show comes from Upwork. Trying to scale your business? At some point, you're probably going to hit a point where you need some help. Sometimes the best way to break through that is bringing in the right talent at the right time. Upwork can help. Upwork is a one-stop platform where you can find, hire, and pay expert freelancers across more than 125 categories. Whether you need specialized skills for a single project or extra support to keep up with demand, it's easy to connect with experienced professionals, review their work, and find the right fit. You can move faster without taking on the commitment of full-time hires. And for businesses that need the very best talent, Upwork Business Plus provides access to the top 1% of freelancers on the platform. AI-powered matching connects you with qualified candidates in under six hours, cutting down the time spent searching.

• 24:40Scott Galloway?

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• 25:07Scott Galloway?

  Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. The regentic trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?

• 25:52Scott Galloway?

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• 26:20Ed Elson?

  We're back with Prof G Markets. Reddit finally went public at $34 per share, the top of its expected range. The stock opened at $47 per share, however, and popped as much as 70% in its first day of trading. At its peak on Thursday, the company had a market cap of nearly $11 billion. That's well above its IPO valuation of $6.5 billion and even surpasses the $10 billion valuation the company received in the private markets back in 2021. Scott, we've been talking about this IPO for a long time now. What do you make of these initial results?

• 26:53Scott Galloway?

  The IPO market is back. I mean Reddit was, in many ways, a really important IPO in 2024 because a big, recognizable consumer internet company. It's the first social media IPO since Pinterest went public in 2019. And at one point, it was up 70%, it closed up 48%. Tomorrow, not even tomorrow, today, a bunch of boards, without even knowing it, have decided that they're going to tell their CEO to file an S1 and that they're going public. You're about to see a dramatic uptick in the IPO business of JP Morgan, Goldman Sachs, and Morgan Stanley, because there's a lot of good companies.

• 27:33Scott Galloway?

  I mean, you had, I think, something like 330 IPOs in 2021, and 90% of them or 80% of them because they were SPACs or below their offering price. And the market just felt like it got its eyebrows burned off. And there were only, I think, 70 IPOs last year, which is, the last 24 months have been two of the driest years in the world of IPOs in a long, long time. A lot of pent-up demand, a lot of money on the sidelines, a lot of good companies waiting to go public. And these companies dipped their toe in the water, and now they are doing the Mark Spitz like butterfly. I mean, these are big, big one-day gains. In some, baby, we're back. The animal spirits are back. You're going to see a bunch of companies that are ready to go, line up, you know, do their confidential filing, whatever it is.

• 28:18Scott Galloway?

  This was a big day for the IPO market. Now, when you look at the company, it's now trading at a price-to-sales ratio of, what did it do, 800? No, actually, it's now trading at about 11. It was priced at eight times revenues, and that just gives you a sense for media, even digital media versus AI, right? Asteria is trading at 70 times revenues. Reddit, even after its pop, is trading at about 9.5 billion, and it's trading about 12 times revenues, right? So there's just a difference. But 12 times revenues for a company that's growing, it grew about 20% last year, is pretty healthy. And the question is the following.

• 29:00Scott Galloway?

  It's a global brand. It has the most traffic in the US of a company that's not owned by Alphabet. So some very positive things, but the analogy I use is my dad. My dad was always trying to give me these tests to see whether I was like going to be successful or not. It was really like, it was really difficult. It was really difficult. He used to tell me if I couldn't run a six minute mile by the time I was 14, I lacked grit and was not going to be successful.

• 29:22Ed Elson?

  Really?

• 29:23Scott Galloway?

  Yeah.

• 29:24Ed Elson?

  This explains.

• 29:25Scott Galloway?

  A lot.

• 29:26Ed Elson?

  Explains a lot, yeah.

• 29:27Scott Galloway?

  Actually, I think some of that was good. I think a little bit of like, a skosh of abuse, abuse-ish. I think a little bit of abuse is a good thing for a boy.

• 29:37Scott Galloway?

  Anyways.

• 29:37Ed Elson?

  Did you, did you finish it?

• 29:38Scott Galloway?

  The six minute mile?

• 29:40Ed Elson?

  Yeah.

• 29:40Scott Galloway?

  Yeah, my dad, something, um, now I'm being serious.

• 29:43Ed Elson?

  Yeah.

• 29:43Scott Galloway?

  My dad used to do, he had this old handbook of the Royal Navy workout. It was basically burpees. We bought a pull-up bar, push-ups, sit-ups. And we used to do them together and then we would go for a run on the beach before he left my mother for a stewardess at Continental Airlines. But we're going to ignore that. And it was wonderful. I, I still work out three or four times a week and it's because my dad got me started, you know, really, really early. It's something I do with my boys. My son, um, pretty much every night at 9:00 PM FaceTimes me and I take him through like a, just a quick 10 minute workout. Cause he's like, me is really skinny.

• 30:14Ed Elson?

  That's so nice.

• 30:14Scott Galloway?

  It is nice and I want him, I want to give him that taste of working out and get him into those routines. Cause it's been, it's been a real gift for me in terms of managing, managing my depression and just feeling better about myself. Anyways, it's, it's, um, oh my God, here. The price to sales of Reddit. There we go. That was a segue. Hold me, Ed. Hold me. Hold me. Oh yeah, my dad. Okay. My dad used to say to me, he used to say, all right. He used to say, the difference between glass half full, like a good salesman and a bad salesman. My dad was Scottish and handsome, which spelled salesman and had no education.

• 30:58Scott Galloway?

  And he was a salesman. He literally sold shit. He sold Scott's fertilizer. He'd go into, he was a charming guy. Everybody loved him and he'd go in and he'd sell like a ton of fertilizer. But anyways, he said to me, all right, a shoe salesman goes to Africa. And then he comes back and he goes, yeah, it's not going to work here. Nobody wears shoes. And he goes, another salesman goes to Africa, comes back and says, this is amazing. No one has shoes. The way I bridge that to Reddit is the following. Reddit is probably the worst monetization of any platform in digital or any big platform. I think Meta gets something like 50 to 80 times the monetization per user on its platform as Reddit. Reddit has done not a very good job of monetizing its enormous traffic.

• 31:43Scott Galloway?

  It's a relatively small business, you know, 800 million, given its traffic, right? Now, is that, is that, nobody buys shoes here or no one has shoes? Or this is great, no one has shoes. Does that mean that if they just start monetizing at a mediocre? If they monetize even at what Snap or Pinterest do, they're gonna, their revenues are gonna explode. So that's the question here. Is the lack of monetization an opportunity? Or does it say something structurally about Reddit that they will have a difficult time figuring out?

• 32:14Ed Elson?

  You mentioned the idea of like, is it, is it a structural problem with Reddit? And this company's been around for 20 years. I think a lot of people or a lot of the bears will argue, yeah, this is structural. I mean, yeah, 800 million in revenue last year on 850 million MAUs. And they lost $91 million. The company's still unprofitable. It has been for, for two decades. Now, the company has said that they're looking to diversify their revenue streams. And one example that they point to is that they're now pursuing these data licensing agreements with companies like Google. And we had that conversation a few episodes ago. But those agreements are only expected to bring in on an annualized basis, $66 million in revenue this year.

• 32:59Ed Elson?

  So that's just not enough. So I guess the question for you as a bull and side note, I'm wondering if you've bought any of the Reddit stock. But what other revenue generating opportunities do you think Reddit can actually look into here?

• 33:14Scott Galloway?

  So side note, I did buy shares and the answer to your question is I don't know. But the reason I bought shares here. Okay, first off, let's talk about the negatives. They haven't figured out a way to monetize this audience. I hate the UI. It's like Lycos and AltaVista called and wants their user interface back. I mean, it's just, the site is ugly. It's, you know, they have not, it's a small business, given the traffic. So there's a lot, it's advertising, it's not subscription. There's a lot not to like. Six and a half billion valuation of pricing, which is just not a lot. And the question I would put forward to you, that I put forward to me, and the way I answered it said, okay, we should buy this. One, it's a global brand, I'm still a brand guy, I think that matters.

• 33:59Scott Galloway?

  And two, would you rather have a platform with a small amount of traffic? I mean, really small, but did an amazing job of monetizing the users? Or the third most traffic site in America that was doing a shitty job monetizing? Which would you prefer to own? I mean, I think I'm with you, I'd rather the Reddit. This is, and I always like to draw conclusions to, or draw analogies to total non sequiturs. But if you look at America, right? If you look at the biggest problems of ALS, income inequality, food insecurity with our kids, teen depression, a discourse that's become increasingly coarse, right? Homelessness, all these things.

• 34:41Scott Galloway?

  I'm not saying those are easy problems, but I can look at any one of those problems and look around the world and find a lot of countries who have mostly figured it out. What we have figured out is the really hard problem that no one else can figure out. And that is, how do you bring together this alchemy of grit, talent, capital, innovation, technology, culture? To create companies that five minutes after their earnings, increase the market capitalization by $240 billion? So would you rather have a country, like where, where does the, in 20 years? Where do you have a better shot of having just a wonderful society?

• 35:23Scott Galloway?

  In a nation that is not able to create nearly as much economic value, but has, for whatever reason, figured out some of these social ills, or a nation that just prints Benjamins, I mean, just for whatever reason, continues to innovate and create massive prosperity, but hasn't figured out a way to solve some of these social ills. Which would you rather have? I would rather have America. I feel like the most frustrating thing for me about America is like, we've figured out the hard stuff. We've figured out the hard thing here. And there's absolutely no reason we should have food insecurity and homelessness in a nation that can figure out a way to create a quarter of a trillion dollars in one company on its earnings release. There's just no fucking excuse.

• 36:08Scott Galloway?

  So I've always thought, okay, that means America, you'd like to think America is a good long-term bet. Now, bringing it back to Reddit, I think it is much harder. If I challenged you, I said, all right, Ed, you got to figure out a way to monetize this massive traffic at Reddit, or you have to figure out a way to exponentially grow the traffic at a much smaller platform? I think you'd pick the former. I think it's a, the, building a product that resonates with hundreds of millions of people, that's the hard part.

• 36:46Ed Elson?

  Microsoft hired Mustafa Suleyman, the co-founder of Inflection AI, as the head of its consumer artificial intelligence business. Suleyman is also taking most of his Inflection staff with him to the tech giant. Inflection is one of the highest-profile AI startups in the market and one of OpenAI's most formidable competitors, perhaps until now. Last year, it raised $1.3 billion in funding, and it launched a consumer chatbot called Pi. Scott, you also spoke with Suleyman on the ProfG pod in September about that product, as well as about his priorities at Inflection.

• 37:20Speaker 06

  I'm committed to a business model where the user pays. And that, I think, is the right thing to do. It is not the maximally profitable thing to do.

• 37:32Speaker 06

  We are a public benefit corporation, which means that first and foremost, whilst I am focused on returning value to my shareholders as a number one priority, my adjacent equal number two priority is to make sure we do the right thing. Scott, any reactions to that clip in light of his move to Microsoft?

• 37:51Scott Galloway?

  Well, first off, just on the statement about this whole public benefit thing. I think these companies, I think private companies are so good at making money, they shouldn't be trusted to do anything else. And I just worry, I think Mustafa is a good man. I think he's, you know, an ethical person. But what I have found and observed in companies is that, and it goes back to the financialization of everything. Then when you finally put yourself in a position of power and in the seat, right age, all the moons lined up and you're like, oh, I could be a billionaire. I think the amount of incremental decisions leading you to a bad place are almost impossible to resist. That's my observation of these individuals, that they will pretty much talk themselves.

• 38:35Scott Galloway?

  I wouldn't describe them as immoral, I would describe them as amoral. And that they believe, okay, we're unfairly criticized. If I do the following things, I can get to this company in a position of power and will do the right thing. And wouldn't it be nice for me to be a billionaire so I could build hospitals and be loved? And that's what it means to be a billionaire in the United States. It means to be loved by almost everybody. And 11,000 people show up and root you on and you get to be the athlete that you never were. Right? So the temptation to be compromised is just too great. So I don't like it when these individuals come out of the gates saying, we're taking a different approach to business. Because I have found that they all sort of say the same thing and I call it Sandberg-ing. You know, I believe Sheryl Sandberg. I thought she was a really good person and really concerned about women.

• 39:18Scott Galloway?

  And then I woke up and realized she'd invented the business model and was the basically the heat shield and the weapon of mass distraction such that she could depress hundreds of thousands of American teenage girls. And she absolutely knew what she was doing, absolutely knew what she was doing. And I see it everywhere and we keep falling for it. Jack Dorsey in his hushed tones about Twitter and his concern about the like button. Okay, fine, boss, you didn't do a fucking thing about it. And now Sam Altman is making these very concerned statements around the dangers of AI. Look, I can guarantee you, if we're waiting on their better angels to show up and for them to be evolved to the next level of

• 39:59Scott Galloway?

  generous, thoughtful statesman who's always checking his own desires for money. Don't bet on it, folks. Don't bet on it. It's our job to elect people that will regulate these companies. My favorite is OpenAI, it reverts to a nonprofit after it's made 100 billion in profits. There's like three companies in history that have aggregated more than 100 billion. Oh, good. Thank God. Once they're bigger than Saudi Aramco and Microsoft, they're gonna, they're gonna start spending money back to the nonprofit thing. It's just such extraordinary jazz hands and bullshit. Anyways, what's really interesting here is I read this and I'm like, we're missing something. Because my understanding is after raising 1.3 billion in funding,

• 40:45Scott Galloway?

  something like 60 of the 75 people, including the CEO, are walking over to Microsoft? You just can't, you don't, and you can't do that in the tech world. Because the people who invested are like, let me get this. You sat across from the table, you cashed my check, and now you're going to another company and my shareholder value is going to zero? There would have been lawsuits apalooza.

• 41:09Scott Galloway?

  Had people at the board not figured this out? And it says, the wording was really interesting here. It says that it's not, what did they say? They're not buying any shares. What is it? They're not taking on any of their IP. But they've said that- They're just taking the people. They're taking the people, but they've said that they're going to make the investors whole? Or something like that? Exactly. So Reid Hoffman, who's on the board of Microsoft and is he on the board of OpenAI too? This is so incestuous. This was such a backroom deal to make sure. My guess is Inflection probably read the tea leaves and said, it's going to be difficult for us to break through. There's some IP here. It's a good business.

• 41:52Scott Galloway?

  What if Microsoft gives us, gives the investors their money back? What if we figure out a deal and we can all go do our work? And Inflection can focus on a smaller business. I think Satya did this because I think he doesn't want to go through the bullshit he went through when he was so dependent upon Sam Altman. So this is Satya Nadella is Bill Walsh, the coach of the 49ers. And he slept really well at night, knowing that I have probably the greatest quarterback in the NFL right now, Joe Montana. But if Joe gets knocked unconscious, I have the second best quarterback in the NFL, Steve Young on the bench. I don't think, I don't think Microsoft wants to make this type of gargantuan investment and have so much market capitalization dependent upon the perception of one guy's genius,

• 42:37Scott Galloway?

  Sam Altman. They're bringing in Steve Young.

• 42:39Ed Elson?

  I mean, the thing that I'm most confused about is whether the investors agreed to this. I mean, yeah, Microsoft, Nvidia, Greylock, they're all investors in this startup, which raised $1.3 billion. And then Inflection turns around and says, yeah, we're going to make you guys whole. So it's fine. But if I'm Greylock and I invested in one of the biggest AI startups in the world, which I was probably expecting was going to be one of my best investments. And then at the end of the day, I come out of it flat.

• 43:12Ed Elson?

  I'm not that happy about that. So I mean, I guess my first que- I have more questions. My first question to you would be like, do you think the investors are fine with this? Do you think they said, yeah, that works for us? And to be clear, they maintain their equity in Inflection. So there's a possibility that, you know, they could get a decent exit here. But it just feels completely unlikely if you've just gutted the entire workforce of the company. So, I mean, let's put Microsoft aside. Let's just imagine like you're Greylock. You think Greylock said yes? Do you think they're okay with this?

• 43:46Scott Galloway?

  It looks like they've all come to some sort of agreement because I remember my first lawyer. God, he's such a neat guy. He actually was, I think he was a partner at Latham and he was the lawyer, the general counsel at Red Envelope. And he actually left a lot to go coach high school basketball. Just a really neat man. Oh God, if you're out there, please reach out, reach out to me. But he said to me, he said, the valley runs on conflict. And that is, okay, so Reid Hoffman is AI's or Inflection AI's third co-founder and early investor through Greylock and a Microsoft board member. So he's got conflict all over this thing. My guess is if I had to speculate what's happened here, Inflection AI said, we're the number five. That's not a good place to be.

• 44:32Scott Galloway?

  We can, Microsoft has agreed to give our shareholders, our investors, make them whole, give them their money back. And has likely said, okay, Inflection, you're going to be in a more focused, smaller business. But we're going to sign a multi-year big contract that's going to take the value of Inflection AI. You know, it's, it's going to, you know, make this a good company with a high valuation. You're getting your money back. And if you do the math, it was going to be a tough road ahead. Whatever happened here, everybody has nodded and held hands around the table and decided to agree on this. Because Mustafa Suleyman, if he did this without the permission of the board representing the shareholders of Inflection AI.

• 45:13Scott Galloway?

  I don't want to say it would never work again, but you don't cash a billion and a half dollars in investors' money and then take your entire team. That, I don't care if you're in California or wherever, you just can't, you're just gonna rack up lawsuits. And not only that, I'm not sure Microsoft wants to hire someone like that. They're like, let me get this. So now we're gonna build, you know, he could do that to us. If someone else shows up with a bigger check, is he gonna take the entire AI team that likes Mustafa over to Llama or whatever, or to Anthropic? So clearly, they have come to some sort of accommodation that the shareholders of both firms and the boards of both firms have agreed on.

• 45:53Ed Elson?

  I want to bring up this idea of power because you look at the AI startup landscape, probably the five biggest names in my view are OpenAI, Anthropic, Perplexity, Mistral, and Inflection. Microsoft essentially owns three of them, OpenAI, Mistral, and Inflection. Now, the word owns is doing a lot of work there, but it's invested $16 million in Mistral, that came out about a week ago. It's invested $13 billion in OpenAI. It reportedly has a 49% interest in its future profits. It's got a pseudo position on the board, this non-voting observer seat, which no one really understands.

• 46:36Ed Elson?

  And now it's taken all of the key personnel at Inflection, which by the way, is one of the biggest competitors to OpenAI. So they own three of the biggest startups in the hottest industry in the world right now. What does this say about the consolidation of power in the tech industry? And is this not a bridge too far?

• 46:59Scott Galloway?

  Power aggregates to the powerful. Generally speaking, the cycle is you have a group of very talented people who break through, make a bunch of money, and they're like, you know what, I really like having a lot of money, and I'd like to have more, at least hold on to what I have. So I'm gonna weaponize the political system and engage in regulatory capture, make it very hard for small companies. And even if a pandemic comes along, I'll convince people to bail me out. And you don't have the churn. And that's what kills societies is they no longer have the churn or the competition that favors younger people and disruptors. And we're moving that way despite the immense prosperity. Old people 72% wealthier than they were 40 years ago, young people 24% less wealthy. And so this is when you just have pure market dynamics and it's Darwin and there isn't

• 47:44Scott Galloway?

  regulation, you do end up with a small number of players aggregating just a disproportionate amount of the spoils. When we talk about Reddit going public at a pricing at $6.5 billion, Nvidia added 40 times that after their earnings call. So the concentration of wealth here, it begins with the market dynamics and I'm a big fan of Tim Wu. I think the best thing you could do to oxygenate the economy from the top down would be to go in and just have fucking break up Lollapalooza. Break, you know, the five or seven of these guys in tech and then go into big chicken and then go into big pharma and just populate the ecosystem with a group of amazing companies

• 48:29Scott Galloway?

  that only have $500 billion in market capitalization that are more focused, more driven. There would be greater competition for human capital raising wages, broader ecosystem. I mean, I just, we are become way too concentrated and I think this, I think this represents that. So AI, the biggest threat in the short term of AI is disinformation. The biggest threat over the long term, in my opinion, is it's absolutely speedballing loneliness. But another, another issue here is this is just a continuation of a trend in technology and a trend in America where the big get bigger by spending money on regulatory capture and network effects. We have to, we have to go in and break them up and redistribute the prosperity to smaller companies.

• 49:11Ed Elson?

  We'll be right back after the break with a look at CalPest's new investment strategy.

• 49:25Speaker 07

  Flowing ad budget on metrics that look great till the CFO sees them? That's bull spend, and marketers are calling it out in... Dashboard Confessions.

• 49:35Speaker 08

  I remember telling my boss, "It'll be good for the brand," when leads were slow. Yeah, it wasn't.

• 49:43Speaker 07

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• 49:57Speaker 09

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• 50:26Scott Galloway?

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• 51:11Scott Galloway?

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• 51:38Ed Elson?

  We're back with Prof G Markets. CalPERS, the largest public pension plan in the US with almost $500 billion under management, is shifting its investment strategy. The agency is reducing its stock and bond holdings and increasing its private market investments by more than $30 billion. The rationale? CalPERS analysis showed that private equity was the best performing asset class of the last decade with annual returns of nearly 12%. That's compared to 9% for public equities and 2% for fixed income. So Scott, CalPERS is doubling down on private equity here. What do you make of this investment strategy?

• 52:14Scott Galloway?

  You know, what's that disclosure? The past returns are no guarantee of future returns. So the question is, I mean, most markets are cyclical. And I've often said, find out what the hottest job is out of business school and short that market because MBAs are very rear view looking. So whatever's performed the best over the last five years, that's the industry they want to go into, realizing that, you know, every industry that's successful typically gets over invested from human capital and financial capital, which drives down returns. And you should be thoughtful about potentially going into industries that may seem down, but you know, might really recognize a pop because you have to be careful about chasing the hot thing.

• 52:56Scott Galloway?

  Now, the question is, are the returns from private equity cyclical like most asset classes? Meaning it's had a great decade run, which means logically the next decade it might perform or underperform other asset classes? Or is there a structural advantage to private equity investing? And there are some structural advantages. One, private equity firms have to raise money with a long lockup, which by the way isn't easy. Investors like to be able to get their money back if they need it. Typically, they raise money long and that is you have to give them or commit your capital for seven years. They have access to very low interest rates. They take control positions. They immediately go in there. They're typically in a control position.

• 53:38Scott Galloway?

  They take the company private. They bring a private equity mindset and that is they're very smart. They understand financial engineering. They're not afraid to cut costs. It's also the thing I've noticed about private equity is they're not afraid to pay management. And they're very good at getting management vested and aligned with their interests. So they'll come in by a food processing company or a food distribution company that's doing 800 million in revenues and doing 100 million in EBITDA and they'll come in, they'll buy it, they'll finance it really inexpensively. And they'll say, okay, we have really smart analysts here. We're going to look at potential acquisitions and we can fund them really easily. We're good at this. We're going to issue more debt and take our money out.

• 54:20Scott Galloway?

  We're going to sell the warehouse that sits on, you know, that you bought 30 years ago. That's now worth more than any warehouse should be worth. We're going to divest these businesses. Oh, and by the way, you know, Bob, you got 70 VPs. You should have 17 and we'll be generous with these people, but you have to trim the fat here. They're usually, they bring in an outside perspective and they're usually very smart and they know how to make companies worth more. And then because the investors have a long-term time horizon, they can usually ride out cycles. Cause if you wait seven years, for the most part, especially over the last, last, you know, 15 years, it's been up and to the right. And they can use leverage. So they, the returns here are really dramatic.

• 55:02Scott Galloway?

  It's probably not easy to raise money with a seven-year lockup and also say, we're really smart operators. We're really good at this stuff. We're not just throwing darts at, you know, a stock ticker. And so unless there's a dearth of capital that keeps them return side, what I would argue is that.

• 55:21Scott Galloway?

  More likely than not, this will be an asset class that underperforms because what you generally find amongst asset classes, except like angel investing, that's just consumption. That's what I call FIPS, formerly important people who get psychic income from helping entrepreneurs. And by the way, that's great. God bless them. But it's a shitty part of the, it's, it's just a terrible business because A, these things take forever and small shitty businesses require as much attention as big businesses that are doing well. And even if the business does well, at some point, it isn't. And unless you set on capital to defend your position, you know, you can get washed out. You can invest in a company that grows up to be Google and at some point you might get washed out. Anyways, the, the other

• 56:03Scott Galloway?

  asset classes tend to be cyclical. They have great periods, they, and they have terrible periods. Generally, what I have found is when you know an asset class is about to overperform is when it's near impossible to raise money for it. Because what that means is the money that's going to go into it is going to get a much higher, much higher return. It is good to be in venture capital right now because the market has had a real thought. It is very hard to raise money, venture capital firms, unless you're big. And a lot of their companies are doing follow-on rounds because they need money and their valuations have come down extraordinarily. So a lot of VCs who have capital are really in a cap rate seat because they can do a follow-on round for a company that's a good company at half the valuation. So I think it's going to be a good vintage for venture capital. The question

• 56:44Scott Galloway?

  here, and I don't, I don't feel like I have an answer, is this, is CalPERS chasing returns, which is not a good idea? Or do they see a structural advantage around private equity and they want to get in front of that? I have generally found that asset classes, it is very hard for an asset class to maintain a structural advantage. And that if one asset class has overperformed the last 10 years, that's usually a decent indicator it's going to underperform the next 10 years.

• 57:09Ed Elson?

  Yeah, I mean, my initial thought on this was. This idea of steering with the rear view mirror, like they have this, they're very obsessive about the 10-year returns, the historical 10-year returns of all these asset classes, you know, fixed income like 2%, real assets around 7%, and then private equity is 11.5%. And it's sort of like, therefore, we're getting into private equity. And that, to me, was a red flag. The one signal to me that signals that they actually have done the correct analysis here was their future projection of returns. Because, you know, if they said something like, we believe private equity will continue to return 11.5% on an annualized basis, that would be a problem. But instead, they actually projected lower returns. They projected 8%

• 57:53Ed Elson?

  over the next decade, which was only one percentage point higher than their expected returns on public equities. And so what that tells me is that, you know, they're recognizing, yeah, it's been a freakishly good run for PE. And still, at the same time, we believe we have to get in. And the more I think about it, it makes sense to me. Because if you look at the public markets, there's actually not that much to invest in. It's basically the mag seven, and if you'd have stuck with those, you'd have outperformed everyone. And then everything else, the returns are mediocre to crappy. I mean, we've pointed this out, the S and P returned 29% last year, but if you removed those seven companies, it would

• 58:33Ed Elson?

  only be up 8%. Meanwhile, you have this other asset class, private equity, that is rapidly growing. It's gone from, in 10 years, $4 trillion in AUM to $15 trillion. And it's now beginning to feel like this is the, this is the elephant in the room, where if you're not exposed to it, if you're not substantively exposed to it, especially if you're a pension fund and you're representing regular people, then you're probably acting irresponsibly. So I guess my question to you would be like,

• 59:06Ed Elson?

  Do you feel at this point that private equity is just too big to ignore? Do you think that everyone, if they can, should be getting some level of private markets exposure?

• 59:16Scott Galloway?

  I think that's really interesting. And again, you catalyze the thought I hadn't considered, and that is because companies are saying private longer, that means the target market or the pool of potential investments has grown. And that is, there's a lot of great big companies now that are really operated well, that are private. And also, once a private equity firm controls a company, you can also get a bit of a kicker from the private to public pop. And that is, the average, the average multiple of EBITDA for a public company is 10.4X. The average multiple of a private company in transactions is 8.9. So if you can borrow money inexpensively, tighten it a bit, maybe increase the EBITDA a little bit, and then take it public, you should recognize a pop right there.

• 1:00:00Scott Galloway?

  So maybe that explains the justification for additional capital allocation because the, I mean, there's just fewer and fewer stocks. I think the number of publicly traded stocks has been cut in half the last 30 years. Also, there's some, there are some real moats here to negotiate a private transaction versus convincing yourself you should buy Coinbase, or a hedge fund manager says, oh, Coinbase, and then just buying stock and getting in it. There's some real barriers to taking a company or buying a company. It's not easy. This requires real structuring skill, real financial acumen. You have to have operators on your team. I work with some private equity firms and they bring me in for very specific tasks,

• 1:00:43Scott Galloway?

  and they expect me to know my shit, which is really unfortunate. But they want, they're not like, they don't want you to come in and do jazz hands around why this is a good or bad investment. They want you to come in and say, okay, you know, should Yahoo be spending this unit or not? And why? And what are some ideas around incorporating video? I mean, they really, they really get their hands dirty. And the thing I've never bought, the populist argument that private equity comes in and ruins towns and companies, I've just, I'm sure there are instances of that, but what I have generally found is that they're good owners, and if they see growth potential, they'll invest. If they think the company is fat, they'll cut the fat. But I find that generally speaking, actually, private equity players

• 1:01:26Scott Galloway?

  Like the absolute worst fucking people are venture capitalists. I mean, these are, these are generally speaking, generally speaking, pretty awful people. And, and because they're lions and they're trying to create an ecosystem with a zebra. They're the lion, the entrepreneur is the zebra. Most private companies, VC companies, high-growth companies, generally there's a point where the interests diverge. And it is full-body contact, ugly business and all these, you know, Silicon Valley venture capitalists who pretend to give a flying fuck about the world, throw a big party to save the whales at night. And during the day, they're literally like trying to figure out how to fuck over entrepreneurs. Too much, too much. What I find with private equity is generally speaking, they figure out the deal.

• 1:02:09Scott Galloway?

  They're like, okay, management, we're going to give you 15 or 20% of the company. And then everyone's kind of on the same page. And generally speaking, the private, the CEO of a private equity-owned company generally gets along. I mean, A, they've decided to let the private equity company buy them, but they generally have good relationships with them. They have to get along with them, they like the CEO. And I generally find that they're nice people to work with. The, the really ugly side of capitalism I have found is in venture. By the way, my, the venture capitalists I work with at Section, you know, they're wonderful people. It's the only, it's the only check I'll ever cash again is, you know, is this firm I work with, General Catalyst.

• 1:02:51Scott Galloway?

  They're wonderful people, so I'm making a very broad generalization here. But I'll just stick with the venture capitalists in San Francisco are just awful people. Specifically, the ones that their firm is named after a type of tree and begins with the letter S. They should rebrand themselves to mendacious fucks capital. Too much, Ed, too much?

• 1:03:13Ed Elson?

  No, it's perfect. Nice impersonal, unbiased analysis. Let's take a look at the week ahead. We'll see consumer sentiment from March and we'll also see the latest inflation data from the personal consumption expenditures index for February. Do you have any predictions?

• 1:03:30Scott Galloway?

  My prediction's really straightforward. I think it's disco and champagne and cocaine for the IPO markets. And I think you're going to see in the next 30 days, a bunch of companies file. And we're going to see a bunch of pops. Now, there was a bit of a head fake last year with Birkenstock and a couple others, and they didn't really perform very well, where they didn't get much of a pop. I think the animal spirits are back, Ed. I think that John Travolta is on the dance floor again. And I just made that up. I like that.

• 1:03:58Ed Elson?

  That's good.

• 1:03:59Scott Galloway?

  But anyways, I think we're about to see the back half of 2024, more IPOs than we've seen in a few years. And we're going to see some big, big Thursday pops.

• 1:04:14Ed Elson?

  This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our executive producers are Jason Stavas and Catherine Dillon. Mia Silverio is our research lead, and Drew Burrows is our technical director. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Wednesday for office hours, and we'll be back with a fresh take on markets every Monday.

• 1:05:18Scott Galloway?

  Quick note, Ed.

• 1:05:19Ed Elson?

  Yep.

• 1:05:19Scott Galloway?

  Go out tonight, get ridiculously fucked up, and make a series of bad decisions. True story. Every long-term relationship I've had, I met the woman when I was fucked up.

• 1:05:30Ed Elson?

  Will do.

• 1:05:31Scott Galloway?

  Go do it, my man. Go do it, my brother. Make me proud.

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